WASTE MANAGEMENT INC 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ Page Reports of Independent Registered Public Accounting Firm (PCAOB ID 42 ) ​ 68 Consolidated Balance Sheets as of December 31, 2022 and 2021 ​ 72 Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020 ​ 73 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020 ​ 73 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 ​ 74 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020 ​ 75 Notes to Consolidated Financial Statements ​ 76 ​ ​ ​ 67 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Waste Management, Inc. ​ Opinion on Internal Control over Financial Reporting ​ We have audited Waste Management, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Waste Management, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022 consolidated financial statements of the Company, and our report dated February 7, 2023 expressed an unqualified opinion thereon. ​ Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. ​ Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. ​ Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. ​ Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ​ ​ 5 ​ /s/ ERNST & YOUNG LLP Houston, Texas February 7, 2023 ​ ​ 68 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Waste Management, Inc. ​ Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Waste Management, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 7, 2023 expressed an unqualified opinion thereon. ​ Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ 69 Table of Contents ​ ​ ​ ​ Landfill Depletion ​ Description of the Matter At December 31, 2022, the Company’s landfill assets, net of accumulated depletion, totaled $7.6 billion and the associated depletion expense for 2022 was $754 million. As discussed in Note 2 of the financial statements, the Company updates the estimates used to calculate individual landfill depletion rates at least annually, or more often if significant facts change. Landfill depletion rates are used in the computation of landfill depletion expense. ​ Auditing landfill depletion rates and related depletion expense is complex due to the highly judgmental nature of assumptions used in estimating the rates. Significant assumptions used in the calculation of the rates include: estimated future development costs associated with the construction and retirement of the landfill, estimated remaining permitted and expansion airspace, airspace utilization factors, and projected timing of retirement activities. ​ How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over determining landfill depletion rates and calculating depletion expense. Our audit procedures included, among others, testing controls over: the Company’s process for evaluating and updating the significant assumptions used in the development of the landfill depletion rates, management’s review of those significant assumptions, and the mathematical accuracy of the calculation and recording of depletion expense. ​ To test the landfill asset depletion rates, our audit procedures included, among others, assessing methodologies used by the Company and testing the significant assumptions discussed above, inclusive of the underlying data used by the Company in its development of these assumptions. We compared the significant assumptions used by management to historical trends and, when available, to comparable size landfills accepting a similar type of waste. Regarding expansion airspace, we evaluated the Company’s criteria for inclusion in remaining airspace. In addition, we considered the professional qualifications and objectivity of management’s internal engineers responsible for developing the assumptions. We involved EY’s engineering specialists to assist with the evaluation of the Company’s landfill future development cost and airspace assumptions. We also tested the completeness and accuracy of the historical data utilized in the development of the landfill depletion rates. ​ 70 Table of Contents ​ Landfill – Final Capping, Closure and Post-Closure Costs Description of the Matter At December 31, 2022, the carrying value of the Company’s landfill asset retirement obligations related to final capping, closure and post-closure costs totaled $2.7 billion. As discussed in Note 2 of the financial statements, the Company updates the estimates used to measure the asset retirement obligations annually, or more often if significant facts change. ​ Auditing the landfill asset retirement obligation is complex due to the highly judgmental nature of the assumptions used in the measurement process. These assumptions include: estimated future costs associated with the capping, closure and post closure activities at each specific landfill; airspace consumed to date in relation to total estimated permitted and expansion airspace; and the projected timing of retirement activities. ​ ​ ​ ​ ​ How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the calculation of landfill asset retirement obligations. Our audit procedures included, among others, testing the Company’s controls over the landfill asset retirement obligation estimation process and management’s review of the significant assumptions used in the estimation of the liability, including the amount and timing of retirement costs. ​ To test the landfill asset retirement obligation valuation, we performed audit procedures that included, among others, assessing methodologies used by the Company, testing the completeness of activities included in the estimate (e.g., gas monitoring and extraction), and testing the significant assumptions discussed above, inclusive of the underlying data used by the Company in its development of these assumptions. We compared the significant assumptions used by management to historical trends and, when available, to comparable size landfills accepting the same type of waste. In addition, we considered the professional qualifications and objectivity of management’s internal engineers responsible for developing the assumptions. We involved EY engineering specialists to assist us with these procedures. Specifically, we utilized the EY engineering specialists to evaluate the reasons for significant changes in assumptions from the historical trend, and to determine whether the change from the historical trend was appropriate and identified timely. We also tested the completeness and accuracy of the historical data utilized in preparing the estimate. ​ ​ ​ ​ ​ ​ ​ /s/ ERNST & YOUNG LLP ​ ​ We have served as the Company’s auditor since 2002. ​ ​ ​ Houston, Texas February 7, 2023 ​ ​ ​ ​ 71 Table of Contents WASTE MANAGEMENT, INC. CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Par Value Amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 351 ​ $ 118 Accounts receivable, net of allowance for doubtful accounts of $ 26 and $ 25 , respectively ​ 2,461 ​ 2,278 Other receivables, net of allowance for doubtful accounts of $ 7 and $ 8 , respectively ​ 291 ​ 268 Parts and supplies ​ 164 ​ 135 Other assets ​ 284 ​ 270 Total current assets ​ 3,551 ​ 3,069 Property and equipment, net of accumulated depreciation and depletion of $ 21,627 and $ 20,537 , respectively ​ 15,719 ​ 14,419 Goodwill ​ 9,323 ​ 9,028 Other intangible assets, net ​ 827 ​ 898 Restricted funds ​ 348 ​ 348 Investments in unconsolidated entities ​ 578 ​ 432 Other assets ​ 1,021 ​ 903 Total assets ​ $ 31,367 ​ $ 29,097 LIABILITIES AND EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 1,766 ​ $ 1,375 Accrued liabilities ​ 1,625 ​ 1,428 Deferred revenues ​ 589 ​ 571 Current portion of long-term debt ​ 414 ​ 708 Total current liabilities ​ 4,394 ​ 4,082 Long-term debt, less current portion ​ 14,570 ​ 12,697 Deferred income taxes ​ 1,733 ​ 1,694 Landfill and environmental remediation liabilities ​ 2,700 ​ 2,373 Other liabilities ​ 1,106 ​ 1,125 Total liabilities ​ 24,503 ​ 21,971 Commitments and contingencies (Note 10) ​ ​ Equity: ​ ​ Waste Management, Inc. stockholders’ equity: ​ ​ Common stock, $ 0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued ​ 6 ​ 6 Additional paid-in capital ​ 5,314 ​ 5,169 Retained earnings ​ 13,167 ​ 12,004 Accumulated other comprehensive income (loss) ​ ( 69 ) ​ 17 Treasury stock at cost, 222,396,166 and 214,158,636 shares, respectively ​ ( 11,569 ) ​ ( 10,072 ) Total Waste Management, Inc. stockholders’ equity ​ 6,849 ​ 7,124 Noncontrolling interests ​ 15 ​ 2 Total equity ​ 6,864 ​ 7,126 Total liabilities and equity ​ $ 31,367 ​ $ 29,097 ​ ​ See Notes to Consolidated Financial Statements. ​ 72 Table of Contents WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Operating revenues ​ $ 19,698 ​ $ 17,931 ​ $ 15,218 Costs and expenses: ​ ​ ​ ​ Operating ​ 12,294 ​ 11,111 ​ 9,341 Selling, general and administrative ​ 1,938 ​ 1,864 ​ 1,728 Depreciation, depletion and amortization ​ 2,038 ​ 1,999 ​ 1,671 Restructuring ​ 1 ​ 8 ​ 9 (Gain) loss from divestitures, asset impairments and unusual items, net ​ 62 ​ ( 16 ) ​ 35 ​ ​ 16,333 ​ 14,966 ​ 12,784 Income from operations ​ 3,365 ​ 2,965 ​ 2,434 Other income (expense): ​ ​ ​ ​ Interest expense, net ​ ( 378 ) ​ ( 365 ) ​ ( 425 ) Loss on early extinguishment of debt, net ​ ​ — ​ ​ ( 220 ) ​ ​ ( 53 ) Equity in net losses of unconsolidated entities ​ ( 67 ) ​ ( 36 ) ​ ( 68 ) Other, net ​ ( 2 ) ​ 5 ​ 5 ​ ​ ( 447 ) ​ ( 616 ) ​ ( 541 ) Income before income taxes ​ 2,918 ​ 2,349 ​ 1,893 Income tax expense ​ 678 ​ 532 ​ 397 Consolidated net income ​ 2,240 ​ 1,817 ​ 1,496 Less: Net income (loss) attributable to noncontrolling interests ​ 2 ​ 1 ​ — Net income attributable to Waste Management, Inc. ​ $ 2,238 ​ $ 1,816 ​ $ 1,496 Basic earnings per common share ​ $ 5.42 ​ $ 4.32 ​ $ 3.54 Diluted earnings per common share ​ $ 5.39 ​ $ 4.29 ​ $ 3.52 ​ ​ ​ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Consolidated net income ​ $ 2,240 ​ $ 1,817 ​ $ 1,496 Other comprehensive income (loss), net of tax: ​ ​ ​ Derivative instruments, net ​ 3 ​ 9 ​ 15 Available-for-sale securities, net ​ ( 24 ) ​ ( 6 ) ​ 11 Foreign currency translation adjustments ​ ( 65 ) ​ ( 28 ) ​ 20 Post-retirement benefit obligations, net ​ — ​ 3 ​ 1 Other comprehensive income (loss), net of tax ​ ( 86 ) ​ ( 22 ) ​ 47 Comprehensive income ​ 2,154 ​ 1,795 ​ 1,543 Less: Comprehensive income (loss) attributable to noncontrolling interests ​ 2 ​ 1 ​ — Comprehensive income attributable to Waste Management, Inc. ​ $ 2,152 ​ $ 1,794 ​ $ 1,543 ​ ​ See Notes to Consolidated Financial Statements. ​ ​ 73 Table of Contents WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Consolidated net income ​ $ 2,240 ​ $ 1,817 ​ $ 1,496 Adjustments to reconcile consolidated net income to net cash provided by operating activities: ​ ​ ​ Depreciation, depletion and amortization ​ 2,038 ​ 1,999 ​ 1,671 Deferred income tax expense (benefit) ​ 49 ​ ( 77 ) ​ 165 Interest accretion on landfill and environmental remediation liabilities ​ 112 ​ 111 ​ 103 Provision for bad debts ​ 50 ​ 37 ​ 54 Equity-based compensation expense ​ 84 ​ 108 ​ 94 Net gain on disposal of assets ​ ( 21 ) ​ ( 25 ) ​ ( 9 ) (Gain) loss from divestitures, asset impairments and other, net ​ 62 ​ ( 16 ) ​ 43 Equity in net losses of unconsolidated entities, net of dividends ​ 67 ​ 38 ​ 60 Loss on early extinguishment of debt, net ​ ​ — ​ ​ 220 ​ ​ 53 Change in operating assets and liabilities, net of effects of acquisitions and divestitures: ​ ​ ​ ​ ​ ​ Receivables ​ ( 329 ) ​ 28 ​ ( 179 ) Other current assets ​ ( 35 ) ​ ( 39 ) ​ 10 Other assets ​ 42 ​ 34 ​ 53 Accounts payable and accrued liabilities ​ 393 ​ 206 ​ ( 37 ) Deferred revenues and other liabilities ​ ( 216 ) ​ ( 103 ) ​ ( 174 ) Net cash provided by operating activities ​ 4,536 ​ 4,338 ​ 3,403 Cash flows from investing activities: ​ ​ ​ Acquisitions of businesses, net of cash acquired ​ ( 377 ) ​ ( 75 ) ​ ( 4,085 ) Capital expenditures ​ ( 2,587 ) ​ ( 1,904 ) ​ ( 1,632 ) Proceeds from divestitures of businesses and other assets, net of cash divested ​ 27 ​ 96 ​ 885 Other, net ​ ( 126 ) ​ ( 11 ) ​ ( 15 ) Net cash used in investing activities ​ ( 3,063 ) ​ ( 1,894 ) ​ ( 4,847 ) Cash flows from financing activities: ​ ​ ​ New borrowings ​ 8,688 ​ 7,948 ​ 9,420 Debt repayments ​ ( 7,328 ) ​ ( 8,404 ) ​ ( 9,629 ) Premiums and other paid on early extinguishment of debt ​ ​ — ​ ​ ( 211 ) ​ ​ ( 30 ) Common stock repurchase program ​ ( 1,500 ) ​ ( 1,350 ) ​ ( 402 ) Cash dividends ​ ( 1,077 ) ​ ( 970 ) ​ ( 927 ) Exercise of common stock options ​ 44 ​ 66 ​ 63 Tax payments associated with equity-based compensation transactions ​ ( 39 ) ​ ( 28 ) ​ ( 34 ) Other, net ​ ( 4 ) ​ 49 ​ ( 20 ) Net cash used in financing activities ​ ( 1,216 ) ​ ( 2,900 ) ​ ( 1,559 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents ​ ( 6 ) ​ 2 ​ 4 Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents ​ 251 ​ ( 454 ) ​ ( 2,999 ) Cash, cash equivalents and restricted cash and cash equivalents at beginning of period ​ 194 ​ 648 ​ 3,647 Cash, cash equivalents and restricted cash and cash equivalents at end of period ​ $ 445 ​ $ 194 ​ $ 648 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 351 ​ $ 118 ​ $ 553 Restricted cash and cash equivalents included in other current assets ​ ​ 25 ​ ​ 7 ​ ​ 28 Restricted cash and cash equivalents included in restricted funds ​ ​ 69 ​ ​ 69 ​ ​ 67 Cash, cash equivalents and restricted cash and cash equivalents at end of period ​ $ 445 ​ $ 194 ​ $ 648 ​ See Notes to Consolidated Financial Statements. ​ 74 Table of Contents WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Millions, Except Shares in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Waste Management, Inc. Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury Stock ​ Noncontrolling ​ Total Shares Amounts Capital Earnings Income (Loss) Shares Amounts Interests Balance, December 31, 2019 ​ $ 7,070 ​ 630,282 ​ $ 6 ​ $ 5,049 ​ $ 10,592 ​ $ ( 8 ) ( 205,956 ) ​ $ ( 8,571 ) ​ $ 2 Adoption of new accounting standards ​ ​ ( 2 ) ​ — ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ — ​ — ​ ​ — ​ ​ — Consolidated net income ​ 1,496 ​ — ​ — ​ — ​ 1,496 ​ — — ​ — ​ — Other comprehensive income (loss), net of tax ​ 47 ​ — ​ — ​ — ​ — ​ 47 — ​ — ​ — Cash dividends declared of $ 2.18 per common share ​ ( 927 ) ​ — ​ — ​ — ​ ( 927 ) ​ — — ​ — ​ — Equity-based compensation transactions, net ​ 172 ​ — ​ — ​ 80 ​ 1 ​ — 2,158 ​ 91 ​ — Common stock repurchase program ​ ( 402 ) ​ — ​ — ​ — ​ — ​ — ( 3,687 ) ​ ( 402 ) ​ — Other, net ​ — ​ — ​ — ​ — ​ ( 1 ) ​ — 4 ​ 1 ​ — Balance, December 31, 2020 ​ $ 7,454 ​ 630,282 ​ $ 6 ​ $ 5,129 ​ $ 11,159 ​ $ 39 ( 207,481 ) ​ $ ( 8,881 ) ​ $ 2 Consolidated net income ​ 1,817 ​ — ​ — ​ — ​ 1,816 ​ — — ​ — ​ 1 Other comprehensive income (loss), net of tax ​ ( 22 ) ​ — ​ — ​ — ​ — ​ ( 22 ) — ​ — ​ — Cash dividends declared of $ 2.30 per common share ​ ( 970 ) ​ — ​ — ​ — ​ ( 970 ) ​ — — ​ — ​ — Equity-based compensation transactions, net ​ 198 ​ — ​ — ​ 110 ​ ( 1 ) ​ — 2,049 ​ 89 ​ — Common stock repurchase program ​ ( 1,350 ) ​ — ​ — ​ ( 70 ) ​ — ​ — ( 8,731 ) ​ ( 1,280 ) ​ — Other, net ​ ( 1 ) ​ — ​ — ​ — ​ — ​ — 4 ​ — ​ ( 1 ) Balance, December 31, 2021 ​ $ 7,126 ​ 630,282 ​ $ 6 ​ $ 5,169 ​ $ 12,004 ​ $ 17 ( 214,159 ) ​ $ ( 10,072 ) ​ $ 2 Consolidated net income ​ 2,240 ​ — ​ — ​ — ​ 2,238 ​ — — ​ — ​ 2 Other comprehensive income (loss), net of tax ​ ( 86 ) ​ — ​ — ​ — ​ — ​ ( 86 ) — ​ — ​ — Cash dividends declared of $ 2.60 per common share ​ ( 1,077 ) ​ — ​ — ​ — ​ ( 1,077 ) ​ — — ​ — ​ — Equity-based compensation transactions, net ​ 150 ​ — ​ — ​ 75 ​ 2 ​ — 1,555 ​ 73 ​ — Common stock repurchase program ​ ( 1,500 ) ​ — ​ — ​ 70 ​ — ​ — ( 9,796 ) ​ ( 1,570 ) ​ — Acquisitions and other, net ​ 11 ​ — ​ — ​ — ​ — ​ — 4 ​ — ​ 11 Balance, December 31, 2022 ​ $ 6,864 ​ 630,282 ​ $ 6 ​ $ 5,314 ​ $ 13,167 ​ $ ( 69 ) ( 222,396 ) ​ $ ( 11,569 ) ​ $ 15 See Notes to Consolidated Financial Statements. ​ ​ ​ 75 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2022, 2021 and 2020 1. Basis of Presentation The financial statements presented in this report represent the consolidation of Waste Management, Inc., a Delaware corporation; its wholly-owned and majority-owned subsidiaries; and certain variable interest entities for which Waste Management, Inc. or its subsidiaries are the primary beneficiaries as described in Note 18. Waste Management, Inc. is a holding company and all operations are conducted by its subsidiaries. When the terms “the Company,” “we,” “us” or “our” are used in this document, those terms refer to Waste Management, Inc., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term “WMI,” we are referring only to Waste Management, Inc., the parent holding company. We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada. We partner with our residential, commercial, industrial and municipal customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. Our “Solid Waste” business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel for our natural gas fleet. Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. On October 30, 2020, we acquired Advanced Disposal Services, Inc. (“Advanced Disposal”), the operations of which are presented in this report within our existing Solid Waste tiers. We also provide additional services that are not managed through our Solid Waste business, which are presented in this report as “Other.” Additional information related to our acquisition of Advanced Disposal and segments is included in Notes 17 and 19, respectively. Reclassifications When necessary, reclassifications have been made to our prior period financial information to conform to the current year presentation and are not material to our consolidated financial statements. ​ ​ 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of WMI, its wholly-owned and majority-owned subsidiaries and certain variable interest entities for which we have determined that we are the primary beneficiary. All material intercompany balances and transactions have been eliminated. Investments in unconsolidated entities are accounted for under the appropriate method of accounting. 76 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Estimates and Assumptions In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Each of these items is discussed in additional detail below. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements. Cash and Cash Equivalents Cash in excess of current operating requirements is invested in short-term interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value. Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments held within restricted funds, and accounts receivable. We make efforts to control our exposure to credit risk associated with these instruments by (i) placing our assets and other financial interests with a diverse group of credit-worthy financial institutions; (ii) holding high-quality financial instruments while limiting investments in any one instrument and (iii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures, although generally we do not have collateral requirements for credit extensions. We also control our exposure associated with trade receivables by discontinuing service, to the extent allowable, to non-paying customers. However, our overall credit risk associated with trade receivables is limited due to the large number and diversity of customers we serve. As of December 31, 2022 and 2021, no single customer represented greater than 5 % of total accounts receivable. Accounts and Other Receivables Our receivables, which are recorded when billed, when services are performed or when cash is advanced, are claims against third parties that will generally be settled in cash. The carrying value of our receivables, net of the allowance for doubtful accounts, represents the estimated net realizable value. We estimate our allowance for doubtful accounts based on historical collection trends; type of customer, such as municipal or commercial; the age of outstanding receivables and existing as well as expected economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due receivable balances are written off when our internal collection efforts have been unsuccessful. Also, we recognize interest income on long-term interest-bearing notes receivable as the interest accrues under the terms of the notes. We no longer accrue interest once the notes are deemed uncollectible. 77 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the year ended December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Balance as of January 1 ​ $ 25 ​ $ 33 Additions charged to expense ​ 55 ​ 35 Accounts written-off, net of recoveries ​ ( 49 ) ​ ( 36 ) Acquisitions, divestitures and other, net ​ ( 5 ) ​ ( 7 ) Balance as of December 31 ​ $ 26 ​ $ 25 ​ To determine the allowance for doubtful accounts for trade receivables, we rely upon, among other factors, historical loss trends, the age of outstanding receivables, and existing as well as expected economic conditions. We determined that all of our trade receivables share similar risk characteristics. