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Waste Management Announces Third Quarter Earnings

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(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 income from operations margin have been presented in certain instances excluding special items noted in this press release. The quantitative reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the accompanying schedules.

The Company’s projected full year 2012 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 2012 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.

(c) The Company also discusses 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 reconciliation of free cash flow for the quarter to the most comparable GAAP measure is 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.

After the second quarter, the Company provided the following reconciliation that presents two scenarios that illustrate projected free cash flow for 2012. The amounts used in this reconciliation are subject to many variables, some of which are not under our control and, therefore, are not necessarily indicative of results.

(Dollars in millions)

                   

Scenario 1

Scenario 2

Net cash provided by operating activities

$

2,300

$

2,400

Capital expenditures

 

(1,450

)

 

(1,600

)

850

800

Proceeds from divestitures of businesses (net of

cash divested) and other sales of assets (*)

 

250

   

400

 

$

1,100

 

$

1,200

 

(*) As discussed in this press release, these projected free cash flow scenarios assume the sale of selected assets. If we decide not to sell these assets at this time, or we do not complete the sales before year end, it will reduce the proceeds from divestitures component of our free cash flow.

The Company will host a conference call at 10:00 AM (Eastern) today to discuss the third quarter 2012 results. Information contained within this press release will be referenced and should be considered in conjunction with the call.

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