<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO
__________
Commission file number 1-7327
WMX TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-2660763
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3003 Butterfield Road, 60521
Oak Brook, Illinois (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code: (630) 572-8800
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
Shares of Registrant's Common Stock, $1 par value, issued and outstanding, at
April 30, 1997 -- 483,957,575
(excluding 10,886,361 shares held in the WMX Technologies, Inc. Employee Stock
Benefit Trust).
================================================================================
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
-----
PAGE
----
PART I. Financial Information:
Consolidated balance sheets as of December 31, 1996, and
March 31, 1997..................................... 3
Consolidated statements of income for the three months
ended March 31, 1996 and 1997...................... 5
Consolidated statements of stockholders' equity for the
three months ended March 31, 1996 and 1997.......... 6
Consolidated statements of cash flows for the three months
ended March 31, 1996 and 1997...................... 8
Notes to consolidated financial statements.............. 9
Management's discussion and analysis of results of
operations and financial condition................. 15
PART II. Other Information.............................. 21
******
2
<PAGE>
PART I. FINANCIAL INFORMATION
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's omitted)
ASSETS
<TABLE>
<CAPTION>
December 31, 1996 March 31, 1997
----------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 323,288 $ 491,749
Short-term investments 341,338 653,006
Accounts receivable, less reserve of $47,523 in 1996
and $42,781 in 1997 1,681,817 1,618,608
Employee receivables 10,084 10,314
Parts and supplies 142,417 148,767
Costs and estimated earnings in excess of billings on
uncompleted contracts 240,531 255,184
Prepaid expenses 353,749 370,385
----------- -----------
Total Current Assets $ 3,093,224 $ 3,548,013
----------- -----------
PROPERTY AND EQUIPMENT, at cost:
Land, primarily disposal sites $ 5,019,065 $ 5,012,586
Buildings 1,495,252 1,485,386
Vehicles and equipment 7,520,902 7,437,287
Leasehold improvements 85,998 86,816
----------- -----------
$14,121,217 $14,022,075
Less - Accumulated depreciation and amortization (4,399,508) (4,483,466)
----------- -----------
Total Property and Equipment, Net $ 9,721,709 $ 9,538,609
----------- -----------
OTHER ASSETS:
Intangible assets relating to acquired businesses, net $ 3,885,293 $ 3,749,401
Sundry, including other investments 1,452,057 920,779
Net assets of discontinued operations 214,309 276,797
----------- -----------
Total Other Assets $ 5,551,659 $ 4,946,977
----------- -----------
Total Assets $18,366,592 $18,033,599
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's omitted except per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1996 March 31, 1997
------------------ ---------------
<S> <C> <C>
CURRENT LIABILITIES:
Portion of long-term debt payable within one year $ 553,493 $ 1,063,426
Accounts payable 948,350 854,398
Accrued expenses 1,324,324 1,563,871
Unearned revenue 212,541 208,800
----------- -----------
Total Current Liabilities $ 3,038,708 $ 3,690,495
----------- -----------
DEFERRED ITEMS:
Income taxes $ 1,011,593 $ 921,031
Environmental liabilities 543,723 503,989
Other 641,918 641,956
----------- -----------
Total Deferred Items $ 2,197,234 $ 2,066,976
----------- -----------
LONG-TERM DEBT, less portion payable within one year $ 6,971,607 $ 6,139,969
----------- -----------
MINORITY INTEREST IN SUBSIDIARIES $ 1,186,955 $ 1,157,147
----------- -----------
COMMITMENTS AND CONTINGENCIES $ $
----------- -----------
PUT OPTIONS $ 95,789 $ -
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $l par value (issuable in series);
50,000,000 shares authorized; none outstanding
during the periods $ - $ -
Common stock, $l par value; 1,500,000,000 shares
authorized; 507,101,774 shares issued in 1996
and 1997 507,102 507,102
Additional paid-in capital 864,730 932,836
Cumulative translation adjustment (79,213) (186,139)
Retained earnings 4,363,754 4,463,002
----------- -----------
$ 5,656,373 $ 5,716,801
Less: Treasury stock; 12,782,864 shares in 1996 and
12,291,956 in 1997, at cost 419,871 403,747
1988 Employee Stock Ownership Plan 6,396 4,729
Employee Stock Benefit Trust; 10,886,361
shares in 1996 and 1997, at market 353,807 329,313
----------- -----------
Total Stockholders' Equity $ 4,876,299 $ 4,979,012
----------- -----------
Total Liabilities and Stockholders'
Equity $18,366,592 $18,033,599
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited)
(000's omitted except per share amounts)
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
REVENUE $2,144,479 $2,198,308
---------- ----------
Operating expenses $1,494,849 $1,551,718
Selling and administrative expenses 245,863 241,529
Interest expense 93,806 98,349
Interest income (6,240) (12,092)
Minority interest 27,204 27,762
Sundry income, net (17,335) (12,584)
---------- ----------
Income from continuing operations
before income taxes $ 306,332 $ 303,626
Provision for income taxes 126,153 125,214
---------- ----------
Income from continuing operations $ 180,179 $ 178,412
Income from operations of discontinued
businesses, less applicable income
taxes and minority interest of
$5,169 in 1996 4,999 -
---------- ----------
NET INCOME $ 185,178 $ 178,412
========== ==========
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 489,913 484,719
========== ==========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Continuing operations $ 0.37 $ 0.37
Discontinued operations 0.01 -
---------- ----------
NET INCOME $ 0.38 $ 0.37
========== ==========
DIVIDENDS DECLARED PER SHARE $ 0.15 $ 0.16
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
1988
Employee
Additional Cumulative Stock Employee
Common Paid-In Translation Retained Treasury Ownership Stock
Stock Capital Adjustment Earnings Stock Plan Benefit Trust
