Business -- Waste Management, Inc. and Subsidiaries (the "Company")
provides integrated waste management services throughout North America
consisting of collection, transfer, disposal (including landfill disposal of
hazardous waste), recycling and resource recovery services as well as other
hazardous waste services, and low-level and other radioactive waste services to
commercial, industrial, municipal and residential customers. Additionally, the
Company is a developer, owner and operator of waste-to-energy and waste-fuel
powered independent power facilities. The Company also operates throughout
Europe, the Pacific Rim, South America and other select international markets.
Internationally, the Company collects and transports solid, hazardous and
medical wastes and recyclables from customers and operates solid and hazardous
waste landfills and municipal and hazardous waste incinerators, water and
wastewater treatment facilities, hazardous waste treatment facilities and
constructs treatment or disposal facilities for third parties.
Principles of consolidation -- The accompanying consolidated financial
statements include the accounts of the Company and its majority-owned
subsidiaries after elimination of all material intercompany balances and
transactions. Investments in affiliated companies in which the Company owns 50%
or less are accounted for under the equity method or cost method of accounting,
as appropriate.
WM Holdings Merger -- On July 16, 1998, the Company, then known as USA
Waste Services, Inc., completed a merger with Waste Management, Inc., which was
subsequently renamed Waste Management Holdings, Inc. ("WM Holdings") (the "WM
Holdings Merger"). WM Holdings was previously the largest publicly traded solid
waste company in the United States, providing integrated solid waste management
and hazardous waste management services in North America and comprehensive waste
management and related services, including solid and hazardous waste management
services, internationally. At the effective time of the WM Holdings Merger, the
Company changed its name to "Waste Management, Inc." See Note 3.
Eastern Merger -- On December 31, 1998, the Company consummated a merger
transaction with Eastern Environmental Services, Inc. ("Eastern") accounted for
using the pooling of interests method of accounting. Accordingly, the financial
statements have been restated from previously reported financial statements to
include the accounts and operations of Eastern for all periods presented. See
Note 3.
Use of estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts for certain revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents -- Cash and cash equivalents consist primarily of
cash on deposit, certificates of deposit, money market accounts, and investment
grade commercial paper purchased with original maturities of three months or
less.
Short-term investments -- As part of its cash management program, the
Company from time to time maintains a portfolio of marketable investment
securities. The securities have an investment grade and a term to earliest
maturity generally of less than one year, and include tax exempt securities,
certificates of deposit and Eurodollar time deposits. These securities are
carried at cost, which approximates market.
Short-term investments also include marketable securities classified as
"trading," which are carried at market price with unrealized gains and losses
included in other income in the accompanying consolidated statements of
operations. At December 31, 1998, no "trading" securities were held by the
Company. At December 31, 1997, this category included certain other equity
securities classified as "trading" as well as a related price collar. These
securities and a related collar in 1998 were disposed with no gain or loss.
61
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Restricted funds held by trustees -- Restricted funds held by trustees of
$153,030,000 and $190,030,000 at December 31, 1998 and 1997, respectively, are
included in other non-current assets and consist principally of funds deposited
in connection with landfill final closure and post-closure obligations,
insurance escrow deposits, and amounts held for landfill and other construction
arising from industrial revenue financings. These amounts are principally
invested in fixed income securities of federal, state, and local governmental
entities and financial institutions. The Company considers its landfill final
closure, post-closure, and construction escrow investments to be held to
maturity. At December 31, 1998 and 1997, the aggregate fair value of these
investments approximates their amortized costs, and substantially all of these
investments mature within one year. The Company's insurance escrow funds are
invested in pooled investment accounts that hold debt and equity securities and
are considered to be available for sale. The market value of those pooled
accounts approximates their aggregate cost at December 31, 1998 and 1997.
Concentrations of credit risk -- Financial instruments that potentially
subject the Company to concentrations of credit risk consist primarily of cash
and cash equivalents and accounts receivable. The Company places its cash and
cash equivalents with high quality financial institutions and limits the amount
of credit exposure with any one institution. Concentrations of credit risk with
respect to accounts receivable are limited because a large number of
geographically diverse customers make up the Company's customer base, thus
spreading the trade credit risk. At December 31, 1998 and 1997, no single group
or customer represents greater than 10% of total accounts receivable. The
Company controls credit risk through credit approvals, credit limits, and
monitoring procedures. The Company performs credit evaluations for commercial
and industrial customers and performs ongoing credit evaluations of its
customers, but generally does not require collateral to support accounts
receivable.
Derivative financial instruments -- From time to time, the Company uses
derivatives to manage interest rate and currency risk. The Company has, in the
past, engaged in hedging of fuel and equity price risk; however, it had no such
financial instruments outstanding at December 31, 1998. The Company's policy is
to use derivatives for risk management purposes only, and it does not enter into
such contracts for trading purposes. The Company enters into derivatives only
with counterparties which are financial institutions having credit ratings of at
least A- or A3, to minimize credit risk. The amount of gains or losses from the
use of derivative financial instruments have not been and are not expected to be
material to the Company's consolidated financial statements.
Instruments used as hedges must be effective at managing risk associated
with the exposure being hedged and must be designated as a hedge at the
inception of the contract. Accordingly, changes in market values or cash flows
of hedge instruments must have a high degree of inverse correlation with changes
in market values or cash flows of the underlying hedged items. Derivatives that
meet the hedge criteria are accounted for under the deferral or accrual method
as discussed in Note 8.
Property and equipment -- Property and equipment are recorded at cost.
Expenditures for major additions and improvements are capitalized, while minor
replacements, maintenance, and repairs are charged to expense as incurred. When
property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts and any resulting gain or
loss is included in the results of operations for the respective period.
Depreciation is provided over the estimated useful lives of the related assets
using the straight-line method. The estimated useful lives for significant
property and equipment categories are as follows (in years):
OCTOBER 1, 1997 PRIOR TO
AND THEREAFTER OCTOBER 1, 1997
--------------- ---------------
Vehicles......................................... 3 to 10 3 to 12
Machinery and equipment.......................... 3 to 20 3 to 20
Commercial and roll-off containers............... 8 to 12 8 to 20
Buildings and improvements....................... 10 to 40 10 to 40
62
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of October 1, 1997, and thereafter, the Company assumed no salvage value
for its depreciable North American fixed assets. Prior to October 1, 1997, WM
Holdings assigned salvage value to certain fixed asset categories as described
in Note 4.
Disposal sites are stated at cost and amortized ratably using the
units-of-production method over the estimated useful life of the site as
airspace of the landfill is consumed. For those sites that the Company believes
permit expansion is probable, the expansion airspace and the projected costs
related to developing the expansion airspace is included in the airspace
amortization rate calculation. Disposal site amortization rates are determined
periodically (not less than annually) for each disposal site based on estimates
provided by the Company's engineers and accountants. Disposal site costs include
expenditures for the acquisition of land and related airspace, engineering and
permitting costs, direct site improvement costs, and capitalized interest.
Disposal site amortization rate calculations consider information provided by
aerial and ground surveys and other density measures. Factors in determining
probable expansions on a site-by-site basis include secured rights to required
land, status of legal, environmental, regulatory and political issues, and the
extent to which the permit application process has proceeded.
Business combinations -- The Company assesses each business combination to
determine whether the pooling of interests or the purchase method of accounting
is appropriate. For those business combinations accounted for under the pooling
of interests method, the financial statements are combined with those of the
Company at their historical amounts, and, if material, all periods presented are
restated as if the combination occurred on the first day of the earliest year
presented. For those acquisitions accounted for using the purchase method of
accounting, the Company allocates the cost of the acquired business to the
assets acquired and the liabilities assumed based on estimates of fair values
thereof. These estimates are revised during the allocation period as necessary
when, and if, information regarding contingencies becomes available to define
and quantify assets acquired and liabilities assumed. The allocation period
varies but does not exceed one year. To the extent contingencies such as
preacquisition environmental matters, litigation and related legal fees are
resolved or settled during the allocation period, such items are included in the
revised allocation of the purchase price. After the allocation period, the
effect of changes in such contingencies is included in results of operations in
the periods in which the adjustments are determined. The Company does not
believe potential deviations between its fair value estimates and actual fair
values will be material.
In certain business combinations, the Company agrees to pay additional
amounts to sellers contingent upon achievement by the acquired businesses of
certain negotiated goals, such as targeted revenue levels, targeted disposal
volumes, or the issuance of permits for expanded landfill airspace. Contingent
payments, when incurred, are recorded as purchase price adjustments or
compensation expense, as appropriate, based on the nature of each contingent
payment.
Excess of cost over net assets of acquired businesses -- The excess of cost
over net assets of acquired businesses is amortized on a straight-line basis
over a period not greater than 40 years commencing on the dates of the
respective acquisitions. Accumulated amortization was $813,638,000 and
$703,656,000 at December 31, 1998 and 1997, respectively.
Other intangible assets -- Other intangible assets consist primarily of
customer lists, covenants not to compete, licenses, permits, and contracts.
Other intangible assets are recorded at cost and amortized on a straight-line
basis. Customer lists are generally amortized over five to seven years.
Covenants not to compete are amortized over the term of the agreement, which is
generally three to five years. Licenses, permits, and contracts are amortized
over the shorter of the definitive terms of the related agreements or 40 years.
Accumulated amortization was $113,312,000 and $110,760,000 at December 31, 1998
and 1997, respectively.
Long-lived assets -- Long-lived assets consist primarily of property and
equipment, excess of cost over net assets of acquired businesses, and other
intangible assets. The recoverability of long-lived assets is evaluated at the
operating unit level by an analysis of operating results and consideration of
other significant
63
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
events or changes in the business environment. If an operating unit has
indications of impairment, such as current operating losses, the Company will
evaluate whether impairment exists on the basis of undiscounted expected future
cash flows from operations before interest for the remaining amortization
period. If impairment exists, the carrying amount of the long-lived assets is
reduced to its estimated fair value.
Contracts in process -- Contracts in process relate to contracts involving
a substantial construction component. Such contracts primarily relate to
activities performed by international operations. The status of the Company's
contracts in process as of the dates indicated is as follows (in thousands):
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
Costs and estimated earnings on uncompleted
contracts........................................ $ 1,312,158 $ 1,511,710
Less billings on uncompleted contracts............. (1,213,795) (1,374,100)
----------- -----------
Total contracts in progress.............. $ 98,363 $ 137,610
=========== ===========
Contracts in process are included in the accompanying consolidated balance
sheets under the following captions:
DECEMBER 31,
-------------------
1998 1997
-------- --------
Costs and estimated earnings in excess of billings on
uncompleted contracts................................. $127,975 $158,610
Billings in excess of costs and estimated earnings on
uncompleted contracts (included in deferred
revenue).............................................. (29,612) (21,000)
-------- --------
Total contracts in process.................... $ 98,363 $137,610
======== ========
All contracts in process are expected to be billed and collected within
five years.
Income taxes -- Deferred income taxes are determined based on the
difference between the financial reporting and tax bases of assets and
liabilities. Deferred income tax expense represents the change during the period
in the deferred tax assets and deferred tax liabilities, net of the effect of
acquisitions and dispositions. Deferred tax assets include tax loss and credit
carryforwards and are reduced by a valuation allowance if, based on available
evidence, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
Foreign currency -- The functional currency of the majority of the
Company's foreign operations is the local currency of the country in which the
Company operates. Adjustments resulting from the translation of financial
information are included in comprehensive income.
Revenue recognition -- The Company recognizes revenues on service contracts
as services are provided. Amounts billed and collected prior to services being
performed are included in deferred revenues. Results from long-term contracts
involving a substantial construction component are recorded on the
percentage-of-completion basis. Changes in project performance and conditions,
estimated profitability and final contract settlements may result in future
revisions to long-term construction contract costs and income.
Capitalized interest -- Interest is capitalized on certain projects under
development including greenfield landfill projects and probable landfill
expansion projects, and on certain assets under construction, including
operating landfills and waste-to-energy facilities. The capitalization of
interest for operating landfills is based on the costs incurred on discrete cell
construction projects, plus an allocated portion of the common site costs. The
common site costs include the development costs of a greenfield site or the
purchase price of an operating landfill, and the ongoing infrastructure costs
benefiting the life cycle of the landfill. Cell construction costs
64
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
include the construction of cell liners and construction of final capping during
the operating life of the site. During 1998, 1997, and 1996, total interest
costs were $722,958,000, $606,952,000, and $582,213,000, respectively, of which
$41,501,000, $51,376,000, and $56,873,000, were capitalized, respectively.
New accounting pronouncements -- In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No.
133"). SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and derivatives used for hedging purposes. SFAS No. 133
requires that entities recognize all derivative financial instruments as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS No. 133 is effective for the Company in 2000.
Management is currently assessing the impact that the adoption of SFAS No. 133
will have on the Company's consolidated financial statements.
In April 1998, the Company adopted the American Institute of Certified
Public Accountants Statement of Position 98-5, Accounting for the Costs of
Start-Up Activities ("SOP 98-5"). SOP 98-5 requires all costs of start-up
activities to be expensed as incurred. Start-up activities are defined as those
one-time activities related to opening a new facility, introducing a new product
or service, conducting business in a new territory, conducting business with a
new class of customer or beneficiary, initiating a new process in an existing
facility, or commencing some new operation. Activities related to mergers or
acquisitions are not considered start-up activities, and therefore SOP 98-5 does
not change the accounting for such items. The impact of SOP 98-5 was not
material to the Company's consolidated financial statements.
Effective January 1, 1997, the Company adopted the American Institute of
Certified Public Accountants Statement of Position 96-1, Environmental
Remediation Liabilities ("SOP 96-1"). SOP 96-1 provides that environmental
remediation liabilities should be accrued when the criteria of the FASB
Statement of Financial Accounting Standards No. 5, Accounting for Contingencies
("SFAS No. 5"), are met. SOP 96-1 also provides that the accrual for such
liabilities should include future costs for those employees expected to devote a
significant amount of time directly to the management of remediation
liabilities. The adoption of SOP 96-1 during 1997 resulted in an increase to
operating costs and expenses of approximately $49,900,000 for that period.
3. BUSINESS COMBINATIONS
1998 Poolings of Interests Transactions
On December 31, 1998, the Company consummated a merger with Eastern
accounted for as a pooling of interests (the "Eastern Merger"), and accordingly,
the accompanying consolidated financial statements have been restated to include
the accounts and operations of Eastern for all periods presented. Under the
terms of the Eastern Merger, the Company issued 0.6406 of a share of its common
stock for each share of Eastern outstanding common stock. Prior to the Eastern
Merger, the Company owned approximately 1.3% of Eastern's outstanding shares,
which were canceled on the effective date of the Eastern Merger. The Eastern
Merger increased the Company's outstanding shares of common stock by
approximately 24,460,000 shares, and the Company assumed Eastern's stock options
equivalent to approximately 2,255,000 underlying shares of the Company's common
stock.
The consolidated balance sheets at December 31, 1998 and 1997 reflect the
combining of (i) the Company prior to consummation of the Eastern Merger ("Waste
Management") and (ii) Eastern as of those dates. Combined and separate results
of operations for the two years ended December 31, 1997, and the nine
65
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
months ended September 30, 1998, of Waste Management and Eastern for the
restated periods are as follows (in thousands):
WASTE
MANAGEMENT EASTERN COMBINED
----------- -------- -----------
Nine months ended September 30, 1998
(unaudited):
Operating revenues.................... $ 9,236,544 $227,821 $ 9,464,365
Income (loss) from continuing
operations before income taxes..... (931,295) 34,121 (897,174)
Net income (loss)..................... (851,670) 17,483 (834,187)
Year ended December 31, 1997:
Operating revenues.................... $11,802,350 $170,148 $11,972,498
Income (loss) from continuing
operations before income taxes..... (668,513) 6,016 (662,497)
Net income (loss)..................... (943,034) 4,139 (938,895)
Year ended December 31, 1996:
Operating revenues.................... $10,874,767 $123,835 $10,998,602
Income (loss) from continuing
operations before income taxes..... 778,069 (3,837) 774,232
Net income (loss)..................... 28,152 (3,921) 24,231
Prior to December 31, 1997, Eastern reported on a June 30 fiscal year-end.
Therefore, the accounts of Eastern for its 1997 and 1996, fiscal years have been
consolidated with the accounts of the Company as of and for the years ended
December 31, 1997 and 1996, respectively. Operating revenues and net income for
Eastern for the six-month period ended December 31, 1997, were approximately
$119,526,000 and $5,319,000, respectively. Accordingly, an adjustment is
included in the Company's 1998 consolidated financial statements for this
six-month period. In addition, Eastern issued shares of its common stock in
connection with acquisitions and a public offering during the six-month period.
On July 16, 1998, the Company consummated a merger with WM Holdings, which
was accounted for as a pooling of interests and, accordingly, the accompanying
consolidated financial statements include the accounts and operations of WM
Holdings for all periods presented. Under the terms of the WM Holdings Merger,
the Company issued 0.725 of a share of its common stock for each share of WM
Holdings outstanding common stock. The WM Holdings Merger increased the
Company's outstanding shares of common stock by approximately 354,000,000
shares, and the Company assumed WM Holdings' stock options equivalent to
approximately 16,000,000 underlying shares of the Company's common stock. Any
unvested WM Holdings options granted prior to March 10, 1998 vested upon
consummation of the Merger due to change of control provisions.
The results of operations for WM Holdings prior to consummation of the WM
Holdings Merger for the restated periods are as follows (in thousands):
YEARS ENDED DECEMBER 31,
THREE MONTHS ENDED -------------------------
MARCH 31, 1998 1997 1996
------------------ ----------- -----------
(UNAUDITED)
Operating revenues................. $2,131,621 $9,188,582 $9,225,636
Income (loss) from continuing
operations before income taxes... 170,968 (1,053,673) 660,467
Net income (loss).................. 74,417 (1,176,104) (39,307)
66
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with the WM Holdings Merger and the Eastern Merger, the
Company incurred significant charges in the third and fourth quarters of 1998.
Additionally, the Company expects to incur additional costs throughout 1999 that
are transitional in nature and not accruable until incurred or committed. The
table below reflects the amounts charged to merger costs related to the WM
Holdings Merger and the Eastern Merger, as well as merger costs expected to be
incurred in future periods for the respective transactions (in thousands):
WM HOLDINGS EASTERN
------------------------------ ------------------------------
CHARGES IN CHARGES EXPECTED CHARGES IN CHARGES EXPECTED
1998 IN FUTURE PERIODS 1998 IN FUTURE PERIODS
---------- ----------------- ---------- -----------------
(UNAUDITED) (UNAUDITED)
Transaction or deal costs, primarily
professional fees and filing fees..... $ 124,100 $ -- $ 14,300 $ --
Employee severance, separation and
transitional costs.................... 323,900 28,500 25,500 9,700
Restructuring charges relating to the
consolidation and relocation of
operations, and the transition and
implementation of information
systems............................... 166,900 71,800 20,500 3,200
Estimated loss on the sale of:
Assets to comply with governmental
orders............................. 255,000 -- 32,200 --
Duplicate facilities and related
leasehold improvements............. 188,900 -- 29,300 --
Duplicate revenue producing assets.... 26,200 -- 32,400 --
Provision for the abandonment of:
Revenue producing assets.............. 126,600 -- 3,000 --
Non-revenue producing assets,
consisting of landfill projects and
leasehold improvements which were
determined to be duplicative assets
from the related merger............ 263,000 -- 6,500 --
Other assets, consisting primarily of
computer hardware and software
costs which have no future value... 150,300 -- 1,500 --
---------- -------- -------- -------
Total......................... $1,624,900 $100,300 $165,200 $12,900
========== ======== ======== =======
Included in the charges above, are estimates for anticipated losses related
to the sales of assets pursuant to governmental orders. These anticipated losses
have been estimated based on the Company's assessment of relevant facts and
circumstances, including consideration of the various provisions of asset sale
agreements. In certain instances, the asset sale agreements contain
contingencies, the resolution of which are uncertain and could materially change
the proceeds which the Company will ultimately receive. Accordingly, dependent
upon actual future experience and the resolution of certain contingencies, the
amount of losses ultimately recorded by the Company could materially differ from
the amounts recorded by the Company.
Additionally, the Company recorded merger costs of approximately
$17,235,000 related to other poolings of interests transactions consummated
during 1998.
Furthermore, the Company recorded certain unusual charges of $864,063,000
in 1998 that were primarily, yet indirectly related to the WM Holdings Merger as
discussed in Note 14.
67
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1997 Pooling of Interests Transactions
On August 26, 1997, the Company consummated a merger with United Waste
Systems, Inc. ("United") accounted for as a pooling of interests (the "United
Merger") and, accordingly, the accompanying consolidated financial statements
include the accounts and operations of United for all periods presented. Under
the terms of the United Merger, the Company issued 1.075 shares of its common
stock for each outstanding share of United common stock. Additionally, at the
effective date of the United Merger, United stock options, whether or not such
stock options had vested or had become exercisable, were canceled in exchange
for shares of the Company's common stock equal in market value to the fair value
of such United stock options, as determined by an independent third party. The
United Merger increased the Company's outstanding shares of common stock by
approximately 51,900,000 shares, which includes approximately 1,900,000 shares
exchanged for the United stock options. In the third quarter of 1997, the
Company incurred approximately $89,152,000 in merger costs associated with the
United Merger. Of this amount, $17,566,000 related to transaction costs,
$26,198,000 for severance and other termination benefits, $21,629,000 for
integration of operations, and $23,759,000 for the disposal of duplicate
facilities and impaired assets as a result of the United Merger. The results of
operations for United prior to consummation of the United Merger for the
restated periods are as follows (in thousands):
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
---------------- -----------------
(UNAUDITED)
Operating revenues................... $216,619 $335,743
Net income........................... 23,849 35,393
1996 Pooling of Interests Transactions
On August 30, 1996, the Company consummated a merger with Sanifill, Inc.
("Sanifill") accounted for as a pooling of interests (the "Sanifill Merger")
and, accordingly, the accompanying consolidated financial statements include the
accounts and operations of Sanifill for all periods presented. Under the terms
of the Sanifill Merger, the Company issued 1.70 shares of its common stock for
each share of Sanifill outstanding common stock. The Sanifill Merger increased
the Company's outstanding shares of common stock by approximately 43,414,000
shares and the Company assumed Sanifill's options and warrants equivalent to
approximately 4,361,000 underlying shares of the Company's common stock. In the
third quarter of 1996, the Company incurred approximately $80,000,000 in merger
costs associated with the Sanifill Merger. The $80,000,000 of merger costs
includes $9,500,000 of transaction costs, $20,000,000 of relocation, severance,
and other termination benefits, $13,000,000 relating to integrating operations,
and $37,500,000 relating to the disposal of duplicate facilities. The results of
operations for Sanifill prior to consummation of the Sanifill Merger for the
restated periods are as follows (in thousands):
SIX MONTHS ENDED
JUNE 30, 1996
----------------
(UNAUDITED)
Operating revenues.................................. $181,406
Net income.......................................... 18,964
On May 7, 1996, the Company consummated a merger with Western Waste
Industries ("Western") accounted for as a pooling of interests (the "Western
Merger") and, accordingly, the accompanying consolidated financial statements
include the accounts and operations of Western for all periods presented. Under
the terms of the Western Merger, the Company issued 1.50 shares of its common
stock for each share of Western outstanding common stock. Prior to the Western
Merger, the Company owned approximately 4.1% of Western's outstanding shares
(634,900 common shares), which were canceled on the effective date of the
Western Merger. The Western Merger increased the Company's outstanding shares of
common stock by
68
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
approximately 22,028,000 shares and the Company assumed options under Western's
stock option plans equivalent to approximately 5,200,000 underlying Company
shares of common stock. In the second quarter of 1996, the Company incurred
approximately $35,000,000 in merger costs associated with the Western Merger and
approximately $4,800,000 in benefits related to Western's pre-merger retirement
program. The $35,000,000 of merger costs include $6,800,000 of transaction
costs, $15,000,000 of severance and other termination benefits, and $13,200,000
of costs related to integrating operations. The results of operations for
Western prior to consummation of the Western Merger for the restated periods are
as follows (in thousands):
THREE MONTHS ENDED
MARCH 31, 1996
------------------
(UNAUDITED)
Operating revenues................................ $68,441
Net income........................................ 4,703
1998 and 1997 Purchase Acquisitions and Acquisitions of Minority Interests
On November 30, 1998, the Company acquired the 49% interest of Waste
Management International plc's ("WMI plc") United Kingdom operations that was
previously owned by Wessex Water Plc for 205 million pounds, which is equivalent
to $342,000,000.
On November 3, 1998, the Company acquired the publicly owned shares of its
subsidiary, WMI plc. Under the agreement, the Company paid approximately
$443,000,000 in the aggregate, to the holders of the approximately 20% of the
outstanding shares of WMI plc not previously owned by WM Holdings and its
subsidiaries. The Company liquidated WMI plc after the acquisition in an effort
to simplify the corporate structure and provide enhanced tax planning
opportunities.
On June 18, 1998, the Company acquired the solid waste businesses of
American Waste Systems, Inc. for approximately $150,000,000 in cash. The
businesses acquired include three landfills and one collection operation located
in Ohio.
On March 31, 1998, the Company acquired the remaining outstanding shares of
Wheelabrator Technologies Inc. ("WTI"), which it did not already own for
$876,200,000 in cash.
On January 14, 1998, the Company acquired the solid waste divisions of City
Management Holdings Trust ("City Management") for approximately $810,000,000
consisting primarily of cash and assumed debt. The businesses acquired include
20 collection operations, ten landfills, and 12 transfer stations, located
primarily in Michigan.
On April 1, 1997, the Company acquired substantially all of the assets of
Mid-American Waste Systems, Inc. for approximately $201,000,000, consisting
primarily of cash and assumed debt. The assets acquired include 11 collection
operations, 11 landfills, six transfer stations, and three recycling operations.
On March 12, 1997, the Company acquired substantially all of the Canadian
solid waste subsidiaries of Allied Waste Industries, Inc. for approximately
$518,000,000 in cash. Those businesses represented 41 collection operations,
seven landfills, and eight transfer stations in Alberta, British Columbia,
Manitoba, Ontario, Quebec, and Saskatchewan.
In addition to the above purchase acquisitions, the Company consummated
numerous other acquisitions that were accounted for under the purchase method of
accounting. Results of operations of companies that were acquired and subject to
purchase accounting are included from the dates of such acquisitions.
The total cost of acquisitions accounted for under the purchase method of
accounting, excluding the purchases of minority interests, was approximately
$2,452,690,000 and $2,150,975,000 in 1998 and 1997, respectively.
69
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma information set forth below assumes acquisitions in 1998 and
1997 accounted for as purchases had occurred at the beginning of 1997. The pro
forma information is presented for informational purposes only and is not
necessarily indicative of the results of operations that actually would have
been achieved had the acquisitions been consummated at that time (in thousands,
except per share amounts):
YEARS ENDED DECEMBER 31,
-------------------------
1998 1997
----------- -----------
(UNAUDITED) (UNAUDITED)
Operating revenues......................................... $13,137,758 $13,431,884
Income (loss) from continuing operations................... (735,939) (938,850)
Net income (loss).......................................... (739,839) (851,907)
Basic earnings (loss) per common share:
Income (loss) from continuing operations................. (1.25) (1.66)
Net income (loss)........................................ (1.26) (1.51)
Diluted earnings (loss) per common share:
Income (loss) from continuing operations................. (1.25) (1.66)
Net income (loss)........................................ (1.26) (1.51)
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
Land and landfills................................. $ 8,384,077 $ 7,160,129
Vehicles........................................... 2,797,137 2,676,433
Machinery and equipment............................ 3,072,162 3,078,799
Containers......................................... 1,844,904 1,637,023
Buildings and improvements......................... 1,632,006 1,664,572
Furniture and fixtures............................. 505,527 544,035
----------- -----------
18,235,813 16,760,991
Less accumulated depreciation and amortization..... (6,598,074) (5,572,461)
----------- -----------
$11,637,739 $11,188,530
=========== ===========
Depreciation and amortization expense for property and equipment was
$1,314,568,000, $1,242,061,000 and $1,102,260,000 for 1998, 1997, and 1996,
respectively.
Effective October 1, 1997, the Board of Directors of WM Holdings approved a
revision to WM Holdings' North American collection fleet management policy.
Under the revised policy, WM Holdings replaced front-end loaders after eight
years, and rear-end loaders and roll-off trucks after ten years. The previous
policy was to not replace front-end loaders before they were a minimum of ten
years old and other heavy collection vehicles before they were a minimum of 12
years old. As a result of this decision, the Company recognized an impairment
writedown of $70,900,000 in the fourth quarter of 1997 for those vehicles
scheduled for replacement in the next two years under the new policy.
Depreciable lives were adjusted for the WM Holdings fleet commencing in the
fourth quarter of 1997 to reflect the new policy. Also effective October 1,
1997, WM Holdings reduced depreciable lives on containers from 15 and 20 years
to 12 years, and ceased assigning salvage value in computing depreciation on
North American collection vehicles or containers. These changes in estimates
resulted in an increase in depreciation expense of $33,700,000 in the fourth
quarter of 1997. Upon consummation of the WM Holdings Merger, WM Holdings'
replacement policies were conformed with that of the Company, which are
materially consistent with the revised WM Holdings policy stated above.
70
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Also effective October 1, 1997, WM Holdings changed its process of
evaluating the probability that landfill airspace from expansions will be
permitted. This change in estimate decreased the useful lives of certain WM
Holdings landfills and increased depreciation and amortization and the provision
for final closure and post-closure by $15,800,000 in the fourth quarter of 1997.
5. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
DECEMBER 31,
------------------------
1998 1997
----------- ----------
Bank borrowings............................................. $ 1,903,100 $ 485,500
Commercial paper, average interest of 5.7% in 1998, and 6.1%
in 1997................................................... 840,108 356,327
Senior notes and debentures, interest of 6 1/8% to 8 3/4%,
due 1999 to 2028.......................................... 5,959,884 5,224,119
4% Convertible subordinated notes due 2002.................. 535,275 535,275
4 1/2% Convertible subordinated notes due 2001.............. 148,370 149,500
5% Convertible subordinated debentures due 2006............. 114,445 115,000
5.75% Convertible subordinated notes due 2005............... 453,680 450,182
Tax-exempt and project bonds, principal payable in periodic
installments, maturing through 2021, fixed and variable
interest rates ranging from 3.53% to 9.25% at December 31,
1998...................................................... 1,220,634 1,307,793
Installment loans and notes payable, interest to 14%,
maturing through 2017..................................... 491,533 779,709
Other....................................................... 30,914 76,556
----------- ----------
11,697,943 9,479,961
Less current maturities..................................... 583,742 1,598,012
----------- ----------
$11,114,201 $7,881,949
=========== ==========
The aggregate estimated payments, including scheduled minimum maturities,
of long-term debt outstanding at December 31, 1998, for the following five years
and thereafter are as follows (in thousands).
Upon consummation of the WM Holdings Merger, the Company entered into a
$3,000,000,000 syndicated loan facility (the "Syndicated Facility") which was in
addition to the Company's existing $2,000,000,000 senior revolving credit
facility (the "Credit Facility"). The Syndicated Facility requires annual
renewal by the lender and provides for a one-year term option at the Company's
request in the event of non-renewal. The Syndicated Facility is available for
borrowings, including up to $800,000,000 of standby letters of credit and to
support the issuance of commercial paper; accordingly, commercial paper has been
classified as non-current for financial reporting purposes. The applicable
interest rate and facility fee for the Syndicated Facility are similar to those
contained in the Company's then existing Credit Facility (which was amended to
71
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
provide for the WM Holdings Merger). The covenant restrictions for the
Syndicated Facility and Credit Facility include, among others, interest coverage
and debt capitalization ratios, and limitations on dividends, additional
indebtedness, liens, and asset sales. The Syndicated Facility and Credit
Facility are used to refinance existing bank loans and letters of credit, to
fund acquisitions, and for working capital purposes. At December 31, 1997, the
committed capacity under the Credit Facility was $2,000,000,000, including
standby letters of credit of up to $650,000,000. At December 31, 1997, the
applicable interest rate was 6.1% per annum and the facility fee was 0.1125% per
annum, with the Company having borrowed $430,000,000 and issued letters of
credit of $467,029,000 under the Credit Facility. Principal reductions are not
required during the five-year term of the Credit Facility, which was entered
into on August 7, 1997. At December 31, 1998, the applicable interest rate on
the syndicated Facility was 5.46% and there were no borrowings outstanding under
the Credit Facility. The facility fee was 0.10% and 0.125% per annum, under the
Syndicated Facility and Credit Facility, respectively, at December 31, 1998. The
Company had borrowed $1,545,000,000 and had issued letters of credit of
$1,253,361,000 under the Syndicated Facility and Credit Facility at December 31,
1998.
In November 1998, the Company entered into two multi-currency credit
facilities totaling EURO 300,000,000, with a syndicate of banks. The facilities
provide for borrowings in several currencies and are renewable annually. The
outstanding balance as of December 31, 1998 was EURO 228,176,000 (equivalent to
$267,400,000). The applicable interest rate is determined by LIBOR or PIBOR plus
margin and mandatory costs as defined per the agreement. The interest rates on
the two outstanding loans at December 31, 1998, were 7.03% and 3.87%.
On July 17, 1998, the Company issued $600,000,000 of 7% senior notes, due
on July 15, 2028 (the "7% Notes") and $600,000,000 of 6 1/8% mandatorily
tendered senior notes, due on July 15, 2011 (the "6 1/8% Notes"). The 7% Notes
are redeemable, in whole or in part, at the option of the Company at any time
and from time to time at the redemption price, as defined in the indenture. The
6 1/8% Notes are subject to certain mandatory tender features as described in
the indenture, which may require the purchase by the Company of a portion of or
all of the outstanding notes on July 15, 2001. The proceeds from the 7% Notes
and 6 1/8% Notes were used to repay outstanding indebtedness under the Company's
bank borrowings. Interest on the 7% Notes and 6 1/8% Notes is payable
semi-annually on January 15 and July 15.
In May 1998, the Company retired approximately $40,000,000 of certain debt
with an average interest rate of 9.0% with proceeds from the Credit Facility. In
connection with this debt retirement, the Company incurred prepayment penalties
and other fees of $1,811,000 and wrote off the remaining unamortized discounts
and debt offering costs of $4,689,000, which were recorded as an extraordinary
item.
On December 17, 1997, the Company issued $350,000,000 of 6 1/2% senior
notes due December 15, 2002, and $150,000,000 of 7 1/8% senior notes due
December 15, 2017. The senior notes constitute senior and unsecured obligations
of the Company ranking equal in right of payment with all other senior and
unsecured obligations of the Company, as defined in the indenture. The 6 1/2%
senior notes due December 15, 2002, are not redeemable. The $150,000,000 of
7 1/8% senior notes due December 15, 2017, are redeemable, in whole or in part,
at the option of the Company at any time and from time to time at a redemption
price defined in the indenture. Interest is payable semi-annually on December 15
and June 15. The proceeds were used to repay debt under the Company's bank
borrowings.
On September 12, 1997, the Company issued $300,000,000 of 7% senior notes
due October 1, 2004, and $300,000,000 of 7 1/8% senior notes due October 1,
2007. The senior notes constitute senior and unsecured obligations of the
Company, ranking equal in right of payment with all other senior and unsecured
obligations of the Company, as defined in the indenture. The senior notes are
redeemable at the option of the Company at any time and from time to time at the
principal amount of such notes, plus accrued interest. Interest is payable
semi-annually on October 1 and April 1. The proceeds were used to repay debt
under the Company's bank borrowings.
72
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During August 1997 and September 1997, the Company prepaid the holders of
certain privately placed senior note an aggregate amount of $182,500,000 with
proceeds from its Credit Facility. Interest on these privately placed senior
notes ranged from 7.29% to 8.44%. In connection with this transaction, the
Company was required to pay prepayment penalties of $7,975,000 and wrote off the
remaining unamortized deferred offering costs of approximately $1,311,000, which
was recorded as an extraordinary item in the third quarter of 1997.
On February 7, 1997, the Company issued $535,275,000 of 4% convertible
subordinated notes, due on February 1, 2002. Interest is payable semi-annually
in February and August. The notes are convertible by the holders into shares of
the Company's common stock at any time at a conversion price of $43.56 per
share. The notes are subordinated in right of payment to all existing and future
senior indebtedness, as defined in the indenture. The notes are redeemable after
February 1, 2000 at the option of the Company at 101.6% of the principal amount,
declining to 100.8% of the principal amount on February 1, 2001 and thereafter
until maturity, at which time the notes will be redeemed at par, plus accrued
interest. The proceeds were primarily used to repay debt under the Company's
bank borrowings, to fund acquisitions, and for general corporate purposes.
On June 5, 1996, United issued $150,000,000 of 4 1/2% convertible
subordinated notes, due June 1, 2001. Interest is payable semi-annually in June
and December. The notes are convertible into shares of the Company's common
stock at a conversion price of $30.23 per share. The notes are subordinated in
right of payment to all existing and future senior indebtedness, as defined in
the indenture. The notes are redeemable after June 1, 1999, at the option of the
Company at 101.8% of the principal amount, declining annually to par on June 1,
2001, plus accrued interest.
