SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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For the quarterly period ended September 30, ~~2018~~2019



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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(Exact name of registrant as specified in its charter)

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Registrant’s telephone number, including area code: (480) 627-2700

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	RSG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ

As of October ~~18, 2018,~~23, 2019, the registrant had outstanding ~~324,570,560~~319,144,722 shares of Common Stock, par value $0.01 per share (excluding treasury shares of ~~27,244,614)~~34,111,724).

REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF INCOME

(in millions, except per share data)

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF COMPREHENSIVE INCOME

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Interests In Consolidated Subsidiary

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY - (CONTINUED)

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS


	Nine Months Ended September 30,
	2019		2018
Cash provided by operating activities:
Net income	$	783.8	$	736.5
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization, depletion and accretion	844.5		841.7
Non-cash interest expense	34.9		31.4
Restructuring related charges	13.0		22.5
Stock-based compensation	29.2		29.4
Deferred tax provision	72.9		113.7
Provision for doubtful accounts, net of adjustments	23.4		24.4
Loss on extinguishment of debt	—		0.3
Gain on disposition of assets and asset impairments, net	(22.4)		(1.7)

Environmental adjustments	(9.6)		3.3
Loss from unconsolidated equity method investment	27.2		5.7

Other non-cash items	(0.9)		0.6
Change in assets and liabilities, net of effects from business acquisitions and divestitures:
Accounts receivable	(65.3)		(72.1)
Prepaid expenses and other assets	98.3		(13.5)
Accounts payable	(9.3)		58.6
Restructuring expenditures	(7.9)		(18.7)
Capping, closure and post-closure expenditures	(47.7)		(42.5)
Remediation expenditures	(29.4)		(30.2)

Other liabilities	52.2		26.4
Proceeds from retirement of certain hedging relationships	—		31.1
Cash provided by operating activities	1,786.9		1,746.9
Cash used in investing activities:
Purchases of property and equipment	(908.3)		(820.5)
Proceeds from sales of property and equipment	11.7		7.9
Cash used in acquisitions and investments, net of cash and restricted cash acquired	(455.9)		(130.5)
Cash received from business divestitures	41.6		10.6
Purchases of restricted marketable securities	(9.1)		(35.4)
Sales of restricted marketable securities	8.6		36.2
Other	(5.2)		—
Cash used in investing activities	(1,316.6)		(931.7)
Cash used in financing activities:
Proceeds from notes payable and long-term debt, net of fees	3,504.8		3,296.7
Proceeds from issuance of senior notes, net of discount and fees	891.9		782.0
Payments of notes payable and long-term debt and senior notes	(4,145.9)		(4,032.6)


Issuances of common stock, net	5.3		19.9

Purchases of common stock for treasury	(353.8)		(574.9)
Cash dividends paid	(361.9)		(340.0)
Distributions paid to non-controlling interests in consolidated subsidiary	(0.2)		(0.6)
Other	(15.2)		(7.9)
Cash used in financing activities	(475.0)		(857.4)
Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(4.7)		(42.2)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year	133.3		179.1
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	128.6	$	136.9

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

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",~~Republic, the Company, we, us, or ~~"our")~~our), is the second largest provider of non-hazardous solid waste collection, transfer, recycling, disposal and ~~energy~~environmental services in the United States, as measured by revenue. We manage and evaluate our operations through ~~two~~2 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")~~(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")~~(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, ~~2017.~~2018.

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, 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, ~~2017.~~2018. Our actual results may differ significantly from our estimates.

~~New Accounting Pronouncements~~

~~Accounting Standards Adopted~~

~~During 2018, we adopted the following accounting standard updates ("ASUs") as issued by the Financial Accounting Standards Board ("FASB"):~~



~~ASU~~		~~Effective Date~~
~~ASU 2014-09~~	~~Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40)~~	~~January 1, 2018~~
~~ASU 2016-15~~	~~Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments~~	~~January 1, 2018~~
~~ASU 2016-18~~	~~Statement of Cash Flows (Topic 230) - Restricted Cash~~	~~January 1, 2018~~
~~ASU 2017-01~~	~~Business Combinations (Topic 805) - Clarifying the Definition of Business~~	~~January 1, 2018~~
~~ASU 2017-07~~	~~Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~	~~January 1, 2018~~
~~ASU 2017-09~~	~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting~~	~~January 1, 2018~~

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

New Accounting Pronouncements

Accounting Standards Adopted

~~Revenue Recognition~~Effective January 1, 2019, we adopted the following accounting standard updates (ASUs) as issued by the Financial Accounting Standards Board (FASB):


ASU		Effective Date
ASU 2016-02	Leases (Topic 842)	January 1, 2019
ASU 2017-12	Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities	January 1, 2019
ASU 2018-16	Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting	January 1, 2019
ASU 2018-02	Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income	January 1, 2019
ASU 2018-07	Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting	January 1, 2019
ASU 2018-15	Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	January 1, 2019

Leases

Effective January 1, ~~2018,~~2019, we adopted ~~ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40)~~ ("ASU 2014-09" or the "new revenue recognition standard") using the modified retrospective approach. We recognized the cumulative effect of adopting the new revenue recognition standard as an adjustment to the beginning balance of Retained Earnings as of the date of adoption. The comparative periods have not been restated and continue to be reported under the accounting standards in effect for those periods. The timing and pattern of revenue recognition has not significantly changed under the new revenue recognition standard, nor has there been a material change to our operating or net income.

Under ASU 2014-09, we record revenue when control is transferred to the customer, generally at the time we provide a service. While the timing and pattern of revenue recognition remains unchanged, we identified certain consideration payable to our customers that is now recorded as a reduction of revenue in accordance with the new revenue recognition standard. These costs were historically recorded as a component of cost of operations and include:

~~payments issued to our municipal customers in accordance with our residential collection contracts,~~

~~payments issued to our municipal customers in accordance with certain landfill operating agreements, and~~

~~commodity rebates in our collection and recycling lines of business.~~

Historically, we also recognized certain upfront payments to acquire customer contracts as other assets in our consolidated balance sheet and amortized the asset as a component of depreciation, amortization and depletion over the respective contract life. In accordance with the new revenue recognition standard, we now amortize the asset as a reduction of revenue. The timing and pattern of recognizing these payments to our customers have not significantly changed under the new revenue recognition standard.

In addition, we historically recognized sales commissions as a component of selling, general and administrative expenses as they were incurred. In accordance with the new revenue recognition standard, we identified certain sales commissions that represent an incremental cost of the contract and should be capitalized and amortized to selling, general and administrative expense over the average life of the customer relationship.

~~The cumulative effect of the changes made to our consolidated balance sheet for the adoption of ASU 2014-09 were as follows:~~

Balance at
December 31, 2017

Adjustments
due to our adoption of
ASU 2014-09

Balance at
January 1,
2018
Balance Sheet
Assets
Other assets $ 335.2
$ 43.8
$ 379.0

Liabilities
Deferred income taxes and other long-term tax liabilities, net $ 796.4
$ 10.4
$ 806.8

Equity
Retained earnings $ 4,152.5
$ 33.4
$ 4,185.9

~~Table of Contents~~

~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

~~The impact of our adoption of the new revenue recognition standard on our consolidated income statement for the three and nine months ended September 30, 2018 was as follows:~~

For the three months ended September 30, 2018 For the nine months ended September 30, 2018
As Reported Effect of Change
As Computed Excluding the Adoption of
ASU 2014-09
As Reported Effect of Change
As Computed Excluding the Adoption of
ASU 2014-09
Income Statement
Revenue $ 2,565.7
$ 85.5
$ 2,651.2
$ 7,510.9
$ 255.2
$ 7,766.1
Expenses:
Cost of operations $ 1,577.4
$ 83.9
$ 1,661.3
$ 4,624.4
$ 250.8
$ 4,875.2
Depreciation, amortization and depletion $ 262.4
$ 1.6
$ 264.0
$ 781.0
$ 4.4
$ 785.4
Selling, general and administrative $ 260.9
$ 0.1
$ 261.0
$ 775.0
$ 0.5
$ 775.5
Operating income $ 440.3
$ (0.1 ) $ 440.2
$ 1,252.6
$ (0.5 ) $ 1,252.1

~~Statement of Cash flows~~

~~Effective January 1, 2018 we adopted ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments~~ ("ASU 2016-15") using a retrospective approach to each period presented. In accordance with the standard, we recognize contingent consideration and holdbacks paid within three months of an acquisition's consummation date as cash outflows from investing activities in the statement of cash flows. Payments made thereafter are recognized as cash outflows from financing activities in the statement of cash flows. As the requirements of the standard do not significantly differ from our previous accounting policy, our adoption of this guidance did not have a material impact on our consolidated financial statements.

~~Effective January 1, 2018 we adopted ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230) - Restricted Cash~~ ("ASU 2016-18") using a retrospective approach to each period presented. As a result of our adoption of the standard, 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. Consequently, we reclassified the $6.0 million change in restricted cash and restricted cash equivalents from cash used in investing activities for the nine months ended September 30, 2017.

~~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:~~

September 30, 2018 December 31, 2017 September 30, 2017 December 31, 2016
Cash and cash equivalents $ 81.9
$ 83.3
$ 63.9
$ 67.8
Restricted cash and marketable securities 99.1
141.1
96.4
90.5
Less: restricted marketable securities (44.1 ) (45.3 ) (45.2 ) (45.3 )
Cash, cash equivalents, restricted cash and restricted cash equivalents $ 136.9
$ 179.1
$ 115.1
$ 113.0

~~Business Combinations~~

~~Effective January 1, 2018 we adopted ASU 2017-01,~~ ~~Business Combinations (Topic 805) - Clarifying the Definition of Business~~ ("ASU 2017-01"), which assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 provides a screen that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance prescribed by ASU 2017-01 will be applied prospectively to relevant transactions on or after the adoption date and did not have a material impact on the acquisitions accounted for as a business combination during the nine months ended September 30, 2018.

~~Table of Contents~~

~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

~~Retirement Benefits~~

~~Effective January 1, 2018 we adopted ASU 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ("ASU 2017-07") using a retrospective approach to each period presented. The standard requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented.

As our pension plan is frozen, we do not have service costs that qualify for the treatment prescribed by ASU 2017-07. Subsequent to the adoption of ASU 2017-07, net benefit costs (income) are reported in other income. Our adoption of ASU 2017-07 did not have a material impact on our consolidated financial statements for the nine months ended September 30, 2018 and 2017.

~~Stock Compensation~~

~~Effective January 1, 2018, we adopted ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting~~ ("ASU 2017-09"), which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. ASU 2017-09 does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions, or award classification and would not be required if the changes are considered non-substantive. The adoption of ASU 2017-09 did not have a material impact on our consolidated financial statements for the nine months ended September 30, 2018.

~~Accounting Standards Issued but not yet Adopted~~

~~Leases~~

~~In February 2016, the FASB issued~~ ASU 2016-02, Leases (Topic 842) (~~"ASU 2016-02"), which increases transparency and comparability among organizations~~ASC 842 or the new leasing standard)using the optional transition method prescribed by requiring lease assets and lease liabilities to be recognized on the balance sheet and requiring certain disclosures regarding key information about leasing arrangements. ASU 2016-02 requires lessees to recognize lease assets and liabilities for most leases classified as operating leases under previous U.S. GAAP. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As such, Republic will adopt the standard beginning January 1, 2019.

~~As we progress to adopt the standard, we continually monitor clarifying interpretations. In July 2018, the FASB issued~~ ASU 2018-11, Leases (Topic 842): Targeted Improvements~~, which amends the guidance to add a method of~~. Upon adoption ~~whereby the issuer may elect to recognize a cumulative-effect adjustment at the beginning~~ of the ~~period of adoption. We plan to adopt the~~new leasing standard, ~~under this method.~~

~~Under ASU 2016-02,~~ we ~~will recognize~~recognized a right-of-use asset and a right-of-use liability for leases classified as operating leases in our consolidated balance sheet. ~~While we continue to assess the overall impact to our consolidated financial statements, we currently plan to apply~~We applied the package of practical expedients to leases that commenced before the effective date whereby we ~~will elect~~elected to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases.

~~We are assessing the disclosure requirements under ASU 2016-02, and we anticipate disclosing additional information, as necessary, to comply with the standard.~~ To assist in quantifying the impact on our consolidated financial statements and supplementing our existing disclosures, we ~~are in~~designed internal controls over the ~~process of implementing~~adoption and implemented a software solution to manage and account for our leases. As of January 1, 2019, we recognized a right-of-use liability for our operating leases of $256.3 million classified as other accrued liabilities and other long-term liabilities and a corresponding right-of-use asset of $236.2 million classified as other long-term assets in our consolidated balance sheet. The right-of-use asset reflects adjustments for certain favorable or unfavorable leases recognized through acquisitions, prepaid or accrued rent, asset impairments and lease incentives, including but not limited to cash incentives, rent abatement or leasehold improvements paid by the lessor. We did not recognize a cumulative effect adjustment to retained earnings as of January 1, 2019 as the standard did not have a material impact on our consolidated statement of income. In addition, the standard did not have a material impact on our accounting for finance (capital) leases.

We assessed the disclosure requirements under the new leasing standard as part of our adoption. Refer to Note 4, Other Assets, Note 5, Other Liabilities, and Note 8, Leases, included herein for our enhanced supplemental disclosures.

Derivatives and Hedging

~~In August 2017,~~Effective January 1, 2019, we adopted the ~~FASB issued~~FASB's ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ~~("ASU 2017-12")~~(ASU 2017-12). ~~ASU 2017-12 intends to address concerns through changes to hedge accounting~~We adopted the new guidance ~~which will accomplish~~over income statement presentation and enhanced disclosures prospectively, and we adopted the following: a) Expand hedge accounting for nonfinancial and financial risk components and amend measurement methodologies to more closely align hedge accounting with a company's risk management activities; b) Decreaseguidance over the ~~complexity~~elimination of ~~preparing and understanding hedge results through eliminating~~ the separate measurement ~~and reporting~~ of ~~hedge ineffectiveness; c) Enhance transparency, comparability and understandability of hedge results through enhanced disclosures and changing the presentation of hedge results~~ineffectiveness on a modified retrospective basis to ~~align the effects~~existing hedging relationships as of the ~~hedging instrument~~date of adoption. Prior to adoption, the net periodic earnings of our fair value hedges were presented within other income, net in our consolidated statement of income and are now presented within interest expense in our consolidated statement of income, i.e. the same line item as the effect of the hedged ~~item; and d) Reduce the cost and complexity~~item. Our adoption of ~~applying hedge accounting by simplifying the manner in which assessments of hedge effectiveness may be performed.~~ ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted in any interim period following the issuance date. We are currently assessing the effect this guidance maydid not have a material impact on our consolidated financial statements.

Effective January 1, 2019, in conjunction with ASU 2017-12, we adopted the FASB's ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting (ASU 2018-16) on a prospective basis. LIBOR is expected to no longer be published by 2021. Consequently, the FASB added the OIS rate based on SOFR as an eligible benchmark interest rate in order to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes. We are developing a plan to transition our interest rate

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

swaps from LIBOR to SOFR. Our adoption of ASU 2018-16 did not have a material impact on our consolidated financial statements for the nine months ended September 30, 2019.

Reclassifications of Certain Tax Effects from Accumulated Other Comprehensive Income

~~In February 2018,~~Effective January 1, 2019, we adopted the ~~FASB issued~~FASB's ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~("ASU 2018-02")~~ (ASU 2018-02). ~~ASU 2018-02 allows~~The amendments eliminate the ~~reclassification from accumulated other comprehensive income to retained earnings for~~ stranded tax effects resulting from the Tax Cuts and Jobs Act (the ~~"Tax Act")~~Tax Act). ~~Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the~~The amendments only relate to the reclassification of the income tax effects of the Tax Act, and the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. We are currently assessing the effect this guidance may have on our consolidated financial statements.

~~Income Taxes~~

~~In March 2018, the FASB issued ASU 2018-05,~~ ~~Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update)~~ ~~which provides guidance on accounting for the~~Consequently, we reclassified $5.4 million of stranded tax effects ~~of the Tax Act. See Note 8,~~ ~~Income Taxes~~ ~~for discussion on our adoption plans.~~from accumulated other comprehensive income to retained earnings.

Improvements to Nonemployee Share-Based Payment Accounting

~~In June 2018,~~Effective January 1, 2019, we adopted the ~~FASB issued~~FASB's ASU 2018-07, ~~Compensation—~~Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting~~("ASU 2018-07")~~ (ASU 2018-07). ASU 2018-07 simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, ~~Compensation—~~Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. We will apply the guidance prescribed by this update on a prospective basis. Our adoption of ASU 2018-07 did not have a material impact on our consolidated financial statements for the nine months ended September 30, 2019.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

Effective January 1, 2019, we early adopted the FASB's ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) No. 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) using a prospective approach. In accordance with the standard, we present capitalized implementation costs incurred in a hosting arrangement that is a service contract as other assets on our consolidated balance sheet. This presentation is consistent with the presentation of the prepayment of fees for the hosting arrangement. Historically, implementation costs were presented as a component of property and equipment, net.

As of January 1, 2019, we reclassified $28.7 million of capitalized implementation costs incurred in a hosting arrangement that is a service contract from property and equipment, net to other assets on our consolidated balance sheet. During the three and nine months ended September 30, 2019, we recognized $9.0 million and $25.3 million, respectively, of amortization expense for the prepayment of fees and capitalized implementation costs incurred in a hosting arrangement as a component of depreciation, amortization and depletion in our consolidated statement of income. During the nine months ended September 30, 2019, we recognized $9.0 million of payments for capitalized implementation costs in the same manner as payments made for fees associated with the hosting arrangement as a component of cash provided by operating activities in our consolidated statement of cash flows.

Accounting Standards Issued but not yet Adopted

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 will replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for public business entities for fiscal years beginning after December 15, ~~2018,~~2019, including interim periods within that fiscal year. We are currently assessing the effect this guidance may have on our consolidated financial statements.

Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU ~~2018-13")~~2018-13). ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value ~~Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits.~~Measurement. ASU 2018-13 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We are currently assessing the effect this guidance may have on our consolidated financial statements.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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")~~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 by applying concepts in the Concepts Statement.~~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.

~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~

~~In August 2018, the FASB issued ASU 2018-15,~~ Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) No. 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post implementation stages are expensed as the activities are performed. ASU 2018-15 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption of the amendments in ASU 2018-15 is permitted, including adoption in any interim period, for all entities. The amendments in ASU 2018-15 should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently assessing the effect this guidance may have on our consolidated financial statements.

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~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

2. BUSINESS ACQUISITIONS, INVESTMENTS AND RESTRUCTURING CHARGES

Acquisitions

We acquired various waste businesses during the nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018. The purchase price for these business acquisitions and the allocations of the purchase price ~~follow:~~follows:

2018 2017
Purchase price:
Cash used in acquisitions, net of cash acquired $ 111.1
$ 136.0
Contingent consideration —
5.2
Holdbacks 10.9
7.7
Fair value of operations surrendered —
70.1
Total 122.0
219.0
Allocated as follows:
Accounts receivable 1.9
10.6
Landfill airspace 22.2
28.0
Property and equipment 17.5
76.3
Other assets 0.1
0.1
Inventory 0.2
0.7
Accounts payable (0.3 ) —
Environmental remediation liabilities —
(0.1 )
Closure and post-closure liabilities (1.7 ) (5.4 )
Other liabilities (3.7 ) (6.5 )
Fair value of tangible assets acquired and liabilities assumed 36.2
103.7
Excess purchase price to be allocated $ 85.8
$ 115.3
Excess purchase price allocated as follows:
Other intangible assets $ 14.8
$ 20.1
Goodwill 71.0
95.2
Total allocated $ 85.8
$ 115.3


	2019		2018
Purchase price:
Cash used in acquisitions, net of cash acquired	$	424.3	$	111.1
Contingent consideration	2.5		—
Holdbacks	16.0		10.9
Fair value, future minimum finance lease payments	5.8		—

Total	448.6		122.0
Allocated as follows:
Accounts receivable	18.3		1.9
Landfill airspace	—		22.2
Property and equipment	143.0		17.5
Operating right-of-use lease assets	18.1		—
Other assets	2.5		0.1
Inventory	1.1		0.2
Accounts payable	(11.5)		(0.3)

Environmental remediation liabilities	(0.1)		—
Closure and post-closure liabilities	—		(1.7)
Operating right-of-use lease liabilities	(18.4)		—
Other liabilities	(2.3)		(3.7)
Fair value of tangible assets acquired and liabilities assumed	150.7		36.2
Excess purchase price to be allocated	$	297.9	$	85.8
Excess purchase price allocated as follows:
Other intangible assets	$	31.5	$	14.8
Goodwill	266.4		71.0
Total allocated	$	297.9	$	85.8

The purchase price allocations are preliminary and are based on information existing at the acquisition dates. Accordingly, the purchase price allocations are subject to change. We are finalizing the valuation of tangible and intangible assets for certain acquisitions that closed during the three months ended September 30, 2019.

