Waste Management 2008 Annual Report Download - page 46
Download and view the complete annual report
Please find page 46 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.If we do not successfully manage our costs, or do not successfully implement our plans and strategies to
improve margins, our income from operations could be lower than expected.
In recent years, we have implemented several profit improvement initiatives aimed at lowering our costs and
enhancing our revenues.
We have implemented price increases and environmental fees, and we have continued our fuel surcharge
program, all of which have increased our internal revenue growth. The loss of volumes as a result of price increases
may negatively affect our cash flows or results of operations. We continue to seek to divest under-performing and
non-strategic assets if we cannot improve their profitability. We may not be able to successfully negotiate the
divestiture of under-performing and non-strategic operations, which could result in asset impairments or the
continued operation of low-margin businesses. Additionally, in February 2009 we announced that we had taken
steps to realign our field operations to combine several of our Market Areas in an effort to achieve greater
economies of scale in our local and regional operations and our Corporate organization to provide support functions
more efficiently. If we are not able to fully or successfully implement our plans and strategies for any reason, many
of which are out of our control, we may not see the expected improvements in our income from operations or our
operating margins.
The seasonal nature of our business causes our quarterly results to fluctuate, and prior performance is
not necessarily indicative of our future results.
Our operating revenues tend to be somewhat higher in summer months, primarily due to the higher volume of
construction and demolition waste. The volumes of industrial and residential waste in certain regions where we
operate also tend to increase during the summer months. Our second and third quarter revenues and results of
operations typically reflect these seasonal trends. Additionally, certain destructive weather conditions that tend to
occur during the second half of the year, such as the hurricanes generally experienced by our Southern Group,
actually increase our revenues in the areas affected. However, for several reasons, including significant start-up
costs, such revenue often generates earnings at comparatively lower margins. Certain weather conditions may result
in the temporary suspension of our operations, which can significantly affect the operating results of the affected
regions. The operating results of our first quarter also often reflect higher repair and maintenance expenses because
we rely on the slower winter months, when waste flows are generally lower, to perform scheduled maintenance at
our waste-to-energy facilities.
For these and other reasons, operating results in any interim period are not necessarily indicative of operating
results for an entire year, and operating results for any historical period are not necessarily indicative of operating
results for a future period.
We cannot predict with certainty the extent of future costs under environmental, health and safety laws,
and cannot guarantee that they will not be material.
We could be liable if our operations cause environmental damage to our properties or to the property of other
landowners, particularly as a result of the contamination of air, drinking water or soil. Under current law, we could
even be held liable for damage caused by conditions that existed before we acquired the assets or operations
involved. Also, we could be liable if we arrange for the transportation, disposal or treatment of hazardous substances
that cause environmental contamination, or if a predecessor owner made such arrangements and under applicable
law we are treated as a successor to the prior owner. Any substantial liability for environmental damage could have a
material adverse effect on our financial condition, results of operations and cash flows.
In the ordinary course of our business, we have in the past, and may in the future, become involved in a variety
of legal and administrative proceedings relating to land use and environmental laws and regulations. These include
proceedings in which:
• agencies of federal, state, local or foreign governments seek to impose liability on us under applicable
statutes, sometimes involving civil or criminal penalties for violations, or to revoke or deny renewal of a
permit we need; and
12