Waste Management Announces Fourth Quarter and Full-Year 2012 Earnings
Waste Management Announces Fourth Quarter and Full-Year 2012 Earnings
Company Expects Significant Cash Generation in 2013
Business Wire
HOUSTON -- February 14, 2013
Waste Management, Inc. (NYSE: WM) today announced financial results for the
fourth quarter and for the year ended December 31, 2012. Revenues for the
fourth quarter of 2012 were $3.43 billion compared with $3.41 billion for the
same 2011 period. Net income ^ (a) for the quarter was $224 million, or $0.48
per diluted share, compared with $266 million, or $0.58 per diluted share, for
the fourth quarter of 2011. Adjusting for certain items, net income would have
been $267 million, or $0.57 per diluted share, in the fourth quarter of 2012
compared with $289 million, or $0.63 per diluted share, in the fourth quarter
of 2011.^(b)
For the full year 2012, the Company reported revenues of $13.65 billion
compared with $13.38 billion for 2011. Earnings per diluted share were $1.76
for the full year 2012 compared with $2.04 for the full year 2011. On an
as-adjusted basis taking into account several items that impacted the full
year results, earnings per diluted share were $2.08 for the full year 2012 and
$2.14 for the full-year 2011.^(b)
As-adjusted results in the fourth quarter of 2012 excluded a negative $0.09
per diluted share impact resulting from the following:
* A total of $27 million in after-tax impacts from charges for asset
impairments, legal reserves and discount rate adjustments; and
* A total of $16 million in after-tax impacts from charges for restructuring
and Oakleaf integration costs.
David P. Steiner, President and Chief Executive Officer of Waste Management,
commented, “Our fourth quarter was in line with our expectations. Our internal
revenue growth from yield in the fourth quarter was at its highest level for
the year. This should provide a nice tailwind for improved yield in 2013 --
something every manager will be focused on in 2013. In addition, we continued
to see the benefit of our second quarter reorganization. These improvements
were partially offset by increased costs for operations labor and repair and
maintenance.
“During 2012, we continued to produce strong cash flows from operating
activities and return cash to our shareholders. We met our goal of $800
million to $850 million of free cash flow, generating $829 million of free
cash. We expect to grow free cash flow by 33% to 45% in 2013. We returned $658
million to our shareholders in 2013 through our dividend, which our Board has
indicated will increase in 2013 to $1.46 per share annually.”
KEY HIGHLIGHTS FOR THE FOURTH QUARTER 2012 AND THE FULL YEAR 2012
* Revenue in the fourth quarter increased by 0.8%, or $28 million. For the
full year, revenue increased by 2.0%, or $271 million.
* Internal revenue growth from yield for collection and disposal operations
was 0.9% for the fourth quarter and 0.8% for the full year. Adjusting for
contract changes related to the Company’s South Florida waste-to-energy
plants, internal revenue growth from yield for collection and disposal
operations was 1.1% in the fourth quarter and 1.0% for the full year.
* Core price increases, which consist of price increases and fees (excluding
fuel surcharges), net of rollbacks, were 2.5% for the fourth quarter and
2.8% for the full year.
* Internal revenue growth from volume was 0.4% for the fourth quarter and
0.5% for the full year.
* Recycling and electricity commodities pricing had a negative impact of
$0.04 per diluted share in the fourth quarter when compared to the fourth
quarter of 2011. For the full year, commodities pricing had a negative
impact of $0.25 per diluted share when compared to the full year of 2011.
* Operating expenses increased by $79 million in the fourth quarter and $338
million for the full year. Adjusting for the items excluded in calculating
the Company’s as-adjusted earnings, operating expenses increased by $71
million in the fourth quarter and $326 million for the full year.^(b) In
the fourth quarter, the majority of the increases were for costs
associated with operating recently acquired businesses, labor, and repair
and maintenance.
