Waste Management 2015 Annual Report Download - page 96

The following explanation of certain items that impacted the comparability of our 2014 results with 2013
has been provided to support investors’ understanding of our performance. Our 2014 results were affected by the
following:
• The recognition of net pre-tax gains of $515 million, which includes the $519 million gain on the sale
of our Wheelabrator business. These items had a positive impact of $1.10 on our diluted earnings per
share;
• Net income was negatively impacted by the recognition of net pre-tax charges aggregating $420
million primarily related to (i) $272 million of charges to impair our oil and gas producing properties;
(ii) $69 million of charges to impair investments related to waste diversion technology companies;
(iii) $31 million of litigation settlements; (iv) $10 million of goodwill impairment charges associated
with our recycling operations and (v) other charges to write down the carrying value of assets to their
estimated fair values related to certain of our operations. These items had a negative impact of $0.68 on
our diluted earnings per share; and
• The recognition of pre-tax restructuring charges of $82 million, which had a negative impact of $0.11
on our diluted earnings per share.
Our 2013 results were affected by the following:
• The recognition of net pre-tax charges aggregating $1.0 billion, primarily related to (i) a $483 million
charge to impair goodwill associated with our Wheelabrator business; (ii) $262 million of charges to
impair certain landfills, primarily in our Eastern Canada Area; (iii) $144 million of charges to write
down the carrying value of three waste-to-energy facilities and (iv) $71 million of impairment charges
relating to investments in waste diversion technology companies. These items had a negative impact of
$1.91 on our diluted earnings per share; and
• The recognition of pre-tax charges aggregating $23 million primarily related to our acquisitions of
Greenstar and RCI as well as prior restructurings and other charges. These items had a negative impact
of $0.03 on our diluted earnings per share.
In 2015, we generated strong earnings and cash flow growth from our Solid Waste business by continuing a
disciplined focus on revenue growth and cost control. These results were driven by strong core pricing in each
line of business; controlling costs of both our operations and corporate functions; improving customer experience
by differentiating our service offerings to reduce customer churn; maintaining discipline around capital spending;
and implementing a more rational and sustainable framework for recycling operations as an integrated
component of solid waste services. Another priority we successfully pursued in 2015 was the investment of cash
proceeds from the divestiture of our Wheelabrator business in late 2014 to support our strategic growth plans. In
2015, we acquired Deffenbaugh Disposal, Inc. (“Deffenbaugh”), one of the largest privately owned collection
and disposal firms in the Midwest. In addition, in January 2016, we completed the acquisition of Southern Waste
Systems/Sun Recycling in Southern Florida. These transactions reflect our view that we can create shareholder
value by making accretive acquisitions in our Solid Waste business. As we look forward to 2016, our key
priorities will remain the same — driving revenue growth from yield, maintaining our commitment to provide
excellent customer service and improving our productivity while managing our costs. We believe that continued
execution of these objectives will translate into earnings and cash flow growth, leaving us well positioned to
continue investing in our business, pay dividends and repurchase shares, while continuing our commitment to
maintain a strong balance sheet.
Free Cash Flow
As is our practice, we are presenting free cash flow, which is a non-GAAP measure of liquidity, in our
disclosures because we use this measure in the evaluation and management of our business. We define free cash
flow as net cash provided by operating activities, less capital expenditures, plus proceeds from divestitures of
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