Waste Management 2014 Annual Report Download - page 128

Provision for bad debts — Our provision for bad debts decreased in 2013 as compared to 2012 primarily as
a result of (i) the collection of certain fully reserved receivables related to our Puerto Rico operations and
(ii) resolution of billing delay issues experienced during 2012 in our WMSBS organization.
Other — In 2014, increased costs resulting principally from litigation settlements were partially offset by a
decline in controllable costs associated with advertising and travel and entertainment costs. 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 declined primarily as a result of our July 2012
restructuring and focus on cost-control initiatives.
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 expenses for the years
ended December 31 (dollars in millions):
2014
Period-to-
Period
Change 2013
Period-to-
Period
Change 2012
Depreciation of tangible property and equipment ...... $ 834 $(19) (2.2)% $ 853 $20 2.4% $ 833
Amortization of landfill airspace ................... 380 (20) (5.0) 400 5 1.3 395
Amortization of intangible assets .................. 78 (2) (2.5) 80 11 15.9 69
$1,292 $(41) (3.1)% $1,333 $36 2.8% $1,297
The decrease in depreciation and amortization expense during 2014 is primarily attributable to favorable
adjustments resulting from changes in landfill estimates and fixed asset depreciation that was suspended when
our Wheelabrator business was classified as held-for-sale in the third quarter of 2014 and subsequently sold in
December 2014. The increase in amortization of intangible assets in 2013 that continued in 2014 is primarily
related to the amortization of customer relationships acquired through our acquisition of RCI.
Restructuring
In August 2014, we announced a consolidation and realignment of several Corporate functions to better
support achievement of the Company’s strategic goals, including cost reduction. Voluntary separation
arrangements were offered to all salaried employees within these organizations. Approximately 650 employees
have separated from our Corporate and recycling organizations in connection with this restructuring, but we do
not anticipate that all of these positions will be permanently eliminated.
During the year ended December 31, 2014 we recognized a total of $82 million of pre-tax restructuring
charges, of which $70 million was related to employee severance and benefit costs. The remaining charges were
primarily related to operating lease obligations for property that will no longer be utilized. We do not expect to
incur any material charges associated with our 2014 restructuring in future periods.
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