Waste Management Announces Fourth Quarter and Full Year 2005 Earnings; Fourth Quarter Internal Revenue Growth from Yield on Base Business Reaches Five-Year High of 3.9%
HOUSTON--(BUSINESS WIRE)--Feb. 14, 2006--Waste Management, Inc. (NYSE:WMI) today announced financial results for its fourth quarter and for the year ended December 31, 2005. Revenues for the quarter were $3.37 billion compared with $3.21 billion in the year ago period, an increase of 5.1%. Net income for the quarter was $290 million, or $0.52 per diluted share, compared with $269 million, or $0.47 per diluted share, for the fourth quarter 2004, or a 7.8% increase in net income and a 10.6% increase in earnings per share.
"We are very pleased with our fourth quarter results and the improvement we achieved during the year. In the fourth quarter, we again accomplished our primary objectives of earnings growth, margin expansion and strong free cash flow," stated David P. Steiner, Chief Executive Officer of Waste Management. "Our pricing excellence initiative was the primary contributor to our improved financial performance, as our internal revenue growth from yield on base business increased 3.9% in the fourth quarter of this year over the prior year's quarter. The internal revenue growth due to yield grew 5.5% when you include the impact of our fuel surcharge program.
"We generated $665 million in net cash from operating activities and $286 million of free cash flow(a) during the quarter. For the year, we produced nearly $2.4 billion in net cash from operating activities and over $1.4 billion of free cash flow. Our free cash flow exceeded our full-year objective due to very strong operating cash flow as well as lower than projected capital expenditures and higher than expected divestiture proceeds. We returned $1.16 billion in cash to our shareholders during 2005, which was comprised of cash dividend payments of $449 million and share repurchases of $706 million."
The Company noted several items that impacted the results for the current quarter:
-- A $43 million reduction in income tax expense primarily
resulting from favorable tax audit settlements and an
adjustment to cumulative deferred taxes arising from the
reduction in our effective state income tax rate.
-- After-tax charges of $8 million related to asset impairments
and unusual items due principally to an asset impairment
charge at a landfill and the impairment of two software
applications; partially offset by the gain on divestiture of
assets in Cincinnati, Ohio.
Combined, these items increased fourth quarter 2005 earnings by $35 million, or $0.06 per diluted share(a). Without the impact of these items, net income for the quarter would have been $255 million, or $0.46 per diluted share.
The prior year's fourth quarter earnings included $46 million in benefits from favorable tax audit settlements and an after-tax charge of $4 million related to asset impairments and unusual items(a). Combined, these items increased 2004 fourth quarter earnings by $42 million, or $0.08 per diluted share. Without the impact of these items, net income for the 2004 quarter would have been $227 million, or $0.39 per diluted share.
Excluding the impact of these items in the current and prior year quarters, adjusted earnings per share grew 17.9% and income from operations as a percent of revenue grew by approximately 90 basis points in the fourth quarter of 2005 compared with the same period of 2004(a).
Steiner continued, "The strong earnings we produced during the fourth quarter demonstrate the progress we have made in our pricing excellence and operational improvement programs. In addition, several other factors contributed to the positive results during the fourth quarter of 2005. Hurricane related services contributed over $50 million in revenue and approximately $0.01 per diluted share in the fourth quarter. We also recorded about $0.02 per diluted share in net benefits due primarily to adjustments related to landfill capping obligations as a result of our annual FAS 143 accounting review."
The Company also updated its plan to divest under-performing or non-strategic operations. In the third quarter of 2005, the Company identified operations for possible divestiture that represent over $400 million in annual gross revenue. The Company has since identified additional operations, representing over $500 million in annual gross revenue, that may be sold as part of the divestiture program. The Company is not projecting the expected proceeds or the timing of the sales of these operations.
Key Highlights for the Quarter and the Full Year
-- Net cash provided by operating activities of $665 million in
the quarter and $2,391 million for the full year.
-- Capital expenditures of $415 million in the quarter and $1,180
million for the full year.
-- Free cash flow of $286 million in the quarter and $1,405
million for the full year.
-- Operating expenses were 65.6% of revenue during the quarter,
down from 66.0% of revenue for the same period in 2004.
