NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Republic Services, Inc., a Delaware corporation, and its consolidated subsidiaries (also referred to collectively as Republic, the Company, we, us, or our), is the second largest provider of non-hazardous solid waste collection, transfer, recycling, disposal and environmental services in the United States, as measured by revenue. We manage and evaluate our operations through two field groups, Group 1 and Group 2, which we have identified as our reportable segments.
The unaudited consolidated financial statements include the accounts of Republic Services, Inc. and its wholly owned and majority owned subsidiaries in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). We account for investments in entities in which we do not have a controlling financial interest under either the equity method or cost method of accounting, as appropriate. All material intercompany accounts and transactions have been eliminated in consolidation.
We have prepared these unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP has been condensed or omitted. In the opinion of management, these financial statements include all adjustments that, unless otherwise disclosed, are of a normal recurring nature and necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of the results you can expect for a full year. You should read these financial statements in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation. All dollar amounts in tabular presentations are in millions, except per share amounts and unless otherwise noted.
Management’s Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. We must make these estimates and assumptions because certain information we use is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. In preparing our financial statements, the more critical and subjective areas that deal with the greatest amount of uncertainty relate to our accounting for our long-lived assets, including recoverability, landfill development costs, and final capping, closure and post-closure costs; our valuation allowances for accounts receivable and deferred tax assets; our liabilities for potential litigation, claims and assessments; our liabilities for environmental remediation, multiemployer pension funds, employee benefit plans, deferred taxes, uncertain tax positions, and insurance reserves; and our estimates of the fair values of assets acquired and liabilities assumed in any acquisition. Each of these items is discussed in more detail in our description of our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Our actual results may differ significantly from our estimates.
In March 2020, the World Health Organization declared the outbreak of a new strain of coronavirus (COVID-19) a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. The extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic, all of which are uncertain and cannot be predicted at this time. An extended period of economic disruption could materially and adversely affect our business, results of operations, access to sources of liquidity and financial condition. We will continue to monitor the evolving COVID-19 pandemic along with the effect on our business and review our estimates for recoverability of our assets and the valuation of our obligations on, at least, a quarterly basis.
As a direct result of COVID-19, we have experienced an increase in certain costs of doing business, including costs for additional safety equipment and hygiene products, increased facility and equipment cleaning, and meals for our frontline employees. These costs are intended to assist in protecting the safety of our frontline employees as we continue to provide an essential service to our customers. We expect to incur similar costs throughout 2020, and potentially into future years. The magnitude of the costs we expect to incur throughout the remainder of the year cannot be predicted at this time due to the various uncertainties surrounding the pandemic (e.g., the duration and spread of the pandemic).
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
New Accounting Pronouncements
Accounting Standards Adopted
Effective January 1, 2020, we adopted the following accounting standards updates (ASUs) as issued by the Financial Accounting Standards Board (FASB):
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ASU
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Effective Date
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ASU 2016-13
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Credit Losses (Topic 326)
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January 1, 2020
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ASU 2018-13
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Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820)
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January 1, 2020
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Credit Losses
Effective January 1, 2020, we adopted ASU 2016-13, Credit Losses Topic 326 (ASU 2016-13 or the new credit losses standard) using the modified retrospective approach. The comparative periods have not been restated and continue to be reported under the accounting standard in effect for those periods. The new credit losses standard amends the impairment model to use a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2020, and we did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2020.
To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we identified financial assets measured at an amortized cost basis in our consolidated balance sheet and evaluated the collectability considerations based on an expected credit loss assessment. We are exposed to credit losses primarily through the collection, transfer and disposal of non-hazardous solid waste and environmental services we provide our customers as well as the recovering and sale of certain recyclable materials. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics.
The consolidated statement of income for the three months ended March 31, 2020 reflects the measurement of credit losses for newly recognized financial assets as well as any changes to historical financial assets. The following table reflects the activity in our allowance for doubtful accounts during the three months ended March 31, 2020.
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Allowance for Doubtful Accounts and Other
|
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Balance as of December 31, 2019
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$
|
34.0
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Additions charged to expense
|
4.9
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Accounts written-off
|
(6.5)
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|
|
Balance as of March 31, 2020
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$
|
32.4
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|
As a result of the unprecedented nature of COVID-19 and the various uncertainties surrounding the pandemic (e.g., the duration and spread of the pandemic), we continue to apply our historical loss rate assumptions and reserve against outstanding balances on an account-specific basis as we assess the collectability of our receivables. In certain situations, we may offer credit extensions to our customers as they navigate the current economic environment. In accordance with our accounting policy, we are actively monitoring the credit risk of our specific customers, age of receivables outstanding, recent collection trends and general economic conditions to evaluate the risk of credit loss.
Fair Value Measurement
Effective January 1, 2020, we adopted the FASB's ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). ASU 2018-13 intends to increase the consistency and comparability of fair value measurements used in financial reporting through eliminating, modifying, and adding certain disclosure requirements within Topic 820. The adoption of ASU 2018-13 did not have a material impact on our consolidated financial statements for the three months ended March 31, 2020.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Accounting Standards Updates Issued but not yet Adopted
Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14). ASU 2018-14 removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant. Although narrow in scope, the amendments are considered an important part of the FASB’s efforts to improve the effectiveness of disclosures in the notes to financial statements. ASU 2018-14 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted for all entities. We are currently assessing the effect this guidance may have on our consolidated financial statements.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
(ASU 2019-12). ASU 2019-12 attempts to simplify aspects of accounting for franchise taxes and enacted changes in tax laws or
rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The amended guidance contains a model under which an entity can consider a list of factors in determining whether the step-up in tax basis of goodwill is related to the business combination that caused the initial recognition of goodwill or to a separate transaction. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted for all entities. We are currently assessing the effect this guidance may have on our consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference
Rate Reform on Financial Reporting (ASU 2020-04). ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are currently assessing the effect this guidance may have on our consolidated financial statements.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. BUSINESS ACQUISITIONS, INVESTMENTS AND RESTRUCTURING CHARGES
Acquisitions
We acquired various waste businesses during the three months ended March 31, 2020 and 2019. The purchase price for these business acquisitions and the allocations of the purchase price follows:
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2020
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2019
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Purchase price:
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Cash used in acquisitions, net of cash acquired
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$
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52.2
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$
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50.6
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Holdbacks
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2.5
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3.9
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Fair value, future minimum finance lease payments
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0.3
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—
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Total
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$
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55.0
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$
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54.5
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Allocated as follows:
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Accounts receivable
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$
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2.3
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$
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1.6
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Property and equipment
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17.3
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7.7
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Operating right-of-use lease assets
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0.2
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—
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Other assets
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0.2
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0.4
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Accounts payable
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(1.2)
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—
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Environmental remediation liabilities
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(1.5)
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—
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Operating right-of-use lease liabilities
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(0.2)
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—
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Other liabilities
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(0.9)
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(0.4)
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Fair value of tangible assets acquired and liabilities assumed
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16.2
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9.3
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Excess purchase price to be allocated
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$
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38.8
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$
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45.2
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Excess purchase price allocated as follows:
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Other intangible assets
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$
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1.8
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$
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12.7
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Goodwill
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37.0
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32.5
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Total allocated
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$
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38.8
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$
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45.2
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The purchase price allocations are based on information existing at the acquisition dates. Accordingly, certain of the purchase price allocations are preliminary and subject to change. Substantially all of the goodwill and intangible assets recorded for these acquisitions are deductible for tax purposes.
These acquisitions are not material to our results of operations, individually or in the aggregate. As a result, no pro forma financial information is provided.
