<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-6805
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
BFI Employee Stock Ownership and Savings Plan (the "Plan")
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Browning-Ferris Industries, Inc.
757 N. Eldridge
Houston, Texas 77079
<PAGE> 2
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
FINANCIAL STATEMENTS
In accordance with Item 4 of the required information for Form 11-K, the
following financial statements for the BFI Employee Stock Ownership and Savings
Plan have been prepared in accordance with the financial reporting requirements
of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
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<PAGE> 3
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
INDEX TO THE FINANCIAL STATEMENTS AND SCHEDULES
Report of Independent Public Accountants
Statements of Net Assets Available for Benefits as of December 31, 1997 and 1996
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1997 and 1996
Notes to Financial Statements as of December 31, 1997 and 1996
Schedule I--Item 27(a) - Schedule of Assets Held for Investment Purposes as of
December 31, 1997
Schedule II--Item 27(d) - Schedule of Reportable Transactions for the Year Ended
December 31, 1997
Schedule III--Item 27(e) - Schedule of Nonexempt Transactions for the Year Ended
December 31, 1997
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<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefits Administration Committee of the
BFI Employee Stock Ownership and Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the BFI Employee Stock Ownership and Savings Plan as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements and supplemental schedules
referred to below are the responsibility of the Benefits Administration
Committee. Our responsibility is to express an opinion on these financial
statements and supplemental 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 net assets available for benefits of the BFI Employee
Stock Ownership and Savings Plan as of December 31, 1997 and 1996, and the
changes in its net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1997, reportable transactions for the
year ended December 31, 1997, and nonexempt transactions for the year ended
December 31, 1997, are presented for purposes of additional analysis and are not
a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
June 12, 1998
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<PAGE> 5
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
ASSETS:
Investments, at fair value-
Common stock of Browning-Ferris Industries, Inc. $ 142,647,942 $ 100,451,500
Equity investment funds 180,708,059 141,433,700
Short-term investments 2,068,934 2,452,695
-------------- --------------
325,424,935 244,337,895
-------------- --------------
Investments, at contract value-
Guaranteed investment contracts 51,757,521 52,011,824
Other investment contracts 8,075,250 5,095,160
-------------- --------------
59,832,771 57,106,984
-------------- --------------
385,257,706 301,444,879
-------------- --------------
Receivables-
Employer contribution 1,372,601 1,361,386
Employee contributions 3,964,994 3,935,981
Dividends receivable 723,176 646,552
-------------- --------------
6,060,771 5,943,919
-------------- --------------
391,318,477 307,388,798
-------------- --------------
LIABILITIES:
Accrued expenses 112,748 92,576
Contribution refunds payable - 144,884
-------------- --------------
112,748 237,460
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 391,205,729 $ 307,151,338
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income-
Net appreciation in fair value of investments $ 64,695,953 $ 1,500,373
Interest income 3,882,247 3,592,632
Dividends on common stock of Browning-Ferris Industries, Inc. 2,821,255 2,489,968
Dividends and gain distributions on equity investment funds 12,631,505 6,501,077
-------------- --------------
84,030,960 14,084,050
-------------- --------------
Contributions-
Employer 12,541,893 12,239,687
Employee 36,341,897 36,238,952
-------------- --------------
48,883,790 48,478,639
-------------- --------------
Total additions 132,914,750 62,562,689
-------------- --------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants 48,541,094 25,590,156
Administrative expenses 319,265 288,609
-------------- --------------
Total deductions 48,860,359 25,878,765
-------------- --------------
Net increase 84,054,391 36,683,924
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 307,151,338 270,467,414
-------------- --------------
End of year $ 391,205,729 $ 307,151,338
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 7
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
1. DESCRIPTION OF THE PLAN:
Organization and Administration
Browning-Ferris Industries, Inc. (the Company), established the BFI Employee
Stock Ownership and Savings Plan (the Plan) effective January 1, 1980. The Plan
is a defined contribution plan covering all United States and certain expatriate
personnel of the Company with one or more years of service, except certain
employees subject to collective bargaining agreements. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974 (ERISA),
as amended.
Management of the Plan is provided by the Benefits Administration Committee (the
Plan Administrator), which is currently composed of five members, all of whom
are management employees of the Company. Members of the Plan Administrator do
not receive any compensation from the Plan. Fees charged by the trustee and
certain other expenses are reflected in the accompanying financial statements.
Certain other costs associated with internal administration are paid by the
Company and are not charged to the Plan. Fidelity Management Trust Company
(Fidelity) is the sole trustee of the Plan's assets under a trust agreement
dated April 12, 1993.
