Waste Management 2008 Annual Report Download - page 115
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Please find page 115 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Scheduled debt and capital lease payments — Scheduled debt and capital lease payments for the next five
years are as follows: $1,184 million in 2009; $719 million in 2010; $255 million in 2011; $583 million in 2012; and
$170 million in 2013. Our recorded debt and capital lease obligations include non-cash adjustments associated with
discounts, premiums and fair value adjustments for interest rate hedging activities, which have been excluded from
these amounts because they will not result in cash payments.
Scheduled debt maturities for 2009 include (i) the $300 million borrowing outstanding under the revolving
credit facility; (ii) US$247 million of advances outstanding under the Canadian credit facility; (iii) $500 million of
6.875% senior notes that mature in May 2009; (iv) $41 million of tax-exempt bonds; (v) $63 million of tax-exempt
project bonds; and (vi) $33 million of capital leases and other debt obligations. As discussed above, $509 million of
these borrowings have been classified as long-term based on our intent and ability to refinance the obligations on a
long-term basis.
Secured debt — Our debt balances are generally unsecured, except for $133 million of the tax-exempt project
bonds outstanding at December 31, 2008 that were issued by certain subsidiaries within our Wheelabrator Group.
These bonds are secured by the related subsidiaries’ assets that have a carrying value of $439 million and the related
subsidiaries’ future revenue.
Debt Covenants
Our revolving credit facility and certain other financing agreements contain financial covenants. The most
restrictive of these financial covenants are contained in our revolving credit facility. The following table sum-
marizes the requirements of these financial covenants and the results of the calculation, as defined by the revolving
credit facility:
Covenant
Requirement
per
Facility
December 31,
2008
December 31,
2007
Interest coverage ratio .......................... ⬎2.75 to 1 4.7 to 1 4.1 to 1
Total debt to EBITDA .......................... ⬍3.5 to 1 2.4 to 1 2.4 to 1
Our revolving credit facility and senior notes also contain certain restrictions intended to monitor our level of
indebtedness, types of investments and net worth. We monitor our compliance with these restrictions, but do not
believe that they significantly impact our ability to enter into investing or financing arrangements typical for our
business. As of December 31, 2008, we were in compliance with the covenants and restrictions under all of our debt
agreements.
Interest rate swaps
We manage the interest rate risk of our debt portfolio largely by using interest rate derivatives to achieve a
desired position of fixed and floating rate debt. As of December 31, 2008, the interest payments on $2.0 billion of
our fixed-rate debt have been swapped to variable rates, allowing us to maintain approximately 67% of our debt at
fixed interest rates and approximately 33% of our debt at variable interest rates. We do not use interest rate
derivatives for trading or speculative purposes. Our significant interest rate swap agreements that were outstanding
as of December 31, 2008 and 2007 are set forth in the table below (dollars in millions):
As of
Notional
Amount Receive Pay Maturity Date
Fair Value
Net
Asset/(Liability)(a)
December 31, 2008. . $1,950 Fixed 5.00%-7.65% Floating 1.22%-5.82% Through March 15, 2018 $ 92(b)
December 31, 2007. . $2,100 Fixed 5.00%-7.65% Floating 4.50%-9.09% Through December 15, 2017 $(28)(c)
(a) These interest rate derivatives qualify for hedge accounting. Therefore, the fair value adjustments to the
underlying debt are deferred and recognized as an adjustment to interest expense over the remaining term of the
hedged instrument.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)