Waste Management 2007 Annual Report Download - page 82

We have contingencies that are not considered reasonably likely. As a result, the impact of these contingencies
have not been included in the above table. See Note 10 to the Consolidated Financial Statements for further
discussion of these contingencies.
Off-Balance Sheet Arrangements
We are party to guarantee arrangements with unconsolidated entities as discussed in the Guarantees section of
Note 10 to the Consolidated Financial Statements. Our third-party guarantee arrangements are generally established
to support our financial assurance needs and landfill operations. These arrangements have not materially affected
our financial position, results of operations or liquidity during the year ended December 31, 2007 nor are they
expected to have a material impact on our future financial position, results of operations or liquidity.
Seasonal Trends and Inflation
Our operating revenues tend to be somewhat higher in the summer months, primarily due to the higher volume
of construction and demolition waste. The volumes of industrial and residential waste in certain regions where we
operate also tend to increase during the summer months. Our second and third quarter revenues and results of
operations typically reflect these seasonal trends. Additionally, certain destructive weather conditions that tend to
occur during the second half of the year, such as the hurricanes experienced in 2004 and 2005, can actually increase
our revenues in the areas affected. However, for several reasons, including significant start-up costs, such revenue
often generates comparatively lower margins. Certain weather conditions may result in the temporary suspension of
our operations, which can significantly affect the operating results of the affected regions. The operating results of
our first quarter also often reflect higher repair and maintenance expenses because we rely on the slower winter
months, when waste flows are generally lower, to perform scheduled maintenance at our waste-to-energy facilities.
While inflationary increases in costs, including the cost of fuel, have affected our operating margins in recent
periods, we believe that inflation generally has not had, and in the near future is not expected to have, any material
adverse effect on our results of operations. However, management’s estimates associated with inflation have had,
and will continue to have, an impact on our accounting for landfill and environmental remediation liabilities.
New Accounting Pronouncements
SFAS No. 157 — Fair Value Measurements
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
SFAS No. 157 will be effective for the Company beginning January 1, 2008. We do not currently expect the
adoption of SFAS No. 157 on January 1, 2008 to have a material impact on our consolidated financial statements.
However, we are continuing to assess the potential effects of SFAS No. 157 as additional guidance becomes
available.
SFAS No. 159 — Fair Value Option for Financial Assets and Financial Liabilities
In February 2007, the FASB issued SFAS No. 159, Fair Value Option for Financial Assets and Financial
Liabilities —Including an amendment of FASB Statement No. 115, which permits entities to choose to measure
many financial instruments and certain other items at fair value. SFAS No. 159 will be effective for the Company
beginning January 1, 2008. The Company has elected not to measure eligible items at fair value upon initial
adoption and does not believe the adoption of this statement will have a material impact on its consolidated financial
statements.
SFAS No. 141(R) — Business Combinations
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, which establishes
principles and requirements for how the acquirer recognizes and measures in the financial statements the
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