FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________________ to____________________
Commission File Number 1-3122
OGDEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-5549268
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Pennsylvania Plaza, New York, N.Y. 10121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code - (212) 868-6100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value New York Stock Exchange
$.50 per share
$1.875 Cumulative Convertible New York Stock Exchange
Preferred Stock (Series A)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [X]
The aggregate market value of registrant's voting stock, held by non-
affiliates based on the New York Stock Exchange closing price as reported in
the consolidated transaction reporting system as of the close of business on
March 1, 1995 was as follows:
Common Stock, par value $.50 per share $ 969,312,218
$1.875 Cumulative Convertible
Preferred Stock (Series A) $ 5,970,668
The number of shares of the registrant's Common Stock outstanding as of March
1, 1995 was 48,792,109 shares.
The following documents are hereby incorporated by reference into this Form
10-K:
(1) Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1994 (Parts II and IV).
(2) Portions of the Registrant's 1995 Proxy Statement to be filed with the
Securities and Exchange Commission (Part III).
INDEX
PART I PAGE
Business 1 - 35
Services 3 - 13
Projects 14 - 26
Other Information 27 - 35
Markets, Competition and General Business Conditions 27 - 28
Equal Employment Opportunity 29
Employee and Labor Relations 29
Environmental Regulatory Laws 29 - 31
Public Utility Regulatory Policies Act 32 - 33
Flow Control 33 - 34
Ash Residue and Other Matters 34 - 35
Properties 36 - 38
Legal Proceeding and Environmental Matters 39 - 40
Submission of Matters to a Vote of Security Holders 40
Executive Officers of Ogden 40 - 43
PART II
Market For Ogden's Common Equity and Related
Stockholder Matters 43
Selected Financial Data 43
Management's Discussion and Analysis of Financial
Condition and Results of Operations 43
Financial Statements and Supplementary Data 43
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 43
PART III
Directors and Executive Officers of Ogden 44
Executive Compensation 44
Security Ownership of Certain Beneficial Owners
and Management 44
Certain Relationships and Related Transactions 44
PART IV
Exhibits, Financial Statement Schedules and Reports on
Form 8-K 44 - 49
PART I
Item 1. BUSINESS
Ogden Corporation, a Delaware corporation (hereinafter together with its
consolidated subsidiaries referred to as "Ogden" or the "Company"), has its
executive offices located at Two Pennsylvania Plaza, New York, New York
10121, pursuant to a lease that expires on April 30, 2008 and which contains
an option by Ogden to renew for an additional five years.
Ogden is a diversified company primarily engaged in providing a wide
range of services through the various operating groups within each of its two
business segments.
At December 31, 1993, Ogden owned approximately 84% of the issued and
outstanding shares of common stock of Ogden Projects, Inc. ("OPI"). During
1994, pursuant to an offer made by Ogden to purchase OPI's remaining 16% of
outstanding shares, Ogden and OPI entered into an Amended and Restated
Agreement and Plan of Merger dated as of September 27, 1994 (the "Merger").
The Merger was approved by the OPI shareholders on December 29, 1994 at which
time OPI became a wholly-owned subsidiary of Ogden. The merger provided that
OPI shareholders of record on November 22, 1994 (except Ogden and
shareholders exercising dissenter's rights) would be entitled to receive 0.84
of a share of Ogden common stock for each share of OPI common stock and cash
for any fractional shares. The transaction required the issuance of
5,139,939 shares of Ogden common stock valued at $18.375 per share on
December 29, 1994 for a total purchase price of $94,446,000.
At December 31, 1994, in connection with Ogden's acquisition of the
publicly traded shares of OPI, Ogden reclassified its business segments.
Ogden now classifies its business segments as Services (formerly "Operating
Services") and Projects, (formerly "Waste-to-Energy Operations").
Independent power activities, formerly part of Operating Services, are now
part of Projects, reflecting consolidation of the overall management of these
activities within OPI. Projects now includes the Waste-to-Energy,
Independent Power, Water and Wastewater groups, and certain Construction
Activities. Within the Services segment, certain business activities have
been reclassified. The Environmental Services group no longer includes
independent power; the Government Services group has been renamed Technology
Services; and all facility management service contracts for government
customers have been transferred to the Facility Management Services group.
The following table and the discussions that follow reflect these
reclassifications.
Set forth in the following table is the amount of revenue attributable
to each of the groups within Ogden's Services and Projects business segments
for each of the last three fiscal years (In Thousands):
YEARS ENDED DECEMBER 31,
1992 1993 1994
SERVICES:
AVIATION SERVICES $371,704 $389,201 $413,337
ENTERTAINMENT SERVICES 211,910 242,347 245,187
ENVIRONMENTAL SERVICES 119,128 122,262 140,745
TECHNOLOGY SERVICES 169,812 181,870 212,098
FACILITY MANAGEMENT
SERVICES 397,600 382,056 357,272
OTHER SERVICES 8,561 12,368 10,811
TOTAL SERVICES $1,278,715 $1,330,104 $1,379,450
PROJECTS:
WASTE-TO-ENERGY $ 371,669 $ 432,609 $ 459,478
INDEPENDENT POWER 24,063 28,173 32,006
WATER AND WASTEWATER 0 0 0
CONSTRUCTION ACTIVITIES 86,687 248,451 213,125
GAIN ON SALE OF LIMITED
PARTNERSHIP INTERESTS 7,681 0 26,126
TOTAL PROJECTS $ 490,100 $ 709,233 $ 730,735
TOTAL SERVICES AND PROJECTS $1,768,815 $2,039,337 $2,110,185
The amounts of revenue, operating profit or loss and identifiable assets
attributable to each of Ogden's two business segments for each of the last
three fiscal years are set forth on page 44 of Ogden's 1994 Annual Report to
Shareholders, certain specified portions of which are incorporated herein by
reference.
SERVICES
The operations of Ogden's Services business segment are performed by Ogden
Services Corporation and its subsidiaries ("Ogden Services") through its five
major operating groups as follows: Aviation Services; Entertainment
Services; Environmental Services; Technology Services; and Facility
Management Services.
Ogden Services, through joint ventures, partnerships and wholly-owned
subsidiaries within each of the foregoing major operating groups, provides a
wide range of services to private and public facilities throughout the United
States and many foreign countries. Its principal customers include airlines,
transportation terminals, sports arenas, stadiums, banks, owners and tenants
of office buildings, state, local and Federal governments, universities and
other institutions and large industrial organizations that are leaders in
such fields as plastics, chemicals, drugs, tires, petroleum and electronics.
Many customers are billed on cost-plus, fixed-price or time and materials
basis. Where services are performed on a cost-plus basis, the customer
reimburses the appropriate Ogden Services' group for all acceptable
reimbursable expenditures made in connection with the job and also pays a
fee, which may be a percentage of the reimbursable expenditures, a specific
dollar amount, or a combination of the two. Fixed-price contracts, in most
cases, contain escalation clauses increasing the fixed price in the event,
and to the extent, that there are increases in payroll and related costs.
Many of the contracts in the Aviation and Facility Management Services'
groups are written on a month-to-month basis or provide for a longer or
indefinite term but are terminable by either party on notice varying from 30
to 180 days.
AVIATION SERVICES
Aviation Services provides specialized support services to 185 airlines
at 90 locations throughout the United States, Canada, Europe, Latin America
and the Pacific Rim. The specialized support services provided by this group
include comprehensive ground handling, ramp, passenger, cargo and warehouse,
aviation fueling and in-flight catering services. These services are
performed through contracts with individual airlines, through consolidated
agreements with several airlines, and contracts with various airport
authorities.
During 1994 Aviation Services began to pursue opportunities associated with
the privatization of airport operations and related airport projects. To
capitalize on these opportunities, Ogden intends to combine its Aviation
Services skills with the development, financing and construction management
expertise of its Projects business segment.
Ground Handling and Specialized Support Services
Ground handling services include diversified ramp operations such as
baggage unloading and loading, aircraft cleaning, aircraft maintenance,
flight planning, de-icing, cargo handling, warehouse operations and
passenger-related services such as ticketing, check-in, porter ("sky-cap")
service, passenger lounge operations and other miscellaneous services.
Global expansion by the Aviation group has resulted in providing
comprehensive ground handling and related services at many international
locations throughout Europe, Canada, South America and other countries.
These locations include eight different airports throughout Germany; Heathrow
Airport in England; Schiphol International Airport in the Netherlands;
Auckland International Airport in New Zealand; the Czech Republic through a
50% interest in a Prague-based airport handling company; Pearson
International Airport in Toronto and the Mirabel and Dorval Airports in
Montreal; the Simon Bolivar International Airport in Caracas, Venezuela; VIP
lounge operation and ground handling services at the Arturo Merino Benitez
Airport in Santiago, Chile and the Mexico International Airport in Mexico
City. Ogden Aviation continues to perform services at St. Maarten's and Air
Aruba's aviation ground service operations at Reina Beatrix International
Airport in Aruba through a corporation jointly owned by Ogden and Air Aruba.
During 1994 Aviation Services: (i) began providing ground handling services
at Jorge Chavez International Airport in Lima, Peru and airports located in
Chicago, Los Angeles and Vancouver, British Columbia, (ii) added ramp
handling services to its existing ground handling services operations at
Guarulhos International Airport in Sao Paulo and Galeao International Airport
in Rio de Janeiro, Brazil, (iii) sold its ground handling operations at
Gatwick and four other United Kingdom regional airports and acquired an air
cargo ground handling company which provides services at the London Heathrow
Airport, (iv) formed joint ventures with the Kashmirwala Group in Pakistan to
begin ground handling services at Karachi International Airport and with a
Turkish company to provide aircraft cleaning, security and commissary
supplies to carriers at Ataturk Airport in Istanbul and other locations in
Turkey, and (v) expanded its cargo/warehouse services in North America
through contract awards at four new airports.
Fueling Services
Aviation operates fueling facilities, including storage and hydrant fueling
systems for the fueling of aircraft. This operation assists airlines in
designing, arranging financing for, and installing underground fueling
systems. These fueling operation services are principally performed in the
North American market. However, Aviation has signed a 10-year contract to
serve as sole fueling handling agent at Tocumen International Airport in
Panama City, Panama and has been awarded a 5-year contract to fuel aircraft
at the Luis Munoz International Airport in San Juan, Puerto Rico commencing
in 1995.
In-Flight Catering
Aviation operates 18 in-flight kitchens for over 85 airline customers at
a number of locations, including John F. Kennedy International and LaGuardia
Airports in New York; Newark International Airport in New Jersey; Los Angeles
and San Francisco International Airports in California; Miami International
Airport in Florida; Washington Dulles International near Washington, D.C.;
McCarren International in Las Vegas, Nevada; and Honolulu International in
Hawaii. The Aviation in-flight kitchen at Honolulu International also
provides catering services to two cruise ships owned by NAVATEK, a Hawaiian
cruise line. During 1994, Aviation acquired inflight catering kitchens in
the Canary Islands and Palma de Mallorca in Spain.
