================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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: August 5, 2003 WASTE MANAGEMENT, INC. (Exact name of registrant as specified in its charter)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) EXHIBITS. 99.1 Press Release of Waste Management, Inc. dated August 5, 2003 announcing Board of Directors' approval of quarterly dividend program. 99.2 Press Release of Waste Management, Inc. dated August 5, 2003 announcing results of operations for the quarter ended June 30, 2003. ITEM 9. REGULATION FD DISCLOSURE Waste Management, Inc. (the "Company") issued a press release on August 5, 2003 to announce that its Board of Directors had approved a quarterly dividend program, to begin in the first quarter of 2004. A copy of that release is furnished herewith as Exhibit 99.1. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION The Company also issued a press release on August 5, 2003 announcing its results of operations for the quarter ended June 30, 2003. A copy of that release is furnished herewith as Exhibit 99.2. -2-
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WASTE MANAGEMENT, INC. Date: August 5, 2003 By: /s/ David P. Steiner --------------------------------------- David P. Steiner Executive Vice President, Chief Financial Officer and Corporate Secretary -3-
EXHIBIT INDEX
EXHIBIT 99.1 (WASTE MANAGEMENT LOGO) FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION: WASTE MANAGEMENT, INC. ANALYSTS: CHERIE RICE 713.512.6548 MEDIA: SARAH SIMPSON 713.394.2154 WMI#03-16 WASTE MANAGEMENT ANNOUNCES SIGNIFICANT INCREASE IN DIVIDEND AND CHANGE TO A QUARTERLY PAYMENT SCHEDULE PER SHARE DIVIDEND TO INCREASE FROM $0.01 TO $0.75 PER YEAR QUARTERLY DIVIDEND PAYMENT OF $0.1875 TO BEGIN IN THE FIRST QUARTER 2004 HOUSTON - AUGUST 5, 2003 - The Board of Directors of Waste Management, Inc. (NYSE: WMI) today announced the approval of a quarterly dividend program, to begin in the first quarter 2004. "This company is first and foremost a big cash flow generator," said A. Maurice Myers, Chairman, President and Chief Executive Officer of Waste Management. "The Board of Directors and management of Waste Management consider the allocation of our cash flow, to the benefit of our shareholders, to be one of our most important duties. With the passage of the new tax law regarding dividends, we felt a change in the allocation of capital is now appropriate. "Accordingly, beginning in 2004 we are putting in place a capital allocation program designed to pay our shareholders a dividend of $0.75 per share annually, to be paid on a quarterly basis. Based on current share count, this equates to nearly $450 million. At the current share price of approximately $24.00, such a dividend produces a 3.1% annual yield. Our substantial cash flow will also provide for a continuation of our stock buy back
program, at a level to be determined annually and for the acquisition of selected core, North American solid waste assets that meet our return criteria," Myers said. "This reallocation of the distribution of our free cash flow demonstrates our confidence in the strength and consistency of our cash flow and is a continuation of the Company's disciplined management of its capital with our shareholders' interests as our top priority, and balanced by our commitment to maintaining a strong balance sheet," added Myers. The Company noted that it intends to announce the record and payment dates for the first quarterly dividend in late January, with the expectation that payment of the dividend will occur in March. Waste Management, Inc. is its industry's leading provider of comprehensive waste management services. Based in Houston, the Company serves municipal, commercial, industrial, and residential 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 2003 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. o possible changes in our estimates of site remediation requirements, final closure and post-closure obligations, compliance and regulatory developments; o the possible impact of regulations on our business, including the cost to comply with regulatory requirements and the potential liabilities associated with disposal operations, as well as our ability to obtain and maintain permits needed to operate our facilities; o the effect of limitations or bans on disposal or transportation of out-of-state waste or certain categories of waste; o possible charges against earnings as a result of shut-down operations, uncompleted acquisitions, development or expansion projects or other events; o the effects that trends toward requiring recycling, waste reduction at the source and prohibiting the disposal of certain types of wastes could have on volumes of waste going to landfills and waste-to-energy facilities; o the effect the weather has on our quarter to quarter results, as well as the effect of extremely harsh weather on our operations; o the effect that price fluctuations on commodity prices may have on our operating revenues; o the outcome of litigation or threatened litigation; o the effect competition in our industry could have on our profitability; o possible diversions of management's attention and increases in operating expenses due to efforts by labor unions to organize our employees;
o possible increases in operating expenses due to fuel price increases or fuel supply shortages; o the effects of general economic conditions, including the ability of insurers to fully or timely meet their contractual commitments and of surety companies to continue to issue surety bonds; o the need for additional capital if cash flows are less than we expect or capital expenditures are more than we expect, and the possibility that we cannot obtain additional capital on acceptable terms if needed; o possible errors or problems upon implementation of new information technology systems; and o possible disruptions due to the implementation of our workforce reductions. 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, 2002. ####
EXHIBIT 99.2 (WASTE MANAGEMENT LOGO) FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION: WASTE MANAGEMENT, INC. ANALYSTS: CHERIE RICE 713.512.6548 MEDIA: SARAH SIMPSON 713.394.2154 WMI#03-17 WASTE MANAGEMENT ANNOUNCES SECOND QUARTER 2003 EARNINGS OPERATING CASH FLOW STRONG AT $644 MILLION HOUSTON - AUGUST 5, 2003 - Waste Management, Inc. (NYSE: WMI) today announced financial results for its second quarter ended June 30, 2003. Revenues for the quarter were $2.92 billion as compared with $2.82 billion in the year ago period. Net income reported for the quarter was $176 million, or $0.30 per diluted share, compared with net income of $217 million, or $0.35 per diluted share, for the second quarter 2002. Results for the second quarter 2003 include a pre-tax restructuring charge of $23 million, or $0.02 per diluted share, related to the workforce reduction announced in late June. Without the charge, earnings per diluted share would have been $0.32. In the first quarter of 2003, Waste Management adopted SFAS 143. In accordance with SFAS 143 the Company has changed the methodology for accounting for the retirement of its long-lived assets, primarily its landfills. As a result, on a year-to-year comparative basis, operating costs were $6 million higher and depreciation and amortization costs were $7 million higher in the current quarter than they would have been if the accounting standards were the same as for the second quarter 2002 period. The increased costs related to SFAS 143 reduced earnings by $0.01 per diluted share. For the six months ended June 30, 2003 Waste Management reported operating revenues of $5.63 billion as compared with $5.43 billion for the comparable period last year. Net
