Exhibit 99.1

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2003 AND DECEMBER 31, 2002 AND

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2003

1

REPORT OF INDEPENDENT AUDITORS

To Allied Waste Industries, Inc.

      In our opinion, the accompanying combined balance sheets and the related combined statements of operations, of equity, and of cash flows present fairly, in all material respects, the financial position of the North Central Florida District (wholly owned divisions of Allied Waste Industries, Inc.) (the “Company”) at December 31, 2003 and 2002, and the results of their operations and their cash flows for the three years in the period ended December 31, 2003 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, which 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.

      As discussed in Note 4 to the combined financial statements, the Company changed its method of accounting for obligations associated with the retirement of long-lived tangible assets and the associated asset retirement costs as of January 1, 2003. As discussed in Note 3 to the combined financial statements, the Company changed its method of accounting for goodwill and other intangible assets as of January 1, 2002.

PRICEWATERHOUSECOOPERS LLP

March 18, 2004

Phoenix, Arizona

2

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED BALANCE SHEETS

		December 31,		December 31,
		2003		2002
		(In thousands)
ASSETS
Current Assets —
Cash		$	4	$	23
Accounts receivable, net of allowance of $80 and $141			9,385		9,976
Prepaid and other current assets			517		723
	Total current assets		9,906		10,722
Property and equipment, net			16,739		18,476
Goodwill			84,835		116,168
Other assets, net			57		609
	Total assets	$	111,537	$	145,975
LIABILITIES AND DISTRICT’S EQUITY
Current Liabilities —
Current portion of long-term debt		$	2	$	—
Accounts payable			4,733		5,157
Current portion of accrued capping, closure, post-closure and environmental costs			308		378
Accrued liabilities			977		1,063
Unearned revenue			4,549		4,630
	Total current liabilities		10,569		11,228
Long-term debt, net of current portion			—		12
Accrued capping, closure, post-closure and environmental costs, less current portion			1,159		268
Due to parent			85,290		98,321
Commitments and contingencies
District’s equity			14,519		36,146
	Total liabilities and district’s equity	$	111,537	$	145,975

The accompanying Notes to Combined Financial Statements are an

integral part of these combined balance sheets.

3

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED STATEMENTS OF OPERATIONS

			Year Ended December 31,
			2003			2002			2001
			(In thousands)
Revenues			$	89,702		$	90,576		$	89,346
Cost of operations				65,657			63,927			60,668
Selling, general and administrative expenses				8,000			6,888			5,649
Depreciation and amortization				4,804			4,663			7,977
Impairment of goodwill				31,333			—			—
	Operating (loss) income			(20,092	)		15,098			15,052
Interest income, net				(5,245	)		(3,409	)		(3,003	)
	(Loss) income before income taxes			(14,847	)		18,507			18,055
Income tax expense				6,594			7,403			8,283
	Net (loss) income before cumulative effect of change in accounting principle			(21,441	)		11,104			9,772
Cumulative effect of change in accounting principle, net of tax				186			—			—
Net (loss) income			$	(21,627	)	$	11,104		$	9,772
Pro forma amounts, assuming the change in accounting principle is applied retroactively and excluding the cumulative effect of change in accounting principle in the year of adoption:
		Net (loss) income	$	(21,441	)	$	11,137		$	9,800

The accompanying Notes to Combined Financial Statements are an

integral part of these combined statements.

4

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED STATEMENTS OF DISTRICT’S EQUITY

		District’s
		Equity
		(In thousands)
Balance as of December 31, 2000		$	15,270
	Net income		9,772
	Balance as of December 31, 2001		25,042
	Net income		11,104
	Balance as of December 31, 2002		36,146
	Net loss		(21,627	)
	Balance as of December 31, 2003	$	14,519

The accompanying Notes to Combined Financial Statements are an

integral part of these combined statements.

