Waste Management 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 219

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219

2015 ANNUAL REPORT

Table of contents

  • Page 1
    2015 ANNUAL REPORT

  • Page 2
    Proxy Statement

  • Page 3
    ... 31, 2016; • To vote on a proposal to approve our executive compensation; • To vote on a stockholder proposal regarding a policy on acceleration of vesting of equity awards in the event of a change in control, if properly presented at the meeting; and • To conduct other business that is...

  • Page 4
    ... ...Special Committee ...Board of Directors Governing Documents ...Non-Employee Director Compensation ...ELECTION OF DIRECTORS (Item 1 on the Proxy Card) ...DIRECTOR AND OFFICER STOCK OWNERSHIP ...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ...SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING...

  • Page 5
    PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS WASTE MANAGEMENT, INC. 1001 Fannin Street Houston, Texas 77002 Our Board of Directors is soliciting your proxy for the 2016 Annual Meeting of Stockholders and at any postponement or adjournment of the meeting. We are furnishing proxy materials to our ...

  • Page 6
    ... FOR our director candidates; • FOR the ratification of the independent registered public accounting firm; • FOR approval of our executive compensation; and • AGAINST the stockholder proposal regarding a policy on acceleration of vesting of equity awards in the event of a change in control. If...

  • Page 7
    ... contain certain information specified in the Company's Bylaws. The stockholder's notice should be delivered to our Corporate Security at Waste Management, Inc., 1001 Fannin Street, Houston, Texas 77002. A copy of our By-laws may be obtained free of charge by writing to our Corporate Secretary and...

  • Page 8
    ...receive separate copies. This procedure helps reduce our printing costs and postage fees. If you wish to receive a separate copy of this Proxy Statement and the Annual Report, please contact: Waste Management, Inc., Corporate Secretary, 1001 Fannin Street, Houston, Texas 77002, telephone 713512-6200...

  • Page 9
    ... following areas: • Environmental and Regulatory Developments; • Information Security and Technology; • Safety; • People Management; and • Operational Risk Management. The ERM program and process continue to evolve with enhancements made annually. Board members are polled to collect their...

  • Page 10
    ...environment, exposures affecting the Company's operations and the Company's plans to address such risks. In addition to information regarding general updates to the Company's operational and financial condition, management reports to the Board on a number of specific issues meant to inform the Board...

  • Page 11
    ... Management Systems where he was principal executive officer for over 30 years. Since 2001, he has served as Chairman of The Lovell Group, a private investment and advisory firm. Mr. Gross holds an MBA from the Stanford University Graduate School of Business, a master's degree in engineering science...

  • Page 12
    ... Yale University. The Audit Committee's duties are set forth in a written charter that was approved by the Board of Directors. A copy of the charter can be found on our website. The Audit Committee generally is responsible for overseeing all matters relating to our financial statements and reporting...

  • Page 13
    ... Report The role of the Audit Committee is, among other things, to oversee the Company's financial reporting process on behalf of the Board of Directors, to recommend to the Board whether the Company's financial statements should be included in the Company's Annual Report on Form 10-K and to select...

  • Page 14
    ...'s financial statements be included in its annual report for its fiscal year ended December 31, 2015. The Committee has also approved the selection of Ernst & Young as the Company's independent registered public accounting firm for fiscal year 2016. The Audit Committee of the Board of Directors...

  • Page 15
    ... of the Board and review the overall effectiveness of the Board; • Recommend retirement policies for the Board, the terms for directors and the proper ratio of employee directors to outside directors; • Perform an annual review of its performance relative to its charter and report the results...

  • Page 16
    ...Nominating and Governance Committee, Waste Management, Inc., 1001 Fannin Street, Houston, Texas 77002, between October 27, 2016 and November 26, 2016. Related Party Transactions The Board of Directors has adopted a written Related Party Transactions Policy for the review and approval or ratification...

  • Page 17
    ... and our Code of Conduct free of charge by contacting the Corporate Secretary, c/o Waste Management, Inc., 1001 Fannin Street, Houston, Texas 77002 or by accessing the "Corporate Governance" section of the "Investor Relations" page on our website at www.wm.com. Non-Employee Director Compensation Our...

  • Page 18
    ...and July 15. Cash Compensation All non-employee directors receive an annual cash retainer for Board service and additional cash retainers for serving as a committee chair. Directors do not receive meeting fees in addition to the retainers. The annual cash retainer is generally paid in advance in two...

  • Page 19
    ... with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The grant date fair value of the awards is equal to the number of shares issued multiplied by the average of the high and low market price of our Common Stock on each date of grant; there are no assumptions used...

  • Page 20
    ... knowledge of management and operations of large public companies, including experience implementing customer focused strategies. He also has over 19 years of experience as a member of a public company board of directors. Mr. Clark served in executive positions at a large public utility company for...

  • Page 21
    ... the AMS financial services business that provided IT-based applications to major banks. As a result, he has extensive experience in applying information technology, advanced data analytics and risk management analytics in global companies. His background, education and board service also provide...

  • Page 22
    ... in sales, human resources, strategic planning and marketing. This diverse background combined with her deep and valuable experience leading various aspects of a customer-focused business will help the Company achieve its strategy to know and service its customers better than anyone in the industry...

  • Page 23
    .... Director of Amsted Industries Incorporated since 2007. Mr. Weidemeyer served in executive positions at a large public company for several years. His roles encompassed significant operational management responsibility, providing him knowledge and experience in an array of functional areas critical...

  • Page 24
    ...of this Proxy Statement. The Security Ownership of Management table below shows the number of shares of Common Stock each director nominee and each executive officer named in the Summary Compensation Table on page 41 beneficially owned as of March 15, 2016, our record date for the annual meeting, as...

  • Page 25
    ... in the "All directors and executive officers as a group" are 17,842 stock equivalents attributable to the executive officers' collective holdings in the Company's 401(k) Retirement Savings Plan stock fund and 552,003 shares of Common Stock deferred on account of vested equity awards pursuant to the...

  • Page 26
    .... Based on a review of the forms and written representations from our executive officers and directors, we believe that all applicable requirements were complied with in 2015, except that, due to administrative errors, (a) Mr. Mark Schwartz, Senior Vice President - Human Resources, was late in...

