(Mark One) | ||
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarterly Period Ended March 31, 2011 | ||
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware | 73-1309529 | |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
34
Item 1.
Financial
Statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Par Value Amounts)
March 31,
December 31,
2011
2010
(Unaudited)
$
676
$
539
1,464
1,510
97
146
130
130
44
40
137
117
2,548
2,482
11,855
11,868
5,771
5,726
318
295
1,156
1,105
$
21,648
$
21,476
LIABILITIES AND EQUITY
$
546
$
692
1,074
1,100
458
460
285
233
2,363
2,485
8,882
8,674
1,670
1,662
1,425
1,402
676
662
15,016
14,885
6
6
4,536
4,528
6,424
6,400
257
230
(4,925
)
(4,904
)
6,298
6,260
334
331
6,632
6,591
$
21,648
$
21,476
2
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months
Ended
March 31,
2011
2010
$
3,103
$
2,935
1,995
1,881
382
351
299
291
2,676
2,523
427
412
(121
)
(112
)
3
(4
)
1
2
(121
)
(110
)
306
302
110
110
196
192
10
10
$
186
$
182
$
0.39
$
0.37
$
0.39
$
0.37
$
0.34
$
0.315
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Three Months
Ended
March 31,
2011
2010
$
196
$
192
299
291
(3
)
1
20
20
1
1
8
11
17
12
4
(3
)
(5
)
(4
)
44
12
(28
)
(31
)
21
4
40
(24
)
(12
)
12
600
496
(99
)
(62
)
(316
)
(255
)
5
12
6
19
(55
)
(149
)
(3
)
(462
)
(435
)
396
114
(158
)
(169
)
(63
)
(120
)
(162
)
(153
)
23
7
4
(7
)
(7
)
(36
)
(3
)
(3
)
(331
)
2
1
137
(269
)
539
1,140
$
676
$
871
4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
(In millions, except shares in thousands)
(Unaudited)
Waste Management, Inc. Stockholders Equity
Accumulated
Other
Additional
Comprehensive
Comprehensive
Common Stock
Paid-In
Retained
Income
Treasury Stock
Noncontrolling
Total
Income
Shares
Amounts
Capital
Earnings
(Loss)
Shares
Amounts
Interests
$
6,591
630,282
$
6
$
4,528
$
6,400
$
230
(155,236
)
$
(4,904
)
$
331
196
$
196
186
10
(5
)
(5
)
(5
)
8
8
8
(2
)
(2
)
(2
)
28
28
28
(2
)
(2
)
(2
)
27
27
223
$
223
(162
)
(162
)
55
8
1,493
47
(68
)
(1,835
)
(68
)
(7
)
(7
)
3
$
6,632
630,282
$
6
$
4,536
$
6,424
$
257
(155,575
)
$
(4,925
)
$
334
5
1.
Basis of
Presentation
6
2.
Landfill
and Environmental Remediation Liabilities
March 31, 2011
December 31, 2010
Environmental
Environmental
Landfill
Remediation
Total
Landfill
Remediation
Total
$
103
$
42
$
145
$
105
$
43
$
148
1,186
239
1,425
1,161
241
1,402
$
1,289
$
281
$
1,570
$
1,266
$
284
$
1,550
Environmental
Landfill
Remediation
$
1,267
$
256
47
(86
)
(36
)
82
5
(49
)
61
5
(2
)
1,266
284
11
(11
)
(7
)
20
1
2
3
1
$
1,289
$
281
7
3.
Debt
March 31,
December 31,
2011
2010
$
$
219
212
5,695
5,452
2,696
2,696
116
116
441
431
9,167
8,907
285
233
$
8,882
$
8,674
8
4.
Derivative
Instruments and Hedging Activities
March 31,
December 31,
Derivatives Designated as Hedging Instruments
Balance Sheet Location
2011
2010
Current other assets
$
$
1
Long-term other assets
32
37
$
32
$
38
Current accrued liabilities
$
$
11
Current accrued liabilities
1
1
Long-term accrued liabilities
11
13
Long-term accrued liabilities
14
3
$
26
$
28
Three Months
Statement of Operations
Gain (Loss) on
Gain (Loss) on
Ended March 31,
Classification
Swap
Fixed-Rate Debt
2011
Interest expense
$
(6
)
$
6
2010
Interest expense
$
1
$
(1
)
9
Three Months
Ended March 31,
Decrease to Interest Expense Due to Hedge Accounting for
Interest Rate Swaps
2011
2010
$
5
$
10
3
5
$
8
$
15
(a)
These amounts represent the net of our periodic variable-rate
interest obligations and the swap counterparties
fixed-rate interest obligations. Our variable-rate obligations
are based on a spread from the three-month LIBOR.
10
Derivative Gain or
Derivative Gain or
(Loss) Reclassified
(Loss) Recognized
from AOCI into
Three Months
in OCI
Statement of Operations
Income
Ended March 31,
(Effective Portion)
Classification
(Effective Portion)
2011
$
(11
)
Other income (expense)
$
(10
)
2010
$
(12
)
Other income (expense)
$
(12
)
11
5.
Income
Taxes
12
6.
Comprehensive
Income
Three Months
Ended March 31,
2011
2010
$
196
$
192
(5
)
(11
)
8
9
(2
)
1
28
27
(2
)
27
26
223
218
(10
)
(10
)
$
213
$
208
March 31,
December 31,
2011
2010
$
(30
)
$
(33
)
3
5
289
261
(5
)
(3
)
$
257
$
230
13
7.
Earnings
Per Share
Three Months
Ended March 31,
2011
2010
474.7
483.8
1.0
1.8
475.7
485.6
1.9
2.5
477.6
488.1
17.9
16.1
0.1
3.7
8.
Commitments
and Contingencies
14
15
16
17
9.
Segment
and Related Information
18
Gross
Intercompany
Net
Operating
Operating
Operating
Income from
Revenues
Revenues
Revenues
Operations
$
704
$
(112
)
$
592
$
120
728
(106
)
622
129
838
(98
)
740
192
790
(108
)
682
140
210
(31
)
179
13
293
(5
)
288
(14
)
3,563
(460
)
3,103
580
(153
)
$
3,563
$
(460
)
$
3,103
$
427
$
685
$
(113
)
$
572
$
109
694
(98
)
596
82
823
(97
)
726
200
764
(103
)
661
129
206
(31
)
175
36
215
(10
)
205
(29
)
3,387
(452
)
2,935
527
(115
)
$
3,387
$
(452
)
$
2,935
$
412
19
10.
