Waste Management 2013 Annual Report Download - page 112

unsuccessful in identifying and assessing potential liabilities during our due diligence investigations. Further, the
counterparties in such transactions may be unable to perform their indemnification obligations owed to us.
Additionally, we could be liable if we arrange for the transportation, disposal or treatment of hazardous
substances that cause environmental contamination, or if a predecessor owner made such arrangements and,
under applicable law, we are treated as a successor to the prior owner. Any substantial liability for environmental
damage could have a material adverse effect on our financial condition, results of operations and cash flows.
In the ordinary course of our business, we have in the past, we are currently, and we may in the future,
become involved in legal and administrative proceedings relating to land use and environmental laws and
regulations. These include proceedings in which:
‰agencies of federal, state, local or foreign governments seek to impose liability on us under applicable
statutes, sometimes involving civil or criminal penalties for violations, or to revoke or deny renewal of a
permit we need; and
‰local communities, citizen groups, landowners or governmental agencies oppose the issuance of a permit
or approval we need, allege violations of the permits under which we operate or laws or regulations to
which we are subject, or seek to impose liability on us for environmental damage.
We generally seek to work with the authorities or other persons involved in these proceedings to resolve any
issues raised. If we are not successful, the adverse outcome of one or more of these proceedings could result in,
among other things, material increases in our costs or liabilities as well as material charges for asset impairments.
Further, we often enter into agreements with landowners imposing obligations on us to meet certain
regulatory or contractual conditions upon site closure or upon termination of the agreements. Compliance with
these agreements inherently involves subjective determinations and may result in disputes, including litigation.
Costs to remediate or restore the condition of closed sites may be significant.
General economic conditions can directly and adversely affect our revenues and our income from
operations margins.
Our business is directly affected by changes in national and general economic factors that are outside of our
control, including consumer confidence, interest rates and access to capital markets. A weak economy generally
results in decreased consumer spending and decreases in volumes of waste generated, which decreases our
revenues. A weak market for consumer goods can significantly decrease demand by paper mills for recycled
corrugated cardboard used in packaging; such decrease in demand can negatively impact commodity prices and
our operating income and cash flows. In addition, we have a relatively high fixed-cost structure, which is difficult
to quickly adjust to match shifting volume levels. Consumer uncertainty and the loss of consumer confidence
may limit the number or amount of services requested by customers. Economic conditions may also limit our
ability to implement our pricing strategy. For example, many of our contracts have price adjustment provisions
that are tied to an index such as the Consumer Price Index, and our costs may increase in excess of the increase,
if any, in the Consumer Price Index.
Some of our customers, including governmental entities, have suffered financial difficulties affecting their
credit risk, which could negatively impact our operating results.
We provide service to a number of governmental entities and municipalities, some of which have suffered
significant financial difficulties due to the downturn in the economy, reduced tax revenue and/or high cost
structures. Some of these entities could be unable to pay amounts owed to us or renew contracts with us at
previous or increased rates.
Many non-governmental customers have also suffered serious financial difficulties, including bankruptcy in
some cases. Purchasers of our recyclable commodities can be particularly vulnerable to financial difficulties in
times of commodity price volatility. The inability of our customers to pay us in a timely manner or to pay
increased rates, particularly large national accounts, could negatively affect our operating results.
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