Western Waste reports $5 million fourth-quarter loss after dumping merger plans.

Western Waste Industries Inc. last week reported a net loss of $4.9 million, or 35 cents a share, on revenue of $58.7 million for the fiscal fourth quarter ended June 30. A year earlier, it netted $2.2 million, or 16 cents a share, on revenue of $57.7 million.

The firm also posted a net loss of $10.1 million, or 73 cents a share, on revenue of $231.2 million for the fiscal year, compared with year-earlier net income of $2.4 million, or 17 cents a share, on revenue of $219.3 million.

"I think it's a terrible year, a year Western Waste would rather forget," said Tom Ennis, environmental analyst for Jersey City, N.J.-based investment firm Pershing & Co.

In addition to reporting the losses, Torrance-based Western Waste announced on Oct. 8 that its $520 million agreement to be acquired by Houston-based waste giant Browning Ferris Industries Inc. was called off.

The two companies issued a terse statement saying they have been "unable to agree on the definitive terms" of the merger and "have discontinued discussion of the transaction."

On Sept. 2, the two announced that BFI had signed a letter of intent to acquire Western Waste by swapping 1.02 shares of BFI stock for every 1 Share of Western Waste stock. Many analysts deemed those terms too high.

In its earnings statement released on Oct. 14, Western Waste also announced it had hired New York-based investment firm Salomon Bros. Inc. "to assist the company with corporate development and strategic planning issues."

Western Waste's stock, which closed at $11.25 a share on Oct. 13, was up 75 cents in the first few hours after the earnings release. Analyst Ennis said the Salomon announcement had spurred renewed speculation that Western Waste will be sold to a larger waste concern.

"I don't believe that at all," Ennis said. "If they are taken over, they're not going to get near the price Browning Ferris was going to give them."

James McDonald, an environmental analyst with Chicago-based investment firm Chicago Corp., agreed the stock price rose on the news that Western Waste had hired an investment banker, but he said he didn't know whether that meant the company would be sold in the future.

The company announced that fourth-quarter results reflected a charge of $6 million for anticipated losses over the life of a waste collection contract.

Both Ennis and McDonald said this loss was expected and pertains to Western Waste's contract to provide refuse and recycling services to the City of San Jose. Western Waste has had to use more trucks than originally anticipated in order to service that contract, according to San Jose officials.

Western Waste's announcement of a special charge of $4 million relating to "increased self-insured loss reserves which result from the trend of increasing known claims" was unexpected, Ennis said.

Craig Parsons, Western Waste spokesman, said that charge resulted from increased workers' compensation claims.