Waste Management 2015 Annual Report Download - page 116

• Charges for the settlement of a legal dispute and related fees in 2014;
• Unfavorable adjustments in 2014 as well as favorable adjustments in 2013 related to changes in U.S.
Treasury rates used to discount the present value of our environmental remediation obligations and
recovery assets; and
• Increased risk management costs in 2015 primarily related to certain higher than anticipated auto and
general liability claim settlements and favorable risk management allocation in 2014.
Interest Expense, net
Our interest expense, net was $385 million in 2015, $466 million in 2014 and $477 million in 2013. During
2015, the decrease in interest expense was primarily attributable to the refinancing of a significant portion of our
high-coupon senior notes. As a result of the combination of a make-whole redemption of certain senior notes,
cash tender offers to purchase certain senior notes and the issuance of $1.8 billion of new senior notes, we
reduced the weighted average interest rate of our senior note portfolio by 1%. During 2014, the decrease in
interest expense was primarily attributable to (i) the impacts that lower market interest rates had on certain of our
tax-exempt debt; (ii) issuing new debt at lower fixed interest rates than debt repaid upon scheduled maturities and
(iii) reduced costs associated with our letter of credit facilities due to improvements in the Company’s overall
credit rating. These decreases were partially offset by increases in expense associated with our terminated interest
rate swaps due to the maturity of the underlying senior notes.
Loss on Early Extinguishment of Debt
During 2015, we refinanced a significant portion of our high-coupon senior notes. As a result of the
combination of a make-whole redemption of certain senior notes, cash tender offers to purchase certain senior
notes and the issuance of $1.8 billion of new senior notes, we reduced the weighted average interest rate of our
senior note portfolio by 1% and extended the weighted average duration of these debt obligations by three years.
Additional details related to each component of the refinancing follow:
Make-Whole Redemption — In January 2015, we repaid $947 million of WM senior notes, which comprised
all of the outstanding senior notes maturing in 2015, 2017 and 2019. The repayment of these debt balances
was achieved by exercising the optional redemption provisions of the notes, which required that we pay the
outstanding principal plus a make-whole premium. The “Loss on early extinguishment of debt” reflected in
our Consolidated Statement of Operations for the year ended December 31, 2015 includes the $122 million
of charges related to these redemptions.
Tender Offers — During 2015, WM and WM Holdings made cash tender offers to purchase any and all of
certain outstanding senior notes. The series of notes targeted in the tenders and the amounts tendered of each
series are summarized below:
• $449 million of WM Holdings 7.10% senior notes due 2026, of which $145 million were tendered;
• $577 million of WM 7.00% senior notes due 2028, of which $182 million were tendered;
• $223 million of WM 7.375% senior notes due 2029, of which $84 million were tendered;
• $496 million of WM 7.75% senior notes due 2032, of which $286 million were tendered; and
• $600 million of WM 6.125% senior notes due 2039, of which $326 million were tendered.
The “Loss on early extinguishment of debt” reflected in our Consolidated Statement of Operations for the
year ended December 31, 2015 includes $430 million of charges related to these tender offers.
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