Airport Privatization and Related Projects
During 1994 Aviation Services and one of its partners,the Macau Services
Corporation (a subsidiary of the Civil Aviation Authority of China) led a
consortium which was awarded a 19-year contract, with a 16-year exclusivity
arrangement, to provide ramp and cargo handling, passenger services, and
aircraft line maintenance at the new Macau International Airport, expected to
be operational in November 1995. The consortium, of which Aviation Services
is the managing partner with a 29% participation, will provide all necessary
passenger and ramp equipment and build cargo and engineering facilities, an
aircraft hangar and a state-of-the-art training center at the airport. The
consortium's investment in infrastructure improvements and equipment in the
new Macau airport is expected to exceed $40 million.
ENTERTAINMENT SERVICES
The Entertainment Services group provides total facility management
services; presentation of concerts and family shows; food, beverage and
novelty concessions; and janitorial, security, parking, and other maintenance
services. These services are provided to a wide variety of public and private
facilities including more than 100 stadiums, convention and exposition
centers, arenas, parks, amphitheaters, and fairgrounds located in the United
States, Mexico, Canada, Brazil, Spain and the United Kingdom. Entertainment
also operates a racetrack and five off-track betting parlors in Illinois.
The facility management and concession arrangements under which this group
operates are individually negotiated and vary widely as to terms and
duration. Concession contracts and leases usually provide for payment by
Entertainment of commissions or rentals based on a stipulated percentage of
gross sales or net profits, sometimes with a minimum rental or payment. Most
of the facility management contracts are on a cost-plus-a-fee basis but a
number of such contracts provide for a sharing of profits and losses between
Entertainment and the facility owner.
Entertainment offers its customers a wide range of project-development
options, including the operational design review, consultation during
construction, and assistance with financing arrangements, as well as
operations of facilities, usually in return for long-term services and
concession contracts. In some cases Ogden Corporation guarantees
Entertainment's performance of these contracts as well as the financing
arrangements.
Food, Beverage and Novelty Services at Stadiums and Arenas
Food, beverage and novelty services are provided by Entertainment in the
United States at a number of locations including the following: Rich Stadium
(Buffalo, New York); the USAir Arena (Landover, Maryland); the Milwaukee
Exposition and Convention Center (Milwaukee, Wisconsin); the Los Angeles
Convention Center (Los Angeles, California); the Kingdome (Seattle,
Washington); Veterans Stadium (Philadelphia, Pennsylvania); Market Square
Arena (Indianapolis, Indiana); McNichols Arena (Denver, Colorado); Cobo Hall
(Detroit, Michigan); Tempe Diablo Stadium (Tempe, Arizona); University of
Oklahoma Stadium (Norman, Oklahoma); and the MGM Grand Gardens Arena (Las
Vegas, Nevada). In 1994 Entertainment was awarded a 5-year contract to
provide food and beverage and merchandise services for Wrigley Field in
Chicago, Illinois and began providing food and beverage services at 110,000-
seat Maracano Stadium, located in Rio de Janeiro, Brazil.
In Canada, food, beverage and novelty concessions are provided at the Saint
John Regional Exhibition Centre located in New Brunswick, Canada and at
Lansdowne Park in Ottawa, Canada. During 1994, Entertainment was awarded a
20-year contract to provide food and beverage services at General Motors
Place, a new sports and entertainment arena under construction in Vancouver,
British Columbia which is scheduled to open in late 1995. This facility will
be the home of the National Hockey League's Vancouver Canucks and the newly
awarded National Basketball Association franchise, the Vancouver Grizzlies.
Food, Beverage and Novelty Services at Amphitheaters
Entertainment also provides food and beverage services at amphitheaters
throughout the United States including the Starlake Amphitheater (near
Pittsburgh, Pennsylvania); the Fiddler's Green Amphitheatre (Englewood,
Colorado); and the Sandstone Amphitheatre (Kansas City, Missouri). During
1994 Entertainment was awarded several new amphitheater contracts, including
the following: (i) a 10-year food and beverage contract at the Mega Star
Amphitheater located in Eufaula, Oklahoma; (ii) a 15-year food and beverage
contract at the all-seasons Connecticut Center for Performing Arts in
Hartford, Connecticut, (iii) a 10-year exclusive food and beverage contract
at the all-seasons Camden Amphitheater located in Camden, New Jersey which is
expected to open in May 1995; (iv) a 20-year agreement pursuant to which
Entertainment will provide food and beverage services and support for the
long-term financing at the Polaris Amphitheater in Columbus, Ohio; and (v) a
20-year contract to provide food and beverage services, parking and support
for the long-term financing at the Cellar Door Amphitheater located near
Manassas, Virginia, expected to open during 1995.
Facility Management and Concession Services
Entertainment, through long-term management and concession agreements,
provides management services, food, beverage and novelty concessions and
maintenance services at various convention centers, arenas and public
facilities including the Pensacola Civic Center in Pensacola, Florida; the
Sullivan Arena and Egan Convention Center in Anchorage, Alaska; the Rosemont
Horizon, near Chicago, Illinois; the Target Center in Minneapolis; The Great
Western Forum in Los Angeles; and Anaheim Stadium, a 70,000 seat stadium
located in Anaheim, California.
During 1994 Entertainment provided design and consulting services at the
19,000 seat Victoria Station Arena in Manchester, England scheduled to open
during 1995, which Entertainment will manage and operate, upon completion,
pursuant to a 20-year lease. During early 1995, Entertainment secured a 20-
year contract to provide total facility management services at the 10,000-
seat Newcastle Arena, a new sports and entertainment arena located in
Newcastle, England which will feature ice hockey, concerts and other events.
Entertainment will provide consulting services during the design and
development phase of the arena which is scheduled to open in November 1995.
During 1994 this service group was also awarded a 20-year contract to
provide complete facility management and concession services at the 12,000-
seat Oberhausen Arena located in Oberhausen, Germany which is scheduled to
open in 1996. The arena will feature ice hockey, handball, basketball and
concerts. During August 1994 Entertainment began providing facility
management services to the Northlands Coliseum in Edmonton, Alberta pursuant
to a 5-year contract. The Coliseum is home to the Edmonton Oilers of the
National Hockey League.
During 1994 Entertainment arranged for the financing and assisted in the
design and construction of the Ottawa Palladium, a 19,000-seat multipurpose
indoor arena under construction in Ottawa, Canada, which is owned by a third
party and which is scheduled to open in 1996. Entertainment has been awarded
a 30-year contract to provide complete facility management and concession
services at the arena which will be the home of the Ottawa Senators of the
National Hockey League. Ogden has agreed that the Ottawa Palladium, under
Entertainment's management, will generate a minimum amount of revenues
computed in accordance with its 30-year contract. The owners of the Ottawa
Palladium have entered into a 30-year license agreement with the owner of the
Ottawa Senators, pursuant to which the Ottawa Senators are expected to play
their home games at the arena commencing in 1996.
Pursuant to a management agreement between the City of Anaheim, California
and a wholly owned subsidiary of Ogden, Entertainment manages and operates
the Arrowhead Pond, a facility owned by and located within the City of
Anaheim. The Arrowhead Pond is a multi-purpose facility capable of
accommodating professional basketball and hockey, concerts and other
attractions, and has a maximum seating capacity of approximately 19,400.
Ogden has agreed that the Arrowhead Pond, under Entertainment's management,
will generate a minimum amount of revenues computed in accordance with the
30-year management agreement with the City. Entertainment also has a 30-year
lease agreement with The Walt Disney Company at the Arrowhead Pond where the
Anaheim Mighty Ducks, a National Hockey League team owned by The Walt Disney
Company, plays its home games.
In Mexico, Entertainment owns a 27% equity interest in a Mexican company
which manages the Sports Palace, a 22,000 seat arena, and the Autodrome, a
45,000 seat open air facility, located in Mexico City, as well as the new
Autodrome Fundidora Amphitheater in Monterey, Mexico that is able to
accommodate 18,000 people. Entertainment also owns 51% of a company that
provides food and beverage concessions at the Sports Palace and the new
Autodrome amphitheater referred to above.
Other Activities
During 1994 Entertainment acquired an equity interest in Parques
Tecnocultiroles, S.A. ("Partecsa"), a Spanish Corporation based in Seville,
Spain. Partecsa has been awarded a 30-year contract with an 8-year renewal
option to convert, remodel, manage and operate Cartuja, a multi-attraction
theme park located on a 200 acre site in Seville, Spain where the 1992
Exposition Fair was held. Partecsa has requested Entertainment to perform
advisory services relating to the conversion and future operation of Cartuja.
Upon completion of its conversion Partecsa has agreed to award Entertainment,
subject to the execution of a definitive agreement, the exclusive rights to
provide the food and beverage concessions at Cartuja for a four (4) year
period.
Entertainment also leases and operates a thoroughbred and harness racetrack
and six off-track betting parlors in Illinois where it telecasts races from
Fairmount Park and other racing facilities. Restaurants and other food and
beverage services are provided by Entertainment at these facilities. A large
portion of the track's revenue is derived from its share of the pari-mutuel
handle, which can be adjusted by state legislation. Other income is derived
from admission charges, parking, programs and concessions.
Entertainment also provides concessions at zoos located in Seattle,
Washington and Cleveland, Ohio.
ENVIRONMENTAL SERVICES
The Environmental Services group provides a comprehensive range of
environmental, infrastructure and energy consulting, engineering and design
services to industrial and commercial companies, electric utilities and
governmental agencies. The Environmental group's services include analysis
and characterization, remedial investigations, analytical testing,
engineering and design, data management, project management, and regulatory
assistance. These services are provided to detect, evaluate, solve and
monitor environmental problems and health and safety risks, environmental,
civil, geotechnical, transportation and sanitary engineering, urban and
regional planning and storm water management, as well as regulatory
assistance, nuclear safety and engineering, and consulting services relating
to nuclear waste management, security engineering and design services.
Environmental provides services to a variety of clients in the public and
private sectors in the United States and abroad. Principal clients include
major Federal agencies, particularly the Department of Defense and the
Department of Energy, as well as major corporations in the chemical,
petroleum, transportation, public utility and health care industries and
Federal and state regulatory authorities. Approximately 33% of
Environmental's revenues are derived from contracts or subcontracts with
departments or agencies of the United States Government. United States
Government contracts may be terminated, in whole or in part, at the
convenience of the government or for cause. In the event of a convenience
termination, the government is obligated to pay the costs incurred by
Environmental under the contract plus a fee based upon work completed.
