Waste Management 2008 Annual Report Download - page 75
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Please find page 75 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.December 31, 2007 (representing a 2.3 percentage point reduction in our effective tax rate) and $149 million
for the year ended December 31, 2006 (representing a 10.1 percentage point reduction in our effective tax
rate).
•Non-conventional fuel tax credits — Through December 31, 2007, non-conventional fuel tax credits were
derived from our landfills and our investments in the two coal-based, synthetic fuel production facilities
discussed in the Equity in net losses of unconsolidated entities section above. Pursuant to Section 45K of the
Internal Revenue Code, these tax credits were phased-out if the price of oil exceeded an annual average as
determined by the IRS. Based on an estimated phase-out of 69% of Section 45K tax credits generated during
2007, our income taxes for the year ended December 31, 2007 included $50 million of non-conventional fuel
tax credits. These tax credits resulted in a 2.9 percentage point reduction in our effective tax rate for the year
ended December 31, 2007. In April 2008, the IRS published the phase-out percentage that must be applied to
Section 45K tax credits generated in 2007, which was 67.2%. Our provision for income taxes for the first
quarter of 2008 included an adjustment of our 2007 year-end estimate to the final 2007 phase-out, which
resulted in the recognition of a $3 million benefit. Our income taxes for the year ended December 31, 2006
included $71 million of non-conventional fuel tax credits, resulting in a 4.8 percentage point reduction in our
effective tax rate. Non-conventional fuel tax credits expired at the end of 2007 pursuant to Section 45K of the
Internal Revenue Code.
Other items that have affected our reported income taxes during the reported periods include the following:
• Canadian tax rate changes and the related revaluation of deferred tax balances resulted in a $30 million tax
benefit during 2007 compared with a $20 million tax benefit in 2006. We did not have any comparable
adjustments during the year ended December 31, 2008.
• We recorded reductions to income tax expense of $8 million in 2008, $9 million in 2007 and $20 million in
2006 due to state-related tax items. These impacts were generally due to either (i) the revaluation of net
accumulated deferred tax liabilities as a result of a decrease in our effective state tax rate or (ii) the expected
utilization of state net operating loss and credit carryforwards.
Landfill and Environmental Remediation Discussion and Analysis
We owned or operated 267 solid waste and six hazardous waste landfills at December 31, 2008 and we owned
or operated 271 solid waste and six hazardous waste landfills at December 31, 2007. At December 31, 2008 and
2007, the expected remaining capacity in cubic yards and tonnage of waste that can be accepted at our owned or
operated landfills is shown below (in millions):
Remaining
Permitted
Capacity
Expansion
Capacity
Total
Capacity
Remaining
Permitted
Capacity
Expansion
Capacity
Total
Capacity
December 31, 2008 December 31, 2007
Remaining cubic yards ..... 4,456 816 5,272 4,265 944 5,209
Remaining tonnage ........ 3,979 794 4,773 3,787 893 4,680
Based on remaining permitted airspace as of December 31, 2008 and projected annual disposal volumes, the
weighted average remaining landfill life for all of our owned or operated landfills is approximately 32 years. Many
of our landfills have the potential for expanded disposal capacity beyond what is currently permitted. We monitor
the availability of permitted disposal capacity at each of our landfills and evaluate whether to pursue an expansion at
a given landfill based on estimated future waste volumes and prices, remaining capacity and likelihood of obtaining
an expansion permit. We are seeking expansion permits at 42 of our landfills that meet the expansion criteria
outlined in the Critical Accounting Estimates and Assumptions section above. Although no assurances can be made
that all future expansions will be permitted or permitted as designed, the weighted average remaining landfill life for
all owned or operated landfills is approximately 39 years when considering remaining permitted airspace,
expansion airspace and projected annual disposal volume.
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