On March 4, 1996, Sanifill issued $115,000,000 of 5% convertible
subordinated debentures, due on March 1, 2006. Interest is payable semi-annually
in March and September. The debentures are convertible into shares of the
Company's common stock at a conversion price of $28.31 per share. The debentures
are subordinated in right of payment to all existing and future senior
indebtedness, as defined in the indenture. In March 1999, these debentures were
called by the Company and subsequently converted into equity by the debenture
holders. See Note 20.
The 5.75% convertible subordinated notes due 2005 are subordinated to all
existing and future senior indebtedness of the Company. Each note bears cash
interest at the rate of two percent per annum of the $1,000 principal amount at
maturity, payable semi-annually. The difference between the principal amount at
maturity of $1,000 and the $717.80 stated issue price of each note represents
the stated discount. At the option of the holder, each note can be purchased for
cash by the Company on March 15, 2000, at $843.03. Accrued unpaid interest to
those dates will also be paid. The notes will be callable by the Company on and
after March 15, 2000, for cash, at the stated issue price plus accrued stated
discount and accrued but unpaid interest through the date of redemption. In
addition, each note is convertible at any time prior to maturity into
approximately 18.9 shares of the Company's common stock, subject to adjustment
upon the occurrence of certain events. Upon any such conversion, the Company
will have the option of paying cash equal to the market value of the shares
which would otherwise be issuable.
6. ENVIRONMENTAL LIABILITIES
The Company has material financial commitments for the costs associated
with its future obligations for final closure, which is the closure of the final
cell of a landfill or the regulatory required costs associated with existing
operations at a hazardous waste treatment, storage or disposal facility which
are subject to Toxic Substances Central Act ("TSCA") or Subtitle D of the
Resource Conservation and Recovery Act ("RCRA") hazardous waste treatment,
storage, or disposal facility, and post-closure of those facilities. For
landfills, the final closure and post-closure liabilities are accrued and
charged to expense as airspace is consumed such that the total estimated final
closure and post-closure cost will be fully accrued for each
73
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
landfill at the time the site discontinues accepting waste and is closed.
Estimates for final closure and post-closure costs are developed using input
from the Company's engineers and accountants and are reviewed by management
(typically not less than once per year). The estimates are based on the
Company's interpretation of current requirements and proposed regulatory
changes. In the U.S., the final closure and post-closure requirements are
established under the standards of the U.S. Environmental Protection Agency's
Subtitle C and D regulations, as implemented and applied on a state-by-state
basis. Such costs may increase in the future as a result of legislation or
regulation. Final closure and post-closure accruals consider estimates for the
final cap and cover for the site, methane gas control, leachate management and
groundwater monitoring, and other operational and maintenance costs to be
incurred after the site discontinues accepting waste, which is generally
expected to be for a period of up to thirty years after final site closure. For
purchased disposal sites, the Company assesses and records a final closure and
post-closure liability at the time the Company assumes closure responsibility
based upon the estimated final closure and post-closure costs and the percentage
of airspace utilized as of such date. Thereafter, the difference between the
final closure and post-closure costs accrued and the total estimated closure and
post-closure costs to be incurred is accrued and charged to expense as airspace
is consumed. Such costs for foreign landfills are estimated based on compliance
with local laws, regulations and customs. For other facilities, final closure
and post-closure costs are determined in consideration of regulatory
requirements.
The Company has also established procedures to evaluate its potential
remedial liabilities at closed sites which it owns or operates, or to which it
transported waste, including 88 sites listed on the Superfund National
Priorities List ("NPL") as of December 31, 1998. The majority of situations
involving NPL sites relate to allegations that subsidiaries of the Company (or
their predecessors) transported waste to the facilities in question, often prior
to the acquisition of such subsidiaries by the Company. The Company routinely
reviews and evaluates sites that require remediation, including NPL sites,
giving consideration to the nature (e.g., owner, operator, transporter, or
generator), and the extent (e.g., amount and nature of waste hauled to the
location, number of years of site operation by the Company, or other relevant
factors) of the Company's alleged connection with the site, the accuracy and
strength of evidence connecting the Company to the location, the number,
connection and financial ability of other named and unnamed potentially
responsible parties ("PRPs"), and the nature and estimated cost of the likely
remedy. Cost estimates are based on management's judgment and experience in
remediating such sites for the Company as well as for unrelated parties,
information available from regulatory agencies as to costs of remediation, and
the number, financial resources and relative degree of responsibility of other
PRPs who are jointly and severally liable for remediation of a specific site, as
well as the typical allocation of costs among PRPs. These estimates are
sometimes a range of possible outcomes. In such cases, the Company provides for
the amount within the range which constitutes its best estimate. If no amount
within the range appears to be a better estimate than any other amount, then the
Company provides for the minimum amount within the range in accordance with the
SFAS No. 5. The Company believes that it is "reasonably possible," as that term
is defined in SFAS No. 5 ("more than remote but less than likely"), that its
potential liability, at the high end of such ranges, would be approximately
$233,000,000 higher on a discounted basis in the aggregate than the estimate
that has been recorded in the consolidated financial statements as of December
31, 1998.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its consolidated financial statements,
it is reasonably possible that technological, regulatory or enforcement
developments, the results of environmental studies, the existence and ability of
other PRPs to
74
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
contribute to the settlements of such liabilities, or other factors could
necessitate the recording of additional liabilities which could be material.
Where the Company believes that both the amount of a particular
environmental liability and the timing of the payments are reliably
determinable, the cost in current dollars is inflated at 2% (3% at December 31,
1997) until expected time of payment and then discounted to present value at
5.5% (6% at December 31, 1997). The portion of the Company's recorded
environmental liabilities that is not inflated or discounted was approximately
$492,339,000 and $344,700,000 at December 31, 1998 and 1997, respectively. Had
the Company not discounted any portion of its liability, the amount recorded
would have been increased by approximately $308,262,000 at December 31, 1998.
The Company's liabilities for final closure, post-closure monitoring and
environmental remediation costs were as follows (in thousands):
DECEMBER 31,
-----------------------
1998 1997
---------- ----------
Current portion, included in accrued liabilities..... $ 150,592 $ 129,611
Non-current portion.................................. 971,507 1,038,049
---------- ----------
Total recorded............................. 1,122,099 $1,167,660
==========
Amount to be provided over remaining life of active
sites, including discount of $308,262 related to
recorded amounts................................... 1,806,966
----------
Expected aggregate environmental liabilities based on
current cost....................................... $2,929,065
==========
Anticipated payments (based on current costs) of environmental liabilities
at December 31, 1998, are as follows (in thousands):
In addition to the amounts above, at a certain site, the Company has
perpetual care obligations aggregating approximately $1,527,000 per year.
From time to time, the Company and certain of its subsidiaries are named as
defendants in personal injury and property damage lawsuits, including purported
class actions, on the basis of a Company subsidiary having allegedly owned,
operated or transported waste to a disposal facility which is alleged to have
contaminated the environment or, in certain cases, conducted environmental
remediation activities at such sites. While the Company believes it has
meritorious defenses to these lawsuits, their ultimate resolution is often
substantially uncertain due to a number of factors, and it is possible such
matters could have a material adverse impact on the Company's earnings for one
or more quarters or years.
The Company has filed suit against numerous insurance carriers seeking
reimbursement for past and future remedial, defense and tort claim costs at a
number of sites. Carriers involved in these matters have typically denied
coverage and are defending against the Company's claims. While the Company is
vigorously
75
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
pursuing such claims, it regularly considers settlement opportunities when
appropriate terms are offered. Settlements to date ($46,600,000 in 1998,
$94,300,000 in 1997, and $60,300,000 in 1996) have been included in operating
costs and expenses as an offset to environmental expenses.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value amounts have been determined by the Company using
available market information and commonly accepted valuation methodologies.
However, considerable judgement is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that the Company or holders of the
instruments could realize in a current market exchange. The use of different
assumptions and/or estimation methodologies may have a material effect on the
estimated fair values. The fair value estimates presented herein are based on
information available to management as of December 31, 1998 and 1997. Such
amounts have not been revalued since those dates, and current estimates of fair
value may differ significantly from the amounts presented herein.
The carrying values of cash and cash equivalents, short-term investments,
restricted funds held by trustees, trade accounts receivable, trade accounts
payable, financial instruments included in notes and other receivables,
financial instruments included in other assets, and derivative financial
instruments approximate their fair values principally because of the short-term
maturities of these instruments.
The fair values of the Company's outstanding indebtedness is as follows (in
thousands):
DECEMBER 31,
-------------------------------------------------
1998 1997
----------------------- -----------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
Senior notes and debentures.......... $5,959,884 $6,202,556 $5,224,119 $5,345,490
4% Convertible subordinated notes due
2002............................... 535,275 641,795 535,275 592,148
4 1/2% Convertible subordinated notes
due 2001........................... 148,370 232,985 149,500 214,906
5% Convertible subordinated
debentures due 2006................ 114,445 188,489 115,000 170,631
5.75% Convertible subordinated notes
due 2005........................... 453,680 442,928 450,182 467,821
Tax-exempt and project bonds......... 1,220,634 1,320,841 1,307,793 1,371,871
Other borrowings..................... 3,265,655 3,303,520 1,698,092 1,706,129
8. DERIVATIVE FINANCIAL INSTRUMENTS
Interest rate agreements -- The Company and its subsidiaries have entered
into interest rate swap agreements to balance fixed and floating rate debt in
accordance with management's criteria. The agreements are contracts to exchange
fixed and floating interest rate payments periodically over a specified term
without the exchange of the underlying notional amounts. The agreements provide
only for the exchange of interest on the notional amounts at the stated rates,
with no multipliers or leverage. Differences paid or received are accrued in the
consolidated financial statements as a part of interest expense on the
underlying debt over the
76
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
life of the agreements and the swap is not recorded on the balance sheet. As of
December 31, 1998, interest rate agreements in notional amounts and with terms
as set forth in the following table were outstanding:
NOTIONAL
CURRENCY AMOUNT RECEIVE PAY DURATION OF AGREEMENTS
-------- ----------- -------- -------- ----------------------
U.S. Dollar................ 50,000,000 Floating Fixed June 1997 to June 1999
U.S. Dollar................ 24,000,000 Floating Fixed November 1994 to September 1999
U.S. Dollar................ 15,000,000 Floating Fixed November 1996 to November 1999
Dutch Guilder.............. 115,000,000 Floating Fixed November 1996 to January 2000
German Deutschemark........ 150,000,000 Floating Fixed March 1996 to January 2000
French Franc............... 200,000,000 Fixed Floating December 1998 to December 2002
U.S. Dollar................ 33,750,000 Floating Fixed January 1998 to January 2003
U.S. Dollar................ 23,772,000 Floating Fixed April 1997 to April 2012
Currency agreements -- From time to time, the Company and certain of its
subsidiaries use foreign currency derivatives to seek to mitigate the impact of
translation on foreign earnings and income from foreign investees. Typically
these have taken the form of purchased put options or collars. The Company
receives or pays, based on the notional amount of the option, the difference
between the average exchange rate of the hedged currency against the base
currency and the average (strike price) contained in the option. Complex
instruments involving multipliers or leverage are not used. Although the purpose
for using such derivatives is to mitigate currency risk, they do not qualify for
hedge accounting under generally accepted accounting principles and,
accordingly, must be adjusted to market value at the end of each accounting
period with gains or losses included in other income. There were no currency
derivatives of this type outstanding at December 31, 1998. From time to time,
the Company also uses foreign currency forward contracts to hedge committed
transactions when the terms of such a transaction are known and there is a high
probability that the transaction will occur.
Commodity agreements -- Prior to the WM Holdings Merger, WM Holdings
utilized derivatives to seek to mitigate the impact of fluctuations in the price
of fuel used by its vehicles. Quantities hedged did not exceed anticipated fuel
purchases in any period. Gains or losses were recognized in operating expenses,
as cost of fuel purchases, when paid or received. The primary instruments used
were collars, swaps and swaptions. Collars consist of the purchase of call
options along with a corresponding sale of put options at a lower price, with
the effect of establishing a "cap" and a "floor" with respect to the price of
specified quantities of fuel. A swap is an agreement with a counterparty whereby
WM Holdings would pay a fixed price and would receive a floating price for
specified quantities during a given period. In a swaption, WM Holdings would be
paid a premium by the counterparty for the right, but not the obligation, at the
end of the option period (usually 90 to 180 days) to enter into a swap with
respect to a specified quantity in a given period in the future. All such
derivatives were terminated following the WM Holdings Merger, and no fuel
hedging transactions were outstanding at December 31, 1998.
9. CAPITAL STOCK
The Board of Directors is authorized to issue preferred stock in series,
and with respect to each series, to fix its designation, relative rights
(including voting, dividend, conversion, sinking fund, and redemption rights),
preferences (including dividends and liquidation), and limitations. The Company
currently has no issued or outstanding preferred stock.
In June 1998, Eastern completed the registration and sale of 8,625,000
shares of its common stock at $26.375 per share (equivalent to 5,525,175 shares
of the Company's common stock at $41.17 per share). This public offering
included the sale of 500,000 shares of Eastern common stock by selling
shareholders (equivalent to 320,300 shares of the Company's common stock). The
net proceeds after deducting fees and
77
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
related costs, were approximately $205,000,000 and were primarily used to repay
debt under Eastern's credit facility and for general corporate purposes.
As a condition to completing the WM Holdings Merger, during June 1998, WM
Holdings sold 20,000,000 shares of its common stock from its treasury
(equivalent to 14,500,000 shares of the Company's common stock) in an offering
to the public. The net proceeds of approximately $607,000,000 were used by WM
Holdings to retire outstanding debt under its credit facilities.
In June 1997, prior to the WM Holdings Merger, the Company acquired a
majority of the Canadian solid waste businesses of WM Holdings in a purchase
business combination for consideration that included 1,705,757 shares of the
Company's common stock. WM Holdings sold its shares of the Company's common
stock on the open market during December 1997 for approximately $65,000,000.
Because the WM Holdings Merger was accounted for as a pooling of interests, WM
Holdings' sale of its shares of the Company's common stock is treated as an
equity offering to the public for financial accounting and reporting purposes.
On March 3, 1997, prior to its becoming a wholly-owned subsidiary of the
Company, United completed a public offering in which it issued 3,450,000 shares
of its common stock, priced at $36.50 per share (equivalent to 3,708,750 shares
of the Company's common stock, priced at $33.95 per share). The net proceeds of
approximately $119,000,000 were used to repay debt under United's credit
facility, to fund acquisitions, and for general corporate purposes.
On February 7, 1997, the Company completed a public offering of 11,500,000
shares of its common stock, priced at $35.125 per share. The net proceeds of
approximately $387,438,000 were primarily used to repay bank borrowing.
In February 1997, the board of directors of WM Holdings authorized the
repurchase of up to 50,000,000 shares of its own common stock (equivalent to
36,250,000 shares of the Company's common stock) in the open market, in
privately negotiated transactions, or through issuer tender offers. WM Holdings
repurchased 30,000,000 shares of its own common stock (equivalent to 21,750,000
shares of the Company's common stock) through a "Dutch auction" tender offer in
the second quarter of 1997.
During 1994 through 1996, WM Holdings sold put options on 42,300,000 shares
of its common stock (equivalent to 30,700,000 shares of the Company's common
stock). The put options gave the holders the right at maturity to require WM
Holdings to repurchase shares of its common stock at specified prices. Proceeds
from the sale of put options were credited to additional paid-in capital. The
amount WM Holdings would be obligated to pay to repurchase shares of its common
stock if all outstanding put options were exercised was reclassified to a
temporary equity account. In the event the options were exercised, WM Holdings
had the right to pay the holder in cash the difference between the strike price
and the market price of WM Holdings' shares, in lieu of repurchasing the stock.
Options on 32,500,000 shares expired unexercised, as the price of WM Holdings'
stock was in excess of the strike price at maturity. WM Holdings repurchased
3,100,000 shares of its common stock at a cost of $107,500,000, and 6,700,000
options were settled for cash of $13,600,000. There were no put options
outstanding at and subsequent to December 31, 1997.
As of December 31, 1998, the Company is limited in its ability to pay
dividends pursuant to its current credit agreements of amounts not to exceed
$100,000,000 per year. The Company declared cash dividends of approximately
$93,810,000, $309,577,000, and $308,265,000, to its shareholders during 1998,
1997, and 1996, respectively. Based on the Company's weighted average common
shares outstanding, the cash dividends per common share are $0.16, $0.56, and
$0.57 for the years ended December 31, 1998, 1997, and 1996, respectively.
78
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. COMMON STOCK OPTIONS AND WARRANTS
In accordance with the Company's 1990 Stock Option Plan (the "1990 Plan"),
options to purchase 900,000 shares of the Company's common stock may be granted
to officers, directors, and key employees. In accordance with the Company's 1993
Stock Option Incentive Plan, as amended (the "1993 Plan"), options to purchase
26,500,000 shares of the Company's common stock may be granted to officers,
directors, and key employees. Options are granted under both the 1990 Plan and
the 1993 Plan at an exercise price which equals or exceeds the fair market value
of the common stock on the date of grant, with various vesting periods, and
expire up to ten years from the date of grant. No options are available for
future grant under the 1990 Plan.
Under the Company's 1996 Stock Option Plan for Non-Employee Directors
("1996 Directors Plan"), its directors who are not officers, full-time
employees, or consultants of the Company receive an annual grant of 12,500
options on each January 1 (amended to 10,000 options effective January 1, 1999).
In accordance with the 1996 Directors Plan, options to purchase up to 1,400,000
shares of the Company's common stock may be granted, with five year vesting
periods (amended to one year effective January 1, 1999), and expiration dates
ten years from the date of grant. Options may be granted at an exercise price
which equals fair market value of the common stock on the date of grant.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123").
SFAS No. 123 prescribes a fair value based method of determining compensation
expense related to stock-based awards granted to employees. The recognition
provisions of SFAS No. 123 are optional; however, entities electing not to adopt
the recognition provisions of SFAS No. 123 are required to make disclosures of
pro forma net income and earnings per share as if the recognition provisions of
SFAS No. 123 had been applied, as well as disclosures regarding assumptions
utilized in determining the pro forma amounts. The Company did not adopt the
recognition provisions of SFAS No. 123, however, the required disclosures are
included below.
Stock options granted by the Company in 1998, 1997, and 1996 have ten year
terms. Stock options granted by Eastern and Western became fully vested upon
consummation of the respective mergers. Stock options granted by Sanifill
continue to vest under varying vesting periods ranging from immediate vesting to
five years following the date of grant. At the effective date of the United
Merger, United stock options, whether or not such stock options had vested or
had become exercisable, were canceled in exchange for shares of the Company's
common stock equal in market value to the fair value of such United stock
options, as determined by an independent third party. Stock options granted by
WM Holdings prior to March 10, 1998, became fully vested upon consummation of
the WM Holdings Merger, and certain of those include put provision benefits for
up to a one year period from the date of the WM Holdings Merger (See Note 14).
WM Holdings options granted after March 10, 1998, continue to vest in accordance
with their original vesting schedule of 3 years.
79
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes common stock option and warrant transactions
under the aforementioned plans and various predecessor plans for 1998, 1997, and
1996:
OPTIONS AND WEIGHTED AVERAGE
WARRANTS EXERCISE PRICE
----------- ----------------
(IN 000'S)
Outstanding at December 31, 1995.................. 33,728 $25.00
Granted......................................... 12,368 28.17
Assumed in acquisitions......................... 373 24.94
Exercised....................................... (7,411) 16.31
Forfeited....................................... (1,147) 44.03
------
Outstanding at December 31, 1996.................. 37,911 27.13
Granted......................................... 10,424 35.20
Exercised....................................... (8,023) 17.26
Forfeited....................................... (2,681) 43.99
------
Outstanding at December 31, 1997.................. 37,631 30.46
Granted......................................... 10,645 43.92
Assumed in acquisitions......................... 1,986 36.77
Exercised....................................... (8,593) 34.17
Forfeited....................................... (859) 45.33
------
Outstanding at December 31, 1998.................. 40,810 32.72
======
Exercisable at December 31, 1996.................. 20,546 27.20
Exercisable at December 31, 1997.................. 20,440 30.34
Exercisable at December 31, 1998.................. 23,994 29.25
The common stock options and warrants outstanding at December 31, 1998,
include approximately 21,247,000, common stock options and warrants granted by
Western, Sanifill, United, WM Holdings, and Eastern, of which approximately
17,470,000 are exercisable.
The weighted average fair value of common stock options and warrants
granted during 1998, 1997 and 1996 were $18.61, $11.92 and $9.59, respectively.
The fair value of each common stock option or warrant granted to employees or
directors by the Company during 1998, 1997 and 1996 is estimated utilizing the
Black-Scholes option-pricing model. The following weighted average assumptions
were used: dividend yield of 0% to 2%, risk-free interest rates which vary for
each grant and range from 5.06% to 7.67%, expected life of three to seven years
for all grants, and stock price volatility primarily ranging from 25.2% to 31.3%
for all grants.
Outstanding and exercisable stock options and warrants at December 31,
1998, were as follows (in thousands):
OUTSTANDING EXERCISABLE
------------------------------------------------- ------------------------------
OPTIONS AND WEIGHTED AVERAGE WEIGHTED AVERAGE OPTIONS AND WEIGHTED AVERAGE
EXERCISE PRICE WARRANTS EXERCISE PRICE REMAINING TERM WARRANTS EXERCISE PRICE
-------------- ----------- ---------------- ---------------- ----------- ----------------
$ 2.25 to $ 10.00....... 3,428 $ 6.71 3.1 years 3,426 $ 6.71
$10.01 to $ 20.00....... 5,885 13.84 5.8 years 4,845 13.47
$20.01 to $ 30.00....... 6,985 24.82 7.0 years 3,793 24.19
$30.01 to $ 40.00....... 10,156 35.06 8.1 years 3,583 35.88
$40.01 to $ 50.00....... 9,274 45.20 6.5 years 6,907 44.48
$50.01 to $140.16....... 5,082 55.57 7.6 years 1,440 59.73
------ ------
$ 2.25 to $140.16....... 40,810 32.72 6.7 years 23,994 29.25
====== ======
80
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
If the Company applied the recognition provisions of SFAS No. 123, the
Company's net income (loss) and earnings (loss) per common share for 1998, 1997,
and 1996 would approximate the pro forma amounts shown below (in thousands,
except per share amounts):
YEARS ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- -------
Net income (loss):
As reported............................... $(770,702) $(938,895) $24,231
Pro forma................................. (833,014) (978,831) (1,042)
Basic earnings (loss) per common share:
As reported............................... (1.32) (1.68) 0.05
Pro forma................................. (1.43) (1.76) --
Diluted earnings (loss) per common share:
As reported............................... (1.32) (1.68) 0.04
Pro forma................................. (1.43) (1.76) --
The effects of applying SFAS No. 123 in this pro forma disclosure are not
necessarily indicative of future amounts.
Beginning in 1996, WM Holdings made grants of restricted stock.
Compensation expense for grants of restricted shares was recognized ratably over
the vesting period (generally five to ten years) and amounted to approximately
$759,000 in 1998 through the date of the WM Holdings Merger, and $2,400,000 and
$100,000 in 1997 and 1996, respectively. The unamortized restricted stock of
$9,209,000 vested upon consummation of the WM Holdings Merger, and accordingly
was included in merger costs in 1998.
In September 1998, two senior executives were granted an aggregate of
1,700,000 shares under the 1993 Plan. The options granted vest according to
certain performance goals in lieu of the normal vesting schedules. All such
options fully vest no later than eight years from the date of grant.
11. EMPLOYEE BENEFIT PLANS
Principally through the USA Waste Services, Inc. Employee's Savings Plan,
the Waste Management Retirement Savings Plan, and the Wheelabrator-Rust Savings
and Retirement Plan, the Company has established qualified defined contribution
retirement plans covering substantially all domestic employees other than those
employees who are covered under collective bargaining agreements which do not
provide for coverage under the plans. In previous years, certain of the plans
provided for annual contributions by the Company as determined by their
respective boards of directors. In 1998, the primary feature of plans covering
the majority of participants was the Company match of employee contributions of
amounts as specified in the applicable plan.
Effective January 1, 1999, the Waste Management Retirement Savings Plan and
the Wheelabrator-Rust Savings and Retirement Plan were merged into the USA Waste
Services, Inc. Employee's Savings Plan, which was then renamed the Waste
Management Retirement Savings Plan ("Savings Plan"). The Savings Plan covers
employees (except those working subject to a collective bargaining agreement
which do not provide for coverage under the plans) following a 90 day waiting
period after hire, and allows eligible employees to contribute up to 15% of
their annual compensation, as limited by IRS regulations. Under the Savings
Plan, the Company matches employee contributions up to 3% of their eligible
compensation, and matches 50% of employee contributions in excess of 3% but less
than 6% of eligible compensation. Both employee and Company contributions vest
immediately. Charges to operations for these plans were $69,721,000, $42,335,000
and $29,648,000 during 1998, 1997 and 1996, respectively.
81
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Certain of the Company's foreign subsidiaries participate in both defined
benefit and defined contribution retirement plans for its employees in those
countries. The projected benefit obligation, plan assets and unfunded liability
of the defined benefit plans are not material. In addition to the pension plan
for certain employees under collective bargaining agreements established at the
end of 1998 (see below), other Company subsidiaries participate in various
multi-employer pension plans covering certain employees not covered under the
Company's pension plan. These multi-employer plans are generally defined benefit
plans; however, in many cases, specific benefit levels are not negotiated with
or known by the employer contributors. Contributions of $25,800,000, $18,600,000
and $16,500,000 for subsidiaries' defined benefit plans were made and charged to
income in 1998, 1997 and 1996, respectively.
The Company had a qualified defined benefit pension plan for all eligible
non-union domestic employees of WM Holdings which, as discussed below, was
terminated as of December 31, 1998 in conjunction with the WM Holdings Merger.
Throughout the life of the plan, benefits were based on the employee's years of
service and compensation during the highest five consecutive years out of the
last ten years of employment. The Company's funding policy was to contribute
annually an amount determined in consultation with its actuaries, approximately
equal to pension expense, except as may be limited by the requirements of the
Employee Retirement Income Security Act ("ERISA"). An actuarial valuation report
was prepared for the plan as of September 30 each year and used, as permitted by
the FASB's Statement of Financial Accounting Standards No. 87, Employers
Accounting for Pensions ("SFAS No. 87"), for the year-end disclosures.
In conjunction with the WM Holdings Merger, the Company decided to
terminate the defined benefit pension plan as of December 31, 1998, and
liquidate the plan's assets and settle its obligations to participants in 1999,
except as related to certain employees participating under collective bargaining
agreements, whose benefits were transferred to a newly created plan effective
October 1, 1998. As required under the FASB's Statement of Financial Accounting
Standard No. 88, Employer's Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits, this decision has
resulted in a curtailment expense charge in unusual items of $34,716,000 in
1998, and is currently estimated to result in an approximate net cash settlement
charge in unusual items in 1999 of $125,000,000. To the extent that this
termination benefit has not yet been charged to expense and funded, additional
minimum pension liability has been recorded as a charge to other comprehensive
income. The Company expects to record this amount in 1999, at which time it will
result in an adjustment to other comprehensive income. The amount of the 1999
settlement is inversely sensitive to changing interest rates. This sensitivity
is approximately $20,000,000 for every 25 basis point fluctuation in interest
rates.
Also in conjunction with the WM Holdings Merger, the Company has terminated
certain non-qualified supplemental benefit plans for certain officers and
non-officer managers, the most significant plan being the Supplemental Executive
Retirement Plan (collectively the "Supplemental Plans"). The curtailment and
settlement loss related to these plans of $61,987,000 was recorded in unusual
items in 1998. A substantial portion of these benefits was paid to participants
by December 31, 1998, and unpaid amounts are accrued at December 31, 1998.
WM Holdings and certain of its subsidiaries provided post-retirement health
care and other benefits to eligible employees. In conjunction with the WM
Holdings Merger, the Company has decided to limit participation in these plans
to participating retired employees as of December 31, 1998.
82
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following tables provide a reconciliation of the changes in the plans'
benefit obligations and the fair value of assets over the two-year period ending
December 31, 1998, and a statement of the funded status as of December 31 of
both years (in thousands):
PENSION BENEFITS OTHER BENEFITS
-------------------- -------------------
1998 1997 1998 1997
--------- -------- -------- --------
Change in benefit obligation:
Benefit obligation at beginning of
period............................... $ 328,892 $257,677 $ 64,482 $ 59,126
Service cost............................ 17,892 14,720 1,783 1,212
Interest cost........................... 23,944 20,877 4,535 4,538
Plan participants' contributions........ -- -- 300 721
Amendments.............................. 23,372 3,060 (24,188) 3,890
Actuarial (gain) loss................... 90,346 44,654 4,651 (230)
Benefits paid........................... (11,928) (12,096) (1,925) (4,775)
Curtailments............................ 52,209 -- 4,085 --
Settlements............................. (52,959) -- -- --
--------- -------- -------- --------
Benefit obligation at end of period..... $ 471,768 $328,892 $ 53,723 $ 64,482
========= ======== ======== ========
Change in plan assets:
Fair value of plan assets at beginning
of period............................ $ 264,870 $193,722 $ -- $ --
Actual return on plan assets............ 29,310 50,357 -- --
Employer contributions.................. 89,985 32,887 1,625 4,054
Plan participants' contributions........ -- -- 300 721
Benefits paid........................... (11,928) (12,096) (1,925) (4,775)
Settlements............................. (52,959) -- -- --
--------- -------- -------- --------
Fair value of plan assets at end of
period............................... $ 319,278 $264,870 $ -- $ --
========= ======== ======== ========
Funded status:
Funded status at December 31............ $(152,490) $(64,022) $(53,723) $(64,482)
Unrecognized transition (asset)
obligation........................... (1,430) (2,860) -- (73)
Unrecognized net actuarial (gain)
loss................................. 123,554 67,176 469 (8,640)
Unrecognized prior service cost......... (10) 953 (20,576) 3,890
--------- -------- -------- --------
Net amount recognized................... $ (30,376) $ 1,247 $(73,830) $(69,305)
========= ======== ======== ========
The following table provides the amounts recognized in the consolidated
balance sheets as of December 31 of both years (in thousands):
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table provides the components of net periodic benefit cost
for the years ended 1998, 1997, and 1996 (in thousands):
PENSION BENEFITS OTHER BENEFITS
------------------------------ ------------------------
1998 1997 1996 1998 1997 1996
-------- -------- -------- ------ ------ ------
Components of net periodic benefit
cost:
Service cost....................... $ 17,892 $ 14,720 $ 15,309 $1,783 $1,212 $1,118
Interest cost...................... 23,944 20,877 16,610 4,535 4,538 4,375
Expected return on plan assets..... (20,954) (17,084) (13,818) -- -- --
Amortization of transition asset... (1,430) (1,430) (1,430) -- -- --
Amortization of prior-service
cost............................ (35) 202 621 278 -- --
Amortization of net (gain) loss.... 8,450 4,772 3,609 (445) (253) (313)
-------- -------- -------- ------ ------ ------
Net periodic benefit cost.......... 27,867 22,057 20,901 6,151 5,497 5,180
Curtailment loss (included in asset
impairments and unusual
items).......................... 53,208 -- -- -- -- --
Settlement loss (included in asset
impairments and unusual
items).......................... 43,495 -- -- -- -- --
-------- -------- -------- ------ ------ ------
Net periodic benefit cost after
curtailments and settlements.... $124,570 $ 22,057 $ 20,901 $6,151 $5,497 $5,180
======== ======== ======== ====== ====== ======
The assumptions used in the measurement of the Company's benefit
obligations are shown in the following table (weighted average assumptions as of
December 31):
PENSION BENEFITS OTHER BENEFITS
----------------- --------------
1998 1997 1998 1997
------ ------ ----- -----
Discount rate.................................. 6.25% 7.25% 6.50% 7.00%
Expected return on plan assets................. 9.00% 9.00% n/a n/a
Rate of compensation........................... 3.50% 3.50% n/a n/a
The principal element of the Other Benefits referred to above is the
post-retirement health care plan. Participants in the WM Holdings plan
contribute to the cost of the benefit, and for retirees since January 1, 1992,
the Company's contribution is capped at between $0 and $600 per month per
retiree, based on years of service. For measurement purposes, a 7.1% annual rate
of increase in the per capita cost of covered health care claims was assumed for
1998 (being an average of the rate used by all plans); the rate was assumed to
decrease to 6% in 2001 and remain at that level thereafter. A 1% change in
assumed health care cost trend rates would have the following effects (in
thousands):
1% INCREASE 1% DECREASE
----------- -----------
Effect on total of service and interest components of
net periodic post-retirement health care benefit
cost................................................ $ 290 $ (273)
Effect on the health care component of the accumulated
post-retirement benefit obligation.................. $3,938 $(3,673)
In 1998, WM Holdings merged the Employee Stock Ownership Plan that was
initially established for eligible WM Holdings' employees in 1988 into its
Retirement Savings Plan. During 1994, WM Holdings established an Employee Stock
Benefit Trust ("Trust") and sold 12,600,000 shares of its treasury stock to the
Trust in return for a 30-year, 7.33% note with interest payable quarterly and
principal due at maturity. WM Holdings has agreed to contribute to the Trust
each quarter funds sufficient, when added to dividends on the shares held by the
Trust, to pay interest on the note as well as principal outstanding at maturity.
At the direction of an administrative committee, the trustee will use the shares
or proceeds from the sale of shares to
84
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
pay employee benefits, and to the extent of such payments by the Trust, the
Company will forgive principal and interest on the note. The shares of common
stock issued to the Trust are not considered to be outstanding in the
computation of earnings per share until the shares are utilized to fund
obligations for which the trust was established. Changes in the market value of
these shares are reflected as adjustments in additional paid-in capital.
12. INCOME TAXES
For financial reporting purposes, income (loss) from continuing operations
before income taxes, showing domestic and international sources, is as follows
(in thousands):
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The federal statutory rate is reconciled to the effective rate as follows:
YEARS ENDED DECEMBER 31,
-------------------------
1998 1997 1996
------ ------ -----
Income taxes (benefit) at federal statutory
rate............................................ (35.00)% (35.00)% 35.00%
State and local income taxes, net of federal
income tax benefit.............................. 3.23 5.51 7.11
Nondeductible costs relating to acquired
intangibles..................................... 16.85 30.88 7.55
Nondeductible merger costs........................ 8.22 1.40 1.33
Writedown of investments in subsidiary............ -- 6.46 7.66
Minority interest................................. 0.82 2.40 1.87
Gain on sale of foreign subsidiary................ -- -- 2.26
Deferred tax valuation and other tax reserves..... 8.79 40.11 0.90
Federal tax on foreign income..................... 4.35 0.30 1.20
Nonconventional fuel tax credit................... (3.61) (2.80) (1.99)
Other............................................. 5.91 5.59 (0.07)
------ ------ -----
Provision for income taxes...................... 9.56% 54.85% 62.82%
====== ====== =====
The components of the net deferred tax assets (liabilities) are as follows
(in thousands):
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
Deferred tax assets:
Net operating loss, capital loss and tax credit
carryforwards................................. $ 322,129 $ 287,384
Environmental and other reserves................. 670,502 754,195
Reserves not deductible until paid............... 178,608 291,168
----------- -----------
Subtotal................................. 1,171,239 1,332,747
Deferred tax liabilities:
Property, equipment, intangible assets, and
other......................................... (1,072,138) (1,567,579)
Valuation allowance................................ (331,592) (232,800)
----------- -----------
Net deferred tax liabilities............. $ (232,491) $ (467,632)
=========== ===========
At December 31, 1998, the Company's subsidiaries have approximately
$200,599,000 of federal net operating loss ("NOL") carryforwards, $1,007,749,000
of state NOL carryforwards, and $598,930,000 of foreign NOL carryforwards.
Foreign NOL carryforwards of approximately $535,530,000 may be carried forward
indefinitely; the remaining NOL carryforwards have expiration dates through
2013. The Company's subsidiaries have $16,062,000 of alternative minimum tax
credit carryforwards that may be used indefinitely; state tax credit
carryforwards of $5,039,000; federal investment tax credit carryforwards of
$381,000; and foreign tax credit carryforwards of $32,614,000. Valuation
allowances have been established for uncertainties in realizing the benefit of
tax loss and credit carryforwards. While the Company expects to realize the
deferred tax assets, net of the valuation allowances, changes in estimates of
future taxable income or in tax laws may alter this expectation.
During 1997, the valuation allowance increased approximately $101,056,000,
composed of increases to allowances due to the uncertainty of realizing
alternative minimum tax credits, tax benefits from certain asset impairment
writedowns (primarily land), foreign tax credits, and NOL carryforwards
partially offset by reductions in allowances attributable primarily to foreign
net operating loss carryforwards. In 1998, the
86
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
valuation allowance increased approximately $98,792,000 primarily due to the
uncertainty of realizing foreign NOL carryforwards.