Investment Programs
The following details the investment options available to each Plan participant:
Fund 1 - Fixed Income Fund
Fund 2 - Fidelity Puritan Fund
Fund 3 - Fidelity Growth and Income Portfolio
Fund 4 - Fidelity Growth Company Fund
Fund 5 - Templeton Foreign Fund
Fund 6 - BFI Common Stock
Fund 7 - Fidelity Balanced Fund
Effective February 3, 1997, Fund 7 was no longer available as an investment
option under the Plan and Funds 2 and 5 were added. The assets of Fund 7 were
liquidated to cash and automatically reinvested into Fund 2.
Participants may invest their contributions in increments of 5 percent in any or
all of the above funds; however, no more than 50 percent of a participant's
contributions can be invested in Fund 6. A participant may contribute up to 5
percent of his total earnings as a "Basic Contribution" and up to an additional
10 percent as a "Supplemental Contribution" subject to Internal Revenue Service
(IRS) limitations. The Company's matching contributions (defined as 50 percent
of the Basic Contribution subject to IRS limitations) are invested in Fund 6.
-7-
<PAGE> 8
Participants can change the allocation of their savings contributions in the
above funds but not more than once monthly, or they can discontinue, increase or
decrease their savings participation rate within the 1 percent to 15 percent
contribution levels permitted by the Plan by giving at least 30 days' written
notice prior to the end of a calendar quarter. During 1996, the Plan was amended
to allow participants who have reached age 55 to transfer the total balance
associated with the Company's matching contributions from BFI common stock to
other funds.
Participant Accounts
Each participant's account is credited with the participant's contributions, the
Company's matching contributions and allocation of Plan earnings. Plan earnings
are allocated by fund in proportion to the participant's balances in each fund.
Administrative expenses are allocated to each participant.
Vesting
Participants are fully vested in all amounts reflected in their accounts.
Distribution of Benefits
Benefits are payable to participants or to a designated beneficiary only at the
time of their retirement, death or termination of employment. In limited
circumstances, account withdrawals may be made for financial hardship in
accordance with IRS guidelines for such withdrawals. During 1996, the Plan was
amended to allow participants who have reached age 65 and continue to be
employed by the Company to receive distributions from their accounts.
Distribution of a participant's account balance depends largely on the value of
the account and the fund from which the distribution is paid. If the account
balance is $3,500 or less, the distribution is lump-sum cash. If the account
balance is greater than $3,500, the participant has the option to defer receipt
in accordance with the Plan or take a lump-sum cash payment. In either case,
with certain requirements, the participant may elect to roll all or a portion of
such distribution to a qualified retirement plan. Funds 1 through 5 are
distributed in cash only and are based on the account balances as of the date
the distribution is processed. In addition, Fund 7 was distributed in cash based
on the account balance as of the date of distribution. For Fund 6, the
participant determines whether the form of distribution will be either the
shares of the Company's common stock with uninvested amounts in cash or in a
lump-sum cash distribution. The market value of the Company's common stock at
the date the shares are sold for cash is used to determine the amount of the
distribution.
During 1997, the Company sold certain entities resulting in the termination of
approximately 2,100 employees, with distributions of approximately $25,000,000.
The Company may terminate the Plan at any time by appropriate resolution of its
board of directors. If the Plan is so terminated, all amounts credited to the
accounts of each participant shall be paid after payment of all appropriate
expenses.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Investment Valuation
Investments in common stock, equity investment funds and short-term investments
are recorded at fair value based on quoted market prices. Investments in
guaranteed and other investment contracts are reported at contract value.
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<PAGE> 9
The financial statements are presented on the accrual basis whereby interest and
dividend income are recognized as earned and expenses are recorded as incurred.
3. GUARANTEED AND OTHER
INVESTMENT CONTRACTS:
Investments in guaranteed and other investment contracts are fully
benefit-responsive and, therefore, are reported at contract value which
represents the principal balance of the investment contracts plus accrued
interest at the stated contract rate (the crediting interest rate), less
payments received and contract charges by the insurance company. A fully
benefit-responsive investment contract provides a liquidity guarantee by a
financially responsible third party of principal and previously accrued interest
for liquidations, transfers, loans or hardship withdrawals initiated by Plan
participants under terms of the ongoing Plan. The estimated fair value of
guaranteed and other investment contracts was $59,092,571 and $57,684,416 as of
December 31, 1997 and 1996, respectively. The crediting interest rate for the
guaranteed investment contracts is established at the time of the purchase of
the contract and does not vary throughout the duration of the contract. The
crediting interest rate of the other investment contracts is reset on a
quarterly basis based upon the terms of the contract and the performance of the
underlying assets; however, the minimum crediting interest rate is zero under
these contracts. As of December 31, 1997 and 1996, the crediting interest rate
for the Fixed Income Fund was 6.36 percent and 6.30 percent, respectively. The
average yield of this fund was 6.58 percent for both years ended December 31,
1997 and 1996. There are limitations on returns of certain of the guaranteed and
other investment contracts upon certain changes to the Plan's provisions or upon
the termination or partial termination of the investment contracts by the
Company or Fidelity.
