Segment Reporting | 14. SEGMENT REPORTING The Company’s revenues are generated from the collection, transfer, recycling and disposal of non-hazardous solid waste and the treatment, recovery and disposal of non-hazardous E&P waste. No single contract or customer accounted for more than 10% of the Company’s total revenues at the consolidated or reportable segment level during the periods presented. The Company manages its operations through five geographic operating segments and its E&P segment, which includes the majority of the Company’s E&P waste treatment and disposal operations. The Company’s five geographic operating segments and its E&P segment comprise the Company’s reportable segments . Each operating segment is responsible for managing several vertically integrated operations, which are comprised of districts. In the third quarter of 2017, the Company moved a district from the Eastern segment to the Canada segment as a significant amount of its revenues are received from Canadian-based customers. The segment information presented herein reflects the realignment of this district. Under the current orientation, the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Louisiana, Mississippi, southern Oklahoma, western Tennessee and Texas; the Company’s Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming; the Company’s Eastern segment services customers located in Illinois, Iowa, Kentucky, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, eastern Tennessee, Vermont and Wisconsin; the Company’s Canada segment services customers located in the state of Michigan and in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan; and the Company’s Central segment services customers located in Arizona, Colorado, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming. The E&P segment services E&P customers located in Arkansas, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and along the Gulf of Mexico. The Company’s Chief Operating Decision Maker evaluates operating segment profitability and determines resource allocations based on several factors, of which the primary financial measure is segment EBITDA. The Company defines segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items, other income (expense) and foreign currency transaction gain (loss). Segment EBITDA is not a measure of operating income, operating performance or liquidity under generally accepted accounting principles and may not be comparable to similarly titled measures reported by other companies. The Company’s management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments. A reconciliation of segment EBITDA to Income (loss) before income tax provision is included at the end of this Note 14. Summarized financial information concerning the Company’s reportable segments for the years ended December 31, 2017, 2016 and 2015, is shown in the following tables: Year Ended December 31, 2017 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Depreciation and Amortization Capital Expenditures Total Assets (e) Southern $ 1,262,147 $ (146,283) $ 1,115,864 $ 258,560 $ 151,417 $ 117,441 $ 2,718,296 Western 1,127,146 (119,916) 1,007,230 323,648 95,724 100,000 1,573,955 Eastern 1,137,608 (178,394) 959,214 273,942 136,998 101,569 2,024,527 Canada 828,755 (99,978) 728,777 264,693 121,174 62,690 2,677,557 Central 716,655 (88,488) 628,167 237,136 78,199 78,000 1,297,118 E&P 199,063 (7,827) 191,236 90,597 42,500 12,274 981,980 Corporate (a), (d) - - - (32,501) 6,472 7,313 741,248 $ 5,271,374 $ (640,886) $ 4,630,488 $ 1,416,075 $ 632,484 $ 479,287 $ 12,014,681 Year Ended December 31, 2016 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Depreciation and Amortization Capital Expenditures Total Assets (e) Southern $ 809,926 $ (96,545) $ 713,381 $ 163,320 $ 99,323 $ 64,624 $ 2,869,841 Western 1,051,637 (116,318) 935,319 315,708 89,198 86,200 1,516,870 Eastern 741,283 (114,639) 626,644 189,220 88,748 77,478 1,519,576 Canada 476,585 (58,716) 417,869 153,446 71,228 25,380 2,554,324 Central 634,393 (72,852) 561,541 208,930 70,027 71,888 1,302,900 E&P 132,504 (11,395) 121,109 32,479 41,215 10,178 1,068,086 Corporate (a), (d) - - - (119,215) 4,173 8,975 272,328 $ 3,846,328 $ (470,465) $ 3,375,863 $ 943,888 $ 463,912 $ 344,723 $ 11,103,925 Year Ended December 31, 2015 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Depreciation and Amortization Capital Expenditures Total Assets (e) Southern $ 168,855 $ (23,566) $ 145,289 $ 35,718 $ 19,959 $ 20,779 $ 259,046 Western 984,283 (103,890) 880,393 290,937 83,073 82,118 1,498,296 Eastern 441,139 (75,313) 365,826 114,747 49,345 38,427 1,042,463 Canada 10,330 - 10,330 4,921 2,787 5,872 20,298 Central 559,801 (59,590) 500,211 184,006 64,072 57,163 1,070,505 E&P 226,782 (11,544) 215,238 70,132 47,339 31,632 1,115,234 Corporate (a), (d) - - - 1,933 2,859 2,842 66,229 $ 2,391,190 $ (273,903) $ 2,117,287 $ 702,394 $ 269,434 $ 238,833 $ 5,072,071 ____________________ (a) Corporate functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training and other administrative functions. Amounts reflected