8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of report (Date of earliest event reported) October 25, 2012

WASTE CONNECTIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-31507	94-3283464
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Waterway Plaza Two

10001 Woodloch Forest Drive, Suite 400

The Woodlands, TX 77380

(Address of Principal Executive Offices) (Zip Code)

(832) 442-2200

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

This Form 8-K/A amends the Current Report on Form 8-K we filed with the United States Securities and Exchange Commission on October 31, 2012 related to our acquisition of the business of R360 Environmental Solutions, Inc. (“R360”) from R360 Environmental Solutions, Inc., R360 Operating Partners, LP, Oilfields LP Holdings, LLC, Oilfields GP Holdings, LLC, New CRI, Inc., New R&G, Inc., New Hitchcock, Inc. and Paine & Partners Capital Fund III AIV II B, L.P (“the sellers”). This amendment includes (1) the historical audited financial statements of R360 as of December 31, 2011 and 2010 and for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010; (2) unaudited financial statements of R360 as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011; (3) the historical audited financial statements of Oilfields Holdings, Inc. (“OHI”), the predecessor to R360, as of July 16, 2010 and December 31, 2009 and for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009; and (4) the unaudited pro forma financial statements as of September 30, 2012 and for the nine months ended September 30, 2012 and for the year ended December 31, 2011, as required to be filed pursuant to Items 2.01, 9.01(a) and 9.01(b) of Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

Audited financial statements for R360 as of December 31, 2011 and 2010 and for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, and unaudited financial statements for R360 as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011, included as Exhibit 99.1.

Audited financial statements of OHI as of July 16, 2010 and December 31, 2009 and for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009, included as Exhibit 99.2.

(b) Pro forma financial information.

Unaudited pro forma financial statements as of September 30, 2012 and for the nine months ended September 30, 2012 and for the year ended December 31, 2011, included as Exhibit 99.3.

(d) Exhibits

Exhibit Number	Description of the Exhibit
Exhibit 23.1	Consent of PricewaterhouseCoopers LLP.
Exhibit 23.2	Consent of PricewaterhouseCoopers LLP.
Exhibit 99.1	Audited financial statements for R360 as of December 31, 2011 and 2010 and

	for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, and unaudited financial statements for R360 as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011.
Exhibit 99.2	Audited financial statements of Oilfields Holdings, Inc. as of July 16, 2010 and December 31, 2009 and for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009.
Exhibit 99.3	Unaudited pro forma financial statements as of September 30, 2012 and for the nine months ended September 30, 2012 and for the year ended December 31, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: January 3, 2013

WASTE CONNECTIONS, INC.
By:	/s/ Worthing F. Jackman
Name:	Worthing F. Jackman
Title:	Executive Vice President and Chief
	Financial Officer

EXHIBIT INDEX

Exhibit Number	Description of the Exhibit
Exhibit 23.1	Consent of PricewaterhouseCoopers LLP.
Exhibit 23.2	Consent of PricewaterhouseCoopers LLP.
Exhibit 99.1	Audited financial statements for R360 as of December 31, 2011 and 2010 and for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, and unaudited financial statements for R360 as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011.
Exhibit 99.2	Audited financial statements of Oilfields Holdings, Inc. as of July 16, 2010 and December 31, 2009 and for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009.
Exhibit 99.3	Unaudited pro forma financial statements as of September 30, 2012 and for the nine months ended September 30, 2012 and for the year ended December 31, 2011.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-87269 and 333-179724) and Form S-8 (No. 333-170193, 333-153621, 333-42096, 333-72113, 333-63407, 333-83172, 333-90810, 333-102413, and 333-117764) of Waste Connections, Inc. of our report dated March 30, 2012 relating to the financial statements of R360 Environmental Solutions, Inc., which appears in the Current Report on Form 8-K/A of Waste Connections, Inc. dated January 3, 2013.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

January 3, 2013

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-87269 and 333-179724) and Form S-8 (No. 333-170193, 333-153621, 333-42096, 333-72113, 333-63407, 333-83172, 333-90810, 333-102413, and 333-117764) of Waste Connections, Inc. of our report dated April 29, 2011, except for Note 2 for which the date is May 3, 2012 relating to the financial statements of Oilfields Holdings, Inc., which appears in the Current Report on Form 8-K/A of Waste Connections, Inc. dated January 3, 2013.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

January 3, 2013

EX-99.1

Exhibit 99.1

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

R360 ENVIRONMENTAL SOLUTIONS, INC.

	Page
Report of Independent Auditors		2
Consolidated Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011 and 2010		3
Consolidated Statements of Operations for the nine months ended September 30, 2012 and 2011 (unaudited), the year ended December 31, 2011 and the period from May 5, 2010 (date of inception) through December 31, 2010		4
Consolidated Statements of Stockholder’s Equity for the nine months ended September 30, 2012 (unaudited), the year ended December 31, 2011 and the period from May 5, 2010 (date of inception) through December 31, 2010		5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 (unaudited), the year ended December 31, 2011 and the period from May 5, 2010 (date of inception) through December 31, 2010		6
Notes to Consolidated Financial Statements		8

1

Report of Independent Auditors

To the Board of Directors and Stockholder of

R360 Environmental Solutions, Inc.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, stockholder’s equity and cash flows present fairly, in all material respects, the financial position of R360 Environmental Solutions, Inc. and its subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the results of their operations and their cash flows for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

March 30, 2012

2

R360 ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	September  30, 2012			December 31,
				2011			2010
	(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	3,306		$	30,836		$	437
Accounts receivable, net of allowance for doubtful accounts of $896 (unaudited), $452 and $121 at September 30, 2012 and December 31, 2011 and 2010, respectively		54,298			35,506			25,817
Prepaid expenses and other current assets		3,537			2,132			2,066
Deferred income taxes		—			3,467			63
Total current assets		61,141			71,941			28,383
Property and equipment, net		132,904			72,921			49,563
Goodwill		142,848			105,006			99,009
Intangible assets, net		146,479			104,647			100,629
Other assets, net		7,427			5,750			5,594
	$	490,799		$	360,265		$	283,178
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Current portion of long-term debt and note payable	$	15,468		$	11,743		$	9,496
Current portion of contingent consideration		12,529			2,875			5,361
Accounts payable		7,095			8,508			7,282
Accrued liabilities		46,973			21,041			14,530
Total current liabilities		82,065			44,167			36,669
Long-term debt and note payable		225,224			144,380			106,688
Contingent consideration		24,316			3,948			6,275
Deferred income taxes		25,926			31,417			24,966
Other long-term liabilities		5,737			5,538			3,176
Total liabilities		363,268			229,450			177,774
Commitments and contingencies
Stockholder’s equity:
Common stock: $0.01 par value per share; 250,000 shares authorized; 112,030 shares issued and outstanding at each of September 30, 2012 (unaudited) and December 31, 2011 and 2010		1			1			1
Additional paid-in capital		113,184			113,807			112,029
Shareholder notes receivable		(14,989	)		(6,493	)		(4,964	)
Retained earnings		12,647			23,500			(1,662	)
Total R360 Environmental Solutions’ stockholder’s equity		110,843			130,815			105,404
Noncontrolling interest in subsidiaries		16,688			—			—
Total stockholder’s equity		127,531			130,815			105,404
	$	490,799		$	360,265		$	283,178

The accompanying notes are an integral part of these consolidated financial statements.

3

R360 ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS)

	Nine months ended September 30,						Year ended December 31, 2011			Period from May 5, 2010 (Date of inception) through December 31, 2010
	2012			2011
	(unaudited)			(unaudited)
Revenues	$	166,938		$	118,852		$	163,180		$	56,902
Operating expenses:
Cost of operations		69,845			52,147			70,988			24,391
Selling, general and administrative		24,588			16,090			24,238			7,801
Equity-based compensation		10,503			—			—			—
Transaction costs		6,638			194			194			14,209
Depreciation		12,231			8,676			12,178			3,832
Amortization		8,392			2,174			2,999			1,111
(Gain) loss on disposal of assets		(62	)		143			439			8
Operating income		34,803			39,428			52,144			5,550
Interest expense		(12,507	)		(9,652	)		(13,116	)		(6,050	)
Interest income		79			84			108			56
Remeasurement of contingent consideration		(8,000	)		—			(281	)		—
Other income (expense), net		500			181			370			(521	)
Income (loss) before income tax provision		14,875			30,041			39,225			(965	)
Income tax provision		(2,421	)		(10,770	)		(14,063	)		(697	)
Net income (loss)		12,454			19,271			25,162			(1,662	)
Less: Net income attributable to noncontrolling interests		(23,307	)		—			—			—
Net income (loss) attributable to R360 Environmental Solutions	$	(10,853	)	$	19,271		$	25,162		$	(1,662	)

The accompanying notes are an integral part of these consolidated financial statements.

4

R360 ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2012, YEAR ENDED DECEMBER 31, 2011 AND THE PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

	R360 ENVIRONMENTAL SOLUTIONS’ STOCKHOLDER’S EQUITY
	COMMON STOCK				ADDITIONAL PAID-IN CAPITAL			SHAREHOLDER NOTES RECEIVABLE			RETAINED EARNINGS			NONCONTROLLING INTERESTS			TOTAL
	SHARES		AMOUNT
Initial capitalization		112,030	$	1	$	112,029		$	(4,964	)	$	—		$	—		$	107,066
Net loss		—		—		—			—			(1,662	)		—			(1,662	)
Balances at December 31, 2010		112,030		1		112,029			(4,964	)		(1,662	)		—			105,404
Payments on notes receivable		—		—		—			249			—			—			249
Notes receivable from shareholders for sale of Options		—		—		1,778			(1,778	)		—			—			—
Net income		—		—		—			—			25,162			—			25,162
Balances at December 31, 2011		112,030		1		113,807			(6,493	)		23,500			—			130,815
Payments on notes receivable (unaudited)		—		—		—			477			—			—			477
Notes receivable from shareholders for exercise of Options (unaudited)		—		—		—			(8,973	)		—			8,973			—
Equity-based compensation (unaudited)		—		—		10,503			—			—			—			10,503
Distributions to noncontrolling interests (unaudited)		—		—		—			—			—			(15,592	)		(15,592	)
Tax effect of gain on exercise of Options (unaudited)		—		—		(11,126	)		—			—			—			(11,126	)
Net income (loss) (unaudited)		—		—		—			—			(10,853	)		23,307			12,454
Balances at September 30, 2012 (unaudited)		112,030	$	1	$	113,184		$	(14,989	)	$	12,647		$	16,688		$	127,531

The accompanying notes are an integral part of these consolidated financial statements.

5

R360 ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

	Nine months ended September 30,						Year ended December 31,			Period from May 5, 2010 (Date of inception) through December 31,
	2012			2011			2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	12,454		$	19,271		$	25,162		$	(1,662	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		20,623			10,850			15,177			4,943
Amortization of debt issuance costs		1,481			1,102			1,538			640
Equity-based compensation		10,503			—			—			—
Accretion of contingent consideration		339			209			281			104
Remeasurement of contingent consideration		8,000			—			281			—
Provision for bad debts		590			169			331			121
(Gain) loss on disposal of assets		(62	)		—			439			8
Deferred income taxes		(2,024	)		2,264			3,344			(3,471	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net		1,988			(6,538	)		(9,138	)		(5,552	)
Prepaid expenses and other current assets		(1,406	)		(724	)		(175	)		(1,043	)
Other assets		(2,388	)		87			(138	)		(223	)
Accounts payable		(1,413	)		1,604			1,226			7,282
Accrued liabilities		13,748			8,803			4,489			2,829
Other long-term liabilities		—			81			489			1,019
Net cash provided by operating activities		62,433			37,178			43,306			4,995
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment		(67,915	)		(23,509	)		(31,368	)		(4,598	)
Payments for acquisitions, net of cash acquired		(78,775	)		(14,797	)		(14,797	)		(216,012	)
Proceeds from disposal of assets		90			—			163			—
Other		—			—			—			(1,068	)
Net cash used in investing activities		(146,600	)		(38,306	)		(46,002	)		(221,678	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Initial capitalization		—			—			—			107,066
Payments on notes receivable		477			249			249			—
Payment of contingent consideration		(2,029	)		(5,000	)		(5,375	)		—
Proceeds from borrowings on notes payable		—			17,500			49,500			120,000
Proceeds from borrowings on revolver		83,500			20,000			20,000			6,500
Principal payments on notes payable		(8,913	)		(6,700	)		(9,350	)		(4,050	)
Principal payments on revolver		—			(20,000	)		(20,000	)		(6,500	)
Principal payments on capital lease obligations		(19	)		(110	)		(211	)		(113	)
Debt issuance costs		(787	)		(1,583	)		(1,718	)		(5,783	)
Distributions to noncontrolling interests		(15,592	)		—			—			—
Net cash provided by financing activities		56,637			4,356			33,095			217,120
Net increase (decrease) in cash and equivalents		(27,530	)		3,228			30,399			437
Cash and equivalents at beginning of period		30,836			437			437			—
Cash and equivalents at end of period	$	3,306		$	3,665		$	30,836		$	437

The accompanying notes are an integral part of these consolidated financial statements.

6

R360 ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH TRANSACTIONS:

	Nine months ended September 30,						Year ended December 31,			Period from May 5, 2010 (Date of inception) through December 31,
	2012			2011			2011			2010
	(unaudited)			(unaudited)
Cash paid for interest	$	13,621		$	7,965		$	11,142		$	5,211
Cash paid for income taxes	$	8,361		$	7,225		$	12,982		$	—
Noncash investing and financing activities:
Notes receivable received for sale of stock and options	$	8,973		$	—		$	1,778		$	4,964
Property and equipment financed through accounts payable and accrued liabilities	$	12,119		$	3,345		$	1,747		$	—
Tax effect of gain on exercise of Options	$	11,126		$	—		$	—		$	—
In connection with its acquisitions, the Company assumed liabilities as follows:
Fair value of assets acquired	$	113,766		$	15,634		$	15,634		$	269,713
Cash paid for acquisitions		(78,775	)		(14,797	)		(14,797	)		(216,761	)
Liabilities assumed and notes payable issued to sellers of businesses acquired	$	34,991		$	837		$	837		$	52,952

The accompanying notes are an integral part of these consolidated financial statements.

7

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

R360 Environmental Solutions, Inc. (the “Company”) was organized in May 2010. On July 16, 2010 the Company completed the acquisition of Oilfields Holdings, Inc. (“OHI”), Controlled Recovery, Inc. and Controlled Recovery Holdings LLC (“CRI”), and Calpet LLC and R&G, Inc. (“Calpet”). The Company’s business consists primarily of processing, recycling and disposing of oil and gas waste materials consistent with environmental regulations in several active natural resource producing areas in North America, including the Permian Basin of West Texas and Southeast New Mexico, the Eagle Ford shale region in South Texas, the Granite Wash and Woodford Cana regions of Oklahoma, the shallow and deep water Gulf of Mexico, the Haynesville shale region in Louisiana and the Niobrara and Pinedale shales in Southwest and Southeast Wyoming, respectively.

In December 2010, the Company acquired Claco Services LLC (“Claco”). Claco provides solids control equipment (“Clack Units”) to drilling companies in the New Mexico Permian Basin. The Clack Units remove suspended solids from heavy brine that is used as drilling fluid for drilling rigs.