5

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED STATEMENTS OF CASH FLOWS

		Year Ended December 31,
		2003			2002			2001
		(In thousands)
Operating activities —
Net (loss) income		$	(21,627	)	$	11,104		$	9,772
Adjustments to reconcile net (loss) income to cash provided by operating activities —
Provisions for:
	Depreciation and amortization		4,804			4,663			7,977
	Doubtful accounts		233			180			373
	Gain on sale of fixed assets		(62	)		(59	)		(121	)
	Loss on sale of trade receivables		1,476			—			—
	Write-off of goodwill		31,333			—			—
	Cumulative effect of change in accounting principle, net of tax		186			—			—
Change in operating assets and liabilities, excluding the effects of purchase acquisitions —
	Accounts receivable, prepaid expenses, inventories and other		(907	)		542			653
	Accounts payable, accrued liabilities, unearned revenue and other		(591	)		601			(2,247	)
	Capping, closure and post-closure accretion and provision		40			244			230
	Capping, closure, post-closure and environmental expenditures		(376	)		(227	)		(224	)
Cash provided by operating activities			14,509			17,048			16,413
Investing activities —
	Cost of acquisitions, net of cash required		—			—			(383	)
	Proceeds from sale of fixed assets		155			100			1,076
	Capital expenditures, excluding acquisitions		(2,178	)		(1,147	)		(877	)
	Capitalized interest		—			(1	)		(11	)
	Change in notes receivable and other		542			3			(545	)
Cash used for investing activities			(1,481	)		(1,045	)		(740	)
Financing activities —
	Change in due to parent		(13,037	)		(16,110	)		(15,678	)
	Payments on debt		(10	)		—			—
Cash used for financing activities			(13,047	)		(16,110	)		(15,678	)
Decrease in cash			(19	)		(107	)		(5	)
Cash at beginning of year			23			130			135
Cash at end of year		$	4		$	23		$	130
Supplemental disclosures:
	Liabilities incurred or assumed in acquisitions	$	—		$	—		$	125
	Non-cash change in due to parent	$	129		$	(192	)	$	314
	Note receivable due from affiliate for trade receivables sold	$	1,405		$	—		$	—

The accompanying Notes to Combined Financial Statements are an

integral part of these combined statements.

6

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

      The North Central Florida District (Company) is a group of several business units that provide waste collection, transfer, recycling and disposal services in North and Central Florida and are wholly-owned by Allied Waste Industries, Inc. (Allied or Parent), a Delaware corporation. Allied is the second largest, non-hazardous solid waste management company in the United States, as measured by revenues and provides non-hazardous waste collection, transfer, recycling and disposal services in 37 states. All significant operational and financial decisions of the Company are made by Allied’s management.

      In November 2003, Allied entered into a definitive agreement to sell substantially all of the Company’s assets and certain liabilities to a third party for expected proceeds of approximately $120 million plus working capital as defined in the agreement. On December 31, 2003, a portion of the divestiture transaction was completed and Allied received proceeds of approximately $76 million. The remainder of the transaction is expected to close during the first and second quarter of 2004. The accompanying balance sheet at December 31, 2003 was prepared by Allied prior to the divestiture and reflects the assets and liabilities of the Company prior to the sale.

Basis of presentation —

      All significant intercompany accounts and transactions between the business units within the Company are eliminated in the combined financial statements. We are not a registrant with the Securities and Exchange Commission (SEC) and are not subject to the SEC’s periodic reporting requirements. Certain estimates, including allocations from the Parent, have been made to provide financial information for SEC and stand-alone reporting purposes. We believe that the presentations and disclosures herein are adequate to make the information not misleading. In the opinion of management, all adjustments necessary to fairly state the financial statements have been reflected.

      We adopted certain changes in accounting principles that impact the comparability of the financial information presented herein. See Recently adopted accounting pronouncements below.

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 contingencies 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.

Allowance for doubtful accounts —

      We perform credit evaluations of our significant customers and establish an allowance for doubtful accounts based on the aging of our receivables, payment performance factors, historical trends and other information. In general, we reserve 50% of those receivables outstanding 90 to 120 days and 100% of those outstanding over 120 days. We also review outstanding balances on an account specific basis and fully reserve the receivable prior to 120 days if information becomes available indicating we will not receive payment. Our reserve is evaluated and revised on a monthly basis.

Concentration of credit risk —

      Financial instruments that potentially subject us to concentrations of credit risk consist of trade receivables. Concentrations of credit risk with respect to trade receivables are limited due to the large number

7

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

of customers comprising our customer base. On-going credit evaluations are performed on customers, but we do not require collateral to support customer receivables.

