Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			62
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (PCAOB ID: 42)			64
Consolidated Balance Sheets as of December 31, 2022 and 2021			65
Consolidated Statements of Income for Each of the Three Years in the Period Ended December 31, 2022			66
Consolidated Statements of Comprehensive Income for Each of the Three Years in the Period Ended December 31, 2022			67
Consolidated Statements of Stockholders' Equity for Each of the Three Years in the Period Ended December 31, 2022			68
Consolidated Statements of Cash Flows for Each of the Three Years in the Period Ended December 31, 2022			69
Notes to Consolidated Financial Statements			70

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Republic Services, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Republic Services, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

						Landfill Development Asset Amortization
Description of the Matter						At December 31, 2022, the net book value of the Company’s landfill development assets totaled $4,515.3 million, and the associated landfill development asset amortization expense for 2022 was $433.7 million. Significant assumptions used in calculating the amortization expense include estimated future development costs associated with the land, permitting, cell construction and environmental structures of the landfill in relation to airspace consumed to date and total estimated available airspace. These assumptions have a significant effect on the total landfill amortization expense. As discussed in Note 2 to the consolidated financial statements, costs and airspace estimates are developed at least annually, or more often if significant facts change.

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How We Addressed the Matter in Our Audit						Auditing landfill development asset amortization expense is complex due to the highly judgmental nature of the assumptions used in the calculation of the expense and required the involvement of specialists to assist us with evaluating estimated future development costs and certain assumptions to project total estimated available airspace.
						We tested controls that address the risks of material misstatement relating to the measurement and valuation of landfill development asset amortization expense. For example, we tested controls over the estimation of future landfill development costs and management’s review of the assumptions to project total estimated available airspace.
						To test the landfill development asset amortization expense, our audit procedures included, among others, assessing methodologies and testing the significant assumptions discussed above related to the underlying cost and airspace data used by the Company. We compared the significant assumptions used by management to historical trends and, when available, to comparable size landfills accepting the same type of waste. We also tested the completeness and accuracy of the historical data utilized in the development of the amortization expense. Regarding available airspace, we evaluated the Company’s estimation of the landfill disposal capacity through a comparison of airspace to historical estimates and annual aerial surveys. We involved EY engineering specialists to assist us with evaluating estimated future development costs and certain assumptions to project total estimated available airspace.
						Landfill Final Capping, Closure and Post-Closure Costs
Description of the Matter						At December 31, 2022, the carrying value of the Company’s landfill final capping, closure and post-closure costs totaled $1,786.4 million. As discussed in Notes 2 and 8 to the consolidated financial statements, asset retirement obligations for final capping, closure and post-closure are measured at their estimated fair value. Management updates the assumptions used to estimate asset retirement obligations at least annually, or more often if significant facts change. These assumptions include estimated future costs associated with the final capping, closure and post-closure activities at each landfill, airspace consumed to date, estimated available airspace, projected annual tonnage volume, projected timing of capping, closure and post-closure activities and estimated inflation and discount rates. These assumptions have a significant effect on the estimated asset retirement obligation.
How We Addressed the Matter in Our Audit						Auditing the landfill asset retirement obligation is complex due to the highly judgmental nature of the assumptions used in the measurement process and required the involvement of specialists to assist us with evaluating the costs estimated for the capping, closure and post-closure activities and certain assumptions to project total estimated available airspace.
						We tested controls that address the risks of material misstatement relating to the completeness, measurement and valuation of the asset retirement obligation. For example, we tested controls over management’s development of the landfill asset retirement obligation models to estimate the future liability and management’s review of data inputs and projections.
						To test the landfill asset retirement obligation, our audit procedures included, among others, assessing methodologies used by the Company, testing the completeness of activities included in the estimate (e.g., gas monitoring and leachate management) and testing the significant assumptions discussed above, as well as the underlying costs and other estimates used by the Company in its development of these assumptions. We compared the significant assumptions used by management to historical trends and, when available, to comparable size landfills accepting the same type of waste. We also tested the completeness and accuracy of the historical data utilized in preparing the estimate. We involved EY engineering specialists to assist us with evaluating the costs estimated for the capping, closure and post-closure activities and the reasons for significant changes in assumptions from historical trends and determined whether the change from the historical trend was appropriate and identified timely. EY engineering specialists were also involved in evaluating certain assumptions to project total estimated available airspace.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Phoenix, Arizona

February 22, 2023

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Republic Services, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Republic Services, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Republic Services, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Republic Services, Inc. as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 22, 2023, expressed an unqualified opinion thereon.

As indicated in the accompanying Report of Management on Republic Services, Inc.’s Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of US Ecology, which are included in the 2022 consolidated financial statements of the Company and constituted approximately 6% of revenues for the year ended December 31, 2022. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of US Ecology.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Republic Services, Inc.’s Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Phoenix, Arizona

February 22, 2023

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REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

			December 31, 2022						December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents			$	143.4					$	29.0
Accounts receivable, less allowance for doubtful accounts and other of $51.9 and $38.5, respectively			1,677.2						1,271.4
Prepaid expenses and other current assets			536.5						410.4
Total current assets			2,357.1						1,710.8
Restricted cash and marketable securities			127.6						139.0
Property and equipment, net			10,744.0						9,232.1
Goodwill			14,451.5						12,826.0
Other intangible assets, net			347.2						259.5
Other assets			1,025.5						787.6
Total assets			$	29,052.9					$	24,955.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	1,221.8					$	910.0
Notes payable and current maturities of long-term debt			456.0						8.2
Deferred revenue			443.0						381.3
Accrued landfill and environmental costs, current portion			132.6						124.5
Accrued interest			79.0						62.1
Other accrued liabilities			1,058.3						929.5
Total current liabilities			3,390.7						2,415.6
Long-term debt, net of current maturities			11,329.5						9,546.2
Accrued landfill and environmental costs, net of current portion			2,141.3						1,837.7
Deferred income taxes and other long-term tax liabilities, net			1,528.8						1,229.5
Insurance reserves, net of current portion			315.1						303.9
Other long-term liabilities			660.7						642.4
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 50 shares authorized; none issued			—						—
Common stock, par value $0.01 per share; 750 shares authorized; 320.3 and 319.6 issued including shares held in treasury, respectively			3.2						3.2
Additional paid-in capital			2,843.2						2,789.5
Retained earnings			7,356.3						6,475.6
Treasury stock, at cost; 4.2 and 2.4 shares, respectively			(504.6)						(274.8)
Accumulated other comprehensive income, net of tax			(12.1)						(14.6)
Total Republic Services, Inc. stockholders’ equity			9,686.0						8,978.9
Non-controlling interests in consolidated subsidiary			0.8						0.8
Total stockholders’ equity			9,686.8						8,979.7
Total liabilities and stockholders’ equity			$	29,052.9					$	24,955.0

The accompanying notes are an integral part of these financial statements.

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REPUBLIC SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)

			Years Ended December 31,
			2022						2021						2020
Revenue			$	13,511.3					$	11,295.0					$	10,153.6
Expenses:
Cost of operations			8,205.0						6,737.7						6,100.5
Depreciation, amortization and depletion			1,351.6						1,185.5						1,075.9
Accretion			89.6						82.7						82.9
Selling, general and administrative			1,454.3						1,195.8						1,053.0
Adjustment to withdrawal liability for multiemployer pension funds			(1.6)						—						34.5
(Gain) loss on business divestitures and impairments, net			(6.3)						0.5						77.7
Restructuring charges			27.0						16.6						20.0
Operating income			2,391.7						2,076.2						1,709.1
Interest expense			(395.6)						(314.6)						(355.6)
Loss from unconsolidated equity method investments			(165.6)						(188.5)						(118.2)
Loss on extinguishment of debt			—						—						(101.9)
Interest income			3.3						2.5						5.2
Other (expense) income, net			(2.3)						(0.5)						4.1
Income before income taxes			1,831.5						1,575.1						1,142.7
Provision for income taxes			343.9						282.8						173.1
Net income			1,487.6						1,292.3						969.6
Net income attributable to non-controlling interests in consolidated subsidiary			—						(1.9)						(2.4)
Net income attributable to Republic Services, Inc.			$	1,487.6					$	1,290.4					$	967.2
Basic earnings per share attributable to Republic Services, Inc. stockholders:
Basic earnings per share			$	4.70					$	4.05					$	3.03
Weighted average common shares outstanding			316.5						318.8						319.3
Diluted earnings per share attributable to Republic Services, Inc. stockholders:
Diluted earnings per share			$	4.69					$	4.04					$	3.02
Weighted average common and common equivalent shares outstanding			317.1						319.4						319.8
Cash dividends per common share			$	1.91					$	1.77					$	1.66

The accompanying notes are an integral part of these financial statements.

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REPUBLIC SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

			Years Ended December 31,
			2022						2021						2020
Net income			$	1,487.6					$	1,292.3					$	969.6
Other comprehensive income (loss), net of tax
Hedging activity:
Realized loss reclassified into earnings			1.1						4.6						5.8
Unrealized gain (loss)			8.4						—						(22.5)
Pension activity:
Change in funded status of pension plan obligations			(2.0)						(6.8)						2.1
Foreign currency activity:
Loss on foreign currency translation			(5.0)						—						—
Other comprehensive income (loss), net of tax			2.5						(2.2)						(14.6)
Comprehensive income			1,490.1						1,290.1						955.0
Comprehensive income attributable to non-controlling interests			—						(1.9)						(2.4)
Comprehensive income attributable to Republic Services, Inc.			$	1,490.1					$	1,288.2					$	952.6

The accompanying notes are an integral part of these financial statements.

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REPUBLIC SERVICES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions)

			Republic Services, Inc. Stockholders’ Equity
			Common Stock												Additional Paid-In Capital						Retained Earnings						Treasury Stock												Accumulated Other Comprehensive Income (Loss), Net of Tax						Non-controlling Interests In Consolidated Subsidiary						Total
			Shares						Amount												Shares						Amount
Balance as of December 31, 2019			353.3						$	3.5					$	4,994.8					$	5,317.3					(34.5)						$	(2,199.6)					$	2.2					$	2.7					$	8,120.9
Net income			—						—						—						967.2						—						—						—						2.4						969.6
Change in the value of derivative instruments, net of tax of $(5.9)			—						—						—						—						—						—						(16.7)						—						(16.7)
Employee benefit plan liability adjustments, net of tax of $0.8			—						—						—						—						—						—						2.1						—						2.1
Cash dividends declared			—						—						—						(528.8)						—						—						—						—						(528.8)
Issuances of common stock			1.3						—						21.6						—						(0.1)						(17.7)						—						—						3.9
Stock-based compensation			—						—						40.7						(3.9)						—						—						—						—						36.8
Purchase of common stock for treasury			—						—						—						—						(1.2)						(98.8)						—						—						(98.8)
Shares returned to unissued status			(35.8)						(0.3)						(2,315.7)						—						35.8						2,316.0						—						—						—
Distributions paid			—						—						—						—						—						—						—						(0.2)						(0.2)
Balance as of December 31, 2020			318.8						3.2						2,741.4						5,751.8						—						(0.1)						(12.4)						4.9						8,488.8
Net income			—						—						—						1,290.4						—						—						—						1.9						1,292.3
Change in the value of derivative instruments, net of tax of $1.6			—						—						—						—						—						—						4.6						—						4.6
Employee benefit plan liability adjustments, net of tax of $(2.4)			—						—						—						—						—						—						(6.8)						—						(6.8)
Cash dividends declared			—						—						—						(563.0)						—						—						—						—						(563.0)
Issuances of common stock			0.8						—						10.5						—						(0.2)						(22.5)						—						—						(12.0)
Stock-based compensation			—						—						60.3						(3.6)						—						—						—						—						56.7
Purchase of common stock for treasury			—						—						—						—						(2.2)						(252.2)						—						—						(252.2)
Purchase of minority interest			—						—						(22.7)						—						—						—						—						(4.8)						(27.5)
Distributions paid			—						—						—						—						—						—						—						(1.2)						(1.2)
Balance as of December 31, 2021			319.6						3.2						2,789.5						6,475.6						(2.4)						(274.8)						(14.6)						0.8						8,979.7
Net income			—						—						—						1,487.6						—						—						—						—						1,487.6
Change in the value of derivative instruments, net of tax of $3.4			—						—						—						—						—						—						9.5						—						9.5
Employee benefit plan liability adjustments, net of tax of $(0.7)			—						—						—						—						—						—						(2.0)						—						(2.0)
Gain (loss) on foreign currency translation			—						—						—						—						—						—						(5.0)						—						(5.0)
Cash dividends declared			—						—						—						(603.4)						—						—						—						—						(603.4)
Issuances of common stock			0.7						—						12.7						—						(0.2)						(26.3)						—						—						(13.6)
Stock-based compensation			—						—						41.8						(3.5)						—						—						—						—						38.3
Purchase of common stock for treasury			—						—						—						—						(1.6)						(203.5)						—						—						(203.5)
Distributions paid			—						—						(0.8)						—						—						—						—						—						(0.8)
Balance as of December 31, 2022			320.3						$	3.2					$	2,843.2					$	7,356.3					(4.2)						$	(504.6)					$	(12.1)					$	0.8					$	9,686.8

The accompanying notes are an integral part of these financial statements.

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REPUBLIC SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

			Years Ended December 31,
			2022						2021						2020
Cash provided by operating activities:
Net income			$	1,487.6					$	1,292.3					$	969.6
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization, depletion and accretion			1,441.2						1,268.2						1,158.8
Non-cash interest expense			71.6						70.5						61.7
Stock-based compensation			38.8						57.0						37.3
Deferred tax provision (benefit)			181.1						(15.5)						60.8
Provision for doubtful accounts, net of adjustments			41.5						19.9						27.8
Loss on extinguishment of debt			—						—						101.9
(Gain) loss on disposition of assets and asset impairments, net			(9.2)						0.4						75.5
Environmental adjustments			2.9						0.5						5.1
Loss from unconsolidated equity method investments			165.6						188.5						118.2
Other non-cash items			(0.1)						(1.1)						(3.8)
Change in assets and liabilities, net of effects from business acquisitions and divestitures:
Accounts receivable			(198.8)						(135.4)						13.8
Prepaid expenses and other assets			(83.8)						(57.0)						6.5
Accounts payable			106.4						113.8						(46.7)
Capping, closure and post-closure expenditures			(64.6)						(59.6)						(58.6)
Remediation expenditures			(54.7)						(57.1)						(63.5)
Other liabilities			64.5						101.3						18.6
Payments from retirement of certain hedging relationships			—						—						(11.4)
Cash provided by operating activities			3,190.0						2,786.7						2,471.6
Cash used in investing activities:
Purchases of property and equipment			(1,454.0)						(1,316.3)						(1,194.6)
Proceeds from sales of property and equipment			32.8						19.5						30.1
Cash used in acquisitions and investments, net of cash and restricted cash acquired			(3,038.5)						(1,221.7)						(769.5)
Cash received from business divestitures			50.6						46.3						32.9
Purchases of restricted marketable securities			(19.6)						(30.8)						(32.9)
Sales of restricted marketable securities			19.7						37.9						11.2
Other			(14.0)						(1.0)						—
Cash used in investing activities			(4,423.0)						(2,466.1)						(1,922.8)
Cash provided by (used in) financing activities:
Proceeds from credit facilities and notes payable, net of fees			16,446.3						5,154.3						2,625.5
Proceeds from issuance of senior notes, net of discount and fees			—						692.3						2,716.1
Payments of credit facilities and notes payable			(14,281.7)						(5,304.5)						(5,221.4)
Premiums paid on extinguishment of debt			—						—						(99.1)
Issuances of common stock, net			(13.6)						(12.0)						3.9
Purchases of common stock for treasury			(203.5)						(252.2)						(98.8)
Cash dividends paid			(592.9)						(552.6)						(522.5)
Distributions paid to non-controlling interests in consolidated subsidiary			(0.8)						(33.2)						(0.2)
Contingent consideration payments			(9.6)						(21.3)						(15.5)
Cash provided by (used in) financing activities			1,344.2						(329.2)						(612.0)
Effect of foreign exchange rate changes on cash			(2.5)						—						—
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents			108.7						(8.6)						(63.2)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year			105.6						114.2						177.4
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year			$	214.3					$	105.6					$	114.2

The accompanying notes are an integral part of these financial statements.

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REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**1.**BASIS OF PRESENTATION

Republic Services, Inc., a Delaware corporation, and its consolidated subsidiaries (also referred to collectively as Republic, the Company, we, us, or our), is one of the largest providers of environmental services in the United States, as measured by revenue. Our senior management evaluates, oversees and manages the financial performance of our operations through three field groups, referred to as Group 1, Group 2 and Group 3. Group 1 is our recycling and solid waste business operating primarily in geographic areas located in the western United States. Group 2 is our recycling and solid waste business operating primarily in geographic areas located in the southeastern and mid-western United States and the eastern seaboard of the United States. Group 3 is our environmental solutions business operating in geographic areas located primarily across the United States and Canada. These groups represent our reportable segments, which each provide integrated environmental services, including but not limited to collection, transfer, recycling and disposal. Prior to the third quarter of 2022, our environmental solutions operating segment, now referred to as our Group 3 reportable segment, was aggregated with Corporate entities and other.

