SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

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

Date of Report (Date of earliest event reported): February 17, 2011

Waste Management, Inc.

(Exact Name of Registrant as Specified in Charter)

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

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

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

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

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

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

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

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

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

 

 

Item 2.02.		Results of Operations and Financial Condition.

     Waste Management, Inc. (the “Company”) issued a press release this morning announcing its financial results for the fourth quarter and full year ended December 31, 2010, a copy of which is attached hereto as Exhibit 99.1. The Company is holding a conference call to discuss these results beginning at 9:00 a.m. Central Time this morning. The call will be webcast live and may be heard by accessing the Investor Relations section of the Company’s website at www.wm.com and selecting “Webcast; Q4 2010 Waste Management Earnings Conference Call.” The call may also be heard by dialing (877) 710-6139 and entering access code 33194439.

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

Item 9.01.		Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1:		Press Release dated February 17, 2011

SIGNATURES

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

Exhibit Index

Exhibit
Number				Description
	99.1			Press Release dated February 17, 2011

Exhibit 99.1

		calculating the Company’s as-adjusted earnings, the income from operations margin improved 220 basis points to 18.6%.(b)
•		Revenues increased by 6.0%, or $181 million, in the fourth quarter and increased by 6.1%, or $724 million, for the full year.
•		Operating expenses were 60.9% of revenue in the fourth quarter of 2010, compared with 62.3% in the prior year period. Adjusted for the items excluded in calculating the Company’s as-adjusted earnings, the Company’s operating expenses were 61.2% of revenue, compared with 62.3% in the prior year period.(b)
•		Selling, general and administrative expenses were 12.4% of revenue in the fourth quarter of 2010, compared with 12.1% in the prior year period. Adjusted for the items excluded in calculating the Company’s as-adjusted earnings, the Company’s selling, general and administrative expenses were 11.5% of revenue, compared with 12.1% in the prior year period.(b)
•		Average recycling commodity prices increased over 36% in the fourth quarter of 2010 compared with the prior year period. This favorable year-over-year impact contributed $0.04 to earnings per diluted share in the fourth quarter of 2010, compared with the prior year period. Average electricity sales prices at the Company’s waste-to-energy plants were essentially flat in the fourth quarter compared to the prior year period.
•		Free cash flow was $263 million in the quarter and $1.2 billion for the full year.(b)
•		Capital expenditures were $367 million in the quarter and $1.1 billion for the full year.
•		The Company returned $208 million to shareholders in the fourth quarter, consisting of $150 million in cash dividends and $58 million in common stock repurchases. For the full year, the Company returned $1.1 billion to shareholders, consisting of $604 million in dividends and $501 million in common stock repurchases.
•		The effective income tax rate in the quarter was approximately 35.1%, due principally to the net favorable impacts of income tax audit settlements and state income tax net operating loss carry-forwards. Adjusted for the items excluded in calculating the Company’s as-adjusted earnings, the effective income tax rate for the fourth quarter of 2010 would have been 36.6%.(b)

Steiner added, “We finished the year with our strongest quarterly pricing performance of 2010, with internal revenue growth from yield of 2.6% for our collection and disposal business. We once again demonstrated our pricing discipline, and we remain committed to pricing of at least 50 to 100 basis points above CPI. As for our volumes, internal revenue growth from volume declined by 1.8% in the fourth quarter of 2010, compared with the prior year period. Volumes were down in the collection line of business, primarily because of the loss of certain residential contracts and severe winter weather. Volumes continue to be strong in our landfill line of business.

“We are proud of our 2010 accomplishments. We continued to produce strong cash flow and continued our strategy of returning cash to our shareholders. In the fourth quarter, we returned $208 million of cash in the form of dividends and common stock repurchases, and for the full year, we returned $1.1 billion.

“For 2011, we expect internal revenue growth from volume to be flat to slightly positive. January volumes were still soft, reflecting the severe winter weather throughout North America, but we expect the remainder of the year to show steady improvement. We expect internal revenue growth from yield in 2011 of approximately 2.0%. The consumer price index has been running close to 1.0%, whereas at this time last year CPI was running above 2.0%. This decrease in the consumer price index will negatively impact pricing on the roughly 40% of our collection business that has annual price adjustments based on a published price index. In 2010, the effect of CPI negatively impacted yield by approximately 70 basis points. But, just as we did in 2010, we expect to overcome the

effect of CPI to produce strong pricing in 2011.

