REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
As of December 31, 2004, the Company had $237.0 million of restricted cash of which $119.0 million
were proceeds from the issuance of tax-exempt bonds and other tax-exempt Ñnancing and will be used to fund
capital expenditures. Restricted cash also includes amounts held in trust as a Ñnancial guarantee of the
Company's performance.
The Company made interest payments on notes payable and long-term debt of approximately $77.0 mil-
lion, $78.4 million and $75.9 million (net of capitalized interest of $2.1 million, $3.3 million and $2.5 million)
for the years ended December 31, 2004, 2003 and 2002, respectively.
The Company's ability to obtain Ñnancing through the capital markets is a key component of its Ñnancial
strategy. Historically, the Company has managed risk associated with executing this strategy, particularly as it
relates to Öuctuations in interest rates, by using a combination of Ñxed and Öoating rate debt. The Company
also entered into interest rate swap agreements to manage risk associated with Öuctuations in interest rates and
to take advantage of favorable Öoating interest rates. The swap agreements have total notional values of
$225.0 million and $210.0 million. Swap agreements with a notional value of $225.0 million matured in May
2004, and agreements with a notional value of $210.0 million mature in August 2011. These maturities are
identical to the Company's public notes that were sold in 1999 and 2001, respectively. Under the swap
agreements, the Company pays interest at Öoating rates based on changes in LIBOR and receives interest at
Ñxed rates of 65/8% and 6 3/4%, respectively. The Company has designated these agreements as hedges in
changes in the fair value of the Company's Ñxed-rate debt and accounts for them in accordance with
SFAS 133. The Company has determined that these agreements qualify for the short-cut method under
SFAS 133 and, therefore, changes in the fair value of the agreements are assumed to be perfectly eÅective in
hedging changes in the fair value of the Company's Ñxed rate debt due to changes in interest rates.
As of December 31, 2004, interest rate swap agreements are reÖected at fair market value of $.5 million
and are included in other assets and as an adjustment to long-term debt in the accompanying Consolidated
Balance Sheets. During the years ended December 31, 2004, 2003 and 2002, the Company recorded net
interest income of $7.2 million, $10.0 million and $5.8 million, respectively, related to its interest rate swap
agreements which is included in interest expense in the accompanying Consolidated Statements of Income.
The unsecured revolving credit facility requires the Company to maintain certain Ñnancial ratios and
comply with certain Ñnancial covenants. The Company has the ability under its loan covenants to pay
dividends and repurchase its common stock under the condition that it is in compliance with the covenants. At
December 31, 2004, the Company was in compliance with the Ñnancial covenants under these agreements.
6. INCOME TAXES
The components of the provision for income taxes are as follows:
Years Ended December 31,
2004 2003 2002
Current:
Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 81.2 $(51.4) $ 62.0
State ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7.0 4.5 11.8
Federal and state deferred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 57.6 178.9 73.1
Provision for income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $145.8 $132.0 $146.9
In December 2003, the Company received written approval from the Internal Revenue Service to exclude
probable expansion airspace from its calculation of landÑll amortization, depletion, and Ñnal capping, closure
and post-closure costs for tax purposes. As a result of this change, the Company's deferred income tax