SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2011

Waste Management, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation)		1-12154 (Commission File Number)		73-1309529 (IRS Employer Identification No.)

1001 Fannin, Suite 4000 Houston, Texas (Address of Principal Executive Offices)		77002 (Zip Code)

Registrant’s Telephone number, including area code: (713) 512-6200

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.		Results of Operations and Financial Condition.

     Waste Management, Inc. (the “Company”) issued a press release this morning announcing its financial results for the quarter ended September 30, 2011, a copy of which is attached hereto as Exhibit 99.1. The Company is holding a conference call to discuss these results beginning at 9:00 a.m. Central Time this morning. The call will be webcast live and may be heard by accessing the Company’s website at www.wm.com. The call may also be heard by dialing (877) 710-6139 and entering access code 96225430.

     On the call, management of the Company is expected to discuss certain non-GAAP financial measures that are included in the Company’s press release. The Company has provided information regarding its use of such non-GAAP measures and reconciliations of such measures to their most comparable GAAP measures in the footnote and schedules to the press release.

     In addition to the non-GAAP measures presented in the press release, management is also expected to discuss adjusted operating revenues, adjusted operating expenses as a percent of revenues and adjusted interest expense. Management believes these non-GAAP measures provide investors with information to better enable them to evaluate the Company’s performance by excluding items that management believes are not indicative of our results of operations.

     The reconciliation of these additional non-GAAP measures to the most directly comparable GAAP measures are shown below.

Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions)
(Unaudited)

		Quarters Ended
		September 30,
		2011				2010
Adjusted Operating Revenues and
Adjusted Operating Expense as a Percent of Revenues
As reported:
Operating revenues		$	3,522			$	3,235
Operating expenses		$	2,261			$	2,006
Operating expenses as a percent of revenues			64.2	%			62.0	%
Adjustments:
Operating revenues — Oakleaf acquisition		$	(106	)		$	—
Operating expenses — Oakleaf acquisition and related integration activities		$	(94	)		$	—
Operating expenses — Closed site adjustments and changes in risk-free interest rate		$	(8	)		$	(19	)
As adjusted:
Operating revenues (a)		$	3,416			$	3,235
Operating expenses		$	2,159			$	1,987
Adjusted operating expenses as a percent of revenues			63.2	%			61.4	%

		Quarters Ended
		September 30,
		2011				2010
Adjusted Interest Expense
Interest Expense, as reported		$	118			$	126
Adjustments to Interest Expense
Oakleaf acquisition			(1	)			—
Adjusted Interest Expense (b)		$	117			$	126

Item 9.01.		Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1:       Press Release dated October 27, 2011

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Exhibit Index

Exhibit
Number				Description
	99.1			Press Release dated October 27, 2011

Exhibit 99.1

Waste Management Announces Third Quarter 2011 Earnings

Steiner continued, “The integration of Oakleaf into our company is progressing as expected. We are working with customers and the third-party hauler network to ensure a smooth transition that benefits customers, haulers, and Waste Management.

“Our internal revenue growth from yield for our collection and disposal operations was 1.6%, consistent with the results from the second quarter of 2011. Internal revenue growth from volume declined by 2.0% in the third quarter of 2011 from the prior year period. Excluding the volumes associated with the Gulf Coast clean-up efforts in 2010, internal revenue growth from volume only declined 0.3% in the quarter, which is the best performance we have seen in several years.”

