Segment and Related Information

9 Months Ended

Sep. 30, 2012

Segment and Related Information

8.    Segment and Related Information

Through the third quarter of 2012, we managed and evaluated our operations primarily through our Eastern, Midwest, Southern, Western and Wheelabrator operating Groups. These five Groups are presented below as our reportable segments. Our four geographic operating Groups provide collection, transfer, disposal (in both solid waste and hazardous waste landfills) and recycling services for residential, commercial, industrial and municipal customers throughout North America. Our fifth Group is the Wheelabrator Group, which provides waste-to-energy services and manages waste-to-energy facilities and independent power production plants in the United States and participates in the design, construction, operation and management of waste-to-energy facilities through investments and consolidated entities in China and Europe. In addition, the Oakleaf operations we acquired on July 28, 2011 represent a separate operating segment; however, they do not meet the criteria to be presented as a separate reportable segment. The operations not managed through our five operating Groups, including the Oakleaf operations, are presented herein as “Other.” See Note 9 for additional information related to our acquisition of Oakleaf.

In July 2012, we announced a reorganization of our operations, designed to streamline management and staff support and reduce our cost structure, while not disrupting our front-line operations. We are in the process of implementing the reorganization, which includes the elimination of our four existing geographic Groups, and we expect it to be completed by the end of 2012. Once the reorganization has been completed, our reportable segments will be realigned to conform with our new management structure. See Note 10 for additional information related to this reorganization.

Summarized financial information concerning our reportable segments for the three and nine months ended September 30 is shown in the following table (in millions):

	Gross Operating Revenues		Intercompany Operating Revenues			Net Operating Revenues		Income from Operations
Three Months Ended:
September 30, 2012
Eastern	$	778	$	(158	)	$	620	$	142
Midwest		833		(141	)		692		175
Southern		862		(140	)		722		180
Western		840		(127	)		713		129
Wheelabrator		218		(30	)		188		43
Other		552		(26	)		526		(22	)
		4,083		(622	)		3,461		647
Corporate and Other		—		—			—		(147	)
Total	$	4,083	$	(622	)	$	3,461	$	500
September 30, 2011
Eastern	$	822	$	(139	)	$	683	$	146
Midwest		847		(123	)		724		175
Southern		853		(104	)		749		194
Western		841		(114	)		727		154
Wheelabrator		228		(28	)		200		57
Other		462		(23	)		439		(40	)
		4,053		(531	)		3,522		686
Corporate and Other		—		—			—		(143	)
Total	$	4,053	$	(531	)	$	3,522	$	543
Nine Months Ended:
September 30, 2012
Eastern	$	2,294	$	(434	)	$	1,860	$	416
Midwest		2,412		(388	)		2,024		504
Southern		2,575		(386	)		2,189		567
Western		2,472		(365	)		2,107		405
Wheelabrator		631		(92	)		539		62
Other		1,564		(68	)		1,496		(94	)
		11,948		(1,733	)		10,215		1,860
Corporate and Other		—		—			—		(493	)
Total	$	11,948	$	(1,733	)	$	10,215	$	1,367
September 30, 2011
Eastern	$	2,326	$	(387	)	$	1,939	$	407
Midwest		2,403		(355	)		2,048		460
Southern		2,553		(307	)		2,246		579
Western		2,456		(336	)		2,120		436
Wheelabrator		664		(89	)		575		112
Other		1,085		(41	)		1,044		(75	)
		11,487		(1,515	)		9,972		1,919
Corporate and Other		—		—			—		(443	)
Total	$	11,487	$	(1,515	)	$	9,972	$	1,476

Fluctuations in our operating results may be caused by many factors, including period-to-period changes in the relative contribution of revenue by each line of business and operating segment, changes in commodity prices and by general economic conditions. In addition, our revenues and income from operations typically reflect seasonal patterns. Our operating revenues normally tend to be somewhat higher in the summer months, primarily due to the traditional seasonal increase in the volume of construction and demolition waste. Historically, the volumes of industrial and residential waste in certain regions in which we operate have tended to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends.

Additionally, certain destructive weather conditions that tend to occur during the second half of the year, such as hurricanes that most often impact our Southern Group, can actually increase our revenues in the areas affected. While weather-related and other “one-time” occurrences can boost revenues through additional work, as a result of significant start-up costs and other factors, such revenue sometimes generates earnings at comparatively lower margins. Certain weather conditions, including severe winter storms, may result in the temporary suspension of our operations, which can significantly affect the operating results of the affected regions. The operating results of our first quarter also often reflect higher repair and maintenance expenses because we rely on the slower winter months, when waste flows are generally lower, to perform scheduled maintenance at our waste-to-energy facilities.