Fair
Value Measurements
Fair Value Measurements at
March 31, 2011 Using
Quoted
Significant
Prices in
Other
Significant
Active
Observable
Unobservable
Markets
Inputs
Inputs
Total
(Level 1)
(Level 2)
(Level 3)
$
539
$
539
$
$
142
142
113
113
32
32
$
826
$
794
$
32
$
$
1
$
$
1
$
11
11
14
14
$
26
$
$
26
$
Fair Value Measurements at
December 31, 2010 Using
Quoted
Significant
Prices in
Other
Significant
Active
Observable
Unobservable
Markets
Inputs
Inputs
Total
(Level 1)
(Level 2)
(Level 3)
$
468
$
468
$
$
148
148
103
103
38
38
$
757
$
719
$
38
$
$
1
$
$
1
$
24
24
3
3
$
28
$
$
28
$
20
11.
Variable
Interest Entities
21
22
12.
Condensed
Consolidating Financial Statements
23
24
(Unaudited)
WM
Non-Guarantor
WM
Holdings
Subsidiaries
Eliminations
Consolidated
$
$
$
3,103
$
$
3,103
2,676
2,676
427
427
(85
)
(9
)
(24
)
(118
)
237
242
(479
)
(3
)
(3
)
152
233
(27
)
(479
)
(121
)
152
233
400
(479
)
306
(34
)
(4
)
148
110
186
237
252
(479
)
196
10
10
$
186
$
237
$
242
$
(479
)
$
186
(Unaudited)
WM
Non-Guarantor
WM
Holdings
Subsidiaries
Eliminations
Consolidated
$
$
$
2,935
$
$
2,935
2,523
2,523
412
412
(75
)
(10
)
(27
)
(112
)
228
234
(462
)
2
2
153
224
(25
)
(462
)
(110
)
153
224
387
(462
)
302
(29
)
(4
)
143
110
182
228
244
(462
)
192
10
10
$
182
$
228
$
234
$
(462
)
$
182
25
WM
Non-Guarantor
WM
Holdings
Subsidiaries
Eliminations
Consolidated
$
186
$
237
$
252
$
(479
)
$
196
(237
)
(242
)
479
(1
)
(11
)
416
404
(52
)
(16
)
668
600
(99
)
(99
)
(316
)
(316
)
5
5
(4
)
(48
)
(52
)
(4
)
(458
)
(462
)
396
396
(147
)
(11
)
(158
)
(63
)
(63
)
(162
)
(162
)
23
23
4
(43
)
(39
)
(69
)
163
(94
)
129
16
(148
)
(3
)
2
2
73
64
137
465
74
539
$
538
$
$
138
$
$
676
26
(Unaudited)
WM
Non-Guarantor
WM
Holdings
Subsidiaries
Eliminations
Consolidated
$
182
$
228
$
244
$
(462
)
$
192
(228
)
(234
)
462
(11
)
(11
)
326
304
(57
)
(17
)
570
496
(62
)
(62
)
(255
)
(255
)
12
12
(130
)
(130
)
(435
)
(435
)
114
114
(35
)
(134
)
(169
)
(120
)
(120
)
(153
)
(153
)
7
7
(10
)
(10
)
7
52
(59
)
(259
)
17
(89
)
(331
)
1
1
(316
)
47
(269
)
1,093
47
1,140
$
777
$
$
94
$
$
871
27
Item 2.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
projections about accounting and finances;
plans and objectives for the future;
projections or estimates about assumptions relating to our
performance; or
our opinions, views or beliefs about the effects of current or
future events, circumstances or performance.
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 in implementing our optimization initiatives and
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 any
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;
28
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.
29
Grow our markets by implementing customer-focused growth,
through customer segmentation and through strategic
acquisitions, while maintaining our pricing discipline and
increasing the amount of recyclable materials we handle each
year;
Grow our customer loyalty;
Grow into new markets by investing in greener
technologies; and
Pursue initiatives that improve our operations and cost
structure.
Revenues of $3,103 million compared with
$2,935 million in the first quarter of 2010, an increase of
$168 million, or 5.7%. This increase in revenues is
primarily attributable to:
Internal revenue growth from yield on our collection and
disposal business of 2.8% in the current period, which increased
revenue by $69 million;
Increases from recyclable commodity prices of $58 million;
increases from our fuel surcharge program of $35 million;
and increases from foreign currency translation of
$9 million; and
Increases associated with acquired businesses of
$48 million;
Internal revenue growth from volume was negative 1.7%, compared
with negative 5.1% in 2010. In addition to the lower rate of
decline driven by changes in the economy, we experienced an
increase in recycling volumes in both our brokerage business and
our material recovery facilities. The
year-over-year
decline in internal revenue growth due to volume was
$51 million;
Operating expenses of $1,995 million, or 64.3% of revenues,
compared with $1,881 million, or 64.1% of revenues, in the
first quarter of 2010. This increase of $114 million, or
6.1%, is due primarily to higher customer rebates because of
higher recyclable commodity prices; higher fuel prices; and
increases resulting from acquisitions and growth initiatives;
offset partially by a $28 million charge in the first
quarter of 2010 related to the partial withdrawal from a
Teamsters underfunded multiemployer pension plan;
Selling, general and administrative expenses increased by
$31 million, or 8.8%, from $351 million in the first
quarter of 2010 to $382 million in the first quarter of
2011. These cost increases were primarily due to support of our
strategic growth plans and optimization initiatives, which are
expected to result in benefits in the second half of 2011;
Income from operations of $427 million, or 13.8% of
revenues, compared with $412 million, or 14.0% of revenues,
in the first quarter of 2010;
30
Interest expense of $121 million compared with
$112 million in the first quarter of 2010, an increase of
$9 million, or 8.0%. This increase is primarily due to a
decrease in benefits to interest expense provided by interest
rate swaps and higher ongoing costs related to our revolving
credit facility executed in June 2010; and
Net income attributable to Waste Management, Inc. of
$186 million, or $0.39 per diluted share, as compared with
$182 million, or $0.37 per diluted share in the first
quarter of 2010. The comparability of our diluted earnings per
share has been affected by the $28 million charge to
Operating expense in the first quarter of 2010
related to the partial withdrawal from a Teamsters
underfunded multiemployer pension plan, which reduced that
quarters diluted earnings per share by $0.04.
Three Months
Ended
March 31,
2011
2010
$
600
$
496
(316
)
(255
)
5
12
$
289
$
253
31
Three Months
Ended
March 31,
2011
2010
$
704
$
685
728
694
838
823
790
764
210
206
293
215
(460
)
(452
)
$
3,103
$
2,935
32
Three Months
Ended
March 31,
2011
2010
$
2,021
$
1,974
579
562
294
312
210
206
370
269
89
64
(460
)
(452
)
$
3,103
$
2,935
Period-to-Period
Change for the
Three Months Ended
March 31,
2011 vs. 2010
As a % of
Total
Amount
Company(a)
$
162
5.5
%
(51
)
(1.7
)
111
3.8
48
1.6
9
0.3
$
168
5.7
%
(a)
Calculated by dividing the amount of current period increase or
decrease by the prior periods total company revenue
($2,935 million) adjusted to exclude the impacts of
divestitures for the current period.