* SG&A expenses in the fourth quarter improved to 10.4% of revenue from
11.9% in the prior year period, and for the full year improved to 10.8% of
revenue from 11.6% in the prior year.
* In the fourth quarter, net cash provided by operating activities was $577
million; capital expenditures were $378 million; and free cash flow was
$215 million.^(b) For the full year 2012, net cash provided by operating
activities was $2.3 billion; capital expenditures were $1.51 billion; and
free cash flow was $829 million.^(b)
* The Company returned $165 million to shareholders in the fourth quarter in
dividends. For the full year, the Company returned $658 million to
shareholders in dividends.
* The effective tax rate was approximately 32.4% in the fourth quarter and
approximately 34.0% for the full year.
2013 OUTLOOK
The Company announced the following with regard to its financial outlook for
2013:
* 2013 adjusted earnings per diluted share are expected to be between $2.15
and $2.20.^(b)
* Internal revenue growth from yield on the collection and disposal business
is expected to be between 1.0% and 1.5%. Internal revenue growth from
volume is expected to be between 0.5% and 1.0%.
* Recycling commodity sales prices are expected to have a negative $0.02
impact on earnings per diluted share in 2013, compared with the prior
year.
* Results from the Company’s waste-to-energy operations are expected to have
a negative $0.02 impact on earnings per diluted share, compared with the
prior year.
* The tax rate is expected to be approximately 35.0%.
* Capital expenditures are expected to be approximately $1.3 to $1.4
billion.
* Free cash flow is projected to be approximately $1.1 to $1.2 billion
without the benefit of any divestitures.^(b) Any divestitures would
increase free cash flow.
* The Board of Directors has announced its intention to increase the
dividend to $1.46 per share on an annual basis, at an approximate annual
cost of $680 million. The Board must separately declare each dividend. The
Board has authorized up to $500 million in share repurchases. The amount
of share repurchases will depend on a number of factors, including changes
from expected levels of capital expenditures, business acquisitions,
investments and debt repayments.
Steiner concluded, “Based upon all of our assumptions, we forecast full-year
adjusted earnings to be in the range of $2.15 to $2.20 per diluted share.^(b)
Capital expenditures are projected to be about $1.3 to $1.4 billion; and our
free cash flow for 2013 is estimated to be approximately $1.1 to $1.2
billion.^(b) We expect to continue to use our free cash to pay our dividend,
to reduce debt, and to repurchase shares, as well as to make appropriate
acquisitions and investments in our business. These acquisitions and
investments will be predominantly in our core businesses of solid waste and
recycling.
“In 2013 we expect to see increased internal revenue growth from yield and
volume, as well as the ongoing benefit from our cost savings programs. We are
forecasting modest earnings per share growth in 2013 of between 3% and 6%, but
strong free cash flow growth of between 33% and 45%. Our projected earnings
growth is being impacted by about $120 million of compensation headwinds from
accruals that we expect in 2013 assuming target payout of our annual and
long-term incentive plans, compared to significantly lower incentive
compensation expense in 2012. Without this accrual, our forecasted earnings
would be $0.15 per share higher. We do not expect this same headwind in 2014,
so based on current conditions and assumptions, we expect to see more
normalized earnings growth of 8% to 12% in 2014.”
--------------------------------------------------------------------------------------------------------------
^(a) ^For purposes of this press release, all references to “Net income” refer
to the financial statement line item “Net income attributable to Waste
Management, Inc.”
^(b) ^This earnings release contains a discussion of non-GAAP measures, as
defined in Regulation G of the Securities Exchange Act of 1934, as amended.
The Company reports its financial results in compliance with GAAP, but
believes that also discussing non-GAAP measures provides investors with (i)
additional, meaningful comparisons of current results to prior periods’
results by excluding items that the Company does not believe reflect its
fundamental business performance and are not representative or indicative of
our results of operations and (ii) financial measures the Company uses in the
management of its business. Accordingly, net income, earnings per diluted
share, and operating expenses have been presented in certain instances
excluding special items noted in this press release.