-- Selling, general and administrative expenses were 9.6% of
revenue during the quarter, down from 9.9% of revenue for the
same period in 2004.
-- $243 million returned to shareholders during the quarter,
consisting of $133 million in common stock repurchases, or 4.6
million shares, and $110 million in cash dividends. For the
full year, repurchases of common stock totaled $706 million,
or 24.7 million shares. Dividends paid totaled $449 million
for the full year.
-- Internal revenue growth on base business of 3.6% for the
quarter, with a positive growth from yield of 3.9% and a
negative growth from volume of 0.3%. In addition, revenue grew
by 1.1% from the combined impact of fuel surcharges, lower
recycling commodity prices and slight increases in electricity
rates at independent power production facilities. The volume
decline is mainly attributable to lower collection volumes in
the 2005 quarter compared to the prior year quarter, partially
offset by higher disposal and recycling volumes. Acquisitions
net of divestitures contributed 0.3% to higher revenues in the
quarter and foreign currency translation contributed an
additional 0.2%.
Steiner continued, "We are very proud of our accomplishments during 2005. As we enter 2006, we are optimistic that the momentum we have achieved in our pricing excellence programs will continue. Cost control is also a primary objective and we have specific plans in place to reduce further our operating costs as a percent of revenue. At the same time, in 2006 we will be making investments in our new revenue management system, in landfill gas projects to produce alternative energy, in medical waste projects and in several process improvement initiatives. These investments, along with our divestiture program to sell underperforming or non-strategic businesses, are being undertaken with the objective of improving the strength of the Company in 2006 and beyond.
"We plan to make these important investments while still fulfilling our $1.2 billion capital allocation program for the benefit of shareholders. And even with the higher expense levels associated with these investments, we are confident that we can achieve the analysts' current full-year 2006 earnings consensus of $1.65 per diluted share. In 2006, we will remain committed to our financial goals of expanding our operating margins, increasing our return on invested capital and generating strong free cash flow, which we intend to return to our shareholders in the form of cash dividend payments and share repurchases."
2006 Outlook
The Company also announced the following in regard to its financial outlook for 2006:
-- Net cash provided by operating activities projected to be in
the range of $2.4 to $2.5 billion.
-- Capital expenditures expected to be approximately $1.45
billion, including approximately $150 million as a result of
combined higher spending on our new revenue management system,
land surrounding our landfills, trucks, and landfill
gas-to-energy and medical waste projects.
-- Free cash flow estimated to be in the range of $1.2 to $1.3
billion, which assumes approximately $60 million in higher
divestiture proceeds compared with 2005. This amount includes
a portion but not all of potential proceeds of our
divestitures due to variables in the timing and amount of
proceeds from those sales.
-- Selling, general and administrative expenses are projected to
remain under 10% of revenue for the full year, and include $70
million in combined higher spending on the implementation of
our new revenue management and other information technology
systems, process improvement initiatives, marketing efforts
and our long-term incentive plan.
-- Projected share repurchases in the range of $700 to $725
million, including an accelerated share repurchase of
approximately 9.0 million shares transacted on January 4, 2006
at a value of $275 million as of that date. The price for the
repurchased shares is subject to a future adjustment to be
determined based on a volume-weighted average price of our
common stock.
-- Projected payment of $0.88 per share in dividends over the
course of the year, at an approximate cash cost of $475
million(b).
(a) This earnings release contains (i) earnings per share and earnings
per share growth, each as adjusted to exclude the impact of asset
impairments and unusual items and tax related items described herein;
(ii) net income and net income growth, as adjusted for the above
mentioned items; (iii) a discussion of the impact of asset impairments
and unusual items on income from operations as a percentage of revenue
and (iv) free cash flow. Each of the adjusted financial measures and
free cash flow is a non-GAAP financial measure as defined in
Regulation G of the Securities Exchange Act of 1934, as amended. 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.
