Waste Management 2008 Annual Report Download - page 121
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Please find page 121 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Upon adoption of FIN 48 and FSP No. 48-1, our income tax liabilities as of January 1, 2007 included a total of
$101 million for unrecognized tax benefits and $16 million of related accrued interest. A reconciliation of the
beginning and ending amount of unrecognized tax benefits, including accrued interest for 2008 and 2007 is as
follows (in millions):
2008 2007
Balance at January 1 ................................................ $102 $117
Additions based on tax positions related to the current year .................. 9 10
Additions related to tax positions of prior years ........................... 11 4
Accrued interest .................................................. 4 7
Reductions for tax positions of prior years .............................. — (1)
Settlements ..................................................... (36) (26)
Lapse of statute of limitations ........................................ (6) (9)
Balance at December 31 ............................................. $ 84 $102
These liabilities are primarily included as a component of long-term “Other liabilities” in our Consolidated
Balance Sheet because the Company generally does not anticipate that settlement of the liabilities will require
payment of cash within the next twelve months. As of December 31, 2008, $58 million of unrecognized tax benefits,
if recognized in future periods, would impact our effective tax rate.
We recognize interest expense related to unrecognized tax benefits in tax expense. During the years ended
December 31, 2008, 2007 and 2006 we recognized approximately $4 million, $7 million and $7 million,
respectively, of such interest expense as a component of our “Provision for income taxes.” We had approximately
$9 million and $13 million of accrued interest in our Consolidated Balance Sheet as of December 31, 2008 and
2007, respectively. We do not have any accrued liabilities or expense for penalties related to unrecognized tax
benefits for the years ended December 31, 2008, 2007 and 2006.
We anticipate that approximately $20 million of liabilities for unrecognized tax benefits, including accrued
interest, and $4 million of related deferred tax assets may be reversed within the next 12 months. The anticipated
reversals are related to various federal and state tax items, none of which are material, and are expected to result
from audit settlements or the expiration of the applicable statute of limitations period.
9. Employee Benefit Plans
Defined contribution plans — Our Waste Management Retirement Savings Plan covers employees (except
those working subject to collective bargaining agreements, which do not provide for coverage under such plans)
following a 90-day waiting period after hire. Eligible employees may contribute as much as 25% of their annual
compensation under the Savings Plan, subject to annual contribution limitations established by the IRS. Under the
Savings Plan, we match, in cash, 100% of employee contributions on the first 3% of their eligible compensation and
match 50% of employee contributions on the next 3% of their eligible compensation, resulting in a maximum match
of 4.5%. Both employee and Company contributions vest immediately. Charges to “Operating” and “Selling,
general and administrative” expenses for our defined contribution plans were $59 million in 2008, $54 million in
2007 and $51 million in 2006.
Defined benefit plans — Certain of the Company’s subsidiaries sponsor pension plans that cover employees
not covered by the Savings Plan. These employees are members of collective bargaining units. In addition,
Wheelabrator Technologies Inc., a wholly-owned subsidiary, sponsors a pension plan for its former executives and
former Board members. As of December 31, 2008, the combined benefit obligation of these pension plans was
$66 million, and the plans had $41 million of plan assets, resulting in an unfunded benefit obligation for these plans
of $25 million.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)