4. FEDERAL INCOME TAXES:
The Plan obtained its latest determination letter on November 13, 1996, in which
the IRS stated that the Plan, as then designed, was in compliance with the
applicable requirements of the Internal Revenue Code (IRC). Although the Plan
has been amended since receiving the determination letter, the Plan
Administrator believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC and that the Plan is
qualified and the related trust is tax-exempt. Neither the Company's
contributions nor the income of the trust fund are taxable to the participants
prior to distribution.
5. NONEXEMPT TRANSACTIONS:
As reported on Schedule III, certain Plan contributions were not remitted to the
Trust within the time frame specified by the Department of Labor's Regulation 29
CFR 2510.3-102, thus constituting nonexempt transactions between the Plan and
the Company.
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<PAGE> 10
6. INVESTMENTS:
Investments that represent 5 percent or more of the Plan's net assets are
separately identified in the following table:
<TABLE>
<CAPTION>
December 31
-----------------------------------------------------------------
1997 1996
------------------------------- -------------------------------
Number of Fair Value/ Number of Fair Value/
Shares Contract Shares Contract
Or Units Value Or Units Value
------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Common stock of Browning-Ferris
Industries, Inc. 3,855,350 $ 142,647,942 3,826,724 $ 100,451,500
-------------- --------------
Equity investment funds-
Fidelity Puritan Fund 2,042,282 39,579,429 - -
Fidelity Growth and Income Portfolio 2,114,289 80,554,412 1,949,856 59,919,075
Fidelity Growth Company Fund 1,347,579 58,377,135 1,224,645 49,549,151
Fidelity Balanced Fund - - 2,270,275 31,965,474
Other 220,812 2,197,083 - -
-------------- --------------
180,708,059 141,433,700
-------------- --------------
Short-term investments 2,068,934 2,452,695
-------------- --------------
Guaranteed investment contracts 51,757,521 52,011,824
-------------- --------------
Other investment contracts 8,075,250 5,095,160
-------------- --------------
Total $ 385,257,706 $ 301,444,879
============== ==============
</TABLE>
During 1997 and 1996, the Plan's investments (including investments bought, sold
and held during the year) appreciated (depreciated) in value as follows:
<TABLE>
<CAPTION>
1997 1996
------------ -------------
<S> <C> <C>
Common stock of Browning-Ferris Industries, Inc. $ 42,077,792 $ (11,190,841)
Equity investments funds 22,618,161 12,691,214
------------ -------------
Net appreciation $ 64,695,953 $ 1,500,373
============ =============
</TABLE>
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<PAGE> 11
7. ALLOCATION TO INVESTMENT PROGRAMS:
The following schedules reflect the allocation of net assets available for
benefits and changes in net assets available for benefits to the separate
investment programs for the respective periods:
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1997
<TABLE>
<CAPTION>
Fund 3
Fund 1 Fund 2 --------------
------------ ------------ Fidelity
Fixed Fidelity Growth and
Income Puritan Income
Fund Fund Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Assets-
Investments, at fair value-
Common stock of Browning-Ferris Industries, Inc. $ - $ - $ -
Equity investment funds - 39,579,429 80,554,412
Short-term investments 2,068,934 - -
------------ ------------ ------------
2,068,934 39,579,429 80,554,412
------------ ------------ ------------
Investments, at contract value-
Guaranteed investment contracts 51,757,521 - -
Other investment contracts 8,075,250 - -
------------ ------------ ------------
59,832,771 - -
------------ ------------ ------------
61,901,705 39,579,429 80,554,412
------------ ------------ ------------
Receivables-
Employer contribution - - -
Employee contributions 851,736 538,436 992,462
Dividends receivable - - -
------------ ------------ ------------
851,736 538,436 992,462
------------ ------------ ------------
62,753,441 40,117,865 81,546,874
------------ ------------ ------------
Liabilities-
Accrued expenses 71,309 - 30,044
------------ ------------ ------------
71,309 - 30,044
------------ ------------ ------------
Net assets available for benefits $ 62,682,132 $ 40,117,865 $ 81,516,830
============ ============ ============
</TABLE>
(Remaining funds and total on following page.)
