The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto included under Item 1. In addition, reference should be made to the Company's audited Consolidated Financial Statements and Notes thereto and related Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company's Annual Report on Form 10-K/A for the year ended April 30, 2009.

This Quarterly Report on Form 10-Q and, in particular, this Management's Discussion and Analysis may contain or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"), including:

† expected future revenues, operations, expenditures and cash needs;
† fluctuations in the commodity pricing of the Company's recyclables, increases in landfill tipping fees and fuel costs, and general economic and weather conditions;
† projected future obligations related to capping, closure and post-closure costs of the Company's existing landfills and any disposal facilities which the Company may own or operate in the future;
† the Company's ability to use its net operating losses and tax positions;
† the projected development of additional disposal capacity or expectations regarding permits of existing capacity;
† the recoverability or impairment of any of the Company's assets or goodwill;
† estimates of the potential markets for the Company's products and services, including the anticipated drivers for future growth;
† sales and marketing plans or price and volume assumptions;
† the outcome of any legal or permitting matter;
† potential business combinations or divestitures; and
† projected improvements to the Company's infrastructure and impact of such improvements on the Company's business and operations.

In addition, any statements contained in or incorporated by reference into this report that are not statements of historical fact should be considered forward-looking statements. Forward-looking statements can be identified by the use of the words "believes", "expects", "anticipates", "plans", "may", "will", "would", "intends", "estimates" and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates as well as management's beliefs and assumptions, and should be read in conjunction with the Company's consolidated financial statements and notes to consolidated financial statements included in this report. The Company cannot guarantee that it will actually achieve the plans, intentions or expectations disclosed in the forward-looking statements made. The occurrence of the events described and the achievement of the expected results, depends on many events, some or all of which are not predictable or within the Company's control. Actual results may differ materially from those set forth in forward-looking statements.

There are a number of important risks and uncertainties that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K/A for the year ended April 30, 2009. The Company does not intend to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by law.

Company Overview

Founded in 1975 with a single truck, Casella Waste Systems, Inc. is a vertically-integrated company. The Company provides resource management expertise and services to residential, commercial, municipal, and industrial customers, primarily in the areas of solid waste collection, transfer, disposal and recycling services. The Company operates in 14 states- including vertically integrated solid waste operations in Vermont, New Hampshire, New York, Massachusetts, Maine; and stand alone materials processing facilities in Connecticut, Pennsylvania, New Jersey, North Carolina, Tennessee, Georgia, Florida, Michigan and Wisconsin.

As of August 31, 2009, the Company owned and/or operated 32 solid waste collection operations, 31 transfer stations, 36 recycling facilities, nine Subtitle D landfills, one landfill permitted to accept construction and demolition materials, and one waste-to-energy facility. In addition, the Company holds a 50% interest in US Green Fiber, LLC ("GreenFiber"), a joint venture that manufactures, markets and sells cellulose insulation made from recycled fiber. The Company also has a 16.2% interest in RecycleRewards, Inc. ("RecycleRewards"), a company that markets an incentive based recycling service and a 19.9% interest in Evergreen National Indemnity Company ("Evergreen"), a surety company which provides surety bonds to secure contractual performance for municipal solid waste collection contracts and landfill closure and post-closure obligations.

Outlook

The continuing weak economy has had an impact on the Company's financial position and results of operations in the quarter ended July 31, 2009. The slowdown in the U.S. economy resulted in lower solid waste collection volumes in the quarter, compared to the prior year, particularly in the Company's commercial and industrial collection lines. Landfill volumes and prices have declined year over year with construction and demolition volume declines in the quarter attributable to a slowdown in construction activities. Landfill volumes also decreased year over year due to the planned closure of the Colebrook facility, which ceased operation in the second quarter of fiscal year 2009. Pricing initiatives in the solid waste collection operations contributed positively in the quarter while landfill prices declined year over year due to the effect of market pressure on pricing due to lower volumes in the market place. Lower fuel costs resulted in lower fuel recovery fees year over year. FCR recycling revenues declined year over year as a result of a sharp decline in commodity prices at the end of the second quarter of fiscal year 2009, driven by a severe drop in demand for all of the Company's commodity product line as a result of global economic conditions. Beginning in the fourth quarter of fiscal year 2009, and continuing in the quarter ended July 31, 2009, prices in the recycling commodity markets have begun to improve, including fiber (newspapers, cardboard, and mixed papers) and plastic prices. The continuing weak economy and lack of liquidity in the credit markets will likely result in continued negative pressure on consumer and business spending, which could result in lower future business volumes and resulting cash flows. The Company has reacted to these economic conditions by managing various expense categories and capital expenditures.