The consolidated financial statements include the accounts of Republic Services, Inc. and its wholly owned and majority owned subsidiaries in accordance with U.S. GAAP. We account for investments in entities in which we do not have a controlling financial interest under the equity method of accounting or, for investments that do not meet the criteria to be accounted for under the equity method, we reflect these investments at their fair value when it is readily determinable. If fair value is not readily determinable, we use an alternative measurement approach. All material intercompany accounts and transactions have been eliminated in consolidation.

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.

**2.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management’s Estimates and Assumptions

In preparing our financial statements, we make numerous estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. We must make these estimates and assumptions because certain information we use is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. In preparing our financial statements, the more critical and subjective areas that deal with the greatest amount of uncertainty relate to our accounting for our long-lived assets, including recoverability, landfill development costs and final capping, closure and post-closure costs; our valuation allowances for accounts receivable and deferred tax assets; our liabilities for potential litigation, claims and assessments; our liabilities for environmental remediation, multiemployer pension plans, 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 elsewhere in these Notes to Consolidated Financial Statements. Our actual results may differ significantly from our estimates.

Cash and Cash Equivalents

We consider liquid investments with a maturity at the date of acquisition of three months or less to be cash equivalents.

We may have net book credit balances in our primary disbursement accounts at the end of a reporting period. We classify such credit balances as accounts payable in our consolidated balance sheets as checks presented for payment to these accounts are not payable by our banks under overdraft arrangements, and, therefore, do not represent short-term borrowings. As of December 31, 2022 and 2021, there were net book credit balances of $143.5 million and $39.0 million, respectively, in our primary disbursement accounts that were classified as accounts payable on our consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents, trade accounts receivable and derivative instruments. We place our cash and cash equivalents with high quality financial institutions. Such balances may be in excess of FDIC insured limits. To manage the related credit exposure, we continually monitor the credit worthiness of the financial institutions where we have deposits. Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers and markets in which we provide services, as well as the dispersion of our operations across many geographic areas. We provide services to small-container, large-container, municipal and residential and environmental solutions customers primarily in the United States and Canada. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables. We establish an allowance

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for doubtful accounts based on various factors including the credit risk of specific customers, age of receivables outstanding, historical trends, economic conditions and other information.

Accounts Receivable, Net

Accounts receivable represents receivables from customers for environmental services, including collection and processing of recyclable materials, collection, transfer and disposal of solid waste and environmental solutions. Our receivables are recorded when billed or when the related revenue is earned and represent claims against third parties that will be settled in cash. The carrying value of our receivables, net of the allowance for doubtful accounts and customer credits, represents their estimated net realizable value.

We establish an allowance for doubtful accounts based on various factors including the age of receivables outstanding, historical trends, economic conditions and other information. We also review outstanding balances on an account-specific basis based on the credit risk of the customer. We determined that all of our accounts receivable share similar risk characteristics. We monitor our credit exposure on an ongoing basis and assess whether assets in the pool continue to display similar risk characteristics. We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables.

The following table reflects the activity in our allowance for doubtful accounts for the years ended December 31:

			2022						2021						2020
Balance at beginning of year			$	38.5					$	34.7					$	34.0
Additions charged to expense			41.5						19.9						27.8
Accounts written-off			(28.1)						(16.1)						(27.1)
Balance at end of year			$	51.9					$	38.5					$	34.7

Restricted Cash and Marketable Securities

As of December 31, 2022, we had $127.6 million of restricted cash and marketable securities of which $88.5 million supports our insurance programs for workers' compensation, commercial general liability and commercial auto liability. Additionally, we obtain funds through the issuance of tax-exempt bonds for the purpose of financing qualifying expenditures at our landfills, transfer stations, collection and recycling centers. The funds are deposited directly into trust accounts by the bonding authorities at the time of issuance. As the use of these funds is contractually restricted, and we do not have the ability to use these funds for general operating purposes, they are classified as restricted cash and marketable securities in our consolidated balance sheets.

In the normal course of business, we may be required to provide financial assurance to governmental agencies and a variety of other entities in connection with, among other things, municipal residential collection contracts, closure or post-closure of landfills, environmental remediation, environmental permits and business licenses and permits as a financial guarantee of our performance. At several of our landfills, we satisfy financial assurance requirements by depositing cash into restricted trust funds or escrow accounts.

Property and Equipment

We record property and equipment at cost. Expenditures for major additions and improvements to facilities are capitalized, while maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of income.

We revise the estimated useful lives of property and equipment acquired through business acquisitions to conform with our policies. We depreciate assets over their estimated useful lives using the straight-line method. We assume no salvage value for our depreciable property and equipment. The estimated useful lives of our property and equipment are as follows:

Buildings and improvements			5 - 30 years
Vehicles			5 - 20 years
Landfill equipment			5 - 7 years
Other equipment			3 - 25 years
Furniture and fixtures			3 - 10 years

Landfill development costs also are included in property and equipment. Landfill development costs include direct costs incurred to obtain landfill permits and direct costs incurred to acquire, construct and develop sites, as well as final capping,

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closure and post-closure assets. These costs are amortized or depleted based on consumed airspace. All indirect landfill development costs are expensed as incurred. For additional information, see Note 8, Landfill and Environmental Costs.

Capitalized Interest

We capitalize interest on all landfill cell construction and other construction or development projects. Interest is capitalized on qualified assets while they undergo activities to ready them for their intended use. Capitalization of interest ceases once an asset is placed into service or if construction activity is suspended for more than a brief period of time. Our interest capitalization rate is based on our weighted average cost of indebtedness. Interest capitalized was $5.0 million for each of the years ended December 31, 2022 and 2021, and $6.2 million for the year ended December 31, 2020.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, restricted cash and marketable securities, interest rate hedges and other derivatives, long-term debt, contingent consideration arrangements and assets in our defined benefit pension plan. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:

• Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

• Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

See Note 12, Employee Benefit Plans, and Note 18, Financial Instruments, for fair value disclosures related to our defined benefit pension plan investments and financial instruments, respectively.

Investments Other Than Derivatives

Investments other than derivatives primarily include money market funds, common stock, mutual funds, real estate investment trusts, United States government and agency securities, municipal and corporate bonds and foreign government bonds. In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology applies to our Level 1 investments, such as money market funds, common stock and certain mutual funds. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. These investments are included in Level 2 and consist primarily of corporate bonds, foreign government bonds, real estate investment trusts and certain agency securities.

Derivative Financial Instruments

We use derivative financial instruments to manage our risk associated with changing interest rates by creating offsetting market exposures. We use interest rate swap agreements designated as fair value hedges to manage risk associated with fluctuations in interest rates. In prior periods, we entered into multiple agreements designated as cash flow hedges to lock interest rates in anticipation of future debt issuance. In connection with our acquisition of US Ecology, in the second quarter of 2022, we acquired and novated a floating-to-fixed interest rate swap agreement that is designated as a cash flow hedge.

All derivatives are measured at fair value using standard valuation models with assumptions about prices and other relevant information based on those observed in the underlying markets (Level 2 in the fair value hierarchy). These instruments are recognized in the balance sheet as assets or liabilities, as appropriate. The estimated fair values of derivatives used to hedge risks fluctuate over time and should be viewed in relation to the underlying hedged transactions.

For derivative instruments designated as fair value hedges, to the extent they are effective, they are included as an adjustment to long-term debt in our consolidated balance sheets. Changes in fair value of the ineffective portions are recognized currently in earnings. For derivatives designated as cash flow hedges, changes in fair value of the effective portions of derivative instruments are reported in stockholders’ equity as components of other comprehensive income until the forecasted transaction occurs or is not probable of occurring. When the forecasted transaction occurs or is not probable of occurring, the realized net

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gain or loss is then recognized in the consolidated statements of income. Changes in fair value of the ineffective portions are recognized currently in earnings*.*

Landfill and Environmental Costs

Life Cycle Accounting

We use life-cycle accounting and the units-of-consumption method to recognize certain landfill costs over the life of the site. In life cycle accounting, all current and future capitalized costs to acquire and construct a site are calculated, and charged to expense based on the consumption of cubic yards of available airspace.

Costs and airspace estimates are developed at least annually by engineers. We use these estimates to adjust the rates we use to deplete capitalized costs. Changes in these estimates primarily relate to changes in cost estimates, available airspace, inflation and applicable regulations. Changes in available airspace include, but are not limited to, changes due to the addition of airspace attributable to probable expansion areas, airspace consumed and changes in engineering estimates.

Probable Expansion Airspace

We classify landfill disposal capacity as either permitted (having received the final permit from the applicable regulatory agency) or as probable expansion airspace. Before airspace included in an expansion area is determined to be probable expansion airspace and, therefore, is included in our calculation of total available disposal capacity, all of the following criteria must be met:

• We own the land associated with the expansion airspace or control it pursuant to an option agreement;

• We are committed to supporting the expansion project financially and with appropriate resources;

• There are no identified fatal flaws or impediments associated with the project, including political impediments;

• Progress is being made on the project;

• The expansion is attainable within a reasonable time frame; and

• We believe it is likely the expansion permit will be received.

Upon meeting our expansion criteria, the rates used at each applicable landfill to expense costs to acquire, construct, cap, close and maintain a site during the post-closure period are adjusted to include both the probable expansion airspace and the additional costs to be capitalized or accrued associated with that expansion airspace.

We have identified three steps that landfills generally follow to obtain expansion permits. These steps are as follows:

• Obtaining approval from local authorities;

• Submitting a permit application to state authorities; and

• Obtaining permit approval from state authorities.

We continually monitor our progress toward obtaining permits for each of our sites with probable airspace. If we determine that a landfill expansion area no longer meets our criteria, the probable expansion airspace is removed from the landfill’s total available capacity and the rates used at the landfill to deplete costs to acquire, construct, cap, close and maintain a site during the post-closure period are adjusted accordingly. In addition, any amounts capitalized for the probable expansion airspace are charged to expense in the period in which it is determined that the criteria are no longer met.

Capitalized Landfill Costs

Capitalized landfill costs include expenditures for land, permitting, cell construction and environmental structures. Capitalized permitting and cell construction costs are limited to direct costs relating to these activities, including legal, engineering and construction costs associated with excavation, natural and synthetic liners, construction of leachate collection systems, installation of methane gas collection and monitoring systems, installation of groundwater monitoring wells and other costs associated with the development of the site. Interest is capitalized on landfill construction projects while the assets are undergoing activities to ready them for their intended use. Capitalized landfill costs also include final capping, closure and post-closure assets and are depleted as airspace is consumed using the units-of-consumption method.

Costs related to acquiring land, excluding the estimated residual value of unpermitted, non-buffer land, and costs related to permitting and cell construction are depleted as airspace is consumed using the units-of-consumption method.

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Capitalized landfill costs also may include an allocation of purchase price paid for landfills. For landfills purchased as part of a group of assets, the purchase price assigned to the landfill is determined based on the estimated fair value of the landfill. If the landfill meets our expansion criteria, the purchase price is further allocated between permitted airspace and expansion airspace based on the respective ratios to total available airspace. Landfill purchase price is amortized using the units-of-consumption method over the total available airspace, including probable expansion airspace, where appropriate.

Final Capping, Closure and Post-Closure Costs

Final capping

We have future obligations for final capping, closure and post-closure costs with respect to the landfills we own or operate as set forth in applicable landfill permits. The permit requirements are based on the Subtitle C and Subtitle D regulations of the Resource Conservation and Recovery Act, as implemented and applied on a state-by-state basis. We define final capping as activities required to permanently cover a portion of a landfill that has been completely filled with waste. Final capping typically includes installing flexible membrane and geosynthetic clay liners, drainage and compact soil layers and topsoil and is constructed over an area of the landfill where total airspace capacity has been consumed and waste disposal operations have ceased. These final capping activities occur in phases as needed throughout the operating life of a landfill as specific areas are filled to capacity and the final elevation for that specific area is reached in accordance with the provisions of the operating permit. We consider final capping events to be discrete activities that are recognized as asset retirement obligations separately from other closure and post-closure obligations. As a result, we use a separate rate per ton for recognizing the principal amount of the liability and related asset associated with each capping event. We amortize the asset recorded pursuant to this approach as waste volume related to the capacity covered by the capping event is placed into the landfill based on the consumption of cubic yards of available airspace.

Closure and post-closure

Closure and post-closure activities occur after the entire landfill ceases to accept waste and closes. These activities involve methane gas control, leachate management and groundwater monitoring, surface water monitoring and control and other operational and maintenance activities that occur after the site ceases to accept waste. Obligations associated with monitoring and controlling methane gas migration and emissions are set forth in applicable landfill permits and these requirements are based on the provisions of the Clean Air Act. The post-closure period generally runs for 30 years after final site closure for municipal solid waste landfills and a shorter period for construction and demolition landfills and inert landfills. We recognize asset retirement obligations and the related amortization expense for closure and post-closure (excluding obligations for final capping) using the units-of-consumption method over the total remaining capacity of the landfill, including probable expansion airspace, where appropriate.

Estimated future expenditures

Estimates of future expenditures for final capping, closure and post-closure are developed at least annually by engineers. Management reviews these estimates and our operating and accounting personnel use them to adjust the rates used to capitalize and amortize these costs. These estimates involve projections of costs that will be incurred during the remaining life of the landfill for final capping activities, after the landfill ceases operations and during the legally required post-closure monitoring period. As of December 31, 2022, we had 128 closed landfills.

Fair value measurements

In general, we engage third parties to perform most of our final capping, closure and post-closure activities. Accordingly, the fair value of these activities is based on quoted and actual prices paid for similar work. We also perform some of our final capping, closure and post-closure activities using internal resources. Where we expect internal resources to be used to fulfill an asset retirement obligation, we add a profit margin to the estimated cost of such services to better reflect their fair value. If we perform these services internally, the added profit margin is recognized as a component of operating income in the period the obligation is settled.

Our estimates of costs to discharge asset retirement obligations for landfills are developed in today’s dollars. These costs are inflated each year to reflect a normal escalation of prices up to the year they are expected to be paid. We used a 1.9% inflation rate for the year ended December 31, 2022 and a 1.7% inflation rate for both the years ended December 31, 2021 and 2020, which is based on the ten-year historical moving average increase of the United States Consumer Price Index. These estimated costs are then discounted to their present values using a credit-adjusted, risk-free interest rate.

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Changes in assets retirement obligations

A liability for an asset retirement obligation is recognized in the period in which it is incurred and is initially measured at fair value. The offset to the liability is capitalized as part of the carrying amount of the related long-lived asset. Changes in the liabilities due to revisions to estimated future cash flows are recognized by increasing or decreasing the liabilities with the offsets adjusting the carrying amounts of the related long-lived assets, and may also require immediate adjustments to amortization expense in the consolidated statements of income. Upward revisions in the amount of undiscounted estimated cash flows used to record a liability are discounted using the credit-adjusted, risk-free interest rate in effect at the time of the change. Downward revisions in the amount of undiscounted estimated cash flows used to record a liability are discounted using the credit-adjusted, risk-free rate that existed when the original liability was recognized.

Changes in asset retirement obligations due to the passage of time are measured by recognizing accretion expense in a manner that results in a constant effective interest rate being applied to the average carrying amount of the liability. The effective interest rate used to calculate accretion expense is our credit-adjusted, risk-free interest rate in effect at the time the liabilities were recorded.

We review our calculations with respect to landfill asset retirement obligations at least annually. If there is a significant change in the facts and circumstances related to a landfill during the year, we will review our calculations for the landfill as soon as practical after the change has occurred.

Landfill operating expenses

Costs associated with daily maintenance activities and environmental compliance during the operating life of the landfill are expensed as incurred. These costs include, among other things, leachate treatment and disposal, methane gas and groundwater monitoring and systems maintenance, interim cap maintenance, costs associated with the application of daily cover materials and the legal and administrative costs of ongoing environmental compliance.

Environmental Liabilities

We are subject to an array of laws and regulations relating to the protection of the environment, and we remediate sites in the ordinary course of our business. Under current laws and regulations, we may be responsible for environmental remediation at sites that we either own or operate, including sites that we have acquired, or sites where we have (or a company that we have acquired has) delivered waste. Our environmental remediation liabilities primarily include costs associated with remediating groundwater, surface water and soil contamination, as well as controlling and containing methane gas migration and the related legal costs. To estimate our ultimate liability at these sites, we evaluate several factors, including the nature and extent of contamination at each identified site, the required remediation methods, timing of expenditures, the apportionment of responsibility among the potentially responsible parties and the financial viability of those parties. We accrue for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable in accordance with accounting for loss contingencies. We periodically review the status of all environmental matters and update our estimates of the likelihood of and future expenditures for remediation as necessary. Changes in the liabilities resulting from these reviews are recognized currently in earnings in the period in which the adjustment is known. Adjustments to estimates are reasonably possible in the near term and may result in changes to recorded amounts. With the exception of those obligations assumed in certain business combinations, environmental obligations are recorded on an undiscounted basis. Adjustments arising from changes in amounts and timing of estimated costs and settlements may result in increases or decreases in these obligations and are calculated on a discounted basis as they were initially estimated on a discounted basis. These adjustments are charged to operating income when they are known. We perform a comprehensive review of our environmental obligations annually and also review changes in facts and circumstances associated with these obligations at least quarterly. We have not reduced the liabilities we have recorded for recoveries from other potentially responsible parties or insurance companies.

