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HomeMy WebLinkAboutMSW Hauling· Complete Items 1, 2, and 3. Also complete Item 4 If ~ Deavmy Is decimal. · Print your name and amddmes on the revm.,ae 2. Article Number PS Form 1~11 l~bmary 2004 B. Receded by (Pn'ntedName) C. Date of Delivery D.m~ deNve~y addmeea different fnom It~n 17 r-lYes ff YES, enter delivery address below: [] No [] Insured M~ [] C.O.D. 7009 0820 0001 7820 8402 [] Expme~ Mell [] R~um Re~lpt for Merchandise Oyes ELIZABETH A. NEVILLE, MMC TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDS MANAGEMENT OFFICER FREEDOM OF INFORMATION OFFICER Town Hall, 53095 Main Road P.O. Box 1179 Southold, NewYork 11971 Fax (631) 765-6145 Telephone (631) 765-1800 www. southoldtownny, gov OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD May 28, 2013 Jim Licato Progressive Waste Solutions of LI Inc 1198 Prospect Avenue Westbury, NY 11590 Dear Mr. Licato: Congratulations. At the regular Town Board meeting held on May 21, 2013, the Town Board accepted the bid of Progressive Waste Solutions of LI Inc for MSW Hauling and Disposal Services. A certified copy of the resolution is enclosed. The bid deposit is being returned to you. Thank you for your bid. Very truly yours, Lynda M Rudder Deputy Town Clerk mils. Southold Town Board - Letter Board Meeting of May 21~ 2013 RESOLUTION 2013-429 ADOPTED Item # 5.28 DOC ID: 8837 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2013-429 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON MAY 21, 2013: RESOLVED that the Town Board of the Town of Southold hereby accepts the bid of Progressive Waste Solutions TS of Long Island, Inc. to supply the town with MSW haul and disposal services for the period July 1, 2013 through June 30, 2015 at a per ton cost of $84.95 and $87.50 respectively per contract year as submitted in their bid of April 25, 2013, all in accordance with the requirements set out in the bid specifications and the Town Attorney. Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: James Dinizio Jr, Councilman SECONDER: William Ruland, Councilman AYES: Dinizio Jr, Ruland, Doherty, Talbot, Evans, Russell Generated May 23, 2013 Page 40 INFORMATION SCHEDULE K FORM OF BID BOND Bond#864337 KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned, Progressive Waste Solutions ~ ~ ~r 'r~ as Principal, and Evergreen National Indammity Company as Surety, are hereby held and firmly bound unto Town of Southold as Owner in the sum of One Hundrt~l Tbm,,qand mint 0~'100' for the payment of which, will and tndy be made, wo hereby jointly and severally bind o~selv~, our heirs, executors, administrators, successors and assigns. Signed this 2nd day of May ,2013 The condition of the above obligation is such that whereas the Principal he~ submitted to the Town of $outhold a certain Bid, attached hereto and hereby made a part hereof to enter into a centmet in writing, for the hauling and disposal of solid waste; NOW, THEREFORE, (a) If mid Bid shail be rejected or in tho alternate, If said Bid stufll be accmpted, and the Principal shall execute and deliver an Agreement in the form off the Sample Operating Agreement attached hereto (properly completed in aecordanec with said Bid) and shall furnish certificates of insurance and a bond for this faitifful performance of said Agreement, and for the payment of ail persons performing labor or fumi~hlng materials in connection therewith, and shall ~n all other respects perform the Agreement ero~tad by acceptance of ~id Bid, then this obligallon ahall be void, otherwkqe the same shall remain in forco and effect; it being expressly understood and agreed that the liability of the surety for any and all claim hereunder shall, in no ~vent, exceed the penal amount of this obligation as herein stated. The Surety, for value received, hereby ~tipulates and ~,rees that the obligations of said Sarety alld its bolld shall he in no w~y impaired or ~ by any ~on of the time within which the Owner may aueept such Bid; and said Sumy does hereby waive notice of any such extension. * Dollars ($100,000.00) Form of Bid Bond BID (PROPOSAL) FORM Schedule 5.0J[ Page 1 of 3 69 SEAL IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seats, and such of them as are ~ov0orafions have caused their coq~orate seals to be hereto affixed and these presents to be signed by their pF~p~ offiemrs, the .d~.y and year first set forth alx)ve. .//!, ,, Prin~fffl T)~6m~as d. Fowler, VP Evergreen National Indemnity Company 6'~na ~Engl~r, AddmssofSumty: ~l~n ;~o..t4...n n..,n...~...~, e,.;~, ~21, '~-'":-'~'~ "~" ............................. · ....... =ghts~ Ohio 44124 (ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION) STATE OF: TEXAS ) COUNTY: DENTON ) SSN: On this 29 d~y of April ,2(]1.3 before me per~nally c~me Thomas J. Fowler , to me known, who being duly sworn, did depose and say that he resides in Fort Worth, Texas .; that he is the Vice President of thc Proaressive Waste Solutions TS of LI. Inc, corporation described in and which executed the forcgo~g h'mtrumcn~ that he knows the seal of corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by the order of the Board of Directors of the corporation; and that he signed his name thel~to by I/kc order. .,,,{;~o teat ^. JOVC :'"A*. I1! i'"J~f..: ! M'., Commission Expires 'Oc,ob,,,6. Form of Bid Bond BID ~ROPOSAL) FORM (ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP) Schedule 5.0X Page 2 of 3 70 EVERGREEN NATIONAL INDEMNITY COMPANY MAYFIELD HEIGHTS, OH POWER OF ATTORNEY POWER NO. 864337 KNOW ALL MEN BY THESE PRESENTS: That t/ne Evergreen National Indemnity Company, a corporation in the State of Ohio does hereby nominats, oenstitate and appoint: *** Gins Engler its true and lawful Attomey(s)-In-Fact to make, execute, attest, asal and deliver for and on its behalf, as Surety, and as its sat and deed, where required, any and ali bonds, unde~taidngs, rec~nizencas end written obligations in the nature thereof. This Power of Affomey is granted and ia signed by facsimile pursuant to the following Resolution adopted by its Beard of Directors on the 23rd day of July, 2004: "RESOLVED, That any two officers of the Company have the authority to make, execute and deliver a power of Attsmey constituting as Attoreay(s)-In-tsct such persons, firms, or corporations as may be ealeatsd from time to time. FURTHER RESOLVED, that the signatures of such officers and the Seal of the Company may be affixed to any such Power of Attorney or any csttifleate misting thereto by facsimile; and any such power of Attorney or csrtffi~ate beadng such facsimile signatures or facsimile seal shall be valid and binding upon the Company;, and any such powers so executed and certified by tscsJmlle signatures and facsimile seal shall be valid and blndtog upon the Company in the future with respect to any bond or u~lertskIng to which it is attached,' IN WITNESS WHEREOF, the Evergreen National Indemnity C~mpany has caused ifa corpamts seal to be affixed hereunto, and these presents to be signed by its duly authorized oflicors this 1 st day of June, 2009. EVERGREEN NATIONAL iNDEMNITY COMPANY Notary Public) State of Ohio) By:_ Charles D. Harem Jr, lheaid~t By David A. Canzone, CFO SS: On this 1st day of June, 2000, before Ihs subscriber, a Notary for the Stats of Ohio, duly commissioned and qualified, personally came Charles D. Hamm, Jr. and David A. Canzone of the Evergreen Natlonat Indemnity Company, fo me personally known fo be the individuals and officers described heroin, end who executed the prese¢ling instrument and acknowledged the e.necoti~n of the same and being by me duly sw~m, deposed end said that they am the officers of said Company afore~d, end that the seal affixed to the preesding Instrument Is the Corporets Seal of said Company, and the said Coq~rete Seal and signatures as officers were duly affi.ved and subscribed fo the said icaltument by the authortty end dlre~lon of said Coq)oration, and that the rseolutle~ of said Company, reformd to In the preceding Inatmment. Is now in force. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at Columbus. Ohio, the day and year above written. q:oauo, r~lr,~ My Commission F. xpir~ April 4, 2017 Board of Direators, set fo;th herein above, la now in force. Signed and oea~:l in May~d Hts, Ohio thls 2~ State of Ohio) SS: I, the underaiglled, Secretary of the Evergreen National Indemnity Company, a stock co~poratfon of the State of Ohid, DO HEREBY CERTIFY that the foregoing Power of Attorney remains in foil force and has not been revoked; and furlhermore that the Resolution of the day of May 201:) Wan C. Collier, State of New York Evergreen Nnl~onal lndemnit~ Comp.ny Home Office Address Ma~eJd HeiSts, Ohio Organized under the Laws of Olio h~s complied with the necessary eequi~ements of er pu~-uant to law, it is hereby Ilce~sed to do within this State the business of ~a~i~, pm~ d~ Ue~, w~' ~afion ~d ~' ~, fi~ ~ ~, n~ ve~ md ~t ~ ~s~p~ (s) 4, 5, 6, 7, 8.9, 1~ 1~, 14. 15, 1~ 19, 20~21 ~28 of~ 1 ] ]3(a) ~ N~ y~ ~w ~ ~o s~w~ ~a~m~ ~ ~be ~ ~ ~ ~~p~ 20~d 21 ~ lll3(a), ~cl~~ d~ Tn WUIle.~ Whereof, T h~ve heeeume set my hand a~d affixed the .r~ad seal of this Depaetme.~t at the Ci~7 of AIIxmy, New York, 'this Z~r da)~ ~f ~Tuly, 20~2 Benjamin M, Lawsky Superintendent ~Tacqueline Catalfemo Special bepu~/Superintendent O~J~mnl on'~at~mazJ(e~ Pape~ Evergreen National Indemnity Company Certffieate 201~- The followin~ finanolal tn formatlon was excmpted from the Staluto~ Annual S'mtement flkd by ~v~green National Ind~nmity ~y with the Ohio D~ll~amlt of In.vamp. STATEMENT OF INCOME Direct Written Premium Reinsurm~ce Assumed Roinsm'ance Ceded Net Wduen Premium Clum§e in Unearned No~ P_~nad Premium Loses & LAE Inourred Net Commission Expenso Oth~ E.xpo~u N*t lav~mmt lnoomo Not ~ ~piml Oalm (Loss) ot~r tt~orn~ (~pen~) Inconm Before FIT Federal lncomo Tax Net Income A~s Balnnces (net of Roia~.) Poslnsumnc~ Re~ov~b[o Odusr Asses Toini Asse~ 280~8 724,074 Une~ted la~mlum Reserve Loss& LAE ~ Ceded Reinsurance Payable Other Liabilities Total Liabilities Sm*plus Total Liabilities & Surplus 3,659,478 ] h~oby c~tflfy tlmt the above Information is that contained in the Statutory ~_ma~m! ~mmnent fll~ by Ever~ee~ Haflcmal Indemnity Company with the Ohio Dopmme~ of ~nsuranoe for dm ~er endJn~ D~vid A. Csr, z~e~ t r~mu~r 05/O4 '13 FRI 0S:15 FAX 631 765 6145 SOUTHOLD TOWN CLERK ~001 TX/RX NO INCOMPLETE TX/RX TRANSACTION OK ERROR *** MULTI TX/RX REPORT *** 2568 [, 60] [, 51118005243326 [, 52]18882329941 [, 53]16002582984 [, 54]18009620544 Burrelle's Info Data Construct Dodge Reports Construct Info NOTICE TO BIDDERS Solid Waste Haul-Disposal Services The Town of Southold will receive sealed bids for solid waste haul-disposal services until the time and at the location herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 DATE: April 25, 2013 TIME: 3:00 PM (LATE BIDS WILL NOT B E OPENED) The offer to be made in accordance with this Bid Solicitation shall include a bid on the followlng: A bid price per ton, to provide equipment and labor for hauling solid waste and disposing solid waste m the Contractor's Solid Waste Disposal Site. The term of this Agreement shall be two (2) years commencing on July 1, 2013, with the potential for three (3~ additional option years (see Section 18.07 p. 21). Notwithstanding contractual or other legal reasons for terminating this Agreement, this Agreement will be guaranteed 'for a two (2) year term, through J~me 30, 2015. Bids must be made in writing on the forms furnished and shall be accompmfied by a Bid Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars ($100,000.00) wherein the timed obligee shall be the Town of Southold. The successful Bidder shall be reqtfired to lhrnish a pertbrmance Bond and insurance in accordance with the instructions in the Bid Solicitation, The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exemnt. One (1) bid was received SOLID WASTE HAUL & DISPOSAL Bid Opening 5/2/13 ~ 3:00 PM C1 C2 C3 C4 C5 Unit .Bid Price Progressive Waste Solutions of LI Inc Jim Licato 1198 Prospect Avenue Westbm3q NY 11590 516-937-0900 84.95 87.50 Original copy is in Town Clerk's file. Two copies sero to SWMD. 90.12 92.83 95.61 89.07 INFORMATION SCHEDULE C Town of Southold Bid Project Solid Waste Haul-Disposal Services Bid #864337 This is identification that Evergreen National Indermity Company will b~ the Surety Company for '[¥n~r~,~iws~ IJ~e~'~ ,qnl,,r~nn~ 'PC ,-dr 1 T, -~..~C_ thc Bidder, on this project and that thc named Surety Company h~r~in pmvid~ writW, n certification that the named Surety Company will provide the Performance Bond, specified in the Contract Documents, in the eve~at the Bidder enters into an agreement with the Town. The Surety Company herein certifies that such Company is licensed to doj~siness in the State of New York. Progress~/~/~ ~olutions TS of LI, Inc · o-so (SEAL) Evergreen National Indemnity Company Surety Company By: - -Fac G~.na Engler, orne¥ n Surety Verification BID (PROPOSAL) FORM Schedule 5.0.C 51 EVERGREEN NATIONAL INDEMNITY COMPANY MAYFIELD HEIGHTS, OH POWER OF AI'FORNEY POWER NO. Bid Consent KNOW ALL MEN BY THESE PRESENTS: That the Evergreen National Indemnity Company, a corparat~on in the State of Ohio does hereby nominate, constitute and appoint: *** Gina Engler *~* its true and lawful Attemey(a)-In-Fact to make, execute, attest, seal and dot[var for and on its behalf, as Surety, and as its act and deed, where required, any and all bonds, undertakings, recognizances and w~ltten obligations In the nature thereof. This Power of Affomey ia granted and is signed by focsJrnile pursuant to the following Resolution adopted by its Board of Directors on the 23rd day of July, 2004: 'RESOLVED, That any two officers of the Company have the authodiy to make, execute and deliver a Po~er of Attorney constituting as Atfomay(s)-In-fant such parsons, th?ns, or co~poraticoa aa may be selected from time to time. FUR]HER RESOLVED, that the algsatures of such officers end the Seal of the Company may be afl'mod to any such Po~mr of Attorney or any csrtff'~csta relating thereto by facsimile; and any such Power of Attorney or certificate [mm'lng such facsimile slgnsturea or facsimile seal shall he valid and binding upon the Company; and any such powers an executed and cs~fled by facsimile signatures and facstmire seal shall be valid and binding upon the Company in the future with respect to any bond or undertaking to which ti is attached." IN WITNESS WHEREOF, the Evergreen National Indemnity Company has caused its co,'poreta seal to be affixed hereunto, and these pmeante to be signed by its duly authorized officers this 1 st day of June, 2009. EVERGREEN NATIONAL INDEMNITY COMPANY Notar~ Public) State of Ohio) SS: By: By David A. Canzone, CFO On this 1st day of June, 2009, before the subscriber, a Notary for the State of Ohio, duly commissioned and qualified, personally came Charles D. Harem, Jr. and David A. Canzone of the Evergreen National Indemnity Company, to me personally known to be the individuals and officers described heroin, and who executed the preceding instrument and acknowledged the executlo~ of the same and being by me duly swom, deposed and said that they are the officers of said Company aforesaid, and that the seal affi.ved to the preceding instrument i$ the Corporate Seal of said Company, and the said Corporate Seal and signatures aa Officers were duly afiJx~d and subscribed to the said instrument by the authority and direction of said Corporation, and that the resolution of said company, refon'ed to In the preceding instrument, ia now in force. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at Columbus, Ohio, the day and year above written. Penny M. Burns, Notagy Publi~ My Commission Explxes April 4, 2017 Board of Dlmcfors, set forth herein above, ia nowin force. Signed and sealed in Mayfleld Hte, Ohio this 2 State of Ohio ) SS: I, the undersignm:l, Secreta~ of the Evergreen National Indemnity Company, a stea~ corpore~ion of the 8t~re at Ohio, DO HEREBY CERTIFY that the foregoing Power of Attomey remains in full force and has not been revoked; and furthermore that the Rasolution of the day of Ma'/ 2013 Wml C. Collie, Svct~ NOTICE TO BIDDERS Solid Waste Haul-Disposal Services The Town of Southold will receive sealed bids for solid waste haul-disposal services until the time and at the location herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 ORIGIN L DATE: April 25, 2013 TIME: 3:00 PM (LATE BIDS WILL NOT BE OPENED) The offer to be made in accordance with this Bid Solicitation shall include a bid on the following: A bid price per ton, to provide equipment and labor for hauling solid waste and disposing solid waste at the Contractor's Solid Waste Disposal Site. The term of this Agreement shall be two (2) years commencing on July 1, 2013, with the potential for three {3) additional option years (see Section 18.0~ p. 21}. Notwithstanding contractual or other legal reasons for terminating this Agreement, this Agreement will be guaranteed for a two (2) year term, through June 30, 2015. Bids must be made in writing on the forms furnished and shall be accompanied by a Bid Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars ($100,000.00) wherein the named obligee shall be the Town of Southold. The successful Bidder shall be required to furnish a performance Bond and insurance in accordance with the instructions in the Bid Solicitation. The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the scheduled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest of the Town of Southold. Bid Solicitation containing submission requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the following location on weekdays from 8:00 A.M. to 4:00 P.M.: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck, Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Bunchuck's office is at the Southold Town Transfer Station, located at: Southold Town Solid Waste District 6155 Cox Lane Cutchogue, New York 11935 For specific further information regarding bidding requirements, contact Southold Town Clerk Elizabeth A. Neville (631) 765-1800. For information regarding the bid specifications contact Southold Town Transfer Station (631) 734-7685. All bids must be signed and sealed in envelopes plainly marked "Bid On Solid Waste Haul- Disposal Services 2013", and submitted to the Office of the Town Clerk, 53095 Main Road, P O Box 1179, Southold, NY 11971. The bid price shall not include any tax, federal, state, or local, from which the Town of Southold is exempt. Dated: February 12, 2013 ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK 2 NON-COLLUSIVE BID CERTIFICATE The undersigned bidder certifies that this bid has been arrived at by the bidder independently and has been submitted without collusion with any other vendor of a materials, supplies or equipment of the type described in the invitation for bids, and the contents of this bid have not been communicated by the bidder, nor, to its best knowledge and belief, by any of its employees or agents, to any person not an employee or agent of the bidder or its surety on any bond furnished herewith prior to the official opening of the bid. ~ r ~ ' (Signed) .)4'~1'A/14[/ ~./~4'~[-~ (Corporate Title if m~Xl C.,(~ ~//flfO~?/(~ PrintedName ~-~;r~q ~iC6c~fO Address Il ~ ?rg_qlt~C½ i~¢,. ~$;J3~rcl. ~/Vtl/~5 ~0 3 BIDDER'S SOLICITATION SOLID WASTE HAUL AND DISPOSAL SERVICES AGREEMENT DOCUMENTS TOWN OF SOUTHOLD STATE OF NEW YORK TOWN OFSOUTHOLD April 2013 4 NOTICE TO BIDDERS Solid Waste Haul-Disposal Services The Town of Southold will receive sealed bids for solid waste haul-disposal services until the time and at the location herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 DATE: April 25, 2013 TIME: 3:00 PM (LATE BIDS WILL NOT BE OPENED) The offer to be made in accordance with this Bid Solicitation shall include a bid on the following: A bid price per ton, to provide equipment and labor for hauling solid waste and disposing solid waste at the Contractor's Solid Waste Disposal Site. The term of this Agreement shall be two (2) years commencing on July 1, 2013, with the potential for three {3) additional option years (see Section 18.0, p. 21}. Notwithstanding contractual or other legal reasons for terminating this Agreement, this Agreement will be guaranteed for a two (2) year term, through June 30, 2015. Bids must be made in writing on the forms furnished and shall be accompanied by a Bid Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars ($100,000.00) wherein the named obligee shall be the Town of Southold. The successful Bidder shall be required to furnish a performance Bond. and insurance in accordance with the instructions in the Bid Solicitation. The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the scheduled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest of the Town of Southold. 5 Bid Solicitation containing submission requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the following location on weekdays from 8:00 A.M. to 4:00 P.M.: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck, Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Bunchuck's office is at the Southold Town Transfer Station, located at: Southold Town Solid Waste District 6155 Cox Lane Cutchogue, New York 11935 Entrance to the facility is gained from Cox Lane, off County Rt. # 48. All bidders are encouraged to inspect the Southold Town Transfer Station. Appointments to do so are not required, but may be scheduled by calling Mr. Bunchuck at the phone number above. Elizabeth A. Neville Town Clerk For further information regarding bidding requiremems, contact Elizabeth A. Neville (631) 765- 1800. For information regarding Town Of Southold waste program and haul-disposal operations, contact James Bunchuck (631) 734-7685. 6 TABLE OF CONTENTS GLOSSARY OF TERMS SECTION A- SUBMISSION REQUIREMENTS 1.0 Project Purpose 2.0 Schedule 3.0 Examination Of Agreement Documents 4.0 Information to be Submitted 4.1 Contractual Bid 4.2 Supplemental Information 5.0 Bid Format 5.1 Binding 5.2 Form Preparation 6.0 Submission of Bid 6.1 Withdrawal Of Bids 6.2 Questions & Addenda 7.0 Bid Guaranty 8.0 Execution Of Agreement 9.0 Consideration Of Bids 10.0 Selection Of Contractor 11.0 Acceptance of Bid 12.0 Assignment 13.0 Limitation Of Funds Available 14.0 Insurance and Bonds 14.1 Insurance 14.2 Bonds 15.0 Indemnity (Hold Harmless) 16.0 Payments 17.0 Default 18.0 Term of Agreement 19.0 Service Agreement 20.0 Subcontracts 21.0 Rights and Options SECTION B - BID SPECIFICATION 1.0 Requirements 2.0 Program Goals and Objectives 3.0 Guarantees 4.0 Character Of The Solid Waste 4.1 Quality and Characteristics 5.0 Program Activities 5.1 Collection 5.2 Loading Mode 5.3 Town of Southold Accident and Damage Policy 5.4 NYSDEC Part 360 Permit to Operate 7 10 11 11 12 13 13 13 15 15 15 15 15 16 16 16 17 17 18 18 18 18 18 20 20 21 21 21 21 22 22 23 24 25 25 25 26 26 26 27 27 27 6.0 Haul Services 6.1 Transport Mode 6.2 Work Included 6.3 Equipment 6.4 Weighings 6.4 Routing Mode - Contractor's Responsibility 7.0 Disposal Services Program Activities 7.1 Work Included 7.2 Operational Capacity 7.3 Permit Requirements 7.3.1 Disposal Sites Inside State Of New York 7.3.2 Disposal Sites Outside State of New York 7.4 Weighings 8.0 Safety and Health Regulations 9.0 Operations and Procedures 9.1 Supporting Data SECTION C - TOWN OF SOUTHOLD SOLID WASTE HAUL/DISPOSAL SERVICES 1.0 Intent 2.0 General Bid Statement 3.0 Unit Price Bid Schedule 3.1 Compensation 3.2 Evaluation Unit Bid Price Formula 4.0 Bid Security Acknowledgment 5.0 Information Schedules Information Schedule A Information Schedule B Information Schedule C Information Schedule D Information Schedule E Information Schedule F Information Schedule G Information Schedule H Information Schedule I Information Schedule J Information Schedule K Information Schedule L Information Schedule M 27 27 28 28 29 29 30 30 30 30 31 32 33 33 34 35 36 37 37 41 41 42 42 42 SECTION D - APPENDICES Appendix A Sample Operating Agreement Appendix B New York State Department of Environmental Conservation Permit Appendix C Accident Report 9 GLOSSARY OF TERMS ADMINISTRATOR -Shall mean the Coordinator of municipal solid waste (or his agent) of the Town of Southold, New York. AGREEMENT- Shall mean a contract set forth by the Town and resulting from this Bid Solicitation between the Town of Southold and the successful Bidder to be executed in 2013. AGREEMENT DOCUMENTS -Shall include the notice to bidders, instructions, bid solicitation, bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance bond, certificates of insurance, glossary of terms any general conditions or special conditions, and any addenda. The Agreement Documents will Form a part of the Agreement. AGREEMENT YEAR -Shall mean the period from July 1 , ora calendar year to June 30, of the next calendar year. BIDDER -Shall mean any party or parties submitting in proper form a bid to perform the work as specified in the Agreement Documents. The successful Bidder selected by the Town to perform the specified work will thereafter be known as the Contractor. BID PRICE -Shall mean the unit cost to determine the ranking of bidders. BID SOLICITATION-Shall mean this document, specifications, and any bid addenda issued. COMMENCEMENT DATE -Shall mean July 1,2013 _. CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) -Shall mean solid waste resulting from the construction, renovation, equipping, remodeling, repair and demolition of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and roofing shingles. CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) DISPOSAL SITES -Shall mean any site designated by the Contractor where construction and demolition debris is disposed of in a manner that minimizes environmental hazards and is permitted under the design and operation requirements of 6NYCRR Part 360 or alternatively outside the State of New York, is permitted under design and operation requirements meeting the requirements of 1) that jurisdiction's applicable regulatory agency and 2) Town of Southold's minimum standards. GLOSSARY-I 10 CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents. CONTRACT YEAR - Shall have the same meaning as Agreement Year. CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors, administrators, agents, or successors thereof. COORDINATOR - Shall mean the coordinator of municipal solid waste for the Town of Southold. COUNTY - Shall mean Suffolk County, State Of New York. DAILY - Sunday to Saturday, inclusive. EPA - Environmental Protection Agency (Federal). HAUL-DISPOSAL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in dollars for each ton of solid waste actually hauled from the Town Of Southold Transfer Station to the Contractor-Designated Disposal Site and disposed of at the Contractor-Designated Disposal Site. HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.. or "hazardous substance" as defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or "hazardous waste" as defined under New York Environmental Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time, and the regulations promulgated thereunder, and any analogous or succeeding Federal, state or local law, rule or regulation and regulations promulgated thereunder and (2) any other material which any governmental agency or unit having appropriate jurisdiction shall determine from time to time cannot be processed at the facility because it is harmful, toxic or dangerous. NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful Bidder that the Town of Southold intends to award an Agreement to the successful Bidder, subject to compliance with all their terms and conditions of the Agreement Documents. NYSDEC - New York State Department Of Environmental Conservation. OSHA - Federal Williams-Steiger Occupations Safety & Health Act of 1970, plus subsequent revisions. GLOSSARY-2 11 OWNER - Shall mean the Town Of Southold, New York. Also may be referred to as the Town. PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience and necessity, Franchises or authorizations which must be issued by any Governmental Body having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of construction and demolition debris. PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition debris or to construct, establish, maintain or operate a construction and demolition debris Disposal Site. RCRA - Resource Conservation Recovery Act (Federal). SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances, including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid Waste does not include C&D waste, recyclables, hazardous, or infectious waste). SOLID WASTE DISPOSAL SITE(S) - Shall mean any site designated by the Contractor where solid waste is disposed of in a manner that minimizes environmental hazards and Is permitted under the design and operation requirements of 6NYCRR Part 360 - Solid Waste Management Facilities, or alternatively outside of the State of New York, is permitted under design and operation requirements meeting the requirements of 1) that judsdiction's applicable regulatory agency and 2) Town of Southold's minimum standards. Also may be referred to as Disposal Site(s). SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract with the Contractor for services, equipment, materials and/or labor. GLOSSARY-3 12 SECTION A SUBMISSION REQUIREMENTS BIDDERS INFORMATION, INSTRUCTIONS, AND AWARD BASIS 13 SECTION A SUBMISSION REQUIREMENTS BIDDERS INFORMATION, INSTRUCTIONS AND AWARD BASIS 1.0 PROJECT PURPOSE The Town of Southold expects that it will receive and need to dispose of approximately 16,000 tons of solid waste during the agreement year. This Bid Solicitation will ensure Town of Southold's solid waste will continue to be 1) hauled From the Town of Southold Transfer Station to Disposal site(s) and 2) disposed of at permitted Disposal Site(s). 2.0 SCHEDULE The schedule below is an estimate of the time period leading up to the commencement of the Agreement. Its intent is to provide each Bidder with an idea of when certain events may occur. The dates given are guidelines and should not be construed as firm dates or deadlines due to. the multiple parties involved in the decision making process. EVENT Transfer Station Visits Pre-Bid Conference Bid Opening Town Board Approval Agreement Executed Operations Commencement DATE By Appointment None 3:00 PM Thursday, April 25, 2013 May 7, 2013 On or Before June 7, 2013 July 1, 2013 14 3.0 EXAMINATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE WORK It is the responsibility of each Bidder before submitting a Bid to (a) examine the Sample Operating Agreement and Agreement Documents thoroughly; (b) visit the site of the Town of Southold Transfer Station; (c) attend and be familiar with the outcome of the pre-bid conference (d) become familiar with conditions at the Town of Southold Transfer Station and Disposal Sites that may affect cost, progress, performance or furnishing of the work; (e) become familiar with and consider all federal, state and local laws, regulations ordinances, permits, approvals and orders that may effect the cost, progress, performance or furnishing of the work: (f) study and carefully correlate the Bidder's observations with the Agreement Documents; and (g) notify the Town Clerk of all conflicts, errors or discrepancies in the Agreement Documents. Reference is made to the following Appendices which contain supplemental information which is attached to and made part of the Agreement Documents: Appendix A: Sample Operating Agreement Appendix B: NYSDEC Part 360 Operating Permit Appendix C: Town of Southold Accident Report Reference is made to the Following information which is available for review by Bidders at the Town Clerk's Office during normal business hours - 8:00 A.M. to 4:00 P.M. Monday through Friday. i. Pending conceptual plans for the proposed Town of Southold Transfer Station. ii. Town of Southold Solid Waste Management Plan. This information is presented solely for the convenience of the Bidders and does not constitute part of the Agreement Documents. Bidders shall form their own conclusions and opinions from this information and shall confirm any information contained therein regarding facilities and equipment through site visits. The Town does not guarantee the accuracy of any information contained in these documents. Before submitting a Bid, each Bidder shall, at the Bidder's own expense, make or obtain any additional inspections, examinations, or 'studies and obtain any additional data and information which may affect cost, progress, performance or furnishing of the work and which Bidder deems necessary to determine its bid for performing and furnishing the work in accordance with the time, price and other terms and conditions of the Agreement Documents. The failure or omission of the Bidder to receive and examine any form, instrument or document, or make required inquiries and inspections, shall not relieve the Bidder from any obligation contained in the Agreement Documents. The Town will be justified in rejecting any claim based on facts or conditions of which the Contractor should have been cognizant. 15 The submission of a Bid will constitute an incontrovertible representation by Bidder that Bidder has complied with every requirement of this Bid Solicitation, that without exception the Bid is premised upon performing and furnishing the work required by the Agreement Documents, and that the Agreement Documents are sufficient in scope and detail to indicate and convey understanding of all terms and conditions for performing and furnishing the work. Bidders will be allowed to ask questions regarding the Bid Documents during the pre-bid conference to be held at: Town Hall 53095 Main Road Southold, New York 11971 4.0 4.1 4.2 INFORMATION TO BE SUBMITTED WITH PROPOSAL Contractual Bid For the purpose of assisting the Town in determining the responsible Bidders for this Bid Solicitation, the Bidder is required to submit the following minimum information with his bid: ii. iii. iv. Contractor Bid Form Bid Security or Bid Bond Information Schedules A through M as applicable Supplemental Information as described in 4.2 Supplemental Information In addition to the aforementioned forms, the Bidder is. required to submit the following supplemental information with his bid: Operational Plan: A plan describing the Bidder's assessment of the requested operation set forth in Exhibit M. This section shall be divided into the following subsections: o Haul A detailed summary of requirements for manpower, materials and supplies, mobile equipment, etc., shall be included to provide the Town with general anticipated guidelines for performance under the Agreement. 16 ii. iii. iv. o Disposal A detailed summary of requirements of site capacity, useful life, hours and days of the week, operation, etc., shall be included to provide the Town with general anticipated guidelines for performance under the Agreement. A copy of the current Permits to Construct and Permits to Operate shall be included. Iftbe Solid Waste Disposal Site is located outside the State of New York, a copy of the current applicable laws and regulations governing the design, construction and operation of the Disposal Site shall additionally be included. Litigation: A section briefly describing any current litigation which in any way may affect the Bidder's operational capability of useful life of the Solid Waste Disposal Sites. Subcontractors: If the Bidder intends to use one or more subcontractors to complete any portion of the work, the Bidder must so indicate this intent in its Bid. The Bidder is advised that any Agreement awarded will be contingent upon the use of the subcontractor(s) so identified. In the event that the Bidder desires to change the number or identity of such subcontractor(s), the proposed change must be submitted to the Town for approval. No such change shall be made without the Town's approval. In addition, it is the policy of the Town of Southold to encourage the participation of Minority Business Enterprises (MBE's) and Women- Owned Business Enterprises (WBE's) on Town projects. For this reason, the Agreement will require Contractor to use its best efforts to include among its subcontractors MBE and WBE firms. In the event the successful Bidder intends to subcontract in excess of twenty-five percent (25%) of the work, the Bidder will be required to submit to the Town an MBE/WBE Utilization Plan acceptable to the Town prior to the Town's execution of the Agreement. Disposal Site Subcontractor: In the event the Bidder does not own the Disposal Site identified in its Bid, the Bidder shall furnish a statement, signed by an authorized representative of the Disposal Site, which provides for Bidder's use of the site pursuant to this Bid Solicitation in accordance with the Agreement Documents. THE SUPPLEMENTAL INFORMATION REQUIREMENTS MAY BE SATISFIED BY INCLUDING A REFERENCE TO AN INFORMATION SCHEDULE (A-M) IF THE SCHEDULE PROVIDES THE INFORMATION REQUESTED AND IS INCLUDED 1N THE BID. 17 5.0 5.1 BID FORMAT Binding The document(s) if bound shall be in a manner that will provide for easy evaluation access (to lie flat when opened). Printing on both sides of the sheets, provided a quality paper is utilized that will prevent the type from showing through, is acceptable. Paper with substantial recycled content is preferred. 5.2 Form Preparation 6.0 6.1 Bids shall be submitted in the form described in this Bid Solicitation. All blank spaces for bid prices shall be properly filled in, in ink or typed, in both words and numerals for all bid categories required. In the event a price shown in words and its equivalent shown in figures do not agree, the written words shall be binding on the Binder. BIDS SHALL NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED IN ANY WAY. In the event a specification is not applicable, it shall be so indicated. Incomplete bids may not be considered, depending on the nature of the missing information. SUBMISSION OF BID Each Bidder shall submit TWO (2) separate complete sets of his Bid which shall be enclosed in a sealed opaque envelope plainly marked on the outside with the title of the work and the name and address of the Bidder. No Bid will be considered unless filed on or before the time and at the place designated in the Notice to Bidders. Bids received after the time set for the opening will be returned to Bidders unopened. When sent by mail, preferably registered, the sealed Bid, marked as above, should be enclosed in an additional envelope similarly marked and addressed to: Office of the Town Clerk Town of Southold 53095 Main Road Southold, New York 11971 Bids received prior to the time of opening will be kept securely unopened. No bid received thereafter will be considered. Withdrawal of Bids Any Bidder will be given permission to withdraw its Bid upon receipt of a properly notarized written request made no later than the time set for opening. At the time of opening of the bids, if such Bid is included, it will be retumed to the Bidder unopened. No bid may be withdrawn after opening until execution of the Agreement or rejection of all bids as provided herein. 18 6.2 Questions & Addenda 7.0 8.0 All questions about this Bid Solicitation must be submitted in writing to the following: Town Clerk Town of Southold 53095 Main Road Southold, New York 11971 No alterations to this Bid Solicitation will be considered valid unless in writing and issued as Addenda. All such addenda shall become part of the documents and ail Bidders shall be bound by such addenda, whether or not received by the Bidders All questions must be received at least ten (10) calendar days before bid opening in order to be answered. It shall be the Bidder's responsibility to make inquiries conceming any addenda issued. All addenda will be on file at the Town Clerk's office at least twenty-four (24) hours before bids are opened. The Town will not be bound by oral clarifications. BID GUARANTY Each Bid must be accompanied by a bid guaranty (Section C, Schedule 5.0.K), without condition or qualification, which shall be in the sum of one hundred thousand dollars ($I00,000.00). The guaranty may be certified check, bank draft, money order, standard form irrevocable letter of credit, or a bid bond in the form attached. The bid bond shall be secured from a surety company authorized to do business in the State of New York as a surety. No Bid will be considered unless it is accompanied by the required guaranty, certified check, money order or bank draft must be made payable to the order of the Town of Southold. The bid bond shall name the Town as the obligee. Cash deposits will not be accepted. The bid guaranty shall ensure the execution of the Agreement and the furnishing of the surety bond or other required bonds by the successful Bidder, all as required by the Agreement Documents. All guaranties will be returned within ten (10) days after the execution of the Agreement and required bonds insurance and other Agreement Documents are received from the successful Bidder. EXECUTION OF AGREEMENT/FURNISHING OF BONDS The successful Bidder, or its legally authorized representative, shall be required to appear in person within ten (10) days of the Notice of Award by the Town at the place and time designated by the Town to execute the Agreement and other Agreement Documents for Haul/disposal services. The successful Bidder shall, at its own cost and expense, procure, execute and deliver to the Town the following documents within ten (10) days of formal Notice of Award by the 19 Performance Bond - A Performance Bond shall be in an amount of one million five hundred thoushand dollars ($1,500,000.00). This bond (as shown by example in Section C, Schedule 5.0.L), shall be maintained at the Contractor's own expense for the term of the Agreement. Failure or refusal of the successful Bidder to execute and/or deliver such bond within the time designated, shall constitute a breach of such Bidder of the Agreement created by the Town's acceptance of the bid. In such event, the Town may determine that such Bidder has abandoned the Agreement and the Town shall be entitled to take action for any and all damages it may suffer as the result of such breach. The Town's fights in this regard shall include but not be limited to a claim against the bid bond provided. The Town specifically reserves any and all other fights against the Contractor as a result of his failure to perform as required by these documents. 9.0 CONSIDERATION OF BIDS The Town of Southold reserves the fight to reject any/or all bids for haul and disposal services if such action is deemed to be in the best interests of the Town. To be considered responsive to this Bid Solicitation, each Bidder shall: Provide equipment, labor, maintenance and management services to haul and dispose of solid waste from the Town of Southold Transfer Station to Contractor designated Solid Waste Disposal Site(s) as set forth in Section B - Bid Specifications. B. Reserve and provide a minimum available capacity of 20,000 tons (52 weeks/year) yearly, allowing for seasonal and other peak periods. Provide evidence of all current valid state and Federal permits, licenses, local ordinances, etc., required by law to receive solid waste at the designated Disposal Site(s). D. Provide evidence of physical and financial capability to perform services described in the bid specifications. 10.0 SELECTION OF CONTRACTOR Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only bids solicited from firms or combinations thereof, who have sufficient management, engineering capabilities, operating, and maintenance experience to fulfill the Town's goals and comply with the applicable local, state, Federal laws, ordinances, regulations e.g. New York State Department of Environmental Conservation, Resource Conservation Recovery Act and Federal Environmental Protection Agency guidelines will be accepted. The Town will review the bids and make a selection recommendation based on the evaluation criteria included in this Bid Solicitation or take such other action as it deems in its best interest. 20 Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole discretion, to reject at bids submitted in response to this Bid Solicitation. 11.0 ACCEPTANCE OF BID The acceptance of a Bid will be a Notice of Award signed by a duly authorized representative of the Town, and no other act of the Town shall constitute the acceptance ora Bid. The acceptance of a Bid shall bind the successful Bidder to execute the Agreement and other Agreement Documents. 12.0 ASSIGNMENT The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right, title, or interest therein or his power to execute such Agreement, to any person or corporation without the prior written consent of the Town. 13.0 LIMITATION OF FUNDS AVAILABLE 14.0 14.1 The Contractor specifically agrees that any Agreement shall be deemed executory only to the extent of the funds appropriated for the purpose of the Agreement and that no liability shall be incurred by the Town beyond the funds appropriated on the date of execution of the Agreement by the Town for the said purpose. INSURANCE AND BONDS Insurance For the period from Agreement commencement date until one (1) year after Agreement termination date, Contractor must maintain insurance acceptable to the Town in the kinds and amounts set forth below. All such insurance coverage, shall be provided by companies licensed to do business in New York State and the state in which the Disposal Site(s) is (are) located. The Town of Southold and its agent shall be named as an additional insured and coverage shall not be changed or cancelled until thirty (30) days written notice has been given to the Town. Within ten (10) days of the Notice of Award, Contractor shall furnish to the Town, certificates of insurance, in a form satisfactory to the Town Attorney, evidencing such insurance. The kinds and amounts of insurance are as follows: A. Contractor's Insurance - Insurance for liability for damage imposed by law of kinds and in the amounts hereinafter provided covering all work under the Agreement, whether performed by Contractor or his subcontractors. The kinds and amounts of insurance are as follows: 21 (1) Worker's Compensation Insurance - A Policy covering the operations of the Contractor in accordance with the provisions of Chapter 41 of the Laws of 1914 as amended, known as the Worker's Compensation Law, covering all operations Of the Contractor, whether performed by him or by his subconlmctors. The Agreement shall be void and of no effect unless the person or corporation making or executing same shall secure compensation coverage for the benefit of, and keep insured during the life of said Agreement such employees in compliance with provisions of the Worker's Compensation Law. (2) General Liability (Comprehensive Form) Insurance - Contractor's liability insurance issued to and covering legal liability of the Contractor with respect to all work performed by him under the Agreement. The following insurance coverage shall be included: (a) Independent Contractor's Protective Liability - Covering work performed by subcontractors. (b) Completed Operations or Product Liability. (c) Contractual Liability. (d) Broad Form Property Damage (e) Personal Injury. NOTE: If any of the rating classifications embody property damage exclusions C or U, coverage for eliminating such exclusions must be provided. Coverage for the above will be required in not less than the following amounts: SINGLE LIMITS OF LIABILITY: AGGREGATE LIMITS OF LIABILITY: $1,000,000.00 $10,000,000.00 (3) Automobile Liability Insurance - Policy shall include coverage for all owned as well as non-owned and hired vehicles, and limits shall not be less than the following amounts: BODILY INJURY LIABILITY Aggregate: $3,000,000.00 Each Person Each Occurrence $1,000,000.00 PROPERTY DAMAGE LIABILITY Aggregate: $3.000,000.00 Each Occurrence $1,000,000.00 22 14.2 Bonds Prior to the execution Of the Agreement. the successful bidder shall furnish to the Town a Performance Bond wherein the named obligee is the Town of Southold. The Performance Bond's purpose is to secure the faithful performance of the Agreement. The bond' amount shall be set forth in Section A-8.0. The bond shall be executed by a surety company approved by the Town authorized to do business in the State of New York and with an office or representative in Suffolk County, New York. The form shall be acceptable to the Town of Southold and shall have a term through the completion of services. As an a alternative to the Performance Bond, the successful Bidder may furnish a certified check, bank draft, money order, or a standard form irrevocable letter of credit, certified check, bank draft or money order must be made payable to the order of the Town of Southold. The standard form irrevocable letter of credit shall be in a form acceptable to the Town of Southold. In the event the Contractor secures a Performance Bond from any of its subcontractors, said bond shall also name the Town of Southold as a dual obligee. Should the Town designate another public or private gent of contract administrator, the same or others shall be added as additional named obligee at no added costs to the Town, upon written request from the Town. 15.0 INDEMNITY (HOLD HARMLESS) Contractor shall agree to defend, indemnify and save harmless the Town against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and expenses of whatever kind or nature which the Town may directly or indirectly incur, suffer or be required to pay by reason of or in consequence of the carrying out of or the performance of the terms of such Agreement, or the failure to carry out any of the revisions, duties, services or requirements of such Agreement, whether such losses and damages are suffered or sustained by the Town directly or its employees, licensees, agents, engineers, citizens or by other persons or corporations, including any of the Contractor's employees and agents who may seek to hold the Town liable therefor. This indemnity shall include any and all claims, penalties or other losses or damages incurred by the Town as a result of enforcement or other proceedings by Federal, state or local government agencies relating to Contractor's Disposal Site(s) operation. This obligation shall be ongoing, survive the term of the Agreement and include, but not be limited to, claims concerning non-sudden environmental impairments. The Bidder agrees to join in the commencement of any action or proceeding or in the defense of any action or proceeding which in the opinion of the Town constitutes actual or threatened interference or interruption with the Town's rights hereunder, including all necessary appeals which may be necessary, in the opinion of the Town. 23 16.0 PAYMENTS 17.0 18.0 Contractor shall receive monthly payments for services performed during the prior calendar month upon submission of an invoice (with a Town voucher) that shall contain an itemized list of municipal solid waste haul trips from the Town of Southold Transfer Station including the tonnage of municipal-solid waste and the manifest number for each load of municipal solid waste removed. Such payments shall be made within sixty (60) days of the Town's approval of Contractor's invoice. Contractor's monthly invoice shall include a daily summary of tonnage received by Contractor at the' Transfer Station. The Town shall be entitled to deduct from any payment owing to Contractor any sums expended by the Town to cure any default or other non-compliance by Contractor. DEFAULT In the event the Contractor fails to perform its obligations under the Agreement, the Town may terminate such Agreement, and the Town may procure the services from other sources and hold the Contractor responsible for any excess costs incurred and deduct from payments owing to the Contractor and/or draw upon the Performance Bond as full or partial reimbursement for such excess costs. The Town reserves the right to terminate the Agreement for just cause. TERM OF AGREEMENT The term of this Agreement shall be two (2) years commencing on July 1, 2013, with the potential for three (3} additional option years. The Town and the Contractor, by mutual consent, shall have the option of renewing this Agreement for up to three (3) additional one-year terms at the prices bid herein. Notice of this mutual consent to be expressed by the parties in writing not less than one-hundred eighty (180) days prior to the expiration of the term in force (i.e., by January 1, 2015, January 1, 2016, and January 1, 2017). Similarly, notice by either party of the intent to reject any option year shall be submitted in writing by the same date (January 1) of each year. The Town reserves the right to terminate the Agreement at any time after Year Two (i.e., after June 30, 2015) of the Agreement for the purpose of entering into an inter-municipal solid waste haul~disposal Agreement with another Long Island Town by giving one-hundred eighty (180) days written notice to the Contractor. 19.0 SERVICE AGREEMENT The Contractor shall be obligated to provide the Town with disposal services without regard to the permit status of its Disposal Site. In the event that Bidder wishes to submit a bid for a Disposal Site for which Bidder does not currently have all necessary federal and state permits, Bidder shall at its sole risk and expense, be responsible for obtaining and/or renewing its permits or providing to the Town an alternate Solid Waste Disposal Site at no additional cost (disposal plus any additional hauling) to the Town. This is a full service Agreement and failure of the successful Bidder to provide the identified Disposal Site or acceptable alternative Disposal Site, on or after the commencement date for services under the Agreement Documents awarded hereunder shall constitute a breach of this Agreement. The Bidder accordingly shall not be excused from it obligations 24 hereunder by reason of any failure to obtain or maintain its permits at the identified Disposal Site. 20.0 SUBCONTRACTS In the event Bidder does not own the Disposal Site identified in its bid prior to execution of the Agreement, Bidder shall: (l) furnish to the Town a copy of the signed Agreement between Bidder and the Disposal Site Contractor which provides for Bidder's use of the site pursuant to this Bid Solicitation in accordance with the Agreement Documents; (2) require the Disposal Site Contractor to furnish to Contractor and the Town a performance bond guaranteeing the availability of the Disposal Site throughout the term of the Agreement; (3) require the certificates Contractor to provide insurance naming the Town as additional insureds on all policies maintained by Contractor. 21.0 RIGHTS AND OPTIONS The Town of Southold, New York, reserves and holds at its discretion the following rights and options upon issuing this Bid Solicitation: 1. To award an Agreement to the candidate whose bid is judged to be the lowest responsible bid pursuant to Section 103 of the General Municipal Law of the State of New York. 2. To reject any and/or all bids. 3. To issue subsequent bid solicitations. 4. To issue additional and subsequent solicitations for statements of qualifications and conduct investigations or interviews with respect to the qualifications of each Bidder. 5. To designate another public body, private or public agency, group, or authority to act in its behalf for evaluation and Agreement negotiations. 6. To designate another public body, private or public agency, group, or authority to act in its behalf for contract administration of this project at any time during the Agreement period. 25 SECTION B BID SPECIFICATIONS (TECHNICAL/MANAGEMENT) 26 1.0 SECTION B BID SPECIFICATIONS TECHNICAL/MANAGEMENT REQUIREMENTS This request for bids is issued for the Town of Southold, State of New York, Town Hall, 53095 Main Road, Southold, New York, 11971 (Telephone (516) 765-1800) The effort, shall be known as the Town of Southold Solid Waste Transport and Disposal Service. The Town of Southold desires to issue an Agreement with a qualified Contractor to haul and dispose of a portion of its Solid Waste. The Town will need to dispose of approximately 10,000 tons of solid waste during the agreement years The Contractor will ensure the Town that solid waste will continue to be; 1 ) hauled from the Town of Southold's transfer Station to disposal site(s), and; 2) disposed at permitted disposal site(s). The following general services are sought in this request: 'HAUL Provide equipment, labor, maintenance, management and policies to operate a transportation system for hauling solid waste from the Town of Southold transfer Station to Contractor designated disposal site(s) as set forth herein. Transportation equipment shall be in accordance with New York. State Department of Transportation, Interstate Commerce Commission, United States Department of Transportation, as defined in the Code of Federal Regulations, or other applicable state and federal regulatory requirements. · Disposal Reserve capacity and provide equipment, labor, maintenance, management and policies to receive and dispose of solid waste from the Town of Southold Transfer Station as set forth herein. The Contractor's New York State Solid Waste Disposal Site(s) must be in compliance with all State of New York Department Of Environmental Conservation's and U.S. Government's Regulatory requirements, e.g., 6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental Protection Agency - Subtitle D, et al. Disposal Sites outside New- York State shall be permitted by applicable local, state and Federal laws including RCRA and Subtitle D and regulations deemed by the Town to be no less protective of the environment than those outlined in this specification. Disposal alternatives that will be considered include land disposal, incineration, composting, etc., as long as they comply with regulatory requirements and environmental standards. 27 2.0 3.0 PROGRAM GOALS AND OBJECTIVES The goal of this project is the continued safe and reliable hauling and disposal of the solid waste materials from the Town Of Southold Transfer Station at minimum cost to the citizenry. It is also the objective of the Town of Southold to ensure that the haul-disposal operations proceed according to the provisions of this document and subsequent agreements/amendments are upheld. GUARANTEES This Agreement will not provide any guarantees with respect to the volume of waste to be hauled and/or disposed of by Contractor or the specific operational techniques and/or equipment to be employed by the Town in the handling of waste at the Town transfer station. The Town reserves the right to designate another public body, private or public agency, group or authority to act in its behalf for administration of the Agreement at any time during the term of Agreement. 4.0 CHARACTER OF THE SOLID WASTE The wastes which are to be hauled and disposed of under terms of this bid solicitation are to include typical municipal wastes from a rural community. This will include all waste types generated in private households, and, therefore, can include broken furniture, small appliances, and other wastes generated in a private home or apartment as allowed under 6NYCRR Part 360- 1.2(a) regulations and the Garbage, Rubbish and Refuse Law, Chapter 48 of the Code of the Town of Southold. Commercial waste may also be included in the solid waste stream. It may include any waste which is typically disposed of in dumpster or roll-off type container boxes at restaurants, small businesses, light industries, hospitals, office buildings etc. It should not include any wastes covered by special waste permits Such as pathogenic or hazardous materials, but the Town cannot guarantee that the waste stream does not contain same. Special costs associated with handling noncompliance loads will be compensated under Forced Accounting (Appendix A-9). 28 4.1 5.0 5.1 Quality and Characteristics The Town Of Southold's historical solid waste quantities and characterization data are Available upon request. MSW Tonnage disposed in under contract in 2006 totaled approx. 9,000 tons. Bidders are cautioned that actual quantities may differ significantly from these data. Recycling programs may affect the quantity and characteristics of the waste received at the Town of Southold Transfer Station. If the Contractor discovers any non-compliance waste (hazardous, regulated medical or special wastes), the Contractor shall notify the Town and dispose of [he noncompliance waste in accordance with local, state and Federal regulations. Compensation for such waste disposal services shall be provided for under Forced Accounting (Appendix A-9). The Town makes no specific representations in the foregoing disclosure. PROGRAM ACTIVITIES Collection The Town of Southold Transfer Station is open 7 days a week, except holidays, from 7:00 A.M. to 5:00 P.M. The Contractor will be expected to collect and remove solid waste from the Transfer Station during the following hours: Monday through Friday 7:00 A.M. to 4:00 P.M. The Transfer Station is closed on the following holidays: New Year's Day Martin Luther King Day President's Day Easter Sunday Memorial Day Independence Day Labor Day Columbus Day Election Day Veteran's Day ½ Thanksgiving Eve Thanksgiving Day ½ Christmas Eve Christmas Day ½ New Years Eve The Contractor must make transfer containers available for loading seven days a week. if requested, between 7:00 A.M. and 4:00 P.M. Removal of waste on Sundays is not always required. The Contractor will be expected to provide enough containers to empty the Transfer Station tipping floor on a daily basis, delivery and staging of an adequate number of containers for this purpose will be coordinated with Transfer Station Staff as needed. 29 5.2 5.3 Loading Mode The Contractor shall fully prepare transfer containers for loading, including assuring that container covers or empty containers are left open. [SEE NOTE AT END OF SECTION 6.3.] Solid Waste will be loaded by the Town at its Transfer Station using a front end wheel loader. After loading, Contractor will bring transfer containers to the Town's truck scales for weighing to prevent overloading and to document haul and disposal tonnages. Contractor will then cover (tarp) his load prior to leaving the site. If required by any local, state or Federal regulations or law, the contractor shall provide sealed containers for loading. This service shall be at the Contractor's expense and included in the unit price bid. Town Of Southold Accident and Damage Policy The Contractor shall be required to prepare an Accident Report (See Appendix C) Of any accidents and/or damage that occur while performing services under the term of the Agreement. The Town of Southold shall immediately be notified of any major occurrences such as bodily injury of structural damage to the Town's Transfer Station. An Accident Report will be submitted to the Town within twenty-four (24) hours containing the date, time, location, and complete description of all incidents. The offending Parts or representative/e thereof shall also be recorded and required to sign the accident/damage report prior to departing the Town of Southold Transfer Station. All accident and/or damage reports will be included in reports to the Town 5.4 NYSDEC Part 360 Permit to Operate 6.0 The Town Of Southold operates the Transfer Station under a New York State Department of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of NYSDEC Permit is included as Appendix B. HAUL SERVICES For Solid Waste Haul-Disposal Services-Agreement, the following services will include the tasks, responsibilities and performance required as outlined herein. 6.1 Transport Mode The Town will consider a transportation mode of truck or truck and rail under this solicitation. 30 6.2 6.3 Work Included The Contractor shall provide the following major essential services or equipment and any other non-specified items without limitations, to maintain a reliable haul services operation in a manner that will meet the needs of the Town of Southold. · Management and operation of a fleet of truck and/or rail containers to accommodate the transport of solid waste from the Town transfer Station to Solid Waste Disposal Site(s) in accordance with all local, state, and Federal regulations. [SEE NOTE AT END OF SECTION 6.3.] · Financial liability and maintenance responsibility of transport equipment, i.e., dump trailers, transfer trailers bulk material containers, vehicles, personnel and services for open-top loading solid waste hauling activities. · Coordination of haul services with disposal services. Equipment The Contractor shall provide reliable refuse handling and other essential ancillary equipment, along with personnel to operate and maintain a reliable haul services system in a manner that will satisfy the needs of the Town of Southold. The minimum level of haul services equipment acceptable to the Town to support the haul operation includes open-top trailers and bulk material containers. The Contractor will supply additional open-top trailers and containers, etc. UNDER THIS SOLICITATION, THE TOWN WILL REQUIRE THE CONTRACTOR TO STAGE AN ADEQUATE NUMBER OF TRANSFER TRAILERS TO ACCOMMODATE THE ANTICIPATED WASTE STREAM COMFORTABLY. While the Town will not dictate the exact number of trailers to be placed, typically, this means the Contractor will need to plan on having three (3) or four (4) trailers at the Transfer Station at any given time. The contractor must assure the Town that an adequate reserve supply of equipment exists to haul and dispose of the daily and seasonal solid waste including unpredictable surges or delays due to inclement weather and that transport equipment storage requirements will meet the Town of Southold Transfer Station requirements. Each bidder is therefore responsible for familiarizing itself with the Town of Southold Transfer Station site. solid waste, etc., to assure equipment compatibility. Transport equipment used at the Southold Town Transfer Station may be open-top bulk material containers, dump trailers, roll-off containers or open-top transfer trailers, provided that all such equipment is suitable for convenient loading given existing configurations of the Town of Southold Transfer Station. All Transport equipment, including equipment involved in any interim transfer operation (i.e., any transfer of Southold Town MSW into other vehicles/containers prior to disposal) shall be: 1) Registered with the State of New York Department of 31 6.4 6.5 Motor Vehicles or equivalent agency; 2) designed to preclude spillage of waste; 3) loaded within their design capacity and New York State Department of Transportation regulations; 4) well maintained in good working order. Corroded defective, bent, deformed or punctured trailers, roll-off boxes, or other containers of waste materials shall not be utilized at any time. Suitable covers shall be provided and used while transporting solid waste in open-top transport equipment. The bidder shall clearly indicate [he quantity and type of transport equipment/vehicles it plans to use, their availability date, state of repair, and that such units are compatible with the Town of Southold Transfer Station scales and New York State DOT regulations, United States Department of Transportation, as defined in the Code of Federal Regulations or equivalent. The Contractor will promptly remove from use any transport equipment/vehicle that does not conform with these requirements and replace it with an acceptable unit. The Contractor shall maintain its own off-site maintenance shop facilities for servicing the transport equipment and vehicle fleet, unless it elects to subcontract for these services. No major maintenance may be done at the Town of Southold Transfer Station site. NOTE: In the course of this Agreement, the Town may, at its discretion, provide 1 or more transfer trailers for use by the Contractor. The Town warrants that any such equipment provided would be compatible with hauling vehicles (tractors) generally standard in the waste hauling industry. In the event that the Town wishes to provide such equipment for use by the Contractor, the Contractor together with the Town shah develop an addendum to this agreement governing such use. Weighings The Town of Southold will provide certified weighing at the Town of Southold Transfer Station. The Contractor will accept these weights for invoicing purposes. All weights will be generated on current certified weigh scales. Routing Mode - Contractor's Responsibility Contractor will have the right to select the ronte(s) for travel from the Town of Southold transfer Station to the Disposal Site(s). Contractor warrants and guarantees that, in selecting and utilizing such route(s), Contractor will insure that it is not violating any applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions, local ordinances or Interstate Commeme Commission regulations. Contractor will indemnify and hold the Town harmless from any claims, fines and other damages assessed upon or incurred by the Town as a result of any violations of applicable restrictions or regulations relating to the routes traveled by the Contractor. 32 7.0 7.1 7.2 7.3 DISPOSAL SERVICES PROGRAM ACTIVITIES For Solid Waste Haul-Disposal Service Agreement, the following disposal services will include the tasks, responsibilities and performance requirements as outlined herein. Work Included The Contractor shall provide the following major essential services or equipment and any other non-specified items, without limitations, to maintain a reliable disposal services operation in a manner that will meet the needs of the Town Of Southold. · Liability insurance, performance and payment bonds. · Safety equipment. Operational Capacity The bidder shall identify in its proposal, the following information: Disposal Site capacity. Flexibility of Disposal Site capacity to allow for seasonal variances in waste generation and sufficient to permit service in the tonnages bid. Hours and days of the week that the designated Disposal Site will be open for receiving solid waste from the Town of Southold, including weekends, holidays and special closure periods. Permit Requirements Throughout the term of Agreement that may result from this Bid solicitation, the Contractor must maintain all current and valid local, state and Federal permits, licenses, or other authorizations, (either temporary and permanent) which are required by law to receive solid waste at any and all Disposal sites designated by the bidder. Because of the varying terms of Solid Waste Disposal Site permits, it is possible that a permit will expire during the term of Agreement. The responsibility of obtaining and/or renewing a permit to operate is solely upon the Contractor. In the event a Contractor fails to maintain or obtain any necessary current and valid local state and Federal Permits., licenses, or other authorizations, allowing the lawful use of its designated Disposal Site then the Contractor will be solely responsible for obtaining the utilization of an alternate Solid Waste Disposal Site at no additional cost to the Town including any additional hauling cost because of the location of the alternate Disposal site. Under no circumstances shall such a change in Disposal Site or failure or inability to 33 obtain permits by the Contractor be considered a change in conditions, in the event the Contractor is unable to find an altemate Disposal Site, it shall be deemed to be in default of the Agreement and liable for damages, bonds forfeitures and other expenses as provided in the Agreement. In the event the individual and/or entity submitting a bid in response to this bid solicitation is not the individual and/or entity named as the permit holder on any necessary current and valid local, state or federal permits, licenses or other authorizations, required by law to receive solid waste at any disposal site designated by the bidder or any alternate disposal site, the bidder is required to provide satisfactory evidence to the Town of Southold of a binding contractual relationship between the bidder and the permit holder which provides the bidder with the irrevocable right to utilize the solid waste disposal site during the term of Agreement, or portion thereof, in a manner which is in complete compliance with this bid solicitation and the bidder's bid submission. The agreement between the bidder and the permit holder shall include provisions that: Provide Town with the right to discuss operational matters with the permit holder whenever necessary. Require the permit holder to comply with directives of the Town which are consistent with and pursuant to the Agreement which shall result from this bid solicitation. 7.3.1 Disposal Sites Inside State of New York The Contractor's Solid Waste Disposal Sites, if located within the State of New York, must be in compliance with all State of New York Department of Environmental Conservation% and U.S. Environmental Protection Agency regulators requirements, e.g., 6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental Protection Agency - Subtitle D, et al. The Solid Waste Disposal Site must have valid construction and operating permits in accordance with all applicable laws in the jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid waste without violating applicable law. It shall meet the design, construction and operating requirements of all applicable laws in the jurisdiction where the disposal site is operating. Disposal alternatives that will be considered include land disposal, waste to energy (incineration), composting, etc., as long as they comply with all the above governing regulators requirements and environmental standards. The use of Solid Waste Disposal Sites shall be subject to the approval of the Town of Southold based upon review of information submitted with the bid describing in detail the nature of the disposal process and other information reasonably requested by the Town. No Disposal Site shall be acceptable unless it poses no significant threat to the environment and its design, construction and operation complies with all applicable laws. 34 7.3.2 Disposal Sites Outside State of New York least The Contractor's Solid Waste Disposal Sites, if located outside the State of New York must be in compliance with all the applicable local, state and Federal laws and regulations and U.S. Environmental Protection Agency regulatory requirements, e.g. Resource Conservation Recovery Act (RCRA), Environmental Protection Agency - Subtitle D, et al. The Solid Waste Disposal Sites must have valid construction and operation permits in accordance with all applicable laws in the jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid waste without violating applicable law. It shall meet the design, construction and operating requirements of all applicable laws in the jurisdiction where the disposal site is operating. If the Solid Waste Disposal Site is a landfill, it must comply with the following minimum standards: · Liner System. All proposed landfills under the Agreement shall be provided with at a single liner system to restrict the migration of leachate and prevent pollution of underling soil or groundwater. Liner systems shall consist of low permeability soil admixtures, clays or synthetic materials. Liners are at a minimum to consist of materials having a demonstrated hydraulic conductivity and chemical and physical resistance not adversely affected by waste emplacement or sanitary landfill leachate, including synthetic geo-membranes and soils such as clay or other semi-impervious admixture. Liner systems may consist of an impervious liner composed of at least two feet of clay with demonstrated hydraulic conductivity of Ix 10-> cm/sec or a synthetic single lining system ora thickness of at least 60 mils. Thicknesses down to 40 mils may be acceptable for composite liners which include impervious clay. Foundation: The proposed landfill shall be designed and constructed on an appropriate foundation which provides firm, relatively unyielding planar surfaces to support the liner system and which is capable of providing support to the liner and resistance to the pressure gradient above and below the liner resulting from settlement, compression or uplift. Leachate Collection: The proposed landfill shall be equipped by a leachate drainage and removal system. The leachate drainage system-shall consist of collection pipes and a drainage layer. The system shall be designed to ensure that the leachate head on the liner does not exceed one foot at any time. A leachate removal system shall be provided to remove leachate within the drainage system to a central collection point for treatment and disposal. Leachate Treatment and Disposal: Leachate shall be treated and disposed of in accordance with all applicable taws, including applicable pretreatment standards and discharge limitations. 35 Gas Collection and Venting: The proposed landfill shall be equipped with a suitable gas collection and/or venting system which complies with all air pollution requirements and other applicable laws. Surface Drainage Systems: The proposed landfill shall be designed with an appropriate surface drainage system which isolates the landfill from adjacent surface water drainage in a controlled manner, as well as controlling run-off from the landfill itself. Monitoring System: The proposed landfill shall be equipped with appropriate systems to monitor groundwater quality, gas production, leachate volume, quantity, slope and settlement status. The number and location of ground water monitoring wells shall be sufficient to define and detect any potential migration of contaminants. However, no fewer than one up-gradient monitoring well and two down-gradient monitoring wells shall be provided in any event. A regular sampling and analysis program shall be in place to verify that no groundwater contamination results from the landfill. Closure: The proposed landfill shall have in place a written closure plan which conforms to applicable taws and standard industry practice. The closure plan shall, be designed to insure that contamination does not spread from the landfill during) the post closure period. Bidder must clearly specify their intended disposal alternatives and support same with copies of appropriate experience, site location, permits, agreements et al., as outlined in this bid solicitation. The use of Solid Waste Disposal Sites shall be subject to the approval of the Town of Southold based upon review of information submitted with the bid describing in detail the nature of the disposal process and other information reasonably requested by the Town. The Contractor shall be solely and completely Responsible for any and all liability relative to contractor's failure to dispose of solid waste at an approved site. 7.4 Weighi~s The Town will compensate the Contractor for waste material hauled and disposed of on a net tonnage basis (short tons = 2000 pounds). The certified weighings will be made at the Southold Town Transfer Station. The Disposal Site will accept these weights for invoicing purposes. Alt weights will be generated on current certified weigh scales. In the event of any dispute over differences in net weights between the Town and Disposal Sites scales and weight records, the Town may make payment upon the weight it deems to be most correct, until the dispute is reconciled. Any claims for differences must be filed in writing within sixty (60) days of occurrence or the Town's calculation shall be deemed final and binding between the parties. 8.0 SAFETY AND HEALTH REGULATIONS 36 The Contractor shall comply with all current Federal Department of Labor, Safety and Health Regulations under the Occupational Safety and Health Act, 1972 (PL 91-596) and Section 107, Agreement Work Hours and Safety Standards Act (PL 91-54). Specific consideration shall be given, but not limited to the following major areas: Maintenance safety procedures - guards and Shields on dynamic equipment, guards, railings, electrical lockouts, vehicle wheelblocks, audio vehicle backup alarms, vehicle wheel chocks, etc. Employee safety orientation, education, teaching, first-aid training, cardiopulmonary resuscitation, etc. Noise and dust control, ear protection, respirators, hard-hats, safety shields, glasses, protective clothing, sanitary facilities, etc., Fire and explosion preventions, control, equipment (fire blankets, extinguishers, first aid hoses, etc.) and personnel escape alternatives. e. Traffic flow control patterns. Accident or injury reporting system (the Town shall received copies of al reports and immediate verbal notification). g. Employee health safeguards. h. Mechanic's lien safeguard against work interference. The Contractor shall comply with all local, state and Federal regulations, laws and Statutes, which apply to the work and to safety in particular. The Contractor shall comply with New York State Department of Labor current requirements. The Contractor shall be solely and completely responsible for operational safety during performance of the Agreement. The obligation exists twenty-four (24) hours a day, each and every day throughout the term of the Agreement. The Town of Southold shall not have any responsibility for means, methods, sequences of techniques selected by the Contractor for safety precautions and programs, or for any failure to comply with laws, rules, regulations, ordinances, codes or orders applicable to the Contractor furnishing and performing the services under the terms of the Agreement. 9.0 OPERATIONS AND PROCEDURES The Contractor will be required, prior to commencement of operations, to provide the following operational plans to the Town for review and acceptance. Revisions, modification's, and updates shall be forwarded to the Town throughout the term of the 37 9.1 Agreement. Organization personnel and structure, showing the chain of command, names and telephone numbers and staffing requirements. Operational plan - shifts, hours, etc. Safety, disaster, and emergency procedures. Transportation plan, including available transport equipment, vehicle fleet and reserve capabilities. Inclement Weather Plan - This shall describe the bidder's plan should inclement weather alter normal daily operations as described in the bidder's operations plan. The inclement weather plan shall include hauling operations and disposal operations. The bidder's means of assessing inclement weather conditions (weather and road conditions), method of reporting to the Town and the alternatives shall be described. Supporting Data In the event the Town requires any information in support of Town held licenses and permits at the Town, County, State and Federal level, the Contractor will be required to furnish all licenses, permits and inspection reports regarding equipment and disposal sites which may be required by Town, County, State or Federal law. In the event the Contractor requires any information in support of Contractor held licenses and permits at the Town, County, State and Federal level, the Town will cooperate in furnishing such information as it applies to the Southold Town operations. Operating (hauling and disposal) records shall be considered essential to the operation. The Contractor shall keep these data in an organized fashion that allows for easy retrieval and analysis. The Town, or its designee, may upon 24 hours notice inspect the contractor's records. Such records shall he kept, available by Contractor for a period of two (2) years after termination of this Agreement. In the event the Town requires additional .information for reporting purposes, the Contractor will supply same. The Town, or its designee, may call upon the Contractor at anytime for an oral review of any technical matter. The Contractor shall file and update the following information as specified herein. Items Haul Equipment (Schedule H) Haul Accident Report (Appendix C) Disposal Accident Reports Licenses, Permits and Inspection Reports Part 360 Permit Due as changes occur on occu~ence on occu~ence on occurrence as changes occur 38 All Bid Information Schedules as changes occur SECTION C CONTRACTOR BID FORM 39 SECTION C TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES CONTRACTOR BID FORM 1.0 1NTENT The undersigned hereby recognizes that these documents are complementary and are intended to provide for uniformity in bid evaluations. The formal Agreements resulting from this Bid Solicitation shall be in a form provided by the Town. These documents are intended to depict complete Solid Waste Haul-Disposal Services Agreement and therefore any discrepancies contained in the documents, of the omission from the documents of express reference to any work which obviously was intended under the Agreement, shall not excuse or relieve the Bidder from furnishing the same. No oral statement shall in any manner or degree modify of otherwise affect the terms of the Agreement. Work or materials described in words which have a well known technical or trade meaning, shall be interpreted by such meaning. 2.0 GENERAL BID. STATEMENT TO: TOWN OF SOUTHOLD STATE OF NEW YORK 53095 MAIN ROAD SOUTHOLD, NEW YORK 11971 Gentlemen: The undersigned Bidder has carefully examined the forms and content of the Bid Solicitation, including notice to bidders, bid bond, sample operating agreement, performance bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has familiarized itself with the sites of work, and hereby proposes to furnish all necessary services, permits, labor, materials, equipment, vehicles, and tools required to perform and complete the 40 work in strict accordance with all of the bid documents written by or on behalf of the Town of Southold for this project. The undersigned Bidder agrees to abide by all conditions stated, intended, or implied both particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by the Town, and the unit price Bid herein stated. 2.1 The Undersigned Bidder also agrees as follows: FIRST: If this bid is accepted, to execute the Agreement through a separate written contract and fumish to the Town a satisfactory performance bond, and insurance all within ten (10) calendar days. SECOND: To begin Solid Waste Haul-Disposal services operations on the commencement date of any Agreement awarded hereunder, having completed all necessary prior preparations of operational planning, personnel hiring, equipment procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure a smooth and orderly acceptance of these duties. THIRD: To pay the Town any and all damages it may incur as a result of the Contractor's failure to 'perform all acts necessary to the execution of the Agreement as provided in the Bid Solicitation. It is recognized and agreed that the Town has the unconditional right to utilize the funds provided by the bid bond posted by the Bidder as a means of obtaining indemnification or, payment of such damages. FOURTH: as follows: During the performance of this Agreement, the Contractor hereby agrees The Contractor shall not discriminate against any employee or applicant for employment because of age, race, creed, color, sex, marital status, national origin, physical disability, and shall take affirmative action to ensure that they are afforded equal employment opportunities without discrimination because of age, race, creed, color, sex, marital status, national origin or physical disability. Such action shall be taken with reference, but not be limited to: recruitment, employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or termination, rates of pay, or other forms of compensation, and selection for training or retraining, including apprenticeship and on-the-job training. The Contractor shall comply with the provisions of Sections 290 through 301 of the Executive Law, Shall fumish ail information and reports deemed necessary by the State Commission for Human Rights under these nondiscrimination clauses and such sections of the Executive Law, and shall permit access to his books, records, and accounts by the State Commission for Human Rights, the Attorney General. and the Industrial Commissioner for purposes of investigation to 41 ascertain compliance with these nondiscrimination clauses and such sections of the Executive Law and Civil Rights Law. Co This Agreement may be forthwith cancelled, terminated, or suspended, in whole or in part, by the Town upon the basis of a finding made by the State Commission for Human Rights that the Contractor has not complied with these nondiscrimination clauses, and the Contractor may be declared ineligible for future Agreements made by or on behalf of the state or public authority or agency of the state, until he satisfies to the State Commission for Human Rights that he has established and is carrying out a program in conformity with the provisions of these nondiscrimination clauses. Such findings shall be made by the State Commission for Human Rights after conciliation efforts by the Commission have failed to achieve compliance with these nondiscrimination clauses and after verified complaint has been filed with the Commission, notice thereof has been given to the Contractor, and an opportunity has been afforded to him to be heard publicly before three members of the Commission. Such sanctions may be imposed and remedies invoked independently or in addition to sanctions and remedies otherwise provided by law. No laborer, workman or mechanic in the employ of the Conlractor or subcontractor shall be permitted or required to work more than eight hours in any one calendar day, or more than five days in any one week except as otherwise provided in Labor Code Section 220. The Contractor shall include the provisions of clauses (a) through (e) in every subcontract or purchase order in such a manner that such provisions will be binding upon each subcontractor or vendor as to operations to be performed within the State of New York. The Contractor will take such action in enforcing such provisions of such subcontract or purchase order as the Town may direct, including sanctions and remedies. FIFTH: By submission of this bid, the Bidder and each person signing on behalf of any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own organization, under penalty of perjury that to the best of his knowledge and belief: The prices in this bid have been arrived at independently without collusion, consultation, communication, or agreement for the purpose of restricting competition, as to any matter relating to such prices with any other Bidder or with any competitor. Co Unless otherwise required by law, the prices which have been quoted in this bid have not been knowingly disclosed by the Bidder and will not knowingly be disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder or to any competitor. No attempt has been made nor will be made by the Bidder to induce any other person, parmership, or corporation to submit or not to submit a bid for the purpose of restricting competition. 42 2.2 2.3 2.4 2.5 The undersigned also declares that it has or they have carefully examined the Bid Solicitation requirements and sample operating agreement and that it has or they have personally inspected the actual location of work, together with the local sources of supply, has or have satisfied itself or themselves as to all the quantities and conditions, and waives all rights to claim any misunderstanding, omissions or errors regarding the same which such inspection and observation would have disclosed. The undersigned further understands and agrees that it is or they are to furnish and provide in return for the respective Evaluation Unit Bid Price, all the necessary materials, machinery, vehicles, implements, tools, labor services, and other items of whatever nature, and to do and perform all work necessary under the aforesaid conditions, to complete operations of the aforementioned Solid' Waste Haul-Disposal Services operations in accordance with the Bid Solicitation requirements, which requirements are a part of this response, and that it or they will accept in full compensation therefore, the compensation provided for in Section C-3. The undersigned submits herewith a bid guaranty within the form provided by the applicable bid documents in the amount of $100,000.00 for any option or combination thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10) calendar days after date of receipt of Notice Of Award from the Town to execute and deliver an Agreement in the form provided by the Town or falls to execute and deliver evidence of proper insurance coverage and performance bond in the amounts required and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty Shall be forfeited and be retained by the Town toward the satisfaction of liquidated damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will be returned to the Bidder. The undersigned acknowledges the receipt of the following addenda, but it agrees that it is bound by all addenda whether or not listed herein and whether or not actually received, it being the Bidder's responsibility to receive and have knowledge of all addenda. ADDENDUM NUMBER AND DATES Number 1 - Dated: Number 2 - Dated: Number 3 - Dated: Number 4 - Dated: Number 5 - Dated: The Bidder has completed the Contract Bid Form and Unit Price Schedules in both words and numerals in accordance with these bid requirements. 43 3.0 UNIT PRICE BID SCHEDULE SOLID WASTE HAUL-DISPOSAL SERVICES SOUTHOLD TOWN, NEW YORK 3. I COMPENSATION The undersigned hereby submits the following price bid to furnish Solid Waste Haul- Disposal Services, to Southold Town, New York for the terms ~J-I~l d ~/3~, 2013 through ~l.m~ 30~ ~0[~) . HAUL-DISPOSAL SERVICES The Haul-Disposal Service applicable unit price per ton for agreement year ONE ¢qrNT¥ I=P4W cents ($ g~. 9~.q- ).(el) The Haul-Disposal Service applicable unit price per ton for agreement year TWO is ~/~T¥ ~'~UP-/~ dollars and ' I~lf-q'y cents($ ~? '/. 0~0 ).(c2) The Haul-Disposal Service applicable unit price per ton for agreement OPTION year ONE is dollars "['[lJ ~'L.M'I~' cents ($ q 0 . I [~, ). (C3) dollars and The Haul-Disposal Service applicable unit price per ton for agreement OPTION year TWO is b/Ib/l'"/ 'Yb3(~ dollarsand fi- IgH'IW 'll't ~ E~' cents ($ c~.~ ~ ). (C4) The Haul-Disposal Service applicable unit price per ton for agreement OPTION year THREE is N I NT¥ ~ [~'~' dollars and % I)t'ar~ 15 N~- cents ($ ~'. ~ [ ). (C5) 44 3.2 EVALUATION UNIT BID PRICE FORMULA Evaluation Unit Bid Price (C 1 ) 10,000+(C2) 10,000+.5(C3) 10,000+.5(C4) 10,000+.5(C5) 10,000 35,000 tons Evaluation Unit Bid Price = $ ~ cl. (5 "~ The evaluation unit bid price formula is designed to evaluate the option years (i.e., years three through 5) at 1/2 the evaluate of each of the first two (2) years. Bidder: Finn-Corporation By: ~_~~ //AuthoCi~e'fl'-Representative 4.(1~/ BID SECURITY ACKNOWLEDGEMENT Address Date I have attached the required bid security to this bid. 5.0 INFORMATION SCHEDULES I agree to furnish and include the following information schedules in addition to the information submitted with this proposal, as a part of this bid: Certification that the Bidder does not currently owe taxes, or other outstanding funds, or have pending or is currently involved in any litigation-involving the Town of Southold, State of New York (Schedule A, attached hereto). Location and address of the Bidder's main office and the main office of parent companies (if applicable) and Certified Statements of Ownership (Schedule B, attached hereto). Identification of Surety Company and its Agent. and written certification from the Surety verifying the bond specified herein will be provided (Schedule C, attached hereto). Do Identification of all currently registered parent bidding subsidiary corporate officers, and their addresses, and identification and certification of offices 45 authorized to execute an Agreement on behalf of the firm (Schedule D, attached hereto). E. Detailed financial statement for the Bidder, and if applicable, for parent companies (Schedule E, attached hereto). F. Statement of Bidder's Qualifications and related experiences (Schedule F, attached hereto). G. Major Subcontractors - (Schedule G, attached hereto). H. Equipment- (Schedule H, attached hereto). I. Maximum Specified Capacity- (Schedule I, attached hereto). J. Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached hereto). K. Form of Bid Bond (Schedule K, attached hereto). L. Performance Bond (Schedule L, attached hereto). M. Operation Plan (Schedule M, attached hereto). Dated: q-lq-ID Address of Bidder: I} q ~ ?Ctbq'Dgt .~ ~/(,. ~, (If a Corporation) Oualified In Iqassau Counht 1~ Commission Expiroo March 8, 20J.~. Incorporated under the laws of the State of ~,I~,W'~]O( ~ 46 Names and addresses of officers of the corporation: (President) Name Address (Secretary) Name Address (Treasurer) Name Address (If an individual or partnership) Names and addresses of all principals or partners 47 INFORMATION SCHEDULE A Town of Southold Bid Project Solid Waste Haul-Disposal Services This Bidder ~ff)~ f~bS,'VE /~/[Zbt~ ~/~7~/O~bTS O~ ~,~..~(.~ hereincertifiesthatas a d (Bidder's legal name) Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending or currently involved in any litigation involving the Town of Southold, State of New York. NameofBidder: j~fOqC~$$/'¢(_ [~/~ ~)0/~5/-/b0,5 Date: /~' (Au ot~ie~'s']gnatdre) NOTE: (]) (2) If blank not applicable, fill in with N/A If bidder owes the Town taxes or is involved in any litigation, a statement of explanation will be attached hereto. Tax/Litigation Certification BID (PROPOSAL) FORM Schedule 5.0.A Page I of I 48 INFORMATION SCHEDULE B Town of Southold Bid Project Solid Waste Haul-Disposal Services The following is information on the undersigned Bidder's office locations: Bidder's Main Office Manager's Namd(Contaet~) Ci~ J St&tel Zip Telephone N~ber Bidder's Parent Corporation Main Office M~ager's Nme (Contact) P~t Fi~'s Leg~ Nme Street Address ~ox Numbe ~ City State Zip The Bidder herein certifies that the pf0}¢c%5[¢~ Ik)C~s~'e ,~,/u}iff/%i,c~ o~ L"~'; _i_~c. , is partially/ owned subsidiary of ( ,ff~f¢,&SWC This ?rentt_~ive [l)a~ ~o~l,~mqT~,~ is o~ed d or is a public~fiva~ stock co~oration. Firm Parent Finn /0o % Parent Firm Bidder Office Locations/Ownership Certification BID (PROPOSAL) FORM Schedule 5.0.B Page 1 of 2 49 INFORMATION SCHEDULE B - (Continued) Name of Bidder: By: £~Z,~ Date: Note: (1) Any attachments or modifications to this form shall be labeled Schedule 5.0.B, and properly integrated into the Bid Form, (2) If blank not applicable, fill in with N/A. Bidder Office Location/Ownership Certification BID (PROPOSAL) FORM Schedule 5.0.B Page 2 of 2 50 This is identification that will be the Surety Company for INFORMATION SCHEDULE C Town of Southold Bid Project Solid Waste Haul-Disposal Services the Bidder, on this project and that the named Surety Company herein provides written certification that the named Surety Company will provide the Performance Bond, specified in the Contract Documents, in the event the Bidder enters into an agreement with the Town. The Surety Company herein certifies that such Company is licensed to do business in the State of New York. (L.S.) (SEAL) Principal Surety Company By: Surety Verification BID (PROPOSAL) FORM Schedule 5.0.C 51 INFORMATION SCHEDULE D C_.D{(.