(b)
The amounts reported herein represent the changes in our revenue
attributable to average yield for the total Company. We analyze
the changes in average yield in terms of related business
revenues in order to differentiate the changes in yield
attributable to our pricing strategies from the changes that are
caused by market-driven price changes in commodities. The
following table summarizes changes in revenues from average
yield on a related-business basis:
33
Period-to-Period Change for the
Three Months Ended
March 31,
2011 vs. 2010
As a % of
Related
Amount
Business(i)
$
69
2.9
%
69
2.8
58
21.1
35
35.4
$
162
5.5
(i)
Calculated by dividing the increase or decrease for the current
period by the prior periods related business revenue,
adjusted to exclude the impacts of divestitures for the current
period. The table below summarizes the related business revenues
for the three months ended March 31, 2010 adjusted to
exclude the impacts of divestitures:
Denominator
$
2,392
103
2,495
275
66
99
$
2,935
(ii)
Average revenue growth for yield for Collection and
disposal excludes all electricity-related revenues
generated by our Wheelabrator Group, which are reported as
Electricity revenues.
35
Higher market prices for recyclable commodities
Overall, market prices for recyclable commodities increased
18% as compared with the prior year period. The
year-over-year
increase is the result of the continued increase in recyclable
commodity prices from the near-historic lows reached in late
2008 and early 2009. In March 2011, market prices almost
attained the decade-high levels reached during the third quarter
of 2008. This increase in market prices was the main driver of
the current quarter increase in cost of goods sold, primarily
customer rebates, as presented in the table below and has also
resulted in increased revenues and earnings this year;
Fuel cost increases
On average, diesel fuel
prices increased 27% from $2.85 per gallon in the first quarter
of 2010 to $3.63 per gallon in the first quarter of 2011. Higher
fuel costs caused increases in both our direct fuel costs and in
the fuel component of our subcontractor costs for the first
quarter of 2011; and
Acquisitions and growth initiatives
We have
experienced cost increases attributable to recently acquired
businesses and, to a lesser extent, our various growth and
business development initiatives. We estimate that these cost
increases affected each of the operating cost categories
identified in the table below and accounted for over 35% of our
total $114 million increase in operating expenses;
partially offset by
Volume declines
During the first quarter of
2011 we continued to experience volume declines as a result of
the ongoing weakness of the overall economic environment,
pricing, competition and recent trends of waste reduction and
diversion by consumers. We continue to manage our fixed costs
and reduce our variable costs as we experience volume declines,
and have achieved cost savings as a result. These cost decreases
have benefited each of the operating cost categories identified
in the table below.
36
Three Months Ended
Period-to-
March 31,
Period
2011
2010
Change
$
563
$
580
$
(17
)
(2.9
)%
220
220
279
268
11
4.1
180
165
15
9.1
240
173
67
38.7
144
117
27
23.1
141
137
4
2.9
60
65
(5
)
(7.7
)
56
53
3
5.7
112
103
9
8.7
$
1,995
$
1,881
$
114
6.1
%
Labor and related benefits
The decrease
was due to (i) a prior year $28 million charge
incurred by our Midwest Group as a result of bargaining unit
employees in Michigan and Ohio agreeing to our proposal to
withdraw them from an underfunded multiemployer pension plan;
and (ii) cost savings that have been achieved as volumes
have declined. These cost savings were offset, in part, by
higher hourly and salaried wages due to merit increases and
additional employee expenses incurred from acquisitions and
growth opportunities.
Maintenance and repairs
The increase was
due to differences in the timing and scope of planned
maintenance projects at our
waste-to-energy
and landfill
gas-to-energy
facilities. The increase in our Wheelabrator Group primarily
relates to additional costs to improve our Portsmouth, Virginia
waste-to-energy
facility, which we acquired in April 2010.
Subcontractor costs
The current quarter
increase in subcontractor costs was primarily a result of
increased diesel fuel prices, recent acquisitions, our various
growth and business development initiatives and additional costs
associated with the servicing of our Strategic Accounts and
Sustainability Services projects.
Cost of goods sold
The significant
increase was from higher customer rebates as a result of the
improvement in recycling commodity pricing discussed above.
Fuel
Higher direct costs for diesel fuel
were due to an increase in market prices on a
year-over-year
basis of 27% for the three months ended March 31, 2011.
37
Three Months Ended
Period-to-
March 31,
Period
2011
2010
Change
$
226
$
208
$
18
8.7
%
54
42
12
28.6
9
12
(3
)
(25.0
)
93
89
4
4.5
$
382
$
351
$
31
8.8
%
Three Months Ended
Period-to-
March 31,
Period
2011
2010
Change
$
199
$
194
$
5
2.6
%
89
87
2
2.3
11
10
1
10.0
$
299
$
291
$
8
2.7
%
38
Three Months Ended
March 31,
Period-to-Period
2011
2010
Change
$
120
$
109
$
11
10.1
%
129
82
47
57.3
192
200
(8
)
(4.0
)
140
129
11
8.5
13
36
(23
)
(63.9
)
(14
)
(29
)
15
(51.7
)
580
527
53
10.1
(153
)
(115
)
(38
)
33.0
$
427
$
412
$
15
3.6
%
39
Three Months Ended March 31, 2011
Landfill
Growth
Wheelabrator
Gas-to-Energy(a)
Opportunities(b)
Total
$
210
$
35
$
$
245
156
14
170
25
1
1
27
16
8
24
197
23
1
221
$
13
$
12
$
(1
)
$
24
Three Months Ended March 31, 2010
Landfill
Growth
Wheelabrator
Gas-to-Energy(a)
Opportunities(b)
Total
$
206
$
28
$
$
234
133
11
1
145
22
1
1
24
15
5
20
170
17
2
189
$
36
$
11
$
(2
)
$
45
(a)
Our landfill
gas-to-energy
business focuses on generating a renewable energy source from
the methane that is produced as waste decomposes. The operating
results include the revenues and expenses of landfill
gas-to-energy
plants that we own and operate, as well as revenues generated
from the sale of landfill gas to third-party owner/operators.
The operating results of our landfill
gas-to-energy
business are included within our geographic reportable segments
and Other.
(b)
Includes businesses and entities we have acquired or invested in
through our organic growth groups business development
efforts. These businesses include a landfill
gas-to-LNG
facility; landfill
gas-to-diesel
fuels technologies; organic waste
streams-to-fuels
technologies; and other engineered fuels technologies. The
operating results of our Growth Opportunities are included
within Other in our assessment of our income from
operations by segment.
