EX-12.1 3 h98564b3exv12w1.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12.1 Waste Management, Inc. Computation of Ratio of Earnings to Fixed Charges (in millions, except ratios)
Nine Months Ended Years Ended December 31, September 30, ------------------------- ------------- 1997 1998 1999 2000 2001 2002 ---- ---- ---- ---- ---- ------------- Income (loss) before income taxes, extraordinary items, cumulative effect of changes in accounting principle, undistributed earnings from affiliated companies and minority interests $ (609) $ (679) $ (139) $ 344 $ 792 $ 929 ------ ------ ------ ------ ------ ------ Fixed charges deducted from income: Interest expense 556 682 770 748 541 350 Implicit interest in rents 59 79 75 74 65 45 ------ ------ ------ ------ ------ ------ 615 761 845 822 606 395 ------ ------ ------ ------ ------ ------ Earnings available for fixed charges $ 6 $ 82 $ 706 $1,166 $1,398 $1,324 ====== ====== ====== ====== ====== ====== Interest expense $ 556 $ 682 $ 770 $ 748 $ 541 $ 350 Capitalized interest 51 42 34 22 16 14 Implicit interest in rents 59 79 75 74 65 45 ------ ------ ------ ------ ------ ------ Total fixed charges $ 666 $ 803 $ 879 $ 844 $ 622 $ 409 ====== ====== ====== ====== ====== ====== Ratio of earnings to fixed charges N/A(1) N/A(2) N/A(3) 1.4 2.2 3.2 ====== ====== ====== ====== ====== ======
(1) Earnings were insufficient to fund fixed charges in 1997. Additional earnings of $660.4 million were necessary to cover fixed charges for this period. The earnings available for fixed charges were negatively impacted by merger costs of $112.7 million (primarily related to the United Waste Systems, Inc. merger in August 1997), and asset impairments and unusual items of $1.8 billion. The asset impairment and unusual items of $1.8 billion primarily related to a comprehensive review performed by Waste Management Holdings, Inc. of its operating assets and investments. (2) Earnings were insufficient to fund fixed charges in 1998. Additional earnings of $720.4 million were necessary to cover fixed charges for this period. The earnings available for fixed charges were negatively impacted by merger costs of $1.8 billion and unusual items of $864.1 million related primarily to the mergers between Waste Management, Inc. and Waste Management Holdings, Inc. in July 1998, and Waste Management and Eastern Environmental Services, Inc. in December 1998. (3) Earnings were insufficient to fund fixed charges in 1999. Additional earnings available for fixed charges of $172.8 million were needed to cover fixed charges for this period. The earnings available for fixed charges were negatively impacted by merger costs of $44.6 million primarily related to the merger between Waste Management, Inc. and Waste Management Holdings, Inc. during July 1998 and asset impairments and unusual items of $738.8 million primarily related to losses on businesses sold and held-for-sale adjustments for businesses to be sold and, to a lesser extent, asset impairments related to landfill sites and other operating assets due to abandonment and closures of facilities, denials and permits, regulatory problems and a more stringent criteria used by Waste Management, Inc. in determining the probability of landfill expansions.