What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-18 compared with 2020-02-13 · 505 added, 503 removed, 1594 unchanged (39% of the section changed)

18 unchanged sentences

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, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 18, 2021 expressed an unqualified opinion.

Change in accounting principle

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases on January 1, 2019 due to the adoption of Accounting Standard Codification (“ASC”) 842, Leases .

Basis for opinion

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These transactions were accounted for as business combinations in accordance with ASC 805, Business Combinations.

The principal consideration for our determination, that the accounting for these acquisitions represents a critical audit matter, is the judgments and assumptions associated with management’s determination of the fair value of assets acquired and liabilities assumed, including fair value determinations related to transfer station permits, residential customer lists, acquisition site costs and commercial customer lists, all of which are recorded as intangible assets.

The principal consideration for our determination that the accounting for these acquisitions represents a critical audit matter, is the judgments and assumptions associated with management’s determination of the fair value of assets acquired and liabilities assumed, including fair value determinations related to transfer station permits, residential customer lists,

acquisition site costs and commercial customer lists, all of which are recorded as intangible assets.

Auditing the fair value involved a high degree of subjectivity, auditor judgment and effort in evaluating management’s significant assumptions, primarily due to the complexity of the valuation models used to measure the fair value of the aforementioned intangible assets, as well as the sensitivity of the underlying significant assumptions.

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The audit procedures related to the accounting for the acquisitions included the following:

● We tested the design and operating effectiveness of key controls related to the accounting for the 2019 acquisitions, including controls relating to management’s development of forecasts for discount rate, revenue growth rates, operating expenses, EBITDA margins, capital expenditures, customer turnover rates, and contributory asset charges;

● We tested the design and operating effectiveness of key controls related to the accounting for the 2020 acquisitions, including controls relating to management’s development of forecasts for discount rates, revenue growth rates, operating expenses, EBITDA margins, capital expenditures, customer turnover rates and contributory asset charges;

● We obtained certain of the purchase price allocation analyses from management and third-party specialists engaged by management.

We assessed the qualifications and competence of management and the third-party specialists and evaluated the methodologies used to determine the fair value of the fixed assets and intangible assets;

● We tested the assumptions used within the discounted cash flow models to estimate the fair value of the intangible assets which included assumptions such as discount rate, revenue growth rates, operating expenses, EBITDA margins, capital expenditures, customer turnover rates, and contributory asset charges;

● We tested the assumptions used within the discounted cash-flow models to estimate the fair value of the intangible assets which included assumptions such as discount rate, revenue growth rate, operating expenses, EBITDA margin, capital expenditures, customer turnover rate and contributory asset charges;

● We tested the Company’s ability to forecast future cash flows for acquired businesses by reviewing actual results in the first year after being acquired compared to amounts forecasted when the fair values of acquired assets and liabilities were determined;

● We utilized an internal valuation specialist to assist the engagement team in evaluating:

the methodologies used and whether they were acceptable for the underlying acquisitions and whether such methodologies were being applied correctly, the appropriateness of the discount rate used by performing a sensitivity analysis, and the qualifications of the valuation specialist engaged by the Company based on their credentials and experience.

Landfill Accounting

At December 31, 2020, the Company’s final capping, closure and post-closure liability was $301.9 million.

As explained in Note 3 to the consolidated financial statements, the net present value of the landfill final capping, closure, and post-closure liabilities are calculated by estimating the total obligation in current dollars, inflating the obligation based upon the expected future date of the expenditures and discounting the inflated total to its present value using a credit-adjusted risk-free rate.

The principal consideration for our determination that landfill accounting represents a critical audit matter is the judgments and estimates associated with management’s determination of the liability, due to the nature of the inputs and significant assumptions used in the process including the discount rate, inflation rate, accretion rates, survey data, acreage information, permitted, deemed and remaining airspace, and probability of landfill expansions, all of which can have a significant impact on the calculation of the final capping, closure, and post-closure liability.

As explained in Note 3 to the consolidated financial statements, the net present value of landfill final capping, closure and post-closure liabilities are calculated by estimating the total obligation in current dollars, inflating the obligation based upon the expected future date of the expenditures and discounting the inflated total to its present value using a credit-adjusted risk-free rate.

The principal consideration for our determination that landfill accounting represents a critical audit matter is the judgments and estimates associated with management’s determination of the liability due to the nature of the inputs and significant assumptions used in the process including the discount rate, inflation rate, accretion rate, survey data, acreage information, permitted, deemed and remaining airspace and probability of landfill expansions, all of which can have a significant impact on the calculation of the final capping, closure and post-closure liability.

Auditing the net present value of the obligation involved a high degree of subjectivity, auditor judgment and effort in evaluating management’s assumptions primarily due to the complexity of the models used to measure the landfill liability, as well as the sensitivity of the underlying significant assumptions.

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● We obtained and reviewed supporting documentation to support management’s criteria for deemed expansions.

Exploration and Production Assets Impairment

As described in Note 3 to the consolidated financial statements, the decrease in energy exploration and production activity caused by the COVID-19 pandemic, together with market expectations of a slow recovery in oil prices, reduced the expected future cash flows of the Company’s Exploration and Production (“E&P”) segment’s operations.

Based upon the results of the impairment test, the Company concluded that the carrying value exceeded the estimated undiscounted cash flows of four E&P landfills, resulting in an impairment charge to property and equipment of $417.4 million to mark these assets down to fair value.

The principal consideration for our determination that the impairment assessment of the E&P assets represents a critical audit matter is the judgments and estimates associated with management’s determination of the fair value of the E&P assets, including determinations about drilling activity by basin as the basis for expectations of future activity and discounted cash flows.

In order to determine the impairment amount, the Company used a discounted cash flow model to estimate the fair values of these landfills, which included assumptions such as discount rate, annual revenue projections based on E&P waste activity which is determined by projected levels of oil and natural gas E&P during the forecast period at each location, gross margin, capital expenditures, and income taxes that form the basis of the forecasted results.

Auditing the fair value calculation of these assets involved a high degree of subjectivity, auditor judgment and effort in evaluating management’s significant assumptions primarily due to the complexity of the valuation models used to measure the fair value of the aforementioned assets, as well as the sensitivity of the underlying significant assumptions.

Our audit procedures related to the accounting for the E&P asset impairment included the following:

● We tested the design and operating effectiveness of key controls related to the accounting for the E&P asset impairment, including development of the discounted cash flow model, discount rate, revenue projections, projected levels of future activity, gross margin, capital expenditures, and income taxes;

● We obtained the impairment analysis from management and assessed the qualifications and competence of management, and evaluated the methodologies used to determine the fair value of four E&P landfills;

● We tested the assumptions used within the discounted cash-flow models to estimate the fair value of the four E&P landfills which included assumptions such as discount rate, forecasted revenue, projected levels of future activity, gross margin, capital expenditures and income taxes;

● We utilized an internal valuation specialist to assist the engagement team in evaluating:

the methodologies used and whether they were acceptable for the underlying assets and whether such methodologies were being applied correctly and the appropriateness of the discount rate and remaining useful life estimates used by performing a sensitivity analysis.

/s/ GRANT THORNTON LLP

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Cash and equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 16,432 and $ 16,760 at December 31, 2019 and 2018, respectively

Accounts receivable, net of allowance for credit losses of $ 19,380 and $ 16,432 at December 31, 2020 and 2019, respectively

Prepaid expenses and other current assets

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Income before income tax provision

Income tax (provision) benefit

Income tax provision

Net loss (income) attributable to noncontrolling interests

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Other comprehensive income (loss), before tax

Income tax (expense) benefit related to items of other comprehensive income (loss)

Income tax benefit related to items of other comprehensive income (loss)

Other comprehensive income (loss), net of tax

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Restricted share units released from deferred compensation plan

Fair value adjustment for common shares in deferred compensation plan exchanged for other investment options

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Exercise of options and warrants

Exercise of warrants

Repurchase of common shares

Cash dividends on common shares

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Cumulative effect adjustment from adoption of new accounting pronouncement

Acquisition of noncontrolling interest

Distributions to noncontrolling interests

Balances at December 31, 2018

3 unchanged sentences

Restricted share units released from deferred compensation plan

Fair value adjustment for common shares in deferred compensation plan exchanged for other investment options

Tax withholdings related to net share settlements of equity-based compensation

1 unchanged sentence

Exercise of warrants

Repurchase of common shares

Cash dividends on common shares

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Distributions to noncontrolling interests

Net income (loss)

Balances at December 31, 2019

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NONCONTROLLING

INCOME (LOSS)

Balances at December 31, 2019

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Restricted share units released from deferred compensation plan

Fair value adjustment for common shares in deferred compensation plan exchanged for other investment options

Tax withholdings related to net share settlements of equity-based compensation

1 unchanged sentence

Exercise of warrants

Repurchase of common shares

( 1,271,977 )

Cash dividends on common shares

2 unchanged sentences

Foreign currency translation adjustment

Cumulative effect adjustment from adoption of new accounting pronouncement

Distributions to noncontrolling interests

Net income (loss)

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Amortization of intangibles

Amortization of leases

Deferred income taxes, net of acquisitions

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Capital expenditures for property and equipment

Capital expenditure for purchase of greenfield landfill site

Capital expenditures for undeveloped landfill property

Investment in noncontrolling interest

Proceeds from disposal of assets

Change in restricted investments, net of interest income

Net cash used in investing activities

1 unchanged sentence

( 1,426,006 )

( 1,371,820 )

CASH FLOWS FROM FINANCING ACTIVITIES:

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( 1,542,958 )

( 1,470,711 )

Payment of contingent consideration recorded at acquisition date

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Proceeds from sale of common shares held in trust

Net cash provided by (used in) financing activities

Distributions to noncontrolling interests

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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Fair value of assets acquired

Fair value of operations exchanged

Cash paid for current year acquisitions

1 unchanged sentence

Liabilities assumed and notes payable issued to sellers of businesses acquired

Non-cash consideration received for asset sales

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

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All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company is an integrated solid waste services company that provides non-hazardous waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the U.S.

Through its R360 Environmental Solutions subsidiary, the Company is also a leading provider of non-hazardous exploration and production (“E&P”) waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the U.S.

The Company also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities.

The Company is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with recycling and resource recovery, in mostly exclusive and secondary markets in the U.S.

Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services (“E&P”) in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest

The challenges posed by the pandemic of coronavirus disease 2019 (“COVID-19”) on the global economy persisted through the fourth quarter of 2020 and continue to impact the demand for the Company’s services to varying degrees and in varying ways across the U.S.

and Canada and across a variety of lines of business, including commercial collection and solid waste and E&P waste disposal.

In response to the COVID-19 pandemic, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing.

In some markets where a portion of these measures have been curtailed, the impact to demand for the Company’s services has decreased as activity levels have increased.

The impact of the COVID-19 pandemic on the Company’s business, results of operations, financial condition and cash flows in future periods will depend largely on future developments, including the duration and spread of the outbreak in the U.S.

and Canada, its severity, the actions to contain the novel coronavirus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted at this time.

NEW ACCOUNTING STANDARDS AND RECLASSIFICATIONS

Accounting Standards Adopted

Lease Accounting .

In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease).

The liability will be equal to the present value of lease payments.

The asset will be based on the liability, subject to adjustment, such as for initial direct costs.

For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance.

Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases).

Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines.

The new standard was effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted.

The FASB issued new guidance in July 2018, which amended the guidance to allow the issuer to elect from two adoption alternatives:

1) apply the new guidance at the beginning of the earliest comparative period presented;

or 2) apply the new guidance at the effective date and recognize a cumulative-effect adjustment, without adjusting the comparative periods presented.

Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments .

In June 2016, the Financial Accounting Standards Board, (“FASB”) issued guidance introducing a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables , that requires entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.

The standard became effective for public business entities that are U.S.

Securities and Exchange Commission (“SEC”) filers for annual periods beginning after December 15, 2019 and interim periods within those years.

The Company adopted the new standard on January 1, 2020.

The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements as pre-existing processes for estimating expected credit losses for trade receivables aligned with the expected credit loss model.

See Note 3 for additional information and disclosures related to the adoption of this new standard.

SEC streamlines some Regulation S-K disclosure requirements and adds new requirement .

In August 2020, the SEC amended its disclosure requirements relating to the description of business, legal proceedings, and risk factors.

Key changes include:

(1) permitting a company to provide an update of the general development of its business if it incorporates by reference a full discussion from a single previously-filed registration statement or report;

(2) requiring, if material, a description of the company’s human capital resources, including any human capital measures/objectives that the company focuses on in managing its business;

(3) increasing the quantitative threshold for disclosing certain governmental environmental proceedings and allowing legal proceedings disclosures to be hyperlinked or cross-referenced to other sections in the document;

and (4) requiring a risk factor summary if the risk factor section is longer than 15 pages.

The provisions were effective 30 days after being published in the Federal Register, or November 9, 2020.

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company adopted the new standard on January 1, 2019 and elected to apply the new guidance at the effective date and recognize a cumulative-effect adjustment, without adjusting the comparative periods presented.

The Company applied the package of practical expedients to leases that commenced before the effective date whereby the Company elected not to reassess the following:

(1) whether any expired or existing contracts are or contain leases;

(2) the lease classification for any expired or existing leases;

and (3) whether initial direct costs exist for any existing leases.

The Company also applied the (1) practical expedient for land easements where the Company elected to not apply the leases standard to certain existing land easements at transition and (2) practical expedient to include both the lease and nonlease components as a single component and account for it as a lease.

The Company has completed its assessment of the provisions of the lease accounting guidance and implementation of its leasing software solution to manage and account for leases under the new standard.