^The Company’s projected full year 2013 earnings per diluted share are not
GAAP net earnings per diluted share and are anticipated to be adjusted to
exclude the effects of events or circumstances in 2013 that are not
representative or indicative of the Company’s results of operations.
^Projected GAAP earnings per diluted share for the full year would require
inclusion of the projected impact of future excluded items, including items
that are not currently determinable, but may be significant, such as asset
impairments and one-time items, charges, gains or losses from divestitures or
litigation, or other items. Due to the uncertainty of the likelihood, amount
and timing of any such items, the Company does not have information available
to provide a quantitative reconciliation of adjusted projected full year
earnings per diluted share to a GAAP earnings per diluted share projection.
^The Company also discusses free cash flow and provides a projection of free
cash flow, which is a non-GAAP measure, because it believes that it is
indicative of our ability to pay our quarterly dividends, repurchase common
stock, fund acquisitions and other investments and, in the absence of
refinancings, to repay our debt obligations. Free cash flow is not intended to
replace “Net cash provided by operating activities,” which is the most
comparable U.S. GAAP measure. However, the Company believes free cash flow
gives investors useful insight into how the Company views its liquidity.
Nonetheless, the use of free cash flow as a liquidity measure has material
limitations because it excludes certain expenditures that are required or that
the Company has committed to, such as declared dividend payments and debt
service requirements. The Company defines free cash flow as:
* ^Net cash provided by operating activities
* ^Less, capital expenditures
* ^Plus, proceeds from divestitures of businesses (net of cash divested),
and other sales of assets.
^The Company's definition of free cash flow may not be comparable to similarly
titled measures presented by other companies, and therefore is not subject to
comparison.
^The quantitative reconciliations of non-GAAP measures used herein, other than
projected earnings per diluted share, to the most comparable GAAP measures are
included in the accompanying schedules. Non-GAAP measures should not be
considered a substitute for financial measures presented in accordance with
GAAP, and investors are urged to take into account GAAP measures as well as
non-GAAP measures in evaluating the Company.
The Company will host a conference call at 10:00 AM (Eastern) today to discuss
the fourth quarter and full year 2012 results. Information contained within
this press release will be referenced and should be considered in conjunction
with the call.
The conference call will be webcast live from the Investor Relations section
of Waste Management’s website www.wm.com. To access the conference call by
telephone, please dial (877) 710-6139 approximately 10 minutes prior to the
scheduled start of the call. If you are calling from outside of the United
States or Canada, please dial (706) 643-7398. Please utilize conference ID
number 88156298 when prompted by the conference call operator.
A replay of the conference call will be available on the Company’s website
www.wm.com and by telephone from approximately 1:00 PM (Eastern) Thursday,
February 14, 2013 through 5:00 PM (Eastern) on Thursday, March 1, 2013. To
access the replay telephonically, please dial (855) 859-2056, or from outside
of the United States or Canada dial (404) 537-3406, and use the replay
conference ID number 88156298.
The Company, from time to time, provides estimates of financial and other
data, comments on expectations relating to future periods and makes statements
of opinion, view or belief about current and future events. This press release
contains a number of such forward-looking statements, including but not
limited to, all of the statements under the heading “2013 Outlook” (which
includes 2013 earnings per diluted share; 2013 free cash flow; 2013 capital
expenditures; future internal revenue growth from yield and volume; future
recycling commodity prices; results from waste-to-energy operations; expected
tax rate; and future dividends and share repurchases), as well as statements
regarding 2013 compensation and accruals, future debt reduction, future
acquisitions and investments, and earnings or cash generation in 2014. You
should view these statements with caution. They are based on the facts and
circumstances known to the Company as of the date the statements are made.
