Republic Services Inc.
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

(Mark One)

     
x   ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED, AS OF OCTOBER 7, 1996)
     
For the fiscal year ended December 31, 2002
     
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
     
For the transition period from                                 to

Commission file number 1-14267

A.   Full title of the plan and address of the plan, if different from that of the issuer named below:

REPUBLIC SERVICES 401(K) PLAN

B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

REPUBLIC SERVICES, INC.
110 S.E. 6th St.
Fort Lauderdale, Florida 33301

 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
NOTES TO FINANCIAL STATEMENTS
Schedule H, Line 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)
Schedule H, Line 4j — SCHEDULE OF REPORTABLE TRANSACTIONS
Exhibit Index
SIGNATURE
Consent of Ernst & Young LLP
Certification

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REPUBLIC SERVICES
401(K) PLAN

FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES

TOGETHER WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

DECEMBER 31, 2002

 

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REPUBLIC SERVICES
401(K) PLAN

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES

         
    Pages
   
Report of Independent Certified Public Accountants
     1  
Statements of Net Assets Available for Benefits as of December 31, 2002 and 2001
     2  
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2002
     3  
Notes to Financial Statements
     4-7  
Schedule H, Line 4i — Schedule of Assets (Held at End of Year) as of December 31, 2002
     8  
Schedule H, Line 4j — Schedule of Reportable Transactions for the Year Ended December 31, 2002
     9  
Exhibit Index
     10  
Signature
     11  

 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Management of Republic Services, Inc.:

     We have audited the accompanying statements of net assets available for benefits of the Republic Services 401(k) Plan as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended December 31, 2002. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2002 and 2001 and the changes in its net assets available for benefits for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States.

     Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets (held at end of year) as of December 31, 2002, and reportable transactions for the year then ended are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.

     
    /s/ ERNST & YOUNG LLP
   
    Ernst & Young LLP
     
Fort Lauderdale, Florida
June 13, 2003		    

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REPUBLIC SERVICES
401(K) PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2002 and 2001
                     
        2002   2001
       
 
Investments, at Fair Value:
                
 
Mutual Funds
   $ 23,932,274     $ 22,340,262  
 
Collective Trust Funds
     20,074,686       16,891,445  
 
Republic Services, Inc. Common Stock
     8,819,919       6,489,271  
 
Loan Fund
     5,691       18,018  
 
Cash
     52,815       225,236  
 
    
     
 
   
Total Investments
     52,885,385       45,964,232  
 
    
     
 
Contributions Receivable:
                
 
Employee
     184,260       305,239  
 
Employer
     645,648       527,520  
 
    
     
 
   
Total Contributions Receivable
     829,908       832,759  
 
    
     
 
   
Total Assets
     53,715,293       46,796,991  
 
    
     
 
Liabilities:
                
 
Excess Contributions Payable
     367,072       8,628  
 
    
     
 
NET ASSETS AVAILABLE FOR BENEFITS
   $ 53,348,221     $ 46,788,363  
 
    
     
 

The accompanying notes to financial statements are an integral part of these statements.

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REPUBLIC SERVICES
401(K) PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2002
                 
Additions:
        
 
Transfers into Plan from Acquired Company Plans
   $ 2,522,013  
 
    
 
 
Contributions —
        
   
Employee
     9,670,784  
   
Employer
     2,620,880  
 
    
 
     
Total Contributions
     12,291,664  
 
    
 
Investment Income (Loss) —
        
   
Dividend and Interest Income
     1,220,052  
   
Net Depreciation in Fair Value
     (4,221,443 )
 
    
 
     
Total Investment Loss
     (3,001,391 )
 
    
 
       
Total Additions
     11,812,286  
 
    
 
Deductions:
        
   
Participant Distributions
     5,251,461  
   
Plan Expenses
     360  
   
Other Deductions
     103  
   
Conversions Out
     504  
 
    
 
       
Total Deductions
     5,252,428  
 
    
 
Net Increase
     6,559,858  
NET ASSETS AVAILABLE FOR BENEFITS:
        
   
Beginning of Year
     46,788,363  
 
    
 
   
End of Year
   $ 53,348,221  
 
    
 

The accompanying notes to financial statements are an integral part of this statement.

