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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