Fair value of financial instruments —

      The carrying value of our financial instruments, which include cash, accounts receivable and accounts payable, as defined by Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about the Fair Value of Financial Instruments, approximate fair values due to the short-term maturities of these instruments.

Accrued capping, closure and post-closure costs —

      Accrued capping, closure and post-closure costs represent an estimate of the present value of the future obligation associated with capping, closure and post-closure monitoring of our two non-hazardous solid waste landfills. Site specific capping, closure and post-closure engineering cost estimates are prepared annually. The present value of estimated future costs are accrued on a per unit basis as landfill disposal capacity is consumed. For active landfills, the impact of changes determined to be changes in estimates, based on the annual update, are accounted for on a prospective basis. Changes in estimates for closed landfill sites and fully incurred capping events are recognized when determined.

Environmental costs —

      We accrue for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value, as the timing of cash payments is not reliably determinable. Recoveries of environmental remediation costs from other parties are recorded when their receipt is deemed probable. Environmental liabilities and apportionment of responsibility among potentially responsible parties are accounted for in accordance with the guidance provided by the American Institute of Certified Public Accountants Statement of Position 96-1 Environmental Remediation Liabilities.

Revenue —

      Revenues result primarily from fees charged to customers for waste collection, transfer, recycling and disposal services. We generally provide collection services under direct agreements with our customers or pursuant to contracts with municipalities. Commercial and municipal contract terms generally range from one to five years and commonly have renewal options.

      Advance billings are recorded as unearned revenue, and revenue is recognized when services are provided, usually within 90 days.

Business combinations —

      Under the purchase method, we allocate the cost of the acquired business to the assets acquired and liabilities assumed based upon their estimated fair values. These estimates are revised during the allocation period as necessary when, and if, information regarding contingencies becomes available to further define and quantify assets acquired and liabilities assumed. The allocation period generally does not exceed one year. To the extent contingencies are resolved or settled during the allocation period, such items are included in the revised allocation of the purchase price. Purchase accounting adjustments, acquisition related costs and other possible charges that may arise from the acquisitions may materially impact our future combined balance sheet and statements of operations.

8

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Allied acquired a hauling and recycling business in February 2001 for cash consideration of approximately $425,000 which was accounted for under the purchase method and is reflected in the results of operations since the effective date of the acquisition. Our reported revenues and net income for the year ended December 31, 2001 were not significantly impacted by the pro forma effect of this acquisition.

Recently adopted accounting pronouncements —

      In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS 143), which outlines the standards for accounting for obligations associated with the retirement of a long-lived tangible asset. The standard was effective beginning January 1, 2003 and impacts the accounting for landfill retirement obligations, which we have historically referred to as closure and post-closure. See Note 4 for additional discussion.

      In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The recognition requirements of FIN 45 are effective for any guarantees entered into subsequent to January 1, 2003. The adoption of FIN 45 did not have a material impact on our combined financial statements.

      Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangibles Assets (SFAS 142), which among other things, eliminates the amortization of goodwill and instead requires an annual assessment of goodwill impairment by applying a fair value based test. See Note 3 for additional discussion.

      Effective January 1, 2002, we adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144) which supercedes SFAS No. 121. SFAS 144 provides a single accounting model for impairment of long-lived assets held for use and for long-lived assets that are to be disposed of by sale (including discontinued operations). SFAS 144 does not address impairment of goodwill. There was no impact on our financial statements or results of operations upon adoption.

2. Property and Equipment

      Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of land improvements (10 years), buildings and improvements (30 to 40 years), vehicles and equipment (3 to 10 years), containers and compactors (5 to 10 years) and furniture and office equipment (3 to 8 years). We do not assume a residual value on our depreciable assets. In accordance with SFAS 144, property and equipment are evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

      The cost of landfill airspace, including original acquisition cost and incurred and projected landfill construction costs, is amortized over the capacity of the landfill based on a per unit basis as landfill airspace is consumed. We periodically review the realizability of our investment in operating landfills. Should events and circumstances indicate that any of our landfills be reviewed for possible impairment, such review for recoverability will be made in accordance with Emerging Issues Task Force (EITF) Issue 95-23, The Treatment of Certain Site Restoration/Environmental Exit Costs When Testing a Long-Lived Asset for Impairment (EITF 95-23). EITF 95-23 outlines how cash flows for environmental exit costs should be determined and measured.