December 31, 2018

Adoption of Lease Guidance

Increase (Decrease)

January 1, 2019

Operating lease right-of-use assets

Current portion of operating lease liabilities

Total current liabilities

Long-term portion of operating lease liabilities

Deferred income taxes

Total liabilities

Retained earnings

Total liabilities and equity

The adoption of the new standard did not have a material impact on the Company’s consolidated statements of net income or consolidated statements of cash flows.

See Note 8 for additional information and disclosures related to the adoption of this amended guidance.

Derivatives and Hedging:

Targeted Improvements to Accounting for Hedging Activities .

In August 2017, the FASB issued guidance which improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP.

The amendments in this update are intended to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results.

The effective date for the standard is for fiscal years beginning after December 15, 2018.

The adoption of this guidance, effective January 1, 2019, did not have a material impact on the Company’s consolidated financial statements.

Derivatives and Hedging:

Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting .

As LIBOR is expected to no longer be published by 2021, the FASB issued guidance in October 2018 which added the OIS rate based on SOFR as an eligible benchmark interest rate in order to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes.

The Company adopted the new guidance effective January 1, 2019 on a prospective basis.

The Company is developing a plan to transition its interest rate swaps from LIBOR to SOFR.

Accounting Standards Pending Adoption

Income Taxes – Simplifying the Accounting for Income Taxes .

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes as part of its overall initiative to reduce complexity in applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements.

The amendments include removal of certain exceptions to the general principles of income taxes, and simplification in several other areas such as accounting for a franchise tax that is partially based on income.

The standard is effective for public business entities that are SEC filers for annual periods beginning after December 15, 2020, and interim periods within those reporting periods.

The Company adopted the new standard as of January 1, 2021.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

SEC modernizes and simplifies certain Regulation S-K disclosure requirements .

In March 2019, the U.S.

Securities and Exchange Commission (the “SEC”) amended its rules to modernize and simplify certain disclosure requirements in Regulation S-K and the related rules and forms.

These changes include, among other things, (1) allowing registrants to redact confidential information from most exhibits to their filings without filing a confidential treatment request;

(2) revising the requirements for management’s discussion and analysis to allow flexibility, including allowing registrants

Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

In March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions to the guidance in U.S.

generally accepted accounting principles (“GAAP”) on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”), anticipated to be phased out by the end of 2021, and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”).

Under the new guidance, entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met.

An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination.

Under the guidance, entities can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met.

The guidance is effective upon issuance.

The guidance on contract modifications is applied prospectively from any date beginning March 12, 2020.

It may also be applied to modifications of existing contracts made earlier in the interim period that includes the effective date.

The guidance on hedging is applied to eligible hedging relationships existing as of the beginning of the interim period that includes the effective date and to new eligible hedging relationships entered into after the beginning of that interim period.

The relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date.

However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022.

The Company is currently assessing the potential impact of implementing this new guidance on its consolidated financial statements .

To the extent that the transition away from the use of LIBOR might affect the Company’s ability to maintain cash ‎flow hedge accounting as described in Note 3, the relief is expected to permit the Company to maintain that cash flow ‎hedge accounting.

SEC amends MD&A and other Regulation S-K disclosure requirements .

In November 2020, the SEC adopted amendments to Regulation S-K to eliminate certain disclosure requirements and to revise several others to make the disclosures provided in management’s discussion and analysis more useful for investors.

Key changes included:

(1) enhancements and clarification of the disclosure requirements for liquidity and capital resources;

(2) elimination of five years of Selected Financial Data;

(3) replacement of the current requirement for two years of quarterly tabular disclosure with a principles-based requirement to provide information only when there are material retrospective changes;

(4) codification of prior SEC guidance on critical accounting estimates;

(5) elminiation of the tabular disclosure of contractual obligations;

and (6) conforming amendments for foreign private issuers.

The amended rules were posted to the Federal Register on January 11, 2021 and became effective February 10, 2021.

Registrants are required to comply with the new rules beginning with the first fiscal year ending on or after August 9, 2021.

Registrants may early adopt the amended rules at any time after the effective date (on an itrem-by-item basis), as long as they provide the disclosure responsive to an amended item in its entirety.

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

providing three years of financial statements to omit discussion of the earliest year and cross-reference its discussion in a previous filing;

(3) removing the example risk factors in Regulation S-K to encourage more meaningful company-specific disclosure;

(4) clarifying the description of property requirements to emphasize that those disclosures should only include properties that are material to the registrant;

and (5) requiring XBRL data tagging for items on the cover pages of certain filings, as well as the use of hyperlinks for information that is incorporated by reference and available on EDGAR.

The provisions regarding the redaction of confidential information in exhibits were effective upon publication in the Federal Register.

The provisions requiring XBRL data tagging are subject to a three-year phase-in, depending on the filing status of the registrant, which, for the Company, were effective for the period ending June 30, 2019.

All other provisions were effective on May 2, 2019.

Accounting Standards Pending Adoption

Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments .

In June 2016, the FASB issued guidance which introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables , which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.

The standard will be effective for public business entities that are SEC filers for annual periods beginning after December 15, 2019 and interim periods within those years.

Early adoption is permitted.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Income Taxes – Simplifying the Accounting for Income Taxes .

The standard will be effective for public business entities that are SEC filers for annual periods beginning after December 15, 2020, and interim periods within those reporting periods.

Early adoption is permitted.

The Company has not yet assessed the potential impact of implementing this new guidance on its consolidated financial statements.

Reclassification

As disclosed within other footnotes of the financial statements, segment information reported in the Company’s prior year have been reclassified to conform with the 2019 presentation.

As disclosed within other notes to the financial statements, segment information reported in the Company’s prior year periods has been reclassified to conform with the 2020 presentation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Gains and losses from foreign currency transactions are included in earnings for the period.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Cash Equivalents

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Credit risk on accounts receivable is minimized as a result of the large and diverse nature of the Company’s customer base.

The Company maintains allowances for losses based on the expected collectability of accounts receivable.

The Company maintains allowances for credit losses based on the expected collectability of accounts receivable.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Revenue Recognition and Accounts Receivable

The Company’s operations primarily consist of providing non-hazardous waste collection, transfer, disposal and recycling services, non-hazardous exploration and production (“E&P”) waste treatment, recovery and disposal services, and intermodal services.

The Company’s operations primarily consist of providing non-hazardous waste collection, transfer, disposal and recycling services, E&P services, and intermodal services.

The following table disaggregates the Company’s revenues by service line for the periods indicated:

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See Note 16 for additional information regarding revenue by reportable segment.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Revenue by Service Line

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In addition, certain 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.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Solid waste collection revenue from sources other than customer contracts primarily relates to lease revenue associated with compactors.

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Solid Waste Recycling

Solid waste recycling revenues are generated by offering residential, commercial, industrial and municipal customers recycling services for a variety of recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles and ferrous and aluminum metals.

The Company owns recycling operations and markets collected recyclable materials to third parties for processing before resale.

In certain instances, the Company issues

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

recycling rebates to municipal or commercial customers, which can be based on the price it receives upon the sale of recycled commodities, a fixed contractual rate or other measures.

Solid waste recycling revenues result from the sale of recycled commodities, which are generated by offering residential, commercial, industrial and municipal customers recycling services for a variety of recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles and ferrous and aluminum metals.

The Company owns and operates recycling operations and markets collected recyclable materials to third parties for processing before resale.

In some instances, the Company utilizes a third party to market recycled materials.

In certain instances, the Company issues recycling rebates to municipal or commercial customers, which can be based on the price it receives upon the sale of recycled commodities, a fixed contractual rate or other measures.

The Company also receives rebates when it disposes of recycled commodities at third-party facilities.

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E&P Waste Treatment, Recovery and Disposal

E&P revenue is primarily generated through the treatment, recovery and disposal of non-hazardous exploration and production waste from vertical and horizontal drilling, hydraulic fracturing, production and clean-up activity, as well as other services including closed loop collection systems, the transportation of waste to the disposal facility in certain markets and the sale of recovered products.

E&P activity varies across market areas that are tied to the natural resource basins in which the drilling activity occurs and reflects the regulatory environment, pricing and disposal alternatives available in any given market.

Revenue recognized under these agreements is variable in nature based on the volume of waste accepted or processed during the period.

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Other revenues consist primarily of the sale of methane gas generated from the Company’s MSW landfills.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Revenue Recognition

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Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash.

The carrying value of the Company’s receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value.

The Company estimates its allowance for doubtful accounts based on historical collection trends, type of customer such as municipal or non-municipal, the age of outstanding receivables and existing economic conditions.

The carrying value of the Company’s receivables, net of the allowance for credit losses, represents their estimated net realizable value.

The allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.

The Company monitors the collectability of its trade receivables as one overall pool due to all trade receivables having similar risk characteristics.

The Company estimates its allowance for credit losses based on historical collection trends, the age of outstanding receivables, geographical location of the customer, existing economic conditions and reasonable forecasts.

If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

receivable balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amount due.

Past-due receivable balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amount due.

The following is a rollforward of the Company’s allowance for credit losses from January 1, 2020 to December 31, 2020:

Beginning balance

Current period provision for expected credit losses

Write-offs charged against the allowance

Recoveries collected

Impact of changes in foreign currency

Ending balance

Contract Acquisition Costs

1 unchanged sentence

The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity would have recognized is one year or less.

The Company had approximately $ 16,900 of deferred sales incentives at both December 31, 2019 and 2018.

The Company had $ 19,669 and $ 16,846 of deferred sales incentives at December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded a total of $ 17,138 , $ 19,673 and $ 17,313 , respectively, of sales incentive amortization expense for deferred sales incentives and sales incentive expense for contracts with original terms of less than one year.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Property and Equipment

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The total cost to develop a site to its final capacity includes amounts previously expended and capitalized, net of accumulated depletion, and projections of future purchase and development costs, liner construction costs, and operating construction costs.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

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Total landfill costs include the development costs associated with expansion airspace.

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consider site inspection, groundwater monitoring, leachate management, methane gas control and recovery, and operating and maintenance costs to be incurred during the period after the facility closes.

Certain of these environmental costs, principally capping and methane gas control costs, are also incurred during the operating life of the site in accordance with the landfill operation requirements of Subtitle D and the air emissions standards.

Certain of these environmental costs, principally capping and methane gas control costs, are also incurred during the operating life of the site in accordance with the landfill operation requirements

WASTE CONNECTIONS, INC.

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of Subtitle D and the air emissions standards.

Daily maintenance activities, which include many of these costs, are expensed as incurred during the operating life of the landfill.

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Any changes in expectations that result in a downward revision (or no revision) to the estimated undiscounted cash flows result in a liability that is inflated and discounted at rates reflecting the market conditions at the time the cash flows were originally estimated.

This policy results in the Company’s final capping, closure and post-closure liabilities being recorded in “layers.” The Company’s discount rate assumption for purposes of computing 2019 and 2018 “layers” for final capping, closure and post-closure obligations was 4.75 % for both years, which reflects the Company’s long-term credit adjusted risk free rate as of the end of both 2018 and 2017.

This policy results in the Company’s final capping, closure and post-closure liabilities being recorded in “layers.” The Company’s discount rate assumption for purposes of computing 2020 and 2019 “layers” for final capping, closure and post-closure obligations was 4.75 % for both years, which reflects the Company’s long-term credit adjusted risk free rate.

The Company’s inflation rate assumption was 2.5 % for the years ended December 31, 2020 and 2019.

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The costs for final capping, closure and post-closure obligations at landfills the Company owns or operates under life-of-site agreements are generally estimated based on interpretations of current requirements and proposed or anticipated regulatory changes.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

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The following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, 2018 to December 31, 2020:

Final capping, closure and post-closure liability at December 31, 2018

Liabilities incurred

Liability adjustments

Accretion expense associated with landfill obligations

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Final capping, closure and post-closure liability at December 31, 2019

Liabilities incurred

Liability adjustments

Accretion expense associated with landfill obligations

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Assumption of closure liabilities from acquisitions

Disposition of closure liabilities from divested operations

Foreign currency translation adjustment

Final capping, closure and post-closure liability at December 31, 2020

Liabilities incurred of $ 19,846 and $ 2,640 for the years ended December 31, 2019 and 2018, respectively, represent non-cash increases to final capping, closure and post-closure liabilities and are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

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Liability adjustments of $ 2,490 and $ 19,846 for the years ended December 31, 2020 and 2019, respectively, represent non-cash changes to final capping, closure and post-closure liabilities and are recorded on the Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed.

The final capping, closure and post-closure liability is included in Other long-term liabilities in the Consolidated Balance Sheets.

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It is possible that the Company’s estimates or assumptions could ultimately be significantly different from actual results.

In some cases, the Company may be unsuccessful in obtaining an expansion permit or the Company may

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

determine that an expansion permit that the Company previously thought was probable has become unlikely.

In some cases, the Company may be unsuccessful in obtaining an expansion permit or the Company may determine that an expansion permit that the Company previously thought was probable has become unlikely.

To the extent that such estimates, or the assumptions used to make those estimates, prove to be significantly different than actual results, or the belief that the Company will receive an expansion permit changes adversely in a significant manner, the costs of the landfill, including the costs incurred in the pursuit of the expansion, may be subject to impairment testing, as described below, and lower profitability may be experienced due to higher amortization rates, higher capping, closure and post-closure rates, and higher expenses or asset impairments related to the removal of previously included expansion airspace.

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The cell processing reserve is the future cost to properly treat and dispose of existing waste within the cells at the various facilities.

The reserve generally covers estimated costs to be incurred over a period of time up to 24 months, with the current portion representing costs estimated to be incurred in the next 12 months.

The reserve generally covers estimated costs to be incurred over a period of time up to 24 months, with the

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

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current portion representing costs estimated to be incurred in the next 12 months.