The Company does not provide for U.S. income taxes on unremitted earnings
of foreign subsidiaries as it is the present intention of management to reinvest
the unremitted earnings in its foreign operations. Unremitted earnings of
foreign subsidiaries are approximately $498,000,000 at December 31, 1998. It is
not practicable to determine the amount of U.S. income taxes that would be
payable upon remittance of the assets that represent those earnings.
13. SEGMENT AND RELATED INFORMATION
The Company's North American solid waste management operations represents
80.5% of operating revenues, 98.7% of earnings before interest and tax ("EBIT"),
and 77.3% of total assets in 1998, and is the Company's principal reportable
segment under Statement of Financial Accounting Standards No. 131, Disclosure
about Segments of an Enterprise and Related Information ("SFAS No. 131"). This
segment provides integrated waste management services consisting of collection,
transfer, disposal (solid waste landfill, hazardous waste landfill and
waste-to-energy), recycling, and other miscellaneous services to commercial,
industrial, municipal and residential customers in North America. Similar
operations in international markets outside of North America are disclosed as a
separate segment. The Company's other reportable segment consists of non-solid
waste services, aggregated as a single segment for this reporting presentation
as permitted under SFAS No. 131. The non-solid waste segment includes other
hazardous waste services such as chemical waste management services and
low-level and other radioactive waste services, the Company's independent power
projects, and other non-solid waste services to commercial, industrial and
government customers, and includes business lines that are being actively
marketed. No single customer accounted for as much as 10% of consolidated
revenue in any year.
Certain of the services provided by the Company are subject to extensive
and evolving federal, state, and local environmental laws and regulations in the
U.S. and elsewhere that have been enacted in response to technological advances
and the public's increased concern over environmental issues. Refer to Notes 6
and 17 for a further discussion of regulatory issues.
Summarized financial information concerning the Company's reportable
segments for the respective years ended December 31, is shown in the following
table. Prior period information has been restated to conform to the segments
described above, which are based on the structure and internal organization of
the Company as of December 31, 1998 (in thousands):
NORTH AMERICAN INTERNATIONAL NON-SOLID CORPORATE
SOLID WASTE WASTE SERVICES WASTE FUNCTIONS(A) TOTAL
-------------- -------------- ---------- ------------ -----------
1998
Net operating revenues(b)... $10,220,478 $1,533,635 $ 949,356 $ -- $12,703,469
Earnings before interest and
taxes (EBIT)(c), (d)..... 2,478,733 132,937 103,443 (204,043) 2,511,070
Depreciation and
amortization............. 1,241,330 169,051 43,579 44,752 1,498,712
Capital expenditures........ 1,438,458 166,035 34,605 12,391 1,651,489
Total assets(d)............. 17,553,957 3,107,968 1,003,035 1,050,238 22,715,198
1997
Net operating revenues(b)... $ 9,244,910 $1,789,988 $ 937,600 $ -- $11,972,498
Earnings before interest and
taxes (EBIT)(c), (d)..... 1,790,027 187,619 96,082 (413,814) 1,659,914
Depreciation and
amortization............. 1,086,547 181,353 55,258 68,652 1,391,810
Capital expenditures........ 1,128,904 150,908 29,337 23,058 1,332,207
Total assets(d)............. 15,067,951 3,055,634 1,222,464 810,375 20,156,424
87
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NORTH AMERICAN INTERNATIONAL NON-SOLID CORPORATE
SOLID WASTE WASTE SERVICES WASTE FUNCTIONS(A) TOTAL
-------------- -------------- ---------- ------------ -----------
1996
Net operating revenues(b)... $ 8,097,860 $1,913,793 $ 986,949 $ -- $10,998,602
Earnings before interest and
taxes (EBIT)(c), (d)..... 1,654,154 216,198 132,267 (148,927) 1,853,692
Depreciation and
amortization............. 949,570 195,944 52,631 66,051 1,264,196
Capital expenditures........ 1,248,623 214,103 27,769 28,777 1,519,272
Total assets(d)............. 13,938,513 4,103,273 2,118,313 567,425 20,727,524
(a) Corporate functions include the corporate treasury function (except for
limited amounts of locally negotiated and managed project debt),
administration of corporate tax function, the corporate insurance function
and management of closed landfill and related insurance recovery functions,
along with other typical administrative functions.
(b) Non-Solid Waste revenues are net of inter-segment revenue with North
American Solid Waste of $122,400,000, $86,400,000 and $69,100,000 in 1998,
1997 and 1996, respectively. There are no other significant sales between
segments.
(c) For those items included in the determination of EBIT, (the earnings
measurement used by management to evaluate operating performance) the
accounting policies of the segments are generally the same as those
described in the summary of significant accounting policies.
(d) There are no material asymmetrical allocations of EBIT versus assets
between segments or corporate. Certain asset impairments and unusual items
reported in the reconciliation of EBIT to reported net income below,
however, have resulted in adjustments to assets ultimately reflected on
segment balance sheets. Assets are net of inter-segment receivables and
investments.
The reconciliation of total EBIT reported above to net income is as follows
(in thousands):
YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
---------- ----------- ----------
EBIT, as reported above.................. $2,511,070 $ 1,659,914 $1,853,692
(Plus) less:
Merger costs........................... 1,807,245 112,748 126,626
Asset impairments and unusual items.... 864,063 1,771,145 529,768
Income (loss) from continuing
operations held for sale............ 151 9,930 (315)
Interest expense....................... 681,457 555,576 525,340
Interest income........................ (26,829) (45,214) (34,603)
Minority interest...................... 24,254 45,442 41,289
Other income, net...................... (139,392) (127,216) (108,645)
---------- ----------- ----------
Income (loss) from continuing operations
before income taxes.................... (699,879) (662,497) 774,232
Provision for income taxes............... 66,923 363,341 486,700
---------- ----------- ----------
Income (loss) from continuing
operations............................. (766,802) (1,025,838) 287,532
Discontinued operations.................. -- (95,688) 263,301
Extraordinary loss....................... 3,900 6,809 --
Cumulative effect of change in accounting
principle.............................. -- 1,936 --
---------- ----------- ----------
Net income (loss).............. $ (770,702) $ (938,895) $ 24,231
========== =========== ==========
88
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Foreign operations in 1998 were conducted in seven countries in Europe,
seven countries in the Pacific Rim, Canada, Mexico, Brazil, Israel and
Argentina. Operating revenues and property and equipment (net) relating to the
Company's operations by significant geographic area is as follows (in
thousands):
The Company operates facilities in Hong Kong which are owned by the Hong
Kong government. The Hong Kong economy has been impacted by the economic
uncertainty associated with many of the countries in the region. High and
volatile interest rates have resulted from speculation regarding its currency.
The Company also has operations in Indonesia, Thailand and Brazil. These
countries have experienced illiquidity, volatile currency exchange rates and
interest rates, and reduced economic activity. The Company will be affected for
the foreseeable future by economic conditions in this region, although it is not
possible to determine the extent of such impact. At December 31, 1998, the
Company has $114,749,000 revenue, $41,403,000 property and equipment, net, and
$104,103,000 total investment in the above Asian countries (including Hong
Kong). The Company has a total investment of $38,900,000 in Brazil which is
primarily investments accounted for under the equity method of accounting.
Income from continuing operations before income taxes from Hong Kong was
$21,200,000 in 1998. Income from Indonesia, Thailand and Brazil has not been
significant to date.
14. ASSET IMPAIRMENTS AND UNUSUAL ITEMS
In 1998, 1997, and 1996, the Company recorded certain charges for asset
impairments and unusual items resulting from reviews of business integration and
operating plans. Such reviews were generally performed in connection with the
Company's merger activities. In addition, the 1997 consolidated financial
statements include a significant accounting charge resulting from a
comprehensive review performed by the management of WM Holdings of its
operations and investments in the fourth quarter of 1997. Similarly, the 1996
consolidated financial statements include accounting charges recorded by WM
Holdings for certain operational and management restructuring activities and
assets that had become impaired.
Fair values for asset impairment losses was determined for landfills,
hazardous waste facilities, recycling investments and other facilities,
primarily based on future cash flow projections discounted back using discount
rates appropriate for the risks involved with the specific assets. For surplus
real estate, market opinions and appraisals were used. In determining fair
values for abandoned projects and vehicles to be sold, recoverable salvage
values were determined using market estimates. Impaired assets to be sold are
primarily businesses to be sold (see Note 18) and surplus real estate. The
Company provides for losses in connection with long-term waste service contracts
where an obligation exists to perform services and when it becomes
89
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
evident the projected direct and incremental contract costs will exceed the
related contract revenues. In general, these losses relate to contracts with
remaining average duration of five years.
The following is a summary of asset impairments and unusual items that are
reflected in the Company's consolidated financial statements for the year ended
December 31, 1998 (in millions):
Provision for losses on contractual commitments............. $115.6
Changes in estimates relating to the reassessment of
ultimate losses for certain legal and remediation
issues.................................................... 331.9
Write-down to estimated net sales proceeds of businesses to
be sold................................................... 195.1
Curtailment and settlement costs of terminating the defined
benefit pension plan (Note 11)............................ 34.7
Compensation charges for the liquidation of WM Holdings'
Supplemental Executive Retirement Plan (Note 11) and other
supplemental plans........................................ 72.2
Put provisions of certain WM Holdings' stock options as a
result of change in control provisions.................... 114.6
------
Total............................................. $864.1
======
In 1998, the Company increased its reserves for certain legal and
environmental remediation issues as a result of management's emphasis to resolve
and settle certain issues relating primarily to WM Holdings, including a class
action securities litigation against WM Holdings.
Certain WM Holdings' employee stock option plans included change of control
provisions that were activated as a result of the WM Holdings Merger whereby the
option holder received certain put rights that require charges to earnings
through the put periods. The charge to pre-tax earnings as a result of these put
rights was $114,600,000 in the third quarter of 1998. To the extent the future
market value of the Company's common stock exceeds $54.34 per share, the Company
will be required to record additional charges to earnings through July 16, 1999,
at which time all put rights expire. The expense related to these stock option
put rights has no impact to equity as the offset is a direct increase to
additional paid-in capital, as these put rights will be satisfied by the
issuance of stock.
90
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of asset impairments and unusual items reflected
in the Company's consolidated financial statements for the year ended December
31, 1997 (in millions):
Asset impairments:
Landfills, related primarily to management decisions to
abandon expansions and development projects due to
political or competitive factors, which will result in
closure earlier than previously expected (includes
$233.8 for hazardous waste sites)...................... $ 592.9
Hazardous waste facilities, resulting from continuing
market deterioration, increased competition, excess
capacity and changing regulation....................... 131.4
Goodwill, primarily related to landfills and hazardous
waste facilities impaired (including $411.0 related to
hazardous waste business).............................. 433.4
Write-down of WTI long-lived assets, including $47.1
related to a wood waste burning independent power
production facility.................................... 57.2
Recycling investments, related primarily to continued
pricing, overcapacity and competitive factors.......... 21.5
Write-down to estimated net realizable value of trucks to
be sold as a result of new fleet management policy
(Note 4)............................................... 70.9
Write-down to estimated net sales proceeds of businesses
to be sold (Note 18)................................... 122.2
Abandoned equipment and facilities........................ 37.3
Surplus real estate....................................... 38.2
Provisions for losses on contractual commitments............ 120.2
Severance for terminated employees.......................... 41.6
Special charge for WM International, primarily costs of
demobilization in Argentina following the expiration of
the City of Buenos Aires contract, divestiture or closure
of underperforming businesses (primarily in Italy and
Germany) and abandonment of projects (primarily in
Germany).................................................. 104.3
--------
Total............................................. $1,771.1
========
91
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of asset impairments and unusual items reflected
in the Company's consolidated financial statements for the year ended December
31, 1996 (in millions):
Asset impairments:
Landfills, related primarily to management decisions to
abandon expansion projects due to political or
competitive factors, which will result in closure
earlier than previously expected....................... $ 20.4
Recycling investments, related primarily to pricing,
overcapacity and competitive factors................... 47.8
Other, primarily equipment to be scrapped................. 2.0
Surplus real estate....................................... 1.5
Write-down to estimated net sales proceeds of businesses to
be sold................................................... 28.9
Reserves for certain litigation and for reengineering of
finance and administrative functions...................... 154.1
Provisions for losses on contractual commitments............ 53.6
Western retirement benefits................................. 4.8
Special charge for WM International:
Loss on sale of investment in Wessex Water Plc............ 47.1
Revaluation of investments in France, Austria, and Spain
in contemplation of exiting all or part of these
markets or forming joint ventures and write-off of a
hazardous waste disposal facility in Germany with
volumes adversely affected by regulatory changes....... 169.6
--------
Total............................................. $ 529.8
========
15. EARNINGS PER SHARE
The following reconciles the number of common shares outstanding at
December 31 of each year to the weighted average number of common shares
outstanding and the weighted average number of common and dilutive potential
common shares outstanding for the purposes of calculating basic and dilutive
earnings per common share, respectively (in thousands):
YEARS ENDED DECEMBER 31,
---------------------------
1998 1997 1996
------- ------- -------
Number of common shares outstanding............. 600,351 556,546 541,071
Effect of using weighted average common shares
outstanding................................... (16,050) 1,129 (3,802)
------- ------- -------
Weighted average number of common shares
outstanding................................... 584,301 557,675 537,269
Dilutive effect of common stock options and
warrants...................................... -- -- 9,647
------- ------- -------
Weighted average number of common and dilutive
potential common shares outstanding........... 584,301 557,675 546,916
======= ======= =======
Diluted earnings per common share for the years ended December 31, 1998,
1997, and 1996 has been calculated excluding the effects of the Company's
convertible subordinated notes and debentures as inclusion of such items would
be anti-dilutive for these periods.
At December 31, 1998, there were approximately 73,600,000 common shares
potentially issuable with respect to stock options, warrants, and convertible
debt, which could dilute basic earnings per share in the future.
92
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. COMPREHENSIVE INCOME
Comprehensive income is defined as the change in equity of a business
enterprise from transactions and other events and circumstances from nonowner
sources and includes all changes in equity except those resulting from
investments by owners and distributions to owners. The components of accumulated
other comprehensive income are as follows for the periods indicated (in
thousands):
Operating leases -- The Company leases many of its operating and office
facilities for various terms. Lease expense aggregated $194,846,000,
$189,873,600, and $186,270,000 during 1998, 1997 and 1996, respectively. These
amounts include rents under long-term leases, short-term cancelable leases and
rents charged as a percentage of revenue, but are exclusive of financing leases
capitalized for accounting purposes.
The long-term rental obligations as of December 31, 1998, are due as
follows (in thousands):
First year............................................... $ 142,397
Second year.............................................. 133,069
Third year............................................... 127,206
Fourth year.............................................. 155,341
Fifth year............................................... 104,568
Sixth through tenth years................................ 431,114
Eleventh year and thereafter............................. 143,004
----------
$1,236,699
==========
Financial instruments -- Letters of credit, performance bonds and other
guarantees have been provided by the Company supporting tax-exempt bonds,
performance of final landfill closure and post-closure requirements, insurance
contracts, and other contracts. Total letters of credit, performance bonds,
insurance policies, and other guarantees outstanding at December 31, 1998,
aggregated approximately $3,940,719,000. The insurance policies are issued by a
wholly-owned insurance company subsidiary, the sole business of which is to
issue such policies to customers of the Company and its subsidiaries. Because
virtually no claims have been made against these financial instruments in the
past, management does not expect these instruments will have a material effect
on the Company's consolidated financial statements.
In the normal course of business, the Company is a party to financial
instruments with off-balance sheet risk, such as bank letters of credit,
performance bonds and other guarantees, which are not reflected in the
consolidated balance sheets. Such financial instruments are to be valued based
on the amount of exposure under the instrument and the likelihood of performance
being required. In the Company's experience, virtually no claims have been made
against those financial instruments. Management does not expect any material
losses to result from these off-balance sheet instruments.
93
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Environmental matters -- The continuing business in which the Company is
engaged is intrinsically connected with the protection of the environment. As
such, a significant portion of the Company's operating costs and capital
expenditures could be characterized as costs of environmental protection. Such
costs may increase in the future as a result of legislation or regulation,
however, the Company believes that in general it tends to benefit when
environmental regulation increases, which may increase the demand for its
services, and that it has the resources and experience to manage environmental
risk.
As part of its ongoing operations, the Company provides for estimated final
closure and post-closure monitoring costs over the estimated operating life of
disposal sites as airspace is consumed. The Company has also established
procedures to evaluate potential remedial liabilities at closed sites which it
owns or operated or to which it transported, waste including 88 sites listed on
the NPL as of December 31, 1998. Where the Company concludes that it is probable
that a liability has been incurred, provision is made in the financial
statements.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services industry, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies, the existence and ability of other
potentially responsible third parties to contribute to the settlements of such
liabilities, or other factors could necessitate the recording of additional
liabilities which could be material.
Litigation -- In November and December 1997, several alleged purchasers of
WM Holdings securities (including but not limited to WM Holdings common stock),
who allegedly bought their securities between 1996 and 1997, brought 14
purported class action lawsuits against WM Holdings and several of its former
officers in the United States District Court for the Northern District of
Illinois. Each of these lawsuits asserted that the defendants violated the
federal securities laws by issuing allegedly false and misleading statements in
1996 and 1997 about WM Holdings' financial condition and results of operations.
Among other things, the plaintiffs alleged that WM Holdings employed accounting
practices that were improper and that caused its publicly filed financial
statements to be materially false and misleading. The lawsuits demanded, among
other relief, unspecified compensatory damages, pre- and post-judgement
interest, attorneys' fees, and the costs of conducting the litigation. In
January 1998, the 14 putative class actions were consolidated before one judge.
On May 29, 1998, the plaintiffs filed a consolidated amended complaint against
WM Holdings and four of its former officers. The consolidated amended complaint
seeks recovery on behalf of a proposed class of all purchasers of WM Holdings
securities between May 29, 1995, and October 30, 1997. The consolidated amended
complaint alleges, among other things, that WM Holdings filed false and
misleading financial statements beginning in 1991 and continuing through October
1997 and seeks recovery for alleged violations of the federal securities laws
between May 1995 and October 1997. In December 1998, the Company announced an
agreement to settle the consolidated action against all defendants and the
establishment of a settlement fund of $220,000,000 for the class of open market
purchasers of WM Holdings equity securities between November 3, 1994, and
February 24, 1998. The settlement agreement with the plaintiffs is subject to
various conditions, including preliminary approval by the Court, notice to the
class and final approval by the Court after a hearing. There can be no
assurances that the Court will find the settlement to be fair to the class or
that, because members of the class may opt out of the lawsuit, WM Holdings will
not be a party to additional lawsuits or claims brought by individuals.
The Company is aware of another action arising out of the same set of facts
alleging a cause of action under Illinois state law. Additionally, there are
several other actions and claims arising out of the same set of
94
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
facts, including one purported class action brought by business owners who
received WM Holdings shares in the sales of their businesses to WM Holdings that
alleges breach of contract causes of action on the basis of allegedly false
representation and warranties. A purported derivative action has also been filed
by an alleged former shareholder of WM Holdings against certain former officers
and directors of WM Holdings and nominally against WM Holdings to recover
damages caused to WM Holdings as a result of the matter described in this
paragraph. It is not possible at this time to predict the impact this litigation
may have on WM Holdings or the Company nor is it possible to predict whether any
other suits or claims arising out of these matters may be brought in the future.
However, it is reasonably possible that the outcome of any present or future
litigation may have a material adverse impact on their respective financial
condition or results of operations in one or more future periods. WM Holdings
intends to defend itself vigorously in the litigation.
The Company is also aware that the Securities and Exchange Commission has
commenced a formal investigation with respect to the WM Holdings previously
filed financial statements (which were subsequently restated) and related
accounting policies, procedures and system of internal controls. The Company
intends to cooperate with such investigation. The Company is unable to predict
the outcome or impact of this investigation at this time.
On March 12, 1998, a stockholder of WM Holdings filed a purported class
action suit in the Chancery Court of the State of Delaware in the New Castle
County against WM Holdings and certain of its former directors. The complaint
alleges, among other things, that (i) the Merger was the product of unfair
dealing and the price paid to members of the purported class for their WM
Holdings common stock was unfair and inadequate, (ii) the WM Holdings Merger
will prevent members of the purported class from receiving their fair portion of
the value of WM Holdings' assets and business and from obtaining the real value
of their equity ownership of WM Holdings, (iii) defendants breached their
fiduciary duties owed to the members of the purported class by putting their
personal interests ahead of the interests of WM Holdings' public stockholders
and (iv) the members of the class action will suffer irreparable damage unless
the defendants are enjoined from breaching their fiduciary duties. The complaint
seeks equitable relief that would rescind the WM Holdings Merger and monetary
damages from the defendants for unlawfully gained profits and special benefits.
The Company believes the suit to be without merit and intends to contest it
vigorously.
In the ordinary course of conducting its business activities, the Company
becomes involved in judicial and administrative proceedings involving
governmental authorities at the foreign, federal, state and local level,
including, in certain instances, proceedings instituted by citizens or local
governmental authorities seeking to overturn governmental action where
governmental officials or agencies are named as defendants together with the
Company or one or more of its subsidiaries, or both. In the majority of the
situations where proceedings are commenced by governmental authorities, the
matters involved relate to alleged technical violations of licenses or permits
pursuant to which the Company operates or is seeking to operate or laws or
regulations to which its operations are subject or are the result of different
interpretations of the applicable requirements. From time to time, the Company
pays fines or penalties in environmental proceedings relating primarily to waste
treatment, storage or disposal facilities. The Company believes that these
matters will not have a material adverse effect on its results of operations or
financial condition. However, the outcome of any particular proceeding cannot be
predicted with certainty, and the possibility remains that technological,
regulatory or enforcement developments, the results of environmental studies or
other factors could materially alter this expectation at any time.
From time to time, the Company and certain of its subsidiaries are named as
defendants in personal injury and property damage lawsuits, including purported
class actions, on the basis of a Company subsidiary's having owned, operated or
transported waste to a disposal facility which is alleged to have contaminated
the environment or, in certain cases, conducted environmental remediation
activities at sites. Some of such lawsuits may seek to have the Company or its
subsidiaries pay the costs of groundwater monitoring and health care
examinations of allegedly affected persons for a substantial period of time even
where no actual damage is
95
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
proven. While the Company believes it has meritorious defenses to these
lawsuits, their ultimate resolution is often substantially uncertain due to the
difficulty of determining the cause, extent and impact of alleged contamination
(which may have occurred over a long period of time), the potential for
successive groups of complainants to emerge, the diversity of the individual
plaintiffs' circumstances, and the potential contribution or indemnification
obligations of co-defendants or other third parties, among other factors.
Accordingly, it is possible such matters could have a material adverse impact on
the Company's consolidated financial statements.
The Company has been advised by the U.S. Department of Justice that Laurel
Ridge Landfill, Inc., a wholly-owned subsidiary of the Company as a result of
the Company's acquisition of United, is a target of a federal investigation
relating to alleged violations of the Clean Water Act at the Laurel Ridge
Landfill in Kentucky. The investigation relates to a period prior to the
Company's acquisition of United in August 1997. The Company is attempting to
negotiate a resolution with the government which may include a guilty plea to a
criminal misdemeanor, a fine and in-kind services. The Company believes that the
ultimate outcome of this matter will not have a material adverse effect on the
Company's consolidated financial statements.
In June 1996, an indictment was brought against All-Waste Systems, Inc.
("All-Waste"), an indirect subsidiary of the Company acquired in December 1998
in connection with the Eastern Merger, thirteen other corporations and seven
individuals in the Southern District of New York. In September 1997 nineteen of
the defendants entered guilty pleas and collectively agreed to pay $17,000,000
in restitution to the IRS and Westchester County, fines and civil forfeitures.
All-Waste pled guilty to mail fraud, which arose out of an alleged bid-rigging
scheme for the Town of New Windsor, paid an $85,000 fine and was sentenced to a
five year probation period. The probation period was terminated upon the closing
of the sale of All-Waste to Eastern in June 1998.
In March 1999, the Company was notified that All-Waste and two other
indirect subsidiaries acquired in the Eastern Merger as well as a current
employee of the Company were suspended from future contracting with any agency
in the executive branch of the U.S. Government pending proceedings. The
suspension and potential debarment are based on the September 1997 conviction of
All-Waste and activities that occurred prior to ownership of the entities by
Eastern. The Company is attempting to remove the three entities from the
suspension and proposed debarment list. The Company believes that the ultimate
outcome of this matter will not have a material adverse effect on the Company's
consolidated financial statements.
In February 1999, a San Bernardino County, California grand jury returned
an amended felony indictment against the Company, certain of its subsidiaries
and their current or former employees, and a County employee. The proceeding is
based on events that allegedly occurred prior to the WM Holdings Merger in
connection with a WM Holdings landfill development project. The indictment
includes allegations that certain of the defendants engaged in conduct involving
fraud, wiretapping, theft of a trade secret and manipulation of computer data,
and that they engaged in a conspiracy to do so. If convicted, the most serious
of the available sanctions against the corporate defendants would include
substantial fines and forfeitures. The Company believes that meritorious
defenses exist to each of the allegations, and the defendants are vigorously
contesting them. The Company believes that the ultimate outcome of this matter
will not have a material adverse effect on the Company's consolidated financial
statements.
The Company has brought suit against a substantial number of insurance
carriers in an action entitled Waste Management, Inc. et al. v. The Admiral
Insurance Company, et al. pending in the Superior Court in Hudson County, New
Jersey. In this action the Company is seeking a declaratory judgment that
environmental liabilities asserted against the Company or its subsidiaries, or
that may be asserted in the future, are covered by insurance policies purchased
by the Company or its subsidiaries. The Company is also seeking to recover
defense costs and other damages incurred as a result of the assertion of
environmental liabilities against the Company or its subsidiaries for events
occurring over at least the last 25 years at approximately 140 sites and the
defendant insurance carriers' denial of coverage of such liabilities. While the
96
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company has reached settlements with some of the carriers, the remaining
defendants have denied liability to the Company and have asserted various
defenses, including that environmental liabilities of the type for which the
Company is seeking relief are not risks covered by the insurance policies in
question. The remaining defendants are contesting these claims vigorously.
Discovery is nearly complete as to the 12 sites in the first phase of the case
and discovery is expected to continue for several years as to the remaining
sites. Currently, trial dates have not been set. The Company is unable at this
time to predict the outcome of this proceeding. No amounts have been recognized
in the Company's consolidated financial statements for potential recoveries. See
Note 6.
Several purported class action lawsuits and one purported derivative
lawsuit seeking injunctive relief and unspecified money damages were filed in
the Chancery Court in and for New Castle County, Delaware against the Company,
WTI, and individual directors of WTI in connection with the June 20, 1997,
proposal by WM Holdings to acquire all of the shares of WTI common stock which
WM Holdings did not own. WM Holdings subsequently consummated a merger in which
WTI's stockholders received $16.50 in cash per share of WTI's common stock. The
lawsuits, which have since been consolidated into a single action, allege, among
other things, that the defendants breached fiduciary duties to WTI's minority
stockholders because the merger consideration contemplated by the proposal was
inadequate and unfair. The Company believes that the defendants' actions in
connection with the proposal were in accordance with Delaware law and, on that
basis, has agreed to a settlement providing for the dismissal of all of the
lawsuits against all defendants. The settlement agreement with the plaintiffs is
subject to various conditions, including notice to the putative class and
approval by the Court after a hearing.
The Company and certain of its subsidiaries are also currently involved in
other civil litigation and governmental proceedings relating to the conduct of
their business. While the outcome of any particular lawsuit or governmental
investigation cannot be predicted with certainty, the Company believes that
these matters will not have a material adverse effect on its consolidated
financial statements.
Tax Matters -- During the first quarter of 1995, WMI Sellbergs AB, a
Swedish subsidiary, received an assessment from the Swedish Tax Authority of
approximately 417,000,000 Krona (approximately $52,000,000) plus interest from
the date of the assessment, relating to a transaction completed in 1990. On
November 4, 1998, the County Court of the County of Stockholm ruled in favor of
WMI Sellbergs AB. However, the Swedish Tax Authority has appealed that decision.
The Company believes that all appropriate tax returns and disclosures were
properly filed at the time of the transaction and intends to vigorously contest
the appeal.
Insurance -- The Company carries a broad range of insurance coverages,
which management considers prudent for the protection of the Company's assets
and operations. Some of these coverages are subject to varying retentions of
risk by the Company. The casualty policies provide for $2,000,000 per occurrence
coverage for primary commercial general liability and $1,000,000 per accident
coverage primary automobile liability (including coverage for pollution exposure
arising out of trucking operations) supported by $400,000,000 in umbrella
insurance protection. The property policy provides insurance coverage for all of
the Company's real and personal property on a replacement cost basis, including
California earthquake perils. The Company also carries $200,000,000 in aircraft
liability protection.
The Company maintains workers' compensation insurance in accordance with
laws of the various states and countries in which it has employees. The Company
also currently has an environmental impairment liability ("EIL") insurance
policy for certain of its landfills, transfer stations, and recycling facilities
that provides coverage for property damages and/or bodily injuries to third
parties caused by off-site pollution emanating from such landfills, transfer
stations, or recycling facilities. At December 31, 1998, this policy provides
$10,000,000 of coverage per loss with a $20,000,000 aggregate limit.
97
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Through the date of the WM Holdings Merger, certain of WM Holdings' auto,
general liability, environmental impairment liability, and workers' compensation
risks were self-insured up to $5,000,000 per accident. For such programs, a
provision was made in each accounting period for estimated losses, including
losses incurred but not reported, and the related reserves are adjusted as
additional claim information becomes available. Claim reserves are discounted at
5.5% and 6% at December 31, 1998 and 1997, respectively. The self-insurance
reserve included in the accompanying consolidated balance sheets is $277,400,000
and $226,700,000 at December 31, 1998 and 1997, respectively.
To date, the Company has not experienced any difficulty in obtaining
insurance. However, if the Company in the future is unable to obtain adequate
insurance, or decides to operate without insurance, a partially or completely
uninsured claim against the Company, if successful and of sufficient magnitude,
could have a material adverse effect on the Company's financial condition,
results of operations or cash flows. Additionally, continued availability of
casualty and EIL insurance with sufficient limits at acceptable terms is an
important aspect of obtaining revenue-producing waste service contracts.
18. ASSETS AND OPERATIONS HELD FOR SALE
Assets Held for Sale
The Company is disposing of certain assets to comply with governmental
orders related to the WM Holdings Merger and Eastern Merger and certain other
assets as a result of implementing the business strategy related to the WM
Holdings Merger. These businesses' results of operations are fully included in
revenues and expenses in the accompanying statements of operations, and
generated third party operating revenues of approximately $372,596,000 and
earnings before interest and taxes of approximately $20,600,000 in 1998. In
addition, as a result of the WM Holdings Merger, various real estate became
duplicative and surplus, and will be sold. As discussed in Notes 3 and 14, the
Company has recorded charges to write down these assets to fair value, less
costs to sell. These charges are based on estimates and certain contingencies
that could materially differ from actual results and resolution of any such
contingencies.
Operations Held for Sale
In the fourth quarter of 1995, the Company approved a plan to sell or
otherwise discontinue the process engineering, construction, specialty
contracting and similar lines of business of Rust International, Inc. ("Rust"),
a subsidiary owned 60% by WM Holdings and 40% by WTI. At December 31, 1996,
management also classified as discontinued and planned to sell Rust's domestic
environmental and infrastructure engineering and consulting business and
Chemical Waste Management, Inc.'s ("CWM") high organic waste fuel blending
services business. Also, WTI classified certain of its water process systems and
equipment manufacturing businesses (sold in 1996) and its water and wastewater
facility operations and privatization business (sold in 1997) as discontinued
businesses in 1996. Operating revenues from the discontinued business were
$84,800,000 in 1997, and $734,500,000 in 1996. Results of their operations in
1997 were included in the reserve for loss on disposition provided previously,
and such results were not material.
In 1997, management reclassified the CWM business back into continuing
operations, and classified certain of its sites as operations held for sale. The
Rust dispositions were not completed within one year, and accordingly, this
business was reclassified back into continuing operations held for sale, at
December 31, 1997, though management continued its efforts to market these
businesses. Because these business were reclassified to continuing operations,
the remaining provision for loss on disposal ($95,000,000 after
tax -- $87,000,000 related to Rust and $8,000,000 related to CWM) was reversed
in discontinued operations and an impairment loss for Rust of $122,200,000 was
recorded in continuing operations in the fourth quarter of 1997. Prior year
financial statements were restated. The majority of these assets were sold
during the second and third quarters of 1998, respectively, for amounts
approximately equal to their recorded net book values. Information
98
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
regarding the businesses presented in the consolidated statement of operations
as net assets of continuing operations held for sale is as follows (in
thousands):
YEARS ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
Operating revenues........................... $238,108 $350,400 $361,500
Income (loss) before tax after minority
interest................................... (151) (9,930) 315
Net income (loss)............................ (376) (6,700) 100
The remaining assets and liabilities of these businesses were not material
at December 31, 1998. At December 31, 1997, related amounts are included in net
assets of continuing operations held for sale (long-term) in the accompanying
consolidated balance sheets, and consists of the following (including 73,300,000
of surplus real estate) (in thousands):
Current assets.......................................... $ 118,600
Land, property and equipment and other noncurrent
assets................................................ 238,000
Current liabilities..................................... (41,000)
Noncurrent liabilities.................................. (161,216)
---------
Net assets of continuing operations held for sale....... $ 154,384
=========
19. SELECTED QUARTERLY FINANCIAL DATA, UNAUDITED
The following table summarizes the unaudited consolidated quarterly results
of operations for 1998 and 1997 (in thousands, except per share amounts):
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------
1998
Operating revenues................. $2,969,433 $3,250,731 $3,244,201 $3,239,104
Operating income(loss)............. 452,248 569,247 (1,545,744) 363,860
Income (loss) from continuing
operations...................... 181,416 246,770 (1,258,473) 63,485
Net income (loss).................. 181,416 242,870 (1,258,473) 63,485
Earnings (loss) from continuing
operations per common share:
Basic........................... 0.32 0.43 (2.11) 0.11
Diluted......................... 0.31 0.42 (2.11) 0.10
Earnings (loss) per common share:
Basic........................... 0.32 0.42 (2.11) 0.11
Diluted......................... 0.31 0.41 (2.11) 0.10
1997
Operating revenues................. $2,699,541 $3,031,015 $3,154,383 $3,087,559
Operating income(loss)............. 337,229 471,707 284,836 (1,327,681)
Income (loss) from continuing
operations...................... 170,419 137,117 56,511 (1,389,885)
Net income (loss).................. 171,066 144,678 50,422 (1,305,061)
Earnings (loss) from continuing
operations per common share:
Basic........................... 0.31 0.25 0.10 (2.50)
Diluted......................... 0.30 0.24 0.10 (2.50)
Earnings (loss) per common share:
Basic........................... 0.31 0.26 0.09 (2.34)
Diluted......................... 0.30 0.25 0.09 (2.34)
99
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Basic and diluted earnings per common share for each of the quarters
presented above is based on the respective weighted average number of common and
dilutive potential common shares outstanding for each period and the sum of the
quarters may not necessarily be equal to the full year basic and diluted
earnings per common share amounts.
Amounts presented above are restated for certain pooling of interests
transactions as discussed in Note 3, and are different from amounts originally
reported. The results of operations for 1998 and 1997 include certain charges
for merger costs, asset impairments and unusual items, as disclosed in Notes 3
and 14. In 1998, such charges were $7,602,000, $7,361,000, $2,231,116,000, and
$425,229,000 in the first, second, third, and fourth quarters, respectively.
Such items charged to expense in the first, second, third and fourth quarters of
1997 were $27,660,000, $52,922,000, $158,113,000 and $1,645,198,000,
respectively.
20. SUBSEQUENT EVENTS
Financing Transactions
In March 1999 the Company called its 5% convertible subordinated debentures
(due March 1, 2006). These debentures were subsequently converted into shares of
the Company's stock by the debentures holders. If the subordinated debenture
conversion occurred on January 1, 1998, diluted earnings per share would have
been increased by $0.01 for 1998.
100
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is set forth under the caption
"Election of Directors" in the Company's definitive Proxy Statement for its 1999
Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1999 Proxy Statement"), and is
incorporated herein by reference. Information concerning the executive officers
of the Company is set forth above under "Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth under the caption
"Election of Directors -- Executive Compensation" in the 1999 Proxy Statement
and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth under the caption
"Election of Directors -- Beneficial Ownership of Waste Management Common Stock"
in the 1999 Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is set forth under the caption
"Election of Directors -- Certain Relationships and Related Transactions" in the
1999 Proxy Statement and is incorporated herein by reference.
101
PART IV
ITEM 14. FINANCIAL STATEMENT SCHEDULES, EXHIBITS, AND REPORTS ON FORM 8-K.
(a)(1) Consolidated Financial Statements:
Report of Independent Public Accountants
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the years ended December 31,
1998, 1997, and 1996
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997, and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997, and 1996
All other schedules have been omitted because the required information is
not significant or is included in the financial statements or notes thereto, or
is not applicable.
(a)(3) Exhibits:
EXHIBIT
NO.* DESCRIPTION
------- -----------
2.1 -- Agreement and Plan of Merger, dated as of June 22, 1996,
by and among the Registrant, Quatro Acquisition Corp. and
Sanifill, Inc. [Incorporated by reference to Annex A in
the Registrant's Registration Statement on Form S-4, File
No. 333-08161].
