Waste Management 2014 Annual Report Download - page 110

yield on our collection and disposal operations of $262 million, or 2.3%, and (ii) revenue from acquired
operations, particularly the RCI operations acquired in July 2013, which increased revenues by
$77 million. Substantially offsetting these increases were (i) lower volumes which decreased our
revenues by $188 million; (ii) divestitures of our Puerto Rico operations and certain other collection
and landfill assets as well as the December 2014 sale of our Wheelabrator business, which decreased
our revenues by $90 million and (iii) foreign currency translation of $61 million related to our
Canadian operations;
• Operating expenses of $9,002 million in 2014, or 64.3% of revenues, compared with $9,112 million, or
65.2% of revenues, in 2013. This decrease of $110 million is largely driven by our decline in collection
volumes and divestitures, both of which affect several of our operating expense categories, particularly
labor costs, transfer and disposal costs, and fuel costs;
• Selling, general and administrative expenses of $1,481 million in 2014, or 10.6% of revenues,
compared with $1,468 million, or 10.5% of revenues, in 2013. This increase of $13 million is driven
mainly by higher litigation settlements;
• Restructuring costs of $82 million in 2014 compared to $18 million in 2013. The 2014 restructuring
charges relate to the consolidation and realignment of several Corporate functions. We anticipate
saving in excess of $100 million annually from these actions when fully implemented in 2015;
• Income from operations of $2,299 million, or 16.4% of revenues, in 2014 compared with
$1,079 million, or 7.7% of revenues, in 2013, the increase of which is primarily attributable to the
$519 million gain on the sale of our Wheelabrator business in December 2014 and impairment charges
of $355 million recognized in 2014 compared to impairment charges of $981 million recognized in
2013 discussed below;
• Net income attributable to Waste Management, Inc. of $1,298 million, or $2.79 per diluted share for
2014, as compared with $98 million, or $0.21 per diluted share for 2013, the increase of which is
primarily attributable to the increase in income from operations discussed above; and
• In 2014, we returned $1,293 million to our shareholders through dividends and share repurchases
compared with $922 million in 2013.
The following explanation of certain items that impacted the comparability of our 2014 results with 2013
has been provided to support investors’ understanding of our performance. Our 2014 results were affected by the
following:
• The recognition of net pre-tax gains of $515 million, which includes the $519 million gain on the sale
of our Wheelabrator business. These items had a positive impact of $1.10 on our diluted earnings per
share;
• Net income was negatively impacted by the recognition of net pre-tax charges aggregating
$420 million primarily related to (i) $272 million of charges to impair our oil and gas producing
properties; (ii) $69 million of charges to impair investments related to waste diversion technology
companies; (iii) $31 million of litigation settlements; (iv) $10 million of goodwill impairment charges
associated with our recycling operations; and (v) other charges to write down the carrying value of
assets to their estimated fair values related to certain of our operations. These items had a negative
impact of $0.68 on our diluted earnings per share; and
• The recognition of pre-tax restructuring charges of $82 million, which had a negative impact of
$0.11 on our diluted earnings per share.
The following explanation of certain items that impacted the comparability of our 2013 results with 2012
has been provided to support investors’ understanding of our performance. Our 2013 results were affected by the
following:
• The recognition of net pre-tax charges aggregating $1.0 billion, primarily related to (i) a $483 million
charge to impair goodwill associated with our Wheelabrator business; (ii) $262 million of charges to
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