The estimate is calculated based on current estimated volume in the cells, estimated percentage of waste treated, and historical average costs to treat and excavate the waste.

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Finite-Lived Intangible Assets

The amounts assigned to franchise agreements, contracts, customer lists, permits and other agreements are being amortized on a straight-line basis over the expected term of the related agreements (ranging from 1 to 56 years ).

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

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The amounts assigned to franchise agreements, contracts, customer lists, permits and other agreements are being amortized over the expected term of the related agreements (ranging from 1 to 56 years ).

The Company uses an accelerated or straight line basis for amortization, depending on the attributes of the related intangibles.

Goodwill and Indefinite-Lived Intangible Assets

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● a more likely than not expectation that a segment or a significant portion thereof will be sold;

● the testing for recoverability of a significant asset group within the segment;

● the testing for recoverability of a significant asset group within a segment;

● current period or expected future operating cash flow losses.

The Company elected to early adopt the guidance issued by the FASB “Simplifying the Test for Goodwill Impairment” on January 1, 2017.

The new guidance removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation.

As such, the impairment analysis is only one step.

In this step, the Company estimates the fair value of each of its reporting units, which consisted of testing its five geographic solid waste operating segments and its E&P segment at December 31, 2019, 2018 and 2017, using discounted cash flow analyses.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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As part of the Company’s goodwill impairment test, the Company estimates the fair value of each of its reporting units using discounted cash flow analyses.

At December 31, 2019 and 2018, the Company’s reporting units consisted of its five geographic solid waste operating segments and its E&P segment.

As of July 1, 2020, the Company combined all operations of its E&P segment into the Southern segment, based on the Company’s determination that the two operating segments met the aggregation criteria, and eliminated the E&P segment.

The Company’s former E&P segment had $ 0 of goodwill at each of June 30, 2020 and December 31, 2019 and 2018.

The Company compares the fair value of each reporting unit with the carrying value of the net assets assigned to each reporting unit.

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If the fair value of the indefinite-lived intangible asset is less than its carrying value, an impairment charge would be recorded to earnings in the Company’s Consolidated Statements of Net Income.

During the Company’s annual impairment analysis of its solid waste operations, the Company determined the fair value of each of its five geographic solid waste operating segments at December 31, 2019, 2018 and 2017 and each indefinite-lived intangible asset within those segments using discounted cash flow analyses, which require significant assumptions and estimates about the future operations of each reporting unit and the future discrete cash flows related to each indefinite-lived intangible asset.

Significant judgments inherent in these analyses include the determination of appropriate discount rates, the amount and timing of expected future cash flows and growth rates.

During the Company’s annual impairment analysis of its solid waste operations, the Company determined the fair value of each of its five geographic operating segments at December 31, 2020, 2019 and 2018 and each indefinite-lived intangible asset within those segments using discounted cash flow analyses, which require significant assumptions and estimates about the future operations of each reporting unit and the future discrete cash flows related to each indefinite-lived intangible asset.

Significant judgments inherent in these analyses include the determination of appropriate discount rates, the amount and timing of expected future cash flows, growth rates and income tax rates.

The cash flows employed in the Company’s 2020 discounted cash flow analyses were based on ten-year financial forecasts, which in turn were based on the 2021 annual budget developed internally by management.

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In assessing the reasonableness of the Company’s determined fair values of its reporting units, the Company evaluates its results against its current market capitalization.

The Company did no t record an impairment charge to any of its five geographic solid

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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waste operating segments as a result of its annual goodwill and indefinite-lived intangible assets impairment tests for the years ended December 31, 2019, 2018 or 2017.

Upon adopting the goodwill impairment accounting guidance in the first quarter of 2017, the Company performed an updated impairment test for its E&P segment.

The impairment test involved measuring the recoverability of goodwill by comparing the E&P segment’s carrying amount, including goodwill, to the fair value of the reporting unit.

The fair value was estimated using an income approach employing a discounted cash flow (“DCF”) model.

The DCF model incorporated projected cash flows over a forecast period based on the remaining estimated lives of the operating locations comprising the E&P segment.

This was based on a number of key assumptions, including, but not limited to, a discount rate of 11.7 %, annual revenue projections based on E&P waste resulting from projected levels of oil and natural gas exploration and production activity during the forecast period, gross margins based on estimated operating expense requirements during the forecast period and estimated capital expenditures over the forecast period, all of which were classified as Level 3 in the fair value hierarchy.

The impairment test showed the carrying value of the E&P segment exceeded its fair value by an amount in excess of the carrying amount of goodwill, or $ 77,343 .

Therefore, the Company recorded an impairment charge of $ 77,343 , consisting of the carrying amount of goodwill at its E&P segment at January 1, 2017, to Impairments and other operating charges in the Consolidated Statements of Net Income during the year ended December 31, 2017.

Additionally, the Company evaluated the recoverability of the E&P segment’s indefinite-lived intangible assets (other than goodwill) by comparing the estimated fair value of each indefinite-lived intangible asset to its carrying value.

The Company estimated the fair value of the indefinite-lived intangible assets using an excess earnings approach.

Based on the result of the recoverability test during the years ended December 31, 2019, 2018 and 2017, the Company did no t record an impairment charge.

The Company did no t record an impairment charge to any of its five geographic operating segments as a result of its annual goodwill and indefinite-lived intangible assets impairment tests for the years ended December 31, 2020, 2019 or 2018.

Impairments of Property and Equipment and Finite-Lived Intangible Assets

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Cash flow projections are sometimes based on a group of assets, rather than a single asset.

If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether an impairment has occurred for the group of assets for which the projected cash flows can be identified.

If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether an impairment has occurred for the group of assets for

WASTE CONNECTIONS, INC.

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which the projected cash flows can be identified.

If the fair value of an asset is determined to be less than the carrying amount of the asset or asset group, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs.

Several impairment indicators are beyond the Company’s control, and whether or not they will occur cannot be predicted with any certainty.

Estimating future cash flows requires significant

Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized.

There are other considerations for impairments of landfills, as described below.

The demand for the Company’s E&P waste services depends on the continued demand for, and production of, oil and natural gas.

Crude oil and natural gas prices historically have been volatile.

Macroeconomic and geopolitical conditions, including a significant decline in oil prices driven by both surplus production and supply, as well as the decrease in demand caused by factors including the COVID-19 pandemic, have resulted in decreased levels of oil and natural gas exploration and production activity and a corresponding decrease in demand for the Company’s E&P waste services.

During the year ended December 31, 2020, total E&P revenue declined $ 112,114 , compared to the prior year period, on rig count declines of 56 % in certain basins.

The most impacted basins include the Williston Basin in North Dakota, the Eagle Ford Basin in Texas and the Powder River Basin in Wyoming, all of which have relatively high costs associated with drilling, making them less attractive than other basins, including the Permian Basin in Texas and New Mexico.

Additionally, across the industry there is uncertainty regarding future demand for oil and related services, as noted by several energy companies, many of whom are customers of the Company’s E&P segment.

These companies have written down the values of their oil and gas assets in anticipation of the potential for the decarbonization of their energy product mix given an increased global focus on reducing greenhouse gases and addressing climate change.

Such uncertainty regarding global demand has had a significant impact on the investment and operating plans of the Company’s E&P waste customers in the basins where the Company operates.

The decrease in exploration and production activity, together with market expectations of a likely slow recovery in oil prices, reduced the expected future period cash flows of the Company’s E&P operations.

Based on these events, the Company concluded that a triggering event occurred which required the Company to perform an impairment test of the property and equipment and intangible assets of its E&P operations as of June 30, 2020 using July 2020 industry projections for drilling activity by basin as the basis for expectations about future activity.

Based upon the results of the impairment test, the Company concluded that the carrying value exceeded the projected undiscounted cash flows of four E&P landfills.

The next step was to calculate the fair value of these four landfills using an income approach employing a discounted cash flow (“DCF”) model over the lesser of 40 years or the remaining life of each landfill.

Additional key assumptions used in the DCF model included a discount rate of 12 % applied to the cash flows, annual revenue projections based on E&P waste resulting from projected levels of oil and natural gas exploration and production activity during the forecast period at each location, gross margins based on estimated operating expense requirements during the forecast period, estimated capital expenditures over the forecast period and income taxes based on the estimated federal and state income tax rates applicable during the cash flow periods, all of which were classified as Level 3 in the fair value hierarchy.

For each of the four landfills, the carrying value exceeded the calculated discounted fair value, resulting in the recording of an impairment charge of $ 417,384 to Impairments and other operating items in the Consolidated Statements of Net Income during the year ended December 31, 2020.

The four landfills had $ 0 of intangible assets at June 30, 2020;

therefore, no impairment charge was attributable to intangible assets.

The impairment charge reduced the carrying value of property and equipment by $ 417,384 .

If the estimated annual cash flows in the DCF model for each asset or asset group tested was changed by 10%, the resulting impairment charge would change by approximately $ 3,000 .

The aforementioned impairment charges were partially offset by a $ 4,145 adjustment to reduce the fair value of an amount payable in 2021 under a liability-classified contingent consideration arrangement calculated on future earnings and cash flows associated with the acquisition of an E&P business in 2014.

Based upon the outlook for E&P waste services in the market where the acquired business operates, the payment of the contingent consideration was deemed unlikely and the carrying value was reduced to $ 0 as of June 30, 2020, resulting in a credit to Impairments and other operating items in the Consolidated Statements of Net Income.

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

judgment and projections may vary from cash flows eventually realized.

There are other considerations for impairments of landfills, as described below.

During the year ended December 31, 2019, the Company recorded an $ 8,000 impairment charge, which is included in Impairments and other operating items in the Consolidated Statements of Net Income, for property and equipment associated with a landfill development project in its E&P segment that the Company is no longer pursuing.

During the year ended December 31, 2018, the Company did no t record an impairment charge for property and equipment.

During the year ended December 31, 2017, the Company recorded an $ 11,038 impairment charge, which is included in Impairments and other operating items in the Consolidated Statements of Net Income, for property and equipment associated with a project to develop a new landfill in its Central segment that the Company is no longer pursuing.

There are certain indicators listed above that require significant judgment and understanding of the waste industry when applied to landfill development or expansion projects.

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2.60 % Senior Notes due 2030

3.05 % Senior Notes due 2050

* Senior Notes are classified as Level 2 within the fair value hierarchy.

Fair value is based on quotes of bonds with similar ratings in similar industries.

Fair value inputs include third-party calculations of the market interest rate of notes with similar ratings in similar industries over the remaining note terms.

For details on the fair value of the Company’s interest rate swaps, fuel hedges, restricted cash and investments and contingent consideration, see Note 11.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

At December 31, 2019, the Company’s derivative instruments included 16 interest rate swap agreements as follows:

At December 31, 2020, the Company’s derivative instruments included six interest rate swap agreements as follows:

Interest Rate

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1-month LIBOR

February 2020

1 unchanged sentence

1-month LIBOR

February 2017

February 2020

1-month LIBOR

February 2020

February 2023

1-month LIBOR

December 2018

1 unchanged sentence

Plus applicable margin.

On September 28, 2020, the Company terminated four of its interest rate swaps with notional amounts of $ 150,000 , $ 150,000 , $ 50,000 and $ 50,000 , each of which would have expired in January 2021.

As a result of terminating these interest rate swaps, the Company made total cash payments of $ 853 to the counterparties of the swap agreements.

Another of the Company’s objectives for utilizing derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in the price of diesel fuel.

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Interest rate swaps

Prepaid expenses and other current assets (a)

Prepaid expenses and other current assets

Accrued liabilities (a)

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Total derivatives designated as cash flow hedges

(a) Represents the estimated amount of the existing unrealized gains and losses, respectively, on interest rate swaps as of December 31, 2019 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months.

(a) Represents the estimated amount of the existing unrealized losses on interest rate swaps as of December 31, 2020 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months.

The actual amounts reclassified into earnings are dependent on future movements in interest rates.

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Prepaid expenses and other current assets

Accrued liabilities

Other long-term liabilities

Other assets, net

Total derivatives designated as cash flow hedges

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The Company classifies its liability for unrecognized tax benefits as a current liability to the extent it anticipates making a payment within one year.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No.

118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (“Tax Act”).

The Tax Act, enacted on December 22, 2017, is comprehensive tax legislation which makes broad and complex changes to the U.S.

tax code that affected 2017 and subsequent years.

SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification 740 (“ASC 740”).

In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete.

To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

In connection with the Company’s analysis of the Tax Act, a discrete net income tax benefit of $ 269,804 was recorded in the year ended December 31, 2017.

This net income tax benefit was primarily the result of the reduction to the corporate income tax rate from 35 percent to 21 percent.

Additionally, the Tax Act’s one-time deemed repatriation transition tax (the “Transition Tax”) on certain unrepatriated earnings of non-U.S.

subsidiaries is a tax on previously untaxed accumulated and current earnings and profits of certain of the Company’s non-U.S.

subsidiaries.

Share-Based Compensation

Under the 2020 Employee Share Purchase Plan (the “ESPP”) , participants will be granted an option to purchase Company common shares on the first business day of each offering period, with such option to be automatically exercised on the last business day of such offering period to purchase a whole number of the Company’s common shares determined by dividing the accumulated payroll deductions in the participant’s notional account on such exercise date by the applicable exercise price.

The exercise price is equal to 95 % of the closing price of the Company’s common shares on the last day of the relevant offering period;

provided, however, that such exercise price will not be less than 85 % of the volume weighted average price of the Company’s common shares as reflected on the Toronto Stock Exchange (the “TSX”) over the final five trading days of the offering period.

The fair value of restricted share unit (“RSU”) awards is determined based on the number of RSUs granted and the closing price of the common shares in the capital of the Company adjusted for future dividends.

