UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ____________ to ___________
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
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
f 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 require- ments for the past 90 days.
Yes X . No .
Indicate the number of shares outstanding of the issuer's common stock, as
of February 3, 1994: 178,729,995.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(In Thousands Except for Per Share Amounts)
- --------------------------------------------------------------------------
Three Months Ended
December 31,
---------------------------------
1993 1992
- --------------------------------------------------------------------------
Revenues $ 934,506 $ 848,204
Cost of operations 676,290 610,129
---------- ----------
Gross profit 258,216 238,075
Selling, general and
administrative expense 144,375 137,723
---------- ----------
Income from operations 113,841 100,352
Interest, net 15,523 14,636
---------- ----------
Income before income
taxes 98,318 85,716
Income taxes 39,327 33,429
---------- ----------
Net income $ 58,991 $ 52,287
========== ==========
Number of common and
common equivalent
shares used in
computing earnings
per share 174,733 169,803
========== ==========
Earnings per common and
common equivalent
share $ .34 $ .31
======= =======
Cash dividends per
common share $ .17 $ .17
======= =======
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(In Thousands)
- ------------------------------------------------------------------------
December 31, September 30,
1993 1993
(Unaudited)
- ------------------------------------------------------------------------
CURRENT ASSETS:
Cash $ 47,959 $ 22,871
Short-term investments 62,393 208,674
Receivables -
Trade, net of allowance for doubtful
accounts of $21,870 at both dates 565,950 556,456
Other 58,954 58,090
Inventories 27,644 26,508
Deferred income taxes 85,307 --
Prepayments and other 53,691 52,899
---------- ----------
Total current assets 901,898 925,498
---------- ----------
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation and amortization
of $1,815,545 and $1,742,362 2,615,397 2,515,709
---------- ----------
OTHER ASSETS:
Cost over fair value of net tangible
assets of acquired businesses,
net of accumulated amortization of
$42,526 and $41,234 309,324 310,065
Other intangible assets, net of
accumulated amortization of $161,734
and $158,693 131,587 138,844
Deferred income taxes 130,686 113,615
Investments in unconsolidated affiliates 223,054 222,698
Other 69,794 69,213
---------- ----------
Total other assets 864,445 854,435
---------- ----------
Total assets $4,381,740 $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)
- --------------------------------------------------------------------------
December 31, September 30,
1993 1993
(Unaudited)
- --------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 22,287 $ 95,953
Accounts payable 251,014 245,555
Accrued liabilities -
Salaries and wages 57,793 75,162
Taxes, other than income 31,363 30,912
Other 315,975 313,687
Income taxes 31,712 27,678
Deferred revenues 140,168 135,509
---------- ----------
Total current liabilities 850,312 924,456
---------- ----------
DEFERRED ITEMS:
Accrued environmental and
landfill costs 622,538 631,690
Deferred income taxes 128,409 --
Other 137,678 128,255
---------- ----------
Total deferred items 888,625 759,945
---------- ----------
LONG-TERM DEBT, net of current portion 351,638 333,689
---------- ----------
CONVERTIBLE SUBORDINATED DEBENTURES 744,949 744,949
---------- ----------
COMMON STOCKHOLDERS' EQUITY:
Common stock, $.16 2/3 par; 400,000,000
shares authorized; 175,091,006 and
174,231,747 shares issued 29,188 29,044
Additional paid-in capital 753,433 743,265
Retained earnings 764,675 761,325
Treasury stock, 688,671 and 686,826
shares, at cost (1,080) (1,031)
---------- ----------
Total common stockholders' equity 1,546,216 1,532,603
---------- ----------
Total liabilities and common
stockholders' equity $4,381,740 $4,295,642
========== ==========
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
- ----------------------------------------------------------------------------
Three Months Ended
December 31,
------------------------
1993 1992
- ----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 58,991 $ 52,287
--------- ---------
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 98,539 90,168
Deferred income tax expense 2,929 2,585
Amortization of deferred investment tax credit (177) (270)
Provision for losses on accounts receivable 4,689 3,621
(Gains) losses on sales of fixed assets (1,481) 534
Equity in earnings of unconsolidated
affiliates (6,214) (3,082)
Increase (decrease) in cash from changes in
assets and liabilities excluding effects
of acquisitions:
Trade receivables (15,094) 10,978
Inventories (1,295) (1,385)
Other assets (2,634) 12,991
Other liabilities 2,942 13,545
--------- ---------
Total adjustments 82,204 129,685
--------- ---------
Net cash provided by operating activities 141,195 181,972
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (156,386) (126,527)