KEY HIGHLIGHTS FOR THE THIRD QUARTER 2011

	•		Revenue increased by 8.9%, or $287 million, with $106 million of the growth coming from the acquisition of Oakleaf.
	•		Internal revenue growth from yield for collection and disposal operations was 1.6%, consistent with the second quarter of 2011. For the nine months ended September 30, internal revenue growth from yield for collection and disposal operations was 2.0%.
	•		Internal revenue growth from volume was negative 2.0%. Adjusting for the Gulf Coast clean-up work in 2010, internal growth from volume was negative 0.3%.
	•		Operating expenses increased by 12.7% or $255 million. Adjusting for the items excluded in calculating the Company’s as-adjusted earnings, operating expenses increased by $172 million in the third quarter.(b) The adjusted increase resulted mainly from $92 million of increased cost of goods sold from recycling commodity rebates and a $39 million increase in fuel costs. During the third quarter of 2011, the fuel surcharge program worked as expected to offset increased fuel costs. Labor costs increased $21 million.
	•		As adjusted, SG&A expenses improved to 10.8% of revenue from 11.4% in the prior year period.(b) Selling, general and administrative expenses increased by $11 million compared with the third quarter of 2010. Adjusted for the items excluded in calculating the Company’s as-adjusted earnings, the selling, general, and administrative expenses were flat in the third quarter when compared with the third quarter 2010.(b)
	•		Average recycling commodity prices increased approximately 29%, and recycling volumes increased 8% organically and 14% including acquisitions in the third quarter of 2011 compared with the prior year period. This led to $0.05 earnings per diluted share benefit in the third quarter of 2011, compared with the prior year period.
	•		Net cash provided by operating activities was $659 million. Capital expenditures were $313 million. Free cash flow was $372 million.(b)
	•		The Company returned $518 million to shareholders, consisting of $158 million in dividends and $360 million in common stock repurchases.
	•		The effective tax rate was approximately 32.3%.
	•		The Company recorded a net tax benefit of $10 million, or $0.02 per diluted share, primarily relating to audit settlements and adjustments from prior years from filing our 2010 income tax returns.
	•		Hurricane Irene on the East Coast had a net negative $0.01 diluted earnings per share impact, which is not excluded in determining the Company’s as-adjusted earnings.

Steiner concluded, “We achieved our targets in the third quarter through cost controls and our continued pricing discipline, and we will remain focused on these priorities. We continue to expect full year adjusted earnings of between $2.14 and $2.18 per diluted share, and we expect our free cash flow to be about $1.25 billion for the year”.^(b)

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 each of the non-GAAP measures presented 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 third quarter 2011 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 96225430 when prompted by the conference call operator.

A replay of the conference call will be available on our website www.wm.com and by telephone from approximately 1:00 PM (Eastern) Thursday, October 27, 2011 through 5:00 PM (Eastern) on Thursday, November 10, 2011. To access the replay telephonically, please dial 800-642-1687, or from outside of the United States or Canada dial 706-645-9291, and use the replay conference ID number 96225430.

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. Statements relating to future events and performance are “forward-looking statements” and include statements regarding financial results, business goals and investments and cost reduction programs, strategic growth initiatives and their future performance, future volume and pricing and related trends, 2011 earnings per diluted share, 2011 free cash flow, and general market and industry conditions. You should view these statements with caution. These statements are not guarantees of future performance, circumstances or events. They are based on the facts and circumstances known to us as of the date the statements are made. All phases of our business are subject to uncertainties, risks and other influences, many of which we do not control. Any of these factors, either alone or taken together, could have a material adverse effect on us and could cause actual results to be materially different from those set forth in such forward-looking statements. We assume 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.

The following are some of the risks that we face:

	•		volatility and deterioration in the credit markets, inflation and other general and local economic conditions may negatively affect the volumes of waste generated;
	•		competition may negatively affect our profitability or cash flows, our pricing strategy may have negative effects on volumes, and inability to execute our pricing strategy in order to retain and attract customers may negatively affect our average yield on collection and disposal business;
	•		increasing use by customers of alternatives to traditional disposal, government mandates requiring recycling and prohibiting disposal of certain types of waste, and overall reduction of waste generated could continue to have a negative effect on volumes of waste going to landfills and waste-to-energy facilities;
	•		we may fail in implementing our optimization initiatives and business strategy, which could adversely impact our financial performance and growth;
	•		weather conditions and one-time special projects cause our results to fluctuate, and harsh weather or natural disasters may cause us to temporarily suspend operations;
	•		possible changes in our estimates of costs for 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, restricting our operations, increasing costs of operations or requiring additional capital expenditures;
	•		climate change legislation, including possible limits on carbon emissions, may negatively impact our results of operations by increasing expenses related to tracking, measuring and reporting our greenhouse gas emissions and increasing operating costs and capital expenditures that may be required to comply with such legislation;
	•		if we are unable to obtain and maintain permits needed to open, operate, and/or expand our facilities, our results of operations will be negatively impacted;
	•		limitations or bans on disposal or transportation of out-of-state, cross-border, or certain categories of waste, as well as mandates on the disposal of waste, can increase our expenses and reduce our revenue;
	•		adverse publicity (whether or not justified) relating to activities by our operations, employees or agents could tarnish our reputation and reduce the value of our brand;
	•		fuel price increases or fuel supply shortages may increase our expenses or restrict our ability to operate;
	•		some of our customers, including governmental entities, have suffered financial difficulties that could affect our business and operating results, due to their credit risk and the impact of the municipal debt market on remarketing of our tax-exempt bonds;
	•		increased costs or the inability to obtain financial assurance or the inadequacy of our insurance coverage could negatively impact our liquidity and increase our liabilities;
	•		possible charges as a result of shut-down operations, uncompleted development or expansion projects or other events may negatively affect earnings;
	•		fluctuations in commodity prices may have negative effects on our operating results;
	•		efforts by labor unions to organize our employees may increase operating expenses and we may be unable to negotiate acceptable collective bargaining agreements with those who have chosen to be represented by unions, which could lead to labor disruptions, including strikes and lock-outs, which could adversely affect our results of operations and cash flows;
	•		we could face significant liability for withdrawal from multiemployer pension plans;
	•		negative outcomes of litigation or threatened litigation or governmental proceedings may increase our costs, limit our ability to conduct or expand our operations, or limit our ability to execute our business plans and strategies;