Investments
In 2020, we continued to acquire non-controlling equity interests in certain limited liability companies that qualified for investment tax credits under Section 48 of the Internal Revenue Code. In exchange for our non-controlling interests, we made capital contributions of $9.4 million, which were recorded to other assets in our March 31, 2020 consolidated balance sheet. During the three months ended March 31, 2020 and 2019, we also reduced the carrying value of these investments by $13.2 million and $11.6 million, respectively, as a result of tax credits allocated to us, cash distributions and our share of income and loss pursuant to the terms of the limited liability company agreements.
Restructuring Charges
In 2019, we incurred costs related to the redesign of certain back-office software systems, which continued into 2020. During the three months ended March 31, 2020 and 2019, we incurred restructuring charges of $3.8 million and $3.0 million, respectively, that primarily related to these restructuring efforts. During the three months ended March 31, 2020 and 2019, we paid $3.8 million and $4.6 million, respectively, related to these restructuring efforts.
In 2020, we expect to incur additional restructuring charges of approximately $10 million primarily related to the redesign of certain of our back-office software systems. Substantially all of these restructuring charges will be recorded in our corporate segment.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
3. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Our senior management evaluates, oversees and manages the financial performance of our operations through two field groups, referred to as Group 1 and Group 2.
Goodwill
A summary of the activity and balances in goodwill accounts by reporting segment follows:
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Balance as of December 31, 2019
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Acquisitions
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Divestitures
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Adjustments to Acquisitions
|
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Balance as of March 31, 2020
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|
Group 1
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$
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6,235.6
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|
$
|
7.5
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$
|
—
|
|
|
$
|
(0.3)
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|
$
|
6,242.8
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Group 2
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5,397.8
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|
|
29.5
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(3.1)
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|
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0.5
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|
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5,424.7
|
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Total
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|
$
|
11,633.4
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|
|
$
|
37.0
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|
|
$
|
(3.1)
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|
|
$
|
0.2
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|
|
$
|
11,667.5
|
|
Other Intangible Assets, Net
Other intangible assets, net, include values assigned to customer relationships, non-compete agreements and trade names, and are amortized over periods ranging from 1 to 17 years. A summary of the activity and balances by intangible asset type follows:
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|
|
Gross Intangible Assets
|
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|
|
|
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
Other Intangible Assets, Net as of March 31, 2020
|
|
|
|
Balance as of December 31, 2019
|
|
Acquisitions
|
|
Adjustments
and Other
|
|
Balance as of March 31, 2020
|
|
Balance as of December 31, 2019
|
|
Additions Charged to Expense
|
|
Adjustments
and Other
|
|
Balance as of March 31, 2020
|
|
|
|
Customer relationships
|
|
$
|
733.8
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
734.5
|
|
|
$
|
(623.0)
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|
|
$
|
(4.2)
|
|
|
$
|
—
|
|
|
$
|
(627.2)
|
|
|
$
|
107.3
|
|
|
Non-compete agreements
|
|
45.3
|
|
|
1.1
|
|
|
(0.2)
|
|
|
46.2
|
|
|
(35.3)
|
|
|
(0.9)
|
|
|
0.1
|
|
|
(36.1)
|
|
|
10.1
|
|
|
Other intangible assets
|
|
58.2
|
|
|
—
|
|
|
(0.7)
|
|
|
57.5
|
|
|
(45.1)
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|
|
(0.2)
|
|
|
0.4
|
|
|
(44.9)
|
|
|
12.6
|
|
|
Total
|
|
$
|
837.3
|
|
|
$
|
1.8
|
|
|
$
|
(0.9)
|
|
|
$
|
838.2
|
|
|
$
|
(703.4)
|
|
|
$
|
(5.3)
|
|
|
$
|
0.5
|
|
|
$
|
(708.2)
|
|
|
$
|
130.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We evaluate goodwill for impairment annually as of October 1, or when an indicator of impairment exists. In accordance with our accounting policy, we also perform a quarterly review of our long-lived and intangible assets. During the performance of our first quarter impairment review, we considered the impact of the COVID-19 pandemic on our business, noting no indicators of impairment for goodwill or other intangible assets.
4. OTHER ASSETS
Prepaid Expenses and Other Current Assets
A summary of prepaid expenses and other current assets as of March 31, 2020 and December 31, 2019 follows:
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|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Income tax receivable
|
$
|
102.5
|
|
|
$
|
156.7
|
|
|
Prepaid expenses
|
74.4
|
|
|
75.5
|
|
|
Other non-trade receivables
|
61.1
|
|
|
88.1
|
|
|
Inventories
|
57.1
|
|
|
56.8
|
|
|
Reinsurance receivable
|
36.6
|
|
|
31.9
|
|
|
Investments, current
|
25.0
|
|
|
—
|
|
|
Prepaid fees for cloud-based hosting arrangements, current
|
12.3
|
|
|
12.4
|
|
|
Interest rate swap locks
|
—
|
|
|
3.6
|
|
|
Other current assets
|
8.0
|
|
|
8.0
|
|
|
Total
|
$
|
377.0
|
|
|
$
|
433.0
|
|
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Other Assets
A summary of other assets as of March 31, 2020 and December 31, 2019 follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Operating right-of-use lease assets
|
$
|
238.0
|
|
|
$
|
243.6
|
|
|
Deferred compensation plan
|
101.2
|
|
|
118.0
|
|
|
Investments
|
94.2
|
|
|
87.8
|
|
|
Reinsurance receivable
|
88.8
|
|
|
78.9
|
|
|
Deferred contract costs and sales commissions
|
80.6
|
|
|
83.1
|
|
|
Other derivative assets
|
61.6
|
|
|
2.9
|
|
|
Amounts recoverable for capping, closure and post-closure obligations
|
32.0
|
|
|
31.8
|
|
|
Prepaid fees and capitalized implementation costs for cloud-based hosting arrangements
|
30.0
|
|
|
32.0
|
|
|
Interest rate swaps
|
21.0
|
|
|
10.7
|
|
|
Deferred financing costs
|
2.7
|
|
|
3.0
|
|
|
Other
|
47.7
|
|
|
55.8
|
|
|
Total
|
$
|
797.8
|
|
|
$
|
747.6
|
|
5. OTHER LIABILITIES
Other Accrued Liabilities
A summary of other accrued liabilities as of March 31, 2020 and December 31, 2019 follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Accrued payroll and benefits
|
$
|
173.5
|
|
|
$
|
207.7
|
|
|
Insurance reserves, current
|
168.1
|
|
|
162.0
|
|
|
Accrued dividends
|
128.9
|
|
|
129.2
|
|
|
Accrued fees and taxes
|
126.3
|
|
|
140.8
|
|
|
Ceded insurance reserves, current
|
36.3
|
|
|
31.6
|
|
|
Operating right-of-use lease liabilities, current
|
35.3
|
|
|
51.5
|
|
|
Accrued professional fees and legal settlement reserves
|
6.8
|
|
|
11.8
|
|
|
|
|
|
|
|
Interest rate swap locks
|
—
|
|
|
14.9
|
|
|
|
|
|
|
|
Other
|
68.4
|
|
|
64.7
|
|
|
Total
|
$
|
743.6
|
|
|
$
|
814.2
|
|
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Other Long-Term Liabilities
A summary of other long-term liabilities as of March 31, 2020 and December 31, 2019 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Operating right-of-use lease liabilities
|
$
|
222.7
|
|
|
$
|
212.5
|
|
|
Other derivative liabilities
|
112.6
|
|
|
22.2
|
|
|
Deferred compensation plan liability
|
102.1
|
|
|
116.1
|
|
|
Ceded insurance reserves
|
90.5
|
|
|
80.6
|
|
|
Contingent purchase price and acquisition holdbacks
|
70.9
|
|
|
71.2
|
|
|
Withdrawal liability - multiemployer pension funds
|
15.9
|
|
|
12.0
|
|
|
Legal settlement reserves
|
12.6
|
|
|
10.0
|
|
|
Interest rate swap locks
|
11.0
|
|
|
0.8
|
|
|
Pension and other post-retirement liabilities
|
6.3
|
|
|
6.2
|
|
|
Other
|
40.3
|
|
|
47.8
|
|
|
Total
|
$
|
684.9
|
|
|
$
|
579.4
|
|
6. LANDFILL AND ENVIRONMENTAL COSTS
As of March 31, 2020, we owned or operated 190 active solid waste landfills with total available disposal capacity estimated to be 5.0 billion in-place cubic yards. Additionally, we had post-closure responsibility for 130 closed landfills.