40
41
March 31,
December 31,
2011
2010
$
676
$
539
$
125
$
124
7
14
8
8
$
140
$
146
$
285
$
233
8,882
8,674
$
9,167
$
8,907
$
70
$
79
Three Months
Ended
March 31,
2011
2010
$
600
$
496
$
(462
)
$
(435
)
$
(3
)
$
(331
)
Increase in earnings
Our income from
operations, net of depreciation and amortization, increased by
$23 million on a
year-over-year
basis.
Decreased income tax payments
Cash paid for
income taxes, net of excess tax benefits associated with
equity-based transactions, was approximately $29 million
lower on a
year-over-year
basis. The comparability of our effective tax rates is discussed
in the
Provision for income taxes
section above.
Changes in assets and liabilities, net of effects from
business acquisitions and divestitures
Our cash
flow from operations was favorably impacted in 2011 by changes
in our working capital accounts. Although our working capital
changes may vary from year to year, they are typically driven by
changes in accounts
42
receivable, which are affected by both revenue changes and
timing of payments received, and accounts payable changes, which
are affected by both cost changes and timing of payments.
Capital expenditures
We used
$316 million during the first quarter of 2011 for capital
expenditures compared with $255 million in the first
quarter of 2010, an increase of $61 million. The increase
can generally be attributed to timing differences associated
with cash payments for the previous years fourth quarter
capital spending. Approximately $206 million of our fourth
quarter 2010 spending was paid in cash in 2011 compared with
approximately $145 million of our fourth quarter 2009
spending that was paid in the first quarter of 2010.
Acquisitions
Our spending on acquisitions
increased from $62 million in the first quarter of 2010 to
$99 million in the first quarter of 2011. The increase in
acquisition spending is due to our focus on accretive
acquisitions and growth opportunities that will contribute to
improved future results of operations and enhance and expand our
existing service offerings.
Investments in unconsolidated entities
We
made $55 million of cash investments in unconsolidated
entities during the first quarter of 2011. These investments
were primarily related to a $48 million payment made to
acquire a noncontrolling interest in a limited liability
company, which was established to invest in and manage a refined
coal facility in North Dakota.
Debt borrowings and repayments
The following
summarizes our most significant cash borrowings and debt
repayments made during each period (in millions):
Three Months
Ended
March 31,
2011
2010
$
$
114
396
$
396
$
114
$
$
(123
)
(147
)
(35
)
(11
)
(11
)
$
(158
)
$
(169
)
$
238
$
(55
)
43
Share repurchases and dividend payments
We
repurchased 1.8 million shares of our common stock for
$68 million during the first quarter of 2011, of which
approximately $5 million was paid in April 2011 compared
with 3.8 million shares of our common stock for
$125 million during the first quarter of 2010, of which
approximately $5 million was paid in April 2010.
Other
These activities are primarily
attributable to changes in our accrued liabilities for checks
written in excess of cash balances due to the timing of cash
deposits or payments.
44
Item 3.
Quantitative
and Qualitative Disclosures About Market Risk
Item 4.
Controls
and Procedures.
45
Item 1.
Legal
Proceedings.
Item 1A.
Risk
Factors.
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds.
Total Number of
Total
Shares Purchased as
Approximate Maximum
Number of
Average
Part of Publicly
Dollar Value of Shares that
Shares
Price Paid
Announced Plans or
May Yet be Purchased Under
Period
Purchased
per Share(a)
Programs
the Plans or Programs(b)
569,202
$
36.77
569,202
$
554 Million
332,491
$
37.53
332,491
$
542 Million
932,869
$
36.99
932,869
$
507 Million
1,834,562
$
37.02
1,834,562
(a)
This amount represents the weighted average price paid per share
and includes a per-share commission paid for all repurchases.
(b)
The approximate maximum dollar value of shares that may yet be
purchased under the program is not necessarily an indication of
the amount we intend to repurchase during the remainder of the
year.
(c)
The amounts reported include 120,600 shares repurchased for an
aggregate of approximately $5 million that were initiated in
March, but settled in cash in April.
46
Item 6.
Exhibits.
Exhibit
No.
Description
4
.1
Officers Certificate delivered pursuant to Section 301 of
the Indenture dated September 10, 1997 by and between Waste
Management, Inc. and The Bank of New York Mellon Trust Company,
N.A., as Trustee, establishing the terms and form of Waste
Management, Inc.s 4.60% Senior Notes due 2021.
4
.2
Guarantee Agreement by Waste Management Holdings, Inc. in favor
of The Bank of New York Mellon Trust Company, N.A., as Trustee
for the holders of Waste Management, Inc.s
4.60% Senior Notes due 2021.
10
.1
Form of 2011 Performance Share Unit Award Agreement
[incorporated by reference to Exhibit 10.1 to Current Report on
Form 8-K filed March 11, 2011].
10
.2
Form of 2011 Stock Option Award Agreement [incorporated by
reference to Exhibit 10.2 to Current Report on Form 8-K filed
March 11, 2011].
10
.3
Amendment to Employment Agreement by and between the Company and
Mr. Jim Trevathan [incorporated by reference to Exhibit 10.3 to
Current Report on Form 8-K filed March 11, 2011].
10
.4
Amendment to Employment Agreement by and between the Company and
Mr. Duane C. Woods [incorporated by reference to Exhibit 10.4 to
Current Report on Form 8-K filed March 11, 2011].
10
.5
Amendment to Employment Agreement by and between the Company and
Mr. Brett W. Frazier.
10
.6
Amendment to Employment Agreement by and between the Company and
Mr. Jeff Harris.
10
.7
Employment Agreement by and between the Company and Mr. Carl V.
Rush.
10
.8
Employment Agreement by and between the Company and Ms. Grace
Cowan.
31
.1
Certification Pursuant to Rules 13a - 14(a) and 15d - 14(a)
under the Securities Exchange Act of 1934, as amended, of David
P. Steiner, President and Chief Executive Officer.
31
.2
Certification Pursuant to Rules 13a - 14(a) and 15d - 14(a)
under the Securities Exchange Act of 1934, as amended, of Robert
G. Simpson, Senior Vice President and Chief Financial Officer.
32
.1
Certification Pursuant to 18 U.S.C. §1350 of David P.
Steiner, President and Chief Executive Officer.
32
.2
Certification Pursuant to 18 U.S.C. §1350 of Robert G.
Simpson, Senior Vice President and Chief Financial Officer.
101
.INS
XBRL Instance Document.
101
.SCH
XBRL Taxonomy Extension Schema Document.
101
.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101
.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101
.LAB
XBRL Taxonomy Extension Label Linkbase Document.