As of December 31, 1994, Environmental's backlog of orders amounted to
approximately $143 million, of which approximately $40 million represented
government orders that were not yet funded; as of December 31, 1993, the
comparable amounts were $120 million and $37 million, respectively.
The Environmental group continues to provide professional environmental
engineering services, including program management, environmental analysis,
testing and restoration to the United States Navy CLEAN Program
(Comprehensive Long Term Environmental Action Navy) pursuant to a 10-year
contract awarded during 1991. Thus far the Environmental group has provided
these services at Navy bases in Hawaii, Guam, Japan, Hong Kong, the
Philippines, Australia and Korea.
Pursuant to its three year contract with the U.S. Air Force Center for
Environmental Excellence, the Environmental group continues to oversee the
removal of storage tanks and contaminated soil from Air Force bases across
the United States and in U.S. territories. The Environmental group also
remains as one of four contractors selected by the U.S. Air Force to
competitively bid for work over a five year period to identify, investigate
and remediate environmental contamination problems at Kelly Air Force Base,
Texas. Environmental also performs remediation services and environmental
studies for the U.S. Army Corps. of Engineers in Alaska and Texas, and
environmental compliance and training services pursuant to a 5-year contract
with the National Guard Bureau and the Air National Guard Readiness Center.
The Environmental group continues to develop its mixed waste analytical
business through its analytical laboratory in Fort Collins, Colorado which
opened during 1993 and analyzes mixtures of nuclear and non-nuclear hazardous
waste. This mixed waste laboratory provides testing services for the
Department of Energy and other Federal government agencies involved in the
cleanup of government facilities.
Environmental is continuing to pursue international markets through its
wholly-owned environmental, and geotechnical consulting firm in Spain; its
environmental services contract with the U.S. Army Corps of Engineers,
European District,to provide environmental site assessments in Germany; its
contract to work with the Chevron Overseas Petroleum, Inc.'s Tengizchevroil
Joint Venture Project; its discussions with the Republic of Kazakhstan to
develop an environmental protection public health and safety plan; and its
IEAJ affiliate in Japan, a leading consultant to the nuclear industry.
TECHNOLOGY SERVICES
The Technology Group provides services through its five technology-based
operating units: Atlantic Design Company, Inc. (Atlantic Design); Applied
Data Technology, Inc. (ADTI), acquired in 1995; W.J. Schafer Associates, Inc.
(WJSA); Systems Engineering, Applied Engineering; and Biomedical. These
operating units produce a broad range of technology and scientific solutions
for public and private industry, including the development and manufacture of
commercial technology products, the development of new applications for
advanced technologies, and analysis, integration, testing and implementation
services. Principal business areas are: computer hardware/software systems
and technologies, telecommunications systems, advanced communications and
sensor systems and technologies, management and logistics services,
biomedical research and repository services, air combat maneuvering
instrumentation systems, and after-action reporting and display systems.
Atlantic Design
This unit, with principal offices located in Charlotte, North Carolina and
engineering facilities located in Fairfield, New Jersey and locations within
New York state, provides engineering design, drafting and technical services,
as well as turn-key, integrated services in electronics contract
manufacturing and assembly and, through its Lenzar operation in Florida,
develops and markets medical products and custom image capturing products.
Atlantic Design provides services to customers primarily in the computer,
medical and electronic industries, including IBM, General Electric, Seiko,
Compaq, Martin Marietta, AT&T, EMC2 Corporation, Netrix Corporation and Pratt
and Whitney.
Atlantic Design's services also include the design of mechanical, electro-
mechanical and electronic equipment; technical writing; engineering analysis;
building, testing and repairing electronic assemblies and equipment; and the
development of prototype equipment for a variety of industries.
ADTI
During January 1995, Technology Services strengthened its group through the
acquisition of ADTI located in San Diego, California. ADTI is a leading
supplier of air combat maneuvering instrumentation systems and after-action
reporting and display systems. ADTI's range systems are installed at Navy
and Air Force aircraft training ranges to facilitate air-to-air combat
exercises and monitor, record and graphically display the exact maneuvers of
the aircraft on the ranges and simulate the various weapons systems aboard
the aircraft. These range automated systems are used by the U.S. Navy and
Air Force to train pilots for combat conditions and by the Department of
Defense in training pilots to avoid "friendly fire" incidents. ADTI's
systems are currently installed at four of the 14 domestic ranges, including
the range at the Top Gun school at Miramar, California. The range systems
business includes new ranges, expansion and upgrade of existing ranges,
product support and related programs.
ADTI also developed a proprietary flight line test set designed to test and
trouble-shoot the Auxiliary Power Unit ("APU") on-board a Boeing air-to-air
refueling aircraft. The APU tester was developed to fill the military's
demand for a practical low cost flightline support unit that will isolate
faults within the APU on-board the Boeing aircraft.
WJSA
This unit provides technology and engineering services and consultation in
space-based and free electron laser technology and high energy systems
research to the Ballistic Missile Defense Organization as well as technical
research to the other agencies within the Department of Defense and the U.S.
Government. This unit is also currently working under contract with the
Defense Nuclear Agency to define and analyze sensor architectures that assess
bomb damage to underground targets. WJSA is also involved in a program with
the Department of Energy to develop an advanced technique for producing
large-scale electric power. WJSA continues its efforts under contract with
the Coleman Research Corporation to provide system engineering and technical
assistance support for the Theater High Altitude Area Defense Project.
Systems Engineering, Applied Engineering
This units provides systems and software engineering and
computer/telephone-related products and services to Government agencies and
private industry. Some of their largest clients are the U.S. General
Services Administration (GSA), the Department of Defense, and the Office of
Personnel Management. During 1994, these units were awarded several large
contracts ranging from one to five years in duration. This included two
information technology (IT) contracts with GSA; one to provide IT
requirements studies for automated business systems to agencies located in
and around Washington, D.C. and another to analyze, design and develop
business, scientific and mathematical systems for agencies located throughout
the Western United States; another contract was awarded with the U.S. Navy to
provide engineering and technical services for advanced strategic and
tactical communications systems and systems integration programs on major
Navy combat vessels.
Biomedical
This unit provides biomedical research, support and biological repository
services for such customers as the National Institute of Health, the Walter
Reed Army Institute of Research, the U.S. Food and Drug Administration, the
Center for Disease Control and Prevention, the National Cancer Institute and
other health agencies, commercial firms and not-for-profit organizations
sponsoring research, primarily in the area of new drug development and
testing.
FACILITY MANAGEMENT SERVICES
The Facility Management Services group provides a comprehensive range of
facility management, maintenance and manufacturing support services to
industrial, commercial, electric utilities, and education and institutional
customers throughout the United States and Canada. Beginning in 1995 the
facility management services operations of the Technology Services group were
transferred to Facility Management Services.
The range of services provided include total facility management; facility
operations and maintenance; operations, maintenance and repair of production
equipment; security and protection; housekeeping; landscaping and grounds
care; energy management; warehousing and distribution; project and
construction management; and skilled craft support services.
This service group's commercial and office building customers include the
World Trade Center and the American Express Tower in New York, Phillips
Petroleum Headquarters in Bartlesville, Oklahoma, various governmental
agencies and AT&T at several sites in New Jersey. Facility's industrial and
manufacturing customers include IBM, Chrysler, Colgate Palmolive, Goodyear,
BF Goodrich, US West, Exxon, Dow Chemical, American Cyanamid, MITRE
Corporation and Martin Marietta.
The group continues its support to the institutional and educational
marketplace whose customers include the University of Miami; New York
University; Clark Atlanta University in Georgia; and Concordia University in
Montreal, Canada.
Facility Management Services, in conjunction with Projects, also provides
services to the waste-to-energy plants in operation, or being built, by Ogden
Martin Systems, Inc. on a cost-plus basis as negotiated between Ogden Martin
and Ogden Facility Services.
OTHER SERVICES
Ogden Services also provides services relating to the removal and
encapsulation of asbestos-containing materials from office buildings and
other facilities and arranges for the transport of such material to approved
disposal sites. Asbestos-remediation jobs are being performed principally in
the greater Manhattan-New York metropolitan area. The market for asbestos
removal and encapsulation services by office buildings and large residential
complexes, industrial plants, airports and other public facilities has been
greatly reduced over the past several years and Ogden Services' continued
involvement in this industry is reviewed on an annual basis.
Through Universal Ogden Services, a joint venture based in Seattle,
Washington, services are provided to a wide range of facilities where people
live for extended periods of time, such as remote job sites and oil rigs.
Food and housekeeping services are currently provided to offshore oil
production platforms and drilling rigs in the Gulf of Mexico, the North Sea,
the West Coast of Africa and South America, for oil production and drilling
companies. Logistical support services, including catering, housing,
security, operations, and maintenance are provided to remote industrial
campsites located in the United States and abroad.
PROJECTS
The operations of Ogden's Projects business segment are conducted by Ogden's
wholly owned subsidiary Ogden Projects, Inc. and its subsidiaries ("OPI")
whose principal business is conducted through it's four major operating
groups: Waste-to-Energy; Independent Power; Water and Wastewater; and
Construction Activities.
WASTE-TO-ENERGY
The Waste-to-Energy group operates facilities which combust municipal solid
waste to make saleable energy in the form of electricity or steam. This group
completed construction of its first waste-to-energy facility in 1986 and
currently operates 27 waste-to-energy facilities at 26 locations. Waste-to-
Energy has one facility under construction, is the owner or lessee of 17 of
its facilities, has been awarded three additional facilities that are not yet
under construction, and has taken steps toward expanding its waste-to-energy
business internationally.
In most cases, the Waste-to-Energy group, through wholly-owned subsidiaries
("Operating Subsidiaries"), provides waste-to-energy services pursuant to
long-term service contracts ("Service Agreements") with local governmental
units sponsoring the waste-to-energy project ("Client Communities"). The
group has projects currently under development for which there is no
sponsoring Client Community and may in the future undertake other such
projects.
(a) Terms and Conditions of Service Agreements. Projects generally have
been awarded by Client Communities pursuant to competitive procurement.
However, Waste-to-Energy has also built and is operating projects that were
not competitively bid.
Following execution of a Service Agreement between the Operating Subsidiary
and the Client Community, several conditions must be met before construction
commences. These usually include, among other things, financing the
facility, executing an agreement providing for the sale of the energy
produced by the facility, purchasing or leasing the facility site, and
obtaining of required regulatory approvals, including the issuance of
environmental and other permits required for construction. In many respects,
satisfaction of these conditions is not wholly within this group's control
and, accordingly, implementation of an awarded project is not assured, or may
occur only after substantial delays. Waste-to-Energy incurs substantial
costs in preparing bids and, if it is the successful bidder, implementing the
project so it meets all conditions precedent to the commencement of
construction. In some instances Waste-to-Energy has made contractual
arrangements with communities that provide partial recovery of development
costs if the project fails to go into construction for reasons beyond its
control.