The fair value of deferred share unit (“DSU”) awards is determined based on the number of DSUs granted and the closing price of the common shares in the capital of the Company.

WASTE CONNECTIONS, INC.

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the amount of the Transition Tax, the Company had to determine, in addition to other factors, the amount of post-1986 earnings and profits of the relevant subsidiaries, as well as the amount of non-U.S.

income taxes paid on such earnings.

The Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional Transition Tax obligation of $ 1,000 for the year ended December 31, 2017.

The Transition Tax, which has been determined to be complete, resulted in a total Transition Tax obligation of $ 746 with a corresponding adjustment of $ 254 to income tax expense for the year ended December 31, 2018.

Further, as it relates to the Company’s policy regarding the accounting for the tax impacts of global intangible low-taxed income, it has elected to record the tax impacts as period costs.

Additionally, in conjunction with the Tax Act, the Company recorded a provisional deferred income tax expense of $ 62,350 for the year ended December 31, 2017 associated with a portion of its U.S.

earnings no longer permanently reinvested.

During the year ended December 31, 2018, the Company recorded a deferred income tax expense of $ 6,429 associated with refinements to the prior year estimate as a measurement period adjustment pursuant to SAB 118.

This resulted in total deferred income tax expense of $ 68,779 which has been determined to be complete.

Share-Based Compensation

The fair value of deferred share unit (“DSU”) awards is determined based on the number of DSUs granted and the closing price of the common shares in the capital of the Company.

Compensation expense associated with outstanding performance-based restricted share unit (“PSU”) awards is measured using the fair value of the Company’s common shares adjusted for future dividends and is based on the estimated achievement of the established performance criteria at the end of each reporting period until the performance period ends, recognized ratably over the performance period.

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The weighted average remaining vesting period of PSU awards is 1.1 years.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Other Restricted Share Units

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All remaining unvested Progressive Waste restricted share units vested during the year ended December 31, 2019.

Other Performance-Based Restricted Share Units

As of December 31, 2018 and 2017, the Company had a liability of $ 1,923 and $ 3,500 , respectively, representing the December 31, 2018 and 2017 fair values, respectively, of outstanding Progressive Waste performance-based restricted share units, which were cash settled, less unrecognized compensation cost.

The fair value was calculated using the volume weighted average price of the Company’s shares for the five preceding business days as of December 31, 2018 and 2017 which were $ 73.06 , and $ 71.50 , respectively.

All remaining unvested Progressive Waste performance-based restricted share units vested during the year ended December 31, 2018.

All remaining outstanding Progressive Waste performance-based restricted share units were settled during the year ended December 31, 2019.

Other Share Based Options

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Annual dividend rate

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

All remaining unvested Progressive Waste share based options vested during the year ended December 31, 2017.

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Advertising expense for the years ended December 31, 2020, 2019 and 2018, was $ 4,870 , $ 5,410 and $ 5,029 , respectively, which is included in Selling, general and administrative expense in the Consolidated Statements of Net Income.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Insurance Liabilities

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The Company’s insurance accruals are based on claims filed and estimates of claims incurred but not reported and are developed by the Company’s management with assistance from its third-party actuary and its third-party claims administrator.

The insurance accruals are influenced by the Company’s past claims experience factors, which have a limited history, and by published industry development factors.

The insurance accruals are influenced by the Company’s past claims experience factors and by published industry development factors.

At December 31, 2020 and 2019, the Company’s total accrual for self-insured liabilities was $ 140,182 and $ 127,029 , respectively, which is included in Accrued liabilities in the Consolidated Balance Sheets.

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Actual results for all estimates could differ materially from the estimates and assumptions that the Company uses in the preparation of its consolidated financial statements.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The Company recognizes, separately from goodwill, the identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values.

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The Company acquired 21 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the year ended December 31, 2020.

The purchase consideration recorded during this period included contingent consideration based upon future asset and revenue growth associated with the acquired businesses.

The fair value of the total contingent consideration recorded during the year ended December 31, 2019 of $ 14,038 was determined using probability assessments of the expected future cash flows over a one to four year period in which the obligations are expected to be settled, and applying an average discount rate of 2.3 %.

As of December 31, 2019, the obligations recognized at the purchase date have not materially changed.

Any changes in the fair value of the contingent

WASTE CONNECTIONS, INC.

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consideration subsequent to the acquisition date will be charged or credited to expense until the contingency is settled.

The total acquisition-related costs incurred during the year ended December 31, 2020 for these acquisitions was $ 9,803 .

1 unchanged sentence

The Company acquired 21 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the year ended December 31, 2019.

The purchase price for one of these acquisitions included contingent consideration of $ 11,593 , representing the fair value of up to $ 12,582 of amounts payable to the former owners based on the achievement of certain operating targets specified in the asset purchase agreement.

The fair value of the contingent consideration was determined using probability assessments of the expected future cash flows over the three-year period in which the obligation is expected to be settled, and applying a discount rate of 2.7 %.

As of December 31, 2019, the obligation recognized at the purchase date has not materially changed.

Any changes in the fair value of the contingent consideration subsequent to the acquisition date will be charged or credited to expense until the contingency is settled.

The purchase consideration recorded during this period for five of the acquired businesses included contingent consideration based upon the achievement of certain targets, including future asset and revenue growth.

During the year ended December 31, 2020, the fair value of an obligation based upon future asset growth increased $ 3,327 .

Any subsequent changes in the fair value of the contingent consideration recorded for these acquisitions will be charged or credited to expense until the contingency is settled.

The total acquisition-related costs incurred during the year ended December 31, 2019 for these acquisitions was $ 12,335 .

These expenses are included in Selling, general and administrative expenses in the Company’s Consolidated Statements of Net Income.

The Company acquired 14 individually immaterial non-hazardous solid waste collection, transfer and recycling businesses during the year ended December 31, 2017.

The Company acquired 20 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the year ended December 31, 2018.

The purchase price for one of these acquisitions included recording an initial estimate for contingent consideration of $ 11,593 , representing the fair value of up to $ 12,582 of amounts payable to the former owners based on the achievement of certain operating targets specified in the asset purchase agreement.

As of December 31, 2020, the fair value of the obligation increased to $ 33,674 , based on updated estimates of the operating targets that are expected to be achieved.

The increase in the fair value of the contingent consideration was charged to expense and any subsequent changes will be charged to or credited to expense until the contingency is settled.

The total acquisition-related costs incurred during the year ended December 31, 2018 for these acquisitions was $ 8,607 .

9 unchanged sentences

Fair value of consideration transferred:

Notes issued to sellers

Fair value of operations exchanged

Change in open working capital settlements at year end

2 unchanged sentences

Prepaid expenses and other current assets

Operating lease right-of-use assets

Property and equipment

4 unchanged sentences

Accounts payable and accrued liabilities

Current portion of operating lease liabilities

Deferred revenue

Contingent consideration

Long-term portion of operating lease liabilities

Other long-term liabilities

4 unchanged sentences

Goodwill acquired in 2018 totaling $ 455,283 is expected to be deductible for tax purposes.

The fair value of acquired working capital related to nine individually immaterial acquisitions completed during the year ended December 31, 2019, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed.

Any adjustments recorded relating to finalizing the working capital for these nine acquisitions are not expected to be material to the Company’s financial position.

The fair value of acquired working capital related to 11 individually immaterial acquisitions completed during the year ended December 31, 2020, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed.

Any adjustments recorded relating to finalizing the working capital for these 11 acquisitions are not expected to be material to the Company’s financial position.

The gross amount of trade receivables due under contracts acquired during the year ended December 31, 2020, was $ 13,854 , of which $ 95 was expected to be uncollectible.

50 unchanged sentences

( 3,446,821 )

Machinery and equipment included $ 3,754 and $ 0 , at December 31, 2020 and 2019, respectively, of equipment assets accounted for as finance leases.

The Company’s landfill depletion expense, recorded in Depreciation in the Consolidated Statements of Net Income, for the years ended December 31, 2020, 2019 and 2018, was $ 200,374 , $ 225,687 and $ 206,404 , respectively.

The Company rents certain equipment and facilities under both short-term agreements and non-cancelable operating lease agreements.

The Company rents certain equipment and facilities under short-term agreements, non-cancelable operating lease agreements and finance leases.

The Company determines if an arrangement is or contains a lease at contract inception.

9 unchanged sentences

The variable lease payments take into account annual changes in the consumer price index and common area maintenance charges, if known.

ROU assets for operating leases are periodically reviewed for impairment losses.

ROU assets for operating and finance leases are periodically reviewed for impairment losses.

The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

The Company did not recognize an impairment charge for any of its ROU assets during the year ended December 31, 2019.

The Company monitors for events or changes in circumstances that require a reassessment of one of its leases.

When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the

The Company did no t recognize an impairment charge for any of its ROU assets during the years ended December 31, 2020 and 2019.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

carrying amount of the corresponding ROU asset.

The Company did not recognize any significant remeasurements during the year ended December 31, 2019.

The Company monitors for events or changes in circumstances that require a reassessment of one of its leases.

When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset.

The Company did no t recognize any significant remeasurements during the years ended December 31, 2020 and 2019.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less.

1 unchanged sentence

The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.

Lease cost for operating leases for the year ended December 31, 2019 was as follows:

December 31, 2019

The Company initially entered into finance leases in December 2020 and the assets under these leases went into service on December 31, 2020.

Lease cost for operating leases for the years ended December 31, 2020 and 2019 were as follows:

Years Ended December 31,

Operating lease cost

Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows:

December 31, 2019

Years Ended December 31,

Operating cash flow information:

1 unchanged sentence

Non-cash activity:

Right-of-use assets obtained in exchange for lease liabilities

Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:

December 31, 2019

Weighted average remaining lease term

Weighted average discount rate

Right-of-use assets obtained in exchange for lease liabilities - operating leases

Right-of-use assets obtained in exchange for lease liabilities - finance leases

Weighted-average remaining lease term and discount rate for the Company’s leases are as follows:

Years Ended December 31,

Weighted average remaining lease term - operating leases

Weighted average remaining lease term - finance leases

Not applicable

Weighted average discount rate - operating leases

Weighted average discount rate - finance leases

Not applicable

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

As of December 31, 2020, future minimum lease payments, as calculated under the new lease guidance and reconciled to the operating lease liability, are as follows:

Operating Leases

Finance Leases

Minimum lease payments

3 unchanged sentences

Long-term portion of operating lease liabilities

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

As of December 31, 2018, minimum lease payments under non-cancelable operating leases by period were expected to be as follows:

A summary of rent expense for both short-term agreements and non-cancelable operating lease agreements for the years ended December 31, 2018 and 2017 was as follows:

A summary of rent expense for both short-term agreements and non-cancelable operating lease agreements for the year ended December 31, 2018 was as follows:

ACCRUED LIABILITIES

3 unchanged sentences

Interest payable

Final capping, closure and post-closure liability - current portion

Unrealized cash flow hedge losses

Cell processing reserve - current portion

Environmental remediation reserve - current portion

Share-based compensation plan liability – current portion

Final capping, closure and post-closure liability

Cell processing reserve

Environmental remediation reserve

Share-based compensation plan liability

WASTE CONNECTIONS, INC.

17 unchanged sentences

2.60 % Senior Notes due 2030

Tax-exempt bonds

3.05 % Senior Notes due 2050

Notes payable to sellers and other third parties, bearing interest ranging from 2.42 % to 10.35 %, principal and interest payments due periodically with due dates ranging from 2021 to 2036 (a)

Finance leases, bearing interest at 1.89 % with a lease expiration date of 2026 (a)

Less – current portion

Less – debt issuance costs

Less – unamortized debt discount and issuance costs

(a) Interest rates represent the interest rates incurred at December 31, 2020.

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The borrowings under the Credit Agreement are unsecured.

The Credit Agreement contains customary representations, warranties, covenants and events of default, including, among others, a change of control event of

The Credit Agreement contains customary representations, warranties, covenants and events of default, including, among others, a change of control event of default and limitations on the incurrence of indebtedness and liens, new lines of business, mergers, transactions with affiliates and burdensome agreements.

During the continuance of an event of default, the Lenders may take a number of actions, including, among others, declaring the entire amount then outstanding under the Credit Agreement to be due and payable.

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

default and limitations on the incurrence of indebtedness and liens, new lines of business, mergers, transactions with affiliates and burdensome agreements.

The Credit Agreement includes a financial covenant limiting, as of the last day of each fiscal quarter, the ratio of (a) (i) Consolidated Total Funded Debt (as defined in the Credit Agreement) as of such date less (ii) the sum of cash and cash equivalents of the Company and its subsidiaries on a dollar-for-dollar basis as of such date in excess of $ 50,000 up to a maximum of $ 200,000 (such that the maximum amount of reduction pursuant to this calculation does not exceed $ 150,000 ) to (b) Consolidated EBITDA (as defined in the Credit Agreement), measured for the preceding 12 months (the “Leverage Ratio”), to not more than 3.50 to 1.00 (or 3.75 to 1.00 during material acquisition periods, subject to certain limitations).

1 unchanged sentence

As of December 31, 2020 and 2019, the Company was in compliance with all applicable covenants in the Credit Agreement.

In addition to the $ 119,636 of letters of credit at December 31, 2020 issued under the Credit Agreement, the Company has issued letters of credit totaling $ 6,634 under facilities other than the Credit Agreement.

2016 Master Note Purchase Agreement

32 unchanged sentences

The Company is amortizing the $ 3,803 of debt issuance costs through the maturity dates of the respective notes.

The Company repaid at maturity its $ 50,000 of 4.00 % senior notes due April 2018 (the “2018 Senior Notes”) in April 2018.