-------- ---------- ----------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $498,817 $422,801 $(102,943) $4,486,877 $ - $13,062 $350,151
Net income for the period - - - 185,178 - - -
Cash dividends ($.15 per share) - - - (74,173) - - -
Dividends paid to Employee
Stock Benefit Trust - 1,718 - (1,718) - - -
Stock issued upon exercise
of stock options 48 (2,354) - - (1,814) - (10,969)
Treasury stock received in
connection with exercise of
stock options - - - - 714 - -
Tax benefit of non-qualified
stock options exercised - 1,289 - - - - -
Contribution to 1988 Employee
Stock Ownership Plan - - - - - (1,667) -
Treasury stock received as
settlement for claims - - - - 1,100 - -
Common stock issued upon
conversion of Liquid Yield
Option Notes 100 1,768 - - - - -
Common stock issued for
acquisitions 7,093 198,618 - - - - -
Adjustment of Employee Stock
Benefit Trust to market value - 23,026 - - - - 23,026
Cumulative translation adjust-
ment of foreign currency
statements - - (9,539) - - - -
-------- -------- ----------- ---------- -------- ------- --------
Balance, March 31, 1996 $506,058 $646,866 $(112,482) $4,596,164 $ - $11,395 $362,208
======== ======== =========== ========== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(Unaudited)
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1988
Employee
Additional Cumulative Stock Employee
Common Paid-In Translation Retained Treasury Ownership Stock
Stock Capital Adjustment Earnings Stock Plan Benefit Trust
--------- --------- ----------- ---------- -------- --------- -------------
Balance, January 1, 1997 $507,102 $864,730 $ (79,213) $4,363,754 $419,871 $ 6,396 $353,807
Net income for the period - - - 178,412 - - -
Cash dividends ($.16 per share) - - - (77,422) - - -
Dividends paid to Employee
Stock Benefit Trust - 1,742 - (1,742) - - -
Stock issued upon exercise
of stock options - (4,733) - - (16,029) - -
Tax benefit of non-qualified
stock options exercised - 1,498 - - - - -
Contribution to 1988 Employee
Stock Ownership Plan - - - - - (1,667) -
Treasury stock received as
settlement for claims - - - - 141 - -
Common stock issued upon
conversion of Liquid Yield
Option Notes - (91) - - (236) - -
Temporary equity related to
put options - 95,789 - - - - -
Settlement of put options - (1,605) - - - - -
Adjustment of Employee Stock
Benefit Trust to market value - (24,494) - - - - (24,494)
Cumulative translation adjust-
ment of foreign currency
statements - - (106,926) - - - -
-------- -------- ---------- ---------- -------- ------- --------
Balance, March 31, 1997 $507,102 $932,836 $(186,139) $4,463,002 $403,747 $ 4,729 $329,313
======== ======== ========== ========== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
Increase (Decrease) in Cash
(Unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income for the period $ 185,178 $ 178,412
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 222,926 213,048
Provision for deferred income taxes 65,252 34,957
Minority interest in subsidiaries 28,075 27,762
Interest on Liquid Yield Option Notes (LYONs)
and WMX Subordinated Notes 2,864 5,486
Contribution to 1988 Employee Stock
Ownership Plan 1,667 1,667
Changes in assets and liabilities, excluding effects
of acquired companies:
Receivables, net 31,434 20,632
Other current assets (31,351) (41,527)
Sundry other assets 17,976 (20,243)
Accounts payable (234,807) (76,134)
Accrued expenses and unearned revenue 8,745 17,945
Deferred items (59,301) (32,035)
Other, net (374) (8,509)
--------- ---------
Net cash provided by operating activities $ 238,284 $ 321,461
--------- ---------
Cash flows from investing activities:
Short-term investments $ 11,607 $ 811
Capital expenditures (280,551) (151,257)
Proceeds of asset monetization program 25,546 330,016
Cost of acquisitions, net of cash acquired (35,695) (2,344)
Other investments (26,496) 11,393
Acquisition of minority interests (81,811) (10,013)
--------- ---------
Net cash provided by (used for) investing activities $(387,400) $ 178,606
--------- ---------
Cash flows from financing activities:
Cash dividends $ (74,173) $ (77,422)
Proceeds from issuance of indebtedness 342,979 222,691
Repayments of indebtedness (213,895) (486,566)
Proceeds from exercise of stock options, net 9,763 11,296
Contributions from minority interests 2,143 -
Settlement of put options - (1,605)
--------- ---------
Net cash provided by (used for) financing activities $ 66,817 $(331,606)
--------- ---------
Net increase (decrease) in cash and cash equivalents $ (82,299) $ 168,461
Cash and cash equivalents at beginning of period 169,541 323,288
--------- ---------
Cash and cash equivalents at end of period $ 87,242 $ 491,749
========= =========
The Company considers cash and cash equivalents
to include currency on hand, demand deposits
with banks and short-term investments with
maturities of less than three months when
purchased.
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 96,451 $ 92,863
Income taxes, net of refunds received $ 31,538 $ 87,660
Supplemental schedule of noncash investing and
financing activities:
LYONs converted into common stock of the Company $ 1,868 $ 145
Liabilities assumed in acquisitions of businesses $ 89,820 $ -
Fair market value of Company stock issued for
acquired businesses $ 205,711 $ -
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
($000's omitted in all tables)
The financial statements included herein have been prepared by WMX Technologies,
Inc. ("WMX" or the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The financial information
included herein reflects, in the opinion of the Company, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position and results of operations for the periods presented. The
results for interim periods are not necessarily indicative of results for the
entire year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets, liabilities, income and expenses and
disclosures of contingencies. Further events could alter such estimates in the
near term.
Certain amounts in previously issued financial statements have been restated to
conform to 1997 classifications.