“Based on these yield and volume estimates and other assumptions, we forecast that our full-year 2011 adjusted earnings will be in the range of $2.24 to $2.30 per diluted share. Free cash flow is projected to be in the range of $1.25 billion to $1.35 billion, with capital expenditures of between $1.35 billion and $1.45 billion.^(b)

“The Board of Directors has announced its intent to increase our quarterly dividend by 8%, to $1.36 per share on an annual basis. We expect our dividend payments to total approximately $650 million in 2011, and we expect common stock repurchases of up to $575 million. In 2011 we will continue to make investments to grow our business, and we remain committed to our goals of growing our revenues, expanding our operating margins, increasing our return on invested capital, increasing our free cash flow and returning cash to our shareholders.”

2011 OUTLOOK

The Company also announced the following with regard to its financial outlook for 2011:

	•		2011 adjusted earnings per diluted share are expected to be between $2.24 and $2.30.(b)
	•		Internal revenue growth from yield on the collection and disposal business is expected to be approximately 2.0%, which is in line with the Company’s goal of internal revenue growth from yield being at least 50 to 100 basis points above CPI. Internal revenue growth from volume is expected to be flat to slightly positive, an improvement of over 260 basis points compared with the full year 2010.
	•		Recycling commodity sales prices are expected to have a slight positive impact on earnings per share in 2011, compared with the prior year. Average electricity sales prices in 2011 at the Company’s waste-to-energy operations are expected to have no net impact on earnings per share, compared with the prior year.
	•		The Company’s waste-to-energy operations are expected to have a negative $0.02 impact on fully diluted earnings per share in 2011 compared with 2010, primarily from upgrades at the recently acquired waste-to-energy plant in Virginia.
	•		The Company expects increased labor costs, due primarily to annual merit increases, which will add approximately $65 million to 2011 expenses. The Company is also planning to increase expenses by up to $50 million primarily for information technology upgrades, customer focused growth initiatives, and other initiatives. Interest expense is expected to increase approximately $25 million, principally because of higher fees and rates from the revolving credit facility that was executed in June of 2010.
	•		The full-year 2011 forecast reflects an expected tax rate of approximately 35.7%.
	•		Capital expenditures are expected to be in the range of $1.35 billion to $1.45 billion.
	•		Free cash flow is projected to be in the range of $1.25 billion to $1.35 billion.(b)
	•		The Company expects an annual payment of $1.36 per share in cash dividends over the course of the year, at an approximate cost of $650 million. The Board must separately declare each dividend. The Company also expects to spend up to $575 million on share repurchases. The amount of stock the Company repurchases will depend on a number of items, including any cash it may in the future decide to use to increase its business acquisitions and investments beyond budgeted levels or to accelerate debt repayments.

Steiner concluded, “I expect continued strong performance in 2011 in our core business, despite expected headwinds from workforce wage increases, start-up costs associated

with new cost savings programs, our customer focused growth and information technology initiatives, and upgrades at our recently acquired waste-to-energy facility. The impact of these headwinds, however, should decline as we progress through 2011, and these investments will build a platform to accelerate earnings growth in the future.”

	•		Net cash provided by operating activities
	•		Less, capital expenditures
	•		Plus, proceeds from divestitures of businesses (net of cash divested), and other sales of assets.

The Company’s definition of free cash flow may not be comparable to similarly titled measures presented by other companies, and therefore not subject to comparison.

The quantitative reconciliations of each of the non-GAAP measures presented herein, other than projected earnings per diluted share, to the most comparable GAAP measures are included in the accompanying schedules. Non-GAAP measures should not be considered a substitute for financial measures presented in accordance with GAAP, and investors are urged to take into account GAAP measures as well as non-GAAP measures in evaluating the Company.