These forward-looking statements are subject to risks and uncertainties that
could cause actual results to be materially different from those set forth in
such forward-looking statements, including but not limited to, increased
competition; pricing actions; failure to implement our optimization, growth,
and cost savings initiatives and overall business strategy; environmental and
other regulations; commodity price fluctuations; disposal alternatives and
waste diversion; declining waste volumes; failure to develop and protect new
technology; significant environmental or other incidents resulting in
liabilities and brand damage; weakness in economic conditions; failure to
obtain and maintain necessary permits; labor disruptions; impairment charges;
and negative outcomes of litigation or governmental proceedings. Please also
see the Company’s filings with the SEC, including Part I, Item 1A of the
Company’s most recently filed Annual Report on Form 10-K, for additional
information regarding these and other risks and uncertainties applicable to
our business. The Company assumes no obligation to update any forward-looking
statement, including financial estimates and forecasts, whether as a result of
future events, circumstances or developments or otherwise.
ABOUT WASTE MANAGEMENT
Waste Management, Inc., based in Houston, Texas, is the leading provider of
comprehensive waste management services in North America. Through its
subsidiaries, the company provides collection, transfer, recycling and
resource recovery, and disposal services. It is also a leading developer,
operator and owner of waste-to-energy and landfill gas-to-energy facilities in
the United States. The company’s customers include residential, commercial,
industrial, and municipal customers throughout North America. To learn more
information about Waste Management visit www.wm.com or www.thinkgreen.com.
Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarters Ended December 31,
2012 2011
Operating revenues $ 3,434 $ 3,406
Costs and expenses:
Operating 2,224 2,145
Selling, general and administrative 356 407
Depreciation and amortization 326 294
Restructuring 16 4
(Income) expense from divestitures, asset 28 4
impairments and unusual items
2,950 2,854
Income from operations 484 552
Other income (expense):
Interest expense (122 ) (123 )
Interest income - 2
Equity in net losses of unconsolidated (11 ) (11 )
entities
Other, net (2 ) (8 )
(135 ) (140 )
Income before income taxes 349 412
Provision for income taxes 114 134
Consolidated net income 235 278
Less: Net income attributable to 11 12
noncontrolling interests
Net income attributable to Waste $ 224 $ 266
Management, Inc.
Basic earnings per common share $ 0.48 $ 0.58
Diluted earnings per common share $ 0.48 $ 0.58
Basic common shares outstanding 464.3 460.8
Diluted common shares outstanding 464.8 462.3
Cash dividends declared per common share $ 0.355 $ 0.34
Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarters Ended December 31,
2012 2011
EPS Calculation:
Net income attributable to Waste $ 224 $ 266
Management, Inc.
Number of common shares outstanding at end 464.2 460.5
of period
Effect of using weighted average common 0.1 0.3
shares outstanding
Weighted average basic common shares 464.3 460.8
outstanding
Dilutive effect of equity-based
compensation awards and
other contingently issuable shares 0.5 1.5
Weighted average diluted common shares 464.8 462.3
outstanding
Basic earnings per common share $ 0.48 $ 0.58
Diluted earnings per common share $ 0.48 $ 0.58
Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
Years Ended December 31,
2012 2011
Operating revenues $ 13,649 $ 13,378
Costs and expenses:
Operating 8,879 8,541
Selling, general and administrative 1,472 1,551
Depreciation and amortization 1,297 1,229
Restructuring 67 19
(Income) expense from divestitures, 83 10
asset impairments and unusual items
11,798 11,350
Income from operations 1,851 2,028
Other income (expense):
Interest expense (488 ) (481 )
Interest income 4 8
Equity in net losses of unconsolidated (46 ) (31 )
entities
Other, net (18 ) (4 )
(548 ) (508 )
Income before income taxes 1,303 1,520
Provision for income taxes 443 511
Consolidated net income 860 1,009
Less: Net income attributable to 43 48
noncontrolling interests
Net income attributable to Waste $ 817 $ 961
Management, Inc.
