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, 2015


	WM		WM Holdings		Non-Guarantor Subsidiaries		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 and advances to affiliates		18,557		18,911		7,365		(44,833	)		—
Other assets		55		29		7,325		—			7,409

Total assets	$	18,615	$	18,946	$	27,691	$	(44,833	)	$	20,419


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		5,833		304		2,591		—			8,728
Due to affiliates		7,289		76		—		(7,365	)		—
Other liabilities		24		—		3,790		—			3,814

Total liabilities		13,270		389		8,758		(7,365	)		15,052
Equity:
Stockholders’ equity		5,345		18,557		18,911		(37,468	)		5,345
Noncontrolling interests		—		—		22		—			22

		5,345		18,557		18,933		(37,468	)		5,367

Total liabilities and equity	$	18,615	$	18,946	$	27,691	$	(44,833	)	$	20,419

CONDENSED CONSOLIDATING BALANCE SHEETS (Continued)

December 31, 2014


	WM		WM Holdings		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1,235	$	—	$	72	$	—		$	1,307
Other current assets		5		6		2,208		—			2,219

		1,240		6		2,280		—			3,526
Property and equipment, net		—		—		10,657		—			10,657
Investments in and advances to affiliates		17,312		17,782		6,745		(41,839	)		—
Other assets		50		28		7,036		—			7,114

Total assets	$	18,602	$	17,816	$	26,718	$	(41,839	)	$	21,297


LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	957	$	—	$	133	$	—		$	1,090
Accounts payable and other current liabilities		86		13		2,296		—			2,395

		1,043		13		2,429		—			3,485
Long-term debt, less current portion		4,958		449		2,938		—			8,345
Due to affiliates		6,703		42		—		(6,745	)		—
Other liabilities		32		—		3,546		—			3,578

Total liabilities		12,736		504		8,913		(6,745	)		15,408
Equity:
Stockholders’ equity		5,866		17,312		17,782		(35,094	)		5,866
Noncontrolling interests		—		—		23		—			23

		5,866		17,312		17,805		(35,094	)		5,889

Total liabilities and equity	$	18,602	$	17,816	$	26,718	$	(41,839	)	$	21,297

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS


	WM			WM Holdings			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Year Ended December 31, 2015
Operating revenues	$	—		$	—		$	12,961		$	—		$	12,961
Costs and expenses(a)		—			(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 taxes		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(a)		—			(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 taxes		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

Year Ended December 31, 2013
Operating revenues	$	—		$	—		$	13,983		$	—		$	13,983
Costs and expenses(a)		—			—			12,904			—			12,904

Income from operations		—			—			1,079			—			1,079

Other income (expense):
Interest expense, net		(355	)		(32	)		(90	)		—			(477	)
Equity in earnings of subsidiaries, net of taxes		313			332			—			(645	)		—
Other, net		—			—			(108	)		—			(108	)

		(42	)		300			(198	)		(645	)		(585	)

Income before income taxes		(42	)		300			881			(645	)		494
Provision for (benefit from) income taxes		(140	)		(13	)		517			—			364

Consolidated net income		98			313			364			(645	)		130
Less: Net income (loss) attributable to noncontrolling interests		—			—			32			—			32

Net income attributable to Waste Management, Inc.	$	98		$	313		$	332		$	(645	)	$	98

(a)	Includes “Goodwill impairments” and “(Income) expense from divestitures, asset impairments (other than goodwill) and unusual items” as reported in our Consolidated Statements of Operations.

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME


	WM		WM Holdings		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Year Ended December 31, 2015
Comprehensive income (loss)	$	762	$	1,245	$	1,129		$	(2,534	)	$	602
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		(1	)		—			(1	)

Comprehensive income (loss) attributable to Waste Management, Inc.	$	762	$	1,245	$	1,130		$	(2,534	)	$	603

Year Ended December 31, 2014
Comprehensive income (loss)	$	1,300	$	1,510	$	977		$	(2,580	)	$	1,207
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		40			—			40

Comprehensive income (loss) attributable to Waste Management, Inc.	$	1,300	$	1,510	$	937		$	(2,580	)	$	1,167