The Company’s projected full year 2011 earnings of $2.24 to $2.30 per diluted share are not GAAP net earnings per diluted share and are anticipated to be adjusted to exclude the effects of events or circumstances in 2011 that management believes are not representative or indicative of our results of operations. Projected GAAP earnings per diluted share for the full year would require inclusion of the projected impact of future excluded items, including items that are not currently determinable, but may be significant, such as asset impairments and one-time items, charges, gains or losses from divestitures, resolution of income tax items or other items. Due to the uncertainty of the likelihood, amount and timing of any such items, we do not have information available to provide a quantitative reconciliation of adjusted projected full year earnings per diluted share to a GAAP earnings per diluted share projection.

The Company will host a conference call at 10:00 AM (Eastern) today to discuss the fourth quarter and full-year 2010 results. Information contained within this press release will be referenced and should be considered in conjunction with the call.

The conference call will be webcast live from the Investor Relations section of Waste Management’s website www.wm.com. To access the conference call by telephone, please dial (877) 710-6139 approximately 10 minutes prior to the scheduled start of the call. If you are calling from outside of the United States or Canada, please dial (706) 643-7398. Please utilize conference ID number 33194439 when prompted by the conference call operator.

A replay of the conference call will be available on our website www.wm.com and by

telephone from approximately 1:00 PM (Eastern) Thursday, February 17, 2011 through 5:00 PM (Eastern) on Thursday, March 3, 2011. To access the replay telephonically, please dial 800-642-1687, or from outside of the United States or Canada dial 706-645-9291, and use the replay conference ID number 33194439.

The Company, from time to time, provides estimates of financial and other data, comments on expectations relating to future periods and makes statements of opinion, view or belief about current and future events. Statements relating to future events and performance are “forward-looking statements” and include statements regarding financial results, future internal revenue growth from yield and volume, business goals and investments, capital allocation, including future dividends, share repurchases and capital expenditures, strategic initiatives and their future performance, future volume and pricing and related trends, future recycling commodity prices, future costs and cost reduction, future electricity sales prices, future tax rates, 2011 earnings per diluted share, 2011 free cash flow, future operating earnings and earnings growth, and general market and industry conditions. You should view these statements with caution. These statements are not guarantees of future performance, circumstances or events. They are based on the facts and circumstances known to us as of the date the statements are made. All phases of our business are subject to uncertainties, risks and other influences, many of which we do not control. Any of these factors, either alone or taken together, could have a material adverse effect on us and could cause actual results to be materially different from those set forth in such forward-looking statement. We assume no obligation to update any forward-looking statement, including financial estimates and forecasts, whether as a result of future events, circumstances or developments or otherwise.

The following are some of the risks that we face:

	•		volatility and deterioration in the credit markets, inflation and other general and local economic conditions may negatively affect the volumes of waste generated;
	•		competition may negatively affect our profitability or cash flows, our pricing strategy may have negative effects on volumes, and inability to execute our pricing strategy in order to retain and attract customers may negatively affect our average yield on collection and disposal business;
	•		we may fail to implement our business strategy, which could adversely impact our financial performance and growth;
	•		weather conditions and one-time special projects cause our results to fluctuate, and harsh weather or natural disasters may cause us to temporarily suspend operations;
	•		possible changes in our estimates of costs for site remediation requirements, final capping, closure and post-closure obligations, compliance and regulatory developments may increase our expenses;
	•		regulations may negatively impact our business by, among other things, restricting our operations, increasing costs of operations or requiring additional capital expenditures;
	•		climate change legislation, including possible limits on carbon emissions, may negatively impact our results of operations by increasing expenses related to tracking, measuring and reporting our greenhouse gas emissions and increasing operating costs and capital expenditures that may be required to comply with such legislation;
	•		if we are unable to obtain and maintain permits needed to open, operate, and/or expand our facilities, our results of operations will be negatively impacted;
	•		limitations or bans on disposal or transportation of out-of-state, cross-border, or certain categories of waste, as well as mandates on the disposal of waste, can increase our expenses and reduce our revenue;
	•		adverse publicity (whether or not justified) relating to activities by our operations, employees or agents could tarnish our reputation and reduce the value of our brand;
	•		fuel price increases or fuel supply shortages may increase our expenses or restrict our ability to operate;
	•		some of our customers, including governmental entities, have suffered financial difficulties that could affect our business and operating results, due to their credit risk and the impact of the municipal debt market on remarketing of our tax-exempt bonds;
	•		increased costs or the inability to obtain financial assurance or the inadequacy of our insurance coverage could negatively impact our liquidity and increase our liabilities;
	•		possible charges as a result of shut-down operations, uncompleted development or expansion