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. Based on aging analysis as of both December 31, 2022 and 2021, approximately 90 % of our trade receivables were outstanding less than 60 days . To determine the allowance for doubtful accounts for other receivables, as well as loans and other instruments, we rely primarily on credit ratings and associated default rates based on the maturity of the instrument. Other receivables, as of December 31, 2022 and 2021, include receivables related to income tax payments in excess of our current income tax obligations of $ 150 million and $ 166 million, respectively. Other receivables as of December 31, 2022 and 2021 also include a receivable of $ 19 million and $ 14 million, respectively, related to alternative fuel tax credits. Based on an aging analysis as of December 31, 2022 and 2021, approximately 55 % and 60 %, respectively, of our other receivables were due within 12 months or less. Parts and Supplies Parts and supplies consist primarily of spare parts, fuel, tires, lubricants and processed recycling materials. Our parts and supplies are stated at the lower of cost (using the average cost method) or market. Landfill Accounting Cost Basis of Landfill Assets — We capitalize various costs that we incur to make a landfill ready to accept waste. These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property); permitting; excavation; liner material and installation; landfill leachate collection systems; landfill gas collection systems; environmental monitoring equipment for groundwater and landfill gas; and directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes asset retirement costs, which represent estimates of future costs associated with landfill final capping, closure and post-closure activities. These costs are discussed below. Final Capping, Closure and Post-Closure Costs — Following is a description of our asset retirement activities and our related accounting: ● Final Capping — Generally involves the installation of flexible membrane liners and geosynthetic clay liners, drainage and compacted soil layers and topsoil over areas of a landfill where total airspace has been consumed. Final capping asset retirement obligations are recorded on a units-of-consumption basis as airspace is consumed related to the specific final capping event with a corresponding increase in the landfill asset. Each final capping event is accounted for as a discrete obligation and recorded as an asset and a liability based on estimates of the discounted cash flows associated with each final capping event. ● Closure — Includes the construction of the final portion of methane gas collection systems (when required), demobilization and routine maintenance costs. These are costs incurred after the site ceases to accept waste, but 78 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ before the landfill is certified as closed by the applicable state regulatory agency. These costs are recorded as an asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in the landfill asset. Closure obligations are recorded over the life of the landfill based on estimates of the discounted cash flows associated with performing closure activities. ● Post-Closure — Involves the maintenance and monitoring of a landfill site that has been certified closed by the applicable regulatory agency. Generally, we are required to maintain and monitor landfill sites for a 30-year period. These maintenance and monitoring costs are recorded as an asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in the landfill asset. Post-closure obligations are recorded over the life of the landfill based on estimates of the discounted cash flows associated with performing post-closure activities. We develop our estimates of these obligations using input from our operations personnel, engineers and accountants. Our estimates are based on our interpretation of current requirements and proposed regulatory changes and are intended to approximate fair value. Absent quoted market prices, the estimate of fair value is based on the best available information, including the results of present value techniques. In many cases, we contract with third parties to fulfill our obligations for final capping, closure and post-closure. We use historical experience, professional engineering judgment and quoted or actual prices paid for similar work to determine the fair value of these obligations. We are required to recognize these obligations at market prices whether we plan to contract with third parties or perform the work ourselves. In those instances where we perform the work with internal resources, the incremental profit margin realized is recognized as a component of operating income when the work is completed. Once we have determined final capping, closure and post-closure costs, we inflate those costs to the expected time of payment and discount those expected future costs back to present value. As of December 31, 2022, 2021 and 2020, we inflated these costs in current dollars to the expected time of payment using an inflation rate of 2.50 %, 2.25 % and 2.25 %, respectively. We discounted these costs to present value using the credit-adjusted, risk-free rate effective at the time an obligation is incurred, consistent with the expected cash flow approach. Any changes in expectations that result in an upward revision to the estimated cash flows are treated as a new liability and discounted at the current rate while downward revisions are discounted at the historical weighted average rate of the recorded obligation. As a result, the credit-adjusted, risk-free discount rate used to calculate the present value of an obligation is specific to each individual asset retirement obligation. The weighted average rate applicable to our long-term asset retirement obligations as of December 31, 2022 was approximately 4.8 %. We record the estimated fair value of final capping, closure and post-closure liabilities for our landfills based on the airspace consumed through the current period. The fair value of final capping obligations is developed based on our estimates of the airspace consumed to date for each final capping event and the expected timing of each final capping event. The fair value of closure and post-closure obligations is developed based on our estimates of the airspace consumed to date for the entire landfill and the expected timing of each closure and post-closure activity. Because these obligations are measured at estimated fair value using present value techniques, changes in the estimated cost or timing of future final capping, closure and post-closure activities could result in a material change in these liabilities, related assets and results of operations. We assess the appropriateness of the estimates used to develop our recorded balances annually, or more often if significant facts change. Sustained changes in inflation rates or the estimated costs, timing or extent of future final capping, closure and post-closure activities typically result in both (i) a current adjustment to the recorded liability and landfill asset and (ii) a change in liability and asset amounts to be recorded prospectively over either the remaining permitted and expansion airspace (as defined below) of the related discrete final capping event or the remaining permitted and expansion airspace of the landfill, as appropriate. Any changes related to the capitalized and future cost of the landfill assets are then recognized in accordance with our landfill depletion policy (previously landfill amortization policy), which would generally result in depletion expense being recognized prospectively over the remaining permitted and expansion airspace of the final capping event or the remaining permitted and expansion airspace of the landfill, as appropriate. Changes in 79 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ such estimates associated with a fully consumed landfill result in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill airspace depletion expense. Interest accretion on final capping, closure and post-closure liabilities is recorded using the effective interest method and is recorded as landfill operating costs, which is included in operating expenses within our Consolidated Statements of Operations. Depletion of Landfill Assets — The depletable basis of a landfill includes (i) amounts previously expended and capitalized; (ii) capitalized landfill final capping, closure and post-closure costs; (iii) projections of future purchase and development costs required to develop the landfill site to its remaining permitted and expansion airspace (as defined below) and (iv) projected asset retirement costs related to landfill final capping, closure and post-closure activities. Depletion is recorded on a units-of-consumption basis, applying expense as a rate per ton. The rate per ton is calculated by dividing each component of the depletable basis of a landfill by the number of tons needed to fill the corresponding asset’s airspace. For landfills that we do not own, but operate through lease or other contractual agreements, the rate per ton is calculated based on expected airspace to be utilized over the lesser of the contractual term of the underlying agreement or the life of the landfill. We apply the following guidelines in determining a landfill’s remaining permitted and expansion airspace: ● Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography. ● Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years, in addition to meeting the following criteria: ● Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals; ● We have a legal right to use or obtain land to be included in the expansion plan; ● There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and ● Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets Company criteria for investment. These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis. Of the 16 landfill sites with expansions included as of December 31, 2022, two landfills required the Chief Financial Officer to approve the inclusion of the unpermitted airspace because the permit application process did not meet the one - or five-year requirements. 80 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the depletable basis of the landfill. Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will consider several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements. After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton depletion rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change. It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher depletion expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately. Environmental Remediation Liabilities A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills, subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities, such liabilities include potentially responsible party (“PRP”) investigations. The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean up. Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on site-specific facts and circumstances. We routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by third-party environmental engineers or other service providers. Internally developed estimates are based on: ● Management’s judgment and experience in remediating our own and unrelated parties’ sites; ● Information available from regulatory agencies as to costs of remediation; 81 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ ● The number, financial resources and relative degree of responsibility of other PRPs who may be liable for remediation of a specific site; and ● The typical allocation of costs among PRPs, unless the actual allocation has been determined. Estimating our degree of responsibility for remediation is inherently difficult. We recognize and accrue for an estimated remediation liability when we determine that such liability is both probable and reasonably estimable. Determining the method and ultimate cost of remediation requires that a number of assumptions be made. There can sometimes be a range of reasonable estimates of the costs associated with the likely site remediation alternatives identified in the environmental impact investigation. In these cases, we use the amount within the range that is our best estimate. If no amount within a range appears to be a better estimate than any other, we use the amount that is the low end of such range. If we used the high ends of such ranges, our aggregate potential liability would be approximately $ 135 million higher than the $ 204 million recorded in the Consolidated Balance Sheet as of December 31, 2022. Our ultimate responsibility may differ materially from current estimates. It is possible that technological, regulatory or enforcement developments, the results of environmental studies, the inability to identify other PRPs, the inability of other PRPs to contribute to the settlements of such liabilities, or other factors could require us to record additional liabilities. Our ongoing review of our remediation liabilities, in light of relevant internal and external facts and circumstances, could result in revisions to our accruals that could cause upward or downward adjustments to our balance sheet and income from operations. These adjustments could be material in any given period. Where we believe that both the amount of a particular environmental remediation liability and the timing of the payments are fixed or reliably determinable, we inflate the cost in current dollars until the expected time of payment and discount the cost to present value using a risk-free discount rate, which is based on the rate for U.S. Treasury bonds with a term approximating the weighted average period until settlement of the underlying obligation. We determine the risk-free discount rate and the inflation rate on an annual basis unless interim changes would materially impact our results of operations. For remedial liabilities that have been discounted, we include interest accretion, based on the effective interest method, in operating expenses in our Consolidated Statements of Operations. As of December 31, 2022, 2021 and 2020, we inflated the costs by 2.50 %, 2.25 % and 2.25 %, respectively, and discounted the costs by 3.75 %, 1.50 % and 1.00 %, respectively. Our discount rate has increased since 2020 as a result of the overall increase in the 10-year Treasury rates. The following table summarizes the impacts of revisions in the risk-free discount rate applied to our environmental remediation liabilities and recovery assets for the year ended December 31 (in millions) and the risk-free discount rate applied as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 ​ Increase (decrease) in operating expenses ​ $ ( 14 ) ​ $ ( 4 ) ​ $ 8 ​ Risk-free discount rate applied to environmental remediation liabilities and recovery assets ​ 3.75 % 1.50 % 1.00 % ​ The portion of our recorded environmental remediation liabilities that were not subject to inflation or discounting, as the amounts and timing of payments are not fixed or reliably determinable, was $ 31 million as of December 31, 2022 and 2021. Had we not inflated and discounted any portion of our environmental remediation liability, the amount recorded would have increased by $ 10 million and decreased by $ 6 million as of December 31, 2022 and 2021, respectively. Property and Equipment (exclusive of landfills, discussed above) We record property and equipment at cost. Expenditures for major additions and improvements are capitalized and maintenance activities are expensed as incurred. We depreciate property and equipment over the estimated useful life of the asset using the straight-line method. We generally assume no salvage value for our depreciable property and equipment. When property and equipment are retired, sold or otherwise disposed of, the cost and accumulated depreciation are removed from our accounts and any resulting gain or loss is included in results of operations as an offset or increase to operating expense for the period. 82 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ The estimated useful lives for significant property and equipment categories are as follows (in years): ​ ​ ​ ​ Useful Lives Vehicles — excluding rail haul cars 3 to 10 Vehicles — rail haul cars 10 to 30 Machinery and equipment — including containers 3 to 30 Buildings and improvements 5 to 40 Furniture, fixtures and office equipment 3 to 10 ​ Leases We lease property and equipment in the ordinary course of our business. Our operating lease activities primarily consist of leases for real estate, landfills and operating equipment. Our financing lease activities primarily consist of leases for operating equipment, railcars and landfill assets. Our leases have varying terms. Some may include renewal or purchase options, escalation clauses, restrictions, penalties or other obligations that we consider in determining minimum lease payments. The leases are classified as either operating leases or financing leases, as appropriate. Operating Leases (excluding landfill leases discussed below) — The majority of our leases are operating leases. This classification generally can be attributed to either (i) relatively low fixed minimum lease payments as a result of real property lease obligations that vary based on the volume of waste we receive or process or (ii) minimum lease terms that are much shorter than the assets’ economic useful lives. Management expects that in the normal course of business our operating leases will be renewed, replaced by other leases or replaced with fixed asset expenditures. Financing Leases (excluding landfill leases discussed below) — Assets under financing leases are capitalized using interest rates determined at the commencement of each lease and are depreciated over either the useful life of the asset or the lease term, as appropriate, on a straight-line basis. The present value of the related lease payments is recorded as a debt obligation. Landfill Leases — From an operating perspective, landfills that we lease are similar to landfills we own because generally we will operate the landfill for the life of the operating permit. The most significant portion of our rental obligations for landfill leases is contingent upon operating factors such as disposal volume and often there are no contractual minimum rental obligations. Contingent rental obligations are expensed as incurred. For landfill financing leases that provide for minimum contractual rental obligations, we record the present value of the minimum obligation as part of the landfill asset, which is depleted on a units-of-consumption basis over the shorter of the lease term or the life of the landfill. For operating and financing leases, including landfill leases, our rent expense for each of the last three years and future minimum lease payments are disclosed in Note 7. Acquisitions We generally recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition. Contingent Consideration — In certain acquisitions, we agree to pay additional amounts to sellers contingent upon achievement by the acquired businesses of certain negotiated goals, such as targeted revenue levels, targeted disposal volumes or the issuance of permits for expanded landfill airspace. We have recognized liabilities for these contingent obligations based on their estimated fair value as of the date of acquisition with any differences between the acquisition-date fair value, subsequent remeasurements and the ultimate settlement of the obligations being recognized as an adjustment to income from operations. 83 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Acquired Assets and Assumed Liabilities — Assets and liabilities arising from contingencies such as pre-acquisition environmental matters and litigation are recognized at their acquisition-date fair value when their respective fair values can be determined. If the fair values of such contingencies cannot be readily determined, they are recognized as of the acquisition date if the contingencies are probable and an amount can be reasonably estimated. Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed. Subsequent to finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations. All acquisition-related transaction costs are expensed as incurred. See Note 17 for additional information related to our acquisitions, including our 2020 acquisition of Advanced Disposal. Goodwill and Other Intangible Assets Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but as discussed in the Long-Lived Asset Impairments section below, we assess our goodwill for impairment at least annually. Other intangible assets consist primarily of customer and supplier relationships, covenants not-to-compete, licenses, permits (other than landfill permits, which are combined with landfill tangible assets and depleted per our landfill depletion policy), and other contracts. Other intangible assets are recorded at fair value on the acquisition date and are generally amortized using either a 150% declining balance approach or a straight-line basis as we determine appropriate. Customer and supplier relationships are typically amortized over terms of 10 to 15 years . Covenants not-to-compete are amortized over the term of the non-compete covenant, which is generally five years . Licenses, permits and other contracts are amortized over the definitive terms of the related agreements. If the underlying agreement does not contain definitive terms and the useful life is determined to be indefinite, the asset is not amortized. Long-Lived Asset Impairments We assess our long-lived assets for impairment as required under the applicable accounting standards. If necessary, impairments are recorded in (gain) loss from divestitures, asset impairments and unusual items, net in our Consolidated Statement of Operations. Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group; (ii) actual third-party valuations and/or (iii) information available regarding the current market for similar assets. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired. The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator 84 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit. As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded. Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess our indefinite-lived intangible assets, including the goodwill of our reporting units, for impairment. We first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying amount. Fair value is typically estimated using an income approach using Level 3 inputs. However, when appropriate, we may also use a market approach. The income approach is based on the long-term projected future cash flows of the reporting units. We discount the estimated cash flows to present value using a weighted average cost of capital that considers factors such as market assumptions, the timing of the cash flows and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting units’ expected long-term performance considering the economic and market conditions that generally affect our business. The market approach estimates fair value by measuring the aggregate market value of publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. We then apply that multiple to the reporting units’ earnings to estimate their fair values. We believe that this approach may also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units. Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating the fair value of our reporting units is reasonable. Refer to Note 11 for information related to impairments recognized during the reported periods. Insured and Self-Insured Claims We have retained a significant portion of the risks related to our health and welfare, general liability, automobile liability and workers’ compensation claims programs. For our self-insured portions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on an actuarial valuation or internal estimates. The gross estimated liability associated with settling unpaid claims is included in accrued liabilities in our Consolidated Balance Sheets if expected to be settled within one year; otherwise, it is included in other long-term liabilities. Estimated insurance recoveries related to recorded liabilities are reflected as other current receivables or other long-term assets in our Consolidated Balance Sheets when we believe that the receipt of such amounts is probable. We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs. We continue to maintain conventional insurance policies with third-party insurers. WMI pays an annual premium to the insurance captive on behalf of WMI and its insured subsidiaries, typically in the first quarter of the year, for estimated losses based on an external actuarial analysis. These premiums are held in a restricted funds account to be used solely for paying insurance claims, resulting in a transfer of risk from our Company to 85 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ the insurance captive, and are allocated between current and long-term assets depending on estimated timing of the use of funds. Restricted Funds Our restricted funds accounts primarily consist of funds deposited for purposes of funding insurance claims and settling landfill final capping, closure, post-closure and environmental remediation obligations. These funds are generally allocated between cash, money market funds, equity securities and available-for-sale debt securities depending on the estimated timing and purpose of the use of funds. We use a wholly-owned insurance captive to insure the deductibles for certain claims programs and the premiums paid are directly deposited into a restricted funds account to be used solely for paying insurance claims. At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds for purposes of settling final capping, closure, post-closure and environmental remediation obligations. Balances maintained in these restricted funds accounts will fluctuate based on (i) changes in statutory requirements; (ii) future deposits made to comply with contractual arrangements; (iii) the ongoing use of funds; (iv) acquisitions or divestitures and (v) changes in the fair value of the financial instruments held in the restricted funds accounts. See Notes 16 and 18 for additional discussion related to restricted funds accounts for final capping, closure, post-closure or environmental remediation obligations. Investments in Unconsolidated Entities Investments in unconsolidated entities over which the Company has significant influence are accounted for under the equity method of accounting. Equity investments in which the Company does not have the ability to exert significant influence over the investees’ operating and financing activities are measured using a quantitative approach as these investments do not have readily determinable fair values. The quantitative approach, or measurement alternative, is equal to its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The fair value of our redeemable preferred stock has been measured based on third-party investors’ recent or pending transactions in these securities, which are considered the best evidence of fair value. The following table summarizes our investments in unconsolidated entities as of December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Equity method investments ​ $ 460 ​ $ 335 Investments without readily determinable fair values ​ 62 ​ ​ 48 Redeemable preferred stock ​ 56 ​ ​ 49 Investments in unconsolidated entities ​ $ 578 ​ $ 432 ​ We monitor and assess the carrying value of our investments throughout the year for potential impairment and write them down to their fair value when other-than-temporary declines exist. Fair value is generally based on (i) other third-party investors’ recent or pending transactions in the securities; (ii) other information available regarding the current market for similar assets; (iii) a market or income approach, as deemed appropriate and/or (iv) a quantitative approach, or measurement alternative, as noted above. Impairments of our investments are recorded in equity in net losses of unconsolidated entities or other, net in our Consolidated Statements of Operations in accordance with appropriate accounting guidance. Refer to Note 11 for information related to impairments and other adjustments recognized during the reported periods. 86 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Foreign Currency We have operations in Canada, as well as certain support functions in India. Local currencies generally are considered the functional currencies of our operations and investments outside the U.S. The assets and liabilities of our foreign operations are translated to U.S. dollars using the exchange rate as of the balance sheet date. Revenues and expenses are translated to U.S. dollars using the average exchange rate during the period. The resulting translation difference is reflected as a component of other comprehensive income (loss). Foreign currency translation adjustments have been impacted by decreases in the U.S. dollar/Canadian dollar exchange rate from 1.2734 at December 31, 2020, to 1.2639 at December 31, 2021 and to 1.3554 at December 31, 2022. Refer to Note 12 for information regarding the impacts of foreign currency on our comprehensive income and results of operations. Revenue Recognition Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal, and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy operations. Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or material recovery facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste being disposed of at our disposal facilities. Fees charged at transfer stations are generally based on the weight or volume of waste deposited, taking into account our cost of loading, transporting and disposing of the solid waste at a disposal site. Recycling revenues generally consist of tipping fees and the sale of recycling commodities to third parties. The fees we charge for our services generally include our environmental, fuel surcharge and regulatory recovery fees, which are intended to pass through to customers direct and indirect costs incurred. We also provide additional services that are not managed through our Solid Waste business, including our Strategic Business Solutions (“WMSBS”) and sustainability businesses, which include landfill gas-to-energy services, Sustainability and Environmental Solutions (“SES”) business and recycling brokerage services. We also offer certain other expanded service offerings and solutions. We generally recognize revenue as services are performed or products are delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling commodities are collected or delivered as product. We bill for certain services prior to performance. Such services include, among others, certain commercial and residential contracts and equipment rentals. These advanced billings are included in deferred revenues and recognized as revenue in the period service is provided. See Note 19 for additional information related to revenue by reportable segment and major lines of business. Deferred Revenues We record deferred revenues when cash payments are received or due in advance of our performance and classify them as current since they are earned within a year and there are no significant financing components. Substantially all our deferred revenues during the reported periods are realized as revenues within one to three months , when the related services are performed. Contract Acquisition Costs Our incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are generally deferred and amortized to selling, general and administrative expense over the estimated life of the relevant customer relationship, ranging from five to 13 years . Contract acquisition costs that are paid to the customer are deferred and amortized as a reduction in revenue over the contract life. Our contract acquisition costs are classified as current or noncurrent based on 87 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ the timing of when we expect to recognize amortization and are included in other assets in our Consolidated Balance Sheets. As of December 31, 2022 and 2021, we had $ 192 million and $ 175 million of deferred contract costs, respectively, of which $ 137 million and $ 126 million, respectively, were related to deferred sales incentives. During each of the years ended December 31, 2022, 2021 and 2020, we amortized $ 24 million, $ 23 million and $ 23 million, respectively, of sales incentives to selling, general and administrative expense. Long-Term Contracts Approximately 20 % of our total revenue is derived from contracts with a remaining term greater than one year. The consideration for these contracts is primarily variable in nature. The variable elements of these contracts primarily include the number of homes and businesses served and annual rate changes based on consumer price index, fuel prices or other operating costs. Such contracts are generally within our collection, recycling and other lines of business and have a weighted average remaining contract life of approximately four years . We do not disclose the value of unsatisfied performance obligations for these contracts as our right to consideration corresponds directly to the value provided to the customer for services completed to date and all future variable consideration is allocated to wholly unsatisfied performance obligations. Capitalized Interest We capitalize interest on certain projects under development, including landfill expansion projects, certain assets under construction, including operating landfills and landfill gas-to-energy projects and internal-use software. During 2022, 2021 and 2020, total interest costs were $ 425 million, $ 388 million and $ 473 million, respectively, of which $ 29 million, $ 13 million and $ 16 million was capitalized in 2022, 2021 and 2020, respectively. Income Taxes The Company is primarily subject to income tax in the U.S. and Canada. Current tax obligations associated with our income tax expense are reflected in the accompanying Consolidated Balance Sheets as a component of accrued liabilities and our deferred tax obligations are reflected in deferred income taxes. Deferred income taxes are based on the difference between the financial reporting and tax basis of assets and liabilities. Deferred income tax expense represents the change during the reporting period in the deferred tax assets and liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carry-forwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We establish reserves for uncertain tax positions when, despite our belief that our tax return positions are supportable, we believe that certain positions may be challenged and potentially disallowed. When facts and circumstances change, we adjust these reserves through our income tax expense. Should interest and penalties be assessed by taxing authorities on any underpayment of income tax, such amounts would be accrued and classified as a component of our income tax expense in our Consolidated Statements of Operations. See Note 8 for discussion of our income taxes. Contingent Liabilities We estimate the amount of potential exposure we may have with respect to claims, assessments and litigation in accordance with authoritative guidance on accounting for contingencies. We are party to pending or threatened legal proceedings covering a wide range of matters in various jurisdictions. It is difficult to predict the outcome of litigation, as it is subject to many uncertainties. Additionally, it is not always possible for management to make a meaningful estimate 88 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ of the potential loss or range of loss associated with such contingencies. See Note 10 for discussion of our commitments and contingencies. Internal-Use Software We include capitalized costs associated with developing or obtaining internal-use software within long-term other assets, and these costs are amortized over the term of the relevant subscription period including any renewal options that are reasonably certain of being exercised. These costs include direct external costs of materials and services used in developing or obtaining the software and internal costs for employees directly associated with the software development project. As of December 31, 2022 and 2021, total costs capitalized for our internal-use software were $ 45 million and $ 48 million, respectively, net of accumulated amortization of $ 27 million and $ 11 million, respectively. During each of the years ended December 31, 2022, 2021 and 2020, we amortized $ 16 million, $ 10 million and $ 1 million, respectively, to selling, general and administrative expense. Supplemental Cash Flow Information The following table shows supplemental cash flow information for the year ended December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Interest, net of capitalized interest ​ $ 348 ​ $ 387 ​ $ 461 Income taxes (a) ​ 736 ​ 370 ​ 422 (a) The increase in income taxes paid in 2022 is primarily due to the increase in pre-tax book income during 2022 and a deposit of approximately $ 103 million made to the Internal Revenue Service (“IRS”) in the fourth quarter of 2022 related to a disputed tax matter for which we expect to seek a refund. See Note 8 for further discussion. During 2022, we had $ 225 million of non-cash financing activities primarily from our federal low-income housing investment and new financing leases. Additionally, we had approximately $ 135 million of non-cash investing activities related to non-cash consideration transferred as part of our acquisitions in 2022. See Note 17 for further discussion of our 2022 acquisitions. During 2021, we had $ 30 million of non-cash financing activities from new financing leases. During 2020, we had $ 50 million of non-cash financing activities primarily related to new financing leases, a portion of which were attributed to our acquisition of Advanced Disposal. Non-cash investing and financing activities are generally excluded from the Consolidated Statements of Cash Flows. ​ 3. Landfill and Environmental Remediation Liabilities Liabilities for landfill and environmental remediation costs as of December 31 are presented in the table below (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ Environmental ​ ​ ​ ​ ​ ​ ​ Environmental ​ ​ ​ ​ Landfill Remediation Total Landfill Remediation Total Current (in accrued liabilities) $ 137 ​ $ 31 ​ $ 168 ​ $ 137 ​ $ 29 ​ $ 166 Long-term ​ 2,527 ​ 173 ​ 2,700 2,189 ​ 184 ​ 2,373 ​ $ 2,664 ​ $ 204 ​ $ 2,868 ​ $ 2,326 ​ $ 213 ​ $ 2,539 ​ 89 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ The changes to landfill and environmental remediation liabilities for the year ended December 31, 2022 are reflected in the table below (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Environmental ​ Landfill Remediation December 31, 2021 ​ $ 2,326 ​ $ 213 Obligations incurred and capitalized ​ 114 — Obligations settled ​ ( 121 ) ( 28 ) Interest accretion ​ 108 4 Revisions in estimates and interest rate assumptions (a) ​ 243 15 Acquisitions, divestitures and other adjustments ​ ( 6 ) — December 31, 2022 ​ $ 2,664 ​ $ 204 (a) In 2021, the increase in our landfill liabilities for revisions in estimates and interest rate assumptions was $ 33 million. The increase in our landfill liabilities in 2022 is primarily due to inflationary cost pressures that are expected to impact costs over the remaining landfill lives. Our recorded liabilities as of December 31, 2022 include the impacts of inflating certain of these costs based on our expectations of the timing of cash settlement and of discounting certain of these costs to present value. Anticipated payments of currently identified environmental remediation liabilities, as measured in current dollars, are $ 31 million in 2023, $ 43 million in 2024, $ 29 million in 2025, $ 19 million in 2026, $ 16 million in 2027 and $ 76 million thereafter. 4. Property and Equipment Property and equipment as of December 31 consisted of the following (in millions): ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Land ​ $ 752 ​ $ 732 Landfills ​ 18,526 ​ 17,734 Vehicles ​ 6,173 ​ 5,893 Machinery and equipment ​ 4,401 ​ 3,571 Containers ​ 3,021 ​ 2,807 Buildings and improvements ​ 3,809 ​ 3,542 Furniture, fixtures and office equipment ​ ​ 664 ​ ​ 677 ​ ​ 37,346 ​ 34,956 Less: Accumulated depreciation of tangible property and equipment ​ ( 10,731 ) ​ ( 10,147 ) Less: Accumulated depletion of landfill airspace ​ ( 10,896 ) ​ ​ ( 10,390 ) Property and equipment, net ​ $ 15,719 ​ $ 14,419 ​ See Note 11 for information regarding asset impairments. Depreciation and depletion expense, including for assets recorded as financing leases, consisted of the following for the year ended December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Depreciation of tangible property and equipment ​ $ 1,155 ​ $ 1,125 ​ $ 996 Depletion of landfill airspace ​ 754 ​ ​ 731 ​ ​ 568 Depreciation and depletion expense ​ $ 1,909 ​ $ 1,856 ​ $ 1,564 ​ See Note 5 for information regarding amortization of our intangible assets. 90 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ 5. Goodwill and Other Intangible Assets Goodwill was $ 9,323 million and $ 9,028 million as of December 31, 2022 and 2021, respectively. The $ 295 million increase in goodwill during 2022 is primarily related to acquisitions. As discussed in Note 2, we perform our annual impairment test of goodwill balances for our reporting units using a measurement date of October 1. We will also perform interim tests if an impairment indicator exists. See Notes 17 and 19 for additional information related to goodwill. Our other intangible assets consisted of the following as of December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Covenants Licenses, ​ ​ ​ ​ and Supplier ​ Not-to- ​ Permits ​ ​ ​ ​ Relationships Compete and Other Total 2022 ​ ​ ​ ​ Intangible assets ​ $ 1,288 ​ $ 51 ​ $ 141 ​ $ 1,480 Less: Accumulated amortization ​ ( 543 ) ​ ( 23 ) ​ ( 87 ) ​ ( 653 ) ​ ​ $ 745 ​ $ 28 ​ $ 54 ​ $ 827 2021 ​ ​ ​ ​ Intangible assets ​ $ 1,355 ​ $ 43 ​ $ 142 ​ $ 1,540 Less: Accumulated amortization ​ ​ ( 538 ) ​ ( 26 ) ​ ( 78 ) ​ ​ ( 642 ) ​ ​ $ 817 ​ $ 17 ​ $ 64 ​ $ 898 ​ Amortization expense for other intangible assets was $ 129 million, $ 143 million and $ 107 million for 2022, 2021 and 2020, respectively. The decrease in amortization expense in 2022 was primarily due to decreasing amortization under the 150% declining balance approach for intangible assets from the acquisition of Advanced Disposal. Amortization expense for other intangible assets for 2021 increased, as compared with 2020, due to the amortization of acquired intangible assets related to our acquisition of Advanced Disposal. Additional information related to other intangible assets acquired through business combinations is included in Note 17. As of December 31, 2022 and 2021, we had $ 19 million of licenses, permits and other intangible assets that are not subject to amortization because they do not have stated expirations or have routine, administrative renewal processes. As of December 31, 2022, we expect annual amortization expense related to other intangible assets to be $ 120 million in 2023, $ 110 million in 2024, $ 101 million in 2025, $ 80 million in 2026 and $ 75 million in 2027. ​ 91 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ 6. Debt The following table summarizes the major components of debt as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Commercial paper program (weighted average interest rate of 4.9 % as of December 31, 2022 and 0.4 % as of December 31, 2021) ​ $ 1,730 ​ $ 1,778 Senior notes, maturing through 2050, interest rates ranging from 0.75 % to 7.75 % (weighted average interest rate of 3.2 % as of December 31, 2022 and 3.1 % as of December 31, 2021) ​ 8,626 ​ 8,126 Term Loan maturing May 2024, interest rate of 5.1 % as of December 31, 2022 ​ ​ 1,000 ​ ​ — Canadian senior notes, C$ 500 million maturing September 2026, interest rate of 2.6 % ​ ​ 369 ​ ​ 395 Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.4 % to 4.4 % (weighted average interest rate of 2.7 % as of December 31, 2022 and 1.4 % as of December 31, 2021) ​ 2,648 ​ 2,619 Financing leases and other, maturing through 2071, weighted average interest rate of 4.7 % as of December 31, 2022 and 4.5 % as of December 31, 2021) (a) ​ 699 ​ 567 Debt issuance costs, discounts and other ​ ( 88 ) ​ ( 80 ) ​ ​ 14,984 ​ 13,405 Current portion of long-term debt ​ 414 ​ 708 Long-term debt, less current portion ​ $ 14,570 ​ $ 12,697 (a) Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059. Debt Classification As of December 31, 2022, we had approximately $ 3.1 billion of debt maturing within the next 12 months, including (i) $ 1.7 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) $ 725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) $ 500 million of 2.4 % senior notes that mature in May 2023 and (iv) $ 192 million of other debt with scheduled maturities within the next 12 months, including $ 65 million of tax-exempt bonds. As of December 31, 2022, we have classified $ 2.7 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $ 3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”), as discussed below. The remaining $ 414 million of debt maturing in the next 12 months is classified as current obligations. Access to and Utilization of Credit Facilities, Commercial Paper Program and Term Loan $3.5 Billion Revolving Credit Facility — In May 2022, we amended and restated our $ 3.5 billion U.S. and Canadian revolving credit facility extending the term through May 2027. The agreement includes a $ 1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WMI, are borrowers under the $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $ 375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the obligations under the $3.5 billion revolving credit facility. 