9

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Expenditures for major renewals and betterments are capitalized, while expenditures for maintenance and repairs, which do not improve assets or extend their useful lives, are charged to expense as incurred. When property is retired, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in cost of operations.

      Property and equipment at December 31, 2003 and December 31, 2002 are as follows (in thousands):

		December 31,		December 31,
		2003		2002
Land and land improvements		$	2,886	$	2,684
Land held for permitting as landfills			96		208
Landfills			4,056		2,156
Buildings and improvements			2,933		2,899
Vehicles and equipment			19,121		18,804
Containers and compactors			8,402		7,838
Furniture and fixtures			340		334
	Total property and equipment		37,834		34,923
Less: Accumulated depreciation and amortization			21,095		16,447
	Property and equipment, net	$	16,739	$	18,476

3. Goodwill

      Our goodwill balance reflects an amount related to the acquisition completed in February 2001, as discussed in Note 1, and an allocation from our Parent related to the acquisition of Browning-Ferris Industries, Inc. (BFI) completed in July 1999. The allocation from our Parent utilized estimates that we believe were applied using a reasonable approach.

      As discussed in Note 1, we adopted SFAS 142, effective January 1, 2002. SFAS 142 eliminates the amortization of goodwill and instead requires an annual assessment of goodwill impairment by applying a fair value based test. The calculation of fair value is subject to judgments and estimates. The estimates of fair value are assumptions about our future business plans and are based on facts and circumstances known at the time of the assessment. We estimate fair value of the combined divisions based on net cash flows discounted using a weighted-average cost of capital and other considerations. The estimated fair value could change if there were future changes in our expenditures levels or ability to perform at levels that were forecasted.

      Upon adoption of SFAS 142 on January 1, 2002, we tested our existing goodwill for realizability and determined that we had no impairment of goodwill and therefore SFAS 142 had no impact to the combined financial statements upon adoption (other than the elimination of goodwill amortization discussed above). The impairment test of goodwill will be completed more frequently than annually under certain conditions. For example, a significant adverse change in liquidity or the business environment, unanticipated competition, a significant adverse action by a regulator or a disposal of a significant portion of our operations could prompt an impairment test between annual assessments.

      In November 2003, Allied entered into a definitive agreement to sell substantially all of the assets and certain liabilities of the Company. As a result of the definitive agreement, we performed an impairment assessment of our goodwill using the anticipated sales price as our estimate of fair value and recorded a charge of approximately $31 million as a component of operating income. The impairment charge was determined as the excess of the estimated implied fair value over the carrying amount of our goodwill. The implied fair value of goodwill was determined in the same manner as the amount of goodwill recognized in a business

10

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

combination. The impairment charge is non-cash in nature and does not affect either the Company’s or Allied’s liquidity or compliance with debt covenants.

      Following is a summary of the changes in our goodwill during the year ended December 31, 2003 (in thousands):

Balance at December 31, 2002	$	116,168
Impairment		(31,333	)
Balance at December 31, 2003	$	84,835

      There was no activity in the goodwill balance from December 31, 2001 through December 31, 2002.

      We adopted SFAS 142 effective January 1, 2002. For the year ended December 31, 2001, net income adjusted to exclude goodwill amortization expense was $12,675.

4. Landfill Accounting

Change in accounting principle —

      Effective January 1, 2003, we adopted SFAS 143 which outlines standards for accounting for our landfill retirement obligations that have historically been referred to as closure and post-closure. SFAS 143 does not change the basic accounting principles that the waste industry has historically followed for accounting for these types of obligations. In general, the industry has followed the accounting practice of recognizing a liability on the balance sheet and related expense as waste is disposed at the landfill to match operating costs with revenues. The industry refers to this practice as life-cycle accounting. The principle elements of life-cycle accounting are still being followed.

      The new rules are a refinement to our industry practices and have caused a change in the mechanics of calculating landfill retirement obligations and the classification of where amounts are recorded in the financial statements. Landfill retirement obligations are no longer accrued through a provision to cost of operations, but rather as an increase to landfill assets. In addition, in accordance with SFAS 143, we changed the classification of certain costs related to capping, closure and post-closure obligations to other accounts. The most significant change in classification is that we now record the costs for methane gas collection systems in the landfill development assets. Further, the cost of financial assurance instruments are no longer accrued as part of the post-closure liability, but rather are expensed as incurred.

