<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, 1998
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, 1998 and 1997
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1998 and 1997
Notes to Financial Statements as of December 31, 1998 and 1997
Schedule I--Item 27(a) - Schedule of Assets Held for Investment Purposes as of
December 31, 1998
Schedule II--Item 27(d) - Schedule of Reportable Transactions for the Year Ended
December 31, 1998
Schedule III--Item 27(e) - Schedule of Nonexempt Transactions for the Year Ended
December 31, 1998
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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, 1998 and
1997, 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, 1998 and 1997, 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, 1998, and reportable transactions and
nonexempt transactions for the year then ended 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.
Houston, Texas
June 4, 1999
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<PAGE> 5
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS:
Investments, at fair value-
Common stock of Browning-Ferris Industries, Inc. $113,357,194 $142,647,942
Equity investment funds 223,702,133 180,708,059
Short-term investments 3,972,221 2,068,934
------------ ------------
341,031,548 325,424,935
------------ ------------
Investments, at contract value-
Guaranteed/bank investment contracts 33,414,269 51,757,521
Other investment contracts 29,479,932 8,075,250
------------ ------------
62,894,201 59,832,771
------------ ------------
403,925,749 385,257,706
------------ ------------
Receivables-
Employer contribution 896,850 1,372,601
Employee contributions 2,577,849 3,964,994
Dividends receivable 753,301 723,176
------------ ------------
4,228,000 6,060,771
------------ ------------
408,153,749 391,318,477
------------ ------------
LIABILITIES:
Accrued expenses 70,292 112,748
Contribution refunds payable 187,400 --
------------ ------------
257,692 112,748
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $407,896,057 $391,205,729
============ ============
</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, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income-
Net appreciation (depreciation) in fair value of investments $ (4,218,581) $ 64,695,953
Interest income 3,955,906 3,882,247
Dividends on common stock of Browning-Ferris Industries, Inc. 2,995,357 2,821,255
Dividends and gain distributions on equity investment funds 15,422,126 12,631,505
------------- -------------
18,154,808 84,030,960
------------- -------------
Contributions-
Employer 12,384,416 12,541,893
Employee 36,028,953 36,341,897
------------- -------------
48,413,369 48,883,790
------------- -------------
Total additions 66,568,177 132,914,750
------------- -------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants 49,592,844 48,541,094
Administrative expenses 285,005 319,265
------------- -------------
Total deductions 49,877,849 48,860,359
------------- -------------
Net increase 16,690,328 84,054,391
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 391,205,729 307,151,338
------------- -------------
End of year $ 407,896,057 $ 391,205,729
============= =============
</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, 1998 AND 1997
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 six 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 and Contributions
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. The Plan allows for participants
who have reached age 55 to transfer the total balance associated with the
Company's matching contributions from Company 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. The Plan allows for
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. In 1997, if the
account balance was $3,500 or less, the distribution was lump-sum cash. If the
account balance was greater than $3,500, the participant had the option to defer
receipt in accordance with the Plan or take a lump-sum cash payment. Effective
January 1, 1998, this $3,500 threshold amount mentioned above was increased to
$5,000. 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 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.
Distributions to participants for the year ended December 31, 1998, include
amounts to be refunded to certain highly compensated participants subsequent to
year-end for contributions determined to be in excess of the maximum
contribution levels for such participants.
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/bank investment contracts and other investment contracts are reported
at contract value.
-8-
<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.
Risks and Uncertainties
The Plan provides for various investments in common stock, equity investment
funds, short-term investments and guaranteed and other investment contracts.
Investment securities, in general, are exposed to various risks, such as
interest rate, credit and overall market volatility risk. Due to the level of
risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term
and that such changes could materially affect the amounts reported in the
statements of net assets available for benefits and participant account
balances.
