Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA
Filed 11/22/2006
10/18/2006
Page 1 of 33
1
1 2
3
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
BROWNING- FERRIS INDUSTRIES &
4 SUBSIDIARIES
5 Plaintiff,
6
vs.
No. 05-738 T (Judge Wheeler)
7 THE UNITED STATES,
8 Defendant.
9
10 11 12
DEPOSITION OF _DALE PARKER, CPA
13
BROWNING-FERRIS INDUSTRIES & SUBSIDIARIES 30(b)(6)
14
15 16 17
18
Phoenix, Arizona October 18, 2006
19 20
c,\) oS-v\)
-v..C,V
ARIZONA REPORTING SERVICE, INC.
Court Report ing
21
22
23
Suite Three 2627 North Third Street Phoenix, Arizona 85004-1126
By:
JODY L. LENS
CHOW , RMR, CRR
Prepared for:
Mr. Stuart J. Bassin Attorney at Law
Certified Reporter Certificate No. 50192
L C'- .i
24 25
¡m.:o copy
, . \" : , i ~... ;..
h,:in 'in (Dr))
ARIZONA REPORTING SERVICE, INC.
(602) 274-9944
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10/18/2006
Page 2 of 33
2
1 2
3
INDEX TO EXAMINATIONS
WITNESS
PAGE
DALE PARKER, CPA
4
Examination by Mr. Bassin
5 6 7 8 9
5
INDEX TO EXHIBITS
NO.
10 11 12
DESCRIPTION
1997 BFI, Inc. Form 1120 top page
MARKED IDENTIFIED
14 16 22
14
22
23
13 14
1998 BFI, Inc. Form 11209 top page
16 22
24
15 16 17
Directors of BFI, Inc.
25 26
12/31/2004 Unanimous Written Consent of the Board of
Delaware Certificate of
Conversion
27 32 39
27 32
18 19 20
27
28
excerpt 7/27/2000 BFI, Inc.
Form 1139
2004 Allied Form 1120
39 41 42
21
22 23 24 25
BFI, Inc. Form 1120X for tax year ending 9/1998
4/25/2005 letter from Mr. Parker to Mr. Mastracchio
41
42
29
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10/18/2006
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1
2 3 4 5
6
OTHER PREMARKED EXHIBITS REFERRED TO HEREIN
NO.
1 2
5
DESCRIPTION
IDENTIFIED
5 5
30(b) (6) Notice of Deposition
Notice of Deposition of Dale Parker
BFI, Inc. Form 112 OX for tax year
ending 9/30/l997
46 46
6
7 8 9
8
BFI, Inc. Form 1120X for tax year ending 9/30/1998
BFI, Inc. Form 112 OX for tax year ending 9/30/1999
7
46
48
10
5/5/2005 letter to Mr. Mastracchio from winston & Strawn
11
12
9
BFI, LLC Form L120X for tax year ending 9/30/1997
BFI, LLC Form 112 OX for tax year ending 9/30/1998
49,70 49,70 49,70
10
13 14 15
11
12
BFI, LLC Form 1120X for tax year ending 9/30/1999 BFI Waste Form 1120X for tax year ending 9/30/1997 BFI Waste Form 1120X for tax year ending 9/30/1998 BFI Waste Form 1120X for tax year
49,70 49,70 49,70
25,48
49
16 17
18
13
14
19 20 21 22
23
24
ending 9/30/l999
18 19
Allied Waste Form 10-K
Amended Notice of Deposition
25
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10/18/2006
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1
DEPOSITION OF DALE PARKER, CPA
2 was taken on October 18,2006, commencing at 9:52 a.m., at
3 the Offices of the United States Attorney, Two Renaissance
4 Center, 40 N. Central Avenue, Suite 1200, Phoenix,
5 Arizona, before JODY L. LENSCHOW, Certified Reporter 6 No. S0192 for the State of Arizona.
7 8
9 APPEARANCES:
10
11 For the Plaintiff:
12 13 14
West Conshohocken, Pennsylvania
- and-
MILLER & CHEVALIER By Mr. Philip Karter 300 Conshohocken State Road
19428
is
16 17
18
ALLIED WASTE INDUSTRIES, INC.
