Waste Management 2006 Annual Report Download - page 115

construction and development, equipment, vehicles and facilities in support of our operations. Proceeds from bond
issues are held in trust until such time as we incur qualified expenditures, at which time we are reimbursed from the
trust funds. We issue both fixed and floating rate obligations. Interest rates on floating rate bonds are re-set on a
weekly basis and the underlying bonds are supported by letters of credit. During the year ended December 31, 2006,
$9 million of our tax-exempt bonds matured and were repaid with either available cash or debt service funds.
As of December 31, 2006, $255 million of fixed rate tax-exempt bonds are subject to repricing within the next
twelve months, which is prior to their scheduled maturities. If the re-offerings of the bonds are unsuccessful, then
the bonds can be put to us, requiring immediate repayment. These bonds are not backed by letters of credit
supported by our long-term facilities that would serve to guarantee repayment in the event of a failed re-offering and
are, therefore, considered a current obligation for financial reporting purposes. However, these bonds have been
classified as long-term in our Consolidated Balance Sheet as of December 31, 2006. The classification of these
obligations as long-term was based upon our intent to refinance the borrowings with other long-term financings in
the event of a failed re-offering and our ability, in the event other sources of long-term financing are not available, to
use our five-year revolving credit facility.
In addition, as of December 31, 2006, we have $606 million of tax-exempt bonds that are remarketed either
daily or weekly by a remarketing agent to effectively maintain a variable yield. If the remarketing agent is unable to
remarket the bonds, then the remarketing agent can put the bonds to us. These bonds are supported by letters of
credit guaranteeing repayment of the bonds in this event. We classified these borrowings as long-term in our
Consolidated Balance Sheet at December 31, 2006 because the borrowings are supported by letters of credit
primarily issued under our five-year revolving credit facility, which is long-term.
Tax-exempt project bonds — Tax-exempt project bonds have been used by our Wheelabrator Group to finance
the development of waste-to-energy facilities. These facilities are integral to the local communities they serve, and,
as such, are supported by long-term contracts with multiple municipalities. The bonds generally have periodic
amortizations that are supported by the cash flow of each specific facility being financed. As of December 31, 2006,
we had $46 million of tax-exempt project bonds that are remarketed either daily or weekly by a remarketing agent to
effectively maintain a variable yield. If the remarketing agent is unable to remarket the bonds, then the remarketing
agent can put the bonds to us. These bonds are supported by letters of credit guaranteeing repayment of the bonds in
this event. We classified these borrowings as long-term in our Consolidated Balance Sheet at December 31, 2006
because the borrowings are supported by letters of credit primarily issued under our five-year revolving credit
facility, which is long-term. During the year ended December 31, 2006, we repaid $51 million of our tax-exempt
project bonds with either available cash or debt service funds.
Capital leases and other — The decrease in our capital leases and other debt obligations in 2006 is primarily
related to (i) the repayment of various borrowings upon their scheduled maturities and (ii) the deconsolidation of a
variable interest entity during the second quarter of 2006.
Scheduled debt and capital lease payments — The schedule of anticipated debt and capital lease payments
(including the current portion) for the next five years is presented below (in millions). 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 here because they will not result in cash payments.
2007 2008 2009 2010 2011
$815 $539 $681 $713 $247
Secured debt — Our debt balances are generally unsecured, except for $262 million of the tax-exempt project
bonds outstanding at December 31, 2006 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 $473 million and the related
subsidiaries’ future revenue. Additionally, our consolidated variable interest entities have $43 million of out-
standing borrowings that are collateralized by certain of their assets. These assets have a carrying value of
$380 million as of December 31, 2006. See Note 19 for further discussion.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)