In July 2011, the Company acquired certain assets of J. Scott, Inc. (“J. Scott”). The J. Scott facility is a commercial exploration and production waste disposal facility located in El Reno, Oklahoma. The facility is permitted to dispose of all exploration and production waste streams.

In June 2012, the Company acquired Prairie Disposal LLC and Prairie Liquids LLC (collectively, “Prairie). Prairie provides commercial exploration and production waste management services in the Williston Basin of North Dakota through a disposal facility capable of accepting solid and liquid exploration and production waste streams.

On December 29, 2011, the Company, R3 Treatment Holdings, Inc. (“R3”), the Company’s parent, and certain other subsidiaries of the Company completed a Reorganization (the “Reorganization”) whereby ownership of certain subsidiaries of the Company were contributed to R360 Operating Partners, L.P. (“OLP”), a newly formed Delaware limited partnership, in exchange for 8,973 common units and 290,127 preferred units. The Company serves as OLP’s general partner. The transfer of assets by the Company and its subsidiaries to OLP in December 2011 was accounted for as transactions between entities under common control. The assets transferred were recorded at the Company’s carrying amount at the date of transfer and the Company continued all historical accounting and reporting of the transferred operations since inception under the Company’s original ownership.

On the date of the Reorganization, R3 purchased options (the “Options”) on the 8,973 common units of OLP and certain other subsidiaries of the Company in exchange for notes receivable from R3. The Options entitle the holder to purchase the 8,973 common units of OLP at an exercise price of $1,000 per unit, which at the date of the Reorganization represented approximately 3% of the equity value of the Company. The fair value of the Options was valued at $1,778 using a Black-Scholes pricing model and recorded in additional paid-in capital at the date of purchase with the corresponding notes receivable recorded as contra equity. R3 subsequently distributed the Options to all of its shareholders. The Options, which were exercisable at the election of a majority of the shareholders of R3 any time prior to December 29, 2012, were exercised in April 2012 in exchange for notes receivable totaling $8,973,000 (unaudited), which were recorded as contra equity.

Following the exercise of the Options, the Company, R3 and OLP remained under common control. The Company, through its consolidated subsidiaries, owned 100% of the preferred units, representing 97% of the value of OLP upon their issuance. The Company no longer owned 100% of OLP, as all of the common units in OLP became held by entities outside of the Company’s consolidated group.

The Company is consolidating the operations of OLP in its consolidated financial statements and accounting for the ownership of the common units, representing 3% of the value of OLP upon their issuance, as noncontrolling interests in its consolidated financial statements. Net income attributable to noncontrolling interests is calculated based on taxable income, as defined in the partnership agreement.

On September 16, 2012, the Company entered into a Purchase and Sale Agreement with WCI Holdings, Inc. (WCI), a wholly owned subsidiary of Waste Connections, Inc., pursuant to which WCI agreed to acquire all of the outstanding equity interests in certain entities that, together with the operating subsidiaries of such entities, hold the Company’s business. The aggregate purchase price for the acquisition, which closed on October 25, 2012, was approximately $1.35 billion.

8

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Principles of Consolidation and Basis of Presentation

The consolidated financial statements reflect the consolidated operations of the Company and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited interim financial statements as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011 include all adjustments, consisting of normal recurring items, necessary for their fair statements in accordance with generally accepted accounting principles.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at purchase to be cash equivalents. The Company did not have any cash equivalents at September 30, 2012 and December 31, 2011 or 2010.

Revenue Recognition

Revenues are recognized when persuasive evidence of an arrangement exists, the service has been provided, the price is fixed or determinable and collection is reasonably assured. The Company recognizes revenue at the time the waste is accepted as the customer has passed the legal and regulatory responsibility and associated risk of disposing the waste to the Company.

By Product Revenues

The Company recognizes by product revenues from the sale of oil skimmed from waste received as well as the sale of a product created using processed waste as road-based material. Revenue is recognized upon the sale of the by product.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company controls credit risk through credit evaluations, credit limits, and monitoring procedures. No single customer balance represents 10% or more of total accounts receivable as of September 30, 2012 (unaudited) and December 31, 2011 and 2010. One customer represents more than 10% of revenue for the nine months ended September 30, 2011 and for the year ended December 31, 2011. No customer represents more than 10% of revenue for the nine months ended September 30, 2012 (unaudited) or the period from May 5, 2010 (Date of Inception) through December 31, 2010. The Company has concentrations of credit risk due to reliance on the oil and gas industry as well as the geographic concentrations of operations in Louisiana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming.

Accounts Receivable and Allowance for Doubtful Accounts

The Company extends credit to customers in the normal course of business. Trade receivables consist of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days of the invoice date. Management regularly reviews outstanding accounts receivable, and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established reserves, management makes judgments regarding the parties’ ability to make required payments, economic events, and other factors. As the financial conditions of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. When deemed uncollectible, the customer receivable is charged against the allowance. The allowance for doubtful accounts was $896,000 (unaudited), $452,000 and $121,000 as of September 30, 2012 and December 31, 2011 and 2010, respectively.

9

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Property and Equipment, Net

Property and equipment are recorded at cost. Improvements or betterments which significantly extend the life of an asset are capitalized. Expenditures for maintenance and repair costs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

Debt Issuance Costs

Costs directly associated with obtaining the credit agreement including origination fees, broker fees, legal expenses, and other professional fees are capitalized and amortized on the straight-line method, which approximates the effective interest method over the credit facility term. For the nine month periods ended September 30, 2012 and 2011, amortization expense was $1,478,000 (unaudited) and $1,102,000 (unaudited), respectively. Amortization expense was $1,538,000 and $640,000 for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, respectively.

Fair Value of Financial Instruments

Certain of the Company’s assets and liabilities are reported on a fair value basis. Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value.

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value requires that a number of significant judgments are made. In general, fair values of financial instruments are based upon quoted market prices, where available.

The Company’s financial instruments consist primarily of cash and equivalents, trade receivables, notes receivable, trade payables, contingent consideration and debt instruments. As of September, 30, 2012 and December 31, 2011 and 2010, the carrying values of cash and equivalents, trade receivables, notes receivable and trade payables are considered to be representative of their respective fair values. The fair value of the Company’s debt was approximately $256,000,000 (unaudited), $168,000,000 and $116,000,000 as of September 30, 2012 and December 31, 2011 and 2010, respectively.

Goodwill and Other Intangible Assets

Goodwill represents the excess of consideration paid over the fair value of net assets and liabilities acquired in a business combination. The Company is required to test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and, if current events or circumstances require, on an interim basis. The Company compares the fair value of each reporting unit to its carrying amount to determine if there is potential goodwill impairment. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than the carrying value of the goodwill.

Intangible assets include permits, customer relationships, trademarks and technology. The Company’s permits are required to operate the treatment facilities and may have either indefinite or finite lives depending on the useful life at the facilities and types of operations. Annual renewal costs for permits are insignificant and are included in cost of sales in the statement of operations. Customer relationships, trademarks and technology are amortized, using the straight-line method or a pattern in which the assets’ economic benefits are consumed. Finite-lived permits are amortized using the units of consumption method. Under this method, amortization is recorded for the percentage of waste received in relation to the total estimated capacity of the permitted site.

10

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Long-Lived Assets

When events, circumstances and/or operating results indicate that the carrying values of certain long-lived assets might be impaired, the Company prepares projections of the undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the projections indicate that the recorded amounts are not expected to be recoverable, such amounts are reduced to estimated fair value. Fair value is estimated based upon internal evaluation of each asset that includes quantitative analyses of net revenue and cash flows, review of recent sales of similar assets and market responses based upon discussions in connection with offers received from potential buyers.

Transaction Costs

Transaction costs consist of third-party and indirect acquisition costs, including legal and professional fees, costs associated with a withdrawn initial public offering and costs associated with the sale of the Company to WCI.

During the nine months ended September 30, 2012, the Company commenced an initial public offering for the issuance of securities to be traded on a public exchange. The initial public offering was withdrawn and cancelled as a result of the sale of the Company to WCI. The Company incurred $2,191,000 (unaudited) of costs associated with the withdrawn initial public offering.

During the nine months ended September 30, 2012, the Company incurred $4,073,000 (unaudited) of costs associated with the sale of the Company to WCI. The Company incurred $374,000 (unaudited) of costs related to the acquisition of Prairie during the nine months ended September 30, 2012, $194,000 of costs related to the acquisition of J. Scott during the year ended December 31, 2011 and $14,209,000 of costs related to the acquisitions of OHI, CRI, Calpet, and Claco in the period from May 5, 2010 (Date of Inception) through December 31, 2010.

Income Taxes

The Company files a consolidated tax return with its parent, the ultimate payer of taxes to the IRS. The Company is also responsible for direct payments to certain states. The Company utilizes the asset and liability method for income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, all expected future events other than enactments of changes in tax laws or rates are considered.

The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized, if any, in the consolidated financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority.

Contingent consideration

Contingent consideration represents the fair value of amounts due to the sellers of the Company’s acquisitions under contingent consideration provisions as well as contractual payments. Contingent consideration is evaluated at each balance sheet date for changes in conditions requiring such payments as well as the passage of time.

Cell Processing Reserves

The Company records a cell processing reserve for certain locations in Louisiana and Texas for the estimated amount of expenses to be incurred upon the treatment and excavation of oilfield waste received. The cell processing reserve is the future cost to properly treat and dispose of existing waste within the cells at the various facilities. The reserve generally covers estimated costs to be incurred over a period of time up to twenty-four months, with the current portion representing costs estimated to be incurred in the next twelve months. The estimate is calculated based on current estimated volume in the cells, estimated percentage of waste treated, and historical average costs to treat and excavate the waste. The processing reserve represents the estimated costs to process the volumes of oilfield waste on-hand for which revenue has been recognized. The current portion of cell processing reserves totaling $6,088,000 (unaudited), $6,484,000 and $4,218,000 are included in Accrued liabilities in the accompanying Consolidated Balance Sheets as of

11

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

September 30, 2012 and December 31, 2011 and 2010, respectively. The long-term portion of cell processing reserves totaling $2,061,000 (unaudited), $2,159,000 and $1,652,000 are included in Other long-term liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 and 2010, respectively.

Closure and Remediation Reserves

Closure reserves (also referred to as “asset retirement obligations”) are legal obligations associated with the retirement of long-lived assets. These liabilities are initially recorded at fair value and the related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the Company records period-to-period changes in the asset retirement obligation liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. The Company derecognizes asset retirement obligation liabilities when the related obligations are settled. Closure reserves totaling $123,000 (unaudited) and $123,000 are included in Accrued liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, respectively. Closure reserves totaling $1,582,000 (unaudited), $1,221,000 and $443,000 are included in Other long-term liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 and 2010, respectively.

The Company expenses costs incurred to investigate and remediate environmental issues unless they extend the economic useful life of related assets. The Company records liabilities when it is probable that an obligation has been incurred and the amounts can be reasonably estimated. The remediation reserves cover anticipated costs, including remediation of environmental damage that waste facilities may have caused to neighboring landowners or residents as a result of contamination of soil, groundwater or surface water, including damage resulting from conditions existing prior to the acquisition of such facilities by the Company. The Company’s estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties. The Company does not discount remediation obligations. The current portion of remediation reserves totaling $892,000 (unaudited) and $892,000 are included in Accrued liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, respectively. The long-term portion of remediation reserves totaling $1,481,000 (unaudited), $1,591,000 and $892,000 are included in Other long-term liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 and 2010, respectively.

Out-of-Period Adjustments

The Company recorded adjustments during the nine months ended September 30, 2012 to correct the following errors in its 2011 and 2010 financial statements:

• The Company’s customer relationships were historically amortized using the straight line method. Approximately $5,600,000 of the Company’s $40,200,000 in customer relationships at December 31, 2011 should have been amortized over a more accelerated method. If corrected in periods in which the errors occurred, the Company would have recorded approximately $361,000 of additional amortization expense in 2011 and $51,000 of additional amortization expense in 2010.

• All the Company’s permits acquired in 2011 and 2010 were classified as indefinite-lived intangibles. Approximately $27,000,000 of these permits should have been classified as finite-lived intangibles and amortized using the units of consumption method. If corrected in the periods in which the errors occurred, the Company would have recorded approximately $602,000 of additional amortization expense in 2011 and $228,000 of additional amortization expense in 2010.

• In connection with its July 2010 acquisition, the Company agreed to pay the former owners of OHI additional consideration contingent on certain future events. The Company did not accurately measure or record the fair value of the resulting contingent consideration liability during 2011 and 2010. If corrected in the periods in which the errors occurred, the increases in the contingent consideration liability would have resulted in additional operating expenses of $246,000 in 2011 and $542,000 in 2010.

12

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

If corrected, these errors would have reduced net income by $1,209,000 in 2011 and increased net loss by $821,000 in 2010. The Company corrected these errors in the unaudited interim consolidated financial statements for the nine months ended September 30, 2012 by recording additional expenses of $2,030,000 that related to prior periods.

The Company does not believe these adjustments are material individually or in the aggregate to its interim consolidated financial statements for the nine months ended September 30, 2012, nor does it believe such adjustments, if recorded, would have been material to either the year ended December 31, 2011 or the period from May 5, 2010 (date of inception) through December 31, 2010.

New accounting standards

Goodwill Impairment. In September 2011, the FASB issued guidance on testing goodwill for impairment. The guidance provides entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company does not expect the adoption of this new guidance to have a significant impact on its financial position, cash flows or results of operations.

Impairment of Indefinite-lived Intangible Assets. In July 2012, the FASB issued guidance on testing indefinite-lived intangible assets for impairment. The guidance provides entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. However, an entity can choose to early adopt, provided that the entity has not yet performed its 2012 annual impairment test or issued its financial statements. The Company does not expect the adoption of this new guidance to have a significant impact on its financial position, cash flows or results of operations.

2. RECLASSIFICATION

Certain amounts reported in the Company’s prior year financial statements have been reclassified to conform with the 2012 presentation.

3. ACQUISITIONS

The Company has recorded an allocation of the purchase price to an acquired company’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the dates of acquisition. Goodwill has been recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired. The goodwill recognized is representative of expected synergies of combining the operations of the acquired companies. Goodwill recognized on acquisitions of members’ units is expected to be deductible for tax purposes.

The allocation of the purchase price to intangible assets, including permits, customer relationships and trademarks, was based on valuations performed to determine the fair value of such assets as of the acquisition dates.

Prairie

On June 4, 2012, the Company acquired 100% of the membership interests of Prairie Disposal LLC and Prairie Liquids, LLC (“Prairie”). Prairie provides exploration and production (“E&P”) waste management services in the Williston Basin of North Dakota through a disposal facility capable of accepting solid and liquid E&P wastes. The Company recorded total consideration of $112,488,000 (unaudited), which consisted of $78,775,000 (unaudited) in cash, a $10,000,000 (unaudited) secured promissory note at 8% interest rate due June 4, 2016 and $23,713,000 (unaudited) representing the fair value of up to $25,000,000 of contingent consideration payable based on the future achievement of certain milestones over a two-year period. The fair value of the contingent consideration was determined using probability assessments of the expected future cash flows over the two-year period in which the obligation is expected to be settled, and applied a discount rate of 3.25% that appropriately captures a market participant’s view of the risk associated with the obligation. Subsequent changes to the valuation are recorded through earnings. This fair value is based upon significant inputs not observable in the market and therefore represents a Level 3 measurement. The results of operations of Prairie have been included in the Company’s consolidated financial statements from its acquisition date.