income was $237 million and diluted earnings per share was $0.40 for the six months ended June 30, 2003 as compared with $355 million and $0.57, respectively, for the same period in 2002. The 2003 results include the unfavorable impact of cumulative effect of changes in accounting principles of $46 million, or $0.08 per diluted share. "General business conditions in the second quarter remained similar to those that we have seen for the past several quarters. While sequential quarterly revenues increased by 7.3 percent, primarily as a result of seasonality, we don't view that as a sign of an improving economy. Year-over-year, the volume component of internal revenue growth for the second quarter was a negative 0.4 percent. However, that statistic was much improved for the month of June, posting a 1.4% gain, " commented A. Maurice Myers, Chairman, President and Chief Executive Officer of Waste Management. "We continue to focus on opportunities to lower our cost structure and to add new, profitable revenue streams to our existing base of business. Both our recent workforce reduction and the continued implementation of our routing optimization program should positively impact our cost structure in the second half of the year. Further, the businesses we acquired at the close of the second quarter combined with those expected to close in the third quarter are projected to be immediately accretive to earnings," continued Myers. "While we have made great improvements to this company in the past three years, now is the time for us to execute and maximize Waste Management's operations." The following important highlights for the quarter were reported: o Operating cash flow of $644 million. o Free cash flow, defined as operating cash flow less capital expenditures plus proceeds from sales of assets, of $373 million.(a) Adjusted for a cash tax benefit related to the anticipated payment of the class action lawsuit settlement, free cash flow was $307 million in the quarter. o Internal revenue growth of 0.2%, split 0.6% price and negative 0.4% volume. The price component excludes combined positive impacts of 0.7% related to higher fuel surcharges, higher recycling commodity prices, and slightly higher electricity rates at Independent Power Production facilities. o Capital expenditures of $289 million. o Selling, General & Administrative costs were 10.3% of revenue. The Company noted that for 2003 it continues to expect to produce $900 million to $1 billion of adjusted free cash flow (before considering the net after-tax cash outflow to pay the settlement of the shareholder class action lawsuit, estimated at approximately $220 million and expected to be paid in the third quarter ), and expressed comfort with the current range of earnings estimates as reported by Multex and First Call. (a) The Company included its free cash flow, which is a non-GAAP financial measure, herein 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. Free cash flow is defined by the Company as: o Net cash provided by operating activities
o Less, capital expenditures o 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 has scheduled an investor and analyst conference call for later today 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 "Live Webcast: 2Q03 Earnings Report." You may also listen to the conference call by telephone by contacting the conference call operator at (877) 710-6139, 5-10 minutes prior to the scheduled start time, and asking for the "Waste Management Conference Call - Call ID 1101575." For those unable to listen to the live call, a replay will be available 24 hours a day beginning at approximately 1:00 p.m. central time August 5th through 5:00 p.m. on August 19th. 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 and enter reservation code 1101575. Waste Management, Inc. is its industry's leading provider of comprehensive waste management services. Based in Houston, the Company serves municipal, commercial, industrial, and residential 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 2003 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. o possible changes in our estimates of site remediation requirements, final closure and post-closure obligations, compliance and regulatory developments; o the possible impact of regulations on our business, including the cost to comply with regulatory requirements and the potential liabilities associated with disposal operations, as well as our ability to obtain and maintain permits needed to operate our facilities; o the effect of limitations or bans on disposal or transportation of out-of-state waste or certain categories of waste; o possible charges against earnings as a result of shut-down operations, uncompleted acquisitions, development or expansion projects or other events; o the effects that trends toward requiring recycling, waste reduction at the source and prohibiting the disposal of certain types of wastes could have on volumes of waste going to landfills and waste-to-energy facilities;
o the effect the weather has on our quarter to quarter results, as well as the effect of extremely harsh weather on our operations; o the effect that price fluctuations on commodity prices may have on our operating revenues; o the outcome of litigation or threatened litigation; o the effect competition in our industry could have on our profitability ; o possible diversions of management's attention and increases in operating expenses due to efforts by labor unions to organize our employees; o possible increases in operating expenses due to fuel price increases or fuel supply shortages; o the effects of general economic conditions, including the ability of insurers to fully or timely meet their contractual commitments and of surety companies to continue to issue surety bonds; o the need for additional capital if cash flows are less than we expect or capital expenditures are more than we expect, and the possibility that we cannot obtain additional capital on acceptable terms if needed; o possible errors or problems upon implementation of new information technology systems; and o possible disruptions due to the implementation of our workforce reductions. 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, 2002. ####
WASTE MANAGEMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
WASTE MANAGEMENT, INC. EARNINGS PER SHARE (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
WASTE MANAGEMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
WASTE MANAGEMENT, INC. EARNINGS PER SHARE (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
WASTE MANAGEMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN MILLIONS)
WASTE MANAGEMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN MILLIONS) (UNAUDITED)
WASTE MANAGEMENT, INC. SUMMARY DATA SHEET (DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
WASTE MANAGEMENT, INC. SUMMARY DATA SHEET (DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)