Payments for businesses acquired (29,855) (13,510)
Investments in unconsolidated affiliates (2,848) (11,125)
Proceeds from disposition of assets 4,207 509
Purchases of short-term investments -- (85,834)
Sales of short-term investments 145,842 20,000
Receipts from unconsolidated affiliates 4,300 3,181
--------- ---------
Net cash used in investing activities (34,740) (213,306)
--------- ---------
(Continued on Following Page)
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)
(In Thousands)
- ----------------------------------------------------------------------------
Three Months Ended
December 31,
------------------------
1993 1992
- ----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of stock 1,970 6,264
Proceeds from issuance of indebtedness 20,845 56,036
Repayments of indebtedness (74,301) (3,658)
Dividends paid (29,488) (28,649)
--------- ---------
Net cash provided by (used in) financing
activities (80,974) 29,993
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES (393) (4,597)
--------- ---------
NET INCREASE (DECREASE) IN CASH 25,088 (5,938)
CASH AT BEGINNING OF PERIOD 22,871 34,682
--------- ---------
CASH AT END OF PERIOD $ 47,959 $ 28,744
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR:
Interest, net of capitalized amounts $ 10,365 $ 9,537
Income taxes $ 28,830 $ 3,438
The accompanying notes are an integral part of these financial statements.
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation -
The accompanying unaudited financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management,
all adjustments (which include only normal recurring adjustments) and
disclosures necessary to a fair presentation of these financial
statements have been included. These financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1993, as filed with the Securities and Exchange
Commission.
Certain reclassifications have been made in prior year financial
statements to conform to the current year presentation.
(2) Earnings Per Common Share -
The following table reconciles the number of common shares
outstanding with the number of common and common equivalent shares used
in computing primary earnings per share (in thousands):
Three Months Ended
December 31,
--------------------
1993 1992
------- -------
Common shares outstanding, end of period 174,402 169,513
Effect of using weighted average common
and common equivalent shares outstanding (350) (539)
Effect of shares issuable under stock option
plans based on the treasury stock method 681 829
------- -------
Shares used in computing earnings per share 174,733 169,803
======= =======
Conversion of the 6 3/4% Convertible Subordinated Debentures due
2005, 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 period.
Common share equivalents include stock options and the Company's 6 1/4%
Convertible Subordinated Debentures due 2012. The effect of these
debentures on earnings per share was not dilutive for each of the
periods presented and, accordingly, has not been included in the
computations.
(3) Long-Term Debt -
The Company's $1 billion Revolving Credit 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. At December 31, 1993,
distributions from retained earnings could not exceed $615 million
under this net worth maintenance requirement (the covenant of the
Company's debt agreements which is most restrictive regarding
dividends).
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. The Company may offer
these securities from time-to-time, either jointly or separately, at
prices and on terms to be determined at or prior to the time of sale.
No securities have yet been issued.
(4) 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 court. The Company intends to vigorously defend
these matters.
In addition to the above described litigation, the Company and
certain subsidiaries are involved in various other administrative
matters of 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 while the suspension and related decisions of California
authorities have been under appeal by the Company. 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 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.
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.
(5) 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. 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.
The tax effects of temporary differences that gave rise to
significant portions of the deferred tax assets and liabilities at
October 1, 1993 are as follows (in thousands):
Deferred Deferred
Tax Assets Tax Liabilities
---------- ---------------
Depreciation and amortization $ 73,866 $ 341,916
Accrued environmental and
landfill costs 201,025 --
Accruals related to discontinued
operations 76,919 --
Self-insurance accruals 41,316 --
Net operating loss carryforwards 114,192
Other 115,542 81,627
--------- ---------
Deferred tax assets and
liabilities 622,860 $ 423,543
=========
Valuation allowance (110,437)
---------
Deferred tax assets, net of
valuation allowance $ 512,423
=========
The valuation allowance applies principally to net operating loss
carryforwards which could expire prior to utilization by the Company.