Refinancing

On July 9, 2009, the Company completed (i) the refinancing of its existing senior credit facility with a senior secured first lien credit facility (the "Senior Secured Credit Facility"), consisting of a $177.5 million revolving credit facility and a $130.0 million aggregate principal term loan and (ii) the placement of $180.0 million aggregate principal amount of 11% senior second lien notes due 2014 (the "Second Lien Notes"). The net proceeds from the Senior Secured Credit Facility and from the Second Lien Notes offering were used to refinance the borrowings under the $525.0 million senior credit facility due April 2010.

Operating Results

For the quarter ended July 31, 2009, the Company reported revenues of $135.9 million, a decrease of $22.0 million, or 14.0%, from $157.9 million for the quarter ended July 31, 2008. As a percentage of total solid waste revenues, including the Company's major accounts program, solid waste revenues decreased 10.3%, with lower collection and landfill volumes accounting for 7.8% of the decrease, 3.0% of the decrease from lower fuel recovery surcharges and 1.6% from lower commodity prices and volumes. These decreases were partially offset by the positive effect of price increases of 1.8%, primarily from our collection operations, and 0.3% from the rollover effect of tuck-in acquisitions. As a percentage of total FCR recycling revenues, FCR revenues decreased 28.8%, with 24.3% coming from lower commodity prices and 4.5% from lower volumes in the quarter. The total decrease in FCR recycling revenues was partially offset by increased tipping fee revenue, lower revenue share payments and the positive effect of commodity hedge contracts, which reduced the impact of pricing fluctuations on a portion of FCR's fiber volumes.

Eastern region revenues for the quarter ended July 31, 2009 declined $4.8 million, or 9.0%, from the same period last year primarily due to the idling of a construction and demolition processing plant as well as lower fuel recovery fees. Also contributing to the revenue decline were lower volumes and prices from disposal facilities and lower volumes from collection operations, partially offset by collection price increases. Western region revenues for the quarter ended July 31, 2009 decreased $5.4 million or 17.7%, from the same period last year, due to lower landfill prices and volumes as well as lower collection volumes and fuel recovery fees, partially offset by collection price increases. In addition the revenue declines were attributable to lower commodity price and volumes from its scrap metal operation. Central region revenues for the quarter ended July 31, 2009 decreased $3.7 million or 11.2%, from the same period last year, due to lower collection and landfill volumes and the effect of lower commodity prices and lower fuel recovery fees. Revenue declines from the planned closure of the Colebrook landfill, which ceased operations in August 2008, were $1.4 million compared to the prior year period. These decreases were partially offset by collection price increases, the positive effect of tuck-in acquisitions and the start-up of the landfill-gas-to-energy facility at the Clinton County landfill.

Operating income for the quarter ended July 31, 2009 was $9.4 million compared to $15.6 million in the prior year comparable period and decreased as a percentage of revenue to 6.9% from 9.9%. Operating income declined primarily due to lower revenue levels, partially offset by lower operating and general administration costs. FCR recycling operating income decreased $3.1 million compared to the prior year period as lower net revenues, due to the impact of lower commodity prices and volumes, and higher depreciation expense, were partially offset by a decrease in purchased material costs. Operating income for the Eastern region decreased $2.3 million, due to lower revenue volumes and increased landfill amortization expenses primarily due to higher amortizations rates associated with the planned ramp-down of landfill volumes at the Pine Tree landfill. These decreases were partially offset by lower operating costs. Also in the prior year, operating income reflected a favorable impact of a $0.8 million benefit from a reimbursement from the Town of Southbridge for previously paid and expensed closure and post closure costs at the Southbridge landfill site. Western region operating income decreased $0.9 million compared to the prior year period due to lower revenue, partially offset by lower operating costs and landfill amortization. Central region operating income increased slightly year over year as lower revenues were more than offset by lower operating costs and landfill amortization.