Accrued Landfill and Environmental Costs
A summary of accrued landfill and environmental liabilities as of March 31, 2020 and December 31, 2019 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Landfill final capping, closure and post-closure liabilities
|
$
|
1,358.9
|
|
|
$
|
1,335.6
|
|
|
Environmental remediation
|
488.7
|
|
|
500.2
|
|
|
Total accrued landfill and environmental costs
|
1,847.6
|
|
|
1,835.8
|
|
|
Less: current portion
|
(131.1)
|
|
|
(132.6)
|
|
|
Long-term portion
|
$
|
1,716.5
|
|
|
$
|
1,703.2
|
|
Final Capping, Closure and Post-Closure Costs
The following table summarizes the activity in our asset retirement obligation liabilities, which includes liabilities for final capping, closure and post-closure, for the three months ended March 31, 2020 and 2019:
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|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Asset retirement obligation liabilities, beginning of year
|
$
|
1,335.6
|
|
|
$
|
1,292.0
|
|
|
Non-cash additions
|
11.5
|
|
|
10.3
|
|
|
Acquisitions, net of divestitures and other adjustments
|
0.1
|
|
|
0.1
|
|
|
Asset retirement obligation adjustments
|
(0.5)
|
|
|
(0.5)
|
|
|
Payments
|
(8.7)
|
|
|
(8.4)
|
|
|
Accretion expense
|
20.9
|
|
|
20.5
|
|
|
Asset retirement obligation liabilities, end of period
|
1,358.9
|
|
|
1,314.0
|
|
|
Less: current portion
|
(74.4)
|
|
|
(75.4)
|
|
|
Long-term portion
|
$
|
1,284.5
|
|
|
$
|
1,238.6
|
|
We review annually, in the fourth quarter, and update as necessary, our estimates of asset retirement obligation liabilities. However, if there are significant changes in the facts and circumstances related to a site during the year, we will update our assumptions prospectively in the period that we know all the relevant facts and circumstances and make adjustments as appropriate.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Landfill Operating Expenses
In the normal course of business, we incur various operating costs associated with environmental compliance. These costs include, among other things, leachate treatment and disposal, methane gas and groundwater monitoring, systems maintenance, interim cap maintenance, costs associated with the application of daily cover materials, and the legal and administrative costs of ongoing environmental compliance. These costs are expensed as cost of operations in the periods in which they are incurred.
Environmental Remediation Liabilities
We accrue for remediation costs when they become probable and can be reasonably estimated. There can sometimes be a range of reasonable estimates of the costs associated with remediation of a site. In these cases, we use the amount within the range that constitutes our best estimate. If no amount within the range appears to be a better estimate than any other, we use the amount that is at the low end of the range. It is reasonably possible that we will need to adjust the liabilities recorded for remediation to reflect the effects of new or additional information, to the extent such information impacts the costs, timing or duration of the required actions. If we used the reasonably possible high ends of our ranges, our aggregate potential remediation liability as of March 31, 2020 would be approximately $365 million higher than the amount recorded. Future changes in our estimates of the cost, timing or duration of the required actions could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
The following table summarizes the activity in our environmental remediation liabilities for the three months ended March 31, 2020 and 2019:
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|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Environmental remediation liabilities, beginning of year
|
$
|
500.2
|
|
|
$
|
540.2
|
|
|
Net adjustments charged to expense
|
(0.4)
|
|
|
(10.5)
|
|
|
Payments
|
(17.2)
|
|
|
(7.2)
|
|
|
Accretion expense (non-cash interest expense)
|
4.6
|
|
|
4.8
|
|
|
Acquisitions, net of divestitures and other adjustments
|
1.5
|
|
|
—
|
|
|
Environmental remediation liabilities, end of period
|
488.7
|
|
|
527.3
|
|
|
Less: current portion
|
(56.7)
|
|
|
(58.6)
|
|
|
Long-term portion
|
$
|
432.0
|
|
|
$
|
468.7
|
|
Bridgeton Landfill. During the three months ended March 31, 2020, we paid $12.1 million related to management and monitoring of the remediation area for our closed Bridgeton Landfill in Missouri. We continue to work with state and federal regulatory agencies on our remediation efforts. From time to time, this may require us to modify our future operating timeline and procedures, which could result in changes to our expected liability. As of March 31, 2020, the remediation liability recorded for this site was $132.4 million, of which approximately $12 million is expected to be paid during the remainder of 2020. We believe the remaining reasonably possible high end of our range would be approximately $163 million higher than the amount recorded as of March 31, 2020.
During the three months ended March 31, 2020, we recognized a favorable insurance recovery of $10.8 million related to our closed Bridgeton Landfill as a reduction of remediation expenses in our consolidated statement of income for the applicable period.
West Lake Landfill Superfund Site. Our subsidiary Bridgeton Landfill, LLC is one of several currently designated Potentially Responsible Parties for the West Lake Landfill Superfund site (West Lake) in Missouri. On September 27, 2018, the U.S. Environmental Protection Agency (EPA) issued a Record of Decision Amendment for West Lake that includes a total undiscounted cost estimate of $229 million over a four- to five-year design and construction timeline. On March 11, 2019, the EPA issued special notice letters under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) to Bridgeton Landfill, LLC and the other currently designated Potentially Responsible Parties to initiate negotiations to implement the remedy. At this time we are neither able to predict the final design of that remedy, nor estimate how much of the future response costs of the site our subsidiary may agree or be required to pay. During any subsequent administrative proceedings or litigation, our subsidiary will vigorously contest liability for the costs of remediating radiologically-impacted materials generated on behalf of the federal government during the Manhattan Project and delivered to the site by an Atomic Energy Commission licensee and its subcontractor. Currently, we believe we are adequately reserved for our expected remediation liability. However, subsequent events related to remedy design, divisibility, or allocation may require us to modify our expected remediation liability.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. DEBT
The carrying value of our notes payable, finance leases and long-term debt as of March 31, 2020 and December 31, 2019 is listed in the following table, and is adjusted for the fair value of interest rate swaps, unamortized discounts, deferred issuance costs and the unamortized portion of adjustments to fair value recorded in purchase accounting. Original issue discounts and adjustments to fair value recorded in purchase accounting are amortized to interest expense over the term of the applicable instrument using the effective interest method.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
Maturity
|
|
Interest Rate
|
|
Principal
|
|
Adjustments
|
|
Carrying Value
|
|
Principal
|
|
Adjustments
|
|
Carrying Value
|
|
Credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uncommitted Credit Facility
|
|
Variable
|
|
$
|
40.0
|
|
|
$
|
—
|
|
|
$
|
40.0
|
|
|
$
|
11.6
|
|
|
$
|
—
|
|
|
$
|
11.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2023
|
|
Variable
|
|
354.4
|
|
|
—
|
|
|
354.4
|
|
|
184.4
|
|
|
—
|
|
|
184.4
|
|
|
Senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2020
|
|
5.000
|
|
—
|
|
|
—
|
|
|
—
|
|
|
850.0
|
|
|
(0.1)
|
|
|
849.9
|
|
|
November 2021
|
|
5.250
|
|
600.0
|
|
|
(0.7)
|
|
|
599.3
|
|
|
600.0
|
|
|
(0.8)
|
|
|
599.2
|
|
|
June 2022
|
|
3.550
|
|
850.0
|
|
|
(2.4)
|
|
|
847.6
|
|
|
850.0
|
|
|
(2.6)
|
|
|
847.4
|
|
|
May 2023
|
|
4.750
|
|
550.0
|
|
|
12.4
|
|
|
562.4
|
|
|
550.0
|
|
|
2.6
|
|
|
552.6
|
|
|
August 2024
|
|
2.500
|
|
900.0
|
|
|
(7.9)
|
|
|
892.1
|
|
|
900.0
|
|
|
(8.3)
|
|
|
891.7
|
|
|
March 2025
|
|
3.200
|
|
500.0
|
|
|
(3.4)
|
|
|
496.6
|
|
|
500.0
|
|
|
(3.6)
|
|
|
496.4
|
|
|
July 2026
|
|
2.900
|
|
500.0
|
|
|
(3.7)
|
|
|
496.3
|
|
|
500.0
|
|
|
(3.9)
|
|
|
496.1
|
|
|
November 2027
|
|
3.375
|
|
650.0
|
|
|
(5.0)
|
|
|
645.0
|
|
|
650.0
|
|
|
(5.2)
|
|
|
644.8
|
|
|
May 2028
|
|
3.950
|
|
800.0
|
|
|
(15.3)
|
|
|
784.7
|
|
|
800.0
|
|
|
(15.7)
|
|
|
784.3
|
|
|
March 2030
|
|
2.300
|
|
600.0
|
|
|
(7.0)
|
|
|
593.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
March 2035
|
|
6.086
|
|
181.9
|
|
|
(13.8)
|
|
|
168.1
|
|
|
181.9
|
|
|
(13.9)
|
|
|
168.0
|
|
|
March 2040
|
|
6.200
|
|
399.9
|
|
|
(3.7)
|
|
|
396.2
|
|
|
399.9
|
|
|
(3.7)
|
|
|
396.2
|
|
|
May 2041
|
|
5.700
|
|
385.7
|
|
|
(5.2)
|
|
|
380.5
|
|
|
385.7
|
|
|
(5.3)
|
|
|
380.4
|
|
|
March 2050
|
|
3.050
|
|
400.0
|
|
|
(7.4)
|
|
|
392.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Debentures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2021
|
|
9.250
|
|
35.3
|
|
|
(0.3)
|
|
|
35.0
|
|
|
35.3
|
|
|
(0.4)
|
|
|
34.9
|
|
|
September 2035
|
|
7.400
|
|
148.1
|
|
|
(32.8)
|
|
|
115.3
|
|
|
148.1
|
|
|
(33.0)
|
|
|
115.1
|
|
|
Tax-exempt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 - 2049
|
|
0.960 - 2.500
|
|
1,066.2
|
|
|
(6.1)
|
|
|
1,060.1
|
|
|
1,122.4
|
|
|
(6.2)
|
|
|
1,116.2
|
|
|
Finance leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 - 2049
|
|
1.917 - 12.203
|
|
117.5
|
|
|
—
|
|
|
117.5
|
|
|
119.3
|
|
|
—
|
|
|
119.3
|
|
|
Total Debt
|
|
|
|
$
|
9,079.0
|
|
|
$
|
(102.3)
|
|
|
8,976.7
|
|
|
$
|
8,788.6
|
|
|
$
|
(100.1)
|
|
|
8,688.5
|
|
|
Less: current portion
|
|
|
|
|
|
|
|
(24.5)
|
|
|
|
|
|
|
(929.9)
|
|
|
Long-term portion
|
|
|
|
|
|
|
|
$
|
8,952.2
|
|
|
|
|
|
|
$
|
7,758.6
|
|
Credit Facilities
In June 2018, we entered into a $2.25 billion unsecured revolving credit facility (the Credit Facility), which replaced our $1.0 billion and $1.25 billion unsecured credit facilities that would have matured in May 2021 and June 2019, respectively. The Credit Facility matures in June 2023. We may request two one-year extensions of the maturity date but none of the lenders are committed to participate in such extension. The Credit Facility also includes a feature that allows us to increase availability, at our option, by an aggregate amount of up to $1.0 billion through increased commitments from existing lenders or the addition
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
of new lenders. At our option, borrowings under the Credit Facility bear interest at a Base Rate, or a Eurodollar Rate, plus an applicable margin based on our Debt Ratings (all as defined in the Credit Facility agreement).
The Credit Facility is subject to facility fees based on applicable rates defined in the Credit Facility agreement and the aggregate commitment, regardless of usage. Availability under our Credit Facility totaled $1,526.6 million and $1,696.9 million as of March 31, 2020 and December 31, 2019, respectively. The Credit Facility can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes. The Credit Facility agreement requires us to comply with financial and other covenants. We may pay dividends and repurchase common stock if we are in compliance with these covenants.
As of March 31, 2020 and December 31, 2019, we had $354.4 million and $184.4 million of borrowings under our Credit Facility, respectively. We had $352.3 million and $351.4 million of letters of credit outstanding under our Credit Facility as of March 31, 2020 and December 31, 2019, respectively.
As of April 30, 2020, we had $189.4 million of borrowings under our Credit Facility.
We also have an Uncommitted Credit Facility, which bears interest at LIBOR, plus an applicable margin and is subject to facility fees defined in the agreement, regardless of usage. We can use borrowings under the Uncommitted Credit Facility for working capital and other general corporate purposes. The agreement governing our Uncommitted Credit Facility requires us to comply with certain covenants. The Uncommitted Credit Facility may be terminated by either party at any time. We had $40.0 million of borrowings and $11.6 million of borrowings outstanding under our Uncommitted Credit Facility as of March 31, 2020 and December 31, 2019, respectively.
As of April 30, 2020, we had $100.0 million of borrowings outstanding under our Uncommitted Credit Facility.
Senior Notes and Debentures
In February 2020, we issued $600.0 million of 2.300% senior notes due 2030 (the 2.300% Notes) and $400.0 million of 3.050% senior notes due 2050 (the 3.050% Notes). We used the net proceeds from the 2.300% Notes and 3.050% Notes to repay $850.0 million of 5.000% senior notes that matured in March 2020. The remaining proceeds were used to repay amounts outstanding under our unsecured credit facilities as well as for general corporate purposes.
In August 2019, we issued $900.0 million of 2.500% senior notes due 2024 (the 2.500% Notes). We used the net proceeds from the 2.500% Notes to repay $650.0 million of 5.500% senior notes that matured in September 2019. The remaining proceeds were used to repay amounts outstanding under our unsecured credit facilities as well as for general corporate purposes.
Our senior notes and debentures are general unsecured obligations. Interest is payable semi-annually.
Interest Rate Swap and Lock Agreements
Our ability to obtain financing through the capital markets is a key component of our financial strategy. Historically, we have managed risk associated with executing this strategy, particularly as it relates to fluctuations in interest rates, by using a combination of fixed and floating rate debt. From time to time, we also have entered into interest rate swap and lock agreements to manage risk associated with interest rates, either to effectively convert specific fixed rate debt to a floating rate (fair value hedges), or to lock interest rates in anticipation of future debt issuances (cash flow hedges).
Fair Value Hedges
During the second half of 2013, we entered into various interest rate swap agreements relative to our 4.750% fixed rate senior notes due in May 2023. The goal was to reduce overall borrowing costs and rebalance our debt portfolio's ratio of fixed-to-floating interest rates. As of March 31, 2020, these swap agreements had a total notional value of $300.0 million and mature in May 2023, which is identical to the maturity of the hedged senior notes. We pay interest at floating rates based on changes in LIBOR and receive interest at a fixed rate of 4.750%. These transactions were designated as fair value hedges because the swaps hedge against the changes in fair value of the fixed rate senior notes resulting from changes in interest rates.