Substantially all of the goodwill and intangible assets recorded for these acquisitions are deductible for tax purposes. These acquisitions are not material to ~~the Company's~~our results of operations, individually or in the aggregate. As a result, no pro forma financial information is provided.

Investments

In ~~2018~~2019 and ~~2017,~~2018, we acquired ~~noncontrolling~~non-controlling equity interests in certain limited liability companies that qualified for ~~a federal~~ investment tax ~~credit~~credits under Section 48 of the Internal Revenue Code. In exchange for our ~~noncontrolling~~non-controlling interests, we made certain capital contributions of ~~$17.4~~$14.1 million and ~~$0.4~~$17.4 million, which were recorded to other ~~long-term~~ assets in our September 30, ~~2018~~ 2019

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and ~~2017~~2018 consolidated balance sheets, respectively. During the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we also reduced the carrying value of these investments by ~~$7.9~~$27.2 million and ~~$8.8~~$5.7 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 ~~agreement. For further discussion of the income tax benefits, see Note 8,~~ ~~Income Taxes~~.agreements.

Restructuring Charges

In January 2016, we realigned our field support functions by combining our three regions into two field groups, consolidating our areas and streamlining select operational support roles at our Phoenix headquarters. Additionally, in the second quarter of 2016, we began the redesign of our back-office functions as well as the consolidation of over 100 customer service locations into three Customer Resource Centers. During the three and nine months ended September 30, 2017, we incurred restructuring charges of $3.7 million and $12.2 million, respectively, that consisted of severance and other employee termination benefits, transition costs, relocation benefits, and the closure of offices with lease agreements with non-cancelable terms. The savings realized from these restructuring efforts have been reinvested in our customer-focused programs and initiatives.

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~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

In January 2018, we eliminated certain positions following the consolidation of select back-office functions, including but not limited to the integration of our National Accounts support functions into our existing corporate support functions. These changes include a reduction in administrative staffing and closing of certain office locations.

During the three and nine months ended September 30, 2019, we incurred restructuring charges of $8.5 million and $13.0 million, respectively, that primarily related to upgrades to our back-office software systems. During the three and nine months ended September 30, 2018, we incurred restructuring charges of $9.2 million and $22.5 million, respectively, that primarily consisted of severance and other employee termination benefits and the closure of offices with lease agreements with non-cancelable terms. We paid ~~$6.1~~$7.9 million and $18.7 million during the ~~three and~~ nine months ended September 30, 2019 and 2018, respectively, related to these restructuring efforts.

WeIn 2019, we expect to incur additional restructuring charges of ~~between~~ approximately $3 million to $5 million ~~to $10 million during the remainder of 2018,~~ primarily related to ~~employee severance costs, lease exit and contract termination costs and the relocation of certain employees.~~upgrades to our back-office software systems. Substantially all of these restructuring charges will be recorded in our corporate segment.

3. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Our senior management evaluates, oversees and manages the financial performance of our operations through ~~two~~2 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:

Balance as of December 31, 2017 Acquisitions Divestitures
Adjustments
and Other
Balance as of September 30, 2018
Group 1 $ 6,084.0
$ 53.0
$ (0.3 ) $ (0.1 ) $ 6,136.6
Group 2 5,231.4
18.0
(4.1 ) 0.8
5,246.1
Total $ 11,315.4
$ 71.0
$ (4.4 ) $ 0.7
$ 11,382.7

~~Goodwill by reporting segment as of December 31, 2017 reflects the transfer of certain areas between our two field groups.~~


	Balance as of December 31, 2018		Acquisitions		Divestitures		Adjustments to Acquisitions		Balance as of September 30, 2019
Group 1	$	6,150.6	$	85.9	$	—	$	(1.2)	$	6,235.3
Group 2	5,249.5		180.5		(14.6)		(0.2)		5,415.2
Total	$	11,400.1	$	266.4	$	(14.6)	$	(1.4)	$	11,650.5

Other Intangible Assets, Net

Other intangible assets, net, include values assigned to customer relationships, ~~franchise agreements, other municipal agreements,~~ non-compete agreements and trade names, and are amortized over periods ranging from 1 to 1918 years. A summary of the activity and balances by intangible asset type follows:

Gross Intangible Assets Accumulated Amortization Other Intangible Assets, Net as of September 30, 2018
Balance as of December 31, 2017 Acquisitions
Adjustments
and Other ⁽¹⁾
Balance as of September 30, 2018 Balance as of December 31, 2017 Additions Charged to Expense
Adjustments
and Other ⁽¹⁾
Balance as of September 30, 2018
Customer relationships, franchise and other municipal agreements $ 666.0
$ 14.0
$ —
$ 680.0
$ (554.7 ) $ (42.1 ) $ —
$ (596.8 ) $ 83.2
Non-compete agreements 35.6
1.4
(0.1 ) 36.9
(28.5 ) (2.3 ) 0.1
(30.7 ) 6.2
Other intangible assets 73.8
—
(9.5 ) 64.3
(51.1 ) (1.0 ) 3.8
(48.3 ) 16.0
Total $ 775.4
$ 15.4
$ (9.6 ) $ 781.2
$ (634.3 ) $ (45.4 ) $ 3.9
$ (675.8 ) $ 105.4

(1) In accordance with our adoption of ASU 2014-09, we transferred a $5.7 million net deferred contract asset to Other Assets during the nine months ended September 30, 2018.


	Gross Intangible Assets														Accumulated Amortization				Other Intangible Assets, Net as of September 30, 2019
	Balance as of December 31, 2018		Acquisitions		Adjustments and Other ⁽¹⁾		Balance as of September 30, 2019		Balance as of December 31, 2018		Additions Charged to Expense		Adjustments and Other ⁽¹⁾		Balance as of September 30, 2019
Customer relationships, franchise and other municipal agreements	$	692.4	$	26.1	$	—	$	718.5	$	(607.2)	$	(11.2)	$	0.2	$	(618.2)	$	100.3
Non-compete agreements	37.0		7.0		0.9		44.9		(31.5)		(2.9)		—		(34.4)		10.5
Other intangible assets	64.3		—		(6.1)		58.2		(48.5)		(0.6)		4.2		(44.9)		13.3
Total	$	793.7	$	33.1	$	(5.2)	$	821.6	$	(687.2)	$	(14.7)	$	4.4	$	(697.5)	$	124.1

(1) In accordance with our adoption of the new leasing standard, we transferred $1.9 million of net favorable lease assets recognized through historical acquisitions to other assets as of January 1, 2019.

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4. OTHER ASSETS

Prepaid Expenses and Other Current Assets

A summary of prepaid expenses and other current assets as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 follows:

2018 2017
Prepaid expenses $ 104.2
$ 78.6
Inventories 55.4
51.2
Other non-trade receivables 47.3
28.6
Reinsurance receivable 25.9
23.1
Income tax receivable 17.3
59.7
Commodity and fuel hedge assets 2.0
3.0
Other current assets 2.1
3.4
Total $ 254.2
$ 247.6


	2019		2018
Prepaid expenses	$	88.0	$	75.6
Inventories	55.3		53.1
Other non-trade receivables	39.0		34.4
Reinsurance receivable	31.4		25.7
Income tax receivable	17.6		187.7
Prepaid fees for cloud-based hosting arrangements, current	11.8		10.2
Other current assets	12.3		4.5
Total	$	255.4	$	391.2

Other Assets

A summary of other assets as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 follows:


	2019		2018
Right-of-use lease asset ⁽¹⁾	$	243.1	$	—
Deferred compensation plan	110.4		100.0
Deferred contract costs and sales commissions	82.4		89.2
Reinsurance receivable	78.0		68.0
Investments	58.6		73.0
Prepaid fees and capitalized implementation costs for cloud-based hosting arrangements ⁽²⁾	33.6		—
Amounts recoverable for capping, closure and post-closure obligations	32.8		30.5
Interest rate swaps and locks	13.1		12.8
Other derivative assets	4.9		—
Deferred financing costs	3.3		4.2
Other	41.5		40.1
Total	$	701.7	$	417.8

2018 2017
Deferred compensation plan $ 105.1
$ 99.9
Deferred contract costs and sales commissions 90.4
43.6
Reinsurance receivable 70.0
65.9
Investments 38.9
27.2
Amounts recoverable for capping, closure and post-closure obligations 30.4
29.9
Interest rate swaps and locks 29.6
27.1
Deferred financing costs 4.5
3.0
Other 40.0
38.6
Total $ 408.9
$ 335.2
(1) Refer to Note 1, Basis of Presentation, for discussion regarding our adoption of ASC 842.

(2) In accordance with our adoption of ASU 2018-15, capitalized implementation costs for cloud-based hosting arrangements are presented as other assets as of September 30, 2019. Similar costs are presented as a component of property and equipment, net as of December 31, 2018.

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5. OTHER LIABILITIES

Other Accrued Liabilities

A summary of other accrued liabilities as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 follows:

2018 2017
Accrued payroll and benefits $ 183.5
$ 212.2
Insurance reserves, current portion 152.1
144.8
Accrued fees and taxes 139.3
129.7
Accrued dividends 121.7
114.4
Accrued professional fees and legal settlement reserves 28.1
45.1
Ceded insurance reserves, current portion 25.9
23.1
Current tax liabilities 0.2
11.7
Commodity and fuel hedge liabilities —
0.3
Other 89.3
126.9
Total $ 740.1
$ 808.2


	2019		2018
Accrued payroll and benefits	$	206.0	$	205.1
Insurance reserves, current	156.7		152.9
Accrued fees and taxes	139.7		124.2
Accrued dividends	129.3		121.0
Operating right-of-use lease liabilities, current ⁽¹⁾	36.6		—
Ceded insurance reserves, current	31.1		25.7
Interest rate swap locks	29.1		—
Accrued professional fees and legal settlement reserves	9.5		13.1


Other	75.4		86.6
Total	$	813.4	$	728.6

~~Table~~(1) Refer to Note 1, Basis of ~~Contents~~Presentation

~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

, for discussion regarding our adoption of ASC 842.

Other Long-Term Liabilities

A summary of other long-term liabilities as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 follows:


	2019		2018
Operating right-of-use lease liabilities ⁽¹⁾	$	226.0	$	—
Deferred compensation plan liability	112.9		96.0
Ceded insurance reserves	79.6		68.0
Contingent purchase price and acquisition holdbacks	68.6		73.9
Other derivative liabilities	24.2		—
Withdrawal liability - multiemployer pension funds	12.1		12.2
Legal settlement reserves	10.0		10.0
Pension and other post-retirement liabilities	6.1		6.0
Interest rate swap locks	1.6		—
Other	50.4		55.3
Total	$	591.5	$	321.4

2018 2017
Deferred compensation plan $ 106.3
$ 97.9
Contingent consideration and acquisition holdbacks 70.0
71.3
Ceded insurance reserves 70.0
65.9
Withdrawal liability - multiemployer pension funds 12.3
12.6
Pension and other post-retirement liabilities 7.3
7.0
Interest rate swaps 3.5
—
Other 57.2
57.4
Total $ 326.6
$ 312.1

(1) Refer to Note 1, Basis of Presentation, for discussion regarding our adoption of ASC 842.

~~Insurance Reserves~~

Our liabilities for unpaid and incurred but not reported claims as of September 30, 2018 and December 31, 2017 (which include claims for workers’ compensation, commercial general and auto liability, and employee-related health care benefits) were $427.9 million and $420.2 million, respectively, under our risk management program and are included in other accrued liabilities and insurance reserves, net of current portion, in our consolidated balance sheets. While the ultimate amount of claims incurred depends on future developments, we believe the recorded reserves are adequate to cover the future payment of claims; however, it is possible that these recorded reserves may not be adequate to cover the future payment of claims. Adjustments, if any, to estimates recorded resulting from ultimate claim payments will be reflected in our consolidated statements of income in the periods in which such adjustments are known.

6. LANDFILL AND ENVIRONMENTAL COSTS

As of September 30, ~~2018,~~2019, we owned or operated ~~191~~190 active landfills with total available disposal capacity of approximately ~~5.1~~5.0 billion in-place cubic yards. ~~We also~~Additionally, we have post-closure responsibility for ~~128~~129 closed landfills.

Accrued Landfill and Environmental Costs

A summary of accrued landfill and environmental liabilities as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 follows:

2018 2017
Landfill final capping, closure and post-closure liabilities $ 1,289.9
$ 1,257.7
Environmental remediation liabilities 552.3
564.0
Total accrued landfill and environmental costs 1,842.2
1,821.7
Less: current portion (168.3 ) (135.2 )
Long-term portion $ 1,673.9
$ 1,686.5


	2019		2018
Landfill final capping, closure and post-closure liabilities	$	1,339.6	$	1,292.0
Environmental remediation	515.6		540.2
Total accrued landfill and environmental costs	1,855.2		1,832.2
Less: current portion	(153.2)		(130.6)
Long-term portion	$	1,702.0	$	1,701.6

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Final Capping, Closure and Post-Closure Costs

The following table summarizes the activity in our asset retirement obligation liabilities, which ~~include~~includes liabilities for ~~landfill~~ final capping, closure and post-closure, for the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:

2018 2017
Asset retirement obligation liabilities, beginning of year $ 1,257.7
$ 1,224.6
Non-cash additions 33.0
34.1
Acquisitions, net of divestitures and other adjustments (0.6 ) (19.6 )
Asset retirement obligation adjustments (18.4 ) (2.1 )
Payments (42.5 ) (44.5 )
Accretion expense 60.7
59.9
Asset retirement obligation liabilities, end of period 1,289.9
1,252.4
Less: current portion (94.2 ) (84.5 )
Long-term portion $ 1,195.7
$ 1,167.9


	2019		2018
Asset retirement obligation liabilities, beginning of year	$	1,292.0	$	1,257.7
Non-cash additions	32.9		33.0
Acquisitions, net of divestitures and other adjustments	0.3		(0.6)
Asset retirement obligation adjustments	0.7		(18.4)
Payments	(47.7)		(42.5)
Accretion expense	61.4		60.7
Asset retirement obligation liabilities, end of period	1,339.6		1,289.9
Less: current portion	(80.9)		(94.2)
Long-term portion	$	1,258.7	$	1,195.7

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. During the nine months ended September 30, 2017, we transferred our ownership of the landfill gas collection and control system and the remaining post-closure and environmental liabilities of $24.8 million and $6.3 million, respectively, associated with one of our divested landfills.

The fair value of assets that are legally restricted for purposes of settling final capping, closure and post-closure liabilities was ~~$29.2~~$30.4 million and ~~$28.6~~$29.5 million as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, and is included in restricted cash and marketable securities in our consolidated balance sheets.

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 September 30, ~~2018~~2019 would be approximately ~~$466~~$369 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.

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~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

The following table summarizes the activity in our environmental remediation liabilities for the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:


	2019		2018
Environmental remediation liabilities, beginning of year	$	540.2	$	564.0
Net adjustments charged to expense	(9.6)		3.3
Payments	(29.4)		(30.2)
Accretion expense (non-cash interest expense)	14.3		15.2
Acquisitions, net of divestitures and other adjustments	0.1		—
Environmental remediation liabilities, end of period	515.6		552.3
Less: current portion	(72.3)		(74.1)
Long-term portion	$	443.3	$	478.2

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2018 2017
Environmental remediation liabilities, beginning of year $ 564.0
$ 602.9
Net additions charged to expense 3.3
—
Payments (30.2 ) (37.7 )
Accretion expense (non-cash interest expense) 15.2
15.7
Acquisitions, net of divestitures and other adjustments —
(6.1 )
Environmental remediation liabilities, end of period 552.3
574.8
Less: current portion (74.1 ) (73.2 )
Long-term portion $ 478.2
$ 501.6

Bridgeton Landfill. During the nine months ended September 30, ~~2018,~~2019, we paid ~~$11.0~~$12.0 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 ~~remediation~~ liability. As of September 30, ~~2018,~~2019, the remediation liability recorded for this site was ~~$166.3~~$149.1 million, of which approximately $9$2 million is expected to be paid during the remainder of ~~2018.~~2019. We believe the remaining reasonably possible high end of our range would be approximately ~~$177~~$171 million higher than the amount recorded as of September 30, ~~2018.~~2019.

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")~~(West Lake) in Missouri. On September 27, 2018, the U.S. Environmental Protection Agency ~~("EPA")~~(EPA) issued a Record of Decision Amendment for West Lake that includes a total undiscounted cost estimate of ~~$205~~$229 million over a four- to ~~five-year~~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.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The carrying value of our notes payable, ~~capital~~finance leases and long-term debt as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 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.