Income Taxes -
The following table sets forth the provision for income taxes for continuing
operations for the three months ended March 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Currently payable $ 58,453 $ 90,450
Deferred 67,894 34,957
Amortization of deferred investment credit (194) (193)
-------- --------
$126,153 $125,214
-------- --------
</TABLE>
Business Combinations -
During 1996, the Company and its principal subsidiaries acquired 83 businesses
for $104,778,000 in cash (net of cash acquired) and notes, $39,446,000 of debt
assumed, and 8,210,568 shares of the Company's common stock. These acquisitions
were accounted for as purchases.
During the three months ended March 31, 1997, the Company and its principal
subsidiaries acquired seven businesses for $2,344,000 in cash and notes. These
acquisitions were accounted for as purchases. The pro forma effect of the
acquisitions made during 1996 and 1997 is not material.
9
<PAGE>
Discontinued Operations -
In line with the Company's strategy to focus on waste management services, other
industry segments, including the engineering, construction and consulting
businesses and industrial scaffolding business of Rust International Inc.
("Rust") and the water businesses of Wheelabrator Technologies Inc. ("WTI") have
been classified as discontinued operations and have been or are in the process
of being sold. The Company expects to complete by the end of 1997 the sale of
those businesses not previously sold.
The discontinued businesses have been segregated from continuing operations in
the accompanying balance sheets and statements of income. Revenue from these
businesses prior to sale was $134.4 million for the three months ended March 31,
1997, and $415.5 million for the comparable period in 1996. Results of
operations for the three months ended March 31, 1997, were not material and were
included in the reserve for loss on disposition provided previously.
Restructuring -
In the fourth quarter of 1996, the Company recorded a charge for reengineering
and streamlining its finance and administrative functions. Approximately $20.0
million of the charge related to cash payments for employee severance. As of
March 31, 1997, approximately $5.0 million of this amount had been spent. The
balance is expected to be paid by the end of 1997. In addition, the Company
expects that the reengineering will result in costs of $.08 to $.10 per share
which will be charged to income over the next nine to fifteen months. Such
amounts were not significant in the first quarter.
Accounting Principles -
In October 1996, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
96-1, "Environmental Remediation Liabilities" which became effective in 1997.
The SOP provides that environmental remediation liabilities should be accrued
when the criteria of Statement of Financial Accounting Standards ("FAS") No. 5,
"Accounting for Contingencies," are met. Included in the SOP are benchmarks to
aid in the determination of when such criteria are met and environmental
remediation liabilities should be recognized. The SOP also provides that an
accrual for environmental liabilities should include future costs of
compensation and benefits for those employees expected to devote a significant
amount of time directly to the remediation effort. The adoption of SOP 96-1 did
not have a material impact on the Company's financial statements.
In February 1997, the Financial Accounting Standards Board issued FAS No. 128,
"Earnings Per Share". This statement supercedes Accounting Principles Board
Opinion No. 15. Primary EPS is replaced by Basic EPS, which is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. In addition, fully diluted EPS is
replaced with Diluted EPS, which gives effect to all common shares that would
have been outstanding if all dilutive potential common shares (relating to such
things as the exercise of stock options and convertible debt) had been issued.
FAS No. 128 is effective for interim and annual periods ending after December
15, 1997. Earlier application is not permitted, but when the opinion becomes
effective, all prior periods presented must be restated. EPS computed in
accordance with FAS No. 128 for the three months ended March 31, 1996 and 1997,
would have been as follows:
<TABLE>
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Continuing Operations -
Basic $0.37 $0.37
Diluted 0.36 0.36
Discontinued Operations -
Basic $0.01 $ -
Diluted 0.01 -
</TABLE>
10
<PAGE>
Derivative Financial Instruments -
From time to time, the Company and certain of its subsidiaries use derivatives
to manage interest rate, currency and commodity risk. The amount of such
instruments outstanding at any one point in time and gains or losses from their
use have not been and are not expected to be material to the Company's financial
statements.
Interest Rate Agreements Certain of the Company's subsidiaries have entered
into interest rate swap agreements to balance fixed and floating rate debt in
accordance with management's criteria. The agreements are contracts to exchange
fixed and floating interest rate payments periodically over the term without the
exchange of the underlying notional amounts. The agreements provide only for
the exchange of interest on the notional amounts at the stated rates, with no
multipliers or leverage. Differences paid or received are recognized as a part
of interest expense on the underlying debt over the life of the agreements.
Currency Agreements From time to time, the Company and certain of its
subsidiaries use foreign currency derivatives to seek to mitigate the impact of
translation on foreign earnings and income from foreign investees. Typically
these have taken the form of purchased put options or offsetting put and call
options with different strike prices. The Company receives or pays, based on
the notional amount of the option, the difference between the average exchange
rate of the hedged currency against the base currency and the average (strike
price) contained in the option. Complex instruments involving multipliers or
leverage are not used. Although the purpose for using such derivatives is to
mitigate currency risk, they do not qualify for hedge accounting under generally
accepted accounting principles and accordingly, must be adjusted to market value
at the end of each accounting period.
Commodity Agreements The Company utilizes collars, calls and swaps to seek to
mitigate the risk of price fluctuations on the fuel used by its vehicles.
Quantities hedged equate to committed fuel purchases or anticipated usage and
accordingly, gains and losses are deferred and recognized as fuel is purchased.
The Company is exposed to credit loss in the event of non-performance by
counterparties on interest rate, currency and commodity derivatives, but in all
cases such counterparties are highly rated financial institutions and the
Company does not anticipate non-performance. Maximum credit exposure is
represented by the fair value of contracts with a positive fair value at March
31, 1997, which is not material.