  • Page 27
    ...James E. Trevathan, Jr... 40 58 63 • Executive Vice President, Corporate Operations and Recycling since November 2015. • Senior Vice President, Corporate Operations from November 2014 to November 2015. • Chief Information Officer and Senior Vice President, Technology, Logistics and Customer...

  • Page 28
    ...Morris - Senior Vice President - Operations since July 2012. Executive Summary The objective of our executive compensation program is to attract, retain, reward and incentivize exceptional, talented employees who will lead the Company in the successful execution of our strategy. The Company seeks to...

  • Page 29
    ...-term value to our stockholders by successfully executing our strategy: to know and service our customers better than anyone in our industry, to extract more value from the materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals through competitive...

  • Page 30
    ... to recommend any changes to our compensation practices. 2016 Compensation Program Preview The MD&C Committee continually reviews our compensation program to ensure that it is clearly aligned with the business strategy and best supports the accomplishment of our goals. The MD&C Committee is pleased...

  • Page 31
    ... aspirations that will continue to drive exemplary performance. With respect to our named executive officers, the MD&C Committee believes that total direct compensation at target should be in a range around the competitive median according to the following: • Base salaries should be paid within...

  • Page 32
    ...to base salary primarily consider competitive market data and the executive's individual performance and responsibilities. Short-Term Performance Incentive Annual Cash Incentive To encourage and reward contributions to our annual financial objectives through performance-based compensation subject...

  • Page 33
    ...-Employment and Change in Control Compensation. The post-employment compensation our named executives receive is based on provisions included in individual equity award agreements, retirement plan documents and employment agreements. Our equity award agreements generally provide that an executive...

  • Page 34
    ... reviews the total compensation, including the base salary, target annual cash incentive award opportunities, long-term incentive award opportunities and other benefits, including potential severance payments for each of our named executive officers. At a regularly scheduled meeting each year...

  • Page 35
    ... ranging in size from $100 million to over $100 billion in annual revenue. Data selected from these surveys is scoped based on Company revenue; and • Median compensation data from a comparison group of 19 publicly traded U.S. companies, described below. The comparison group of companies is...

  • Page 36
    ... general industry survey data. The competitive analysis showed that 2015 total direct compensation opportunities were near the median for our President and Chief Executive Officer and did not exceed the median for our other named executive officers. For competitive comparisons, the MD&C Committee...

  • Page 37
    ... and Accounting Matters. Section 162(m) of the Internal Revenue Code of 1985, as amended ("Code Section 162(m)"), denies a compensation deduction for federal income tax purposes for certain compensation in excess of $1 million per person paid in any year to our President and Chief Executive Officer...

  • Page 38
    ... payment in March 2016 for fiscal year 2015 equal to 108.5% of target. The MD&C Committee develops financial performance measures for annual cash incentive awards to drive improvements in business operations, as well as support and fund the long-term strategy of the Company. The MD&C Committee...

  • Page 39
    ...on a basis consistent with the Company's reporting of its 2015 financial results, including exclusion of asset impairments and unusual items, restructuring charges and settlement payments in connection with withdrawal from multiemployer pension plans. The 2015 cash incentive performance calculations...

  • Page 40
    ...for meeting the Company's strategic objectives. Target dollar amounts for equity incentive awards will vary from grant date fair values calculated for accounting purposes. Dollar Values of Annual Long-Term Equity Incentives Set by the Committee (at Target) Named Executive Officer Mr. Steiner ...Mr...

  • Page 41
    ... targets, the MD&C Committee carefully considered several material factors affecting the Company for 2015 and beyond, including general economic and market conditions and economic indicators for future periods, to ensure that the cash flow targets align with the Company's long-range strategic plan...

  • Page 42
    ... MD&C Committee believes use of stock options is appropriate to support the growth element of the Company's strategy. The grant of options made to the named executive officers in the first quarter of 2015 in connection with the annual grant of long-term equity awards was based on the targeted dollar...

  • Page 43
    ...May 2014 to account for the Company's recent sustained Common Stock market value. The ownership requirement of our Chief Executive Officer and President is approximately 5.6 times base salary, using his 2015 base salary and a $40 per share stock price. Using the closing price of the Company's Common...

  • Page 44
    ...not include deferred compensation, retirement benefits or accelerated vesting or continuation of equity-based awards pursuant to generally-applicable equity award plan provisions. Insider Trading - The Company maintains an insider trading policy that prohibits directors, executive officers and other...

  • Page 45
    ...named executives in 2013, 2014 and 2015. The grant date fair values are calculated in accordance with the Financial Accounting Standards Board Accounting Standards Codification ("ASC") Topic 718, as further described in Note 16 in the Notes to the Consolidated Financial Statements in our 2015 Annual...

  • Page 46
    ... using the Black-Scholes option pricing model. The assumptions made in determining the grant date fair values of options are disclosed in Note 16 in the Notes to the Consolidated Financial Statements in our 2015 Annual Report on Form 10-K. (3) Amounts in this column represent cash incentive awards...

  • Page 47
    ...price on the date of the grant, in accordance with our 2014 Stock Incentive Plan. (5) These amounts represent grant date fair value of the awards as calculated under ASC Topic 718, as further described in Note 16 in the Notes to the Consolidated Financial Statements in our 2015 Annual Report on Form...

  • Page 48
    ...2024 3/8/2023 2/25/2025 3/7/2024 3/8/2023 James E. Trevathan, Jr. - 16,854 - James C. Fish, Jr. - 16,854 27,500 Jeff M. Harris - 13,483 25,142 John J. Morris, Jr. - - - (1) Values are based on the closing price of the Company's Common Stock on December 31, 2015 of $53.37. (2) Represents vested...

  • Page 49
    ...121. The value of the RSUs realized on vesting was calculated using the average of the high and low market price of the Company's Common Stock of the date of vesting. Nonqualified Deferred Compensation in 2015 Executive Contributions in Last Fiscal Year ($)(1) 7,509,787 78,366 51,825 124,743 74,976...

  • Page 50
    ... in each named executive officer's agreement requires a double trigger in order to receive any payment in the event of a change in control situation. First, a change in control must occur, and second, the individual must terminate his employment for good reason or the Company must terminate his...

  • Page 51
    ...of the employee's termination of employment. The terms "Cause," "Good Reason," and "Change in Control" as used in the table below are defined in the executives' employment agreements and/or the applicable equity award agreement and have the meanings generally described below. You should refer to the...

