Waste Management 2014 Annual Report Download - page 189

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
provided by these agreements to continue to meet the needs of our ongoing operations. Therefore, we do not
expect these established arrangements to materially impact our future financial position, results of operations or
cash flows.
Guarantees — We have entered into the following guarantee agreements associated with our operations:
• As of December 31, 2014, WM Holdings has fully and unconditionally guaranteed all of WM’s senior
indebtedness, including its senior notes, $2.25 billion revolving credit agreement and certain letter of
credit facilities, which mature through 2039. WM has fully and unconditionally guaranteed the senior
indebtedness of WM Holdings, which matures in 2026. Performance under these guarantee agreements
would be required if either party defaulted on their respective obligations. No additional liabilities have
been recorded for these guarantees because the underlying obligations are reflected in our Consolidated
Balance Sheets. See Note 23 for further information.
• WM and WM Holdings have guaranteed subsidiary debt obligations, including the Canadian credit
facility, tax-exempt bonds, capital leases and other indebtedness. If a subsidiary fails to meet its
obligations associated with its debt agreements as they come due, WM or WM Holdings will be
required to perform under the related guarantee agreement. No additional liabilities have been recorded
for these guarantees because the underlying obligations are reflected in our Consolidated Balance
Sheets. See Note 7 for information related to the balances and maturities of our tax-exempt bonds.
• Before the divestiture of our Wheelabrator business, WM had guaranteed certain performance and
financial guarantees of Wheelabrator and its subsidiaries in the ordinary course of business. In
conjunction with the divestiture, certain WM guarantees of Wheelabrator obligations were terminated,
but others continued and are now guarantees of third-party obligations. Wheelabrator is working with
the various third-party beneficiaries to release WM from these guarantees, but until they are successful,
WM has agreed to retain the guarantees and, in exchange, receive a credit support fee. The most
significant of these guarantees specifically define WM’s maximum financial obligation over the course
of the relevant agreements, and as of December 31, 2014, WM’s maximum future payments associated
with those guarantees is $176 million. WM’s exposure under certain of the performance guarantees is
variable and a maximum exposure is not defined. We have recorded the fair value of the financial and
performance guarantees, some of which could extend through 2041 if not sooner terminated, in our
December 31, 2014 Consolidated Balance Sheet. The estimated fair value of WM’s potential obligation
associated with guarantees of Wheelabrator obligations is $18 million (net of credit support fee). We
currently do not expect the financial impact of such performance and financial guarantees to materially
exceed the recorded fair value.
• We have guaranteed certain financial obligations of unconsolidated entities. The related obligations,
which mature through 2020, are not recorded on our Consolidated Balance Sheets. As of December 31,
2014, our maximum future payments associated with these guarantees are approximately $8 million.
Any requirement to act under these guarantees would not materially impact our financial position,
results of operations or cash flows.
• Certain of our subsidiaries have guaranteed the market or contractually-determined value of certain
homeowners’ properties that are adjacent to certain of our landfills. These guarantee agreements extend
over the life of the respective landfill. Under these agreements, we would be responsible for the
difference, if any, between the sale value and the guaranteed market or contractually-determined value
of the homeowners’ properties. As of December 31, 2014, we have agreements guaranteeing certain
market value losses for approximately 800 homeowners’ properties adjacent to or near 20 of our
landfills. We do not believe that these contingent obligations will have a material effect on our
financial position, results of operations or cash flows.
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