Waste Management 2008 Annual Report Download - page 82
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Please find page 82 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.2007 effective tax rates is discussed in the Provision for income taxes section above. In addition, the
overpayment of income taxes in 2006 reduced our 2007 tax payments.
•Decreased interest payments — Cash paid for interest was approximately $65 million lower on a year-o-
ver-year basis. This decline is due primarily to a decline in our weighted average borrowing rate, which can
be attributed to the maturity of higher rate debt that we refinanced at lower rates and a decline in market
rates.
•Accounts payable processes — In 2008, we began various initiatives to improve our working capital
management, including reviewing our accounts payable process to ensure vendor payments are made on a
basis that results in more optimal cash management. The changes made to the timing of our vendor payments
favorably impacted our cash flow from operations on a year-over-year basis by approximately $30 million.
The most significant items affecting the comparison of our operating cash flows for 2007 and 2006 are
summarized below:
•Earnings improvements — Our income from operations, net of depreciation and amortization, increased by
$150 million, on a year-over-year basis, which positively affected our cash flows from operations in 2007.
•Decreased income tax payments and refunds — Cash paid for income taxes, net of excess tax benefits
associated with equity-based transactions, was approximately $80 million lower on a year-over-year basis,
largely due to excess tax payments in 2006, which reduced our estimated tax payment made in the third
quarter of 2007. Cash tax refunds attributable to audit settlements decreased by approximately $40 million
on a year-over-year basis.
•Risk management assets and liabilities — During 2007, we were able to reduce risk management liabilities
by approximately $80 million, primarily as a result of reduced actuarial projections of claim losses for auto
and general liability and worker’s compensation claims, which was attributed to our continued focus on
safety and reduced accident and injury rates. While this non-cash reserve reduction had a positive impact on
income from operations, it did not have a significant impact on our cash flow from operations.
•Trade receivables — The change in our receivables balances, net of effects of acquisitions and divestitures,
negatively affected the comparison of our cash flows from operations by approximately $70 million. This
decline is primarily attributable to increased trade receivables when comparing 2007 and 2006 as compared
to decreased trade receivables when comparing 2006 to 2005.
•Increased bonus payments — Our bonus payments for 2006, which were paid in the first quarter of 2007,
were higher than bonus payments for 2005 paid in 2006 due to the relative strength of our financial
performance against incentive plan measures in 2006 as compared with 2005. The comparative changes in
our liabilities for bonuses negatively affected the comparison of our cash flow from operations by
approximately $60 million.
•Liabilities for unclaimed property — In 2007, we made significant cash payments for our obligations
associated with unclaimed property, reducing our liabilities. In 2006, our liabilities for unclaimed property
increased, primarily due to the charge to earnings required to fully record our obligations. The changes in our
recorded obligations for unclaimed property negatively affected the comparison of our cash flow from
operations by approximately $30 million.
Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing
cash flows for the periods presented are summarized below:
•Cash paid for acquisitions — Our spending on acquisitions increased from $32 million during 2006 to
$90 million during 2007 and $280 million in 2008 due to an increased 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 — Proceeds from divestitures (net of cash divested) and other sales of assets were
$112 million in 2008, $278 million in 2007 and $240 million in 2006. Our proceeds from divestitures for all
three years have been driven by the divestiture of under-performing and non-strategic operations. The
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