  • Page 52
    ... those benefits. • Waste Management's practice is to provide all benefits eligible employees with life insurance that pays one times annual base salary upon death. The insurance benefit is a payment by an insurance company, not the Company, and is payable under the terms of the insurance policy...

  • Page 53
    ...the Company or For Good Reason by the Employee Six Months Prior to or Two Years Following a Chang in Control (Double Trigger) Severance Benefits • Two times base salary plus target annual cash bonus, paid in lump sum ...2,513,700 • Continued coverage under benefit plans for two years • Health...

  • Page 54
    ... Event Compensation Component Payout ($) Termination Without Cause by the Company or For Good Reason by the Employee Six Months Prior to or Two Years Following a Change in Control (Double Trigger) Severance Benefits • Two times base salary plus target annual cash bonus (one-half payable...

  • Page 55
    ... the Company or For Good Reason by the Employee Six Months Prior to or Two Years Following a Change in Control (Double Trigger) Severance Benefits • Two times base salary plus target annual cash bonus (one half payable in lump sum; one half payable in bi-weekly installments over a two year period...

  • Page 56
    ... Compensation Plan Table The following table provides information as of December 31, 2015 about the number of shares to be issued upon vesting or exercise of equity awards and the number of shares remaining available for issuance under our equity compensation plans. Number of Securities to be Issued...

  • Page 57
    ...... Audit fees includes fees for the annual audit, reviews of the Company's Quarterly Reports on Form 10-Q, work performed to support the Company's debt issuances, accounting consultations, and separate subsidiary audits required by statute or regulation, both domestically and internationally. Audit...

  • Page 58
    ... award agreements and recent employment agreements, and has adopted a clawback policy applicable to annual incentive compensation, designed to recoup compensation when cause and/or misconduct are found; • our executive officer severance policy implemented a limitation on the amount of benefits...

  • Page 59
    ... take any action as a result of the outcome of the vote on this proposal. The MD&C Committee will carefully consider the outcome of the vote in connection with future executive compensation arrangements. THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION. 55

  • Page 60
    ...approve after the date of the 2016 annual meeting. SUPPORTING STATEMENT: Waste Management ("Company") allows executives to receive an accelerated award of unearned equity under certain conditions after a change of control of the Company. We do not question that some form of severance payments may be...

  • Page 61
    ... awards upon a change in control. As a result, the proposed policy could significantly jeopardize the objective of our compensation program to attract, retain, reward and incentivize exceptional, talented employees who will lead the Company in the successful execution of its strategy. Additionally...

  • Page 62
    ...the MD&C Committee's structuring of executive compensation Our Board believes that stockholders' interests are best served by recognizing that the MD&C Committee, comprised of seven independent, non-management directors, is in the best position to set the terms of executive compensation arrangements...

  • Page 63
    Form 10-K

  • Page 64
    ... (I.R.S. Employer Identification No.) 73-1309529 (Address of principal executive offices) Registrant's telephone number, including area code: 1001 Fannin Street Houston, Texas (Zip code) 77002 (713) 512-6200 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name...

  • Page 65
    ... Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management...

  • Page 66
    ... services that supplement our traditional Solid Waste business. Our Company's goals are targeted at serving our customers, our employees, the environment, the communities in which we work and our stockholders, and achievement of our goals is intended to meet the needs of a changing industry. Our...

  • Page 67
    ...-term value to our stockholders by successfully executing our strategy: to know and service our customers better than anyone in our industry, to extract more value from the materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals through competitive...

  • Page 68
    ... or weight of the waste collected, distance to the disposal facility, labor costs, cost of disposal and general market factors. As part of the service, we provide steel containers to most customers to store their solid waste between pick-up dates. Containers vary in size and type according to the...

  • Page 69
    ... rates for disposal costs and other general market factors. The utilization of our transfer stations by our own collection operations improves internalization by allowing us to retain fees that we would otherwise pay to third parties for the disposal of the waste we collect. It enables us to manage...

  • Page 70
    ... supply agreements referred to above and in Note 11 to the Consolidated Financial Statements. Recycling. Our recycling operations provide communities and businesses with an alternative to traditional landfill disposal and support our strategic goals to extract more value from the materials we manage...

  • Page 71
    ... nationwide locations' waste management needs. Our Energy and Environmental Services organization offers our customers in all Areas a variety of services in collaboration with our Area and strategic accounts programs, including (i) construction and remediation services; (ii) services associated with...

  • Page 72
    ... employed in administrative and sales positions and the balance in operations. Approximately 8,200 of our employees are covered by collective bargaining agreements. Financial Assurance and Insurance Obligations Financial Assurance Municipal and governmental waste service contracts generally require...

  • Page 73
    ...the Company, as the Company is not insured for any money it advances for defense costs or pays as indemnity to the insured directors and officers. Regulation Our business is subject to extensive and evolving federal, state or provincial and local environmental, health, safety and transportation laws...

  • Page 74
    ... municipal solid waste landfills and landfill gas-to-energy facilities. In 1996 the EPA issued new source performance standards ("NSPS") and emission guidelines controlling landfill gases from new and existing large landfills. In January 2003, the EPA issued Maximum Achievable Control Technology...

  • Page 75
    ... Safety and Health Administration, and various reporting and record keeping obligations as well as disclosure and procedural requirements. Various standards for notices of hazards, safety in excavation and demolition work and the handling of asbestos, may apply to our operations. The Department...

  • Page 76
    ... low-carbon service offerings in the future, the services we are developing will be increasingly valuable. • In 2011, the EPA published the Non-Hazardous Secondary Materials ("NHSM") Rule, which provides the standards and procedures for identifying whether NHSM are solid waste under RCRA when used...

  • Page 77
    ... disposal costs. Despite these increased costs, we believe we are well positioned among our potential competitors to respond to and comply with such regulations. We are revising our service agreements to address these increased costs and are working with stakeholders to educate the general public on...

  • Page 78
    ... marketing evaluations, we assess customer demand for and opportunities to develop waste services offering verifiable carbon reductions, such as waste reduction, increased recycling, and conversion of landfill gas and discarded materials into electricity and fuel. We use carbon life cycle tools in...

  • Page 79
    ... primarily of two national waste management companies and regional and local companies of varying sizes and financial resources, including companies that specialize in certain discrete areas of waste management, operators of alternative disposal facilities and companies that seek to use parts of the...

