Waste Management 2006 Annual Report Download - page 83

activities, which are discussed below. Prior to adopting SFAS No. 123(R), our excess tax benefits associated with
equity-based compensation were included within cash flows from operating activities as a change in “Accounts
payable and accrued liabilities.” During 2005 and 2004, these excess tax benefits improved our operating cash flows
by approximately $17 million and $37 million, respectively.
Net Cash Used in Investing Activities — We used $788 million of our cash resources for investing activities
during 2006, a decrease of $274 million compared with 2005. This decrease is primarily due to (i) a $417 million
increase in net cash flows provided by purchases and sales of short-term investments; (ii) a $110 million decline in
spending for acquisitions of businesses; and (iii) a $46 million increase in proceeds from divestitures of businesses
(net of cash divested) and other sales of assets. The effect of these items on our cash used in investing activities was
partially offset by a $149 million increase in capital spending and a $142 million decline in net receipts from
restricted trust and escrow accounts.
Net sales of short-term investments provided $122 million of cash in 2006, compared with net purchases of
short-term investments of $295 million during 2005. In 2006, we experienced net sales of short-term investments as
we utilized our short-term investments and available cash to fund our common stock repurchases, dividend
payments and debt repayments, which are discussed below.
Our spending on acquisitions decreased from $142 million during 2005 to $32 million in 2006. As we make
progress on our divestiture program, we plan to increase our focus on accretive acquisitions and other investments
that will contribute to improved future results of operations and enhance and expand our existing service offerings.
Proceeds from divestitures (net of cash divested) and other sales of assets were $240 million in 2006 compared
with $194 million in 2005, an increase of $46 million. Approximately $89 million of our 2005 proceeds were related
to the sale of one of our landfills in Ontario, Canada as required by a Divestiture Order from the Canadian
Competition Tribunal. When excluding the cash proceeds generated by this transaction, proceeds from divestitures
have increased by $135 million during 2006 when compared with 2005. This increase is primarily a result of the
execution of our plan to divest of certain under-performing and non-strategic operations.
Net funds received from our restricted trust and escrow accounts, which are largely generated from the
issuance of tax-exempt bonds for our capital needs, contributed $253 million to our investing activities in 2006
compared with $395 million in 2005. The decrease is due to a decline in new tax-exempt borrowings.
We used $1,329 million during 2006 for capital expenditures, compared with $1,180 million in 2005. The
increase occurred across all asset categories. However, our landfill and vehicles asset categories were the most
significantly affected.
We used $1,062 million of our cash resources for investing activities during 2005, an increase of $180 million
compared with 2004. This increase is primarily due to a $266 million change in net cash flows associated with
purchases and sales of short-term investments. Net purchases of short-term investments during 2005 were
$295 million compared with net purchases of $29 million during 2004. The increase in our short-term investments
available for use as of December 31, 2005 can generally be attributed to an increase in our available cash, which we
used to fund, among other things, a $275 million accelerated share repurchase agreement that became effective in
January 2006 and our first quarter 2006 dividend that was paid in March 2006. Our share repurchases and dividends
are discussed in our Net Cash Used in Financing Activities section below.
The increase in net cash outflows from investing activities as a result of our short-term investments was
partially offset by (i) an increase in proceeds from divestitures of businesses (net of cash divested) and other sales of
assets and (ii) a decrease in capital expenditures. Proceeds from divestitures of businesses (net of cash divested) and
other sales of assets were $194 million in 2005 and $96 million in 2004. The $98 million increase from 2004 to 2005
is largely attributable to the sale of one of our landfills in Ontario, Canada. Capital expenditures were $1,180 million
in 2005, which is $78 million less than we invested in capital in 2004.
Net Cash Used in Financing Activities — The most significant changes in our financing cash flows during the
three years ended December 31, 2006 are related to (i) increases in cash paid for our repurchases of common stock
and cash dividends; (ii) variances in our net debt repayments, which can generally be attributed to scheduled
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