13

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Total revenues for the period from June 4, 2012 through September 30, 2012, generated from the Prairie operations and included within consolidated revenues were $28,509,000 (unaudited). Total pre-tax earnings for the period from June 4, 2012 through September 30, 2012, generated from the Prairie operations and included within consolidated income (loss) before income tax provision were $17,477,000 (unaudited).

The following table summarizes the consideration transferred to acquire this business and the amounts of identifiable assets acquired and liabilities assumed as of June 4, 2012 (in thousands):

Fair value of consideration transferred (unaudited):
Cash	$	78,775
Note payable to seller		10,000
Contingent consideration		23,713
		112,488
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable		21,371
Property and equipment		4,330
Customer relationships		23,139
Permits		27,084
Other liabilities		(1,278	)
Total identifiable net assets		74,646
Goodwill	$	37,842

The gross amount of accounts receivable due under contracts is $21,872,000 (unaudited), of which $1,600,000 (unaudited) is expected to be collected from the former owners of Prairie and $501,000 (unaudited) is expected to be uncollectible.

The amortization period of customer relationships is 12 years. The amortization of finite-lived permits is recorded using the units of consumption method based upon an estimated capacity at date of acquisition which approximates 24 years. The goodwill is attributable to the assembled workforce and the synergies and growth opportunities expected to arise after the Company’s acquisition of Prairie. The goodwill acquired is expected to be deductible for tax purposes. The amounts above represent a preliminary allocation of the purchase price subject to finalization of post-closing procedures, which may result in further adjustments to the values.

J. Scott

On July 25, 2011 the Company acquired the assets of J. Scott for a purchase price of $14,797,000. The J. Scott facility is a commercial exploration and production waste disposal facility located in El Reno, Oklahoma.

14

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

The following table summarizes the consideration transferred to acquire this business and the amounts of identifiable assets acquired and liabilities assumed (in thousands):

Fair value of consideration transferred:
Cash	$	14,797
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable		882
Property and equipment		1,738
Customer relationships		2,137
Permits		4,880
Other liabilities		(837	)
Total identifiable net assets		8,800
Goodwill	$	5,997

The fair value of acquired receivables was not significantly different from contractual amounts.

The amortization period of customer relationships is nine years. The amortization period of finite-lived permits is recorded using the units of consumption method based upon an estimated capacity at date of acquisition which approximates 81 years.

OHI, CRI, and Calpet

On July 16, 2010 the Company acquired OHI, CRI, and Calpet. The following table summarizes the consideration transferred to acquire these businesses and the amounts of identifiable assets acquired and liabilities assumed (in thousands):

	OHI			CRI			Calpet
Fair value of consideration transferred:
Cash	$	119,085		$	70,540		$	21,136
Contingent consideration		—			5,000			5,475
		119,085			75,540			26,611
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash		14			460			275
Accounts receivable		12,948			6,369			757
Property and equipment		30,654			7,424			9,152
Other assets		827			137			—
Permits		26,980			20,560			11,320
Customer relationships		13,250			16,020			5,295
Trademarks		2,620			1,900			—
Deferred tax liabilities		(14,879	)		(11,876	)		(1,619	)
Cell processing reserve		(5,039	)		—			—
Other liabilities		(6,718	)		(2,520	)		(144	)
Total identifiable net assets		60,657			38,474			25,036
Goodwill	$	58,428		$	37,066		$	1,575

Contingent consideration for Calpet is based on the achievement of revenue and earnings targets through September 30, 2013 as well as for expansion of the existing facilities and can range from $0 to $11,500,000. This contingent consideration was estimated by management based on current earnings’ forecasts, operating rates and the likelihood of facilities expansion. The expected consideration was discounted to present value at the acquisition date using a discount rate of 2.5% and is reevaluated at each balance sheet date (Refer to Note 10). Deferred consideration for CRI was payable to the former owners upon the earlier of 30 days after the completion of the Company’s audit for the period from May 5, 2010 (Date of Inception) through December 31, 2010 or June 30, 2011.

15

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

The fair value of acquired receivables has been reduced from contractual amounts by $7,000, $172,000 and $2,000 for OHI, CRI and Calpet, respectively.

The amortization period for trademarks is 15 years for OHI and CRI. The amortization period for finite-lived permits for CRI is 30 years (see Note 1). Permits for OHI and Calpet were deemed to be indefinite-lived. The amortization period for customer relationships is 18, 14, and 26 years for OHI, CRI and Calpet, respectively.

Claco

On December 8, 2010, the Company acquired the assets of Claco for a purchase price of $7,057,000.

The following table summarizes the consideration transferred to acquire this business and the amounts of identifiable assets acquired and liabilities assumed (in thousands):

Fair value of consideration transferred:
Cash	$	6,000
Contingent consideration		1,057
		7,057
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable		312
Property and equipment		1,575
Customer relationships		3,498
Technology		297
Total identifiable net assets		5,682
Goodwill	$	1,375

Deferred consideration for Claco is based on a payout to the previous ownership for consulting services. This contingent consideration is $375,000 to be paid on the acquisition anniversary date for each of the three years following the sale. The expected payments were discounted to present value at the acquisition date.

The amortization period for intangible assets is seven years for customer relationships and 20 years for technology. The weighted-average amortization period for these intangibles was eight years.

16

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of September 30, 2012 and December 31, 2011 and 2010 (in thousands):

	Depreciable Life	September 30,			December 31,
	(Years)	2012			2011			2010
		(unaudited)
Land	–	$	6,758		$	5,348		$	2,763
Landfarm and processing sites	5 – 15		25,430			21,176			18,414
Buildings and improvements	7 – 15		3,590			1,423			808
Machinery and equipment	3 – 15		55,651			40,378			25,216
Vehicles	3 – 5		9,825			6,081			3,108
Furniture and fixtures	3 – 5		1,278			985			608
Construction in progress	–		58,098			12,530			2,478
Total property and equipment			160,630			87,921			53,395
Less: Accumulated depreciation			(27,726	)		(15,000	)		(3,832	)
		$	132,904		$	72,921		$	49,563

Depreciation expense was $12,231,000 (unaudited), $8,676,000 (unaudited), $12,178,000 and $3,832,000 for the nine months ended September 30, 2012 and 2011, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, respectively. Included in property and equipment as of September 30, 2012 and December 31, 2011 and 2010, are assets under capital lease of $23,000 (unaudited), $107,000 and $1,029,000, respectively. Depreciation expense relating to assets under capital lease of $13,000 (unaudited), $13,000 (unaudited), $21,000 and $113,000 are included in depreciation expense for the nine months ended September 30, 2012 and 2011, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, respectively. Accumulated depreciation relating to assets under capital lease as of September 30, 2012 and December 31, 2011 and 2010 was $39,000 (unaudited), $31,000 and $113,000, respectively.

5. SHAREHOLDER NOTES RECEIVABLE

The Company has notes receivable of $4,238,000 (unaudited), $4,715,000 and $4,964,000 from certain members of management as of September 30, 2012 and December 31, 2011 and 2010, respectively. These notes were received as consideration in the initial capitalization of the Company and bear interest at the rate of 2.3%, compounded quarterly, and are due on July 15, 2020. The note holders are required to apply portions of annual bonus amounts as well as proceeds from the exercise of stock appreciation rights to the principal balance of the notes. Amounts applied totaled $477,000 (unaudited) and $249,000 during the nine months ended September 30, 2012 and year ended December 31, 2011, respectively. No amounts were applied from issuance through December 31, 2010.

The Company has related party notes receivable of $1,778,000 due from its parent for the value of the Options to purchase common units of OLP. The notes bear interest at 4% per annum and principal and accrued interest are due December 29, 2016. Additionally, the Company has related party notes receivable of $8,973,000 from the shareholders of R3 for the exercise price of the Options to purchase common units of OLP. The notes bear interest at 4% per annum and principal and accrued interest are due April 25, 2017.

All notes receivable recorded as of September 30, 2012 were redeemed in full on October 25, 2012 as a result of the sale of the Company to WCI.

17

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

6. GOODWILL AND INTANGIBLE ASSETS

Goodwill consisted of the following as of September 30, 2012 and December 31, 2011 and 2010 (in thousands):

	September 30,		December 31,
	2012		2011		2010
	(unaudited)
Balance at beginning of period	$	105,006	$	99,009	$	—
Goodwill acquired		37,842		5,997		99,009
Balance at end of period	$	142,848	$	105,006	$	99,009

Intangible assets consisted of the following as of September 30, 2012 (in thousands):

	Useful Life (Years)	Cost		Accumulated Amortization			Net Book Value
		(unaudited)		(unaudited)			(unaudited)
Indefinite-lived intangible assets:
Permits		$	36,600	$	—		$	36,600
Finite-lived intangible assets:
Customer relationships	7 – 26		63,339		(8,734	)		54,605
Permits	24 – 30		54,224		(1,772	)		52,452
Trademarks	2		4,520		(1,970	)		2,550
Technology	20		297		(25	)		272
Total intangible assets		$	158,980	$	(12,501	)	$	146,479

Intangible assets consisted of the following as of December 31, 2011 (in thousands):

	Useful Life (Years)	Cost		Accumulated Amortization			Net Book Value
Indefinite-lived intangible assets:
Permits		$	63,740	$	—		$	63,740
Finite-lived intangible assets:
Customer relationships	7 – 26		40,200		(3,655	)		36,545
Trademarks	15		4,520		(439	)		4,081
Technology	20		297		(16	)		281
Total intangible assets		$	108,757	$	(4,110	)	$	104,647

18

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Intangible assets consisted of the following as of December 31, 2010 (in thousands):

	Useful Life (Years)	Cost		Accumulated Amortization			Net Book Value
Indefinite-lived intangible assets:
Permits		$	58,860	$	—		$	58,860
Finite-lived intangible assets:
Customer relationships	7 – 26		38,063		(973	)		37,090
Trademarks	15		4,520		(138	)		4,382
Technology	20		297		—			297
Total intangible assets		$	101,740	$	(1,111	)	$	100,629

During the nine months ended September 30, 2012, the Company reassessed $27,149,000 of indefinite-lived permit intangible assets and has determined they should have been finite-lived. The classification of the permit intangible assets was corrected as of September 30, 2012 (see Note 1, “Out-of-Period Adjustments”). They are being amortized using the units of consumption method.

Amortization expense was $8,392,000 (unaudited), which includes $1,241,000 that should have been recorded during 2010 and 2011 (see Note 1, “Out of Period Adjustments”), $2,174,000 (unaudited), $2,999,000 and $1,111,000 for the nine months ended September 30, 2012 and 2011, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, respectively. Estimated amortization expense for each of the next five years as of September 30, 2012 (unaudited) is as follows (in thousands):

2012 (three months)	$	3,505
2013		11,437
2014		7,926
2015		6,986
2016		6,318
Thereafter		73,707
	$	109,879

In 2012, the Company rebranded all acquired facilities to a single brand strategy under the R360 Environmental Solutions name. As a result, the Company reevaluated trademarks acquired prior to 2012, considering their value as a defensive asset, and prospectively changed the remaining useful life to two years.

There were no impairment losses on goodwill or indefinite-lived intangibles during the nine months ended September 30, 2012 and 2011 (unaudited), the year ended December 31, 2011 or the period from May 5, 2010 (Date of Inception) through December 31, 2010.

19

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

7. ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of September 30, 2012 and December 31, 2011 and 2010 (in thousands):

	September 30,		December 31,
	2012		2011		2010
	(unaudited)
Payroll and related costs	$	1,537	$	1,584	$	602
Accrued bonuses		2,170		3,651		1,576
Accrued costs for leased equipment		366		414		1,512
Income taxes payable		10,131		1,389		3,980
Current portion of cell processing reserve		6,088		6,484		4,218
Current portion of closure and remediation reserve		1,015		1,015		—
Sales tax payable		446		330		236
Accrued interest payable		362		77		227
Accrued insurance payable		2,043		439		427
Accrued property and equipment		10,837		1,747		—
Refund due to customer on overpayment		1,724		1,724		—
Accrued transaction costs		4,073		—		—
Other accrued expenses		6,181		2,187		1,752
	$	46,973	$	21,041	$	14,530

8. INCOME TAXES

The provision for income taxes consisted of the following for the nine months ended September 30, 2012 and 2011, for the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 (in thousands):

	September 30,						December 31,
	2012			2011			2011			2010
	(unaudited)			(unaudited)
Current
Federal	$	5,279		$	6,808		$	9,156		$	3,793
State		783			1,401			1,563			375
		6,062			8,209			10,719			4,168
Deferred
Federal		(2,698	)		2,906			3,796			(3,273	)
State		(943	)		(345	)		(452	)		(198	)
		(3,641	)		2,561			3,344			(3,471	)
Income tax provision	$	2,421		$	10,770		$	14,063		$	697

The Company provides for income taxes during interim periods based on an estimate of the Company’s effective tax rate for the year. Discrete items and changes in the estimate of the annual tax rate are recorded in the period they occur.

20

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

The difference between the income tax provision and the tax provision computed by applying the statutory federal income tax rate to income before income taxes is attributable to the following (in thousands):

	Nine months  ended September 30, 2012					Nine months ended September 30, 2011
	(unaudited)					(unaudited)
Tax provision at U.S. statutory rate	$	5,206		35.0	%	$	10,515		35.0	%
Nondeductible transaction costs		2,800		18.8			—		—
Nontaxable income		(1,093	)	(7.4	)		(691	)	(2.3	)
Nondeductible expenses		166		1.1			120		0.4
Equity-based compensation		3,676		24.7			—		—
State income taxes, net of federal benefit		231		1.6			450		1.5
Change in federal tax rate		—		—			510		1.7
Noncontrolling interests		(8,634	)	(58.0	)		—		—
Other		69		0.5			(134	)	(0.4	)
Income tax provision	$	2,421		16.3	%	$	10,770		35.9	%
	Year ended December 31, 2011					Period from May 5, 2010 (Date of inception) through December  31, 2010
Tax provision at U.S. statutory rate	$	13,729		35.0	%	$	(328	)	34.0	%
Nondeductible transaction costs		—		—			873		(90.5	)
Nontaxable income		(896	)	(2.3	)		—		—
Nondeductible expenses		163		0.4			64		(6.6	)
State income taxes, net of federal benefit		564		1.5			36		(3.7	)
Change in federal tax rate		646		1.7			—		—
Other		(143	)	(0.4	)		52		(5.4	)
Income tax provision	$	14,063		35.9	%	$	697		(72.2	)%

The Company’s effective tax rate decreased from 35.9% (unaudited) for the nine months ended September 30, 2011 to 16.3% (unaudited) for the nine months ended September 30, 2012, primarily due to permanent differences for equity-based compensation and noncontrolling interests.

