UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6805.
_______________
BROWNING-FERRIS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 74-1673682
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
757 N. Eldridge
Houston, Texas 77079
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (713) 870-
8100.
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.16-2/3 New York Stock Exchange, Inc.
par value
Chicago Stock Exchange
Incorporated
The Pacific Stock Exchange
Incorporated
6-1/4% Convertible Subordinated New York Stock Exchange, Inc.
Debentures Due 2012
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X. No .
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
The approximate aggregate market value of common stock held by non-
affiliates of the registrant: $5.2 billion, computed on the basis
of $26-3/8 per share, closing price of the common stock on the New
York Stock Exchange, Inc. on November 29, 1994.
There were 196,601,555 shares of the registrant's common stock,
$.16-2/3 par value, outstanding as of November 29, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 of Part III (except for information
required with respect to executive officers of the Company, which
is set forth under "Business--Executive Officers of the Company" in
Part I of this report) have been omitted from this report, since
the Company will file with the Securities and Exchange Commission,
not later than 120 days after the close of its fiscal year, a
definitive proxy statement, pursuant to Regulation 14A, which
involves the election of directors. The information required by
Items 10, 11, 12 and 13 of Part III of this report, which will
appear in the definitive proxy statement, is incorporated by
reference into this report.
PART I.
Item 1. Business.
General
Browning-Ferris Industries, Inc. is one of the largest publicly-
held companies engaged in providing waste services. Subsidiaries
and affiliates collect, transport, treat and/or process, recycle
and dispose of commercial, residential and municipal solid waste
and industrial wastes. BFI's subsidiaries are also involved in re-
source recovery, medical waste services, portable restroom
services, and municipal and commercial sweeping operations.
The terms "BFI" and "Company" refer to Browning-Ferris Industries,
Inc., a Delaware corporation incorporated on October 26, 1970, and
are used herein to include its subsidiaries, affiliates and
predecessors, unless the context requires otherwise. BFI's
executive offices are located at 757 N. Eldridge, Houston, Texas
77079. The Company's mailing address is P.O. Box 3151, Houston,
Texas 77253, and its telephone number is (713) 870-8100.
The Company's subsidiaries and affiliates operate in approximately
400 locations in North America and approximately 250 locations
outside North America (including locations of unconsolidated
affiliates), and employ approximately 37,000 persons (including
employees of unconsolidated affiliates). No single customer or
district accounts for a material amount of BFI's revenue or net
income.
The Company's solid waste operating subsidiaries in North America
are aligned, for management oversight purposes, into six regions.
Each region is further divided into a number of divisions and local
districts within each division. Each region is headed by a
regional vice president responsible for the operating and financial
performance of that region. Divisional vice presidents are
responsible for managing growth opportunities in their geographic
markets, including acquisitions, business development and municipal
contracting opportunities. Under this management structure, the
regional vice president, divisional vice presidents and staff
oversee and assist local district managers within each region.
Regional responsibility for local district operations is exercised
by assisting with the development and approval of each district's
capital budget, the review and implementation of profit, pricing
and corporate development goals and the monitoring of performance.
Each district's operation is a distinct, localized service business
that is managed, on a day-to-day basis, at the local level. The
Company's regions and operating locations are responsible, with
support and resources provided by the corporate office, for
compliance with all applicable rules and regulations. Selective
company-wide uniform operating procedures are being implemented
when BFI's management believes the procedures will result in
improved operating efficiency.
The business strategies currently being implemented by BFI's
management are designed to: (i) continue expansion, both
domestically and internationally, through an aggressive market
development program; (ii) capitalize on opportunities resulting
from regulatory, legislative, competitive and economic
developments; (iii) expand participation and pursue new business
opportunities resulting from the continued segmentation of the
municipal and industrial waste streams; (iv) continue to improve
both operating efficiencies and management of costs while
effectively allocating resources; and (v) continue to selectively
implement uniform operating procedures when management believes it
will improve operating efficiency.
The Company's business is subject to extensive federal governmental
regulation and legislative initiative. Further, in some states and
local jurisdictions, its business is also subject to environmental
regulation, mandatory recycling laws, medical waste regulation,
preclusion of certain waste from landfills and restrictions on the
flow of solid waste. Due to continuing public awareness and
influence regarding waste and the environment, and uncertainty with
respect to the enactment and enforcement of future laws, the
Company can not always accurately project the impact any future
regulation or legislative initiative may have on its operations.
See "Regulation" and "Legal Proceedings - Environmental
Proceedings" for additional information.
The table below reflects the total revenues contributed by the
Company's principal lines of business for each of the three years
ended September 30, 1994.
Contribution to
Consolidated Revenues
(in millions)
Year Ended September 30,(1)
1994 1993 1992
---- ---- -----
North American Operations
Collection Services -
Solid Waste $2,360 $2,138 $2,038
Disposal and Transfer -
Solid Waste 885 787 753
Medical Waste Services 161 146 119
Recycling Services 359 240 175
Services Group 83 79 106
Elimination of Affiliated
Companies' Revenues (392) (339) (304)
Total North American
Operations 3,456 3,051 2,887
International Operations 859 428 391
Total Company $4,315 $3,479 $3,278
_____________
(1)Certain reclassifications have been made in prior years' amounts
to conform to the current year presentation.
Total assets at September 30, 1994, 1993 and 1992 were $5,797
million, $4,296 million and $4,068 million, respectively.
Solid Waste Services
Collection
BFI collects solid waste in approximately 430 operating locations
in 45 states, Australia, Canada, Finland, Germany, Italy, Kuwait,
the Netherlands, New Zealand, Puerto Rico, Spain and the United
Kingdom. These operations provide solid waste collection services
for numerous commercial establishments, industrial plants and
governmental and residential units. BFI uses approximately 1.1
million steel containers and approximately 12,400 specially
equipped collection trucks in its waste collection operations.
The Company's commercial and industrial solid waste collection
services are typically performed pursuant to service agreements
providing for one-year to three-year initial terms and specified
successive terms thereafter. Residential collection contracts with
individual homeowners, homeowner groups and municipalities are
generally for periods of one to five years. Solid waste residen-
tial collection contracts with governmental units are usually
awarded after competitive bidding.
Operating costs, disposal costs and collection fees vary widely
throughout the geographic areas of the Company's operations.
Prices for solid waste collection services are determined locally,
principally by the volume, weight and type of wastes collected,
treatment required, risks involved in handling or disposing of the
wastes, collection frequency, disposal costs, distance to final
disposal sites, amount and type of equipment furnished to the
customer and competitive factors. The Company's ability to pass on
cost increases is often influenced by competitive and other
factors. Long-term residential solid waste collection contracts
often contain a formula, generally based on published price
indices, for adjustments of fees to cover increases in certain
operating costs.
Solid Waste Transfer and Disposal
BFI operates approximately 110 solid waste transfer stations, approximately
50 of which it owns, where solid wastes are compacted for transfer to
final disposal facilities. Transfer stations are used for the
purpose of either (i) reducing costs associated with transporting
waste to final disposal sites, or (ii) better utilizing the
Company's disposal sites.
Landfilling is the primary method employed by the Company for final
disposal of the solid waste stream which is not recycled. BFI
currently operates 97 landfill sites in North America, 14 of which
are operated under contracts with municipalities or others. BFI
does not currently own or lease a landfill site in every
metropolitan area in which it is engaged in solid waste collection;
however, the Company intends to continue to seek, where
practicable, ownership, lease or other arrangements to use disposal
facilities in all such areas. To date, the Company has not
experienced excessive difficulty securing the use of disposal
facilities owned or operated by others in those communities in
which it does not operate its own landfill sites.
The U.S. Environmental Protection Agency ("EPA") promulgated its
Subtitle D landfill regulations in October 1991, with the
regulations becoming generally effective on October 9, 1993, for
most landfills not closed prior to that date. The impact on the
solid waste disposal market was downward pressure on pricing of
disposal services for the last several years. However, the longer-
term impact on the disposal market is expected to be a reduction in
the number of operating landfill sites in the United States and a
firming of prices. See "Business - Regulation" and "Business -
Waste Disposal Risk Factors."
Medical Waste
The Company is the largest provider of medical waste services in
North America. Approximately 100 of the Company's operating
locations provide medical waste services involving the collection
and disposal of infectious and pathological waste materials from
approximately 114,000 customers. In the last five years, most
states have enacted laws regulating medical waste. The Company is
pursuing new opportunities to provide needed services created by
these regulations. The Company owns or operates 28 treatment sites
using either incineration or autoclaving (steam sterilization)
technology. One additional treatment site is in the construction
stage and another site is in the permitting process. The Company is
pursuing the development of various healthcare markets, including
but not limited to clinical and home healthcare markets, shipboard
waste disposal, mail disposal and spill kit and other related
markets. The Company believes the implementation of new Clean Air
Act guidelines relating to medical waste incinerators could have a
positive impact on the Company's medical waste operations.
Recycling
The Company provides recycling services for certain materials
streams in approximately 230 of its North American operating
locations for approximately 5 million households, including
curbside customers, and for approximately 166,000 commercial and
industrial customers. Recycling continued as one of the fastest-
growing segments of the Company's business in fiscal 1994. The
Company's recycling business has 104 recycleries in North America
and 32 such facilities outside North America. The Company also
engages in the organic materials recycling and/or disposal
business, tire recycling and other alternative energy concepts such
as biomass fuels. In fiscal 1994, the Company added 17 processing
centers to further expand its processing capacity. BFI also
acquired a company that is a producer and marketer of decorative
bark, mulch, compost and organic soils to secure a market for
organic materials collected. In response to public demand,
recycling is increasingly required through legislation and
regulation at all levels of government. In the case of many
recycled materials, these requirements and the public's interest in
recycling have resulted in an excess supply of recovered materials
in some markets. Recognizing that the recycling momentum would
involve necessary markets for recovered materials, the Company has
developed relationships with numerous other companies to assure
municipalities and other customers of continuous and diversified
markets. To improve the marketing of recycled commodities, the
Company operates a centralized materials marketing group. This
group has enhanced the Company's ability to anticipate changing
market conditions and establish longer-term customer relationships
and agreements.
Other Services
The Company is also involved in street and parking lot sweeping and
the rental and servicing of portable restroom facilities. During
fiscal 1993 and the first quarter of fiscal 1994, the Company sold
a portion of its portable restroom and sweeping businesses, but has
retained most of its operations located on the southern and western
coasts of the United States. These locations are operated as part
of the solid waste regions. The Company may also participate, to
a limited extent, in the end-use development of certain BFI
landfills which have reached permitted capacity and other real and
personal property in which it has an interest. From time to time,
the Company sells or otherwise disposes of surplus land and other
real or personal property and reflects any gain or loss from such
transactions in the results of operations for the period in which
the transactions occur.
International Operations
Subsidiaries or affiliates of the Company are involved in waste
collection, processing, disposal and/or recycling operations in
approximately 250 locations (including locations of unconsolidated
affiliates) in Australia, Finland, Germany, Italy, Hong Kong,
Kuwait, the Netherlands, New Zealand, Spain and the United Kingdom.
European operations comprise the largest number of operating loca-
tions outside of North America, and the Company believes that its
operations in the Netherlands constitute the largest waste systems
operation in that country.
The Company currently operates 49 landfill sites in its
international operations (including those operated through
unconsolidated affiliates). The Company also has 32 recycleries in
its international operations.
On February 3, 1994, the Company acquired 50% of the stock of Otto
Entsorgungsdienstleistung GmbH ("Otto Waste Services"), marking the
Company's entry into the German solid waste market. Otto Waste
Services is primarily engaged in providing collection and recycling
services under long-term contracts with municipalities and Duales
System Deutschland GmbH, the non-governmental organization
responsible for the collection of recyclable materials in Germany.
The purchase price for the 50% interest in Otto Waste Services was
approximately $400 million, including approximately 3.9 million
shares of Common Stock. See "Business-Financing and Capital
Expenditures" and Note (3) of Notes to Consolidated Financial
Statements. During fiscal 1994, the Company reported consolidated
revenues of $344 million applicable to the Otto Waste Services
acquisition.
In addition to being subject to many similar business risks
generally encountered in the Company's domestic operations, the
Company's operations outside of North America are subject to other
risks, such as currency fluctuations, currency control regulations,
the recruitment of non-resident labor, changes in foreign laws,
social instability, war, invasion, compliance with foreign
immigration laws, political changes, international tensions and
problems associated with foreign governmental appropriation
processes.
The financial performance of the Company's international operations
has been lower than that of its North American operations, due
primarily to (i) the higher concentration of collection activities
(which have lower margins than disposal activities) in
international operations, (ii) the inability to pass through
certain disposal and other cost increases, particularly in Italy,
and (iii) the assets being used in international operations having
been recently acquired as compared to the assets being used in
North American operations. For information concerning revenues,
income from operations and identifiable assets applicable to
foreign operations (including those in Canada), see Note (16) of
Notes to Consolidated Financial Statements.
Resource Recovery
The Company and Air Products and Chemicals, Inc. ("Air Products"),
headquartered in Allentown, Pennsylvania, are each 50% general
partners in a partnership which designs, builds, owns and operates
facilities that burn solid waste and recover energy and other
materials. This partnership markets its capabilities under the name
American Ref-Fuel ("American Ref-Fuel"). Three of the facilities
owned by American Ref-Fuel partnerships utilize the solid waste
mass-burning technology of the German firm, Deutsche Babcock
Industrie AG ("DBA"), for which American Ref-Fuel is the exclusive
licensee in North America. This technology has been utilized
successfully for over 30 years in Europe and elsewhere. American
Ref-Fuel pays for the right to utilize this technology. The fourth
facility, located in Niagara Falls, New York, utilizes a
refuse-derived fuel technology; however, a significant modification
and expansion of the plant to employ the DBA mass-burning
technology is currently under construction. The estimated
construction cost of this project ranges from approximately $150
million to $200 million and the plant's capacity is expected to be
approximately 2,250 tons per day. This project will be financed
with tax exempt bonds to the extent feasible.
In each American Ref-Fuel project, a partnership is formed by
indirect wholly-owned subsidiaries of Air Products and the Company.
Separate American Ref-Fuel partnerships are operating resource
recovery facilities in Hempstead, New York; Essex County, New
Jersey; Niagara Falls, New York; and Preston, Connecticut. In
connection with the existing projects, both the Company and Air
Products have delivered, and in connection with any future projects
may be required to deliver, support agreements for certain project
indebtedness of each of the respective subsidiary partners. See
Note (9) of Notes to Consolidated Financial Statements for
information concerning these obligations.
The Company's equity investment in American Ref-Fuel's resource
recovery projects was approximately $160 million at September 30,
1994. American Ref-Fuel's business is very capital intensive and
its ability to raise capital is an important factor in its
competitiveness in the waste services industry. When feasible,
American Ref-Fuel attempts to finance its projects with tax exempt
bonds due to the lower interests costs. The Company plans to
expand its investment in American Ref-Fuel in fiscal 1995 by
undertaking the significant modification and expansion of the
Niagara Falls, New York, facility and permitting a new resource
recovery project near Albany, New York, as well as pursuing a
number of domestic and international acquisition opportunities,
especially in Holland and Germany.
All resource recovery facilities must meet rigid environmental laws
and regulations. Existing laws and regulations can be changed or
administered so as to affect the design, construction, startup or
operation of such facilities. Management believes that the DBA
mass-burning technology is capable of meeting anticipated future
changes in laws and regulations; however, there can be no assurance
that required environmental and other permits will be issued for
any planned project.
Although the Company believes that each of the existing operating
facilities are viable since each facility generates significant
cash flows relative to the Company's investment in the facility,
the economic viability of certain resource recovery facilities may
be adversely affected by (i) the availability of commercially
reasonable energy sales contracts; (ii) the availability of
landfills for the disposal of ash residue, bypass and
nonprocessible waste; (iii) existing and proposed governmental
standards applicable to the disposal of ash residue that could
limit the number of sites available for such disposal; (iv) air
emission standards applicable to the facilities, (v) the possible
lower cost of other alternatives for waste disposal and (vi) the
recent decision by the U.S. Supreme Court which invalidates local
flow control laws. Resource recovery facilities may also be
adversely affected by many of the same factors that are currently
impacting other waste disposal facilities. See "Business -
Regulation" and "Business - Waste Disposal Risk Factors."
Regulation
All of the Company's principal business activities are governed by
federal, state and local laws and regulations pertaining to public
health and the environment, as well as transportation laws and
regulations. These regulatory systems are complex and are subject
to change.
The U.S. Congress and certain states have considered legislation,
and some states are taking action, to ban or otherwise restrict the
interstate transportation of wastes for disposal, to impose
discriminatory fees on such transported wastes, to limit the types
of wastes that may be disposed of at existing disposal facilities,
and to mandate waste minimization initiatives, recycling quotas and
composting of yard wastes. The Company's waste collection,
transportation, treatment and disposal operations may be adversely
affected by these developments.
In recent years, a number of communities have instituted "flow
control" requirements, which typically require that waste collected
within a particular area be deposited at a designated facility. In
May 1994, the U.S. Supreme Court ruled that a flow control
ordinance was inconsistent with the Commerce Clause of the
Constitution of the United States. A number of lower federal
courts have struck down similar measures. Congress recently
considered, but did not adopt, legislation that would have
partially overturned the Supreme Court's decision. The 1995
Congress may also examine bills that immunize particular
governmental actions (for example, flow control that results from
franchises or municipal contracts) from Commerce Clause scrutiny.
In the absence of federal legislation, certain local laws that seek
to direct waste flows to designated facilities may be
unenforceable.
Similarly, the U.S. Supreme Court has consistently held that state
and local measures that seek to restrict the importation of
extraterritorial waste or tax imported waste at a higher rate are
unconstitutional. To date, congressional efforts to enable states
to, under certain circumstances, impose differential taxes on out-
of-state waste or restrict waste importation have not been
successful. In the absence of federal legislation, discriminatory
taxes and importation restrictions should continue to be subject to
judicial invalidation.
Because a major component of the Company's business is the
collection and disposal of solid waste in an environmentally sound
manner, a material amount of the Company's capital expenditures are
related (directly or indirectly) to environmental protection
measures, including compliance with federal, state and local
provisions which have been enacted or adopted regulating the
discharge of materials into the environment. There are costs that
are associated with facility upgrading, corrective actions,
facility closure and post-closure care in addition to other costs
normally associated with the Company's waste management activities.
The majority of these expenditures are made in the normal course of
the Company's business, and do not place the Company at any
competitive disadvantage.
In October 1991, the EPA issued its final regulations under
Subtitle D of the Resource Conservation and Recovery Act of 1976
("RCRA"), which set forth minimum federal performance and design
criteria for municipal solid waste landfills. These regulations
also incorporated provisions under the Clean Air Act relating to
landfill operations. All Subtitle D regulations are in effect,
except for the ground-water monitoring requirements which are to be
phased in over a five-year period and the financial assurance
requirements which the EPA has now requested be effective in April
1996. Management of BFI believes that, as described below, these
regulations will have a favorable long-term impact on its landfill
operations, but meeting these new regulatory requirements is
resulting in increased costs.
Under the Clean Air Act, the EPA proposed regulations in May 1991
which would require extensive methane gas collection systems to be
installed at many of the Company's landfills. Although these
regulations are not expected to be finalized until the Spring of
1995, the Company has proceeded to design, permit and install gas
extraction and control systems at many of its facilities. The
Company believes these systems substantially comply with the
proposed regulations under the Clean Air Act. The Company is also
seeking operating and other applicable permits for its activities
and is pursuing a strategy of reducing emissions from both mobile
and stationary sources. Implementation of certain provisions of
the Clean Air Act will result in additional stringent control for
those areas of the country that are placed in "nonattainment
status".
Increasing regulation of solid waste management activities may also
offer the Company expanded opportunities. The federal Subtitle D
landfill regulations have resulted in the closure of a number of
smaller, older existing landfills, which has increased the demand
for solid waste capacity at other landfills that are in compliance
with the regulations. Also, the regulations allow for the deposit
of certain non-hazardous industrial wastes into solid waste
landfills, thus increasing the volume of waste eligible for
disposal in solid waste landfills. Medical waste regulations,
mining waste regulations, ash regulations, municipal waste
combustion regulations, and regulations for other industrial solid
wastes (including waste water) will provide new opportunities for
waste management facilities. While recycling regulations and
procurement requirements for recycled goods will continue to create
business opportunities in the recycling area, they will also
diminish the volume of waste otherwise available for disposal in
landfills.
Financial responsibility regulations, adopted in various forms by
many states, require owners or operators of waste disposal
facilities and underground storage tanks to demonstrate financial
ability to respond to and correct for sudden and accidental
pollution occurrences, as well as for non-sudden or gradual
pollution occurrences. To meet these requirements, the Company has
secured Environmental Impairment Liability ("EIL") insurance
coverage in amounts the Company believes are in compliance with
federal and state law. Under the current EIL policy, which is
collateralized, the Company must reimburse the carrier for any
losses. It is possible that the Company's net income could be
adversely affected in a specific reporting period in the event of
significant environmental impairment claims.
Many state regulations also require owners or operators of waste
disposal facilities to provide assurance of their financial ability
to cover the estimated costs of proper closure and post-closure
monitoring and maintenance of these facilities. The federal
Subtitle D regulations require all states to adopt financial
assurance regulations that meet the federal standards. The Company
has generally relied upon its consolidated financial position to
issue corporate guarantees, or has utilized letters of credit or
surety bonds to satisfy these requirements. The EPA has proposed
a financial test and corporate guarantee for use by private
Subtitle D facilities, which, if adopted, would afford the Company
a highly cost effective method to satisfy the financial assurance
requirements. The Company has also established a captive insurance
company that is being used to provide insurance as a recognized
means of demonstrating this financial assurance. The Company is
continuing its efforts to get this captive insurance company
admitted in certain states, after which it can serve as a low-cost
alternative to certain other forms of financial assurance,
including letters of credit.
Many of the states and local jurisdictions in which the Company
operates have enacted "fitness" statutes that allow agencies having
jurisdiction over waste service contracts or facility permits to
refuse to award such contracts or to revoke or deny such permits on
the basis of the applicant's (or permit holder's) environmental or
other legal compliance history. The underlying intent of these
statutes is to ensure that entities which engage in waste
management activities merit and maintain the public confidence and
trust. These statutes authorize the agencies to make determinations
of an applicant's "fitness" to be awarded the waste service
contract or to operate the particular waste facility and to revoke
or deny that facility's operating permit, absent a showing that the
applicant has been rehabilitated through its adoption of various
operating practices, policies and procedures to ensure compliance
with all applicable laws of that jurisdiction. Certain of the
Company's subsidiaries with past violations of environmental or
other laws, or affiliates of such subsidiaries, have to respond to
these requirements. In addition, the federal Clean Water Act
provides for debarment of contractors for violations of its
provisions.
In 1988, the EPA issued regulations under RCRA which require an
owner or operator of underground storage tanks that contain or
contained petroleum to meet certain design, operating and
performance standards for such tanks and to demonstrate financial
responsibility for any appropriate corrective action and third-
party compensation. The Company has conducted an analysis of its
tanks, and the majority of its underground tanks will have been
removed by 1998. Tanks that need replacing are being replaced by
either above- or below-ground systems that meet the new standards.
With respect to international operations, the profitability and
risks associated with these operations can be affected by changes
in national business, financial and political policies, war,
invasion, social instability, currency fluctuations and other risk
factors associated with operations in foreign countries. In its
international operations, the Company has noted a trend toward
increased environmental regulation, particularly in those countries
within the European Economic Community. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Environmental Matters."
Competition
BFI competes with both larger and smaller publicly-held companies
and numerous small privately-owned waste services companies that
are primarily engaged in offering all or part of the waste services
that BFI provides. This competition is intense and has increased
in recent years. BFI believes that neither it nor any other waste
services company has a significant portion of any major aspect of
the solid waste services markets. In some geographic areas, all or
part of the solid waste collection, processing and disposal
services offered by BFI may also be provided by municipalities or
by governmental authorities with regional or multi-county
jurisdiction. Generally, however, governmental units do not
provide significant commercial or industrial solid waste collection
or disposal services. Because solid waste services provided by
municipal or regional governmental authorities are generally
subsidized by tax revenues and utilize major equipment and facili-
ties that are financed with proceeds from the sale of tax-exempt
bonds, these authorities may provide such services at lower prices
(though not necessarily at lower costs) than those of private
companies.
Competition is encountered primarily from publicly-held and
numerous locally-owned private solid waste services companies and,
to a lesser degree, from municipalities and other governmental
units with respect to residential solid waste collection and solid
waste sanitary landfills. Intense competition in pricing and type
and quality of services offered is encountered. Some competitors
in certain markets have increased competitive pressure by their
willingness to accept lower profit margins to maintain market
share.
Waste Disposal Risk Factors
There are serious, sometimes unforeseeable, business risks and
potentially substantial cost exposures associated with the
establishment, ownership and operation of solid waste sanitary
landfill sites and other types of waste processing and disposal
facilities. These risk factors include, but are not limited to:
(i) the difficulty of obtaining permits to expand or establish new
sites and facilities and public and private opposition to the
location, expansion and operation of these facilities, (ii) govern-
mental actions at all levels that seek to restrict the interstate
movement of waste for disposal, which can result in declining
volumes of waste available for disposal at some facilities, (iii)
costs associated with liner requirements, groundwater monitoring,
leachate and landfill gas control, surface water control, post-
closure monitoring, site cleanup, other remedial work and
maintenance and long-term care obligations, (iv) the obligation to
manage possible adverse effects on the environment, (v) regulations
requiring demonstration of financial responsibility (see "Business
- - Regulation") and conformance to prescribed or changing standards
and methods of operation, (vi) judicial and administrative
proceedings regarding alleged possible adverse environmental and
health effects of landfills or other treatment and disposal
facilities, and (vii) reduction in the volume of solid waste
available for direct landfill disposal in certain states because of
governmental incentives to reduce the daily volume of waste that
may be disposed of, initiatives that require waste recycling,
minimization or composting and because of incineration in large
waste-to-energy facilities. See also "Business - Resource
Recovery", "Business - Regulation" and "Legal Proceedings -
Environmental Proceedings."
Some of the issues faced by the Company and the waste industry
generally include (i) opposition to the siting and operation of new
or expanded waste facilities, (ii) public concern regarding the
potential for adverse effects on public health and the environment
attributable to the waste managed at such facilities, (iii) the
cost of complying with complex and changing regulations, (iv)
governmental restraints on interstate shipment of waste or
discriminatory taxes on waste imports, (v) differential enforcement
of laws and regulations by governmental agencies, and (vi) a desire
on the part of many waste generators to maintain or increase
control over their wastes by managing their wastes. See also
"Legal Proceedings-Environmental Proceedings."
BFI has periodically undertaken or been required, and may in the
future undertake or be required, to cease or to alter substantially
its operations at existing waste disposal sites, to implement new
construction standards at existing facilities and to add additional
monitoring, post-closure maintenance or corrective measures at
waste disposal sites. The Subtitle D regulations have required
costly, additional expenditures by the Company and may in the
future require substantial expenditures, which could have a
negative impact on operations. See "Business - Regulation" for
information concerning capital expenditures relating to
environmental and health laws and regulations and Notes (1) and (6)
of Notes to Consolidated Financial Statements.
If the Company were unable to continue disposing of planned volumes
of wastes at existing solid waste landfills and unable to either
expand existing landfills or establish new sites, it would be
required to obtain the rights to use other disposal facilities or
to suspend or curtail solid waste collection or disposal
activities. Any such actions would have an adverse impact on the
Company's collection business and could substantially reduce the
Company's revenues and income from operations and increase the risk
of impairing the value of the Company's investment in existing or
proposed facilities. These developments could also result in
accelerating the recognition of closure costs and post-closure
monitoring cost accruals for those landfills, with a corresponding
negative impact on the Company's net income.
Certain geographic regions in the United State have, at times,
experienced shortages of suitable solid waste disposal facilities.
Without long term planning, many private and governmental solid
waste collection companies operating in the affected areas,
including BFI, could be required to curtail or even suspend land
disposal operations, or seek other, more distant sites. In other
cases, collection companies, including those owned by BFI, may be
excluded from disposing of solid waste in landfills or waste-to-
energy facilities either because of regulation or because of the
owners' desire to preserve the remaining capacity for their own
disposal needs.
Corporate Development
On September 20, 1994, BFI Acquisitions plc ("BFI (UK)"), a
subsidiary of the Company, announced the terms of cash offers to
acquire all of the outstanding ordinary shares (including ordinary
shares represented by American Depositary Shares) of Attwoods plc
("Attwoods"), a United Kingdom company, and convertible preference
shares of Attwoods (Finance) N.V., a Netherlands Antilles company
and finance subsidiary of Attwoods. On November 17, 1994, the
Company announced its increased and final cash offers ("Final
Offers") expiring on December 2, 1994. The Final Offers,
denominated in pounds sterling, are 116.75 pence per ordinary share
(583.75 pence per ADS) and 92 pence per preference share (an
aggregate of approximately U.S. $611 million based on
exchange rates prevailing on November 29, 1994). The Final Offers
also provide for a recommended final dividend of 3.25 pence per
ordinary share payable to Attwoods shareholders.
Attwoods is a provider of waste management services operating
principally in the United States, the United Kingdom, the Caribbean
and mainland Europe, primarily Germany, and also has mineral
extraction operations in the United Kingdom.
The Final Offers are subject to the satisfaction of various
conditions, including acceptance by the holders of not less than
50% of the ordinary shares and satisfaction of applicable
requirements under the Hart-Scott-Rodino Anti-Trust Improvements
Act ("HSR Act"). The Company has an agreement in principle with
the U.S. Department of Justice ("DOJ") respecting satisfaction of
the requirements of the HSR Act and expects to reach a definitive
agreement prior to expiration of the Final Offers.
On November 29, 1994, the Company announced that the holders of
approximately 42.6% of the ordinary shares (including ADS) had
accepted the Final Offers.
The Company's corporate development program will continue to focus
on opportunities to expand its customer base by entering into new
domestic and international markets, by broadening the type of
services offered, by pursuing municipal contracting opportunities,
and by acquiring businesses and properties. Developing suitable
new solid waste processing and disposal facilities will continue to
be an important strategy. When investing in capital-intensive
facilities such as landfills, the Company faces the risk that
required permits will not be obtained or renewed. If permits are
not ultimately obtained and maintained, the value of such
facilities can be substantially impaired, which could result in a
reduction of future net income. See "Business - Solid Waste
Services - Disposal" and "Business - Regulation." The Company will
also pursue project opportunities for its services in foreign
markets. See "Business - International Operations."
The Company has continued to acquire from unaffiliated persons, in
negotiated transactions, businesses and properties engaged
primarily in or related to one or more aspects of the solid waste
services industry. BFI intends to continue pursuing opportunities
to acquire such businesses using BFI Common Stock, cash, agreements
for the payment of royalties and indebtedness. There can be no
assurance that BFI will be successful in making additional
acquisitions. See "Business-Financing and Capital Expenditures."
Financing and Capital Expenditures
Capital Expenditures
Capital expenditures were approximately $1.3 billion in fiscal
1994, which included $611 million for acquired businesses,
including the acquisition of 50% of Otto Waste Services. Reflected
in the $611 million is the fair market value of common stock issued
in connection with four business combinations which met the
criteria to be accounted for as poolings-of-interests.
Additionally, approximately $218 million was expended in connection
with the development of existing operations, municipal contracts
and investment in unconsolidated subsidiaries. The remainder of
capital expenditures for 1994 related to additions and replacements
of capital items for existing operations. See Notes (3) and (5) of
Notes to Consolidated Financial Statements.
Subject to Board of Director approval and excluding the proposed
Attwoods transaction, the capital appropriations budget will be
approximately $1.2 billion for fiscal 1995. This includes amounts
for corporate development and the normal replacement of assets and
expansion within existing operations. A change in national
economic conditions, regulatory or other factors could result in a
revised level of capital expenditures. The Company believes that
the amounts budgeted to replace assets, if expended, are sufficient
to maintain the level of its existing assets through 1995. It is
currently anticipated that the funds required for fiscal 1995
capital expenditures will be provided from internally generated
sources and from outside sources of capital, including borrowings.
See "Business - Resource Recovery", "Business - International
Operations" and "Business - Corporate Development". See "Business
- - Regulation" for information concerning capital expenditures
relating to evolving environmental and health laws and regulations.
Management of the Company believes that there are ample provisions
in the capital appropriations budget for business opportunities
that may arise in the ordinary course of business.
During the next five years, the Company currently expects that
internally generated funds will be sufficient to finance most of
its anticipated capital expenditures in the ordinary course of
business. Any shortfall in funds required for these purposes
(including the funds required to meet the Company's share of the
several American Ref-Fuel project obligations and commitments; see
"Business - Resource Recovery") will have to be obtained from
outside sources of capital, including borrowings.
Financings and Credit Facilities
On September 20, 1994, the Company announced the terms of a cash
offer (the "Offers") to acquire all the ordinary shares of Attwoods
plc, a United Kingdom company, and all of the preferred shares of
Attwoods (Finance) N.V., a Netherlands Antilles company. On
September 19, 1994, the Company entered into a letter agreement
providing for the borrowing by the Company of up to 500 million
pounds sterling (or its equivalent) to finance the Offers. The
facility is to be used to assist in funding the Offers and to fund
the working capital requirements and refinance any existing
indebtedness of Attwoods, including any existing obligations of
Attwoods that become due and payable as a result of the Offers
becoming unconditional. Borrowings under the facility are
conditional on the Offers having become (or in certain
circumstances, having been declared) unconditional in all respects
under United Kingdom law. The payment of dividends or other
distributions on the Company's Common Stock will be limited by the
provisions of this credit agreement; these provisions will be
somewhat more restrictive than the restrictions imposed on the
payment of dividends and other distributions pursuant to the
Revolving Credit Agreement discussed below and in Note (7) of Notes
to Consolidated Financial Statements. See "Market for the
Registrant's Common Equity and Related Stockholder Matters" for a
discussion of the Company's dividend history.
The Company has a bank credit agreement providing for borrowings of
up to $1 billion (the "Revolving Credit Agreement"). The Company
had no borrowings under this bank credit agreement at November 29,
1994. The borrowing capacity under this agreement will be
available, if needed, to assist the Company in meeting its
requirements for outside sources of capital. The payment of
dividends or other distributions on the Company's Common Stock is
limited by the provisions of the Revolving Credit Agreement. The
Company's long-term objective is to maintain most of its
indebtedness in fixed interest rate obligations. See "Market for
the Registrant's Common Equity and Related Stockholder Matters" and
Notes (7), (8) and (17) of Notes to Consolidated Financial
Statements for more detailed information concerning these
agreements and the Company's other indebtedness.
The Company has a commercial paper program authorizing the issuance
of up to $1 billion in commercial paper. At November 29, 1994, the
Company had $45.5 million in commercial paper outstanding.
Borrowings under the commercial paper program may not exceed the
available credit under the Company's Revolving Credit Agreement.
The commercial paper program is available to provide the Company
with external financing to meet its capital requirements.
In March 1994, the Company completed a public offering of
15,525,000 shares of its Common Stock. The net proceeds of
approximately $434.7 million received by the Company were used to
redeem the $100 million 8 1/2% Sinking Fund Debentures due 2017
outstanding, to repay indebtedness associated with the acquisition
of the Company's 50% interest in Otto Waste Services and other
working capital requirements. See "Management's Discussion and
Analysis - Liquidity and Capital Resources" for additional
information.
Executive Officers of the Company
The executive officers of the Company, their positions (including
their principal areas of responsibility with the Company) and their
respective ages are as follows:
Name Position Age*
William D. Ruckelshaus Chairman of the Board, 62
Chief Executive Officer
and Director (1)
Bruce E. Ranck President, Chief 45
Operating Officer and
Director (1)
Norman A. Myers Vice Chairman, Chief 58
Marketing Officer and
Director (1)
Jeffrey E. Curtiss Senior Vice President and 46
Chief Financial Officer
Hugh J. Dillingham, III Senior Vice President 45
(Disposal Operations)
J. Gregory Muldoon Senior Vice President 40
(Corporate Development)
Rufus Wallingford Senior Vice President 54
and General Counsel
David R. Hopkins Vice President, Controller 51
and Chief Accounting
Officer
Louis A. Waters Chairman and President of 56
BFI International, Inc.
and Director (1)(2)
________________
*As of November 30, 1994.
(1) Serves on the Executive Committee of the Board of Directors.
(2) Serves on the Finance Committee of the Board of Directors.
Mr. Ruckelshaus was elected a director in June 1987 and Chairman of
the Board and Chief Executive Officer in September 1988. Mr.
Ruckelshaus also serves as a director of Cummins Engine Company,
Monsanto Company, Nordstrom, Inc., Texas Commerce Bancshares, Inc.
and Weyerhaeuser Company. He also serves as a director or trustee
of several educational and charitable organizations.
Mr. Ranck became President and Chief Operating Officer in November
1991, having served as Executive Vice President (Solid Waste Opera-
tions-North America) of the Company since October 1989 and a
director since March 1990. Prior to that time, he served the
Company as a Regional Vice President in one of the Company's
regions for a period in excess of five years. He also serves as a
director of Furon Co. and Junior Achievement of Southeast Texas,
Inc.
Mr. Myers was elected a director in 1978, Chief Marketing Officer
in March 1981 and Vice Chairman of the Board in December 1982. He
was initially elected a Vice President in December 1970 and became
an Executive Vice President in July 1976. Mr. Myers is a director
of My Friends, a foundation for children in crisis.
Mr. Curtiss became Senior Vice President and Chief Financial
Officer of the Company in January 1992. Before that time, he
served from August 1989 to January 1992 as Executive Vice
President, Chief Financial Officer and a director of Heritage Media
Corporation, an American Stock Exchange-listed company based in
Dallas.
Mr. Dillingham was elected Senior Vice President (Disposal
Operations) in March 1993, having served as Vice President
(Disposal Operations) since December 1991. Prior to his election,
he served as Divisional Vice President of Disposal Operations in
one of the Company's regions, and has over sixteen years of
experience with the Company in landfill operations. Mr. Dillingham
serves as a director of the Wildlife Habitat Enhancement Council.
Mr. Muldoon was elected Senior Vice President (Corporate
Development) in September 1992, having served as Vice President
(Operations) since December 1991. He had joined the Company in
1980 as a market development representative and from 1983 to 1988,
he had served as district manager in several locations. From early
1989 until October 1990, he served as President of CECOS
International, Inc., a subsidiary of the Company, through the
discontinuation of its hazardous waste business. He then served as
Regional Vice President of one of the Company's regions from
October 1990 to November 1991.
Mr. Wallingford became Senior Vice President and General Counsel of
the Company in January 1994. Prior to that time, he was a senior
partner with the law firm of Fulbright & Jaworski L.L.P., Houston,
Texas, for a period in excess of five years. Mr. Wallingford also
serves as a director of St. Luke's Episcopal Hospital and the
Children's Museum Foundation in Houston, Texas.
Mr. Hopkins, who was a Divisional Vice President and Assistant
Controller prior to becoming Controller of the Company in September
1986, joined the Company in September 1980. He was elected a Vice
President and named Chief Accounting Officer in December 1986.
From September 1991 to January 1992, he served as acting Chief
Financial Officer of the Company.
Mr. Waters has served as Chairman of the Finance Committee since
September 1988, has served as Chairman of BFI International, Inc.
since May 1991 and has served as President of BFI International,
Inc. since March 1993. He also serves as a member of the Executive
Committee of the Company's Board of Directors, and served as
Chairman of the Executive Committee from September 1980 until 1988.
He served as Chairman of the Board of the Company from August 1969
to September 1980. Mr. Waters serves as a director or trustee of
several business, educational and charitable organizations.
All officers of the Company (including executive officers) are
elected by the Board of Directors, generally at its meeting held
the day of the annual meeting of stockholders or as soon thereafter
as practicable. Each officer is elected to hold office until his
successor shall have been chosen and shall have qualified or until
his death or the effective date of his resignation or removal. The
annual meeting of stockholders is scheduled to be held March 1,
1995 in Houston, Texas.
Item 2. Properties.
In their operations, subsidiaries and affiliates of the Company use
specially-equipped trucks, steel containers and stationary
compactors. The Company also owns and/or operates sanitary
landfill sites throughout the United States and Canada, and in the
United Kingdom, Germany, the Netherlands, Spain, Australia and Italy. See
"Business - Solid Waste Services - Collection" and "Business -
Solid Waste Services - Solid Waste Transfer and Disposal," and Notes (4)
and (6) of Notes to Consolidated Financial Statements.
The Company's executive offices are located at 757 N. Eldridge,
Houston, Texas. The Company owns real estate, buildings and other
physical properties, which it employs in its daily operations in a
large number of its operating locations. The Company also leases
a substantial portion of its transfer stations, offices, storage
and shop space. See Notes (4) and (9) of Notes to Consolidated
Financial Statements.
BFI believes that the property and equipment of its subsidiaries
and affiliates are well-maintained and adequate for its current
needs, although substantial investments are expected to be made in
additional property and equipment for expansion, for replacement of
assets as they reach the end of their useful lives and in
connection with corporate development activities. See "Business -
Corporate Development," "Business - Financing and Capital
Appropriations" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Certain of the
property and equipment of BFI's subsidiaries and affiliates is
subject to mortgages and liens securing payment of portions of
their indebtedness. See Notes (7) and (9) of Notes to Consolidated
Financial Statements for information with respect to mortgage and
lease obligations on these properties.
Item 3. Legal Proceedings.
On November 7, 1990, a lawsuit styled Leonard Eisner Profit Sharing
Plan et al. v. Browning-Ferris Industries, Inc. et al. was filed in
the United States District Court for the Southern District of
Texas. Another purported class action styled Jerry Krim, on behalf
of himself and all others similarly situated v. Browning-Ferris
Industries, Inc., et. al. was filed on September 9, 1991, in the
United States District Court for the Southern District of Texas.
It is a purported class action on behalf of those persons who
purchased BFI Common Stock during the period from December 17, 1990
through September 9, 1991. Thereafter, several other purported
class actions were also filed. These cases were consolidated into
a lawsuit styled In Re Browning-Ferris Industries, Inc. Securities
Litigation, which is pending in the United States District Court
for the Southern District of Texas. The suit generally alleges
violations of Section 10(b) and Section 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder by allegedly prepar-
ing, issuing and disseminating materially false and misleading
information to plaintiffs and the investing public. The amended
consolidated suit seeks unquantified damages and attorneys' and
other fees. On June 11, 1993, the trial court certified the class
action and two classes of persons who purchased the Company's
common stock. The first class period is from August 9, 1990
through November 5, 1990, and the second class period is from
November 6, 1990 through September 3, 1991. On June 30, 1994, the
plaintiffs filed a motion for leave to file an amended complaint to
broaden the allegations in the suit. This motion has been denied.
The defendants have filed motions for summary judgment as to both
classes, which motions are still pending. The defendants have also
filed a motion to dismiss as class action or, in the alternative,
to decertify the classes. This motion has not been ruled on by the
court. The Company is vigorously defending these cases.
The case of Gary David Harding, et al. v. Browning-Ferris
Industries, Inc., et al. was filed in the 229th Judicial District
Court of Duval County, Texas, on February 28, 1994. The
approximately 356 plaintiffs allege that they reside in the
vicinity of a landfill in San Patricio County, Texas, and they
allege that they have sustained personal injuries and other damages
from allegedly contaminated groundwater and other alleged pathways
of exposure. Although the complaint does not specify the amount of
damages sought in the case, the plaintiffs' attorneys have
informally notified the Company that they will "seek damages
greatly exceeding ten percent of BFI's current consolidated
assets." This lawsuit was first filed in the 105th Judicial
District Court of Nueces County, Texas on September 23, 1992, with
respect to approximately 171 plaintiffs. The plaintiffs moved to
have the Nueces County lawsuit dismissed by the trial court without
prejudice. This motion was granted by the trial court. The
plaintiffs from the Nueces Court case along with numerous new
plaintiffs refiled the litigation in Duval County. The Company has
filed a motion that seeks to transfer venue in the litigation back
to Nueces County, Texas. This motion has not been ruled on by the
court in Duval County. The Company is vigorously defending
against the allegations in the litigation.
On May 18, 1994, a lawsuit styled Ogden Projects, Inc., et al. v.
New Morgan Landfill Company, Inc. ("New Morgan") was filed in the
United States District Court for the Eastern District of
Pennsylvania. The suit alleges that a subsidiary of the Company
did not obtain a permit to construct and operate a landfill under
provisions of the Clean Air Act. The plaintiffs, who are private
parties without regulatory authority, seek a declaratory judgment,
an order enjoining the subsidiary from continuing the construction
and/or operation of the landfill without a permit, and civil
penalties of $25,000 for each day New Morgan has constructed and/or
operated the landfill without a permit under the provisions of the
Clean Air Act. The Company believes the suit is without merit and
is vigorously defending the case.
In addition to the above-described litigation, the Company and
certain subsidiaries are involved in various other administrative
matters or litigation, including original or renewal permit
application proceedings in connection with the establishment,
operation, expansion, closure and post-closure activities of
certain landfill disposal facilities, environmental proceedings
relating to governmental actions resulting from the involvement of
various subsidiaries of the Company with certain waste sites
(including Superfund sites) (see "Environmental Proceedings"),
personal injury and other civil actions, as well as other claims
and disputes that could result in additional litigation or other
adversary proceedings.
While the final resolution of any such litigation or such other
matters may have an impact on the Company's consolidated financial
results for a particular reporting period, management believes that
the ultimate disposition of such litigation or such other matters
will not have a materially adverse effect upon the consolidated
financial position of the Company.
Environmental Proceedings
The Company strives to conduct its operations in compliance with
applicable laws and regulations, including environmental rules and
regulations, and has as its goal 100% compliance. However,
management believes that in the normal course of doing business,
companies in the waste disposal industry, including the Company,
are faced with governmental enforcement proceedings and resulting
fines or other sanctions and will likely be required to pay civil
penalties or to expend funds for remedial work on waste disposal
sites. The possibility always exists that such expenditures could
be substantial, which would have a negative impact on earnings for
a particular reporting period. Management of BFI believes that the
existence of these proceedings does not provide an accurate
reflection of the Company's operating policies, procedures and
capabilities, although the Company will have to respond to those
issues in filings required to be made in jurisdictions which have
enacted "fitness" statutes. See "Business - Regulation." In any
event, management of the Company believes that the ultimate
resolution of such proceedings will neither individually nor in the
aggregate have a materially adverse effect upon the consolidated
financial position of the Company.
Subsidiaries of the Company are continuously engaged in various
original or renewal permit application proceedings in connection
with the establishment, operation, expansion, closure and post-
closure activities relating to waste treatment and disposal
facilities, properties and activities. These proceedings, which
are a necessary and routine part of waste disposal activities, are
held before a variety of regulatory and judicial agencies at the
federal, state and local level. In these proceedings, legal
challenges are routinely raised by private parties and by the
regulatory agencies, alleging a variety of adverse consequences
(including adverse effects on the environment, in some instances
with particular reference to the inequitable distribution of
environmental burdens among various social groups and classes) if
the proposed permits are granted or renewed. Opposition is also
routinely encountered in connection with proposed changes in zoning
designations, operating procedures, remedial or upgrading actions
and post-closure activities at waste processing and disposal
facilities. See "Business - Regulation."
Various subsidiaries of the Company are participating in
potentially responsible party ("PRP") groups at 84 sites listed on
the EPA's National Priority List, which sites may be subject to
remedial action under the Comprehensive Environmental Response,
Compensation and Liability Act (also known as "Superfund").
Complete settlements with other members of the PRP groups and/or
the EPA have been negotiated with respect to 61 of these sites.
Partial settlements have been negotiated with regard to ten of the
sites. These settlements had no material effect on the Company's
results of operations or consolidated financial position. Further,
various subsidiaries of the Company have received information
requests relating to 64 additional sites on the EPA's National
Priority List. For 35 of these sites, the Company has determined
that it is not a PRP. The Company's PRP status at the remaining 29
sites has not yet been determined. The number of Superfund sites
with which the Company's subsidiaries are involved may increase or
decrease depending upon the EPA's findings from responses to these
information requests and any future information requests which may
be received. Superfund legislation permits strict joint and
several liability to be imposed without regard to fault, and as a
result, one company might be required to bear significantly more
than its proportional share of the cleanup costs if it is unable to
obtain appropriate contributions from other responsible parties.
Management routinely reviews each site requiring corrective action
(including Superfund sites) in which the Company's subsidiaries are
involved, considers each subsidiary's role with respect to each
site and the relationship to the involvement of other parties at
the site, the quantity and content of the waste with which it was
associated, and the number and financial capabilities of the other
parties at the various sites. Based on reviews of the various
sites, currently available information and management's judgment
and significant prior experience related to similarly situated
facilities, expense accruals are provided by the Company for its
share of estimated future costs associated with corrective actions
to be implemented at certain of these sites and existing accruals
are revised as deemed necessary. The final negotiated settlement
relating to the large majority of Superfund sites occurs several
years after a party's identification as a potentially responsible
party, due to the many complex issues that must be addressed in
determining the magnitude of the contamination at the site. The
process for addressing contamination at a site usually includes
technical investigations, selection of a remedy and implementation
of the remedy selected. In many cases, the expenditures related to
actual corrective action may be incurred over a number of years.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Environmental Matters."
Management believes that the ultimate disposition of these
environmental matters will not have a materially adverse effect
upon the liquidity, capital resources or consolidated financial
position of the Company, although the resolution of one or more of
these matters could have a significant negative impact on the
Company's consolidated financial results for a particular reporting
period. It can be reasonably expected that various subsidiaries of
the Company will become involved in additional remedial actions and
Superfund sites in the future.
A subsidiary of a Company, CECOS International, Inc. ("CECOS"), is
a party to a consent order with the U.S. Environmental Protection
Agency, one aspect of which concerns a leachate pretreatment system
that CECOS agreed to construct at one of its closed facilities. By
letter dated March 16, 1994, the USEPA has demanded $528,500 in
stipulated penalties due to CECOS's alleged failure to commence
timely start-up of the leachate pretreatment system that is
presently operating. CECOS is vigorously defending the imposition
of this proposed penalty. Management of the Company is unable to
conclude whether the ultimate monetary sanction in this matter, if
any, will be more than $100,000.
On March 6, 1991, Region VI of the EPA filed an administrative
proceeding entitled In the Matter of Chemical Reclamation Services,
Avalon, Texas. The complaint alleges that Chemical Reclamation
Services ("CRS"), a former subsidiary of the Company, failed to
comply with certain notification requirements under RCRA and under
regulations established under the Texas hazardous waste management
program. The complaint seeks a proposed monetary sanction against
CRS in the amount of $229,500. A claim for indemnity has been made
against the Company. Management of the Company is currently unable
to determine whether the ultimate monetary sanction, if any, will
be more than $100,000, and whether the Company will be obligated
for any part of the monetary sanction, if any, that may ultimately
be imposed upon CRS.
On March 9, 1991, CECOS was named in a civil administrative
complaint, entitled In the Matter of CECOS International, Inc.,
initiated by Region II of the EPA. This complaint alleges that
CECOS landfilled certain waste generated by General Motors
Corporation, that by definition contained polychlorinated biphenyls
in excess of the regulatory limit, rather than incinerating such
waste, and that CECOS failed to test the waste in accordance with
the requirements of its permits. The complaint seeks a monetary
sanction against CECOS in the amount of $14,150,000. CECOS is
vigorously contesting the allegations in the complaint. Management
of the Company is currently unable to determine whether the
ultimate monetary sanction, if any, will be more than $100,000.
Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter of the fiscal year covered by this
report, no matter was submitted to a vote of security holders.
PART II.
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
BFI's Common Stock is traded on the New York Stock Exchange, the
Chicago Stock Exchange, the Pacific Stock Exchange and The
International Stock Exchange of the United Kingdom and Republic of
Ireland Ltd. The table below sets forth by fiscal quarter, for the
fiscal years ended September 30, 1993 and 1994, the high and low
sales prices of BFI's Common Stock on the New York Stock Exchange -
Composite Transactions, as reported in The Wall Street Journal.
Fiscal Year 1993 Fiscal Year 1994
High Low High Low
First Quarter $ 27-1/8 $ 21-5/8 27-1/2 20-7/8
Second Quarter 28-5/8 25-3/4 30-1/4 24-1/4
Third Quarter 28 24 32-1/4 24-5/8
Fourth Quarter 27-7/8 22-3/8 32-7/8 29
As of November 29, 1994, there were approximately 20,000 holders of
record of BFI Common Stock.
In June 1988, the Company's Board of Directors adopted a Preferred
Stock Purchase Rights Plan and in connection therewith declared a
dividend of one Preferred Stock Purchase Right (a "Right") on each
outstanding share of the Company's Common Stock and on each share
subsequently issued until separate Rights certificates are
distributed or the Rights expire or are redeemed. See Note (11) of
Notes to Consolidated Financial Statements for more detailed
information concerning these Rights.
BFI has paid cash dividends on its Common Stock each year since
1950. Cash dividends are paid quarterly. During each of fiscal
1993 and 1994, 68 cents was paid in dividends on each share of
Common Stock. The most recently declared quarterly cash dividend
on the Common Stock was 17 cents per share. The payment of
dividends or other distributions on, or with respect to, the Common
Stock is limited by provisions of the Company's Revolving Credit
Agreement. See Note (7) of Notes to Consolidated Financial
Statements. The amount available for payment of dividends or
distributions on or with respect to Common Stock pursuant to such
limitation was approximately $1.3 billion on September 30, 1994,
after giving effect to cash dividends paid or declared through
September 30, 1994. The provisions of the credit agreement for 500
million pounds sterling to finance the acquisition of Attwoods
will be somewhat more restrictive with respect to the payment of
dividends. See "Financing and Capital Expenditures -Financings and
Credit Facilities" for a description of this credit agreement. BFI
currently expects to continue the payment of dividends, although
future dividend payments will depend on BFI's earnings, financial
needs and other factors.
Due to the nature of the Company's business, the Company or its
competitors receives unfavorable publicity from time to time, which
can result in aberrational market conditions for the Company's
securities.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III.
Items 10, 11, 12 and 13 of Part III (except for information
required with respect to executive officers of the Company which is
set forth under "Business - Executive Officers of the Company" in
Part I of this report) have been omitted from this report, since
the Company will file with the Securities and Exchange Commission,
not later than 120 days after the close of its fiscal year, a
definitive proxy statement, pursuant to Regulation 14A, which
involves the election of directors. The information required by
Items 10, 11, 12 and 13 of this report, which will appear in the
definitive proxy statement, is incorporated by reference into Part
III of this report.
Item 6. - Selected Financial Data
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
The following is a summary of certain consolidated financial information
regarding the Company for the five years ended September 30, 1994.