3. GUARANTEED/BANK AND OTHER INVESTMENT CONTRACTS:
Investments in guaranteed/bank 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. Investments in
other investment contracts represent synthetic investment contracts comprised of
both an investment and a contract component. 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/bank and other
investment contracts was $62,983,826 and $59,092,571 as of December 31, 1998 and
1997, respectively. The contractual component of the other investment contracts
was not material as of December 31, 1998 or 1997, and has been netted with the
other investment contracts in the statements of net assets available for
benefits. The crediting interest rate for the guaranteed/bank 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, 1998 and 1997, the crediting interest rate for the Fixed Income Fund was
6.02 percent and 6.36 percent, respectively. The average yield of this fund was
6.37 percent and 6.58 percent for the years ended December 31, 1998 and 1997,
respectively. There are limitations on returns of certain of the guaranteed/bank
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 as of December 31, 1998 and 1997.
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.
-9-
<PAGE> 10
6. SUBSEQUENT EVENT:
On March 8, 1999, the Company and Allied Waste Industries, Inc. (Allied),
announced that they had entered into a definitive merger agreement under which
Allied will acquire the Company for $45 in cash for each outstanding share of
the Company's common stock. The transaction is structured as a merger of the
Company with a subsidiary of Allied and is subject to the approval of the
Company's stockholders and other customary conditions. The Company and Allied
are pursuing the necessary approvals. The merger agreement may be terminated and
the merger may be abandoned under a number of conditions. If this were to occur,
dependent upon the reasons for termination of the merger agreement, a
termination fee of $225 million could be payable by the Company to Allied,
receivable by the Company from Allied, or no fee may be payable.
Consummation of the merger will have a significant, favorable impact on the
value of participant accounts due to the $45 in cash received for each
outstanding share of the Company's common stock held. The value of the Company's
common stock in the Plan would have been approximately $66 million greater had
such stock been valued at $45 per share at December 31, 1998. Further, no
determination has been made concerning the future of this Plan subsequent to
consummation of the merger.
7. 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,
------------------------------------------------------
1998 1997
------------------------ -------------------------
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. 3,986,117 $113,357,194 3,855,350 $142,647,942
------------ ------------
Equity investment funds-
Fidelity Puritan Fund 2,276,522 45,689,795 2,042,282 39,579,429
Fidelity Growth and Income Portfolio 2,258,648 103,536,420 2,114,289 80,554,412
Fidelity Growth Company Fund 1,410,094 71,942,979 1,347,579 58,377,135
Other 301,900 2,532,939 220,812 2,197,083
------------ ------------
223,702,133 180,708,059
------------ ------------
Short-term investments 3,972,221 2,068,934
------------ ------------
Guaranteed/bank investment contracts 33,414,269 51,757,521
------------ ------------
Other investment contracts 29,479,932 8,075,250
------------ ------------
Total $403,925,749 $385,257,706
============ ============
</TABLE>
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<PAGE> 11
During 1998 and 1997, the Plan's investments (including investments bought, sold
and held during the year) appreciated (depreciated) in value as follows:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Common stock of Browning-Ferris Industries, Inc. $(33,517,526) $ 42,077,792
Equity investment funds 29,298,945 22,618,161
------------ ------------
Net appreciation (depreciation)
in fair value of investments $ (4,218,581) $ 64,695,953
============ ============
</TABLE>
8. 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, 1998
<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 -- 45,689,795 103,536,420
Short-term investments 3,972,221 -- --
------------ ------------ ------------
3,972,221 45,689,795 103,536,420
------------ ------------ ------------
Investments, at contract value-