September 30, 2018 December 31, 2017
Maturity Interest Rate Principal Adjustments Carrying Value Principal Adjustments Carrying Value
Credit facilities:
Uncommitted Credit Facility Variable $ 56.6
$ —
$ 56.6
$ —
$ —
$ —
June 2019 Variable —
—
—
130.0
—
130.0
May 2021 Variable —
—
—
—
—
—
June 2023 Variable 50.0
—
50.0
—
—
—
Senior notes:
May 2018 3.800 —
—
—
700.0
(0.3 ) 699.7
September 2019 5.500 650.0
(1.2 ) 648.8
650.0
(2.1 ) 647.9
March 2020 5.000 850.0
(1.2 ) 848.8
850.0
(1.8 ) 848.2
November 2021 5.250 600.0
(1.3 ) 598.7
600.0
(1.5 ) 598.5
June 2022 3.550 850.0
(3.9 ) 846.1
850.0
(4.6 ) 845.4
May 2023 4.750 550.0
(11.7 ) 538.3
550.0
(1.0 ) 549.0
March 2025 3.200 500.0
(4.4 ) 495.6
500.0
(4.8 ) 495.2
June 2026 2.900 500.0
(4.5 ) 495.5
500.0
(5.0 ) 495.0
November 2027 3.375 650.0
(6.2 ) 643.8
650.0
(7.0 ) 643.0
May 2028 3.950 800.0
(17.6 ) 782.4
—
—
—
March 2035 6.086 181.9
(14.6 ) 167.3
181.9
(14.9 ) 167.0
March 2040 6.200 399.9
(3.8 ) 396.1
399.9
(3.9 ) 396.0
May 2041 5.700 385.7
(5.4 ) 380.3
385.7
(5.5 ) 380.2
Debentures:
May 2021 9.250 35.3
(0.7 ) 34.6
35.3
(1.0 ) 34.3
September 2035 7.400 148.1
(34.0 ) 114.1
148.1
(34.5 ) 113.6
Tax-exempt:
2019 - 2044 1.400 - 2.250 1,042.4
(5.7 ) 1,036.7
1,042.4
(6.4 ) 1,036.0
Capital leases:
2018 - 2046 3.273 - 12.203 113.8
—
113.8
108.4
—
108.4
Total Debt $ 8,363.7
$ (116.2 ) 8,247.5
$ 8,281.7
$ (94.3 ) 8,187.4
Less: current portion (690.8 ) (706.7 )
Long-term portion $ 7,556.7
$ 7,480.7


		September 30, 2019										December 31, 2018
Maturity	Interest Rate	Principal		Adjustments		Carrying Value		Principal		Adjustments		Carrying Value
Credit facilities:
Uncommitted Credit Facility	Variable	$	12.2	$	—	$	12.2	$	33.4	$	—	$	33.4

June 2023	Variable	170.0		—		170.0		159.0		—		159.0
Senior notes:

September 2019	5.500	—		—		—		650.0		(0.9)		649.1
March 2020	5.000	850.0		(0.4)		849.6		850.0		(1.0)		849.0
November 2021	5.250	600.0		(0.8)		599.2		600.0		(1.2)		598.8
June 2022	3.550	850.0		(2.9)		847.1		850.0		(3.6)		846.4
May 2023	4.750	550.0		4.9		554.9		550.0		(5.5)		544.5
August 2024	2.500	900.0		(8.0)		892.0		—		—		—
March 2025	3.200	500.0		(3.7)		496.3		500.0		(4.3)		495.7
July 2026	2.900	500.0		(4.0)		496.0		500.0		(4.4)		495.6
November 2027	3.375	650.0		(5.4)		644.6		650.0		(5.9)		644.1
May 2028	3.950	800.0		(16.1)		783.9		800.0		(17.3)		782.7
March 2035	6.086	181.9		(14.1)		167.8		181.9		(14.4)		167.5
March 2040	6.200	399.9		(3.7)		396.2		399.9		(3.8)		396.1
May 2041	5.700	385.7		(5.3)		380.4		385.7		(5.3)		380.4
Debentures:
May 2021	9.250	35.3		(0.5)		34.8		35.3		(0.7)		34.6
September 2035	7.400	148.1		(33.2)		114.9		148.1		(33.8)		114.3
Tax-exempt:
2020 - 2049	1.300 - 1.875	1,072.4		(6.1)		1,066.3		1,042.4		(5.6)		1,036.8
Finance leases:
2019 - 2049	3.070 - 12.203	112.4		—		112.4		109.5		—		109.5
Total Debt		$	8,717.9	$	(99.3)	8,618.6		$	8,445.2	$	(107.7)	8,337.5
Less: current portion						(912.8)						(690.7)
Long-term portion						$	7,705.8					$	7,646.8

In June 2018, we entered into a $2.25 billion unsecured revolving credit facility (the ~~"Credit Facility")~~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 "Replaced Credit Facilities").~~respectively. The Credit Facility ~~is unsecured and~~ matures in June 2023. We may request ~~two one-year~~2 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 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).

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~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

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 ~~$1,771.5~~$1,710.6 million and $1,694.1 million

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

as of September 30, ~~2018~~2019 and ~~under the Replaced Credit Facilities totaled $1,639.1 million as of~~ December 31, ~~2017.~~2018, 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 September 30, 2019 and December 31, 2018, we had ~~$50.0~~$170.0 million and $159.0 million of borrowings under our Credit Facility, ~~and $130.0 million of borrowings under the Replaced Credit Facilities as of December 31, 2017.~~respectively. We had ~~$411.2~~$352.0 million and $379.6 million of letters of credit outstanding under our Credit Facility as of September 30, ~~2018~~2019 and ~~$462.7 million of letters of credit outstanding under our Replaced Credit Facilities as of~~ December 31, ~~2017.~~2018, respectively.

~~Our~~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 ~~$56.6~~$12.2 million of borrowings and no$33.4 million of borrowings outstanding under our Uncommitted Credit Facility as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Senior Notes and Debentures

In ~~May~~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. Any remaining proceeds were used to repay amounts outstanding under our unsecured credit facilities as well as for general corporate purposes. Contemporaneously with this offering, we amended interest rate lock agreements with a notional value of $375.0 million and dedesignated the hedging relationship. There was 0 ineffectiveness recognized in the termination of these cash flow hedges. In addition, we entered into an offsetting interest rate swap to manage exposure to fluctuations in interest rates associated with the amended agreements. For further detail regarding the effect of our derivative contracts on interest expense, refer to Note 12, Financial Instruments, to our unaudited consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

In 2018, we issued $800.0 million of 3.950% senior notes due 2028 (the ~~"3.950% Notes")~~3.950% Notes). We used the net proceeds from the 3.950% Notes to repay $700.0 million of 3.800% senior notes that matured in May 2018, and ~~the~~any remaining proceeds were used for general corporate purposes. In connection with this offering, we terminated interest rate lock agreements with a notional value of $600.0 million, resulting in net proceeds of $31.1 million. There was no0 ineffectiveness recognized in the termination of these cash flow hedges.

Our senior notes and debentures are general unsecured obligations. Interest is payable semi-annually. ~~The senior notes have a make-whole provision that is exercisable at any time three months prior to their respective maturity dates at a stated redemption price.~~

Tax-Exempt Financings

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. As of ~~both~~ September 30, ~~2018 and~~2019, we had $1,066.3 million of certain variable rate tax-exempt financings outstanding with maturities ranging from 2020 to 2049. As of December 31, ~~2017,~~2018, we had ~~$1,042.4~~$1,036.8 million of ~~fixed and~~certain variable rate tax-exempt financings outstanding with maturities ranging from 2019 to 2044. Approximately 100% of our tax-exempt financings are remarketed quarterly 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. To date, the remarketing agents have been able to remarket all of our variable rate unsecured tax-exempt bonds. ~~These bonds have been classified as long-term because of our ability and intent to refinance them using availability under our Credit Facility, if necessary.~~

~~Capital~~Finance Leases

We had ~~capital~~finance lease liabilities of ~~$113.8~~$112.4 million and ~~$108.4~~$109.5 million as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, with maturities ranging from ~~2018~~2019 to ~~2046.~~2049 and 2019 to 2046, respectively.

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 ~~also~~ 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).

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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 September 30, 2019 and December 31, 2018, 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.

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~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the interest rate swap agreements are reflected at their fair value of ~~$(3.5)~~$13.1 million and ~~$8.0~~$2.5 million, respectively, and are included in other ~~long-term liabilities and other assets.~~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 $0.3 million and $1.7 million during the three and nine months ended September 30, 2018, respectively, and $1.1 million and $3.8 million during the three and nine months ended September 30, 2017, respectively, related to net swap settlements for these interest rate swap agreements, which is included as an offset to interest expense in our unaudited consolidated statements of income.

For the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we recognized ~~gains~~a loss of ~~$1.9~~$1.1 million and ~~$1.0~~a gain of $1.9 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with an offsetting gain of $1.4 million and ~~losses~~an offsetting loss of $2.0 ~~million and $0.8~~ million, respectively, on the related interest rate swaps. For the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we recognized ~~gains~~a loss of ~~$11.1~~$10.0 million and ~~$1.3~~a gain of $11.1 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with an offsetting gain of $10.5 million and ~~losses~~an offsetting loss of $11.5 ~~million and $0.6~~ million, respectively, on the related interest rate swaps. The ~~net amount~~difference of these fair value changes ~~represents hedge ineffectiveness, which is~~for the nine months ended September 30, 2018 was recorded directly in earnings as other income, net. In accordance with our adoption of ASU 2017-12, the difference of these fair value changes for the nine months ended September 30, 2019 was recorded directly in earnings as an adjustment to interest expense in our consolidated statement of income.

For further detail regarding the effect of our fair value hedging on interest expense, refer to Note 12, Financial Instruments, to our unaudited consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

~~Our~~As of September 30, 2019 and December 31, 2018, our interest rate lock agreements had an aggregate notional ~~amount~~value of ~~$450.0~~$575.0 million ~~as of September 30, 2018~~and $725.0 million, respectively, with fixed interest rates ranging from 1.330% to 3.000% and 1.900% to ~~2.950%.~~3.250%, respectively. We entered into these transactions to manage exposure to fluctuations in interest rates in anticipation of planned future issuances of senior notes in 2019 through 2021. Upon the expected issuance of senior notes, we will 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 ~~as of September 30, 2018~~ 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 September 30, ~~2018~~2019 were assets of $1.3 million, which were recorded in prepaid expenses and other current assets in our consolidated balance sheet and liabilities of $30.7 million, which were recorded in other accrued liabilities and other long-term liabilities in our consolidated balance sheet. As of December 31, ~~2017~~2018, the aggregate fair values of the outstanding interest rate locks were ~~$29.6~~assets of $10.3 million ~~and $19.1 million, respectively,~~ and were recorded in other ~~long term~~ assets in our consolidated balance sheet. No amounts were recognized in other income, net in our consolidated statements of income for the ineffective portion of the changes of fair values during the three and nine months ended September 30, 2018 and 2017, respectively.

Total unrealized (loss) gain recognized in other comprehensive income ~~net of tax,~~for interest rate locks was ~~$4.2~~$(11.9) million and ~~$0.7~~$4.2 million for the three months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~For the nine months ended September 30, 2018, the total~~Total unrealized (loss) gain recognized in other comprehensive income ~~net of tax,~~for interest rate locks was ~~$10.2~~$(43.0) million and $33.1 million for the nine months ended September 30, ~~2017, total loss recognized in other comprehensive income, net of tax was $1.9 million.~~2019 and 2018, respectively.

As of September 30, ~~2018~~2019 and December 31, ~~2017, the effective portion of~~2018, our previously terminated interest rate locks were recorded as ~~a component~~components of accumulated other comprehensive income (loss), net of tax ~~was income~~ of ~~$11.5~~$(3.5) million and ~~loss of $11.8~~$11.2 million, respectively. The ~~effective portion~~amortization of the terminated interest rate locks is ~~amortized~~recorded as an adjustment to interest expense over the life of the issued debt using the effective interest method. We expect to amortize approximately ~~$0.7~~$1.9 million of net interest ~~income~~expense, net of tax, over the next ~~twelve~~12 months as a yield adjustment of our senior notes.

For detail regarding the effect of our cash flow hedging on interest expense, refer to Note 12, Financial Instruments, to our unaudited consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

We lease property and equipment in the ordinary course of business under various lease agreements. The ~~effective portion~~most significant lease obligations are for real property and equipment specific to our industry, including property operated as a landfill or transfer

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

station and operating equipment. Our leases have varying terms. Some may include renewal or purchase options, escalation clauses, restrictions, penalties or other obligations that we consider in determining minimum lease payments. Our lease terms include options to renew the lease when it is reasonably certain that we will exercise the option.

Certain leases require payments that are variable in nature based on volume measurements, e.g. a fixed rate per ton at our landfills. In addition, certain rental payments are adjusted annually based on changes in an underlying base index such as a consumer price index. Variable lease payments are recognized in our consolidated statement of income in the period incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We generally account for lease components separately from non-lease components.

Leases are classified as either operating leases or finance leases, as appropriate. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet.

Many of our leases are operating leases. Operating lease classification generally can be attributed to either (1) relatively low fixed minimum lease payments (including, for example, real property lease payments that are not fixed and vary based on the volume of waste we receive or process), or (2) minimum lease terms that are shorter than the asset's economic useful life. We expect that, in the ordinary course of business, our operating leases will be renewed, replaced by other leases, or replaced with capital expenditures. We recognize rent expense for these leases on a straight-line basis over the lease term.

We recognize a right-of-use liability and right-of-use asset for leases classified as operating leases in our consolidated balance sheet upon lease commencement. The right-of-use liability represents the present value of the remaining lease payments. An implicit rate is often not readily available for these leases. As such, we use our incremental borrowing rate at the commencement date to determine the present value of the lease payments. Our incremental borrowing rate represents the rate of interest ~~rate locks amortized~~that we would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. In addition, we recognize a corresponding right-of-use asset, which represents our right to use an underlying asset for the lease term. The right-of-use asset is adjusted for certain favorable or unfavorable leases recognized through acquisition, prepaid or accrued rent, asset impairments and lease incentives, including but not limited to cash incentives, rent abatement or leasehold improvements paid by the lessor.

We capitalize assets acquired under finance leases at lease commencement and amortize them to depreciation expense over the lesser of the useful life of the asset or the lease term on either a straight-line or a units-of-consumption basis, depending on the asset leased. We record the present value of the related lease payments as a ~~net increase~~debt obligation. Our finance lease liability relates primarily to ~~interest expense was zero and $0.7 million during~~certain long-term landfill operating agreements that require minimum lease payments with offsetting finance lease assets recorded as part of the landfill development costs.

A summary of the lease classification on our consolidated balance sheet as of September 30, 2019 follows:


		2019
Assets
Operating right-of-use lease assets	Other assets	$	243.1
Finance lease assets	Property and equipment, net	128.2
Total lease assets		$	371.3

Liabilities
Current
Operating	Other accrued liabilities	$	36.6
Finance	Notes payable and current maturities of long-term debt	7.0
Long-term
Operating	Other long-term liabilities	226.0
Finance	Long-term debt, net of current maturities	105.4
Total lease liabilities		$	375.0

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

A summary of the lease cost reflected in our consolidated statement of income for the three ~~months ended September 30, 2018~~ and ~~2017, respectively and $0.8 million and $2.0 million during the~~ nine months ended September 30, ~~2018~~2019 follows:


		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost
Fixed lease cost	Cost of operations	$	10.7	$	31.0
Short-term lease cost	Cost of operations	9.4		28.4
Variable lease cost	Cost of operations	4.6		13.3
Finance lease cost
Amortization of leased assets	Depreciation amortization, and depletion	1.4		4.1
Interest on lease liabilities	Interest expense	1.9		5.6
Variable lease cost	Interest expense	1.6		4.3
Total lease cost		$	29.6	$	86.7

As of September 30, 2019, aggregate principal payments for operating and ~~2017, respectively.~~finance leases follows:


	Operating Leases		Finance Leases		Total
2019 (remaining)	$	12.7	$	3.7	$	16.4
2020	42.8		15.6		58.4
2021	39.5		14.0		53.5
2022	33.3		13.4		46.7
2023	31.7		39.2		70.9
Thereafter	157.0		129.0		286.0
Total lease payments	317.0		214.9		531.9
Less: interest	(54.4)		(102.5)		(156.9)
Present value of lease liabilities	$	262.6	$	112.4	$	375.0

A summary of the weighted-average remaining lease term and weighted-average discount rate as of September 30, 2019 follows:


	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	9.0
Finance leases	14.7
Weighted-average discount rate
Operating leases	3.9	%
Finance leases	7.0	%

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Supplemental cash flow and other non-cash information for the three and nine months ended September 30, 2019 follows:


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	25.0	$	73.3
Operating cash flows from finance leases	$	3.5	$	9.9
Financing cash flows from finance leases	$	1.6	$	4.4
Leased assets obtained in exchange for new finance lease liabilities	$	6.3	$	7.1
Leased assets obtained in exchange for new operating lease liabilities	$	26.6	$	36.0

Our effective tax rate, exclusive of ~~noncontrolling~~non-controlling interests, for the three and nine months ended September 30, 2019 was 19.3% and 22.5%, respectively. Our effective tax rate, exclusive of non-controlling interests, for the three and nine months ended September 30, 2018 was 22.7% and 23.6%, respectively. Our effective tax rate, ~~exclusive of noncontrolling interests,~~ for the three and nine months ended September 30, ~~2017, was 37.4% and 37.7%, respectively. Our effective tax rate, exclusive of noncontrolling interests, for the three and nine months ended September 30, 2018~~2019, was favorably affected by ~~the Tax Act, investments in solar energy assets qualifying for tax credits under Section 48~~settlements of ~~the Internal Revenue Code~~various state matters and the realization of additional federal and state benefits as well as adjustments to deferred taxes due to the ~~substantial~~ completion of our ~~2017~~2018 tax returns.

Cash paid for income taxes ~~(net~~was a net refund of ~~refunds) was $43.5~~$4.3 million and ~~$270.5~~a net payment of $43.5 million for the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Cash ~~paid for income~~ taxes ~~(net of refunds) for the nine months ended September 30, 2018 was~~have been favorably ~~affected by the Tax Act and our investments in solar energy assets.~~

The Tax Act was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%, limits deductions for, among other things, interest expense, executive compensation and meals and entertainment, while enhancing deductions for equipment and other fixed assets. The Tax Act also requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings.

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~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

~~The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides up to a one year measurement period~~impacted from the ~~Tax Act's enactment date for companies to complete their accounting under ASC 740.~~

~~In accordance with SAB 118, for the year ended December 31, 2017, we recorded provisional amounts based on our estimates~~receipt of ~~the Tax Act's effect to our deferred taxes, uncertain tax positions and the one-time transition tax.~~

During the three months ended September 30, 2018, we adjusted the provisional amounts recorded as of December 31, 2017 for the one-time transition tax, deferred taxes and uncertain tax positions. These adjustments resulted in a net charge to the tax provision of $0.3 million.

As of September 30, 2018, we have not finalized our accounting for the tax effects of the enactment of the Tax Act. In accordance with SAB 118, we will finalize all accounting related to the Tax Act in the period ended December 31,funds from amended returns filed during 2018. ~~We do not anticipate further adjustments will have a material impact on our tax provision.~~

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 or administrative review by state and local taxing authorities and Puerto Rico for various tax years. We believe that 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.

We recognize interest and penalties as incurred within the provision for income taxes in the consolidated statements of income. As of September 30, 2018, we accrued a liability for penalties of $0.5 million and a liability for interest (including interest on penalties) of $11.7 million related to our uncertain tax positions.

For the three months ended September 30, 2018, we accrued additional uncertain tax liabilities of $30.5 million resulting from the filing of our 2017 tax returns and prior year amended tax returns. For the three months ending December 31, 2018, we anticipate filing additional amended tax returns reflecting a similar uncertain tax position. As a result, we estimate our reserve for uncertain tax positions will increase by approximately $20 million to $40 million once these returns are completed, however, we are unable to estimate the resolution of these matters over the next twelve months.

The additional liabilities for uncertain tax positions described previously will have no impact on our effective tax rate except for the possible future accrual of interest on a portion of the recorded liability. Any such future interest accruals will not significantly affect our provision for income taxes.

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 changes in U.S. tax law and 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 September 30, ~~2018,~~2019, the valuation allowance associated with our state loss carryforwards was approximately ~~$78~~$68 million.

9.We believe that 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 September 30, 2019, 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 September 30, 2019, we accrued a liability for penalties of $0.3 million and a liability for interest (including interest on penalties) of $11.0 million related to our uncertain tax positions.

10. STOCK REPURCHASES, DIVIDENDS AND EARNINGS PER SHARE

~~In March 2013, our board of directors approved the Republic Services, Inc. Amended and Restated 2007 Stock Incentive Plan (the "Plan"), and in May 2013 our shareholders ratified the Plan.~~ We currently have approximately ~~13.4~~12.8 million shares of common stock reserved for future grants under the Republic Services, Inc. Amended and Restated 2007 Stock Incentive Plan.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Stock repurchase activity during the three and nine months ended September 30, ~~2018~~2019 and ~~September 30, 2017~~2018 follows (in millions, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Number of shares repurchased 1.4
1.9
8.5
5.6
Amount paid $ 100.9
$ 122.7
$ 574.9
$ 353.3
Weighted average cost per share $ 71.83
$ 64.78
$ 67.84
$ 62.81


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Number of shares repurchased	1.7		1.4		4.3		8.5
Amount paid	$	151.3	$	100.9	$	353.8	$	574.9
Weighted average cost per share	$	86.87	$	71.83	$	81.63	$	67.84

As of September 30, ~~2018,~~2019, there were ~~no repurchased shares pending settlement. As of September 30, 2017,~~less than 0.1 million repurchased shares ~~were~~ pending settlement, resulting in an associated ~~$3.3~~$0.1 million of share repurchases unpaid and included within other accrued liabilities. As of September 30, 2018, there were 0 repurchased shares pending settlement.

