Waste Management 2011 Annual Report Download - page 128

Reportable Segments — The most significant items affecting the results of operations of our four geographic
Groups during the three-year period ended December 31, 2011 are summarized below:
‰revenue growth from yield on our base business;
‰market prices for recyclable commodities reflected significant year-over-year improvement in both 2011
and 2010;
‰the accretive benefits of recent acquisitions during 2011and 2010;
‰continued volume declines in 2010, and to a lesser extent in 2011, due to the economy, pricing,
competition and increasing focus on waste reduction and diversion by consumers;
‰higher salaries and wages due to annual merit increases in both 2011 and 2010 for salaried and hourly
employees. The increases during 2011 were offset, in large part, by the transfers of certain field sales
organization employees to the Corporate sales organization;
‰higher maintenance and repair costs during 2011; and
‰restructuring charges during 2011 and 2009.
Other significant items affecting the comparability of our Groups’ results of operations for the years ended
December 31, 2011, 2010 and 2009 are summarized below:
Eastern — During 2009, the Group recognized (i) an $18 million increase in revenues and income
from operations associated with an oil and gas lease at one of our landfills; and (ii) a $9 million charge
related to bargaining unit employees in New Jersey agreeing to our proposal to withdraw them from an
underfunded multiemployer pension fund.
Midwest — The income from operations of our Midwest Group in 2010 was significantly affected by
the recognition of charges of $26 million as a result of employees of five bargaining units in Michigan and
Ohio agreeing to our proposal to withdraw them from an underfunded multiemployer pension plan.
Additionally, when comparing the average exchange rate in 2010 with 2009, the Canadian exchange
rate strengthened by 10%, which increased the Group’s income from operations. The effects of foreign
currency translation were the most significant to this Group because substantially all of our Canadian
operations are managed by our Midwest Group.
Southern — The decrease in income from operations of our Southern Group for the year ended
December 31, 2011 as compared with 2010 was driven largely by the volume decline previously discussed,
which includes the unfavorable year-over-year impact of 2010 project volumes resulting from oil spill clean-up
activities along the Gulf Coast. Additionally, the Group recognized a charge of $11 million in 2011 related to
litigation reserves. This charge was initially recognized in “Other” during the fourth quarter of 2010.
Western — The Group’s income from operations included additional “Selling, general and
administrative” expense of $24 million recognized in 2011 as a result of a litigation loss and $12 million
recognized in 2010 in connection with a litigation settlement. The Group’s 2009 income from operations
included the recognition of an impairment charge of $27 million as a result of a change in expectations for
the future operations of an inactive landfill in California.
Further affecting the comparison of results was the recognition of $7 million of favorable adjustments
to landfill amortization expense during 2010 associated with our obligations for landfill final capping,
closure and post-closure and net expenses of $5 million recognized for adjustments related to these
obligations during 2009. The unfavorable adjustments during 2009 primarily related to a closed landfill in
Los Angeles, California for which the Group recognized additional amortization expense.
Wheelabrator — The decrease in income from operations of our Wheelabrator Group for the year
ended December 31, 2011 as compared with 2010 was driven largely by (i) lower revenues due to the
expiration of a long-term electric power capacity agreement that expired December 31, 2010 and the
expiration of other long-term contracts at our waste-to-energy and independent power facilities; (ii) an
increase in year-to-date costs at our facility in Portsmouth, Virginia that we acquired in April 2010 as we
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