By Mr. Joseph Sciarrotta, Jr. Managing Corporate Counsel 15880 N. Greenway-Hayden Loop Suite 100 Scottsdale, Arizona 85260
19
20 For the Defendant:
21 U. S. DEPARTMENT OF JUSTICE
By Mr. Stuart J. Bassin
22 and Mr. Jacob E. Christensen
23 Room 7203
25
Tax Division
555 Fourth Street, N.W.
24 Washington, D. C. 20001
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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA
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10/18/2006
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1
DALE PARKER, CPA,
2 called as a witness herein, having been first duly sworn
3 by the Certified Reporter to speak the truth and nothing
4 but the truth, was examined and testified as follows:
5 6 7
EXAMINATION
8 BY MR. BASSIN:
9
Q.
We i re on the record.
We're here today for two
10 depositions, the 30 (b) (6) deposition of the plaintiff, as
11 well as the personal, which is in the premarked exhibits
12
13
as a Government Exhibit 1.
There is an amended notice,
which is Government Exhibit 19.
We also are here for the
14 personal deposition of Dale Parker, which is marked as
15 Exhibi t NO.2.
16
MR. BASSIN:
Do we have any obj ection to doing
17 them as a combined exercise?
18
MR. KARTER: MR. BASSIN:
No objection.
19
We're going to assume that
20 Mr. Parker is the designee?
21
MR. KARTER:
Correct, for the items listed in
22 the 30(b)(6) deposition notice, other than the Item i). MR. BASSIN: Correct. 23
24 BY MR. BASSIN:
25
Q.
Mr. Parker, I would like to go through a couple
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1 preliminaries before we start.
2 Have you given depositions before?
3
A.
Q.
Yes.
In what context?
4
5 6 7
A.
Q.
Two with my work at Allied.
What kind of depositions?
A.
There was a lawsuit brought against Allied by a
8 company called Power Strategies, so I participated in
9 that; and then one deposition by the IRS associated with
10 our contingent liability transaction, or, sorry, contested
11 liability transaction.
12 Q. Is that the same transaction as the one that's
13 ensued here?
14
A.
Q.
No.
What contested liability?
It's a contested liability transaction.
15 16 17 18
A.
Q.
Do you know who the lawyer was who handled that?
A.
I think it was handled all by the exam team with
19 the attorney from the local IRS office there.
20 21
22 23
Q. A.
Q.
John Duncan?
Yes, correct.
For your reference, we use a question-and-answer
We ask you to answer as clearly
format in the deposition.
24 25
and as fully and as accurately as possible.
You r re under
oath.
There's a court reporter taking stenographic notes
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10/18/2006
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1
here.
There will be a transcript, which you'll want to
2 review?
3
MR. KARTER: MR. BASSIN: MR. KARTER:
We'll -will he want to review?
4 5
We'll decide that at the end of the
6 deposition.
7 BY MR. BASSIN:
8 9
Q.
It's as though you were in a courtroom for your Because we have a court reporter, there are
Number one, we
purposes.
10
three things that I think are important.
11 will have a number of documents here that we'll be
12
referring to.
It's important to refer to them by exhibit
13 number and page number, so that a month from now we will
14 know what document you are actually referring to.
15 16
A.
Q.
Okay.
And we'll assist you, and you try to watch
I think virtually every page has a page
yourself as well. 18 number on it.
17
19
Second thing is, audible answers are real
20
important.
A. Q.
If you shake your head now, I'LL understand
21 what you're saying, but the record won't show anything.
22
23
Uh-huh.
Just like that.
Okay.
Exactly.
And I've found that my uh-huhs and
24 huh-uhs are really embarrassing and confusing when I see
25
them on a transcript.
Okay.
The only other thing is, we
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10/18/2006
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1 can only speak one at a time, because our fine court
2 reporter wi I 1 short - c ircui t if three of us are talking at
3 once and she's trying to write it all down.
4 From a scheduling standpoint it's about
5 6
7 8
10:00 a.m. right now.
My guess is that we have something
We'll try to
If you need a
under three hours' worth of work to do here.
take a break, say about an hour and a half.
break, let us know, we' i i take one.
If we get to a point
9 where you need to be fed lunch, let us know, we'll work on
10 that.
11
12 13 14 15
A.
Q.
Okay.
Any questions before we get started?
No.
If any develop, let me know, and we'll try to
We're not trying to trick you.
We i re
A.
Q.
get them clarified.
16 just trying to get your view of the facts as clearly and
17 as accurately as possible.
18
For the record, we have premarked I think
Exhibits 1 through 20.
19
They are in the binder, and they
20 have been handed - - and there were a couple of them that 21 were added during Ms. Kuether's deposition. There's also
22 an index, and we'll refer to them from time to time.
23
Mr. Parker, can you summarize your educational
24 experience after high school?
25
A.