      Upon adoption, SFAS 143 required a cumulative change in accounting for landfill obligations retroactive to the date the landfill operations commenced or the date the asset was acquired. To do this, SFAS 143 required the creation of the related landfill asset, net of accumulated amortization and an adjustment to the capping, closure and post-closure liabilities for cumulative accretion.

      At January 1, 2003, we recorded a cumulative effect of a change in accounting principle of a net loss of approximately $186,000 (net of income tax benefit of $123,000). In addition, we recorded an increase in our capping, closure and post-closure liabilities of approximately $286,000 and a decrease in our net landfill assets of approximately $23,000.

Landfill assets —

      We have two active landfills in the North Central Florida District. One landfill has an expected operating life of 4 years. The second landfill has a remaining operating life of 9 years, including permitted airspace approved in October 2003. We use a life-cycle accounting method for landfills and the related capping, closure and post-closure liabilities. This method applies the costs to be capitalized associated with acquiring,

11

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

developing, closing and monitoring the landfills over the associated landfill capacity and associated consumption. On an annual basis, we update the development cost estimates (which include the costs to develop the site as well as the individual cell construction costs), and capping, closure and post-closure cost estimates for each landfill. Additionally, future capacity estimates (sometimes referred to as airspace) are updated annually using aerial surveys of each landfill to estimate utilized disposal capacity and remaining disposal capacity. The overall cost and capacity estimates are reviewed and approved by senior operations management annually.

      We use the units of production method for purposes of calculating the amortization rate at each landfill. This methodology divides the remaining costs (including unamortized amounts recorded) associated with acquiring, permitting and developing the entire landfill plus the present value of the total remaining costs for specific capping projects, closure and post-closure by the total remaining disposal capacity of that landfill (except for capping costs, which are divided by the total remaining capacity of the specific capping project). The resulting per unit amortization rate is applied to each unit disposed at the landfill and is recorded as expense for that period.

      Costs associated with developing the landfill include direct costs such as excavation, liners, leachate collection systems, engineering and legal fees, and capitalized interest. We classify this total disposal capacity as either permitted (having received the final permit from the governing authorities) or probable expansion. Probable expansion disposal capacity has not yet received final approval from the regulatory agencies, but we have determined that certain critical criteria have been met and the successful completion of the expansion is highly probable. Our requirements to classify disposal capacity as probable expansion are as follows:

      1. We have control of and access to the land where the expansion permit is being sought.

      2. All geologic and other technical siting criteria for a landfill have been met, or a variance from such requirements has been received (or can reasonably be expected to be achieved).

      3. The political process has been assessed and there are no identified impediments that cannot be resolved.

      4. We are actively pursuing the expansion permit and have an expectation that the final local, state and federal permits will be received within the next five years.

      5. Senior operations management approval has been obtained.

      Upon successfully meeting the preceding criteria, the costs associated with developing, constructing, closing and monitoring the total additional future disposal capacity are considered in the life-cycle cost of the landfill and reflected in the calculation of the amortization rate and the rate at which capping, closure and post-closure is accrued.

      Allied and its engineering and legal consultants continually monitor the progress of obtaining local, state and federal approval for each of its expansion permits. If it is determined that the expansion no longer meets our criteria, the disposal capacity is removed from our total available disposal capacity, the costs to develop that disposal capacity and the associated capping, closure and post-closure costs are removed from the landfill amortization base, and rates are adjusted prospectively. In addition, any value assigned to probable expansion capacity is written-off to expense during the period in which it is determined that the criteria are no longer met.

Capping, closure and post-closure —

      As individual areas within each landfill reach capacity, we are required to cap and close the areas in accordance with the landfill site permit. Generally, capping activities include the installation of compacted clay, geosynthetic liners, drainage channels, compacted soil layers and vegetative soil barriers over areas of a

12

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

landfill where total airspace has been consumed and waste is no longer being received. Capping activities occur throughout the life of the landfill.