Environmental Liabilities -
The continuing business in which the Company is engaged is intrinsically
connected with the protection of the environment. As such, a significant
portion of the Company's operating costs and capital expenditures could be
characterized as costs of environmental protection. While the Company is faced,
in the normal course of business, with the need to expend funds for
environmental protection and remediation, it does not expect such expenditures
to have a material adverse effect on its financial condition or results of
operations because its business is based upon compliance with environmental laws
and regulations and its services are priced accordingly. Such costs may
increase in the future as a result of legislation or regulation; however, the
Company believes that in general it tends to benefit when government regulation
increases, which may increase the demand for its services, and that it has the
resources and experience to manage environmental risk.
As part of its ongoing operations, the Company provides for estimated closure
and post-closure monitoring costs over the operating life of disposal sites as
airspace is consumed. The Company has also established procedures to evaluate
its potential remedial liabilities at closed sites which it owns or operated, or
to which it transported waste, including 94 sites listed on the Superfund
National Priority List ("NPL"). The majority of situations involving NPL sites
relate to allegations
11
<PAGE>
that subsidiaries of the Company (or their predecessors) transported waste to
the facilities in question, often prior to the acquisition of such subsidiaries
by the Company. Where the Company concludes that it is probable that a
liability has been incurred, provision is made in the financial statements.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies or other factors could necessitate the
recording of additional liabilities which could be material.
Stockholders' Equity -
The Boards of Directors of WMX and WTI have authorized their respective
companies to repurchase shares of their own common stock (up to 50 million
shares in the case of WMX and 30 million shares in the case of WTI) in the open
market, in privately negotiated transactions, or through issuer tender offers.
These programs extend into 1998. WMX did not repurchase any shares during the
first quarter of 1997, but on April 1 it commenced a "Dutch Auction" through
which it subsequently repurchased 30 million of its shares at $30 per share.
WTI announced in March of 1997 the indefinite deferment of its previously
planned Dutch Auction pending a further review of strategic options in its core
business. However, during the first quarter of 1997, WTI repurchased 762,900
shares of its stock in the open market.
WMX periodically sells put options on its common stock. The put options give
the holders the right at maturity to require the Company to repurchase its
shares at specified prices. Proceeds from the sale of the options were credited
to additional paid-in capital. In the event the options are exercised, the
Company may elect to pay the holder in cash the difference between the strike
price and the market price of the Company's shares in lieu of repurchasing the
stock. In February 1997, options on 1.9 million shares were exercised, and the
Company elected to settle them for $1.6 million in cash; 1.0 million options
expired unexercised as the price of the Company's stock was in excess of the
strike price at maturity. At March 31, 1997, no put options were outstanding,
although the Company may sell such options in the future.
Commitments and Contingencies -
During the first quarter of 1995, Waste Management International plc ("WM
International") received an assessment from the Swedish Tax Authority of
approximately 417 million Krona (approximately $60 million) plus interest from
the date of the assessment, relating to a transaction completed in 1990. WM
International believes that all appropriate tax returns and disclosures were
filed at the time of the transaction and intends to vigorously contest the
assessment.
A Company subsidiary has been involved in litigation challenging a municipal
zoning ordinance which restricted the height of its New Milford, Connecticut
landfill to a level below that allowed by the permit previously issued by the
Connecticut Department of Environmental Protection ("DEP"). Although a lower
court had declared the zoning ordinance's height limitation unconstitutional,
during 1995 the Connecticut Supreme Court reversed this ruling and remanded the
case for further proceedings in the Superior Court. In November 1995, the
Superior Court ordered the subsidiary to apply to the DEP for permission to
remove all waste above the height allowed by the zoning ordinance, and the
Connecticut Supreme Court has upheld that ruling. The Company believes that the
removal of such waste is an inappropriate remedy and is seeking an alternative
resolution to the issue, but is unable to
12
<PAGE>
predict the outcome. Depending upon the nature of any plan eventually approved
by applicable regulatory authorities for removing the waste, the actual volume
of waste to be moved, and other currently unforseeable factors, the subsidiary
could incur costs which would have a material adverse impact on the Company's
financial condition and results of operations in one or more future periods.
In May 1994, the U.S. Supreme Court ruled that state and local governments may
not constitutionally restrict the free movement of trash in interstate commerce
through the use of flow control laws. Such laws typically involve a
municipality specifying the disposal site for all solid waste generated within
its borders. Since the ruling, several decisions of state or federal courts
have invalidated regulatory flow control schemes in a number of jurisdictions.
Other judicial decisions have upheld nonregulatory means by which municipalities
may effectively control the flow of municipal solid waste.
WTI's Gloucester County, New Jersey, facility relies on a disposal franchise for
substantially all of its supply of municipal solid waste. In July 1996, a
Federal District Court permanently enjoined the State of New Jersey from
enforcing its solid waste regulatory flow control system, which was held to be
unconstitutional, but stayed the injunction for as long as its ruling is on
appeal plus an additional period of two years to enable the State to devise an
alternative nondiscriminatory approach. On May 1, 1997, the Third Circuit Court
of Appeals affirmed the District Court's ruling that the New Jersey flow control
system was unconstitutional, but vacated the two year "post appeal" stay.
However, the Appeals Court granted a continued stay for so long as any appeals
are pending. The State has indicated that it will continue to enforce flow
control during the appeal process. The New Jersey legislature is now
considering a bill to authorize counties and authorities, including the
Gloucester County Improvement Authority, which administers WTI's franchise
there, to implement a constitutionally permissible system of "economic flow
control" designed to recover waste disposal costs incurred in reliance on the
State's franchise system.
The Supreme Court's 1994 ruling and subsequent court decisions have not to date
had a material adverse effect on any of the Company's operations. Federal
legislation has been proposed, but not yet enacted, to effectively grandfather
existing flow control mandates. In the event that such legislation is not
adopted, the Company believes that affected municipalities will endeavor to
implement alternative lawful means to continue controlling the flow of waste.
In view of the uncertain state of the law at this time, however, the Company is
unable to predict whether such efforts would be successful or what impact, if
any, this matter might have on the Company's disposal facilities, particularly
WTI's trash-to-energy facilities.
