Waste Management 2011 Annual Report Download - page 139

accounts receivable, which are affected by both revenue changes and timing of payments received, and
accounts payable changes, which are affected by both cost changes and timing of payments.
The most significant items affecting the comparison of our operating cash flows for 2010 and 2009 are
summarized below:
‰Increase in earnings — Our income from operations increased by $229 million on a year-over-year basis,
driven, in part, by a favorable cash benefit of $77 million resulting from a litigation settlement in April
2010. This earnings increase was also impacted by (i) the recognition of a $51 million non-cash charge
associated with the abandonment of licensed revenue management software and (ii) the recognition of a
$27 million non-cash charge in 2009 as a result of a change in expectations for the future operations of an
inactive landfill in California.
The comparison of our 2010 and 2009 income from operations was also affected by a $91 million
increase in non-cash charges attributable to (i) equity-based compensation expense; (ii) interest accretion
on landfill liabilities; (iii) interest accretion and discount rate adjustments on environmental remediation
liabilities and recovery assets; (iv) depreciation and amortization; and (v) the impact of the withdrawal of
certain bargaining units from multiemployer pension plans. While these increases in non-cash charges
unfavorably affected our earnings comparison, there was no impact on net cash provided by operating
activities.
‰Changes in assets and liabilities, net of effects from business acquisitions and divestitures — Our cash
flow from operations was negatively impacted in 2010 and favorably impacted in 2009, by changes in our
working capital accounts. Although our working capital changes may vary from year to year, they are
typically driven by changes in accounts receivable, which are affected by both revenue changes and
timing of payments received, and accounts payable changes, which are affected by both cost changes and
timing of payments. Additionally, the following are other significant items that affected our cash flow
from operations:
‰Increased income tax payments — Cash paid for income taxes, net of excess tax benefits associated
with equity-based transactions, was approximately $86 million higher on a year-over-year basis. The
comparability of our effective tax rates is discussed in the Provision for income taxes section above.
‰Increased interest payments — Cash paid for interest was approximately $61 million higher on a year-
over-year basis. This increase was primarily due to (i) the issuance of an additional $600 million of
senior notes in November 2009 to support acquisitions and investments made throughout 2010;
(ii) significantly higher costs related to the execution and maintenance of our revolving credit facility,
which was refinanced in June 2010; and (iii) a decrease in benefits to interest expense provided by
active interest rate swaps as a result of decreases in the notional amount of swaps outstanding.
‰Settlement of Canadian hedge — In December 2010, our previously existing foreign currency hedges
matured and we paid cash of $37 million upon settlement. The cash payment from the settlement was
classified as a change in accrued liabilities within “Net cash provided by operating activities” in the
Consolidated Statement of Cash Flows.
‰Liquidation of a foreign subsidiary — We received a $65 million federal tax refund in the third quarter
of 2010 related to the liquidation of a foreign subsidiary in 2009. The cash proceeds were classified as
a change in other current assets within “Net cash provided byoperating activities” in the Consolidated
Statement of Cash Flows.
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:
‰Capital expenditures — We used $1,324 million during 2011 for capital expenditures, compared with
$1,104 million in 2010 and $1,179 million in 2009. The increase in capital expenditures in 2011 is a result
of our increased spending on natural gas vehicles and fueling infrastructure, information technology
infrastructure and growth initiatives, as well as our taking advantage of the bonus depreciation legislation.
The year-over-year comparison of 2011 with 2010 was also affected by timing differences associated
60