			projects or other events may negatively affect earnings;
	•		fluctuations in commodity prices may have negative effects on our operating results;
	•		increasing use by customers of alternatives to traditional disposal, government mandates requiring recycling and prohibiting disposal of certain types of waste, and overall reduction of waste generated could continue to have a negative effect on volumes of waste going to landfills and waste-to-energy facilities;
	•		efforts by labor unions to organize our employees may increase operating expenses and we may be unable to negotiate acceptable collective bargaining agreements with those who have chosen to be represented by unions, which could lead to labor disruptions, including strikes and lock-outs, which could adversely affect our results of operations and cash flows;
	•		we could face significant liability for withdrawal from multiemployer pension plans;
	•		negative outcomes of litigation or threatened litigation or governmental proceedings may increase our costs, limit our ability to conduct or expand our operations, or limit our ability to execute our business plans and strategies;
	•		problems with the operation of our current information technology or the development and deployment of new information systems could decrease our efficiencies and increase our costs;
	•		our existing and proposed service offerings to customers may require that we develop or license, and protect, new technologies; and our inability to obtain or protect new technologies could impact our services to customers and development of new revenue sources;
	•		the adoption of new accounting standards or interpretations may cause fluctuations in reported quarterly results of operations or adversely impact our reported results of operations;
	•		we may reduce or suspend capital expenditures, acquisition activity, dividend declarations or share repurchases if we suffer a significant reduction in cash flows; and
	•		we may be unable to incur future indebtedness on terms we deem acceptable or to refinance our debt obligations, including near-term maturities, on acceptable terms and higher interest rates and market conditions may increase our expenses.

Additional information regarding these and/or other factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in Part I, Item 1A of the Company’s most recent Annual Report on Form 10-K.

ABOUT WASTE MANAGEMENT

Waste Management, Inc., based in Houston, Texas, is the leading provider of comprehensive waste management services in North America. Through its subsidiaries, the company provides collection, transfer, recycling and resource recovery, and disposal services. It is also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States. The company’s customers include residential, commercial, industrial, and municipal customers throughout North America. To learn more information about Waste Management visit www.wm.com or www.thinkgreen.com.

###

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

		Quarters Ended December 31,
		2010				2009
Operating revenues		$	3,187			$	3,006
Costs and expenses:
Operating			1,941				1,874
Selling, general and administrative			396				365
Depreciation and amortization			277				274
Restructuring			(1	)			4
(Income) expense from divestitures, asset impairments and unusual items			—				33
			2,613				2,550
Income from operations			574				456
Other income (expense):
Interest expense			(119	)			(110	)
Interest income			1				3
Other, net			(2	)			(2	)
			(120	)			(109	)
Income before income taxes			454				347
Provision for income taxes			160				16
Consolidated net income			294				331
Less : Net income attributable to noncontrolling interests			13				16
Net income attributable to Waste Management, Inc.		$	281			$	315
Basic earnings per common share		$	0.59			$	0.65
Diluted earnings per common share		$	0.59			$	0.64
Basic common shares outstanding			475.8				488.5
Diluted common shares outstanding			478.0				491.6
Cash dividends declared per common share		$	0.315			$	0.29

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

		Quarters Ended December 31,
		2010				2009
EPS Calculation:
Net income attributable to Waste Management, Inc.		$	281			$	315
Number of common shares outstanding at end of period			475.0				486.1
Effect of using weighted average common shares outstanding			0.8				2.4
Weighted average basic common shares outstanding			475.8				488.5
Dilutive effect of equity-based compensation awards and other contingently issuable shares			2.2				3.1
Weighted average diluted common shares outstanding			478.0				491.6
Basic earnings per common share		$	0.59			$	0.65
Diluted earnings per common share		$	0.59			$	0.64