The Company also repaid at maturity its $ 175,000 of 5.25 % senior notes due 2019 (the “2019 Senior Notes”) in November 2019.

The Company repaid at maturity its $ 175,000 of 5.25 % senior notes due 2019 (the “2019 Senior Notes”) in November 2019.

Under the terms and conditions of the 2008 NPA, the Company is authorized to issue and sell notes in the aggregate principal amount of $ 1,250,000 , provided that the purchasers of the 2008 NPA Notes shall not have any obligation to purchase any additional notes issued pursuant to the 2008 NPA.

3 unchanged sentences

Upon the occurrence of an event of default, payment of the 2008 NPA Notes may be accelerated by the holders of the 2008 NPA Notes.

The 2008 NPA Notes may also be prepaid by the

The 2008 NPA Notes may also be prepaid by the Company at par plus a make-whole amount determined by the amount of excess, if any, of the discounted value of the remaining scheduled payments with respect to the called principal of such 2008 NPA Notes minus the amount of such

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Company at par plus a make-whole amount determined by the amount of excess, if any, of the discounted value of the remaining scheduled payments with respect to the called principal of such 2008 NPA Notes minus the amount of such called principal, provided that the make whole shall in no event be less than zero.

called principal, provided that the make whole shall in no event be less than zero.

The discounted value is determined using market-based discount rates.

9 unchanged sentences

The 2028 Senior Notes were issued under the Indenture, dated as of November 16, 2018 (the “Base Indenture”), by and between the Company and U.S.

Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of November 16, 2018 (the Base Indenture as so supplemented, the “Indenture”).

Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of November 16, 2018.

The Company will pay interest on the 2028 Senior Notes semi-annually in arrears and the 2028 Senior Notes will mature on December 1, 2028 .

5 unchanged sentences

On April 16, 2019, the Company completed an underwritten public offering of $ 500,000 aggregate principal amount of 3.50 % Senior Notes due 2029 (the “2029 Senior Notes”).

The 2029 Senior Notes were issued under the Indenture, dated as of November 16, 2018 (the “Base Indenture”), by and between the Company and U.S.

Bank National Association, as trustee (the “Trustee”), as supplemented by the Second Supplemental Indenture, dated as of April 16, 2019 (the Base Indenture as so supplemented, the “Indenture”).

The 2029 Senior Notes were issued under the Base Indenture, as supplemented by the Second Supplemental Indenture, dated as of April 16, 2019.

The Company will pay interest on the 2029 Senior Notes semi-annually in arrears and the 2029 Senior Notes will mature on May 1, 2029 .

3 unchanged sentences

The Company may redeem some or all of the 2029 Senior Notes at its option prior to February 1, 2029 (three months before the maturity date) at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the 2029 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2029 Senior Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Commencing on February 1, 2029 (three months before the maturity date), the Company

Commencing on February 1, 2029 (three months before the maturity date), the Company may redeem some or all of the 2029 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2029 Senior Notes being redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

may redeem some or all of the 2029 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2029 Senior Notes being redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

Under certain circumstances, the Company may become obligated to pay additional amounts (the “Additional Amounts”) with respect to the 2028 and/or 2029 Senior Notes (the “Notes”) to ensure that the net amounts received by each holder of the Notes will not be less than the amount such holder would have received if withholding taxes or deductions were not incurred on a payment under or with respect to the Notes.

If such payment of Additional Amounts is a result of a change in the laws or regulations, including a change in any official position, the introduction of an official position or a holding by a court of competent jurisdiction, of any jurisdiction from or through which payment is made by or on behalf of the Notes having power to tax, and the Company cannot avoid such payments of Additional Amounts through reasonable measures, then the Company may redeem the 2028 and/or 2029 Notes then outstanding at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

On January 23, 2020, the Company completed an underwritten public offering of $ 600,000 aggregate principal amount of 2.60 % Senior Notes due 2030 (the “2030 Senior Notes”).

The 2030 Senior Notes were issued under the Base Indenture, as supplemented by the Third Supplemental Indenture, dated as of January 23, 2020.

The Company will pay interest on the 2030 Senior Notes semi-annually in arrears and the 2030 Senior Notes will mature on February 1, 2030 .

The 2030 Senior Notes are senior unsecured obligations, ranking equally in right of payment with the Company’s other existing and future unsubordinated debt and senior to any of the Company’s future subordinated debt.

The 2030 Senior Notes are not guaranteed by any of the Company’s subsidiaries.

The Company is amortizing $ 5,435 of debt issuance costs through the maturity date.

The Company may redeem some or all of the 2030 Senior Notes at its option prior to November 1, 2029 (three months before the maturity date) at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the 2030 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2030 Senior Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Commencing on November 1, 2029 (three months before the maturity date), the Company may redeem some or all of the 2030 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2030 Senior Notes being redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

On March 13, 2020, the Company completed an underwritten public offering of $ 500,000 aggregate principal amount of 3.05 % Senior Notes due 2050 (the “2050 Senior Notes”).

The 2050 Senior Notes were issued under the Base Indenture, as supplemented by the Fourth Supplemental Indenture, dated as of March 13, 2020.

The Company will pay interest on the 2050 Senior Notes semi-annually in arrears and the 2050 Senior Notes will mature on April 1, 2050 .

The 2050 Senior Notes are senior unsecured obligations, ranking equally in right of payment with the Company’s other existing and future unsubordinated debt and senior to any of the Company’s future subordinated debt.

The 2050 Senior Notes are not guaranteed by any of the Company’s subsidiaries.

The Company is amortizing a $ 7,375 debt discount and $ 5,682 of debt issuance costs through the maturity date.

The Company may redeem some or all of the 2050 Senior Notes at its option prior to October 1, 2049 (six months before the maturity date) at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the 2050 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2050 Senior Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Commencing on October 1, 2049 (six months before the maturity date), the Company may redeem some or all of the 2050 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2050 Senior Notes being redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

Under certain circumstances, the Company may become obligated to pay additional amounts (the “Additional Amounts”) with respect to the 2028, 2029, 2030 and/or 2050 Senior Notes (collectively, the “Notes”) to ensure that the net amounts received by each holder of the Notes will not be less than the amount such holder would have received if withholding taxes or deductions were not incurred on a payment under or with respect to the Notes.

If such payment of Additional Amounts is a result of a change in the laws or regulations, including a change in any official position, the introduction of an official position or a holding by a court of competent jurisdiction, of any jurisdiction from or through which payment is made by or on behalf of the Notes having power to tax, and the Company cannot avoid such payments of Additional Amounts through reasonable measures, then the Company may redeem the applicable series of the Notes then outstanding at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

If the Company experiences certain kinds of changes of control, each holder of the Notes may require the Company to repurchase all or a portion of the Notes for cash at a price equal to 101 % of the aggregate principal amount of such Notes, plus any accrued but unpaid interest to, but excluding, the date of repurchase.

The covenants in the Indenture include limitations on liens, sale-leaseback transactions and mergers and sales of all or substantially all of the Company’s assets.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The covenants in the Base Indenture (as supplemented from time to time, the “Indenture”) include limitations on liens, sale-leaseback transactions and mergers and sales of all or substantially all of the Company’s assets.

The Indenture also includes customary events of default with respect to the Notes.

As of December 31, 2019, the Company was in compliance with all applicable covenants in the Indenture .

Upon an event of default, the principal of and accrued and unpaid interest on all the Notes may be declared to be due and payable by the Trustee or the holders of not less than 25% in principal amount of the outstanding 2028 and/or 2029 Senior Notes.

Upon such a declaration, such principal and accrued interest on all of the 2028 and/or 2029 Senior Notes will be due and payable immediately.

In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding 2028 and/or 2029 Senior Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder of the Notes.

As of December 31, 2020 and 2019, the Company was in compliance with all applicable covenants in the Indenture .

Upon such a declaration, such principal and accrued interest on all of the applicable series of the Notes will be due and payable immediately.

In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding series of the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder of the applicable series of the Notes.

Under certain circumstances, the holders of a majority in principal amount of the outstanding Notes of any series may rescind any such acceleration with respect to the Notes of that series and its consequences.

Tax-Exempt Bonds

3 unchanged sentences

As of December 31, 2020, aggregate contractual future principal payments by calendar year on long-term debt are due as follows:

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

2021 (a), (b)

(a) The Company has recorded the 2021 Senior Notes in the 2023 category in the table above as the Company has the intent and ability to redeem the 2021 Senior Notes on April 1, 2021 using borrowings under the Credit Agreement.

(b) The Company has recorded the New 2021 Senior Notes in the 2023 category in the table above as the Company has the intent and ability to redeem the New 2021 Senior Notes on June 1, 2021 using borrowings under the Credit Agreement .

FAIR VALUE OF FINANCIAL INSTRUMENTS

4 unchanged sentences

and Level 3, defined as unobservable inputs that are not corroborated by market data.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments and restricted cash and investments.

18 unchanged sentences

for Identical

Interest rate swap derivative instruments – net asset position

Interest rate swap derivative instruments – net liability position

Restricted cash and investments

Contingent consideration

See Note 3 – “Impairments of Property and Equipment and Finite-Lived Intangible Assets” regarding non-recurring fair value measurements.

WASTE CONNECTIONS, INC.

27 unchanged sentences

These fuel purchase contracts expire on or before December 31, 2023.

During the years ended December 31, 2020, 2019 and 2018, the Company paid $ 93,813 , $ 73,269 and $ 41,949 , respectively, under the respective fuel purchase contracts then outstanding.

WASTE CONNECTIONS, INC.

18 unchanged sentences

From time to time, the Company may also be subject to actions brought by special interest or other groups, adjacent landowners or residents in connection with the permitting and licensing of landfills, transfer stations, and E&P waste treatment, recovery and disposal operations, or alleging environmental damage or violations of the permits and licenses pursuant to which the Company operates.

The Company uses $ 1,000 as a threshold (up from the previously required threshold of $ 300 ) for disclosing environmental matters involving potential monetary sanctions.

In addition, the Company is a party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the Company’s business.

4 unchanged sentences

Environmental Protection Agency, Region 10 (the “EPA”) as a potentially responsible party (“PRP”), along with more than 100 others, under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or the “Superfund” law) with respect to the Lower Duwamish Waterway Superfund Site (the “LDW Site”).

Listed on the National Priorities List in 2001, the LDW Site is a five-mile stretch of the Duwamish River flowing into Elliott Bay in Seattle, Washington.

A group of PRPs known as the Lower Duwamish Working Group (“LDWG”) and consisting of the City of Seattle, King County, the Port of Seattle, and Boeing Company conducted a Remedial

Listed on the National Priorities List in 2001, the LDW Site is a five-mile stretch of the Duwamish River flowing into Elliott Bay in

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Investigation/Feasibility Study for the LDW Site.

Seattle, Washington.

A group of PRPs known as the Lower Duwamish Working Group (“LDWG”) and consisting of the City of Seattle, King County, the Port of Seattle, and Boeing Company conducted a Remedial Investigation/Feasibility Study for the LDW Site.

On December 2, 2014, the EPA issued its Record of Decision (the “ROD”) describing the selected clean-up remedy, and therein estimated that clean-up costs (in present value dollars as of November 2014) would total approximately $ 342,000 .

9 unchanged sentences

At the April 24, 2019 stakeholders meeting the LDWG projected completion of the remedial design for the upper reach could be completed by August 2024.

On August 16, 2016, the EPA sent individual letters to each of the PRPs for the LDW Site, including NWCS, stating that it expects to initiate negotiations with all PRPs in early 2018 relating to a Remedial Design/Remedial Action (“RD/RA”) Consent Decree.

In late September 2020, the EPA informed attorneys for several PRPs that the work may be completed by late 2023 or early 2024.

On August 16, 2016, the EPA sent individual letters to each of the PRPs for the LDW Site, including NWCS, stating that it expected to initiate negotiations with all PRPs in early 2018 relating to a Remedial Design/Remedial Action (“RD/RA”) Consent Decree.

An RD/RA Consent Decree provides for the cleanup of the entire site and is often referred to as a “global settlement.” In August 2014, NWCS entered into an Alternative Dispute Resolution Memorandum of Agreement with several dozen other PRPs and a neutral allocator to conduct a confidential and non-binding allocation of certain past response costs allegedly incurred at the LDW Site as well as the anticipated future response costs associated with the clean-up.

The pre-remedial design work under the AOC 3 was not expected to conclude until the end of 2019, and in March 2017, the PRPs provided the EPA with notice that the allocation was not scheduled to conclude until mid-2019.

Later extensions pushed the allocation conclusion date to early 2020 and the EPA was informed of that schedule.

The allocation participants voted in June 2019 to extend the final allocation report deadline to July 2020.

The EPA has been informed of that change.

In January 2020, the allocator informed the parties that the allocation report will be delayed but he did not provide an expected delivery date.

In June 2017, attorneys for the EPA informed attorneys for several PRPs that the EPA expected to begin RD/RA negotiations in the late summer or early fall of 2018.

Those negotiations have not been scheduled and there is no recent indication from the EPA regarding when they will begin.

In March 2017, the PRPs provided the EPA with notice that the allocation was not scheduled to conclude until mid-2019.

Later extensions pushed the allocation conclusion date first to early 2020 and then to July 2020.

The EPA was informed of those changes.

The allocator’s most recent projection is that the preliminary allocation report will not be issued before March 2021.

The final allocation report will be issued only after the allocator considers comments of the parties on the preliminary report.

In September 2020, the EPA informed attorneys for several PRPs that the EPA intends to initiate settlement negotiations in 2021, and the EPA was informed of the delay in the issuance of the preliminary allocation report.

More recently, the EPA indicated that the start of settlement negotiations will be further delayed.

