Summary of WASTE MANAGEMENT INC

Results of Operations and Financial Condition, Financial Statements and Exhi

Item 2.02. Results of Operations and Financial Condition.
Waste Management, Inc. (the "Company") issued a press release this morning, announcing its earnings for the quarter ended March 31, 2009, a copy of which is attached hereto as exhibit 99.1.
The Company is holding a conference call, open to the public, to discuss these results, from 9:00 a.m. to 10:00 a.m. Central time this morning. The call will be webcast live, and may be heard by accessing the Company's website at www.wm.com. The call may also be listened to by calling (877) 710-6139 and entering the access code 90934084.
On the conference call, management of the Company is expected to discuss results of operations using certain non-GAAP financial measures that are included in the Company's press release. The Company has provided information regarding its use of these non-GAAP measures and reconciliations of them to their most comparable GAAP measures in the press release that is attached to this Form 8-K as exhibit 99.1 and the schedules thereto.
Management also is expected to discuss additional non-GAAP financial measures on the call, including diluted earnings per share as adjusted for the negative impact of the downturn in the recyclable commodities markets; operating expense as a percentage of revenue excluding the negative impacts of the recyclable commodities markets and fuel prices; and free cash flow.
Management believes that a discussion of these non-GAAP measures provides investors with information to enable them to perform additional analyses of past, present and future operating performance and a supplemental means of evaluating the Company's operations. The non-GAAP information should not be considered a substitute for financial information presented in accordance with GAAP.
The reconciliation of earnings per diluted share to the adjusted earnings per diluted share we disclosed in the press release and as further adjusted for the negative effect of the recyclable commodities markets is shown below (dollars in millions, except per share amounts):

                                                                                               (Unaudited)
                                                                              Quarter Ended               Quarter Ended
                                                                             March 31, 2009              March 31, 2008
                                                                                           Per                         Per
                                                                          After-tax       Share       After-tax       Share
Adjusted Net income attributable to WMI and Diluted Earnings Per Share     Amount        Amount        Amount        Amount
Net income attributable to WMI and Diluted EPS, as reported              $       155     $  0.31     $       241     $  0.48

Adjustments to Net income attributable to WMI and Diluted EPS:

Restructuring                                                                     23        0.05               -           -

SAP abandonment                                                                   30        0.06               -           -

Income tax audit settlements                                                       -           -              (6 )     (0.01 )

                                                                                                         (Unaudited)
                                                                                    Quarter Ended                        Quarter Ended
                                                                                    March 31, 2009                       March 31, 2008
                                                                                                   Per                                  Per
                                                                              After-tax           Share            After-tax           Share
Adjusted Net income attributable to WMI and Diluted Earnings Per Share         Amount             Amount            Amount             Amount
Net income attributable to WMI and Diluted EPS, as adjusted                  $       208         $   0.42         $       235         $   0.47

Further adjusted for Commodity impact:
Decline in price and demand for recyclable commodities as compared
with Q1 2008                                                                          70             0.09                   -                -


Net income attributable to WMI and Diluted EPS, as further adjusted          $       278         $   0.51         $       235         $   0.47

The table below reconciles operating expenses as a percentage of revenues to operating expenses as a percentage of revenues excluding the effect of recyclable commodities and fuel prices (dollars in millions):

                                                                            (Unaudited)
                                                                      Quarters Ended March 31,
                                                                       2009               2008
Adjusted Operating Expenses as a percent of Revenues

As reported:
Operating revenues                                                 $    2,810           $ 3,266
Operating expenses                                                 $    1,725           $ 2,092
Operating Expenses as a percent of Revenues                              61.4 %            64.1 %

Less period-over-period decreases in Commodity and Fuel:
Operating Revenues
Commodity                                                          $     (197 )         $     -
Fuel                                                               $      (46 )         $     -

Operating Expense
Commodity                                                          $     (127 )         $     -
Fuel                                                               $      (63 )         $     -

As adjusted:
Operating revenues                                                 $    3,053           $ 3,266
Operating expenses                                                 $    1,915           $ 2,092

As adjusted Operating Expenses as a percent of Revenues                  62.7 %            64.1 %

The Company discusses its free cash flow because it believes that investors are interested in management's expectations about the cash it believes the Company will generate from non-financing activities that is available for uses such as acquisitions, share repurchases, scheduled debt reduction and the payment of dividends. The Company defines free cash flow as: (i) net cash provided by operating activities; (ii) less, capital expenditures; (iii) 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 tables below show the reconciliations of free cash flow to net cash generated by operating activities for the first quarter of 2009 the projection for the full-year 2009 (dollars in millions):