14.

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

March 31, 2014

(Unaudited)


	WM		WM Holdings		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	339	$	—		$	339
Other current assets		—		6		2,190		—			2,196

		—		6		2,529		—			2,535
Property and equipment, net		—		—		12,170		—			12,170
Investments in and advances to affiliates		12,136		16,519		4,498		(33,153	)		—
Other assets		41		12		7,684		—			7,737

Total assets	$	12,177	$	16,537	$	26,881	$	(33,153	)	$	22,442

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	772	$	—	$	444	$	—		$	1,216
Accounts payable and other current liabilities		65		5		2,071		—			2,141

		837		5		2,515		—			3,357
Long-term debt, less current portion		5,603		449		2,926		—			8,978
Other liabilities		—		—		4,068		—			4,068

Total liabilities		6,440		454		9,509		—			16,403
Equity:
Stockholders’ equity		5,737		16,083		17,070		(33,153	)		5,737
Noncontrolling interests		—		—		302		—			302

		5,737		16,083		17,372		(33,153	)		6,039

Total liabilities and equity	$	12,177	$	16,537	$	26,881	$	(33,153	)	$	22,442

CONDENSED CONSOLIDATING BALANCE SHEETS (Continued)

December 31, 2013


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	58	$	—		$	58
Other current assets		—		6		2,435		—			2,441

		—		6		2,493		—			2,499
Property and equipment, net		—		—		12,344		—			12,344
Investments in and advances to affiliates		12,133		16,246		4,268		(32,647	)		—
Other assets		42		12		7,706		—			7,760

Total assets	$	12,175	$	16,264	$	26,811	$	(32,647	)	$	22,603

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	587	$	—	$	139	$	—		$	726
Accounts payable and other current liabilities		109		13		2,166		—			2,288

		696		13		2,305		—			3,014
Long-term debt, less current portion		5,772		449		3,279		—			9,500
Other liabilities		—		—		4,087		—			4,087

Total liabilities		6,468		462		9,671		—			16,601
Equity:
Stockholders’ equity		5,707		15,802		16,845		(32,647	)		5,707
Noncontrolling interests		—		—		295		—			295

		5,707		15,802		17,140		(32,647	)		6,002

Total liabilities and equity	$	12,175	$	16,264	$	26,811	$	(32,647	)	$	22,603

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2014

(Unaudited)


				WM			Non-Guarantor
	WM			Holdings			Subsidiaries			Eliminations			Consolidated
Operating revenues	$	—		$	—		$	3,396		$	—		$	3,396
Costs and expenses		—			—			2,927			—			2,927

Income from operations		—			—			469			—			469

Other income (expense):
Interest expense, net		(87	)		(8	)		(26	)		—			(121	)
Equity in earnings of subsidiaries, net of taxes		281			286			—			(567	)		—
Other, net		—			—			(12	)		—			(12	)

		194			278			(38	)		(567	)		(133	)

Income before income taxes		194			278			431			(567	)		336
Provision for (benefit from) income taxes		(34	)		(3	)		136			—			99

Consolidated net income		228			281			295			(567	)		237
Less: Net income attributable to noncontrolling interests		—			—			9			—			9

Net income attributable to Waste Management, Inc.	$	228		$	281		$	286		$	(567	)	$	228

Three Months Ended March 31, 2013

(Unaudited)


				WM			Non-Guarantor
	WM			Holdings			Subsidiaries			Eliminations			Consolidated
Operating revenues	$	—		$	—		$	3,336		$	—		$	3,336
Costs and expenses		—			—			2,934			—			2,934

Income from operations		—			—			402			—			402

Other income (expense):
Interest expense, net		(89	)		(8	)		(24	)		—			(121	)
Equity in earnings of subsidiaries, net of taxes		222			227			—			(449	)		—
Other, net		—			—			(19	)		—			(19	)

		133			219			(43	)		(449	)		(140	)

Income before income taxes		133			219			359			(449	)		262
Provision for (benefit from) income taxes		(35	)		(3	)		124			—			86

