SEC Comment Letter for WASTE MANAGEMENT INC (WM) (CIK 0000823768) (WM) — Jun 16, 2006
WASTE MANAGEMENT INC (WM) (CIK 0000823768)
Date: June 16, 2006 · CIK: 0000823768 · Accession: 0000000000-06-028380
AI Filing Summary & Sentiment
File numbers found in text: 001-12154
Referenced dates: June 6, 2006, May 16, 2006
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-7010 DIVISION OF CORPORATION FINANCE Mail Stop 7010 June 16, 2006 Mr. David P. Steiner Chief Executive Officer Waste Management, Inc. 1001 Fannin Street, Suite 4000 Houston, TX 77002
RE: Waste Management, Inc. Form 10-K for Fiscal Year Ended December 31, 2005 Filed February 21, 2006 File No. 001-12154
Dear Mr. Steiner:
We have reviewed your response letter dated June 6, 2006 to our letter dated May 16, 2006 and have the following comment. If you disagree with a comment, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as deta iled as necessary in your expl anation. In some of our comments, we may ask you to provide us w ith supplemental information so we may better understand your disclosure. After review ing this information, we may or may not raise additional comments.
Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Tax Matters
1. In future filings, you should explain how you differentiate betw een your valuation account recorded pursuant to SFAS 109 a nd your tax reserve account recorded pursuant to SFAS 5. As you know the criteria for recording a va luation against a deferred tax asset is a more likely than not standard and the criteria for recording a contingency under SFAS 5 is probable a nd estimable, a higher hurdle on the probability scale. We assume that the j udgments related to the valuation account are based upon the assumption that all tax positions are reasonable and the
Mr. David P. Steiner Waste Management, Inc. June 16, 2006 Page 2 valuation relates only to those uncertain ties that are unrelated to a potential disallowance, such as the availability of appropriate taxable income and so on.
Further, we note the following:
- All but one of the tax positions included in the reserves as of January 1, 2005 represented tax uncertainties entered into in the ordinary course of business; - You have had only one material tax pos ition for which a deduction has been disallowed in the past three fiscal years; - The IRS audits for the 2002-2003 tax year s will not result in a disallowance; - In general the overwhelming majority of your reserves for uncertain tax positions are ultimately reversed.
It would appear that your threshold for r ecognition of the rela ted tax assets may have been too conservative. However you are in the best pos ition to judge the realizability of a financia l-statement benefit for a position taken for tax-return purposes.
As you know the FASB is due to issue a fi nal interpretation con cerning this issue, which will define the recognition criteri a and provide for more transparent disclosures regarding uncertain tax positions. We encourage you to consider the issues raised in the Exposure Draft and the related deliberations, and to vigorously apply the appropriate accounting and disc losures when the final interpretation becomes effective, beginning in 2007.
* * * *
Please respond to this comment within 10 business days, or tell us when you will provide us with a response. Please provide us with a supplementa l response letter that keys your response to our comment and provide any requested supplemental information. Detailed letters greatly facil itate our review. Please file your supplemental response on EDGAR as a correspondence file. Please understand that we may have additional comments after reviewing your response to our comment.
If you have any questions regarding these comments, please direct them to Ryan Rohn, Staff Accountant, at (202) 551-3739 or, in his absence, to the undersigned at (202) 551-3689.
S i n c e r e l y ,
John Hartz Senior Assistant Chief Accountant
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
Mail Stop 7010
June 16, 2006
Mr. David P. Steiner
Chief Executive Officer
Waste Management, Inc.
1001 Fannin Street, Suite 4000
Houston, TX 77002
RE: Waste Management, Inc.
Form 10-K for Fiscal Year Ended December 31, 2005
Filed February 21, 2006
File No. 001-12154
Dear Mr. Steiner:
We have reviewed your response letter dated June 6, 2006 to our letter dated May
16, 2006 and have the following comment. If you disagree with a comment, we will
consider your explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as deta iled as necessary in your expl anation. In some of our
comments, we may ask you to provide us w ith supplemental information so we may
better understand your disclosure. After review ing this information, we may or may not
raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Tax Matters
1. In future filings, you should explain how you differentiate betw een your valuation
account recorded pursuant to SFAS 109 a nd your tax reserve account recorded
pursuant to SFAS 5. As you know the criteria for recording a va luation against a
deferred tax asset is a more likely than not standard and the criteria for recording
a contingency under SFAS 5 is probable a nd estimable, a higher hurdle on the
probability scale. We assume that the j udgments related to the valuation account
are based upon the assumption that all tax positions are reasonable and the
Mr. David P. Steiner
Waste Management, Inc.
June 16, 2006 Page 2
valuation relates only to those uncertain ties that are unrelated to a potential
disallowance, such as the availability of appropriate taxable income and so on.
Further, we note the following:
- All but one of the tax positions included in the reserves as of January 1, 2005
represented tax uncertainties entered into in the ordinary course of business;
- You have had only one material tax pos ition for which a deduction has been
disallowed in the past three fiscal years;
- The IRS audits for the 2002-2003 tax year s will not result in a disallowance;
- In general the overwhelming majority of your reserves for uncertain tax
positions are ultimately reversed.
It would appear that your threshold for r ecognition of the rela ted tax assets may
have been too conservative. However you are in the best pos ition to judge the
realizability of a financia l-statement benefit for a position taken for tax-return
purposes.
As you know the FASB is due to issue a fi nal interpretation con cerning this issue,
which will define the recognition criteri a and provide for more transparent
disclosures regarding uncertain tax positions. We encourage you to consider the
issues raised in the Exposure Draft and the related deliberations, and to vigorously
apply the appropriate accounting and disc losures when the final interpretation
becomes effective, beginning in 2007.
* * * *
Please respond to this comment within 10 business days, or tell us when you will
provide us with a response. Please provide us with a supplementa l response letter that
keys your response to our comment and provide any requested supplemental information. Detailed letters greatly facil itate our review. Please file your supplemental response on
EDGAR as a correspondence file. Please understand that we may have additional
comments after reviewing your response to our comment.
If you have any questions regarding these comments, please direct them to Ryan
Rohn, Staff Accountant, at (202) 551-3739 or, in his absence, to the undersigned at (202)
551-3689.
S i n c e r e l y ,
John Hartz
Senior Assistant Chief Accountant