NWCS is defending itself vigorously in this confidential allocation process.

10 unchanged sentences

NWCS timely responded with correspondence to the NOAA Office of General Counsel, in which it declined the invitation at that time.

NWCS does not know how other PRPs responded to the Letter, and has not received any further communication from NOAA or the Trustees.

The Trustees have not responded to NWCS’ letter.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Trustees released their Assessment Plan in March 2019.

NWCS does not know how other PRPs responded to the Letter, and has not received any further communication from NOAA or the Trustees.

The Trustees have not responded to NWCS’ letter.

The Trustees released their Assessment Plan in March 2019.

The Assessment Plan does not set forth a timeline for implementation.

17 unchanged sentences

(a) an injunction and writ of mandate against certain of the CUP’s operational restrictions, taxes and fees, (b) a declaration that the challenged conditions are unconstitutional and in violation of state and federal statutes, (c) reimbursement for any such illegal fees paid under protest, (d) damages, (e) an award of just compensation for a taking, (f) attorney fees, and (g) all other appropriate legal and equitable relief.

Responding to a procedural suggestion from the Court, CCL filed its First Amended Complaint on March 23, 2018.

After full briefing, the hearing on the demurrer took place on July 17, 2018.

On December 6, 2017, the County filed a demurrer to and motion to strike regarding portions of the Complaint, arguing that the Complaint was legally insufficient to proceed.

After full briefing, the hearing on the demurrer and motion to strike regarding CCL’s First Amended Complaint took place on July 17, 2018.

The Superior Court sustained the demurrer and granted the motion to strike.

4 unchanged sentences

The Court of Appeal agreed to hear CCL’s appeal and on February 25, 2019, the Court of Appeal issued its decision, reversing the trial court orders that granted the County’s motion to strike and demurrer.

The Court of Appeal ruled that CCL had adequately pled a claim that the County was equitably estopped from contending that CCL had forfeited its rights to challenge the legality of the 13 operational conditions.

CCL’s Complaint sets forth that CCL relied on representations made by the County in 2017 that

The Court of Appeal ruled that CCL had adequately pled a claim that the County was equitably estopped from contending that CCL had forfeited its rights to challenge the legality of the 13 operational

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

CCL could reserve its legal rights to challenge the CUP in a separate reservation of rights letter rather than the affidavit of acceptance of the CUP that the County compelled Chiquita to file.

At a trial setting conference on May 28, 2019, the equitable estoppel issues in this case were discussed and the Superior Court continued the June 18, 2019 trial date to April 23, 2020.

The Superior Court also set an evidentiary hearing on the equitable estoppel issues for November 12, 2019.

CCL’s Complaint sets forth that CCL relied on representations made by the County in 2017 that CCL could reserve its legal rights to challenge the CUP in a separate reservation of rights letter rather than the affidavit of acceptance of the CUP that the County compelled Chiquita to file.

The Superior Court set an evidentiary hearing on the equitable estoppel issues for November 12, 2019.

Discovery occurred on these issues in July through September 2019.

Following full briefing and oral argument on November 12, 2019, the Superior Court issued its decision on November 13th, finding that the County was estopped from contending that CCL has waived its rights to challenge the legality of the 13 operational conditions.

Following full briefing and oral argument on November 12, 2019, the Superior Court issued its decision on November 13, 2019, finding that the County was estopped from contending that CCL has waived its rights to challenge the legality of the 13 operational conditions.

The County sought interlocutory review of the Superior Court’s decision in the Court of Appeal, which denied the County’s petition on February 7, 2020.

Trial remains set for April 23, 2020.

Following full briefing and oral argument on June 22, 2020 on six of CCL’s causes of action, the Superior Court issued its decision on July 2, 2020, granting CCL’s petition for writ of mandate in part and denying it in part.

CCL prevailed with respect to 12 of the challenged conditions, many of which imposed new fees and exactions on the Landfill.

Before entry of final judgment, the Superior Court will hear CCL’s remaining causes of action.

A cause of action for a taking under the Fifth Amendment of the U.S.

Constitution is the subject of a pending motion for leave to amend the Complaint.

CCL is awaiting assignment to an individual calendar court for its remaining causes of action.

Once the Superior Court has entered final judgment, CCL and the County will be permitted to appeal any adverse ruling to the California Court of Appeal.

After entry of final judgment and resolution of any appeals, the Superior Court will issue a writ directing the County Board of Supervisors to set aside its decision on the permit with respect to 12 of the challenged conditions.

The Board will be allowed to make additional findings to support four of those conditions and reconsider its permit decision in light of the Superior Court’s writ.

CCL will continue to vigorously prosecute the lawsuit.

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A separate lawsuit involving CCL and the Landfill was filed on August 24, 2017 by community activists alleging that the environmental review underlying the CUP was inadequate under state law.

The Val Verde Civic Association, Citizens for Chiquita Canyon Landfill Compliance, and the Santa Clarita Organization for Planning the Environment filed a petition for writ of mandate in the Superior Court of California, County of Los Angeles against the County, naming CCL as the real party in interest.

The Val Verde Civic Association, Citizens for Chiquita Canyon Landfill Compliance, and the Santa Clarita Organization for Planning and the Environment filed a petition for writ of mandate in the Superior Court of California, County of Los Angeles against the County, naming CCL as the real party in interest.

The lawsuit seeks to overturn the County’s approval of the CUP for the expansion of the Landfill and the certification of the final Environmental Impact Report, arguing that the report violates the California Environmental Quality Act.

Pursuant to Condition No.

6 of the CUP, which requires CCL to defend, indemnify, and hold harmless the County, its agents, officers, and employees from any claim or proceeding against the County brought by any third party to attack, set aside, void, or annul the CUP approval, CCL has agreed to reimburse the County for its legal costs associated with defense of the lawsuit.

6 of the CUP, which requires CCL to defend, indemnify, and hold harmless the County, its agents, officers, and employees from any claim or proceeding against the County brought by any third party to attack, set aside, void, or annul the CUP approval, CCL agreed to reimburse the County for its legal costs associated with defense of the lawsuit.

As the real party in interest, CCL has a right to notice and an opportunity to be heard in opposition to the petition for writ of mandate.

The petitioners filed their Opening Brief with the court on September 27, 2018.

CCL filed its Opposition Brief with the court on November 28, 2018 and the petitioners filed their Reply Brief on December 20, 2018.

A trial date had been scheduled for February 8, 2019, but on February 6, 2019, the court reassigned the case to a different judge and vacated the trial date.

A new trial date was scheduled for August 23, 2019.

At the conclusion of oral argument on August 23, 2019, the court asked the parties to return on September 13, 2019 for further oral argument on the odor mitigation issue.

Initial briefs were filed in 2018 and a trial date was set in February 2019, which was later rescheduled and held in August 2019.

The court issued a final ruling on October 10, 2019 and a final judgment on December 4, 2019, denying the writ petition in full.

On December 6, 2019, one of the petitioners, Santa Clarita Organization for Planning the Environment, filed an appeal of the court’s October 10, 2019 ruling.

On December 9, 2019, the same petitioner filed an appeal of the court’s December 4, 2019 judgment.

One petitioner, Santa Clarita Organization for Planning and the Environment, appealed the judgment.

All interested parties filed their briefs by July 1, 2020 and the County did not file an opposition brief.

No amicus or “friend of the court” briefs were filed, so the case was fully briefed on July 1, 2020.

The court heard oral argument on November 18, 2020.

The court issued its opinion on February 10, 2021, upholding the trial court’s ruling in full and rejecting the petitioner’s appeal.

The court’s decision becomes final on March 12, 2021.

The petitioner may file a Petition for Review to the California Supreme Court within 10 days of the decision becoming final.

December 11, 2017 Notice of Violation Regarding Certain CUP Conditions.

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The alleged B&T fee was ostensibly to fund the construction of transportation infrastructure in the area of the Landfill.

At the time the NOV was issued, CCL had already contested the legality of the B&T fee in the October 20, 2017 Complaint filed against the County in Los Angeles County Superior Court.

At the time the NOV was issued, CCL had

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already contested the legality of the B&T fee in the October 20, 2017 Complaint filed against the County in Los Angeles County Superior Court.

On January 12, 2018, CCL filed an appeal of the alleged violations in the NOV.

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On April 13, 2018, CCL filed in the Superior Court of California, County of Los Angeles a Petition for Writ of Administrative Mandamus against the County seeking to overturn the decision sustaining the NOV, contending that the NOV and decision are not supported by the facts or law.

On June 22, 2018,

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Chiquita filed a Motion for Stay seeking to halt enforcement of the B&T fee and penalty and the accrual of any further penalties pending the resolution of the Petition for Writ of Mandamus.

On June 22, 2018, Chiquita filed a Motion for Stay seeking to halt enforcement of the B&T fee and penalty and the accrual of any further penalties pending the resolution of the Petition for Writ of Mandamus.

The motion was heard and denied by the Court on July 17, 2018.

As explained above, the Court granted CCL leave to pay the $ 11,600 B&T fee and to amend its Complaint to reflect the payment under protest, allowing the challenge to the B&T fee to proceed.

As explained above, the Court granted CCL leave to pay the $ 11,600 B&T fee and to amend its Complaint to reflect the payment under protest, allowing the challenge to the B&T fee and to amend its Complaint to reflect the payment under protest, allowing the challenge to the B&T fee to proceed.

CCL paid the B&T fee on August 10, 2018, and also paid on that date the administrative penalty of $ 83 and a noncompliance fee of $ 0.75 .

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At the May 28, 2019 trial setting conference referenced above where the trial of the CUP case was set for April 23, 2020, the Superior Court set the trial for the B&T fee/NOV case for June 25, 2020.

However, following the rescheduling of the trial date for the CUP case, the Superior Court agreed to continue the trial date for the B&T fee/NOV case to October 20, 2020.

At an August 20, 2020 status conference, the Superior Court again continued the trial date for the B&T fee/NOV case to January 14, 2021.

The County and CCL filed a request for a new hearing date to accommodate continued prosecution of the lawsuit challenging the CUP, and the trial date was continued again to September 14, 2021.

The Superior Court’s July 2, 2020 decision in the CUP case upheld the B&T fee and addressed two other conditions that were also the subject of the NOV, which may impact the scope of the B&T fee/NOV case.

CCL will continue to vigorously prosecute the lawsuit.

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Town of Colonie, New York Landfill Expansion Litigation

On April 16, 2014, the Town of Colonie (the “Town”) filed an application (the “Application”) with the New York State Department of Environmental Conservation (“DEC”) to modify the Town’s then-current Solid Waste Management Facility Permit and for other related permits to authorize the development and operation of Area 7 of the Town of Colonie Landfill (the “Landfill”), which is located in Albany County, New York.

On April 16, 2014, the Town of Colonie (the “Town”) filed an application with the New York State Department of Environmental Conservation (“DEC”) to modify the Town’s then-current Solid Waste Management Facility Permit and for other related permits to authorize the development and operation of Area 7 of the Town of Colonie Landfill (the “Landfill”), which is located in Albany County, New York.

DEC issued the requested permits on April 5, 2018 (the “Permits”).

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The Petitioners asked the court to:

annul the Permits and invalidate DEC’s Findings Statement, enjoin the Town and CRL from taking any action authorized by the Permits, require an issues conference and possibly an adjudicatory hearing before DEC can re-consider the Town’s permit application;

annul the Permits and invalidate DEC’s Findings Statement,

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enjoin the Town and CRL from taking any action authorized by the Permits, require an issues conference and possibly an adjudicatory hearing before DEC can re-consider the Town’s permit application;

remand all regulatory issues to a DEC Administrative Law Judge;

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Young denied the Petitioners’ motion for preliminary injunction on November 30, 2018.

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On January 23, 2019, the court held that the Petitioners lacked standing to maintain the proceedings and dismissed both the Waterford and Halfmoon Amended Verified Petitions in their entirety.

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The Company, CRL, and the Town filed their joint appellee brief and supplemental appendix on November 20, 2019.

On January 8, 2020, the Office of the Attorney General of the State of New York filed a motion seeking a 45-day extension of the date by which DEC is required to file its appellee brief, which was granted.

Its brief is now due by February 25, 2020.

The Waterford and Halfmoon Petitioners’ reply briefs will be due ten days from service of DEC’s appellee brief.

On February 24, 2020, after receiving multiple filing extensions, DEC filed its appellee brief and supplemental appendix.

The Waterford and Halfmoon Petitioners filed their reply briefs on March 10, 2020 and March 13, 2020, respectively.

The Appellate Division, Third Department, held virtual oral argument in the appeals on September 14, 2020.

On October 29, 2020, the Third Department issued its Memorandum and Order.

While the Third Department held that certain Petitioners appeared to have standing, it declined to remand the proceedings to the trial court, and instead denied Petitioners’ claims on the merits.

Accordingly, the Third Department dismissed the appeals in their entirety and affirmed judgment in favor of Respondents.

Petitioners did not have an automatic right of appeal to the Court of Appeals of New York and they did not seek leave to appeal the Third Department’s Memorandum and Order.

As such, the proceedings have formally concluded.

Collective Bargaining Agreements

Twenty-one of the Company’s collective bargaining agreements have expired or are set to expire in 2020.

Seventeen of the Company’s collective bargaining agreements have expired or are set to expire in 2021.

The Company does not expect any significant disruption in its overall business in 2021 as a result of labor negotiations, employee strikes or organizational efforts.

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SHAREHOLDERS’ EQUITY

On April 26, 2017, the Company announced that its Board of Directors approved a split of its common shares on a three -for-two basis, which was approved by its shareholders at the Company’s Annual and Special Meeting of Shareholders on May 23, 2017 .

Shareholders of record on June 7, 2017 received from the Company’s transfer agent on June 16, 2017, one additional common share for every two common shares held.