  • Page 80
    ...level in the United States and Canada have a substantial impact on our business, and compliance with such regulations is costly. A large number of complex laws, rules, orders and interpretations govern environmental protection, health, safety, land use, zoning, transportation and related matters. In...

  • Page 81
    ... to develop, expand or operate a landfill or other waste management facility, we must have various facility permits and other governmental approvals, including those relating to zoning, environmental protection and land use. The permits and approvals are often difficult, time consuming and costly to...

  • Page 82
    ... prices. Changes in laws or government regulations regarding GHG emissions from oil and gas operations and/or hydraulic fracturing could increase our customers' costs of doing business and reduce oil and gas exploration and production by customers. There remains heightened attention from the public...

  • Page 83
    ...lines of business, it is possible that our revenues and our income from operations margins could be negatively affected due to disposal alternatives. Developments in technology could trigger a fundamental change in the waste management industry, as waste streams are increasingly viewed as a resource...

  • Page 84
    ... 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...

  • Page 85
    ... and increase our costs. Our ability to meet our financial and operating objectives depends in part on our ability to obtain and maintain the permits necessary to operate landfill sites. Permits to build, operate and expand solid waste management facilities, including landfills and transfer stations...

  • Page 86
    ... expected cost savings. Additionally, any systems failures could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. A cybersecurity incident could negatively impact our business and our relationships with customers. We use computers...

  • Page 87
    ... pension plans. Our business is subject to operational and safety risks, including the risk of personal injury to employees and others. Providing environmental and waste management services, including constructing and operating landfills, involves risks such as truck accidents, equipment...

  • Page 88
    ... may record material charges against our earnings due to impairments to our assets. In accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we capitalize certain expenditures and advances relating to disposal site development, expansion projects, acquisitions, software development...

  • Page 89
    ... comprehensive federal climate change legislation be enacted, we expect it could impose costs on our operations that might not be offset by the revenue increases associated with our lower-carbon service options, the materiality of which we cannot predict. In 2010, the EPA published a Prevention...

  • Page 90
    ... and India. We own or lease real property in most locations where we have operations or administrative functions. We have operations in all 50 states. We also have operations in the District of Columbia and throughout Canada. Our principal property and equipment consists of land (primarily landfills...

  • Page 91
    The following table provides certain information regarding the 216 landfills owned or operated through lease agreements as of December 31, 2015: Landfills Total Acreage(a) Permitted Acreage(b) Expansion Acreage(c) Landfills owned or operated through lease agreements ... 216 144,123 37,064 1,277...

  • Page 92
    ... Note 15 to the Consolidated Financial Statements for additional information. The Company entered into an additional ASR agreement in December 2015 to repurchase $150 million of our common stock in early 2016. We subsequently announced in December 2015 that the Board of Directors refreshed its prior...

  • Page 93
    .... 2015(a) Years Ended December 31, 2014(a) 2013(a) 2012 (In millions, except per share amounts) 2011 Statement of Operations Data: Operating revenues ...Costs and expenses: Operating ...Selling, general and administrative ...Depreciation and amortization ...Restructuring ...Goodwill impairments...

  • Page 94
    ...-term value to our stockholders by successfully executing our strategy: to know and service our customers better than anyone in our industry, to extract more value from the materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals through competitive...

  • Page 95
    ...771 million is primarily attributable to (i) operating costs associated with divestitures of $495 million, primarily the sale of our Wheelabrator business; (ii) lower fuel costs of $187 million due to lower year-over-year average fuel prices; (iii) lower cost of goods sold of $102 million, primarily...

  • Page 96
    ...support our strategic growth plans. In 2015, we acquired Deffenbaugh Disposal, Inc. ("Deffenbaugh"), one of the largest privately owned collection and disposal firms in the Midwest. In addition, in January 2016, we completed the acquisition of Southern Waste Systems/Sun Recycling in Southern Florida...

  • Page 97
    ... Environment Group, which was part of our Wheelabrator business, for $155 million and (iii) our Puerto Rico operations for proceeds of $80 million, including $65 million in cash. Acquisitions Deffenbaugh Disposal, Inc. - On March 26, 2015, we acquired Deffenbaugh, one of the largest privately...

  • Page 98
    ... 8, 2016, Waste Management Inc. of Florida, a wholly-owned subsidiary of WM, acquired certain operations and business assets of Southern Waste Systems/Sun Recycling in Southern Florida. The acquired business assets include residential, commercial, and industrial solid waste collection, processing...

  • Page 99
    ... collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. Additionally, landfill development includes all land...

  • Page 100
    ...a landfill-specific review process that includes approval by our Chief Financial Officer and a review by the Audit Committee of our Board of Directors on a quarterly basis. Of the 21 landfill sites with expansions included at December 31, 2015, three landfills required the Chief Financial Officer to...

  • Page 101
    ... amount and type of waste hauled to the site and the number of years we were associated with the site. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by...

  • Page 102
    ... generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates and Assumptions - Expansion Airspace...

  • Page 103
    ... revenue, and increase assumed operating costs. Additionally, the discount factor previously utilized in the income approach in 2013 increased mainly due to increases in interest rates. In 2013, we also incurred $10 million of charges to impair goodwill associated with our Puerto Rico operations...

  • Page 104
    ... but not reported losses, are based on an actuarial valuation and internal estimates. The accruals for these liabilities could be revised if future occurrences or loss development significantly differ from our assumptions used. Estimated recoveries associated with our insured claims are recorded as...

  • Page 105
    ...from fees charged for our collection, disposal, transfer, recycling and resource recovery, and from sales of commodities by our recycling and landfill gas-toenergy operations. Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment...

  • Page 106
    ... (b) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company. We also analyze the changes in average yield in terms of related-business revenues in order to differentiate the changes in yield attributable to our pricing strategies from the...

  • Page 107
    ... revenue from the pricing activities of our collection, transfer and landfill operations, exclusive of volume changes. Revenue growth from collection and disposal average yield includes not only base rate changes and environmental and service fee increases, but also (i) certain average price changes...

  • Page 108
    ... and recovery assets, leachate and methane collection and treatment, landfill remediation costs and other landfill site costs; (ix) risk management costs, which include auto liability, workers' compensation, general liability and insurance and claim costs and (x) other operating costs, which...

