Waste Management 2008 Annual Report Download - page 65
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Please find page 65 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.In 2007, declines in revenue due to lower third-party volumes in our transfer station operations were the
most notable in our Eastern Group and were generally due to the effects of pricing. We also experienced
declines in third-party revenue at our landfills due to reduced disposal volumes. The most significant declines
were in our construction and demolition waste, particularly in our Southern Group. The reduction in
construction and demolition volumes was largely due to the significant slowdown in residential construction
across the United States. The volume declines for our municipal solid waste disposal operations were the most
significant in our Midwest Group due primarily to our focus on pricing increases.
Waste-to-energy and recycling revenues also declined in 2007 due to volume decreases. In our
waste-to-energy business, the decrease was largely due to the termination of an operating and maintenance
agreement in May 2007. The revenue decline due to lower third-party volumes in our recycling business was
primarily attributable to the decreases in certain brokerage activities and the closure of a plastics processing
facility.
Acquisitions and Divestitures — Revenues increased $117 million in 2008 and $37 million in 2007 due to
acquisitions, principally in the collection, transfer and recycling businesses, although we also made acquisitions in
2008 in our “Other” business as we focus on entering new lines of business. Divestitures accounted for decreased
revenues of $130 million in 2008 and $320 million in 2007. These divestitures were primarily comprised of
collection operations and, to a lesser extent, transfer station and recycling operations. In the second, third and fourth
quarters of 2008, revenue growth from acquisitions exceeded revenue declines from divestitures, a trend we had not
seen in over two years. This change reflects (i) that there are less under-performing operations that are being
considered for divestiture and (ii) the resulting shift of focus to accretive acquisitions.
Operating Expenses
Our operating expenses include (i) labor and related benefits (excluding labor costs associated with main-
tenance and repairs included below), which include salaries and wages, bonuses, related payroll taxes, insurance
and benefits costs and the costs associated with contract labor; (ii) transfer and disposal costs, which include tipping
fees paid to third-party disposal facilities and transfer stations; (iii) maintenance and repairs relating to equipment,
vehicles and facilities and related labor costs; (iv) subcontractor costs, which include the costs of independent
haulers who transport waste collected by us to disposal facilities and are driven by variables such as volumes,
distance and fuel prices; (v) costs of goods sold, which are primarily the rebates paid to suppliers associated with
recycling commodities; (vi) fuel costs, which represent the costs of fuel and oil to operate our truck fleet and landfill
operating equipment; (vii) disposal and franchise fees and taxes, which include landfill taxes, municipal franchise
fees, host community fees and royalties; (viii) landfill operating costs, which include interest accretion on asset
retirement and environmental remediation obligations, leachate and methane collection and treatment, landfill
remediation costs and other landfill site costs; (ix) risk management costs, which include workers’ compensation
and insurance and claim costs and (x) other operating costs, which include, among other costs, equipment and
facility rent and property taxes.
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