21

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company’s deferred tax assets and liabilities consisted of the following as of September 30, 2012 and December 31, 2011 and 2010 (in thousands):

	September 30,			December 31,
	2012			2011			2010
	(unaudited)
Current deferred taxes:
Accruals and reserves	$	—		$	4,208		$	743
Prepaids and other assets		—			(741	)		(680	)
Current deferred tax asset, net		—			3,467			63
Noncurrent deferred taxes:
Investment in Partnership		(28,776	)		—			—
Property and equipment		—			(5,737	)		(1,341	)
Intangible assets		2,850			(27,159	)		(26,481	)
Accruals and reserves		—			1,479			2,856
Noncurrent deferred tax liability		(25,926	)		(31,417	)		(24,966	)
Net deferred tax liability	$	(25,926	)	$	(27,950	)	$	(24,903	)

Prior to the formation of OLP, deferred taxes assets and liabilities included temporary differences that were calculated as the tax effect of the book versus tax basis in the underlying asset or liability. Deferred taxes were presented as current or non-current based on the underlying asset or liability to which the deferred tax item related. In connection with the formation of OLP, the Company transferred its operating assets and liabilities to OLP at their historical book and tax basis. The deferred taxes at September 30, 2012 are measured based on the difference between the book basis of the investment in partnership and its tax basis as well as the difference between certain transaction costs incurred by the Company.

As of September 30, 2012 and December 31, 2011 and 2010, the Company had unrecognized tax benefits which are included as a component of other long-term liabilities. In addition to the unrecognized tax benefits, the Company had total accrued interest and penalties recognized as of September 30, 2012 and December 31, 2011 and 2010 of approximately $201,000 (unaudited), $131,000 and $52,000, respectively, recorded as a component of other long-term liabilities. The Company records those amounts in income tax expense.

The changes to unrecognized tax benefits for the nine months ended September 30, 2012, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 were as follows (in thousands):

	Nine months ended September 30,		Year ended December 31,		Period from May 5, 2010 (Date of inception) through December 31,
	2012		2011		2010
	(unaudited)
Balance at beginning of period	$	437	$	136	$	—
Additions for tax positions related to current period		226		301		136
Balance at end of period	$	663	$	437	$	136

The amount of unrecognized tax benefits including interest and penalties that, if recognized, would favorably impact the effective income tax rate in future periods were $857,000 (unaudited), $562,000 and $182,000, respectively, as of September 30, 2012 and December 31, 2011 and 2010.

22

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

The Company pays taxes in different jurisdictions, including the U.S. and certain U.S. states. Consequently, as the Company’s earnings fluctuate between taxing jurisdictions, its effective tax rate fluctuates. The Company’s federal and state returns are subject to examination by the Internal Revenue Service and state taxing authorities since inception. Currently, the Company is under examination by the Internal Revenue Service for the tax period May 5, 2010 (Date of inception) through December 31, 2010.

9. LONG-TERM DEBT

Long-term debt consisted of the following as of September 30, 2012 and December 31, 2011 and 2010 (in thousands):

	September 30,			December 31,
	2012			2011			2010
	(unaudited)
Revolving credit facility	$	83,500		$	—		$	—
Tranche A term loan		39,688			47,500			56,250
Tranche B term loan		58,650			59,100			59,700
Tranche B-1 term loan		49,005			49,500			—
Note payable to seller in connection with acquisition		9,844			—			—
Capital lease obligations		5			23			234
		240,692			156,123			116,184
Less: Current maturities of long-term debt		(15,468	)		(11,743	)		(9,496	)
	$	225,224		$	144,380		$	106,688

On July 16, 2010, the Company entered into a credit agreement that consists of the following:

• a $40,000,000 revolving credit facility, including a $20,000,000 letter of credit sub-facility, that expires on July 16, 2013,

• a $60,000,000 Tranche A term loan facility with a maturity of January 12, 2015 and quarterly principal payments escalating from $1,875,000 to $3,750,000 by the maturity date. Accrued interest is due quarterly, and

• a $60,000,000 Tranche B term loan facility with a maturity of July 16, 2015 and quarterly principal payments of $150,000. Accrued interest is due quarterly.

In 2011, the Company amended its credit agreement with the following modifications:

• the revolving credit facility increased from $40,000,000 to $70,000,000, and was extended to expire on July 16, 2014, and

• a newly originated $49,500,000 Tranche B-1 term loan facility with a maturity of July 16, 2015 with payments of 1% of the principal balance to be paid quarterly was issued. Accrued interest is due quarterly. No additional amounts may be borrowed under the term loan facility without future amendment to the facility.

In 2012, the Company further amended its credit agreement to increase the maximum borrowings under the revolving credit facility from $70,000,000 (unaudited) to $130,000,000 (unaudited).

The interest rates applicable to loans under the credit agreement are, at the Company’s option, equal to either the alternate base rate (ABR) or an adjusted LIBOR rate for a three-month interest period, with a floor rate that ranges between 1.25% and 2% plus an applicable margin percentage.

The base rate is the greater of (i) the prime rate in effect or (ii) one-half of 1% over the weighted average of the rates on overnight Federal funds transactions as published by the Federal Reserve Bank of New York. The adjusted LIBOR is based upon offered rates in the London interbank market. The applicable margin percentage is a percentage per annum equal to 5%, 5.5%, 4.75%, and 2.875% for ABR borrowings for Tranche A term loans, Tranche B term loans, the revolving credit facility, and Tranche B-1 term loans,

23

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

respectively, and 6%, 6.5%, 5.75%, and 3.875% for LIBOR borrowings for Tranche A term loans, Tranche B term loans, the revolving credit facility, and the Tranche B-1 term loans, respectively. For the nine months ended September 30, 2012, the average interest rate was 6.84% (unaudited). For the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, the average interest rate was 7.25% and 8.0%, respectively.

The credit agreement requires that the Company enter into derivative contracts with a notional amount of at least 50% of outstanding borrowings under Tranche A and Tranche B loans.

In September 2010, the Company entered into an interest rate cap agreement with quarterly maturities through 2013. The agreement caps the interest payable under the credit agreement at rates ranging from 2% to 4% on notional amounts varying from $45,000,000 to $60,000,000. The fair value of the interest rate cap was insignificant at September 30, 2012 and December 31, 2011 and 2010.

On the last business day of each calendar quarter, the Company is required to pay the lender a commitment fee for any unused commitment under the revolving credit facility. The commitment fee is equal to the average of the daily difference between (a) the Revolving Commitments and (b) the sum of the aggregate principal amount of outstanding Revolving Loans plus the Letter of Credit Usage, times 1% per year.

Indebtedness under the credit agreement is collateralized by substantially all of the Company’s assets, including a first priority pledge of the capital stock of the Company’s subsidiaries.

The credit agreement requires that the Company comply, on a quarterly basis, with certain financial covenants, including a fixed charge ratio of 1.1 to 1 and a maximum leverage ratio of 3.75 to 1 at December 31, 2011 and 2010 and 3.50 to 1 at September 30, 2012. The maximum leverage ratio declines to 3.25 to 1 over time. The Company was in compliance with its debt covenants as of September 30, 2012 (unaudited) and December 31, 2011 and 2010.

Voluntary prepayments of loans under the credit agreement and voluntary reductions of revolving credit commitments are permitted, in whole or in part, in minimum amounts of $1,000,000 and integral multiples of $100,000 in excess of that amount without premium or penalty.

The credit agreement requires mandatory prepayments of term loans, subject to certain exceptions, in amounts equal to:

• 100% of the net cash proceeds from asset sales, except, in certain cases, when proceeds are reinvested by the Company within a specified period;

• 50% of the net cash proceeds from the issuance of certain equity securities by the Company;

• 50% of the net cash proceeds from the issuance of certain debt securities by the Company; and

• 50% (subject to reduction based upon the ratio of the Company’s total indebtedness to the Company’s consolidated EBITDA) of the Company’s annual excess cash flow.

No such payments were required during the nine months ended September 30, 2012, the year ended December 31, 2011 or the period from May 5, 2010 (Date of Inception) through December 31, 2010.

All outstanding borrowings under the term loans and credit facility were repaid in full on October 25, 2012 in connection with the acquisition of the Company by WCI.

Note Payable

The Company issued a note payable to seller in the amount of $10,000,000, related to its acquisition of Prairie in June 2012. The note payable bears interest at 8% with quarterly payments and a maturity date of June 2016.

24

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

Annual maturities of long-term debt and note payable as of September 30, 2012 (unaudited) are as follows (in thousands):

2012	$	4,178
2013		15,284
2014		100,850
2015		119,152
2016		1,228
	$	240,692

10. CONTINGENT CONSIDERATION

The changes to contingent consideration for the nine months ended September 30, 2012, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 were as follows (in thousands):

	September 30,			December 31,
	2012			2011			2010
	(unaudited)
Balance at beginning of period	$	6,823		$	11,636		$	—
Contingent consideration recorded at acquisition		23,713			—			11,532
Payments		(2,030	)		(5,375	)		—
Accretion		339			281			104
Changes in estimates, net		8,000			281			—
Balance at end of period	$	36,845		$	6,823		$	11,636

Changes in estimates are recorded as a charge due to remeasurement of contingent consideration in the Consolidated Statements of Operations.

The change in estimates during the nine months ended September 30, 2012 consisted of the accrual of $8,000,000 of contingent consideration related to the acquisition of OHI in 2010. The acquisition of OHI required the payment of additional contingent cash consideration up to $8,000,000 to the former owners of OHI if the Company subsequently completed a qualifying cash event, as defined in the purchase agreement. A qualifying cash event included a sale of the Company or an initial public offering that involved the issuance of securities to be traded on a public exchange. Payment of the contingent consideration required the qualifying cash event to generate a return on investment above a certain minimum threshold. Upon the closing of the acquisition of OHI, the Company assessed the probability of a qualifying cash event as remote and did not record a liability for the payment of contingent consideration. The Company did not adjust the initial valuation of the liability for contingent consideration during the periods ended December 31, 2011 and 2010, as the fair value of the contingency was assessed as zero (see Note 1, “Out-of-Period Adjustments”). As discussed in Note 1, on September 16, 2012, the Company entered into a Purchase and Sale Agreement with WCI, which subsequently closed on October 25, 2012. As a result of this event, the Company reassessed the fair value and recorded the maximum amount of $8,000,000.

The change in estimates during the year ended December 31, 2011 consisted of the net change in two contingencies. In 2011, the Company achieved an earnings target, related to the acquisition of Calpet, which was previously not expected and had not been recorded as a liability. As a result, a contingent payment of $2,500,000, discounted to present value, was recorded as of December 31, 2011, of which $2,030,000 (unaudited) was paid in 2012. In addition, due to engineering impediments, the Company no longer expects to expand certain Calpet facilities by the date which would have required a payment. The contingent payment of $2,500,000 related to the facility expansion, which was discounted to present value, was removed from liabilities as of December 31, 2011.

25

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

The future expected payments for contingent consideration as of September 30, 2012 (unaudited), are as follows (in thousands):

2012	$	8,846
2013		22,875
2014		6,250
Total anticipated contingent consideration		37,971
Amount representing interest		(1,126	)
Present value of anticipated contingent consideration		36,845
Less: Current portion		(12,529	)
Contingent consideration, net of current portion	$	24,316

11. OTHER LONG-TERM LIABILITIES

Other long-term liabilities consisted of the following as of September 30, 2012 and December 31, 2011 and 2010 (in thousands):

	September 30,		December 31,
	2012		2011		2010
	(unaudited)
Cell processing reserve	$	2,061	$	2,159	$	1,652
Closure and remediation reserves		3,063		2,811		1,336
Other long-term liabilities		613		568		188
	$	5,737	$	5,538	$	3,176

12. CLOSURE RESERVES

The Company operates landfarm facilities, transfer stations, and disposal sites in Louisiana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming. The costs that will be incurred to retire certain assets at these facilities consist of removal of levees and roads, post-closure monitoring, plugging and abandoning injection and monitoring wells, and other costs.

The changes to closure reserves for the nine months ended September 30, 2012, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 were as follows (in thousands):

	September 30,		December 31,
	2012		2011		2010
	(unaudited)
Balance at beginning of period	$	1,234	$	443	$	—
Liabilities assumed in acquisition		248		395		420
Additions		—		322		—
Accretion		100		74		23
Balance at end of period	$	1,582	$	1,234	$	443

13. EMPLOYEE BENEFITS

The Company sponsors a 401(k) retirement plan under which all employees may choose to invest a portion of their salary on a pretax basis, subject to certain IRS limits. The Company matches employee contributions on a discretionary basis. The plan also allows the Company to provide for a discretionary profit sharing contribution. Company contributions for the months ended September 30, 2012 and 2011, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 were $178,000 (unaudited), $149,000 (unaudited), $204,000 and $46,000, respectively.

26

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

14. EQUITY-BASED COMPENSATION

In 2010, the Company established an incentive plan (“SARs Plan”) whereby stock appreciation rights (“SARs”) are granted to employees. SARs are either vested in full on the date of grant or vest annually over four years in equal installments commencing on the first anniversary of the grant date, or if earlier, upon the occurrence of an exit event, subject to continued employment on the vesting date and acceleration in limited cases upon a qualifying termination of employment. The SARs are exercisable upon an exit event and expire ten years after the date of grant. As the exercise of the SARs is contingent upon an exit event, and no such event had occurred as of December 31, 2011, no SARs were exercisable and no compensation expense has been recognized.

In conjunction with the Reorganization, the SARs Plan was replaced by OLP’s Incentive Unit Plan. In February 2012, participants in the SARs Plan elected to participate in an exchange offer whereby each SAR unit was exchanged for one incentive unit under OLP’s Incentive Unit Plan, which incentive units are intended to constitute “profits interests.” Each incentive unit is subject to the same vesting conditions that were applicable to the corresponding SARs based on the employees’ continued employment with OLP or any of its affiliates, and is subject to restrictions substantially similar to the exercise restrictions applicable to the corresponding SARs. While the SARs expired ten years from their respective grant date, there is no expiration date on the incentive units.

SARs activity and changes for nine month period ended September 30, 2012 and the year ended December 31, 2011 were as follows:

	Number of SARs			Weighted Average Strike Price
Outstanding as of December 31, 2010		15,266		$	967
Granted		400			1,250
Outstanding as of December 31, 2011		15,666			974
Cancelled (unaudited)		(15,666	)		974
Outstanding as of September 30, 2012 (unaudited)		—			—

The exchange resulted in 8,151 service-based incentive units and 6,848 performance-based incentive units which vest over four years from the grant date of the original SAR in equal 25% increments, and 667 units which were vested as of the exchange date. During the nine month period ended September 30, 2012, an additional 834 (unaudited) service-based incentive units were awarded to employees. Compensation expense is amortized based upon the fair value of the share-based awards on a straight-line basis over the requisite service period. Compensation expense recognized was $10,503,000 (unaudited) for the nine months ended September 30, 2012.

The following table summarizes information about incentive units which have been granted to the Company’s employees as of September 30, 2012:

	Number of Incentive Units			Weighted Average Price
Outstanding as of January 1, 2012		—		$	—
Units issued in exchange for SARs (unaudited)		15,666			1,170
Granted (unaudited)		834			1,812
Cancelled (unaudited)		(192	)		1,812
Outstanding as of September 30, 2012 (unaudited)		16,308			1,195

The fair value of each incentive unit issued in respect of a SAR granted during the period from July 16, 2010 to May 9, 2011 was determined employing a scenario analysis of the future enterprise value of the Company. The scenario analysis involved growing the Company’s valuation as of December 31, 2011, the date upon which the evaluation was prepared by a third-party. In each enterprise value scenario, the value of the incentive units was determined by tranche incorporating any performance based hurdles. These incentive unit values were then discounted back to a date to approximate the exchange date. The scenarios were then assigned a

27

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

weighting to arrive at the weighted average value of the incentive units. The fair value of the SARs exchanged for incentive units was $18,311,000. The fair value of the incentive units granted during the nine months ended September 30, 2012 was $1,100,000 (unaudited) using the same methodology discussed above.

