Financial Instruments

9 Months Ended

Sep. 30, 2023

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 nine months ended September 30, 2023 and 2022 follows (in millions):


	Classification and amount of gain (loss) recognized in income on hedging relationships and derivative instruments
		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		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		$	(127.6)	$	(105.2)	$	(378.8)	$	(282.7)

The effects of fair value and cash flow hedging relationships in Subtopic 815-20:
(Loss) gain on fair value hedging relationships:
Interest rate swaps:
Net swap settlements		$	—	$	0.4	$	(2.2)	$	3.7
Net periodic (loss) earnings		$	—	$	(0.9)	$	(1.1)	$	(2.1)

(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		$	(0.9)	$	(1.1)	$	(2.9)	$	(3.2)
2022 interest rate swap		$	3.2	$	1.1	$	10.0	$	1.1

The effects of derivative instruments not in Subtopic 815-20:
Gain (loss) on free-standing derivative instruments:
Interest rate swaps:
Gain (loss) on change in fair value of free-standing derivative instruments		$	—	$	(0.8)	$	1.0	$	(5.2)
Interest rate contract:
Net (loss) gain on change in fair value of free-standing derivative instruments		$	(0.6)	$	0.5	$	(1.9)	$	2.2

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 September 30, 2023 and December 31, 2022, our assets and liabilities that are measured at fair value on a recurring basis include the following:


	September 30, 2023
			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	$	41.9	$	41.9	$	41.9	$	—	$	—
Bonds - restricted cash and marketable securities and other assets	57.3		57.3		—		57.3		—
Derivative and hedging assets - prepaid and other current assets and other assets	120.8		120.8		—		120.8		—

Total assets	$	220.0	$	220.0	$	41.9	$	178.1	$	—
Liabilities:


Derivative and hedging liabilities - other accrued liabilities and other long-term liabilities	$	111.3	$	111.3	$	—	$	111.3	$	—

Contingent consideration - other accrued liabilities and other long-term liabilities	64.1		64.1		—		—		64.1
Total liabilities	$	175.4	$	175.4	$	—	$	111.3	$	64.1


	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

Total Debt

The carrying value of our total debt was $11.9 billion and $11.8 billion as of September 30, 2023 and December 31, 2022, respectively, and the fair value of our total debt was $11.0 billion and $11.1 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 September 30, 2023 and December 31, 2022. 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 September 30, 2023, the Sonoma contingent consideration represents the fair value of $59.3 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. During the nine months ended September 30, 2023, 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.