The Company recorded a net loss of $2.8 million for the quarter ended July 31, 2009 compared to net income of $2.2 million in the prior year. Interest costs and the performance of the Company's unconsolidated subsidiary, GreenFiber, remained relatively consistent year over year. As discussed above, the Company's refinancing of its former senior credit facility took place on July 9, 2009 and accordingly, the net interest expense in the quarter was primarily impacted by the pricing structure under

the terms in effect prior to the refinancing. The Company expects that interest expense will increase in the future under the terms described in the newly refinanced Senior Secured Credit Facility and Second Lien Notes. As a result of the refinancing, the Company recorded a loss from debt modification in the quarter ended July 31, 2009 of $0.5 million due to the write-off of unamortized financing costs associated with the former senior credit facility.

Divestitures

The Company completed the divestiture of its FCR Greenville operation in the quarter ended July 31, 2008 for cash proceeds of $0.7 million. The Company recorded a loss on disposal of discontinued operations (net of tax) of $0.03 million. The operating results of this operation for the three months ended July 31, 2008 have been reclassified from continuing to discontinued operations in the accompanying consolidated financial statements. Revenues and loss before income taxes attributable to discontinued operations for the three months ended July 31, 2008 were $0.2 million and $0.02 million respectively.

Critical Accounting Policies and Estimates

The preparation of the Company's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and assumptions which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. The Company's significant accounting policies are more fully discussed in Item 7 of the Company's Annual Report on Form 10-K/A for the year ended April 30, 2009.

Adoption of New Accounting Pronouncements

For a description of the new accounting standards adopted that affect the Company, see Note 1 to the Company's consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

General

Revenues

The Company's revenues in our Eastern, Central and Western regions are attributable primarily to fees charged to customers for solid waste disposal and collection, landfill, landfill gas-to energy, waste-to-energy, transfer and recycling services. The Company derives a substantial portion of its collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities. The majority of the Company's residential collection services are performed on a subscription basis with individual households. Landfill, waste-to-energy facility and transfer customers are charged a tipping fee on a per ton basis for disposing of their solid waste at the Company's disposal facilities and transfer stations. Recycling revenues, which are included in FCR recycling and the Central and Western regions, consist of revenues from the sale of recyclable commodities and operations and maintenance contracts of recycling facilities for municipal customers. The Company also generates and sells electricity under a contract at our waste-to-energy facility and at certain of its landfill facilities.

GreenFiber's business is conducted through a 50/50 joint venture with Louisiana-Pacific Corporation, and accordingly, the Company recognizes half of the joint venture's net income on the equity method in its results of operations. The Company's investments in RecycleRewards and Evergreen are accounted

under the cost method of accounting. Also, in the "Other" segment, the Company has ancillary revenues including major customer accounts.

The Company's revenues are shown net of inter-company eliminations. The Company typically establishes its inter-company transfer pricing based upon prevailing market rates. The table below shows, for the periods indicated, the percentages and dollars (in millions) of revenue attributable to services provided.

                               Three Months Ended July 31,
                                 2008               2009
Collection                 $    58.3    36.9 % $  52.2    38.4 %
Disposal                        32.4    20.5 %    29.7    21.9 %
Power generation                 6.9     4.4 %     6.4     4.7 %
Processing and recycling        20.2    12.8 %    15.5    11.4 %
Solid waste operations         117.8    74.6 %   103.8    76.4 %
                                 8.8     5.6 %     9.8     7.2 %
FCR recycling                   31.3    19.9 %    22.3    16.4 %
Total revenues             $   157.9   100.0 % $ 135.9   100.0 %

Solid waste operations revenues increased as a percentage of total revenues in the three months ended July 31, 2009 compared to the same period in the prior year, mainly because of the decrease in processing and recycling revenues. The dollar decrease in collection and disposal revenues in the three months ended July 31, 2009 compared to the prior year is primarily due to lower volumes, partially offset by collection price increases. Solid waste processing and recycling revenues and FCR recycling revenues were lower year over year due to lower commodity prices and volumes in the quarter ended July 31, 2009.

