Waste Management 2008 Annual Report Download - page 122
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Please find page 122 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.In addition, Waste Management Holdings, Inc. and certain of its subsidiaries provided post-retirement health
care and other benefits to eligible employees. In conjunction with our acquisition of WM Holdings in July 1998, we
limited participation in these plans to participating retired employees as of December 31, 1998. The unfunded
benefit obligation for these plans was $52 million at December 31, 2008.
Our accrued benefit liabilities for our defined benefit pension and other post-retirement plans are $77 million
as of December 31, 2008 and are included as a component of “Accrued liabilities” in our Consolidated Balance
Sheet.
We are a participating employer in a number of trustee-managed multi-employer, defined benefit pension
plans for employees who participate in collective bargaining agreements. Contributions of $35 million in 2008,
$33 million in 2007 and $37 million in 2006 were charged to operations for our subsidiaries’ ongoing participation
in these defined benefit plans. Our portion of the projected benefit obligation, plan assets and unfunded liability of
the multi-employer pension plans are not material to our financial position. Specific benefit levels provided by
union pension plans are not negotiated with or known by the employer contributors.
Based on our negotiations with collective bargaining units and our review of the plans in which they
participate, we may negotiate for the complete or partial withdrawal from one or more of these pension plans. If we
elect to withdraw from these plans, we may incur expenses associated with our obligations for unfunded vested
benefits at the time of the withdrawal. As discussed in Note 10, in 2008, we recognized an aggregate charge of
$39 million to “Operating” expenses for the withdrawal of certain bargaining units from multi-employer pension
plans.
10. Commitments and Contingencies
Financial instruments — We have obtained letters of credit, performance bonds and insurance policies and
have established trust funds and issued financial guarantees to support tax-exempt bonds, contracts, performance of
landfill closure and post-closure requirements, environmental remediation, and other obligations.
Historically, our revolving credit facilities have been used to obtain letters of credit to support our bonding and
financial assurance needs. We also have two letter of credit and term loan agreements that were established to provide us
with additional sources of capacity from which we may obtain letters of credit. These facilities are discussed further in
Note 7. We obtain surety bonds and insurance policies from an entity in which we have a non-controlling financial
interest. We also obtain insurance from a wholly-owned insurance company, the sole business of which is to issue policies
for the parent holding company and its other subsidiaries, to secure such performance obligations. In those instances
where our use of captive insurance is not allowed, we generally have available alternative bonding mechanisms.
Because virtually no claims have been made against the financial instruments we use to support our
obligations, and considering our current financial position, management does not expect that any claims against
or draws on these instruments would have a material adverse effect on our consolidated financial statements. We
have not experienced any unmanageable difficulty in obtaining the required financial assurance instruments for our
current operations. In an ongoing effort to mitigate risks of future cost increases and reductions in available
capacity, we continue to evaluate various options to access cost-effective sources of financial assurance.
Insurance — We carry insurance coverage for protection of our assets and operations from certain risks
including automobile liability, general 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
exposure, however, could increase if our insurers were unable to meet their commitments on a timely basis.
We have retained a significant portion of the risks related to our automobile, general liability and workers’
compensation insurance programs. For our self-insured retentions, the exposure for unpaid claims and associated
expenses, including incurred but not reported losses, is based on an actuarial valuation and internal estimates. The
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)