As the states and U.S. Congress have accelerated their consideration of ways in
which economic efficiencies can be gained by deregulating the electric
generation industry, some have argued that over-market power sales agreements
entered into pursuant to the Public Utilities Regulatory Policies Act of 1978
("PURPA") should be voidable as "stranded assets." WTI's 25 power production
facilities are qualifying facilities under PURPA and depend on the sanctity of
their power sales agreements for their economic viability. Recent state and
federal agency and court decisions have unanimously upheld the inviolate nature
of these contracts. WTI believes that federal law offers strong protections to
its PURPA contracts. However, there is a risk that future utility
restructurings, court decisions or legislative or administrative action in this
area will have a material adverse effect on its business.
WM International operates facilities in Hong Kong which are owned by the Hong
Kong government. On July 1, 1997, control of the Hong Kong government transfers
to the People's Republic of China. WM International is unable to predict what
impact, if any, this change will have on its operations in Hong Kong. At March
31, 1997, WM International had identifiable assets of $256.3 million related to
its Hong Kong operations which generated pretax income of approximately $15.3
million in calendar 1996 and $7.4 million in the first quarter of 1997.
13
<PAGE>
From time to time, the Company and certain of its subsidiaries are named as
defendants in personal injury and property damage lawsuits, including purported
class actions, on the basis of a Company subsidiary's having owned, operated or
transported waste to a disposal facility which is alleged to have contaminated
the environment, or, in certain cases, conducted environmental remediation
activities at such sites. Some of these lawsuits may seek to have the Company or
its subsidiaries pay the cost of groundwater monitoring and health care
examinations of allegedly affected persons for a substantial period of time,
even where no actual damage is proven. While the Company believes that it has
meritorious defenses to these lawsuits, their ultimate resolution is often
substantially uncertain due to the difficulty of determining the cause, extent
and impact of alleged contamination (which may have occurred over a long period
of time), the potential for successive groups of complainants to emerge, the
diversity of the individual plaintiffs' circumstances, and the potential
contribution or indemnification obligations of co-defendants or other third
parties, among other things. Accordingly, it is reasonably possible that such
matters could have a material adverse impact on the Company's earnings for one
or more fiscal quarters or years.
In the ordinary course of conducting its business, the Company becomes involved
in lawsuits, administrative proceedings and governmental investigations,
including antitrust and environmental matters and commercial disputes. Some of
these proceedings may result in fines, penalties or judgments being assessed
against the Company which, from time to time, may have an impact on earnings for
a particular quarter or year. The Company believes it has adequately provided
for such matters in its financial statements and does not believe that their
outcome, individually or in the aggregate, will have a material adverse impact
on its business or financial condition.
Legal Matters --
See Part II of this Form 10-Q for a discussion of legal matters.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Tables in millions)
RESULTS OF OPERATIONS:
Summary -
- ---------
For the three months ended March 31, 1997, WMX Technologies, Inc. and its
subsidiaries ("WMX" or the "Company") had net income from continuing operations
of $178.4 million or $.37 per share compared with $180.2 million or $.37 per
share in the same period in 1996. During the 1996 quarter, discontinued
businesses contributed $5.0 million of net income after tax and minority
interest, resulting in consolidated net income of $185.2 million or $.38 per
share for that quarter. Discontinued operations had no impact on net income in
the 1997 first quarter. Revenue was $2.20 billion in the first quarter of 1997
compared with $2.14 billion (restated to eliminate discontinued operations) in
the first quarter of 1996.
In February 1997, WMX laid out a comprehensive set of strategic initiatives
designed to enhance shareholder value. The centerpiece of that strategy is a
focus solely on waste management services in domestic and selected international
markets where the Company holds or can develop a strong competitive position.
As part of these initiatives, the Company articulated a financial strategy
focused on generating cash and using that cash for the benefit of shareholders.
The increased cash flow is to come from divestiture of non-core or non-
integrated assets, reduction of capital expenditures, control of costs, and
improved return on the asset base. During the first quarter of 1997, the Company
monetized $330.0 million of non-core and non-integrated assets, including the
investment in Wessex Water Plc ("Wessex"), and capital expenditures were reduced
to $151.3 million from $280.6 million in the same quarter of 1996. In early
April, the Company completed the sale of its approximately 20% ownership
interest in ServiceMaster Limited Partnership ("ServiceMaster"), and its
Wheelabrator Technologies Inc. ("WTI") subsidiary sold its water and wastewater
facility operations and privatization business to United States Filter
Corporation ("U.S. Filter") for 2.3 million shares of U.S. Filter stock. Other
divestitures are in process.
During the first quarter of 1997, the Company announced a "Dutch Auction"
through which it offered to repurchase 30 million shares of its stock.
Subsequent to March 31, 1997, the 30 million shares were repurchased at a price
of $30 per share.
The Company has five primary operating subsidiaries. Waste Management, Inc.
("WMI") provides integrated solid waste management services in North America and
manages the industrial cleaning services business of Rust International Inc.
("Rust"). Chemical Waste Management, Inc. ("CWM") provides chemical waste
treatment, storage, disposal and related services and also furnishes low-level
radioactive waste management and disposal services in North America. WTI is
engaged in the ownership and operation of trash-to-energy, waste-fuel powered
independent power, and biosolids pelletizer facilities as well as providing
biosolids land application services. Waste Management International plc ("WM
International") provides comprehensive waste management and related services
outside North America, with operations in ten countries in Europe, six countries
in the Asia-Pacific region, and Argentina, Australia, Brazil, Israel and New
Zealand. The Company considers its operations to be part of a single industry
segment-- waste management services -- and reports accordingly. The Company's
former service lines have been classified as discontinued operations in the
accompanying financial statements and have been or are in process of being sold.