I have an undergraduate degree, Bachelor of
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10/18/2006
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i Science in business management.
2 3
Q.
From where?
BYU, and then a Master's of accounting from BYU.
A.
Q.
4
5
What years?
You make me go way back here, Stu.
1979 for the
A.
6 B. S. degree in business and 1983 for the Master's degree
7 in accounting.
8 9
Q.
That isn't so far.
Yes.
No.
I hold a CPA.
Those are the same years of
my degrees.
A.
Q.
Okay, do you hold any professional licenses?
10 11
12 13
Any others?
From the time that you got your Master's degree,
A.
Q.
14 can you summarize your professional experience?
15
A.
About six years in public accounting.
Following
16 that, about six years in two different industry jobs and
17 then the last eleven years with Allied Waste.
18
Q.
The industry jobs are about 1990 through about
19 1995?
20
A. Q. A.
Correct.
What were the employers?
21
22
First employer was Bell Atlantic Systems Leasing
23 Company and the second employer was Walsh America.
24 25
Q.
What kind of company is Walsh America?
It was a pharmaceutical information company.
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A.
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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA
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10/18/2006
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10
1
Q.
And then in 1995, roughly, you went to work for
2 Allied?
3
A.
Q.
Correct.
What was your first position at Allied?
Tax director.
4 5
6 7 8
A.
Q.
What were your duties as tax director?
Primarily, initially was compliance-related.
I was the first tax
A.
Allied did not have a tax department.
9 employee.
10
Q.
At the time, who did their tax planning and
11 advisory function?
12 13
A. Q.
Primarily Arthur Andersen.
Who were the people at Arthur Andersen '95
14 through, say, '99 who worked the account primarily?
15
A.
First couple of years, primarily Tray Maxwell is
16 his name; and then the partner after that was Dean Bakke.
17 18
Q.
How is his last name spelled?
A.
Q.
B-A-K-K-E.
Was there a time after '95 where your duties at
19
20 Allied started to expand or change?
21
22 23
A.
Q.
Sure.
Can you explain how it changed and when?
Maybe be a little bit more specific.
Help me
A.
24 with your question.
25
Q.
Did your title change at some point?
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10/18/2006
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1
A.
I believe at the end of 2002, was made vice
2 president of tax.
3
Q.
What was the difference between your duties as
4 tax director and as vice president of tax?
5
A.
Initially when I started with Allied, like I
6 indicated, it was more compliance-driven, and then further
7 into Allied, still had compliance responsibilities, but
8 then involved in tax planning.
9
Q.
When did you start becoming involved in tax
10 planning?
11
A.
To a certain extent, even from day one with
12 Allied. The return had been outsourced to Arthur
13 Andersen, so my initial couple years was getting familiar
14 with the compliance process, getting more familiar with
15 the company.
16
Q.
Did the tax function grow during this period,
17 say, from 1995 through 2002 in terms of number of people
18 employed there?
19
20
A. Q.
Yes.
In what ways did it change?
Hired a tax manager.
21
A.
Again, you're testing my
22 memory here, but by the end of 2002, maybe had ten people
23 in the tax department, nine to ten.
24
Q.
25
A.
And you were on top? Correct.
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1
2 3
Q.
Throughout this period?
A.
Q.
Correct.
Who were some of those - - who were the other
4 professionals in that group by 2002?
5 6 7
8
A.
At the end of 2002, Ann Couture, C-O-U-T-U-R-E, I'm trying to remember a few of the
There was a couple of
was tax manager.
other names at that point in time.
staff people.
I believe by that time we had hired a State
That's about the
9
tax manager by the name of Jeff Stair.
10 best I can do off the top of my head.
11
Q.
We know that in 1999 there was a merger with
12 Browning-Ferris Industries. A. Correct. 13
14
Q.
After that merger, what was done for taking care
15 of the historic Browning-Ferris Industries' tax issues?
16 17
A.
Q.
Wha t do you mean by what was done?
Okay.
Prior to the merger, who was responsible
18 for Browning-Ferris Industries' tax compliance and
19 planning?
20 21
22 23
A.
Q.
Rich Howe.
He was the director of tax for BFI.
And what happened after the merger?
A.
It became a process of my becoming familiar with
So I worked
BFI, and it was an integration process.
24 closely with Rich Howe and the members of his staff.
25
Q.
Who were the other principal members of his
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10/18/2006
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1 staff?
2
A.
Wal t Stone worked wi th Rich.
He was primarily
3 in treasury at the time, but he had previously been in the
4
tax department so had some tax knowledge.
