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Segment and Related Information | 12 Months Ended
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Dec. 31, 2018
Segment and Related Information |
Segment and Related Information | 19. 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 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. In 2017, we analyzed the Areas’ income from operations margins for purposes of segment reporting and realigned our Solid Waste tiers to reflect recent 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. In 2018, there was no realignment of our Solid Waste tiers. 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 includes Southern California, Eastern Canada, Wisconsin and Minnesota. Tier 3 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 as of December 31 and for the years then ended is shown in the following table (in millions):
|  |  |  |  |  |  |  |  |  |  | Income |  |  |  |  |  |  |  |  |
|  | Gross |  | Intercompany |  | Net |  | from |  | Depreciation |  | Capital |  | Total
|  | Operating |  | Operating |  | Operating |  | Operations |  | and |  | Expenditures |  | Assets
|  | Revenues |  | Revenues(c) |  | Revenues |  | (d)(e) |  | Amortization |  | (f) |  | (g)(h)
Years Ended December 31: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 5,868 |  | $ | (1,063) |  | $ | 4,805 |  | $ | 1,642 |  | $ | 510 |  | $ | 595 |  | $ | 6,958
Tier 2 |  |  | 2,622 |  |  | (487) |  |  | 2,135 |  |  | 542 |  |  | 232 |  |  | 257 |  |  | 3,761
Tier 3 |  |  | 7,047 |  |  | (1,365) |  |  | 5,682 |  |  | 1,211 |  |  | 614 |  |  | 547 |  |  | 9,119
Solid Waste |  |  | 15,537 |  |  | (2,915) |  |  | 12,622 |  |  | 3,395 |  |  | 1,356 |  |  | 1,399 |  |  | 19,838
Other (a) |  |  | 2,487 |  |  | (195) |  |  | 2,292 |  |  | (66) |  |  | 91 |  |  | 72 |  |  | 1,571
|  |  | 18,024 |  |  | (3,110) |  |  | 14,914 |  |  | 3,329 |  |  | 1,447 |  |  | 1,471 |  |  | 21,409
Corporate and Other (b) |  |  | — |  |  | — |  |  | — |  |  | (540) |  |  | 30 |  |  | 200 |  |  | 1,487
Total |  | $ | 18,024 |  | $ | (3,110) |  | $ | 14,914 |  | $ | 2,789 |  | $ | 1,477 |  | $ | 1,671 |  | $ | 22,896
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 5,576 |  | $ | (1,002) |  | $ | 4,574 |  | $ | 1,538 |  | $ | 451 |  | $ | 603 |  | $ | 6,528
Tier 2 |  |  | 2,559 |  |  | (443) |  |  | 2,116 |  |  | 552 |  |  | 203 |  |  | 185 |  |  | 3,749
Tier 3 |  |  | 6,697 |  |  | (1,220) |  |  | 5,477 |  |  | 1,199 |  |  | 574 |  |  | 595 |  |  | 8,727
Solid Waste |  |  | 14,832 |  |  | (2,665) |  |  | 12,167 |  |  | 3,289 |  |  | 1,228 |  |  | 1,383 |  |  | 19,004
Other (a) |  |  | 2,538 |  |  | (220) |  |  | 2,318 |  |  | (68) |  |  | 103 |  |  | 93 |  |  | 1,785
|  |  | 17,370 |  |  | (2,885) |  |  | 14,485 |  |  | 3,221 |  |  | 1,331 |  |  | 1,476 |  |  | 20,789
Corporate and Other (b) |  |  | — |  |  | — |  |  | — |  |  | (585) |  |  | 45 |  |  | 92 |  |  | 1,327
Total |  | $ | 17,370 |  | $ | (2,885) |  | $ | 14,485 |  | $ | 2,636 |  | $ | 1,376 |  | $ | 1,568 |  | $ | 22,116
2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Solid Waste: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 |  | $ | 5,241 |  | $ | (911) |  | $ | 4,330 |  | $ | 1,430 |  | $ | 424 |  | $ | 452 |  | $ | 6,188
Tier 2 |  |  | 2,400 |  |  | (404) |  |  | 1,996 |  |  | 522 |  |  | 190 |  |  | 157 |  |  | 3,562
Tier 3 |  |  | 6,327 |  |  | (1,137) |  |  | 5,190 |  |  | 994 |  |  | 530 |  |  | 589 |  |  | 8,497
Solid Waste |  |  | 13,968 |  |  | (2,452) |  |  | 11,516 |  |  | 2,946 |  |  | 1,144 |  |  | 1,198 |  |  | 18,247
Other (a) |  |  | 2,278 |  |  | (185) |  |  | 2,093 |  |  | (100) |  |  | 101 |  |  | 104 |  |  | 1,489
|  |  | 16,246 |  |  | (2,637) |  |  | 13,609 |  |  | 2,846 |  |  | 1,245 |  |  | 1,302 |  |  | 19,736
Corporate and Other (b) |  |  | — |  |  | — |  |  | — |  |  | (550) |  |  | 56 |  |  | 45 |  |  | 1,401
Total |  | $ | 16,246 |  | $ | (2,637) |  | $ | 13,609 |  | $ | 2,296 |  | $ | 1,301 |  | $ | 1,347 |  | $ | 21,137
| (a) |  | Our “Other” net operating revenues and “Other” income from operations include (i) our WMSBS organization; (ii) those elements of our landfill gas-to-energy operations and third-party subcontract and administration revenues managed by our EES and WM Renewable Energy organizations that are not included in the operations of our reportable segments; (iii) our recycling brokerage services and (iv) certain other expanded service offerings and solutions. In addition, our “Other” segment reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.
