REPUBLIC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in millions, except per share data) Ì (Continued)
Years Ended December 31,
2004 2003 2002
Weighted-average fair value of the Company's stock options,
restricted stock and stock units granted during the period ÏÏÏ $ 9.33 $ 7.64 $ 7.47
Assumptions Ì
Risk-free interest ratesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.6% 3.2% 2.7%
Expected livesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 years 5 years 5 years
Expected volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30.0% 40.0% 40.0%
Dividend yieldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ .9% Ì Ì
Revenue Recognition and Deferred Revenue
The Company generally provides services under contracts with municipalities or individual customers.
Revenue consists primarily of collection fees from commercial, industrial, residential and municipal customers
and transfer and landÑll disposal fees charged to third parties. Advance billings are recorded as deferred
revenue, and the revenue is then recognized over the period services are provided. Collection, transfer and
disposal, and other services accounted for approximately 74.3%, 18.9% and 6.8%, respectively, of consolidated
revenue for the year ended December 31, 2004. No one customer has individually accounted for more than
10% of the Company's consolidated revenues or of the Company's reportable segment revenue in any of the
past three years.
The Company recognizes revenue when all four of the following criteria are met:
‚ Persuasive evidence of an arrangement exists such as a service agreement with a municipality, a
hauling customer or a disposal customer,
‚ Services have been performed such as the collection and hauling of waste or the disposal of waste at a
Company-owned disposal facility,
‚ The price of the services provided to the customer are Ñxed or determinable, and
‚ Collectability is reasonably assured.
Other Charges
During the fourth quarter of 2002, the Company recorded a $5.6 million gain on the sale of certain assets
for amounts exceeding estimates originally made and recorded as other charges during the fourth quarter of
2001.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial Accounting
Standards No. 109, ""Accounting for Income Taxes.'' Accordingly, deferred income taxes have been provided
to show the eÅect of temporary diÅerences between the recognition of revenue and expenses for Ñnancial and
income tax reporting purposes and between the tax basis of assets and liabilities and their reported amounts in
the Ñnancial statements.
Comprehensive Income
During the year ended December 31, 2002, the Company recorded an unrealized gain of $2.8 million
($1.7 million, net of tax) relating to the change in fair value of its fuel hedge option agreements in accordance
with Statement of Financial Accounting Standards No. 133, ""Accounting for Derivative Instruments and
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