92 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ The $3.5 billion revolving credit facility provides us with credit capacity to be used for cash borrowings, to support letters of credit or to support our commercial paper program. The interest rates we pay on outstanding U.S. or Canadian loans are based on a secured overnight financing rate administered by the Federal Reserve Bank of New York (“SOFR”) or the Canadian Dollar Offered Rate (“CDOR”), respectively, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The spread above SOFR or CDOR can range from 0.585 % to 1.025 % per annum, plus a credit adjustment spread of 0.10 % per annum on SOFR-based rates (the “SOFR Credit Adjustment Spread”) to account for the transition from the use of LIBOR to SOFR in such rate calculations. We also pay certain other fees set forth in the $3.5 billion revolving credit facility agreement, including a facility fee based on the aggregate commitment, regardless of usage. As of December 31, 2022, we had no outstanding borrowings under this facility. We had $ 166 million of letters of credit issued and $ 1.7 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program, both supported by the facility, leaving unused and available credit capacity of $ 1.6 billion as of December 31, 2022. Commercial Paper Program — We have a commercial paper program that enables us to borrow funds for up to 397 days at competitive interest rates. The rates we pay for outstanding borrowings are based on the term of the notes. The commercial paper program is fully supported by our $3.5 billion revolving credit facility. As of December 31, 2022, we had $ 1.7 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program. $1.0 Billion, Two-Year, Term Credit Agreement — In May 2022, we entered into a $ 1.0 billion, two-year , U.S. term credit agreement (“Term Loan”) maturing May 2024 to be used for general corporate purposes. The interest rate we pay on our outstanding balance is generally based on SOFR, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The spread above SOFR can range from 0.50 % to 0.90 % per annum, plus the SOFR Credit Adjustment Spread. As of December 31, 2022, we had $ 1.0 billion of outstanding borrowings under our Term Loan. WM Holdings also guarantees all of the obligations under the Term Loan. Other Letter of Credit Lines — As of December 31, 2022, we had utilized $ 800 million of other uncommitted letter of credit lines with terms extending through April 2024. Debt Borrowings and Repayments Commercial Paper Program — During the year ended December 31, 2022 we made cash repayments of $ 6.7 billion, which were partially offset by $ 6.6 billion of cash borrowings (net of related discount on issuance). Term Loan — In May 2022, we borrowed $ 1.0 billion under our Term Loan for general corporate purposes. Senior Notes — In May 2022, WMI issued $ 1.0 billion of 4.15 % senior notes due April 15, 2032, the net proceeds of which were $ 992 million. We used the net proceeds to redeem our $ 500 million of 2.9 % senior notes due September 2022 in advance of their scheduled maturity, to repay a portion of outstanding borrowings under our commercial paper program and for general corporate purposes. ​ Tax-Exempt Bonds — We issued $ 100 million of tax-exempt bonds in 2022. The proceeds from the issuance of these bonds were deposited directly into a restricted trust fund and may only be used for the specific purpose for which the money was raised, which is generally to finance expenditures for solid waste disposal facility, material recovery facility and renewable natural gas facility construction and development. In 2022, we also repaid $ 71 million of our tax-exempt bonds with available cash at their scheduled maturities. Financing Leases and Other — The increase in our financing leases and other debt obligations in 2022 is primarily related to a note payable associated with our federal low-income housing investment discussed in Note 8, which increased our debt obligations by $ 183 million. The increase in our debt obligations was partially offset by $ 93 million of cash repayments of debt at maturity. 93 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Scheduled Debt Payments Principal payments of our debt for the next five years and thereafter, based on scheduled maturities are as follows: $ 2,423 million in 2023, $ 1,290 million in 2024, $ 1,324 million in 2025, $ 673 million in 2026, $ 1,163 million in 2027 and $ 8,275 million thereafter. Our recorded debt and financing lease obligations include non-cash adjustments associated with debt issuance costs, discounts and fair value adjustments attributable to terminated interest rate derivatives, which have been excluded from these amounts because they will not result in cash payments. As discussed above, we have the intent and ability to refinance certain 2023 scheduled maturities on a long-term basis, including our $500 million of 2.4% senior notes that mature in May 2023. See Note 7 below for further discussion of our financing lease arrangements. Secured Debt Our debt balances are generally unsecured, except for financing lease obligations and the notes payable associated with our investments in low-income housing properties. See Notes 8 and 18 for additional information related to these investments. Debt Covenants The terms of certain of our financing arrangements require that we comply with financial and other covenants. Our most restrictive financial covenant is the one contained in both our $3.5 billion revolving credit facility and Term Loan, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization ratio (the “Leverage Ratio”). This covenant requires that the Leverage Ratio for the preceding four fiscal quarters will not be more than 3.75 to 1, provided that if an acquisition permitted under the $3.5 billion revolving credit facility involving aggregate consideration in excess of $ 200 million occurs during the fiscal quarter, the Company shall have the right to increase the Leverage Ratio to 4.25 to 1 during such fiscal quarter and for the following three fiscal quarters (the “Elevated Leverage Ratio Period”). There shall be no more than two Elevated Leverage Ratio Periods during the term of the $3.5 billion revolving credit facility, and the Leverage Ratio must return to 3.75 to 1 for at least one fiscal quarter between Elevated Leverage Ratio Periods. The calculation of all components used in the Leverage Ratio covenant are as defined in the $3.5 billion revolving credit facility. As of December 31, 2022 and 2021, we were in compliance with our Leverage Ratio covenant. Our $3.5 billion revolving credit facility, Term Loan, senior notes and other financing arrangements also contain certain restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the ability of the Company and its subsidiaries to, among other things, incur liens, engage in sale-leaseback transactions and engage in mergers and consolidations. We monitor our compliance with these restrictions, but do not believe that they significantly impact our ability to enter into investing or financing arrangements typical for our business. As of December 31, 2022 and 2021, we were in compliance with all covenants and restrictions under our financing arrangements, in addition to our Leverage Ratio covenant, that may have a material effect on our Consolidated Financial Statements. ​ 7. Leases Our operating lease activities primarily consist of leases for real estate, landfills (refer to Note 2 for further detail) and operating equipment. Our financing lease activities primarily consist of leases for operating equipment, railcars and landfill assets. Leases with an initial term of 12 months or less, which are not expected to be renewed beyond one year, are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms generally ranging from one to 10 years . The exercise of lease renewal options is generally at our sole discretion. We include the renewal term in the calculation of the right-of-use asset and related lease liability when such renewals are reasonably certain of being exercised. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease 94 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments based on usage and other lease agreements include rental payments adjusted periodically for inflation; these payments are treated as variable lease payments. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. When the implicit interest rate is not readily available for our leases, we discount future cash flows of the remaining lease payments using the current interest rate that would be paid to borrow on collateralized debt over a similar term, or incremental borrowing rate, at the commencement date. Supplemental balance sheet information for our leases as of December 31 is as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ Leases Classification 2022 2021 Assets ​ ​ ​ ​ ​ ​ ​ Long-term: ​ ​ ​ ​ ​ ​ ​ Operating ​ Other assets ​ $ 456 ​ $ 451 Financing ​ Property and equipment, net of accumulated depreciation and depletion ​ ​ 328 ​ ​ 364 Total lease assets ​ ​ ​ $ 784 ​ $ 815 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ Current: ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Accrued liabilities ​ $ 64 ​ $ 64 Financing ​ Current portion of long-term debt ​ ​ 44 ​ ​ 47 Long-term: ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Other liabilities ​ ​ 460 ​ ​ 459 Financing ​ Long-term debt, less current portion ​ ​ 258 ​ ​ 291 Total lease liabilities ​ ​ ​ $ 826 ​ $ 861 ​ Operating lease expense was $ 183 million, $ 155 million and $ 140 million during 2022, 2021 and 2020, respectively, and is included in operating and selling, general and administrative expenses in our Consolidated Statements of Operations. Financing lease expense was $ 55 million, $ 58 million and $ 51 million during 2022, 2021 and 2020, respectively, and is included in depreciation, depletion and amortization expense and interest expense, net in our Consolidated Statements of Operations. 95 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Minimum contractual obligations for our leases (undiscounted) as of December 31, 2022 are as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Financing 2023 $ 78 ​ $ 52 2024 ​ 71 ​ ​ 46 2025 ​ 59 ​ ​ 56 2026 ​ 52 ​ ​ 36 2027 ​ ​ 40 ​ ​ 28 Thereafter ​ ​ 414 ​ ​ 169 Total undiscounted lease payments ​ $ 714 ​ $ 387 Less: interest ​ ​ ( 190 ) ​ ​ ( 85 ) Discounted lease liabilities ​ $ 524 ​ $ 302 ​ As of December 31, 2022, we entered into operating and financing leases, primarily for real estate and equipment, that have not yet commenced and therefore are not reflected in the table above, with future lease payments of $ 52 million and $ 50 million, respectively. These leases commence through 2024 and have non-cancelable lease terms up to 17 years . Cash paid during 2022 for our operating and financing leases was $ 76 million and $ 56 million, respectively. During 2022, right-of-use assets obtained in exchange for lease obligations for our operating and financing leases were $ 69 million and $ 33 million, respectively. Cash paid during 2021 for our operating and financing leases was $ 70 million and $ 64 million, respectively. During 2021, right-of-use assets obtained in exchange for lease obligations for our operating and financing leases were $ 69 million and $ 36 million, respectively. As of December 31, 2022, the weighted average remaining lease terms of our operating and financing leases were approximately 19 years and 11 years , respectively. The weighted average discount rates used to determine the lease liabilities as of December 31, 2022 for our operating and financing leases were approximately 3.0 % and 4.0 %, respectively. ​ 8. Income Taxes Income Tax Expense Our income tax expense consisted of the following for the year ended December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Current: ​ ​ ​ Federal ​ $ 456 ​ $ 436 ​ $ 114 State ​ 130 ​ 132 ​ 91 Foreign ​ 43 ​ ​ 41 ​ ​ 27 ​ ​ 629 ​ ​ 609 ​ ​ 232 Deferred: ​ ​ ​ ​ ​ Federal ​ 20 ​ ​ ( 55 ) ​ ​ 149 State ​ 30 ​ ​ ( 22 ) ​ ​ 10 Foreign ​ ( 1 ) ​ ​ — ​ ​ 6 ​ ​ 49 ​ ​ ( 77 ) ​ ​ 165 Income tax expense ​ $ 678 ​ $ 532 ​ $ 397 ​ 96 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ 2020 Income tax expense at U.S. federal statutory rate 21.00 % 21.00 % ​ 21.00 % State and local income taxes, net of federal income tax benefit 4.16 4.14 ​ 4.46 ​ Federal tax credits ( 2.81 ) ( 2.69 ) ​ ( 3.78 ) ​ Taxing authority audit settlements and other tax adjustments 0.54 0.53 ​ ( 0.17 ) ​ Tax impact of equity-based compensation transactions ( 0.45 ) ( 0.60 ) ​ ( 1.12 ) ​ Tax impact of impairments 0.02 ( 0.29 ) ​ ( 0.35 ) ​ Tax rate differential on foreign income 0.27 0.37 ​ 0.33 ​ Other 0.51 0.16 ​ 0.57 ​ Effective income tax rate 23.24 % 22.62 % ​ 20.94 % ​ The comparability of our income tax expense for the reported periods has been primarily affected by (i) variations in our income before income taxes; (ii) federal tax credits; (iii) excess tax benefits associated with equity-based compensation transactions; (iv) the realization of state net operating losses and credits; (v) tax audit settlements; (vi) adjustments to our accruals and deferred taxes; (vii) the tax implications of divestitures and (viii) non-deductible transaction costs. For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Domestic ​ $ 2,779 ​ $ 2,211 ​ $ 1,780 Foreign ​ 139 ​ ​ 138 ​ ​ 113 Income before income taxes ​ $ 2,918 ​ $ 2,349 ​ $ 1,893 ​ Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties. In February 2022, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Total consideration for this investment is expected to be $ 253 million, comprised of a $ 183 million note payable, an initial cash payment of $ 28 million and $ 42 million of interest payments expected to be paid over the life of the investment. At the time of the investment, we increased our investments in unconsolidated entities in our Consolidated Balance Sheet by $ 211 million, representing the principal balance of the note and the initial cash investment. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments qualify for federal tax credits that we expect to realize through 2033 under Section 42 or Section 45D of the Internal Revenue Code. We also held a residual financial interest in an entity that owned a refined coal facility that qualified for federal tax credits under Section 45 of the Internal Revenue Code through 2019. The entity sold the majority of its assets in the first quarter of 2020, which resulted in a $ 7 million non-cash impairment of our investment at that time. We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities within our Consolidated Statements of Operations. During the years ended December 31, 2022, 2021 and 2020, we recognized net losses of $ 65 million, $ 51 million and $ 73 million (including the $ 7 million impairment of the refined coal facility noted above), respectively, and a reduction in our income tax expense of $ 99 million, $ 74 million and $ 87 million, respectively, due to tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the years ended December 31, 2022, 2021 and 2020, we recognized interest expense of $ 14 million, $ 9 million and $ 11 million, respectively, associated with our investments in low-income housing properties. See Note 18 for additional information related to these unconsolidated variable interest entities. 97 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Equity-Based Compensation — During 2022, 2021 and 2020, we recognized a reduction in our income tax expense of $ 17 million, $ 18 million and $ 27 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards. State Net Operating Losses and Credits — During 2022, 2021 and 2020, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $ 8 million, $ 15 million and $ 12 million, respectively. Tax Audit Settlements — We file income tax returns in the U.S. and Canada, as well as other state and local jurisdictions. We are currently under audit by various taxing authorities, as discussed below, and our audits are in various stages of completion. During the reported periods, we settled various tax audits which resulted in a reduction in our income tax expense of $ 6 million, $ 13 million and $ 10 million for the years ended December 31, 2022, 2021 and 2020, respectively. We participate in the IRS’s Compliance Assurance Process, which means we work with the IRS throughout the year towards resolving any material issues prior to the filing of our annual tax return. Any unresolved issues as of the tax return filing date are subject to routine examination procedures. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $ 103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company’s Consolidated Balance Sheet. In addition, we are in the examination phase of an IRS audit for the 2022 tax year and expect the audit to be completed within the next 18 months. We are also currently undergoing audits by various state and local jurisdictions for tax years that date back to 2014. Adjustments to Accruals and Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $ 1 million and $ 17 million for the years ended December 31, 2022 and 2021, respectively, and a reduction in our income tax expense of $ 3 million for the year ended December 31, 2020. Tax Implications of Divestitures — During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations. This gain was not taxable, which benefited our effective income tax rate for the year ended December 31, 2021. Non-Deductible Transaction Costs — During 2020, we recognized the detrimental tax impact of $ 27 million of non-deductible transaction costs related to our acquisition of Advanced Disposal. The tax rules require the capitalization of certain facilitative costs on the acquisition of stock of a company resulting in the applicable costs not being deductible for tax purposes. Tax Legislation — The Inflation Reduction Act of 2022 (“IRA”) was signed into law by President Biden on August 16, 2022 and contains a number of tax-related provisions. The provisions of the IRA related to alternative fuel tax credits secure approximately $ 55 million of annual pre-tax benefit (to be recorded as a reduction in our operating expense) from tax credits through 2024. Additionally, we will incur an excise tax of 1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock. The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as the overall measurement of corporate income taxes. We are in the process of evaluating the IRA and identifying all potential impacts that may be applicable. 