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<PAGE> 12
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Fund 4
------------ Fund 5 Fund 6
Fidelity ----------- --------------
Growth Templeton BFI
Company Foreign Common
Fund Fund Stock(a) Total
------------ ----------- -------------- --------------
<S> <C> <C> <C> <C>
Assets-
Investments, at fair value-
Common stock of Browning-Ferris
Industries, Inc. $ - $ - $ 142,647,942 $ 142,647,942
Equity investment funds 58,377,135 2,197,083 - 180,708,059
Short-term investments - - - 2,068,934
------------ ----------- -------------- --------------
58,377,135 2,197,083 142,647,942 325,424,935
------------ ----------- -------------- --------------
Investments, at contract value-
Guaranteed investment contracts - - - 51,757,521
Other investment contracts - - - 8,075,250
------------ ----------- -------------- --------------
- - - 59,832,771
------------ ----------- -------------- --------------
58,377,135 2,197,083 142,647,942 385,257,706
------------ ----------- -------------- --------------
Receivables-
Employer contribution - - 1,372,601 1,372,601
Employee contributions 893,595 73,928 614,837 3,964,994
Dividends receivable - - 723,176 723,176
------------ ----------- -------------- --------------
893,595 73,928 2,710,614 6,060,771
------------ ----------- -------------- --------------
59,270,730 2,271,011 145,358,556 391,318,477
------------ ----------- -------------- --------------
Liabilities-
Accrued expenses 6,050 - 5,345 112,748
------------ ----------- -------------- --------------
6,050 - 5,345 112,748
------------ ----------- -------------- --------------
Net assets available for benefits $ 59,264,680 $ 2,271,011 $ 145,353,211 $ 391,205,729
============ =========== ============== ==============
</TABLE>
- ------------------
(a) The following table separately identifies participant-directed and
nonparticipant-directed net assets available for benefits of the BFI Common
Stock Fund, Fund 6.
-12-
<PAGE> 13
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Participant- Nonparticipant-
Directed Directed Total
------------ ------------- --------------
<S> <C> <C> <C>
Assets-
Common stock of Browning-Ferris Industries, Inc. $ 45,925,010 $ 96,722,932 $ 142,647,942
Contributions receivable 614,837 1,372,601 1,987,438
Dividends receivable 232,984 490,192 723,176
------------ ------------- --------------
46,772,831 98,585,725 145,358,556
------------ ------------- --------------
Liabilities-
Accrued expenses 5,345 - 5,345
------------ ------------- --------------
5,345 - 5,345
------------ ------------- --------------
Net assets available for benefits (Fund 6) $ 46,767,486 $ 98,585,725 $ 145,353,211
============ ============= ==============
</TABLE>
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<PAGE> 14
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1996
<TABLE>
<CAPTION>
Fund 3
Fund 1 Fund 2 -------------
-------------- -------------- Fidelity
Fixed Fidelity Growth and
Income Puritan Income
Fund Fund Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Assets-
Investments, at fair value-
Common stock of Browning-Ferris Industries, Inc. $ - $ - $ -
Equity investment funds - - 59,919,075
Short-term investments 2,452,695 - -
------------ ------------ ------------
2,452,695 - 59,919,075
------------ ------------ ------------
Investments, at contract value-
Guaranteed investment contracts 52,011,824 - -
Other investment contracts 5,095,160 - -
------------ ------------ ------------
57,106,984 - -
------------ ------------ ------------
59,559,679 - 59,919,075
------------ ------------ ------------
Receivables-
Employer contribution - - -
Employee contributions 927,722 - 928,916
Dividends receivable - - -
------------ ------------ ------------
927,722 - 928,916
------------ ------------ ------------
60,487,401 - 60,847,991
------------ ------------ ------------
Liabilities-
Accrued expenses 59,351 - 12,765
Contribution refunds payable 22,806 - 49,984
------------ ------------ ------------
82,157 - 62,749
------------ ------------ ------------
Net assets available for benefits $ 60,405,244 $ - $ 60,785,242
============ ============ ============
</TABLE>
(Remaining funds and total on following page.)
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<PAGE> 15
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Fund 4
------------ Fund 5 Fund 6 Fund 7
Fidelity -------------- -------------- ------------
Growth Templeton BFI Fidelity
Company Foreign Common Balanced
Fund Fund Stock(a) Fund Total
------------ -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Assets-
Investments, at fair value-
Common stock of
Browning-Ferris
Industries, Inc. $ - $ - $ 100,451,500 $ - $ 100,451,500
Equity investment funds 49,549,151 - - 31,965,474 141,433,700
Short-term investments - - - - 2,452,695
------------ -------------- -------------- ------------ --------------
49,549,151 - 100,451,500 31,965,474 244,337,895
------------ -------------- -------------- ------------ --------------
Investments, at contract
value-
Guaranteed investment
contracts - - - - 52,011,824
Other investment
contracts - - - - 5,095,160
------------ -------------- -------------- ------------ --------------
- - - - 57,106,984
------------ -------------- -------------- ------------ --------------
49,549,151 - 100,451,500 31,965,474 301,444,879
------------ -------------- -------------- ------------ --------------
Receivables-
Employer contribution - - 1,361,386 - 1,361,386
Employee contributions 913,790 - 625,003 540,550 3,935,981
Dividends receivable - - 646,552 - 646,552
------------ -------------- -------------- ------------ --------------
913,790 - 2,632,941 540,550 5,943,919
------------ -------------- -------------- ------------ --------------
50,462,941 - 103,084,441 32,506,024 307,388,798
------------ -------------- -------------- ------------ --------------
Liabilities-
Accrued expenses 4,363 - 2,424 13,673 92,576
Contribution refunds
payable 39,089 - 15,880 17,125 144,884
------------ -------------- -------------- ------------ --------------
43,452 - 18,304 30,798 237,460
------------ -------------- -------------- ------------ --------------
Net assets available
for benefits $ 50,419,489 $ - $ 103,066,137 $ 32,475,226 $ 307,151,338
============ ============== ============== ============ ==============
</TABLE>
- ------------------
(a) The following table separately identifies participant-directed and
nonparticipant-directed net assets available for benefits of the BFI Common
Stock Fund, Fund 6.
