Republic Services, Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
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(Mark One) |
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2007 |
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission file number 1-14267 |
A. |
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Full title of the plan and address of the plan, if different from that of the issuer named
below: |
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REPUBLIC SERVICES 401(k) PLAN |
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B. |
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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., 28th Floor
Fort Lauderdale, Florida 33301
REPUBLIC SERVICES
401(k) PLAN
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
TOGETHER WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
DECEMBER 31, 2007
REPUBLIC SERVICES
401(k) PLAN
INDEX TO AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
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Pages |
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1 |
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2 |
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3 |
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4-7 |
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8 |
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9 |
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10 |
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Consent of Independent Registered Public Accounting Firm |
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11 |
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Schedules not listed above are omitted because of the absence of conditions under which
they are required under the Department of Labors Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors 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, 2007 and 2006, and the related statement of
changes in net assets available for benefits for the year ended December 31, 2007. These financial
statements are the responsibility of the Plans management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (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. We were not engaged to perform an audit of the Plans internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Plans internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and 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, 2007 and 2006, and the
changes in its net assets available for benefits for the year ended December 31, 2007, in
conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements
taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of
December 31, 2007 is presented for purposes of additional analysis and is not a required part of
the financial statements but is supplementary information required by the Department of Labors
Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974. This supplemental schedule is the responsibility of the Plans management. The
supplemental schedule has been subjected to the auditing procedures applied in our audits of the
financial statements and, in our opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.
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/s/ ERNST & YOUNG LLP
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Certified Public Accountants |
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Fort Lauderdale, Florida
June 26, 2008
1
REPUBLIC SERVICES
401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2007 and 2006
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2007 |
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2006 |
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Investments, at Fair Value: |
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Mutual Funds |
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$ |
88,999,600 |
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$ |
70,543,069 |
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Collective Trust Funds |
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45,198,773 |
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39,480,338 |
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Republic Services, Inc. Common Stock |
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24,461,401 |
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22,689,234 |
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Loan Fund |
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9,505 |
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10,557 |
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Cash |
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218,135 |
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114,919 |
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Total Investments |
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158,887,414 |
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132,838,117 |
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Contributions Receivable: |
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Employee |
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291,459 |
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Employer |
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3,003,890 |
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2,459,403 |
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Total Contributions Receivable |
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3,003,890 |
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2,750,862 |
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Accrued Investment Income |
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41,322 |
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35,259 |
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Net Assets Available for Benefits, Reflecting
Investments at Fair Value |
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161,932,626 |
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135,624,238 |
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Adjustment From Fair Value to Contract Value for
Fully Benefit-Responsive Investment Contracts
Held by Collective Trust Funds |
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272,523 |
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484,171 |
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NET ASSETS AVAILABLE FOR BENEFITS |
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$ |
162,205,149 |
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$ |
136,108,409 |
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The accompanying notes to financial statements are an integral part of these statements.
2
REPUBLIC SERVICES
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2007
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Additions: |
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Contributions |
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Employee |
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$ |
20,914,103 |
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Employer |
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11,099,076 |
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Total Contributions |
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32,013,179 |
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Investment Income |
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Dividend and Interest Income |
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9,836,718 |
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Net Appreciation in Fair Value of Investments |
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84,205 |
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Total Investment Income |
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9,920,923 |
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Total Additions |
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41,934,102 |
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Deductions: |
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Participant Distributions |
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15,751,678 |
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Plan Expenses |
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85,684 |
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Total Deductions |
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15,837,362 |
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Net Increase |
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26,096,740 |
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NET ASSETS AVAILABLE FOR BENEFITS: |
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Beginning of Year |
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136,108,409 |
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End of Year |
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$ |
162,205,149 |
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The accompanying notes to financial statements are an integral part of this statement.
3
REPUBLIC SERVICES
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
(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 and
Plan agreement 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 remain 100% vested and will receive
a benefit equal to the value of the participants interest in their account as of the date of the
distribution. Each participant would have the option of receiving a lump-sum distribution or
rolling over their distributions into another qualified retirement plan or an individual retirement
account.