Each Service Agreement is different in order to reflect the specific needs
and concerns of the Client Community, applicable regulatory requirements, and
other factors. The following description sets forth terms that are generally
common to these agreements: (i) the Operating Subsidiary designs the
facility, generally applies for the principal permits required for its
construction and operation, and helps to arrange for financing, and then
constructs and equips the facility on a fixed price and schedule basis. The
actual construction and installation of equipment is performed by contractors
under the supervision of the Operating Subsidiary. The Operating Subsidiary
bears the risk of costs exceeding the fixed price of the facility and may be
charged liquidated damages for construction delays, unless caused by the
Client Community or by unforeseen circumstances beyond its control, such as
changes of law ("Unforeseen Circumstances"). After the facility successfully
completes acceptance testing, the Operating Subsidiary operates and maintains
the facility for an extended term, generally 20 years or more; (ii) the
Operating Subsidiary generally guarantees that the facility will meet minimum
processing capacity and efficiency standards, energy production levels, and
environmental standards. The Operating Subsidiary's failure to meet these
guarantees or to otherwise observe the material terms of the Service
Agreement (unless caused by the Client Community or by Unforeseen
Circumstances) may result in liquidated damages to the Operating Subsidiary
or, if the breach is substantial, continuing, and unremedied, the termination
of the Service Agreement. In the case of such Service Agreement termination,
the Operating Subsidiary may be obligated to discharge project indebtedness;
(iii) the Client Community is generally required to deliver minimum
quantities of municipal solid waste ("MSW") to the facility and, regardless
of whether that quantity of waste is delivered to the facility, to pay a
service fee. Generally, the Client Community also provides or arranges for
debt financing. Additionally, the Client Community bears the costs of
disposing ash residue from the facility and, in many cases, of transporting
the residue to the disposal site. Generally, expenses resulting from the
delivery of unacceptable and hazardous waste to the facility, and from the
presence of hazardous materials on the site, are also borne by the Client
Community. In addition, the Client Community is also generally responsible
to pay increased expenses and capital costs resulting from Unforeseen
Circumstances, subject to limits which may be specified in the Service
Agreement; (iv) Ogden typically guarantees each Operating Subsidiary's
performance under its respective Service Agreement.
After construction is completed and the facility is accepted, the Client
Community pays the Operating Subsidiary a fixed operating fee which escalates
in accordance with specified indices, reimburses the Operating Subsidiary for
certain costs specified in the Service Agreement including taxes,
governmental impositions (other than income taxes), ash disposal and utility
expenses, and shares with the Operating Subsidiary a portion of the energy
revenues (generally 10%) generated by the facility. If the facility is owned
by the Operating Subsidiary, the Client Community also pays as part of the
Service Fee an amount equal to the debt service due to be paid on the bonds
issued to finance the facility. At most facilities, Waste-to-Energy may earn
additional fees from accepting waste from the Client Community or others
utilizing the capacity of the facility which exceeds the amount of waste
committed by the Client Community.
Waste-to-Energy operates transfer stations in connection with some of its
waste-to-energy facilities and, in connection with the Montgomery County,
Maryland, project, OPI will use a railway system to transport MSW and ash
residue to and from the facility. Waste-to-Energy leases and operates a
landfill located at its Haverhill, Massachusetts, facility, and leases, but
does not operate, a landfill in connection with its Bristol, Connecticut,
facility.
(b) Other Arrangements for Providing Waste-to-Energy Services. Waste-
to-Energy owns two facilities that are not operated pursuant to Service
Agreements with Client Communities, and is currently developing, and may
undertake in the future, additional such projects. In such projects, OPI
must obtain sufficient waste under contracts with haulers or communities to
ensure sufficient project revenues. In these cases, Waste-to-Energy is
subject to risks usually assumed by the Client Community, such as those
associated with Unforeseen Circumstances and the supply and price of
municipal waste to the extent not contractually assumed by other parties.
This group's current contracts with waste suppliers for these two facilities
provide that the fee charged for waste disposal service is subject to limited
increases in the event that costs of operation increase as a result of
Unforeseen Circumstances. On the other hand, in these cases, Waste-to-Energy
generally retains all of the energy revenues from sales of power to utilities
or industrial power users and disposal fees for waste accepted at these
facilities. Accordingly, OPI believes that such projects carry both greater
risks and greater potential rewards than projects in which there is a Client
Community.
For the projects that are not operated pursuant to a Service Agreement,
tipping fees, which are generally subject to escalation in accordance with
specified indices, and energy revenues are paid to the Waste-to-Energy group.
Electricity generated by these projects is sold to public utilities and in
one instance, steam and a portion of the electricity generated is sold to
industrial users. Under certain of the contracts under which waste is
provided to these facilities, Waste-to-Energy may be entitled to fee
adjustments to reflect certain Unforeseen Circumstances.
(c) Project Financing. Financing for projects is generally accomplished
through the issuance of a combination of tax-exempt and taxable revenue bonds
issued by a public authority. If the facility is owned by the Operating
Subsidiary, the authority lends the bond proceeds to the Operating Subsidiary
and the Operating Subsidiary contributes additional equity to pay the total
cost of the project. For such facilities, project-related debt is included as
a liability in Ogden's consolidated financial statements. Generally, such
debt is secured by the revenues pledged under the respective indenture and is
collateralized by the assets of the Operating Subsidiary and otherwise
provides no recourse to Ogden, subject to construction and operating
performance guarantees and commitments.
(d) Waste-to-Energy Projects. Certain information with respect to
projects as of February 28, 1995 is summarized in the following table:
WASTE-TO-ENERGY PROJECTS
Tons Boiler Commencement
In Operation Per Day Units of Operations
Tulsa,OK(I)<F1>............ 750 2 1986
Haverhill/Lawrence,
MA-RDF<F8>................ 950 1 1984
Marion County, OR.......... 550 2<F2> 1987
Hillsborough County, FL<F3> 1,200 3<F2> 1987
Tulsa, OK(II)<F1><F4>...... 375 1 1987
Bristol, CT................ 650 2<F2> 1988
Alexandria/Arlington, VA... 975 3 1988
Indianapolis, IN........... 2,362 3<F2> 1988
Hennepin County, MN <F1><F5> 1,000 2 1990
Stanislaus County, CA...... 800 2 1989
Babylon, NY................ 750 2<F2> 1989
Haverhill, MA-Mass Burn.... 1,650 2 1989
Warren County, NJ <F5>..... 400 2 1990
Kent County, MI<F3>........ 625 2<F2> 1990
Wallingford, CT<F5>........ 420 3<F2> 1990
Fairfax County, VA......... 3,000 4<F2> 1990
Huntsville, AL<F3>......... 690 2<F2> 1990
Lake County, FL............ 528 2<F2> 1990
Lancaster County, PA<F3>... 1,200 3<F2> 1991
Pasco County, FL<F3>....... 1,050 3<F2> 1991
Huntington, NY <F6>........ 750 3<F2> 1991
Hartford, CT <F3><F7><F8>.. 2,000 3 1989
Detroit, MI <F1><F8><F9>... 3,300 3 1989
Honolulu, HI <F1><F8>...... 2,160 2 1990
Union County, NJ<F3>....... 1,440 3 1994
Lee County, FL <F3>........ 1,200 3<F2> 1994
Onondaga, NY<F6><F10>...... 990 3 1995
Total................ 31,765
Unrecognized
Construction
Revenues as
of 12/31/94
Scehduled (In
Tons Boiler Commencement thousands
Under Construction Per Day Units of Operations of dollars)
Montgomery County, MD <F3> 1,800 3(2) 1995 $ 44,764
Estimated
Construction
Revenues
Expected (In
Awarded - Not Yet Tons Boiler Commencement thousands
Under Construction Per Day Units of Construction of dollars)
Mercer County, NJ <F3>..... 1,450 2 1995 $185,120
Halifax, Nova Scotia <F3> 550 2 <F11> $ 99,620*
Clark County, OH 1,750 2 <F12> $ N/A
Total................. 3,750
*Expressed in Canadian Dollars
NOTES:
<F1> Facility is owned by an owner/trustee pursuant to a sale/leaseback
arrangement.
<F2> Facility has been designed (or, with respect to awarded facilities and
facilities under construction, will be designed) to allow for the
addition of another unit.
<F3> Facility is owned (or, with respect to facilities not under
construction, is to be owned) by the Client Community.
<F4> Phase II of the Tulsa facility, which was financed as a separate
project, expanded the capacity of the facility from two to three units.
<F5> Operating Subsidiaries were purchased after completion, and use a mass-
burn technology that is not the Martin Technology.
<F6> Owned by a limited partnership in which the limited partners are not
affiliated with OPI.
<F7> Under contracts with the Connecticut Resource Recovery Authority and
Northeast Utilities, OPI operates only the boiler and turbine for this
facility.
<F8> Operating contracts were acquired after completion. Facility uses a
refuse-derived fuel technology and does not employ the Martin
Technology.
<F9> In addition, Waste-to-Energy is presently constructing environmental
improvements to the Detroit Facility. The total price for this project
is approximately $117,800,000 (subject to escalation), and Waste-to-
Energy expects construction to be completed in 1995.
<F10> This facility is substantially complete and is processing waste.
<F11> During 1994, the Minister of the Environment for the Province of Nova
Scotia disapproved the project for economic, not environmental,
reasons, and the Metropolitan Authority purported to terminate its
contract with OPI on that basis. OPI has challenged the minister's
decision as being beyond his authority. If OPI is successful in its
challenge, the Metropolitan Authority may still terminate development
of the project, subject to certain obligations to reimburse OPI for
certain of its costs.
<F12> In 1993, OPI negotiated major project agreements with Clark County,
Ohio, for the disposal of MSW and with Ohio Edison Company pursuant to
which Ohio Edison leases a site to OPI and purchases steam generated at
the proposed waste-to-energy facility. This project is conditional
upon obtaining commitments of additional MSW from other sources and
satisfactory resolution of litigation described below. Contracts
related to the project are the subject of litigation brought by a local
landfill in which an intermediate appellate court recently enjoined
performance by the County. The Ohio Supreme Court has agreed to hear
OPI's appeal of this decision, probably in the Spring of 1995. When
this litigation is resolved, OPI will evaluate whether to attempt to
procure additional waste contracts for this facility.
(e) Technology. The principal feature of the Martin Technology is the
reverse-reciprocating stoker grate upon which the waste is burned. The patent
for the basic stoker grate technology used in the Martin Technology expired
in 1989. OPI has no information that would cause it to believe that any other
company uses the basic stoker grate technology that was protected by the
expired patent. Moreover, OPI believes that unexpired patents on other
portions of the Martin Technology would limit the ability of other companies
to effectively use the basic stoker grate technology in competition with OPI.