- -----------------------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
(In Thousands Except for Per Share Amounts)
Operating State-
ment Data:
- ----------------
Revenues(1) $4,314,541 $3,478,830 $3,277,635 $3,174,899 $2,957,880
Income from contin-
uing operations
before special
charges and extra-
ordinary item $ 283,973 $ 213,910 $ 175,607 $ 221,642 $ 298,053
Income from contin-
uing operations
before extra-
ordinary item $ 283,973 $ 197,440 $ 175,607 $ 65,177 $ 256,786
Net income
(loss) $ 278,710 $ 197,440 $ 175,607 $ 65,177 $ (44,743)
Income (loss) per
common and common
equivalent share -
Income from
continuing
operations
before extra-
ordinary item $ 1.52 $ 1.15 $ 1.11 $ .42 $ 1.68
Net income
(loss) $ 1.49 $ 1.15 $ 1.11 $ .42 $ (.29)
Cash dividends per
common share $ .68 $ .68 $ .68 $ .68 $ .64
(Continued on Following Page)
- -----------------------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
(In Thousands Except for Per Share Amounts)
Balance Sheet Data:
- ------------------
Property and
equipment, net $3,049,767 $2,515,709 $2,263,653 $2,140,203 $1,988,221
Total assets $5,796,955 $4,295,642 $4,067,524 $3,655,892 $3,573,573
Senior long-term
debt $ 713,680 $ 333,689 $ 349,183 $ 406,987 $ 447,581
Convertible
subordinated
debentures $ 744,949 $ 744,949 $ 744,949 $ 744,959 $ 744,959
Common stock-
holders' equity $2,391,680 $1,532,603 $1,460,406 $1,114,299 $1,161,929
Cash Flow Data:
- --------------
Capital expendi-
tures - continuing
operations $ 694,475 $ 606,240 $ 531,239 $ 477,632 $ 440,850
Cash flows from
operating
activities $ 693,928 $ 613,965 $ 577,007 $ 685,664 $ 593,010
- -----------
(1) Certain reclassifications have been made in prior year amounts to
conform to the current year presentation.
Item 7. - Management's Discussion and Analysis of Financial
Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The fiscal 1994 results reflected significant improvement over the prior
year as the Company capitalized on opportunities for growth in North America
and expanded its international operations. Revenues compared with fiscal 1993
increased 24% to $4.3 billion while net income increased to $279 million from
$197 million or 41% over the prior year. Fiscal 1994 results included an
extraordinary charge of $5.3 million, net of tax, related to the early
retirement of debt, and fiscal 1993 net income included a pre-tax
reorganization charge of $27 million ($16.5 million, net of tax). Current
year net income before considering the extraordinary item was $284 million,
an increase of 33% over prior year net income of $214 million excluding the
reorganization charge. The increase in net income before charges was largely
the result of increased profitability in the Company's domestic disposal and
transfer services and recycling operations, and improved earnings from
international operations.
International results have been favorably affected by improved overall
performance in Europe, and include the recent acquisition of a 50% interest in
one of the largest waste services companies in Germany. In February 1994, the
Company paid approximately $400 million, consisting of 3.9 million shares of
the Company's common stock and the remainder in Deutsche Mark, to acquire a
50% interest in Otto Waste Services. This purchase represents the single
largest acquisition in the history of the Company. Otto Waste Services is an
integrated waste services company operating throughout Germany that is
principally engaged in providing collection and recycling services under
long-term contracts to municipalities. The Otto Waste Services' group of
companies includes in excess of 50 wholly owned and partially owned
subsidiaries. The revenues and earnings of these companies and partially
owned subsidiaries have been included in the Company's results for the year
ended September 30, 1994 from the date of acquisition in February 1994.
The Company reported consolidated revenues of $344 million during fiscal
year 1994 applicable to the Otto Waste Services acquisition, representing over
40% of the growth in year-to-year revenues. Fiscal 1994's higher revenues were
also due in part to the success of the Company's North American acquisition
activities. Further, revenue growth from additional volume was significant
during the year, particularly in the collection, landfill and recycling
businesses. Excluding the Otto Waste Services acquisition, international
revenue growth was primarily the result of market development activities in
Germany and the Netherlands and the reconsolidation of certain operations
in Spain in May 1993.
In addition to reviewing its financial results by geographic area (region,
division, district), the Company analyzes its results by reported line of
business: collection, disposal and transfer, recycling, medical waste and
international. As the various lines of business become integrated within
numerous markets, separate business line analysis becomes less meaningful than
aggregate marketplace profitability relative to the investment deployed in the
market. Despite this shortcoming, analyzing financial results by line of
business remains the most feasible method of explaining business performance
for the Company.
North American collection services revenues increased 10% primarily due
to acquisition activities and volume growth from sales efforts and increases
in service provided to existing customers. Total revenue change in North
American collection due to pricing was slightly negative, a clear reflection
of the continued industry competitive climate. Average unit price was
negatively impacted to an extent by price reductions in markets where
landfill tip fees declined, faster growth in lower than average priced
markets and certain acquisitions and municipal contracts which had a lower
unit price than that of the average unit price of the collection business
as a whole. Pricing of new business appeared to improve somewhat in the
latter part of the fiscal year as the Company initiated higher overall
pricing levels on new business sold during the third and fourth quarters of
fiscal year 1994. The ability to increase pricing in the collection business
continues to represent a significant challenge and opportunity for the
Company. In addition, during the current fiscal year the Company concluded
an extensive study which identified opportunities for profit improvement of
the Company. The Company has recently begun to implement a number of these
profit improvement initiatives. The goal of these initiatives, which will be
implemented over the next two to three years, is to increase per unit
revenues and decrease per unit costs, with a principal focus on the
collection services line of business.
North American landfills were a principal driver of improved domestic
operating results. Increased earnings in the landfill business were generally
attributable to increased disposal volumes. Total landfill volume increased by
13% in fiscal 1994. Volume growth was due principally to increased flow to
existing and new sites, internalization of volumes at the Company's landfills,
general volume growth from the closing of landfill facilities by municipalities
and other companies as a result of Subtitle D landfill regulations and the
improving economy in general. Total non-special waste volumes (generally
municipal solid waste) were 12% over the prior year and special waste volumes
(such as sludges, ash volumes, nonhazardous chemical wastes and contaminated
soils) increased 22%. The Company intends to make special waste opportunities
an area of emphasis in fiscal 1995. Average landfill pricing to unaffiliated
customers was almost flat compared with the prior year, despite the negative
impact of (i) a shift in mix of waste disposed from contaminated soils at
higher tipping fees to other types of special and municipal wastes which
carry a lower tipping fee and (ii) a shift in the mix of waste disposed from
landfills in the northern section of the United States to landfills in the
southern and southeastern sections of the United States which receive lower
tipping fees. In fiscal 1994, the Company internalized approximately 42% of
collection services volumes, similar to the 44% internalized in fiscal 1993.
Short-term fluctuations in the percent of waste disposed at Company landfills
were primarily timing issues related to the opening and closing of sections
or cells of individual facilities. The Company's current goal is to
internalize 50% of collected volumes, a strategy which both conserves cash
and lessens exposure to, and dependency on, outside disposal sites. In
fiscal 1995, the Company will continue to focus on increasing volumes,
controlling operating costs and managing capital expenditures in order
to increase cash flow and earnings. Improved profitability is also dependent
in part on increased tip fee flexibility.
Recycling initiatives within the Company were launched in earnest several
years ago when the Company recognized that legislation was segmenting and
prioritizing the treatment of waste streams, customers were demanding changes
in the way waste was serviced, and consumers of recyclable materials were
planning capital projects. The Company's investment in recycling reflected
improved results this year as the recycling business continued to contribute
a significant percentage of the growth in total Company revenues in fiscal
1994. Revenues from recycling services grew 50% during fiscal 1994 to $359
million. Operating margins in this business improved over the prior year due
in large part to an increase in commodity prices paid for the products sold
and volume throughput at the Company's processing centers. Increased
commodity prices were most notable for corrugated cardboard and newspaper.
Prices for these commodities climbed in the early months of calendar 1994
and reached their highest levels in the fourth quarter. Total revenues
increased from the sale of commodities and increased volumes of material
processed over fiscal 1993. The Company also added a number of processing
centers during the year to further expand processing capacity. Recycling
collection services continued to grow as the number of residential customers
serviced grew 36% and the number of commercial accounts grew 25% over
fiscal 1993. The Company has recently begun to enter into long-term contracts
with floor prices to minimize its exposure to any future downturn in commodity
pricing that may occur. The Company expects to pursue new waste segmentation
opportunities in recycling during 1995, with emphasis on organics processing
and further segmentation of waste paper streams.
The Company's medical waste services line of business enjoyed
double-digit growth in revenues (up 10% to $161 million). Margins declined
slightly from the prior year due to continued price pressure and higher
operating costs. However, the Company is well positioned to benefit from
the upcoming implementation of certain provisions of the Clean Air Act as
hospitals across the United States assess their medical waste treatment
technology and determine whether to invest significant capital in improving
technology or contract for the treatment and disposal of medical waste
streams. Areas of focus in the coming year include providing for more
efficient transportation of waste flows, centralization of certain purchasing
functions, and continued revenue growth through acquisitions and marketing
initiatives.
The Company's international business experienced the most significant
revenue growth of any business type in fiscal 1994, due primarily to the
acquisition of the 50% interest in Otto Waste Services discussed previously,
and other market development activity. Otto Waste Services contributed 80%
of the total international revenue growth and over 40% of total Company
revenue growth in the current year. Operating results in the Netherlands
improved as revenue grew 10% to $237 million, due largely to acquisition
activity, and operating margins improved over the prior fiscal year. Some
profit improvement was also noted in the Company's United Kingdom operations.
Revenues in Spain increased approximately 138% over the prior year due to
the reconsolidation of Spanish operations in May 1993 when the Company
increased its investment in its Spanish affiliate. Margins in Spain were
negatively affected by the competitive environment and a weak economy in the
Barcelona area. International operating results continue to be negatively
affected by operating losses of the Company's wholly-owned solid waste
Italian operations. Results from these Italian operations improved slightly
over the course of the year, but significant improvement in these operations
will depend on greater stability in the country's political climate and the
Company's ability to rebid business at improved margins. Results of the
Company's Italian joint venture industrial waste operations improved
significantly over the previous year.
The Company plans to continue to focus on acquisition and other market
development opportunities, improving pricing and controlling operating and
SG&A costs in order to achieve improved performance in fiscal year 1995.
The Company believes that continued segmentation of waste streams, industry
consolidation due in part to increasing capital intensity and regulation,
and the bundling of various integrated waste services are industry trends
which will benefit the Company in the years to come. Over the past several
years, the Company has geographically diversified its business by investing
in select foreign countries, such as Germany, Spain and the Netherlands, and
investing within North America in many southern markets, including market
areas in Georgia, Alabama, Arizona and Texas. The Company has also pursued
vigorously municipal contract business in the United States and acquired
companies with significant contractual waste arrangements, such as Otto
Waste Services. Municipal contract waste service tends to be counter
cyclical as revenues are usually set on a per home basis while costs vary
with the amount of waste collected and many of such contracts remain in
effect for five or more years. Further, during the past two years, the
Company has experienced significant asset expansion coupled with improved
returns on its average assets employed (on a pre-tax, pre-interest basis
and excluding reorganization charge) in both its North American and
international business areas as it has focused on growth in its business
and emphasized controlling operating and SG&A costs.
The proposed Attwoods acquisition, if consummated, will further diversify
the Company as Attwoods' domestic business is principally in southern states,
its United Kingdom business would expand the Company's operations in Europe
and much of its business is of a municipal contract nature. See "Liquidity
and Capital Resources" and Note (9) of Notes to Consolidated Financial
Statements.
Results of Operations
- ---------------------
Revenues
- --------
Revenues for fiscal 1994 were $4.3 billion, a 24% increase over fiscal
1993 revenues of $3.5 billion. The following table reflects the contribution
to total revenues of the Company's principal lines of business for the last
three fiscal years (in millions):
Year Ended September 30,
-------------------------------
1994 1993 (1) 1992 (1)
-------- -------- --------
North American Operations
- -------------------------
Collection Services -
Solid Waste $2,360 $2,138 $2,038
Disposal and Transfer -
Solid Waste
Unaffiliated customers 493 448 449
Affiliated companies 392 339 304
------ ------ ------
885 787 753
Medical Waste Services 161 146 119
Recycling Services 359 240 175
Services Group and other 83 79 106
Elimination of affiliated
companies' revenues (392) (339) (304)
------ ------ ------
Total North American Operations 3,456 3,051 2,887
International Operations (2) 859 428 391
- ------------------------ ------ ------ ------
Total Company $4,315 $3,479 $3,278
====== ====== ======
Percentage Increase from
Prior Year 24% 6% 3%
- ---------------
(1) Certain reclassifications have been made in prior year amounts
to conform to the current year presentation.
(2) Revenues from Canadian operations are excluded from
international revenues and are combined with North American
revenues.
For the first time since 1989, the Company exceeded 20% top-line
growth as revenues increased 24% versus the prior year. Growth was primarily
caused by an aggressive acquisition and market development program highlighted
most notably by the purchase of 50% of Otto Waste Services, one of the largest
waste services companies in Germany. Increased volumes from existing
customers, primarily in the collection, disposal and transfer, and
recycling businesses also contributed a significant portion of revenue
growth. Revenue growth due to increased pricing was limited in most lines
of business due to the continued industry competitive climate and resistance
to price increases.
In fiscal 1993, the Company's revenue growth rate exceeded the revenue
growth rate of the prior year for the first time since fiscal 1987. Revenue
growth was due almost exclusively to acquisitions and increased volumes in the
collection, recycling and medical waste lines of business. The impact of
pricing on revenue growth was negligible for the second straight year in
fiscal 1993 due to economic weakness and competitive pressures in many of
the markets in which the Company competes, both domestically and globally.
As the table below reflects, revenue growth in fiscal year 1994 was due
primarily to acquisitions and volume increases. Consistent with fiscal years
1993 and 1992, pricing impact on total revenue growth was minimal.
Change in Revenues
--------------------------------
1994 1993 1992
------ ------ ------
Price 1% --% --%
Volume (1) 7 2 1
Acquisitions (2) 16 4 2
---- ---- ----
Total Percentage Increase 24% 6% 3%
==== ==== ====
- -----------------
(1) Includes the negative impact of foreign currency exchange
rates.
(2) Includes purchased companies and the impact of the
reconsolidation of Spanish operations in fiscal 1993, and the
fiscal 1992 deconsolidation of certain Italian operations.
Weighted average per unit pricing edged upward in fiscal 1994 due to
positive price movement which occurred in the recycling business as the
commodity price of newspapers and cardboard sold by the Company's recycling
processing centers increased during 1994. Collection systems (such as solid
waste collection, medical waste collection and recyclables collection) and
the unaffiliated disposal and transfer business line continued to experience
negative or only slightly positive pricing versus prior periods. Although
the solid waste collection line of business reflected a negative change in
pricing versus the prior year, indications in the commercial systems late
in the fiscal year appeared to suggest that the ability to increase pricing
was improving. Given the sizeable increases in collection volumes over the
past few years due to acquisition and volume growth, any significant
improvement in per unit pricing would likely have a favorable impact on
earnings.
Every line of business enjoyed strong volume growth in fiscal 1994.
Total revenue growth due to increased volume was 7%; the largest dollar
contributions came from the collection, disposal and transfer, and recycling
lines of business. Both the medical waste and disposal and transfer lines
approached double digit percentage revenue growth due to volume in the
current year while recycling revenues grew 26% due to volume improvement.
Collection revenues expanded by 5% due to volume growth with increases most
evident in the rear load residential and rolloff systems. The rolloff
system services the large containers used, for example, at construction
sites and large businesses.
Revenue growth from acquisitions was 16% with approximately two-thirds of
the increase coming from the purchase of a 50% interest in Otto Waste
Services, one of the largest waste services companies in Germany. The
majority of North America acquisition activity occurred in the collection
and, to a lesser extent, recycling lines of business. Internationally,
absent the Otto Waste Services transaction, acquisition activity was centered
in the Netherlands and Germany.
Cost of Operations
- ------------------
Cost of operations increased $598 million (24%) in fiscal 1994,
$152 million (6%) in fiscal 1993, and $161 million (7%) in fiscal 1992 over
the prior year. Fiscal 1994 cost of operations was 72.4% of revenues, down
slightly from the fiscal 1993 level and flat when compared with fiscal
1992. Disposal costs (which are the single largest component of operating
expenses) increased international operating expenses (primarily due to the
Otto Waste Services transaction), and increased collection business activity
contributed to the increase in operating expenses in fiscal 1994. Disposal
costs, which include landfill and transfer station operating expenses,
increased 23%, 4% and 10% over the prior year in fiscal years 1994, 1993,
and 1992, respectively. More than half of the fiscal 1994 increase in
disposal cost originated internationally, due principally to the Otto Waste
Services consolidation. Domestically, increased volumes in the collection,
landfill and recycling businesses were the main factors in the higher
disposal cost results.
Non-disposal operating expenses increased 24%, 9% and 5% over the prior
year in fiscal years 1994, 1993 and 1992, respectively. The majority of the
increase in these costs during 1994, comprised primarily of employee,
equipment and facility-related costs, occurred in the international segment,
as well as the collection and recycling businesses. The primary cause of
the increase in the international expense was the impact of the consolidation
of the Otto Waste Services operations beginning in February 1994. In North
America, non-disposal operating expense increases in the collection and
recycling lines of business were chiefly the result of volume and acquisition
growth. Similarly, in 1993, the principal businesses responsible for the
non-disposal operating expense increase were the collection and recycling
businesses, again due to volume gains and acquisitions.
Selling, General and Administrative Expense (SG&A)
- --------------------------------------------------
Selling, general and administrative expense increased by $88 million (16%)
in fiscal 1994 versus fiscal 1993. SG&A decreased $5 million (-1%) in fiscal
1993 versus fiscal 1992 and increased $26 million (5%) in fiscal 1992 versus
the prior year. The SG&A increase in fiscal 1994 was due principally to the
consolidation of Otto Waste Services in February 1994 as well as additional
acquisition and market development activity domestically, principally in the
collection and recycling lines of business. The decrease in SG&A in fiscal
1993 was a result of a concerted effort at all levels of the Company to control
general and administrative expenses in particular. That effort continued
during fiscal 1994 as well, as SG&A expenses as a percent of revenue declined
to 15% from 16% in fiscal 1993 and 17% in fiscal 1992. The Company continues
to address consolidation of administrative support functions and other cost
control measures to successfully manage SG&A costs.
Reorganization Charge
- ---------------------
A reorganization charge of $27 million (an after-tax charge of
approximately $.10 per share), which was announced in June 1993, was
recorded in the third quarter of fiscal year 1993 to cover the estimated
expense of reorganizing the Company's regional structure in the United
States to better plan and coordinate its business operations, capitalize
on new growth opportunities and more efficiently serve its customers in the
Company's major market areas. The reorganization included the designation
of a divisional vice president with responsibility for each market area, the
closing of three regional offices, the opening of one new regional office
and the relocation of one regional office, which reduced the number of United
States regional offices from seven to five. The reorganization charge
included employee severance and relocation costs and other employee,
organization and transition related costs.
Interest Expense and Income
- ---------------------------
Interest expense for the last three fiscal years was as follows (in
thousands):
1994 1993 1992
-------- -------- --------
Gross interest expense $104,759 $ 89,563 $ 86,908
Interest capitalized (11,600) (18,669) (15,812)
-------- -------- --------
Interest expense $ 93,159 $ 70,894 $ 71,096
======== ======== ========
Fiscal year 1994 interest expense increased to $93 million compared with $71
million for the prior year, principally a result of the acquisition of 50% of
Otto Waste Services. The Company also experienced a reduction in interest
capitalized due to the completion of construction of a number of significant
market development projects late in the prior year and early in the current
fiscal year. Fiscal year 1993 interest expense varied only slightly from
fiscal year 1992. Increased interest expense due to foreign acquisitions
and new domestic revenue bonds was largely offset by an increase in
capitalized interest associated principally with the Company's landfill
market development projects in 1993.
Fiscal year 1994 interest income of $11 million declined $3 million from
the prior year due to lower weighted average investment balances outstanding
during the year, offset partially by increased interest income associated
with the consolidation of Otto Waste Services. Fiscal year 1993 interest
income increased to $15 million from $9 million in fiscal year 1992,
principally due to the higher weighted average balance of short-term
investments outstanding over the prior year.
Equity in Earnings of Unconsolidated Affiliates
- -----------------------------------------------
Equity in earnings of unconsolidated affiliates increased $21 million from
fiscal year 1993 due principally to improvement in earnings of American
Ref-Fuel and certain international affiliates and as a result of the
Company's acquisition of a 50% interest in Otto Waste Services in February
1994. During 1993, American Ref-Fuel acquired a resource recovery facility
in Niagara Falls, New York, which contributed significantly to this
improvement. In fiscal year 1993, equity in
earnings of unconsolidated affiliates increased $6 million from the prior year,
also principally a result of improved earnings of American Ref-Fuel and certain
international affiliates. For further information, see Note (5) of Notes to
Consolidated Financial Statements.
Minority Interest in Income of Consolidated Subsidiaries
- --------------------------------------------------------
The increase in minority interest in income of consolidated subsidiaries
in fiscal year 1994 over the prior year of $15 million is the result of the
Company's acquisition of a 50% interest in Otto Waste Services in February
1994.
Income Taxes
- ------------
The Company's effective income tax rates for fiscal years 1994, 1993, and
1992 were 40.0%, 39.6%, and 39.0%, respectively. The increases in the income
tax rate in fiscal years 1994 and 1993 are the result of an increase in the
U.S. income tax rate effective January 1, 1993. Additionally, in November
1994, the Company reached an agreement with the Internal Revenue Service,
settling all material issues raised in the May 1993 Revenue Agent's Report,
principally related to the deductibility of intangible assets. For further
information concerning income taxes, see Note (14) of Notes to Consolidated
Financial Statements.
Profitability Ratios
- --------------------
These ratios (shown as a percent of revenues, except for the return on
assets ratio) reflect certain profitability trends for the Company's
operations. The effect of general inflation, as measured by the average
consumer price index, did not have a material effect on the Company's
overall financial position or results of operations.
Year Ended September 30,
-------------------------
1994 1993 1992
------ ------ ------
Gross profit margin 27.6% 27.4% 27.6%
Income from operations
before reorganization charge 12.6% 11.3% 10.4%
Income from operations 12.6% 10.6% 10.4%
Income before income taxes,
minority interest and
extraordinary item 11.6% 9.4% 8.8%
Net income before reorganization
charge and extraordinary item 6.6% 6.1% 5.4%
Net income 6.5% 5.7% 5.4%
Pre-tax, pre-interest return on
average total assets, excluding
reorganization charge 11.5% 9.8% 9.1%
Profitability ratios improved in fiscal year 1994 due principally to increased
earnings in the landfill and recycling businesses, higher operating margins
associated with the Otto Waste Services operations and the Company's ability to
control the growth in SG&A. Profitability ratios improved in fiscal year 1993
due principally to lower SG&A. Increases in profitability in fiscal year
1993 were due to lower landfill operating expenses and increased recycling
processing center capacity utilization, offset by continued price compression
as a result of the economy, competitive pressure, and waste minimization
efforts. In many markets, disposal cost increases (due primarily to
increased container utilization by customers) were not fully recoverable
due to the competitive nature of the market.
During fiscal 1994, total assets of the Company increased by approximately
$1.5 billion, principally a result of acquiring 50% of Otto Waste Services,
foreign currency translation, the adoption of the new standard related to
accounting for income taxes and capital expenditures. Despite the significant
increase in total assets, pre-tax, pre-interest return on average total assets
(excluding the reorganization charge) increased over 17% to 11.5% for fiscal
1994 compared with 9.8% for the prior year.
During fiscal 1995, management will focus on acquisition and other
market development opportunities, operating and SG&A cost controls and
improvements in pricing. These efforts are intended to favorably impact
margins in fiscal 1995.
Environmental Matters
- ---------------------
As of September 30, 1994 and 1993, included in the Company's balance sheet
were accrued environmental costs of $688 million and $729 million associated
with its obligations for closure and post-closure of its operating and closed
landfills and for remediation and corrective actions at Superfund sites and
other facilities which are discussed in the following paragraphs. See Notes
(1) and (6) of Notes to Consolidated Financial Statements for a discussion of
the Company's environmental and landfill accounting policies and other
financial information related to environmental and landfill accruals.
The Company's landfills are subject to specific operating permit
requirements and the applicable existing regulatory requirements of the
national, state and local jurisdictions in which they are operated. On
an ongoing basis, the Company, based on input from its engineers, estimates
its future cost requirements for closure and post-closure management of its
landfills based on its interpretations of these regulations and standards.
Accruals for these costs are typically provided as the remaining permitted
airspace of these facilities is consumed. Engineering reviews of the future
cost requirements for closure and post-closure monitoring and maintenance for
the Company's operating landfills are performed at least annually and are the
basis upon which the Company's estimates of these future costs and the
related accruals are revised. In its foreign operations, the Company has
noted a trend toward increased landfill regulation, particularly in those
countries within the European Economic Community. While increasing
regulation often presents new business opportunities to the Company,
it likewise often results in increased operating costs in those
jurisdictions in which such regulatory changes occur and could potentially
have a negative impact on operations.
The Company is also responsible for a significant number of closed solid
waste landfills, principally in North America, which require varying levels of
inspection, maintenance, environmental monitoring and from time to time
corrective action. An overall program of management has been implemented to
provide a systematic and routine standard of care and maintenance and to ensure
environmental compliance at these closed facilities.
In fiscal year 1990, the Company announced its withdrawal from the
hazardous waste collection, treatment and disposal business principally because
the Company believed its resources would be better utilized if they were
directed toward developing opportunities in the solid waste business.
Anticipated cash expenditures related principally to remediation and post-
closure monitoring at certain closed sites are expected to be required over a
long period of time with no significant amounts anticipated to be paid in any
single year. In addition, these future cash expenditures will be offset in
part by the realization of related income tax benefits.
Various subsidiaries of the Company are participating in potentially
responsible party ("PRP") groups at 84 waste disposal sites listed on the U.S.
Environmental Protection Agency's National Priority List, which may be subject
to remedial action under Superfund. Certain of these subsidiaries have
negotiated settlements with other members of the PRP groups and the EPA with
respect to 61 of these 84 Superfund sites. Partial settlements have been
negotiated with regard to ten of the remaining sites. These settlements had no
material effect on the Company's liquidity, results of operations or financial
position. Further, various subsidiaries have received information requests
relating to 64 additional sites on the EPA's National Priority List. For 35 of
these sites, the Company has determined it is not a PRP; the Company's PRP
status at the remaining 29 sites has not yet been determined. The number of
Superfund sites with which the Company's subsidiaries are involved may
increase or decrease depending upon the EPA's findings from responses to
these information requests and any future information requests which may be
received. Superfund legislation permits strict joint and several liability
to be imposed without regard to fault, and as a result, one company may be
required to bear significantly more than its proportional share of the
cleanup costs if it is unable to obtain appropriate contributions from other
responsible parties. The final negotiated settlement relating to the large
majority of Superfund sites occurs several years after a company has been
identified as a PRP due to the many complex issues that must be addressed in
determining the magnitude of contamination present, the cause of the
contamination and the recommended remedial action to be taken. In many cases,
the expenditures related to actual remediation may also occur over a number of
years.
The Company has implemented programs to promote compliance with the laws,
regulations and permit requirements governing its landfills and has as its goal
100% compliance. Even with these programs, management believes that in the
normal course of doing business, companies in the waste disposal industry are
faced with governmental enforcement proceedings resulting in fines or other
sanctions and will likely be required to pay civil penalties or to expend funds
for remedial work on waste disposal sites. These programs include systematic
site reviews and evaluations of each site requiring corrective action
(including Superfund sites) in which the Company's subsidiaries are involved,
considering each subsidiary's role with respect to each site and the
relationship to the involvement of other parties at the site, the quantity
and content of the waste with which the subsidiary was associated, and the
number and financial capabilities of the other parties at the various sites.
Based on reviews of the various sites, currently available information, and
management's judgment and significant prior experience related to similarly
situated facilities, expense accruals are provided by the Company for its
share of estimated future costs associated with corrective actions to be
implemented at certain of these sites and existing accruals are revised as
deemed necessary. Management also routinely reviews the realization of its
investments in operating landfills and the adequacy of its accruals for the
future costs of closure and post-closure monitoring and maintenance at its
operating and closed landfills and adjusts its asset values and accruals as
deemed appropriate.
Management believes that the ultimate disposition of these environmental
matters will not have a materially adverse effect upon the liquidity, capital
resources, business or consolidated financial position of the Company, though
resolution of one or more of these matters could have a significant negative
impact on the Company's consolidated financial results for a particular
reporting period. Due to the nature of the Company's business and the
increasing emphasis of government in all jurisdictions and the public on
environmental issues relating to the waste disposal industry, it can be
reasonably expected that various subsidiaries of the Company will become
involved in additional remediation actions and Superfund sites in the
future. Management attempts to anticipate future changes in laws,
regulations and operating permit requirements which may affect its
operations; however, there is no assurance that such future changes will
not significantly affect its operations.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's working capital and related ratios at the end of the last
three years were as follows:
As of September 30,
----------------------------
1994 1993 1992
------- ------- --------
Working capital (in thousands) $ 7,104 $ 1,042 $250,833
Working capital ratios 1.0:1 1.0:1 1.3:1
Working capital was affected favorably in the current fiscal year by the
adoption of SFAS No. 109, "Accounting for Income Taxes" (see Note (14) of Notes
to Consolidated Financial Statements) and increased profitability, offset
largely by current year acquisitions and the use of cash for capital
expenditures during fiscal 1994. The Company's unusually high level of
working capital at September 30, 1992 resulted principally from investing
the net proceeds of $283 million from the sale of 14,000,000 shares of the
Company's common stock in June 1992 which were not utilized during fiscal
year 1992. The Company's long-term strategy in managing working capital is
to maintain substantial available commitments under bank credit agreements or
other financial agreements to finance short-term capital requirements in
excess of internally generated cash while minimizing working capital.
In January 1994, the Company filed a universal shelf registration
statement with the Securities and Exchange Commission to provide for the
registration of up to $700 million of unsecured debt securities, preferred
stock, common stock or warrants to purchase unsecured debt securities,
preferred stock or common stock. In March 1994, the Company issued
15,525,000 shares of its common stock under this universal shelf
registration statement in concurrent public offerings in the United States
and outside the United States. The Company used approximately $106 million
of the net proceeds of approximately $434 million during April 1994 to redeem
its $100 million 8 1/2% Sinking Fund Debentures due 2017 (see Note (7) of
Notes to Consolidated Financial Statements). The balance of the proceeds
was used to repay indebtedness associated with the February 1994 acquisition
of the 50% interest in Otto Waste Services and other working capital
requirements.
In July 1994, the Company closed a $100 million master equipment leasing
program. A portion of the commitments under this program was drawn at closing
and the proceeds were used to pay indebtedness and for working capital
purposes. The balance of the commitments will be drawn on or before
March 31, 1995.
On September 20, 1994, the Company announced the terms of a cash offer
("Attwoods Offers") to acquire all the ordinary shares of Attwoods plc, a UK
company, and all of the preferred shares of Attwoods (Finance) N.V., a
Netherlands Antilles company. On September 19, 1994, the Company entered into
a letter agreement providing for the borrowing by the Company, under a credit
agreement to be entered into pursuant to the letter agreement, of up to 500
million pounds sterling (or its equivalent) to finance the Attwoods Offers.
The facility is to be used to assist in funding the Attwoods Offers and to
fund the working capital requirements and refinance any existing indebtedness
of Attwoods including any existing obligations of Attwoods that become due
and payable as a result of the Attwoods Offers becoming unconditional.
Borrowings under the facility are conditional on the Attwoods Offers having
become (or in certain circumstances, having been declared) unconditional in
all respects under United Kingdom law. The payment of dividends or other
distributions on the Company's Common Stock will be limited by the provisions
of this credit agreement which will be somewhat more restrictive than the
most restrictive provisions at September 30, 1994. See Note (9) of Notes to
Consolidated Financial Statements.
The Company's bank credit agreement provides total committed credit
capacity of $1 billion. The available credit capacity under this facility,
which matures in August 1996, is used principally to support the Company's
commercial paper program, established in January 1990, authorizing the
issuance of up to $1 billion in commercial paper. Borrowings under the
commercial paper program may not exceed the available credit under the
Company's existing bank credit agreement. There were approximately $43
million of commercial paper borrowings outstanding as of September 30, 1994.
In February 1990, the Company initiated a program for the issuance of up
to $100 million principal amount of medium-term notes, but has not yet
utilized this program. In March 1991, the Company filed a shelf registration
statement with the Securities and Exchange Commission to provide for the
future issuance of up to $300 million of additional debt securities, $200
million of which was unutilized at September 30, 1994.
As of September 30, 1994, the Company's unused committed borrowing
capacity under its primary bank credit agreement was $957 million. Such
capacity may be used to refinance amounts outstanding under short-term
facilities, for financing requirements in connection with foreign exchange
contracts or for other capital requirements. Of the $1.5 billion of the
Company's long-term indebtedness outstanding (including the $745 million of
Convertible Subordinated Debentures) at September 30, 1994, 89% was at fixed
interest rates for a period of at least 12 months. Management's long-term
objective is to maintain most of its indebtedness in fixed interest rate
obligations, although variable rate debt has been and will likely continue
to be used to meet short-term and certain longer term financing needs. The
Company's weighted average cost of indebtedness increased slightly to
approximately 7.9% for fiscal 1994 from 7.7% for fiscal year 1993.
Long-term indebtedness (including $428 million of Otto Waste Services
debt, which has not been guaranteed by the Company, and $745 million of
Convertible Subordinated Debentures) as a percentage of total capitalization
declined from 41% at September 30, 1993 to 38% at September 30, 1994,
principally a result of the March 1994 common stock offering.
Subject to the Board of Director approval and excluding the proposed
Attwoods transaction, the capital appropriations budget for fiscal year 1995
will be established at $1.2 billion, of which $579 million is intended to
provide for normal replacement requirements and to provide new assets to
support planned revenue growth within all consolidated businesses. The
remaining $590 million is designated for corporate market development
activities which principally include new or expanded solid waste transfer
and disposal facilities, recycling processing centers, acquisitions of solid
waste businesses and other investments in both North American and
international operations. Over $50 million of the Company's capital
requirements in fiscal 1995 are expected to be financed through master
leasing programs. Further, the Company has announced the terms of its
Attwoods Offers discussed above. See Note (9) of Notes to Consolidated
Financial Statements.
Excluding the specific financing arrangements associated with the Attwoods
Offers, the Company believes that its cash flows from operations and its access
to cash from banks and other external sources, including the public markets,
are more than sufficient for its financing needs.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Browning-Ferris Industries, Inc.:
We have audited the accompanying consolidated balance sheet of Browning-Ferris
Industries, Inc. (a Delaware corporation) and subsidiaries as of September 30,
1994 and 1993, and the related consolidated statements of income, common
stockholders' equity, and cash flows for each of the three years in the period
ended September 30, 1994. These financial statements and the schedules
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Browning-Ferris
Industries, Inc. and subsidiaries as of September 30, 1994 and 1993, and
the results of their operations and their cash flows for each of the three
years in the period ended September 30, 1994, in conformity with generally
accepted accounting principles.
As discussed in Notes 1 and 14 to the consolidated financial statements,
effective October 1, 1993, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards
No. 109.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules II, V, VI and VIII listed
in the index of financial statements are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
November 30, 1994
Item 8. - Financial Statements and Supplemental Data
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For The Three Years Ended September 30, 1994
(In Thousands Except for Per Share Amounts)
-------------------------------------------------------------------------
Year Ended September 30,
------------------------------------
1994 1993 1992
-------------------------------------------------------------------------
Revenues $4,314,541 $3,478,830 $3,277,635
Cost of operations 3,123,375 2,525,023 2,372,658
---------- ---------- ----------
Gross profit 1,191,166 953,807 904,977
Selling, general and
administrative expense 647,256 559,419 564,708
Reorganization charge -- 27,000 --
---------- ---------- ----------
Income from operations 543,910 367,388 340,269
Interest expense 93,159 70,894 71,096
Interest income (11,288) (14,633) (8,880)
Equity in earnings of
unconsolidated affiliates (37,084) (16,060) (9,827)
---------- ---------- ----------
Income before income taxes,
minority interest and
extraordinary item 499,123 327,187 287,880
Income taxes 199,649 129,726 112,273
Minority interest in income
of consolidated subsidiaries 15,501 21 --
---------- ---------- ----------
Income before extraordinary
item 283,973 197,440 175,607
Extraordinary item - loss on
early retirement of debt,
net of income tax benefit
of $2,833 5,263 -- --
---------- ---------- ----------
Net income $ 278,710 $ 197,440 $ 175,607
========== ========== ==========
Number of common and common
equivalent shares used in
computing earnings per share 187,621 171,496 158,662
========== ========== ==========
(Continued on Following Page)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For The Three Years Ended September 30, 1994
(In Thousands Except for Per Share Amounts)
-------------------------------------------------------------------------
Year Ended September 30,
------------------------------------
1994 1993 1992
-------------------------------------------------------------------------
Earnings per common and common
equivalent share:
Income before extraordinary item $ 1.52 $ 1.15 $ 1.11
Extraordinary item (.03) -- --
------- ------- -------
Net income $ 1.49 $ 1.15 $ 1.11
======= ======= =======
Cash dividends per common share $ .68 $ .68 $ .68
======= ======= =======
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(In Thousands)
- --------------------------------------------------------------------------
September 30,
-----------------------------
1994 1993
- --------------------------------------------------------------------------
CURRENT ASSETS:
Cash $ 79,131 $ 22,871
Short-term investments 61,993 208,674
Receivables -
Trade, net of allowances of $33,284
and $21,870 for doubtful accounts 752,686 556,456
Other 60,934 58,090
Inventories 32,811 26,508
Deferred income taxes 114,925 --
Prepayments and other 83,613 52,899
---------- ----------
Total current assets 1,186,093 925,498
---------- ----------
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation and amortization
of $2,046,604 and $1,742,362 3,049,767 2,515,709
---------- ----------
OTHER ASSETS:
Cost over fair value of net tangible
assets of acquired businesses,
net of accumulated amortization of
$62,527 and $41,234 954,378 310,065
Other intangible assets, net of
accumulated amortization of $156,080
and $158,693 113,059 138,844
Deferred income taxes 97,998 113,615
Investments in unconsolidated affiliates 292,579 222,698
Other 103,081 69,213
---------- ----------
Total other assets 1,561,095 854,435
---------- ----------
Total assets $5,796,955 $4,295,642
========== ==========
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
(In Thousands Except for Share Amounts)
- --------------------------------------------------------------------------
September 30,
-----------------------------
1994 1993
- --------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 49,841 $ 95,953
Accounts payable 400,177 245,555
Accrued liabilities -
Salaries and wages 101,530 75,162
Taxes, other than income 44,129 30,912
Other 373,978 313,687
Income taxes 53,642 27,678
Deferred revenues 155,692 135,509
---------- ----------
Total current liabilities 1,178,989 924,456
---------- ----------
DEFERRED ITEMS:
Accrued environmental and landfill
costs 529,501 631,690
Deferred income taxes 78,678 --
Other 159,478 128,255
---------- ----------
Total deferred items 767,657 759,945
---------- ----------
LONG-TERM DEBT, net of current portion 713,680 333,689
---------- ----------
CONVERTIBLE SUBORDINATED DEBENTURES 744,949 744,949
---------- ----------
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, $.16 2/3 par; 400,000,000
shares authorized; 197,084,755 and
174,231,747 shares issued 32,854 29,044
Additional paid-in capital 1,351,919 743,265
Retained earnings 1,009,132 761,325
Treasury stock, 743,497 and 686,826
shares, at cost (2,225) (1,031)
---------- ----------
Total common stockholders' equity 2,391,680 1,532,603
---------- ----------
Total liabilities and common
stockholders' equity $5,796,955 $4,295,642
========== ==========
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
For The Three Years Ended September 30, 1994
(In Thousands Except for Share Amounts)
- -------------------------------------------------------------------------------
Common Stock,
$.16 2/3 Par Additional
-------------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock
- -------------------------------------------------------------------------------
BALANCE, as of
September 30, 1991 153,537,025 $25,595 $ 341,492 $ 748,125 $ (913)
Stock options -
Exercises 489,348 81 4,769 -- --
Income tax benefit from
exercises -- -- 781 -- --
Common stock issuances
related to -
Public offering, net of
expenses 14,000,000 2,334 280,656 -- --
Dividend Reinvestment Plan 158,425 26 3,334 -- --
BFI Employee Stock Owner-
ship and Savings Plan 605,767 101 12,398 -- --
Acquisitions 526,619 88 10,842 -- --
Net income -- -- -- 175,607 --
Cash dividends -- -- -- (109,389) --
Foreign currency translation
adjustment -- -- -- (37,826) --
Other 243 -- 2,418 -- (113)
----------- ------- ---------- --------- --------
BALANCE, as of
September 30, 1992 169,317,427 28,225 656,690 776,517 (1,026)
Stock options -
Exercises 1,057,434 176 15,907 -- (8)
Income tax benefit from
exercises -- -- 1,677 -- --
Common stock issuances
related to -
Dividend Reinvestment Plan 115,283 19 2,941 -- --
BFI Employee Stock Owner-
ship and Savings Plan 432,753 72 11,041 -- --
Acquisitions 2,294,299 382 28,130 -- 3
Additional investment
in Spanish operations 1,000,000 167 25,333 -- --
Net income -- -- -- 197,440 --
Cash dividends -- -- -- (116,358) --
Foreign currency translation
adjustment -- -- -- (96,274) --
Other 14,551 3 1,546 -- --
----------- ------- ---------- --------- --------
(Continued on Following Page)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
For The Three Years Ended September 30, 1994
(In Thousands Except for Share Amounts)
- -------------------------------------------------------------------------------
Common Stock,
$.16 2/3 Par Additional
--------------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock
- -------------------------------------------------------------------------------
BALANCE, as of
September 30, 1993 174,231,747 29,044 743,265 761,325 (1,031)
Stock options -
Exercises 866,809 145 15,579 -- (1,192)
Income tax benefit from
exercises -- -- 1,949 -- --
Common stock issuances
related to -
Public offering, net of
expenses 15,525,000 2,588 431,307 -- --
Dividend Reinvestment Plan 95,817 16 2,587 -- --
BFI Employee Stock Owner-
ship and Savings Plan 597,108 100 16,628 -- --
Acquisitions 5,707,845 951 139,788 -- --
Net income -- -- -- 278,710 --
Cash dividends -- -- -- (126,818) --
Foreign currency translation
adjustment -- -- -- 95,915 --
Other 60,429 10 816 -- (2)
----------- ------- ---------- ---------- -------
BALANCE, as of
September 30, 1994 197,084,755 $32,854 $1,351,919 $1,009,132 $(2,225)
=========== ======= ========== ========== =======
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Three Years Ended September 30, 1994
(In Thousands)
- ------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $278,710 $197,440 $175,607
-------- -------- --------
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 444,192 366,481 365,122
Reorganization charge -- 27,000 --
Deferred income tax expense (benefit) 23,458 732 (2,455)
Amortization of deferred investment
tax credit (706) (1,023) (2,138)
Provision for losses on accounts
receivable 31,346 18,657 17,944
Gains on sales of fixed assets (5,167) (667) (2,641)
Equity in earnings of unconsolidated
affiliates, net of dividends received (19,442) (16,060) (9,827)
Increase (decrease) in cash from
changes in assets and liabilities
excluding effects of acquisitions:
Trade receivables (112,586) (46,605) (52,442)
Inventories 2,606 508 (411)
Other assets (14,563) 13,316 984
Other liabilities 66,080 54,186 87,264
-------- -------- --------
Total adjustments 415,218 416,525 401,400
-------- -------- --------
Net cash provided by operating activities 693,928 613,965 577,007
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (694,475) (606,240) (531,239)
Payments for businesses acquired (398,734) (83,786) (21,644)
Investments in unconsolidated affiliates (54,342) (52,035) (69,362)
Proceeds from disposition of assets 74,797 24,554 87,980
Purchases of short-term investments -- (30,003) (213,867)
Sales of short-term investments 147,424 173,922 --
Receipts from unconsolidated affiliates 30,431 49,497 43,619
-------- -------- --------
Net cash used in investing activities (894,899) (524,091) (704,513)
-------- -------- --------
(Continued on Following Page)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Three Years Ended September 30, 1994
(In Thousands)
- ------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of common stock 450,876 45,337 291,087
Proceeds from issuances of indebtedness 175,111 51,468 16,848
Repayments of indebtedness (246,761) (76,455) (84,835)
Dividends paid (122,944) (115,519) (106,725)
-------- -------- --------
Net cash provided by (used in)
financing activities 256,282 (95,169) 116,375
-------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES 949 (6,516) 1,945
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 56,260 (11,811) (9,186)
CASH AT BEGINNING OF YEAR 22,871 34,682 43,868
-------- -------- --------
CASH AT END OF YEAR $ 79,131 $ 22,871 $ 34,682
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR:
Interest, net of capitalized amounts $ 97,996 $ 72,960 $ 70,692
Income taxes $174,005 $138,498 $ 68,797
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies -
Principles of consolidation.
The consolidated financial statements include the accounts of Browning-
Ferris Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated. Investments in
which the Company does not exercise control over the affiliated companies
operations are not consolidated and are accounted for under the equity method
or the cost method, as appropriate. Foreign currencies have been translated
into United States dollars at appropriate exchange rates.
Short-term investments.
Short-term investments are carried at cost, which approximates the
aggregate market value. At September 30, 1994 and 1993, short-term
investments included approximately $61.7 million and $89.6 million,
respectively, invested in time deposits. The remainder of these balances
was invested principally in marketable securities comprised of money market
funds, preferred stocks, tax-exempt securities or U.S. government securities.
Inventories.
Inventories consisting principally of equipment parts, materials and
supplies are valued under a method which approximates the lower of cost (first-
in, first-out) or market.
Property and equipment.
Property and equipment are recorded at cost. Capitalized landfill
costs include expenditures for land and related airspace, permitting costs and
preparation costs. Landfill permitting and preparation costs represent only
direct costs related to these activities, including legal, engineering,
construction of landfill improvements, cell development costs and the direct
costs of Company personnel dedicated for these purposes. Interest is
capitalized on landfill permitting and construction projects and other
projects under development while the assets are undergoing activities to
ready them for their intended use. The interest capitalization rate is
based on the Company's weighted average cost of indebtedness. Interest
capitalized during fiscal years 1994, 1993 and 1992 was $11,600,000,
$18,669,000 and $15,812,000, respectively. Management routinely reviews its
investment in operating landfills, transfer stations and other significant
facilities to determine whether the costs of these investments are realizable.
Landfill costs, excluding the estimated residual value of land, are
typically amortized as permitted airspace of the landfill is consumed. Certain
landfill preparation costs related specifically to cell development are
amortized as airspace of the related cell is consumed, generally over not
more than two to five
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
years. Units-of-production amortization rates applicable to each of the
Company's operating landfills are determined annually. The rates are based on
estimates provided by the Company's engineers and accounting personnel, and
consider the information provided by aerial surveys which are generally
performed annually. Depreciation of property and equipment, other than
landfills, is provided on the straight-line method based upon the estimated
useful lives of the assets, generally estimated as follows: buildings, 20 to
40 years and vehicles and equipment, 3 to 12 years.
Expenditures for major renewals and betterments are capitalized and
expenditures for maintenance and repairs are charged to expense as incurred.
During 1994, 1993, and 1992, maintenance and repairs charged to cost of
operations were $247,143,000, $210,673,000, and $201,670,000, respectively.
When property is retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the accounts and any resulting
gain or loss is reflected in income.
Intangible assets.
The cost over fair value of net tangible assets of acquired businesses
("goodwill") is amortized on the straight-line method over periods not
exceeding 40 years. Other intangible assets, substantially all of which
are customer lists and covenants not to compete, are amortized on the
straight-line method over their estimated lives, typically no more than
seven years. Amortization expense for fiscal years 1994, 1993, and 1992
related to goodwill and other intangible assets was $52,553,000, $46,862,000
and $49,532,000, respectively.
Deferred income taxes.
Effective October 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109 - "Accounting for Income Taxes". Under
SFAS No. 109, deferred tax assets and liabilities reflect the impact of
temporary differences between the financial reporting basis and tax basis of
assets and liabilities. Such amounts are recorded using presently enacted
tax rates and regulations. Valuation allowances are recorded to reduce
deferred tax assets when it is more likely than not that a tax benefit will
not be realized. As permitted under SFAS No. 109, prior years' financial
statements have not been restated to apply the provisions of SFAS No. 109.
The adoption of SFAS No. 109 had no material effect on the Company's results
of operations; however, it did affect the classification of deferred tax
assets and liabilities resulting in an increase in working capital of $90.3
million and increases in both total assets and liabilities of $128.4 million
as of October 1, 1993. In prior years, deferred income taxes were determined
under Accounting Principles Board ("APB") Opinion No. 11, which required use
of the deferral method. Under that method, deferred income taxes resulted
from differences in the timing of the recognition of certain revenue and
expense items for income tax and financial reporting purposes. Such amounts
were recorded using
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
the tax rate in effect when the timing difference originated.
Deferred revenues.
Amounts billed to customers prior to providing the related services are
deferred and later reported as revenues in the period in which the services are
rendered.
Deferred items.
Accrued environmental and landfill costs -
Accrued environmental and landfill costs includes the non-current
portion of accruals associated with obligations for closure and post-closure of
the Company's operating and closed landfills, corrective actions and
remediation at certain of these landfill facilities and corrective actions
at Superfund sites. The Company, based on input from its engineers, estimates
its future cost requirements for closure and post-closure monitoring and
maintenance for solid waste operating landfills in the United States based
on its interpretation of the technical standards of the U.S. Environmental
Protection Agency's Subtitle D regulations and the proposed air emissions
standards under the Clean Air Act as they are being applied on a state-by-state
basis. Closure and post-closure monitoring and maintenance costs represent
the costs related to cash expenditures yet to be incurred when a landfill
facility ceases to accept waste and closes. Accruals for closure and
post-closure monitoring and maintenance requirements in the U.S. consider
final capping of the site, site inspections, ground-water monitoring, leachate
management, methane gas control and recovery, and operation and maintenance
costs to be incurred during the period after the facility closes. Certain
of these environmental costs, principally capping and methane gas control
costs, are also incurred during the operating life of the site in accordance
with the landfill operation requirements of Subtitle D and the proposed air
emissions standards. Future cost requirements for closure and post-closure
monitoring and maintenance of foreign operating landfills are determined
based on the country or local landfill regulations governing the facility.
The Company typically provides accruals for these costs as the remaining
permitted airspace of such facilities is consumed. Engineering reviews of
the future cost requirements for closure and post-closure monitoring and
maintenance for the Company's operating landfills are performed at least
annually and are the basis upon which the Company's estimates of these future
costs and the related accrual rates are revised.
An overall program of management of closed solid waste landfills,
principally in North America, previously owned or operated by the Company has
been implemented to provide a systematic and routine standard of care and
maintenance and to ensure environmental compliance at closed facilities which
require varying levels of inspection, maintenance, environmental monitoring and
from time to time corrective action. Additionally, the Company routinely
reviews and evaluates each landfill site requiring
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
corrective action (including Superfund sites) in which the Company's
subsidiaries are involved, considering each subsidiary's role with respect
to each site and the relationship to the involvement of other parties at the
site, the quantity and content of the waste with which the subsidiary was
associated and the number and financial capabilities of the other parties at
the various sites. Based on reviews of the various sites, currently available
information, and management's judgment and significant prior experience
related to similarly situated facilities, expense accruals are provided by
the Company for its share of estimated future costs associated with corrective
actions to be implemented at certain of these sites and existing accruals are
revised as deemed necessary. Expense accruals related to post-closure care
of previously owned or operated solid waste landfills are also reviewed on a
periodic basis and revised as necessary.
Accruals for closure, post-closure and certain other liabilities related
to hazardous waste disposal were provided in fiscal 1990 when the Company
discontinued its hazardous waste operations. The Company reviews the adequacy
of these accruals on a periodic basis to determine whether any revisions in the
accruals provided at that time are required.
Other deferred items -
Deferred items as of September 30, 1994 and 1993 were as follows (in
thousands):
1994 1993
-------- --------
Self-insurance accruals $ 69,453 $ 57,189
Accrued pension costs 42,176 28,868
Unamortized investment tax credits 21,807 22,541
Other 26,042 19,657
-------- --------
$159,478 $128,255
======== ========
The Company amortizes investment tax credits under the deferral method
over the estimated useful lives of the related assets as they are placed in
service. No investment tax credits have been generated since fiscal year
1992. For the year ended September 30, 1992, the total estimated investment
tax credits generated by the Company's resource recovery partnerships, which
qualified for the credit under a special provision of the Tax Reform Act of
1986, were $1,091,000. Included in other accrued liabilities at
September 30, 1994 and 1993 was the current portion of self-insurance
accruals of $64,998,000 and $63,143,000, respectively, and accrued pension
costs of $1,547,000 and $1,076,000, respectively.
Foreign exchange contracts.
The Company enters into foreign exchange contracts as a hedge against
certain of its net investments in foreign subsidiaries and purchase commitments
from time to time. Realized and unrealized
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
gains and losses on these contracts and the amortization of any
premiums or discounts are deferred and included with translation adjustments
in the separate component of common stockholders' equity or reflected as a
deferred asset or liability associated with the anticipated purchase
commitment. When deemed appropriate, the Company enters into foreign
exchange contracts as a hedge against certain advances to foreign
subsidiaries, which are to be repaid in the foreseeable future. Realized
and unrealized gains and losses associated with these contracts are reflected
in income for each period such contracts are outstanding. There were no
significant foreign exchange contracts outstanding at September 30, 1994 and
none were outstanding at the end of fiscal 1993.
Cash flow information.
The Consolidated Statement of Cash Flows provides information about
changes in cash and excludes the effects of non-cash transactions,
principally related to business combinations discussed in Note (3).
Reclassifications.
Certain reclassifications have been made in prior years' financial
statements to conform to the fiscal year 1994 presentation.
(2) Reorganization charge -
A reorganization charge of $27 million (an after-tax charge
of approximately $.10 per share) was included in fiscal year 1993 results of
operations. The charge, which was announced in June 1993, was recorded to
cover the estimated expense of reorganizing the Company's regional structure
in the United States to better plan and coordinate its business operations,
capitalize on new growth opportunities and more efficiently serve its
customers in the Company's major market areas. The reorganization included
the designation of a divisional vice president with responsibility for
each market area, the closing of three regional offices, the opening of one
new regional office and the relocation of one regional office, which reduced
the number of United States regional offices from seven to five. The
reorganization charge included employee severance and relocation costs and
other employee, organizational and transition related costs.
