Waste Management 2015 Annual Report Download - page 194

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
consideration for this investment consisted of a cash payment of $48 million. At December 31, 2015 and 2014, our
investment balance was $29 million and $32 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 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, 2015 and
2014, our investment balance was $81 million and $104 million, respectively, and our debt balance was $80 million and $104
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 $94 million at
December 31, 2015 and $129 million at December 31, 2014. The decline in these balances can be attributed to our
decision to work with various beneficiaries to release these funds and secure the obligations with alternate assurance
instruments. 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 Sheets, as appropriate. Our investments and receivables related to these trusts had an aggregate
carrying value of $93 million and $113 million as of December 31, 2015 and December 31, 2014, respectively.
As the party with primary responsibility to fund the related final capping, closure, post-closure or environmental
remediation activities, we are exposed to risk of loss as a result of potential changes in the fair value of the assets of the
trust. The fair value of trust assets can fluctuate due to (i) changes in the market value of the investments held by the trusts
and (ii) credit risk associated with trust receivables. Although we are exposed to changes in the fair value of the trust
assets, we currently expect the trust funds to continue to meet the statutory requirements for which they were established.
21. Segment and Related Information
We evaluate, oversee and manage the financial performance of our Solid Waste subsidiaries through our 17 Areas.
The 17 Areas constitute our operating segments and none of the Areas individually meet the quantitative criteria to be a
separate reportable segment. We have evaluated the aggregation criteria and concluded that, based on the similarities
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