There are several unexpired patents related to the Martin Technology
including: (i) Grate Bar for Grate Linings, Especially in Incinerators -
expires 2/9/99; (ii) Method and Arrangement for Reducing NOx Emissions from
Furnaces - expires 7/19/00; (iii) Method and Apparatus for Regulating the
Furnace Output of Incineration Plants - expires 9/4/07; (iv) Method for
Regulating the Furnace Output in Incineration Plants - expires 1/1/08; and
(v) Feed Device with Filling Hopper and Adjoining Feed Chute for Feeding
Waste to Incineration Plants - expires 4/23/08. More importantly, OPI
believes that it is Martin's know-how in manufacturing grate components and
in designing and operating mass-burn facilities, Martin's worldwide
reputation in the waste-to-energy field, and OPI's know-how in designing,
constructing and operating waste-to-energy facilities, rather than the use of
patented technology, that is important to OPI's competitive position in the
waste-to-energy industry in the United States. OPI does not believe that the
expiration of the patent covering the basic stoker grate technology or
patents on other portions of the Martin Technology will have a material
adverse effect on OPI's financial condition or competitive position.
(f) The Cooperation Agreement. Under an agreement between Martin GmbH
fur Umuelt-und Energietechnik of Germany ("Martin") and OPI (the "Cooperation
Agreement"), OPI has the exclusive rights to market the proprietary
technology (the "Martin Technology") of Martin in the United States, Canada,
Mexico, Bermuda, certain Caribbean countries, most of Central and South
America, and Israel. In addition, in Germany, Turkey, Saudi Arabia, Kuwait,
the Netherlands, Denmark, Norway, Sweden, Finland, Poland, and Italy OPI has
exclusive rights to use the Martin Technology, but only on a full service
design, construct, and operate basis. The Cooperation Agreement provides
that OPI may acquire, own, commission, and/or operate facilities that use
technology other than the Martin Technology that have been constructed by
entities other than OPI or its affiliates. Martin is obligated to assist OPI
in installing, operating, and maintaining facilities incorporating the Martin
Technology. The fifteen year term of the Cooperation Agreement renews
automatically each year unless notice of termination is given, in which case
the Cooperation Agreement would terminate 15 years after such notice.
Additionally, the Cooperation Agreement may be terminated by either party if
the other fails to remedy its material default within 90 days of notice. The
Cooperation Agreement is also terminable by Martin if there is a change of
control (as defined in the Cooperation Agreement) of Ogden Martin Systems,
Inc. ("OMS"), a wholly-owned subsidiary of OPI or any direct or indirect
parent of OMS not approved by its respective board of directors. Although
termination would not affect the rights of OPI to design, construct, operate,
maintain, or repair waste-to-energy facilities for which contracts have been
entered into or proposals made prior to the date of termination, the loss of
OPI's right to use the Martin Technology could have a material adverse effect
on OPI's future business and prospects.
(g) International Business Development. In 1994, Waste-to-Energy
continued the development of its waste-to-energy business in selected
international markets. An office in Munich, Germany, was opened in 1993 and,
as indicated above, extended its right to use the Martin Technology to
develop full service projects in much of Europe. In Europe, waste-to-energy
facilities have been built as turn-key construction projects and then
operated by local governmental units or by utilities under cost-plus
contracts. Waste-to-Energy emphasizes developing projects which it will
build and then operate for a fixed fee. Some European countries are seeking
to substantially reduce their dependency on landfilling. For example,
Germany has enacted legislation which would prevent the landfilling of
untreated raw municipal waste by the end of the decade.
The trend toward privatization of municipal services in Latin America
continues to remain strong. The market for waste-to-energy is in a formative
stage and, with few exceptions, continues to lag behind other infrastructure
project development in most Latin American countries. Waste-to-energy
services in Latin America will be offered through strategic alliances with
Latin American firms and by coordinating marketing efforts with other
business development efforts of Ogden's Services segment.
Ogden plans to open an office in Hong Kong in 1995. OPI has entered into
an agreement with CTCI Corporation in Taiwan to jointly pursue waste-to-
energy operation and maintenance contracts in that country. Certain other
Asia Pacific countries are seeking alternatives to landfilling and are also
moving toward privatization of municipal services. The development of this
market by OPI will be managed through the Hong Kong office, with emphasis on
establishing teaming agreements with local firms to pursue select project
opportunities.
(h) Backlog. Waste-to-Energy's backlog as of December 31, 1994, is set
forth under (d) above. As of the same date of the prior year, the estimated
unrecognized construction revenues for projects under construction was
$224,257,000, and the estimated construction revenues for projects awarded
but not yet under construction was $254,486,000 (including U.S. dollar
equivalent of $99,620,000 expressed in Canadian Dollars). The change in the
amount for projects under construction reflects construction progress on two
projects. Generally, the construction period for a waste-to-energy facility
is approximately 28 to 34 months.
INDEPENDENT POWER
The Independent Power group, through wholly-owned subsidiaries, develops,
operates and, in some cases, owns power projects ("alternative energy
projects") which cogenerate electricity and steam or generate electricity
alone for sale to utilities both in the United States and abroad. In 1994,
the independent power business of Projects and of Services' Environmental
Services group were combined under Projects' Independent Power group. The
Independent Power group intends to develop additional projects which use,
among other fuels, wood, tires, other wastes, coal, oil, natural gas, or
water. Independent Power is currently pursuing further opportunities to own
and/or operate independent power projects domestically and abroad.
Independent Power will seek to participate in the operation of the
independent power project facilities pursuant to long-term operations and
maintenance contracts from which it will seek operating profits. In many
cases, capital may be invested in the ownership of the project (usually
through acquiring an interest in a corporate or partnership entity that owns
the power production facilities and the contracts for the supply of fuel and
the purchase of power from these facilities), to derive investment earnings
and possibly tax benefits. In some cases, if Independent Power has expended
funds in and dedicated resources to development of the project, it will seek
a developers fee at the time the construction financing of the project is
completed.
Many alternate energy projects are awarded to private power producers on
the basis of open, competitive bidding, in which pricing of capacity and
electric energy is the dominant selection criterion. Because these awards
are often vigorously contested by a number of independent power producers,
the returns on such projects are often driven to very low levels. The
Independent Power group therefore seeks opportunities in which power purchase
contract terms can be set by negotiations and in which the group is able to
stress its abilities to operate facilities in a highly reliable manner and to
provide operational guarantees of performance that may be attractive to the
power purchaser.
The Independent Power group, through Catalyst New Martinsville
Hydroelectric Corporation, manages and operates a hydroelectric power
generating facility under a long-term lease with the City of New
Martinsville, West Virginia. The plant has been in operation since 1988 and
rated at approximately 40 megawatts of power. The plant's electrical output
is sold to the Monongahela Power Company under a long-term power sales
agreement. The Independent Power group, as a 50/50 partner in the Heber
Geothermal Company ("HGC") (a partnership with Centennial Geothermal, Inc.),
leases and operates a 47-megawatt (net) power plant in Heber, California.
The power is sold to Southern California Edison. The working interest in the
geothermal field, which is adjacent to and supplies fluid to the power plant,
is owned by a partnership composed of an Independent Power group subsidiary
and Centennial Field, Inc., an unaffiliated company. The Independent Power
group also has the contracts to operate and maintain both the geothermal
field, which currently produces approximately eight million pounds per hour
of fluid, and the power plant.
During December 1994 the acquisition of the Second Imperial Geothermal
Company (SIGC) and its principal asset, a leasehold interest in a 48 megawatt
geothermal power plant located in Heber, California, was completed. SIGC is
a party to a 30-year power purchase contract with Southern California Edison.
Prior to the acquisition, the Independent Power group (through the
Environmental group) was the operations and maintenance contractor at SIGC.
This acquisition will compliment the geothermal field operated by the
Independent Power group in Heber, California.
During 1994 the Independent Power group's operations were expanded into the
Latin American market through the acquisition of an equity interest in
Energia Global, Inc. (EGI) which resulted in a long term contract to operate
two hydroelectric plants owned by EGI's Costa Rica subsidiary and which are
under construction in Costa Rica. During the design and construction phase
of these two plants, the Independent Power group will serve as a consultant.
WATER AND WASTEWATER
The Water and Wastewater group, through Ogden Water Systems, Inc., intends
to develop, operate and, in some cases, own projects that purify water, treat
wastewater, and treat and manage biosolids and compost organic wastes. As
with the waste-to-energy business, water and wastewater projects involve
various contractual arrangements with a variety of private and public
entities including municipalities, lenders, joint venture partners (which
provide financing or technical support), and contractors and subcontractors
which build the facilities. In 1994, Ogden Water Systems, Inc. formed a
joint venture, the Ogden Yorkshire Water Company, with a wholly-owned
subsidiary of Yorkshire Water, plc, a major British water and wastewater
utility. The purpose of the joint venture is to develop, design, construct,
maintain, operate, and in some cases own, water and wastewater treatment
facilities in the United States, Canada, and Latin America. The joint
venture is actively bidding on public procurements for such services and
seeking acquisition opportunities. Ogden Water Systems, Inc., is also
pursuing opportunities in water and wastewater treatment facilities in
countries outside of the territory of the joint venture.
CONSTRUCTION ACTIVITIES
The construction of each of Projects' waste-to-energy facilities is the
responsibility of its Construction Activities group. Construction of
Independent Power, Water and Wastewater projects and any other construction
activities undertaken in connection with Ogden's Services business are
expected to be the responsibility of this group. A general contractor is
usually responsible for the procurement of bulk commodities used in the
construction of the facility, such as steel and concrete. These commodities
are generally readily available from many suppliers.
The Construction Activities group generally directs the procurement of all
major equipment utilized in a project, which equipment is also generally
readily available from many suppliers. The stoker grates utilized Waste-to-
Energy in facilities constructed by the group are required to be obtained
from Martin pursuant to the Cooperation Agreement.
During the construction period for waste-to-energy facilities owned by
Client Communities, construction income is recognized on the percentage-of-
completion method based on the percentage of costs incurred to total
estimated costs.
PROJECTS' FOREIGN BUSINESS DEVELOPMENT
Projects' Waste-to-Energy, Independent Power, Water and Wastewater and
Construction groups are involved in the development of projects in foreign
countries where opportunities for the services provided by these groups are
highly dependent upon the elimination of historic legal and political
barriers to the participation of foreign capital and foreign companies in the
financing, construction, ownership and operation of waste-to-energy, power
production and water and wastewater facilities. For example, in many
countries, the production, distribution and delivery of electricity has
traditionally been provided by governmental or quasi-governmental agencies.
Although a number of these countries have recently liberalized their laws and
policies with regard to the participation of private interests and foreign
capital in their electric sectors, not all have done so, and not all that
have done so may afford acceptable opportunities for Projects.