Terri Page was
5 one of the managers under Rich Howe; Ann Smith, another 6 manager under Rich Howe; and then he had about three or
7 four staff.
8 9
Q.
Where were these people located?
In Houston.
A.
Q.
10
Did they ever come to Phoenix?
11
12 13 14
A.
Q.
I don't believe so.
At what point
well, are any of them still
or by Allied?
She's a
employed by Browning
A.
Terri Page is still -- not employed.
15 consultant for Allied.
16
Q.
At what time did any of the others depart the
17 combined company?
18 19
A.
Q.
Again, you're asking for my best guess?
Right.
Rich Howe
MR. KARTER:
20
A.
21
Don't guess.
If you recall, state
22 what your recollection is.
23
THE WITNESS:
Best of my recollection, about a
24 year for Mr. Howe and about a year and a half, two years
25 for Mr. Stone.
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10/18/2006
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14
1 BY MR. BASSIN:
2
Q.
So by the beginning of about 2002, they were
3 both out?
4 5
6
A.
Q.
Approximately, yes.
What about Ann Smith?
A.
She stayed as a consultant for a period of time;
7 and correct a prior statement, Walt Stone stayed as a
8 consultant for a period of time as well.
9
Q.
Do you know where they are now?
10
A.
Q.
I know where Walt Stone is.
Where?
11
12
13
A.
Q.
Houston.
What about Rich Howe?
14 15
A.
Q.
I'm not sure.
Have you had occasion to become familiar with
16 the tax returns that were filed for the BFI Consolidated
17 Group for the last couple years before the merger?
18
A.
Q.
Yes.
I would like to start with the tax return for
19
20
the year ending September 30, 1998.
We're up to
21 Exhibit 22.
22
(Deposi tion Exhibit No. 22 was marked for
23 identification.)
24 BY MR. BASSIN:
25
Q.
I would like you to look at Exhibit 22.
(602) 274-9944
Can you
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15
1 tell me what Exhibit 22 is?
2
A.
Page 1 of the 9-30-98 consolidated tax return
3 for BFI.
4 5 6
Q.
Can you tell me whose signature that is?
A.
Q.
No.
Now, a couple basic questions about this return.
7 Was this a single company or a consolidated return?
8
A.
Q.
Consolidated return.
And the name of the entity that was filing was
9
10 Browning- Ferris Industries, Inc.? A. Correct. 11
12
Q.
With the EIN, employer identification number, of
13 74-1673682?
14
A.
Q.
Correct.
Are you familiar with the process whereby
15
16 Browning- Ferris Industries, Inc. had obtained the consent
17 or authorization of the members of the group, its
18 subsidiaries, to file the consolidated return on behalf of
19 the group?
20
A.
Q.
No.
Do you know if there was any kind of tax sharing
21
22 agreement amongst the various members of the
23 Browning-Ferris Industries, Inc. Consolidated Group?
24
A.
Q.
I don't know.
25
Let's go to Exhibit 23.
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16
1
(Deposition Exhibit No. 23 was marked for
2 identification.)
3 BY MR. BASSIN:
4
5
Q.
Can you tell me what Exhibit 23 is?
A.
The consolidated tax return for Browning-Ferris
6 Industries, Inc. and subs for the short year ended
7 July 30th, 1999.
8
Q.
Do you know whose signature that is as the
9 person who signed the return?
10
A.
Are you talking about the officer or the paid
11 preparer?
12 13 14
Q.
The officer. I don't know.
A.
Q.
What about the paid preparer; do you know who
15 that was?
16
A.
Q.
Yes.
Who was that?
Teresa Dieguez.
17
18 19 20
A.
Q.
Any idea how to spell that?
I believe it's D-I-E-G-U-E-Z.
A.
Q.
21
Do you know if there was any change in the
22 composition of the group, of the BFI Group, that reported
23 the tax on Exhibit 23?
24
A.
Q.
Change from -The prior year.
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17
1
2
A.
Q.
I don't know of any.
To your knowledge, has there ever been - - well,
3 was there ever i prior to the current controversy / been any
4 question regarding the authorization of Browning-Ferris
5 Industries, Inc. to file returns for this group, prior to
6 the current controversy?
7
8
A. Q.
Not that I'm aware of.
Now, after the BFI/Allied merger, do you know
9 how the income earned by the former Browning-Ferris
10 Industries Consolidated Group was reported to the Internal
11 Revenue Service for postmerger years?
12
13 14
A.
Q.
Yes.
Can you explain how that was done?
A.