-15-
<PAGE> 16
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Fund 6
BFI Common Stock Fund
----------------------------------------------------
Participant- Nonparticipant-
Directed Directed Total
------------ ------------- --------------
<S> <C> <C> <C>
Assets-
Common stock of Browning-Ferris Industries, Inc. $ 34,195,464 $ 66,256,036 $ 100,451,500
Contributions receivable 625,003 1,361,386 1,986,389
Dividends receivable 220,391 426,161 646,552
------------ ------------- --------------
35,040,858 68,043,583 103,084,441
------------ ------------- --------------
Liabilities-
Accrued expenses 2,424 - 2,424
Contribution refunds payable 15,880 - 15,880
------------ ------------- --------------
18,304 - 18,304
------------ ------------- --------------
Net assets available for benefits $ 35,022,554 $ 68,043,583 $ 103,066,137
============ ============= ==============
</TABLE>
-16-
<PAGE> 17
Allocation of Changes in Net Assets Available for Benefits
to Investment Programs
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Fund 3
Fund 1 Fund 2 ------------
------------ ------------ Fidelity
Fixed Fidelity Growth and
Income Puritan Income
Fund Fund Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Additions to net assets attributed to-
Investment income-
Net appreciation (depreciation) in fair value of
investments $ - $ 2,884,985 $ 15,080,332
Interest income 3,882,247 - -
Dividends on common stock of Browning-Ferris Industries, Inc. - - -
Dividends and gain distributions on equity investment funds - 3,165,482 3,668,149
------------ ------------ ------------
3,882,247 6,050,467 18,748,481
------------ ------------ ------------
Contributions-
Employer - - -
Employee 8,747,246 4,878,203 8,580,035
------------ ------------ ------------
8,747,246 4,878,203 8,580,035
------------ ------------ ------------
Total additions 12,629,493 10,928,670 27,328,516
------------ ------------ ------------
Deductions from net assets attributed to-
Distributions to participants 10,031,956 4,838,292 9,906,903
Administrative expenses 202,445 338 84,262
------------ ------------ ------------
Total deductions 10,234,401 4,838,630 9,991,165
------------ ------------ ------------
Transfers between funds (118,204) 34,027,825 3,394,237
------------ ------------ ------------
Net increase (decrease) 2,276,888 40,117,865 20,731,588
Net assets available for benefits-
Beginning of year 60,405,244 - 60,785,242
------------ ------------ ------------
End of year $ 62,682,132 $ 40,117,865 $ 81,516,830
============ ============ ============
</TABLE>
(Remaining funds and total on following page.)
-17-
<PAGE> 18
Allocation of Changes in Net Assets Available for Benefits to
Investment Programs
For the Year Ended December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Fund 4
------------ Fund 5 Fund 6 Fund 7
Fidelity ----------- -------------- -------------
Growth Templeton BFI Fidelity
Company Foreign Common Balanced
Fund Fund Stock(a) Fund Total
------------ ----------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to-
Investment income-
Net appreciation
(depreciation) in fair
value of investments $ 3,897,030 $ (257,952) $ 42,077,792 $ 1,013,766 $ 64,695,953
Interest income - - - - 3,882,247
Dividends on common stock
of Browning-Ferris
Industries, Inc. - - 2,821,255 - 2,821,255
Dividends and gain
distributions on equity
investments 5,566,545 231,329 - - 12,631,505
------------ ----------- -------------- ------------- --------------
9,463,575 (26,623) 44,899,047 1,013,766 84,030,960
------------ ----------- -------------- ------------- --------------
Contributions-
Employer - - 12,541,893 - 12,541,893
Employee 7,973,787 404,486 5,673,245 84,895 36,341,897
------------ ----------- -------------- ------------- --------------
7,973,787 404,486 18,215,138 84,895 48,883,790
------------ ----------- -------------- ------------- --------------
Total additions 17,437,362 377,863 63,114,185 1,098,661 132,914,750
------------ ----------- -------------- ------------- --------------
Deductions from net assets
attributed to-
Distributions to participants 6,974,418 170,500 16,433,249 185,776 48,541,094
Administrative expenses 16,682 79 15,459 - 319,265
------------ ----------- -------------- ------------- --------------
Total deductions 6,991,100 170,579 16,448,708 185,776 48,860,359
------------ ----------- -------------- ------------- --------------
Transfers between funds (1,601,071) 2,063,727 (4,378,403) (33,388,111) -
------------ ----------- -------------- ------------- --------------
Net increase (decrease) 8,845,191 2,271,011 42,287,074 (32,475,226) 84,054,391
Net assets available for
benefits-
Beginning of year 50,419,489 - 103,066,137 32,475,226 307,151,338
------------ ----------- -------------- ------------- --------------
End of year $ 59,264,680 $ 2,271,011 $ 145,353,211 $ - $ 391,205,729
============ =========== ============== ============= ==============
</TABLE>
- ------------------
(a) The following table separately identifies participant-directed and
nonparticipant-directed changes in net assets available for benefits of the
BFI Common Stock Fund, Fund 6.