Operating Expenses

Cost of operations includes labor, tipping fees paid to third-party disposal facilities, fuel, maintenance and repair of vehicles and equipment, worker's compensation and vehicle insurance, the cost of purchasing materials to be recycled, third party transportation expense, district and state taxes, host community fees and royalties. Cost of operations also includes accretion expense related to landfill capping, closure and post closure, leachate treatment and disposal costs and depletion of landfill operating lease obligations.

General and administration expenses include management, clerical and administrative compensation and overhead, professional services and costs associated with marketing, sales force and community relations efforts.

Depreciation and amortization expense includes depreciation of fixed assets over the estimated useful life of the assets using the straight-line method, amortization of landfill airspace assets under the units-of-consumption method, and the amortization of intangible assets (other than goodwill) using the straight-line method.

Results of Operations

The following table sets forth for the periods indicated the percentage relationship that certain items from the Company's consolidated financial statements bear to revenues.

                                                 Three Months Ended
                                                      July 31,
                                                 2008         2009

Revenues                                           100.0 %      100.0 %
Cost of operations                                  66.1 %       66.7 %
General and administration                          11.7 %       12.0 %
Depreciation and amortization                       12.4 %       14.4 %
Operating income                                     9.8 %        6.9 %
Interest expense, net                                6.3 %        7.2 %
Loss from equity method investments                  0.7 %        0.9 %
Other expense (income), net                         -0.1 %        0.3 %
Provision for income taxes                           1.5 %        0.5 %
(Loss) income before discontinued operations         1.4 %       -2.0 %

Three months ended July 31, 2009 versus July 31, 2008

Revenues - Revenues decreased $22.0 million, or 14.0%, to $135.9 million in the quarter ended July 31, 2009 from $157.9 million in the quarter ended July 31, 2008. Solid waste revenues, including the Company's major accounts program, decreased $13.0 million, with $9.8 million coming from volume decreases in our collection and landfill operations, $3.8 million of the decrease from lower fuel recovery fees and $2.1 million from lower commodity prices and volumes within the solid waste group. These decreases were partially offset by price increases in our collection operations of $2.3 million and the rollover effect of acquisitions of $0.4 million. FCR recycling revenues decreased $9.0 million mainly due to sharp declines in commodity prices and to a lesser extent, lower volumes.

Cost of operations - Cost of operations decreased $13.8 million, or 13.2%, to $90.6 million in the quarter ended July 31, 2009 from $104.4 million in the quarter ended July 31, 2008 and remained relatively consistent as a percentage of revenue between periods. The dollar decrease in cost of operations is attributable to a decrease in the cost of purchased materials associated with lower recycling revenues as well as lower fuel costs and direct labor partially offset by a benefit in the prior year period of $0.8 million related to the reimbursement from the Town of Southbridge for previously paid and expensed closure and post closure costs at the Southbridge landfill site.

General and administration - General and administration expenses decreased $2.1 million, or 11.4%, to $16.3 million in the quarter ended July 31, 2009 from $18.4 million in the quarter ended July 31, 2008. General and administration expenses as a percentage of revenues remained relatively consistent between periods. The dollar decrease in general and administration expenses is primarily from lower expense associated with reduced salary and incentive compensation costs and lower travel expenses, partially offset by higher bad debt expense.

