Waste Management 2008 Annual Report Download - page 128
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Please find page 128 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.recognized an aggregate charge of $39 million to “Operating” expenses for the withdrawal of certain bargaining
units from multi-employer pension plans, including a $35 million charge resulting from our partial withdrawal from
the Central States Pension Plan. We do not believe that our withdrawals from the multi-employer plans, individually
or in the aggregate, would have a material adverse effect on our financial condition or liquidity. However,
withdrawals of other bargaining units in the future could have a material adverse effect on our results of operations
for the period in which any such withdrawals were recorded.
Tax matters — During 2008, we settled IRS audits for the 2006 and 2007 tax years, as well as various state tax
audits. In addition, we settled Canadian audits for tax years 2002 through 2005. As a result of these audit
settlements, we recognized a $26 million net benefit as a reduction to our provision for income taxes. We are
currently in the examination phase of an IRS audit for the 2008 tax year. We expect this audit to be completed within
the next 12 months. Audits associated with state and local jurisdictions date back to 1999 and examinations
associated with Canada date back to 1998. To provide for certain potential tax exposures, we maintain a liability for
unrecognized tax benefits, the balance of which management believes is adequate. Results of audit assessments by
taxing authorities could have a material effect on our quarterly or annual cash flows as audits are completed,
although we do not believe that current tax audit matters will have a material adverse impact on our results of
operations.
As discussed in Note 7 we have approximately $2.9 billion of tax-exempt financings as of December 31, 2008.
Tax-exempt financings are structured pursuant to certain terms and conditions of the Internal Revenue Code, which
exempt from taxation the interest income earned by the bondholders in the transactions. The requirements of the
Code can be complex, and failure to comply with these requirements could cause certain past interest payments
made on the bonds to be taxable and could cause either outstanding principal amounts on the bonds to be accelerated
or future interest payments on the bonds to be taxable. Some of the Company’s tax-exempt financings have been, or
currently are, the subject of examinations by the IRS to determine whether the financings meet the requirements of
the Code and applicable regulations. It is possible that an adverse determination by the IRS could have a material
adverse effect on the Company’s cash flows and results of operations.
11. Restructuring
2008 and 2009 Restructurings — The $2 million of restructuring expenses recognized during 2008 was related
to a reorganization of customer service functions in our Western Group and the realignment of certain operations in
our Southern Group. Refer to Note 24 for a discussion of our ongoing 2009 restructuring activities.
2007 Restructuring and Realignment — In the first quarter of 2007, we restructured certain operations and
functions, resulting in the recognition of a charge of approximately $9 million. We incurred an additional $1 million
of costs for this restructuring during the second quarter of 2007, increasing the costs incurred to date to $10 million.
Approximately $7 million of our restructuring costs was incurred by our Corporate organization, $2 million was
incurred by our Midwest Group and $1 million was incurred by our Western Group. These charges included
approximately $8 million for employee severance and benefit costs and approximately $2 million related to
operating lease agreements.
Through December 31, 2008, we had paid approximately $8 million of the employee severance and benefit
costs incurred as a result of this restructuring. The length of time we are obligated to make severance payments
varies, with the longest obligation continuing through the first quarter of 2009. These first quarter 2009 payments
amount to less than $1 million.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)