Waste Management 2014 Annual Report Download - page 131

Income from Operations
The following table summarizes income from operations for the years ended December 31 (dollars in
millions):
2014 Period-to- Period Change 2013 Period-to- Period Change 2012
Solid Waste:
Tier 1 ................................ $ 893 $ 41 4.8% $ 852 $ 1 0.1% $ 851
Tier 2 ................................ 1,318 27 2.1 1,291 21 1.7 1,270
Tier 3 ................................ 588 297 * 291 (213) (42.3) 504
Solid Waste ....................... 2,799 365 15.0 2,434 (191) (7.3) 2,625
Wheelabrator ............................. 669 1,186 * (517) (630) * 113
Other .................................... (400) (229) * (171) 71 (29.3) (242)
Corporate and other ........................ (769) (102) 15.3 (667) (22) 3.4 (645)
Total ............................ $2,299 $1,220 * $1,079 $(772) (41.7)% $1,851
*Percentage change does not provide a meaningful comparison.
Items affecting the comparability of our results of operations include (i) charges associated with our August
2014 and July 2012 restructurings; (ii) subsequent benefits realized as a result of these restructurings and ongoing
cost containment efforts; (iii) increased labor costs due to merit increases effective in 2014 and 2013 and
(iv) lower 2012 year-over-year incentive compensation costs.
Solid Waste — The comparability of our income from operations for the periods presented is driven by
$279 million of net charges primarily related to impairments recognized in 2013. The most significant
impairment charges were in our Eastern Canada Area, which is included in Tier 3, and were associated with the
impairment of certain landfills as discussed above in (Income) Expense from Divestitures, Asset Impairments
(Other than Goodwill) and Unusual Items. Other significant items affecting the results of operations of our Solid
Waste business during the three years ended December 31, 2014 are summarized below:
• Our base business benefited from (i) internal revenue growth, principally in our collection and disposal
business; (ii) increased fuel cost recovery and (iii) decreased fuel costs. These favorable variances were
offset, in part, by net cost increases driven by higher operating expenses in 2013;
• Results from our recycling business contributed favorably in 2014 when compared to the prior period
principally due to (i) increased efforts to reduce controllable recycling rebates paid to customers;
(ii) better alignment of rebate structures to commodity prices for new recycling contracts and (iii) ongoing
business improvement efforts around inbound quality control. These favorable variances more than offset
lower market prices for recyclable commodities and lower volumes. Results from our recycling business
contributed unfavorably in 2013 when compared to the prior period primarily due to (i) lower prices for
commodities; (ii) higher processing costs driven in part by increased outbound quality control in 2013 and
(iii) operating losses related to the operations of Greenstar acquired in 2013.
In addition, the following items affected comparability of 2014 to 2013 within specific segments:
• The loss on the sale of our Puerto Rico operations and certain other collection and landfill assets in
2014, which were included in Tier 3 and Tier 1, respectively;
• Adverse weather in the first quarter of 2014 unfavorably affected income from operations primarily in
Tier 2;
• The gain on the sale of certain landfill and collection operations in our Eastern Canada Area in 2014,
which were included in Tier 3;
• The accretive benefits of the RCI operations acquired in July 2013, which are included in Tier 3;
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