Waste Management 2015 Annual Report Download - 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
certain Wheelabrator facilities. These agreements generally provide for fixed volume commitments with certain
market price resets through 2021.
Other Divestitures
During 2014, we sold our Puerto Rico operations and received proceeds of $80 million, consisting of $65
million of cash and $15 million of preferred stock and recognized a loss of $25 million. In addition, we sold
certain landfill and collection operations in our Eastern Canada Area and received cash proceeds of $39 million
and recognized a gain of $18 million. The gain or loss on these divestitures is included within “(Income) expense
from divestitures, asset impairments (other than goodwill) and unusual items” in the Consolidated Statement of
Operations. The remaining proceeds from divestitures in 2014 were comprised substantially of cash.
The aggregate sales price for divestitures of operations in 2013 was $70 million comprised substantially of
cash and we recognized net gains of $8 million. These divestitures were made as part of our continuous focus on
improving or divesting 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.
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; (ii) those that represent a significant interest in an
unconsolidated entity and (iii) trusts for final capping, closure, post-closure or environmental remediation
obligations for both consolidated and unconsolidated variable interest entities.
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 leased, operated and
maintained. We initially owned 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”) owned 99.5% of LLC I and 99.75% of
LLC II was owned by LLC I and the CIT Group (“CIT”). We determined that we were the primary beneficiary of
the LLCs and consolidated these entities in our Consolidated Financial Statements because (i) all of the equity
owners of the LLCs were considered related parties for purposes of applying this accounting guidance; (ii) the
equity owners shared power over the significant activities of the LLCs and (iii) we were the entity within the
related party group whose activities were most closely associated with the LLCs. During the years ended
December 31, 2014 and 2013 we recognized reductions in earnings of $39 million and $43 million, respectively,
for Hancock’s and CIT’s noncontrolling interests in the LLCs’ earnings, which are included in our consolidated
net income. The LLCs’ earnings related to the rental income generated from leasing the facilities to our
subsidiaries, reduced by depreciation expense. The LLCs’ rental income was eliminated in WM’s consolidation.
In December 2014, we purchased the noncontrolling interests in the LLCs from Hancock and CIT in
anticipation of our sale of our Wheelabrator business. The LLCs were then subsequently sold as part of the
divestment. See Note 19 for further discussion of the sale of our Wheelabrator business.
Significant Unconsolidated Variable Interest 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
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