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REPUBLIC SERVICES
401(K) PLAN

NOTES TO FINANCIAL STATEMENTS
December 31, 2002

(1) DESCRIPTION OF PLAN:

(a) General

     The following description of the Republic Services 401(k) Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Summary Plan Description for a more complete description of the Plan.

     The Plan was established effective April 1, 1999 to provide benefits to all eligible employees of Republic Services, Inc. and its subsidiaries (the “Company”). The Plan is a defined contribution plan commonly known as an Internal Revenue Code (“IRC”) section 401(k) profit sharing plan and is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. The Company is the designated administrator of the Plan.

     Although it has expressed no intention to do so, the Company retains the right, if necessary, to terminate the Plan. The Company also retains the right to amend the Plan from time to time.

     In the event the Plan is terminated, each participant will receive a benefit equal to the value of the participant’s interest in their account as of the date of the distribution. Each participant will have the option of receiving a lump-sum distribution or rolling over their distributions into an Individual Retirement Account.

(b) Eligibility

     Employees are eligible to participate in the Plan when they are at least 18 years of age and have completed three months of employment. Enrollment provisions allow for weekly entry dates by all eligible employees.

(c) Contributions and Funding Policy

     Under the provisions of the Plan, participants may direct the Company to defer a portion of their compensation to the Plan, subject to a maximum of 25% and 15% of eligible compensation in 2002 and 2001, respectively, as defined. Participants direct the investment of their contributions into various investment options offered by the Plan. In 2002, each eligible participant could contribute up to $11,000 and participants over 50 years of age could make catch-up contributions, subject to other applicable IRC limitations. The Plan also allows for rollovers of vested contributions from previous employers’ qualified plans.

     During 2002 and 2001, an employer matching contribution of 50% of the amount contributed by each participant up to 4% of the employee’s salary was made. This contribution is made by the Company to all participants who are employees on the last day of each calendar quarter and are credited with at least one year of service at that time. The employer match is generally made in shares of the Company’s common stock. The employer matching contribution for 2002 and 2001 is $2,620,880 and $2,236,697, respectively, which was paid in stock of the Company and is included in the accompanying financial statements. Participants are allowed to sell their investment in the Company’s common stock and reinvest the proceeds in any of the other Plan’s investment options. The Company did not make any discretionary contributions to the Plan during 2002 or 2001.

     Individual accounts are maintained for each of the Plan’s participants to reflect the participant’s contributions and related employer matching contributions, as well as the participant’s share of investment income. The Plan provides for immediate vesting of all contributions plus actual earnings thereon.

(d) Investments

     The Company entered into an agreement whereby Merrill Lynch Trust Company (the “Trustee”) has been appointed the Trustee of the Plan’s assets. Under the terms of the agreement, the Trustee holds and invests the funds of the Plan subject to the direction of the Plan’s Benefits Committee and participant investment elections.

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     The Plan does not permit participant loans. However, the Plan accepts and services loans rolled over from the plans of acquired companies (See Note 5).

(e) Payment of Benefits

     In general, upon termination of service due to death, disability, or retirement, a participant (or designated beneficiary) will receive a lump-sum amount equal to the value of the participant’s account. Participants with balances attributable to participation in the former Republic Rewards 401(k) Plan (which is a plan for employees of AutoNation, Inc., Republic Services, Inc.’s former parent company) can elect to receive annual installments over a period not exceeding the remaining life expectancy of the payee. Participants with balances from other prior plans will retain the distribution options of those plans. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution.

(2)  SIGNIFICANT ACCOUNTING POLICIES:

     The accompanying financial statements are prepared under the accrual method of accounting in conformity with accounting principles generally accepted in the United States.

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Investment Valuation and Income Recognition

     The Plan’s investments in mutual funds and Republic Services, Inc. common stock are stated at fair value as determined by quoted market prices for these securities on national securities exchanges. The Plan’s investments in collective trust funds are stated at fair value as determined by the Trustee. Purchases and sales of investments are recorded on a trade-date basis. The Plan records dividends on the ex-dividend date.

Reclassifications

     Certain amounts in the 2001 Statement of Net Assets Available for Benefits have been reclassified to conform to the 2002 presentation.

