15. 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, 2018

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	83	$	—	$	83
Other current assets		46		5		2,541		—		2,592
		46		5		2,624		—		2,675
Property and equipment, net		—		—		11,815		—		11,815
Investments in affiliates		24,055		24,544		—		(48,599)		—
Advances to affiliates		—		—		16,289		(16,289)		—
Other assets		7		31		8,063		—		8,101
Total assets	$	24,108	$	24,580	$	38,791	$	(64,888)	$	22,591

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	104	$	—	$	343	$	—	$	447
Accounts payable and other current liabilities		71		4		2,548		—		2,623
		175		4		2,891		—		3,070
Long-term debt, less current portion		7,409		304		1,856		—		9,569
Due to affiliates		16,353		219		6,073		(22,645)		—
Other liabilities		5		—		3,706		—		3,711
Total liabilities		23,942		527		14,526		(22,645)		16,350
Equity:
Stockholders’ equity		6,239		24,053		24,546		(48,599)		6,239
Advances to affiliates		(6,073)		—		(283)		6,356		—
Noncontrolling interests		—		—		2		—		2
		166		24,053		24,265		(42,243)		6,241
Total liabilities and equity	$	24,108	$	24,580	$	38,791	$	(64,888)	$	22,591

CONDENSED CONSOLIDATING BALANCE SHEETS (Continued)

December 31, 2017


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	22	$	—	$	22
Other current assets		5		5		2,592		—		2,602
		5		5		2,614		—		2,624
Property and equipment, net		—		—		11,559		—		11,559
Investments in affiliates		22,393		22,893		—		(45,286)		—
Advances to affiliates		—		—		15,349		(15,349)		—
Other assets		9		31		7,606		—		7,646
Total assets	$	22,407	$	22,929	$	37,128	$	(60,635)	$	21,829

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	537	$	—	$	202	$	—	$	739
Accounts payable and other current liabilities		55		9		2,459		—		2,523
		592		9		2,661		—		3,262
Long-term debt, less current portion		6,457		304		1,991		—		8,752
Due to affiliates		15,404		224		6,073		(21,701)		—
Other liabilities		8		—		3,765		—		3,773
Total liabilities		22,461		537		14,490		(21,701)		15,787
Equity:
Stockholders’ equity		6,019		22,392		22,894		(45,286)		6,019
Advances to affiliates		(6,073)		—		(279)		6,352		—
Noncontrolling interests		—		—		23		—		23
		(54)		22,392		22,638		(38,934)		6,042
Total liabilities and equity	$	22,407	$	22,929	$	37,128	$	(60,635)	$	21,829

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2018

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Operating revenues	$	—	$	—	$	3,866	$	(44)	$	3,822
Costs and expenses		44		—		3,123		(44)		3,123
Income from operations		(44)		—		743		—		699
Other income (expense):
Interest expense, net		(78)		(6)		(9)		—		(93)
Equity in earnings of subsidiaries, net of tax		589		592		—		(1,181)		—
Other, net		—		—		(9)		—		(9)
		511		586		(18)		(1,181)		(102)
Income before income taxes		467		586		725		(1,181)		597
Income tax expense (benefit)		(32)		(2)		133		—		99
Consolidated net income		499		588		592		(1,181)		498
Less: Net income (loss) attributable to noncontrolling interests		—		—		(1)		—		(1)
Net income attributable to Waste Management, Inc.	$	499	$	588	$	593	$	(1,181)	$	499

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

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Continued)

Nine Months Ended September 30, 2018

(Unaudited)


			WM		Non‑Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Operating revenues	$	—	$	—	$	11,204	$	(132)	$	11,072
Costs and expenses		132		—		9,050		(132)		9,050
Income from operations		(132)		—		2,154		—		2,022
Other income (expense):
Interest expense, net		(232)		(15)		(30)		—		(277)
Equity in earnings of subsidiaries, net of tax		1,662		1,672		—		(3,334)		—
Other, net		—		—		(28)		—		(28)
		1,430		1,657		(58)		(3,334)		(305)
Income before income taxes		1,298		1,657		2,096		(3,334)		1,717
Income tax expense (benefit)		(96)		(4)		425		—		325
Consolidated net income		1,394		1,661		1,671		(3,334)		1,392
Less: Net income (loss) attributable to noncontrolling interests		—		—		(2)		—		(2)
Net income attributable to Waste Management, Inc.	$	1,394	$	1,661	$	1,673	$	(3,334)	$	1,394

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

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Three Months Ended September 30:
2018
Comprehensive income	$	501	$	588	$	623	$	(1,181)	$	531
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		(1)		—		(1)
Comprehensive income attributable to Waste Management, Inc.	$	501	$	588	$	624	$	(1,181)	$	532

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


			WM		Non-Guarantor
	WM		Holdings		Subsidiaries		Eliminations		Consolidated
Nine Months Ended September 30:
2018
Comprehensive income	$	1,400	$	1,661	$	1,646	$	(3,334)	$	1,373
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		(2)		—		(2)
Comprehensive income attributable to Waste Management, Inc.	$	1,400	$	1,661	$	1,648	$	(3,334)	$	1,375

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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2018

(Unaudited)


			WM		Non-Guarantor
	WM(a)		Holdings(a)		Subsidiaries(a)		Eliminations		Consolidated
Cash flows provided by (used in):
Operating activities	$	—	$	—	$	2,658	$	—	$	2,658
Investing activities		—		—		(1,506)		—		(1,506)
Financing activities		—		—		(1,015)		—		(1,015)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents		—		—		—		—		—
Intercompany activity		—		—		—		—		—
Increase in cash, cash equivalents and restricted cash and cash equivalents		—		—		137		—		137
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		—		—		293		—		293
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	—	$	—	$	430	$	—	$	430

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	$	—	$	—	$	2,388	$	—	$	2,388
Investing activities		—		—		(1,050)		—		(1,050)
Financing activities		—		—		(1,331)		—		(1,331)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents		—		—		1		—		1
Intercompany activity		—		—		—		—		—
Increase in cash, cash equivalents and restricted cash and cash equivalents		—		—		8		—		8
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		—		—		94		—		94
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	—	$	—	$	102	$	—	$	102

(a)

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