In October 2017, our ~~board~~Board of ~~directors~~Directors added $2.0 billion to ~~our~~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~~Board of ~~directors~~Directors has approved the ~~share purchase~~ 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 September 30, ~~2018,~~2019, the remaining authorized purchase capacity under our October 2017 repurchase program was ~~$1.3 billion.~~$750.3 million.

In July ~~2018,~~2019, our ~~board~~Board of ~~directors~~Directors approved a quarterly dividend of ~~$0.375~~$0.405 per share. Cash dividends declared were ~~$347.4~~$370.2 million for the nine months ended September 30, ~~2018.~~2019. As of September 30, ~~2018,~~2019, we recorded a quarterly dividend payable of ~~$121.7~~$129.3 million to shareholders of record at the close of business on October 1, ~~2018.~~2019.

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)~~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 and nine months ended September 30, 2019 and 2018 are calculated as follows (in thousands, except per share amounts):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Basic earnings per share:
Net income attributable to Republic Services, Inc.	$	298,300	$	263,400	$	784,000	$	736,000
Weighted average common shares outstanding	320,633		325,483		321,544		327,830
Basic earnings per share	$	0.93	$	0.81	$	2.44	$	2.25
Diluted earnings per share:
Net income attributable to Republic Services, Inc.	$	298,300	$	263,400	$	784,000	$	736,000
Weighted average common shares outstanding	320,633		325,483		321,544		327,830
Effect of dilutive securities:
Options to purchase common stock	368		673		437		799
Unvested RSU awards	276		263		248		241
Unvested PSU awards	433		525		415		456
Weighted average common and common equivalent shares outstanding	321,710		326,944		322,644		329,326
Diluted earnings per share	$	0.93	$	0.81	$	2.43	$	2.23

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~Earnings per share for the three and nine months ended September 30, 2018 and 2017 are calculated as follows (in thousands, except per share amounts):~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Basic earnings per share:
Net income attributable to Republic Services, Inc. $ 263,400
$ 223,200
$ 736,000
$ 614,000
Weighted average common shares outstanding 325,483
336,549
327,830
338,158
Basic earnings per share $ 0.81
$ 0.66
$ 2.25
$ 1.82
Diluted earnings per share:
Net income attributable to Republic Services, Inc. $ 263,400
$ 223,200
$ 736,000
$ 614,000
Weighted average common shares outstanding 325,483
336,549
327,830
338,158
Effect of dilutive securities:
Options to purchase common stock 673
1,200
799
1,295
Unvested RSU awards 263
355
241
347
Unvested PSU awards 525
370
456
312
Weighted average common and common equivalent shares outstanding 326,944
338,474
329,326
340,112
Diluted earnings per share $ 0.81
$ 0.66
$ 2.23
$ 1.81

There were no0 antidilutive securities outstanding during the three and nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018.

~~10.~~11. 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 nine months ended September 30, ~~2018~~2019 follows:

Cash Flow Hedges Defined Benefit Pension Items Total
Accumulated other comprehensive income as of December 31, 2017 $ 1.4
$ 21.2
$ 22.6
Other comprehensive income before reclassifications 35.5
—
35.5
Amounts reclassified from accumulated other comprehensive income (2.2 ) —
(2.2 )
Net current period other comprehensive income 33.3
—
33.3
Accumulated other comprehensive income as of September 30, 2018 $ 34.7
$ 21.2
$ 55.9


	Cash Flow Hedges		Defined Benefit Pension Items		Total
Balance as of December 31, 2018	$	16.1	$	14.7	$	30.8
Other comprehensive loss before reclassifications	(43.0)		(0.8)		(43.8)
Amounts reclassified from accumulated other comprehensive income	(0.9)		—		(0.9)
Net current period other comprehensive loss	(43.9)		(0.8)		(44.7)
Adoption of accounting standard	5.4		—		5.4
Balance as of September 30, 2019	$	(22.4)	$	13.9	$	(8.5)

A summary of reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 follows:

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement where Net Income is Presented
Gain (loss) on cash flow hedges:
Recyclable commodity hedges $ 0.4
$ (1.3 ) $ 0.7
$ (2.8 ) Revenue
Fuel hedges 1.2
(0.8 ) 3.1
(3.1 ) Cost of operations
Terminated interest rate locks —
(0.7 ) (0.8 ) (2.0 ) Interest expense
Total before tax 1.6
(2.8 ) 3.0
(7.9 )
Tax (expense) benefit (0.4 ) 1.1
(0.8 ) 3.1

Total gains (losses) reclassified, net of tax $ 1.2
$ (1.7 ) $ 2.2
$ (4.8 )

~~11. FINANCIAL INSTRUMENTS~~

We have entered into multiple swap agreements designated as cash flow hedges to mitigate some of our exposure related to changes in diesel fuel prices. These swaps qualified for, and were designated as, effective hedges of changes in the prices of forecasted diesel fuel purchases (fuel hedges).

~~The following table summarizes our outstanding fuel hedges as of September 30, 2018:~~

Year Gallons Hedged
Weighted Average Contract
Price per Gallon
2018 1,875,000 $2.59

If the national U.S. on-highway average price for a gallon of diesel fuel as published by the Department of Energy exceeds the contract price per gallon, we receive the difference between the average price and the contract price (multiplied by the notional gallons) from the counterparty. If the average price is less than the contract price per gallon, we pay the difference to the counterparty.

The fair values of our fuel hedges are determined using standard option valuation models with assumptions about commodity prices based on those observed in underlying markets (Level 2 in the fair value hierarchy). The aggregate fair values of our outstanding fuel hedges as of September 30, 2018 were current assets of $1.6 million, which have been recorded in other current assets in our consolidated balance sheets. As of December 31, 2017, the aggregate fair values of our outstanding fuel hedges were current assets of $3.0 million, which are included in other current assets in our consolidated balance sheets. No amounts were recognized in other income, net in our unaudited consolidated statements of income for the ineffectiveness portion of the changes in fair values for each of the three or nine months ended September 30, 2018 and 2017.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. FINANCIAL INSTRUMENTS

~~For~~The effect of our derivative instruments in fair value and cash flow hedging relationships on the ~~three and nine months ended September 30, 2018, a loss~~consolidated statement of ~~$0.7 million was recognized in other comprehensive~~ income ~~net of tax, for fuel hedges (the effective portion), and $2.1 million was recognized in other comprehensive income, net of tax, for fuel hedges (the effective portion)~~ for the three and nine months ended September 30, ~~2017. We classify cash inflows~~2019 and ~~outflows from our fuel~~2018 follows (in millions):


	Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
	Interest Expense		Interest Expense		Interest Expense		Interest Expense

Total amounts of expense line items presented in the consolidated statement of income in which the effects of fair value or cash flow hedges are recorded	$	(98.0)	$	(96.0)	$	(296.9)	$	(287.3)

The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Interest rate swaps:
Net swap settlements	$	0.3	$	0.3	$	0.5	$	1.7
Net periodic earnings⁽¹⁾	$	0.3	$	(0.2)	$	0.5	$	(0.4)
Gain (loss) on cash flow hedging relationships:
Interest rate swap locks:
Amount of gain (loss) reclassified from AOCI into income, net of tax	$	0.5	$	—	$	0.9	$	(0.6)

(1) During 2018 (prior to adoption of ASU 2017-12), all net periodic earnings for fair value hedges ~~within operating activities in~~were recorded to other income, net. To align the ~~unaudited consolidated statements of cash flows.~~

~~Recyclable Commodity Hedges~~

Revenue from the sale of recycled commodities is primarily from sales of old corrugated containers ("OCC") and old newsprint. From time to time we use derivative instruments such as swaps and costless collars designated as cash flow hedges to manage our exposure to changes in prices of these commodities. During 2017, we entered into multiple agreements related to the forecasted OCC sales. The agreements qualified for, and were designated as, effective hedges of changes in the prices of certain forecasted recyclable commodity sales (commodity hedges).

We entered into costless collar agreements on forecasted sales of OCC. The agreements involve combining a purchased put option giving us the right to sell OCC at an established floor strike price with a written call option obligating us to deliver OCC at an established cap strike price. The puts and calls have the same settlement dates, are net settled in cash on such dates and have the same terms to expiration. The contemporaneous combination of options resulted in no net premium for us and represents costless collars. Under these agreements, we will neither make or receive payments as long as the settlement price is between the floor price and cap price; however, if the settlement price is above the cap, we will pay the counterparty an amount equal to the excesseffect of the ~~settlement price over~~hedging relationship with the ~~cap times the monthly volumes hedged. If the settlement price is below the floor, the counterparty will pay us the deficit~~activity of the settlement price below the floor times the monthly volumes hedged. The objective of these agreements is to reduce variability of cash flows for forecasted sales of OCC between two designated strike prices.

As of September 30, 2018, we had outstanding costless collar hedges for OCC totaling 30,000 tons with a weighted average floor strike price of $81.50 per ton and a weighted average cap strike price of $120.00 per ton,hedged item, beginning January 1, 2019, all ~~of which will be settled in 2018. Costless collar~~net periodic earnings on fair value hedges are ~~recorded~~presented within interest expense in our consolidated ~~balance sheets at fair value. Fair values~~statement of costless collars are determined using standard option valuation models with assumptions about commodity prices based upon forward commodity price curves in underlying markets (Level 2 in the fair value hierarchy).

The aggregate fair values of the outstanding recyclable commodity hedges as of September 30, 2018 were current assets of $0.4 million, which are included in prepaid expenses and other current assets in our consolidated balance sheets. As of December 31, 2017, the aggregate fair values of the outstanding recyclable commodity hedges were current liabilities of $0.2 million, which are included in other accrued liabilities in our consolidated balance sheets. No amounts were recognized in other income, net in our unaudited consolidated statements of income for the ineffectiveness portion of the changes in fair values during the three and nine months ended September 30, 2018 and 2017.

Total gains (losses) recognized in other comprehensive income for recyclable commodity hedges (the effective portion) was $(0.3) million and $0.4 million, net of tax, for the three and nine months ended September 30, 2018, respectively, and $1.1 million and $(0.2) million, net of tax, for the same periods in 2017, respectively.income.

Fair Value Measurements

In measuring ~~the~~ 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.

The carrying value for certain of our financial instruments, including cash, accounts receivable, accounts payable and certain other accrued liabilities, approximates fair value because of their short-term nature.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, our assets and liabilities that are measured at fair value on a recurring basis include the following:

Fair Value Measurements Using
Carrying Amount Total as of September 30, 2018
Quoted
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Assets:
Money market mutual funds $ 34.5
$ 34.5
$ 34.5
$ —
$ —
Bonds - restricted cash and marketable securities and other assets 48.6
48.6
—
48.6
—
Fuel hedges - other current assets 1.6
1.6
—
1.6
—
Commodity hedges - other current assets 0.4
0.4
—
0.4
—
Interest rate locks - other assets 29.6
29.6
—
29.6
—
Total assets $ 114.7
$ 114.7
$ 34.5
$ 80.2
$ —
Liabilities:
Interest rate swaps - other long-term liabilities $ 3.5
$ 3.5
$ —
$ 3.5
$ —
Contingent consideration - other accrued liabilities and other long-term liabilities 71.9
71.9
—
—
71.9
Total liabilities $ 75.4
$ 75.4
$ —
$ 3.5
$ 71.9


	September 30, 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	$	42.9	$	42.9	$	42.9	$	—	$	—
Bonds - restricted cash and marketable securities and other assets	50.7		50.7		—		50.7		—


Interest rate swaps - other assets	13.1		13.1		—		13.1		—
Other derivative assets - other assets	4.9		4.9		—		4.9		—
Interest rate locks - prepaid expenses and other current assets	1.3		1.3		—		1.3		—
Total assets	$	112.9	$	112.9	$	42.9	$	70.0	$	—
Liabilities:




Other derivative liabilities - other long-term liabilities	$	24.2	$	24.2	$	—	$	24.2	$	—
Interest rate locks - other accrued liabilities and other long-term liabilities	30.7		30.7		—		30.7		—
Contingent consideration - other accrued liabilities and other long-term liabilities	72.5		72.5		—		—		72.5
Total liabilities	$	127.4	$	127.4	$	—	$	54.9	$	72.5

Fair Value Measurements Using
Carrying Amount Total as of December 31, 2017 Quoted
Prices in
Active
Markets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Assets:
Money market mutual funds $ 30.3
$ 30.3
$ 30.3
$ —
$ —
Bonds - restricted cash and marketable securities and other assets 92.1
92.1
—
92.1
—
Fuel hedges - other current assets 3.0
3.0
—
3.0
—
Interest rate swaps - other assets 8.0
8.0
—
8.0
—
Interest rate locks - other assets 19.1
19.1
—
19.1
—
Total assets $ 152.5
$ 152.5
$ 30.3
$ 122.2
$ —
Liabilities:
Commodity hedges - other accrued liabilities $ 0.2
$ 0.2
$ —
$ 0.2
$ —
Contingent consideration - other accrued liabilities and other long-term liabilities 73.3
73.3
—
—
73.3
Total liabilities $ 73.5
$ 73.5
$ —
$ 0.2
$ 73.3


	December 31, 2018
			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	$	37.1	$	37.1	$	37.1	$	—	$	—
Bonds - restricted cash and marketable securities and other assets	47.8		47.8		—		47.8		—

Interest rate swaps - other assets	2.5		2.5		—		2.5		—
Interest rate locks - other assets	10.3		10.3		—		10.3		—
Total assets	$	97.7	$	97.7	$	37.1	$	60.6	$	—
Liabilities:


Contingent consideration - other long-term liabilities	$	71.4	$	71.4	$	—	$	—	$	71.4


Total liabilities	$	71.4	$	71.4	$	—	$	—	$	71.4

Total Debt

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the carrying value of our total debt was ~~$8.2~~$8.6 billion and $8.3 billion, respectively and the fair value of our total debt was ~~$8.6~~$9.4 billion and ~~$8.8~~$8.7 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 September 30, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018. See Note 7, Debt, for further information related to our debt.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Derivative Contracts

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 (the Extended Interest Rate Swaps). In addition, we entered into an offsetting interest rate swap to offset future exposures to fair value fluctuations of the Extended Interest Rate Swaps (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 September 30, 2019, the fair value of the Extended Interest Rate Swaps was a liability of $24.2 million which was included in other long-term liabilities in our consolidated balance sheet, and the fair value of the Offsetting Interest Rate Swaps was an asset of $4.9 million and was included in other assets in our consolidated balance sheet. For the three and nine months ended September 30, 2019, we recognized a loss of $5.4 million on the change in fair value of the Extended Interest Rate Swaps, with an offsetting gain of $4.9 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 statement of income.

Contingent Consideration

In April 2015, we entered into a waste management contract with the County of Sonoma, ~~County,~~ California to operate the county's waste management facilities. As of September 30, ~~2018, we recognized $67.3 million of~~2019, the Sonoma contingent consideration ~~which~~ represents the fair value of ~~amounts~~$65.9 million payable to the County of Sonoma ~~County~~ based on the achievement of future annual tonnage targets through the expected remaining capacity of the ~~landfill. We~~landfill, which we estimate ~~the remaining life of the landfill~~ to be approximately 30 years. 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 ~~$82~~$79 million and ~~$171~~$168 million.

~~The fair value of~~ During the nine months ended September 30, 2019, the activity in the contingent consideration liability included accretion, which was ~~determined using probability assessments~~offset by concession payments made in the ordinary course of business. There were 0 changes to the estimate of fair value. The contingent consideration liability is classified within Level 3 of the expected future payments over the remaining useful life of the landfill, and applying a discount rate of 4.0%. The future payments are based on significant inputs that are not observable in the market. Key assumptions include annual volume of tons disposed at the landfill, the price paid per ton and the discount rate that represent the best estimates of management, which are subject to remeasurement at each reporting date.fair value hierarchy.

In 2017, we recognized additional contingent consideration associated with the acquisition of a landfill. As of September 30, ~~2018,~~2019, the contingent consideration of ~~$4.6~~$4.1 million represents the fair value of amounts payable to the seller based on annual volume of tons disposed at the landfill. During the nine months ended September 30, 2019, the activity in the contingent consideration liability included accretion, which was offset by concession payments made in the ordinary course of business. There were 0 changes to the estimate of fair value. The contingent consideration liabilities are classified within Level 3 of the fair value hierarchy.

In June 2019, we recognized additional contingent consideration associated with the acquisition of a collection business. As of September 30, 2019, the contingent consideration of $2.5 million represents the fair value of amounts payable to the seller based on annual volume of tons collected from certain customers of the business. The fair value of the contingent consideration was determined using probability assessments of the expected future payments over the ~~remaining useful life of the landfill,~~estimated customer relationships, and applying a discount ~~rate of 4.3%.~~rate. The future payments are based on significant inputs that are not observable in the market. Key assumptions include annual ~~volume of tons disposed at the landfill,~~collection volumes, which are subject to remeasurement at each reporting date.

The contingent consideration liabilities are classified within Level 3 of the fair value hierarchy.

~~12.~~13. SEGMENT REPORTING

Our senior management evaluates, oversees and manages the financial performance of our operations through ~~two~~2 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.

~~We manage and evaluate our operations through the two field groups, Group 1 and Group 2.~~ These ~~two~~2 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 ~~energy~~environmental services.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Summarized financial information concerning our reportable segments for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 follows:

Gross
Revenue Intercompany
Revenue Net
Revenue Depreciation,
Amortization,
Depletion and
Accretion Operating
Income
(Loss) Capital
Expenditures Total Assets
Three Months Ended September 30, 2018
Group 1 $ 1,474.9
$ (245.4 ) $ 1,229.5
$ 123.9
$ 298.5
$ 137.2
$ 10,968.3
Group 2 1,517.7
(220.3 ) 1,297.4
129.0
231.4
147.4
8,970.0
Corporate entities 42.9
(4.1 ) 38.8
29.6
(89.6 ) (6.3 ) 1,463.8
Total $ 3,035.5
$ (469.8 ) $ 2,565.7
$ 282.5
$ 440.3
$ 278.3
$ 21,402.1
Three Months Ended September 30, 2017
Group 1 $ 1,518.3
$ (273.6 ) $ 1,244.7
$ 120.6
$ 293.7
$ 169.8
$ 9,882.3
Group 2 1,500.0
(237.7 ) 1,262.3
129.2
246.4
114.4
9,495.3
Corporate entities 58.9
(3.9 ) 55.0
31.0
(92.0 ) (12.7 ) 1,571.0
Total $ 3,077.2
$ (515.2 ) $ 2,562.0
$ 280.8
$ 448.1
$ 271.5
$ 20,948.6


	Gross Revenue		Intercompany Revenue		Net Revenue		Depreciation, Amortization, Depletion and Accretion		Operating Income (Loss)		Capital Expenditures		Total Assets

Three Months Ended September 30, 2019
Group 1	$	1,543.2	$	(258.0)	$	1,285.2	$	128.7	$	316.0	$	163.3	$	11,290.3
Group 2	1,548.7		(225.9)		1,322.8		133.7		242.8		157.4		9,385.6
Corporate entities	43.9		(5.0)		38.9		25.4		(91.0)		(1.1)		1,653.2
Total	$	3,135.8	$	(488.9)	$	2,646.9	$	287.8	$	467.8	$	319.6	$	22,329.1

Three Months Ended September 30, 2018
Group 1	$	1,476.7	$	(247.2)	$	1,229.5	$	123.9	$	298.5	$	147.4	$	10,968.3
Group 2	1,517.7		(220.3)		1,297.4		129.0		231.4		137.0		8,970.0
Corporate entities	42.9		(4.1)		38.8		29.6		(89.6)		(6.1)		1,463.8
Total	$	3,037.3	$	(471.6)	$	2,565.7	$	282.5	$	440.3	$	278.3	$	21,402.1

Gross
Revenue

Intercompany
Revenue

Net
Revenue

Depreciation,
Amortization,
Depletion and
Accretion

Operating
Income
(Loss)

Capital
Expenditures
Total Assets
Nine Months Ended September 30, 2018
Group 1 $ 4,338.1
$ (735.5 ) $ 3,602.6
$ 370.9
$ 851.6
$ 322.1
$ 10,968.3
Group 2 4,433.3
(642.6 ) 3,790.7
382.3
666.3
398.3
8,970.0
Corporate entities 129.5
(11.9 ) 117.6
88.5
(265.3 ) 100.1
1,463.8
Total $ 8,900.9
$ (1,390.0 ) $ 7,510.9
$ 841.7
$ 1,252.6
$ 820.5
$ 21,402.1
Nine Months Ended September 30, 2017
Group 1 $ 4,450.2
$ (817.9 ) $ 3,632.3
$ 355.9
$ 841.0
$ 395.2
$ 9,882.3
Group 2 4,385.8
(700.4 ) 3,685.4
381.0
711.5
274.2
9,495.3
Corporate entities 174.6
(10.8 ) 163.8
92.0
(290.8 ) 99.6
1,571.0
Total $ 9,010.6
$ (1,529.1 ) $ 7,481.5
$ 828.9
$ 1,261.7
$ 769.0
$ 20,948.6

~~Financial information for the three and nine months ended September 30, 2017 reflects the transfer of certain areas between our two field groups.~~


	Gross Revenue		Intercompany Revenue		Net Revenue		Depreciation, Amortization, Depletion and Accretion		Operating Income (Loss)		Capital Expenditures		Total Assets

Nine Months Ended September 30, 2019
Group 1	$	4,502.8	$	(760.0)	$	3,742.8	$	377.2	$	913.1	$	400.4	$	11,290.3
Group 2	4,515.2		(651.2)		3,864.0		392.1		695.5		374.6		9,385.6
Corporate entities	129.1		(13.2)		115.9		75.2		(280.6)		133.3		1,653.2
Total	$	9,147.1	$	(1,424.4)	$	7,722.7	$	844.5	$	1,328.0	$	908.3	$	22,329.1

Nine Months Ended September 30, 2018
Group 1	$	4,342.9	$	(740.3)	$	3,602.6	$	370.9	$	851.6	$	397.8	$	10,968.3
Group 2	4,433.3		(642.6)		3,790.7		382.3		666.3		321.2		8,970.0
Corporate entities	129.4		(11.8)		117.6		88.5		(265.3)		101.5		1,463.8
Total	$	8,905.6	$	(1,394.7)	$	7,510.9	$	841.7	$	1,252.6	$	820.5	$	21,402.1

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.

