10-KPeriod: FY2002

REPUBLIC SERVICES, INC. Annual Report, Year Ended Dec 31, 2002

Filed March 27, 2003For Securities:RSG

Summary

Republic Services, Inc. (RSG) reported a strong financial performance for the fiscal year ended December 31, 2002. The company demonstrated significant operational improvements, with revenue increasing by 4.8% to $2.37 billion and operating income soaring by 62.1% to $459.5 million. This growth was primarily driven by successful execution of operating and growth strategies, coupled with cost efficiencies and the elimination of goodwill amortization following the adoption of a new accounting standard. The company also highlighted its financial stability and commitment to shareholder value. It exceeded its free cash flow and earnings per share objectives for 2002. RSG actively managed its capital structure, repurchasing approximately $150 million of its common stock and maintaining an investment-grade credit rating. The company's 'recession resilient' business segments, such as residential and commercial collection, performed well despite an economic slowdown, underscoring the stability of its core operations.

Key Highlights

  • 1Revenue increased by 4.8% to $2.37 billion for the year ended December 31, 2002.
  • 2Operating income rose significantly by 62.1% to $459.5 million, largely due to operational efficiencies and a one-time charge in the prior year.
  • 3The company exceeded its 2002 financial objectives for free cash flow and earnings per share.
  • 4Republic Services repurchased approximately $150 million of its common stock in 2002, demonstrating a commitment to returning value to shareholders.
  • 5The company maintained its investment-grade credit rating, with senior debt rated Baa3 by Moody's, BBB by Standard & Poor's, and BBB+ by Fitch.
  • 6Despite an economic slowdown, residential and commercial collection services, deemed 'recession resilient', showed stable performance.

Frequently Asked Questions

Revenue growth was driven by a 4.8% increase to $2.37 billion, attributed to successful operating and growth strategies, including a 1.4% price increase and 1.6% volume growth in core operations. Operating income saw a substantial 62.1% increase to $459.5 million, primarily due to a favorable comparison with the prior year which included significant charges related to divestitures and impairments, as well as a $43 million benefit from the elimination of goodwill amortization following the adoption of SFAS 142.

The economic slowdown negatively impacted segments serving the manufacturing and non-residential construction industries, leading to weaker volumes. However, the company's residential and commercial collection services were described as 'recession resilient' due to their flat-rate nature, which helped mitigate the overall impact. Despite these challenges, the company's geographic focus on high-growth markets contributed positively to its performance.

Republic Services' financial strategy prioritizes generating free cash flow to maximize shareholder value and return on investment. This includes reinvesting in existing operations, funding internal growth, pursuing strategic acquisitions, repurchasing common stock, and potentially considering dividends if strategic acquisition opportunities are limited. In 2002, the company utilized free cash flow to repurchase $150 million of its common stock.