Business Acquisitions, Investments and Restructuring Charges

12 Months Ended

Dec. 31, 2018

Business Acquisitions, Investments and Restructuring Charges

BUSINESS ACQUISITIONS, INVESTMENTS AND RESTRUCTURING CHARGES

We acquired various waste businesses during the years ended December 31, 2018 and 2017. The purchase price paid for these business acquisitions and the allocations of the purchase price follows:



	2018			2017
Purchase price:
Cash used in acquisitions, net of cash acquired	$	99.9		$	325.4
Contingent consideration	—			5.2
Holdbacks	11.2			7.7
Fair value, future minimum lease payments	—			6.0
Fair value of operations surrendered	78.6			70.1
Total	$	189.7		$	414.4
Allocated as follows:
Restricted cash	$	—		$	2.9
Accounts receivable	6.4			28.5
Landfill airspace	22.2			28.0
Property and equipment	28.0			130.7
Other assets	0.1			51.3
Inventory	0.2			4.3
Accounts payable	(0.3		)	(6.5		)
Environmental remediation liabilities	—			(0.8		)
Closure and post-closure liabilities	(1.5		)	(5.4		)
Other liabilities	(6.1		)	(25.0		)
Fair value of tangible assets acquired and liabilities assumed	49.0			208.0
Excess purchase price to be allocated	$	140.7		$	206.4
Excess purchase price to be allocated as follows:
Other intangible assets	$	27.8		$	25.5
Goodwill	112.9			180.9
Total allocated	$	140.7		$	206.4

One of our fourth quarter 2018 acquisitions included certain hauling and recycling operations, the effects of which impacted our Group 1 operating segment. On a preliminary basis, we recorded $10.3 million of property and equipment, $12.4 million of intangible assets and $41.8 million of goodwill. Contemporaneous with this acquisition, we divested certain hauling and transfer operations in our Group 1 operating segment with a fair value of approximately $79 million, resulting in a gain on disposition of $39.5 million.

One of our third quarter 2017 acquisitions included certain hauling, recycling and landfill operations, the effects of which impacted both of our operating segments. We recorded $35.2 million of property and equipment, $8.8 million of intangible assets and $26.1 million of goodwill. Contemporaneous with this acquisition, we divested certain hauling operations in our Group 1 operating segment with a fair value of approximately $70 million, resulting in a gain on disposition of $17.1 million.

In the fourth quarter of 2017, we acquired all of the issued and outstanding shares of RE Community Holdings II, Inc. (ReCommunity) for $167.1 million, net of cash acquired, plus $5.3 million of certain capital leases. Prior to the acquisition, ReCommunity was the largest independent recycling-processing company in the United States, with 26 recycling processing centers in 14 states, operating primarily in locations where Republic maintains a leading market presence. We allocated $50.0 million of property and equipment, $48.5 million of deferred tax assets, $3.5 million of intangible assets and $69.1 million of goodwill.

The purchase price allocations are preliminary and are based on information existing at the acquisition dates. Accordingly, the purchase price allocations are subject to change. Substantially all of the goodwill and intangible assets recorded for acquisitions in 2018 were deductible for tax purposes. Goodwill of $42.2 million recorded for certain acquisitions in 2017 was not deductible for tax purposes.

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.

Investments

In 2018 and 2017, 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 noncontrolling interests, we made certain capital contributions of approximately $82 million and $29 million, which were recorded to other long-term assets in our December 31, 2018 and 2017 consolidated balance sheets, respectively. During 2018 and 2017, we also reduced the carrying value of these investments by $35.8 million and $27.4 million, respectively, as a result of tax credits allocated to us, cash distributions, and our share of income and loss pursuant to the terms of the limited liability company agreements.

For further discussion of the income tax benefits, see Note 10, Income Taxes.

Restructuring Charges

In January 2018, we eliminated certain positions following the consolidation of select back-office functions, including but not limited to the integration of our National Accounts support functions into our existing corporate support functions. These changes include a reduction in administrative staffing and closing of certain office locations. During 2018, we incurred restructuring charges of $26.4 million that primarily consisted of severance and other employee termination benefits, the closure of offices with non-cancelable lease agreements, and the redesign of our back-office functions and software systems. We paid $24.7 million during 2018 related to these restructuring efforts.

In January 2016, we realigned our field support functions by combining our three regions into two field groups, consolidating our areas and streamlining select operational support roles at our Phoenix headquarters. Additionally, in the second quarter of 2016, we began the redesign of our back-office functions as well as the consolidation of over 100 customer service locations into three Customer Resource Centers. The redesign of our back-office functions and software systems continued into 2018. During the years ended December 31, 2017 and 2016, we incurred $17.6 million and $40.7 million of restructuring charges, respectively, that primarily consisted of severance and other employee termination benefits, transition costs, relocation benefits, and the closure of offices with lease agreements with non-cancelable terms. The savings realized from these restructuring efforts have been reinvested in our customer-focused programs and initiatives. During 2017 and 2016, we paid $18.6 million and $32.5 million, respectively, related to these restructuring efforts.