(3) Business combinations -
In February 1994, the Company acquired 50% of the share capital of Otto
Waste Services, a company engaged in the solid waste services business in
Germany, which has been accounted for as a purchase. The Company paid
approximately $400 million, consisting of 3,928,075 shares of the Company's
common stock valued at $117.4 million and the remainder in Deutsche Mark, for
its interest in Otto Waste Services.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
During its current fiscal year, the Company paid approximately $179.5
million (including liabilities assumed and additional amounts payable to former
owners of $31.4 million and 752,049 shares of the Company's common stock valued
at $21.4 million) to acquire 111 solid waste businesses, which were accounted
for as purchases, in addition to the Otto Waste Services transaction discussed
above. The Company also exchanged 1,027,721 shares of its common stock and
assumed liabilities and equity of $7.0 million in connection with four
business combinations which met the criteria to be accounted for as
poolings-of-interests. As the aggregate effect of these four business
combinations was not significant, prior period financial statements were not
restated.
During the prior fiscal year, the Company paid approximately $119.1
million (including liabilities assumed and additional amounts payable to
former owners of $18.9 million and 726,931 shares of the Company's common
stock (including 1,993 shares of treasury stock) valued at $17.7 million)
to acquire 107 solid waste businesses, which were accounted for as
purchases. The Company also exchanged 1,569,361 shares of its common
stock and assumed liabilities and equity of $22.8 million in connection
with three business combinations which met the criteria to be accounted for
as poolings-of-interests. As the aggregate effect of these three business
combinations was not significant, prior period financial statements were not
restated.
The results of all businesses acquired in fiscal years 1994 and 1993 have
been included in the consolidated financial statements from the dates of
acquisition. In allocating purchase price, the assets acquired and liabilities
assumed in connection with Otto Waste Services and many of the Company's other
acquisitions have been initially assigned and recorded based on preliminary
estimates of fair value and may be revised as additional information concerning
the valuation of such assets and liabilities becomes available. As a result,
the financial information included in the Company's consolidated financial
statements and in the pro forma information below is subject to adjustment
as subsequent revisions in estimates of fair value, if any, are necessary.
The Company's consolidated results of operations on an unaudited pro
forma basis, as though the businesses acquired during fiscal year 1994 had
been acquired on October 1, 1992, are as follows (in thousands, except per
share amounts):
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Year Ended
September 30,
--------------------------
1994 1993
(Unaudited) (Unaudited)
----------- -----------
Pro forma revenues $4,596,208 $4,146,053
Pro forma income before
extraordinary item $ 289,936 $ 209,515
Pro forma net income $ 284,673 $ 209,515
Pro forma income per common and
common equivalent share -
Income before extraordinary
item $ 1.52 $ 1.15
Net income $ 1.49 $ 1.15
The pro forma effect of the acquisitions consummated during the prior
fiscal year was not material. These pro forma results are presented for
informational purposes only and do not purport to show the actual results
which would have occurred had the business combinations been consummated on
October 1, 1992, nor should they be viewed as indicative of future results
of operations.
For certain business combinations accounted for as poolings-of-interests,
the Company received additional income tax basis based on the fair market
value of the acquired assets. The tax benefit of this additional basis is
treated as an increase in additional paid-in capital when realized. Taxes
on the recapture of depreciation resulting from such tax basis adjustments
are charged to additional paid-in capital when the taxes are paid.
(4) Property and equipment -
Property and equipment at September 30, 1994 and 1993, was as follows (in
thousands):
1994 1993
---------- ----------
Land and improvements $ 232,732 $ 188,414
Buildings 425,775 328,173
Landfills 1,472,565 1,313,366
Vehicles and equipment 2,847,902 2,331,094
Construction-in-progress 117,397 97,024
---------- ----------
Total property and equipment 5,096,371 4,258,071
Less accumulated depreciation
and amortization 2,046,604 1,742,362
---------- ----------
Property and equipment, net $3,049,767 $2,515,709
========== ==========
Included in property and equipment, net are $173,353,000 and $210,040,000
as of September 30, 1994 and 1993, respectively, related to solid waste
landfill market development projects, including landfill permitting costs,
for which amortization has not
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
yet commenced. The Company reviews the realization of these projects on a
periodic basis.
(5) Investments in unconsolidated affiliates -
The Company uses the equity method of accounting for investments in
unconsolidated affiliates over which it exercises control of 20% - 50%. The
summarized combined balance sheet and income statement information presented in
the table below (and the Company's related investments and earnings) includes
amounts primarily related to the following significant equity investees:
American Ref-Fuel Company of Hempstead, Inc. (New York) (50%),
American Ref-Fuel Company of Essex County, Inc. (New Jersey) (50%), American
Ref-Fuel Company of Southeastern Connecticut, Inc. (50%), American Ref-Fuel
Company of Niagara, L.P. (New York) (50%), Browning-Ferris Industries
Iberica, S.A. (Spain) (50% - for the period December 31, 1990 through
May 10, 1993, at which time the Company issued 1,000,000 shares and paid
approximately $6.8 million to acquire an additional 31% ownership in this
entity, resulting in reconsolidation of the Company's Spanish operations),
Servizi Industriali Group (Italy) (50% - since December 31, 1991), Swire BFI
Waste Services, Ltd. (Hong Kong) (50%), Pfitzenmeier & Rau (Germany) (50% -
since February 3, 1994) and Congress Development Company (Chicago, Illinois)
(50%) (in thousands).
1994 1993
---------- ----------
Combined Balance Sheet Information
as of Fiscal Yearend:
Assets -
Current assets $ 211,382 $ 196,206
Noncurrent assets 1,122,711 1,041,059
---------- ----------
$1,334,093 $1,237,265
========== ==========
Liabilities and Net Worth -
Current liabilities $ 155,048 $ 135,155
Noncurrent liabilities 804,544 774,175
Net worth 374,501 327,935
---------- ----------
$1,334,093 $1,237,265
========== ==========
Company's Investments in and Advances
to Equity Investees (including
subordinated notes receivable
of $71,453 and $56,182,
respectively) $ 268,404 $ 219,712
========== ==========
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1994 1993 1992
-------- -------- --------
Combined Income Statement Informa-
tion for the Fiscal Year Ended:
Revenues $398,753 $330,899 $267,466
Gross profit $162,870 $133,624 $114,811
Net income $ 74,804 $ 25,538 $ 2,862
Company's Equity in Earnings
of Equity Investees (1) $ 37,084 $ 16,060 $ 9,827
- ----------------
(1) Differences between the equity in earnings of equity investees
reported by the Company and the Company's proportionate share of the
combined earnings of the related equity investees have resulted
principally from accounting differences in the recognition of income and
the elimination of intercompany transactions.
During fiscal year 1994, the Company received $17.6 million in dividends
from unconsolidated affiliates. No significant dividends were received in
fiscal years 1993 and 1992.
(6) Accrued environmental and landfill costs -
Accrued environmental and landfill costs at September 30, 1994 and 1993
were as follows (in thousands):
1994 1993
-------- --------
Accrued costs associated with open
landfills (including landfills
under expansion) $328,920 $414,021
Accrued costs associated with closed
landfills and corrective action
costs (including Superfund sites) 197,754 125,162
Accrued costs of closure, post-closure
and certain other liabilities associated
with discontinued operations 161,531 189,947
-------- --------
Total 688,205 729,130
Less current portion (included
in other accrued liabilities) 158,704 97,440
-------- --------
Accrued environmental and
landfill costs $529,501 $631,690
======== ========
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
For a discussion of the Company's significant accounting policies related
to these environmental and landfill costs, see Note (1) - "Summary of
significant accounting policies" - "Deferred items" - "Accrued environmental
and landfill costs".
Open landfills.
The Company operates 93 solid waste landfills in the United States, 14 of
which are operated under contracts with municipalities or others. The Company
also operates 53 landfills outside of the United States. The Company is
responsible for closure and post-closure monitoring and maintenance costs at
most of these landfills which are currently operating or are engaged in
expansion efforts. Estimated aggregate closure and post-closure costs are to
be fully accrued for these landfills at the time that such facilities cease
to accept waste and are closed. Considering existing accruals at the end of
fiscal 1994, approximately $300-$325 million of additional accruals are to
be provided over the remaining lives of these facilities. Estimated
additional environmental costs ranging from $450-$475 million, principally
related to capping and methane gas control activities expected to occur during
the operating lives of these sites, are also to be expensed over the remaining
lives of these landfill facilities. In addition, during fiscal year 1994, in
excess of $85 million of these accruals was transferred to accrued costs
associated with closed landfills and corrective action costs in connection
with the closing of a number of landfills.
Closed landfills and corrective action costs
(including Superfund sites).
These costs relate to closure and post-closure activities or corrective
actions at closed solid waste landfills owned or previously operated by the
Company as well as a number of Superfund sites where subsidiaries of the
Company are participating in potentially responsible party groups or are
otherwise involved.
Discontinued operations.
These costs relate to closure and post-closure activities or corrective
actions at hazardous waste landfills owned or previously operated by the
Company as well as a number of Superfund sites where subsidiaries of the
Company previously disposed of hazardous waste and are participating in
potentially responsible party groups or are otherwise involved.
(7) Long-term debt -
Long-term debt at September 30, 1994 and 1993 was as follows (in
thousands):
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1994 1993
-------- --------
Senior indebtedness:
9 1/4% Debentures $100,000 $100,000
8 1/2% Sinking Fund Debentures,
net of unamortized discount
of $1,499 at yearend 1993 -- 98,501
Dfl. 125 million 6 1/2% Notes -- 68,200
Solid waste revenue bond obligations 114,031 79,977
Other notes payable, primarily
5.0%-14.0% 366,145 82,964
-------- --------
580,176 429,642
Commercial paper and short-term
facilities to be refinanced 183,345 --
-------- --------
Total long-term debt 763,521 429,642
Less current portion 49,841 95,953
-------- --------
Long-term debt, net of current
portion $713,680 $333,689
======== ========
The long-term portion of the debt outstanding at September 30, 1994,
matures as follows: 1996, $325,530,000; 1997, $65,656,000; 1998, $38,074,000;
1999, $23,560,000 and in subsequent years, $260,860,000.
9 1/4% Debentures.
In March 1991, the Company filed a shelf registration statement with the
Securities and Exchange Commission to provide for the future issuance of up to
$300 million of debt securities. The Company may issue these securities from
time to time in one or more series. Maturities, terms, covenants and other
conditions will be determined prior to the offering and sale of any series of
these securities. In May 1991, the Company issued $100 million of 9 1/4%
Debentures which mature on May 1, 2021. The debentures may not be redeemed
prior to maturity and are not subject to any sinking fund.
8 1/2% Sinking Fund Debentures.
In April 1994, the Company called for redemption of its $100 million
8 1/2% Sinking Fund Debentures due 2017 which were originally issued in
January 1987. As a result, the Company recorded an after-tax loss of
$5,263,000, which has been reflected in the Company's consolidated statement
of income as an extraordinary item.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Dfl. 125 million 6 1/2% Notes.
In November 1988, Browning-Ferris Industries Finance B.V., an indirect
wholly-owned subsidiary of the Company, issued Dfl. 125,000,000 of 6 1/2% Notes
at 100 1/2% of their face amount, which were guaranteed by the Company. The
notes, listed on the Amsterdam Stock Exchange, were unsecured obligations on
which interest was payable annually. The notes matured on November 1, 1993 and
were repaid from available funds.
Bank credit agreement.
During September 1992, the Company modified the terms of its two existing
bank credit agreements to provide, among other things, for the merger of the
two agreements into one agreement and extended the maturity of the facility
to August 1996. The agreement provides total committed credit capacity of
$1 billion. The facility can be utilized to borrow U.S. domestic dollars or
Eurodollars on a committed basis. At the option of the Company and the
participating banks, U.S. dollar and Eurodollar loans bear a rate of interest
based on the London Interbank Offered Rate ("LIBOR"), the prime rate, the
federal funds rate or a certificate of deposit rate, plus a margin. The
$1 billion Revolving Credit Agreement with Texas Commerce Bank National
Association as administrative agent and Credit Suisse First Boston Limited
as co-agent for a group of U.S. and international banks, requires a facility
fee of .2% per annum on the total commitment, whether used or unused.
The bank credit agreement is used primarily to support the Company's
commercial paper program which was established in January 1990. The
agreement contains a net worth requirement of $1 billion, which increases
annually after September 30, 1992 by 25% of the consolidated net income of the
preceding year and excludes the effect of any foreign currency translation
adjustments on net worth. The agreement also restricts the incurrence or
assumption of additional debt if the debt to capitalization ratio after
considering such additional debt exceeds .65 to 1. At September 30, 1994 and
1993, the Company had no outstanding borrowings under its bank credit
agreement.
At September 30, 1994, distributions from retained earnings could not
exceed $1.3 billion under the bank credit agreement's net worth maintenance
requirement (the covenant of the Company's debt agreements which is most
restrictive regarding dividends).
Medium-Term Notes, Series A.
In February 1990, the Company supplemented an existing shelf registration
statement to provide for the registration of a program to issue up to $100
million of Medium-Term Notes, Series A. Under this program the Company may
offer notes for sale from time to time in one or more series. The notes may
have maturities ranging from one year to 30 years from the date of issue, as
selected by the purchaser and agreed to by the Company, and will bear interest
at a fixed rate agreed to by the Company at the date of issuance. No notes
have yet been issued under this program.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Universal shelf registration statement.
In January 1994, the Company filed a universal shelf registration
statement with the Securities and Exchange Commission to provide for the
registration of up to $700 million of unsecured debt securities, preferred
stock, common stock or warrants to purchase unsecured debt securities,
preferred stock or common stock. In March 1994, the Company utilized a
portion of these registered securities when it issued 15,525,000 shares
of its common stock in concurrent public offerings in the United States and
outside the United States. The Company used approximately $106 million of
the net proceeds of approximately $434 million to redeem its $100 million
8 1/2% Sinking Fund Debentures, due 2017 during April 1994. The balance
of the proceeds was used to repay indebtedness associated with the February
1994 acquisition of the fifty percent interest in Otto Waste Services and
other working capital requirements. The Company may offer the remaining
securities available under the universal shelf registration statement
from time to time, either jointly or separately, at prices and on terms to be
determined at or prior to the time of sale.
Solid waste revenue bond obligations.
Certain subsidiaries of the Company have entered into agreements under
which they receive proceeds from the sale by government authorities of solid
waste revenue bonds. These subsidiaries are obligated to make payments
sufficient to pay the interest and retire the bonds. The weighted average
interest rate of these issues is approximately 6.1%. These issues mature
at various dates through the year 2027. The solid waste revenue bond
obligations of the subsidiaries are guaranteed by the Company.
Other notes payable.
Other notes payable includes mortgages payable and other secured debt,
unsecured debt and capitalized lease obligations of the Company. Approximately
$288 million of this indebtedness relates to a large number of separate company
debt instruments of Otto Waste Services and its consolidated subsidiaries, in
which the Company acquired a 50% interest in February 1994. A substantial
portion of the Otto Waste Services debt is secured by assets of the related
companies and is payable in Deutsche Mark.
Commercial paper and short-term facilities to be refinanced.
In January 1990, the Company established a commercial paper program,
authorizing the issuance of up to $1 billion in commercial paper through
Goldman, Sachs Money Markets, Inc. and Shearson Lehman (a division of
Shearson Lehman Brothers, Inc.). The Company may use proceeds from
borrowings under this program to refinance existing indebtedness and for
general corporate purposes, including interim financing of business
acquisitions and funding working capital requirements. Borrowings under
the commercial paper program may not exceed the available credit under the
Company's
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
bank credit agreement which provides for aggregate borrowings of up to $1
billion. At September 30, 1994, the Company had commercial paper and other
outstanding borrowings of $183,345,000 classified as long-term debt. At
September 30, 1993, the Company had no borrowings outstanding under the
commercial paper program. It is the Company's intention to refinance the
commercial paper and other outstanding borrowings classified as long-term debt
through the use of its existing committed long-term bank credit agreements or
medium-term note program in the event that alternative long-term refinancing is
not arranged. A summary by country of the commercial paper and other
outstanding borrowings to be refinanced as of September 30, 1994 is as
follows (amounts in thousands):
1994
----------------------------
Amount to be Interest Rate
Refinanced at Yearend
------------ -------------
United States -
Commercial paper $ 43,482 5%
Germany 139,863 8-12%
--------
$183,345
========
It is the Company's practice to maintain bank accounts with certain
banks through which cash collections and disbursements are made in the
ordinary course of business. The cash balances in these operating accounts
may also serve as compensating balances for loans and various services
provided by the banks.
(8) Convertible Subordinated Debentures -
In August 1987, the Company issued to the public $345 million of 6 1/4%
Convertible Subordinated Debentures due 2012. Each $1,000.00 debenture is
convertible by the holder, at any time, into the Company's common stock, at a
conversion price of $41.00 per share. On August 15, 1990, the debentures
became redeemable at the option of the Company, in whole or in part, at an
initial redemption price of 104.375% of the principal amount, which decreases
in equal increments annually through August 15, 1997 and remains at 100.0%
thereafter. The debentures are subject to an annual sinking fund obligation
in an amount equal to 5% of the originally issued principal amount beginning
on August 15, 1997.
In July 1990, the Company issued $400 million of 6 3/4% Convertible
Subordinated Debentures due 2005. The debentures are convertible by a holder
into shares of the Company's common stock at a conversion price of $52.50 per
share. These debentures are subject to redemption, at the option of the
Company, in whole or in part, at any time on and after July 18, 1993 at an
initial redemption price of 103% of the principal amount, which decreases
in equal increments annually through July 18, 1996 and remains at 100%
thereafter.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) Commitments and contingencies -
Legal proceedings.
Since early November 1990, several lawsuits have been filed in the United
States District Court for the Southern District of Texas. These suits, seeking
unquantified damages and attorneys' and other fees, are class actions on behalf
of those persons who purchased the Company's common stock during specified
periods beginning August 9, 1990 through September 3, 1991. The suits
generally allege that the Company violated the Securities Exchange Act of
1934 by allegedly preparing, issuing and disseminating materially false and
misleading information to plaintiffs and the investing public. Two classes
(August 9, 1990 to November 5, 1990 and November 6, 1990 to September 3, 1991)
were certified by the trial courts. The Company is vigorously defending these
matters.
In addition to the above-described litigation, the Company and certain
subsidiaries are involved in various other administrative matters or
litigation, including personal injury and other civil actions, as well as
other claims and disputes that could result in additional litigation or other
adversary proceedings.
While the final resolution of any matter may have an impact on the
Company's consolidated financial results for a particular reporting period,
management believes that the ultimate disposition of these matters will not
have a materially adverse effect upon the consolidated financial position of
the Company.
Environmental proceedings.
California judicial and regulatory authorities suspended the Company's
ability to accept decomposable household waste at certain portions of its
Azusa, California landfill in January 1991. The Company has continued to use
the facility for the disposal of primarily inert waste. Since January 1991,
the Company has sought and received the ability to dispose of certain
additional non-municipal solid waste streams at the facility. The ultimate
realization of the Company's total investment of approximately $100 million
is dependent upon continued disposal of current and future acceptable waste
streams while continuing to pursue all possible alternative uses of the
property to maximize its value.
The Company and certain subsidiaries are involved in various other
environmental matters or proceedings, including original or renewal permit
application proceedings in connection with the establishment, operation,
expansion, closure and post-closure activities of certain landfill disposal
facilities, and proceedings relating to governmental actions resulting from the
involvement of various subsidiaries of the Company with certain waste sites
(including Superfund sites), as well as other matters or claims that could
result in additional environmental proceedings.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
While the final resolution of any matter may have an impact on the
Company's consolidated financial results for a particular reporting period,
management believes that the ultimate disposition of these matters will not
have a materially adverse effect upon the consolidated financial position of
the Company.
Insurance matters.
Under its insurance policies, the Company generally has self-insured
retention limits ranging from $1,000,000 to $5,000,000 and has obtained fully
insured layers of coverage above such self-retention limits. In November 1992,
a wholly-owned insurance subsidiary of the Company received a Certificate of
Authority from the Colorado Division of Insurance to operate as a captive
insurance company. It currently writes insurance to meet financial assurance
obligations related to closure and post-closure of certain landfills of the
Company. At September 30, 1994, no claims had been made relative to this
insurance operation, and no claim reserves had been posted.
In order to meet existing governmental requirements, the Company has been
able to secure an environmental impairment liability insurance policy in
amounts which the Company believes are in compliance with the amounts
required by federal and state law. Under this policy, the Company must
reimburse the carrier for losses incurred by the Company.
Resource recovery projects.
Subsidiaries of the Company and Air Products and Chemicals, Inc. ("Air
Products") each have 50% ownership interests in American Ref-Fuel partnerships
that construct, own and operate facilities which generate and sell electricity
from the incineration of solid waste. The four facilities currently in
commercial operation are located in Hempstead, New York, Essex County in New
Jersey, Preston, Connecticut and Niagara Falls, New York. Financing
arrangements for these projects include parent company support arrangements
under which the Company and Air Products generally have agreed to each
severally fund one-half of partnership cash deficiencies resulting
from the partnership's failure to meet certain obligations during
construction and, to a lesser extent, operation of each of the facilities.
In all cases except Niagara Falls, the Company and Air Products generally are
not obligated to fund cash deficiencies associated with waste deliveries by
the sponsoring municipality below certain minimum levels, changes in law or
termination of incineration service for reasons other than default by the
respective partnership. In the event of a partnership default which results
in termination of incineration service, the Company may limit its financial
obligations as follows:
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Hempstead, New York - Funding of 50% of periodic payments related
to outstanding debt. At September 30, 1994, $227 million of total
unamortized project debt was outstanding, which matures on various dates
between 1994 and 2010. Average annual debt service on 50% of the debt
over the next five years is $13 million.
Essex County in New Jersey - Funding of 50% of cash deficiencies
including debt service until facility has passed its acceptance tests. The
facility has not yet passed certain of its final acceptance tests. At
September 30, 1994, total outstanding debt included unamortized project
debt of $178 million and $10 million of additional partnership debt (of
which $5 million is guaranteed by the Company). Upon final acceptance of
the facility, the Company will be obligated to fund one-half of cash
deficiencies up to $50 to $100 million, depending upon the circumstances.
Average annual debt service on 50% of the debt over the next five years is
$10 million.
Preston, Connecticut - Funding of 50% of periodic payments re-
lated to outstanding debt. At September 30, 1994, total outstanding debt
included $95 million of unamortized project debt and $44 million of
additional partnership debt (of which $22 million is guaranteed by the
Company). Such outstanding indebtedness matures on various dates between
1994 and 2023. Average annual debt service on 50% of the debt over the
next five years is $6 million.
Niagara Falls, New York - Funding of 50% of partnership cash
deficiencies, including debt service. At September 30, 1994, $35 million
of total unamortized project debt was outstanding. Average annual debt
service on 50% of the debt over the next five years is $3 million.
Operating leases.
The Company and its subsidiaries lease substantial portions of their
office and other facilities under various lease agreements. At September 30,
1994, total minimum rental commitments becoming payable under all
noncancellable operating leases are as follows (in thousands):
1995 $ 36,993 1999 $ 24,259
1996 $ 32,882 2000 - 2004 $ 99,988
1997 $ 29,269 2005 - 2009 $102,366
1998 $ 26,111 All years thereafter $ 45,379
Total rental expenses for fiscal years 1994, 1993 and 1992, substantially
all of which related to fixed amount rental agreements, were $58,667,000,
$55,667,000 and $49,178,000, respectively.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other matters.
On September 20, 1994, BFI Acquisition plc ("BFI (UK)"), a subsidiary of
the Company, announced the terms of cash offers to acquire all of the
outstanding ordinary shares (including ordinary shares represented by
American Depositary Shares) of Attwoods plc ("Attwoods") and convertible
preference shares of Attwoods (Finance) N.V., a finance subsidiary of
Attwoods. On November 17, 1994, BFI (UK) announced increased and final
offers ("Final Offers") for Attwoods. The Final Offers, denominated in
pounds sterling, are 116.75 pence per ordinary share (583.75 pence per
American Depositary Share) and 92 pence per preference share (an aggregate
of approximately U.S. $611 million based on exchange rates prevailing
on November 29, 1994). The Final Offers also provide for a recommended final
dividend of 3.25 pence per ordinary share payable to Attwoods shareholders.
Attwoods is a provider of waste management services operating principally
in the United States, the United Kingdom, the Caribbean and mainland
Europe, primarily Germany, and also has mineral extraction operations in the
United Kingdom. The Final Offers are subject to the satisfaction of various
conditions, including acceptance by the holders of not less than 50% of the
ordinary shares and satisfaction of applicable requirements under the
Hart-Scott-Rodino Anti-Trust Improvements Act. The expiration date of the
Final Offers is December 2, 1994.
(10) Preferred stock -
The Company is authorized by its Restated Certificate of Incorporation to
issue 25 million shares of preferred stock, the terms and conditions to be
determined by the Board of Directors in creating any particular series.
(11) Preferred Stock Purchase Rights Plan -
In June 1988, the Board of Directors of the Company adopted a
Preferred Stock Purchase Rights Plan (the "Plan") and in connection
therewith declared a dividend of one Preferred Stock Purchase Right (a "Right")
on each outstanding share of the Company's common stock and on each share
subsequently issued until separate Rights certificates are distributed, or the
Rights expire or are redeemed. When exercisable, each Right will entitle a
holder to purchase one one-hundredth of a share of a new series of the
Company's Preferred Stock at an exercise price of $110.00, subject to
adjustment.
The Plan, as subsequently amended in March 1990, provides that if the
Company is acquired in a business combination transaction on or at any time
after the date on which a person obtains ownership of stock having 10% or
more of the Company's general voting power, provision generally must be made
prior to the consummation of such transaction to entitle each holder of a
Right to purchase at the exercise price a number of the acquiring company's
common shares having a market value at the time of such transactions of two
times the exercise price of the Right. The Plan also provides that upon the
occurrence of certain other specific matters, each holder of a Right will
have the right to receive, upon payment of the exercise
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
price, shares of the new series of Preferred Stock having a market value of two
times the exercise price of a Right. The Company has a right to redeem the
Rights for $.05 per Right (subject to adjustment) prior to the time they
become exercisable. The Rights will expire on June 13, 1998.
(12) Common stock -
Earnings per share.
The following table reconciles the number of common shares shown as
outstanding on the consolidated balance sheet with the number of common and
common equivalent shares used in computing primary earnings per share (in
thousands):
Year Ended September 30,
----------------------------
1994 1993 1992
------- ------- -------
Common shares outstanding 196,341 173,545 168,629
Effect of using weighted average
common and common equivalent
shares outstanding (9,788) (2,962) (10,846)
Effect of shares issuable under
stock option plans based on
the treasury stock method 1,068 913 879
------- ------- -------
Shares used in computing
primary earnings per share 187,621 171,496 158,662
======= ======= =======
The difference between shares for primary and fully diluted earnings
per share was not significant in any year. Conversion of the 6 3/4%
Convertible Subordinated Debentures issued in July 1990, which were
determined not to be common stock equivalents, was not assumed in the
computation of fully diluted earnings per share because the debentures had
an anti-dilutive effect.
Earnings per common and common equivalent share were computed by dividing
net income by the weighted average number of shares of common stock and common
stock equivalents outstanding during each year. Common stock equivalents
include stock options and the Company's 6 1/4% Convertible Subordinated
Debentures issued in August 1987. The effect of the debentures on earnings
per share was anti-dilutive for each of the years presented and, accordingly,
has not been included in the computations.
Stock incentive plans.
The Company presently maintains five stock option plans affording
employees, directors and other persons affiliated with the Company the right
to purchase shares of its common stock. At September 30, 1994, options were
available for future grants only under four plans, the Company's 1987, 1990
and both of its 1993
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
plans. At September 30, 1994, 236,350 of the options outstanding were
incentive stock options and 9,669,518 were non-qualified stock options.
The exercise price, term and other conditions applicable to each
option granted under the Company's plans are generally determined by the
Compensation Committee at the time of the grant of each option and may vary
with each option granted. No option may be granted at a price less than the
stock's fair market value on the date of the grant.
Transactions under all stock option plans are summarized below:
Year Ended September 30,
----------------------------------------
1994 1993 1992
---------- ---------- ----------
Options outstanding at
beginning of year 9,708,547 9,202,726 7,719,664
Options granted 1,697,000 1,865,400 2,127,500
Options terminated (632,870) (302,145) (155,090)
Options exercised (866,809) (1,057,434) (489,348)
---------- ---------- ----------
Options outstanding at
end of year 9,905,868 9,708,547 9,202,726
========== ========== ==========
Options exercisable at
end of year 5,939,033 5,341,527 5,189,576
Options available for future
grants at end of year 6,501,573 380,657 1,944,052
Total option price of
options outstanding at
end of year $249,683,713 $242,054,596 $219,553,936
Option price range:
Options granted $25.44-$31.69 $24.81-$27.75 $17.31-$23.56
Options terminated $17.31-$43.38 $ 9.90-$43.38 $17.31-$43.38
Options exercised $ 7.00-$29.84 $ 7.00-$31.75 $ 4.68-$24.06
Options outstanding
at end of year $ 9.34-$43.38 $ 7.00-$43.38 $ 7.00-$43.38
Under the 1993 Stock Incentive Plans, restricted common stock of the
Company may be granted to officers, other key employees and certain
non-employee directors. Shares granted are subject to certain restrictions
on ownership and transferability. Such restrictions on current restricted
stock grants lapse 2 years from the date of grant for officers and key
employees and three years for non-employee directors. The deferred
compensation expense related to restricted stock grants is amortized to
expense on a straight-line basis over the period of time the restrictions
are in place and the unamortized portion is classified as a reduction of
additional paid-in capital in the Company's consolidated balance sheet.
Additionally, the 1993 stock incentive plans provide for common stock
awards. Restricted stock grants and common stock awards reduce stock options
otherwise available for future grant.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Of the 500,000 shares which may be awarded principally to officers and key
employees as restricted stock grants or stock awards, approximately 15,000
restricted shares were issued during the current year and were outstanding as
of September 30, 1994. No common stock awards were granted as of September
30, 1994.
Dividend Reinvestment Plan.
The Company has a Dividend Reinvestment Plan which provides registered
common stockholders an opportunity to reinvest automatically their dividends in
shares of the Company's common stock. Each participant in the plan may also
make additional cash payments of not less than $25 per remittance and not
more than $60,000 per calendar year to be invested in such common shares
pursuant to the plan. The plan provides that newly issued shares may be
acquired from the Company, purchased on the open market or purchased under a
combination of the two alternatives.
(13) Foreign currency translation -
Increases (decreases) in the equity component for each period's
translation adjustments are as follows (in thousands):
Year Ended September 30,
-----------------------------------
1994 1993 1992
---------- ---------- ---------
Beginning cumulative
translation adjustment $(136,659) $ (40,385) $ (2,559)
--------- --------- --------
Adjustments for the fiscal year:
Foreign currency translation
adjustments 95,915 (96,274) 8,155
Adjustments related to foreign
exchange hedging contracts -- -- (45,981)
--------- --------- --------
Total adjustments 95,915 (96,274) (37,826)
--------- --------- --------
Ending cumulative translation
adjustment $ (40,744) $(136,659) $(40,385)
========= ========= ========
(14) Income taxes -
In the first quarter of fiscal 1994, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes"
effective October 1, 1993. As permitted under SFAS No. 109, prior years
financial statements have not been restated to apply the provisions of SFAS
No. 109. Information shown below for prior years was determined under the
provisions of Accounting Principles Board Opinion No. 11.
The components of (i) earnings before income taxes, minority
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
interest and extraordinary item and (ii) the income tax provision for each of
the three fiscal years ended September 30, are as set forth below (in
thousands).
1994 1993 1992
-------- -------- --------
Domestic $421,620 $305,023 $285,869
Foreign (1) 77,503 22,164 2,011
-------- -------- --------
$499,123 $327,187 $287,880
======== ======== ========
- ----------
(1) Amounts are net of intercompany interest for fiscal years 1994, 1993
and 1992 of $23,838,000, $20,216,000 and $32,106,000, respectively. The
Company maintains a capital structure with respect to its foreign
operations designed to minimize worldwide income and other tax costs.
State
Federal Foreign & Local Total
-------- -------- -------- --------
1994: Current $116,164 $ 42,107 $ 18,626 $176,897
Deferred 34,646 (220) (10,968) 23,458
Amortization
of investment
tax credit (706) -- -- (706)
-------- -------- -------- --------
$150,104 $ 41,887 $ 7,658 $199,649
======== ======== ======== ========
1993: Current $ 90,861 $ 18,790 $ 20,366 $130,017
Deferred 11,859 (3,320) (7,807) 732
Amortization
of investment
tax credit (1,023) -- -- (1,023)
-------- -------- -------- --------
$101,697 $ 15,470 $ 12,559 $129,726
======== ======== ======== ========
1992: Current $ 95,378 $ 10,865 $ 10,623 $116,866
Deferred (2,803) (711) 1,059 (2,455)
Amortization
of investment
tax credit (2,138) -- -- (2,138)
-------- -------- -------- --------
$ 90,437 $ 10,154 $ 11,682 $112,273
======== ======== ======== ========
The following is a reconciliation between the effective income tax rate
and the applicable statutory federal income tax rate for each of the three
fiscal years in the period ended September 30, 1994:
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1994 1993 1992
------- ------- -------
Income tax - statutory rate 35.00% 34.75% 34.00%
Amortization of investment
tax credit (.14) (.31) (.74)
Federal effect of state
income taxes (.54) (1.33) (1.38)
Effect of foreign operations .89 2.51 3.01
All other, net 3.26 .19 .05
------ ------ ------
Federal and foreign 38.47 35.81 34.94
State income taxes 1.53 3.84 4.06
------ ------ ------
Effective income tax rate 40.00% 39.65% 39.00%
====== ====== ======
The tax effects of temporary differences that gave rise to significant
portions of the deferred tax assets and liabilities at September 30, 1994, are
as follows (in thousands):
Deferred Deferred Tax
Tax Assets Liabilities
----------- ------------
Depreciation and amortization $103,971 $403,891
Accrued environmental and
landfill costs 193,373 --
Accruals related to discontinued
operations 79,345 --
Self-insurance accruals 49,814 --
Net operating loss carryforwards 116,660 --
Other 192,819 78,446
-------- --------
Deferred tax assets and
liabilities 735,982 $482,337
========
Valuation allowance 119,400
--------
Deferred tax assets, net of
valuation allowance $616,582
========
The valuation allowance applies principally to a substantial portion of
the net operating loss carryforwards which could expire prior to utilization
by the Company. Foreign net operating loss carryforwards of approximately
$172 million are available to reduce future taxable income of the applicable
foreign entities for periods which generally range from 1995 to 1999.
Domestic state net operating loss carryforwards of approximately $718 million
(the tax benefit of which is calculated at rates ranging generally from 5%-10%)
are available to reduce future taxable income of the applicable entities
taxable in such states for periods which range from 1995 to 2009. The net
change in the total valuation allowance for the year ended September 30, 1994,
was an increase of $8.9 million.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Deferred income taxes have not been provided as of September 30, 1994, on
approximately $320 million of undistributed earnings of foreign affiliates
which are considered to be permanently reinvested.
The components of the deferred income tax expense (benefit) for each of
the two years ended September 30, are as follows (in thousands):
1993 1992
-------- --------
Depreciation expense for
income tax purposes in
excess of amounts for
financial reporting
purposes $ 34,565 $ 24,187
Environmental compliance and
other landfill related
costs recognized for
financial reporting purposes
but deferred for income tax
purposes, net (14,775) (16,664)
Reorganization charge (8,340) --
Other, net (10,718) (9,978)
-------- --------
Deferred income tax expense
(benefit) $ 732 $ (2,455)
======== ========
The Company's consolidated federal income tax returns for fiscal years
1986, 1987 and 1988 have been under audit by the Internal Revenue Service. In
May 1993, the Company received a Revenue Agent's Report proposing that the
Company pay additional taxes of approximately $22 million (plus interest of
approximately $19 million as of September 30, 1994) relating to
disallowed deductions in those income tax returns. The principal issue
involved, which extends as well to the Company's subsequent taxable years,
is the deductibility of amortization relating to customer lists and covenants
not to compete associated with acquisitions consummated by the Company in
fiscal years 1986, 1987 and 1988. Pursuant to a Congressional order, the
IRS developed the Intangible Settlement Initiative and is seeking to settle
outstanding claims with affected companies. In April 1994, the IRS proposed
to settle substantially all of the Company's pending issues related to
intangible assets from acquisitions. In November 1994, the Company reached
an agreement with the IRS under the Intangible Settlement Initiative which
had no material effect on the Company's results of operations or financial
position. As a result of this settlement, all material issues raised in the
May 1993 Revenue Agent's Report were resolved.
(15) Employees' benefit plans -
Employee stock ownership and savings plan.
The Company sponsors an employee stock ownership and savings
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
plan which incorporates deferred savings features permitted under IRS Code
Section 401(k). The plan covers substantially all U.S. employees with one or
more years of service except for certain employees subject to collective
bargaining agreements. Eligible employees may make voluntary contributions to
one or more of five investment funds through payroll deductions which, in turn,
will allow them to defer income for tax purposes. The Company matches these
voluntary contributions at a rate of $.50 per $1.00 on the first 5% of total
earnings contributed by each participating employee. The Company matches the
voluntary contributions through open market purchases or issuances of shares of
the Company's common stock. The Company expenses its contributions to the
employee stock ownership and savings plan which for fiscal years 1994, 1993 and
1992 were $9,430,000, $9,072,000, and $8,160,000, respectively.
Employees' retirement plans.
The Company and its domestic subsidiaries have two defined benefit
retirement plans covering substantially all U.S. employees except for certain
employees subject to collective bargaining agreements. The benefits for these
plans are based on years of service and the employee's compensation. The
Company's general funding policy for these plans is to make annual
contributions to the plans equal to or exceeding the actuary's
recommended contribution.
The Company also has employees in various foreign countries that are
covered by defined benefit pension plans. The benefits for these plans are
based generally on years of service and the employee's compensation. Under the
Company's funding policy, annual contributions are made in order to fund the
plans over the participants' total expected periods of service in conformity
with the requirements of local law or custom.
The components of net periodic pension cost for fiscal years 1994, 1993
and 1992 for the defined benefit plans were as follows (in thousands):
1994 1993 1992
------- ------- -------
U.S. Plans:
Service cost (benefits earned
during the period) $11,260 $11,257 $11,866
Interest cost on projected
benefit obligation 10,329 10,515 9,952
Investment gain on plan
assets (11,728) (29,121) (9,934)
Net amortization and deferral (1,534) 18,102 (84)
------- ------- -------
Net periodic pension cost $ 8,327 $10,753 $11,800
======= ======= =======
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1994 1993 1992
------- ------- -------
Non-U.S. Plans:
Service cost (benefits earned
during the period) $ 1,118 $ 994 $ 1,223
Interest cost on projected
benefit obligation 1,004 1,054 1,032
Investment loss (gain) on plan
assets (62) (2,788) 1,064
Net amortization and deferral (1,766) 767 (2,918)
------- ------- -------
Net periodic pension cost $ 294 $ 27 $ 401
======= ======= =======
The following table sets forth the funded status and amounts recognized in
the Company's consolidated balance sheet as of September 30, 1994 and 1993, and
the significant assumptions used in accounting for the defined benefit plans
(in thousands):
1994 1993
-------------------- -------------------
U.S. Non-U.S. U.S. Non-U.S.
--------- -------- --------- --------
Actuarial present value
of accumulated benefit
obligations, including
vested benefits of
$114,878, $5,158,
$96,418, and $5,615,
respectively $(115,780) $ (5,746) $(111,195) $ (6,130)
========= ======== ========= ========
Actuarial present value
of projected benefit
obligation $(132,275) $(14,295) $(150,364) $(14,880)
Plan assets at fair value,
primarily commercial
paper, common stocks
(including 22,000 shares
of the Company's common
stock for U.S. plans at
both dates) and mutual
funds 150,175 20,800 142,491 18,837
--------- -------- --------- --------
Projected benefit obligation
(in excess of) less than
plan assets 17,900 6,505 (7,873) 3,957
Unrecognized net gain (29,147) (1,403) (11,868) (1,570)
Unrecognized prior service
cost (16,562) -- 453 --
Unrecognized net (asset)
obligation at transition (1,873) 1,526 (2,066) 2,050
--------- -------- --------- --------
Prepaid (accrued) pension
costs $ (29,682) $ 6,628 $ (21,354) $ 4,437
========= ======== ========= ========
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1994 1993
-------------------- -------------------
U.S. Non-U.S. U.S. Non-U.S.
--------- -------- --------- --------
Discount rate 8.25% 6.5-9.5% 7.0% 6.5-8.0%
Rate of increase in
compensation levels 4.5% 3.5-7.5% 4.5% 3.5-6.5%
Expected long-term rate of
return on assets 9.5% 7.0-10.5% 9.5% 7.0-9.5%
Termination indemnity plan.
The employees of the Company's Italian operations are covered by a
termination indemnity plan. Benefits under the plan, which are based on
periods of service and the employee's compensation, are payable in a
lump sum upon (1) retirement, (2) termination, (3) death after 10 years
of credited service or (4) disability after 10 years of credited service.
Expense for fiscal years 1994, 1993 and 1992 related to this unfunded plan
was $1,202,677, $1,224,040 and $1,509,070, respectively.
Other postretirement benefits.
The Company currently maintains an unfunded postretirement benefit
plan which provides for employees participating in its medical plan to
receive a monthly benefit after retirement based on years of service.
Effective October 1, 1993, the Company adopted SFAS No. 106 - "Employers'
Accounting for Postretirement Benefits Other Than Pensions", which requires
the accrual of such benefits over the active service period of the employee.
Prior to October 1, 1993, such benefits were expensed when paid. As
permitted under SFAS No. 106, the Company has chosen to recognize the
transition obligation (the actuarially-determined accumulated postretirement
benefit obligation of approximately $11.9 million at September 30, 1994) over
a 20-year period. Current year expense associated with the adoption of this
standard was not material to the Company's results of operations.
Postemployment benefits.
The Company maintains no plans which provide significant benefits to
former or inactive employees after employment but before retirement.
(16) Operations by industry segment and geographic area -
The Company's revenues and income are derived principally from one
industry segment, which includes the collection, processing/recovery and
disposal of solid wastes. This segment renders services to a variety of
commercial, industrial, governmental and residential customers. Substantially
all revenues represent income from unaffiliated customers.
The table below reflects certain geographic information relat-
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
ing to the Company's operations. For purposes of this table, general
corporate expenses have been included in the computation of income from
operations and are classified under "United States and Puerto Rico" (in
thousands).
United States
and
Puerto Rico Foreign Consolidated
------------ ---------- ------------
Revenues 1994 $3,293,297 $1,021,244 $4,314,541
1993 2,881,150 597,680 3,478,830
1992 2,706,507 571,128 3,277,635
Income from
operations 1994 426,499 117,411 543,910
1993 316,313(1) 51,075(2) 367,388
1992 294,291 45,978(2) 340,269
Depreciation and
amortization 1994 349,189 95,003 444,192
1993 304,968 61,513 366,481
1992 307,191 57,931 365,122
Identifiable assets 1994 3,626,134 2,170,821(2) 5,796,955
1993 3,370,508 925,134(3) 4,295,642
1992 3,248,110 819,414(3) 4,067,524
- -----------------
(1) Income from operations for the United States and Puerto
Rico operations has been reduced by a reorganization charge incurred
in the third quarter of fiscal 1993 of $27.0 million. See Note
(2).
(2) In excess of $1.0 billion of the increase in identifiable
assets since fiscal yearend 1993 is attributable to consolidated
assets of Otto Waste Services. The Company acquired a 50% interest
in Otto Waste Services in February 1994.
(3) Included in foreign income from operations is approximately
$8.0 million, $13.9 million and $13.8 million of operating losses
from Italian operations for fiscal 1994, 1993 and 1992,
respectively; the Company's investment in Italian operations at
September 30, 1994 and 1993 was approximately $154 million and $149
million, respectively.
(17) Fair value of financial instruments -
The following disclosures of the fair value of financial instruments are
presented in accordance with the requirements of SFAS No. 107, "Disclosures
About Fair Value of Financial Instruments". The estimated fair value amounts
have been determined by the
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Company using available market data and valuation methodologies. Considerable
judgment is required in developing the methodologies used to determine the
estimates of fair value and in interpreting available market data and,
accordingly, the estimates presented herein are not necessarily indicative of
the values of such financial instruments in a current market exchange.
Additionally, under certain financing agreements, the Company is prohibited
from redeeming certain of the long-term debt before its maturity.
As of September 30,
---------------------------------------
1994 1993
------------------ ------------------
Book Fair Book Fair
Value Value Value Value
-------- -------- -------- --------
Debt - (In Thousands)
9 1/4% Debentures $100,000 $101,000 $100,000 $125,500
8 1/2% Sinking Fund
Debentures -- -- 98,501 113,125
Dfl. 125 million
6 1/2% Notes -- -- 68,200 68,200
Solid waste revenue
bond obligations 114,031 110,639 79,977 86,986
Other notes payable 366,145 380,330 82,964 93,887
Commercial paper and
short-term facilities
to be refinanced 183,345 189,373 -- --
Convertible
subordinated
debentures 744,949 714,101 744,949 750,174
The book values of cash, short-term investments, trade accounts
receivables, trade accounts payable and financial instruments included in other
receivables, other assets and accrued liabilities approximate their fair values
principally because of the short-term maturities of these instruments.
The estimated fair value of long-term debt and convertible subordinated
debentures is based on quoted market prices where available or on present value
calculations which are calculated using current rates for similar debt with the
same remaining maturities.
In the normal course of business, the Company has letters of credit,
performance bonds and other guarantees which are not reflected in the
accompanying consolidated balance sheets. In the past, no significant claims
have been made against these financial instruments. Management believes that
the likelihood of performance under these financial instruments is minimal
and expects no material losses to occur in connection with these financial
instruments.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(18) Related party transactions -
One of the Company's directors is affiliated with Otto Holding
International B.V. ("OHI") which owns the other 50% interest of Otto
Waste Services. The Company, primarily through its 50% ownership of
Otto Waste Services, is engaged in various transactions through the ordinary
course of business with OHI, its subsidiaries and unconsolidated affiliates
("OHI Group"). The OHI Group leased containers and equipment under operating
leases and provided certain administrative services to Otto Waste Services
during the current fiscal year. Charges for these services were approximately
$3.5 million for the period since Otto Waste Services was acquired in
February 1994. The Company, including Otto Waste Services, also purchased
or entered into capital leases for approximately $25.4 million of containers
from the OHI Group during fiscal year 1994. Included in the balance sheet
at September 30, 1994, are the following amounts relating to transactions
with the OHI Group (in thousands):
Accounts receivable - other $ 5,227,000
Accounts payable 3,388,000
Capital lease obligations 31,515,000
Notes payable, interest
payable at 8% 11,569,000
(19) Quarterly financial information (Unaudited) -
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- ---------- -----------
(In thousands except for per share amounts)
Revenues 1994 $928,292 $984,154 $1,160,632 $1,241,463
1993 $845,131 $822,813 $ 887,500 $ 923,386
Gross profit 1994 $252,002 $270,177 $ 318,510 $ 350,477
1993 $235,002 $230,155 $ 242,282 $ 246,368
Income from 1994 $107,627 $119,087 $ 154,545 $ 162,651
operations 1993 $ 97,279 $ 93,374 $ 77,996(1) $ 98,739
Income taxes 1994 $ 39,327 $ 42,905 $ 57,648 $ 59,769
1993 $ 33,429 $ 32,502 $ 26,365 $ 37,430
Income before
extraordinary
item 1994 $ 58,991 $ 61,918 $ 80,813 $ 82,251
1993 $ 52,287 $ 50,836 $ 41,238 $ 53,079
Net income 1994 $ 58,991 $ 56,655(2) $ 80,813 $ 82,251
1993 $ 52,287 $ 50,836 $ 41,238 $ 53,079
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- ---------- -----------
(In thousands except for per share amounts)
Earnings per
share:
Income before
extraordinary
item 1994 $ .34 $ .34 $ .41 $ .42
1993 $ .31 $ .30 $ .24 $ .31
Net income 1994 $ .34 $ .31 $ .41 $ .42
1993 $ .31 $ .30 $ .24 $ .31
- -------------
(1) In the third quarter of fiscal year 1993, a reorganization
charge of $27.0 million was taken by the Company to cover the
estimated expense of reorganizing the Company's regional
structure in the United States. See Note (2).
(2) In the second quarter of fiscal year 1994, the Company
recorded an after-tax loss of $5.3 million associated with the early
retirement of indebtedness, which was reflected in the Company's
consolidated statement of income as an extraordinary item. See Note
(7).
(This page intentionally left blank.)
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
Financial Statements
Browning-Ferris Industries, Inc. and Subsidiaries:
Report of independent public accountants.
Consolidated statement of income for the three years ended
September 30, 1994.
Consolidated balance sheet--September 30, 1994 and 1993.
Consolidated statement of common stockholders' equity for the
three years ended September 30, 1994.
Consolidated statement of cash flows for the three years ended
September 30, 1994.
Notes to consolidated financial statements.
Schedules
II Amounts receivable from directors, officers and employees
for the three years ended September 30, 1994.
V Property and equipment for the three years ended
September 30, 1994.
VI Accumulated depreciation and amortization of property and
equipment for the three years ended September 30, 1994.
VIII Allowance for doubtful accounts for the three years ended
September 30, 1994.
Schedules, other than those listed above, are omitted because of the
absence of conditions under which they are required, or because the
information is included in the financial statements or notes thereto.
Exhibits
3(a) Restated Certificate of Incorporation of BFI, dated
October 7, 1991. (Exhibit 3(a) of Form 10-K for the
fiscal year ended September 30, 1993, is hereby
incorporated by reference.)
3(b) By-laws of BFI, as amended through March 3, 1993.
(Exhibit 3(b) of Form 10-K for the fiscal year ended
September 30, 1993, is hereby incorporated by
reference.)
4.1 Rights Agreement, dated June 1, 1988, between BFI and
Texas Commerce Bank National Association. (Exhibit 3.3
of Form 10-K for the fiscal year ended September 30,
1988, is hereby incorporated by reference.)
4.2 First Amendment, dated March 1, 1989, to Rights Agree-
ment, dated as of June 1, 1988, between BFI and Texas
Commerce Bank National Association. (Exhibit 10.1 of
Form 10-Q for the quarter ended June 30, 1989, is
hereby incorporated by reference.)
4.3 Second Amendment, dated March 7, 1990, to Rights Agree-
ment, dated as of June 1, 1988, between the Registrant
and First Chicago Trust Company of New York as
successor Rights Agent. (Exhibit 4.1 of Form 10-Q for
the quarter ended March 31, 1990, is hereby
incorporated by reference.)
4.4 Amended and Restated Revolving Credit Agreement, dated
as of September 10, 1992, among BFI and Texas Commerce
Bank National Association, as Administrative Agent, and
the other banks named therein. (Exhibit 4.4 of Form
10-K for the fiscal year ended September 30, 1992, is
hereby incorporated by reference.)
4.5 Restated Indenture, dated as of September 1, 1991,
between First City, Texas-Houston, National
Association, Trustee, and BFI. (Exhibit 4.8 of Form
10-K for the fiscal year ended September 30, 1991, is
hereby incorporated by reference.)
4.6 Indenture, dated as of August 1, 1987, between First
RepublicBank Houston, National Association, Trustee,
and BFI. (Exhibit 4.1 to Registration Statement on
Form S-3 No. 33-16537 is hereby incorporated by
reference.)
4.7 First Supplemental Indenture, dated as of January 11,
1994, between Nations Bank of Texas, National
Association, Trustee, and BFI. (Exhibit 4(f) to
Registration Statement on Form S-3 No. 33-58790 is
hereby incorporated by reference.)
4.8 Indenture, dated as of July 16, 1990, between BFI and
Morgan Guaranty Trust Company of New York, as Trustee.
(Exhibit 4.1 of Form 10-Q for the quarter ended June
30, 1990, is hereby incorporated by reference.)
4.9 First Supplemental Indenture, dated as of December 26,
1990, to Indenture, dated as of July 16, 1990, between
BFI and Morgan Guaranty Trust Company of New York, as
Trustee. (Exhibit 4.1 of Form 10-Q for the quarter
ended December 31, 1990, is hereby incorporated by
reference.)
*4.10 Agreement dated September 20, 1994, between BFI
Acquisition plc and Laidlaw Inc. and each of the
subsidiaries of Laidlaw Inc. listed on Schedule I
thereto.
*4.11 Agreement dated September 20, 1994, between BFI and
Laidlaw Inc.
*4.12 Agreement dated September 20, 1994, among BFI
Acquisitions plc, Laidlaw Inc. and Laidlaw
International Investments B.V.
4.13 Commitment Letter dated September 19, 1994, between
Credit Suisse and BFI.
10.1 Employment Agreement, dated July 10, 1989, between BFI
and William D. Ruckelshaus. (Exhibit 10.3 of Form 10-K
for the fiscal year ended September 30, 1989, is hereby
incorporated by reference.)
10.2 First Amendment, dated September 1, 1993, to the
Employment Agreement, dated as of July 10, 1989,
between BFI and William D. Ruckelshaus. (Exhibit 10 of
Form 10-Q for the quarter ended December 31, 1993, is
hereby incorporated by reference.)
*10.3 Second Amendment, dated September 7, 1994, to the
Employment Agreement, dated as of July 10, 1989,
between BFI and William D. Ruckelshaus.
10.4 Deferral Agreement, dated December 28, 1988, between
BFI and William D. Ruckelshaus. (Exhibit 10.2 of the
Form 10-Q for the quarter ended December 31, 1988, is
hereby incorporated by reference.)
10.5 Employment Agreement, dated July 10, 1989, between BFI
and Harry J. Phillips, Sr. (Exhibit 10.5 of Form 10-K
for the fiscal year ended September 30, 1989, is hereby
incorporated by reference.)
10.6 First Amendment, dated January 21, 1992, to the
Employment Agreement, dated as of July 10, 1989, between
BFI and Harry J. Phillips, Sr. (Exhibit 10.6 to
Registration Statement on Form S-4 No. 33-52240 is
hereby incorporated by reference.)
10.7 Second Amendment, dated December 7, 1993, to the
Employment Agreement, dated as of July 10, 1989, between
BFI and Harry J. Phillips, Sr. (Exhibit 10 of the Form
10-Q for the quarter ended December 31, 1993, is hereby
incorporated by reference.)