All share and per share amounts for all periods presented have been retroactively adjusted to reflect the share split.

Employee Share Purchase Plan

On May 15, 2020, the Company’s shareholders approved the ESPP.

Under the ESPP, qualified employees may elect to have payroll deductions withheld from their eligible compensation on each payroll date in amounts equal to or greater than one percent (1%) but not in excess of ten percent (10%) of eligible compensation in order to purchase the Company’s common shares under certain terms and subject to certain restrictions set forth in the ESPP.

The exercise price is equal to 95 % of the closing price of the Company’s common shares on the last day of the relevant offering period;

provided, however, that such exercise price will not be less than 85 % of the volume weighted average price of the Company’s common shares as reflected on the TSX over the final five trading days of such offering period.

The maximum number of shares that may be issued under the ESPP is 1,000,000 .

As of December 31, 2020, none of the Company’s common shares have been purchased under the ESPP.

Cash Dividend

The Board of Directors authorized the initiation of a quarterly cash dividend in October 2010 and has increased it on an annual basis.

The Board of Directors of the Company authorized the initiation of a quarterly cash dividend in October 2010 and has increased it on an annual basis.

In October 2020, the Company announced that its Board of Directors increased its regular quarterly cash dividend by $ 0.02 , from $ 0.185 to $ 0.205 per Company common share.

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Normal Course Issuer Bid

On July 25, 2019, the Board of Directors of the Company approved, subject to receipt of regulatory approvals, the annual renewal of the Company’s normal course issuer bid (the “NCIB”) to purchase up to 13,184,474 of the Company’s

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common shares during the period of August 8, 2019 to August 7, 2020 or until such earlier time as the NCIB is completed or terminated at the option of the Company.

On July 23, 2020, the Board of Directors of the Company approved, subject to receipt of regulatory approvals, the annual renewal of the Company’s normal course issuer bid (the “NCIB”) to purchase up to 13,144,773 of the Company’s common shares during the period of August 10, 2020 to August 9, 2021 or until such earlier time as the NCIB is completed or terminated at the option of the Company.

The renewal followed the conclusion of the Company’s NCIB that expired August 7, 2020.

The Company received Toronto Stock Exchange (the “TSX”) approval for its annual renewal of the NCIB on August 2, 2019.

The Company received TSX approval for its annual renewal of the NCIB on August 5, 2020.

Under the NCIB, the Company may make share repurchases only in the open market, including on the NYSE, the TSX, and/or alternative Canadian trading systems, at the prevailing market price at the time of the transaction.

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All common shares purchased under the NCIB will be immediately cancelled following their repurchase.

For the year ended December 31, 2019, the Company did no t repurchase any common shares pursuant to the NCIB in effect during that period.

For the year ended December 31, 2018, the Company repurchased 831,704 common shares pursuant to its NCIB in effect during such period at an aggregate cost of $ 58,928 .

For the year ended December 31, 2017, the Company did no t repurchase any common shares pursuant to the NCIB in effect during that period.

As of December 31, 2019, the remaining maximum number of shares available for repurchase under the current NCIB was 13,184,474 .

For the year ended December 31, 2020, the Company repurchased 1,271,977 common shares pursuant to the NCIB at an aggregate cost of $ 105,654 .

For the year ended December 31, 2019, the Company did no t repurchase any common shares pursuant to the normal course issuer bid in effect during that period.

For the year ended December 31, 2018, the Company repurchased 831,704 common shares pursuant to the normal course issuer bid in effect during that period at an aggregate cost of $ 58,928 .

As of December 31, 2020, the remaining maximum number of shares available for repurchase under the NCIB was 11,912,497 .

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Common Shares

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For future grants under the 2016 Incentive Award Plan

For future grants under the Employee Share Purchase Plan

Common Shares Held in Trust

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During the years ended December 31, 2020, 2019 and 2018, the Company sold 7,330 , 48,375 and 36,244 common shares held in the trust, respectively, to settle vested restricted share units and deferred share units.

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Special Shares

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Third Amended and Restated 2004 Equity Incentive Plan (the “2004 Plan”), and the Waste Connections US, Inc.

Consultant Incentive Plan (the “Consultant Plan,” and, together with the 2014 Plan and the 2004 Plan, the “Assumed Plans”) for the purposes of administering the Assumed Plans and the awards issued thereunder.

Consultant Incentive Plan (the “Consultant Plan,” and, together with the 2014 Plan and the 2004 Plan, the “Assumed

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Plans”) for the purposes of administering the Assumed Plans and the awards issued thereunder.

No additional awards will be made under any of the Assumed Plans.

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RSUs granted under the 2014 Plan generally vest in installments pursuant to a vesting schedule set forth in each award agreement.

RSU awards under the 2014 plan do not require any cash payment from the participant to whom an

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award was made.

RSU awards under the 2014 plan do not require any cash payment from the participant to whom an award was made.

The vesting of performance awards, including performance-based restricted share units (“PSUs”), was dependent on one or more performance criteria determined by the administrator on a specific date or dates or over any period or periods determined by the administrator.

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Total fair value of restricted share units vested

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A summary of activity related to RSUs during the year ended December 31, 2020, is presented below:

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At December 31, 2020, 2019 and 2018, the Company had 177,760 , 247,999 and 264,374 vested deferred RSUs outstanding, respectively.

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Performance-Based Restricted Share Units

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During the year ended December 31, 2018, the Company’s Compensation Committee granted PSUs with three-year performance-based metrics that the Company was required to meet before those awards were earned, and the performance period for those grants ended on December 31, 2020 .

During the same period, the Company’s Compensation Committee also granted PSUs with a one-year performance-based metric that the Company was required to meet before those awards were earned, with the awards then subject to time-based vesting for the remaining three years of their four-year vesting period.

During the same period, the Company’s Compensation Committee also granted

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PSUs with a one-year performance-based metric that the Company was required to meet before those awards were earned, with the awards then subject to time-based vesting for the remaining three years of their four-year vesting period.

The Compensation Committee determines the achievement of performance results and corresponding vesting of PSUs for each performance period.

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Warrants outstanding at December 31, 2020, expire between 2021 and 2025 .

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A summary of warrant activity during the year ended December 31, 2020, is presented below:

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The DSUs consist of a combination of DSU grants outstanding under the Progressive Waste share-based compensation plans that were continued by the Company following the Progressive Waste acquisition and DSUs granted by the Company since the Progressive Waste acquisition.

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A summary of activity related to DSUs during the year ended December 31, 2020, is presented below:

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Other Restricted Share Units

RSU grants outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to

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employees upon vesting.

A summary of activity related to Progressive Waste RSUs during the year ended December 31, 2020, is presented below:

1 unchanged sentence

Outstanding at December 31, 2020

A summary of vesting activity related to Progressive Waste RSUs during the year ended December 31, 2019, is presented below:

Vested at December 31, 2018

Vested over remaining service period

Vested at December 31, 2019

No RSUs under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016.

During the year ended December 31, 2019, 964 Progressive Waste RSUs were forfeited and have been redistributed to the other remaining active participants.

All remaining RSUs were vested as of December 31, 2019.

Other Performance-Based Restricted Share Units

PSU grants outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for cash settlement only to employees upon vesting based on achieving target results.

A summary of activity related to Progressive Waste PSUs during the year ended December 31, 2019, is presented below:

Outstanding at December 31, 2018

Cash settled, net of notional dividend

Outstanding at December 31, 2019

No PSUs under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016.

All outstanding PSUs were vested as of December 31, 2018.

Share Based Options

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Interest rate swap amounts reclassified into interest expense

Fuel hedge amounts reclassified into cost of operations

Changes in fair value of interest rate swaps

Changes in fair value of fuel hedge

Foreign currency translation adjustment

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Balance at December 31, 2020

The Company’s operations are conducted through its various subsidiaries in countries throughout the world.

The Company has provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company’s operations are conducted through its various subsidiaries in countries throughout the world.

The Company has provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.

Income before provision for income taxes consists of the following:

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Income before income taxes

The provision (benefit) for income taxes for the years ended December 31, 2019, 2018 and 2017, consists of the following:

The provision for income taxes consists of the following:

Years Ended December 31,

Provision (benefit) for income taxes

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Provision for income taxes

The Company is organized under the laws of Ontario, Canada;

however, since the proportion of U.S.

revenues, assets, operating income and associated tax provisions is significantly greater than any other single taxing jurisdiction within the worldwide group, the reconciliation of the differences between the Company’s income tax provision (benefit) as presented in the accompanying Consolidated Statements of Net Income and income tax provision (benefit) computed at the federal statutory rate is presented on the basis of the U.S.

federal statutory income tax rate of 21 %for the years ended December 31, 2019 and 2018 and 35 % for the year ending December 31, 2017, as opposed to the Canadian statutory rate of approximately 27 % to provide a more meaningful insight into those differences.

revenues, assets, operating income and associated tax provisions is significantly greater than any other single taxing jurisdiction within the worldwide group, the reconciliation of the differences between the Company’s income tax provision as presented in the accompanying Consolidated Statements of Net Income and income tax provision computed at the federal statutory rate is presented on the basis of the U.S.

federal statutory income tax rate of 21 %, as opposed to the Canadian statutory rate of approximately 27 % to provide a more meaningful insight into those differences.

The items shown in the following table are a percentage of pre-tax income:

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Effect of international operations

Enactment of the Tax Act

Deferred tax on undistributed earnings

Goodwill impairment

The comparability of the Company’s income tax provision (benefit) for the reported periods has been affected by variations in its income before income taxes.

The effects of international operations are primarily due to the Company’s non-U.S.

income being taxed at rates substantially lower than the U.S.

federal statutory rate for the year ended December 31, 2017, as well as a portion of the Company’s income from internal financing that is taxed at effective rates substantially lower than the U.S.

federal statutory rate for each of the years presented.

Additionally, for the year ended December 31, 2019, a reduction in deferred income tax assets primarily related to compensation of executive officers no longer deemed deductible for tax purposes resulted in an increase to tax expense of $ 3,805 .

For the year ended December 31, 2018, the restructuring of the Company’s internal refinancing in conjunction with the Tax Act resulted in an increase to tax expense of $ 5,572 .

Further, a reduction in the Company’s deferred income tax liabilities due to enacted state legislation and changes in the Company’s geographical apportionment due to acquisition activity resulted in a tax benefit of $ 3,057 .

During the year ended December 31, 2017, in conjunction with the Tax Act, the Company recorded a provisional deferred income tax expense of $ 62,350 associated with a portion of its U.S.

earnings no longer permanently reinvested.

This resulted in total deferred income tax expense of $ 68,779 which has been considered to be complete.

During the year ended December 31, 2017, as a result of the enactment of the Tax Act, the Company recorded a net deferred income tax benefit of $ 269,804 primarily due to the reduction of the corporate income tax rate effective for tax years beginning in 2018.

Additionally, the goodwill impairment within the E&P segment and disposal of goodwill from the divesture of certain operations, resulted in the write off of goodwill that was not deductible for tax purposes resulting in an increase to tax expense of $ 11,825 .

The comparability of the Company’s income tax provision for the reported periods has been affected by variations in its income before income taxes.

The effects of international operations are primarily due to a portion of the Company’s income from internal financing that is taxed at effective rates substantially lower than the U.S.

federal statutory rate.

Additionally, for the year ended December 31, 2020, the Company’s income tax provision included a $ 27,358 expense associated with certain 2019 inter-entity payments no longer being deductible for tax purposes due to the finalization of tax regulations on April 7, 2020 under Internal Revenue Code section 267A and a $ 4,148 expense related to an increase in the Company’s deferred income tax liabilities resulting from the impairment of certain assets within its E&P operations which impacted the geographical

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The significant components of deferred income tax assets and liabilities, reduced by valuation allowances as applicable, as of December 31, 2019 and 2018 are presented below.

apportionment of its state income taxes.

For the year ended December 31, 2018, the restructuring of the Company’s internal refinancing in conjunction with the Tax Cuts and Jobs Act (“Tax Act”) resulted in an increase to tax expense of $ 5,572 .

Additionally, the Company recorded a deferred income tax expense of $ 6,429 associated with refinements to the prior year estimate of its U.S.

earnings no longer permanently reinvested in conjunction with the Tax Act.

The significant components of deferred income tax assets and liabilities, reduced by valuation allowances as applicable, are presented below.

Deferred income tax assets:

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Contingent liabilities

Finance costs

Tax credits and loss carryforwards

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Prepaid expenses

Interest rate and fuel hedges

Investment in subsidiaries

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federal income tax jurisdiction, which remains open for years subsequent to 2007.

Additionally, the Company has concluded all Canadian income tax matters for years through 2014.

The Company did no t have any unrecognized tax benefits recorded at December 31, 2019, 2018 or 2017.

The Company does not anticipate the total amount of unrecognized tax benefits will significantly change by December 31, 2020.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Additionally, the reassessment period for the Company has expired for all Canadian income tax matters for years through 2015.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company did no t have any unrecognized tax benefits recorded at December 31, 2020, 2019 or 2018.

The Company does not anticipate the total amount of unrecognized tax benefits will significantly change by December 31, 2021.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

SEGMENT REPORTING

1 unchanged sentence

No single contract or customer accounted for more than 10% of the Company’s total revenues at the consolidated or reportable segment level during the periods presented.

The Company manages its operations through five geographic solid waste operating segments and its E&P segment, which includes the majority of the Company’s E&P waste treatment and disposal operations.

The Company’s five geographic solid waste operating segments and its E&P segment comprise the Company’s reportable segments.

Prior to July 2020, the Company managed its operations through five geographic solid waste operating segments and its E&P segment, which were also its reportable segments.