Subsequent Event

In October 2019, certain of our owned and operated facilities in our Group 1 segment were impacted by separate fire-related events. We are estimating the financial impact of any damage to the facilities, and we may experience higher operating expenses or asset impairments in the fourth quarter as a result of these events.

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REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

~~13.~~14. REVENUE

Our operations primarily consist of providing collection, transfer and disposal of non-hazardous solid waste, recovering and

recycling of certain materials, and ~~energy~~environmental services. The following table disaggregates our revenue by service line for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Collection:
Residential $ 562.8
21.9 % $ 576.5
22.5 % $ 1,671.4
22.3 % $ 1,717.2
23.0 %
Small-container 772.1
30.1
752.7
29.4
2,284.8
30.4
2,233.5
29.9
Large-container 560.3
21.8
541.3
21.1
1,630.8
21.7
1,565.4
20.9
Other 11.1
0.5
11.6
0.4
32.7
0.4
32.1
0.4
Total collection ⁽¹⁾
1,906.3
74.3
1,882.1
73.4
5,619.7
74.8
5,548.2
74.2
Transfer 322.6
312.8
931.7
907.0

Less: intercompany (178.6 ) (178.0 ) (529.1 ) (531.3 )
Transfer, net 144.0
5.6
134.8
5.3
402.6
5.4
375.7
5.0
Landfill 590.2
576.1
1,720.7
1,650.5

Less: intercompany (258.8 ) (252.7 ) (767.5 ) (740.7 )
Landfill, net 331.4
12.9
323.4
12.6
953.2
12.7
909.8
12.2
Energy services 51.5
2.0
40.0
1.6
149.6
2.0
103.3
1.4
Other:
Recycling processing and commodity sales ⁽²⁾
76.0
3.0
130.5
5.1
220.0
2.9
400.4
5.3
Other non-core 56.5
2.2
51.2
2.0
165.8
2.2
144.1
1.9
Total other 132.5
5.2
181.7
7.1
385.8
5.1
544.5
7.2
Total revenue $ 2,565.7
100.0 % $ 2,562.0
100.0 % $ 7,510.9
100.0 % $ 7,481.5
100.0 %

~~(1)~~In accordance with our adoption of the new revenue recognition standard, municipal franchise fees were presented as a reduction to revenue for the three and nine months ended September 30, 2018. Similar fees were presented as a cost of operations for the three and nine months ended September 30, 2017.

(2) In accordance with our adoption of the new revenue recognition standard, rebates paid to customers associated with recycled commodities were presented as a reduction to revenue for the three and nine months ended September 30, 2018. Similar costs were presented as a cost of operations for the three and nine months ended September 30, 2017.


	Three Months Ended September 30,														Nine Months Ended September 30,
	2019						2018						2019				2018
Collection:
Residential	$	574.4	21.7	%	$	563.2	22.0	%	$	1,701.8	22.0	%	$	1,672.4	22.3	%
Small-container	799.1		30.2		772.5		30.1		2,369.0		30.7		2,286.0		30.4
Large-container	583.6		22.1		561.3		21.9		1,688.2		21.9		1,633.5		21.8
Other	11.7		0.4		11.0		0.4		34.2		0.4		32.6		0.4
Total collection	1,968.8		74.4		1,908.0		74.4		5,793.2		75.0		5,624.5		74.9
Transfer	347.1				322.9				985.8				932.5
Less: intercompany	(192.2)				(180.6)				(556.8)				(534.6)
Transfer, net	154.9		5.8		142.3		5.5		429.0		5.6		397.9		5.3
Landfill	605.3				590.2				1,750.7				1,720.7
Less: intercompany	(265.5)				(258.8)				(776.6)				(767.5)
Landfill, net	339.8		12.8		331.4		12.9		974.1		12.6		953.2		12.7
Environmental services	57.8		2.2		51.5		2.0		143.6		1.8		149.6		2.0
Other:
Recycling processing and commodity sales	68.6		2.6		76.0		3.0		213.2		2.8		219.9		2.9
Other non-core	57.0		2.2		56.5		2.2		169.6		2.2		165.8		2.2
Total other	125.6		4.8		132.5		5.2		382.8		5.0		385.7		5.1
Total revenue	$	2,646.9	100.0	%	$	2,565.7	100.0	%	$	7,722.7	100.0	%	$	7,510.9	100.0	%

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 ~~recognized~~recognize deferred revenue for the amount billed and subsequently recognize revenue at the time the service is provided. ~~Depending upon the nature~~Substantially all of the ~~contract, we may also generate~~deferred revenue ~~through~~recognized as of December 31, 2018 was recognized as revenue during the ~~collection of fuel recovery fees and environmental fees which are designed to recover our internal costs of providing services to our customers.~~nine months ended September 30, 2019 when the service was performed.

See Note ~~12,~~13, Segment Reporting, for additional information regarding revenue by reportable segment.

~~Revenue by Service Line~~

~~Collection Services~~

Our collection business involves the collection of waste for transport to transfer stations, or directly to landfills or recycling centers. Our solid waste collection services business includes both recurring and temporary customer relationships. Our standard contract duration is three years, although some of our exclusive franchises are for significantly longer periods. The fees received for collection services are based primarily on the market, collection frequency, type of service, type and volume or weight of the waste collected, the distance to the disposal facility and the cost of disposal.

~~Table of Contents~~

~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

In general, small-container and residential collection fees are billed monthly or quarterly in advance. Substantially all of the deferred revenue recognized as of December 31, 2017 was recognized as revenue during the nine months ended September 30, 2018 when the service was performed. Our large-container customers are typically billed on a monthly basis based on the nature of the services provided during the period.

Revenue recognized under these agreements is variable in nature based on the number of residential homes or businesses serviced during the period, the frequency of collection and the volume of waste collected. In addition, certain of our contracts have annual price escalation clauses that are tied to changes in an underlying base index such as a consumer price index which are unknown at contract inception.

~~Transfer Services~~

Revenue at our transfer stations is primarily generated by charging tipping or disposal fees. The fees received for transfer services are based primarily on the market, type and volume or weight of the waste accepted, the distance to the disposal facility and the cost of disposal. In general, fees are billed and revenue is recognized at the time the service is performed. Revenue recognized under these agreements is variable in nature based on the volume of waste accepted at the transfer station.

~~Landfill Services~~

Revenue at our landfills is primarily generated by charging tipping fees to third parties based on the volume disposed and the nature of the waste. In general, fees are variable in nature and revenue is recognized at the time the waste is disposed at the facility.

~~Energy Services~~

Energy Services revenue is primarily generated through waste managed from vertical and horizontal drilling, hydraulic fracturing, production and clean-up activity, as well as other services including closed loop collection systems and the sale of recovered products. Energy services activity varies across market areas that are tied to the natural resource basins in which the drilling activity occurs and reflects the regulatory environment, pricing and disposal alternatives available in any given market. Revenue recognized under these agreements is variable in nature based on the volume of waste accepted or processed during the period.

~~Sale of Recycled Commodities~~

Our recycling centers generate revenue through the processing and sale of OCC, old newsprint ("ONP"), aluminum, glass and other materials at market prices. In certain instances, we issue recycling rebates to our municipal or large-container customers, which can be based on the price we receive upon the final sale of recycled commodities, a fixed contractual rate or other measures. We also receive rebates when we dispose of recycled commodities at third-party facilities. The fees received are based primarily on the market, type and volume or weight of the materials sold. In general, fees are billed and revenue is recognized at the time title is transferred. Revenue recognized under these agreements is variable in nature based on the volume and type of materials sold. In addition, the amount of revenue recognized is based on commodity prices at the time of sale, which are unknown at contract inception.

Revenue Recognition

Our service obligations of a long-term nature, e.g., 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 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.

Table of Contents

REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

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 ~~sheet,~~sheets, and we amortize the asset over the average life of the customer relationship. As of September 30, 2019 and December 31, 2018, we recognized ~~$90.4~~$82.4 million and $89.2 million, respectively, of deferred contract costs and capitalized sales commissions. During the three and nine months ended September 30, 2019, we amortized $2.9 million and $8.9 million of capitalized sales commissions to selling, general and administrative expenses and $1.6 million and $4.6 million of other deferred contract costs as a reduction of revenue, respectively. During the three and nine months ended September 30, 2018, we amortized $2.8 million and $8.3 million ~~respectively,~~ of capitalized sales commissions to selling, general and administrative expenses and $1.6 million and $4.4 million of other deferred contract costs as a reduction of revenue, ~~for the same respective periods.~~respectively.

~~14.~~15. 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 ~~$27.6~~$19 million relating to our outstanding legal proceedings as of September 30, ~~2018.~~2019. 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 ~~$16.2~~$15 million higher than the amount recorded as of September 30, ~~2018.~~2019.

Multiemployer Pension Plans

We contribute to 2526 multiemployer pension plans under collective bargaining agreements covering union-represented employees. These plans generally provide retirement benefits to participants based on their service to contributing employers. We do not administer these plans.

Under current law regarding multiemployer pension plans, a plan’s termination, ~~and any termination of an employer’s obligation to make contributions, including~~ 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 our multiemployer pension plans. We accrue for such events when losses become probable and reasonably estimable.

~~Table of Contents~~

~~REPUBLIC SERVICES, INC.~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)~~

Restricted Cash and Marketable Securities

Our restricted cash and marketable securities include, among other things, restricted cash and marketable securities held for capital expenditures under certain debt facilities, restricted cash pursuant to a holdback arrangement, restricted cash and marketable securities pledged to regulatory agencies and governmental entities as financial guarantees of our performance ~~related~~under certain collection, landfill and transfer station contracts and permits, and relating to our final capping, closure and post-closure obligations at our landfills, and restricted cash and marketable securities related to our insurance obligations.

Table of Contents

REPUBLIC SERVICES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table summarizes our restricted cash and marketable ~~securities~~securities:


	September 30, 2019		December 31, 2018


Capping, closure and post-closure obligations	$	30.4	$	29.5
Insurance	90.9		78.6

Total restricted cash and marketable securities	$	121.3	$	108.1

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 ~~September 30, 2018 and December 31, 2017:~~cash flows is reconciled as follows:

2018 2017
Financing proceeds $ —
$ 38.6
Capping, closure and post-closure obligations 29.2
28.6
Insurance 69.9
71.4
Other —
2.5
Total restricted cash and marketable securities $ 99.1
$ 141.1


	September 30, 2019		December 31, 2018		September 30, 2018		December 31, 2017
Cash and cash equivalents	$	55.6	$	70.5	$	81.9	$	83.3
Restricted cash and marketable securities	121.3		108.1		99.1		141.1
Less: restricted marketable securities	(48.3)		(45.3)		(44.1)		(45.3)
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	128.6	$	133.3	$	136.9	$	179.1

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.


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the unaudited consolidated financial statements and notes thereto included under Item 1 of Part I of this Form 10-Q. In addition, you should refer to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017.~~2018.

Disclosure Regarding Forward-Looking ~~Statements.~~Statements

This Quarterly Report on Form 10-Q contains certain forward-looking information about us that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as “guidance,” “expect,” “will,” “may,” “anticipate,” “plan,” “estimate,” “project,” “intend,” “should,” “can,” “likely,” “could,” “outlook” and similar expressions are intended to identify forward-looking statements. In particular, information appearing under this “Management's Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. These statements include information about our plans, strategies and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to risk and uncertainties that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that the expectations will prove to be correct. Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are acts of war, riots or terrorism, and the impact of these acts on economic, financial and social conditions in the United States as well as our dependence on large, long-term collection, transfer and disposal contracts. More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, particularly under Part I, ~~Item 1A - Risk Factors, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, particularly under Part II,~~ Item 1A - Risk Factors. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business. We undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Table of Contents

Overview

Republic is the second largest provider of non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the ~~domestic non-hazardous solid waste industry,~~United States, as measured by revenue. As of September 30, ~~2018,~~2019, we operated facilities in 4041 states and Puerto Rico through ~~348~~342 collection operations, ~~207~~211 transfer stations, ~~191~~190 active landfills, 9188 recycling processing centers, 78 treatment, recovery and disposal facilities, ~~and 11~~15 salt water disposal wells and 2 deep injection wells. We are engaged in 75 landfill gas to energy and renewable energy projects and had post-closure responsibility for ~~128~~129 closed landfills.

~~On January 1, 2018, we adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40)~~ ("ASU 2014-09" or the "new revenue recognition standard") using the modified retrospective approach. The results presented below for the three and nine months ended September 30, 2017 reflect our historical presentation prior to the adoption of the new revenue recognition standard.

Revenue for the nine months ended September 30, ~~2018~~2019 increased by ~~0.4%~~2.8% to ~~$7,510.9~~$7,722.7 million compared to ~~$7,481.5~~$7,510.9 million for the same period in ~~2017.~~2018. This change in revenue is due to increases in average yield of ~~2.2%, volume of 0.8%~~2.8%, fuel recovery fees of ~~0.7%, energy services of 0.2%~~0.1%, and acquisitions, net of divestitures of ~~1.8%~~0.7%, partially offset by the impact of decreased volumes of (0.4)%, environmental services of (0.3)%, and recycling processing and commodity sales of ~~(1.2)% and our adoption of the new revenue recognition standard of (4.1)~~(0.1)%.

The following table summarizes our revenue, ~~costs~~expenses and ~~expenses~~operating income for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in millions of dollars and as a percentage of revenue):


	Three Months Ended September 30,												Nine Months Ended September 30,													Three Months Ended September 30,														Nine Months Ended September 30,
	2018						2017						2018						2017							2019						2018						2019				2018
Revenue	$	2,565.7		100.0		%	$	2,562.0		100.0		%	$	7,510.9		100.0		%	$	7,481.5		100.0		%	Revenue	$	2,646.9	100.0	%	$	2,565.7	100.0	%	$	7,722.7	100.0	%	$	7,510.9	100.0	%
Expenses:																									Expenses:
Cost of operations	1,577.4			61.5			1,580.1			61.7			4,624.4			61.6			4,621.6			61.8			Cost of operations	1,631.4		61.6		1,577.4		61.5		4,754.4		61.6		4,624.4		61.6
Depreciation, amortization and depletion of property and equipment	247.5			9.6			242.9			9.5			736.0			9.8			715.5			9.6			Depreciation, amortization and depletion of property and equipment	253.5		9.6		245.4		9.5		743.4		9.6		730.2		9.7
Amortization of other intangible assets and other assets	14.9			0.6			17.9			0.7			45.0			0.6			53.5			0.7
Amortization of other intangible assets																									Amortization of other intangible assets	4.8		0.2		14.9		0.6		14.4		0.2		45.0		0.6
Amortization of other assets																									Amortization of other assets	9.0		0.3		2.1		0.1		25.3		0.3		5.8		0.1
Accretion	20.1			0.8			20.0			0.8			60.7			0.8			59.9			0.8			Accretion	20.5		0.8		20.1		0.8		61.4		0.8		60.7		0.8
Selling, general and administrative	260.9			10.2			266.7			10.4			775.0			10.3			783.2			10.5			Selling, general and administrative	275.4		10.4		260.9		10.2		806.3		10.4		775.0		10.3
Withdrawal costs - multiemployer pension funds	—			—			—			—			—			—			1.1			—

Gain on disposition of assets and asset impairments, net	(4.6		)	(0.2	)		(17.4		)	(0.7	)		(5.3		)	(0.1	)		(27.2		)	(0.4	)		Gain on disposition of assets and asset impairments, net	(24.0)		(0.9)		(4.6)		(0.2)		(23.5)		(0.3)		(5.3)		(0.1)
Restructuring charges	9.2			0.4			3.7			0.1			22.5			0.3			12.2			0.2			Restructuring charges	8.5		0.3		9.2		0.4		13.0		0.2		22.5		0.3
Operating income	$	440.3		17.1		%	$	448.1		17.5		%	$	1,252.6		16.7		%	$	1,261.7		16.8		%	Operating income	$	467.8	17.7	%	$	440.3	17.1	%	$	1,328.0	17.2	%	$	1,252.6	16.7	%

Our pre-tax income was ~~$340.3~~$369.5 million and ~~$963.6~~$1,010.9 million for the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to ~~$356.7~~$340.3 million and ~~$986.4~~$963.6 million for the same respective periods in ~~2017.~~2018. Our net income attributable to Republic Services, Inc. was ~~$263.4~~$298.3 million and ~~$736.0~~$784.0 million for the three and nine months ended September 30, ~~2018,~~2019, or ~~$0.81~~$0.93 and ~~$2.23~~$2.43 per diluted share, respectively, compared to ~~$223.2~~$263.4 million and ~~$614.0~~$736.0 million, or ~~$0.66~~$0.81 and ~~$1.81~~$2.23 per diluted share, for the same periods in ~~2017,~~2018, respectively.

During each of the three and nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we recorded a number of charges, other expenses and ~~gains~~benefits that impacted our pre-tax income, net income attributable to Republic Services, Inc. (net income – Republic) and diluted earnings per share as noted in the following table (in millions, except per share data). Additionally, see ~~our~~ ~~“Cost of Operations,” “Selling, General and Administrative Expenses”~~ ~~and~~ ~~“Income Taxes”~~ ~~discussions contained in~~ the Results of Operations ~~section~~discussion of this Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of other items that impacted our earnings during the three and nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018.

