Waste Management 2006 Annual Report Download - page 44

(c) On August 17, 2006, WMI entered into a five-year, $2.4 billion revolving credit facility that matures in August
2011, replacing a $2.4 billion revolving credit facility that would have expired in 2009. At December 31, 2006,
we had unused and available credit capacity of $1,099 million under our revolving credit facility.
(d) In June 2003, we entered into a five-year, $15 million letter of credit and term loan agreement, a seven-year,
$175 million letter of credit and term loan agreement and a ten-year, $105 million letter of credit and term loan
agreement, which expire in June 2008, 2010, and 2013, respectively (collectively, the “LC and term loan
agreements”). At December 31, 2006, the entire capacity under the LC and term loan agreements was used to
support outstanding letters of credit.
(e) In December 2003, we entered into a five-year, $350 million letter of credit facility (the “letter of credit facility”).
At December 31, 2006, $4 million was unused and available under the facility to support letters of credit.
(f) Our funded trust and escrow accounts have been established to support landfill closure, post-closure and
remedial obligations, the repayment of debt obligations and our performance under various operating
contracts. Balances maintained in these trust funds and escrow accounts will fluctuate based on (i) changes
in statutory requirements; (ii) future deposits made to comply with contractual arrangements; (iii) the ongoing
use of funds for qualifying activities; (iv) acquisitions or divestitures of landfills; and (v) changes in the fair
value of the financial instruments held in the trust fund or escrow accounts.
(g) Financial guarantees are provided on behalf of our subsidiaries to municipalities, customers and regulatory
authorities. They are provided primarily to support our performance of landfill closure and post-closure activities.
The assets held in our funded trust and escrow accounts may be drawn and used to meet the obligations for which
the trusts and escrows were established. Other than these permitted draws on funds, virtually no claims have been made
against our financial assurance instruments in the past, and considering our current financial position, management does
not expect there to be claims against these instruments that will have a material adverse effect on our consolidated
financial statements. In an ongoing effort to mitigate the risks of future cost increases and reductions in available
capacity, we are continually evaluating various options to access cost-effective sources of financial assurance.
Insurance
We also carry a broad range of insurance coverages, including general liability, automobile liability, real and
personal property, workers’ compensation, directors’ and officers’ liability, pollution legal liability and other
coverages we believe are customary to the industry. Our exposure to loss for insurance claims is generally limited to
the per incident deductible under the related insurance policy. Our general liability insurance program has a per
incident deductible of $2.5 million and our workers’ compensation and auto insurance programs each have per
incident deductibles of $1 million. Effective January 1, 2007, we increased the per incident deductible for our
workers’ compensation insurance program to $1.5 million. We do not expect the impact of any known casualty,
property, environmental or other contingency to be material to our financial condition, results of operations or cash
flows. Our estimated insurance liabilities as of December 31, 2006 are summarized in Note 10 to the Consolidated
Financial Statements.
Regulation
Our business is subject to extensive and evolving federal, state or provincial and local environmental, health,
safety and transportation laws and regulations. These laws and regulations are administered by the EPA and various
other federal, state and local environmental, zoning, transportation, land use, health and safety agencies in the
United States and various agencies in Canada. Many of these agencies regularly examine our operations to monitor
compliance with these laws and regulations and have the power to enforce compliance, obtain injunctions or impose
civil or criminal penalties in case of violations.
Because the major component of our business is the collection and disposal of solid waste in an environ-
mentally sound manner, a significant amount of our capital expenditures is related, either directly or indirectly, to
environmental protection measures, including compliance with federal, state or provincial and local provisions that
regulate the discharge of materials into the environment. There are costs associated with siting, design, operations,
monitoring, site maintenance, corrective actions, financial assurance, and facility closure and post-closure obli-
gations. In connection with our acquisition, development or expansion of a disposal facility or transfer station, we
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