Consolidated net income		168			222			235			(449	)		176
Less: Net income attributable to noncontrolling interests		—			—			8			—			8

Net income attributable to Waste Management, Inc.	$	168		$	222		$	227		$	(449	)	$	168

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations			Consolidated
Three Months Ended March 31, 2014
Comprehensive income	$	224	$	281	$	234	$	(567	)	$	172
Less: Comprehensive income attributable to noncontrolling interests		—		—		9		—			9

Comprehensive income attributable to Waste Management, Inc.	$	224	$	281	$	225	$	(567	)	$	163

Three Months Ended March 31, 2013
Comprehensive income	$	170	$	222	$	200	$	(449	)	$	143
Less: Comprehensive income attributable to noncontrolling interests		—		—		8		—			8

Comprehensive income attributable to Waste Management, Inc.	$	170	$	222	$	192	$	(449	)	$	135

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2014

(Unaudited)


				WM			Non-Guarantor
	WM			Holdings			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Consolidated net income	$	228		$	281		$	295		$	(567	)	$	237
Equity in earnings of subsidiaries, net of taxes		(281	)		(286	)		—			567			—
Other adjustments		(54	)		(8	)		409			—			347

Net cash provided by (used in) operating activities		(107	)		(13	)		704			—			584

Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired		—			—			(11	)		—			(11	)
Capital expenditures		—			—			(266	)		—			(266	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets		—			—			166			—			166
Net receipts from restricted trust and escrow accounts and other, net		—			—			(11	)		—			(11	)

Net cash provided by (used in) investing activities		—			—			(122	)		—			(122	)

Cash flows from financing activities:
New borrowings		870			—			43			—			913
Debt repayments		(850	)		—			(78	)		—			(928	)
Cash dividends		(174	)		—			—			—			(174	)
Exercise of common stock options		14			—			—			—			14
Distributions paid to noncontrolling interests and other		1			—			(5	)		—			(4	)
(Increase) decrease in intercompany and investments, net		246			13			(259	)		—			—

Net cash provided by (used in) financing activities		107			13			(299	)		—			(179	)

Effect of exchange rate changes on cash and cash equivalents		—			—			(2	)		—			(2	)

Increase (decrease) in cash and cash equivalents		—			—			281			—			281
Cash and cash equivalents at beginning of period		—			—			58			—			58

Cash and cash equivalents at end of period	$	—		$	—		$	339		$	—		$	339

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Continued)

Three Months Ended March 31, 2013

(Unaudited)


				WM			Non-Guarantor
	WM			Holdings			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Consolidated net income	$	168		$	222		$	235		$	(449	)	$	176
Equity in earnings of subsidiaries, net of taxes		(222	)		(227	)		—			449			—
Other adjustments		(16	)		(8	)		425			—			401

Net cash provided by (used in) operating activities		(70	)		(13	)		660			—			577

Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired		—			—			(180	)		—			(180	)
Capital expenditures		—			—			(266	)		—			(266	)
Proceeds from divestitures of businesses (net of cash divested) and other sales of assets		—			—			37			—			37
Net receipts from restricted trust and escrow accounts and other, net		—			—			(12	)		—			(12	)

Net cash provided by (used in) investing activities		—			—			(421	)		—			(421	)

Cash flows from financing activities:
New borrowings		225			—			19			—			244
Debt repayments		(125	)		—			(26	)		—			(151	)
Cash dividends		(170	)		—			—			—			(170	)
Exercise of common stock options		38			—			—			—			38
Distributions paid to noncontrolling interests and other		6			—			(8	)		—			(2	)
(Increase) decrease in intercompany and investments, net		181			13			(194	)		—			—

Net cash provided by (used in) financing activities		155			13			(209	)		—			(41	)

Effect of exchange rate changes on cash and cash equivalents		—			—			(2	)		—			(2	)

Increase (decrease) in cash and cash equivalents		85			—			28			—			113
Cash and cash equivalents at beginning of period		60			—			134			—			194

Cash and cash equivalents at end of period	$	145		$	—		$	162		$	—		$	307