98 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Unremitted Earnings in Foreign Subsidiaries — In the third quarter of 2020, we modified our permanent reinvestment assertion and began providing additional income taxes for the undistributed current year earnings of our foreign subsidiaries. No additional income taxes have been provided for any remaining undistributed foreign earnings prior to 2020 not subject to the one-time, mandatory transition tax, or any additional outside basis difference, as these amounts continue to be indefinitely reinvested in foreign operations. Deferred Tax Assets (Liabilities) The components of net deferred tax liabilities as of December 31 are as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Deferred tax assets: ​ ​ Net operating loss, capital loss and tax credit carry-forwards ​ $ 155 ​ $ 189 Landfill and environmental remediation liabilities ​ 216 ​ 238 Operating lease liabilities ​ 131 ​ 135 Miscellaneous and other reserves, net ​ 117 ​ 113 Subtotal ​ 619 ​ 675 Valuation allowance ​ ( 143 ) ​ ( 158 ) Deferred tax liabilities: ​ ​ Property and equipment ​ ( 1,061 ) ​ ( 1,064 ) Goodwill and other intangibles ​ ( 1,034 ) ​ ( 1,027 ) Operating lease right-of-use assets ​ ( 114 ) ​ ( 120 ) Net deferred tax liabilities ​ $ ( 1,733 ) ​ $ ( 1,694 ) ​ As of December 31, 2022, we had $ 6 million of federal net operating loss carry-forwards with expiration dates through 2026 and $ 2.5 billion of state net operating loss carry-forwards with expiration dates through 2042. We also had $ 27 million of federal capital loss carry-forwards with expiration dates through 2026, $ 39 million of foreign tax credit carry-forwards with expiration dates through 2032 and $ 8 million of state tax credit carry-forwards with expiration dates through 2038. We have established valuation allowances for uncertainties in realizing the benefit of certain tax loss and credit carry-forwards and other deferred tax assets. While we expect to realize the deferred tax assets, net of the valuation allowances, changes in estimates of future taxable income or in tax laws may alter this expectation. Liabilities for Uncertain Tax Positions A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest, is as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Balance as of January 1 ​ $ 64 ​ $ 37 ​ $ 40 Additions based on tax positions related to the current year ​ 5 ​ 22 ​ 5 Additions based on tax positions of prior years ​ — ​ 18 ​ — Accrued interest ​ 1 ​ 3 ​ 2 Settlements ​ — ​ ( 12 ) ​ — Lapse of statute of limitations ​ ( 6 ) ​ ( 4 ) ​ ( 10 ) Balance as of December 31 ​ $ 64 ​ $ 64 ​ $ 37 ​ These liabilities are included as a component of other long-term liabilities or as an offset to other long-term assets in our Consolidated Balance Sheets because the Company does not anticipate that settlement of the liabilities will require 99 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ payment of cash within the next 12 months. As of December 31, 2022, we had $ 53 million of net unrecognized tax benefits that, if recognized in future periods, would impact our effective income tax rate. We recognize interest expense related to unrecognized tax benefits in our income tax expense, which was not material for the reported periods. We did not have any material accrued liabilities or expense for penalties related to unrecognized tax benefits for the reported periods. ​ 9. Employee Benefit Plans Defined Contribution Plans — Waste Management sponsors a 401(k) retirement savings plan that covers employees, except those working subject to collective bargaining agreements that do not provide for coverage under the plan. U.S. employees who are not subject to such collective bargaining agreements are generally eligible to participate in the plan following a 90-day waiting period after hire and may contribute as much as 50 % of their eligible annual compensation and 80 % of their annual incentive plan bonus, subject to annual contribution limitations established by the IRS. Under the retirement savings plan, for non-union employees, we match 100 % of employee contributions on the first 3 % of their eligible annual compensation and 50 % of employee contributions on the next 3 % of their eligible annual compensation, resulting in a maximum match of 4.5 % of eligible annual compensation. Non-union employees are automatically enrolled in the plan at a 3 % contribution rate upon eligibility. Both employee and Company contributions are in cash and vest immediately. Certain U.S. employees who are subject to collective bargaining agreements may participate in the 401(k) retirement savings plan under terms specified in their collective bargaining agreement. Certain employees outside the U.S., including those in Canada, participate in defined contribution plans maintained by the Company in compliance with laws of the appropriate jurisdiction. Charges to operating and selling, general and administrative expenses for our defined contribution plans totaled $ 112 million, $ 104 million and $ 92 million for the years ended December 31, 2022, 2021 and 2020, respectively. Defined Benefit Plans (other than multiemployer defined benefit pension plans discussed below) — WM Holdings sponsors a defined benefit plan for certain employees who are subject to collective bargaining agreements that provide for participation in this plan. Further, certain of our Canadian subsidiaries sponsor defined benefit plans that are frozen to new participants. As of December 31, 2022, the combined benefit obligation of these pension plans was $ 117 million supported by $ 113 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of $ 4 million. As of December 31, 2021, the combined benefit obligation of these pension plans was $ 150 million supported by $ 150 million of combined plan assets. In addition, WM Holdings and certain of its subsidiaries provided post-retirement health care and other benefits to eligible retirees. In conjunction with our acquisition of WM Holdings in July 1998, we limited participation in these plans to participating retirees as of December 31, 1998. The unfunded benefit obligation for these plans was $ 8 million and $ 12 million as of December 31, 2022 and 2021, respectively. Our accrued benefit liabilities for our defined benefit pension and other post-retirement plans are included as components of accrued liabilities and long-term other liabilities in our Consolidated Balance Sheets. Multiemployer Defined Benefit Pension Plans — We are a participating employer in a number of trustee-managed multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for employees who are covered by collective bargaining agreements. The risks of participating in these Multiemployer Pension Plans are different from single-employer plans in that (i) assets contributed to the Multiemployer Pension Plan by one employer may be used to provide benefits to employees or former employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be required to be assumed by the remaining participating employers and (iii) if we choose to stop participating in any of our Multiemployer Pension Plans, we may be required to 100 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ pay those plans a withdrawal amount based on the underfunded status of the plan. The following table outlines our participation in Multiemployer Pension Plans considered to be individually significant (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expiration Date ​ ​ ​ ​ Pension Protection Act ​ ​ ​ Company ​ of Collective ​ ​ EIN/Pension Plan ​ Reported Status(a) ​ FIP/RP ​ Contributions ​ Bargaining Pension Fund Number 2022 2021 Status(b)(c) 2022 2021 2020 Agreement(s) Automotive Industries Pension Plan EIN: 94-1133245; Plan Number: 001 Critical and Declining Critical and Declining Implemented ​ $ 1 ​ $ 1 ​ $ 1 6/30/2025 Midwest Operating Engineers Pension Trust Fund ​ EIN: 36-6140097; Plan Number: 001 ​ Not Endangered or Critical as of 3/31/2022 ​ Not Endangered or Critical as of 3/31/2021 ​ Implemented ​ ​ 2 ​ ​ 2 ​ ​ 2 ​ Various dates through 9/30/2026 Suburban Teamsters of Northern Illinois Pension Plan (d) EIN: 36-6155778; Plan Number: 001 Not Endangered or Critical Not Endangered or Critical Implemented ​ 4 ​ 4 ​ 3 Various dates through 9/30/2027 Western Conference of Teamsters Pension Plan EIN: 91-6145047; Plan Number: 001 Not Endangered or Critical Not Endangered or Critical Not Applicable ​ 37 ​ 35 ​ 33 Various dates through 6/30/2027 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 44 ​ $ 42 ​ $ 39 ​ ​ Contributions to other Multiemployer Pension Plans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 17 ​ ​ 19 ​ ​ 15 ​ ​ Total contributions to Multiemployer Pension Plans (e) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 61 ​ $ 61 ​ $ 54 ​ ​ (a) Unless otherwise noted in the table above, the most recent Pension Protection Act zone status available in 2022 and 2021 is for the plan’s year-end as of December 31, 2021 and 2020, respectively. The zone status is based on information that we received from the plan and is certified by the plan’s actuary. As defined in the Pension Protection Act of 2006, among other factors, plans reported as critical are generally less than 65 % funded and plans reported as endangered are generally less than 80 % funded. Under the Multiemployer Pension Reform Act of 2014, a plan is generally in critical and declining status if it (i) is certified to be in critical status pursuant to the Pension Protection Act of 2006 and (ii) is projected to be insolvent within the next 15 years or, in certain circumstances, 20 years . (b) The “FIP/RP Status” column indicates plans for which a Funding Improvement Plan (“FIP”) or a Rehabilitation Plan (“RP”) has been implemented. (c) A Multiemployer Pension Plan that has been certified as endangered, seriously endangered or critical may begin to levy a statutory surcharge on contribution rates. Once authorized, the surcharge is at the rate of 5 % for the first 12 months and 10 % for any periods thereafter. Contributing employers, however, may eliminate the surcharge by entering into a collective bargaining agreement that meets the requirements of the applicable FIP or RP. (d) Of the Multiemployer Pension Plans considered to be individually significant, the Company was listed in the Form 5500 of the Suburban Teamsters of Northern Illinois Pension Plan as providing more than 5 % of the total contributions for plan years ending December 31, 2021 and 2020. (e) Total contributions to Multiemployer Pension Plans exclude contributions related to withdrawal liabilities. Our portion of the projected benefit obligation, plan assets and unfunded liability for the Multiemployer Pension Plans is not material to our financial position. However, the failure of participating employers to remain solvent could affect our portion of the plans’ unfunded liability. Specific benefit levels provided by union pension plans are not negotiated with or known by the employer contributors. In connection with our ongoing renegotiations of various collective bargaining agreements, we may discuss and negotiate for the complete or partial withdrawal from one or more of these pension plans. Further, business events, such as the discontinuation or nonrenewal of a customer contract, the decertification of a union, or relocation, reduction or discontinuance of certain operations, which result in the decline of Company contributions to a Multiemployer Pension Plan could trigger a partial or complete withdrawal. In the event of a withdrawal, we may incur expenses associated with 101 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ our obligations for unfunded vested benefits at the time of the withdrawal. Refer to Note 10 for additional information related to our obligations to Multiemployer Pension Plans. Multiemployer Plan Benefits Other Than Pensions — During the years ended December 31, 2022, 2021 and 2020, the Company made contributions of $ 49 million, $ 51 million and $ 48 million, respectively, to multiemployer health and welfare plans that also provide other post-retirement employee benefits. Funding of benefit payments for plan participants are made at negotiated rates in the respective collective bargaining agreements as costs are incurred. ​ 10. Commitments and Contingencies Financial Instruments — We have obtained letters of credit, surety bonds and insurance policies and have established trust funds and issued financial guarantees to support tax-exempt bonds, contracts, performance of landfill final capping, closure and post-closure requirements, environmental remediation and other obligations. Letters of credit generally are supported by our $ 3.5 billion revolving credit facility and other credit lines established for that purpose. These facilities are discussed further in Note 6. Surety bonds and insurance policies are supported by (i) a diverse group of third-party surety and insurance companies; (ii) an entity in which we have a noncontrolling financial interest or (iii) a wholly-owned insurance captive, the sole business of which is to issue surety bonds and/or insurance policies on our behalf. Management does not expect that any claims against or draws on these instruments would have a material adverse effect on our financial condition, results of operations or cash flows. We have not experienced any unmanageable difficulty in obtaining the required financial assurance instruments for our current operations. In an ongoing effort to mitigate risks of future cost increases and reductions in available capacity, we continue to evaluate various options to access cost-effective sources of financial assurance. Insurance — We carry insurance coverage for protection of our assets and operations from certain risks including general liability, automobile liability, workers’ compensation, real and personal property, directors’ and officers’ liability, pollution legal liability, cyber incident liability and other coverages we believe are customary to the industry. Our exposure to loss for insurance claims is generally limited to the per-incident deductible under the related insurance policy and any amounts that exceed our insured limits. Our exposure could increase if our insurers are unable to meet their commitments on a timely basis. We have retained a significant portion of the risks related to our general liability, automobile liability and workers’ compensation claims programs. “General liability” refers to the self-insured portion of specific third-party claims made against us that may be covered under our commercial general liability insurance policy. For our self-insured portions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on an actuarial valuation or internal estimates. The accruals for these liabilities could be revised if future occurrences or loss development significantly differ from such valuations and estimates. We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs. Our receivable balance 102 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ associated with insurance claims was $ 142 million and $ 155 million as of December 31, 2022 and 2021 respectively. The changes to our insurance reserves for the year ended December 31 are summarized below (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022(a) 2021 Balance as of January 1 ​ $ 734 ​ $ 664 Self-insurance expense ​ 242 ​ 240 Cash paid and other ​ ​ ( 247 ) ​ ​ ( 170 ) Balance as of December 31 ​ $ 729 ​ $ 734 Current portion as of December 31 ​ $ 189 ​ $ 191 Long-term portion as of December 31 ​ $ 540 ​ $ 543 (a) Based on current estimates, we anticipate that most of our insurance reserves will be settled in cash over the next six years . We do not expect the impact of any known casualty, property, environmental or other contingency to have a material impact on our financial condition, results of operations or cash flows. Unconditional Purchase Obligations — Our unconditional purchase obligations are generally established in the ordinary course of our business and are structured in a manner that provides us with access to important resources at competitive, market-driven rates and consist primarily of the following: ● Disposal — We have several agreements expiring at various dates through 2052 that require us to dispose of a minimum number of tons at third-party disposal facilities. Under these put-or-pay agreements, we are required to pay for the agreed upon minimum volumes regardless of the actual number of tons placed at the facilities. We generally fulfill our minimum contractual obligations by disposing of volumes collected in the ordinary course of business at these disposal facilities. ● Other — We are party to certain multi-year service agreements expiring at various dates through 2030 requiring minimum annual payments. As of December 31, 2022, our estimated minimum obligations associated with unconditional purchase obligations, which are not recognized in our Consolidated Balance Sheets, were $ 192 million in 2023, $ 158 million in 2024, $ 114 million in 2025, $ 101 million in 2026, $ 34 million in 2027 and $ 369 million thereafter. We may also establish unconditional purchase obligations in conjunction with acquisitions or divestitures. Our future minimum obligations under these outstanding purchase agreements are generally quantity driven and, as a result, our associated financial obligations are not fixed as of December 31, 2022. For contracts that require us to purchase minimum quantities of goods or services, we have estimated our future minimum obligations based on the current market values of the underlying products or services or contractually stated amounts. We currently expect the products and services provided by these agreements to continue to meet the needs of our ongoing operations. Therefore, we do not expect these established arrangements to materially impact our future financial position, results of operations or cash flows. Other Commitments ● Royalties — We have various arrangements that require us to make royalty payments to third parties including prior land owners, lessors or host communities where our operations are located. Our obligations generally are based on per ton rates for waste actually received at our transfer stations or landfills. Royalty agreements that are non-cancelable and require fixed or minimum payments are included in our financing leases and other debt obligations in our Consolidated Balance Sheets as disclosed in Note 6. Guarantees — We have entered into the following guarantee agreements associated with our operations: ● As of December 31, 2022, WM Holdings has fully and unconditionally guaranteed all of WMI’s senior indebtedness, including its senior notes which mature through 2050, $ 3.5 billion revolving credit facility, Term 103 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Loan and certain letter of credit lines. WMI has fully and unconditionally guaranteed the senior indebtedness of WM Holdings, which matures in 2026. Performance under these guarantee agreements would be required if either party defaulted on their respective obligations. No additional liabilities have been recorded for these intercompany guarantees because all of the underlying obligations are reflected in our Consolidated Balance Sheets. ● WMI and WM Holdings have guaranteed subsidiary debt obligations, including tax-exempt bonds, financing leases and other indebtedness. If a subsidiary fails to meet its obligations associated with its debt agreements as they come due, WMI or WM Holdings will be required to perform under the related guarantee agreement. No additional liabilities have been recorded for these intercompany guarantees because all of the underlying obligations are reflected in our Consolidated Balance Sheets. See Note 6 for information related to the balances and maturities of these debt obligations. ● Certain of our subsidiaries have guaranteed the market or contractually-determined value of certain homeowners’ properties that are adjacent to or near certain of our landfills. These guarantee agreements extend over the life of the respective landfill. Under these agreements, we would be responsible for the difference, if any, between the sale value and the guaranteed market or contractually-determined value of the homeowners’ properties. As of December 31, 2022, we have agreements guaranteeing certain market value losses for certain properties adjacent to or near 17 of our landfills. Any liability associated with the triggering of the home value guarantee has been reflected in our Consolidated Balance Sheets. We do not believe that the remaining contingent obligations will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. ● We have indemnified the purchasers of businesses or divested assets for the occurrence of specified events under certain of our divestiture agreements. Other than certain identified items that are currently recorded as obligations, we do not believe that it is possible to determine the contingent obligations associated with these indemnities. Additionally, under certain of our acquisition agreements, we have provided for additional consideration to be paid to the sellers if established financial targets or other market conditions are achieved post-closing and we have recognized liabilities for these contingent obligations based on an estimate of the fair value of these contingencies at the time of acquisition. We do not currently believe that contingent obligations to provide indemnification or pay additional post-closing consideration in connection with our divestitures or acquisitions will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. ● WMI and WM Holdings guarantee the service, lease, financial and general operating obligations of certain of their subsidiaries. If such a subsidiary fails to meet its contractual obligations as they come due, the guarantor has an unconditional obligation to perform on its behalf. No additional liability has been recorded for service, financial or general operating guarantees because the subsidiaries’ obligations are properly accounted for as costs of operations as services are provided or general operating obligations as incurred. No additional liability has been recorded for the lease guarantees because the subsidiaries’ obligations are properly accounted for as operating or financing leases, as appropriate. Environmental Matters — A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills, subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities, such liabilities include PRP investigations. The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean-up. As of December 31, 2022, we have been notified by the government that we are a PRP in connection with 73 locations listed on the Environmental Protection Agency’s (“EPA’s”) Superfund National Priorities List (“NPL”). Of the 73 sites at which claims have been made against us, 14 are sites we own. Each of the NPL sites we own was initially developed by 104 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ others as a landfill disposal facility. At each of these facilities, we are working in conjunction with the government to characterize or remediate identified site problems, and we have either agreed with other legally liable parties on an arrangement for sharing the costs of remediation or are working toward a cost-sharing agreement. We generally expect to receive any amounts due from other participating parties at or near the time that we make the remedial expenditures. The other 59 NPL sites, which we do not own, are at various procedural stages under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, known as CERCLA or Superfund. The majority of proceedings involving NPL sites that we do not own are based on allegations that certain of our subsidiaries (or their predecessors) transported hazardous substances to the sites, often prior to our acquisition of these subsidiaries. CERCLA generally provides for liability for those parties owning, operating, transporting to or disposing at the sites. Proceedings arising under Superfund typically involve numerous waste generators and other waste transportation and disposal companies and seek to allocate or recover costs associated with site investigation and remediation, which costs could be substantial and could have a material adverse effect on our consolidated financial statements. At some