2.2 -- Amendment No. 1, dated as of July 18, 1996, to Agreement
and Plan of Merger, by and among the Registrant, Quatro
Acquisition Corp. and Sanifill, Inc. [Incorporated by
reference to Annex A in the Registrant's Registration
Statement on Form S-4, File No. 333-08161].
2.3 -- Agreement and Plan of Merger, dated as of April 13, 1997,
by and among the Registrant, Riviera Acquisition
Corporation and United Waste Systems, Inc. [Incorporated
by reference to Appendix A in the Registrant's
Registration Statement on Form S-4, File No. 333-31979].
2.4 -- Agreement and Plan of Merger, dated March 10, 1998, by
and among the Registrant, Dome Merger Subsidiary, Inc.
and Waste Management, Inc. [Incorporated by reference to
Exhibit 99.1 of the Registrant's Current Report on Form
8-K dated March 10, 1998].
2.5 -- Agreement and Plan of Merger, dated as of February 16,
1998, by and among the Registrant, C&S Ohio Corp. and
American Waste Services, Inc. [Incorporated by reference
to Exhibit 10.70 to American Waste Services' Current
Report on Form 8-K, dated February 6, 1998].
2.6 -- Agreement and Plan of Merger, dated as of August 16,
1998, by and among the Registrant, Ocho Acquisition
Corporation and Eastern Environmental Services, Inc.
[Incorporated by reference to Annex A in the Registrant's
Registration Statement on Form S-4, File No 333-64239].
102
EXHIBIT
NO.* DESCRIPTION
------- -----------
2.7 -- Scheme of Arrangement between Waste Management
International plc and the Holders of the Scheme Shares
dated September 7, 1998 [Incorporated by reference to the
Registrant's Schedule 13E-3 Transaction Statement dated
September 7, 1998]
2.8 -- Agreement and Plan of Merger by and among the Registrant,
TransAmerican Acquisition Corp., and TransAmerican Waste
Industries, Inc. dated January 1998 [Incorporated by
reference to the Registrant's Registration Statement on
Form S-4, File No. 333-49253]
2.9 -- Agreement and Plan of Merger by and among Waste
Management, Inc., WMI Merger Sub, Inc. and Wheelabrator
Technologies Inc. dated December 8, 1997 [Incorporated by
reference to Exhibit A of WTI's Proxy Statement on
Schedule 14A filed on March 3, 1998]
3.1 -- Restated Certificate of Incorporation, as amended
[Incorporated by reference to Exhibit 3.2 of the
Registrant's current Report on Form 8-K dated July 16,
1998].
3.2 -- Bylaws [Incorporated by reference to Exhibit 3.2 to the
Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form S-4, File No. 33-60103].
4.1 -- Specimen Stock Certificate.
4.2 -- Indenture for Subordinated Debt Securities dated February
1, 1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated February 7, 1997].
4.3 -- Supplemental Indenture, dated as of August 26, 1997,
among the Registrant, United Waste Systems, Inc. and
Bankers Trust Company relating to United Waste Systems,
Inc.'s 4 1/2% Convertible Subordinated Notes due June 1,
2001 [Incorporated by reference to Exhibit 10.2 of the
Registrant's Current Report on Form 8-K dated August 26,
1997].
4.4 -- Indenture for Senior Debt Securities dated September 10,
1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated September 10, 1997].
10.1 -- 1990 Stock Option Plan [Incorporated by reference to
Exhibit 10.1 of the Registrant's Annual report on Form
10-K for the year ended December 31, 1990].
10.2 -- Conformed copy of 1993 Stock Incentive Plan, as amended
and restated.
10.3 -- Conformed copy of 1996 Stock Option Plan for Non-Employee
Directors, as amended.
10.4 -- Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated
by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form S-8, File No. 33-84990].
10.5 -- Western Waste Industries Amended and Restated 1983
Incentive Stock Option Plan [Incorporated by reference to
Exhibit 99.1 of the Registrant's Registration Statement
on Form S-8, File No. 333-02181].
10.6 -- Western Waste Industries 1983 Non-Qualified Stock Option
Plan [Incorporated by reference to Exhibit 99.2 of the
Registrant's Registration Statement on Form S-8, File No.
333-02181].
10.7 -- Western Waste Industries 1992 Option Plan [Incorporated
by reference to Exhibit 99.3 of the Registrant's
Registration Statement on Form S-8, File No. 333-02181].
103
EXHIBIT
NO.* DESCRIPTION
------- -----------
10.8 -- Sanifill, Inc. 1994 Long-Term Incentive Plan
[Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-08161].
10.9 -- Sanifill, Inc. 1989 Stock Option Plan [Incorporated by
reference to Exhibit 99.2 of the Registrant's
Registration Statement on Form S-8, File No. 333-08161].
10.10 -- Waste Management, Inc. 1997 Equity Incentive Plan
[Incorporated by reference to Exhibit A to Waste
Management Holdings' Proxy Statement for its 1997 Annual
Meeting of Shareholders].
10.11 -- WMX Technologies, Inc. 1996 Replacement Stock Option Plan
[Incorporated by reference to Exhibit 4.13 to Waste
Management Holdings' Registration Statement on Form S-8,
File No. 333-01325].
10.12 -- WMX Technologies, Inc. 1992 Stock Option Plan
[Incorporated by reference to Exhibit 10.31 to Waste
Management Holdings' Registration Statement on Form S-1,
File No. 33-44849].
10.13 -- WMX Technologies, Inc. 1992 Stock Option Plan for
Non-Employee Directors [Incorporated by reference to
Exhibit 10.23 to Waste Management Holdings' 1996 Annual
Report on Form 10-K].
10.14 -- Waste Management, Inc. 1982 Stock Option Plan, as amended
to March 11, 1988 [Incorporated by reference to Exhibit
10.3 to Waste Management Holdings' 1988 Annual Report on
Form 10-K].
10.15 -- Wheelabrator Technologies Inc. 1992 Stock Option Plan
[Incorporated by reference to Exhibit 10.45 to the 1991
Annual Report on Form 10-K of Wheelabrator Technologies
Inc.].
10.16 -- Wheelabrator Technologies Inc. 1988 Stock Plan for
Executive Employees of WTI and its Subsidiaries
[Incorporated by reference to Exhibit 28.1 to Amendment
No. 1 to the Registration Statement of Wheelabrator
Technologies Inc. on Form S-8, File No. 33-31523].
10.17 -- Chemical Waste Management, Inc. 1992 Stock Option Plan
[Incorporated by reference to Exhibit 10.19 to the 1991
Annual Report on Form 10-K of Chemical Waste Management,
Inc.].
10.18 -- 1991 Stock Option Plan for Non-Employee Directors of
Wheelabrator Technologies, Inc. [Incorporated by
reference to Exhibit 19.04 WTI's Quarterly Report for the
quarterly period ended June 30, 1991].
10.19 -- Amendments dated as of September 7, 1990 to the WTI 1988
Stock Plan [Incorporated by reference to Exhibit 19.02 to
the 1990 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.20 -- Amendment dated as of November 1, 1990 to the WTI 1988
Stock Plan [Incorporated by reference to Exhibit 19.04 to
the 1990 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.21 -- Amendment dated as of November 1, 1990 to the WTI 1986
Stock Plan [Incorporated by reference to Exhibit 19.03 to
the 1990 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.22 -- Amendment dated as of December 6, 1991 to the WTI 1986
Stock Plan [Incorporated by reference to Exhibit 19.01 to
the 1991 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
104
EXHIBIT
NO.* DESCRIPTION
------- -----------
10.23 -- Amendment dated as of December 6, 1991 to the WTI 1988
Stock Plan [Incorporated by reference to Exhibit 19.02 to
the 1991 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.24 -- 1997 Employee Stock Purchase Plan [Incorporated by
reference to Exhibit 10.10 of the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1997].
10.25 -- 401(k) Restoration Plan [Incorporated by reference to
Exhibit 10.11 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997].
10.26 -- TransAmerican Waste Industries, Inc. Amended and Restated
1990 Stock Incentive Plan [Incorporated by reference to
Exhibit 99.1 of the Registrant's Registration Statement
on Form S-8, File No. 333-51975].
10.27 -- TransAmerican Waste Industries, Inc. 1997 Non-Employee
Director Stock Option Plan [Incorporated by reference to
Exhibit 99.2 of the Registrant's Registration Statement
on Form S-8, File No. 333-51975].
10.28 -- Eastern Environmental Services, Inc. 1997 Stock Option
Plan [Incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, File No.
333-70055].
10.29 -- Eastern Environmental Services, Inc. Amended and Restated
1996 Stock Option Plan [Incorporated by reference to
Exhibit 4.2 to the Registrant's Registration Statement on
Form S-8, File No. 333-70055].
10.30 -- Eastern Environmental Services, Inc. 1991 Stock Option
Plan [Incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8, File No.
333-70055].
10.31 -- Form of Employment Agreement by and between the
Registrant and its Executive Officers.
10.32 -- Second Amended and Restated Revolving Credit Agreement,
dated as of July 16, 1998 among the Registrant, Bank of
America National Trust and Savings Association, Morgan
Guaranty Trust Company of New York and other financial
institutions [Incorporated by reference to Exhibit 10.3
of the Registrant's Quarterly Report on Form 10-Q/A for
the quarterly period ended June 30, 1998].
10.33 -- Loan Agreement dated as of July 16, 1998, among the
Registrant, Bank of America National Trust and Savings
Association, Chase Bank of Texas, N.A., Deutsche Bank AG,
New York Branch, Morgan Guaranty Trust Company of New
York and other financial institutions [Incorporated by
reference to Exhibit 10.4 of the Registrant's Quarterly
Report on Form 10-Q/A for the quarterly period ended June
30, 1998].
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Registrant.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP.
27 -- Financial Data Schedule.
27.1 -- Restated Financial Data Schedule.
27.2 -- Restated Financial Data Schedule.
27.3 -- Restated Financial Data Schedule.
105
* In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the Registrant's file number under that Act
is 1-12154. Waste Management Holdings' file number under the Exchange Act is
1-7327, Chemical Waste Management, Inc.'s file number is 1-9253 and
Wheelabrator Technologies Inc.'s file number is 0-14246.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the Company
filed a Current Report on Form 8-K dated October 8, 1998 to report the Company's
public announcement reaffirming its earnings outlook for the second half of 1998
and for 1999.
106
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WASTE MANAGEMENT, INC.
By: /s/ JOHN E. DRURY
----------------------------------
John E. Drury,
Chief Executive Officer
Date: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN E. DRURY Chief Executive Officer and March 30, 1999
----------------------------------------------------- Director (Principal Executive
John E. Drury Officer)
/s/ RODNEY R. PROTO President, Chief Operating Officer March 30, 1999
----------------------------------------------------- and Director
Rodney R. Proto
/s/ EARL E. DEFRATES Executive Vice President and Chief March 30, 1999
----------------------------------------------------- Financial Officer (Principal
Earl E. DeFrates Financial Officer)
/s/ BRUCE E. SNYDER Vice President and Chief March 30, 1999
----------------------------------------------------- Accounting Officer (Principal
Bruce E. Snyder Accounting Officer)
/s/ H. JESSE ARNELLE Director March 30, 1999
-----------------------------------------------------
H. Jesse Arnelle
/s/ PASTORA SAN JUAN CAFFERTY Director March 30, 1999
-----------------------------------------------------
Pastora San Juan Cafferty
/s/ RALPH F. COX Director March 30, 1999
-----------------------------------------------------
Ralph F. Cox
/s/ RICHARD J. HECKMANN Director March 30, 1999
-----------------------------------------------------
Richard J. Heckmann
/s/ RODERICK M. HILLS Director March 30, 1999
-----------------------------------------------------
Roderick M. Hills
107
SIGNATURE TITLE DATE
--------- ----- ----
/s/ RICHARD D. KINDER Director March 30, 1999
-----------------------------------------------------
Richard D. Kinder
/s/ ROBERT S. MILLER Non-Executive Chairman of the March 30, 1999
----------------------------------------------------- Board and Director
Robert S. Miller
/s/ PAUL M. MONTRONE Director March 30, 1999
-----------------------------------------------------
Paul M. Montrone
/s/ JOHN C. POPE Director March 30, 1999
-----------------------------------------------------
John C. Pope
/s/ STEVEN G. ROTHMEIER Director March 30, 1999
-----------------------------------------------------
Steven G. Rothmeier
/s/ RALPH V. WHITWORTH Director March 30, 1999
-----------------------------------------------------
Ralph V. Whitworth
/s/ JEROME B. YORK Director March 30, 1999
-----------------------------------------------------
Jerome B. York
108
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited in accordance with generally accepted auditing standards,
the financial statements of Waste Management, Inc. and Subsidiaries included in
this Annual Report on Form 10-K and have issued our report thereon dated
February 25, 1999, in which we expressed an unqualified opinion based upon our
audits and the report of other auditors. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. Schedule
II is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. Schedule II has been subjected to
the auditing procedures applied in the audit of the basic financial statements,
and in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Arthur Andersen LLP
Houston, Texas
February 25, 1999
S-1
WASTE MANAGEMENT, INC.
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
(IN THOUSANDS)
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ACCOUNTS EFFECT OF
BALANCE CHARGED WRITTEN OFF/ FOREIGN BALANCE
BEGINNING TO USE OF CURRENCY END OF
OF YEAR INCOME RESERVE OTHER(A) TRANSLATION YEAR
--------- -------- ------------ -------- ----------- --------
1996 -- Reserve for doubtful accounts(B)(C)....... $ 84,615 $ 60,505 $ (74,507) $6,294 $ (245) $ 76,662
1997 -- Reserve for doubtful accounts(B)(C)....... 76,662 69,592 (56,586) 7,336 (2,605 94,399
1998 -- Reserve for doubtful accounts(B)(C)....... 94,399 70,727 (51,657) 4,164 1,284 118,917
1996 -- Merger and restructuring accruals(D)...... 28,936 106,600 (65,693) -- -- 69,843
1997 -- Merger and restructuring accruals(D)...... 69,843 160,528 (109,039) -- -- 121,332
1998 -- Merger and restructuring accruals(D)...... 121,332 675,200 (536,401) -- 1,106 261,237
(A) Reserves for doubtful accounts of business combinations accounted for as
purchases.
(B) Includes reserves for doubtful long-term notes receivable.
(C) Excludes discontinued operations.
(D) Accruals are included in accrued liabilities and other liabilities. These
accruals represent transaction or deal costs, employee severance,
separation and transitional costs and restructuring charges.
S-2
INDEX TO EXHIBITS
EXHIBIT
NO.* DESCRIPTION
------- -----------
2.1 -- Agreement and Plan of Merger, dated as of June 22, 1996,
by and among the Registrant, Quatro Acquisition Corp. and
Sanifill, Inc. [Incorporated by reference to Annex A in
the Registrant's Registration Statement on Form S-4, File
No. 333-08161].
2.2 -- Amendment No. 1, dated as of July 18, 1996, to Agreement
and Plan of Merger, by and among the Registrant, Quatro
Acquisition Corp. and Sanifill, Inc. [Incorporated by
reference to Annex A in the Registrant's Registration
Statement on Form S-4, File No. 333-08161].
2.3 -- Agreement and Plan of Merger, dated as of April 13, 1997,
by and among the Registrant, Riviera Acquisition
Corporation and United Waste Systems, Inc. [Incorporated
by reference to Appendix A in the Registrant's
Registration Statement on Form S-4, File No. 333-31979].
2.4 -- Agreement and Plan of Merger, dated March 10, 1998, by
and among the Registrant, Dome Merger Subsidiary, Inc.
and Waste Management, Inc. [Incorporated by reference to
Exhibit 99.1 of the Registrant's Current Report on Form
8-K dated March 10, 1998].
2.5 -- Agreement and Plan of Merger, dated as of February 16,
1998, by and among the Registrant, C&S Ohio Corp. and
American Waste Services, Inc. [Incorporated by reference
to Exhibit 10.70 to American Waste Services' Current
Report on Form 8-K, dated February 6, 1998].
2.6 -- Agreement and Plan of Merger, dated as of August 16,
1998, by and among the Registrant, Ocho Acquisition
Corporation and Eastern Environmental Services, Inc.
[Incorporated by reference to Annex A in the Registrant's
Registration Statement on Form S-4, File No 333-64239].
2.7 -- Scheme of Arrangement between Waste Management
International plc and the Holders of the Scheme Shares
dated September 7, 1998 [Incorporated by reference to the
Registrant's Schedule 13E-3 Transaction Statement dated
September 7, 1998]
2.8 -- Agreement and Plan of Merger by and among the Registrant,
TransAmerican Acquisition Corp., and TransAmerican Waste
Industries, Inc. dated January 1998 [Incorporated by
reference to the Registrant's Registration Statement on
Form S-4, File No. 333-49253]
2.9 -- Agreement and Plan of Merger by and among Waste
Management, Inc., WMI Merger Sub, Inc. and Wheelabrator
Technologies Inc. dated December 8, 1997 [Incorporated by
reference to Exhibit A of WTI's Proxy Statement on
Schedule 14A filed on March 3, 1998]
3.1 -- Restated Certificate of Incorporation, as amended
[Incorporated by reference to Exhibit 3.2 of the
Registrant's current Report on Form 8-K dated July 16,
1998].
3.2 -- Bylaws [Incorporated by reference to Exhibit 3.2 to the
Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form S-4, File No. 33-60103].
4.1 -- Specimen Stock Certificate.
4.2 -- Indenture for Subordinated Debt Securities dated February
1, 1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated February 7, 1997].
EXHIBIT
NO.* DESCRIPTION
------- -----------
4.3 -- Supplemental Indenture, dated as of August 26, 1997,
among the Registrant, United Waste Systems, Inc. and
Bankers Trust Company relating to United Waste Systems,
Inc.'s 4 1/2% Convertible Subordinated Notes due June 1,
2001 [Incorporated by reference to Exhibit 10.2 of the
Registrant's Current Report on Form 8-K dated August 26,
1997].
4.4 -- Indenture for Senior Debt Securities dated September 10,
1997, among the Registrant and Texas Commerce Bank
National Association, as trustee [Incorporated by
reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated September 10, 1997].
10.1 -- 1990 Stock Option Plan [Incorporated by reference to
Exhibit 10.1 of the Registrant's Annual report on Form
10-K for the year ended December 31, 1990].
10.2 -- Conformed copy of 1993 Stock Incentive Plan, as amended
and restated.
10.3 -- Conformed copy of 1996 Stock Option Plan for Non-Employee
Directors, as amended.
10.4 -- Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated
by reference to Exhibit 4.1 of the Registrant's
Registration Statement on form S-8, File No. 33-84990.
10.5 -- Western Waste Industries Amended and Restated 1983
Incentive Stock Option Plan [Incorporated by reference to
Exhibit 99.1 of the Registrant's Registration Statement
on Form S-8, File No. 333-02181].
10.6 -- Western Waste Industries 1983 Non-Qualified Stock Option
Plan [Incorporated by reference to Exhibit 99.2 of the
Registrant's Registration Statement on Form S-8, File No.
333-02181].
10.7 -- Western Waste Industries 1992 Option Plan [Incorporated
by reference to Exhibit 99.3 of the Registrant's
Registration Statement on Form S-8, File No. 333-02181].
10.8 -- Sanifill, Inc. 1994 Long-Term Incentive Plan
[Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-08161].
10.9 -- Sanifill, Inc. 1989 Stock Option Plan [Incorporated by
reference to Exhibit 99.2 of the Registrant's
Registration Statement on Form S-8, File No. 333-08161].
10.10 -- Waste Management, Inc. 1997 Equity Incentive Plan
[Incorporated by reference to Exhibit A to Waste
Management Holdings' Proxy Statement for its 1997 Annual
Meeting of Shareholders].
10.11 -- WMX Technologies, Inc. 1996 Replacement Stock Option Plan
[Incorporated by reference to Exhibit 4.13 to Waste
Management Holdings' Registration Statement on Form S-8,
File No. 333-01325].
10.12 -- WMX Technologies, Inc. 1992 Stock Option Plan
[Incorporated by reference to Exhibit 10.31 to Waste
Management Holdings' Registration Statement on Form S-1,
File No. 33-44849].
10.13 -- WMX Technologies, Inc. 1992 Stock Option Plan for
Non-Employee Directors [Incorporated by reference to
Exhibit 10.23 to Waste Management Holdings' 1996 Annual
Report on Form 10-K].
10.14 -- Waste Management, Inc. 1982 Stock Option Plan, as amended
to March 11, 1988 [Incorporated by reference to Exhibit
10.3 to Waste Management Holdings' 1988 Annual Report on
Form 10-K].
EXHIBIT
NO.* DESCRIPTION
------- -----------
10.15 -- Wheelabrator Technologies Inc. 1992 Stock Option Plan
[Incorporated by reference to Exhibit 10.45 to the 1991
Annual Report on Form 10-K of Wheelabrator Technologies
Inc.].
10.16 -- Wheelabrator Technologies Inc. 1988 Stock Plan for
Executive Employees of WTI and its Subsidiaries
[Incorporated by reference to Exhibit 28.1 to Amendment
No. 1 to the Registration Statement of Wheelabrator
Technologies Inc. on Form S-8, File No. 33-31523].
10.17 -- Chemical Waste Management, Inc. 1992 Stock Option Plan
[Incorporated by reference to Exhibit 10.19 to the 1991
Annual Report on Form 10-K of Chemical Waste Management,
Inc.].
10.18 -- 1991 Stock Option Plan for Non-Employee Directors of
Wheelabrator Technologies, Inc. [Incorporated by
reference to Exhibit 19.04 WTI's Quarterly Report for the
quarterly period ended June 30, 1991].
10.19 -- Amendments dated as of September 7, 1990 to the WTI 1988
Stock Plan [Incorporated by reference to Exhibit 19.02 to
the 1990 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.20 -- Amendment dated as of November 1, 1990 to the WTI 1988
Stock Plan [Incorporated by reference to Exhibit 19.04 to
the 1990 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.21 -- Amendment dated as of November 1, 1990 to the WTI 1986
Stock Plan [Incorporated by reference to Exhibit 19.03 to
the 1990 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.22 -- Amendment dated as of December 6, 1991 to the WTI 1986
Stock Plan [Incorporated by reference to Exhibit 19.01 to
the 1991 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.23 -- Amendment dated as of December 6, 1991 to the WTI 1988
Stock Plan [Incorporated by reference to Exhibit 19.02 to
the 1991 Annual Report on Form 10-K of Wheelabrator
Technologies Inc.].
10.24 -- 1997 Employee Stock Purchase Plan [Incorporated by
reference to Exhibit 10.10 of the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1997].
10.25 -- 401(k) Restoration Plan [Incorporated by reference to
Exhibit 10.11 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997].
10.26 -- TransAmerican Waste Industries, Inc. Amended and Restated
1990 Stock Incentive Plan [Incorporated by reference to
Exhibit 99.1 of the Registrant's Registration Statement
on Form S-8, File No. 333-51975].
10.27 -- TransAmerican Waste Industries, Inc. 1997 Non-Employee
Director Stock Option Plan [Incorporated by reference to
Exhibit 99.2 of the Registrant's Registration Statement
on Form S-8, File No. 333-51975].
10.28 -- Eastern Environmental Services, Inc. 1997 Stock Option
Plan [Incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, File No.
333-70055].
10.29 -- Eastern Environmental Services, Inc. Amended and Restated
1996 Stock Option Plan [Incorporated by reference to
Exhibit 4.2 to the Registrant's Registration Statement on
Form S-8, File No. 333-70055].
EXHIBIT
NO.* DESCRIPTION
------- -----------
10.30 -- Eastern Environmental Services, Inc. 1991 Stock Option
Plan [Incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8, File No.
333-70055].
10.31 -- Form of Employment Agreement by and between the
Registrant and its Executive Officers.
10.32 -- Second Amended and Restated Revolving Credit Agreement,
dated as of July 16, 1998 among the Registrant, Bank of
America National Trust and Savings Association, Morgan
Guaranty Trust Company of New York and other financial
institutions [Incorporated by reference to Exhibit 10.3
of the Registrant's Quarterly Report on Form 10-Q/A for
the quarterly period ended June 30, 1998].
10.33 -- Loan Agreement dated as of July 16, 1998, among the
Registrant, Bank of America National Trust and Savings
Association, Chase Bank of Texas, N.A., Deutsche Bank AG,
New York Branch, Morgan Guaranty Trust Company of New
York and other financial institutions [Incorporated by
reference to Exhibit 10.4 of the Registrant's Quarterly
Report on Form 10-Q/A for the quarterly period ended June
30, 1998].
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Registrant.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP.
27 -- Financial Data Schedule.
27.1 -- Restated Financial Data Schedule.
27.2 -- Restated Financial Data Schedule.
27.3 -- Restated Financial Data Schedule.
* In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the Registrant's file number under that Act
is 1-12154. Waste Management Holdings' file number under the Exchange Act is
1-7327, Chemical Waste Management, Inc.'s file number is 1-9253 and
Wheelabrator Technologies Inc.'s file number is 0-14246.
EXHIBIT 4.1
057591
INCORPORATED UNDER THE LAWS COMMON STOCK
OF THE STATE OF DELAWARE PAR VALUE $.01 PER SHARE
NUMBER
WM [GRAPHIC] SHARES
CUSIP 94106L 10 9
THIS CERTIFICATE IS TRANSFERABLE IN
CHICAGO, IL OR NEW YORK, NY SEE REVERSE FOR CERTAIN DEFINITIONS
WASTE MANAGEMENT, INC.
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
CERTIFICATE OF STOCK
Waste Management, Inc. ("Corporation") transferable on the books of the Corporation by the holder hereof in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are
issued and shall be subject to all of the provisions of the Certificate of Incorporation of the Corporation and of the amendments
therein, to all of which the holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned by the
Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
[SEAL]
Dated:
/s/ [ILLEGIBLE]
CHIEF EXECUTIVE OFFICER COUNTERSIGNED AND REGISTERED:
HARRIS TRUST AND SAVINGS BANK
/s/ [ILLEGIBLE] TRANSFER AGENT
SECRETARY AND REGISTRAR
BY /s/ [ILLEGIBLE]
[WASTE MANAGEMENT LOGO] AUTHORIZED SIGNATURE
[WASTE MANAGEMENT, INC. LOGO]
The Corporation will furnish, without charge to each stockholder who so
requests, the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Such requests may be made to the Corporation's Secretary at the
principal office of the Corporation
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____________ Custodian ___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act __________________
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, __________________ hereby sell, assign and transfer unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________ Shares
of the Stock represented by the within Certificate and do hereby irrevocably
constitute and appoint ___________________________________________, Attorney,
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated _______________________________
X ___________________________________________
(SIGNATURE)
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
X ___________________________________________
(SIGNATURE)
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
SIGNATURE(S) GUARANTEED BY:
EXHIBIT 10.2
WASTE MANAGEMENT, INC.
1993 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED)
JULY 6, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I. GENERAL.........................................................................1
Section 1.1. Purpose.............................................................1
Section 1.2. Administration......................................................1
Section 1.3. Eligibility for Participation.......................................2
Section 1.4. Types of Awards Under Plan..........................................2
Section 1.5. Aggregate Limitation on Awards......................................2
Section 1.6. Effective Date and Term of Plan.....................................3
ARTICLE II. STOCK OPTIONS..................................................................4
Section 2.1. Award of Stock Options..............................................4
Section 2.2. Stock Option Agreements.............................................4
Section 2.3. Stock Option Price..................................................4
Section 2.4. Term and Exercise...................................................4
Section 2.5. Manner of Payment...................................................4
Section 2.6. Delivery of Shares..................................................5
Section 2.7. Death, Retirement and Termination of Employment of Optionee.........5
Section 2.8. Tax Election........................................................5
Section 2.9. Effect of Exercise..................................................6
ARTICLE III. INCENTIVE STOCK OPTIONS.......................................................6
Section 3.1. Award of Incentive Stock Options....................................6
Section 3.2. Incentive Stock Option Agreements...................................6
Section 3.3. Incentive Stock Option Price........................................6
Section 3.4. Term and Exercise...................................................6
Section 3.5. Maximum Amount of Incentive Stock Option Grant......................7
Section 3.6. Death of Optionee...................................................7
Section 3.7. Retirement or Disability............................................7
Section 3.8. Termination for Other Reasons.......................................7
Section 3.9. Applicability of Stock Options Sections.............................7
ARTICLE IV. RELOAD OPTIONS.................................................................8
Section 4.1. Authorization of Reload Options.....................................8
Section 4.2. Reload Option Amendment.............................................8
Section 4.3. Reload Option Price.................................................8
Section 4.4. Term and Exercise...................................................8
Section 4.5. Termination of Employment...........................................8
Section 4.6. Applicability of Stock Options Sections.............................9
ARTICLE V. ALTERNATE APPRECIATION RIGHTS...................................................9
Section 5.1. Award of Alternate Appreciation Rights..............................9
Section 5.2. Alternate Appreciation Rights Agreement.............................9
i
Section 5.3. Exercise............................................................9
Section 5.4. Amount of Payment...................................................9
Section 5.5. Form of Payment.....................................................9
Section 5.6. Effect of Exercise..................................................10
Section 5.7. Termination of Employment, Retirement, Death or Disability..........10
ARTICLE VI. LIMITED RIGHTS.................................................................10
Section 6.1. Award of Limited Rights.............................................10
Section 6.2. Limited Rights Agreement............................................10
Section 6.3. Exercise Period.....................................................10
Section 6.4. Amount of Payment...................................................10
Section 6.5. Form of Payment.....................................................11
Section 6.6. Effect of Exercise..................................................11
Section 6.7. Retirement or Disability............................................11
Section 6.8. Death of Optionee or Termination for Other Reasons..................11
Section 6.9. Termination Related to a Change in Control..........................11
ARTICLE VII. SUBSTITUTION AWARDS...........................................................12
ARTICLE VIII. BONUS STOCK AWARDS...........................................................12
Section 8.1. Award of Bonus Stock................................................12
Section 8.2. Stock Bonus Agreements..............................................12
ARTICLE IX. MISCELLANEOUS..................................................................12
Section 9.1. General Restriction.................................................12
Section 9.2. Non-Assignability...................................................13
Section 9.3. Withholding Taxes...................................................13
Section 9.4. Right to Terminate Employment.......................................13
Section 9.5. Non-Uniform Determination...........................................13
Section 9.6. Rights as a Shareholder.............................................13
Section 9.7. Definitions.........................................................14
Section 9.8. Leaves of Absence...................................................15
Section 9.9. Newly Eligible Employees............................................15
Section 9.10. Adjustments.........................................................15
Section 9.11. Changes in the Company's Capital Structure..........................16
Section 9.12. Change in Control...................................................17
Section 9.13. Amendment of the Plan...............................................18
Section 9.14. Effective Date......................................................18
ii
WASTE MANAGEMENT, INC.
1993 STOCK INCENTIVE PLAN
ARTICLE I. GENERAL
Section 1.1. Purpose. The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) closely associate the interests of the employees and
consultants of Waste Management, Inc. and its Subsidiaries and Affiliates
(collectively referred to as the "Company") with the shareholders to generate an
increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of its
stockholders; (2) provide employees and consultants with a proprietary ownership
interest in the Company commensurate with Company performance, as reflected in
increased shareholder value; (3) maintain competitive compensation levels
thereby attracting and retaining highly competent and talented employees and
consultants; and (4) provide an incentive to employees and consultants for
continuous employment with or services to the Company.
Section 1.2. Administration.
(a) The Plan shall be administered by a committee of non-employee
directors appointed by the Board of Directors of the Company (the "Committee"),
as constituted from time to time.
(b) The Committee shall have the authority, in its sole discretion
and from time to time to:
(i) designate the employees and consultants or classes of
employees of and consultants to the Company eligible to participate
in the Plan;
(ii) grant awards ("Awards") provided in the Plan in such
form and amount as the Committee shall determine;
(iii) impose such limitations, restrictions, and conditions,
not inconsistent with this Plan, upon any such Award as the Committee
shall deem appropriate; and
(iv) interpret the Plan and any agreement, instrument, or
other document executed in connection with the Plan; adopt, amend, and
rescind rules and regulations relating to the Plan; and make all other
determinations and take all other action necessary or advisable for the
implementation and administration of the Plan.
1
(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be final,
conclusive, and binding upon all persons, including the Company, any
participant, any stockholder of the Company, and any employee or consultant. A
majority of the members of the Committee may determine its actions and fix the
time and place of its meetings. No member of the Committee shall be liable for
any action taken or decision made in good faith relating to the Plan or any
Award thereunder.
Section 1.3. Eligibility for Participation. Participants in the Plan
("Participants") shall be selected by the Committee from the employees of and
consultants to the Company who are responsible for or contribute to the
management, growth, success and, profitability of the Company. In making this
selection and in determining the form and amount of Awards, the Committee shall
consider any factors deemed relevant, including the individual's functions,
responsibilities, value of services to the Company, and past and potential
contributions to the Company's profitability and growth.
Section 1.4 Types of Awards Under Plan. Awards under the Plan may be
in the form of any one or more of the following:
(i) Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III;
(iii) Reload Options, as described in Article IV;
(iv) Alternate Appreciation Rights, as described in
Article V;
(v) Limited Rights, as described in Article VI;
(vi) Alternate Stock Awards, as described in Article VII;
and/or
(vii) Stock Bonus Awards, as described in Article VIII.
Awards under the Plan shall be evidenced by an Award Agreement between the
Company and the recipient of the Award, in form and substance satisfactory to
the Committee, and not inconsistent with this Plan.
Section 1.5. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of Common Stock $.01 par value, of
the Company ("Common Stock"). Subject to the further provisions of this Section
1.5 and Section 9.10, the maximum number of shares of Common Stock which may be
issued under the Plan shall be 26,500,000.
2
(b) For purposes of calculating the maximum number of shares of
Common Stock that may be issued under the Plan:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be counted when cash
is used as full payment for shares issued upon exercise of a Stock
Option, Incentive Stock Option, or Reload Option;
(ii) only the shares issued (including the shares, if any,
withheld for tax withholding requirements) as a result of an exercise
of Alternate Appreciation Rights shall be counted; and
(iii) only the net shares issued (including the shares, if
any, withheld for tax withholding requirements) shall be counted when
shares of Common Stock or another Award under the Plan are used or
withheld as full or partial payment for shares issued upon exercise of
a Stock Option, Incentive Stock Option, or Reload Option;
provided, however, in all events the maximum number of shares of Common Stock
that may be issued pursuant to Incentive Stock Options is 26,500,000.
(c) In addition to shares of Common Stock actually issued pursuant
to the exercise of Stock Options, Incentive Stock Options, Reload Options, or
Alternate Appreciation Rights, there shall be deemed to have been issued a
number of shares equal to the number of shares of Common Stock in respect of
which Limited Rights (as described in Article VI) shall have been exercised.
(d) Shares tendered by a Participant or withheld as payment for
shares issued upon exercise of a Stock Option, Incentive Stock Option, or Reload
Option shall be available for issuance under the Plan. Any shares of Common
Stock subject to a Stock Option, Incentive Stock Option, or Reload Option that
for any reason is terminated unexercised or expires shall again be available for
issuance under the Plan, but shares subject to a Stock Option, Incentive Stock
Option, or Reload Option that are not issued as a result of the exercise of
Limited Rights shall not again be available for issuance under the Plan.
(e) The maximum number of shares of Common Stock with respect to
which any Participant may receive Awards in any calendar year is 1,500,000.
Section 1.6. Effective Date and Term of Plan.
(a) The Plan became effective on the date it was approved by the
holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at the 1993 Annual Meeting of shareholders of the
Company.
3
(b) No Awards shall be made under the Plan after the tenth
anniversary of the effective date of this Plan; provided, however, that the Plan
and all Awards made under the Plan prior to such date shall remain in effect
until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.
ARTICLE II. STOCK OPTIONS
Section 2.1. Award of Stock Options. The Committee may from time to
time, and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any Participant in the Plan
one or more options to purchase the number of shares of Common Stock ("Stock
Options") allotted by the Committee. The date a Stock Option is granted shall
mean the date selected by the Committee as of which the Committee allots a
specific number of shares to a Participant pursuant to the Plan.
Section 2.2. Stock Option Agreements. The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed by the Company and the
holder of the Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Stock Option evidenced thereby, and in such form as
the Committee may from time to time determine.
Section 2.3. Stock Option Price. The Option Price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be an amount
selected by the Committee and shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the date the Stock Option is granted.
Section 2.4. Term and Exercise. A Stock Option shall not be exercisable
prior to six months from the date of its grant unless a shorter period is
provided by the Committee or by another Section of this Plan, and may be
exercised during the period established by the Committee, but not after ten
years from the date of grant thereof (the "Option Term"). No Stock Option shall
be exercisable after the expiration of its Option Term.
