Waste Management 2007 Annual Report Download - page 93

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2007, 2006 and 2005
1. Business
The financial statements presented in this report represent the consolidation of Waste Management, Inc., a
Delaware corporation, our wholly-owned and majority-owned subsidiaries and certain variable interest entities for
which we have determined that we are the primary beneficiary (See Note 19). Waste Management, Inc. is a holding
company and all operations are conducted by subsidiaries. When the terms “the Company,” “we,” “us” or “our” are
used in this document, those terms refer to Waste Management, Inc., its consolidated subsidiaries and consolidated
variable interest entities. When we use the term “WMI,” we are referring only to the parent holding company.
We are the leading provider of integrated waste services in North America. Using our vast network of assets
and employees, we provide a comprehensive range of waste management services. Through our subsidiaries we
provide collection, transfer, recycling, disposal and waste-to-energy services. In providing these services, we
actively pursue projects and initiatives that we believe make a positive difference for our environment, including
recovering and processing the methane gas produced naturally by landfills into a renewable energy source. Our
customers include commercial, industrial, municipal and residential customers, other waste management compa-
nies, electric utilities and governmental entities.
We manage and evaluate our principal operations through six operating Groups, of which four are organized by
geographic area and two are organized by function. The geographic Groups include our Eastern, Midwest, Southern
and Western Groups, and the two functional Groups are our Wheelabrator Group, which provides waste-to-energy
services, and our WM Recycle America, or WMRA, Group, which provides recycling services not managed by our
geographic Groups. We also provide additional waste management services that are not managed through our six
Groups, which are presented in this report as “Other.” Refer to Note 20 for additional information related to our
segments.
2. Accounting Changes and Reclassifications
Accounting Changes
FIN 48, Accounting for Uncertainty in Income Taxes
In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes (an interpretation of FASB Statement No. 109). FIN 48 prescribes a recognition
threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or
expected to be taken in tax returns. In addition, FIN 48 provides guidance on the de-recognition, classification and
disclosure of tax positions, as well as the accounting for related interest and penalties. On May 2, 2007, the FASB
issued FSP No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48, to provide guidance associated
with the criteria that must be evaluated in determining if a tax position has been effectively settled and should be
recognized as a tax benefit.
Our adoption of FIN 48 and FSP No. 48-1 effective January 1, 2007 resulted in the recognition of a $28 million
increase in our liabilities for unrecognized tax benefits, a $32 million increase in our non-current deferred tax assets
and a $4 million increase in our beginning retained earnings as a cumulative effect of change in accounting
principle.
Refer to Note 8 for additional information about our unrecognized tax benefits.
SFAS No. 158 — Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans
In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS No. 158
requires companies to recognize the overfunded or underfunded status of their defined benefit pension and other
post-retirement plans as an asset or liability and to recognize changes in that funded status through comprehensive
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