As of March 31, 2020 and December 31, 2019, the interest rate swap agreements are reflected at their fair value of $21.0 million and $10.7 million, respectively, and are included in other assets in our consolidated balance sheet. To the extent they are effective, these interest rate swap agreements are included as an adjustment to long-term debt in our consolidated balance sheets. We recognized net interest income of $0.7 million and $0.1 million during the three months ended March 31, 2020 and 2019, respectively, related to net settlements for these interest rate swap agreements, which is included as an offset to interest expense in our consolidated statements of income.
For the three months ended March 31, 2020 and 2019, we recognized losses of $9.7 million and $3.4 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with offsetting gains
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
of $10.3 million and $3.4 million, respectively, on the related interest rate swaps. The difference of these fair value changes for the three months ended March 31, 2020 was recorded directly in earnings as an adjustment to interest expense in our consolidated statements of income.
For further detail regarding the effect of our fair value hedging on interest expense, refer to Note 11, Financial Instruments, of the notes to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Cash Flow Hedges
As of March 31, 2020 and December 31, 2019, our interest rate lock agreements had an aggregate notional value of $200.0 million and $575.0 million, respectively, with fixed interest rates ranging from 0.784% to 2.374% and 1.330% to 3.000%, respectively. We entered into these transactions to manage exposure to fluctuations in interest rates in anticipation of planned future issuances of senior notes in 2020 and 2021. Upon the expected issuance of senior notes, we terminate the interest rate locks and settle with our counterparties. These transactions were accounted for as cash flow hedges.
The fair value of our interest rate locks was determined using standard valuation models with assumptions about interest rates being based on those observed in underlying markets (Level 2 in the fair value hierarchy). The aggregate fair values of the outstanding interest rate locks as of March 31, 2020 were liabilities of $11.0 million, which were recorded in other long-term liabilities in our consolidated balance sheet. As of December 31, 2019, the aggregate fair values of the outstanding interest rate locks were assets of $3.6 million, which were recorded in prepaid expenses and other current assets in our consolidated balance sheet and liabilities of $15.7 million, which were recorded in other accrued liabilities and other long-term liabilities in our consolidated balance sheet.
Total unrealized loss recognized in other comprehensive income for interest rate locks was $22.2 million and $11.3 million for the three months ended March 31, 2020 and 2019, respectively.
As of March 31, 2020 and December 31, 2019, our previously terminated interest rate locks were recorded as components of accumulated other comprehensive loss, net of tax of $26.9 million and $4.7 million, respectively. The amortization of the terminated interest rate locks is recorded as an adjustment to interest expense over the life of the issued debt using the effective interest method. Over the next 12 months, we expect to amortize approximately $4.5 million from accumulated other comprehensive loss to interest expense as a yield adjustment of our senior notes .
For further detail regarding the effect of our cash flow hedging on interest expense, refer to Note 11, Financial Instruments, of the notes to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Derivative Contracts
Contemporaneously with the issuance of our 2.300% Notes in February 2020, we amended interest rate lock agreements with a notional value of $550.0 million, extending the mandatory maturity date from 2020 to 2030 and dedesignated them as cash flow hedges (the 2020 Extended Interest Rate Locks). Contemporaneously with the issuance of our 2.500% Notes in August 2019, we amended interest rate lock agreements with a notional value of $375.0 million, extending the mandatory maturity date from 2019 to 2024 and dedesignated them as cash flow hedges (collectively with the 2020 Extended Interest Rate Locks referred to as the Extended Interest Rate Locks). There was no ineffectiveness recognized in the termination of these cash flow hedges. In addition, we entered into offsetting interest rate swaps to offset future exposures to fair value fluctuations of the Extended Interest Rate Locks (the Offsetting Interest Rate Swaps). The fair value of these free-standing derivatives was determined using standard valuation models with assumptions about interest rates being based on those observed in underlying markets (Level 2 in the fair value hierarchy).
As of March 31, 2020 and December 31, 2019, the fair value of the Extended Interest Rate Locks was a liability of $112.6 million and $22.2 million, respectively, which was included in other long-term liabilities in our consolidated balance sheets, and the fair value of the Offsetting Interest Rate Swaps was an asset of $61.6 million and $2.9 million, respectively, and was included in other assets in our consolidated balance sheets. For the three months ended March 31, 2020, we recognized a loss of $61.3 million on the change in fair value of the Extended Interest Rate Locks, with an offsetting gain of $58.7 million on the Offsetting Interest Rate Swaps. The change in fair value was recorded directly in earnings as an adjustment to interest expense in our consolidated statements of income.
Tax-Exempt Financings
As of March 31, 2020 and December 31, 2019, we had $1,060.1 million and $1,116.2 million of certain variable rate tax-exempt financings outstanding, respectively, with maturities ranging from 2020 to 2049. During the second quarter of 2019, we refinanced $35.0 million of tax-exempt financings and issued $30.0 million of new tax-exempt financings. In addition, we issued $50.0 million of tax-exempt financings during the fourth quarter of 2019.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
All of our tax-exempt financings are remarketed either quarterly or semi-annually by remarketing agents to effectively maintain a variable yield. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. 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 currently have availability under our $2.25 billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have classified these borrowings as long-term in our consolidated balance sheets as of March 31, 2020 and December 31, 2019. As of March 31, 2020, we elected not to remarket and, instead, acquired $25.0 million of tax-exempt financings as a result of the rates available at the time. We intend to remarket these bonds when we believe the rates available are acceptable. Our investment in these bonds was recorded in prepaid expenses and other current assets in our consolidated balance sheet as of March 31, 2020.
Finance Leases
We had finance lease liabilities of $117.5 million and $119.3 million as of March 31, 2020 and December 31, 2019, respectively, with maturities ranging from 2020 to 2049.
8. INCOME TAXES
Our effective tax rate, exclusive of non-controlling interests, for the three months ended March 31, 2020 and 2019 was 23.5% and 25.0%, respectively.
Cash paid for income taxes was $1.4 million for the three months ended March 31, 2020 and a net refund of $32.2 million for the same period in 2019. The net refund received for the three months ended March 31, 2019 was due to the receipt of funds from amended tax returns.
We have deferred tax assets related to state net operating loss carryforwards. We provide a partial valuation allowance due to uncertainty surrounding the future utilization of these carryforwards in the taxing jurisdictions where the loss carryforwards exist. When determining the need for a valuation allowance, we consider all positive and negative evidence, including recent financial results, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies.
As a result of our ongoing efforts to evaluate, streamline and maximize the efficiency of our tax footprint, we could adjust our valuation allowance in a future period if there is sufficient evidence to support a conclusion that it is more certain than not that a portion of the state net operating loss carryforwards, on which we currently provide a valuation allowance, would be realized. Future changes in our valuation allowance could have a material effect on our results of operations in the period recorded.
The realization of our deferred tax asset for state loss carryforwards ultimately depends upon the existence of sufficient taxable income in the appropriate state taxing jurisdictions in future periods. The weight given to the positive and negative evidence is commensurate with the extent such evidence can be objectively verified. We continue to regularly monitor both positive and negative evidence in determining the ongoing need for a valuation allowance. As of March 31, 2020, the valuation allowance associated with our state loss carryforwards was approximately $67 million, which we believe is sufficient at this time.
Given the various uncertainties surrounding the COVID-19 pandemic, we will continue to review our estimates for recoverability of our assets on, at least, a quarterly basis.
We are subject to income tax in the United States and Puerto Rico, as well as in multiple state jurisdictions. Our compliance with income tax rules and regulations is periodically audited by taxing authorities. These authorities may challenge the positions taken in our tax filings. We are currently under examination by the Internal Revenue Service for tax years 2015 through 2017, as well as state and local taxing authorities and Puerto Rico for various tax years.