(b) Eligibility
Effective January 1, 2007, employees are eligible to participate in the Plan as of their date
of hire when they are at least 18 years of age. Employees are automatically enrolled in the Plan
after 90 days of continuous service, and 5% of their eligible pay is contributed to the Plan unless
or until the employee changes their deferral percentage. Enrollment provisions allow for weekly
entry dates by all eligible employees.
Effective January 1, 2008, the Plan was amended to expand the automatic enrollment of eligible
employees to include all employees not deferring under the Plan as of January 1, 2008.
(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 IRC limitations. Participants direct the investment of
their contributions into various investment options offered by the Plan. In 2007, each eligible
participant could contribute up to $15,500, and participants who are or will be at least 50 years
of age by the end of a calendar year are also eligible to make catch-up contributions to the Plan
at any time during such calendar year. In 2007, the maximum amount of catch-up contributions a
participant could contribute was $5,000. The Plan also allows for rollovers of vested contributions
from previous employers qualified plans.
The employer matching contribution is 100% of the first 3% of eligible compensation and 50% of
the next 2% of eligible compensation contributed by each participant. Contributions are made by
the Company to all participants who are credited with at least one year of service. The employer
match in 2007 and 2006 was funded in cash and allocated to the appropriate investment funds in
accordance with the participants elections. The total employer matching contribution recognized
in the statement of changes in net assets available for benefits for 2007 was $11,099,076. The
Company did not make any discretionary contributions to the Plan during 2007.
Individual accounts are maintained for each of the Plans participants to reflect the
participants contributions and related employer matching contributions, as well as the
participants share of investment income. The Plan provides for immediate vesting of all
contributions plus actual earnings thereon.
4
(d) Investments
The Company entered into an agreement whereby Merrill Lynch Trust Company (the Trustee) has
been appointed the Trustee of the Plans assets. Under the terms of the agreement, the Trustee
holds and invests the funds of the Plan subject to the direction of the Plans Benefits Committee
and participant investment elections.
The Company presents its Statements of Net Assets Available For Benefits in accordance with
Financial Accounting Standards Board Staff Position AAG INV-1 and Statement of Position 94-4-1,
Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Audit Guide and Defined-Contribution Health and Welfare and
Pension Plans (the FSP). One of the investment options offered by the Plan, the Merrill Lynch
Retirement Preservation Trust, is a common collective trust that is fully invested in contracts
deemed to be fully benefit-responsive within the meaning of the FSP. The FSP requires that this
investment be reported at fair value. However, contract value is the relevant measure to the Plan
because it is the amount that is available for Plan benefits. Accordingly, investments as reflected
in the Statements of Net Assets Available for Benefits state the Merrill Lynch Retirement
Preservation Trust, included within the Collective Trust Funds, at its fair value, with a
corresponding adjustment to reflect the investment at contract value.
The Plan does not permit participant loans. However, the Plan accepts and services loans
rolled over from the plans of acquired companies.
(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 participants
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 or
may rollover the vested interest in his or her account into an Individual Retirement Account
(IRA) or another employers qualified retirement plan.
(2) SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements are prepared under the accrual basis of accounting in
conformity with U.S. generally accepted accounting principles.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates that affect the reported amounts of assets and
liabilities and changes therein, and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Investment Valuation and Income Recognition
The Plans 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 Plans investments in collective trust funds (other than the Merrill Lynch Retirement
Preservation Trust) are stated at fair value as determined by the Trustee. The fair value of the
Plans interest in the Merrill Lynch Retirement Preservation Trust is based on information reported
by the issuer of the common collective trust at year-end. The contract value of the Merrill Lynch
Retirement Preservation Trust represents contributions plus earnings, less participant withdrawals
and administrative expenses. The participant loans are valued at their outstanding balances, which
approximate fair value. Purchases and sales of investments are recorded on a trade-date basis. The
Plan records dividends on the ex-dividend date. Interest income is recorded on the accrual basis.
