-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DYDQsngPC7a4vo9sb5CEOhi2Wh2yH+3fWmTLalPzERyEXwcSTHWbcFg1hVIOe1Qa Xy0ioU4DwHDPMsFa6FW0fA== 0000950129-98-001614.txt : 19980416 0000950129-98-001614.hdr.sgml : 19980416 ACCESSION NUMBER: 0000950129-98-001614 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980415 SROS: CSE SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWNING FERRIS INDUSTRIES INC CENTRAL INDEX KEY: 0000014827 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 741673682 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06805 FILM NUMBER: 98594391 BUSINESS ADDRESS: STREET 1: 757 N ELDRIDGE CITY: HOUSTON STATE: TX ZIP: 77079 BUSINESS PHONE: 7138708100 8-K 1 BROWNING-FERRIS INDUSTRIES, INC. 1 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: March 31, 1998 (Date of earliest event reported) BROWNING-FERRIS INDUSTRIES, INC. (Exact name of registrant as specified in charter) Commission file number 1-6805 Delaware 74-1673682 (State of Incorporation) (I.R.S. Employer Identification No.) 757 N. Eldridge Houston, Texas 77079 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (281)870-8100. - -------------------------------------------------------------------------------- 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On November 10, 1997, Browning-Ferris Industries, Inc. (the "Company") announced the signing of an agreement to merge its operations outside North America with SITA, a societe anonyme formed under the laws of the Republic of France ("SITA"). On March 31, 1998, the Company announced that it had completed this transaction. Under the terms of the agreement, the Company received cash in the amount of US$950 million and ordinary shares, FF50 par value, of SITA resulting in approximately a 20 percent equity ownership in SITA. Formal transfer of the Hong Kong operations is subject to satisfaction of certain requirements of Hong Kong regulatory authorities which is expected soon. Suez Lyonnaise des Eaux, a societe anonyme formed under the laws of the Republic of France ("Suez Lyonnaise"), owns greater than 50% of the ordinary shares of SITA. Pursuant to a Shareholders' Agreement between the Company and Suez Lyonnaise, the Company is entitled to representation on the board of directors of SITA. Paris-based SITA is a leading industrial waste services company, providing collection, recycling, waste-to-energy and disposal services related to residential, commercial, industrial and medical waste. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED None (b) PRO FORMA FINANCIAL INFORMATION 2 3 BROWNING-FERRIS INDUSTRIES, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS AND BALANCE SHEET In November 1997, the Company entered into an agreement to merge its operations outside North America with SITA, a subsidiary of Suez Lyonnaise des Eaux. On March 31, 1998, the Company announced that this transaction had been completed. Under the terms of the agreement, the Company received cash totaling U.S. $950 million and shares of SITA stock amounting to approximately a 20 percent equity interest in SITA. Suez Lyonnaise des Eaux owns more than 50 percent of SITA. Formal transfer of the Hong Kong operations is subject to satisfaction of certain requirements of Hong Kong regulatory authorities which is expected soon. The following unaudited pro forma consolidated statements of operations and balance sheet give effect to (i) the divestiture of the Company's operations outside of North America associated with the SITA transaction as discussed above and the disposition of the remainder of these operations as a result of this transaction with SITA, (ii) the repurchase of 15 million shares of common stock of the Company ($585 million) as a result of a Dutch auction tender offer which was completed in October 1997 and (iii) the purchase of approximately 11 million additional shares of the Company's common stock on the open market through March 31, 1998 at a cost of approximately $370 million under the Company's $1 billion stock buyback program. The pro forma balance sheet reflects the Company's estimated investment related to its equity interest in SITA. However, the related earnings associated with this investment have not been considered. In addition, these pro forma statements do not give effect to (i) the remaining $45 million of shares of the Company's common stock to be purchased under its $1 billion stock buyback program, (ii) the $500 million increase in the existing stock buyback program that the Company expects to complete by December 31, 1998, or (iii) the issuance of common stock associated with the automatic common exchange security units in June 1998 for cash of approximately $410 million. The unaudited pro forma consolidated statements of operations for the year ended September 30, 1997 and the three months ended December 31, 1997 were prepared assuming that the transactions described above were consummated on October 1, 1996. The unaudited pro forma consolidated balance sheet as of December 31, 1997 was prepared assuming that the transactions described above were consummated on December 31, 1997. 