Basic earnings per common share $ 1.76 $ 2.05
Diluted earnings per common share $ 1.76 $ 2.04
Basic common shares outstanding 463.6 469.7
Diluted common shares outstanding 464.4 471.4
Cash dividends declared per common share $ 1.42 $ 1.36
Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
Years Ended December 31,
2012 2011
EPS Calculation:
Net income attributable to Waste Management, $ 817 $ 961
Inc.
Number of common shares outstanding at end 464.2 460.5
of period
Effect of using weighted average common (0.6 ) 9.2
shares outstanding
Weighted average basic common shares 463.6 469.7
outstanding
Dilutive effect of equity-based compensation
awards and
other contingently issuable shares 0.8 1.7
Weighted average diluted common shares 464.4 471.4
outstanding
Basic earnings per common share $ 1.76 $ 2.05
Diluted earnings per common share $ 1.76 $ 2.04
Waste Management, Inc.
Condensed Consolidated Balance Sheets
(In Millions)
December 31, December 31,
2012 2011
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 194 $ 258
Receivables, net 1,839 1,775
Other 390 346
Total current assets 2,423 2,379
Property and equipment, net 12,651 12,242
Goodwill 6,291 6,215
Other intangible assets, net 397 457
Other assets 1,335 1,276
Total assets $ 23,097 $ 22,569
Liabilities and Equity
Current liabilities:
Accounts payable, accrued
liabilities, and
deferred revenues $ 2,293 $ 2,437
Current portion of long-term debt 743 631
Total current liabilities 3,036 3,068
Long-term debt, less current portion 9,173 9,125
Other liabilities 4,213 3,986
Total liabilities 16,422 16,179
Equity:
Waste Management, Inc. stockholders' 6,354 6,070
equity
Noncontrolling interests 321 320
Total equity 6,675 6,390
Total liabilities and equity $ 23,097 $ 22,569
Waste Management, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)
Years Ended December 31,
2012 2011
Cash flows from operating activities:
Consolidated net income $ 860 $ 1,009
Adjustments to reconcile consolidated
net income to net cash
provided by operating activities:
Depreciation and amortization 1,297 1,229
Other 356 403
Change in operating assets and
liabilities, net of effects of
acquisitions and divestitures (218 ) (172 )
Net cash provided by operating 2,295 2,469
activities
Cash flows from investing activities:
Acquisitions of businesses, net of cash (250 ) (867 )
acquired
Capital expenditures (1,510 ) (1,324 )
Proceeds from divestitures of businesses
(net of cash
divested) and other sales of assets 44 36
Investments in unconsolidated entities (77 ) (155 )
Net receipts from restricted trust and
escrow
accounts, and other (37 ) 125
Net cash used in investing activities (1,830 ) (2,185 )
Cash flows from financing activities:
New borrowings 1,180 1,201
Debt repayments (1,058 ) (503 )
Common stock repurchases - (575 )
Cash dividends (658 ) (637 )
Exercise of common stock options 43 45
Other, net (37 ) (97 )
Net cash used in financing activities (530 ) (566 )
Effect of exchange rate changes on cash 1 1
and cash equivalents
Increase (decrease) in cash and cash (64 ) (281 )
equivalents
Cash and cash equivalents at beginning 258 539
of period
Cash and cash equivalents at end of $ 194 $ 258
period
Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
Quarters Ended
December September December
31, 30, 31,
2012 2012 2011
Operating
Revenues by
Lines of
Business
Collection
Commercial (a) $ 846 $ 851 $ 879
Residential 652 644 656
Industrial 538 553 517
Other 70 71 67
Total 2,106 2,119 2,119
Collection
Landfill 689 705 671
Transfer 335 332 315
Wheelabrator 215 218 213
Recycling 330 316 353
Other 385 393 251
Intercompany (626 ) (622 ) (516 )
(b)
Operating $ 3,434 $ 3,461 $ 3,406
revenues
Quarters Ended
December 31, 2012 December 31, 2011
Analysis of
Change in Year As a % of As a % of
Over Year
Revenues
Amount Total Amount Total
Company Company
