In connection with our waste management services, we process both hazardous and non-hazardous waste, which we transport to our own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.

 

In the normal course of conducting our business, we are involved in various litigation. We are not a party to any litigation or governmental proceeding which our management believes could result in any judgments

or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.

The Company has a 25-year finite risk insurance policy entered into in June 2003 with American International Group, Inc. (“AIG”), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The policy, as amended, provides for a maximum allowable coverage of $39,000,000 and has available capacity to allow for annual inflation and other performance and surety bond requirements. All of the required payments for this finite risk insurance policy, as amended, were made by 2012. As of December 31, 2015, our financial assurance coverage amount under this policy totaled approximately $38,454,000. The Company has recorded $15,460,000 and $15,429,000 in sinking fund related to this policy in other long term assets on the accompanying Consolidated Balance Sheets as of December 31, 2015 and 2014, respectively, which includes interest earned of $989,000 and $958,000 on the sinking fund as of December 31, 2015 and 2014, respectively. Interest income for the twelve months ended December 31, 2015 and 2014 was approximately $31,000 and $20,000, respectively. If the Company so elects, AIG is obligated to pay the Company an amount equal to 100% of the sinking fund account balance in return for complete release of liability from both us and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.

 

In August 2007, the Company entered into a second finite risk insurance policy for our PFNWR facility with AIG. The policy provided an initial $7,800,000 of financial assurance coverage with an annual growth rate of 1.5%, which at the end of the four year term policy, provides maximum coverage of $8,200,000. The Company has made all of the required payments on this policy. The Company has recorded $5,920,000 and $5,905,000 in our sinking fund related to this policy in other long term assets on the accompanying Consolidated Balance Sheets as of December 31, 2015 and 2014, respectively, which includes interest earned of $220,000 and $205,000 on the sinking fund as of December 31, 2015 and 2014, respectively. Interest income for the twelve months ended December 31, 2015 and 2014 was approximately $15,000 and $7,000, respectively. This policy is renewed annually at the end of the four year term with a nominal fee for the variance between the coverage requirement and the sinking fund balance. The Company has renewed this policy annually from 2011 to 2015 (with fees ranging from $41,000 to $46,000 annually). All other terms of the policy remain substantially unchanged.

 

From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. As of December 31, 2015, the total amount of these bonds and letters of credit outstanding was approximately $1,738,000, of which the majority of the amount relates to various bonding requirements.

 

The Company leases certain facilities and equipment under operating leases. The following table lists future minimum rental payments as of December 31, 2015 under these leases for our continuing operations (in thousands):

 

Total rent expense was $976,000 and $1,158,000 for the years ended 2015 and 2014, respectively, for our continuing operations. These amounts included payments on non-cancelable operating leases of approximately $659,000 and $826,000 for the years ended 2015 and 2014, respectively. The remaining rent expense was for non-contractual monthly and daily rentals of specific use vehicles, machinery and equipment.