are net of allocations to the six operating segments. For the year ended December 31, 2016, amounts also include costs associated with the Progressive Waste acquisition, including direct acquisition expenses, severance-related expenses, excise taxes, share-based compensation expenses associated with Progressive Waste share-based grants existing at June 1, 2016 and incentive compensation expenses based on the achievement of acquisition synergy goals. For the year ended December 31, 2017, amounts also include Progressive Waste integration-related expenses, direct acquisition expenses and share-based compensation expenses associated with Progressive Waste share-based grants existing at June 1, 2016 . (b) Intercompany 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. (c) For those items included in the determination of segment EBITDA, the accounting policies of the segments are the same as those described in Note 1. (d) Corporate assets include cash, net deferred tax assets, debt issuance costs, equity investments, and corporate facility leasehold improvements and equipment. (e) Goodwill is included within total assets for each of the Company’s six operating segments. The following table shows changes in goodwill during the years ended December 31, 2016 and 2017, by reportable segment: Southern Western Eastern Canada Central E&P Total Balance as of December 31, 2015 $ 95,710 $ 373,820 $ 459,532 $ - $ 416,420 $ 77,343 $ 1,422,825 Goodwill acquired (a) 1,378,879 2,717 79,116 1,502,850 51,504 - 3,015,066 Goodwill adjustment for assets held for sale (4,566) - (5,244) - - - (9,810) Goodwill reclassified as assets held for sale - - (244) - - - (244) Impact of changes in foreign currency - - - (37,576) - - (37,576) Balance as of December 31, 2016 1,470,023 376,537 533,160 1,465,274 467,924 77,343 4,390,261 Goodwill acquired 7,510 20,971 275,006 7,127 1,018 - 311,632 Goodwill divested (32,338) - (4,354) - (667) - (37,359) Impairment loss - - - - - (77,343) (77,343) Goodwill adjustment for assets sold 2,205 - 321 - - - 2,526 Goodwill adjustment for assets held for sale (11,080) - - - - - (11,080) Impact of changes in foreign currency - - - 103,137 - - 103,137 Balance as of December 31, 2017 $ 1,436,320 $ 397,508 $ 804,133 $ 1,575,538 $ 468,275 $ - $ 4,681,774 ____________________ (a) During the year ended December 31, 2017, the Company recorded an adjustment for $15,339 to decrease the value of property and equipment acquired in the Progressive Waste acquisition. Property and equipment, net relating to operations in the United States and Canada are as follows: December 31, 2017 2016 United States $ 4,082,124 $ 4,002,665 Canada 738,810 735,390 Total $ 4,820,934 $ 4,738,055 A reconciliation of the Company’s primary measure of segment profitability (segment EBITDA) to Income (loss) before income tax provision in the Consolidated Statements of Net Income (Loss) is as follows: Years ended December 31, 2017 2016 2015 Southern segment EBITDA $ 258,560 $ 163,320 $ 35,718 Western segment EBITDA 323,648 315,708 290,937 Eastern segment EBITDA 273,942 189,220 114,747 Canada segment EBITDA 264,693 153,446 4,921 Central segment EBITDA 237,136 208,930 184,006 E&P segment EBITDA 90,597 32,479 70,132 Subtotal reportable segments 1,448,576 1,063,103 700,461 Unallocated corporate overhead (32,501) (119,215) 1,933 Depreciation (530,187) (393,600) (240,357) Amortization of intangibles (102,297) (70,312) (29,077) Impairments and other operating items (156,493) (27,678) (494,492) Interest expense (125,297) (92,709) (64,236) Interest income 5,173 602 487 Other income (expense), net 3,736 53 (1,005) Foreign currency transaction gain (loss) (2,200) 1,121 - Income (loss) before income tax provision $ 508,510 $ 361,365 $ (126,286) The following tables reflect a breakdown of the Company’s revenue and inter-company eliminations for the periods indicated: Year Ended December 31, 2017 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 3,181,447 $ (9,472) $ 3,171,975 68.5% Solid waste disposal and transfer 1,577,975 (609,567) 968,408 20.9 Solid waste recycling 161,730 (8,959) 152,771 3.3 E&P waste treatment, recovery and disposal 203,473 (11,468) 192,005 4.2 Intermodal and other 146,749 (1,420) 145,329 3.1 Total $ 5,271,374 $ (640,886) $ 4,630,488 100.0% Year Ended December 31, 2016 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 2,359,813 $ (7,766) $ 2,352,047 69.7% Solid waste disposal and transfer 1,155,410 (443,022) 712,388 21.1 Solid waste recycling 92,456 (6,941) 85,515 2.5 E&P waste treatment, recovery and disposal 132,286 (12,086) 120,200 3.6 Intermodal and other 106,363 (650) 105,713 3.1 Total $ 3,846,328 $ (470,465) $ 3,375,863 100.0% Year Ended December 31, 2015 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 1,378,679 $ (4,623) $ 1,374,056 64.9% Solid waste disposal and transfer 670,369 (255,200) 415,169 19.6 Solid waste recycling 47,292 (924) 46,368 2.2 E&P waste treatment, recovery and disposal 228,529 (13,156) 215,373 10.2 Intermodal and other 66,321 - 66,321 3.1 Total $ 2,391,190 $ (273,903) $ 2,117,287 100.0% |