-18-
<PAGE> 19
Allocation of Changes in Net Assets Available for Benefits to
Investment Programs
For the Year Ended December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Fund 6
BFI Common Stock Fund
----------------------------------------------------
Participant- Nonparticipant-
Directed Directed Total
------------ ---------------- --------------
<S> <C> <C> <C>
Additions to net assets attributed to-
Investment income-
Net appreciation in fair value of investments $ 14,080,535 $ 27,997,257 $ 42,077,792
Dividends on common stock of Browning-Ferris
Industries, Inc. 930,845 1,890,410 2,821,255
------------ ------------- --------------
15,011,380 29,887,667 44,899,047
------------ ------------- --------------
Contributions 5,673,245 12,541,893 18,215,138
------------ ------------- --------------
Total additions 20,684,625 42,429,560 63,114,185
------------ ------------- --------------
Deductions from net assets attributed to-
Distributions to participants 5,465,341 10,967,908 16,433,249
Administrative expenses 9,033 6,426 15,459
------------ ------------- --------------
Total deductions 5,474,374 10,974,334 16,448,708
------------ ------------- --------------
Transfers between funds (3,465,319) (913,084) (4,378,403)
------------ ------------- --------------
Net increase 11,744,932 30,542,142 42,287,074
Net assets available for benefits-
Beginning of year 35,022,554 68,043,583 103,066,137
------------ ------------- --------------
End of year $ 46,767,486 $ 98,585,725 $ 145,353,211
============ ============= ==============
</TABLE>
-19-
<PAGE> 20
Allocation of Changes in Net Assets Available for Benefits to
Investment Programs
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Fund 3
Fund 1 Fund 2 ------------
------------ ------------ Fidelity
Fixed Fidelity Growth and
Income Puritan Income
Fund Fund Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Additions to net assets attributed to-
Investment income-
Net appreciation (depreciation) in fair value of
investments $ - $ - $ 6,774,993
Interest income 3,592,632 - -
Dividends on common stock of Browning-Ferris Industries, Inc.
- - -
Dividends and gain distributions on equity investment
funds - - 2,916,806
------------ ------------ ------------
3,592,632 - 9,691,799
------------ ------------ ------------
Contributions-
Employer - - -
Employee 9,294,417 - 8,058,088
------------ ------------ ------------
9,294,417 - 8,058,088
------------ ------------ ------------
Total additions 12,887,049 - 17,749,887
------------ ------------ ------------
Deductions from net assets attributed to-
Distributions to participants 5,939,524 - 4,583,738
Administrative expenses 176,966 - 40,544
------------ ------------ ------------
Total deductions 6,116,490 - 4,624,282
------------ ------------ ------------
Transfers between funds (753,596) - 2,193,053
------------ ------------ ------------
Net increase (decrease) 6,016,963 - 15,318,658
Net assets available for benefits-
Beginning of year 54,388,281 - 45,466,584
------------ ------------ ------------
End of year $ 60,405,244 $ - $ 60,785,242
============ ============ ============
</TABLE>
(Remaining funds and total on following page.)
-20-
<PAGE> 21
Allocation of Changes in Net Assets Available for Benefits to
Investment Programs
For the Year Ended December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Fund 4
------------ Fund 5 Fund 6 Fund 7
Fidelity ------------- --------------- ----------
Growth Templeton BFI Fidelity
Company Foreign Common Balanced
Fund Fund Stock(a) Fund Total
------------ ----------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed
to-
Investment income-
Net appreciation
(depreciation) in fair
value of investments $ 4,609,198 $ - $ (11,190,841) $ 1,307,023 $ 1,500,373
Interest income - - - - 3,592,632
Dividends on common
stock of
Browning-Ferris
Industries, Inc.