The following table summarizes information about incentive units outstanding as of September 30, 2012:

	Incentive Units Outstanding (unaudited)				Incentive Units Exercisable (unaudited)
Exercise Price	Number of Incentive Units		Weighted Average Price		Number of Incentive Units		Weighted Average Price
$1,318 to $1,812		9,460	$	1,380		4,404	$	1,345
$1,318		1,712		1,318		808		1,318
$1,091		1,712		1,091		808		1,091
$824		1,712		824		808		824
$531		1,712		531		808		531
		16,308		1,195		7,636		1,174

Subsequent to September 30, 2012, as a result of the sale of the Company to WCI, the 8,672 unvested and outstanding incentive units at September 30, 2012 became fully vested and were exercised by the holders.

15. DISTRIBUTIONS

During September 2012, the Company distributed $15,592,000 in cash payments to noncontrolling interests in accordance with the partnership agreement. These distributions are recorded as a reduction of noncontrolling interests within the Consolidated Statements of Stockholder’s Equity.

In connection with the formation of OLP, the Company distributed options in OLP to its shareholders. As discussed in Note 1, these options were exercised by the shareholders in April 2012. As a result, the Company recognized the tax effect of the gain on the exercise of Options of $11,126,000 as a reduction in additional paid-in capital in the Consolidated Statements of Stockholder’s Equity.

16. COMMITMENTS AND CONTINGENCIES

Letters of Credit

Outstanding letters of credit were $3,037,000 (unaudited), $9,000,000 and $12,000,000 as of September 30, 2012 and December 31, 2011 and 2010, respectively, to provide financial assurance for the ultimate closure of the Company’s facilities. In order to obtain or renew operating permits, the Company is required to provide financial assurances to guarantee that the permitted facilities will be closed in accordance with applicable law.

Litigation

The Company is involved in various legal actions arising in the ordinary course of business. After consultation with its legal counsel, management does not believe that the outcome of such legal actions will have a material adverse effect on the Company’s consolidated financial statements.

Environmental Matters

The Company’s operations and properties are subject to federal, state and local regulatory requirements relating to environmental protection. It is the Company’s policy to comply fully with all applicable requirements. Based on current information, the Company believes that its operations are in compliance with applicable environmental laws and regulations and management is not aware of any

28

R360 ENVIRONMENTAL SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED), YEAR ENDED DECEMBER 31, 2011 AND PERIOD FROM MAY 5, 2010 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010

violation that could have a material adverse effect on the consolidated financial statements. The remediation reserve covers anticipated costs; however, these estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, or alteration to the expected remediation plans.

Operating Leases

The Company leases office space and processing facilities and certain equipment under noncancelable operating leases for periods ranging from one to ten years. The following table presents future minimum rental payments under noncancelable operating leases with terms in excess of one year due in the following periods (in thousands) as of September 30, 2012 (unaudited):

2012 (three months)	$	821
2013		2,674
2014		2,542
2015		2,212
2016		1,515
Thereafter		2,301
	$	12,065

The Company has accrued amounts due at the end of various equipment operating lease agreements for excess hours incurred above the agreed hour limit and costs to return leased equipment to its previous condition. The accrual for such charges, recorded on an undiscounted basis, was $366,000 (unaudited), $414,000 and $1,512,000, as of September 30, 2012 and December 31, 2011 and 2010, respectively.

Rental expense for the nine months ended September 30, 2012 and 2011, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010 was $3,540,000 (unaudited), $2,917,000 (unaudited), $3,498,000 and $1,894,000, respectively which also includes month-to-month rentals of equipment.

17. RELATED PARTIES

The Company has an agreement with certain shareholders of its parent whereby the Company pays a management fee of 2% of earnings before interest, tax, depreciation, and amortization expense as calculated under the Company’s credit agreement. The management fee was $1,984,000 (unaudited), $1,132,000 (unaudited), $1,522,000 and $586,000 for the nine months ended September 30, 2012 and 2011, the year ended December 31, 2011 and the period from May 5, 2010 (Date of Inception) through December 31, 2010, respectively. The expense is included in selling, general, and administrative expense within the statement of operations. The management fee payable as of September 30, 2012 and December 31, 2011 and 2010 was $849,000 (unaudited), $439,000 and $292,000, respectively.

29

EX-99.2

Exhibit 99.2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of

Oilfields Holdings, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholder’s equity (deficit) and cash flows present fairly, in all material respects, the financial position of Oilfields Holdings, Inc. and its subsidiaries (the “Company”) at July 16, 2010 and December 31, 2009, and the results of their operations and their cash flows for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements 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 the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

April 29, 2011, except for Note 2 for which the date is May 3, 2012

OILFIELDS HOLDINGS, INC.

Consolidated Balance Sheets

July 16, 2010 and December 31, 2009

(in thousands, except share and per share amounts)	July 16, 2010			December 31, 2009
Assets
Cash	$	14		$	4,766
Accounts receivable, net		12,830			9,123
Prepaid expenses and other current assets		732			643
Income tax receivable		2,762			805
Total current assets		16,338			15,337
Property and equipment, net		34,026			35,011
Debt issuance costs, net		887			1,082
Intangible assets		10,500			10,500
Other assets		95			171
Total assets	$	61,846		$	62,101
Liabilities and Stockholder’s Equity (Deficit)
Current portion of long-term debt	$	330		$	330
Current portion of capital lease obligations		145			222
Accounts payable		3,501			2,382
Accrued expenses		2,316			1,416
Deferred tax liability		146			108
Cell processing reserve		2,895			2,730
Total current liabilities		9,333			7,188
Long-term debt, net of current portion		39,719			32,187
Subordinated note payable to stockholder		10,000			10,000
Accrued interest payable to stockholder		7,745			6,855
Capital lease obligations, net of current portion		40			98
Closure and remediation reserves		1,322			1,280
Deferred tax liability, net		1,499			1,539
Interest rate swap at fair value		—			766
Total liabilities		69,658			59,913
Commitments and contingencies
Oilfields Holdings, Inc. shareholder’s equity (deficit)
Preferred stock, $.01 par value, 10,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $.01 par value, 900,000 shares authorized, 864,827 issued and outstanding		8			8
Additional paid-in capital (deficit)		(21,172	)		(16,463	)
Retained earnings		13,352			17,568
Total Oilfields Holdings, Inc. shareholder’s equity (deficit)		(7,812	)		1,113
Noncontrolling interest		—			1,075
Total stockholder’s equity (deficit)		(7,812	)		2,188
Total liabilities and stockholder’s equity (deficit)	$	61,846		$	62,101

The accompanying notes are an integral part of these consolidated financial statements.

2

OILFIELDS HOLDINGS, INC.

Consolidated Statements of Operations

Period from January 1, 2010 through July 16, 2010 and

Year Ended December 31, 2009

(in thousands of dollars)	Period from January 1, 2010 through July 16, 2010			Year Ended December 31, 2009
Revenues	$	34,540		$	53,796
Cost of sales, exclusive of depreciation and amortization		19,634			31,164
Depreciation and amortization		3,451			5,912
Gross profit		11,455			16,720
Operating expenses
Selling, general and administrative expenses		2,991			5,177
Operating income		8,464			11,543
Other income (expense)
Transaction costs		(10,893	)		—
Interest expense		(2,567	)		(4,895	)
Mineral rights income		—			553
Other income, net		390			681
Other expense, net		(13,070	)		(3,661	)
Income (loss) before income taxes		(4,606	)		7,882
Income tax (benefit) provision		(1,140	)		2,849
Net income (loss)		(3,466	)		5,033
Net income (loss) attributable to the noncontrolling interest		(407	)		1,075
Net income (loss) attributable to Oilfields Holdings, Inc.	$	(3,059	)	$	3,958

The accompanying notes are an integral part of these consolidated financial statements.

3

OILFIELDS HOLDINGS, INC.

Consolidated Statements of Stockholder’s Equity (Deficit)

Period from January 1, 2010 through July 16, 2010 and

Year Ended December 31, 2009

	Oilfields Holdings, Inc. Shareholders
	Common Stock				Additional paid-in capital			Retained			Non-Controlling			Total Stockholder’s
(in thousands, except share amounts)	Shares		Amount		(deficit)			Earnings			interest			Equity (Deficit)
Balance at December 31, 2008		864,827	$	8	$	(19,174	)	$	13,699		$	—		$	(5,467	)
Cumulative effect of adoption of accounting for uncertain tax positions		—		—		—			(89	)		—			(89	)
Sale of Redfish Minerals		—		—		2,711			—			—			2,711
Net income		—		—		—			3,958			1,075			5,033
Balance at December 31, 2009		864,827		8		(16,463	)		17,568			1,075			2,188
Dividend paid to shareholders		—		—		—			(1,157	)		—			(1,157	)
Purchase of non controlling interest		—		—		(4,709	)		—			(668	)		(5,377	)
Net loss		—		—		—			(3,059	)		(407	)		(3,466	)
Balance at July 16, 2010		864,827	$	8	$	(21,172	)	$	13,352		$	—		$	(7,812	)

The accompanying notes are an integral part of these consolidated financial statements.

4

OILFIELDS HOLDINGS, INC.

Consolidated Statements of Cash Flows

Period from January 1, 2010 through July 16, 2010 and

Year Ended December 31, 2009

(in thousands of dollars)	Period from January 1, 2010 through July 16, 2010 (Revised)			Year Ended December 31, 2009
Cash flows from operating activities
Net income (loss)	$	(3,466	)	$	5,033
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		3,372			5,912
Amortization of debt issuance costs		195			361
Provision for bad debts		—			327
(Gain) loss on sale of property and equipment		4			(32	)
Unrealized loss on interest rate swap		—			539
Realized gain on settlement of interest rate swap		(766	)		—
Deferred income tax benefit		10			(1,241	)
Changes in operating assets and liabilities
Accounts receivable		(3,707	)		4,810
Prepaid expenses and other current assets		(89	)		48
Other assets		64			(139	)
Accounts payable and accrued expenses		994			(960	)
Cell processing reserve		165			228
Net cash provided by (used in) operating activities		(3,224	)		14,886
Cash flows from investing activities
Purchases of property and equipment		(2,756	)		(3,260	)
Proceeds from sale of equipment		365			103
Net cash used in investing activities		(2,391	)		(3,157	)
Cash flows from financing activities
Borrowings of long-term debt		8,000			—
Principal payments on long-term debt		(468	)		(7,606	)
Principal payments on capital lease obligations		(135	)		(1,951	)
Purchase of non-controlling interest		(5,377	)		—
Dividend paid to shareholders		(1,157	)		—
Proceeds from sale of subsidiary to affiliate		—			635
Net cash provided by (used in) financing activities		863			(8,922	)
Net increase (decrease) in cash and cash equivalents		(4,752	)		2,807
Cash and cash equivalents
Beginning of period		4,766			1,959
End of period	$	14		$	4,766
Supplemental disclosure of cash flow information
Cash paid for interest	$	1,179		$	2,476
Cash paid for income taxes		429			2,891

The accompanying notes are an integral part of these consolidated financial statements.

5

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

1. Organization and Summary of Significant Accounting Policies

Oilfields Holdings, Inc. (“OHI”) was organized in July 2006. On January 8, 2007, approximately 82% of the equity of Oilfields Environmental Services Corporation (“OESC”) was contributed to OHI. The remaining 18% was owned by members of management of OESC. OESC conducts all of its business through US Liquids of Louisiana, L.P. (“USLL”), which is a provider of services for the collection, treatment and disposal of oilfield waste generated in oil and gas exploration and production in North America. OHI and subsidiaries are collectively referred to as the “Company”.

In December 2008, the Company formed Redfish Minerals, LLC (“Redfish Minerals”), a wholly owned subsidiary, for the purpose of maintaining mineral rights. In April 2009, the Company sold Redfish Minerals to an affiliate for cash proceeds of $635,000 (See Notes 2 and 15).

The financial statements have been prepared through July 16, 2010 when the Company was acquired by R360 Environmental Solutions, Inc. for consideration of approximately $118,000,000. In connection with the acquisition the following transactions have been included in the financial statements for the period from January 1, 2010 through July 16, 2010:

• Transaction costs of $10,893,000.

• Payment of $5,377,000 to acquire the 18% non-controlling interests of OESC.

• Dividend paid to shareholders of $1,157,000.

• Settlement of the interest rate swap that occurred on July 13, 2010 in anticipation of the settlement of the Company’s debt.

Excluded from these financial statements are any transactions associated with post acquisition activities such as the settlement of the Company’s debt and purchase price adjustments.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements reflect the consolidated operations of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Prior to the adoption of accounting guidance related to non-controlling interest, as equity capital of OESC was a deficit, the deficit was absorbed by OHI. Upon adoption, income or losses attributable to the non-controlling interest is applied to the non-controlling interest.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue from processing services when material is unloaded at the Company’s facilities. The Company recognizes revenue at the time the waste is accepted as the customer has passed the legal and regulatory responsibility and associated risk of disposing the waste to the Company.

6

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company controls credit risk through credit evaluations, credit limits, and monitoring procedures. No single customer balance represents 10% or more of total accounts receivable at July 16, 2010 and December 31, 2009, or revenue for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009. The Company has concentrations of credit risk due to geographic concentrations of operations in Louisiana and Texas.

Accounts Receivable and Allowance for Doubtful Accounts

The Company extends credit to customers in the normal course of business. Trade receivables consist of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days of the invoice date. Management regularly reviews outstanding accounts receivable, and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established reserves, management makes judgments regarding the parties’ ability to make required payments, economic events, and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The allowance for doubtful accounts was $125,000 at July 16, 2010 and December 31, 2009.

Property and Equipment, Net

Property and equipment are recorded at cost. Improvements or betterments which significantly extend the life of an asset are capitalized. Expenditures for maintenance and repair costs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains and losses resulting from property disposals are included in other income or expense. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

Debt Issuance Costs

Costs directly associated with obtaining the credit facility including origination fees, broker fees, legal expenses, and other professional fees are capitalized and amortized on the straight line method which approximates the effective interest method over the credit facility term. Amortization expense was $195,000 for the period from January 1, 2010 through July 16, 2010 and $361,000 for the year ended December 31, 2009.

Fair Value of Financial Instruments

Certain of the Company’s assets and liabilities are reported on a fair value basis. Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value.

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance on fair value measurements requires that a number of significant judgments are made. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

7

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

Derivative Financial Instruments

The Company utilizes interest rate swap agreements to limit interest rate exposure associated with variable rate debt. Under the swap agreements, the Company agrees to make fixed rate payments and receive variable rate payments on specified notional amounts. The swaps are intended to convert variable rate debt to a fixed rate basis. Notional amounts do not represent exposure to credit loss. The swaps are recorded on the balance sheet at their fair value. Changes in the fair value of the swaps are recorded each period within interest expense in the consolidated statement of income.

Goodwill and Other Intangible Assets

Goodwill represents the excess of consideration paid over the fair value of net assets and liabilities acquired in a business combination. Goodwill is not amortized, but instead is assessed for impairment at least annually. Additionally, impairment tests are required when triggering events occur.

