Waste Management 2008 Annual Report Download - page 114
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Please find page 114 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.because we do not have sufficient available and forecasted capacity under our $2.4 billion revolving credit facility to
demonstrate our ability to do so at the balance sheet date.
Tax-exempt bonds — We actively issue tax-exempt bonds as a means of accessing low-cost financing for
capital expenditures. We issued $171 million of tax-exempt bonds during 2008. The proceeds from these debt
issuances may only be used for the specific purpose for which the money was raised, which is generally to finance
expenditures for landfill 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. During the year ended December 31, 2008, $20 million of our tax-
exempt bonds were repaid with either available cash or debt service funds.
We issue both fixed- and variable-rate tax-exempt obligations. Interest rates on variable-rate tax-exempt bonds
are reset on either a daily or weekly basis through a remarketing process. 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. As of December 31, 2008, we have $771 million of
variable-rate tax-exempt bonds. We classified these borrowings as long-term in our Consolidated Balance Sheet at
December 31, 2008 because the borrowings are supported by letters of credit issued under our five-year revolving
credit facility, which is long-term.
As of December 31, 2008, $347 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 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, $233 million of these bonds have been classified as long-term
in our Consolidated Balance Sheet as of December 31, 2008. 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. The classification of these obligations as long-term was limited to $233 million by the
available and forecasted capacity of our $2.4 billion revolving credit facility as of December 31, 2008.
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. During the year ended
December 31, 2008, we repaid $68 million of our tax-exempt project bonds with either available cash or debt
service funds.
As of December 31, 2008, 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, 2008 because the borrowings are supported by letters of credit issued
under our five-year revolving credit facility, which is long-term.
Additionally, as of December 31, 2008, we had $40 million of fixed rate tax-exempt project bonds 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 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.
Capital leases and other — The decrease in our capital leases and other debt obligations in 2008 is primarily
related to the repayment of various borrowings upon their scheduled maturities.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)