REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
Unconditional purchase commitments consist primarily of commitments to purchase collection vehicles
and long-term disposal agreements that require the Company to dispose of a minimum number of tons at third
party facilities.
Liability Insurance
The Company carries general liability, vehicle liability, employment practices liability, pollution liability,
directors and oÇcers liability, worker's compensation and employer's liability coverage, as well as umbrella
liability policies to provide excess coverage over the underlying limits contained in these primary policies. The
Company also carries property insurance.
The Company's insurance programs for worker's compensation, general liability, vehicle liability and
employee-related health care beneÑts are eÅectively self-insured. Claims in excess of self-insurance levels are
fully insured subject to policy limits. Accruals are based on claims Ñled and estimates of claims incurred but
not reported.
During 2003, the Company experienced an increase in expense associated with self-insurance. This
increase was attributable to the expansion of the Company's operations and various changes in estimates as a
result of continued negative trends through the 2003 policy year, based upon recent actuarial claims
experience, expected claims development and medical cost inÖation.
The Company's liabilities for unpaid and incurred but not reported claims at December 31, 2004 was
$143.8 million under its current risk management program and are included in other current and other
liabilities in the accompanying Consolidated Balance Sheets. While the ultimate amount of claims incurred
are dependent on future developments, in management's opinion, recorded reserves are adequate to cover the
future payment of claims. However, it is reasonably possible that recorded reserves may not be adequate to
cover the future payment of claims. Adjustments, if any, to estimates recorded resulting from ultimate claim
payments will be reÖected in results of operations in the periods in which such adjustments are known.
Guarantees of Subsidiary Debt
The Company has guaranteed the tax-exempt bonds of its subsidiaries. If a subsidiary fails to meet its
obligations associated with tax-exempt bonds as they come due, the Company will be required to perform
under the related guarantee agreement. No additional liability has been recorded for these guarantees because
the underlying obligations are reÖected in the Company's Consolidated Balance Sheets. (For further
information, see Note 5, Debt).
Restricted Cash and Marketable Securities, and Other Financial Guarantees
In the normal course of business, the Company is required by regulatory agencies, governmental entities
and contract parties to post performance bonds, letters of credit and/or cash deposits as Ñnancial guarantees of
the Company's performance. At December 31, 2004, letters of credit totaling $489.8 million were outstanding,
and surety bonds totaling $392.2 million were outstanding, which will expire on various dates through 2015.
At December 31, 2004, the Company had $237.0 million of restricted cash deposits and $38.7 million of
restricted marketable securities held as Ñnancial guarantees, including $119.0 million of restricted cash held
for capital expenditures under certain debt facilities, and $34.3 million and $38.7 million of restricted cash and
restricted marketable securities, respectively, pledged to regulatory agencies and governmental entities as
Ñnancial guarantees of the Company's performance related to its Ñnal capping, closure and post-closure
obligations at its landÑlls. The Company's restricted marketable securities consist of mutual funds invested in
short-term investment grade securities, including mortgage-backed securities and U.S. Government obliga-