Acquisitions

3 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Acquisitions

9.    Acquisitions

Oakleaf — On July 28, 2011, we paid $432 million, net of cash received of $4 million and inclusive of certain adjustments, to acquire Oakleaf. Oakleaf provides outsourced waste and recycling services principally through a nationwide network of third-party haulers. The operations we acquired generated approximately $580 million in revenues in 2010. We acquired Oakleaf to advance our growth and transformation strategies and increase our national accounts customer base while enhancing our ability to provide comprehensive environmental solutions. For the year ended December 31, 2011, we incurred $1 million of acquisition-related costs, which were classified as “Selling, general and administrative” expenses. For the three- and six-month periods ended June 30, 2012, Oakleaf recognized revenues of $147 million and $295 million, respectively, and net losses of $4 million for each period. These amounts are included in our Condensed Consolidated Statement of Operations.

The following table shows adjustments since December 31, 2011 to the preliminary allocation of the purchase price of Oakleaf to the assets acquired and liabilities assumed based on their estimated fair value (in millions):

	December 31, 2011			Adjustments			June 30, 2012
Accounts and other receivables	$	70		$	1		$	71
Other current assets		28			—			28
Property and equipment		72			(2	)		70
Goodwill		327			1			328
Other intangible assets		87			—			87
Accounts payable		(82	)		—			(82	)
Accrued liabilities		(48	)		—			(48	)
Deferred income taxes, net		(10	)		1			(9	)
Other liabilities		(12	)		(1	)		(13	)
Total purchase price	$	432		$	—		$	432

The purchase price allocation, which is still preliminary and may change, will be finalized in the third quarter of 2012. The following table presents the preliminary allocation of the purchase price to other intangible assets (amounts in millions, except for amortization periods):

	Amount		Weighted Average Amortization Periods (In Years)
Customer relationships	$	74	10.0
Vendor relationships		4	10.0
Trademarks		9	15.0
	$	87	10.5

Goodwill of $328 million was calculated as the excess of the consideration paid over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is a result of expected synergies from combining the Company’s operations with Oakleaf’s national accounts customer base and vendor network. The vendor-hauler network expands our partnership with third-party service providers. In many cases we can provide vendor-haulers with opportunities to maintain and increase their business by utilizing our extensive post-collection network. We believe this will generate significant benefits for the Company and for the vendor-haulers. Based on our preliminary valuation, goodwill has been assigned to our four geographic Groups as they are expected to benefit from the synergies of the combination. Goodwill related to this acquisition is not deductible for income tax purposes.

The following pro forma consolidated results of operations for the three and six months ended June 30, 2011 have been prepared as if the acquisition of Oakleaf occurred at January 1, 2011 (in millions, except per share amounts):

	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
Operating revenues		$	3,488		$	6,721
Net income attributable to Waste Management, Inc. .			235			417
Basic earnings per common share			0.49			0.88
Diluted earnings per common share			0.49			0.87

Other — During the first half of 2012, we paid $94 million for interests in oil and gas producing properties through two transactions. The purchase price was allocated primarily to “Property and equipment.” Additionally, during the six months ended June 30, 2012 we acquired 16 other businesses related to our collection and recycling operations.