~~'~ Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder herein certifies that the below named individuals are the current registered corporate officers, along current permanent addresses, and designates their authority to execute an Agreement on behalf of the finn Officer's Name Officer's Name Subsidiary Parent Corporate Title Corporate Title Address Address City City State, Zip State, Zip Officer's Name Officer's Name Subsidiary Parent Corporate Title Corporate Title Address Address C~ty City State, Zip State, Zip Officer's Name Officer's Name Subsidiary Parent Corporate Title Corporate Title Address Address City City State, Zip_ State, Zip Current Corporate Officers BID (PROPOSAL) FORM Schedule 5.0.D Page 1 of 2 52 Officer's Name Officer's Name Subsidiary Corporate Title Address Parent Corporate Title Address City State, Zip_ Corporate Seal City State, Zip NOTE: If blank not applicable, fill in with N/A Current Corporate Officer BID (PROPOSAL) FORM Schedule 5.0.D Page 2 of 2 53 INFORMATION SCHEDULE E Town of Southold Bid Project Solid Waste Haul-Disposal Services STATEMENT OF BIDDER'S FINANCIAL CONDITION This Bidder agrees to provide for any subsidiary and parent firm, and hereto attaches a current or the most recent audited financial Statement(s) including as a minimum the firms opinions, notes, revenue/expense statements, conditions of cash, etc. The attached statement provided includes: Accounting Firm Name )-"-~'~OflCJJ ~dT14f. ff]~O'~ ~fe~rEid )]fi: ~-~J~' ~ ~C L-]~. ~-. Address -F-ocon~ot 0 Financial Period }'l' ]~ To ,J~J3J / Statement Date_ The bidder certifies that he currently has an available line of credit in the amount of $ . A supporting documentary evidence attached to this r" ~ ..J form is supplied by: Nanle Address Date The undersigned Bidder certifies to the validity of statement and agrees to furnish any other information upon request that may be required by the Town of Southold, New Bidder's Financial Condition BID (PROPOSAL) FORM Schedule 5.0.E Page 1 of 2 54 INFORMATION SCHEDULE E - (continued) The undersigned hereby authorizes and requests any person, firm or corporation to furnish any information requested by Town of Southold, New York in verification of the firms financial condition. Datedat This ~ _dayof ~f)(i] ,20 ]3 Off Name of Bidder TitleJ ' ~J State of New York, County of is ( nnaqeff xfl Title d being duly sworn deposes and saws that he ~ N~e of org~i~tion and that the answers to the foregoing questions and all statement therein contained are tree and correct. Sworn to me this ~4q dayof ~r'~['i / My Commission expires: Q~ ,20 '~ ~ Notary Public ~ L ~,~/MARY C. FREIE~ER .~.~/_ _ ~ Notary Publtc, State of New Yor~ No, 01FR6020456 Qualified In Nassau County ,r Commission Expires March 8, 20/-3 NOTE: (1) (2) (Bidder may submit additional information desired as Schedule E attachments.) If blank not applicable, fill in with N/A Bidder's Financial Condition BID (PROPOSAL) FORM Schedule 5.0.E Page 2 of 2 55 INFORMATION SCHEDULE F Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the Bidder offers the following related information and references in order that the Town may evaluate the Bidder's qualifications and experience. 1. Bidder's LegalName: Pf.~¥L L~tLq~'~ ,~C30_ ItL~,'aQ5'-'~ 0~ k'~;%~ 2. Business Address:Street]tqm/ , ~). Av~'' City ) ' State ~ip o 4. 5. 6. State incorporated: New York State; Business License No.: ~-0 ~t SI.q301id No. Years in contracting business under above name: ~ i69J' Has firm ever defaulted on a contract? Yes No ~t~oI~,- Year incorp.: Gross Value- work under current contract: $ --~C)., C)O~, 000 .o0 Number of Current Contracts: Brief description general work performed by firm: 10. Has Firm ever failed to complete work awarded? Yes If yes, attach supporting statement as to circumstances. NOV/' Qualifications Summary BID (PROPOSAL) FORM Schedule 5.0.F Page 1 of 3 56 INFORMATION SCHEDULE F - (continued) 11. Related Experience Reference (within previous 5 years) 11.1 Project Title: Owner's Name: Address: Engineer: Address: Project Initial Start Date: Project Acceptance Date: Initial Bid Value: $ Final Complete Project Value: $ Brief Project Description: 11.2 Project Title: Owner's Name: Address: Engineer: Address: Project Initial Start Date: Project Acceptance Date: Initial Bid Value: $ Final Complete Project Value: $ Brief Project Description: Qualifications Summary BID (PROPOSAL) FORM Schedule 5.0.F Page 2 of 3 57 11.3 Project Title: Owner's Name: Address: Engineer: Address: Project Initial Start Date: Project Acceptance Date: Initial Bid Value: $ Final Complete Project Value: $ Brief Project Description: 12. NOTE: Principal Firm Members' Background/Experience (3 members minimum). Attach current resumes as Schedule 5.0.F supplement or give concise description by individual. Nanle of Bidder~ ?r~ f~cxql V~' Il JO& ,~O/I,~c,~,' B '~ .,~q ~Ob~ Date: //V (~ort~ed Signature) Any supplemental attachments or modifications to this form shall be labeled Schedule 5.0.F, and shall be properly integrated into this Bid Form. If blank not applicable, fill in with N/A. Qualifications Summary BID (PROPOSAL) FORM Schedule 5.0.F Page 3 of 3 58 INFORMATION SCHDULE G Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul sub-contractors on this project. Sub-Contractor/ Contract Individual 2. 3. 4. 5. 6. 7. 8. 9. 10. NOTE: Trade/ Address . . . ~,Phone# o~lq bl~, d~hurOh ~d, Specialties ,5 . /t"'O '~ ' '-- By: [JINY1 ~,(,t~ Date: q '~]~c]-I~ //' (X~azed Signature) - Ifbl~ not applicable, fill in ~ N/A Subcontractors BID (PROPOSAL) FORM Schedule 5.0.G 59 IFORMATION SCHEDULE H Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder states that it owns the following pieces of equipment that are available for use on the project, if awarded the agreement. ~/~uipment Item Proposed Project Use Current Equipment Location NOTE: Name of Bidde~;: /')~Oq/~.S&ke-/4/a~/r~ ~/tz~ns'~t~' Any supplemental attachment~r modifications to this form shall be labeled Schedule 5.0.H and shall be properly integrated into the Bid Form. If blank not applicable, fill in with N/A Construction Equipment BID (PROPOSAL) FORM Schedule 5.0.H 60 INFORMATION SCHEDULE I Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder hereby states that it will be prepared to dispose of up to the following Maximum Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement Contract Year Maximum Tons per Contract Year ~0,ooo J-ona .')0, ooo Jori5 Dc~: 000 ~l~,o~ ~ , rlJ "J ' ' By: V tAAII .-~ Z,~ Date: Maximum Specified Capacity BID (PROPOSAL) FORM Schedule 5.0.1 61 INFORMATION SCHEDULE J Town of Southold Bid Project Solid Waste Haul-Disposal Services NOTE: IF A BIDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE COMPLETED FOR EACH DISPOSAL SITE. The following is information on the undersigned Bidder's Solid Waste Disposal Site: I. GENERAL A. Disposal Site Location Name: Address: Bo Phone: Disposal Site mailing address (if different than I) Address: II. CURRENT OPERATIONS A. Operations Permit 1. Permittee: 2. No.: 3. State: 4. Date of Issue: 5. Date of Expiration: 6. Copy Enclosed: Yes: No: Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page I of 7 62 INFORMATION SCHEDULE J - (Continued) Are you willing to meet,/Mth the Town of Southold to discuss your short and long term disposal capabilities? Yes x/ No The undersigned hereby certifies that services, material, equipmem to be furnished as a result of this bid will be in accordance with Town of Southold specifications applying thereto unless exceptions are indicated above and an explanation attached. Bidding Company Address City ~J SgJtte Zip NAM~AND TITLE By Signature ~a~e~' Phone CORPORATE SEAL Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 7 of 7 68 INFORMATION SCHEDULE K ~--~/~- \ ~0~3~'~~ FORM OF BID BOND ~)~/3//~\~ KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned, as Principal, and as Surety, are hereby held and firmly bound unto Owner in the sum of and truly be made, we hereby jointly and severally bind ourselves, our heirs, executors, administrators, successors and assigns. Signed this day of ,20__ for the payment of which, will The condition of the above obligation is such that whereas the Principal has submitted to the Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into a contract in writing, for the hauling and disposal of solid waste; NOW, THEREFORE, (a) If said Bid shall be rejected or in the alternate, (b) If said Bid shall be accepted, and the Principal shall execute and deliver an Agreement in the form off the Sample Operating Agreement attached hereto (properly completed in accordance with said Bid) and shall furnish certificates of insurance and a bond for this faithful performance of said Agreement, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perform the Agreement created by the acceptance of said Bid, then this obligation shall be void, otherwise the same shall remain in force and effect; it being expressly understood and agreed that the liability of the Surety for any and all claims hereunder shall, in no event, exceed the penal amount of this obligation as herein stated. The Surety, for value received, hereby stipulates and agrees that the obligations of said Surety and its bond shall be in no way impaired or affected by any extension of the time within which the Owner may accept such Bid; and said Surety does hereby waive notice of any such extension. Form of Bid Bond BID (PROPOSAL) FORM Schedule 5.0.K Page 1 of 3 69 1N WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seats, and such of them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above. (L.S.) Principal Surety By: Address of Surety: SEAL (ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION) STATE OF: COUNTY: On this SSN: day of ,20__ before me personally came ., to me known, who being duly sworn, did depose and say that he resides in ; that he is the of the corporation described in and which executed the foregoing instrument; that he knows the seal of corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by the order of the Board of Directors of the corporation; and that he signed his name thereto by like order. Notary Public Form of Bid Bond BID (PROPOSAL) FORM (ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP) Schedule 5.0.K Page 2 of 3 70 STATE OF: ) COUNTY: ) SSN: On this day of ,20__ before me personally came , to me known, and known to me to be a member of the firm of , and known to me to be an individual described in, and who executed the foregoing instrument in the firm name of , and he duly acknowledged to me that he executed the same for and in the behalf of said firm for the uses and purposes mentioned therein. Notary Public (ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR) STATE OF: ) COUNTY: ) SSN: On this day of ., 20__ before me personally came , to me know, and known to be the person described in and who executed the foregoing instrument and duly acknowledged that he executed the same. Notary Public Form of Bid Bond BID (PROPOSAL) FORM Schedule 5.0.K Page 3 of 3 71 INFORMATION SCBEDULE L PERFORMANCE BOND Bond No. KNOW ALL MEN BY THESE PRESENTS, that (hereinafter called the "principal") and (hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter called the "Owner") in the full and just sum of dollars ($. ) good and lawful money of the United States of America, for the payment of which sum of money, well and truly to be made and done, the Principal binds himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has entered into a certain written Agreement bearing date on the day of ,20 , with the Owner for the Town of Southold Solid Waste Haul-Disposal Services, a copy of which Agreement is annexed to and hereby made part of this bond as though herein set forth in full. NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his or its representatives or assigns, shall well and faithfully comply with and perform all the terms, covenants and conditions of said Agreement or his (their, its) part to be kept and performed and all modifications, amendments, additions and alterations thereto that may hereafter be made, according to the true intent and meaning of said Agreement, and shall fully indemnify and save harmless the Owner from all cost and damage which it may suffer by reason of failure so to do, and shall fully reimburse and repay the Owner for all outlay and expense which the Owner may incur in making good any such default, and shall protect the said Owner against, and pay any and all amounts, damages, costs and judgments which may or shall be recovered against said Owner or its officers or agents or which the said Owner may be called upon to pay to any person or corporation by reason of any damages arising or growing out of the doing of said work, or the repair of maintenance thereof, or the manner of doing the same, or the neglect of the said Principal, or his (their, its) agents or servants or the improper performance of the said work by the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent rights by reason of the use of any materials furnished or work done as aforesaid or otherwise, then this obligation shall be null and void, otherwise to remain in full force and effect; Performance Bond BID (PROPOSAL) FORM Schedule 5.0.L Page 1 of 2 72 PROVIDED HOWEVER, the Surety, for the value received, hereby stipulates and agrees, if requested to do so by the Owner, to fully perform and complete the work mentioned and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for any cause the Principal fails or neglects to so fully perform and complete such work and the Surety further agrees to commence such work of completion within ten (10) calendar days after written notice thereof from the Owner and to complete such work within ten (10) calendar days from the expiration of the time allowed the Principal in the Agreement for the completion thereof; and further PROVIDED HOWEVER, the Surety, for value received, for itself, and its successors and assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no may impaired or affected by an extension of time, modification, work to be performed thereunder, or by any payment thereunder before the time required herein, or by any waiver of any provisions thereof or by any assignment, subletting or other transfer of any work to be performed or any monies due or to become due thereunder; and said Surety does hereby waive notice of any and all of such extensions, modifications, omissions, additions, changes, payments, waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that any and all things done and omitted to be done by and in relation co assignees, subcontractors, and other transferees shall have the same effect as to said Surety as though done or omitted to be done by or in relation to said Principal. IN WITNESS WHEREOF, the Principal has hereunto sec his (their, its) hand and seal and the Surety has caused this instrument to be signed by its and its corporate seal to be hereunto affixed this __ day of ,20__ (If Corporation add Seal and Attestation) By: Attest: Principal Surety Add Corporate Seal By: Attest: Address of Surety: Performance Bond BID (PORPOSAL) FORM Schedule 5.0.L Page 2 of 2 73 INFORMATION SCHEDULE M OPERATIONAL PLAN The Bidder hereby states that it proposes to implement the following operational plan to haul and dispose of Municipal Solid Waste (MSW) from the Town of Southold Landfill if awarded an Agreement. Summarize the manpower and equipment you will make available to perform under this Agreement. ~,-' ['G~.c--K CL'"J-catc,~t~c% II. Disposal Summarize the identity and location of the primary and secondary sites you plan to use for disposal of the solid waste. Describe the arrangements between your company and the disposal site for use of the site. Describe any treatment the MSW will undergo during transport or upon arrival at the disposal site. Attach copies of the permits to construct and permits to operate the disposal site. Site No. 1 NAME LOCATION CONTACT PERSON AND PHONE NO. T~ATMENT OR ~USUAL CONDITIONS Operational Plan BID (PROPOSAL) FORM Schedule 5.0.M Page 1 of 2 74 Site No. 2 NAME LOCATION CONTACT PERSON AND PHONE NO. ARRANGEMENTS FOR USE ] fb(O~ TREATMENT OR UNUSUAL CONDITIONS Operational Plan BID (PROPOSAL) FORM Schedule 5.0.M Page 2 of 2 75 Progr s?e So!u,V,o 1198 Prospect Ave, Westbury, NY 11590 T: {516) 937-0900 F: (516) 333 9839 May 1, 2013 Town of Southold Solid Waste Haul-Disposal Services Schedule F References 1) 2) Town of North Hempstead 999 West Shore Road Port Washington, NY 11050 Contact: John Peters Phone: 516-883-6932 Contract Start Date: 1/2011 - present Contracted amount: >$11,000,000.00 Description: Transfer Station Operation / Maintenance and Solid waste Transport, Recycling and Disposal Services. Town of Oyster Bay 101 Bethpage -Sweet Hollow Rd. Bethpage, NY 11714 Contact: Dan Pearl Phone: 516-523-9541 Contract Date 7/2011 - present Contract Amount: > $800,000.00 Description: Transfer, Haul, Disposal of Waste from Town of Oyster Bay Solid Waste SDisposal District. 3) City Of Glen Cove 100 Morris Ave. Glen Cove, NY 11542 Contact: Mike Selentino Phone: 516-369-5067 Contract Date: 3/2012-present Contract Amount: > 1,500,000.00 Decription: Transfer Station Operation / Maintenance and Solid Waste Transport, Recycling and Disposal Services New'. York State Department of Environmental Conservation .Division of'Environmental Permits SUNY @ Stony Brook, 50 Circle Road Stony Brook, New York 11790-3409 . Telephone {631} 444-0364 · Facsimile (63!)444-0360 'Website: www.dec.~tate.ny.us Alexander B, Grannis Commissioner October 1, 2009· Winters Brothers' Waste Systems Inc. & Winters Brothers Holtsville Transfer Station LLC 1198 Prospect Avenue . Westhury, NY 11590-2723 Dear Permi~tee: RE: Permit No.: 1-4722-00699/00002 Facility/Program No.: 52-T-83 In conformance with the requirements of the State Uniform Procedures Act (Article 70, ECL) and its implementing regulations (6 NYCRR, Part 62D we are enclosing your permit. Please read all conditions carefUlly. .. Ifyou are unable to comply with any conditions, please contact us at the above address. CAF/Is Enclosure Sincerely, Carol A. Farkas Environmental Analyst DEC PERMIT NUMBER 1 ~4722-00699/00002 FACILITY/PROGRAM NUMBER(S) 52-T-83 NE~V YORK STATE DEPARTMENT OF ENVIRONMENTAL PERMIT Under the Environmental Conservation Law ' :)NSERVATION EFFECTIVE DATE September 30, 2009 EXPIRATION DATE(S) September 29, 2019 TYPE OF PERMIT [] New · Renewal · Modification [] Permit ~o Construct · Permit to Operate Article 15, Title 5: Protection o[Waters [] 6NYCRR 608: Water Quality Cer'flfl~atton [] ArtiCle 15, Title 15: Water Supply [3 .Article 15, Title 15: Water Transport · .[].' Article 15, Title 15: Long I~land Wells r3 Article 15, Title 27: Wild, Scenic and Recreational Rivers [] Other:. [] ArtiCle 17, Tities 7, 8:SPDES [] Artide 19: Air Pollution Control [] Article 23, T'Cde 27: Mined Land Reclamation D Article 24: Freshwater Wetlands [] Article 25: 'ridal Wetlands J · Article 27, Title 7; 6NYCRR 360: Solid Waste Management [3 Article 27, T~Je 9~ 6NYCRR 373: Hazardous'Waste Management [] Article 34: Coastal Erosion' Management [] A~de 36: Floodpl,~in Management ArtiCles 1, 3, 17, 19, 27, 37; 6NYCRR 380: Radiation Conb'ol PERMIT IssUED TO Winters Brothers Waste Systems Inc. & Winters Brothers Hol~ville Transfer Station LLC ADDRESS OF PERMITrEE · TELEPHONE NUMBER (510) 9370900 !198 ProspectA, venue~ Westbury, NY 11590-2723 CONTACT PERSON FOR PERMI'I-rED WORK John Soldir~er~ ·1198 Pro~l~:.'t ^¥enue~ Wes~u~ NY 11590-2723 NAME AND ADDRESS OF PROJECT/FACILITY ITELEPHONE NUMBER (516) 937-0900 Winters Brothers Holtsville Transfer Station LLC, 971 Waverly Avenuep Hc4tsville COUNTY TOWN . I WATERCOURSE Suffolk ~ H01tsvllle DESCRIPTION OF AUTHORIZED ACTIVITY: NYTM COORDINATES Receive and process up to 875 tons per day of municipal solid waste (MSW) based on an 'average monthly throughput. All facility operations involving MSW shall be performed inside the approved building. By acceptance of this permit, the permittee agrees that the permit 'is contingent upon strict compliance with the ECL, all applicable regulations, the General Conditions specified Conditions included as part of this permit. PERMIT ADMINISTRATOR: ADDRESS AUTHORI; SUNY @ Stony Brook, 50 Circle Road, Stony Brook, NY 11790-3409 DATE September 30, 2009 I of 7 ~NEW YC~K 8TAT~ DEPAi~I~=NT OF E:NVI~ONM~NTAL CONB~/ATION SPECIAL CONDmONS 1. General The Permittse, WinterBros. Waste Systams, inc. and Winters Holtsville Transfer Station, Inc. must strlcl~y conform to: a. Th~ provtslons of this Pm'mit b. 6NYCRRPart360, effec0veMarch 1,2003 . c. The Englnesdng Report, a~d Operations and Malntana~e (O&M) Manual, boftt dated September 7,'2007 prepared by Galll Engineering, P.C d. Order on Consent 20051205-2134, executad February 28, 2006 In the event that the Permittes will modify Ihe'facllity, the Permlttse shall submit to the Deperiment the pro .ppsed plans to ensure Ihat the plans wlll[.be acceptable to the DepartmenL The pelmlttee muat addmsa any comments made by the Department, and shall not modify the facility without Department approval. Based on Ihs proposed changes, t~e Permittee ' shall revise the site plan, O&M Menual~ and/or Engineering Report as detam31ned by the Department. 2, Author]zed Act~es The Permit'tee is authorized to receive and process up to 875 tops per day of Municipal Solid Waste (MSW), based on an average monthly throughput. The Permittee is prohibited f~m accepting any waste that is industrial waste, regulated medical waste, asbestos waste, hazardous waste, or liquid waste. 3. Solid Waste Stora;le end Pre~,easing All facfllty operaOens invo-Mng MSW, and recyclabise, including, but not limited to, crushing, sorting, processing, transferring shall ha performed inside the approved buildings.. The amount of MSW onsite shall not exceed 1000 cubic yards.- The amount of recyclables 0nsite shall not exceed 1200 cubic yards. No solid waste shall be placed outside the enclosed buildings for any purpose, unless it meets one of the following requirements: a. The outside storage of a maximum of 360 cubic yards of recyclablbs in mil-0ff containers or compactor containers. Cor~talners being used to store recyclebles that are not self-enclosed shall be covered with e waterproof material. b. The outside storage of a maximum of 600 self-contained bales of MSW wrapped with HDPE (or other Department approved) shdnk wrapped and.covered on all sides, lop and bottom to prevent odors, leaching, vectors, and other nuisances. The storage of partially wrapped or unwrapped bales ia not The loading of oPen top thJcks shall ha conducted Insida the enclosed MSW tipping building, In which laachate and blowing litter shall be prevented from entering groundwater and/or surface water catchment basins. Recovered recyclebles may be.stored onsite for up to 60 calendar days from receipt, serf-contained bales' may be stored for up to 60 calendar days from production. . At the close of each business day, the MSW Upping floor shall be free from waate and Swept olean. Machines shall be placed In Itlelr stemOo ames end the site shall be swept clean o~ all solid w~ste. Any solid waste gathered shall be pfaced In the proper dedicated storage containers and removed from the site for subsequent ' transfer, to an approved disposal facility. The Permittee shall cease the acceptance of solid waste, if solid waste operations cannot be conducted in st~ct compliance with the Permit to Operate, 6NYCRR Part 300, and Order on Consent 20051205-264. Permilfee shall continue to remove solid .waste from the site. · DEC PERMIT NUMBER 1 4722-00699/00002. Facility/Program No. 52-T-83 PAGE 3 OF 7 SPECIAL CONDITIONS 4. Operational Requimm~nts Hours and-days of operation shall not coni'llot with local ordinances. The Porrnittee shali limit the hours and days of operation from 6:00 am'to midnight, MOnday thrqugh S!aturday, with no incoming loads after 6:00 pm ~ach day. Site'dean-up Is permitted from midnight to 4:00 am following a day of facility opera0ons, excluding Saturday... No opemaoce of any kind am pen'nltfad on Sunday. From April I thru September 30, pdor to a regular workday, 'batween ins hours of 5:00 am and 6:00 am, incoming waste may be ecsepted at the ~=tllty, however baling, screening or other processing Is strictly prohibited during this time. The Permittee shall post signs showing the hours and days of operationS, a list of materials the facility is authorized to ~ccept; and a II~t of materials the facility is e~'essiy prohibited from accepting. All signs ~hall be v?ible to any vehicle approachlng the facllit~ antrance, Odors, vectors, dust, and nolae shall be controlled at all times; the Permitfae shall immediately ' implemaht any conbois required by the Department, Including cessation of any faa'lity operatiea$, Offsite noise levals'genenated during operation shall nof exceed limits set by Ioc~l zoning o~linanc6s as w~ll ss those set forth In 6 NYCRR Part 360-1.14{p). If noise is deemed by. the Department to be excessive, the Permittoe si)all mndify the facility and/or equipment to rectify the situation. A supervising attendant shall be on duty during all hours of operation. The attendant shall inspect all vehicles entering the facility and shall reject any loads containing unauthorized and/or suspicious materials. Co~tJneencv Plannina a. In the event that any hazardous wastes, industrial wastes,.medical wastes, or other regulated wastes not expressly all.ed under this Permit ars accepted by the facility they shall be contained properly and ssc~Jrsd immediately. The owner/operator of the facility shall verbally notffythe Department and the Suffolk County Department Of Health Senfices within 24 hours oftha event. The waste material shall be removed by a waste transporter authorized under 6NYCRR Part 364 to transport such waste. A written report of the event shall be submltto(J, to the Department within 5 business days. b. The Permittee shall varbally notify the Department within 18 hours of any qccurreoce of any event which causes the facility to cease operation for a period of 48 hours or more. Such an avant would · include a fire, spill, equipment breakdown or other sim~r events. A written report shall be submitted to the Depariment within 5 business 'days of the event. c. The required notffioations stated above shall be directed to the following offices: NYSDEC Division of Solid & Hazardous Materials 50 Circle Road Stony Brook, New York 11790-3,409 (631) ~.~, 0375 ii. . Office of Pollution Control Suffolk County Department of Health Services 15 Horseblock Place Farmlngvilla, New York 11738 (63!) 85~-2537 d. Equipment and materials used to contain small spills must be available at the facility. These materials shall be stored in ag appropriate Emergency Response Materials Storage/Containment Area. At a minimum, the Permittea shall have on site tho following items: FACILITY/PROGRAM NO. 52-T-83 DEE: P ER~Iri' NUMBER 1-4722-00699/00002. . PAGE 4 OF 7 SPECIAL COND~rlONS i. f~ur emp~ 55 gallon drums 'ii, 400 jbe, o~ absorbent material (e.g. Speedi-Drii Ill. spill c!annup kits (e.g. absorbent pads) Iv. assorted shovels and brooms e. The Permittee shall maintain Fire Protection Equipment in accordance wifft Local Laws and Ordinances, ~3,..Re¢Of~Jke.e. elna and Reoo~na Reaulrements a. A dally log shall be'malntelnad by the Perm~ee at the facility. T~e daily log Is subject to tevisw by a NYSDEC Onsita Env. imnmantal Monitor es part Of the Inspection process and must be made available upon:request. At · minimum, the dally log shall include the following Informa0on: I. Quantity, type and origin of all sol!d waste received or transported. IL Quantity and destination of all recyciables and residuals ~ransported.fi'om.~e site. Iii. Pen~lltee shall malntoln s log of all Collect~r/transporl~rs which deliver waste to Ihs facility end ~ the date and time of clay of each such delivery end the amount of waste so delivered. iv. A nototion that the Permlttee has confirmed that each shipment ofweste has il~ fact been mcetved and accepted at a destination Solid Waste'Management Facility, authorized to accep~ such w~atss. The quantity shall be expressed I~ units of elth~ cubic yards or {ons. The type of sotid waste shall be one of.the wastes the Permlttee is authorized to receive. The ortg.hl shall be a listing of clients or'custom~rs. (if solid waste is mcelved from multiple sites along a pickup route, the daily log shal! Indicate as such via a route de,nation name or number).' The destination shall be the name and location of alther a secondary vendor or disposal site. b. The Permittee sha!l maintain at.the facility:. i. W alghFvolume tlokats and disposal' receipts for each shipment of material tmnsportad off. site Such tickets or receipts shell be use~ to support the daily log; and ri. The waste tracking document authorized by the Depa.r~ment for matad~is leaving the facility as per 6NYCRR Part 360-16.4(1). The permittea'shall maintain the daily logs and the waste tracking documents for seven years after their creation and shall make the dally logs, and all records used to support the dally logs, available to the Department Immediately upon request. ' The Permlttee shall submit annual mporte to the Depar1~nont each ~,ear by March 1 on forms provided by or othen~,es acceptable to the Department. DEC PERMIT NUMBER 1-4722-00699/00002 I' Facility/Program No. 52-T-83 IPAGE 5 OF 7 · SPECIAL coNDITIONS Fl.oanclal Assurance The Permittee sha~l continue to maintain an acceptable form of financial assurance in.the amount of $750,000 for a proper Part 360 closure of the facility. In .subsequent years, tho Depa~"nent may n;,odlfy this ,amount based on an annual review. The Permlttee shall not accept any solid waste, if an acceptable form of financial assurance is not in place. The Permlttee must continue to remov~ so!id waste fmn~ the site in compliance with the sto[age time limitations ouffined by this Permit. Oh-Site Environh~ental Monitor (OEM) a. The Permittee shall fund environmer'~tsi monitoring services to be performed by the Department for operations directly related to Winters Bros. Waste Systems Inc. and Winters Holtsvilie Waste Transfer, LLC These monitorir~g service~ will include, but not be limited to, the following: ' · 1. Monitoring ~f solid Waste operations'to ensure operations are in compliance with appropriate regulations, . . 2. . Provide inspections and compliance monitoring to the Permitfee's facility, including consfi'uction inspections. 3. Pr?vide monitOring to the ~urmunding area to monitor for facility impacts to the surrounding area. 4. Respond to complaints. 5. Offer technical assistance to the Permiitee, and answer questions from the public. · ~;. Maintain tiles and ~[atabases. 7. Review'annual reports, permit applications, permit modifications, end other submittals to the Deparlment. 8. Prepare documentation, for enforcement actions. b. Funds necessary to support the monitoring services and requirements for the coming year shall be provided to the E~epariment by the Permittee on an annual basis. The sum to be provided is based.on ann. ual environmental monitoring eervice costs of the Department a~d is subject to annual revision. Subsequent annual paymente shall be' made for the duration of this Permit or until the monitoring requirement no longer e:~sts, whichever comes first· · · The Permlttee shall be billed annually for each fiscal year beginning on April 1; If this Permit is to first become effective subsequent to April 1, the initial payment may be for an amount sufficient to meet the anticipated cost of the 'monitoring through the end of the current fiscal year. The Department may revise the required payment on an annual basis to include all of the Department's costs assoclatsd with the monitoring services. The annual revisi(~n may take into account such'factors as 1i3flation, sal~y increases, changes in operating hours ahd procedures, Increase or decrease in the amount of monitoring necessary, and increase or decrease in the number of OEM an~or OEM supervisors necessary. Upon written request by the Permittee, the Department shall provide the Permittee with a written explanation of the basis for any revision or modification, If such a revision is required, the Department will notify the Permittee of such a revision no later than 60 days in advance of such revision. Prior to making its annual payment, the Permittea will receive, and have an opportunity to review, an annual work plan that the Department will underiake during the year. Payments are to be in advance of the period in which they will be expended. DEC PERMIT NUb~ER 1-4722-00699/00002 Facility/Program NO. 52-3'-83 PAGE § OF, 7 SPECIAL CONDITIONS 10. Dl~veatltu re The Pemittee shal! comply with the fofiowin~ divestiture'requlremants a. Salvatore .~velllno, Jr. IS prohibited, individually and as an oWner, officer, director, stockholder or employee of a'compaey, from having any direct or indirect involvement with the Permittse. Including but not limited to any (1) ownership interest; (2) economic Interests; (3) stock o~voershlp; [4) invastment'inter~, (5) equipment ~)wnershlp; (6) pmporty oWnership; (7) management Ingolvei~lent; (8) authority to direct officers or employees of the PermE'tee; (g) interest as a landlord, · supplier creditor or debtor (~f the Permittee; (10) interest as owner of the property upon which the Perm~ee's facility i$ located; (11 ) having a direct or indirect Interest or any involvement In' Ihe operation of ' any and all business ac~vffies at or near 971 Waverly A~enue, Ho~villi~, New York; (12) physical presence at : or near 971 Waverly AvemJe, Holtsviile, New York. ' ' b. ,;',ddltionally Salvatore Avollino Jr. !s prohibited, individually and as an owner, officer, director, stockholder or employee of a company, from having any-business relationship with the Permittee of ahy kind, IncJuding but not limited to any acceptance of money or other consideraUon fmm the · revenues of the Permittee. c. :The Perrnittee shall prevent any direct or indirect in¥olvement or interest whatsoever by Salvatore Avellino, Jr. in the Permittee ot its facility, including bUt not limited to those Interests listed in Subppragraph (a) of this paragraph. ' Co.mp!lance with Federal Court Stipulation and Conteot Jud.qement The Permittee hereby aclinowledges its agreement to the Stipulation of'SeUJement and Consent Judgeme. nt issued by Judge F. Leo Glaser on FebmaG' 28, 1994 in United States v. Private Sanitation Industry Assodat]0e o( . Nassau/Suffolk Inc., et. al., No. CV-89-1848 with regard to Permittee and related indlvldual~ and entities, and will comply with the terms and cond tJons of sa d Stipulation and Consent Judgement as It relates to Permi~tee'~ operations under this Permit. Compliance shall be determined as pmvlded for in said Stipulation and Consent Judgement.. · I DEC PERMIT NUMBER I Facility/Program No. I PAGE 1.-4722-00699/00002 52-T-83 -- 7 OF 7 INFORMATION SCHEDULE J - (continued) Hours of Operations 1. What are the PERMITTED operating hours? DAY A.M. P.M. Monday (,o to ~ Tuesday to Wednesday to Thursday to Friday to Saturday ~ to I g[ Sunday C~[o%q~4 to 2. Are there any PERMITTED closure periods stipulated? What are the ACTUAL operating hours? DAY A.M. Monday to Tuesday to Wednesday to Thursday to Friday to Saturday to Sunday to P.Mo What holiday or other period is the Disposal Site typically closed? New Year's to Memorial f~ to Independence to Labor to Thanksgiving to Christmas _ _ to Other (specify) to NO Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 2 of 7 63 INFORMATION SCHEDULE J - (continued) Will the ACTUAL operating hours be extended up to the PERMITTED operating hours in Question II.B.I in order to accommodate Town of Southold solid waste? Yes No NO o Are there any local agreements, ordinances, etc. which would prohibit extending the ACTUAL operating hours in Question II.B.3 up to the PERMITTED operating hours in Question II.B.I? al/il. Yes No What is the PERMITTED annual capacity in tons? 2O 2O 20 20 20 At the PERMITTED levels in Question II.C., what is the projected useful life in years? What is the annual RECEIVING6 level today? At the RECEIVING levels in Question II.E, what is the projected useful life in Years? Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 3 of 7 64 New York State Department of Environmental Conservation Division of Environmental Permits, Region One Building 40 - SUNY, Sto~y Brook, New York 11790-2356 Phone: (631)444-0365 * FAX: (631)444-0360 Webslte: www.dec, state.ny, us Acting Commts,floner American Re-Fuel Corr~pany of Hcmpst~ad 600 Merchants Concourse Westbury, NY 11590 May 13, 2005 RE: i'qYSDEC Permit Renewal # 1-2820-01727~0031 Dear Mr. Wheeler:. .In conformance with the requirements of the State Un/form Procedures Act (Article 70, ECL) and its tmplementing regulations (6NYCRR, Part 621) we are enclosingyour permit. Please read all conditions carefully. If yon are unable to comply with any conditions, please oontact us at the above address. Also enclosed is a permit sign which is to b~ conspicuously posted at thc project site and pro~ectad from the weather. Very ~, Deputy Regional Permit Administrator cc: I. Sikirio, NYSDEC S. Rahman, NYSDEC file enclosure NEW YORK STATE DEPARTMENT OF EN~RONMENTAL CONSERVATION PERMIT Under the Envl~onmantal Censer'ration Law EFFECTIVE DATE _ Ju~y 1, 2005 EXPIRATION DATE(S) June 30, 20t S TYPE OF PERMIT [3 New · Renewal r3 M,.x,';;;,.<,~on ~ Permit to Construct · ca Article 15, lille 5: Protecho~ of We- e Article 15, TItle 15: Wate~ Supply O Article 15, Title 15: Water Transport O Article 15, Title 15: Long Island Wells Cl Afficle t5. TItle 27: Wild, Scenic and Recreational Rivets O 6NYCRR 608: Watar Qualily Ce~Scatlon O Aracle 17, TItlas 7. 8: SPDES {3 Article t9: A/r Pollulior~ Conb'ol ~ Article 23, "Rile 27: Mined Land Reclamation [~ AdJcle 24: Frechwate~ Wetfaf~d$ Article 27, Tlae 9;, 6NYCRR 3r3:' Hazardous Waste Management Article 34: Coastal Erosion Management 0:3 Article 36: Floodplain Management Articles 1, 3, t7. t9, 27. 37: 6NYCRR 380: Radiation Conlrol PERMIT ISSUED TO ADDRESS OF PERMI'I ri=E: Amedcen R~f.-F~el Company'of Hempstead 600 Merchants Concourse Waslbmy, NY 11590 CONTACT PERSON FOR PERMITTED WORK Scoff M. Wheeler, Environmental EngJr~eer NAME AND ADORESS OF PRCU ECT/FAC/LITY COUNTY Nassau I ToWN Hempslasd Res~rce Recovery Fadlily 600 Merchants Concourse~ Hempstead J WATERCOURSE ITELEPHONE NUMBER (516) 683-.5400 rTELEPHONE NUMBER (5163 s83-5438 INYTM COORDINATES E: 618.2 N; 4510.5 DESCRIPTION OF AUTHORIZED ACTIVITY: Thc Hempstead Resource Recovery Facility (h'RRF) is a 975,000 ton per year waste-to-energy facility, based upon a 12-month rolling average, consisting of three identical mass bum watenvall type municipal solid waste combustors. The facility c0mbusts municipal solid waste which include non-hazardous residential, commercial, e.nd governmental and/or institutional wastes, and other non- .hazardous industrial wastc streams as approved by NYSDBC on a case- by- case basis. By acceptance of this permit, the permittee agrees that the pea:mit is contingent upon strict compliance with the ECL, all applicable regulations, the General Conditions spectfled (see page 2) and any Speclal Condlti'ons included as part of this permit. PERMIT ADMINISTRATOR: I ADDRESS ' Roger Evans Region 1 Headquarters I Bldg. #40, SUNY, Stony Brook, NY 1t790-2356 Jl ~lle ' - ~O~i~ATION OF [ m A: Pe~l~ ~p~ Legal Responslbll]~ and ~me~ lo Indemnlflcallon ] T~ p~l~ e~ a~ees to I~emn]~ ~d ~d h=mless I ~a~ of New Y~,.as re~es~tat~e~ em~, ~d ~n~ ~E~) f~ ~ ~a ms ~i~ ~s ~d d -' ~t a~ut~ ~ ~e ~l~' · , ,, , amages,~o ~ s ac~ or omlss~ns n ~nne~n ~, or opemUon a~ m~nt~an~ of. the ~li~ ~ fadl~ ~ho~d by ~e ~E ~e~ In ~plt~ or not ~ c~i~ce ~ ~ te~ ~ ~dit~s ~ ~e pe~. ~ls ~d~n~ca~on d~s ~t ~ tO any cM~ su~s · a~ons, ~ d~ages ~ ~.~t a~bu~b~ ~ DEC~ ~ ~t or Int~tl~al a~ or ~lo~ or to ~y ~lms ~its. or a~ ~ming ~-DEC ~d arising under ~lcle 78 of the New Yo~ Civil Pr~ice ~ ~d ~1~ or ~ dtlzen suit or ~ ri~ pm~si~ u~er federal or s~te I~m B; Pe~l~'s ~n~c~m to Comply wl~ Pe~lt The p~l~e Is re~ns~le f~ Inf~Jng I~ hdep~d~t ~ntractom, employes, ag~ ~ asslg~ of their r~po~ili~ to ~mply~ ~ls p~m~, in~d~g ~ sp~la ~ndEions w~le acti~ as ~ pe~l~e's a~t w~ r~p~ to the perml~d accel~, ~d su~ pemo~ shaa be subj~t to ~e same sanctions for vblatl~s of ~ En~r~t~ Conse~atl~ ~ as ~e ~es~d f~ ~e ~rmlaee. It~ C: Pe~l~ ResponsiVe for Ob~lnlng Other Required Perml~ ~e permiff~ Is res~sble f~ obta~g any ~h~ perm,s, appro~ls, la~s, easemen~ a~ righ~-of-~ thai may be r~ired to ~ o~ ~ a~fies ~at are ~or~d ~ Ihb pe~it. Item D:. No ~ght to Tres~ss or Ink.ere ~th Riparian Rights This p~ d~ n~ ~ey to t~e p~i~e'any right to Ve~ass upon the ~nds or hte~ere ~h ~e ri~d~ r~h~ of o~rs ~ ~der t0 ~ ~ pe~Eted ~ ~r d~ it auth~ ~ [mpa~t of ~y dgh~, ~le, or bter~t In rea or pemona~ prope~ ~ ~ vested In a'p~son not ~ pa~ to GENE~ ~NDI~ONS 'General Condition 1= Faclll~lns~ctlon by the De~ent ' ~e pe~i~ site or ~li~, Including relev~t r~or~, is ~b~ to In~l~ authorized repr~enta~e of ~e Depa~ent of ~r~men~l C~se~tlon [~e Depa~ent) to det~be w~t~r the )erml~ee Is ~plyhg ~ ~is p~ ~d t~ ECL Such mpr~tative may ~d~ the ~rk s~'~t to ECL 71-0301 ~d S~A401(3). T~ peewee sh~l p~e a pem~ to a~mpany the Dep~Fs r~resentaflve during ~ insp~ to t~ ~mit ama wh~ requ~t~ by ~e Dep~t. A ~y of ~ p~tt, ~uding all referen~d maps, dra~ngs and sp~l~ ~l~s, must ~ av~le for ~n by the Depa~ent ~ ell t~ at the pr~ site or fac,~. Failqre to pm~ a copy of ~ peril u~n r~t by a Dep~me~ repre~tat~e Is a vlolatl~ ~ this permE. General Condition 2: Relationship of this Permit Io Other ~pa~ment Orders and ~lnaflOns Unless expr~sly ~ for by ~e Depadment, issuan~ of order or de~minali~ pmv~ay issued by the D~a~ent or a~ ~_the te~s, cond~ns or r~uimm~ts ~nlabed in su~ order or dete~inaflon. General Condition 3: Appll~fions for Permit Renewals or Modifications The ~1~ mu~ submit a sepa~e wr ~en app~l~fl~ to t~ Depa~t for renewa, m~l~a~n ~ transfer of this petE. Such ap~i~on must Indu~ ~y fo~s or suppl~l ~fo~aa~ the Dep~m~ m~lres. ~y renewS, modifi~fion ~ tra~f~ ~anted by the Depa~ment must ~ in ~lng. The permltt~ must submit a fenwal app~c~ion a) 1~ d~ bef~e e~]r~lon of Pe~lts ~ S~ P~l~ant Dl~arge Elimination S~tem (S~ES), Ha~rdous W~te M~agement Fa~lEles (~MF), ma~ ~r Pollution Contel (~C) and ~lld Waste ~n~ement Fac~ (SWMF); and b) 30 days ~om e~E~i~ of aa oth~ p~mE Submlssi~ of ~lca~om for ~ mne~l or m~ion N~DEC ~gl~l P~ ~m~istm~, R~ One. Bldg. 40 - SU~ Stony Br~ N~ York 1179~23~ ~neral Condition 4: Permit Modifications, ~uspenslons and Revocations by the Depa~menl The Depa~ent resew~ ~e right to ~, su~end or re~ke ~Is ~ In a~rda~ with 6 NYC~ Pad ~1. The gr~nds for m0di~t~, ~sp~sion ~ mvo~fion In.de: a) mated~ly ~lse ~ i~ccum~ s~l~en~ h ~e pe~ appli~fion ~ suppo~g pa~rs; b) failure ~ ~e per,tee to ~ply ~h any te~ or ~nd~lo~ of t~ peril; c) ex~d~g ~e s~pe oft~ proJ~t as des~ib~ in the permE ~pl~flon; d) ne~y d~r~ materl~ inaction or a mater~ ~ge ~ ~vir~mental ~ndilions, rele~nt t~n~y or appa~ble I~ or r~lat~ns sin~ the Issu~ of t~ ~isthg p~i~ e) noncompll~ wEh previously I~ued ~rmlt ~dltions, o~ ~ the ~mmiss~r, any pro~sions ~ the ~v~nm~la Conse~afion L~ or regulafl~s of t~ Depa~ent re.ted to ~e p~miEed a~vi~. ?~0~1727/~31 ~ ~"~':'" ....... :: ......... ..................... .................................................. PAGB.--~-OF-- 1. Pcnnitt~l Activities SPECIAL CONDITIONS Permitted activities are limited to the delivery, unloading and combustion of solid Waste, loading, transfer of ash residue, recovered materials, bypass waste and cardboard removal for recycling. No other solid waste activities regulated under 6 NYCRR Part 360 are to be conducted at the Fac/lity, unless allowed for as a special permit condition. 2. Authorized and Unauthofir, ed Wnst~ The facility may receive and combust only household waste and non-hazardous commercial waste, and pursuant to a varianc~ issued by the D~partment on May 9, 2002, wood chips infested by the Asian Long- . Homed Beetle. In addition, non-hazardous industrial wastes may be only accepted with prior written approval of the Regional Solid Waste Engineer or his designee. All requests should be submitted along with an "Application for Treatment or Disposal of an Industrial Waste Stream" at least two Weeks in advance of requested acceptance. Approvals of nsw applications shall be valid for either one year or until any information on the approved application change~ whichever is sooner. Approvals of renewal applications shall be valid for three years or until any information on the rengwed applications changes, whichever is s0onet, bio h~rdous waste as defined in 61~YCRR Part 370 through 374 and no radioactive waste as deemed in 6NYCRR Part 380 may be accepted at this facility. No regulated medical waste or sewage sludge may be processed at this facility unless specifically authorized in writing by the Depatanent 3. cra 'oral R uirem nt a) All activities at the facility must be performed in accordance with the manuals, plans, and programs required by the Part 360 regulations and approved by the DcparOnent. All manuals, plato, and programs must be updated no less frequently than the duration of the permit to operate. The facility must operate in compliance with the requirements of 6NYCRR 360-3 and 360-1. The facility shall not process approved non-hazardoas industrial wastes in amounts exceeding 10% of the daily throughput without prior written approval fi~m the Depastmcnt b) The facility shall not charge (process) more than 975,000 tons of MSw during any consecutive 12-month period and shall r~port to thc Depattuzent, on a monthly basis, the facilitiy's rolling average annual throughput using the following ~'ormnla: Tons Processed/Week = Tons Received/Week +/. Change in the Existing Inventory/Week - Bulldes Removed from the Floor/Week-where, Tons Received/Week = Tons of incoming municipal waste received at the tipping floor for that week. +/.- Change in tho Existing Inventory/Week = Change in the existing waste inventory determined from the prior week's calculation and either added to (if the inventory went down) or subtracted from (if the inventorywent up) the total deliver/es recorded by the scale system for that week. Bulk/es Removed from the Floor/week = Any Bulky or unacceptable waste that is removed from the incoming waste on the tipping floor during that week. To demonstrate compliance with the 12~month rolling total, thc facility shall calculate the total of the above items for each month. oEcPEP~rrNL~4aea I J-~PAGE3'OF6 1-2820-O1727/00031 SPECIAL CONDITIONS % All reports and submittals shall be in accordance with 6 I',IYCRR Part 360 and the approved Operation and Maintenance Manual and also: a. The Regional Solid Waste Engineer, or his designee, must immediately be notified of the delivery to the Facility of unauthorized medical waste, hazardous waste or low level radioactive waste or of any emergency, breakdown or unplanned total Facility shutdown occurring for more than 24 ho~xs. b. The average daily throughput shall be reported to the Departmenl on a monthly basis and shall also include the quantity and percentage of non-hazardous industrial wastes procassed, c. In addition, Qusr~erly and Aunual Reports shall include the amounts ofindus~al waste processed and also the amount of cardboard and non-ferrous metal removed from the waste stream. d. Ash testing for volatile matter as per Part 360-3.5(c)(2)(i) shall be conducted as follows: i) On a monthly basis if volatile matter remains below 10%. ii) On a w~eldy or more basis (as determined by the Department) if volatile matter exceeds 10 percent in addition to the requirements of 360-3.5(c)(2)(iXd). 5, Access The Permittee must restrict the presence of, and must minimize the possibility for any unauthorized entry onto the facility. A description oftbe security measures must be updated ~ they change and must include, but not be limited to, a means to control ~ntry all times through the gates or other entrances to the facility (as by a 24 hour surveillance system which continuously monitors and control enh'y, or an artificial or natural barrier). Signs legible from a distance of at least 25 feet that read "VISITORS AND I. JlqAUTHO- R I73~D PERSONNEL MUST REPORT TO THE OFFICE"must be posted at each entrance to the facility and at other locations, in sufficient numbers to be seen from any approach to the facility. 6. Prol~or Overation and MairncnancO The Pcrmittee shall at all times properly operate and maintain this facility. Proper operation and maintenance includes, but is not limited to, effective performance, adequate funding, adequate operator staffing and training, and adequate process and laboratory controls, including appropriate quality assurancdquality control procexiures in accordance with the requirements of this p~rmit and as described in the Operation and Maintenance Manual. This provision requires the opera6on of back-up or anxilliary facilities or similar systems only when necessary to achieve compliance with the conditions of the permit. 7. Non-Hazardous Samplin~ and Testi,[, ........... The facility shall conduct sampling and testing for verification that Department approved wastes are non- ba~,,rdous using the methods descn'bed in the approved wasle control plan. The~e results shall be submitted to the Department within 90 days aRer samples have been collected, SPEC~ C~D~IONS 8. The Pe~tt~ mu~ ~lude ~ ~ch of~ P~'s ~ce cen~cts pro~slon ~a~ a. Each m~cipali~ ~o solid w~to is to be p~s~ ~at~, or dispos~ of at ~e faciH~m~t have a C~ ~fis~g ~o ~uir~ of~C~ 3~1.9(0, ~d ~ impl~ent~ r~yclablea ~o~ pro~ da~ to be ~ibl~ by ~at ~ ~s for ~e s~ic¢ ~a of~e fadli~, ~th~ ~o~ m~cip~iW h~ such ~l~is ~d ~e D~ent appro~d it ~d ~at ~ysis ~ ~e w~ s~ of ~t m~cip~, or a 1~1 ~d w~te m~ag~ent p~ ~t ad~s~ ~1 ~mpon~ of~ ~ly~ is ~ e~L b. The Department may direct the Petmitte¢ to refuse to accept solid waste fi.om any municipalhy that ia not complying with special condition 8(a). 9. The Permitt~ shall not accept solid waste that originates fi.om a municipality that has not completed a Comprelieasive Recycling Analysis (CRA) satisfying the requirements of 6N-YCRR 360-1.9(/) and imle. mented the recyclables recovery program determined to be feasible by the analysis, unless for the serwco area of the facility, either another municipality prepares such an analysis, and the Department approves it and that analysis addrosses the waste sta~an of that municipality;, or a Deparmaent approved local solid waste management plan that addresses all components of such analysis is in effect. t0. The ?ermittee shall fund environmental monitoring services to be performed by the Departn~ent as follows: (a) (b) Funds as required to support the monitoring requirements shall be provided to the Depamnent for funding of environmental compliance activities related to the operation ofpennittee's Facility. This sum is based on annual Environmental Monitoring service costs. Subsequent annual payments shall be made for the duration of this Permit to maintain an account balance sufficient to meet the next year's anticipated expenses. The Permittee shall be billed annually for each fiscal year beginning April l, 2004. One semi-annual payment shall be made for the period beginning October l, 2004 to March 31, 2005, and thereafter the permittee shall be billed annually for each fiscal year beginning April l, 2005. The Department may revise thc required payment on an annual basis to include all costs of monitoring to the Department. The annual revision may take into account factors such as inflation, salary increases, changes in operating hours and procedures and the need for additional Environmental Monitors. Upon written.request by the Permittee, the Department shall provide the Permittee with a written explanation of the basis for any modification. If such a revision is required, the Department will notify the Permittee of such a revision no later than 60 days in advanco of any such revision. (c) Pri.or to making its annual payment, the ?ermittee will receive and have an opportunity to revaew .ap annual work plan that the Department will undertake during the year. (d) Payments ar~ to be made within 30 days of receiving a bill from tho Departmeat. Paymants for. this account shall be in addition to any other funds previously paid by the Permittec for environmental monitoring services prior to October 1, 2004. SPECIAL CONDITIONS (c) Upon tmmination (expiration, surrender, transfex) of this permit and payment of any outstandhag costa, thc uncxpcndcd balance, including interest, will be returned to thc permittee. (f) The Department may take appropriate act/on to enforce thc above payment provisions. (g) Thc Morfitor shall receive fi~m thc pcrmittcc all general health and safety training which ia normally given to new site con,actors. This lraining will be a supplement to thc mandatory safety train/rig that Environmental Men/torn receive from the Depa~acnt 01) The environmental monitoring services will include, but not be limited to, thc following: (1) Monitor the fadlity routinely to cnsur~ compliance with both Solid Waste and Air Quality Regulations and Special Permit Conditions. (2) Monitor environmental compl/ancc of other d/recfly rehted solid waste activities in the Town of Hempstend. O) Spot cheek incoming truckloads to ensure only acceptable waste is being accepted.. (4) Review operational records and observe operational procedures. (5) Prepare written inspection reports. (6) Review renewal permit .applications and write Special Permit Conditions. (7) Review and process the Industrial Waste Applications. (8) Investigate and respond to reported violations and complaints. (9) Review and respond to requests and correspondence relating to thc facility. (10) Ensure that all submittals are received, reviewed and commented upon in a timely (l 1) [ntcract w/th public, consultants and municipal_agencies. :- 5~P~-~//f ~ LT~-E-~ .... 1~282.0~O1727~00031- INFORMATION SCHEDULE J - (continued) Hours of Operations 1. What are the PERMITTED operating hours? DAY A.M. P.M. Monday ~ ~(~. to Tuesday to Wednesday to Thursday to Friday to Saturday to Sunday to 2. Are there any PERMITTED closure periods stipulated? What are the ACTUAL operating hours? DAY Monday Tuesday Wednesday Thursday Friday Saturday Sunday A.M. P.M. ~qhfs to to to to to to to What holiday or other period is the Disposal Site typically closed? DAY YES NO New Year's C[~d to Memorial ~ to Independence to Labor _ _ to Thanksgiving ~ to Christmas to Other (specify) to Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 2 of 7 63 INFORMATION SCHEDULE J - (continued) Will the ACTUAL operating hours be extended up to the PERMITTED operating hours in Question II.B. 1 in order to accommodate Town of Southold solid waste? Yes No Are there any local agreements, ordinances, etc. which would prohibit extending the ACTUAL operating hours in Question II.B.3 up to the PERMITTED operating hours in Question II.B.1 ? Yes No /~]O What is the PERMITTED annual capacity in tons? 20 20 20 20 20 At the PERMITTED levels in Question lI.C., what is the projected useful life in years? What is the annual RECEIVING6 level today?F'~7 7~ D6~ /ll At the RECEIVING levels in Question II.E, what is the projected useful life in Years? 30 ~L 4e29.f,5 /--.- Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 3 of 7 64 Go INFORMATION SCHEDULE J - (continued) How much of the RECEIVING level in Question II.E is committed to under contract in tons? 20 20 20 20 20 Does the Disposal Site have special waste restrictions? Gate Yes No Fee ($) 1. Construction/Demolition 2. Asbestos 3. Wastewater Treatment Sludge 4. Hazardous Waste Are there any existing agreements with local municipalities which prohibit: Item Routing to site Weight limits between state coeds and site Number of vehicles Vehicle size Solid waste importation outside jurisdictional area Host Community Benefits Yes N._.~o Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 4 of 7 65 Progressive Waste Solutions Ltd. Company Profile Progr , s ! About Us Progressive Waste Solutions Ltd. is one of North America's largest full-service, vertically integrated waste management companies, providing non-hazardous solid waste collection, recycling, and landfill disposal services to commercial, industrial, municipal and residential customers throughout the U.S. and Canada. Its major brands, IESI, BFI Canada and Waste Services Inc., are leaders in their markets. We pride ourselves on our community involvement, environmental awareness and a very strong commitment to personalized and friendly customer service. Community Commitment No one knows the needs of a community better than those who live and work in it. Our philosophy of local managerial empowerment allows our site managers to give back to their communities in ways that best meet the needs of their communities. This location-specific approach to good corporate citizenship results in a kaleidoscope of outreach programs, contributions and support that serve to benefit thousands of people across our service region. Whenever possible, we hire within the communities we serve and locally purchase supplies, fuel and equipment. We don't just sign a contract with a city or company.., we become part of the community. Thinking Beyond Today Progressive Waste Solutions is committed to creating a more sustainable future. Our landfills fund infrastructure for public use and provide compost, nutrient management, recycling, energy recovery, education and many other environmentally and socially responsible initiatives. Our environmental practices and technologies provide benefits including: diversion of waste from our landfills through our recycling facilities; organized, timely, safe waste removal from residential and business communities; energy capture of greenhouse gases for productive use; and recycling and composting to conserve precious resources. Beyond meeting and exceeding regulatory expectations, we work constantly to identi~y best management practices that promote environmental sustainability. In all of our communities, this means engaging with regulators, engineers and industry experts to learn about and implement new waste management technologies. On a daily basis, we help homes and businesses come up with smart solutions for all of their waste needs. 1 Our Operations In the United States, Progressive Waste Solutions operates 85 collection operations, 48 transfer stations, 22 landfills, 29 municipal recycling facilities and four landfilt gas-to-energy facility. Our U.S. operations are primarily focused in two geographic regions: the South Region, including Texas, Florida, Louisiana, Oklahoma, Arkansas, Missouri, Mississippi and Illinois; and the Northeast Region, consisting of New York, New Jersey, Pennsylvania, Maryland, Virginia and the District of Columbia. Progressive Waste Solutions' Canadian operations include 41 collection operations, 19 transfer stations, 8 landfills, 21 municipal recycling facilities and one landfill gas-to-energy facility. Our Canadian operations are located in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and O.u~bec. Today, through the dedication of our more than 7,000 employees, Progressive Waste Solutions has a fleet of 3,000 trucks running along the streets across North America. We service more than four million residential and commercial customers. Progressive Waste Solutions' shares are listed on the New York and Toronto Stock Exchanges under the symbol BIN. Service and Asset Footprint Commercial and Industrial Collection. We provide hand collection and containerized services to a wide variety of commercial and industrial customers. Most commercial and industrial customers are provided with containers that are designed to be lifted mechanically and either emptied into a collection vehicle's compaction hopper or, in the case of the large roll-off containers, to be loaded onto the collection vehicle. Our standard commercial containers generally range in size from one to eight cubic yards and roll-off containers generally range in size from 10 to 40 cubic yards. Residential Collection. We provide environmentally responsible and affordable non-hazardous solid municipal waste solutions. We possess the experience and resources to provide our customers with superior customer service, while remaining sensitive to environmental concerns. Municipal waste removal services include curbside bag service, fully or semi-automated collections systems, and customized community programs. Transfer Stations. We operate 66 transfer stations, which are located near many of our collection routes and which receive the non-hazardous solid waste that has been collected by our own and third-party collection vehicles. These transfer stations receive non-hazardous solid waste and then safely and cost- effectively transport it, in bulk, to a designated facility. Landfills. We own or operate 30 landfills. These operations are designed to meet the highest standards of environmental protection while effectively disposing of non-recyclable, non-hazardous solid waste that cannot be diverted. Our facilities are staffed by experienced operators who employ the most modern landfill operating procedures. To ensure that we continue to meet the highest environmental protection standards, we encourage government inspections of our sites and invest in independent third-party monitoring. Recycling and Material Recovery. Our recycling services include collection of recyclable materials from commercial, industrial and residential customers, for which we charge collection and processing fees. Each day, our facilities receive and process a wide variety of recyclable materials including cardboard, glass, plastic containers, office paper and newsprint. To provide practical, front-line support for our nation's recycling efforts, we own or operate 50 dedicated material recovery facilities in North America. Our managers are skilled at harvesting quality recoverable material that is marketed to post-consumer mills for the best attainable product value. Through our network of material recovery facilities and our recycling collection services, we work hard to help our customers reduce waste generation and increase recovery rates. Landfill Gas. We have invested in waste-to-energy technologies which converts methane gas produced in a landfill to electricity. Conversion of methane reduces greenhouse emissions while making a positive contribution to energy production. Our landfills in Seneca Falls, New York, Bethlehem, Pennsylvania, St. Louis, Missouri and Lachenaie, Quebec, have landfill gas recovery systems that transfer methane gas from the landfill to independently-owned facilities at which the gas is converted into electricity. Together these operations produce more electrical power annually than the energy contained in more than 200,000 barrels of oil. We plan to build more gas-to-energy facilities as our landfills continue to develop. In addition to electrical generation, the company opened its first operating facility in Alvarado, Texas in late 2011 where landfill gas is upgraded to natural pipeline grid quality. Our landfill sites provide an environmentally safe and economical way to manage the non-hazardous, solid waste generated within the community. We strive to find new and innovative methods to use at our facilities to further benefit the community. For more information, please visit www.progressivewaste.com 3 Progre ss i Pro§ressive Waste Solutions Ltd. Corporate Sustainabilit¥ and Community Commitment About Us Progressive Waste Solutions Ltd. is one of North America's largest full-service, vertically integrated waste management companies, providing non-hazardous solid waste collection, recycling, and landfill disposal services to commercial, industrial, municipal and residential customers throughout the U.S. and Canada. Its major brands, IESI, 8FI Canada and Waste Services Inc., are leaders in their markets. We pride ourselves on our environmental awareness, community involvement, and a very strong commitment to personalized and friendly customer service. Commitment to Sustainability Progressive Waste Solutions is committed to creating a more sustainable future. Our landfills fund infrastructure for public use and provide compost, nutrient management, and recycling, energy recovery, education and many other environmentally and socially responsible initiatives. Our environmental practices and technologies provide benefits including: diversion of waste from our landfills through our recycling facilities; organized, timely, safe waste removal from residential and business communities; energy capture of greenhouse gases for productive use; and recycling and composting to conserve precious resources. Beyond meeting and exceeding regulatory expectations, we work constantly to identi~y best management practices that promote environmental sustainability. In all of our communities, this means engaging with regulators, engineers and industry experts to learn about and implement new waste management technologies. Green House Gas and Carbon Reduction The company's core businesses include the management of methane emissions, a Green House Gas (GHG) which represents approximately 50% of landfill gas generated by the decomposition of waste at our landfill sites. GHG emitted from our landfills accounts for approximately 90% of the company's total emissions with the remaining 10% relating to our transportation operations. Control of landfill gas and minimization methane emissions to the atmosphere is accomplished by the collection of landfill gas and by destruction of methane, either on our properties or as a fuel elsewhere. The elimination of methane emissions is referred to as "emission avoidance" and, currently, the company's emission avoidance rate continues to be approximately 60% of the potential emissions that would be generated if avoidance practices were not in place. We provide emissions controls at both our larger landfill facilities and also at some of our smaller facilities where voluntary, cost-effective emissions reduction actions have been introduced ahead of any regulated requirement because they provide a facility or operational benefit. We annually expand our gas capture at these facilities by enlarging the scope of controls and also by expanding the range of gas control facilities at our smaller sites. As our landfills mature, new and expansion landfill gas control systems are installed. For example, in 2010, at the Ridge Landfill in 81enheim, Ontario, landfill gas collections wells and flares were initially deployed in 2010, expanded in 2011 and 2012, and will continue to be added to in subsequent years to capture and destroy methane gas generated at the site. Other sites, such as Seneca Meadows in New York State, also continue to expand gas control as the landfill ages. Where gas collection using wells is not applicable, we use alternative technologies to advance our emission reduction initiatives. We have, after several years of research, received regulatory approval for a new, first-of-its-kind in Alberta, Canada, passively managed landfill cap enhancement at the Calgary Landfill that reduces methane emissions substantially more effectively than by traditional landfill covers. In Louisiana, United States, at our LaSalle Grant Landfill, we have received regulatory approval, after a successful pilot, for an alternative landfill final cover system cover that utilizes an innovative synthetic material, known as "Closure Tur~', to close finished portions of this facility. Closure Turf allows capture of GHG emissions while also providing a functional and visually attractive finish at significantly less cost than traditional landfill closure systems. This cover allows us to also benefit from the capture of landfill gas which it is not required to do by permit thereby providing an opportunity to create voluntary green house gas offset credits. In 2010, this synthetic cover approach was also proposed for use in the State of Texas and was approved for a pilot scale installation in 2011. As more landfill gas control systems are installed at the company's landfills, additional facilities will come on stream to manage our emissions, reduce the quantity of methane emitted and increase emission avoidance. Recognition of Landfill Excellence Our landfills are recognized in our industry as being best-in-class facilities. In 2012, SWANA (Solid Waste Association of North America) awarded its Gold Excellence Awards for 2012 to Seneca Meadows Landfill in New York for Landfill Management and Timber Ridge Landfill in Missouri for Landfill Gas Control. 2 SWANA's Excellence Awards Program recognizes outstanding solid waste programs and facilities that advance the practice of environmentally and economically sound solid waste management through their commitment to utilizing effective technologies and processes in system design and operations, advancing worker and community health and safety, and implementing successful public education and outreach programs. Programs also must demonstrate that they are fiscally and environmentally responsible through their compliance with all applicable federal, state and local regulations. Seneca Meadows has been previously awarded the "Seneca County Business of the Year" and received the Rochester Business Journal Environmental Leadership Award in 2009. The Montezuma Audubon Center recently honored Seneca Meadows with the Donald T. Colvin Conservation Award for its outstanding service and continuing vigilance in the preservation and enhancement of the environment. The facility has also received a U.S. Congressional Proclamation for its commitment to preserve and protect the environment. Timber Ridge Landfill has also recently been presented with the "Outstanding Achievement in Environmental Leadership" award by the Missouri Waste Coalition (MWCC) and the "Outstanding Achievement Award" in the 2011 International Achievement Awards (IAA)/Geosynthetics presented by the Industrial Fabrics Association International. Through the use of the innovative Agru/Closure Turf system, Timber Ridge has been able to cost effectively contain all odors and reduce labor and maintenance at the landfill site. Renewable Energy and Conversion Technologies We employ gas-to-energy technologies to convert landfill methane gas into electricity. In 1996, we opened our first power plant running on biogas at Lachenaie Landfill in Montreal, Quebec (Energia Award in 1997, Environment category). This power plant allows the conversion of waste's organic portion into bio-energy while protecting the environment. In New York, at the Seneca Meadows Landfill, 18 generators produce 17 megawatts of electricity per hour. We have also dedicated 200 acres to a "Renewable Resource Park" that utilizes the energy created from the 17-megawatt gas-to-energy facility integrated in the landfill. Conversion of methane reduces greenhouse emissions and makes a positive contribution to energy production. Our Lachenaie Landfill in Montreal and our Seneca Meadows Landfill in New York, combined with our landfill gas-to-electricity plants in Bethlehem, Pennsylvania, and St. Louis, Missouri, generate enough energy to power more than 32,000 homes - up from 17,500 homes in 2007. Collectively, our landfill gas-fuelled power generating facilities produce 25 megawatt hours of electrical power per hour, 24 hours a day, and 365 days per year. It would require 200,000 barrels of oil to produce the same amount of power each year. The company has plans for several more like facilities as our landfills continue to develop. In addition to electrical generation, the company opened its first operating facility in Alvarado, Texas in late 2011 where landfill gas is upgraded to natural pipeline grid quality. Additional similar facilities in both Canada and the United States are in various stages of planning and implementation. In the area of organic waste management, the company continues to pursue other innovative emissions reductions technologies. By way of example, in Canada, the company has developed an arrangement with an anaerobic digestion provider to pursue the Quebec marketplace. Transportation Vehicles and Emissions Reduction In the transportation arm of the company, which accounts for about 10% of total emissions, there is the ongoing replacement of older waste collection vehicles with new vehicles, resulting in the company possessing one of the youngest fleets in the industry. These newer transportation vehicles are more emissions-efficient. The company's fleet of approximately 3,000 vehicles across the U.S. and Canada is being equipped with measures to enhance productive use to further reduce carbon emissions and environmental impact potential. Such initiatives include: The use of self inflating tires (in the event of a tire flat) to allow completion of daily activities without the need for tire changes. This essentially removes the need for road side tire service functions and therefore reducing the environmental impacts associated with a service vehicle while also increasing employee and public safety. With newer vehicles in collection fleet, the use of fossil-based lubricants is being phased out and being replaced by synthetic oils which result in greater life between engine services, less emissions and a further reduction in carbon footprint. in November 2009, the Company was selected by a major vehicle manufacturer because of our record of innovation to start testing a new waste collection vehicle type which was equipped with both the Diesel Particulate Filter (DPF) and the new Selective Catalytic Reduction (SCR) processes. This new system was designed to reduce the NOX emissions by 83% and meet the 2010 vehicle emissions regulations. All new diesel trucks purchased by the company are being equipped with this new system. The company has embraced Global Positioning (GPS) as a further tool for increasing productivity. Productivity increases result in reduced equipment operating time and vehicle driving time and distances conserving fuel and assets, which reduces its overall environmental impact and its carbon footprint. In addition, the introduction of natural gas powered collection vehicles to our fleet will reduce emissions intensity. In 2011, we deployed our first compressed natural gas collection (CNG) vehicle in Fort Worth, Texas. An additional 10 CNG vehicles were delivered to our U.S. south operations in the summer of 2012, and an additional 10 more CNG vehicles are expected for 2013. As of October 1, 2012, the company is now providing curb side waste, recycling and source- separated organic waste collection for the City of Surrey, British Columbia, with a fleet of 42 new CNG trucks purchased specifically for the collection contract. An additional nine CNG trucks were purchased in this market area to service the company's commercial customers. Beginning April 1, 2013, we will deploy 60 new CNG vehicles to provide side waste, recycling and source separated organic waste collection for Simcoe County, Ontario. In 2013, of the company's total fleet, more than 3% of vehicles are expected to be CNG, generating fewer emissions than conventional diesel fueled trucks. The fleet will continue to be converted over time in markets where there are large enough operations to support the investment in the vehicles and infrastructure. The company will continue to propose waste collection contracts using natural gas vehicle fuel to increase the environmental attributes of the collection process. The company is committed to continuing to use these innovative approaches to its business and to identifying other services that would mutually benefit its communities and its customers in further addressing climate change issues. Recycling and Diversion Over the next decade as waste per person is expected to increase, demand for material recovery solutions is expected to grow. This trend is already firmly entrenched, in fact, through the recent recession, recycling rates increased while GDP decreased. In short, green is here to stay. For that reason, we believe commercial, industrial and municipal sectors of the economy will increasingly align with partners to build a sustainable future - partners that recognize waste not just as a cost center, but as a resource to be managed for value creation. To position ourselves for this exciting future, we are giving our customers the proper tools, new services and new choices. Our recycling services include collection of recyclable materials from commercial, industrial and residential customers, for which we charge collection and processing fees. Each day, our facilities receive and process a wide variety of recyclable materials including cardboard, glass, plastic containers, office paper and newsprint. To provide practical, front-line support for our nation's recycling efforts, we own or operate 50 dedicated material recovery facilities (MRFs) in North America. We are actively adding more MRFs to our network, either through organic means or by way of acquisition. For example, in 2009, we constructed and opened the first LEED Certified privately-funded single-stream material recovery facility (MRF) in the United States located in McKinney, Texas. In 2Oll, we announced the acquisition of The Recycling Foundation Inc., a single stream facility with approximately 35,000 square feet located in Baton Rouge and Lafayette, Louisiana. As these facilities employ a single-stream process, customers can combine paper, metals, cardboard and plastics in one large container, which increases the diversion rate. Using sophisticated tools and our own expertise, we identify, quantify and analyze the composition of waste generated by our customers - often across multiple functional areas - to determine how they can reduce, reuse, recycle and recover value. Our reports are then used to develop comprehensive waste reduction work plans, which pinpoint opportunities to increase diversion and generate value from the recovery of everything from aluminum to cardboard. We train our customers on how to effectively separate and manage waste streams. Then, using our integrated assets, we deliver a solution that not only meets the highest standards of environmental care but transforms waste into opportunity. Our progressive nature means we will continue to anticipate what our customers want and add solutions that will achieve the best results for them and for us. Our sustainability efforts are reflected in the amount of material we divert from landfills across North America. In 2010, the company diverted more than 1.2 million tons of material from landfills, including more than 600,000 tons of paper, representing nearly 10.8 million trees, a two-fold increase from 2008. In addition, our Seneca Meadows Tire Recycling center in upstate New York processes more than 1.5 million automotive tires each year for beneficial reuse. The company's recycling efforts extend beyond materials recovery and into the design, construction and management at our 30 landfill facilities. For example, innovative liner designs have led to the replacement of natural stone material with tire chips as a drainage layer, preserving a natural resource and providing a recycled use for otherwise disposed old tires. At some landfill facilities, beneficial re-use of material previously classified as wastes allows the company to conserve thousands of tons of capacity for waste materials. Building Sustainability and LEED Certifications What is LEED? Leadership in Energy and Environmental Design is an internationally recognized green building certification system, providing third-party verification that a building or community was designed and built using strategies aimed at improving performance across ali the metrics that matter most: energy savings, water ej~iciency, C02 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts. Through the provision of recycling services to the construction industry, the company is helping companies achieve LEED certification in their businesses. However, Progressive Waste Solutions is achieving LEED certifications in its own merit as well. In 2009, the U.S. Green Building Council awarded the gold level LEED certification to our Environmental Education Center, located near the Seneca Meadows Landfill in upstate New York. Our building was the first to receive LEED certification in Seneca County, and is one of only 18 gold level structures in New York State. The environmental features which contributed to the gold level status include: a geothermal heating and cooling system, building with recycled and regional construction materials, motion sensor interior lighting, daylighting (lights will not come on, or will not function at full capacity when there is sufficient daylight), Iow flow lavatories, high efficiency water source heat pumps, Iow VOC paint, and native plant landscaping. In 2010, the U.S. Green Building Council awarded Gold Certification to our Material Recovery Facility (MRF) in McKinney, Texas. The MRF was the first privately funded single-stream recycling facility in North America to receive LEED gold status. The 28,000 square-foot McKinney MRF contains numerous sustainable features including certified wood, recycled steel, Iow-flow water fixtures, and energy efficient machinery. Because the facility utilizes the single-stream process, customers can combine paper, glass, metals, cardboard and plastics all in one large container. This first-of-its-kind facility in the country allows us to process material more efficiently, increases the amount of recyclables being 6 diverted from the landfill, creates a pleasant working environment for our employees, and provides a wonderful educational resource for the community. Commitment to Community No one knows the needs of a community better than those who live and work in it. At Progressive Waste Solutions, our philosophy of local managerial empowerment allows our site managers to give back to their communities in ways that best meet the needs of their communities. This location°specific approach to good corporate citizenship results in a kaleidoscope of outreach programs, contributions and support that serve to benefit thousands of people across our service region. Encouraging Economic Growth Our waste management and recycling facilities encourage economic vitality and growth in their communities through more than contributions. Throughout the Progressive Waste Solutions service network, our companies purchase goods and services locally, employ local people, and contribute to the local tax base. We also belong to our local chambers of commerce, and sponsor chamber events that promote the economy. Some of our facilities provide host community benefits packages for their municipalities, as well, that lower residential taxes and provide for municipal capital improvements. At our Seneca Meadows Landfill in New York State, innovative management of landfill gas led to the establishment of a 200~acre "Renewable Resource Park", an economic development zone beside the landfill where currently landfill gas is converted to power at a 17MW gas-to-electricity generating facility and waste heat from the conversion process is captured to provide heat for commercial greenhouse operations. In partnership with the Seneca County Industrial Development Agency, this park has received special tax status designed to encourage the establishment of other third party eco-friendly industry at this location. Giving Back Giving back to our local communities is part of doing business for Progressive Waste Solutions. One of the most vital groups served by our donations is our emergency service organizations. Our facilities help provide equipment, gear, and vehicles for our local fire, police and sheriff's departments. We also give to our ambulance services, helicopter services and specialized emergency teams. Another area of vital importance for our giving is the children of our communities. We believe in our children, and we support them with scholarships, educational and sports programs, and school improvement projects. At the Seneca Meadows Landfill, in upstate New York, the company opened a community education center complex where students and members of the community are now learning about recycling, alternative energy and environmental monitoring. At the Lachenaie Landfill in Quebec, more than 175,000 local students have visited the site's educational center since 1992 and taken part in learning programs around sustainability, the environment and waste minimization. In 2007, at Seneca Meadows, we restored and enhanced 157 acres of existing wooded wetlands to create 419 acres of new wetlands. In addition to our 576 acre wetlands preserve, Seneca Meadows also dedicated 500 acres of floodwater conveyance wetlands for permanent preservation. In 2004, during the initial permitting of our JED Landfill in St. Cloud, Florida, approximately 1,089 acres of the facility was dedicated as a Conservation Easement granted to the Florida Fish and Wildlife Commission and Florida Department of Environmental Protection. The Conservation Easement is maintained and managed by us for the protection of several native and protected wildlife species including the Gopher Tortoise, Eastern Indigo Snake and Grasshopper Sparrow. In addition, we have completed several onsite wetlands restoration projects there to enhance the wetland tributary of Bull Creek that intersects the Conservation Easement. Last, but certainly not least, in the area of giving are the thousands of local service and community organizations that benefit from our financial backing. We believe that investing in service organizations, such as the Kiwanis, Rotaries, and food pantries will bring great returns to our communities. We frequently participate in city-wide trash clean-up programs and our employees are active on environmental boards and commissions. We believe that supporting the myriad of local community organizations that come to us for help will make our neighborhoods better places in which to live and work. Progressive Waste Solutions contributes more than 530 million each year to the communities it serves, in the form of host fees, franchise fees and charitable donations. The communities we serve also recognize our commitment to the environment. We have received numerous awards and recognitions by environmental organizations including Keep America Beautiful, Ducks Unlimited and the National Audubon Society. 9 By the Numbers For more information, please visit www.progressivewaste.com 10 Progr£, So!, April 16, 2013 Winters Bros. Waste Systems, Inc. and Winters Bros. Transfer Station Corp. are proud to announce to you the start of an exciting new era for our companies as we launch a new corporate name: Progressive Waste Solutions o. f LI, Inc. and Progressive Waste Solutions TS o,f LI, Inc. respectively. Our parent company, Progressive Waste Solutions, Ltd. and its US subsidiaries plan to transition to our new brand and identity across North America over time. As part of the process of changing our name, Winters Bros. Recycling Corp., Winters Bros. Recycling East End, Inc., and Winters MSW Holdings, LLC were merged into Winters Bros. Waste Systems, Inc. Additionally, Med/ord Trans/er, LLC, Excel Recycling, LLC, Winters Waste Services al New York, LLC, Winters Ho/tsville Trans/er Station, LLC, Winters Bros. Paper Recycling, LLC and Medj:ord II, LLC were merged into Winters Bros. Transfer Station Corp. Our new name, complete with a new Iago, has been designed to help us move forward with one unified voice as a true industry leader in North America. It reflects our commitment to dependable service and a sustainable future for our company and the communities we serve. Our new Iago represents the complete integration of our business operations in North America and our lines of business across the entire non-hazardous solid waste management stream. The intertwined motion of the blue and green wheel suggests our promise to constantly progress toward a more sustainable future and ties this promise to our core business. We are proud that our BFI Canada, IESI and Winters brands have earned significant customer loyalty and support in their respective markets through the years. As we unite under the Progressive Waste Solutions banner, we will remain the same, dependable partner committed to helping with your waste services needs. As we grow, we will remain focused not only on providing the best in dependable services, but also on developing innovative new waste solutions that are both environmentally responsible and sustainable. If you would like more information on our new brand and our plans for the future, please visit our new company web site at www.proRressivewaste.com. I also invite you to contact us with questions or comments as we embark on a new era of achievement and success as Progressive Waste Solutions, building on our legacy of dependability, growth and innovation. 1198 Prospect Avenue, Westbury, NY 1 t590 Phone (516) 937-0900 Fax (516) 333-9839 Progr£ ?o! £ From all of us, best wishes and sincere thanks for your continued support. Sincerely, Anthony I. Farina District Manager 1198 Prospect Avenue, Westbury, NY 11590 Phone (516) 937-0900 Fax (516) 333-9839 Progressive Waste Solutions of LI, Inc. Director and Officer List February 2013 Schedule D Town of Southold Bid Project Solid Waste Haul-Disposal Services Full Name Title Address Thomas L. Brown lan Kidson Thomas J. Fowler Stephen T. Moody Thomas E. Miller John Lamanna Robe~ A. Chee Director, President Vice President, Treasurer Director, Vice President, Secretary & General Counsel Direct, Vice President & Assistant Secretary Vice President Vice President Vice President 502 Glenwick Court Trophy Club, TX 76262 4b Cheltenham Avenue Toronto, ON M4N 1P7 (Canada) 1303 Briar Ridge Drive Keller, TX 76248 4202 Balboa Court Arlington, TX 76016 1621 Fountain Pass Drive Colleyville, TX 76034 1064 Turkey Foot Road Lexington, KY 40502 1708 Buckingham Drive Keller, TX 76262 Throughout 2012, an area of important focus for us, as well as our investors, was our U.S. northeast segment. A key part of our plan to improve operating results in this segment has been strategic acquisitions to improve our asset balance, through more transfer and collection assets. This will allow us to oversee and deliver more of our own volume to our landfills. We executed on this plan throughout 2012, completing five"tuck-in~ acquisitions during the year. We added collection and transfer assets in New York, Maryland and Washington, D.C., to feed more volume to our three landfills in the region. Our latest"tuck-ins~will increase our own volume to our landfills and improve the flow of waste between our disposal sites. We also brought in new local management to oversee several key districts and welcomed a new regional vice president to lead our U.S. northeast operations. While we were faced with obstacles, such as lower recycled commodity pricing and a sluggish economic environment, we expect to see the benefits of our improvement plan in 2013. I would be remiss if l did not mention the impact of Superstorm Sandy and the unexpected challenges faced by our people in the U.S. northeast. In the weeks following the tragic storm that left many without power and shelter, our team mobilized quickly to support the affected communities. We brought in drivers, trucks and containers from other areas and regions of our business to help with the clean- up volumes, and we extended the operating hours at our transfer facilities to accommodate the ensuing rise in material volumes. I am very proud of how our people pulled together to make a difference for the communities impacted by the storm during such a di~cult time. Our efforts and progress in 2012 position us well for continued improvement in 2013, and we will continue to prioritize efforts to grow the business, increase free cash flow~B) and create future value for shareholders by driving improvements in return on invested capital. Priorities for 2013 Integration Complete the integt'ation of ~tuck-~n,operat~ons acquired in 2012 to obtain full ~ of the asset synergie~ Our first priority for 2013 is to complete the integration of the 19 =tuck-in"operations acquired in key markets during 2012, of which seven were purchased near the end of the fourth quarter, and in our US. northeast segment in particular. We are focused on the integration of these assets to obtain the full benefit of the identified synergies. In 2012, we spent just over $308 million on strategic"tuck-in" acquisitions that position us well for growth in 2013 and beyond. We expect these assets to contribute approximately S 138 million in m~lover revenue in 2013. Where we acquired businesses with collection and transfer assets close to our existing operations, we are working quickly to incorporate these assets into our business, so that we can begin to profit from efficiencies generated from the integration and elimination of mutes, higher landfill internalization as we bring more volume to our own landfills, and the reduction of certain selling, general and administrative expenses. And as part of our improvement plan in the U-~. northeast, it is critical that we focus on properly integrating the five "tuck-in" acquisitions completed late in 2012. As we drive mom of our own volumes into our landfills from the newly acquired collection and transfer assets, we expect to see our U-~. northeast Adjusted EBITDA~^~ margins gradually improve throughout 2013. Our second priority is to remain focused on the disciplined deployment of our free cash flow~B~ to improve ROIC. We generated nearly $:200 million of free cash flo~B~ in 2012 before acquisitions and discretionary infrastructure investments, and we expect that to increase in 2013. As stewards of that capital, we are committed to allocating it to increase our return on invested capital over the long term. Throughout 2012, we maintained our disciplined commitment to specific return on capital thresholds for every cash outlay. Whether it was the purchase of replacement or growth capital, an investment [n our own infrastructure or the repurchase of our sba res, the focus was on deploying each dollar to generate the highest available returns for our shareholders. There is strong oversight of all capital expenditures ("CAP~=X") in our Company, with controls and procedures in place for capital approvals. In fact, we recently aligned our management group's compensation more closely with CAPEX by making earnings before interest and tax ("~=BIT~) versus EBITDAI^l a key performance measure, so that our focus on return on capital is incented right down to the operating level. That said, we are also careful not to underspend on the capital required to maintain our fleet and all of our assets. In addition to our normal CAPEX budget, in 2012 we invested in a number of internal infrastructure projects, and the investments will continue in 2013.These are discretionary opportunities that will earn returns that are in most cases better than acquisitions. These projects are more strategic and discretionary than normal course growth CAPEX, and there is a finite timeframe for these projects, which we expect will be complete by the first quarter of 2014. We expect to spend $40 million to S45 million in 2013 on our previously announced infrastructure projects. Many of these investments are to rebuild or upgrade transfer stations and material recovery facilities in order to facilitate the flow of more waste and recyclable materials. However, the largest of these infrastructure projects is the construction of a natural gas generation plant at our Lachenaie landfill near Montreal, Quebec, in Canada. Most of the cash we plan to spend on infrastructure projects in 2013 will be allocated toward the Lachenaie plant that we expect will be operational and a contributor to earnings in the first half of 2014, yielding a great return on invested capital. in 2013, we expect to generate between $200 million to $215 million of free cash flov~B~ before spending on our internal infrastructure projects of $40 million to $45 million. While we will be opportunistic on acquisitions and share repurchases during the year, we intend to direct excess free cash flov~BI to reduce our leverage and to the payment of our dividend. Overall, the stability of our balance sheet combined with the strong levels of free cash flov~B~ we are generating allow us to be flexible, and ultimately direct capital to where we believe it will generate the most value. Our third priority is to leverage the strength of our core business to deliver organic growth, and achieve operational excellence to drive free cash flow~ and higher returns on invested capital. Excellence in operational execution is just as mission-critical as integrating our acquisitions and effectively allocating our cash. While certain parts of the waste industry, such as construction and demolition volumes, can be tied to broad economic cycles, the core business of solid waste collection, transfer and disposal consistently demonstrates great resilience during times of economic turbulence. We must remain focused on managing the areas of our core business that are within our control to mitigate certain pressures, economic or otherwise, which are outside of our control, to the greatest degree possible. Progressive Waste Solutions 12012 Annual Report 13 Our relentless focus on executing local market strategies that continuously improve revenue per asset, and building a competitive advantage through continuously improving productivity and operational efficiencies, is what will allow us to consistently generate accretive organic growth, strong free cash flow(B~ and higher returns on invested capital. We execute strategic sales programs with disciplined pricing models in each of our markets, actively manage and measure our progress, and adjust tactics on an ongoing basis. Largely recurring revenue in our core business, combined with contributions from strategic acquisitions and infrastructure investments, provides visibility into 2013. This is what gives us great confidence as we move forward in the year ahead. Longer term as the broader economy improves, especially in larger urban and highly populated markets, we expect to benefit with higher volumes and subsequent growth given our exposure and strong position within the higher-growth open markets that are most leveraged to recovery. We must also remain diligent in managing all elements of our operating cost structure, including our fleet, disposal and recycling assets, in the most efficient and productive manner possible. We strive to always manage our cost structure to defined standards and employ fuel-hedging strategies to mitigate the rising cost of fuel affecting our business where we are unable to pass through fuel increases. As we move forward, we will also look to add trucks fueled by compressed natural gas ("CNG') rather than diesel fuel. Although the waste industry is not often significantly impacted by each new emerging technology, CNG technology is changing the industry and the expectations of municipalities. We have already started embracing the changes. During 2012, we won two large residential contracts in Canada, and we are servicing these new contracts with CNG- powered vehicles. The municipalities benefit from the lower operating costs, quieter vehicles a nd a smaller carbon footprint associated with operating a CNG fleet. And in parts of our U.S. markets, such as Louisiana, Texas and Florida, we have already deployed CNG vehicles and plan to deploy more of these vehicles in additional U.S. cities. Throughout the whole company, our plan is to convert more of our fleet to CNG over time, as part of our regular vehicle replacement schedule. Looking Ahead We believe our priorities - integration of acquisitions, disciplined deployment of capital to improve ROIC and operational excellence to drive growth - will help drive returns for our shareholders in 2013 and beyond. We began 2013 with increasing momentum, thanks to the efforts of our incredible team of more than 7,000 drivers, operators, mechanics and other employees. And I see great opportunity ahead. I am confident that we will achieve success by continuing to execute on our business model and investing in the right assets, ensuring the right people are on the ground, and having the right processes in place alongside a seasoned leadership team with the discipline and focus to deliver on this promise. Joseph D. Quarin Vice Chairman and Chief Executive Officer For definitions of Adjusted EBITDA and Free Cash Flow, please refer to page 67. Progressive Waste Solutions 12012 Annual Reporl 14 Progressive Waste Solutions Ltd. MD&A for the year ended December 31, 2012 Disclaimer This Management Discussion and Analysis ("MD&A") contains forward-looking statements and forward-looking information. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events. These statements can generally be identified by the use of forward-looking words or phrases such as "anticipate," "believe," "budget," "continue,~ "could," "estimate,~ "expect," "forecast," ~goals," ~intend," "intent," "belief," "may," "plan," fforesee," 'likely," "potential," "project," ~seek," "strategy," "synergies,' "targets," ~will," ~should," "would," or variations of such words and other similar words. Forward-looking statements include, but are not limited to, statements relating to future financial and operating results and our plans, objectives, prospects, expectations and intentions. These statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Numerous factors could cause our actual results to differ materially from those expressed or implied in these forward-looking statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. Numerous important factors could cause our actual results, performance or achievements to differ materially from those expressed in or implied by these forward-looking statements, including, without limitation, those factors outlined in the Risks and Uncertainties section of this MD&A. We caution that the list of factors is illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements in this MD&A are qualified by these cautionary statements. The forward-looking statements in this MD&A are made as of the date of this MD&A and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Industry Overview The North American non-hazardous solid waste management industry is a fragmented and competitive industry, requiring expertise, labour and capital resources. Industry participants compete for collection accounts primarily on the basis of quality of service and price and compete for transfer station and landfill volumes on the basis of tipping fees, geographic location and environmental practices. The North American non-hazardous solid waste management industry has undergone significant consolidation and integration in both Canada and the United States ("U.S.'~. We believe that consolidation will continue as larger operators seek to achieve greater economies of scale and smaller operators exit the industry due to landfill closures brought about by regulatory changes, stringent environmental regulation and enforcement, and higher compliance and capital costs. This industry comprises the collection, transportation, transfer, disposal and recycling of non-hazardous solid waste (~waste'~ at landfills or other disposal facilities such as incineration or composting facilities. Non-hazardous solid waste includes commercial, industrial and residential waste, including household and yard waste. Non-hazardous solid waste is solid waste that is not comprised of substances considered hazardous materials under any federal, provincial, state and/or local legislation or regulation applicable to the collection, transfer, disposal and/or recycling of solid waste. The principal services offered in this industry are summarized below. Collection. Collection of waste is from commercial, industrial and residential customers. Commercial collection typically involves the use of front-end and rear-end loader trucks to collect waste stored in steel bins that are usually supplied by the waste collection service provider. Industrial waste collection typically involves the use of roll-off trucks to collect waste stored in large roll-off containers placed at manufacturing businesses or construction and demolition ("C&D~) sites. Residential waste collection involves the curbside collection of residential solid waste using rear-end and side-loader trucks. Residential waste collection services are provided by municipalities and companies that contract either with municipalities or directly with individual homeowners, homeowners' associations, apartment building owners or similar groups. Once collected, waste or recyclable material is transported to a transfer station or directly to a disposal or recycling facility. Transfer Stations. Transfer stations are facilities typically located near commercial, industrial and residential collection routes that are a distance from the ultimate disposal site. Waste is received at the transfer station from collection trucks, sometimes sorted and then transferred in large volumes to landfills or other waste disposal or recycling facilities. This consolidation reduces the costs associated with transporting the waste and may allow operators to obtain volume discounts on disposal rates at landfills and other disposal facilities. Transfer stations also facilitate the efficient utilization of collection personnel and equipment by allowing them to focus on collection operations and spend less time traveling to disposal sites. Transfer stations can handle Progressive Waste Solutions 12012 Annual Report 15 waste received from commercial and residential collection operations and most industrial waste. Some transfer stations are constructed to receive certain specialized waste, such as C&D debris. Landfills. Landfills are the primary waste disposal facility for all types of waste. Landfills are designed, permitted, operated and closed in accordance with comprehensive federal, provincial, state and/or local regulations. These regulations also dictate the type of waste that may be received by the landfill. Landfill operations include excavation of earth, spreading and compacting of waste and covering of waste with earth or other inert material. Recycling. Recovery and recycling involve operations in which certain types of waste material, including wood, paper, cardboard, plastic, glass, aluminum and other metals, are sorted, processed and resold as recycled material. After processing and sorting, purchasers generally pay a market price for recycled materials. Waste for which there is no market is shipped to a disposal facility, typically a landfill. Corporate Overview As one of North America's largest full-service waste management companies, we provide waste collection, recycling and disposal services to commercial, industrial, municipal and residential customers in 13 U.S. states and the District of Columbia and in six Canadian provinces. We serve our customers with vertically integrated collection and disposal assets. Our U.S. south and northeast segments, collectively our U.S. business, operate under the Progressive Waste Solutions, IESI and WSI brands and provide vertically integrated waste collection, recycling and disposal services in two geographic regions: the south, consisting of various service areas in Florida, Texas, Louisiana, Oklahoma, Arkansas, Mississippi, Missouri and Illinois, and the northeast, consisting of various service areas in New York, New Jersey, Pennsylvania, Maryland, Virginia and the District of Columbia. Our Canadian business operates under the Progressive Waste Solutions, BFI Canada and WSl brand names. We believe we are one of Canada's two largest waste management companies providing vertically integrated waste collection, recycling and disposal services in the provinces of British Columbia, Alberta, Manitoba, Ontario, and Quebec. Our Canadian business also provides disposal services in the province of Saskatchewan. Our operating philosophy is focused on developing strong collection operations and substantial market share in dense, urban markets. We believe that collection density provides us flexibility to pursue various strategies to drive revenue growth, margin expansion and cash flow generation. Our collection operations are supported by our extensive asset footprint, which include transfer stations, landfills and material recovery facilities ("MRFs"). The integration of our collection operations with our transfer and disposal assets enhances the operating leverage in our business model. Our ability to internalize a significant portion of the waste we collect augments our margin profile and the positioning of our local market operations. We focus on markets where we can implement our operational philosophy to optimize return on assets and invested capital and drive additional growth and profitability. We benefit from our longstanding relationships with many of our commercial, industrial and residential customers, which provides a high degree of stability to our business. The majority of our revenue from commercial and industrial customers is generated from contracts with typical durations of three-to-five years. These contracts provide us with visible, recurring revenue and typically provide us with the ability to make annual indexed fee adjustments and the ability to pass through fuel, disposal, transportation and other surcharges to mitigate increasing expenses. Many of our contracts with commercial and industrial customers automatically renew on expiry of their then current term. We are highly focused on tracking productivity-based operating metrics and managing our business to optimize returns against our asset base. We believe that improving asset utilization drives growth and profitability. Introduction The following is a discussion of our consolidated financial condition and results of operations for the year ended December 31, 2012 and has been prepared with all available information up to and including February 19, 2013. All amounts are reported in U.S. dollars, unless otherwise stated, and have been prepared in accordance with accounting principles generally accepted in the U.S. (~U.S. GAAP''). This discussion should be read in conjunction with our consolidated financial statements ("financial statements"), including notes thereto, and MD&A for the year ended December 31,2011, both of which are filed on www.sec, gov and www. sedar, com. Progressive Waste Solutions 12012 Annual Report 16 Foreign Currency Exchange ("FX') Rates We have elected to report our financial results in accordance with U.S. GAAP and in U.S. dollars to improve the comparability of our financial results with our peers. Reporting our financial results in U.S. dollars also reduces foreign currency fluctuations in our reported amounts because our complement of assets and operations are larger in the U.S. than they are in Canada. However, we remain a legally domiciled Canadian entity and our functional currency is the Canadian dollar. As a result, our financial position, results of operations, cash flows and equity are initially translated to, and consolidated in, Canadian dollars ("CS') using the current rate method of accounting. The resulting translation adjustments are included in other comprehensive income or loss. Our consolidated Canadian dollar balance sheet is further translated from Canadian to U.S. dollars applying the foreign currency exchange rate in effect at the balance sheet date, while our consolidated Canadian dollar results of operations and cash flows are translated to U.S. dollars applying the average foreign currency exchange rate in effect during the reporting period. Translating the financial position, results of operations and cash flows of our U.S. business into Canadian dollars, our functional currency, and re-translating these amounts to U.S. dollars, our reporting currency, has no translation impact on our financial statements. Accordingly, our U.S. results retain their original values when expressed in our reporting currency. Translation adjustments are only included in the determination of net income or loss when we realize a reduction in the investment we hold in our foreign operations. Our consolidated financial position and operating results have been translated to U.S. dollars applying FX rates outlined in the table below. FX rates are expressed as the amount of U.S. dollars required to purchase one Canadian dollar and represent noon rates according to the Bank of Canada. 2012 2011 Consolidated Consolidated Consolidated Consolidated Balance Statement of Operations and Balance Statement of Operations a nd Sheet Comprehensive Income or Loss Sheet Comprehensive Income or Loss Cumulative Cumulative Current Average Average Current Avera~]e Avera~e March 31 $ 1.0009 $ 0.9988 $ 0.9988 $ 1.0290 S 1.0142 $ 1.0142 June 30 $ 0.0813 $ 0.9899 $ 0.9943 $ 1.0370 $ 1.0334 $ 1.0237 September ao $ 1.0166 $ 1.0052 $ 0.9979 $ 0.9626 $ 1.0202 $ 1.0225 December 31 $ 1.0051 $ 1.0088 $ 1.0006 $ 0.9833 $ 0.9774 S 1.0109 Progressive Waste Solutions ] 2012 Annual RepoKc I 7 FX Impact on Consolidated Results The following table has been prepared to assist readers in assessing the FX impact on selected results for the year ended December 31,2012. Yearended December31, December31, December31, December31, December31, 2011 2012 2012 2012 2012 (organic, acquisition (holding FX and other constant non- with the operating comparative (as reported) chanties) year) (FX impact) (as reported) Consolidated Statement of Operations Revenues $ 1,840,096 $ 64,582 $ 1,904,678 $ (7,937) $ 1,896,741 Operating expenses 1,094,067 65,120 1,159,187 (4,423) 1,154,764 Selling, general and administration 218,600 13,105 231,705 (965) 230,740 Restructuring expenses 1,609 (1,609) Goodwill impairment 360,557 (360,557) Amortization 257,066 18,127 275,193 (1,075) 274,118 Net gain on sale of capital assets (3,412) 2,822 (590) (2) (592) Operating (loss) income (88,391) 327,574 239,183 (1,472) 237,711 Interest on long-term debt 62,086 (4,388) 57,698 (270) 57,428 Net foreign exchange (gain) loss (73) 82 9 9 Net (gain) loss on financial instruments (4,984) 6,714 1,750 (5) 1,725 Loss o n extinguishme nt of debt 17,012 17,012 (88) 16,924 Other expense 872 (766) 106 (1) 105 (Loss) income before net income tax expense and net loss from equity accounted investee (146,292) 308,920 162,628 (1,108) 161,520 Net income tax expense 49,748 17,752 67,500 (378) 67,122 Net loss from equity accounted investee 96 (55) 41 41 Net(loss) income $ (196,136) $ 291,223 $ 95,0~7 $ (730) $ 94,357 Adjusted EBITDA~^~ $ 534,536 $ (12,308) $ 522,228 $ (2,569) $ 519,659 Adjusted operating Income~^~ $ 280,882 $ (33,257) $ 247,625 $ (1,492) $ 246,133 Adjusted net income~^~ $ 135,003 $ (21,003) $ 114,000 $ (813) $ 113,187 Free cash flow~B~ $ 262,464 $ (89,095) $ 173,369 $ (909) $ 172,460 Progressive Waste Solutions 12012 Annual Repor~ 18 Review of Operation $ - For the year ended December 31, 2012 (all amounts are in thousands of U.S. dollars, unless otherwise stated) Revenues Year ended December31 2012 2011 Change Total $ 1,896,741 S 1,840,096 S 56,645 Canada $ 776,814 $ 757,594 $ 19,220 U.S. south $ 780,331 $ 723,315 $ $7,016 U.S. northeast $ 339,596 $ 359,187 $ (19,591) Gross revenue by service type Year ended December 31,2012 Year ended December 31,2011 Canada - Canada - U.S. - Canada - Canada - U.S. - stated in percent- percent- stated in percent- percent- thousands age of age of thousands age of age of of CS revenues U.S. revenues of CSc'l revenues U.S.el revenues Commercial $ 308,715 39.8 $ 356,804 31.9 S 297,110 39.6 $ 338,275 31.2 Industrial 141,027 18.2 195,236 17.4 141,232 18.8 190,492 17.6 Residential 150,603 19.4 290,026 25.9 13S,722 18.1 257,960 23.8 Transfer and disposal 236,425 30.5 404,348 36.1 223,765 29.9 425,668 39.3 Recycling 31,314 4.0 34,010 3.0 40,546 5.4 34,267 3.2 Other 22,875 2.9 3,577 0.3 18,462 2.5 3,283 0.3 Gross revenues 890,959 114.8 1,284,001 114,6 856,837 114.3 1,249,945 115.4 Intercompany (114,639) (14.8) (164,074) (14.6) (107,381) (14.3) (167,443) (15.4) Revenues $ 776,320 100.0 $ 1,119,827 100.0 $ 749,456 100.0 $ 1,082,502 100.0 Note: ~'>Prior year amounts have been adjusted to conform to the current year's presentation. Progressive Waste Solutions 12012 Annual Report 19 Revenue growth or decline components - expressed in percentages and excluding FX Year ended December 31,2012~'~ Year ended December 31,2011 Canada U.S. Consolidated Canada U.S. Consolidated Price Core pdceI'l 2.1 1.0 1.4 2.4 0.8 1.4 Fuel surcharges 0.3 O.S 0.4 1.1 1.1 1.1 Recycling and othe~') (1.6) ll .7) (1.6) 0.3 0.4 0.4 Total price growth (decline) 0.8 (0.2) 0.2 3.8 2.3 2.9 Volume (0.9) (1.4) (1.2) 1.2 0.2 0.6 Total organic revenue (decline) growth (0.1) (1.6) (1.0) 5.0 2.5 3.S Acquiskions 3.7 5.1 4.5 0.7 9.8 6.0 Total revenue ~rowth 3.6 3.5 3.5 5.7 12.3 9.5 Note: (')Prior year amounts have been adjusted to conform to the current year's presentation. J"~Component percentages for 2012 have been presented on a reportable revenue basis, while component percentages for 2011 have been presented on a gross revenue basis. In addition, component percentages for 2011 have been prepared as if Waste Services, Inc.'s results for the year ended December 31, 2010 included their results for the period from Janua~ 1 to June 30, 2010. Readers are reminded that Waste Services, Inc. was acquired in July 2010. Year ended On a consolidated basis, revenues grew approximately $56,600, partially offset by FX, approximately $7,900. Acquisitions were the primary contributor to consolidated revenue growth year-over-year. In the current year, we completed 19 acquisitions which included eight in our U.S. south segment and six and five in our Canadian and U.S. northeast segments, respectively. These acquisitions were of the "tuck-in" variety which we folded into our existing operations. The second most significant contribution to revenue growth came from core pricing which increased year-over-year in every business line. Prici.ng growth was strongest in our collection ~ines of business and most pronounced in our commercial and residential service offerings. Consolidated volumes were down year-over-year on lower transfer and disposal volumes. On a comparative basis, our U.S. northeast segment had to compete with excess disposal capacity, lower special waste volumes, lower overall disposal volumes and stagnant economic growth in the region. On balance, however, core pricing gains exceeded volume shortfalls year-to-year. Recycled commodity pricing was the largest single headwind to consolidated revenue growth year-over-year. Recycled commodity pricing declines began in the fourth quarter of the prior year, and moved lower throughout most of 2012. Finally, marginally higher fuel surcharges contributed to the comparative growth in revenues resulting from the pass through of slightly higher fuel prices. On a regional basis, revenues in Canada grew approximately C$26,900 over last year. Acquisitions and core price growth across all service lines were the primary drivers of revenue growth on a comparative basis. Volumes were down on lower transfer station and industrial collection volumes. Industrial collection volumes were soft in the central portion of our Canadian segment, due primarily to a more modest economic environment compared to the prior year. The temporary closure of a transfer station facility in central Canada resulting from our investment in its revitalization was the primary contributor to the decline in transfer station volumes. Our investment in this facility positions us for future growth, internalization and the opportunity to find greater efficiencies in these operations. We also lost a commercial municipal contract in western Canada which also impacted volume growth. While we had some challenges specific to comparative volume gains year-over-year, pricing growth and higher landfill volumes outpaced the comparative volume shortfall in certain collection lines. As noted above in the consolidated discussion, recycled commodity pricing was a significant headwind for our Canadian segment and fuel surcharges were essentially flat year- over-year having no meaningful impact on revenues comparatively. In our U.S. south segment we realized revenue growth of approximately $57,000. Acquisitions, core pricing, volume growth and higher fuel surcharges all contributed to higher revenues this year compared to last. While revenue growth was primarily the result of contributions from acquisitions, we recognized core pricing growth in all business lines. A combination of higher commercial and residential collection pricing was the primary catalyst for pricing improvements. Volume gains represent a mix of industrial and residential collection volume improvements partially offset by lower transfer and landfill volumes. Lower transfer and landfill volumes, including special waste volumes, were primarily concentrated in our Florida operations and reflect competitive pressures for volumes, compounded by a Iow economic growth environment. Lower recycled commodity pricing was a drag on this segment's revenue growth year-to-year as well. Progressive Waste Solutions 12012 Annual Report I 10 Revenues in our U.S. northeast declined approximately ($19,600) year-over-year. Not only were lower recycled commodity prices a significant contributor to lower revenues year-to-year, but lower transfer station and landfill volumes, including special waste volumes, and lower industrial collection volumes also contributed to the decline. Economic softness continues to constrain available waste volumes in this region and excess disposal capacity is also fostering price sensitivity at our landfills. We continued to realize pricing improvements in our collection business lines and contributions to revenues from higher MRF volumes partially offset the aforementioned headwinds. We continued to invest in this segment and completed five tuck-in acquisitions in the year. We generated additional revenues from these acquisitions, and from the three acquisitions we completed in the prior year, which in total contributed an additional approximately $10,900 to revenues in the current year. Marginally higher fuel costs were passed through to customers in this segment in the form of fuel surcharges. Please refer to the Outlook section of this MDS~, for additional discussion of the economic trends affecting revenues, our strategy and our operations. Operating expenses Year ended December 31 2012 2011 Change Operating expenses $ 1,154,764 $ 1,094,067 $ 60,697 Canada $ 432,975 S 415,497 $ 17,478 U.S. south $ 485,184 $ 439,700 $ 45,484 U.S. no~heast $ 236,605 $ 238,870 $ (2,265) Year ended On a consolidated basis, higher disposal, subcontract, labour, vehicle repair, maintenance and operating costs all contributed to the increase in operating expense year-over-year. Acquisitions completed in the current and prior years are the primary reasons for the operating cost increase. Insurance and safety costs also increased year-over-year, which is due in part to acquisitions, but also from higher accident claims incurred in the central and western portions of our Canadian segment and in the central portion of our U.S. south segment. Higher diesel fuel pricing also contributed to the comparative increase, albeit to a lesser extent. Lower volumes in our U.S. northeast segment resulted in lower comparative disposal and transportation costs, which was a partial offset to the aforementioned increases. On a consolidated basis, operating expense in the current year represented 60.9% of reportable revenues, an increase of approximately 140 basis points compared to the prior year. Lower recycled commodity revenues and lower landfill and disposal revenues in our U.S. northeast segment, coupled with an increase in costs resulting from acquisition growth representing the acquisition of lower margin business, are the primary reasons for the comparative increase. When we exclude the impact of lower recycled commodity pricing to normalize for its impact on the relationship between current year operating costs relative to reportable revenues, this metric improves by approximately 90 basis points to 60.0%. Last year, operating costs represented 59.5% of reported revenues. Operating costs in Canada were 55.7% of reported revenues for the year, compared to 54.8% last year. Excluding lower recycled commodity pricing on the current year measure improves this relationship by approximately 80 basis points to 54.9%. Acquisitions were the primary contributors to higher reported operating costs year-over-year. The principal cost increases were disposal, subcontract, labour, safety and insurance claims and vehicle repair, maintenance and operating costs. Higher diesel fuel pricing was a component of higher vehicle operating costs. As a percentage of reported revenues, operating expenses in our U.S. south segment were 62.2% for the year, compared to 60.8% last year. Excluding lower recycled commodity pricing improves this relationship by 80 basis points to 63.4% in the current year. Productivity improvements in this segment were partially offset by lower special waste volumes, particularly in our Florida operations, coupled with the acquisition of several collection businesses that impacted the mix of revenues and margins. While gains have been made organically, the increase in reported operating costs is due in large part to acquisitions, which contributed to higher disposal, labour and vehicle repair, maintenance and operating costs. Higher diesel fuel pricing also contributed to the comparative increase. As a percentage of revenues, operating expense in our U.S. northeast segment increased by approximately 320 basis points, of which 170 basis points is attributable to the decline in recycled commodity pricing. A lower volume of higher margin disposal revenue is the primary reason for the balance of the percentage increase in operating costs relative to revenues. Excess disposal Progressive Waste Solutions 12012 Annual Report 111 capacity, stagnant economic growth and our decision to preserve price in this region are the primary reasons for the decline in disposal volumes and revenues. Acquisitions also impacted the relationship between operating costs and revenues. On a total dollar basis, operating costs declined on a comparative basis. The decline is largely attributable to lower transportation and disposal costs resulting from a decline in waste volumes, including special waste volumes, received in this segment. Selling, general and administration ("SG&A") Year ended December 31 2012 2011 Change Total S 230,740 S 218,600 S 12,140 Canada $ 65,378 $ 61,689 $ 3,689 U.S. south $ 78,070 S 72,186 $ 5,884 U.S. northeast $ 31,465 $ 30,775 $ 690 Corporate $ 55,827 $ 53,9S0 $ 1,877 Year ended On a consolidated basis, SG&A expense increased by approximately $12,100 over the prior year. Stock option recoveries recorded last year totaled approximately $6,800 compared to a current year recovery of approximately $100. Lower current year stock option recoveries were offset by lower current year charges incurred in respect of executive and senior management succession costs, in the current year, we announced the succession of our Chief Financial Officer ("CFO~), compared to the prior year when we announced the succession of our Chief Executive Officer ('CEO'~. In the current year, additional costs were incurred due to other senior management changes which are included in SG&A expense. Current year charges for executive succession and other senior management changes were approximately $5,900 lower on a comparative basis. Higher current period SG&A expense is due principally to acquisitions which contributed in excess of $11,300 to the increase year- over*year. Retention awards for certain front line employees servicing residential contracts in Canada were also higher year-over- year due to these contracts concluding, approximately $700. Severance expenses were also higher year-to-year, approximately $1,200, which includes severance costs incurred in respect of certain acquisitions completed in 2012. Legal and legal settlement costs contributed approximately $600 to the increase. In the current year, we benefited from lower long-term incentive plan ("LTIP") expense resulting from a change to our plan for certain participants. These changes allow us to recognize LTIP expense for these plan participants over a period of three years and the payout of these amounts is tied to various performance measures and our Company's share price. Current year SG&A expense also benefited from a reduction in bonus accruals as a result of the Company's current year performance. These benefits, approximately $7,800, were mostly offset by net new hires and year-to-year salary increases. From a segment perspective, higher SG&A expense in Canada is attributable to acquisitions, organic growth, retention awards and severance, partially offset by lower bonus accruals. SG&A expense in our U.S. south segment also benefited from lower bonus accruals year-over-year, but, in total, expenses were higher as a result of acquisition and organic growth. Our U.S. northeast segment realized a similar change, where lower bonus accruals were offset by additional costs from acquisition related growth. From a corporate perspective, corporate SG&A expense increased comparatively. As outlined above, higher stock option expenses and legal and legal settlement costs were offset by lower costs incurred for executive and senior management succession. Higher costs for net new hires and general salary increases were offset by lower LTIP expense and lower bonus accruals. As a percentage of revenues, adjusted SG&A expense is 11.7% versus 11.5% last year. The year-over-year deterioration is due to the weaker performance of our U.S. northeast segment and the impact on revenues of a decline in recycled commodity pricing. Progressive Waste Solutions 12012 Ann ual Report I 12 Restructuring expenses Year ended December 31 2012 2011 Change Total $ $ 1,609 $ (1,609) Canada S $ U.S. south $ S S U.S. northeast $ $ Corporate $ S ~,609 (1,609) Year ended For 2011, restructuring expenses represented costs incurred to integrate Waste Services, Inc. ('WSI") into our pre-existing business. Restructuring expenses included costs to integrate various operating locations, exit certain lease agreements and also included employee severance costs. Restructuring expenses were classified as a corporate expense. Goodwill impairment Year ended December 31 2012 2011 Change Total $ $ 360,557 S (360,557) Canada $ $ $ U.S. south $ S $ U.S. northeast $ $ 360,S$7 $ (360,557) Corpo~te $ $ $ Year ended As a result of continuing economic weakness in our U.S. northeast segment coupled with a competitive environment for constrained volumes, our 2011 step one test for goodwill impairment concluded that the carrying amount of the U.S. northeast reporting unit was in excess of its fair value. Accordingly, we conducted step two of the goodwill impairment test which compared the implied fair value of the reporting units' goodwill with the carrying amount of that goodwill. The resulting impairment loss amounted to approximately $360,600. Amortization Year ended December 31 2012 2011 Change Total $ 274,118 S 257,066 $ 17,052 Canada $ 103,112 $ 100,516 $ 2,596 U.S. south $ 110,172 $ 99,126 $ 11,04~ U.S. northeast $ 57,501 $ 54,041 $ 3,460 Corporate $ 3,333 $ 3,383 $ (50) Year ended For the year ended December 31, 2012 amortization expense increased. Intangible, capital and landfill asset amortization were each higher than last year. The increase in intangible and capital amortization is due in large part to acquisitions and to a lesser extent higher infrastructure spending. Higher landfill asset amortization is due to lower cash flow revisions in estimates in the current year compared to last. In each of 2012 and 2011, cash flow revisions in estimates resulted in a recovery and therefore reduced landfill amortization expense. By comparison, prior year recoveries totaled approximately $9,800 versus $1,600 in the current year. Lower landfill volumes in the current year, which were most notable in our U.S. northeast segment and our Florida operations in our U.S. south segment, partially offset the increase resulting from lower recoveries attributable to cash flow revisions in estimates. Progressive Waste Solutions 12012 Annual Report I 13 Net gain on sale of capital assets Year ended December 31 2012 2011 Change Total $ (S92) $ (3,412) $ 2,820 Canada $ 198 $ (640) S 838 U.S. $ (790) S (2,772) $ 1,982 Corpo~te $ S $ Year ended In the prior year we disposed of certain redundant infrastructure capital in Canada and the U.S. south which resulted in higher prior year gains on the sale of capital. The balance of the remaining net gain in each year reflects our normal course disposal of assets, which are neither significant individually or in aggregate. Interest on long-term debt Year ended December 31 2012 2011 Change Total $ 57,428 $ 62,086 S (4,658) Year ended In the current year, we benefited from pricing amendments completed in the third quarter of 2011 to our Sixth Amended and Restated Credit Facility Agreement (the "Canadian facility") and our Amended and Restated Senior Secured Revolving Credit Facility (the "U.S. facility"). These pricing amendments are the primary reasons for the declines in interest expense this year compared to last. In the fourth quarter of 2012 we entered into $2,350,000 Credit Agreement (the ~consolidated facility'~ and concurrently repaid all outstanding indebtedness issued under our Canadian and U.S. facilities and our series B senior secured debenture. While most of our drawings on the consolidated facility are from revolving advances, we also drew $$00,000 under the senior secured term B facility ("term B facility"). Drawings on the term B facility bear interest at a higher rate than interest borne on revolving advances. Interest incurred on term B facility drawings was a partial offset to the current year benefit realized from pricing amendments noted above. Additionally, acquisitions completed in the current year increased our overall borrowings year-over-year and was also a partial offset to favorable pricing amendments. Higher long-term debt drawings in Canada are due to the Canadian operations funding all dividends and a portion of the total common shares repurchased under our normal course issuer bid. Acquisitions in Canada also contributed to the increase in total long-term borrowings and while debt has risen year-over-year, the benefit of prior year pricing amendments outpaced the additional interest cost attributable to higher borrowings. In the U.S., total long-term debt drawings increased year over-year. The increase is due to our U.S. business funding a portion of the common shares repurchased in the year and completing 13 acquisitions as well. Pricing amendments on our U.S. facility partially offset the additional interest expense incurred to carry a higher debt load. Please refer to the Liquidity and Capital Resources section of this MD&A for additional details regarding amendments to our Canadian and U.S. facilities. Progressive Waste Solutions 12012 Annual Report I 14 Net foreign exchange loss (gain) Year ended December 31 2012 2011 Change Total $ 9 S (73) S 82 Year ended Foreign exchange gains or losses are typically incurred on the settlement of transactions conducted in a currency that is other than our Canadian and U.S. businesses functional currency. Gains and losses are not attributable to bne significant transaction or series of transactions in either year. Net loss (gain) on financial instruments Year ended De~ember 31 2012 2011 Change Total $ 1,725 S (4,984) S 6,709 Year ended The primary reason for the current year loss is due to fair value changes in interest rate swaps. In conjunction with the repayment of our U.S. facility effective October 24, 2012, the designation of certain interest rate swaps as cash flow hedges ceased and hedge accounting was discontinued. Accordingly, we recorded a loss on financial instruments as a result of this change. By comparison, movements in interest rates between 2010 and 2011 resulted in us recognizing a substantial gain. Foreign currency exchange hedges have also contributed to the higher current year loss. In the prior year, the fair value attributable to foreign currency hedge agreements resulted in the recognition of a financial asset. In the current year, the strengthening Canadian dollar relative its U.S. counterpart produced a financial liability at the end of the current year. Fair value changes in fuel hedges due to movements in the price of diesel fuel partially offset the current year losses stemming from interest rate swaps and foreign currency hedge agreements. At the end of the year, most of our financial assets and liabilities are not designated as hedges for accounting purposes. Accordingly, fair value movements in these arrangements are recorded as gains or losses on financial instruments in our condensed consolidated statement of operations and comprehensive income or loss. Loss on extinguishment of debt Year ended December 31 2012 2011 Change Total $ 16,924 $ S 16,924 Year ended Effective October 24, 2012, we entered into a consolidated facility and concurrently repaid all outstanding indebtedness issued under our pre-existing Canadian and U.S. facilities and our series B senior secured debenture. Our review of this transaction led us to conclude that our modification of debt facilities was significant and accounting for our pre-existing debt as extinguished was appropriate. Accordingly, we wrote-off deferred financing costs attributable to our Canadian and U.S. facilities and our series B senior secured debenture, approximately $11,700. In addition, we incurred a "make whole" charge on the repayment of our series B senior secured debenture, approximately $5,200, which we also recorded to loss on extinguishment of debt. Other expense Year ended December 31 2012 2011 Change Total $ 105 $ 872 $ (767) Yearended In the current and prior year, other expenses include the cost to retain certain management that we incurred in connection with certain acquisitions completed in prior years and special compensation expense forformerWSI executives whichwas recognized Progressive Waste Solutions 12012 Annual Report I 15 over a two year service period. In the prior year only, other expenses also included the full expense of amounts we previously expected to recognize over the contractual term of service for a former executive. Net income tax expense Year ended December 31 2012 2011 Change Total $ 67,122 S 49,748 $ 17,374 Year ended For the year ended December 31, 2012, net income tax expense in Canada was approximately $37,000, representing a comparative increase over the prior year period of approximately $800. The change comprises an increase in current income tax expense totaling approximately $1,200 and a decline in deferred income tax expense of approximately $400. For Canada, the increase in net income tax expense is due in large part to a one-time charge for a tax assessment that relates to a period when we operated as an income trust, approximately $1,100. Excluding this one-time charge, income subject to tax in Canada was similar year-to-year. Prior year expenses for CEO succession costs were almost equally matched by deductions for the write-off of deferred financing costs incurred in connection with the new consolidated lending facility. The impact of lower recycled commodity pricing was principally offset by lower current year bonus and LTIP expense and contributions to current year results from acquisitions completed in the current and prior years. Net income tax expense in our U.S. business increased as well. The increase is almost entirely attributable to an increase in deferred income tax expense, approximately $~ 6,000. In the current year we utilized bonus depreciation, permitted for tax, which created an increase in the difference between the carrying values of our U.S. domiciled assets and their tax basis. The result was an increase in deferred tax liabilities and higher current year deferred income tax expense. Our U.S. business also experienced slightly higher current tax expense due to higher state taxes. Income tax expense at the combined basic rate totaled approximately $53,700 for the year ended December 31, 2012. The difference between income tax expense at the combined basic rate and income tax expense presented on our consolidated statement of operations is due to withholding taxes on dividends paid between Canada and the U.S., approximately $3,100 and tax on non-deductible expenses, approximately $2,400. Revisions to tax balances, other state taxes and other current year revisions represent the balance of the difference. Please refer to the Outlook section of this MD&A for additional discussion about our income taxes. Net loss from equity accounted investee Yearended December31 2012 2011 Chan~e Total $ 41 $ 96 $ (55) Year ended Our net loss from our equity accounted investee represents our pro rata share of the investee's post-acquisition earnings, computed applying the consolidation method. Progressive Waste Solutions 12012 Annual Report I 16 Review of Operations ~ For the three months ended December 31, 2012 (all amounts are in thousands of U.S. dollars, unless otherwise stated) Three months ended December 31,2012 Canada US south US northeast Corporate Total Revenues Operating expenses SG&A Amortization Net loss on sale of capital assets $ 199,021 $ 201,725 $ 95,076 $ 111,411 127,051 66,774 17,528 20,600 8,506 13,180 27,815 28,115 14,895 941 495,822 305,236 59~14 71,766 383 Operating income Interest on long-term debt Net foreign exchange gain Net loss on financial instruments LOSS on extinc~uishment of debt 42,267 25,959 4,901 (14,121 ) 58,623 14,494 (3) 3,541 16,924 Income before net income tax expense and net loss from eq ui'~/accounted investee Net income tax expense Net loss from equity accounted investee 23,667 11,903 $ 11,753 Three months ended December 31,2011 Canada U.S. south U.S. northeast Corporate Total Revenues Operating expenses SG&A Restructuring expenses Goodwill impairment Amortization Net ~lain on sale of capSal assets S 185,590 101,656 15,350 25,145 185,426 $ 86,196 $ 112,929 58,698 18,624 7,272 360,557 24,033 8,333 861 457,212 273,283 5&178 411 360,557 58,372 (541) Operating loss Interest on long-term debt Net foreign exchange loss Net gain on financial instruments Other expenses 43,439 2%840 (348,664) (18,204) (293,048) 13,723 45 Loss before net income tax recovery and net loss from equity accounted investee Net income tax recovery Net loss from ecluity accounted investee (305,725) (9,575) 38 Netloss $ (296,188) Progressive Waste Solutions 12012 Annual Report I 17 FX Impact on Consolidated Quarterly Results The following table has been prepared to assist readers in assessing the impact of FX on selected results for the three months ended Oecember 31,2012. Thre~ months ended December 31, December 31, December 31, December 31, December 31, 2011 2012 2012 2012 2012 (organic, acquisition (holding FX and other constant non- with the operating comparative (as reported) changes) period) (FX impact) (as reported) Consolidated Statement of Operations Revenues $ 457,212 Operating expenses 273,283 Selling, general and administration 58,178 Restructuring expenses 411 Goodwill impairment 360,557 Amortization 58,372 Net (gain) loss on sale of capital assets (541) 32,310 $ 489,522 $ 6,300 $ 495,822 28,452 301,735 3,501 305,236 859 59,037 777 59,814 (411) (360,557) 12,573 70,945 821 71,766 936 395 (12) 383 Operating (loss) income Interest on long-term debt Net foreign exchange loss (gain) Net (gain) loss on financial instruments toss on extinguishment of debt Other ex[Dense (293,048) 350,458 57,410 1,213 58,623 13,723 673 14,396 98 14,494 lO (13) (3) (3) (1,101) 4,630 3,529 12 3,541 17,012 17,012 {88) 16,924 45 (46) (1) 1 (Loss) income before net income tax (recovery) expense and net loss from equity accounted investee Net income tax (recovery) expense Net loss from equity accounted investee (305,725) 320,202 22,477 1,190 23,667 (9,575) 21,140 11,565 338 11,903 38 (28) 10 1 11 Net(loss) income S (296,188) $ 307,090 $ 10,902 $ 851 $ 11,753 Adjusted EBITDA;^~ $ 133,861 $ (2,153) $ 131,708 $ 2,029 $ 133,737 Adjusted operating income;'e $ 76,030 $ (15,663) $ 60,367 $ 1,221 $ 61,588 Adjusted net incomeIA) $ 37,995 $ (10,642) $ 27,353 $ 799 $ 28,152 Free cash flow~B~ $ 59,281 $ (23,565) $ 35,716 $ 904 $ 36,620 Progressive Waste Solutions j 2012 Annual Report 118 Revenues Gross revenue by service type Three months ended December 31,2012 Three months ended December 31,2011 Canada - Canada - U.S. - Canada - Canada - U.S. - stated In percent- percent- stated in percent- percent- thousands age of age of thousands age of age of of CS revenues U.S. revenues of CS<.) revenues U.S.") revenues Commercial S 77,521 39.3 S 93,191 31.4 S 73,939 38.9 $ 8~,094 31.7 Industrial 36,184 18.3 51,803 17.5 34,641 18.2 46,777 17.2 Residential 40,125 20.3 76,819 25.9 34,616 18.2 68,022 25.0 Transfer and disposal 60,891 30.9 106,916 36.0 59,853 31.5 101,722 37.4 Recycling 7,394 3.7 8,129 2.7 9,068 4.8 9,029 3.3 Other 6,249 3.2 1,169 0.4 4,610 2.4 871 0.3 Gross revenues 228,364 115.7 338,027 113.9 216,727 114.0 312,515 114.9 Intercompany/ (31,028) (15.7) (41,226) (13.9) (26,670) (14.0) (40,893) (14.9) Revenues $ 197,336 100.0 $ 296,801 100.O $ 190,057 100.0 $ 271,622 100.0 Note: ~'>P riot period amounts have been adjusted to conform to the current period's presentation. Revenue growth or decline components - expressed in percentages and excluding FX Three months ended December 31, 2012('~ Three months ended December 31,2011 Canada U.S. Consolidated Canada U.S. Consolidated Core price¢) 1 .S 1.0 1.2 2.1 0.5 1.2 Fuel surcharges O.1 0.6 0.3 0.8 1.0 0.9 Rec¥clin~ and othe~TM (t .6) (0.6) (1.0) (0.2) (0.2) (0.2) Total price growth 1.0 0.5 2.7 1.3 1.9 Volume (2.6) 2.0 0.1 1.5 0.6 Total organic revenue (decline) growth (2.6) 3.0 0.6 4.2 1.3 2.5 Acquisitions 6.4 6.3 6.4 0.3 9.5 5.6 Total revenue c~rowth 3.8 9.3 7.0 4.5 10.8 8.1 ¢~Component percentages for 2012 have been presented on a reportable revenue basis, while component percentages for 2011 have been presented on a gross On a consolidated basis, revenues grew approximately $38,600, which includes an approximately $6,300 contribution from FX. Acquisitions were the primary contributor to consolidated revenue growth quarter-over-quarter. In the quarter, we completed seven acquisitions, five of which closed late in December, and included three in our U.S. south segment, one in Canada and three in the U.S. northeast. These acquisitions were tuck-in acquisitions which we folded into our existing operations. Core pricing growth was also a significant contributor to revenue growth period-over-period. Core pricing improved in every business line on a comparative basis and this pricing growth was strongest in our commercial and residential revenue streams. Consolidated were volumes up slightly on higher collection volumes which were partially offset by lower transfer and landfill volumes. The temporary closure of a transfer station facility in central Canada resulting from our investment in its revitalization was the primary contributor to the decline in transfer station volumes and special waste volumes in the fourth quarter of the current year were particularly slow in western Canada. We attribute lower special waste volumes to delayed project starts in the quarter due to harsh early winter weather conditions. In addition, our Canadian segment saw lower residential volumes due to an overall net loss of residential contracts. On a comparative basis, our U.S. northeast segment realized volume gains in its transfer and disposal Progressive Waste Solutions 12012 Annual Report 119 business lines, which is due in part to Superstorm Sandy ("Sandy") clean-up activity that contributed approximately $8,000 to comparative revenue growth. In total, consolidated pricing gains outpaced volume shortfalls on a comparative basis by approximately $5,200. Recycled commodity pricing was the single largest drag on consolidated revenue growth in the quarter. Recycled commodity pricing declines began in the fourth quarter of the prior year and average pricing in the current quarter remained below the average price realized last year. Higher fuel surcharges also contributed to the comparative growth in revenues resulting from the pass through of higher fuel prices. On a regional basis, revenues in Canada grew approximately C$7,300 over the same quarter last year. Acquisitions and core price growth across all service lines were the primary drivers of revenue growth on a comparative basis. Disposal volumes were down on lower transfer station, landfill and residential volumes. As noted above, the temporary closure of a transfer station in central Canada, lower special waste volumes in western Canada due to harsh early winter weather conditions and residential contract losses are the primary reasons for the lower revenue performance from a volume perspective. While we had some challenges specific to comparative volume gains quarter-to-quarter we view these challenges as primarily temporary in nature. As noted above in the consolidated discussion, recycled commodity pricing was a significant headwind for this segment while higher fuel surcharges contributed modestly to the growth in revenues quarter-over-quarter. In our U.S. south segment we realized revenue growth of approximately $16,300. Acquisitions, core pricing, volume gains and higher fuel surcharges all contributed to higher revenues this quarter compared to last year. While revenue growth was primarily on the back of acquisitions, we recognized core pricing growth in all business lines, except for industrial which was down slightly. A combination of higher commercial and residential pricing spurred revenue growth derived from higher prices. Volume gains represent a mix of industrial and residential volume improvements only slightly offset by lower transfer volumes. Higher fuel surcharges also contributed to the comparative increase in revenues while lower recycled commodity pricing was a drag on this segments revenue growth quarter-over-quarter. Revenues in our U.S. northeast improved approximately $8,900 quarter-to-quarter. Similar to our Canadian and U.S. south segments, acquisitions were the primary contributor to revenue growth on a comparative basis. We are pleased that pricing was up across all business lines, with the exception of landfill. Landfill pricing was down due to the mix of materials received at certain sites. Sandy had a positive impact on volumes this quarter compared to last year, most notably in our transfer station and landfill business lines. A portion of higher fuel costs year-to-year were passed through to customers in this segment and recycled commodity pricing remained a headwind on a comparative basis as well. Please refer to the Outlook section of this MD&A for additional discussion of the economic trends affecting revenues, our strategy and our operations. Operating expenses On a consolidated basis, higher disposal, labour, vehicle repair, maintenance and operating costs all contributed to the increase in operating costs quarter-to-quarter. Acquisitions completed in the current quarter, year, and prior year quarter are the primary reasons for the operating cost increase. Insurance and safety costs also increased quarter-over-quarter, which is due in part to acquisitions, but also from higher workers compensation claims in our U.S. south segment. Higher diesel fuel pricing also contributed to the comparative increase. Higher volumes in our U.S. northeast segment, partly attributable to Sandy, also contributed to the rise in labour and operating costs. On a consolidated basis, operating costs in the current quarter represented 61.6% of reportable revenues, an increase of approximately 180 basis points compared to the same quarter last year. Lower recycled commodity revenues and an increase in costs resulting from acquisition growth due to the mix of business acquired are the primary reasons for the comparative increase. Excluding the impact of lower recycled commodity pricing on the relationship between current period operating costs relative to reportable revenues, this metric improves by approximately 50 basis points to 61.1%. For the same period a year ago, operating costs represented 59.8% of reported revenues. Operating costs in Canada were 56.0% of reported revenues in the quarter, compared to 54.8% in the same quarter last year. Excluding lower recycled commodity pricing on the current year measure, improves this relationship by 70 basis points to 55.3%. Acquisitions were the primary contributors to higher reported operating costs quarter-to-quarter relative to revenues. The principal cost increases were disposal, labour and vehicle repair, maintenance and operating costs. Higher diesel fuel pricing was a component of higher vehicle operating costs. As a percentage of reported revenues, operating expense in our U.S. south segment was 63.0% in the quarter, compared to 60.9% in the same quarter a year ago. Excluding lower recycled commodity pricing improves this relationship by 30 basis points to 62.7% for the current year quarter. Acquisitions are the largest contributor to higher operating costs relative to revenues leading Progressive Waste Solutions 12012 Annual Report 120 to higher disposal, labour and vehicle repair, maintenance and operating costs. Higher diesel fuel pricing and the integration of various acquisitions completed in the quarter also contributed to the comparative increase. As a percentage of revenues, operating expense in our U.S. northeast segment increased by approximately 210 basis points, of which 40 basis points is attributable to the decline in recycled commodity pricing. While we recognize higher waste volumes attributable to Sandy, and by extension higher costs, the impact of acquisitions was more pronounced on the relationship between operating costs and revenues. Disposal, labour and vehicle repair, maintenance and operating costs were all higher on a comparative basis. Higher diesel fuel pricing also contributed to the comparative increase. SG&A On a consolidated basis, SG&A expense increased quarter-to-quarter. Stock option recoveries recorded in the fourth quarter of last year totaled approximately 52,700 compared to a current quarter expense of approximately $700. Lower current quarter recoveries from stock options were offset by lower current quarter charges for executive management succession costs. In the fourth quarter last year, we announced the succession of our Chief Executive Officer ('CEO'9 and recorded a charge of approximately $9,900. We did not incur a like charge in the fourth quarter this year. Higher current period SG&A expense is principally due to acquisitions, approximately $S,000. The balance of the increase is due to one-time retention awards for certain front line employees servicing residential contracts in Canada, severance expenses, including severance costs incurred in respect of certain acquisitions and higher legal and legal settlement costs, which collectively totaled $2,100. In the current quarter, we benefited from lower LTIP expense resulting from a change to our plan for certain participants. Current year SG&A expense also benefited from a reduction in bonus accruals as a result of the Company's current year performance. These benefits were offset by net new hires and period-over-period salary increases. From a segment perspective, higher SG&A expense in Canada is attributable to acquisitions, retention awards and severance, partially offset by lower bonus accruals resulting from the Company's current year performance. SG&A expense in our U.S. south segment also benefited from lower bonus accruals quarter-over-quarter, but higher expenses attributable to acquisitions and organic growth outpaced this benefit. Our U.S. northeast segment realized a similar change, where lower bonus accruals were offset by additional costs from acquisition related growth. From a corporate perspective, corporate SG&A expense declined comparatively. As outlined above, costs incurred for executive and senior management succession were not repeated at similar levels seen in the fourth quarter of last year. Lower succession costs were partially offset by higher current period stock option expenses, net new hires, higher legal and legal settlement costs and general salary increases, partially offset by lower LTIP and bonus expenses. As a percentage of revenues, adjusted SG&A expense is 11.5% versus 11.0% last year. Much of the deterioration is due to the impact on revenues of a decline in recycled commodity pricing, coupled with acquisitions, net new hires and salary increases. Amortization Intangible, capital and landfill asset amortization were each higher than the same quarter a year ago. The increase in intangible and capital amorfization is due in large part to acquisitions. Higher landfill asset amortization is due to lower comparative recoveries resulting from cash flow revisions in estimates. In the fourth quarter of last year, our Bethlehem and Seneca Meadows landfills both recorded substantial cash flow revisions which resulted in a reduction in landfill amortization expense. Current quarter cash flow revisions in estimates did not yield a similar recovery amount. Interest on long-term debt in the fourth quarter of 2012 we entered into a new consolidated borrowing facility. While most of our drawings on the consolidated facility are from revolving advances, we also drew $500,000 under the term B facility. Drawings on the term B facility bear interest at a higher rate than interest borne on revolving advances. Additionally, acquisitions completed in the current year increased our overall borrowing levels quarter-to-quarter and by extension our interest expense on a comparative basis. Explanations for the quarterly change in restructuring expenses, goodwill impairment, net gain or loss on sale of capital assets, net foreign exchange gain or loss, net gain or loss on financial instruments, loss on extinguishment of debt, other expenses, net income tax expense or recovery and net loss from equity accounted investee is either consistent with that outlined in the Review of Operations - For the year ended December 31, 2012 section of this MD&A or does not warrant additional discussion. Progressive Waste Solutions 12012 Annual Report 121 Other Performance Measures - For the year ended December 31, 2012 (all amounts are in thousands of U.S. dollars, unless otherwise stated) Free cash flow(B~ Purpose and objective The purpose of presenting this non-GAAP measure is to provide investors and analysts with an additional measure of our value and liquidity, We use this nomGAAP measure to assess our relative performance to our peers and to assess the availability of funds for growth investment, share repurchases, debt repayment or dividend increase5, Free cash flow;B~- cash flow approach Year ended December 31 2012 m 2011 Chancre Cash generated from operatinc~ activities $ 336,761 $ 395,706 $ (58,94S} Operating and Investing Stock option recovery (11 O) (6,808) 6,698 Acquisition and related costs 2,507 1,880 627 Payments made to executive and senior management on succession 3,991 9,928 (5,937) Restructuring expenses 1,609 (1,609) Other expenses 105 872 (767) Changes in non-cash working capital items 68,657 28,664 39,993 Capital and landfill asset purchases (246,878) (171,013) (75,865) Proceeds from the sale of capital assets 2,761 5,925 (3,164) Financing Loss on extinguishment of debt (net of non-cash portion) 5,198 5,198 Purchase of restricted shares (541) (4,226) 3,685 Net realized foreign exchange loss (c~ain) 9 (73) 82 Free cash flow(B) $ 172,460 $ 262,464 $ (~0,004) Note: ~'~Capital and landfill asset purchases include infrastructure expenditures of approximately $26,10O for the year ended December 31,2012. Progressive Waste Solutions 12012 Annual Report J 22 Free cash flow(B) - adjusted EBITDA(A) approach We typically calculate free cash flowIBI using an operations approach which is a better reflection of how we manage the business and free cash flowIBI. Year ended December 31 2012 I'~ 2011 Chancre Ad)usted EBITDAI^l $ 519,659 $ 534,536 S (14J377) Purchase of restricted shares (541) (4,226) 3,685 Capital and landfill asset purchases (246,878) (171,013) (75,865) Proceeds from the sale of capital assets 2,761 5,925 (3,164) Landfill closure and post- closure expenditures (6,737) (4,345) (2,392) Landfill closure and post- closure cost accretion expense 5,240 S,071 169 Interest on long-term debt (57,428) (62,086) 4,658 Non-cash interest expense 5,665 6,035 (370) Current income tax expense {49,281 ) (47,433) (1,848) Free cash flow~B) $ 172,460 $ 262,464 $ (90,004) Note: nCapital and landfill asset purchases include infrastructure expenditures of approximately $26,100 for the year ended December 31, 2012. Year ended Free cash flow~B) was lower on a comparative basis. Higher capital and landfill asset purchases are the single largest contributor to the decline. In 2012, capital and landfill purchases totaled approximately $246,900, representing an increase of approximately $75,900 over last year. Details supporting this change are outlined below in the Capital and landfill purchases section of this MD&A. The next largest contributor to the decline in free cash flowI~l is lower adjusted EBITDA~1. Lower adjusted EBITDA~1 reflects lower recycled commodity pricing and a weaker comparative performance for our U.S. northeast segment, partially offset by contributions from acquisitions and, to a lesser extent, net organic growth. The balance of the change is due primarily to lower restricted shares purchases, interest expense and proceeds from sales of capital assets and higher landfill closure and post-closure expenditures. Restricted shares purchased in the prior year were incurred to retain and incent certain management due in large part to the CEO's succession in 2011. Details of the decline in interest on long-term debt can be found in the Review of Operations section of this MD&A. Proceeds from the sale of capital assets declined year-over-year, due to the sale of redundant infrastructure assets in the prior year. Finally, higher landfill closure and post-closure expenditures are due to in part to spending at our Bethlehem site, but most notably at our JED landfill, which accounts for the bulk of the increased spending year-over-year. Capital and landfill purchases Capital and landfill purchases characterized as replacement and growth expenditures are as follows: Year ended December 31 2012 2011 Chan~]e Replacement $ 154,928 $ 126,808 $ 28,120 Growth 91,950 44,205 47,745 Total $ 246,878 $ 171,013 $ 75,865 Capital and landfill purchases - replacement Capital and landfill purchases characterized as ~replacement" represent cash outlays to sustain current cash flows and are funded from free cash flow~. Replacement expenditures include the replacement of existing capital assets and all construction spending at our landfills. Progressive Waste Solutions 12012 Annual Report 123 Year ended For our Canadian segment, total replacement capital and landfill spending was higher by approximately $8,800 in the current year compared to last year. Higher spending in the current year is due in large part to infrastructure spending in western Canada for a material recovery facility. Higher infrastructure spending was partially offset by tower landfill construction costs which is due to the timing of spend. Lower current year spending was realized across all of our significant sites, including Lachenaie, Ridge, Winnipeg and Coronation. Replacement expenditures in our U.S. business increased approximately $19,300 year-over-year. The increase is due to construction of a leachate facility at our Seneca Meadows landfill and higher cell development activities at our Bethlehem landfill and various sites in our U.S. south segment. In addition, the timing of collection and landfill equipment purchases also resulted in an increase in replacement expenditures year-to-year as well. Capital and landfill purchases - growth Capital and landfill purchases characterized as "growth" represent cash outlays to generate new or future cash flows and are generally funded from free cash flow~B~. Growth expenditures include capital assets, including facilities (new or expansion), to support new contract wins and organic business growth. Year ended In total, growth expenditures were up year-over-year. Higher growth spending in our Canadian segment contributed approximately $25,700 to the increase. The increase is due to a combination of items, including: a residential contract win in western Canada requiring the purchase of compressed natural gas vehicles, approximately $12,600, a transfer station revitalization in central Canada, approximately $3,900 and an internal infrastructure investment in eastern Canada, approximately $7,700. Growth spending in our U.S. segment also increased over the prior year as well, approximately $22,100. The increase is due to growth expenditures for landfill infrastructure spending at our Bethlehem landfill, approximately $3,200 and infrastructure spending and new residential contract wins in our U.S. south segment, approximately $18,300. Readers are reminded that revenue, adjusted EBITDA~^~, and cash flow contributions realized from growth and internal infrastructure expenditures will materialize over future periods. Progressive Waste Solutions 12012 Annual Report 124 Dividends 2013 Our expected dividend record and payment dates, and payment amounts per share, are as follows: Expected quarterly dividend Dividend amounts per share - stated Expected record date ExDected payment date in CS March 28, 2013 April 15, 2013 $ 0.14 June 28, 2013 July 1 $, 2013 0.14 September 30, 2013 October 15, 2013 0.14 December 31,2013 January 15, 2014 0.14 Total $ 0.56 2012 Our dividend record and payment dates, and payment amounts per share, were as follows: Actual quarterly dividend Actualrecord date Actual payment date Dividend amounts per share ~ stated in C$ March 30, 2012 April 16, 2012 $ 0.14 June 29, 2012 July 16, 2012 0.14 September 28, 2012 October 15, 2012 0.14 December 31,2012 January 15, 2013 0.14 Total $ 0.56 We expect to fund ali of our 2013 dividend payments from free cash flow~"~ generated by our Canadian business. Funding all dividends from Canadian cash flows eliminates our foreign currency exchange exposure since the dividends are denominated in Canadian dollars. Dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada). Progressive Waste Solutions 12012 Annual Report I 25 Selected Annual Information (all amounts are in thousands of U.S. dollars, unless otherwise stated) Yearended December31 2012 2011 2010 Revenues Net income (loss) Net income (loss) per share, basic Net income (loss) per share, diluted Total assets Total long-term liabilities Dividends declared, per weighted average share 1,896,741 $ 1,840,096 $ 1,429,765 94,357 $ (196,136) $ 82,169 0.81 S (1.63) $ 0.77 0.81 $ (1.63) S 0.76 3,475,561 S 3,077,604 S 3,390,487 1,895,612 $ ~,487,34S S 1,441,163 0.56 $ 0.$0 $ 0.50 Revenues 2012-2011 The increase in revenues is detailed in the Review of Operations - Revenues section of this MD&A. 2011-2010 Revenues in Canada grew approximately C$146,200. Growth was due in large part to pricing strength we enjoyed across all service lines. With the exception of our industrial service line, all service lines in Canada posted comparative revenue growth from volume improvements. The decline in industrial collection volumes reflected softer economic conditions in certain markets. Acquisitions and rising diesel fuel prices, which contributed to the increase in comparable fuel surcharges recorded to revenues, also contributed to revenue growth year-over-year. On a comparable basis, U.S. south segment gross revenues increased approximately $221,O00. Acquisitions were a large component of this segment's revenue growth. We also realized stronger pricing across all service lines and with the exception of a residential contract loss, we also enjoyed comparative volume growth in all service lines as well. Higher diesel fuel prices passed through to our customers in the form of fuel surcharges also contributed to revenue growth year-over-year. Revenues increased approximately S15,900 in our U.S. northeast segment with acquisitions representing the primary reason for the increase. Overall, pricing and volumes declined in this segment, excluding our landfill and recycling services lines which realized price and volume growth. Economic softness in this segment, heightened competition and the closure of a recycling collection facility for the better part of 2011, were the primary reasons for this segment's softer performance across all other service lines. Higher fuel surcharges contributed to the growth in revenues comparatively, but the pass through of fuel surcharges was insufficient to cover the rise in diesel fuel costs. Net income Included in net income are some or all of the following: restructuring expenses, goodwill impairment, amortization, net gain or loss on sale of capital assets, interest on long-term debt, net foreign exchange gain or loss, net gain or loss on financial instruments, loss on extinguishment of debt, other expense, net income tax expense or recovery and net loss from equity accounted for investee. 2012-2011 The increase in net income is detailed in the Review of Operations - For the year ended December 31,2012 section of this M D&A. 2011-2010 In 2011, we recognized a goodwill impairment charge and a succession charge that caused us to recognize a significant net loss for the year. Excluding the impact of impaired goodwill and the CEO succession charge, operating income was higher than the previous year. Higher operating income was driven principally from acquisitions, organic growth and lower restructuring costs. Interest on long-term debt benefited from Canadian and U.S. facility re-pricing completed in the third quarter of 2011, partially offset by higher debt levels. Higher amortization and net income tax expense was due in large part to acquisitions. Totalassets 2012-2011 Totalassetsincreased by approximately $398,000. The increase is comprised ofan approximately $258,900 increase in total U.S. assets and anincrease ofapproximately $139,100in totalCanadian assets. Progressive Waste Solutions 12012 Annual Report 126 The increase in total U.S. assets is attributable to an increase in goodwill, capital and intangible assets, accounts receivable and cash and cash equivalents, approximately $118,000, $69,300, $28,900, $17,400 and $12,300, respectively. The increase in goodwill is attributable to acquisitions completed in the year. An acquisition completed in our U.S. south segment and two acquisitions completed in our U.S. northeast segment in the last half of 2012, combined, contributed approximately $94,700 of the year-to- year increase in goodwill. The increase in capital assets is due to current year additions and acquired capital exceeding amortization. Current year additions are addressed in greater detail in the Other Performance Measures section of this MD&A. Capital assets acquired in the current year, are due in large part to the acquisitions referenced above, and combined represent approximately $50,800 of the approximately $62,300 increase in capital assets attributable to acquisitions. The increase in intangible assets is similar to capital, whereby acquisitions outpaced amortization. Intangible a~sets recognized on acquisition totaled approximately $67,100 compared to the approximately $38,200 of current year amortization. The increase in accounts receivable is largely attributable to acquisitions completed in the year, which contributed approximately $9,600 to the year-over- year increase. The balance of the increase in accounts receivable is due to timing and a stronger comparative operating performance in the fourth quarter of 2012 versus 2011. Cash and cash equivalents also increased comparatively, and the increase is simply a function of timing. The increase in total Canadian segment assets is due in part to FX, approximately $28,200. Our Canadian segment also realized increases in capital assets, goodwill and accounts receivable, approximately $82,100, $36,700 and $9,500, respectively. The increase in capital assets is a function of current year additions, acquired capital, FX and an increase in working capital outpacing amortization. Current year additions are addressed in greater detail in the Other Performance Measures section of this MD&A. Capital assets acquired by way of acquisition represent approximately $28,100 of the year-to-year increase, while the impact of working capital changes and FX account for approximately $17,300 and $7,200 of the increase, respectively. Acquisitions completed in the central and eastern portions of Canada during the year were the primary contributors to the increase in capital assets acquired. The increase in working capital represents capital assets acquired but which remain unpaid at the end of the year. The increase in goodwill is entirely a function of acquisitions completed in the year and the increase in accounts receivable is attributable to acquisitions as well. 2011-2010 Total assets decreased approximately ($312,900). The decrease was comprised of an approximately ($264,100) decrease in total U.S. assets and a decline of approximately ($48,800) in total Canadian assets. The decrease in total U.S. assets was attributable to a decrease in goodwill, partially offset by an increase in capital assets and accounts receivable, approximately ($301,200), $27,200 and $8,100, respectively. The decrease in goodwill was attributable to the goodwill impairment charge recognized in 2011, net of acquisitions. Accounts receivable also increased as a result of acquired receivables, approximately $5,900, with the balance of the change simply due to the timing of receipt. The increase in capital assets was also due in large part to acquisitions, partially offset by amortization outpacing purchases. The decline in total Canadian segment assets was due in part to FX, approximately ($25,900). Our Canadian segment also saw declines in both intangible assets and landfill assets, approximately ($14,700) and ($10,200), respectively. The decline in intangible assets was due to normal course amortization, only slightly offset by acquired intangibles in the year. Similarly, normal course landfill amortization outpaced additions, which accounts for the decline in landfill assets on a comparative basis. Total long-term liabilities 2012-2011 Total long-term liabilities increased approximately $408,300. The increase is due in large part to higher long-term debt borrowings for our U.S. operations due to acquisitions we completed in 2012. Our U.S. segment also financed over half of our share repurchases in the current year. Total liabilities in our Canadian business also increased. The primary reason for the rise in total Canadian liabilities is also due to higher long-term debt levels. Higher long-term debt attributable to our Canada operations is also due to acquisitions and share repurchases in the current year. The balance of the increase is due to deferred tax liabilities in our U.S segment. Timing differences between the carrying value of capital assets relative to their tax values represents approximately $25,600 of the increase, of which approximately $4,900 is attributable to acquisitions completed in the year. A significant portion of the remaining increase in deferred tax liabilities is due to our U.S. business taking advantage of bonus depreciation in the current year. 2011-2010 Total long-term liabilities increased approximately $40,600, of which approximately $39,800 was attributable to our U.S. business. The increase in our U.S. business was due in large part to higher long-term debt borrowings, which increased approximately $38,300. The increase in long-term debt was due to acquisitions we completed in 2011, coupled with a portion of the share repurchases financed from U.S. sources. Total liabilities in our Canadian business also increased, but only marginally. However, excluding the impact of FX, approximately ($13,600), total Canadian liabilities increased approximately $14,400. The primary reason for the rise in total Canadian liabilities, excluding FX, was due to long-term debt. Long-term debt increased approximately Progressive Waste Solutions 12Ol 2 Annual Report 127 $24,100 in Canada, with the bulk of the increase attributable to share repurchases occurring in the year. An approximately ($7,100) decline in deferred income tax liabilities in Canada partially offset the increase in long-term debt borrowings. The decline in deferred income tax liabilities was due primarily to a decline in the carrying value of intangible assets in excess of its tax basis. Summary of Quarterly Results 2012 Q4 Q3 Q2 Q1 Total Canada $ 199,021 $ 205,696 $ 198,179 $ 173,918 $ 776,814 U.S. south 201,725 195,678 195,521 187,407 780,331 U.S. northeast 95,076 85,835 81,735 76,950 339,596 Totat revenues $ 495J22 $ 487,209 $ 475,435 $ 438,275 $ 1,806,741 Net income $ 11,753 $ 32,158 $ 28,377 $ 22,069 $ 94,357 Net income per weighted average share, basic $ O.10 $ 0.28 $ 0.24 $ O.19 $ 0.81 Net income per weighted average share, diluted $ 0.10 $ 0.28 $ 0.24 $ O.19 $ 0.81 Adjusted net income<A) $ 28,152 $ 32,122 $ 28,847 $ 24,066 $ 113,187 })er weighted average share, basic $ 0.24 $ 0.28 $ 0.25 $ 0.20 $ 0.97 per weighted average share, diluted $ 0.24 $ 0.28 $ 0.25 $ 0.20 $ 0.97 2011 Q4 Q3 Q2 Q1 Total Revenues Canada $ 188,S90 $ 203,350 $ 196,734 $ 171,920 $ 757,594 U.S. south 18S,426 190,537 179,177 168,175 723,315 U.S. northeast 86,196 96,635 93,601 82,755 359,187 Total revenues $ 457,212 $ 490,522' $ 469,512 $ 422,850 $ 1,840,096 Net(loss) income $ (296,188) $ 40,347 $ 36,607 $ 23,098 $ (196,136) Net (loss) income per weighted average share, basic S (2.48) $ 0.33 $ 0.30 $ 0.19 $ (1.63) Net (loss) income per weighted average share, diluted $ (2.48) $ 0.33 S 0.30 S 0.19 $ (1.63) Adjusted net income(^) $ 37,995 $ 35,105 $ 33,674 S 28,229 $ 135,003 Adjusted net income(~ per weighted average sha~, basic S 0.32 $ 0.29 $ 0.28 S 0.23 $ 1.12 Adjusted net income(^> per weighted average share, diluted $ 0.32 $ 0.29 $ 0.28 $ 0.23 $ 1.12 2010 Q4 Q3 Q2 Q1 Total Revenues Canada $ 181,584 $ 184,765 $ 117,697 $ 100,09S S 584,141 U.S. south 158,760 162,342 93,406 87,800 502,308 U.S. northeast 89,535 89,155 88,479 76,147 343,316 Total revenues $ 429,879 $ 436,262 $ 299,582 $ 264,042 $ 1,429,765 Net income $ 21,683 $ 23,941 $ 19,835 $ 16,710 $ 82,169 Net income Per weighted average share, basic $ 0.18 $ 0.20 $ 0.21 $ 0.18 $ 0.77 Net income Per weighted average share, diluted $ 0.18 S 0.20 $ 0.21 $ 0.18 $ 0.76 Adjusted net incomeI^) $ 27,245 $ 32,529 $ 23,672 $ 18,989 $ 102,43S Adjusted net incomeI^) per weighted average share, basic $ 0.23 $ 0.27 $ 0.25 $ 0.20 S 0.96 Adjusted net income~^) per weighted avera~le share, diluted $ 0.22 $ 0.27 $ 0.25 $ 0.20 $ 0.95 Progressive Waste Solutions 12012 Annual Report I 28 Revenues Canadian segment revenues expressed in thousands of CS Q4 Q3 Q2 Q1 Total 2012 $ 107,336$ 204,767$ 200,087$ 174t130$ 776,320 2011 $ 190,057 $ 199,290 $ 190,596 $ 169,513 $ 749,456 2010 $ 184,734 $ 193,216 $ 121,066 $ 104,191 $ 603,207 2012 less 2011 revenues $ 7,279 $ 5,477 $ 9,491 $ 4,617 $ 26,864 2011 less 2010 revenues $ $,323 $ 6,074 $ 69,530 $ 65,322 $ 146,249 2012-2011 Revenues grew in each quarter of 2012 compared to each comparative period in 2011. Acquisitions, coupled with core pricing and fuel surcharge improvements, are the primary reasons for the quarterly growth in each period. Volume improvements also contributed to revenue growth in each of the first two quarters of the year, but lower third quarter industrial, transfer station and commercial volumes collectively contributed to a third quarter decline in volumes. Lower third quarter industrial volumes were the result of economic softness in central Canada, while lower transfer station volumes were largely attributable to the temporary closure of a transfer station in central Canada slated for infrastructure investment and revitalization. In the fourth quarter of 2012, we also experienced a decline in volumes. Lower volumes are due in large part to lower residential volumes due to an overall net loss of residential contracts in Canada. The temporary closure of a transfer station facility in central Canada and particularly slow special waste volumes in the fourth quarter of the current year in western Canada were all contributors to the volume decline. We attribute lower special waste volumes to delayed project starts in the quarter due to harsh weather conditions. The decline in recycled commodity pricing that began in the fourth quarter of 2011 was a headwind to revenue growth in every current year quarter on a comparative basis. 2011-2010 Our acquisition of WSI was the primary contributor to first and second quarter revenue growth in 2011 and third and fourth quarter revenue growth in 2010. The balance of the change was due to organic growth and "tuck-in" acquisitions. Excluding WSI's contribution to first and second quarter 2011 and third and fourth quarter 2010 revenue growth, comparative improvements were principally attributable to stronger overall pricing, volume improvements and contributions from tuck-in acquisitions. Excluding the fourth quarter of 2011, we also enjoyed stronger comparative recycled commodity pricing in each comparative quarter. Recycled commodity pricing was strong for most of the year, but dropped off in the fourth quarter of 2011. Revenues for the first quarter of 2011 were softer than anticipated due to inclement weather which affected landfill volumes and were lower than expected in the second quarter of 2011 due, once again, to weather and a delay in the expected seasonal uptick. In the third and fourth quarters of 2011, revenues outpaced the marks set in each comparative period in the previous year, largely on the back of stronger pricing. It should be noted, that 2010 revenues include revenues from assets and operations divested of in accordance with the Canadian Competition Bureau consent agreement. The rising price of diesel fuel also contributed to the increase in Canadian segment revenues in each quarter of 2011 comparatively. While we have made comparative improvements in every quarter, we caution readers that the economic climate continues to be unstable, and this instability can impact certain services we offer and the revenues we generate from them. Economic disruptions can have a significant impact on our ability to realize revenue growth in future periods and these disruptions are applicable to all of our segments. U.S. south segment Q4 Q3 Q2 Q1 Total 2012 $ 201,725$ 195,678$ 195,521$ 187,407$ 780,331 2011 $ 185,426 S 190,537 $ 179,177 $ 16~17S $ 723,315 2010 $ 158,760 $ 162,342 $ 93,406 $ 87,800 $ 502,308 2012 less 2011 revenues $ 16,299 $ 5,141 $ 16,344 $ 19,232 $ 57,816 2011 less 2010 revenues $ 26,666 $ 28,195 $ 85,771 $ 80,375 $ 221,007 2012-2011 Comparative revenues increased in each 2012 quarter spurred on primarily by acquisitions. Revenue improvements also came from overall core pricing improvements across all service lines and from fuel surcharges. Our U.S. south segment realized a decline in revenues attributable to volume contributions in each of the first two quarters in 2012 due to lower special waste volumes, coupled with the loss of a residential collection and disposal contract. In the third quarter of the year, residential Progressive Waste Solutions 12012 Annual Report 129 contract wins helped support an increase in revenues from volume improvements and fourth quarter volumes were higher across all service lines. Lower recycled commodity pricing was the only persistent headwind for all of 2012 on a quarterly basis. 2011-2010 The acquisition of WSI was the primary contributor to the increase in comparative first and second quarter revenue growth in 2011 and third and fourth quarter revenue growth in 2010. Tuck-in acquisitions also contributed to the increase, which included Fred Weber. On balance, U.S. south segment revenues generally delivered a stronger performance in each comparable quarter. In each 2011 quarter, comparative revenue gains were attributable to stronger overall net pricing, net volume gains, and contributions from other less notable tuck-in acquisitions. We experienced some localized.softness in the fourth quarter of 2011 resulting from lower soil volumes received at certain landfills in our Florida operations, but overall net volumes increased. Rising fuel prices have also contributed to this segment's revenue growth on a comparative basis. U.S. northeast segment Q4 Q3 Q2 Q1 Total 2012 $ 95,076 $ 85,835 $ 81,735 $ 76,950 $ 339,596 2011 S 86,196 S 96,635 S 93,601 $ 82,755 $ 359,187 2010 $ 89,535 $ 89,155 $ 88,479 $ 76,147 $ 343,316 2012 less 2011 revenues $ 8,880 $ (10,800) $ (11,866) $ (5,805) $ (19,591) 2011 less 2010 revenues $ (3,339) $ 7,480 S 5,122 $ 6,608 $ 15,871 2012-2011 Revenues in our U.S. northeast region declined between the first, second and third quarters of 2012 versus the same periods a year ago, while fourth quarter revenues exceeded the mark set in the prior year. Acquisitions were the primary contributor to the fourth quarter revenue improvement on a comparative basis. Pricing in the fourth quarter was up across all business lines, with the exception of pricing at our landfills due to the mix of materials received at certain sites. Sandy had a positive impact on volumes in the fourth quarter compared to last year, most notably in our transfer station and landfill business lines. For the preceding three quarters, our U.S. northeast segment realized volume unit gains from its collection service lines; however these gains were muted by lower transfer station and landfill volumes, including special waste volumes: Lower comparative pricing also contributed to the comparative declines, principally attributable to lower pricing for recycled commodities. This segment continues to be affected by economic stagnation, which contributed to lower available waste volumes, and excess landfill capacity in a price sensitive environment. Marginally higher fuel costs were passed through to customers in all four quarters and lower recycled commodity pricing was a headwind in all four quarters of the current year as well. 2011-2010 Our U.S. northeast segment delivered comparative quarterly increases in the first three quarters of 2011. For most of 2011, recycled commodity pricing demonstrated continued resilience and we also enjoyed revenue growth from companies we acquired. Overall, our first and second quarters of 2011 benefited from higher overall net pricing, however volume improvements were a headwind to this segment's growth in these periods. The loss of a residential contract, increasing competitive pressures and economic weakness in this segment, were the primary contributors to the decline in comparative 2011 volumes in each of the first and second quarters. In the third quarter of 2011, acquisitions bolstered revenues on a comparative basis and, in total, volumes rebounded to support revenue growth as well. Pricing was a challenge in the third quarter of 2011. We attributed weaker third quarter pricing to a sluggish economy and stronger competition for a customer base that is stagnate. As we entered into the fourth quarter, revenues were supported by acquisitions, but pricing continued to be a challenge and the decline in recycled commodity pricing was a hindrance to growth. We simply did not see the recovery we had anticipated at the start of 2011. In the fourth quarter of the year, the pass through of fuel surcharges also caused constraints on revenue growth on a comparative basis. Net income or loss Q4 Q3 Q2 Q! Total 2012 $ 11,753 $ 32,158 $ 28,377 $ 22,069 $ 94,357 2011 $ (296,188) $ 40,347 $ 36,607 $ 23,098 S (196,136) 2010 S 21,683 S 23,941 $ 19,835 $ 16,710 $ 82,169 2012 less 2011 net (loss) Income 2011 less 2010 net (loss) income $ 307,941 $ (8,199) $ (8,230) $ ll,029) $ 290,493 $ (317,871) $ 16,406 S 16,772 S 6,388 $ (278,305) Progressive Waste Solutions 12012 Annual Report 130 Net income generally follows the rise and fall in revenues resulting from the seasonal nature of our business. Net income is also impacted by changes in transaction and related costs, fair value movements in stock options, restricted share expense, payments made to executive and senior management on succession, restructuring expenses, goodwill impairment, amortization, net gain or loss on sale of capital assets, interest on long-term debt, foreign exchange gains or losses, gains or losses on financial instruments, loss in extinguishment of debt and other non-operating expenses which are not tied to the seasonal nature of our business and which fluctuate with other non-operating variables. Net income has also been impacted by net income tax expense or recovery and net loss from equity accounted investee. 2012-2011 Net income for the first three quarters of 2012 was lower than net income posted in the first three quarters of 2011. While we benefited from lower interest expense and income tax in each of the first three quarters this year, weaker comparative recycled commodity pricing and the performance of our U.S. northeast segment overshadowed these benefits. On a positive note, we did recognize stronger comparative performances in our Canadian and U.S. south segments and contributions from acquisitions. In the fourth quarter of 2012, net income was higher than the amount posted in 201 t. The goodwill impairment charge recorded in the fourth quarter of 2011 is the primary reason for the current period improvement. 2011-2010 When looking at the fourth quarter of 2011 relative to the fourth quarter of 2010, we recognized a goodwill impairment charge that resulted in us posting a significant net loss in 2001 compared to 2010. Excluding the impact of impaired goodwill, operating income was higher on account of acquisitions, organic growth, lower restructuring costs and lower amortization expense. Overall, we grew both price and volume, and acquisitions also contributed to the period-over-period improvement, excluding goodwill impairment. Restructuring costs in the fourth quarter of the prior year were incurred in connection with the integration of WSI's business with our own. For the fourth quarter of 2011, these costs declined due to the curtailment of integration activities. Amortization declined comparatively due to engineering changes for some of our landfills. These changes led to a decline in the overall accrued obligation coupled with a decline in amortization expense in the fourth quarter of2011. Interest on long-term debt benefited from Canadian and U.S. facility re-pricing completed in the third quarter of 2011, partially offset by higher debt levels resulting from acquisitions and share repurchases. Higher net income tax expense was also a drag on net income comparatively, due largely to higher income subject to tax. Net income for the first, second and third quarters of 2011, was higher than net income in each comparable period. Higher comparative operating income was the primary contributor to higher net income, which was driven principally by the acquisition of WSl, "tuck-in" acquisitions and organic growth, and was partially offset by higher restructuring and other expenses. Our assumption or repayment of WSI's outstanding debt on closing was the primary contributor to higher first and second quarter 2011 and higher third and fourth quarter 2010 interest expense, which partially offset our stronger revenue and operating income performance in these periods. Amendments to pricing on our Canadian and U.S. facilities was a contributing factor to the increase in third quarter 2011 net income relative to 2010. Higher comparative income tax expense, resulting from stronger comparative operating results and the third quarter 2010 acquisition of WSI, was a partial offset to the stronger net income performance in each comparable period in 2011. The variability of net income quarter-to-quarter is due in large part to the fluctuation of non-operating variables which are largely outside of our control, and in certain circumstances are the result of the accounting treatment we have elected to take. Additionally, non-recurring or non-operational items have also impacted net income performance quarter-to-quarter. Net income per weighted average share, basic and diluted 2012-2011 Net income per weighted average share was higher in the fourth quarter of 2012 compared to the same quarter a year ago. The write-off of goodwill in the fourth quarter of 2011 was the most significant contributor to the prior period loss per share and by extension improvement in the current year measure. For the second and third quarters of 2012, net income per weighted average share was lower than the comparative periods even though our weighted average shares outstanding continued to decline as a result of share repurchases in both the current and prior year periods. The weak performance of our U.S. northeast segment, coupled with tagging recycled commodity pricing, which impacted all segments, overshadowed organic and acquisition growth. Net income per weighted average share in the first quarter of 2012 was on par with the same measure in the year ago period. 