Segment and Related Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment and Related Information

8. Segment and Related Information

Our senior management evaluates, oversees and manages the financial performance of our Solid Waste subsidiaries through our 17 geographic Areas. These 17 Areas constitute our operating segments and none of the Areas individually meet the quantitative criteria to be a separate reportable segment. We have evaluated the aggregation criteria and concluded that, based on the similarities between our Areas, including the fact that our Solid Waste business is homogenous across geography with the same services offered across the Areas, aggregation of our Areas is appropriate for purposes of presenting our reportable segments. Accordingly, we have aggregated our 17 Areas into three tiers that we believe have similar economic characteristics and future prospects based in large part on a review of the Areas’ income from operations margins. The economic variations experienced by our Areas is attributable to a variety of factors, including regulatory environment of the Area; economic environment of the Area, including level of commercial and industrial activity; population density; service offering mix and disposal logistics, with no one factor being singularly determinative of an Area’s current or future economic performance. As a result of our consideration of economic and other similarities, we have established the following three reportable segments for our Solid Waste business: Tier 1, which is comprised almost exclusively of Areas in the Southern United States; Tier 2, which is comprised predominately of Areas located in the Midwest and Northeast United States; and Tier 3, which encompasses all remaining Areas, including the Northwest and Mid-Atlantic regions of the United States and Eastern Canada. Our Wheelabrator business, which manages waste-to-energy facilities and independent power production plants, continues to be a separate reportable segment as it meets one of the quantitative disclosure thresholds. The operating segments not evaluated and overseen through the 17 Areas and Wheelabrator are presented herein as “Other” as these operating segments do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately reported.

Summarized financial information concerning our reportable segments is shown in the following table (in millions):

	Gross Operating Revenues		Intercompany Operating Revenues			Net Operating Revenues		Income from Operations
Three Months Ended:
June 30, 2014
Solid Waste:
Tier 1	$	885	$	(138	)	$	747	$	223
Tier 2		1,650		(310	)		1,340		335
Tier 3		911		(151	)		760		149
Solid Waste		3,446		(599	)		2,847		707
Wheelabrator		206		(25	)		181		20
Other		551		(18	)		533		(29	)
		4,203		(642	)		3,561		698
Corporate and Other		—		—			—		(166	)
Total	$	4,203	$	(642	)	$	3,561	$	532
June 30, 2013
Solid Waste:
Tier 1	$	891	$	(144	)	$	747	$	221
Tier 2		1,641		(313	)		1,328		325
Tier 3		871		(139	)		732		131
Solid Waste		3,403		(596	)		2,807		677
Wheelabrator		215		(27	)		188		4
Other		554		(23	)		531		(27	)
		4,172		(646	)		3,526		654
Corporate and Other		—		—			—		(144	)
Total	$	4,172	$	(646	)	$	3,526	$	510
Six Months Ended:
June 30, 2014
Solid Waste:
Tier 1	$	1,735	$	(267	)	$	1,468	$	441
Tier 2		3,152		(578	)		2,574		619
Tier 3		1,758		(286	)		1,472		273
Solid Waste		6,645		(1,131	)		5,514		1,333
Wheelabrator		436		(52	)		384		54
Other		1,098		(39	)		1,059		(47	)
		8,179		(1,222	)		6,957		1,340
Corporate and Other		—		—			—		(339	)
Total	$	8,179	$	(1,222	)	$	6,957	$	1,001
June 30, 2013
Solid Waste:
Tier 1	$	1,734	$	(277	)	$	1,457	$	428
Tier 2		3,157		(588	)		2,569		623
Tier 3		1,697		(267	)		1,430		240
Solid Waste		6,588		(1,132	)		5,456		1,291
Wheelabrator		420		(54	)		366		13
Other		1,088		(48	)		1,040		(68	)
		8,096		(1,234	)		6,862		1,236
Corporate and Other		—		—			—		(324	)
Total	$	8,096	$	(1,234	)	$	6,862	$	912

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, changes in commodity prices and by general economic conditions. In addition, our revenues and income from operations typically reflect seasonal patterns. Our operating revenues tend to be somewhat higher in the summer months, primarily due to the higher volume of construction and demolition waste. The volumes of industrial and residential waste in certain regions where we operate also tend to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends. 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.

Service disruptions caused by severe storms, extended periods of inclement weather or climate extremes can significantly affect the operating results of the affected Areas. On the other hand, certain destructive weather conditions that tend to occur during the second half of the year, such as the hurricanes that most often impact our operations in the Southern and Eastern U.S., can actually increase our revenues in the areas affected. While weather-related and other “one-time” occurrences can boost revenues through additional work for a limited time span, as a result of significant start-up costs and other factors, such revenue sometimes generates earnings at comparatively lower margins.