Waste Management 2007 Annual Report Download - page 124

• WM Holdings has guaranteed all reimbursement obligations of WMI under its $350 million letter of credit
facility and $295 million letter of credit and term loan agreements. Under those facilities, WMI must
reimburse the entities funding the facilities for any draw on a letter of credit supported by the facilities. As of
December 31, 2007, we had $644 million in outstanding letters of credit under these facilities.
• In connection with the $350 million letter of credit facility, WMI and WM Holdings guaranteed the interest
rate swaps entered into by the entity funding the letter of credit facility. The probability of loss for the
guarantees was determined to be remote and the fair value of the guarantees is immaterial to our financial
position and results of operations.
• Certain of our subsidiaries have guaranteed the market value of certain homeowners’ properties that are
adjacent to certain of our landfills. These guarantee agreements extend over the life of the respective landfill.
Under these agreements, we would be responsible for the difference between the sale value and the
guaranteed market value of the homeowners’ properties, if any. Generally, it is not possible to determine the
contingent obligation associated with these guarantees, but we do not believe that these contingent
obligations will have a material effect on our financial position, results of operations or cash flows.
• We have indemnified the purchasers of businesses or divested assets for the occurrence of specified events
under certain of our divestiture agreements. Other than certain identified items that are currently recorded as
obligations, we do not believe that it is possible to determine the contingent obligations associated with these
indemnities. Additionally, under certain of our acquisition agreements, we have provided for additional
consideration to be paid to the sellers if established financial targets are achieved post-closing. The costs
associated with any additional consideration requirements are accounted for as incurred.
• WMI and WM Holdings guarantee the service, lease, financial and general operating obligations of certain
of their subsidiaries. If such a subsidiary fails to meet its contractual obligations as they come due, the
guarantor has an unconditional obligation to perform on its behalf. No additional liability has been recorded
for service, financial or general operating guarantees because the subsidiaries’ obligations are properly
accounted for as costs of operations as services are provided or general operating obligations as incurred. No
additional liability has been recorded for the lease guarantees because the subsidiaries’ obligations are
properly accounted for as operating or capital leases, as appropriate.
We currently do not believe it is reasonably likely that we would be called upon to perform under these
guarantees and do not believe that any of the obligations would have a material effect on our financial position,
results of operations and cash flows.
Environmental matters — Our business is intrinsically connected with the protection of the environment. As
such, a significant portion of our operating costs and capital expenditures could be characterized as costs of
environmental protection. Such costs may increase in the future as a result of legislation or regulation. However, we
generally do not believe that increases in environmental regulation negatively affect our business, because such
regulations increase the demand for our services, and we have the resources and experience to manage environ-
mental risk.
We are subject to an array of laws and regulations relating to the protection of the environment. Under current
laws and regulations, we may have liabilities for environmental damage caused by operations, or for damage caused
by conditions that existed before we acquired a site. Such liabilities include potentially responsible party , or PRP,
investigations, settlements, certain legal and consultant fees, as well as costs directly associated with site
investigation and clean up, such as materials and incremental internal costs directly related to the remedy.
Estimating our degree of responsibility for remediation of a particular site is inherently difficult and
determining the method and ultimate cost of remediation requires that a number of assumptions be made. Our
ultimate responsibility may differ materially from current estimates. It is possible that technological, regulatory or
enforcement developments, the results of environmental studies, the inability to identify other PRPs, the inability of
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)