Waste Management 2008 Annual Report Download - page 61
Download and view the complete annual report
Please find page 61 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.and our estimates often vary from cash flows eventually realized. Impairments are measured by comparing the fair
value of the asset to its carrying value. Fair value is generally determined by considering (i) internally developed
discounted projected cash flow analysis of the asset; (ii) actual third-party valuations; and/or (iii) information
available regarding the current market environment for similar assets. If the fair value of an asset is determined to be
less than the carrying amount of the asset, an impairment in the amount of the difference is recorded in the period
that the impairment indicator occurs.
There are other considerations for impairments of landfills and goodwill, as described below.
Landfills — Certain impairment indicators require significant judgment and understanding of the waste
industry when applied to landfill development or expansion projects. For example, a regulator may initially deny a
landfill expansion permit application though the expansion permit is ultimately granted. In addition, management
may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace.
Therefore, certain events could occur in the ordinary course of business and not necessarily be considered indicators
of impairment of our landfill assets due to the unique nature of the waste industry.
Goodwill — At least annually, we assess whether goodwill is impaired. We assess whether an impairment
exists by comparing the fair value of each Group to its carrying value, including goodwill. We rely on discounted
cash flow analysis, which requires significant judgments and estimates about the future operations of each Group, to
develop our estimates of fair value. Additional impairment assessments may be performed on an interim basis if we
encounter events or changes in circumstances that would indicate that, more likely than not, the carrying value of
goodwill has been impaired.
Self-insurance reserves and recoveries — We have retained a significant portion of the risks related to our
health and welfare, automobile, general liability and workers’ compensation insurance programs. Our liabilities
associated with the exposure for unpaid claims and associated expenses, including incurred but not reported losses,
generally is estimated with the assistance of external actuaries and by factoring in pending claims and historical
trends and data. Our estimated accruals for these liabilities could be significantly different than our ultimate
obligations if variables such as the frequency or severity of future incidents are significantly different than what we
assume. Estimated insurance recoveries related to recorded liabilities are recorded as assets when we believe that
the receipt of such amounts is probable.
Results of Operations
Operating Revenues
Our operating revenues in 2008 were $13.4 billion, compared with $13.3 billion in 2007 and $13.4 billion in
2006. We manage and evaluate our operations primarily through our Eastern, Midwest, Southern, Western,
Wheelabrator and WMRA Groups. These six operating Groups are our reportable segments. Shown below (in
millions) is the contribution to revenues during each year provided by our six operating Groups and our Other waste
services:
2008 2007 2006
Years Ended December 31,
Eastern ............................................. $ 3,182 $ 3,281 $ 3,614
Midwest ............................................ 3,117 3,141 3,141
Southern ............................................ 3,667 3,681 3,759
Western ............................................. 3,300 3,350 3,373
Wheelabrator . . ....................................... 912 868 902
WMRA............................................. 1,014 953 740
Other .............................................. 330 307 283
Intercompany . ....................................... (2,134) (2,271) (2,449)
Total ............................................. $13,388 $13,310 $13,363
27