2011-2010 Net income per weighted average share in the first, second and third quarters of 2011, was higher or equal to the comparable quarter in 2010. The principal reasons for this performance is due to organic growth, the impact of FX, tuckqn acquisitions and our third quarter acquisition of WSI and its related impact on the last two quarters of 2010 and first two quarters of 2011. Progressive Waste Solutions t 2Ol 2 Annual Report 131 Recognizing a goodwill impairment loss on goodwill previously recorded in our U.S. northeast segment resulted in us recognizing a significant net loss per weighted average share in the fourth quarter of 2011. Excluding the impact of impaired goodwill, our net income per share was higher than the fourth quarter of 2010, the reasons for which are outlined above in the discussion of net income or loss. Financial Condition (all amounts are in thousands of shares and U.S. dollars, excluding per share or option amounts, unless othep~/ise stated) Selected Consolidated Balance Sheet Information Canada- U.S. - Consolidated - Canada - U.S. - Consolidated - December December December December 31, December 31, December 31, 31,2012I°l 31,2012el 31,2012 2011 (') 2011 (') 2011 Accounts receivable Intangibles Goodwill Landfill development assets Capital assets Landfill assets Working capital position (deficit) - (currant assets less current liabilities) $ 123,115 $ 115~43 $ 238,958 $ 113,636 $ 98,463 $ 212,099 $ 100,010 $ 187,837 $ 287,847 $ 98,796 $ 158,935 $ 257,731 $ 409,296 $ 519,818 $ 929,114 $ 372,596 $ 401,813 $ 774,409 $ 11,843 $ 7,872 $ 19,715 S 8,669 $ 7,200 $ 15,869 $ 383,066 $ 544,452 $ 927,518 $ 300,928 $ 475,130 $ 776,058 $ 207,485 $ 756,235 S 963,720 $ 221,6~0 $ 737,132 $ 958,792 $ 12,448 $ (6,739) $ 5,709 $ (1,397) $ (35,157) S (36,554) Note: ~'~lncludes certain corporate assets and liabilities, when applicable. Accounts receivable - December 31, 2012 versus December 31,2011 Change - Consolidated $ 26,859 Change - Canada $ 9~179 Change - U.S. $ 17,380 The increase in accounts receivable is largely attributable to acquisitions which we completed in the year. For our U.S. segment, approximately $9,600 of the increase is attributable to acquisitions and for Canada the amount is approximately $8,600. The balance of the increase is due to timing, a stronger comparative operating performance in the fourth quarter of 2012 versus 2011, especially in our U.S. northeast segment, and FX which increased current year accounts receivable by approximately $2,700. Intan~libles - December 31, 2012 versus December 31,2011 Change - Consolidated $ 30,116 Change - Canada $ 1,214 Change - U.S. $ 28,902 In total, intangibles increased year-to-year and the increase is attributable to intangible asset additions, approximately $80,800, outpacing normal course amortization, approximately $53,600. The increase in intangible assets is principally due to our U.S. segment which added $67,100 of value to intangible assets from acquisitions completed in the year partially offset by approximately $38,200 of amortization. Approximately $30,300 of current year additions, for our U.S. operations, is due to an acquisition completed in our U.S. south segment. In Canada, amortization of approximately $15,400 exceeded current year additions, approximately $13,700. The balance of change is attributable to FX. Goodwill - December 31, 2012 versus December 31,2011 Change-Consolidated $ 154,705 Change Canada $ 36,700 Change-U.S. $ 118,005 The increase in goodwill is attributable to acquisitions completed in the year. An acquisition completed in our U.S. south segment and two acquisitions completed in our U.S. northeast segment in the last half of 2012, combined, contributed approximately $94,700 to the year-to-year increase in goodwill. In Canada, the increase in goodwill was fueled largely by acquisitions we Progressive Waste Solutions 12012 Annual Report 132 completed in the central portion of Canada and a single acquisition we completed in eastern Canada. FX of approximately $8,500 also contributed to the increase year-over-year. Landfill development assets - December 31,2012 versus December 31,2011 Change-Consolidated $ 3,846 Change-Canada $ 3,174 Change- U.S. $ 672 Ongoing landfill development initiatives in Canada net of amounts reclassified to capital and landfill assets is the primary reason for the increase. Landfill development assets in Canada are principally comprised of amounts incurred to develop a replacement site for our Calgary landfill. In March 2012, we received a modification to our operating permit for the Ridge landfill and reclassed the related costs from landfill development assets to landfill assets, tn addition, we reclassified various costs related to the construction of a new natural gas plant at our Lachenaie landfill to capital assets as well. In total, costs incurred in respect of the permit modification and gas plant, totaling approximately $900, were reclassified out of landfill development costs. In our U.S. segment, continued investment in our Jacksboro landfill project, coupled with a land option at our SLD landfill are the primary reasons for the increase. Capital assets - December 31, 2012 versus December 31,2011 Change-Consolidated $ 151,460 Change-Canada $ 8~138 Change U.S. $ 6~322 The Canadian segment increase is due to additions, acquired capital, working capital changes and FX, approximately $85,700, $28,100, $17,300 and S7,100, respectively, which outpaced amortization approximately $55,200. Acquisitions completed in central and eastern portions of Canada during the year were the primary contributors to the increase in capital assets acquired. The increase in working capital represents capital assets acquired but which remain unpaid at the end of the year. The increase in U.S. segment capital assets is due to additions and assets acquired by way of acquisition, approximately $94,700 and $62,300, respectively, eclipsing amortization approximately $86,000. An acquisition completed in our U.S. south segment and two acquisitions completed in our U.S. northeast segment in the last half of 2012, combined, represents approximately $50,800 of the approximately $62,300 increase in capital assets attributable to acquisitions in the year. Please refer to the Other Performance Measures - Capital and landfill purchases section of this MD&A for additional details of the comparative change in current year additions. Landfill assets - December 31, 2012 versus December 31,2011 Change - Consolidated $ 4,928 Change Canada $ (14,175) Change - U.S. $ 19,103 In total, landfill assets increased year-to-year. Total consolidated additions, approximately $66,500 and FX, approximately $4,800, combined to outpace amortization, approximately $67,300 (expressed net of amortization attributable to capitalized landfill retirement obligations). The reclassification of landfill development assets to landfill assets and working capital changes represent the balance of the change. In our Canadian business, landfill asset additions were approximately $8,300, while capitalized landfill retirement obligations were approximately $6,300. Additions represent cell or site development expenditures incurred principally at our Lachenaie, Ridge and GAP landfills. Amortization, including the amortization of capitalized landfill retirement obligations, totaled approximately $34,600, and in total more than offset landfill asset additions, including capitalized interest, capitalized landfill retirement obligations and FX. In the U.S., additions were principally attributable to cell development at our Champ, Seneca Meadows, Bethlehem and JED landfills, approximately $58,200. Amortization and working capital changes only partially offset current period additions. Progressive Waste Solutions 12012 Annual Repo~c 133 Workin9 capital position (deficit) - December 31, 2012 versus December 31,2011 Change - Consolidated $ 42,263 Change - Canada $ 13,845 Change - U.S. $ 28,418 Our Canadian segment's working capital position strengthened from a slight deficit position at December 31,2011 to a positive position at December 31, 2012. The increase is the result of higher accounts receivable, prepaid expense and income taxes recoverable positions, approximately $9,500, $2,100 and $2,900, respectively. The increase in accounts receivable is outlined above, while the increase in prepaid expenses is due to the comparative increase in prepaid interest as a result of higher outstanding indebtedness, higher prepaid insurance premiums and acquisitions. The increase in income taxes recoverable is due in large part to the change in our consolidated borrowing arrangements. When we entered into the consolidated facility, we replaced our Canadian facility, and this allowed us to recognize an immediate deduction of deferred financing costs for tax and a reduction in income subject to tax. Accordingly, installment payments made in the current year exceeded amounts payable. From a liability perspective, an increase in accounts payable was almost fully offset by a decline in accrued charges. The increase in accounts payable is due in large part to capital expenditures incurred but unpaid. Expenditures in respect of compressed natural gas collection ("CNG") vehicles for a residential collection contract commencing early in 2013 and the revitalization of a transfer station in central Canada were the primary reasons for the rise in capital expenditures that remained unpaid at the end of the year. Infrastructure expenditures incurred in western Canada to accommodate a new CNG vehicle serviced residential contract coupled with investment in a facility in western Canada also contributed to the increase in accounts payable on a comparative basis. Accrued charges in the current year declined, due in large part to the payment of amounts accrued in respect of executive succession in the prior year. Other notable contributions to the decline in accrued charges include lower indirect taxes payable, due to input tax credits for capital expenditures at the end of the current year, lower LTIP accruals resulting from a change to our plan for certain participants and lower bonus accruals as a result of the Company's current year performance. Our U.S. business also saw an improvement in their working capital position. The increase is the result of higher accounts receivable, cash and cash equivalents and prepaid expense balances, approximately $17,400, $12,300 and $5,200, respectively. The increase in cash and cash equivalents and prepaid expenses is a function of timing and the increase in accounts receivable is outlined above. We also held excess cash at year end in anticipation of closing an acquisition that we didn't close at the end of the year. From a liability perspective, accrued charges increased approximately $21,800, due in large part to higher accrued transaction and related costs, which includes holdbacks for certain acquisitions completed in the year, the most significant of which is the acquisition completed in the Florida portion of our U.S. south segment. Higher insurance reserves were partially offset by lower accrued interest and payroll accruals. Payroll accruals are a function of timing and lower bonus accruals as a result of the Company's current year performance. Lower accrued interest amounts reflect a change in borrower for the Company's long-term debt facility. Accounts payable amounts declined by approximately $14,400 year-to-year. The timing of capital spending and the related impact on accounts payable is the primary reason for the decline. Disclosure of outstanding share capital December 31,2012 Shares $ Co rnrnon shares 115,166 I f773,530 Restricted shares (173) (3,460) Total contributed equit~ 114,993 1,770,O70 February 19, 2013 Shares $ Common shares 115,166 1,773,530 Restricted sha~s (173) (3,460) Total contributed ecluit~ 114,993 1,770,070 Normal course issuer bid ("NClB") In August 2011, we commenced a normal course issuer bid to purchase up to 4,000 of our common shares. Daily purchases on the Toronto Stock Exchange ('q~SX") were limited to a maximum of 47.833 shares. Under the terms of the NCIB, we were only permitted to purchase a block of common shares once a week which could exceed the daily purchase limit, so long as the block was not owned by an insider. All shares purchased were cancelled. In December 2011, we received approval from the TSX to increase the number of common shares available for purchase under the NCIB to 7,500 and in August 2012, we received approval Progressive Waste Solutions 12o12 Annual Report 134 to renew our NCIB for an additional 12 months. The renewed NCIB allows us to purchase up to 7,500 common shares in the open market and limits daily purchases on the TSX to a maximum of 57.806 shares. For the year ended December 31, 2012, 3,155 common shares were purchased and cancelled at a total cost of approximately $65,600. Since we commenced our NCIB, we have purchased 5,776 common shares for cancellation at a total cost of approximately $121,500 through December 31,2012. As of February 19, 2013, no additional common shares have been purchased and settled. Changes to share capital resulting from the Company's secondary offering On March 29, 2011, in connection with the secondary offering of 10,906 common shares held by TC Carting III, EL.C, an affiliate of Thayer I Hidden Creek Partners, EEC., the Company purchased 1,000 common shares from the underwriters in the secondary offering, at the public offering price of $23.50 per share. The common shares purchased were cancelled. Shareholders' equity We are authorized to issue an unlimited number of common, special and preferred shares issuable in series. Common shareholders are entitled to one vote for each common share held and to receive dividends, as and when determined by the Board of Directors. Common shareholders are entitled to receive, on a pro rata basis, the remaining property and assets of the Company upon dissolution or wind-up, subject to the priority rights of other classes of shares. Special Shores No special shares are outstanding. Special shareholders are entitled to one vote for each special share held. The special shares carry no right to receive dividends or to receive the remaining property and assets of the Company upon dissolution or wind-up. Preferred Shares No preferred shares are outstanding. Each series of preferred share, when issued, will have rights, privileges, restrictions and conditions determined by the Board of Directors prior to their issuance. Preferred shareholders are not entitled to vote, but take preference over the common shareholders in the remaining property and assets of the Company in the event of dissolution or wind-up. Liquidity and Capital Resources (all amounts are in thousands of U.S. dollars, unless otherwise Stated) Contractual obligations Decem be~, 31,2012 Payments due Less than 1 Greater than 5 Total year 1-3 years 4-5 years years Long term debt (current and Iong~term) Interest on long-term debt(*) Landfill closure and post-closure costs, undiscounted Interest rate swaps Foreign currency exchange hedges Operating leases Capital leases Other Ionc~-term oblic~ations $ 11683,388 $ 6,142 $ 9,903 $ 1,083,998 $ 583,345 211,246 32,540 97,620 30,121 50,965 666,204 8,871 29,613 19,204 608,516 3,788 2,523 1,265 12,300 12,300 60,342 13,423 20,183 13,S02 13,234 7,338 588 1,267 1,401 4,082 21,108 21,108 Total contractual obli~lations $ 2,665,714 $ 76,387 $ 180,959 $ 1,148,226 $ 1,260,142 Note: ~*~Long-terrn debt attracts interest at both fixed and variable interest rates. Interest on variable rate debt is calculated based on borrowings and interest rates prevailing at December 31,2012. Interest is calculated through the period to maturity for all long term fixed rate debt instruments. Progressive Waste Solutions 12012 Annual Report 135 Long-term debt Summarized details of our long-term debt facilities at December 31,2012 are as follows: Available lending Letters of Available Facility drawn credit capacit-/ Credit Agreement ("consolidated facility") Revolving facility $ 1,850,000 Term B facility i'l $ 500,000 1,074,712 $ 183,767 $ 591,521 500,000 S $ U.S. long-term debt facilities Variable rate demand solid waste disposal revenue bonds ("IRBs")(''~ $ 194,000 $ 109,000 $ Other $ 2,116 $ 2,116 $ $ 85,000 $ Note: rlAvaila hie lending and facility drawn amounts are expressed before the debt discount of approximately $2,400. I")IRB drawings at floating fates Of interest, will, under the terms of the underlying agreement, typically be used to repay revolving credit advances on our consolidated facility. However, IRB drawings bearing interest at floating rates requires us to issue letters of credit equal to the principal amount of the IRB drawn. Funded debt to EBITDA (as defined and calculated in accordance with our consolidated facility) At December 31,2012, funded long-term debt to EBITDA is as follows: December 31.2012 December 31,2011 Consolidated faclllt~ Canada U.S. Funded debt to ERITDA Funded debt to EBI~DA maximum 3.14 1.81 3.21 4.00 3.00 4.00 Consolidated fadlity On December 31, 2012, advances under the consolidated facility were approximately 51,074,700, excluding amounts drawn on the senior secured term B facility, and total letters of credit amounted to approximately $183,800. Available capacity at December 31, 2012, excluding the accordion, was approximately $591,500 and our funded debt to EBITDA ratio (as defined and calculated in accordance with our consolidated facility) was 3.14 times. On a consolidated basis, long-term debt drawings increased year-over- year, principally as a result of acquisitions and share repurchases in the year. A higher ending cash and cash equivalent balance at December 31, 2012 also contributed to the increase in long-term debt drawings. Canadian facility- repaid October 24, 2012 In June 2012, we gave notice to our Canadian facility lenders of our interest to exercise a portion of the accordion feature available to us under our Canadian facility. Effective July 19, 2012, total availability under the Canadian facility increased to C$595,000 from C$525,000. The accordion feature declined by a like amount from C$~25,000 to C$55,000. All other significant terms remained unchanged. In July 2011, we amended pricing on our Canadian facility. Pricing on advances drawn under the facility declined by 62.5 basis points and pricing ranged from 50 to 175 basis points over bank prime for borrowings on prime and 150 to 275 basis points over Bankers' Acceptances ("BAs") for borrowings on BAs. Pricing on financial letters of credit decreased by similar amounts and pricing ranged from 150 to 275 basis points. Standby fees declined between 15 and 17.5 basis points, and pricing ranged from 37.5 to 68.8 basis points, while pricing for non-financial letters of credit decreased between 41.3 and 41.7 basis points. All other significant terms remain unchanged. U.S. facility- repaid October24, 2012 In June 2012, we gave notice to our U.S. facility lenders of our interest to exercise a portion of the accordion feature available to us under our U.S. facility. Effective July 20, 2012, total availability under the U.S. facility increased to $1,253,600 from $1,122,500. The accordion feature declined by a like amount from $255,000 to $123,900. All other significant terms remained unchanged. in July 2011, we entered into a Second Amended and Restated Senior Secured Revolving Credit Facility (the "amended U.S. facility"). By entering into the amended U.S. facility the total commitment increased to $1,377,500, from $1,250,000. Available lending under the amended U.S. facility was $1,122,500, up $45,000 from $1,077,500, and the facility had an "accordion feature" Progressive Waste Solutions 12012 Annual Report 136 equal to $255,000. While financial covenants remained principally unchanged, the amended U.S. facility introduced a maximum total funded debt to rolling four-quarter EBITDA ratio of 4.5 times and a maximum senior secured debt to rolling four-quarter EBITDA ratio of 3.5 times should the parent company, Progressive Waste Solutions Ltd., borrow an amount no less than $150,000 and loan these borrowings to IESl. In addition, the restriction precluding IESI from paying dividends if their funded debt to EBITDA ratio exceeded 3.9 times increased to 4.4 times should 1ESI receive monies from parent company borrowings. The amended U.S. facility was also modified to allow IESI to be in compliance with the requirement to maintain interest rate hedges at fixed rates for at least 40% of total funded debt so long as its' in place interest rate hedges were not more than $10,000 under the 40% hedging requirement. This test is performed quarterly. Pricing declined on advances drawn under the facility by 75 basis points. Pricing ranged from 175 to 250 basis points over LIBOR for borrowings on LIBOR and 75 to 150 basis points over bank prime for prime rate advances. Pricing on financial letters of credit was 175 to 250 basis points which represented a decline of 75 basis points from previous pricing points. Fronting fees of 12.5 basis points on financial letters of credit were payable at all pricing levels. Standby fees declined by 12.5 basis points and ranged from 25 to $0 basis points. All other significant terms remain unchanged. Consolidated lending fadlity- initial drawing October24, 2012 Effective October 24~h, 2012, we entered into a 52,350,000 Credit Agreement (the "consolidated facility") and concurrently repaid all outstanding indebtedness under our Canadian and U.S. facilities and our series B, senior secured debentures. The borrower under the consolidated facility is Progressive Waste Solutions Ltd. (the "Company" or ~Progressive'9 and the facility is guaranteed by all subsidiaries of Progressive, excluding certain subsidiaries as permitted by the consolidated facility. The consolidated facility is comprised of a 5500,000 seven year senior secured term B facility, which was fully drawn on October 24th, and a $1,850,000 five year senior secured revolving facility ("consolidated revolver"). The consolidated facility has a $750,000 accordion feature, which is subject to certain conditions. Proceeds from the consolidated facility were used to refinance previously existing indebtedness and may be used for permitted acquisitions, as defined by the agreement, capital expenditures, working capital, letters of credit and for general corporate purposes. Amounts drawn under the consolidated revolver are repayable in full at maturity. The term B facility is subject to an amortization schedule and all final payment amounts outstanding, plus accrued interest, are due in full at maturity. The term B facility is subject to principal amortization of one percent per annum, payable quarterly. The term B facility is also subject to mandatory prepayment conditions, which include net cash proceeds from the sale of assets, the issuance of additional indebtedness that does not constitute permitted indebtedness and a percentage of excess cash flow, all of which are subject to various conditions. The Company is required to provide its consolidated facility lenders with a first priority perfected security interest in all the present and future assets of it and its subsidiaries, save for the excluded subsidiaries, and excluding real estate and certain equipment unless requested by the lenders, including all present and future intercompany indebtedness and a pledge of all of the equity interests in each of the Company's direct and indirect subsidiaries, subject to certain conditions. The consolidated facility permits a maximum consolidated total funded debt to four-quarter consolidated EBITDA ratio ("leverage ratio'') of four times, as defined therein. In the event the Company delivers to its lenders a corporate credit rating from Standard & Poor's ("S&P") or Moody's of at least BBB-/Baa3 (with a stable outlook or better), the Company may elect to have the security interests of the lenders terminated, provided the term B facility is repaid in full, at which time the maximum leverage ratio declines to three and one half times. The leverage ratio increases to four and one half times if the Company obtains unsecured indebtedness in an aggregate amount of not less than $250,000 and remains at this ratio for as long as the unsecured indebtedness remains outstanding. The consolidated facility also requires a minimum four quarter consolidated EBITDA to consolidated interest expense ratio ("interest coverage ratio~) of two and one half times, subject to certain conditions, and two and three quarter times if the Company elects to have the security interests of the lenders terminated. Borrowings on the consolidated revolver are available in either U.S. or Canadian dollars. Pricing on the consolidated facility for U.S. base and Canadian prime rate loans is the U.S. base or Canadian prime rate plus an applicable margin which ranges from 0.50% to 1.25% depending on the Company's leverage ratio. Borrowings on LIBOR based or BA loans are LIBOR or BA's plus 1.50% to 2.25% depending on the Company's leverage ratio. BA equivalents are priced at the BA equivalent plus 10 basis points plus 1.50% to 2.25%. Letter of credit fees are 1.50% to 2.25% and the commitment fee is 0.25% to 0.50%. For the first six months following the closing of the facility, the applicable margin for LIBOR, BA and BA equivalent loans is no less than 2.0% per annum, the applicable margin for U.S. base or Canadian prime rate loans is no less than 1.0% per annum and the commitment fee is no less than 0.375%. If an event of default occurs, the applicable margin on all obligations owing under the consolidated facility will increase by 2.0% per annum. Letter of credit and commitment fees are payable quarterly in arrears. Interest on borrowings is payable quarterly in arrears for U.S. base and Canadian prime rate loans and monthly in advance on BA loans. Interest on LIBOR based loans is payable in arrears in accordance with the tenure of the drawing. Pricing on the term B facility is LIBOR plus 275 basis points, subject to a LIBOR floor of 75 basis points, or U.S base plus 175 basis points. Progressive Waste Solutions 12012 Annual Report 137 Funded debt to £BITDA (as defined and calculated in accordance with our consolidated facility) The ratio of funded debt to EBITDA, which includes first year pro forma EBITDA for completed acquisitions, is 3.14 times. The ratio is higher than our target threshold due to the timing of acquisitions, growth and infrastructure spending and lower recycled commodity price performance than expected. Cash flows from acquisitions beyond the first year of operation will contribute to the further improvement of funded debt relative to EBITDA in subsequent periods. Cash flow contributions from growth and infrastructure spending will materialize over future periods and will also improve this relationship. Working copital Our consolidated working capital position at December 31, 2012 is approximately $5,700. It is common for us to operate with a slight working capital position or deficit. Our treasury function actively manages the Company's available working capital with a mandate of reducing accounts receivable days outstanding, actively managing payments to our suppliers, and limiting the amount of cash and cash equivalents on hand in favour of reducing long-term debt advances, amongst others. While our working capital position is only marginally positive, our ability to generate cash from operations is healthy. We also view our access to funds available under our consolidated facility to be sufficient to meet our working capital needs. Please refer to the Outlook section of this MD&A for additional discussion regarding our longer term liquidity requirements. Risks and restrictions Drawings on our term B facility, our consolidated revolver and a portion of our IRBs are subject to interest rate fluctuations with bank prime, the 30 day rate on BAs or LIBOR. Term B facility drawings, 5500,000, expressed before debt discount, consolidated revolver drawings, $1,074,712, and certain amounts drawn on our IRBs, $64,000, are subject to interest rate risk. A 1.0% rise or fall in the variable interest rate results in a $5,000, $10,747 and $640, change in annualized interest expense, respectively. A rise or fall in interest expense incurred by our Canadian business has a direct impact on current income tax expense. Accordingly, a $5,317 increase in interest expense reduces current income tax expense by approximately $1,400. Currently, our U.S. business has losses available to shelter income otherwise subject to tax. Accordingly, a $5,000, $5,430 and $640 increase in interest expense will result in lower deferred income tax expense of approximately 54,100. The inverse relationship between interest expense and both current and deferred income tax expense holds true for our Canadian and U.S. businesses should interest rates decline. We are obligated under the terms of our consolidated facility and IRBs (collectively the "facilities'9 to repay the full principal amount of each at their respective maturities. Failure to comply with the terms included in any facility could result in an event of default which, if not cured or waived, could accelerate repayment of the underlying indebtedness. If repayment of the facilities were to be accelerated, there can be no assurance that our assets would be sufficient to repay these facilities in full. Based on current and expected future performance, we expect to refinance these facilities in full on or before their respective maturities. The terms of the facilities contain restrictive covenants that limit management's discretion with respect to certain business matters. These covenants place restrictions on, among other things, our ability to incur additional indebtedness, to create liens or other encumbrances, to make certain payments, investments, loans and guarantees, and to sell or otherwise dispose of assets and merge or consolidate with another entity. In addition, the consolidated facility contains several financial covenants that require us to meet certain financial ratios and financial condition tests. Failure to comply with the terms of these facilities could result in an event of default which, if not cured or waived, could result in accelerated repayment. If the repayment of these facilities were to be accelerated, there can be no assurance that our assets would be sufficient to repay the facilities in full. Progressive Waste Solutions 12012 Annual Report 138 Fuel hedges, interest rate swaps and foreign currency exchange agreements at December 3 1, 2012 U.S. fuel hedges Notional (gallons per Diesel rate month paid expressed in (expressed in Date entered ~lallons) dollars) Diesel rate received variable Effective date Expiration date October 2008 62,500 $ 3.69 Diesel Fuel Index July 2009 October 2013 June 2009 170,000 $ 2.34 NYMEX Heating Oil Index January 2013 May 2013 June 2012 150,000 S 3.62 Diesel Fuel Index January 2015 December 2015 May 2012 150,000 $ 3.94 Diesel Fuel Index January 2013 December 2013 May 2012 150,000 $ 3.82 Diesel Fuel Index January 2013 December 2013 June 2012 300,000 $ 3.74 Diesel Fuel index January 2013 December 2013 June 2012 62,500 S 3.69 Diesel Fuel Index November 2013 June 2014 May 2012 150,000 S 3.85 Diesel Fuel Index January 2014 December 2014 May 2012 150,000 $ 3.79 Diesel Fuel Index January 2014 December 2014 June 2012 300,000 $ 3.73 Diesel Fuel Index January 2014 December 2014 June 2012 150,000 $ 3.72 Diesel Fuel Index January 2015 December 2015 Canadian fuel hedges Notional amount (litres Diesel rate per month paid expressed in (expressed in Date entered litres) CS) Diesel rate received vadable Effective date Expiration date May 2012 260,000 $ 0.61 NYMEX vtrrl Index January 2013 December 2014 May 2012 260,000 $ 0.60 NYMEX WTI Index January 2013 December 2014 June 2012 520,000 $ 0.76 NYMEX Heating Oil Index January 2013 December 2013 June 2012 520,000 $ 0.57 NYMEX WTI Index January 2014 December 2014 June 2012 520,000 $ 0.57 NYMEX WTI Index January 2015 December 2015 Interest rate swaps Fixed interest Variable rate (plus interest Notional applicable rate Date entered amount rnar~in) received Effective date Expiration date October 2010 S 160,000 1.07% 0.23% Nove m ber 2010 July 2014 March 2011 $ 60,000 1.61% 0.23% April 2011 July 2014 June 2011 $ 30,000 1.13% 0.23% July 2011 July 2014 October 2011 $ 45,000 October 2011 April 2013 Note: (*) This interest rate swap agreement is based on LIBOR with an interest rate cap of 3.0%. Foreign currency exchange agreements Foreign U.S. dollars currency Date entered purchased exchan~le rate Effective date October 2011 $ 4,O00 1.0057 January 2013 February 2012 S 4,000 0.9998 April 2013 August 2012 $ 4,300 1.0054 July 2013 Credit ratings of securities and liquidity Our access to financing depends on, among other things, suitable market conditions and maintaining our credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demands for our services, increased competition, a deterioration in general economic and business conditions and Progressive Waste Solutions 12012 Annual Report 139 adverse publicity. Any downgrades in our credit ratings may impede our access to debt markets, raise our borrowing rates or affect our ability to enter into interest rate swaps, preclude us from entering into commodity swaps to hedge diesel fuel, other commodities or enter into foreign exchange currency agreements to hedge dividends paid between Canada and the U.S. Ratings On October 3, 2012, S&P issued a rating of BBB- stable and on October 1, 2012 Moody's issued a rating of BA1 stable on our consolidated facility. Cashflows Yearended December 31 2012 2011 Change Cash flows generated from (utilized in): Operating activities $ 336,761 $ 39S,706 $ (58,945) Investing activities $ (530,534) $ (311,298) $ (219,236) Financing activities $ 20~,593 $ (84,795) $ 294,388 Operating activities Yearended Overall, we expect working capital changes to reflect growth in our business, be it organic or acquisition. We also expect non- cash working capital changes in the first half of the year to reflect a use of cash due to the timing of cash compensation payments. Cash compensation payments accrued at the end of a year are made in the first quarter of the subsequent year. We further expect non-cash working capital uses to increase in tandem with the seasonal nature of our business. Compared to the prior year, cash generated from operating activities declined approximately $58,900 year-over-year. The most significant reason for the decline is higher non-cash working capital uses, which increased approximately $40,000. Excluding the impact of acquisitions, lower accounts payable, accrued charges and income taxes payable, net of income taxes recoverable, and higher accounts receivable and prepaid expenses all contributed to the increased use of working capital. A discussion of the change in our working capital position is more fully described in the Financial Condition section of this MD&A. In addition to the increased use of working capital year-over-year, softer overall operating performance was also a contributing factor to the decline in cash generated from operating activities. Lower recycled commodity pricing and a weaker financial result from our U.S. northeast segment hindered our current year revenue and revenue less operating and selling, general and administration expense performance. Lower interest expense was a positive to current year operating cash flow, partially offset by higher cash taxes. The year-to-year change in interest and income taxes are more fully described in the Review of Operations section of this MD&A. Investing activities Year ended Compared to the prior year, we invested more in acquisitions and capital and landfill assets. In the current year, we completed 19 acquisitions for total cash consideration of approximately $282,300 compared to approximately $139,900 last year. As always, the timing of acquisitions is inherently unpredictable from one year to the next and as such our investment in acquired companies reflects this variability. In addition, rooming changes to certain U.S. tax rules increased the appetite of private company owners to sell their company's in advance of December 31, 2012. Accordingly, we closed five acquisitions in our U.S. business in the fourth quarter of 2012 for total consideration in excess of $160,000. The increase in capital and landfill purchases is addressed in detail in the Other Performance Measures section of this MD&A. Financing activities Yearended From a financing perspective, higher borrowings were largely the result of more acquisitions completed in the current year compared to last. We also invested more in capital and landfill assets on a comparative basis and continued to purchase shares under our NCIB, albeit slightly below 2011 levels. The slower pace of current year share repurchases is a byproduct of the acquisitions we closed in the current year. In addition, the increase in net debt drawings also reflects our use of cash required to support the change in working capital. Lower excess free cash, due to higher capital and landfill investment, also contributed to higher comparative borrowings in the current year. We have a strong ability to generate cash from operations and we expect the cash derived from operations will be sufficient to continue supporting our base operations for the foreseeable future. We don't anticipate a change to this expectation in the near Progressive Waste Solutions 12012 Annual Report 140 to midterm and remain confident that we can continue to borrow on our long-term debt facility or raise capital in the equity markets as required. As evidence of our ability to continue to borrow, please refer to the Liquidity and Capital Resources section of this MD&A which provides additional details of the consolidated facility we entered into on October 24th, 2012. Critical Accounting Estimates General Our MD&A uses information from our financial statements prepared in conformity with U.S. GAAP. In the preparation of our financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and, where and as applicable, disclosures of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. These areas include, amongst others, landfill closure and post-closure costs, landfill assets, goodwill and other assumptions used in our determination of impairment, deferred income taxes, accrued insurance reserves and other areas of our business that require judgment. Our estimates are based on historical experience, our observance of trends in particular areas and information or valuations and other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Due to the inherent complexity, judgment and uncertainty in estimating certain amounts, actual amounts could differ significantly from these estimates. We employ significant estimates in the determination of certain accounting amounts in the areas outlined below. Landfill closure and post-closure costs In the determination of landfill closure and post-closure costs we use a variety of assumptions, including but not limited to, the following: engineering estimates for materials, labour and post-closure monitoring, assumptions market place participants would use to determine these estimates, including inflation, markups, and inherent uncertainties due to the timing of work performed, the credit standing of the Company, the risk free rate of interest, current economic and financial conditions, landfill capacity estimates, the timing of expenditures and government oversight and regulation. Significant increases or decreases in engineering cost estimates for materials, labour and monito.ring or assumptions market place participants would use to determine these estimates could have a material adverse or positive effect on our financial condition and operating performance, all else equal. Material inputs tied to commodity prices, which may include fuel or other commodities, whose value fluctuates with multiple and varied market inputs or conditions, could result in a rise or fall in engineering cost estimates. Both increases and decreases in cost estimates are recognized over the period in which the landfill accepts waste. However, upward revisions in cost estimates are discounted applying the current credit adjusted risk free rate, while downward revisions are discounted applying the risk free rate when the estimated closure and post-closure costs were originally recorded or a weighted average credit adjusted risk free rate if the period of original recognition cannot be identified. Landfill closure and post-closure costs are estimated applying present value techniques. Accordingly, a decline in either the risk free rate or our credit spread over the risk free rate, or both, results in higher recorded landfill closure and post-closure costs. Inversely, an increase will result in lower recorded landfill closure and post-closure cost accruals. Fluctuations in either of these estimates could have a material adverse or positive effect on our financial condition and operating performance. A decrease or increase in the expected inflation rate will result in lower or higher recorded landfill closure and post-closure costs. A change to our inflation estimate could have a material adverse or positive effect on our financial condition and operating performance. Landfill capacity estimates are developed at least annually using survey information typically provided by independent engineers or land surveyors and are reviewed by management having the appropriate level of knowledge and expertise. An increase in landfill capacity estimates, due to changes in the respective operating permit or design, deemed permitted capacity assumptions, or compaction, does not impact recorded landfill closure and post-closure costs, but does impact the recognition of expense in subsequent periods. All else equal, accretion expense, which is recorded to operating expenses, will increase over the life of the site and thereby reduce adjusted EBITDA(^~. Landfill amortization expense will decline by a similar amount. The inverse holds true for a decrease in capacity estimates. Changes in landfill capacity estimates could have a material adverse or positive impact on our operating performance. Changes to the timing of expenditures or changes to the types of expenditures or monitoring periods established through government oversight and regulation could have a material adverse or positive impact on our financial condition and operating performance. If the timing of expenditures becomes more near-term, recorded landfill closure and post-closure costs will Progressive Waste Solutions 12012 Annual Report 141 increase. Changes to government oversight and regulation could increase or decrease estimated costs or the timing thereof, or result in additional or diminished capacity estimates as a result of permit life expansion or contraction. A governmental change which renders the landfill's operating permit inactive will result in the acceleration of both closure and post-closure costs, which will increase the recorded amount of landfill closure and post-closure costs, and these amounts could be material. Competitive market pressures or significant cost escalation may not be recoverable through gate rate increases and could impact the profitability of our landfills operation or its ability to operate as a going concern. As landfills near the end of their active life, which is the case for our Calgary landfill, any change in estimate can have a significant impact on landfill closure and post-closure cost accruals as the period to ultimate spending is more near term compared to our other landfill sites. Landfill assets Similar to landfill closure and post-closure costs, the determination of landfill asset amortization rates requires us to use a variety of assumptions, including but not limited to the following: engineering estimates for materials and labour to construct landfill capacity, landfill capacity estimates, and government oversight and regulation. Changes to any of our estimates, which may include changes to material inputs tied to commodity prices, economic and socio- economic conditions which impact the rate of inflation, changes to landfill operating permits or design, deemed permitted capacity assumptions, or compaction which impacts landfill capacity estimates or a change in government or a governmental regulation that impacts estimated costs to construct or impacts capacity, may have a material adverse or positive impact on our financial condition and results of operations. Changes which increase cost estimates or reduce or constrain capacity estimates will result in higher landfill asset amortization expense in future periods, but have no immediate effect on capitalized landfill assets unless the asset is determined to be impaired. Higher landfill asset amortization wilt be recorded over a shorter period of time to reflect the shortened life of the site. Changes which decrease cost estimates or increase capacity estimates will have the inverse effect. Included in the capitalized cost of landfill assets, are amounts incurred to develop, expand and secure the landfills operating permit in addition to capitalized interest costs which are capitalized over the period when portions of the landfill are being constructed but are not available for use. These amounts are amortized over the period in which the landfill actively accepts waste. Any change to capacity estimates will impact the period over which these costs are amortized. A governmental change which renders the landfill's operating permit inactive will result in the recognition of an impairment charge to landfill assets, and this charge could be material. Competitive market pressures or significant cost escalation may not be recoverable through gate rate increases and could impact the profitability of the landfills operation and its ability to operate as a going concern. Goodwill Goodwill is not amortized and is tested annually for impairment or more frequently if an event or circumstance occurs that more likely than not reduces the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include: a significant adverse change in legal factors or in the business climate; an adverse action or assessment by a regulator; unanticipated competition; a loss of key personnel; a more likely than not expectation that a significant portion or all of a reporting unit will be sold or otherwise disposed of; the testing for write-down or impairment of a significant asset group within a reporting unit; or the recognition of a goodwill impairment loss by a subsidiary that is a component of the reporting unit. Goodwill is not tested for impairment when the assets and liabilities that make up the reporting unit have not changed significantly since the most recent fair value determination, the most recent fair value determination results in an amount that exceeded the carrying amount by a substantial margin, and based on an analysis of events that have occurred and circumstances that have changed since the most recent fair value determination, the likelihood that a current fair value determination would be less than the current carrying amount of the reporting unit is remote. The impairment test is a two step test. The first test requires us to compare the fair value of our reporting units to their carrying amounts. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. However, if the carrying amount of the reporting unit exceeds its fair value, the fair value of the reporting unit's goodwill is compared with its carrying amount to measure the amount of impairment loss, if any. The fair value of goodwill is determined in the same manner as the value of goodwill determined in a business combination, whereby the excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the fair value of goodwill. Fair value is the amount at which an item can be bought or sold in a current transaction between willing parties, that is, other than in a forced sale or liquidation. In determining fair value, we have utilized a discounted future cash flow approach. Additional measures of fair Progressive Waste Solutions 12012 Annual Repo~ 142 value are also considered by us. Accordingly, we compare fair vaJues determined using a discounted future cash flow approach to other fair value measures which may incJude some of all of the following: adjusted EBITDA°~ multiplied by a market trading multiple, offers from potential suitors, where available, or appraisals. There may be circumstances where an alternative method to determine fair value is a more accurate measure. Accordingly, if our enterprise value declines due to share price erosion or our adjusted EBITDA~) declines as a result of recession, loss of business or loss of operating permit, goodwill may be impaired and could have a material adverse effect on our financial condition and operating performance. Our annual impairment test was completed on April 30, 2012, at which time we determined that the fair value of our Canadian and U.S. south reporting units substantially exceeded their carrying amounts while the fair value of the northeast reporting unit exceeded its carrying amount by a marginal amount. At December 31, 2012, we re-performed step one of the goodwill impairment test for our U.S. northeast reporting unit due to the loss of key management and the continuation of economic weakness and competition. The results of the step one test concluded that the fair value of the U.S. northeast reporting unit was in excess of its carrying amount and a step two test was not warranted. In determining the fair value of our U.S. northeast reporting unit, in step one of the goodwill impairment test, we included the expected cash flows attributable to successfully securing a long-term contact with New York City. Should the prospects of securing a long-term contract with the city become less certain or we are not successful in the award of such contract, the fair value of our U.S. northeast reporting unit will be less than its carrying amount and we will be required to perform step two of the two step impairment test to determine the resulting impairment loss. It is our belief that if we are not awarded the long-term contract with New York City, goodwill recorded in our U.S. northeast reporting unit will be impaired. Deferred income taxes Deferred income taxes are calculated using the liability method of accounting. Deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates and laws. The effect of a change in ta~ rates on deferred income tax assets and liabilities is recorded to operations in the period in which the change in tax rate occurs. Unutilized tax loss carryforwards that do not meet the more likely than not threshold are reduced by a valuation allowance in the determination of deferred income tax assets. Significant changes to enacted tax rates or laws, or estimates of timing differences and their reversal, could result in a material adverse or positive effect on our financial condition and operating performance. In addition, changes in regulation or insufficient taxable income could impact our ability to utilize tax loss carryforwards, which could have a significant impact on deferred income taxes. The recognition of deferred tax assets related to unutilized loss carryforwards is supported by our historical, and expected, ability to generate income subject to tax. Should we be unable to continue generating income subject to tax, deferred tax assets resulting from unutilized loss car~forwards may not be available to us prior to their expiry. Looking forward, we will continue to defer the use of discretionary tax deductions in periods where the expiry of loss carryforwards maybe impacted by their use with a view to maximizing our realization of these deferred tax assets. Should we not be able to realize our deferred tax assets attributable to loss carryforwards, we would record a deferred income tax expense in the period when we determine that the likelihood of not realizing these losses was more likely than not. Our maximum exposure is equal to the carrying amount of the deferred tax asset attributable to loss carryforwards, approximately $79,800. Loss carryforwards available to us from our acquisition of WSI and related specifically to WSI's U.S. operations are included in this amount. In light of our historical ability to generate income subject to tax and based on our expectations for the future, we view the risk of not realizing these deferred tax assets as Iow. We recognize accounting expense related to landfill closure and post-closure costs and these accounting expenses are not deductible for tax on a similar basis. This difference has resulted in a deferred tax asset. We are obligated under the terms of our landfill operating permits to satisfy the obligations for closure and post-closure monitoring at each site. We view our historical financial performance, expected future financial performance, relationships with all levels of government and community as key indicators that we will continue as a going concern, and, as such, deem the risk of not recognizing these deferred tax assets as Iow. Accrued insurance reserve In the U.S. we are self-insured for certain general liability, auto liability and workers' compensation claims. For certain claims that are self-insured, stop-loss insurance coverage is maintained for incidents in excess of $250 and $500, depending on the policy period in which the claim occurred. For claims where stop-loss insurance coverage is not maintained, additional insurance coverage has been added to cover claims in excess of these self insured levels. We use independent actuarial reports both Progressive Waste Solutions 12012 Annual Report 143 quarterly and annually as a basis for developing our estimates for reported claims and estimating claims incurred but not reported. Significant fluctuations in assumptions used to assess and accrue for accident claims reserves, including filed and unreported claims, claims history, the frequency of claims and settlement amounts, could result in a material adverse or positive impact on our financial condition and operating performance. Other Other estimates include, but are not limited to the following: estimates for doubtful accounts receivable; recoverability assumptions for landfill development assets; the useful life of capital and intangible assets; estimates and assumptions used in the determination of the fair value of contingent acquisition payments and assets and liabilities acquired in a business combination; various economic estimates used in the development of fair value estimates, including but not limited to interest and inflation rates; share based compensation, including a variety of assumptions and variables used in option pricing models; and the fair value of financial instruments. New Accounting Policies Adopted or Requiring Adoption Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ('IFRS") In May 2011, FASB issued amendments that changed the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements, including enhanced disclosures about the assumptions used in fair value measurements. These amendments result in common fair value measurement and disclosure requirements between U.S. GAAP and IFRS. The amendments are applicable prospectively. For us, this guidance was effective January 1, 2012. This guidance did not have a significant impact on our financial statements. Presentation of Comprehensive Income In June 2011, FASB issued amendments to the presentation of comprehensive income. The amendments give an entity the option to present comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements, in either instance, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. An entity is also required to present on the face of the financial statements adjustments for items reclassified from other comprehensive income to net income and present these adjustments with the components of net income and other comprehensive income. In December 2011, FASB indefinitely deferred the second requirement. The amendments are to be applied retrospectively and were effective for us on January 1, 2012. This guidance did not have a significant impact on our financial statements. Intangibles - Goodwill and Other: Testing Goodwill for Impairment In September 2011, FASB issued amendments in respect of testing goodwill for impairment. The amendment provides an entity with the option to qualitatively assess factors to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying amount. If an entity's qualitative assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, then the entity is not required to perform step one of the two-step impairment test. However, if an entity's assessment concludes otherwise, the entity is required to perform the first step of the two-step impairment test which requires the entity to calculate the fair value of the reporting unit and compare it to its carrying amount. The amendments also provide the entity with the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step impairment test. An entity may resume the qualitative assessment in a subsequent period. The amendments are effective for our annual and, if necessary, interim impairment tests performed after December 31,2011. This guidance did not have any impact on our financial statements. Intangibles - Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment In July 2012, FASB issued amendments to the testing of indefinite-lived intangible assets for impairment. The amendment provides an entity with the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible is impaired. If an entity's qualitative assessment of events and circumstances concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity's assessment concludes otherwise, the entity is required to perform the quantitative impairment test which compares the fair value of the indefinite-lived intangible to its carrying amount. The amendments also provide the entity with the option to bypass the qualitative assessment for any indefinite- lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity may resume Progressive Waste Solutions 12012 Annual Report 144 the qualitative assessment in any subsequent period. The amendments are effective for our annual and, if necessary, interim impairment tests performed after September 15, 2012. This guidance will not have any impact on our financial statements. Comprehensive Income - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income In February 2013, FASB issued amendments to comprehensive income requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross- reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. The amendments are effective for reporting periods beginning after December 15, 2012 with early adoption permitted. This guidance is not expected to have a significant impact on our financial statements. Related Party Transactions (~11 amounts are in thousands of U.S. do#ors, unless othenvise stated) In January 2010, we entered into a Share Purchase Agreement with two companies to acquire a fifty percent ownership interest in each. The remaining fifty percent ownership interests are held by two trusts. The brother of one of our former directors, who currently provides consulting services to our Company, serves as a trustee for both trusts. Our former director serves as a trustee for one of the two trusts and has no economic interests in the trusts or their underlying assets. The business conducted by each of these two companies is consistent with the business of the Company and is comprised principally of compactor and related equipment rentals. Our original investment tn these companies totaled approximately $3,300 or C$3,$00, which includes common shares in the invested companies and net adjustments, as defined in the Share Purchase Agreement. Investments in which we have joint control over the strategic operating, investing and financing policies of an investee, are accounted for using the equity method of accounting. The equity method of accounting requires that we record our initial investment at cost. The carrying value of our initial investment is subsequently adjusted to include our pro rata share of post- acquisition earnings from the investee, reflecting adjustments similar to those made in preparing consolidated financial statements, which we include in our determination of net income. In addition, our investment also reflects loans and advances, including amounts accruing thereon, our share of capital transactions, changes in accounting policies and corrections of errors relating to prior period financial statements applicable to post-acquisition periods. Dividends received or receivable from our investee reduces the carrying value of our investment. In December 2010, we received a promissory note from our equity accounted investee for C$750. The promissory note is repayable on demand with no fixed term to maturity. Interest on the note accrues at a rate equal to the greater of 5.5%, or bank prime plus 2.0% per annum calculated annually, not in advance, and payable on maturity. The promissory note may be repaid, in whole or in part, at any time, subject to certain restrictions. Transactions between us and our investee have all been transacted in the normal course of business. These transactions are generally the result of the investee billing us for services it provides. In turn, we bill our customers for this service which is measured at the exchange amount. Transactions between us and our investee only reflect our share of the transaction. We incurred approximately $300 (2011 - $300) of charges for the year ended December 31, 2012 from our equity investee which are recorded to operating expenses. A company providing transportation services to us is owned by an officer of a BFI Canada Inc. subsidiary. Total charges of approximately $3,700 (2011 - $2,400) were incurred for the year ended December 31, 2012. Pricing for these transportation services is billed at market rates which approximates fair market value. We lease office space that is owned by one of our directors. The lease commenced in 2004 and has a lease term expiring in September 2014. The cost of the lease is approximately C$320 annually. In 2012, we incurred consulting fees from one of our former directors. For the year ended December 31,2012 these fees totaled approximately $800, respectively. This consulting arrangement may continue on a month to month basis. These transactions are in the normal course of operations. Prog~ssive Waste Solutions 12o12 Annual Report 145 Outlook (all amounts are in thousands of U.S. dollars, except per weigh ted average share amounts, unless otherwise stared) Overview Management is committed to employing its improvement and market-focused strategies with the goal of delivering additional value to the Company's shareholders. Management is further committed to deliver a multi-pronged approach in its delivery of shareholder value, which may include some or all of the following: business growth through strategic acquisition, reinvestment in the business to drive organic growth or operating efficiencies, share repurchases and/or dividend increases. Management's objective is to continuously improve the business, which equates to a focus on revenge growth and effective cost management. New market entry, existing market densification and landfill development is our business focus as we look for ways to expand our operations, increase customer density in strategic markets, and increase the internalization of disposed waste. In addition, we continue to investigate and review alternative technologies for waste diversion, and when appropriate, invest in them. Our strengths are founded in the following: historical organic growth, growth through strategic acquisition, strong competitive position, a solid customer base with long-term contracts, disciplined operating process, predictable replacement capital requirements and stable cash flows. We are committed to actively managing these strengths in the future. Strategy Increase collection density. Operating in high density urban markets provides us with the opportunity to develop significant collection density. Our ability to strategically increase collection density in a given market enhances our flexibility to pursue organic growth strategies, generate cash flow and achieve margin expansion through vertical integration. In addition, increasing our revenue per hour against a fixed cost base creates operating leverage in our business model. We intend to continue our focus of growing within existing markets that support our market strategy and pursue growth in new markets that provide similar opportunities. Optimize asset mix to improve return on capital Balancing the composition of assets within our segments and operating areas allows us to execute our asset productivity strategies. By optimizing our collection, recycling and disposal assets around a mix of commercial, industrial and residential customers, we believe we can increase our return on invested capital. Our asset mix in Canada has consistently generated strong adjusted EBITDA(^). We have and will continue to execute a variety of strategies to adjust our asset mix and to improve margins in our U.S. operations. Accordingly, we intend to acquire collection assets to increase density and optimize price and volume strategies in our U.S. northeast operations. Generate internal growth. We seek to leverage our market positions and asset profile to drive internal revenue growth. Through focused business development efforts, we seek to increase contracted waste volumes in the markets we serve. In particular, we are focused on obtaining new commercial, industrial and residential contracts in markets that we can integrate into our existing operations. By increasing route density in the markets we also offer disposal, we can strengthen the internalization and margin profile of our existing operations. In addition, we intend to apply different pricing strategies, when appropriate, to adequately capture the value of our service offerings. Increase internalization. We seek to increase internalization in the markets we serve by controlling the waste stream from our collection operations to our disposal assets. Internalization gives us greater ability to control costs by avoiding third-party landfill tipping fees and allows for greater asset utilization within our business. We believe vertical integration is critical to our objective of achieving access to a landfill or other waste disposal facility on favorable terms and to maintaining a steady supply of waste, which is needed to operate these facilities economically. In support of our internalization goals, we aim to increase route density and acquire assets that enhance vertical integration opportunities in our markets. Pursue strategy enhancing acquisitions. We employ a disciplined approach to evaluating strategic acquisitions. We intend to pursue acquisitions that support our market strategy and are accretive on a return on capital and free cash flowlB) basis. Our acquisition efforts are focused in markets that we believe enhance our existing operations or provide significant growth opportunities. We have identified acquisition targets that meet our strategic criteria. Guidance outlook We included in our press release for the fourth quarter and year ended December 31,2012, issued February 14, 2013, guidance for the fiscal year ending December 31,2013. This press release is available at www. sec.gov and www. sedar, com. Operations Our objective is to pass through fuel and commodity surcharges, and environmental costs, including government imposed disposal charges to our end customers, with the goal of eliminating variability in our operating results and cash flows. However certain services and contracts make it difficult for us to recover fuel and commodity price variability. Therefore, to eliminate a Progressive Waste Solutions 12012 Annual Report 146 portion of this variability, we may enter into fuel and commodity hedges. Readers are reminded that increasing fuel costs, environmental costs, and government imposed disposal charges result in higher revenues when passed through to end customers which, all else equal, reduces our gross operating margin (defined as revenues less operating expenses divided by revenues). We expect to realize 2013 revenue growth in Canada which is equal to or greater than growth in Canada's gross domestic product ("GDP~). We expect that volume and organic growth will improve density and productivity, and we continue to look for pricing growth in the markets we serve. Further, we look to maximize landfill tonnages and recover operating cost variances resulting from fluctuations in the price of diesel fuel and other costs, and we will continue to execute our growth strategy through strategic "tuck-in" acquisitions. In the U.S., portions of our U.S. south operations will grow on pace with U.S. GDP growth, but we anticipate our Florida operations will fall short of the national average. In light of the prolonged economic downturn and high levels of competition impacting operations in our U.S. northeast business, we expect the U.S. northeast to trail average GDP growth in 2013. Not unlike our Canadian operations, we continue to execute our market focused strategies in the U.S. to influence price, volume, densification, productivity and internalization. In addition, we continue to pass along operating cost increases where we can and we continue to pursue growth through strategic acquisition in this region. As noted in the Review of Operations section of this MD&A, we lost certain contracts in 2012 that will have a carryover impact in 2013. The expected headwind to revenues in 2013 is approximately $37,400 and approximately $5,700 to EBITDA(^~. Sandy will also be a drag on 2013 revenues and EBITDA(A) on a comparative basis., approximately $8,000 and $2,500, respectively. SG&A For the year ended December 31, 2012, SG&A expense benefited from lower LTIP and bonus costs. The benefit was a function of changes to the LTIP plan, as previously outlined in the Review of Operations section of this MD&A, and lower bonus and LTIP expenses resulting from the Company's 2012 performance. As a result, we expect lower LTIP and bonus expenses to be a 2013 headwind or approximately $7,800. Other Calgary landfill We continue to work through the regulatory and approvals process to establish a replacement site for our Calgary landfill. We completed construction of a transfer station to accommodate both internal and external wastes that would have otherwise been destined for our Calgary site due to the expected delay between the closure of our existing site and the opening of a replacement site. We anticipate incurring additional hauling costs to transport waste to our Coronation landfill or a third-party site and the annual impact could be as much as a C$18,300 reduction to EBITDA(^). We expect the Calgary landfill to continue operations through June 2013 and expect a comparative decline in EBITDA~^) for 2013 of approximately C$11,200. Please refer to our press release issued February 14, 2013 which outlines our assumptions and factors used in the development of our 2013 outlook and the factors readers should consider when using forward looking information. Commodity pricing Our revenues and earnings are impacted by changes in recycled commodity prices, which principally include old corrugated cardboard ("OCC'~ and other paper fibers, including newsprint, sorted office paper and mixed paper. Other commodities we receive include wood, plastics, aluminum and metals. Our results of operations may be affected by changing prices or market requirements for recyclable materials. The resale and purchase price of, and market demand for, recyclable materials can be volatile due to changes in economic conditions and numerous other factors beyond our control. These fluctuations may affect our consolidated financial condition, results of operations and cash flows. Based on current volumes, a ten dollar change in the price of an average basket of commodities results in an approximately $8,000 change to revenues and an approximately $0.04 change to net income per share on an annual basis. Foreign currency We have elected to report our financial results in U.S. dollars. However, we earn a significant portion of our revenues and income in Canada. We provided our guidance for 20]3 assuming parity between the Canadian and U.S. dollar. If the U.S. dollar strengthens by one cent our reported revenues will decline by approximately $7,600. EBITDAI^) is similarly impacted by approximately 52,500, assuming a strengthening U.S. dollar. The impact on net income for a similar change in FX rate, results in an approximately $1,000 decline. Should the U.S. dollar weaken by one cent, our reported revenues, EBITDA(^) and net income will improve by amounts similar to those outlined above in the event of a strengthening U.S. dollar. Progressive Waste Solutions 12012 Annual Report 147 Taxation In March 2010, the Minister of Finance of Canada an nounced that it intended to allow the deduction of property losses that would have otherwise been lost to subsidiaries of an income trust on the trust's wind-up. The Minster's announcement requires enactment before we can record the benefit for accounting purposes due to the wind-up of the trust in 2009. In October 2012, the Minister of Finance, tabled a detailed Notice of Ways and Means Motion to implement outstanding technical tax amendments which addresses their announcement of intention dating back to March 2010. If enacted, the benefit to us is expected to be in excess of C$3,000. Our U.S. business continues to utilize carryforward losses available to it to offset income otherwise subject to tax. Based on the current rate of utilization and expected performance of our U.S. business, we expect that these carryforward losses will be fully utilized as early as the second quarter of 2014. Accordingly, current income tax expense will increase significantly as a result of the full utilization of the carryforward losses currently available. The increase in current income tax expense in 2014 and beyond will have a significant impact on the amount of free cash flow® we generate and the free cash flow~8~ yield we return. Based on our current business performance, we estimate current income tax expense will increase by approximately $50,000 to $55,000 annually. The Company's wholly-owned Canadian holding company holds all of the issued and outstanding share capital of our U.S. business. We have reviewed our investment in our U.S. business and have concluded that our investment has been permanently reinvested. We have drawn this conclusion after careful consideration of many factors. Management's stated strategy is to continue to grow through strategic acquisition and this growth will, most likely, be concentrated in the U.S. Additionally, repatriating monies from our U.S. operations comes at a cost in the form of withholding taxes. We have no intention of incurring withholding taxes unnecessarily, and as such we ensure that all alternatives are considered before we repatriate any monies from our U.S. business to Canada. Applying this approach also eliminates exposure to foreign currency risk. Our Canadian operations have the ability to generate earnings and or draw availability under the consolidated facility to achieve this plan. Accordingly, we have not established a deferred tax asset or liability reflecting the difference between the tax and accounting values of our Canadian held investment in our U.S. operations. If, however, we are required to repatriate some portion of our U.S. operations to Canada, these monies would likely attract withholding taxes at a rate of 5%, subject to our U.S. operations cumulative earnings and profits position at the time of repatriation, and these taxes would be accrued and paid for at the time of repatriation. The Company's indirectly held, but wholly-owned, U.S. holding company, WSI LLC, holds a 22.5% interest in the issued and outstanding share capital of BFt Canada Inc. We have reviewed our investment in our Canadian business and have concluded that our investment has been permanently reinvested. We have drawn this conclusion after considering many of the same factors outlined above that support permanent reinvestment of our Canadian held interest in our U.S. business. Accordingly, we have not established a deferred tax asset or liability reflecting the difference between the tax and accounting values of our U.S. held investment in our Canadian operations. If, however, we are required to repatriate some portion of our Canadian operations to the U.S., these monies would likely attract withholding taxes at a rate of 5%, subject to our Canadian operations cumulative earnings and profits position at the time of repatriation, and these taxes would be accrued and paid for at the time of repatriation. Financing strategic growth One of our objectives is to grow organically and through strategic acquisition. Growth through strategic acquisition is dependent on our ability to generate free cash flow181 and our ability to access debt and equity in the capital markets. We remain confident we will continue to generate free cash flowB~ in excess of our dividend payments and share repurchase targets and these excess amounts will be available to finance a portion of our continued growth, including growth through strategic acquisition. Significant growth, especially through strategic acquisition, will require continued access to debt and equity in the capital markets and any capital market restrictions could affect this growth. We remain confident that our current access to the capital markets is sufficient to meet our near and longer-term needs. Share repurchases We commenced the purchase of our common shares under the normal course issuer bid in 2011. Based on the acquisitions we completed in 2012, it is our intention to be selective in the repurchase of our common stock in 2013 and focus on reducing our long-term debt borrowings. Our intent to not aggressively repurchase common shares in 2013 is subject to various factors, including but not limited to, economic and market conditions, our share price, acquisition opportunities and our long-term debt levels, to name a few. Liquidity Our ability to generate cash from operations is strong. Our operations generate stable cash flows, which we expect will be in excess of our needs to continue operating the business steady state. Over the long-term, we intend to apply a balanced approach to the use of these cash flows for strategic acquisitions, share repurchases, dividends and debt repayment. In addition, it is our long-term goal to maintain a consolidated total debt to adjusted EBITDA~^~ ratio in the range of 2.3 to 2.7 times. On a pro forma Progressive Waste Solutions 12012 Annual Report 148 basis, calculated at FX parity, we are in excess of our long-term target range of 2.7 by approximately 0.4 times, which is due in large part to our recent acquisition activity, coupled with the recent downward trend in commodity prices and a weaker than anticipated performance from our U.S. northeast operations. We anticipate a return to our stated long-term range in the near to mid-term, but caution that acquisitions are lumpy which may influence the near term result of this ratio from time to time. With our closing of the consolidated facility on October 24th, 2012, we have, what we believe to be, an adequate source of liquidity in the mid-term. Borrowing rates are at historical lows in the U.S. and at comparatively Iow levels in Canada. Accordingly, if the economy strengthens, we would expect interest rates to rise. An increase in interest rates results in higher interest expense partially offset by lower current or deferred income tax expense. Withholding taxes on foreign source income When and as applicable, withholding tax on foreign source income is recorded as current income tax expense on the condensed consolidated statement of operations and comprehensive income or loss (~consolidated statement of operations and comprehensive income or Ioss'~. An increase in dividends paid or common share repurchases funded by IESI, or the inability of IESI to return capital, results in an increase in withholding taxes from foreign source income received by the Company. In addition, in connection with the closing of the WSI acquisition, there were various changes made to our organizational structure in order for us to complete and structure the transaction. One such change resulted in our Canadian operations being partially owned by a U.S. holding company within our consolidated group of companies. Accordingly, a per share dividend paid by the Canadian parent for the benefit of, and distribution by, Progressive Waste Solutions Ltd. to its shareholders also requires the Canadian parent to pay a like dividend to the U.S. holding company. Amounts paid by the Canadian parent to the U.S. holding company are subject to withholding tax. Amortization We have historically accounted for acquisitions applying the purchase method of accounting. The purchase method of accounting required us to recognize the fair value of all assets acquired and liabilities assumed, including recognizing all intangible assets separately from goodwill. On acquisition, fair value adjustments typically increased the carrying amount of capital and landfill assets and resulted in the allocation of a portion of the purchase price to identified intangible assets. Accordingly, capital, landfill and intangible asset amortization not only includes amortization of the assets unamortized original cost but also includes the amortization of fair value adjustments recognized on acquisition, Even though we have grown organically, a significant portion of our growth has been through acquisition. Therefore, fair value adjustments included in amortization expense are significant. Our most notable fair value adjustments arose on the formation of our predecessor company, our initial public offering, and our acquisitions of IESI, WSI, the Ridge landfill, Winters Bros., Fred Weber and Choice Environmental. Due to the inherent difficulty in isolating fair value adjustments for every acquisition completed by us, it is unreasonable for us to derive the exact impact these acquisitions have had on amortization expense. Fair value adjustments are recognized in amortization expense over the useful life of the underlying asset and for landfill assets over the landfills permitted or deemed permitted useful life. If we continue to grow through acquisition, amortization expense will continue to increase. Increases will be partially offset by declines in fully amortized fair value adjustments. Financial Instruments (all amounts are in thousands of U.S. dollars, unless otherwise stated) Hedge accounting We enter into commodity swaps to reduce our exposure to fluctuations in cash flows due to changes in the price of diesel fuel which we consume to service certain fixed price contracts or in certain segments of our business where the recovery of escalating fuel prices is either difficult or nomexistent. To fulfill our objective, we have entered into cash flow hedges specifically tied to a portion of our forecasted diesel fuel purchases. We have also entered into interest rate swaps to mitigate the risk of interest rate fluctuations resulting from variable rate interest charged on borrowings under our pre-existing U.S. facility and to satisfy a condition required by that facility. In connection with us entering into our consolidated facility, the requirement to swap a portion of variable rate debt to a fixed rate of interest was eliminated. In conjunction with the repayment of our U.S. facility, effective October 24, 2012, the designation of interest rate swaps as cash flow hedges ceased and hedge accounting was discontinued. This change resulted in a reclassification adjustment to earnings net of the related income tax effect. At December 31, 2012, we designated certain commodity and interest rate swaps as cash flow hedges. The following table outlines changes in the fair value of commodity and interest rate swaps designated as cash flow hedges and their impact on other comprehensive income or loss, net of the related income tax effect. Progressive Waste Solutions 120! 2 Annual Report 149 Year ended December 31 2012 2011 Total other comprehensive income or loss, net of income tax $ 3,854 S (2,478) (2,250) (3,312) $ 1,604 S (5,790) We measure and record any ineffectiveness on commodity swaps representing the difference between the underlying index price and the actual price of diesel fuel purchased. Gains or losses are reclassified to net income or loss as diesel fuel is consumed. The estimated net amount of the unrealized losses on commodity swaps expected to be reclassified to earnings within the next twelve months is approximately $900 (December 31,2011 - approximately $1,500). The timing of actual amounts reclassified to net income is dependent on the movement of diesel fuel prices in the future. Until October 24th, 2012, we measured and recorded any ineffectiveness on interest rate swaps using regression analysis. Interest rate swaps were, and continue to be, settled quarterly. Gains or losses arising from interest rate swaps are reclassified to interest expense upon settlement. Credit risk Credit risk is defined as the risk that one party to a financial instrument will cause a financia~ loss for the other party by failing to discharge its obligation. Our exposure to credit risk is limited principally to cash and cash equivalents, accounts receivable, other receivables, funded landfill post-closure costs, interest rate and commodity swaps, and when and as applicable, FX agreements and hedge agreements for OCC. In all instances, our risk management objective, whether of credit, liquidity, market or otherwise, is to mitigate our risk exposures to a level consistent with our risk tolerance. Cash c~nd cash equivalents Certain senior management is responsible for determining which financial institutions we bank and hold deposits with. Management's selected financial institutions are approved by the Board of Directors. Senior management typically selects financial institutions which are lenders in its long-term debt fa~:ilities and those which are deemed by management to be of sufficient size, liquidity, and stability. Management reviews the Company's exposure to credit risk from time to time or as a condition indicates that the Company's exposure to credit risk has or is subject to change. Our maximum exposure to credit risk, related to cash and cash equivalents, is the fair value of these amounts recorded on the condensed consolidated balance sheet ("consolidated balance sheet'S, approximately $29,900 (December 31, 2011 - approximately $14,100). We hold no collateral or other credit enhancements as security over our cash and cash equivalent balances. We deem the credit quality of our cash and cash equivalent balances to be high and no amounts are impaired. Accounts receivable We are subject to credit risk on accounts receivable and our maximum exposure to credit risk is equal to the fair value of accounts receivable recorded on our consolidated balance sheet, approximately $239,000 (December 31, 2011 - $212,100). We perform credit checks or accept payment or security in advance of service to limit our exposure to credit risk. The diversity of our customer base, including diversity in customer size, balance and geographic location inherently reduces our exposure to credit risk. We have also assigned various employees to carry out collection efforts in a manner consistent with our accounts receivable and credit and collections policies. These policies establish procedures to manage, monitor, control, investigate, record and improve accounts receivable credit and collection. We also have policies and procedures which establish estimates for doubtful account allowances. These calculations are generally based on historical collection or alternatively historical bad debt provisions. Specific account balance review is permitted, where practical, and consideration is given to the credit quality of the customer, historical payment history, and other factors specific to the customer, including bankruptcy or insolvency. Accounts receivable that are deemed by management to be at risk of collection are provided for. When accounts receivable are considered uncollectable, they are written-off against the provision. The recovery of amounts previously written-off is recorded to the provision. Management typically assesses aggregate accounts receivable impairment applying historical rates of collection giving consideration to broader economic conditions. Our accounts receivable are generally due upon invoice receipt. Accordingly, all amounts which are outstanding for a period that exceeds the current period are past due. Based on historical collections, we have been successful in collecting amounts that are not outstanding for greater than 90 days. We assess the credit quality of accounts receivable that are neither past due nor impaired as high. Our maximum exposure to accounts receivable credit risk is equivalent to our net carrying amount. We may request payment in advance of service generally in the form of credit card deposit or full or partial prepayment as security. Progressive Waste Solutions 12012 Annual Report 150 Amounts deposited or prepaid in advance of service are recorded to deferred revenue on our consolidated balance sheet. Accounts receivable considered impaired at December 31,2012 are not considered significant. Other receivables We are subject to credit risk on other receivables. We enter into agreements with cities in the province of Quebec to finance containers. Senior management is responsible for reviewing each agreement, including but not limited to its financial terms, in advance of entering into the agreement. Management views cities in the province of Quebec to be Iow risk counterparties. Our maximum exposure to credit risk is equal to the carrying amount of other receivables, approximately $500 (December 31,2011 - $800). We typically retain ownership of the containers until such time as all payments are received. Ownership of the containers is transferred to the respective city upon full receipt of payment. We deem the credit quality of other receivables balances to be high and no amounts are impaired. Funded landfill post-closure costs We are subject to credit risk on deposits we make to a social utility trust. Our deposits are invested in BAs offered through Canadian financial institutions or Government of Canada treasury bills. Due to the nature of the underlying investments, management deems its exposure to credit risk related to funded landfill post-closure cost amounts as Iow. Our maximum exposure to credit risk is equal to the fair value of funded landfill post-closure costs recorded on our consolidated balance sheet, approximately $9,900 (December 31,2011 - $9,200). Management reviews the Company's exposure to risk from time to time or as a condition indicates that its exposure to risk has changed or is subject to change. We hold no collateral or other credit enhancements as security over the invested amounts. However, we deem the credit quality of the financial asset as high in light of the underlying investments. Liquidity risk Liquidity risk is the risk that we will encounter difficulty in meeting obligations associated with the settlement of our financial liabilities. Our exposure to liquidity risk is due primarily to our reliance on long-term debt financing. Our treasury function is responsible for ensuring that we have sufficient short, medium and long-term liquidity and liquidity is managed daily through our monitoring of actual and forecasted cash flows and liquidity available through our consolidated facility. The treasury function is also responsible for ensuring that liquidity is available on the most favourable financial terms and conditions. Our treasury function reports quarterly on our available capacities and covenant compliance to the Audit Committee and maintains regular contact with the primary parties to our long-term debt facilities. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency, interest rate and other price risk. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in FX rates. Our exposure to currency risk is specific to the movement of monies between Canada and the U.S. Accordingly, we are exposed to currency risk on U.S. dollars received by our Canadian business from U.S. sources to fund Canadian dollar denominated dividends or share repurchases and similarly on Canadian dollars received by our U.S. business due to dividend payments payable to a U.S. holding company. To mitigate this risk, management decides where dividend and share repurchases are funded from and looks to fund these amounts from cash flows generated from Canadian sources wherever possible. Our treasury function actively reviews our exposure and assesses the need to enter into further FX agreements. Our Board of Directors also considers currency risk when establishing the Company's dividend. For the year ended December 31,2012, we were exposed to currency risk on the portion of dividends received by our U.S. holding company that were not hedged by FX agreements. To mitigate a portion of the risk attributable to paying Canadian dollar denominated dividends to a U.S. holding company, we entered into four FX hedges in January 2011. These FX hedges settled in April, July and October 2011 and January 2012. We entered into additional FX hedges in November 201~ and February and August 2012 which settled or settle in April, July and October 2012 and January, April and July 2013. Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates, interest rate risk arises from our interest bearing financial assets and liabilities. We have various financial assets and liabilities which are exposed to interest rate risk, the most notable of which is our long-term debt facility. Although the 2005 Seneca IRB Facility bears interest at fixed rates, it remains subject to interest rate risk on maturity or renegotiation. Our consolidated facility and a portion of our IRBs are subject to interest rate risk. An increase or decrease in the variable interest rate results in a corresponding increase or decrease to interest expense on long-term debt. We are also subject to interest rate risk on funded landfill post-closure costs. Funded landfill post-closure costs are invested in interest rate sensitive short-term investments. An increase or decrease in the return on invested amounts could result in us having to decrease or increase our funding for this obligation. We are also subject to interest rate risk on our cash equivalents balance and other receivables. Progressive Waste Solutions 12012 Annual Report 151 The policies and process for managing these risks are included above in the credit risk section. Risk management objectives Our financial risk management objective is to mitigate risk exposures to a level consistent with our risk tolerance. Derivative financial instruments are evaluated against the exposures they are expected to mitigate and the selection of a derivative financial instrument may not increase the net exposure of the Company to risk. Derivative financial instruments may expose us to other types of risk, which may include, but is not limited to, credit risk. The exposure to other types of risk is evaluated against the selected derivative financial instrument and is subject to a cost versus benefit review and analysis. Our use of derivative financial instruments for speculative or trading purposes is prohibited and the value of the derivative financial instrument cannot exceed the risk exposure of the underlying asset, liability or cash flow it expects to mitigate. Fair value methods and assumptions The fair values of financial instruments are calculated using available market information, commonly accepted valuation methods and third-party valuation specialists. Considerable judgment is required to interpret market information to develop these estimates. Accordingly, fair value estimates are not necessarily indicative of the amounts we, or counter-parties to the instruments, could realize in a current market exchange. The use of different assumptions and or estimation methods could have a material effect on these fair values. Funded landfill post-closure amounts are invested in BAs offered through Canadian financial institutions or Government of Canada treasury bills. The fair value of these investments is supported by quoted prices in active markets for identical assets. The fair values of commodity swaps are determined applying a discounted cash flow methodology. This methodology uses the Department of Energy forward index curve and the risk-free rate of interest, for a period consistent with the underlying terms of the agreements, to discount the commodity swaps. Financial institutions and the U.S. Department of Treasury are the sources of the Department of Energy forward index curve and risk-free rate of interest, respectively. The use of different assumptions and or estimation methods could have a material impact on these fair values. Our interest rate swaps are recorded at their estimated fair values based on quotes received from financial institutions that trade these contracts. We verify the reasonableness of these quotes at each financial statement date using quotes for similar swaps from another financial institution. In addition, we employ a third party, who is not a counter-party, to independently value the interest rate swaps and we use all of this information to derive our fair value estimates. The use of different assumptions and or estimation methods could have a material effect on these fair values. Foreign currency exchange agreements are recorded at their estimated fair values based on quotes received from a financial institution that trades these contracts. We verify the reasonableness of these quotes by comparing them to the period end foreign currency exchange rate, plus a reasonable premium to market. The three foreign currency exchange agreements outstanding at December 31,2012 are for the exchange of between $4,000 and $4,300 quarterly. Accordingly, the risk of having a material impact on the determination of fair values through the use of different assumptions and or estimation methods is considered remote. Financial assets and liabilities recorded at fair value, as and where applicable, are included on our consolidated balance sheets as funded landfill post-closure costs, other assets and other liabilities. Progressive Waste Solutions 12012 Annual Report 152 Risks and Uncertainties Downturns in the worldwide economy could adversely affect our revenues and operating margins Our business is affected by changes in economic factors that are outside our control, including consumer confidence, interest rates and access to capital markets. Although our services are of an essential nature, a weak worldwide economy generally results in a decline of waste volumes generated, which decreases our revenues. Additionally, consumer uncertainty and the loss of consumer confidence may limit the number or amount of services requested by customers. During time of weak economic conditions, we may also be adversely impacted by our customers' ability to pay in a timely manner, if at all, due to their financial difficulties, which could include bankruptcies. If our customers do not have access to capital, our volumes may decline and our growth prospects and profitability may be adversely affected. Due to the inherent diversity of our customer base and the nature of our services, we haven't been severely affected by downturns in the worldwide economy. Our U.S. northeast operations have been impacted the most by the economic downturn, but we don't believe that this region is not able to continue as a going concern. As outlined in the Outlook - strategy section of this MD&A, the composition of assets in this segment is not optimal. Accordingly, we will continue to pursue ways to maximize the internalization of waste from our collected waste streams, we remain committed to participating with the city of New York in their long-term waste plan and to optimizing this segment's asset mix to reduce our exposure to further or future economic downturns. We may be unable to obtain, renew or continue to maintain certain permits, licenses and approvals that we need to operate our business We are subject to significant environmental and land use laws and regulations. Our internalization strategy depends on our ability to maintain our existing operations, expand our landfills and transfer stations, establish new landfills and transfer stations and increase applicable daily or periodic tonnage allowances. To own and operate solid waste facilities, we must obtain and maintain licenses or permits, as well as zoning, environmental and other land use approvals. Permits, licenses and approvals to operate or expand nomhazardous solid waste landfills and transfer stations are difficult, time consuming and expensive to obtain. Obtaining permits often takes several years and requires numerous hearings, and this is in addition to complying with land use, environmental and other regulatory requirements. We may also face resistance from citizen groups and other environmental advocacy groups. Failure to obtain the required permits, licenses or approvals to establish new landfills and transfer stations or expand the permitted capacity of our existing landfills and transfer ~tations could restrict internalization and compromise our business strategy. To date we have been successful in overcoming these obstacles and have a solid history of obtaining permits, licenses and approvals necessary to conduct our business. However, a failure to obtain, renew or extend various permits and licenses could result in the impairment of certain assets recorded on our consolidated balance sheet and result in significant impairment charges recorded to our consolidated statement of operations and comprehensive income or loss. We are not aware of any significant permit or licensing barriers or issues that would significantly impact our ability to continue operating in a manner consistent with our historical or near-term expected future performance. Please refer to the Outlook section of this MD&A for a discussion about our Calgary landfill site. Our long-term debt facilities existing at December 31, 2012 (collectively our "facilities") contain restrictive covenants which requires us to meet certain financial ratios and financial condition tests The terms of our consolidated facility and IRBs contain restrictive covenants that limit the discretion of our management with respect to certain business matters. These covenants place restrictions on, among other things, our ability to incur additional indebtedness, to create liens or other encumbrances, to pay dividends above certain levels or make certain other payments, including share repurchases, investments, loans and guarantees, and to sell or otherwise dispose of assets and merge or consolidate with another entity. In addition, the consolidated facility contains a number of financial covenants that require us to meet certain financial ratios and financial condition tests. A failure to comply with the terms of these facilities could result in an event of default which, if not cured or waived, could result in accelerated repayment. If the repayment of any of these facilities was to be accelerated, we cannot provide absolute assurance that our assets would be sufficient to repay these facilities in full. Our access to financing depends on, among other things, suitable market conditions and the maintenance of our credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demands, increased competition, a further deterioration in general economic and business conditions and adverse publicity. Any downgrade in our credit ratings may impede our access to the debt markets, raise our borrowing rates or affect our ability to enter into interest rate swaps, commodity swaps or foreign currency exchange agreements. Our consolidated facility is rated BBB- stable by S&P and BA1 stable by Moody's. Based on the restrictive covenant and financial condition tests included in our facilities, we remain confident that we will continue to meet these tests in the near-term and the foreseeable future. Progressive Waste SolutionsI 2Ol 2 Annual Report 153 We hove significant indebtedness, which could adversely affect our financial condition We have, and expect to continue to have, a significant amount of indebtedness and, as a result, significant debt service obligations. As of December 31, 2012, we had total indebtedness of approximately $1,688,000. Our degree of leverage could have important consequences, including: · increasing our vulnerability to adverse economic and industry conditions; · require us to dedicate a substantial portion of cash from operations to service our indebtedness, thereby reducing the availability of cash to fund working capital, capital expenditures, other general corporate purposes, acquisitions, dividends and share repurchases; · limit our ability to obtain additional financing in the future for working capital, capital expenditures, general corporate purposes, acquisitions, dividends or share repurchases; · place us at a disadvantage compared to our competitors that have less debt; and · limit our flexibility in planning for, or reacting to, changes in the business and in the industry generally. Currently our consolidated leverage is higher than our long-term target range however, we don't expect to be encumbered by it. Our financial obligations to pay closure and post-closure costs in respect of our landfills could exceed current reserves We have material financial obligations to pay closure and post-closure costs in respect of our landfills. We have estimated these costs and made provisions for them, but these costs could exceed current reserves as a result of, among other things, any federal, provincial, state or local government regulatory action, including unanticipated closure and post-closure obligations. The requirement to pay increased closure and post-closure costs could substantially increase our expenses and cause our net income to decline. Additional discussion is included in the Critical Accounting Estimates - Landfill closure and post-closure costs and Environmental Matters sections of this MD&A. We may be unable to obtain performance or surety bonds, letters of credit or other financial assurances or to maintain adequate insurance coverage If we are unable to obtain performance or surety bonds, letters of credit or insurance, we may not be able to enter into additional solid waste or other collection contracts or retain necessary landfill operating permits. Collection contracts, municipal contracts, transfer station operation and landfill closure and post-closure obligations may require performance or surety bonds, letters of credit or other financial assurance to secure contractual performance or comply with federal, provincial, state or local environmental laws or regulations. We typically satisfy these requirements by posting bonds or letters of credit. As of December 31, 2012, we had approximately $383,400 of bonds and approximately $183,800 of letters of credit issued. Closure bonds are difficult to obtain. If we are unable to obtain performance or surety bonds or additional letters of credit in sufficient amounts or at acceptable rates, we could be precluded from entering into additional collection contracts or obtaining or retaining landfill operating permits. Any future difficulty in obtaining insurance also could impair our ability to secure future contracts that are conditional upon the contractor having adequate insurance coverage. Accordingly, our failure to obtain performance or surety bonds, letters of credit or other financial assurances or to maintain adequate insurance coverage could limit our operations or violate federal, provincial, state or local requirements, which could have a materially adverse effect on our business, financial condition and results of operations. We have been successful in obtaining sufficient surety bonds, letters of credit or other financial assurances and have maintained adequate insurance coverage. Accordingly, we have not experienced significant costs or recoveries stemming from an inability to secure financial assurances or insurance. While we are subject to market conditions as it relates to the cost of surety bonds, letters of credit or other financial assurances, we don't anticipate nor do we have any indication that the costs to obtain these assurances will have a material effect on our operations and cash flows in the near-term. We are also subject to market conditions as it relates to the cost of insurance which is further affected by our claims history. We don't anticipate, nor do we have any indication that the costs for, or our ability to obtain or retain, insurance are at risk or at costs that would preclude us from being competitive or impede our current or future operations. We expect to engage in further acquisitions or mergers, which may adversely affect the profit, revenues, profit margins or other aspects of our business, and we may not realize the anticipated benefits of future acquisitions or mergers to the degree anticipated Our growth strategy is based, in part, on our ability to acquire other waste management businesses. The success of our acquisition strategy depends, in part, on our ability to: · identify suitable businesses to buy; · negotiate the purchase of those businesses on acceptable terms; · complete the acquisitions within our expected time frame; · improve the results of operations of the businesses that we buy and successfully integrate their operations into our own; and · respond to any concerns expressed by regulators, including anti-trust or competition law concerns. Progressive Waste Solutions 12012 Annual Report 154 We may fail to properly complete any or all of these steps. Many of our competitors are also seeking to acquire collection operations, transfer stations and landfills, including competitors that have greater financial resources than we do. Increased competition may reduce the number of acquisition targets available to us and may lead to unfavorable terms as part of any acquisition, including higher purchase prices, if acquisition candidates are unavailable or too costly, we may need to change our business strategy. Our integration plan for acquisitions contemplates certain cost savings, including the elimination of duplicative personnel and facilities. Unforeseen factors may offset the estimated cost savings or other components of our integration plan in whole or in part and, as a result, we may not realize any cost savings or other benefits from future acquisitions. Our due diligence investigations may also fail to discover certain undisclosed liabilities. Further, any difficulties we encounter in the integration process could interfere with our operations and reduce our operating margins. Even if we are able to make acquisitions on advantageous terms and are able to integrate them successfully into our operations and organization, some acquisitions may not fulfill our strategy in a given market due to factors that we cannot control, such as market position or customer base. As a result, operating margins could be less than we originally anticipated when we made those acquisitions. In such cases, it may change our strategy with respect to that market or those businesses and we may decide to sell the operations at a loss, or keep those operations and recognize an impairment of goodwill, capital, intangible or landfill assets. We have been successful in identifying, negotiating and integrating various acquisitions in markets we currently serve and new markets we have entered. The lack of improvement in economic and competitive conditions in our U.S. northeast segment resulted in us recognizing a goodwill impairment charge in 2011. We attribute a portion of the impairment charge to the results of our Winters Bros. acquisition which has been significantly impacted by the economic and competitive pressures in this segment. While we remain confident that we can continue to execute our acquisition strategy in the near-term and foreseeable future, we are cognizant of the risks that it presents. Future acquisitions may increase our capital requirements We cannot be certain that we will have enough capital or that we will be able to raise capital by issuing equity or debt securities or through other financing methods on reasonable terms, if at all, to complete the purchases of any waste management businesses that we want to acquire. Acquisitions will generally increase our capital requirements unless they are funded from excess free cash flowIB~, defined as free cash flow~B~ in excess of dividends declared and shares repurchased. Acquisitions financed with debt or equity capital will result in higher long-term debt or equity amounts recorded on our consolidated balance sheet. Higher debt levels can increase our borrowing rates and will increase interest expense due to higher levels of outstanding indebtedness. Higher interest expense will reduce current income tax expense or preserve loss carryforwards. Based on current economic conditions, we remain optimistic that capital will be available, on reasonable terms, to allow us to execute our acquisition growth strategy and that a portion of our acquisitions will be funded from excess free cash flow~, thereby reducing the need for additional capital. We may be unable to successfully manage our growth Our growth strategy may place significant demands on our financial, operational and management resources. In order to continue our growth, we may need to add administrative, management and other personnel, and make additional investments in operations and systems. We cannot provide assurance that we will be able to find and train qualified personnel, or do so on a timely basis, or expand our operations and systems in the time required. We have, however, been successful in managing our growth and its demands on our financial, operational and management resources to date. We remain confident that we can continue to manage our growth as we expand our operations, management and financial resource requirements. At present, we deem the risk of managing our growth to be Iow. We may lose contracts through competitive bidding or early termination We derive a portion of our revenue from municipal contracts that require competitive bidding by a variety of potential service providers. Although we intend to continue to bid on municipal contracts and to re-bid our existing municipal contracts, these contracts may not be maintained or won in the future. Contracts that we re-bid and successfully retain may be won at lower pricing levels, but still provide acceptable returns. We may also be unable to meet bonding requirements for municipal contracts at a reasonable cost to us or at all. These requirements may limit our ability to bid for some municipal contracts and may favor some of our competitors. We also derive a portion of our revenue from non-municipal contracts, which generally have a term of three to five years. Some of these contracts permit our customers to terminate them before the end of the contractual term. Any failure by us to replace revenue from contracts lost through competitive bidding, termination or non-renewal within a reasonable time period could result in a decrease in our operating revenue and earnings. Contract losses may also make certain capital assets obsolete before they have exhausted their useful lives. We may have no choice but to sell the assets in the open market at prices that differ from their recorded amounts, which could result in significant gains or losses on the assets disposition. However, because we operate in various geographical locations throughout Canada and the U.S., we have generally been successful in obtaining new contracts at a pace that is not significantly less than the pace of loss. Because contract wins and losses are subject to fluctuation, there may Progressive Waste Solutions 12012 Annual Report / 55 be periods or years when losses are more prevalent than gains and vice versa. Our track record of organic growth has been positive and we expect this trend to continue over the mid-term period. We depend on third-party disposal customers at our landfills and we cannot assure you that we will maintain these relationships or continue to provide services at current levels Operating and maintaining a landfill is capital intensive. As a result, a steady volume of waste is required over the operating life of the landfill in order to maintain profitable operations. The loss of third-party disposal customers could reduce our revenues and profitability. For the year ended December 31, 2012, 57.1% of the total tonnage received by our landfills was derived from the disposal of waste received from third-party disposal customers. Accordingly, we depend on maintaining a certain level of third- party disposal customers at our landfills so we can continue operating our landfills at profitable levels. We cannot assure you that we will maintain our relationships or continue to provide services to any particular disposal customer at current levels. We also cannot assure you that third-party customers will continue to utilize our sites and pay acceptable gate rates that generate acceptable margins for us. Decreases could occur if new landfills open, if our existing disposal customers fail to renew their contracts, if the volume of waste decreases or if we are unable to increase our gate rates to correspond with an increasing cost of operations. In addition, new contracts for disposal services entered into by us may not have terms similar to those contained in current arrangements, in which case revenues and profitability could decline. We have been successful at maintaining relationships with our disposal customers and are cognizant of the geographical proximity of our landfills to alternative disposal sites, the competitive pressures faced in each market, and the economic environment in each market. While there are always changes to the composition of our external customer mix, we have not experienced declines in volumes that are so pervasive that they have caused us to question the operating or financial viability of our landfills. In our U.S. northeast operations, we face the most significant challenge, representing a combination of soft economic conditions coupled with resilient competition. Accordingly, we have been burdened with increasing pricing pressures for a basket of constrained volumes. We will continue to evaluate and re-evaluate our price and volume strategies in this segment with the goal of preserving both. Our Canadian and U.S. operations are geographically concentrated and susceptible to local economies, regulations and seasonal fluctuations Our Canadian operations are in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec and are susceptible to those markets' local economies, regulations and seasonal fluctuations. Our U.S. operations are in the northeastern and southern U.S. and are susceptible to those regions' local economies, regulations and seasonal fluctuations. We operate in the following thirteen states: Florida, Texas, Arkansas, Missouri, Oklahoma, Louisiana, Mississippi, New York, New Jersey, Pennsylvania, Maryland, Virginia and Illinois, as well as the District of Columbia. We derived more than 14.8% of our revenue during 2012 and 13.8% of our revenue for 2011 from services provided in Texas, more than 14.1% of our revenue during 2012 and 14.8% of our revenue for 2011 from services provided in New York and more than 12.8% of our revenue from services provided in Florida during 2012 and 12.9% ofour revenue for2011. Revenue from the province of Ontario represented 16.3% of total revenues in 2012 while the province of Quebec represented 9.4% of total revenues in the current year, and 16.5% and 8.4%, respectively in 2011. Accordingly, economic downturns in Texas, New York, Florida, Ontario and Quebec, and other factors affecting such states or provinces, such as state or provincial regulations affecting the non- hazardous solid waste management industry or severe weather conditions, could have a material adverse effect on our business, financial condition and results of operations. In addition, seasonality may temporarily affect our revenues and expenses. We generally experience lower construction and demolition debris volumes during the winter months when the construction industry is less active. Frequent and/or heavy snow and ice storms can also affect revenues, primarily from transfer station and landfill operations, which are volume based, and can also impact the productivity of our collection operations. Higher than normal rainfall and more frequent rain storms over a 30 to 90 day period can put additional stress on the construction industry and lower the volumes of waste handled in our landfills. We employ various strategies to combat the seasonal nature of our business where we can. Inclement weather conditions are out of our control, but its impact is partially mitigated by the geographical diversity of our operations. We actively participate in the local economies we operate in and are an active voice directed at various levels of government. We will continue to be active to ensure our interests are heard and are considered. Revenues generated under municipal contracts with New York City represented 2.2% of our consolidated revenue in 2012. Termination, modification or non-renewal of such contracts could have a material adverse effect on our business, results of operations and financial condition We attribute 2.2% of our consolidated revenue in 2012 and 2.7% of our consolidated revenue in 2011 to our municipal contracts with New York City. New York City issued bids for two municipal contracts. In February 2011 we responded to the bids and in September 2011 we received a Notice of Award from the New York City Department of Sanitation to extend our interim Brooklyn contracts for a three year term. While the award is for the entire amount of the contract, we have lost certain volumes that were Progressive Waste Solutions 12012 Annual Report I S6 otherwise transferred to our landfills. As with prior contracts, New York City can terminate them upon l0 days' notice. If these contracts are terminated, or if they are not renewed, we may not be able to replace the resulting iost revenue. Such a loss could have an adverse effect on our business, financial condition and results of operations. In addition, during 2002, New York City announced changes to its solid waste management plan that would include reducing or eliminating the City's reliance on private transfer stations, such as the ones we operate in New York City. While the plan has undergone substantial revision, New York City continues to pursue major changes in its system for transferring and disposing of municipal waste. Since the announcement in 2002, New York City has requested proposals for alternative methods of handling municipal waste. We have made our proposals as requested by the City and await the City's decision on the final plan and contractors. If New York City implements changes to this system, it is possible that our existing contracts with the City would be modified, terminated or not renewed. We remain vigilant in our communication with City officials to ensure we continue to meet the needs of the City and remain compliant with the terms of the contracts we service. We believe that we have the right compliment of employees to continue to execute on this deliverable and we are not aware of any impediments that would jeopardize our belief. Some of our employees are covered by collective bargaining agreements and efforts by labor unions to renegotiate those agreements or to organize our employees could divert management's attention from its business or increase its operating cost As of December 31,2012, approximately 1,700, or 22.2%, of our employees were covered by collective bargaining agreements. These collective bargaining agreements expire through 2016 and have terms ranging from three to five years, except for one which has a one-year renewal. The negotiation or renegotiation of these agreements could divert management's attention away from other business matters. If we are unable to negotiate acceptable collective bargaining agreements, we may have to wait through ~cooling off" periods, which are often followed by union initiated work stoppages, including strikes. Unfavorable collective bargaining agreements, work stoppages or other labor disputes may result in increased operating expenses and reduced operating revenue. We believe that we have good relationships with our unions and have a history of negotiating contracts that don't impede our ability to manage our business and/or impose undue costs on us. We remain confident that we can continue to successfully negotiate union contracts efficiently and without the contracts being cost prohibitive. Fluctuating fuel costs impact our operoting expenses and we may be unable to fully offset increased diesel fuel costs through fuel surcharges The price of diesel fuel is unpredictable and fluctuates based on events outside of our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries, regional production patterns and environmental concerns. We need a significant amount of fuel to operate our collection and transfer trucks, and any price escalations will increase our operating expenses and could have a negative impact on our consolidated financial condition, results of operations and cash flows. From time to time, in accordance with the terms of most of our customer contracts, we attempt to offset increased fuel costs through the implementation of fuel surcharges. However, we may be unable to pass through all of the increased fuel costs due to the terms of certain customers' contracts and market conditions. We have entered into a series of fuel hedges in both Canada and the U.S. to limit our exposure to fluctuating diesel fuel prices and to reduce operating cost variability. While we have typically been successful in recovering rising diesel fuel costs from our customer base, not all of our contracts allow us to pass along increasing diesel fuel costs and the pass through of these costs has been most difficult in the U.S. northeast in light of current market conditions and competition. Accordingly, entering into fuel hedges that effectively offset increasing diesel fuel costs where recoverability is limited will, and does, allow us to stay operating cost variability. We remain confident that we can continue to pass along rising diesel fuel costs or enter into fuel hedges to mitigate a portion of our exposure to fluctuations in our operating costs resulting from changes in diesel fuel prices. Our revenues will fluctuate based on changes in commodity prices Our recycling operations process certain recyclable materials, such as OCC, paper, including newsprint, sorted office paper and mixed paper, plastics and aluminum, which are marketed as commodities and are subject to significant price fluctuations. Our results of operations may be affected by changing prices or market requirements for recyclable materials. The resale and purchase prices of, and market demand for, recyclable materials can be volatile due to changes in economic conditions and numerous other factors beyond our control. These fluctuations may affect our consolidated financial condition, results of operations and cash flows. From time to time we have entered into commodity swaps for OCC to limit our exposure to fluctuating OCC prices. We believe our sources of revenues are diversified, which limits our exposure to commodity price fluctuations. However, commodity price fluctuations can be significant and can affect our reportable revenues and earnings. Progressive Waste Solutions 12Ol 2 Annual Repor~ I S7 Please refer to the Outlook section of this MD&A for further discussion regarding the impact of commodity pricing on out business. Emerging extended producer responsibility ("EPR'~ programs may impact our customer relationships and revenues Numerous jurisdictions in Canada and the U.S. have passed, or are considering new legislation or regulations to implement, EPR programs that could affect our existing customer contracts. EPRs shift the financial responsibility and the physical logistics for the end of life management of waste packaging, printed paper and designated products, such as tires and electronics, from the generator to the producer or brand owner and usually include mandated minimum recycling rates which must be achieved. Declines in waste volumes could occur due to increased waste diversion associated with these EPR programs and existing contracts to collect and process recyclables could be lost as post life management responsibility and contractual obligations shift from our existing municipal and commercial generating customers to the brand owners who will likely manage their EPR obligations through co-operative stewardship agencies. Where EPR is implemented, these stewardship agencies will control the design and award of contracts for recycling collection, transfer and processing services. Currently, these contracts are widely issued by many different municipal jurisdictions within a state or province. Under EPR, the stewardship organization may choose to consolidate many of the contracts to realize economies of scale and associated efficiencies to reduce the cost of EPR obligations to their producer members. We would seek to participate in and partner with stewardship organizations as a solution provider to the producer members. However, there remains a risk that we may not be successful in securing these relationships. We depend on members of our management team and if we are unable to retain them, our operating results could suffer Our future success depends on, among other things, our ability to retain the services of our management and to hire other highly qualified employees at all levels. We compete with other potential employers for employees, and we may not be successful in hiring and keeping the services of executives and other employees that we need. The loss of the services of, or the inability to hire, executives or key employees could hinder our business operations and growth. We believe that we have good relationships with our management and their teams and offer each the opportunity to share in our success. We structure our compensation plans to ensure we offer competitive remuneration and we regularly provide feedback and support to our managers to ensure they have the appropriate tools to successfully complete their required functions. We remain confident that we can continue to retain and attract top talent without interruption or significant impact to our operating results. We may record material charges against our earnings due to any number of events that could cause impairments to our assets In accordance with U.S. GAAP, we capitalize certain expenditures and advances relating to disposal site development and expansion projects. Events that could, in some circumstances, lead to impairment include, but are not limited to, shutting down a facility or operation or abandoning a development project or the denial of an expansion permit. If we determine that a development or expansion project is impaired, we will charge against earnings any unamortized capitalized expenditures and advances relating to such facility or project reduced by any portion of the capitalized costs that we estimate will be recoverable, through sale or otherwise. We also carry a significant amount of goodwill on our consolidated balance sheet, which is assessed for impairment annually, and more frequently in the case of certain triggering events. We may be required to incur charges against earnings if we determine that certain events (such as a downturn in the recycling commodities market) could potentially cause the carrying value of our assets to be greater than their fair value, resulting in impairment. Any such charges could have a material adverse effect on our results of operations. Our insurance coverage may not be sufficient to cover all losses or claims that we may incur We seek to obtain and maintain, at all times, insurance coverage in respect of our potential liabilities and the accidental loss of value of our assets ftom risks, in those amounts, with those insurers, and on those terms we consider appropriate, taking into account all relevant factors, including the practices of owners of similar assets and operations. However, not all risks are covered by insurance, and we cannot assure you that insurance will be available consistently or on an economically feasible basis or that the amounts of insurance will be sufficient to cover losses or claims that may occur involving our assets or operations. We have been successful in securing insurance at commercially reasonable rates and on a basis which has been sufficient to cover our primary operating losses and claims. We do not have any indication that our insurance coverage is or would be insufficient. Governmental authorities may enact climate change regulations that could increase our costs to operate Environmental advocacy groups and regulatory agencies in Canada and in the U.S. have been focusing considerable attention on the emissions of greenhouse gases and their potential role in climate change. As a consequence, governments have begun (and are expected to continue) devising and implementing laws and regulations that require reduced, or are intended to reduce, greenhouse gas emissions. The adoption of such laws and regulations, including the auction of allowances (for certain greenhouse gas emissions) and the imposition of fees, taxes or other costs, could adversely affect our collection and disposal operations. As an example, certain jurisdictions in which we operate are contemplating air pollution control regulations that are more stringent than the existing requirements. Changing environmental regulations could require us to take any number of actions, including the purchase of emission allowances or the installation of additional pollution control technology, and could make our operations less profitable, which could adversely affect our results of operations. While governmental authorities may Progressive Waste Solutions 12012 Annual Report I 58 enact regulations that increase our cost of operations, it is unlikely that an increase in the cost of operations would be isolated to us. Accordingly, the management of waste, and the companies that participate in its management are all subject to the same governmental regulation resulting in no one company being any more or less advantaged or disadvantaged than the other. We may also have opportunities to earn environmental credits at our facilities that convert methane gas to energy. We remain confident that we could recover increasing operating costs should regulations change that increase those costs. Our business is highly competitive, which could reduce our profitability or limit our growth potential The North American waste management industry is very competitive. We face competition from several larger competitors and a large number of local and regional competitors. Some of our competitors have significantly larger operations, significantly greater financial resources and greater name recognition or are able or willing to provide or bid their services at a lower price. Because companies can enter the collection segment of the waste management industry with very little capital or technical expertise, there are a large number of regional and local collection companies in the industry. We face competition from these businesses in the markets and regions we currently serve. Similar competition may exist in each location into which we try to expand in the future. In addition to national and regional firms and numerous local companies, we compete in certain markets with those municipalities that maintain waste collection or disposal operations. These municipalities may have financial advantages due to their access to user fees and similar charges, tax revenue and tax exempt financing, and some control of the disposal of waste collected within their jurisdictions. In each market in which we operate a landfill, we compete for solid waste business on the basis of disposal or "tipping" fees, geographical location and quality of operations. Our ability to obtain solid waste business for our landfills may be limited by the fact that some major collection companies also operate landfills to which they send their waste. In markets in which we do not operate a landfill, our collection operations may operate at a disadvantage to fully integrated competitors. Generally, we are either the number one, two or three operator in every market we conduct business in. We deem profitability and growth risk as Iow in our Canadian and U.S. south segments, but moderate in our U.S. northeast segment. Increasing efforts by provinces, states and municipalities to reduce landfill disposal could lead to our landfills operating at a reduced capacity or force us to charge lower rates Provinces, states and municipalities increasingly have supported the following alternatives to or restrictions on current landfill disposal: · reducing waste at the source, including recycling and composting; · prohibiting disposal of certain types of waste at landfills; and · limiting landfill capacity. Many provinces and states have enacted, or are currently considering or have considered enacting, laws regarding waste disposal, including: · requiring counties, regions, cities and municipalities under their jurisdiction to use waste planning, composting, recycling or other programs to reduce the amount of waste deposited in landfills; and · prohibiting the disposal of yard waste, tires and other items in landfills. These trends may reduce the volume of waste disposed of in landfills in certain areas, which could lead our landfills operating at less than capacity or force us to charge lower prices for landfill disposal services. While reduced landfill volumes may occur as a result of various waste reduction initiatives, we look to be a partner with the provinces, states and municipalities we operate in to be part of their waste reduction solution. And while landfill volumes may decline due to waste reduction initiatives effectively causing over-capacity in the market place, in markets where alternative means of disposal do not exist or the costs are prohibitive, landfill pricing could increase. Operating a vertically integrated suite of assets allows us to run strategies in each market place. We don't perceive this risk to be significant in the near term as this risk may take years to develop any significance. If our assumptions relating to expansion of our landfills should prove inaccurate, our results of operations and cash flow could be adversely affected Our estimates or assumptions concerning future cell closure and landfill closure and post-closure costs may turn out to be significantly different from actual results. In addition, in some cases we may be unsuccessful in obtaining an expansion permit or we may determine that an expansion permit that we previously thought was probable has become unlikely. To the extent that such events occur at a landfill certain of our cash expenditures for closure and post-closure could be accelerated, our results of operations and cash flow estimates may be adversely affected and the carrying amount of the landfill may be subject to Progressive Waste Solutions 12012 Annual Report 159 impairment testing. Our management team has a successful track record of successfully obtaining expansion permits. Any changes to expansion assumptions will be recognized over the remaining life of the landfill site from the date of change in assumption. Changes to expansion assumptions when a landfill site has many years of permitted operation remaining will have less of an impact on our results of operations than a site with a significantly shorter permitted life. Many of our landfills are permitted for significant periods of time, such that a change in expansion assumptions limits our exposure to change. Accordingly, we don't perceive this risk to be significant at this time. We routinely make accounting estimates and judgments. If these are proven to be incorrect, subsequent adjustments could require us to restate our historical financial statements We make accounting estimates and judgments in the ordinary course of business. Such accounting estimates and judgments will affect the reported amounts of our assets and liabilities at the date of our financial statements and the reported amounts of our operating results during the periods presented. Additionally, we interpret the accounting rules in existence as of the date of our financial statements when the accounting rules are not specific to a particular event or transaction. If the underlying estimates are ultimately proven to be incorrect, or if our auditors or regulators subsequently interpret our application of accounting rules differently, subsequent adjustments could have an adverse effect on our operating results for the period or periods in which the change is identified. Additionally, subsequent adjustments could require us to restate our historical financial statements. We remain diligent in our review of accounting rules and regulation. We work with our auditors on all significant accounting matters and perform various internal reviews and complete various internal procedures to ensure we remain compliant. The adoption of new accounting standards or interpretations could adversely affect our financial results Our implementation of and compliance with changes in accounting rules and interpretations could adversely affect our operating results or cause unanticipated fluctuations in our results in future periods. The accounting rules and regulations that we must comply with are complex and continually changing. While we have prepared our financial statements in accordance with U.S. GAAP, we cannot predict the impact of future changes to accounting principles on our financial statements going forward. If we identify deficiencies in our internal control over finandal reporting, we could be required to restate our historical financial statements We may face risks if there are deficiencies in our internal control over financial reporting and disclosure controls and procedures. Any deficiencies, if uncorrected, could result in our financial statements being inaccurate and result in future adjustments or restatements of our historical financial statements, which could adversely affect our business, financial condition and results of operations. We cannot predict the impact a deficiency in our internal controls over financial reporting could have on our financial statements. However, we remain confident that we have established and maintain adequate internal controls over financial reporting and believe that our internal controls are effective. Risks and uncertainties related to an investment in shares Future issuances of shares will be dilutive to existing shareholders We are authorized to issue an unlimited number of shares, an unlimited number of special shares and an unlimited number of preferred shares issuable in series for that consideration and on those terms and conditions as shall be established by the Board of Directors, generally without the approval of shareholders. Existing shareholders have no pre-emptive rights in connection with such further issues. Subject to rules of the Toronto and New York stock exchanges requiring shareholder approval, we may make future acquisitions or enter into financings or other transactions involving the issuance of our securities which may be dilutive to existing shareholders. Sales or issuances of substantial amounts of shares, or the perception that such sales could occur, may adversely affect prevailing market pricing for our shares. Shares are publicly traded, and are subject to various factors that could make share price volatile From time to time, the stock market experiences significant price and volume volatility that may affect the market price of the shares for reasons unrelated to our performance. The market price of shares may fluctuate based on a number of factors, including our operating performance, the public's reaction to our press releases, the arrival and departure of key personnel and changes in our guidance. Payment of dividends is subject to the discretion of the Board of Directors Dividends paid by us may fluctuate. The payment of dividends is subject to the discretion of the Board of Directors, and our dividend policy and the funds available for the payment of dividends from time to time will be dependent upon, among other things, our free cash flow~B~, general business conditions, financial requirements for our operations and our execution of our growth strategy, the terms of our existing indebtedness, the satisfaction of solvency tests imposed by the Business Corporations Act (Ontario) for the declaration and payment of dividends and other factors that the Board of Directors may in the future consider to be relevant. Progressive Waste Solutions 12012 Annual Report 160 We are a 'foreign private issuer" in the U.S. and we are permitted to file less information with the U.S. Securities and Exchange Commission than a company incorporated in the U.S. Accordingly, there may be less information about us than publicly available from a company incorporated in the U.S. As a "foreign private issuer" we are exempt from rules under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act'9, as well as procedural requirements, for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act. Moreover, we are not required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission (the "SEC") as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, nor are we generally required to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information. In addition, we are permitted, under a multi-jurisdictional disclosure system ("MJDS'9 adopted by the U.S. and Canada, to prepare our disclosure documents in accordance with Canadian disclosure requirements. Accordingly, there may be less information concerning us publicly available than there is for U.S. public companies. We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses More than 50% of our total assets are located in the U.S. In order to maintain our current status as a foreign private issuer under U.S. securities laws, the majority of our shares must be either directly or indirectly owned by non-residents of the U.S. We may in the future lose our foreign private issuer status if the majority of our shares are held by residents of the U.S. The regulatory and compliance costs to us under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs we incur as a Canadian foreign private issuer eligible to use the MJDS. If we were not a foreign private issuer, we would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. In addition, we may lose the ability to rely upon exemptions from New York Stock Exchange ("NYSE'~ corporate governance requirements that are available to foreign private issuers. Finally, if we lose our foreign private issuer status, to the extent that we were to offer or sell our securities outside of the U.S., we would have to comply with the generally more restrictive Regulation S requirements that apply to U.S. companies, which could limit our ability to access the capital markets in the future and create a higher likelihood that investors would require us to file resale registration statements with the SEC as a condition of any such financings. While we contend that losing our MJDS filing status will result in additional costs and expense, we don't believe the costs will be significant. Because we are an Ontario company, certain civil liabilities andjudgments may not be enforceable against us We are organized under the laws of the Province of Ontario, Canada, and certain of our directors and officers are residents of Canada. Consequently, it may be difficult for U.S. investors to affect services of process within the U.S. upon us or upon our directors or officers, or to realize in the U.S. upon judgments of U.S. courts predicated upon civil liabilities under the Exchange Act. Furthermore, it may be difficult for investors to enforce judgments of U.S. courts based on civil liability provisions. Progressive Waste Solutions 12012 Annual Report 161 Environmental Matters Environmental charter and mandate We have an environmental, health and safety committee (the Ucommittee'~ and its primary purpose is to assist the Company's Board of Directors in fulfilling its oversight responsibilities in relation to the following: · establish and review of safety, health and environmental policies, standards, accountability and programs; · manage and oversee the implementation of compliance systems; · monitor the effectiveness of safety, health and environmental policies, systems and monitoring processes; · receive audit results and updates from management with respect to health, safety and environmental performance; · review the annual budget for safety, health and environmental operations; · commission and review reports, including external audits, on the nature and extent of any compliance and non-compliance with environmental and occupational health and safety policies, standards and applicable legislation and establishing plans to correct deficiencies, if any; · matters customarily performed by the committee; and · addressing any additional matters delegated to the committee by the Company's Board of Directors. The committee consists of no less than three directors. Its members and its Chair will be appointed annually by the Board of Directors, on the recommendation of the governance and nominating committee. The Board of Directors may fill vacancies in the committee by election from its members, and if and whenever a vacancy shall exist in the committee, the remaining members may exercise all of its powers so long as a quorum remains in office. The Company's secretary shall, upon the request of committee chairman, any member of the committee or the Vice-Chairman and Chief Executive Officer of the Company, call a meeting of the committee. Any member of the committee may participate in the meeting and the committee may invite such officers, directors and employees of the Company and its subsidiaries as it may see fit, from time to time, to attend meetings of the committee. The committee shall keep minutes of its meetings which shall be submitted to the Board of Directors. To carry out its oversight responsibilities, with respect to the environment, the responsibilities of the committee will be: · to review and recommend to the Board of Directors, for approval, environmental policies, standards, accountabilities and programs for the Company, and changes or additions thereto, in the context of competitive, legal and operational considerations; · to commission and review reports, including external audits, on the nature and extent of compliance or any non-compliance by the Company with environmental policies, standards and applicable legislation and plans to correct deficiencies, if any, and to report to the Board of Directors on the status of such matters; · to review such other environmental matters as the committee may consider suitable or the Board of Directors may specifically direct. The committee will regularly report to the Board of Directors on: · compliance with safety, health and environmental policies; · the effectiveness of safety, health and environmental policies; and · all other significant matters it has addressed and with respect to such other matters that are within its responsibilities. The committee will annually review and evaluate the adequacy of its charter and recommend any proposed changes to the governance and nominating committee. The committee may, without seeking approval of the 8oard of Directors or management, select, retain, terminate, set and approve the fees and other retention terms of any outside advisor, as it deems appropriate. The Company will provide for appropriate funding, for payment of compensation to any such advisors, and for ordinary administrative expenses of the committee. Environmental policies (excluding critical accounting policies) Our environmental health and safety policy requires that we complete a thorough review of the environmental health and safety risks associated with acquisition candidates, or assumption, essential to ensure that the status of compliance with laws, regulations, permits or other legal instruments is understood to the best of our knowledge prior to completing the acquisition, or assumption. This policy establishes the requirement and responsibility for conducting environmental health and safety due diligence reviews of acquisition candidate companies, joint-ventures, building or land leases, buildings or land acquisition, third Progressive Waste Solutions 12012 Annual Report 162 party storage facilities and assumption including environmental health and safety provisions of facility operating contracts or other obligations being assumed. The policy further requires a review and assessment of the structural integrity of buildings and tipping floors of buildings where waste will be placed. Our third party transfer and disposal sites policy addresses waste disposal by us at third party transfer stations, landfills, recycling facilities and other processing and disposal facilities. These facilities receive wastes and recyclable material collected by us from our customers and in some instances generated by us in the operation of our business. Internally generated wastes include general waste and recyclable material, used oils and lubricants, leachate, condensate, batteries, solvents, used tires, scrap metals and other wastes. To ensure that the third party facilities used by us do not impact our business, or our environmental or health and safety record, the third party facilities must meet an acceptable operational and regulatory compliance requirement as set forth by us. Third party facilities that do not meet the acceptable minimum standards will not be used, unless approved by certain senior management. Our nuisance wildlife management policy addresses guidelines for managing nuisance wildlife. Policy development In the development of any policy, including but not limited to environmental policies, management input drives the core content for all policies. Our internal audit function provides the necessary administrative support for documenting management's intent and maintaining the policies. Policy owners are identified and referenced in the policy itself and will drive the input to their policies. Ownership and input is primarily determined by the core functional nature (e.g. finance, human resources, environmental) of the policy and by the constituency impacted. A policy may be developed or refined as the result of a significant event that permanently changes the way we operate or report financial results. When a significant event occurs, relevant management, together with the policy owner, will determine whether a new policy should be developed or an existing policy updated. The company level policies must meet or exceed the TSX and NYSE guidelines for corporate governance. Policy content must be specific enough to provide adequate and effective internal controls, and general enough to ensure that adherence by all locations is realistic, regardless of size. Special care is given to ensure policies are concise and focused on the essential requirements of management and regulatory authorities. Both the policy owner and executive management must approve ail new policies and changes to existing policies. The audit committee and/or Board of Directors is also charged with reviewing company level policies (i.e. disclosure, code of conduct) and changes to existing policies or new policy requests. Once a policy is finalized and approvals are obtained, the most up-to-date version of each policy is maintained internally in electronic and printed formats. A printed copy of all policies is made available and maintained at each location. As policies are updated and disseminated, it is the responsibility of each department head and/or field management to maintain the most current policies and communicate them to the employees at their respective location(s). Policy owners review their respective policies, at least annually, and update the content as necessary. Requests for new policies or permanent changes to existing policies are communicated to internal audit. The internal audit department will review the request and present it to the relevant policy owner for evaluation. An invento~ of existing policies is maintained on our Intranet site and will be referred to when deciding whether to add or change a policy. Legislation and governmental regulation We are subject to extensive legislation and governmental regulation that may restrict or increase the cost of our operations. Our equipment, facilities and operations are subject to extensive and changing federal, provincial, state and local laws and regulations relating to environmental protection, health, safety, training, land use, transportation and related matters. These include, among others, laws and regulations governing the use, treatment, transportation, storage and disposal of wastes and materials, air quality, including carbon or green house gas emissions, water quality, permissible or mandatory methods of processing waste and the remediation of contamination associated with the release of hazardous substances. In addition, federal, provincial, state and local governments may change the rights they grant to, and the restrictions they impose on, waste management companies, and those changes could restrict our operations and growth. Our compliance with regulatory requirements is costly. We may be required to enhance, supplement or replace our equipment and facilities and to modify landfill operations and, if we are unable to comply with applicable regulatory requirements, we could be required to dose certain landfills or we may not be able to offset the cost of complying with these requirements. In addition, Prog~ssive Waste Solutions 12012 Annual Report I 63 environmental regulatory changes or an inability to obtain extensions to the life of a landfill could accelerate or increase accruals or expenditures for closure and post-closure monitoring and obligate us to spend monies in addition to those currently accrued. Extensive regulations govern the design, operation, and closure of landfills. For example, in October 1991, the U.S. Environmental Protection Agency ("EPA'~ established minimum federal requirements for solid waste landfills under Subtitle D of The Federal Resource Conservation and Recovery Act of 1976, as amended. If we fail to comply with the Subtitle D regulations, we could be required to undertake investigatory or remedial activities, curtail operations or close a landfill temporarily or permanently, or be subject to monetary penalties. Moreover, if regulatory agencies fail to enforce the Subtitle D regulations vigorously or consistently, competitors whose facilities do not comply with the Subtitle D regulations or their state counterparts may obtain an advantage over us. The financial obligations arising from any failure to comply with the Subtitle D regulations could harm our business and operating results. Similar minimum requirements, including the requisite obligations, exist for solid waste landfills operating in Canada, which are governed by the respective provincial jurisdiction in which the landfill is located. Certain of our waste disposal operations traverse state, provincial, county and the Canada/U.S. national boundaries, in the future, our collection, transfer, and landfill operations may be affected by proposed U.S. federal legislation governing interstate shipments of waste. Such proposed federal legislation could prohibit or limit the disposal of out-of-state waste (including waste from Canada) and may require states, under certain circumstances, to reduce the amount of waste exported to other states. If this or similar legislation is enacted in states in which we operate, it could have an adverse effect on our operating results, including our landfills that receive a significant portion of waste originating from out-of-state. In addition, we believe that several states have proposed or have considered adopting legislation that would regulate the interstate transportation and disposal of waste in the states' landfills. Certain collection, transfer, and landfill operations may also be affected by "flow control" legislation. Some states and local governments may enact laws or ordinances directing waste generated within their jurisdiction to a specific facility for disposal or processing. If this or similar legislation is enacted, state or local governments could limit or prohibit disposal or processing of our waste in transfer stations or landfills or in third party landfills used by us. In 1996, the New York City Council enacted Local Law 42, which prohibits the collection, disposal or transfer of commercial and industrial waste without a license issued by the New York City Business Integrity Commission, formerly known as the Trade Waste Commission (the "Business Integrity Commission"), and requires Business Integrity Commission approval of all acquisitions or other business combinations in New York City proposed by all licensees. The need for review by the Business Integrity Commission could delay our consummation of acquisitions in New York City, which could limit our ability to expand our business in this region. From time to time, provincial, state or local authorities consider and sometimes enact laws or regulations imposing fees or other charges on waste disposed of at landfills. For example the province of Quebec and Manitoba introduced a disposal levy payable to the province for all solid waste disposed of at a landfill. Accordingly, these levies may discourage the delivery and disposal of solid waste at landfills we operate in these provinces. While we have been successful in passing these additional levies along to our customers, if additional fees are imposed in these or other jurisdictions in which we operate, and we are not able to pass the fees through to our customers, our operating results would be negatively affected. We must comply with the requirements of federal, provincial, and state legislation related to worker health and safety. These requirements can be onerous and require the employer to provide a safe workplace and require that any person that directs (or has the authority to direct) how another person does work or performs a task must take reasonable steps to prevent bodily harm to any person arising from that work or task. Our compliance with these regulatory requirements is costly. We may be required to enhance, supplement or replace equipment and or facilities. If we are unable to comply with these regulatory requirements, we could be required to close certain facilities. Failure to comply with these requirements may result in criminal or quasi-criminal proceedings and related penalties. The operational and financial effects discussed above associated with compliance with the laws and regulations and changes thereto to which we are subject, could require us to make significant expenditures or otherwise affect the way we operate our business, and could affect our financial condition and results of operations. Environmental regulation and litigation We may be subject to legal action relating to compliance with environmental laws, and to civil claims from parties alleging some harm as a consequence of migrating contamination, odours, and other releases to the environment or other environmental matters (including the acts or omissions of its predecessors) for which the business may be responsible. We may also be subject to court challenges of our operating permits. Progressive Waste Solutions 12012 Annual Report 164 Solid waste management companies are often subject to close scrutiny by federal, provincial, state, and local regulators, as well as private citizens, and may be subject to judicial and administrative proceedings, including proceedings relating to their compliance with environmental and local land use laws. In general, environmental laws authorize federal, provincial, state or local environmental regulatory agencies and attorneys general (and in some cases, private citizens) to bring administrative or judicial actions for violations of environmental laws or to revoke or deny the renewal of a permit. Potential penalties for such violations may include, among other things, civil and criminal monetary penalties, imprisonment, permit suspension or revocation, and injunctive relief. Under certain circumstances, citizens are also authorized to file lawsuits to compel compliance with environmental laws, regulations or permits under which we operate. Surrounding landowners or community groups may also assert claims alleging environmental damage, personal injury or property damage in connection with our operations. From time to time, we have received, and may in the ordinary course of business in the future receive, citations or notices from governmental authorities alleging that our operations are not in compliance with our permits or certain applicable environmental or land use laws or regulations. We will generally seek to work with the relevant authorities and citizens and citizen groups to resolve the issues raised by these citations or notices. However, we may not always be successful in resolving these types of issues without resorting to litigation or other formal proceedings. Any adverse outcome in these proceedings, whether formal or informal, could result in negative publicity, reduce the demand for our services, and negatively impact results from operations. A significant judgment against us, the loss of a significant permit or license or the imposition of a significant fine could also affect our financial condition and results of operations. Our future compliance with landfill gas management requirements under the U.S. Clean Air Act of 1970, as amended, and provincial gas management legislation in Canada, may require installation of costly equipment, as well as incurring additional operating and maintenance costs. Environmental contamination We may have liability for environmental contamination associated with our current and former facilities as well as third party facilities. We may also be susceptible to negative publicity if we are identified as the source of potential environmental contamination. We could be liable to federal, provincial or state governments or other parties if hazardous (or other regulated or potentially harmful) substances contaminate or have contaminated our properties, including soil or water under our properties, or if such substances from our properties contaminate or have contaminated the properties of others. We could be liable for this type of contamination even if the contamination did not result from these activities or occurred before we owned or operated the properties. We could also be liable for such contamination at properties to which we transported such substances or arranged to have hazardous substances transported, treated or disposed. Certain environmental laws impose joint and several and strict liability in connection with environmental contamination, which means that the we could have to pay all recoverable damages, even if we did not cause or permit the event, circumstance or condition giving rise to the damages. Moreover, many substances are defined as ~hazardous" under various environmental laws and their presence, even in minute amounts, can result in substantial liability. While we may seek contribution for these expenses from others, we may not be able to identify who the other responsible parties are and we may not be able to compel them to contribute to these expenses or they may be insolvent or unable to afford contribution. If we incur liability and if we cannot identify other parties whom we can compel to contribute to our expenses and who are financially able to do so, our financial condition and results of operations may be impacted. In addition, we have previously acquired, and may in the future acquire, businesses that may have handled and stored, or will handle and store, hazardous substances, including petroleum products, at their facilities. These businesses may have released substances into the soil or groundwater. They may also have transported or disposed of substances or arranged to have transported, disposed of or treated substances to or at other properties where substances were released into soil or groundwater. Depending on the nature and business of these acquisitions, and other factors, we could be liable for the cost of cleaning up any contamination, and other damages, for which the acquired businesses are liable. Any indemnities or warranties we obtained or obtain in connection with the purchases of these businesses may not suffice to cover these liabilities, due to limited scope, amount or duration, the financial limitations of the party who gave or gives the indemnity or warranty or other reasons. Moreover, available insurance does not cover liabilities associated with some environmental issues that may have existed prior to attachment of coverage. We could be subject to legal actions brought by governmental or private parties in connection with environmental contamination or discharges. Any substantial liabilities associated with environmental contamination, whether to federal, provincial or state environmental authorities or other parties, could affect our financial condition and results of operations. Progressive Waste Solutions 12012 Annual Report 165 The currently inactive Tantalo landfill, which is located on the Seneca Meadows landfill, has been identified by the State of New York as an "Inactive Hazardous Waste Disposal Site". In the second quarter of 2009, the Department of Environmental Conservation reclassified the site to one which no longer presents a significant threat to public health or the environment. The reclassification is the result of recently completed remedial construction activities. Climate Change Risk We believe we are exposed to regulatory risks related to climate change because we operate in one of the most heavily regulated industries in North America. The addition of increased regulations for the management of Green House Gases ("GHG~), particularly methane as a component of landfill gas, has been anticipated in the U.S. and in Canada. We believe we are well positioned to manage these changes without severe impact to our operations. The management of landfill gas generated at our landfills has been an integral part of our operations for many years and the associated costs required to manage this gas is contemplated in the development of our landfill asset amortization rates and asset retirement obligations. We expect and encourage further strengthening of regulations related to our industry and we are committed to ensuring our operations meet and, where possible, exceed those requirements. While meeting an ever-increasing regulatory regime can be costly, we proactively undertake initiatives to manage our GHG obligations to minimize those costs in an environmentally conscious manner. We have taken action to manage regulatory risks and as one of North America's largest environmental services companies, we have extensive experience and resources needed to operate in a highly regulated industry with strict legislation. In addition to meeting and exceeding regulatory expectations for many years, we work constantly to identify best management practices that promote environmental sustainability. We regularly review regulatory risks by qualified internal and external personnel at the local, regionat and national levels. This means that in all of our communities learning about new and improved methods of managing our services occurs by engaging with regulators and with industry experts to ensure we are always at the forefront of environmental excellence. We are also exposed to physical risks. Our operations provide service to various Canadian and U.S. markets and we operate landfills, transfer stations, MRFs and three landfill gas to energy facilities. In addition, several of our landfills include facilities for the collection and thermal destruction of methane and it is management's future intention to implement landfill gas recovery systems for other landfills it operates. Some of these markets are located in geographic areas with altitudes close to sea level, but the majority are located either remote from or at sufficient altitudes as to not be affected by sea level change. We are prepared for and have historically taken steps to minimize the potential impact of extreme events, such as weather, to our operations. We are also dependent on suppliers of various resources such as waste collection vehicles, fuel and other consumables. Any extreme disruption in the supply of such resources could impede our ability to operate efficiently. We continually review our physical risks as part of regular management operating reviews and, as issues are raised, we adapt our operating processes to minimize potential impacts from these risks. We are also aware of consumer attitudes and demands, and changes thereto, as the public becomes ever increasingly aware of, and educated about, environmental issues. We believe that consumers prefer to work with companies that are environmentally astute, provide environmentally sound services and encourage environmental well-being. We encourage these attitudes and beliefs and, as an industry leader, we are well-positioned to assist our customers in realizing beneficial actions and in adjusting to changes in regulation or service that may result from climate change initiatives. We are committed to identifying and offering services that can mutually benefit our customers while also addressing their climate change issues. We regularly review our operations and policies to incorporate innovation and strategic management plans to reduce greenhouse gas emissions while remaining committed to provide competitive customer service and having continued respect for regulations and environmental stewardship. Progressive Waste Solutions 12012 Annual Report 166 Financial Information Controls and Procedures The Vice Chairman and Chief Executive Officer and the Vice President and Chief Financial Officer of the Company, together with various levels of management, have evaluated the design and operating effectiveness of the Company's disclosure controls and procedures and internal control over financial reporting at December 31, 2012. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The Vice Chairman and Chief Executive Officer and the Vice President and Chief Financial Officer concluded that the Company's disclosure controls and procedures were adequate and effective to ensure significant information relating to the Company is disclosed in accordance with various regulatory requirements, in addition, the Vice Chairman and Chief Executive Officer and Vice President and Chief Financial Officer concluded that the Company's internal control over financial reporting was adequate and effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, excluding certain permitted assets and operations acquired in the year as outlined in Management's Report on Internal Control Over Financial Reporting. For the year ended December 31, 2012, there have been no changes to the Company's internal control over financial reporting that had, or are reasonably likely to have, a material effect on its internal controls over financial reporting. Definitions ~^~ All references to 'Adjusted EBITDA~ in this document are to revenues less operating expense and SG&A, excluding certain non-operating or non-recurring SG&A expense, on the consolidated statement of operations and comprehensive income or loss. Adjusted EBITDA excludes some or all of the following: certain SG&A expenses, restructuring expenses, goodwill impairment, amortization, net gain or loss on sale of capital assets, interest on long-term debt, net foreign exchange gain or loss, net gain or loss on financial instruments, loss on extinguishment of debt, other expenses, income taxes and income or loss from equity accounted investee. Adjusted EBITDA is a term used by us that does not have a standardized meaning prescribed by U.S. GAAP and is therefore unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA is a measure of our operating profitability, and by definition, excludes certain items as detailed above. These items are viewed by us as either non-cash (in the case of goodwill impairment, amortization, net gain or loss on financial instruments, net foreign exchange gain or loss, deferred income taxes and net income or loss from equity accounted investee) or non-operating (in the case of certain SG&A expenses, restructuring expenses, net gain or loss on sale of capital assets, interest on long-term debt, loss on extinguishment of debt, other expenses, and current income taxes). Adjusted EBITDA is a useful financial and operating metric for us, our Board of Directors, and our lenders, as it represents a starting point in the determination of flee cash flow~B~. The underlying reasons for the exclusion of each item are as follows: Certain SG&A expenses - SG&A expense includes certain non-operating or non-recurring expenses. These expenses include transaction costs related to acquisitions, fair value adjustments attributable to stock options, restricted share expense and payments made to senior executives on their departure. These expenses are not considered an expense indicative of continuing operations. Certain SG&A costs represent a different class of expense than those included in adjusted EBITDA. Restructuring expenses - restructuring expenses includes costs to integrate various operating locations with our own, exiting certain property and building and office leases, employee severance and employee relocation costs incurred in connection with our acquisition of WSI. These expenses are not considered an expense indicative of continuing operations. Accordingly, restructuring expenses represent a different class of expense than those included in adjusted EBITDA. Goodwillimpairment- as a non-cash item goodwill impairment has no impact on the determination of free cash flow(8). Amortization - as a non-cash item amortization has no impact on the determination of free cash flow~B). Net gain or loss on sale of capital assets - proceeds from the sale of capital assets are either reinvested in additional or replacement capital assets or used to repay revolving credit facility borrowings. Interest on long-term debt - interest on long-term debt is a function of our debt/equity mix and interest rates; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in adjusted EBITDA. Netforeign exchange gain orloss - as non-cash items, foreign exchange gains or losses have no impact on the determination of free cash flow(8). Net gain or loss on financialinstruments - as non-cash items, gains or losses on financial instruments have no impact on the determination of flee cash flowIBI. Loss on extinguishment of debt - loss on extinguishment of debt is a function of our debt financing; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in adjusted EBITDA. Progressive Waste Solutions 12012 Annual Report 167 Other expenses - other expenses typically represent amounts paid to certain management of acquired companies who are retained by us post acquisition and amounts paid to certain executives in respect of acquisitions successfully completed. These expenses are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in adjusted EBITDA. Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from our daily operations. Net income or loss from equity accounted investee - as a non-cash item, net income or loss from our equity accounted investee has no impact on the determination of flee cash flowIBI. Adjusted EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between adjusted EBITDA and net income or loss are detailed in the consolidated statement of operations and comprehensive income or loss beginning with operating income or loss before restructuring expenses, goodwill impairment, amortization and net gain or loss on sale of capital assets and ending with net income or loss and includes certain adjustments for expenses recorded to SG&A, which management views as not being indicative of continuing operations. A reconciliation between operating income or loss and adjusted EBITDA is provided below. Adjusted operating income and adjusted net income are also presented below. Yearended December31 2012 2011 Operating income (loss) Transaction and related costs - SG&A Fair value movements in stock options SG&A Restricted share expense - SG&A Payments made to executives and senior management on departure - SG&A Restructurinc. i expenses and goodwill impeirment Adjusted operatln~l income $ 237,711 $ (88,391) 2,507 1 ,~0 (110) (6,808) 2,034 2,107 3,991 9,928 362,] 66 246,133 280,882 Net gain on sale of capital assets (592) (3,412) Amortization 274,118 257,066 Ad~ustedEBl~)A $ 519,659 $ 534,536 Net income (loss) Transaction and related costs- SG&A Fair value movements in stock options - SG&A Restricted share expense - SG&A Payments made to executives and senior management on departure - SG&A Restructuring expenses and goodwill impairment Net loss (gain) on financial instruments Loss on extinguishment of debt Other expenses Net income tax expense or (recover) $ ~4,357 $ (196,136) 2,507 1,880 (110) (6,808) 2,034 2,107 3,991 9,928 362,166 1,725 (4,984) 16,924 105 872 (8,346) (34,022) Adjusted net income $ 113,187 S 13S,003 ~B~ We have adopted a measure called "free cash flow" to supplement net income or loss as a measure of our operating performance. Free cash flow is a term which does not have a standardized meaning prescribed by U.S. GAAP, is prepared before dividends declared and shares repurchased, and may not be comparable to similar measures prepared by other companies. The purpose of presenting this non-GAAP measure is to provide disclosure similar to the disclosure provided by other U.S. publicly listed companies in our industry and to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our performance relative to other U.S. publicly listed companies and to assess the availability of funds for growth investment, debt repayment, share repurchases or dividend increases. All references to "free cash flow" in this document have the meaning set out in this note. Progressive Waste Solutions J 2012 Annual Report 168 Management's Report on Internal Control Over Financial Reporting The management of Progressive Waste Solutions Ltd. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is reviewed and approved by the Vice Chairman and Chief Executive Officer and the Vice President and Chief Financial Officer with the expectation of providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles genera(ly accepted in the United States of America. Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Also, projections regarding the effectiveness of these controls applicable to future periods are also subject to risk and may not be sufficient to meet the degree of compliance required to comply with the policy or procedure in the future. Management conducted an assessment of the Company's internal control over financial reporting (~ICFR'') based on the "Internal Control-Integrated Framework" established by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on that assessment, management has concluded that, as of December 31, 2012, the Company's internal control over financial reporting is considered effective. As permitted, management's evaluation of and conclusion on the effectiveness of the Company's ICFR did not include an evaluation of the internal control over financial reporting for the assets and operations of Choice Environmental Services, Inc. ("Choice") acquired on November 15, 2012. At December 31, 2012, Choice represented 3.82% of the Company's total consolidated assets and represented (0.02%) of the Company's consolidated net assets. For the year ended December 31, 2012, Choice represented 0.43% of the Company's consolidated revenues and (0.30%) of the Company's consolidated net income. Based on management's evaluation, which excluded the acquisition of Choice, the Vice Chairman and Chief Executive Officer and Vice President and Chief Financial Officer concluded that the Company's internal control over financial reporting was effective as of December 31, 2012. There were no material weaknesses identified by management as of December 31,2012. The Company's internal control over financial reporting as of December 31, 2012 has been audited by Deloitte LLI), Independent Registered Chartered Accountants, who also audited the Company's consolidated financial statements for the year ended December 31, 2012. Deloitte LLP issued an unqualified opinion on the effectiveness of our internal control over financial reporting. Joseph D. Quarin (signed) Vice Chairman and Chief Executive Officer February 19, 2013 lan Kidson (signed) Vice President and Chief Financial Officer February 19, 2013 Progressive Waste Solutions 12012 Annual Report 169 Management's Responsibility for Financial Statements The consolidated financial statements of Progressive Waste Solutions Ltd. (the "Company") are the responsibility of management and have been approved by the Company's Board of Directors. The consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements include amounts that are based on estimates and judgments which management has determined to be reasonable and presented fairly in all material respects. The Company maintains systems of internal accounting and administrative controls. These systems are designed and operated effectively to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the Company's assets are properly accounted for and adequately safeguarded. The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board of Directors carries out this responsibility principally through its Audit Committee. The Audit Committee is appointed by the Board of Directors and is comprised entirely of nommanagement directors. The Audit Committee meets periodically with management and the Company's external auditors to discuss auditing, internal control, accounting policy and financial reporting matters. The Audit Committee reviews the consolidated financial statements with management and the Company's external auditors and reports its findings to the Board of Directors before the consolidated financial statements are approved by the Board of Directors. The consolidated financial statements have been audited by Deloitte LLP, the Company's external auditors, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Joseph D. Quarin (signed) Vice Chairman and Chief Executive Officer February 19, 2013 lan Kidson (signed) Vice President and Chief Financial Officer February 19, 2013 Progressive Waste Solutions 12012 Annual Repor~ 170 Report of Independent Registered Chartered Accountants To the Board of Directors and Shareholders of Progressive Waste Solutions Ltd. We have audited the internal control over financial reporting of Progressive Waste Solutions Ltd. and subsidiaries (the "Company'~ as of December 31, 2012, based on the criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management's Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting the operat!ons and assets of Choice Environmental Services, Inc. ("Choice'~ which was acquired on November 15, 2012. At December 31, 2012 Choice represented approximately 3.82% of the Company's total consolidated assets and (0.02%) of the Company's total consolidated net assets. For the year ended December 31, 2012, Choice represented 0.43% of the Company's consolidated revenues and (0.30%) of consolidated net income. Accordingly, our audit did not include the internal control over financial reporting at Choice. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control -- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31,2012 of the Company and our report dated February 19, 2013 expressed an unqualified opinion on those financial statements. "Deloitte LLP" Independent Registered Chartered Accountants Licensed Public Accountants February 19, 2013 Toronto, Canada Progressive Waste Solutions 12012 Annual Report f 71 Report of Independent Registered Chartered Accountants To the Board of Directors and Shareholders of Progressive Waste Solutions Ltd. We have audited the accompanying consolidated financial statements of Progressive Waste Solutions Ltd. and subsidiaries (the "Company'S, which comprise the consolidated balance sheets as at December 31, 2012 and December 31, 2011, and the consolidated statements of operations and comprehensive income or loss, cash flows and equity for each of the years in the two- year period ended December 31,2012, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are flee from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Progressive Waste Solutions and subsidiaries as at December 31, 2012 and December 31,2011 and the results of their operations and cash flows for each of the years in the two-year period ended December 31, 2012 in accordance with accounting principles generally accepted in the United States of America. Other Matter We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31,2012, based on the criteria established in Internal Control -- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2013 expressed an unqualified opinion on the Company's internal control over financial reporting. "Deloitte LLP" independent Registered Chartered Accountants Licensed Public Accountants February 19, 2013 Toronto, Canada Progressive Waste Solutions 12012 Annual Report 172 Progressive Waste Solutions Ltd. Consolidated Balance Sheets ('Balance sheer December 31,2012 and December 31,2011 (stated in accordance with accounting principles generally accepted in the United States of America ("U.S.") and in thousands of U.S. dollars except for issued and outstanding sham amounts) December 31, December 31, 2012 2011 ASSETS CURRENT Cash and cash equivalents $ 29,940 Accounts receivable (Note 6) 238,958 Other receivables 440 Prepaid expenses 38,762 Income taxes recoverable 2,928 Restricted cash (Note 7) 476 Other assets (Note 13) 1,573 14,143 212,099 414 31,484 452 1,972 OTHER RECEIVABLES FUNDED LANDFILL POST~:LOSURE COSTS (Note 16) INTANGIBLES (Note 8) GOODWILL (Note 9) LANDFILL OEVELOPMENT ASSETS DEFERRED FINANCING COSTS (Note 10) CAPITALASSETS (Note 11) LANDFILL ASSETS (Note 12) INVESTMENT IN EQUITY ACCOUN~D INVESTEE (Note 21 ) OTHER ASSETS (Note 13) 313,077 260,564 72 376 9,885 9,200 287,847 257,731 929,114 774,409 19,715 15,869 20,060 19,983 927,518 776,058 963,720 958,792 4,062 3,973 491 649 $ 3,475,561 $ 3,077,604 LIABILITIES CURRENT Accounts payable $ 120,341 $ 115,292 Accrued charges (Note 14) 131,528 124,496 Dividends payable 16,206 14,540 Income taxes payable 1,986 10,693 Deferred revenues 19,002 17,645 Current portion of long-term debt (Note 15) 6,907 1,500 Landfill closure and post-closure costs (Note 16) 8~71 9,468 Otherliabilities (Note 13) 2,827 3,484 307,368 297,118 LONG-TERM DEBT (Note 15) 1,681,370 1,311,593 LANDFILL CLOSURE AND POST-CLOSURE COSTS (Note 16) 1 O4,281 92,034 OTH ER LIABILITIES (Note 13) 6,166 7,484 DEFERRED INCOME TAXES (Note 23) 103,795 76,234 2,202,980 1,784,463 COMMITMENTS AND CONTINGENCIES (Note 20) SHAREHOLDERS' EQUITY (Note 17) Common shares (authorized - unlimited, issued and outstanding - 114,993,864 (December 31,2011 - 118,040,683)) Restricted shares (issued and outstanding - 172,500 (December 31,2011 - 252,150)) Additional paid in capital Accumulated deficit Accumulated other comprehensive loss 1,773,530 1,824,231 (3,460) (5,353) 2,166 2,789 (451,539) (466,775) (48,116) (61,751) Total shareholders' equity 1,272,581 1,293,141 $ 3,47S,861 $ 3,077,604 James J. Forese (signed) - Non-Executive Chalrman Douglas Knight (signed) Audit Committee Chair The accompanying notes are an integral part of these consolidated financial statements. Progressive Waste Solutions 12012 Annual Report 173 Progressive Waste Solutions Ltd. Consolidated Statements of Operations and Comprehensive Income or Loss ("Statement of Operations and Comprehensive Income or Loss") For the years ended December 31,2012 and 2011 (stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars, except share and net income or loss per share amounts) 2012 2011 $ 1,896,741 1,154,764 230,740 REVENUES $ 1,840,096 EXPENSES OPERATING 1,094,067 SELLING, GENERAL AND ADMINISTRATION 218,600 RESTRUCTURING 1,609 GOODWILL IMPAIRMENT (Note 9) 360,557 AMORTIZATION 274,118 257,066 NET GAIN ON SALE OF CAPITAL ASSETS (592) (3,412) OPERATING INCOME (LOSS) 237,711 (88,391) INTEREST ON LONG-TERM DEBT 57,428 62,086 NET FOREIGN EXCHANGE LOSS (GAIN) 9 (73) NET LOSS (GAIN) ON FINANCIAL INSTRUMENTS (Note 22) 1,725 (4,984) LOSS ON EXTINGUISHMENT OF DEBT (Note 15) 16,924 OTHER EXPENSES 105 872 INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND NET LOSS FROM EQUITY ACCOUNTED INVESTEE 161,520 (146,292) INCOME TAX EXPENSE (Note 23) Current 4g,281 47,433 Deferred 17,841 2,31 S 67,122 49,748 NET LOSS FROM EQUITY ACCOUNTED INVESTEE 41 96 NET INCOME (LOSS) g4,357 (196,136) OTHER COMPREHENSIVE INCOME (LOSS): Forei~In cur~enc~ translation adjustment 11,702 (12,520) Derivatives designated as cash flow hedges, net of income tax ($863) (2011 - $3,117) Settlement of derivatives designated as cash flow hedges, net of income tax ($177) (2011 - ($646)) 1,804 (5,790) 329 1,201 1,933 (4,589) TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 13,635 (17,109) COMPREH EN SIVE INCOME (LOSS) $ 107,992 $ (213,245) Net income (loss) per weighted average share, basic (Note 17) Net income (loss) per weighted average share, diluted (Note 17) Weighted average number of shares outstanding (thousands), basic (Note 17) Weighted average number of shares outstanding (thousands), diluted (Note 17) $ 0.81 S $ 0.81 S 116,178 116,178 (1.63) (I.63) 120,683 120,683 The accompanying notes are an integral part of these consolidated financial statements. Progressive Waste Solutions 12012 Annual Report 174 Progressive Waste Solutions Ltd. Consolidated Statements of Cash Flows ("statement of Cash Flows") For tl~ years ended December 31,2012 and 2011 (stated in accordance with accountinc, i principles ~le nerally accepted in the U.S. and in thousands of U.S. dollars) 2012 2011 NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES OPERATING Net income (loss) ~tems not affecting cash Restricted share expense Write~off of deferred financing costs (Note 10 and 1 $) Accretion of landfill closure and post-closure costs (Note 16) Goodwill impairment AmoKdzation of intangibles Amortization of capital assets Amortization of landfill assets Interest on long-term debt (amortization of deferred financing costs) (Note 10) Net gain on sale of capital assets Net loss (gain) on financial instruments Deferred income taxes Net loss from equity accounted investee Landfill closure and post-closure expenditures (Note 16) Changes in non-cash workin~l capital items (Note 18) $ 94,357 $ (196,136) 2,034 2,107 11,726 5,240 5,071 360,5S7 S3,585 49,559 141,192 131,088 79,341 76,419 5,665 6,035 (592) (3,412) 1,725 (4,984) 17,841 2,315 41 96 (6,737) (4,345) (68,657) (28,664) Cash ~lenerated from operatin~ activities 336,761 395,706 INVESTING Acquisitions, net of cash acquired (Note 5) Restricted cash deposits Investment in other receivables Proceeds from other receivables Funded landfill post-closure costs Purchase of capital assets Purchase of landfill assets Proceeds from the sale of capital assets Investment in landfill development assets (282,313) (139,857) (24) (18) (148) 440 474 (404) (381) (180,322) (112,348) (66,556) (58,665) 2,761 5,925 (3,968) (6,428) Cash utilized in investin~ activities (530,534) (311,298) FINANCING Payment of deferred financing costs Proceeds from long-term debt Repayment of long term debt Proceeds from the exercise of sto~k options (Note 17) Repurchase of common shares (Note 17) Purchase of, net of proceeds from, restricted shares Dividends paid to shareholders (17,315} (4,811 ) 1,924,480 380,347 (1,568,323) (318,085) 403 2,385 (65,633) (79,326) (541) (4,226) (63,478) (61,078) Cash generated from (utirized in) financing activities Effect of foreign currency translation on cash and cash ecluivalents 209,593 (84,795) (23) 1,124 NET CASH INFLOW 15,797 737 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 14,143 13,406 CASH AND CASH EQUIVALENTS, END OF YEAR $ 20,940 S 14,143 SUPPLEMENTAL CASH FLOW INFORMATION: Cash and cash equivalents are comprised of: Cash $ 28,029 S 14,142 Cash ec~uivalents 1,011 1 $ 29,940 $ 14,143 Cash paid during the year for: Income taxes $ 53,S31 $ 49,509 Interest $ 57,109 $ 59,289 The accompanying notes are an integral part of these consolidated financial statements. Progressive Waste Solutions 12012 Annual Repor~ 175 Progressive Waste Solution.s_ Ltd. Consolidated Statement of Equity ("statement of Equity") For the year ended December 31, 2012 (stated in accordance with accountincj principles c. tenerally accepted in the U.S. and in thousands of U.S. dollars) Additional Common Restricted Treasury paid in shares shares shares capital Balance at December 31, 2011 $ 1,824,231 $ (5,353) $ $ 2,789 Net income Dividends declared Restricted shares purchased, net of restricted shares sold Restricted share expense Vesting of restricted shares Common sba res issued on exercise of stock options Common shares acquired by U.S. long-term incentive plan ("tTIP") Deferred compensation obligation Repurchase of common shares Foreign currency translation adjustment Derivatives designated as cash flow hedges, net of income tax Settlement of derivatives desionated as cash flow hed~les, net of income tax Balance at December 31, 2012 (494) 2,034 2,387 (2,387) 673 (270) (3,505) 3,505 (51,374) $ 1,773,530 S (3,460) $ Accum- ulated other Accum- comprehen ulated -sive loss Total deficit (Note 17) eq ui'e/ $ (466,775) $ (61,751) $ 1,293,141 94,357 94,357 (64~15) (64~15) (47) (541) 2,034 4O3 (3,505) 3,505 (14,259) (65~33) 11,702 11,702 1,604 1,604 329 329 $ 2,166 $ (451,539) $ (48,116) $ 1,272,581 The accompanying notes are an integral parc of these consolidated financial statements. Progressive Waste Solutions Ltd. Consolidated Statement of Equity For the year ended December 31,2011 (stated in accordance with accounting principles c~enerall)' accepted in the U.S. and in thousands of U.S. dollars) Additional Common Restricted Treasury paid in shares shares shares capital 1,878,286 $ (5,169) $ S 7,092 (4,226) 2,107 4,042 (4,042) (1,115) (1,253) Balance at December 31, 2010 Net loss Dividends declared Restricted shares purchased Restricted share expense Vesting of restricted shares Common shares issued on exercise of stock options Common shares issued on exercise of warrants (Note 17) Common shares acquired by U.S. LTIP Deferred compensation obligation Repurchase of common shares Foreign currency translation adjustment Derivatives designated as cash flow hedges, net of income tax Settlement of derivatives desic,]nated as cash flow hedc)es, net of income tax 3,500 750 (58,305) Accum- ulated other Accum- comprehen ulated -sire loss deficit (Note 17) $ (188,972) S (44,642) $ (196,136) (60,646) (3,188) 3,188 Tota[ equi~ 1,646,595 (196,136) (6O,646) (4,226) 2,107 2,385 (503) (3,188) 3,188 (79,326) (12,520) (12,520) (5,790) (5,790) 1,201 1,201 Balance at December 31,2011 $ 1,824,231 S (5,353) S S 2,789 S (466,775) S (61,751) $ 1,293,141 The accompanying notes are an integral part of these consolidated financial statements. Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,20~ 2 and 20~ 1 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 1. Organization Effective May 2, 2011, Progressive Waste Solutions Ltd. (the "Company'~ amalgamated with its parent IESI-BFC Ltd. and continued operating as Progressive Waste Solutions Ltd. The Company was incorporated on May 20, 2009 under the provisions of the Business Corporations Act (Ontario). The Company, through its operating subsidiaries, provides vertically integrated non-hazardous solid waste ('waste~) services to commercial, industrial, municipal and residential customers in Canada and the U.S. 2. Reporting Currency The Company has elected to report its financial results in U.S. dollars to improve the comparability of its financial information with its peers. Reporting its financial results in U.S. dollars also reduces foreign currency fluctuations in the Company's reported amounts because the Company's collection of assets and operations are larger in the U.S. than they are in Canada. The Company remains a legally domiciled Canadian entity and its functional currency is the Canadian dollar. As a result, the Company's financial position, results of operations, cash flows and equity are initially translated to, and consolidated in, Canadian dollars using the current rate method of accounting. The Company's consolidated Canadian dollar financial position is further translated from Canadian to U.S. dollars applying the foreign currency exchange rate in effect at the consolidated balance sheet date, while the Company's consolidated Canadian dollar results of operations and cash flows are translated to U.S dollars applying the average foreign currency exchange rate in effect during the reporting period. The resulting translation adjustments are included in other comprehensive income or loss. Translating the Company's U.S. segment financial position, results of operations and cash flows into Canadian dollars, the Company's functional currency, and re-translating these amounts to U.S. dollars, the Company's reporting currency, has no translation impact on the Company's consolidated financial statements. Accordingly, U.S. segment results retain their original values when expressed in the Company's reporting currency. 