Waste Management 2014 Annual Report Download - page 133

• Unfavorable adjustments in both 2014 and 2012 as well as favorable adjustments in 2013 related to
changes in U.S. Treasury rates used to discount the present value of our environmental remediation
obligations and recovery assets;
• 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; and
• Favorable risk management allocation in 2014 and higher year-over-year risk management expense in
2013 primarily due to increased overall costs associated with auto and general liability insurance.
Interest Expense, net
Our interest expense, net was $466 million in 2014, $477 million in 2013 and $484 million in 2012. During
2014, the decrease in interest expense was primarily attributable to (i) the impacts that lower market interest rates
have had on certain of our tax-exempt debt; (ii) issuing new debt at lower fixed interest rates than debt repaid
upon scheduled maturities and (iii) reduced costs associated with our letter of credit facilities due to
improvements in the Company’s overall credit rating. These decreases were partially offset by increases in
expense associated with our terminated interest rate swaps due to the maturity of the underlying senior notes. In
December 2014, the Company decided to redeem $947 million of senior notes due in 2015, 2017 and 2019 with a
weighted average coupon rate of 7.0%. The Company incurred a make-whole premium of $130 million to repay
these notes with available cash in January 2015. We anticipate that a near-term refinancing of these debt balances
will reduce interest expense in future years.
During 2013, our debt balances increased by approximately $300 million, which can generally be attributed
to the debt financing of our acquisition of RCI offset by debt repayments. In spite of this increase in debt, we
reduced our interest costs by (i) reducing the interest rate periods of some of our tax-exempt bonds, allowing us
to benefit from lower rates available for shorter-term remarketings; (ii) issuing new debt at lower fixed interest
rates than debt repaid upon scheduled maturities and (iii) reducing the cost of our revolving credit facility by
amending the credit agreement to provide for lower fees and rates.
Equity in Net Losses of Unconsolidated Entities
We recognized “Equity in net losses of unconsolidated entities” of $53 million, $34 million and $46 million
in 2014, 2013 and 2012, respectively. These losses are primarily related to our noncontrolling interests in two
limited liability companies established to invest in and manage low-income housing properties and a refined coal
facility, as well as (i) noncontrolling investments made to support our strategic initiatives and (ii) unconsolidated
trusts for final capping, closure, post-closure or environmental obligations. The tax impacts realized as a result of
our investments in low-income housing properties and the refined coal facility are discussed below in Provision
for Income Taxes. Refer to Notes 9 and 20 to the Consolidated Financial Statements for more information related
to these investments. The expense in 2014 as compared to 2013 was impacted by charges of $11 million in 2014
primarily to write down equity method investments in waste diversion technology companies to their fair value.
The expense in 2013 as compared to 2012 was impacted by a charge of $10 million in 2012 related to a payment
we made under a guarantee on behalf of an equity method investment in an unconsolidated entity that went into
liquidation.
Other, net
We recognized other, net expense of $29 million, $74 million and $18 million in 2014, 2013 and 2012,
respectively. The expenses for 2014, 2013 and 2012 were impacted by impairment charges of $22 million,
$71 million and $16 million, respectively, related to other-than-temporary declines in the value of investments in
waste diversion technology companies which were accounted for under the cost method. We wrote down our
investments to their fair value which was primarily determined using an income approach based on estimated
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