Waste Management
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Waste Management settles
November 7, 2001: 1:00 p.m. ET
Leading U.S. trash hauling firm settles class action lawsuit for $457 million.
Andersen settles SEC case - June 19, 2001
Waste Management
NEW YORK (CNNmoney) - Shares of Waste Management Inc., the nation's largest trash hauler, rose Wednesday after it reported settling a class-action lawsuit for $457 million, while its third-quarter earnings missed Wall Street expectations.
The Houston-based company said it would pay to settle a suit accusing it of violations of federal securities laws in connection with its 1998 merger with USA Waste Services and its statements about financial performance in the first three quarters of 1999.
Waste Management said the settlement, which must still be approved by a federal court in Texas and the company's shareholders, will end all litigation against it and covers all people and entities that purchased company securities or sold put options from June 11, 1998 to Nov. 9, 1999.
"We believe that this is a good and fair settlement for both the company and members of the class," CEO Maurice Myers said. "From our perspective, we see this as putting to rest the most significant issues from the past and allowing the company to remove the cloud of uncertainty that has been associated with this litigation."
Waste Management (WMI: up $1.66 to $27.01, Research, Estimates) shares rose in midday trading.
Last summer, the company and its auditing firm, Arthur Andersen, agreed to pay $229 million to settle another class-action suit about questionable accounting practices.
Chicago-based Arthur Andersen will also pay Waste Management $20 million as part of a malpractice settlement. In June, Arthur Andersen agreed to pay a $7 million civil fine after the Securities and Exchange Commission accused it of "knowingly or recklessly" issuing false and misleading audit reports for Waste Management for the years 1993 though 1996 that inflated the company's earnings by more than $1 billion.
Waste Management also reported third-quarter earnings of $226 million before the settlements and other one-time items, or 36 cents a share, compared with $208 million, or 33 cents a share, a year ago. Wall Street analysts surveyed by earnings tracker First Call expected Waste Management to earn 37 cents a share.
Including one-time items and the settlements, the company earned just $30 million, or 5 cents a share, compared with a loss of $191 million, or 31 cents a share, a year ago. Revenue fell to $2.9 billion from $3.1 billion a year ago.
Waste Management had been in financial trouble since Houston-based USA Waste bought it in 1998, took over its name, and moved its headquarters to Houston from Oak Brook, Ill.
In 1999 the combined company became embroiled in the accounting scandal and had to restate financial results for several quarters, leading its stock price to drop from more than $56 to as low as $13.
It fired its top management and began selling off a slew of non-core businesses acquired during an aggressive expansion spree, and its results began to turn around this year.
The company also said it will recommend to shareholders that its board be up for election each year. |