5
(3) INVESTMENTS:
The investments of the Plan as of December 31, 2007 and 2006 are as follows:
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2007 |
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2006 |
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Mutual Funds |
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AIM International Growth Fund |
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$ |
12,268,490 |
(a) |
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$ |
7,666,728 |
(a) |
Alger Large Cap Growth Institutional Portfolio |
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10,793,807 |
(a) |
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6,980,495 |
(a) |
BlackRock Aurora Portfolio |
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4,564,967 |
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5,748,659 |
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BlackRock Government Income Portfolio |
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3,066,818 |
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2,613,364 |
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DWS Dreman Small Cap Value Fund |
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5,666,192 |
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2,920,838 |
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Evergreen Special Equity Fund |
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840,207 |
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868,505 |
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Franklin Small-Mid Cap Growth Fund |
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9,853,442 |
(a) |
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6,832,883 |
(a) |
ING International Value Fund |
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10,584,117 |
(a) |
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9,809,865 |
(a) |
Oakmark Select Fund |
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9,380,208 |
(a) |
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9,762,766 |
(a) |
PIMCO Total Return Fund |
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10,234,171 |
(a) |
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7,944,316 |
(a) |
Van Kampen Growth and Income Fund |
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11,747,181 |
(a) |
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9,394,650 |
(a) |
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Total Mutual Funds |
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88,999,600 |
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70,543,069 |
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Collective Trust Funds |
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Merrill Lynch Retirement Preservation Trust |
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29,411,421 |
(a)(b) |
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25,492,052 |
(a)(b) |
Merrill Lynch Equity Index Trust |
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15,787,352 |
(a) |
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13,988,286 |
(a) |
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Total Collective Trust Funds |
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45,198,773 |
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39,480,338 |
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Republic Services, Inc. Common Stock |
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24,461,401 |
(a) |
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22,689,234 |
(a) |
Loan Fund |
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9,505 |
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10,557 |
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Cash |
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218,135 |
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114,919 |
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Total Investments |
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$ |
158,887,414 |
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$ |
132,838,117 |
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(a) |
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Investment amount represents more than 5% of the Plans net assets as of December 31 of the
Plan year. |
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(b) |
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Represents the fair value. The contract value of this investment as of December 31, 2007 and
2006 was $29,683,944 and $25,976,223, respectively. |
The adjustment from fair value to contract value for fully benefit-responsive investment
contracts totaled $272,523 and $484,171 at December 31, 2007 and 2006, respectively. Such
adjustments are included in net assets available for benefits and total additions as of and for the
years ended December 31, 2007 and 2006 in accordance with American Institute of Certified Public
Accountants guidelines. However, these adjustments have been excluded from net assets available for
benefits and total income in the Plans Form 5500 in accordance with IRC guidelines.
During 2007, the Plans investments (including gains and losses on investments bought and
sold, as well as held) appreciated, net in fair value as follows:
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Year Ended |
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December 31, 2007 |
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Net Realized and Unrealized (Depreciation) Appreciation in
Fair Value of Investments: |
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Mutual Funds (Quoted Market Prices) |
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$ |
(4,194,088 |
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Collective Trust Funds (Quoted Redemption Value) |
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806,504 |
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Republic Services, Inc. Common Stock (Quoted Market Prices) |
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3,471,789 |
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Net Appreciation in Fair Value |
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$ |
84,205 |
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(4) BENEFIT DISTRIBUTIONS:
In general, upon termination of service, including death, total and permanent disability, or
retirement, a participant (or the participants beneficiary) will receive an amount equal to the
value of the participants vested account.
Amounts allocated to withdrawing participants for benefit claims that have been processed and
approved for payment but have not yet been paid totaled $215,360 and $111,951 at December 31, 2007
and 2006, respectively. Such amounts are included in net assets available for benefits at December
31, 2007 and 2006 in accordance with American Institute of Certified Public Accountants guidelines.
However, the Plans Form 5500 reflects such amounts as liabilities of the Plan in accordance with
IRC guidelines.