~~The following tables summarize our adjustments to pre-tax income, net income – Republic, and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 (in millions~~

Table of ~~dollars except per share data):~~

Contents


	Three Months Ended September 30, 2018									Three Months Ended September 30, 2017											Three Months Ended September 30, 2019															Three Months Ended September 30, 2018
				Net			Diluted						Net			Diluted								Net			Diluted						Net			Diluted
	Pre-tax			Income -			Earnings			Pre-tax			Income -			Earnings					Pre-tax			Income -			Earnings			Pre-tax			Income -			Earnings
	Income			Republic			per Share			Income			Republic			per Share					Income			Republic			per Share			Income			Republic			per Share

As reported	$	340.3		$	263.4		$	0.81		$	356.7		$	223.2		$	0.66		As reported		$	369.5		$	298.3		$	0.93		$	340.3		$	263.4		$	0.81

Restructuring charges	9.2			7.4			0.02			3.7			2.2			0.01			Restructuring charges		8.5			6.3			0.02			9.2			7.4			0.02
Incremental contract startup costs - large municipal contract ⁽¹⁾	0.1			—			—			2.7			1.8			0.01
Incremental contract startup costs - large municipal contract ⁽²⁾																			Incremental contract startup costs - large municipal contract ⁽²⁾		—			—			—			0.1			—			—
Adoption of the Tax Act ⁽¹⁾⁽²⁾	—			0.3			—			—			—			—				—			—			—			—			0.3			—
Gain on disposition of assets and asset impairments, net	(4.6		)	(2.1		)	(0.01		)	(17.4		)	(2.0		)	(0.01		)	Gain on disposition of assets and asset impairments, net		(24.0)			(14.3)			(0.04)			(4.6)			(2.1)			(0.01)
Acquisition integration and deal costs⁽¹⁾																			Acquisition integration and deal costs⁽¹⁾		1.9			1.4			—			—			—			—

Total adjustments	4.7			5.6			0.01			(11.0		)	2.0			0.01			Total adjustments		(13.6)			(6.6)			(0.02)			4.7			5.6			0.01
As adjusted	$	345.0		$	269.0		$	0.82		$	345.7		$	225.2		$	0.67		As adjusted		$	355.9		$	291.7		$	0.91		$	345.0		$	269.0		$	0.82

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended September 30, 2019.

(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended September 30, 2018.


	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017										Nine Months Ended September 30, 2019										Nine Months Ended September 30, 2018
				Net			Diluted						Net			Diluted						Net		Diluted				Net		Diluted
	Pre-tax			Income -			Earnings			Pre-tax			Income -			Earnings				Pre-tax		Income -		Earnings		Pre-tax		Income -		Earnings
	Income			Republic			per Share			Income			Republic			per Share				Income		Republic		per Share		Income		Republic		per Share

As reported	$	963.6		$	736.0		$	2.23		$	986.4		$	614.0		$	1.81		As reported	$	1,010.9	$	784.0	$	2.43	$	963.6	$	736.0	$	2.23
Loss on extinguishment of debt and other related costs ⁽¹⁾	0.3			0.2			—			—			—			—
Loss on extinguishment of debt and other related costs⁽²⁾																			Loss on extinguishment of debt and other related costs⁽²⁾	—		—		—		0.3		0.2		—
Restructuring charges	22.5			17.1			0.06			12.2			7.4			0.02			Restructuring charges	13.0		9.6		0.03		22.5		17.1		0.06
Incremental contract startup costs - large municipal contract	5.4			4.1			0.01			5.0			3.0			0.01
Adoption of the Tax Act ⁽¹⁾	—			0.3			—			—			—			—
Incremental contract startup costs - large municipal contract ⁽¹⁾																			Incremental contract startup costs - large municipal contract ⁽¹⁾	0.7		0.5		—		5.4		4.1		0.01
Adoption of the Tax Act ⁽²⁾																			Adoption of the Tax Act ⁽²⁾	—		—		—		—		0.3		—
Gain on disposition of assets and asset impairments, net	(5.3		)	(2.7		)	(0.01		)	(27.2		)	(6.7		)	(0.02		)	Gain on disposition of assets and asset impairments, net	(23.5)		(13.9)		(0.04)		(5.3)		(2.7)		(0.01)
Withdrawal costs - multiemployer pension funds ⁽²⁾	—			—			—			1.1			0.7			—
Acquisition integration and deal costs																			Acquisition integration and deal costs	4.4		3.2		0.01		—		—		—

Total adjustments	22.9			19.0			0.06			(8.9		)	4.4			0.01			Total adjustments	(5.4)		(0.6)		—		22.9		19.0		0.06
As adjusted	$	986.5		$	755.0		$	2.29		$	977.5		$	618.4		$	1.82		As adjusted	$	1,005.5	$	783.4	$	2.43	$	986.5	$	755.0	$	2.29

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the nine months ended September 30, ~~2018.~~2019.

(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the nine months ended September 30, ~~2017.~~2018.

We believe that presenting adjusted pre-tax income, adjusted net income – Republic, and adjusted diluted earnings per share, which are not measures determined in accordance with U.S. GAAP, provides an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges and costs in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Although our business regularly incurs startup costs under municipal contracts, we specifically identify in the tables above the startup costs with respect to an individual municipal contract (and do not adjust for other startup costs under other contracts in 2018 or 2017). We do this because of the magnitude of the costs involved with this particular municipal contract and the unusual nature for the time period in which they are incurred. We adjusted for the impact associated with our adoption of the Tax Cuts and Jobs Act (the "Tax Act") due to the significant decrease in the federal corporate tax rate and the magnitude of the effect on our operating results. Our definitions of adjusted pre-tax income, adjusted net income – Republic, and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies. Further information on each of these adjustments is included below.

Loss on extinguishment of debt and other related costs.During the nine months ended September 30, 2018, we incurred a $0.3 million loss on the extinguishment of certain financing arrangements.

Restructuring charges. In January 2016, we realigned our field support functions by combining our three regions into two field groups, consolidating our areas and streamlining select operational support roles at our Phoenix headquarters. Additionally, in the second quarter of 2016, we began the redesign of our back-office functions as well as the consolidation of over 100 customer service locations into three Customer Resource Centers. During the three and nine months ended September 30, 2017, we incurred restructuring charges of $3.7 million and $12.2 million, respectively, that consisted of severance and other employee termination benefits, transition costs, relocation benefits, and the closure of offices with lease agreements with non-cancelable terms. The savings realized from these restructuring efforts have been reinvested in our customer-focused programs and initiatives.

Table of Contents

In ~~2018,~~2019, we expect to incur additional restructuring charges of approximately $5$3 million to ~~$10~~$5 million primarily related to ~~the consolidation of select~~upgrades to our back-office ~~functions, lease exit and contract termination costs and the relocation of certain employees. We expect annual savings of approximately $25 million to $30 million.~~software systems. Substantially all of these restructuring charges will be recorded in our corporate segment.

Incremental contract startup costs - large municipal contract. Although our business regularly incurs startup costs under municipal contracts, we specifically identify in the tables above the startup costs with respect to an individual municipal contract (and do not adjust for other startup costs under other contracts in 2019 or 2018). We do this because of the magnitude of the costs involved with this particular municipal contract and the unusual nature for the time period in which they were incurred.

During the nine months ended September 30, 2019, we incurred costs of $0.7 million, and during the three and nine months ended September 30, 2018, we incurred costs of $0.1 million and $5.4 million, respectively, related to the implementation of a large municipal contract. These costs did not meet the capitalization criteria prescribed by the new revenue recognition standard.

Adoption of the Tax Act.The Tax Act was enacted on December 22, 2017. Among other things, the Tax Act reduced the U.S. federal corporate tax rate from 35% to 21%. For the year ended December 31, 2017, we recorded provisional amounts based on our estimates of the Tax Act's effect to our deferred taxes, uncertain tax positions, and ~~the~~ one-time transition tax. During the three months ended September 30, 2018, we adjusted the provisional amounts recorded as of December 31, 2017 for the one-time transition tax, deferred taxes and uncertain tax positions. These adjustments increased our tax provision by ~~$0.3 million~~.

~~Incremental contract startup costs - large municipal contract~~. During the three and nine months ended September 30, 2018, we incurred costs of $0.1 million and $5.4 million, respectively, related to the implementation of a large municipal contract. We incurred similar costs of $2.7 million and $5.0 million during the three and nine months ended September 30, 2017, respectively. These costs did not meet the capitalization criteria prescribed by the new revenue recognition standard.

~~Withdrawal costs - multiemployer pension funds.~~ During the nine months ended September 30, 2017, we recorded charges to earnings of $1.1 million for withdrawal events at multiemployer pension funds to which we contribute. As we obtain updated information regarding multiemployer pension funds, the factors used in deriving our estimated withdrawal liabilities will be subject to change, which may adversely impact our reserves for withdrawal costs.$0.3 million.

Gain on disposition of assets and asset impairments, net. During the three and nine months ended September 30, 2019, we recorded a net gain on disposition of assets and asset impairments related to business divestitures of $24.0 million and $23.5 million, respectively. During the three and nine months ended September 30, 2018, we recorded a net gain on disposition of assets and asset impairments related to business divestitures of $4.6 million and $5.3 million, respectively.

Acquisition integration and deal costs. Although our business regularly incurs costs related to acquisitions, we specifically identify in the tables above the integration and deal costs incurred during the three and nine months ended September 30, 2019. We do this because of the magnitude of the costs associated with the particular acquisition activity during these time periods. During the three and nine months ended September 30, ~~2017,~~2019, we ~~recorded a net gain on disposition~~incurred acquisition related integration and deal costs of ~~assets and asset impairments related to business divestitures of $17.4~~$1.9 million and ~~$27.2~~$4.4 million, respectively.

Recent Developments

2020 Preliminary Financial Outlook

Adjusted Diluted Earnings per Share

We are providing our preliminary financial outlook for ~~2019.~~2020. This does not represent full detailed guidance, but rather a point-in-time estimate based on current projections of ~~2018~~2019 performance, early indicators from the ~~2019~~2020 budget process and current economic conditions. Consistent with prior practice, we will provide formal guidance in February ~~2019~~2020 once the budget process is complete and full year ~~2018~~2019 results are reported. The following is a summary of anticipated adjusted diluted earnings per share preliminary outlook for the year ending December 31, ~~2019,~~2020, which is not a measure determined in accordance with ~~U.S.~~U.S GAAP:



	(Preliminary Outlook) Year Ending December 31, ~~2019~~2020
Diluted earnings per share	$~~3.22~~ 3.44 - ~~$3.27~~	3.49
~~Restructuring charges~~	~~0.01~~

Restructuring charges	0.02
Adjusted diluted earnings per share	$~~3.23~~ 3.46 - ~~$3.28~~	3.51

Table of Contents

We believe that ~~the presentation of an~~presenting adjusted diluted earnings per share preliminary outlook ~~which excludes restructuring charges,~~ provides an understanding of operational activities before the financial impact of certain items. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges and costs in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definition of adjusted diluted earnings per share ~~guidance~~ may not be comparable to similarly titled measures presented by other companies.

Results of Operations

Revenue

We generate revenue primarily from our solid waste collection operations. Our remaining revenue is from other services, including transfer station, landfill disposal, recycling, and ~~energy~~environmental services. Our residential, small-container and ~~small-container~~large-container collection operations in some markets are based on long-term contracts with municipalities. Certain of our municipal contracts have annual price escalation clauses that are tied to changes in an underlying base index such as a consumer price index. We generally provide small-container and large-container collection services to customers under contracts with terms up to three years. Our transfer stations ~~landfills~~ and ~~to a lesser extent, our recycling facilities~~landfills generate revenue from disposal or tipping fees charged to third parties. ~~In general, we integrate our~~Our recycling ~~operations with our collection operations and obtain~~processing facilities generate revenue from tipping fees charged to third parties and the sale of recycled commodities. Our revenue from ~~energy~~environmental services consists mainly of fees we charge for the treatment and disposal of liquid and solid waste derived from the production of oil and natural gas. Other 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 following table reflects our revenue by service line for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in millions of dollars and as a percentage of revenue):


	Three Months Ended September 30,														Nine Months Ended September 30,
	2019						2018						2019				2018
Collection:
Residential	$	574.4	21.7	%	$	563.2	22.0	%	$	1,701.8	22.0	%	$	1,672.4	22.3	%
Small-container	799.1		30.2		772.5		30.1		2,369.0		30.7		2,286.0		30.4
Large-container	583.6		22.1		561.3		21.9		1,688.2		21.9		1,633.5		21.8
Other	11.7		0.4		11.0		0.4		34.2		0.4		32.6		0.4
Total collection	1,968.8		74.4		1,908.0		74.4		5,793.2		75.0		5,624.5		74.9
Transfer	347.1				322.9				985.8				932.5
Less: intercompany	(192.2)				(180.6)				(556.8)				(534.6)
Transfer, net	154.9		5.8		142.3		5.5		429.0		5.6		397.9		5.3
Landfill	605.3				590.2				1,750.7				1,720.7
Less: intercompany	(265.5)				(258.8)				(776.6)				(767.5)
Landfill, net	339.8		12.8		331.4		12.9		974.1		12.6		953.2		12.7
Environmental services	57.8		2.2		51.5		2.0		143.6		1.8		149.6		2.0
Other:
Recycling processing and commodity sales	68.6		2.6		76.0		3.0		213.2		2.8		219.9		2.9
Other non-core	57.0		2.2		56.5		2.2		169.6		2.2		165.8		2.2
Total other	125.6		4.8		132.5		5.2		382.8		5.0		385.7		5.1
Total revenue	$	2,646.9	100.0	%	$	2,565.7	100.0	%	$	7,722.7	100.0	%	$	7,510.9	100.0	%

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Collection:
Residential $ 562.8
21.9 % $ 576.5
22.5 % $ 1,671.4
22.3 % $ 1,717.2
23.0 %
Small-container 772.1
30.1 752.7
29.4 2,284.8
30.4 2,233.5
29.9
Large-container 560.3
21.8 541.3
21.1 1,630.8
21.7 1,565.4
20.9
Other 11.1
0.5 11.6
0.4 32.7
0.4 32.1
0.4
Total collection ⁽¹⁾
1,906.3
74.3 1,882.1
73.4 5,619.7
74.8 5,548.2
74.2
Transfer 322.6
312.8
931.7
907.0

Less: intercompany (178.6 ) (178.0 ) (529.1 ) (531.3 )
Transfer, net 144.0
5.6 134.8
5.3 402.6
5.4 375.7
5.0
Landfill 590.2
576.1
1,720.7
1,650.5

Less: intercompany (258.8 ) (252.7 ) (767.5 ) (740.7 )
Landfill, net 331.4
12.9 323.4
12.6 953.2
12.7 909.8
12.2
Energy services 51.5
2.0 40.0
1.6 149.6
2.0 103.3
1.4
Other:
Recycling processing and commodity sales ⁽²⁾
76.0
3.0 130.5
5.1 220.0
2.9 400.4
5.3
Other non-core 56.5
2.2 51.2
2.0 165.8
2.2 144.1
1.9
Total other 132.5

5.2 181.7
7.1 385.8
5.1 544.5
7.2
Total revenue $ 2,565.7
100.0 % $ 2,562.0
100.0 % $ 7,510.9
100.0 % $ 7,481.5
100.0 %

~~(1)In accordance with our adoption~~Table of the new revenue recognition standard, municipal franchise fees were presented as a reduction to revenue for the three and nine months ended September 30, 2018. Similar fees were presented as a cost of operations for the three and nine months ended September 30, 2017.Contents

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three and nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Average yield	2.8	%	2.4	%	2.8	%	2.2	%
Fuel recovery fees	(0.2)		0.8		0.1		0.7
Total price	2.6		3.2		2.9		2.9
Volume ⁽¹⁾	0.1		(0.1)		(0.4)		0.8
Recycling processing and commodity sales	(0.3)		(1.0)		(0.1)		(1.2)
Environmental services	(0.4)		0.1		(0.3)		0.2
Total internal growth	2.0		2.2		2.1		2.7
Acquisitions / divestitures, net	1.2		1.9		0.7		1.8

Subtotal	3.2		4.1		2.8		4.5
Adoption of the new revenue recognition standard	—		(4.0)		—		(4.1)
Total	3.2	%	0.1	%	2.8	%	0.4	%

Core price	4.7	%	3.9	%	4.7	%	3.8	%

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Average yield 2.4 % 2.5 % 2.2 % 2.5 %
Fuel recovery fees 0.8
0.3
0.7
0.4
Total price 3.2
2.8
2.9
2.9
Volume (0.1 ) 1.6
0.8
1.5
Recycling processing and commodity sales (1.0 ) 0.7
(1.2 ) 1.4
Energy services 0.1
0.8
0.2
0.6
Total internal growth 2.2
5.9
2.7
6.4
Acquisitions / divestitures, net 1.9
0.4
1.8
0.3
Subtotal 4.1 % 6.3 % 4.5 % 6.7 %
Adoption of the new revenue recognition standard (4.0 )% — % (4.1 )% — %
Total 0.1 % 6.3 % 0.4 % 6.7 %

Core price 3.9 % 4.1 % 3.8 % 4.1 %

(1) The increase in volume of 0.1% during the three months ended September 30, 2019 includes an increase of 0.5% due to one additional work day as compared to the three months ended September 30, 2018.

Average yield is defined as revenue growth from the change in average price per unit of service, expressed as a percentage. Core price is defined as price increases to our customers and fees, excluding fuel recovery fees, net of price decreases to retain customers. We also measure changes in average yield and core price as a percentage of related-business revenue, defined as total revenue excluding recycled commodities and fuel recovery fees, to determine the effectiveness of our pricing strategies. Average yield as a percentage of related-business revenue was ~~2.5%~~2.9% and ~~2.4%~~3.0% for the three and nine months ended September 30, ~~2018,~~2019, respectively, and ~~2.7%~~2.5% and ~~2.6%~~2.4% for the ~~three and nine months ended September 30, 2017.~~same respective periods in 2018. Core price as a percentage of related-business revenue was ~~4.2% and 4.0%~~5.0% for both the three and nine months ended September 30, ~~2018,~~2019, and ~~4.3%~~4.2% and ~~4.4%~~4.0% for the ~~three and nine months ended September 30, 2017.~~same respective periods in 2018.

During the three and nine months ended September 30, ~~2018,~~2019, we experienced the following changes in our revenue as compared to the same periods in ~~2017:~~2018:

•Average yield increased revenue by ~~2.4% and 2.2%~~2.8% during both the three and nine months ended September 30, ~~2018,~~2019, respectively, due to ~~positive pricing~~price increases in all lines of business.

•The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, decreased revenue by (0.2)% during the three months ended September 30, 2019, primarily due to a decrease in fuel prices compared to the same period in 2018. The fuel recovery fee program increased revenue by ~~0.8%~~0.1% during the nine months ended September 30, 2019 primarily due to an increase in the total revenue subject to the fuel recovery fees. This increase was partially offset by a decrease in fuel prices during the nine months ended September 30, 2019, compared to the same period in 2018.

•Volume increased revenue by 0.1% during the three months ended September 30, 2019 primarily due to one additional workday, partially offset by lower residential and ~~0.7%~~small-container collection volumes as compared to the three months ended September 30, 2018. Volume decreased revenue by (0.4)% during the nine months ended September 30, 2019, primarily due to volume declines in our residential and small-container collection lines of business. The volume declines in our collection lines of business were primarily due to certain non-regrettable losses during the nine months ended September 30, 2019 as compared to the same period in 2018. In addition, special waste landfill volumes decreased during the three and nine months ended September 30, 2018. These fees fluctuate with the price of fuel and, consequently, any increase in fuel prices results in an increase in our revenue. Higher fuel recovery fees for the three and nine months ended September 30, 2018 resulted primarily from the increase in fuel prices when2019 as compared to ~~fuel prices for~~ the same periods in ~~2017.~~2018.

