Waste Management 2013 Annual Report Download - page 101

(b) We hold a noncontrolling interest in an entity that we use to obtain financial assurance. Our contractual
agreement with this entity does not specifically limit the amounts of surety bonds or insurance that we may
obtain, making our financial assurance under this agreement limited only by the guidelines and restrictions
of surety and insurance regulations.
(c) WM has a $2.25 billion revolving credit facility with a term extending through July 2018. At
December 31, 2013, we had $420 million of outstanding borrowings and $872 million of letters of credit
issued and supported by the facility. The unused and available credit capacity of the facility was $958
million as of December 31, 2013. We also have a C$150 million revolving credit facility which matures in
November 2017 and provides for up to C$50 million of letter of credit capacity. At December 31, 2013, we
had no letters of credit outstanding under this facility and outstanding borrowings of C$10 million. The
unused and available credit capacity of this facility was C$140 million as of December 31, 2013, of which
C$50 million may be used for letters of credit.
(d) We have an aggregate committed capacity of $400 million under letter of credit facilities with terms
ending through December 2016. This letter of credit capacity was fully utilized as of December 31, 2013.
(e) Our funded trust and escrow accounts generally have been established to support landfill final capping,
closure, post-closure and environmental remediation 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 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. 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.
(f) Financial guarantees are provided primarily to support our performance of landfill final capping, closure
and post-closure activities. The amount of financial assurance provided by such guarantees is dependent
upon measures of our tangible net worth and other criteria.
(g) The amount of financial assurance required can, and generally will, differ from the obligation determined
and recorded under U.S. Generally Accepted Accounting Principles (“GAAP”).
The assets held in our funded trust and escrow accounts may be drawn and used to meet the closure, post-
closure and remedial 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 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, business
interruption 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. As of December 31,
2013, our commercial General Liability Insurance Policy 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, 2013, our auto liability insurance program included a per-incident base
deductible of $5 million, subject to additional deductibles of $4.8 million in the $5 million to $10 million layer.
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. Our estimated insurance liabilities
as of December 31, 2013 are summarized in Note 11 to the Consolidated Financial Statements.
The Directors’ and Officers’ Liability Insurance policy we choose to maintain covers only individual
executive liability, often referred to as “Broad Form Side A,” and does not provide corporate reimbursement
coverage, often referred to as “Side B.” The Side A policy covers directors and officers directly for loss,
11