Section 2.5. Manner of Payment. Each Award Agreement providing for
Stock Options shall set forth the procedure governing the exercise of the Stock
Option granted thereunder, and shall provide that, upon such exercise in respect
of any shares of Common Stock subject thereto, the Optionee shall pay to the
Company, in full, the Option Price for such shares with cash, which may be
pursuant to a "cashless-broker" exercise pursuant to procedures established by
the Committee from time to time, or with previously owned Common Stock, or at
the discretion of the Committee, in whole or in part with, the surrender of
another Award under the Plan, the withholding of shares of Common Stock issuable
upon exercise of such Stock Option, other property, or any combination thereof
(each based on the Fair Market Value of such Common Stock, Award or other
property on the date the Stock Option is exercised as determined by the
Committee).
4
Section 2.6. Delivery of Shares. As soon as practicable after receipt
of payment, the Committee shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock. The Optionee shall become a
shareholder of the Company with respect to Common Stock represented by share
certificates so issued and as such shall be fully entitled to receive dividends,
to vote and to exercise all other rights of a shareholder.
Section 2.7. Death, Retirement and Termination of Employment of
Optionee. Unless otherwise provided in an Award Agreement or otherwise agreed to
by the Committee:
(a) Upon the death of the Optionee, any rights to the extent
exercisable by the Optionee on the date of termination of employment or
consulting, as the case may be, may be exercised by the Optionee's estate, or by
a person who acquires the right to exercise such Stock Option by bequest or
inheritance or by reason of the death of the Optionee, provided that such
exercise occurs within both the remaining effective term of the Stock Option and
one year after the Optionee's death. The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may have terminated
prior to death.
(b) Upon termination of the Optionee's employment by reason of
retirement or permanent disability (as each is determined by the Committee), the
Optionee may, within 36 months from the date of termination, exercise any Stock
Options to the extent such Stock Options are exercisable on the date of such
termination of employment.
(c) Except as provided in Subsections (a) and (b) of this Section
2.7, or except as otherwise determined by the Committee, all Stock Options shall
terminate three months after the date of the termination of the Optionee's
employment or consulting, as the case may be, and shall be exercisable during
such period only to the extent exercisable on the date of termination of
employment or consulting.
Section 2.8. Tax Election. Recipients of Stock Options who are
directors or executive officers of the Company or who own more than 10% of the
Common Stock of the Company ("Section 16(a) Option Holders") at the time of
exercise of a Stock Option may elect, in lieu of paying to the Company an amount
required to be withheld under applicable tax laws in connection with the
exercise of a Stock Option in whole or in part, to have the Company withhold
shares of Common Stock having a fair market value equal to the amount required
to be withheld. Such election may not be made prior to six months following the
grant of the Stock Option, except in the event of a Section 16(a) Option
Holders's death or disability. The election may be made at the time the Stock
Option is exercised by notifying the Company of the election, specifying the
amount of such withholding and the date on which the number of shares to be
withheld is to be determined ("Tax Date"), which shall be either (i) the date
the Stock Option is exercised or (ii) a date six months after the Stock Option
was granted, if later. The number of shares of Common Stock to be withheld to
satisfy the tax obligation shall be the amount
5
of such tax liability divided by the fair market value of the Common Stock on
the Tax Date (or if not a business day, on the next closest business day). If
the Tax Date is not the exercise date, the Company may issue the full number of
shares of Common Stock to which the Section 16(a) Option Holders is entitled,
and such option holder shall be obligated to tender to the Company on the Tax
Date a number of such shares necessary to satisfy the withholding obligation.
Certificates representing such shares of Common Stock shall bear a legend
describing such Section 16(a) Option Holders obligation hereunder.
Section 2.9. Effect of Exercise. The exercise of any Stock Option shall
cancel that number of related Alternate Appreciation Rights and/or Limited
Rights, if any, that is equal to the number of shares of Common Stock purchased
pursuant to said option unless otherwise agreed by the Committee in an Award
Agreement or otherwise.
ARTICLE III. INCENTIVE STOCK OPTIONS
Section 3.1. Award of Incentive Stock Options. The Committee may, from
time to time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any employee of The Company
or a Subsidiary one or more "incentive stock options" (intended to qualify as
such under the provisions of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") ("Incentive Stock Options") to purchase the number of
shares of Common Stock allotted by the Committee. The date an Incentive Stock
Option is granted shall mean the date selected by the Committee as of which the
Committee allots a specific number of shares to a participant pursuant to the
Plan.
Section 3.2. Incentive Stock Option Agreements. The grant of an
Incentive Stock Option shall be evidenced by a written Award Agreement, executed
by the Company and the holder of an Incentive Stock Option (the "Optionee"),
stating the number of shares of Common Stock subject to the Incentive Stock
Option evidenced thereby, and in such form as the Committee may from time to
time determine.
Section 3.3. Incentive Stock Option Price. The Option Price per share
of Common Stock deliverable upon the exercise of an Incentive Stock Option shall
be at least 100% of the Fair Market Value of a share of Common Stock on the date
the Incentive Stock Option is granted; provided, however, the Option Price per
share of Common Stock deliverable upon the exercise of an Incentive Stock Option
granted to any owner of 10% or more of the total combined voting power of all
classes of stock of the Company and its subsidiaries shall be at least 110% of
the fair market value of a share of Common Stock on the date the Incentive Stock
Option is granted.
Section 3.4. Term and Exercise. Each Incentive Stock Option shall not
be exercisable prior to six months from the date of its grant unless a shorter
period is provided by the Committee or another Section of this Plan, and may be
exercised during the period established by the Committee, but not after ten
years from the date of grant thereof (the "Option Term"). No Incentive Stock
Option shall be exercisable after the expiration of its Option Term.
6
Section 3.5. Maximum Amount of Incentive Stock Option Grant. To the
extent that the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Common Stock with respect to
which Incentive Stock Options granted are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of
the Company and its parent and subsidiary corporations exceeds $100,000, such
Incentive Stock Options shall be treated as Options which do not constitute
Incentive Stock Options.
Section 3.6. Death of Optionee. Unless otherwise provided in an Award
Agreement:
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable by the Optionee on the date of termination of employment may be
exercised by the Optionee's estate or by a person who acquires the right to
exercise such Incentive Stock Option by bequest or inheritance or by reason of
the death of the Optionee, provided that such exercise occurs within both the
remaining option term of the Incentive Stock Option and one year after the
Optionee's death.
(b) The provisions of this Section shall apply notwithstanding the
fact that the Optionee's employment may have terminated prior to death.
Section 3.7. Retirement or Disability. Unless otherwise provided in an
Award Agreement, upon the termination of the Optionee's employment by reason of
permanent disability or retirement (as each is determined by the Committee), the
Optionee may, within 36 months from the date of such termination of employment,
exercise any Incentive Stock Options to the extent such Incentive Stock Options
were exercisable at the date of such termination of employment. Notwithstanding
the foregoing, the tax treatment available pursuant to Section 422 of the Code
upon the exercise of an Incentive Stock Option will not be available to an
Optionee who exercises any Incentive Stock Options more than (i) 12 months after
the date of termination of employment due to permanent disability or (ii) three
months after the date of termination of employment due to retirement.
Section 3.8. Termination for Other Reasons. Except as provided in
Sections 3.6 and 3.7 or except as otherwise determined by the Committee, all
Incentive Stock Options shall terminate three months after the date of the
termination of the Optionee's employment and shall be exercisable during such
period only to the extent exercisable on the date of termination of employment.
Section 3.9. Applicability of Stock Options Sections. Sections 2.5,
Manner of Payment; 2.6, Delivery of Shares; 2.8, Tax Elections and 2.9, Effect
of Exercise,
7
applicable to Stock Options, shall apply equally to Incentive Stock Options.
Such Sections are incorporated by reference in this Article III as though fully
set forth herein.
ARTICLE IV. RELOAD OPTIONS
Section 4.1. Authorization of Reload Options. Concurrently with or
subsequent to the award of Stock Options to any Participant in the Plan, the
Committee may authorize reload options ("Reload Options") to purchase shares of
Common Stock. The number of Reload Options shall equal (i) the number of shares
of Common Stock used to pay the exercise price of the underlying Stock Options
or Incentive Stock Options and (ii) to the extent authorized by the Committee,
the number of shares of Common Stock withheld by the Company in payment of the
exercise price underlying the Stock Option or Incentive Stock Option or used to
satisfy any tax withholding requirement incident to the exercise of the
underlying Stock Options or Incentive Stock Options. The grant of a Reload
Option will become effective upon the exercise of underlying Stock Options,
Incentive Stock Options, or Reload Options through the use of shares of Common
Stock held by the Optionee or the withholding of shares by the Company in
payment of the exercise price of the underlying Stock Option or Incentive Stock
Option held by the Optionee. Notwithstanding the fact that the underlying option
may be an Incentive Stock Option, a Reload Option is not intended to qualify as
an "incentive stock option" under Section 422 of the Code.
Section 4.2. Reload Option Amendment. Each Award Agreement shall state
whether the Committee has authorized Reload Options with respect to the Stock
Options and/or Incentive Stock Options covered by such Award Agreement. Upon the
exercise of an underlying Stock Option, Incentive Stock Option, or other Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Award Agreement in such form as the Committee shall approve.
Section 4.3. Reload Option Price. The Option Price per share of Common
Stock deliverable upon the exercise of a Reload Option shall be the Fair Market
Value of a share of Common Stock on the date the grant of the Reload Option
becomes effective.
Section 4.4. Term and Exercise. Each Reload Option is fully exercisable
six months from the effective date of grant. The term of each Reload Option
shall be equal to the remaining option term of the underlying Stock Option
and/or Incentive Stock Option.
Section 4.5. Termination of Employment. Unless otherwise determined by
the Committee in an Award Agreement or otherwise, no additional Reload Options
shall be granted to Optionees when Stock Options, Incentive Stock Options,
and/or Reload Options are exercised pursuant to the terms of this Plan following
termination of the Optionee's employment.
8
Section 4.6. Applicability of Stock Options Sections. Sections 2.5,
Manner of Payment; 2.6 Delivery of Shares; 2.7, Death, Retirement and
Termination of Employment of Optionee; 2.8, Tax Elections; and 2.9, Effect of
Exercise, applicable to Stock Options, shall apply equally to Reload Options.
Such Sections are incorporated by reference in this Article IV as though fully
set forth herein.
ARTICLE V. ALTERNATE APPRECIATION RIGHTS
Section 5.1. Award of Alternate Appreciation Rights. Concurrently with
or subsequent to the award of any Stock Option, Incentive Stock Option, or
Reload Option to purchase one or more shares of Common Stock, the Committee may,
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award to the Optionee with respect to each share of
Common Stock covered by an Option, a related alternate appreciation right
permitting the Optionee to be paid the appreciation on the Option in lieu of
exercising the Option ("Alternate Appreciation Right").
Section 5.2. Alternate Appreciation Rights Agreement. Alternate
Appreciation Rights shall be evidenced by written Award Agreements in such form
as the Committee may from time to time determine.
Section 5.3. Exercise. An Optionee who has been granted Alternate
Appreciation Rights may, from time to time, in lieu of the exercise of an equal
number of Options, elect to exercise one or more Alternate Appreciation Rights
and thereby become entitled to receive from the Company payment in Common Stock
of the number of shares determined pursuant to Section 5.4 and 5.5. Alternate
Appreciation Rights shall be exercisable only to the same extent and subject to
the same conditions as the Options related thereto are exercisable, as provided
in this Plan. The Committee may, in its discretion, prescribe additional
conditions to the exercise of any Alternate Appreciation Rights.
Section 5.4. Amount of Payment. The amount of payment to which an
Optionee shall be entitled upon the exercise of each Alternate Appreciation
Right shall be equal to 100% of the amount, if any, by which the Fair Market
Value of a share of Common Stock on the exercise date exceeds the Option Price
per share on the Option related to such Alternate Appreciation Right. A Section
16(a) Option Holder may elect to withhold shares of Common Stock issued under
this Section to pay taxes as described in Section 2.8.
Section 5.5. Form of Payment. The number of shares to be paid shall be
determined by dividing the amount of payment determined pursuant to Section 5.4
by the Fair Market Value of a share of Common Stock on the exercise date of such
Alternate Appreciation Rights. As soon as practicable after exercise, the
Company shall deliver to the Optionee a certificate or certificates for such
shares of Common Stock.
9
Section 5.6. Effect of Exercise. Unless otherwise provided in an Award
Agreement or agreed to by the Committee, the exercise of any Alternate
Appreciation Rights shall cancel an equal number of Stock Options, Incentive
Stock Options, Reload Options, and Limited Rights, if any, related to said
Alternate Appreciation Rights.
Section 5.7. Termination of Employment, Retirement, Death or
Disability. Unless otherwise provided in an Award Agreement or agreed to by the
Committee:
(a) Upon termination of the Optionee's employment (including
employment as a director of the Company after an Optionee terminates
employment as an employee of the Company) by reason of permanent
disability or retirement (as each is determined by the Committee) or
consulting, the Optionee may, within six months from the date of such
termination, exercise any Alternate Appreciation Rights to the extent
such Alternate Appreciation Rights are exercisable during such
six-month period.
(b) Except as provided in Section 5.7(a), all Alternate
Appreciation Rights shall terminate three months after the date of the
termination of the Optionee's employment, consulting or upon the death
of the Optionee.
ARTICLE VI. LIMITED RIGHTS
Section 6.1. Award of Limited Rights. Concurrently with or subsequent
to the award of any Stock Option, Incentive Stock Option, Reload Option, or
Alternate Appreciation Right, the Committee may, subject to the provisions of
the Plan and such other terms and conditions as the Committee may prescribe,
award to the Optionee with respect to each share of Common Stock covered by an
Option, a related limited right permitting the Optionee, during a specified
limited time period, to be paid the appreciation on the Option in lieu of
exercising the Option ("Limited Right").
Section 6.2. Limited Rights Agreement. Limited Rights granted under the
Plan shall be evidenced by written Award Agreements in such form as the
Committee may from time to time determine.
Section 6.3. Exercise Period. Limited Rights are exercisable in full
for a period of seven months following the date of a Change in Control of the
Company (the "Exercise Period"); provided, however, that Limited Rights may not
be exercised under any circumstances until the expiration of the six-month
period following the date of grant.
Section 6.4. Amount of Payment. The amount of payment to which an
Optionee shall be entitled upon the exercise of each Limited Right shall be
equal to 100% of the amount, if any, which is equal to the difference between
the Option Price per share of Common Stock covered by the related Option and the
Market Price of a share of such Common Stock. "Market Price" is defined to be
the greater of (i) the highest price per
10
share of the Company's Common Stock paid in connection with any Change in
Control and (ii) the highest price per share of the Company's Common Stock
reflected in the consolidated trading tables of The Wall Street Journal
(presently the New York Stock Exchange - Composite Transactions) during the
60-day period prior to the Change in Control.
Section 6.5. Form of Payment. Payment of the amount to which an
Optionee is entitled upon the exercise of Limited Rights, as determined pursuant
to Section 6.4, shall be made solely in cash.
Section 6.6. Effect of Exercise. If Limited Rights are exercised, the
Stock Options, Incentive Stock Options, Reload Options, and Alternate
Appreciation Rights, if any, related to such Limited Rights shall cease to be
exercisable to the extent of the number of shares with respect to which the
Limited Rights were exercised. Upon the exercise or termination of the Stock
Options, Incentive Stock Options, Reload Options, and Alternate Appreciation
Rights, if any, related to such Limited Rights, the Limited Rights granted with
respect thereto terminate to the extent of the number of shares as to which the
related options and Alternate Appreciation Rights were exercised or terminated.
Section 6.7. Retirement or Disability. Upon termination of the
Optionee's employment (including employment as a director of the Company after
an Optionee terminates employment as an employee of the Company) by reason of
permanent disability or retirement (as each is determined by the Committee) or
consulting, the Optionee may, within six months from the date of such
termination, exercise any Limited Right to the extent such Limited Right is
exercisable during such six-month period.
Section 6.8. Death of Optionee or Termination for Other Reasons. Except
as provided in Sections 6.7 and 6.9, or except as otherwise determined by the
Committee, all Limited Rights granted under the Plan shall terminate upon the
termination of the Optionee's employment, consulting or upon the death of the
Optionee.
Section 6.9. Termination Related to a Change in Control. The
requirement that an Optionee be terminated by reason of retirement or permanent
disability or be employed by the Company at the time of exercise pursuant to
Sections 6.7 and 6.8, respectively, is waived during the Exercise Period as to
an Optionee who (i) was employed by the Company at the time of the Change in
Control and (ii) is subsequently terminated by the Company other than for just
cause or who voluntarily terminates if such termination was the result of a good
faith determination by the Optionee that as a result of the Change in Control he
is unable to effectively discharge his present duties or the duties of the
position which he occupied just prior to the Change in Control. As used herein
"just cause" shall mean willful misconduct or dishonesty or conviction of or
failure to contest prosecution for a felony, or excessive absenteeism unrelated
to illness.
11
ARTICLE VII. SUBSTITUTION AWARDS
Section 7.1. Awards may be granted under the Plan from time to time in
substitution for stock options held by individuals employed by corporations who
become employees of the Company as a result of a merger or consolidation of the
employing corporation with the Company, or the acquisition by the Company of the
assets of the employing corporation, or the acquisition by the Company of stock
of the employing corporation with the result that such employing corporation
becomes a Subsidiary or an Affiliate.
ARTICLE VIII. BONUS STOCK AWARDS
Section 8.1. Award of Bonus Stock. The Committee may from time to time,
and subject to the provisions of this Plan and such other terms and conditions
as the Committee may prescribe, grant to any Participant in the Plan shares of
Common Stock ("Stock Bonus"). A Stock Bonus shall vest (i) in the case of
performance-based vesting criteria, no sooner than one year following the date
of the Stock Bonus grant, and (ii) in the case of time-based vesting criteria,
no sooner than one-third of the grant on each subsequent anniversary of the date
of grant. Notwithstanding the foregoing, the Committee may grant a fully vested
Stock Bonus in lieu of an earned cash bonus.
Section 8.2. Stock Bonus Agreements. The grant of a Stock Bonus shall
be evidenced by a written Award Agreement, executed by the Company and the
recipient of a Stock Bonus, in such form as the Committee may from time to time
determine, providing for the terms of such grant, including any vesting
schedule, restrictions on the transfer of such Common Stock or other matters.
ARTICLE IX. MISCELLANEOUS
Section 9.1. General Restriction. Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration, or qualification of the shares of Common
Stock subject to or related thereto upon any securities exchange or under any
state or federal law, or (ii) the consent or approval of any government
regulatory body, or (iii) an agreement by the grantee of an Award with respect
to the disposition of shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the issue or
purchase of shares of Common Stock thereunder, such Award may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
12
Section 9.2. Non-Assignability. Except as provided below, no Award
under the Plan shall be assignable or transferable by the recipient thereof,
except by will or by the laws of descent and distribution, and during the life
of the recipient, such Award shall be exercisable only by such person or by such
person's guardian or legal representative.
Notwithstanding the foregoing, as provided by the Committee in an
Award Agreement, Awards (other than Incentive Stock Options) may be transferred
(in whole or in part in a form approved by the Company) by a Participant to (i)
the spouse, children or grandchildren of the Participant ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of the Immediate
Family Members and, if applicable, the Participant, or (iii) a partnership in
which such Immediate Family Members and, if applicable, the Participant are the
only partners. Following any such transfer, the Award shall continue to be
subject to the same terms and conditions as were applicable to the Award
immediately prior to the transfer. A transferee of an Award may not transfer the
Award except to an Immediate Family Member or the Participant.
Section 9.3. Withholding Taxes. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery of any certificates for such shares.
Alternatively, the Company may issue or transfer such shares of the Company net
of the number of shares sufficient to satisfy the withholding tax requirements.
For withholding tax purposes, the shares of Common Stock shall be valued on the
date the withholding obligation is incurred.
Section 9.4. Right to Terminate Employment. Nothing in the Plan or in
any agreement entered into pursuant to the Plan shall confer upon any
Participant the right to continue in the employment of, or consulting to, the
Company or effect any right which the Company may have to terminate the
employment or consulting relationship of such Participant.
Section 9.5. Non-Uniform Determination. The Committee's determinations
under the Plan (including without limitation determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not such persons are
similarly situated.
Section 9.6. Rights as a Shareholder. The recipient of any Award under
the Plan shall have no right as a shareholder with respect thereto unless and
until certificates for shares of Common Stock are issued to him.
13
Section 9.7. Definitions. In this Plan the following definitions shall
apply:
(a) "Subsidiary" means any corporation of which, at the time
more than 50% of the shares entitled to vote generally in an election
of directors are owned directly or indirectly by the Company or any
subsidiary thereof.
(b) "Affiliate" means any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with the Company.
(c) "Fair Market Value" as of any date and in respect or any
share of Common Stock means the lowest reported trading price on such
date or on the next business day, if such date is not a business day,
of a share of Common Stock reflected in the consolidated trading tables
of The Wall Street Journal (presently the New York Stock Exchange -
Composite Transactions) or any other publication selected by the
Committee, provided that, if shares of Common Stock shall not have been
quoted on the New York Stock Exchange for more than 10 days immediately
preceding such date or if deemed appropriate by the Committee for any
other reason, the fair market value of shares of Common Stock shall be
as determined by the Committee in such other manner as it may deem
appropriate. In no event shall the Fair Market Value of any share of
Common Stock be less than its par value.
(d) "Option" means Stock Option, Incentive Stock Option, or
Reload Option.
(e) "Option Price" means the purchase price per share of the
Common Stock deliverable upon the exercise of a Stock Option, Incentive
Stock Option, or Reload Option.
(f) "Change in Control" means the occurrence, at any time
during the specified term of an Option granted under the Plan, of any
of the following events:
(i) The Company is merged or consolidated or
reorganized into or with another corporation or other legal
person (an "Acquiror") and as a result of such merger,
consolidation or reorganization less than 75% of the
outstanding voting securities or other capital interests of
the surviving, resulting or acquiring corporation or other
legal person are owned in the aggregate by the stockholders of
the Company, directly or indirectly, immediately prior to such
merger, consolidation or reorganization, other than the
Acquiror or any corporation or other legal person controlling,
controlled by or under common control with the Acquiror;
14
(ii) The Company sells all or substantially all of
its business and/or assets to an Acquiror, of which less than
75% of the outstanding voting securities or other capital
interests are owned in the aggregate by the stockholders of
the Company, directly or indirectly, immediately prior to such
sale, other than any corporation or other legal person
controlling, controlled by or under common control with the
Acquiror;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), disclosing that any
person or group (as the terms "person" and "group" are used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and
the rules and regulations promulgated thereunder) has become
the beneficial owner (as the term "beneficial owner") is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more of the
issued and outstanding shares of voting securities of the
Company; or
(iv) During any period of two consecutive years,
individuals who at the beginning of any such period constitute
the directors of the Company cease for any reason to
constitute at least a majority thereof unless the election, or
the nomination for election by the Company's stockholders, of
each new director of the Company was approved by a vote of at
least two-thirds of such directors of the Company then still
in office who were directors of the Company at the beginning
of any such period.
Section 9.8. Leaves of Absence. The Committee shall be entitled to
make such rules, regulations, and determinations as it deems appropriate under
the Plan in respect of any leave of absence taken by the recipient of any Award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan and (ii)
the impact, if any, of any such leave of absence on Awards under the Plan
theretofore made to any recipient who takes such leave of absence.
Section 9.9. Newly Eligible Employees. The Committee shall be entitled
to make such rules, regulations, determinations and awards as it deems
appropriate in respect of any employee who becomes eligible to participate in
the Plan or any portion thereof after the commencement of an award or incentive
period.
Section 9.10. Adjustments. In any event of any change in the
outstanding Common Stock by reason of a stock dividend or distributions,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, the Committee may appropriately adjust the number of shares
of Common Stock that may be issued under the
15
Plan, the number of shares of Common Stock subject to Options theretofore
granted under the Plan, and any and all other matters deemed appropriate by the
Committee.
Section 9.11. Changes in the Company's Capital Structure.
(a) The existence of outstanding Options, Alternative
Appreciation Rights, or Limited Rights shall not affect in any way the
right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company's capital structure or its business, or any
merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) If, while there are outstanding Options, the Company
shall effect a subdivision or consolidation of shares or other increase
or reduction of the number of shares of the Common Stock outstanding
without receiving compensation therefor in money, services or property,
then (i) in the event of an increase in the number of such shares
outstanding, the number of shares of Common Stock then subject to
Options hereunder shall be proportionately increased; and (ii) in the
event of a decrease in the number of such shares outstanding the number
of shares then available for Option hereunder shall be proportionately
decreased.
(c) After a merger of one or more corporations into the
Company, or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving corporation,
each holder of an outstanding Option shall, at no additional cost, be
entitled upon exercise of such Option to receive (subject to any
required action by stockholders) in lieu of the number of shares as to
which such Option shall then be so exercisable, the number and class of
stock or other securities to which such holder would have been entitled
to receive pursuant to the terms of the agreement of merger or
consolidation if, immediately prior to such merger or consolidation,
such holder had been the holder of record of a number of shares of the
Company equal to the number of shares as to which such Option had been
exercisable.
(d) If the Company is merged into or consolidated with
another corporation or other entity under circumstances where the
Company is not the surviving corporation, or if the Company sells or
otherwise disposes of substantially all of its assets to another
corporation or other entity while unexercised Options remain
outstanding, then the Committee may direct that any of the following
shall occur:
16
(i) If the successor entity is willing to assume
the obligation to deliver shares of stock or securities after
the effective date of the merger, consolidation or sale of
assets, as the case may be, each holder of an outstanding
Option shall be entitled to receive, upon the exercise of
such Option and payment of the Option Price, in lieu of
shares of Common Stock, such shares of stock or other
securities as the holder of such Option would have been
entitled to receive had such Option been exercised immediately
prior to the consummation of such merger, consolidation or
sale, and any related Alternate Appreciation Right and Limited
Right associated with such Option shall apply as nearly as
practicable to the shares of stock or other securities
purchasable upon exercise of the Option following such
merger, consolidation or sale of assets.
(ii) The Committee may waive any limitations set
forth in or imposed pursuant to this Plan or any Award
Agreement with respect to such Option and any related
Alternate Appreciation Right or Limited Option such that such
Option and related Alternate Appreciation Right and Limited
Right shall become exercisable prior to the record or
effective date of such merger, consolidation or sale of
assets.
(iii) The Committee may cancel all outstanding
Options and Alternate Appreciation Rights (but not Limited
Rights) as of the effective date of any such merger,
consolidation, or sale of assets provided that prior notice of
such cancellation shall be given to each holder of an Option
at least 30 days prior to the effective date of such merger,
consolidation, or sale of assets, and each holder of an Option
shall have the right to exercise such Option and any related
Alternate Appreciation Right in full during a period of not
less than 30 days prior to the effective date of such merger,
consolidation, or sale of assets. No action taken by the
Committee under this subsection shall have the effect of
terminating, and nothing in this subsection shall permit the
Committee to terminate, any Limited Right held by an Optionee.
(c) Except as herein provided, the issuance by the
Company of Common Stock or any other shares of capital stock or
services convertible into shares of capital stock, for cash property,
labor done or other consideration, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of
shares of Common Stock then subject to outstanding Options.
Section 9.12. Change in Control. Any Award granted under the Plan prior
to the date of a Change in Control shall be immediately exercisable in full on
such date, without regard to any times of exercise established under its Award
Agreement; provided, however, in no event shall Stock Options or Incentive Stock
Options be exercisable after the tenth anniversary of their respective grant
dates.
17
Section 9.13. Amendment of the Plan.
(a) The Committees may without further action by the
shareholders and without receiving further consideration from the
Participants, amend this Plan or condition or modify Awards under this
Plan in response to changes in securities or other laws or rules,
regulations or regulatory interpretations thereof applicable to this
Plan or to comply with stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except that
without shareholder approval the Committee may not (i) increase the
maximum number of shares of Common Stock which may be issued under the
Plan (other than increases pursuant to Section 9.10), (ii) extend the
period during which any Award may be granted or exercised, (iii) extend
the term of the Plan, (iv) change the class of eligible Participants in
the Plan, or (v) materially increase benefits available to Participants
under the Plan if such increase would require shareholder approval
pursuant to the listed company rules of the New York Stock Exchange,
Inc. as such rules may be amended from time to time. The termination or
any modification or amendment of the Plan, except as provided in
subsection (a), shall not, without the consent of a Participant, affect
his or her rights under an Award previously granted to him or her.
Section 9.14. Effective Date. The Plan, as amended as of July 6, 1998,
shall become effective as of July 6, 1998.
18
EXHIBIT 10.3
WASTE MANAGEMENT, INC.
1996 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED - NOVEMBER 10, 1998)
CONFORMED COPY
1. PURPOSE. The principal purpose of this 1996 Stock Option Plan for
Non-Employee Directors (the "Plan") is to benefit WASTE MANAGEMENT, INC. (the
"Company") and its subsidiaries through offering its directors who are not
officers or full-time employees of the Company or any of its subsidiaries an
opportunity to become holders of stock in the Company, thereby giving them a
stake in the growth and prosperity of the Company, in order to enable them to
represent the viewpoint of other stockholders of the Company more effectively
and to encourage them to continue serving as directors of the Company.
2. ADMINISTRATION. The Plan shall be administered by the Executive
Committee of the Board of Directors (the "Committee"), whose interpretation of
the terms and provisions of the Plan and whose determination of matters
pertaining to options granted under the Plan shall be final and conclusive."
3. ELIGIBILITY. Options shall be granted under this Plan only to
members of the Board of Directors who are not officers or full-time employees of
the Company or any of its subsidiaries (each such director receiving options
granted under the Plan and each other person entitled to exercise an option
granted under the Plan is referred to herein as an "Optionee").
4. GRANT OF OPTIONS. (a) An option under which a total of 10,000
shares of the common stock of the Company may be purchased from the Company
shall be automatically granted to each eligible director of the Company on the
first business day of January of each year in which such eligible director is
still serving as a director (whether or not such director's term has been
continuous). Notwithstanding the foregoing, the Committee may provide for an
annual option grant for the purchase of a different number of Company shares and
for such additional grants to eligible persons under this Plan as the Committee
may in its discretion determine. The aggregate number of shares which shall be
available to be so optioned under this Plan shall be 1,400,000 shares. Such
number of shares, and the number of shares subject to options outstanding under
the Plan, shall be subject in all cases to adjustment as provided in Paragraph
10 hereof. No option shall be granted under the Plan subsequent to January 1,
2006.
(b) Notwithstanding any of the foregoing to the contrary, in the event
an option expires or is terminated or canceled unexercised as to any shares of
common stock, such released shares may again be the subject of an option granted
under the Plan. Shares subject to options may be made available from unissued or
reacquired shares of common stock.
(c) Nothing contained in the Plan or in any option granted pursuant
thereto shall in itself confer upon any Optionee any right to continue serving
as a director of the Company or interfere in any way with any right of the Board
of Directors or stockholders of the Company to remove such director pursuant to
the restated certificate of incorporation or by-laws of the Company or
applicable law.
5. OPTION PRICE. Subject to adjustment under Paragraph 10 hereof, the
option price shall be the fair market value, on the date as of which the option
is granted, of the stock subject to the option, which shall be, for purposes of
this Paragraph, the lowest trading price of the Company's common stock on the
New York Stock Exchange Composite Tape (as reported in The Wall Street Journal,
Southwest Edition) (or, if the Company's common stock is not then traded on the
New York Stock Exchange, on the principal market where such common stock is
actively traded) on the date as of which the option is granted.
6. DURATION OF OPTIONS; VESTING. Subject to the provisions of
Paragraph 8 hereof, each option shall be for a term of ten years. Each option
shall become exercisable with respect of 100% of the total number of shares
subject to the option on the first anniversary of the date of grant.
7. EXERCISE OF OPTION. (a) An option may be exercised by giving
written notice to the Company, attention of the Secretary, specifying the number
of shares to be purchased, accompanied by the full purchase price for the shares
to be purchased in cash, by check, or a "cashless-broker" exercise pursuant to
procedures established by the Committee from time to time, by a promissory note
in the form specified by the Company and payable to the Company 15 business days
after the date of exercise of the option, by shares of the Company's common
stock or by a combination of these methods of payment. For this purpose, the per
share value of the Company's common stock shall be the fair market value on the
date of exercise (or if the date of exercise is not a trading day on the trading
day next preceding the date of exercise), which shall be, for purposes of this
Paragraph, the average of the highest and lowest sales price of the Company's
common stock on the New York Stock Exchange Composite Tape (as reported in The
Wall Street Journal, Southwest Edition) (or, if the Company's common stock is
not then traded on the New York Stock Exchange, on the principal market where
such common stock is actively traded) on such date.
(b) At the time of any exercise of any option, the Company may, if it
shall determine it necessary or desirable for any reason, require the Optionee
(or his or her heirs, legatees or legal representatives, as the case may be) as
a condition upon the exercise thereof, to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the Optionee upon his or her exercise of part or all of the option and a stop
transfer order may be placed with the transfer agent. Each option shall also be
subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state, federal
or foreign law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in consideration with, the issue
or purchase of shares thereunder, the option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company.
8. TERMINATION-EXERCISE THEREAFTER. (a) In the event an Optionee
ceases to be a director of the Company for any reason other than death,
permanent disability, resignation or
2
retirement, such Optionee's option shall expire and all rights to purchase
shares pursuant thereto shall terminate immediately.
(b) In the event of death, permanent disability (as the term is defined
in the Social Security Act, as now in effect or as it shall be subsequently
amended), resignation or retirement, the vesting of any unvested options shall
accelerate and such options may be exercised in full by the Optionee or, if the
Optionee is not living, by the Optionee's heirs, legatees, or legal
representatives, as the case may be, at any time during its specified term after
the date of death, permanent disability, resignation or retirement.
9. TRANSFERABILITY. (a) Except as provided in subparagraph (b) below,
no Option will be transferable by an Optionee other than by will or the laws of
descent and distribution and Options will be exercisable during the lifetime of
the Optionee only by the Optionee or by the Optionee's legal representative.
(b) Notwithstanding the foregoing, Options may be transferred (in whole
or in part in a form approved by the Company) by an Optionee to (i) the spouse,
children or grandchildren of the Optionee ("Immediate Family Members"), (ii) a
trust or trusts for the exclusive benefit of the Immediate Family Members and,
if applicable, the Optionee, or (iii) a partnership in which such Immediate
Family Members and, if applicable, the Optionee are the only partners. Following
any such transfer, the Option shall continue to be subject to the same terms and
conditions as were applicable to the Option immediately prior to the transfer. A
transferee of an Option may not transfer the Option except to an Immediate
Family Member or the Optionee.
10. ADJUSTMENT. The number of shares subject to the Plan and to options
granted under the Plan shall be adjusted as follows: (a) in the event that the
Company's outstanding common stock is changed by any stock dividend, stock split
or combination of shares, the number of shares subject to the Plan and to
options granted thereunder shall be proportionately adjusted, (b) in the event
of any merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable basis as
determined by the Board of Directors, for each share of common stock then
subject to the Plan and for each share of common stock then subject to an option
granted under the Plan, the number and kind of shares of stock, other
securities, cash or other property to which the holders of common stock of the
Company will be entitled pursuant to the transaction, and (c) in the event of
any other relevant change in the capitalization of the Company, the Board of
Directors shall provide for an equitable adjustment in the number of shares of
common stock then subject to the Plan and to each share of common stock then
subject to an option granted under the Plan. In the event of any such
adjustment, the exercise price per share shall be proportionately adjusted.
11. CHANGE IN CONTROL. (a) Any option granted under the Plan prior to
the date of a "Change in Control" shall be immediately exercisable in full on
such date, without regard to any times of exercise established under the
Paragraph 6 hereof. The term "Change in Control" shall mean the occurrence, at
any time during the specified term of an option granted under the Plan, of any
of the following events:
3
(i) The Company is merged or consolidated or reorganized
into or with another corporation or other legal person (an "Acquiror")
and as a result of such merger, consolidation or reorganization less
than 75% of the outstanding voting securities or other capital
interests of the surviving, resulting or acquiring corporation or other
legal person are owned in the aggregate by the stockholders of the
Company, directly or indirectly, immediately prior to such merger,
consolidation or reorganization, other than the Acquiror or any
corporation or other legal person controlling, controlled by or under
common control with the Acquiror;
(ii) The Company sells all or substantially all of its
business and/or assets to an Acquiror, of which less than 75% of the
outstanding voting securities or other capital interests are owned in
the aggregate by the stockholders of the Company, directly or
indirectly, immediately prior to such sale, other than any corporation
or other legal person controlling, controlled by or under common
control with the Acquiror;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person or group (as the terms
"person" and "group" are used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act and the rules and regulations promulgated
thereunder) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more of the issued and
outstanding shares of voting securities of the Company; or
(iv) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of the
Company cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
stockholders, of each new director of the Company was approved by a
vote of at least two-thirds of such directors of the Company then still
in office who were directors of the Company at the beginning of any
such period.