The Company believes that providing investors with these non-GAAP
financial measures gives investors additional information to enable
them to assess, in the way management assesses, the Company's current
and continuing operations. The Company included the non-GAAP financial
measure of free cash flow because it uses that measure in the
management of its business and because it believes that investors are
interested in the cash produced by the Company from non-financing
activities that is available for uses such as the Company's
acquisition program, its share repurchase program, its scheduled debt
reduction and the payment of dividends. A reconciliation of (x) free
cash flow to the Company's GAAP reported cash flows from operating
activities, which is the most comparable GAAP measure, (y) adjusted
earnings per share and net income to the Company's GAAP reported
earnings per share and net income, and the corresponding earnings per
share and net income growth percentages, and (z) adjusted income from
operations to the Company's GAAP reported income from operations, and
corresponding income from operations as a percentage of revenue
calculations are included in the accompanying schedules. Investors are
urged to take into account GAAP measures as well as non-GAAP measures
in evaluating the Company.
(b) All future dividend payments are at the discretion of the Board of
Directors and depend on various factors that the Board may deem
relevant in declaring any such dividend.
The Company has scheduled an investor and analyst conference call for later this morning to discuss the results of today's earnings announcement. The information in this press release should be read in conjunction with the information on the conference call. The call will begin at 10:00 a.m. eastern time, 9:00 a.m. Central time, and is open to the public. To listen to the conference call, which will be broadcast live over the Internet, go to the Waste Management Website at http://www.wm.com, and select "4Q and Full Year 2005 WMI Earnings Report Conference Call." You may also listen to the analyst conference call by telephone by contacting the conference call operator 5 to 10 minutes prior to the scheduled start time and asking for the "Waste Management Conference Call -- Call ID 4193513." US/Canada Dial-In Number: 877-710-6139. Int'l/Local Dial-In Number: 706-643-7398. For those unable to listen to the live call, a replay will be available 24 hours a day beginning at approximately 11:00 a.m. Central time February 14 through 5:00 p.m. Central time on February 28. To hear a replay of the call over the Internet, access the Waste Management Website at http://www.wm.com. To hear a telephonic replay of the call, dial 800-642-1687 or 706-645-9291 and enter reservation code 4193513.
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.
Certain statements contained in this press release include statements that are "forward-looking statements." Outlined below are some of the risks that the Company faces and that could affect our financial statements for 2006 and beyond and that could cause actual results to be materially different from those that may be set forth in forward-looking statements made by the Company. However, they are not the only risks that the Company faces. There may be additional risks that we do not presently know or that we currently believe are immaterial which could also impair our business. We caution you not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the Company, from time to time, provides estimates of financial and other data relating to future periods. Such estimates and other information are the Company's expectations at the point in time of issuance but may change at some future point in time. By issuing such estimates the Company has no obligation, and is not undertaking any obligation, to update such estimates or provide any other information relating to such estimates. The following are some of the risks we face:
-- competition may negatively affect our profitability or cash
flows, our price increases may have negative effects on
volumes, and price roll-backs and lower than average pricing
to retain and attract customers may negatively affect our
revenue growth from yield;
-- we may be unable to maintain or expand margins as volumes
increase if we are unable to control our costs;
-- we may be unable to attract or retain qualified personnel,
including licensed drivers and truck maintenance
professionals, due to any number of factors including
qualified workforce shortages;
-- we may not be able to successfully execute or continue our
plans and programs such as pricing increases, passing on
increased costs to our customers, divesting of
under-performing assets and purchasing accretive businesses,
any of which could negatively affect our revenues and margins;
-- fuel price increases or fuel supply shortages may increase our
expenses or increase our tax expense due to the reduction of
Section 29 credits;
-- fluctuating commodity prices may have negative effects on our
operating revenues and expenses;
-- inflation and resulting higher interest rates may have
negative effects on the economy, which could result in
decreases in volumes of waste generated and increases in our