10.8 Form of Employment Agreement between BFI and each of
Norman A. Myers, Bruce E. Ranck and certain other
officers and former officers (Exhibit 10.6 of Form 10-K
for the fiscal year ended September 30, 1989, is hereby
incorporated by reference.)
10.9 Employment Agreement, dated as of November 1, 1991 be-
tween BFI and Louis A. Waters. (Exhibit 10.7 of Form
10-K for the fiscal year ended September 30, 1991, is
hereby incorporated by reference.)
10.10 First Amendment, dated December 7, 1993, to the
Employment Agreement, dated as of November 1, 1991,
between BFI and Louis A. Waters. (Exhibit 10 of the
Form 10-Q for the quarter ended December 31, 1993, is
hereby incorporated by reference.)
10.11 Executive Officer Form of Employment Agreement between
BFI and certain executive officers, beginning in January
1993. (Exhibit 10.9 of Post-Effective Amendment No. 1
to Registration Statement on Form S-4 No. 33-52240 is
hereby incorporated by reference.)
10.12 Trust Agreement, dated September 7, 1988, between BFI
and Texas Commerce Bank, National Association with Louis
A. Waters as Beneficiary. (Exhibit 10.9 of Form 10-K
for the fiscal year ended September 30, 1988, is hereby
incorporated by reference.)
10.13 Browning-Ferris Industries, Inc. 1993 Stock Incentive
Plan. (Exhibit 4(d) to Registration Statement on Form S-
8 No. 33-53393 is hereby incorporated by reference.)
10.14 Browning-Ferris Industries, Inc. 1993 Non-Employee
Director Stock Plan (Exhibit 4(e) to Registration
Statement on Form S-8 No. 33-53393 is hereby
incorporated by reference.)
10.15 Browning-Ferris Industries, Inc. 1990 Stock Option Plan.
(Exhibit 10.9 of Form 10-K for the fiscal year ended
September 30, 1991, is hereby incorporated by
reference.)
10.16 Browning-Ferris Industries, Inc. 1987 Stock Option Plan.
(Exhibit 10.11 of Form 10-K for the fiscal year ended
September 30, 1988, is hereby incorporated by refer-
ence.)
10.17 Browning-Ferris Industries, Inc. 1983 Stock Option Plan,
as amended on December 2, 1986. (Exhibit 10.7 of Form
10-K for the fiscal year ended September 30, 1986, is
hereby incorporated by reference.)
*10.18 Browning-Ferris Industries, Inc.'s Cash Balance and
Retirement Plan, as amended and restated pursuant to an
indenture dated September 15, 1994.
10.19 BFI Employee Stock Ownership and Savings Plan, as amend-
ed through December 1, 1986. (Exhibit 10.10 of Form 10-
K for the fiscal year ended September 30, 1986, is
hereby incorporated by reference.)
10.20 Fifth Amendment dated June 8, 1988, to the BFI Employee
Stock Ownership and Savings Plan. (Exhibit 10.16 of
Form 10-K for the fiscal year ended September 30, 1988,
is hereby incorporated by reference.)
10.21 Sixth Amendment, dated December 23, 1988, to the BFI
Employee Stock Ownership and Savings Plan. (Exhibit
10.4 of the Form 10-Q for the quarter ended December 31,
1988, is hereby incorporated by reference.)
10.22 Seventh, Eighth and Ninth Amendments, dated as of May
31, 1989, June 7, 1989 and October 31, 1991,
respectively, to the BFI Employee Stock Ownership and
Savings Plan. (Exhibit 10.20 of Form 10-K for the
fiscal year ended September 30, 1991, is hereby
incorporated by reference.)
10.23 Tenth Amendment, dated September 7, 1993, to the BFI
Employee Stock Ownership and Savings Plan. (Exhibit
10.22 of Form 10-K for the fiscal year ended September
30, 1993, is hereby incorporated by reference.)
10.24 Amended and Restated Partnership Agreement, dated as of
January 25, 1991, between Air Products Ref-Fuel, Inc.
and BFI Ref-Fuel, Inc. (Exhibit 10.23 of Form 10-K for
the fiscal year ended September 30, 1993, is hereby
incorporated by reference.)
*10.25 BFI Management Incentive Compensation Plan.
10.26 Purchase and Transfer Agreement between Otto Holding
International B.V., the Registrant and BFI Atlantic
GmbH, dated September 27, 1993. (Exhibit 10.25 of Form
10-K for the fiscal year ended September 30, 1993, is
hereby incorporated by reference.)
*10.27 BFI Deferred Compensation Agreement.
*10.28 BFI Convertible Annual Incentive Award Plan.
*12 Computation of Ratio of Earnings to Fixed Charges of
Browning-Ferris Industries, Inc. and Subsidiaries.
*21 Subsidiaries of the Registrant.
*23.1 Consent of Arthur Andersen LLP.
*27 Financial Data Schedule.
________________
*Filed herewith.
Reports on Form 8-K
During the quarter ended September 30, 1994, the Company did not file a
Current Report on Form 8-K.
_________________
NOTE: Upon the request of a holder of the Company's securities directed to
Browning-Ferris Industries, Inc., P.O. Box 3151, Houston, Texas 77253, Attn:
Secretary, the Company will furnish a copy of any exhibit for ten cents per
page to cover the cost of copying and mailing.
_________________
SCHEDULE II
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS AND EMPLOYEES
For the Three Years Ended September 30, 1994
(Table Amounts In Thousands)
- -----------------------------------------------------------------------------
Balance
Balance Deductions End of Year
Beginning Amounts Amounts -----------------
Interest of Coll- Written Not
Rate Year Additions ected Off Current Current
- -----------------------------------------------------------------------------
1994 -
W. Bestreich -- $ 256 $ -- $ 66 $ -- $ 190 (1) $ --
B. Blaisdell 12% 49 -- 49 -- -- (2) --
R. Daniels -- 115 -- -- 115 -- (3) --
D. Neukam -- 227 -- 37 -- 41 (4) 149
R. Pfeifer -- 179 -- 54 -- 60 (5) 65
M. Saleski -- 227 -- 37 -- 41 (4) 149
D. Sutherland-
Yoest 6% 276 (10) 138 128 -- (6) --
------ ------ ----- ----- ----- ----
$1,329 $ (10) $ 381 $ 243 $ 332 $363
====== ====== ===== ===== ===== ====
1993 -
L. Appleton 8% $ 84 $ -- $ 84 $ -- $ -- (7) $ --
W. Bestreich -- -- 256 -- -- 66 (1) 190
B. Blaisdell 12% 49 -- -- -- 49 (2) --
R. Daniels -- -- 115 -- -- 41 (3) 74
D. Neukam -- -- 227 -- -- 37 (4) 190
R. Pfeifer -- -- 179 -- -- 54 (5) 125
M. Saleski -- -- 227 -- -- 37 (4) 190
D. Sutherland-
Yoest 6% 295 (19) -- -- 276 (6) --
------ ------ ----- ----- ----- ----
$ 428 $ 985 $ 84 $ -- $ 560 $769
====== ====== ===== ===== ===== ====
1992 -
L. Appleton 8% $ 105 $ (9) $ 12 $ -- $ 84 (7) $ --
R. Berres 12% 100 -- 100 -- -- (8) --
B. Blaisdell 12% 115 -- 66 -- -- (2) 49
G. Lawrence 12% -- 165 165 -- -- (8) --
D. Sutherland-
Yoest 6% 354 (33) 26 -- 295 (6) --
------ ------ ----- ----- ------ ----
$ 674 $ 123 $ 369 $ -- $ 379 $ 49
====== ====== ===== ===== ====== ====
------------------
(1) Contingent on future performance of the individual, a $300,000 non-
interest bearing note related to employee relocation is due in annual
installments of $60,000, half of the amount to be deducted from the
employee's annual incentive award and half to be forgiven by the Company.
For reporting purposes, interest is imputed on these notes at 10%. These
notes are secured by a lien on the employee's residence. The remaining
principal balance was collected in October 1994.
(Continued on Following Page)
SCHEDULE II
(Continued)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS AND EMPLOYEES
For the Three Years Ended September 30, 1994
(2) This note was secured by a lien on the employee's residence. The
remaining principal balance was collected in October 1993.
(3) This note, held by a majority owned subsidiary formed to pursue a
market development project, was secured by a lien on the employee's
residence or other property. During fiscal year 1994, this note and
other amounts associated with this subsidiary were removed from the
Company's books when the Company withdrew from the project.
(4) Contingent on satisfactory future performance of the respective
individual, the non-interest bearing notes related to employees'
relocation are due in annual installments of $60,000, half of the amount
to be deducted from the employee's annual incentive award and half to be
forgiven by the Company. For reporting purposes, interest is imputed on
these notes at 10%. Each note is secured by a lien on the employee's
residence.
(5) Contingent on satisfactory future performance of the respective
individual, the non-interest bearing note related to employee relocation is
due in annual installments of $72,091, half of the amount to be deducted from
the employee's annual incentive award and half to be forgiven by the Company.
For reporting purposes, interest is imputed on this note at 10%. The note is
secured by a lien on the employee's residence.
(6) A settlement agreement and mutual release between Mr. Sutherland-Yoest
and the Company was entered into in January 1994. A payment was received
in April 1994 and the remaining balance was written-off at that time. The
foreign exchange gain/(loss) on this note, which is denominated in Canadian
dollars, has been reflected in current period additions.
(7) This note initially in the amount of 200,000 Canadian dollars, was
replaced by a note in the amount of 150,000 Canadian dollars after receipt
of the first annual installment of 50,000 Canadian dollars. The foreign
exchange gain/(loss) has been reflected in 1992 additions. The remaining
principal balance was collected in October 1992.
(8) These notes were secured by liens on employees' residences or other
property.
SCHEDULE V
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
For the Three Years Ended September 30, 1994
(In Thousands)
----------------------------------------------------------------------------
Effect
Additions Sales, of
of Pooled Retire- Foreign
Balance Addi- Companies ments Currency Balance
Beginning tions Not or Trans- End of
of Year at Cost Restated Transfers lation Year
----------------------------------------------------------------------------
1994 -
Land and im-
provements $ 188,414 $ 41,733 $ 971 $ (1,119) $ 2,733 $ 232,732
Buildings 328,173 93,471 274 (2,960) 6,817 425,775
Landfills 1,313,366 192,902 -- (37,945) 4,242 1,472,565
Vehicles and
equipment 2,331,094 623,370 12,688 (152,065) 32,815 2,847,902
Construction
-in-progress 97,024 18,314(1) -- -- 2,059 117,397
---------- -------- ------- --------- -------- ----------
$4,258,071 $969,790 $13,933 $(194,089) $ 48,666 $5,096,371
========== ======== ======= ========= ======== ==========
1993 -
Land and im-
provements $ 169,948 $ 25,477 $ 1,673 $ (5,153) $ (3,531) $ 188,414
Buildings 298,616 35,169 4,744 (3,750) (6,606) 328,173
Landfills 1,167,915 239,025 -- (71,111) (22,463) 1,313,366
Vehicles and
equipment 2,071,946 328,643 24,718 (51,182) (43,031) 2,331,094
Construction
-in-progress 89,976 5,825(1) -- 1,696 (473) 97,024
---------- -------- ------- --------- -------- ----------
$3,798,401 $634,139 $31,135 $(129,500) $(76,104) $4,258,071
========== ======== ======= ========= ======== ==========
(Continued on Following Page)
SCHEDULE V
(Continued)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
For the Three Years Ended September 30, 1994
(In Thousands)
-----------------------------------------------------------------------------
Effect
Additions Sales, of
of Pooled Retire- Foreign
Balance Addi- Companies ments Currency Balance
Beginning tions Not or Trans- End of
of Year at Cost Restated Transfers lation Year
-----------------------------------------------------------------------------
1992 -
Land and im-
provements $ 149,497 $ 27,495 $ -- $ (8,072) $ 1,028 $ 169,948
Buildings 338,149 45,073 -- (88,255) 3,649 298,616
Landfills 987,791 182,761 -- (2,806) 169 1,167,915
Vehicles and
equipment 1,862,791 266,448 -- (62,406) 5,113 2,071,946
Construction
-in-progress 97,453 (7,634)(1) -- (27) 184 89,976
---------- -------- ------ --------- ------- ----------
$3,435,681 $514,143 $ -- $(161,566) $10,143 $3,798,401
========== ======== ====== ========= ======= ==========
- ---------------------
(1) Represents net change during the period.
SCHEDULE VI
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
For the Three Years Ended September 30, 1994
(In Thousands)
- ------------------------------------------------------------------------------
Effect
Additions Sales, of
Additions of Pooled Retire- Foreign
Balance Charged Companies ments Currency Balance
Beginning to Not or Trans- End of
of Year Income Restated Transfers lation Year
- ------------------------------------------------------------------------------
1994 -
Land and im-
provements $ 17,934 $ 4,390 $ -- $ (355) $ 64 $ 22,033
Buildings 80,989 17,668 175 (1,447) 467 97,852
Landfills 360,247 118,101 189 (21,303) 832 458,066
Vehicles and
equipment 1,283,192 256,269 9,381 (87,685) 7,496 1,468,653
----------- -------- ------- --------- -------- ----------
$1,742,362 $396,428 $ 9,745 $(110,790) $ 8,859 $2,046,604
========== ======== ======= ========= ======== ==========
1993-
Land and im-
provements $ 15,263 $ 3,309 $ -- $ (527) $ (111) $ 17,934
Buildings 68,517 14,948 1,459 (2,807) (1,128) 80,989
Landfills 314,809 87,129 -- (37,900) (3,791) 360,247
Vehicles and
equipment 1,136,159 212,628 13,429 (62,696) (16,328) 1,283,192
---------- -------- ------- --------- -------- ----------
$1,534,748 $318,014 $14,888 $(103,930) $(21,358) $1,742,362
========== ======== ======= ========= ======== ==========
(Continued on Following Page)
SCHEDULE VI
(Continued)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
For the Three Years Ended September 30, 1994
(In Thousands)
- ------------------------------------------------------------------------------
Effect
Additions Sales, of
Additions of Pooled Retire- Foreign
Balance Charged Companies ments Currency Balance
Beginning to Not or Trans- End of
of Year Income Restated Transfers lation Year
- ------------------------------------------------------------------------------
1992 -
Land and im-
provements $ 12,815 $ 2,914 $ -- $ (460) $ (6) $ 15,263
Buildings 66,926 15,304 -- (14,063) 350 68,517
Landfills 244,899 82,099 -- (12,340) 151 314,809
Vehicles and
equipment 970,838 217,424 -- (52,366) 263 1,136,159
---------- -------- ------- --------- -------- ----------
$1,295,478 $317,741 $ -- $ (79,229) $ 758 $1,534,748
========== ======== ======= ========= ======== ==========
- -----------------
For financial reporting purposes, depreciation is computed on the
straight-line method based upon the estimated useful lives of the assets
as follows: buildings, 20 to 40 years, and vehicles and equipment, 3 to
12 years. Landfill costs include expenditures for land and related airspace,
permitting costs and preparation costs. These landfill costs, excluding the
estimated residual value of land, are typically amortized as permitted
airspace of the landfill is consumed.
SCHEDULE VIII
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
ALLOWANCE FOR DOUBTFUL ACCOUNTS
For the Three Years Ended September 30, 1994
(In Thousands)
------------------------------------------------------------------------
Additions
Balance Charged Deductions Balance
Beginning to from End of
of Year Income Reserves Year
------------------------------------------------------------------------
1994 $21,870 $31,346 $(19,932) $33,284
1993 $16,172 $18,657 $(12,959) $21,870
1992 $17,858 $17,944 $(19,630) $16,172
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BROWNING-FERRIS INDUSTRIES, INC.
(Registrant)
DATE: November 30, 1994 By: /s/ William D. Ruckelshaus
William D. Ruckelshaus
Chairman of the Board,
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ William D. Ruckelshaus
William D. Ruckelshaus
Chairman of the Board,
Chief Executive Officer
and Director
/s/ Norman A. Myers
Norman A. Myers, Vice
Chairman, Chief Marketing
Officer and Director
/s/ Bruce E. Ranck
Bruce E. Ranck,
President, Chief Operating
Officer and Director
/s/ Jeffrey E. Curtiss
Jeffrey E. Curtiss,
Senior Vice President and
Chief Financial Officer
/s/ David R. Hopkins
David R. Hopkins,
Vice President, Controller and
Chief Accounting Officer
/s/ William T. Butler
William T. Butler,
Director
/s/ C. Jackson Grayson, Jr.
C. Jackson Grayson, Jr.,
Director
/s/ Gerald Grinstein
Gerald Grinstein, Director
/s/ Ulrich Otto
Ulrich Otto, Director
/s/ Harry J. Phillips, Sr.
Harry J. Phillips, Sr.,
Director
/s/ Joseph L. Roberts, Jr.
Joseph L. Roberts, Jr.,
Director
/s/ Marc J. Shapiro
Marc J. Shapiro, Director
/s/ Robert M. Teeter
Robert M. Teeter, Director
/s/ Louis A. Waters
Louis A. Waters, Director
/s/ Marina v.N. Whitman
Marina v.N. Whitman, Director
/s/ Peter S. Willmott
Peter S. Willmott, Director
November 30, 1994.
EXHIBIT 4.10
AGREEMENT
AGREEMENT (the "Agreement") dated as of September ___, 1994,
between BFI ACQUISITIONS PLC, a company incorporated in
England ("Purchaser"), and LAIDLAW INC, a Canadian
corporation, and each of the subsidiaries of Laidlaw Inc.
executing this Agreement and listed on Schedule I hereto (such
companies are referred to collectively and individually as the
"Stockholder").
WHEREAS, the Stockholder is the beneficial owner and holder of
record of (i) the aggregate number of ordinary shares of 5p
each ("Ordinary Shares") and American Depositary Shares
evidenced by American Depositary Receipts ("ADS") of ATTWOODS
PLC, an English company (the "Company") and (ii) the aggregate
number of 81/2p Guaranteed Redeemable Convertible Preference
Shares of 5p each ("Preference Shares") in the capital of
ATTWOODS (FINANCE) N.V. a subsidiary of the Company ("Finance
Subsidiary"), set forth in Schedule I hereto;
WHEREAS, Purchaser proposes that CS First Boston Limited or an
affiliate thereof on behalf of Purchaser make offers (the
"Offers") for the outstanding Ordinary Shares, ADS, and
Preference Shares on substantially the terms and conditions
set forth in the draft press announcement attached as Annex A
("Press Announcement") and any additional terms and conditions
as may be necessary or advisable under applicable United
States securities laws or the requirements of the City Code on
Takeovers and Mergers ("Code") and the London Stock Exchange
(the offer for the Ordinary Shares, including those
represented by ADS, is referred to hereinafter as the
"Ordinary Share Offer"): and
WHEREAS, Purchaser has requested and Stockholder has agreed to
enter into a contract binding the Stockholder to accept the
Offers when they are made, and this Agreement constitutes such
contract;
NOW, THEREFORE, it is agreed by and between the parties as
follows:
l. Definitions. In this Agreement, (a) the term "Option
Shares" means the aggregate number of Ordinary Shares,
ADS and Preference Shares set forth in Schedule I hereto,
(b) the term "Purchase Price" means the aggregate price
for the Option Shares (the "Purchase Price") set forth in
Schedule I hereto, including the Contingent Cash Payment
referred to therein, and (c) the term "Offers" mean the
offers for the Ordinary Shares, Preference Shares, and
ADS described in the Press Announcement and any revision
thereof, except for any revisions which decrease the cash
payable for the Ordinary Shares, Preference Shares and
ADS.
2. Irrevocable Undertakings of the Stockholder. In
consideration of the Purchaser agreeing to make the
Ordinary Share Offer the Stockholder hereby irrevocably
undertakes and agrees that unless the Offers shall have
lapsed or shall have been withdrawn:
(a) upon receipt of, and not prior to, written request
from Purchaser, to accept the Offers with respect
to all (but not less than all) of the Option
Shares. Any such acceptance of the Offers shall be
made by Stockholder within twenty-four (24) hours
of receiving a written request to do so from
Purchaser in accordance with the procedure for
acceptance set out in the formal document
containing the Offers (the "Offer Document") to be
despatched to holders of Ordinary Shares, ADS and
Preference Shares. The Stockholder will not
withdraw its acceptances of the Offers unless
requested to do so by Purchaser and, if so
requested, shall withdraw with respect to all (but
not less than all) of the Option Shares;
(b) not to sell, transfer, assign, pledge, hypothecate
or otherwise dispose of any of the Option Shares or
enter into any agreement to do so (other than to or
with the Purchaser);
(c) not to purchase or acquire any shares in the
Company or Finance Subsidiary or any interest
therein, except as set forth in Section 6 hereof;
(d) promptly upon request of Purchaser, to lodge with a
mutually satisfactory institution (the "Escrow
Agent") the share certificates for the Option
Shares and acceptances of the Offers duly executed
by the registered holders thereof (together with
duly executed stock transfer forms and/or stock
powers) pursuant to an escrow agreement ("Escrow
Agreement") mutually satisfactory to Purchaser and
Stockholder providing that the Escrow Agent is (i)
irrevocably authorized and instructed, in the event
of a written request from the Purchaser under
Clause 2(a) hereof, forthwith to lodge the same in
accordance with the procedures for the acceptance
of the Offers or (ii) to deliver the same upon
exercise of the Stock Option provided for herein.
3. Grant of and Exercise of Stock Option. The Stockholder
hereby grants to the Purchaser an irrevocable option (the
"Stock Option") to purchase the Option Shares at the
Purchase Price. On the terms and subject to the
conditions of this Agreement, Purchaser may exercise the
Stock Option, in whole but not in part, at any time after
the date hereof and prior to the earlier of (i) the tenth
business day after the Offers, including any extension of
the Offers, have lapsed or been withdrawn and (ii) June
30, 1995; provided that:
(a) for the avoidance of doubt nothing in this
Agreement shall preclude or restrict the Purchaser
from extending the date by which the Offers must
become or be declared unconditional beyond the
sixtieth day after the date the initial document
making the Offers was posted so long as (1) a
competing offer has been made and remains open, or
(2) Purchaser has not received and is pursuing with
reasonable diligence any regulatory approvals
required to consummate the Offers, or (3) the Panel
on Takeovers and Mergers ("Panel") otherwise
consents to the extension;
(b) if the initial Offer Document is not posted to
holders of Ordinary Shares of the Company not later
than the 28th day after the release of the final
Press Announcement or by such later date (but not
later than ninety (90) days from the date hereof)
as may be required if the posting of such Offer
Document is enjoined by a court of competent
jurisdiction or delayed at the request of the
Panel, the Stock Option may not be exercised after
that date;
(c) the Stock Option may not be exercised after the
time the Purchaser makes a written request under
Clause 2(a) unless at the request of the Purchaser
Stockholder withdraws its acceptance of the Offer;
(d) the undertakings on the part of Stockholder in
Clause 2(b) shall continue to apply for as long as
the Stock Option may be capable of exercise; and
(e) upon due exercise of the Stock Option, no written
request by the Purchaser may thereafter be made
under Clause 2(a) hereof.
4. Stock Option Closing. If Purchaser wishes to exercise
the Stock Option, it shall send a written notice
("Exercise Notice") to the Stockholder (or to the Escrow
Agent and the Stockholder if certificates representing
the Option Shares have been placed in escrow) prior to
expiration of the Stock Option specifying that it wishes
to purchase the Option Shares and a date and place for
the closing of such purchase (the "Closing"). The
Closing shall occur on the later of the date specified
for such Closing in the Exercise Notice (which shall be
no more than five (5) business days after delivery of the
Exercise Notice) and the first day on which the conditions
set forth in Section 5 are satisfied. At the Closing,
(a) the Stockholder shall deliver or cause to be
delivered to Purchaser certificates representing all of
the Option Shares, and duly executed stock powers and/or
transfers with respect to such Option Shares in favor of
Purchaser or its designee in form reasonably satisfactory
to Purchaser, and (b) Purchaser shall pay to the
Stockholder, in immediately available funds, an amount
equal to the Purchase Price (except for the Contingent
Cash Payment which shall be paid in accordance with the
Press Announcement). Notwithstanding the foregoing, if
certificates representing the Option Shares have been
lodged in escrow, the provisions set forth in the Escrow
Agreement shall be applicable. The Stockholder covenants
that such Option Shares will be delivered free of all
claims, pledges, liens, security interests, charges,
equities, options and encumbrances of any nature
whatsoever, and with all rights now or hereafter
attaching thereto, including all dividends paid or
declared on or after the date hereof with respect to the
Ordinary Shares and Preference Shares; provided, that
Stockholder shall be entitled to (i) the final dividend,
if any, paid on the Ordinary Shares in respect of the
year ended July 31, 1994, if the record date for such
dividend is prior to exercise of the Stock Option and
(ii) any half-yearly preferential dividend or dividends
paid on the Preference Shares if the record date or dates
for such dividend or dividends is prior to exercise of
the Stock Option. The Purchase Price shall be payable in
Pounds Sterling.
5. Conditions.
5.1 Following the delivery of the Exercise Notice, the
obligation of Purchaser to purchase and pay for the
Option Shares specified in such Exercise Notice
shall be subject to the satisfaction of the
following conditions:
(a) There shall not be in effect a preliminary or
permanent injunction or other order by any
court of competent jurisdiction which
prohibits or otherwise restrains the purchase
or sale of the Option Shares.
(b) All waiting periods, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR
Act"), applicable to the purchase of the
Option Shares shall have expired or been
terminated.
(c) The representations and warranties made by the
Stockholder in Section 7 hereof shall be true
in all respects as of the date of this
Agreement and as of the time of the Closing.
5.2 Following the delivery of the Exercise Notice, the
obligation of the Stockholder to sell, transfer,
assign and deliver the Option Shares shall be
subject to the satisfaction of the following
conditions:
(a) The conditions specified in Section 5.1(a) and
5.1(b) hereof.
(b) The representations and warranties made by the
Purchaser in Section 8 hereof shall be true in
all respects as of the date of this Agreement
and as of the time of the Closing.
6. Adjustments Upon Changes in Capitalization; Dividends. In
the event of any change in the number of outstanding
Option Shares by reason of stock dividends, split-ups,
recapitalizations, combinations, conversions, exchanges
of shares or other change in the corporate or capital
structure of the Company or the Finance Subsidiary
effected without the payment of any amounts by the
Stockholder, the number of Option Shares for purposes of
this Agreement and the purchase price per share (but not
the Purchase Price) shall be adjusted accordingly, and
the term "Option Shares" shall include any additional
shares allocable to Stockholder as a result of any such
event.
7. Representations and Warranties by the Stockholder. The
Stockholder represents and warrants to Purchaser that:
(a) The Stockholder has all necessary power and
authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by the
Stockholder and the consummation of the
transactions contemplated hereby have been duly
authorized by all necessary action on the part of
the Stockholder and this Agreement has been duly
executed and delivered by the Stockholder and
constitutes a valid and binding agreement of the
Stockholder, enforceable in accordance with its
terms.
(c) The Stockholder is the beneficial owner of the
Option Shares; the Option Shares constitute all the
securities of the Company owned, directly or
indirectly, by the Stockholder; the Stockholder has
good, valid and marketable title to the Option
Shares; the Stockholder has not granted any proxy
with respect to the Option Shares, deposited the
Option Shares into a voting trust or entered into
any voting agreement or other arrangement with
respect to the Option Shares; and there are no
outstanding security interests, pledges, liens,
encumbrances, options, warrants, or rights to
purchase or acquire, or agreements relating to, any
of the Option Shares.
8. Representations and Warranties by Purchaser. Purchaser
represents and warrants to the Stockholder that:
(a) Purchaser is a company duly incorporated and
registered under the Companies Act 1985 in
accordance with the laws of England.
(b) Purchaser has all necessary power and authority to
enter into this Agreement and to consummate the
transactions contemplated hereby.
(c) The execution and delivery of this Agreement by
Purchaser and the consummation of the transactions
contemplated hereby have been duly authorized by
all necessary action on the part of Purchaser and
this Agreement has been duly executed and delivered
by Purchaser and constitutes a valid and binding
agreement of Purchaser, enforceable in accordance
with its terms.
9. Miscellaneous.
(a) Further Assurances. From time to time, at
Purchaser's request and without further
consideration, the Stockholder will execute and
deliver to Purchaser such documents and take such
action as Purchaser may reasonably request in order
to consummate more effectively the transactions
contemplated hereby and to vest in Purchaser good,
valid and marketable title to the Option Shares
being sold by the Stockholder, including, but not
limited to, using its best efforts to cause the
Company's and Finance Subsidiary's transfer agent
or the Depositary of the ADS to transfer the
Ordinary Shares, Preference Shares or the ADS on
the transfer books of the Company, Finance
Subsidiary or the Depositary to Purchaser.
(b) Voting of Shares. Until the Offers become or are
declared unconditional in all respects, lapse or
are withdrawn:
(i) Stockholder will not exercise any voting
or other rights attaching to the Option
Shares in relation to any resolution
which would hinder or prevent or be
likely to prevent implementation of the
Offers or their becoming unconditional
without the consent of Purchaser (or,
save under the Offers, appoint any other
person to do so on its behalf) and, in
particular, it will not without the prior
written consent of the Purchaser appoint
a proxy for or vote at general meetings
or separate class meetings of the Company
or the Finance Subsidiary in relation to
any such resolution;
(ii) Stockholder shall not without the prior
written consent of Purchaser requisition
or join in the requisition of any general
or class meeting of the Company or the
Finance Subsidiary for the purpose of
considering any such resolution;
(iii) Stockholder shall not take any action or
make any statement which is or may be
prejudicial to the success of the Offers,
including, without limitation, soliciting
any other offer by any third party for
any part of the issued share capital of
the Company or the Finance Subsidiary or,
save insofar as required by the Code,
enter into discussions or negotiations
with, or provide any information to, or
facilitate in any way any offer for any
of the share capital of the Company or
the Finance Subsidiary by, any such third
party; and
(iv) Stockholder may, notwithstanding the
foregoing, vote at the next annual
general meeting of the Company in support
of a resolution approving the payment of
a final dividend on the Ordinary Shares
in respect of the year ended July 31,
1994, in an amount which would not result
in any of the conditions to the Offers
set forth in the Press Announcement not
being satisfied.
(c) Reference to Stockholder. Stockholder agrees to:
(i) the issue of the Press Announcement
substantially in the form attached
(including the reference to Stockholder),
subject to any amendments which may be
agreed with it;
(ii) the issue of the formal Offer Documents
incorporating references to it similar to
those contained in the Press
Announcement.
(iii) details of the Agreement and the Escrow
Agreement being set out in the Offer
Documents;
(iv) this Agreement and the Escrow Agreement
being available for inspection during the
offer period (as defined in the Code).
(d) Information on Transactions. Stockholder shall
supply Purchaser promptly on request with all
information, including details of Stockholder's
interests and dealings with securities of the
Company and the Finance Subsidiary, and those of
any other person interested in the Option Shares,
as may be required by the Code for inclusion in the
Offer Documents. Stockholder shall notify
Purchaser promptly of any changes to such
information.
(e) Offer Revisions. In this Agreement references to
the Offers include any revised or increased offer
or offers which may be made by or on behalf of
Purchaser or any affiliate of Purchaser, provided
that in any such case the terms of such offer or
offers are, in the opinion of CS First Boston, no
less favorable than the terms set out in the Press
Announcement.
(f) Nominee. If the Option Shares are registered in
the name of a nominee, the Stockholder shall direct
the nominee to act as if the nominee were bound by
the terms of this Agreement, and the Stockholder
shall do all acts and things necessary to carry the
terms hereof into effect as if it had been the
registered holder of the Option Shares.
(g) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of and be
enforceable by the parties hereto and their
respective successors and assigns.
(h) Assignment. The Stockholder may not assign any of
its respective rights or obligations under this
Agreement without the prior written consent of the
Purchaser. The Purchaser may assign its rights and
obligations hereunder, in whole but not in part.
(i) Amendments. This Agreement may not be amended,
modified, altered or supplemented except upon the
execution and delivery of a written agreement by
each party hereto. Any condition to any party's
obligation hereunder may be waived in writing by
such party.
(j) Severability of Provisions. If any term,
provision, covenant or restrictions of this
Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in
full force and effect and shall not in any way be
affected, impaired or invalidated; provided, that
in no event shall (i) Stockholder be required to
accept the Offers with respect to less than all the
Option Shares or (ii) the Stock Option be exercised
in part and not in whole or (iii) the Stockholder
be required to accept any payment other than cash
in an amount not less than the Purchase Price upon
exercise of the Stock Option.
(k) Specific Performance. The parties hereto
acknowledge that money damages are an inadequate
remedy for breach of this Agreement and that the
obligations of the parties hereto shall be
specifically enforceable.
(1) Guaranty. Laidlaw, Inc. covenants and agrees to
cause each of its subsidiaries included within the
term "Stockholder" to perform the obligations of
such subsidiaries hereunder.
(m) Entire Agreement. This Agreement, and the
documents referred to herein or delivered pursuant
hereto, which form a part hereof, contain the
entire understanding of the parties hereto with
respect to its subject matter. This Agreement
supersedes all prior agreements and understandings
between the parties with respect to its subject
matter.
(n) Notices. All notices, claims, certificates,
requests, demands and other communications
hereunder shall be in writing and shall be deemed
to have been duly given when delivered in person,
by facsimile reproduction or by certified mail
(Postage prepaid, return receipt requested) to
Purchaser at 757 N. Eldridge, Houston, Texas USA
77057, Attention: Corporate Secretary, Fax No.
(713) 870-7825, or to the Stockholder at 3221 N.
Service Road, Burlington, Ontario, Canada L7R 3Y8,
Attention: Senior Vice President and General
Counsel, Fax No. (905) 332-6550.
(o) Descriptive Headings. The descriptive headings
contained herein are inserted for convenience of
reference only and are not intended to be part of
or to affect the meaning or interpretation of this
Agreement.
(p) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be
an original, but all of which together shall
constitute one and the same instrument.
(q) Governing Law. This Agreement shall be governed in
all respects, including validity, interpretation
and effect, by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereof.
BFI ACQUISITION PLC LAIDLAW TRANSPORTATION,
INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
LAIDLAW, INC. LAIDLAW
INTERNATIONAL INVESTMENTS B.V.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
LAIDLAW INVESTMENTS LAIDLAW WASTE SYSTEMS,
(BARBADOS) LTD. INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
SCHEDULE I
Title of Number Price Aggregate Registered Beneficial
Shares of per Price for Owner Owner
Shares Share Shares
Ordinary 9,651,765 109p *10,520,424 Laidlaw Laidlaw
Shares of Investments Investments
5p each of (Barbados) Ltd. (Barbados) Ltd.
Attwoods plc
36,797,848 109p *40,109,654 Laidlaw Laidlaw
Transportation, International
Inc. Investments BY
3,562,906 109p *3,883,567.5 Laidlaw Waste Laidlaw
Systems, Inc. International
Investments BY
33,614,087 109p *36,639,355 Laidlaw Laidlaw
International International
Investments BY Investments BY
American 250 545p *1,362.5 Laidlaw, Inc. Laidlaw, Inc.
Depositary
Attwoods plc 128,520 545p *700,434 Laidlaw Laidlaw
Transportation, Investments
Inc. (Barbados) Ltd.
90 545p *4905 Laidlaw, Inc. Laidlaw
Investments
(Barbados) Ltd.
8 1/2p 47,856,351 85p *40,677,898 Laidlaw Laidlaw
Guaranteed Investments Investments
Redeemable (Barbados) Ltd. (Barbados) Ltd.
Convertible
Preference
Shares of
Attwoods
(Finance) NV
Aggregate *132,533,185.5
price for
all Shares
("Purchase
Price")
The "Purchase Price" shall also include any Contingent Cash Payment referred
to in the Press Announcement.
* Pounds Sterling
Exhibit 4.11
AGREEMENT
Agreement ("Agreement") dated as of September ___, 1994, between
BFI ACQUISITIONS PLC ("Seller") and LAIDLAW INTERNATIONAL
INVESTMENTS B.V. and LAIDLAW INC. (referred to herein collectively
as "Laidlaw"):
Whereas, CS First Boston Limited, on behalf of Seller, proposes to
make offers ("Offers") to acquire all of the outstanding Ordinary
Shares of 5 pence each ("Ordinary Shares") and American Depository
Shares ("ADS") represented by American Depository Receipts of
Attwoods plc ("Company") and 8 1/2 pence Guaranteed Redeemable
Convertible Preference Shares of 5 pence each ("Preference Shares")
of Attwoods (Finance) N.V, a subsidiary of the Company ("Finance
Subsidiary") on the terms and conditions set out in the attached
press announcement (the "Press Announcement");
Whereas, Laidlaw desires for Seller to make the Offers and has
entered into an Agreement of even date herewith ("Irrevocable
Agreement") with Seller, inter alia, granting to Seller an option
to acquire all of the Ordinary Shares, ADS and Preference Shares
owned by Laidlaw and certain of its subsidiaries upon the terms and
conditions set forth therein;
Whereas, subject to the Offers becoming unconditional, Seller
intends to cause the sale of the Business (as defined herein)
carried on by the Company and/or subsidiaries of the Company;
Whereas, it is a condition to commencement of the Offers that
Seller and Laidlaw enter into this Agreement;
Now, therefore, in consideration of the premises, including the
commencement of the Offers, and other good and valuable
consideration, the parties hereby agree as follows:
1. Definitions. In this Agreement, (a) the term "the Business"
means the portable sanitation, portable accommodation and
office accommodation and sanitary cleaning business conducted
on the date hereof by the Company or any direct or indirect
subsidiary thereof in continental Europe, and (b) the term
"Assets" shall mean all assets, whether owned or leased,
tangible or intangible, real or personal, primarily utilized
in the Business including, without limitation, goodwill,
equipment, machinery, inventories, supplies, vehicles,
containers, office equipment, corporate names, trademarks,
tradenames, portable facilities, contract rights, accounts
receivable, all business, financial, accounting and legal
records pertaining to such assets, leases of any such assets,
interests in real estate and "net working capital" of
$1,750,000. There will be an equitable proration of all
prepaid items. "Net working capital" shall mean accounts
receivable less accounts payable as of a date reasonably near
the date of conveyance of the Assets plus cash and cash
equivalent items as of the date of conveyance. Such Assets
shall include the assets described above in existence on the
date hereof, adjusted for additions or dispositions in the
ordinary course of business between the date hereof and the
date of sale pursuant to the Sales Agreement (as defined
herein). If any assets of the type described above are
utilized by the Company or any of its subsidiaries to a
material extent (but not primarily) in the Business, Seller
shall, if deemed advisable in its sole discretion for the
operating efficiency of the Business, cause the inclusion in
the sale of substitute assets of comparable function in lieu
thereof. In no event shall the Assets include any assets used
primarily in the solid waste collection or disposition
operations of the Company or any subsidiary of the Company in
continental Europe.
2. Auction Process. As promptly as practicable after the date
representatives of Seller constitute a majority of the
Company's directors, Seller shall prepare and/or assemble or
cause to be prepared and/or assembled appropriate documents
and other materials pertaining to the Business (the "Auction
Documents") and shall make such information available to all
persons which the Seller and its advisors believe are
financially responsible and have expressed a bona fide
interest in acquiring the Business. Seller shall disseminate
information reflecting the proposed sale to as many potential
purchasers (including Laidlaw) as is reasonably practicable.
The Auction Documents shall include a proposed form of
purchase and sale agreement ("Sales Agreement"). Subject to
Section 4, Seller undertakes to cause the sale of the Business
to the purchaser with the highest and best offer; provided,
that Seller shall be the sole judge of the highest and best
offer and shall be responsible for all procedures in
connection with the auction of the Business. All potential
purchasers shall receive or have access to the same
information reflecting the Business. Seller shall also make
personnel available at reasonable times to discuss the
Business. Seller shall cause the Business to be operated in
the ordinary course of business during the auction process.
3. Alternative Structures. Seller may in its discretion, in lieu
of transferring the Assets directly, cause the sale to any
third party of the capital stock of the entities owning the
Assets or consider other forms of conveying the Assets if
Seller determines that any such alternative would not have an
adverse effect on (i) the Net Proceeds (as defined herein) and
(ii) the economic consequences of the sale to Seller
considering all relevant factors including tax consequences.
4. Threshold Price.
(a) If the auction process does not result in a binding
agreement resulting in the sale of the Business
acceptable to Seller for a consideration of at least
$56,800,000 (exclusive of value added tax or similar
sales tax) in cash, including the principal amount of (i)
any indebtedness secured by the Assets and assumed in the
sale and (ii) any capital leases on the Assets
("Threshold Price"), or is otherwise on terms which
Seller determines are more burdensome to it than the
terms of the proposed Sales Agreement, Seller may, but
shall not be obligated to, give written notice ("Sales
Notice") to such effect to Laidlaw.
(b) Within thirty (30) days after receipt of the Sales
Notice, Laidlaw shall purchase the Business from the
Company and/or its subsidiaries (as appropriate) for the
Threshold Price in immediately available funds pursuant
to the Sales Agreement.
5. Terms of the Sales Agreement. The Sales Agreement will
include the following terms:
(a) the Assets will be sold "as is, where is" with no
representation or warranty or covenant of any kind except
for a representation that the Assets are being sold free
and clear of any lien, claims and encumbrance created
through or under Seller;
(b) the purchase price paid for the Business shall be payable
in immediately available funds;
(c) the purchaser will assume responsibility for the
following:
(i) all accounts payable and other liabilities
arising in the ordinary course of the Business in
existence on the date of sale or an agreed date
reasonably near the date of sale, except for
indebtedness for money borrowed (other than
indebtedness secured by the Assets);
(ii) obligations under any leases (including capital
leases) or contracts assigned to the purchaser
and included in the Assets;
(iii) liabilities under any litigation pending at the
time of conveyance or arising thereafter on
account of events prior to such time in
connection with the Business;
(iv) all other contingent liabilities of the Business;
(v) all taxes payable by the purchaser under
applicable law; and
(d) the purchaser shall assume responsibility for all full or
part-time employees engaged primarily in the Business and
all obligations thereto existing under contracts,
employee benefit plans and arrangements and other similar
plans or agreements arising by reason of laws relating to
employee rights and benefits.
Otherwise the Sales Agreement shall provide for the sale
price, closing date and place and identification of the Assets
and conveyancing of the same.
6. Termination. This Agreement shall remain in full force and
effect from the date hereof until the earlier of (a) the
execution of the Sales Agreement between Laidlaw and the
Company and/or its subsidiaries (as appropriate), (b) the
conveyance of the Business by Seller to another party or
parties, (c) six (6) months after the date on which
representatives of Seller constitute a majority of the
Company's directors, (d) the assignment of the Irrevocable
Agreement or transfer of the beneficial interest in the Option
Shares to a party other than an affiliate of Seller, and (e)
the transfer of more than 50% of the Beneficial interest in
the ordinary shares of Seller or more than 50% of the
beneficial interest in the Ordinary Shares of the Company to
a party other than an affiliate of Seller.
7. Assignment. This Agreement may not be assigned by either
party hereto, except that Seller may assign its rights and
obligations hereunder to a corporation which is a direct or
indirect wholly-owned subsidiary of Browning-Ferris
Industries, Inc. and Laidlaw may assign its rights and
obligations hereunder, but no such assignment shall relieve
any assignor of its obligations hereunder.
8. Distribution of Net Proceeds. If the sale of the Business
results in aggregate Net Proceeds (as hereinafter defined) of
at least $56,800,000, Seller will pay an amount equal to an
aggregate of 80% of the excess over $56,800,000 of such Net
Proceeds to all persons accepting the Offer for the Ordinary
Shares (which shall be deemed to include Laidlaw if the Stock
Option in the Irrevocable Agreement is exercised by Seller),
allocated among such persons as set forth in the Press
Announcement. The term "Net Proceeds" shall mean the
aggregate cash proceeds received for the sale of the Business,
plus the principal amount of any indebtedness secured by the
Assets and assumed in the sale of any capital leases on the
Assets, less all expenses related to such sale, including
legal and accounting fees and expenses, fees and expenses of
the Seller and its affiliates in connection with the auction
process, including financial advisory fees, transfer taxes and
sales or similar taxes arising from the sale and borne by the
Seller pursuant to applicable law the fees and expenses of the
accounting firm described below, and expenses of distribution
of the Net Proceeds; provided that such expenses shall not
include any amount for the time of any employees of Seller or
its affiliates or any income taxes, capital gains tax, or
similar taxes. The calculation of Net Proceeds shall be
confirmed by an accounting firm of recognized international
standing which shall provide a report respecting such
calculation.
9. Arbitration. Any dispute or controversy arising out of or in
connection with this Agreement as to the existence,
construction, validity, interpretation or meaning,
performance, non-performance, enforcement, operation, breach,
continuance or termination thereof or as to any disagreement
as to the term of or any other aspect of the Sales Agreement
or the identity of the assets to be transferred or liabilities
to be assumed thereunder shall be submitted to arbitration
pursuant to the following procedure:
(i) Either party may demand such arbitration in writing
after the controversy arises, which demand shall
include the name of the arbitrator appointed by the
party demanding arbitration, together with a statement
of the matter in controversy;
(ii) Within 15 days after such demand, the other party shall
name an arbitrator, or in default thereof, such
arbitrator shall be named by the Arbitration Committee
of the American Arbitration Association, and the two
arbitrators so selected shall name a third arbitrator
within 15 days or, in lieu of such agreement on a third
arbitrator by the two arbitrators so appointed, a third
arbitrator shall be appointed by the Arbitration
Committee of the American Arbitration Association;
(iii) Each party shall bear all arbitration costs and
expenses including legal fees and expenses incurred by
it, except as hereafter provided. If any contest or
dispute shall arise under this Agreement involving the
failure or refusal of a party to perform in accordance
with the terms hereof, and the arbitrators make an
award to a party, the party against whom liability is
found shall, as a part of the arbitration award,
reimburse the other party for all legal fees and
expenses, if any (including without limitation,
arbitration costs and expenses), incurred by the other
party in connection with such contest or dispute
together with interest in an amount equal to the prime
interest rate as reported in the Wall Street Journal,
from time to time, but in no event higher than the
maximum legal rate permissible under applicable law, on
all payments held to be due under the terms of this
Agreement, such interest to accrue from the date such
payment(s) become due through the date of payment
thereof;
(iv) The arbitration hearing shall be held, as a part of the
arbitration award, at a site in New York, New York to
be agreed to by a majority of the arbitrators on 10
days' written notice to the parties, such notice to be
given within 10 days after the naming of the third
arbitrator as contemplated by Clause (ii) above;
(v) The arbitration hearing shall be concluded within 10
days after the commencement thereof, unless otherwise
ordered by a majority of the arbitrators, and the award
thereon shall be made within 10 days after the close of
the submission of evidence. An award rendered by a
majority of the arbitrators appointed pursuant to this
Agreement shall be final and binding on all parties to
the proceeding during the period of this Agreement, and
judgement on such award may be entered by either party
in the highest court having jurisdiction. The parties
stipulate that the provisions hereof shall be a
complete defence to any suit, action, or proceeding
instituted in any federal, state, local or foreign
court or before any administrative tribunal with
respect to any controversy or dispute arising during
the period of this Agreement and which is arbitrable as
herein set forth.
10. Notices. Any notice provided for herein shall be in writing
and shall be delivered in person or sent by certified mail,
return receipt requested, to the parties at the address of
each set forth below:
If to: BFI Acquisitions plc
P.O. Box 3151
Houston, Texas 77253
Attn: Corporate Secretary
If to: Laidlaw Inc.
3221 North Service Road
Burlington, Ontario, Canada L7R 3Y8
Attn: Senior Vice President and General Counsel
The notice shall be deemed received on the date of delivery in
person or the date of actual receipt by certified mail.
11. Miscellaneous.
(a) Modification. This Agreement shall not be changed or
modified except by an agreement in writing signed by all
parties hereto.
(b) Waiver. The waiver by either party of any failure on the
part of the other party to perform in accordance with any
of the terms or conditions of this Agreement shall not be
construed as a waiver of any future or continuing
failure, whether similar or dissimilar thereto. Except as
otherwise expressly provided herein, no waiver of any
right shall be implied by any delay by a party in
enforcing or acting under such right. Waivers shall be
effective only if specifically set forth in writing
signed by the party to be charged with such waiver.
(c) Governing Law. This Agreement and any provisions
contained herein shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Multiple Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the date and year first herein above set forth.
BFI ACQUISITIONS PLC LAIDLAW, INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
LAIDLAW INTERNATIONAL
INVESTMENTS B.V.
By:___________________________
Title:________________________
Exhibit 4.12
THIS AGREEMENT is dated as of September ___, 1994 between
BROWNING-FERRIS INDUSTRIES, INC., a Delaware corporation
("Parent") and LAIDLAW INC., a Canadian corporation ("the
Stockholder").
WHEREAS, BFI ACQUISITIONS PLC ("Purchaser") is a wholly-owned
indirect subsidiary of Parent;
WHEREAS, the Stockholder and a subsidiary or subsidiaries of the
Stockholder are the beneficial owners and holders of record of (i)
the aggregate number of ordinary shares of 5p each ("Ordinary
Shares") and American Depositary Shares evidenced by American
Depositary Receipts ("ADS") of Attwoods plc, an English company
(the "Company") and (ii) the aggregate number of 8 1/2p Guaranteed
Redeemable Convertible Preference Shares of 5p each ("Preference
Shares") in the capital of Attwoods (Finance) N.V., a subsidiary of
the Company ("Finance Subsidiary"), set forth in Schedule I hereto:
WHEREAS, Purchaser proposes that CS First Boston Limited or an
affiliate thereof on behalf of Purchaser make offers (the "Offers")
for the outstanding Ordinary Shares, ADS and Preference Shares on
substantially the terms and conditions set forth in the draft press
announcement attached as Annex A ("Press Announcement") and any
additional terms and conditions as may be necessary or advisable
under applicable United States securities laws or the requirements
of the City Code on Takeovers and Mergers ("Code") and the London
Stock Exchange;
WHEREAS Purchaser and the Stockholder have requested Parent to
provide Purchaser with a letter of support in terms acceptable to
the Purchaser pursuant to which Parent undertakes to make available
to Purchaser sufficient funds to enable Purchaser to implement the
Offers in full;
WHEREAS Parent is prepared to provide such a letter of support on
condition that Stockholder enters into an agreement with Parent on
the terms hereinafter provided.
NOW THEREFORE, it is agreed by and between the parties as follows:
1. Definitions. In this Agreement, (a) the term "Option Shares"
means the aggregate number of Ordinary Shares, ADS and
Preference Shares set forth in Schedule I hereto, whether
owned by Stockholder or a subsidiary of Stockholder, (b) the
term "Purchase Price" means the aggregate price for the Option
Shares set forth in Schedule I hereto, and (c) the term
"Option Period" means the period commencing on the date hereof
and expiring on the earlier of (i) tenth business day after
the Offers, including any extension of the Offers, have lapsed
or been withdrawn and (ii) June 30, 1995.
2. Stockholder Undertaking. In consideration of Parent agreeing
with the Stockholder to make available to Purchaser the letter
of support thereby enabling Purchaser to proceed with the
Offers, the Stockholder hereby agrees and undertakes with
Parent that if the Stockholder shall receive or become
entitled to receive from a sale of the Option Shares made, or
from an agreement to sell the Option Shares entered into,
during the Option Period, whether from Purchaser or any other
person and whether pursuant to the Offers or any competing
offer or otherwise, an amount in cash at least equal to the
Purchase Price and an additional amount (whether in cash,
securities, or any other property) in excess of the Purchase
Price ("Excess Amount"). Stockholder shall promptly and in
any event within 5 days after receipt of written request from
Purchaser pay such Excess Amount to Purchaser. In the
foregoing sentence, (i) the references to "Stockholder" shall
be deemed to include any nominee or subsidiary of the
"Stockholder" in the name of which all or any of the option
shares are registered or which beneficially owns all or any of
them and (ii) the references to "Purchase Price" shall be
deemed to exclude the Contingent Cash Payment referred to in
the Press Announcement.
3. (a) Miscellaneous. In this Agreement references to the
Offers include any revised or increased offer or offers
which may be made by or on behalf of Purchaser (or any
affiliate of the Parent); provided that in any such case
the terms of such offer or offers are, in the opinion of
CS First Boston, no less favorable than the terms set out
in the Press Announcement.
(b) Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns.
(c) Amendment. This Agreement may not be amended, modified,
altered or supplemented except upon the written agreement
of all the parties hereto.
(d) Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given when
delivered in person, by facsimile reproduction or by
certified mail (Postage prepaid, return receipt requested
to Parent at 757 N. Eldridge, Houston, Texas USA 77079,
Attention: Corporate Secretary, Fax No. (713) 870-7825,
or to the Stockholder at 3221 N. Service Road,
Burlington, Ontario, Canada L7R 3Y8, Attention: Senior
Vice President and General Counsel, Fax No. (905 332-
6550.
(e) Descriptive Headings. The descriptive headings contained
herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning
or interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one
and the same instrument.
(g) Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect,
by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date hereof.
BROWNING-FERRIS INDUSTRIES, INC. LAIDLAW, INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
Exhibit 4.13
PRIVATE & CONFIDENTIAL
Browning-Ferris Industries, Inc September 19, 1994
("Big Spring")
757 North Eldridge
Houston, TX 77079
Dear Sirs,
Proposed Bid for Attwoods plc ("Abilene")
Acquisition and Refinancing Facility
This letter outlines the terms and conditions upon which we are
willing to underwrite a credit facility of 500,000,000 Pounds
Sterling (or equivalent) in connection with your proposed bid for
Abilene:
COMMERCIAL TERMS
-----------------
Borrower: one or more wholly-owned
subsidiaries of Big Spring.
Guarantor: All obligations of the Borrower in
respect of the Facility are to be
irrevocably and unconditionally
guaranteed by Big Spring.
Sole Arranger and Sole
Administrative Agent: Credit Suisse (the "Arranger").
The Facility: The Facility will be a revolving
credit facility for up to
500,000,000 Pounds Sterling (the
"Facility").
Currencies: Sterling, or at the option of the
Borrower, US dollars or
deutschmarks.
Syndication: Following the date of acceptance of
this letter (the "Commitment
Letter"), the Arranger will
syndicate the Facility among a group
of banks acceptable to Big Spring
and the Arranger. Each bank
participating in the Facility as an
original party to the Credit
Agreement (together, the "Banks")
will severally participate in each
drawdown under the Facility in the
proportion which its Commitment
under the Facility bears to
aggregate Commitments of the Banks
under the Facility.
The Arranger's Commitment to
underwrite the entire Facility is
not conditional on a successful
syndication although to the extent
that the Facility is syndicated, the
Arranger's Commitment will be
consequently reduced.