Depreciation and amortization - Depreciation and amortization expense for the quarter ended July 31, 2009 was $19.5 million, which was consistent with the same period in the prior year, and increased as a percentage of revenue from 12.4% to 14.4%, due to lower revenue levels in the current quarter. Compared to the prior year period, higher landfill amortization expenses at the Pine Tree landfill, due to higher amortizations rates associated with the planned ramp-down of landfill volumes, were more than offset by lower amortization from the closure of the Colebrook facility as well as lower volumes at other landfill sites. Depreciation expense increased between periods by $0.4 million primarily due to the Company's landfill energy projects and investments in FCR recycling single stream projects.

Interest expense, net - Net interest expense decreased $0.2 million, or 2.0%, to $9.8 million in the quarter ended July 31, 2009 from $10.0 million in the quarter ended July 31, 2008. This decrease is attributable

to lower average interest rates, partially offset by higher net debt levels. As discussed above, the refinancing of the Company's senior credit facility took place on July 9, 2009 and accordingly, the net interest expense in the quarter was primarily impacted by the pricing structure under the terms in effect prior to the refinancing. Net interest expense, as a percentage of revenues, increased to 7.2% in the quarter ended July 31, 2009 from 6.3% in the quarter ended July 31, 2008.

Loss from equity method investments - The loss from equity method investments in the quarter ended July 31, 2009 relates to the Company's 50% joint venture interest in GreenFiber. GreenFiber reported a loss for the quarter ended July 31, 2009 of which the Company's share was $1.2 million, compared to a loss million in the quarter ended July 31, 2008 of which the Company's share was $1.1 million.

Loss on debt modification - The loss in the quarter ended July 31, 2009 of $0.7 million is due to the write-off of unamortized financing costs associated with the former senior credit facility, which was amended in the quarter.

Provision for income taxes - Provision for income taxes decreased $1.6 million to $0.7 million for the quarter ended July 31, 2009 from $2.3 million for the quarter ended July 31, 2008. The effective tax rate changed to (32.2)% for the quarter ended July 31, 2009 from 51.1% for the quarter ended July 31, 2008. The rate variance between the periods is due mainly to the Company changing its assessment of the realizability of deferred tax assets in the fourth quarter of fiscal year 2009. The change in the effective tax rate between periods is primarily a result of an increase in the valuation allowance related to the book loss projected for the year and the provision of deferred tax liabilities related to indefinite lived intangible asset amortization for tax purposes.

Liquidity and Capital Resources

The Company's business is capital intensive. The Company's capital requirements include acquisitions, fixed asset purchases and capital expenditures for landfill development and cell construction, as well as site and cell closure. The Company's capital expenditures are broadly defined as pertaining to either growth or maintenance activities. Growth capital expenditures are defined as costs related to development of new airspace, permit expansions, new recycling contracts along with incremental costs of equipment and infrastructure added to further such activities. Growth capital expenditures include the cost of equipment added directly as a result of new business, as well as expenditures associated with increasing infrastructure to increase throughput at transfer stations and recycling facilities. Growth capital expenditures also include those outlays associated with acquiring landfill operating leases, which do not meet the operating lease payment definition, but which were included as a commitment in the successful bid. Maintenance capital expenditures are defined as landfill cell construction costs not related to expansion airspace, costs for normal permit renewals and replacement costs for equipment due to age or obsolescence.

The Company had a net working capital deficit of $7.1 million at July 31, 2009 compared to a deficit of $2.1 million at April 30, 2009. Net working capital comprises current assets, excluding cash and cash equivalents, minus current liabilities. The decrease in net working capital at July 31, 2009 was primarily due to higher accrued interest offset by higher trade receivables associated with higher revenues in the month of July 2009 versus the month of April 2009.

On July 9, 2009, the Company completed the refinancing of its existing senior credit facility with a Senior Secured Credit Facility, consisting of a $177.5 million revolving credit facility (the "New Revolver"), a $130.0 million aggregate principal term loan (the "New Term Loan") and the offering of $180.0 million aggregate principal amount of Second Lien Notes. The net proceeds from the Senior Secured Credit Facility and from the Second Lien Notes offering were used to refinance the borrowings under the Company's $525.0 million existing senior credit facility due April 2010.

For the first two quarters after the closing date, the interest rate for . . .