Financial Instruments

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The effect of our hedging relationships and derivative instruments on the consolidated statements of income for the three and six months ended June 30, 2022 and 2021 follows (in millions):


	Classification and amount of gain (loss) recognized in income on hedging relationships and derivative instruments
		Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021
		Interest Expense		Interest Expense		Interest Expense		Interest Expense

Total amount of expense line items presented in the consolidated statements of income in which the effects of hedging relationships and derivative instruments are recorded		$	(94.0)	$	(78.4)	$	(177.5)	$	(156.7)

The effects of fair value and cash flow hedging relationships in Subtopic 815-20:
Gain on fair value hedging relationships:
Interest rate swaps:
Net swap settlements		$	1.4	$	2.0	$	3.2	$	3.9
Net periodic (loss) earnings		$	(0.6)	$	0.1	$	(1.2)	$	0.2

Loss on cash flow hedging relationships:
Interest rate swap locks:
Amount of loss reclassified from accumulated other comprehensive loss into income, net of tax		$	(1.1)	$	(1.2)	$	(2.2)	$	(2.3)

The effects of derivative instruments not in Subtopic 815-20:
Gain (loss) on free-standing derivative instruments:
Interest rate swaps:
Loss on change in fair value of free-standing derivative instruments		$	(1.6)	$	(0.8)	$	(4.3)	$	(2.0)
Interest rate contract:
Net gain (loss) on change in fair value of free-standing derivative instruments		$	0.4	$	(0.6)	$	1.7	$	(0.2)

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, current investments, accounts payable and certain other accrued liabilities, approximates fair value because of their short-term nature. As of June 30, 2022 and December 31, 2021, our assets and liabilities that are measured at fair value on a recurring basis include the following:


	June 30, 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	$	30.5	$	30.5	$	30.5	$	—	$	—
Bonds - restricted cash and marketable securities and other assets	57.4		57.4		—		57.4		—
Derivative and hedging assets - other assets	59.5		59.5		—		59.5		—

Total assets	$	147.4	$	147.4	$	30.5	$	116.9	$	—
Liabilities:


Derivative and hedging liabilities - other long-term liabilities	$	66.8	$	66.8	$	—	$	66.8	$	—

Contingent consideration - other accrued liabilities and other long-term liabilities	67.9		67.9		—		—		67.9
Total liabilities	$	134.7	$	134.7	$	—	$	66.8	$	67.9


	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:
Derivative and hedging 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

The carrying value of our total debt was $11.9 billion and $9.6 billion as of June 30, 2022 and December 31, 2021, respectively, and the fair value of our total debt was $11.4 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 were based on Level 2 inputs of the fair value hierarchy as of June 30, 2022 and December 31, 2021. See Note 7, 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 June 30, 2022, the Sonoma contingent consideration represents the fair value of $61.4 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 $77 million and $95 million. During the six months ended June 30, 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.