Waste Management Fixes $3.5 Billion in Book Errors
Culloton, Dan, Daily Herald (Arlington Heights, IL)
Byline: Dan Culloton Daily Herald Business Writer
Waste Management Inc.'s founder and former Chief Executive Dean L. Buntrock once told an investor who wanted answers about the company's sagging stock that "our problem is no one believes our numbers."
Now, that investor said Wednesday, we know why.
The Oak Brook-based waste hauler this week admitted its books have been skewed by loose accounting and mistakes for years.
Its fourth-quarter results included a total of $3.5 billion in pre-tax charges and financial statement corrections that date back to 1992.
The company said it lost $1.4 billion, or $3.10 per share, in 1997's fourth quarter and $1.2 billion, or $2.52 per share, for the whole year because of the charges and balance sheet adjustments.
The earnings corrections and reductions cover everything from writing off old recycling plants and landfill costs to reassessing the value of trucks and dumpsters.
It was a stunning announcement, but not unexpected in the investment community.
Waste Management stock fell Wednesday xxx to xxx on the New York Stock Exchange.
"I think everyone's relieved it's not worse," said Nell Minow, principal of the asset management firm and Waste Management investor Lens Inc.
"I feel they now have something they haven't had before, which is credibility," Minow said.
The company warned analysts and investors last fall it would adjust its books after completing an in-depth audit and implementing more stringent methods of bookkeeping and valuing its fleet of garbage trucks and other assets.
Interim Chief Executive Robert Miller said the charges help "clear the decks" for a new chief executive to take the helm of the company that has been hamstrung by a management crisis ever since Buntrock's hand-picked successor Phillip Rooney resigned amid shareholder rancor a year ago. …