Waste Management 2011 Annual Report Download - page 126

Other — During 2011 and 2010, we experienced increases in our computer costs, due in part to
improvements we are making to our information technology systems, and litigation loss and settlement costs.
Also driving the increase during 2010 was increased marketing and advertising costs, driven in part by our
strategic growth plans.
Depreciation and Amortization
Depreciation and amortization includes (i) depreciation of property and equipment, including assets recorded
for capital leases, on a straight-line basis from three to 50 years; (ii) amortization of landfill costs, including those
incurred and all estimated future costs for landfill development, construction and asset retirement costs arising from
closure and post-closure, on a units-of-consumption method as landfill airspace is consumed over the total estimated
remaining capacity of a site, which includes both permitted capacity and expansion capacity that meets our
Company-specific criteria for amortization purposes; (iii) amortization of landfill asset retirement costs arising from
final capping obligations on a units-of-consumption method as airspace is consumed over the estimated capacity
associated with each final capping event; and (iv) amortization of intangible assets with a definite life, either using a
150% declining balance approach or a straight-line basis over the definitive terms of the related agreements, which
are generally from two to ten years depending on the type of asset.
The following table summarizes the components of our depreciation and amortization costs for the years
ended December 31 (dollars in millions):
2011
Period-to-
Period
Change 2010
Period-to-
Period
Change 2009
Depreciation of tangible property and
equipment ........................ $ 800 $19 2.4% $ 781 $ 2 0.3% $ 779
Amortization of landfill airspace ........ 378 6 1.6 372 14 3.9 358
Amortization of intangible assets ........ 51 10 24.4 41 12 41.4 29
$1,229 $35 2.9% $1,194 $28 2.4% $1,166
The increases in amortization expense of intangible assets in 2011 and 2010 are due to our focus on the growth
and development of our business through acquisitions and other investments. The increase in amortization of
intangible assets in 2011 is primarily related to the amortization of customer lists, which were acquired (i) through
our acquisition of Oakleaf, (ii) by our Southern Group and (iii) by our recycling and electronic brokerage services
business. The increase in amortization of intangible assets in 2010 is primarily related to the amortization of
definite-lived operating permits acquired by our healthcare solutions operations, customer lists acquired by our
Southern and Midwest Groups and gas rights acquired by our renewable energy operations.
Restructuring
Beginning in July 2011, we took steps to streamline our organization as part of our cost savings programs.
This reorganization eliminated over 700 employee positions throughout the Company, including approximately
300 open positions. Additionally, subsequent to our acquisition of Oakleaf, we incurred charges in connection
with restructuring that organization. During the year ended December 31, 2011, we recognized a total of
$19 million of pre-tax restructuring charges, of which $18 million were related to employee severance and
benefit costs associated with this reorganization.
In January 2009, we streamlined our organization by (i) consolidating our Market Areas from 45 Market
Areas to 25 Market Areas; (ii) integrating the management of our recycling operations with our solid waste
businesses in our four geographic Groups; and (iii) realigning our Corporate organization with this new structure
in order to provide support functions more efficiently. This restructuring eliminated over 1,500 employee
positions throughout the Company. During 2009, we recognized $50 million of pre-tax charges associated with
this restructuring, of which $41 million were related to employee severance and benefit costs. The remaining
charges were primarily related to lease obligations for property that will no longer be utilized. In 2010, we
recognized $2 million of income related to the reversal of pre-tax restructuring charges recorded in 2009.
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