Big Spring agrees to co-operate
fully with the Arranger in the
syndication of the Facility,
including the preparation of the
Information Memorandum, the
participation in such meetings and
presentations and the provision of
such further information in each
case as the Arranger shall
reasonably request.
Purpose: To assist the Borrower in funding
the consideration for the offer
proposed to be announced by it on or
about September 19, 1994 to acquire
the whole of the share capital
(whether in issue or to be allotted)
of Abilene not already owned by the
Borrower, the Guarantor and
Subsidiaries of the Guarantor (the
"Offer", which expression shall
include that offer as it or any of
its terms may from time to time be
amended, added to, revised, renewed
or waived with the prior approval of
the Arranger). In addition, the
Facility may be used to fund
purchases of ordinary and preference
shares in the capital of Abilene
other than pursuant to the Offer at
a price per share first approved by
the Arranger if greater than the
price per share under the Offer and
may be used to refinance any
existing indebtedness of Abilene
including any existing obligations
of Abilene which become due and
payable as a result of, and in
funding working capital requirements
of the Borrower that result from,
the Offer being declared
unconditional in all respects.
Availability Period: The period from the date of the
Credit Agreement until Final
Maturity on a fully revolving basis.
Drawdown: On any business day during the
Availability Period in any amount
which is not less than 25,000,000
Pounds Sterling (or equivalent) and,
if greater, is a whole multiple of
5,000,000 Pounds Sterling, subject
to at least 4 business days' notice
and fulfillment of the applicable
Conditions Precedent.
Facility Fee: A Facility Fee will be payable at an
annual rate determined by the
Arranger in accordance with the
pricing matrix set out below.
The Facility Fee will accrue from
the date of this letter and will be
payable on the uncancelled amount of
the Facility. The accrued fee will
be payable on December 31, 1994 (or
the date the Facility or the
Commitment contained in this letter
is cancelled, if earlier) and
thereafter quarterly in arrear, with
the final payment due on the date on
which the Facility is fully
cancelled (if then undrawn) or
finally repaid (if drawn).
The accrued Facility Fee will be
payable by the Borrower, failing
whom the Guarantor, whether or not
the Credit Agreement is signed.
Cancellation: Any undrawn amount of the Facility
which is not less than 25,000,000
Pounds Sterling (or equivalent) and,
if greater, is a whole multiple of
5,000,000 Pounds Sterling, may be
cancelled at any time, without
penalty, subject to at least 5
business days' notice of the date
and amount of cancellation.
Final Maturity: December 31, 1997.
Repayment: Each Advance must be repaid at the
end of its Term together with
accrued interest thereon. Any
amount so repaid will remain
available for redrawing during the
Availability Period.
Voluntary Prepayment: Each Advance under the Facility may
be prepaid subject to the payment of
breakage costs, if any, but
otherwise without penalty, (i) in
the case of LIBOR Advances or CD
Advances (as defined below) upon 5
business days notice and (ii) in the
case of Base Rate Advances (as
defined below) upon 1 business day's
notice.
Terms of Advances: Advances which are to bear interest
calculated by reference to LIBOR
("LIBOR Advances") shall have terms
of 1, 2, 3 or 6 months (or, in the
case of LIBOR Advances denominated
in sterling, 1 week) or, subject to
availability to each Bank, such
longer periods as may be requested.
Advances denominated in U.S. dollars
which are to bear interest
calculated by reference to the Base
Rate ("Base Rate Advances") or a CD
Rate ("CD Advances"), shall, in the
case of CD Advances have terms of
30, 60, 90 or 180 days, and shall in
all other respects have such terms
as shall be requested by the
Borrower and agreed to by the Banks
(LIBOR Advances, Base Rate Advances
and CD Advances together the
"Advances"). However, no Advance may
mature after Final Maturity.
Interest Rate: Interest will accrue and be payable
on Advances drawn under the Facility
at the rate per annum (plus Reserve
Asset Costs, if any,), determined by
the Arranger and in the case of
LIBOR and CD Advances shall carry a
margin over LIBOR or the applicable
CD rate determined in accordance
with the pricing matrix set out
below.
Pricing Matrix: For the purposes of determining the
rate at which the Facility Fee shall
accrue and for determining the rate
at which interest shall accrue on
LIBOR Advances and CD Advances, the
Arranger shall, at the commencement
of each period during which such fee
or interest is to accrue, determine
the rating given by Moody's
Investors Service Inc. ("Moody's"),
Standard & Poor's Ratings Group
("Standard & Poor's") Duff & Phelps
Credit Rating Company ("Duff &
Phelps") to the outstanding senior
indebtedness of the Guarantor, and
depending on such determination,
such fee and interest shall accrue
as follows:
Rating Facility Fee LIBOR Margin CD Margin D Margin
- ------ ------------- ------------ ---------
A- / A3/ A- or 12.5 20.0 32.5
higher
BBB+ / Baa1/ BBB+ 15.0 35.0 47.5
BBB / Baa2/ BBB 17.5 40.0 52.5
BBB- / Baa3/ BBB- 25.0 50.0 62.5
BB+ / Ba1/ BB+ or 37.5 87.5 100.0
below
If the rating changes the applicable
rates change on the date of
announcement. In the event of a
split rating the rating of the
majority (or in the case of three
different ratings, the middle
rating) will apply.
Agency Fees: Agency fees will be payable by the
Borrower, failing whom, the
Guarantor to the Arranger in respect
of the Facility in the amounts and
at the times provided for in a
letter of today's date from the
Arranger to the Guarantor.
OTHER TERMS
-----------
The detailed terms and conditions of the Facility will be contained
in a credit agreement (the "Credit Agreement") which will include:
Conditions Precedent, Substantially in accordance with
Representations and Annexes 2, 3, 4 and 5 of this
Warranties, Undertakings letter, which Annexes and, where
and Events of Defaults relevant, this letter shall be
construed by reference to Annex 1.
However, the Arranger may with the
consent of the Guarantor (such
consent not to be unreasonably
withheld) make amendments and
additions in the event of any
material revision or other material
change to the terms and conditions
of the bid.
Transferability: Advances under the Facility will be
freely transferable by novation (in
whole or in part) to Qualifying
Lenders. Similarly, Commitments
will be freely transferable by
novation (in whole or in part) to,
or to any affiliate (provided it is
a Qualifying Lender) of, any Bank
party to the Credit Agreement or
(with the Borrower's consent, such
consent not to be unreasonably
withheld) to any other Qualifying
Lender.
Governing Law: The laws of England or the United
States (as shall be agreed by the
Arranger and the Guarantor).
Other: The Credit Agreement will contain
other terms usual for transactions
of this type, including provisions
for the calculation of Reserve Asset
Costs and clauses protecting the
Banks against inability to determine
interest rates, alternative currency
problems, funding problems, taxes
(including grossing-up), illegality,
increased costs (including
compensation for any cost, etc.
directly to or indirectly
attributable to any capital adequacy
or similar requirements), default
interest, indemnities, etc.
FRONT-END FEES, EXPENSES AND INDEMNITY
--------------------------------------
Applicability: From the acceptance of this letter
the following provisions shall
apply, and constitute irrevocable,
unconditional, joint and several and
legally binding obligations of the
Borrower and the Guarantor for the
benefit of the Arranger and each
other Indemnified Party.
Front-end Fees: The Borrower, failing whom, the
Guarantor, will pay to the Arranger
the front-end fees in the amounts
and at the times provided for in a
letter of today's date from the
Arranger to the Guarantor.
Expenses: All reasonable legal and other fees,
costs and out-of-pocket expenses
(including VAT and similar taxes
thereon) incurred by the Arranger in
connection with the preparation and
negotiation of this letter, the
Credit Agreement and related
documentation, and in connection
with the syndication of the Facility
will be for the account of the
Borrower, failing whom the
Guarantor, whether or not the Credit
Agreement is signed.
Indemnity: The Guarantor shall indemnify the
Arranger, each Bank, each affiliate
of a Bank and each director,
officer, employee or agent of any
Bank or such affiliate (each an
"Indemnified Party"), from and
against any and all losses,
liabilities, claims, costs or
expenses (including reasonable legal
fees) ("Claims") which the relevant
Indemnified Party may suffer or
incur (except to the extent that the
same result from the gross
negligence or willful misconduct of
that Indemnified Party) arising out
of or in connection with the Offer
(whether or not made) or any
acquisition or proposed acquisition
by any member of the Group or any
person acting in concert with any
member of the Group of any shares of
Abilene or otherwise arising out of
or in connection with the Facility
or any use of proceeds of any
drawdown under the Facility from
time to time on demand of the
relevant Bank (subject to the
provision by such Bank of a
certificate showing the amount of
such Claim and providing reasonable
detail of the basis for the
calculation of such amount). The
Guarantor shall be entitled to
participate in the defence of any
related litigation or proceedings
upon standard terms. The foregoing
indemnity by the Guarantor in favor
of each Indemnified Party
specifically includes all Claims
that are the result of the simple
negligence whether exclusive,
concurrent, contributory or
otherwise of such Indemnified Party.
This indemnity shall survive the
execution of the Credit Agreement
which will contain a similar
indemnity from the Borrower and the
Guarantor in favor of each
Indemnified Party and each other
party to the Credit Agreement and
their respective affiliates,
directors, officers, employees and
agents.
This letter shall be governed by and construed in accordance with
English law. By counter-signing the enclosed copy of this letter,
the Guarantor will irrevocably agree, for the benefit of the
Arranger and the Banks, that the courts of England are to have
jurisdiction to settle any disputes which may arise out of or in
connection with this letter and that accordingly any legal action
or proceedings arising out of or in connection with this letter may
be brought in those courts.
Without prejudice to the obligations of the Guarantor under this
letter in respect of the Facility Fee, the Front-end Fees, Expenses
and Indemnity as provided above, the offer contained in this letter
is subject to the preparation, execution and delivery by all
parties prior to December 31, 1994 of a Credit Agreement in form
and substance complying with the provisions and requirements of
this letter and its Annexes. This offer may only be accepted by
the Guarantor counter signing the enclosed copy of this letter.
Yours faithfully,
CREDIT SUISSE
By: ____________________________
By: ____________________________
We refer to the letter of which this is a true copy and accept the
offer contained in it in accordance with its terms.
September ___, 1994
BROWNING-FERRIS INDUSTRIES, INC.
By: ____________________________
ANNEX 1
INTERPRETATION
--------------
(A) Definitions: Except to the extent that the context requires
otherwise: -
"Advance Date" means the date on which any Advance is made
pursuant to the Credit Agreement
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, as of any particular time, the present
value (discounted at the rate of interest implicit in the
terms of the lease involved in such Sale and Leaseback
Transaction, as determined in good faith by the Guarantor), of
the obligation of the lessee thereunder for net rental
payments (excluding, however, any amounts required to be paid
by such lessee, whether or not designated as rent or
additional rent, on account of maintenance and repairs,
services, insurance, taxes, assessments, water rates and
similar charges or any amounts required to be paid by such
lessee thereunder contingent upon monetary inflation or the
amount of sales, maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges) during the
remaining term of such lease (including any period for which
such lease has been extended or may, at the option of the
lessor, be extended)
"Code" means the United States Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder
"Consolidated Net Income" means, for any period, the gross
revenues of the Guarantor and its Subsidiaries for such period
less all expenses and proper income charges (including taxes),
determined on a consolidated basis in accordance with United
States generally accepted accounting principles applied on a
consistent basis
"Consolidated Net Tangible Assets" means the aggregate amount
of Assets (less applicable reserves and other properly
deductible items) after deducting therefrom (a) all goodwill,
customer lists, covenants not to compete, trade names,
trademarks, patents, copyrights, franchises, organization
expenses, formulae and processes, option rights and other like
intangibles and (b) all current liabilities; all as reflected
in the Guarantor's latest audited consolidated balance sheet
contained in the Guarantor's most recent audited financial
statements prior to the time as of which "Consolidated Net
Tangible Assets" shall be determined
"Consolidated Net Worth" means in relation to the Guarantor
and its Subsidiaries, the aggregate of (1) the stated and
paid-in capital accounts for all outstanding common and
preferred shares (but excluding redeemable preferred shares)
and (2) retained earnings, as shown on the then most recent
consolidated balance sheet of the Guarantor, prepared in
accordance with generally accepted accounting principles in
the United States of America in effect as of the date of this
Agreement
"Debt" means Indebtedness for Borrowed Money
"Event of Default" means any one of the events mentioned in
the Clause of the Credit Agreement headed "Events of Default"
"Group" means, at any particular time, the Guarantor and all
its Subsidiaries (and "member of the Group" shall be construed
accordingly)
"Information Memorandum" means the document to be prepared
containing certain information regarding (among other things)
the Borrower, the Guarantor, Abilene and their respective
Subsidiaries and such other information as shall be agreed by
the Arranger and the Guarantor and which, at the request and
on behalf of the Borrower and the Guarantor, has been prepared
in connection with this transaction and distributed by the
Arranger to the Banks
"Lien" means any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or other
similar encumbrance
"Majority Banks" means Banks whose Outstandings together
exceed 66 2/3% of the total Outstandings (or, if there are no
Outstandings, Banks whose Commitments together exceed 66 2/3%
of the total commitments)
"Offer Document" means the offer document as first posted to
shareholders of Abilene in connection with the Offer
"Outstandings" means, in relation to a Bank at any particular
time, the aggregate principal amount of its share of all (if
any) Advances outstanding at that time
"Potential Event of Default" means any event or circumstance
which, if it continued after the giving of any notice, the
expiry of any grace period, and/or (as the case may be) the
making of any determination by the Majority Banks, provided
for in the Clause of the Credit Agreement headed "Events of
Default", would become an Event of Default
"Principal Property" means any waste processing, waste
disposal or resource recovery plant or similar facility owned
by, or leased to, the Guarantor or any Principal Subsidiary,
except (a) any such plant or facility (i) owned or leased
jointly or in common with one or more Persons other than the
Guarantor and its Subsidiaries, in which the interest of the
Guarantor and its Principal Subsidiaries does not exceed fifty
percent. (50%), or (ii) which the Board of Directors of the
Borrower determines in good faith is not of material
importance to the total business conducted, or Assets owned,
by the Guarantor and its Subsidiaries as an entirety, or (b)
any portion of any such plant or facility which the Board of
Directors of the Guarantor determines in good faith not to be
of material importance to the use or operation thereof
"Principal Subsidiary" means a Subsidiary (a) whose total
Assets or gross revenues (each such amount expressed on a
combined basis before eliminations and adjustments in the case
of a Subsidiary or a Subsidiary which itself has Subsidiaries)
represent, respectively, not less than one point seven five
percent (1.75%) of either the consolidated total Assets or
consolidated gross revenues of the Guarantor and its
Subsidiaries all as calculated annually by reference to the
immediately preceding fiscal year end financial data
(consolidated or unconsolidated, as the case may be) of such
Subsidiary and the then latest fiscal year end audited
consolidated financial statements of the Guarantor, or (b) to
which is transferred all or substantially all of the Assets or
undertakings of a Principal Subsidiary. A certificate by the
chief financial officer for the time being of the Guarantor as
to whether a Subsidiary is or is not or was or was not a
Principal Subsidiary at a specified date shall, in the absence
of manifest error, be conclusive and binding
"Qualifying Lender" a Person which for any reason, including
but not limited to, its place of incorporation, the nature of
its business or its entitlement to the benefit of an
applicable tax treaty shall be entitled on the date hereof to
receive interest on its participation in the Advances free of
any withholding or deduction for or on account of any taxes
"Regulations G, T, U and X" means Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System of the
United States
"Restricted Subsidiary" means any Principal Subsidiary other
than Otto Entsorgungsdienstleistungen GmbH
"Subsidiary", in relation to any Person, means, at any
particular time, any Person which is then directly or
indirectly Controlled, or more than 50% of whose issued equity
share capital (or equivalent) is then beneficially owned, by
that first-mentioned Person and/or one or more of its
Subsidiaries
(B) Construction of Certain References: Except to the extent that
the context requires otherwise, any reference in this to:
an Act or any Section of, Schedule to or other provision of an
Act shall be construed, at any particular time, as including
a reference to any modification, extension or re-enactment
thereof then in force and all instruments, orders and
regulations then in force and made under or deriving validity
from the relevant Act or provision
"acting in concert" shall have the meaning attributed to the
term in The City Code on Takeovers and Mergers
an "affiliate" of any Person is a reference to a Subsidiary or
a holding company, or a Subsidiary of a holding company, of
such Person
an "Agency" of a state includes any agency, authority, central
bank, department, government, legislature, minister, ministry,
official, or public or statutory Person (whether autonomous or
not) of, or of the government of, that state or any political
sub-division in or of that state
the "Assets" of any Person means all or any part of its
business, undertaking, property, assets, revenues (including
any right to receive revenues) and uncalled capital
"Borrowed Money" includes any Indebtedness (1) for or in
respect of money borrowed or raised (whether or not for cash),
by whatever means (including acceptances and deposits) or (2)
for the deferred purchase price of Assets or Services
"Consent" also includes an approval, authorization, exemption,
filling, license, order, permission, recording or registration
(and references to obtaining Consents shall be construed
accordingly)
one Person being "Controlled" by another means that that other
(whether directly or indirectly and whether by the ownership
of share capital, the possession of voting power, contract or
otherwise) has the power directly or indirectly to control the
affairs and policies of that Person
a "Directive" includes any present or future directive,
regulation, request, requirement, rule or credit restraint
program of any Agency of any country or state or of any self-
regulating organization (but, if not having the force of law,
only if compliance with the Directive is in accordance with
the general practice of Persons to whom the Directive is
intended to apply)
a "Guarantee" also includes an indemnity, and any other
obligation (whatever called) of any Person to pay, purchase,
provide funds (whether by the advance of money, the purchase
of or subscription for shares or other securities, the
purchase of Assets or services, or otherwise) for the payment
of, indemnify against the consequences of default in the
payment of, or otherwise be responsible for, any Indebtedness
of any other Person (and "guaranteed" and "guarantor" shall be
construed accordingly)
"Indebtedness" includes any obligation (whether present or
future, actual or contingent, secured or unsecured, as
principal, surety or otherwise) for the payment or repayment
of money which would be regarded as indebtedness in accordance
with United States generally accepted accounting principles
something having a "Material Adverse Effect" on a Person is to
it having a material adverse effect (1) on its financial
position or business or on the consolidated financial position
or business of that Person and its Subsidiaries or (2) on its
ability to perform and comply with its obligations under this
Agreement
any "obligation" of any Person under this Agreement or any
other agreement or document shall be construed as a reference
to an obligation expressed to be assumed by or imposed on it
under this Agreement or, as the case may be, that other
agreement or document (and "due", "owing", "payable" and
"receivable" shall be similarly construed)
a "Person" includes any individual, company, corporation,
firm, partnership, joint venture, association, organization,
trust, state or Agency of a state (in each case, whether or
not having separate legal personality)
"Security" includes any mortgage, pledge, lien, hypothecation,
security interest or other charge or encumbrance (and
"secured" shall be construed accordingly)
"Tax(es)" includes any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed a time of the
day is to London time unless otherwise stated
the "Winding-up" of a Person also includes the amalgamation,
reconstruction, reorganization, administration, dissolution,
liquidation, merger or consolidation of that Person, and any
equivalent or analogous procedure under the law of any
jurisdiction in which that Person is incorporated, domiciled
or resident or carries on business or has Assets.
Headings shall be ignored in construing this Letter.
ANNEX 2
CONDITIONS PRECEDENT
--------------------
(A) To First Drawdown under the Facility: The conditions
precedent to be fulfilled to the satisfaction of the Arranger
before first drawdown under the Facility will include:
(1) The Credit Agreement, in form and substance satisfactory
to the Banks and the Arranger shall have been executed
and delivered by all parties but not later than December
31, 1994.
(2) Payment to the Arranger and the Banks of all fees, costs
and expenses then due.
(3) Receipt of certified copies of the Offer Document in the
form previously approved by the Arranger.
(4) The Office of Fair Trading indicating in terms
satisfactory to the Arranger that it is not the intention
of the Secretary of State for Trade and Industry to refer
the proposed acquisition of Abilene by the Borrower, or
any matters arising therefrom, to the Monopolies and
Mergers Commission.
(5) No government or other Agency has instituted or
threatened any action, legal proceedings, suit, inquiry
or investigation or enacted, made or proposed any
statute, regulation or order which in the opinion of the
Arranger is likely to have any of the effects mentioned
in paragraphs (16) (a), (b) or (c) of sub-clause (A) of
Annex 3. No other litigation, arbitration, administrative
proceedings, injunction or order is current, pending or
threatened or has been made which in the opinion of the
Majority Banks is likely to have any such effect.
(6) No material adverse change in the financial position or
operations of the Guarantor from that set forth in the
Information Memorandum.
(7) All necessary corporate documents, board resolutions,
shareholders' resolutions and specimen signatures and
certified copies of the constitutional documents of the
Borrower and the Guarantor.
(8) All necessary Consents (whether in relation to the Offer
the Credit Agreement or otherwise) shall have been
obtained.
(9) Legal opinions from:
- Linklaters & Paines, English legal advisers to the
Arranger
- Internal Counsel of the Guarantor and Fulbright &
Jaworski, U.S. legal adviser to the Guarantor
(10) No condition of the Offer having been waived in the whole
or part and the Offer Document not having been amended,
added to, revised or renewed, in each case without the
prior approval o the Arranger and the Offer not having
lapsed.
(11) The Offer has become (or, but only if the Arranger has
given prior approval to such declaration, has been
declared) unconditional in all respects.
(A) To each Drawdown under the Facility: The conditions precedent
to be fulfilled to the satisfaction of the Arranger before
each drawdown (including the first) under the Facility will
include:-
(1) All representations and warranties in the Credit
Agreement in the form set out in Annex 3 (other than
those in paragraphs (13) and (15) of sub-clause (A)
thereof which shall relate only to the first drawdown)
would be correct if repeated on the proposed date of the
drawdown by reference to the circumstances then existing.
(2) No Event of Default or Potential Event of Default has
occurred and is continuing on or before the date of the
drawdown, or will occur as a result of that drawdown.
ANNEX 3
REPRESENTATIONS AND WARRANTIES
------------------------------
(A) Each of the Borrower and the Guarantor severally represents
and warrants to and for the benefit of each other party to
this Agreement (but, in the case of the Borrower, only in
relation to itself and its Subsidiaries) as follows:
(1) Status: The Borrower, the Guarantor and each Principal
Subsidiary (a) is a corporation duly incorporated,
validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (b) has the
corporate power to own its property and to carry on its
business as now being conducted, (c) is duly qualified to
do business and is in good standing in each jurisdiction
in which the properties owned or leased by it therein or
in which the nature of the business conducted by it makes
such qualification necessary except where the failure of
the Borrower, the Guarantor or such Principal Subsidiary
to be so qualified or in good standing, individually or
collectively, would not have a Material Adverse Effect,
and in the case of the Borrower, is wholly-owned and
Controlled by the Guarantor.
(2) Powers: each of the Borrower and the Guarantor has the
corporate power to enter into, exercise its rights and
perform and comply with its obligations under this
Agreement and (in the case of the Borrower) to make and
implement the Offer all of which have been duly
authorized by all proper and necessary corporate action;
(3) Authorization and Consents: all actions, conditions and
things required by applicable federal, state, or local
statute or any order, rule or regulation of any court or
governmental agency or body to be taken, fulfilled and
done (including the obtaining of any necessary Consents)
in order (a) to enable each of the Borrower and the
Guarantor lawfully to enter into, exercise their
respective rights and perform and comply with their
respective obligations under this Agreement, (b) to
ensure that those obligations are legally binding and
enforceable in accordance with their respective terms,
(c) to enable the Borrower to make and implement the
Offer and (d) to make this Agreement admissible in
evidence in the courts of England, and the state and
federal courts of each of the States of Texas, Delaware
and New York, have been taken, fulfilled and done;
(4) Non-Violation of Laws, etc.: the entry by the Borrower
and the Guarantor into, exercise of their respective
rights and/or performance of or compliance with their
respective obligations under this Agreement and/or the
making and implementation of the Offer do not and will
not violate (a) any statute or any order, rule or
regulation of any court or governmental agency or body to
which either of them is subject, (b) their respective
constitutional documents, or (c) any agreement to which
either of them or any Subsidiary is a party or which is
binding on them or their respective Assets other than
violations of any such agreements which individually or
collectively would not have a Material Adverse Effect on
the Group, and do not and will not, except as provided in
Paragraph (B) in Annex 4, result in the creation of, or
oblige either of them to create, any security over those
Assets;
(5) Obligations Binding: the obligations of the Borrower and
the Guarantor under this Agreement are valid, binding and
enforceable in accordance with their terms;
(6) Accounts:
(a) The audited financial statements with respect to
the Guarantor and its consolidated subsidiaries
included in the Annual Report on Form 10-K for the
year ended September 30, 1993 filed by the
Guarantor pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act"), have been prepared in accordance with
generally accepted accounting principles accepted
in the United States of America for the periods
concerned, conform to the requirements of
Regulation S-X of the Securities and Exchange
Commission and fairly present the financial
position, results of operations and cash flows of
the Guarantor and its consolidated subsidiaries at
the respective dates and for the respective periods
indicated therein;
(b) The unaudited financial statements with respect to
the Guarantor and its consolidated subsidiaries
included in the Reports on Form 10-Q for the
quarters ended December 31, 1993, March 31, 1994
and June 30, 1994 filed by the Guarantor pursuant
to Section 13 of the Exchange Act, (i) have been
prepared in conformity with the rules and
regulations of the Securities and Exchange
Commission and (ii) in the opinion of the
management of the Guarantor, all adjustments
necessary to a fair statement of the financial
position, results of operations and cash for the
periods indicated have been made;
(7) Litigation: no proceedings against or affecting either of
the Borrower or the Guarantor is pending or to the
knowledge of either of them threatened before any court
or governmental agency or department:
(a) which purports to or does restrain the entry into,
exercise of any of their respective rights under
and/or performance or enforcement of or compliance
with any of their respective obligations under this
Agreement; or
(b) which involves a material risk of the ultimate
disposition of such proceeding having (either
singly or when aggregated with any other
proceeding) a Material Adverse Effect on the Group;
(8) No Default: no Event of Default or Potential Event of
Default has occurred and is continuing or will occur as
a result of making any Advance. Neither the Guarantor,
the Borrower nor any of their respective Subsidiaries are
in breach of or default under any agreement relating to
borrowed money to an extent or in a manner which is
likely to have a Material Adverse Effect on the Group;
(9) Investment Company Act; Public Utility Holding Company
Act: neither the Guarantor nor any Subsidiary is (a) an
"investment company" as defined in, or subject to
regulation as such under, the Investment Company Act of
1940, as amended, or (b) a non-exempt "holding company"
subject to regulation or, to the knowledge of the
Guarantor's officers, an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company"
within the meaning of the Public Utility Holding Company
Act of 1935, as amended;
(10) ERISA: neither the Guarantor nor any Subsidiary has
incurred any accumulated funding deficiency within the
meaning of ERISA which would have a Material Adverse
Effect and neither the Guarantor nor any Principal
Subsidiary has incurred any liability in connection with
any Plan under Sections 501 or 502 of ERISA, Subtitle IV
of ERISA, or Chapter 43 of the Code which would have a
Material Adverse Effect, and each Plan is and has been in
compliance in all material respects with all applicable
laws;
(11) Tax Returns and Payments:
(a) the Guarantor and its Subsidiaries have filed all
federal, state and other tax returns (or obtained
extensions with respect thereto) which, to the
knowledge of the Guarantor's officers, are required
to be filed and have paid all taxes which are shown
to be due pursuant to such returns. No material
income tax liability of the Guarantor and its
Subsidiaries has been asserted by the Internal
Revenue Service of the United States of America or
any state or local agency for income taxes in
excess of those already paid which is not being
contested in good faith by appropriate proceedings
and for which adequate reserves have not been
created on the books of the Guarantor and its
Subsidiaries;
(b) the federal income tax liabilities of the Guarantor
and its Subsidiaries, if any, have been finally
determined by the Internal Revenue Service and
satisfied for all taxable years through the 1985
fiscal year.
(12) Existing Security: no Security exists on or over the
Assets except as permitted by paragraph (B) of Annex 4.
(13) No Material Adverse Change: there has been no material
adverse change in the financial position or results of
operations of the Guarantor since September 30, 1993.
(14) Winding-up: no meeting has been convened for Winding-up
the Borrower or the Guarantor, no such step is intended
by either of them and, so far as either of them is aware,
no petition, application or the like is outstanding for
Winding-up either of them.
(15) Information Memorandum:
(a) the information in the Information Memorandum
relating to the Borrower, the Guarantor and their
respective Subsidiaries and affiliates was true,
complete and accurate in all material respects at
the date thereof.
(b) the information in the Information Memorandum
relating to Abilene was correctly extracted from
publicly available information.
(16) Proceedings affecting Offer or Abilene Group: no
government or other Agency has instituted or (to the best
of the knowledge and belief of either the Borrower or the
Guarantor) threatened any action, legal proceedings,
suit, inquiry or investigation or enacted or made, or (to
the best of the knowledge and belief of either the
Borrower or the Guarantor) proposed to enact or make, any
statute, regulation or order which might:
(a) make illegal or restrict, prohibit, delay or
otherwise interfere with the acquisition of any or
all of the shares in Abilene the making or
implementation of the Offer or any other
transaction contemplated hereunder or hereby; or
(b) require the divestiture by any member of the Group
or by Abilene or any Subsidiary of Abilene of all
or any part of its revenues, which divestiture
could reasonably be expected to be likely to have a
Material Adverse Effect on the Group; or
(c) have a materially prejudicial effect on the
business, financial condition or prospects of
Abilene and its Subsidiaries taken as a whole.
No other litigation, arbitration, administrative
proceeding, injunction or order is current or pending or
(to the best of the knowledge and belief of either the
Borrower or the Guarantor) threatened or has been made
which might have any of the effects mentioned in (a), (b)
or (c) above.
(17) Margin Stock; Use of Proceeds: neither the Guarantor nor
any of its Subsidiaries is engaged in the business of
extending credit for the Purpose of purchasing or
carrying margin stock (within the meaning of Regulation
U). No part of the proceeds of any Advance will be used,
directly or indirectly, for the purpose of purchasing or
carrying or trading in any securities under such
circumstances as to involve the Guarantor or any Bank in
a violation of Regulation G, T, U or X.
(18) Franchises and Other Rights: the Guarantor and each of
its Subsidiaries have all franchises, permits, licenses,
and other authority (collectively, the "Operating
Rights") as are necessary to enable them to carry on
their respective businesses as now being conducted,
failure to have which would in the aggregate have a
Material Adverse Effect on the Group.
(19) Repetition: each of the representations and warranties in
paragraphs (1) to (5) above will be correct and complied
with so long as any sum remains to be lent or remains
payable under the Credit Agreement and those in
paragraphs (6) to (18) above (other than paragraphs (13),
(15) and (16)) will be correct and complied with on each
Advance Date, in each case as if repeated then by
reference to the then existing circumstances.
(B) Each representation and warranty in paragraphs (3)(d) and (5)
of sub-clause (A) shall (where applicable) be subject, as to
matters of law only, to the qualifications in the opinions
referred to in paragraph (9) of sub-clause (A) of Annex 2.
ANNEX 4
UNDERTAKINGS
------------
Each of the Borrower and the Guarantor severally undertakes (but,
in the case of the Borrower, only in relation to itself and its
Subsidiaries) that, so long as any sum remains to be lent or
remains payable under the Facility:
(A) Status: each of their respective payment obligations under
this Agreement rank and will at all times rank at least
equally and rateably in all respects with all its other
unsecured and unsubordinated Indebtedness other than
statutorily preferred Indebtedness;
(B) Negative Pledge of the Guarantor:
(1) except as otherwise provided in paragraph (2) below, the
Guarantor shall not, and shall not permit any Restricted
Subsidiary to, incur any Debt secured by a Lien upon any
Principal Property of the Guarantor or any Restricted
Subsidiary or upon any shares of stock or Debt other than
margin stock (within the meaning of Regulation U) of any
Restricted Subsidiary (whether such Principal Property,
shares of stock or Debt are now owned or hereafter
acquired) without in any such case effectively providing
concurrently with the incurrence of any such Debt that
all sums payable at that time or thereafter under this
Agreement (together with, if the Guarantor shall so
determine, any other Indebtedness of the Guarantor or
such Restricted Subsidiary then existing or thereafter
created which is not subordinate to such sums) shall be
secured equally and rateably with (or, at the option of
the Guarantor, prior to) such Debt, so long as such Debt
shall be so secured; provided, however, that nothing in
this sub-clause (B) shall prevent, restrict or apply to
(and there shall be excluded from secured Debt in any
computation under this sub-clause (B)) Debt secured by:
(a) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that
are not yet past due or which are being contested
by the Guarantor in good faith and against which
adequate reserves as required by generally accepted
accounting principles have been established by the
Guarantor;
(b) pledges or deposits made in the ordinary course of
business to secure payment of worker's
compensation, or to participate in any fund in
connection with worker's compensation, unemployment
insurance, old-age pensions or other social
security programs;
(c) Liens of mechanics, materialmen, warehouses,
carriers, or other like liens, securing obligations
incurred in the ordinary course of business that
are not yet past due or which are being contested
by the Guarantor in good faith and against which
adequate reserves as required by generally accepted
accounting principles have been established by the
Guarantor;
(d) Liens on property, shares of stock or Indebtedness
of any corporation existing at the time such
corporation becomes a Restricted Subsidiary or
arising thereafter (i) otherwise than in connection
with the borrowing of money arranged thereafter and
(ii) pursuant to contractual commitments entered
into prior to and not in contemplation of such
corporation becoming a Restricted Subsidiary;
(e) Liens on any property (including shares of stock or
Debt) existing at the time of acquisition thereof
(including acquisition through merger or
consolidation) or securing the payment of all or
any part of the purchase price or construction cost
thereof or securing any Debt incurred prior to, at
the time of, or within 180 days after, the
acquisition of such property, shares of stock or
Debt or the completion of any such construction,
whichever is later, for the purpose of financing
all or any part of the purchase price or
construction cost thereof (provided such Liens are
limited to such property, improvements thereon and
the land upon which such property and improvements
are located and any other property not then
constituting a Principal Property);
(f) Liens on any property to secure all or any part of
the cost of development, operation, construction,
alteration, repair or improvement of all or any
part of such property, or to secure Debt, incurred
prior to, at the time of or within 180 days after,
the completion of such development, operation,
construction, alteration, repair or improvement,
whichever is later, for the purpose of financing
all or any part of such cost (provided such Liens
are limited to such property, improvements thereon
and the land upon which such property and
improvements are located and any other property not
then constituting a Principal Property);
(g) Liens which secure Debt owing by a Restricted
Subsidiary to the Guarantor or to another
Restricted Subsidiary or by the Guarantor to a
Restricted Subsidiary;
(h) Liens on property of the Guarantor or a Restricted
Subsidiary in favor of the United States of America
or any State thereof, or any department, agency or
instrumentality or political subdivision of the
United States of America or any State thereof, or
in favor of any other country or any political
subdivision thereof, to secure partial, progress,
advance or other payments pursuant to any contract
or statute or to secure any Indebtedness incurred
for the purpose of financing all or any part of the
purchase price or the cost of construction of the
property subject to such Liens, or in favor of any
trustee or mortgagee for the benefit of holders of
Indebtedness of any such entity incurred for any
such purpose;
(i) Liens incurred in connection with tax exempt or
similar financing of pollution control, sewage or
solid or hazardous waste disposal facilities, or
similar qualified facilities;
(j) Liens existing at June 30, 1994 and as set out in
Annex 6; and
(k) any extension, renewal or replacement (or
successive extensions, renewals or replacements),
in whole or in part, of any Lien referred to in the
foregoing sub-paragraphs (a) to (j), inclusive, or
of any Debt secured thereby; provided that such
extension, renewal or replacement Lien shall be
limited to all or any part of the same property
that secured the Lien extended, renewed or replaced
(plus any improvements on such property) and shall
secure no larger amount of Debt than that existing
at the time of such extension, renewal or
replacement;
(2) notwithstanding the foregoing provisions of this Clause
(B), the Guarantor and any one or more Restricted
Subsidiaries may incur Debt secured by a Lien which would
otherwise be subject to the foregoing restrictions if at
the time it does so (the "Incurrence Time") the aggregate
amount of such Debt plus all other Debt of the Guarantor
and its Restricted Subsidiaries secured by a Lien which
would otherwise be subject to the foregoing restrictions
(not including Debt permitted to be secured under
paragraph (1) above), plus the aggregate Attributable
Debt (determined as of the Incurrence Time) of Sale and
Leaseback Transactions (other than Sale and Leaseback
Transactions permitted by paragraphs (1) and (2) of
Clause (C) below) entered into after the date of this
Agreement and in existence at the Incurrence Time (less
the aggregate amount of proceeds of such Sale and
Leaseback Transactions which shall have been applied in
accordance with paragraph (4) of Clause (C) below), do
not exceed ten per cent. (10%) of Consolidated Net
Tangible Assets;
(C) Sale and Leaseback Transactions: the Guarantor shall not
itself, and shall not permit any Restricted Subsidiary to,
enter into any arrangements after the date of this Agreement
with any bank, insurance company or other lender or investor
(other than the Guarantor or another Restricted Subsidiary)
providing for the leasing as lessee by the Guarantor or any
such Restricted Subsidiary of any Principal Property (except
a lease for a temporary period not to exceed three years by
the end of which it is intended the use of such Principal
Property by the lessee will be discontinued), which was or is
owned by the Guarantor or a Restricted Subsidiary and which
has been or is to be sold or transferred by the Guarantor or
a Restricted Subsidiary, more than 180 days after the
completion of construction and commencement of full operation
thereof by the Guarantor or such Restricted Subsidiary, to
such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the
security of such Principal Property (herein called a "Sale and
Leaseback Transaction") unless:
(1) the Guarantor or such Restricted Subsidiary would (at the
time of entering into such arrangement) be entitled
pursuant to sub-paragraphs (a) through (h) of paragraph
(1) of Clause (B) above, without equally and rateably
securing all sums payable at that time or thereafter
under this Agreement, to incur Debt secured bs a Lien on
such Principal Property; or
(2) such Sale and Leaseback Transaction relates to a landfill
or other waste disposal site (excluding any plant or
similar facility located thereon) owned by the Guarantor,
the Borrower or such Restricted Subsidiary or which the
Guarantor, the Borrower or such Restricted Subsidiary has
the right to use; or
(3) the Attributable Debt of the Guarantor and its Restricted
Subsidiaries in respect of such Sale and Leaseback
Transaction and all other Sale and Leaseback Transactions
entered into after the date of this Agreement (other than
such Sale and Leaseback Transactions as are permitted by
paragraph (1), (2) or (4) of this Clause (C)), plus the
aggregate principal amount of Debt secured by Liens on
Principal Properties then outstanding (excluding any such
Debt secured by Liens covered in sub-paragraphs (a)
through (h) of paragraph (1) of Clause (B)) which do not
equally and rateably secure such sums, would not exceed
ten percent (10%) of Consolidated Net Tangible Assets; or
(4) the Guarantor, within 180 days after the sale or
transfer, applies or causes a Restricted Subsidiary to
apply an amount equal to the greater of the net proceeds
of such sale or transfer or fair market value of the
Principal Property so sold and leased back at the time of
entering into such Sale and Leaseback Transaction (in
either case as determined by the Board of Directors of
the Guarantor) to the repayment or prepayment of Advances
or to the retirement of other indebtedness of the
Guarantor (other than Indebtedness subordinated to the
obligations of the Guarantor under this Agreement) or
indebtedness of a Restricted Subsidiary, for money
borrowed, having a stated maturity more than 12 months
from the date of such application or which is extendible
at the option of the obligor thereon to a date more than
12 months from the date of such application, provided
that the amount to be so applied shall be reduced by the
principal amount of any such indebtedness of the
Guarantor or a Restricted Subsidiary voluntarily retired
by the Guarantor or a Restricted Subsidiary within 180
days after such sale or transfer. Notwithstanding the
foregoing, no retirement referred to in this paragraph
(4) may be affected by payment at maturity.
Notwithstanding the foregoing, where the Guarantor or any
Restricted Subsidiary is the lessee in any Sale and Leaseback
Transaction, Attributable Debt shall not include any Debt
resulting from the Guarantee by the Guarantor or any other
Restricted Subsidiary of the lessee's obligation thereunder if
the lessee's obligation is included in Attributable Debt;
(D) Disposals: the Guarantor will not, and will ensure that its
Subsidiaries will not, (whether by a single transaction or a
number of related transactions and whether or not at one time
or over a period of time) sell or otherwise dispose of all or
substantially all of the assets of the Guarantor and its
Subsidiaries taken as a whole.
(E) Merger and Consolidation: neither the Borrower nor the
Guarantor shall merge into or consolidate with any Person and
they shall not permit any Person to merge into or consolidate
with either of them unless:-
(1) in case the Borrower or the Guarantor shall merge into or
consolidate with another corporation, the corporation
formed by such consolidation or into which the Borrower
or the Guarantor as the case may be is merged or
consolidated shall be a corporation organized and
existing under the laws of England (in the case of the
Borrower) or the laws of the United States of America,
any State thereof or the District of Columbia (in the
case of the Guarantor) and, if the Guarantor or the
Borrower are not the survivor, such corporation shall
expressly assume, by an agreement supplemental hereto,
executed and delivered to the Arranger, in form
satisfactory to the Majority Banks, the due and punctual
payment of all sums payable at that time or thereafter
under this Agreement and the performance of every
covenant of the Borrower or the Guarantor, as the case
may be, contained in this Agreement to be performed or
observed; and
(2) immediately after giving effect to such transaction and
treating any Indebtedness which becomes an obligation of
the Guarantor, the Borrower or a Subsidiary as a result
of such transaction as having been incurred by the
Guarantor, the Borrower or such Subsidiary at the time of
such transaction, no Event of Default or Potential Event
of Default shall have occurred and be continuing.
(F) Consolidated Net Worth: The Guarantor shall not permit
Consolidated Net Worth (i) to be less than $1,500,000,000 and
(ii) at any time during the fiscal year ending September 30,
1995 and each fiscal year thereafter to be less than an amount
equal to the sum of (A) the amount of Consolidated Net Worth
required under this Paragraph (F) for the immediately
preceding fiscal year plus (B) 25% of Consolidated Net Income
for such immediately preceding fiscal year; provided, however,
the amount of any foreign currency translation adjustment
shall not be included for purposes of determining Consolidated
Net Worth; and provided further, if Consolidated Net Income in
any such preceding fiscal year is less than zero, the amount
to be aggregated for such fiscal year shall be zero.
(G) Financial Statements and Other Information: the Guarantor
shall maintain a system of accounting in accordance with
generally accepted accounting principles and practices in the
United States of America and will furnish to the Arranger
(with a sufficient number of copies for each Bank):
(1) as soon as available, and in any case within 120 days
after the end of each fiscal year of the Guarantor, the
consolidated balance sheet of the Guarantor and its
Subsidiaries as of the close of such fiscal year, and the
related consolidated statement of income, consolidated
statement of cash flows and consolidated statement of
retained earnings (or such other related statements as
the Guarantor shall prepare in accordance with such
principles and practices) for the Guarantor and its
Subsidiaries for such year, setting forth, in comparative
form, the corresponding figures from the preceding fiscal
year, certified by independent public accountants
selected by the Guarantor together with in the case of
the Borrower, its unconsolidated audited accounts
prepared in accordance with the foregoing;
(2) as soon as available, and in any case within 60 days
after the end of each of the first three fiscal quarters
of each fiscal year of the Guarantor, and certified by an
authorized financial officer of the Guarantor, the
consolidated balance sheet of the Guarantor and its
Subsidiaries as at the end of such quarter and the
related consolidated statement of income for such fiscal
quarter and fiscal year to date and consolidated
statement of cash flows for such fiscal year to date (or
such other related statements as the Guarantor shall
prepare in accordance with generally accepted accounting
principles and practice in the United States of America)
for the Guarantor and its Subsidiaries for such fiscal
quarter and for the fiscal year to date together with, in
the case of the Borrower its unconsolidated accounts
prepared in accordance with the foregoing;
(3) at the time of each delivery of a balance sheet pursuant
to the foregoing paragraphs (1) and (2), a certificate of
an authorized financial officer of the Guarantor stating
that no Event of Default or Potential Event of Default
shall have occurred and be continuing, and setting forth
computations in reasonable detail showing, as at the date
of such balance sheet, whether or not there was
compliance with the financial covenant contained in
Clause (F) above and, if requested by the Arranger,
Clause (B) above;
(4) promptly after their becoming available, (a) copies of
all financial statements, reports and proxy statements
which the Guarantor shall have sent to its stockholders
generally; and (b) copies of all registration statements
(other than registration statements on Form S-8 or any
successor form) and regular and periodic reports (other
than reports on Form ll-K or any successor form), if any,
which the Guarantor or the Borrower shall have filed with
the Securities and Exchange Commission, the Stock
Exchange or any governmental agency or agencies
substituted therefor, or any similar or corresponding
governmental department, commission, board, bureau or
agency, federal, state or foreign, or (except for routine
listing applications) with any securities exchange,
provided that these obligations do not extend to
documents filed and not available for public inspection;
and
(5) such other information relating to the performance of the
provisions of this Agreement by the Borrower and the
Guarantor or to the business and financial position of
the Borrower and the Guarantor or any of its Subsidiaries
as the Arranger or any Bank (through the Arranger) may
from time to time reasonably request including, without
limitation, information concerning material legal
proceedings and such legal opinions and/or other
documents relevant in the context of or relating to this
Agreement as the Arranger may reasonably request; and
(6) promptly after a financial officer becomes aware thereof,
each change in the rating given by either Standard &
Poor's, Moody's or Duff & Phelps to any outstanding
senior indebtedness of the Guarantor.
(H) Payment of Taxes: each of the Borrower and the Guarantor will
pay and discharge, and cause each Subsidiary to pay and
discharge, all taxes, assessments and governmental charges or
levies imposed upon either of them or upon their income or
profits, or upon any property belonging to them, prior to the
date on which penalties attach thereto, and all lawful claims
which, if unpaid, might become a Lien or charge upon any
material property of the Borrower, the Guarantor or such
Subsidiary not permitted by paragraph (B)(l)(a) above,
provided that neither the Borrower, the Guarantor nor any such
Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim the payment of which is being contested
in good faith and by proper proceedings and in respect of
which the Borrower or the Guarantor, as the case may be, has
provided adequate reserve in its books.
(I) Insurance: to the extent such insurance shall be available on
commercially reasonable terms, each of the Borrower and the
Guarantor shall, and shall cause its Subsidiaries to, keep
adequately insured by financially sound and reputable
insurers, or by way of adequate self-insurance, all risks of
loss of a character usually insured by corporations of
comparable size and financial strength and with comparable
risks.
(J) Maintenance of Existence: subject to Clause (E) each of the
Borrower and the Guarantor will:
(1) preserve and maintain its corporate existence in good
standing if failure to do so could have a Material
Adverse Effect on the Group;
(2) qualify and remain qualified to do business as a foreign
corporation in each jurisdiction in which the character
of the properties owned or leased by it therein or in
which the transaction of its business is such that
failure to qualify has or could have a Material Adverse
Effect on the Group.
(K) Compliance with Applicable Laws: each of the Borrower and the
Guarantor will comply, and cause each Subsidiary to comply,
with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority of
England, the United States of America or such other
jurisdiction to which they or any Subsidiary may be subject,
a breach of which has or could have a Material Adverse Effect
on the Group and, without prejudice to the generality of the
foregoing, the Borrower will not apply the proceeds of any
Advance in such a way that would result in the violation by
the Guarantor or any Bank of the provisions of Regulations U,
T, G or X.
(L) Notices of Default: the Borrower and the Guarantor will
furnish to the Arranger, immediately upon becoming aware of
the existence of any Event of Default or Potential Event of
Default, a written notice specifying the nature and period of
existence thereof and what action the Borrower or the
Guarantor is taking or proposes to take with respect thereto.
(M) Inspection: each of the Borrower and the Guarantor shall
permit an authorized representative or representatives of the
Arranger or any of the Banks to visit and inspect at all
reasonable times, at the risk and expense of the inspecting
party, any of the properties of the Guarantor, the Borrower or
their respective Subsidiaries, including its books, and to
make extracts therefrom (subject to any confidentiality
agreements, copyright laws and similar requirements) and to
discuss the affairs, finances, and accounts of the Guarantor,
the Borrower or their respective Subsidiaries with its
officers and employees.
(N) Prior Approval to Variation of Offer: there will be no
amendments, addition to, revision, renewal or waiver of the
Offer and/or all or any of the terms and conditions of the
Offer without the prior approval of the Arranger. Such
approval will not be unreasonably withheld.
(O) Compliance with Regulations/Purchases: the Offer will comply
with The City Code on Take-overs and Mergers. In addition the
Borrower and the Guarantor will not and will ensure that no
Person acting in concert with either of them will acquire any
shares in Abilene at a price higher than that price per share
under the Offer at that time without the prior approval of the
Arranger and they will each comply in all respects with The
City Code on Take-overs and Mergers.
(P) Compulsory Acquisitions: as and when it is entitled to do so,
the Borrower will promptly take all necessary action to
exercise all rights it may have under Sections 428 to 430F of
the Companies Act 1985 to acquire those shares in Abilene not
already acquired by it.
(Q) Releases etc: the Borrower will ensure that, promptly after
the issue thereof, there are delivered to the Arranger enough
copies for the Banks of the Offer Document, any amendment,
addition to, revision or renewal of the Offer and any press
release or other announcement at any time by or on behalf of
the Borrower in relation to the Offer.
(R) Prior Approval of References to Banks etc.: the Borrower and
the Guarantor shall ensure that, before the issue of any
document or the making of any announcement referred to in
sub-clause (P), any reference therein to the Facility or all
or any of the Banks and the Arranger shall have been approved
by the Arranger, such approval not to be unreasonably
withheld.
ANNEX 5
EVENTS OF DEFAULT
------------------
(1) The following are Events of Default:
(A) Non-Payment: the Borrower does not pay in the manner
provided in this Agreement (1) any principal payable
under it when due or (2) any other sum payable under it
within three business days after notice of that
non-payment has been given to it by the Arranger.
(B) Breach of Representation or Warranty: any representation,
warranty or statement by or on behalf of the Borrower or
the Guarantor in this Agreement or in any document,
certificate or financial statement delivered in
connection with it proves to have been incorrect, in any
material respect when made and the same remains incorrect
for a period of 30 days after the earlier of written
notice of such circumstance shall have been given to the
Borrower or the Guarantor, as the case may be, by the
Arranger or any Bank or discovery of such circumstance by
the Borrower or the Guarantor as the case may be; or
(C) Breach of Undertaking: the Borrower or the Guarantor does
not comply with its obligations under Clause (D), (E),
(F) or (J)(1) of Annex 4; or
(D) Breach of Other Obligation: the Borrower or the Guarantor
does not perform or comply with any one or more of its
other obligations under this Agreement or the Commitment
Letter, and such failure shall remain unremedied for a
period of 30 days after the earlier of written notice of
such failure shall have been given to the Borrower or the
Guarantor, as the case may be, by the Arranger or any
Bank or discovery of such failure by the Borrower; or
(E) Cross Default: the Borrower, the Guarantor or any of
their respective Subsidiaries shall (a) default in the
payment of any Indebtedness of the Borrower, the
Guarantor or such Subsidiary (as the case may be), or any
interest or premium thereon, when due whether by
acceleration or otherwise beyond any period of grace
provided with respect thereto or (b) default in the
performance or observance of any obligation or condition
with respect to such other Indebtedness if such default
enables the holder of such Indebtedness or any Person
acting on such holder's behalf to accelerate the maturity
thereof (provided that if such default or failure shall
be cured or waived by the holders of such Indebtedness,
in each case as may be permitted by the indenture,
agreement or instrument evidencing such Indebtedness,
then the Event of Default hereunder by reason thereof
shall be deemed likewise to have been thereupon cured or
waived), if in the case of any defaults described in
clauses (a) and (b) of this Clause (E), the aggregate
principal amount of all such Indebtedness for which all
such defaults shall have occurred and be continuing
exceeds $25,000,000; provided, however, a default for
purposes of this Clause (E) shall not be deemed to exist
by reason of the acceleration of the maturity of any such
obligation to a Bank or an affiliate (within the meaning
of Regulation U) of a Bank solely by reason of a default
in the performance of a term or condition in any
agreement or instrument under or by which such obligation
is created, evidenced or secured, which term and
condition restricts the right of the Borrower, the
Guarantor or any other Person to sell, pledge or
otherwise dispose of any margin stock (within the meaning
of Regulation U) held by the Borrower, the Guarantor or
such other Person; or
(F) Inability to Pay Debts: the Borrower, the Guarantor or
any Principal Subsidiary shall admit in writing its
inability to pay, or generally shall not be paying, its
debts as such debts become due; or
(G) Involuntary Winding up: (a) the presentation to a court
having jurisdiction in the premises of a petition (i)
seeking a decree or order for relief in respect of the
Borrower, the Guarantor or any Principal Subsidiary in an
involuntary case or proceeding under any applicable
English, United States Federal or State bankruptcy,
insolvency, reorganization or other similar Law, (ii)
seeking a decree or order adjudging the Borrower, the
Guarantor or any Principal Subsidiary a bankrupt or
insolvent, (iii) seeking reorganization, arrangement,
adjustment or composition of or in respect of the
Borrower, the Guarantor or any Principal Subsidiary under
any applicable English, United States Federal or State
Law, or (iv) seeking the appointment of a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Borrower, the Guarantor or
any Principal Subsidiary or of any substantial part of
its Assets, or the Winding Up of its affairs, and in any
such case such petition remaining unstayed or not having
been dismissed for a period of 90 consecutive days or (b)
a decree, order or other judgment of the court is entered
in respect of any of the remedies, reliefs or other
matters for which any petition referred to in (a) above
is presented; or
(H) Voluntary Winding up: the commencement by the Borrower,
the Guarantor or any Principal Subsidiary of a voluntary
case or proceeding under any applicable English, United
States Federal or State bankruptcy, insolvency,
reorganization or other similar Law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent,
or the consent by it to the entry of a decree or order
for relief in respect of the Borrower, the Guarantor or
any Principal Subsidiary in an involuntary case or
proceeding under any applicable English, United States
Federal or State bankruptcy, insolvency, reorganization
or other similar Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it,
or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable
United States Federal or State Law, or the Consent by the
Borrower, the Guarantor or any Principal Subsidiary to
the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar
official of the Borrower, the Guarantor or any Principal
Subsidiary or of any substantial part of its Assets, or
the making by it of a general assignment for the benefit
of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due,
or the taking of corporate action by the board of
directors or the stockholders of the Borrower, the
Guarantor or any Principal Subsidiary in furtherance of
any such action; or
(I) Enforcement Proceedings: the Borrower, the Guarantor or
any Principal Subsidiary shall suffer the entry of a
final judgment or judgments for the payment of money in
excess of $25,000,000 in aggregate against it and the
same shall not be discharged (or provision made for its
discharge) or a stay of execution thereof shall not be
procured, within the appeal time provided by law or rules
of the court and the Borrower, the Guarantor or such
Principal Subsidiary, as the case may be, shall not,
within said period, or such longer period during which
execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed
during such appeal; or
(J) ERISA: any finding or determination shall be made with
respect to a Plan under Section 4041(c) or (e) of ERISA,
or any fact or circumstance shall occur with respect to
a Plan which, in the opinion of the Majority Banks,
provides grounds for the commencement of any proceeding
under Section 4042 of ERISA, or any proceeding shall be
commenced with respect to a Plan under Section 4042 of
ERISA, or any Plan termination or any full or partial
withdrawal from a Plan or Plans shall occur which could
result in liability of the Guarantor or any Principal
Subsidiary to the Pension Benefit Guaranty Corporation or
to the Plan or Plans in the aggregate amount of
$20,000,000 or more, or the actuarial present value of
unfunded vested benefits under all Plans shall exceed
$50,000,000; or
(K) Illegality: it is unlawful for the Borrower and/or the
Guarantor to perform its obligations to pay any sum
payable by it under this Agreement; or
(L) Ownership of Borrower: the Borrower (or its successor
pursuant to any merger or consolidation permitted
pursuant to paragraph (E) of Annex (4) ceases to be
wholly-owned and Controlled by the Guarantor; or
(M) Guarantee: the Guarantee by the Guarantor of the
obligations of the Borrower in respect of the Facility is
not (or is claimed by tho Guarantor not to be) in full
force and effect; or
(N) Analogous Events: any event occurs which, under the law
of any relevant jurisdiction, has an analogous or
equivalent effect to any event mentioned in sub-clause
(G), (H) or (I).