101
.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
47
By:
By:
48
|
|
|||
|
|
|||
|
Vice President Finance and
Treasurer |
|||
|
||||
|
/s/ Linda J. Smith | |||
|
||||
|
Linda J. Smith | |||
|
Corporate Secretary |
(1) | The title of the series of Securities shall be 4.60% Senior Notes due 2021 (the Notes). | |
(2) | The Notes shall be general unsecured, senior obligations of the Company. | |
(3) | The initial aggregate principal amount of the Notes that may be authenticated and delivered under the Indenture shall be $400,000,000 (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture); provided, however, that the authorized aggregate principal amount of such series may be increased before or after the issuance of any Notes of such series by a Board Resolution (or action pursuant to a Board Resolution) to such effect. | |
(4) | The principal amount of each Note shall be payable on March 1, 2021. | |
(5) | Each Note shall bear interest from February 28, 2011 at the fixed rate of 4.60% per annum; the Interest Payment Dates on which such interest shall be payable shall be March 1 and September 1, of each year, commencing September 1, 2011, until maturity unless such date falls on a day that is not a Business Day, in which case, such payment shall be made on the next day that is a Business Day. The Regular Record Date for the determination of Holders to whom interest is payable shall be February 15 or August 15, respectively, immediately preceding such date, as the case may be. | |
(6) | If a Change of Control Triggering Event (as defined in the Notes) occurs, each Holder of the Notes may require the Company to purchase all or a portion of such Holders Notes at a price equal to 101% of the principal amount, plus accrued interest, if any, to the date of purchase, on the terms and subject to the conditions set forth in the Notes. | |
(7) | The Notes are to be issued as Registered Securities only. Each Note is to be issued as a book-entry note (Book-Entry Note) but in certain circumstances may be represented by Notes in definitive form. The Book-Entry Notes shall be issued, in whole or in part, in the form of one or more Notes in global form as contemplated by Section 203 of the Indenture. The Depositary with respect to the Book-Entry Notes shall be The Depository Trust Company, New York, New York. |
(8) | Payments of principal of, premium, if any, and interest due on the Notes representing Book-Entry Notes on any Interest Payment Date or at maturity will be made available to the Trustee by 11:00 a.m., New York City time, on such date, unless such date falls on a day which is not a Business Day, in which case such payments will be made available to the Trustee by 11:00 a.m., New York City time, on the next Business Day. As soon as possible thereafter, the Trustee will make such payments to the Depositary. | |
(9) | Before the date that is three months prior to the maturity date, the Notes will be redeemable, at the option of the Company, at any time in whole, or from time to time in part, at a Redemption Price equal to the greater of (i) 100% of the principal amount of the Notes to be redeemed or (ii) the sum of the present value of the remaining scheduled payments of principal and interest (at the rate in effect on the date of calculation of the Redemption Price) thereon (exclusive of interest accrued to the Redemption Date (as defined in the Notes)) discounted to the Redemption Date on a semiannual basis (assuming a 360 day year consisting of twelve 30-day months) at the applicable Treasury Yield (as defined in the Notes) plus 20 basis points; plus, in either case, accrued interest to the Redemption Date. On or after the date that is three months prior to the maturity date, the Notes will be redeemable and repayable, at the option of the Company, at any time in whole, or from time to time in part, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus accrued interest on the Notes to be redeemed to the Redemption Date. | |
(10) | The Company shall have no obligation to redeem, purchase or repay the Notes pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof. | |
(11) | The Notes will be subject to defeasance and discharge as contemplated by Section 1302 of the Indenture and to covenant defeasance under Section 1303 of the Indenture. | |
(12) | The Notes shall be entitled to the benefit of the covenants contained in Sections 1008 and 1009 of the Indenture. | |
(13) | The Bank of New York Mellon shall serve initially as Security Registrar for the Notes. | |
(14) | The Notes shall be substantially in the form of Exhibit A hereto. | |
(15) | The Notes will be fully and unconditionally guaranteed on a senior basis by the Companys wholly owned subsidiary, Waste Management Holdings, Inc., pursuant to the terms and conditions of a Guarantee Agreement dated February 28, 2011 (the Guarantee). The amount of the Guarantee will be limited to the extent required under applicable fraudulent conveyance laws to cause the Guarantee to be enforceable. The terms and conditions of the Guarantee shall continue in full force and effect for the benefit of holders of the Notes until release thereof as set forth in Section 6 of the Guarantee. |
RGN-1
|
WASTE MANAGEMENT, INC. |
Principal Amount
U.S. $400,000,000, which may be decreased by the Schedule of Exchanges of Definitive Security attached hereto |
||
|
||||
|
4.60% SENIOR NOTES DUE 2021 | |||
|
||||
|
CUSIP 941063AQ2 |
Dated: February 28, 2011 |
WASTE MANAGEMENT, INC.,
a Delaware corporation |
|||
By: | ||||
Cherie C. Rice | ||||
Vice President-Finance and Treasurer | ||||
Attest:
|
||||
By: | ||||
Linda J. Smith | ||||
Secretary | ||||
Date of Authentication: February 28, 2011 |
The Bank of New York Mellon
Trust Company N.A., as Trustee |
|||
By: | ||||
Marcella Burgess | ||||
Vice President | ||||
| accept for payment all Securities or portions of Securities properly tendered and not withdrawn pursuant to the Change of Control Offer; |
| deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Securities or portions of Securities properly tendered; and | ||
| deliver or cause to be delivered to the Trustee the Securities properly accepted together with an Officers Certificate stating the aggregate principal amount of Securities or portions of Securities being repurchased. |
Date of Exchange
Amount of
decrease in
Principal Amount
of this Book-Entry
Security
Amount of increase
in Principal
Amount of this
Book-Entry
Security
Principal Amount
of this Book-Entry
Security following
such decrease (or
increase)
Signature of
authorized officer
of Trustee or
Security Custodian
WASTE MANAGEMENT HOLDINGS, INC.,
|
||||
By: | /s/ Cherie C. Rice | |||
Cherie C. Rice | ||||
Vice President Finance and Treasurer | ||||
By: | /s/ Devina Rankin | |||
Devina Rankin | ||||
Assistant Treasurer | ||||
|
/s/ Brett W. Frazier
|
WASTE MANAGEMENT, INC. | ||||||
|
||||||
|
By: |
/s/ David P. Steiner
|
||||
|
Chief Executive Officer |
|
/s/ Jeff Harris
|
WASTE MANAGEMENT, INC. | ||||||
|
||||||
|
By: |
/s/ David P. Steiner
|
||||
|
Chief Executive Officer |
2
(i) | For purposes of this Agreement, the term Cause means any of the following: Executives (A) willful or deliberate and continual refusal to perform Executives employment duties reasonably requested by the Company after receipt of written notice to Executive of such failure to perform, specifying such failure (other than as a result of Executives sickness, illness or injury) and Executives failure to cure such nonperformance within ten (10) days of receipt of said written notice; (B) breach of any statutory or common law duty of loyalty to the Company; (C) conviction of, or plea of nolo contendre to, any felony; (D) willful or intentional cause of material injury to the Company, its property, or its assets; (E) disclosure or attempted disclosure to any unauthorized person(s) of the Companys proprietary or confidential information; (F) material violation or a repeated and willful violation of the Companys policies or procedures, including but not limited to, the Companys Code of Business Conduct and Ethics (or any successor policy) then in effect; or (G) breach of any of the covenants set forth in Section 10 hereof. | ||
(ii) | For purposes of this Agreement, the phrase Notice of Termination for Cause shall mean a written notice that shall indicate the specific termination provision or provisions in Section 5(c)(i) relied upon, and shall set forth in reasonable detail the facts and circumstances which provide the basis for termination for Cause. |
(i) | A termination for Good Reason means a resignation of employment by Executive by written notice (Notice of Termination for Good Reason) given to the Companys Chief Executive Officer within ninety (90) days after the occurrence of the Good Reason event, unless such circumstances are substantially corrected prior to the date of termination specified in the Notice of Termination for Good Reason. For purposes of this Agreement, Good Reason shall mean the occurrence or failure to cause the occurrence, as the case may be, without Executives express written consent, of any of the following circumstances: (A) the Company materially diminishes Executives core duties or responsibility for |
3
