Waste Management 2011 Annual Report Download - page 210

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(a) Our “Other” net operating revenues and “Other” income from operations include (i) the effects of those
elements of our in-plant services, landfill gas-to-energy operations, and third-party subcontract and
administration revenues managed by our Sustainability Services, Renewable Energy and Strategic Accounts
organizations, including Oakleaf, respectively, that are not included with the operations of our reportable
segments; (ii) our recycling brokerage and electronic recycling services; and (iii) the impacts of investments
that we are making in expanded service offerings, such as portable self-storage, fluorescent lamp recycling
and healthcare solutions, and in oil and gas producing properties. In addition, our “Other” income from
operations reflects the impacts of (i) non-operating entities that provide financial assurance and self-
insurance support for the Groups or financing for our Canadian operations; and (ii) certain year-end
adjustments recorded in consolidation 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 five 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 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 four geographic Groups is generally indicative of the margins
provided by our collection, landfill, transfer and recycling businesses. The operating margins provided by
our Wheelabrator Group (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. However, the revenues and operating results of our Wheelabrator Group have
been unfavorably affected by a significant decrease in the rates charged for electricity under our power
purchase contracts, which correlate with natural gas prices in the markets where we operate. Exposure to
market fluctuations in electricity prices increased for the Wheelabrator Group in 2009 due in large part to
the expiration of several long-term energy contracts. Additionally, the Company’s current focus on the
expansion of our waste-to-energy business both internationally and domestically has increased
Wheelabrator’s costs and expenses, which has negatively affected the comparability of their operating
results for the periods presented. 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 12 and Note 13 for an explanation of certain transactions and
events affecting the operating results of our reportable segments.
(f) Includes non-cash items. Capital expenditures are reported in our reportable 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.
(g) The reconciliation of total assets reported above to “Total assets” in the Consolidated Balance Sheets is as
follows (in millions):
December 31,
2011 2010 2009
Total assets, as reported above .............................. $23,241 $22,169 $21,801
Elimination of intercompany investments and advances .......... (672) (693) (647)
Total assets, per Consolidated Balance Sheets ................. $22,569 $21,476 $21,154
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