Business Combinations

We acquire businesses in the environmental services industry as part of our growth strategy. Businesses are included in the consolidated financial statements from the date of acquisition.

We recognize, separately from goodwill, the identifiable assets acquired and liabilities assumed at their estimated acquisition-date fair values. We measure and recognize goodwill as of the acquisition date as the excess of: (1) the aggregate of the fair value of consideration transferred, the fair value of any non-controlling interest in the acquiree (if any) and the acquisition date fair value of our previously held equity interest in the acquiree (if any), over (2) the fair value of assets acquired and liabilities assumed. If information about facts and circumstances existing as of the acquisition date is incomplete by the end of the reporting period in which a business combination occurs, we report provisional amounts for the items for which the accounting is incomplete. The measurement or allocation period ends once we receive the information we are seeking; however, this period will generally not exceed one year from the acquisition date. Any material adjustments recognized during the measurement

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period will be reflected retrospectively in the consolidated financial statements of the subsequent period. We recognize third-party transaction related costs as expense currently in the period in which they are incurred.

Goodwill and Other Intangible Assets

We evaluate goodwill for impairment annually as of October 1st, or when an indicator of impairment exists, at the reporting unit level. Our reporting units are our three field groups: Group 1, Group 2 and Group 3 (formerly Environmental Solutions).

We may use both qualitative and quantitative approaches when testing goodwill for impairment. If, after assessing qualitative factors, we determine it is more likely than not that a reporting unit's goodwill is impaired, then we perform a quantitative test for that reporting unit. The quantitative impairment test for goodwill encompasses calculating a fair value of goodwill and comparing the fair value to its carrying value. If the carrying value exceeds the fair value, impairment is recognized for the difference.

As of October 1, 2022, we utilized a qualitative approach and performed an evaluation of circumstances and events impacting our reporting units to determine the likelihood of goodwill impairment. Examples of such events or circumstances include: (1) a significant adverse change in legal factors or in the business climate; (2) an adverse action or assessment by a regulator; (3) a more likely than not expectation that a reporting unit or a significant portion thereof will be sold; (4) continued or sustained losses at a reporting unit; (5) a significant decline in our market capitalization as compared to our book value; or (6) we conclude that we may not recover a significant asset group within the reporting unit. We determined it was more likely than not that the fair values of our reporting units exceeded their carrying amounts. No impairment losses were recorded for goodwill during the year ended December 31, 2022.

Other intangible assets include values assigned to customer relationships, non-compete agreements and trade names and are amortized generally on a straight-line basis over periods ranging from 1 to 15 years.

Asset Impairments

We continually consider whether events or changes in circumstances have occurred that may warrant revision of the estimated useful lives of our long-lived assets (other than goodwill) or whether the remaining balances of those assets should be evaluated for possible impairment. Long-lived assets include, for example, capitalized landfill costs, other property and equipment and identifiable intangible assets.

Events or changes in circumstances that may indicate that an asset may be impaired include the following:

• A significant decrease in the market price of an asset or asset group;

• A significant adverse change in the extent or manner in which an asset or asset group is being used or in its physical condition;

• A significant adverse change in legal factors or in the business climate that could affect the value of an asset or asset group, including an adverse action or assessment by a regulator;

• An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;

• A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group;

• A current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life; or

• An impairment of goodwill at a reporting unit.

There are certain indicators listed above that require judgment and understanding of the environmental services industry when applied to landfill development or expansion. For example, a regulator may initially deny a landfill expansion permit application though the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace. Therefore, certain events could occur in the ordinary course of business and not necessarily be considered indicators of impairment due to the unique nature of the environmental services industry.

If indicators of impairment exist, the asset or asset group is reviewed to determine whether its recoverability is impaired. We assess the recoverability of the asset or asset group by comparing its carrying value to an estimate (or estimates) of its undiscounted future cash flows over its remaining life. If the estimated undiscounted cash flows are not sufficient to recover the carrying value of the asset or asset group, we measure an impairment loss as the amount by which the carrying amount of the asset exceeds its fair value. The loss is recorded in the consolidated statements of income in the period in which such

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impairment is identified. Estimating future cash flows requires significant judgment, and our projections of future cash flows and remaining useful lives may vary materially from actual results.

Insurance Reserves

Our insurance programs for workers' compensation, commercial general and auto liability, environmental and remediation liability and employee-related health care benefits are subject to high deductible insurance policies. Accruals for insurance reserves are based on claims filed and estimates of claims incurred but not reported. We consider our past claims experience, including both frequency and settlement amount of claims, in determining these estimates. It is possible that recorded reserves may not be adequate to fund the future payment of claims. Adjustments, if any, to estimates recorded resulting from ultimate claim payments will be reflected in the consolidated statements of income in the periods in which such adjustments are known. In general, our insurance reserves are recorded on an undiscounted basis; however, the insurance liabilities we assumed in business combinations are recorded at estimated fair value, and therefore have been discounted to present value based on our estimate of the timing of the related cash flows.

Costs Associated with Exit Activities

We record costs associated with exit activities such as employee termination benefits that represent a one-time benefit when management approves and commits to a plan of termination, and communicates the termination arrangement to the employees, or over the future service period, if any. Other costs associated with exit activities may include contract termination costs, including facility and employee relocation costs.

Contingent Liabilities

We are subject to various legal proceedings, claims and regulatory matters, the outcomes of which are subject to significant uncertainty. In general, we determine whether to disclose or accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable, and whether it can be reasonably estimated. We assess our potential liability relating to litigation and regulatory matters based on information available to us. Management develops its assessment based on an analysis of possible outcomes under various strategies. We accrue for loss contingencies when such amounts are probable and reasonably estimable. If a contingent liability is only reasonably possible, we disclose the potential range of the loss, if estimable. Contingent liabilities recorded in purchase accounting are recorded at their fair values. These fair values may be different from the values we would have otherwise recorded, had the contingent liability not been assumed as part of an acquisition of a business.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income is a component of stockholders’ equity and includes the effective portion of the net changes in fair value of our cash flow hedges, amortization of our interest rate locks, certain adjustments to liabilities associated with our employee defined benefit pension plan liabilities, net of tax, and foreign currency translation adjustments.

Revenue Recognition

We generally provide services under contracts with municipalities or individual customers. Municipal and small-container

contracts are generally long-term and often have renewal options. Environmental solutions revenue may be billed in advance of the service being performed, such as the treatment or disposal of the waste. Advance billings are recorded as deferred revenue, and revenue is recognized over the period services are provided.

We recognize revenue when control is transferred to the customer, generally at the time we provide a service. Revenue is

measured as the amount of consideration we expect to receive in exchange for providing a service. We make payments

to certain of our customers, including payments to our municipal customers or commodity rebates to customers in our recycling business, which reduce the amount of revenue we recognize.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we record deferred income taxes to reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases using enacted tax rates that we expect to be in effect when the taxes are actually paid or recovered. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making these determinations, we consider all available positive and negative evidence, including scheduled reversals of deferred tax

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liabilities, tax planning strategies, projected future taxable income and recent financial operating results. The weight given to the positive and negative evidence is commensurate with the extent such evidence can be objectively verified. If we determine that we would be able to realize a deferred income tax asset in the future in excess of its net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.

We record uncertain tax positions in accordance with ASC 740. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized.

We recognize interest and penalties related to uncertain tax positions in the provision for income taxes in the accompanying consolidated statements of income. Accrued interest and penalties are included in other accrued liabilities, deferred income taxes and other long-term tax liabilities in the consolidated balance sheets.

We use the flow-through method to account for investment tax credits earned on eligible development expenditures. Under this method, the investment tax credits are recognized as a reduction to income tax expense in the year they are earned.

Defined Benefit Pension Plan

We currently have one qualified defined benefit pension plan, the BFI Retirement Plan (the Plan). The Plan covers certain current and former employees of Allied in the United States, including some employees subject to collective bargaining agreements. The Plan’s benefit formula is based on a percentage of compensation as defined in the Plan document. However, the benefits of all current Plan participants are frozen.

Our pension contributions are made in accordance with funding standards established by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code, as amended by the Pension Protection Act of 2006. The Plan’s assets have been invested as determined by our Employee Benefits Committee. The Employee Benefits Committee reviews and adjusts the Plan’s asset allocation as deemed necessary.

The benefit obligation and associated income or expense related to the Plan are determined using annually established assumptions for discount rates, expected rates of return and mortality rates. We determine the discount rate based on a model that matches the timing and amount of expected benefit payments to maturities of high quality bonds priced as of the pension plan measurement date. When that timing does not correspond to a published high-quality bond rate, our model uses an expected yield curve to determine an appropriate current discount rate. The yields on the bonds are used to derive a discount rate for the liability. In developing our expected rate of return assumption, we evaluate long-term expected and historical actual returns on the Plan assets, giving consideration to the asset mix and the anticipated duration of our Plan obligations. The average rate of compensation increase reflects our expectations of average pay increases over the period benefits are earned. Our assumptions are reviewed annually and adjusted as deemed necessary.

Equity-Based Compensation Plans

Compensation expense associated with our restricted share units is recognized ratably over the vesting period, or to the employee's retirement eligible date, if earlier. The fair value of restricted share units is based on the closing market price on the date of the grant.

Compensation expense associated with our performance shares that vest based on future performance targets is measured using the fair value of our common stock at the grant date for the stock-settled, equity classified awards and the fair value of our common stock at the end of each reporting period for the cash-settled, liability classified awards. Compensation expense is recognized ratably over the performance period based on our estimated achievement of the established performance criteria. Compensation expense is only recognized for those awards that we expect to vest, which we estimate based on an assessment of the probability that the performance criteria will be achieved.

Income tax related cash flows resulting from equity-based payments are reported as a component of operating activities.

Share Repurchases

Share repurchases under our share repurchase authorization may be made through open market purchases or privately negotiated transactions at the current market prices. From time-to-time, we return treasury shares acquired through share repurchases to the status of authorized but unissued. Our accounting policy is to deduct the par value from common stock and to reflect any excess of cost over par value as a deduction from additional paid-in capital.

Leases

We lease property and equipment in the ordinary course of business under various lease agreements. The 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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NOTES TO 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 statements 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.

Operating Leases

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 material 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 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.

Finance Leases

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 debt obligation. Our finance lease liabilities relate primarily to real property, including certain long-term landfill operating agreements that require minimum lease payments with offsetting finance lease assets recorded as part of the landfill development costs.

Related Party Transactions

It is our policy that transactions with related parties must be on terms that, on the whole, are no less favorable than those that would be available from unaffiliated parties.

New Accounting Pronouncements

Accounting Standards Adopted

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), as extended in ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. During the year ended December 31, 2022, we novated a certain hedging relationship related to one of our interest rate swap agreements by changing the reference rate from the London Interbank Offered Rate (LIBOR) to a secured overnight financing rate (SOFR). The amendment did not have a material impact on our consolidated financial statements. For further discussion of the amendment and relevant hedging relationship, refer to Note 9, Debt, in Part II, Item 8 of this Annual Report on Form 10-K. We have not modified any other contracts as a result of reference rate reform.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting Standards Updates Issued but not yet Adopted as of December 31, 2022

Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). ASU 2021-08 improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and the payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 is effective for all entities that enter into a business combination within the applicable scope. The amendments in this update were effective for fiscal years beginning after December 15, 2022. As such, we adopted the standard beginning January 1, 2023. Our adoption of ASU 2021-08 did not have a material impact on our audited consolidated financial statements.

**3.**BUSINESS ACQUISITIONS, INVESTMENTS AND RESTRUCTURING CHARGES

We acquired various environmental services businesses during the years ended December 31, 2022 and 2021. The purchase price paid for these business acquisitions and the allocations of the purchase price follows:

			2022						2021
Purchase price:
Cash used in acquisitions, net of cash acquired of $65.9 and $14.7, respectively			$	2,668.6					$	1,052.9
Holdbacks			17.2						10.3
Fair value, future minimum lease payments			15.6						40.2
Total			$	2,701.4					$	1,103.4
Allocated as follows:
Restricted cash			$	0.7					$	7.2
Accounts receivable			250.7						63.9
Prepaid expenses			15.7						4.5
Landfill development costs			565.4						66.0
Property and equipment			540.0						143.5
Operating right-of-use lease assets			61.1						10.2
Interest rate swap			29.1						—
Assets held for sale			—						43.6
Other assets			40.7						2.1
Inventory			10.7						1.9
Accounts payable			(112.4)						(30.1)
Deferred revenue			(28.2)						(7.2)
Environmental remediation liabilities			(57.5)						(31.6)
Closure and post-closure liabilities			(173.3)						(31.8)
Operating right-of-use lease liabilities			(57.1)						(10.2)
Deferred income tax liabilities			(109.3)						(3.3)
Other liabilities			(58.5)						(23.7)
Fair value of tangible assets acquired and liabilities assumed			917.8						205.0
Excess purchase price to be allocated			$	1,783.6					$	898.4
Excess purchase price allocated as follows:
Other intangible assets			$	132.9					$	98.2
Goodwill			1,650.7						801.8
Gain on bargain purchase			—						(1.6)
Total allocated			$	1,783.6					$	898.4

The purchase price allocations are preliminary and based on information existing at the acquisition dates. Accordingly, the purchase price allocations are subject to change. Excluding the US Ecology acquisition discussed below, substantially all of the goodwill and intangible assets recorded for these acquisitions are deductible for tax purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

These acquisitions are not material to the Company's results of operations, individually or in the aggregate. As a result, no pro forma financial information is provided.

On May 2, 2022, we acquired all outstanding equity of US Ecology in a transaction valued at $2.2 billion. US Ecology is a leading provider of environmental solutions offering treatment, recycling and disposal of hazardous, non-hazardous and specialty waste. We financed the transaction using the proceeds of a new $1.0 billion unsecured Term Loan Credit Agreement (Term Loan Facility) and borrowings under our existing $3.0 billion unsecured revolving credit facility. For further discussion of the borrowings used to fund the US Ecology acquisition, refer to Note 9, Debt, in Part II, Item 8 of our Annual Report on Form 10-K. The preliminary purchase price allocation for the US Ecology acquisition is reflected in the table above and remains subject to revisions as additional information is obtained about the facts and circumstances that existed at the valuation date. The preliminary allocation of purchase price, including the value of certain tangible and intangible assets acquired, such as property, plant and equipment, landfill development costs and customer relationship intangible assets, as well as certain leases and environmental liabilities assumed, is based on the best estimates of management and is subject to revision based on the final valuations. We do not expect a step-up in the tax basis of the assets recognized in connection with the US Ecology acquisition, and do not expect the goodwill and intangible assets will be deductible for tax purposes.

In 2022, we incurred $77.3 million of acquisition integration and deal costs in connection with the acquisition of US Ecology, which included certain costs to close the acquisition and integrate the business, including stock compensation expense for unvested equity awards at closing as well as severance and change-in-control payments.

Investments

In July 2022, we acquired a non-controlling equity interest in a joint venture with a landfill gas-to-energy developer to construct 39 renewable natural gas projects across the United States for approximately $88 million. We also purchased an approximately $38 million interest in a landfill gas-to-energy project and subsequently divested of our interest to the joint venture. The joint venture agreement provides for additional contributions as certain project milestones are achieved over the next four to five years. The investment is accounted for under the equity method of accounting.

