Waste Management 2015 Annual Report Download - page 110

the reduction in costs due to the divestitures, as discussed above. The decrease in costs in 2014 were driven in
part by lower volumes in the collection and recycling lines of business.
Maintenance and repairs — The decrease in maintenance and repairs in 2015 was largely driven by the
divestiture of Wheelabrator, which was partially offset by the increased costs related to the Deffenbaugh
acquisition.
Subcontractor costs — The following significant items affected the comparability of expenses for the
periods presented:
• Volume declines related to the loss of certain large accounts in our WMSBS organization;
• Decreased costs associated with lower costs in the landfill and recycling businesses in 2015;
• Higher costs related to remediation services; and
• Higher costs related to the RCI operations acquired in July 2013.
Cost of goods sold — The reduction in costs is primarily driven by lower recycling rebates due to (i) lower
commodity prices; (ii) increased efforts to reduce controllable recycling rebates paid to customers; (iii) better
alignment of rebate structures with commodity prices for new recycling contracts and (iv) ongoing recycling
business improvement efforts around inbound quality control. These cost reductions were offset, in part, by
increased costs in our remediation business and increased costs in 2014 related to our portable self-storage
service.
Fuel — The decrease in fuel expense in 2015 and 2014 when compared to the prior periods was driven by
(i) lower fuel prices; (ii) lower fuel purchases due to reduced collection volumes; (iii) lower costs resulting from
the conversion of our fleet to natural gas vehicles and (iv) year-over-year increases in natural gas fuel excise
credits.
Disposal and franchise fees and taxes — Significant items affecting the comparability of expenses for the
periods presented include (i) increased disposal fees and taxes due to higher landfill volumes; (ii) decreased costs
due to divestitures and (iii) a disposal surcharge in 2013.
Landfill operating costs — Significant items affecting the comparability of expenses for the periods
presented include (i) unfavorable adjustments in 2014 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 and (ii) higher leachate costs for all comparable periods.
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.
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 decreased $138 million, or 9.3%, when comparing 2015
with 2014 and increased $13 million, or 0.9%, when comparing 2014 with 2013. Our selling, general and
administrative expenses as a percentage of revenues were 10.4% in 2015, 10.6% in 2014 and 10.5% in 2013.
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