  • Page 109
    ...: 2015 Period-to-Period Change 2014 Period-to-Period Change 2013 Labor and related benefits ...Transfer and disposal costs ...Maintenance and repairs ...Subcontractor costs ...Cost of goods sold ...Fuel ...Disposal and franchise fees and taxes ...Landfill operating costs ...Risk management ...Other...

  • Page 110
    ...landfill and recycling businesses in 2015; Higher costs related to remediation services; and Higher costs related to the RCI operations acquired in July 2013. Cost of goods sold - The reduction in costs is primarily driven by lower recycling rebates due to (i) lower commodity prices; (ii) increased...

  • Page 111
    ... of property and equipment, including assets recorded for capital leases, on a straight-line basis from three to 40 years; (ii) amortization of landfill costs, including those incurred and all estimated future costs for landfill development, construction and asset retirement costs arising from...

  • Page 112
    ... of goodwill impairment charges, primarily related to (i) $483 million associated with our Wheelabrator business; (ii) $10 million associated with our Puerto Rico operations and (iii) $9 million associated with a majority-owned waste diversion technology company. See Item 7. Management's Discussion...

  • Page 113
    ... landfill and collection operations in our Eastern Canada Area. Partially offsetting these gains was a $25 million loss on the divestiture of our Puerto Rico operations. Refer to Note 19 to the Consolidated Financial Statements for additional information related to our divestitures. Oil and gas...

  • Page 114
    ... of our Canadian operations in Tiers 1 and 2; The unfavorable impact on our oilfield services business, primarily in Tier 2, of reduced drilling and auxiliary activities as a result of declining oil and gas prices; and The transfer of certain sales employees from our Corporate and Other segment...

  • Page 115
    ... to impairments of oil and gas producing properties recognized in 2015, 2014 and 2013, respectively; Higher costs related to remediation services in 2015; The transfer of certain sales employees from our Corporate and Other segment in 2014; and Improved results in our Strategic Business Solutions...

  • Page 116
    ... related to changes in U.S. Treasury rates used to discount the present value of our environmental remediation obligations and recovery assets; and Increased risk management costs in 2015 primarily related to certain higher than anticipated auto and general liability claim settlements and favorable...

  • Page 117
    ... respectively. The expenses for 2015, 2014 and 2013 were impacted by impairment charges of $5 million, $22 million and $71 million, respectively, related to other-than-temporary declines in the value of investments in waste diversion technology companies accounted for under the cost method. We wrote...

  • Page 118
    ... of our Wheelabrator business, our Puerto Rico operations and certain landfill and collection operations in our Eastern Canada Area. Had this net gain been fully taxable, our provision for income taxes would have increased by $138 million. During 2015, the Company recorded an additional $10...

  • Page 119
    Landfill and Environmental Remediation Discussion and Analysis We owned or operated 244 solid waste and five secure hazardous waste landfills at December 31, 2015 and 247 solid waste and five secure hazardous waste landfills at December 31, 2014. At December 31, 2015 and 2014, the expected remaining...

  • Page 120
    ... tons received at our landfills in 2015 and 2014 are shown below (tons in thousands): 2015 # of Sites Total Tons Tons per Day # of Sites 2014 Total Tons Tons per Day Solid waste landfills ...Hazardous waste landfills...Solid waste landfills closed, divested or contract expired during related year...

  • Page 121
    ... and installation, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, and on-site road construction and other capital infrastructure costs. The cost basis of...

  • Page 122
    ... remediation costs ...Other landfill site costs ...Total landfill operating costs ... $ 89 1 96 5 64 $255 $ 88 14 84 9 71 $266 $ 87 (10) 77 10 68 $232 The comparison of these costs for the reported periods has been significantly affected by accounting for changes in the risk-free discount rate...

  • Page 123
    ... arise during the year as a result of changing business conditions or new opportunities. In addition to our working capital needs for the general and administrative costs of our ongoing operations, we have cash requirements for: (i) the construction and expansion of our landfills; (ii) additions to...

  • Page 124
    ... escrow accounts at December 31, 2014 included the funding of a legal settlement which was paid in full in the second quarter of 2015. Debt - We use long-term borrowings in addition to the cash we generate from operations as part of our overall financial strategy to support and grow our business. We...

  • Page 125
    ... the comparison of our operating cash flows in 2015 to 2014 are summarized below: • Increased earnings from our traditional Solid Waste business - In 2015, we saw an increase in cash earnings from our traditional Solid Waste business which was enhanced by acquisitions and corporate overhead cost...

  • Page 126
    ... receivable, which are affected by both revenue changes and timing of payments received, and accounts payable changes, which are affected by both cost changes and timing of payments. • • The most significant items affecting the comparisons of our operating cash flows in 2014 as compared to...

  • Page 127
    ... sale of our Wheelabrator business for $1.95 billion and, to a lesser extent, the sale of our Puerto Rico operations and certain landfill and collection operations in our Eastern Canada Area. In 2013, our proceeds from divestitures included approximately $41 million related to oil and gas producing...

  • Page 128
    ... the quarterly dividend from $0.385 to $0.41 per share for dividends declared in 2016. However, all future dividend declarations are at the discretion of the Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for future business plans and...

  • Page 129
    ... will increase as we continue to place additional tons within the permitted airspace at our landfills. (b) The amounts reported here represent the scheduled principal payments related to our long-term debt, excluding related interest. Refer to Note 7 to the Consolidated Financial Statements for...

  • Page 130
    ...financial position, results of operations or liquidity. New Accounting Standard Pending Adoption In May 2014, the FASB amended authoritative guidance associated with revenue recognition. The amended guidance requires companies to recognize revenue to depict the transfer of promised goods or services...

  • Page 131
    ... revenues are generated under long-term agreements with price adjustments based on various indices intended to measure inflation. Additionally, management's estimates associated with inflation have had, and will continue to have, an impact on our accounting for landfill and environmental remediation...

  • Page 132
    ... our costs in the prices we charge our customers for the services provided. Accordingly, as the market prices for these commodities increase or decrease, our revenues also increase or decrease. Currency Rate Exposure - We have operations in Canada as well as a cost center in India and investments...

  • Page 133
    ... Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Management's Report on Internal Control Over Financial Reporting ...Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of December 31, 2015 and 2014 ...Consolidated Statements of Operations for the Years...

