Waste Management 2014 Annual Report Download - page 188

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(b) We currently expect substantially all of our net claims liability to be settled in cash over the next five years.
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,
including defense costs, when corporate indemnification is unavailable. Side A-only coverage cannot be
exhausted by payments to the Company, as the Company is not insured for any money it advances for defense
costs or pays as indemnity to the insured directors and officers.
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.
Operating Leases — Rental expense for leased properties was $159 million during 2014, $170 million
during 2013 and $180 million during 2012. Minimum contractual payments due for our operating lease
obligations are $103 million in 2015, $83 million in 2016, $70 million in 2017, $57 million in 2018, $47 million
in 2019 and $308 million thereafter. Our minimum contractual payments for lease agreements during future
periods is less than current year rent expense due to short-term leases and the sale of our Wheelabrator business.
Other Commitments
•Disposal — We have several agreements expiring at various dates through 2052 that require us to
dispose of a minimum number of tons at third-party disposal facilities. Under these put-or-pay
agreements, we are required to pay for the agreed upon minimum volumes regardless of the actual
number of tons placed at the facilities. We generally fulfill our minimum contractual obligations by
disposing of volumes collected in the ordinary course of business at these disposal facilities.
Additionally, following the sale of our Wheelabrator business, we entered into several agreements to
dispose of a minimum number of tons of waste at certain Wheelabrator facilities. These agreements
generally provide for fixed volume commitments, with certain market price resets, for up to seven years.
•Waste Paper — We are party to waste paper purchase agreements expiring at various dates through
2018 that require us to purchase a minimum number of tons of waste paper. The cost per ton we pay is
based on market prices.
•Royalties — We have various arrangements that require us to make royalty payments to third parties
including prior land owners, lessors or host communities where our operations are located. Our
obligations generally are based on per ton rates for waste actually received at our transfer stations,
landfills or waste-to-energy facilities. Royalty agreements that are non-cancelable and require fixed or
minimum payments are included in our “Capital leases and other” debt obligations in our Consolidated
Balance Sheet as disclosed in Note 7.
Our unconditional purchase obligations are generally established in the ordinary course of our business and
are structured in a manner that provides us with access to important resources at competitive, market-driven
rates. We may also establish unconditional purchase obligations in conjunction with acquisitions or divestitures.
Our actual future minimum obligations under these outstanding purchase agreements are generally quantity
driven and, as a result, our associated financial obligations are not fixed as of December 31, 2014. For contracts
that require us to purchase minimum quantities of goods or services, we have estimated our future minimum
obligations based on the current market values of the underlying products or services. As of December 31, 2014,
our estimated minimum obligations for the above-described purchase obligations, which are not recognized in
our Consolidated Balance Sheet, were $189 million in 2015, $172 million in 2016, $156 million in 2017, $116
million in 2018, $91 million in 2019 and $430 million thereafter. We currently expect the products and services
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