REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
Current Practice
Description Historical Practice (EÅective January 1, 2003)
LandÑll Asset Amortization Not applicable. The landÑll asset is amortized as
airspace is consumed over the life of
a speciÑc capping event for Ñnal
capping or the life of a landÑll for
closure and post-closure.
Accretion Not applicable. Expense recognized as a component
of operating expenses at credit-
adjusted, risk-free rate using the
eÅective interest method.
The Company has future obligations for Ñnal capping, closure and post-closure costs with respect to the
landÑlls it owns or operates as set forth in applicable landÑll permits. Final capping, closure and post-closure
costs include estimated costs to be incurred for Ñnal capping and closure of landÑlls and estimated costs for
providing required post-closure monitoring and maintenance of landÑlls. The permit requirements are based
on the Subtitle C and Subtitle D regulations of the Resource Conservation and Recovery Act (RCRA), as
implemented and applied on a state-by-state basis. Obligations associated with monitoring and controlling
methane gas migration and emissions are set forth in applicable landÑll permits and these requirements are
based upon the provisions of the Clean Air Act of 1970, as amended. Final capping typically includes installing
Öexible membrane and geosynthetic clay liners, drainage and compact soil layers, and topsoil, and is
constructed over an area of the landÑll where total airspace capacity has been consumed and waste disposal
operations have ceased. These Ñnal capping activities occur throughout the operating life of a landÑll. Other
closure activities and post-closure activities occur after the entire landÑll ceases to accept waste and closes.
These activities involve methane gas control, leachate management and groundwater monitoring, surface
water monitoring and control, and other operational and maintenance activities that occur after the site ceases
to accept waste. The post-closure period generally runs for up to 30 years after Ñnal site closure for municipal
solid waste landÑlls and a shorter period for construction and demolition landÑlls and inert landÑlls.
Estimates of future expenditures for Ñnal capping, closure and post-closure are developed annually by
engineers. These estimates are reviewed by management at least annually and are used by the Company's
operating and accounting personnel to adjust the rates used to capitalize and amortize these costs. These
estimates involve projections of costs that will be incurred during the remaining life of the landÑll for Ñnal
capping activities, after the landÑll ceases operations and during the legally required post-closure monitoring
period. Additionally, the Company currently retains post-closure responsibility for several closed landÑlls.
Under SFAS 143, a liability for an asset retirement obligation must be recognized in the period in which
it is incurred and should be initially measured at fair value. Absent quoted market prices, the estimate of fair
value should be based on the best available information, including the results of present value techniques in
accordance with Statement of Financial Accounting Concepts No. 7, ""Using Cash Flow and Present Value in
Accounting Measurements'' (""SFAC 7''). The oÅset to the liability must be capitalized as part of the carrying
amount of the related long-lived asset. Changes in the liability due to the passage of time are recognized as
operating items in the income statement and are referred to as accretion expense. Changes in the liability due
to revisions to estimated future cash Öows are recognized by increasing or decreasing the liability with the
oÅset adjusting the carrying amount of the related long-lived asset.
In applying the provisions of SFAS 143, the Company has concluded that a landÑll's asset retirement