It was included in the Allied Consolidated Group
15 tax return.
16 17
Q.
And that's for the first year after the merger?
It's for the period July 31st, '99 through the
A.
18 end of the year and then forward.
19
Q.
Are there any separate Form 1120 returns filed
20 by Browning-Ferris Industries, Inc. for any period after
21 July 30, 1999?
22 A. No.
23 Q. What was the process whereby the members of the
24 old Browning-Ferris Industries Consolidated Group
25 indicated their consent to be part of the Allied
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l8
1 consolidated return and to file on that, if there was any?
2
A.
I don't know of any consent, any process that
3 was gone through.
4
Q.
Is there any kind of a tax sharing agreement
5 amongst the members of the Allied Consolidated Group?
6 7
A.
Q.
No.
Was there any change made prior to the current
8 controversy regarding Browning-Ferris Industries' role as
9 the head of the Browning Consolidated Group for premerger
10 years?
11
A. Q.
Repeat the question for me, Stu.
l2
Prior to the current controversy, was there any
13 change that you're aware of made regarding Browning-Ferris
14 Industries' role as the head of the Browning Consolidated
l5 Group for tax purposes for premerger years?
l6
17
A.
Q.
No, that I'm aware of.
Let's shift gears a little bit.
18 Do you know when the first time you heard about
19 the possibility that the old Browning-Ferris Industries,
20 Inc. might be restructured as a Delaware LLC, limited
21 liability company?
22 23
MR. KARTER: MR. BASSIN:
Object to form.
Is your obj ection to the term
24 "restructuredrr or -25
MR. KARTER:
Correct, and then, also, with
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19
1
regard to he heard.
Both assume certain facts that aren't
2 in evidence.
3
MR. BASSIN:
Okay.
4 BY MR. BASSIN:
5 Q. What was your first awareness of the possibility
6 that the old Browning-Ferris Industries, Inc.' s corporate
7 structure might be changed?
8
A.
We started talking about some State tax planning
9 opportunities.
10 11 12
Q.
When was thi s?
A.
Q.
Gi ve or take, summer of '04.
What kind of State tax planning opportunities
13 were you discussing?
14
A~
The opportunity was trying to reduce our cash
15 taxes that we were paying on behalf of the BFI North
16 America entity.
17
Q.
And how did a change of the old Browning-Ferris
18 Industries, Inc. corporate structure fit into that
19 potential opportunity?
20
A.
It was a step in providing a way for the income
21 of BFI North America to flow up into Allied Waste North
22 America.
23
Q.
Can you explain how that would work?
Excuse me.
24 Can you explain how you thought that would work?
25
A.
I f we could get the income wi thin BFI North
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20
1 America to flow up into Allied Waste North America, Allied
2 Waste North America is the entity with all the debt of the
3 company, and it had losses, so to the extent we could get
4 income matched with those losses, cash taxes would be
5 reduced.
6
Q.
And is this a State tax issue or a Federal tax
7 issue or both?
8
A.
Q.
State.
And how did you think you could accomplish that
9
10 matching of income and losses through the restructuring or
11 through the modification of the BFI, Inc. corporate 12 structure?
13 14
A.
Again, the losses were in Allied Waste North
It owned 100 percent of BFI, Inc., and BFI, Inc.
The only way that you're
America.
15
owned BFINA, BFI North America.
16 going to get that income to flow up is if you have a
17 liquidation of BFI North America and then a liquidation of
18 BFI, Inc.
19 20
Q.
You're using the term "liquidation."
I've also
Can you
seen the terms irdissolution" and .'termination. ii
21 explain what the relationship, if any there is, between
22 those terms?
23 A. I can explain for tax purposes it was a
24 liquidation under Section 332.
25
Q.
Of the Internal Revenue Code?
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A.
Q.
1
2
Correct.
What was a liquidation for Section 332 of the
3 Internal Revenue Code?
4
MR. KARTER:
Are you asking him to explain what
5 332 is?
6 BY MR. BASSIN:
7
Q.
No.
What event did you understand would create
8 a liquidation for purposes of Section 332 of the Internal
9 Revenue Code?
10
11 12
13 14
A.
Q. A. Q.
With respect to? BFI, Inc.
A convers ion to a single member LLC.
Did that have anything - - strike that.
Did such a liquidation have anything to do
15 with what happened to BFI, LLC - - can you change LLC to
16
Inc. ?
Did such a liquidation have anything to
17 do -- strike that.
18
MR. KARTER:
The trans c r ipt says what it says.