In 2022 and 2021, we acquired non-controlling equity interests in certain limited liability companies that qualified for investment tax credits under Section 48 of the Internal Revenue Code. In exchange for our non-controlling interests, we made capital contributions of approximately $205 million and $175 million, which were recorded to other assets in our December 31, 2022 and 2021 consolidated balance sheets, respectively. During 2022 and 2021, we reduced the carrying value of these investments by approximately $158 million and $178 million, respectively, as a result of cash distributions and our share of income and loss pursuant to the terms of the limited liability company agreements. Additionally, our tax provisions reflect benefits of approximately $139 million and $126 million for the years end December 31, 2022 and 2021, respectively, due to the tax credits related to these investments. For further discussion of the income tax benefits, refer to Note 11, Income Taxes, in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Restructuring Charges

In 2022 and 2021, we incurred restructuring charges of $27.0 million and $16.6 million, respectively, primarily related to the redesign of our general ledger, budgeting and procurement enterprise resource planning systems. These systems were placed into production in 2022, and we do not expect to incur future costs related to the implementation of these systems. We paid $19.8 million and $17.2 million during 2022 and 2021, respectively, related to these restructuring efforts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**4.**PROPERTY AND EQUIPMENT, NET

A summary of property and equipment, net as of December 31 follows:

			2022						2021
Land			$	779.7					$	694.9
Landfill development costs			9,574.2						8,539.6
Vehicles and equipment			9,465.3						8,576.9
Buildings and improvements			1,704.6						1,508.4
Construction-in-progress – landfill			358.3						279.3
Construction-in-progress – other			358.6						182.9
			$	22,240.7					$	19,782.0
Less: accumulated depreciation, depletion and amortization
Landfill development costs			$	(5,058.9)					$	(4,625.6)
Vehicles and equipment			(5,679.9)						(5,231.6)
Buildings and improvements			(757.9)						(692.7)
			(11,496.7)						(10,549.9)
Property and equipment, net			$	10,744.0					$	9,232.1

Depreciation, amortization and depletion of property and equipment was $1,245.6 million, $1,111.7 million and $1,015.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

**5.**GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

A summary of the activity and balances in goodwill accounts by reporting segment follows:

			Balance as of December 31, 2021						Acquisitions						Divestitures						Adjustments to Acquisitions						Balance as of December 31, 2022
Group 1			$	6,549.7					$	95.2					$	—					$	(7.0)					$	6,637.9
Group 2			5,994.2						239.0						(3.7)						8.8						6,238.3
Group 3			282.1						1,316.5						(0.3)						(23.0)						1,575.3
Total			$	12,826.0					$	1,650.7					$	(4.0)					$	(21.2)					$	14,451.5

			Balance as of December 31, 2020						Acquisitions						Divestitures						Adjustments to Acquisitions						Balance as of December 31, 2021
Group 1			$	6,404.9					$	162.6					$	—					$	(17.8)					$	6,549.7
Group 2			5,641.5						357.1						—						(4.4)						5,994.2
Group 3			—						282.1						—						—						282.1
Total			$	12,046.4					$	801.8					$	—					$	(22.2)					$	12,826.0

Goodwill by reportable segment as of December 31, 2021 and December 31, 2022 reflects the presentation of Group 3 as a reportable segment for all periods presented. Prior to the third quarter of 2022, Group 3 was aggregated with Corporate entities and other.

Adjustments to acquisitions during the year ended December 31, 2022 primarily related to changes in our valuation of tangible and intangible assets as well as certain landfill leases and environmental liabilities assumed as a result of obtaining new information regarding the acquisitions that closed in 2021. Adjustments to acquisitions during the year ended December 31, 2021 primarily related to changes in our valuation of customer relationship intangible assets and fixed assets as a result of obtaining new information regarding certain acquisitions that closed in December 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other Intangible Assets, Net

Other intangible assets, net, include values assigned to customer relationships, non-compete agreements and trade names, and are amortized over periods ranging from 1 to 15 years. A summary of the activity and balances by intangible asset type follows:

			Gross Intangible Assets																								Accumulated Amortization																								Other Intangible Assets, Net as of December 31, 2022
			Balance as of December 31, 2021						Acquisitions						Adjustments and Other						Balance as of December 31, 2022						Balance as of December 31, 2021						Additions Charged to Expense						Adjustments and Other						Balance as of December 31, 2022
Customer relationships			$	898.4					$	109.2					$	5.9					$	1,013.5					$	(666.8)					$	(42.3)					$	—					$	(709.1)					$	304.4
Non-compete agreements			60.4						7.7						(0.2)						67.9						(44.6)						(6.3)						—						(50.9)						17.0
Other intangible assets			58.0						16.0						3.0						77.0						(45.9)						(5.3)						—						(51.2)						25.8
Total			$	1,016.8					$	132.9					$	8.7					$	1,158.4					$	(757.3)					$	(53.9)					$	—					$	(811.2)					$	347.2

			Gross Intangible Assets																								Accumulated Amortization																								Other Intangible Assets, Net as of December 31, 2021
			Balance as of December 31, 2020						Acquisitions						Adjustments and Other						Balance as of December 31, 2021						Balance as of December 31, 2020						Additions Charged to Expense						Adjustments and Other						Balance as of December 31, 2021
Customer relationships			$	788.1					$	92.3					$	18.0					$	898.4					$	(639.5)					$	(27.3)					$	—					$	(666.8)					$	231.6
Non-compete agreements			51.4						9.2						(0.2)						60.4						(39.1)						(5.5)						—						(44.6)						15.8
Other intangible assets			57.5						0.5						—						58.0						(45.3)						(0.6)						—						(45.9)						12.1
Total			$	897.0					$	102.0					$	17.8					$	1,016.8					$	(723.9)					$	(33.4)					$	—					$	(757.3)					$	259.5

Based on the amortizable intangible assets recorded in the consolidated balance sheet as of December 31, 2022, amortization expense for each of the next five years is estimated as follows:

2023			$	59.7
2024			$	53.6
2025			$	49.7
2026			$	46.5
2027			$	40.4

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**6.**OTHER ASSETS

Prepaid Expenses and Other Current Assets

A summary of prepaid expenses and other current assets as of December 31 follows:

			2022						2021
Income taxes receivable			$	214.0					$	173.8
Prepaid expenses			114.3						85.3
Inventories			96.6						72.2
Other non-trade receivables			59.8						32.2
Reinsurance receivable			31.9						31.0
Prepaid fees for cloud-based hosting arrangements, current			14.4						12.9
Other current assets			5.5						3.0
Total			$	536.5					$	410.4

Other Assets

A summary of other assets as of December 31 follows:

			2022						2021
Investments			$	281.4					$	127.6
Operating right-of-use lease assets			275.1						255.3
Derivative and hedging assets			105.8						19.7
Deferred compensation plan			100.6						133.5
Reinsurance receivable			84.1						79.5
Deferred contract costs and sales commissions			80.2						80.6
Prepaid fees and capitalized implementation costs for cloud-based hosting arrangements			51.4						43.4
Amounts recoverable for capping, closure and post-closure obligations			20.5						19.4
Deferred financing costs			5.1						4.6
Other			21.3						24.0
Total			$	1,025.5					$	787.6

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**7.**OTHER LIABILITIES

Other Accrued Liabilities

A summary of other accrued liabilities as of December 31 follows:

			2022						2021
Accrued payroll and benefits			$	342.6					$	295.0
Insurance reserves, current portion			187.5						193.5
Accrued fees and taxes			168.5						143.7
Accrued dividends			156.4						145.9
Operating right-of-use lease liabilities, current portion			57.9						38.2
Ceded insurance reserves, current portion			32.0						31.0
Accrued professional fees and legal settlement reserves			8.6						8.4
Other			104.8						73.8
Total			$	1,058.3					$	929.5

Other Long-Term Liabilities

A summary of other long-term liabilities as of December 31 follows:

			2022						2021
Operating right-of-use lease liabilities			$	238.0					$	239.0
Derivative and hedging liabilities			99.7						50.7
Deferred compensation plan liability			98.6						119.4
Ceded insurance reserves			84.1						79.5
Contingent purchase price and acquisition holdbacks			60.5						64.4
Withdrawal liability - multiemployer pension funds			20.0						24.5
Legal settlement reserves			2.1						3.1
Other			57.7						61.8
Total			$	660.7					$	642.4

Insurance Reserves

Our liabilities for unpaid and incurred but not reported claims as of December 31, 2022 and 2021 (which include claims for workers’ compensation, commercial general and auto liability and employee-related health care benefits) were $502.6 million and $497.4 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.

The following table summarizes the activity in our insurance reserves for the years ended December 31:

			2022						2021						2020
Balance at beginning of year			$	497.4					$	449.3					$	438.5
Additions charged to expense			568.7						552.4						466.1
Payments			(593.8)						(531.8)						(482.6)
Accretion expense			0.2						0.3						0.5
Premium written for third party risk assumed			35.3						36.5						36.5
Reclassified to ceded insurance reserves			(5.2)						(9.3)						(9.7)
Balance at end of year			502.6						497.4						449.3
Less: current portion			(187.5)						(193.5)						(167.5)
Long-term portion			$	315.1					$	303.9					$	281.8

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**8.**LANDFILL AND ENVIRONMENTAL COSTS

As of December 31, 2022, we owned or operated 206 active landfills with total available disposal capacity estimated to be 5.0 billion in-place cubic yards. Additionally, we have post-closure responsibility for 128 closed landfills.

Accrued Landfill and Environmental Costs

A summary of our accrued landfill and environmental liabilities as of December 31 follows:

			2022						2021
Landfill final capping, closure and post-closure liabilities			$	1,786.4					$	1,507.3
Environmental remediation			487.5						454.9
Total accrued landfill and environmental costs			2,273.9						1,962.2
Less: current portion			(132.6)						(124.5)
Long-term portion			$	2,141.3					$	1,837.7

Final Capping, Closure and Post-Closure Costs

The following table summarizes the activity in our asset retirement obligation liabilities, which includes liabilities for final capping, closure and post-closure, for the years ended December 31:

			2022						2021						2020
Asset retirement obligation liabilities, beginning of year			$	1,507.3					$	1,346.4					$	1,335.6
Non-cash additions			60.1						47.2						42.3
Acquisitions, net of divestitures and other adjustments			173.5						32.1						(10.9)
Asset retirement obligation adjustments			20.0						58.5						(44.9)
Payments			(64.6)						(59.6)						(58.6)
Accretion expense			89.6						82.7						82.9
Foreign currency translation			0.5						—						—
Asset retirement obligation liabilities, end of year			1,786.4						1,507.3						1,346.4
Less: Current portion			(75.2)						(68.4)						(57.5)
Long-term portion			$	1,711.2					$	1,438.9					$	1,288.9

We review annually, in the fourth quarter, and update as necessary, our estimates of asset retirement obligation liabilities. As a result, we reduced amortization expense by $5.8 million, increased amortization expense by $6.9 million, and reduced amortization expense by $12.5 million for the years ended December 31, 2022, 2021 and 2020, respectively, primarily related to changes in estimates and assumptions concerning the anticipated waste flow, cost and timing of future final capping, closure and post-closure activities.

The expected future payments for final capping, closure and post-closure as of December 31, 2022 follows:

2023			$	75.2
2024			86.8
2025			87.3
2026			98.2
2027			116.7
Thereafter			6,952.1
			$	7,416.3

The estimated remaining final capping, closure and post-closure expenditures presented above are not inflated and not discounted and reflect the total estimated future payments for liabilities which include those incurred and recorded as of December 31, 2022 as well as liabilities yet to be incurred over the remaining life of our landfills.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

amount that is at the low end of such 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 December 31, 2022 would be approximately $374 million higher than the amounts recorded. Future changes in our estimates of the cost, timing or duration of the required actions could have a material adverse effect on our consolidated financial position, results of operations and cash flows.

The following table summarizes the activity in our environmental remediation liabilities for the years ended December 31:

			2022						2021						2020
Environmental remediation liabilities, beginning of year			$	454.9					$	462.8					$	500.2
Net additions charged to expense			2.9						0.5						5.1
Payments			(54.7)						(57.1)						(63.5)
Accretion expense (non-cash interest expense)			17.3						17.1						18.6
Acquisitions, net of divestitures and other adjustments			67.1						31.6						2.4
Environmental remediation liabilities, end of year			487.5						454.9						462.8
Less: current portion			(57.4)						(56.1)						(57.0)
Long-term portion			$	430.1					$	398.8					$	405.8

The expected undiscounted future payments for remediation costs as of December 31, 2022 follows:

2023			$	57.4
2024			72.7
2025			67.7
2026			62.1
2027			40.4
Thereafter			349.6
			$	649.9

The following is a discussion of certain of our significant remediation matters:

Bridgeton Landfill. During the year ended December 31, 2022,we paid $15.9 million related to management and monitoring of the remediation area for our closed Bridgeton Landfill in Missouri. We continue to work with state and federal regulatory agencies on our remediation efforts. From time to time, this may require us to modify our future operating timeline and procedures, which could result in changes to our expected liability. As of December 31, 2022, the remediation liability recorded for this site was $87.2 million, of which approximately $15 million is expected to be paid during 2023. We believe the remaining reasonably possible high end of our range would be approximately $140 million higher than the amount recorded as of December 31, 2022.

West Lake Landfill Superfund Site. Our subsidiary Bridgeton Landfill, LLC is one of several currently designated Potentially Responsible Parties for the West Lake Landfill Superfund site (West Lake) in Missouri. On September 27, 2018, the United States Environmental Protection Agency (EPA) issued a Record of Decision Amendment for West Lake that includes a total undiscounted cost estimate of $229 million over a four to five year design and construction timeline. On March 11, 2019, the EPA issued special notice letters under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) to Bridgeton Landfill, LLC and the other currently designated Potentially Responsible Parties to initiate negotiations to implement the remedy. At this time we are neither able to predict the final design of that remedy, nor estimate how much of the future response costs of the site our subsidiary may agree or be required to pay. During any subsequent administrative proceedings or litigation, our subsidiary will vigorously contest liability for the costs of remediating radiologically-impacted materials generated on behalf of the federal government during the Manhattan Project and delivered to the site by an Atomic Energy Commission licensee and its subcontractor. Currently, we believe we are adequately reserved for our expected remediation liability. However, subsequent events related to remedy design, divisibility, or allocation may require us to modify our expected remediation liability.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**9.**DEBT

The carrying value of our credit facilities, finance leases and long-term debt as of December 31, 2022 and 2021 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.

												December 31, 2022																		December 31, 2021
Maturity						Interest Rate						Principal						Adjustments						Carrying Value						Principal						Adjustments						Carrying Value
Credit facilities:
Uncommitted Credit Facility						Variable						$	—					$	—					$	—					$	—					$	—					$	—
$3.0 billion - August 2026						Variable						250.0						—						250.0						24.3						—						24.3
Term Loan						Variable						1,000.0						—						1,000.0						—						—						—
Commercial Paper						Variable						1,000.0						(1.8)						998.2						—						—						—
Senior notes:
May 2023						4.750						300.0						(2.5)						297.5						300.0						(0.1)						299.9
August 2024						2.500						900.0						(3.0)						897.0						900.0						(4.8)						895.2
March 2025						3.200						500.0						(1.6)						498.4						500.0						(2.2)						497.8
November 2025						0.875						350.0						(1.9)						348.1						350.0						(2.6)						347.4
July 2026						2.900						500.0						(2.2)						497.8						500.0						(2.8)						497.2
November 2027						3.375						650.0						(3.1)						646.9						650.0						(3.8)						646.2
May 2028						3.950						800.0						(10.7)						789.3						800.0						(12.4)						787.6
March 2030						2.300						600.0						(5.2)						594.8						600.0						(5.9)						594.1
February 2031						1.450						650.0						(7.1)						642.9						650.0						(7.9)						642.1
February 2032						1.750						750.0						(6.0)						744.0						750.0						(6.6)						743.4
March 2033						2.375						700.0						(7.1)						692.9						700.0						(7.6)						692.4
March 2035						6.086						181.9						(12.2)						169.7						181.9						(12.8)						169.1
March 2040						6.200						399.9						(3.4)						396.5						399.9						(3.6)						396.3
May 2041						5.700						385.7						(4.8)						380.9						385.7						(5.0)						380.7
March 2050						3.050						400.0						(7.0)						393.0						400.0						(7.1)						392.9
Debentures:
September 2035						7.400						148.1						(30.0)						118.1						148.0						(31.1)						116.9
Tax-exempt:
2023 - 2051						2.350 - 4.100						1,189.1						(7.1)						1,182.0						1,189.1						(7.6)						1,181.5
Finance leases:
2023 - 2063						0.806 - 9.750						247.5						—						247.5						249.4						—						249.4
Total Debt												$	11,902.2					$	(116.7)					11,785.5						$	9,678.3					$	(123.9)					9,554.4
Less: current portion																								(456.0)																		(8.2)
Long-term portion																								$	11,329.5																	$	9,546.2

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Future Maturities of Debt

Aggregate principal maturities of notes payable, finance leases and other long-term debt as of December 31, 2022 follow:

2023			$	456.0
2024			931.1
2025			1,860.6
2026			1,840.7
2027			658.5
Thereafter			6,155.3
			$	11,902.2

Credit Facilities

The Credit Facility

In August 2021, we entered into a $3.0 billion unsecured revolving credit facility (the Credit Facility). Borrowings under the Credit Facility mature in August 2026. As permitted by the Credit Facility, we have the right to request two one-year extensions of the maturity date, but none of the lenders are committed to participate in such extensions. 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, a daily floating LIBOR, or a Eurodollar Rate, plus a current applicable margin of 0.910% based on our Debt Ratings (all as defined in the Credit Facility agreement). On the earliest of (i) the date that all available tenors of United States dollar LIBOR have permanently or indefinitely ceased to be provided or have been announced to be no longer representative, (ii) June 30, 2023 or (iii) the effective date of an election to opt into a SOFR rate, the LIBOR rate will be replaced by a forward-looking term rate based on SOFR or a daily rate based on SOFR published on such date.