Average yield $ (35 ) -1.0 % $ 46 1.5 %
(i)
Volume 14 0.4 % (20 ) -0.6 %
Internal (21 ) -0.6 % 26 0.9 %
revenue growth
Acquisition 45 1.3 % 194 6.0 %
Divestitures (2 ) -0.1 % - -
Foreign
currency 6 0.2 % (1 ) 0.0 %
translation
$ 28 0.8 % $ 219 6.9 %
As a % of As a % of
Related Related
Amount Business Amount Business
(i) Average
yield
Collection,
landfill and $ 29 1.1 % $ 43 1.7 %
transfer
Waste-to-energy (3 ) -2.8 % (5 ) -4.2 %
disposal
Collection and 26 0.9 % 38 1.4 %
disposal
Recycling (83 ) -23.2 % (20 ) -5.8 %
commodities
Electricity 6 9.1 % (6 ) -8.5 %
Fuel surcharges
and mandated 16 10.3 % 34 27.9 %
fees
Total $ (35 ) -1.0 % $ 46 1.5 %
Quarters Ended December 31, Years Ended December 31,
2012 2011 2012 2011
Free Cash Flow
Analysis (c)
Net cash
provided by $ 577 $ 732 $ 2,295 $ 2,469
operating
activities
Capital (378 ) (415 ) (1,510 ) (1,324 )
expenditures
Proceeds from
divestitures of
businesses (net
of
cash divested)
and other sales 16 14 44 53
of assets (d)
Free cash flow $ 215 $ 331 $ 829 $ 1,198
During 2012, our revenues resulting from subcontracting work for our
(a) National Accounts customers has been reclassified from our
Commercial Collection line of business to our Other line of
business. For the three months ended September 30, 2012 and December
31, 2011, $4.0 million and $25.0 million, respectively, of these
subcontract revenues were included in our Commercial Collection line
of business.
(b) Intercompany revenues between lines of business are eliminated
within the Condensed Consolidated Financial Statements included
herein.
The summary of free cash flows has been prepared to highlight and
(c) facilitate understanding of the principal cash flow elements. Free
cash flow is not a measure of financial performance under generally
accepted accounting principles and is not intended to replace the
consolidated statement of cash flows that was prepared in accordance
with generally accepted accounting principles.
Proceeds for the year ended December 31, 2011 includes the repayment
(d) of a $17.0 million note receivable from a prior year divestiture.
This repayment is included as a component of "Net receipts from
restricted trust and escrow accounts, and other" in our Condensed
Consolidated Statement of Cash Flows.
Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
Quarters Ended
December 31, September 30, December 31,
2012 2012 2011
Balance Sheet Data
Cash and cash equivalents $ 194 $ 398 $ 258
Debt-to-total capital
ratio:
Long-term indebtedness,
including current
portion $ 9,916 $ 9,992 $ 9,756
Total equity 6,675 6,612 6,390
Total capital $ 16,591 $ 16,604 $ 16,146
Debt-to-total capital 59.8 % 60.2 % 60.4 %
Capitalized interest $ 6 $ 5 $ 8
Acquisition Summary (a)
Gross annualized revenue $ 55 $ 20 $ 169
acquired
Total consideration $ 76 $ 26 $ 237
Cash paid for acquisitions $ 72 $ 24 $ 222
Other Operational Data
Internalization of waste, 67.0 % 66.9 % 68.3 %
based on disposal costs
Total landfill disposal 23.6 23.9 22.7
volumes (tons in millions)
Total waste-to-energy
disposal volumes (tons in 2.0 2.0 2.0
millions)
Total disposal volumes 25.6 25.9 24.7
(tons in millions)
Active landfills 269 270 271
Landfills reporting volume 254 259 254
Amortization, Accretion
and Other Expenses for
Landfills Included in
Operating Groups:
Landfill amortization
expense -
Cost basis of landfill $ 86.2 $ 86.7 $ 84.5
assets
Asset retirement costs 5.0 19.1 (12.3 )
Total landfill
amortization expense 91.2 105.8 72.2
(b)(c)
Accretion and other 17.9 17.1 17.7
related expense
Landfill amortization,
accretion and other $ 109.1 $ 122.9 $ 89.9
related expense
Represents amounts associated with business acquisitions consummated
(a) during the indicated periods. Note that cash paid for acquisitions may
include cash payments for business acquisitions consummated in prior
quarters.
