Waste Management 2014 Annual Report Download - page 210

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In 2012, we paid $94 million for interests in oil and gas producing properties through two transactions. The
purchase price was allocated primarily to “Property and equipment.” Additionally, we acquired 32 other
businesses related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was
$244 million, which included $207 million in cash paid in 2012, deposits paid during 2011 for acquisitions
completed in 2012 of $7 million, a liability for additional cash payments with a preliminary estimated fair value
of $22 million, and assumed liabilities of $8 million. The additional cash payments are contingent upon
achievement by the acquired businesses of certain negotiated goals, which generally include targeted revenues.
At the dates of acquisition, our estimated maximum obligations for the contingent cash payments were $57
million. As of December 31, 2012, we had paid $9 million of this contingent consideration. In 2012, we also paid
$34 million of contingent consideration associated with acquisitions completed prior to 2012.
The allocation of purchase price for 2012 acquisitions was primarily to “Property and equipment,” which
had an estimated fair value of $126 million; “Other intangible assets,” which had an estimated fair value of $43
million; and “Goodwill” of $69 million. Other intangible assets included $34 million of customer contracts and
customer relationships and $9 million of covenants not-to-compete. Goodwill is primarily a result of expected
synergies from combining the acquired businesses with our existing operations and is tax deductible.
Current Year Divestitures
The aggregate sales price for divestitures of operations was $2.09 billion in 2014, primarily related to (i) the
sale of our Wheelabrator business in December 2014; (ii) the sale of certain landfill and collection operations in
our Eastern Canada Area in the third quarter of 2014 and (iii) the sale of our Puerto Rico operations and certain
other collection and landfill assets in the second quarter of 2014, as discussed further below. We recognized net
gains on these divestitures of $515 million in 2014. These divestitures were made as part of our initiative to
improve or divest certain non-strategic or underperforming operations. The remaining amounts reported in the
Consolidated Statement of Cash Flows generally relate to the sale of fixed assets.
Divestiture of Wheelabrator Business
On December 19, 2014, we sold our Wheelabrator business to an affiliate of Energy Capital Partners and
received cash proceeds of $1.95 billion, net of cash divested, subject to certain post-closing adjustments. We
recognized a gain of $519 million on this sale which is included within “(Income) expense from divestitures,
asset impairments (other than goodwill) and unusual items” in the Consolidated Statement of Operations. In
conjunction with the sale, the Company entered into several agreements to dispose of a minimum number of tons
of waste at certain Wheelabrator facilities. These agreements generally provide for fixed volume commitments,
with certain market price resets, for up to seven years.
Our Wheelabrator business met the criteria to be classified as held-for-sale and was classified as
“Businesses held-for-sale” within our Condensed Consolidated Balance Sheet at September 30, 2014.
Wheelabrator provides waste-to-energy services and manages waste-to-energy facilities and independent
power production plants. Wheelabrator owns or operates 16 waste-to-energy facilities and four independent
power production plants. Prior to the sale, our Wheelabrator business constituted a reportable segment, as
discussed in Note 21. We concluded that the sale of our Wheelabrator business did not qualify for discontinued
operations accounting under current authoritative guidance based on our significant continuing obligations under
the long-term waste supply agreements referred to above and in Note 11.
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