(2) If at any time and for any reason (whether within or beyond
the control of any party to this Agreement):
(a) either of the Events of Default specified in Clause
(G) or (H) occurs; or
(b) any other Event of Default mentioned above occurs
and, while such Event of Default is continuing, the
Arranger, having been so instructed by the Majority
Banks, by notice to the Borrower shall so declare.
the Commitments shall immediately be cancelled and/or all
Advances, accrued interest thereon and any other sum then
payable under this Agreement shall automatically become and be
immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, or other notice of
any kind to either the Borrower or the Guarantor, or any other
Person, all of which are hereby expressly waived by the
Borrower and the Guarantor.
ANNEX 6
LIENS EXISTING AS OF JUNE 30, 1994
----------------------------------
Mortgages Payable (by segment): $
(Millions)
Solid Waste 6.2
Corporate 0.1
International (1) 0.5
6.8
Other Secured Obligations (by segment):
Solid Waste 7.4
International (1) 5.7
13.1
____
Total Liens 19.9
====
__________________
(1) Excluding Otto Entsorgungsdienstleistung GmbH
Exhibit 10.3
SECOND AMENDMENT TO AMENDED AND RESTATED
AGREEMENT RESPECTING EMPLOYMENT
This Second Amendment ("Amendment") to Amended and Restated
Agreement Respecting Employment dated as of July 10, 1989, as
amended (the "Agreement"), by and between Browning-Ferris
Industries, Inc., a Delaware corporation (the "Company"), and
William D. Ruckelshaus ("Employee") is entered into by and between
the Company and Employee effective as of September 7, 1994, as
follows:
1. Section 3.D(ii) of the Agreement shall be replaced in its
entirety and shall hereafter read as follows:
"(ii) Employee's Rights Upon Change in Control. If a
Change in Control (as defined in subsection (b) of
Section 3(D)(i)) occurs while the Employee is on full-
time employment status with the Company and thereafter
any of the events specified in Section 4.C.(ii) occur
giving Employee the right to place himself on part-time
employment status, the Employee may, in his sole
discretion, within twelve (12) months after the
occurrence of the first such event, give notice to the
Secretary of the Company that he intends to elect to
exercise his rights under this Section 3(D) (the "Notice
of Intention"). Within thirty (30) days after the
Company's receipt of the Notice of Intention, the Company
shall provide written notice to the Employee setting
forth the Company's computation of the amount that would
be payable pursuant to subsection (iii) of this Section
3(D), accompanied by the written opinion of the Company's
independent certified public accountants confirming the
Company's computation. If the Employee takes exception
to the Company's computation of such amount, the Employee
may (but shall not be prejudiced in this right to later
contest the amount actually paid by failure to do so)
give a further written notice to the Company setting
forth in reasonable detail the Employee's exceptions to
the Company's computation, accompanied by the written
opinion of the Employee's tax advisor confirming the
basis for such exceptions. Exercise by the Employee of
his rights pursuant to this Section 3(D) shall only be
made by giving further notice to the Secretary of the
Company (the "Notice of Exercise") within six (6) months
from the date of the Notice of Intention.
2. As amended hereby, the terms of the Agreement shall be and
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed and delivered this
First Amendment to Amended and Restated Agreement as of the day and
year indicated above.
EMPLOYEE: BROWNING-FERRIS INDUSTRIES, INC.
By:__________________________ By:_____________________________
William D. Ruckelshaus Name: Gerald Grinstein
Title: Chairman of the
Compensation Committee of
the Board of Directors
Exhibit 12
BROWNING-FERRIS INDUSTRIES, INC.
AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
(Dollar Amounts in Thousands)
Year Ended September 30,
--------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Earnings Available for
Fixed Charges:
Income before minority
interest and extra-
ordinary item $299,474 $197,461 $175,607 $ 66,026 $258,392
Income taxes 199,649 129,726 112,273 51,670 164,175
-------- -------- -------- -------- --------
Income before income
taxes, minority
interest and extra-
ordinary item 499,123 327,187 287,880 117,696 422,567
Consolidated interest
expense 93,159 70,894 71,096 84,129 80,743
Interest expense related
to proportionate share
of 50% owned affiliates 22,689 25,354 25,269 16,520 9,176
Portion of rents repre-
senting the interest
factor 20,868 18,721 16,393 13,319 12,286
Less-Equity in earnings
(losses) of affiliates
less than 50% owned 4,698 -- 22 148 253
-------- -------- -------- -------- --------
Total $631,141 $442,156 $400,616 $231,516 $524,519
======== ======== ======== ======== ========
Fixed Charges:
Consolidated interest
expense and interest
costs capitalized $104,759 $ 89,563 $ 86,908 $ 95,455 $ 95,883
Interest expense and
interest costs capi-
talized related to
proportionate share
of 50% owned
affiliates 22,974 25,484 26,952 22,649 16,428
Portion of rents repre-
senting the interest
factor 20,868 18,721 16,393 13,319 12,286
-------- -------- -------- -------- --------
Total $148,601 $133,768 $130,253 $131,423 $124,597
======== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges 4.25 3.31(1) 3.08 1.76(2) 4.21
======== ======== ======== ======== ========
(1) Excluding the effects of the fiscal 1993 reorganization charge of $27.0
million, the ratio of earnings to fixed charges for fiscal 1993 is 3.51.
(2) Excluding the effects of the fiscal year 1991 special charge of $246.5
million, the ratio of earnings to fixed charges for fiscal year 1991 is 3.63.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated November 30, 1994,
included in this Form 10-K, into the Browning-Ferris Industries,
Inc. previously filed Form S-8 Registration Statement File Nos. 33-
48207, 33-41281, 33-53393 and 33-56583, Form S-3 Registration
Statement File Nos. 33-7793, 33-39432, 33-58298 and 33-51879 and
Form S-4 Registration Statement File No. 33-52240.
ARTHUR ANDERSEN LLP
Houston, Texas
November 30, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Company's consolidated financial statements for the year ended
September 30, 1994 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<CASH> 141,124
<SECURITIES> 0
<RECEIVABLES> 846,904
<ALLOWANCES> (33,284)
<INVENTORY> 32,811
<CURRENT-ASSETS> 1,186,093
<PP&E> 5,096,371
<DEPRECIATION> (2,046,604)
<TOTAL-ASSETS> 5,796,955
<CURRENT-LIABILITIES> 1,178,989
<BONDS> 1,458,629
<COMMON> 32,854
0
0
<OTHER-SE> 2,358,826
<TOTAL-LIABILITY-AND-EQUITY> 5,796,955
<SALES> 0
<TOTAL-REVENUES> 4,314,541
<CGS> 0
<TOTAL-COSTS> 3,123,375
<OTHER-EXPENSES> 615,910
<LOSS-PROVISION> 31,346
<INTEREST-EXPENSE> 81,871
<INCOME-PRETAX> 499,123
<INCOME-TAX> 199,649
<INCOME-CONTINUING> 283,973
<DISCONTINUED> 0
<EXTRAORDINARY> (5,263)
<CHANGES> 0
<NET-INCOME> 278,710
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
</TABLE>
Exhibit 10.18
BFI
RETIREMENT PLAN
THIS INDENTURE made as of the 15th day of September, 1994,
by Browning-Ferris Industries, Inc., a corporation organized and
existing under the laws of the State of Delaware (hereinafter
called the "Primary Sponsor");
W I T N E S S E T H:
WHEREAS, the BFI Retirement Plan, a defined benefit pension
plan, is maintained under an indenture dated June 5, 1985, as
amended (the "Plan"); and
WHEREAS, the Primary Sponsor desires to amend and restate
the Plan into a cash balance defined benefit pension plan and to
comply with the Tax Reform Act of 1986 and subsequent
legislation; and
WHEREAS, except as set forth below, the provisions of the
Plan, as amended and restated herein, shall apply only to
employees who perform an hour of service on or after October 1,
1994;
WHEREAS, to the extent required to comply with applicable
law, the applicable provisions of the Plan, as amended and
restated herein, shall apply on or after January 1, 1989 or such
later date as may be legally required;
NOW, THEREFORE, the Primary Sponsor does hereby amend and
restate, in its entirety, the Plan, generally effective as of
October 1, 1993, except as otherwise provided herein, to read as
follows:
BFI
RETIREMENT PLAN
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3 FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4 RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5 PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT. . . . . . . 19
SECTION 6 DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7 GENERAL RULES ON DISTRIBUTIONS. . . . . . . . . . . . . . . . 20
SECTION 8 REHIRED EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9 OFFSETS AND TRANSFERS INVOLVING FOREIGN
AFFILIATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10 ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . . 28
SECTION 11 CLAIM REVIEW PROCEDURE. . . . . . . . . . . . . . . . . . . . 30
SECTION 12 LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS. . . . . . . . . . . . 31
SECTION 13 PROHIBITION AGAINST DIVERSION . . . . . . . . . . . . . . . . 32
SECTION 14 LIMITATION OF RIGHTS. . . . . . . . . . . . . . . . . . . . . 32
SECTION 15 AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . 32
SECTION 16 ADOPTION OF PLAN BY AFFILIATES. . . . . . . . . . . . . . . . 35
SECTION 17 QUALIFICATION AND RETURN OF CONTRIBUTIONS. . . . . . . . . . 35
SECTION 18 INCORPORATION OF SPECIAL LIMITATIONS . . . . . . . . . . . . 36
Appendix A LIMITATION ON BENEFITS . . . . . . . . . . . . . . . .A-1
Appendix B TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . .B-1
SECTION 1 DEFINITIONS
Wherever used herein, the masculine pronoun shall be deemed
to include the feminine, and the singular to include the plural,
unless the context clearly indicates otherwise, and the following
words and phrases shall, when used herein, have the meanings set
forth below:
1.1 "Account" means a hypothetical account balance
established for each Participant which equals the present value
Actuarial Equivalent of the Participant's Old Plan Benefit, plus
the total amount credited on behalf of the Participant as of the
last day of each Plan Year beginning at December 31, 1994. The
amount credited on the last day of each Plan Year shall equal the
sum of:
(a) 4.5% of the Compensation for October 1, 1993 through
December 31, 1993, and thereafter, 4.5% of Compensation for the
Plan Year, of a Participant who is an Eligible Employee (and with
respect to part-time and seasonal employees only, has received a
year of Credited Service for such Plan Year); plus
(b) interest on the period's beginning balance computed
by multiplying such balance by 6% per annum for 1993 and 1994,
and thereafter, an annual rate determined by the Committee prior
to the first day of each Plan Year, but not less than 4% and not
more than 12% per annum thereafter. Such interest shall be
credited for each Plan Year through the end of the month
coinciding with or immediately preceding the date as of which
payment commences under the Plan.
Notwithstanding Subsection (a) above:
(1) a Participant who would otherwise be excluded
from receiving a credit for a period under Subsection (a) above
solely because the Employee was included in a unit of Employees
covered under a collective bargaining agreement between a union
and a Plan Sponsor shall receive a credit under Subsection (a)
for such period if the Participant is not included in such a
unit, and is an Eligible Employee, on his Severance Date; and
(2) a Participant who reaches a Disability
Retirement Date shall receive a credit under Subsection (a) above
equal to 4.5% of the greater of the Participant's Compensation in
the Plan Year in which the Disability Retirement Date occurred or
the first Plan Year immediately preceding that date, continuing
for each Plan Year until the earliest of the date as of which the
Participant (1) reaches age 65, (2) is no longer subject to a
Disability, or (3) elects to begin receiving payment under the
Plan.
1.2 "Accrued Benefit" means the Participant's Account at
any given date; provided, however:
(a) each Participant's accrued benefit, expressed as an
annuity commencing as of Normal Retirement Age (or if the
Participant continues to perform Hours of Service after his
Normal Retirement Age, as of the date of determination), shall
not be less than a frozen amount calculated under the Old Plan
Benefit Formula as of October 31, 1994; and
(b) the accrued benefit, expressed in the form described
in (a) above, of each Grandfathered Participant shall not be less
than as determined pursuant to the Old Plan Benefit Formula.
1.3 "Actuarial Equivalent" means, with respect to a
benefit, any benefit provided under the terms of the Plan which
has the same present value on the date the benefit payment
commences. In making such determination:
(a) except as set forth in Subsections (b) and (d), for
purposes of determining whether a benefit is the Actuarial
Equivalent of another benefit, an 8% interest rate and the 1983
Group Annuity Mortality Table weighted 85% male/15% female shall
be used;
(b) for purposes of determining the present value
Actuarial Equivalent of the guaranteed minimum accrued benefit
determined pursuant to Section 1.2(a), the following shall be
used:
(1) the "applicable interest rate" if the present value
(using such rate) is not in excess of $25,000; and
(2) 120% of the "applicable interest rate" if the
present value (as determined under Paragraph (1)) exceeds
$25,000; provided that the lump sum determined under this
Paragraph (2) shall not be less than $25,000.
For purposes of this Section, the "applicable interest rate"
means the interest rate which would be used as of the first day
of the Plan Year in which the distribution occurs by the PBGC for
purposes of determining the present value of a lump sum
distribution on plan termination;
(c) for any Participant whose vested Accrued Benefit is
his Account, the present value Actuarial Equivalent of the
Accrued Benefit is equal to the Account; and
(d) for purposes of determining the present value
Actuarial Equivalent of a Participant's Old Plan Benefit for
Participants who are Employees on both October 1, 1994 and
September 30, 1993, a Participant's age as of September 30, 1993
shall be calculated in years and whole months, the 1983 Group
Annuity Mortality Table weighted 85% male/15% female, and a 6%
interest rate shall be used.
1.4 "Actuary" means an actuary, enrolled by the Joint
Board for the Enrollment of Actuaries, selected by the Primary
Sponsor to provide actuarial services for the Plan.
1.5 "Affiliate" means (a) any corporation which is a
member of the same controlled group of corporations (within the
meaning of Code Section 414(b)) as is a Plan Sponsor, (b) any
other trade or business (whether or not incorporated) under
common control (within the meaning of Code Section 414(c) of the
Code) with a Plan Sponsor, (c) any other organization which is a
member of an affiliated service group (within the meaning of Code
Section 414(m)) with a Plan Sponsor, and (d) any other entity
required to be aggregated with a Plan Sponsor pursuant to
regulations under Code Section 414(o).
1.6 "Beneficiary" means the person or trust that a
Participant designated most recently in writing to the Plan
Administrator; provided, however, that if the Participant has
failed to make a designation, or if no person designated is
alive, or if no trust has been established, or no successor
Beneficiary has been designated who is alive or in existence, the
term "Beneficiary" means the legal representative of the deceased
Participant's estate. Notwithstanding the preceding sentence,
the Spouse of a married Participant shall be his Beneficiary
unless the Spouse has consented in writing to the designation by
the Participant of some other person or trust in the manner
described in Plan Section 7. The Participant may not change his
designation without further consent of his Spouse under the terms
of the preceding sentence unless the Spouse's consent permits
designation of another person or trust without further spousal
consent and acknowledges that the Spouse has the right to limit
consent to a specific beneficiary and that the Spouse voluntarily
relinquishes this right. Notwithstanding the above, the Spouse's
consent shall not be required if the Participant establishes to
the satisfaction of the Plan Administrator that the Spouse cannot
be located, if the Participant has a court order indicating that
he is legally separated or has been abandoned (within the meaning
of local law) unless a "qualified domestic relations order" (as
defined in Code Section 414(p)) provides otherwise, or if there
are other circumstances as the Secretary of the Treasury
prescribes. If the Spouse is legally incompetent to give
consent, consent by the Spouse's legal guardian shall be deemed
to be consent by the Spouse. Changes in designations of
Beneficiaries may be made prior to the expiration of the
"applicable election period" (as defined in Plan Section 7.2)
upon written notice to the Plan Administrator in the form as the
Plan Administrator may from time to time prescribe.
1.7 "Board of Directors" means the Board of Directors of
the Primary Sponsor.
1.8 "Break in Service" means:
(a) as to regular Employees, the failure of the Employee
to perform an Hour of Service within each twelve-consecutive-
month period beginning on the Employee's Severance Date; and
(b) as to temporary and seasonal Employees, the failure
of Employee to complete more than 500 Hours of Service in any
Plan Year.
1.9 "Code" means the Internal Revenue Code of 1986, as
amended.
1.10 "Committee" means Benefits Administrative Committee
of Browning-Ferris Industries, Inc.
1.11 "Compensation" means wages within the meaning of
Code Section 3401(a) (for purposes of income tax withholding at
the source) paid to an Employee by a Plan Sponsor (and Affiliates
for purposes of Appendix B) during the Plan Year (but without
regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the service
performed, such as the exception for agricultural labor in Code
Section 3401(a)(2)), to the extent not in excess of the
Compensation Limit for all purposes under the Plan except
determining Key Employees. Notwithstanding the above,
Compensation shall be determined as follows:
(a) in determining an Employee's Accrued Benefit,
Compensation shall only include amounts received for the portion
of the Plan Year during which the Employee was a Participant and
an Eligible Employee;
(b) for purposes of applying the Compensation Limit with
respect to an Employee's benefit accrual, if an Employee is the
Spouse or a lineal descendant of an Employee who is a "five
percent owner" (within the meaning of Code Section 414(q)(6)) or
a "highly compensated employee" (within the meaning of Code
Section 414(q)) in the group consisting of the ten "highly
compensated employees" (within the meaning of Code
Section 414(q)) paid the greatest Compensation (determined
without regard to the Compensation Limit), the Employee shall not
be treated as a separate Employee;
(c) for all purposes under the Plan, except Appendices A
and B hereto, Compensation shall include any elective
contributions that are made by a Plan Sponsor on behalf of an
Employee pursuant to a salary reduction agreement which is not
includable in the gross income of the Employee under Code
Sections 125 and 402(e)(3);
(d) for all purposes under the Plan except for purposes
of determining the annual limits under Code Section 415,
Compensation shall not include reimbursements or other expense
allowances, fringe benefits, moving expenses, deferred
compensation, welfare benefits and any contributions by a Plan
Sponsor (other than elective contributions pursuant to a salary
reduction agreement) on behalf of the Members to a plan described
in Code Section 125, whether or not includable in gross income;
(e) for purposes of applying the limits set forth in
Appendix A, the term Plan Sponsor as used in this Plan Section
1.11 shall mean Plan Sponsor as that term is defined in
Section 10 of Appendix A; and
(f) for purposes of determining a Participant's benefit
accrual in any Plan Year, the exercise of stock options shall be
excluded, unless determined to be discriminatory under Code
Section 401(a)(4).
1.12 "Compensation Limit" means (1) $200,000 for the
Plan Year beginning January 1, 1989, which amount shall be
adjusted for each subsequent Plan Year through the Plan year
beginning January 1, 1993, based on changes in the cost of living
as announced by the Secretary of the Treasury, and (2) $150,000
for the Plan Year beginning January 1, 1994 which amount shall be
adjusted for each subsequent Plan Year based on changes in the
cost of living as announced by the Secretary of the Treasury.
1.13 "Credited Service" means
(a) as to regular Employees, the completion by a
Participant who is an Eligible Employee of each twelve month
period (calculated by aggregating less than twelve-consecutive-
month periods) beginning on the date on which the Employee first
performs or performed an Hour of Service as a Participant and
ending on his Severance Date; and
(b) as to temporary and seasonal Employees, each Plan
Year during which a Participant who is an Eligible Employee
completes no less than 1,000 Hours of Service.
(c) Notwithstanding anything contained herein to the
contrary, Credited Service shall not include:
(1) except as provided in Subsection (d)(1) and (d)(2),
periods or Hours of Service during which a Participant is not an
Eligible Employee;
(2) in the case of a rehired Employee who completes five
consecutive Breaks in Service for purposes of determining the
vested portion of his Accrued Benefit which accrued before those
Breaks in Service, all service after those Breaks in Service;
(3) in the case of a rehired Employee who, does not have
any vested right at his Severance Date and who completes five
consecutive Breaks in Service, all service before those Breaks in
Service; and
(4) subject to the rules in Plan Section 8.4, all
years of Credited Service performed by the Participant with
respect to which the Participant received a distribution of the
present value of his nonforfeitable benefit attributable to his
years of Credited Service.
(d) Credited Service shall include:
(1) periods or Hours of Service that would otherwise be
excluded under Subsection (c)(1) above solely because the
Employee was included in a unit of employees covered under a
collective bargaining agreement between a union and a Plan
Sponsor, if the Participant is not included in such a unit, and
is an Eligible Employee, on his Severance Date; and
(2) for a Participant who incurs a Disability
Retirement Date, any continuous period commencing on his
Disability Retirement Date and ending at the earliest of the date
as of which the Participant (A) reaches age 65, (B) is no longer
subject to a Disability, or (C) elects to begin receiving payment
under the Plan.
1.14 "Deferred Retirement Date" means the date
subsequent to a Participant's Normal Retirement Age on which the
Participant actually retires.
1.15 "Direct Rollover" means a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
1.16 "Disability" means a physical or mental condition
which qualifies the Participant for and for which he receives
disability benefits under a Plan Sponsor's total, permanent
disability plan. If the Participant is not covered under a Plan
Sponsor's total, permanent disability plan, disability means a
physical or mental condition which would qualify the Participant
under the total, permanent disability plan for the corporate
headquarters personnel of the Primary Sponsor, if the Participant
was covered under that plan, in which case the determination as
to whether a Disability exists shall be made by a third party
retained by the Primary Sponsor.
1.17 "Disability Retirement Date" means the date on
which a Participant actually retires after both becoming subject
to a Disability and completing five (5) years of Vesting Service.
1.18 "Distributee" means an Employee or former Employee.
In addition, the Employee's or former Employee's surviving Spouse
and the Employee's or former Employee's Spouse or former Spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are Distributees with
regard to the interest of the Spouse or former Spouse.
1.19 "Early Retirement Date" means the date before a
Participant's Normal Retirement Age on which the Participant
retires after attaining at least age 55 and completing at least
ten (10) years of Vesting Service.
1.20 "Eligibility Service" means
(a) as to regular Employees, the completion by an
Employee of a twelve-consecutive-month period beginning on the
date on which the Employee first performs or performed an Hour of
Service upon his employment or reemployment or any anniversary
thereof, without reaching a Severance Date; provided, however:
(1) if an Employee quits, retires, or is discharged and
then performs an Hour of Service within twelve months of his
Severance Date, then such period of severance shall be taken into
account in calculating Eligibility Service;
(2) if an Employee quits, is discharged or retires
during an absence from service of twelve months or less for any
reason other than quit, discharge or attainment of a Retirement
Date and the Employee then performs an Hour of Service within
twelve months of the date the Employee was first absent from
service, then such period of absence shall be taken into account
in calculating Eligibility Service;
(3) in the case of an Employee who remains absent from
service beyond the first anniversary of the commencement of a
period of absence (1) by reason of the pregnancy of the Employee,
(2) by reason of the birth of a child of the Employee, (3) by
reason of the placement of a child with the Employee in
connection with the adoption of the child by the Employee, or (4)
for purposes of caring for such child for a period immediately
following its birth or placement, the period between the first
and second anniversaries of such period of absence shall not be
counted as Eligibility Service; and
(b) as to temporary and seasonal Employees:
(1) the twelve-consecutive-month period during which the
Employee completes no less than 1,000 Hours of Service, beginning
on the date the Employee first completes his first Hour of
Service upon his employment or reemployment; and
(2) in the event the Employee fails to complete 1,000
Hours of Service in that twelve-consecutive-month period, any
Plan Year thereafter during which the Employee completes no less
than 1,000 Hours of Service, including the Plan Year in which the
Employee is first employed or reemployed.
Eligibility Service shall not include, in the case of a
rehired Employee who did not have any vested right at his
Severance Date and then incurs five consecutive Breaks in
Service, all periods which would otherwise constitute Eligibility
Service before the first of the five consecutive Breaks in
Service commenced.
1.21 "Eligible Employee" means any Employee of a Plan
Sponsor, other than an Employee who is (a) a non-resident alien
who receives no earned income from the Plan Sponsor that
constitutes income from sources within the United States, within
the meaning of Code Section 861(a)(3), (b) covered by a
collective bargaining agreement between a union and a Plan
Sponsor provided that retirement benefits were the subject of
good faith bargaining (unless the collective bargaining agreement
provides that the Employee shall be eligible to participate in
the Plan), (c) a leased employee within the meaning of Code
Section 414(n)(2), or (d) deemed to be an Employee of a Plan
Sponsor pursuant to regulations under Code Section 414(o).
If an individual is a U.S. citizen employed by a foreign
affiliate of a Plan Sponsor, the individual will be treated as an
Eligible Employee if the following further conditions are met:
(1) the Plan Sponsor has not less than a 10 percent interest
(either directly or through one or more entities) in the voting
stock of the foreign affiliate if it is a corporation or in the
profits of the foreign affiliate if it is any other entity;
(2) the Plan Sponsor has entered into an agreement with the U.S.
Treasury Department to cover for social security purposes all
U.S. citizens employed by the foreign affiliate by which the
individual is employed; and (iii) the individual is not covered
by any other funded plan of deferred compensation (whether or not
the plan is described in Section 401(a) or 403(a) of the Code)
provided by any other person with respect to the compensation
paid to the individual by the foreign affiliate.
1.22 "Eligible Retirement Plan" means an individual
retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b),
an annuity plan described in Code Section 403(a) or a qualified
trust described in Code Section 401(a) that accepts the
Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to the surviving
Spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.23 "Eligible Rollover Distribution" means any
distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated Beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under Code Section
401(a)(9); and the portion of any distribution that is not
includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
1.24 "Employee" means any person who is employed by a
Plan Sponsor or an Affiliate for purposes of the Federal
Insurance Contributions Act, who is a leased employee within the
meaning of Code Section 414(n)(2) with respect to a Plan Sponsor,
or who is deemed to be an employee of a Plan Sponsor pursuant to
regulations under Code Section 414(o).
1.25 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
1.26 "Fiduciary" means each Named Fiduciary and any
other person who exercises or has any discretionary authority or
control regarding management or administration of the Plan, any
other person who renders investment advice for a fee or has any
authority or responsibility to do so with respect to any assets
of the Plan, or any other person who exercises or has any
authority or control respecting management or disposition of
assets of the Plan.
1.27 "Final Average Compensation" means the average of a
Participant's Compensation determined by taking the numerical
average of the five highest consecutive Plan Years of
Compensation earned by the Participant within the ten consecutive
Plan Years immediately preceding his Retirement Date or Severance
Date.
For purposes of determining Final Average Compensation:
(a) in determining the five consecutive Plan Years of
highest Compensation, the Participant's Compensation earned
during the Plan Year in which his Retirement Date or Severance
Date is incurred will be included (provided it is a consecutive
year), if inclusion would produce a higher Final Average
Compensation;
(b) in the case of a Participant who does not have five
full Plan Years of Compensation as of his Retirement Date or
Severance Date, Final Average Compensation shall be the average
(determined on an annual basis) of the Compensation during the
Participant's entire period of employment with the Plan Sponsor;
and
(c) for purposes of determining the Participant's
guaranteed minimum Accrued Benefit pursuant to Plan Section
1.2(a) and for purposes of determining the Old Plan Benefit,
Final Average Compensation shall be determined by using the
Plan's definition of "Earnings" in effect prior to this Plan
amendment and restatement, rather than the definition of
"Compensation" herein.
1.28 "Fund" means the amount at any given time of the
cash and other property held by the Trustee pursuant to the Plan.
1.29 "Grandfathered Participant" means a Participant who
is at least age 55 and has completed at least five years of
Vesting Service as of December 31, 1994.
1.30 "Hour of Service" means:
(a) each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for a Plan Sponsor or
any Affiliate during the applicable computation period, and such
hours shall be credited to the computation period in which the
duties are performed;
(b) each hour for which an Employee is paid, or entitled
to payment, by a Plan Sponsor or any Affiliate on account of a
period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence;
(c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by a Plan
Sponsor or any Affiliate, and such hours shall be credited to the
computation period or periods to which the award or agreement for
back pay pertains rather than to the computation period in which
the award, agreement or payment is made; provided, that the
crediting of Hours of Service for back pay awarded or agreed to
with respect to periods described in Subsection (b) of this
Section shall be subject to the limitations set forth in
Subsection (f);
(d) solely for purposes of determining whether a Break
in Service has occurred, each hour during any period that the
Employee is absent from work (1) by reason of the pregnancy of
the Employee, (2) by reason of the birth of a child of the
Employee, (3) by reason of the placement of a child with the
Employee in connection with the adoption of the child by the
Employee, or (4) for purposes of caring for a child for a period
immediately following its birth or placement. The hours
described in this Subsection (d) shall be credited (A) only in
the computation period in which the absence from work begins, if
the Employee would be prevented from incurring a Break in Service
in a year solely because of the credit, or (B), in any other
case, in the next following computation period;
(e) without duplication of the Hours of Service counted
pursuant to Subsection (d) hereof and solely for such purposes as
required pursuant to the Family and Medical Leave Act of 1993 and
the regulations thereunder (the "Act"), each hour (as determined
pursuant to the Act) for which an Employee is granted leave under
the Act (1) for the birth of a child, (2) for placement with the
Employee of a child for adoption or foster care, (3) to care for
the Employee's Spouse, child or parent with a serious health
condition, or (4) for a serious health condition that makes the
Employee unable to perform the functions of the Employee's job;
(f) the Plan Administrator shall determine Hours of
Service from the employment records of a Plan Sponsor, or in any
other manner consistent with regulations promulgated by the
Secretary of Labor, and shall construe any ambiguities in favor
of crediting Employees with Hours of Service. Notwithstanding
any other provision of this Section, in no event shall an
Employee be credited with more than 501 Hours of Service during
any single continuous period during which he performs no duties
for the Plan Sponsor or an Affiliate; and
(g) in the event that a Plan Sponsor or an Affiliate
acquires substantially all of the assets of another corporation
or entity or a controlling interest of the stock of another
corporation or merges with another corporation or entity and is
the surviving entity, then service of an Employee who was
employed by the prior corporation or entity and who is employed
by the Plan Sponsor or an Affiliate at the time of the
acquisition or merger shall be counted in the manner provided,
with the consent of the Primary Sponsor, in resolutions adopted
by the Plan Sponsor authorizing the counting of such service.
1.31 "Investment Manager" means a Fiduciary, other than
the Trustee, the Plan Administrator or a Plan Sponsor, which may
be appointed by the Plan Administrator:
(a) who has the power to manage, acquire, or dispose of
any assets of the Fund or a portion thereof;
(b) who (1) is registered as an investment adviser under
the Investment Advisers Act of 1940; (2) is a bank as defined in
that Act; or (3) is an insurance company qualified to perform
services described in Subsection (a) of this Section under the
laws of more than one state; and
(c) who has acknowledged in writing that he is a
Fiduciary with respect to the Plan.
1.32 "Named Fiduciary" means only the following:
(a) the Plan Administrator;
(b) the Trustee;
(c) the Board of Directors;
(d) the Committee; and
(e) the Investment Manager(s), if any.
1.33 "Normal Fund Payment" means:
(a) in the case of a Participant who is not married on
the date payments to the Participant are to commence under the
terms of the Plan, an immediate single life annuity, payable in
monthly installments for the life of the Member, which is the
Actuarial Equivalent of the Participant's vested Accrued Benefit;
(b) in the case of a Participant who is married on the
date payments are to commence under the terms of the Plan, a
joint and survivor annuity (which is the Actuarial Equivalent of
the Participant's vested Accrued Benefit), payable in monthly
installments, which is an immediate annuity for the life of the
Participant with a survivor annuity for the life of his Spouse
which is fifty percent (50%) of the amount of the annuity payable
during the joint lives of the Participant and his Spouse;
(c) in the case of a Participant who dies while married
and before payments are to commence under the terms of the Plan,
a single life annuity, payable in monthly installments for the
life of his Spouse, which is fifty percent (50%) of the amount of
the annuity which would have been payable for the life of the
Participant if:
(1) in the case of a Participant who dies on or after
the date on which the Participant attains the earliest retirement
age under the Plan, the Participant had retired with a Normal
Fund Payment on the date of his death; or
(2) in the case of a Participant who dies before the
date on which the Participant would have attained the earliest
retirement age under the Plan, the Participant had:
(A) separated from service on his date of death (unless
the Participant had earlier separated from service),
(B) survived to the earliest retirement age under the
Plan,
(C) retired with a Normal Fund Payment at the earliest
retirement age under the Plan, and
(D) died on the day after the date on which he would
have attained the earliest retirement age under the Plan; and
(d) notwithstanding anything contained in this Section,
if the Participant's vested pension benefit or the Spouse's
benefit determined under this Plan Section 1.33(c) has a present
value Actuarial Equivalent of $3,500 or less, the Normal Fund
Payment shall be a lump sum payment.
Any annuity may be purchased from an insurance company
designated by the Plan Administrator in writing to the Trustee,
and may be distributed to the Participant or his joint annuitant,
as the case may be. The distribution, if any, shall be in full
satisfaction of the benefits to which the Participant or his
joint annuitant is entitled under the Plan.
1.34 "Normal Retirement Age" means age 65.
1.35 "Normal Retirement Date" means the first day of the
month following the date on which a Participant retires upon the
earlier of (a) attaining Normal Retirement Age, or (b) the later
of (1) attaining age 62 or (2) completing 35 years of Vesting
Service.
1.36 "Old Plan Benefit" means a Participant's frozen
accrued benefit based on the Old Plan Benefit Formula, expressed
as a single life annuity commencing at Normal Retirement Age,
determined under the Plan (a) as of September 30, 1993 for a
Participant who is an Employee on both October 1, 1994 and
September 30, 1993, and (b) as of the Participant's Severance
Date for a Participant who was not an Employee on both October 1,
1994 and September 30, 1993, but again became an Employee after
October 1, 1994.
Notwithstanding the foregoing, the Old Plan Benefit for a
Participant who is an Employee on both October 1, 1994 and
September 30, 1993, who is a Grandfathered Participant, and who
would have at least 10 years of Vesting Service at December 31,
1994, means a frozen accrued benefit based on the Old Plan
Benefit formula, expressed as a single life annuity commencing as
of the later of (a) September 30, 1993, or (b) the later of the
date the Participant (i) reaches age 55 or (ii) completes 10
years of Vesting Service.
1.37 "Old Plan Benefit Formula" means:
(a) in the case of a Participant whose benefit commences
as of his Normal Retirement Age, an annual amount payable as a
single life annuity commencing as of his Normal Retirement Age
(or if he continues to perform Hours of Service after his Normal
Retirement Age, as of the date of determination) equal to (1) the
excess of (A) 50% of the Participant's Final Average Compensation
over (B) 60% of the Participant's Primary Social Security
Benefit, multiplied by (2) a fraction, the numerator of which is
the Employee's Years of Credited Service not in excess of 35 and
the denominator of which is 35;
(b) for purposes of applying the Old Plan Benefit
Formula, each Section 401(a)(17) Employee's accrued benefit will
be the greatest of the amount determined under Paragraphs (1),
(2), or (3) below:
(1) the accrued benefit determined with respect to the
Old Plan Benefit Formula as applied to the Employee's total years
of Credited Service before January 1, 1994 (to the extent
recognized for computing a benefit under the Plan), and the
Employee's Compensation not in excess of the applicable
Compensation Limit in effect before January 1, 1994;
(2) the accrued benefit determined under the Old Plan
Benefit Formula as applied to the Employee's total years of
Credited Service (to the extent recognized for computing a
benefit under the Plan) and on the Employee's Compensation not in
excess of the applicable Compensation Limit in effect on and
after January 1, 1994; or
(3) the sum of:
(A) the accrued benefit as of December 31, 1988, frozen
in accordance with Treas. Reg. Section 1.401(a)(4)-13; plus
(B) the accrued benefit determined under the Old Plan
Benefit Formula applicable for the Plan Year beginning January 1,
1989, as applied to the Employee's years of Credited Service
credited to the Employee for Plan Years beginning on or after
January 1, 1989 through December 31, 1993 (to the extent
recognized for computing a benefit under the Plan), frozen in
accordance with Treas. Reg. Section 1.401(a)(4)-13; plus
(C) the accrued benefit determined under the Old Plan
Benefit Formula as applied to the Employee's years of Credited
Service credited to the Employee for Plan years beginning on or
after January 1, 1994 (to the extent recognized for computing a
benefit under the Plan).
A Section 401(a)(17) Employee means an Employee whose
current Accrued Benefit as of a date on or after January 1, 1989,
is based on Compensation for a Plan Year beginning before
January 1, 1994 that exceeded $150,000.
1.38 "Participant" means any Employee or former Employee
who has become a participant pursuant to Plan Section 2 and who
has not received a full distribution from the Plan of his Accrued
Benefit.
1.39 "PBGC" means the Pension Benefit Guaranty
Corporation.
1.40 "Plan Administrator" means the Committee.
1.41 "Plan Sponsor" means individually the Primary
Sponsor or each Affiliate of the Primary Sponsor or other entity
which has adopted the Plan.
1.42 "Plan Year" means the calendar year.
1.43 "Primary Social Security Benefit" means the amount
which would be available at age 65 as an annual old age benefit
for the Participant, exclusive of benefits for relatives or
dependents, under the Federal Social Security Act or under any
similar Federal act or acts as now existing or subsequently
amended, superseded, or created, whether or not payment of such
amount is delayed, suspended, or forfeited because of failure to
apply, other work, or for any other reason.
In determining benefits under Plan Section 4.4 (early
retirement benefits), the Primary Social Security Benefit, for
the purposes of this Plan, shall be determined by assuming that
the Participant has no further wages subject to FICA tax after he
ceased to receive Compensation.
In determining benefits under Plan Sections 4.5, 5.3, and 6
(disability, termination and death benefits), the Primary Social
Security Benefit shall be calculated assuming the Participant
continues to have wages which are subject to FICA at his rate of
Compensation on his Severance Date, except that in determining
the Spouse's benefit, the Primary Social Security Benefit shall
be calculated as described in the preceding paragraph.
In determining benefits, Primary Social Security shall be
based on the Participant's average annual wages as determined
from his history of covered wages for Social Security. If a
Participant's history of covered wages for Social Security is
incomplete, then any such missing wages shall be determined by
discounting the covered Compensation for the last available Plan
year at the annual rate indicated by the average wage indices, as
published by the Social Security Administration for the purpose
of calculating Social Security benefits, for those years
increased by one percent per year; provided, however, that the
Participant may furnish, at his own expense, his year-by-year
Social Security covered wages and request a recomputation of any
benefit due from this Plan, within a period of 90 days from the
date the Participant is notified of the amount of the benefit.
If, and only if, such recomputation yields a higher benefit, then
such benefit will be paid to the Participant, his Spouse, or
Beneficiary.
1.44 "Prior Plan" means any pension, profit sharing or
retirement plan to which a Plan Sponsor or an Affiliate
contributed.
1.45 "Retirement Date" means Normal Retirement Date,
Early Retirement Date, Deferred Retirement Date, or Disability
Retirement Date.
1.46 "Severance Date" means the earlier of:
(a) the date of the last active day of work of the
Employee if the Employee quits, retires, or is discharged, or
dies; or
(b) the first anniversary of the first date of a period
in which the Employee remains absent from service (with or
without pay) with the Plan Sponsor for any reason other than
quit, attainment of a Retirement Date, discharge, or death, such
as vacation, holiday, sickness, disability, leave of absence or
layoff.
Notwithstanding the foregoing, the Severance Date for an
Employee who remains absent from service beyond the first
anniversary of the first date of a period of absence (1) by
reason of the pregnancy of the Employee, (2) by reason of the
birth of a child of the Employee, (3) by reason of the placement
of a child with the Employee in connection with the adoption of a
child by the Employee, or (4) for purposes of caring for such
child for a period immediately following its birth or placement,
means the second anniversary of the first date of the absence.
1.47 "Spouse" means the person to whom the Participant
has been married for at least one year on the earlier of the date
of commencement of payment of a Participant's benefit or the date
of the Participant's death. For purposes of the preceding
sentence, if the Participant and his spouse have been married to
each other for less than one year on the date payments commence
they will be treated as married for one year as of the date of
commencement of payments if they remain married for at least one
year.
1.48 "Trust" means the trust established under an
agreement between the Primary Sponsor and the Trustee to hold the
Fund or any successor agreement.
1.49 "Trustee" means the trustee under the Trust.
1.50 "Vesting Service" means:
(a) as to regular Employees, the completion by an
Employee of each twelve month period (calculated by aggregating
less than twelve-consecutive-month periods) beginning on the date
on which an Employee first performs or performed an Hour of
Service upon his employment or reemployment or any anniversary
thereof and ending on his Severance Date; provided, however:
(1) if an Employee quits, retires, or is discharged and
then performs an Hour of Service within twelve months of his
Severance Date, then such period of severance shall be taken into
account in calculating Vesting Service;
(2) if an Employee quits, is discharged or attains a
Retirement Date during an absence from service of twelve months
or less for any reason other than quit, discharge or attainment
of a Retirement Date and the Employee then performs an Hour of
Service within twelve months of the date the Employee was first
absent from service, then such period of absence shall be taken
into account in calculating Vesting Service;
(3) in the case of an Employee who remains absent from
service beyond the first anniversary of the commencement of a
period of absence (1) by reason of pregnancy of the Employee, (2)
by reason of the birth of a child of the Employee, (3) by reason
of the placement of child with the Employee in connection with
the adoption of the child by the Employee, or (4) for purposes of
caring for such child for a period between the first and second
anniversaries of such period of absence shall not be counted as
Vesting Service; and
(b) as to temporary and seasonal Employees, (1) each
Plan Year during which the Employee complete no less than 1,000
Hours of Service.
Notwithstanding anything contained herein to the contrary,
Vesting Service shall not include:
(1) in the case of a rehired Employee who completes five
consecutive Breaks in Service, for purposes of determining the
vested portion of his Accrued Benefit which accrued before those
Breaks in Service, all service after those Breaks in Service; and
(2) in the case of a rehired Employee who does not have
any vested right at his Severance Date and who completes five
consecutive Breaks in Service, all service before those Breaks in
Service.
SECTION 2 ELIGIBILITY
2.1 General Rule. Each Employee shall become a
Participant as of the first day of the month which occurs the
latest of the date on which the Employee (a) completes his
Eligibility Service, (b) becomes an Eligible Employee, or (c)
attains age 21.
2.2 Rehired Participants Who Are Nonvested and Have Five
Breaks in Service. In the case of a rehired Employee who (a) was
a Participant (b) did not have any vested right at his Severance
Date, and (c) then incurs five Breaks in Service, he shall become
a Participant as of the later of (1) the first day of the month
coinciding with or next following the date of his reemployment as
an Eligible Employee or (2) the first day of the month in which
the Employee completes his Eligibility Service.
2.3 Rehired Participants in General. Each former
Participant (other than an Employee described in Plan
Section 2.2) who participated under the Plan, and who is
reemployed by a Plan Sponsor shall become a Participant as of the
date of his reemployment as an Eligible Employee.
2.4 Rehired Employees Who Were Not Participants. Each
former Employee who had a Severance before becoming a Participant
shall become a Participant as of the latest of (a) the date he is
reemployed by a Plan Sponsor, (b) the date he would have become a
Participant if he had not terminated employment, (c) the date he
becomes an Eligible Employee, or (d) the first day of the month
in which the Employee completes his Eligibility Service.
SECTION 3 FUNDING
3.1 (a) Minimum Funding. It is the Primary Sponsor's
intention that (unless a waiver of the minimum funding standards
described in ERISA Section 302 and Code Section 412) is obtained,
each Plan Sponsor shall contribute to the Fund such amounts as
are determined by the Actuary to be necessary to fund the
benefits provided under the Plan. For this purpose, the Plan
Administrator shall establish a funding standard account for the
Plan, which shall be maintained by the Actuary, who will be
responsible for determining that such account meets the funding
requirements described in ERISA Section 302 and Code Section 412.
(b) Forfeitures. All forfeitures arising under the Plan
shall be used to reduce the cost of the Plan and shall not be
used to increase any benefits payable under the Plan.
(c) Additional Funding. Notwithstanding the other
provisions of this Section 3.1, each Plan Sponsor shall have the
right, but not the obligation, to contribute such additional
amounts as it, in its sole discretion, deems necessary or
desirable to maintain the actuarial soundness of the Plan, and a
Plan Sponsor shall also have the right at any time to discontinue
contributions hereunder.
3.2 No Participant Contributions. No contributions by
Participants shall be required or permitted under the Plan.
3.3 Deductibility. All contributions to the Plan by a
Plan Sponsor are made subject to the condition that such
contributions are fully deductible for federal income tax
purposes under Code Section 404.
SECTION 4 RETIREMENT BENEFITS
4.1 Vesting. The Accrued Benefit of a Participant who
has attained Normal Retirement Age or Retirement Date shall be
fully vested.
4.2 Normal Retirement Benefit. The pension payable to a
Participant as of his Normal Retirement Date shall be his Accrued
Benefit. A Participant who has a Normal Retirement Date may
elect to receive his Accrued Benefit commencing as of the first
day of any month on or after his Normal Retirement Date but
before his "required beginning date" (as defined in Plan Section
7.6(c)).
4.3 Deferred Retirement Benefit. The pension payable to
a Participant as of his Deferred Retirement Date shall be the
greater of:
(a) his Accrued Benefit as of his Deferred Retirement
Date; or
(b) the Actuarial Equivalent of the Accrued Benefit as
of his Normal Retirement Age.
Notwithstanding the foregoing, in any Plan Year if the
Participant begins to receive payment while an Employee and after
attaining age 70-1/2 pursuant to Plan Section 7.6, the accrual for
each such Plan Year shall be reduced (but not below zero), to the
extent necessary to prevent duplication of accrual of benefits,
by the Actuarial Equivalent of the benefit paid to the Employee
during that Plan Year.
A Participant who has a Deferred Retirement Date may elect
to receive his benefit commencing as of the first day of any
month on or after his Deferred Retirement Date but before his
"required beginning date" (as defined in Plan Section 7.6(c)).
4.4 Early Retirement Benefit. A Participant who has an
Early Retirement Date may elect to receive his Accrued Benefit:
(a) commencing as of the first day of any month on or
after his Normal Retirement Age but before his "required
beginning date" (as defined in Plan Section 7.6(c)); or
(b) commencing as of the first day of any month so
elected after his Early Retirement Date but before his Normal
Retirement Age; provided, however, that a Grandfathered
Participant or any other Participant whose Accrued Benefit is
determined under the Old Plan Benefit Formula shall receive (1)
his Account or (2) his Accrued Benefit determined under the Old
Plan Benefit Formula but reduced by 0.375% for each full calendar
month by which the payment commencement date precedes his Normal
Retirement Age, whichever results in larger payments in the form
chosen by the Participant.
4.5 Disability Retirement Benefit. A Participant who
has a Disability Retirement Date and who is subject to a
Disability that continues until after he has attained age 55 and
after he has completed 10 years of Vesting Service, may elect to
receive his Accrued Benefit:
(a) commencing as of the first day of any month on or
after his Normal Retirement Age but before his "required
beginning date" (as defined in Plan Section 7.6(c)); or
(b) commencing as of the first day of any month so
elected after satisfying such criteria but before his Normal
Retirement Age; provided, however, that a Grandfathered
Participant or any other Participant whose Accrued Benefit is
determined under the Old Plan Benefit Formula shall receive (1)
his Account or (2) his Accrued Benefit determined under the Old
Plan Benefit Formula but reduced by 0.375% for each full calendar
month by which the payment commencement date precedes his Normal
Retirement Age, whichever results in larger payments in the form
chosen by the Participant.
SECTION 5 PAYMENT OF BENEFITS ON
TERMINATION OF EMPLOYMENT
5.1 Vesting. If a Participant has a Severance Date due
to termination of employment, he shall be vested in his Accrued
Benefit according to the following vesting schedule:
Full Years of Percentage
Vesting Service Vested
Less than 5 0%
5 or more 100%
5.2 Forfeiture. If a Participant is not vested as of
his Severance Date due to termination of employment, his Accrued
Benefit shall be forfeited as provided in Plan Section 8.5 and
subject to the restoration rules set forth there, and any
forfeitures resulting from the operation of this Section 5 shall
be used to reduce the cost of the Plan by reducing future Plan
Sponsor contributions.
5.3 Termination of Employment Benefits. A Participant
who has a Severance Date due to termination of employment may
elect:
(a) commencing as of the first day of any month on or
after his Normal Retirement Age but before his "required
beginning date" (as defined in Plan Section 7.6(c)), his vested
Accrued Benefit; or
(b) if the Participant has completed 10 years of Vesting
Service, commencing as of the first day of any month after
reaching age 55 but before his Normal Retirement Age, the
Actuarial Equivalent of the Participant's vested Accrued Benefit.
5.4 Changes in Vesting Schedule. In the event that an
amendment to the Plan directly or indirectly changes the vesting
schedule of the Plan, the vested percentage for each Participant
accumulated to the date when the amendment is adopted shall not
be reduced as a result of such amendment. In addition, any
Participant with at least three (3) years of Vesting Service may
irrevocably elect to remain under the vesting schedule in
operation prior to the amendment with respect to benefits accrued
both before and after the amendment.
SECTION 6 DEATH BENEFITS
6.1 Entitlement. The Beneficiary of a Participant who
dies after becoming vested pursuant to Section 4 or 5, shall be
entitled to death benefits, to the extent provided in this
Section 6.
6.2 Death Benefits of Participant in Pay Status. Upon
the death of a Participant who is receiving payment under the
Plan, his Beneficiary shall be entitled to receive such payments
as are payable to the Beneficiary in accordance with the form of
payment payable to the Participant pursuant to Plan Section 7.
6.3 Death Benefits of Married Participant Not in Pay
Status. If the Participant dies while married before the
commencement of retirement payments under the Plan, the
Participant's Spouse shall receive as a death benefit a Normal
Fund Payment payable commencing as of the earliest retirement age
under the Plan; provided, however, that a Spouse whose Normal
Fund Payment is an annuity described in Plan Section 1.33(c) may
elect, prior to commencement of payments, to receive instead a
lump sum, payable immediately, that is the Actuarial Equivalent.
6.4 No Death Benefits for Single Participant Not in Pay
Status. If a Participant dies while not married before
commencement of retirement payments under the Plan, no death
benefits shall be payable to the Participant's Beneficiary.
SECTION 7 GENERAL RULES ON DISTRIBUTIONS
7.1 Timing of Payment. Notwithstanding any other
provision of the Plan, if the present value Actuarial Equivalent
of the Normal Fund Payment payable is not more than $3,500,
payment shall be made in one lump sum as soon as administratively
feasible after the earliest of the Participant's (a) Severance
Date, (b) Retirement Date, or (c) death. If the present value
Actuarial Equivalent of the Normal Fund Payment exceeds $3,500,
it shall not be immediately distributed without the written
consent of the Participant and, if the Participant is married and
elects a form of payment other than a Normal Fund Payment, his
Spouse. In all events, unless the Participant otherwise elects,
payment shall commence no later than sixty (60) days after the
end of the Plan Year in which occurs the later of (a) the date
the Participant attains Normal Retirement Age, or (b) the earlier
of the date the Participant (1) reaches a Retirement Date or (2)
has a Severance Date. If the present value Actuarial Equivalent
of the Participant's Accrued Benefit exceeds $3,500, the
Participant may elect to defer commencement of payment until a
date no later than the "required beginning date" (as defined in
Plan Section 7.5(c)).
7.2 Form of Payment.
(a) Any payments pursuant to Section 4 or 5 of the Plan
shall be in the form of a Normal Fund Payment except as follows:
If the Participant's benefit payable pursuant to Plan Section 4
or 5 has a present value Actuarial Equivalent of greater than
$3500 at the time he is first entitled to the commencement of
benefit payments under the Plan, the Participant may elect,
during the applicable election period (as hereinafter defined),
not to receive the Normal Fund Payment described in Subsection
(a) or (b) of Plan Section 1.33 by execution and delivery to the
Plan Administrator of a form provided for that purpose by the
Plan Administrator. For purposes of this Section, the term
"applicable election period" means the 90-day period ending on
the first date as of which the Participant receives payment from
the Fund. In the case of a Participant who has a Spouse, no
election, other than an election to receive a joint and survivor
annuity pursuant to Plan Section 7.2(b)(2), shall be effective
unless:
(1) the Spouse of the Participant has consented in
writing to the election (including, if applicable, the identity
of any Beneficiary selected other than the Participant's Spouse
and the alternate form of payment selected), and the Spouse's
consent acknowledges the effect of the election and is witnessed
by a notary public; or
(2) the Participant establishes to the satisfaction of
the Plan Administrator that the consent required pursuant to this
Subsection (A) may not be obtained because the Spouse cannot be
located, the Participant has a court order indicating that he is
legally separated or has been abandoned (within the meaning of
local law) unless a "qualified domestic relations order" (as
defined in Code Section 414(p)) provides otherwise, or there are
other circumstances as the Secretary of the Treasury prescribes.