The development, construction, ownership and operation of waste-to-energy,
independent power production, and water and wastewater facilities in foreign
countries also exposes Projects to several potential risks that typically are
not involved in such activities in the United States.
Many of the countries in which Projects is or intends to be active in
developing its waste-to-energy, independent power, water and wastewater and
construction projects are lesser developed countries or developing countries.
The financial condition and creditworthiness of the potential purchasers of
power and services provided by Projects--which may be a governmental or
private utility or industrial consumer--or of the suppliers of fuel for
alternate energy projects or of waste for waste-to-energy projects in these
countries may not be as strong as those of similar entities in the developed
countries. The obligations of the purchaser under the power purchase
agreement, the services recipient under the related service agreement and the
supplier under the fuel supply agreement may not be guaranteed by any host
country governmental or other creditworthy agency.
Waste-to-Energy and Independent Power projects in particular, are keenly
dependent on the reliable and predictable delivery of fuel, municipal solid
waste in the case of waste-to-energy, meeting the quantity and quality
requirements of the project facilities. Projects will in all cases seek to
negotiate long-term contracts for the supply of fuel with creditworthy and
reliable suppliers under terms that will permit it to project the future cost
of fuel through the life of the contract. However, the reliability of fuel
deliveries may be compromised by one or more of several factors that may be
more acute or may occur more frequently in developing countries than in
developed countries, including a lack of sufficient infrastructure to support
deliveries under all circumstances, bureaucratic delays in the import,
transportation and storage of fuel in the host country, customs and tariff
disputes and local or regional unrest or political instability .
Payment for electricity to project companies in which Projects may invest,
and for related operating services that it may provide, will often be made in
whole or part in the domestic currencies of the host countries. Conversion
of such currencies into U.S. dollars may not be assured by a governmental or
other creditworthy host country agency, and may be subject to limitations in
the currency markets, as well as restrictions of the host country. In
addition, fluctuations in value of such currencies against the value of the
U.S. dollar may cause the group's participation in such projects to yield
less return than expected. Transfer of earnings and profits in any form
beyond the borders of the host country may be subject to special taxes or
limitations imposed by host country laws.
In addition, Projects will generally participate in projects, the
facilities for which will be fixed and practically immovable. The provision
of electric power, waste disposal and water and wastewater services are
treated as a matter of national or key economic importance by the laws and
politics of many host countries. There is therefore some risk that the
assets constituting the facilities of the projects in which it participates
could be temporarily or permanently expropriated or nationalized by a host
country, or made subject to martial or exigent law or control.
Projects will seek to manage and mitigate these risks through all available
means that it deems appropriate. They will include: careful political and
financial analysis of the host countries and the key participants in each
project; guarantees of relevant agreements with creditworthy entities;
political risk and other forms of insurance; participation by international
finance institutions, such as affiliates of the World Bank, in financing of
projects in which it participates; and joint ventures with other companies to
pursue the development, financing and construction of these projects.
GAIN ON SALE OF LIMITED PARTNERSHIP INTERESTS
In 1991, limited partnership interests in, and the related tax benefits of,
the partnership that owns the Huntington, New York, facility were sold by
Waste-to-Energy to third-party investors. In 1992 Waste-to-Energy sold the
subsidiary that held the remaining limited partnership interests in, and
certain related tax benefits of, that partnership. During 1994, an Operating
Subsidiary of the Waste-to-Energy group that is the owner of the Onondaga
County, New York, facility sold limited partnership interests and tax
benefits to third party investors. Under both the Huntington and Onondaga
limited partnership agreements, Operating Subsidiaries are general partners
and retain responsibility for the operation and maintenance of the
facilities.
OTHER ACTIVITIES
Projects also intends to develop, operate and, in some cases, own projects
that process recyclable paper products into containerboard for reuse in the
commercial sector. As with it's Waste-to-Energy group, such projects involve
various contractual arrangements with a variety of private and public
entities, including municipalities, lenders, joint venture partners (which
may provide some of the financing or technical support), purchasers of the
plant output, and contractors and subcontractors which build the facilities.
In addition, such projects require significant amounts of energy in the form
of steam, which may be provided by present or future waste-to-energy projects
operated by the Waste-to-Energy group.
In 1993, Projects discontinued the fixed-site hazardous waste business
conducted through American Envirotech, Inc., an indirect subsidiary. In light
of substantial and adverse changes in the market for hazardous waste
incineration services and regulatory uncertainty stemming from EPA
pronouncements, Projects ceased all development activities. Although
Projects continues to hold permits and certain related assets pending
resolution of certain litigation, any other related assets have been disposed
of or otherwise abandoned. (See "Item 3. Legal Proceedings and Environmental
Matters" of this Form 10-K.)
OTHER INFORMATION
MARKETS, COMPETITION AND GENERAL BUSINESS CONDITIONS
Ogden's Services and Projects business segments can be adversely affected
by general economic conditions, war, inflation, adverse competitive
conditions, governmental restrictions and controls, natural disasters, energy
shortages, weather, the adverse financial condition of customers and
suppliers, various technological changes and other factors over which Ogden
has no control.
The economic climate can also adversely affect several of Ogden's Services'
operations, including, but not limited to, fewer airline flights, reduced
inflight meals and flight cancellations in Services' Aviation group; cost
cutting and budget reductions in Services' Technology group and Facility
group; and, reduced event attendance in Services' Entertainment group. In
addition, disputes between owners of professional sports organizations and
the professional players of such organizations have affected and may continue
to affect the operations of the Entertainment group.
Ogden's Projects business segment, through its Waste-to-Energy group,
markets its services principally to governmental entities, including city,
county, and state governments as well as public authorities or special
purpose districts established by one or more local government units for the
purpose of managing the collection and/or disposal of municipal solid waste
("MSW"). Since 1989 there has been a decline in the number of communities
requesting proposals for waste-to-energy facilities. Ogden believes that this
decline has resulted from a number of factors that adversely affected
communities' willingness to make long-term capital commitments to waste
disposal projects, including: declining prices at which energy can be sold;
declining alternative disposal costs; uncertainties about the impact of
recycling on the waste stream; and continuing concerns arising from the Clean
Air Act Amendments of 1990 and the regulatory actions currently being
proposed pursuant to its terms. Ogden believes that waste-to-energy
facilities and recycling are complimentary methods of managing a community's
waste disposal needs. The fact that many of Ogden's Client Communities have
recycling rates in excess of national averages demonstrates that a properly
sized waste-to-energy facility does not hinder achievement of aggressive
recycling goals. Ogden does not believe there will be a near term return to
frequent public procurement for waste-to-energy facilities.
MSW is typically supplied to Ogden's waste-to-energy facilities pursuant
to long-term contracts. In most of the markets that Projects' Waste-to-
Energy group currently serve, the cost of waste-to-energy services to its
current Client Communities is competitive with the cost of other disposal
alternatives, mainly landfilling.
Compliance with regulations promulgated by the United States Environmental
Protection Agency (the "EPA") in 1991 will to some extent increase the cost
of landfilling, although landfills may be less expensive in some cases, in
the short term, than waste-to-energy facilities. Landfills generally do not
commit their capacity for extended periods. Much of the landfilling done in
the United States is done on a spot market or through short term contracts
(less than 5 years). Accordingly, landfill pricing tends to be more volatile
as a result of periodic changes in waste generation and available capacity
than Ogden's pricing, which is based on long-term contracts. Ogden believes
that landfills have not been required to comply with permitting requirements
relating to the emission of air pollutants and that this provides landfills
with a competitive advantage. Another factor affecting the competitiveness of
waste-to-energy fees are the additional charges imposed by Client Communities
and included in such fees to support recycling programs, household hazardous
waste collections, citizen education, and similar initiatives. The cost
competitiveness of waste-to-energy facilities also depends on the prices at
which the facility can sell the energy it generates. Another factor
affecting the demand for new waste-to-energy projects was a 1994 United
States Supreme Court decision invalidating state and local laws and
regulations mandating that waste generated within a given jurisdiction be
taken to a designated facility. Waste-to-energy facilities also compete with
other disposal technologies such as mixed solid-waste composting. Mixed
waste composting is not a proven technology, and Ogden believes that it has
not been applied successfully to date in a large scale facility.
Mass-burn waste-to-energy systems compete with various refuse-derived fuel
("RDF") systems in which MSW is preprocessed to remove various non-
combustibles and is shredded for sizing prior to burning. Ogden believes
that the large-scale facilities being contracted for today are primarily
mass-burn systems. Although OPI operates four RDF projects, these were all
acquired after construction. Other technologies utilized in mass-burn type
facilities in the United States include those of Von Roll, W+E, Takuma,
Volund, Steinmueller, Deutsche Babcock, O'Connor, and Detroit Stoker.
There is substantial competition within the waste-to-energy field. Ogden
competes with a number of firms, some of which have greater financial
resources than Ogden. Some competitors have licenses or similar contractual
arrangements for competing technologies in the waste-to-energy field, and a
limited number of competitors have their own proprietary technology.
Competition for projects is intense in all markets in which Projects does
business or intends to do business. There are numerous companies in the
United States and in several foreign countries that pursue these projects.
Many of these companies have more experience, capital and other resources
than does Ogden.
EQUAL EMPLOYMENT OPPORTUNITY
In recent years, governmental agencies (including the Equal Employment
Opportunity Commission) and representatives of minority groups and women have
asserted claims against many companies, including some Ogden subsidiaries,
alleging that certain persons have been discriminated against in employment,
promotions, training, or other matters. Frequently, private actions are
brought as class actions, thereby increasing the practical exposure. In some
instances, these actions are brought by many plaintiffs against groups of
defendants in the same industry, thereby increasing the risk that any
defendant may incur liability as a result of activities which are the primary
responsibility of other defendants. Although Ogden and its subsidiaries have
attempted to provide equal opportunity for all of its employees, the
combination of the foregoing factors and others increases the risk of
financial exposure.
EMPLOYEE AND LABOR RELATIONS
As of January 31, 1995, Ogden and its subsidiaries employed approximately
45,000 people.
Certain employees of Ogden are employed pursuant to collective bargaining
agreements with various unions. During 1994 Ogden successfully renegotiated
collective bargaining agreements in certain of its business sectors with no
strike-related loss of service. Ogden considers relations with its employees
to be good and does not anticipate any significant labor disputes in 1995.
ENVIRONMENTAL REGULATORY LAWS
Ogden's business activities are pervasively regulated pursuant to federal,
state, and local environmental laws. Federal laws, such as the Clean Air Act
and Clean Water Act, and their state counterparts, govern discharges of
pollutants to air and water. Other federal, state, and local laws, such as
RCRA, comprehensively govern the generation, transportation, storage,
treatment, and disposal of solid waste, including hazardous waste (such laws
and the regulations thereunder, "Environmental Regulatory Laws").