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. 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.

We had $250.0 million and $24.3 million outstanding under our Credit Facility as of December 31, 2022 and 2021, respectively. We had $347.6 million and $341.9 million of letters of credit outstanding under our Credit Facility as of December 31, 2022 and 2021, respectively. We also had $998.2 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program as of December 31, 2022. In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully. As a result, availability under our Credit Facility was $1,402.4 million and $2,633.8 million as of December 31, 2022 and 2021, respectively.

Uncommitted Credit Facility

In January 2022, we entered into a $200.0 million unsecured uncommitted revolving credit facility (the Uncommitted Credit Facility), which replaced the prior $135.0 million uncommitted credit facility. The Uncommitted Credit Facility bears interest at an annual percentage rate to be agreed upon by both parties. Borrowings under the Uncommitted Credit Facility can be used for working capital, letters of credit 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. As of December 31, 2022 and 2021, we had no borrowings outstanding under our Uncommitted Credit Facility.

Term Loan Credit Agreement

On April 29, 2022, we entered into a $1.0 billion term loan facility (the Term Loan Facility). The Term Loan Facility will mature on April 29, 2025 and bears interest at a base rate or a forward-looking SOFR, plus an applicable margin based on our debt ratings. The weighted average interest rate for the borrowings outstanding as of December 31, 2022 was 4.629%. We may prepay, without penalty, all or any part of the borrowings under the Term Loan Facility at any time.

On May 2, 2022, we completed the acquisition of US Ecology using proceeds from the Term Loan Facility and borrowings under the Credit Facility.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Commercial Paper Program

In May 2022, we entered into a commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate principal amount not to exceed $500.0 million outstanding at any one time (the Commercial Paper Cap). In August 2022, the Commercial Paper Cap was increased to $1.0 billion. As of December 31, 2022, we had $1.0 billion principal value of commercial paper issued and outstanding under the program with a weighted average interest rate of 4.670% and a weighted average maturity of approximately 36 days for the year ended December 31, 2022. In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund amounts currently borrowed under the commercial paper program until they are re-borrowed successfully. Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of December 31, 2022.

Interest Rate Swap and Lock Agreements

Our ability to obtain financing through the capital markets is a key component of our financial strategy. Historically, we have managed risk associated with executing this strategy, particularly as it relates to fluctuations in interest rates, by using a combination of fixed and floating rate debt. From time to time, we also have entered into interest rate swap and lock agreements to manage risk associated with interest rates, either to effectively convert specific fixed rate debt to a floating rate (fair value hedges), or to lock interest rates in anticipation of future debt issuances (cash flow hedges).

Fair Value Hedges

During the second half of 2013, we entered into various interest rate swap agreements (the 2013 Interest Rate Swaps) relative to our 4.750% fixed rate senior notes due in May 2023 (4.750% Notes). The goal was to reduce overall borrowing costs and rebalance our debt portfolio's ratio of fixed-to-floating interest rates. As of December 31, 2022, these swap agreements had a total notional value of $300.0 million and mature in May 2023. We pay interest at floating rates based on changes in LIBOR and receive interest at a fixed rate of 4.750%. In 2013, these transactions were designated as fair value hedges because the swaps hedge against the changes in fair value of the 4.750% Notes resulting from changes in interest rates.

Contemporaneously with the $250.0 million partial redemption of the 4.750% Notes in November 2020, we dedesignated the proportional share of these swap agreements as fair value hedges. There was no ineffectiveness recognized in the dedesignation of these fair value hedges. Following the dedesignation, 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 December 31, 2022 and 2021, these free-standing derivatives were reflected at their fair value of a $1.0 million liability and a $3.9 million asset, respectively, and are included in other accrued liabilities and other assets, respectively, in our consolidated balance sheets. For the years ended December 31, 2022, 2021 and 2020, we recognized losses of $5.0 million, $4.4 million and $0.1 million, directly in earnings as an adjustment to non-cash interest expense attributable to the change in fair value of the free-standing derivatives, respectively.

As of December 31, 2022 and 2021, the 2013 Interest Rate Swaps that were designated as fair value hedges are reflected at their fair value of a $1.2 million liability and a $4.7 million asset, respectively, and are included in other accrued liabilities and other assets, respectively, in our consolidated balance sheets. To the extent they are effective, the remaining hedged portion of these interest rate swap agreements is included as an adjustment to long-term debt in our consolidated balance sheets.

We recognized net interest income of $2.9 million, $7.9 million and $5.7 million, respectively, during 2022, 2021 and 2020, related to net swap settlements for these interest rate swap agreements, which is included as an offset to interest expense in our consolidated statements of income.

For the years ended December 31, 2022, 2021 and 2020, we recognized gains of $2.7 million and $5.2 million and a loss of $5.7 million, respectively, related to the impact of changes in the benchmark interest rate on the fair value of the hedged senior notes. For the years ended December 31, 2022, 2021 and 2020, we recognized offsetting losses of $6.0 million and $5.2 million and an offsetting gain of $7.6 million, respectively, on the related interest rate swaps attributable to changes in the benchmark interest rate. The difference of these fair value changes for the years ended December 31, 2022, 2021 and 2020 was recorded directly in earnings as an adjustment to interest expense in our consolidated statements of income.

For further detail regarding the effect of our fair value hedging on interest expense, see Note 18, Financial Instruments, of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

Cash Flow Hedges

We have historically entered into multiple swap agreements designated as cash flow hedges to manage exposure to fluctuations in interest rates in anticipation of planned future issuances of senior notes. Upon the expected issuance of senior notes, we terminate the interest rate locks and settle with our counterparties. These transactions were accounted for as cash flow hedges. All of our cash flow hedges settled on or before December 31, 2020. The fair value of our interest rate locks is determined

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 December 31, 2022 and 2021, our previously terminated interest rate locks were recorded as components of accumulated other comprehensive loss of $21.4 million and $25.8 million, respectively, net of tax. The effective portion of the interest rate locks is amortized as an adjustment to interest expense over the life of the issued debt using the effective interest method. During 2022, 2021 and 2020, we recognized losses, net of tax of $4.4 million, $4.6 million and $5.8 million, respectively, as a result of this amortization. Over the next 12 months, we expect to amortize $3.9 million, net of tax, from accumulated other comprehensive loss to interest expense as a yield adjustment of our senior notes.

In connection with our acquisition of US Ecology, in the second quarter of 2022, we acquired and novated a floating-to-fixed interest rate swap agreement (the 2022 Interest Rate Swap) with an initial effective date of March 6, 2020 and an initial notional amount of $500 million relative to our Term Loan Facility. The interest rate swap matures in November 2026. The goal was to reduce overall borrowing costs. Under the terms of the acquired agreement, we pay interest at a fixed interest rate of 0.832% and received interest at floating rates based on changes in LIBOR. The interest rate swap is designated as a cash flow hedge. In May 2022, following the closing of the acquisition, we amended the reference rate from a floating rate based on LIBOR to a SOFR rate. In accordance with ASU 2020-04, the amendment of the reference rate did not result in dedesignation of the cash flow hedge. Changes in the fair value of the interest rate swap are recorded as a component of accumulated other comprehensive loss and are recognized in interest expense in the period in which the payment is settled.

The fair value of our floating-to-fixed interest rate swap is 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 December 31, 2022, the 2022 Interest Rate Swap was recorded at its fair value of $36.0 million and is included in other assets in our consolidated balance sheets. During 2022, we recognized an unrealized gain of $8.4 million in accumulated other comprehensive income for the 2022 Interest Rate Swap.

As of December 31, 2022, the 2022 Interest Rate Swap was recorded as a component of accumulated other income of $5.1 million, net of tax. The effective portion of the Interest Rate Swap is amortized as an adjustment to interest expense over the life of the instrument using the effective interest method. During 2022, we recognized a gain, net of tax, of $3.3 million as a result of this amortization. Over the next 12 months, we expect to amortize approximately $3 million, net of tax, from accumulated other comprehensive income related to this instrument as an offset to interest expense in the period in which payments are settled.

For further detail regarding the effect of our cash flow hedging on interest expense, see Note 18, Financial Instruments, of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

Derivative Contracts

Contemporaneously with the issuance of our 2.300% Notes in February 2020, we amended interest rate lock agreements with an aggregate notional value of $550.0 million, extending the mandatory maturity date from 2020 to 2030, and dedesignated them as cash flow hedges (2020 Extended Interest Rate Locks). Contemporaneously with the issuance of our 2.500% Notes in August 2019, we amended interest rate lock agreements with an aggregate notional value of $375.0 million, extending the mandatory maturity date from 2019 to 2024, and dedesignated them as cash flow hedges (2019 Extended Interest Rate Locks and collectively with the 2020 Extended Interest Rate Locks referred to as the Extended Interest Rate Locks). There was no ineffectiveness recognized in the termination of these cash flow hedges. In addition, we entered into offsetting interest rate swaps to offset future exposures to fair value fluctuations of the Extended Interest Rate Locks (2019 Offsetting Interest Rate Swap and the 2020 Offsetting Interest Rate Swap, or collectively 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 December 31, 2022 and 2021, the fair values of the Extended Interest Rate Locks were assets of $69.8 million and liabilities of $49.9 million, respectively, which were included in other assets and other long-term liabilities, respectively, in our consolidated balance sheets.

As of December 31, 2022 and 2021, the fair value of the 2019 Offsetting Interest Rate Swap was a liability of $17.8 million and an asset of $11.1 million, which were included in other long-term liabilities and other assets, respectively, in our consolidated balance sheets. As of December 31, 2022 and 2021, the fair values of the 2020 Offsetting Interest Rate Swap were liabilities of $81.9 million and $0.8 million, respectively, which were included in other long-term liabilities in our consolidated balance sheets.

For the year ended December 31, 2022, we recognized a gain of $109.4 million on the change in fair value of the Extended Interest Rate Locks, with an offsetting loss of $107.3 million, on the change in fair value of the Offsetting Interest Rate Swaps. For the year ended December 31, 2021, we recognized a gain of $45.1 million on the change in fair value of the Extended

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest Rate Locks, with an offsetting loss of $44.8 million, on the change in fair value of the Offsetting Interest Rate Swaps. The changes in fair value were recorded directly in earnings as an adjustment to interest expense in our consolidated statements of income.

Tax-Exempt Financings

As of December 31, 2022 and 2021 we had $1,182.0 million and $1,181.5 million of certain variable rate tax-exempt financings outstanding, respectively, with maturities ranging from 2023 to 2051. During 2021, we issued $205.0 million of tax-exempt financings.

In the fourth quarter of 2021, the Pennsylvania Economic Development Financing Authority issued, for our benefit, $30.0 million of Solid Waste Disposal Revenue Bonds. The proceeds from the issuance, after deferred issuance costs, will be used to fund qualifying landfill-related expenditures in the Commonwealth of Pennsylvania, of which $30.0 million and $17.2 million was incurred and reimbursed to us as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, we had $127.6 million and $139.0 million, respectively, of restricted cash and marketable securities. As of December 31, 2021, $12.4 million of the restricted cash and marketable securities balance represented proceeds from the issuance of the tax-exempt bonds.

All of our tax-exempt financings are remarketed either quarterly or semiannually by remarketing agents to effectively maintain a variable yield. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. If the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, we currently have availability under our Credit Facility to fund these bonds until they are remarketed successfully. Accordingly, we classified these borrowings as long-term in our consolidated balance sheets as of December 31, 2022 and 2021.

Finance Leases

We had finance lease liabilities of $247.5 million and $249.4 million as of December 31, 2022 and 2021, respectively, with maturities ranging from 2023 to 2063.

Interest Paid

Interest paid, excluding net swap settlements for our fair value hedges, was $311.5 million, $249.4 million and $325.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

**10.**LEASES

A summary of the lease classification on our consolidated balance sheet as of December 31, 2022 and 2021 follows:

						2022						2021
Assets
Operating right-of-use lease assets			Other assets			$	275.1					$	255.3
Finance lease assets			Property and equipment, net			288.3						291.7
Total leased assets						$	563.4					$	547.0
Liabilities
Current
Operating			Other accrued liabilities			$	57.9					$	38.2
Finance			Notes payable and current maturities of long-term debt			14.3						8.2
Long-term
Operating			Other long-term liabilities			238.0						239.0
Finance			Long-term debt, net of current maturities			233.2						241.2
Total lease liabilities						$	543.4					$	526.6

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A summary of the lease cost reflected in our consolidated statements of income for the years ended December 31, 2022 and 2021 follow:

						2022						2021
Operating lease cost
Fixed lease cost			Cost of operations			$	55.5					$	44.6
Short-term lease cost			Cost of operations			70.4						25.4
Variable lease cost			Cost of operations			26.6						20.7
Finance lease cost
Amortization of leased assets			Depreciation amortization and depletion			15.2						10.5
Interest on lease liabilities			Interest expense			12.0						9.3
Variable lease cost			Interest expense			17.4						16.4
Total lease cost						$	197.1					$	126.9

During the years ended December 31, 2022 and 2021, we recognized changes in our operating right-of-use lease liabilities and assets, resulting from the recognition of non-cash lease expense of $46.2 million and $35.8 million, respectively.

As of December 31, 2022, maturities for operating and finance lease liabilities were as follows:

			Operating Leases						Finance Leases						Total
2023			$	62.8					$	21.4					$	84.2
2024			55.9						18.9						74.8
2025			45.2						18.8						64.0
2026			39.1						16.3						55.4
2027			28.1						15.4						43.5
Thereafter			103.9						339.5						443.4
Total lease payments			335.0						430.3						765.3
Less: interest			(39.1)						(182.8)						(221.9)
Present value of lease liabilities			$	295.9					$	247.5					$	543.4

A summary of the weighted-average remaining lease term and weighted-average discount rate as of December 31, 2022 and 2021 follows:

						2022						2021
Weighted-average remaining lease term (years)
Operating leases						7.2						8.2
Finance leases						29.6						28.2
Weighted-average discount rate
Operating leases						3.1		%				3.2		%
Finance leases						4.4		%				3.8		%

Supplemental cash flow and other non-cash information for the years ended December 31, 2022 and 2021 follow:

			2022						2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases			$	151.6					$	91.4
Operating cash flows from finance leases			$	29.4					$	25.8
Financing cash flows from finance leases			$	33.6					$	7.4
Leased assets obtained in exchange for new finance lease liabilities			$	31.7					$	50.2
Leased assets obtained in exchange for new operating lease liabilities			$	73.9					$	78.5

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**11.**INCOME TAXES

The components of the provision for income taxes for the years ended December 31 follow:

			2022						2021						2020
Current:
Federal			$	72.4					$	234.9					$	71.7
State			81.5						67.3						43.6
Deferred:
Federal			164.2						(34.1)						65.4
State			16.9						18.6						12.6
State deferred benefit - change in valuation allowance			—						—						(17.2)
Uncertain tax positions and interest and other			8.9						(3.9)						(3.0)
Provision for income taxes			$	343.9					$	282.8					$	173.1

The reconciliations of the statutory federal income tax rate to our effective tax rate for the years ended December 31 follow:

			2022						2021						2020
Federal statutory rate			21.0		%				21.0		%				21.0		%
State income taxes, net of federal benefit			4.6						4.5						4.4
Change in valuation allowance			—						—						(1.5)
Non-deductible expenses			1.1						1.0						1.7
Uncertain tax position taxes and interest			0.2						0.1						0.1
Investment tax credits			(7.6)						(8.0)						(8.8)
Other, net			(0.5)						(0.6)						(1.7)
Effective income tax rate			18.8		%				18.0		%				15.2		%

During 2022, we acquired non-controlling interests in limited liability companies established to own solar energy assets that qualified for investment tax credits under Section 48 of the Internal Revenue Code. We account for these investments using the equity method of accounting and recognize our share of income or loss and other reductions in the value of our investment in loss from unconsolidated equity method investments within our consolidated statements of income. For further discussion regarding our equity method accounting, see Note 3, Business Acquisitions, Investments and Restructuring Charges. Our 2022 tax provision reflects a benefit of approximately $139 million due to the tax credits related to these investments.

Our 2021 tax provision was reduced by approximately $126 million related to the tax credits from our non-controlling interest in limited liability companies established to own solar energy assets.

Our 2020 tax provision was reduced by approximately $12 million from excess tax benefits related to stock compensation, approximately $100 million related to the tax credits from our non-controlling interest in limited liability companies established to own solar energy assets, approximately $17 million for adjustments to our valuation allowance due to the realizability of certain state loss carryforwards, and approximately $8 million due to the realization of additional federal and state benefits as well as adjustments to deferred taxes due to the completion of our 2019 tax returns.