We believe our recorded liabilities for uncertain tax positions are adequate. However, a significant assessment against us in excess of the liabilities recorded could have a material adverse effect on our consolidated financial position, results of operations and cash flows. As of March 31, 2020, we are unable to estimate the resolution of our gross unrecognized benefits over the next 12 months.
We recognize interest and penalties as incurred within the provision for income taxes in the consolidated statement of income. As of March 31, 2020, we accrued a liability for penalties of $0.3 million and a liability for interest (including interest on penalties) of $11.8 million related to our uncertain tax positions.
9. STOCK REPURCHASES, DIVIDENDS AND EARNINGS PER SHARE
Available Shares
We currently have approximately 12.3 million shares of common stock reserved for future grants under the Republic Services, Inc. Amended and Restated 2007 Stock Incentive Plan.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Stock Repurchases
Stock repurchase activity during the three months ended March 31, 2020 and 2019 follows (in millions, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
Number of shares repurchased
|
|
|
|
|
1.2
|
|
|
1.5
|
|
|
Amount paid
|
|
|
|
|
$
|
98.8
|
|
|
$
|
111.5
|
|
|
Weighted average cost per share
|
|
|
|
|
$
|
85.06
|
|
|
$
|
74.76
|
|
As of March 31, 2020 and 2019, no repurchased shares were pending settlement.
In October 2017, our Board of Directors added $2.0 billion to the existing share repurchase authorization that now extends through December 31, 2020. Share repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable federal securities laws. While the Board of Directors has approved the program, the timing of any purchases, the prices and the number of shares of common stock to be purchased will be determined by our management, at its discretion, and will depend upon market conditions and other factors. The share repurchase program may be extended, suspended or discontinued at any time. As of March 31, 2020, the remaining authorized purchase capacity under our October 2017 repurchase program was $605.8 million.
Dividends
In February 2020, our Board of Directors approved a quarterly dividend of $0.405 per share. Cash dividends declared were $128.9 million for the three months ended March 31, 2020. As of March 31, 2020, we recorded a quarterly dividend payable of $128.9 million to shareholders of record at the close of business on April 1, 2020.
Earnings per Share
Basic earnings per share is computed by dividing net income attributable to Republic Services, Inc. by the weighted average number of common shares (including vested but unissued RSUs and PSUs) outstanding during the period. Diluted earnings per share is based on the combined weighted average number of common shares and common share equivalents outstanding, which include, where appropriate, the assumed exercise of employee stock options, unvested RSUs and unvested PSUs at the expected attainment levels. We use the treasury stock method in computing diluted earnings per share.
Earnings per share for the three months ended March 31, 2020 and 2019 are calculated as follows (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
Net income attributable to Republic Services, Inc.
|
$
|
246,300
|
|
|
$
|
234,200
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
319,577
|
|
|
322,282
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
0.77
|
|
|
$
|
0.73
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
Net income attributable to Republic Services, Inc.
|
$
|
246,300
|
|
|
$
|
234,200
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
319,577
|
|
|
322,282
|
|
|
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
Options to purchase common stock
|
92
|
|
|
504
|
|
|
|
|
|
|
Unvested RSU awards
|
217
|
|
|
227
|
|
|
|
|
|
|
Unvested PSU awards
|
345
|
|
|
437
|
|
|
|
|
|
|
Weighted average common and common equivalent shares outstanding
|
320,231
|
|
|
323,450
|
|
|
|
|
|
|
Diluted earnings per share
|
$
|
0.77
|
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended March 31, 2020, there were 0.1 million antidilutive securities outstanding. During the three months ended March 31, 2019, there were no antidilutive securities outstanding.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
10. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT
A summary of changes in accumulated other comprehensive income (AOCI), net of tax, by component, for the three months ended March 31, 2020 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges
|
|
Defined Benefit Pension Items
|
|
Total
|
|
Balance as of December 31, 2019
|
$
|
(13.7)
|
|
|
$
|
15.9
|
|
|
$
|
2.2
|
|
|
Other comprehensive (loss) income before reclassifications
|
(22.2)
|
|
|
1.6
|
|
|
(20.6)
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
Net current period other comprehensive (loss) income
|
(21.4)
|
|
|
1.6
|
|
|
(19.8)
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020
|
$
|
(35.1)
|
|
|
$
|
17.5
|
|
|
$
|
(17.6)
|
|
A summary of reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2020 and 2019 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Details about Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
|
Affected Line Item in the Statement where Net Income is Presented
|
|
Gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated interest rate locks
|
|
$
|
(1.1)
|
|
|
$
|
0.1
|
|
|
|
|
|
|
Interest expense
|
|
Total before tax
|
|
(1.1)
|
|
|
0.1
|
|
|
|
|
|
|
|
|
Tax expense
|
|
0.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (loss) gain reclassified into earnings, net of tax
|
|
$
|
(0.8)
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
11. FINANCIAL INSTRUMENTS
The effect of our hedging relationships and derivative instruments on the consolidated statements of income for the three months ended March 31, 2020 and 2019 follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classification and amount of gain (loss) recognized in income on hedging relationships and derivative instruments
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Interest Expense
|
|
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount of expense line items presented in the consolidated statements of income in which the effects of hedging relationships and derivative instruments are recorded
|
$
|
(96.6)
|
|
|
$
|
(100.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effects of fair value and cash flow hedging relationships in Subtopic 815-20:
|
|
|
|
|
|
|
|
|
Gain on fair value hedging relationships:
|
|
|
|
|
|
|
|
|
Interest rate swaps:
|
|
|
|
|
|
|
|
|
Net swap settlements
|
$
|
0.7
|
|
|
$
|
0.1
|
|
|
|
|
|
|
Net periodic earnings
|
$
|
0.6
|
|
|
$
|
—
|
|
|
|
|
|
|
(Loss) gain on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
Interest rate swap locks:
|
|
|
|
|
|
|
|
|
Amount of (loss) gain reclassified from AOCI into income, net of tax
|
$
|
(0.8)
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effects of derivative instruments not in Subtopic 815-20:
|
|
|
|
|
|
|
|
|
Loss on free-standing derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
Interest rate contract:
|
|
|
|
|
|
|
|
|
Net loss on change in fair value of free-standing derivative instruments
|
$
|
(2.6)
|
|
|
$
|
—
|
|
|
|
|
|
Fair Value Measurements
In measuring fair values of assets and liabilities, we use valuation techniques that maximize the use of observable inputs (Level 1) and minimize the use of unobservable inputs (Level 3). We also use market data or assumptions that we believe market participants would use in pricing an asset or liability, including assumptions about risk when appropriate.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The carrying value for certain of our financial instruments, including cash, accounts receivable, current investments, accounts payable and certain other accrued liabilities, approximates fair value because of their short-term nature. As of March 31, 2020 and December 31, 2019, our assets and liabilities that are measured at fair value on a recurring basis include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Carrying Amount
|
|
Total
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
$
|
43.3
|
|
|
$
|
43.3
|
|
|
$
|
43.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Bonds - restricted cash and marketable securities
and other assets
|
58.5
|
|
|
58.5
|
|
|
—
|
|
|
58.5
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps - other assets
|
21.0
|
|
|
21.0
|
|
|
—
|
|
|
21.0
|
|
|
—
|
|
|
Other derivative assets - other assets
|
61.6
|
|
|
61.6
|
|
|
—
|
|
|
61.6
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
184.4
|
|
|
$
|
184.4
|
|
|
$
|
43.3
|
|
|
$
|
141.1
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other derivative liabilities - other long-term liabilities
|
$
|
112.6
|
|
|
$
|
112.6
|
|
|
$
|
—
|
|
|
$
|
112.6
|
|
|
$
|
—
|
|
|
Interest rate locks - other long-term liabilities
|
11.0
|
|
|
11.0
|
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|
Contingent consideration - other accrued liabilities and other long-term liabilities
|
71.7
|
|
|
71.7
|
|
|
—
|
|
|
—
|
|
|
71.7
|
|
|
Total liabilities
|
$
|
195.3
|
|
|
$
|
195.3
|
|
|
$
|
—
|
|
|
$
|
123.6
|
|
|
$
|
71.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Carrying Amount
|
|
Total
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
$
|
43.0
|
|
|
$
|
43.0
|
|
|
$
|
43.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Bonds - restricted cash and marketable securities and other assets
|
51.6
|
|
|
51.6
|
|
|
—
|
|
|
51.6
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps - other assets
|
10.7
|
|
|
10.7
|
|
|
—
|
|
|
10.7
|
|
|
—
|
|
|
Other derivative assets - other assets
|
2.9
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
Interest rate locks - prepaid expenses and other current assets
|
3.6
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
Total assets
|
$
|
111.8
|
|
|
$
|
111.8
|
|
|
$
|
43.0
|
|
|
$
|
68.8
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Other derivative liabilities - other long-term liabilities
|
$
|
22.2
|
|
|
$
|
22.2
|
|
|
$
|
—
|
|
|
$
|
22.2
|
|
|
$
|
—
|
|
|
Interest rate locks - other accrued liabilities and other long-term liabilities
|
15.7
|
|
|
15.7
|
|
|
—
|
|
|
15.7
|
|
|
—
|
|
|
Contingent consideration - other accrued liabilities and other long-term liabilities
|
72.0
|
|
|
72.0
|
|
|
—
|
|
|
—
|
|
|
72.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
$
|
109.9
|
|
|
$
|
109.9
|
|
|
$
|
—
|
|
|
$
|
37.9
|
|
|
$
|
72.0
|
|
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Total Debt
As of March 31, 2020 and December 31, 2019, the carrying value of our total debt was $9.0 billion and $8.7 billion, respectively, and the fair value of our total debt was $9.5 billion and $9.4 billion, respectively. The estimated fair value of our fixed rate senior notes and debentures is based on quoted market prices. The fair value of our remaining notes payable, tax-exempt financings and borrowings under our credit facilities approximates the carrying value because the interest rates are variable. The fair value estimates are based on Level 2 inputs of the fair value hierarchy as of March 31, 2020 and December 31, 2019. See Note 7, Debt, for further information related to our debt.
Contingent Consideration
In April 2015, we entered into a waste management contract with the County of Sonoma, California to operate the county's waste management facilities. As of March 31, 2020, the Sonoma contingent consideration represents the fair value of $65.2 million payable to the County of Sonoma based on the achievement of future annual tonnage targets through the expected remaining capacity of the landfill. The potential undiscounted amount of all future contingent payments that we could be required to make under the waste management contract is estimated to be between approximately $75 million and $165 million. During the three months ended March 31, 2020, the activity in the contingent consideration liability included accretion, which was offset by concession payments made in the ordinary course of business. There were no changes to the estimate of fair value.
In 2017, we recognized additional contingent consideration associated with the acquisition of a landfill. As of March 31, 2020, the contingent consideration of $3.9 million represents the fair value of amounts payable to the seller based on annual volume of tons disposed at the landfill. During the three months ended March 31, 2020, the activity in the contingent consideration liability included accretion, which was offset by concession payments made in the ordinary course of business. There were no changes to the estimate of fair value.
