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 most current 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 September 30:
2018
Solid Waste:
Tier 1	$	1,506	$	(277)	$	1,229	$	416
Tier 2		671		(127)		544		142
Tier 3		1,818		(353)		1,465		291
Solid Waste		3,995		(757)		3,238		849
Other		629		(45)		584		(15)
		4,624		(802)		3,822		834
Corporate and Other		—		—		—		(135)
Total	$	4,624	$	(802)	$	3,822	$	699

2017
Solid Waste:
Tier 1	$	1,432	$	(258)	$	1,174	$	398
Tier 2		660		(114)		546		142
Tier 3		1,711		(313)		1,398		313
Solid Waste		3,803		(685)		3,118		853
Other		662		(64)		598		(16)
		4,465		(749)		3,716		837
Corporate and Other		—		—		—		(136)
Total	$	4,465	$	(749)	$	3,716	$	701


	Gross		Intercompany		Net		Income
	Operating		Operating		Operating		from
	Revenues		Revenues		Revenues		Operations
Nine Months Ended September 30:
2018
Solid Waste:
Tier 1	$	4,364	$	(787)	$	3,577	$	1,176
Tier 2		1,947		(361)		1,586		405
Tier 3		5,227		(1,012)		4,215		877
Solid Waste		11,538		(2,160)		9,378		2,458
Other		1,849		(155)		1,694		(25)
		13,387		(2,315)		11,072		2,433
Corporate and Other		—		—		—		(411)
Total	$	13,387	$	(2,315)	$	11,072	$	2,022

2017
Solid Waste:
Tier 1	$	4,189	$	(754)	$	3,435	$	1,159
Tier 2		1,903		(329)		1,574		400
Tier 3		4,979		(909)		4,070		877
Solid Waste		11,071		(1,992)		9,079		2,436
Other		1,922		(168)		1,754		(66)
		12,993		(2,160)		10,833		2,370
Corporate and Other		—		—		—		(438)
Total	$	12,993	$	(2,160)	$	10,833	$	1,932

The mix of operating revenues from our major lines of business are as follows (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Commercial	$	1,007	$	936	$	2,948	$	2,764
Residential		639		635		1,885		1,888
Industrial		723		673		2,068		1,930
Other		117		107		333		330
Total collection		2,486		2,351		7,234		6,912
Landfill		926		884		2,646		2,487
Transfer		445		412		1,257		1,192
Recycling		337		375		954		1,122
Other (a)		430		443		1,296		1,280
Intercompany (b)		(802)		(749)		(2,315)		(2,160)
Total	$	3,822	$	3,716	$	11,072	$	10,833

(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.