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Debt | 12 Months Ended
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Dec. 31, 2018
Debt |
Debt | 7. Debt The following table summarizes the major components of debt as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31:
|  | 2018 |  | 2017
Revolving credit facility (weighted average interest rate of 3.1% as of December 31, 2018) |  | $ | 11 |  | $ | —
Commercial paper program (weighted average interest rate of 2.9% as of December 31, 2018 and 1.9% as of December 31, 2017) |  |  | 990 |  |  | 515
Canadian term loan and revolving credit facility (weighted average effective interest rate of 2.5% as of December 31, 2017) |  |  | — |  |  | 113
Senior notes, maturing through 2045, interest rates ranging from 2.4% to 7.75% (weighted average interest rate of 4.3% as of December 31, 2018 and December 31, 2017) |  |  | 6,222 |  |  | 6,222
Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 1.35% to 4.3% (weighted average interest rate of 2.35% as of December 31, 2018 and 2.0% as of December 31, 2017) |  |  | 2,388 |  |  | 2,370
Capital leases and other, maturing through 2040, interest rates up to 12% |  |  | 467 |  |  | 327
Debt issuance costs, discounts and other |  |  | (52) |  |  | (56)
|  |  | 10,026 |  |  | 9,491
Current portion of long-term debt |  |  | 432 |  |  | 739
|  | $ | 9,594 |  | $ | 8,752
Debt Classification As of December 31, 2018, we had $1.9 billion of debt maturing within the next 12 months, including (i) $990 million of short-term borrowings under our commercial paper program; (ii) $705 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) $161 million of other debt with scheduled maturities within the next 12 months, including $106 million of tax-exempt bonds and (iv) C$15 million, or $11 million, of Canadian borrowings under our long-term U.S. and Canadian revolving credit facility (“$2.75 billion revolving credit facility”). Of the $990 million of short-term borrowings outstanding under our commercial paper program as of December 31, 2018 that are supported by our $2.75 billion revolving credit facility, we have the intent and ability to refinance or maintain approximately $730 million of these borrowings on a long-term basis, and we have classified these amounts as long-term debt. As of December 31, 2018, we have classified an additional $705 million of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $2.75 billion revolving credit facility, as discussed below. The remaining $432 million of debt maturing in the next 12 months is classified as current obligations. As of December 31, 2018, we also have $268 million of variable-rate tax-exempt bonds that are supported by letters of credit under our $2.75 billion revolving credit facility. The interest rates on our variable-rate tax-exempt bonds are generally reset on either a daily or weekly basis through a remarketing process. All recent tax-exempt bond remarketings have successfully placed Company bonds with investors at market-driven rates and we currently expect future remarketings to be successful. However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the availability under our $2.75 billion revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have also classified these borrowings as long-term in our Consolidated Balance Sheet as of December 31, 2018. Access to and Utilization of Credit Facilities and Commercial Paper Program $2.75 Billion Revolving Credit Facility — In June 2018, we entered into the $2.75 billion revolving credit facility, which amended and restated our prior long-term U.S. revolving credit facility. Amendments to the credit agreement included (i) increasing total capacity under the facility from $2.25 billion to $2.75 billion; (ii) establishment of a $750 million accordion feature that may be used to increase total capacity in future periods; (iii) extending the term through June 2023 and (iv) inclusion of two one-year extension options. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WM, were added as additional borrowers under the $2.75 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings, a wholly-owned subsidiary of WM, guarantees all the obligations under the $2.75 billion revolving credit facility. The $2.75 billion revolving credit facility provides us with credit capacity to be used for either cash borrowings or to support letters of credit or commercial paper. The rates we pay for outstanding U.S. or Canadian loans are generally based on LIBOR or CDOR, respectively, plus a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR or CDOR ranges from 0.69% to 1.05%. Our $2.75 billion revolving credit facility was drafted in anticipation of the phaseout of LIBOR and contains provisions to replace LIBOR with an appropriate alternate benchmark rate as needed. As of December 31, 2018, we had C$15 million, or $11 million, of Canadian borrowings outstanding under this facility. We had $587 million of letters of credit issued and $990 million of outstanding borrowings under our commercial paper program, both supported by this facility, leaving unused and available credit capacity of $1.2 billion as of December 31, 2018. Commercial Paper Program — We have a commercial paper program that enables us to borrow funds for up to 397 days at competitive interest rates. The rates we pay for outstanding borrowings are based on the term of the notes. The commercial paper program is fully supported by our $2.75 billion revolving credit facility. In June 2018, we amended our commercial paper program, increasing our ability to borrow funds from $1.5 billion to $2.75 billion, provided that the aggregate outstanding amount of commercial paper borrowings, together with borrowings and issued letters of credit under the $2.75 billion revolving credit facility, shall not at any time exceed the aggregate authorized borrowing capacity of such facility. As of December 31, 2018, we had $990 million of outstanding borrowings under our commercial paper program. Canadian Term Loan and Revolving Credit Facility — In August 2018, we terminated our