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

		Years Ended December 31,
		2010				2009
Operating revenues		$	12,515			$	11,791
Costs and expenses:
Operating			7,824				7,241
Selling, general and administrative			1,461				1,364
Depreciation and amortization			1,194				1,166
Restructuring			(2	)			50
(Income) expense from divestitures, asset impairments and unusual items			(78	)			83
			10,399				9,904
Income from operations			2,116				1,887
Other income (expense):
Interest expense			(473	)			(426	)
Interest income			4				13
Other, net			(16	)			(1	)
			(485	)			(414	)
Income before income taxes			1,631				1,473
Provision for income taxes			629				413
Consolidated net income			1,002				1,060
Less : Net income attributable to noncontrolling interests			49				66
Net income attributable to Waste Management, Inc.		$	953			$	994
Basic earnings per common share		$	1.98			$	2.02
Diluted earnings per common share		$	1.98			$	2.01
Basic common shares outstanding			480.2				491.2
Diluted common shares outstanding			482.2				493.6
Cash dividends declared per common share		$	1.26			$	1.16

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

		Years Ended December 31,
		2010				2009
EPS Calculation:
Net income attributable to Waste Management, Inc.		$	953			$	994
Number of common shares outstanding at end of period			475.0				486.1
Effect of using weighted average common shares outstanding			5.2				5.1
Weighted average basic common shares outstanding			480.2				491.2
Dilutive effect of equity-based compensation awards and other contingently issuable shares			2.0				2.4
Weighted average diluted common shares outstanding			482.2				493.6
Basic earnings per common share		$	1.98			$	2.02
Diluted earnings per common share		$	1.98			$	2.01

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

		December 31,				December 31,
		2010				2009
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	539			$	1,140
Receivables, net			1,656				1,527
Other			287				343
Total current assets			2,482				3,010
Property and equipment, net			11,868				11,541
Goodwill			5,726				5,632
Other intangible assets, net			295				238
Other assets			1,105				733
Total assets		$	21,476			$	21,154
Liabilities and Equity
Current liabilities:
Accounts payable, accrued liabilities, and deferred revenues		$	2,252			$	2,152
Current portion of long-term debt			233				749
Total current liabilities			2,485				2,901
Long-term debt, less current portion			8,674				8,124
Other liabilities			3,726				3,538
Total liabilities			14,885				14,563
Equity:
Waste Management, Inc. stockholders’ equity			6,260				6,285
Noncontrolling interests			331				306
Total equity			6,591				6,591
Total liabilities and equity		$	21,476			$	21,154

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

		Years Ended December 31,
		2010				2009
Cash flows from operating activities:
Consolidated net income		$	1,002			$	1,060
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			1,194				1,166
Other			309				102
Change in operating assets and liabilities, net of effects of acquisitions and divestitures			(230	)			34
Net cash provided by operating activities			2,275				2,362
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired			(407	)			(281	)
Capital expenditures			(1,104	)			(1,179	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets			44				28
Investments in unconsolidated entities			(173	)			(21	)
Net receipts from restricted trust and escrow accounts, and other			34				203
Net cash used in investing activities			(1,606	)			(1,250	)
Cash flows from financing activities:
New borrowings			908				1,749
Debt repayments			(1,112	)			(1,335	)
Common stock repurchases			(501	)			(226	)
Cash dividends			(604	)			(569	)
Exercise of common stock options			54				20
Other, net			(18	)			(96	)
Net cash used in financing activities			(1,273	)			(457	)
Effect of exchange rate changes on cash and cash equivalents			3				5
Increase (decrease) in cash and cash equivalents			(601	)			660
Cash and cash equivalents at beginning of period			1,140				480
Cash and cash equivalents at end of period		$	539			$	1,140

Note: Prior year information has been reclassified to conform to 2010 presentation.