(3)  INVESTMENTS:

     The investments of the Plan as of December 31, 2002 and 2001 are as follows:

                       
          2002   2001
         
 
Mutual Funds —
                
 
Alger Growth Retirement Portfolio
   $ 1,494,682     $ 1,332,014  
 
Franklin Small-Mid Cap Growth Fund
     3,306,599 (a)     3,815,048 (a)
 
Ivy International Fund
     1,229,113       1,322,877  
 
Oakmark Select II Fund
     6,581,857 (a)     7,271,565 (a)
 
Pilgrim International Value Fund
     613,170       508,999  
 
PIMCO Total Return Fund
     7,427,623 (a)     5,591,541 (a)
 
State Street Research Aurora Fund
     1,375,894       1,097,269  
Van Kampen Growth & Income Fund
     1,903,336       1,400,949  
 
    
     
 
     
Total Mutual Funds
     23,932,274       22,340,262  
 
    
     
 
Collective Trust Funds —
                
   
Merrill Lynch Retirement Preservation Trust
     15,601,426 (a)     11,715,796 (a)
   
Merrill Lynch Equity Index Trust
     4,473,260 (a)     5,175,649 (a)
 
    
     
 
     
Total Collective Trust Funds
     20,074,686       16,891,445  
 
    
     
 
Republic Services, Inc. Common Stock
     8,819,919 (a)(b)     6,489,271 (a)(b)
Loan Fund
     5,691       18,018  
Cash
     52,815       225,236  
 
    
     
 
 
Total Investments
   $ 52,885,385     $ 45,964,232  
 
    
     
 

(a)   Investment amount represents more than 5% of the Plan’s net assets as of December 31 of the Plan year.
(b)   Non-participant-directed investment and participant-directed investments in Republic Services, Inc. common stock.

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     During 2002 and 2001, the Plan’s investments (including gains and losses on investments bought and sold, as well as held) appreciated (depreciated), net in value by $(4,221,443) and $208,961, respectively, as follows:

                 
    2002   2001
   
 
Mutual Funds
   $ (4,756,072 )   $ (632,686 )
Republic Services, Inc. Common Stock
     534,629       841,647  
 
    
     
 
Net Appreciation (Depreciation) in Fair Value
   $ (4,221,443 )   $ 208,961  
 
    
     
 

(4) NON-PARTICIPANT-DIRECTED RECEIVABLES AND INVESTMENTS:

     Information about the net assets and the significant components of the changes in net assets relating to the non-participant-directed receivables and investments is as follows:

                   
      As of December 31,
     
      2002   2001
     
 
Net Assets:
                
 
Employer Contribution Receivable
   $ 645,648     $ 527,520  
 
Republic Services, Inc. Common Stock
     8,819,919       6,489,271  
 
    
     
 
 
   $ 9,465,567     $ 7,016,791  
 
    
     
 
               
          Year Ended
          December 31, 2002
         
Changes in Net Assets:
        
   
Contributions —
        
     
Employee
   $ 212,234  
     
Employer
     2,620,880  
 
Net appreciation in fair value
     534,629  
 
Other receipts
     18,764  
 
Participant distributions
     (628,510 )
 
Plan expenses
     (82 )
 
Other deductions
     (15,955 )
 
Net transfers to participant-directed investments
     (293,184 )
 
    
 
 
   $ 2,448,776  
 
    
 

(5) TRANSFERS INTO PLAN:

     The 401(k) plans of certain companies acquired by the Company are periodically converted into the Plan, with the related employees becoming participants. All of the assets of these plans are transferred at fair value and invested in the Plan based upon the employees’ former account balances by investment type. For the Plan year ended December 31, 2002, $2,522,013 of Plan assets are reflected as transfers into the Plan from acquired company plans in the accompanying statement of changes in net assets available for benefits.

(6) BENEFIT DISTRIBUTIONS:

     In general, upon termination of service, including death, total and permanent disability, or retirement, a participant (or the participant’s beneficiary) will receive an amount equal to the value of the participant’s account.