  • Page 134
    ... CONTROL OVER FINANCIAL REPORTING Management of the Company, including the principal executive and financial officers, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act...

  • Page 135
    ... PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Waste Management, Inc. We have audited Waste Management, Inc.'s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee...

  • Page 136
    ... years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Waste Management, Inc.'s internal control over financial reporting...

  • Page 137
    ... revenues ...Current portion of long-term debt ...Total current liabilities ...Long-term debt, less current portion ...Deferred income taxes ...Landfill and environmental remediation liabilities ...Other liabilities ...Total liabilities ...Commitments and contingencies Equity: Waste Management...

  • Page 138
    WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) Years Ended December 31, 2015 2014 2013 Operating revenues: Service revenues ...Tangible product revenues ...Total operating revenues ...Costs and expenses: Operating costs: Cost of services ...Cost...

  • Page 139
    ... assets ...(7) 22 4 Accounts payable and accrued liabilities ...(112) 117 (27) Deferred revenues and other liabilities ...(97) (117) (94) Net cash provided by operating activities ...2,498 2,331 2,455 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired ...(554) (35...

  • Page 140
    WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Millions, Except Shares in Thousands) Waste Management, Inc. Stockholders' Equity Accumulated Other Common Stock Additional Paid-In Retained Comprehensive Treasury Stock Noncontrolling Total Shares Amounts Capital Earnings ...

  • Page 141
    ...collection, transfer, recycling and resource recovery, and disposal services. Through our subsidiaries, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the United States. We evaluate, oversee and manage the financial performance of our Solid Waste business...

  • Page 142
    ... our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, asset impairments, deferred income taxes and reserves associated with...

  • Page 143
    ...; landfill gas collection systems; environmental monitoring equipment for groundwater and landfill gas; and directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes asset retirement costs...

  • Page 144
    ... obligation. The weighted average rate applicable to our long-term asset retirement obligations at December 31, 2015 is approximately 6.25%. We expect to apply a credit-adjusted, risk-free discount rate of 4.50% to liabilities incurred in the first quarter of 2016. We record the estimated fair value...

  • Page 145
    ...a landfill-specific review process that includes approval by our Chief Financial Officer and a review by the Audit Committee of our Board of Directors on a quarterly basis. Of the 21 landfill sites with expansions included at December 31, 2015, three landfills required the Chief Financial Officer to...

  • Page 146
    ... take into account several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate...

  • Page 147
    ... FINANCIAL STATEMENTS - (Continued) waste hauled to the site and the number of years we were associated with the site. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal...

  • Page 148
    ...directly associated with the software development project. Leases We lease property and equipment in the ordinary course of our business. Our most significant lease obligations are for property and equipment specific to our industry, including real property operated as a landfill or transfer station...

  • Page 149
    ... Consideration - In certain acquisitions, we agree to pay additional amounts to sellers contingent upon achievement by the acquired businesses of certain negotiated goals, such as targeted revenue levels, targeted disposal volumes or the issuance of permits for expanded landfill airspace. We have...

  • Page 150
    ... business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit. As a result, our tests of recoverability, which generally make use...

  • Page 151
    ... due to increases in interest rates. In 2013, we also incurred $10 million of charges to impair goodwill associated with our Puerto Rico operations. In 2014, we recognized $10 million of goodwill impairment charges associated with our recycling operations. Refer to Note 13 for information related to...

  • Page 152
    ...qualifying final capping, closure, post-closure and environmental remediation activities; (iv) acquisitions or divestitures of landfills and (v) changes in the fair value of the financial instruments held in the trust fund or escrow accounts. As of December 31, 2015 and 2014, we had $105 million and...

  • Page 153
    ... securities; (ii) other information available regarding the current market for similar assets and/or (iii) a market or income approach as deemed appropriate. Foreign Currency We have operations in Canada as well as a cost center in India and investments in Hong Kong. Local currencies generally are...

  • Page 154
    ... customers increased direct and indirect costs incurred because of changes in market prices for fuel. We generally recognize revenue as services are performed or products are delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer...

  • Page 155
    ... Remediation Liabilities Liabilities for landfill and environmental remediation costs are presented in the table below (in millions): December 31, 2015 Environmental Landfill Remediation December 31, 2014 Environmental Landfill Remediation Total Total Current (in accrued liabilities) ...Long-term...

  • Page 156
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The changes to landfill and environmental remediation liabilities for the years ended December 31, 2014 and 2015 are reflected in the table below (in millions): Landfill Environmental Remediation December 31, 2013 ......

  • Page 157
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 5. Property and Equipment Property and equipment at December 31 consisted of the following (in millions): 2015 2014 Land ...Landfills ...Vehicles ...Machinery and equipment ...Containers ...Buildings and improvements ...

  • Page 158
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Our other intangible assets as of December 31, 2015 and 2014 were comprised of the following (in millions): Customer and Supplier Relationships Covenants Not-toCompete Licenses, Permits and Other Total December 31, ...

  • Page 159
    ... under the credit agreement. The rates we pay for outstanding loans under the Canadian credit agreement are generally based on the applicable Canadian Dealer Offered Rate (CDOR) plus a spread depending on the Company's debt rating assigned by Moody's Investors Service and Standard and Poor's. The...

  • Page 160
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The C$500 million of term credit was established specifically to fund the acquisition of substantially all of the assets of RCI and was fully drawn in July 2013. The term loan is a non-revolving loan and principal ...

  • Page 161
    ... FINANCIAL STATEMENTS - (Continued) Also affecting the change in the carrying value of our senior notes from December 31, 2014 to December 31, 2015 were decreases due to the amortization and write-off associated with fair value hedge accounting for previously terminated interest rate swap contracts...

  • Page 162
    ... previously terminated swaps were recorded as interest expense in the Consolidated Statement of Operations. There was no significant ineffectiveness associated with our cash flow hedges during the years ended December 31, 2015, 2014 or 2013. Refer to Note 14 for information regarding the impacts of...

  • Page 163
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Fair Value Hedges Interest Rate Swaps We did not have any interest rate swaps outstanding during the reported periods. However, in prior years, we entered into interest rate swaps to maintain a portion of our debt ...

  • Page 164
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The U.S. federal statutory income tax rate is reconciled to the effective income tax rate as follows: Years Ended December 31, 2015 2014 2013 Income tax expense at U.S. federal statutory rate ...Federal tax credits ......