- - 2,489,968 - 2,489,968
Dividends and gain
distributions on equity
investment funds 2,159,106 - - 1,425,165 6,501,077
------------ ----------- -------------- ------------- --------------
6,768,304 - (8,700,873) 2,732,188 14,084,050
------------ ----------- -------------- ------------- --------------
Contributions-
Employer - - 12,239,687 - 12,239,687
Employee 7,859,779 - 5,866,885 5,159,783 36,238,952
------------ ----------- -------------- ------------- --------------
7,859,779 - 18,106,572 5,159,783 48,478,639
------------ ----------- -------------- ------------- --------------
Total additions 14,628,083 - 9,405,699 7,891,971 62,562,689
------------ ----------- -------------- ------------- --------------
Deductions from net assets
attributed to-
Distributions to participants
3,806,517 - 8,083,896 3,176,481 25,590,156
Administrative expenses 15,659 - 11,346 44,094 288,609
------------ ----------- -------------- ------------- --------------
Total deductions 3,822,176 - 8,095,242 3,220,575 25,878,765
------------ ----------- -------------- ------------- --------------
Transfers between funds 1,290,701 - (792,420) (1,937,738) -
------------ ----------- -------------- ------------- --------------
Net increase (decrease) 12,096,608 - 518,037 2,733,658 36,683,924
Net assets available for
benefits-
Beginning of year 38,322,881 - 102,548,100 29,741,568 270,467,414
------------ ----------- -------------- ------------- --------------
End of year $ 50,419,489 $ - $ 103,066,137 $ 32,475,226 $ 307,151,338
============ =========== ============== ============== ==============
</TABLE>
- ---------------
(a) The following table separately identifies participant-directed and
nonparticipant-directed changes in net assets available for benefits of the
BFI Common Stock Fund, Fund 6.
-21-
<PAGE> 22
Allocation of Changes in Net Assets Available for Benefits to
Investment Programs
For the Year Ended December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Fund 6
BFI Common Stock
----------------------------------------------------
Participant- Nonparticipant-
Directed Directed Total
------------ ------------ --------------
<S> <C> <C> <C>
Additions to net assets attributed to-
Investment income-
Net depreciation in fair value of investments $ (3,748,520) $ (7,442,321) $ (11,190,841)
Dividends on common stock of Browning-Ferris
Industries, Inc. 851,196 1,638,772 2,489,968
------------ ------------ --------------
(2,897,324) (5,803,549) (8,700,873)
------------ ------------ --------------
Contributions 5,866,885 12,239,687 18,106,572
------------ ------------ --------------
Total additions 2,969,561 6,436,138 9,405,699
------------ ------------ --------------
Deductions from net assets attributed to-
Distributions to participants 3,076,413 5,007,483 8,083,896
Administrative expenses 4,635 6,711 11,346
------------ ------------ --------------
Total deductions 3,081,048 5,014,194 8,095,242
------------ ------------ --------------
Transfers between funds (452,018) (340,402) (792,420)
------------ ------------ --------------
Net increase (decrease) (563,505) 1,081,542 518,037
Net assets available for benefits-
Beginning of year 35,586,059 66,962,041 102,548,100
------------ ------------ --------------
End of year $ 35,022,554 $ 68,043,583 $ 103,066,137
============ ============ ==============
</TABLE>
-22-
<PAGE> 23
SCHEDULE I
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Number of Cost/ Current/
Shares or Contract Contract
Identity of Issue/Description Units Value Value
------------------------------ ------------ --------------- ---------------
<S> <C> <C> <C>
COMMON STOCK OF BROWNING-FERRIS
INDUSTRIES, INC.* 3,855,350 $ 102,068,188 $ 142,647,942
--------------- ---------------
EQUITY INVESTMENT FUNDS:
Fidelity Puritan Fund* 2,042,282 37,023,716 39,579,429
Fidelity Growth and Income Portfolio* 2,114,289 54,740,405 80,554,412
Fidelity Growth Company Fund* 1,347,579 46,902,188 58,377,135
Templeton Foreign Fund 220,812 2,453,470 2,197,083
--------------- ---------------
Total equity investment funds 141,119,779 180,708,059
--------------- ---------------
SHORT-TERM INVESTMENTS:
Fidelity Short Term Investment Fund* 2,068,934 2,068,934
--------------- ---------------
GUARANTEED INVESTMENT CONTRACTS(a):
Allstate Life Insurance GIC, April 30, 2001, 6.94% 3,129,562 3,129,562
Combined Insurance GIC, July 30, 1998, 7.76% 4,117,102 4,117,102
Continental Assurance Company GIC, January 31, 1998, 7.59% 3,780,704 3,780,704
John Hancock Mutual GIC, March 31, 1999, 7.68% 4,663,719 4,663,719
Life of Virginia GIC, March 31, 2002, 6.62% 2,552,348 2,552,348
New York Life GIC, July 30, 1999, 7.13% 6,007,664 6,007,664
Ohio National Life Insurance GIC, January 31, 2000, 6.52% 2,933,161 2,933,161
Peoples Security Life GIC, April 30, 1998, 4.60% 2,411,648 2,411,648
Principal Mutual GIC, January 31, 2000, 7.15% 4,344,524 4,344,524
Protective Life GIC, January 31, 1998, 7.58% 2,844,554 2,844,554
Provident Life GIC, July 31, 1998, 4.59% 2,177,035 2,177,035
Safeco Life Insurance GIC, October 30, 1998, 6.18% 3,071,662 3,071,662
Security Life of Denver GIC, June 30, 1998, 6.22% 3,075,323 3,075,323
Sun Life of Canada GIC, January 31, 1998, 5.72% 3,819,974 3,819,974
Transamerican Life & Annuity GIC, January 31, 2000, 6.08% 2,828,541 2,828,541
--------------- ---------------
Total guaranteed investment contracts 51,757,521 51,757,521
--------------- ---------------
OTHER INVESTMENT CONTRACTS(a):
Peoples Security Life Asset Backed Security, July 7, 1998 2,631,354 2,631,354
Peoples Security Life Mortgage Backed Security,
November 15, 2000 2,447,912 2,447,912
AIG Financial Products Asset Backed Security,
June 15, 2000 2,995,984 2,995,984
--------------- ---------------
Total other investment contracts 8,075,250 8,075,250
--------------- ---------------
Total assets held for investment purposes $ 305,089,672 $ 385,257,706
=============== ===============
</TABLE>
* Party in interest
- -------------------
(a) These amounts are recorded at contract value in the accompanying
statements.