The discussion which follows relates to the Company's continuing operations.
15
<PAGE>
Revenue -
- ---------
Consolidated revenue for the first quarter of 1997 compared with the same period
in 1996 is shown in the table which follows:
<TABLE>
<CAPTION>
Percentage
1997 1996 Increase/(Decrease)
-------- --------- -------------------
<S> <C> <C> <C>
North America -
WMI -
Residential $ 313.0 $ 312.4 0.2%
Commercial 405.6 405.1 0.1
Rolloff & industrial 310.0 315.8 (1.8)
Disposal, transfer & other 346.5 331.5 4.5
-------- --------
Total WMI $1,375.1 $1,364.8 0.8
CWM 109.3 125.2 (12.7)
Rust 71.9 65.2 10.3
WTI 248.2 219.5 13.1
WM International 457.2 453.7 0.8
Eliminations (63.4) (83.9)
-------- --------
Total $2,198.3 $2,144.5 2.5%
-------- --------
</TABLE>
As the Company previously announced, it is not anticipating significant revenue
growth in 1997 as divestitures offset internal growth. In total, revenue grew
2.5% for the quarter compared with the same period in 1996. WMI revenue growth
of .8% reflects a net decline of 1% from divestitures in excess of acquisitions,
offset by slight increases in price and volume. WMI continues to see a very
difficult pricing environment and has experienced an increased lost customer
rate from price increases in the second and third quarters of 1996.
WTI revenue in the first quarter of 1997 included $15.9 million of construction
revenue related to the retrofit of its Pinellas County, Florida trash-to-energy
facility and construction of a biosolids compost facility for Burlington County,
New Jersey. It had no similar construction revenue in the first quarter of
1996. The remaining $12.8 million of WTI's revenue growth was derived
approximately equally from new industrial cogeneration plants (so-called
"inside-the-fence" facilities) which it acquired in 1996, and existing
businesses. WTI is attempting to leverage its energy plant operating
capabilities and project financing expertise by owning and/or operating
inside-the-fence power plants for industrial customers.
WM International, a U.K. corporation which maintains its accounts in pounds
sterling, had revenue growth from price (1.4%), volume (2.5%) and acquisitions
(.4%) aggregating 4.3%, but this was largely offset by translation losses
resulting from the strength of the pound against other world currencies.
Operating Expenses -
- --------------------
Operating expenses increased slightly as a percentage of revenue to 70.6% in the
first quarter of 1997 compared with 69.7% in the first quarter of 1996. The
lower 1997 margin was due, among other things, to the relatively low revenue
growth in North American solid waste, including weak commodity prices, the WTI
construction revenue, which has virtually no margin, and higher levels of
maintenance at certain trash-to-energy facilities.
Selling and Administrative Expenses -
- -------------------------------------
Selling and administrative expenses declined in the first quarter of 1997 in
both actual dollars and as a percentage of revenue compared with the same 1996
period. The improvement reflects the ongoing focus on overhead cost control
throughout the Company.
16
<PAGE>
Interest, Net -
- ---------------
The following table sets forth the components of consolidated interest, net, for
the three months ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Interest expense $113.3 $111.0
Interest income (12.1) (6.2)
Capitalized interest (14.9) (17.2)
------ ------
Interest expense, net $ 86.3 $ 87.6
====== ======
</TABLE>
Net interest expense declined slightly. Debt balances were reduced and
investments increased with the cash flow from operations and asset monetization.
This benefit was partially offset by slightly higher interest rates. However,
the Company required substantial cash to complete the Dutch Auction, and thus
net interest expense may increase over the remainder of the year.
Sundry Income, Net -
- --------------------
Sundry income previously consisted primarily of earnings from the investments in
Wessex and ServiceMaster. The decline in sundry income in 1997 reflects the loss
of this income, partially offset by a gain recognized when the ServiceMaster
shares were reclassified as trading securities and marked-to-market.
Discontinued Operations -
- -------------------------
In line with the Company's strategy to focus on waste management services, other
industry segments, including the engineering, construction and consulting
businesses and industrial scaffolding business of Rust and the water businesses
of WTI, have been classified as discontinued operations and have been or are in
the process of being sold. Sale of the remaining businesses is expected to be
completed by the end of 1997. Results of operations for the three months ended
March 31, 1997, for those businesses not yet sold were not material and were
included in the reserve for loss on dispositions provided previously. Revenues
of discontinued operations prior to sale were $134.4 million for the three
months ended March 31, 1997, and $415.5 million for the comparable period in
1996.
Restructuring -
- ---------------
In the fourth quarter of 1996, the Company recorded a charge for reengineering
and streamlining its finance and administrative functions. Approximately $20.0
million of the charge related to cash payments for employee severance. As of
March 31, 1997, approximately $5.0 million of this amount had been spent. The
balance is expected to be paid by the end of 1997. In addition, the Company
expects that the reengineering will result in costs of $.08 to $.10 per share
which will be charged to income over the next nine to fifteen months. Such
amounts were not significant in the first quarter.
Accounting Principles -
- -----------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("FAS") No. 128, "Earnings Per Share." This
statement supersedes Accounting Principles Board Opinion No. 15. Primary EPS is
replaced by Basic EPS, which is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. In addition, Fully Diluted EPS is replaced with Diluted EPS, which gives
effect to all common shares that would have been outstanding if all dilutive
potential common shares (relating to such things as the exercise of stock
options and convertible debt) had been issued.
17
<PAGE>
FAS No. 128 is effective for interim and annual periods ending after December
15, 1997. Earlier application is not permitted, but when the opinion becomes
effective all prior periods presented must be restated. EPS computed in
accordance with FAS No. 128 for the three months ended March 31, 1996 and 1997,
would have been as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Continuing Operations -
Basic $0.37 $0.37
Diluted 0.36 0.36
Discontinued Operations -
Basic $ - $0.01
Diluted - 0.01
</TABLE>
In October 1996, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
96-1 - "Environmental Remediation Liabilities" - which became effective in 1997.