Intangible assets consist primarily of permits required to operate the treatment facilities. The majority of the Company’s permits have been determined to have indefinite lives. Permits with indefinite lives are not amortized, but instead are assessed for impairment. Permits with finite lives are amortized, using the straight-line basis, over the life of the permits.

Long-Lived Assets

When events, circumstances and operating results indicate that the carrying values of certain long-lived assets might be impaired, the Company prepares projections of the undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the projections indicate that the recorded amounts are not expected to be recoverable, such amounts are reduced to estimated fair value. Fair value is estimated based upon internal evaluation of each asset that includes quantitative analyses of net revenue and cash flows, review of recent sales of similar assets and market responses based upon discussions in connection with offers received from potential buyers.

Income Taxes

The Company utilizes the asset and liability method for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, all expected future events other than enactments of changes in tax laws or rates are considered.

Self-Insurance

The Company is self-insured for certain losses relating to workers’ compensation and general liability coverage. The workers’ compensation program is subject to a $250,000 per occurrence retention, whereas the general liability coverage is subject to a $25,000 total per occurrence retention. As no claims on these policies were incurred as of July 16, 2010 and December 31, 2009, the reserve as of July 16, 2010 and December 31, 2009 is zero.

8

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

Cell Processing Reserves

The Company records a cell processing reserve for the estimated amount of expenses to be incurred upon the treatment of oilfield waste received in order to match revenues with their related costs. The related treatment costs are charged against the reserve as such costs are incurred, which generally covers a period of nine to twelve months. At year end, the processing reserve represents the estimated costs to process the volumes of oilfield waste on hand for which revenue has already been recognized.

Closure and Remediation Reserves

Closure reserves represent accruals for the present value of the total estimated costs associated with the ultimate closure of the Company’s land farm facilities and certain other facilities, including costs of decommissioning, statutory monitoring costs and incremental direct administrative costs required during the closure and subsequent post-closure periods. Closure reserves of $284,000 and $242,000 as of July 16, 2010 and December 31, 2009, are included in closure and remediation reserves in the accompanying consolidated balance sheet. The change in closure reserves is included in the cost of operations in the statement of income and represents changes in cost estimates of closure activities and remaining useful lives of certain properties.

The Company expenses costs incurred to investigate and remediate environmental issues unless they extend the economic useful life of related assets. The Company records liabilities when it is probable that an obligation has been incurred and the amounts can be reasonably estimated. The environmental reserves cover anticipated costs, including remediation of environmental damage that waste facilities may have caused to neighboring landowners or residents as a result of contamination of soil, groundwater or surface water, including damage resulting from conditions existing prior to the acquisition of such facilities by the Company. The Company’s estimates are based primarily on investigations and remediation plans established by independent consultants, regulatory agencies and potentially responsible third parties. The Company does not discount environmental obligations. As of July 16, 2010 and December 31, 2009, $1,038,000 is included in closure and remediation reserves in the accompanying consolidated balance sheet.

Unearned Revenue

Income from mineral leases was deferred and recognized into income over the expected life of the Leases until sale of the Redfish Minerals subsidiary in April 2009. At the sale date, the remaining unearned revenue was recognized (See Note 15).

Recent Accounting Pronouncements

In January 2010, the FASB issued authoritative guidance to update disclosure requirements related to fair value measurements. The guidance requires a gross presentation of activities within the Level 3 roll forward and adds a new requirement to disclose details of significant transfers in and out of Level 1 and 2 measurements and the reasons for the transfers. The new disclosures are required for all companies required to provide disclosures about recurring and nonrecurring fair value measurements, and are effective for the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 roll forward information, which is required for annual reporting periods beginning after December 15, 2010 and for reporting periods within those years. The Company does not expect the adoption of this new guidance to have a significant impact on its financial position, cash flows or results of operations.

9

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

2. Revision of Previously Issued Financial Statements

The Company revised its financial statements for the period from January 1, 2010 through July 16, 2010 to report the cash dividend paid to shareholders and purchase of non-controlling interest as cash flows from financing activities instead of investing activities.

The effect of the revision on the Company’s previously reported statement of cash flows for the period from January 1, 2010 through July 16, 2010 is as follows:

(in thousands of dollars)	As Previously Reported			Adjustment			As Revised
Statement of cash flows
Cash flows from investing activities:
Purchase of non-controlling interest	$	(5,377	)	$	5,377		$	—
Dividend paid to shareholders		(1,157	)		1,157			—
Total cash used in investing activities		(8,925	)		6,534			(2,391	)
Cash flows from financing activities:
Purchase of non-controlling interest		—			(5,377	)		(5,377	)
Dividend paid to shareholders		—			(1,157	)		(1,157	)
Total cash used in financing activities		7,397			(6,534	)		863

The revision has no impact on the balance sheet, statement of operations, or statement of stockholder’s equity (deficit) for the period from January 1, 2010 through July 16, 2010.

3. Property and Equipment

Property and equipment consisted of the following at July 16, 2010 and December 31, 2009:

(in thousands of dollars)	Depreciable Life (Years)	July 16, 2010			December 31, 2009
Land	—	$	630		$	630
Landfarm and processing sites	25		13,280			12,609
Buildings and improvements	5-30		23,248			22,985
Machinery and equipment	3-20		22,039			20,247
Vehicles	3-5		851			854
Furniture and fixtures	3-15		587			567
Construction in progress	—		164			653
Total property and equipment			60,799			58,545
Less: Accumulated depreciation			(26,773	)		(23,534	)
		$	34,026		$	35,011

Depreciation expense was $3,372,000 and $5,912,000 for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009, respectively. Included in property and equipment at July 16, 2010 and December 31, 2009, are assets under capital lease of $1,371,000 and $1,371,000, respectively. Depreciation expense relating to assets under capital lease of $142,000 and $341,000 is included in depreciation expense for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009, respectively. Accumulated depreciation relating to assets under capital lease at July 16, 2010 and December 31, 2009 was $877,000 and $735,000, respectively.

10

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

4. Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3:	Measured based on prices or valuation models that required inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for the Company’s financial assets and liabilities, the associated credit risk and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

The Company has classified its derivative contract into one of three levels based upon the data relied upon to determine the fair value. The fair value of the Company’s interest rate swap is based upon quotes obtained from the counterparty to the derivative contracts. The Company reviews other readily available market prices for its derivative contracts; however, the Company does not have access to specific valuation models used by the counterparties. Included in these models are discount factors that the Company must estimate in its calculation. Based on the inputs for the fair value measurement, the Company classified its derivative contract liability as Level 3. The Company’s interest rate swap was settled on July 13, 2010. There are no outstanding derivatives at July 16, 2010. The following table summarizes the valuation of the Company’s financial assets and liabilities as of December 31, 2009:

(in thousands of dollars)	Fair Value Measurements Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Assets/ (Liabilities) at Fair Value
Interest rate swap liability	$	—	$	—	$	(766	)	$	(766	)

The table below sets forth a reconciliation of the Company’s derivative financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009:

(in thousands of dollars)	Period from January 1, 2010 through July 16, 2010			Year Ended December 31, 2009
Balance at beginning of period	$	(766	)	$	(227	)
Unrealized losses		—			(1,116	)
Purchases, issuances and settlements		766			577
Balance at end of period	$	—		$	(766	)

11

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

The fair values of certain assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable approximate their respective carrying values due to their short-term nature.

The fair value of the Company’s senior secured credit and revolver facilities is $37.9 million at July 16, 2010, and $30.9 million at December 31, 2009 based on market prices of similar borrowings available to the Company.

5. Intangible Assets

Intangible assets consisted of the following at July 16, 2010 and December 31, 2009:

(in thousands of dollars)	Cost		Accumulated Amortization			Net Book Value
Indefinite lived intangible assets
Goodwill	$	565	$	—		$	565
Permits		9,935		—			9,935
		10,500		—			10,500
Finite lived intangible assets
Permits		29		(29	)		—
	$	10,529	$	(29	)	$	10,500

There was no amortization expense for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009. Permits with finite useful lives were fully amortized at July 16, 2010 and December 31, 2009.

6. Accrued Expenses

Accrued expenses consisted of the following at July 16, 2010 and December 31, 2009:

(in thousands of dollars)	July 16, 2010		December 31, 2009
Payroll and related costs	$	725	$	594
Accrued bonuses		224		209
Accrued uncertain tax positions		572		211
Goods received not invoiced		8		41
Other accrued expenses		787		361
	$	2,316	$	1,416

12

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

7. Income Taxes

The provision for income taxes consisted of the following for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009:

(in thousands of dollars)	Period from January 1, 2010 through July 16, 2010			Year Ended December 31, 2009
Current provision (benefit)
Federal	$	(1,129	)	$	3,402
State		(21	)		688
		(1,150	)		4,090
Deferred provision (benefit)
Federal		19			(1,064	)
State		(9	)		(177	)
		10			(1,241	)
Income tax provision (benefit)	$	(1,140	)	$	2,849

The difference between the income tax provision and the tax provision computed by applying the statutory federal income tax rate to income (loss) before income taxes is attributable to the following:

(in thousands of dollars)	Period from January 1, 2010 through July 16, 2010			Year Ended December 31, 2009
Tax provision at U.S. statutory rate	$	(1,566	)	$	2,680
Permanent differences		145			124
Tax contingencies		349			55
State income taxes, net of federal benefit		(68	)		38
Decrease in tax rate from 35% to 34%		—			(48	)
Income tax provision (benefit)	$	(1,140	)	$	2,849

Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company’s deferred tax assets and liabilities consisted of the following at July 16, 2010 and December 31, 2009:

(in thousands of dollars)	July 16, 2010			December 31, 2009
Current deferred taxes
Accruals and reserves	$	212		$	(324	)
Prepaid and other assets		(358	)		216
Current deferred tax asset (liability), net		(146	)		(108	)
Noncurrent deferred taxes
Property and equipment		(746	)		(1,200	)
Intangible assets		(1,116	)		(908	)
Accruals and reserves		363			569
Noncurrent deferred tax liability, net		(1,499	)		(1,539	)
Net deferred tax liability	$	(1,645	)	$	(1,647	)

13

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

On January 1, 2009, the Company adopted new guidance for accounting for uncertainty in income taxes. As a result of adoption, the Company recognized an $89,000 liability for uncertain tax positions, which was recorded as a reduction to retained earnings. The Company had gross unrecognized tax benefits of $134,000, including approximately $25,000 of interest and penalties, of which, $89,000 represents the amount of unrecognized tax benefits that, if recognized, would favorably impact the effective income tax rate in future periods.

For the period from January 1, 2010 through July 16, 2010, the Company recorded additional liabilities on current gross uncertain positions of approximately $491,000 of which approximately $435,000, if recognized, would favorably impact the effective income tax rate in future periods.

The Company is subject to U.S. federal income tax as well as income tax in Texas and Louisiana. The Company has substantially concluded all U.S. federal income tax matters for years through 2006. The IRS closed its examination of the Company’s 2006 tax year during 2009 with no tax adjustments. The earliest year that remains subject to examination is 2007 for Louisiana and 2007 for Texas. Currently the Company is not under examination by the IRS or state taxing authorities.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The liability for unrecognized tax benefits included accrued interest and penalties of $25,000 at adoption on January 1, 2009 and December 31, 2009. Tax expense for the period from January 1, 2010 through July 16, 2010 included an additional $107,000 of interest and penalties.

8. Long-Term Debt

Long-term debt consisted of the following at July 16, 2010 and December 31, 2009:

(in thousands of dollars)	July 16, 2010			December 31, 2009
Revolving credit facility	$	8,000		$	—
Senior secured credit facility		32,049			32,517
Current portion of long-term debt		(330	)		(330	)
Long-term debt	$	39,719		$	32,187

The senior secured credit facility consists of:

• a $20.0 million revolving credit facility, including a letter of credit sub-facility and a swingline loan sub-facility that will expire on January 8, 2013. On July 14, 2010 $8.0 million was borrowed under the facility and was outstanding at July 16, 2010. Outstanding letters of credit of $9.8 million reduced the balance available for borrowing to $2.2 million at July 16, 2010, and

• a $45.0 million term loan facility with a maturity of January 8, 2013 and quarterly payments of 0.25% of the principal balance, or $113,000. No additional amounts may be borrowed under the term loan facility without future amendment to the facility.

The interest rates applicable to loans, other than swingline loans, under the senior secured credit facility are, at the Company’s option, equal to either a base rate or an adjusted LIBOR rate for a three-month interest period, plus an applicable margin percentage. Based on the three-month LIBOR at July 16, 2010, borrowings under the revolving credit facility have an effective interest rate of 3.29%. Swingline loans bear interest at the interest rate applicable to base rate loans.

14

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

As of July 16, 2010, the base rate is the greater of (i) the prime rate in effect or (ii) one-half of 1% over the weighted average of the rates on overnight Federal funds transactions as published by the Federal Reserve Bank of New York. The adjusted LIBOR is based upon offered rates in the London interbank market. The applicable margin percentage is a percentage per annum equal to (i) 2.00% for base rate term loans and (ii) 3.00% for adjusted LIBOR term loans. The applicable margin percentage under the term loan facility is subject to adjustment based upon the ratio of the Company’s total indebtedness to the Company’s consolidated EBITDA (as defined in the credit agreement). For the period from January 1, 2010 through July 16, 2010, the average interest rate was 3.29%.

On the last business day of each calendar quarter, the Company is required to pay the lender a commitment fee in respect to any unused commitment under the revolving credit facility. The commitment fee is equal to (1) the average of the daily difference between (a) the Revolving Commitments, and (b) the sum of the aggregate principal amount of outstanding Revolving Loans plus the Letter of Credit Usage, times (2) 0.50% per year.

The senior secured credit facility requires mandatory prepayments of term loans, subject to certain exceptions, in amounts equal to:

• 100% of the net cash proceeds from asset sales, except, in certain cases, when proceeds are reinvested by the Company within a specified period;

• 100% of the net cash proceeds from the issuance of certain equity securities by the Company;

• 100% of the net cash proceeds from the issuance of certain debt securities by the Company; and

• 75% (subject to reduction based upon the ratio of the Company’s total indebtedness to the Company’s consolidated EBITDA) of the Company’s annual excess cash flow.

Voluntary prepayments of loans under the senior secured credit facility and voluntary reductions of revolving credit commitments are permitted, in whole or in part, in minimum amounts of $250,000 and integral multiples of $25,000 in excess of that amount without premium or penalty.

Indebtedness under the senior secured credit facility is collateralized by a first priority security interest in substantially all of the Company’s assets, including a first priority pledge of the capital stock of the Company’s subsidiaries.

The senior secured credit facility requires that the Company comply, on a quarterly basis, with certain financial covenants, including a minimum interest coverage ratio test, a maximum leverage ratio test and a maximum capital expenditure threshold, which become more restrictive over time. The Company may be obligated (based on certain leverage thresholds) to make payments on its term loan facility of up to 75% of “excess cash flow”, as defined. No such payment was required as of July 16, 2010.

In February 2009, the Company entered into an interest rate swap, effective March 31, 2009. The agreement fixes the interest rate at 5.73% on principal amounts varying from $20 million to $35 million over a period of three years. The swap agreement was settled on July 13, 2010.