On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA, among other things, implements a 15% minimum tax on financial statement income of certain large corporations, a 1% excise tax on stock repurchases and extends, enhances and creates several tax incentives to promote clean energy. While we continue to evaluate the IRA, at present, outside of the potential for future energy credits, we do not believe it will have a material effect on our audited consolidated financial statements.

We made income tax payments (net of refunds) of approximately $185 million, $300 million and $124 million for 2022, 2021, and 2020, respectively. Income taxes paid in 2022, 2021 and 2020 reflect benefits from tax credits from our continuing investments in solar energy. For 2022 and 2020 cash taxes paid also reflects benefits from 100% bonus depreciation on qualified assets.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of the net deferred income tax asset and liability as of December 31 follow:

			2022						2021
Deferred tax liabilities relating to:
Differences between book and tax basis of property and equipment			$	(1,252.7)					$	(949.2)
Difference between book and tax basis of intangible assets			(521.7)						(503.7)
Operating right-of-use lease assets			(74.3)						(66.5)
Basis difference due to redemption of partnership interests			(82.0)						(82.2)
Total liabilities			$	(1,930.7)					$	(1,601.6)
Deferred tax assets relating to:
Environmental reserves			$	253.0					$	217.6
Accruals not currently deductible			94.6						82.4
Net operating loss carryforwards			88.5						105.1
Difference between book and tax basis of other assets			14.4						22.5
Operating right-of-use lease liabilities			80.5						66.4
Other			15.2						14.1
Total assets			546.2						508.1
Valuation allowance			(43.1)						(43.7)
Net deferred tax asset			503.1						464.4
Net deferred tax liabilities			$	(1,427.6)					$	(1,137.2)

Changes in the deferred tax valuation allowance for the years ended December 31 follow:

			2022						2021						2020
Valuation allowance, beginning of year			$	43.7					$	43.8					$	67.6
Additions charged to provision for income taxes			1.9						0.4						2.2
Deferred tax assets realized or written-off			(6.4)						0.1						(28.3)
Other, net			3.9						(0.6)						2.3
Valuation allowance, end of year			$	43.1					$	43.7					$	43.8

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. The weight given to the positive and negative evidence is commensurate with the extent such evidence can be objectively verified. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.

Substantially all of our valuation allowance is associated with state loss carryforwards. 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. We continue to regularly monitor both positive and negative evidence in determining the ongoing need for a valuation allowance.

We have deferred tax assets related to state net operating loss carryforwards with an estimated tax effect of approximately $77 million available as of December 31, 2022. These state net operating loss carryforwards expire at various times between 2023 and 2042. We believe that it is more likely than not that the benefit from some of our state net operating loss carryforwards will not be realized due to limitations on these loss carryforwards in certain states. In recognition of this risk, as of December 31, 2022, we have provided a valuation allowance of approximately $42 million.

We are subject to income tax in the United States, as well as income tax in multiple state jurisdictions. Our compliance with income tax rules and regulations is periodically audited by tax authorities. These authorities may challenge the positions taken in our tax filings. Thus, to provide for certain potential tax exposures, we maintain liabilities for uncertain tax positions for our estimate of the final outcome of the examinations. Our federal statute of limitations is closed for all years prior to 2015. We are currently under examination by the Internal Revenue Service (IRS) for tax years 2015 through 2018. In addition, we are currently under state examination or administrative review in various jurisdictions for tax years 2012 to 2020.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity in our gross unrecognized tax benefits for the years ended December 31:

			2022						2021						2020
Balance at beginning of year			$	101.5					$	101.1					$	100.7
Additions for tax positions of current year			7.1						—						—
Additions for tax positions of prior years			2.4						0.5						0.4
Reductions for tax positions of prior years			—						(0.1)						—
Balance at end of year			$	111.0					$	101.5					$	101.1

Included in our gross unrecognized tax benefits as of December 31, 2022, 2021 and 2020 are $96.5 million, $93.6 million and $93.3 million, respectively, of unrecognized tax benefits (net of the federal benefit) that, if recognized, would affect our effective income tax rate in future periods. However, we are unable to estimate the resolution of these matters over the next 12 months.

We recognize interest and penalties as incurred within the provision for income taxes in our consolidated statements of income. Related to the unrecognized tax benefits previously noted, we recorded interest expense of $1.1 million during 2022 and, in total as of December 31, 2022, have recognized a liability for penalties of $0.3 million and interest of $15.2 million.

During 2021, we recorded interest expense of approximately $0.8 million and, in total as of December 31, 2021, had recognized a liability for penalties of $0.3 million and interest of $13.7 million. During 2020, we accrued interest of $0.8 million and, in total as of December 31, 2020, had recognized a liability for penalties of $0.3 million and interest of $12.6 million.

We believe the 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.

**12.**EMPLOYEE BENEFIT PLANS

Stock-Based Compensation

In October 2020, our Board of Directors amended and restated the Republic Services, Inc. Executive Incentive Plan (the 2021 Plan) to remove references to the performance-based compensation exception that was previously permitted but is no longer applicable under Section 162(m) of the Code. The purposes of the 2021 Plan are to promote the success of the Company; to provide designated Executive Officers with an opportunity to receive incentive compensation dependent upon that success; and to attract, retain and motivate such individuals. We currently have 12.0 million shares of common stock reserved for future grants under the 2021 Plan.

In February 2007, our Board of Directors approved the 2007 Stock Incentive Plan (the 2007 Plan); in May 2007 our shareholders approved the 2007 Plan. In March 2011, our Board of Directors approved the Amended and Restated 2007 Stock Incentive Plan (the Amended and Restated 2007 SIP); in May 2011 our shareholders approved the Amended and Restated 2007 SIP. In March 2013, our Board of Directors approved the Republic Services, Inc. Amended and Restated 2007 Stock Incentive Plan (the Republic Amended and Restated 2007 SIP); in May 2013 our shareholders approved the Republic Amended and Restated 2007 SIP (the 2007 Plan, the Amended and Restated 2007 SIP and the Republic Amended and Restated 2007 SIP are collectively referred to as the Amended and Restated 2007 Stock Incentive Plan). No further awards will be made under the Amended and Restated 2007 Stock Incentive Plan.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Restricted Stock Units

The following table summarizes restricted stock unit (RSU) activity for the years ended December 31, 2022, 2021 and 2020:

			Number of RSUs (in thousands)						Weighted-Average Grant Date Fair Value per Share						Weighted-Average Remaining Contractual Term (years)						Aggregate Intrinsic Value (in millions)
Unissued as of December 31, 2019			1,499.5						$	57.63
Granted			314.9						$	95.75
Vested and issued			(538.2)						$	50.63
Forfeited			(64.1)						$	79.77
Unissued as of December 31, 2020			1,212.1						$	69.47
Granted			358.0						$	91.21
Vested and issued			(434.5)						$	74.69
Forfeited			(44.8)						$	87.43
Unissued as of December 31, 2021			1,090.8						$	77.19
Granted			258.8						$	122.54
Vested and issued			(388.4)						$	74.34
Forfeited			(47.5)						$	110.92
Unissued as of December 31, 2022			913.7						$	85.43					0.7						$	117.9
Vested and unissued as of December 31, 2022			407.4						$	59.45

During the years ended December 31, 2022, 2021 and 2020, we awarded our non-employee directors 18,689, 26,328 and 29,331 RSUs, respectively, which vested upon issuance.

During the years ended December 31, 2022, 2021 and 2020, we awarded 226,108, 312,602 and 258,661 RSUs, respectively, to executives and employees that vest in four equal annual installments beginning on the anniversary date of the original grant or cliff vest after three or four years.

During the years ended December 31, 2022, 2021 and 2020, we granted an additional 13,969, 19,049 and 26,907 RSUs, respectively, as dividend equivalents.

The RSUs do not carry any voting or dividend rights, except the right to receive additional RSUs in lieu of dividends.

Compensation Expense

The fair value of RSUs is based on the closing market price on the date of the grant. The compensation expense related to RSUs is amortized ratably over the vesting period, or to the employee's retirement eligible date, if earlier.

During the years ended December 31, 2022, 2021 and 2020, compensation expense related to RSUs totaled $22.8 million, $32.5 million and $26.2 million, respectively. In 2021, we recognized approximately $6 million of compensation expense related to the accelerated vesting of RSUs previously granted to Donald W. Slager that were previously scheduled to vest in 2022 and beyond as a result of his retirement as Chief Executive Officer (CEO) of Republic Services, Inc. in June 2021. As of December 31, 2022, total unrecognized compensation expense related to outstanding RSUs was $34.4 million, which will be recognized over a weighted average period of 2.6 years.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Performance Shares

The following table summarizes performance stock unit (PSU) activity for the years ended December 31, 2022, 2021 and 2020:

			Number of PSUs (in thousands)						Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2019			919.2						$	65.92
Granted			247.0						$	98.01
Vested and issued			(285.0)						$	61.22
Forfeited			(27.6)						$	88.29
Outstanding as of December 31, 2020			853.6						$	76.14
Granted			313.1						$	91.01
Vested and issued			(287.0)						$	65.35
Forfeited			(22.4)						$	91.20
Outstanding as of December 31, 2021			857.3						$	84.79
Granted			156.6						$	124.29
Vested and issued			(233.4)						$	76.24
Forfeited			(24.3)						$	109.62
Outstanding and Exercisable as of December 31, 2022			756.2						$	95.19

During the years ended December 31, 2022, 2021 and 2020, we awarded 79,043, 181,322 and 127,278 PSUs to our executive officers, respectively. These awards are performance-based as the number of shares ultimately earned depends on performance against pre-determined targets for return on invested capital (ROIC), cash flow value creation (CFVC) and total shareholder return relative to the S&P 500 index (RTSR). The PSUs are payable 50% in shares of common stock and 50% in cash after the end of a three-year performance period, when our financial performance for the entire performance period is reported, typically in February of the succeeding year. At the end of the performance period, the number of PSUs awarded can range from 0% to 150% of the targeted amount, depending on the performance against the pre-determined targets.

During the years ended December 31, 2022, 2021 and 2020, we awarded 66,296, 118,168 and 102,994 PSUs to our employees other than our executive officers, respectively. The PSUs are payable 100% in shares of common stock after the end of a three-year performance period, when our financial performance for the entire performance period is reported, typically in February of the succeeding year. At the end of the performance period, the number of PSUs awarded can range from 0% to 150% of the targeted amount, depending on the performance against the pre-determined targets.

During the years ended December 31, 2022, 2021 and 2020, we granted an additional 11,304, 13,586 and 16,760 PSUs, respectively, as dividend equivalents.

The PSUs do not carry any voting or dividend rights, except the right to accumulate additional PSUs in lieu of dividends.

Compensation Expense

For the stock-settled portion of the award that vests based on future ROIC and CFVC performance, compensation expense is measured using the fair value of our common stock at the grant date. For the cash-settled portion of the award that vests based on future ROIC and CFVC performance, compensation expense is recorded based on the fair value of our common stock at the end of each reporting period. Compensation expense is recognized ratably over the performance period based on our estimated achievement of the established performance criteria. Compensation expense is only recognized for the portion of the award that we expect to vest, which we estimate based on an assessment of the probability that the performance criteria will be achieved.

For the stock-settled portion of the award that vests based on RTSR, the grant date fair value is based on a Monte Carlo valuation and compensation expense is recognized on a straight-line basis over the vesting period. For the cash-settled portion of the award that vests based on RTSR, compensation expense also incorporates the fair value of our PSUs at the end of each reporting period. Compensation expense is recognized for the RTSR portion of the award whether or not the market conditions are achieved.

During the years ended December 31, 2022, 2021 and 2020, compensation expense related to PSUs totaled $22.1 million, $47.1 million and $17.2 million, respectively. In 2021, we recognized approximately $16 million of compensation expense related to the accelerated vesting of PSUs previously granted to Mr. Slager that were previously scheduled to vest in 2022 and beyond as a result of his retirement in June 2021. As of December 31, 2022, total unrecognized compensation expense related to outstanding PSUs was $22.9 million, which will be recognized over a weighted average period of approximately 1 year.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Defined Benefit Pension Plan

We currently have one qualified defined benefit pension plan, the BFI Retirement Plan (the Plan). The Plan covers certain employees in the United States, including some employees subject to collective bargaining agreements.

The Plan benefits are frozen. Interest credits continue to be earned by participants in the Plan, and participants whose collective bargaining agreements provide for additional benefit accruals under the Plan continue to receive those credits in accordance with the terms of their bargaining agreements. The Plan was converted from a traditional defined benefit plan to a cash balance plan in 1993.

Prior to the conversion to the cash balance design, benefits payable as a single life annuity under the Plan were based on the participant’s highest five years of earnings out of the last ten years of service. Upon conversion to the cash balance plan, the existing accrued benefits were converted to a lump-sum value using the actuarial assumptions in effect at the time. Participants’ cash balance accounts are increased until retirement by certain benefit and interest credits under the terms of their bargaining agreements. Participants may elect early retirement with the attainment of age 55 and completion of ten years of credited service at reduced benefits. Participants with 35 years of service may retire at age 62 without any reduction in benefits.

Our pension contributions are made in accordance with funding standards established by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code, as amended by the Pension Protection Act enacted in 2006 (the PPA). No contributions were made in 2022 or 2021.

We must separately recognize the overfunded or underfunded status of the Plan as an asset or liability. The funded status represents the difference between the projected benefit obligation (PBO) and the fair value of the Plan assets. The PBO is equal to the accumulated benefit obligation (ABO) as the Plan is frozen and the present value of liabilities is not affected by future salary increases. We use a measurement date that coincides with our year end of December 31.

The following table presents the ABO and reconciliations of the changes in the PBO, the Plan assets and the accounting funded status of our defined benefit pension plan for the years ended December 31:

			Defined Benefit Pension Plan
			2022						2021
Accumulated benefit obligation			$	172.3					$	215.1
Change in projected benefit obligation:
Projected benefit obligation at beginning of year			$	215.1					$	219.2
Interest cost			5.7						4.7
Actuarial (gain) loss			(32.6)						6.7
Benefits paid			(15.9)						(15.5)
Projected benefit obligation at end of year			$	172.3					$	215.1
Change in plan assets:
Fair value of plan assets at beginning of year			$	221.8					$	232.5
Actual return on plan assets			(26.3)						6.3
Estimated expenses			(1.4)						(1.5)
Benefits paid			(15.9)						(15.5)
Fair value of plan assets at end of year			$	178.2					$	221.8
Over funded status			$	5.9					$	6.7
Amounts recognized in the statement of financial position consist of:
Noncurrent assets			$	5.9					$	6.7
Net amount recognized			$	5.9					$	6.7
Weighted average assumptions used to determine benefit obligations:
Discount rate			5.13		%				2.77		%
Rate of compensation increase			N/A						N/A

The amounts included in accumulated other comprehensive income on the consolidated balance sheets that have not yet been recognized as components of net periodic benefit cost as of December 31, 2022 and 2021 were $11.8 million and $14.5 million, respectively.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of the net periodic benefit income for the years ended December 31 are summarized below:

			2022						2021						2020
Components of net periodic benefit income:
Interest cost			$	5.7					$	4.7					$	6.4
Expected return on plan assets			(7.0)						(6.0)						(8.0)
Recognized net actuarial gain			—						—						(0.1)
Amortization of prior service cost			—						—						0.1
Net periodic benefit income			$	(1.3)					$	(1.3)					$	(1.6)
Weighted average assumptions used to determine net periodic benefit income:
Discount rate			5.13		%				2.77		%				2.24		%
Expected return on plan assets			5.40		%				4.10		%				3.45		%
Rate of compensation increase			N/A						N/A						N/A

We determine the discount rate used in the measurement of our obligations based on a model that matches the timing and amount of expected benefit payments to maturities of high quality bonds priced as of the Plan measurement date. When that timing does not correspond to a published high-quality bond rate, our model uses an expected yield curve to determine an appropriate current discount rate. The yields on the bonds are used to derive a discount rate for the liability. The term of our obligation, based on the expected retirement dates of our workforce, is approximately six years.

In developing our expected rate of return assumption, we have evaluated the actual historical performance and long-term return projections of the Plan assets, which give consideration to the asset mix and the anticipated timing of the Plan outflows. We primarily utilize fixed income investments to minimize the volatility of the difference between the market value of the Plan assets and the present value of the obligation. Risk tolerance is established through careful consideration of Plan liabilities, Plan funded status and our financial condition. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset and liability studies and quarterly investment portfolio reviews.