| (b) |  | Corporate operating results reflect certain costs incurred for various support services that are not allocated to our reportable segments. These support services include, among other things, treasury, legal, information technology, tax, insurance, centralized service center processes, other administrative functions and the maintenance of our closed landfills. Income from operations for “Corporate and other” also includes costs associated with our long-term incentive program and any administrative expenses or revisions to our estimated obligations associated with divested operations.
| (c) |  | Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.
| (d) |  | For those items included in the determination of income from operations, the accounting policies of the segments are the same as those described in Note 3.
| (e) |  | The income from operations provided by our Solid Waste business is generally indicative of the margins provided by our collection, landfill, transfer and recycling lines of business. From time to time, the operating results of our reportable segments are significantly affected by certain transactions or events that management believes are not indicative or representative of our results. Refer to Note 11 for explanations of certain transactions and events affecting our operating results.
| (f) |  | Includes non-cash items. Capital expenditures are reported in our reportable segments at the time they are recorded within the segments’ property and equipment balances and, therefore, may include amounts that have been accrued but not yet paid.
(g) The reconciliation of total assets reported above to total assets in the Consolidated Balance Sheets as of December 31 is as follows (in millions):
|  | 2018 |  | 2017 |  | 2016
Total assets, as reported above |  | $ | 22,896 |  | $ | 22,116 |  | $ | 21,137
Elimination of intercompany investments and advances |  |  | (246) |  |  | (287) |  |  | (278)
Total assets, per Consolidated Balance Sheet |  | $ | 22,650 |  | $ | 21,829 |  | $ | 20,859
(h) Goodwill is included within each segment’s total assets. For segment reporting purposes, our material recovery facilities are included as a component of their respective Areas and our recycling brokerage services are included as part of our “Other” operations. The following table presents changes in goodwill during the reported periods by segment (in millions):
|  | Solid Waste |  |  |  |  |  |
|  | Tier 1 |  | Tier 2 |  | Tier 3 |  | Other |  | Total
Balance, December 31, 2016 |  | $ | 2,203 |  | $ | 1,196 |  | $ | 2,661 |  | $ | 155 |  | $ | 6,215
Acquired goodwill |  |  | 12 |  |  | 20 |  |  | 7 |  |  | — |  |  | 39
Divested goodwill |  |  | — |  |  | (1) |  |  | — |  |  | — |  |  | (1)
Impairments |  |  | — |  |  | — |  |  | — |  |  | (34) |  |  | (34)
Foreign currency translation |  |  | 6 |  |  | 22 |  |  | — |  |  | — |  |  | 28
Balance, December 31, 2017 |  | $ | 2,221 |  | $ | 1,237 |  | $ | 2,668 |  | $ | 121 |  | $ | 6,247
Acquired goodwill |  |  | 88 |  |  | 17 |  |  | 142 |  |  | 1 |  |  | 248
Divested goodwill |  |  | (6) |  |  | — |  |  | — |  |  | (19) |  |  | (25)
Impairments |  |  | — |  |  | — |  |  | — |  |  | (6) |  |  | (6)
Foreign currency translation |  |  | (7) |  |  | (27) |  |  | — |  |  | — |  |  | (34)
Balance, December 31, 2018 |  | $ | 2,296 |  | $ | 1,227 |  | $ | 2,810 |  | $ | 97 |  | $ | 6,430
The mix of operating revenues from our major lines of business for the years ended December 31 are as follows (in millions):
|  | 2018 |  | 2017 |  | 2016
Commercial |  | $ | 3,972 |  | $ | 3,714 |  | $ | 3,480
Residential |  |  | 2,529 |  |  | 2,528 |  |  | 2,487
Industrial |  |  | 2,773 |  |  | 2,583 |  |  | 2,412
Other |  |  | 450 |  |  | 439 |  |  | 423
Total collection |  |  | 9,724 |  |  | 9,264 |  |  | 8,802
Landfill |  |  | 3,560 |  |  | 3,370 |  |  | 3,110
Transfer |  |  | 1,711 |  |  | 1,591 |  |  | 1,512
Recycling |  |  | 1,293 |  |  | 1,432 |  |  | 1,221
Other (a) |  |  | 1,736 |  |  | 1,713 |  |  | 1,601
Intercompany (b) |  |  | (3,110) |  |  | (2,885) |  |  | (2,637)
Total |  | $ | 14,914 |  | $ | 14,485 |  | $ | 13,609
| (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 Consolidated Financial Statements included within this report.
Net operating revenues relating to operations in the U.S. and Canada for the years ended December 31 are as follows (in millions):
|  | 2018 |  | 2017 |  | 2016
U.S. |  | $ | 14,167 |  | $ | 13,768 |  | $ | 12,915
Canada |  |  | 747 |  |  | 717 |  |  | 694
Total |  | $ | 14,914 |  | $ | 14,485 |  | $ | 13,609
Property and equipment, net of accumulated depreciation and amortization, relating to operations in the U.S. and Canada for the years ended December 31 are as follows (in millions):
|  | 2018 |  | 2017 |  | 2016
U.S. |  | $ | 11,044 |  | $ | 10,591 |  | $ | 10,040
Canada |  |  | 898 |  |  | 968 |  |  | 910
Total |  | $ | 11,942 |  | $ | 11,559 |  | $ | 10,950

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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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