Waste Management 2006 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2006 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.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

liability for future service is recorded when we bill the customer and operating revenues are recognized as services
are actually provided. Revenues from our disposal operations consist of tipping fees, which are generally based on
the weight, volume and type of waste being disposed of at our disposal facilities and are normally billed monthly or
semi-monthly. Fees charged at transfer stations are generally based on the volume of waste deposited, taking into
account our cost of loading, transporting and disposing of the solid waste at a disposal site, and are normally billed
monthly. Our Wheelabrator revenues are based on the type and volume of waste received at our waste-to-energy
facilities and IPPs and fees charged for the sale of energy and steam. Recycling revenue, which is generated by our
Recycling Group as well as our four geographic operating Groups, generally consists of the sale of recyclable
commodities to third parties and tipping fees. Intercompany revenues between our operations have been eliminated
in the consolidated financial statements. The mix of operating revenues from our different services is reflected in the
table below (in millions):
2006 2005 2004
Years Ended December 31,
Collection ........................................... $ 8,837 $ 8,633 $ 8,318
Landfill ............................................. 3,197 3,089 3,004
Transfer............................................. 1,802 1,756 1,680
Wheelabrator ......................................... 902 879 835
Recycling and other .................................... 1,074 1,183 1,083
Intercompany. ........................................ (2,449) (2,466) (2,404)
Total ............................................. $13,363 $13,074 $12,516
The following table provides details associated with the period-to-period change in revenues (dollars in
millions) along with an explanation of the significant components of the current period changes:
Period-to-
Period
Change for
2006 vs. 2005
Period-to-
Period
Change for
2005 vs. 2004
Average yield:
Base business ........................................ $461 3.6% $336 2.7%
Commodity.......................................... (48) (0.4) (38) (0.3)
Electricity (IPPs) ..................................... 2 — 4 —
Fuel surcharges and fees ................................ 120 0.9 161 1.3
Total ................................................ 535 4.1 463 3.7
Volume .............................................. (187) (1.4) 3 —
Internal revenue growth .................................. 348 2.7 466 3.7
Acquisitions ........................................... 52 0.4 112 0.9
Divestitures ........................................... (154) (1.2) (62) (0.4)
Foreign currency translation ............................... 43 0.3 42 0.3
$ 289 2.2% $558 4.5%
Base Business — Revenue growth from yield on base business reflects the effect on our revenue from the
pricing activities of our collection, transfer, disposal and waste-to-energy operations, exclusive of volume changes.
Our revenue growth from base business yield includes not only price increases, but also (i) price decreases to retain
customers; (ii) changes in average price from new and lost business; and (iii) certain average price changes related
to the overall mix of services, which are due to both the types of services provided and the geographic locations
where our services are provided. Our pricing excellence initiative continues to be the primary contributor to internal
revenue growth.
In both 2005 and 2006, revenue growth from base business yield was primarily attributable to our collection
operations, where we experienced substantial revenue growth in every geographic operating Group. Our base
32