Waste Management 2014 Annual Report Download - page 127

Risk management — The decrease in costs in 2014 was primarily due to lower auto and general liability
claims and, to a lesser extent, decreased workers’ compensation, claims and lower truck insurance expenses. The
increase in costs in 2013 was driven principally by higher workers’ compensation claims.
Other — The decrease in 2014 is primarily due to the gain on the sale of a vacant facility and lower rental
costs. The increased costs in 2013 when compared to 2012 were due in part to (i) higher telecommunications
costs driven by our initiative to equip our fleet with onboard computers; (ii) higher utilities; (iii) higher property
taxes and (iv) lower gains on the sale of assets. These increases were offset, in part, by favorable adjustments to
contingent consideration associated with acquisitions.
Selling, General and Administrative
Our selling, general and administrative expenses consist of (i) labor and related benefit costs, which include
salaries, bonuses, related insurance and benefits, contract labor, payroll taxes and equity-based compensation;
(ii) professional fees, which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts,
which includes allowances for uncollectible customer accounts and collection fees and (iv) other selling, general
and administrative expenses, which include, among other costs, facility-related expenses, voice and data
telecommunication, advertising, travel and entertainment, rentals, postage and printing. In addition, the financial
impacts of litigation settlements generally are included in our “Other” selling, general and administrative
expenses.
Our selling, general and administrative expenses increased by $13 million, or 0.9%, and decreased by
$4 million, or 0.3%, when comparing 2014 with 2013 and 2013 with 2012, respectively. Our selling, general and
administrative expenses as a percentage of revenues were 10.6% in 2014, 10.5% in 2013 and 10.8% in 2012.
The following table summarizes the major components of our selling, general and administrative expenses
for the years ended December 31 (dollars in millions):
2014
Period-to-
Period
Change 2013
Period-to-
Period
Change 2012
Labor and related benefits ...................... $ 933 $ 2 0.2% $ 931 $ 81 9.5% $ 850
Professional fees .............................. 126 (5) (3.8) 131 (32) (19.6) 163
Provision for bad debts ......................... 41 — — 41 (19) (31.7) 60
Other ....................................... 381 16 4.4 365 (34) (8.5) 399
$1,481 $ 13 0.9% $1,468 $ (4) (0.3)% $1,472
Labor and related benefits — Factors affecting the year-over-year changes in our labor and related benefits
costs include:
• Merit increases;
• Higher incentive compensation cost, particularly in 2013, as compared with the prior year periods,
including bonuses and equity-based compensation;
• Higher health and welfare costs in 2014 as compared to 2013; and
• Year-over-year labor and related benefits cost savings of approximately $40 million in 2014 and $45
million in 2013 from restructuring plans implemented in 2014 and 2012.
Professional fees — Our professional fees continued to decline during 2014 as a result of our concerted
effort to reduce consulting fees. Our 2013 consulting fees were lower as we incurred significant fees during 2012
resulting from company-wide initiatives. The lower consulting fees were partially offset by higher legal fees in
2014 as compared to 2013.
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