If an election is made, the Participant's vested Accrued
Benefit payable pursuant to Plan Section 4 or 5, as applicable,
shall be paid in an Actuarial Equivalent form set forth in
Subsection (b) of this Section chosen by the Participant by
written instrument delivered to the Plan Administrator prior to
the date payments are otherwise to commence.
(b) The alternate forms of payment are:
(1) a lump sum;
(2) a joint and survivor annuity, payable in monthly
installments, which is an annuity for the life of the Participant
with a survivor annuity for the life of his Beneficiary which is
50%, 75% or 100% of the amount of the annuity payable during the
joint lives of the Participant and his Beneficiary;
(3) a single life annuity, payable in monthly
installments, for the life of the Participant;
(4) an annuity, payable in monthly installments, with
guaranteed payments for 60, 120, or 180 months. If the
Participant dies before receiving all of the guaranteed payments,
his Beneficiary will receive the monthly benefit the Participant
was receiving for the number of months left in the guaranteed
period;
(5) an annuity, payable in monthly installments
beginning before age 62 with reduced payments thereafter for the
life of the Participant, in an amount estimated to provide
together with Social Security retirement benefits a level income;
or
(6) for Participants who do not begin
receiving a distribution until after age 70-1/2, the required
minimum distribution pursuant to Plan Section 7,6 payable in a
single sum annually, for the life of the Participant or the joint
lives of the Participant and his Beneficiary, with any remainder
thereafter paid in a single sum to the successor Beneficiary.
(c) the Plan Administrator shall furnish to the
Participant a written explanation of:
(1) the terms and conditions of the Normal Fund Payment
described in Subsection (a) or (b) of Plan Section 1.33,
including a general description of the conditions and eligibility
and other material features of the alternate forms of payment
under the Plan;
(2) the Participant's right to make, and the effect of,
an election not to receive the Normal Fund Payment described in
Subsection (a) or (b) of Plan Section 1.33, including a general
description of the conditions of eligibility and other material
features of the alternate forms of payment under the Plan;
(3) the rights of the Participant's Spouse as described
in Subsection (a) of this Section; and
(4) the right to make, and the effect of, a revocation
of an election pursuant to this Section.
(d) The written explanation shall be provided to the
Participant within 90 days prior to the first date on which he is
entitled to payment from the Fund.
(e) The Participant may revoke any election not to
receive payment in the form of a Normal Fund Payment at any time
prior to commencement of payments from the Fund, and may make a
new election at any time prior to the commencement of payments
from the Fund.
7.3 Incidental Death Benefits. Notwithstanding anything
to the contrary contained in the Plan, the payments to be made to
a Participant shall satisfy the incidental death benefit
requirements under Code Section 401(a)(9)(G) and the regulations
thereunder.
7.4 Direct Rollovers. Notwithstanding any provisions of
the Plan to the contrary that would otherwise limit a
Distributee's election under this Section 7, effective January 1,
1993, a Distributee may elect at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a direct rollover
so long as all Eligible Rollover Distributions to a Distributee
for a calendar year total or are expected to total at least $200
and, in the case of a Distributee who elects to directly receive
a portion of an Eligible Rollover Distribution and directly roll
the balance over to an Eligible Retirement Plan, the portion that
is to be directly rolled over totals at least $500. If the
Eligible Rollover Distribution is one to which Code
Sections 401(a)(11) and 417 do not apply, such Eligible Rollover
Distribution may commence less than 30 days after the notice
required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(a) the Plan Administrator clearly informs the
Distributee that the Distributee has a right to a period of at
least 30 days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a
particular distribution option); and
(b) the Distributee, after receiving the notice,
affirmatively elects a distribution.
7.5 Participants Who Reach Age 70 1/2. Subject to the
provisions of the Plan, including without limitation Section 7.2,
any Participant who reaches age 70 1/2 and has not yet begun to
receive a distribution of his benefits hereunder shall be
required to submit an election form within the "applicable
election period" (as defined in Plan Section 7.2), but no later
than 60 days before the "required beginning date" as defined in
Plan Section 7.6 to select the form of payment of benefits by the
required beginning date. Such a Participant may elect any form
of distribution set forth in Plan Section 7.2(b).
(a) If the Participant elects a lump sum
distribution, any future Compensation credits pursuant to Plan
Section 1.1 will be distributed in a lump sum annually as soon as
administratively feasible after the end of the Plan Year to which
the credit relates, without any interest under Plan Section 1.1;
(b) If the Participant elects to receive the
required minimum distribution pursuant to Plan Section 7.6
payable in a single sum annually, the Participant's Account will
continue to be credited with Compensation credits pursuant to
Plan Section 1.1, if applicable, and interest credits pursuant to
Plan Section 1.1 through the end of the month coinciding with or
immediately preceding the complete distribution of the benefit;
and
(c) If the Participant elects any other form of
distribution, future payments will be increased by the Actuarial
Equivalent of any future Compensation credits pursuant to Plan
Section 1.1 without any interest under Plan Section 1.1.
7.6 Required Minimum Distributions. Notwithstanding any
other provisions of the Plan,
(a) Prior to the death of a Participant, all retirement
payments hereunder shall --
(1) be distributed to the Participant not later than the
required beginning date (as defined in Plan Section 7.6(c)) or,
(2) be distributed, commencing not later than the
required beginning date (as defined in Plan Section 7.6(c))--
(i) in accordance with regulations prescribed by
the Secretary of the Treasury, over the life of the Participant
or over the lives of the Participant and his designated
beneficiary, if any, or
(ii) in accordance with regulations prescribed by
the Secretary of the Treasury, over a period not extending beyond
the life expectancy of the Participant or the joint life and last
survivor expectancy of the Participant and his designated
beneficiary, if any.
(b) (1) If --
(iii) the distribution of a Participant's
retirement payments have begun in accordance with Subsection
(a)(2) of this Section, and
(iv) the Participant dies before his entire vested
Accrued Benefit has been distributed to him, then the remaining
portion of his vested Accrued Benefit shall be distributed at
least as rapidly as under the method of distribution being used
under Subsection (a)(2) of this Section as of the date of his
death.
(2) If a Participant dies before the commencement of
retirement payments hereunder, the entire interest of the
Participant shall be distributed within five (5) years after his
death.
(3) If --
(i) any portion of a Participant's benefit is
payable to or for the benefit of the Participant's designated
beneficiary, if any,
(ii) that portion is to be distributed, in
accordance with regulations prescribed by the Secretary of the
Treasury, over the life of the beneficiary or over a period not
extending beyond the life expectancy of the beneficiary, and
(iii) the distributions begin not later than one
(1) year after the date of the Participant's death or any later
date as the Secretary of the Treasury may by regulations
prescribe,
then, for purposes of Paragraph (2) of this Subsection (b), the
portion referred to in Subparagraph (A) of this Paragraph (3)
shall be treated as distributed on the date on which the
distributions to the designated beneficiary begin.
(4) If the designated beneficiary referred to in
Paragraph (3)(A) of this Subsection (b) is the surviving Spouse
of the Participant, then --
(i) the date on which the distributions are required to
begin under Paragraph (3)(C) of this Subsection (b) shall not be
earlier than the date on which the Participant would have
attained age 70-1/2, and
(ii) if the surviving Spouse dies before the
distributions to the Spouse begin, this Subsection (b) shall be
applied as if the surviving Spouse were the Participant.
(c) For purposes of this Section, the term "required
beginning date" means April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2.
Notwithstanding the foregoing, in the case of a Participant who
has attained age 70-1/2 before January 1, 1988, other than a
Participant who is described in Section 1(b)(3) of Appendix B,
the term "required beginning date" means the calendar year in
which the Participant retires or otherwise terminates employment
with a Plan Sponsor.
7.7 Restrictions on Payments to Highly Compensated.
Notwithstanding anything contained to the contrary in this
Section 7, the annual payments to a Participant who is among the
twenty-five (25) highly compensated employees (within the meaning
of Code Section 414(q)) who receive during their most recent year
of employment with a Plan Sponsor the greatest Compensation
(determined without regard to the Compensation Limit) shall not
exceed an amount equal to the payments that would be made on
behalf of the Participant under a single life annuity that is the
Actuarial Equivalent of the sum of the Participant's Accrued
Benefit and the Participant's other benefits under the Plan. For
purposes of this Section 7.7, "other benefits" includes loans in
excess of the amounts set forth in Code Section 72(p)(2)(A), any
periodic income, any withdrawal values payable to a living
Participant, and any death benefit which is payable from the Plan
not provided for by insurance on the Participant's life. The
restrictions of this Section will not apply, however, if:
(a) after payment to a Participant described in this
Section of all benefits described in Section 7.7 above, the value
of the Fund equals or exceeds 110% of the value of the Plan's
current liabilities, as defined in Code Section 412(l)(7); or
(b) the value of the benefits described in Section 7.7
above for a Participant described in this Section is less than
one percent (1%) of the value of the Plan's current liabilities,
as defined in Code Section 412(l)(7).
SECTION 8 REHIRED EMPLOYEES
8.1 Service Counted. In general, if an Employee is
rehired after his Severance Date, service prior to his Severance
Date is counted for purposes of determining Credited Service,
Eligibility Service and Vesting Service. However, in the
situations described in Plan Sections 1.13, 1.20 and 1.50, that
service will be disregarded as provided in those Sections.
8.2 Participation. Plan Sections 2.3 through 2.5
explain when an Employee who is rehired will again become a
Participant.
8.3 Cessation of Benefits for Rehired Employee. In the
case of a rehired Employee who previously had a Severance,
payment of any benefits pursuant to Section 5 shall continue just
as if the Participant had not been rehired, and any benefit the
Participant accrues after the date he is rehired shall be treated
for purposes of the Plan as a separate Accrued Benefit which
shall be paid in accordance with the provisions of the Plan when
the Participant again retires, reaches his "required beginning
date" (as defined in Plan Section 7.6(c)), or dies.
8.4 Cash-out/Buy-back. In the case of any rehired Employee:
(a) for the purpose of determining a Participant's
Accrued Benefit only, the Plan shall disregard years of service
performed by the Participant with respect to which the
Participant received a lump sum distribution of the present value
of his nonforfeitable benefit. (For this purpose, a nonvested
Participant shall be deemed to have received a distribution of
zero dollars.);
(b) the Accrued Benefit which is forfeited under Plan
Section 8.4(a) shall be restored (along with interest credits
pursuant to Plan Section 1.1(b) through the date of repayment)
upon repayment to the Plan of the full amount of the distribution
with interest on that amount compounded annually at a rate equal
to 120% of the federal mid-term rate as in effect under Code
Section 1274 at the beginning of each Plan Year from the date of
distribution to the date of repayment; provided that the
Participant:
(1) resumes employment with a Plan Sponsor or an
Affiliate prior to completing five Breaks in Service; and
(2) makes repayment within five years of the
resumption of employment; and
(c) if the Participant's Accrued Benefit was 100%
nonvested, the Accrued Benefit of the Participant is forfeited
under Plan Section 8.4(a) will be restored upon his reemployment
prior to completing five Breaks in Service.
SECTION 9 OFFSETS AND TRANSFERS INVOLVING
FOREIGN AFFILIATES
9.1 Offset for Prior Plan Benefit. Notwithstanding any
other provision of the Plan:
(a) a Participant or Beneficiary who is entitled to or
has received a benefit from a Prior Plan shall have any
retirement benefit from this Plan that is based on Credited
Service, or Compensation paid, during periods of time covered by
such Prior Plan reduced by the Actuarial Equivalent (computed as
of the date benefits from this Plan commence) of the amount of
any such benefit from the Prior Plan applicable to service
included as part of his Credited Service under this Plan or
applicable to service during a period for which a Participant
receives a credit to his Account under this Plan. The reduction
described in the previous sentence will be applied with respect
to a Prior Plan that was maintained as part of a collective
bargaining agreement between a union and a Plan Sponsor, unless
an agreement to waive the reduction for Prior Plan benefits is
concluded as a result of collective bargaining;
(b) a Participant whose Credited Service includes a
period of credited service under any funded plan of deferred
compensation maintained pursuant to the laws of a country other
than the U.S. (including the Browning-Ferris Industries, Inc.
Canadian Retirement Plan pursuant to Plan Section 9.3) shall have
his retirement income benefits under the Plan reduced by any
benefits payable (or the Actuarial Equivalent thereof) from such
other plan;
(c) all retirement income benefits under this
Section 9.1 shall be reduced by the Actuarial Equivalent of any
and all payments the Participant is receiving or is eligible to
receive relating to income replacement (including compromise or
redemption settlements) under any and all statutes pertaining to
workers' compensation, presently in effect of which may be
enacted from time to time, to the extent that the workers'
compensation has been provided by premiums, taxes, or other
payments paid by or at the expense of any Plan Sponsor.
9.2 Employees of Foreign Ventures. Notwithstanding any
statement in this Plan to the contrary, in the event that any
Employee would incur a Severance Date as a result of a transfer
from a Plan Sponsor to any other business operation, joint
venture, or organization carrying on business outside of the
United States of America to which the Primary Sponsor by action
of its Board directs that this Section 9.2 of the Plan shall
apply (referred to as a "Foreign Venture"), such Employee:
(a) shall continue to accrue Vesting Service under the
plan until such Employee's termination of employment with the
Foreign Venture;
(b) shall, if later transferred from the Foreign Venture
to a Plan Sponsor, be treated as having continued to accrue
Credited Service and to receive Compensation credits under Plan
Section 1.1(a) while employed by the Foreign Venture for the
purposes of determining the amount of monthly benefits payable
under the Plan;
(c) shall, for purposes of determining eligibility for a
Disability benefit under the Plan, continue to accrue Credited
Service and to receive Compensation credits under Plan Section
1.1(a) while employed by the Foreign Venture; and
(d) shall, if later transferred from the Foreign Venture
to a Plan Sponsor, for the purpose of determining the Employee's
Final Average Compensation, be considered an Employee whose
Compensation while employed by the Foreign Venture are the
amounts earned by the Employee for personal service to the
Foreign Venture as determined by the Plan Sponsor to be the
Employee's salary.
9.3 Transfer to Canadian Plan. A Participant who ceases
to accrue Credited Service under this Plan or receive
Compensation credits under Plan Section 1.1(a) by virtue of a
change in employment to an Affiliate which is an employing
company under the Browning-Ferris Industries, Inc. Canadian
Retirement Plan shall continue to accrue Vesting Service so long
as he remains an employee of such Affiliate.
SECTION 10 ADMINISTRATION OF THE PLAN
10.1 Trust Agreement. Each Plan Sponsor shall enter
into a Trust with the Trustee designated by the Committee for the
management of the Fund, which Trust shall form a part of the Plan
and is incorporated herein by reference.
10.2 Operation of the Plan Administrator. The Board of
Directors shall appoint the Plan Administrator. The Plan
Administrator may designate in writing a person who may act on
behalf of the Plan Administrator. The Board of Directors shall
have the right to remove the Plan Administrator at any time by
notice in writing. The Plan Administrator may resign at any time
by written notice of resignation to the Trustee and the Board of
Directors. Upon removal or resignation, or in the event of the
dissolution of the Plan Administrator, the Board of Directors
shall appoint a successor.
10.3 Fiduciary Responsibility.
(a) The Plan Administrator, as a Named Fiduciary, may
allocate its fiduciary responsibilities among Fiduciaries, other
than the Trustee, designated in writing by the Plan Administrator
and may designate in writing other persons (other than the
Trustee) to carry out its fiduciary responsibilities under the
Plan. The Plan Administrator may at any time and from time to
time remove any such person designated to carry out its fiduciary
responsibilities under the Plan by notice in writing to such
person.
(b) The Plan Administrator and each other Plan Fiduciary
may employ persons to perform services and to render advice with
regard to any of the Fiduciary's responsibilities under the
Plan. Charges for all services performed and advice rendered
shall be directly paid by each Plan Sponsor or, to the extent
permissible under ERISA, may be paid at the direction of the Plan
Administrator by the Trustee from the Fund, but until paid shall
constitute a charge against the Fund.
(c) Each Plan Sponsor shall indemnify and hold harmless
each person constituting the Plan Administrator from and against
any and all claims, losses, costs, expenses (including, without
limitation, attorney's fees and court costs), damages, actions or
causes of action arising from, on account of or in connection
with the performance by such person of his duties in such
capacity, other than such of the foregoing arising from, on
account of or in connection with the willful neglect or willful
misconduct of such person so acting.
10.4 Duties of the Plan Administrator.
(a) The Plan Administrator shall advise the Trustee with
respect to all payments made under the terms of the Plan and
shall direct the Trustee in a writing to make such payments;
provided, however, in no event shall the Trustee be required to
make payments if the Trustee has actual knowledge that the
payments are contrary to the terms of this Plan or the Trust.
(b) The Plan Administrator shall from time to time
establish rules, not contrary to the provisions of the Plan and
the Trust, for the administration of the Plan and the transaction
of its business. All elections and designations to be made under
the Plan by a Participant or his Spouse shall be made on forms
prescribed by the Plan Administrator. The Plan Administrator
shall have discretionary authority to construe the terms of the
Plan and shall determine all questions arising in the
administration, interpretation and application of the Plan,
including, but not limited to, those concerning eligibility for
benefits, and it shall not act so as to discriminate in favor of
any person. All determinations of the Plan Administrator shall
be conclusive and binding on all Employees, Participants,
beneficiaries, and Fiduciaries, subject to the provisions of the
Plan and the Trust and subject to applicable law.
(c) The Plan Administrator shall furnish Participants
and Beneficiaries of deceased Participants with all disclosures
now or hereafter required by ERISA or the Code. The Plan
Administrator shall file the various reports and disclosures
concerning the Plan and its operations as required by ERISA and
by the Code, and shall be responsible for establishing and
maintaining all records of the Plan and the Trust.
(d) The statement of specific duties for a Plan
Administrator in this Section 10.4 is not in derogation of any
other duties which a Plan Administrator has under the provisions
of the Plan or the Trust or under applicable law.
10.5 Investment Manager. The Committee may, by action
in writing certified by notice to the Trustee, appoint an
Investment Manager. Any Investment Manager may be removed in the
same manner in which appointed, and in the event of any such
removal, the Investment Manager shall, as soon as possible, but
in no event more than thirty (30) days after notice of removal,
turn over all assets managed by it to the Trustee or to any
successor Investment Manager appointed, and shall make a full
accounting to the Primary Sponsor with respect to all assets
managed by it since its appointment as an Investment Manager.
10.6 Committee. The Board of Directors shall, by action
in writing certified by notice to the Trustee, appoint the
Committee. The Committee shall consist of three or more persons
and the Board of Directors shall have the right to remove any
person constituting any part of the Committee at any time by
notice in writing to such person or persons. A person
constituting any part of the Committee may resign at any time by
written notice of resignation to the Primary Sponsor. Upon any
removal, resignation or death, the Board of Directors may appoint
a successor to that person. Until a successor has been
appointed, the remaining person or persons constituting the
Committee may continue to act as the Committee.
10.7 Action by the Primary Sponsor or a Plan Sponsor.
Any action to be taken by the Primary Sponsor or a Plan Sponsor
shall be taken by resolution or written direction duly adopted by
its board of directors or appropriate governing body, as the case
may be; provided, however, that by resolution or written
direction, the board of directors or appropriate governing body,
as the case may be, may delegate to any officer or other
appropriate person the authority to take any such actions as may
be specified in such resolution or written direction; provided,
further, that minor amendments to the Plan which do not affect
benefits may be made by an officer of the Primary Sponsor without
any action by the Board of Directors.
SECTION 11 CLAIM REVIEW PROCEDURE
11.1 Notice of Denial. In the event that a Participant
or beneficiary is denied a claim for benefits under the Plan, the
Plan Administrator shall provide to such claimant written notice
of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of
the Plan on which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the claim and
an explanation of why such material or information is necessary;
and
(d) an explanation of the Plan's claim review procedure.
11.2 Application For Review. After receiving written
notice of the denial of a claim, a claimant or his representative
may request a full and fair review of the denial by written
application to the Plan Administrator, review pertinent
documents, and submit issues and comments in writing to the Plan
Administrator.
11.3 Timing of Application for Review. If the claimant
wishes such a review of the decision denying his claim to
benefits under the Plan, he must submit such written application
to the Plan Administrator within sixty (60) days after receiving
written notice of the denial.
11.4 Hearing. Upon receiving the written application
for review, the Plan Administrator may schedule a hearing for
purposes of reviewing the claimant's claim, which hearing shall
take place not more than thirty (30) days from the date on which
the Plan Administrator received the written application for
review.
11.5 Notice of Hearing. At least ten (10) days prior to
the scheduled hearing, the claimant and his representative
designated in writing by him shall receive written notice of the
date, time, and place of such scheduled hearing. The claimant or
his representative may request that the hearing be rescheduled,
for his convenience, on another reasonable date or at another
reasonable time or place.
11.6 Counsel. All claimants requesting a review of the
decision denying their claim for benefits may employ counsel for
purposes of the hearing.
11.7 Final Decision. No later than sixty (60) days
after receiving the written application for review, the Plan
Administrator shall submit its decision in writing to the
claimant and to his representative, if any; provided, however, a
decision on the written application for review may be extended,
if special circumstances, such as the need to hold a hearing
require an extension of time, to a date no later than one hundred
twenty (120) days after the date of receipt of the written
application for review. The decision shall include specific
reasons therefor and specific references to the pertinent Plan
provisions on which it is based.
SECTION 12
LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS
12.1 No Assignment. No benefit which shall be payable
under the Plan to any person shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same shall
be void. No benefit shall in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or
torts of any person, nor shall it be subject to attachment or
legal process for, or against, any person, and the same shall not
be recognized under the Plan, except to such extent as may be
required by law. Notwithstanding the above, this Section shall
not apply to a "qualified domestic relations order" (as defined
in Code Section 414(p)), and benefits may be paid pursuant to the
provisions of such an order. The Plan Administrator shall
develop procedures (in accordance with applicable federal
regulations) to determine whether a domestic relations order is
qualified, and, if so, the method and the procedures for
complying therewith.
12.2 Attempted Assignment. If any person who shall be
entitled to any benefit under the Plan shall become bankrupt or
shall attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge such benefit under the Plan, then the
payment of any such benefit in the event a Participant or
Beneficiary is entitled to payment shall, in the discretion of
the Plan Administrator, terminate and in that event the Trustee
shall hold or apply the same for the benefit of such person, his
Spouse, children, other dependents or any of them in the manner
and proportion as the Plan Administrator shall determine.
12.3 Minors. Whenever any benefit which shall be
payable under the Plan is to be paid to or for the benefit of any
person who is then a minor or determined to be incompetent by
qualified medical advice, the Plan Administrator need not require
the appointment of a guardian or custodian, but shall be
authorized to cause the same to be paid over to the person having
custody of the minor or incompetent, or to cause the same to be
paid to the minor or incompetent without the intervention of a
guardian or custodian, or to cause the same to be paid to a legal
guardian or custodian of the minor or incompetent if one has been
appointed or to cause the same to be used for the benefit of the
minor or incompetent.
12.4 Missing Participants. Whenever the Plan
Administrator cannot, within a reasonable time after payments are
to commence, locate any person to or for the benefit of whom such
payments are to be made, after making a reasonable effort to
locate such person, the Plan Administrator may deposit the amount
to be paid in a savings account of a bank or savings and loan
association to be held in the name of such person, subject
however, to any applicable escheat laws.
SECTION 13 PROHIBITION AGAINST DIVERSION
At no time shall any part of the Fund be used for or
diverted to purposes other than the exclusive benefit of the
Participants or their Beneficiaries, subject, however, to the
payment of all taxes and administrative expenses and subject to
the provisions of the Plan with respect to returns of
contributions and assets.
SECTION 14 LIMITATION OF RIGHTS
Neither the Plan, the Trust nor the mere fact of Plan
participation shall give any Employee or other person any right
or claim except to the extent that the right or claim is
specifically fixed under the terms of the Plan and the Fund is
sufficient therefor. The establishment of the Plan shall not be
construed to give any Employee a right to continue in the employ
of a Plan Sponsor or as interfering with the right of the Plan
Sponsor to terminate the employment of any Employee at any time.
SECTION 15 AMENDMENT AND TERMINATION
15.1 Right to Amend or Terminate Plan. The Primary
Sponsor reserves the right at any time to modify, amend, or
terminate the Plan or the Trust in whole or in part by notice
thereof in writing delivered to the Trustee; provided, however,
that the Primary Sponsor shall have no power to modify or amend
the Plan in such manner as would cause or permit any portion of
the funds held under the Plan to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants or
their Beneficiaries, or as would cause or permit any portion of
any funds held under the Plan to become the property of a Plan
Sponsor; and provided further, that the duties or liabilities of
the Trustee shall not be increased without the Trustee's written
consent. No modifications or amendments shall have the effect of
retroactively changing or depriving Participants or Beneficiaries
of rights already accrued under the Plan. No Plan Sponsor other
than the Primary Sponsor shall have the right to so modify, amend
or terminate the Plan or the Trust.
15.2 Right to Terminate Participation in Plan. Each
Plan Sponsor other than the Primary Sponsor shall have the right
to terminate its participation in the Plan and the Trust by
resolution of its board of directors or other appropriate
governing body and notice in writing to the Primary Sponsor and
the Trustee, unless the termination would result in the
disqualification of the Plan or the Trust as to any other Plan
Sponsor. If contributions by or on behalf of a Plan Sponsor are
completely terminated, the Plan and Trust shall be deemed
terminated as to such Plan Sponsor.
15.3 Notice of Termination. In the event that the
Primary Sponsor shall desire to terminate the Plan, within the
meaning of Section 4041 of ERISA, the Plan Administrator shall
notify the PBGC, each Participant, each beneficiary, and each
other affected party of the proposed termination of the Plan in
accordance with the provisions of the Single-Employer Pension
Plan Amendments Act of 1986 ("SEPPAA") and regulations issued by
the PBGC thereunder. Amounts paid from the Fund pursuant to a
termination of the Plan and final distribution of the Fund shall
be in accordance with Plan Section 15.5, subject to SEPPAA and
regulations issued by the PBGC thereunder.
15.4 Priority Categories. In the event of the
termination of the Plan in accordance with Section 4041 of ERISA,
the assets of the Plan shall be distributed in accordance with
Section 4044 of ERISA and any regulations issued thereunder. In
order that the assets of the Plan may be properly allocated, the
total benefits payable under the Plan shall be divided with
respect to each affected Participant among the priority
categories (a) through (g) set forth below. Each affected
Participant's benefit assigned to a particular priority category
shall then be separated between basic benefits and non-basic
benefits. The Plan Administrator shall then value each type of
benefit in each priority category in accordance with the
valuation factors prescribed by the PBGC, and shall then allocate
the assets of the Plan sequentially to the following priority
categories:
(a) That portion, if any, of each Participant's Accrued
Benefit which is derived from his voluntary employee
contributions.
(b) That portion, if any, of each Participant's Accrued
Benefit which is derived from his mandatory employee
contributions.
(c) Those benefits, excluding any increases in such
benefits resulting from Plan amendments during the preceding five
(5) years, payable as an annuity under the terms of the Plan to
all Participants and Beneficiaries:
(1) to whom benefits have been in pay status for at
least three (3) years prior to the date of the Plan's
termination, taking the lowest benefit in pay status during such
three (3) year period, and
(2) to whom benefits (other than those described in the
foregoing priority (c)(1)) would have been in pay status as of
the beginning of such three (3) year period had an eligible
Participant actually retired on a retirement date prior to the
beginning of such three (3) year period, as if such benefits had
commenced as a Normal Fund Payment as of the beginning of such
three (3) year period.
(d) Those basic benefits, other than those benefits
payable pursuant to the foregoing priority categories (b) and (c)
to which Participants or their Beneficiaries are entitled, or
would be entitled if their employment were terminated on the date
of the Plan's termination, to the extent such benefits are
guaranteed by the PBGC. For purposes of this Section, the term
"basic benefits" means the type of benefits which are, or would
be, guaranteed under Section 4022 of ERISA and the regulations
issued thereunder, without regard to the limitations set forth in
Section 4022(b) of ERISA.
(e) All other benefits payable with respect to a
Participant in the Plan in which such Participant is vested as of
the date of its termination; provided, however, that if the Plan
assets are insufficient to satisfy in full the benefits provided
pursuant to this priority category (e), the available assets
shall be allocated in accordance with Plan Section 15.6.
(f) All other benefits provided for under the Plan.
(g) If any assets remain as a result of actuarial error
after complete allocation pursuant to this Section 15.4, such
remaining assets shall be paid to the terminating Plan Sponsor.
15.5 Insufficient Assets. In the event Plan assets
shall be insufficient to provide in full the benefits of the
entire class of individuals described within any priority
category other than priority category (e), the available assets
for such class shall be allocated among the Participants of that
class and their beneficiaries, pro rata among such individuals on
the basis of the present value (as of the Participating Plan's
termination date) of their respective benefits as described in
ERISA Section 4044.
15.6 Insufficient Assets for Category (e). In the event
that the assets available for allocation under Plan Section
15.4(e) are insufficient to satisfy in full the benefits of
Participants described within that Section, the available assets
for such class shall be allocated on the basis of the benefits of
Participants of that class and their Beneficiaries, based upon
the Plan as in effect at the beginning of the five (5) year
period ending on the date of termination; or, if additional
assets remain available for allocation under Plan Section
15.4(e), the available assets shall be allocated on the basis of
the Plan as amended by the most recent amendment to the Plan
effective during such five (5) year period, under which the
assets available for allocation are sufficient to satisfy in full
the benefits of the class of individuals described in Plan
Section 15.4(e) and any assets thereafter remaining to be
allocated under Plan Section 15.4(e) shall be allocated on the
basis of the Plan as amended by the next succeeding amendment to
the Plan effective during such five (5) year period.
15.7 Benefits Payable. The Plan Administrator may
direct that any benefit payable in accordance with Plan Section
15.4 shall be provided through the continuance of the existing
Trust or through the purchase of an annuity contract or contracts
from an insurance company, or by a combination thereof as it may
decide.
15.8 Merger or Consolidation. In the case of any merger
or consolidation of the Plan with, or any transfer of the assets
or liabilities of the Plan to any other plan qualified under Code
Section 401, the terms of such merger, consolidation or transfer
shall be such that each Participant would receive (in the event
of termination of the Plan or its successor immediately
thereafter) a benefit which is no less than the benefit which
such Participant would have received in the event of termination
of the Plan immediately before the merger, consolidation or
transfer.
15.9 Full Vesting. Subject to the limitations on
entitlement to benefits contained in this Section 15, in the
event of the termination or partial termination of the Plan, each
affected Participant's Accrued Benefit as of the date of such
termination or partial termination, to the extent funded as of
such date, shall be fully vested and thereafter shall be
nonforfeitable, notwithstanding any other provisions of the Plan.
15.10 Elimination of Benefits. Notwithstanding any
other provision of the Plan, a Plan amendment--
(a) which eliminates or reduces an early retirement
benefit, if any, or which eliminates or reduces a retirement-type
subsidy (as defined in regulations issued by the Department of
the Treasury), if any, or
(b) which eliminates an optional form of benefit,
shall not be effective with respect to benefits attributable to
service before the amendment is adopted. In the case of a
retirement-type subsidy described in Subsection (a) of this
Section, this Section shall be applicable only to a Participant
who satisfies, either before or after the amendment, the
preamendment conditions for the subsidy.
SECTION 16 ADOPTION OF PLAN BY AFFILIATES
Any trade or business related to the Primary Sponsor by
function or operation and any Affiliate, if the trade or business
or Affiliate is authorized to do so by a written direction
adopted by the Primary Sponsor, may adopt the Plan and the
related Trust by action of the trade of business or Affiliate.
Any adoption shall be evidenced by certified copies of the
resolutions indicating the adoption and by the execution of the
Trust by the adopting trade or business or Affiliate. The
resolution shall state and define the Effective Date for the
purpose of the adopting trade or business or Affiliate and, for
the purpose of Code Section 415, the "limitation year" as to the
adopting trade or business or Affiliate. Notwithstanding the
foregoing, however, if the Plan and Trust as adopted by a trade
or business or Affiliate under the foregoing provisions shall
fail to receive the initial approval of the Internal Revenue
Service as a qualified Plan and Trust, any contributions by the
adopting trade or business or Affiliate after payment of all
expenses will be returned to the adopting trade or business or
Affiliate free of any trust, and the Plan and Trust shall
terminate as to the adopting trade or business or Affiliate.
SECTION 17 QUALIFICATION AND RETURN OF CONTRIBUTIONS
17.1 If the Plan and the related Trust fail to receive
the initial approval of the Internal Revenue Service as a
qualified plan, within one (1) year after the date of denial of
qualification, the contribution by a Plan Sponsor after payment
of all expenses will be returned to the Plan Sponsor of the Plan
and the Trust, and the Plan and Trust shall thereupon terminate.
17.2 If and to the extent permitted by the Code and
other applicable laws and regulations thereunder, upon a Plan
Sponsor's request, a contribution which was made by a
mistake-in-fact, or conditioned upon initial qualification or
upon the deductibility of the contribution under Code Section 404
shall be returned to a Plan Sponsor within one (1) year after the
payment of the contribution, the denial of the qualification, or
the disallowance of the deduction (to the extent disallowed),
whichever is applicable. The amount to be returned to the Plan
Sponsor shall be the excess of the contribution above the amount
that would have been contributed had the mistake of fact or the
mistake in determining the deduction not occurred, less any net
loss attributable to such excess. Any net income attributable to
such excess shall not be returned to the Plan Sponsor. In the
event of a contribution which was conditioned upon initial
qualification of the Plan, the amount to be returned to the Plan
sponsor shall be all of the assets of the Fund.
SECTION 18 INCORPORATION OF SPECIAL LIMITATIONS
Appendices A and B to the Plan attached hereto are hereby
incorporated by reference and the provisions of the same shall
apply notwithstanding anything to the contrary herein.
IN WITNESS WHEREOF, the Primary Sponsor has caused this
indenture to be executed as of the day and year first above
written.
BROWNING-FERRIS INDUSTRIES, INC.
By:
Title:
ATTEST:
By:
Title:
[CORPORATE SEAL]
APPENDIX A
LIMITATION ON BENEFITS
SECTION 1
(a) Notwithstanding any other provision of the Plan, in
no event shall the annual pension benefit of a Participant under
the Plan attributable to Plan Sponsor contributions exceed the
lesser of (1) $90,000, subject to adjustment in accordance with
regulations issued by the Secretary of Treasury or other
applicable provision of law, provided that any adjustment shall
be effective as of January 1 of each calendar year and shall be
applicable with respect to the limitation year ending with or
within each calendar year, or (2) 100% of the Participant's
average Compensation for the three consecutive calendar years
during which (A) he was a Participant and (B) his aggregate
Compensation from a Plan Sponsor was the highest. The $90,000
limit provided herein shall be adjusted, and the maximum pension
benefit shall be recalculated, for each calendar year the
Participant receives a benefit payment.
(b) In the case of a Participant who has less than ten
(10) years of participation in the Plan, the limitation under
Subsection (a)(1) of this Section shall be determined by
multiplying the otherwise applicable limit by a fraction, the
numerator of which is the number of years (or part thereof) of
participation in the Plan and the denominator of which is ten
(10). In the case of a Participant who has less than ten (10)
years of Vesting Service with a Plan Sponsor, the limitation
under Subsection (a)(2) of this Section shall be determined by
multiplying the otherwise applicable limit by a fraction, the
numerator of which is the number of years (or part thereof) of
Vesting Service with a Plan Sponsor and the denominator of which
is ten (10). Notwithstanding the above, in no event shall the
limitations contained in this Subsection reduce the limitations
referred to in Subsection (a) of this Section to an amount less
than one-tenth (1/10) of the applicable limitation provided in
Subsection (a) (as determined without regard to this
Subsection). To the extent provided in regulations promulgated by
the Secretary of the Treasury, this Subsection shall be applied
separately with respect to each change in the benefit structure
of the Plan.
SECTION 2
If retirement payments to a Participant commence after the
Participant attains age 62 but before the Participant attains
Social Security Retirement Age, the limitation under Section
1(a)(1) of this Appendix A shall be adjusted as follows: (1) if
the Participant's Social Security Retirement Age is 65, the
limitation under Section 1(a)(1) of this Appendix A shall be
reduced by 5/9 of 1% for each month by which retirement payments
commence before the month in which the Participant attains age
65; or (2) if the Participant's Social Security Retirement Age is
greater than 65, the limitation under Section 1(a)(1) of this
Appendix A shall be reduced by 5/9 of 1% for each of the first 36
months and 5/12 of 1% for each of the additional months (up to
24) by which retirement payments commence before the Participant
attains his Social Security Retirement Age. If retirement
payments to a Participant commence before the Participant attains
age 62, the limitation under Section 1(a)(1) of this Appendix A
shall be reduced so that it is the actuarial equivalent of the
adjusted $90,000 limit at age 62; provided, however, that the
interest rate used in determining the actuarial equivalent shall
be the greater of the interest rate in Plan Section 1.2 or five
percent (5%) per year.
If retirement payments to a Participant commence before the
Participant's Social Security retirement age, the limitation
under Section 1(a)(1) of this Appendix A shall be adjusted so
that it is the Actuarial Equivalent of an annual pension benefit
of $90,000 beginning at the Social Security retirement age,
multiplied by the cost-of-living adjustment factor prescribed by
the Secretary of the Treasury under Code Section 415(d), based on
the greater of the interest rate specified in Plan Section 1.3 or
five percent (5%) per year.
SECTION 3
If the retirement payments to a Participant commence after
the Participant's Social Security retirement age, the limitation
under Section 1(a)(1) shall be adjusted so that it is the
Actuarial Equivalent of a benefit of $90,000 beginning at the
Social Security retirement age, multiplied by the cost-of-living
adjustment factor prescribed by the Secretary of the Treasury
under Code Section 415(d), based on the lesser of the interest
rate specified in Plan Section 1.3 or 5% per year.
SECTION 4
For purposes of this Appendix A, the term "Social Security
retirement age" shall mean the age used as the retirement age
under Section 216(l) of the Social Security Act, except that such
Section shall be applied (a) without regard to the age increase
factor, and (b) as if the early retirement age under
Section 216(l)(2) of the Social Security Act were 62.
SECTION 5
If a Participant is a participant in any other defined
benefit pension plan sponsored by a Plan Sponsor, his pension
benefit under that plan shall be aggregated with his projected
benefit under the Plan, and his benefit under the Plan shall be
reduced, if necessary, so that the aggregate of the benefits does
not exceed the foregoing limitations.
SECTION 6
In the event a Plan Sponsor maintains a defined contribution
plan in which a Participant also participates, the sum of the
defined benefit plan fraction and the defined contribution plan
fraction shall not exceed 1.0.
(a) The defined benefit plan fraction for any limitation
year is a fraction:
(1) the numerator of which is the projected annual
benefit of the Participant under all defined benefit plans
(determined as of the close of the year); and
(2) the denominator of which is the lesser of
(A) the product of 1.25, multiplied by the maximum
annual benefit allowable under Code Section 415(b)(1)(A), or
(B) the product of 1.4 multiplied by the amount
which may be taken into account under Code Section 415(b)(1)(B)
with respect to a Participant under the defined benefit plan for
the year (determined as of the close of the year).
(b) The defined contribution plan fraction for any
limitation year is a fraction:
(1) the numerator of which is the sum of a
Participant's annual additions as of the close of the year; and
(2) the denominator of which is the sum of the
lesser of the following amounts determined for the year and for
all prior limitation years during which the Participant was
employed by a Plan Sponsor:
(A) the product of 1.25, multiplied by the
dollar limitation in effect under Code Section 415(c)(1)(A) for
the limitation year (determined without regard to Code
Section 415(c)(6)), or
(B) the product of 1.4 multiplied by the
amount which may be taken into account under Code
Section 415(c)(1)(B) (or Code Section 415(c)(7) if applicable)
with respect to the Participant for the limitation year.
SECTION 7
For purposes of this Appendix A, the term "limitation year"
shall mean a Plan Year unless a Plan Sponsor elects, by adoption
of a written resolution, to use any other twelve-month period in
accordance with regulations issued by the Secretary of the
Treasury.
SECTION 8
For purposes of applying the limitations of this Appendix A,
all defined contribution plans maintained or deemed to be
maintained by a Plan Sponsor shall be treated as one defined
contribution plan, and all defined benefit plans now or
previously maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined benefit plan.
SECTION 9
In the event that the limitations set forth in this Appendix
A are exceeded with respect to a Participant for a particular
limitation year, a Plan Sponsor shall take appropriate steps to
comply with the limitations. If a Participant is a participant
in one or more defined contribution plans sponsored by a Plan
Sponsor, his benefit under this Plan shall be reduced, if the
defined contribution plans do not provide for a sufficient
automatic reduction of the Participant's annual additions in that
case, so that the aggregate of all benefits does not exceed the
permissible limits set forth in Code Section 415.
SECTION 10
For purposes of applying the limitations set forth in this
Appendix A, the term "Plan Sponsor" shall be deemed to mean a
Plan Sponsor and any other corporations which are members of the
same controlled group of corporations (as described in Code
Section 414(b), as modified by Code Section 415(h)) with a Plan
Sponsor, any other trades or businesses under common control (as
described in Code Section 414(c), as modified by Code Section
415(h)) with a Plan Sponsor, any other corporations, partnerships
or other organizations which are members of an affiliated service
group (within the meaning of Code Section 414(m)) with the Plan
Sponsor and any other entity required to be aggregated with a
Plan Sponsor pursuant to regulations under Code Section 414(o).
For purposes of applying the limitations set forth in this
Appendix A, where a defined benefit plan provides for employee
contributions, the annual benefit attributable to those
contributions is not taken into account, but those contributions
are considered a separate defined contribution plan maintained by
the Plan Sponsor which is subject to the limitations set forth in
this Appendix A.
APPENDIX B
TOP-HEAVY PROVISIONS
SECTION 1
As used in this Appendix B, the following words shall have
the following meanings:
(a) "Determination Date" means, with respect to any Plan
Year, the last day of the preceding Plan Year, or, in the case of
the first Plan Year, means the last day of the first Plan Year.
(b) "Key Employee" means an Employee or former Employee
(including a beneficiary of a Key Employee or former Key
Employee) who at any time during the Plan Year containing the
Determination Date or any of the four preceding Plan Years is:
(1) An officer of a Plan Sponsor or of any Affiliate of
a Plan Sponsor whose Monthly Compensation on an annual basis was
greater than 50% of the amount in effect under Code Section
415(b)(1)(A) for the calendar year in which the Plan Year ends,
where the term "officer" means an administrative executive in
regular and continual service to a Plan Sponsor or Affiliate;
provided, however, that in no event shall the number of officers
exceed the lesser of Subparagraphs (A) or (B) of this Paragraph
(1), where:
(A) equals fifty Employees; and
(B) equals the greater of (i) three Employees or
(ii) 10% of the number of Employees during the Plan Year, with
any non-integer being increased to the next integer; or
(2) One of the ten Employees owning both (A) more than
one-half percent (.5%) of the outstanding stock of the Plan
Sponsor, more than one-half percent (.5%) of the total combined
voting power of all stock of the Plan Sponsor, or more than
one-half percent (.5%) of the capital or profits interest in the
Plan Sponsor, and (B) the largest percentage ownership interests
in the Plan Sponsor or any of its Affiliates, and whose
Compensation is equal to or greater than the amount then in
effect under Code Section 415(C)(1)(A) for the calendar year in
which the Determination Date falls; or
(3) An owner of more than 5% of the outstanding stock
of the Plan Sponsor or more than 5% of the total combined voting
power of all stock of the Plan Sponsor; or
(4) An owner of more than 1% of the outstanding stock
of the Plan Sponsor or more than 1% of the total combined voting
power of all stock of the Plan Sponsor, and who in the Plan Year
had Compensation from the Plan Sponsor and all of its Affiliates
in the sum of more than $150,000.
Employees other than Key Employees are sometimes
referred to in this Appendix as "non-key employees."
(c) "Required Aggregation Group" means:
(1) each plan of a Plan Sponsor and its Affiliates
which qualifies under Code Section 401(a) in which a Key Employee
is a participant, and
(2) each other plan of a Plan Sponsor and its
Affiliates which qualifies under Code Section 401(a) and which
enables any plan described in Subsection (a) of this Section to
meet the requirements of Section 401(a)(4) or 410 of the Code.
(d) (1) "Top-Heavy" means:
(A) if the Plan is not included in a Required
Aggregation Group, the Plan's condition in a Plan Year for which,
as of the Determination Date:
(i) the present value of the cumulative
Accrued Benefits under the Plan for all Key Employees exceeds 60
percent of the present value of the cumulative Accrued Benefits
under the Plan for all Participants; and
(ii) the Plan when included in every potential
combination, if any, with any or all of:
(I) any Required Aggregation Group, and
(II) any plan of a Plan Sponsor
which is not part of any Required Aggregation Group and which
qualifies under Code Section 401(a),
is part of a Top-Heavy Group (as defined in
Paragraph (2) of this Subsection); and
(B) if the Plan is included in a Required
Aggregation Group, the Plan's condition in a Plan Year for which,
as of the Determination Date:
(i) the Required Aggregation Group is a
Top-Heavy Group (as defined in Paragraph (2) of this Subsection);
and
(ii) the Required Aggregation Group when
included in every potential combination, if any, with any or all
of the plans of a Plan Sponsor and its Affiliates which are not
part of the Required Aggregation Group and which qualify under
Code Section 401(a) is part of a Top-Heavy Group (as defined in
Paragraph (2) of this Subsection).
(C) For purposes of Subparagraphs (A)(i) and
(B)(ii) of this Paragraph (1), any combination of plans must
satisfy the requirements of Code Sections 401(a)(4) and 410.
(2) A group shall be deemed to be a Top-Heavy Group
if:
(A) the sum, as of the Determination Date, of
the present value of the cumulative accrued benefits for all Key
Employees under all plans included in such group exceeds
(B) 60% of a similar sum determined for all
participants in such plans.
(3) (A) For purposes of this Section, the
present value of the accrued benefit for any participant in a
defined contribution plan as of any Determination Date or last
day of a plan year shall be the sum of:
(i) as to any defined contribution plan other
than a simplified employee pension, the account balance as of the
most recent valuation date occurring within the plan year ending
on the Determination Date or last day of a plan year, and
(ii) as to any simplified employee
pension, the aggregate employer contributions, and
(iii) an adjustment for contributions due as
of the Determination Date or last day of a plan year.
In the case of a plan that is not subject to the
minimum funding requirements of Code Section 412, the adjustment
in Clause (iii) of this Subparagraph (A) shall be the amount of
any contributions actually made after the valuation date but on
or before the Determination Date or last day of the plan year to
the extent not included under Clause (i) or (ii) of this
Subparagraph (A); provided, however, that in the first plan year
of the plan, the adjustment in Clause (iii) Subparagraph (A)
shall also reflect the amount of any contributions made
thereafter that are allocated as of a date in such first Plan
Year. In the case of a plan that is subject to the minimum
funding requirements, the account balance in Clause (i) of this
Subparagraph (A) and the aggregate contributions in Clause (i)
of this Subparagraph (A) shall include contributions that would
be allocated as of a date not later than the Determination Date
or last day of a plan year, even though those amounts are not yet
required to be contributed, and the adjustment in Clause (iii) of
this Subparagraph (A) shall be the amount of any contribution
actually made (or due to be made) after the valuation date but
before the expiration of the extended payment period in Code
Section 412(c)(10) to the extent not included under Clause (i) or
(ii) of this Subparagraph (A).
(B) For purposes of this Subsection, the
present value of the accrued benefit for any participant in a
defined benefit plan as of any Determination Date or last day of
a plan year must be determined as of the most recent valuation
date which is within a 12-month period ending on the
Determination Date or last day of a plan year as if such
participant terminated as of such valuation date; provided,
however, that in the first plan year of a plan, the present value
of the accrued benefit for a current participant must be
determined either (i) as if the participant terminated service as
of the Determination Date or last day of a plan year or (ii) as
if the participant terminated service as of such valuation date,
but taking into account the estimated accrued benefit as of the
Determination Date or last day of a plan year. For purposes of
this Subparagraph (B), the valuation date must be the same
valuation date used for computing plan costs for minimum funding,
regardless of whether a valuation is performed that year. The
actuarial assumptions utilized in calculating the present value
of the accrued benefit for any participant in a defined benefit
plan for purposes of this Subparagraph (B) shall be established
by the Plan Administrator after consultation with the actuary for
the plan, and shall be reasonable in the aggregate and shall
comport with the requirements set forth by the Internal Revenue
Service in Q&A T-26 and T-27 of Regulation Section 1.416-1.
(C) For purposes of determining the present
value of the cumulative accrued benefit under a plan for any
participant in accordance with this Subsection, the present value
shall be increased by the aggregate distributions made with
respect to the participant (including distributions paid on
account of death to the extent they do not exceed the present
value of the cumulative accrued benefit existing immediately
prior to death) under each plan being considered, and under any
terminated plan which if it had not been terminated would have
been in a Required Aggregation Group with the Participating Plan,
during the 5-year period ending on the Determination Date or last
day of the plan year that falls within the calendar year in which
the Determination Date falls.
(D) For purposes of this Paragraph (3),
participant contributions which are deductible as "qualified
retirement contributions" within the meaning of Code Section 219
or any successor, as adjusted to reflect income, gains, losses,
and other credits or charges attributable thereto, shall not be
considered to be part of the accrued benefits under any plan.
(E) For purposes of this Paragraph (3), if any
employee is not a Key Employee with respect to any plan for any
plan year, but such employee was a Key Employee with respect to
such plan for any prior plan year, any accrued benefit for such
employee shall not be taken into account.
(F) For purposes of this Paragraph (3), if any
employee has not any Plan Sponsor or Affiliate maintaining the
plan at any time during the five-year period ending on the
Determination Date, any accrued benefit for that employee shall
not be taken into account.
(G) (i) In the case of an "unrelated
rollover" (as defined below) between plans which qualify under
Code Section 401(a), (a) the plan providing the distribution
shall count the distribution as a distribution under
Subparagraph (C) of this Paragraph (3), and (b) the plan
accepting the distribution shall not consider the distribution
part of the accrued benefit under this Section; and
(ii) In the case of a "related rollover"
(as defined below) between plans which qualify under Code Section
401(a), (a) the plan providing the distribution shall not count
the distribution as a distribution under Subparagraph (C) of this
Paragraph (3), and (b) the plan accepting the distribution shall
consider the distribution part of the accrued benefit under this
Section.
For purposes of this Subparagraph (G), an
"unrelated rollover" is a rollover as defined in Code Section
402(a)(5) or 408(d)(3) or a plan-to-plan transfer which is both
initiated by the participant and made from a plan maintained by
one employer to a plan maintained by another employer where the
employers are not Affiliates. For purposes of this Subparagraph
(G), a "related rollover" is a rollover as defined in Code
Section 402(a)(5) or 408(d)(3) or a plan-to-plan transfer which
is either not initiated by the participant or made to a plan
maintained by the employer or an Affiliate.
SECTION 2
Notwithstanding anything contained in the Plan to the
contrary, in any Plan Year during which the Plan is Top-Heavy, a
Participant's interest in his Accrued Benefit shall not vest at
any rate which is slower than the following schedule, effective
as of the first day of that Plan Year:
Full Years of Percentage
Vesting Service Vested
One year or less 0%
Two years 20%
Three years 40%
Four years 60%
Five years or more 100%
The schedule set forth above in this Section of Appendix B
of the Plan shall be inapplicable to a Participant who has failed
to perform an Hour of Service after the Determination Date on
which the Plan has become Top-Heavy. When the Plan ceases to be
Top-Heavy, the schedule set forth above in this Section of
Appendix B to the Plan shall cease to be applicable; provided
however, that the provisions of the Plan Section dealing with
changes in the vesting schedule shall apply.
SECTION 3
(a) Notwithstanding anything contained in the Plan to
the contrary, and except as otherwise provided in Subsection (b)
of this Section, the Accrued Benefit derived from Plan Sponsor
contributions of each Participant who is not a Key Employee, when
expressed as an annual retirement benefit (as defined below),
shall not be less than the applicable percentage (as defined in
Subsection (b) of this Section) of the Participant's average
compensation (as defined in Subsection (d) of this Section
below).
(b) For purposes of Subsection (a) of this Section, the
term "applicable percentage" means the lesser of:
(1) 2% multiplied by the number of years of service (as
defined in (c) below) with a Plan Sponsor, or
(2) 20%.
(c) For purposes of this Section:
(1) Except as provided in Paragraph (2) of this
Subsection (c), years of service shall be determined under the
rules of Paragraphs (4), (5), and (6) of Code Section 411(a).
(2) A year of service with a Plan Sponsor shall not
be taken into account if:
(A) the Plan was not Top-Heavy for any Plan Year
ending during that year of service, or
(B) that year of service was completed in a Plan
Year beginning before January 1, 1984.
(d) (1) For purposes of Subsection (a) of this
Section, "average compensation" means the average of a
Participant's Compensation for each Plan Year in the
Participant's testing period (as defined in Paragraph (2) of this
Subsection).
(2) (A) A Participant's testing period shall be
the period of consecutive Plan Years (not exceeding 5) during
which the Participant had the greatest aggregate Compensation.
(B) The Plan Years taken into account under
Subparagraph (A) of this Paragraph (2) shall not include years
for which the Participant did not earn a year of service under
the rules of paragraphs (4), (5) and (6) of Code Section 411(a).
(C) A Plan Year shall not be taken into
account under Subparagraph (A) of this Paragraph (2) if:
(i) that Plan Year ends before January 1,
1984, or
(ii) that Plan Year begins after the close
of the last Plan Year in which the Plan was Top-Heavy.
(e) (1) For purposes of Subsection (a) of this
Section, the term "annual retirement benefit" means a benefit
payable annually in the form of a single life annuity (with no
ancillary benefits) beginning at Normal Retirement Age.
(2) If the Participant's benefit under this Plan
begins at a date other than his Normal Retirement Age, the
Participant shall receive a benefit which is no less than the
Actuarial Equivalent of the annual retirement benefit provided
under this Section.
(f) The minimum Accrued Benefit described under this
Section shall be provided to any Employee who is otherwise
eligible for participation in the Plan, even if:
(1) The Employee fails to make mandatory employee
contributions required as a condition of participation in the
Plan, or
(2) The Employee's compensation is less than a
stated amount, or
(3) The Employee is not employed by a Plan Sponsor
or Affiliate on a given date.
SECTION 4
In any limitation year (as defined in Section 6 of Appendix
A to the Plan) which contains any portion of a Plan Year in which
the Plan is Top-Heavy, the number "l.0" shall be substituted for
the number "1.25" in Section 5 of Appendix A to the Plan.