those core duties, so as to effectively cause Executive to no longer be performing the duties of his position (except in each case in connection with the termination of Executives employment for Death, Total Disability, or Cause, or temporarily as a result of Executives illness or other absence); (B) in the event of the Companys becoming a fifty percent or more subsidiary of any other entity, the Company materially diminishes the duties, authority or responsibilities of the person to whom Executive is required to report; (C) removal or the non-reelection of the Executive from the officer position with the Company specified herein, or removal of the Executive from any of his then officer positions; (D) any material breach by the Company of any provision of this Agreement; or (E) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to Executive upon the assignee becoming such, the obligations of the Company hereunder, resulting in a material negative change in the employment relationship. |
(ii) | A Notice of Termination for Good Reason shall mean a notice that shall indicate the specific termination provision or provisions relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason. The Notice of Termination for Good Reason shall provide for a date of termination not less than thirty (30) nor more than sixty (60) days after the date such Notice of Termination for Good Reason is given, provided that in the case of the events set forth in Sections 5(d)(i)(A) or (B), the date may be twenty (20) days after the giving of such notice. |
(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, any accrued but unused vacation to the date of employment termination, and any earned but unpaid bonuses for any prior calendar year. Executive shall also be |
4
eligible for a pro-rata bonus or incentive compensation payment for the calendar year of his employment termination to the extent such awards are made to other senior executives of the Company and paid at the same time as other senior executives are paid. |
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof), as determined and paid in accordance with the terms of such plans, policies and arrangements. |
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. Executive shall also be eligible for a pro-rata bonus or incentive compensation payment for the calendar year of his employment termination to the extent such awards are made to other senior executives of the Company and paid at the same time as other senior executives are paid. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof) shall be determined and paid in accordance with the terms of such plans, policies and arrangements. |
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof up to the date of termination) shall be determined and paid in accordance with the terms of such plans, policies and arrangements. |
5
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof up to the date of termination) shall be determined and paid in accordance with the terms of such plans, policies and arrangements. |
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. | ||
(ii) | Any benefits accrued through the date of termination 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) | Subject to Executives execution of the Release (as defined in Section 7), Executive shall be eligible for a bonus or incentive compensation payment, at the same time, on the same basis, and to the same extent payments are made to senior executives of the Company, pro-rated for the fiscal year in which the Executives employment is terminated. | ||
(iv) | Subject to Executives execution of the Release (as defined in Section 7), an amount equal to two (2) times the sum of Executives Base Salary plus his Target Annual Bonus (in each case, as then in effect), of which one-half of such amount shall be paid in a lump sum within the calendar quarter in which the 60 th day following Executives employment termination date falls and one-half of such amount shall be paid during the two (2) year period beginning in the calendar quarter within which the 60 th day following Executives employment termination date falls and continuing 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. | ||
(v) | Subject to Executives execution of the Release (as defined in Section 7) and Executives completion of required enrollment elections, the Company will |
6
continue for Executive and Executives spouse and eligible dependents coverage under the Companys health benefit plan and disability benefit plans, in which Executive was a participant at any time during the twelve-month period prior to the date of termination, until the earliest to occur of (A) twenty-four (24) months after the employment termination date; (B) Executives death (provided that benefits provided to Executives spouse and dependents shall not terminate until twenty-four (24) months after the employment termination date); or (C) with respect to any particular plan, the date Executive becomes eligible to participate in a comparable benefit provided by a subsequent employer. In the event that Executives continued participation in any such Company plan is prohibited, the Company will arrange to provide Executive with benefits substantially similar to those which Executive would have been entitled to receive under this paragraph on a basis which provides Executive with no additional after-tax cost. |
(i) | the Company may elect to cancel any and all payments of any benefits otherwise due Executive, but not yet paid, under this Agreement or otherwise; and | ||
(ii) | upon written demand by the Company, Executive shall refund to the Company any amounts, plus interest, previously paid by Company to Executive pursuant to Subsections 6(e)(iii), 6(e)(iv) or 6(e)(v), less one thousand dollars ($1,000) which Executive shall be entitled to retain as fully sufficient consideration to support and maintain in effect any contractual obligations that Executive has to the Company prior to the refund, including the Release as defined herein. |
(i) | The payments and benefits provided for in Section 6(e)(i), (ii), (iv) and (v) in the same form as provided for therein. | ||
(ii) | Executive shall also receive a bonus or incentive compensation payment for the calendar year of the employment termination, payable at 100% of the maximum bonus available to Executive, pro-rated as of the employment termination date. |
7
Such bonus payment shall be payable within five (5) days after the later of the effective date of Executives termination or the Change in Control. |
(i) | For purposes of this Agreement, Change in Control means the first to occur on or after the date on which this Agreement is first signed, the occurrence of any of the following events: |
(A) | any Person, or Persons acting as a group (within the meaning of Section 409A of the Internal Revenue Code), directly or indirectly, including by purchases, mergers, consolidation or otherwise, acquires ownership of securities of the Company that, together with stock held by such Person or Persons, represents fifty percent (50%) or more of the total voting power or total fair market value of the Companys then outstanding securities; | ||
(B) | any Person, or Persons acting as a group (within the meaning of Section 409A of the Internal Revenue Code), acquires, (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) directly or indirectly, including by purchases, merger, consolidation or otherwise, ownership of the securities of the Company that represent thirty percent (30%) or more of the total voting power of the Companys then outstanding voting securities; | ||
(C) | the following individuals cease for any reason to constitute a majority of the number of directors then serving during any 12-month period: individuals who, at the beginning of the 12-month period, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating or the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Companys stockholders was approved or recommended by a vote of at least a majority of the directors before the date of such appointment or election or whose appointment, election or nomination for election was previously so approved or recommended; | ||
(D) | a Person or Persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, other than a sale or disposition by the Company of such assets to an entity, at least fifty percent (50%) of the combined voting power of the voting securities of which are owned by the Company or by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
8
(ii) | For purposes of this Agreement, Change in Control Period means the period commencing on the date occurring six months immediately prior to the date on which a Change in Control occurs and ending on the second anniversary of the date on which a Change in Control occurs. | ||
(iii) | For purposes of this Agreement, Exchange Act means the Securities and Exchange Act of 1934, as amended from time to time. | ||
(iv) | For purposes of this Section 7, Person shall have the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (1) the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (3) an employee benefit plan of the Company, (4) an underwriter temporarily holding securities pursuant to an offering of such securities or (5) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of Common Stock of the Company. | ||
(v) | For purposes of this Agreement, Release means that specific document which the Company shall present to Executive for consideration and execution after any applicable termination of employment, wherein if he agrees to such, he will irrevocably and unconditionally release and forever discharge the Company, it subsidiaries, affiliates and related parties from any and all causes of action which Executive at that time had or may have had against the Company (excluding any claim for indemnity under this Agreement, any claim under state workers compensation or unemployment laws, or any claim under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)). |
9
10
11
12
13
14
15
16
To the Company: |
Waste Management, Inc.