15

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

Annual maturities of long-term debt as of July 16, 2010 are as follows:

(in thousands of dollars)
2010	$	165
2011		330
2012		330
2013		39,224
	$	40,049

9. Subordinated Note Payable to Stockholder

Effective January 8, 2007, the Company assumed a note payable to the stockholder with a principal amount of $10,000,000 and $2,799,000 of accrued interest. Interest is payable at 9% on a quarterly basis with any unpaid interest accruing at 11% until paid. The note matures on December 31, 2012.

As of July 16, 2010 and December 31, 2009, accrued interest on the note was $7,745,000 and $6,855,000, respectively.

10. Capital Lease Obligations

The Company has obtained financing for equipment used in operations. Aggregate future minimum lease payments under capital lease obligations at July 16, 2010, are as follows:

(in thousands of dollars)
2010	$	145
2011		20
2012		20
		185
Less: Amounts representing interest		—
Present value of capital lease obligations		185
Current portion of capital lease obligations		(145	)
Capital lease obligations, net of current portion	$	40

11. Environmental Liabilities

The Company operates four sites in Louisiana and three in Texas. The costs that will be incurred to retire the landfarm assets consist of removal of levees and roads, post-closure monitoring, plugging and abandoning injection and monitoring wells, and other costs.

The Louisiana landfarms include four sites that have been approved under the State’s regulations. The cells comprising the landfarms are used repeatedly. Water from the Louisiana landfarms is collected and deep well injected. Solid residue is removed from the treatment cells and placed in an on-site stockpile. The facilities are depreciated on a straight-line basis over estimated useful lives of up to 25 years. The Company’s policy has been to accrue the liability for the cost of retiring the asset and adjust the accrual for changes in inflation.

16

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

The two Texas landfarms are also approved under State regulations. These sites operate in a manner that differs from the Louisiana sites. Since the Texas facilities operate in a more arid climate, the water evaporates. Solid residue is removed from the treatment cells and placed in a lined landfill. As such, there is a limit on the amount of waste that can be disposed in the lined landfill. The capitalized costs relating to the Texas sites are depreciated on a straight-line basis and evaluated periodically to determine whether the remaining available space approximates the remaining estimated useful life. The Company adjusts the closure reserves for changes in inflation and interest.

12. Employee Benefits

The Company sponsors a 401(k) retirement plan established in 2003 under which all employees may choose to invest a portion of their salary on a pretax basis, subject to certain IRS limits. The Company matches employee contributions on a discretionary basis. The plan also allows the Company to provide for a discretionary profit sharing contribution. Company contributions for the period from January 1. 2010 through July 16, 2010 and the year ended December 31, 2009 were $53,000 and $108,000, respectively.

The Company maintains bonus agreements with management and employees that vest over their time of service with the Company and are due upon the sale of the Company.

13. Commitments and Contingencies

Letters of Credit

Outstanding letters of credit were $9,800,000 at July 16, 2010, and $9,500,000 at December 31, 2009, to provide financial assurance for the ultimate closure of the Company’s facilities. The Company is required to provide financial assurances in order to obtain or renew operating permits and to guarantee that the permitted facilities will be closed in accordance with applicable law.

Litigation

The Company is involved in various other legal actions arising in the ordinary course of business. After consultation with its legal counsel, management does not believe that the outcome of such legal actions will have a material adverse effect on the Company’s consolidated financial statements.

Environmental Matters

The Company’s operations and properties are subject to federal, state and local regulatory requirements relating to environmental protection. It is the Company’s policy to comply fully with all applicable requirements. Based on current information, the Company believes that its operations are in compliance with applicable environmental laws and regulations and management is not aware of any violation that could have a material adverse effect on the business. The remediation reserve covers anticipated costs; however, these estimates are based primarily on investigations and remediation plans established by independent consultants and regulatory agencies. Accordingly, these estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, or alteration to the expected remediation plans. It is the Company’s policy to realize a change in estimate once it becomes probable and can be reasonably estimated.

17

OILFIELDS HOLDINGS, INC.

Notes to Consolidated Financial Statements

July 16, 2010 and December 31, 2009

Leases

The Company leases office and processing facilities and certain equipment under noncancellable operating leases for periods ranging from one to ten years. The Company has the option to renew the lease term for its office leases. The following table presents future minimum rental payments under noncancelable operating leases with terms in excess of one year due in the following periods:

(in thousands of dollars)
2010	$	3,139
2011		2,678
2012		2,206
2013		2,185
2014		2,158
Thereafter		6,755
	$	19,121

Rental expense for the period from January 1, 2010 through July 16, 2010 and the year ended December 31, 2009 was $2,291,000 and $4,852,000, respectively, which also includes month-to-month rentals of equipment.

14. Transaction Costs

The Company incurred approximately $10,893,000 of costs related to the proposed sale of the Company to a third party. These costs include legal and professional fees and management bonuses.

15. Sale of Redfish Minerals

On April 30, 2009 the Company sold Redfish Minerals LLC to an affiliate for $635,000. The gain on sale included in Additional Paid in Capital of $2,711,000 includes the proceeds received on sale of $635,000 previously unearned revenue relating to a mineral rights lease that was been transferred to the subsidiary in previous years of $3,736,000 and associated tax liabilities of $1,660,000.

16. Acquisition of Non-Controlling Interest

On July 16, 2010 the Company acquired the 18% non-controlling interest in its OESC subsidiary for $5,377,000.

17. Dividend paid to Shareholders

On July 16, 2010 the Company paid $1,157,000 to its shareholders as a dividend in anticipation of the sale of the Company.

18. Subsequent Event

The Company has evaluated subsequent events through April 29, 2011, the date the financial statements were available to be issued. On July 16, 2010, the Company was sold to R360 Environmental Solutions, Inc. for consideration of approximately $118 million (subject to various contingencies).

18

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Basis of Presentation

On October 25, 2012 (the “Closing Date”), Waste Connections, Inc. (“Waste Connections”), through its wholly-owned subsidiary, WCI Holdings Co., Inc., completed the acquisition of the business of R360 Environmental Solutions, Inc. (“R360”) through the acquisition of all of R360’s principal operating subsidiaries from the sellers for total consideration of approximately $1.35 billion. The acquisition was funded with available cash and with borrowings of $475 million under our existing senior revolving credit facility and of $800 million under a new unsecured term loan facility. Additionally, Waste Connections assumed approximately $9.8 million of outstanding R360 debt. R360 provides non-hazardous oilfield waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins. R360 operates 26 facilities across Louisiana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming.

The unaudited pro forma combined statements of operations for the twelve months ended December 31, 2011, and the nine months ended September 30, 2012, give effect to the acquisition as if it had been completed on January 1, 2011. The unaudited pro forma combined balance sheet gives effect to the acquisition as if it had been completed on September 30, 2012.

The unaudited pro forma condensed combined financial information presented below is derived from the historical financial statements of Waste Connections and R360, adjusted to give effect to the acquisition and the financing transactions entered into in order to fund the acquisition. The unaudited pro forma combined financial statements, including the notes thereto, should be read in conjunction with the historical financial statements of: Waste Connections, which are included in its Annual Report on Form 10-K for the year ended December 31, 2011 and its Quarterly Reports on Form 10-Q for the quarter ended September 30, 2012; and R360, which is included in its Consolidated Financial Statements for the year ended December 31, 2011 and nine months ended September 30, 2012, included as Exhibit 99.1 to this current report on Form 8-K/A.

The pro forma adjustments are preliminary and have been made solely for informational purposes. The actual results reported by the combined company in periods following the acquisition may differ significantly from that reflected in these unaudited pro forma condensed combined financial statements for a number of reasons, including but not limited to cost savings from operating efficiencies, synergies and the impact of the incremental costs incurred in integrating the two companies. As a result, the pro forma condensed combined financial information is not intended to represent and does not purport to be indicative of what the combined company’s financial condition or results of operations would have been had the acquisition and the related financing transactions been completed on the applicable dates of this pro forma condensed combined financial information. In addition, the pro forma condensed combined financial information does not purport to project the future financial condition and results of operations of the combined company.

The acquisition is accounted for using the purchase method of accounting whereby the assets acquired and liabilities assumed as of the Closing Date, including identifiable intangible assets, are recorded at their estimated fair value. The excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed is recognized as goodwill.

The accompanying Unaudited Pro Forma Condensed Combined Financial Statements have been prepared based on preliminary assessments of the fair values of the assets to be acquired and the liabilities to be assumed. The final allocation of that consideration will be determined after the fair values of R360’s tangible assets, identifiable intangible assets and liabilities as of the effective time of the acquisition are determined. The finalization of the purchase accounting assessment may result in changes in the valuation of assets and liabilities acquired, particularly in regards to permits and customer relationships intangible assets, which could be materially different from those reflected in the pro forma combined company’s consolidated financial statements subsequent to the acquisition.

WASTE CONNECTIONS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2012

(In thousands, except share and per share amounts)

	Historical
	Waste Connections, Inc.			R360 Environmental Solutions, Inc.			Pro Forma Adjustments			Pro Forma
ASSETS
Current assets:
Cash and equivalents	$	103,532		$	3,306		$	(72,922	)(a)	$	33,916
Accounts receivable, net of allowance for doubtful accounts		196,617			54,298			—			250,915
Deferred income taxes		29,125			—			4,769	(b)		33,894
Prepaid expenses and other current assets		33,487			3,537			—			37,024
Total current assets		362,761			61,141			(68,153	)		355,749
Property and equipment, net		1,561,415			132,904			—	(b)		1,694,319
Goodwill		1,183,363			142,848			607,168	(b)		1,933,379
Intangible assets, net		496,341			146,479			359,675	(b)		1,002,495
Restricted assets		32,982			—			—			32,982
Other assets, net		36,965			7,427			2,284	(b)		46,676
	$	3,673,827		$	490,799		$	900,974		$	5,065,600
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	105,883		$	7,095		$	—		$	112,978
Book overdraft		8,786			—			—			8,786
Accrued liabilities		119,579			46,973			—			166,552
Deferred revenue		68,694			—			—			68,694
Current portion of contingent consideration		25,958			12,529			21	(b)		38,508
Current portion of long-term debt and notes payable		4,128			15,468			17,343	(c)		36,939
Total current liabilities		333,028			82,065			17,364			432,457
Long-term debt and notes payable		976,446			225,224			1,026,814	(c)		2,228,484
Contingent consideration		23,995			24,316			427	(b)		48,738
Other long-term liabilities		66,045			5,737			—			71,782
Deferred income taxes		422,487			25,926			(14,845	)(b)		433,568
Total liabilities		1,822,001			363,268			1,029,760			3,215,029
Commitments and contingencies
Equity:
Waste Connections’ preferred stock: $0.01 par value per share; 7,500,000 shares authorized		—			—			—			—
Common stock: $0.01 par value per share		1,228			1			(1	)(d)		1,228
Additional paid-in capital		772,043			113,184			(113,184	)(d)		772,043
Accumulated other comprehensive loss		(6,080	)		—			—	(d)		(6,080	)
Shareholder note receivable		—			(14,989	)		14,989	(d)		—
Retained earnings		1,079,482			12,647			(13,902	)(d)		1,078,227
Total Waste Connections’ equity		1,846,673			110,843			(112,098	)		1,845,418
Noncontrolling interest in subsidiaries		5,153			16,688			(16,688	)(d)		5,153
Total equity		1,851,826			127,531			(128,786	)		1,850,571
	$	3,673,827		$	490,799		$	900,974		$	5,065,600

Page 1

WASTE CONNECTIONS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Nine months ended September 30, 2012

(In thousands, except share and per share amounts)

	Historical
	Waste Connections, Inc.			R360 Environmental Solutions, Inc.			R360 Reclassifications			Pro Forma Adjustments			Pro Forma
Revenues	$	1,212,815		$	166,938		$	—		$	—		$	1,379,753
Operating expenses:
Cost of operations		698,351			69,845			—			—			768,196
Selling, general and administrative		143,899			24,588			17,141	(1)		(5,436	)(e)		180,192
Equity-based compensation		—			10,503			(10,503	)(1)		—			—
Transaction costs		—			6,638			(6,638	)(1)		—			—
Depreciation		119,331			12,231			—			—	(b)		131,562
Amortization of intangibles		18,115			8,392			—			36,049	(f)		62,556
Loss (gain) on disposal of assets		715			(62	)		—			—			653
Gain from litigation settlement		(3,537	)		—			—			—			(3,537	)
Operating income		235,941			34,803			—			(30,613	)		240,131
Interest expense		(36,063	)		(12,507	)		—			(7,196	)(g)		(55,766	)
Interest income		630			79			—			—			709
Remeasurement of contingent consideration		—			(8,000	)		—			—			(8,000	)
Other income		1,033			500			—			—			1,533
Income before income tax provision		201,541			14,875			—			(37,809	)		178,607
Income tax provision		(77,967	)		(2,421	)		—			5,733	(h)		(74,655	)
Net income		123,574			12,454			—			(32,076	)		103,952
Less: Net income attributable to noncontrolling interests		(470	)		(23,307	)		—			23,307	(i)		(470	)
Net income (loss) attributable to controlling interests	$	123,104		$	(10,853	)	$	—		$	(8,769	)	$	103,482
Earnings per common share attributable to Waste Connections’ common stockholders:
Basic	$	1.02											$	0.86
Diluted	$	1.02											$	0.85
Shares used in the per share calculations:
Basic		120,571,106												120,571,106
Diluted		121,198,901												121,198,901

Page 2

WASTE CONNECTIONS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Year Ended December 31, 2011

(In thousands, except share and per share amounts)

	Historical
	Waste Connections, Inc.			R360 Environmental Solutions, Inc.			R360 Reclassifications			Pro Forma Adjustments			Pro Forma
Revenues	$	1,505,366		$	163,180		$	—		$	—		$	1,668,546
Operating expenses:
Cost of operations		857,580			70,988			—			—			928,568
Selling, general and administrative		161,967			24,513			194	(1)		—			186,674
Transaction costs		—			194			(194	)(1)		—			—
Depreciation		147,036			12,178			—			—	(b)		159,214
Amortization of intangibles		20,064			2,999			—			41,114	(f)		64,177
Loss on disposal of assets		1,657			439			—			—			2,096
Operating income		317,062			51,869			—			(41,114	)		327,817
Interest expense		(44,520	)		(13,116	)		—			(13,709	)(g)		(71,345	)
Interest income		530			108			—			—			638
Remeasurement of contingent consideration		—			(281	)		—			—			(281	)
Other income		57			645			—			—			702
Income before income tax provision		273,129			39,225			—			(54,823	)		257,531
Income tax provision		(106,958	)		(14,063	)		—			20,833	(h)		(100,188	)
Net income (loss)		166,171			25,162			—			(33,990	)		157,343
Less: Net income attributable to noncontrolling interests		(932	)		—			—			—			(932	)
Net income (loss) attributable to Waste Connections	$	165,239		$	25,162		$	—		$	(33,990	)	$	156,411
Earnings per common share attributable to Waste Connections’ common stockholders:
Basic	$	1.47											$	1.39
Diluted	$	1.45											$	1.38
Shares used in the per share calculations:
Basic		112,720,444												112,720,444
Diluted		113,583,486												113,583,486

Page 3

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share amounts)

The effective date of the acquisition is assumed to be September 30, 2012 for purposes of preparing the Unaudited Pro Forma Condensed Combined Balance Sheet. The effective date of the acquisition is assumed to be January 1, 2011 for purposes of preparing the Unaudited Pro Forma Condensed Combined Statements of Net Income. See also Unaudited Pro Forma Condensed Combined Financial Statements — Basis of Presentation for further information.

