NOTE 14. SUPPLEMENTARY INFORMATION

Waste and Service Revenues



	For the Years Ended December 31,
	2012		2011		2010
	(in millions)
Waste and service revenues unrelated to project debt	$	964	$	954	$	903
Revenue earned explicitly to service project debt - principal	39		43		60
Revenue earned explicitly to service project debt - interest	8		11		18
Total waste and service revenues	$	1,011	$	1,008	$	981

Under some of our service agreements, we bill municipalities fees to service project debt (principal and interest). The amounts billed are based on the actual principal amortization schedule for the project bonds. Regardless of the amounts billed to client communities relating to project debt principal, we recognize revenue earned explicitly to service project debt principal on a levelized basis over the term of the applicable agreement. In the beginning of the agreement, principal billed is less than the amount of levelized revenue recognized related to principal and we record an unbilled service receivable asset. At some point during the agreement, the amount we bill will exceed the levelized revenue and the unbilled service receivable begins to reduce, and ultimately becomes nil at the end of the contract.

In the final year(s) of a contract, cash may be utilized from available debt service reserve accounts to pay remaining principal amounts due to project bondholders and such amounts are no longer billed to or paid by municipalities. Generally, therefore, in the last year of the applicable agreement, little or no cash is received from municipalities relating to project debt, while our levelized service revenue continues to be recognized until the expiration date of the term of the agreement.

Operating Costs

Other operating expenses

The components of other operating expenses are as follows (in millions):



	For the Years Ended December 31,
	2012			2011			2010
Construction costs	$	141		$	143		$	101
Insurance subsidiary operating expenses ⁽¹⁾	16			16			23
Pension plan settlement expense ⁽²⁾	11			—			—
Gain on sale of business	—			(9		)	—
Insurance recoveries ⁽³⁾	(7		)	(5		)	(1		)
Foreign exchange gain	(1		)	(5		)	(1		)
Other	(4		)	(2		)	(2		)
Total other operating expenses	$	156		$	138		$	120


(1)	Insurance subsidiary operating expenses are primarily comprised of incurred but not reported loss reserves, loss adjustment expenses and policy acquisition costs. During the year ended December 31, 2012, we transitioned our remaining insurance business to run-off and recorded additional losses of $7 million primarily relating to adverse loss development and reserve increases.


(2)	In 2012, we terminated our pension plan. For additional information, see Note 16. Employee Benefit Plans.


(3)	See Stanislaus Energy-from-Waste Facility discussion below.

Stanislaus Energy-from-Waste Facility

In January 2012, our Stanislaus, California energy-from-waste facility experienced a turbine generator failure. Damage to the turbine generator was extensive and operations at the facility were suspended promptly to assess the cause and extent of damage. The facility is capable of processing waste without utilizing the turbine generator to generate electricity, and we resumed waste processing operations during the first quarter of 2012. The facility began to generate electricity during the fourth quarter of 2012 and is fully operational. The cost of repair or replacement, and business interruption losses, were insured under the terms of applicable insurance policies, subject to deductibles. During 2012, we received insurance recoveries of approximately $11 million under applicable insurance policies. Approximately $2 million of the insurance recoveries offset the write-down of assets for the repair and reconstruction of the turbine and property, $2 million was recorded as reductions to plant operating expenses and other operating expenses and $7 million was recorded as a gain from insurance recoveries in our consolidated statements of income.

Net (Gains) Write-offs

The components of net (gains) write-offs are as follows (in millions):



	For the Years Ended December 31,
	2012			2011		2010
Americas segment:
Write-off of intangible liability ⁽¹⁾	$	(29	)	$	—	$	—
Write-off of renewable fuels project ⁽²⁾	16			—		—
Net gain related to lease termination ⁽³⁾	(44		)	—		—
Write-off of loan issued for the Harrisburg EfW facility to fund certain facility improvements ⁽⁴⁾	—			—		7
Write-off of other assets ⁽⁵⁾	—			—		4
Other:
Development costs ⁽⁶⁾	11			5		—
Write-off of capitalized costs related to the Dublin development project ⁽⁷⁾	—			—		23
Total net (gains) write-offs	$	(46	)	$	5	$	34


(1)	During 2012, our service contract for the Essex EfW facility was amended and we recorded a non-cash write-off of an intangible liability of $29 million related to the below-market service contract which was recorded at fair value upon acquisition of the facility. For additional information, see Note 3. Business Development and Acquisitions.


(2)	During 2012, we suspended construction of a facility that transformed waste materials into renewable liquid fuels. We recorded a non-cash write-off of $16 million representing the capitalized costs related to this project.


(3)	During 2012, we recorded a net gain related to the termination of the pre-existing lease in connection with the Delaware Valley EfW acquisition. For additional information, see Note 3. Business Development and Acquisitions.


(4)	See Harrisburg Energy-from-Waste Facility discussion below.


(5)	During 2010, we recorded a non-cash impairment charge of $4 million which is comprised primarily of the write-down of real estate for our corporate office and certain project assets to estimated fair value.