The SOP provides that environmental remediation liabilities should be accrued
when the criteria of FAS No. 5 - "Accounting for Contingencies" - are met.
Included in the SOP are benchmarks to aid in the determination of when such
criteria are met and environmental remediation liabilities should be recognized.
The SOP also provides that an accrual for environmental liabilities should
include future costs of compensation and benefits for employees expected to
devote a significant amount of time directly to the remediation effort. The
adoption of SOP 96-1 did not have a material impact on the Company's financial
statements.
Derivatives -
- -------------
From time to time, the Company and certain of its subsidiaries use derivatives
to manage currency, interest rate, and commodity (fuel) risk. Derivatives used
are simple agreements which provide for payments based on the notional amount,
with no multipliers or leverage. The Company's use of derivatives has not been
and is not expected to be material with respect to financial condition or
results of operations.
Environmental Liabilities -
- ---------------------------
The continuing business in which the Company is engaged is intrinsically
connected with the protection of the environment. As such, a significant portion
of the Company's operating costs and capital expenditures could be characterized
as costs of environmental protection. As part of its ongoing operations, the
Company provides for estimated closure and post-closure monitoring costs over
the life of disposal sites as airspace is consumed. The Company has also
established procedures to evaluate its potential remedial liability at closed
sites which it owns or operated, or to which it transported waste. While the
Company believes that it has adequately provided for its environmental
liabilities, it is reasonably possible that technological, regulatory or
enforcement developments, the results of environmental studies or other factors
could necessitate the recording of additional liabilities which could be
material. For further discussion, see "Environmental Liabilities" in the Notes
to Consolidated Financial Statements.
FINANCIAL CONDITION:
Liquidity and Capital Resources -
- ---------------------------------
The Company had a working capital deficit of $142.5 million at March 31, 1997,
compared with working capital of $54.5 million at December 31, 1996. The Company
operates in a service industry with neither significant inventory nor seasonal
variation in receivables. In connection with its strategy to maximize cash
flow, the Company has placed emphasis on minimizing working capital, since doing
so typically does not adversely affect operations.
18
<PAGE>
The Company has adopted the strategy of raising the level of "owners' cash
flow", which it defines as cash flow from operating activities, less capital
expenditures and dividends, plus proceeds from asset monetization. Such amounts
are available to make acquisitions, reduce debt, or repurchase common stock. For
the first quarter of 1997, owners' cash flow was $422.8 million, including
$330.0 million of proceeds from the asset monetization program, compared with a
negative $90.9 million in the first quarter of 1996.
Acquisitions and Capital Expenditures -
- ---------------------------------------
Capital expenditures, excluding property and equipment of purchased businesses,
were $151.3 million for the three months ended March 31, 1997, and $280.6
million for the comparable quarter in 1996. In addition, the Company and its
principal subsidiaries spent $2.3 million on acquisitions in 1997 compared with
$67.1 million in cash and debt (including debt assumed) and 7.1 million shares
of WMX common stock during the first quarter of 1996.
Capital Structure -
- -------------------
Although the Company has placed increasing emphasis on generating owners' cash
flow during the last two years, a substantial portion of such cash has been
returned to shareholders through stock repurchases. However, during the first
quarter of 1997, total debt declined $497.6 million from the first quarter of
1996 and $321.7 million from December 31, 1996. Cash and marketable securities
increased $480.1 million in the first quarter of 1997 to $1.14 billion, in
preparation for the completion of the Dutch Auction.
The Boards of Directors of WMX and WTI have authorized their respective
companies to repurchase shares of their own common stock (up to 50 million
shares in the case of WMX and 30 million shares in the case WTI) in the open
market, in privately negotiated transactions, or through issuer tender offers.
These programs extend into 1998. WMX did not repurchase any shares during the
first quarter of 1997, but on April 1 commenced a "Dutch Auction" through which
it subsequently repurchased 30 million of its shares at $30 per share.
WTI announced in March of 1997 the indefinite deferment of its previously
planned Dutch Auction pending a further review of strategic options in its core
business. During the first quarter of 1997, WTI repurchased 762,900 shares of
its stock in the open market.
In conjunction with its authorized repurchased program, WMX periodically sells
put options on its common stock. These options give the holders the right at
maturity to require the company to repurchase its shares at specified prices. As
of December 31, 1996, the Company had outstanding 2.9 million options which
expired in February of 1997. The Company paid the holders of 1.9 million options
cash of $1.6 million, representing the difference between the strike price and
the market price of the underlying shares at expiration, in lieu of repurchasing
the stock. The remaining options expired unexercised as the price of the
Company's stock was in excess of the strike price at maturity. There were no put
options outstanding at March 31, 1997, although the Company may sell additional
such options in the future.
Risks and Uncertainties -
- -------------------------
See "Commitments and Contingencies" in the Notes to Consolidated Financial
Statements for a description of certain contingent liabilities relating to the
Company and its subsidiaries. There has been no significant change in the status
of these matters since December 31, 1996.
19
<PAGE>
Forward-Looking Information -
- -----------------------------
Except for historical data, the information herein constitutes forward-looking
statements. Forward-looking statements are inherently uncertain and subject to
risks. Such statements should be viewed with caution. Actual results or
experience could differ materially from the forward-looking statements as a
result of many factors, including changes in the price of recyclable
commodities, weather conditions, slowing of the overall economy, higher interest
rates, failure of the Company's restructuring and reengineering plans to produce
the anticipated cost savings, the inability to complete the divestiture of
discontinued businesses or the monetization of other assets at appropriate
prices and terms, and the cost and timing of stock repurchase programs. The
Company makes no commitment to disclose any revisions to forward-looking
statements, or any facts, events or circumstances after the date hereof that
may bear upon forward-looking statements.
