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We made tremendous progress in developing  three new landfills within our existing markets that could commence operations in the  latter half of 2005. In Kansas, we expect to receive a final permit from the State by mid-2 005 to commence construction of a new MSW landfill in Harper County that would ser ve our Wichita market. In Kentucky, we expect to construct a new MSW landfill in Hopk ins County that would serve our Bowling Green market. Finally in Colorado, we also ex pect to construct a new C&D landfill in Sedalia that would serve our market south of De nver. When fully ramped, these three sites should increase our internalization rate to betw een 73% - 75% and increase annualized margins between 30 to 35 basis points, excludin g the impact of new acquisitions. • 

Our differentiated strategy has led to strong operati ng results and superior stockholder returns. These, in turn, drove a dramatic improvement in  our credit profile when, in April 2004, we redeemed an issue of outstanding convertible not es, resulting in over $120 million principal amount of debt converting into equity. Given the  notable improvement in our leverage ratios, we launched a two year, $200 million stock repu rchase program. We are fortunate that our strong cash flow from operations combined with l ow leverage enables us to fund both a high reinvestment in our business and our acquisit ion growth strategy, while also returning significant cash to stockholders through our stock r epurchase program. • 

## Outlook 

We believe that we will benefit in 2005 from many  of the actions we took and disciplines we maintained in 2004. Our focus on pricing growth sh ould again result in us leading the sector in that measure. We expect volume growth to incre ase over last year’s level. Taken together, this combination of price and volume growth sh ould produce a high quality of revenue where we would expect good flow thru to the o perating income line. Financial margins within our solid waste segment should expand year o ver year, excluding the impact of any new acquisitions since acquired companies typically have lower margins than our corporate average. This expected margin expansion is despite  potential headwinds from rising fuel and insurance costs. Our financial results and strong free  cash flow should continue to fund both our acquisition program and the expected repurcha se of $100 million of common stock, or about 6% of outstanding shares at recent prices. 

Though still early in 2005, we believe we have go od visibility on a number of items that should benefit us into 2006 and beyond. In additio n to the improving macro economy, we 

