Waste Management 2011 Annual Report Download - page 111

Acquisition of Oakleaf Global Holdings — On July 28, 2011, we paid $432 million, net of cash received of
$4 million and inclusive of certain adjustments, to acquire Oakleaf. Oakleaf provides outsourced waste and
recycling services through a nationwide network of third-party haulers. The operations we acquired generated
approximately $580 million in revenues in 2010. We acquired Oakleaf to advance our growth and transformation
strategies and increase our national accounts customer base while enhancing our ability to provide
comprehensive environmental solutions. For the year ended December 31, 2011, we incurred $1 million of
acquisition-related costs, which are classified as “Selling, general and administrative” expenses. Since the
acquisition date, Oakleaf has recognized revenues of $265 million and net income of less than $1 million, which
are included in our Consolidated Statement of Operations.
The following table shows adjustments to the preliminary allocation of the purchase price of Oakleaf to
tangible and intangible assets acquired and liabilities assumed based on their estimated fair value from
September 30, 2011 to December 31, 2011 (in millions):
September 30, 2011 Adjustments (a) December 31, 2011
Accounts and other receivables ........... $ 68 $ 2 $ 70
Other current assets ..................... 28 — 28
Property and equipment ................. 77 (5) 72
Goodwill ............................. 320 7 327
Other intangible assets .................. 92 (5) 87
Accounts payable ...................... (80) (2) (82)
Accrued liabilities ...................... (48) — (48)
Deferred income taxes, net ............... (13) 3 (10)
Other liabilities ........................ (12) — (12)
Total purchase price .................. $432 $— $432
(a) The purchase price adjustments relate primarily to changes in the valuation of the customer and vendor
relationships and evaluation of physical and market conditions of equipment.
The following table presents the preliminary allocation of the purchase price to intangible assets (amounts in
millions, except for amortization periods):
Amount
Weighted Average
Amortization
Periods (in Years)
Customer relationships ........................................ $74 10.0
Vendor relationships .......................................... 4 10.0
Trademarks ................................................. 9 15.0
Total intangible assets subject to amortization .................... $87 10.5
Goodwill of $327 million was calculated as the excess of the consideration paid over the net assets
recognized and represents the future economic benefits arising from other assets acquired that could not be
individually identified and separately recognized. Goodwill is a result of expected synergies from combining the
Company’s operations with Oakleaf’s national accounts customer base and vendor network. The vendor-hauler
network expands our partnership with third-party service providers. In many cases we can provide vendor-
haulers with opportunities to maintain and increase their business by utilizing our extensive post-collection
network. We believe this will generate significant benefits for the Company and for the vendor-haulers. Goodwill
acquired has been allocated to our four geographic Groups based on our preliminary valuations. Goodwill related
to this acquisition is not deductible for income tax purposes.
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