The following table summarizes our target asset allocation as of December 31, 2022 and the actual asset allocation as of December 31, 2022 and 2021 for our Plan:

			December 31, 2022						December 31, 2022						December 31, 2021
			Target Asset Allocation						Actual Asset Allocation						Actual Asset Allocation
Debt securities			100		%				100		%				82		%
Equity securities			—						—						18
Total			100		%				100		%				100		%

Asset allocations are reviewed and rebalanced periodically based on funded status. For 2023, the investment strategy for Plan assets is to maintain a portfolio designed to achieve our target of an average long-term rate of return of 5.40%. While we believe we can achieve a long-term average return of 5.40%, we cannot be certain that the portfolio will perform to our expectations. Assets are strategically allocated among fixed income and cash portfolios to achieve a diversification level that reduces fluctuations in investment returns. Asset allocation target ranges and strategies are reviewed periodically with the assistance of an independent external consulting firm.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Plan assets are measured at fair value. The following table summarizes, by level, within the fair value hierarchy, the investments of the Plan at fair value as of December 31, 2022 and 2021:

									Fair Value Measurements Using
			December 31, 2022						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Money market accounts and U.S. government securities			$	23.6					$	23.6					$	—					$	—
Fixed income securities			154.6						—						154.6						—
Total assets			$	178.2					$	23.6					$	154.6					$	—

									Fair Value Measurements Using
			December 31, 2021						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Money market accounts			$	5.0					$	5.0					$	—					$	—
Mutual funds			216.8						—						216.8						—
Total assets			$	221.8					$	5.0					$	216.8					$	—

Estimated future benefit payments for the next ten years under the Plan follow:

2023			$	15.5
2024			$	15.7
2025			$	15.5
2026			$	15.8
2027			$	15.5
2028 through 2032			$	66.1

Collective Bargaining Agreements

As of December 31, 2022, approximately 23% of our workforce was covered by collective bargaining agreements (CBAs), and approximately 7% of our workforce was covered by CBAs that will expire during 2023.

Multiemployer Pension Plans

We participate in multiemployer pension plans that generally provide retirement benefits to participants of contributing employers. We do not administer these plans. In general, these plans are managed by a board of trustees with the unions appointing certain trustees and other contributing employers of the plan appointing certain members. We generally are not represented on the board of trustees.

Based on the information available to us, we believe that some of the multiemployer plans to which we contribute are either critical or endangered as those terms are defined in the Pension Protection Act (PPA). The PPA requires underfunded pension plans to improve their funding ratios within prescribed intervals based on the level of their underfunding. Until the plan trustees develop the funding improvement plans or rehabilitation plans as required by the PPA, we cannot determine the amount of any additional contribution or other financial obligations that we may be subject to, if any. Accordingly, we cannot presently determine the effect that the PPA may have on our consolidated financial position, results of operations or cash flows.

Furthermore, under current law regarding multiemployer benefit plans, a plan’s termination, our voluntary withdrawal (which we consider from time to time), or the mass withdrawal from any under-funded multiemployer pension plan would require us to make payments to the plan for our proportionate share of the multiemployer plan’s unfunded vested liabilities. During the course of operating our business, we may incur withdrawal events regarding certain of the multiemployer pension plans in which we participate. We accrue for such events when losses become probable and reasonably estimable.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Republic’s participation in individually significant multiemployer pension plans for the year ended December 31, 2022 is outlined in the table below. Only with respect to multiemployer pension plans, we considered contributions in excess of $3.5 million in any period disclosed to be individually significant. The most recent PPA zone status available in 2022 and 2021 is for the plans’ year ended September 30, or December 31, 2021 and 2020, respectively. The status is based on information that Republic received from the plans and is certified by the plans’ actuary. Among other factors, plans in the critical red zone are generally less than 65% funded, plans in the endangered yellow zone are less than 80% funded and plans in the safe green zone are at least 80% funded. Plans in the critical and declining zone are classified as critical and projected to be insolvent in the current year or any of the 14 following plan years. The last column lists the expiration dates of the CBAs to which the plans are subject.

									Pension Protection Act Zone Status												Funding Improvement or Rehabilitation Plan Status Pending /						Republic Contributions to Plan																		Surcharge						Expiration Dates
Legal Plan Name			EIN						2021						2020						Implemented						2022						2021						2020						Imposed						of CBAs
Western Conference of Teamsters Pension Plan			91-6145047						Safe						Safe						No						$	61.2					$	52.2					$	49.4					No						Various dates through 6/30/27
Local No. 731 I.B. of T., Pension Fund			36-6513567						Safe						Safe						No						8.1						8.7						8.8						No						Various dates through 1/31/24
Individually significant plans																											69.3						60.9						58.2
All other plans			N/A						N/A						N/A						N/A						16.8						15.5						15.0						N/A
Total																											$	86.1					$	76.4					$	73.2

We are listed in the Form 5500 for Local No. 731, I.B. of T. Pension Fund as providing more than 5% of the total contributions. At the date these financial statements were issued, Forms 5500 were not available for the plan years ended in 2022.

Defined Contribution Plan

We maintain the Republic Services 401(k) Plan (the 401(k) Plan), which is a defined contribution plan covering all eligible employees. Under the 401(k) Plan, participants may direct us to defer a portion of their compensation to the 401(k) Plan, subject to Internal Revenue Code limitations. We provide for an employer matching contribution equal to 100% of the first 3.0% of eligible compensation and 50.0% of the next 2.0% of eligible compensation contributed by each employee, which is funded in cash. All contributions vest immediately.

Total expense recorded for matching 401(k) contributions in 2022, 2021 and 2020 was $73.7 million, $62.4 million and $59.3 million, respectively.

Deferred Compensation Plan

We provide eligible Republic employees, officers and directors with the opportunity to voluntarily defer base salary, bonus payments, long-term incentive awards and other compensation, as applicable, on a pre-tax basis through the Republic Services, Inc. Deferred Compensation Plan (the DCP). The DCP is a nonqualified deferred compensation plan that conforms to Section 409A of the Internal Revenue Code. Eligible participants can defer up to 80% of base salary and up to 100% of bonus, long-term compensation and directors’ fees. Under the DCP, some participants also are eligible for matching contributions. The matching contribution under the DCP is equal to the lesser of 2% of the participant’s compensation over established 401(k) limits or 50% of the amount the participant has deferred. The DCP participants have no ownership or security interest in any of the amounts deferred or the measurement funds under the DCP. The right of each participant in the DCP is solely that of a general, unsecured creditor of Republic with respect to his or her own interest under the DCP. Deferred amounts may be subject to forfeiture and are deemed invested among investment funds offered under the DCP, as directed by each participant. Payments of deferred amounts are payable following separation from service or at a date or dates elected by the participant when the deferral is elected. Payments of deferred amounts are made in either a lump sum or in annual installments over a period not exceeding 15 years.

Republic invested in corporate-owned life insurance policies to satisfy future obligations under the DCP. These corporate-owned life insurance policies are held in a Rabbi Trust and are recorded at the amount that can be realized under insurance contracts at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. The aggregate cash surrender value of these life insurance policies was $100.6 million and $133.5 million as of December 31, 2022 and 2021, respectively, and is classified in other assets in our consolidated balance

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

sheets. The DCP liability was $98.6 million and $119.4 million as of December 31, 2022 and 2021, respectively, and is classified in other long-term liabilities in our consolidated balance sheets.

Employee Stock Purchase Plan

Republic employees are eligible to participate in an employee stock purchase plan. The plan allows participants to purchase our common stock for 95% of its quoted market price on the last day of each calendar quarter. For the years ended December 31, 2022, 2021 and 2020, issuances under this plan totaled 99,680 shares, 104,217 shares and 116,865 shares, respectively. As of December 31, 2022, shares reserved for issuance to employees under this plan totaled 2.5 million and Republic held employee contributions of $2.9 million for the purchase of common stock.

**13.**SHARE REPURCHASES AND DIVIDENDS

Share Repurchases

Share repurchase activity during the years ended December 31, 2022, 2021 and 2020 follows (in millions except per share amounts):

			2022						2021						2020
Number of shares repurchased			1.6						2.2						1.2
Amount paid			$	203.5					$	252.2					$	98.8
Weighted average cost per share			$	124.02					$	116.09					$	85.06

As of December 31, 2022, 2021 and 2020 there were no repurchased shares pending settlement.

In October 2020, our Board of Directors approved a $2.0 billion share repurchase authorization effective starting January 1, 2021 and extending through December 31, 2023. Share repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable federal securities laws. While the Board of Directors has approved the program, the timing of any purchases, the prices and the number of shares of common stock to be purchased will be determined by our management, at its discretion, and will depend upon market conditions and other factors. The share repurchase program may be extended, suspended or discontinued at any time. As of December 31, 2022, the remaining authorized purchase capacity under our October 2020 repurchase program was $1.5 billion. On a quarterly basis, our Board of Directors reviews the intrinsic value of our stock and the parameters around which we repurchase our shares.

Dividends

In October 2022, our Board of Directors approved a quarterly dividend of $0.495 per share. Aggregate cash dividends declared were $603.4 million, $563.0 million and $528.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, we recorded a quarterly dividend payable of $156.4 million to shareholders of record at the close of business on January 3, 2023.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**14.**EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to Republic Services, Inc. by the weighted average number of common shares (including vested but unissued RSUs and PSUs) outstanding during the period. Diluted earnings per share is based on the combined weighted average number of common shares and common share equivalents outstanding, which include, where appropriate, the assumed exercise of employee stock options, unvested RSUs and unvested PSUs at the expected attainment levels. We use the treasury stock method in computing diluted earnings per share.

Earnings per share for the years ended December 31, 2022, 2021 and 2020 are calculated as follows (in thousands, except per share amounts):

			2022						2021						2020
Basic earnings per share:
Net income attributable to Republic Services, Inc.			$	1,487,586					$	1,290,405					$	967,237
Weighted average common shares outstanding			316,530						318,811						319,282
Basic earnings per share			$	4.70					$	4.05					$	3.03
Diluted earnings per share:
Net income attributable to Republic Services, Inc.			$	1,487,586					$	1,290,405					$	967,237
Weighted average common shares outstanding			316,530						318,811						319,282
Effect of dilutive securities:
Options to purchase common stock			—						—						52
Unvested RSU awards			152						266						175
Unvested PSU awards			398						348						327
Weighted average common and common equivalent shares outstanding			317,080						319,425						319,836
Diluted earnings per share			$	4.69					$	4.04					$	3.02

During each of the years ended December 31, 2022, 2021 and 2020 there were less than 0.1 million antidilutive securities outstanding.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**15.**SEGMENT REPORTING

Our senior management evaluates, oversees and manages the financial performance of our operations through three field groups, referred to as Group 1, Group 2 and Group 3. Group 1 is our recycling and solid waste business operating primarily in geographic areas located in the western United States. Group 2 is our recycling and solid waste business operating primarily in geographic areas located in the southeastern and mid-western United States and the eastern seaboard of the United States. Group 3 is our environmental solutions business operating in geographic areas located across the United States and Canada. These groups are presented below as our reportable segments, which each provide integrated environmental services, including but not limited to collection, transfer, recycling and disposal. Prior to the third quarter of 2022, our environmental services operating segment, now referred to as our Group 3 reportable segment, was aggregated with Corporate entities and other.

Summarized financial information concerning our reportable segments for the years ended December 31, 2022, 2021 and 2020 follows:

			Group 1						Group 2						Recycling & Solid Waste Subtotal						Group 3 (Environmental Solutions)						Corporate entities and other						Total
2022
Gross Revenue			$	7,240.5					$	6,903.8					$	14,144.3					$	1,262.5					$	238.3					$	15,645.1
Intercompany Revenue			(1,104.5)						(930.9)						(2,035.4)						(46.6)						(51.8)						(2,133.8)
Net Revenue			$	6,136.0					$	5,972.9					$	12,108.9					$	1,215.9					$	186.5					$	13,511.3
Gross Adjusted EBITDA			$	1,979.4					$	1,685.9					$	3,665.3					$	253.7					$	10.3					$	3,929.3
Adjusted EBITDA allocations			27.5						25.4						52.9						(42.6)						(10.3)						—
Net Adjusted EBITDA			$	2,006.9					$	1,711.3					$	3,718.2					$	211.1					$	—					$	3,929.3
Adjusted EBITDA margin			32.2		%				28.2		%				30.2		%				17.4		%				—		%				29.1		%
Capital Expenditures			$	626.2					$	527.7					$	1,153.9					$	141.7					$	158.4					$	1,454.0
Total Assets			$	12,494.3					$	10,439.4					$	22,933.7					$	4,086.3					$	2,032.9					$	29,052.9
2021
Gross Revenue			$	6,630.0					$	6,229.1					$	12,859.1					$	242.4					$	220.3					$	13,321.8
Intercompany Revenue			(1,071.1)						(905.7)						(1,976.8)						(19.5)						(30.5)						(2,026.8)
Net Revenue			$	5,558.9					$	5,323.4					$	10,882.3					$	222.9					$	189.8					$	11,295.0
Gross Adjusted EBITDA			$	1,841.1					$	1,494.8					$	3,335.9					$	44.6					$	3.0					$	3,383.5
Adjusted EBITDA allocations			1.6						1.4						3.0						—						(3.0)						—
Net Adjusted EBITDA			$	1,842.7					$	1,496.2					$	3,338.9					$	44.6					$	—					$	3,383.5
Adjusted EBITDA margin			32.6		%				27.6		%				30.2		%				20.0		%				—		%				30.0		%
Capital Expenditures			$	601.9					$	541.8					$	1,143.7					$	50.8					$	121.8					$	1,316.3
Total Assets			$	12,199.2					$	9,926.9					$	22,126.1					$	1,211.6					$	1,617.3					$	24,955.0
2020
Gross Revenue			$	6,059.3					$	5,581.2					$	11,640.5					$	162.8					$	228.4					$	12,031.7
Intercompany Revenue			(1,001.8)						(828.6)						(1,830.4)						(18.0)						(29.7)						(1,878.1)
Net Revenue			$	5,057.5					$	4,752.6					$	9,810.1					$	144.8					$	198.7					$	10,153.6
Gross Adjusted EBITDA			$	1,639.8					$	1,267.1					$	2,906.9					$	27.5					$	54.9					$	2,989.3
Adjusted EBITDA allocations			29.0						25.9						54.9						—						(54.9)						—
Net Adjusted EBITDA			$	1,668.8					$	1,293.0					$	2,961.8					$	27.5					$	—					$	2,989.3
Adjusted EBITDA margin			32.3		%				26.7		%				29.7		%				19.0		%				—		%				29.4		%
Capital Expenditures			$	546.6					$	465.8					$	1,012.4					$	26.3					$	155.9					$	1,194.6
Total Assets			$	11,761.0					$	9,256.0					$	21,017.0					$	410.8					$	2,006.2					$	23,434.0

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 and other primarily include vehicle inventory acquired but not yet assigned to operating locations and facilities.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

National Accounts revenue included in Corporate entities and other represents the portion of revenue generated from nationwide and regional contracts in markets outside our operating areas where the associated material handling is subcontracted to local operators. Corporate functions include legal, tax, treasury, information technology, risk management, human resources, closed landfills and other administrative functions.

Revenue and overhead costs generated by Corporate entities and other are either specifically assigned or allocated on a rational and consistent basis amongst our reportable segments to calculate EBITDA and Adjusted EBITDA. This presentation is consistent with how our chief operating decision maker reviews results of operations to make resource allocation decisions.

Net Adjusted EBITDA reflects the allocation of Gross Adjusted EBITDA from Corporate entities and other to our reportable segments. As presented in the tables below, Adjusted EBITDA reflects certain adjustments for US Ecology deal and integration costs, losses on equity method investments, (gains) losses on business divestitures, restructuring expenses, adjustments to withdrawal liabilities from multi-employer pension funds, accelerated vesting of compensation expense related to the 2021 CEO transition, loss on extinguishment of debt and other related costs and Bridgeton insurance recovery.