Volume decreased by (0.1)% during the three months ended September 30, 2018, primarily due to non-regrettable losses in our residential collection line of business. Volume increased revenue by 0.8% during the nine months ended September 30, 2018, primarily due to volume growth in our landfill, transfer station,•Recycling processing and large-container collection lines of business, which were partially offset by volume declines in our residential collection line of business. The volume increase in our landfill line of business is primarily attributable to increased special waste volumes.

~~Recycled commodities~~commodity sales decreased revenue by ~~(1.0)~~(0.3)% and ~~(1.2)~~(0.1)% during the three and nine months ended September 30, ~~2018,~~2019, respectively, primarily due to ~~decreased~~a decline in overall commodity ~~prices.~~prices as compared to the same periods in 2018. The average price for ~~old corrugated containers~~recycled commodities, excluding glass and organics, for the three and nine months ended September 30, ~~2018~~2019 was ~~$95~~$72 and ~~$96~~$81 per ton, respectively, compared to ~~$185~~$106 and ~~$174~~$103 per ton for the same periods in ~~2017. The average price~~2018.

Table of ~~old newsprint for the three and nine months ended September 30, 2018 was $51 and $59 per ton, respectively, compared to $108 and $114 per ton, for the same periods in 2017.~~Contents

Changing market demand for recycled commodities causes volatility in commodity prices. At current volumes and mix of materials, we believe a $10 per ton change in the price of recycled commodities will change both annual revenue and operating income by approximately ~~$20 million and $20 million, respectively.~~$18 million.

•Acquisitions, net of divestitures, increased revenue by ~~1.9%~~1.2% and ~~1.8%~~0.7% during the three and nine months ended September 30, ~~2018,~~2019, respectively, due to our continued ~~acquisition~~ growth strategy of acquiring privately held solid waste, recycling and ~~recycling~~environmental services companies that complement our existing business platform.

~~Energy~~•Environmental services ~~increased~~decreased revenue by ~~0.1%~~(0.4)% and ~~0.2%~~(0.3)% during the three and nine months ended September 30, ~~2018,~~2019, respectively, primarily due ~~primarily~~ to ~~increased~~a decline in drilling activity ~~compared to~~and increased competition in the ~~same respective periods in 2017.~~Permian Basin.

Cost of Operations

Cost of operations includes labor and related benefits, which consists of salaries and wages, health and welfare benefits, incentive compensation and payroll taxes. It also includes transfer and disposal costs representing tipping fees paid to third party disposal facilities and transfer stations; maintenance and repairs relating to our vehicles, equipment and containers, including related labor and benefit costs; transportation and subcontract costs, which include costs for independent haulers that transport our waste to disposal facilities and costs for local operators who provide waste handling services associated with our National Accounts in markets outside our standard operating areas; fuel, which includes the direct cost of fuel used by our vehicles, net of fuel tax credits; disposal fees and taxes, consisting of landfill taxes, host community fees and royalties; landfill operating costs, which include financial assurance, leachate disposal, remediation charges and other landfill maintenance costs; risk management costs, which include casualty insurance premiums and claims; cost of goods sold, which includes material costs paid to suppliers; and other, which includes expenses such as facility operating costs, equipment rent and gains or losses on sale of assets used in our operations.

The following table summarizes the major components of our cost of operations for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Labor and related benefits $ 536.1
20.9
% $ 507.6
19.8
% $ 1,604.2
21.4
% $ 1,502.8
20.1
%
Transfer and disposal costs 214.9
8.4
204.0
8.0
617.8
8.2
598.6
8.0

Maintenance and repairs 250.8
9.8
240.0
9.4
742.3
9.9
702.8
9.4

Transportation and subcontract costs 166.5
6.5
153.1
6.0
482.3
6.4
432.1
5.8

Fuel 103.9
4.0
87.2
3.4
289.7
3.9
255.0
3.4

Disposal fees and taxes ⁽¹⁾
82.9
3.2
120.2
4.7
240.4
3.2
348.2
4.7

Landfill operating costs 60.7
2.4
53.6
2.1
169.4
2.3
163.7
2.2

Risk management 52.4
2.0
58.6
2.3
160.5
2.1
162.1
2.2

Cost of goods sold ⁽²⁾
—
—
57.8
2.3
—
—
176.1
2.4

Other 109.2
4.3
98.0
3.7
317.8
4.2
280.2
3.6

Total cost of operations $ 1,577.4
61.5
% $ 1,580.1
61.7
% $ 4,624.4
61.6
% $ 4,621.6
61.8
%

(1) Disposal fees and taxes included municipal franchise fees of $39.1 million and $115.0 million for the three and nine months ended September 30, 2017, respectively. In accordance with our adoption of the new revenue recognition standard, these fees were presented as a reduction to revenue for the same respective periods in 2018.

(2) Cost of goods sold included rebates paid to customers associated with recycled commodities for the three and nine months ended September 30, 2017. In accordance with our adoption of the new revenue recognition standard, these rebates were presented as a reduction to revenue for the same respective periods in 2018.


	Three Months Ended September 30,														Nine Months Ended September 30,
	2019						2018						2019				2018
Labor and related benefits	$	558.9	21.1	%	$	536.1	20.9	%	$	1,647.7	21.3	%	$	1,604.2	21.4	%
Transfer and disposal costs	216.5		8.2		214.9		8.4		634.8		8.2		617.8		8.2
Maintenance and repairs	265.0		10.0		250.8		9.8		757.8		9.8		742.3		9.9
Transportation and subcontract costs	179.1		6.8		166.5		6.5		504.7		6.6		482.3		6.4
Fuel	94.2		3.6		103.9		4.0		283.1		3.7		289.7		3.9
Disposal fees and taxes	84.7		3.2		82.9		3.2		242.9		3.1		240.4		3.2
Landfill operating costs	63.5		2.4		60.7		2.4		184.4		2.4		169.4		2.3
Risk management	54.4		2.0		52.4		2.0		170.5		2.2		160.5		2.1

Other	115.1		4.3		109.2		4.3		328.5		4.3		317.8		4.2


Total cost of operations	$	1,631.4	61.6	%	$	1,577.4	61.5	%	$	4,754.4	61.6	%	$	4,624.4	61.6	%

These cost categories may change from time to time and may not be comparable to similarly titled categories ~~used~~presented by other companies. As such, you should take care when comparing our cost of operations by component to that of other companies.

Our cost of operations ~~decreased~~increased in aggregate dollars for the three months ended September 30, ~~2018~~2019 partly due to one additional workday as compared to the same period in ~~2017.~~2018. Our cost of operations further increased in aggregate dollars for the nine months ended September 30, 2018 compared to the same period in 2017, which was partially offset by a decrease resulting from our adoption of the new revenue recognition standard. For the three and nine months ended September 30, 2018, we recognized $83.9 million and $250.8 million, respectively, of municipal franchise fees and rebates paid to customers associated with recycled commodities as a reduction to revenue. Historically, these costs were presented as a cost of operations.

~~In addition, the following items impacted our major components of our cost of operations~~ for the three and nine months ended September 30, 2019 compared to the same periods in 2018 ~~and 2017:~~as a result of the following:

•Labor and related benefits increased in aggregate dollars due to ~~increased~~higher hourly and salaried wages as a result of annual merit increases along with increased headcount ~~and higher collection volumes.~~attributable to acquisition-related growth.

•Transfer and disposal costs increased in aggregate dollars primarily due to ~~higher collection volumes.~~an increase in third party disposal rates. During ~~each of~~ the three and nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, approximately 68% of the total waste volume we collected was disposed at landfill sites that we own or operate (internalization).

•Maintenance and repairs expense increased in aggregate dollars due to ~~higher collection volumes,~~the complexity of trucks, including the cost of parts and internal labor.

•Transportation and subcontract costs increased ~~primarily~~in aggregate dollars due to ~~higher~~increased third party transportation rates and acquisition related activity.

Table of Contents

•Fuel costs decreased during the three and nine months ended September 30, 2019 due to a decline in both fuel prices and collection ~~and transfer station volumes and an increase~~volumes. The decrease in ~~subcontracted work attributable to an increase in non-core revenues.~~

~~Our~~ fuel costs ~~increased due~~during the nine months ended September 30, 2019 was partially offset by favorable compressed natural gas (CNG) tax credits of approximately $15 million that were enacted in 2018, retroactively effective to ~~an increase~~2017 and recognized during the same period in ~~the average diesel fuel cost per gallon.~~2018, which did not recur in 2019. The national average diesel fuel cost per gallon for the three and nine months ended September 30, ~~2018~~2019 was $3.02 and $3.05, respectively, as compared to $3.24 and $3.15 ~~respectively, compared to $2.62 and $2.58~~ for the same ~~respective~~ periods in 2017. This increase was partially offset by compressed natural gas ("CNG") tax credits that were enacted in 2018, retroactively effective to 2017 and recognized during the nine months ended September 30, 2018.

At current consumption levels, we believe a twenty-cent per gallon change in the price of diesel fuel would change our fuel costs by approximately ~~$25~~$26 million per year. Offsetting these changes in fuel expense would be changes in our fuel recovery fee charged to our customers. At current participation rates, a twenty-cent per gallon change in the price of diesel fuel changes our fuel recovery fee by approximately $25 million per year.

•Landfill operating costs increased ~~during the three and nine months ended September 30, 2018 as compared to the same periods in 2017~~ due to increased leachate treatment, transportation, and disposal costs, ~~from rainfall associated with hurricane and storm related activity.~~

~~Additionally, during the nine months ended September 30, 2018, we recorded~~partially offset by certain ~~unfavorable~~favorable remediation adjustments.

Risk management expenses decreased primarily due to favorable actuarial development in our workers compensation and auto liability programs during the three and nine months ended September 30, 2018 as compared to the same periods in 2017.

~~During the three and nine months ended September 30, 2018, other costs of operations increased primarily due to higher occupancy and facility costs.~~

Depreciation, Amortization and Depletion of Property and Equipment

The following table summarizes depreciation, amortization and depletion of property and equipment for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in millions of dollars and as a percentage of revenue):


	Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,														Nine Months Ended September 30,
	2018				2017				2018				2017					2019						2018						2019				2018
Depreciation and amortization of property and equipment	$	163.0	6.3	%	$	159.6	6.2	%	$	488.7	6.5	%	$	475.0	6.4	%	Depreciation and amortization of property and equipment	$	164.0	6.2	%	$	160.9	6.3	%	$	484.4	6.3	%	$	482.9	6.4	%
Landfill depletion and amortization	84.5		3.3		83.3		3.3		247.3		3.3		240.5		3.2		Landfill depletion and amortization	89.5		3.4		84.5		3.3		259.0		3.3		247.3		3.3
Depreciation, amortization and depletion expense	$	247.5	9.6	%	$	242.9	9.5	%	$	736.0	9.8	%	$	715.5	9.6	%	Depreciation, amortization and depletion expense	$	253.5	9.6	%	$	245.4	9.6	%	$	743.4	9.6	%	$	730.2	9.7	%

Depreciation and amortization of property and equipment for the three and nine months ended September 30, ~~2018~~2019 increased in aggregate dollars due to ~~higher acquisition costs of replacement vehicles, an increased number of vehicles to support volume growth,~~ additional assets acquired with our acquisitions, ~~and an increased number~~partially offset by the full depreciation of ~~CNG vehicles, which are more expensive to purchase than diesel vehicles.~~certain assets recognized in our 2008 acquisition of Allied Waste Industries, Inc.

During the three and nine months ended September 30, ~~2018,~~2019, landfill depletion and amortization expense increased in aggregate dollars, primarily due to ~~increased landfill disposal volumes and an overall increase in our average depletion rate. The increase was partially offset by~~ favorable one-time amortization adjustments recorded during the three and nine months ended September 30, 2018, ~~of $1.6 million~~which did not recur in 2019 and ~~$9.2 million, respectively, related to asset retirement obligations.~~an increase in our overall average depletion rate.

Amortization of Other Intangible Assets ~~and Other Asset~~s

Expenses for amortization of other intangible assets ~~and other assets~~ were ~~$14.9~~$4.8 million and ~~$45.0~~$14.4 million, or ~~0.6%~~0.2% of revenue, for the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to ~~$17.9~~$14.9 million and ~~$53.5~~$45.0 million, or ~~0.7%~~0.6% of revenue, for each of the same periods in ~~2017.~~2018. Our other intangible ~~assets and other~~ assets primarily relate to customer relationships ~~franchise agreements, other municipal agreements, favorable lease assets~~ and, to a lesser extent, non-compete agreements. ~~In addition, we historically~~Amortization expense decreased primarily due to the full amortization of certain intangible assets recognized ~~certain upfront payments to acquire customer contracts as an asset~~ in our ~~consolidated balance sheet~~2008 acquisition of Allied Waste Industries, Inc.

Amortization of Other Assets

Expenses for amortization of other assets were $9.0 million and amortized the asset as a component of depreciation, amortization and depletion over the respective contract life. In accordance with the new revenue recognition standard, we amortized the asset as a reduction$25.3 million, or 0.3% of revenue, ~~during~~for the three and nine months ended September 30, 2019, respectively, compared to $2.1 million and $5.8 million, or 0.1% of revenue, for the same periods in 2018. ~~Exclusive~~Our other assets primarily relate to the prepayment of ~~this change,~~fees and capitalized implementation costs associated with cloud-based hosting arrangements. Effective January 1, 2019, we adopted ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) No. 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) on a prospective basis. During the three and nine months ended September 30, 2018, we recognized $5.3 million and $14.7 million, respectively, of amortization ~~has remained relatively unchanged~~related to the prepayment of fees as ~~a result~~selling, general and administrative expenses. During the three and nine months ended September 30, 2019, we recognized $6.1 million and $17.9 million, respectively, of ~~assets acquired~~amortization related to the prepayment of similar fees in ~~the acquisitions~~amortization of ~~various waste businesses, offset by certain intangible assets that are now fully amortized.~~other assets.

Accretion expense was ~~$20.1~~$20.5 million and ~~$60.7~~$61.4 million, or 0.8% of revenue, for the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to ~~$20.0~~$20.1 million and ~~$59.9~~$60.7 million, or 0.8% of revenue, for each of the same ~~respective~~ periods in ~~2017.~~2018. Accretion expense has remained relatively unchanged as our asset retirement obligations have remained relatively consistent period over period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include salaries, health and welfare benefits, and incentive compensation for corporate and field general management, field support functions, sales force, accounting and finance, legal, management information systems, and clerical and administrative departments. Other expenses include rent and office costs, fees for professional services provided by third parties, legal settlements, marketing, investor and community relations services, directors’ and officers’ insurance, general employee relocation, travel, entertainment and bank charges. Restructuring charges are excluded from selling, general and administrative expenses and are discussed separately.

The following table summarizes our selling, general and administrative expenses for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 (in millions of dollars and as a percentage of revenue):

These cost categories may change from time to time and may not be comparable to similarly titled categories ~~used~~presented by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies.

The most significant items affecting our selling, general and administrative expenses during the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 are summarized below:

•Salaries and related benefits increased primarily due to higher incentive pay and wages, benefits, and other payroll related items resulting from annual merit increases.

Salaries remained relatively unchanged and were $173.9 million and $520.8 million, or 6.8% and 6.9% of revenue, for the three and nine months ended September 30, 2018, respectively, compared to $176.8 million and $527.0 million, or 6.9% and ~~7.0% of revenue, for the same respective periods in 2017.~~

~~Withdrawal Costs - Multiemployer Pension Funds~~

~~During~~favorable legal settlements received during the three and nine months ended September 30, ~~2017, we recorded charges to earnings~~2018, which did not recur in the same periods in 2019, as well as higher consulting and professional fees. The increase was partially offset by our adoption of $1.1 million for withdrawal events at multiemployer pension funds to which we contribute. As we obtain updated information regarding multiemployer pension funds, the factors used in deriving our estimated withdrawal liabilities will be subject to change, which may adversely impact our reserves for withdrawal costs.

~~Gain on Disposition of Assets and Asset Impairments, Net~~

ASU 2018-15. During the three and nine months ended September 30, 2018, we ~~recorded a net gain on disposition~~recognized $5.3 million and $14.7 million, respectively, of ~~assets and asset impairments~~amortization related to ~~business divestitures~~the prepayment of ~~$4.6 million~~certain fees as selling, general, and ~~$5.3 million, respectively. During~~administrative expenses. The amortization for prepayments of similar fees was recognized as amortization of other assets during the three and nine months ended September 30, ~~2017, we recorded a net gain~~2019.

Gain on ~~disposition~~Disposition of ~~assets~~Assets and ~~asset impairments related to business divestitures of $17.4 million and $27.2 million, respectively.~~Asset Impairments, Net

We strive to have a number one or number two market position in each of the markets we serve, or have a clear path on how we will achieve a leading market position over time. Where we cannot establish a leading market position, or where operations are not generating acceptable returns, we may decide to divest certain assets and reallocate resources to other markets. Asset or

business divestitures could result in gains, losses or asset impairment charges that may be material to our results of operations



~~DELAWARE~~Delaware		65-0716904
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

18500 ~~NORTH ALLIED WAY~~ ~~PHOENIX, ARIZONA~~ North Allied Way		85054
Phoenix,	Arizona
(Address of principal executive offices)		(Zip Code)



PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, ~~2018~~2019 (Unaudited) and December 31, ~~2017~~2018	3
	Unaudited Consolidated ~~Statements~~Statement of Income for the Three and Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	4
	Unaudited Consolidated ~~Statements~~Statement of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	5
	Unaudited Consolidated Statement of Stockholders' Equity for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Unaudited Consolidated ~~Statements~~Statement of Cash Flows for the Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	78
	Notes to Unaudited Consolidated Financial Statements	89
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	5453
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5554
Item 3.	Defaults upon Senior Securities	5554
Item 4.	Mine Safety Disclosures	5554
Item 5.	Other Information	5554
Item 6.	Exhibits	5655
	Signatures	5756



þ☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


								September 30,		December 31,
	September 30, 2018			December 31, 2017				2019		2018
	(Unaudited)							(Unaudited)
ASSETS	ASSETS						ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	81.9		$	83.3		Cash and cash equivalents	$	55.6	$	70.5
Accounts receivable, less allowance for doubtful accounts and other of $34.5 and $38.9, respectively	1,156.0			1,105.9
Accounts receivable, less allowance for doubtful accounts and other of $35.7 and $34.3, respectively							Accounts receivable, less allowance for doubtful accounts and other of $35.7 and $34.3, respectively	1,162.9		1,102.7
Prepaid expenses and other current assets	254.2			247.6			Prepaid expenses and other current assets	255.4		391.2

