Waste Management 2013 Annual Report Download - page 143

Labor and related benefits — Factors affecting the year-over-year changes in our labor and related benefits
costs include:
‰Higher incentive compensation costs of $94 million in 2013 and $73 million in 2011, as compared with
2012, as a result of higher anticipated payouts.
‰Higher non-cash compensation expense recognized in 2013 as compared to 2012, in part due to the payout of
performance share units granted in 2010, which was approved in 2013. Expense associated with these awards
had been reversed in 2012 when it no longer appeared probable that threshold performance would be achieved.
‰Cost savings of $45 million in 2013 driven primarily from our July 2012 restructuring.
Professional fees — Consulting fees declined year over year as company-wide initiatives, which began in
2011, were implemented; partially offset by higher legal fees in 2012 as compared with 2013 and 2011.
Provision for bad debts — Our provision for bad debts decreased in 2013 as a result of the collection of
certain fully reserved receivables related to our Puerto Rico operations. Additionally, many of the billing delay
issues we experienced throughout fiscal year 2012 with certain of our strategic account customers have been
resolved, favorably affecting our year-over-year bad debt comparisons.
Other — In 2013, controllable costs associated with (i) building and equipment; (ii) advertising;
(iii) computer and telecommunication; (iv) travel and entertainment and (v) seminars and education have
declined primarily as a result of our July 2012 restructuring and continued focus on cost-control initiatives. In
2012, we experienced decreases in (i) litigation settlement costs and (ii) insurance and claims. These decreases
were partially offset by increases in (i) computer and telecommunications costs, due in part to improvements we
are making to our information technology systems and (ii) building and equipment costs, which include rental
and utilities.
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, using either a 150% declining balance approach or a straight-line basis over
the definitive terms of the related agreements, which are generally from two to 15 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):
2013
Period-to-
Period
Change 2012
Period-to-
Period
Change 2011
Depreciation of tangible property and equipment .... $ 853 $20 2.4% $ 833 $33 4.1% $ 800
Amortization of landfill airspace ................. 400 5 1.3 395 17 4.5 378
Amortization of intangible assets ................. 80 11 15.9 69 18 35.3 51
$1,333 $36 2.8% $1,297 $68 5.5% $1,229
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