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Segment and Related Information | 6 Months Ended
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Jun. 30, 2018
Segment and Related Information |
Segment and Related Information | 8. Segment and Related Information We evaluate, oversee and manage the financial performance of our Solid Waste business subsidiaries through our 17 Areas. The 17 Areas constitute our operating segments and 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 geographies 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 are 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. Annually, we analyze the Areas’ income from operations margins for purposes of segment reporting and in the fourth quarter of 2017, we realigned our Solid Waste tiers to reflect changes in their relative economic characteristics and prospects. These changes are the results of various factors including acquisitions, divestments, business mix and the economic climate of various geographies. Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation. Tier 1 is comprised of our operations across the Southern U.S., with the exception of Southern California and the Florida peninsula, and also includes the New England states, the tri-state area of Michigan, Indiana and Ohio, and Western Canada. Tier 2 now includes Southern California, Eastern Canada, Wisconsin and Minnesota. Tier 3 now encompasses all the remaining operations including the Pacific Northwest and Northern California, the Mid-Atlantic region of the U.S., the Florida peninsula, Illinois and Missouri. The operating segments not evaluated and overseen through the 17 Areas 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 |  | Intercompany |  | Net |  | Income
|  | Operating |  | Operating |  | Operating |  | from
|  | Revenues |  | Revenues |  | Revenues |  | Operations
Three Months Ended June 30: |  |  |  |  |  |  |  |  |  |  |  |
2018 |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 1,485 |  | $ | (269) |  | $ | 1,216 |  | $ | 395
Tier 2 |  |  | 663 |  |  | (123) |  |  | 540 |  |  | 141
Tier 3 |  |  | 1,776 |  |  | (350) |  |  | 1,426 |  |  | 295
Solid Waste |  |  | 3,924 |  |  | (742) |  |  | 3,182 |  |  | 831
Other |  |  | 613 |  |  | (56) |  |  | 557 |  |  | 13
|  |  | 4,537 |  |  | (798) |  |  | 3,739 |  |  | 844
Corporate and Other |  |  | — |  |  | — |  |  | — |  |  | (129)
Total |  | $ | 4,537 |  | $ | (798) |  | $ | 3,739 |  | $ | 715
2017 |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 1,417 |  | $ | (258) |  | $ | 1,159 |  | $ | 395
Tier 2 |  |  | 651 |  |  | (114) |  |  | 537 |  |  | 142
Tier 3 |  |  | 1,691 |  |  | (311) |  |  | 1,380 |  |  | 296
Solid Waste |  |  | 3,759 |  |  | (683) |  |  | 3,076 |  |  | 833
Other |  |  | 657 |  |  | (56) |  |  | 601 |  |  | (18)
|  |  | 4,416 |  |  | (739) |  |  | 3,677 |  |  | 815
Corporate and Other |  |  | — |  |  | — |  |  | — |  |  | (142)
Total |  | $ | 4,416 |  | $ | (739) |  | $ | 3,677 |  | $ | 673
|  | Gross |  | Intercompany |  | Net |  | Income
|  | Operating |  | Operating |  | Operating |  | from
|  | Revenues |  | Revenues |  | Revenues |  | Operations
Six Months Ended June 30: |  |  |  |  |  |  |  |  |  |  |  |
2018 |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 2,858 |  | $ | (510) |  | $ | 2,348 |  | $ | 760
Tier 2 |  |  | 1,276 |  |  | (234) |  |  | 1,042 |  |  | 263
Tier 3 |  |  | 3,409 |  |  | (659) |  |  | 2,750 |  |  | 586
Solid Waste |  |  | 7,543 |  |  | (1,403) |  |  | 6,140 |  |  | 1,609
Other |  |  | 1,220 |  |  | (110) |  |  | 1,110 |  |  | (10)
|  |  | 8,763 |  |  | (1,513) |  |  | 7,250 |  |  | 1,599
Corporate and Other |  |  | — |  |  | — |  |  | — |  |  | (276)
Total |  | $ | 8,763 |  | $ | (1,513) |  | $ | 7,250 |  | $ | 1,323
2017 |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 2,757 |  | $ | (496) |  | $ | 2,261 |  | $ | 761
Tier 2 |  |  | 1,243 |  |  | (215) |  |  | 1,028 |  |  | 258
Tier 3 |  |  | 3,268 |  |  | (596) |  |  | 2,672 |  |  | 564
Solid Waste |  |  | 7,268 |  |  | (1,307) |  |  | 5,961 |  |  | 1,583
Other |  |  | 1,260 |  |  | (104) |  |  | 1,156 |  |  | (50)
|  |  | 8,528 |  |  | (1,411) |  |  | 7,117 |  |  | 1,533
Corporate and Other |  |  | — |  |  | — |  |  | — |  |  | (302)
Total |  | $ | 8,528 |  | $ | (1,411) |  | $ | 7,117 |  | $ | 1,231
The mix of operating revenues from our major lines of business are as follows (in millions):
|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
Commercial |  | $ | 986 |  | $ | 917 |  | $ | 1,941 |  | $ | 1,828
Residential |  |  | 632 |  |  | 632 |  |  | 1,246 |  |  | 1,253
Industrial |  |  | 708 |  |  | 654 |  |  | 1,345 |  |  | 1,257
Other |  |  | 115 |  |  | 123 |  |  | 216 |  |  | 223
Total collection |  |  | 2,441 |  |  | 2,326 |  |  | 4,748 |  |  | 4,561
Landfill |  |  | 915 |  |  | 864 |  |  | 1,720 |  |  | 1,603
Transfer |  |  | 437 |  |  | 414 |  |  | 812 |  |  | 780
Recycling |  |  | 305 |  |  | 375 |  |  | 617 |  |  | 747
Other (a) |  |  | 439 |  |  | 437 |  |  | 866 |  |  | 837
Intercompany (b) |  |  | (798) |  |  | (739) |  |  | (1,513) |  |  | (1,411)
Total |  | $ | 3,739 |  | $ | 3,677 |  | $ | 7,250 |  | $ | 7,117
| (a) |  | The “Other” line of business includes (i) our WMSBS organization; (ii) our landfill gas-to-energy operations; (iii) certain services within our EES organization, including our construction and remediation services and our services associated with the disposal of fly ash and (iv) certain other expanded service offerings and solutions. In addition, our “Other” line of business reflects the results of non-operating entities that provide financial assurance and self-insurance support, net of intercompany activity.
| (b) |  | Intercompany revenues between lines of business are eliminated in the Condensed Consolidated Financial Statements included within this report.
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 general economic conditions. In addition, our revenues and income from operations typically reflect seasonal patterns. Our operating revenues tend to be somewhat higher in summer months, primarily due to the higher construction and demolition waste volumes. 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. Service disruptions caused by severe storms, extended periods of inclement weather or climate extremes resulting from climate change can significantly affect the operating results of the Areas affected. 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 increase our revenues in the Areas affected. While weather-related and other event driven special projects can boost revenues through additional work for a limited time, as a result of significant start-up costs and other factors, such revenue can generate earnings at comparatively lower margins.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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