The quarter ended December 31, 2012 as compared to the quarter ended
September 30, 2012 reflects a decrease in amortization expense of
(b) approximately $14.6 million, primarily due to changes in landfill
estimates identified in both quarters, as volumes remained consistent
quarter-over-quarter.
The quarter ended December 31, 2012 as compared to the quarter ended
(c) December 31, 2011 reflects an increase in amortization expense of
approximately $19.0 million. Approximately $17 million is due to changes
in landfill estimates identified in both quarters.
Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions, Except Per Share Amounts)
(Unaudited)
Quarter Ended Quarter Ended
December 31, 2012 December 31, 2011
Adjusted Net
income and After-tax Per After-tax Per
Diluted Amount (a) Share Amount (a) Share
Earnings Per Amount Amount
Share
Net income and
Diluted EPS, $ 224 $ 0.48 $ 266 $ 0.58
as reported
Adjustments to
Net income and
Diluted EPS:
Asset
impairments,
legal reserves 27 3
and landfill
operating
costs (b)
Restructuring
charges and
Oakleaf 16 4
related
integration
activities
Litigation - 16
43 0.09 23 0.05
Net income and
Diluted EPS, $ 267 $ 0.57 $ 289 $ 0.63
as adjusted
Year Ended Year Ended
December 31, 2012 December 31, 2011
Adjusted Net
income and After-tax Per After-tax Per
Diluted Amount (a) Share Amount (a) Share
Earnings Per Amount Amount
Share
Net income and
Diluted EPS, $ 817 $ 1.76 $ 961 $ 2.04
as reported
Adjustments to
Net income and
Diluted EPS:
Asset
impairments 84 7
(c)
Restructuring 41 11
Oakleaf
related 9 7
integration
activities
Legal reserve
and landfill 6 5
operating
costs (d)
Partial
withdrawal
from 6 -
multiemployer
pension plan
Labor dispute 3 -
Litigation - 16
149 0.32 46 0.10
Net income and
Diluted EPS, $ 966 $ 2.08 $ 1,007 $ 2.14
as adjusted
Please see the "Adjusted tax expense reconciliation" for the tax expense
(a) associated with each of the after-tax adjustments to net income and
diluted EPS in the fourth quarter and full year of 2012 and 2011.
Adjustments in the fourth quarter of 2012 include impairment charges
associated with certain of our investments in unconsolidated entities
that are included in the "Other, net" financial caption, as well as
impairment charges associated with assets in the "Asset Impairments and
(b) Unusual Items" financial caption. Adjustments in the fourth quarter of
2012 consist of $21 million of asset impairment charges and $6 million
in legal reserves and landfill operating costs. Adjustments in the
fourth quarter of 2011 consist of asset impairment charges of $3
million.
Adjustments in 2012 consist of impairment charges associated with
certain of our investments in unconsolidated entities that are included
(c) in the "Equity in Earnings/Losses of Unconsolidated Entities" and
"Other, net" financial captions, as well as impairment charges
associated with assets in the "Asset Impairments and Unusual Items"
financial caption.