3. Summary of Significant Accounting Policies These consolidated financial statements ("financial statements'~ have been prepared in conformity with accounting principles generally accepted in the U.S. ("U.S. GAAP"), are stated in U.S. dollars, and reflect the following significant accounting policies. Basis of presentation These financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions include the following: estimates of the Company's allowance for doubtful accounts receivable; future earnings, income tax and other estimates used in the annual, or step one and step two, test for impairment of goodwill; recoverability assumptions for landfill development assets; the useful life of capital and intangible assets; estimates and assumptions used in the determination of the fair value of contingent acquisition payments; accrued insurance reserves; projected landfill construction and development costs and estimated permitted airspace capacity consumed in the determination of landfill asset amortization; estimated landfill remediation costs; estimated closure and post-closure costs; various economic estimates used in the development of fair value estimates, including but not limited to interest and inflation rates; share price volatility and the estimated length of time employees will hold options before exercise used in the determination of share based compensation and warrants, in addition to estimates of future performance used in the determination of performance share units; the fair value of financial instruments; realization of deferred income tax assets; and deferred income tax assets and liabilities. Accordingly, results may differ significantly from these estimates. Progressive Waste Solutions 12012 Annual Report 178 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dol~a rs and sha Rs, except per sha re amounts a nd where otherwise stated) Cash and cash equivalents Cash and cash equivalents include cash and highly liquid short-term money market investments that have an original term to maturity of three months or less. Other receivables Other receivables may include direct finance lease receivables. Assets leased under terms that transfer substantially all of the benefits and risks and rewards of ownership to customers are accounted for as direct finance lease receivables. Direct finance lease receivables are carried at cost and discounted at the underlying rate implidt in the lease. The fair value of other receivables is estimated using a discounted cash flow analysis applying interest rates that management considers consistent with the credit quality of the borrower. Other receivables are periodically reviewed for impairment and any resulting write-down to the net recoverable amount is recorded in the period in which impairment occurs. Restricted cash Cash received on the issuance of variable rate demand solid waste disposal revenues bonds ("IRBs") is made available for certain purposes which may include some or all of the of following: landfill construction or equipment, vehicle and or container expenditures. Cash received in advance of certain permitted expenditures is not available for general Company purpose or use. Accordingly, restricted cash amounts are classified as restricted cash on the Company's balance sheet. Deposits and withdrawals of restricted cash amounts are recorded as an investing activity in the statement of cash flows. Intangibles Intangible assets include customer collection contracts, customer lists, non-competition agreements, transfer station permits and trade-names, and all are deemed to have finite lives. Finite life intangibles are amortized on a straight-line basis as follows: Customer collection contracts Customer lists Non-competition agreements Transfer station permits Trade-names Estimated contract term net of attrition 2-12 years 2-5 years 10-25 years 1-13 years Goodwill Goodwill is not amortized and is tested annually for impairment or more frequently if an event or circumstance occurs that more likely than not reduces the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include: a significant adverse change in legal factors or in the business climate; an adverse action or assessment by a regulator; unanticipated or increased competition; a loss of key personnel; a more-likely-than-not expectation that a significant portion or all of a reporting unit will be sold or otherwise disposed of; the testing for write-down or impairment of a significant asset group within a reporting unit; or the recognition of a goodwill impairment loss by a subsidiary that is a component of the reporting unit. Goodwill is not tested for impairment when the assets and liabilities that make up the reporting unit have not changed significantly since the most recent fair value determination, the most recent fair value determination results in an amount that exceeded the carrying amount by a substantial margin, and based on an analysis of events that have occurred and circumstances that have changed since the most recent fair value determination, the likelihood that the current fair value determination would be less than the current carrying amount of the reporting unit is remote. The Company has identified its reporting units as its operating segments and the amount of goodwill assigned to each and methodology employed to make such assignments has been applied on a consistent basis. Progressive Waste Solutions 12012 Annual Report / 79 L. IsO~+ · Rct'Nbr 302448097 Town of Southold Invoice Nbr Cust Nbr 2013-BID IESI Corporation lnvc Date Invoice Amount 04/15/13 50.00 Amount Paid 50.00 Disc Taken 0.00 4/17/2013 NetCheck Amt 50.00 102022835 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The impairment test is a two step test. The first test requires the Company to compare the fair value of its reporting units to its carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. However, if the carrying amount of the reporting unit exceeds its fair value, the fair value of the reporting unit's goodwill is compared with its carrying amount to measure the amount of impairment loss, if any. The fair value of goodwill is determined in the same manner as the value of goodwill determined in a business combination, whereby the excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the fair value of goodwill. Fair value is the amount an item can be bought or sold in a current transaction between willing parties, that is, other than in a forced sale or liquidation. In determining fair value, the Company has utilized a discounted future cash flow approach. Additional measures of fair value are also considered by the Company. Accordingly, the Company compares fair values determined using a discounted future cash flow approach to other fair value measures which may include some or all of the following: market multiple approach, offers from potential suitors, where available, or appraisals. There may be circumstances where an alternative method to determine fair value is a more accurate measure. Prolonged economic weakness, higher levels of competition, loss of business or loss of an operating permit could render goodwill impaired and could have a material adverse effect on the Company's financial condition and operating performance. The Company's annual impairment test was completed on April 30, 2012, at which time the Company determined that the fair value of its Canadian and U.S. south reporting units substantially exceeded their carrying amounts while the fair value of the northeast reporting unit exceeded its carrying amount by a marginal amount. At December 31, 2012, the Company re-performed step one of the goodwill impairment test for its U.S. northeast reporting unit due to the loss of key management and the continuation of economic weakness and competition. The results of the step one test concluded that the fair value of the U.S. northeast reporting unit was in excess of its carrying amount and a step two test was not warranted. Landfill development assets Landfill development assets represent costs incurred to develop landfills, including costs to obtain new landfill, or landfill expansion, permits. Landfill development assets are capitalized to landfill assets once the asset is available for use, which is typically when the landfill is permitted to accept waste. Once capitalized to landfill assets, these costs are amortized in accordance with the Company's landfill asset accounting policy. Management periodically reviews the carrying values of landfill development assets for impairment. Any resulting write-down to fair value is recorded in the period in which the impairment occurs and is recorded to operating expense on the Company's statement of operations and comprehensive income or loss. Deferred financing costs Deferred financing costs represent fees and costs incurred to secure or amend long-term debt facilities which are deferred and amortized on a straight-line basis over the term of the underlying debt instrument, which approximates the effective interest method. Amortization of deferred financing costs is recorded to interest on long-term debt in the Company's statement of operations and comprehensive income or loss. Capital assets Capital assets are recorded at cost and, with the exception of land and land improvements, are amortized over their estimated useful lives on a straight-line basis as follows: Buildings and improvements Vehicles and equipment Containers and compactors Furniture, fixtures and computer equipment 10-40 years 3-10 years 5-10 years 3-10 years The historical cost of acquiring an asset includes the cost incurred to bring it to the condition and location necessary for its intended use, which may include interest costs attributable to the construction and development of certain assets. The Company ceases to capitalize interest once the construction and development effort is complete and the asset is available for use. Interest is capitalized applying a rate equal to the Company's weighted average cost incurred on its long-term debt facilities in the year of capitalization. Construction and development activities undertaken in Canada and the U.S. incur interest at the rate of interest applicable to each region. Capitalized costs and interest amounts are amortized over the asset's intended useful life. Progressive Waste Solutions 12072 Annual Report [ 80 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and whew otherwise stated) Landfill assets Landfill assets represent the cost of landfill airspace, which includes original acquisition cost and landfill construction and development costs, including gas collection systems installed during the operating life of the site. Landfill assets also include capitalized landfill closure and post-closure costs, net of accumulated amortization. Interest is capitalized on certain landfill construction and development activities prior to the landfill asset being available for use and is capitalized applying a rate equal to the Company's weighted average cost incurred on its long-term debt facilities in the year of capitalization. Construction and development activities undertaken in Canada and the U.S. incur interest at the rate of interest applicable to each region. The original acquisition cost of landfill assets, together with incurred and projected landfill construction and development costs and capitalized interest, is amortized on a per unit basis as landfill airspace is consumed. Capitalized landfill closure and post- closure costs are amortized immediately as the capitalized amounts are deemed to have no future benefit. At least annually, management updates landfill capacity estimates and projected landfill construction and development costs. The impact of changes in capacity and construction cost estimates is accounted for prospectively. Total available disposal capacity for the purpose of amortizing landfill assets represents the sum of estimated permitted airspace capacity (having received the final permit from the governing authorities) plus future permitted airspace capacity, which represents an estimate of airspace capacity that management believes is probable of being permitted based on the following criteria: · Personnel are actively working to obtain the permit or permit modifications necessary for expansion of an existing landfill, and progress is being made on the project; · It is probable that the required approvals will be received within the normal application and processing periods for approvals in the jurisdiction in which the landfill is located; · The Company has a legal right to use or obtain land associated with the expansion plan; · There are no significant known political, technical, legal or business restrictions or issues that could impair the success of the expansion effort; · Management is committed to pursuing the expansion; and · Additional airspace capacity and related costs have been estimated based on the conceptual design of the proposed expansion. The Company and its predecessors have been successful in receiving approvals for expansions pursued; however, there can be no assurance that the Company will be successful in obtaining approvals for landfill expansions in the future. Investment in equity accounted investee Investments in which the Company has joint control or the ability to exercise significant influence over the strategic operating, investing and financing policies of an investee, are accounted for using the equity method of accounting. The equity method of accounting requires the Company to record its initial investment at cost. The carrying value of the Company's initial investment is subsequently adjusted to include its pro rata share of posbacquisition earnings from the investee, reflecting adjustments similar to those made in preparing consolidated financial statements, which is included in the Company's determination of net income or loss. In addition, the Company's investment also reflects loans and advances, including amounts accruing thereon, its share of capital transactions, changes in accounting policies and corrections of errors relating to prior period financial statements applicable to post-acquisition periods. Dividends received or receivable from the Company's investee reduces the carrying value of the Company's investment. Capital leases Assets qualifying as capital leased assets are initially recorded at an amount equal to the present value of the minimum lease payments excluding executory costs, including any profit thereon. In the event that the present value of the minimum lease payments exceeds the fair value of the leased asset at lease inception, the capital asset and lease obligation are recorded at fair value. Capital leased assets are amortized over either the shorter of the estimated useful life of the asset or the lease term on a straight-line basis. Capital lease obligations are recorded as long-term debt on the Company's balance sheet. Progressive Waste Solutions 12012 Annual Re port 181 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Accrued insurance The Company is self-insured for certain general, auto liability and workers' compensation claims. Stopqoss insurance coverage is maintained for claims in excess of $250 or $500, depending on the policy period in which the claim occurred. Self-insurance accruals are based on reported claims and claims incurred but not reported. The Company engages independent actuaries in its assessment of insurance accruals and considers its historical claims experience in the determination of its accrued amounts. Changes in the Company's claims history, including amounts or frequency, that increase or decrease the insurance accrual are recorded to selling, general and administrative expenses in the Company's statement of operations and comprehensive income or loss in the period in which the change occurs. The Company makes various estimates in its determination of its self insurance accruals. Changes in these estimates could result in significant changes to accrued insurance amounts. Landfill closure and post-closure costs Costs associated with capping, closing and monitoring the landfill, or portions thereof, after it ceases to accept waste are recognized at fair value over the landfill's operating life which represents the period over which waste is accepted at the site. The Company develops estimates for landfill closure and post-closure costs with input from its engineers and landfill and accounting personnel. Estimates are reviewed at least once annually and consider amongst other things various regulations that govern each site. Revenues derived from the Company's landfill gas to energy facilities do not reduce the Company's closure and post-closure cost estimates. Quoted market prices are not available to fair value landfill closure and post-closure costs. Accordingly, the Company estimates the fair value of landfill closure and post-closure costs using present value techniques that consider and incorporate assumptions and considerations marketplace participants would use in the determination of these estimates, including inflation, markups, inherent uncertainties due to the timing of work performed, information obtained from third parties, quoted and actual prices paid for similar work and engineering estimates. Inflation assumptions are based on management's understanding of current and future economic conditions and the expected timing of expenditures. An inflation factor of 2.0% (December 31,2011 - 2.0%) and 2.5% (December 31,2011 - 2.5%) has been used in the derivation of fair value estimates for the Company's Canadian and U.S. landfill closure and post-closure cost obligations, respectively. Fair value estimates are discounted back applying the credit adjusted risk free rate, which is the rate of interest that is essentially free of default risk, plus an adjustment for the Company's credit standing. The credit adjusted risk free rate considers current and future economic conditions and the expected timing of expenditures. Accordingly, the Company has discounted landfill closure and post-closure costs using credit adjusted risk free rates between 4.6% and 9.5% in Canada (December 31,2011 - 4.6% and 9.5%) and 4.5% and 7.2% (December 31,2011 - 4.5% and 7.2%) in the U.S. Due to the inherent uncertainty in making these estimates, actual results could differ significantly. In isolation, a change in the Company's credit standing does not change previously recorded closure and post-closure obligations, but it would change subsequent fair value calculations. Reliable estimates of market risk premiums are not available as there is no existing market for selling the responsibility of landfill closure and post-closure activities. Accordingly, the Company has excluded any estimate of market risk premiums in the fair value determination of landfill closure and post-closure costs. Upward revisions to estimated closure and post-closure costs are discounted using the current credit adjusted risk free rate. Downward revisions to estimated closure and post-closure costs are discounted using the credit adjusted risk free rate when the estimated closure and post-closure costs were originally recorded or a weighted average credit adjusted risk free rate if the period of original recognition cannot be identified. The Company records the estimated fair value of landfill closure and post-closure cost obligations as airspace is consumed. The total obligation will be fully accrued, net of accretion, at the time these sites cease to accept waste and are closed. Accretion represents an increase in the carrying amount of landfill closure and post-closure cost obligations due to the passage of time and is recorded to operating expense in the statement of operations and comprehensive income or loss. Accretion expense continues to be recognized post waste acceptance. Progressive Waste Solutions 12012 Annual Report 182 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Maintenance activities including: environmental monitoring, mowing and fertilizing, leachate management, well monitoring, buffer maintenance, landfill gas to energy collection and flaring systems, and other activities, are charged to operating expenses during the sites operating life. These same costs are estimated and included in the Company's landfill post-closure accruals which are incurred subsequent to the landfill's operating life. Post-closure maintenance activities are generally required for a period of 30 years post waste acceptance. Income taxes Deferred income taxes are calculated using the liability method of accounting. Deferred income tax assets and liabilities represent differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect of a change in tax rates on deferred income tax assets and liabilities is recorded to operations in the period in which the change in tax rate occurs. Unutilized tax loss carryforwards that are not likely to be realized are reduced by a valuation allowance in the determination of deferred income tax assets. Uncertain tax positions are recognized when it is more likely than not that the tax position will be sustained upon examination based on its technical merits. The Company recognizes interest and penalties in current income tax expense. Revenues Revenues consist primarily of waste collection fees earned from commercial, industrial, municipal and residential ("cotlection'~ customers and transfer and landfill disposal fees charged to third parties. The Company recognizes revenues when the service is provided, persuasive evidence of an arrangement exists, ultimate collection is reasonably assured and the price is determinable. The Company's revenues are not derived from multiple deliverables. Revenue is recognized upon the collection of waste for collection customers under contractual service agreements. Revenue earned from transfer and landfill disposal fees charged to third parties is recognized upon the receipt of waste at the Company's facilities. The Company also earns revenue from the collection and sale of recycled materials and generation of electric power or methane gas. Revenue earned from the collection of recycled materials is recognized when materials are collected while revenue recognized on the sale of recycled materials is recognized when the material is delivered to the purchaser. Revenue earned from the sale of electric power or methane gas is under contract and is recognized when the supply of electricity or methane gas is delivered to the purchaser. Tax assessed by governmental authorities on revenue-producing transactions between the Company and its customers is excluded from revenues presented in the statement of operations and comprehensive income or loss. Deferred revenue relates to long-term collection contracts, under which advanced billing occurs, or cash received prior to the service being performed. Acquisitions The Company accounts for acquisitions using the acquisition method of accounting and allocates the fair value of the consideration transferred, together with the fair value of non-controlling interest, if any, to the fair value of identifiable assets acquired and liabilities assumed. Goodwill is recognized as the excess of the fair value of consideration, including any amount of non-controlling interest in the acquired company, over the acquisition date fair values of the net assets acquired, subject to certain exceptions. If aggregate consideration is less than the net assets acquired, a gain is recognized to net income or loss on the date of acquisition. The measurement and recognition of acquired identifiable net assets may require adjustment when information is absent and fair value allocations are presented on an estimated or preliminary basis. Subsequent adjustments to estimated or preliminary amounts occurring not later than one year from the date of acquisition are recorded retrospectively to the purchase price allocation to reflect new information obtained about facts and circumstances that existed at the date of acquisition. Progressive Waste Solutions 12012 Annual Report 183 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shams, except per share amounts and where otherwise stated) Certain of the Company's purchase and sale agreements contain contingent consideration provisions. For acquisitions completed subsequent to January 1, 2009, purchase price allocation adjustments resulting from contingent consideration provisions are required when additional information is obtained subsequent to the date of acquisition that existed at the date of acquisition. Contingent consideration is initially recorded at fair value on the date of acquisition. Purchase price allocation adjustments are permitted, but are limited to the measurement period, which is the earlier of the date on which all facts and circumstances that existed at the date of acquisition are known or are determined to not be obtainable, and one year from the acquisition date. Changes in events that occur subsequent to the date of acquisition are not permissible measurement period adjustments. Changes in the fair value of contingent consideration classified as equity are not re-measured, but subsequent settlement is recorded to shareholders' equity. A change in the fair value of contingent consideration classified as an asset or liability is measured at fair value and recorded to net income or loss. Contingent consideration for acquisitions completed prior to January 1, 2009, which could be reasonably estimated at the date of acquisition and the outcome could be determined beyond a reasonable doubt, was recognized at fair value and included in the purchase price allocation. Consideration which is contingent on maintaining or achieving specified revenue or earnings levels, satisfying representations and warranties, achieving specified tonnage thresholds, in the case of acquired landfills, or receiving approval from regulatory authorities for landfill expansion, is recognized as an adjustment to the purchase price allocation when the contingency is resolved and the additional consideration is issued or becomes issuable. The acquisition date is the date the Company obtains control and is generally the date the Company obtains legal title to the net assets acquired. To be recognized at the date of acquisition, assets and liabilities must meet their fundamental definitions. Contingencies existing before or on the date of acquisition are recognized at their fair values if they can be reliably measured. The Company recognizes acquisition and related costs in the period incurred and records these costs to selling general and administration expense in the statement of operations and comprehensive income or loss. Costs associated with the issuance of long-term debt are capitalized to deferred financing costs and amortized over the period of the underlying debt, while equity issue costs are recorded against common shares on the Company's balance sheet. Advertising costs Advertising costs of $3,515 (2011 - $3,412) were expensed as incurred and included in selling, general and administration expenses in the statement of operations and comprehensive income or loss. Royalties Certain of the Company's purchase and sale agreements contain provisions that require the Company to make royalty payments. Royalty payments, including accrued amounts, are recorded to operating expense on the statement of operations and comprehensive income or loss as incurred. Costs associated with exit activities The Company records employee termination benefits that represent a one-time benefit accruing to an employee as an expense when management approves and commits to a plan of termination and communicates the termination arrangement to the employee. Expenses may be recorded in future periods if employees are required to provide future services in order to receive the termination benefits. A liability for costs to terminate a contract before the end of its term is recognized when the Company terminates the contract. Other costs associated with an exit activity may include costs to consolidate or close facilities and relocate employees, which are expensed as incurred. Impairment of long-lived assets An impairment loss is recognized when events or circumstances indicate that the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. Management assesses its long-lived assets periodically or more frequently if impairment indicators exist. Any resulting impairment loss is recorded in the period in which the impairment occurs. The Company has not recorded any significant impairment losses on long-lived assets in the current or comparative year. Progressive Waste Solutions [ 2012 Annual Report 184 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Share based compensation Share based options With the exception of stock options assumed on the acquisition of Waste Services, Inc. ('~/VSI'), the Company has issued all share based options with stock appreciation rights. Stock appreciation rights give the holder the righ~ to surrender to the Company all or a portion of an option in exchange for cash equal to the excess of the fair market value, defined as the five day volume weighted average trading price of a share, over the option's exercise price. Stock appreciation rights are measured at fair value on the date of grant and are re-measured at fair value at each balance sheet date until the date of settlement. The Company considers estimated forfeitures in the determination of fair value. Changes to estimated forfeitures are recorded as a selling, general and administration expense in the period in which the change occurs. Changes in the fair value of share based options are also recorded to selling, general and administration expense. The Company has elected to recognize compensation expense on a straight-line basis over the requisite service period for the entire award. The stock options assumed on the acquisition of WSl were fully vested and measured at fair value on the date of closing. The Company uses the Black-Scholes-Merton option pricing model which requires several input variables. These variables include the estimated length of time employees will retain their options before exercising them and the expected volatility of the Company's share price. Changes in these variables can materially affect the estimated fair value of share based compensation and, consequently, the related amount recognized in selling, general and administration expense on the statement of operations and comprehensive income or loss. Restricted shares Compensation related to restricted shares is recognized over the period in which employee services are rendered. Restricted shares with graded vesting schedules are viewed as separate awards and each is accounted for separately over the employee service period to the date of vesting. Restricted shares are initially recorded to shareholders' equity at the fair value of the shares issued on the date of grant. The related expense is recorded to selling, general and administration expense as the employee service period is satisfied. Performance Share Units ("PSUs~) PSUs have been issued to certain employees of the Company. PSU awards are subject to meeting a three year service period, subject to certain conditions, and certain three year performance measures, which consist of operating cash flow and return on invested capital. The fair value of each PSU is based on the expected level of achievement relative to each performance measure and the price of the Company's shares traded on the Toronto Stock Exchange ('q-SX~). The Company's compensation committee may, in its sole discretion, consider other business circumstances that warrant adjustment to the financial results or targets when assessing the final award amount. Compensation expense is recognized over the service period based on the fair value of the award at each balance sheet date until the date of vesting. The Company uses the Black-Scholes-Merton pricing model to determine the fair value of its PSUs which requires several input variables. Changes in these variables can have a significant impact on the estimated fair value of PSUs and, consequently, the related amounts accrued on the balance sheet and recognized as compensation expense or recovery in the statement of operations and comprehensive income or loss. Compensation expense or recovery is based on the change or a portion of the change in the fair value of the PSU at each reporting period multiplied by the percentage of the service period satisfied at the reporting date. The Company considers the likelihood of achieving each performance measure and recognizes compensation expense only to the extent that it believes the performance measures will be achieved. If the Company concludes that it is unlikely that its performance measures will be met, the Company will recover any amounts accrued to date and cease recognizing compensation expense until this conclusion is no longer supportable. In estimating the fair value of the liability the Company also considers current and historical forfeitures. PSUs are settled in cash and are recorded as liabilities on the Company's balance sheet. Changes in the fair value of PSUs are recorded to selling, general and administration expense in the statement of operations and comprehensive income or loss. Progressive Waste Solutions 12012 Annual Report 185 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Shares held by a rabbi trust Common shares held in a rabbi trust are classified as treasury shares. Shares of the Company acquired for the benefit of its U.S. LTIP participants are held in a rabbi trust. A rabbi trust, as a grantor trust, requires that the assets held in the trust be available to satisfy the claims of general creditors in the event of bankruptcy. The deferred compensation obligation is recorded to restricted shares as a component of shareholders' equity and subsequent changes in the fair value of the shares are not recognized in either treasury stock or deferred compensation obligations. As U.S. LTIP participants draw shares from the rabbi trust, both the deferred compensation obligation and shares acquired by the U.S. LTIP reduce by a similar amount. The rabbi trust holds no other investments. Warrants The warrants assumed on the acquisition of WSI were fully vested and measured at fair value on the date of closing using the Black-Scholes-Merton option pricing model. Financial instruments Derivatives, including derivatives that are embedded in financial or nomfinancial contracts that are not closely related to the host contract, subject to certain exceptions, are measured at fair value, even when they are part of a hedging relationship. Gains or losses on financial instruments measured at fair value are recognized in the statement of operations and comprehensive income or loss in the periods in which they arise, with the exception of gains and losses on certain financial instruments that are part of a designated hedging relationship, and are presented as other assets or other liabilities on the Company's balance sheet. Gains or losses on financial instruments designated as hedges are recognized in other comprehensive income or loss. Derivatives are financial instruments or other contracts that embody all of the following characteristics: · their value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable (sometimes called the "underlying"), provided that, in the case of a non-financial variable, the variable is not specific to a party to the contract; · they require no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and · they are settled at a future date. The Company enters into various types of derivative financial instruments, which may include some or all of the following: interest rate swaps, commodity swaps, foreign currency exchange agreements or old corrugated cardboard hedges. Embedded derivatives are components ora hybrid (combined) instrument that also includes a non-derivative host contract. The result is that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that would otherwise be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable, provided that, in the case of a non-financial variable, the variable is not specific to a party to the contract. An embedded derivative is separated from its host contract when all of the following conditions are met: · the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; · the separated instrument would meet the definition of a derivative; and · the hybrid (combined) instrument is not measured at fair value with changes in fair value recognized in net income. Any gains or losses on embedded derivatives are recorded in the statement of operations and comprehensive income or loss as a gain or loss on financial instruments and are presented as other assets or other liabilities on the Company's balance sheet. Hedges Hedges modify the Company's exposure to one or more risks by creating an offset between changes in the fair value of, or the cash flows attributable to, the hedged item and the hedging item. Hedge accounting ensures that counterbalancing gains, losses, revenues and expenses are recognized in net income or loss in the same period or periods. In addition, hedge accounting is only applied when gains, losses, revenues and expenses on a hedging item would otherwise be recognized in net income or loss in a different period than the hedged item. Progressive Waste Solutions 12012 Annual Report 186 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. doJlars and sha~s, except per share amounts and where otherwise stated) The application of hedge accounting is at the option of the Company; however, hedge accounting can only be applied when, at the inception of the hedging relationship the Company has met or satisfied the following conditions: · the nature of the specific risk exposure or exposures being hedged has or have been identified in accordance with the Company's objective and strategy; · the Company has designated that hedge accounting will be applied to the hedging relationship; and · the Company has formally documented its risk management objective, its strategy, the hedging relationship, the hedged item, the related hedging item, the specific risk exposure or exposures being hedged, the term of the hedging relationship, and the method for assessing the effectiveness of the hedging relationship. In addition, both at the inception of the hedging relationship, and throughout its term, the Company has to be reasonably certain that the relationship will be effective and consistent with its originally documented risk management objective and strategy. Hedge effectiveness represents the extent to which changes in the fair value or cash flows of a hedged item relating to a risk being hedged, and arising during the term of a hedging relationship, are offset by changes in the fair value or cash flows of the corresponding hedging item related to the risk being hedged and arising during the same period. Accordingly, the effectiveness of the hedging relationship must be reliably measurable, the hedging relationship must be assessed on a regular periodic basis over its term to determine that it has remained, and is expected to continue to be, effective, and in the case of a forecasted transaction, it is probable that the transaction will occur. Fair value hedges, hedge the exposure to changes in the fair value of: a recognized asset or liability; an unrecognized firm commitment; or, an identified portion of such an asset, liability or firm commitment. The Company has no fair value hedges. Cash flow hedges, hedge the exposure to variability in cash flows associated with: a recognized asset or liability; a forecasted transaction; or, a foreign currency risk in an unrecognized firm commitment. The gain or loss on the hedging item that is determined to be an effective hedge is recognized in other comprehensive income or loss and the ineffective portion of the gain or loss is recognized on the Company's statement of operations and comprehensive income or loss as a net gain or loss on financial instruments. The Company discontinues hedge accounting when a hedging relationship ceases to satisfy the conditions of hedge accounting, including: the maturity, expiry, sale, termination, cancellation or exercise, of the hedging item or hedged item; the anticipated transaction will not occur within the documented time period or within an additional two month period thereafter; the Company terminates its designation of the hedging relationship; or, the hedging relationship ceases to be effective. When a hedging item ceases to exist or it is determined that the anticipated transaction will not occur, amounts recognized in other comprehensive income or loss are recognized in net income or loss. If the Company terminates its designation of the hedging relationship or the hedging relationship ceases to be effective, amounts recorded to other comprehensive income or loss in previous periods are not reversed, while amounts arising subsequently are recorded on the Company's statement of operations and comprehensive income or loss as a net gain or loss on financial instruments. Amounts that were recorded to other comprehensive income or loss in previous periods that were not reversed are recorded as a net gain or loss on financial instruments in the same period or periods as the hedged transaction affects net income. Foreign currency translation The Company's functional currency is the Canadian dollar. Accordingly, its financial position, results of operations, cash flows and equity are initially consolidated in Canadian dollars. The Company has concluded that its U.S. segments are self-sustaining foreign operations which are translated applying the current rate method. Applying this method, assets and liabilities are translated to Canadian dollars from their functional currency using the exchange rate in effect at the balance sheet date. Revenues and expenses are translated to Canadian dollars at the average monthly exchange rates. The resulting translation adjustments are included in other comprehensive income or loss and are only included in net income or loss when the Company realizes a reduction in its foreign operations investment. Gains or losses on foreign currency balances or transactions that are designated as hedges of a net investment in self-sustaining foreign operations are offset against exchange gains or losses included in other comprehensive income or loss. Progressive Waste Solutions r 2012 Annual Report 187 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The Company has elected to report its financial results in U.S. dollars. Accordingly, the Company's balance sheet is translated from Canadian to U.S. dollars at the foreign currency exchange rate in effect at the balance sheet date. The statement of operations and comprehensive income or loss and statement of cash flows are translated to U.S. dollars applying the average foreign currency exchange rate in effect during the reporting period. The resulting translation adjustments are included in other comprehensive income or loss. Disposal of long-lived assets and discontinued operations Long-lived assets, to be disposed of other than by sale, such as abandonment or exchange for similar productive long-lived assets, are classified as held and used until the disposal transaction occurs. Long-lived assets held for sale are carried at the lower of their carrying amount or fair value less cost to sell. 4. Changes in Accounting Policies Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS") In May 2011, the Financial Accounting Standards Board ("FASB") issued amendments that changed the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements, including enhanced disclosures about the assumptions used in fair value measurements. These amendments result in common fair value measurement and disclosure requirements between U.S. GAAP and IFRS. The amendments are applicable prospectively. For the Company, this guidance was effective January 1, 2012. This guidance did not have a significant impact on the Company's financial statements. Presentation of Comprehensive Income In June 2011, FASB issued amendments to the presentation of comprehensive income. The amendments give an entity the option to present comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either instance, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. An entity is also required to present on the face of the financial statements adjustments for items reclassified from other comprehensive income to net income and present these adjustments with the components of net income and other comprehensive income. In December 2011, FASB indefinitely deferred this second requirement. The amendments are to be applied retrospectively and were effective for the Company on January 1, 2012. This guidance did not have a significant impact on the Company's financial statements. Intangibles - Goodwill and Other: Testing Goodwill for Impairment In September 2011, FASB issued amendments to the testing of goodwill for impairment. The amendment provides an entity with the option to qualitatively assess factors to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying amount. If an entity's qualitative assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, then the entity is not required to perform step one of the two-step impairment test. However, if an entity's assessment concludes otherwise, the entity is required to perform the first step of the two-step impairment test which requires the entity to calculate the fair value of the reporting unit and compare it to its carrying amount. The amendments also provide the entity with the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step impairment test. An entity may resume the qualitative assessment in any subsequent period. The amendments are effective for the Company's annual and, if necessary, interim impairment tests performed after December 3~, 2011. This guidance did not have any impact on the Company's financial statements. Progressive Waste Solutions 12012 Annual Report 188 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Intangibles - Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment In July 2012, FASB issued amendments to the testing of indefinite-lived intangible assets for impairment. The amendment provides an entity with the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible is impaired, if an entity's qualitative assessment of events and circumstances concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity's assessment concludes otherwise, the entity is required to perform the quantitative impairment test which compares the fair value of the indefinite-lived intangible to its carrying amount. The amendments also provide the entity with the option to bypass the qualitative assessment for any indefinite- lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity may resume the qualitative assessment in any subsequent period. The amendments are effective for the Company's annual and, if necessary, interim impairment tests performed after September 15, 2012. This guidance will not have any impact on the Company's financial statements Comprehensive Income - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income in February 2013, FASB issued amendments to comprehensive income requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross- reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. The amendments are effective prospectively for reporting periods beginning after December 15, 2012 with early adoption permitted. This guidance is not expected to have a significant impact on the Company's financial statements. 5. Acquisitions The following table outlines the number of acquisitions completed by the Company in each of its business segments for the year ended December 31, 2012 and 2011. Acquisitions may include all of the issued and outstanding share capital of the purchased company or a company's assets, including various current assets and liabilities. Each of the acquisitions completed constitutes a business. December 31 2012 2011 Assets Shares Total Assets Shares Total Canada 4 2 6 2 1 3 U.S. south 7 I 8 7 1 8 U.S. northeast I 4 5 3 3 Total accluisitions 12 7 19 12 2 14 The Company considers each of these acquisitions a "tuck-in". Tuck-ins represent the acquisition of solid waste collection and or disposal operations in markets where the Company has existing operations. Goodwill arising from these tuck-in acquisitions is largely attributable to assembled workforces and to expected synergies resulting from personnel and operating overhead reductions, disposal or collection advantages or the deployment of market focused strategies. Pro forma revenues and net income for these acquisitions have not been disclosed as the acquired companies are immaterial both individually and in the aggregate. Certain purchase price allocations for acquisitions completed in the current year are absent final fair value adjustments. The results from these acquisitions have been included in the Company's financial statements from the date of closing. Progressive Waste Solutions 12012 Annual Report 189 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The payment of contingent consideration, for acquisitions completed prior to 2009, which will result from meeting various business performance targets is also subject to final adjustment. Final fair value adjustments occurring during the measurement period that change the fair value of certain assets or liabilities are recorded to the original purchase price allocation. Cash consideration paid, and its preliminary allocation to the fair value of net assets acquired, is as follows: December 31 2012 2011 Consideration Cash, Jncludinc, I holdbacks (as applicable) $ 308,314 $ 148,272 Net assets acquired Cash 717 Accounts receivable 18,176 6,315 Intangibles (Note 8) 79,730 37,262 Goodwill (Note 9) 146,702 57,976 Capital assets 90,396 43,449 Accounts payable (17,O59) (5,205) Long-term debt (2,628) Remediation liabilities (200) Deferred income taxes (7,820) 8,475 Total net assets acquired $ 308,314 $ 148,272 Consideration by segment (including holdbacks (as applicable)) Canada $ 69,271 $ 3,602 U.S. south 145,766 128,781 U.S. northeast g3,277 15,889 Total consideration $ 308,314 S 148,272 Goodwill recorded by segment Canada $ 28,167 $ 2,139 U.S. south 71,512 48,884 U.S. northeast 47,023 6,953 Total c, loodwill $ 146,702 $ 57,976 Goodwill expected to be deductible for tax purposes $ 99,777 $ 51,699 December 31 2012 2011 Aggregate cash consideration (excluding holdbacks and cash payments due to sellers for achieving various business performance targets) Contingent consideration (paid in respect of acquisitions completed prior to January 1, 2009) Transaction costs (included in selling, general and administration expense) $ 281,970 $ 139,683 $ 343 $ 174 $ 2,507 S 1,880 Progressive Waste Solutions 12012 Annual Report 190 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dolla~ and shares, except per share amounts and where otherwise stated) In connection with the acquisition of a company's shares completed in the third quarter of 2010, the Company subsequently elected under section 338(h)(10) of the Internal Revenue Code to deem the acquisition as a sale of assets for tax purposes. In this regard, the Company has borne the tax burden accruing to the seller as a result of the election after determining that the present value of the future tax savings exceeds the cost payable to the seller for the step-up in basis. Accordingly, during the year ended December 31,2011 the Company paid the seller an additional $5,237 of cash consideration and recognized a $6,433 reduction to recorded goodwill and an increase in deferred tax assets of $11,670. These amounts are included in the table above. The Company typically holds back a portion of amounts due to sellers subject to the acquired operations meeting various business performance conditions. These conditions are generally short term in nature and the Company has assessed the fair value of its obligation for payment as the full amount of the hold back. In certain circumstances, the Company has also agreed to pay sellers additional amounts for meeting certain business performance targets which are longer in term. The Company has assessed the fair value of its obligation for payment as the full amount of the additional consideration it expects to pay discounted back to the date of acquisition. Holdback and additional amounts payable for current period acquisitions totaled $25,627 as at December 31,2012 (December 31,2011 - $8,589). 6. Accounts Receivable - Allowance for Doubtful Accounts The following table illustrates the change in the Company's allowance for doubtful accounts for the years ended December 31, 2012 and 2011. December 31 2012 2011 Balance, beginning of the year Additions, during the year Wdttemoff, uncollectible, during the year Recoveries, during the year Foreign currency/translation ad)ustment, for the year Balance, end of ~'ear $ 5,250 $ 5,603 5,594 4,643 (5,774) (5,463) 869 503 41 (36) $ 5,980 $ 5,250 7. Restricted Cash Restricted cash represents cash received from IRB drawings that have been received in advance of incurring expenditures for which the IRBs are made available. At December 31, 2012, $476 (2011 - $452) of cash is restricted to fund a portion of landfill construction activities and equipment and container expenditures in the Company's U.S. northeast operations. Progressive Waste Solutions 12012 Annual Report 191 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shams, except per share amounts and where otherwise stated) 8. Intangibles December 31,2012 Weighted average amortization Accumulated Net book period of Cost amortization value Additions additions Customer collection contracts $ 249,308 $ 150,337 $ 98,971 $ 23,675 3.83 Customer lists 247,553 104,833 142,720 42,221 6.60 Non-competition agreements 31,602 20,932 10,670 6,990 4.54 Transfer station permits 34,415 6,837 27,578 5,570 20.00 Trade-names 13,142 5,234 7,908 2,377 3.67 $ 576,020 $ 288,173 $ 287,847 $ 80,833 December 31,2011 Weighted average amortization Accumulated Net book period of Cost amortization value Additions additions Customer collection contracts $ 221,283 $ 129,948 $ 91,335 $ 10,812 3.72 Customer lists 205,324 78,162 127,162 18,944 7.36 Non-competition agreements 24,732 14,903 9,829 7,173 3.85 Transfer station permits 27,622 5,324 22,298 250 20.00 Trade-names 10,607 3,500 7,107 83 2.00 $ 489,568 $ 231,837 $ 257,731 $ 37,262 Adjustments to the fair value of certain assets, occurring in the measurement period, and acquired in the prior year, resulted in a $572 and $531 increase to customer collection contracts and customer lists, respectively, for the year ended December 31, 2012. Intangible assets are expected to amortize as follows in the next five years and thereafter: 2013 $ 59,233 2014 53,548 2015 43,443 2016 38,708 2017 33,077 Thereafter 59,838 $ 287,847 Progressive Waste Solutions 12012 Annual Repor~ 192 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per sham amounts and where otherwise stated) 9. Goodwill The following tables illustrate the change in goodwill for the year ended December 31,2012 and 2011. December 31, 2012 Canada U.S. south U.S. northeast Total Goodwill, stated at cost $ 372,596 $ 350,126 $ 412,244 $ 1,134,966 Accumulated impairment loss (360,557) (360,557) Balance, beginning of year 372,596 350,126 51,687 774,409 Goodwill recognized on acquisitions, during the year 28,167 71,512 47,023 146,702 Goodwill adjustments in respect of prior year acquisitions, during the year (530) (530) Foreicj n currenc~ exchange ad)ustment, for the year 8,533 8,533 Goodwill, stated at cost Accumulated impairment loss 409,296 421,108 459,267 1,289,671 (360,557) (360,557) Balance, end of year $ 409,296 $ 421,108 $ 98,710 $ 929,114 December 31,2011 Canada U.S. south U.S. northeast Total Goodwill, stated at cost S 378,884 $ 297,077 $ 405,907 S 1,081,868 Accumulated impairment loss Balance, beginning of year 378,884 297,077 405,907 1,081,868 Goodwill impairment recognized, during the year (360,557) (360,557) Goodwill recognized on acquisitions, during the year 2,139 48,884 6,953 57,976 Goodwill adjustments in respect of prior year acquisitions, during the year 4,165 (616) 3,549 Foreic. ln currency exchange adjustment, for the year (8,427) (8,427) Goodwill, stated at cost Accumulated impairment loss 372,596 350,126 412,244 1,134,966 (360,557) (360,557) Balance, end of year S 372,596 $ 350,126 S 51,687 $ 774,409 For the year ended December 31, 2012, goodwill arising from accrued contingent consideration due to sellers for acquisitions consummated prior to January 1, 2009 amounted to Snil (2011 - Snil). Adjustments to preliminary fair value allocations resulted in a ($873) decrease to goodwill (2011 - $3,375 increase to goodwill). The Company has not disposed of any goodwill for the years ended December 31,2012 and 2011. The Company has not recognized a goodwill impairment charge for the year ended December 31, 2012 (2011 - $360,557). The impairment charge recorded in 2011 was a reflection of continued deteriorating economic conditions and heightened competition for volumes which are constrained in the Company's U.S. northeast reporting unit. FASB's guidance on intangibles - goodwill and other, addresses, amongst other things, the considerations and steps an entity is required to undertake to test goodwill for impairment. The guidance also requires that goodwill of a reporting unit should be tested between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Progressive Waste Solutions 12012 Annual Report 193 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except p~r share amounts and where otherwise stated Goodwill is tested for impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment, referred to as a component. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and the information is regularly reviewed by segment management. The Company has defined its operating segments as follows: Canada, U.S. northeast and U.S. south. There are several components that exist under each operating segment. However, the Company has determined that since the components under each operating segment share similar characteristics, its operating segments are also its reporting units. The amount of goodwill assigned to each reporting unit and the methodology employed to make such assignments has been applied on a consistent basis. At December 31,2012, the Company re-performed step one of the goodwill impairment test for its U.S. northeast reporting unit due to the loss of key management and the continuation of economic weakness and competition. The results of the step one test concluded that the fair value of the U.S. northeast reporting unit was in excess of its carrying amount and a step two test was not warranted. In determining the fair value of the U.S. northeast reporting unit, in step one of the goodwitl impairment test, the Company included the expected cash flows attributable to successfully securing a long-term contact with New York City. Should the prospects of securing a long-term contract with the city become less certain or the Company is not successful in the award of such contract, the fair value of the U.S. northeast reporting unit will be less than its carrying amount and a step two of the two step impairment test would be required to be performed to determine the resulting impairment loss. It is the Company's belief that if it is not awarded the long-term contract with New York City, goodwill recorded in the U.S. northeast reporting unit will be impaired. The Company's annual test for impairment, conducted on April 30, 2011, concluded, at that time, that the fair value of its U.S. northeast reporting unit was in excess of its carrying amount, recognizing that the margin of excess wasn't significant. Since then, the Company's U.S. northeast business was subjected to an economic environment that continued to weaken and where competition remained strong. Accordingly, these deteriorating economic conditions and resilient levels of competition represent a change in business climate that the Company wasn't anticipating nor did it reflect in its step one test for impairment in April. The Company re-performed step one of the goodwill impairment test at September 30, 2011 and reached the conclusion that the carrying amount of the U.S. northeast reporting unit was in excess of its fair value. The Company had also concluded that in light of the weak economic outlook that it was more likely than not that impairment exists. Accordingly, the Company commissioned a third party to assist it with step two of the goodwill impairment test. Step two of the impairment test compares the implied fair value of the reporting units' goodwill with the carrying amount of that goodwill. The Company completed the second step of the impairment test in the fourth quarter of2011 resulting in the recognition of an impairment loss. The fair value of goodwill for the Company's U.S. northeast reporting unit was determined in the same manner as the value of goodwill is determined in a business combination, whereby the excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the fair value of goodwill. Fair value is the amount at which an item can be bought or sold in a current transaction between willing parties, other than in a forced sale or liquidation. In determining fair value, the Company utilized a discounted future cash flow approach. The Company concluded that the discounted future cash flow approach to determine fair value was the most appropriate for the following reasons: quoted market prices for the sale of a similar basket of assets, liabilities, revenues and expenses were not readily available, prices for the sale of a comparable business of the same size and composition of operations was not readily available and finally, the Company employs the discounted future cash flow approach when it values and acquires companies and therefore believes that a market place participant would apply a similar approach. The Company also calculated fair value applying the market multiple approach. The fair value calculated applying the market approach was compared to the results calculated applying the discounted cash flow approach as a measure of reasonability. Progressive Waste Solutions 12Ol 2 Annual Report 194 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The discounted cash flow approach employs a variety of assumptions, including revenue growth, capital and landfill spending, margins, acquisitions, corporate cost allocations and tax and discount rates. The primary assumptions used to determine the fair value of the Company's U.S. northeast reporting unit were as follows: revenue growth of 2.0%; capital and landfill expenditures equal to 13.2% of revenue in year one and declining by 0.5% in each year thereafter until a value of 9.0% of revenue was attained; revenue less operating and selling, general and administration expense margin of 24.2% with no annual improvement; no acquisitions or corporate cost allocations were assumed; a tax and discount rate of 40% and 8.9%, respectively, was applied. The discounted cash flow approach assumptions applied at September 30, 2011 differed from those the Company applied at April 30, 2011 as follows: The revenue growth rate assumption declined from 3.0% in April to 2.0% in September. The decline was a function of several factors, including: refined volume and pricing growth assumptions in light of continued economic weakness coupled with a softer economic outlook in this segment and heightened competition in this segment for volumes which are constrained Broader economic assumptions used in April 2011 were tempered as well. The economy, especially in this segment, had only delivered marginal improvements since the prior year and the Department of Commerce and gross domestic product outlooks suggest that 2.0% may be attained, but accelerated growth is some distance away The introduction of rail haul by some of the Company's competitors to their landfill sites had increased the competitive reach for volumes that have typically been destined for its landfills. Accordingly, landfill volumes and pricing had come under pressure to remain competitive in this segment Capital and landfill expenditures increased from the Company's April 2011 assumptions due to project related spending expected in 2012 and for a period thereafter to remain competitive in this market place The assumption of margin expansion was tempered in light of waning economic conditions and the increase in competitive pressures. Margin expansion was predicated on strong pricing and volume gains, and since neither was expected to be robust in the near to medium term, the expectation of margin expansion had been discontinued. At April 2011, the Company anticipated modest margin expansion of 10 basis points annually The Company refreshed its revenue and revenue less operating and selling, general and administration ('EBITDA~) assumptions to reflect its revised expectations for this segments performance, as presented to, and approved by, the Company's board of directors The Company refreshed its discount rate to 8.9% using rates and factors in effect at September 30, 2011, compared to 8.09% applied at April 30, 2011 Assumptions that remained unchanged between the Company's September 30, 20t 1 and April 30, 2011 discounted cash flow calculations were as follows: No acquisitions were assumed Tax rates remained unchanged Amortization and asset retirement spending was refreshed, but effectively unchanged There is significant subjectivity in estimating fair value. Accordingly, changes in any one of these assumptions could have a significant impact on the implied fair value of goodwill the Company derived for its U.S. northeast reporting unit. The net carrying amount of goodwill allocated to the U.S. northeast segment, net of impairment charges, at December 31,2011 was $51,687. Progressive Waste Solutions 12012 Annual Report 195 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shams, except per sham amounts and where otherwise stated) 10. Deferred Financing Costs Decembez 31, 2012 Accumulated Net book Cost amortization value Deferred financing costs $ 21,543 $ 1,483 $ 20,060 December 31,2011 Accumulated Net book Cost amortization value Deferred financln~ costs $ 38,452 $ ~ 8,469 $ 19,983 Deferred financing cost amortization for the year ended December 31, 2012 amounted to $5,665 (2011 - $6,035) and is recorded to interest on long-term debt. In the current year, $11,726 (2011 - Snil) of deferred financing costs were written off in connection with the Company entering into a consolidated Credit Agreement effective October 24, 2012 (Note 15). Estimated future amortization expense for the Company's deferred financing costs in each of the next five years and thereafter is as follows: 2013 $ 3,475 2014 3,475 2015 3,475 2016 3,475 2017 2,974 Therea~er 3,186 $ 2O,O6O 11. Capital Assets December 31,2012 Accumulated Net book Cost amortization value Land and improvements $ 146,044 $ $ 146,044 Buildings and improvements 251,157 55,100 1~6,057 Vehicles and equipment 814,371 389,810 424,561 Containers and compactors 325,212 173,314 151,898 Furniture, fixtures and computer ecluipment 31,653 22,695 8,958 $ 1,568,437 $ 640,919 $ 927,518 Progressive Waste Solutions 12012 Annual Report 196 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) December 31,2011 Accumulated Net book Cost amortization value Land and improvements $ 129,582 $ $ 129,582 Buildlngs and improvements 189,859 43,146 146,713 Vehicles and equipment 664,157 315,971 348,186 Containers and compactors 284,720 141,497 143,223 Furniture, fixtures and computer equipment 26,020 17,666 8,354 S 1,294,338 $ 518,280 S 776,058 Capitalized interest for the year ended December 31, 2012 amounted to $391 (2011 - $12). At December 31, 2012, assets recorded under capital lease total $754 and $3,060 (2011 - Snil and Snil) and are recorded in the land and improvements and buildings and improvements capital asset classifications, respectively. 12. Landfill Assets December 31, 2012 Accumulated Net book Cost amortization value Landfill assets $ 1,561,567 $ 597,~47 $ 963,720 December 31,2011 Accumulated Net book Cost amortization value Landfill assets $ 1,471,359 $ 512,567 $ 958,792 Capitalized interest for the year ended December 31, 2012 amounted to $1,518 (2011 - $1,471 ). Progressive Waste Solutions 12012 Annual Report 197 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 13. Other Assets and Other Liabilities December 31 2012 2011 Fair value of commodity swaps designated as cash flow hedges Fair value of foreign currency exchange agreements Less current portion of other assets $ 1,151 $ 220 913 2,038 5 358 2,064 2,621 1,573 1,972 $ 491 S 649 $ 3,754 $ 1,492 4,099 759 Other liabilities Fair value of interest rate swaps Fair value of interest rate swaps designated as cash flow hedges Fair value of foreign currency exchange agreements 80 Deferred lease liabilities 1,267 Unfavourable lease arrangements 552 Contingent acquisition payables 1,009 Share based compensation 1,188 Other 843 1,751 8,693 10,968 Less current portion of other liabilities 2,527 3,484 $ 6,166 $ 7,484 14. Accrued Charges Accrued charges are comprised of the following: December 31, December 31, 2012 2011 Insurance $ 29,040 S 27,383 Payroll and related costs 28,745 43,334 Franchise and royalty fees 8,653 S,999 Interest 2,737 5,221 Provincial, federal and state sales taxes 4,542 5,738 Acquisition holdbacks and acquisition related costs 27,834 4,308 Environmental surcharges 7,990 7,268 Property taxes 141 544 Share based compensation 3,730 3,757 Other 18,116 20,944 $ 131,528 $ 124,496 Progressive Waste Solutions 12012 Annual Report 198 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 15. Long-Term Debt December 31 2012 2011 Senior secured term B facility, net of debt discount S2,440 (2011 - Snil) $ 497,560 $ Senior secured revolving credit 1,074,712 1,143,667 Senior secured debenture, series B 57,030 IRBs 109,000 109,000 Other 7,005 3,396 1,688,277 1,313,093 Less current portion of long-term debt 6,907 1,500 $ 1,681,370 S 1,311,593 Consolidated credit agreement Effective October 24, 2012, the Company entered into a Credit Agreement (the "consolidated facility') and concurrently repaid all outstanding indebtedness under its pre~existing Canadian and U.S revolving credit facilities and its series B, senior secured debenture. The borrower under the consolidated facility is Progressive Waste Solutions Ltd. and the facility is guaranteed by all subsidiaries of Progressive, excluding certain subsidiaries as permitted by the consolidated facility. The consolidated facility is comprised of a $500,000 senior secured term [3 facility ("term B facility') and a $1,850,000 senior secured revolving facility ("consolidated revolver') having maturity dates of October 24, 2019 and October 24, 2017, respectively. The consolidated facility has a $750,000 accordion feature, which is subject to certain conditions. Proceeds from the consolidated facility were used to refinance previously existing indebtedness and may be used for permitted acquisitions, as defined by the agreement, capital expenditures, working capital, letters of credit and fc~r general corporate purposes. Amounts drawn under the consolidated revolver are repayable in full at maturity. The term B facility is subject to an amortization schedule with all final payment amounts outstanding, plus accrued interest, being payable in full at maturity. The term B facility is subject to principal amortization of one percent per annum and payable quarterly commencing in March 2013. The term B facility is also subject to mandatory prepayment conditions, which include net cash proceeds from the sale of assets, the issuance of additional indebtedness that does not constitute permitted indebtedness and a percentage of excess cash flow, all of which are subject to various conditions. The Company is required to provide its consolidated facility lenders with a first priority perfected security interest in all the present and future assets of it and its subsidiaries, save for the excluded subsidiaries, and excluding real estate and certain other equipment unless requested by the lenders, including all present and future intercompany indebtedness and a pledge of all of the equity interests in each of the Company's direct and indirect subsidiaries, subject to certain conditions. The consolidated facility permits a maximum consolidated total funded debt to four-quarter consolidated EBITDA ratio ("leverage ratio") of four times, as defined therein. In the event the Company delivers to its lenders a corporate credit rating from Standard & Poor's or Moody's of at least [3BB-/Baa3 (with a stable outlook or better), the Company may elect to have the security interests of the lenders terminated, provided the term B facility is repaid in full, at which time the maximum leverage ratio declines to three and one half times. The leverage ratio increases to four and one half times if the Company obtains unsecured indebtedness in an aggregate amount of not less than $250,000 and remains at this ratio for as long as the unsecured indebtedness remains outstanding. The consolidated facility also requires a minimum four quarter consolidated EBITDA to consolidated interest expense ratio ("interest coverage ratio") of two and one half times, subject to certain conditions, and two and three quarter times if the Company elects to have the security interests of the lenders terminated. Progressive Waste Solutions [ 2012 Annual Report 199 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Borrowings on the consolidated revolver are available in either U.S. or Canadian dollars. Applicable margins are dependent on the Company's leverage ratio. If an event of default occurs, the applicable margin on all obligations owing under the consolidated facility will increase by 2.0% per annum. Pricing on the consolidated facility i5 as follows: Consolidated Consolidated Term B Consolidated Bankers' U.S. based/ facility - Term B revolver - Acceptances Canadian Euro based facility- U.S. Euro based ("BA")/BA prime rate Letters of loans based loans loans equivalents loans credit Interest rate basis Applicable margin Floor Applicable margin - minimum Applicable margin - maximum Applicable margin - first 6 months Fee rate - minimum Fee rate - maximum Fee rate - first 6 months Frequency of payments LIBOR U.S. base LIBOR BA or BA U.S. base or prime equivalents Canadian plus 10 basis prime rate points 2.75% 1.75% 0.75% 1.50% 1,50% 0.50% 2.25% 2.25% 1.25% 2.00% 2.00% 1.00% Commitment fee 1.50% 0.25% 2.25% 0.50% 0.375% Monthly, in Quarterly, in In arrears, In advance, Quarterly, in Quarterly, in Quarterly, in arrears arrears for applicable for applicable arrears arrears arrears U.S revolving credit facility On July 7, 2011, the Company entered into a second amendment to its Amended and Restated Senior Secured Revolving Credit Facility (the "U.S. facility'~ on behalf of IESI Corporation ("IESI'~, an indirect wholly owned subsidiary of the Company. Entering into the second amendment increased the total commitment to $1,377,500, from $1,250,000. Available lending under the amended U.S. facility was $1,122,500, up $45,000 from $1,077,500, and the facility had a $255,000 accordion feature. Monies from the U.S. facility were available for permitted acquisitions, subject to certain restrictions, capital expenditures, refinancing existing indebtedness, working capital, letters of credit and for general corporate purposes. All amounts under the U.S. facility were revolving. Financial covenants under the U.S. facility permitted a maximum total funded debt to rolling four-quarter FBITDA ratio of 4.5 times and a maximum senior secured debt to rolling four-quarter EBITDA ratio of 3.5 times had the Company borrowed an amount no less than $150,000 and loaned these borrowings to IESI. Other covenants included a minimum rolling four-quarter EBITDA to interest expense ratio of 2.5 times and a capital expenditure maximum of 1.1 times actual deprecation and landfill depletion expense for any fiscal year. The U.S. facility required that IESI maintain interest rate hedges at fixed rates for at least 40% of the total funded debt, as defined therein. In addition, the U.S. facility precluded IESI from paying dividends if their funded debt to EBITDA ratio exceeded 3.9 times but increased to 4.4 times had IESl received monies from Company borrowings. The U.S. facility was also modified to allow IESI to be in compliance with the requirement to maintain interest rate hedges at fixed rates for at least 40% of total funded debt so long as its' in place interest rate hedges were not more than $10,000 under than the hedging requirement at the 40% test and the test is performed quarterly. The U.S. facility was to mature on July 2, 2014. Pricing on the U.S. facility declined on advances drawn by 75 basis points. Pricing ranged from 175 to 250 basis points over LIBOR for borrowings on LIBOR and 75 to 150 basis points over bank prime for prime rate advances. Pricing on financial letters of credit were 175 to 250 basis points which represented a decline of 75 basis points from previous pricing points. Fronting fees of 12.5 basis points on financial letters of credit were payable at all pricing levels. Standby fees declined by 12.5 basis points and range from 25 to 50 basis points. All other significant terms remained unchanged. Progressive Waste Solutions j 2012 Annual Report J 10~ Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) In July 2012, the Company exercised a portion of the accordion feature available under the U.S. facility. Effective July 20, 2012, total availability under the U.S. facility increased to $1,253,600 from $1,122,500. The accordion feature declined by a like amount from $255,000 to $123,900. All other significant terms remained unchanged. Security under the U.S. facility represented an interest over all assets of the U.S. operating companies and a pledge of the U.S. operating entities equity. Effective October 24, 2012, all amounts outstanding under the U.S. facility were repaid. Canadian revolving credit facility Effective July 2, 2010, the Company entered into a Sixth Amended and Restated Credit Facility Agreement in Canada (the "Canadian facility~) on behalf of BFI Canada Inc. (~BFI"), an indirect wholly owned subsidiary of the Company. Monies from the Canadian facility were available for general corporate purposes, including permitted acquisitions, subject to certain restrictions. The Canadian facility made available 52S,000 Canadian dollars ('C$'~ and the total additional availability under the facility (the "accordion feature~) was CS 125,000. All committed monies under the Canadian facility were revolving and the maturity date was July 2, 2014. Financial covenants included a maximum funded debt to ESITDA ratio, as defined and calculated in accordance with the terms of the Canadian facility, of 3.0 times. The funded debt to EBITDA ratio covenant expanded to a maximum of 3.25 times for a period of two quarters following the completion of an acquisition which exceeds C$75,000. Security under the Canadian facility represented a first priority perfected security interest over all personal and real propemJ of the Canadian operating companies and a pledge of the Canadian operating entities equity held by the Canadian parent. Effective July 15, 2011, the Company entered into an Amending Agreement to its Canadian facility which resulted in a 62.5 basis point pricing decline for advances made under the facility. Pricing ranged from 50 to 175 basis points over bank prime for borrowings on prime and 150 to 275 basis points over BAs for borrowings on BAs. Pricing on financial letters of credit decreased by similar amounts and pricing ranged from 150 to 275 basis points. Standby fees declined by at least 15 basis points, and pricing ranged from 37.5 to 68.8 basis points, while non-financial letters of credit decreased by at least 41.3 basis points and pricing ranged from 100 to 183.3 basis points. All other significant terms were unchanged. in July 2012, the Company exercised a portion of the accordion feature available under the Canadian facility. Effective July 19, 2012, total availability under the Canadian facility increased to C$595,000 from C$525,000. The accordion feature declined by a like amount from CS 125,000 to C$55,000. All other significant terms remained unchanged. Effective October 24, 2012, all amounts outstanding under the Canadian facility were repaid. Progressive Waste Solutions 12Ol 2 Annual Report I 101 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Details of outstanding debt - credit facilities December 31 2012 2011 Term B facility Amount drawn $ 500,000 Interest rate applicable 3,50% Available Amount drawn Letters of credit Available Amount drawn - Euro based loan Interest rate applicable - Euro based loan Amount drawn U.S. based loan Interest rate applicable - U.S. based loan Commitment - rate applicable Canadian focility (in Canadian dollars) Amount drawn Letters of credit Available Amount drawn - BAs Interest rate applicable - BAS Commitment- rate applicable 1,074,712 183,767 591,521 543,000 2.21% 527,691 3.28% 4,021 4.00% 0.375% 800,500 143,655 178,345 795,000 2.52% 5,500 4.50% 0.375% 349,000 55,481 120,519 349,000 2.20% 0.50% Progressive Waste Solutions 12012 Annual Report I 102 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Senior secured debenture, series B ("debenture") Date issued Amount issued (in Canadian dollars) Interest rate Maturity date Frequency of interest payments Date interest payments commenced Covenants June 25, 2004 $ ss,000 7.015% June 26, 2014 Quarterly, in arrears September 26, 2004 Same as Canadian facility The debenture was redeemable in whole or in part from time to time at a price equal to the greater of par and the net present value of ail scheduled payments of interest and principal using a discount rate equivalent to the sum of the Government of Canada Yield plus a margin. The debenture was secured by a charge over all the personal and real property of BFI, Ridge (Chatham) Holdings G.P. Inc., and Ridge (Chatham) Holdings L.P. and the shares of BFI and its subsidiaries. The debenture ranked equally with the Company's Canadian revolving credit facility. On October 24, 2012, the Company redeemed the debenture in full in accordance with the redemption provisions. Loss on extinguishment of debt December 31 2012 2011 Excess over principal of cash paid for redemption of debenture Write-off of deferred financing costs - debenture, U.S. and Canadian facility Loss on extinguishment of debt $ 5,198 S $ 16,924 $ Progressive Waste Solutions J 2012 Annual Report J 103 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shams, except per share amount~ and where otherwise stated) IRBs The Company entered into the following IRB facilities which are available to fund a portion of landfill construction activities and equipment, vehicle and container expenditures at its Seneca Meadows landfill and in its Pennsylvania and Texas operations: 2005 Seneca County Industrial Development Agency IRB ("2005 Seneca IRB Facility"), Pennsylvania Economic Development Corporation IRB ("PA IRB Facility"), Mission Economic Development Corporation IR8 (~fX IRB Facility'') and 2009 Seneca County Industrial Development Agency IRB ('2009 Seneca IRB Facility''). Date Frequency interest Date Term, in interest of interest payments IRB Facility entered years Maturity Availability rate basis payments commenced Security 2005 Seneca IRB Facility Oct. 20, 2005 30 Oct. 1,203S $ 4S,O00 LIBOR Monthly, in Nov. 1, 2005 Guaranteed less an arrears by IESI applicable discount PA IRB Facility Nov. 16, 22 Nov. 1,2028 $ 35,000 LIBOR Monthly, in Dec. 1, 2006 Letter of 2006 less an arrears credit equal applicable to amount discount drawn TX IRB Facility Mar. 1,2007 15 Apr. 1, 2022 S 24,000 LIBOR Monthly, in May. 1, 2007 Letter of less an arrears credit equal applicable to amount discount drawn 2009 Seneca IRB Facility Dec. 1,2009 IRB Facility Amendment 30 Dec. 31, 2039 $ 90,000 Securities Monthly, in Feb. 1, 2010 Letter of Indust~ arrears credit equal and to amount Financial drawn Markets Association Municipal Swap Index Term for amended Amended interest Amendment interest rate rate basis, date basis in years 2009 Seneca IRB Facility Aug. 1,2008 Fixed rate 5 Progressive Waste Solutions 12012 Annual Report I 104 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 2012 2011 2005 Seneca IRB Facility Amount drawn $ 45,000 S 45,000 Annual interest rate 6.625% 6.625% PA IRB F(]cility Amount drawn $ 35,000 S 35,000 Current daily interest rate 0.14% 0.15% TX IRB Facility Amount drawn $ 24,000 S 24,000 Current daily interest rate 0.13% 0.16% 2009 Seneca IRB Focility Amount drawn $ S,000 $ 5,000 Amount restricted $ 476 $ 452 Current daily interest rate 0.14% 0.18% Other In connection with the WSI acquisition, the Company assumed a note that was originally payable to WCA of Florida LLC ('~/VCA'~ and subsequently assigned to Credit Suisse. The note has an original issue date of June 29, 2007 and was originally issued for $10,500. The note is non-interest bearing and requires payments of $125 per month until its maturity in June 2014. The note was entered into as part of a transaction between WSI and WCA to acquire certain WCA assets in Florida and to setl certain WSI operations in Texas. The note is secured by the WCA assets acquired. At December 31, 2012 and 2011, the Company has capital lease obligations of $4,889 (2011 - Snil) with maturities and interest rates ranging from 2020 to 2025 and 5.00% to 12.70%, respectively. The following is a schedule of the future minimum lease payments required under capital lease obligations in each of the next five years ending December 31, and thereafter: 2013 S 588 2014 617 2015 650 2016 683 2017 718 Therea~er 4,082 7,338 2~449 Present value of minimum capital lease obligations $ 4,889 Consolidated long-term debt The Company is subject to various restrictions included in its long-term debt financing agreements. At December 31, 2012 and 2011 the Company is in compliance with all restrictions included in these agreements. Interest on long-term debt amounted to $57,428 (2011 - $62,086). Interest on long-term debt includes deferred financing costs and debt discount amortization and excludes capitalized interest. Progressive Waste Solutions 12012 Annual Report 1105 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 3 I, 2012 and 2011 (in thousands of U.S. dolla rs a nd sha res, except per sha re amounts and where otherwise stated) Principal repayments, excluding capital lease obligations, required in each of the next five years ending December 31, and thereafter are as follows: 2013 $ 6,142 2014 5,260 2015 4,643 2016 4,643 2017 1,879,355 Therea~er 583,34S $ 1,683,388 16. Landfill Closure and Post-Closure Costs The tables below outline key assumptions used to determine the value of landfill closure and post-closure costs. The tables also outline the expected timing of undiscounted landfill closure and post-closure expenditures and changes to landfill closure and post-closure costs between periods. December 31,2012 Fair value of legally restricted assets Undiscounted closure and post-closure costs Credit adjusted risk free rates Canadian segment land fills Credit adjusted risk free rates - U.S. segment landfills Expected timing of undiscounted landfill closure and post-closure expenditures 2013 2014 2015 2016 2017 Thereafter $ 9,885 $ 666,204 4.6 - 9.5% 4.5 - 7.2% 8,871 18,394 7,438 11,766 Landfill closure and post-closure costs, beginning of the year Provision for landfill closure and post closure costs, during the year Accretion of landfill closure and post-closure costs, during the year Landfill closure and post-closure expenditures, during the year Remediation liabilities acquired, during the year Revisions to estimated cash flows, during the year Foreign currency translation adjustment, for the year 101,502 S 98,239 13,925 13.008 (6,737) (4,345) (1,630) (9,803) Less current portion of landfill closure and post-closure costs 8,871 9,468 Landfill closure and post-closure costs, end of ~,ear $ 104,281 $ 92,034 The Company is required to deposit monies into a social utility trust for the purpose of settling post-closure costs at its Lachenaie landfill. The funding amount is established by the Quebec Government based on each cubic metre of waste accepted and payment is due quarterly. At December 31, 2012, funded landfill post-closure costs, representing the fair value of legally restricted assets, totals $9,885 (2011 - $9,200). At December 31, 2012, $9,782 (2011 - $9,115) was deposited into the social utility trust with the balance, $103 (2011 - $85) remaining unfunded and included in accounts payable. Progressive Waste Solutions J 2012 Annual Report J 106 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 17. Shareholders' Equity Shareholders' equity The Company is authorized to issue an unlimited number of common, special and preferred shares, issuable in series. Common Shares On March 29, 2011, in connection with the secondary offering by TC Carting III, L.LC., an affiliate of Thayer I Hidden Creek Partners, EL.C, the Company agreed to purchase 1,000 of its common shares from the underwriters in a secondary offering, at the same public offering price of $23.50 per share for a total cost of $23,500. The common shares were cancelled and no longer remain outstanding. Effective August 19, 2011, the Company received approval to commence a normal course issuer bid ("NCIB'~ to purchase up to 4,000 of the Company's common shares. On December 23, 2011, the Company received approval to increase the number of common shares repurchased under the NCIB to 7,500. Daily purchases were limited to a maximum of 47.833 shares on the TSX. Once a week, the Company is permitted to purchase a block of common shares which can exceed the daily purchase limit, as long as the block is not owned by an insider. All shares purchased will be cancelled. Effective August 21, 2012, the Company received approval to renew its NCIB for an additional 12 months which allows the Company to purchase up to 7,500 common shares in the open market. Daily purchases are limited to a maximum of 57.806 shares on the TSX. For the year ended December 31, 2012, 3,155 common shares (2011 - 2,622) were purchased and cancelled at a total cost of $65,633 (2011 - $55,826). As of February 19, 2013, no additional common shares have been purchased and settled. For the year ended December 31, 2012, 28 stock options (2011 - 141) were exercised for total consideration of $403 (2011 $2,385). At December 31,2012, 691 (2011 - 729) common shares were held by the U.S. LTIP plan rabbi trust. Special Shares The Company is authorized to issue an unlimited number of special shares. Special shareholders are entitled to one vote in matters of the Company for each special share held. The special shares carry no right to receive dividends or to receive the remaining property or assets of the Company upon dissolution or wind-up. At December 31, 2012 and 2011, no special shares are issued. Preferred Shares The Company is authorized to issue an unlimited number of preferred shares, issuable in series. At December 31, 2012 and 2011, no preferred shares are issued. Each series of preferred shares issued shall have rights, privileges, restrictions and conditions as determined by the Board of Directors prior to their issuance. Preferred shareholders are not entitled to vote, but take preference over the common shareholders rights in the remaining property and assets of the Company in the event of dissolution or wind- up. Progressive Waste Solutions 12012 Annual Report 1107 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Details of common and restricted shares for the year ended December 31, 2012 are as follows: December31 2012 2011 Common shares issued and outstanding, beginning of the year Common sha~s issued on exercise of options, during the year Restricted common shares purchased, during the year Restricted common shares forfeited, during the year Common shares issued and outstandin~l, end of },ear Restricted common shams issued and outstanding, beginning of year Restricted common shares forfeited, during the year Restricted common shares vested, during the ~/ear Restricted common shares issued and outstaedinc. L end of year 118,041 28 121,430 141 67 (3,155) (3,622) (SO) (185) 23 107 210 114,994 118,041 252 277 50 185 (23) (tO7) (210) 172 252 Accumulated other comprehensive loss Accumulated other comprehensive loss, is comprised of accumulated foreign currency translation adjustments, including accumulated exchange gains or losses on intangibles, goodwill and capital and landfill assets, partially offset by accumulated exchange losses or gains on long-term debt, landfill closure and post-closure costs, and deferred income tax liabilities. Accumulated other comprehensive loss also includes gains or losses recognized on the effective portion of derivatives designated as cash flow hedges, net of income tax and settlements. Derivatives designated as cash flow Foreign hedges, net Accumulated currency of income other translation tax and comprehen- adjustment settlements sive loss D~cember 31,2012 Balance, beginning of year $ (59,994) Change, during the year 11,702 $ (1,757) $ (61,751) Balance, end of},ear $ (48,292) $ 176 $ (48,116) December 31,2011 Balance, beginning of year Chan~le, durin~l the ~/ear $ (47,474) $ 2,832 $ (44,642) (12,520) (4,589) (17,109) Balance, end or,ear $ (59,994) $ (1,757) S (61,751) Progressive Waste Solutions 12012 Annual Report I 108 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shams, except par share amounts and where otherwise stated) Net income per share The following table presents net income and reconciles the weighted average number of shares outstanding at December 31, 2012 and 2011 for the purpose of computing basic and diluted net income per share. December 31 2012 2011 Net income (loss) $ 94,357 S (196,136) Weighted average number of shares, basic 116,178 120,683 Dilutive effect of share based options Weighted ave rathe number of shares, diluted 116,178 120,683 Net income (loss) per weighted average share, basic Net income (loss) per weighted avera~le share, diluted $ 0.81 $ (1.63) $ O.81 $ (1.63) Issued and outstandin~g share based options 2,687 2,505 Share based options are anti-dilutive to the calculation of net income (loss) per share and have been excluded from the calculation. Warrants December 31 2012 2011 Number of Weighted Number of Weighted common average common average shares exercise shares exercise Issuable price issuable price Outstanding, beginning of year Exercised, during the year Expired, durin9 the year $ 194 $ 13.89 (194) (13.89) Outstanding, end ofyear $ As of December 31,2011, ali warrants were exercised. The warrants were exercised in a cashless conversion and resulted in the Company issuing 67 of its' common shares. 