3 4 The pro forma financial results are not necessarily indicative of the actual results of operations that would have occurred had these transactions occurred on October 1, 1996, nor are they indicative of future results. The unaudited pro forma consolidated statements of operations and balance sheet should be read in conjunction with the Company's historical consolidated financial statements and related notes thereto included in its Annual Report on Form 10-K for the fiscal year ended September 30, 1997 and Quarterly Report on Form 10-Q for the three months ended December 31, 1997. The pro forma adjustments included in the following pro forma statements of operations and balance sheet represent preliminary estimates of the total fair value of the consideration and related costs associated with the merger of the Company's international operations with SITA, which will be revised as additional information concerning the valuation of these amounts becomes available. 4 5 BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1997 (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
Year Ended September 30, 1997 ----------------------------------------------------- Pro Forma Company Company Adjustments Pro Forma ------------ ------------ ------------ Revenues $ 5,782,972 $ (1,458,316)(A) $ 4,324,656 Cost of operations 4,289,614 (1,135,061)(A) 3,154,553 ------------ ------------ ------------ Gross profit 1,493,358 (323,255) 1,170,103 Selling, general and administrative expense 812,242 (208,623)(A) 603,619 Special charges (credits), net 81,879 (145,144)(A) (63,265) ------------ ------------ ------------ Income from operations 599,237 30,512 629,749 Interest expense, net 158,083 (31,343)(A) 130,765 (50,888)(B) 54,913 (C) Equity in earnings of unconsolidated affiliates (53,988) 19,367 (A) (34,621) ------------ ------------ ------------ Income before income taxes, minority interest and extraordinary items 495,142 38,463 533,605 Income taxes 198,057 16,995 (A) 213,442 20,355 (B) (21,965)(C) Minority interest in income of consolidated subsidiaries 13,390 (12,127)(A) 1,263 ------------ ------------ ------------ Income before extraordinary items $ 283,695 $ 35,205 $ 318,900 ============ ============ ============ Earnings per share before extraordinary items(D): Basic $ 1.40 $ 1.80 ============ ============ Diluted $ 1.39 $ 1.79 ============ ============ Number of common shares used in computing earnings per share: Basic 202,800 176,800 ============ ============ Diluted 203,746 177,746 ============ ============
5 6 BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
Three Months Ended December 31, 1997 ----------------------------------------------------- Pro Forma Company Company Adjustments Pro Forma ----------- ----------- ----------- Revenues $ 1,344,742 $ (327,062)(A) $ 1,017,680 Cost of operations 981,359 (253,526)(A) 727,833 ----------- ----------- ----------- Gross profit 363,383 (73,536) 289,847 Selling, general and administrative expense 190,619 (44,646)(A) 145,973 Special credits, net (2,557) -- (2,557) ----------- ----------- ----------- Income from operations 175,321 (28,890) 146,431 Interest expense, net 35,619 (6,720)(A) 21,996 (12,722)(B) 5,819 (C) Equity in earnings of unconsolidated affiliates (10,089) 3,730 (A) (6,359) ----------- ----------- ----------- Income before income taxes, minority interest and cumulative effect of change in accounting principle 149,791 (18,997) 130,794 Income taxes 59,916 (10,360)(A) 52,317 5,089 (B) (2,328)(C) Minority interest in income of consolidated subsidiaries 3,117 (2,448)(A) 669 ----------- ----------- ----------- Income before cumulative effect of change in accounting principle $ 86,758 $ (8,950) $ 77,808 =========== =========== =========== Earnings per share before cumulative effect of change in accounting principle: Basic $ 0.45 $ 0.43 =========== =========== Diluted $ 0.45 $ 0.43 =========== =========== Number of common shares used in computing earnings per share: Basic 190,911 179,240 =========== =========== Diluted 192,282 180,611 =========== ===========