-23-
<PAGE> 24
SCHEDULE II
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
The following table presents series of transactions which were greater than 5
percent of the Plan's assets as of January 1, 1997:
<TABLE>
<CAPTION>
Purchase Selling Cost of
Description Price*(a) Price*(a) Asset Sold Net Gain
------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
COMMON STOCK OF BROWNING-FERRIS
INDUSTRIES, INC. $21,948,478 $21,829,828 $17,044,965 $4,784,863
FIDELITY PURITAN FUND 42,508,398 5,813,954 5,484,682 329,272
FIDELITY GROWTH AND INCOME PORTFOLIO 17,662,582 12,107,577 8,636,550 3,471,027
FIDELITY GROWTH COMPANY FUND 15,712,763 10,781,809 7,965,827 2,815,982
FIDELITY BALANCED FUND 737,286 33,716,526 29,958,072 3,758,454
FIDELITY SHORT TERM INVESTMENT FUND 26,124,823 26,508,584 26,508,584 -
</TABLE>
* Expenses incurred are netted against purchase/selling price, as applicable.
- -----------------
(a) Amounts represent current value at the date of transaction.
-24-
<PAGE> 25
SCHEDULE III
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27(e) - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Relationship to Plan, Description of Transactions Including Interest
Identity of Employer or Other Maturity Date, Rate of Interest, Amount Incurred
Party Involved Party in Interest Collateral and Maturity Loaned on Loan
-------------- ----------------------- ------------------------------------------- ---------- --------
<S> <C> <C> <C> <C>
Browning Ferris Employer Lending of monies from the Plan to the
Industries, Inc. Employer (contributions not timely
remitted to the Plan) as follows:
Deemed loan dated December 4, 1996,
maturity of April 1, 1997, with
interest at various rates $ 391,488 $ 4,779(a)
Deemed loan dated July 21, 1997,
maturity of July 25, 1997, with
interest at 24% per annum 549,788 1,446(b)
Deemed loan dated July 21, 1997,
maturity of July 25, 1997, with
interest at 24% per annum 728,242 1,915(b)
Deemed loan dated September 19, 1997,
maturity of September 29, 1997,
with interest at 24% per annum
486,376 3,198(b)
Deemed loan dated October 21,
1997, maturity of October 24,
1997, with interest at 24% per
annum
469,157 925(b)
--------
$ 12,263
========
</TABLE>
- ---------------------
(a) Interest amounts of $1,240 and $3,539 were remitted to the Plan by the
Employer on May 16, 1997, and May 22, 1997, respectively.
(b) Interest amounts of $7,484 were remitted to the Plan by the Employer on
June 23, 1998.
-25-
<PAGE> 26
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Benefits Administration Committee, which administers the employee benefit
plan, has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
BFI EMPLOYEE STOCK OWNERSHIP
AND SAVINGS PLAN
June 29, 1998
/s/ Gerald K. Burger
------------------------
Gerald K. Burger
/s/ Jeffrey E. Curtiss
------------------------
Jeffrey E. Curtiss
/s/ Ronald E. Long
------------------------
Ronald E. Long
/s/ J. Gregory Muldoon
------------------------
J. Gregory Muldoon
/s/ Bruce E. Ranck
------------------------
Bruce E. Ranck
The Members of the Benefits Administration Committee
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
INDEX DESCRIPTION
- -------- -----------
<S> <C>
23.1 Consent of Arthur Andersen LLP
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 12, 1998, included in this Annual Report on
Form 11-K into the Browning-Ferris Industries, Inc., previously filed Form S-8
Registration Statement File No. 33-56583.
ARTHUR ANDERSEN LLP
Houston, Texas
June 29, 1998
