Waste Management 2014 Annual Report Download - page 213

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Following delays in obtaining planning approval, the Norfolk County Council (the “Council”), which had
awarded the project to the JV, held a special meeting on April 7, 2014 and voted to terminate the project
agreement with the JV. The JV then exercised its right to accelerate the effective date of the project agreement’s
termination to May 16, 2014. The Council subsequently reimbursed project development costs and losses
incurred on certain foreign currency and interest rate derivatives as determined under the project agreement. Our
portion of the loss recognized by the JV for unreimbursed costs was not material and was reflected in our “Equity
in net losses of unconsolidated entities.”
Investment in Refined Coal Facility — In 2011, we acquired a noncontrolling interest in a limited liability
company established to invest in and manage a refined coal facility. Along with the other equity investor, we
support the operations of the entity in exchange for a pro-rata share of the tax credits it generates. Our initial
consideration for this investment consisted of a cash payment of $48 million. At December 31, 2014 and 2013,
our investment balance was $32 million and $27 million, respectively, representing our current maximum pre-tax
exposure to loss. Under the terms and conditions of the transaction, we do not believe that we have any material
exposure to loss. Required capital contributions commenced in the first quarter of 2013 and will continue through
the expiration of the tax credits under Section 45 of the Internal Revenue Code, which occurs at the end of 2019.
We are only obligated to make future contributions to the extent tax credits are generated. We determined that we
are not the primary beneficiary of this entity as we do not have the power to individually direct the entity’s
activities. Accordingly, we account for this investment under the equity method of accounting and do not
consolidate the entity. Additional information related to this investment is discussed in Note 9.
Investment in Low-Income Housing Properties — In 2010, we acquired a noncontrolling interest in a limited
liability company established to invest in and manage low-income housing properties. We support the operations
of the entity in exchange for a pro-rata share of the tax credits it generates. Our target return on the investment is
guaranteed and, therefore, we do not believe that we have any material exposure to loss. Our consideration for
this investment totaled $221 million, which was comprised of a $215 million note payable and an initial cash
payment of $6 million. At December 31, 2014 and 2013, our investment balance was $104 million and $129
million, respectively, and our debt balance was $104 million and $128 million, respectively. We determined that
we are not the primary beneficiary of this entity as we do not have the power to individually direct the entity’s
activities. Accordingly, we account for this investment under the equity method of accounting and do not
consolidate the entity. Additional information related to this investment is discussed in Note 9.
Trusts for Final Capping, Closure, Post-Closure or Environmental Remediation Obligations — We have
significant financial interests in trust funds that were created to settle certain of our final capping, closure, post-
closure or environmental remediation obligations. Generally, we are the sole beneficiary of these restricted
balances; however, certain of the funds have been established for the benefit of both the Company and the host
community in which we operate. We have determined that these trust funds are variable interest entities;
however, we are not the primary beneficiary of certain of these entities because either (i) we do not have the
power to direct the significant activities of the trusts or (ii) power over the trusts’ significant activities is shared.
We account for the trusts for which we are the sole beneficiary as long-term “Other assets” in our Consolidated
Balance Sheet. We reflect our interests in the unrealized gains and losses on available-for-sale securities held by
these trusts as a component of “Accumulated other comprehensive income.” These trusts had a fair value of $129
million at December 31, 2014 and $125 million at December 31, 2013. Our interests in the trusts that have been
established for the benefit of both the Company and the host community in which we operate are accounted for as
investments in unconsolidated entities and receivables. These amounts are recorded in “Other receivables,”
“Investments in unconsolidated entities” and long-term “Other assets” in our Consolidated Balance Sheet, as
appropriate. Our investments and receivables related to these trusts had an aggregate carrying value of $113 million
and $110 million as of December 31, 2014 and December 31, 2013, respectively.
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