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

September 30, 2017

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	35	$	—	$	35
Other current assets		3		5		2,257		—		2,265
		3		5		2,292		—		2,300
Property and equipment, net		—		—		11,136		—		11,136
Investments in affiliates		21,105		21,607		—		(42,712)		—
Advances to affiliates		—		—		14,171		(14,171)		—
Other assets		12		31		7,470		—		7,513
Total assets	$	21,120	$	21,643	$	35,069	$	(56,883)	$	20,949

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	736	$	—	$	114	$	—	$	850
Accounts payable and other current liabilities		61		4		2,344		—		2,409
		797		4		2,458		—		3,259
Long-term debt, less current portion		5,911		304		2,280		—		8,495
Due to affiliates		14,425		231		5,299		(19,955)		—
Other liabilities		8		—		3,887		—		3,895
Total liabilities		21,141		539		13,924		(19,955)		15,649
Equity:
Stockholders’ equity		5,278		21,104		21,608		(42,712)		5,278
Advances to affiliates		(5,299)		—		(485)		5,784		—
Noncontrolling interests		—		—		22		—		22
		(21)		21,104		21,145		(36,928)		5,300
Total liabilities and equity	$	21,120	$	21,643	$	35,069	$	(56,883)	$	20,949

CONDENSED CONSOLIDATING BALANCE SHEETS (Continued)

December 31, 2016


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		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		—		—		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		6,229		304		2,360		—		8,893
Due to affiliates		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

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2017

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Operating revenues	$	—	$	—	$	3,716	$	—	$	3,716
Costs and expenses		—		—		3,015		—		3,015
Income from operations		—		—		701		—		701
Other income (expense):
Interest expense, net		(75)		(5)		(10)		—		(90)
Equity in earnings of subsidiaries, net of tax		432		435		—		(867)		—
Other, net		—		—		(8)		—		(8)
		357		430		(18)		(867)		(98)
Income before income taxes		357		430		683		(867)		603
Income tax expense (benefit)		(29)		(2)		246		—		215
Consolidated net income		386		432		437		(867)		388
Less: Net income (loss) attributable to noncontrolling interests		—		—		2		—		2
Net income attributable to Waste Management, Inc.	$	386	$	432	$	435	$	(867)	$	386

Three Months Ended September 30, 2016

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Operating revenues	$	—	$	—	$	3,548	$	—	$	3,548
Costs and expenses		—		—		2,988		—		2,988
Income from operations		—		—		560		—		560
Other income (expense):
Interest expense, net		(77)		(5)		(12)		—		(94)
Equity in earnings of subsidiaries, net of tax		349		352		—		(701)		—
Other, net		—		—		(9)		—		(9)
		272		347		(21)		(701)		(103)
Income before income taxes		272		347		539		(701)		457
Income tax expense (benefit)		(30)		(2)		185		—		153
Consolidated net income		302		349		354		(701)		304
Less: Net income (loss) attributable to noncontrolling interests		—		—		2		—		2
Net income attributable to Waste Management, Inc.	$	302	$	349	$	352	$	(701)	$	302

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Continued)

Nine Months Ended September 30, 2017

(Unaudited)


			WM		Non‑Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Operating revenues	$	—	$	—	$	10,833	$	—	$	10,833
Costs and expenses		—		—		8,901		—		8,901
Income from operations		—		—		1,932		—		1,932
Other income (expense):
Interest expense, net		(223)		(15)		(34)		—		(272)
Equity in earnings of subsidiaries, net of tax		1,181		1,190		—		(2,371)		—
Other, net		—		—		(53)		—		(53)
		958		1,175		(87)		(2,371)		(325)
Income before income taxes		958		1,175		1,845		(2,371)		1,607
Income tax expense (benefit)		(88)		(6)		655		—		561
Consolidated net income		1,046		1,181		1,190		(2,371)		1,046
Less: Net income (loss) attributable to noncontrolling interests		—		—		—		—		—
Net income attributable to Waste Management, Inc.	$	1,046	$	1,181	$	1,190	$	(2,371)	$	1,046

Nine Months Ended September 30, 2016

(Unaudited)


			WM		Non‑Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Operating revenues	$	—	$	—	$	10,149	$	—	$	10,149
Costs and expenses		—		—		8,470		—		8,470
Income from operations		—		—		1,679		—		1,679
Other income (expense):
Interest expense, net		(227)		(15)		(40)		—		(282)
Equity in earnings of subsidiaries, net of tax		986		995		—		(1,981)		—
Other, net		(1)		—		(84)		—		(85)
		758		980		(124)		(1,981)		(367)
Income before income taxes		758		980		1,555		(1,981)		1,312
Income tax expense (benefit)		(89)		(6)		561		—		466
Consolidated net income		847		986		994		(1,981)		846
Less: Net income (loss) attributable to noncontrolling interests		—		—		(1)		—		(1)
Net income attributable to Waste Management, Inc.	$	847	$	986	$	995	$	(1,981)	$	847

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Three Months Ended September 30:
2017
Comprehensive income	$	388	$	432	$	482	$	(867)	$	435
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		2		—		2
Comprehensive income attributable to Waste Management, Inc.	$	388	$	432	$	480	$	(867)	$	433

2016
Comprehensive income	$	303	$	349	$	339	$	(701)	$	290
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		2		—		2
Comprehensive income attributable to Waste Management, Inc.	$	303	$	349	$	337	$	(701)	$	288


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Nine Months Ended September 30:
2017
Comprehensive income	$	1,052	$	1,181	$	1,278	$	(2,371)	$	1,140
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		—		—		—
Comprehensive income attributable to Waste Management, Inc.	$	1,052	$	1,181	$	1,278	$	(2,371)	$	1,140

2016
Comprehensive income	$	852	$	986	$	1,053	$	(1,981)	$	910
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		(1)		—		(1)
Comprehensive income attributable to Waste Management Inc.	$	852	$	986	$	1,054	$	(1,981)	$	911

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2017

(Unaudited)


			WM		Non-Guarantor
	WM(a)		Holdings(a)		Subsidiaries(a)		Eliminations		Consolidated
Cash flows provided by (used in):
Operating activities	$	—	$	—	$	2,390	$	—	$	2,390
Investing activities		—		—		(984)		—		(984)
Financing activities		—		—		(1,404)		—		(1,404)
Effect of exchange rate changes on cash and cash equivalents		—		—		1		—		1
Intercompany activity		—		—		—		—		—
Increase (decrease) in cash and cash equivalents		—		—		3		—		3
Cash and cash equivalents at beginning of period		—		—		32		—		32
Cash and cash equivalents at end of period	$	—	$	—	$	35	$	—	$	35

Nine Months Ended September 30, 2016

(Unaudited)


			WM		Non-Guarantor
	WM(a)		Holdings(a)		Subsidiaries(a)		Eliminations		Consolidated
Cash flows provided by (used in):
Operating activities	$	—	$	—	$	2,252	$	—	$	2,252
Investing activities		—		—		(1,550)		—		(1,550)
Financing activities		—		—		(711)		—		(711)
Effect of exchange rate changes on cash and cash equivalents		—		—		—		—		—
Intercompany activity		—		—		—		—		—
Increase (decrease) in cash and cash equivalents		—		—		(9)		—		(9)
Cash and cash equivalents at beginning of period		—		—		39		—		39
Cash and cash equivalents at end of period	$	—	$	—	$	30	$	—	$	30

(a)

Cash receipts and payments of WM and WM Holdings are transacted by Non-Guarantor Subsidiaries.