Waste Management 2007 Annual Report Download - page 140

(a) Our “Other” net operating revenues and “Other” income from operations include the effects of those elements
of our in-plant services, methane gas recovery and third-party sub-contract and administration revenues
managed by our Renewable Energy, National Accounts and Upstream organizations that are not included with
the operations of our reportable segments. In addition, our “Other” income from operations reflect the impacts
of (i) non-operating entities that provide financial assurance and self-insurance support for the operating
Groups or financing for our Canadian operations; and (ii) certain year-end adjustments recorded in consol-
idation related to the reportable segments that were not included in the measure of segment profit or loss used to
assess their performance for the periods disclosed
(b) Corporate operating results reflect the costs incurred for various support services that are not allocated to our six
operating Groups. 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 managing our international and non-solid waste divested operations, which
primarily includes administrative expenses and the impact of revisions to our estimated obligations. As
discussed above, in 2005 we centralized support functions that had been provided by our Group offices.
Beginning in the third quarter of 2005, our “Corporate and other” operating results also include the costs
associated with these support functions.
(c) Corporate expenses in 2005 include impairment charges of $68 million associated with capitalized software
costs and $31 million of net charges associated with various legal and divestiture matters. These items are
discussed further in Note 12. Also included in our 2005 Corporate results are costs associated with our 2005
restructuring charge and organizational changes, which were partially offset by associated savings at Corporate.
(d) 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.
(e) 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.
(f) The income from operations provided by our four geographic segments is generally indicative of the margins
provided by our collection, landfill and transfer businesses, although these Groups do provide recycling and
other services that can affect these trends. The operating margins provided by our Wheelabrator segment
(waste-to-energy facilities and independent power production plants) have historically been higher than the
margins provided by our base business generally due to the combined impact of long-term disposal and energy
contracts and the disposal demands of the regions in which our facilities are concentrated. Income from
operations provided by our WMRA segment generally reflects operating margins typical of the recycling
industry, which tend to be significantly lower than those provided by our base business. From time to time the
operating results of our reportable segments are significantly affected by unusual or infrequent transactions or
events. Refer to Note 11 and Note 12 for an explanation of transactions and events affecting the operating results
of our reportable segments.
(g) Includes non-cash items. Capital expenditures are reported in our operating segments at the time they are
recorded within the segments’ property, plant and equipment balances and, therefore, may include amounts that
have been accrued but not yet paid.
(h) Because of the length of time inherent in certain fleet purchases, our Corporate and Other segment initiates
certain fleet-related purchases on behalf of our operating segments. The related capital expenditures are
recorded in our Corporate and Other segment until the time at which the fleet items are delivered to our
operating groups. Once delivery occurs, the total cost of the items received are reported as capital expenditures
in our operating groups with an offset for the costs previously reported by the Corporate and Other segment. In
2007, the quantity of fleet purchases previously reported by the Corporate and Other segment that were
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)