Waste Management 2011 Annual Report Download - page 136

Amortization of landfill airspace, which is included as a component of “Depreciation and amortization”
expense, includes the following:
‰the amortization of landfill capital costs, including (i) costs that have been incurred and capitalized and
(ii) estimated future costs for landfill development and construction required to develop our landfills to
their remaining permitted and expansion airspace; and
‰the amortization of asset retirement costs arising from final landfill capping, closure and post-closure
obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement
costs.
Amortization expense is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate
per ton is calculated by dividing each component of the amortizable basis of a landfill by the number of tons
needed to fill the corresponding asset’s airspace. Landfill capital costs and closure and post-closure asset
retirement costs are generally incurred to support the operation of the landfill over its entire operating life, and
are, therefore, amortized on a per-ton basis using a landfill’s total airspace capacity. Final capping asset
retirement costs are related to a specific final capping event and are, therefore, amortized on a per-ton basis using
each discrete final capping event’s estimated airspace capacity. Accordingly, each landfill has multiple per-ton
amortization rates.
The following table presents our landfill airspace amortization expense on a per-ton basis:
Years Ended December 31,
2011 2010 2009
Amortization of landfill airspace (in millions) ....................... $378 $372 $358
Tons received, net of redirected waste (in millions) ................... 90 91 92
Average landfill airspace amortization expense per ton ................ $4.19 $4.08 $3.90
Different per-ton amortization rates are applied at each of our 271 landfills, and per-ton amortization rates
vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and
provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and
post-closure activities; and (ii) differences in the cost basis of landfills that we develop versus those that we
acquire. Accordingly, our landfill airspace amortization expense measured on a per-ton basis can fluctuate due to
changes in the mix of volumes we receive across the Company year-over-year. The comparability of our total
Company average landfill airspace amortization expense per ton for the years ended December 31, 2011, 2010
and 2009 has also been affected by the recognition of reductions to amortization expense for changes in our
estimates related to our final capping, closure and post-closure obligations. Landfill amortization expense was
reduced by $11 million in 2011, $13 million in 2010 and $14 million in 2009, for the effects of these changes in
estimates. In each year, the majority of the reduced expense resulted from revisions in the estimated timing or
cost of final capping events that were generally the result of (i) concerted efforts to improve the operating
efficiencies of our landfills and volume declines, both of which have allowed us to delay spending for final
capping activities; (ii) effectively managing the cost of final capping material and construction; or (iii) landfill
expansions that resulted in reduced or deferred final capping costs.
Liquidity and Capital Resources
We continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us
to plan for our present needs and fund unbudgeted business activities that may arise during the year as a result of
changing business conditions or new opportunities. In addition to our working capital needs for the general and
administrative costs of our ongoing operations, we have cash requirements for: (i) the construction and expansion of
our landfills; (ii) additions to and maintenance of our trucking fleet and landfill equipment; (iii) construction,
refurbishments and improvements at waste-to-energy and materials recovery facilities; (iv) the container and
equipment needs of our operations; (v) final capping, closure and post-closure activities at our landfills; (vi) the
repayment of debt and discharging of other obligations; and (vii) capital expenditures, acquisitions and investments in
support of our strategic growth plans. We also are committed to providing our shareholders with a return on their
investment through our capital allocation program that provides for dividend payments and share repurchases.
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