19 BY MR. BASSIN:
20 Q. Did such a liquidation have anything to do with 21 what happened to BFI, Inc. for State corporate law
22 purposes?
23
MR. KARTER:
I'm sorry, would you mind repeating
24 the question?
25
THE WITNESS:
For me, too.
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1 BY MR. BASSIN:
2 Q. Was there any connection between a liquidation
3 for Federal income tax purposes of BFI, Inc. occurring and
4 what happened to BFI, Inc. for State corporate law
5 purposes?
6 7 8
MR. KARTER:
I'm just going to object to the
form.
You can answer it if you understand the question.
THE WITNESS:
I'm not an attorney.
I know wha t
9 it was for tax purposes.
10 BY MR. BASSIN:
11 Q. Were there any other benefits that you were
12 aware of to changing BFI, Inc. to a limited liability
13 company?
14
A.
Q.
None that I was aware of. Our next exhibit is No. 24.
15 16 17
Handing you Exhibit 24.
MR. KARTER:
Do you want to give him the
18 original to give to the reporter?
19
20
MR. BASSIN:
MR. KARTER:
Jacob has it someplace.
I have no objection if you want to
21 use this as the original.
22
MR. BASSIN:
It isn't even marked.
There you
23 go.
24
(Deposi tion Exhibi t No. 24 was marked for
25 identification.)
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23
1 BY MR. BASSIN:
2
Q.
I would like to ask you - - well, have you seen
3 Exhibit 24 before?
4
5
A. Q.
Yes.
Let's start with on the third page, we have some
6 signatures of the board of directors of Browning-Ferris 7 Industries, Inc., Donald Slager, Thomas Martin and James
8
Gray.
A.
Who are they?
9
Don Slager is currently our president/chief
10 operating officer.
11
12
Q.
When you say Ilourli
A.
Sorry, Allied's.
At the end of '04, I'm not
13 sure what his title was.
14
Thomas Martin was the treasurer at the time and
15 James E. Gray was chief accounting officer/controller.
16
Q.
There's a reference in the first whereas clause
17 to a phrase that the company has entered into a restated
18
indenture with JPMorgan Chase Bank, N .A.
Do you know wha t
19 that is?
20 21
22
A.
Q.
It would be the bank credit agreement.
What bank credit agreement?
A.
And I'm not in treasury, but this would be in
23 effect the line of credit, the -- a source of borrowing
24 for Allied.
25
Q.
What did Browning-Ferris Industries, Inc. have
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1 anything to - - have to do with that line of credit?
2
A.
It is Allied's line of credit.
It's my
3 understanding
4
5
MR. KARTER:
THE WITNESS:
There's no question.
Okay.
6 BY MR. BASSIN:
7
Q.
I think I'm getting a little confused here.
In
8 the first paragraph of Exhibit 24, they refer to
9 Browning-Ferris Industries, Inc. as the company.
10
A.
Q.
Uh-huh.
And in the second paragraph in the whereas, it
11
12 talks about the company, Browning- Ferris Industries, Inc.
13 having entered into a restated indenture as of
14
September 1, 1991 with certain banks.
That's premerger
15 16 17
date.
A.
I'm confused.
Right.
I need to correct my previous statement.
I'm not familiar. I don't 18 indenture is referring to.
19
Q.
know what that restated
In the second whereas of Exhibit 24 on the first
20 page, it says it is no longer desirable in the conduct of
21 the business of the company to preserve the corporate
22 status and that it is in the best interests of the company
23 to convert into a limited liability company.
24 Do you know what determination the board made or
25 what the basis for the board's determination was?
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1
2
A.
Q.
No.
Did you have anything to do with advising the
3 board of Browning-Ferris Industries, Inc. regarding
4 whether to convert Browning-Ferris Industries, Inc. into a
5 limited liability company?
6
7 8 9
A.
Q.
Not that I can recall.
Do you know who would, who did?
A.
Q.
No.
Did it have anything to do with what you
10 described prior as the tax advantages, at least for State
11 tax purposes, of converting into an LLC?
12
13
A.
Q.
For tax purposes that's why we wanted to do it.
Were you aware of any other purposes for wanting
14 to convert BFI, Inc. into an LLC?
15 16
A.
Q.
No.
I would like you to look at Exhibit 18 in the
17 binder, and this is the Form 10-K filed by Allied for the
18 fiscal year ended December 31, 2005, and I would
19 specifically direct your attention to what's labeled as
20
Exhibi t 149 or Page 149.
A.
Q.
On Page 149 - - are you there?
21
22
Uh-huh.
I am.
