Waste Management 2013 Annual Report Download - page 156

Summary of Cash Flow Activity
The following is a summary of our cash flows for the years ended December 31 (in millions):
2013 2012 2011
Net cash provided by operating activities ...................... $2,455 $ 2,295 $ 2,469
Net cash used in investing activities .......................... $(1,900) $(1,830) $(2,185)
Net cash used in financing activities .......................... $ (687) $ (530) $ (566)
Net Cash Provided by Operating Activities — The most significant items affecting the comparison of our
operating cash flows in 2013 as compared with 2012 are summarized below:
‰Earnings change — Our 2013 earnings drove our improved net cash provided by operating activities in
spite of a year-over-year decrease in income from operations, of $772 million. Our income from
operations decline resulted from higher non-cash charges during 2013 of $949 million, associated
principally with higher impairment charges. Absent these non-cash charges, we experienced higher
earnings, which resulted in cash flow expansion.
‰Increased income tax payments — Cash paid for income taxes, net of excess tax benefits associated with
equity-based transactions, was approximately $144 million higher on a year-over-year basis. Note that,
while pre-tax income on a year-over-year basis has declined $809 million, a significant portion of the
2013 impairments discussed above do not qualify for a tax benefit.
‰Forward starting swaps — During the third quarter of 2012, the forward-starting interest rate swaps
associated with anticipated fixed-rate debt issuances were terminated contemporaneously with the actual
issuance of senior notes in September 2012, and we paid cash of $59 million to settle the liabilities related
to the swap agreements. This cash payment has been classified as a change in “Other liabilities” within
“Net cash provided by operating activities” in the Consolidated Statement of Cash Flows.
‰Termination of interest rate swaps — In April 2012, we elected to terminate our $1 billion interest rate
swap portfolio associated with senior notes that were scheduled to mature from November 2012 through
March 2018. Upon termination of the swaps, we received $72 million in cash for their fair value. The
cash proceeds received from the termination of interest rate swap agreements have been classified as a
change in “Other assets” within “Net cash provided by operating activities” in the Consolidated Statement
of Cash Flows.
‰Changes in assets and liabilities, net of effects from business acquisitions and divestitures — Our cash
flow from operations was favorably impacted in 2013 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, which are affected by both cost changes and timing of payments. Additionally, accruals
for our annual incentive plan favorably affected our working capital comparison, driven by both higher
incentive plan expense accruals in 2013 compared to 2012 and lower incentive plan payments in 2013 as
compared to 2012.
The most significant items affecting the comparison of our operating cash flows in 2012 as compared with
2011 are summarized below:
‰Decrease in earnings — Our income from operations, excluding depreciation and amortization, decreased
by $109 million, on a year-over-year basis. Included in the $109 million decrease are the following items:
‰higher charges in 2012 related to impairments and restructuring costs of $89 million and $48 million,
respectively;
‰lower non-cash charges attributable to equity-based compensation expense and interest accretion and
discount rate adjustments on environmental remediation liabilities and recovery assets of $16 million
and $17 million, respectively; and
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