In June 2019, we recognized additional contingent consideration associated with the acquisition of a collection business. As of March 31, 2020, the contingent consideration of $2.6 million represents the fair value of amounts payable to the seller based on annual volume of tons collected from certain customers of the business. During the three months ended March 31, 2020, the activity in the contingent consideration liability included accretion. There were no changes to the estimate of fair value.
12. SEGMENT REPORTING
Our senior management evaluates, oversees and manages the financial performance of our operations through two field groups, referred to as Group 1 and Group 2. Group 1 primarily consists of geographic areas located in the western United States, and Group 2 primarily consists of geographic areas located in the southeastern and mid-western United States, and the eastern seaboard of the United States. These two groups are presented below as our reportable segments, which provide integrated waste management services consisting of non-hazardous solid waste collection, transfer, recycling, disposal and environmental services.
Summarized financial information concerning our reportable segments for the three months ended March 31, 2020 and 2019 follows:
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Gross Revenue
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Intercompany Revenue
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Net Revenue
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Depreciation, Amortization, Depletion and Accretion
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Operating Income (Loss)
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Capital Expenditures
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Total Assets
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Three Months Ended March 31, 2020
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Group 1
|
$
|
1,507.5
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|
|
$
|
(252.9)
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|
|
$
|
1,254.6
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|
|
$
|
128.5
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|
|
$
|
311.7
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|
|
$
|
114.0
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|
|
$
|
11,376.6
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Group 2
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1,467.9
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|
(209.4)
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|
1,258.5
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|
134.5
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|
234.5
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|
82.4
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|
9,369.4
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Corporate entities
|
46.1
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(5.3)
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40.8
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26.5
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(113.2)
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150.4
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2,162.9
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Total
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$
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3,021.5
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|
$
|
(467.6)
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|
|
$
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2,553.9
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|
|
$
|
289.5
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|
|
$
|
433.0
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|
|
$
|
346.8
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|
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$
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22,908.9
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|
|
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Three Months Ended March 31, 2019
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Group 1
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$
|
1,430.9
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|
|
$
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(237.7)
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|
|
$
|
1,193.2
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|
|
$
|
121.5
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|
|
$
|
288.3
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|
|
$
|
86.9
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|
|
$
|
11,103.6
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Group 2
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1,438.1
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|
|
(198.4)
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|
|
1,239.7
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|
|
126.0
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|
|
223.3
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|
|
84.2
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|
|
8,980.2
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Corporate entities
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41.3
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(3.6)
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|
37.7
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|
|
24.5
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|
(88.8)
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|
|
128.2
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|
|
1,698.2
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Total
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$
|
2,910.3
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|
|
$
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(439.7)
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|
|
$
|
2,470.6
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|
|
$
|
272.0
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|
|
$
|
422.8
|
|
|
$
|
299.3
|
|
|
$
|
21,782.0
|
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Intercompany revenue reflects transactions within and between segments that generally are made on a basis intended to reflect the market value of such services. Capital expenditures for corporate entities primarily include vehicle inventory acquired but not yet assigned to operating locations and facilities. Corporate functions include legal, tax, treasury, information technology, risk management, human resources, closed landfills and other administrative functions.
13. REVENUE
Our operations primarily consist of providing collection, transfer and disposal of non-hazardous solid waste, recovering and recycling of certain materials, and environmental services. The following table disaggregates our revenue by service line for the three months ended March 31, 2020 and 2019 (in millions of dollars and as a percentage of revenue):
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Three Months Ended March 31,
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2020
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2019
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Collection:
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Residential
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$
|
568.5
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|
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22.3
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%
|
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$
|
557.4
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22.6
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%
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Small-container
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805.7
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|
31.5
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|
|
777.9
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31.5
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Large-container
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552.4
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|
|
21.6
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|
|
530.7
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|
|
21.5
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|
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|
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Other
|
12.3
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|
|
0.5
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|
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10.8
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|
0.4
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|
|
|
|
|
|
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Total collection
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1,938.9
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|
|
75.9
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|
|
1,876.8
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|
76.0
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Transfer
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323.0
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|
|
294.9
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Less: intercompany
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(186.0)
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(172.0)
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Transfer, net
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137.0
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|
5.4
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|
122.9
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5.0
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Landfill
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558.3
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|
536.4
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Less: intercompany
|
(252.3)
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|
(239.6)
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Landfill, net
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306.0
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|
12.0
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|
296.8
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|
12.0
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Environmental services
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46.8
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|
1.8
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|
45.0
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|
1.8
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Other:
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Recycling processing and commodity sales
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67.1
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|
|
2.6
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|
|
72.9
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|
|
3.0
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|
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|
|
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Other non-core
|
58.1
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|
|
2.3
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|
|
56.2
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|
|
2.2
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|
|
|
|
|
|
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Total other
|
125.2
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|
|
4.9
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|
|
129.1
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|
|
5.2
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|
|
|
|
|
|
|
|
|
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Total revenue
|
$
|
2,553.9
|
|
|
100.0
|
%
|
|
$
|
2,470.6
|
|
|
100.0
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%
|
|
|
|
|
|
|
|
|
Other non-core revenue consists primarily of revenue from National Accounts, which represents the portion of revenue generated from nationwide or regional contracts in markets outside our operating areas where the associated waste handling services are subcontracted to local operators. Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.