12. AMENDMENT OF PLAN. The Board of Directors of the Company or any
authorized committee thereof may amend or discontinue the Plan at any time,
provided, however, that the Plan may not be amended more than once every six
months except to comport with the changes in the Internal Revenue Code, the
Employee Retirement Income Security Act of 1976, as amended, or the rules and
regulations under each, and provided further, that no such amendment or
discontinuance shall (a) without the consent of the Optionee change or impair
any option previously granted, or (b) without the approval of the holders of a
majority of the shares of voting common stock of the Company which are present
or represented at a duly held stockholders' meeting, (i) increase the maximum
number of shares which may be purchased by all eligible directors pursuant to
the Plan, (ii) change the purchase price, or (iii) change the option period or
increase the time limitations on the grant of options.
4
EXHIBIT 10.31
EMPLOYMENT AGREEMENT
WASTE MANAGEMENT, INC. (the "Company"), and _____________________ (the
"Executive") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as
of _____________, 19____, as follows:
1. EMPLOYMENT.
The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall begin as of
_____________, 19____, and shall be for continuously renewing [five (5)] [three
(3)] year terms, unless Executive's employment is terminated in accordance with
Section 5 below.
3. DUTIES AND RESPONSIBILITIES.
(a) Executive shall serve as ___________________, and report to
____________________. In such capacity, Executive shall perform such
duties as may be assigned to Executive from time to time by the Board
of Directors of the Company or the Chief Executive Officer of the
Company.
(b) Executive shall faithfully serve the Company, and/or its affiliated
corporations, devote Executive's full working time, attention and
energies to the business of the Company, and/or its affiliated
corporations, and perform the duties under this Agreement to the best
of Executive's abilities. Executive may make and manage his personal
investments, provided such investments in other activities do not
violate, in any material respect, the provisions of Section 8 of this
Agreement.
(c) Executive shall (i) comply with all applicable laws, rules and
regulations, and all requirements of all applicable regulatory,
self-regulatory, and administrative bodies; (ii) comply with the
Company's rules, procedures, policies, requirements, and directions;
and (iii) not engage in any other business or employment without the
written consent of the Company except as otherwise specifically
provided herein.
4. COMPENSATION AND BENEFITS.
(a) BASE SALARY. During the Employment Term, the Company shall pay
Executive a base salary at the annual rate of ($________) dollars per
year or such higher rate as may be determined from time to time by the
Company ("Base Salary"). Such Base Salary shall be paid in accordance
with the Company's standard payroll practice for senior executives.
(b) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of the duties hereunder in accordance with the
Company's customary practices applicable to senior executives,
provided that such expenses are incurred and accounted for in
accordance with the Company's policy.
(c) BENEFIT PLANS. Executive shall be eligible to participate in or
receive benefits under any pension plan, profit sharing plan, medical
and dental benefits plan, life insurance plan, short-term and
long-term disability plans, supplemental and/or incentive compensation
plans, or any other fringe benefit plan, generally made available by
the Company to [senior executives] [executive working pursuant to this
form of Agreement (hereinafter referred to as "similarly situated
executives")].
(d) EMPLOYEE'S EXPENSES. All costs and expenses (including reasonable
legal, accounting and other advisory fees) incurred by the Executive
to (i) defend the validity of this Agreement, (ii) contest any
determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Executive under this Agreement,
(iii) determine in any tax year of the Executive, the tax consequences
to the Executive of any amount payable (or reimbursable) under Section
7(b) or 7(c) hereof, or (iv) prepare responses to an Internal Revenue
Service audit of, and to otherwise defend, his personal income tax
return for any year which is the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation
arising therefrom that is occasioned by or related to any audit by the
Internal Revenue Service of the Company's income tax returns, are,
upon written demand by the Executive, to be promptly advanced or
reimbursed to the Executive, or paid directly, on a current basis, by
the Company or its successors.
5. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon
Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment
hereunder upon Executive becoming "Totally Disabled". For purposes of
this Agreement, Executive shall be "Totally Disabled" if Executive is
physically or mentally incapacitated so as to render Executive
incapable of performing Executive's usual and customary duties under
this Agreement. Executive's receipt of disability benefits under the
Company's long-term disability plan or receipt of Social Security
disability benefits shall be deemed conclusive evidence of Total
Disability for purpose of this Agreement; provided, however, that in
the absence of Executive's receipt of such long-term disability
benefits or Social Security benefits, the Company's Board of Directors
may, in its reasonable discretion (but based upon appropriate medical
evidence), determine that Executive is Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment hereunder for "Cause" at any time after
providing written notice to Executive.
Page 2 of 14
(i) For purposes of this Agreement, the term "Cause" shall mean
any of the following: (A) conviction of a crime (including
conviction on a nolo contendere plea) involving a felony or,
in the good faith judgment of the Company's Board of
Directors, fraud, dishonesty, or moral turpitude; (B)
deliberate and continual refusal to perform employment duties
reasonably requested by the Company or an affiliate after
thirty (30) days' written notice by certified mail of such
failure to perform, specifying that the failure constitutes
cause (other than as a result of vacation, sickness, illness
or injury); (C) fraud or embezzlement determined in
accordance with the Company's normal, internal investigative
procedures consistently applied in comparable circumstances;
(D) gross misconduct or gross negligence in connection with
the business of the Company or an affiliate which has
substantial effect on the Company or the affiliate; or (E)
breach of any of the covenants set forth in Section 8 hereof.
(ii) An individual will be considered to have been terminated for
Cause if the Company determines that the individual engaged
in an act constituting Cause at any time prior to a payment
date for an award, regardless of whether the individual
terminates employment voluntarily or is terminated
involuntarily, and regardless of whether the individual's
termination initially was considered to have been for Cause.
(iii) Any determination of Cause under this Agreement shall be made
by resolution of the Company's Board of Directors adopted by
the affirmative vote of not less than a majority of the
entire membership of the Board of Directors at a meeting
called and held for that purpose and at which Executive is
given an opportunity to be heard.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
hereunder at any time after providing ninety (90) days' written notice
to the Company, or for good reason as described in Section 7 of this
Agreement.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment hereunder without Cause at any time after
providing written notice to Executive.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's
employment is terminated by reason of Executive's death, the Company
shall pay the following amounts to Executive's beneficiary or estate:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of death, any accrued but unpaid expenses required
to be reimbursed under this Agreement; a pro-rata "bonus" or
incentive compensation payment to the extent payments are
awarded similarly situated executives and paid at the same
time as similarly situated executives are paid; and any
vacation accrued to the date of death.
Page 3 of 14
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(c) hereof, as determined and paid in accordance with the
terms of such plans, policies and arrangements.
(iii) An amount equal to the Base Salary (at the rate in effect as
of the date of Executive's death) which would have been
payable to Executive if Executive had continued in employment
until the end of the current Employment Term. Such amount
shall be paid in a single lump sum cash payment within thirty
(30) days after Executive's death.
[(iv) As of the date of termination by reason of Executive's death,
stock options awarded to Executive shall be fully vested and
Executive's estate or beneficiary shall have up to one (1)
year from the date of death to exercise all such options.]
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
Executive's employment is terminated by reason of Executive's Total
Disability as determined in accordance with Section 5(b), the Company
shall pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination. Executive shall also be
eligible for a pro-rata bonus or incentive compensation
payment to the extent such awards are made to similarly
situated executives for the year in which Executive is
terminated.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(c) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(iii) The Base Salary (at the rate in effect as of the date of
Executive's Total Disability) which would have been payable
to Executive if Executive had continued in active employment
until the end of the current Employment Term. Payment shall
be made at the same time and in the same manner as such
compensation would have been paid if Executive had remained
in active employment until the end of such period.
[(iv) As of the date of termination by reason of Executive's total
disability, Executive shall be fully vested in all stock
option awards and Executive shall have up to one (1) year
from the date of termination by reason of total disability to
exercise all such options.]
(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 5(c), the
Company shall pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination.
Page 4 of 14
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(c) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
terminates employment pursuant to Section 5(d), and other than for a
resignation tendered pursuant to Section 7 of this Agreement, the
Company shall pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(c) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that
Executive's employment is terminated by the Company pursuant to
Section 5(e) for reasons other than death, Total Disability or Cause,
the Company shall pay the following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(c) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(iii) An annual amount equal to 75 percent (75%) of the average of
Executive's "Total Annual Direct Compensation" for the two
highest of the three most recent calendar years prior to
Executive's termination. Such annual amount shall be paid
during the five (5) year period beginning on the date of
Executive's termination and shall be paid at the same time
and in the same manner as Base Salary would have been paid if
Executive had remained in active employment until the end of
such period. For purposes of this Agreement, the term "Total
Annual Direct Compensation" means the total of the Base
Salary and other cash compensation payable to Executive
attributable to a calendar year (A) including any cash
compensation which would have been payable for such year but
for Executive's election to defer payment of such
compensation and (B) excluding any amounts recognized as
compensation as a result of Executive's exercise of a stock
option or receipt of a stock award.
(iv) The Company completely at its expense will continue for
Executive and Executive's spouse and dependents, all health
benefit plans, programs or arrangements, whether group or
individual, in which Executive was entitled to participate at
any time during the twelve-month period prior to the date of
termination, until the earliest to occur of (A) [five]
[three] years after the date of termination; (B) Executive's
death (provided
Page 5 of 14
that benefits payable to Executive's beneficiaries shall not
terminate upon Executive's death); or (C) with respect to any
particular plan, program or arrangement, the date Executive
becomes covered by a comparable benefit by a subsequent
employer. In the event that Executive's continued
participation in any such plan, program, or arrangement of
the Company is prohibited, the Company will arrange to
provide Executive with benefits substantially similar to
those which Executive would have been entitled to receive
under such plan, program, or arrangement, for such period.
(v) Except to the extent prohibited by law, Executive will be
100% vested in all benefits, awards, and grants accrued but
unpaid as of the date of termination under any pension plan,
profit sharing plan, supplemental and/or incentive
compensation plans, and stock option plans in which Executive
was a participant as of the date of termination. [Executive
shall have one (1) year from the date of termination to
exercise stock options.] [Executive shall be able to exercise
stock options for the life of the award.] Executive shall
also be eligible for a bonus or incentive compensation
payment, to the extent payments are made to similarly
situated executives, pro-rated for the year in which the
Executive is terminated.
(f) NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under
this Agreement, under the terms of any incentive compensation,
employee benefit, or fringe benefit plan applicable to Executive at
the time of Executive's termination or resignation of employment,
Executive shall have no right to receive any other compensation, or to
participate in any other plan, arrangement or benefit, with respect to
future periods after such termination or resignation.
(g) SUSPENSION OR TERMINATION OF BENEFITS AND COMPENSATION. In the event
that the Company, in its sole discretion determines that, without the
Company's express written consent, Executive has
(i) directly or indirectly engaged in, assisted or have any
active interest or involvement whether as an employee, agent,
consultant, creditor, advisor, officer, director, stockholder
(excluding holding of less than 1% of the stock of a public
company), partner, proprietor, or any type of principal
whatsoever, in any person, firm, or business entity which is
directly or indirectly competitive with the Company or any of
its affiliates, or
(ii) directly or indirectly, for or on behalf of any person, firm,
or business entity which is directly or indirectly
competitive with the Company or any of its affiliates (A)
solicited or accepted from any person or entity who is or was
a client of the Company during the term of Executive's
employment hereunder or during any of the twelve calendar
months preceding or following the termination of Executive's
employment any business for services similar to those
rendered by the Company, (B) requested or advised any present
or future customer of the Company to withdraw, curtail or
cancel its business dealings with the Company, or (C)
requested or advised any employee of the Company to terminate
his or her employment with the Company;
Page 6 of 14
the Company shall have the right to suspend or terminate any or all
remaining benefits payable pursuant to Section 6 of this Agreement.
Such suspension or termination of benefits shall be in addition to and
shall not limit any and all other rights and remedies that the Company
may have against Executive.
7. RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE FOLLOWING
CHANGE IN CONTROL.
(a) RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event
a "Change in Control" occurs, Executive will be paid the compensation
described in this Section 7 if Executive resigns or is terminated from
employment with the Company at any time prior to the six (6) month
anniversary of the date of the Change in Control following the
occurrence of any of the following events:
(i) without Executive's express written consent, the assignment
to Executive of any duties inconsistent with Executive's
positions, duties, responsibilities and status with the
Company immediately before a Change in Control, or a change
in Executive's reporting, responsibilities, titles or offices
as in effect immediately before a Change in Control, or any
removal of Executive from, or any failure to re-elect
Executive to, any of such positions, except in connection
with the termination of Executive's employment as a result of
death, or by the Company for Disability or Cause, or by
Executive other than for the reasons described in this
Section 7(a);
(ii) a reduction by the Company in Executive's Base Salary as in
effect immediately before a Change in Control plus all
increases therein subsequent thereto;
(iii) the failure of the Company substantially to maintain and to
continue Executive's participation in the Company's benefit
plans as in effect immediately before a Change in Control and
with all improvements therein subsequent thereto (other than
those plans or improvements that have expired thereafter in
accordance with their original terms), or the taking of any
action which would materially reduce Executive's benefits
under any of such plans or deprive Executive of any material
fringe benefit enjoyed by Executive immediately before a
Change in Control, unless such reduction or termination is
required by law;
[(iv) the failure of the Company to pay Executive with an
appropriate adjustment to compensation, such as a lump sum
relocation bonus, salary adjustment and/or housing allowance
so that Executive can purchase comparable primary housing if
required to relocate (it being the intention of this Section
7[a][iv] to keep the Executive "whole" if required to
relocate). In this regard, comparable housing shall be
determined by comparing factors such as location (taking into
account, by way of example, items such as the value of the
surrounding neighborhood, reputation of the public school
district, if applicable, security and proximity to
Executive's place of work), quality of construction, design,
age, size of the housing and the ratio of the monthly
payments including principle, interest, taxes and insurance,
to the
Page 7 of 14
Executive's take-home-pay, to housing most recently owned by
Executive prior to, or as of the effective date of the change
of control;]
[(iv) the change of Executive's principal place of employment to a
location more than fifty (50) miles from such principal place
of employment, except for required travel on the Company's
business to an extent substantially consistent with
Executive's business travel obligations immediately before a
Change in Control;]
(v) the failure by the Company to pay Executive any portion of
Executive's current compensation, or any portion of
Executive's compensation deferred under any plan, agreement
or arrangement of or with the Company, within seven (7) days
of the date such compensation is due; or
(vi) the failure by the Company to obtain an assumption of, and
agreement to perform the obligations of the Company under
this Agreement by any successor to the Company.
(b) COMPENSATION PAYABLE. In the event that Executive terminates
employment pursuant to Section 7(a), the Company shall pay the
following amounts to Executive:
(i) Any accrued but unpaid Base Salary for services rendered to
the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any vacation
accrued to the date of termination.
(ii) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
4(c) hereof, shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(iii) An amount equal to $1.00 less than three (3) times
Executive's "base amount" within the full meaning of Section
280G of the Internal Revenue Code. Such amount shall be paid
to Executive in a single lump sum cash payment within five
(5) business days after the effective date of Executive's
resignation.
(iv) Executive will be 100% vested in all benefits, awards, and
grants (including stock option grants) accrued but unpaid as
of the date of termination under any non-qualified pension
plan, supplemental and/or incentive compensation or bonus
plans, in which Executive was a participant as of the date of
termination. Executive shall also be eligible for a bonus or
incentive compensation payment (the "bonus payment"), payable
at 100% of the maximum bonus available to Executive,
pro-rated as of the effective date of the termination. The
bonus payment shall be payable within five (5) days after the
effective date of Employee's termination. [Employee shall
have until the expiration date shown on the stock option
award in which to exercise the options which have vested
pursuant to this section.]
Except as may be provided under this Section 7 or under the terms of
any incentive compensation, employee benefit, or fringe benefit plan
applicable to Executive at the time of Executive's resignation from
employment, Executive shall have no right to receive any
Page 8 of 14
other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such resignation or
termination.
(c) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. In the event that any
portion of the benefits payable under this Agreement, and any other
payments and benefits under any other agreement with, or plan of the
Company to or for the benefit of the Executive (in aggregate, "Total
Payments") constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code (the "Code"), then the
Company shall pay the Executive as promptly as practicable following
such determination an additional amount (the "Gross-up Payment")
calculated as described below to reimburse the Executive on an
after-tax basis for any excise tax imposed on such payments under
Section 4999 of the Code. The Gross-up Payment shall equal the amount,
if any, needed to ensure that the net parachute payments (including
the Gross-up Payment) actually received by the Executive after the
imposition of federal and state income, employment and excise taxes
(including any interest or penalties imposed by the Internal Revenue
Service), are equal to the amount that the Executive would have netted
after the imposition of federal and state income and employment taxes,
had the Total Payments not been subject to the taxes imposed by
Section 4999. For purposes of this calculation, it shall be assumed
that the Executive's tax rate will be the maximum federal rate to be
computed with regard to Section 1(g) of the Code.
In the event that the Executive and the Company are unable to agree as
to the amount of the Gross-up Payment, if any, the Company shall
select a law firm or accounting firm from among those regularly
consulted (during the twelve-month period immediately prior to a
Change-in-Control) by the Company regarding federal income tax matters
and such law firm or accounting firm shall determine the amount of
Gross-up Payment and such determination shall be final and binding
upon the Executive and the Company.
(d) CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
means the occurrence of any of the following events:
(i) Any transfer to, assignment to, or any acquisition by any
person, corporation or other entity, or group thereof, of the
beneficial ownership, within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, of any securities of the
Company, which transfer, assignment or acquisition results in
such person, corporation, entity, or group thereof, becoming
the beneficial owner, directly or indirectly, of securities
of the Company representing 25 percent (25%) or more of the
combined voting power of the Company's then outstanding
securities; or
(ii) As a result of a tender offer, merger, consolidation, sale of
assets, or contested election, or any combination of such
transactions, the persons who were directors immediately
before the transaction shall cease to constitute a majority
of the Board of Directors of the Company or any successor to
the Company.
Page 9 of 14
8. RESTRICTIVE COVENANTS
(a) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and during
the period that payments are made to Executive pursuant to Section 6
of this Agreement, Executive will not engage in, assist, or have any
active interest or involvement, whether as an employee, agent,
consultant, creditor, advisor, officer, director, stockholder
(excluding holding of less than 1% of the stock of a public company),
partner, proprietor or any type of principal whatsoever in any person,
firm, or business entity which, directly or indirectly, is engaged in
the same business as that conducted and carried on by the Company,
without the Company's specific written consent to do so. Executive
further agrees that for a period of one (1) year after the date
payments made to Executive pursuant to Section 6 of this Agreement
cease, or for a period of two (2) years following the date of
termination, whichever is later, Executive will not, directly or
indirectly, within 75 miles of any operating location of any affiliate
of the Company, engage in, assist, or have any active interest or
involvement, whether as an employee, agent, consultant, creditor,
advisor, officer, director, stockholder (excluding holding of less
than 1% of the stock of a public company), partner, proprietor or any
type of principal whatsoever in any person, firm, or business entity
which, directly or indirectly, is engaged in the same business as that
conducted and carried on by the Company or any of its affiliated
companies, without the Company's specific written consent to do so.
(b) NON-SOLICITATION. Executive covenants and agrees that at all times
during Executive's period of employment with the Company, and for a
period of one (1) year after the date payments made to Executive
pursuant to Section 6 of this Agreement cease, or two (2) years after
the date of termination of the Executive's employment, whichever date
is later, whether such termination is voluntary or involuntary by
wrongful discharge, or otherwise, Executive will not directly or
indirectly (i) induce any customers of the Company or corporations
affiliated with the Company to patronize any similar business which
competes with any material business of the Company; (ii) canvass,
solicit or accept any similar business from any customer of the
Company or corporations affiliated with the Company; (iii) directly or
indirectly request or advise any customers of the Company or
corporations affiliated with the Company to withdraw, curtail or
cancel such customer's business with the Company; [or] (iv) directly
or indirectly disclose to any other person, firm or corporation the
names or addresses of any of the customers of the Company or
corporations affiliated with the Company[. or; (v) individually or
through any person, firm, association or corporation with which
Executive is now or may hereafter become associated, cause, solicit,
entice, or induce any present or future employee of the Company, or
any corporation affiliated with the Company to leave the employ of the
Company, or such other corporation to accept employment with, or
compensation from, the Executive or any such person, firm, association
or corporation without the prior written consent of the Company.]
(c) NON-DISPARAGEMENT. Executive covenants and agrees that Executive shall
not engage in any pattern of conduct that involves the making or
publishing of written or oral statements or remarks (including,
without limitation, the repetition or distribution of derogatory
rumors, allegations, negative reports or comments) which are
disparaging, deleterious or damaging to the integrity, reputation or
good will of the Company, its management, or of management of
corporations affiliated with the Company.
Page 10 of 14
(d) PROTECTED INFORMATION. Executive recognizes and acknowledges that
Executive has had and will continue to have access to various
confidential or proprietary information concerning the Company and
corporations affiliated with the Company of a special and unique value
which may include, without limitation, (i) books and records relating
to operation, finance, accounting, sales, personnel and management,
(ii) policies and matters relating particularly to operations such as
customer service requirements, costs of providing service and
equipment, operating costs and pricing matters, and (iii) various
trade or business secrets, including customer lists, route sheets,
business opportunities, marketing or business diversification plans,
business development and bidding techniques, methods and processes,
financial data and the like (collectively, the "Protected
Information"). Executive therefore covenants and agrees that Executive
will not at any time, either while employed by the Company or
afterwards, knowingly make any independent use of, or knowingly
disclose to any other person or organization (except as authorized by
the Company) any of the Protected Information.
9. ENFORCEMENT OF COVENANTS.
(a) TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Executive
agrees that any breach by Executive of any of the covenants set forth
in Section 8 hereof during Executive's employment by the Company,
shall be grounds for immediate dismissal of Executive and forfeiture
of any accrued and unpaid salary, bonus, commissions or other
compensation of such Executive as liquidated damages, which shall be
in addition to and not exclusive of any and all other rights and
remedies the Company may have against Executive.
(b) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
covenants set forth in Section 8 hereof will cause irreparable damage
to the Company with respect to which the Company's remedy at law for
damages will be inadequate. Therefore, in the event of breach of
anticipatory breach of the covenants set forth in this section by
Executive, Executive and the Company agree that the Company shall be
entitled to the following particular forms of relief, in addition to
remedies otherwise available to it at law or equity; (i) injunctions,
both preliminary and permanent, enjoining or restraining such breach
or anticipatory breach and Executive hereby consents to the issuance
thereof forthwith and without bond by any court of competent
jurisdiction; and (ii) recovery of all reasonable sums expended and
costs, including reasonable attorney's fees, incurred by the Company
to enforce the covenants set forth in this section.
(c) SEPARABILITY OF COVENANTS. The covenants contained in Section 8 hereof
constitute a series of separate covenants, one for each applicable
State in the United States and the District of Columbia, and one for
each applicable foreign country. If in any judicial proceeding, a
court shall hold that any of the covenants set forth in Section 8
exceed the time, geographic, or occupational limitations permitted by
applicable laws, Executive and the Company agree that such provisions
shall and are hereby reformed to the maximum time, geographic, or
occupational limitations permitted by such laws. Further, in the event
a court shall hold unenforceable any of the separate covenants deemed
included herein, then such unenforceable covenant or covenants shall
be deemed eliminated from the provisions of this Agreement for the
purpose of such proceeding to the extent necessary to permit the
remaining separate
Page 11 of 14
covenants to be enforced in such proceeding. Executive and the Company
further agree that the covenants in Section 8 shall each be construed
as a separate agreement independent of any other provisions of this
Agreement, and the existence of any claim or cause of action by
Executive against the Company whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the
Company of any of the covenants of Section 8.
10. DISPUTES AND PAYMENT OF ATTORNEY'S FEES.
If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and
expenses of experts, etc.) incurred by Executive in connection with any such
dispute or any litigation, (a) provided that Executive shall repay any such
amounts paid or advanced if Executive is not the prevailing party with respect
to any dispute or litigation arising under Sections 5c or 8 of this Agreement,
or (b) regardless of whether Executive is the prevailing party in a dispute or
in litigation involving any other provision of this Agreement, provided that
the court in which such litigation is first initiated determines with respect
to this obligation, upon application of either party hereto, Executive did not
initiate frivolously such litigation. Under no circumstances shall Executive be
obligated to pay or reimburse the Company for any attorneys' fees, costs or
expenses incurred by the Company. The provisions of this Section 10 shall
survive the expiration or termination of this Agreement and of Executive's
employment hereunder.
11. WITHHOLDING OF TAXES.
The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
12. NON-DISCLOSURE OF AGREEMENT TERMS.
Executive agrees that Executive will not disclose the terms of this Agreement
to any third party other than Executive's immediate family, attorney,
accountants, or other consultants or advisors or except as may be required by
any governmental authority.
13. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant
to a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.
Page 12 of 14
14. ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive, and shall be assignable by the Company only to any
financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
15. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws
of the State of __________________ applicable to agreements made and to be
performed in that State, without regard to its conflict of laws provisions.
17. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company:
Waste Management, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Corporate Secretary
To Executive:
At the address for Executive set forth below
Page 13 of 14
18. MISCELLANEOUS.
(a) WAIVER. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a
waiver thereof or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this
Agreement.
(b) SEPARABILITY. Subject to Section 9 hereof, if any term or provision of
this Agreement is declared illegal or unenforceable by any court of
competent jurisdiction and cannot be modified to be enforceable, such
term or provision shall immediately become null and void, leaving the
remainder of this Agreement in full force and effect.
(c) HEADINGS. Section headings are used herein for convenience of
reference only and shall not affect the meaning of any provision of
this Agreement.
(d) RULES OF CONSTRUCTION. Whenever the context so requires, the use of
the singular shall be deemed to include the plural and vice versa.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, and such counterparts will together constitute but one
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
WASTE MANAGEMENT, INC.
By:
Name:
Title:
Date:
EXECUTIVE
Date:
Address:
Page 14 of 14
EXHIBIT 12.1
Waste Management, Inc.
Computation of Ratio Earnings to Fixed Charges
(in thousands, except ratios)
(unaudited)
Years Ended December 31,
------------------------------------------
1998 1997 1996
---------- ---------- ----------
Income (loss) from continuing operations before income
taxes, undistributed earnings from affiliated companies,
and minority interest $ (678,919) $ (609,024) $ 781,365
---------- ---------- ----------
Fixed charges deducted from income:
Interest expense 681,457 555,576 525,340
Implicit interest in rents 79,108 58,869 58,949
---------- ---------- ----------
760,565 614,445 584,289
---------- ---------- ----------
Earnings available for fixed charges $ 81,646 $ 5,421 $1,365,654
========== ========== ==========
Interest expense $ 681,457 $ 555,576 $ 525,340
Capitalized interest 41,501 51,376 56,873
Implicit interest in rents 79,108 58,869 58,949
========== ========== ==========
Total fixed charges $ 802,066 $ 665,821 $ 641,162
========== ========== ==========
Ratio of earnings to fixed charges n/a (1) n/a (2) 2.1x
========== ========== ==========
(1) The ratio of earnings to fixed charges for 1998 was less than a
one-to-one ratio. Additional earnings available for fixed charges of
$720,420,000 were needed to have a one-to-one ratio. The earnings
available for fixed charges were negatively impacted by merger cost of
$1,807,245,000 and unusual items of $864,063,000 related primarily to
the mergers between Waste Management, Inc. and Waste Management
Holdings, Inc. in July 1998, and Waste Management, Inc. and Eastern
Environmental Services, Inc. in December 1998.
(2) The ratio of earnings to fixed charges for 1997 was less than a
one-to-one ratio. Additional earnings available for fixed charges of
$660,399,000 were needed to have a one-to-one ratio. The earnings
available for fixed charges were negatively impacted by merger costs of
$112,748,000 (primarily related to the United Waste Systems, Inc.
merger in August 1997), and asset impairments and unusual items of
$1,771,145,000. The asset impairment and unusual items of
$1,771,145,000 primarily related to a comprehensive review performed by
Waste Management Holdings, Inc. of its operating assets and
investments.
EXHIBIT 21.1
WASTE MANAGEMENT, INC. SUBSIDIARIES
STATE OR COUNTRY
NAME OF INCORPORATION
---- ----------------
1420 Chestnut Avenue Associates NJ
1420 Chestnut Avenue LLC NJ
40th Street, Inc. FL
709292 Alberta Ltd. AB
730810 Alberta Ltd. AB
740922 Alberta Ltd. AB
762570 Alberta Ltd. AB
A..C.T.S. B.V. NETHERLANDS
A.S.P.I.C.A. S.r.1. ITALY
A-1 Compaction, Inc. NY
Dba United Waste Systems of West Michigan
AB Gosta M. Skoglund SWEDEN
Action Portables, Inc. CA
Advanced Environmental Technical Services L.L.C. DE
Affordable Recycling Systems, Inc. NY
Afvalstoffen Terminal Mocrdijk B.V. NETHERLANDS
Akron Regional Landfill, Inc. OH
Alabama Waste Disposal Solutions, L.L.C. AL
Alaska Landfills, Inc. AK
Alliance Sanitary Landfill, Inc. PA
All-Waste Recycling, Inc. NY
All-Waste Systems, Inc. NY
Amador County Environmental Services, Inc. CA
American Landfill Gas Co. OH
American Landfill, Inc. OH
American Waste Control of New York, Inc. NY
Anchorage Refuse, Inc. AK
Anderson Landfill, Inc. DE
Anderson-Cottonwood Disposal Services, Inc. CA
Anthony Dally & Sons, Inc. PA
APEX Waste Services, Inc. PA
ARB Enterprises, Inc. NY
Arden Landfill, Inc. (fka William H. Martin) PA
Arrow Refuse, Inc. AK
Art Spert Disposal, LLC NY
Art-Jo Co. NJ
Aseo S.A. ARGENTINA
Atascadero Waste Alternatives, Inc. CA
Atlantic of New York, Inc. DE
Atlantic Transportation Services, Inc. DE
Atlantic Waste Collection, Inc. DE
Atlantic Waste Disposal, Inc. DE
Automated Container Recovery, Inc. CT
Automated Recycling Technologies, Inc. (25%) NJ
Automated Salvage Transport, Inc. CT
Auxiwaste SA (FRANCE) FRANCE
Avenal Waste Alternatives, Inc. CA
AW Bryant Ltd. NEW ZEALAND
Azusa Land Reclamation Company, Inc. (fka American Sheds) CA
B&E Cartage, Inc. WV
B&L Disposal Co. NV
B. Holmes (Graded Paper) Ltd. UNITED KINGDOM
B.C. Environmental Enterprises, Inc. OH
B.C.D. Disposal, Inc. PA
Bad Bins Ltd. NEW ZEALAND
Baltimore Environmental Recovery Group, Inc. MD
Baltimore Refuse Energy Systems Company, Limited Partnership
Bayside of Marion, Inc. FL
Belpar Chemical Services, Inc. WV
Bensinger, Inc. TX
Big Valley Transport, Inc. WV
Bio-Energy Partners IL
Biosolids Reuse Management (JV) CA
Blandfill, Inc. (fka United Waste Landfill of UT) UT
Bluegrass Containment, Inc. KY
Bolton Road Landfill, Inc. DE
Boothscreek Sanitation, Inc. WV
Bosarge & Edmonds Contractors, Inc. MS
Dba Robo
Boudin's Waste & Recycling, Inc. MS
Braddon Enterprises, Inc. WV
Brand Construction Services, Inc. DE
Brazoria County Recycling Center, Inc. TX
BCRC
Brazoria County Recycling Center
USA Brazoria County Landfill
WRS Transfer Station
Brem-Air Disposal, Inc. OR
Brent Run Landfill, Inc. DE
Bridgeport Resco Company L.P.
Brushy Island Landfill, L.L.C. DE
Burnsville Sanitary Landfill, Inc. MN
C&D Sanitation and Recycling, LLC CT
C&L Disposal Company, Inc. CA
Caire's CKC Enterprises, Inc. CA
Cal Sanitation Services, Inc. CA
A-1 Sanitation
Cal Sierra Disposal, Inc. CA
Cal Sierra Transfer, Inc. CA
California Asbestos Monofill, Inc. CA
CAM
California Waste Recycling Systems, Inc. CA
California Waste Systems, Inc. CA
Campbell Wells Norm Corporation LA
Canadian Waste Services Holdings, Inc. ON
Canadian Waste Services, Inc. ON
635952 Ontario Inc. ON
1263404 Ontario Inc. ON
3368084 Canada Inc. ON
Arthur Richer & Fils Inc. ON
Bestan Inc. ON
Key Disposal, LTD. CDN
Intersan Inc. CDN
Location Sanico Ltee
Dechex Ltee
Centre de Tri Transit (1) Inc./Transit
Sorting Center (1) Inc.
Canterbury Waste Services Ltd. NEW ZEALAND
Capital Sanitation Company NV
Caramella-Ballardini, Ltd. NV
Cardinal Ridge Development, Inc. OH
Carmel Marina Corporation CA
Carolina Grading, Inc. SC
CDF Consolidated Corporation IL
Dba Rolling Kleen Disposal
Dba Southern Illinois Transfer Station
Cedar Hammock Refuse Disposal Corporation FL
Waste Management of Manatee County
Waste Management of Sarasota County
Cedar Ridge Landfill, Inc. DE
Central Disposal Systems, Inc. IA
Central Missouri Landfill, Inc. MO
Ceriani Cave ITALY
Chadwick Road Landfill, Inc. GA
Dba Chadwick Road Landfill
Chambers Development Company, Inc. DE
Monroeville Landfill
North Huntington Hauling
Chambers Enterprises, Inc. PA
Chambers International, Inc. DE
Chambers Development Europe B.V. FOR
Chambers Europe B.V. FOR
Chambers Medical Technologies of South Carolina, Inc. SC
MedTec
Medical Technologies
Chambers Medical Technologies, Inc. PA
Chambers of Delaware, Inc. DE
Chambers of Massachusetts, Inc. MA
Chambers of Mississippi, Inc. MS
Chambers of New Jersey, Inc. NJ
Chambers Services, Inc. NY
Chemical Waste Management de Mexico, S.A. de C.V. MEXICO
Chemical Waste Management Ltd. NEW ZEALAND
Chemical Waste Management of Indiana, L.L.C. DE
Chemical Waste Management of New Jersey, Inc. NJ
Chemical Waste Management of Pennsylvania, Inc. DE
Chemical Waste Management of the Northwest, Inc. WA
Chemical Waste Management, Inc. DE
Trade Waste Incineration
Chem-Nuclear Systems, LLC DE
Cheshire Sanitation, Inc. NH
Harris Trucking
Tri-State Rubbish
Chesser Island Road Landfill, Inc. GA
Chiquita Canyon Landfill, Inc. (fka Laidlaw W. S. (Chiquita) CA
CID Landfill, Inc. NY
CID MRRF, Inc. DE
CID Refuse Service, Inc. NY
City Disposal Services, Inc. DE
City Environmental Services Landfill, Inc. of Florida FL
City Environmental Services Landfill, Inc. of Hastings MI
City Environmental Services of West Michigan
City Express
Hastings Sanitary Service
Lubbers Resource Systems
City Environmental Services Landfill, Inc. of Lapeer MI
Pioneer Rock Landfill
City Environmental Services Landfill, Inc. of Panama City MI
City Environmental Services Landfill, Inc. of Saginaw MI
Saginaw Valley Landfill
City Environmental Services, Inc. of Arecibo MI
City Environmental Services, Inc. of Mid-Michigan MI
CES-Saginaw
CES- West Branch
City Express
City Environmental Services, Inc. of Northern Michigan MI
City Express
City Environmental Services, Inc. of Romulus MI
City Express
Seagate Recycling
Seagate Sanitation Services
City Environmental Services, Inc. of Waters MI
City Environmental, Inc. DE
City Management Corporation MI
Adam Refuse
Brent Run
CES - Montrose
City Disposal System
City Environment
City Environmental Contracting
City Environmental
City Environmental Services East
City Environmental Services of Montrose
City Environmental Services of Joilet
City Equipment Company
City Express
City Liquid Treatment and Processing
City Municipal Services
City Recycling Center
City Sand & Landfill
City Waste Systems
D&J Refuse Company
G&G Disposal
Gary's Disposal
J.L. Smith Refuse Service
M&M Contracting of Michigan
M&M Holding Company, Inc.
Metro Waste Systems
Michigan City Management Corporation
Moore's Disposal
People's Garbage
People's Garbage Disposal
People's Garbage Disposal of Midland/Gladwin
Pollard Disposal
Premier Steel
Raska Disposal
Seymour Road Demolition
Seymour Road Landfill
Soave-Volpe Hauling
Trashbusters Transfer Station, Ltd.
