Waste Management 2008 Annual Report Download - page 123
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Please find page 123 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.estimated accruals for these liabilities could be affected if future occurrences or loss development significantly
differ from the assumptions used. As of December 31, 2008, our general liability insurance program carried self-
insurance exposures of up to $2.5 million per incident and our workers’ compensation insurance program carried
self-insurance exposures of up to $5 million per incident. As of December 31, 2008, our auto liability insurance
program included a per-incident base deductible of $1 million, subject to additional aggregate deductibles in the
$1 million to $5 million layer and the $5 million to $10 million layer of $2.4 million and $2.5 million, respectively.
Self-insurance claims reserves acquired as part of our acquisition of WM Holdings in July 1998 were discounted at
2.25% at December 31, 2008 and 4.0% at December 31, 2007. The changes to our net insurance liabilities for the
years ended December 31, 2007 and 2008 are summarized below (in millions):
Gross Claims
Liability
Estimated Insurance
Recoveries(a)
Net Claims
Liability
Balance, December 31, 2005 . . . ............... $660 $(311) $ 349
Self-insurance expense (benefit) .............. 233 (31) 202
Cash (paid) received ....................... (241) 75 (166)
Balance, December 31, 2006 . . . ............... 652 (267) 385
Self-insurance expense (benefit) .............. 144 (1) 143
Cash (paid) received ....................... (225) 54 (171)
Balance, December 31, 2007 . . . ............... 571 (214) 357
Self-insurance expense (benefit) .............. 169 (28) 141
Cash (paid) received ....................... (209) 51 (158)
Balance, December 31, 2008 . . . ............... $531 $(191) $ 340
Current portion at December 31, 2008 ........... $142 $ (63) $ 79
Long-term portion at December 31, 2008 ......... $389 $(128) $ 261
(a) Amounts reported as estimated insurance recoveries are related to both paid and unpaid claims liabilities.
For the 14 months ended January 1, 2000, we insured certain risks, including auto, general liability and
workers’ compensation, with Reliance National Insurance Company, whose parent filed for bankruptcy in June
2001. In October 2001, the parent and certain of its subsidiaries, including Reliance National Insurance Company,
were placed in liquidation. We believe that because of probable recoveries from the liquidation, currently estimated
to be $15 million, it is unlikely that events relating to Reliance will have a material adverse impact on our financial
statements.
We do not expect the impact of any known casualty, property, environmental or other contingency to have a
material impact on our financial condition, results of operations or cash flows.
Operating leases — Rental expense for leased properties was $114 million, $135 million and $122 million
during 2008, 2007 and 2006, respectively. These amounts primarily include rents under operating leases. Minimum
contractual payments due for our operating lease obligations are $81 million in 2009, $71 million in 2010,
$58 million in 2011, $57 million in 2012 and $46 million in 2013.
Our minimum contractual payments for lease agreements during future periods is significantly less than
current year rent expense because our significant lease agreements at landfills have variable terms based either on a
percentage of revenue or a rate per ton of waste received.
Other commitments — We have the following unconditional obligations:
•Fuel Supply — We have purchase agreements expiring at various dates through 2011 that require us to
purchase minimum amounts of wood waste, anthracite coal waste (culm) and conventional fuels at our
independent power production plants. These fuel supplies are used to produce steam that is sold to industrial
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)