The following table calculates our EBITDA and EBITDA margin for the years ended December 31, 2022, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

			2022												2021												2020
Net income attributable to Republic Services, Inc.			$	1,487.6					11.0		%				$	1,290.4					11.4		%				$	967.2					9.5		%
Net income attributable to noncontrolling interests			—												1.9												2.4
Provision for income taxes			343.9												282.8												173.1
Other expense (income), net			2.3												0.5												(4.1)
Interest income			(3.3)												(2.5)												(5.2)
Interest expense			395.6												314.6												355.6
Depreciation, amortization and depletion			1,351.6												1,185.5												1,075.9
Accretion			89.6												82.7												82.9
EBITDA and EBITDA margin			$	3,667.3					27.1		%				$	3,155.9					27.9		%				$	2,647.8					26.1		%

The following table calculates our adjusted EBITDA and adjusted EBITDA margin for the years ended December 31, 2022, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

			2022												2021												2020
EBITDA			$	3,667.3					27.1		%				$	3,155.9					27.9		%				$	2,647.8					26.1		%
Loss from unconsolidated equity method investment			165.6												188.5												118.2
Adjustment to withdrawal liability for multiemployer pension funds			(1.6)												—												34.5
Restructuring charges			27.0												16.6												20.0
(Gain) loss on business divestitures and impairments, net			(6.3)												0.5												77.7
US Ecology, Inc. acquisition integration and deal costs			77.3												—												—
Accelerated vesting of compensation expense for CEO transition			—												22.0												—
Loss on extinguishment of debt and other related costs			—												—												101.9
Bridgeton insurance recovery			—												—												(10.8)
Total adjustments			262.0												227.6												341.5
Adjusted EBITDA and adjusted EBITDA margin			$	3,929.3					29.1		%				$	3,383.5					30.0		%				$	2,989.3					29.4		%

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**16.**REVENUE

Our operations primarily consist of providing environmental services. The following table disaggregates our revenue by service line for the years ended December 31 (in millions of dollars and as a percentage of revenue):

			2022												2021												2020
Collection:
Residential			$	2,642.6					19.5		%				$	2,452.8					21.7		%				$	2,309.0					22.7		%
Small-container			3,945.7						29.2						3,417.7						30.3						3,106.8						30.6
Large-container			2,701.1						20.0						2,355.6						20.8						2,128.5						21.0
Other			53.9						0.4						52.1						0.5						45.2						0.5
Total collection			9,343.3						69.1						8,278.2						73.3						7,589.5						74.8
Transfer			1,574.5												1,490.0												1,349.4
Less: intercompany			(849.8)												(814.4)												(745.9)
Transfer, net			724.7						5.4						675.6						6.0						603.5						5.9
Landfill			2,681.7												2,516.6												2,307.3
Less: intercompany			(1,131.9)												(1,092.8)												(1,018.5)
Landfill, net			1,549.8						11.5						1,423.8						12.6						1,288.8						12.7
Environmental solutions			1,262.1												242.4												163.3
Less: intercompany			(53.9)												(19.5)												(18.1)
Environmental solutions, net			1,208.2						8.9						222.9						2.0						145.2						1.4
Other:
Recycling processing and commodity sales			359.3						2.7						420.5						3.7						297.1						2.9
Other non-core			326.0						2.4						274.0						2.4						229.5						2.3
Total other			685.3						5.1						694.5						6.1						526.6						5.2
Total revenue			$	13,511.3					100.0		%				$	11,295.0					100.0		%				$	10,153.6					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 material handling is subcontracted to local operators. Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.

Environmental solutions revenue includes revenue generated by US Ecology following our acquisition of the business on May 2, 2022.

The factors that impact the timing and amount of revenue recognized for each service line may vary based on the nature of the service performed. Generally, we recognize revenue at the time we perform a service. In the event that we bill for services in advance of performance, we recognize deferred revenue for the amount billed and subsequently recognize revenue at the time the service is provided. Depending on the nature of the contract, we may also generate revenue through the collection of fuel recovery fees and environmental fees which are designed to recover our internal costs of providing services to our customers.

See Note 15, Segment Reporting, for additional information regarding revenue by reportable segment.

Revenue by Service Line

Collection Services

Our collection business involves the collection of material for transport to transfer stations, or directly to landfills or recycling centers. Our 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 material collected, the distance to the disposal facility and the cost of disposal.

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, 2021 was recognized as revenue during 2022 when the service was performed.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 material 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 material 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 and nature of the material 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.

Environmental Solutions

Environmental solutions revenue is primarily generated from the fees we charge for the collection, treatment, consolidation, disposal and recycling of hazardous and non-hazardous waste, field and industrial services, equipment rental, emergency response and standby services and in-plant services, such as transportation and logistics, including at our transfer, storage and disposal facilities (TSDF). Activity for this service line varies across markets and reflects the regulatory environment, pricing and disposal alternatives available in any given market. Revenue recognized under these agreements is variable in nature and primarily based on the volume and type of waste accepted or processed during the period. For certain field and industrial services contracts, we have a right to consideration from our customers in an amount that corresponds directly with the value to the customer of the Company's performance completed to date. Therefore, we have applied the practice expedient to recognize revenue in the amount to which we have the right to invoice.

Recycling Processing and Commodity Sales

Our recycling centers generate revenue through the processing and sale of old corrugated cardboard (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., certain 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 material collected, treated, transported and disposed, and the nature of the material 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.

REPUBLIC SERVICES, INC.

NOTES TO 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, and we amortize the asset over the average life of the customer relationship. As of December 31, 2022 and 2021, we recognized $80.2 million and $80.6 million, respectively, of deferred contract costs and capitalized sales commissions. During the years ended December 31, 2022, 2021 and 2020, we amortized $13.4 million, $12.5 million and $12.2 million, respectively, of capitalized sales commissions to selling, general and administrative expenses, and $5.7 million, $6.4 million and $6.5 million, respectively, of other deferred contract costs as a reduction of revenue.

**17.**CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

A summary of changes in accumulated other comprehensive loss, net of tax, by component, for the years ended December 31, 2022, 2021 and 2020 follows:

			Cash Flow Hedges						Defined Benefit Pension Plan						Foreign Currency Translation						Total
Balance as of December 31, 2019			$	(13.7)					$	15.9					$	—					$	2.2
Other comprehensive (loss) income before reclassifications			(22.5)						2.1						—						(20.4)
Amounts reclassified from accumulated other comprehensive loss			5.8						—						—						5.8
Net current-period other comprehensive (loss) income			(16.7)						2.1						—						(14.6)
Balance as of December 31, 2020			(30.4)						18.0						—						(12.4)
Other comprehensive loss before reclassifications			—						(5.8)						—						(5.8)
Amounts reclassified from accumulated other comprehensive loss			4.6						(1.0)						—						3.6
Net current-period other comprehensive income (loss)			4.6						(6.8)						—						(2.2)
Balance as of December 31, 2021			(25.8)						11.2						—						(14.6)
Other comprehensive income (loss) before reclassifications			8.4						(1.6)						(5.0)						1.8
Amounts reclassified from accumulated other comprehensive loss			1.1						(0.4)						—						0.7
Net current-period other comprehensive income (loss)			9.5						(2.0)						(5.0)						2.5
Balance as of December 31, 2022			$	(16.3)					$	9.2					$	(5.0)					$	(12.1)

A summary of reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2022, 2021 and 2020 follows:

						Amount Reclassified from Accumulated Other Comprehensive Loss
Details about Accumulated Other Comprehensive Loss Components						2022						2021						2020						Affected Line Item in the Statement Where Net Income is Presented
(Loss) gain on cash flow hedges:
Terminated interest rate locks						$	(5.9)					$	(6.2)					$	(7.9)					Interest expense
2022 Interest Rate Swap						4.4						—						—						Interest expense
Total before tax						(1.5)						(6.2)						(7.9)
Tax benefit						0.4						1.6						2.1
Net of tax						(1.1)						(4.6)						(5.8)
Pension gains:
Pension settlement						0.5						1.3						—						Other income
Tax expense						(0.1)						(0.3)						—
Net of tax						0.4						1.0						—
Total gain (loss) reclassified into earnings, net of tax						$	(0.7)					$	(3.6)					$	(5.8)

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

**18.**FINANCIAL INSTRUMENTS

The effect of our derivative instruments in fair value and cash flow hedging relationships on the consolidated statements of income for the years ended December 31, 2022, 2021 and 2020 follows (in millions):

			Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
			2022									2021									2020
			Interest Expense									Interest Expense									Interest Expense
Total amounts of expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded			$	(395.6)								$	(314.6)								$	(355.6)
The effects of fair value and cash flow hedging relationships in Subtopic 815-20:
Gain (loss) on fair value hedging relationships:
Interest rate swaps:
Net swap settlements			$	2.9								$	7.9								$	5.7
Net periodic (loss) earnings			$	(3.3)								$	(0.1)								$	2.0
Effect of dedesignation			$	—								$	—								$	4.7
(Loss) gain on cash flow hedging relationships:
Amount of (loss) gain reclassified from accumulated other comprehensive loss into earnings, net of tax
Interest rate swap locks			$	(4.4)								$	(4.6)								$	(5.8)
2022 Interest Rate Swap			$	3.3								$	—								$	—
The effects of derivative instruments not in Subtopic 815-20:
Loss on free-standing derivative instruments:
Interest rate swaps:
Loss on change in fair value of free-standing derivative instruments			$	(5.0)								$	(4.4)								$	(0.1)
Interest rate contract:
Net gain (loss) on change in fair value of free-standing derivative instruments			$	2.1								$	0.3								$	(2.7)

Fair Value Measurements

In measuring fair values of assets and liabilities, we use valuation techniques that maximize the use of observable inputs (Level 1) and minimize the use of unobservable inputs (Level 3). We also use market data or assumptions that we believe market participants would use in pricing an asset or liability, including assumptions about risk when appropriate.

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.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2022 and 2021, our assets and liabilities that are measured at fair value on a recurring basis include the following:

			December 31, 2022
									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			$	38.3					$	38.3					$	38.3					$	—					$	—
Bonds - restricted cash and marketable securities and other assets			56.9						56.9						—						56.9						—
Derivative and hedging assets - other assets			105.8						105.8						—						105.8						—
Total assets			$	201.0					$	201.0					$	38.3					$	162.7					$	—
Liabilities:
Derivative and hedging liabilities - other accrued liabilities and other long-term liabilities			$	102.0					$	102.0					$	—					$	102.0					$	—
Contingent consideration - other accrued liabilities and other long-term liabilities			65.1						65.1						—						—						65.1
Total liabilities			$	167.1					$	167.1					$	—					$	102.0					$	65.1

			December 31, 2021
									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			$	35.2					$	35.2					$	35.2					$	—					$	—
Bonds - restricted cash and marketable securities and other assets			63.1						63.1						—						63.1						—
Derivative and hedging assets - other assets			19.7						19.7						—						19.7						—
Total assets			$	118.0					$	118.0					$	35.2					$	82.8					$	—
Liabilities:
Other derivative liabilities - other long-term liabilities			$	50.7					$	50.7					$	—					$	50.7					$	—
Contingent consideration - other accrued liabilities and other long-term liabilities			68.8						68.8						—						—						68.8
Total liabilities			$	119.5					$	119.5					$	—					$	50.7					$	68.8

Total Debt

As of December 31, 2022 and 2021, the carrying value of our total debt was $11.8 billion and $9.6 billion, respectively, and the fair value of our total debt was $11.1 billion and $10.3 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 December 31, 2022 and 2021. See Note 9, Debt, for further information related to our debt.

Contingent Consideration

In 2015, we entered into a waste management contract with the County of Sonoma, California to operate the county's waste management facilities. As of December 31, 2022, the Sonoma contingent consideration represents the fair value of $60.2 million payable to the County of Sonoma based on the achievement of future annual tonnage targets through the expected remaining capacity of the landfill. The potential undiscounted amount of all future contingent payments that we could be required to make under the waste management contract is estimated to be between approximately $78 million and $113 million.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2022, the activity in the contingent consideration liability included accretion, which was offset by concession payments made in the ordinary course of business. There were no changes to the estimate of fair value.

19. 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 7, Other Liabilities; and (2) environmental remediation liabilities, which are discussed in Note 8, Landfill and Environmental Costs.

We accrue for legal proceedings when losses become probable and reasonably estimable. We have recorded an aggregate accrual of approximately $9 million relating to our outstanding legal proceedings as of December 31, 2022. 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 $7 million higher than the amount recorded as of December 31, 2022.

Multiemployer Pension Plans

We participate in multiemployer pension plans that generally provide retirement benefits to participants of contributing employers. We do not administer these plans.

Under current law regarding multiemployer pension plans, our withdrawal (which we consider from time to time) or the mass withdrawal from any under-funded multiemployer pension plan (each, a Withdrawal Event) could require us to make payments to the plan for our proportionate share of the plan’s unfunded vested liabilities. During the course of operating our business, we incur Withdrawal Events regarding certain of the multiemployer pension plans in which we participate. We accrue for such events when losses become probable and reasonably estimable.

Unconditional Purchase Commitments

Royalties

We have entered into agreements to pay royalties to prior landowners or host communities, based on, among other things, revenue received and waste tonnage disposed at specified landfills. These royalties are generally payable quarterly and amounts incurred, but not paid, are accrued in our consolidated balance sheets. Royalties are accrued as revenue is received or tonnage is disposed of, as applicable, in the landfills.

Disposal Agreements

We have several agreements that require us to dispose of a minimum number of tons at third-party disposal facilities. Under these put-or-pay agreements, we must pay for agreed-upon minimum volumes regardless of the actual number of tons placed at the facilities.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our unconditional purchase commitments have varying expiration dates, with some extending through the remaining life of the respective landfill. Future minimum payments under unconditional purchase commitments, consisting primarily of (1) disposal related agreements, which include fixed or minimum royalty payments, host agreements and take-or-pay and put-or-pay agreements, and (2) other obligations including committed capital expenditures and consulting service agreements, as of December 31, 2022 are as follows:

2023			$	133.9
2024			103.8
2025			69.2
2026			42.0
2027			36.1
Thereafter			360.2
			$	745.2

Cash and Cash Equivalents and Restricted Cash and Marketable Securities

Restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. Beginning-of-period and end-of-period cash, cash equivalents, restricted cash and restricted cash equivalents as presented in the statements of cash flows are reconciled as follows:

						December 31, 2022						December 31, 2021						December 31, 2020
Cash and cash equivalents						$	143.4					$	29.0					$	38.2
Restricted cash and marketable securities						127.6						139.0						149.1
Less: restricted marketable securities						(56.7)						(62.4)						(73.1)
Cash, cash equivalents, restricted cash and restricted cash equivalents						$	214.3					$	105.6					$	114.2

Our restricted cash and marketable securities includes amounts pledged to regulatory agencies and governmental entities as financial guarantees of our performance under certain collection, landfill and transfer station contracts and permits and relating to our final capping, closure and post-closure obligations at our landfills and restricted cash and marketable securities related to our insurance obligations.

The following table summarizes our restricted cash and marketable securities as of December 31:

			2022						2021
Financing proceeds			$	—					$	12.4
Capping, closure and post-closure obligations			39.1						42.4
Insurance			88.5						84.2
Total restricted cash and marketable securities			$	127.6					$	139.0

We must provide financial assurance to governmental agencies and a variety of other entities under applicable environmental regulations relating to our landfill operations for capping, closure and post-closure costs and our performance under certain collection, landfill and transfer station contracts. We satisfy our financial assurance requirements by providing surety bonds, letters of credit, insurance policies or trust deposits. The amount of the financial assurance requirements for capping, closure and post-closure costs is determined by applicable state environmental regulations, which vary by state. The financial assurance requirements for capping, closure and post-closure costs can either be for costs associated with a portion of the landfill or the entire landfill. Generally, states will require a third-party engineering specialist to determine the estimated capping, closure and post-closure costs that are used to determine the required amount of financial assurance for a landfill. The amount of financial assurance required can, and generally will, differ from the obligation determined and recorded under U.S. GAAP. The amount of the financial assurance requirements related to contract performance varies by contract. Additionally, we are required to provide financial assurance for our insurance program and collateral for certain performance obligations.

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We had the following financial instruments and collateral in place to secure our financial assurances as of December 31:

			2022						2021
Letters of credit			$	475.0					$	465.5
Surety bonds			$	4,322.3					$	3,950.2

We had $347.6 million and $341.9 million of letters of credit outstanding under our Credit Facility as of December 31, 2022 and 2021, respectively. Surety bonds subject to expiration will expire on various dates through 2029.

These financial instruments are issued in the normal course of business and are not classified as debt. Because we currently have no liability for this financial assurance, it is not reflected in our consolidated balance sheets. However, we have recorded capping, closure and post-closure obligations and insurance reserves as they are incurred.

We own a 19.9% interest in a company that, among other activities, issues financial surety bonds to secure capping, closure and post-closure obligations for companies operating in the environmental services industry. We account for this investment using an alternative measurement approach. There have been no identified events or changes in circumstances that may have a significant adverse effect on the recoverability of this investment. This investee company and the parent company of the investee had written surety bonds for us relating primarily to our landfill operations for capping, closure and post-closure, of which $1,606.0 million were outstanding as of December 31, 2022. Our reimbursement obligations under these bonds are secured by an indemnity agreement with the investee and a surety bond.

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.

Guarantees

We enter into contracts in the normal course of business that include indemnification clauses. Indemnifications relating to known liabilities are recorded in the consolidated financial statements based on our best estimate of required future payments. Certain of these indemnifications relate to contingent events or occurrences, such as the imposition of additional taxes due to a change in the tax law or adverse interpretation of the tax law and indemnifications made in divestiture agreements where we indemnify the buyer for liabilities that relate to our activities prior to the divestiture and that may become known in the future. We do not believe that these contingent obligations will have a material effect on our consolidated financial position, results of operations or cash flows.

We have entered into agreements with property owners to guarantee the value of property that is adjacent to certain of our landfills. These agreements have varying terms. We do not believe that these contingent obligations will have a material effect on our consolidated financial position, results of operations or cash flows.

Other Matters

Our business activities are conducted in the context of a developing and changing statutory and regulatory framework. Governmental regulation of the environmental services industry requires us to obtain and retain numerous governmental permits to conduct various aspects of our operations. These permits are subject to revocation, modification or denial. The costs and other capital expenditures that may be required to obtain or retain the applicable permits or comply with applicable regulations could be significant. Any revocation, modification or denial of permits could have a material adverse effect on us.