Item 7.01. Regulation FD Disclosure.
On February 13, 2009, Waste Management, Inc. (the "Company") disclosed
certain supplemental information relating to its Consolidated Statements of Cash
Flows. As a result of an increase in the significance of certain non-cash
expenses, the Company has elected to separately identify the effects of
"Interest accretion on landfill liabilities," "Interest accretion on and
discount rate adjustments to environmental remediation liabilities and recovery
assets" and "Equity-based compensation expense" within the "Cash flows from
operating activities" section of its Consolidated Statements of Cash Flows. The
following table reflects the impacts of these reclassifications on the Company's
cash flows from operations for the nine months ended September 30, 2008 and
provides the Company's operating cash flows for the three and twelve months
ended December 31, 2008 on a reclassified basis (in millions):
WASTE MANAGEMENT, INC.
CASH FLOWS FROM OPERATING ACTIVITIES
(unaudited)
Three Months
Nine Months Ended September 30, 2008 Ended Year Ended
As Previously As December 31, December 31,
Reported Reclassifications Reclassified 2008 2008
Cash flows from operating activities:
Net income $ 869 $ - $ 869 $ 218 $ 1,087
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 941 - 941 297 1,238
Deferred income tax provision 83 - 83 67 150
Interest accretion on landfill
liabilities - 57 57 20 77
Interest accretion on and discount rate
adjustments to environmental
remediation liabilities and recovery
assets - 6 6 35 41
Provision for bad debts 32 - 32 18 50
Equity-based compensation expense - 38 38 10 48
Minority interest 33 - 33 8 41
Equity in net losses of unconsolidated
entities, net of distributions 1 - 1 - 1
Net gain from disposal of assets (25 ) - (25 ) (8 ) (33 )
Effect of (income) expense from
divestitures, asset impairments and
unusual items (25 ) - (25 ) (4 ) (29 )
Excess tax benefits associated with
equity-based transactions (7 ) - (7 ) - (7 )
Change in operating assets and
liabilities, net of effects of
acquisitions and divestitures:
Receivables 35 - 35 181 216
Other current assets (29 ) - (29 ) 20 (9 )
Other assets 2 - 2 3 5
Accounts payable and accrued
liabilities 12 (38 ) (26 ) (157 ) (183 )
Deferred revenues and other liabilities (20 ) (63 ) (83 ) (35 ) (118 )
Net cash provided by operating
activities $ 1,902 $ - $ 1,902 $ 673 $ 2,575
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The Company also made clarifications with respect to information disclosed on
its earnings conference call and in its press release on February 12, 2009
regarding its Annual Incentive Plan. As the Company has disclosed in its Proxy
Statement for the 2008 Annual Meeting of Stockholders, under the Annual
Incentive Plan, executives of the Company earn their bonuses dependent on the
Company achieving pre-set financial measures, which include income from
operations as a percentage of revenue and income from operations excluding
depreciation and amortization. The Company has not changed the structure of the
Plan and still uses these pre-set measures to determine the bonuses, if any,
that are earned. However, due to current economic conditions, and in order to
drive performance, the Company has determined to implement policies and
practices within the organization that must be followed in order for its
executives to be eligible to earn bonuses under the Plan. These policies will
include meeting certain hurdles related to minimum yield. Similar measures will
be set for otherwise bonus eligible employees throughout the Company.
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