1001 Fannin, Suite 4000 Houston, Texas 77002 Attention: General Counsel |
||
|
|||
To Executive: | At the address for Executive set forth below. |
17
18
19
CARL RUSH
(Executive) |
||||
/s/ Carl Rush | ||||
Carl Rush | ||||
(Address)
|
||||
20
WASTE MANAGEMENT, INC. | ||||||
(The Company) | ||||||
|
||||||
|
By: |
/s/ David P. Steiner
|
3/10/2011
|
|||
|
President and Chief Executive Officer |
21
2
(i) | For purposes of this Agreement, the term Cause means any of the following: Executives (A) willful or deliberate and continual refusal to perform Executives employment duties reasonably requested by the Company after receipt of written notice to Executive of such failure to perform, specifying such failure (other than as a result of Executives sickness, illness or injury) and Executives failure to cure such nonperformance within ten (10) days of receipt of said written notice; (B) breach of any statutory or common law duty of loyalty to the Company; (C) conviction of, or plea of nolo contendre to, any felony; (D) willful or intentional cause of material injury to the Company, its property, or its assets; (E) disclosure or attempted disclosure to any unauthorized person(s) of the Companys proprietary or confidential information; (F) material violation or a repeated and willful violation of the Companys policies or procedures, including but not limited to, the Companys Code of Business Conduct and Ethics (or any successor policy) then in effect; or (G) breach of any of the covenants set forth in Section 10 hereof. | ||
(ii) | For purposes of this Agreement, the phrase Notice of Termination for Cause shall mean a written notice that shall indicate the specific termination provision or provisions in Section 5(c)(i) relied upon, and shall set forth in reasonable detail the facts and circumstances which provide the basis for termination for Cause. |
3
(i) | A termination for Good Reason means a resignation of employment by Executive by written notice (Notice of Termination for Good Reason) given to the Companys Chief Executive Officer within ninety (90) days after the occurrence of the Good Reason event, unless such circumstances are substantially corrected prior to the date of termination specified in the Notice of Termination for Good Reason. For purposes of this Agreement, Good Reason shall mean the occurrence or failure to cause the occurrence, as the case may be, without Executives express written consent, of any of the following circumstances: (A) the Company materially diminishes Executives core duties or responsibility for those core duties, so as to effectively cause Executive to no longer be performing the duties of her position (except in each case in connection with the termination of Executives employment for Death, Total Disability, or Cause, or temporarily as a result of Executives illness or other absence); (B) in the event of the Companys becoming a fifty percent or more subsidiary of any other entity, the Company materially diminishes the duties, authority or responsibilities of the person to whom Executive is required to report; (C) removal or the non-reelection of the Executive from the officer position with the Company specified herein, or removal of the Executive from any of her then officer positions; (D) any material breach by the Company of any provision of this Agreement; (E) the Companys change of Executives reporting hierarchy such that Executive no longer reports directly to the Companys Chief Executive Officer; or (F) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to Executive upon the assignee becoming such, the obligations of the Company hereunder, resulting in a material negative change in the employment relationship. | ||
(ii) | A Notice of Termination for Good Reason shall mean a notice that shall indicate the specific termination provision or provisions relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason. The Notice of Termination for Good Reason shall provide for a date of termination not less than thirty (30) nor more than sixty (60) days after the date such Notice of Termination for Good Reason is given, provided that in the case of the events set forth in Sections 5(d)(i)(A) or (B), the date may be twenty (20) days after the giving of such notice. |
4
(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, any accrued but unused vacation to the date of employment termination, and any earned but unpaid bonuses for any prior calendar year. Executive shall also be eligible for a pro-rata bonus or incentive compensation payment for the calendar year of her employment termination to the extent such awards are made to other senior executives of the Company and paid at the same time as other senior executives are paid. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof), as determined and paid in accordance with the terms of such plans, policies and arrangements. |
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. Executive shall also be eligible for a pro-rata bonus or incentive compensation payment for the calendar year of her employment termination to the extent such awards are made to other senior executives of the Company and paid at the same time as other senior executives are paid. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof) shall be determined and paid in accordance with the terms of such plans, policies and arrangements. |
5
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof up to the date of termination) shall be determined and paid in accordance with the terms of such plans, policies and arrangements. |
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. | ||
(ii) | Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the plans, policies and arrangements (including those referred to in Section 4(c) hereof up to the date of termination) shall be determined and paid in accordance with the terms of such plans, policies and arrangements. |
(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 accrued but unused vacation to the date of termination, and any earned but unpaid bonuses for any prior calendar year. | ||
(ii) | Any benefits accrued through the date of termination 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) | Subject to Executives execution of the Release (as defined in Section 7), Executive shall be eligible for a bonus or incentive compensation payment, at the |
6
same time, on the same basis, and to the same extent payments are made to senior executives of the Company, pro-rated for the fiscal year in which the Executives employment is terminated. |
(iv) | Subject to Executives execution of the Release (as defined in Section 7), an amount equal to two (2) times the sum of Executives Base Salary plus her Target Annual Bonus (in each case, as then in effect), of which one-half of such amount shall be paid in a lump sum within the calendar quarter in which the 60 th day following Executives employment termination date falls and one-half of such amount shall be paid during the two (2) year period beginning in the calendar quarter within which the 60 th day following Executives employment termination date falls and continuing 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. | ||
(v) | Subject to Executives execution of the Release (as defined in Section 7) and Executives completion of required enrollment elections, the Company will continue for Executive and Executives spouse and eligible dependents coverage under the Companys health benefit plan and disability benefit plans, in which Executive was a participant at any time during the twelve-month period prior to the date of termination, until the earliest to occur of (A) twenty-four (24) months after the employment termination date; (B) Executives death (provided that benefits provided to Executives spouse and dependents shall not terminate until twenty-four (24) months after the employment termination date); or (C) with respect to any particular plan, the date Executive becomes eligible to participate in a comparable benefit provided by a subsequent employer. In the event that Executives continued participation in any such Company plan is prohibited, the Company will arrange to provide Executive with benefits substantially similar to those which Executive would have been entitled to receive under this paragraph on a basis which provides Executive with no additional after-tax cost. |