Foreign net operating loss carryforwards of approximately $130 million
are available to reduce future taxable income of the applicable foreign
entities for periods which generally range from 1994 to 1998. Domestic
state net operating loss carryforwards of approximately $600 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 1994 to
2008. Additionally, deferred income taxes have not been provided on
approximately $98.7 million of undistributed earnings of foreign
affiliates which are considered to be permanently reinvested.
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 $17 million as of December 31,
1993) 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. The Company intends to contest the proposed adjustment
vigorously. Although the final outcome cannot be predicted with
certainty, management believes that the ultimate disposition of the
issues raised by the Revenue Agent's Report will not have a materially
adverse effect upon the Company's consolidated financial position or
results of operations.
6) Postretirement Benefits -
The Company currently maintains a 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 $9.8 million) over a 20-year period.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net income for the first three months of fiscal year 1994 was $59
million, an increase of nearly $7 million (13%) as compared to the same
period of the prior year. The increase in net income was due largely
to increased profitability in the Company's domestic operations,
particularly in the landfill business, and to improved operating
results in the Company's international operations. Increased landfill
operating profitability was attributable to increased landfill volumes
and lower landfill operating expenses. International's improved
earnings can be attributed primarily to improved performance in the
United Kingdom and the Netherlands and the consolidation of Spanish
operations. The increase was also due in part to the Company's ability
to control the growth rate in selling, general and administrative
expenses as compared with the strong rate of growth in revenues
experienced during the first quarter. The current quarter's positive
results were negatively affected, to some extent, by continued
competitive pressures on margins, principally in the collection
business.
The following table presents ratios (shown as a percentage of
revenues) which reflect certain profitability trends of the Company's
operations and shows the Company's ratios of earnings to fixed charges.
Three Months Ended
------------------ Year Ended
12/31/93 12/31/92 9/30/93
-------- -------- ----------
Gross profit margin 27.6% 28.1% 27.8%
Income from operations before
reorganization charge 12.2% 11.8% 11.7%
Income from operations 12.2% 11.8% 11.0%
Income before income taxes 10.5% 10.1% 9.4%
Net income before reorganization
charge 6.3% 6.2% 6.1%
Net income 6.3% 6.2% 5.6%
Ratio of earnings to fixed charges 4.01 3.43 3.31
Profitability margins, except for the gross profit margin,
improved between the first three months of fiscal 1994 and the same
period of the prior year as selling, general and administrative
expenses declined as a percentage of revenues while net interest
expense as a percentage of revenue remained flat. The improvements in
profitability noted in the landfill component of the Company's business
and the continuing emphasis of the Company on controlling costs all
contributed to the improvement in these margins. However, as stated
above, margins in the collection business continued to be affected
negatively; a function of competitive pressures on pricing and slightly
higher per unit costs associated with disposal and other operating
expenses. Early indications are that recently implemented collection
service price increases have largely been accepted by our customers and
the Company's current plans are to continue to selectively increase
prices throughout the remainder of the year. International profit
margins have improved in the first quarter of 1994 compared with the
same prior year period, but results continue to be negatively affected
by operating losses of the Company's Italian operations and by foreign
currency exchange rates.
Revenues -
Revenues for the first three months of fiscal year 1993 were $935
million, as compared to revenues of $848 million for the same period
last year. The following table reflects total revenues of the Company
by each of the principal lines of business (dollar amounts in
thousands):
Three Months Ended
December 31,
------------------- %
1993 1992(1) Change
-------- -------- --------
North American Operations -
Collection Services - Solid Waste $570,397 $520,019 9.7 %
Disposal and Transfer - Solid Waste
Unaffiliated customers 112,038 115,270 (2.8)%
Affiliated companies 86,622 81,203 6.7 %
-------- --------
198,660 196,473 1.1 %
Medical Waste Services 39,169 34,872 12.3 %
Recycling Services 70,746 55,102 28.4 %
Services Group and Other 21,367 24,961 (14.4)%
Elimination of affiliated
companies' revenues (86,622) (81,203) 6.7 %
-------- --------
Total North American Operations 813,717 750,224 8.5 %
International Operations (2) 120,789 97,980 23.3 %
-------- --------
Total company $934,506 $848,204 10.2 %
======== ========
- ------------
(1) Certain reclassificiations have been made in prior year amounts
to conform to the current year presentation.