	•		problems with the operation of our current information technology or the development and deployment of new information systems could decrease our efficiencies and increase our costs;
	•		our existing and proposed service offerings to customers may require that we develop or license, and protect, new technologies; and our inability to obtain or protect new technologies could impact our services to customers and development of new revenue sources;
	•		the adoption of new accounting standards or interpretations may cause fluctuations in reported quarterly results of operations or adversely impact our reported results of operations;
	•		we may reduce or suspend capital expenditures, acquisition activity, dividend declarations or share repurchases if we suffer a significant reduction in cash flows; and
	•		we may be unable to incur future indebtedness on terms we deem acceptable or to refinance our debt obligations, including near-term maturities, on acceptable terms and higher interest rates and market conditions may increase our expenses.

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 1A of the Company’s most recent Annual Report on Form 10-K.

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 September 30,
		2011				2010
Operating revenues		$	3,522			$	3,235
Costs and expenses:
Operating			2,261				2,006
Selling, general and administrative			380				369
Depreciation and amortization			317				317
Restructuring			15				—
(Income) expense from divestitures, asset impairments and unusual items			6				(1	)
			2,979				2,691
Income from operations			543				544
Other income (expense):
Interest expense			(118	)			(126	)
Interest income			1				1
Equity in net losses of unconsolidated entities			(7	)			(8	)
Other, net			2				—
			(122	)			(133	)
Income before income taxes			421				411
Provision for income taxes			136				153
Consolidated net income			285				258
Less : Net income attributable to noncontrolling interests			13				14
Net income attributable to Waste Management, Inc.		$	272			$	244
Basic earnings per common share		$	0.58			$	0.51
Diluted earnings per common share		$	0.58			$	0.51
Basic common shares outstanding			468.3				477.3
Diluted common shares outstanding			469.7				481.0
Cash dividends declared per common share		$	0.34			$	0.315

Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)

		Quarters Ended September 30,
		2011				2010
EPS Calculation:
Net income attributable to Waste Management, Inc.		$	272			$	244
Number of common shares outstanding at end of period			461.2				475.7
Effect of using weighted average common shares outstanding			7.1				1.6
Weighted average basic common shares outstanding			468.3				477.3
Dilutive effect of equity-based compensation awards and other contingently issuable shares			1.4				3.7
Weighted average diluted common shares outstanding			469.7				481.0
Basic earnings per common share		$	0.58			$	0.51
Diluted earnings per common share		$	0.58			$	0.51

Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)

		Nine Months Ended September 30,
		2011				2010
Operating revenues		$	9,972			$	9,328
Costs and expenses:
Operating			6,396				5,883
Selling, general and administrative			1,144				1,065
Depreciation and amortization			935				917
Restructuring			15				(1	)
(Income) expense from divestitures, asset impairments and unusual items			6				(78	)
			8,496				7,786
Income from operations			1,476				1,542
Other income (expense):
Interest expense			(358	)			(354	)
Interest income			6				3
Equity in net losses of unconsolidated entities			(20	)			(16	)
Other, net			4				2
			(368	)			(365	)
Income before income taxes			1,108				1,177
Provision for income taxes			377				469
Consolidated net income			731				708
Less : Net income attributable to noncontrolling interests			36				36
Net income attributable to Waste Management, Inc.		$	695			$	672
Basic earnings per common share		$	1.47			$	1.40
Diluted earnings per common share		$	1.46			$	1.39
Basic common shares outstanding			472.7				481.7
Diluted common shares outstanding			474.5				484.9
Cash dividends declared per common share		$	1.02			$	0.945

Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)