Total current assets	1,492.1			1,436.8			Total current assets	1,473.9		1,564.4
Restricted cash and marketable securities	99.1			141.1			Restricted cash and marketable securities	121.3		108.1
Property and equipment, net	7,913.9			7,777.4			Property and equipment, net	8,257.6		8,020.1
Goodwill	11,382.7			11,315.4			Goodwill	11,650.5		11,400.1
Other intangible assets, net	105.4			141.1			Other intangible assets, net	124.1		106.5
Other assets	408.9			335.2			Other assets	701.7		417.8
Total assets	$	21,402.1		$	21,147.0		Total assets	$	22,329.1	$	21,617.0
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY						LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	661.3		$	598.1		Accounts payable	$	697.2	$	761.5
Notes payable and current maturities of long-term debt	690.8			706.7			Notes payable and current maturities of long-term debt	912.8		690.7
Deferred revenue	336.4			312.1			Deferred revenue	341.1		338.7
Accrued landfill and environmental costs, current portion	168.3			135.2			Accrued landfill and environmental costs, current portion	153.2		130.6
Accrued interest	78.4			74.5			Accrued interest	79.7		68.5
Other accrued liabilities	740.1			808.2			Other accrued liabilities	813.4		728.6
Total current liabilities	2,675.3			2,634.8			Total current liabilities	2,997.4		2,718.6
Long-term debt, net of current maturities	7,556.7			7,480.7			Long-term debt, net of current maturities	7,705.8		7,646.8
Accrued landfill and environmental costs, net of current portion	1,673.9			1,686.5			Accrued landfill and environmental costs, net of current portion	1,702.0		1,701.6
Deferred income taxes and other long-term tax liabilities, net	970.0			796.4			Deferred income taxes and other long-term tax liabilities, net	1,074.6		1,028.3
Insurance reserves, net of current portion	275.8			275.4			Insurance reserves, net of current portion	279.3		270.8
Other long-term liabilities	326.6			312.1			Other long-term liabilities	591.5		321.4
Commitments and contingencies							Commitments and contingencies
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, par value $0.01 per share; 50 shares authorized; none issued	—			—			Preferred stock, par value $0.01 per share; 50 shares authorized; none issued	—		—
Common stock, par value $0.01 per share; 750 shares authorized; 351.8 and 350.1 issued including shares held in treasury, respectively	3.5			3.5
Common stock, par value $0.01 per share; 750 shares authorized; 353.3 and 351.9 issued and outstanding, respectively							Common stock, par value $0.01 per share; 750 shares authorized; 353.3 and 351.9 issued and outstanding, respectively	3.5		3.5
Additional paid-in capital	4,911.0			4,839.6			Additional paid-in capital	4,979.5		4,924.9
Retained earnings	4,571.6			4,152.5			Retained earnings	5,155.9		4,750.5
Treasury stock, at cost; 27.2 and 18.4 shares, respectively	(1,620.4		)	(1,059.4		)
Accumulated other comprehensive income, net of tax	55.9			22.6
Treasury stock, at cost; 33.9 and 29.4 shares, respectively							Treasury stock, at cost; 33.9 and 29.4 shares, respectively	(2,153.9)		(1,782.6)
Accumulated other comprehensive income (loss), net of tax							Accumulated other comprehensive income (loss), net of tax	(8.5)		30.8
Total Republic Services, Inc. stockholders’ equity	7,921.6			7,958.8			Total Republic Services, Inc. stockholders’ equity	7,976.5		7,927.1
Noncontrolling interests in consolidated subsidiary	2.2			2.3
Non-controlling interests in consolidated subsidiary							Non-controlling interests in consolidated subsidiary	2.0		2.4
Total stockholders’ equity	7,923.8			7,961.1			Total stockholders’ equity	7,978.5		7,929.5
Total liabilities and stockholders’ equity	$	21,402.1		$	21,147.0		Total liabilities and stockholders’ equity	$	22,329.1	$	21,617.0


																														Republic Services, Inc. Stockholders’ Equity
	Republic Services, Inc. Stockholders’ Equity																													Common Stock						Additional Paid-In Capital		Retained Earnings		Treasury Stock						Accumulated Other Comprehensive Income, Net of Tax		Non-controlling Interests In Consolidated Subsidiary
	Common Stock			Additional Paid-In Capital				Retained Earnings			Treasury Stock						Accumulated Other Comprehensive Income, Net of Tax				Noncontrolling Interests In Consolidated Subsidiary									Shares		Amount								Shares		Amount							Total
Balance as of December 31, 2018																Balance as of December 31, 2018								351.9						$	3.5	$	4,924.9	$	4,750.5	(29.4)		$	(1,782.6)	$	30.8	$	2.4	$	7,929.5
Adoption of accounting standard																												Adoption of accounting standard		—		—		—		(5.4)		—		—		5.4		—		—
Net income																												Net income		—		—		—		234.2		—		—		—		0.7		234.9
Other comprehensive loss																												Other comprehensive loss		—		—		—		—		—		—		(11.4)		—		(11.4)
Cash dividends declared																												Cash dividends declared		—		—		—		(120.7)		—		—		—		—		(120.7)
Issuances of common stock																												Issuances of common stock		0.9		—		7.7		—		(0.2)		(16.8)		—		—		(9.1)
Stock-based compensation																												Stock-based compensation		—		—		12.0		(1.1)		—		—		—		—		10.9
Purchase of common stock for treasury																												Purchase of common stock for treasury		—		—		—		—		(1.5)		(111.5)		—		—		(111.5)
	Shares	Amount					Additional Paid-In Capital				Retained Earnings			Shares			Amount				Accumulated Other Comprehensive Income, Net of Tax				Noncontrolling Interests In Consolidated Subsidiary				Total
Balance as of December 31, 2017	350.1	$	3.5			(18.4				)			$	(1,059.4	)				$	7,961.1
Adoption of accounting standard, net of tax	—	—		—				33.4			—		—				—				—				33.4
Balance as of March 31, 2019																												Balance as of March 31, 2019		352.8		3.5		4,944.6		4,857.5		(31.1)		(1,910.9)		24.8		3.1		7,922.6

Net income	—	—		—				736.0			—		—				—				0.5				736.5			Net income		—		—		—		251.5		—		—		—		(0.6)		250.9
Other comprehensive income	—	—		—				—			—		—				33.3				—				33.3
Other comprehensive loss																												Other comprehensive loss		—		—		—		—		—		—		(20.9)		—		(20.9)
Cash dividends declared	—	—		—				(347.4		)	—		—				—				—				(347.4		)	Cash dividends declared		—		—		—		(120.2)		—		—		—		—		(120.2)
Issuances of common stock	1.7	—		39.8				—			(0.3	)	(19.9		)		—				—				19.9			Issuances of common stock		0.2		—		6.3		—		—		(0.3)		—		—		6.0
Stock-based compensation	—	—		31.6				(2.9		)	—		—				—				—				28.7			Stock-based compensation		—		—		9.8		(0.9)		—		—		—		—		8.9
Purchase of common stock for treasury	—	—		—				—			(8.5	)	(541.1		)		—				—				(541.1		)	Purchase of common stock for treasury		—		—		—		—		(1.1)		(91.9)		—		—		(91.9)
Distributions paid	—	—		—				—			—		—				—				(0.6		)		(0.6		)	Distributions paid		—		—		—		—		—		—		—		(0.2)		(0.2)
Balance as of September 30, 2018	351.8	$	3.5	$	4,911.0			$	4,571.6		(27.2	)	$	(1,620.4	)		$	55.9			$	2.2			$	7,923.8
Balance as of June 30, 2019																												Balance as of June 30, 2019		353.0		3.5		4,960.7		4,987.9		(32.2)		(2,003.1)		3.9		2.3		7,955.2

Net income																												Net income		—		—		—		298.3		—		—		—		(0.3)		298.0
Other comprehensive loss																												Other comprehensive loss		—		—		—		—		—		—		(12.4)		—		(12.4)
Cash dividends declared																												Cash dividends declared		—		—		—		(129.3)		—		—		—		—		(129.3)
Issuances of common stock																												Issuances of common stock		0.3		—		8.7		—		—		(0.3)		—		—		8.4
Stock-based compensation																												Stock-based compensation		—		—		10.1		(1.0)		—		—		—		—		9.1
Purchase of common stock for treasury																												Purchase of common stock for treasury		—		—		—		—		(1.7)		(150.5)		—		—		(150.5)

Balance as of September 30, 2019																												Balance as of September 30, 2019		353.3		$	3.5	$	4,979.5	$	5,155.9	(33.9)		$	(2,153.9)	$	(8.5)	$	2.0	$	7,978.5



	Balance at December 31, 2017		Adjustments due to our adoption of ASU 2014-09		Balance at January 1, 2018
Balance Sheet
Assets
Other assets	$	335.2	$	43.8	$	379.0

Liabilities
Deferred income taxes and other long-term tax liabilities, net	$	796.4	$	10.4	$	806.8

Equity
Retained earnings	$	4,152.5	$	33.4	$	4,185.9



	For the three months ended September 30, 2018							For the nine months ended September 30, 2018
	As Reported		Effect of Change			As Computed Excluding the Adoption of ASU 2014-09		As Reported		Effect of Change			As Computed Excluding the Adoption of ASU 2014-09
Income Statement
Revenue	$	2,565.7	$	85.5		$	2,651.2	$	7,510.9	$	255.2		$	7,766.1
Expenses:
Cost of operations	$	1,577.4	$	83.9		$	1,661.3	$	4,624.4	$	250.8		$	4,875.2
Depreciation, amortization and depletion	$	262.4	$	1.6		$	264.0	$	781.0	$	4.4		$	785.4
Selling, general and administrative	$	260.9	$	0.1		$	261.0	$	775.0	$	0.5		$	775.5
Operating income	$	440.3	$	(0.1	)	$	440.2	$	1,252.6	$	(0.5	)	$	1,252.1



	September 30, 2018			December 31, 2017			September 30, 2017			December 31, 2016
Cash and cash equivalents	$	81.9		$	83.3		$	63.9		$	67.8
Restricted cash and marketable securities	99.1			141.1			96.4			90.5
Less: restricted marketable securities	(44.1		)	(45.3		)	(45.2		)	(45.3		)
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	136.9		$	179.1		$	115.1		$	113.0



Year	Gallons Hedged	Weighted Average Contract Price per Gallon
2018	1,875,000	$2.59



			Fair Value Measurements Using
	Carrying Amount		Total as of September 30, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market mutual funds	$	34.5	$	34.5	$	34.5	$	—	$	—
Bonds - restricted cash and marketable securities and other assets	48.6		48.6		—		48.6		—
Fuel hedges - other current assets	1.6		1.6		—		1.6		—
Commodity hedges - other current assets	0.4		0.4		—		0.4		—
Interest rate locks - other assets	29.6		29.6		—		29.6		—
Total assets	$	114.7	$	114.7	$	34.5	$	80.2	$	—
Liabilities:
Interest rate swaps - other long-term liabilities	$	3.5	$	3.5	$	—	$	3.5	$	—
Contingent consideration - other accrued liabilities and other long-term liabilities	71.9		71.9		—		—		71.9
Total liabilities	$	75.4	$	75.4	$	—	$	3.5	$	71.9



			Fair Value Measurements Using
	Carrying Amount		Total as of December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market mutual funds	$	30.3	$	30.3	$	30.3	$	—	$	—
Bonds - restricted cash and marketable securities and other assets	92.1		92.1		—		92.1		—
Fuel hedges - other current assets	3.0		3.0		—		3.0		—
Interest rate swaps - other assets	8.0		8.0		—		8.0		—
Interest rate locks - other assets	19.1		19.1		—		19.1		—
Total assets	$	152.5	$	152.5	$	30.3	$	122.2	$	—
Liabilities:
Commodity hedges - other accrued liabilities	$	0.2	$	0.2	$	—	$	0.2	$	—
Contingent consideration - other accrued liabilities and other long-term liabilities	73.3		73.3		—		—		73.3
Total liabilities	$	73.5	$	73.5	$	—	$	0.2	$	73.3



	2018		2017
Financing proceeds	$	—	$	38.6
Capping, closure and post-closure obligations	29.2		28.6
Insurance	69.9		71.4
Other	—		2.5
Total restricted cash and marketable securities	$	99.1	$	141.1


	Net Revenue		Depreciation, Amortization, Depletion and Accretion Before Adjustments for Asset Retirement Obligations		Adjustments to Amortization Expense for Asset Retirement Obligations		Depreciation, Amortization, Depletion and Accretion		Gain on Disposition of Assets and Impairments, Net		Operating Income (Loss)		Operating Margin

Three Months Ended September 30, 2019
Group 1	$	1,285.2	$	128.7	$	—	$	128.7	$	—	$	316.0	24.6	%
Group 2	1,322.8		133.7		—		133.7		—		242.8		18.4	%
Corporate entities	38.9		25.4		—		25.4		24.0		(91.0)		—
Total	$	2,646.9	$	287.8	$	—	$	287.8	$	24.0	$	467.8	17.7	%

Three Months Ended September 30, 2018
Group 1	$	1,229.5	$	124.6	$	(0.7)	$	123.9	$	—	$	298.5	24.3	%
Group 2	1,297.4		129.9		(0.9)		129.0		—		231.4		17.8	%
Corporate entities	38.8		29.6		—		29.6		4.6		(89.6)		—
Total	$	2,565.7	$	284.1	$	(1.6)	$	282.5	$	4.6	$	440.3	17.2	%



	Net Revenue		Depreciation, Amortization, Depletion and Accretion Before Adjustments for Asset Retirement Obligations		Adjustments to Amortization Expense for Asset Retirement Obligations			Depreciation, Amortization, Depletion and Accretion		Gain (Loss) on Disposition of Assets and Asset Impairments, Net			Operating Income (Loss)			Operating Margin
Three Months Ended September 30, 2018
Group 1	$	1,229.5	$	124.6	$	(0.7	)	$	123.9	$	—		$	298.5		24.3	%
Group 2	1,297.4		129.9		(0.9		)	129.0		—			231.4			17.8
Corporate entities	38.8		29.6		—			29.6		4.6			(89.6		)	—
Total	$	2,565.7	$	284.1	$	(1.6	)	$	282.5	$	4.6		$	440.3		17.2	%
Three Months Ended September 30, 2017
Group 1	$	1,244.7	$	120.6	$	—		$	120.6	$	—		$	293.7		23.6	%
Group 2	1,262.3		129.9		(0.7		)	129.2		(0.4		)	246.4			19.5
Corporate entities	55.0		31.0		—			31.0		17.8			(92.0		)	—
Total	$	2,562.0	$	281.5	$	(0.7	)	$	280.8	$	17.4		$	448.1		17.5	%


	Balance as of December 31, 2017	New Expansions Undertaken	Landfills Acquired, Net of Divestitures	Permits Granted, Net of Closures		Airspace Consumed		Changes in Engineering Estimates		Balance as of September 30, 2018		Balance as of December 31, 2018	New Expansions Undertaken	Landfills Acquired, Net of Divestitures	Permits Granted, Net of Closures	Airspace Consumed	Changes in Engineering Estimates	Balance as of September 30, 2019
Cubic yards (in millions):											Cubic yards (in millions):
Permitted airspace	4,735.7	—	4.3	85.1		(62.3	)	(15.1	)	4,747.7	Permitted airspace	4,736.8	—	—	35.1	(61.3)	(2.2)	4,708.4
Probable expansion airspace	350.3	57.3	—	(66.4	)	—		—		341.2	Probable expansion airspace	341.2	6.7	—	(18.1)	—	—	329.8
Total cubic yards (in millions)	5,086.0	57.3	4.3	18.7		(62.3	)	(15.1	)	5,088.9	Total cubic yards (in millions)	5,078.0	6.7	—	17.0	(61.3)	(2.2)	5,038.2
Number of sites:											Number of sites:
Permitted airspace	195	—	—	(4	)					191	Permitted airspace	190	—	—	—			190
Probable expansion airspace	11	5	—	(4	)					12	Probable expansion airspace	12	2	—	(2)			12


	Balance as of December 31, 2018		Capital Additions (Amortization)		Retirements		Acquisitions, Net of Divestitures		Non-cash Additions for Asset Retirement Obligations		Impairments, Transfers and Other Adjustments		Adjustments for Asset Retirement Obligations		Balance as of September 30, 2019
Non-depletable landfill land	$	167.5	$	0.6	$	(0.9)	$	—	$	—	$	(1.1)	$	—	$	166.1
Landfill development costs	7,106.0		2.6		(0.1)		8.1		34.1		117.4		(0.6)		7,267.5
Construction-in-progress - landfill	287.9		288.4		—		—		—		(116.9)		—		459.4
Accumulated depletion and amortization	(3,635.9)		(258.7)		—		—		—		—		(0.3)		(3,894.9)
Net investment in landfill land and development costs	$	3,925.5	$	32.9	$	(1.0)	$	8.1	$	34.1	$	(0.6)	$	(0.9)	$	3,998.1



	Allowance for Doubtful Accounts and Other			Final Capping, Closure and Post-Closure			Remediation			Insurance Reserves
Balance as of December 31, 2017	$	38.9		$	1,257.7		$	564.0		$	420.2
Non-cash additions for asset retirement obligations	—			33.0			—			—
Acquisitions, net of divestitures and other adjustments	0.3			(0.6		)	—			—
Asset retirement obligation adjustments	—			(18.4		)	—			—
Accretion expense	—			60.7			15.2			0.2
Premium written for third-party risk assumed	—			—			—			24.0
Reclassified to ceded insurance reserves	—			—			—			(20.0		)
Net additions charged to expense	24.4			—			3.3			335.8
Payments or usage	(29.1		)	(42.5		)	(30.2		)	(332.3		)
Balance as of September 30, 2018	34.5			1,289.9			552.3			427.9
Less: current portion	(34.5		)	(94.2		)	(74.1		)	(152.1		)
Long-term portion	$	—		$	1,195.7		$	478.2		$	275.8



	Gross Property and Equipment
	Balance as of December 31, 2017		Capital Additions		Retirements			Acquisitions, Net of Divestitures			Non-cash Additions for Asset Retirement Obligations		Adjustments for Asset Retirement Obligations			Impairments, Transfers and Other Adjustments			Balance as of September 30, 2018
Land	$	433.2	$	3.5	$	(0.5	)	$	2.7		$	—	$	—		$	(0.4	)	$	438.5
Non-depletable landfill land	166.9		0.2		(0.7		)	(0.1		)	—		—			1.1			167.4
Landfill development costs	6,757.3		2.7		—			15.4			32.9		(18.4		)	133.0			6,922.9
Vehicles and equipment	6,954.3		507.6		(207.3		)	1.5			—		—			20.3			7,276.4
Buildings and improvements	1,221.5		14.2		(4.3		)	3.5			0.1		—			31.0			1,266.0
Construction-in- progress - landfill	233.2		243.7		—			—			—		—			(131.9		)	345.0
Construction-in- progress - other	55.7		62.7		—			0.2			—		—			(56.5		)	62.1
Total	$	15,822.1	$	834.6	$	(212.8	)	$	23.2		$	33.0	$	(18.4	)	$	(3.4	)	$	16,478.3


	Accumulated Depreciation, Amortization and Depletion
	Balance as of December 31, 2018		Additions Charged to Expense		Retirements		Acquisitions, Net of Divestitures		Adjustments for Asset Retirement Obligations		Impairments, Transfers and Other Adjustments		Balance as of September 30, 2019
Landfill development costs	$	(3,635.9)	$	(258.7)	$	—	$	—	$	(0.3)	$	—	$	(3,894.9)
Vehicles and equipment	(4,571.1)		(440.1)		234.4		12.1		—		23.4		(4,741.3)
Buildings and improvements	(524.9)		(46.5)		7.1		1.0		—		(0.5)		(563.8)
Total	$	(8,731.9)	$	(745.3)	$	241.5	$	13.1	$	(0.3)	$	22.9	$	(9,200.0)


~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~


	Total Number of Shares Purchased (a)	Average Price Paid per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Program (b)	Dollar Value of Shares that May Yet Be Purchased Under the Program (c)
July 1 - 31	77,596	$	86.65	77,596	$	894,870,236
August 1 - 31	838,889	$	87.75	838,889	$	821,258,964
September 1 - 30	824,999	$	86.01	824,999	$	750,303,067
	1,741,484			1,741,484


~~(b)~~	~~The total number of shares purchased as part of the publicly announced program were all purchased pursuant to the October 2017 authorization.~~


~~(c)~~	Shares that may be purchased under the program exclude shares of common stock that may be surrendered to satisfy statutory minimum tax withholding obligations in connection with the vesting of restricted stock units issued to employees.


~~ITEM 6.~~Exhibit Number			~~EXHIBITS.~~			Description of Exhibit



~~Exhibit Number~~						~~Description of Exhibit~~










~~31.1~~4.1**						Limited consent (2018 Credit Agreement), dated as of August 21, 2019, by and among Republic Services, Inc., as Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the lenders party thereto.

31.1 *						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2*						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1*						Section 1350 Certification of Chief Executive Officer.

32.2*						Section 1350 Certification of Chief Financial Officer.

101.INS*						XBRL Instance Document. - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						XBRL Taxonomy Extension Schema Document.

101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*						XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.

104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).