     Amounts allocated to withdrawing participants for benefit claims that have been processed and approved for payment but have not yet been paid totaled $39,440 and $200,841 at December 31, 2002 and 2001, respectively. Such amounts are included in net assets available for benefits at December 31, 2002 and 2001 in accordance with American Institute of Certified Public Accountants guidelines. However, the Plan’s Form 5500 reflects such amounts as liabilities of the Plan in accordance with IRC guidelines.

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(7) PARTY-IN-INTEREST TRANSACTIONS:

     Certain Plan investments are shares of mutual funds and collective trust funds managed by Merrill Lynch Asset Management Company, an affiliate of the Trustee. Therefore, these investments represent a party-in-interest to the Plan. The Company pays substantially all fees and expenses of the Plan, which primarily consist of legal, administrative and accounting fees. Fees and expenses paid directly by the Company were $171,046 and $120,173 in 2002 and 2001, respectively.

(8) INCOME TAX STATUS:

     The Plan has received a determination letter from the Internal Revenue Service dated September 11, 2002 stating that the Plan is qualified under Section 401(a) of the IRC and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt.

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E.I.N.: 65-0716904
Plan #: 001

REPUBLIC SERVICES
401(K) PLAN

Schedule H, Line 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)
As of December 31, 2002
                             
Description   Shares   Cost   Market Value
 
 
 
*Merrill Lynch Retirement Preservation Trust
     15,601,426     $ 15,601,426     $ 15,601,426  
*Merrill Lynch Equity Index Trust
     71,401       5,572,163       4,473,260  
 
Alger Growth Retirement Portfolio
     178,363       1,990,623       1,494,682  
 
Franklin Small-Mid Cap Growth Fund
     150,642       4,398,997       3,306,599  
 
Ivy International Fund
     75,175       1,500,126       1,229,113  
 
Oakmark Select II Fund
     277,599       7,453,205       6,581,857  
 
Pilgrim International Value Fund
     59,589       719,025       613,170  
 
PIMCO Total Return Fund
     696,122       7,336,126       7,427,623  
*Republic Services, Inc. Common Stock
     420,397       8,285,420       8,819,919  
 
State Street Research Aurora Fund
     53,329       1,622,843       1,375,894  
 
Van Kampen Growth & Income Fund
     133,193       2,111,354       1,903,336  
 
Loan Fund (interest rates ranging from 9.25% to 10.50%)
     5,691       5,691       5,691  
 
Cash
     N/A       52,815       52,815  
 
            
     
 
   
Total
           $ 56,649,814     $ 52,885,385  
 
            
     
 

*   Represents a party-in-interest to the Plan.

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E.I.N.: 65-0716904
Plan #: 001

REPUBLIC SERVICES
401(K) PLAN

Schedule H, Line 4j — SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 2002
                                                 
    Number of           Purchase   Selling   Asset   Net
Investment Description   Transactions   Shares   Price   Price   Cost   Gain/(Loss)
 
 
 
 
 
 
Category (iii) Series of Securities Transactions in Excess of 5% of the Current Value of Plan Assets –
    Purchases:
                                                
    Republic Services, Inc. Common Stock
     68       132,842     $ 2,534,726       N/A     $ 2,534,726       N/A  
    Sales:
                                                
    Republic Services, Inc. Common Stock
     435       41,588     $ 658,227     $ 820,902     $ 658,227     $ 162,675  

Note:   Transactions included herein represent transactions, or a series of transactions, in securities of the same issue, or with respect to the same issuer, of 5% or more of the quoted value of Plan assets at the beginning of the Plan year for non-participant-directed investments. There were no category (i), (ii) or (iv) transactions during the year ended December 31, 2002.

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Exhibit Index

     
Exhibit    
Number   Description
 
23.1   Consent of Ernst & Young LLP
99.1   Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of James E. O’Connor, Chairman and Chief Executive Officer of Republic Services, Inc. and Tod C. Holmes, Senior Vice President and Chief Financial Officer of Republic Services, Inc. and Chairperson of the Benefits Committee of the Republic Services 401(k) Plan.

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SIGNATURE

     THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    Republic Services 401(k) Plan
   
    (Name of Plan)
         
    By:   /s/ Tod C. Holmes
       
    Title:   Chairperson of the Benefits Committee of the Republic Services 401(k) Plan
         
Date: June 26, 2003        

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