Waste Management 2011 Annual Report Download - page 206

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following pro forma consolidated results of operations have been prepared as if the acquisition of
Oakleaf occurred at January 1, 2010 (in millions, except per share amounts):
Years Ended December 31,
2011 2010
Operating revenues ..................................... $13,693 $13,059
Net income attributable to Waste Management, Inc. ........... 955 935
Basic earnings per common share .......................... 2.03 1.95
Diluted earnings per common share ........................ 2.03 1.94
Prior Year Acquisitions
In 2010, we acquired businesses primarily related to our collection and waste-to-energy operations. Total
consideration, net of cash acquired, for acquisitions was $427 million, which included $379 million in cash
payments, $20 million in contributed assets, a liability for additional cash payments with an estimated fair value
of $23 million, and assumed liabilities of $5 million. The additional cash payments are contingent upon
achievement by the acquired businesses of certain negotiated goals, which generally included targeted revenues.
At the date of acquisition, our estimated maximum obligations for the contingent cash payments were
$23 million. As of December 31, 2010, we had paid $8 million of this contingent consideration. In 2010, we also
paid $20 million of contingent consideration associated with acquisitions completed in 2009.
The allocation of purchase price was primarily to “Property and equipment,” which had an estimated fair value
of $279 million; “Other intangible assets,” which had an estimated fair value of $98 million; and “Goodwill” of
$77 million. Goodwill is primarily a result of expected synergies from combining the acquired businesses with our
existing operations and is tax deductible. Other intangible assets included $35 million of customer contracts and
customer lists, $8 million of covenants not-to-compete and $55 million of licenses, permits and other.
In 2009, we acquired businesses primarily related to our collection operations. Total consideration, net of
cash acquired, for acquisitions was $329 million, which included $259 million in cash payments, a liability for
additional cash payments with an estimated fair value of $46 million, and assumed liabilities of $24 million. The
additional cash payments are contingent upon achievement by the acquired businesses of certain negotiated
goals, which generally included targeted revenues. At the date of acquisition, our estimated obligations for the
contingent cash payments were between $42 million and $56 million. As of December 31, 2009, we had paid
$15 million of this contingent consideration. In 2009, we also paid $7 million of contingent consideration
associated with acquisitions completed in 2008.
The allocation of purchase price was primarily to “Property and equipment,” which had an estimated fair value
of $102 million; “Other intangible assets,” which had an estimated fair value of $105 million; and “Goodwill” of
$125 million. Goodwill is primarily a result of expected synergies from combining the acquired businesses with our
existing operations and is tax deductible. Other intangible assets included $66 million of customer contracts and
customer lists, $19 million of covenants not-to-compete and $20 million of licenses, permits and other.
Our 2009 acquisitions included the purchase of the remaining equity interest in one of our portable self-
storage investments, increasing our equity interest in this entity from 50% to 100%. As a result of this
acquisition, we recognized a $4 million loss for the remeasurement of the fair value of our initial equity
investment, which was determined to be $5 million. This loss was recognized as a component of “(Income)
expense from divestitures, asset impairments and unusual items” in our Consolidated Statement of Operations.
Divestitures
The aggregate sales price for divestitures of operations was $32 million in 2011, $1 million in 2010 and
$1 million in 2009. The proceeds from these sales for 2011 were comprised of assets acquired in exchanges of assets.
For 2010 and 2009, the proceeds from these sales were comprised substantially of cash. We recognized net losses on
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