United Machinery Movers and Erectors
Universal Waste & Transit
Whitefeather Development Company
Clarfield Recycling Ltd. UNITED KINGDOM
Clayton-Ward Company, Inc. CA
Clearview Environmental Landfill, Inc. MS
Cleburne Landfill Company Corp. AL
Cleburne Landfill Corporation MI
Clements Waste Services, Inc. PA
Cloverdale Disposal, Inc. CA
CNS Holdings, Inc. DE
CNSI Sub, Inc. DE
Coast Waste Management, Inc. CA
Cocopah Landfill, Inc. (fka Southern Sanitation, Inc.) CA
Codemonte Srl ITALY
Colorado Landfill, Inc. DE
Columbia County Drop Off Box, Inc. OR
Forest Grove Disposal Service
AC Trucking
Colusa Solid Waste & Recycling, Inc. CA
Condusa Srl ITALY
Connecticut Valley Sanitary Waste Disposal, Inc. MA
Conservation Services, Inc. CO
Container Recycling Alliance, L.P. DE
Contractor Container Corporation MI
Copper Mountain Landfill, Inc. (fka Copper State Recycling) AZ
Corgest Srl ITALY
Corning Disposal Service, Inc. CA
Corti Fillippo Spa ITALY
Coshocton Landfill, Inc. OH
Cougar Landfill, Inc. (fka Cougar Holdings) TX
Countryside Landfill, Inc. IL
County-Wide Disposal, Inc. CA
Cunningham Properties Limited ONTARIO
Cuyahoga Landfill, Inc. (fka CRSL) DE
CWM Cement, Inc. DE
CWM Chemical Services, L.L.C. DE
CWM Resource Recovery, Inc. OH
D&D Container Services Company, Inc. UT
Dafter Sanitary Landfill, Inc. MI
Dakota Landfill, Inc. (fka Big Dipper Enterprises) ND
Dakota Resource Recovery, Inc. MN
United Waste Transfer
Dauphin Meadows Landfill, Inc. PA
Davie Disposal Systems, Inc. NE
Decker Disposal, Inc. FL
Deep Valley Landfill, Inc. DE
Deer Track Park Landfill, Inc. (fka Sanifill of WI, Inc.) DE
Advance Service Corp.
DeLand Landfill, Inc. DE
Delaware Recyclable Products, Inc. DE
Deponie Bentheim Entsorgung Verwaltungsgeskellscaft mbH GERMANY
Dickinson Landfill, Inc. DE
Disposal Service, Inc. NV
Disposal Services Medical Waste
Disposal Service, Inc. WV
Diversified Scientific Services, Inc. TN
Domenick Pucillo Disposal, Inc. NJ
Donno Company, Inc. NY
Drake's Sanitation, Inc. AK
Duluth Waste Marketing, Inc. MN
Durachem Limited Partnership MD
Eager Beaver Sanitary Service, Inc. OR
Earthcorp, L.L.C. DE
Earthmovers Landfill, L.L.C. DE
East Columbia C&D Landfill, Inc. SC
(fka TNT Sands, Inc.)
East Liverpool Landfill, Inc. OH
Eastern Container Corporation DE
Eastern Environmental Services of Florida, Inc. FL
Eastern Environmental Services of Indiana, Inc. DE
Eastern Environmental Services, Inc. DE
Eastern of Georgia, Inc. (formerly Pearless Waste Industries) DE
Eastern Recycling of NJ, Inc, DE
Eastern Transfer of New York, Inc. DE
Eastern Waste of Bethlehem, Inc. DE
Eastern Waste of LI, Inc. DE
Eastern Waste of New York, Inc. DE
Eastern Waste of NJ, Inc. DE
Eastern Waste of Pennsylvania, Inc. DE
Eastern Waste of West Virginia, Inc. DE
EC Waste, Inc. PR
Eco West Corporation MT
Ecoadda ITALY
Ecocamuna Spa ITALY
Ecocentro s.p.a. ITALY
Eco-Consult s.r.l. ITALY
Ecol S.A. ARGENTINA
Ecologia meridoionale Srl ITALY
Ecologica Srl ITALY
Ecology Systems, Inc. NJ
Ecolombardia 21 Srl ITALY
Ecopi Srl ITALY
Ecoserve Limited HONG KONG
Ecoservice Srl ITALY
Ecoservizi S.p.A. ITALY
Ecovision B.V. NETHERLANDS
EESI Charter, Inc. DE
Egdemere Development, Inc. NY
Eksjo Rehallning AB SWEDEN
El Coqui de San Juan PR
El Coqui Landfill Company, Inc. PR
El Coqui Waste Disposal, Inc. DE
El Coqui Waste Disposal, Inc. PR
EC Waste, Inc. PR
El Dorado Disposal Service, Inc. CA
Elk River Landfill, Inc. MN
Elme Transport AB SWEDEN
EMICA S.r.1. ITALY
EMIG Trailer Sales, Inc. PA
Empire Wrecking Corporation NJ
Envirofil, Inc. DE
Enviroland, Incorporated MI
Environmental Control, Inc. NM
Environmental Management Systems, Inc. (MI) MI
Sumpter II Corp.
Environmental Technologies China Ltd. HONG KONG
Environmental Transfer Corp. NJ
Environmental Transfer Corporation DE
Enviropace Ltd. HONG KONG
Equipment Credit Corporation DE
ERC Landfill, Inc. (fka Environmental Restoration) OH
ESG Entsorgungswirtschaft Soest GmbH GERMANY
Esposito Srl ITALY
Ever Ready Drop Box CA
Evergreen Landfill, Inc. DE
Farmer's Landfill, Inc. MO
Feather River Disposal, Inc. CA
Fernley Disposal, Inc. NV
Churchill County Refuse Service
Fernley Sanitation
FFF, Inc. MN
Fibre Fuel Limited UNITED KINGDOM
First Waste Ltd. (Guernsey) UNITED KINGDOM
Fourth Avenue Holdings FL
Frank Stamato & Co. NJ
Freeth & Brocks Bins Ltd. NEW ZEALAND
Front Range Landfill, Inc. (fka Sanifill of CO) DE
Best Trash
City Disposal
ERD Landfill
Franklin Street Transfer
Frontier Environmental, Inc. FL
Future-Tech Environmental Services, Inc. CA
G.C. Environmental, Inc. TX
G.I. Industries, Inc. UT
G.S.A. Scarl Srl ITALY
GA Landfills, Inc. DE
Gallia Landfill, Inc. DE
Garnet of Maryland, Inc. MD
Gebr. Van Vliet B.V. NETHERLANDS
Gedis Srl ITALY
General Nuclear Systems, Inc. DE
General Sanitation Corporation FL
Georgia Waste Systems, Inc. GA
B.J. Recycling and Disposal Facility
Chapman Waste Disposal
Rolling Hills Recycling and Disposal Facility
Waste Management of Augusta- Aiken
Waste Management of Atlanta
Waste Management of Macon
GES Gesallschaft zur Entdorgung von Sekundaerrohstoffen mbH GERMANY
Gesam Gestione Servizi Ambientali S.p.A. ITALY
Gestion Des Rebuts D.M.P. Inc. QUEBEC
WMI Mauricie Bois- Franc
WMI Parc Hirondelles
Gestioni Ambientali, Srl ITALY
GI Industries, Inc. UT
Glegg Industries, Inc. ONTARIO
Glenn County Disposal Service, Inc. CA
Glen's Sanitary Landfill, Inc. MI
Graham Road Recycling & Disposal Facility, Inc. (Sanifill of WA) WA
Grand Blanc Landfill, Inc. MI
Grand Central Sanitary Landfill, Inc. PA
Greater Manchester Sites Ltd. UNITED KINGDOM
Green Valley Landfill Limited HONG KONG
Greenfield WMI Transfer Limited HONG KONG
Greenhills Landfill Restoration Limited HONG KONG
Grupo WMX, S.A. De C.V. MEXICO
Guang Jia Environmental Protection Co. Ltd. HONG KONG
Guyan Transfer and Sanitation Service, Inc. WV
H.B.J.J., Incorporated CA
H.S.S. Inc. NJ
Ham Lake Haulers, Inc. MN
Hamm's Sanitation, Inc. NJ
Harford Disposal, Inc. MD
Harper Employment Services, Inc. MI
Harris Sanitation, Inc. FL
Harwood Landfill, Inc. (fka PST Reclamation) MD
Hedco Landfill Limited UNITED KINGDOM
Hillsboro Landfill, Inc. OR
Hillside Maintenance Corporation NJ
Hite Construction, Inc. AK
Hollander Industriediensten Amsterdam BV NETHERLANDS
Hollister Disposal, Inc. CA
Holyoke Sanitary Landfill, Inc. MA
Hoot Landfill, L.L.C. DE
Hudson Jersey Sanitation Co. NJ
Ibka Miljoservice A/S DENMARK
Ichochema B.V. NETHERLANDS
Icopower B.V. NETHERLANDS
Icosloop B.V. NETHERLANDS
Icotech NETHERLANDS
Icova B.V. NETHERLANDS
Icova Maltha Glasracylcing B.V. NETHERLANDS
IGM S.p.A. ITALY
IN Landfills, L.L.C. DE
Independent Disposal Services, Inc. CA
Independent Sanitation Company NV
Incline Sanitation
Interport Paper Company Limited UNITED KINGDOM
Interstate Recycling Corporation NJ
IRA S.r.1. ITALY
J Bar J Land, Inc. NE
J&S Sanitation, Inc. PA
J. van Loenen en Zonen B.V. NETHERLANDS
Jaarstveld Groen En Milieu B.V. NETHERLANDS
Jahner Sanitation, Inc. ND
Jay County Landfill, L.L.C. IN
Jefferson County Landfill, L.L.C. DE
John B. & Sons, Inc. NJ
John Smith Landfill, Inc. CA
Johnson Canyon Road Disposal Site, Inc. CA
Jolon Road Landfill Corporation CA
Jones Sanitation, L.L.C. DE
Junker Sanitation Services, Inc. MN
United Waste Systems of Minnesota
Jydsk Milijoservice A/S DENMARK
K and W Landfill, Inc. MI
KAB-WMI Sdn. Bhd MALAYSIA
Kahle Landfill, Inc. MO
Keene Road Landfill, Inc. FL
Kelley Run Hauling, Inc. DE
Kelly Run Sanitation, Inc. PA
Kennedy & Donkin (Middle East) Limited CYPRUS
Kennedy & Donkin Africa (Botswana) Partnership BOTSWANA
Kennedy & Donkin Africa (Malawi) Partnership MALAWI
Kennedy & Donkin Building Services Limited UNITED KINGDOM
Kennedy & Donkin Generation & Industrial Limited UNITED KINGDOM
Kennedy & Donkin Information Systems Ltd. UNITED KINGDOM
Kennedy & Donkin International Ltd. HONG KONG
Kennedy & Donkin Ltd. UNITED KINGDOM
Kennedy & Donkin Malaysia Ltd. DE
Kennedy & Donkin Overseas Ltd. UNITED KINGDOM
Kennedy & Donkin Power Ltd. UNITED KINGDOM
Kennedy & Donkin Quality Engineering UNITED KINGDOM
Kennedy & Donkin Systems Control Ltd. UNITED KINGDOM
Kennedy & Donkin Transportation Ltd. UNITED KINGDOM
Ken's Pickup Service, Inc. MI
United Waste Systems of Northern Michigan
Kershaw County Landfill, Inc. SC
(fka USA Waste Kershaw County, Landfill, Inc.)
Kimmins Recycling Corporation FL
King George Landfill, Inc. (fka Garnet of VA) VA
Klamath Disposal, Inc. OR
Klok Containers B.V. NETHERLANDS
Knutson Material Recovery Facility, Inc. MN
Knutson Services, Inc. MN
Knutson Kleen Sweep
L&K Debris Box Service CA
L & K Disposal
L&M Landfill, Inc. DE
Laidlaw Waste Systems (Valley View), L.L.C. DE
Land Reclamation Company, Inc. DE
Kestrel Hawk Park Landfill
Landfill of Union County, L.L.C. DE
Landfill Services of Charleston, Inc. (fka WVA Waste Services) WV
Landfill Systems, Inc. NM
Landfill Systems
Larry's Sanitary Service, Inc. CA
Lassen Waste Lines, Inc. CA
Lassen Waste Systems, Inc. CA
Laurel Highlands Landfill, Inc. PA
Laurel Ridge Landfill, L.L.C. DE
LCS Services, Inc. WV
LCS Landfill
North Mountain Landfill
Leroy Brown Landfill, Inc. (fka Envirofil of IL) IL
Lewis Road Disposal Site, Inc. CA
LFG Production (Partnership) DE
LG-Garnet of Maryland JV DC
(LG Industries, Inc. owns 50 % and LG-Garnet of Maryland Joint
Venture owns 50%)
DC U line Transfer
Liberty Landfill, L.L.C. DE
Liquid Waste Management, Inc. CA
Living Earth Joint Venture Company Ltd. NEW ZEALAND
Ljungby Renhallning & Transport AB SWEDEN
Ljusne Renhallnings AB SWEDEN
Local Sanitation of Rowan County, L.L.C. DE
Lo-Cost Waste Disposal, Inc. ALBERTA
Lodi Sanitary City Disposal Co., Inc. CA
Longview Group, Inc. DE
Longview of Buchanan County, Inc. MO
Longview of Kansas City, Inc. MO
Longview of Livingston County, Inc. MO
Longview of Mercer County I, Inc. NJ
Longview of Mercer County, Inc. NJ
Longview of Mid-Missouri, Inc. MO
Longview of Ocean County, Inc. NJ
Longview of Pettis County, Inc. MO
Longview of St. Joseph, Inc. MO
Loristan Services Limited UNITED KINGDOM
M&O Waste Management Limited Partnership IL
M.P.S. Medical Package Service srl ITALY
M.S.T.S. , Limited Partnership DE
M.S.T.S., Inc. DE
Maack Enterprises NV
Mahoning Landfill, Inc. OH
Malardalens Tankservice AB SWEDEN
Manliba SA ARGENTINA
Maplewood Landfill, Inc. (fka Chambers Energy) VA
Marangi Brothers, Inc. NJ
Mashor & Reym Charters Sdn. Bhd Brunei NETHERLANDS
Mashor Reym Sdn Shd Malaysia NETHERLANDS
Mashr & Reym Charters Sdn Bhd BRUNEI
Massachusetts Refusetech, Inc. DE
McDaniel Landfill, Inc. ND
McGinnes Industrial Maintenance Corp. TX
Meadowfill Landfill, Inc. DE
Megastock, Ltd. UNITED KINGDOM
Michigan Environs, Inc. MI
United Waste Systems of Menominee
Mid Valley Portable Storage, Inc. CA
Middle Island Enterprises, Inc. WV
Middlemass Holdings Pty Limited AUSTRALIA
Middlemass Industrial Services Pty Limited AUSTRALIA
Midwest Transport, Inc. WI
Minneapolis Refuse, Incorporated (23.826%-owned) MN
Missouri Disposal Partners, L.P. IL
M-L Commercial Garbage Service, Inc. WV
M-Land Corp NY
Monmouth Processing Company NJ
Moor Refuse, Inc. CA
Mountain Indemnity Insurance Company VT
Mountainview Landfill, Inc. (fka Chambers of MD) MD
MSTS. Lizenz GmbH GERMANY
Mull Entsorgung West GmbH & Co. KG GERMANY
Mull Entsorgung West Verwaltungs GmbH GERMANY
Municipal Waste and Service Corp. MI
Napa Garbage Service, Inc. CA
Napa Valley Disposal Service, Inc. CA
Nassjo Renhallning AB SWEDEN
National Guaranty Insurance Company VT
National Seal Company IL
Neal Road Landfill Corporation CA
Neotec Srl ITALY
Nevada City Garbage Service, Inc. CA
Nevada County Transfer, Inc. CA
New England CR, Inc. MA
New Milford Landfill, L.L.C. DE
NH/VT Energy Recovery Corporation NH
Nichols Sanitation, Inc. FL
Lake Placid Sanitation
North Broward County Resource Recovery Project, Inc. FL
North Broward Holdings, Inc. DE
North Hennepin Recycling & Transfer Corporation MN
North Valley Disposal Service, Inc. CA
Northeast Hauling Company, Inc. NJ
Northeast Waste Systems, Inc. CT
Northern Recycling, Inc. NY
Northwestern Landfill, Inc. DE
Norwaste Limited UNITED KINGDOM
Norwaste, Inc. AK
NRT Realty Corp. NY
NSC Corporation MA
NSC Sales Corp VA
Nu-Way Live Oak Landfill, Inc. (fka Sanifill of CA) DE
NYOFCO Holdings, Inc. DE
O.V.E.R. s.r.1. ITALY
Oak Grove Landfill, Inc. DE
Oakridge Landfill, Inc. (fka Chambers Oakridge LF) SC
Oakwood Landfill, Inc. (fka Pinewood Recycling) SC
Ocean Combustion Service, B.V. NETHERLANDS
OHM Corporation OH
Oil & Solvent Process Company CA
Okeechobee Landfill, Inc. (fka Chambers W.S. of FL) FL
Olney Sanitary System, Inc. IL
Olshan Demolishing Company, Inc. TX
Olson's Sanitation Service, Inc. WA
Olympic View Sanitary Landfill, Inc. WA
Orange County Landfill, Inc. (fka Chambers Orange Co. LF) FL
Ormsby Sanitary Landfill, Inc. NV
P.I.T.E.F. S.r.1. ITALY
Pacific Environmental Partners NEW ZEALAND
Pacific Waste Alternatives, Inc. CA
Pacific Waste Management Holdings Pty. Limited. AUSTRALIA
Pacific Waste Management Ltd. NEW ZEALAND
Pacific Waste Management Pte. Ltd. SINGAPORE
Pacific Waste Management Pty Limited AUSTRALIA
Palo Alto Sanitation Company CA
Paper Recycling International, L.P. DE
Pappy, Inc. MD
Paradise Solid Waste Systems, Inc. CA
Pearl Delta WMI Limited HONG KONG
Peerless Landfill Company FL
Peninsula Sanitation, Inc. AK
Penn Warner Club, Inc. DE
Pen-Rob, Inc. AZ
Penuelas Valley Landfill, Inc. PR
People's Landfill, Inc. DE
Peterson Demolition, Inc. MN
Phoenix Resources, Inc. PA
Photodigit Ltd. UNITED KINGDOM
Piacenza Amb. Srl. ITALY
Pikes Point Transfer Station Ltd. NEW ZEALAND
Pilmuir Waste Disposal Limited UNITED KINGDOM
Pine Bluff Landfill, Inc. (fka Sanifill/Pine Bluff LF) GA
Pine Grove Hauling, Inc. PA
Pine Grove Landfill, Inc. DE
Pine Grove Landfill, Inc. PA
Pine Grove, Inc. DE
Pine Ridge Landfill, Inc. DE
Pine Tree Acres, Inc. MI
S&V Disposal
PPK Environmental & Infrastructure Pty. Ltd. AUSTRALIA
Practical Recycling Systems Ltd. UNITED KINGDOM
Progesam Ecosistemi Srl ITALY
PT Prtasada Painunah Limbah Industri INDONESIA
PT Waste Management Indonesia INDONESIA
Public Sanitary Service, Inc. OR
Pucillo and Companies Environmental Recovery, Inc. NJ
Pulaski Grading, Inc. KY
Pullman Chimney of Canada Ltd. CANADA
Pullman Power Products Corporation DE
Pullman Power Products International Corporation DE
Pullman Power Products of Canada Limited CANADA
Pullman Power Products of Ohio, Inc. OH
PWMH Affiliates Superannuation Fund Pty Limited AUSTRALIA
Quail Hollow Landfill, Inc. DE
R A Johnson (Hauliage) Ltd. ENGLAND
R&A Bender, Inc. PA
R&B Landfill, Inc. (fka Chambers R&B LF) GA
R.S.W. Recycling, Inc. NV
RA Johnson (Haulage) Ltd. UNITED KINGDOM
Rail-Cycle L.P. CA
Randers Omlast Aps DENMARK
RCC Fiber Company, Inc. DE
RCI Hudson, Inc. MA
United Waste Systems of Hudson
RECO Venture, L.P. (45%) DE
Recuperi Piemontesi Srl ITALY
Recycle & Recover, Inc. GA
Recycle New Zealand Ltd. NEW ZEALAND
Recycling Works, Inc. PA
Re-Cy-Co, Inc. MN
United Waste Transfer
Red Bluff Disposal, Inc. CA
Redwood Landfill, Inc. DE
Refuse Disposal, Inc. WV
Refuse Removal Systems, Inc. CA
Refuse Services, Inc. FL
Clay County Recycling and Disposal Facility
Jacksonville Waste Control
Refuse, Inc. NV
Sage Street Transfer Station
Stead Street Transfer Station
Regin B.V. NETHERLANDS
Regional Recycling Corporation NJ
Regional Recycling, Inc. NY
REI Holdings, Inc. DE
Reliable Landfill, L.L.C. DE
Reliable Trash Hauling, Inc. FL
Remote Landfill Services, Inc. TN
Reno Disposal Co. NV
Reno Sanitation Company
Sparks Sanitation
Renovadan Miljoservice A/S DENMARK
Rent-a-Weld (Wirral) Ltd. UNITED KINGDOM
Resco Holdings, Inc. DE
Residential Services, Inc. NY
Residuals Processing, Inc. CA
Residuos Industriales Multiquim, S.A. de C.V. MEXICO
Resource Control Composting, Inc. MA
Resource Control, Inc. MA
Reuter Recycling of Florida, Inc. FL
Reym B.V. NETHERLANDS
Reym GmbH NETHERLANDS
Richland County Landfill, Inc. (fka Chambers Richland Co. LF) SC
Ridge Generating Station Limited Partnership
Ri-Eco S.r.1. ITALY
RIH Inc. DE
Riley Energy Systems of Lisbon Connecticut Corp. CT
Riley Energy Systems of Lisbon Corporation DE
RIS Risk Management Inc. DE
Riverbend Landfill, Inc. OR
Rolling Meadows Landfill, L.L.C. DE
Ross County Landfill, Inc. DE
RRT Design & Construction Corp DE
RRT Empire Returns Corp. of Monroe County, Inc. NY
RRT of Broome, Inc. DE
RRT of New Jersey, Inc. NJ
RRT of Pennsylvania, Inc. PA
RRT of Philadelphia, Inc. DE
RRT Plastics Corporation DE
RRT Recycling Associates of North Carolina, Inc. NC
RRT-Recycle America, Inc. DE
RTS Landfill, Inc. (fka Sanifill of GA) DE
Del Mar Virginia District
Plant Atkinson Transfer Station
South Side Sanitation
Starr Tranfer Station
Rudolph Beck & Sohne Aktiengesellschaft AUSTRIA
Rural Dispos-all Service, Inc. CA
Rust Capital Corporation DE
Rust China Ltd DE
Rust Controldua, S.A. De C.V. MX
Rust Engineering & Construction Inc. DE
Rust Federal Environmental Services Inc. DE
Rust Industrial Cleaning Inc. DE
Rust International Holdings Inc. DE
Rust International Inc. DE
Rust JRP Pty Ltd. SINGAPORE
Rust Limited UNITED KINGDOM
Rust North America Holdings Inc. DE
Rust Remedial Services Holding Company Inc. DE
Rust Sweden Holdings A B SWEDEN
S&J Landfill, Limited Partnership TX
S&L Total Waste Systems, Inc. NV
S&S Grading of Illinois, Inc. IL
S&S Grading, Inc. WV
S.A.P. s.p.a. ITALY
S.A.R.I. S.p.A. ITALY
S.A.R.I. spa ITALY
S.A.S.P.I. S.p.A. ITALY
S.I.R.T.I.S. s.r.1. ITALY
S.P.E.M. S.p.A. ITALY
S.V. Farming Corp. NJ
Sa Ge Ter Spa ITALY
Sacagica s.r.l. ITALY
Sacramento Valley Environmental Waste Company CA
Saframa S.A. ARGENTINA
Sakab Batteri B SWEDEN
Salinas Disposal Service, Inc. CA
Saline County Landfill, Inc. IL
Salutec, S.A. ARGENTINA
Sanifill Canada, Inc. CDN
Sanifill de Mexico (US), Inc. DE
Sanifill de Mexico, S.A. de C.V. MX
AceVerde S.A. de C.V. MX
AceVerde Servicios, S.A. de C.V. MX
Sanifill Forest Products, Inc. CA
Sanifill of Florida, Inc. FL
Sanifill of Hawaii, Inc. DE
Sanifill of San Juan, Inc. PR
El Coqui de San Juan (JV Partnership) (PR) (50% by
EC Inc. and 50% by Sanifill of San Juan, Inc.)
Sanifill of Tennessee Hauling, Inc. TN
Sanifill of Tennessee, Inc. DE
Sanifill of Texas Hauling, Inc. TX
Sanifill Power Corporation DE
RECO Ventures, L.P. (DE) (49% owned by Sanifill
Power Corporation)
Sanifill, Inc. DE
Frontier Recycling
Orange Soil Cement
Orange Transportation
Orange Trucking
Orange Waste Landfill
Orange Waste Transfer Station
Pine Ridge Landfill
SC Holdings, Inc. PA
L&D Landfill
Sanitary Landfill
SCA Services, Inc. DE
Mohawk Valley Sanitary Landfill
SCS Contractors Ltd. UNITED KINGDOM
Serecol Srl ITALY
Servizi Piemonte S.r.1. ITALY
SES Connecticut Inc. DE
SF, Inc. DE
Southern Services of TN, LLC (TN) (50% owned by
SF, Inc.)
Shade Landfill, Inc. DE
Shereg Schleswig Holsteinische Entsorgung u. Recycling GmbH GERMANY
Shore Disposal, Inc. VA
Shoreline Disposal, Inc. CA
SIE Srl ITALY
Sierra Estrella Landfill, Inc. (fka USA of Pinal County) (D) AZ
Signal Capital Sherman Station Inc. DE
Signal RESCO, Inc. DE
Sir-Mas Srl ITALY
Skaraborgs Energi-Och Mijo AB SWEDEN
SMC Smaltimenti Controllati S.p.a. ITALY
Smyrna Landfill, Inc. (fka Chambers Smyrna LF) GA
Sofind Srl ITALY
Solna Transport & Renhallnning AB SWEDEN
Sonoma Marin Waste Management, Inc. CA
Sonoma West Marin Recycling, Inc. CA
South Broward County Resource Recovery Project, Inc. FL
South Broward Holdings Inc. DE
South China WMI Transfer Limited HONG KONG
Southern Alleghenies Landfill, Inc. PA
Altoona Transfer Station
American Recycling
Southern Plains Landfill, Inc. OK
Southern Services of TN, L.L.C. TN
Southern Services of TN, L.P. (50/50 w/Sanifill) TN
Southern Waste Services, L.L.C. DE
Specialized Recycling Technologies NJ
Spruce Ridge Landfill, Inc. MN
Spruce Ridge, Inc. MN
Star Sanitation Services, Inc. AK
Stockton Scavengers Association CA
Storey County Sanitation, Inc. NV
Strawser Disposal Services, Inc. PA
Suffolk Waste Systems, Inc. NY
Summit Environmental Group, Inc. PA
Summit Transport Group, Inc. PA
Sun Waste Alternatives, Inc. CA
Super Kwik, Inc. PA
Svensk Avfallskonvertering AB SWEDEN
Swindell-Dressler Energy Supply Company DE
Swindell-Dressler Leasing Company DE
Sylvan & Qvibelius AB SWEDEN
Sylvans Kemiteknik AB SWEDEN
T. R. Walters Investments, Inc. CA
Tactical Management, Inc. NJ
Techim S.r.1. ITALY
The H. Sienknecht Company TN
The Rust Engineering Company of Michigan MI
The Woodlands of Van Buren, Inc. DE
Thoroughbred Leasing, Inc. PA
TMS Recycling, Inc. NV
Tonitown Landfill, L.L.C. DE
Town & Country Refuse, Inc. FL
Port-O-Let
Tra. S.E. s.p.a. ITALY
Trade & Domestic Ltd. NEW ZEALAND
Trade Domestic (1997) Ltd. NEW ZEALAND
Trail Ridge Landfill, Inc. FL
Transamerican Environmental, Inc. FL
Transamerican Waste Central Landfill, Inc. DE
TransAmerican Waste Industries of Alabama, Inc. AL
Transamerican Waste Industries of Ohio, Inc. DE
Transamerican Waste Industries of Southeast, Inc. DE
Transamerican Waste Industries, Inc. DE
Transamerican Waste of Houston, Inc. TX
Transmetro SA ARGENTINA
Transportbedrijf Van Bliet B.V. NETHERLANDS
Transpsro, Inc. NJ
TransWaste, Inc. LA
Trash Hunters of Tunica, Inc. MS
Trash Hunters, Inc. MS
Trepic SA ARGENTINA
Tri-County Sanitary Landfill, L.L.C. DE
Tri-State Recycling & Fibers, Inc. NJ
TVG Transport u. Verwertungsgesellschaft GERMANY
Twin City Sanitation, Inc. MN
Tyneside Waste Paper Co Ltd. UNITED KINGDOM
UK Waste Management Limited UNITED KINGDOM
Ulster County Roll-Offs, Inc. NY
Ulster Sanitation, Inc. NY
United Waste Systems Leasing, Inc. MI
United Waste Systems of Gardner, Inc. MA
United Waste Systems of Iowa, Inc. IA
United Waste Systems of Maine, Inc. DE
United Waste Systems of Minneapolis, Inc. MN
United Waste Systems of Minnesota, Inc. MN
Bellaire Sanitation
Gallagher's Service
J.J. Young Rubbish
Lake Sanitation
Mike's Disposal and Recycling Service
UWS
UWT
United Waste Systems of Onaway, Inc. MI
United Waste Systems of the Eastern UP, Inc. MI
United Waste Systems of Trinity County, Inc. CA
United Waste Systems, Inc. (MI) MI
United Waste Systems, Inc. (MN) MN
Mike's Disposal & Recycling Service
United Waste Transfer, Inc. MN
Universal Assurance Corporation VT
USA Crinc, Inc. DE
USA Landfills of Nevada, Inc. NV
USA South Hills Landfill, Inc. PA
USA Valley Facility, Inc. DE
USA Waste Arizona Landfill, Inc. (fka Sanifill of AZ) DE
USA Waste Geneva Landfill, Inc. (fka Sanifill of OH) OH
USA Waste of Ashtabula
USA Waste Hauling of Philadelphia, Inc. DE
USA Waste Industrial Services, Inc. TX
USA Environmental Services
USA Waste Landfill Operations and Transfer, Inc. (fka Sanifill...) TX
USA Waste- Management Resources, L.L.C. NY
USA Waste of Alaska, Inc. DE
USA Waste of California, Inc. DE
USA Waste of Connecticut, Inc. DE
USA Waste of DC, Inc. (fka LG Industries, Inc.) DC
USA Waste of Illinois, Inc. (fka USA Illinois Newco) IL
USA Waste of Kentucky, L.L.C. DE
USA Waste of Maryland, Inc. (fka Sanifill of MD) MD
A.R.D. Equipment, Inc.
ARD Equipment Leasing Co., L.L.C.
Debris Disposers, Ltd.
Lowery's Trash Removal & Services
USA Waste of Massachusetts, Inc. MA
Westcott Disposal
USA Waste of Michigan, Inc. (fka Phillips Env. (MI)) MI
USA Waste of Minnesota, Inc. (fka Sanifill of MN Hauling) MN
Kato Sanitation.Northwest Valley
Meeker County Transfer Station
West Side Hauling
USA Waste of Mississippi, Inc. (fka Chambers WS of MS) MS
USA Waste of Montana, Inc. (fka Rozel Corp.) MT
USA Waste of Nevada, Inc. DE
USA Waste of New Jersey, Inc. (fka Chambers WS of NJ) NJ
Atlantic City Hauling
Bergen County Transfer Station
Burlington County Landfill
USA Waste of New York City, Inc DE
Marshall's Refuse, Inc.
North Hempstead Transfer
USA Waste of Ohio, Inc. OH
Johnson Disposal
Johnson Disposal Transfer & Recycling Facility
Mound Transfer Station
Northern Ohio Waste Systems
Reliable Sanitation
Sanitary Commercial Services
USA Waste of Oregon, Inc. OR
Alpine Disposal & Recycling
Energy Reclamation
Forest Grove Transfer Station
Klamath Disposal
Metropolitan Disposal & Recycling
Mt. Hood Refuse
Sandy Transfer Station
USA Waste of Pennsylvania, Inc. PA
Helmick's Sanitation and General Hauling
Kittinning Transfer Station
LeHigh Hauling
Mainline Sanitation
Tri-Valley Recycling
Tri-Valley Waste Systems
USA Waste of Harrisburg
USA Waste of Rhode Island, Inc. (fka Chambers WS of RI) DE
USA Waste of Tennessee, Inc. (fka Chambers of TN) TN
Nashville Hauling
Nashville Transfer
USA Waste of Texas Landfills, Inc. DE
USA Waste of Virginia Landfills, Inc. (fka Sanifill of VA) DE
Bethel Landfill
Bushrod Disposal Service
James City County Transfer
Qualla Road Landfill
USA Waste of Virginia, Inc. (fka Chambers Devlp of VA) VA
USA Waste of West Virginia, Inc. (fka Chambers of WVA) WV
USA Waste Recycling of New Jersey, Inc. (fka Safety Recycling) NJ
Safety Recycling
USA Waste Services North Carolina Landfills, Inc. DE
Anson Road Landfill
Coble Road Landfill
USA Waste Services of Nevada, Inc. NV
USA Waste Services of NYC, Inc. DE
USA Waste Services of Western Illinois, Inc. IL
USA Waste Services-Hickory Hills, L.L.C. DE
USA Waste Transfer of New Jersey, Inc. (fka Ellesor) NJ
USA Waste Transfer of Philadelphia, Inc. PA
UWS Barre, Inc. MA
UWS of Rhode Island, Inc. RI
Truk-Away of R.I.
UWS Transport, Inc. DE
Container Service
Waste Control
Wasteco
V&W Investments, Inc. CA
VAI VA Projekt AS SWEDEN
Valdenza Srl ITALY
Valley Garbage Service, Inc. WA
Van Len Recycling B.V. NETHERLANDS
Van Loenen Millieu B.V. NETHERLANDS
Van Loenen Transport en Verhuur B.V. NETHERLANDS
Vanerborgs Stadbudsbyra AB SWEDEN
VAR Projekt AS SWEDEN
VE-Part S.r.1. ITALY
Vern's Refuse Service, Inc. ND
Vinton county Sanitary Facility, Inc. DE
Vliko B.V. NETHERLANDS
W. van Loenen Beheer B.V. NETHERLANDS
W/W Risk Management, Inc. DE
Wallkill Recyclable Products, Inc. DE
Wallkill/Mid-Hudson Development Co., L.L.C. NY
Walters and Vann, Inc. CA
Winton Disposal
Warner Company DE
Warner West
Warner East
Warren Waste Transfer, Inc. MI
Wasco Landfill, Inc. DE
Washington Waste Hauling & Recycling, Inc. DE
Mountain Group-Northwest Office
Port-O-Let
Recycle America
Valley Topsoil
Waste Management-Northwest
Waste Management of Ellensburg
Waste Management of Greater Wenatchee
Waste Management of Kennewick
Waste Management of Seattle
Waste Management of Spokane
Waste Management of Yakima
Waste Management-SnoKing
Waste Management-Rainier
WMI Services
Washington Waste Systems, Inc. WA
Wasilla Refuse, Inc. AK
Wass Entreprenad AB SWEDEN
Waste Away Group, Inc. AL
Environmental Waste Systems
LaGrange Transfer Station
Montgomery Transfer Station
Phenix City Transfer
Springhill Landfill
Waste Management of Alabama- Central
Waste Management of Alabama- East
Waste Management of Alabama- North
Waste Management of Alabama- South
Waste Clearance (Holdings) Limited UNITED KINGDOM
Waste Control Systems, Inc. MN
Waste Management (Auckland) Ltd NEW ZEALAND
Waste Management (Land) Limited UNITED KINGDOM
Waste Management (Rock Common) Limited UNITED KINGDOM
Waste Management (Roxby) Limited UNITED KINGDOM
Waste Management (UK) Holdings Ltd. UNITED KINGDOM
Waste Management (W.M.) Israel Limited ISRAEL
Waste Management Asia B.V. NETHERLANDS
Waste Management Austria mbH AUSTRIA
Waste Management Collection and Recycling, Inc. CA
American Waste Systems
Empire Waste Management
Great Western Reclamation
Recycle America
SAWDCO Collection
Sunset Environment
Valley Waste Management
Waste Management of Inland Valley
Waste Management of Sacramento
Waste Management of San Gabriel/Pomona Valley
Waste Management of Santa Cruz County
Waste Management of the Central Valley
Waste Management of Woodland
Waste Management Czechoslovakia s.r.o. CZECHOSLOVAKIA
Waste Management de Mexico, S.A. de C.V. MEXICO
Waste Management Denmark A/S DENMARK
Waste Management Development B.V. NETHERLANDS
Waste Management Disposal Services of Arizona, Inc. DE
Waste Management Disposal Services of Colorado, Inc. CO
Central Weld Sanitary Landfill
Colorado Springs Recycling and Disposal Facility
County Line Recycling and Disposal Facility
Denver/Arapahoe Disposal Site
East Weld Sanitary Landfill
North Weld Sanitary Landfill
Waste Management of Colorado- Landfill Division
Waste Management Disposal Services of Maine, Inc. ME
Waste Management Disposal Services of Maine- Crossroads
Waste Management Disposal Services of Maryland, Inc. MD
Sandy Hill
Waste Management Disposal Services of Massachusetts, Inc. MA
Waste Management Disposal Services of Oregon, Inc. DE
Columbia Ridge Landfill and Recycling Center
Oregon Waste Systems
Waste Management Disposal Services of Pennsylvania, Inc. PA
Burlington County Resource Recovery Facilities Complex
G.R.O.W.S. Landfill
Meadowlands Baler Facility
Meadowland Recycling and Disposal Facility
Northwest Sanitary Landfill
Pottstown Landfill and Recycling Center
Waste Management Disposal Services of Virginia, Inc. DE
Middle Peninsula Landfill and Recycling Facility
Waste Management Disposal Services of Washington, Inc. DE
Greater Wenatchee Regional Landfill and Recycling Center
Waste Management of Washington
Waste Management Do Brasil, Ltda BRAZIL
Waste Management Environmental Services B.V. NETHERLANDS
Waste Management Federal Services of Colorado, Inc. DE
Waste Management Federal Services of Hanford, Inc. DE
Waste Management Federal Services of Idaho, Inc. DE
Waste Management Federal Services, Inc. DE
Waste Management Financing Corp. DE
Waste Management Geotech, Inc. DE
Waste Management GmbH & Co. MVA Hamm oHG GERMANY
Waste Management Greece AAE GREECE
Waste Management Holdings, Inc. (f/k/a Waste Management, Inc.) DE
Waste Management Inc., of Florida FL
Atlantic Waste Management
Broward Disposal
Central Disposal
Environmental Waste Systems
Florida Environmental Waste
Florida Disposal
Florida Resource Management
Gulf Coast Recycling and Disposal Facility
Hillsborough Heights Recycling and Disposal Facility
Medly Landfill & Recycling Center
Rubbish Gobbler
Southeast recycling and Disposal Facility
Southern Sanitation Service
South Florida Service Center
United Sanitation Recycling and Disposal Facility
Waste Management of Bay County
Waste Management of Collier County
Waste Management of Dade County
Waste Management of Monroe County
Waste Management of Pasco County
Waste Management of Tampa
Waste Management Industrial Services, Inc. DE
Waste Management International JAPAN
Waste Management International SWITZERLAND
Waste Management International Services Limited UNITED KINGDOM
Waste Management International, Inc. DE
Waste Management International, Ltd. BERMUDA
Waste Management Italia S.r.1. ITALY
Waste Management Ltd. UNITED KINGDOM
Waste Management N.Z. Ltd. NEW ZEALAND
Waste Management Nederland B.V. NETHERLANDS
Waste Management of Alameda County, Inc. CA
Altamont Landfill and Resource Recovery Facility
Central Division
Davis Street Station for Material Recovery and Transfer
East Bay Disposal Co.
