REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
Hedging Activities'' (""SFAS 133''), as amended. (For further information, see Note 11, Fuel Hedge.) Of this
amount, $1.6 million, net of tax, representing the eÅective portion of the change in fair value was recorded to
other comprehensive income for the year ended December 31, 2002.
At December 31, 2004, the Company had $38.7 million of restricted marketable securities held as
Ñnancial guarantees. These securities consist of mutual funds invested in short-term investment grade
securities, including mortgage-backed securities and U.S. Government obligations. These securities are
available for sale and, as a result, are stated at fair value based on quoted market prices. During the years
ended December 31, 2004 and 2003, the Company recorded a $.1 million and ($.1) million unrealized
gain/(loss), net of tax, respectively, to other comprehensive income related to the change in fair value of these
securities.
The Company had no other components of other comprehensive income for the periods presented.
Statements of Cash Flows
The Company considers all unrestricted highly liquid investments with purchased maturities of three
months or less to be cash equivalents. The eÅect of non-cash transactions related to business combinations, as
discussed in Note 4, Business Combinations, and other non-cash transactions are excluded from the
accompanying Consolidated Statements of Cash Flows.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash and marketable securities, receivables,
accounts payable and accrued liabilities approximate fair value due to the short maturity of these instruments.
The fair value of the Company's Ñxed rate unsecured notes and tax-exempt Ñnancing using quoted market
rates is $1,227.4 million at December 31, 2004. The carrying value of the unsecured notes and tax exempt
Ñnancing is $1,123.3 million at December 31, 2004. The carrying amounts of the Company's remaining notes
payable and tax-exempt Ñnancing approximate fair value because interest rates are variable and, accordingly,
approximate current market rates.
Concentration of Credit Risk
The Company provides services to commercial, industrial, municipal and residential customers in the
United States. Concentrations of credit risk with respect to trade receivables are limited due to the wide
variety of customers and markets in which services are provided as well as their dispersion across many
geographic areas in the United States. The Company performs ongoing credit evaluations of its customers, but
does not require collateral to support customer receivables. The Company establishes an allowance for
doubtful accounts based on various factors including the credit risk of speciÑc customers, age of receivables
outstanding, historical trends, economic conditions and other information.
New Accounting Pronouncement
On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123 (revised 2004), ""Share-Based Payment'' (""SFAS 123(R)''), which is a
revision of Statement of Financial Accounting Standards No. 123, ""Accounting for Stock-Based Compensa-
tion'' (""SFAS 123''). SFAS 123(R) supersedes APB Opinion No. 25, ""Accounting for Stock Issued to
Employees,'' and amends SFAS 95, ""Statement of Cash Flows.'' Generally, the approach in SFAS 123(R) is
similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the income statement based on
their fair values. Pro forma disclosure is no longer an alternative.
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