Waste Management 2007 Annual Report Download - page 123

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the terms and conditions of long-term contracts. Our purchase agreements have been established based on
the plants’ anticipated fuel supply needs to meet the demands of our customers under these long-term
electricity sale contracts. Under our fuel supply take-or-pay contracts, we are generally obligated to pay for a
minimum amount of waste or conventional fuel at a stated rate even if such quantities are not required in our
operations.
•Disposal — We have several agreements expiring at various dates through 2024 that require us to dispose of
a minimum number of tons at third-party disposal facilities. Under these put-or-pay agreements, we are
required to pay for the agreed upon minimum volumes regardless of the actual number of tons placed at the
facilities.
•Waste Paper — We are party to a waste paper purchase agreement that requires us to purchase a minimum
number of tons of waste paper. The cost per ton we pay is based on market prices plus the cost of delivery to
our customers. We currently expect to fulfill our purchase obligation in 2012.
•Royalties — At some of our landfills, we are required to make minimum royalty payments to the prior land
owners, lessors or host communities where the landfills are located. Our obligations expire at various dates
through 2023. Although we have an obligation to make minimum payments, actual payments are based on
per ton rates for waste received at the landfill and are significantly higher.
•Property — From time to time, we make commitments to purchase assets that we expect to use in our
operations. We are currently party to an agreement to purchase a corporate aircraft to replace an existing
aircraft, the lease for which is expiring in 2010. The agreement requires that we make installment payments
between now and delivery, expected in 2010, based on the total purchase price for the aircraft.
Our unconditional obligations are established in the ordinary course of our business and are structured in a
manner that provides us with access to important resources at competitive, market-driven rates. Our actual future
obligations under these outstanding agreements are generally quantity driven, and, as a result, our associated
financial obligations are not fixed as of December 31, 2007. We currently expect the products and services provided
by these agreements to continue to meet the needs of our ongoing operations. Therefore, we do not expect these
established arrangements to materially impact our future financial position, results of operations or cash flows.
Guarantees — We have entered into the following guarantee agreements associated with our operations:
• As of December 31, 2007, WM Holdings has fully and unconditionally guaranteed all of WMI’s senior
indebtedness, which matures through 2032. WMI has fully and unconditionally guaranteed all of the senior
indebtedness of WM Holdings, which matures through 2026. Performance under these guarantee agree-
ments would be required if either party defaulted on their respective obligations. No additional liabilities
have been recorded for these guarantees because the underlying obligations are reflected in our Consolidated
Balance Sheets. See Note 22 for further information.
• WMI and WM Holdings have guaranteed the tax-exempt bonds and other debt obligations of their
subsidiaries. If a subsidiary fails to meet its obligations associated with its debt agreements as they come
due, WMI or WM Holdings will be required to perform under the related guarantee agreement. No
additional liabilities have been recorded for these guarantees because the underlying obligations are
reflected in our Consolidated Balance Sheets. See Note 7 for information related to the balances and
maturities of our tax-exempt bonds.
• We have guaranteed certain financial obligations of unconsolidated entities. The related obligations, which
mature through 2020, are not recorded on our Consolidated Balance Sheets. As of December 31, 2007, our
maximum future payments associated with these guarantees are approximately $12 million. We do not
believe that it is likely that we will be required to perform under these guarantees.
88
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)