6 7 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (A) To remove the accounts of the Company's operations outside of North America which are to be either merged into SITA or otherwise disposed as a result of the SITA transaction. (B) To reflect changes in interest expense and related income taxes associated with the estimated net cash proceeds of $885 million after considering income taxes and other costs related to the SITA transaction. It is assumed that the proceeds were used to pay down debt balances. (C) To reflect increased interest expense and related income taxes associated with the repurchase of the Company's common stock in connection with the Company's Dutch auction tender offer of $585 million and open market purchases of $370 million under the Company's $1 billion stock buyback program. These stock purchases have been funded principally through debt issuances. (D) Excluding special charges and extraordinary items reflected in the fiscal 1997 operating results, earnings per share amounts were:
Company Company Pro Forma --------------- --------------- Basic $ 1.64 $ 1.59(i) =============== =============== Diluted $ 1.63 $ 1.58(i) =============== ===============
(i)Pro forma amounts give no effect to earnings from the Company's ownership interest in SITA. Had estimated earnings from the Company's equity investment in SITA been considered in the Company pro forma earnings per share amounts presented above, management believes that such amounts would have exceeded the related historical earnings per share amounts. 7 8 BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (IN THOUSANDS)
December 31, 1997 ----------------------------------------------------- Pro Forma Company Company Adjustments Pro Forma ----------- ----------- ----------- Trade receivables, net $ 812,493 $ (226,082)(A) $ 586,411 Other current assets 374,698 (114,426)(A) 260,272 ----------- ----------- ----------- Total current assets 1,187,191 (340,508) 846,683 Property and equipment, net 3,473,372 (741,799)(A) 2,731,573 Cost over fair value of net tangible assets of acquired businesses, net 1,397,197 (802,295)(A) 594,902 Other assets 427,726 (79,313)(A) 683,413 335,000 (B) ----------- ----------- ----------- Total assets $ 6,485,486 $(1,628,915) $ 4,856,571 =========== =========== =========== Current liabilities $ 1,259,389 $ (231,133)(A) $ 1,028,256 Deferred items 891,328 (162,305)(A) 729,023 Long-term debt 2,300,923 (449,378)(A) 1,264,233 (885,000)(B) 297,688 (C) Common stockholders' equity 2,033,846 (1,121,099)(A) 1,835,059 1,220,000 (B) (297,688)(C) ----------- ----------- ----------- Total liabilities and common stockholders' equity $ 6,485,486 $(1,628,915) $ 4,856,571 =========== =========== ===========
8 9 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (A) To remove the accounts of the Company's operations outside of North America which are to be either merged into SITA or otherwise disposed as a result of the SITA transaction. (B) To reflect cash proceeds of $950 million and the estimated investment in shares of SITA stock that will result in approximately a 20 percent ownership in SITA (estimated fair value of approximately $360 million), after considering estimated income taxes and other costs of approximately $65 million associated with the SITA transaction. It is assumed that the proceeds were used to pay down outstanding debt balances. Additionally, the pro forma entries give effect to the recognition of 80% of the preliminary estimate of the gain associated with the transaction (estimate of $99 million as of December 31, 1997), offset largely by 80% of the cumulative foreign currency translation losses associated with these operations outside of North America (approximately $89 million as of December 31, 1997). The deferred portion of the gain has been reflected as a reduction in the estimated investment in SITA. (C) To reflect additional repurchases of the Company's common stock of approximately $298 million subsequent to December 31, 1997 under the Company's $1 billion stock buyback program. These stock purchases have been funded principally through debt issuances. (c) EXHIBITS None 9 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. BROWNING-FERRIS INDUSTRIES, INC. (Registrant) April 15, 1998. By: /s/Jeffrey E. Curtiss --------------------------------------- Jeffrey E. Curtiss Senior Vice President and Chief Financial Officer 10 -----END PRIVACY-ENHANCED MESSAGE-----