  • Page 165
    ... 2000. We are also under audit in Canada for the tax years 2012 and 2013. We acquired Deffenbaugh, which is subject to potential IRS examination for the years 2012 through the date of acquisition in 2015. Tax Implications of Divestitures - During 2014, the Company recorded a net gain of $515 million...

  • Page 166
    ... 31, 2015 2014 Deferred tax assets: Net operating loss, capital loss and tax credit carryforwards ...Landfill and environmental remediation liabilities ...Miscellaneous and other reserves, net ...Subtotal ...Valuation allowance ...Deferred tax liabilities: Property and equipment ...Goodwill and...

  • Page 167
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Liabilities for Uncertain Tax Positions A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest is as follows (in millions): 2015 2014 2013 Balance at January 1...

  • Page 168
    ... TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 10. Employee Benefit Plans Defined Contribution Plans - Waste Management sponsors a 401(k) retirement savings plan that covers employees, except those working subject to collective bargaining agreements that do not allow for coverage under that...

  • Page 169
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Multiemployer Defined Benefit Pension Plans - We are a participating employer in a number of trusteemanaged multiemployer, defined benefit pension plans for employees who are covered by collective bargaining agreements. ...

  • Page 170
    ... employee benefits. Funding of benefit payments for plan participants are made at rates as negotiated in the respective collective bargaining agreements as costs are incurred. 11. Commitments and Contingencies Financial Instruments - We have obtained letters of credit, surety bonds and insurance...

  • Page 171
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We have retained a significant portion of the risks related to our automobile, general liability and workers' compensation claims programs. "General liability" refers to the self-insured portion of specific third party ...

  • Page 172
    ... collected in the ordinary course of business at these disposal facilities. Waste Paper - We are party to waste paper purchase agreements expiring at various dates through 2018 that require us to purchase a minimum number of tons of waste paper. The cost per ton we pay is based on market prices...

  • Page 173
    ... and, in exchange, receive a credit support fee. The most significant of these guarantees specifically define WM's maximum financial obligation over the course of the relevant agreements, and as of December 31, 2015, WM's maximum future payments associated with those guarantees are $106 million. WM...

  • Page 174
    ... 2010 and January 2011. WMHI may face civil claims from the Hawaii Department of Health or the EPA based on the same underlying events, but we do not anticipate such claims could have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. 111

  • Page 175
    ... the environment or, in certain cases, on the basis of having conducted environmental remediation activities at sites. Some of the lawsuits may seek to have us pay the costs of monitoring of allegedly affected sites and health care examinations of allegedly affected persons for a substantial...

  • Page 176
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) multiemployer defined benefit pension plans for the covered employees. Refer to Note 10 for additional information about our participation in multiemployer defined benefit pension plans considered individually ...

  • Page 177
    ... associated with our Wheelabrator business; (ii) $10 million associated with our Puerto Rico operations and (iii) $9 million associated with a majority-owned waste diversion technology company. See Note 3 for additional information related to these impairment charges as well as the accounting policy...

  • Page 178
    ... on the sale of certain landfill and collection operations in our Eastern Canada Area. Partially offsetting these gains was a $25 million loss on the divestiture of our Puerto Rico operations. Refer to Note 19 for additional information related to our divestitures. Oil and gas properties impairments...

  • Page 179
    ...) During the years ended December 31, 2015, 2014 and 2013, we recognized impairment charges of $5 million, $22 million and $71 million, respectively, related to other-than-temporary declines in the value of investments in waste diversion technology companies accounted for under the cost method. We...

  • Page 180
    ...of Waste Management, Inc. stockholders' equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income): Foreign PostAvailableCurrency Retirement Derivative for-Sale Translation Benefit Instruments Securities Adjustments Plans Total...

  • Page 181
    ... the quarterly dividend from $0.385 to $0.41 per share for dividends declared in 2016. However, all future dividend declarations are at the discretion of the Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for future business plans and...

  • Page 182
    ... is limited by IRS regulations. The total number of shares issued under the plan for the offering periods in each of 2015, 2014 and 2013 was approximately 786,000, 774,000 and 928,000, respectively. Including the impact of the January 2016 issuance of shares associated with the July to December...

  • Page 183
    ... under the Incentive Plans are determined by the Management Development and Compensation Committee of our Board of Directors. The 2015 annual Incentive Plan awards granted to the Company's senior leadership team, which generally includes the Company's executive officers, included a combination of...

  • Page 184
    ... results and corresponding vesting of PSUs for the threeyear performance period ended December 31, 2015 was performed by the Management Development and Compensation Committee in February 2016. Accordingly, vesting information for such awards is not included in the table above as of December 31...

  • Page 185
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Deferred Units - Recipients can elect to defer some or all of the vested RSU or PSU awards until a specified date or dates they choose. Deferred units are not invested, nor do they earn interest, but deferred amounts do ...

  • Page 186
    ...options, combined with other relevant factors including implied volatility in market-traded options on the Company's stock. The dividend yield is the annual rate of dividends per share over the exercise price of the option as of the grant date. For the years ended December 31, 2015, 2014 and 2013 we...

  • Page 187
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 17. Earnings Per Share Basic and diluted earnings per share were computed using the following common share data (shares in millions): Years Ended December 31, 2015 2014 2013 Number of common shares outstanding at year-...

  • Page 188
    ... FINANCIAL STATEMENTS - (Continued) Fair Value Measurements at December 31, 2014 Using Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Assets: Money market funds ...Available-for-sale securities ...Fixed...

  • Page 189
    ... existing service offerings. During the year ended December 31, 2015, we acquired 27 businesses primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $661 million, which included $554 million in cash paid in 2015, purchase price holdbacks...

  • Page 190
    ...of amounts for estimated working capital. Deffenbaugh's assets include five collection operations, seven transfer stations, two recycling facilities, one subtitle-D landfill, and one construction and demolition landfill. Since the acquisition date, Deffenbaugh has recognized revenues of $134 million...

  • Page 191
    ... acquired businesses with our existing operations and is generally tax deductible. Acquisition of Greenstar, LLC On January 31, 2013, we paid $170 million inclusive of certain adjustments, to acquire Greenstar. Pursuant to the sale and purchase agreement, up to an additional $40 million was payable...