The Environmental Regulatory Laws and other federal, state, and local laws,
such as the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA") (collectively, "Environmental Remediation Laws"), make Ogden
potentially liable on a joint and several basis for any environmental
contamination which may be associated with its activities at sites, including
landfills, which OPI has owned, operated, or leased or at which there has
been disposal of residue or other waste handled or processed by OPI. OPI
leases and operates a landfill in Haverhill, Massachusetts, and leases a
landfill in Bristol, Connecticut, in connection with its projects at those
locations. Some state and local laws also impose liabilities for injury to
persons or property caused by site contamination. Some Service Agreements
provide for indemnification of the Operating Subsidiaries from some such
liabilities.
The Environmental Regulatory Laws require that many permits be obtained
before the commencement of construction and operation of any waste-to-energy
facility, including: air quality permits, stormwater discharge permits, solid
waste facility permits in most cases, and,in many cases, wastewater discharge
permits. There can be no assurance that all required permits will be issued,
and the process of obtaining such permits can often cause lengthy delays,
including delays caused by third party appeals challenging permit issuance.
Failure to meet conditions of these permits or of the Environmental
Regulatory Laws and the corresponding regulations can subject an Operating
Subsidiary to regulatory enforcement actions by the appropriate governmental
unit, which could include monetary penalties, and orders requiring certain
remedial actions or limiting or prohibiting operation. To date, OPI has not
incurred material penalties, been required to incur material capital costs or
additional expenses, nor been subjected to material restrictions on its
operations as a result of violations of environmental laws, regulations, or
permits. Certain of the Environmental Regulatory Laws also authorize suits by
private parties for damages and injunctive relief. Repeated unexcused failure
to comply with environmental standards may also constitute a default by the
Operating Subsidiary under its Service Agreement.
The Environmental Regulatory Laws and federal and state governmental
regulations and policies governing their enforcement are subject to revision.
New technology may be required or stricter standards may be established for
the control of discharges of air or water pollutants or for solid waste or
ash handling and disposal. Thus, as new technology is developed and proven,
it may be required to be incorporated into new facilities or major
modifications to existing facilities. This new technology may often be more
expensive than that used previously.
The Clean Air Act Amendments of 1990 required EPA to promulgate New Source
Performance Standards ("NSPS") and Emission Guidelines ("EG") applicable to
new and existing municipal waste combustion units for particulate matter
(total and fine), opacity (as appropriate), sulfur dioxide, hydrogen
chloride, oxides of nitrogen, carbon monoxide, dioxins and dibenzofurans.
The EPA proposed NSPS and EG regulations on September 20, 1994, incorporating
all the requirements mandated by the 1990 Amendments. OPI, as well as other
individual members of the industry, the industry trade association, affected
client communities and their organizations and environmental groups have all
submitted extensive comments to EPA on these proposed regulations. EPA is
developing the regulations under a court order which requires that they be in
their final form by September 1, 1995. Due to the extensive nature of the
comments submitted, as well as developments in the Congress which could
suspend new regulations, it is not clear at what time nor in what form the
final regulations will indeed be published. The form of the proposed rules
would require that most of Ogden's existing facilities be retrofitted for
control equipment to achieve some or all of the mercury, nitrogen oxide,
organics and acid gases emissions limits.
The NSPS and EG, which OPI believes will be issued in final form in 1995,
will require capital improvements or operating changes to most of the
facilities operated by Ogden. The exact timing and cost of such
modifications cannot be stated definitively because State regulations
embodying these have generally not been finally adopted. The costs to meet
new rules for existing facilities owned by Client Communities will be borne
by the Client Communities. For projects owned or leased by Ogden and
operated under a Service Agreement, the Client Community has the obligation
to fund such capital improvements, to which Ogden must make an equity
contribution, generally 20%. Such equity contributions are likely to range,
in total for all such facilities, from $9 million to $15 million. With
respect to a project owned by Ogden and not operated pursuant to a Service
Agreement, such capital improvements may cost between $8 million and $15
million. Ogden believes that most costs incurred to meet EG and operating
permit requirements at facilities it operates may be recovered from Client
Communities and other users of its facilities through increased tipping fees
permitted under applicable contracts.
The Clean Air Act also requires each state to implement a state
implementation plan that outlines how areas out of compliance with federally-
established national ambient air quality standards will be returned to
compliance. The state plans must include an operating permit program. Most
states are now in the process of implementing these requirements. The state
implementation plans and the operating permits to be issued under them may
place new requirements on waste-to-energy facilities. Under federal law, the
new operating permits may have a term of up to 12 years after issuance or
renewal, subject to review every 5 years.
The Environmental Remediation Laws prohibit disposal of hazardous waste
other than in small, household-generated quantities at Ogden's municipal
solid waste facilities. The Service Agreements recognize the potential for
improper deliveries of hazardous wastes and specify procedures for dealing
with hazardous waste that is delivered to a facility. Although certain
Service Agreements require the Operating Subsidiary to be responsible for
some costs related to hazardous waste deliveries, to date, no Operating
Subsidiary has incurred material hazardous waste disposal costs.
PUBLIC UTILITY REGULATORY POLICIES ACT
Ogden's business is subject to the provisions of the federal Public Utility
Regulatory Policies Act ("PURPA"). Pursuant to PURPA, the Federal Energy
Regulatory Commission ("FERC") has promulgated regulations that exempt
qualifying facilities (facilities meeting certain size, fuel and ownership
requirements) from compliance with certain provisions of the Federal Power
Act, the Public Utility Holding Company Act of 1935, and, except under
certain limited circumstances, state laws regulating the rates charged by, or
the financial and organizational activities of, electric utilities. PURPA
was promulgated in 1978 to encourage the development of cogeneration
facilities and small facilities making use of non-fossil fuel power sources,
including waste-to-energy facilities. The exemptions afforded by PURPA to
qualifying facilities from the Federal Power Act and the Public Utility
Holding Company Act of 1935 and most aspects of state electric utility
regulation are of great importance to OPI and its competitors in the waste-
to-energy industry.
State public utility commissions must approve the rates, and in some
instances other contract terms, by which public utilities purchase electric
power from Ogden's projects. PURPA requires that electric utilities purchase
electric energy produced by qualifying facilities at negotiated rates or at
a price equal to the incremental or "avoided" cost that would have been
incurred by the utility if it were to generate the power itself or purchase
it from another source. While public utilities are not required by PURPA to
enter into long-term contracts, PURPA creates a regulatory environment in
which such contracts can typically be negotiated.
In January and February, 1995, the FERC issued two orders in which it
modified its previous interpretation of PURPA and held that state laws and
regulatory orders directing utilities to purchase electricity from qualifying
facilities at rates in excess of the utility's projected avoided costs were
preempted by PURPA and that contracts providing for such above-avoided cost
rates were void. Such laws and regulations have been used in the past by
states to encourage the development of environmentally beneficial facilities
such as waste-to-energy facilities. The FERC stated in both orders that it
intends to apply its reinterpretation of PURPA only on a prospective basis
and that it will not entertain requests by utilities to invalidate power
sales agreements entered into pursuant to such state laws and regulatory
orders unless the purchasing utility raised the issue of the legality of the
rate at the time of contract execution. Ogden does not believe any of the
power sales agreements related to its waste-to-energy facilities is subject
to challenge based on the prospective nature of the orders. However,
numerous petitions have been filed with the FERC seeking rehearing of its
January, 1995 order, including by electric utilities challenging the
prospective nature of the relief granted by the FERC. Ogden cannot predict
the ultimate outcome of these proceedings or whether any of the agreements
for the sale of electricity from its facilities will be affected thereby.
FLOW CONTROL
Many states have mandated local and regional solid waste planning, and
require that new solid waste facilities may be constructed only in conformity
with these plans. State laws may authorize the planning agency to require
that waste generated within its jurisdiction be brought to a designated
facility, which may help that facility become economically viable but
preclude the development of other facilities in that jurisdiction. Such
ordinances are sometimes referred to as legal flow control. In 1994, the
United States Supreme Court ruled that the flow control ordinance of
Clarkstown, New York was unconstitutional as a local regulation of interstate
commerce that is unauthorized by Congress and therefore violative of the
United States Constitution. The Court's decision has been applied by other
courts to invalidate or question other similar laws and ordinances.
Ogden does not believe this decision would materially impact Ogden's
existing facilities or its ability to develop new ones. This view is based
on a number of considerations. Most of the contracts pursuant to which Ogden
provides disposal services require the Client Community to deliver stated
minimum quantities of waste on a put-or-pay basis. Furthermore, only a few
of the Client Communities served by Ogden relied solely on legal flow control
to provide waste to Ogden's facilities, a factor influenced in part by past
difficulties in enforcing legal flow control ordinances. Although some
municipalities may experience temporary difficulties in meeting delivery
commitments as they address required changes in their waste disposal plans,
such difficulties should not be long-lived as indicated by the experience of
municipalities served by OPI which adopted alternative measures. Ogden
believes that there are other methods for providing incentives to use
integrated waste systems incorporating waste to energy that do not entail
legal flow control, which incentives should not be affected by the Court's
decision. These include mandating that charges for utilization of the system
be maintained at competitive levels and that revenue shortfalls be funded
from tax revenues or special assessments on residents. This type of
incentive will be utilized at the facility being constructed and which will
be operated by Ogden in Montgomery County, Maryland.
Congressional action authorizing flow control was brought at the end of the
1994 Congressional session, but passage was defeated on the last day of the
session by a single vote. Legislation is again pending in the current
session of Congress.
Furthermore, in most of the municipalities where OPI provides services,
information available to Ogden indicates that the cost to the Client
Community of waste to energy is competitive with alternative disposal
facilities, and therefore Ogden's facilities should be able to compete for
waste economically. As indicated, however, certain additional waste disposal
services are financed by the Client Community's increasing the cost for
disposal at waste-to-energy facilities, and these services may have to be
paid for by other mechanisms.
In addition, state laws have been enacted in some jurisdictions that may
also restrict the intrastate and interstate movement of solid waste.
Restrictions on importation of waste from other states have generally been
voided by Federal courts as invalid restrictions on interstate commerce.
Bills proposed in past sessions of Congress would authorize such designations
and restrictions. Bills of this nature have been introduced in the current
session of Congress.
ASH RESIDUE
In 1994, the United States Supreme Court held that municipal solid waste
ash residue having hazardous characteristics is subject to RCRA's provisions
for management as a hazardous waste relating to transportation, disposal and
treatment downstream of the point of generation. No ash residue from a fully
operational facility operated by Ogden has been characterized as hazardous
under the present or past EPA prescribed test procedures and such ash residue
is currently disposed of in permitted landfills as non-hazardous waste. In
certain states, ash residue from certain waste-to-energy facilities of other
vendors or communities has, on occasion, been found to have hazardous
characteristics under these test procedures. The Supreme Court's ruling has
not had a significant impact on Ogden's business. Following that decision
and related EPA actions made adjustments to its operations and, as required
by EPA guidance, did tests that show that the ash residue leaving its
facilities is not hazardous.