(i) | the Company may elect to cancel any and all payments of any benefits otherwise due Executive, but not yet paid, under this Agreement or otherwise; and | ||
(ii) | upon written demand by the Company, Executive shall refund to the Company any amounts, plus interest, previously paid by Company to Executive pursuant to Subsections 6(e)(iii), 6(e)(iv) or 6(e)(v), less one thousand dollars ($1,000) which Executive shall be entitled to retain as fully sufficient consideration to support and maintain in effect any contractual obligations that Executive has to the Company prior to the refund, including the Release as defined herein. |
7
(i) | The payments and benefits provided for in Section 6(e)(i), (ii), (iv) and (v) in the same form as provided for therein. | ||
(ii) | Executive shall also receive a bonus or incentive compensation payment for the calendar year of the employment termination, payable at 100% of the maximum bonus available to Executive, pro-rated as of the employment termination date. Such bonus payment shall be payable within five (5) days after the later of the effective date of Executives termination or the Change in Control. |
(i) | For purposes of this Agreement, Change in Control means the first to occur on or after the date on which this Agreement is first signed, the occurrence of any of the following events: |
(A) | any Person, or Persons acting as a group (within the meaning of Section 409A of the Internal Revenue Code), directly or indirectly, including by purchases, mergers, consolidation or otherwise, acquires ownership of securities of the Company that, together with stock held by such Person or Persons, represents fifty percent (50%) or more of the total voting power or total fair market value of the Companys then outstanding securities; | ||
(B) | any Person, or Persons acting as a group (within the meaning of Section 409A of the Internal Revenue Code), acquires, (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) directly or indirectly, including by purchases, merger, consolidation or otherwise, ownership of the securities of the Company that represent thirty percent (30%) or more of the total voting power of the Companys then outstanding voting securities; | ||
(C) | the following individuals cease for any reason to constitute a majority of the number of directors then serving during any 12-month period: individuals who, at the beginning of the 12-month period, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating or the election of directors of the Company) whose appointment or election by the Board |
8
or nomination for election by the Companys stockholders was approved or recommended by a vote of at least a majority of the directors before the date of such appointment or election or whose appointment, election or nomination for election was previously so approved or recommended; |
(D) | a Person or Persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, other than a sale or disposition by the Company of such assets to an entity, at least fifty percent (50%) of the combined voting power of the voting securities of which are owned by the Company or by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
(ii) | For purposes of this Agreement, Change in Control Period means the period commencing on the date occurring six months immediately prior to the date on which a Change in Control occurs and ending on the second anniversary of the date on which a Change in Control occurs. | ||
(iii) | For purposes of this Agreement, Exchange Act means the Securities and Exchange Act of 1934, as amended from time to time. | ||
(iv) | For purposes of this Section 7, Person shall have the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (1) the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (3) an employee benefit plan of the Company, (4) an underwriter temporarily holding securities pursuant to an offering of such securities or (5) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of Common Stock of the Company. | ||
(v) | For purposes of this Agreement, Release means that specific document which the Company shall present to Executive for consideration and execution after any applicable termination of employment, wherein if she agrees to such, she will irrevocably and unconditionally release and forever discharge the Company, it subsidiaries, affiliates and related parties from any and all causes of action which Executive at that time had or may have had against the Company (excluding any claim for indemnity under this Agreement, any claim under state workers compensation or unemployment laws, or any claim under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)). |
9
10
11
Engage in, or assist any person, entity, or business engaged in, the selling or providing of products or services that would displace the products or services that (i) the Company is currently in the business of providing and was in the business of providing, or was planning to be in the business of providing, at the time Executive was employed with the Company, and (ii) that Executive had involvement in or received Confidential Information about in the course of employment; the foregoing is expressly understood to include, without limitation, the business of the collection, transfer, recycling and resource recovery, or disposal of solid waste, |
12
hazardous or other waste, including the operation of waste-to-energy facilities. |
13
14
15
16
To the Company: |
Waste Management, Inc.
1001 Fannin, Suite 4000 Houston, Texas 77002 Attention: General Counsel |
||
To Executive: | At the address for Executive set forth below. |
17
(A) including: (i) cash amounts payable by the Company in the event of termination of Executives employment; and (ii) the present value of benefits or perquisites provided for periods after termination of employment (but excluding benefits or perquisites provided to employees generally); and | |||
(B) excluding: (i) payments of salary, bonus or performance award amounts that had accrued at the time of termination; (ii) payments based on accrued qualified and non-qualified deferred compensation plans, including retirement and savings benefits; (iii) any benefits or perquisites provided under plans or programs applicable to employees generally; (iv) amounts paid as part of any agreement intended to make-whole any forfeiture of benefits from a prior employer; (v) amounts paid for services following termination of employment for a reasonable consulting agreement for a period not to exceed one year; (vi) amounts paid for post-termination covenants (such as a covenant not to compete); (vii) the value of accelerated vesting or payment of any outstanding equity-based award; and (viii) any payment that the Board or any committee thereof determines in good faith to be a reasonable settlement of any claim made against the Company. |
18
19
|
GRACE COWAN | |||
|
(Executive) | |||
|
||||
|
/s/ Grace Cowan
|
|||
|
||||
|
(Address) | |||
|
20
WASTE MANAGEMENT, INC. | ||||||
(The Company) | ||||||
|
||||||
|
By: |
/s/ David. P. Steiner
|
4/18/11 | |||
|
President and Chief Executive Officer |
21
By: | /s/ DAVID P. STEINER | |||
David P. Steiner | ||||
President and Chief Executive Officer | ||||
By: | /s/ ROBERT G. SIMPSON | |||
Robert G. Simpson | ||||
Senior Vice President and Chief Financial Officer | ||||
By: | /s/ DAVID P. STEINER | |||
David P. Steiner | ||||
President and Chief Executive Officer | ||||
By: | /s/ ROBERT G. SIMPSON | |||
Robert G. Simpson | ||||
Senior Vice President and Chief Financial Officer | ||||