(2) Revenues from Canadian operations are excluded from inter-
national revenues and are combined with North American
revenues.
During the first quarter of fiscal 1994, the Company experienced
revenue growth of 10.2% over the same period last year, the highest
rate of growth in 12 consecutive quarters.
As shown above, revenue growth was experienced in all business
areas other than the Services Group, which was impacted negatively by
the sale of a significant portion of its operations during fiscal year
1993. The Company has decided to retain the unsold portion of its
services group operations and reintegrate these operations into its
existing business operations. In the collection business (which
represents over 60% of total Company revenues), revenues increased by
9.7% over the first three months of last year, principally due to
business acquisitions and increased volumes. Revenue growth was
impeded by a decline in landfill revenues from unaffiliated customers.
Despite increased landfill volumes from these unaffiliated customers,
revenues have declined due to (i) a shift in mix of waste disposed from
landfills in the northern section of the United States, which charge
higher tipping fees, to the southern and southeastern sections, where
tipping fees are currently lower, (ii) a shift in mix of waste disposed
from contaminated soils at higher tipping fees to other types of
special waste and municipal solid waste, which command lower tipping
fees and (iii) lower prices received for municipal solid waste and
contaminated soils as compared with the first quarter of last year.
Recycling revenues increased over the same period of the prior year by
28.4%. Volume growth was the main contributor to the increase, with
acquisitions and slight pricing increases contributing to a lesser
extent. Recycling revenues continue to be favorably impacted by the
continuing demand of the public for these services, the impact of
legislation and the Company's aggressive marketing and sales efforts.
The increase in medical waste revenues of 12.3% over the first three
months of last year was principally attributable to increased volume
growth and current year acquisitions. Revenue growth of over 23.3% in
the international segment resulted in large part from the
reconsolidation of Spanish operations in May of 1993, partially offset
by the negative impact of foreign currency translation.
Cost of Operations -
Cost of operations increased $66 million (11%) for the first three
months of fiscal year 1994 as compared to the same period last year.
Operating costs, other than disposal, increased more than 13% in the
first three months of the current fiscal year over the same period last
year. Non-disposal operating cost increases were largely related to
growth, particularly in the Company's collection and recycling
businesses. Disposal costs, which include landfill and transfer
station operating expenses, increased approximately 8% in the first
three months of the current fiscal year as compared to the same period
of last year, largely due to increased volumes. Disposal costs were
favorably impacted by lower landfill operating expenses, which was
caused by the mix of sites receiving waste compared with the prior
year, the benefit of higher cost sites closed in the prior year and
continued improvements in expenses associated with the Company's
closure and post closure management program.
Selling, General and Administrative Expense (SG&A) -
SG&A expense increased slightly less than $7 million (5%) for the
first three months of fiscal year 1994 as compared to the same period
of the prior year. The increase is primarily related to increased
acquisition activity. Additionally, selling expenses, which grew at a
rate of 7% over the first quarter of last year, accounted for over one-
fourth of the increase in SG&A. However, SG&A as a percent of revenue
declined from 16.3% last year to 15.4% in the current year, due
principally to the Company's continued efforts to control general and
administrative expenses.
Net Interest Expense -
Net interest expense increased slightly less than $1 million (6%)
for the first three months of fiscal year 1994 as compared to the same
period of fiscal 1993. This increase was due principally to lower
interest income related to reduced short-term investments, partially
offset by reduced interest expense as a result of the retirement of
approximately $66 million of Dutch guilder debt on November 1, 1993.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's working capital of $1.0 million at September 30,
1993, increased to $51.6 million at December 31, 1993. Working
capital was affected favorably in the current quarter by the adoption
of SFAS No. 109, "Accounting for Income Taxes". See Note (5). Over
the long term, it continues to be the Company's desire 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. No securities have yet
been issued.