Guaranteed/bank investment contracts 33,414,269 -- --
Other investment contracts 29,479,932 -- --
------------ ------------ ------------
62,894,201 -- --
------------ ------------ ------------
66,866,422 45,689,795 103,536,420
------------ ------------ ------------
Receivables-
Employer contribution -- -- --
Employee contributions 552,431 342,616 667,173
Dividends receivable -- -- --
------------ ------------ ------------
552,431 342,616 667,173
------------ ------------ ------------
67,418,853 46,032,411 104,203,593
------------ ------------ ------------
Liabilities-
Accrued expenses 12,167 5,954 9,079
Contribution refunds payable 20,516 25,037 69,810
------------ ------------ ------------
32,683 30,991 78,889
------------ ------------ ------------
Net assets available for benefits $ 67,386,170 $ 46,001,420 $104,124,704
============ ============ ============
</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, 1998
(Continued)
<TABLE>
<CAPTION>
Fund 4
Fidelity Fund 5 Fund 6
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 $ -- $ -- $113,357,194 $113,357,194
Equity investment funds 71,942,979 2,532,939 -- 223,702,133
Short-term investments -- -- -- 3,972,221
------------ ------------ ------------ ------------
71,942,979 2,532,939 113,357,194 341,031,548
------------ ------------ ------------ ------------
Investments, at contract value-
Guaranteed/bank investment contracts -- -- -- 33,414,269
Other investment contracts -- -- -- 29,479,932
------------ ------------ ------------ ------------
-- -- -- 62,894,201
------------ ------------ ------------ ------------
71,942,979 2,532,939 113,357,194 403,925,749
------------ ------------ ------------ ------------
Receivables-
Employer contribution -- -- 896,850 896,850
Employee contributions 578,519 49,228 387,882 2,577,849
Dividends receivable -- -- 753,301 753,301
------------ ------------ ------------ ------------
578,519 49,228 2,038,033 4,228,000
------------ ------------ ------------ ------------
72,521,498 2,582,167 115,395,227 408,153,749
------------ ------------ ------------ ------------
Liabilities-
Accrued expenses 34,196 6,090 2,806 70,292
Contribution refunds payable 42,103 2,427 27,507 187,400
------------ ------------ ------------ ------------
76,299 8,517 30,313 257,692
------------ ------------ ------------ ------------
Net assets available for benefits $ 72,445,199 $ 2,573,650 $115,364,914 $407,896,057
============ ============ ============ ============
</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.
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<PAGE> 13
Allocation of Net Assets Available for Benefits to Investment Programs
As of December 31, 1998
(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. $ 35,664,553 $ 77,692,641 $113,357,194
Contributions receivable 387,882 896,850 1,284,732
Dividends receivable 236,311 516,990 753,301
------------ ------------ ------------
36,288,746 79,106,481 115,395,227
------------ ------------ ------------
Liabilities-
Accrued expenses 2,806 -- 2,806
Contribution refunds payable 27,507 -- 27,507
------------ ------------ ------------
30,313 -- 30,313
------------ ------------ ------------
Net assets available for benefits $ 36,258,433 $ 79,106,481 $115,364,914
============ ============ ============
</TABLE>
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<PAGE> 14
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> 15
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.
-15-
<PAGE> 16
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> 17
Allocation of Changes in Net Assets Available for Benefits
to Investment Programs
For the Year Ended December 31, 1998
<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 $ -- $ 1,916,829 $ 17,315,497
Interest income 3,955,906 -- --
Dividends on common stock of Browning-Ferris
Industries, Inc. -- -- --
Dividends and gain distributions on equity
investment funds -- 4,651,441 5,468,778
------------ ------------ ------------
3,955,906 6,568,270 22,784,275
------------ ------------ ------------
Contributions-
Employer -- -- --
Employee 8,347,506 4,822,628 8,796,083
------------ ------------ ------------
8,347,506 4,822,628 8,796,083
------------ ------------ ------------
Total additions 12,303,412 11,390,898 31,580,358
------------ ------------ ------------
Deductions from net assets attributed to-
Distributions to participants 9,612,024 5,195,567 11,077,812