(6)	During 2012, we recorded a non-cash write-off of $11 million of capitalized development costs related to a development project which we ceased to pursue in the United Kingdom. During 2011, we recorded a non-cash write-off of $5 million of capitalized development costs and land related to a development project which we ceased to pursue in the United Kingdom.


(7)	See Dublin Joint Venture discussion below.

Harrisburg Energy-from-Waste Facility

In 2008, we entered into a ten year agreement with The Harrisburg Authority to maintain and operate an 800 ton per day energy-from-waste facility located in Harrisburg, Pennsylvania. We also agreed to provide construction management services and to advance up to $26 million in funding to The Harrisburg Authority for certain facility improvements required to enhance facility performance, which improvements were substantially completed during 2010. The repayment of this funding is guaranteed by the City of Harrisburg, but is otherwise unsecured, and is junior to project bondholders' rights. We had advanced $22 million, of which $20 million was outstanding as of December 31, 2010 under this funding arrangement. On October 5, 2010, we filed suit against the City of Harrisburg in the Dauphin County Court of Common Pleas seeking to enforce our rights under the City's guaranty. On December 15, 2010, the City of Harrisburg was formally admitted to the State oversight program for distressed municipalities known as Act 47. In 2010, we recorded a non-cash impairment charge of $7 million, pre-tax, to write-down the receivable to $13 million, which was calculated based on a range of potential outcomes utilizing various estimated cash flows for the receivable. In October 2011, the City of Harrisburg filed for protection under the bankruptcy laws. In November 2011, the bankruptcy court dismissed the filing as prohibited under state law, and the City appealed the dismissal. The City's appeal was denied in February 2012. In June 2012, the Lancaster County Solid Waste Management Authority was selected by the Office of the Receiver for the City of Harrisburg as the winner of a competitive bidding process to enter into immediate negotiations for the purchase of the Harrisburg energy-from-waste facility. We intend to continue to pursue our lawsuit in parallel with efforts to work with the Office of the Receiver for the City of Harrisburg and other stakeholders to protect the full recovery of our advance and to maintain our position in the project.

Dublin Joint Venture

In 2007, we entered into agreements to build, own, and operate a 1,700 metric tpd energy-from-waste project serving the City of Dublin, Ireland and surrounding communities at an estimated cost of €350 million. Dublin Waste to Energy Limited, which we control and co-own with DONG Energy Generation A/S, developed the project and has a 25 year tip fee type contract to provide disposal service for 320,000 metric tons of waste annually, representing approximately 50% of the facility’s processing capacity. The project was expected to sell electricity into the local electricity grid, at rates partially supported by a preferential renewable tariff. While the primary approvals and licenses for the project have been obtained, the longstop date for acquiring necessary property rights and achieving certain other conditions precedent under the project agreement expired in September 2010, without the satisfaction of all the conditions precedent. The parties will need to agree to proceed and are currently working toward addressing the project issues while we also pursue project financing. We recorded a non-cash impairment charge of $23 million, pre-tax, during the year ended December 31, 2010, reducing the carrying value of the net assets to the present value of the expected cash flows to be recovered (Level 3 measure of fair value). This charge was comprised of the entire capitalized pre-construction and construction costs for the project, net of approximately $8 million in recoverable assets net of liabilities, of which approximately $4 million remain on the consolidated balance sheet as of December 31, 2012 and primarily related to recoverable premiums under project insurance.

Non-Cash Convertible Debt Related Expense

The components of non-cash convertible debt related expense are as follows (in millions):



	For the Years Ended December 31,
	2012			2011			2010
Debt discount accretion related to the 3.25% Notes	$	26		$	24		$	21
Debt discount accretion related to the Debentures	—			3			19
Fair value changes related to the cash convertible note hedge	(57		)	65			11
Fair value changes related to the cash conversion option derivative	56			(67		)	(12		)
Total non-cash convertible debt related expense	$	25		$	25		$	39

Other Income (Expense), Net

For the year ended December 31, 2012, other income (expense), net included a $3 million foreign currency gain related to intercompany loans. For the year ended December 31, 2011, other income (expense), net included a $15 million expense for a liability to pre-petition claimants and a $4 million foreign currency loss related to intercompany loans. See Note 15. Income Taxes for additional information related to the liability to pre-petition claimants.

Selected Supplementary Balance Sheet Information

Selected supplementary balance sheet information is as follows (in millions):



	As of December 31,
	2012		2011
Note Hedge (see Note 11)	$	104	$	47
Prepaid expenses	67		86
Land use rights and capitalized development costs	58		65
Other noncurrent receivables	27		17
Reinsurance recoverable on unpaid losses (see Note 1)	22		10
Other	65		40
Total other noncurrent assets	$	343	$	265
Operating expenses, payroll and related expenses	$	130	$	121
Accrued liabilities to client communities	23		27
Interest payable	17		12
Dividends payable	1		11
Other	34		40
Total accrued expenses and other current liabilities	$	205	$	211