      Closure costs are those costs incurred after a landfill site stops receiving waste, but prior to being certified as closed. After the entire landfill site has reached capacity and is closed, we are required to maintain and monitor the site for a post-closure period, which may extend for 30 years. Post-closure requirements generally include maintenance and operational costs of the site and monitoring the methane gas collection systems and groundwater systems, among other post-closure activities. Estimated costs for capping, closure and post-closure as required under Subtitle D regulations are compiled and updated annually for each landfill by local and regional company engineers. Daily maintenance activities, such as leachate disposal, methane gas and groundwater monitoring and maintenance, and mowing and fertilizing capped areas, incurred during the operating life of the landfill are expensed as incurred.

      SFAS 143 required landfill obligations to be recorded at fair value. Quoted market prices in active markets are the best evidence of fair value. Since quoted market prices for landfill retirement obligations are not available to determine fair value, we use discounted cash flows of capping, closure and post-closure cost estimates to approximate fair value. The cost estimates are prepared by our local management and third-party engineers based on the applicable local, state and federal regulations and site specific permit requirements and are intended to approximate fair value.

      Capping, closure and post-closure costs are estimated for the period of performance utilizing estimates a third party would charge (including profit margins) to perform those activities in full compliance with Subtitle D. If we perform the capping, closure and post-closure activities internally, the difference between amounts accrued, based upon third party cost estimates (including profit margins) and our actual cost incurred is recognized as a component of cost of operations in the period earned. An estimate of fair value should include the price that marketplace participants are able to receive for bearing the uncertainties in cash flows. However, when utilizing discounted cash flows, reliable estimates of market risk premiums may not be obtainable. In our industry, there is no market that exists for selling the responsibility for capping, closure and post-closure independent of selling the entire landfill. Accordingly, we believe that it is not possible to develop a methodology to reliably estimate a market risk premium and have excluded a market risk premium from our determination of expected cash flows for capping, closure and post-closure liability.

      We discount our capping, closure and post-closure costs using our credit-adjusted, risk-free rate (of 9% in 2003). The credit-adjusted, risk-free rate is based on the risk-free interest rate on obligations of similar maturity adjusted for our own credit rating. Changes in our credit-adjusted, risk-free rate do not change recorded liabilities, but subsequently recognized obligations are measured using the revised credit-adjusted, risk-free rate.

      Accretion expense is necessary to increase the accrued capping, closure and post-closure accrual balance to its future, or undiscounted, value. To accomplish this, we accrete our capping, closure and post-closure accrual balance using the credit-adjusted, risk-free rate (of 9% in 2003) and charge this accretion as an operating expense in that period. Accretion expense on recorded landfill liabilities is recorded to cost of operations from the time the liability is recognized until the costs are paid.

13

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Following is a table that shows the activity and balances for the capping, closure and post-closure accruals from December 31, 2002 to December 31, 2003 (in thousands):

Balance at December 31, 2002	$	593
Charges to expenses		40
Other charges(1)		1,163
Payments		(366	)
Balance at December 31, 2003	$	1,430

(1)  Amounts consist primarily of the cumulative effect of change in accounting principle for the adoption of SFAS 143 and the recognition of amounts accrued for capping, closure and post-closure liability to landfill asset during the period.

      The pro forma capping, closure and post-closure obligations as of December 31, 2002, 2001 and 2000 would have been approximately $879,000, $718,000 and $572,000, respectively.

Environmental costs —

      We engage independent environmental consulting firms to assist us in conducting environmental assessments of existing landfills or other properties, and in connection with companies acquired from third parties.

      The ultimate amounts for environmental liabilities cannot be precisely determined and estimates of such liabilities made by us, after consultation with our independent environmental engineers and legal counsel, require assumptions about future events due to a number of uncertainties including the extent of the contamination, the appropriate remedy, the financial viability of other potentially responsible parties and the final apportionment of responsibility among the potentially responsible parties. Where we have concluded that our estimated share of potential liabilities is probable, a provision has been made in the combined financial statements.

      Since the ultimate outcome of these matters may differ from the estimates used in our assessment to date, the recorded liabilities are periodically evaluated, as additional information becomes available to ascertain whether the accrued liabilities are adequate. We have determined that the recorded liability for environmental matters as of December 31, 2003 and December 31, 2002 of approximately $38,000 and $53,000, respectively, represents the most probable outcome of these contingent matters. We do not reduce our estimated obligations for proceeds from other potentially responsible parties or insurance companies. If receipt is probable, proceeds are recorded as an offset to environmental expense in operating income. There were no significant recovery receivables outstanding as of December 31, 2003 or December 31, 2002. We do not expect that adjustments to estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our combined liquidity, financial position or results of operations. In addition, we do not believe that it is reasonably possible the ultimate outcome of environmental matters, excluding closure and post-closure could result in any additional material liability.