Canadian credit agreement, as discussed further below. Prior to its termination, the Canadian credit agreement provided the Company with (i) C$50 million of revolving credit capacity to be used for borrowings or letters of credit and (ii) C$460 million of non-revolving term credit that was prepayable without penalty. Other Letter of Credit Facilities — As of December 31, 2018, we had utilized $556 million of other letter of credit facilities, which are both committed and uncommitted, with terms maturing through December 2020. Debt Borrowings and Repayments Revolving Credit Facility — During the first half of 2018, we borrowed and repaid $28 million under our revolving credit facility, which we amended in June 2018, as discussed above. During the second half of 2018, we had net cash Canadian borrowings of C$15 million, or $11 million, under our $2.75 billion revolving credit facility, a portion of which was used to repay net advances under our Canadian term loan, as discussed below. Commercial Paper Program — During the year ended December 31, 2018, we had net cash borrowings of $453 million (net of the related discount on issuance) for general corporate purposes. Canadian Term Loan — Through August 2018, we repaid the remaining balance of C$142 million, or $109 million, under our Canadian term loan and revolving credit facility and subsequently terminated our Canadian credit agreement. The remaining change in the carrying value of outstanding borrowings under our Canadian term loan and revolving credit facility is due to foreign currency translation. Tax-Exempt Bonds — We issued $80 million of new tax-exempt bonds in 2018. The proceeds from the issuance of these bonds were deposited directly into a restricted trust fund and may only be used for the specific purpose for which the money was raised, which is generally to finance expenditures for landfill and solid waste disposal facility construction and development. Additionally, during the year ended December 31, 2018, we repaid $62 million of our tax-exempt bonds with available cash at their scheduled maturities. In the fourth quarter of 2018, we elected to refund and reissue $105 million of tax-exempt bonds to extend the maturities. Capital Leases and Other — The increase in our capital leases and other debt obligations in 2018 is related to our recent federal low-income housing investment discussed in Note 8 and new capital leases, which increased our debt obligations by $250 million, offset by $60 million of net cash repayments and $50 million in divestitures. Scheduled Debt Payments Principal payments of our debt and capital leases for the next five years and thereafter, based on scheduled maturities are as follows: $1,16 6 million in 2019, $7 80 million in 2020, $58 4 million in 2021, $62 2 million in 2022, $614 million in 2023 and $6,382 million thereafter. Our recorded debt and capital lease obligations include non-cash adjustments associated with debt issuance costs, discounts, premiums and fair value adjustments attributable to terminated interest rate derivatives, which have been excluded from these amounts because they will not result in cash payments. Cross-Currency Swaps In March 2016, our Canadian subsidiaries repaid C$370 million of intercompany debt to WM Holdings with proceeds from our Canadian term loan. Concurrent with the repayment of the intercompany debt, we terminated the related cross-currency swaps and received $67 million in cash. The cash received from our termination of these swaps was classified as a change in other current assets and other assets within net cash provided by operating activities in the Consolidated Statement of Cash Flows. In addition, we recognized $8 million of expense associated with the termination of these swaps in 2016, which was included in other, net in the Consolidated Statement of Operations. Secured Debt Our debt balances are generally unsecured, except for capital leases and the notes payable associated with our investments in low-income housing properties. Debt Covenants The terms of certain of our financing arrangements require that we comply with financial and other covenants. Our most restrictive financial covenant is the one contained in our $2.75 billion revolving credit facility, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation and amortization ratio (the “Leverage Ratio”). This covenant requires that the Leverage Ratio for the preceding four fiscal quarters will not be more than 3.5 to 1, provided that if an acquisition permitted under the $2.75 billion revolving credit facility involving aggregate consideration in excess of $200 million occurs during the fiscal quarter, the Company shall have the right to increase the Leverage Ratio to 4.0 to 1 during such fiscal quarter and for the following three fiscal quarters (the “Elevated Leverage Ratio Period”). There shall be no more than two Elevated Leverage Ratio Periods during the term of the $2.75 billion revolving credit facility, and the Leverage Ratio must return to 3.5 to 1 for at least one fiscal quarter between Elevated Leverage Ratio Periods. The calculation of all components used in the Leverage Ratio covenant are as defined in the $2.75 billion revolving credit facility. Our $2.75 billion revolving credit facility, senior notes and other financing arrangements also contain certain restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the ability of the Company and its subsidiaries to, among other things, incur liens; engage in sale-leaseback transactions; make certain investments and engage in mergers and consolidations. We monitor our compliance with these restrictions, but do not believe that they significantly impact our ability to enter into investing or financing arrangements typical for our business. As of December 31, 2018 and 2017, we were in compliance with all covenants and restrictions under our financing arrangements that may have a material effect on our Consolidated Financial Statements.

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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