EX-12.1 7 wm-20171231ex121288b99.htm EX-12.1

Exhibit 12.1

WASTE MANAGEMENT, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In Millions, Except Ratios)

(Unaudited)

|  | Years Ended December 31,
|  | 2017 |  | 2016 |  | 2015 |  | 2014 |  | 2013
Income before income taxes and losses in equity investments (b) |  | $ | 2,263 |  | $ | 1,867 |  | $ | 1,109 |  | $ | 1,805 |  | $ | 535
Fixed charges deducted from income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | 368 |  |  | 385 |  |  | 391 |  |  | 471 |  |  | 481
Implicit interest in rents |  |  | 44 |  |  | 42 |  |  | 46 |  |  | 53 |  |  | 56
|  |  | 412 |  |  | 427 |  |  | 437 |  |  | 524 |  |  | 537
Earnings available for fixed charges (b) |  | $ | 2,675 |  | $ | 2,294 |  | $ | 1,546 |  | $ | 2,329 |  | $ | 1,072
Interest expense |  | $ | 368 |  | $ | 385 |  | $ | 391 |  | $ | 471 |  | $ | 481
Capitalized interest |  |  | 15 |  |  | 9 |  |  | 16 |  |  | 16 |  |  | 19
Implicit interest in rents |  |  | 44 |  |  | 42 |  |  | 46 |  |  | 53 |  |  | 56
Total fixed charges (b) |  | $ | 427 |  | $ | 436 |  | $ | 453 |  | $ | 540 |  | $ | 556
Ratio of earnings to fixed charges (a) |  |  | 6.3x |  |  | 5.3x |  |  | 3.4x |  |  | 4.3x |  |  | 1.9x
Adjusted ratio of earnings to fixed charges (c) |  |  | 6.2x |  |  | 5.5x |  |  | 4.9x |  |  | 4.2x |  |  | 3.7x

| (a) |  | We have computed the ratio of earnings to fixed charges by dividing earnings available for fixed charges by fixed charges. For this purpose, earnings available for fixed charges consist of consolidated earnings before income taxes, cumulative effects of changes in accounting principles, losses in equity investments and fixed charges. Fixed charges consist of interest expense, capitalized interest, and the portion of our operating lease rental expense that represents an interest factor, which we refer to as implicit interest in rents.

| (b) |  | To the extent interest may be assessed by taxing authorities on any underpayment of income tax, such amounts are classified as a component of income tax expense in our Consolidated Statements of Operations. For purposes of this disclosure, we have elected to exclude interest expense related to income tax matters from our measurements of earnings available for fixed charges and total fixed charges for all periods presented, as amounts are immaterial.

| (c) |  | This adjusted ratio of earnings to fixed charges (“Adjusted Ratio”) excludes the impact of restructuring charges, impairments, divestitures, losses on early extinguishment of debt and other adjustments, including our subsidiary’s estimated potential share of an environmental remediation liability and related costs for a closed site. A reconciliation showing the effect of these items on our income before income taxes and losses in equity investments used to calculate our earnings available for fixed charges is as follows (in millions):

|  | Years Ended December 31,
|  | 2017 |  | 2016 |  | 2015 |  | 2014 |  | 2013
As reported income before income taxes and losses in equity investments |  | $ | 2,263 |  | $ | 1,867 |  | $ | 1,109 |  | $ | 1,805 |  | $ | 535
Adjustments to income before income taxes and losses in equity investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Restructuring costs |  |  | — |  |  | 4 |  |  | 15 |  |  | 82 |  |  | 18
Asset impairments |  |  | 41 |  |  | 59 |  |  | 89 |  |  | 355 |  |  | 981
(Income) expense from divestitures |  |  | (38) |  |  | 9 |  |  | (7) |  |  | (515) |  |  | (8)
Loss on early extinguishment of debt |  |  | 6 |  |  | 4 |  |  | 555 |  |  | — |  |  | —
Environmental remediation and other adjustments |  |  | (19) |  |  | 44 |  |  | — |  |  | — |  |  | —
Adjusted income before income taxes and losses in equity investments |  | $ | 2,253 |  | $ | 1,987 |  | $ | 1,761 |  | $ | 1,727 |  | $ | 1,526

We believe that the Adjusted Ratio is useful to investors as an indicator of our ability to meet our fixed obligations because it is independent of significant non-cash impacts and other items that management believes are not representative of our results. The Adjusted Ratio is a measurement not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and may not be comparable to similarly titled measures used by other companies. You should not rely on the Adjusted Ratio as a substitute for the ratio of earnings to fixed charges calculated and presented in accordance with GAAP or any other GAAP financial measure.