Livermore Dublin Disposal
Northern Division
Recycle America of Northern California
Southern Division
Sunnyvale Recycling and Disposal Facility
Tri-Cities Recycling and Disposal Facility
Waste Management of Arizona, Inc. CA
Asset Recovery Group
Butterfield Station Recycling and Disposal Facility
Industrial Services Division
Sky Harbor regional Transfer & Recycling Center
27th Avenue Recycling and Disposal Facility
Waste Management of Northern Arizona
Waste Management of Phoenix - North
Waste Management of Phoenix - Recycle America
Waste Management of Phoenix - South
Waste Management of Tucson
Waste Management of Tucson - Recycle America
Waste Management of Verde Valley
WMI Services- Phoenix
Waste Management of Arkansas, Inc. DE
Brushy Island Recycling and Disposal Facility
Jefferson County Recycling and Disposal Facility
Shannon Road Recycling and Disposal Facility
Union County Recycling and Disposal Facility
Waste Management of Arkansas North
Waste Management of Arkansas South
Waste Management of California, Inc. CA
Kirby Canyon recycling and Disposal Facility
Lancaster Recycling and Disposal Facility
Simi Valley Recycling and Disposal Facility
Universal Refuse Removal of El Cajon
Waste Management of Fresno County
Waste Management of Lancaster
Waste Management of Los Angeles
Waste Management of Los Angeles - South
Waste Management of North County
Waste Management of San Diego
Waste Management of San Fernando Valley
Waste Management of Santa Clara County
Waste Management of the Desert
WMI Services
Waste Management of Carolinas, Inc. NC
Piedmont Landfill and Recycling Center
Waste Management of Asheville
Waste Management of Carolinas
Waste Management of Central Carolina
Waste Management of Eastern Carolina
Waste Management of the Piedmont
Waste Management of Raleigh/Durham
Waste Management of Wilmington
Waste Management of the Triad
Waste Management of Central Florida, Inc. FL
Aluchua Waste Management
Waste Management of Colorado, Inc. CO
Canon City Disposal and Recycling
Colorado Springs Transfer Station
Englewood Transfer Station
Port-O-Let
Waste Management of Aurora
Waste Management of Colorado - Aurora Facility
Waste Management of Colorado - North Facility
Waste Management of Colorado - Recycle Facility
Waste Management of Colorado - South Facility
Waste Management of Colorado Springs-Recycle America
Facility
Waste Management of Denver
Waste Management of Denver- Recycle America
Processing Facility
Waste Management of Northern Colorado
Waste Management of Pueblo
Waste Management of the Rockies
WMI Medical Services
Waste Management of Delaware, Inc. DE
Waste Management of Delaware- Wilmington
Waste Management of Delmarva
Waste Management of Five Oaks Recycling and Disposal, Inc. DE
Waste Management of Florida Holding Co, Inc. DE
Waste Management of Georgia, Inc. GA
Live Oak Landfill
Superior Sanitation Landfill
Waste Management of Savannah
Waste Management of the Tennessee Valley
Waste Management of Grass Valley, Inc. DE
Waste Management of Hawaii, Inc. HI
Waimanalo Gilch Recycling and Disposal Facility
West Hawaii Landfill
Waste Management of Idaho, Inc. ID
Waste Management of Illinois, Inc. DE
Banner/Western Disposal Service
Chain of Rocks Recycling and Disposal Facility
CID
DeKalb County Recycling and Disposal Facility
Durbin Paper Stock Company
Five Oaks Recycling and Disposal Facility
Greene Valley Recycling and Disposal Facility
Kankakee recycling and Disposal Facility
Laraway Recycling and Disposal Facility
McLean County Disposal and recycling Services
Milam Recycling and Disposal Facility
Prairie Hill Recycling and Disposal Facility
Settler's Hill recycling and Disposal Facility
Tazewell Recycling and Disposal Facility
TCD Services
United Waste Systems
Waste Management- Metro
Waste Management- North
Waste Management- Northwest
Waste Management- West
Waste Management of Metro East
Waste Management of Peoria
Waste Management of the South Suburbs
Wheatland Prairie Recycling and Disposal Facility
Woodland Recycling and Disposal Facility
Waste Management of Indiana Holdings One, Inc. DE
Waste Management of Indiana Holdings Two, Inc. DE
Waste Management of Indiana LLC DE
Deercroft Recycling and Disposal Facility
Glenwood Ridge Recycling and Disposal Facility
Oak Ridge recycling and Disposal Facility
Prairie View recycling and Disposal Facility
Superior Waste Systems
Twin Bridges Recycling and Disposal Facility
Waste Management of Central Indiana
Waste Management of Evansville
Waste Management of Fort Wayne
Waste Management of Indianapolis
Waste Management of Indianapolis-Hamilton County
Transfer
Waste Management of Lafayette
Waste Management of Muncie
Waste Management of Northwest Indiana
Waste Management of Warsaw
Wheeler Recycling and Disposal Facility
Waste Management of Iowa, Inc. IA
Solid Waste Systems
Waste Management of Kansas, Inc. KS
Forest View recycling and Disposal Facility
Rolling Meadows recycling & Disposal facility
Solid Waste Systems
Topeka Waste Systems
Waste Management of Wichita
Waste Management - Refuse Control
Waste Management of Kentucky Holdings, Inc. DE
Waste Management of Kentucky LLC DE
Blue Ridge Recycling and Disposal Facility
Kramer Lane Recycling and Disposal Facility
Lexington recycling and Disposal Facility
Outer Loop recycling and Disposal Facility
Waste Management of Kentucky - Gray Disposal
Waste Management of Kentucky - Lexington
Waste Management of Kentucky - Louisville
Waste Management of Kentucky - Madison Disposal
Waste Management of Kentucky - Stevens Dispos-All
Service
Waste Management of Leon County, Inc. FL
Waste Management of Louisiana Holdings One, Inc. DE
Waste Management of Louisiana Holdings Two, Inc. DE
Waste Management of Louisiana LLC DE
Acadiana Recycling and Disposal Facility
Acadia Parish Sanitary Landfill
Alexandria Recycling and Disposal Facility
American Waste and Pollution Control-Algiers Residential
American Waste and Pollution Control- Eastern New
Orleans Residential
American Waste and Pollution Control- Kelvin Recycling
and Disposal Facility
American Waste and Pollution Control- St. Bernard Parish
Residential
American Waste and Pollution Control- Slidell
American Waste and Pollution Control- West Jefferson
Residential
Jefferson Davis Recycling and Disposal Facility
Kelvin Recycling and Disposal Facility
Magnolia Recycling and Disposal Facility
Pelican Recycling and Disposal Facility
Pelican State Environmental Services
Waste Management of Acadiana
Waste Management of Baton Rouge
Waste Management of the Bayous
Waste Management of Central Louisiana
Waste Management of Lake Charles
Waste Management of New Orleans
Waste Management of Northeast Louisiana
Waste Management of Northwest Louisiana
Waste Management of the Pines
Waste Management of St. Landry
Waste Management of St. Tammany
Waste Management of South Louisiana
Woodside Recycling and Disposal Facility
Waste Management of Maine, Inc. ME
Waste Management of Maine- Portland
Waste Management of Malaysia Sdn Bhd MALAYSIA
Waste Management of Maryland, Inc. MD
Mobile Offices of Maryland
Waste Management of Cambridge
Waste Management of Greater Washington
Waste Management of Maryland, Baltimore
Waste Management of Southern Maryland
WMI Medical Services
WMI Services of Maryland
Waste Management of Massachusetts, Inc. MA
Somerville Transfer Station
Waste Management- Container Services
Waste Management of Boston- North
Waste Management of Central Massachusetts
Waste Management of Massachusetts- Gloucester
Waste Management of Massachusetts- South Shore
Waste Management of Michigan, Inc. MI
Autumn Hills Recycling and Disposal Facility
Cedar Ridge Recycling and Disposal Facility
Eagle Valley Recycling and Disposal Facility
Efficient Sanitation
Northern Oaks Recycling and Disposal Facility
Recycle America- Metro Detroit
Valley Rubbish
Venice Park recycling and Disposal Facility
Waste Management of Detroit- Residential
Waste Management - Metro Detroit
Waste Management of Michigan- Alma Transfer and
Recycling Facility
Waste Management of Michigan- Area Disposal
Waste Management of Michigan- Burr Oak
Waste Management of Michigan- Central
Waste Management of Michigan- Detroit East Recycling
Transfer Facility
Waste Management of Michigan- Detroit Transfer and
Recycling Facility
Waste Management of Michigan- Detroit MRF/Transfer
Waste Management of Michigan- Dowagiac Transfer and
Recycling Facility
Waste Management of Michigan- Holland
Waste Management of Michigan- Holland Transfer and
Recycling Facility
Waste Management of Michigan- Mideast
Waste Management of Michigan- Mideast/Port Huron
Waste Management of Michigan- Midwest
Waste Management of Michigan- Northern
Waste Management of Michigan- Recycle
America/Grand Rapids
Waste Management of Michigan- Southwest
Waste Management of Michigan- Western
Westside Recycling and Disposal Facility
WMI Services- Eastern Michigan/ Northwest Ohio
Woodland Meadows Recycling and Disposal Facility
Waste Management of Minnesota, Inc. MN
Anoka Recycling and Disposal Facility
Dietman Sanitation & Recycling
Northern Waste Systems
Recycle America of Minnesota
Sun Prairie Recycling and Disposal Facility
Waste Management- Blaine
Waste Management- LeSeur
Waste Management- Rochester
Waste Management- Savage
Waste Management- St. Cloud
Waste Management of Hastings
WMI Services of Minnesota
Waste Management of Mississippi, Inc. MS
Pecan Grove Landfill
Pine Ridge Landfill
Plantation Oaks Landfill
Prairie Bluff Landfill
Waste Management of Central Mississippi- Jackson
Waste Management of Central Mississippi- Kosciusko
Waste Management of Central Mississippi- Meridian
Waste Management of Central Mississippi- Vicksburg
Waste Management of North Mississippi-Clarksdale
Waste Management of North Mississippi- Columbus
Waste Management of North Mississippi- Corinth
Waste Management of North Mississippi- Greenville
Waste Management of North Mississippi- Grenada
Waste Management of North Mississippi- Tupelo
Waste Management of South Mississippi- Gulfport
Waste Management of South Mississippi- McComb
Waste Management of South Mississippi- Natchez
Waste Management of South Mississippi- Pine Belt
Waste Management of Missouri, Inc. DE
Black Oak and Disposal Facility
Environmental Industries
Kahle Recycling and Disposal facility
Meramec Hauling
Pezold Hauling
Rumble Recycling and Disposal Facility
Waste Management of Kansas City
Waste Management of Springfield
Waste Management fo St. Loius
Waste Management of the Ozarks
Waste Management of Montana, Inc DE
Waste Management of Great Falls
Waste Management of Nebraska, Inc. DE
Douglas County Recycling and Disposal Facility
Waste Management of New Hampshire, Inc. CT
Turnkey Recycling and Environmental Enterprises
Waste Management of New Hampshire- Londonberry
Waste Management of New Hampshire- New Hampton
Waste Management of New Hampshire- Rochester
Waste Management of New Hampshire- Peterborough
Waste Management of New Jersey, Inc. DE
Avenue A Transfer & Recycling Center
Middle Martee Landfill
Recycle America
Waste Management of Camden
Waste Management of New Mexico, Inc. NM
Environmental Waste Equipment Company
Hobbs Recycling and Disposal Facility
Landfill Hauling Systems
Landfill Systems
R&B Rubbish Removal
Rio Rancho Recycling and Disposal Facility
San Juan Recycling and Disposal Facility
Seay Brothers Rolloff
Tijeras Disposal
United Waste Systems
Waste Management of Albuquerque-Recycle America
Processing Facility
Waste Management of Four Corners
Waste Management of Southeast New Mexico
Waste Management of the Southwest
Waste Management of New York, L.L.C. DE
High Acres Landfill and Recycling Facility
Waste Management of Eastern New York
Waste Management of Hudson Valley
Waste Management of New York-Albion
Waste Management of New York- Buffalo
Waste Management of New York- Rochester
Waste Management of New York- Syracuse
Waste Management of New York- Utica
Waste Management of Southwestern New York
WMI Services of New York
Waste Management of North America, Inc. IL
Waste Management of North Dakota, Inc. DE
Northern Waste Systems
Waste Management of Ohio, Inc. DE
Countywide Recycling and Disposal Facility
ELDA Recycling and Disposal Facility
Evergreen Recycling and Disposal Facility
Herrick Valley Recycling and Disposal Facility
Lake County Recycling and Disposal Facility
Pinnacle Road Recycling and Disposal Facility
Seneca East Recycling and Disposal Facility
Stony Hollow Recycling and Disposal facility
Suburban Recycling and Disposal Facility
Waste Management of Ohio- Akron
Waste Management of Ohio- Blaylock
Waste Management of Ohio- Cleveland Transfer and
Recycling Facility
Waste Management of Ohio- Cleveland West
Waste Management of Ohio- Columbus
Waste Management of Ohio- Columbus Transfer and
Recycling Facility
Waste Management of Ohio- Findlay
Waste Management of Ohio- IWD
Waste Management of Ohio- Koogler
Waste Management of Ohio- Lima
Waste Management of Ohio- Lima Transfer and Recycling
Facility
Waste Management of Ohio- M&M Sanitation
Waste Management of Ohio- Newark
Waste Management of Ohio- Northwest
Waste Management of Ohio- Recycle America/Toledo
Waste Management of Ohio- S.E.M.
Waste Management of Ohio- Shelby County Transfer
Waste Management of Ohio- Suburban Sanitation Service
Waste Management of Ohio- Western Reserve
Waste Management of Ohio- Youngstown
WMI Services- Ohio
Waste Management of Oklahoma, Inc. OK
East Oak Recycling and Disposal Facility
Muskogee recycling and Disposal Facility
Quarry Recycling and Disposal Facility
Waste Management of Oklahoma City
Waste Management of Tulsa
Waste Management of Oregon, Inc. OR
Metro South Transfer Station
Port-O-Let
Waste Management of Vancouver U.S.A.
Zero Garbage
Waste Management of Pennsylvania, Inc. PA
Alderfer & Frank
Lake View Landfill (Northern)
Mid-Atlantic Recycling and Distribution Center
Milton Grove Demolition and Tire Recycling
Philadelphia Transfer and Recycling Station
Pottsville Transfer Station
Recycle America
River Road Landfill
Steel Valley Transfer Station
The Forge Recycling and Resource Recovery Center
Tully Town Resource Recovery Facility
Waste Automation
Waste Management - Allentown
Waste Management- Dixon Recycling
Waste Management of Camp Hill
Waste Management of Delaware Valley- North
Waste Management of Delaware Valley- South
Waste Management of Erie
Waste Management of Greater Lancaster
Waste Management of Greencastle
Waste Management of Greenville
Waste Management of Indian Valley
Waste Management of Laurel Valley
Waste Management of Northeast Pennsylvania
Waste Management of Pennsylvania- Hauling
Waste Management of Pittsburgh
Waste Management of Pottstown
Waste Management of Wilkinsburg
WMI Medical Services of New Jersey
WMI Medical Services of New York
WMI Medical Services of Pennsylvania
WMI Medical Services of West Virginia
Waste Management of Rhode Island, Inc. DE
Waste Management of Rhode Island- Newport
Waste Management of South Carolina, Inc. SC
Charleston Landfill
Hickory Hill Sanitary Landfill
Palmetto Landfill
Sandy Pines Landfill
Waste Management of South Carolina
Waste Management of the Low Country
Waste Management of South Dakota, Inc. SD
Waste Management of Sioux Falls
Waste Management of the Black Hills
Waste Management of Texas, Inc. TX
All Waste Paper Recycling
Atascosita Recycling and Disposal Facility
Ausitn Community Disposal Co.
Bluebonnet Recycling and Disposal Facility
Centex Waste Management
Coastal Plains Recycling and Disposal Facility
Comal County Recycling and Disposal Facility
Covell Gardens Landfill
DFW Recycling and Disposal Facility
Fogle Garbage Service
Garbage Gobbler
Hillside recycling and Disposal Facility
Kingwood Garbage Service
Lacy Lakeview Recycling and Disposal Facility
Longhorn Disposal
Northwest Transfer Station
Oak Hill Recycling and Disposal Facility
Pecan Prairie Recycling and Disposal Facility
Recycle America- Dallas Bulk grade Division
Recycle America- Dallas High Grade Division
S&B trucking & Sanitation
Security Landfill
Skyline Recycling and Disposal Facility
Texas Waste Management
Waste Management of Fort Worth Recycling and Disposal
Facility
Waste Management - Golden Triangle
Waste Management of Dallas- East
Waste Management of Dallas Recycle America Processing
Facility
Waste Management of Dallas- West
Waste Management of East Texas
Waste Management of Fort Worth
Waste Management of Fort Worth Recycling and Disposal
Facility
Waste Management of Houston
Waste Management of Northeast Texas
Waste Management of Southeast Texas
Waste Management of Southeast Texas- Angleton
Waste Management of Southeast Texas- Dickinson
Waste Management of South Texas
Waste Management of West Texas
Westside Recycling and Disposal Facility
Williamson County Recycling and Disposal Facility
WMI Services of Dallas
WMI Services of North Texas
WMI Services of Texas
Waste Management of Utah, Inc. UT
Waste Management of Northern Utah
Reliable Waste Systems
Waste Management of Salt Lake
Waste Management of Virginia, Inc. VA
Manassas Transfer Station
Waste Management of Hampton Roads
Waste Management of Northern Virginia
Waste Management of Northern Virginia- Crown Disposal
Waste Management of the Outer Banks
Waste Management of Richmond/Fiber Fuels
Waste Management of Richmond Port-O-Let
Waste Management of Richmond Recycle America
Waste Management of Virginia- Blue Ridge
WMI Services of Hampton Roads
WMI Services of Virginia
Waste Management of West Virginia, Inc. DE
Waste Management of Shenandoah Valley
Waste Management of Wisconsin, Inc. WI
Best Disposal
Mallard Ridge Recycling and Disposal Facility
Metro/Stone Ridge Recycling and Disposal Facility
Orchard Ridge Recycling and Disposal Facility
Parkview Recycling and Disposal Facility
Pheasant Run Recycling and Disposal Facility
Ridgeview Recycling and Disposal Facility
Timberline Trail Recycling and Disposal Facility
UWS Transportation
Valley Trail Recycling and Disposal Facility
Waste Management- Northeast Wisconsin
Waste Management of Fox Valley
Waste Management of La Crosse
Waste Management of Madison
Waste Management of Milwaukee
Waste Management of Muskego
Waste Management of Rockford
Waste Management of Wisconsin- East
Waste Management Southwest
Waste Management of St. Croix Valley
Waste Management - Tri County
WMI Services of Wisconsin
Waste Management of Wyoming, Inc. DE
Waste Management Operations Ireland Ltd. UNITED KINGDOM
Waste Management Paper Recycling, Inc. DE
Waste Management Paper Stock Company, Inc. DE
Southern Sanitation Southeast - Recycle America
Waste Management of Florida- Recycle America
Waste Management of Sarasota- Recycle America
Waste Management of Tampa- Recycle America
Waste Management Partners, Inc. DE
American Refuse Systems, Inc.
Ocmulgee Disposal, Inc.
Waste Management Partnership Holdings, Inc. DE
Waste Management Plastic Products, Inc. DE
Waste Management Project Services B.V. NETHERLANDS
Waste Management Queensland Pty Ltd. AUSTRALIA
Waste Management Queensland Pty. Limited QUEENSLAND
Waste Management Recycling & Services Ltd HONG KONG
Waste Management Remediation Services B.V. NETHERLANDS
Waste Management Siam Holdings Limited THAILAND
Waste Management Siam Limited THAILAND
Waste Management South America B.V. NETHERLANDS
Waste Management Stendahl GmbH GERMANY
Waste Management Technology Center, Inc. DE
Waste Management Thailand B.V. NETHERLANDS
Waste Management, Inc. (f/k/a USA Waste Services, Inc.) DE
Waste Management, Inc. of Tennessee TN
Chestnut Ridge Landfill and Recycling Center
Waste Management of Tennessee - Clarksville
Waste Management of Tennessee - Jackson
Waste Management of Tennessee - Knoxville
Waste Management of Tennessee - Memphis
Waste Management of Tennessee - Nashville
West Camden Sanitary Landfill
Waste Resource Technologies, Inc. CA
Waste Resources of Tennessee, Inc. TN
Waste Services of South Florida, Inc. FL
Waste-X Services, Inc. FL
Wastronics, Inc. AK
Water Investments, Inc. DE
LJ Water Partners, L.P. (49% ownership by Water Investment,
Inc.)
Waterblast Ltd. UNITED KINGDOM
Webster Parish Landfill, L.L.C. DE
WESI Baltimore Inc. DE
WESI Capital Inc. DE
WESI Peekskill Inc. DE
WESI Westchester Inc. DE
Wessex Waste Gas to Energy Ltd. UNITED KINGDOM
Wessex Waste Management Limited UNITED KINGDOM
West Milford Haulage, Inc. NJ
Westchester Resco Company, L.P.
Western El Dorado Recovery Systems, Inc. CA
Western Land Acquisition, Inc. RI
Western States Waste Systems, Inc. AZ
Western U.P. Landfill, Inc. MI
Western Waste Industries CA
Conroe Industrial Transportation
Conroe Landfill #7
Conroe Landfill Administration
Fresno Transfer Station
Inland Empire
Redondo Beach Recycling
Sunnydale Transfer Station
Western Beaumont Landfill
Western Longmont Landfill
WW/Chino Transfer Station
WW/Conroe Processing Plant
WW/EL Sobrante Landfill
Nassau Landfill
WW/Southern California Processing
Westley Trading Ltd. UNITED KINGDOM
Wheelabrator Air Pollution Control Inc. DE
Wheelabrator Canada Inc. ONTARIO
Wheelabrator Carteret Inc. DE
Wheelabrator Cedar Creek Inc. DE
Wheelabrator Clean Water New Jersey Inc. DE
Wheelabrator Coal Services Company DE
Wheelabrator Concord Inc. DE
Wheelabrator Connecticut Inc. DE
Wheelabrator Culm Services Inc. DE
Wheelabrator Energy Leasing Company DE
Wheelabrator Energy Systems Inc. DE
Wheelabrator Environmental Systems Inc. DE
Wheelabrator Falls Inc. DE
Wheelabrator Frackville Energy Company Inc. DE
Wheelabrator Frackville Properties Inc. DE
Wheelabrator Fuel Services Inc. DE
Wheelabrator Fuels Service Corporation DE
Wheelabrator Gloucester Inc. DE
Wheelabrator Guam Inc. DE
Wheelabrator Hudson Energy Company Inc. DE
Wheelabrator Land Resources Inc. DE
Wheelabrator Lassen Inc. DE
Wheelabrator Martell Inc.
Wheelabrator McKay Bay Inc. FL
Wheelabrator Millbury Inc. DE
Wheelabrator New Hampshire Inc. DE
Wheelabrator New Jersey Inc. DE
Wheelabrator NHC Inc. DE
Wheelabrator North Broward Inc. DE
Wheelabrator North Shore Inc. DE
Wheelabrator Norwalk Energy Company Inc. DE
Wheelabrator Penacook Inc. DE
Wheelabrator Pinellas Inc. DE
Wheelabrator Polk Inc. DE
Wheelabrator Power Marketing Inc. DE
Wheelabrator Putnam Inc. DE
Wheelabrator Ridge Energy Inc. DE
Wheelabrator Saugus Inc. DE
Wheelabrator Shasta Energy Company Inc. DE
Wheelabrator Sherman Station One Inc. DE
Wheelabrator Sherman Station Two Inc. DE
Wheelabrator Shrewsbury Inc. DE
Wheelabrator South Broward Inc. DE
Wheelabrator Spokane Inc. DE
Wheelabrator Technologies Inc. DE
Wheelabrator Water Technologies Baltimore L.L.C. DE
Wheelabrator Water Technologies Canada Inc. DE
Wheelabrator Water Technologies Inc. MD
White Lake Landfill, Inc. MI
Whitefeather Landfill, Inc. DE
Wildcat Refuse, Inc. MD
Williams Disposal Service, Inc. FL
Williams Landfill, L.L.C. DE
Wil-Mar, Inc. CA
WM International Holdings, Inc. DE
WM Norge AS NORWAY
WM Umwelttechnik GmbH GERMANY
WM Ymparistopalvelut OY FINLAND
WMD Bockmann Fritz Ohlig GmbH GERMANY
WMD Just Entsorgung GmbH GERMANY
WMD Knab GmgH GERMANY
WMD Knab Zwischenlager GmbH GERMANY
WMD Knoss & Anthes GmbH GERMANY
WMD Schreiber GmbH GERMANY
WMD Waste Management Deutschland Holding GmbH GERMANY
WMI Medical Services of Ohio, Inc. OH
WMI Medical Services- Dayton
WMI Merger Sub, Inc. DE
WMI Mexico Holdings, Inc. DE
WMI Quebec Inc. QUEBEC
WMI Selbergs AB SWEDEN
WMI Services of Nevada, Inc. NV
WMI Urban Services, Inc. DE
WMI Waste Management of Canada Inc. CANADA
TCL Waste Systems
Waste Management Big Bear Services
Waste Management Fraser Valley
Waste Management Halton/Hamilton
Waste Management Materials Processing- Recycle Canada
Waste Management Materials Processing- Toronto Transfer
Waste Management McLellan Disposal
Waste Management of Oxford/Perth
Waste Management of Calgary
Waste Management of Edmonton
Waste Management of Greater Toronto
Waste Management of Greater Vancouver
Waste Management of Southwestern Ontario
Waste Management of the Okanagan
Waste Management York/Simcoe
West Edmonton Recycling and Disposal Facility
WMI du Quebec
WMI - Hull/Ottawa
WMI Recyclage Quebec
WMI Rive - Sud
WMI Waste Management DuCanada
WMNA Container Recycling, Inc. DE
WMNA Rail-Cycle Sub, Inc. DE
WR Pollard and Son Limited UNITED KINGDOM
Wright General, Inc. AK
WTI China Holdings I, Inc. CAYMAN ISLANDS
WTI China Holdings II Inc. CAYMAN ISLANDS
WTI China One Inc. DE
WTI China Two Inc. DE
WTI International Energy Inc. DE
WTI International Holdings Inc. DE
WTI Qicheng LLC CAYMAN ISLANDS
WTI Rust Holdings Inc. DE
WTI Rust Holdings, Inc. DE
WTI Taicang LLC. CAYMAN ISLANDS
WTI Yingkou LLC. CAYMAN ISLANDS
Yell County Landfill, L.L.C. DE
Zenith/Kremer Material Recovery, Inc. MN
Suburban Recycling Service
Zenith/Kremer Waste Systems, Inc. MN
Cecil Shykes Sanitary Service
Home Town Garbage Service
Kremer Disposal
Kremer Recycling
Suburban Sanitation Service
Zenith Recycling
Zhong Zia Environmental Technology Co. Ltd. HONG KONG
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included or incorporated by reference in this Annual Report on Form 10-K,
into the Company's previously filed Registration Statements on Form S-8
(Registration Nos. 33-43619, 33-72436, 33-84988, 33-84990, 33-59807, 33-61621,
33-61625, 33-61627, 333-02181, 333-08161, 333-14115, 333-14613, 333-34819,
333-51975, 333-64239, 333-70055, 333-59247, 333-56113), previously filed
Registration Statements on Form S-3 (Registration Nos. 333-00097, 333-08573,
333-32471, 333-33889, 333-52197), and previously filed Registration Statements
on Form S-4 (Registration Nos. 333-31979 and 333-32805).
Arthur Andersen LLP
Houston, Texas
March 29, 1999
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Waste Management, Inc. on Form S-3 (File Nos. 333-00097, 333-08573, 333-32471,
333-33889, and 333-52197), on Form S-4 (File Nos. 333-31979 and 333-32805),
and on Form S-8 (File Nos. 33-43619, 33-72436, 33-84988, 33-84990, 33-59807,
33-61621, 33-61625, 33-61627, 333-02181, 333-08161, 333-14115, 333-14613,
333-34819, 333-51975, 333-64239, 333-70055, 333-59247, and 333-56113),
of our report dated March 16, 1998, on our audits of the consolidated financial
statements of USA Waste Services, Inc. as of December 31, 1997, and for the
years ended December 31, 1997 and 1996, which report is included in this Annual
Report on Form 10-K.
PricewaterhouseCoopers LLP
Houston, Texas
March 29, 1999
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WASTE MANAGEMENT, INC. FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
MULTIPLIER: 1,000
PERIOD TYPE
12 MOS
FISCAL YEAR END
DEC 31 1998
PERIOD START
JAN 01 1998
PERIOD END
DEC 31 1998
CASH
86,873
SECURITIES
1,792
RECEIVABLES
2,362,407
ALLOWANCES
116,430
INVENTORY
0
CURRENT ASSETS
3,881,397
PP&E
18,235,813
DEPRECIATION
6,598,074
TOTAL ASSETS
22,715,198
CURRENT LIABILITIES
4,293,666
BONDS
11,114,201
PREFERRED MANDATORY
0
PREFERRED
0
COMMON
6,083
OTHER SE
4,366,413
TOTAL LIABILITY AND EQUITY
22,715,198
SALES
12,703,469
TOTAL REVENUES
12,703,469
CGS
7,383,751
TOTAL COSTS
12,863,858
OTHER EXPENSES
(141,967)
LOSS PROVISION
0
INTEREST EXPENSE
681,457
INCOME PRETAX
(699,879)
INCOME TAX
66,923
INCOME CONTINUING
(766,802)
DISCONTINUED
0
EXTRAORDINARY
(3,900)
CHANGES
0
NET INCOME
(770,702)
EPS PRIMARY
(1.32)
EPS DILUTED
(1.32)
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WASTE MANAGEMENT, INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
RESTATED:
MULTIPLIER: 1,000
PERIOD TYPE
9 MOS
6 MOS
3 MOS
FISCAL YEAR END
DEC 31 1998
DEC 31 1998
DEC 31 1998
PERIOD START
JAN 01 1998
JAN 01 1998
JAN 01 1998
PERIOD END
SEP 30 1998
JUN 30 1998
MAR 31 1998
CASH
179,409
410,083
362,781
SECURITIES
994
1,462
3,053
RECEIVABLES
2,319,027
2,217,370
2,047,533
ALLOWANCES
98,346
100,116
102,682
INVENTORY
0
0
0
CURRENT ASSETS
4,098,242
3,194,590
2,897,298
PP&E
17,345,504
18,342,658
17,396,632
DEPRECIATION
6,298,377
6,020,357
5,616,731
TOTAL ASSETS
22,029,650
22,525,101
21,560,881
CURRENT LIABILITIES
4,427,297
4,442,141
5,048,621
BONDS
9,796,572
9,335,043
9,046,878
PREFERRED MANDATORY
0
0
0
PREFERRED
0
0
0
COMMON
6,054
6,141
6,033
OTHER SE
4,345,467
5,343,752
4,172,374
TOTAL LIABILITY AND EQUITY
22,029,650
22,525,101
21,560,881
SALES
9,464,365
6,220,164
2,969,433
TOTAL REVENUES
9,464,365
6,220,164
2,969,433
CGS
5,583,644
3,713,344
1,801,261
TOTAL COSTS
9,988,614
5,198,669
2,507,167
OTHER EXPENSES
(130,422)
(86,770)
(51,254)
LOSS PROVISION
0
0
0
INTEREST EXPENSE
503,347
329,085
155,531
INCOME PRETAX
(897,174)
779,180
357,989
INCOME TAX
66,887
350,994
158,841
INCOME CONTINUING
(830,287)
428,186
199,148
DISCONTINUED
0
0
0
EXTRAORDINARY
3,900
3,900
0
CHANGES
0
0
0
NET INCOME
(834,187)
424,286
199,148
EPS PRIMARY
(1.44)
0.74
0.35
EPS DILUTED
(1.44)
0.72
0.34
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WASTE MANAGEMENT, INC. FOR THE YEAR ENDED DECEMBER 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
RESTATED:
MULTIPLIER: 1,000
PERIOD TYPE
12 MOS
9 MOS
6 MOS
3 MOS
FISCAL YEAR END
DEC 31 1997
DEC 31 1997
DEC 31 1997
DEC 31 1997
PERIOD START
JAN 01 1997
JAN 01 1997
JAN 01 1997
JAN 01 1997
PERIOD END
DEC 31 1997
SEP 30 1997
JUN 30 1997
MAR 31 1997
CASH
189,942
201,653
510,786
597,241
SECURITIES
59,296
69,362
80,910
631,006
RECEIVABLES
2,066,642
2,041,170
2,018,867
1,945,215
ALLOWANCES
90,164
79,366
70,576
59,899
INVENTORY
0
0
0
0
CURRENT ASSETS
2,839,676
2,937,889
3,349,673
3,810,303
PP&E
16,760,990
17,837,010
17,467,223
16,938,840
DEPRECIATION
5,572,461
5,993,600
5,805,087
5,697,665
TOTAL ASSETS
20,156,424
21,332,276
21,482,619
21,396,873
CURRENT LIABILITIES
4,803,954
3,595,392
3,976,762
4,170,864
BONDS
7,881,949
8,925,132
8,809,762
7,915,134
PREFERRED MANDATORY
0
0
0
0
PREFERRED
0
0
0
0
COMMON
5,987
5,969
5,895
5,812
OTHER SE
3,848,942
5,319,353
5,208,716
5,914,580
TOTAL LIABILITY AND EQUITY
20,156,424
21,332,276
21,482,619
21,396,873
SALES
11,972,498
8,884,939
5,730,556
2,699,541
TOTAL REVENUES
11,972,498
8,884,939
5,730,556
2,699,541
CGS
7,482,273
5,537,598
3,559,970
1,720,129
TOTAL COSTS
12,206,407
7,791,167
4,921,620
2,362,312
OTHER EXPENSES
(126,988)
(75,642)
(85,984)
(126,845)
LOSS PROVISION
0
0
0
0
INTEREST EXPENSE
555,576
406,264
269,027
131,717
INCOME PRETAX
(662,497)
763,150
625,893
332,357
INCOME TAX
363,341
399,103
318,357
161,938
INCOME CONTINUING
(1,025,838)
364,047
307,536
170,419
DISCONTINUED
95,688
8,412
8,208
647
EXTRAORDINARY
6,809
6,293
0
0
CHANGES
1,936
0
0
0
NET INCOME
(938,895)
366,166
315,744
171,066
EPS PRIMARY
(1.68)
0.66
0.57
0.31
EPS DILUTED
(1.68)
0.65
0.56
0.30
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WASTE MANAGEMENT, INC. FOR THE YEAR ENDED DECEMBER 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
Next Section
Previous Section