Waste Management 2013 Annual Report Download - page 226

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
increase our national accounts customer base while enhancing our ability to provide comprehensive
environmental solutions. For the year ended December 31, 2011, subsequent to the acquisition date, Oakleaf
recognized revenues of $265 million and net income of less than $1 million, which are included in our
Consolidated Statement of Operations.
The following pro forma consolidated results of operations have been prepared as if the acquisition of
Oakleaf occurred at January 1, 2011 (in millions, except per share amounts):
Year Ended December 31, 2011
Operating revenues ........................................... $13,693
Net income attributable to Waste Management, Inc. ................. 955
Basic earnings per common share ............................... 2.03
Diluted earnings per common share .............................. 2.03
Divestitures
The aggregate sales price for divestitures of operations was $70 million in 2013, $7 million in 2012 and $32
million in 2011. The proceeds from these sales for 2013 and 2012 were comprised substantially of cash. For
2011, the proceeds from these sales were comprised primarily of assets acquired in exchanges of assets. We
recognized net gains on these divestitures of $8 million and less than $1 million in 2013 and 2012, respectively,
and net losses on these divestitures of $1 million in 2011. These divestitures were made as part of our initiative to
improve or divest certain underperforming and non-strategic operations. The remaining amounts reported in the
Consolidated Statement of Cash Flows generally relate to the sale of fixed assets.
20. Variable Interest Entities
Following is a description of our financial interests in variable interest entities that we consider significant,
including (i) those for which we have determined that we are the primary beneficiary of the entity and, therefore,
have consolidated the entities into our financial statements; and (ii) those that represent a significant interest in an
unconsolidated entity.
Consolidated Variable Interest Entities
Waste-to-Energy LLCs — In June 2000, two limited liability companies were established to purchase
interests in existing leveraged lease financings at three waste-to-energy facilities that we lease, operate and
maintain. We own a 0.5% interest in one of the LLCs (“LLC I”) and a 0.25% interest in the second LLC (“LLC
II”). John Hancock Life Insurance Company (“Hancock”) owns 99.5% of LLC I and 99.75% of LLC II is owned
by LLC I and the CIT Group (“CIT”). In 2000, Hancock and CIT made an initial investment of $167 million in
the LLCs, which was used to purchase the three waste-to-energy facilities and assume the seller’s indebtedness.
Under the LLC agreements, the LLCs shall be dissolved upon the occurrence of any of the following events: (i) a
written decision of all members of the LLCs; (ii) December 31, 2063; (iii) a court’s dissolution of the LLCs; or
(iv) the LLCs ceasing to own any interest in the waste-to-energy facilities.
Income, losses and cash flows of the LLCs are allocated to the members based on their initial equity
ownership percentages until Hancock and CIT achieve targeted returns on their initial capital investments in each
respective LLC. All allocations made through December 31, 2013 have been based on initial equity ownership
percentages as the target returns have not yet been achieved for either LLC. We currently expect Hancock and
CIT to achieve their targeted return on LLC II in early 2015 and Hancock to achieve its targeted return on LLC I
in mid-2015. After the investors have achieved their targeted returns, the LLC agreements provide that we will
receive 80% of the earnings of each of the LLCs and Hancock and CIT will be allocated the remaining 20%.
Our obligations associated with our interests in the LLCs are primarily related to the lease of the facilities.
In addition to our minimum lease payment obligations, we are required to make cash payments to the LLCs for
differences between fair market rents and our minimum lease payments. These payments are subject to
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