6
(5) 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 certain fees and expenses of the Plan, which include legal, administrative
and accounting fees. Fees and expenses paid directly by the Company were $60,812 in 2007.
(6) INCOME TAX STATUS:
The Plan has received a determination letter from the Internal Revenue Service dated June 28,
2007, 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. Subsequent to this determination by the
Internal Revenue Service, the Plan was amended. The Company believes the Plan is being operated in
compliance with the applicable requirements of the IRC and, therefore, believes that the Plan, as
amended, is qualified and the related trust is tax exempt.
(7) RISKS AND UNCERTAINTIES:
The Plan invests in various investment securities. Investment securities are exposed to
various risks such as interest rate, market and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes could materially affect
participants account balances and the amounts reported in the statements of net assets available
for benefits.
(8) SUBSEQUENT EVENT:
On June 22, 2008, the Company entered into an Agreement and Plan of Merger (the Merger
Agreement) with Allied Waste Industries, Inc., (Allied), and RS Merger Wedge, Inc., a wholly
owned subsidiary of the Company (Merger Sub). The Merger Agreement provides that, upon the terms
and subject to the conditions set forth in the Merger Agreement, Allied will merge with and into
Merger Sub (the Merger), with Allied continuing as the surviving corporation and a wholly owned
subsidiary of the Company. The completion of the Merger is subject to various closing conditions,
including approval of the transaction by the common stockholders of both the Company and Allied and
certain other regulatory approvals. The Company has not expressed any intention to amend, modify
or terminate the Plan in connection with the Merger; however, the Company retains the right, as the
Company deems appropriate, to amend, modify or terminate the Plan.
7
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, 2007
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Description |
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Shares |
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Cost |
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Market Value |
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* |
Merrill Lynch Retirement Preservation Trust |
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29,638,944 |
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$ |
* |
* |
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$ |
29,411,421 |
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* |
Merrill Lynch Equity Index Trust |
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898,540 |
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* |
* |
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15,787,352 |
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AIM International Growth Fund |
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|
377,957 |
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* |
* |
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12,268,490 |
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Alger Large Cap Growth Institutional Portfolio |
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|
660,576 |
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* |
* |
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10,793,807 |
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BlackRock Aurora Portfolio |
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|
190,207 |
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* |
* |
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4,564,967 |
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BlackRock Government Income Portfolio |
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|
287,694 |
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* |
* |
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3,066,818 |
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DWS Dreman Small Cap Value Fund |
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|
161,246 |
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* |
* |
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5,666,192 |
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Evergreen Special Equity Fund |
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|
67,704 |
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* |
* |
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840,207 |
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Franklin Small-Mid Cap Growth Fund |
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272,420 |
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* |
* |
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9,853,442 |
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ING International Value Fund |
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569,651 |
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* |
* |
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10,584,117 |
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Oakmark Select Fund |
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|
368,429 |
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* |
* |
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9,380,208 |
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PIMCO Total Return Fund |
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|
957,359 |
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* |
* |
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|
10,234,171 |
|
* |
Republic Services, Inc. Common Stock |
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|
780,268 |
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* |
* |
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24,461,401 |
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Van Kampen Growth and Income Fund |
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|
552,809 |
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* |
* |
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|
11,747,181 |
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* |
Loan Fund (interest rates ranging from 7.0%
to 10.5%) |
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|
|
|
|
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* |
* |
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9,505 |
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Cash |
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N/A |
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* |
* |
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|
218,135 |
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Total |
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$ |
158,887,414 |
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* |
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Represents a party-in-interest to the Plan. |
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** |
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Not applicable as the investment is participant-directed. |
8
Exhibit Index
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Exhibit |
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Number |
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Description |
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23.1
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Consent of Ernst & Young LLP |
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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.
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Republic Services 401(k) Plan |
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(Name of Plan)
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By: |
/s/ Tod C. Holmes
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Title: |
Chairperson of the Benefits Committee of the |
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Republic Services 401(k) Plan |
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Date: June 26, 2008
10