Waste Management 2007 Annual Report Download - page 129

(Income) expense from divestitures (including held-for-sale impairments) — The net gains from divestitures in
all three years were a result of our fix-or-seek exit initiative, and 2005 also included a $39 million gain from the
divestiture of a landfill in Canada as a result of a Divestiture Order by the Competition Bureau. Gains recognized
from divestitures in 2006 were partially offset by the recognition of aggregate impairment charges of $18 million for
operations held for sale as required by SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.
Impairments of assets held-for-use — During 2007, we recognized $12 million in impairment charges due to
impairments recognized for two landfills in our Southern Group. The impairments were necessary as a result of the
re-evaluation of our business alternatives for one landfill and the expiration of a contract that we had expected
would be renewed that had significantly contributed to the volumes for the second landfill.
The $24 million of impairment charges recognized during 2006 was primarily related to the impairment of a
landfill in our Eastern Group as a result of a change in our expectations for future expansions and the impairment of
under-performing operations in our WMRA Group.
During the second quarter of 2005, our Eastern Group recorded a $35 million charge for the impairment of the
Pottstown Landfill in Pennsylvania. We determined that the impairment was necessary after the denial of a permit
application for a vertical expansion at the landfill was upheld and we decided not to pursue an appeal of that
decision. In addition, during 2005 we recorded $68 million in impairment charges associated with capitalized
software, driven by a $59 million charge for revenue management system software that had previously been under
development. The remaining impairment charges recognized in 2005 were largely related to the impairment of a
landfill in our Eastern Group as a result of a change in our expectations for future expansions.
Other — In both 2006 and 2005 we recognized charges associated with the termination of legal matters related
to issues that arose in 2000 and earlier. In 2006, we recognized a $26 million charge for the impact of an arbitration
ruling against us related to the termination of a joint venture relationship in 2000. In 2005, we recognized a
$16 million charge for the impact of a settlement reached with a group of stockholders that had opted not to
participate in the settlement of the securities class action lawsuit against us related to 1998 and 1999 activity and a
$27 million charge to settle our ongoing defense costs associated with possible indemnity obligations to former
officers of WM Holdings related to the litigation brought against them by the SEC. The 2005 charges were partially
offset by the recognition of a net benefit of $12 million, primarily for adjustments to receivables and estimated
obligations for non-solid waste operations that had been sold in 1999 and 2000.
13. Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income were as follows (in millions):
2007 2006 2005
December 31,
Accumulated unrealized loss on derivative instruments, net of a tax benefit
of $13 for 2007, $21 for 2006, and $17 for 2005 ................... $(20) $ (33) $ (27)
Accumulated unrealized gain on marketable securities, net of taxes of $3 for
2007, $6 for 2006 and $3 for 2005 .............................. 5 10 5
Cumulative translation adjustment of foreign currency statements ......... 240 151 148
Underfunded post-retirement benefit obligations, net of taxes of $0 for 2007
and $3 for 2006 ............................................ 4 1 —
$229 $129 $126
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)