		Nine Months Ended September 30,
		2011				2010
EPS Calculation:
Net income attributable to Waste Management, Inc.		$	695			$	672
Number of common shares outstanding at end of period			461.2				475.7
Effect of using weighted average common shares outstanding			11.5				6.0
Weighted average basic common shares outstanding			472.7				481.7
Dilutive effect of equity-based compensation awards and other contingently issuable shares			1.8				3.2
Weighted average diluted common shares outstanding			474.5				484.9
Basic earnings per common share		$	1.47			$	1.40
Diluted earnings per common share		$	1.46			$	1.39

Waste Management, Inc.
Condensed Consolidated Balance Sheets
(In Millions)

		September 30,				December 31,
		2011				2010
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	282			$	539
Receivables, net			1,799				1,656
Other			338				287
Total current assets			2,419				2,482
Property and equipment, net			11,911				11,868
Goodwill			6,104				5,726
Other intangible assets, net			397				295
Other assets			1,221				1,105
Total assets		$	22,052			$	21,476
Liabilities and Equity
Current liabilities:
Accounts payable, accrued liabilities, and deferred revenues		$	2,302			$	2,252
Current portion of long-term debt			225				233
Total current liabilities			2,527				2,485
Long-term debt, less current portion			9,388				8,674
Other liabilities			3,852				3,726
Total liabilities			15,767				14,885
Equity:
Waste Management, Inc. stockholders’ equity			5,948				6,260
Noncontrolling interests			337				331
Total equity			6,285				6,591
Total liabilities and equity		$	22,052			$	21,476

Waste Management, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)

		Nine Months Ended September 30,
		2011				2010
Cash flows from operating activities:
Consolidated net income		$	731			$	708
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			935				917
Other			204				223
Change in operating assets and liabilities, net of effects of acquisitions and divestitures			(133	)			(195	)
Net cash provided by operating activities			1,737				1,653
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired			(645	)			(343	)
Capital expenditures			(909	)			(737	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets			22				36
Investments in unconsolidated entities			(92	)			(162	)
Net receipts from restricted trust and escrow accounts, and other			89				31
Net cash used in investing activities			(1,535	)			(1,175	)
Cash flows from financing activities:
New borrowings			1,001				775
Debt repayments			(425	)			(932	)
Common stock repurchases			(528	)			(443	)
Cash dividends			(481	)			(454	)
Exercise of common stock options			40				28
Other, net			(66	)			(43	)
Net cash used in financing activities			(459	)			(1,069	)
Effect of exchange rate changes on cash and cash equivalents			—				1
Decrease in cash and cash equivalents			(257	)			(590	)
Cash and cash equivalents at beginning of period			539				1,140
Cash and cash equivalents at end of period		$	282			$	550

Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)

		Quarters Ended
		September 30,				June 30,				September 30,
		2011				2011				2010
Operating Revenues by Lines of Business
Collection		$	2,150			$	2,116			$	2,119
Landfill			690				671				674
Transfer			337				334				342
Wheelabrator			228				226				237
Recycling			438				419				286
Other			210				105				86
Intercompany (a)			(531	)			(524	)			(509	)
Operating revenues		$	3,522			$	3,347			$	3,235

		Quarters Ended
		September 30, 2011								September 30, 2010
						As a % of								As a % of
		Amount				Total Company				Amount				TotalCompany
Analysis of Change in Year Over Year Revenues
Average yield (i)		$	191				5.9	%		$	153				5.0	%
Volume			(64	)			-2.0	%			(22	)			-0.7	%
Internal revenue growth			127				3.9	%			131				4.3	%
Acquisition			150				4.6	%			72				2.4	%
Divestitures			(1	)			—				—				—
Foreign currency translation			11				0.4	%			9				0.3	%
		$	287				8.9	%		$	212				7.0	%

						As a % of Related								As a % of Related
		Amount				Business				Amount				Business
(i) Average yield
Collection, landfill and transfer		$	45				1.7	%		$	53				2.1	%
Waste-to-energy disposal			(2	)			-1.6	%			7				6.7	%
Collection and disposal			43				1.6	%			60				2.3	%
Recycling commodities			104				34.9	%			78				38.8	%
Electricity			(3	)			-4.1	%			4				5.6	%
Fuel surcharges and mandated fees			47				41.2	%			11				10.8	%
Total		$	191				5.9	%		$	153				5.0	%

		Quarters Ended September 30,								Nine Months Ended September 30,
		2011				2010				2011				2010
Free Cash Flow Analysis (b)
Net cash provided by operating activities		$	659			$	677			$	1,737			$	1,653
Capital expenditures			(313	)			(262	)			(909	)			(737	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets (c)			26				9				39				36
Free cash flow		$	372			$	424			$	867			$	952

Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)

		Quarters Ended
		September 30,				June 30,				September 30,
		2011				2011				2010
Balance Sheet Data
Cash and cash equivalents		$	282			$	371			$	550
Debt-to-total capital ratio:
Long-term indebtedness, including current portion		$	9,613			$	9,037			$	8,959
Total equity			6,285				6,623				6,439
Total capital		$	15,898			$	15,660			$	15,398
Debt-to-total capital			60.5	%			57.7	%			58.2	%
Capitalized interest		$	5			$	5			$	4
Acquisition Summary (a)
Gross annualized revenue acquired		$	651			$	41			$	71
Total consideration		$	495			$	68			$	122
Cash paid for acquisitions		$	488			$	58			$	106
Other Operational Data
Internalization of waste, based on disposal costs			67.8	%			67.9	%			67.9	%
Total landfill disposal volumes (tons in millions)			24.0				23.3				24.4
Total waste-to-energy disposal volumes (tons in millions)			2.1				2.0				2.0
Total disposal volumes (tons in millions)			26.1				25.3				26.4
Active landfills			271				270				272
Landfills reporting volume			254				255				258
Amortization, Accretion and Other Expenses for Landfills Included in Operating Groups:
Landfill amortization expense -
Cost basis of landfill assets		$	87.0			$	84.7			$	89.5
Asset retirement costs			15.2				21.9				20.0
Total landfill amortization expense			102.2				106.6				109.5
Accretion and other related expense			17.6				17.0				17.0
Landfill amortization, accretion and other related expense		$	119.8			$	123.6			$	126.5

Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions, Except Per Share Amounts)
(Unaudited)

		Quarter Ended								Quarter Ended
		September 30, 2011								September 30, 2010
Adjusted Net Income and Earnings Per Diluted Share		After-tax Amount (a)				Per Share Amount				After-tax Amount (a)				Per Share Amount
Net income and Diluted EPS, as reported		$	272			$	0.58			$	244			$	0.51
Adjustments to Net income and Diluted EPS:
Restructuring charges and asset impairments			14				0.03				—				—
Closed site adjustments and changes in risk-free interest rate			5				0.01				16				0.03
Oakleaf acquisition and related integration activities			4				0.01				—				—
Tax items			—				—				4				0.01
Net income and Diluted EPS, as adjusted		$	295			$	0.63			$	264			$	0.55

		Quarters Ended
		September 30,
Adjusted Operating Expenses		2011				2010
Operating expenses, as reported		$	2,261			$	2,006
Adjustments to Operating Expenses
Oakleaf acquisition and related integration activities			(94	)			—
Closed site adjustments and changes in risk-free interest rate			(8	)			(19	)
Adjusted Operating Expenses (b)		$	2,159			$	1,987

		Quarters Ended
		September 30,
Adjusted Operating Revenues, Adjusted SG&A Expenses, and Adjusted SG&A Expenses as a Percent of Revenues		2011				2010
As reported:
Operating revenues		$	3,522			$	3,235
SG&A expenses		$	380			$	369
SG&A expenses as a percent of revenues			10.8	%			11.4	%
Adjustments:
Operating revenues — Oakleaf acquisition		$	(106	)		$	—
SG&A expenses — Oakleaf acquisition and related integration activities		$	(12	)		$	—
SG&A expenses — Closed site adjustment		$	—			$	(1	)
As adjusted:
Operating revenues		$	3,416			$	3,235
SG&A expenses (c)		$	368			$	368
Adjusted SG&A expenses as a percent of revenues			10.8	%			11.4	%

Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions)
(Unaudited)

		Quarter Ended								Quarter Ended
		September 30, 2011								September 30, 2010
Adjusted Tax Expense Reconciliation		Pre-tax Income				Tax Expense				Pre-tax Income				Tax Expense
As reported amounts		$	421			$	136			$	411			$	153
Adjustments to Tax Expense:
Restructuring charges and asset impairments			20				6				—				—
Closed site adjustments and changes in risk-free interest rate			8				3				24				8
Oakleaf acquisition and related integration activities			7				3				—				—
Tax items			—				—				—				(4	)
As adjusted amounts		$	456			$	148			$	435			$	157

Full Year 2011 Free Cash Flow Reconciliation(d)
Net cash provided by operating activities		$	2,550
Capital expenditures			(1,350	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets			50
		$	1,250