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

		Quarters Ended
		December 31,				September 30,				December 31,
		2010				2010				2009
Operating Revenues by Lines of Business
Collection		$	2,072			$	2,119			$	2,005
Landfill			640				674				618
Transfer			313				342				337
Wheelabrator			229				237				214
Recycling			333				286				231
Other			88				86				80
Intercompany (a)			(488	)			(509	)			(479	)
Operating revenues		$	3,187			$	3,235			$	3,006

		Quarters Ended
		December 31, 2010								December 31, 2009
						As a % of								As a % of
		Amount				Total Company				Amount				Total Company
Analysis of Change in Year Over Year Revenues
Average yield (i)		$	169				5.6	%		$	49				1.5	%
Volume			(54	)			-1.8	%			(200	)			-6.4	%
Internal revenue growth			115				3.8	%			(151	)			-4.9	%
Acquisitions			58				1.9	%			30				1.0	%
Divestitures			—				—				(3	)			-0.1	%
Foreign currency translation			8				0.3	%			22				0.7	%
		$	181				6.0	%		$	(102	)			-3.3	%

						As a % of								As a % of
						Related								Related
		Amount				Business				Amount				Business
(i) Average yield
Collection, landfill and transfer		$	66				2.6	%		$	65				2.5	%
Waste-to-energy disposal			1				0.9	%			7				6.5	%
Collection and disposal			67				2.6	%			72				2.7	%
Recycling commodities			83				35.8	%			35				17.6	%
Electricity			—				0.0	%			(18	)			-20.9	%
Fuel surcharges and mandated fees			19				18.6	%			(40	)			-28.6	%
Total		$	169				5.6	%		$	49				1.5	%

		Quarters Ended December 31,								Years Ended December 31,
		2010				2009				2010				2009
Free Cash Flow Analysis (b)
Net cash provided by operating activities		$	622			$	720			$	2,275			$	2,362
Capital expenditures			(367	)			(356	)			(1,104	)			(1,179	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets			8				8				44				28
Free cash flow		$	263			$	372			$	1,215			$	1,211

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

		Quarters Ended
		December 31,				September 30,				December 31,
		2010				2010				2009
Balance Sheet Data
Cash and cash equivalents		$	539			$	550			$	1,140
Debt-to-total capital ratio:
Long-term indebtedness, including current portion		$	8,907			$	8,959			$	8,873
Total equity			6,591				6,439				6,591
Total capital		$	15,498			$	15,398			$	15,464
Debt-to-total capital			57.5	%			58.2	%			57.4	%
Capitalized interest		$	5			$	4			$	4
Acquisition Summary (a)
Gross annualized revenue acquired		$	42			$	71			$	107
Total consideration		$	58			$	122			$	165
Cash paid for acquisitions		$	64			$	106			$	146
Other Operational Data
Internalization of waste, based on disposal costs			68.6	%			67.9	%			68.7	%
Total landfill disposal volumes (tons in millions)			22.5				24.4				22.3
Total waste-to-energy disposal volumes (tons in millions)			2.0				2.0				1.8
Total disposal volumes (tons in millions)			24.5				26.4				24.1
Active landfills			271				272				273
Landfills reporting volume			256				258				259
Amortization, Accretion and Other Expenses for Landfills Included in Operating Groups:
Landfill amortization expense -
Cost basis of landfill assets		$	79.1			$	89.5			$	82.5
Asset retirement costs			(14.3	)			20.0				(15.8	)
Total landfill amortization expense (b)			64.8				109.5				66.7
Accretion and other related expense			17.7				17.0				17.6
Landfill amortization, accretion and other related expense		$	82.5			$	126.5			$	84.3

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

		Quarter Ended								Quarter Ended
		December 31, 2010								December 31, 2009
		After-tax				Per Share				After-tax				Per Share
Adjusted Net income and Diluted Earnings Per Share		Amount (a)				Amount				Amount (a)				Amount
Net income and Diluted EPS, as reported		$	281			$	0.59			$	315			$	0.64
Adjustments to Net income and Diluted EPS:
Litigation			20								—
Benefit from income tax related items			(7	)							(81	)
Landfill operating costs — changes in risk-free interest rates			(7	)							—
Expense from divestitures, asset impairments and unusual items, net			—								20
Restructuring			—								3
			6				0.01				(58	)			(0.12	)
Net income and Diluted EPS, as adjusted (b)		$	287			$	0.60			$	257			$	0.52