The factors that impact the timing and amount of revenue recognized for each service line may vary based on the nature of the service performed. Generally, we recognize revenue at the time we perform a service. In the event that we bill for services in advance of performance, we recognize deferred revenue for the amount billed and subsequently recognize revenue at the time the service is provided. Substantially all of the deferred revenue recognized as of December 31, 2019 was recognized as revenue during the three months ended March 31, 2020 when the service was performed.
See Note 12, Segment Reporting, for additional information regarding revenue by reportable segment.
Revenue Recognition
Our service obligations of a long-term nature, e.g., certain solid waste collection service contracts, are satisfied over time, and we recognize revenue based on the value provided to the customer during the period. The amount billed to the customer is based on variable elements such as the number of residential homes or businesses for which collection services are provided, the volume of waste collected, transported and disposed, and the nature of the waste accepted. We do not disclose the value of unsatisfied performance obligations for these contracts as our right to consideration corresponds directly to the value provided to the customer for services completed to date and all future variable consideration is allocated to wholly unsatisfied performance obligations.
Additionally, certain elements of our long-term customer contracts are unknown upon entering into the contract, including the amount that will be billed in accordance with annual price escalation clauses, our fuel recovery fee program and commodity
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
prices. The amount to be billed is often tied to changes in an underlying base index such as a consumer price index or a fuel or commodity index, and revenue can be recognized once the index is established for the period.
Deferred Contract Costs
We incur certain upfront payments to acquire customer contracts which are recognized as other assets in our consolidated balance sheet, and we amortize the asset over the respective contract life. In addition, we recognize sales commissions that represent an incremental cost of the contract as other assets in our consolidated balance sheets, and we amortize the asset over the average life of the customer relationship. As of March 31, 2020 and December 31, 2019, we recognized $80.6 million and $83.1 million, respectively, of deferred contract costs and capitalized sales commissions. During each of the three months ended March 31, 2020 and 2019, we amortized $3.0 million of capitalized sales commissions to selling, general and administrative expenses. During the three months ended March 31, 2020 and 2019, we amortized $1.6 million and $1.5 million, respectively, of other deferred contract costs as a reduction of revenue.
Effective January 1, 2020, we adopted ASU 2016-13. In accordance with the standard, we evaluated the impairment considerations for our deferred contract cost assets based on an expected credit loss assessment. We considered the impact of the COVID-19 pandemic on our business, noting no significant changes to our expected credit loss assessment.
14. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are subject to extensive and evolving laws and regulations and have implemented safeguards to respond to regulatory requirements. In the normal course of our business, we become involved in legal proceedings. Some may result in fines, penalties or judgments against us, or settlements, which may impact earnings and cash flows for a particular period. Although we cannot predict the ultimate outcome of any legal matter with certainty, we do not believe the outcome of any of our pending legal proceedings will have a material adverse impact on our consolidated financial position, results of operations or cash flows.
As used herein, the term legal proceedings refers to litigation and similar claims against us and our subsidiaries, excluding: (1) ordinary course accidents, general commercial liability and workers' compensation claims, which are covered by insurance programs, subject to customary deductibles, and which, together with insured employee health care costs, are discussed in Note 5, Other Liabilities; and (2) environmental remediation liabilities, which are discussed in Note 6, Landfill and Environmental Costs.
We accrue for legal proceedings when losses become probable and reasonably estimable. We have recorded an aggregate accrual of approximately $19 million relating to our outstanding legal proceedings as of March 31, 2020. As of the end of each applicable reporting period, we review each of our legal proceedings and, where it is probable that a liability has been incurred, we accrue for all probable and reasonably estimable losses. Where we can reasonably estimate a range of losses we may incur regarding such a matter, we record an accrual for the amount within the range that constitutes our best estimate. If we can reasonably estimate a range but no amount within the range appears to be a better estimate than any other, we use the amount that is the low end of such range. If we had used the high ends of such ranges, our aggregate potential liability would be approximately $14 million higher than the amount recorded as of March 31, 2020.
Multiemployer Pension Plans
We participate in multiemployer pension plans that generally provide retirement benefits to participants of contributing employers. We do not administer these plans.
Under current law regarding multiemployer pension plans, a plan’s termination, our voluntary withdrawal (which we consider from time to time) or the mass withdrawal of all contributing employers from any under-funded multiemployer pension plan (each, a Withdrawal Event) would require us to make payments to the plan for our proportionate share of the plan’s unfunded vested liabilities. During the course of operating our business, we incur Withdrawal Events regarding certain of the multiemployer pension plans in which we participate. We accrue for such events when losses become probable and reasonably estimable.
The COVID-19 pandemic has created significant volatility and disruption of financial markets, which has negatively impacted companies across the globe. We will continue to monitor the Pension Protection Act zone status of the multiemployer pension plans in which we participate, noting that the current economic environment may impact certain contributing employers' ability to fulfill their obligations under the plans. We believe the largest risk is attributable to plans in the critical red zone, which are less than 65% funded. In the event other contributing employers default on their obligations under the plans, we could be required to adjust our estimates for these matters, which could have a material and adverse effect on our consolidated financial position, results of operations and cash flows.
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Restricted Cash and Marketable Securities
Restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Beginning-of-period and end-of-period cash, cash equivalents, restricted cash and restricted cash equivalents as presented in the statement of cash flows is reconciled as follows:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Cash and cash equivalents
|
|
$
|
281.6
|
|
|
$
|
47.1
|
|
|
$
|
68.0
|
|
|
$
|
70.5
|
|
|
Restricted cash and marketable securities
|
|
117.7
|
|
|
179.4
|
|
|
115.1
|
|
|
108.1
|
|
|
Less: restricted marketable securities
|
|
(55.9)
|
|
|
(49.1)
|
|
|
(46.6)
|
|
|
(45.3)
|
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
$
|
343.4
|
|
|
$
|
177.4
|
|
|
$
|
136.5
|
|
|
$
|
133.3
|
|
Our restricted cash and marketable securities include, among other things, restricted cash and marketable securities pledged to regulatory agencies and governmental entities as financial guarantees of our performance under certain collection, landfill and transfer station contracts and permits, and relating to our final capping, closure and post-closure obligations at our landfills, restricted cash and marketable securities related to our insurance obligations, and restricted cash related to a payment for a certain maturing tax-exempt financing.
The following table summarizes our restricted cash and marketable securities:
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|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
Capping, closure and post-closure obligations
|
$
|
31.0
|
|
|
$
|
30.6
|
|
|
Insurance
|
86.7
|
|
|
99.4
|
|
|
Payment for maturing tax-exempt financing
|
—
|
|
|
49.4
|
|
|
|
|
|
|
|
Total restricted cash and marketable securities
|
$
|
117.7
|
|
|
$
|
179.4
|
|
Off-Balance Sheet Arrangements
We have no off-balance sheet debt or similar obligations, other than short-term operating leases and financial assurances, which are not classified as debt. We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported financial position or results of operations. We have not guaranteed any third-party debt.