of the sites at which we have been identified as a PRP, our liability is well defined as a consequence of a governmental decision and an agreement among liable parties as to the share each will pay for implementing that remedy. At other sites, where no remedy has been selected or the liable parties have been unable to agree on an appropriate allocation, our future costs are uncertain. On October 11, 2017, the EPA issued its Record of Decision (“ROD”) with respect to the previously proposed remediation plan for the San Jacinto River Waste Pits Site in Harris County, Texas. McGinnes Industrial Maintenance Corporation (“MIMC”), a subsidiary of Waste Management of Texas, Inc., operated some of the waste pits from 1965 to 1966 and has been named as a site PRP. In 1998, WMI acquired the stock of the parent entity of MIMC. MIMC has been working with the EPA and other named PRPs as the process of addressing the site proceeds. On April 9, 2018, MIMC and International Paper Company entered into an Administrative Order on Consent agreement with the EPA to develop a remedial design for the EPA’s proposed remedy for the site, and we recorded a liability for MIMC’s estimated potential share of the EPA’s proposed remedy and related costs, although allocation of responsibility among the PRPs for the proposed remedy has not been established. MIMC and International Paper Company have continued to work on a remedial design to support the EPA’s proposed remedy; however, design investigations indicate that fundamental changes are required to the proposed remedy and MIMC maintains its prior position that the remedy set forth in the ROD is not the best solution to protect the environment and public health. Due to further increases in the estimated cost of the remedy set forth in the ROD, we recorded an additional liability of $ 17 million as of March 31, 2022 for MIMC’s estimated potential share of such costs. As of December 31, 2022 and 2021, the recorded liability for MIMC’s estimated potential share of the EPA’s proposed remedy was $ 68 million and $ 53 million, respectively. MIMC’s ultimate liability could be materially different from current estimates and MIMC will continue to engage the EPA regarding its proposed remedy. Item 103 of the SEC’s Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings, or such proceedings are known to be contemplated, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, below a stated threshold. In accordance with this SEC regulation, the Company uses a threshold of $ 1 million for purposes of determining whether disclosure of any such environmental proceedings is required. As of the date of this filing, we are not aware of any matters that are required to be disclosed pursuant to this standard. From time to time, we are also named as defendants in personal injury and property damage lawsuits, including purported class actions, on the basis of having owned, operated or transported waste to a disposal facility that is alleged to have contaminated the environment or, in certain cases, on the basis of having conducted environmental remediation activities at sites. Some of the lawsuits may seek to have us pay the costs of monitoring of allegedly affected sites and health care examinations of allegedly affected persons for a substantial period of time even where no actual damage is proven. While we believe we have meritorious defenses to these lawsuits, the ultimate resolution is often substantially uncertain due to the difficulty of determining the cause, extent and impact of alleged contamination (which may have occurred over a long period of time), the potential for successive groups of complainants to emerge, the diversity of the individual plaintiffs’ circumstances, and the potential contribution or indemnification obligations of co-defendants or other 105 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ third parties, among other factors. Additionally, we often enter into agreements with landowners imposing obligations on us to meet certain regulatory or contractual conditions upon site closure or upon termination of the agreements. Compliance with these agreements inherently involves subjective determinations and may result in disputes, including litigation. Litigation — We are subject to various proceedings, lawsuits, disputes and claims arising in the ordinary course of our business. Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions that have been filed against us, and that may be filed against us in the future, include personal injury, property damage, commercial, customer, and employment-related claims, including purported state and national class action lawsuits related to: alleged environmental contamination, including releases of hazardous material and odors; sales and marketing practices, customer service agreements and prices and fees; and federal and state wage and hour and other laws. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. These actions are in various procedural stages, and some are covered, in part, by insurance. We currently do not believe that the eventual outcome of any such actions will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. In June 2022, we and certain of our officers were named as defendants in a complaint alleging violation of the federal securities laws and seeking certification as a class action in the U.S. District Court for the Southern District of New York. A lead plaintiff has been appointed and an amended complaint was filed in January 2023. The amended complaint seeks damages on behalf of a putative class of persons who purchased our SMR Notes (as defined and discussed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Loss on Early Extinguishment of Debt, Net ), asserting claims under the Securities Exchange Act based on alleged misrepresentations and omissions concerning the time for completion of our acquisition of Advanced Disposal. We will vigorously defend against this pending suit. We believe any potential recovery by the plaintiffs, in excess of applicable deductibles, will be covered by insurance, and we do not believe that the eventual outcome of this suit will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. WMI’s charter and bylaws provide that WMI shall indemnify against all liabilities and expenses, and upon request shall advance expenses to any person, who is subject to a pending or threatened proceeding because such person is or was a director or officer of the Company. Such indemnification is required to the maximum extent permitted under Delaware law. Accordingly, the director or officer must execute an undertaking to reimburse the Company for any fees advanced if it is later determined that the director or officer was not permitted to have such fees advanced under Delaware law. Additionally, the Company has direct contractual obligations to provide indemnification to each of the members of WMI’s Board of Directors and each of WMI’s executive officers. The Company may incur substantial expenses in connection with the fulfillment of its advancement of costs and indemnification obligations in connection with actions or proceedings that may be brought against its former or current officers, directors and employees. Multiemployer Defined Benefit Pension Plans — About 20 % of our workforce is covered by collective bargaining agreements with various local unions across the U.S. and Canada. As a result of some of these agreements, certain of our subsidiaries are participating employers in a number of Multiemployer Pension Plans for the covered employees. Refer to Note 9 for additional information about our participation in Multiemployer Pension Plans considered individually significant. In connection with our ongoing renegotiation of various collective bargaining agreements, we may discuss and negotiate for the complete or partial withdrawal from one or more of these Multiemployer Pension Plans. A complete or partial withdrawal from a Multiemployer Pension Plan may also occur if employees covered by a collective bargaining agreement vote to decertify a union from continuing to represent them. Any other circumstance resulting in a decline in Company contributions to a Multiemployer Pension Plan through a reduction in the labor force, whether through attrition over time or through a business event (such as the discontinuation or nonrenewal of a customer contract, the decertification of a union, or relocation, reduction or discontinuance of certain operations) may also trigger a complete or partial withdrawal from one or more of these pension plans. We do not believe that any future liability relating to our past or current participation in, or withdrawals from, the Multiemployer Pension Plans to which we contribute will have a material adverse effect on our business, financial 106 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ condition or liquidity. However, liability for future withdrawals could have a material adverse effect on our results of operations or cash flows for a particular reporting period, depending on the number of employees withdrawn and the financial condition of the Multiemployer Pension Plan(s) at the time of such withdrawal(s). Tax Matters — We maintain a liability for uncertain tax positions, the balance of which management believes is adequate. Results of audit assessments by taxing authorities are not currently expected to have a material adverse effect on our financial condition, results of operations or cash flows. We participate in the IRS’s Compliance Assurance Process, which means we work with the IRS throughout the year towards resolving any material issues prior to the filing of our annual tax return. Any unresolved issues as of the tax return filing date are subject to routine examination procedures. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $ 103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company’s Consolidated Balance Sheet. ​ 11. Asset Impairments and Unusual Items (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual items, net for the year ended December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Gain from divestitures, net ​ $ ( 5 ) ​ $ ( 44 ) ​ $ ( 33 ) Asset impairments ​ 50 ​ 8 ​ 68 Other ​ 17 ​ 20 ​ — ​ ​ $ 62 ​ $ ( 16 ) ​ $ 35 ​ For the year ended December 31, 2022, we recognized $ 62 million of net charges consisting of (i) $ 50 million of asset impairment charges primarily related to management’s decision to close two landfills within our East Tier segment and (ii) a $ 17 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10. These losses were partially offset by a $ 5 million gain from the divestiture of a solid waste business in our West Tier segment. For the year ended December 31, 2021, we recognized net gains of $ 16 million primarily consisting of (i) a $ 35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations in our East Tier segment and (ii) an $ 8 million gain from divestitures of certain ancillary operations in our Other segment. These gains were partially offset by (i) a $ 20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $ 8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment. For the year ended December 31, 2020, we recognized $ 35 million of net charges primarily related to (i) a $ 33 million net gain associated with net asset divestitures executed to address requirements of the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment; (ii) $ 41 million of non-cash impairment charges primarily related to two landfills and an oil field waste injection facility in our West Tier segment; (iii) a $ 20 million non-cash impairment charge in our East Tier segment due to management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $ 7 million of net charges primarily related to non-cash impairments of certain assets within our WM Renewable Energy business in our Other segment. 107 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ See Note 2 for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 for additional information related to the impact of impairments on the results of operations of our reportable segments. Equity in Net Losses of Unconsolidated Entities For the year ended December 31, 2020, we recorded a non-cash impairment charge of $ 7 million related to an investment in a refined coal facility which is discussed further in Note 8. The fair value of our investment was not readily determinable; thus, we determined the fair value using management assumptions pertaining to investment value (Level 3 inputs). The remaining losses for the years ended December 31, 2022, 2021 and 2020 were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties. Refer to Notes 8 and 18 for additional information related to these investments. 12. Accumulated Other Comprehensive Income (Loss) The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, which is included as a component of WMI stockholders’ equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ Post- ​ ​ ​ ​ ​ ​ ​ ​ Available- ​ Currency ​ Retirement ​ ​ ​ ​ ​ Derivative ​ for-Sale ​ Translation ​ Benefit ​ ​ ​ ​ Instruments Securities Adjustments(a) Obligations Total Balance, December 31, 2019 ​ $ ( 24 ) ​ $ 38 ​ $ ( 21 ) ​ $ ( 1 ) ​ $ ( 8 ) Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $ 2 , $ 4 , $ 0 and $ 1 , respectively ​ 7 ​ 12 ​ 20 ​ 2 ​ 41 Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $ 2 , $ 0 , $ 0 and $( 1 ), respectively ​ 8 ​ ( 1 ) ​ — ​ ( 1 ) ​ 6 Net current period other comprehensive income (loss) ​ 15 ​ 11 ​ 20 ​ 1 ​ 47 Balance, December 31, 2020 ​ $ ( 9 ) ​ $ 49 ​ $ ( 1 ) ​ $ — ​ $ 39 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $ 0 , $( 2 ), $ 0 and $ 2 , respectively ​ — ​ ( 6 ) ​ 7 ​ 5 ​ 6 Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $ 3 , $ 0 , $ 0 and $ 0 , respectively ​ 9 ​ — ​ ( 35 ) ​ ( 2 ) ​ ( 28 ) Net current period other comprehensive income (loss) ​ 9 ​ ( 6 ) ​ ( 28 ) ​ 3 ​ ( 22 ) Balance, December 31, 2021 ​ $ — ​ $ 43 ​ $ ( 29 ) ​ $ 3 ​ $ 17 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $ 0 , $( 8 ), $ 0 and $ 0 , respectively ​ — ​ ( 24 ) ​ ( 65 ) ​ 1 ​ ( 88 ) Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $ 1 , $ 0 , $ 0 and $ 0 , respectively ​ 3 ​ — ​ — ​ ( 1 ) ​ 2 Net current period other comprehensive income (loss) ​ 3 ​ ( 24 ) ​ ( 65 ) ​ — ​ ( 86 ) Balance, December 31, 2022 ​ $ 3 ​ $ 19 ​ $ ( 94 ) ​ $ 3 ​ $ ( 69 ) ​ (a) As a result of the divestiture of certain non-strategic Canadian operations in the third quarter of 2021, we reclassified $ 35 million of cumulative foreign currency translation adjustments from accumulated other comprehensive income 108 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ to (gain) loss from divestitures, asset impairments and unusual items, net within our Consolidated Statement of Operations . ​ 13. Capital Stock, Dividends and Common Stock Repurchase Program Capital Stock We have 1.5 billion shares of authorized common stock with a par value of $ 0.01 per common share. As of December 31, 2022, we had 407.9 million shares of common stock issued and outstanding. The Board of Directors is authorized to issue preferred stock in series, and with respect to each series, to fix its designation, relative rights (including voting, dividend, conversion, sinking fund, and redemption rights), preferences (including dividends and liquidation) and limitations. We have 10 million shares of authorized preferred stock, $ 0.01 par value, none of which is currently outstanding. Dividends Our quarterly dividends have been declared by our Board of Directors. Cash dividends declared and paid were $ 1,077 million in 2022, or $ 2.60 per common share, $ 970 million in 2021, or $ 2.30 per common share, and $ 927 million in 2020, or $ 2.18 per common share. In December 2022, we announced that our Board of Directors expects to increase the quarterly dividend from $ 0.65 to $ 0.70 per share for dividends declared in 2023. However, all future dividend declarations are at the discretion of our Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant. Common Stock Repurchase Program The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board of Directors. Share repurchases during the reported periods were completed through accelerated share repurchase (“ASR”) agreements and, to a lesser extent, open market transactions. The terms of these ASR agreements required that we deliver cash at the beginning of each ASR repurchase period. In exchange, we received a portion of the total shares expected to be repurchased based on the then-current market price of our common stock. The remaining shares repurchased over the course of each repurchase period are delivered to us once the repurchase period is complete. In the table below, shares repurchased are measured and reported based on the period shares are delivered to us, which can differ from the period cash is delivered to a repurchase agent for the value of such shares. The following is a summary of our share repurchases under our common stock repurchase program for the year ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022(a) 2021(b) 2020(c) Shares repurchased (in thousands) ​ 9,796 ​ 8,731 ​ 3,687 Weighted average price per share $ 160.26 ​ $ 146.61 ​ $ 108.92 Total repurchases (in millions) ​ $ 1,570 ​ $ 1,280 ​ $ 402 (a) We executed and completed four ASR agreements during 2022 to repurchase $ 1.417 billion of our common stock and received 8.8 million shares in connection with these ASR agreements. We also repurchased an additional 0.6 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934 (“Exchange Act”) for $ 83 million, inclusive of per-share commissions. Shares repurchased in 2022 include 0.4 million shares of our common stock for $ 70 million pursuant to our December 2021 ASR agreement that completed in January 2022. (b) We executed and completed three ASR agreements during 2021 to repurchase $ 1.0 billion of our common stock and received 7.0 million shares in connection with these ASR agreements. Additionally, in December 2021, we executed 109 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ an ASR agreement to repurchase $ 350 million of our common stock. At the beginning of the repurchase period, we delivered $ 350 million in cash and received 1.7 million shares based on a stock price of $ 160.67 . The ASR agreement completed in January 2022, at which time we received 0.4 million additional shares based on a final weighted average price of $ 160.33 . (c) During 2020, we executed and completed an ASR agreement to repurchase $ 313 million of our common stock and received 2.8 million shares in connection with this ASR agreement. We also repurchased an additional 0.9 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for $ 89 million, inclusive of per-share commissions. We announced in December 2022 that the Board of Directors has authorized up to $ 1.5 billion in future share repurchases. This new authorization replaces our prior $ 1.5 billion authorization that was fully utilized in 2022. Any future share repurchases will be made at the discretion of management and will depend on factors similar to those considered by the Board of Directors in making dividend declarations, including our net earnings, financial condition and cash required for future business plans, growth and acquisitions. ​ 14. Equity-Based Compensation Employee Stock Purchase Plan We have an Employee Stock Purchase Plan (“ESPP”) under which employees that have been employed for at least 30 days may purchase shares of our common stock at a discount. The plan provides for two offering periods for purchases: January through June and July through December. At the end of each offering period, enrolled employees purchase shares of our common stock at a price equal to 85 % of the lesser of the market value of the stock on the first and last day of such offering period. The purchases are made at the end of an offering period with funds accumulated through payroll deductions over the course of the offering period. Subject to limitations set forth in the plan and under IRS regulations, eligible employees may elect to have up to 10 % of their base pay deducted during the offering period. The total number of shares issued under the plan for the offering periods in 2022, 2021 and 2020 was approximately 455,000 , 513,000 and 570,000 , respectively. After the January 2023 issuance of shares associated with the July to December 2022 offering period, 2.3 million shares remain available for issuance under the ESPP. As a result of our ESPP, annual compensation expense increased by $ 13 million, or $ 10 million net of tax expense, for 2022, $ 12 million, or $ 9 million net of tax expense, for 2021 and $ 13 million, or $ 10 million net of tax expense, for 2020. Employee Stock Incentive Plans In May 2014, our stockholders approved our 2014 Stock Incentive Plan (the “2014 Plan”) to replace our 2009 Stock Incentive Plan (the “2009 Plan”). The 2014 Plan authorized 23.8 million shares of our common stock for issuance pursuant to the 2014 Plan, plus the approximately 1.1 million shares that then remained available for issuance under the 2009 Plan, and any shares subject to outstanding awards under both incentive plans that are subsequently cancelled, forfeited, terminate, expire or lapse. In May 2020, the Company’s Board of Directors amended the 2014 Plan to provide that the number of future shares surrendered in payment of the exercise or purchase price of an award, and the number of future shares used to satisfy the withholding obligations, shall no longer be credited back to the total number of shares available for issuance under the 2014 Plan. As of December 31, 2022, approximately 16.1 million shares were available for future grants under the 2014 Plan. All of our equity-based compensation awards described herein have been made pursuant to either our 2009 Plan or our 2014 Plan, collectively referred to as the “Incentive Plans.” We currently utilize treasury shares to meet the needs of our equity-based compensation