The capital appropriations budget for fiscal year 1994 was
established at $962 million, a significantly higher level than the $784
million of capital expenditures in the prior year, in anticipation of
more attractive business acquisition opportunities and higher
replacement capital needs in the Company's core business. In addition,
on February 4, 1994, the Company completed its acquisition of 50% of
Otto Waste Services, a solid waste services business in Germany, for a
purchase price of approximately U.S. $400 million, consisting of 3.9
million shares of the Company's common stock and the remainder in
Deutsche Mark. The Company continues to believe that cash provided by
operations, cash obtained from the sale of short-term investments, cash
available under its commercial paper program supported by its credit
facility, under its medium-term note program and its universal shelf
registration statement, and its access to cash from banks and other
external sources, including the public markets, are more than
sufficient for its financing needs.
There have been no material changes in the Company's financial
condition from that reported at September 30, 1993.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
On January 11, 1994, American Ref-Fuel Company of Essex County
("Ref- Fuel"), a New Jersey partnership, entered into an Administration
Consent Order with the New Jersey Department of Environmental
Protection and Energy (the "Department") regarding alleged violations
of air permit requirements. A subsidiary of the Company owns a 50%
interest in Ref-Fuel. Ref-Fuel agreed to pay a monetary sanction of
$212,600 to settle all outstanding and pending Administrative Orders
and Notices of Civil Administrative Penalty Assessments with the
Department concerning these alleged violations, including air emission
excursions for the period of July 1, 1991 through June 30, 1993.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10. Amendments to Agreements Respecting Employments between
Browning-Ferris Industries and each of William D. Ruckelshaus, Louis A.
Waters and Harry J. Phillips, Sr., said amendments being respectively
dated September 1, 1993, December 7, 1993 and December 7, 1993.
12. Computation of Ratio of Earnings to Fixed Charges of
Browning-Ferris Industries, Inc. and Subsidiaries.
(b) Reports on Form 8-K:
None.
SIGNATURES
Pursuant to the requirements 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.
(Company)
Date: February 8, 1994 /s/ William D. Ruckelshaus
William D. Ruckelshaus
Chairman of the Board and
Chief Executive Officer
/s/ David R. Hopkins
David R. Hopkins
Vice President, Controller and
Chief Accounting Officer
_______________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
For the Quarter Commission file number 1-6805
Ended December 31, 1993
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
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(Address of principal (Zip Code)
Executive offices)
Registrant's telephone number, including area code: (713) 870-8100
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EXHIBITS
___________________________
EXHIBIT 10
FIRST AMENDMENT TO AMENDED AND RESTATED
AGREEMENT RESPECTING EMPLOYMENT
This First Amendment (the "Amendment") to Amended and Restated Agreement
Respecting Employment (the "Agreement") dated as of July 10, 1989 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 1, 1993, as
follows:
1. Section 4.C.(iii) of the Agreement shall be replaced in its entirety
and shall hereafter read as follows:
"(iii) Election by Employee After Reaching Age 62. The Employee may
elect at any time during his employment on full-time status after reaching
the age of 62, at his sole option by giving written notice to the
Secretary of the Company, to enter part-time employment status with the
Company. Such part-time status will begin ninety (90) days after the date
on which such notice is given by the Employee. If the Employee, pursuant
to this Section 4(c)(iii), elects part-time employment status, on a date
(a) after the Employee has reached the age of 62 and prior to the date
that the Employee has reached the age 66, (b) after the Employee has
reached the age of 66 and prior to the date that the Employee has reached
the age of 67, (c) after the Employee has reached the age of 67 and prior
to the date that the Employee has reached the age of 68, or, (d) after the
date that the Employee has reached the age of 68, the term of part-time
employment status under this Agreement shall become a term of four (4)
years, three (3) years, two (2) years or one (1) year, respectively.
Subject to the provisions of Section 4(H) hereof, if notice of termination
is given by the Company after the Employee has reached age 62, 66, 67 or
68, such termination shall be effective four (4) years, three (3) years,
two (2) years or one (1) year respectively, from the date the notice is
given by the Company."
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 date and year
indicated above.
EMPLOYEE BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ William D. Ruckelshaus By: /s/ Gerald Grinstein
-------------------------- --------------------------------
William D. Ruckelshaus Name: Gerald Grinstein
Title: Chairman of the Compensation
Committee of the Board of
Directors
FIRST AMENDMENT TO AMENDED AND RESTATED
AGREEMENT RESPECTING EMPLOYMENT
This First Amendment (this "Amendment") to Amended and Restated
Agreement Respecting Employment (the "Agreement") dated as of November
1, 1991 by and between Browning-Ferris Industries, Inc., a Delaware
corporation (the "Company"), and Louis A. Waters ("Employee") is entered
into by and between the Company and Employee effective as of December 7,
1993, as follows:
1. The Company and Employee acknowledge and agree that, pursuant to
subsection 5.A. (1) (ii) of the Agreement, Employee is currently
entitled to be granted options to purchase 133,200 shares of the common
stock of the Company in September, 1995, subject, however, to the
possibility that the number of shares may hereafter be adjusted pursuant
to the terms of the Agreement.
