REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
approximately $48.0 million which was collected or used to oÅset taxes payable during the year ended
December 31, 2004.
A reconciliation of the statutory federal income tax rate to the Company's eÅective tax rate is shown
below:
Years Ended
December 31,
2004 2003 2002
Statutory federal income tax rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35.0% 35.0% 35.0%
Non-deductible expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.3 1.9 .7
State income taxes, net of federal beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.4 1.7 2.1
Other, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (.7) (.6) .2
EÅective income tax rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 38.0% 38.0% 38.0%
Components of the net deferred income tax asset and liability in the accompanying Consolidated Balance
Sheets are as follows:
December 31,
2004 2003
Deferred tax assets (liabilities):
Current portion Ì
Book basis in property over tax basisÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.8 $ 2.5
Accruals not currently deductible ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.1 3.3
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9.9 $ 5.8
Long-term portion Ì
Book basis in property over tax basisÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(434.4) $(367.3)
Accruals not currently deductible ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27.9 13.8
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(406.5) $(353.5)
At December 31, 2004, the Company had available domestic federal and state net operating loss
carryforwards of approximately $25.6 million ($16.6 million after tax), which begin to expire in 2023. In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not some
portion or all of the deferred tax assets will not be realized after the initial recognition of the deferred tax asset.
The Company provides valuation allowances to oÅset portions of deferred tax assets due to uncertainty
surrounding the future realization of such deferred tax assets. The Company adjusts the valuation allowance, if
any, in the period management determines it is more likely than not that deferred tax assets will or will not be
realized.
The Company made income tax payments (net of refunds received) of approximately $12.9 million,
$17.7 million and $69.3 million for the years ended December 31, 2004, 2003 and 2002, respectively.
Through the date of the Company's initial public oÅering of common stock in July 1998, the Company
Ñled consolidated federal income tax returns with AutoNation Inc. (""AutoNation''), its former parent
company. In accordance with the Company's tax sharing agreement with AutoNation, the Company may be
liable for certain assessments imposed by the Internal Revenue Service for the periods through June 1998.
The Internal Revenue Service is auditing the Company's consolidated tax returns for Ñscal years 1998 through
2003. Management believes that the tax liabilities recorded are adequate. However, a signiÑcant assessment in
excess of liabilities recorded against the Company could have a material adverse eÅect on the Company's
Ñnancial position, results of operations or cash Öows.
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