  • Page 192
    ...$481 million, to acquire substantially all of the assets of RCI, the largest waste management company in Quebec, and certain related entities. Total consideration, inclusive of amounts for estimated working capital, was C$515 million, or $487 million. RCI provides collection, transfer, recycling and...

  • Page 193
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) year ended December 31, 2015, net adjustments to this gain were immaterial on a pre-tax basis. In conjunction with the sale, the Company entered into several agreements to dispose of a minimum number of tons of waste at ...

  • Page 194
    ... 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...

  • Page 195
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) between our Areas, including the fact that our Solid Waste business is homogenous across geography with the same services offered across the Areas, aggregation of our Areas is appropriate for purposes of presenting our ...

  • Page 196
    ...,102 Total ...$16,507 (a) Our "Other" net operating revenues and "Other" income from operations include (i) the effects of those elements of our landfill gas-to-energy operations and third-party subcontract and administration revenues managed by our Energy and Environmental Services and Renewable...

  • Page 197
    ... things, treasury, legal, information technology, tax, insurance, centralized service center processes, other administrative functions and the maintenance of our closed landfills. Income from operations for "Corporate and other" also includes costs associated with our long-term incentive program and...

  • Page 198
    ... FINANCIAL STATEMENTS - (Continued) The mix of operating revenues from our major lines of business is reflected in the table below (in millions): Years Ended December 31, 2015 2014 2013 Collection: Commercial ...Residential ...Industrial ...Other ...Total collection ...Landfill ...Transfer...

  • Page 199
    ... recognition of pre-tax charges of $14 million associated with divestitures, impairments and restructuring, which include a $7 million net loss associated with the sale of our Wheelabrator business in December 2014 and a $5 million impairment charge related to a landfill in our Western Canada Area...

  • Page 200
    ...certain adjustments associated with the sale of our Wheelabrator business. Combined, these charges had a favorable after-tax impact of $0.01 on our diluted earnings per share. Fourth Quarter 2015 • • The recognition of $70 million of pre-tax charges primarily to impair our oil and gas producing...

  • Page 201
    ...to impair our oil and gas producing properties; (ii) $25 million of charges to write down assets related to waste diversion technology companies; (iii) $20 million of other-than-temporary declines in the value of investments in waste diversion technology companies accounted for under the cost method...

  • Page 202
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING BALANCE SHEETS (Continued) ...term debt ...$ 957 $ - Accounts payable and other current liabilities ...86 13 Long-term debt, less current portion ...Due to affiliates ...Other liabilities ...Total...

  • Page 203
    ... MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS WM WM Non-Guarantor Holdings Subsidiaries Eliminations Consolidated Year Ended December 31, 2015 Operating revenues ...$ - Costs and expenses(a) ...- Income from operations...

  • Page 204
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated Year Ended December 31, 2015 Comprehensive income (loss) ...Less: Comprehensive income (loss...

  • Page 205
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated Year Ended December 31, 2015 Cash flows from operating activities: Consolidated net income (loss) ......

  • Page 206
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Continued) WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated Year Ended December 31, 2014 Cash flows from operating activities: Consolidated net income...

  • Page 207
    ... Adoption (Unaudited) In May 2014, the FASB amended authoritative guidance associated with revenue recognition. The amended guidance requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the...

  • Page 208
    ... 8, 2016, Waste Management Inc. of Florida, a wholly-owned subsidiary of WM, acquired certain operations and business assets of Southern Waste Systems/Sun Recycling in Southern Florida. The acquired business assets include residential, commercial, and industrial solid waste collection, processing...

  • Page 209
    ... Officers and Corporate Governance. The information required by this Item is incorporated by reference to the sections entitled "Board of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," and "Executive Officers," in the Company's definitive Proxy Statement for its 2016 Annual...

  • Page 210
    ... Management and Related Stockholder Matters. The information required by this Item is incorporated herein by reference to the sections entitled "Executive Compensation - Executive Compensation Tables - Equity Compensation Plan Table," "Director and Officer Stock Ownership," and "Security Ownership...

  • Page 211
    ... duly authorized. WASTE MANAGEMENT, INC. By: /s/ DAVID P. STEINER David P. Steiner President, Chief Executive Officer and Director Date: February 18, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

  • Page 212
    ...PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Waste Management, Inc. We have audited the consolidated financial statements of Waste Management, Inc. as of December 31, 2015 and 2014, and for each of the three years in the period ended December 31, 2015, and have issued our report...

  • Page 213
    WASTE MANAGEMENT, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (In Millions) Balance Beginning of Year Charged to Income Accounts Written Off/Use of Reserve Balance End of Year 2013 - Reserves for doubtful accounts(a) ...2014 - Reserves for doubtful accounts(a) ...2015 - Reserves for ...

  • Page 214
    ... by reference to Exhibit 4.2 to Form 10-K for the year ended December 31, 2014]. Amended and Restated By-laws of Waste Management Holdings, Inc. [incorporated by reference to Exhibit 4.3 to Form 10-Q for the quarter ended June 30, 2014]. Indenture for Subordinated Debt Securities dated February...

  • Page 215
    ... and Waste Management Holdings, Inc., as guarantors, the Lenders from time to time party thereto, and The Bank of Nova Scotia, as administrative agent [incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended September 30, 2013]. Employment Agreement between the Company and David...

  • Page 216
    ... of Director and Executive Officer Indemnity Agreement [incorporated by reference to Exhibit 10.43 to Form 10-K for the year ended December 31, 2012]. Form of 2014 Senior Leadership Team Award Agreement for Long Term Incentive Compensation under the Waste Management, Inc. 2009 Stock Incentive Plan...

  • Page 217
    ... amended, of David P. Steiner, President and Chief Executive Officer. Certification Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, of James C. Fish, Jr., Executive Vice President and Chief Financial Officer. Certification Pursuant to 18 U.S.C. §1350...

  • Page 218
    ...at the corporate address or call (713) 512-6574 ANNUAL MEETING The annual meeting of the stockholders of the Company is scheduled to be held at 11:00 a.m. on May 12, 2016 at: The Maury Myers Conference Center Waste Management, Inc. 1021 Main Street Houston, Texas 77002 WEB SITE www.wm.com (A) Audit...

  • Page 219
    1001 Fannin - Houston, Texas 77002 www.wm.com