2. The Company and Employee agree, and the affected portion of said
subsection 5.A. (1) (ii) of the Agreement shall be amended to provide,
that, subject to any appropriate adjustment of the number of shares
pursuant to the terms of the Agreement, Employee shall be issued options
to purchase 44,400 shares in each of December 1993, December 1994 and
September 1995 instead of 133,200 in September 1995.
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
Amendment to Amended and Restated Agreement as of the day and year
indicated above.
/s/ Louis A. Waters
--------------------------
Louis A. Waters
Employee's Permanent Address:
1103 Wickwood
Houston, Texas 77024
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ William D. Ruckelshaus
------------------------------
William D. Ruckelshaus
Title: Chairman of the Board and
Chief Executive Officer
Address: P.O. Box 3151
Houston, Texas 77253
SECOND AMENDMENT TO AMENDED AND RESTATED
AGREEMENT RESPECTING EMPLOYMENT
This Second Amendment (this "Amendment") to Amended and Restated
Agreement Respecting Employment (the "Agreement") dated as of July 10,
1989, and previously amended as of January 21, 1992, by and between
Browning-Ferris Industries, Inc., a Delaware corporation (the
"Company"), and Harry J. Phillips, Sr., ("Employee") is entered into by
and between the Company and Employee effective as of December 7, 1993,
as follows:
1. The Company and Employee acknowledge that, pursuant to the January
21, 1992 First Amendment to the Agreement, Employee is currently
entitled to be granted options to purchase 133,000 shares of the common
stock of the Company in September, 1995, subject, however, to the
possibility that the number of shares may hereafter be adjusted pursuant
to the terms of the Agreement.
2. The Company and Employee agree, and the affected portion of said
Amendment to the Agreement shall be amended to provide, that, subject to
any appropriate adjustment of the number of shares pursuant to the terms
of the Agreement, Employee shall be issued options to purchase 44,400
shares in each of December 1993, December 1994 and December 1995 instead
of 133,000 in September 1995.
3. The Company and Employee further agree, and the affected provisions
of the Agreement all prior Amendments thereto shall be amended to
provide, that the annual Base Salary payable to Employee beginning
January 1, 1994 and continuing thereafter for the entire remaining term
of the Agreement shall be in the amount of $200,000 per year without
adjustment based on the CPI.
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
Amendment to Amended and Restated Agreement as of the day and year
indicated above.
/s/ Harry J. Phillips, Sr.
---------------------------------
Harry J. Phillips, Sr.
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ William D. Ruckelshaus
------------------------------
William D. Ruckelshaus
Title: Chairman of the Board and
Chief Executive Officer
tlp/20009.asc
Exhibit 12
BROWNING-FERRIS INDUSTRIES, INC.
AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
(Dollar Amounts in Thousands)
Three Months
Ended December 31,
-------------------------
1992 1993
-------- --------
Earnings Available for Fixed Charges:
Net income $ 52,287 $ 58,991
Income taxes 33,429 39,327
-------- --------
Income before income taxes 85,716 98,318
Consolidated interest expense 18,107 17,089
Interest expense related to proportionate
share of 50% owned affiliates 7,410 5,670
Portion of rents representing the
interest factor 4,487 4,523
Less-Equity in earnings of affiliates less
than 50% owned -- 91
-------- --------
Total $115,720 $125,509
======== ========
Fixed Charges:
Consolidated interest expense and interest
costs capitalized $ 21,873 $ 21,137
Interest expense and interest costs
capitalized related to proportionate
share of 50% owned affiliates 7,410 5,670
Portion of rents representing the interest
factor 4,487 4,523
-------- --------
Total $ 33,770 $ 31,330
======== ========
Ratio of Earnings to Fixed Charges 3.43 4.01
======== ========