programs. Pursuant to the Incentive Plans, we have the ability to issue stock options, stock appreciation rights and stock awards, including restricted stock, restricted stock units (“RSUs”) and performance share units (“PSUs”). The terms and conditions 110 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ of equity awards granted under the Incentive Plans are determined by the Management Development and Compensation Committee of our Board of Directors. The 2022 annual incentive plan awards granted to the Company’s senior leadership team, which generally includes the Company’s executive officers, included a combination of PSUs and stock options. Additionally, several members of the Company’s senior leadership team received a grant of RSUs in 2022 in special recognition of leadership and contributions critical to the acquisition of Advanced Disposal and the subsequent integration and synergy generation. Awards granted to other eligible employees under the 2014 Plan included a combination of PSUs, RSUs and stock options in 2022. The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field-based managers. Restricted Stock Units — A summary of our RSUs is presented in the table below (units in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Per Share ​ Units Fair Value Unvested as of January 1, 2022 343 ​ $ 114.28 Granted 162 ​ $ 147.74 Vested ( 107 ) ​ $ 100.11 Forfeited ( 33 ) ​ $ 136.43 Unvested as of December 31, 2022 365 ​ $ 131.26 ​ The total fair market value of RSUs that vested during the years ended December 31, 2022, 2021 and 2020 was $ 15 million, $ 12 million and $ 14 million, respectively. During the year ended December 31, 2022, we issued approximately 77,000 shares of common stock for these vested RSUs, net of approximately 30,000 units deferred or used for payment of associated taxes. RSUs may not be voted or sold by award recipients until time-based vesting restrictions have lapsed. RSUs primarily provide for three-year cliff vesting and include dividend equivalents accumulated during the vesting period. Unvested units are subject to forfeiture in the event of voluntary or for-cause termination. RSUs are generally subject to pro-rata vesting upon an employee’s involuntary termination other than for cause and generally payout at the end of the three-year vesting period and become immediately vested in the event of an employee’s death or disability. Compensation expense associated with RSUs is measured based on the grant-date fair value of our common stock and is recognized on a straight-line basis over the required employment period. Beginning in 2021, the terms of the award agreements for new grants of RSUs were updated to provide for accelerated vesting following retirement as if the employee had remained employed until the end of the vesting period. Accordingly, compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement-eligible or (ii) the defined service requirement of the award. Compensation expense is only recognized for those awards that we expect to vest, which we estimate based upon an assessment of expected forfeitures. Performance Share Units — Two types of PSUs are currently outstanding: (i) PSUs for which payout is dependent on total shareholder return relative to the S&P 500 Index (“TSR PSUs”) and (ii) PSUs for which payout is dependent on the Company’s performance against pre-established adjusted cash flow metrics (“Cash Flow PSUs”). Both types of PSUs are payable in shares of common stock after the end of a three-year performance period, when the Company’s financial performance for the entire performance period is reported, typically in the first half of the first quarter of the succeeding year. At the end of the performance period, the number of shares awarded can range from 0 % to 200 % of the 111 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ targeted amount, depending on the performance against the pre-established targets. A summary of our PSUs, at 100 % of the targeted amount, is presented in the table below (units in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Per Share ​ Units Fair Value Unvested as of January 1, 2022 968 ​ $ 129.60 Granted 290 ​ $ 168.49 Vested ( 346 ) ​ $ 116.26 Forfeited ( 48 ) ​ $ 147.79 Unvested as of December 31, 2022 864 ​ $ 147.00 ​ The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2022 was performed by the Management Development and Compensation Committee of our Board of Directors in January 2023. Accordingly, vesting information for such awards is not included in the table above as of December 31, 2022. The “vested” PSUs are for the three-year performance period ended December 31, 2021, as achievement of performance results and corresponding vesting was determined in February 2022. The performance of the Company’s common stock for purposes of the TSR PSUs exceeded target performance criteria, and the Company’s financial results, as measured for purposes of the Cash Flow PSUs, exceeded the maximum performance criteria. Accordingly, recipients of the PSU awards received a payout of 167.78 % of the vested TSR PSUs and 200 % of the vested Cash Flow PSUs. In February 2022, approximately 637,000 PSUs vested and we issued approximately 420,000 shares of common stock for these vested PSUs, net of units deferred or used for payment of associated taxes. The shares of common stock that were issued or deferred during the years ended December 31, 2022, 2021 and 2020 for prior PSU award grants had a fair market value of $ 91 million, $ 74 million and $ 89 million, respectively. PSUs have no voting rights. PSUs receive dividend equivalents that are paid out in cash based on the number of shares that vest at the end of the awards’ performance period. Subject to attainment of the performance metrics described above, PSUs are payable to an employee (or his beneficiary) upon death or disability as if that employee had remained employed until the end of the performance period. PSUs are generally subject to pro-rata vesting upon an employee’s involuntary termination other than for cause and are subject to forfeiture in the event of voluntary or for-cause termination. The terms of the award agreements for outstanding PSUs provide for continued vesting following retirement as if the employee had remained employed until the end of the performance period, and compensation expense for PSUs granted to retirement-eligible employees is accelerated over the period that the recipient becomes retirement-eligible plus a defined service requirement. Compensation expense associated with our Cash Flow PSUs is based on the grant-date fair value of our common stock. Compensation expense is recognized ratably over the performance period based on our estimated achievement of the established performance criteria. Compensation expense is only recognized for those awards that we expect to vest, which we estimate based upon an assessment of both the probability that the performance criteria will be achieved and expected forfeitures. The grant-date fair value of our TSR PSUs is based on a Monte Carlo valuation and compensation expense is recognized on a straight-line basis over the vesting period. Compensation expense is recognized for all TSR PSUs whether or not the market conditions are achieved less expected forfeitures. Deferred Units — Certain employees can elect to defer some or all of the vested RSU or PSU awards until a specified date or dates they choose. Deferred units are not invested, nor do they earn interest, but deferred amounts do receive dividend equivalents paid in cash during deferral at the same time and at the same rate as dividends on the Company’s common stock. Deferred amounts are paid out in shares of common stock at the end of the deferral period. As of December 31, 2022, we had approximately 179,000 vested deferred units outstanding. 112 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Stock Options — Stock options granted prior to 2021 vest in 25 % increments on the first two anniversaries of the date of grant with the remaining 50 % vesting on the third anniversary. Beginning in 2021, stock options granted vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The exercise price of the options is the average of the high and low market value of our common stock on the date of grant, and the options have a term of 10 years . A summary of our stock options is presented in the table below (options in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Per Share ​ Options Exercise Price Outstanding as of January 1, 2022 3,206 ​ $ 92.53 Granted 477 ​ $ 145.67 Exercised (a) ( 675 ) ​ $ 88.54 Forfeited or expired ( 85 ) ​ $ 124.31 Outstanding as of December 31, 2022 (b) 2,923 ​ $ 101.22 Exercisable as of December 31, 2022 (c) 1,762 ​ $ 83.34 (a) Includes approximately 141,000 stock options exercised pursuant to Rule 10b5-1 trading plans that provided for net share settlement, resulting in the Company withholding approximately 112,000 shares of our common stock to cover the associated stock option exercise price and taxes. (b) Stock options outstanding as of December 31, 2022 have a weighted average remaining contractual term of 6.2 years and an aggregate intrinsic value of $ 163 million based on the market value of our common stock on December 31, 2022. (c) Stock options exercisable as of December 31, 2022 have an aggregate intrinsic value of $ 130 million based on the market value of our common stock on December 31, 2022. During 2022, 2021 and 2020, we received cash proceeds of $ 44 million, $ 66 million and $ 63 million, respectively, from the exercise of 675,000 , 962,000 and 1,039,000 of employee stock options. The aggregate intrinsic value of stock options exercised during 2022, 2021 and 2020 was $ 51 million, $ 66 million and $ 58 million, respectively. Stock options exercisable as of December 31, 2022 were as follows (options in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ Per Share ​ Weighted Average Range of Exercise Prices Options Exercise Price Remaining Years $ 36.88 -$ 50.00 166 ​ $ 40.31 1.0 $ 50.01 -$ 70.00 355 ​ $ 55.53 2.7 $ 70.01 -$ 100.00 888 ​ $ 87.95 5.3 $ 100.01 -$ 145.67 353 ​ $ 119.87 7.6 $ 36.88 -$ 145.67 1,762 ​ $ 83.34 5.0 ​ All unvested stock options shall become exercisable upon the award recipient’s death or disability. In the event of a recipient’s retirement, stock options shall continue to vest pursuant to the original schedule set forth in the award agreement. If the recipient is terminated by the Company without cause or voluntarily resigns, the recipient shall be entitled to exercise all stock options outstanding and exercisable within a specified time frame after such termination. All outstanding stock options, whether exercisable or not, are forfeited upon termination for cause. We account for our employee stock options under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. The weighted average grant-date fair value of stock options granted during the years ended December 31, 2022, 2021 and 2020 was $ 26.44 , $ 17.25 and $ 15.82 , respectively. The fair value of stock options at the date of grant is amortized to expense over the vesting period less expected forfeitures, except 113 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ for stock options granted to retirement-eligible employees, for which expense is accelerated over the period that the recipient becomes retirement-eligible. The following table presents the weighted average assumptions used to value employee stock options granted during the year ended December 31 under the Black-Scholes valuation model: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Expected option life 4.7 years 4.7 years 4.6 years Expected volatility 23.4 % 23.2 % 16.6 % Expected dividend yield 1.8 % 2.1 % 1.7 % Risk-free interest rate 1.6 % 0.6 % 1.4 % ​ The Company bases its expected option life on the expected exercise and termination behavior of its optionees and an appropriate model of the Company’s future stock price. The expected volatility assumption is derived from the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options, combined with other relevant factors including implied volatility in market-traded options on the Company’s stock. The expected dividend yield is the annual rate of dividends per share over the exercise price of the option as of the grant date. For the years ended December 31, 2022, 2021 and 2020, we recognized $ 71 million, $ 94 million and $ 79 million, respectively, of compensation expense associated with RSU, PSU and stock option awards as a component of selling, general and administrative expenses in our Consolidated Statements of Operations. Our income tax expense for the years ended December 31, 2022, 2021 and 2020 includes related income tax benefits of $ 14 million, $ 18 million and $ 15 million, respectively. We have not capitalized any equity-based compensation costs during the reported periods. As of December 31, 2022, we estimate that $ 45 million of currently unrecognized compensation expense will be recognized over a weighted average period of 1.5 years for our unvested RSU, PSU and stock option awards issued and outstanding. Non-Employee Director Plan Our non-employee directors currently receive annual grants of shares of our common stock, generally payable in two equal installments, under the 2014 Plan described above. ​ 15. Earnings Per Share Basic and diluted earnings per share were computed using the following common share data for the year ended December 31 (shares in millions): ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Number of common shares outstanding at end of period 407.9 ​ 416.1 422.8 Effect of using weighted average common shares outstanding 4.9 ​ 4.3 0.2 Weighted average basic common shares outstanding 412.8 ​ 420.4 423.0 Dilutive effect of equity-based compensation awards and other contingently issuable shares 2.2 ​ 2.5 2.1 Weighted average diluted common shares outstanding 415.0 ​ 422.9 425.1 Potentially issuable shares 5.2 ​ 5.7 6.1 Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding 1.1 ​ 0.6 1.6 ​ Refer to the Consolidated Statements of Operations for net income attributable to Waste Management, Inc. ​ 114 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ 16. Fair Value Measurements Assets and Liabilities Accounted for at Fair Value Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In measuring the fair value of our assets and liabilities, we use market data or assumptions that we believe market participants would use in pricing an asset or liability, including assumptions about risk when appropriate. Our assets and liabilities that are measured at fair value on a recurring basis include the following as of December 31 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Quoted prices in active markets (Level 1): ​ ​ ​ ​ ​ ​ Cash equivalents and money market funds $ 240 $ 38 Equity securities ​ ​ 37 ​ ​ 25 Significant other observable inputs (Level 2): ​ ​ ​ ​ ​ ​ Available-for-sale securities ​ 360 ​ ​ 395 Significant unobservable inputs (Level 3): ​ ​ ​ ​ ​ ​ Redeemable preferred stock ​ 56 ​ 49 Total Assets $ 693 ​ $ 507 ​ See Note 11 for information related to our nonrecurring fair value measurements and the impact of impairments. See Note 17 for information related to the nonrecurring fair value measurement of assets and liabilities acquired in connection with our acquisitions. Cash Equivalents and Money Market Funds Cash equivalents primarily include short-term interest-bearing instruments with maturities of three months or less. We invest portions of our restricted trust funds in money market funds and we measure the fair value of these investments using quoted prices in active markets for identical assets. The fair value of our cash equivalents and money market funds approximates our cost basis in these instruments. Equity Securities We invest portions of our restricted trust funds in equity securities and we measure the fair value of these securities using quoted prices in active markets for identical assets. Any changes in fair value of these securities related to unrealized gains and losses have been appropriately reflected as a component of other income (expense). 115 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Available-for-Sale Securities Our available-for-sale securities include restricted trust funds and an investment in an unconsolidated entity, as discussed in Note 18. We invest primarily in debt securities, including U.S. Treasury securities, U.S. agency securities, municipal securities and mortgage- and asset-backed securities, which generally mature over the next nine years . We measure the fair value of these securities using quoted prices for identical or similar assets in inactive markets. Any changes in fair value of these trusts related to unrealized gains and losses have been appropriately reflected as a component of accumulated other comprehensive income (loss). Redeemable Preferred Stock Redeemable preferred stock is related to a noncontrolling investment in an unconsolidated entity and is included in investments in unconsolidated entities in our Consolidated Balance Sheets. The fair value of our investment has been measured based on third-party investors’ recent or pending transactions in these securities, which are considered the best evidence of fair value. When this evidence is not available, we use other valuation techniques as appropriate and available. These valuation methodologies may include transactions in similar instruments, discounted cash flow techniques, third-party appraisals or industry multiples and public company comparable transactions. Fair Value of Debt As of December 31, 2022 and 2021, the carrying value of our debt was $ 15.0 billion and $ 13.4 billion, respectively. The estimated fair value of our debt was approximately $ 13.8 billion and $ 14.1 billion as of December 31, 2022 and 2021, respectively. The decrease in the fair value of debt is primarily related to increases in current market rates of our senior notes, the impacts of which were substantially offset by net borrowings of $ 1.4 billion during 2022. Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, our estimates are not necessarily indicative of the amounts that we, or holders of the instruments, could realize in a current market exchange. The use of different assumptions or estimation methodologies could have a material effect on the estimated fair values. The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of December 31, 2022 and 2021. These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented. ​ 17. Acquisitions and Divestitures Acquisitions 2022 Acquisitions During the year ended December 31, 2022, we acquired 13 businesses, including the acquisition of a controlling interest in a business intended to allow us to deliver new recycling capabilities for our customers and provide circular solutions for film and clear plastic wrap used commercially, such as plastic stretch wrap for pallets, furniture film, grocery bags and potentially shrink wrap around food and beverage containers. Our other acquisitions in 2022 primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $ 507 million, which included $ 372 million in net cash paid and $ 135 million in non-cash consideration, primarily related to purchase price holdbacks and the conversion of $ 67 million in secured convertible promissory notes receivable into equity of the acquired business. In addition, we paid $ 5 million of holdbacks related to prior year acquisitions. 116 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Total consideration for our 2022 acquisitions was primarily allocated to $ 138 million of property and equipment, $ 64 million of other intangible assets, $ 325 million of goodwill and $ 14 million of noncontrolling interests. Other intangible assets included $ 45 million of customer relationships and $ 19 million of covenants not-to-compete. We remain in the measurement period for most of our 2022 acquisitions, and further adjustments to our preliminary purchase price allocations may occur, specifically for the valuation of certain acquired intangibles. The goodwill related to our 2022 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations, of which less than half was tax deductible. 2021 Acquisitions During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $ 94 million, which included $ 73 million in net cash paid and $ 21 million of other consideration, primarily purchase price holdbacks and the settlement of a preexisting promissory note with one of the acquired businesses. In addition, we paid $ 3 million of holdbacks, primarily related to current year acquisitions. Our 2021 acquisitions discussed above include our acquisition of the remaining ownership interest in a waste diversion technology company. Concurrent with our acquisition, the acquired entity issued shares to an unrelated third-party, diluting our ownership interest. We determined the entity constituted a variable interest entity and concluded that we did not have the power to direct its significant activities. As a result, we subsequently deconsolidated the entity and account for our remaining ownership interest as an equity method investment. 