SEC Presentation: 10-K & S-3

Waste Management, Inc.

By: Brandon Miller, Brianne Miller, Sara Shirk, & Jered Rogers

WMI Profile

International provider of comprehensive waste management services

WM is now organized into 66 Market Areas• 58 in the U.S.

• 8 in Canada

Operations include collection, disposal, and recycling

Headquarters: Houston, TX

WMI Statistics

Serves 25 million residential customers

Serves 2 million commercial customers

30,000 Collection Vehicles57,000 EmployeesFiscal Year Ends: December 31

WMI 28%

Public Sector 24%Allied Waste 14%

Republic Svs 6%

Other Public Cos 4%

Privately Held Cos 24%

Today’s $40 Billion Market

Over $11 Billion in RevenuesAbout the same size as:

Eli LillyOffice DepotWilliamsToys ‘R’ UsOracleTyson Foods

And larger than:

Marriott

Whirlpool

Schering Plough

Consolidated Edison

MBNA

A Fortune 200 CompanyBased on 2001 reported revenues

Stock Information

Fraud Revealed

March of 2002 the SEC announced it had filed suit against the founder and five other top officers.

The officers were charged with perpetrating a massive financial fraud for the years 1992-1997

The SEC noted Waste Management:

Avoided depreciation expense by assigning inflated salvage values and extending useful lives.

Failed to record expenses for decreases in the value of landfills

Established inflated environmental reservesImproperly capitalized a variety of expensesFailed to establish reserves for income taxes

WMI Restatement

On January 28, 1998 Waste Management issued a report that it would restate earnings for the years in question.

The cumulative effect of this restatement was 2.9 Billion After tax

The SEC eventually settled charges with Arthur Andersen of 7 million dollars

Filing Requirements for 10-K

Must be filed annually Must be filed with the SEC within 90 days

after the end of the company's fiscal yearRequires Basic Information Package (BIC)

The BIC should describe the following:The general development of the business

The location and general character of the principal plants, mines and other materially important physical properties

Any material pending legal proceedings

Submission of Matters to a Vote of Security Holders

The principal United States market or markets in which each class of the registrant's common equity is being traded

Filing Requirements for 10-K Continued

The principal market or markets in which stock is tradedAll securities sold by the registrant within the past three

yearsSelected financial data for each of the last five fiscal years Financial condition, changes in financial condition and

results of operationsQuantitative information about market risk as of the end of

the latest fiscal yearFinancial Statements and Supplementary Data

Filing Requirements for 10-K Continued

All securities of the registrant sold by the registrant within the past three years

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Directors and Executive Officers of the RegistrantExecutive CompensationCertain Relationships and Related TransactionsEvaluation of disclosure controls and procedures,

changes in internal controls, asset-Backed Issuers

10-K Conclusion

Waste Management followed the filing requirements mandated by the SEC.

2002 Financial Results($ in Millions, except EPS)

2002% of

revenues

Revenues $ 11,142

Operating Expense 6,743 60.5%

SG&A 1,529 13.7%

D&A 1,222 11.0%

Interest Expense 462 4.1%

Net Income 822 7.4%

Diluted EPS 1.33

Key Finance Accomplishments

Increased EBIT by $95 million in 2002Issued $500 million 30-year notes in May and $400

million 10-year notes in NovemberChanged external auditor to Ernst & Young, LLPAccelerated earnings reporting schedule & SEC

filings by one full week

Moody’s recently announced that they are reviewing WM for a rating upgrade.

2003 GuidanceRevenue approximately $11.6 billion,

growth expected to primarily come from acquisitions

SG&A projected to be reduced 11% to 11.5% by year end

Acquisition capital of up to $375 millionShare repurchases between $600 million to

$1 billion

Why file an S-3?

1933 Securities Act regulates the original distribution of securities in order to assure that investors have sufficient information in order to make an informed investment decision

The Act requires filing of a registration statement with the SEC each time new securities are offered for sale

S-3 RequirementsA company may file an S-3 if:

• the company has filed reports on a timely basis with the SEC for at least one year

• the company must not have defaulted on any obligations

• the company must have at least $75 million of voting stock outstanding

There are two parts to an S-3: • Part I: Prospectus consists of information thought

to be important to reach an informed investment decision

• Part II: Supplementary and SEC procedural data

S-3 Part I:Information Required in Prospectus

Summary Information, Risk Factors, and Ratio of Earnings to Fixed Charges

Use of ProceedsDetermination of Offering Price DilutionSelling Security Holders

Plan of Distribution Description of Securities to Be Registered Interests of Named Experts and Counsel

Material ChangesIncorporation of Certain Information by ReferenceDisclosure of Commission Position on Indemnification for Securities Act Liabilities

S-3 Part II:Information Not Required in

Prospectus

Other Expenses of Issuance and Distribution

Indemnification of Directors and OfficersExhibitsUndertakings

Additional Information

Securities to be registered by S-3: $1,868,070,886Waste Management added a risk statement in an

amendment to their initial S-3: “You may not be able to sell the debt securities- There will be no active trading market for the debt securities we issue and a market may never develop.”

Our Conclusion

Waste Management followed the filing requirements mandated by the Securities Act of 1933.

Any Questions or Comments?

Thanks for listening