18. Changes in Non-Cash Working Capital Items The following table outlines changes in non-cash working capital items: December 31 2012 2011 Accounts receivable Prepaid expenses Accounts payable Accrued charges Income taxes recoverable and payable Deferred revenues Effect of foreign current)' translation adjustments and other non-cash changes (8,683) S 1,314 (7,278) (4,230) (24,964) 9,568 (18,595) (24,813) (11,635) (3,732) 1,387 (2,733) 1,141 (4,038) $ (68,657) S (28,664) Progressive Waste Solutions 12012 Annual Report 1109 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except p~r share amounts and where otherwise stated) 19. Share Based Compensation Sha~e based o~fions Share based options ("options") are granted to certain directors, officers or management employees at the discretion of the Company's Board of Directors, or its designate. Options, in the absence of any other determination, are exercisable equally on their first, second, third and fourth anniversary dates and expire on the 10th anniversary date of the grant. The Company has reserved 4,000 shares for issuance under the option plan. The exercise date of options may be accelerated at the discretion of the Board of Directors, or its designate. Options are not transferable or assignable. On August 20, 2012, the 8oard of Directors issued 210 share based options, all of which have stock appreciation rights, to one executive of the Company. The options vest and are exercisable on December 31, 2016. The options have an exercise price of C$20.29 and a grant date market value of C$20.01. On termination of employment without cause, death or disability, the options become immediately exercisable. Unexercised options expire on December 31,2021. December 31 2012 2011 Weighted average Weighted Numberof exercise Number of average options price options exercise price Outstanding, beginning of year Granted, during the year Exercised, during the year Forfeited, during the year Expired, during the },ear 2,505 $ 23.28 2,646 $ 21.23 210 $ 20.51 $ (28) $ (14.42) (141) $ (16.02) s $ $ $ 2,687 $ 23.59 2,505 $ 23.28 Outstanding, end of },ear Options outstandinc, I, exercisable 2,477 2,505 Weic~hted averac~e grant date market value $ 22.28 S 20.68 Wei~]hted avera~]e rernainin~l contractual life (in),ears) 5.1 5.8 Share based compensation recovePJ Unrecognized compensation costs for share based compensation Share based compensation accrued $ (110) $ (6,8O8) $ 1,070 $ $ 3,730 S 3,757 Progressive Waste Solutions 12012 Annual Report I 110 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The Company uses the Black-Scholes-Merton option pricing model which requires several input variables. These variables include the estimated length of time employees will retain their options before exercising them and the expected volatility of the Company's share price. Changes in these variables can materially affect the estimated fair value of share based compensation and, consequently, the related amount recognized in selling, general and administration expense on the statement of operations and comprehensive income or loss. In calculating the fair value of the options at December 31, 2012 and 2011, the following weighted average assumptions were used: 2012 2011 Grant date - February 14, 2006 Dividend yield Expected volatility Risk free interest rate Expected remaining life, stated in years Fair value, per option (in Canadian dollars) 2.8% 16.9% 1.0% 0.7 $ 0.01 S 2.5% 20.90/0 0.9% 1.7 0.19 Gr(~ntdate August2S, 2008 Dividend yield Expected volatility Risk free interest rate Expected remaining life, stated in years Fair value, per option (in Canadian dollars) 22.2% 1.0% 2.50 $ 2.5% 23.1% 0.9% 2.2 2.26 Grant date - January 9, 2009 Dividend yield Expected volatility Risk free interest rate Expected remaining life, stated in years Fair value, per option (in Canadian dollars) $ 2.82 $ 2.5% 22.3% 1.0% 2.5 2.30 Grant date - November I I, 2010 Dividend yield Expected volatility Risk free interest rate Expected remaining life, stated in years Fair value, per option (in Canadian dollars) 2.8% 22,2% 1.1% 3.0 $ 2.26 $ 2.5% 38.3% 1.2% 4.0 4.20 Grant date - August 20, 2012 Dividend yield Expected volatility Risk free interest rate Expected remaining life, stated in years Fair value, per option (in Canadian dollars) 2.8% 36.4% 4.3 $ 5.56 $ Compensation expense or recovery including fair value changes in share based options are recorded to selling, general and administration expense on the statement of operations and comprehensive income or loss. In determining the expected life of the options, management considered the age of the recipients and duration between the vesting date and date of expiration. These options represent the Company's first, second, third, fourth and fifth option grants. Expected volatility was calculated using changes in monthly share prices for a period commensurate with the remaining term to expected vesting. Progressive Waste Solutions 12012 Annual Report 1111 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Restricted shares On September 12, 2011, the Company issued 185 restricted shares at a weighted average cost of $22.84 per share to certain executives. In conjunction with the restricted share issuance, the Company purchased 185 common shares for total cash consideration of $4,226. The restricted shares issued have vesting dates as follows: 37.5 restricted shares on May 31, 2013, 12.5 restricted shares on June 15, 2013, 30 restricted shares on December 15, 2012, 30 restricted shares on December 15, 2013, 25 restricted shares on May 31,2014, 12.5 restricted shares on June 15, 2014 and 37.5 restricted shares on May 31,2015. On August 24, 2012, the Company issued 50 restricted shares at a weighted average cost of C$19.95 per share to one executive. In conjunction with the restricted share issuance, the Company purchased 50 common shares for total cash consideration of CS998. The restricted shares issued have a vesting date of December 1, 2014. In September 2012, 23 restricted shares previously awarded on September 12, 2011 to two employees were forfeited. In conjunction with the forfeiture, the Company sold 23 restricted shares for total cash proceeds of $456. Additionally, 23 restricted shares previously awarded on September 12, 2011 to these same employees were modified. The vesting date for the modified awards is December 31, 2012, subject to the achievement of certain performance conditions. The changes resulted in a $663 recovery of previously recognized restricted share expense. Restricted shares are issued as an incentive for certain executive management ("employees" or ~executive management~) in respect of their employment with the Company and to align the interests of executive management with the interests of the Company's shareholders. Restricted shares are purchased by the Company in the open market and are held in trust for the employees' benefit. Restricted shares vest when the employee has satisfied the requisite service period or performance conditions. Executive management forfeits their right to restricted shares upon termination for cause or resignation without good reason. Accelerated vesting occurs in certain circumstances, including termination without cause or resignation for good reason, change of control, and death or disability. Dividends received by the trustee, on restricted shares held for the benefit of executive management, are paid to the employee. The employee's interest in restricted shares cannot be assigned or transferred. The following table outlines various details pertaining to restricted shares. December 31 2012 2011 Outstanding, beginning of year 252 277 Granted, during the year 50 185 Vested, during the year (107) (21 O) Forfeited, durinc. I the year (23) Outstanding, end of ~'ear 172 2S2 Weighted avera~le rernalnlnc~ llfe 1.74 1.49 Restricted share expense $ 2,034 $ 2,107 Restricted share expense is recorded to selling, general and administration expense on the statement of operations and comprehensive income or loss. If employees satisfy the requisite service period requirements, the Company will record the compensation expense in the following years: 2013 $ 915 2014 551 2015 65 $ 1,531 Progressive Waste Solutions 12012 Annual Report I 112 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shams, except per sham amounts and where otherwise stated) PSUs In March 2012, the Company's Compensation Committee approved a revised long-term incentive compensation plan for all executive officers and certain employees effective January 1, 2012. Under the revised plan, PSU payments are awarded at the end of a three year performance period and payment amounts can range from 0% to 150% of the target award subject to the Company's performance against pre-established performance measures. Performance measures are recommended by executive management and sabmitted to the Compensation Committee for approval. In addition to these performance measures, the Compensation Committee may evaluate performance results and retains the authority and discretion to amend PSU payments. PSU award payments are paid in lump sum cash amounts based on the volume weighted average trading price of the Company's shares for the five trading days immediately preceding the vesting date. Payments are measured and distributed in the final month of the performance period. A participant who voluntarily terminates employment or is terminated with cause prior to the date of payment forfeits all rights to, or interest in, any unvested award. If a participant's employment is terminated without cause, or by death, disability or retirement, after the mid-point of the performance period, the participant shall be entitled to the full amount of the participant's unvested PSUs and related dividend PSUs. If a participant's employment is terminated without cause, or by death, disability or retirement, prior to the mid-point of the performance period, the participant shall be entitled to a pro-rated amount of the award that the Compensation Committee determines would have been paid to the participant had their employment continued to the end of the performance period. The following table outlines details of PSU's: 2012 2011 Weighted average Weighted Number of grant date Number of average grant PSUs fair value PSUs date fair value Outstanding, beginning of year Granted, during the year Vested, during the year Forfeited, during the year $ 333 $ 20.04 $ $ Outstandin~l, end of ~'ear 333 $ 20.04 2012 2011 PSU expense $ 1,185 Unrecognized compensation cost for PSU's $ 2,218 $ PSU cornpensation cost accrued $ 1,188 $ In calculating the fair value of the PSU's at December 31, the following weighted average assumptions were used: 2012 2011 Grant date - March 16, 2012 Dividend yield Expected volatility Risk free interest rate Expected remaining life, stated in years Fair value per PSU (in Canadian dollars) 2,8% 21.1% 1.1% 2.0 $ 20.32 Compensation expense includes fair value changes in PSU's which are recorded to selling, general and administration expense on the statement of operations and comprehensive income or loss. Progressive Waste Solutions 12012 Annual Report I 113 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and whe~ otherwise stated) Long-term incentive plan Effective January 1, 2003, the Company entered into a trust (the "Trust'3 agreement to establish a long-term incentive plan on behalf of certain Canadian employees, officers and directors. The purpose of the Trust is to receive monies from the Company and its subsidiaries on behalf of certain Canadian employees, officers and directors to purchase shares of the Company in the open market and to hold the shares acquired for the benefit of its participants. Shares remain registered in the name of the Company, the Trustee, or its nominee(s), until the shares are redeemed, sold or distributed to the participant for whom they are held. Dividends received by the Trust are distributed to the participants in proportion to their pro rata entitlement. The Company's maximum exposure to loss is limited to its obligation to fund the administration of the Trust and its indemnity to the Company and its officers, directors, employees, agents or shareholders for various items including, but not limited to, all costs to settle suits or actions due to association with the Trust, subject to certain restrictions. The risk of fluctuations in the price of the Company's shares is borne by the participants. In February 2006, the Company amended and restated its long-term incentive plan and established a long-term incentive plan on behalf of certain U.S. employees, officers and directors of IESl and its subsidiaries. With the exception of changes to the vesting period, the terms of the long-term incentive plan remained principally unchanged. Shares acquired by the Trust in respect of fiscal year ended December 31, 2004 for the benefit of its participants have vested. Shares acquired by the Trust in respect of fiscal year ended December 31, 2005, and thereafter, vest as follows: one third on the day such shares are allocated to the participant, one third on December 31 of the year such shares are allocated to the participant, and the balance on December 31 of the subsequent year. Shares that are forfeited by participants to the long-term incentive plan are allocated to the remaining participants in accordance with their proportional entitlement to all of the shares held by the Trust and the Trust will abstain from voting on all matters related to the Company. The purpose and terms of the U.S. long-term incentive plan are consistent with those outlined for the Company's amended and restated Canadian plan. In 2012, contributions to the long-term incentive plan are calculated at 1.45% (2011 - 1.45%) of operating income before restructuring costs, goodwill impairment, amortization and gain or loss on sale of capital and landfill assets, adjusted for certain non-recurring or non- operating items. The Compensation Committee exercised its discretion with regards to 2012 amounts awarded. As a result, 2012 awards represent half of the target award amount. Included in selling, general and administration expenses are 51,342 (2011 - $6,159) of accrued amounts payable to the Trust on behalf of certain Canadian and U.S. employees at December 31,2012. Certain employees previously in this plan are participating in the revised long-term incentive plan where they receive PSU awards. 20. Commitments and Contingencies The Company leases buildings and equipment under various operating leases. Payments for the next five years eoding December 31 and thereafter are as follows: 2013 $ 13,423 2014 10,664 2015 9,519 2017 5,219 Therea~er 13,234 $ 6~342 The Company is the successor to a license agreement to use the trade name "BFI" and the related logo which is subject to certain restrictions. The agreement was amended on February 22, 2002, whereby a one-time payment of C$2,000 was made on April 25, 2002 in full satisfaction of all royalty obligations under the license agreement payable through June 1, 2015 (the initial 15-year term). The Company has two additional 10 year extension options. The first and second 10 year extension options bear per annum costs of $603 (C$600) and $1,508 (C$1,500), respectively. The Company enters into various commitments in the normal course of business. At December 31, 2012, the Company has issued letters of credit amounting to $183,767 (2011 - $198,208) and performance bonds totaling $383,391 (2011 - $295,524). Letters of credit are made available to the Company through the consolidated facility and are included in the security offered by the Company to its lenders. Progressive Waste Solutions 12012 Annual Report I 114 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) On the acquisition of IESI, the Company assumed various obligations which requires the Company to pay additional amounts for achieving certain negotiated events or business performance targets, including landfill expansion approval or target disposal volumes. The Company is obligated to pay certain sellers various amounts for achieving certain negotiated disposal volumes to a maximum of approximately $6,400. Amounts are accrued monthly, and paid from time to time in accordance with underlying agreements, until certain threshold negotiated disposal volume targets are achieved, and the maximum obligation is satisfied. Accrued amounts, which are paid up to the date the disposal volume threshold targets are met, reduce the threshold payment by a similar amount. The Company will record an adjustment to the purchase price allocation when the contingency is resolved and consideration is issued or becomes issuable. Landfill permits acquired on the acquisition of IESl were recorded at their fair values. Accordingly, future contingent payments made, in respect of landfill expansion approval or fulfilling disposal volume targets, are recorded to goodwill. The Company has a disposal contract that requires it to meet specific disposal volume targets which expires on March 31, 2019. The volume requirements are measured based on an annual average. In the event the Company does not meet the required volume targets, the Company is required to make additional payments on the disposal volume shortfall. At December 31, 20t2, the Company expects to meet its disposal volume target and accordingly no accrual has been made. The Company has an accrued environmental liability of $14,256 (2011 - $14,950) recorded in landfill closure and post-closure costs, related principally to an inactive landfill (hereinafter referred to as 'q-antalo~), which the Company assumed as part of the IESI acquisition. The Tantalo environmental liability consists of remediation and 30 years of post-closure monitoring totaling $14,215 (2011 ~ $15,102). The initial remediation work commenced in 2004, and the post-closure monitoring commenced in 2007. Tantalo is a 26 acre landfill that stopped accepting waste in 1976 and has been identified by the State of New York as an "Inactive Hazardous Waste Disposal Site". During its period of operation, Tantalo received both municipal and industrial waste, some of which has been found to exhibit "hazardous" characteristics as defined by the U.S. Resource Conservation and Recovery Act. Past activities at Tantalo have resulted in the release of hazardous wastes into the groundwater. A remediation program was developed for Tantalo in conjunction with the New York State Department of Environmental Conservation. The remediation program includes: installation of groundwater barriers, protective liner caps, leachate and gas collection systems, and storm-water drainage controls, as well as methods to accelerate the decontamination process. In addition, IESI purchased a "Cleanup Cost Cap Insurance Policy," with a ten-year policy period, which provides $25,000 of coverage in excess of the remediation portion of the liability. The cost of remediation requires a number of assumptions and estimates which are inherently difficult to estimate, and the outcome may differ materially from current estimates. However, management believes that its experience provides a reasonable basis for estimating its liability. As additional information becomes available, estimates are adjusted as applicable. It is possible that technological, regulatory or enforcement developments, the results of environmental studies, or other factors could necessitate the recording of additional liabilities which could be material. The estimated environmental remediation liabilities have not been reduced for possible recoveries from other potentially responsible third parties. The Company is subject to certain lawsuits and other claims arising in the ordinary course of business. The outcome of these matters is subject to resolution. Based on management's evaluation and analysis of these matters, the amounts of potential losses are accrued and management believes that any amount above the amounts accrued will not be material to the financial statements. Purchase agreements In April 2007, WSl acquired a company that owns a permit to construct a construction and demolition waste transfer station on land owned by it in Bradenton, Florida. An additional payment of $2,500 is due to the sellers upon the transfer of the company or the property to any non-affiliate of WSl or upon obtaining all necessary permits to operate the transfer station. WSi entered into an agreement to purchase an adjacent parcel of land to its SLD landfill for total consideration of approximately $4,900. Deposits to date total $1,400. All deposits will be credited to total purchase consideration paid on closing. Deposits made by the Company are not refundable should the purchase not close. At December 31,2012, future minimum payments under an unconditional capital expenditure commitment totals approximately C$19,600. Progressive Waste Solutions 12Ol 2 Annual Report I 115 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 21. Related Party Transactions Lease The Company leases office space that is owned by one of its directors. Investment in equity accounted investee The Company's fifty percent ownership interest in its equity investee is with a related party. The remaining fifty percent is owned by two trusts. The brother of one of the Company's former directors serves as a trustee for both trusts and one of the Company's former directors serves as a trustee for one of the two trusts. The Company exercises joint control over its equity investment through its fifty percent ownership interest. The Company's fifty percent ownership interest grants it authority to nominate fifty percent of the directors to the board of the investee. The Chairperson of the investee's Board of Directors cannot be nominated by the Company and the Chairperson cannot be a member of the Company's Board of Directors. The Chairperson of the investee is entitled to cast a second vote in the event of a tie amongst its board. Certain matters are beyond the control of the investee's board and reside with its shareholders. These matters are related to certain financing, board composition, the sharing of profits and material business changes. Transactions between the Company and its investee have all been transacted in the normal course of business. These transactions are generally the result of the investee billing the Company for services it provides to the Company. in turn, the Company bills its customers for this service which is measured at the exchange amount. Transactions between the Company and its investee only reflect the Company's share of the transaction. The Company received an unsecured promissory note from its equity accounted investee in exchange for cash. The promissory note is repayable on demand with no fixed term to maturity. Interest on the note accrues at a rate equal to the greater of 5.5%, or the rate which is equal to bank prime plus 2.0% calculated annually, not in advance and payable on maturity. The promissory note may be repaid, in whole or in part, at any time, subject to certain restrictions. Transportation services A company owned by an officer of a BFI subsidiary provides transportation services to the Company. Consulting fees The Company has incurred consulting fees from one of its former directors. All related party transactions are recorded at the exchange amounts. Lease expi~/date September 30, 2014 Approximate annual lease cost (in Canadian dollars, recorded to selling, genera[ and administration expenses) $ 320 2012 2011 Investment in equity accounted Investee Charges (recorded to operating expenses) Amounts owing to equity investee (included in accounts payable) Unsecured promissory note issued December 6, 2010 (in Canadian dollars) Interest income (recorded to interest expense) Transportation services Charges (recorded to operating expenses) Amounts owing (included in accounts payable) Consultiog fees Charges (recorded to selling, general and administration expenses) $ 267 $ 295 $ 32 $ 4 $ 750 $ 750 $ 41 $ 41 $ 3,714 $ 2,419 $ 63 $ 35 $ 78O $ Progressive Waste Solutions 12012 Annual Report I 116 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 22. Financial Instruments The following table categorizes the Company's derivative financial assets and liabilities and their fair value amounts. Amounts are recorded as other assets or other liabilities on the Company's balance sheet. December 31, December 31, 2012 2011 Financial assets Derivatives not designated in a hedging relationship Current - commodity swaps Long term commodity swaps Current - foreign currency exchange agreements Long-term - foreign currency exchange agreements Long-term interest rate swaps S 660 $ 220 S 491 S $ S 289 S $ 69 $ $ s Derivatives designated in a hedging relationship Current - commodity swaps Long-term - commodity swaps $ g13 $ 1,463 $ $ 575 Financial liabilities DerivatiYes not designated in a hedging relationship Current interest rate swaps Long-term interest rate swaps Current foreign currency exchange agreements $ 2,447 $ 1,307 $ 8O 1,492 $ $ 1,993 S $ 2,106 The following tables outline the hierarchical measurement categories for various financial assets and liabilities. As at December 31,2012 and December 31,2011 financial assets and liabilities measured on a recurring basis had the following fair values: December 31, 2012 Quoted prices in active Significant markets for other Significant identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) Total Cash and cash equivalents Funded landfill post<losure costs Other assets - commodity swaps (designated in a hedging relationship) Other assets - commodity swaps Other liabilities - interest rate swaps Other liabilities - foreic~n currency exchange a~reements S 29,940 S S 9,885 913 1,151 (3,754) (80) 29,940 913 (3,754) (8o) $ 39,825 S (3~34) $ 2,064 $ 38,055 Progressive Waste Solutions 12012 Annual Report I 117 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) December 31,2011 Quoted prices in active Significant markets for other Significant identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) Total $ 14,143 S S S 9,200 2,038 220 Cash and cash equivalents Funded landfill post-closure costs Other assets - commodity swaps (designated in a hedging relationship) Other assets commodity swaps Other assets - interest rate swaps Other assets - foreign currency exchange agreements Other liabilities - interest rate swaps (designated in a hedging relationship) Other liabilities - interest rate swaps 14,143 9,200 2,038 220 5 5 358 358 (4,099) (4,099) (1,492) (1,492) $ 23,343 $ (5,228) $ 2,258 $ 20,373 The following table outlines the change in fair value for recurring Level 3 fair value measurements for the year ended December 31,2012 and 2011: December 31 2012 2011 Balance, beginning of year $ 2,258 S 3,801 Realized gains included in the statement of operations, during the year 513 1,242 Unrealized gains (losses) included in the statement of operations, during the year 928 (324) Unrealized losses included in accumulated other comprehensive loss, during the year (1,126) (1,215) Settlements (513) (1,242) Foreign currency translation adjustment 4 (4) Balance, eed of ~ear $ 2,064 $ 2,258 Fairvalue Funded landfill post-closure costs are invested in Bankers' Acceptances, offered through Canadian financial institutions, or Government of Canada treasury bills. The fair value of these investments is supported by quoted prices in active markets for identical assets. The fair values of financial instruments are calculated using available market information, commonly accepted valuation methods and third-party valuation specialists. Considerable judgment is required to interpret market information to develop these estimates. Accordingly, these fair value estimates are not necessarily indicative of the amounts the Company, or counter-parties to the instruments, could realize in a current market exchange. The use of different assumptions and or estimation methods could have a material effect on these fair values. The Company's interest rate swaps are recorded at their estimated fair values based on quotes received from financial institutions that trade these contracts. The Company verifies the reasonableness of these quotes by comparing them to similar quotes from another financial institution. In addition, the Company employs a third party, who is not a counter-party, to independently value the interest rate swaps and the Company uses all of this information to derive its fair value estimates. The use of different assumptions and or estimation methods could have a material effect on these fair values. The fair values of commodity swaps are determined applying a discounted cash flow methodology. This methodology uses the Department of Energy forward index curve and the risk-free rate of interest, on a basis consistent with the underlying terms of the agreements, to discount the commodity swaps. Financial institutions and the U.S. Department of Treasury are the sources of the Department of Energy forward index curve and risk-flee rate of interest, respectively. The use of different assumptions and or estimation methods could have a material effect on these fair values. Progressive Waste Solutions 12012 Annual Report I 118 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The Company's foreign currency exchange agreements are recorded at their estimated fair values based on quotes received from the financial institution that the Company has entered the agreement with. The Company verifies the reasonableness of the quotes by comparing them to the period end foreign currency exchange rate plus a forward premium. The use of different assumptions and or estimation methods could result in differing fair values which the Company believes would not be material. Hedge accounting The Company has designated certain commodity and interest rate swaps as cash flow hedges. The following tables outline changes in the fair value of commodity and interest rate swaps designated as cash flow hedges and their impact on other comprehensive income or loss, net of the related income tax effect, for the year ended December 31, 2012 and 2011. Decembe~ 31 2012 2011 Derivatives designated as cash flow hedges, net of income tax Other comprehensive income (loss), interest rate swaps Other comprehensive loss, commodity swaps Total other comprehensive income {loss), net of income tax $ 3,854 $ (2,478) (2,250) (3,312) S 1,804 S (5,79o) The Company measures and records any ineffectiveness on commodity swaps representing the difference between the underlying index price and the actual price of diesel fuel purchased. Gains or losses are reclassified to operating expenses as diesel fuel is consumed. The estimated net amount of the unrealized losses on commodity swaps expected to be reclassified to earnings within the next twelve months is $9t3 (December 31, 2011 - $1,463). The timing of actual amounts reclassified to net income is dependent on the movement in diesel fuel prices in the future. Until October 24, 2012, the Company measured and recorded any ineffectiveness on interest rate swaps using regression analysis. Interest rate swaps were settled quarterly, consistent with the Company's obligation to pay interest on its previous U.S. facility. Gains or losses arising from interest rate swaps were reclassified to interest expense upon settlement. The estimated net amount of the unrealized gains on interest rate swaps expected to be reclassified to earnings within the next twelve months at December 31,2011 was $1,993. In conjunction with the full repayment of the U.S. facility, effective October 24, 2012, the designation of interest rate swaps as cash flow hedges ceased and hedge accounting was discontinued. This resulted in a reclassification adjustment to earnings totaling $2,840, net of the related income tax effect, $1,530. Interest rate, commodig/ swaps and foreign currency exchange agreements The Company is subject to credit risk on certain interest rate, commodity swaps and foreign currency exchange agreements (collectively the ~agreements"). As a condition of its U.S. fad[ity the Company had entered into interest rate swaps to fix a portion of its variable rate interest charged on borrowings under the facility, some of which had been designated for hedge accounting up to October 24, 2012. In addition, the Company has entered into commodity swaps for a portion of diesel fuel consumed in its Canadian and U.S. operations. Finally, the Company has entered into foreign currency exchange agreements to mitigate against the risk of foreign currency fluctuations on dividends paid by BFI to WSl LLC, a U.S. holding company. WSl LLC has a partial ownership interest in BFI. The Company's corporate treasury function is responsible for arranging all agreements while the Audit Committee is responsible for approving such agreements. Suitable counterparties identified by the Company's treasury function are approved by the Audit Committee. The Company will only enter into agreements with highly rated and experienced counterparties who have successfully demonstrated that they are capable of executing these arrangements. If the counterparties' credit rating, prepared by reputable third party rating agencies, is downgraded, the Company's treasury function will review the agreement and assess if its exposure to the counterparty can be collateralized or if the agreement should be terminated. The Company's treasury function also prepares a report, at least once annually, to the Company's Audit Committee which outlines key terms of its agreements, fair values, counterparties and each counterparty's most recent credit rating, and, where applicable, changes to the risks related to each agreement. Progressive Waste Solutions J 2012 An nual Report J 119 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31, 2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The Company's maximum exposure to credit risk is equal to the fair value of interest rate and commodity swaps and foreign currency exchange agreements recorded in other assets on the Company's balance sheet. The Company holds no collateral or other credit enhancements as security over these agreements. The Company deems the agreements' credit quality to be high in light of its counterparties and no amounts are either past due or impaired. In all instances, the Company's risk management objective is to mitigate its risk exposures to a level consistent with its risk tolerance. The Company has entered into the following commodity and interest rate swaps and foreign currency exchange agreements as outlined in the tables below: U.S. fuel hedges Notional (gallons per Diesel rate month paid expressed in (expressed in Date entered ~lallons) dollars) Diesel rate received vadable Effective date Expiration date October 29, 2008 62,500 $ 3.69 Diesel Fuel Index July 1, 2009 October 31, 2013 June 1, 2009 170,000 $ 2.34 NYMEX Heating Oil Index January 1,2013 May 31,2013 June 21,2012 150,000 $ 3.62 Diesel Fuel index January 1,2015 December 31,2015 May 9, 2012 150,000 $ 3.94 Diesel Fuel Index January 1,2013 December 31,2013 May 24, 2012 150,000 $ 3.82 Diesel Fuel index January 1,2013 Decer~per 31,2013 June 1,2012 300,000 S 3.74 Diesel Fuel Index January 1,2013 December 31,2013 June 1,2012 62,500 $ 3.69 Diesel Fuel Index November 1,2013 June 30, 2014 May 9, 2012 150,000 $ 3.85 Diesel Fuel Index January 1,2014 December 31,2014 May 24, 2012 150,000 $ 3.79 Diesel Fuel Index January 1,2014 December 31,2014 June 1,2012 300,000 $ 3.73 Diesel Fuel Index January 1,2014 December 31,2014 June 1,2012 150,000 $ 3.72 Diesel Fuel Index January 1,2015 December 31,2015 Canadian fuel hedges Notional amount (litres Diesel rate per month paid expressed in (expressed in Date entered litres) CS) Diesel rate received variable Effective date Expiration date May 9, 2012 260,000 $ 0.61 NYMEX WTI Index January 1,2013 December 31, 2014 May 23, 2012 260,000 $ 0.60 NYMEX WTI index January 1,2013 December 31, 2014 June 4, 2012 520,000 $ 0.76 NYMEX Heating Oil Index January 1,2013 December 31, 2013 June 4, 2012 $20,000 $ 0.57 NYMEX ~rl Index January t, 2014 December 31, 2014 June4,2012 520,000 $ 0.57 NYMEX WTI Index January 1, 2015 December 31, 2015 Progressive Waste Solutions 12012 Annual Report I 120 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per sham amounts and where other, vise stated) Interest rate swaps Fixed interest Variable rate (plus interest Notional applicable rate Date entered amount mar~in) received Effective date Expiration date October 26, 2010 $ 160,000 1.07% 0.23% November 2, 2010 July2, 2014 March 25, 2011 $ 60,000 1.61 % 0.23% April 4, 2011 July 2, 2014 June 29, 2011 S 30,000 1.13% 0.23% July 5, 2011 July 2, 2014 October 4, 2011 $ 45,000 October 4, 2011 April 4, 2013 Note: (*) This interest rate swap agreement is based on LIBOR with an interest rate cap of 3.0%. Forei~ln currency exchanoe aoreements Foreign U.S. dollars currency Date entered purchased exchange rate Effective date October 28, 2011 $ 4,000 1.0057 Januar~ I 5, 2013 February 29, 2012 $ 4,000 0.9998 April 15, 2013 August 9, 2012 $ 4,300 1.0054 July 15, 2013 The contractual maturities of the Company's derivatives are as follows: December 31,2012 Payments due Less than 1 Total year 1-3 years 4 5 years After 5 years Derivative Interest rate swaps $ 3,788 $ 2,523 Foreign cuffency exchange agreements $ 12,300 $ 12,300 1,265 Unrealized amounts recorded to net gain or loss on financial instruments for the year ended December 31,2012 are as follows: December 31 2012 2011 Net loss (gain) on finandal instruments Funded landfill post-closure costs $ (59) $ (89) Interest rate swaps 2,269 (4,851) Fuel hedges (920) 324 Forei~in currency exchange a~reernents 443 (368) $ 1,725 $ (4,984) Progressive Waste Solutions 12012 Annual Report 1121 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) Estimated fair value The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued charges approximates fair value due to the relatively short-term maturities of these instruments. Funded landfill post-closure costs and derivative financial instruments are recorded on the balance sheet at fair value. At December 31,2012, the estimated fair value of the direct finance lease receivables applying an interest rate consistent with the credit quality of the instrument is $528 (2011 - $1,030), compared to the carrying amount of $512 (2011 - $790). At December 31,2011, the debenture's estimated fair value was approximately $86,900 compared to the carrying amount of $57,030. The debenture was repaid in full on October 24, 2012. At December 31, 2012, the estimated fair value of the 2005 Seneca IRI3 Facility is approximately $45,400 (2011 - $45,300) compared to the carrying amount of $45,000 (2011 - $45,000). At December 31, 2012, the estimated fair value of the term B facility is approximately $538,500 (2011 - Snil) compared to the carrying amount of $497,560 (2011 - Snil). At December 31, 2012, the estimated fair value of long-term debt, excluding the term B facility and the 2005 Seneca IRB facility, bearing interest at variable rates approximates its carrying amount. The Company believes that renegotiation of its variable rate long-term debt would result in equivalent pricing than it currently enjoys. However, because the Company's variable rate facilities are non-amortizing and the Company's credit spreads have remained principally unchanged, the current carrying amount of the Company's variable rate long-term debt approximates its carrying amount. In accordance with FASB's guidance on intangibles - goodwill and other, goodwill with a carrying amount of $4t2,244 in 2011 was written down to its implied fair value of $51,687 which resulted in the Company recognizing an impairment loss of $360,557. The impairment loss was recorded to the statement of operations and comprehensive income or loss for the year ended December 31, 2011. Measuring the fair value of goodwill includes the use of significant unobservable Level 3 inputs in the fair value hierarchy. A description of the significant inputs and valuation techniques applied, including a reconciliation of the beginning and ending balance of goodwill, can be found in Note 9. Fair value methods and assumptions Financial assets and liabilities recorded at fair value, as and where applicable, and included in other assets and other liabilities on the Company's balance sheets include: funded landfill post-closure costs, and interest rate and commodity swaps. Deposits made to the social utility trust, and recorded as funded landfill post-closure costs, are invested by the social utility trust trustee. Statements of invested amounts are supplied to the Company by the social utility trust trustee and are prepared from quoted market prices for the underlying investments. The fair value of interest rate and commodity swaps are determined by management with the assistance of third parties. Progressive Waste Solutions 12012 Annual Report I 122 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) 23. Income Taxes The following table reconciles the difference between income taxes that would result solely by applying statutory rates to the Company's pre-tax income or loss and income tax expense or recovery recorded in the statement of operations and comprehensive income or loss. December 31 2012 2011 Income (loss) before income taxes $ 161,520 $ (146,292) Income tax expense (recover) at the combined basic rate 53,655 (55,354) Large corporation and state tax 3,300 2,523 Withholding tax on foreign dividends 3,112 2,105 Tax on other non deductible expenses 2,369 1,306 Net revisions to certain tax bases and tax rates 1,870 433 Goodwill impairment 99,109 Other 2,816 (374) Income tax expense $ 67,122 $ 49,748 December 31 2012 2011 Deferred income tax assets Unutilized tax loss carryforwards $ 79,764 $ 75,995 Deferred financing costs and offering expenses 677 2,973 Foreign tax credits available for carryforward 14,567 14,567 Accounting provisions not currently deductible for tax 54,532 51,453 Tax value of intangibles and landfill assets in excess of carrying value 18,475 27,943 Other 643 768 Valuation allowance (18,267) (18,267) 150,391 155,432 Deferred income tax liabilities Carrying value of capital assets in excess of tax value 81,855 55,717 Carrying value of intangibles and landfill assets in excess of tax value 166,109 170,389 Other 6,222 5,560 Net deferred income tax liabilities $ 103,795 S 76,234 Canada $ 38,231 $ 42,348 Net deferred income tax liabilities $ 103,795 $ 76,234 Progressive Waste Solutions 12012 Annual Report 1123 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) The components of domestic and foreign income (loss) before income taxes and domestic and foreign income taxes are as follows: 2012 2011 Income (loss) before income taxes and net loss from equity accounted investee Canada $ 108,289 $ 127,991 U.S. 53,231 (274,283) $ 161,520 $ (146,292) Current income tax expense Canada $ 44,894 $ 43,669 U.S, 4,387 3,764 49,281 47,433 Deferred income tax expense (recovery) Canada 11,921 ) (7,489) U.S. 25,762 9,804 17,841 2,315 Total income tax expense $ 67,122 $ 49,748 The Company recognizes interest related to uncertain tax positions and penalties to current income tax expense. The Company has no material uncertain tax positions. Accordingly, interest and penalties recognized in respect of uncertain tax positions and amounts accrued in respect thereof amount to Snil at December 31,2012 and 2011. The Company is subject to federal, provincial and state income taxes and files tax returns in multiple jurisdictions. Tax years open to audit range from 2000 to 2012 in Canada and from 1997 to 2012 in the U.S. The Company does not tax effect its foreign currency translation adjustment. Subsidiaries of the Company have unutilized tax losses amounting to $197,484 (2011 - $187,520) which expire 2013 to 2031. The realization of the deferred income tax assets, net of a $3,250 (2011 - $3,250) valuation allowance on certain U.S. unutilized tax loss carryforwards, totaling $72,544 (2011 - $70,414), is dependent on the Company generating taxable income in future years in which those temporary differences become deductible. Based on management's estimate of the Company's projected future taxable income and its tax planning strategies, management expects to realize these deferred income tax assets in advance of expiry. Changes to the Company's ownership structure could limit the Company's use of unutilized tax losses as imposed by Section 382 of the U.S. Internal Revenue Code. As of December 31, 2012, a subsidiary of the Company has foreign tax credit carryforwards which expire in 2018 and 2019 that result in a deferred income tax asset totaling $14,567 (2011 - $14,567). As the Company does not expect to generate foreign source income in the future, it has provided a full valuation allowance against the foreign tax credits available for carryforward. On the Company's acquisition of IESI, IESI issued a $160,000 intercompany note payable ("U.S. note'~. Effective August 28, 2007, the U,S. note was cancelled. For the purposes of determining taxable income, IESI has taken the position that the U.S. note and its related interest was commercially reasonable and has deducted the interest paid thereon on this basis. Management has taken steps to ensure that the U.S. note was commercially reasonable, however, there can be no assurance that U.S. taxation authorities will not seek to challenge the treatment of the U.S, note as debt or the amount of interest expense deducted, which could increase IESl's taxable income and accordingly its U.S. federal income tax liability. Management has determined that it has met the more-likely-than-not threshold based on its technical merits and that management's position would be sustained upon examination by the relevant tax authority. Progressive Waste Solutions 12Ol 2 Annual Repot[ I 124 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements FO~ the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except pe~ share amounts and where otherwise stated) 24. Segmented Reporting The Company carries on business through three separate geographic segments: Canada, the U.S. south and the U.S. northeast. The business segments are vertically integrated and include the collection and disposal of waste and recyclable materials, transfer station operations, material recovery facilities, landfills and landfill gas to energy facilities. The geographic location of each business segment limits the volume and number of transactions between them. The Company has elected to exclude corporate costs in the determination of each business segment's performance. Corporate costs include certain executive, legal, accounting, internal audit, treasury, investor relations, corporate development, environmental management, information technology, human resources, sales and other administrative support costs. Corporate costs also include transaction and related costs, restricted share expense and fair value changes of stock options. The accounting policies applied by the business segments are the same as those described in the summary of significant accounting policies (Note 3). The Company evaluates its segment performance based on revenues, less operating and selling, general and administration expenses. December 31 2012 2011 Revenues Canada $ 776,814 S 757,594 U.S. south 780,331 723,315 U.S. northeast 339,596 359,187 Corporate $ 1,896,741 $ 1,840,096 Revenues less operating and selling, general and administration expense Canada $ 278,461 $ 280,408 U.S. south 217,077 211,429 U.S. northeast 71,526 89,542 Corporate (55,827) (53,950) $ 511,237 $ 527,429 Amortization Canada $ 103,112 $ 100,516 U.S. south 110,172 99,126 U.S. northeast 57,501 54,041 Corporate 3,333 3,383 $ 274,118 $ 257,066 Restructuring expenses $ $ 1,609 Goodwill impairment $ $ 360,557 Net gain on sale of capital assets $ (592) $ (3,412) Operatin~ income (loss) $ 237,711 $ (88,391) Progressive Waste Solutions 12012 Annual Report I 125 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 (in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) December 31, 2012 Canada U.S. south U.S. northeast Corporate Total Goodwill $ 409,296 $ 421,108 $ 98,710 $ $ 929,114 Capital assets $ 379,095 $ 421,374 $ 118,210 $ 8~39 $ 927,518 Landfill assets $ 207,485 $ 404,403 $ 351,832 $ $ 963,720 Total Assets $ 1,283,434 $ 1,461,817 $ 684,959 $ 45,351 $ 3,475,561 December 31,2011 Canada U.S. south U.S. northeast Corporate Total Goodwill $ 372,596 $ 350,126 $ 51,687 $ $ 774,409 Capital asseLs S 296,397 $ 364,396 $ 105,034 S 10,231 $ 776,058 Landfill assets $ 221,660 $ 397,293 $ 339,839 $ $ 958,792 Total Assets S 1,145,143 $ 1,301,687 $ 587,931 $ 42,843 S 3,077,604 25. Guarantees In the normal course of business, the Company enters into agreements that meet the definition of a guarantee. The Company's primary guarantees are as follows: The Company has provided indemnities under lease agreements for the use of various operating facilities. Under the terms of these agreements the Company agrees to indemnify the counterparties for various items including, but not limited to, all liabilities, loss, suits, damage and the existence of hazardous substances arising during, on or after the term of the agreement. Changes in environmental laws or in the interpretation thereof may require the Company to compensate the counterparties. The maximum amount of any potential future payment cannot be reasonably estimated. These indemnities are in place for various periods beyond the original term of the lease and these leases expire between 2013 and 2025. Indemnity has been provided to all directors and officers of the Company and its subsidiaries for various items including, but not limited to, all costs to settle suits or actions due to association with the Company and its subsidiaries, subject to certain restrictions. The Company has purchased directors' and officers' liability insurance to mitigate the cost of any potential future suits or actions. The term of the indemnification is not explicitly defined, but is limited to the period over which the indemnified party serves as a director or officer of the Company, including any one of its subsidiaries. The maximum amount of any potential future payment cannot be reasonably estimated. The Company has received indemnities for the receipt of hazardous, toxic or radioactive wastes or substances and the Company has issued indemnities for their disposal at third party landfills. Applicable federal, provincial, state or local laws and regulations define hazardous, toxic or radioactive wastes or substances. Changes in environmental laws or in their interpretation may require the Company to compensate or be compensated by the counterparties. The term of the indemnity is not explicitly defined and the maximum amount of any potential future reimbursement or payment cannot be reasonably estimated. Certain of the Company's landfills have Host Community Agreements ("HCA'~ between the Company and the towns, municipalities or cities in which the landfills operate. The Company has agreed to guarantee the market value of certain homeowners' properties within a certain distance of the landfills based on a Property Value Protection Program ("PVPP") incorporated into the HCA. Under the PVPP, the Company would be responsible for the difference between the sale value and the hypothetical market value of the homeowners' properties assuming a previously approved expansion of the landfill had not been approved, if any. The Company does not believe it is possible to determine the contingent obligation associated with the PVPP guarantees, but does not believe it would have a material effect on the Company's financial position or results of operations. As of December 31, 2012, the Company has compensated one homeowner under the PVPP. Progressive Waste Solutions 12012 Annual Report I 126 Progressive Waste Solutions Ltd. Notes to the Consolidated Financial Statements For the years ended December 31,2012 and 2011 {in thousands of U.S. dollars and shares, except per share amounts and where otherwise stated) In the normal course of business, the Company has entered into agreements that include indemnities in favour of third parties, such as purchase and sale agreements, confidentiality agreements, engagement letters with advisors and consultants, outsourcing agreements, leasing contracts, underwriting and agency agreements, information technology agreements and service agreements. These indemnification agreements may require the Company to compensate counterparties for losses incurred by the counterparties as a result of breaches in representation and regulations or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The terms of these indemnities are not explicitly defined and the maximum amount of any potential reimbursement cannot be reasonably estimated. The nature of these indemnification agreements prevents the Company from making a reasonable estimate of the maximum exposure due to the difficulty in assessing the amount of liability which results from the unpredictability of future events and the unlimited coverage offered to counterparties. Historically, the Company and its predecessor have not made any significant payments under these or similar indemnification agreements and therefore no amount has been accrued with respect to these agreements. Progressive Waste Solutions 12012 Annual Report I 127 James J. Forese Non-Executive Chairman Michael Ho DeGroote Director John T. Dillon~ Director Jeffrey L. Keefer~ Director Douglas W. Knight~ Director Daniel R. Milliard~ Director Joseph D. Quarin Vice Chairman Joseph D. Quarin Vice Chairman and Chief Executive Officer William R Hulligan President and Chief Operating Officer lan M. Kidson Vice President and Chief Financial Officer Thomas L Brown Senior Vice President and Chief Operating Officer, U.S. Domenico D. Plo Vice President and Chief Operating Officer, Canada Izzie Abrams Vice President, Corporate Development and Government Relations, Canada Kenneth M. Baylor Vice President, Human Resources and Organizational Development Ivan Cairns Vice President and General Counsel Robert Chee Vice President, Tax, U.S. William Chyfetz Vice President, Associate General Counsel and Secretary Chaya M. Cooperberg Vice President, Investor Relations and Corporate Communications Thomas J. Fowler Senior Vice President, General Counsel, U.S. Howard M. Goldby Vice President, Environmental Management and Technology Group William R M. Herman Vice President and Chief Accounting Officer Michael May Vice President, Chief Information Officer Tom Miller Vice President, Corporate Development Stephen T, Moody Vice President and Corporate Controller, U.S. Geoff Rathbone Vice President, Resource Recovery Scott Richards Vice President, Internal Audit Kevin Walbridge Vice President, Operations, Canada David West Vice President, Purchasing, Fleet and Maintenance Colin Wittke Vice President, Sales and Marketing Head Office Progressive Waste Solutions 400 Applewood Crescent, 2nd Floor Vaughan, Ontario L4K 0C3 Phone: 905.532.7510 Fax: 905.532.7580 Website: www.progr essivewa ste.com Investor Relations For further information about Progressive Waste Solutions or to be placed on the mailing list for news releases, please contact: Investor Relations Phone: 905.532.7510 Email: investorrelations@progressivewaste.com Auditors Deloitte LLP Toronto, Ontario Stock Exchange Listing New York Stock Exchange Toronto Stock Exchange Trading Symbol: BIN Transfer Agent and Registrar Computershare Trust Company of Canada 100 University Avenue Toronto, Ontario MSJ 2Y1 Annual General Meeting of Shareholders Tuesday, May 7, 2013 at 2:00 PM ET Toronto Board of Trade 1 First Canadian Place Toronto, Ontario MSX 1C1 John C. Gustafson, Jr. Vice President, Texas Region, U.S. John Lamanna Vice President, Northeast Region, U.S. Yves Normandin Vice President, Quebec Region, Canada Joseph Rajotte Vice President, Western Canada Region Phillip L. Smith Vice President, South Central Region, U.S. Progressive Waste Solutions 12012 Annual Report I 129 Request for Taxpayer Giw Fom~ to me requester. Do not Identification Number and Certification send to the IRS, Progressive Waste SoluUons TS of LI, Inc. [] ~av~4e pn~et= [] c Cor~at~ [] S Ccmora<io~ [] Pa~r~,hip [] ~rusUea<a<e 1198 Prospect Ave. En~r Westbury, NY 11580 ;aB Taxpayer Identification Number ('I'IN) our TIN in the appropriate box. 1'ne TIN provided must match the name given on the 'Name" Jne to avoid bac~<up withhoiding. For Individuals, this is y<~Jr social security number (SSN). However, for a resident aJan, sole proprietor, or disregarded entity, see the Part I Instructions on page 3. For ether entitles, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN on page 3. Note. If the account Is In more than one r~me, see the chart on page 4 for guiseline~ on whose number to enter. Certification security numb~ ~ Under penalties of per)ur/, I certify that: 1. ~ numbe~ shown on this form is my correct taxpayer identification number (or I am wafting for a number to be issued to me), and 2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (t3) I have net been notified by the Internal Revenue Service (IRS) ff'~at I am subject to backup withholding as a re.gult of a failure to report all interest or dividends, or (c) the IF~ has notified me that I am no Ionge~ subject to backup withholding, a~d 3. I am a U.S. citizen or other U.S. person (deitned below). Certitlcaflon Insfructlon~ You must cross out item 2 above if you have been notitfad by the IRS that you are atrre~tfy subject to backup withholding because you have failed to report all Interest and dividends on your tax return. For real estate transsotiocts, item 2 does not apply. For mortgage Inta~'eet paid, aoquislflon or abandonment of secured property, canoelletin~ of debt, ~ot butlons to an individual retirement arrangernant (IRA), and generally, payments other than Intereet and dividends, you are not/q~quhed to sign t he/oefl/1~_,etJo~,~]t~ou must provide your correct TIN. See the Here I g General Instructions / / ~'oto. if a requester ,Ivse you s fon~ otl-~ th~n Form W-S to request ! / your TIN, you must u~e the requester's form If It Is subatanflally sitnllar Section references are to the Iotemal R~enue Code unle~ otherwise to this Form W-9. noted. ~' Definition of a U.S. person. For federal tax purposes, ycya are Purpose of Form A person who is required to file an information retum with the IRS must obtain your correct taxpayer ideotfficaflon number (TIN) to report, for example, income p~cl to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or con~buflons you n'~de to an IR,~ Use Form W-9 only it you are a U.S. person (including a resident alien), to provfde yo~Jr correct TIN to the person requesting it (the r~ue~ter) and, when applicable, to: 1. CeriJfy that the TIN you are giving Is correct (or you am waiting for a number to be Issued), 2, Certify that y~J are not subject to backup withholding, or 3, Claim exemption from backup withholding it yOU are a U.S. exempt payee, if applicable, you are also certifying that eaa U.S. person, your allocobis share of any partnership Income from a U.S. tTade or bualnese Is not subject to the w~thhotding tax on foreign partners' share of effectively connected income. considered a U.S. pers(m if you are: · An indMdual who is a U.S. citizen or U.S. resident siie~, · A pa~nershlp, corporallon, company, or easootalfon ereated or organized in the United States or under the laws of the United States, · An estate (other than a foreign estate), or · A domestic trust (as defined in Regulations section 301.7701-7). Ca<. No. 10231x Fo~m W-9 ~isv. 12-201 f) Fom~ w-9 (Rev. 12-2011) PaGe 2 Payments you receive will be subject to backup withholding If:. Updating Your Information Penalties Specific Instructions Name F~ W-9 (Rev. 12-2011) Page 3 Exempt Payee Gene~aly, Indlvkluals (including sole pn)pdetof~) are not exempt from above, 1 through 15. IF the pe~e~t Is for... THEN the payment Is exempt Interest and dividend payments A. exempt payees except fort; Broker transactions Exempt payees 1 through 5 and 7 through 13. Also, C corporations, Bar~er exchange transaotio~s and Exempt payees 1 through 5 patronage dk4dends Payrnents over $6D0 required to be Gener;dly, exempt payees $5,000' Part I. Taxpayer Identification Number CrlN) .l~n~ your 11N In ~ apl~odllt~ box. If you a~ a msk~eflt 811e~ arNd separate from ~ts owner (see Urn/ted L/ab//fb/Company (LL C) on page 2), Part II. Certifioation should sign (when required). In the case of a disregarded entfty, the F~m W-9 (Rev. 12-2011) Page 4 payments (under .cotton ~29), IRA, Coverdel ESA, Archer MSA or What Name and Number To Give the Requester Secure Your Tax Records from Identlly Theft Identl~y theft occurs when ~eene ~ your perso~d InfonmaUon ~ IdenUty thief may use your SSN to get a Job or may flle a tax rcturn using your $$N to receive a re,ind. To reduce your r~k: · Ensure your employer is protecting your SSN, and if your mx records ~e affected by Identity theft and you receive a If your tax records ~'e not cufTectly affected by I~ent~ thelt but you credit card activity or c~dlt report, contact the IRS Identity l~efl Hotline Victims of Identity theft who are e~oerl~nclng eoonomlc harm or a Taxpayer Advocate Service (TAS) as~$idr~e. You can reach TAS by forward this message to ph~h/ng~/rs.gov. You may also repo~ misuse (1-877-438-4338}, your risk. Privacy Act Notice SUFFOLK COUNTY DEPARTMESFF OF HE~J~TH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) Permit NO. : RD-280 Fir~ Name: PROGRESSIVE WASTE SOLUTIONS OF LI, INC. LIST OF TRUCKS USED FOR WASTE HAULING YEAR MAKE LICENSE DATE , o OOPY 2004 MACK 34854-JS 11/04/2011 2004 MACK 34863-JS 11/04/2011 2004 MACK 40963-JS 11/04/2011 2004 MACK 40964-JS 11/04/2011 2004 MACK 53366-JR 11/04/2011 2004 MITSU 40708JS 11/04/2011 2004 MITSU 40709JS 11/04/2011 2004 MITSU 40715JS 11/04/2011 2005 CEEVR 76467-JW 11/04/2011 2005 MACK 36646-JV 11/04/2011 2005 MACK 36647-JV 11/04/2011 2005 MACK 88932-JV 11/04/2011 2005 MACK 30154-073 11/04/2011 2005 MACK 30167-JU 11/04/2011 2005 MACK 62304-JY 11/04/2011 2005 MACK 68675-JT 11/04/2011 2005 MACK 97678-JS 11/04/2011 2005 MACK 97679-JS 11/04/2011 2006 CHEVR 76489-JW 11/04/2011 2006 CHEVE 76490-JW 11/04/2011 2006 CHEVR 88947-JV 11/04/2011 2006 INTER/gATIONAL 86338-JV 11/04/2011 2006 INTERNATIONAL 91741-J~ 11/04/2011 2006 MACK 60282-JV 11/04/2011 2006 MACK 36580-JV 11/04/2011 2006 MACK 37468-JU 11/04/2011 2006 MACK 60283-JV 11/04/2011 2007 MACK 36599-JV 11/04/2011 2008 MACK 88663-KA 12/06/2011 2010 MACK 56786-JZ 11/04/2011 2011 MACK 31499-MB 11/04/2011 2011 MACK 31675-MB 11/04/2011 2011 MACK 61543-MA 11/04/2011 2012 MACK 31693-~ 11/04/2011 2012 MACK 31694-~ 11/04/2011 2012 MACK 31695-MB 11/04/2011 Printed on February 4, 2013. Authorized Truck Listing - Page 3 of 3 SUFFOLK COUNTY DEPARTMENT OF HEALTH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) Permit No. : RD-280 Firm Name: PROGRESSIVE WASTE SOLUTIONS OF LI, INC. LIST OF TRUCKS USED FOR WASTE HAULING YE~uR MAKE LICENSE DATE 2001 MACK 88724-JV 11/04/2011 2001 MACK 88925-JV 11/04/2011 2001 MACK 88935-J%; 11/04/2011 2001 MACK 88937-J¥ 11/04/2011 2001 MACK 88942-J5; 11/04/2011 2001 MACK 88945-JV 11/04/2011 2001 MACK 22860-JA 11/04/2011 2001 MACK 76456-JW 11/04/2011 2001 MACK 99009-JA 11/04/2011 2002 FREIG 88929-J¥ 11/04/2011 2002 KENWORTH 88738-JA 11/04/2011 2002 MACK 36408-~7V 11/04/2011 2002 MACK 36409-~7V 11/04/2011 2002 MACK 36416-JV 11/04/2011 2002 MACK 36642-JV 11/04/2011 2002 MACK 76455-~ 11/04/2011 2002 MACK 76482-JW 11/04/2011 2002 MACK 88711-JV 11/04/2011 2002 MACK 88718-JA; 11/04/2011 2002 MACK 88720-J5; 11/04/2011 2002 MACK 88930-JV 11/04/2011 2002 MACK 88931-JA; 11/04/2011 2002 MACK 88938-JV 11/04/2011 2002 MACK 88941-J5; 11/04/2011 2002 MACK 36415-JV 11/04/2011 2002 MACK 76458-JW 11/04/2011 2002 MITSUBISHI 95708-JE 11/04/2011 2003 CHE~rY 83319-JU 11/04/2011 2003 FORD 24747-JP 11/04/2011 2003 FREIGHTLINER 29912-JK 11/04/2011 2003 FREIGHTLINER 29921-JK 11/04/2011 2003 MACK 88722-JV 11/04/2011 2003 MACK 36644-JV 11/04/2011 2003 MACK 49110-JW 11/04/2011 2003 MACK 59658-JL 11/04/2011 2003 MACK 81158-JF 11/04/2011 2003 MACK 83324-JU 11/04/2011 2003 MACK 88949-JV 11/04/2011 2004 KENWORTH 36244-JK 11/04/2011 2004 MACK 36411-JV 11/04/2011 2004 MACK 70270JR 11/04/2011 2004 MACK 24689-JP 11/04/2011 2004 MACK 34853-JS 11/04/2011 Printed on February 4, 2013. Authorized Truck Listing - Page 2 of 3 SUFFOLK COUNTy DEPARTMENT OF HEALTH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) Permit NO. : RD-280 Firm Name: PROGRESSIVE WASTE SOLUTIONS OF LI, INC. LIST OF TRUCKS USED FOR WASTE HAULING YEAR MAKE LICENSE DATE APPROVED COPY 1992 FOP~D 25873-~.R 11/04/2011 1993 ~t~CK 36607-JV 11/04/2011 1994 MACK 36620-J¥ 11/04/2011 1995 ~ACK 88707-J¥ 11/04/2011 1997 ~t~CK 76452-JW 11/04/2011 1997 MITSU 76668-0q~ 11/04/2011 1998 MACK 77257-J~4 11/04/2011 1998 MACK 31920-TR 11/04/2011 1998 MACK 52838-JZ 11/04/2011 1999 MACK 17743JT 11/04/2011 1999 MACK 36405-JV 11/04/2011 1999 MACK 36414-J¥ 11/04/2011 1999 MACK 61582JS 11/04/2011 1999 MACK 88939-JV 11/04/2011 1999 MACK 34491-AW 11/04/2011 1999 MACK 34493-AW 11/04/2011 1999 MACK 36404-JV 11/04/2011 1999 MACK 36581-JV 11/04/2011 1999 MACK 56539-AP 11/04/2011 1999 MACK 88701-KA 11/04/2011 2000 CHEVY 17676-JT 11/04/2011 2000 GMC 14766-JT 11/04/2011 2000 INTERNATIONAL 90618-JX 11/04/2011 2000 KENWORTH 76404-AV 11/04/2011 2000 MACK 36585-JV 11/04/2011 2000 MACK 36609-JV 11/04/2011 2000 MACK 44023-JW 11/04/2011 2000 MACK 14765-JT 11/04/2011 2000 MACK 88708-05; 11/04/2011 2000 MACK 88946-JV 11/04/2011 2000 MACK 88948-J¥ 11/04/2011 2000 STERL 36402-J5; 11/04/2011 2000 STERL 36624-JV 11/04/2011 2000 STERLING 36403-JV 11/04/2011 2001 FREIGHTLINER 87423~JA 11/04/2011 2001 INTER 76465-JW 11/04/2011 2001 INTER 76466-JW 11/04/2011 2001 INTER 76469-0W 11/04/2011 2001 MACK 76456-JW 11/04/2011 2001 MACK 88710-JV 11/04/2011 2001 MACK 88719-JA; 11/04/2011 2001 MACK 88721-JV 12/06/2011 2001 MACK 88723-JV 11/04/2011 Printed on February 4, 2013. Authorized Truck Listing - Page 1 of 3 1198 Prospect Ave Westbur¥,NY 11590 ¥: (516) 937 0900 I: (516) 333 9839 Progressive Waste Solutions of LI, Inc. Director and Officer List February 2013 Full Name Title Address Thomas L. Brown lan Kidson Thomas J. Fowler Stephen T. Moody Thomas E. Miller John Lamanna Robert A. Chee Amy J. Hochberger Director, President Vice President, Treasurer Director, Vice President, Secretary & General Counsel Direct, Vice President & Assistant Secretary Vice President Vice President Vice President Vice President 502 Glenwick Court Trophy Club, TX 76262 4b Cheltenham Avenue Toronto, ON M4N 1P7 (Canada) 1303 Briar Ridge Drive Keller, TX 76248 4202 Balboa Court Arlington, TX 76016 1621 Fountain Pass Drive Colleyville, TX 76034 1064 Turkey Foot Road Lexington, KY 40502 1708 Buckingham Drive Keller, TX 76262 3408 W. 4th Street Fort Worth, TX 76107 Page 1 of 1 From: (516) g37-0900 Odgin iD: RMEA PROGRESSIVE WASTE SOLUTI~ OF LI 1198 PROSPECT AVE r~ WESTBURY, NY 11590 SHIP TO: (63t) 765-t802 Elizabeth A. Neville Southold Town Hall 53095 Main Road BILL SENDER Ship Date: 01MAY13 Ac6N~ 6.0 LB CAD: 5165267/INET33?0 Delivery Addres~ Bar Code l illllll, lllllllffmlllllllll! SOUTHOLD, NY 11971 THU - 02 MAY 12:00P PRIORITY OVERNIGHT ~.~ 7996 6012 3798 DSR ZM WSHA After printing this label: 1. Use the 'Print' button on this page to print your label to your laser or inkjet printer. 2. Fold the pdnted page along the horizontal line, 3. Place label in shipping pouch and affix it to your shipment so that the barcode portion of the label can be read and scanned. Warning: Use only the printed original label for shipping Using a photocopy of this labet for shipping purposes is fraudulent and could result in additional billing charges, along with the cancellation of your FedEx account number Use of this system constitutes your agreement to the service conditions in the current FedEx Service Guide, available on fedex.com. FedEx will not be responsible for any claim in excess of $100 per pact(age, whether the result of loss, damage, delay, non- delivery,misdelivery,or misinformation, unless you declare a higher value, pay an additional charge, document your actual loss and file a timely claim. Limitations found in the current FedEx Service Guide apply. Your right to recover from FedEx for any loss, including intrinsic value of the package, loss of sales, income interest, profit, attorney's fees, costs, and other forms of damage whether direct, incidental,consequential, or special is limited to the greater of $100 or the authorized declared value. Recovery cannot exceed actual documented loss. Maximum for items of extraordinary value is $1,000, e.g. jewelry, precious metals, negotiable instruments and other items listed in our ServicoGuide. Written claims must be filed within strict time limits, see current FedEx Service Guide. https://www.fedex.com/shipping/html/en//PrintIFrame.html 5/1/2013 #11164 STATE OF NEW YORK) ) SS: COUNTY OF SUFFOLK) Karen Kine of Mattituck, in said county, being duly sworn, says that she is Principal Clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in week(s), successfully commencing on the day of said Newspaper once each week for 1 25th day of April, 2013. Sworn to before me this Principal Clerk ~ 2013. CHRISTINA VOt. INSKI NOTARY PUBLIC-STATE OF NEW YORK No, 0tV06105050 Qualified in Sutiolk County bty Commi~$icn Expires February 28, 201~ STATE OF NEW YORK ) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, New York being duly sworn, says that on the ~ day of ~ ,2013, she affixed a notice of which the annexed printed notice is a tree copy, in a proper and substantial manner, in a most public place in the Town of Southold, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, $outhold, New York. 2013 MSW Haul Elizabeth A~-Neville -- Southold Town Clerk Sworn before me this ~ day of ~ ,2013. ~qotary Public LYNDA M, RUDDER I~.~ry Publle, State of New~M~ No. 0t RU6020932 Qualified In Suffo~ CounW ~-~ ~ommission Expires March 8, ~ REVISED NOTICE TO BIDDERS Solid Waste Haul-Disposal Services The Town of Southold will receive sealed bids for solid waste haul-disposal services until the time and at the location herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 DATE: A~4¢~$~4M~ May2,2013 TIME: 3:00 PM (LATE BIDS WILL NOT BE OPENED) Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 All bids must be signed and sealed in envelopes plainly marked "Bid On Solid Waste Haul-Disposal Services 2013", and submitted to the Office of the Town Clerk, 53095 Main Road, P O Box 1179, Southold, NY 11971. The bid price shall not include any tax, federal, state, or local, from which the Town of Southold is exempt. Dated: February 12, 2013 ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK ELIZABETH A. NEVILLE, MMC TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDS OF MANAGEMENT OFFICER FREEDOM OF INFORMATION OFFICER Town Hall, 53095 Main Road P.O. Box 1179 Southold, New York 11971 Fax (631) 765-6145 Telephone (631) 765-1800 southoldtown.nor thfork.net OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD BID OPENING 2013 Solid Waste Haul-Disposal Services Bid Opening 4/25/2013 ~ 3:00 PM. No bids were received Progrwe. 1198 Prospect Ave, Westbury, NY 11590 T: (516) 937 0900 F: (516) 333 9839 April 18, 2013 Office of Town Clerk Southold Town Hall 53095 Main Road Southold, NY 11971 Attention: Lynda Rudder RECEIVED APR 1 9 2013 $outhold Town Clerk Dear Lynda, As per our conversation yesterday, I am enclosing a check for $50.00 for the deposit for the bid documents for Solid Waste Haul-Disposal Services. I would greatly appreciate it if you would email these documents to my attention at: mfreiberg~iesi.com. I appreciate you help in this matter. If you have any questions, please feel free to contact me at 5:16-301-3619. Ma/~ibe~g~Sincerely' ~ ~ Progl:e~sive waste SO'lutions of LI, Inc. Page I of I Fr~: (5t6)~?~ ~R~~'-~o ~E~E W~E S~S ~ LI 1198 ~O~T A~ ~ ~ST~Y, ~ t1§~ SHIP TO: (~3'1) Lynda Rudder Southold Town Hall 53095 Main Road SOUTHOLD, NY 11971 B[L~ENDER I II After printing this label: ShipOate:18APR13 A~'W~t.0Lg CN:):$1652674NET3370 Address Ba~ C~de l[lllllllllllllllllllllllll Rd # bid deposit Invoice # ~O# FRI - 19 APR 12:00P PRIORITY OVERNIGHT 7995 5843 6451 DSR 11971 ZM WSHA 1. Use the 'Pdnt' button on this page to pdnt your tabel to your laser or inkjet printer. 2. Fold the pdnted page along the horizontal line. 3. Place label in shipping pouch and affix it to your shipment so that the bamode portion of the label can be read and scanned. Warning: Use only the printed original label for shipping Using a photocopy of this label for shipping purposes is fraudulent and could result in additional billing charges, along with the cancellation of your FedEx account number Use of this system constitutes your agreement to the service conditions in the current FedEx Service Guide, available on fedex.cem. FedEx will not be responsible for any claim in excess of $100 per package, whether the result of loss, damage, delay, non- delivery,misdelivery,or misinformation, unless you declare a higher value, pay an additional charge, document your actual loss and file a timely claim. Limitations found in the current FedEx Service Guide apply. Your dght to recover from FedEx for any loss, including intrinsic value of the package, loss of sales, income interest, profit, attorney's fees, costs, and other forms of damage whether direct, incidental,consequential, or special is limited to the greater of $100 or the authorized declared value. Recovery cannot exceed actual documented loss. Maximum for items of extraordinary value is $1,000, e.g. jewelry, precious metals, negotiable instruments and other items listed in our ServiceGuide. Written claims must be filed within strict time limits, see current FedEx Service Guide. https://www, fedex.conVshipping/html/en//PrintlFrame.html 4/18/2013 #11142 STATE OF NEW YORK) ) SS: COUNTY OF SUFFOLK) Karen Kine of Mattituck, in said county, being duly sworn, says that she is Principal Clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in said Newspaper once each week for 1 week(s), successfully commencing on the 11th day of April, 2013. Principal Clerk Sworn to before me this I{~ dayof ~//~~ 2Q13. LEGAL NOTICE NOTICE TO BIDDERS Solid Waste Hadi-Di~M~sal seth, ices The Town of Southold will receive sealed bids for solid waste bani-disposal services until thc time and at thc Ioca- tion herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 DATE: April 25, 2013 TIME: 3:00 PM (LATE BIDS WILL NOT BE OPENED) The offer to be made in accordance with this Bid Solicitation shall include a bid on the following: A bid price per ton, to provide equip- ment and labor for hauling solid waste and disposing solid waste at the Contrac- tor's Solid Waste Disposal Site. The term of this Agreement shall be two (2) yearn commencing on July 1, 2013, with the ootential for three f31 additional ontion years {see Section 18.0. o. 211. Notwith- standing contractual or other legal rea sons for terminating this Agreement, this Agreement will be guaranteed for a two (2) year term, through June 30, 2015. Bids must be made in writing on the forms furnished and shall be accompa- nied by a Bid Guaranty in the Form of certified check, money order, bank draff or standard form letter of credit made · payable to Town of Southold, or bid bond, in the sum of one hundred thousand dol- lars ($100,000.00) wherein the named obligee shall be the Town of Southold. The successful Bidder shall be re- quired to furnish a performance Bond and insurance in accordance with the nistructions in the Bid Solicitation. The bid price shall not include any tax, Federal, state, or local, from which. the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the sched- uled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest of the Town of Southold. Bid Solicitation containi~ng submis- sion requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the fol- lowing location on weekdays from 8:00 A.M. to 4:00 EM.: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fif- ty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck, Southuld Town So§d Waste Coordinator at 631-7347685. Mr. Bunchuck's office is at the Southold Town Transfer Station. located at: Southold Town Solid Waste District 1 Zack's Lane Cutchogue, New York 11935 For specific further infomaation re garding bidding requirements, contact Southold Town Clerk Elizabeth A. Neville (631) 765-1800. For information regarding the bid spedfications contact Southold To.wa Transfer Station (631) 734-7685. All bids must be signed and sealed in envelopes plainly marked "Bid On Solid submitted to the Office of the Town Clerk, 53095 Main Road, P O Box 1179, Southold, NY 11971.The bid price shall not include any tax, federal, state, or local, from which the Town of Southold is exempt. Dated: February 12, 2013 ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK ~KI NOTARY PUBLIC-STATE OF NEW YORK No. 01V06105050 QuaJilied in Suffolk County M;, Commission Expires Febluary 28, 2016 NOTICE TO BIDDERS Solid Waste Haul-Disposal Services The Town of Southold will receive sealed bids for solid waste haul-disposal services until the time and at the location herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 DATE: April 25, 2013 TIME: 3:00 PM (LATE BIDS WILL NOT BE OPENED) The offer to be made in accordance with this Bid Solicitation shall include a bid on the following: A bid price per ton, to provide equipment and labor for hauling solid waste and disposing solid waste at the Contractor's Solid Waste Disposal Site. The term of this Agreement shall be two (2) years commencing on July 1,2013, with the potential for three {3) additional option years {see Section 18.0~ p. 21). Notwithstanding contractual or other legal reasons for terminating this Agreement, this Agreement will be guaranteed for a two (2) year term, through June 30, 2015. Bids must be made in writing on the forms furnished and shall be accompanied by a Bid Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars ($100,000.00) wherein the named obligee shall be the Town of Southold. The successful Bidder shall be required to furnish a performance Bond and insurance in accordance with the instructions in the Bid Solicitation. The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the scheduled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest of the Town of Southold. Bid Solicitation containing submission requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the following location on weekdays from 8:00 A.M. to 4:00 P.M.: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck, Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Bunchuck's office is at the Southold Town Transfer Station, located at: Southold Town Solid Waste District 6155 Cox Lane Cutchogue, New York 11935 For specific further information regarding bidding requirements, contact Southold Town Clerk Elizabeth A. Neville (631) 765-1800. For information regarding the bid specifications contact Southold Town Transfer Station (631) 734-7685. All bids must be signed and sealed in envelopes plainly marked "Bid On Solid Waste Haul-Disposal Services 2013", and submitted to the Office of the Town Clerk, 53095 Main Road, P O Box 1179, Southold, NY 11971. The bid price shall not include any tax, federal, state, or local, from which the Town of Southold is exempt. Dated: February 12, 2013 ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK lq?¢,l L * * * PLEASE PUBLISH ON4t~tffi~ 11, 2013, AND FORWARD ONE (1) AFFIDAVIT OF PUBLICATION TO ELIZABETH NEVILLE, TOWN CLERK, TOWN HALL, PO BOX 1179, SOUTHOLD, NY 11971. Copies to the following: The Suffolk Times Accounting Dodge Reports Town Clerk's Bulletin Board rFown Board Members James Bunchuck, SWD Brown's Letters Town Attorney Data Construction Burrelle's Info Services BIDDER'S SOLICITATION SOLID WASTE HAUL AND DISPOSAL SERVICES AGREEMENT DOCUMENTS TOWN OF SOUTHOLD STATE OF NEW YORK TOWN OF SOUTHOLD April 2013 NOTICE TO BIDDERS Solid Waste Haul-Disposal Services The Town of Southold will receive sealed bids for solid waste haul-disposal services until the time and at the location herein specified which, will then be opened and publicly read aloud; PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road Southold New York 11971 (631) 765-1800 DATE: April 25, 2013 TIME: 3:00 PM (LATE BIDS WILL NOT BE OPENED) The offer to be made in accordance with this Bid Solicitation shall include a bid on the following: A bid price per ton, to provide equipment and labor for hauling solid waste and disposing solid waste at the Contractor's Solid Waste Disposal Site. The term of this Agreement shall be two (2) years commencing on July 1, 2013, with the potential for three {3) additional option years (see Section 18.0~ p. 21). Notwithstanding contractual or other legal reasons for terminating this Agreement, this Agreement will be guaranteed for a two (2) year term, through June 30, 2015. Bids must be made in writing on the forms furnished and shall be accompanied by a Bid Guaranty in the Form of certified check, money order, bank draft or standard form letter of credit made payable to Town of Southold, or bid bond, in the sum of one hundred thousand dollars ($100,000.00) wherein the named obligee shall be the Town of Southold. The successful Bidder shall be required to furnish a performance Bond. and insurance in accordance with the instructions in the Bid Solicitation. The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the scheduled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest of the Town of Southold. 2 Bid Solicitation containing submission requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the following location on weekdays from 8:00 A.M. to 4:00 P.M.: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall 53095 Main Road Southold, New York 11971 Questions regarding the Bid Solicitation should be directed to Mr. James Bunchuck, Southold Town Solid Waste Coordinator at 631-734-7685. Mr. Btmchuck's office is at the Southold Town Transfer Station, located at: Southold Town Solid Waste District 6155 Cox Lane Cutchogue, New York 11935 Entrance to the facility is gained from Cox Lane, offCounty Rt. # 48. All bidders are encouraged to inspect the Southold Town Transfer Station. Appointments to do so are not required, but may be scheduled by calling Mr. Bunchuck at the phone number above. Elizabeth A. Neville Town Clerk For further information regarding bidding requirements, contact Elizabeth A. Neville (631 ) 765- 1800. For information regarding Town Of Southold waste program and haul-disposal operations, contact James Bunchuck (631) 734-7685. 3 TABLE OFCONTENTS GLOSSARY OF TERMS SECTION A- SUBMISSION REQUIREMENTS 1.0 Project Purpose 2.0 Schedule 3.0 Examination Of Agreement Documents 4.0 Information to be Submitted 4.1 Contractual Bid 4.2 Supplemental Information 5.0 Bid Format 5.1 Binding 5.2 Form Preparation 6.0 Submission of Bid 6.1 Withdrawal Of Bids 6.2 Questions & Addenda 7.0 Bid Guaranty 8.0 Execution Of Agreement 9.0 Consideration Of Bids 10.0 Selection Of Contractor 11.0 Acceptance of Bid 12.0 Assigmnent 13.0 Limitation Of Funds Available 14.0 Insurance and Bonds 14.1 Insurance 14.2 Bonds 15.0 Indemnity (Hold Harmless) 16.0 Payments 17.0 Default 18.0 Term of Agreement 19.0 Service Agreement 20.0 Subcontracts 21.0 Rights and Options SECTION B - BID SPECIFICATION 1.0 Requirements 2.0 Program Goals and Objectives 3.0 Guarantees 4.0 Character Of The Solid Waste 4.1 Quality and Characteristics 5.0 Program Activities 5.1 Collection 5.2 Loading Mode 5.3 Town of Southold Accident and Damage Policy 5.4 NYSDEC Part 360 Permit to Operate 7 10 11 11 12 13 13 13 15 15 15 15 15 16 16 16 17 17 18 18 18 18 18 20 20 21 21 21 21 22 22 23 24 25 25 25 26 26 26 27 27 27 4 6.0 Haul Services 6.1 Transport Mode 6.2 Work Included 6.3 Equipment 6.4 Weighings 6.4 Routing Mode ~ Contractor's Responsibility 7.0 Disposal Services Program Activities 7.1 Work Included 7.2 Operational Capacity 7.3 Permit Requirements 7.3.1 Disposal Sites Inside State Of New York 7.3.2 Disposal Sites Outside State of New York 7.4 Weighings 8.0 Safety and Health Regulations 9.0 Operations and Procedures 9.1 Supporting Data SECTION C - TOWN OF SOUTHOLD SOLID WASTE HAUL/DISPOSAL SERVICES 1.0 Intent 2.0 General Bid Statement 3.0 Unit Price Bid Schedule 3.1 Compensation 3.2 Evaluation Unit Bid Price Formula 4.0 Bid Security Acknowledgment 5.0 Information Schedules Information Schedule A Information Schedule B Information Schedule C Information Schedule D Information Schedule E Information Schedule F Information Schedule G Information Schedule H Information Schedule I In~brmation Schedule J Information Schedule K Information Schedule L Information Schedule M 27 27 28 28 29 29 30 30 30 30 31 32 33 33 34 35 36 37 37 41 41 42 42 42 SECTION D - APPENDICES Appendix A Sample Operating Agreement Appendix B New York State Department of Environmental Conservation Permit Appendix C Accident Report 6 GLOSSARY OF TERMS ADMINISTRATOR -Shall mean the Coordinator of municipal solid waste (or his agent) of the Town of Southold, New York. AGREEMENT- Shall mean a contract set forth by the Town and resulting from this Bid Solicitation between the Town of Southold and the successful Bidder to be executed in 2013. AGREEMENT DOCUMENTS -Shall include the notice to bidders, instructions, bid solicitation, bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance bond, certificates of insurance, glossary of terms any general conditions or special conditions, and any addenda. The Agreement Documents will Form a part of the Agreement. AGREEMENT YEAR -Shall mean the period from _July 1_, of a calendar year to June 30~ of the next calendar year. BIDDER -Shall mean any party or parties submitting in proper form a bid to perform the work as specified in the Agreement Documents. The successful Bidder selected by the Town to perform the specified work will thereafter be known as the Contractor. BID PRICE -Shall mean the unit cost to determine the ranking of bidders. BID SOLICITATION-Shall mean this document, specifications, and any bid addenda issued. COMMENCEMENT DATE -Shall mean July 1, 2013_. CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) -Shall mean solid waste resulting from the construction, renovation, equipping, remodeling, repair and demolition of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and roofing shingles. CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS {C&D) DISPOSAL SITES -Shall mean any site designated by the Contractor where construction and demolition debris is disposed of in a manner that minimizes environmental hazards and is permitted under the design and operation requirements of 6NYCRR Part 360 or alternatively outside the State of New York, is permitted under design and operation requirements meeting the requirements of 1) that jurisdiction's applicable regulatory agency and 2) Town of Southold's minimum standards. GLOSSARY-I 7 CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents. CONTRACT YEAR - Shall have the same meaning as Agreement Year. CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors, administrators, agents, or successors thereof. COORDINATOR - Shall mean the coordinator of municipal solid waste for the Town of Southold. COUNTY - Shall mean Suffolk County, State Of New York. DAILY - Sunday to Saturday, inclusive. EPA - Environmental Protection Agency (Federal). HAUL-DISPOSAL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in dollars for each ton of solid waste actually hauled from the Town Of Southold Transfer Station to the Contractor-Designated Disposal Site and disposed of at the Contractor-Designated Disposal Site. HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.. or "hazardous substance" as defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or "hazardous waste" as defined under New York Environmental Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time, and the regulations promulgated thereunder, and any analogous or succeeding Federal, state or local law, rule or regulation and regulations promulgated thereunder and (2) any other material which any governmental agency or unit having appropriate jurisdiction shall determine from time to time cannot be processed at the facility because it is harmful, toxic or dangerous. NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful Bidder that the Town of Southold intends to award an Agreement to the successful Bidder, subject to compliance with all their terms and conditions of the Agreement Documents. NYSDEC - New York State Department Of Environmental Conservation. OSHA - Federal Williams-Steiger Occupations SafEty & Health Act of 1970, plus subsequent revisions. GLOSSARY - 2 OWNER - Shall mean the Town Of Southold, New York. Also may be referred to as the Town. PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience and necessity, Franchises or authorizations which must be issued by any Govemmental Body having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of construction and demolition debris. PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition debris or to construct, establish, maintain or operate a construction and demolition debris Disposal Site. RCRA - Resource Conservation Recovery Act (Federal). SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances, including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid Waste does not include C&D waste, recyclables, hazardous, or infectious waste). SOLID WASTE DISPOSAL SITE(S) - Shall mean any site designated by the Contractor where solid waste is disposed of in a manner that minimizes environmental hazards and Is permitted under the design and operation requirements of 6NYCRR Part 360 - Solid Waste Management Facilities, or alternatively outside of the State of New York, is permitted under design and operation requirements meeting the requirements of 1) that jurisdiction's applicable regulatory agency and 2) Town of Southold's minimum standards. Also may be referred to as Disposal Site(s). SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract with the Contractor for services, equipment, materials and/or labor. GLOSSARY-3 9 SECTION A SUBMISSION REQUIREMENTS BIDDERS INFORMATION, INSTRUCTIONS, AND AWARD BASIS 10 SECTION A SUBMISSION REQUIREMENTS BIDDERS INFORMATION, INSTRUCTIONS AND AWARD BASIS 1.0 PROJECT PURPOSE The Town of Southold expects that it will receive and need to dispose of approximately 16,000 tons of solid waste during the agreement year. This Bid Solicitation will ensure Town of Southold's solid waste will continue to be 1) hauled From the Town of Southold Transfer Station to Disposal site(s) and 2) disposed of at permitted Disposal Site(s). 2.0 SCHEDULE The schedule below is an estimate of the time period leading up to the commencement of the Agreement. Its intent is to provide each Bidder with an idea of when certain events may occur. The dates given are guidelines and should not be construed as finn dates or deadlines due to. the multiple parties involved in the decision making process. EVENT Transfer Station Visits Pre-Bid Conference Bid Opening Town Board Approval Agreement Executed Operations Commencement DATE By Appointment None 3:00 PM Thursday, April 25, 2013 May 7, 2013 On or Before June 7, 2013 July 1, 2013 11 3.0 EXAMINATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE WORK It is the responsibility of each Bidder before submitting a Bid to (a) examine the Sample Operating Agreement and Agreement Documents thoroughly; (b) visit the site of the Town of Southold Transfer Station; (c) attend and be familiar with the outcome of the pre-bid conference (d) become familiar with conditions at the Town of Southold Transfer Station and Disposal Sites that may affect cost, progress, performance or furnishing of the work; (e) become familiar with and consider all federal, state and local laws, regulations ordinances, permits, approvals and orders that may effect the cost, progress, performance or furnishing of the work: (f') study and carefully correlate the Bidder's observations with the Agreement Documents; and (g) notify the Town Clerk of all conflicts, errors or discrepancies in the Agreement Documents. Reference is made to the following Appendices which contain supplemental information which is attached to and made part of the Agreement Documents: Appendix A: Sample Operating Agreement Appendix B: NYSDEC Part 360 Operating Permit Appendix C: Town of Southold Accident Report Reference is made to the Following information which is available for review by Bidders at the Town Clerk's Office during normal business hours - 8:00 A.M. to 4:00 P.M. Monday through Friday. i. Pending conceptual plans for the proposed Town of Southold Transfer Station. ii. Town of Southold Solid Waste Management Plan. This information is presented solely fur the convenience of the Bidders and does not constitute part of the Agreement Documents. Bidders shall form their own conclusions and opinions from this information and shall confirm any information contained therein regarding facilities and equipment through site visits. The Town does not guarantee the accuracy of any information contained in these documents. Betbre submitting a Bid, each Bidder shall, at the Bidder's own expense, make or obtain any additional inspections, examinations, or 'studies and obtain any additional data and intbrmation which may affect cost, progress, performance or furnishing of the work and which Bidder deems necessary to determine its bid tbr performing and furnishing the work in accordance with the time, price and other terms and conditions of the Agreement Documents. The failure or omission of the Bidder to receive and examine any form, instrument or document, or make required inquiries and inspections, shall not relieve the Bidder from any obligation contained in the Agreement Documents. The Town will be justified in rejecting any claim based on facts or conditions of which the Contractor should have been cognizant. 12 The submission of a Bid will constitute an incontrovertible representation by Bidder that Bidder has complied with every requirement of this Bid Solicitation, that without exception the Bid is premised upon performing and furnishing the work required by the Agreement Documents, and that the Agreement Documents are sufficient in scope and detail to indicate and convey understanding of all terms and conditions for performing and fumishing the work. Bidders will be allowed to ask questions regarding the Bid Documents during the pre-bid conference to be held at: Town Hall 53095 Main Road Southold, New York 11971 4.0 4.1 4.2 INFORMATION TO BE SUBMITTED WITH PROPOSAL Contractual Bid For the purpose of assisting the Town in determining the responsible Bidders for this Bid Solicitation, the Bidder is required to submit the following minimum information with his bid: ii. iii. iv. Contractor Bid Form Bid Security or Bid Bond Information Schedules A through M as applicable Supplemental Information as described in 4.2 Supplemental Information In addition to the aforementioned forms, the Bidder is. required to submit the following supplemental information with his bid: Operational Plan: A plan describing the Bidder's assessment of the requested operation set forth in Exhibit M. This section shall be divided into the following subsections: o Haul A detailed summary of requirements for manpower, materials and supplies, mobile equipment, etc., shall be included to provide the Town with general anticipated guidelines for performance under the Agreement. 13 ii. iii. iv. o Disposal A detailed summary of requirements of site capacity, useful life, hours and days of the week, operation, etc., shall be included to provide the Town with general anticipated guidelines for performance under the Agreement. A copy of the current Permits to Construct and Permits to Operate shall be included. If the Solid Waste Disposal Site is located outside the State of New York, a copy of the current applicable laws and regulations governing the design, construction and operation of the Disposal Site shall additionally be included. Litigation: A section briefly describing any current litigation which in any way may affect the Bidder's operational capability of useful life of the Solid Waste Disposal Sites. Subcontractors: If the Bidder intends to use one or more subcontractors to complete any portion of the work, the Bidder must so indicate this intent in its Bid. The Bidder is advised that any Agreement awarded will be contingent upon the use of the subcontractor(s) so identified. In the event that the Bidder desires to change the number or identity of such subcontractor(s), the proposed change must be submitted to the Town for approval. No such change shall be made without the Town's approval. In addition, it is the policy of the Town of Southold to encourage the participation of Minority Business Enterprises (MBE's) and Women- Owned Business Enterprises (WBE's) on Town projects. For this reason, the Agreement will require Contractor to use its best efforts to include among its subcontractors MBE and WBE firms. In the event the successful Bidder intends to subcontract in excess of twenty-five percent (25%) of the work, the Bidder will be required to submit to the Town an MBE/WBE Utilization Plan acceptable to the Town prior to the Town's execution of the Agreement. Disposal Site Subcontractor: In the event the Bidder does not own the Disposal Site identified in its Bid, the Bidder shall furnish a statement, signed by an authorized representative of the Disposal Site, which provides for Bidder's use of the site pursuant to this Bid Solicitation in accordance with the Agreement Documents. THE SUPPLEMENTAL INFORMATION REQUIREMENTS MAY BE SATISFIED BY INCLUDING A REFERENCE TO AN INFORMATION SCHEDULE (A-M) IF THE SCHEDULE PROVIDES THE INFORMATION REQUESTED AND IS INCLUDED IN THE B1D. 14 5.0 5.1 BID FORMAT Binding The document(s) if bound shall be in a manner that will provide for easy evaluation access (to lie flat when opened). Printing on both sides of the sheets, provided a quality paper is utilized that will prevent the type from showing through, is acceptable. Paper with substantial recycled content is preferred. 5.2 Form Preparation 6.0 6.1 Bids shall be submitted in the form described in this Bid Solicitation. All blank spaces for bid prices shall be properly filled in, in ink or typed, in both words and numerals for all bid categories required. In the event a price shown in words and its equivalent shown in figures do not agree, the written words shall be binding on the Binder. BIDS SHALL NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED IN ANY WAY. In the event a specification is not applicable, it shall be so indicated. Incomplete bids may not be considered, depending on the nature of the missing information. SUBMISSION OF BID Each Bidder shall submit TWO (2) separate complete sets of his Bid which shall be enclosed in a sealed opaque envelope plainly marked on the outside with the title of the work and the name and address of the Bidder. No Bid will be considered unless filed on or before the time and at the place designated in the Notice to Bidders. Bids received after the time set for the opening will be returned to Bidders unopened. When sent by mail, preferably registered, the sealed Bid, marked as above, should be enclosed in an additional envelope similarly marked and addressed to: Office of the Town Clerk Town of Southold 53095 Main Road Southold, New York 11971 Bids received prior to the time of opening will be kept securely unopened. No bid received thereafter will be considered. Withdrawal of Bids Any Bidder will be given permission to withdraw its Bid upon receipt of a properly notarized written request made no later than the time set for opening. At the time of opening of the bids, if such Bid is included, it will be returned to the Bidder unopened. No bid may be withdrawn after opening until execution of the Agreement or rejection of all bids as provided herein. 15 6.2 Questions & Addenda 7.0 8.0 All questions about this Bid Solicitation must be submitted in writing to the following: Town Clerk Town of Southold 53095 Main Road Southold, New York 11971 No alterations to this Bid Solicitation will be considered valid unless in writing and issued as Addenda. All such addenda shall become part of the documents and all Bidders shall be bound by such addenda, whether or not received by the Bidders All questions must be received at least ten (10) calendar days before bid opening in order to be answered. It shall be the Bidder's responsibility to make inquiries concerning any addenda issued. All addenda will be on file at the Town Clerk's office at least twenty-four (24) hours before bids are opened. The Town will not be bound by oral clarifications. BID GUARANTY Each Bid must be accompanied by a bid guaranty (Section C, Schedule 5.0.K), without cohdition or qualification, which shall be in the sum of one hundred thousand dollars ($100,000.00). The guaranty may be certified check, bank draft, money order, standard form irrevocable letter of credit, or a bid bond in the form attached. The bid bond shall be secured from a surety company authorized to do business in the State of New York as a surety. No Bid will be considered unless it is accompanied by the required guaranty, certified check, money order or bank draft must be made payable to the order of the Town of Southold. The bid bond shall name the Town as the obligee. Cash deposits will not be accepted. The bid guaranty shall ensure the execution of the Agreement and the furnishing of the surety bond or other required bonds by the successful Bidder, all as required by the Agreement Documents. All guaranties will be returned within ten (10) days after the execution of the Agreement and required bonds insurance and other Agreement Documents are received from the successful Bidder. EXECUTION OF AGREEMENT/FURNISHING OF BONDS The successful Bidder, or its legally authorized representative, shall be required to appear in person within ten (10) days of the Notice of Award by the Town at the place and time designated by the Town to execute the Agreement and other Agreement Documents for Haul/disposal services. The successful Bidder shall, at its own cost and expense, procure, execute and deliver to the Town the following documents within ten (10) days of formal Notice of Award by the 16 Performance Bond - A Performance Bond shall be in an amount of one million five hundred thoushand dollars ($1,500,000.00). This bond (as shown by example in Section C, Schedule 5.0.L), shall be maintained at the Contractor's own expense for the term of the Agreement. Failure or refusal of the successful Bidder to execute and/or deliver such bond within the time designated, shall constitute a breach of such Bidder of the Agreement created by the Town's acceptance of the bid. In such event, the Town may determine that such Bidder has abandoned the Agreement and the Town shall be entitled to take action for any and all damages it may suffer as the result of such breach. The Town's fights in this regard shall include but not be limited to a claim against the bid bond provided. The Town specifically reserves any and all other rights against the Contractor as a result of his failure to perform as required by these documents. 