As of July 2020, the Company’s chief operating decision maker determined that the Company’s E&P and Southern operating segments met all the aggregation criteria and eliminated the E&P segment by combining all operations of the E&P segment into the Southern segment.

After giving effect to this combination, the Company’s reportable segments consist of its five geographic operating segments.

Each operating segment is responsible for managing several vertically integrated operations, which are comprised of districts.

In the third quarter of 2017, the Company moved a district from the Eastern segment to the Canada segment as a significant amount of its revenues are received from Canadian-based customers.

In the first quarter of 2019, the Company moved two districts from the Eastern segment to the Central segment because their locations in Iowa were closer in proximity to operations in the Company’s Central segment.

The segment information presented herein reflects the realignment of these districts.

Under the current orientation, the Company’s Eastern segment services customers located in northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin;

the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, southern Oklahoma, western Tennessee and Texas;

Segment results for the 2019 and 2018 periods reflected in this report have been reclassified to reflect the realignment of the Company’s reportable segments for comparison with the same period in 2020.

Under the current orientation, the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Dakota, southern Oklahoma, western Tennessee, Texas, Wyoming and along the Gulf of Mexico;

the Company’s Eastern segment services customers located in Delaware, northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin;

the Company’s Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming;

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and the Company’s Canada segment services customers located in the state of Michigan and in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan.

The E&P segment services E&P customers located in Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and along the Gulf of Mexico.

The Company’s Chief Operating Decision Maker evaluates operating segment profitability and determines resource allocations based on several factors, of which the primary financial measure is segment EBITDA.

The Company defines segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items, and other income (expense).

Segment EBITDA is not a measure of operating income, operating performance or liquidity under generally accepted accounting principles and may not be comparable to similarly titled measures reported by other companies.

Segment EBITDA is not a measure of operating income, operating performance or liquidity under GAAP and may not be comparable to similarly titled measures reported by other companies.

The Company’s management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments.

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Corporate (a), (d)

Corporate functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training, direct acquisition expenses, other administrative functions and share-based compensation expenses associated with Progressive Waste share-based grants existing at June 1, 2016.

Amounts reflected are net of allocations to the six operating segments.

For the years ended December 31, 2018 and 2017, amounts also include Progressive Waste integration-related expenses.

(a) The majority of Corporate expenses are allocated to the five operating segments.

Direct acquisition expenses and share-based compensation expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the Company are not allocated to the five operating segments and comprise the net EBITDA of the Company’s Corporate segment for the periods presented.

For the year ended December 31, 2018, amounts also include Progressive Waste integration-related expenses.

Intercompany revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments.

2 unchanged sentences

Corporate assets include cash, debt issuance costs, equity investments, operating lease right-of-use assets and corporate facility leasehold improvements and equipment.

Goodwill is included within total assets for each of the Company’s six operating segments.

Goodwill is included within total assets for each of the Company’s five operating segments.

WASTE CONNECTIONS, INC.

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Balance as of December 31, 2018

Goodwill transferred

Goodwill acquired

Goodwill adjustment for assets sold

Goodwill divested

Impact of changes in foreign currency

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Years ended December 31,

Eastern segment EBITDA

Southern segment EBITDA

Eastern segment EBITDA

Western segment EBITDA

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Canada segment EBITDA

E&P segment EBITDA

Subtotal reportable segments

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Internal Revenue Code.

The Company’s matching contributions under the 401(k) Plans were suspended from June 1, 2020 to December 31, 2020.

The Company reinstated its matching contributions effective January 1, 2021.

Total employer expenses, including employer matching contributions, for the DPSP and 401(k) Plans were $ 16,350 , $ 26,111 and $ 12,055 , respectively, during the years ended December 31, 2020, 2019 and 2018.

These amounts include matching contributions Waste Connections made under the Deferred Compensation Plan, described below.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Multiemployer Pension Plans:

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The Company is generally not represented on the board of trustees.

The Company makes periodic contributions to these plans pursuant to its collective bargaining agreements.

The Company makes periodic contributions to these plans pursuant to

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

its collective bargaining agreements.

The Company’s participation in multiemployer pension plans is summarized as follows:

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Zone Status (a)

Company Contributions

Company Contributions (d)

Local 731, I.B.

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36-6513567 - 001

Green for the plan year ended 9/30/2019

Green for the plan year beginning 10/1/2019

Green for the plan year ended 9/30/2019

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Green for the plan year beginning 1/1/2019

Not applicable

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Green for the plan year beginning 4/1/2020

Yellow for the plan year ended 3/31/2017

Green for the plan year beginning 4/1/2019

Not applicable

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51-6031295 - 002

Not applicable

International Union of Operating Engineers Pension Trust

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Green as of 1/1/2020

Green as of 1/1/2019

Not applicable

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Contributions to other multiemployer plans

Unless otherwise noted in the table above, the most recent Pension Protection Act zone status available in 2020 and 2019 is for the plans’ years ended December 31, 2019 and 2018, respectively.

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The Company was not required to pay a surcharge to these plans during the years ended December 31, 2020 and 2019.

Of the Multiemployer Pension Plans considered to be individually significant, the Company was listed in the Form 5500 of the Local 731, I.B.

of T., Private Scavengers, Garage Attendants, and Textile Maintenance Pension Trust Fund as providing more than 5% of the total contributions for plan years ending September 30, 2019, 2018 and 2017.

The Company was also listed in the Form 5500 of the Teamster Local 301 Pension Fund as providing more than 5% of the total contributions for plan years ending December 31, 2019, 2018 and 2017.

The status is based on information that the Company received from the pension plans and is certified by the pension plans’ actuary.

2 unchanged sentences

Plans with “critical” status are less than 65% funded.

The Company’s contributions to each individual multiemployer pension plan represent less than 5 % of total contributions to such plan.

Under current law regarding multiemployer benefit plans, a plan’s termination, the Company’s voluntary withdrawal, or the withdrawal of all contributing employers from any under-funded multiemployer pension plan would require the Company to make payments to the plan for its proportionate share of the multiemployer plan’s unfunded vested liabilities.

6 unchanged sentences

Members of the Company’s Board of Directors are eligible to participate in the Deferred Compensation Plan with respect to their director fees.

Although the Company periodically contributes the amount of its obligation under the plan to a trust for the benefit of the participants, the amounts of any compensation deferred under the Deferred Compensation Plan constitute an unsecured obligation of the Company to pay the participants in the future and, as such, are subject to the claims of other creditors in the event of insolvency proceedings.

Although the Company periodically contributes the amount of its obligation under the plan to a trust for the benefit of the participants, any compensation deferred under the Deferred Compensation Plan constitutes an unsecured obligation of the Company to pay the participants in the future and, as such, is subject to the claims of other creditors in the event of insolvency proceedings.

Participants may elect certain future distribution dates on which all or a portion of their accounts will be paid to them, including in the case of a change in control of the Company.

Their accounts will be distributed to them in cash, except for amounts credited with respect to deferred restricted share unit grants, which will be distributed in the Company’s common shares pursuant to the 2014 Plan or the 2004 Plan.

In addition to the amount of participants’ contributions, the Company will pay participants an amount reflecting a deemed return based on the returns of various mutual funds or measurement funds selected by the participants, except in the case of restricted share units that were deferred and not subsequently exchanged into a measurement fund pursuant to the terms of the Deferred Compensation Plan, which will be credited to their accounts as Company common shares.

The measurement funds are used only to determine the amount of return the Company pays to participants and participant funds are not actually invested in the measurement fund, nor are any Company common shares acquired under the Deferred Compensation Plan.

During the year ended December 31, 2019, the Company also made matching contributions to the Deferred Compensation Plan of 100 % of every dollar of a participating employee’s pre-tax eligible contributions until the employee’s contributions equaled 5 % of the employee’s eligible compensation, less the amount of any match the Company made on behalf of the employee under the Waste Connections 401(k) Plan, and subject to certain deferral limitations imposed by the U.S.

Internal Revenue Code on 401(k) plans, except that the Company’s matching contributions under the Deferred Compensation Plan were 100% vested when made.

During each of the two years ended December 31, 2018 and 2017, the Company also made matching contributions to the Deferred Compensation Plan of 50 % of every dollar of a participating employee’s pre-tax eligible contributions until the employee’s contributions equaled 6 % of the employee’s eligible compensation, less the amount of any match the Company made on behalf of the employee under the Waste Connections 401(k) Plan, and subject to certain deferral limitations imposed by the U.S.

Internal Revenue Code on 401(k) plans, except that the Company’s

Their accounts

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

matching contributions under the Deferred Compensation Plan were 100% vested when made.

will be distributed to them in cash, except for amounts credited with respect to deferred restricted share unit grants, which will be distributed in the Company’s common shares pursuant to the 2004 Plan.

The Company’s matching contributions to the Deferred Compensation plan were suspended from June 1, 2020 to December 31, 2020.

The Company reinstated its matching contributions effective January 1, 2021.

During the period from January 1, 2020 through May 31, 2020 and for the year ended December 31, 2019, the Company also made matching contributions to the Deferred Compensation Plan of 100 % of every dollar of a participating employee’s pre-tax eligible contributions until the employee’s contributions equaled 5 % of the employee’s eligible compensation, less the amount of any match the Company made on behalf of the employee under the Waste Connections 401(k) Plan, and subject to certain deferral limitations imposed by the U.S.

Internal Revenue Code on 401(k) plans, except that the Company’s matching contributions under the Deferred Compensation Plan were 100% vested when made.

During the year ended December 31, 2018, the Company also made matching contributions to the Deferred Compensation Plan of 50 % of every dollar of a participating employee’s pre-tax eligible contributions until the employee’s contributions equaled 6 % of the employee’s eligible compensation, less the amount of any match the Company made on behalf of the employee under the Waste Connections 401(k) Plan, and subject to certain deferral limitations imposed by the U.S.

Internal Revenue Code on 401(k) plans, except that the Company’s matching contributions under the Deferred Compensation Plan were 100% vested when made.

The Company’s total liability for deferred compensation at December 31, 2020 and 2019 was $ 43,069 and $ 37,707 , respectively, which was recorded in Other long-term liabilities in the Consolidated Balance Sheets.

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Fourth Quarter

Operating income

Net income attributable to Waste Connections

Basic income per common share attributable to Waste Connections’ common shareholders

Diluted income per common share attributable to Waste Connections’ common shareholders

During the first quarter of 2019, the Company recorded $ 12,230 of charges to terminate or write off the carrying cost of certain contracts, primarily acquired in the Progressive Waste acquisition, that were not, or are not expected to be, renewed prior to their original estimated termination date.

During the third quarter of 2019, the Company recorded $ 8,000 resulting from the abandonment of a landfill development project at the Company’s E&P segment.

During the fourth quarter of 2019, the Company recorded $ 25,798 of charges associated with the write-down of an operating permit and equipment at a non-strategic materials recovery facility that was disposed of by sale on January 2, 2020.

Operating income (loss)

Net income (loss)

Net income (loss) attributable to Waste Connections

Basic income (loss) per common share attributable to Waste Connections’ common shareholders

Diluted income (loss) per common share attributable to Waste Connections’ common shareholders

During the second quarter of 2020, the Company recorded an impairment charge of $ 417,384 as the carrying value of four landfills in the Company’s E&P operations exceeded their calculated discounted fair value and recorded $ 16,718 of expenses associated with adjusting the carrying value of liabilities for contingent consideration associated with acquisitions closed in prior periods.

During the fourth quarter of 2020, the Company recorded $ 13,255 of charges to adjust the carrying values of certain long-lived assets acquired in the Progressive Waste acquisition.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The following table summarizes the Company’s unaudited consolidated quarterly results of operations for 2019:

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Diluted income per common share attributable to Waste Connections’ common shareholders

During the third quarter of 2018, the Company reversed $ 6,257 of expenses recognized in prior periods to adjust the carrying cost of assets held for disposal to fair market value due to modifications to its divestiture plan and changes in the fair market value of the divested operations.

During the third quarter of 2018, the Company also recorded $ 5,005 in equity-based compensation expenses associated with adjusting common shares of Waste Connections, Inc.

WASTE CONNECTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Company’s deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options.

During the fourth quarter of 2018, the Company recorded $ 11,043 for the potential settlement of a final judgment obtained against Progressive Waste Solutions of FL, Inc., now known as Waste Connections of Florida, Inc.

SUBSEQUENT EVENTS

On January 23, 2020, the Company completed an underwritten public offering of $ 600,000 aggregate principal amount of 2.60 % Senior Notes due 2030 (the “2030 Senior Notes”).

The 2030 Senior Notes were issued under the Indenture, dated as of November 16, 2018, by and between the Company and U.S.

Bank National Association, as trustee, as supplemented by the Third Supplemental Indenture, dated as of January 23, 2020.

The Company will pay interest on the Notes semi-annually in arrears and the Notes will mature on February 1, 2030 .

The Notes are the Company’s senior unsecured obligations, ranking equally in right of payment with its other existing and future unsubordinated debt and senior to any of its future subordinated debt.

The Notes are not guaranteed by any of the Company’s subsidiaries.

Net proceeds to the Company from the offering were used to repay a portion of the Company’s borrowings outstanding under its Credit Agreement and for general corporate purposes.

During the third quarter of 2019, the Company recorded $ 8,000 resulting from the abandonment of a landfill development project at the Company’s E&P segment.

SUBSEQUENT EVENT

On February 17, 2021 , the Company announced that its Board of Directors approved a regular quarterly cash dividend of $ 0.205 per Company common share.

The dividend will be paid on March 12, 2020 , to shareholders of record on the close of business on February 27, 2020 .

The dividend will be paid on March 17, 2021 , to shareholders of record on the close of business on March 3, 2021 .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data