2020 Acquisitions During the year ended December 31, 2020, we acquired four businesses related to our Solid Waste business, including the acquisition of Advanced Disposal discussed further below. Total consideration, net of cash acquired of $ 36 million, for all acquisitions was $ 4.1 billion, none of which related to other consideration such as purchase price holdbacks. In 2020, we paid $ 3 million of holdbacks, all of which related to prior year acquisitions. Contingent consideration obligations are primarily based on achievement by the acquired businesses of certain negotiated goals, which generally include targeted financial metrics. Advanced Disposal — On October 30, 2020, we completed our acquisition of all outstanding shares of Advanced Disposal for $ 30.30 per share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on June 24, 2020. Total enterprise value of the acquisition was $ 4.6 billion when including approximately $ 1.8 billion of Advanced Disposal’s net debt. This acquisition grew our footprint and allows us to provide differentiated, sustainable waste management and recycling services to approximately three million new commercial, industrial and residential customers, primarily located in the Eastern half of the U.S. The acquisition was funded using a $3.0 billion, 364-day, U.S. revolving credit facility and our commercial paper program. In November 2020, we issued $ 2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the $ 3.0 billion, 364-day, U.S. revolver and terminated the facility. For the year ended December 31, 2022 and 2021, we incurred integration related costs of $ 10 million and $ 51 million, respectively, and for the year ended December 31, 2020, we incurred acquisition and integration related costs of $ 156 million, which were primarily classified as “Selling, general and administrative expenses.” The post-closing operating results of Advanced Disposal have been included in our consolidated financial statements, within our existing reportable segments. Post-closing through December 31, 2020, Advanced Disposal recognized $ 205 million, $ 142 million and $ 60 million of revenue, operating expenses and selling, general and administrative expenses, respectively, which are included in our Consolidated Statement of Operations. 117 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Our consolidated financial statements have not been retroactively restated to include Advanced Disposal’s historical financial position or results of operations. The acquisition was accounted for as a business combination. In accordance with the purchase method of accounting, the purchase price paid has been allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. The Company valued the customer relationship asset using an income approach; specifically, the multi-period excess earnings method. The significant assumptions used to value customer relationships included, among others, attrition rates, revenue growth rate, and discount rate. The Company valued the landfill assets using an income approach; specifically, the multi-period excess earnings method. The significant assumptions used to value landfill assets included, among others, the forecasted revenue and revenue growth (including forecasted waste volumes and rate per ton), discount rate, and forecasted capital expenditures. The allocation of the purchase price was finalized in October 2021. Goodwill of $ 2.5 billion was calculated as the excess of the consideration paid over the net assets recognized and represents the future economic benefits expected to arise from other assets acquired that could not be individually identified and separately recognized. Goodwill has been assigned to our reporting units that have integrated these operations as they are benefitting from the synergies of the combination. Goodwill related to this acquisition is not deductible for income tax purposes. The following table shows the purchase price allocation as of the date acquired, and adjustments to October 30, 2021 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 30, 2020 ​ ​ Adjustments ​ ​ October 30, 2021 Accounts and other receivables ​ $ 159 ​ $ 1 ​ $ 160 Parts and supplies 8 ( 1 ) ​ 7 Other current assets ​ ​ 17 ​ ​ ( 1 ) ​ ​ 16 Assets held for sale (a) ​ ​ 1,022 ​ ​ — ​ ​ 1,022 Property and equipment ​ ​ 1,278 ​ ​ ( 12 ) ​ ​ 1,266 Goodwill ​ ​ 2,470 ​ ​ 26 ​ ​ 2,496 Other intangible assets ​ ​ 604 ​ ​ ( 3 ) ​ ​ 601 Investments in unconsolidated entities ​ ​ 9 ​ ​ — ​ ​ 9 Other assets ​ ​ 27 ​ ​ ( 2 ) ​ ​ 25 Accounts payable ​ ​ ( 107 ) ​ ​ 1 ​ ​ ( 106 ) Accrued liabilities ​ ​ ( 155 ) ​ ​ ( 3 ) ​ ​ ( 158 ) Deferred revenues ​ ​ ( 19 ) ​ ​ — ​ ​ ( 19 ) Current portion of long-term debt ​ ​ ( 12 ) ​ ​ — ​ ​ ( 12 ) Liabilities held for sale (a) ​ ​ ( 234 ) ​ ​ — ​ ​ ( 234 ) Long-term debt, less current portion (b) ​ ​ ( 441 ) ​ ​ — ​ ​ ( 441 ) Landfill and environmental remediation liabilities ​ ​ ( 242 ) ​ ​ ( 13 ) ​ ​ ( 255 ) Deferred income taxes ​ ​ ( 223 ) ​ ​ 9 ​ ​ ( 214 ) Other liabilities ​ ​ ( 79 ) ​ ​ ( 2 ) ​ ​ ( 81 ) Total purchase price ​ $ 4,082 ​ $ — ​ $ 4,082 (a) In connection with our acquisition of Advanced Disposal, we and Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal to address divestitures required by the U.S. Department of Justice. Upon acquisition these assets met the criteria for reporting discontinued operations and were classified as held for sale and included within the “Assets held for sale” and “Liabilities held for sale” line items in the above final allocation of purchase price. Immediately following the 118 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $ 856 million. ​ (b) At the time of acquisition, Advanced Disposal had outstanding $ 425 million of 5.625 % senior notes due November 2024, the fair value of which was $ 438 million. In November 2020, we redeemed the notes pursuant to an optional redemption feature. ​ The final allocation of $ 601 million for other intangibles includes $ 572 million for customer relationships with an amortization period of 15 years and $ 29 million of other intangibles with a weighted average amortization period of seven years . The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Advanced Disposal as though the companies had been combined as of January 1, 2020. Examples of adjustments made to arrive at the pro forma amounts include, but are not limited to, the following: • The effect of divestitures required by the U.S. Department of Justice; • Intercompany true-ups based on acquisition/divestiture activity; • Transaction expenses incurred by us and Advanced Disposal; • Adjustments to depreciation and amortization expense due to step-up in fair value of the acquired assets; and • Interest expense adjustments. The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2020 for the year ended December 31 (in millions, except per share amounts): ​ ​ ​ ​ ​ ​ 2020 Operating revenues ​ $ 16,192 Net income attributable to Waste Management, Inc. ​ 1,685 Basic earnings per common share ​ ​ 3.99 Diluted earnings per common share ​ ​ 3.96 ​ ​ ​ ​ Weighted average common shares outstanding: ​ ​ ​ Basic ​ 423 Diluted ​ 425 ​ Divestitures In 2022, 2021 and 2020, the aggregate sales price for divestitures of certain landfill assets, as well as collection, hauling, disposal and ancillary operations, was $ 6 million, $ 48 million and $ 856 million, and we recognized net gains of $ 5 million, $ 44 million and $ 33 million, respectively. In 2021, divestitures primarily related to the sale of certain non-strategic Canadian operations, as discussed in Note 11. In 2020, divestitures primarily consisted of assets required to be sold by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, as discussed above. The remaining amounts reported in the Consolidated Statements of Cash Flows generally relate to the sale of fixed assets. ​ 119 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ 18. Variable Interest Entities The following is a description of our financial interests in unconsolidated and consolidated variable interest entities that we consider significant: Low-Income Housing Properties We do not consolidate our investments in entities established to manage low-income housing properties because we are not the primary beneficiary of these entities as we do not have the power to individually direct the activities of these entities. Accordingly, we account for these investments under the equity method of accounting. Our aggregate investment balance in these entities was $ 321 million and $ 178 million as of December 31, 2022 and 2021, respectively. The debt balance related to our investments in low-income housing properties was $ 295 million and $ 156 million as of December 31, 2022 and 2021, respectively. Additional information related to these investments is discussed in Note 8. Trust Funds for Final Capping, Closure, Post-Closure or Environmental Remediation Obligations Unconsolidated Variable Interest Entities — Trust funds that are established for both the benefit of the Company and the host community in which we operate are not consolidated because we are not the primary beneficiary of these entities as (i) we do not have the power to direct the significant activities of the trusts or (ii) power over the trusts’ significant activities is shared. Our interests in these trusts are accounted for as investments in unconsolidated entities and receivables. These amounts are recorded in other receivables, investments in unconsolidated entities and long-term other assets in our Consolidated Balance Sheets, as appropriate. We also reflect our share of the unrealized gains and losses on available-for-sale securities held by these trusts as a component of our accumulated other comprehensive income (loss). Our investments and receivables related to these trusts had an aggregate carrying value of $ 93 million and $ 110 million as of December 31, 2022 and 2021, respectively. Consolidated Variable Interest Entities — Trust funds for which we are the sole beneficiary are consolidated because we are the primary beneficiary. These trust funds are recorded in restricted funds in our Consolidated Balance Sheets. Unrealized gains and losses on available-for-sale securities held by these trusts are recorded as a component of accumulated other comprehensive income (loss). These trusts had a fair value of $ 113 million and $ 117 million as of December 31, 2022 and 2021, respectively. ​ 19. Segment and Related Information Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. The operating segments not evaluated and overseen through our East and West Tiers are presented herein as “Other” as these operating segments do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately reported. 120 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Summarized financial information concerning our reportable segments as of December 31 and for the year then ended is shown in the following table (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Intercompany ​ Net ​ Income Depreciation, ​ Capital ​ Total ​ ​ Operating ​ Operating ​ Operating ​ from Depletion and ​ Expenditures ​ Assets ​ Revenues Revenues(d) Revenues Operations(e) Amortization (f) (g)(h) Years Ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ Solid Waste: ​ ​ ​ ​ ​ ​ ​ ​ East Tier ​ $ 10,283 ​ $ ( 1,977 ) ​ $ 8,306 ​ $ 2,249 ​ $ 998 ​ $ 1,129 ​ $ 14,741 West Tier ​ 10,190 ​ ( 2,123 ) ​ 8,067 ​ 2,346 ​ 878 ​ 1,047 ​ 11,916 Solid Waste (a) ​ 20,473 ​ ( 4,100 ) ​ 16,373 ​ 4,595 ​ 1,876 ​ 2,176 ​ 26,657 Other (b) ​ 3,545 ​ ( 220 ) ​ 3,325 ​ 26 ​ 66 ​ 328 ​ 1,972 ​ ​ ​ 24,018 ​ ​ ( 4,320 ) ​ ​ 19,698 ​ ​ 4,621 ​ ​ 1,942 ​ ​ 2,504 ​ ​ 28,629 Corporate and Other (c) ​ — ​ — ​ — ​ ( 1,256 ) ​ 96 ​ 305 ​ 3,048 Total ​ $ 24,018 ​ $ ( 4,320 ) ​ $ 19,698 ​ $ 3,365 ​ $ 2,038 ​ $ 2,809 ​ $ 31,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ ​ ​ ​ ​ ​ ​ Solid Waste: ​ ​ ​ ​ ​ ​ ​ East Tier ​ $ 9,278 ​ $ ( 1,738 ) ​ $ 7,540 ​ $ 2,037 ​ $ 970 ​ $ 708 ​ $ 14,269 West Tier ​ 9,369 ​ ( 1,908 ) ​ 7,461 ​ 2,103 ​ 883 ​ 579 ​ 11,476 Solid Waste (a) ​ 18,647 ​ ( 3,646 ) ​ 15,001 ​ 4,140 ​ 1,853 ​ 1,287 ​ 25,745 Other (b) ​ 3,046 ​ ( 116 ) ​ 2,930 ​ 34 ​ 70 ​ 181 ​ 1,275 ​ ​ ​ 21,693 ​ ​ ( 3,762 ) ​ ​ 17,931 ​ ​ 4,174 ​ ​ 1,923 ​ ​ 1,468 ​ ​ 27,020 Corporate and Other (c) ​ — ​ — ​ — ​ ( 1,209 ) ​ 76 ​ 571 ​ 2,372 Total ​ $ 21,693 ​ $ ( 3,762 ) ​ $ 17,931 ​ $ 2,965 ​ $ 1,999 ​ $ 2,039 ​ $ 29,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ ​ ​ ​ ​ ​ ​ Solid Waste: ​ ​ ​ ​ ​ ​ ​ East Tier ​ $ 7,873 ​ $ ( 1,503 ) ​ $ 6,370 ​ $ 1,672 ​ $ 801 ​ $ 537 ​ $ 14,274 West Tier ​ 8,241 ​ ( 1,657 ) ​ 6,584 ​ 1,800 ​ 738 ​ 465 ​ 11,501 Solid Waste (a) ​ 16,114 ​ ( 3,160 ) ​ 12,954 ​ 3,472 ​ 1,539 ​ 1,002 ​ 25,775 Other (b) ​ 2,364 ​ ( 100 ) ​ 2,264 ​ ( 42 ) ​ 87 ​ 75 ​ 2,064 ​ ​ ​ 18,478 ​ ​ ( 3,260 ) ​ ​ 15,218 ​ ​ 3,430 ​ ​ 1,626 ​ ​ 1,077 ​ ​ 27,839 Corporate and Other (c) ​ — ​ — ​ — ​ ( 996 ) ​ 45 ​ 508 ​ 1,810 Total ​ $ 18,478 ​ $ ( 3,260 ) ​ $ 15,218 ​ $ 2,434 ​ $ 1,671 ​ $ 1,585 ​ $ 29,649 (a) Income from operations provided by our Solid Waste business is generally indicative of the margins provided by our collection, landfill, transfer and recycling lines of business. From time to time, the operating results of our reportable segments are significantly affected by certain transactions or events that management believes are not indicative or representative of our results. Income from operations in our Solid Waste business increased in 2022, as compared with 2021, primarily due to revenue growth in our collection and disposal businesses driven by both yield and volume. This increase was partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments; (iii) divestitures, asset impairments and unusual items, discussed in Note 11 above, that impacted our East Tier results and (iv) reduced profitability in our recycling business from the decline in recycling commodity prices and lower volumes. 121 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Income from operations in our Solid Waste business increased in 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal; (ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment and (iii) changes from divestitures, asset impairments and unusual items, discussed in Note 11, that impacted both Tiers’ results. These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth; (ii) increased landfill depletion from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post-closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post-closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures. During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation, depletion and amortization of acquired assets. (b) “Other” includes (i) elements of our Strategic Business Solutions (“WMSBS”) business that are not included in the operations of our reportable segments; (ii) elements of our sustainability business that includes landfill gas-to-energy operations managed by our WM Renewable Energy business, our SES business and recycling brokerage services and not included in the operations of our reportable segments; (iii) certain other expanded service offerings and solutions and (iv) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. The decrease in income from operations in 2022, as compared with 2021, was due to the recognition of acquisition and integration-related costs, as well as, a prior year gain from divestitures of certain ancillary operations in our Other segment, discussed in Note 11, partially offset by improved profitability in our SES and WMSBS businesses. The increase in income from operations for 2021, as compared to 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business. (c) “Corporate and other” operating results reflect certain costs incurred for various support services that are not allocated to our reportable segments. These support services include, among other things, treasury, legal, digital, tax, insurance, centralized service center processes, other administrative functions and the maintenance of our closed landfills. Income from operations for “Corporate and Other” also includes costs associated with our long-term incentive program. These costs increased in 2022, as compared with 2021, primarily due to strategic investments in our digital platform and sustainability initiatives, partially offset by lower acquisition and integration related costs. These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs; (ii) increased labor, support and integration costs following our acquisition of Advanced Disposal; (iii) strategic investments in our digital platform; (iv) increased health and welfare costs attributable to medical care activity generally returning to pre-pandemic levels from the lower levels experienced during 2020 and (v) charges pertaining to reserves for certain loss contingencies during 2021. These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in the fourth quarter of 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021. (d) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service. (e) For those items included in the determination of income from operations, the accounting policies of the segments are the same as those described in Note 2. (f) Includes non-cash items. Capital expenditures are reported in our reportable segments at the time they are recorded within the segments’ property and equipment balances and, therefore, include timing differences for amounts accrued but not yet paid. 122 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ (g) The reconciliation of total assets reported above to total assets in the Consolidated Balance Sheets as of December 31 is as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Total assets, as reported above ​ $ 31,677 ​ $ 29,392 ​ $ 29,649 Elimination of intercompany investments and advances ​ ( 310 ) ​ ( 295 ) ​ ( 304 ) Total assets, per Consolidated Balance Sheet ​ $ 31,367 ​ $ 29,097 ​ $ 29,345 ​ (h) Goodwill is included within each segment’s total assets. For segment reporting purposes, our material recovery facilities are included as a component of their respective Tiers and our recycling brokerage services are included as part of our “Other” operations. The following table presents changes in goodwill during the reported periods by segment (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Solid Waste ​ ​ ​ ​ ​ ​ ​ East Tier West Tier Other Total Balance, December 31, 2020 ​ $ 5,101 ​ $ 3,823 ​ $ 70 ​ $ 8,994 Acquired goodwill (a) ​ 27 ​ 15 ​ 34 ​ 76 Divested goodwill ​ ( 11 ) ​ ( 7 ) ​ ( 29 ) ​ ( 47 ) Foreign currency translation and other ​ 3 ​ 2 ​ — ​ 5 Balance, December 31, 2021 ​ $ 5,120 ​ $ 3,833 ​ $ 75 ​ $ 9,028 Acquired goodwill ​ 92 ​ 24 ​ 209 ​ 325 Divested goodwill ​ — ​ — ​ — ​ — Foreign currency translation and other ​ ( 30 ) ​ — ​ — ​ ( 30 ) Balance, December 31, 2022 ​ $ 5,182 ​ $ 3,857 ​ $ 284 ​ $ 9,323 (a) Includes $ 26 million of post-closing acquisition adjustments related to our acquisition of Advanced Disposal. ​ The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Commercial ​ ​ $ 5,450 ​ $ 4,760 ​ $ 4,102 Industrial ​ ​ 3,681 ​ 3,210 ​ 2,770 Residential ​ ​ 3,339 ​ 3,172 ​ 2,716 Other collection ​ ​ 699 ​ 533 ​ 465 Total collection ​ ​ 13,169 ​ 11,675 ​ 10,053 Landfill ​ ​ 4,600 ​ 4,153 ​ 3,667 Transfer ​ ​ 2,143 ​ 2,072 ​ 1,855 Recycling ​ ​ 1,701 ​ 1,681 ​ 1,127 Other (a) ​ ​ 2,405 ​ 2,112 ​ 1,776 Intercompany (b) ​ ​ ( 4,320 ) ​ ( 3,762 ) ​ ( 3,260 ) Total ​ ​ $ 19,698 ​ $ 17,931 ​ $ 15,218 (a) The “Other” line of business includes (i) certain services provided by our WMSBS business; (ii) certain services within our sustainability business including our landfill gas-to-energy operations managed by our WM Renewable Energy business and (iii) certain other expanded service offerings and solutions and reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. Revenue attributable to collection, landfill, transfer and recycling services provided by our “Other” businesses has been reflected as a component of the relevant line of business for purposes of presentation in this table. (b) Intercompany revenues between lines of business are eliminated in the Consolidated Financial Statements included within this report. 123 Table of Contents WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ​ Fluctuations in our operating results may be caused by many factors, including period-to-period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions. Our revenues and income from operations typically reflect seasonal patterns. Our operating revenues tend to be somewhat higher in summer months, primarily due to the higher construction and demolition waste volumes. The volumes of industrial and residential waste in certain regions where we operate also tend to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends. Our 2020 operating results were negatively impacted by COVID-19, as volume declines began in March 2020 in our landfill, industrial and commercial collection businesses due to steps taken by national and local governments to slow the spread of the virus, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. Throughout 2021 and 2022, our volumes recovered from the sharp decline experienced in 2020, with minimal impact from the resurgence in transmission of COVID-19 associated with recent virus variants, as communities and businesses remained open. However, the potential for future resurgence in transmission of COVID-19 and related business closures, due to virus variants or other pandemic conditions, could adversely impact our volumes and costs in the future. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers’ businesses, reducing the amount of waste generated by their operations. On the other hand, certain destructive weather and climate conditions, such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern U.S. during the second half of the year, can increase our revenues in the geographic areas affected as a result of the waste volumes generated by these events. While weather-related and other event-driven special projects can boost revenues through additional work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings at comparatively lower margins. Net operating revenues relating to operations in the U.S. and Canada for the year ended December 31 are as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 U.S. ​ $ 18,860 ​ $ 17,136 ​ $ 14,505 Canada ​ 838 ​ 795 ​ 713 Total ​ $ 19,698 ​ $ 17,931 ​ $ 15,218 ​ Property and equipment, net of accumulated depreciation and depletion, relating to operations in the U.S. and Canada for the year ended December 31 are as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 U.S. ​ $ 14,725 ​ $ 13,428 ​ $ 13,168 Canada ​ 994 ​ 991 ​ 980 Total ​ $ 15,719 ​ $ 14,419 ​ $ 14,148 ​ ​ ​ ​ ​ 124 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.