9.0 CONSIDERATION OF BIDS The Town of Southold reserves the right to reject any/or all bids for haul and disposal services if such action is deemed to be in the best interests of the Town. To be considered responsive to this Bid Solicitation, each Bidder shall: Provide equipment, labor, maintenance and management services to haul and dispose of solid waste from the Town of Southold Transfer Station to Contractor designated Solid Waste Disposal Site(s) as set forth in Section B - Bid Specifications. B. Reserve and provide a minimum available capacity of 20,000 tons (52 weeks/year) yearly, allowing for seasonal and other peak periods. Provide evidence of all current valid state and Federal permits, licenses, local ordinances, etc., required by law to receive solid waste at the designated Disposal Site(s). D. Provide evidence of physical and financial capability to perform services described in the bid specifications. 10.0 SELECTION OF CONTRACTOR Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only bids solicited from firms or combinations thereol; who have sufficient management, engineering capabilities, operating, and maintenance experience to fulfill the Town's goals and comply with the applicable local, state, Federal laws, ordinances, regulations e.g. New York State Department of Environmental Conservation, Resource Conservation Recovery Act and Federal Environmental Protection Agency guidelines will be accepted. The Town will review the bids and make a selection recommendation based on the evaluation criteria included in this Bid Solicitation or take such other action as it deems in its best interest. 17 Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole discretion, to reject at bids submitted in response to this Bid Solicitation. 11.0 ACCEPTANCE OF BID The acceptance of a Bid will be a Notice of Award signed by a duly authorized representative of the Town, and no other act of the Town shall constitute the acceptance of a Bid. The acceptance of a Bid shall bind the successful Bidder to execute the Agreement and other Agreement Documents. 12.0 ASSIGNMENT The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right, title, or interest therein or his power to execute such Agreement, to any person or corporation without the prior written consent of the Town. 13.0 LIMITATION OF FUNDS AVAILABLE 14.0 14.1 The Contractor specifically agrees that any Agreement shall be deemed executory only to the extent of the funds appropriated for the purpose of the Agreement and that no liability shall be incurred by the Town beyond the funds appropriated on the date of execution of the Agreement by the Town for the said purpose. INSURANCEANDBONDS Insurance For the period from Agreement commencement date until one (1) year after Agreement termination date, Contractor must maintain insurance acceptable to the Town in the kinds and amounts set forth below. All such insurance coverage, shall be provided by companies licensed to do business in New York State and the state in which the Disposal Site(s) is (are) located. The Town of Southold and its agent shall be named as an additional insured and coverage shall not be changed or cancelled until thirty (30) days written notice has been given to the Town. Within ten (10) days of the Notice of Award, Contractor shall furnish to the Town, certificates of insurance, in a form satisfactory to the Town Attorney, evidencing such insurance. The kinds and amounts of insurance are as follows: A. Contractor's Insurance - Insurance for liability for damage imposed by law of kinds and in the amounts hereinafter provided covering all work under the Agreement, whether performed by Contractor or his subcontractors. The kinds and amounts of insurance are as follows: 18 (1) Worker's Compensation Insurance - A Policy covering the operations of the Contractor in accordance with the provisions of Chapter 41 of the Laws of 1914 as amended, known as the Worker's Compensation Law, covering all operations Of the Contractor, whether performed by him or by his subcontractors. The Agreement shall be void and of no effect unless the p~rson or corporation making or executing same shall secure compensation coverage for the benefit of, and keep insured during the life of said Agreement such employees in compliance with provisions of the Worker's Compensation Law. (2) General Liability (Comprehensive Form) Insurance - Contractor's liability insurance issued to and covering legal liability of the Contractor with respect to all work performed by him under the Agreement. The following insurance coverage shall be included: (a) Independent Contractor's Protective Liability - Covering work performed by subcontractors. (b) Completed Operations or Product Liability. (c) Contractual Liability. (d) Broad Form Property Damage (e) Personal Injury. NOTE: If any of the rating classifications embody property damage exclusions C or U, coverage for eliminating such exclusions must be provided. Coverage for the above will be required in not less than the following amounts: SINGLE LIMITS OF LIABILITY: $1,000,000.00 AGGREGATE LIMITS OF LIABILITY: $10,000,000.00 (3) Automobile Liability Insurance - Policy shall include coverage lbr all owned as well as non-owned and hired vehicles, and limits shall not be less than the tbllowing amounts: BODILY INJURY LIABILITY Aggregate: $3,000,000.00 Each Person Each Occurrence $1,000,000.00 PROPERTY DAMAGE LIABILITY Aggregate: $3.000,000.00 Each Occurrence $1,000,000.00 19 14.2 Bonds 15.0 Prior to the execution Of the Agreement. the successful bidder shall furnish to the Town a Performance Bond wherein the named obligee is the Town of Southold. The Performance Bond's purpose is to secure the faithful performance of the Agreement. The bond' amount shall be set forth in Section A-8.0. The bond shall be executed by a surety company approved by the Town authorized to do business in the State of New York and with an office or representative in Suffblk County, New York. The form shall be acceptable to the Town of Southold and shall have a term through the completion of services. As an a alternative to the Performance Bond, the successful Bidder may furnish a certified check, bank draft, money order, or a standard form irrevocable letter of credit, certified check, bank draft or money order must be made payable to the order of the Town of Southold. The standard form irrevocable letter of credit shall be in a form acceptable to the Town of Southold. In the event the Contractor secures a Performance Bond from any of its subcontractors, said bond shall also name the Town of Southold as a dual obligee. Should the Town designate another public or private gent of contract administrator, the same or others shall be added as additional named obligee at no added costs to the Town, upon written request from the Town. INDEMNITY (HOLD HARMLESS) Contractor shall agree to defend, indemnify and save harmless the Town against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and expenses of whatever kind or nature which the Town may directly or indirectly incur, suffer or be required to pay by reason of or in consequence of the carrying out of or the performance of the terms of such Agreement, or the failure to carry out any of the revisions, duties, services or requirements of such Agreement, whether such losses and damages are suffered or sustained by the Town directly or its employees, licensees, agents, engineers, citizens or by other persons or corporations, including any of the Contractor's employees and agents who may seek to hold the Town liable therefor. This indemnity shall include any and all claims, penalties or other losses or damages incurred by the Town as a result of enfbrcement or other proceedings by Federal, state or local government agencies relating to Contractor's Disposal Site(s) operation. This obligation shall be ongoing, survive the term of the Agreement and include, but not be limited to, claims concerning non-sudden environmental impairments. The Bidder agrees to join in the commencement of any action or proceeding or in the defense of any action or proceeding which in the opinion of the Town constitutes actual or threatened interference or interruption with the Town's rights hereunder, including all necessary appeals which may be necessary, in the opinion of the Town. 20 16.0 PAYMENTS Contractor shall receive monthly payments for services performed during the prior calendar month upon submission of an invoice (with a Town voucher) that shall contain an itemized list of municipal solid waste haul trips from the Town of Southold Transfer Station including the tonnage of municipal-solid waste and the manifest number for each load of municipal solid waste removed. Such payments shall be made within sixty (60) days of the Town's approval of Contractor's invoice. Contractor's monthly invoice shall include a daily summary of tonnage received by Contractor at the' Transfer Station. The Town shall be entitled to deduct from any payment owing to Contractor any sums expended by the Town to cure any default or other non-compliance by Contractor. 17.0 DEFAULT In the event the Contractor fails to perform its obligations under the Agreement, the Town may terminate such Agreement, and the Town may procure the services from other sources and hold the Contractor responsible for any excess costs incurred and deduct from payments owing to the Contractor and/or draw upon the Performance Bond as full or partial reimbursement for such excess costs. The Town reserves the right to terminate the Agreement for just cause. 18.0 TERM OF AGREEMENT The term of this Agreement shall be two (2) years commencing on July 1, 2013, with the potential for three {3) additional option years. The Town and the Contractor, by mutual consent, shall have the option of renewing this Agreement for up to three (3) additional one-year terms at the prices bid herein. Notice of this mutual consent to be expressed by the parties in writing not less than one-hundred eighty (180) days prior to the expiration of the term in force (i.e., by January 1, 2015, January 1, 2016, and January 1,2017). Similarly, notice by either party of the intent to reject any option year shall be submitted in writing by the same date (January 1) of each year. The Town reserves the right to terminate the Agreement at any time after Year Two (i.e., after June 30, 2015) of the Agreement~[br the purpose r?['entering into an inter-municipal solid waste haul~disposal Agreement with another Long Island Town by giving one-hundred eighty (180) days written notice to the Contractor. 19.0 SERVICE AGREEMENT The Contractor shall be obligated to provide the Town with disposal services without regard to the permit status of its Disposal Site. In the event that Bidder wishes to submit a bid for a Disposal Site tbr which Bidder does not currently have all necessary federal and state permits, Bidder shall at its sole risk and expense, be responsible for obtaining and/or renewing its permits or providing to the Town an alternate Solid Waste Disposal Site at no additional cost (disposal plus any additional hauling) to the Town. This is a full service Agreement and failure of the successful Bidder to provide the identified Disposal Site or acceptable alternative Disposal Site, on or after the commencement date for services under the Agreement Documents awarded hereunder shall constitute a breach of this Agreement. The Bidder accordingly shall not be excused from it obligations 21 hereunder by reason of any failure to obtain or maintain its permits at the identified Disposal Site. 20.0 SUBCONTRACTS In the event Bidder does not own the Disposal Site identified in its bid prior to execution of the Agreement, Bidder shall: (1) furnish to the Town a copy of the signed Agreement between Bidder and the Disposal Site Contractor which provides for Bidder's use of the site pursuant to this Bid Solicitation in accordance with the Agreement Documents; (2) require the Disposal Site Contractor to furnish to Contractor and the Town a performance bond guaranteeing the availability of the Disposal Site throughout the term of the Agreement; (3) require the certificates Contractor to provide insurance naming the Town as additional insureds on all policies maintained by Contractor. 21.0 RIGHTS AND OPTIONS The Town of Southold, New York, reserves and holds at its discretion the following rights and options upon issuing this Bid Solicitation: 1. To award an Agreement to the candidate whose bid is judged to be the lowest responsible bid pursuant to Section 103 of the General Municipal Law of the State of New York. 2. To reject any and/or all bids. 3. To issue subsequent bid solicitations. 4. To issue additional and subsequent solicitations for statements of qualifications and conduct investigations or interviews with respect to the qualifications of each Bidder. 5. To designate another public body, private or public agency, group, or authority to act in its behalf for evaluation and Agreement negotiations. 6. To designate another public body, private or public agency, group, or authority to act in its behalf for contract administration of this project at any time during the Agreement period. 22 SECTION B BID SPECIFICATIONS (TECHNICAL/MANAGEMENT) 23 1.0 SECTION B BID SPECIFICATIONS TECHNICAL/MANAGEMENT REQUIREMENTS This request for bids is issued for the Town of Southold, State of New York, Town Hall, 53095 Main Road, Southold, New York, 11971 (Telephone (516) 765-1800) The effort, shall be known as the Town of Southold Solid Waste Transport and Disposal Service. The Town of Southold desires to issue an Agreement with a qualified Contractor to haul and dispose of a portion of its Solid Waste. The Town will need to dispose of approximately 10,000 tons of solid waste during the agreement years The Contractor will ensure the Town that solid waste will continue to be; 1 ) hauled from the Town of Southold's transfer Station to disposal site(s), and; 2) disposed at permitted disposal site(s). The following general services are sought in this request: 'HAUL Provide equipment, labor, maintenance, management and policies to operate a transportation system for hauling solid waste from the Town of Southold transfer Station to Contractor designated disposal site(s) as set forth herein. Transportation equipment shall be in accordance with New York. State Department of Transportation, Interstate Commerce Commission, United States Department of Transportation, as defined in the Code of Federal Regulations, or other applicable state and federal regulatory requirements. · Disposal Reserve capacity and provide equipment, labor, maintenance, management and policies to receive and dispose of solid waste from the Town of Southold Transfer Station as set forth herein. The Contractor's New York State Solid Waste Disposal Site(s) must be in compliance with all State of New York Department Of Environmental Conservation's and U.S. Government's Regulatory requirements, e.g., 6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental Protection Agency - Subtitle D, et al. Disposal Sites outside New- York State shall be permitted by applicable local, state and Federal laws including RCRA and Subtitle D and regulations deemed by the Town to be no less protective of the environment than those outlined in this specification. Disposal alternatives that will be considered include land disposal, incineration, composting, etc., as long as they comply with regulatory requirements and environmental standards. 24 2.0 3.0 4.0 PROGRAM GOALS AND OBJECTIVES The goal of this project is the continued safe and reliable hauling and disposal of the solid waste materials from the Town Of Southold Transfer Station at minimum cost to the citizenry. It is also the objective of the Town of Southold to ensure that the haul-disposal operations proceed according to the provisions of this document and subsequent agreements/amendments are upheld. GUARANTEES This Agreement will not provide any guarantees with respect to the volume of waste to be hauled and/or disposed of by Contractor or the specific operational techniques and/or equipment to be employed by the Town in the handling of waste at the Town transfer station. The Town reserves the right to designate another public body, private or public agency, group or authority to act in its behalf for administration of the Agreement at any time during the term of Agreement. CHARACTER OF THE SOLID WASTE The wastes which are to be hauled and disposed of under terms of this bid solicitation are to include typical municipal wastes from a rural community. This will include all waste types generated in private households, and, therefore, can include broken furniture, small appliances, and other wastes generated in a private home or apartment as allowed under 6NYCRR Part 360- 1.2(a) regulations and the Garbage, Rubbish and Refuse Law, Chapter 48 of the Code of the Town of Southold. Commercial waste may also be included in the solid waste stream. It may include any waste which is typically disposed of in dumpster or roll-off type container boxes at restaurants, small businesses, light industries, hospitals, office buildings etc. It should not include any wastes covered by special waste permits Such as pathogenic or hazardous materials, but the Town cannot guarantee that the waste stream does not contain same. Special costs associated with handling noncompliance loads will be compensated under Forced Accounting (Appendix A-9). 25 4.1 5.0 5.1 Quality and Characteristics The Town Of Southold's historical solid waste quantities and characterization data are Available upon request. MSW Tonnage disposed in under contract in 2006 totaled approx. 9,000 tons. Bidders are cautioned that actual quantities may differ significantly from these data. Recycling programs may affect the quantity and characteristics of the waste received at the Town of Southold Transfer Station. If the Contractor discovers any non-compliance waste (hazardous, regulated medical or special wastes), the Contractor shall notify the Town and dispose of [he noncompliance waste in accordance with local, state and Federal regulations. Compensation for such waste disposal services shall be provided for under Forced Accounting (Appendix A-9). The Town makes no specific representations in the foregoing disclosure. PROGRAM ACTIVITIES Collection The Town of Southold Transfer Station is open 7 days a week, except holidays, from 7:00 A.M. to 5:00 P.M. The Contractor will be expected to collect and remove solid waste from the Transfer Station during the following hours: Monday through Friday 7:00 A.M. to 4:00 P.M. The Transfer Station is closed on the following holidays: New Year's Day Martin Luther King Day President's Day Easter Sunday Memorial Day Independence Day Labor Day Columbus Day Election Day Veteran's Day V2 Thanksgiving Eve Thanksgiving Day V2 Christmas Eve Christmas Day ~/2 New Years Eve The Contractor must make transfer containers available for loading seven days a week. if requested, between 7:00 A.M. and 4:00 P.M. Removal of waste on Sundays is not always required. The Contractor will be expected to provide enough containers to empty the Transfer Station tipping floor on a daily basis, delivery and staging of an adequate number of containers for this purpose will be coordinated with Transfer Station Staff as needed. 26 5.2 5.3 5.4 6.0 6.1 Loading Mode The Contractor shall fully prepare transfer containers for loading, including assuring that container covers or empty containers are left open. [SEE NOTE AT END OF SECTION 6.3.1 Solid Waste will be loaded by the Town at its Transfer Station using a front end wheel loader. After loading, Contractor will bring transfer containers to the Town's truck scales for weighing to prevent overloading and to document haul and disposal tonnages. Contractor will then cover (tarp) his load prior to leaving the site. If required by any local, state or Federal regulations or law, the contractor shall provide sealed containers for loading. This service shall be at the Contractor's expense and included in the unit price bid. Town Of Southold Accident and Damage Policy The Contractor shall be required to prepare an Accident Report (See Appendix C) Of any accidents and/or damage that occur while performing services under the term of the Agreement. The Town of Southold shall immediately be notified of any major occurrences such as bodily injury of structural damage to the Town's Transfer Station. An Accident Report will be submitted to the Town within twenty-four (24) hours containing the date, time, location, and complete description of all incidents. The offending Parts or representative/e thereof shall also be recorded and required to sign the accident/damage report prior to departing the Town of Southold Transfer Station. All accident and/or damage reports will be included in reports to the Town NYSDEC Part 360 Permit to Operate The Town Of Southold operates the Transfer Station under a New York State Department of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of NYSDEC Permit is included as Appendix B. HAUL SERVICES For Solid Waste Haul-Disposal Services-Agreement, the following services will include the tasks, responsibilities and pertbrmance required as outlined herein. Transport Mode The Town will consider a transportation mode of truck or truck and rail under this solicitation. 27 6.2 Work Included 6.3 The Contractor shall provide the following major essential services or equipment and any other non-specified items without limitations, to maintain a reliable haul services operation in a manner that will meet the needs of the Town of Southold. · Management and operation ora fleet of truck and/or rail containers to accommodate the transport of solid waste from the Town transfer Station to Solid Waste Disposal Site(s) in accordance with all local, state, and Federal regulations. [SEE NOTE AT END OF SECTION 6.3.] · Financial liability and maintenance responsibility of transport equipment, i.e., dump trailers, transfer trailers bulk material containers, vehicles, personnel and services for open-top loading solid waste hauling activities. · Coordination of haul services with disposal services. Equipment The Contractor shall provide reliable refuse handling and other essential ancillary equipment, along with personnel to operate and maintain a reliable haul services system in a manner that will satisfy the needs of the Town of Southold. The minimum level of haul services equipment acceptable to the Town to support the haul operation includes open-top trailers and bulk material containers. The Contractor will supply additional open-top trailers and containers, etc. UNDER THIS SOLICITATION, TItE TOWN WILL REQUIRE TItE CONTRACTOR TO STAGE AN ADEQUATE NUMBER OF TRANSFER TRAILERS TO ACCOMMODATE THE ANTICIPATED WASTE STREAM COMFORTABLY. While the Town will not dictate the exact number of trailers to be placed, typically, this means the Contractor will need to plan on having three (3) or four (4) trailers at the Transfer Station at any given time. The contractor must assure the Town that an adequate reserve supply of equipment exists to haul and dispose of the daily and seasonal solid waste including unpredictable surges or delays due to inclement weather and that transport equipment storage requirements will meet the Town of Southold Transfer Station requirements. Each bidder is therefore responsible for familiarizing itself with the Town of Southold Transfer Station site. solid waste, etc., to assure equipment compatibility. Transport equipment used at the Southold Town Transfer Station may be open-top bulk material containers, dump trailers, roll-off containers or open-top transfer trailers, provided that all such equipment is suitable for convenient loading given existing configurations of the Town of Southold Transfer Station. All Transport equipment, including equipment involved in any interim transfer operation (i.e., any transfer of Southold Town MSW into other vehicles/containers prior to disposal) shall be: 1) Registered with the State of New York Department of 28 6.4 6.5 Motor Vehicles or equivalent agency; 2) designed to preclude spillage of waste; 3) loaded within their design capacity and New York State Department of Transportation regulations; 4) well maintained in good working order. Corroded defective, bent, deformed or punctured trailers, roll-off boxes, or other containers of waste materials shall not be utilized at any time. Suitable covers shall be provided and used while transporting solid waste in open-top transport equipment. The bidder shall clearly indicate [he quantity and type of transport equipment/vehicles it plans to use, their availability date, state of repair, and that such units are compatible with the Town of Southold Transfer Station scales and New York State DOT regulations, United States Department of Transportation, as defined in the Code of Federal Regulations or equivalent. The Contractor will promptly remove from use any transport equipment/vehicle that does not conform with these requirements and replace it with an acceptable unit. The Contractor shall maintain its own off-site maintenance shop facilities for servicing the transport equipment and vehicle fleet, unless it elects to subcontract for these services. No major maintenance may be done at the Town of Southold Transfer Station site. NOTE: In the course of this Agreement, the Town may, at its discretion, provide I or more transfer trailers for use by the Contractor. The Town warrants that any such equipment provided would be compatible with hauling vehicles (tractors) generally standard in the waste hauling industry. In the event that the Town wishes to provide such equipment for use by the Contractor, the Contractor together with the Town shall develop an addendum to this agreement governing such use. Weighings The Town of Southold will provide certified weighing at the Town of Southold Transfer Station. The Contractor will accept these weights for invoicing purposes. All weights will be generated on current certified weigh scales. Routing Mode - Contractor's Responsibility Contractor will have the right to select the route(s) ibr travel from the Town of Southold transfer Station to the Disposal Site(s). Contractor warrants and guarantees that, in selecting and utilizing such route(s), Contractor will insure that it is not violating any applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions, local ordinances or Interstate Commerce Commission regulations. Contractor will indemnify and hold the Town harmless from any claims, fines and other damages assessed upon or incurred by the Town as a result of any violations of applicable restrictions or regulations relating to the routes traveled by the Contractor. 29 7.0 DISPOSAL SERVICES PROGRAM ACTIVITIES For Solid Waste Haul-Disposal Service Agreement, the following disposal services will include the tasks, responsibilities and performance requirements as outlined herein. 7.1 7.2 Work Included The Contractor shall provide the following major essential services or equipment and any other non-specified items, without limitations, to maintain a reliable disposal services operation in a manner that will meet the needs of the Town Of Southold. · Liability insurance, performance and payment bonds. · Safety equipment. Operational Capacity The bidder shall identify in its proposal, the following information: · Disposal Site capacity. · Flexibility of Disposal Site capacity to allow for seasonal variances in waste generation and sufficient to permit service in the tonnages bid. · Hours and days of the week that the designated Disposal Site will be open for receiving solid waste from the Town of Southold, including weekends, holidays and special closure periods. 7.3 Permit Requirements Throughout the term of Agreement that may result from this Bid solicitation, the Contractor must maintain all current and valid local, state and Federal permits, licenses, or other authorizations, (either temporary and permanent) which are required by law to receive solid waste at any and all Disposal sites designated by the bidder. Because of the varying terms of Solid Waste Disposal Site permits, it is possible that a permit will expire during the term of Agreement. The responsibility of obtaining and/or renewing a permit to operate is solely upon the Contractor. In the event a Contractor fails to maintain or obtain any necessary current and valid local state and Federal Permits., licenses, or other authorizations, allowing the lawful use of its designated Disposal Site then the Contractor will be solely responsible for obtaining the utilization of an alternate Solid Waste Disposal Site at no additional cost to the Town including any additional hauling cost because of the location of the alternate Disposal site. Under no circumstances shall such a change in Disposal Site or failure or inability to 3O obtain permits by the Contractor be considered a change in conditions, in the event the Contractor is unable to find an alternate Disposal Site, it shall be deemed to be in default of the Agreement and liable for damages, bonds forfeitures and other expenses as provided in the Agreement. In the event the individual and/or entity submitting a bid in response to this bid solicitation is not the individual and/or entity named as the permit holder on any necessary current and valid local, state or federal permits, licenses or other authorizations, required by law to receive solid waste at any disposal site designated by the bidder or any alternate disposal site, the bidder is required to provide satisfactory evidence to the Town of Southold of a binding contractual relationship between the bidder and the permit holder which provides the bidder with the irrevocable right to utilize the solid waste disposal site during the term of Agreement, or portion thereof, in a manner which is in complete compliance with this bid solicitation and the bidder's bid submission. The agreement between the bidder and the permit holder shall include provisions that: Provide Town with the right to discuss operational matters with the permit holder whenever necessary. Require the permit holder to comply with directives of the Town which are consistent with and pursuant to the Agreement which shall result from this bid solicitation. 7.3.1 Disposal Sites Inside State of New York The Contractor's Solid Waste Disposal Sites, if located within the State of New York, must be in compliance with all State of New York Department of Environmental Conservation's and U.S. Environmental Protection Agency regulators requirements, e.g., 6NYCRR Part 360, Resource Conservation Recovery Act (RCRA), Environmental Protection Agency - Subtitle D, et al. The Solid Waste Disposal Site must have valid construction and operating permits in accordance with all applicable laws in the jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid waste without violating applicable law. It shall meet the design, construction and operating requirements of all applicable laws in the jurisdiction where the disposal site is operating. Disposal alternatives that will be considered include land disposal, waste to energy (incineration), composting, etc., as long as they comply with all the above governing regulators requirements and environmental standards. The use of Solid Waste Disposal Sites shall be subject to the approval of the Town of Southold based upon review of intbrmation submitted with the bid describing in detail the nature of the disposal process and other information reasonably requested by the Town. No Disposal Site shall be acceptable unless it poses no significant threat to the environment and its design, construction and operation complies with all applicable laws. 31 7.3.2 Disposal Sites Outside State of New York The Contractor's Solid Waste Disposal Sites, if located outside the State of New York must be in compliance with all the applicable local, state and Federal laws and regulations and U.S. Environmental Protection Agency regulatory requirements, e.g. Resource Conservation Recovery Act (RCRA), Enviromnental Protection Agency - Subtitle D, et al. The Solid Waste Disposal Sites must have valid construction and operation permits in accordance with all applicable laws in the jurisdiction in which it is located. It shall be permitted to accept Town of Southold solid waste without violating applicable law. It shall meet the design, construction and operating requirements of all applicable laws in the jurisdiction where the disposal site is operating. If the Solid Waste Disposal Site is a landfill, it must comply with the following minimum standards: · Liner System. All proposed landfills under the Agreement shall be provided with at least a single liner system to restrict the migration of leachate and prevent pollution of underling soil or groundwater. Liner systems shall consist of low permeability soil admixtures, clays or synthetic materials. Liners are at a minimum to consist of materials having a demonstrated hydraulic conductivity and chemical and physical resistance not adversely affected by waste emplacement or sanitary landfill leachate, including synthetic geo-membranes and soils such as clay or other semi-impervious admixture. Liner systems may consist of an impervious liner composed of at least two feet of clay with demonstrated hydraulic conductivity of lx 10-> cm/sec or a synthetic single lining system of a thickness of at least 60 mils. Thicknesses down to 40 mils may be acceptable for composite liners which include impervious clay. Foundation: The proposed landfill shall be designed and constructed on an appropriate foundation which provides firm, relatively unyielding planar surfaces to support the liner system and which is capable of providing support to the liner and resistance to the pressure gradient above and below the liner resulting from settlement, compression or uplift. Leachate Collection: The proposed landfill shall be equipped by a leachate drainage and removal system. The leachate drainage system-shall consist of collection pipes and a drainage layer. The system shall be designed to ensure that the leachate head on the liner does not exceed one foot at any time. A leachate removal system shall be provided to remove leachate within the drainage system to a central collection point for treatment and disposal. Leachate Treatment and Disposal: Leachate shall be treated and disposed of in accordance with all applicable taws, including applicable pretreatment standards and discharge limitations. 32 7.4 Gas Collection and Venting: The proposed landfill shall be equipped with a suitable gas collection and/or venting system which complies with all air pollution requirements and other applicable laws. Surface Drainage Systems: The proposed landfill shall be designed with an appropriate surface drainage system which isolates the landfill from adjacent surface water drainage in a controlled manner, as well as controlling run-off from the landfill itself. Monitoring System: The proposed landfill shall be equipped with appropriate systems to monitor groundwater quality, gas production, leachate volume, quantity, slope and settlement status. The number and location of ground water monitoring wells shall be sufficient to define and detect any potential migration of contaminants. However, no fewer than one up-gradient monitoring well and two down-gradient monitoring wells shall be provided in any event. A regular sampling and analysis program shall be in place to verify that no groundwater contamination results from the landfill. Closure: The proposed landfill shall have in place a written closure plan which conforms to applicable taws and standard industry practice. The closure plan shall, be designed to insure that contamination does not spread from the landfill during) the post closure period. Bidder must clearly specify their intended disposal alternatives and support same with copies of appropriate experience, site location, permits, agreements et al., as outlined in this bid solicitation. The use of Solid Waste Disposal Sites shall be subject to the approval of the Town of Southold based upon review of information submitted with the bid describing in detail the nature of the disposal process and other information reasonably requested by the Town. The Contractor shall be solely and completely Responsible for any and all liability relative to contractor's failure to dispose of solid waste at an approved site. Weighings The Town will compensate the Contractor for waste material hauled and disposed of on a net tonnage basis (short tons -- 2000 pounds). The certified weighings will be made at the Southold Town Transfer Station. The Disposal Site will accept these weights for invoicing purposes. Alt weights will be generated on current certified weigh scales. In the event of any dispute over differences in net weights between the Town and Disposal Sites scales and weight records, the Town may make payment upon the weight it deems to be most correct, until the dispute is reconciled. Any claims for differences must be filed in writing within sixty (60) days of occurrence or the Town's calculation shall be deemed final and binding between the parties. 8.0 SAFETY AND HEALTH REGULATIONS The Contractor shall comply with all current Federal Department of Labor, Safety and 33 9.0 Health Regulations under the Occupational Safety and Health Act, 1972 (PL 91-596) and Section 107, Agreement Work Hours and Safety Standards Act (PL 91-54). Specific consideration shall be given, but not limited to the following major areas: Maintenance safety procedures - guards and Shields on dynamic equipment, guards, railings, electrical lockouts, vehicle wheelblocks, audio vehicle backup alarms, vehicle wheel chocks, etc. Employee safety orientation, education, teaching, first-aid training, cardiopulmonary resuscitation, etc. Noise and dust control, ear protection, respirators, hard-hats, safety shields, glasses, protective clothing, sanitary facilities, etc., Fire and explosion preventions, control, equipment (fire blankets, extinguishers, first aid hoses, etc.) and personnel escape alternatives. e. Traffic flow control patterns. Accident or injury reporting systmn (the Town shall received copies of al reports and immediate verbal notification). g. Employee health safeguards. h. Mechanic's lien safeguard against work interference. The Contractor shall comply with all local, state and Federal regulations, laws and Statutes, which apply to the work and to safety in particular. The Contractor shall comply with New York State Department of Labor current requirements. The Contractor shall be solely and completely responsible for operational safety during performance of the Agreement. The obligation exists twenty-four (24) hours a day, each and every day throughout the term of the Agreement. The Town of Southold shall not have any responsibility tbr means, methods, sequences of techniques selected by the Contractor tbr safety precautions and programs, or ibr any failure to comply with laws, rules, regulations, ordinances, codes or orders applicable to the Contractor thrnishing and performing the services under the terms of the Agreement. OPERATIONS AND PROCEDURES The Contractor will be required, prior to commencement of operations, to provide the following operational plans to the Town for review and acceptance. Revisions, modification's, and updates shall be forwarded to the Town throughout the term of the Agreement. 34 9.1 Organization personnel and structure, showing the chain of command, names and telephone numbers and staffing requirements. Operational plan - shifts, hours, etc. Safety, disaster, and emergency procedures. Transportation plan, including available transport equipment, vehicle fleet and reserve capabilities. Inclement Weather Plan - This shall describe the bidder's plan should inclement weather alter normal daily operations as described in the bidder's operations plan. The inclement weather plan shall include hauling operations and disposal operations. The bidder's means of assessing inclement weather conditions (weather and road conditions), method of reporting to the Town and the alternatives shall be described. Supporting Data In the event the Town requires any information in support of Town held licenses and permits at the Town, County, State and Federal level, the Contractor will be required to furnish all licenses, permits and inspection reports regarding equipment and disposal sites which may be required by Town, County, State or Federal law. In the event the Contractor requires any information in support of Contractor held licenses and permits at the Town, County, State and Federal level, the Town will cooperate in furnishing such information as it applies to the Southold Town operations. Operating (hauling and disposal) records shall be considered essential to the operation. The Contractor shall keep these data in an organized fashion that allows for easy retrieval and analysis. The Town, or its designee, may upon 24 hours notice inspect the contractor's records. Such records shall he kept, available by Contractor for a period of two (2) years after termination of this Agreement. In the event the Town requires additional .information for reporting purposes, the Contractor will supply same. The Town, or its designee, may call upon the Contractor at anytime for an oral review of any technical matter. The Contractor shall file and update the tbllowing information as specified herein. Items Haul Equipment (Schedule H) Haul Accident Report (Appendix C) Disposal Accident Reports Licenses, Permits and Inspection Reports Part 360 Permit All Bid Information Schedules Due as changes occur on occurrence on occurrence on occu~ence as changes occur as changes occur 35 SECTION C CONTRACTOR BID FORM 36 SECTION C TOWN OF SOUTHOLD SOLID WASTE HAUL-DISPOSAL SERVICES CONTRACTOR BIDFORM 1.0 INTENT The undersigned hereby recognizes that these documents are complementary and are intended to provide for uniformity in bid evaluations. The formal Agreements resulting from this Bid Solicitation shall be in a form provided by the Town. These documents are intended to depict complete Solid Waste Haul-Disposal Services Agreement and therefore any discrepancies contained in the documents, of the omission from the documents of express reference to any work which obviously was intended under the Agreement, shall not excuse or relieve the Bidder from furnishing the same. No oral statement shall in any manner or degree modify of otherwise affect the terms of the Agreement. Work or materials described in words which have a well known technical or trade meaning, shall be interpreted by such meaning. 2.0 GENERAL BID. STATEMENT TO: TOWN OF SOUTHOLD STATE OF NEW YORK 53095 MAIN ROAD SOUTHOLD, NEW YORK 11971 Gentlemen: The undersigned Bidder has carefully examined the forms and content of the Bid Solicitation, including notice to bidders, bid bond, sample operating agreement, performance bond, certificates of insurance, genera! conditions, bid specifications, and addenda, has familiarized itself with the sites of work, and hereby proposes to furnish all necessary services, permits, labor, materials, equipment, vehicles, and tools required to perform and complete the 37 work in strict accordance with all of the bid documents written by or on behalf of the Town of Southold for this project. The undersigned Bidder agrees to abide by all conditions stated, intended, or implied both particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by the Town, and the unit price Bid herein stated. 2.1 The Undersigned Bidder also agrees as follows: FIRST: If this bid is accepted, to execute the Agreement through a separate written contract and furnish to the Town a satisfactory performance bond, and insurance all within ten (10) calendar days. SECOND: To begin Solid Waste Haul-Disposal services operations on the commencement date of any Agreement awarded hereunder, having completed all necessary prior preparations of operational planning, personnel hiring, equipment procurement, subcontractor contractual agreements, and ancillary facilities, etc.; to assure a smooth and orderly acceptance of these duties. THIRD: To pay the Town any and all damages it may incur as a result of the Contractor's failure to 'perform all acts necessary to the execution of the Agreement as provided in the Bid Solicitation. It is recognized and agreed that the Town has the unconditional right to utilize the funds provided by the bid bond posted by the Bidder as a means of obtaining indemnification or, payment of such damages. FOURTH: as follows: During the performance of this Agreement, the Contractor hereby agrees The Contractor shall not discriminate against any employee or applicant for employment because of age, race, creed, color, sex, marital status, national origin, physical disability, and shall take affirmative action to ensure that they are aftbrded equal employment opportunities without discrimination because of age, race, creed, color, sex, marital status, national origin or physical disability. Such action shall be taken with reference, but not be limited to: recruitment, employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or termination, rates of pay, or other tbrms of compensation, and selection for training or retraining, including apprenticeship and on-the-job training. The Contractor shall comply with the provisions of Sections 290 through 301 of the Executive Law, Shall furnish all information and reports deemed necessary by the State Commission for Human Rights under these nondiscrimination clauses and such sections of the Executive Law, and shall permit access to his books, records, and accounts by the State Commission for Human Rights, the Attorney General. and the Industrial Commissioner for purposes of investigation to 38 ascertain compliance with these nondiscrimination clauses and such sections of the Executive Law and Civil Rights Law. This Agreement may be forthwith cancelled, terminated, or suspended, in whole or in part, by the Town upon the basis of a finding made by the State Commission for Human Rights that the Contractor has not complied with these nondiscrimination clauses, and the Contractor may be declared ineligible for future Agreements made by or on behalf of the state or public authority or agency of the state, until he satisfies to the State Commission for Human Rights that he has established and is carrying out a program in conformity with the provisions of these nondiscrimination clauses. Such findings shall be made by the State Commission for Human Rights after conciliation effbrts by the Commission have failed to achieve compliance with these nondiscrimination clauses and after verified complaint has been filed with the Commission, notice thereof has been given to the Contractor, and an opportunity has been afforded to him to be heard publicly before three members of the Commission. Such sanctions may be imposed and remedies invoked independently or in addition to sanctions and remedies otherwise provided by law. No laborer, workman or mechanic in the employ of the Contractor or subcontractor shall be permitted or required to work more than eight hours in any one calendar day, or more than five days in any one week except as otherwise provided in Labor Code Section 220. The Contractor shall include the provisions of clauses (a) through (e) in every subcontract or purchase order in such a manner that such provisions will be binding upon each subcontractor or vendor as to operations to be performed within the State of New York. The Contractor will take such action in enforcing such provisions of such subcontract or purchase order as the Town may direct, including sanctions and remedies. FIFTH: By submission of this bid, the Bidder and each person signing on behalf of any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own organization, under penalty of perjury that to the best of his knowledge and belief.' The prices in this bid have been arrived at independently without collusion, consultation, communication, or agreement fbr the purpose of restricting competition, as to any matter relating to such prices with any other Bidder or with any competitor. Unless otherwise required by law, the prices which have been quoted in this bid have not been knowingly disclosed by the Bidder and will not knowingly be disclosed by the Bidder prior to opening, directly or indirectly to any other Bidder or to any competitor. No attempt has been made nor will be made by the Bidder to induce any other person, partnership, or corporation to submit or not to submit a bid for the purpose of restricting competition. 39 2.2 2.3 2.4 2.5 The undersigned also declares that it has or they have carefully examined the Bid Solicitation requirements and sample operating agreement and that it has or they have personally inspected the actual location of work, together with the local sources of supply, has or have satisfied itself or themselves as to all the quantities and conditions, and waives all rights to claim any misunderstanding, omissions or errors regarding the same which such inspection and observation would have disclosed. The undersigned further understands and agrees that it is or they are to furnish and provide in return tbr the respective Evaluation Unit Bid Price, all the necessary materials, machinery, vehicles, implements, tools, labor services, and other items of whatever nature, and to do and perform all work necessary under the aforesaid conditions, to complete operations of the aforementioned Solid' Waste Haul-Disposal Services operations in accordance with the Bid Solicitation requirements, which requirements are a part of this response, and that it or they will accept in full compensation therefore, the compensation provided for in Section C-3. The undersigned submits herewith a bid guaranty within the form provided by the applicable bid documents in the amount of $100,000.00 for any option or combination thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10) calendar days after date of receipt of Notice Of Award from the Town to execute and deliver an Agreement in the form provided by the Town or fails to execute and deliver evidence of proper insurance coverage and performance bond in the amounts required and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty Shall be forfeited and be retained by the Town toward the satisfaction of liquidated damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will be returned to the Bidder. The undersigned acknowledges the receipt of the following addenda, but it agrees that it is bound by all addenda whether or not listed herein and whether or not actually received, it being the Bidder's responsibility to receive and have knowledge of all addenda. ADDENDUM NUMBER AND DATES Number I - Dated: Number 2 - Dated: Number 3 - Dated: Number 4 - Dated: Number 5 - Dated: The Bidder has completed the Contract Bid Form and Unit Price Schedules in both words and numerals in accordance with these bid requirements. 4O 3.0 3.1 UNIT PRICE BID SCHEDULE SOLID WASTE HAUL-DISPOSAL SERVICES SOUTHOLD TOWN, NEW YORK COMPENSATION The undersigned hereby submits the following price bid to furnish Solid Waste Haul- Disposal Services, to Southold Town, New York for the terms through HAUL-DISPOSAL SERVICES The Haul-Disposal Service applicable unit price per ton for agreement year is cents ($ ). (Cl) The Haul-Disposal Service applicable unit price per ton for agreement year is cents ($ ). (C2) ONE dollars and TWO dollars and The Haul-Disposal Service applicable unit price per ton for agreement OPTION year ONE is dollars and cents ($ ). (C3) The Haul-Disposal Service applicable unit price per ton for agreement OPTION year TWO is dollars and cents ($ ).(C4) The Haul-Disposal Service applicable unit price per ton for agreement OPTION year THREE is dollars and cents ($ ). (C5) 41 3.2 EVALUATION UNIT BID PRICE FORMULA Evaluation Unit Bid Price = (C 1) 10,000+(C2) 10,000+.5(C3) 10,000+.5(C4) 10,000+.5(C5)10,000 35,000 tons Evaluation Unit Bid Price = $ The evaluation unit bid price fbrmula is designed to evaluate the option years (i.e., years three through 5) at 1/2 the evaluate of each of the first two (2) years. Bidder: By: 4.0 5.0 Firm-Corporation Address Authorized Representative Date BID SECURITY ACKNOWLEDGEMENT I have attached the required bid security to this bid. INFORMATION SCHEDULES I agree to furnish and include the fullowing information schedules in addition to the information submitted with this proposal, as a part of this bid: A. Certification that the Bidder does not currently owe taxes, or other outstanding funds, or have pending or is currently involved in any litigation-involving the Town of Southold, State of New York (Schedule A, attached hereto). B. Location and address of the Bidder's main office and the main office of parent companies (if applicable) and Certified Statements of Ownership (Schedule B, attached hereto). C. Identification of Surety Company and its Agent. and written certification from the Surety verifying the bond specified herein will be provided (Schedule C, attached hereto). D. Identification of all currently registered parent bidding subsidiary corporate officers, and their addresses, and identification and certification of offices 42 Dated: H. I. J. authorized to execute an Agreement on behalf of the firm (Schedule D, attached hereto). Detailed financial statement for the Bidder, and if applicable, for parent companies (Schedule E, attached hereto). Statement of Bidder's Qualifications and related experiences (Schedule F, attached hereto). Major Subcontractors - (Schedule G, attached hereto). Equipment- (Schedule H, attached hereto). Maximum Specified Capacity- (Schedule i, attached hereto). Information on Bidder's Solid Waste Disposal Site(s) (Schedule J attached hereto). Form of Bid Bond (Schedule K, attached hereto). Performance Bond (Schedule L, attached hereto). Operation Plan (Schedule M, attached hereto). Name of Bidder: Address of Bidder: By: Signature Title Corporate Seal (If a Corporation) Incorporated under the laws of the State of 43 Names and addresses of officers of the corporation: (President) Name Address (Secretary) Name Address (Treasurer) Name Address (If an individual or partnership) Names and addresses of all principals or partners 44 This Bidder INFORMATION SCHEDULE A Town of Southold Bid Project Solid Waste Haul-Disposal Services herein certifies that as a (Bidder's legal name) Bidder, it does not currently owe delinquent taxes or other outstanding Funds, of having pending or currently involved in any litigation involving the Town of Southold, State of New York. Name of Bidder: By: Date: (Authorized Signature) NOTE: (1) (2) If blank not applicable, fill in with N/A If bidder owes the Town taxes or is involved in any litigation, a statement of explanation will be attached hereto. Tax/Litigation Certification BID (PROPOSAL) FORM Schedule 5.0.A Page 1 of 1 45 INFORMATION SCHEDULE B Town of Southold Bid Project Solid Waste Haul-Disposal Services The following is information on the undersigned Bidder's office locations: Bidder's Parent Bidder's Main Office Corporation Main Office Manager's Name (Contact) Firm's Legal Name Street Address (Box Numbers) City State Zip Telephone Number The Bidder herein certifies that the is partially/wholly owned subsidiary of This By Manager's Name (Contact) Parent Firm's Legal Name Street Address (Box Numbers) City State Zip Telephone Number Firm is owned Parent Finn Parent Firm or is a public/private stock corporation. Bidder Office Locations/Ownership Certification BID (PROPOSAL) FORM Schedule 5.0.B Page 1 of 2 46 INFORMATION SCHEDULE B - (Continued) Name of Bidder: By: Date: Note: (1) Any attachments or modifications to this form shall be labeled Schedule 5.0.B, and properly integrated into the Bid Form, (2) If blank not applicable, fill in with N/A. Bidder Office Location/Ownership Certification BID (PROPOSAL) FORM Schedule 5.0.B Page 2 of 2 47 This is identification that will be the Surety Company for INFORMATION SCHEDULE C Town of Southold Bid Project Solid Waste Haul-Disposal Services the Bidder, on this project and that the named Surety Company herein provides whtten certification that the named Surety Company will provide the Performance Bond, specified in the Contract Documents, in the event the Bidder enters into an agreement with the Town. The Surety Company herein certifies that such Company is licensed to do business in the State of New York. (SEAL) Principal Surety Company (LS.) By: Surety Verification BID (PROPOSAL) FORM Schedule 5.0.C 48 INFORMATION SCHEDULE D Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder herein certifies that the below named individuals are the current registered corporate officers, along current permanent addresses, and designates their authority to execute an Agreement on behalf of the firm Officer's Name Subsidiary Corporate Title Address City State, Zip Officer's Name Parent Corporate Title Address City State, Zip Officer's Name Subsidiary Corporate Title Address City State, Zip Officer's Name Parent Corporate Title Address City State, Zip Officer's Name Subsidiary Corporate Title Address City State, Zip Officer's Name Parent Corporate Title Address City State, Zip Current Corporate Officers BID (PROPOSAL) FORM Schedule 5.0.D Page 1 of 2 49 INFORMATION SCHEDULE D - (Continued) Officer's Name Subsidiary Corporate Title Address City State, Zip Officer's Name Parent Corporate Title Address City State, Zip Corporate Seal Name of Bidder: By: Date: NOTE: If blank not applicable, fill in with N/A Current Corporate Officer BID (PROPOSAL) FORM Schedule 5.0.D Page 2 of 2 50 INFORMATION SCHEDULE E Town of Southotd Bid Project Solid Waste Haul-Disposal Services STATEMENT OF BIDDER'S FINANCIAL CONDITION This Bidder agrees to provide tbr any subsidiary and parent firm, and hereto attaches a current or the most recent audited financial Statement(s) including as a minimum the firms opinions, notes, revenue/expense statements, conditions of cash, etc. The attached statement provided includes: Accounting Firm Name Address Financial Period To Statement Date The bidder certifies that he currently has an available line of credit in the amount of $ . A supporting documentary evidence attached to this form is supplied by: Name Address Date The undersigned Bidder certifies to the validity of statement and agrees to furnish any other information upon request that may be required by the Town of Southold, New York. Bidder's Financial Condition BID (PROPOSAL) FORM Schedule 5.0.E Page 1 of 2 51 INFORMATION SCHEDULE E - (continued) The undersigned hereby authorizes and requests any person, finn or corporation to furnish any information requested by Town of Southold, New York in verification of the finns financial condition. Dated at This day of ,20 State of New York, County of Name of Bidder Title being duly sworn deposes and saws that he is of Title Name of Organization and that the answers to the foregoing questions and all statement therein contained are true and correct. Sworn to me this day of ,20 My Commission expires: Notary Public NOTE: (1) (2) (Bidder may submit additional information desired as Schedule E attachments.) If blank not applicable, fill in with N/A Bidder's Financial Condition BID (PROPOSAL) FORM Schedule 5.0.E Page 2 of 2 52 INFORMATION SCHEDULE F Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder herein certifies that it is qualified to perform the work covered by this proposal, and that it is not acting as a broker on the behalf of others. To substantiate these qualifications, the Bidder offers the following related information and references in order that the Town may evaluate the Bidder's qualifications and experience. 4. 5. 6. 7. 8. 9. Bidder's Legal Name: Business Address: State incorporated: Street City State Zip Year incorp.: New York State; Business License No.: No. Years in contracting business under above name: Has firm ever defaulted on a contract? Yes Gross Value - work under current contract: $ Number of Current Contracts: Brief description general work peribrmed by firm: No 10. Has Firm ever tailed to complete work awarded? Yes If yes, attach supporting statement as to circumstances. Qualifications Summary BID (PROPOSAL) FORM No Schedule 5.0.F Page 1 of 3 53 INFORMATION SCHEDULE F (continued) 11. Related Experience Reference (within previous 5 years) 11.1 Project Title: Owner's Name: Address: Engineer: Address: Project Initial Start Date: Project Acceptance Date: Initial Bid Value: $ Final Complete Project Value: $ Brief Project Description: 11.2 Project Title: Owner's Name: Address: Engineer: Address: Project Initial Start Date: Project Acceptance Date: Initial Bid Value: $ Final Complete Project Value: $ Brief Project Description: Qualifications Summary BID (PROPOSAL) FORM Schedule 5.0.F Page 2 of 3 54 11.3 Project Title: Owner's Name: Address: Address: Project Initial Start Date: Project Acceptance Date: Initial Bid Value: $ Final Complete Project Value: $ Brief Project Description: 12. Principal Firm Members' Background/Experience (3 members minimum). Attach current resumes as Schedule 5.0.F supplement or give concise description by individual. Name of Bidder: By: Date: (Authorized Signature) NOTE: Any supplemental attachments or modifications to this form shall be labeled Schedule 5.0.F, and shall be properly integrated into this Bid Form. If blank not applicable, fill in with N/A. Qualifications Summary BID (PROPOSAL) FORM Schedule 5.0.F Page 3 of 3 55 INFORMATION SCHDULE G Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder hereby states that it proposes, if awarded an Agreement to use the following haul sub-contractors on this project. 2. 3. 4. 5. 6. 7. 8. 9. 10. Sub-Contractor/ Contract Trade/ Individual Address Phone # Specialties NOTE: Name of Bidder: By: (Authorized Signature) If blank not applicable, fill in with N/A Date: Subcontractors BID (PROPOSAL) FORM Schedule 5.0.G 56 IFORMATION SCHEDULE H Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder states that it owns the following pieces of equipment that are available for use on the project, if awarded the agreement. Proposed Current Equipment Item Project Use Equipment Location NOTE: Name of Bidder: By: Date: Any supplemental attachments or modifications to this form shall be labeled Schedule 5.0.H and shall be properly integrated into the Bid Form. If blank not applicable, fill in with N/A Construction Equipment BID (PROPOSAL) FORM Schedule 5.0.H 57 INFORMATION SCHEDULE 1 Town of Southold Bid Project Solid Waste Haul-Disposal Services The Bidder hereby states that it will be prepared to dispose of up to the following Maximum Specified Yearly Capacities in tons of Town of Southold solid waste if awarded an agreement Contract Year Maximum Tons per Contract Year Name of Bidder: By: Date: Maximum Specified Capacity BID (PROPOSAL) FORM Schedule 5.0.1 58 INFORMATION SCHEDULE J Town of Southold Bid Project Solid Waste Haul-Disposal Services NOTE: IF A BIDDER INTENDS TO UTILIZE MORE THAN ONE SOLID WASTE DISPOSAL SITE, AN INFORMATION SCHEDULE J MUST BE COMPLETED FOR EACH DISPOSAL SITE. The following is information on the undersigned Bidder's Solid Waste Disposal Site: I. GENERAL A. Disposal Site Location Name: Address: Phone: Disposal Site mailing address (if different than I) Address: II. CURRENT OPERATIONS A. Operations Permit 1. Permittee: 2. No.: 3. State: 4. Date of Issue: 5. Date of Expiration: 6. Copy Enclosed: Yes: No: Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 1 of 7 59 INFORMATION SCHEDULE J (continued) Hours of Operations 1. What are the PERMITTED operating hours? DAY A.M. Monday to Tuesday to Wednesday to Thursday to Friday to Saturday to Sunday to P,Mo 2. Are there any PERMITTED closure periods stipulated? What are the ACTUAL operating hours? DAY A.M. Monday to Tuesday to Wednesday to Thursday to Friday to Saturday to Sunday to PoMo What holiday or other period is the Disposal Site typically closed? DAY YES New Year's to Memorial to Independence to Labor to Thanksgiving to Christmas to Other (specify) to NO Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 2 of 7 60 INFORMATION SCHEDULE J - (continued) 4. Will the ACTUAL operating hours be extended up to the PERMITTED operating hours in Question II.B. 1 in order to accommodate Town of Southold solid waste? Yes No 6. Are there any local agreements, ordinances, etc. which would prohibit extending the ACTUAL operating hours in Question II.B.3 up to the PERMITTED operating hours in Question lI.B. 1 ? Yes No What is the PERMITTED annual capacity in tons? 20 20 20 20 20 At the PERMITTED levels in Question II.C., what is the projected useful life in years? What is the annual RECEIVING6 level today? At the RECEIVING levels in Question II.E, what is the projected useful life in Years? Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 3 of 7 61 INFORMATION SCHEDULE J - (continued) How much of the RECEIVING level in Question II.E is committed to under contract in tons? 20 20 20 20 20 Does the Disposal Site have special waste restrictions? Gate Yes No Fee ($) 1. Construction/Demolition 2. Asbestos 3. Wastewater Treatment Sludge 4. Hazardous Waste Are there any existing agreements with local municipalities which prohibit: Item Yes No 1. Routing to site 2. Weight limits between state coeds and site 3. Number of vehicles 4. Vehicle size 5. Solid waste importation outside jurisdictional area 6. Host Community Benefits Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 4 of 7 62 INFORMATION SCHEDULE J - (Continued) III. EXPANSION PLANS A. Application Permit 1. Permitee: 2. No.: 3. State: 4. Date of Submission: 5. Copy Enclosed: 6. Submission Status: Yes No Expansion of current site or new site Local Citizenry Reaction Regulatory agency Litigation Likelihood to succeed Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 5 of 7 63 INFORMATION SCHEDULE J - {Continued) If you are successful in Question III.A, what is the additional annual DESIGN capacity in tons (do not include figures from Question II.C.)? 20 20 20 20 20 At the annual DESIGN levels in Question III.B., what would be the projected useful life in years? Would you be willing to share with the Town of Southold engineering reports utilized for the preparation of the Operating Permits on Expansion Application? Yes No Bidder's Disposal Site(s) Engineer of Record Firm's Name Fi rm'sAddress Project Engineer Bidder Solid Waste Disposal Site(s) BID (PROPOSAL) FORM Schedule 5.0.J Page 6 of 7 64 INFORMATION SCHEDULE J - (Continued) Are you willing to meet with the Town of Southold to discuss your short and long term disposal capabilities? Yes No The undersigned hereby certifies that services, material, equipment to be furnished as a result of this bid will be in accordance with Town of Southold specifications applying thereto unless exceptions are indicated above and an explanation attached. Bidding Company Address City State Zip By_ Signature (Please Print or Type) NAME AND TITLE Phone No. Date CORPORATESEAL BidderSolid WasteDisposalSite(s) BID(PROPOSAL)FORM Schedule 5.0.J Page 7 of 7 65 INFORMATION SCHEDULE K FORM OF BID BOND KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned, as Principal, and as Surety, are hereby held and firmly bound unto Owner in the sum of and truly be made, we hereby jointly and severally bind ourselves, our heirs, executors, administrators, successors and assigns. Signed this day of _, 20__ as for the payment of which, will The condition of the above obligation is such that whereas the Principal has submitted to the Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into a contract in writing, for the hauling and disposal of solid waste; NOW, THEREFORE, (a) If said Bid shall be rejected or in the alternate, (b) If said Bid shall be accepted, and the Principal shall execute and deliver an Agreement in the form off the Sample Operating Agreement attached hereto (properly completed in accordance with said Bid) and shall fumish certificates of insurance and a bond for this faithful performance of said Agreement, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perform the Agreement created by the acceptance of said Bid, then this obligation shall be void, otherwise the same shall remain in force and efl'ect; it being expressly understood and agreed that the liability of the Surety fbr any and all claims hereunder shall, in no event, exceed the penal amount of this obligation as herein stated. The Surety, for value received, hereby stipulates and agrees that the obligations of said Surety and its bond shall be in no way impaired or affected by any extension of the time within which the Owner may accept such Bid; and said Surety does hereby waive notice of any such extension. Form of Bid Bond BID (PROPOSAL) FORM Schedule 5.0.K Page 1 of 3 66 IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seats, and such of them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above. Principal (L.S.) Surety By: Address of Surety: SEAL (ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION) STATE OF: ) COUNTY: ) SSN: On this day of _, 20__ before me personally came ., to me known, who being duly sworn, did depose and say that he resides in ; that he is the of the corporation described in and which executed the foregoing instrument; that he knows the seal of corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by the order of the Board of Directors of the corporation; and that he signed his name thereto by like order. Notary Public Form of Bid Bond BID (PROPOSAL) FORM (ACKNOWLEDGMENT BY CONTRACTOR, IF A PARTNERSHIP) Schedule 5.0.K Page 2 of 3 67 STATE OF: ) COUNTY: ) SSN: On this day of ~ 20__ before me personally came , to me known, and known to me to be a member of the firm of , and known to me to be an individual described in, and who executed the foregoing instrument in the firm name of ~ and he duly acknowledged to me that he executed the same for and in the behalf of said firm for the uses and purposes mentioned therein. Notary Public (ACKNOWLEDGEMENT BY iNDIVIDUAL CONTRACTOR) STATE OF: ) COUNTY: ) SSN: On this day of ,20__ before me personally came , to me know, and known to be the person described in and who executed the foregoing instrument and duly acknowledged that he executed the same. Notary Public Form of Bid Bond BID (PROPOSAL) FORM Schedule 5.0.K Page 3 of 3 68 INFORMATION SCBEDULE L PERFORMANCE BOND Bond No. KNOW ALL MEN BY THESE PRESENTS, that (hereinafter called the "principal") and (hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter called the "Owner") in the full and just sum of dollars ($. ) good and lawful money of the United States of America, for the payment of which sum of money, well and truly to be made and done, the Principal binds himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has entered into a certain written Agreement bearing date on the day of ,20 ___, with the Owner for the Town of Southold Solid Waste Haul-Disposal Services, a copy of which Agreement is annexed to and hereby made part of this bond as though herein set forth in full. NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his or its representatives or assigns, shall well and faithfully comply with and perform all the terms, covenants and conditions of said Agreement or his (their, its) part to be kept and performed and all modifications, amendments, additions and alterations thereto that may hereafter be made, according to the true intent and meaning of said Agreement, and shall fully indemnify and save harmless the Owner from all cost and damage which it may suffer by reason of failure so to do, and shall fully reimburse and repay the Owner for all outlay and expense which the Owner may incur in making good any such default, and shall protect the said Owner against, and pay any and all amounts, damages, costs and judgments which may or shall be recovered against said Owner or its officers or agents or which the said Owner may be called upon to pay to any person or corporation by reason of any damages arising or growing out of the doing of said work, or the repair of maintenance thereof, or the manner of doing the same, or the neglect of the said Principal, or his (their, its) agents or servants or the improper pertbrmance of the said work by the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent rights by reason of the use of any materials furnished or work done as aforesaid or otherwise, then this obligation shall be null and void, otherwise to remain in full force and effect; Pertbrmance Bond BID (PROPOSAL) FORM Schedule 5.0.L Page 1 of 2 69 PROVIDED HOWEVER, the Surety, for the value received, hereby stipulates and agrees, if requested to do so by the Owner, to fully perform and complete the work mentioned and deschbed in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for any cause the Principal fails or neglects to so fully perform and complete such work and the Surety further agrees to commence such work of completion within ten (10) calendar days after written notice thereof from the Owner and to complete such work within ten (10) calendar days from the expiration of the time allowed the Principal in the Agreement for the completion thereof; and further PROVIDED HOWEVER, the Surety, for value received, for itself, and its successors and assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no may impaired or affected by an extension of time, modification, work to be performed thereunder, or by any payment thereunder before the time required herein, or by any waiver of any provisions thereof or by any assignment, subletting or other transfer of any work to be performed or any monies due or to become due thereunder; and said Surety does hereby waive notice of any and all of such extensions, modifications, omissions, additions, changes, payments, waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that any and all things done and omitted to be done by and in relation co assignees, subcontractors, and other transferees shall have the same effect as to said Surety as though done or omitted to be done by or in relation to said Principal. IN WITNESS WHEREOF, the Principal has hereunto sec his (their, its) hand and seal and the Surety has caused this instrument to be signed by its and its corporate seal to be hereunto affixed this day of ,20 (If Corporation add Seal and Attestation) By: Attest: Principal Add Corporate Seal By: Attest: Address of Surety: Surety Performance Bond BID (PORPOSAL) FORM Schedule 5.0.L Page 2 of 2 70 INFORMATION SCHEDULE M OPERATIONAL PLAN The Bidder hereby states that it proposes to implement the following operational plan to haul and dispose of Municipal Solid Waste (MSW) from the Town of Southold Landfill if awarded an Agreement. I. Haul Summarize the manpower and equipment you will make available to perform under this Agreement. II. Disposal Summarize the identity and location of the primary and secondary sites you plan to use for disposal of the solid waste. Describe the arrangements between your company and the disposal site for use of the site. Describe any treatment the MSW will undergo during transport or upon arrival at the disposal site. Attach copies of the permits to construct and permits to operate the disposal site. Site No. 1 NAME LOCATION CONTACT PERSON AND PHONE NO. ARRANGEMENTS FOR USE TREATMENT OR UNUSUAL CONDITIONS Operational Plan BID (PROPOSAL) FORM Schedule 5.0.M Page 1 of 2 71 Site No. 2 NAME LOCATION CONTACT PERSON AND PHONE NO. ARRANGEMENTS FOR USE TREATMENT OR UNUSUAL CONDITIONS Operational Plan BID (PROPOSAL) FORM Schedule 5.0.M Page 2 of 2 72 NON-COLLUSIVE BID CERTIFICATE The undersigned bidder certifies that this bid has been arrived at by the bidder independently and has been submitted without collusion with any other vendor of materials, supplies or equipment of the type described in the invitation for bids, and the contents of this bid have not been communicated by the bidder, nor, to its best knowledge and belief, by any of its employees or agents, to any person not an employee or agent of the bidder or its surety on any bOnd furnished herewith prior to the official opening of the bid. Signed: Print name Corporate Title (if any) Company Name Mailing Address Phone Number BID ON 2013 MSW Haul APPENDIX A SAMPLE OPERATING AGREEMENT (CONTRACT) 73 THIS AGREEMENT, made on the __ day of _, 20 , by and between the Town of Southold, a municipal corporation of the State of New York having its Principal place of business at 53095 Main Road Southold, New York hereinafter called the "Town" and hereinafter called the "Contractor." WITNESSETH WHEREAS, Contractor has submitted to the Town a bid dated 20 , ("Bid") in response to the Town's Bid Solicitation for Solid Waste Hauling- Disposal Services dated ,20 , ("Solicitation"); and WHEREAS, the Town Board of the Town of Southold by resolution No. adopted on authorized the Town Supervisor to enter into an agreement with the Contractor to perform certain services in connection with the handling of solid waste, NOW, THEREFORE, it is mutually covenanted and agreed by and between the parties hereto as follows: 1. DEFINITIONS - Terms defined in the Bid Solicitation shall have the same meaning as if defined herein. Il. SCOPE OF SERVICES - The Contractor shall perform the services in accordance with the description of those services as set forth in the Solicitation. III. TERM OF AGREEMENT The term of this Agreement shall be two (2) years commencing on July 1,2013, with the potential for three (3) additional option years. The Town and the Contractor, by mutual consent, shall have the option of renewing this Agreement for up to three (3) additional one-year terms at the prices bid herein. Notice of this mutual consent to be expressed by the parties in writing not less than one-hundred eighty (180) days prior to APPENDIX A-1 74 the expiration of the term in force (i.e., by January 1,2015, January 1, 2016, and January l, 2017). Similarly, notice by either party of the intent to reject any option year shall be submitted in writing by the same date (January 1) of each year. The Town reserves the right to may terminate the Agreement at any time after Year Two (i.e., after June 30, 2015) of the Agreement for the purpose of entering into an inter- municipal solid waste haul~disposal Agreement with another Long Island Town by giving one-hundred eighty (180) days written notice to the Contractor. IV. PRICE SCHEDULE/COMPENSATION The unit bid price schedule for the services to be furnished by Contractor is found in Section C - 3.1, 3.2, Contractor's bid which is incorporated into this Agreement. V. PAYMENTS A. The Contractor shall receive monthly payments for services performed during the prior calendar month. The Contractor shall submit a request for payment on a Town approved voucher form along with Contractor's invoice which shall include a daily summary of tonnage hauled by Contractor to a Disposal Site and disposed by Contractor at a Disposal Site as applicable. Such payments shall be made within sixty (60) days of the Town's approval of Contractor's invoice. The Town shall be entitled to deduct from any payment owning to Contractor any sums expended by the Town to cure any default or other Agreement non-compliance by Contractor or to protect the Town from loss on account of claims filed or reasonably anticipated to be filed. VI. CONTRACTOR'S WARRANTIES AND REPRESENTATIONS Contractor makes the following warranties and representations: A. Contractor represents that the Town has made no commitment under this Agreement with respect to the volume solid waste to be handled by Contractor during the term of this Agreement. B. Contractor warrants that Contractor shall comply with all federal, state and local laws, ordinances regulations applicable to ail of the services to be pertbrmed Contractor. APPENDIX A-2 75 C. Contractor represents that the information furnished by Contractor in the equipment schedules included in the bid is accurate and complete and Contractor acknowledges that Town has relied upon the accuracy and completeness of that information in the selection of Contractor as the lowest responsible bidder. D. The Contractor represents that Contractor shall utilize its best effbrts to insure that Minority and Women Owned Businesses (MBE's and WBE's) have the opportunity to participate as subcontractors under this Agreement. In the event the contractor subcontracts twenty-five percent (25%) or more of its work hereunder, Contractor shall submit to the Town an and a WBE Utilization Plan, prior to execution of this Agreement, D. In the event the Contractor's Disposal Site is unable to receive and dispose of the Town's waste for any reason (including failure to obtain or maintain necessary permits or licenses), Contractor shall be responsible for providing to the Town an alternate Disposal Site for the Town's use at no additional cost to the Town, and shall indemnify the Town against any additional hauling cost by the Town or its agent because of the location of the alternate Disposal Site. Under no circumstances shall a change in Disposal Site(s) or failure or inability to obtain or maintain necessary permits by the Contractor be considered a change in conditions. In the event the Contractor is unable to find an alternate Disposal Site(s), he shall be deemed to be in default of this Agreement and liable fbr damages, bond forfeitures and other expenses as provided in the Agreement. VII. INDEMNIFCATION INSURANCE/BONDS A. Contractor agrees to defend, indemnify and save harmless the Town of Southold against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and expenses of what ever kind or nature which the Town may directly or indirectly incur, suffer or be required to pay by reason of or in consequence of the Contractor carrying out or performing under the terms of this Agreement, or thilure to carry out any of the provisions, duties, services or requirements of this Agreement, whether such losses and damages are suffered or sustained by the Town directly or by its employees, licensees, agents, engineers, citizens or by other persons or corporations, including any of Contractor's employees or agents APPENDIX A-3 76 who may seek to hold the Town liable therefore. This obligation shall be ongoing, shall survive the term of this Agreement and include, but not be limited to, claims concerning non-sudden environmental impairments, The Contractor shall join in the commencement of any action or proceeding or in the defense of any action or proceeding which in the opinion of the Town constitutes actual or threatened interference or interruption with the Town's rights hereunder, including all appeals which, in the opinion of the Town, may be necessary. B. Contractor shall procure and maintain the insurance described in Section A of the Solicitation for a period commencing on the date of this Agreement and terminating no earlier than one year following termination of services under this Agreement. All such insurance coverage shall name the Town as an additional insured and shall provide that the coverage shall not be changed or canceled until thirty (30) days written notice has been given to the Town. All such insurance shall be issued by a company duly authorized, to transact business in the State of New York and acceptable to the Town and shall include all riders and additional coverage necessary to insure that Contractor will be financially able to meet its obligations under the foregoing indemnification. C. Contractor shall, for the period of the performance of services hereunder, maintain a Performance Bond in the amount of one million ($1,000,000.00) dollars wherein named obligee is Town of Southold. The Bond shall be in a form acceptable to the Town Attorney and issued by a surety licensed to do business in New York as a surety. VII1. FORCE MAJEURE If either party is delayed or prevented ti'om fulfilling any of its obligations under this Agreement due to any act, event or condition, whether affecting the Town, the Contractor, the Disposal Site or any of the Town's or the Contractor's respective subcontractors or suppliers, to the extent that it materially and adversely affects the ability of either party to peribrm any obligation hereunder (except for payment obligations), and if such act, event or condition is APPENDIX A-4 77 beyond the reasonable control and is not also the result of the willful or negligent action, inaction, or fault of the party relying thereon as justification for not performing an obligation or complying with any condition required of such party under the Agreement, the time for fulfilling that obligation shall be extended day-by-day for the period of the uncontrollable circumstance; provided, however, that the contesting in good faith or the failure in good faith to contest such action or in action shall not be construed as willful or negligent action or a lack of reasonable diligence of either party. Subject to the foregoing, such acts or events shall include the following: (1) an act of God (but not including reasonable anticipated weather conditions for the geographic area of the Town or Disposal Site) hurricane, landslide, lightning, earthquake, fire, explosion, flood, sabotage or similar occurrence, acts of a public enemy, extortion, war, blockade or insurrection, riot or civil disturbance; (2) the failure of any appropriate federal, state, county, town or local public agency or private utility having Jurisdiction in the areas in which the Transfer Station or Disposal Site is located to provide and maintain utilities, services, water and sewer lines and power transmission lines which are required for the operation or maintenance of the Transfer Station or Disposal Site; (3) govemmental pre-emption of materials or services in connection with a public emergency or any condemnation or other taking by eminent domain of any portion of the transfer Station or Disposal Site; and (4) the presence of hazardous waste upon, beneath or migrating from the Transfer Station. It is specifically understood that none of the following acts or conditions shall constitute uncontrollable circumstances: (a) general economic conditions, interest or inflation rates, or currency fluctuations; (b) the financial condition of the Town, the Contractor, any of its affiliates or any sub-contractor; (c) union work rules, requirements or demands which have the effect of increasing the number of employees employed otherwise increase the cost to the Contractor of operating its haul operation or the Disposal Site (d) equipment failure; (e) any impact of prevailing wage law, customs practices on the Contractor's costs; (f) any act, event or APPENDIX A-5 78 circumstances occurring outside of the United States, or (g) any change in law or in the permit conditions or status of the Transfer Station Disposal Site or alternate Disposal Site. IX. SUBONTRACTS Contractor shall not enter into any subcontracts in connection with the services to be performed by Contractor hereunder without the prior written approval by the town of such subcontracts. All such subcontracts shall make express reference to the terms and conditions of this agreement and shall obligate the subcontractor to comply with all applicable federal, state and local laws, ordinances or regulations relating to the services to be performed under the subcontract. In the event the subcontractor is required to furnish any insurance or bonds for the benefit of Contractor, the Town shall also be named as an additional insured or obliges. X. PREVAILING WAGE RATES Contractor agrees to comply with the provisions of the New York State Labor Law relating to the payment of prevailing wage rates to the extent applicable, or the applicable State Law in the state of disposal. In the event that at any time during performance under this Agreement the Contractor is required to increase the wages paid to any of its employees as a result of such requirement, all costs be borne exclusively by Contractor. XI. FORCED ACCOUNTING In the event the Town directs the Contractor, by written authorization signed either by the Town Supervisor or Town's Solid Waste Coordinator, to perform additional services beyond the scope of those described in this Agreement, the Contractor shall be compensated fbr such additional services on the following basis: TOTAL COMPENSATION FOR ADDITIONAL SERVICES = DIRECT LABOR COST + DIRECT MATERIAL COST + OVERHEADO + PROFIT For the purposes of this Section: APPENDIX A-6 79 A. DIRECT LABOR COST shall include hourly wages, including overtime premiums actually paid plus the following thnge benefits-associated with those wages - group medical, group life insurance, pensions, FICA, uniforms, safety equipment or special tools. These fringe benefits shall be separately identified and shall not duplicate fringe benefits paid in connection with work performed within the scope off the Agreement. B. DIRECT MATERIAL COST shall be those costs actually paid by Contractor for materials utilized by Contractor in performance of the additional services. The costs for such materials shall not include sales tax for any materials which constitute personal property incorporated into the structures, buildings, or real property of the Town since such personal property is exempt fi.om taxation York State Tax Law, under Section 1115 of the New York State Tax Law. C. OVERHEAD shall be 10% of the total of the Direct Labor Costs and the Direct Material Costs, D. PROFITS shall be 5% of the total of the Direct Labor Costs, the Direct Material Costs and the Overhead. XII. CONTRACTOR'S OPERATIONS AND PROCEDURES REPORTS Contractor will provide the operating plan and supporting data listed in Sections A and B of the Solicitation to the Town for review and acceptance. Contractor will update the plan as necessary and furnish copies of those updates to the Town. XIII. DEFAULT In the event the Contractor fails co' perform its obligations under the Agreement, the Town may terminate the Agreement, procure the services from other sources and hold the Contractor responsible for any costs incurred. This Town also may deduct such costs from payments owing to the Contractor and/or draw upon the Performance Bond as full or partial reimbursement for such excess costs. The Town reserves the fight to terminate the Agreement tbr just cause. XIV. SERVICE AGREEMENT The Contractor shall be obligated to provide the Town with disposal services without regard to the permit status of its Disposal Site. In the event that Contractor submits a APPENDIX A-7 8O Bid for a Disposal Site fur which Contractor does not currently have all necessary federal and state permits, or which after the acceptance of the Bid loses its permitted status, Contractor shall, at its sole risk and expense, be responsible for obtaining and/or renewing its permits or providing the Town an alternate Solid Waste Disposal Site at no additional cost (disposal plus any additional hauling) to the Town. The parties agree that this is a full service Agreement and failure of the Contractor to provide the identified Disposal Sits or acceptable alternative Disposal Site, on or after the commencement date shall constitute a breach of this Agreement. The Contractor accordingly shall not be excused from its obligations hereunder by reason of any failure to obtain or maintain its permits at the identified Disposal Site. XV. LIMITATION OF FUNDS The Contractor agrees that this Agreement shall be deemed executory only to the extant of the funds currently available for the purposes of this Agreement and that the Town incurs no liability beyond those available by authorization of the Town Board as of the date of this Agreement. XVI. DISPUTES/ARBITRATION Any disputes between the parties to this Agreement may be referred to arbitration by mutual agreement of the parties. Absent such an agreement, any actions or claims by either party hereto shall be commenced in Supreme Court, Suffolk County, New York. In the event the parties agree to arbitrate a dispute, such arbitration shall be conducted in accordance with the rules of the American-Arbitration Association. In no event shall any demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim or dispute would be barred by the applicable statute of limitations. An award rendered by arbitrators following any such arbitration shall be final and Judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof~ XVII. MISCELLANEOUS A. This Ab-:eement shall be governed by the laws of the State of New York. B. Contractor shall not assign, convey or otherwise transfer its rights or obligations under this Agreement without the prior written consent of the Town. APPENDIX A-8 81 C. This Agreement, including all Exhibits and documents referred to herein, along with the Specifications, Solicitation and the Bid, and alt Appendices and Exhibits thereto, represent the entire agreement between the Town and Contractor relating to the Services to be performed hereunder. This Agreement may be modified only by written agreement of Contractor and the Town. D. To the extent of any inconsistency among the documents constituting the agreement of the parties, the priority among those documents shall be: 2. 3. 4. This Agreement; Exhibits hereto; The Solicitation including Appendices; Contractor's Bid. E. Without limiting any other right and/or remedy which the Town may have at law or under this Agreement, if the Contractor is adjudged bankrupt or makes an assignment for the benefit of creditors or s receiver is appointed for the Contractor or any insolvency arrangement proceedings are instituted by or against the Contractor, the Town may terminate this Agreement. F. Contractor agrees that it will conduct itself consistent with its status, said status being that of an independent contractor and, Contractor, its employees or agents will neither held themselves out nor claim to be an officer or employee of the Town of Southold nor make claim to any right accruing thereto including, but not limited to, Worker's Compensation, Unemployment Benefits, Social Security or retirement membership or credit. G. If any provision of this Agreement shall for any reason he held to be invalid or unenforceable, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Agreement and this Agreement shall be enforced as if such invalid and unenforceable provision had not been contained herein. H. Contractor agrees that it shall not discriminate and that it shall cause there to be no discrimination against any employee who is employee in the work, or against any APPENDIX A-9 82 applicant for such employment, because of race, religion, color, sex, age, marital status, handicap or national origin in any manner prohibited by the laws of the United States or of the State of New York. These requirements shall include, but not be limited to, the following: employment; upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training. XVIII. NOTICES All notices required to be given hereunder shall be made in writing by first class mail addressed as follows: If to the Town: With a copy to: Supervisor of the Town of Southold P.O. Box 1179 Southold, New York 11971 Solid Waste Coordinator, Town of Southold P.O. Box 962 Cutchogue, NY 11935 If to the Contractor: IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. TOWN OF SOUTHOLD By:. Scott A. Russell, Supervisor By: APPENDIX A-10 83 APPENDIX B NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION PERMIT 84 APPENDIX C Town of Southold Accident Report 87 Page 1 of 1 Rudder, Lynda From: Reisenberg, Lloyd Sent: Friday, April 05. 2013 11:45 AM To: Rudder, Lynda Subject: RE: for publication Posted Lloyd H. Reisenberg Network and Systems Administrator Town of Southold, New York Email: IIoFd. reisenberq~.town.southold, ny. us Office: 631-765-1891 Cell: 631-879.1554 CONFIDENTIALITY NOTICE: This communication with its contents may contain confidential and/or legally privileged information. It is solely for the use of the intended recipient(s). Unauthorized interception, review, use or disclosure is prohibited and may violate applicable laws including the Electronic Communications Privacy Act. If you are not the intended recipient, please contact the sender and destroy all copies of the communication From: Rudder, Lynda Sent: Friday, April 05, 2013 9:28 AH To: (jim@jamesdinizio.com); Andaloro, -]ennifer; Cushman, -]ohn; Doherty, .]ill; Finnegan, Hartin; Krauza, Lynne; Legals (cschott@timesreview.com); Louisa Evans (Ipevans06390@gmail.com); Neville, Elizabeth; Reisenberg, Lloyd; Russell, Scott; Standish, Lauren; Talbot, Christopher; Tomaszewski, Hichelle; William Ruland Subject: for publication please publish in the Suffolk times 4/11 edition and on the Town website 4/5/2013 Rudder, L~nda From: Sent: To: Cc: Subject: Tracey Doubrava <tdoubrava@timesreview.com> Tuesday, April 23, 2013 10:24 AM Rudder, Lynda; tr-legals Bunchuck, Jim Re: legal Importance: High I'm in receipt and have this moved along to be set and included in this week's edition of the Suffolk Times. Thanks. Trace¥ Doubrava Display Ad Sales Coordinator Times/Review News Group 7785 Main Rd. P,O. Box 1500 Mattituck, NY 11952 P: (631) 298-3200 E: tdoubrava~timesreview.com From: <Rudder>, Lynda <lynda.rudder~town.southold.n¥.us> Date: Tuesday, April 23, 2013 10:21 AM To: tr-le§als <le~;als~timesreview.com> Cc: "Bunchuck, Jim" <jbunchuck~town.southotd.ny.us> Subject: le§al