20
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
-----------------
The continuing business in which the Company is engaged is intrinsically
connected with the protection of the environment, and the potential exists for
the unintended or unpermitted discharge of materials into the environment. In
the ordinary course of conducting its business activities, the Company becomes
involved in judicial and administrative proceedings involving governmental
authorities at the federal, state and local level, including, in certain
instances, proceedings instituted by citizens or local governmental authorities
seeking to overturn governmental action where governmental officials or agencies
are named as defendants together with the Company or one or more of its
subsidiaries, or both. In the majority of the situations where proceedings are
commenced by governmental authorities, the matters involved relate to alleged
technical violations of licenses or permits pursuant to which the Company
operates or is seeking to operate or laws or regulations to which its operations
are subject, or are the result of different interpretations of the applicable
requirements. From time to time the Company pays fines or penalties in
environmental proceedings relating primarily to waste treatment, storage or
disposal facilities. Subject to the discussion set forth above under
"Commitments and Contingencies" in the Notes to Consolidated Financial
Statements concerning a Company subsidiary's New Milford, Connecticut landfill,
the Company believes that these matters will not have a material adverse effect
on its results of operation or financial condition. However, the outcome of any
particular proceeding cannot be predicted with certainty, and the possibility
remains that technological, regulatory or enforcement developments, the results
of environmental studies or other factors could materially alter this
expectation at any time.
ITEM 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
The exhibits to this report are listed in the Exhibit Index elsewhere
herein.
(b) Reports on Form 8-K.
During the period covered by this Quarterly Report on Form 10-Q, the
Company filed reports on Form 8-K as follows:
(i) A report dated February 4, 1997 stating that on February 4, 1997 the
Company announced (a) Board of Directors approval of a comprehensive package of
strategic initiatives, (b) the Company's divestiture of non-core and non-
integrated assets valued at about $1.5 billion over the next 18-24 months and
reduction of overhead and capital spending, (c) a new member of its Board of
Directors, (d) a planned change of its name to "Waste Management, Inc.," (e) a
two-year, 50 million share repurchase program, which would include an
approximately $1 billion "Dutch Auction" tender offer targeted for early in the
second quarter, (f) its results of operations for the quarter and year ended
December 31, 1996 and a charge to 1996 earnings of $680 million, after tax and
minority interest, and (g) anticipated earnings from continuing operations of
approximately $1.75 per share in 1997 and an earnings goal of $2.05 per share
from continuing operations for 1998.
(ii) A report dated February 18, 1997 stating that (a) the Company's
President and Chief Executive Officer, Phillip B. Rooney, had resigned and Dean
L. Buntrock, Chairman of the Company's Board of Directors, will serve as acting
Chief Executive Officer while the Board of Directors searches for a new Chief
Executive Officer from outside the Company, and (b) the Company and
ServiceMaster Limited Partnership had signed a definitive agreement under which
ServiceMaster Limited Partnership would purchase the Company's entire interest
in ServiceMaster Limited Partnership for approximately $626 million in cash on
or before April 14, 1997.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WMX TECHNOLOGIES, INC.
/s/ JOHN D. SANFORD
---------------------------------------
John D. Sanford, Senior Vice President,
Chief Financial Officer and Treasurer
May 8, 1997
22
<PAGE>
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
Number and Description of Exhibit*
---------------------------------
2 None
3 None
4 None
10 None
11 None
12 Computation of Ratios of Earnings to Fixed
Charges
15 None
18 None
19 None
22 None
23 None
24 None
27 Financial Data Schedule
99 None
- -----------------------
* Exhibits not listed are inapplicable.
<PAGE>
EXHIBIT 12
WMX TECHNOLOGIES, INC.
Ratio of Earnings to Fixed Charges
(Unaudited)
(millions of dollars, except ratio)
<TABLE>
<CAPTION>
Three Months
Ended March 31
------------------
1996 1997
------ -------
<S> <C> <C>
Income from Continuing Operations Before Income
Taxes, Undistributed Earnings from Affiliated
Companies and Minority Interest ....................... $324.6 $330.4
Interest Expense.......................................... 111.0 113.3
Captialized Interest...................................... (17.2) (14.9)
One-Third of Rents Payable in the Next Year............... 13.8 12.5
------ ------
Income from Continuing Operations Before Income
Taxes, Undistributed Earnings from Affiliated
Companies, Minority Interest, Interest and
One-Third of Rents..................................... $432.2 $441.3
====== ======
Interest Expense.......................................... $111.0 $113.3
One-Third of Rents Payable in the Next Year............... 13.8 12.5
------ ------
Interest Expense plus One-third of Rents.................. $124.8 $125.8
====== ======
Ratio of Earnings to Fixed Charges........................ 3.46 to 1 3.51 to 1
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARCH 31, 1997 CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF
INCOME FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE FOOTNOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 491,749
<SECURITIES> 653,006
<RECEIVABLES> 1,661,389
<ALLOWANCES> 42,781
<INVENTORY> 0
<CURRENT-ASSETS> 3,548,013
<PP&E> 14,022,075
<DEPRECIATION> 4,483,466
<TOTAL-ASSETS> 18,033,599
<CURRENT-LIABILITIES> 3,690,495
<BONDS> 6,139,969
0
0
<COMMON> 507,102
<OTHER-SE> 4,471,910
<TOTAL-LIABILITY-AND-EQUITY> 18,033,599
<SALES> 0
<TOTAL-REVENUES> 2,198,308
<CGS> 0
<TOTAL-COSTS> 1,551,718
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,705
<INTEREST-EXPENSE> 98,349
<INCOME-PRETAX> 303,626
<INCOME-TAX> 125,214
<INCOME-CONTINUING> 178,412
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178,412
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.00
</TABLE>