Adjustments in 2012 consist of an aggregate after-tax charge of $6
million related to legal reserves and changes in risk-free interest
rates. Adjustments in 2011 consist of a net after-tax charge resulting
(d) from an $11 million charge due to changes in risk-free interest rates
partially offset by an after-tax benefit of $6 million due to decreases
in environmental remediation reserves and closure and post-closure
costs.
Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions)
(Unaudited)
Quarters Ended December 31,
Adjusted Operating Expenses 2012 2011(e)
Operating Expenses, as reported $ 2,224 $ 2,145
Adjustments to Operating Expenses
Legal reserves and landfill operating costs (10 ) -
Oakleaf related integration activities - (2 )
Adjusted Operating Expenses (f) $ 2,214 $ 2,143
Years Ended December 31,
Adjusted Operating Expenses 2012 2011(e)
Operating Expenses, as reported $ 8,879 $ 8,541
Adjustments to Operating Expenses
Partial withdrawal from multiemployer pension (10 ) -
plan
Legal reserves and landfill operating costs (10 ) (8 )
(g)
Labor dispute (6 ) -
Oakleaf related integration activities - (6 )
Adjusted Operating Expenses (h) $ 8,853 $ 8,527
Full Year 2013 Free Cash Flow Reconciliation Scenario 1 Scenario 2
(i)
Net cash provided by operating activities $ 2,500 $ 2,500
Capital expenditures (1,400 ) (1,300 )
Proceeds from divestitures of businesses (net
of
cash divested) and other sales of assets - -
$ 1,100 $ 1,200
Our financial results for the fourth quarter and full year 2011 were
adjusted to exclude the impact of our then recently acquired Oakleaf
(e) operations. However, for purposes of this year-over-year comparison, we
have included the impact of the Oakleaf operations in the results of
both 2012 and 2011, except for certain integration costs.
(f) Adjusted operating expenses for fourth quarter 2012 increased $71
million as compared with fourth quarter 2011.
Adjustments in 2012 were primarily comprised of $7 million in legal
reserves and landfill operating costs of $3 million. Adjustments in 2011
(g) were primarily comprised of a $17 million charge due to changes in
risk-free interest rates partially offset by a $9 million benefit from
decreases in environmental remediation reserves and closure and
post-closure costs.
(h) Adjusted operating expenses for full year 2012 increased $326 million as
compared with full year 2011.
The reconciliation illustrates two scenarios that show our projected
(i) free cash flow for 2013. The amounts used in the reconciliation are
subject to many variables, some of which are not under our control and,
therefore, are not necessarily indicative of actual results.
Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions)
(Unaudited)
Quarter Ended Quarter Ended
December 31, 2012 December 31, 2011
Adjusted tax expense Pre-tax Tax Pre-tax Tax
reconciliation Income Expense Income Expense
As reported amounts $ 349 $ 114 $ 412 $ 134
Adjustments to Tax Expense:
Asset impairments, legal reserves 41 14 4 1
and landfill operating costs
Restructuring charges and Oakleaf 25 9 7 3
related integration activities
Litigation - - 24 8
As adjusted amounts $ 415 $ 137 $ 447 $ 146
Year Ended Year Ended
December 31, 2012 December 31, 2011
Adjusted tax expense Pre-tax Tax Pre-tax Tax
reconciliation Income Expense Income Expense
As reported amounts $ 1,303 $ 443 $ 1,520 $ 511
Adjustments to Tax Expense:
Asset impairments 112 28 10 3
Restructuring 67 26 17 6
Oakleaf related integration 15 6 11 4
activities
Legal reserve and landfill 10 4 8 3
operating costs
Partial withdrawal from 10 4 - -
multiemployer pension plan
Labor dispute 6 3 - -
Litigation - - 24 8
As adjusted amounts $ 1,523 $ 514 $ 1,590 $ 535
Contact:
Waste Management, Inc.
Analysts
Ed Egl, 713-265-1656
eegl@wm.com
or
Media
Lynn Brown, 713-394-5093
lynnbrown@wm.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page