		Year Ended								Year Ended
		December 31, 2010								December 31, 2009
		After-tax				Per Share				After-tax				Per Share
Adjusted Net income and Diluted Earnings Per Share		Amount (a)				Amount				Amount (a)				Amount
Net income and Diluted EPS, as reported		$	953			$	1.98			$	994			$	2.01
Adjustments to Net income and Diluted EPS:
(Income) expense from divestitures, asset impairments and unusual items, net (c)			(48	)							50
Tax items			34								(95	)
Landfill operating costs (d)			34								—
Litigation			20								—
Multiemployer pension withdrawal costs			17								6
Labor disruptions			1								—
Restructuring			—								31
			58				0.11				(8	)			(0.01	)
Net income and Diluted EPS, as adjusted		$	1,011			$	2.09			$	986			$	2.00

		Quarter Ended								Quarter Ended
		December 31, 2010								December 31, 2009
						As a % of								As a % of
Adjusted Income from Operations as a percent of Revenues		Amount				Revenues				Amount				Revenues
Operating revenues, as reported		$	3,187							$	3,006
Income from operations, as reported (e)		$	574				18.0	%		$	456				15.2	%
Adjustments to Income from Operations:
Litigation			31								—
Landfill operating costs — changes in risk-free interest rates			(12	)							—
Expense from divestitures, asset impairments and unusual items, net			—								33
Restructuring			—								4
			19								37
Income from operations, as adjusted (f)		$	593				18.6	%		$	493				16.4	%

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

		Quarters Ended December 31,
Adjusted Operating expenses as a percent of Revenues		2010				2009
As reported:
Operating revenues		$	3,187			$	3,006
Operating expenses		$	1,941			$	1,874
Operating expenses as a percent of Revenues			60.9	%			62.3	%
Adjustments
Operating revenues		$	—			$	—
Operating expenses (g)		$	10			$	—
As adjusted:
Operating revenues		$	3,187			$	3,006
Operating expenses (h)		$	1,951			$	1,874
Adjusted Operating expenses as a percent of Revenues (h)			61.2	%			62.3	%

		Quarters Ended December 31,
Adjusted Selling, general and administrative expenses as a percent of Revenues		2010				2009
As reported:
Operating revenues		$	3,187			$	3,006
Selling, general and administrative expense		$	396			$	365
Selling, general and administrative expenses as a percent of Revenues			12.4	%			12.1	%
Adjustments:
Operating revenues		$	—			$	—
Selling, general and administrative expense — litigation		$	(29	)		$	—
As adjusted:
Operating revenues		$	3,187			$	3,006
Selling, general and administrative expense		$	367			$	365
Adjusted Selling, general and administrative expenses as a percent of Revenues (i)			11.5	%			12.1	%

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

		Quarter Ended												Quarter Ended
		December 31, 2010												December 31, 2009
		Pre-tax				Tax				Effective				Pre-tax				Tax
Adjusted effective tax rate		Income				Expense				Tax Rate (j)				Income				Expense
As reported amounts		$	454			$	160				35.1	%		$	347			$	16
Adjustments to Tax Expense:
Litigation			31				11								—				—
Benefit from income tax related items			—				7								—				81
Landfill operating costs — changes in risk-free interest rates			(12	)			(5	)							—				—
Expense from divestitures, asset impairments and unusual items, net			—				—								33				13
Restructuring			—				—								4				1
As adjusted amounts		$	473			$	173				36.6	%		$	384			$	111

		Year Ended								Year Ended
		December 31, 2010								December 31, 2009
		Pre-tax				Tax				Pre-tax				Tax
Adjusted tax expense reconciliation		Income				Expense				Income				Expense
As reported amounts		$	1,631			$	629			$	1,473			$	413
Adjustments to Tax Expense:
(Income) expense from divestitures, asset impairments and unusual items, net			(77	)			(29	)			82				32
Tax items			—				(34	)			—				95
Landfill operating costs			51				17				—				—
Litigation			31				11				—				—
Multiemployer pension withdrawal costs			28				11				9				3
Labor disruptions			2				1				—				—
Restructuring			—				—				50				19
As adjusted amounts		$	1,666			$	606			$	1,614			$	562

Full Year 2011 Free Cash Flow Reconciliation (k)		Scenario 1				Scenario 2
Net cash provided by operating activities		$	2,650			$	2,700
Capital expenditures			(1,450	)			(1,350	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets			50				—
		$	1,250			$	1,350