Year Ended December 31, 2013
Comprehensive income (loss)	$	112	$	313	$	311		$	(645	)	$	91
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		32			—			32

Comprehensive income (loss) attributable to Waste Management, Inc.	$	112	$	313	$	279		$	(645	)	$	59

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)	$	753		$	1,245		$	1,288		$	(2,534	)	$	752
Equity in earnings of subsidiaries, net of taxes		(1,245	)		(1,289	)		—			2,534			—
Other adjustments		9			(6	)		1,743			—			1,746

Net cash provided by (used in) operating activities		(483	)		(50	)		3,031			—			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		1,881			—			456			—			2,337
Debt repayments		(1,920	)		(145	)		(699	)		—			(2,764	)
Premiums paid on early extinguishment of debt		(503	)		(52	)		—			—			(555	)
Common stock repurchases		(600	)		—			—			—			(600	)
Cash dividends		(695	)		—			—			—			(695	)
Exercise of common stock options		77			—			—			—			77
Acquisitions of and distributions paid to noncontrolling interests and other		9			—			36			—			45
(Increase) decrease in intercompany and investments, net		999			247			(1,246	)		—			—

Net cash provided by (used in) financing activities		(752	)		50			(1,453	)		—			(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

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 (loss)	$	1,298		$	1,510		$	1,110		$	(2,580	)	$	1,338
Equity in earnings of subsidiaries, net of taxes		(1,510	)		(1,070	)		—			2,580			—
Other adjustments		(36	)		(1	)		1,030			—			993

Net cash provided by (used in) operating activities		(248	)		439			2,140			—			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)		—			1,618			635			—			2,253
Net receipts from restricted trust and escrow accounts and other, net		—			—			(72	)		—			(72	)

Net cash provided by (used in) investing activities		—			1,618			(623	)		—			995

Cash flows from financing activities:
New borrowings		2,572			—			245			—			2,817
Debt repayments		(3,005	)		—			(563	)		—			(3,568	)
Common stock repurchases		(600	)		—			—			—			(600	)
Cash dividends		(693	)		—			—			—			(693	)
Exercise of common stock options		93			—			—			—			93
Acquisitions of and distributions paid to noncontrolling interests and other		5			—			(126	)		—			(121	)
(Increase) decrease in intercompany and investments, net		3,111			(2,057	)		(1,054	)		—			—

Net cash provided by (used in) financing activities		1,483			(2,057	)		(1,498	)		—			(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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Continued)


	WM			WM Holdings			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Year Ended December 31, 2013
Cash flows from operating activities:
Consolidated net income (loss)	$	98		$	313		$	364		$	(645	)	$	130
Equity in earnings of subsidiaries, net of taxes		(313	)		(332	)		—			645			—
Other adjustments		(2	)		—			2,327			—			2,325

Net cash provided by (used in) operating activities		(217	)		(19	)		2,691			—			2,455

Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired		—			—			(724	)		—			(724	)
Capital expenditures		—			—			(1,271	)		—			(1,271	)
Proceeds from divestitures of businesses and other assets (net of cash divested)		—			—			138			—			138
Net receipts from restricted trust and escrow accounts and other, net		—			—			(43	)		—			(43	)

Net cash provided by (used in) investing activities		—			—			(1,900	)		—			(1,900	)

Cash flows from financing activities:
New borrowings		1,140			—			1,092			—			2,232
Debt repayments		(1,120	)		—			(957	)		—			(2,077	)
Common stock repurchases		(239	)		—			—			—			(239	)
Cash dividends		(683	)		—			—			—			(683	)
Exercise of common stock options		132			—			—			—			132
Acquisitions of and distributions paid to noncontrolling interests and other		14			—			(66	)		—			(52	)
(Increase) decrease in intercompany and investments, net		913			19			(932	)		—			—

Net cash provided by (used in) financing activities		157			19			(863	)		—			(687	)

Effect of exchange rate changes on cash and cash equivalents		—			—			(4	)		—			(4	)

Increase (decrease) in cash and cash equivalents		(60	)		—			(76	)		—			(136	)
Cash and cash equivalents at beginning of year		60			—			134			—			194

Cash and cash equivalents at end of year	$	—		$	—		$	58		$	—		$	58