5. Retirement Plan

      Allied sponsors the AWI 401(k) Plan, a defined contribution plan which is available to all eligible employees not represented by collective bargaining agreements. Eligible employees may contribute up to 25% of their annual compensation on a pre-tax basis. Participant contributions are subject to certain restrictions as set forth in the Internal Revenue Code. Allied matches in cash 50% of employee contributions, up to the first 5% of the employee’s compensation which is deferred. Participant contributions vest immediately and the

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NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

employer contributions vest in increments of 20% based upon years of service. Allied’s matching contributions to the plan on our behalf amounted to approximately $214,000, $242,000 and $85,000 for the years ended December 31, 2003, 2002, and 2001, respectively, included in selling, general and administrative expenses.

6. Income Taxes

      Our operating results are included in the consolidated federal income tax return of AWI for the periods ended December 31, 2003, 2002 and 2001. Separate company state income tax returns are filed in Florida. The allocation of consolidated taxes of Allied to us is determined as if we prepared a separate tax return, in accordance with the provisions of the SFAS No. 109, Accounting for Income Taxes. The components of the income tax provision consist of the following (in thousands):

	For the Year Ended
	December 31,
	2003		2002		2001
Current state tax provision	$	670	$	812	$	1,173
Balance of provision		5,924		6,591		7,110
Total	$	6,594	$	7,403	$	8,283

      The current state tax provision represents the state income taxes paid and payable for the periods presented. The balance of the provision represents federal and deferred state income taxes. The income tax provision allocated includes both current and deferred taxes. Under our tax sharing arrangement with the Parent, the total provision is considered to be a current provision, reduces our cash flows from operating activities and is reflected in the due to Parent on our combined balance sheet. The reconciliation of our income tax provision at the federal statutory tax rate to our effective tax rate is as follows (in thousands):

	For the Year Ended
	December 31,
	2003			2002		2001
Federal statutory tax rate	$	(5,196	)	$	6,478	$	6,320
Consolidated state taxes, net of federal benefit		823			925		943
Write off of goodwill(1)		10,967			—		—
Amortization of goodwill(1)		—			—		1,020
Effective tax rate	$	6,594		$	7,403	$	8,283

(1)  In connection with various acquisitions, we recorded goodwill that was non-deductible goodwill for income tax purposes.

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NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Deferred tax assets and liabilities (including any valuation allowance) are recognized, realized and maintained on a corporate-wide basis by AWI. Our cumulative tax-effected temporary differences that have been recorded in due to Parent on our combined balance sheets are as follows (in thousands):

	December 31,
	2003			2002
Cumulative Tax-Effected Future (Taxable) Deductible Temporary Differences:
Relating primarily to basis differences in goodwill, landfills, fixed assets and other assets	$	(2,597	)	$	(3,089	)
Environmental, capping, closure and post-closure reserves		587			258
Other reserves		32			57
Total	$	(1,978	)	$	(2,774	)

7. Commitments and Contingencies

Litigation —

      We are subject to extensive and evolving laws and regulations and have implemented our own environmental safeguards to respond to regulatory requirements. In the normal course of conducting operations, we may become involved in certain legal and administrative proceedings. Some of these actions may result in fines, penalties or judgments against us, which may have an impact on earnings for a particular period. Litigation and regulatory compliance contingencies are accrued for when such costs are probable and reasonably estimable. There are no matters at December 31, 2003 that management expects to have a material adverse effect on our liquidity, financial position or results of operations.

Lease agreements —

      We have non-cancelable operating lease agreements for certain facilities and equipment. Future minimum lease commitments under these agreements are as follows (in thousands):

For the Years Ending December 31,
2004	$	1,822
2005		778
2006		62
2007		22
2008		—
Total	$	2,684

      Rent expense was approximately $1.7 million, $1.5 million and $588,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Financial assurances —

      We are required to provide $9.4 million in financial assurances to governmental agencies under applicable environmental regulations relating to our landfill operations and collection contracts. We satisfy the financial assurance requirements by providing performance bonds, letters of credit, or trust deposits to secure our obligations as they relate to landfill capping, closure and post-closure costs and performance under certain

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NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

collection, landfill and transfer station contracts. Additionally, we are required to provide financial assurances for collateral required for certain performance obligations.