Under Section 9, Footnote 9 to the consolidated
23 financial statements of Browning-Ferris, LLC, there's a
24 paragraph there, and it says, "Effective for 2005,
25 Browning-Ferris Industries, Inc. was converted to a single
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1
member limited liability company (LLC).
Allied NA, a
2 wholly-owned subsidiary of the Allied Waste Industries,
3 Inc., is the sole member in Browning- Ferris Industries,
4 LLC and therefore BFI continues to be wholly-owned by
5 Allied NA, which ownership has not changed since Allied
6 acquired BFI in 1999."
7 8
To your knowledge, is that statement accurate?
MR. KARTER:
Just for my own clarification, can
9 we be clear, when it references BFI, which entity it's
10
talking about now?
I haven't looked at this prior to
11 this, and I want to make sure I understand, because
12 there's so many entities floating around and many of them
13 have a BFI in them.
14 15
MR. BASSIN:
Okay.
Well, we are -- it's
Allied's document, of course, so I
but I think if you
16 were to go forward in the document to Page - - if you go to
17 Page 119, I think you'll get a -- you'll see the
18 definition of Browning-Ferris Industries for purposes of
19 these financial statements.
20
MR. KARTER: MR. BASSIN:
Browning- Ferris Industries, LLC.
21
Is the short.
BFI becomes the
22 short form for Browning- Ferris Industries, LLC.
23
So if we go back to Page 149, that may help
24 clarify.
25
THE WITNESS:
So the question, again?
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1 BY MR. BASSIN:
2
Q.
Is the statement in Footnote 9 on Page 149 of
3 Exhibit 18 accurate, to your knowledge?
4
5 6
A. Q.
Let me state what my understanding is.
Please.
Allied North America owned all of the stock of
A.
7 BFI, Inc. through 12-31-04; and then when Inc. converted
8
to an LLC, it was the sole member.
It held the sole
9 member interest in BFI, LLC.
10
Q.
One other thing in
let's go back to
11
Exhibit 24.
On the second page of Exhibit 24, in the last
12 resolved, do you know why BFI, Inc. adopted as a
13 resolution the particular terms shown in that final 14 paragraph; that the company will not be required to wind
15 up its affairs or pay its liabilities and distribute
16 assets, and that the conversion shall not constitute a
17 dissolution of the company and that shall constitute a 18 continuation of the existence of the converted company in
19 the form of a limited liability company of the State of
20 Delaware?
21 Do you know why those terms were adopted?
22 23 24
A.
Q.
No.
Let's go next to Exhibit 25.
(Deposition Exhibit No. 25 was marked for
25 identification.)
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1 BY MR. BASSIN:
2
Q.
Have you seen the documents in Exhibit 25
3 before?
4
5 6
A. Q.
Yes.
When?
When I was reviewing certain documents in
A.
7 preparation for this deposition.
8
Q.
The third and fourth pages, or the third and
Do you
9
fifth pages of Exhibit 25 are dated December 2004.
10 recall having seen them at a date anywhere near December
11 2004?
12 13
14
A.
Q.
I don't recalL.
Who is Jo Lynn White?
A.
She was in the legal department for Allied
15 Waste.
16 17
Q.
On the fifth page, we have the certificate of
Do you
formation that is dated as of December 31, 2004.
18 know what date Ms. White actually signed the document?
19
A.
Q.
No.
Does the phrase "dated as of" indicate the
20
21 possibility that it wasn't actually signed on
22 December 31st, 2004, to your knowledge?
23
MR. KARTER:
Obj ect to form, speculation.
24 BY MR. BASSIN:
25 Q. Do you know?
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A.
Q.
1
No.
When we were looking at Exhibit 18~ which was
2
3 the Form 10-K, we were looking at financial statements,
4 separate financial statements for BFI after it had
5 merged - - several years after it had merged into Allied.
6 Do you know why those financial statements were prepared
7 and published as part of the 10-K?
8 9
A. Q.
I know it was required.
For tax purposes?
10
A.
My understanding, it was required for credit
11 agreement purposes, but that's about all I know.
12
13 14
Q.
Allied's credit agreement or BFI's?
I believe it was BFI's.
A.
Q.
Can you tell me what your understanding is of
15 why it was that somebody required publication of BFI
16 separate financial statements as of 2004, 2005?
17
A.
It's my understanding they were BFI bondholders
18 and that is what required - - or that is what required the
19 separate BFI financial statements.
20
Q.
So BFI had bonds that predated the merger; is
21 that correct?
22
23
A.
