Waste Management 2008 Annual Report Download - page 68
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Please find page 68 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.• During 2007, we recognized an $8 million charge for a revision in our estimate of remediation costs
associated with one of our prior operations.
Risk management
• Over the last three years, we have been successful in reducing these costs, which can be primarily attributed
to our continued focus on safety and reduced accident and injury rates.
• For 2008, the decrease in expense was largely associated with reduced actuarial projections of workers’
compensation costs and reduced auto and general liability claims for current claim periods.
• For 2007, the decrease in expense was largely associated with reduced actuarial projections of auto and
general liability claims and, to a lesser extent, reduced workers’ compensation costs, all primarily related to
prior claim periods.
Other
• In 2007, we incurred $21 million of lease termination costs associated with the purchase of one of our
independent power production plants that had previously been operated through a lease agreement.
• In 2008 and 2007, we had an increase in gains recognized on the sales of assets due to our focus on
identifying under-utilized assets in order to increase our efficiency.
Selling, General and Administrative
Our selling, general and administrative expenses consist of (i) labor costs, which include salaries, bonuses,
related insurance and benefits, contract labor, payroll taxes and equity-based compensation; (ii) professional fees,
which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts, which includes
allowances for uncollectible customer accounts and collection fees; and (iv) other general and administrative
expenses, which include, among other costs, facility-related expenses, voice and data telecommunication, adver-
tising, travel and entertainment, rentals, postage and printing. In addition, the financial impacts of litigation
settlements generally are included in our “other” selling, general and administrative expenses.
The following table summarizes the major components of our selling, general and administrative expenses for
the years ended December 31 (dollars in millions):
2008
Period-to-
Period Change 2007
Period-to-
Period Change 2006
Labor and related benefits ............... $ 853 $18 2.2% $ 835 $41 5.2% $ 794
Professional fees ...................... 168 8 5.0 160 (1) (0.6) 161
Provision for bad debts ................. 57 8 16.3 49 — — 49
Other .............................. 399 11 2.8 388 4 1.0 384
$1,477 $45 3.1% $1,432 $44 3.2% $1,388
A significant portion of the $45 million increase in our “Selling, general and administrative” expenses in 2008
was as a result of our focus on business development initiatives, including gaining new customers and entering new
lines of business. We estimate that these initiatives increased our expenses by nearly $19 million when comparing
2008 with 2007. Approximately $8 million of the $19 million increase is associated with increased consulting costs
and has been included in “Professional fees.” The remaining cost increases can generally be attributed to increased
headcount, advertising and travel and entertainment costs.
Other significant changes in our selling, general and administrative expenses during the reported periods are
summarized below:
Labor and related benefits — The increases in 2008 and 2007 are primarily attributable to (i) higher salaries
and hourly wages due to merit raises; (ii) higher compensation costs due to an increase in headcount driven by an
increase in the size of our sales force and our focus on our people and business development initiatives; and
(iii) higher non-cash compensation costs associated with the equity-based compensation provided for by our long-
term incentive plans. In 2008, we also experienced higher insurance and benefit costs. These increases were
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