      These financial instruments are issued in the normal course of business. They are not debt and, therefore, are not reflected in the accompanying combined balance sheets. The underlying obligations of the financial assurance instruments would be valued and recorded in the combined balance sheets based on the likelihood of performance being required. We do not expect this to occur.

Guarantees and collateral —

      We enter into contracts in the normal course of business that include indemnification clauses. Indemnifications relating to known liabilities are recorded in our combined financial statements based on our best estimate of required future payments. Certain of these indemnifications relate to contingent events or occurrences, such as the imposition of additional taxes due to a change in the tax law or adverse interpretation of the tax law, and indemnifications made in divestiture agreements where we indemnify the buyer for liabilities that may become known in the future but that relate to our activities prior to the divestiture.

      Along with substantially all of the other operations of our Parent, our assets collateralize certain of our Parent’s outstanding debt obligations.

8. Related Party Transactions

      All treasury functions are maintained by Allied. Cash receipts are deposited into an account maintained by Allied, and our cash requirements are met by Allied on our behalf. The net amount of these cash transactions is recorded in due to Parent balance. We earn interest on the balance with our Parent, excluding tax-related items, purchase accounting related items, goodwill and certain other non-cash, non-interest bearing items at a rate of 6%, 6% and 9% for the years ended December 31, 2003, 2002 and 2001, respectively. Related interest income allocated by our Parent to us was approximately $5.2 million, $3.4 million and $3.0 million for the years ended December 31, 2003, 2002 and 2001, respectively.

      The average balance due from Parent for which we earned interest income was $86.6 million, $56.4 million and $32.5 million for the years ended December 31, 2003, 2002 and 2001, respectively. The average balance due to Parent for which no interest was charged by the Parent was $174.4 million, $162.9 million and $154.8 million for the years ended December 31, 2003, 2002 and 2001, respectively.

      In 2002 and 2001, we received services from affiliated business units which are recorded in our statement of operations at amounts that approximate arms length transactions. However, these amounts would not necessarily represent those charged by non-affiliate companies. We recorded related expenses of approximately $91,000 and $124,000 as disposal expenses in cost of operations for the years ended December 31, 2002 and 2001, respectively.

      In 2001, we entered into operating lease agreements with certain other subsidiaries of our Parent for equipment and vehicles. The associated lease expense included in cost of operations for the years ended December 31, 2003, 2002 and 2001 was approximately $1.5 million, $1.3 million and $0.4 million, respectively.

      During 2003, we sold trade receivables at a discount to another subsidiary of Allied in connection with Allied’s receivables secured loan program. In connection with the sale, we recognized a loss of approximately $1.4 million recorded in selling, general and administrative expenses for the year ended December 31, 2003, and recorded a note receivable from the affiliate of approximately $1.4 million which is included in the due to Parent balance as part of the initial sale of receivables. Allocated interest income on the note receivable was approximately $19,000 for the year ended December 31, 2003. In November 2003, we discontinued selling

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NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

trade receivables to a subsidiary of our Parent in connection with the divestiture transaction described in Note 1.

      We are charged for management, financial and other administrative services provided by Allied during the year, including allocations for overhead. Amounts were allocated on the basis of revenues earned. Related charges for the years ended December 31, 2003, 2002 and 2001 are $1.7 million, $1.6 million and $1.1 million, respectively, and are included in selling, general and administrative expenses. In addition, Allied maintains employee health and workers’ compensation insurance coverage for us and we are allocated a portion of the cost of such coverage. Related charges included in cost of operations for the years ended December 31, 2003, 2002 and 2001 of $6.6 million, $5.7 million and $5.1 million, respectively, were allocated on the basis of payroll expenses incurred. Management believes the method of allocation used is reasonable, but would not necessarily represent those charged by non-affiliated companies or incurred for similar functions on a stand-alone basis. With the exception of the lease agreements discussed above, there are no contractual relationships between us and Allied.

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