financing and operating costs;
-- the possible inability of our insurers to meet their
obligations may cause our expenses to increase or result in
our inability to recover from losses we might incur;
-- weather conditions cause our quarter to quarter results to
fluctuate, and extremely harsh weather or natural disasters
may cause us to shut down operations;
-- possible changes in our estimates of site remediation
requirements, final capping, closure and post-closure
obligations, compliance and regulatory developments may
increase our expenses;
-- regulations may negatively impact our business by, among other
things, increasing the cost to comply with regulatory
requirements and the potential liabilities associated with
disposal operations;
-- if we are unable to obtain and maintain permits needed to
operate our facilities, our results of operations will be
negatively impacted;
-- limitations or bans on disposal or transportation of
out-of-state or cross-border waste or certain categories of
waste can increase our expenses or reduce our revenues,
earnings and cash flows;
-- possible charges as a result of shut-down operations,
uncompleted development or expansion projects or other events
may negatively affect earnings;
-- trends toward requiring recycling, waste reduction at the
source and prohibiting the disposal of certain types of wastes
could have negative effects on volumes of waste going to
landfills and waste-to-energy facilities, which are higher
margin businesses than recycling;
-- management's attention may be diverted and operating expenses
may increase due to efforts by labor unions to organize our
employees or due to strikes or work disruptions;
-- litigation and threatened litigation may increase our costs
and negative outcomes from litigation may result in increased
expenses;
-- possible errors or problems in connection with the
implementation and deployment of new information technology
systems may decrease our efficiencies and increase our costs
to operate;
-- the adoption of new accounting standards or interpretations
may cause fluctuations in quarterly results of operations or
adversely impact our quarterly or annual results of
operations; and
-- we may reduce or eliminate our dividend or share repurchase
program and we may need additional capital if cash flows are
less than we expect or capital expenditures are more than we
expect, and we may not be able to obtain additional capital on
acceptable terms if needed.
Additional information regarding these and/or other factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in Part I, Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2004 and Part II of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarters Ended
December 31,
---------------
2005 2004
------ ------
Operating revenues $3,372 $3,208
------ ------
Costs and expenses:
Operating (exclusive of depreciation
and amortization shown below) 2,212 2,117
Selling, general and administrative 324 318
Depreciation and amortization 325 318
Restructuring 1 -
Asset impairments and unusual items 11 7
------ ------
2,873 2,760
------ ------
Income from operations 499 448
------ ------
Other income (expense):
Interest expense (127) (111)
Interest income 11 39
Equity in net losses of unconsolidated entities (28) (28)
Minority interest (15) (10)
Other, net 1 -
------ ------
(158) (110)
------ ------
Income before income taxes 341 338
Provision for income taxes 51 69
------ ------
Net income $ 290 $ 269
====== ======
Basic earnings per common share $ 0.53 $ 0.47
====== ======
Diluted earnings per common share $ 0.52 $ 0.47
====== ======
Basic common shares outstanding 552.1 571.2
====== ======
Diluted common shares outstanding 555.8 576.3
====== ======
Cash dividends declared per common share (2005
includes $0.22 payable in 2006) $ 0.42 $ 0.19
====== ======
Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarters Ended
December 31,
---------------
2005 2004
------ ------
EPS Calculation:
Net income $ 290 $ 269
Interest on convertible subordinated notes, net
of taxes - -
------ ------
Diluted net income $ 290 $ 269
====== ======
Number of common shares outstanding at end of
period 552.3 570.2
Effect of using weighted average common shares
outstanding (0.2) 1.0
------ ------
Weighted average basic common shares outstanding 552.1 571.2
Dilutive effect of equity-based compensation awards,
warrants, convertible subordinated notes and other
contingently issuable shares 3.7 5.1
------ ------
Weighted average diluted common shares
outstanding 555.8 576.3
====== ======
Basic earnings per common share $ 0.53 $ 0.47
====== ======
Diluted earnings per common share $ 0.52 $ 0.47
====== ======
Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
Years Ended
December 31,
-----------------
2005 2004
------- -------
Operating revenues $13,074 $12,516
------- -------
Costs and expenses:
Operating (exclusive of depreciation
and amortization shown below) 8,631 8,228
Selling, general and administrative 1,276 1,267
Depreciation and amortization 1,361 1,336
Restructuring 28 (1)
Asset impairments and unusual items 68 (13)
------- -------
11,364 10,817
------- -------
Income from operations 1,710 1,699