Administrative expenses 80,647 26,158 37,776
------------ ------------ ------------
Total deductions 9,692,671 5,221,725 11,115,588
------------ ------------ ------------
Transfers between funds 2,093,297 (285,618) 2,143,104
------------ ------------ ------------
Net increase (decrease) 4,704,038 5,883,555 22,607,874
Net assets available for benefits-
Beginning of year 62,682,132 40,117,865 81,516,830
------------ ------------ ------------
End of year $ 67,386,170 $ 46,001,420 $104,124,704
============ ============ ============
</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, 1998
(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>
Additions to net assets attributed to-
Investment income-
Net appreciation (depreciation) in fair
value of investments $ 10,491,383 $ (424,764) $ (33,517,526) $ (4,218,581)
Interest income -- -- -- 3,955,906
Dividends on common stock of
Browning-Ferris Industries, Inc. -- -- 2,995,357 2,995,357
Dividends and gain distributions on
equity investment funds 5,035,644 266,263 -- 15,422,126
------------- ------------- ------------- -------------
15,527,027 (158,501) (30,522,169) 18,154,808
------------- ------------- ------------- -------------
Contributions-
Employer -- -- 12,384,416 12,384,416
Employee 7,808,525 721,966 5,532,245 36,028,953
------------- ------------- ------------- -------------
7,808,525 721,966 17,916,661 48,413,369
------------- ------------- ------------- -------------
Total additions 23,335,552 563,465 (12,605,508) 66,568,177
------------- ------------- ------------- -------------
Deductions from net assets attributed to-
Distributions to participants 8,618,175 298,511 14,790,755 49,592,844
Administrative expenses 108,256 17,273 14,895 285,005
------------- ------------- ------------- -------------
Total deductions 8,726,431 315,784 14,805,650 49,877,849
------------- ------------- ------------- -------------
Transfers between funds (1,428,602) 54,958 (2,577,139) --
------------- ------------- ------------- -------------
Net increase (decrease) 13,180,519 302,639 (29,988,297) 16,690,328
Net assets available for benefits-
Beginning of year 59,264,680 2,271,011 145,353,211 391,205,729
------------- ------------- ------------- -------------
End of year $ 72,445,199 $ 2,573,650 $ 115,364,914 $ 407,896,057
============= ============= ============= =============
</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, 1998
(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 $ (10,558,791) $ (22,958,735) $ (33,517,526)
Dividends on common stock of Browning-Ferris
Industries, Inc. 944,731 2,050,626 2,995,357
------------- ------------- -------------
(9,614,060) (20,908,109) (30,522,169)
------------- ------------- -------------
Contributions 5,532,245 12,384,416 17,916,661
------------- ------------- -------------
Total additions (4,081,815) (8,523,693) (12,605,508)
------------- ------------- -------------
Deductions from net assets attributed to-
Distributions to participants 4,801,978 9,988,777 14,790,755
Administrative expenses 5,693 9,202 14,895
------------- ------------- -------------
Total deductions 4,807,671 9,997,979 14,805,650
------------- ------------- -------------
Transfers between funds (1,619,567) (957,572) (2,577,139)
------------- ------------- -------------
Net decrease (10,509,053) (19,479,244) (29,988,297)
Net assets available for benefits-
Beginning of year 46,767,486 98,585,725 145,353,211
------------- ------------- -------------
End of year $ 36,258,433 $ 79,106,481 $ 115,364,914
============= ============= =============
</TABLE>
-19-
<PAGE> 20
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.)
-20-
<PAGE> 21
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.
-21-
<PAGE> 22
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>
-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, 1998
<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.* 3,986,117 $109,992,574 $113,357,194
------------ ------------
EQUITY INVESTMENT FUNDS:
Fidelity Puritan Fund* 2,276,522 41,811,310 45,689,795
Fidelity Growth and Income Portfolio* 2,258,648 64,884,950 103,536,420
Fidelity Growth Company Fund* 1,410,094 52,759,842 71,942,979
Templeton Foreign Fund 301,900 3,136,215 2,532,939
------------ ------------
Total equity investment funds 162,592,317 223,702,133
------------ ------------
SHORT-TERM INVESTMENTS:
Fidelity Short Term Investment Fund* 3,972,221 3,972,221