Q.
Correct.
And that those bonds remained outstanding
24 through 2004?
25
A.
Correct.
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1
Q.
And as part of the terms of those bonds,
2 separate financials for BFI had to be prepared even after
3 the merger with Allied?
4
A.
I don't know if it was the terms of the bonds or
5 if it was an SEC requirement.
6
Q.
Did the conversion from BFI, Inc. to BFI, LLC
7 change the substance of those financial reports, other
8 than the name at the top?
9
MR. KARTER:
Object to form.
When you say
10 IIsubstancell
11
THE WITNESS:
Yeah, what do you mean by
12 substance?
13 BY MR. BASSIN:
14
Q.
Do we zero - - were the accounts zeroed out, or
15 did they just carryover the way they had always been as
16 shown in those financial reports?
17
A.
I don't know the specific changes, if any, that
18 were made in the general ledger.
19
Q.
Are you aware of any changes that were made?
20 21
A.
Q.
No.
Do you know if any specific notice was given to
22 these bondholders that there had been a change of BFI from
23 Inc. to BFI, LLC?
24 25
A.
Q.
I don't know.
Let's change the subject a little bit here.
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1
2 3
We were talking about designations of agents for
the consolidated - - for the BFI Consolidated Group.
Now,
let's make sure I have this correct.
Prior to the merger
4 and for premerger years, the designated agent of BFI, Inc.
5 and the Consolidated Group was Browning-Ferris Industries,
6 Inc. for Federal income tax purposes?
7
8
MR. KARTER:
Did you say designated agent?
MR. BASSIN:
Let me rephrase that.
9 BY MR. BASSIN:
10
Q.
As of the date of the merger, was
11 Browning- Ferris Industries, Inc. the agent for the
12 Browning-Ferris Industries Consolidated Group for Federal
13 income tax purposes?
14
A.
It was the parent of the Browning-Ferris
15 Industries group.
16
Q.
Up until August 2006, are you aware of any
17 ac t ion that was taken to change the iden t i ty of the agent
18 for the Browning-Ferris Industries Consolidated Group for
19 Federal income tax purposes for premerger tax years?
20
A.
Q.
State it one more time, please.
21
Up until August 2006, are you aware of any
22 action that was taken to change the identity of the agent 23 for the Browning-Ferris Industries Consolidated Group for
24 Federal income tax purposes for premerger tax years?
25
A.
No.
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1
MR. KARTER:
Stu i when we have a moment, can we
2 take a short break?
3
MR. BASSIN:
Sure.
Why don't we take five
4 minutes now.
5 (A recess was taken.)
6 BY MR. BASSIN:
7
Q.
I would like to hand you what's labeled as
8 Exhibit 26.
9
(Deposition Exhibit No. 26 was marked for
10 identification.)
11 BY MR. BASSIN:
12 Q. Can you tell me what that document is?
13
A.
Looks like a portion of Allied Waste Industries,
14 Inc. and Subsidiaries' consolidated return for the
15 calendar year '04.
16 17
18
Q.
Would you have been the signatory on that?
A.
Yes.
MR. BASSIN:
Just to clarify, Mr. Karter, can we
19 stipulate that this is - - these are documents off that CD
20 that you sent us?
21
MR. KARTER:
I'll take your word that they are.
22 Obviously I don't know for certain, but if that's what you 23 printed them off, then I'll stipulate that that's where
24 they came from.
25
MR. BASSIN:
Okay.
Please advise us if you find
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1 that they aren't.
2
MR. KARTER:
Dale, is there anything about this
3 that is inconsistent with your recollection of a piece of
4 the 2004 return?
5 6
THE WITNESS: MR. KARTER:
No.
Okay.
7 BY MR. BASSIN:
8
Q.
Mr. Parker, there are handwritten numbers on the
9 bottom of Exhibit 26 for page numbering purposes, and I'll
10
admit -- I'LL state that those are mine.
But we'll start
11 wi th Page 5.
12 Was this the document that Allied submitted to
13 the Internal Revenue Service reporting the conversion of
14 BFI, Inc. to an LLC?
15
MR. KARTER:
Object to form.
You said reporting
16 the conversion to the IRS.
17 18
You can answer it, if you can.
THE WITNESS:
It's the liquidation statement for
19 BFI, Inc.
20 BY MR. BASSIN:
21 Q. Do you know if there was any tax effect for 22 Federal income tax purposes to this associated with this
23 complete liquidation?
24
A.
Q.
What do you mean by tax effect?
Did the amount of Allied's Federal income,
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