------- -------
Other income (expense):
Interest expense (496) (455)
Interest income 31 70
Equity in net losses of unconsolidated entities (107) (98)
Minority interest (48) (36)
Other, net 2 (2)
------- -------
(618) (521)
------- -------
Income before income taxes and cumulative effect
of change in accounting principle 1,092 1,178
Provision for (benefit from) income taxes (90) 247
------- -------
Income before cumulative effect of change in
accounting principle 1,182 931
Cumulative effect of change in accounting
principle, net of income tax expense of $5 in 2004 - 8
------- -------
Net income $ 1,182 $ 939
======= =======
Basic earnings per common share:
Income before cumulative effect of change in
accounting principle $ 2.11 $ 1.62
Cumulative effect of change in accounting
principle - 0.01
------- -------
Net income $ 2.11 $ 1.63
======= =======
Diluted earnings per common share:
Income before cumulative effect of change in
accounting principle $ 2.09 $ 1.60
Cumulative effect of change in accounting
principle - 0.01
------- -------
Net income $ 2.09 $ 1.61
======= =======
Basic common shares outstanding 561.5 576.3
======= =======
Diluted common shares outstanding 565.1 581.1
======= =======
Cash dividends declared per common share (2005
includes $0.22 payable in 2006) $ 1.02 $ 0.75
======= =======
Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
Years Ended
December 31,
---------------
2005 2004
------ ------
EPS Calculation:
Income before cumulative effect of change in
accounting principle $1,182 $ 931
Cumulative effect of change in accounting
principle - 8
------ ------
Net income $1,182 $ 939
====== ======
Number of common shares outstanding at end of
period 552.3 570.2
Effect of using weighted average common shares
outstanding 9.2 6.1
------ ------
Weighted average basic common shares
outstanding 561.5 576.3
Dilutive effect of equity-based compensation
awards, warrants and other contingently
issuable shares 3.6 4.8
------ ------
Weighted average diluted common shares
outstanding 565.1 581.1
======= =======
Basic earnings per common share:
Income before cumulative effect of change in
accounting principle $ 2.11 $ 1.62
Cumulative effect of change in accounting
principle - 0.01
------ ------
Net income $ 2.11 $ 1.63
====== ======
Diluted earnings per common share:
Income before cumulative effect of change in
accounting principle $ 2.09 $ 1.60
Cumulative effect of change in accounting
principle - 0.01
------ ------
Net income $ 2.09 $ 1.61
====== ======
Waste Management, Inc.
Condensed Consolidated Balance Sheets
(In Millions)
December 31, December 31,
2005 2004
----------- -----------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 666 $ 424
Receivables, net 2,004 1,949
Other 781 446
----------- -----------
Total current assets 3,451 2,819
Property and equipment, net 11,221 11,476
Goodwill 5,364 5,301
Other intangible assets, net 150 152
Other assets 949 1,157
----------- -----------
Total assets $ 21,135 $ 20,905
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable, accrued liabilities,
and deferred revenues $ 2,735 $ 2,821
Current portion of long-term debt 522 384
----------- -----------
Total current liabilities 3,257 3,205
Long-term debt, less current portion 8,165 8,182
Other liabilities 3,311 3,265
----------- -----------
Total liabilities 14,733 14,652
Minority interest in subsidiaries and
variable interest entities 281 282
Stockholders' equity 6,121 5,971
----------- -----------
Total liabilities and stockholders'
equity $ 21,135 $ 20,905
=========== ===========
Note: Prior year information has been reclassified to
conform to 2005 presentation.
Waste Management, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)
Years ended
December 31,
-----------------
2005 2004
------- -------
Cash flows from operating activities:
Net income $ 1,182 $ 939
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting
principle - (8)
Depreciation and amortization 1,361 1,336
Other 167 270
Change in operating assets and liabilities, net
of effects of acquisitions and divestitures (319) (319)
------- -------
Net cash provided by operating activities 2,391 2,218
------- -------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (142) (130)
Capital expenditures (1,180) (1,258)
Purchases of short-term investments (1,079) (1,348)
Proceeds from sales of short-term investments 784 1,319
Net receipts from restricted trust and escrow
accounts, business divestitures, asset sales and
other 555 535
------- -------
Net cash used in investing activities (1,062) (882)
------- -------
Cash flows from financing activities:
New borrowings 365 415
Debt repayments (376) (801)
Common stock repurchases (706) (496)
Cash dividends (449) (432)
Exercise of common stock options and warrants 129 193
Other, net (53) (9)
------- -------
Net cash used in financing activities (1,090) (1,130)
------- -------
Effect of exchange rate changes on cash and cash
equivalents 3 1
------- -------
Increase in cash and cash equivalents 242 207
Cash and cash equivalents at beginning of period 424 217
------- -------
Cash and cash equivalents at end of period $ 666 $ 424
======= =======
Note: Prior year information has been reclassified to
conform to 2005 presentation.
Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
Quarters Ended
----------------------------
December September December
31, 30, 31,
2005 2005 2004
-------- -------- -------
Operating Revenues by Lines of
Business
-------------------------------
Collection $ 2,209 $ 2,199 $ 2,141
Landfill 806 816 762
Transfer 444 462 422
Wheelabrator 232 231 210
Recycling and other 289 306 281
Intercompany (a) (608) (639) (608)
-------- -------- -------
Operating revenues $ 3,372 $ 3,375 $ 3,208
======== ======== =======
Internal Growth of Operating
Revenues from Comparable Prior
Periods
--------------------------------
Internal growth 4.7% 2.4% 6.4%
Less: Yield changes due to
recycling commodities,
electricity (IPP) and
fuel surcharge 1.1% 1.3% 1.9%
-------- -------- -------
Adjusted internal growth
(b) 3.6% 1.1% 4.5%
======== ======== =======
Acquisition Summary (c)
-----------------------
Gross annualized revenue
acquired $ 10 $ 23 $ 15
======== ======== =======
Total consideration $ 21 $ 54 $ 17
======== ======== =======
Cash paid for acquisitions $ 10 $ 36 $ 16
======== ======== =======
Recycling Segment Supplemental
Data (d)
------------------------------
Operating revenues $ 198 $ 207 $ 179
======== ======== =======
Operating expenses (exclusive
of depreciation and
amortization) $ 171 $ 180 $ 159
======== ======== =======
Quarters Ended Years Ended
December 31, December 31,
------------------- -----------------
2005 2004 2005 2004
-------- -------- ------- -------
Free Cash Flow Analysis (e)
---------------------------
Net cash provided by operating
activities $ 665 $ 600 $ 2,391 $ 2,218
Capital expenditures (415) (421) (1,180) (1,258)
Proceeds from divestitures of
businesses, net of cash
divested, and other sales of
assets 36 23 194 96
-------- -------- ------- -------
Free cash flow $ 286 $ 202 $ 1,405 $ 1,056
======== ======== ======= =======
(a) Intercompany revenues between lines of business are eliminated
within the Condensed Consolidated Financial Statements included
herein.
(b) Excluding the impacts of hurricane revenue, adjusted internal
growth for the quarters ended December 31, 2005, September 30, 2005
and December 31, 2004 is estimated to be 3.9%, 3.0% and 2.6%,
respectively.
(c) Represents amounts associated with business acquisitions
consummated during the indicated periods.
(d) Information provided is after the elimination of intercompany
revenues and related expenses.
(e) The summary of free cash flows has been prepared to highlight
and 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.
Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
Quarters Ended
------------------------------
December September December
31, 30, 31,
2005 2005 2004
--------- -------- --------
Balance Sheet Data
------------------
Cash, cash equivalents and short-term
investments available for use (a) $ 966 $ 478 $ 443
========= ======== ========
Debt-to-total capital ratio:
Long-term indebtedness, including
current portion $ 8,687 $ 8,342 $ 8,566
Total equity 6,121 6,107 5,971
--------- -------- --------
Total capital $ 14,808 $ 14,449 $ 14,537
========= ======== ========
Debt-to-total capital 58.7% 57.7% 58.9%
========= ======== ========
Capitalized interest $ 5 $ 2 $ 6
========= ======== ========
Other Operational Data
----------------------
Internalization of waste, based on
disposal costs 66.3% 66.3% 65.0%
========= ======== ========
Total landfill disposal volumes (tons
in millions) 31.7 32.9 30.6
Total waste-to-energy disposal volumes
(tons in millions) 2.1 2.1 1.9
--------- -------- --------
Total disposal volumes (tons in
millions) 33.8 35.0 32.5
========= ======== ========
Active landfills 283 286 286
========= ======== ========
Landfills reporting volume 262 265 264
========= ======== ========
Amortization and SFAS No. 143 Expenses
for Landfills Included in Operating Groups
----------------------------------------
Non - SFAS No. 143 amortization
expense $ 101.2 $ 123.2 $ 99.5
Amortization expense related to SFAS
No. 143 obligations (b) 9.6 21.2 (4.5)
--------- -------- --------
Total amortization expense (c) 110.8 144.4 95.0
Accretion and other related expense 14.5 13.2 14.2
--------- -------- --------
Landfill amortization, accretion and
other related expense $ 125.3 $ 157.6 $ 109.2
========= ======== ========
(a) Prior period information has been reclassified to conform to
2005 presentation. The quarters ended December 31, 2005, September 30,
2005 and December 31, 2004 include short-term investments available
for use of $300 million, $178 million and $19 million, respectively.
(b) Reflected in the December 31, 2005 and December 31, 2004
results is a reduction in landfill amortization expense of $12.4
million and $22.6 million, respectively. These reductions relate
primarily to adjustments to our fully accrued landfill final capping
obligations and are a result of fourth quarter event-driven changes as
well as changes in certain estimates resulting from our annual
landfill review process.
(c) The quarter ended September 30, 2005 includes a cumulative
correction to increase Non-SFAS No.143 Amortization Expense in the
amount of $20.6 million and SFAS No.143 Amortization Expense in the
amount of $1.5 million resulting from reducing amortization periods at
five of our landfills.
Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarter Ended Quarter Ended
December 31, December 31,
2005 2004
------------------- ---------------
Adjusted Net income and Diluted After- Per
Earnings per Share After-tax Per Share tax Share
Amount Amount Amount Amount
------------------- ---------------
Net income and Diluted EPS, as
reported (a) $ 290 $ 0.52 $ 269 $ 0.47
Adjustments to Net income and
Diluted EPS:
Income tax settlements (23) (0.04) (46) (0.08)
Benefit from reduction of
estimated effective tax rate
for 2005 (20) (0.03) - -
Asset impairments and unusual
items 8 0.01 4 -
-------- -------- ----- ------
Net income and Diluted EPS, as
adjusted (b) $ 255 $ 0.46 $ 227 $ 0.39
======== ======== ===== ======
Adjusted Income from Operations Quarters Ended
as a percent of Revenue December 31,
-------------------
2005 2004
-------- --------
As reported:
Operating revenues $ 3,372 $ 3,208
Income from operations $ 499 $ 448
Income from Operations as a
percent of Revenue (c) 14.8% 14.0%
Adjustments to Income from
Operations:
Asset impairments and unusual
items $ 11 $ 7
As adjusted:
Operating revenues $ 3,372 $ 3,208
Income from operations $ 510 $ 455
Adjusted Income from Operations
as a percent of Revenue (d) 15.1% 14.2%
Free Cash Flow - Projected
ranges for the year ended
December 31, 2006 Low High
--------- ---------
Net cash provided by operating
activities $ 2,400 $ 2,500
Capital expenditures (1,450) (1,450)
Proceeds from divestitures of
businesses, net of cash
divested, and other sales of
assets 250 250
-------- --------
Free cash flow $ 1,200 $ 1,300
======== ========
(a) Increase in Net income and Diluted EPS, as reported, of 7.8% and
10.6%, respectively.
(b) Increase in Net income and Diluted EPS, as adjusted, of 12.3% and
17.9%, respectively.
(c) Increase in Income from Operations as a percent of Revenue, as
reported, of 80 basis points.
(d) Increase in Income from Operations as a percent of Revenue, as
adjusted, of 90 basis points.
CONTACT: Waste Management, Inc., Houston
Greg Nikkel, 713-265-1358 (Analysts)
Lynn Brown, 713-394-5093 (Media)
http://www.wm.com
SOURCE: Waste Management, Inc.