Reclassifications

Reclassifications have been made to R360’s historical statements of operations to conform to Waste Connections’ presentation as follows:

(1) Selling, General and Administrative

R360’s transaction costs for the year ended December 31, 2011 and the nine months ended September 30, 2012 have been reclassified to selling, general and administrative expenses. Transaction costs of $194 for the year ended December 31, 2011 consist of third party and indirect acquisition costs. Transaction costs for the nine month ended September 30, 2012 consist of $374 of third party and indirect acquisition costs, $2,191 of costs associated with a withdrawn initial public offering and $4,073 of costs associated with the sale of the R360 to Waste Connections.

Additionally, equity-based compensation costs of $10,503 have been reclassified to selling, general and administrative expenses.

Pro Forma Adjustments

(a) Cash and Cash Equivalents

The pro forma adjustment to cash and cash equivalents includes $64,754 for the portion of the total purchase price consideration funded with existing cash, $1,255 of transaction costs expected to be incurred after September 30, 2012 as a result of the acquisition and debt issuance costs of $6,913. Prior to September 30, 2012, Waste Connections incurred $1,363 of transaction costs related to the acquisition of R360, which are reflected in its historical balance sheet at September 30, 2012 and historical results of operations for the nine months ended September 30, 2012.

Transaction costs represent Waste Connections’ direct costs of the acquisition. These costs include legal, accounting, engineering, valuation, and other advisory fees paid to third parties related to due diligence and closing the transaction.

Debt issuance costs primarily include legal and underwriting fees associated with the issuance of a new unsecured term loan facility. The unsecured term loan facility, in the principal amount of $800,000, matures on October 25, 2017.

(b) Goodwill

The pro forma adjustments to goodwill include the reversal of R360’s goodwill of $142,848 as of September 30, 2012 and the addition of the preliminary purchase price allocation to goodwill of $750,016 for the acquisition of R360. The adjustments reflect the preliminary allocation of the purchase price for the acquisition of R360. The acquisition of R360 by Waste Connections is being treated as a purchase with Waste Connections as the accounting acquirer in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations” (formerly SFAS No. 141(R)). Accordingly, Waste Connections will recognize identifiable assets acquired and liabilities assumed at fair value.

As of the date of this current report on Form 8-K/A, management has used draft third party valuations and other information to complete the preliminary valuation of such assets and liabilities. Accordingly, the preliminary purchase price allocation used for the purpose of this unaudited pro forma financial information has been allocated on a preliminary basis using financial information as of September 30, 2012.

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Waste Connections is in the process of evaluating the fair value of tangible and intangible assets acquired and liabilities assumed which will be based on independent appraisals and estimates by management and will be finalized prior to the filing of its annual report on Form 10-K for the year ended December 31, 2012. Therefore, the purchase price allocation is subject to adjustment, and such adjustments could be material.

Management has determined the preliminary allocation of the purchase price for the acquisition as follows (in thousands):

Purchase consideration for the acquisition of R360:
Cash consideration (1)	$	1,339,754
Contingent consideration (2)		37,293
		1,377,047
Plus:
Debt assumed		9,849
Deferred income taxes (3)		6,312
Less:
Intangible assets (4)		(506,154	)
Property and equipment (5)		(132,904	)
Other assets/liabilities, net (6)		(4,134	)
Goodwill	$	750,016

(1) Cash consideration included payment for the estimated net working capital of $18,906, as defined in the acquisition agreement. Subsequent to the closing date of the acquisition, Waste Connections will calculate the final closing date net working capital. If the final closing date net working capital is determined to be greater than the estimate at close, Waste Connections will remit additional cash consideration, equal to the difference, to R360. If the final closing date net working capital is determined to be less than the estimate at close, R360 will return to Waste Connections a portion of the cash consideration received at close equal to the difference.

(2) Contingent consideration consists of amounts payable to former owners of companies acquired by R360 based on the achievement of certain targets. The pro forma adjustment to contingent consideration includes the reversal of current and long-term contingent consideration assumed from R360 of $12,529 and $24,316, respectively, totaling $36,845, and the addition of the fair value of the acquired contingent consideration, discounted based upon Waste Connections’ credit-adjusted borrowing rate. The fair value of the current and long-term portions of the acquired contingent consideration as of September 30, 2012 is $12,550 and $24,743, respectively, totaling $37,293. The contingency periods lapse between 2012 and 2014, and the future accretion expense Waste Connections expects to record associated with the acquired contingent consideration is $1,126.

(3) The preliminary pro forma deferred income taxes recorded for the difference between R360’s tax bases and Waste Connections’ pro forma fair values for the assets acquired and liabilities assumed, using an estimated combined company federal and state statutory income tax rate of 38.0%, consist of deferred income tax liabilities of $11,081 and deferred income tax assets of $4,769.

(4) As part of its preliminary assessment of the purchase price accounting for R360, Waste Connections has identified on a preliminary basis the following significant identifiable intangible assets and assessed their preliminary fair values and estimated useful lives as follows:

Customer relationships – R360 operations are characterized by contractual arrangements with customers for oilfield waste treatment, recovery and disposal services. The separately identifiable intangible asset reflects the estimated value that is attributable to the existing contractual arrangement and the value that is expected from the on-going relationship beyond the existing contractual period.

Permits – Waste Connections is acquiring all of the permits required to provide oilfield waste treatment, recovery and disposal services at R360’s facilities. Permits are classified as indefinite-lived if the permit has a perpetual life, or is subject to periodic renewals that are automatically granted if the facility is in compliance with the terms

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of the permit, and the permit is for services that can be provided for an indefinite period and is not subject to capacity limitations. Permits with limited lives and permits for disposal services at facilities with capacity limitations are classified as definite-lived and amortized over the lesser of the remaining life of the disposal asset or the remaining life of the permit, adjusted for expected renewal periods that extend the permits life.

Waste Connections has preliminarily ascribed the following values and estimated useful lives to the identifiable intangible assets (dollars in thousands):

Type of Identifiable Intangible Assets	Preliminary Fair Values		Estimated Useful Life
Indefinite-lived intangible assets:
Permits	$	32,835
Definite-lived intangible assets:
Customer relationships		328,223		15 Years
Permits		145,096		20 –30 Years
Preliminary fair value of identifiable intangible assets	$	506,154

The table below (in thousands) illustrates the effect of a 10% increase or decrease to the preliminary fair values of the acquired intangible assets on the pro forma financial statements. Such increases or decreases would result in a corresponding offsetting and equal change in the preliminary value of goodwill.

Permits	$	17,793
Customer relationships		32,822

An increase or decrease of 10% to the preliminary fair values of the acquired intangible assets would result in a corresponding increase or decrease to amortization expense by $4,411 for the year ended December 31, 2011, and by $4,444 for the nine months ended September 30, 2012.

(5) Historically, R360 has calculated depreciation on a straight-line method using the following useful economic lives:

	Years
Landfarm and processing sites	5 – 15
Buildings and improvements	7 – 15
Machinery and equipment	3 – 15
Vehicles	3 – 5
Furniture and fixtures	3 – 5

The preliminary valuation of acquired property and equipment has not been finalized; however, management has assumed that book value approximates fair value based on the limited period of time since the valuation of the property and equipment, which occurred upon the formation of R360 in May 2010, and management’s review of the useful lives of the property and equipment acquired. The table below illustrates the effect of a 10% increase or decrease to the preliminary fair values of the acquired property and equipment on the pro forma financial statements. Such increases or decreases would result in a corresponding offsetting and equal change in the preliminary value of goodwill.

Estimated preliminary fair values	$	132,904
Effect of a 10% increase in property and equipment		(13,290	)
Effect of a 10% decrease in property and equipment		13,290

Assuming an average useful economic life of eight years, an increase or decrease of 10% to the preliminary fair values of the acquired property and equipment would result in a corresponding increase or decrease to depreciation expense by $1,822 for the year ended December 31, 2011 and by $1,367 for the nine months ended September 30, 2012.

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(6) Management has assumed that the historical carrying values of the following assets and liabilities, with the exception of other assets, net, equate to their fair value for the purposes of this preliminary purchase price allocation (in thousands):

	Historical Carrying Value			Pro Forma Adjustments			Assumed Fair Value
Cash and cash equivalents	$	3,306		$	—		$	3,306
Accounts receivable		54,298			—			54,298
Prepaid expenses and other current assets		3,537			—			3,537
Other assets, net		7,427			(4,629	)		2,798
Accounts payable		(7,095	)		—			(7,095	)
Accrued liabilities		(46,973	)		—			(46,973	)
Other long-term liabilities		(5,737	)		—			(5,737	)
	$	8,763		$	(4,629	)	$	4,134

The pro forma adjustment to R360’s other assets, net, includes the reversal of R360’s debt issuance costs of $4,629, which is the result of the repayment of certain debt of R360 as a result of the acquisition. Additionally, Waste Connections incurred debt issuance costs of $6,913 related to its new unsecured term loan facility. For further information, see (a) Cash and Cash Equivalents above. The net impact of Waste Connections’ new debt issuance costs and the reversal of R360’s debt issuance costs is a net increase to other assets, net, of $2,284, in the Unaudited Pro Forma Condensed Combined Balance Sheet.

(c) Debt

The pro forma adjustments to debt include the following (in thousands):

	R360 Debt Paid at Close			Waste Connections’ Borrowings		Pro Forma Adjustments
Revolving credit facility	$	(83,500	)	$	475,000
Tranche A term loan		(39,688	)		—
Tranche B term loan		(58,650	)		—
Tranche B-1 term loan		(49,005	)		—
Unsecured term loan		—			800,000
		(230,843	)		1,275,000
Less: current portion		(12,657	)		30,000	$	17,343
Long-term debt and notes payable	$	(218,186	)	$	1,245,000	$	1,026,814

R360’s other debt with a current and long-term balance of $2,811 and $7,038, respectively, remained outstanding immediately following the acquisition. Borrowings under the Waste Connections credit facility are due in 2016 and classified as long-term. The proceeds from the new unsecured term loan facility include $30,000 due within one year and classified as current, with the remaining $770,000 classified as long-term.

(d) Equity

The pro forma adjustments to equity include, as of September 30, 2012, the elimination of R360’s total equity of $127,531, including shareholder notes receivable of $14,989 which were not acquired by Waste Connections and noncontrolling interests in R360’s subsidiaries of $16,688. R360’s ownership was comprised of preferred units, representing 97% of the value of R360, and common units, representing 3% of the value of R360. The ownership interests in the common units were accounted for as noncontrolling interests as they were owned by entities outside of R360’s consolidated group. The preferred units were owned 100% by entities within R360’s consolidated group. Waste Connections purchased all of the common and preferred units of R360, which eliminated the existence of the noncontrolling interests in R360. Additionally, a pro forma adjustment of $1,255 has been recorded to reduce retained earnings for Waste Connections’ transactions costs expected to be incurred after September 30, 2012 as a result of the acquisition.

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In addition, R360 has equity-based incentive units under the terms of an equity-based Incentive Unit Plan. Under the terms of the Incentive Unit Plan, the incentive unit awards became fully vested upon the close of the acquisition. Compensation expense of approximately $8,927 was recognized as of the closing date of the acquisition for the acceleration of the vesting of these equity-based awards. This compensation expense will not be recorded in the purchase price allocation for the acquisition of R360, and, therefore, is not included as a pro forma adjustment to the Unaudited Pro Forma Condensed Combined Financial Statements.

(e) Selling, General and Administrative Expenses

The pro forma adjustment to selling, general and administrative expenses of $5,436 includes the reversal of Waste Connections’ and R360’s acquisition-related expenses recorded during the nine months ended September 30, 2012 of $1,363 and $4,073, respectively. These costs have been excluded from the Unaudited Pro Forma Condensed Combined Statements of Operations as they are nonrecurring charges that are directly attributable to the transaction.

(f) Amortization Expense

Represents adjustments to give pro forma effect to the following as if the R360 acquisition had occurred on January 1, 2011 (in thousands):

	Year ended December 31, 2011			Nine months ended September 30, 2012
Amortization of intangibles (1)	$	44,113		$	44,441
Elimination of historical amortization of intangibles		(2,999	)		(8,392	)
Total adjustment to income before taxes	$	41,114		$	36,049

(1) Assumes total intangible assets of $506,154 amortized over a 15 to 30 year period using the straight-line method, or a pattern in which the assets’ economic benefits are consumed.

(g) Interest Expense

Reflects changes in interest expense for debt issued in connection with the acquisition of R360 (in thousands):

	Year ended December 31, 2011			Nine months ended September 30, 2012
Unsecured term loan issued (1)	$	17,465		$	12,454
Credit facility borrowings (2)		7,057			5,293
Debt issuance costs (3)		1,694			1,208
Pro forma interest expense		26,216			18,955
Less historical interest expense on debt retired		(12,507	)		(11,759	)
Total pro forma adjustment	$	13,709		$	7,196

(1) The borrowings under the unsecured term loan bear interest, at the Company’s option, at either the base rate plus the applicable base rate margin on base rate loans, or the LIBOR rate plus the applicable LIBOR margin on LIBOR loans. The applicable margins under the unsecured term loan facility vary from 0.375% to 1.50% for base rate loans and 1.375% to 2.50% for LIBOR loans, depending on Waste Connections’ leverage ratio, as defined in the term loan agreement. The pro forma adjustments to interest expense attributable to the unsecured term loan borrowings for the year ended December 31, 2011 and the nine months ended September 30, 2012 of $17,465 and $12,454, respectively, assume LIBOR loans at an interest rate of 2.21%, which includes an applicable margin of 2.0%.

(2) The borrowings under the credit facility bear interest, at the Company’s option, at either the base rate plus the applicable base rate margin on base rate loans, or the LIBOR rate plus the applicable LIBOR margin on LIBOR loans. The applicable margins under the credit facility vary from 0.15% to 1.0% for base rate loans and 1.15% to 2.0% for LIBOR loans, depending on Waste Connections’ leverage ratio, as defined in the credit facility agreement. The pro forma adjustments to interest expense attributable to the credit facility borrowings for the year ended December 31, 2011 and the nine months ended September 30, 2012 of $7,057 and $5,293, respectively, assume LIBOR loans at an interest rate of 1.49%, which includes an applicable margin of 1.275%.

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(3) Assumes total capitalized debt issuance costs of $6,913 being amortized using the effective interest method over a five-year period.

(h) Provision for Income Taxes

Income tax benefit has been provided for the income tax effect of the pro forma adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations at an estimated combined company federal and state statutory rate of 38.0%, and the addition of income tax expense of $8,634 resulting from the elimination of noncontrolling interests in R360’s subsidiaries.

(i) Net Income Attributable to Noncontrolling Interests

The pro forma adjustment to net income attributable to noncontrolling interests of $23,307 for the nine months ended September 30, 2012 consists of the reversal of net income allocated to ownership interests held by entities outside of R360’s consolidated group. Net income attributable to noncontrolling interests has been excluded from the Unaudited Pro Forma Condensed Combined Statements of Operations since Waste Connections acquired 100% of the equity interests in entities that, together with the operating subsidiaries of such entities, hold the R360 business.

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