Waste Management 2013 Annual Report Download - page 141

The following table summarizes the major components of our operating expenses, including the impact of
foreign currency translation, for the years ended December 31 (dollars in millions):
2013
Period-to-Period
Change 2012
Period-to-Period
Change 2011
Labor and related benefits .................... $2,506 $ 99 4.1% $2,407 $ 71 3.0% $2,336
Transfer and disposal costs .................... 973 9 0.9 964 27 2.9 937
Maintenance and repairs ...................... 1,181 24 2.1 1,157 67 6.1 1,090
Subcontractor costs .......................... 1,182 (8) (0.7) 1,190 242 25.5 948
Cost of goods sold .......................... 1,000 81 8.8 919 (152) (14.2) 1,071
Fuel ...................................... 603 (46) (7.1) 649 21 3.3 628
Disposal and franchise fees and taxes ........... 653 23 3.7 630 28 4.7 602
Landfill operating costs ...................... 232 8 3.6 224 (31) (12.2) 255
Risk management ........................... 244 14 6.1 230 8 3.6 222
Other ..................................... 538 29 5.7 509 57 12.6 452
$9,112 $233 2.6% $8,879 $ 338 4.0% $8,541
Significant changes in our operating expenses are discussed below.
‰Labor and related benefits — Significant items affecting the comparability of expenses for the periods
presented include:
‰Higher wages due to merit increases effective in the second quarter of 2013 and the effect of
acquisitions, particularly the Greenstar acquisition in 2013;
‰Incentive compensation expense fluctuations due to higher anticipated payouts for 2013 as compared to
the prior year period and lower payouts for 2012 as compared to 2011;
‰Increased contract labor in both 2013 and 2012 principally attributed to the recycling line of business;
‰Headcount, exclusive of acquisitions, decreased in 2013 compared to the prior year period; conversely,
headcount increased in 2012 when compared to 2011; and
‰Non-cash charges incurred during the third quarter of 2013 and the second quarter of 2012 as a result
of our partial withdrawals from underfunded multiemployer pension plans.
‰Maintenance and repairs — The increase in 2013 compared to 2012 was driven by (i) the Greenstar
acquisition and (ii) higher internal shop labor costs due in part to higher incentive compensation and merit
increases. The increase in 2012 as compared to 2011 is primarily due to (i) increased fleet maintenance
costs, which include services provided by third-parties, tires, parts and internal shop labor costs and
(ii) differences in the timing and scope of planned maintenance projects at our waste-to-energy facilities.
‰Subcontractor costs — The decrease in 2013 was driven primarily by the volume decline associated with
the loss of certain strategic accounts. These decreases were offset, in part, by higher costs associated with
the acquired RCI operations. The increase in 2012 was driven in part by (i) the acquisition of Oakleaf in
July 2011 and (ii) increased volumes related to Hurricane Sandy.
‰Cost of goods sold — The increase in cost of goods sold in 2013 is due in large part to higher customer
rebates resulting from higher volumes in our recycling commodity business driven primarily by the
acquired Greenstar operations. The significantly reduced market prices for recyclable commodities in
2012 drove the majority of the cost decrease when compared to the prior period.
‰Fuel — The decrease in fuel expense in 2013 compared to 2012 was due to (i) a retroactive CNG fuel excise
tax credit recognized in the first quarter of 2013; (ii) reduced fuel purchases due to reduced collection volumes;
(iii) lower costs as we convert our fleet to CNG vehicles and (iv) lower diesel fuel prices. The increase in fuel
expense in 2012 compared to 2011 was mainly driven by higher diesel fuel prices.
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