EXHIBIT 10.25
BFI MANAGEMENT INCENTIVE COMPENSATION PLAN
The Company's officers and certain other key employees are eligible
to participate in an annual incentive compensation plan designed to
reward the attainment of certain company financial goals and
specific individual or team performance objectives which support
the Company's overall business plan.
Each eligible plan participant shall have a "target" incentive
which is a percent of base salary as of the end of the fiscal year.
Eligibility for participation and the target incentive percent is
determined by the position responsibilities, organizational level,
and competitive practices. In addition, the target incentive is
weighted for financial, and individual or team performance
depending on ability of the participant to impact the Company's
overall financial results. Generally, while financial performance
is more heavily weighted for executive officers, the financial and
individual/team components are more balanced for middle management.
Availability of any incentive awards under this plan requires
improved performance over prior year - - financial, as measured by
return on assets (ROA) and earnings per share (EPS), and individual
or team criteria which, when achieved, add significant value to the
Company. For any incentive awards to be paid under this plan, ROA
must exceed prior year's performance. The actual portion of the
award attributable to financial performance is based on the EPS for
the fiscal year. For each year, a specified percentage growth in
EPS over the prior year is established as the performance level
required for payout of "target" incentive awards; performance below
this specified level results in less than target awards. EPS also
determines the level of payout made available for the portion of
the incentive award attributable to individual or team performance;
the actual award is determined by the actual individual or team
achievement as compared to the established objectives. The maximum
incentive award available under this plan is two times the target
incentive.
All financial goals are established and approved by the
Compensation Committee of the Board of Directors at the beginning
of the fiscal year. In addition, each incentive plan participant
receives a detailed workplan outlining individual and/or team
objectives focused on the priorities within the areas of functional
accountability and support the Company's overall business
objectives. These workplans contain specific criteria and define
the levels of performance required to meet and exceed the
objectives. The workplan becomes the basis from which performance
is measured at the end of the fiscal year.
This plan is administered by the Compensation department in
Corporate Human Resources. All award levels made under this plan
are subject to the approval of the Compensation Committee of the
Board of Directors. Incentive awards are paid no later than 75 days
following the end of the fiscal year. No incentive awards are paid
to non-employee directors.
Exhibit 10.27
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this ___ day of _____________, 1994, by and
between Browning-Ferris Industries, Inc., a Delaware corporation,
hereinafter referred to as the "Company" and ____________________
hereinafter referred to as the "Participant".
W I T N E S S E T H:
WHEREAS, the Company desires to implement a program whereby the
directors and officers of Browning-Ferris Industries, Inc. and
Regional Vice Presidents employed by the Company or one of its
subsidiaries may defer payment of director fees, salaries and/or
bonuses payable in cash as compensation for services rendered to
the Company or, as the case may be, one of its subsidiaries; and
WHEREAS, the Company is willing to enter into an arrangement with
the Participant whereby the Participant may defer receipt of such
compensation otherwise payable to the Participant; and the
Participant desires to enter into such an arrangement.
NOW, THEREFORE, in consideration of the premises, and in
consideration of the mutual covenants and agreements herein
contained, the Company and the Participant agree as follows:
1. For purposes of this Agreement, the period of the
Participant's active service shall mean the period commencing
with the date of election, appointment or employment of the
Participant and expiring on the date on which occurs the
termination of the Participant's service by reason of
expiration of term or the date of resignation, removal,
retirement, disability or death of the Participant whichever
shall occur first.
2. (a) During the period of the Participant's active service,
the Participant may instruct the Company by delivery to
it of written notice to withhold any whole percentage of
fees, salary and/or bonus otherwise payable in cash to
Participant for services to be rendered in the following
fiscal year or the following calendar year as applicable
(the "Deferred Amounts"). Any election to defer any
portion of a Participant's bonus shall be made by
Participant prior to the start of the Company's fiscal
year (i.e., October 1), and such election to defer shall
be effective on October 1 for that fiscal year. Any
election to defer any portion of a Participant's salary
and any director's fees shall be made by Participant
prior to January 1 of each year, and such an election
shall be effective on January 1 for that calendar year.
The Deferred Amounts shall be credited when otherwise due
to be paid to a Phantom Stock Account or an Interest-
Bearing Account (collectively, the "Deferred Accounts")
established on the books of the Company for this purpose.
At the time of the election to defer, the Participant
shall by written notice designate which Deferred Account
or Accounts the Participant elects the Company to
establish for said Participant and the percentage (but
not less than 25% in either Deferred Account if both
Deferred Accounts are designated by the Participant) of
the Deferred Amount to be credited to each such Deferred
Account, as more fully set forth in Subparagraphs 2(b)(i)
and 2(b)(ii) hereinafter. The form of Deferred
Compensation Election is attached as Exhibit "A" and the
Participant shall complete such an election form annually
if the Participant wishes to defer any compensation for
that period. Except as expressly provided otherwise
herein, any election to defer, including the designation
of Deferred Accounts and the time of ultimate cash
payment shall be irrevocable for the fiscal or calendar
year as to which it is made.
Two exceptions apply to the deferral of salary and
director fees pursuant to this subsection:
(1) In the year in which the Agreement is first
implemented, an eligible Participant may make an
election to defer compensation for services to be
performed subsequent to the election within 30 days
after the date the Agreement is effective for
eligible participants; and
(2) In the first year in which a Participant becomes
eligible to participate in the Agreement, the newly
eligible Participant may make an election to defer
compensation for services to be performed
subsequent to the election within 30 days after the
date the Participant becomes eligible.
(b)(i) Deferred Account #1 (Phantom Stock Account)
(A) The Deferred Amount credited by the Company to
this Deferred Account by election of the
Participant shall each month be converted to that
number of share units equal to the number of
shares (to the nearest hundredth of a share) of
common stock of the Company which could have been
purchased with this amount at the average of the
closing prices on the New York Stock Exchange-
Composite Transactions, as reported in The Wall
Street Journal, for shares of common stock of the
Company for each trading day during the month
(the "Share Units").
(B) During the period that the Company shall maintain
such Deferred Account, on each date on which the
Company pays dividends on shares of its common
stock, it shall credit the Deferred Account with
an additional number of Share Units equal to the
number of shares (to the nearest hundredth of a
share) of common stock of the Company which could
have been purchased at the average of the high
and low prices on the New York Stock Exchange,
Composite Transactions, as reported in The Wall
Street Journal, for shares of common stock of the
Company on such dividend payment date, with the
amount of dividends that would have been received
on the number of shares of common stock equal to
the number of Share Units in such Participant's
Deferred Account, as of the end of the month
preceding the dividend record date.
(C) In the event of any stock dividend, stock split,
combination of shares, recapitalization or the
like of the common stock of the Company, the
Company shall make appropriate adjustment in the
number of Share Units credited to the
Participant's Deferred Account.
(D) The Participant is not allowed to withdraw any
amount from the Phantom Stock Account any sooner
than six months after deferral and credit of the
latest contribution to said account pursuant to
this Agreement in order to comply with the rules
and regulations of the Securities and Exchange
Commission prohibiting short-swing transactions,
to the extent applicable.
(b)(ii) Deferred Account #2 (An Interest-Bearing Account)
At the end of each calendar quarter during the period
of the Participant's active service, the Company
agrees to credit this Deferred Account with an annual
rate of interest equal to the prime rate as of the
end of each calendar quarter, based upon the average
of the high and the low balance in the Participant's
Deferred Account during that calendar quarter. For
purposes of this Agreement, the prime interest rate
shall mean the prime rate as reported in "Money
Rates" published in The Wall Street Journal with
respect to the last trading day at the end of each
calendar quarter.
(c) The amounts credited to the Participant's Deferred
Account or Accounts pursuant to this Agreement shall
constitute an unsecured claim against the general funds
of the Company.
3. (a) At the time that the Participant makes the election for
the percentage of director fees, salary or bonus to be
deferred, the Participant shall advise the Company in
writing of Participant's desire to receive the amounts in
the Deferred Account or Accounts (i) in cash as a lump
sum payment subject to Subparagraph 2(b)(i)(D) above on
a specific date in the future during continued service or
at a specific time following termination of service for
any reason or retirement or (ii) in cash subject to
Subparagraph 2(b)(i)(D) above in pro rata installments
over a number of years or months (not exceeding ten years
or 120 months), beginning on a specified date during
continued service, or at a specific time following
termination of service for any reason or retirement, with
a pro rata amount being distributed annually to the
Participant during the payout term selected. Participant
recognizes that the amount of the distribution will
change from year to year, based on changes in the value
of the Deferred Account or Accounts. The payout period
selected can commence during or after the Participant's
affiliation with the Company. All cash payouts from the
Phantom Stock Account shall be computed by the Company by
using the average of the closing prices on the New York
Stock Exchange - Composite Transactions, as reported in
The Wall Street Journal, for shares of common stock of
the Company for each trading day during the calendar
month preceding the cash payment date.
4. In the event of the death of the Participant during the term
of this Agreement, the Company shall pay in one lump sum
within sixty (60) days thereafter the amount in the Deferred
Account or Accounts to such beneficiary or beneficiaries as
the Participant may have designated in writing to the Company
or, in the event a beneficiary is not so designated by the
Participant, to the Participant's estate. If a beneficiary
other than a Participant's spouse is named, the spouse must
consent to that beneficiary designation. All cash payouts
from the Phantom Stock Account shall be computed by the
Company by using the average of the closing prices on the New
York Stock Exchange - Composite Transactions, as reported in
The Wall Street Journal, for shares of common stock of the
Company for each trading day during the calendar month
preceding the cash payment date.
5. No rights or interest of the Participant, his beneficiary, or
estate established herein, shall be assignable or transferable
in whole or in part either directly or by operation of law or
otherwise, including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy, or in any
other manner, and no right or interest established herein
shall be liable for, or subject to, any obligation or
liability of the Participant.
6. This Agreement shall be binding upon the parties hereto, their
heirs, executors, administrators, successors (including but
not limited to successors resulting from any corporate merger)
or assigns.
7. This Agreement shall be construed in accordance with the laws
of the State of Texas.
8. This Agreement may be executed in duplicate, each copy of
which when so executed and delivered shall be an original, but
both copies shall together constitute the same document.
9. This Agreement may at any time be amended or terminated by the
Company, but no such amendment or termination shall diminish
the value of any amounts then credited to the Participant
under the Agreement.
10. The Compensation Committee of the Board of Directors of
Browning-Ferris Industries, Inc. shall have the exclusive
responsibility for the general administration of the Agreement
according to the terms and provisions of the Agreement and
shall have all powers necessary to accomplish those purposes,
including but not by way of limitation the right, power and
authority:
(a) to make rules and regulations for the administration of
the Agreement;
(b) to construe all terms, provisions, conditions and
limitations of the Agreement;
(c) to correct any defect, supply any omission or reconcile
any inconsistency that may appear in the Agreement in the
manner and to the extent it deems expedient to carry the
Agreement into effect;
(d) to determine all controversies relating to the
administration of the Agreement, including, but not
limited to:
(1) differences of opinion arising between the
Company and a Participant; and
(2) any question it deems advisable to determine in
order to promote the uniform administration of
the Agreement for the benefit of all parties at
interest; and
(e) to delegate by written notice those clerical and
recordation duties of the Compensation Committee, as it
deems necessary or advisable for the proper and efficient
administration of the Agreement.
The Compensation Committee in exercising power or authority
granted under this Agreement or in making any determination
under this Agreement shall perform or refrain from performing
those acts using its sole discretion and judgment. Any
decision made by the Compensation Committee or any refraining
to act or any act taken by the Compensation Committee in good
faith shall be final and binding on all parties and shall not
be subject to de novo review.
The Compensation Committee shall cause each Participant to
receive a statement at least annually, as soon as
administratively feasible after the conclusion of each
calendar year, containing a statement of the Participant's
account balance in the Deferred Accounts through the end of
that calendar year. The statement shall include a report of
the number of units allocated to Deferred Account #1 for that
calendar year.
The Compensation Committee shall be reimbursed by the Company
for all expenses properly and actually incurred in the
performance of its duties under this Agreement.
11. Nothing in this Agreement will be construed:
(a) to limit in any way the right of the Company to terminate
a Participant's employment with the Company at any time;
or
(b) to evidence any agreement or understanding, expressed or
implied, that the Company will employ a Participant in
any particular position or for any particular
remuneration.
12. The Company shall withhold appropriate federal and state
income and payroll taxes as may be required by law from
payments and deferrals under the Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands the day
and year first above written.
______________________________
Participant
BROWNING-FERRIS INDUSTRIES, INC.
(Company)
By: ____________________________
Title: _________________________
<PAGE>
EXHIBIT "A"
DEFERRED COMPENSATION ELECTION
FOR OFFICERS AND REGIONAL VICE PRESIDENTS
Pursuant to paragraph 2 of the Deferred Compensation Agreement,
dated ____________________, 19___, between ___________________ and
me (the "Agreement"), which is incorporated by reference, I hereby
elect the following deferrals:
1. Base Salary. Percentage Deferral. I irrevocably elect to
defer _____% of the Base Salary which otherwise would become
payable to me during calendar 19__.
2. Bonus. Percentage Deferral. I irrevocably elect to defer
____% of the amount of any Bonus payable in cash which is
granted to me for the Company's fiscal year ending September
30, 199__.
3. Beneficiary Designation. In the event of my death, I
designate ____________________________________________________
________________, to receive all amounts otherwise due me on
my date of death that I have deferred pursuant to this
election. If I have designated a beneficiary who is not my
spouse, my spouse has indicated his or her consent by his or
her execution of this document, properly notarized.
Importance Notice from the Company: In the event that the
Participant wishes to designate as beneficiary a person who is
not his or her spouse, then the Participant and his or her
spouse are advised to seek independent tax counsel as to the
possible federal and/or state gift and estate tax consequences
of such a beneficiary designation.
4. Deferral. Of the amounts being deferred by me, I irrevocably
elect that ___% of the amounts be invested in Deferred Account
#1 (Phantom Stock Account) and ___% in Deferred Account #2 (an
Interest Bearing Account). (DEFERRALS MUST BE IN INCREMENTS
OF 25%).
5. Payout Election.
_______ A. By initialing here, I hereby irrevocably elect
that the amounts deferred by me hereunder shall be paid to me
in a lump sum payment on ________________________________.
(Specify date or time during continued service or after
termination or retirement).
or
_______ B. By initialing here, I hereby irrevocably elect
that the amounts deferred by me hereunder shall be paid to me
in ____________ annual/_____ monthly pro rata installments
(not exceeding ten years or 120 months, whichever is
applicable) commencing __________________. (Specify date or
time during continued service or after termination or
retirement).
This deferral, payout and beneficiary election does not revoke any
prior election under the Agreement applicable to any prior period.
_____________ ______________________________
Date Participant
Consent to Beneficiary in Item 3 above:
I understand that if the Participant names a beneficiary other than
his or her spouse, the spouse must consent. I hereby consent to
the beneficiary named in Item 3 of the Agreement.
Consent of Participant's Spouse:
______________________________ ______________________________
Spouse Date
The State of _________________
County of ____________________
Before me, the undersigned authority, on this day personally
appeared ________________________, known to me to be the person
whose name is subscribed to the foregoing instrument as the
Participant's spouse, and such person acknowledged to me that he or
she executed the same for the purposes expressed and in the
capacity stated.
Given under my hand and seal of office, this ___ day of
___________, 19__.
______________________________
Notary Public for the
State of _______________
My commission expires on
_____________, 19__.
Accepted by the Company:
By: __________________________
<PAGE>
EXHIBIT "A"
DEFERRED COMPENSATION ELECTION
FOR NON-EMPLOYEE DIRECTORS
Pursuant to paragraph 2 of the Deferred Compensation Agreement,
dated ____________________, 1994, between Browning-Ferris
Industries, Inc. and me (the "Agreement"), which is incorporated by
reference, I hereby elect the following deferrals for the calendar
year ending December 31, 1995:
1. Director Fees. Percentage Deferral. I irrevocably elect to
defer ___% of the amount of any and all director's fees which
otherwise would become payable to me during the calendar year.
2. Beneficiary Designation. In the event of my death, I
designate ____________________________________________________
________________, to receive all amounts otherwise due me on
my date of death that I have deferred for the year. If I have
designated a beneficiary who is not my spouse, my spouse has
indicated his or her consent by his or her execution of this
document, properly notarized.
Importance Notice from the Company: In the event that the
Participant wishes to designate as beneficiary a person who is
not his or her spouse, then the Participant and his or her
spouse are advised to seek independent tax counsel as to the
possible federal and/or state gift and estate tax consequences
of such a beneficiary designation.
3. Deferral. Of the amounts being deferred by me, I irrevocably
elect that ___% of the amounts be invested in Deferred Account
#1 (Phantom Stock Account) and ___% in Deferred Account #2 (an
Interest Bearing Account). (DEFERRALS MUST BE IN INCREMENTS
OF 25%).
4. Payout Election.
_______ A. By initialing here, I hereby irrevocably elect
that the amounts deferred by me hereunder shall be paid to me
in a lump sum payment on ____________________________.
(Specify date or time during continued service or after
termination or retirement).
or
_______ B. By initialing here, I hereby irrevocably elect
that the amounts deferred by me hereunder shall be paid to me
in ____________ annual/____ monthly pro rata installments (not
exceeding ten years or 120 months, whichever is applicable)
commencing __________________________________________________.
(Specify date or time or continued service or after
termination or retirement).
This deferral, payout and beneficiary election does not revoke any
prior election under the Agreement applicable to any prior calendar
year.
_____________ ______________________________
Date Participant
Consent to Beneficiary in Item 2 above:
I understand that if the Participant names a beneficiary other than
his or her spouse, the spouse must consent. I hereby consent to
the beneficiary named in Item 2 of the Agreement.
Consent of Participant's Spouse:
______________________________ ______________________________
Spouse Date
The State of _________________
County of ____________________
Before me, the undersigned authority, on this day personally
appeared ________________________, known to me to be the person
whose name is subscribed to the foregoing instrument as the
Participant's spouse, and such person acknowledged to me that he or
she executed the same for the purposes expressed and in the
capacity stated.
Given under my hand and seal of office, this ___ day of
___________, 19__.
______________________________
Notary Public for the
State of _______________
My commission expires on
_____________, 19__.
Accepted by the Company:
By: __________________________
Exhibit 10.28
BROWNING-FERRIS INDUSTRIES, INC.
CONVERTIBLE ANNUAL INCENTIVE AWARD PLAN
The Browning-Ferris Industries, Inc. (the "Company") Convertible
Annual Incentive Award Plan (the "Plan") is an executive incentive
plan designed to encourage increased ownership of BFI Common Stock
by the Company's and its subsidiaries' executives and key employees
who have a significant impact on the growth and profitability of
the Company. The objectives of the Plan are to offer a highly
competitive stock-based compensation program to executives, to
ensure that the Company is managed in the best long-term interests
of its shareholders and employees. The Plan seeks to achieve these
objectives by allowing plan participants to convert a portion of
their annual cash incentive awards, which may be earned in the next
fiscal year, to the Company's common stock, with restrictions
placed on this stock for a period of two years after the grant
date. As an incentive for participating in the Plan, participants
will receive a 25% premium, also in shares of restricted stock, in
addition to the shares of converted incentive award. This plan
document sets forth all the terms and conditions of the Plan as
approved by the Compensation Committee of the Board of Directors of
Browning-Ferris Industries, Inc.
Participation Eligibility
Participation in the Plan shall be restricted to Corporate Officers
and Regional Vice Presidents; participation in the Plan is
voluntary.
Conversion Approach
A Plan participant can convert up to 50% of an annual incentive
award, on a pre-tax basis, to BFI Common Stock. The number of
shares received by the participant is a function of the percentage
of the annual cash incentive award to be converted, specified by
the participant prior to the beginning of the Company's fiscal
year, and the fair market value of BFI Common Stock on the grant
date. In addition, premium shares will be granted on a 1-for-4
basis (where one premium share is issued for every four shares of
common stock that the participant converts). The following is an
example of how the Plan operates:
Hypothetical Annual Incentive Award $34,800
50% of Award converted to Common Stock $17,400
Fair Market Value of Common Stock on Grant Date $30.00
per share
Number of shares of Common Stock converted 580
Number of Premium Shares offered 145
Total number of Plan shares awarded* 725
Dollar value on Grant Date of both Converted Shares $21,750
and Premium Shares
*Note: Only whole shares in five share increments will be awarded
to participants in the Plan. Fractional share amounts will not be
converted but will be paid in cash as part of the annual incentive
payment.
As used in this Plan, "grant date" shall mean the date the
Compensation Committee approves annual incentive awards for each
Plan participant and "fair market value" shall mean the average of
the high and low prices on the New York Stock Exchange, Composite
Transactions, as reported in the Wall Street Journal, for shares of
common stock of the Company.
Restriction Period for Shares
Both converted shares and premium shares acquired through the Plan
are subject to a two-year restriction period during which the Plan
shares are forfeitable and a participant cannot sell, transfer,
pledge or assign Plan shares. During this restriction period, all
Plan shares maintain full voting rights and participants will
receive dividend payments as declared and paid by the Company. The
restriction period begins on the grant date, with subsequent
two-year restriction periods beginning on the grant dates of any
subsequent awards. Generally, the taxation of all Plan shares is
deferred until the expiration of the restriction period. Following
the expiration of this restriction period, both the converted
shares and the premium shares become fully vested and their fair
market value on that date will be recognized as taxable income
subject to applicable payroll taxes and inclusion in W-2 earnings
for that calendar year. No participant shall exercise the election
permitted by Section 83(b) of the Code without the express written
approval of the Compensation Committee of the Board of Directors.
Forfeiture in the Case of Separation of Employment
Termination prior to the expiration of the restriction period
requires complete forfeiture of all converted common stock shares
and premium shares acquired through the Plan. Should employment end
by reason of death, disability, or retirement in accordance with
the then existing rules of the Company, during the restriction
period, all Plan shares shall be vested on the effective
termination date and valued at fair market value on that date for
compensation purposes.
Conversion Election by Participant
Each participant must specify the portion of his/her annual
incentive award to be converted to BFI common stock prior to the
beginning of the Company's fiscal year or 30 days following
eligibility for this Plan. Eligibility for initial participants
shall commence on September 27, 1994. Once made, each annual
election is irrevocable. A separate election must be made prior to
the beginning of each subsequent fiscal year as to the respective
award conversion for that fiscal year.
Term and Adoption of the Plan
This Plan, as set forth herein, was approved by the Compensation
Committee on September 7, 1994, and is subject to the terms of the
Company's 1993 Stock Incentive Plan (the "Stock Incentive Plan"),
and in the event of a conflict or inconsistency between the terms
of the Plan and the Stock Incentive Plan, then the terms of the
Stock Incentive Plan shall control. The Plan shall remain in effect
until it is terminated pursuant to the following section. The
adoption of this Plan or any modification hereof does not imply any
commitment to continue or adopt the same Plan, or any modification
thereof, or any other Plan for incentive compensation for any
succeeding year, or for any award to be paid under the Company's
annual incentive plans. Neither this Plan nor any award made under
the Plan shall create any employment contract or relationship
between the Company or its subsidiaries and any participant.
Right to Amend or Terminate the Plan
This Plan will be construed in accordance with the laws of the
State of Delaware. The Compensation Committee can amend, suspend,
or terminate the Plan at any time and for any reason, except that
the provisions of the Plan pertaining to the amount, price, and
timing of grants shall not be amended more than once in any
12-month period, unless such action is required to comply with
changes in laws or regulations of the Internal Revenue Service, the
Securities and Exchange Commission or other government agencies
having jurisdiction over these types of plans.
Plan Agreement
Each participant must sign the Convertible Annual Incentive Award
Plan Agreement (Attachment I) to indicate his/her participation in
the Plan under all terms and conditions set forth herein. A new
agreement must be signed for each subsequent fiscal year for which
the participant wishes to make an election.
Plan Administration
The Compensation Committee of the Board of Directors of
Browning-Ferris Industries, Inc. shall have the exclusive
responsibility for the general administration of this Plan,
according to the terms and provisions of the Plan and the Stock
Incentive Plan. In order to properly fulfill its administrative
responsibilities, the Committee shall have the right to construe
the Plan, resolve ambiguities and when exercising its discretion in
good faith, its decisions shall be binding on all parties and shall
only be subject to review as to whether the Committee has abused
its discretion.
Attachment I
CONVERTIBLE ANNUAL INCENTIVE AWARD PLAN AGREEMENT
This document shall constitute the agreement between
Browning-Ferris Industries, Inc. or one its subsidiaries (the
"Company") and ________________________, which confirms his or her
election to participate in the Company's Convertible Annual
Incentive Award Plan (the "Plan").
Subject to the terms and conditions of the Plan, I elect to be a
participant in the Plan for the fiscal year beginning October 1,
1994 and ending September 30, 1995.
For the above fiscal year, I irrevocably elect the following
(complete either item 1 or 2 below):
1. X Fixed Option.
-- ___% (not to exceed 50%) of any annual
incentive award I am eligible to receive
2. Variable Option. (Complete each of the items listed below):
--
___% (not to exceed 50%) of any annual
incentive award I am eligible to receive if
such award represents less than 50% of the
Target award I am eligible for in the annual
incentive plan,
___% (not to exceed 50%) of any annual
incentive award I am eligible to receive if
such award represents at least 50% but less
than 75% of the Target award,
___% (not to exceed 50%) of any annual
incentive award I am eligible to receive if
such award represents at least 75% but less
than 100% of the Target award, and
___% (not to exceed 50%) of any annual
incentive award I am eligible to receive if
such award represents 100% or more of the
Target award
to be converted to BFI Common Stock under the provisions of the
Plan. For each four shares of converted incentive award that the
Company grants in common stock under the terms of the Plan, the
Company will grant one premium share of BFI Common Stock. All
converted common shares and premium shares acquired under the terms
of this Plan are subject to a two year restriction period from the
grant date. During this restriction period, shares cannot be sold,
transferred, pledged or assigned.
In the event that my employment with the Company is terminated for
reasons other than disability, retirement, or death prior to the
expiration of the restriction period, I am required to forfeit all
converted common stock shares and premium shares acquired under the
provisions of this Plan which are still subject to the restriction
period.
I acknowledge that I have received a copy of the Convertible Annual
Incentive Plan document and the 1993 Stock Incentive Plan and am
responsible for understanding their provisions.
This agreement is valid for the fiscal year described above and is
irrevocable once made; my conversion election and beneficiary
designation does not revoke any prior election applicable to any
prior period.
Beneficiary Designation
In the event of my death, I designate _____________________________
to receive all Plan shares for the fiscal year covered by this
agreement, which will be vested on the date of my death and valued
at fair market value on that date. If I have designated a
beneficiary who is not my spouse, my spouse has indicated his or
her consent by his or her execution of this document, properly
notarized. (Important Notice from the Company: In the event that a
married participant wishes to designate as beneficiary a person who
is not his or her spouse, then the participant and his or her
spouse are advised to seek independent tax counsel as to the
possible federal and/or state gift and estate tax consequences of
such a beneficiary designation.)
Date:_____________________ Participant:_______________________
Consent to Beneficiary
I understand that if the participant names a beneficiary other than
his or her spouse, the spouse must consent. I hereby consent to the
beneficiary named in this Agreement.
Consent of
Participant's Spouse: ______________________ Date: ______________
The State of ______________
County of _________________
Before me, the undersigned authority, on this day personally
appeared known to me to be the person whose name is subscribed to
the foregoing instrument as the Participant's spouse, and such
person acknowledged to me that he or she executed the same for the
purposes expressed and in the capacity stated.
Given under my hand and seal of office, this ____ day of
___________, 19__.
____________________________
Notary Public for the
State of ____________
My commission expires on
____________________, 19___.
Accepted by the Company:
By:____________________________
EXHIBIT 21
BROWNING-FERRIS INDUSTRIES, INC.
LIST OF SUBSIDIARIES
2 A.B.C. Disposal, Inc. Wisconsin
10 Al-Mulla Environmental Systems, W.L.L. Kuwait
Acco International, Inc. Texas
Acco Paper Mill Fibers Co., Inc. Texas
Acco Records Disposal Company, Inc. Texas
Acco Trading Company, Inc. Texas
Acco Waste Disposal, Inc. Texas
Acco Waste Paper, Inc. Texas
BFI Acquisition Company No. 2, Inc. Wisconsin
BFI Acquisition, Inc. Delaware
BFI Aviation Services, Inc. Delaware
BFI Constructors California
BFI Disposal Systems of North America, Inc. Delaware
BFI Disposal Systems of Alabama, Inc. Delaware
Blount County Disposal, Inc. Alabama
Lawrence County Disposal, Inc. Alabama
South Alabama Disposal, Inc. Alabama
Walker County Disposal, Inc. Alabama
BFI Disposal Systems of Florida, Inc. Florida
BFI Wood Resource of Jacksonville, Inc. Florida
Wood Resource Recovery, Inc. Florida
BFI Disposal Systems of Georgia, Inc. Delaware
East DeKalb Landfill, Inc. Georgia
Marble Mill Recycling & Transfer Station, Inc. Georgia
Moreland Avenue Disposal, Inc. Georgia
BFI Disposal Systems of Mississippi, Inc. Delaware
Escatawpa Environmental Services, Inc. Mississippi
BFI Disposal Systems of North Carolina, Inc. Delaware
Holly Springs Disposal, Inc. North Carolina
Sampson County Disposal, Inc. North Carolina
BFI Disposal Systems of Ohio, Inc. Delaware
Browning-Ferris Industries of Ohio, Inc. Delaware
BFI Acquisition Company Ohio
BFI Tire Recyclers of Ohio, Inc. Ohio
Franklintown East Realty, Inc. Pennsylvania
1 Warner Hill Development Company Ohio
1 Warner Hill Improvement Company Ohio
Browning-Ferris Gas Services, Inc. Delaware
BFI Energy Systems, Inc. Delaware
BFI Ref-Fuel, Inc. Delaware
BFI Energy Systems of Albany, Inc. Delaware
BFI Energy Systems of Bergen County, Inc. New Jersey
BFI Energy Systems of Boston, Inc. Massachusetts
BFI Energy Systems of East Bridgewater, Inc. Delaware
BFI Energy Systems of Essex County, Inc. New Jersey
13 American REF-FUEL Construction of New Jersey
Essex County, Inc.
BFI Energy Systems of Fresno, Inc. California
BFI Energy Systems of Hempstead, Inc. Delaware
BFI Energy Systems of Kent/Sussex, Inc. Delaware
BFI Energy Systems of Lehigh Valley, Inc. Delaware
15 American REF-FUEL Construction of Delaware
Lehigh Valley, Inc.
BFI Energy Systems of Lowell, Inc. Delaware
BFI Energy Systems of Mecklenburg County, Inc. North Carolina
BFI Energy Systems of Midstate Connecticut, Inc. Delaware
BFI Energy Systems of Niagara, Inc. Delaware
BFI Energy Systems of Oyster Bay, Inc. Delaware
BFI Energy Systems of Plymouth, Inc. Delaware
BFI Energy Systems of Southeastern Connecticut, Inc. Delaware
BFI Energy Systems of Texas, Inc. Texas
14 American REF-FUEL Construction of Texas, Inc. Texas
BFI Energy Systems-U.K., Inc. Delaware
8 American REF-FUEL Construction of Capital District, Inc. Delaware
8 American REF-FUEL Construction of Delaware County, Inc. Delaware
BFI Environmental Management Systems, Inc. Delaware
BFI Environmental Nuclear Systems, Inc. Delaware
BFI Environmental NORM Systems, Inc. Delaware
BFI International Finance B.V. Netherlands
BFI Investments, Inc. Delaware
BFI Medical Waste Systems, Inc. Delaware
BFI Medical Waste Systems (Atlantic), Inc. Delaware
BFI Medical Waste Systems of New Jersey, Inc. New Jersey
Lancaster Bio-Medical Services Corp. Pennsylvania
Philadelphia Bio-Medical Services Corp. Pennsylvania
BFI Medical Waste Systems (Northeast), Inc. Delaware
BFI Medical Waste Systems (South Central), Inc. Tennessee
Health Management, Inc. Tennessee
Bio-Tech Services, Inc. Missouri
BFI Medical Waste Systems (Steel), Inc. Delaware
BFI Medical Waste Systems (Southeast), Inc. Delaware
BFI Medical Waste Systems of Arizona, Inc. Delaware
BFI Medical Waste Systems of California, Inc. Delaware
BFI Medical Waste Systems of Colorado, Inc. Colorado
RxTHERMAL of Colorado, Inc. Colorado
BFI Medical Waste Systems of Illinois, Inc. Delaware
BFI Medical Waste Systems of Iowa, Inc. Iowa
BFI Medical Waste Systems of Minnesota, Inc. Delaware
BFI Medical Waste Systems of Oregon, Inc. Delaware
BFI Medical Waste Systems of Utah, Inc. Delaware
BFI Medical Waste Systems of Washington, Inc. Delaware
Merrimack Valley Medical Services Company, Inc. Massachusetts
EnviroMed, Inc. Massachusetts
Port of Albany Medical Waste Facility New York, Inc. New York
BFI of Albion, Inc. New York
BFI of Metro New York, Inc. Delaware
BFI Organics, Inc. Delaware
BFI Services Group, Inc. California
BFI of Ponce, Inc. Puerto Rico
BFI Northern Transfer, Inc. Delaware
BFI Pharmaceutical Services, Inc. Delaware
BFI Recycling Systems of Minnesota, Inc. Minnesota
BFI Recycling of New Jersey, Inc. New Jersey
BFI Special Services, Inc. Delaware
BFI Twin Cities Recyclery, Inc. Minnesota
BFI Waste Systems of Indiana, Inc. Indiana
BFI Waste Systems of North America, Inc. Delaware
BFI Transportation, Inc. Delaware
BFI Waste Systems of Michigan, Inc. Delaware
BFI Waste Systems of Ohio, Inc. Delaware
Isler's Refuse Service, Inc. Ohio
Karas Trucking Co., Inc. Ohio
Lorain County Resource Recovery Complex, Inc. Delaware
Youngstown BFI Waste Systems, Inc. Ohio
BFI Whispering Oaks Sanitary Landfill, Inc. Missouri
Browning-Ferris, Inc. Delaware
BFI Amarillo Landfill, Inc. Texas
BFI Crude Oil Recovery Brokering, Inc. Texas
BFI de Mexico, S.A. deC.V. Mexico
BFI Medical Waste Systems of Texas, Inc. Texas
BFI Waste Systems, Inc. Texas
Browning-Ferris Industries of Louisiana, Inc. Louisiana
Health Management of New Orleans, Inc. Louisiana
Ninety Plus, Inc. Louisiana
RMRR, Inc. Texas
Browning-Ferris, Inc. Maryland
BFI Transfer Systems of Maryland, Inc. Maryland
Mon Valley Sanitary Landfill, Inc. Pennsylvania
TRC, Inc. Pennsylvania
Browning-Ferris Industries Chemical Services, Inc. Nevada
Browning-Ferris Industries, Inc. Massachusetts
Northern Disposal, Inc. Massachusetts
Suburban Disposal Co., Inc. Massachusetts
Browning-Ferris Industries Ltd. Ontario
389343 Alberta Ltd. Alberta
34 Eldridge Finance Company Republic of Ireland
Contenants - Rebut Cadi Ltee Quebec
Usine de Triage Lachenaie Inc. Quebec
BFI Energy Inc. Quebec
2 Environmental Waste Systems, Inc. Ontario
10133 Newfoundland Limited Newfoundland
Browning-Ferris Industries (DC), Inc. Delaware
Browning-Ferris Industries of Alabama, Inc. Alabama
Browning-Ferris Industries of Arizona, Inc. Delaware
Browning-Ferris Industries of Arkansas, Inc. Arkansas
Browning-Ferris Industries of California, Inc. California
American Sheds, Inc. California
Azusa Land Reclamation Co., Inc. California
BFI Riverside, Inc. California
32 Mine Reclamation Corporation California
BFIC, Inc. California
Keller Canyon Landfill Company California
Los Angeles BFI Industries, Inc. California
Loma Linda Disposal Company, Inc. California
33 Pleasant Hill Bayshore Disposal, Inc. California
Browning-Ferris Industries of Colorado, Inc. Colorado
Jeffco Land Reclamation Company Colorado
RPS, Inc. Colorado
Browning-Ferris Industries of Connecticut, Inc. Delaware
Browning-Ferris Industries of Falls Township, Inc. Pennsylvania
Browning-Ferris Industries of Florida, Inc. Delaware
Tanis Leasing Company Florida
Browning-Ferris Industries of Georgia, Inc. Georgia
BFI Tire Recyclers of Georgia, Inc. Georgia
BGS of Georgia, Inc. Georgia
Browning-Ferris Industries of Atlanta, Inc. Delaware
3 UWL, Inc. Georgia
Browning-Ferris Industries of Hawaii, Inc. Delaware
Browning-Ferris Industries of Idaho, Inc. Idaho
Browning-Ferris Industries of Illinois, Inc. Delaware
Brooks Disposal Service, Inc. Illinois
11 Congress Development Co. Illinois
E&E Hauling, Inc. Illinois
Hoving and Sons, Inc. West Virginia
Oak Brook Disposal, Inc. Illinois
Browning-Ferris Industries of Indiana, Inc. Indiana
Browning-Ferris Industries of Iowa, Inc. Iowa
Browning-Ferris Industries of Kansas City, Inc. Missouri
Browning-Ferris Industries of Kansas, Inc. Kansas
Browning-Ferris Industries of Kentucky, Inc. Delaware
Browning-Ferris Industries of Owensboro, Inc. Delaware
Browning-Ferris Industries of Maine, Inc. Delaware
Browning-Ferris Industries of Marion County, Inc. Delaware
Browning-Ferris Industries of Michigan, Inc. Michigan
Browning-Ferris Industries of Minnesota, Inc. Minnesota
Action Disposal System, Inc. Minnesota
BFI Tire Recyclers of Minnesota, Inc. Minnesota
Browning-Ferris Industries of Mississippi, Inc. Mississippi
Browning-Ferris Industries of Mississippi Valley, Inc. Missouri
Browning-Ferris Industries of Montana, Inc. Nevada
Browning-Ferris Industries of Nebraska, Inc. Nebraska
BFI Recycling Systems of Nebraska, Inc. Nebraska
Browning-Ferris Industries of New Hampshire, Inc. New Hampshire
Hooksett Recycling & Processing Center, Inc. New Hampshire
Browning-Ferris Industries of New Jersey, Inc. New Jersey
BFI Palisades, Inc. New Jersey
BFI Transfer Systems of New Jersey, Inc. New Jersey
Browning-Ferris Industries of Central Jersey, Inc. Delaware
Browning-Ferris Industries of Elizabeth, N.J., Inc. New Jersey
Browning-Ferris Industries of Gloucester, N.J., Inc. New Jersey
Browning-Ferris Industries of North Jersey, Inc. New Jersey
Browning-Ferris Industries of Paterson, N.J., Inc. New Jersey
Browning-Ferris Industries of South Jersey, Inc. New Jersey
Browning-Ferris Industries of Western Jersey, Inc. New Jersey
Browning-Ferris Industries of Southwestern Jersey, Inc. New Jersey
Browning-Ferris Industries Waste Control, Inc. Delaware
Browning-Ferris Industries of New York, Inc. New York
Browning-Ferris Industries of Eagle, New York, Inc. Texas
Van Buren Services Inc. New York
Browning-Ferris Industries of Northern Michigan, Inc. Michigan
Browning-Ferris Industries of Ohio and Michigan, Inc. Ohio
Comet Enterprises, Inc. Ohio
Browning-Ferris Industries of Oregon, Inc. Oregon
Browning-Ferris Industries of Oyster Bay, Inc. Delaware
Browning-Ferris Industries of Pennsylvania, Inc. Delaware
Homestand Land Corp. Pennsylvania
Imperial Landfill Company, Inc. Pennsylvania
New Morgan Landfill Company, Inc. Pennsylvania
Browning-Ferris Industries of Philadelphia, Inc. Pennsylvania
Browning-Ferris Industries of Pinal County, Inc. Arizona
Browning-Ferris Industries of Puerto Rico, Inc. Puerto Rico
Browning-Ferris Industries of Quincy, Illinois, Inc. Iowa
Longview of Northeast Missouri, Inc. Missouri
Browning-Ferris Industries of Rhode Island, Inc. Delaware
Browning-Ferris Industries of Rochester, Inc. Minnesota
George Fenske Sanitary Service, Inc. Minnesota
Browning-Ferris Industries of South Atlantic, Inc. North Carolina
CMS Development Corp. North Carolina
Browning-Ferris Industries of Southern Illinois, Inc. Delaware
Browning-Ferris Industries of Southeastern Michigan, Inc. Michigan
Browning-Ferris Industries of Southwest Virginia, Inc. Virginia
Browning-Ferris Industries of Springfield, Inc. Missouri
Springfield Relay Systems, Inc. Missouri
Browning-Ferris Industries of St. Louis, Inc. Delaware
BFI Modern Landfill, Inc. Illinois
Halls Ferry Investments, Inc. Missouri
Jeffco Land Reclamation, Inc. Missouri
Longview of St. Louis, Inc. Missouri
Schroder Solid-Waste Service, Inc. Missouri
2 The Trash Men, Inc. Missouri
Browning-Ferris Industries of Tennessee, Inc. Tennessee
Jefferson Pike Landfill, Inc. Delaware
Middle Tennessee Recyclery, Inc. Tennessee
T.R.A.S.H., Inc. Tennessee
Browning-Ferris Industries of Utah, Inc. Utah
Browning-Ferris Industries of Vermont, Inc. Vermont
Browning-Ferris Industries of Washington, Inc. Washington
Browning-Ferris Industries of West Virginia, Inc. Delaware
Browning-Ferris Industries of Wisconsin, Inc. Wisconsin
2 A-C Trucking Company, Inc. Wisconsin
River City Refuse Removal, Inc. Wisconsin
Town & Country Waste Service, Inc. Wisconsin
Troy Area Landfill, Inc. Wisconsin
Browning-Ferris Industries of Wyoming, Inc. Wyoming
BFI International, Inc. Delaware
BFI Atlantic, Inc. Delaware
37 BFI Atlantic GmbH Germany
38 Otto Entsorgungsdienstleistung GmbH Germany
BFI Waste Systems (Thailand) Limited Kingdom of
Thailand
Browning-Ferris Industries Chile, Inc. Delaware
36 Browning-Ferris Industries (Australia) Pty. Ltd. Australia
Browning-Ferris Industries (Cranbourne) Pty. Ltd. Australia
Browning-Ferris Industries (N.S.W.) Pty. Ltd. Australia
Browning-Ferris Industries (S.A.) Pty. Ltd. Australia
Browning-Ferris Industries (Vic.) Pty. Ltd. Australia
Browning-Ferris Industries Asia Pacific, Inc. Delaware
35 UMW-BFI Waste Services Sdn Bhd Malaysia
Browning-Ferris Industries Malaysia Sdn Bhd Malaysia
16 Swire BFI Waste Services Ltd. Hong Kong
39 C.S.R. Macau-Companhia de Sistemas de Residuos Limitada Macau
Waylung Waste Collection Limited Hong Kong
Midland Waste International Limited Hong Kong
Island East Transfer Station Company Limited Hong Kong
Waste Care Limited New Zealand
Besco Bins (1992) Limited New Zealand
Browning-Ferris Industries (NZ) Limited New Zealand
Cheep Bins Limited New Zealand
Container Rubbish Services (1992) Limited New Zealand
Hopper Services (Wellington) Limited New Zealand
J.R. McKeen Contractors Limited New Zealand
Jumbo Bins Limited New Zealand
Waste Care Medi Safe Limited New Zealand
Winz Bins (N.Z.) Limited New Zealand
Browning-Ferris Industries de Costa Rica S.A. Costa Rica
Browning-Ferris Industries Finance B.V. Netherlands
Browning-Ferris Industries (Ireland) Limited Republic of Ireland
Falkenberg Limited Republic of Ireland
Browning-Ferris Industries (Taiwan), Ltd. Republic of China
40 Browning-Ferris Industries Europe, Inc. Delaware
BFI Acquisitions plc United Kingdom
Browning-Ferris Industries (Belgium) Belgium
Browning-Ferris Industries Reinigungstechnik Gmbh Germany
Browning-Ferris Industries (Deutschland) GmbH Germany
Browning-Ferris Industries Europa B.V. Netherlands
18 Browning-Ferris Industries (Italia) S.r.l. Italy
Nuova ISPA S.r.l. Italy
26 ISPA S.r.l. Italy
27 Grosso Scarl Italy
9 Servizi Industriali S.r.l. Italy
Fineco Partecip. S.r.l. Italy
19 Maddalena e Rossi S.r.l. Italy
20 Impresa Maddalena S.r.l. Italy
23 Ecofin S.r.l. Italy
24 Valeco S.p.A. Italy
21 Assia S.r.l. Italy
22 Imec S.r.l. Italy
G.E.A. Italia S.r.l. Italy
Ca' Brusa S.r.l. Italy
28 ISUC S.r.l. Italy
Technoveneta S.r.l. Italy
Ecoimpresa S.r.l. Italy
Feller S.r.l. Italy
25 Eldridge Finance Co. Italy
Browning-Ferris Industries UK Limited United Kingdom
BFI Packington Limited United Kingdom
Jacksons (Warwickshire) Brickworks Limited United Kingdom
Browning-Ferris Services (U.K.) Limited United Kingdom
Browning-Ferris Environmental Services United Kingdom
Limited
BFI Wastecare Limited United Kingdom
BFI Coventry Limited United Kingdom
BFI Carnforth Limited United Kingdom
Browning-Ferris Industries B.V. Netherlands
6 Browning-Ferris Industries Iberica, S.A. Spain
Ingenieria Ambiental Alcarrena, S.A. Spain
Ingenieria Ambiental Andaluza, S.A. Spain
30 Ingenieria Ambiental Antequerana, S.A. Spain
17 Ingenieria Ambiental Granadina, S.A. Spain
Contractes Municipals, S.A. Spain
Browning Ferris Iberica, S.A. Spain
29 Castellana de Servicios, S.A. Y Transric, S.A., Spain
U.T.E.
Transric, S.A., U.T.E. Spain
1 Transric Andalucia S.A. Spain
United Port Services S.A. Spain
Jansen Industriele reiniging en Netherlands
afvalverwerking B.V.
Jaap Van Vliet B.V. Netherlands
Riooltechnieken Nederland B.V. Netherlands
West Holland Milieu B.V. Netherlands
Koks Nilo Milieu B.V. Netherlands
Koks' Containerservice B.V. Netherlands
Zwart Vastgoed B.V. Netherlands
Koks/Nilo Recycling B.V. Netherlands
Cotraned Milieu B.V. Netherlands
A.C.D. Milieu B.V. Netherlands
Recycling Amsterdam Vastgoed B.V. Netherlands
Recycling Maatschappij "Houtsnip" B.V. Netherlands
Wijtrans Recycling B.V. Netherlands
Maatman Milieu B.V. Netherlands
Maatman Reiniging B.V. Netherlands
Maatman Rioolreiniging B.V. Netherlands
Maatman Afvalverwerking B.V. Netherlands
Maatman Eibergen B.V. Netherlands
R.J. Maatman Beheer B.V. Netherlands
Maatman Containers B.V. Netherlands
Wijtrans Milieu B.V. Netherlands
Spitman Industrie Service B.V. Netherlands
Groenheide Reiniging B.V. Netherlands
Kroon Beheer Urmond B.V. Netherlands
Kroon Milieu Technick B.V. Netherlands
BFI Vastgoed B.V. Netherlands
West Holland Recycling B.V. Netherlands
Van Rijswijk Containers B.V. Netherlands
Lekkerkerk-Rehorst Vastgoed Combinatie B.V. Netherlands
Oost Nederlandse Reinigingsdienst B.V. Netherlands
Oost-Nederlandse Container Dienst B.V. Netherlands
B.V. Handelsmaatschappij R.V.R. Netherlands
IBA Recycling B.V. Netherlands
Spitman Chemie B.V. Netherlands
Spitman Milieu B.V. Netherlands
IBA Milieu B.V. Netherlands
Niemendal Transport B.V. Netherlands
Heerbaart Recycling B.V. Netherlands
Reinmat B.V. Netherlands
Transportbedrijf J. van Tongeren B.V. Netherlands
Browning-Ferris Industries Umwelttechnik Gesellschaft Austria
m.b.H.
Latin American Environmental Services, Inc. Delaware
Browning-Ferris Services, Inc. Delaware
BFI Equipment Leasing I, Inc. Delaware
Butts County Development Corp. Georgia
CECOS International, Inc. New York
2 CECOS International, Inc. Nevada
DeWatering Services, Inc. Delaware
R.R.I.E.B.S., Inc. New York
Condor Waste Transportation, Inc. Texas
12 Cotecnica, C.A. Venezuela
Dave Systems, Inc. California
Ameride Corporation California
Disposal Specialists, Inc. Vermont
Dooley Equipment Corporation Massachusetts
5 Eastern Disposal Inc. Quebec
Environmental Development Corp. Puerto Rico
ESI, Inc. Pennsylvania
Global Indemnity Assurance Company Colorado
Hennepin Transfer, Inc. Minnesota
HL-NIW, Inc. New York
Indoco, Inc. Texas
International Disposal Corp. of California California
International Disposal Corporation of Indiana Delaware
RWCGP, Inc. Texas
International Disposal Corporation of Kansas Kansas
Landfill, Inc. Missouri
Lake Area Disposal, Inc. Wisconsin
Land Reclamation, Inc. New York
Lanham Waste Control, Inc. Georgia
Louis Kmito & Son, Inc. Massachusetts
National Disposal Service of Nebraska, Inc. Nebraska
Newco Waste Systems of New Jersey, Inc. New Jersey
Niagara Landfill, Inc. New York
Niagara Recycling, Inc. New York
Pine Bend Landfill, Inc. Minnesota
R.L. Equity Corp. Minnesota
Refuse Transfer, Inc. Minnesota
Removal, Inc. California
Residential Service, Inc. Nebraska
Risk Services, Inc. Delaware
Seaboard Refuse, Inc. Delaware
Waste Disposal, Inc. Kansas
Wasteco, Inc. California
West Roxbury Crushed Stone Co. Massachusetts
Westowns Disposal Systems, Inc. Wyoming
Woodlake Sanitary Service, Inc. Minnesota
33 VHG, Inc. Minnesota
4 Minneapolis Refuse, Incorporated Minnesota
______________________
Parent-subsidiary relationships are indicated by indentations. Except as
otherwise indicated by symbol preceding the name, 100% of the voting
securities of each of the subsidiaries is owned by the indicated parent of
such subsidiary.
1 66-2/3% owned
2 Namesaver corporation. No stock issued at this time
3 100% of Preferred Stock of UWL, Inc. owned by Browning-Ferris
Industries of Georgia, Inc.
4 9% of stock owned by Woodlake Sanitary Service, Inc.
5 50% owned by Browning-Ferris Industries, Ltd.
50% owned by Browning-Ferris Industries, Inc. (Delaware)
6 82.23% owned by Browning-Ferris Industries B.V.
10.18% Carlos Benjumea
1.11% Grup Liga Financera
2.78% Unidades Moviles
2.88% Jaime Ventura
.82% Luis Basteiro
8 No stock issued at this time
9 50% owned by Browning-Ferris Industries (Italia) S.r.l. and
50% owned by outside party
10 49% owned
11 50% owned by Browning-Ferris Industries of Illinois, Inc. and
50% John Sexton Sand and Gravel Corp.
12 45% owned
13 50% owned by BFI Energy Systems of Essex County, Inc. and
50% owned by Air Products Ref-Fuel of Essex County, Inc.
14 50% owned by BFI Energy Systems of Texas, Inc.
50% owned by Air Products Ref-Fuel of Texas, Inc.
15 50% owned by BFI Energy Systems of Lehigh Valley, Inc. and
50% owned by Air Products Ref-fuel of Lehigh Valley, Inc.
16 50% owned by Browning-Ferris Indsutries Asia Pacific, Inc. and
50% owned by Swire Engineering Limited
17 90% owned by Browning-Ferris Industries Iberica S.A.
10% owned by Granada Municipality
18 95% owned by Browning-Ferris Industries Europe, Inc.
5% owned by BFI International, Inc.
19 80% owned by Browning-Ferris Industries (Italia) S.r.l.
20% owned by Fineco S.r.l.
20 99.23% owned by Maddalena e Rossi S.r.l.
.77% owned by Browning-Ferris Industries (Italia) S.r.l.
21 95% owned by Imp. Maddalena
5% owned by Maddalena and Rossi
22 80% owned by Imp. Maddalena
20% owned by Maddalena and Rossi
23 37.5% owned by Impresa Maddalena S.r.l.
67.5% owned by outside party
24 80% owned by Ecofin S.r.l.
20% owned by outside party
25 1% owned by Browning-Ferris Industries (Italia) S.r.l.
99% outside party
26 80% owned by Browning-Ferris Industries (Italia) S.r.l.
20% owned by Impresa Maddelena S.r.l.
27 65% owned by ISPA S.r.l.
35% owned by outside party
28 44% owned by G.E.A. Italia
56% owned by outside party
29 50% owned by Browning Ferris Iberica, S.A.
50% owned by Castellana de Servicios, S.A.
30 80% owned by Ingenieria Ambiental Andaluza, S.A.
20% owned by Antequera Municipality
31 47.76% owned by Browning-Ferris Industries Iberica, S.A.
52.24% owned by Browning Ferris Iberica, S.A.
32 50% owned by BFI Riverside, Inc.
33 50% owned by Woodlake Sanitary Service, Inc.
34 99% owned by Browning-Ferris Industries Ltd. and
1% owned by Browning-Ferris Industries (Italia) S.r.l.
35 49% owned by Browning-Ferris Industries Asia Pacific, Inc.
51% owned by UMW Industries (1985) Sdn Bhd
36 99% owned by BFI International, Inc.
1% owned by Browning-Ferris Industries Asia Pacific, Inc.
37 50% owned by BFI International, Inc.
50% owned by BFI Atlantic, Inc.
38 (Subsidiaries of this Company are not listed herein)
50% owned by BFI Atlantic GmbH
50% owned by Otto Holding International B.V.
39 70% owned by Swire BFI Waste Services Limited
30% owned by Noriente-Gestao de Participacoes Limited
40 49,999 ordinary shares owned by Browning-Ferris Industries Europe, Inc.
1 ordinary share is held by nominee shareholder,
Browning-Ferris Industries UK Limited
_______________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
For Fiscal Year Commission file number 1-6805
Ending September 30, 1994
BROWNING-FERRIS INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 74-1673682
- ------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
757 N. Eldridge
Houston, Texas 77079
- ------------------------------- ----------------------------
(Address of principal (Zip Code)
Executive offices)
Registrant's telephone number, including area code: (713) 870-8100
___________________________
EXHIBITS
___________________________
