Waste Management 2015 Annual Report Download - page 172

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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. 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 through 2021. We generally fulfill our minimum contractual obligations by
disposing of volumes collected in the ordinary course of business at these disposal facilities.
•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 or
landfills. 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, 2015. 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, 2015,
our estimated minimum obligations for the above-described purchase obligations, which are not recognized in
our Consolidated Balance Sheet, were $184 million in 2016, $164 million in 2017, $126 million in 2018, $100
million in 2019, $86 million in 2020 and $424 million thereafter. We currently expect the products and services
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, 2015, 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 2045. 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
and term loan, 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 these debt obligations.
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