Condensed Consolidating Financial Statements | 23. Condensed Consolidating Financial Statements WM Holdings has fully and unconditionally guaranteed all of WM’s senior indebtedness. WM has fully and unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WM’s other subsidiaries have guaranteed any of WM’s or WM Holdings’ debt. As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information (in millions): CONDENSED CONSOLIDATING BALANCE SHEETS December 31, 2016 WM WM Non-Guarantor Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ — $ 32 $ — $ 32 Other current assets 5 5 2,334 — 2,344 5 5 2,366 — 2,376 Property and equipment, net — — 10,950 — 10,950 Investments in affiliates 19,924 20,331 — (40,255 ) — Advances to affiliates(a) — — 13,000 (13,000 ) — Other assets 14 30 7,489 — 7,533 Total assets $ 19,943 $ 20,366 $ 33,805 $ (53,255 ) $ 20,859 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $ 269 $ — $ 148 $ — $ 417 Accounts payable and other current liabilities 81 9 2,287 — 2,377 350 9 2,435 — 2,794 Long-term debt, less current portion(a) 6,229 304 2,360 — 8,893 Due to affiliates(a) 13,350 128 5,299 (18,777 ) — Other liabilities 16 — 3,836 — 3,852 Total liabilities 19,945 441 13,930 (18,777 ) 15,539 Equity: Stockholders’ equity 5,297 19,925 20,330 (40,255 ) 5,297 Advances to affiliates (5,299 ) — (478 ) 5,777 — Noncontrolling interests — — 23 — 23 (2 ) 19,925 19,875 (34,478 ) 5,320 Total liabilities and equity $ 19,943 $ 20,366 $ 33,805 $ (53,255 ) $ 20,859 (a) In conjunction with the preparation of our June 30, 2016 Condensed Consolidating Balance Sheet, we identified and corrected the presentation of $126 million of tax-exempt bonds previously reported in Non-Guarantor Subsidiaries’ rather than WM’s “Long-term debt, less current portion,” which had corresponding impacts on “Advances to affiliates” and “Due to affiliates.” This immaterial correction has been reflected in our 2016 Condensed Consolidating Financial Statements. CONDENSED CONSOLIDATING BALANCE SHEETS (Continued) December 31, 2015 WM WM Non-Guarantor Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ — $ 39 $ — $ 39 Other current assets 3 6 2,297 — 2,306 3 6 2,336 — 2,345 Property and equipment, net — — 10,665 — 10,665 Investments in affiliates(b) 18,557 18,925 — (37,482 ) — Advances to affiliates — — 12,113 (12,113 ) — Other assets 23 29 7,305 — 7,357 Total assets $ 18,583 $ 18,960 $ 32,419 $ (49,595 ) $ 20,367 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $ 41 $ — $ 212 $ — $ 253 Accounts payable and other current liabilities 83 9 2,165 — 2,257 124 9 2,377 — 2,510 Long-term debt, less current portion 5,801 304 2,571 — 8,676 Due to affiliates(b) 12,588 76 5,299 (17,963 ) — Other liabilities 24 — 3,790 — 3,814 Total liabilities 18,537 389 14,037 (17,963 ) 15,000 Equity: Stockholders’ equity 5,345 18,571 18,911 (37,482 ) 5,345 Advances to affiliates(b) (5,299 ) — (551 ) 5,850 — Noncontrolling interests — — 22 — 22 46 18,571 18,382 (31,632 ) 5,367 Total liabilities and equity $ 18,583 $ 18,960 $ 32,419 $ (49,595 ) $ 20,367 (b) In conjunction with the preparation of our September 30, 2016 Condensed Consolidating Balance Sheet, we identified $5.9 billion of intercompany loans between WM and Non-Guarantor Non-Guarantor CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS WM WM Non-Guarantor Eliminations Consolidated Year Ended December 31, 2016 Operating revenues $ — $ — $ 13,609 $ — $ 13,609 Costs and expenses — — 11,313 — 11,313 Income from operations — — 2,296 — 2,296 Other income (expense): Interest expense, net (303 ) (20 ) (53 ) — (376 ) Loss on early extinguishment of debt (1 ) — (3 ) — (4 ) Equity in earnings of subsidiaries, net of tax provision 1,367 1,381 — (2,748 ) — Other, net — — (94 ) — (94 ) 1,063 1,361 (150 ) (2,748 ) (474 ) Income before income taxes 1,063 1,361 2,146 (2,748 ) 1,822 Provision for (benefit from) income taxes (119 ) (8 ) 769 — 642 Consolidated net income 1,182 1,369 1,377 (2,748 ) 1,180 Less: Net income (loss) attributable to noncontrolling interests — — (2 ) — (2 ) Net income attributable to Waste Management, Inc. $ 1,182 $ 1,369 $ 1,379 $ (2,748 ) $ 1,182 Year Ended December 31, 2015 Operating revenues $ — $ — $ 12,961 $ — $ 12,961 Costs and expenses — (1 ) 10,917 — 10,916 Income from operations — 1 2,044 — 2,045 Other income (expense): Interest expense, net (298 ) (22 ) (65 ) — (385 ) Loss on early extinguishment of debt (500 ) (52 ) (3 ) — (555 ) Equity in earnings of subsidiaries, net of tax provision 1,245 1,289 — (2,534 ) — Other, net — — (45 ) — (45 ) 447 1,215 (113 ) (2,534 ) (985 ) Income before income taxes 447 1,216 1,931 (2,534 ) 1,060 Provision for (benefit from) income taxes (306 ) (29 ) 643 — 308 Consolidated net income 753 1,245 1,288 (2,534 ) 752 Less: Net income (loss) attributable to noncontrolling interests — — (1 ) — (1 ) Net income attributable to Waste Management, Inc. $ 753 $ 1,245 $ 1,289 $ (2,534 ) $ 753 Year Ended December 31, 2014 Operating revenues $ — $ — $ 13,996 $ — $ 13,996 Costs and expenses — (459 ) 12,156 — 11,697 Income from operations — 459 1,840 — 2,299 Other income (expense): Interest expense, net (351 ) (31 ) (84 ) — (466 ) Equity in earnings of subsidiaries, net of tax provision 1,510 1,070 — (2,580 ) — Other, net — — (82 ) — (82 ) 1,159 1,039 (166 ) (2,580 ) (548 ) Income before income taxes 1,159 1,498 1,674 (2,580 ) 1,751 Provision for (benefit from) income taxes (139 ) (12 ) 564 — 413 Consolidated net income 1,298 1,510 1,110 (2,580 ) 1,338 Less: Net income (loss) attributable to noncontrolling interests — — 40 — 40 Net income attributable to Waste Management, Inc. $ 1,298 $ 1,510 $ 1,070 $ (2,580 ) $ 1,298 CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME WM WM Non-Guarantor Eliminations Consolidated Year Ended December 31, 2016 Comprehensive income $ 1,189 $ 1,369 $ 1,417 $ (2,748 ) $ 1,227 Less: Comprehensive income (loss) attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive income attributable to Waste Management, Inc. $ 1,189 $ 1,369 $ 1,419 $ (2,748 ) $ 1,229 Year Ended December 31, 2015 Comprehensive income $ 762 $ 1,245 $ 1,129 $ (2,534 ) $ 602 Less: Comprehensive income (loss) attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive income attributable to Waste Management, Inc. $ 762 $ 1,245 $ 1,130 $ (2,534 ) $ 603 Year Ended December 31, 2014 Comprehensive income $ 1,300 $ 1,510 $ 977 $ (2,580 ) $ 1,207 Less: Comprehensive income (loss) attributable to noncontrolling interests — — 40 — 40 Comprehensive income attributable to Waste Management, Inc. $ 1,300 $ 1,510 $ 937 $ (2,580 ) $ 1,167 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS WM(c) WM Non-Guarantor Eliminations Consolidated Year Ended December 31, 2016 Cash flows from operating activities: Consolidated net income $ 1,182 $ 1,369 $ 1,377 $ (2,748 ) $ 1,180 Equity in earnings of subsidiaries, net of tax provision (1,367 ) (1,381 ) — 2,748 — Other adjustments 185 12 1,583 — 1,780 Net cash provided by operating activities — — 2,960 — 2,960 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired — — (611 ) — (611 ) Capital expenditures — — (1,339 ) — (1,339 ) Proceeds from divestitures of businesses and other assets (net of cash divested) — — 43 — 43 Net receipts from restricted trust and escrow accounts and other, net — — (25 ) — (25 ) Net cash provided by (used in) investing activities — — (1,932 ) — (1,932 ) Cash flows from financing activities: New borrowings — — 3,057 — 3,057 Debt repayments — — (2,682 ) — (2,682 ) Premiums paid on early extinguishment of debt — — (2 ) — (2 ) Common stock repurchase program — — (725 ) — (725 ) Cash dividends — — (726 ) — (726 ) Exercise of common stock options — — 63 — 63 Other, net — — (20 ) — (20 ) (Increase) decrease in intercompany and investments, net — — — — — Net cash provided by (used in) financing activities — — (1,035 ) — (1,035 ) Effect of exchange rate changes on cash and cash equivalents — — — — — Increase (decrease) in cash and cash equivalents — — (7 ) — (7 ) Cash and cash equivalents at beginning of year — — 39 — 39 Cash and cash equivalents at end of year $ — $ — $ 32 $ — $ 32 (c) Cash receipts and payments of WM and WM Holdings are transacted by Non-Guarantor WM(d) WM Non-Guarantor Eliminations Consolidated Year Ended December 31, 2015 Cash flows from operating activities: Consolidated net income $ 753 $ 1,245 $ 1,288 $ (2,534 ) $ 752 Equity in earnings of subsidiaries, net of tax provision (1,245 ) (1,289 ) — 2,534 — Other adjustments 492 44 1,210 — 1,746 Net cash provided by operating activities — — 2,498 — 2,498 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired — — (554 ) — (554 ) Capital expenditures — — (1,233 ) — (1,233 ) Proceeds from divestitures of businesses and other assets (net of cash divested) — — 145 — 145 Net receipts from restricted trust and escrow accounts and other, net — — 34 — 34 Net cash provided by (used in) investing activities — — (1,608 ) — (1,608 ) Cash flows from financing activities: New borrowings — — 2,337 — 2,337 Debt repayments — — (2,764 ) — (2,764 ) Premiums paid on early extinguishment of debt — — (555 ) — (555 ) Common stock repurchase program — — (600 ) — (600 ) Cash dividends — — (695 ) — (695 ) Exercise of common stock options — — 77 — 77 Other, net — — 45 — 45 (Increase) decrease in intercompany and investments, net (1,235 ) — 1,235 — — Net cash provided by (used in) financing activities (1,235 ) — (920 ) — (2,155 ) Effect of exchange rate changes on cash and cash equivalents — — (3 ) — (3 ) Increase (decrease) in cash and cash equivalents (1,235 ) — (33 ) — (1,268 ) Cash and cash equivalents at beginning of year 1,235 — 72 — 1,307 Cash and cash equivalents at end of year $ — $ — $ 39 $ — $ 39 (d) Cash receipts and payments of WM and WM Holdings are transacted by Non-Guarantor WM(e) WM Non-Guarantor Eliminations Consolidated Year Ended December 31, 2014 Cash flows from operating activities: Consolidated net income $ 1,298 $ 1,510 $ 1,110 $ (2,580 ) $ 1,338 Equity in earnings of subsidiaries, net of tax provision (1,510 ) (1,070 ) — 2,580 — Other adjustments 212 (440 ) 1,221 — 993 Net cash provided by operating activities — — 2,331 — 2,331 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired — — (35 ) — (35 ) Capital expenditures — — (1,151 ) — (1,151 ) Proceeds from divestitures of businesses and other assets (net of cash divested) — — 2,253 — 2,253 Net receipts from restricted trust and escrow accounts and other, net — — (72 ) — (72 ) Net cash provided by (used in) investing activities — — 995 — 995 Cash flows from financing activities: New borrowings — — 2,817 — 2,817 Debt repayments — — (3,568 ) — (3,568 ) Common stock repurchase program — — (600 ) — (600 ) Cash dividends — — (693 ) — (693 ) Exercise of common stock options — — 93 — 93 Other, net — — (121 ) — (121 ) (Increase) decrease in intercompany and investments, net 1,235 — (1,235 ) — — Net cash provided by (used in) financing activities 1,235 — (3,307 ) — (2,072 ) Effect of exchange rate changes on cash and cash equivalents — — (5 ) — (5 ) Increase (decrease) in cash and cash equivalents 1,235 — 14 — 1,249 Cash and cash equivalents at beginning of year — — 58 — 58 Cash and cash equivalents at end of year $ 1,235 $ — $ 72 $ — $ 1,307 (e) Cash receipts and payments of WM and WM Holdings are transacted by Non-Guarantor |