Waste Management 2014 Annual Report Download - page 142

•Changes in assets and liabilities, net of effects from business acquisitions and divestitures — Our cash
flow from operations was favorably impacted on a year-over-year basis 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 changes, which are affected by both cost changes and timing
of payments.
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 $945 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. See Liquidity Impacts of Income
Tax Items below for additional information.
•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 requiring a cash payment of $59 million. 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.
Net Cash Provided by (Used in) Investing Activities — The most significant items affecting the comparison
of our investing cash flows for the periods presented are summarized below:
•Capital expenditures — We used $1,151 million during 2014 for capital expenditures, compared with
$1,271 million in 2013 and $1,510 million in 2012. The decrease can generally be attributed to
increased focus on capital spending management. Capital expenditures in 2012 included increased
spending on compressed natural gas vehicles, related fueling infrastructure, and information
technology infrastructure and growth initiatives, as well as our taking advantage of the bonus
depreciation legislation.
•Proceeds from divestitures — Proceeds from divestitures and other assets (net of cash divested) were
$2,253 million in 2014, $138 million in 2013 and $44 million in 2012. These divestitures were made as
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