------------ ------------
GUARANTEED/BANK INVESTMENT CONTRACTS:
Allstate Life Insurance GIC, April 30, 2001, 6.94% 3,346,753 3,346,753
CDC Capital, May 15, 2003, 6.13% 2,015,052 2,015,052
John Hancock Mutual GIC, March 31, 1999, 7.68% 5,021,892 5,021,892
Life of Virginia GIC, March 31, 2002, 6.62% 2,721,313 2,721,313
New York Life GIC, July 30, 1999, 7.13% 6,436,010 6,436,010
Ohio National Life Insurance GIC, January 31, 2000, 6.52% 3,124,404 3,124,404
Principal Life Insurance GIC, January 31, 2000, 7.15% 4,655,157 4,655,157
Security Life of Denver GIC, June 30, 2000, 6.22% 3,093,171 3,093,171
Transamerican Occidental GIC, January 31, 2000, 6.08% 3,000,517 3,000,517
------------ ------------
Total guaranteed investment contracts 33,414,269 33,414,269
------------ ------------
</TABLE>
*Party in interest
-23-
<PAGE> 24
SCHEDULE I
Continued
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
(Continued)
<TABLE>
<CAPTION>
Cost/ Current/
Contract Contract
Identity of Issue/Description Value Value
----------------------------- ------------ ------------
<S> <C> <C>
OTHER INVESTMENT CONTRACTS:
AIG Financial Products Asset Backed Security,
June 15, 1999 $ 1,666,346 $ 1,666,346
AIG Financial Products Asset Backed Security,
March 15, 2001 2,028,240 2,028,240
Chase Manhattan Bank Asset Backed Security,
March 15, 2002 3,066,059 3,066,059
Monumental Life Insurance Asset Backed Security,
May 8, 2001 2,006,862 2,006,862
Monumental Life Insurance Mortgage Backed Security,
November 15, 2000 2,477,645 2,477,645
Monumental Life Insurance Mortgage Backed Security,
May 28, 2002 2,013,786 2,013,786
Morgan Guaranty Asset Backed Security,
July 25, 2003 2,000,591 2,000,591
Morgan Guaranty Mortgage Backed Security,
September 17, 2001 1,897,296 1,897,296
State Street Bank Asset Backed Security, October 17, 2000 2,516,556 2,516,556
State Street Bank Collateralized Mortgage Obligation,
August 15, 2001 1,997,605 1,997,605
Transamerica Life Insurance Asset Backed Security,
September 15, 2000 2,004,051 2,004,051
UBS AG Asset Backed Security, January 19, 2004 2,011,282 2,011,282
Westdeutsche Landesbank Asset Backed Security,
June 15, 2000 2,012,437 2,012,437
Westdeutsche Landesbank Asset Backed Security,
March 17, 2003 1,781,176 1,781,176
------------ ------------
Total other investment contracts 29,479,932 29,479,932
------------ ------------
Total assets held for investment purposes $339,451,313 $403,925,749
============ ============
</TABLE>
*Party in interest
-24-
<PAGE> 25
SCHEDULE II
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
The following table presents series of transactions which were greater than 5
percent of the Plan's assets as of January 1, 1998:
<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 $22,212,696 $17,985,918 $14,288,310 $ 3,697,608
FIDELITY GROWTH AND INCOME PORTFOLIO 19,422,104 13,755,593 9,277,559 4,478,034
FIDELITY GROWTH COMPANY FUND 15,067,761 11,993,300 9,210,107 2,783,193
FIDELITY SHORT-TERM INVESTMENT FUND 42,832,106 40,928,819 40,928,819 --
</TABLE>
*Expenses incurred are netted against purchase/selling price, as applicable.
- ----------
(a) Amounts represent current value at the date of transaction.
-25-
<PAGE> 26
SCHEDULE III
BFI EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27(e) - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<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 February 20, 1998,
maturity of March 4, 1998, with
interest at 9% per annum $ 1,635,523 $ 4,840
Deemed loan dated February 20, 1998,
maturity of March 9, 1998, with
interest at 9% per annum 1,304,046 5,466
Deemed loan dated March 20, 1998,
maturity of March 24, 1998, with
interest at 9% per annum 1,384,887 1,366
Deemed loan dated May 21, 1998,
maturity of May 27, 1998, with
interest at 8% per annum 325,563 428
--------
$ 12,100
========
</TABLE>
Interest in the amount of $12,100 was remitted to the Plan by the Employer
subsequent to December 31, 1998.
-26-
<PAGE> 27
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 14, 1999 /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
/s/ Kim B. Clarke
----------------------------
Kim B. Clarke
The Members of the Benefits Administration Committee
-27-
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
23 Consent of Independent Public Accountants
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 4, 1999, 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 15, 1999