The trade association of which Ogden is a member, Ogden and other industry
members have filed an action against the EPA in federal court challenging
certain actions taken by EPA since the Court's ruling which could require
some waste-to-energy facilities to obtain permits under RCRA in connection
with the conditioning of ash. Ogden believes that pending EPA rulings will
resolve this issue so that such permitting is not required at its facilities.
However, a conclusion must await final agency action.
OTHER MATTERS
In October, 1992, Congress enacted, and the President signed into law,
comprehensive energy legislation, several provisions of which are intended to
foster the development of competitive, efficient bulk power generation
markets throughout the country. Although the impact of the legislation
cannot be fully known because Federal and State regulatory agencies are still
engaged in the process of developing policies and promulgating implementing
regulations, OPI believes that, over the long term, the legislation will
create business opportunities both in the waste-to-energy field as well as in
other power generation fields.
Item 2. PROPERTIES
(a) Services
The principal physical properties of Services are the fueling installations
at various airports in the United States and Canada and the corporate
premises located at Two Pennsylvania Plaza, New York, New York 10121 under
lease, which expires on April 30, 2008 and which contains an option by Ogden
to renew for an additional five years.
Atlantic Design Company's corporate offices are located in Charlotte, North
Carolina. Atlantic Design owns a 51,000 square foot operating facility on
3.5 acres of land in Vestal, New York. Atlantic Design also leases operating
facilities at various locations in Florida, New Jersey and New York. The
leases range from a term of one year to as long as ten years.
Ogden Services Corporation, through wholly-owned subsidiaries, owns and
leases buildings in various areas in the United States and several foreign
countries which house office, laboratory and warehousing operations. The
leases range from a month-to-month term to as long as five years.
The Aviation in-flight food service operation facilities, aggregating
approximately 600,000 square feet, are leased, except at Newark, New Jersey;
Miami, Florida; and Las Vegas, Nevada, which are owned.
Entertainment owns and operates Fairmount Park racetrack, which conducts
thoroughbred and harness racing on a 150-acre site with a long-term lease
expiring in 2017 located in Collinsville, Illinois, eight miles from downtown
St. Louis. Entertainment also owns a 148-acre site located at East St.
Louis, Illinois.
Ogden Abatement and Decontamination Services owns a 12,000 square-foot
warehouse and office facility located in Long Island City, New York.
Technology leases most of its facilities, consisting almost entirely of
office space. This includes an 11-year lease which began in 1986 for its
headquarters facility in Fairfax, Virginia, for approximately 119,000 square
feet as well as office space in other locations throughout the United States
under lease terms of five years or less.
Environmental's headquarters is located in Fairfax, Virginia, where
Environmental currently occupies approximately 27,000 square feet of space in
the headquarters building of ERC International, Inc. ("ERCI"), a wholly-owned
subsidiary of Ogden. Environmental's lease payments include the cost of
certain services and allocations which are shared with ERCI. Environmental
has agreed to continue to occupy and sublease from ERCI not less than 24,000
square feet of space in the building for the remainder of the lease term
expiring in 1997.
Environmental also leases an aggregate of approximately 347,000 square feet
of office and laboratory space in 40 separate locations in 17 states in the
United States. These leases are generally short term in nature, with terms
which range from five to ten years or less and include (i) the headquarters
office described above, (ii) office and laboratory space in Nashville and Oak
Ridge, Tennessee; San Diego, California; Pensacola, Florida; and Phoenix,
Arizona, and (iii) laboratory office space owned in Fort Collins, Colorado.
In addition to its Fairfax, Virginia headquarters, Environmental maintains
regional headquarters in San Diego, California and Nashville, Tennessee.
Many of the other Services segment facilities operate from
leased premises located principally within the United States.
(b) Projects
OPI's principal executive offices are located in Fairfield, New Jersey, in
an office building located on a 5.4-acre site owned by OPI.
The following table summarizes certain information relating to the
locations of the properties owned or leased by OPI or its subsidiaries as of
January 31, 1995<F1>.
Approx.
Site
Size
Location in Acres Site Use Nature of Interest
Fairfield, New Jersey 5.4 Office space Own
Marion County, Oregon 15.2 Waste-to-energy Own <F2>
Alexandria/Arlington, facility
Virginia 3.3 Waste-to-energy Acquiring the Alexandria
factility Authority's and the
Arlington Authority's
interest under Site lease
(expires Oct. 1, 2025)
pursuant to Conditional
Sale Agreement
Bristol, Connecticut 18.2 Waste-to-energy Own <F2>
facility
Bristol, Connecticut 35.0 Landfill Site lease(expires Jul.
1, 2014)
Indianapolis, Indiana 23.5 Waste-to-energy Site lease (expires Dec.,
facility 2008 subject to four 5-
year renewal options)<F2>
Stanislaus County, 16.5 Waste-to-energy Site lease (expires Aug.
California facility 20, 2021 subject to 15-
year renewal option) <F2>
Babylon, New York 9.5 Waste-to-energy Site lease (expires Dec.
facility 19, 2010, with renewal
options)
Haverhill, Massachusetts 12.7 Waste-to-energy Site lease (expires Mar.
facility 16, 1997, subject to
sixteen 5-year renewal
options) <F2>
Haverhill, Massachusetts 16.8 RDF processing Site lease (expires Mar.
facility 16, 1997, subject to
sixteen 5-year renewal
options) <F2>
Haverhill, Massachusetts 20.2 Landfill Site lease (expires Mar.
16, 1997, subject to
sixteen 5-year renewal
options) <F2>
Lawrence, Massachusetts 11.8 RDF power plant Own <F2>
Lake County, Florida 15.0 Waste-to-energy Own <F2>
facility
Wallingford, Connecticut 10.3 Waste-to-energy Site lease (expires Dec.
facility 1, 2026) <F2>
Fairfax County, Virginia 22.9 Waste-to-energy Acquiring Fairfax
facility Authority's interest
under Site Lease (expires
Mar. 10, 2016) pursuant
to Conditional Sale
Agreement
Imperial County, 83.0 Undeveloped Own
California land
Montgomery County 35.0 Waste-to-energy Site lease (expires Nov.
facility 16, 2030) <F2>
Huntington, New York 13.0 Waste-to-energy Site lease (expires Oct.
facility 28, 2012, subject to
successive renewal terms
through Jan. 28, 2029)
<F2>
Warren County, 19.8 Waste-to-energy Site lease (expires Nov.
New Jersey facility 16, 2005 subject to two
ten-year renewals) <F2>
Hennepin County, 14.6 Waste-to-energy Leases of site and
Minnesota facility facility (expires Oct. 1,
2017 subject to renewal
options to December 20,
2024) <F2><F3>
Stockton, California 4.5 Contaminated Site lease (expired
soil remediation remediation February 1,
facility 1994)
(discontinued)
Tulsa, Oklahoma 22.0 Waste-to-energy Leases of site and
facility facility (expires April
30, 2012 subject to
renewal options to August
2, 2026) <F2><F3>
Harris County, Texas 14.0 Undeveloped Own
land
Onondaga, New York 12.0 Facility site Site lease expires
contemporaneously with
service agreement,
subject to renewal
options to May 9, 2020
<F2>
NOTES:
<F1> Two Facilities not listed in the table were initially owned by political
subdivisions and were sold to a leveraged lessor. The leverage lessor
entered into lease agreements with the respective Operating subsidiaries
as accommodation leases. All of the lease obligations, including the
obligation to pay rent, are passed through to the client communities.
<F2> The Operating Subsidiary's ownership or leasehold interest is subject to
material liens in connection with the financing of the related project.
<F3> Sublease of site expires contemporaneously with facility lease.
Item 3. LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS
(a) Legal Proceedings
The Company is a party to various legal proceedings involving matters
arising in the ordinary course of business. The Company does not believe
that there are any pending legal proceedings for damages against the Company,
including the legal proceeding described below, the outcome of which would
have a material adverse effect on the Company on a consolidated basis.
In December 1993 and January 1994, individuals who had been shareholders
of American Envirotech, Inc. ("AEI"), a company which in 1992 had been
acquired in a merger by a subsidiary of the Company, sued the Company and
several of its subsidiaries in state courts in Fort Worth and Houston, Texas.
The plaintiffs claim that AEI's termination of its project development in
1993 breached the merger agreement, and that in connection with the
termination the Company and its subsidiaries breached fiduciary duties and
committed fraud. The Fort Worth plaintiffs seek damages in an unspecified
amount. The Houston plaintiffs seek $37 million in actual damages as well as
significant punitive damages. Both cases are in pre-trial proceedings. On
March 2, 1995, the Fort Worth court indicated that it would grant plaintiffs'
summary judgement motion, and find that the defendants breached the contract.
The Company believes that AEI properly terminated its contract in
accordance with its terms, that it acted at all times fairly and in
compliance with its obligations; and, based on the advice of counsel, that it
has meritorious defenses. The Company also believes, based on the advice of
counsel, that questions of fact exist and therefore, the Fort Worth court
erred in granting summary judgment. The Company intends to take whatever
actions are necessary, at the appropriate time, to overcome the impact of the
summary judgment ruling, and if it is successful all issues will be tried by
a jury. Otherwise the case will be tried as to non-contractual claims and
damages only. The Company believes that plaintiffs have not been damaged
because the project could not have been completed on a successful basis, and
under the merger agreement payments to the plaintiffs were contingent upon
successful financing and profitable operations. The Company will vigorously
defend these lawsuits and pursue all appropriate appeal rights, if necessary.
No assurances can be given as to the ultimate outcome of either case.
(b) Environmental Matters
Ogden conducts regular inquiries of its subsidiaries regarding litigation
and environmental violations which include determining the nature, amount and
likelihood of liability for any such claims, potential claims or threatened
litigation.
In the ordinary course of its business, subsidiaries of Ogden may become
involved in Federal, state, and local proceedings relating to the laws
regulating the discharge of materials into the environment and the protection
of the environment. These include proceedings for the issuance, amendment,
or renewal of the licenses and permits pursuant to which the subsidiary
operates. Such proceedings also include actions brought by individuals or
local governmental authorities seeking to overrule governmental decisions on
matters relating to the subsidiaries' operations in which the subsidiary may
be, but is not necessarily, a party. Most proceedings brought against an
Ogden subsidiary by governmental authorities or private parties under these
laws relate to alleged technical violations of regulations, licenses, or
permits pursuant to which the subsidiary operates. Ogden believes that such
proceedings will not have a material adverse effect on Ogden and its
subsidiaries on a consolidated basis.
Ogden's operations are subject to various Federal, state and local
environmental laws and regulations, including the Clean Air Act, the Clean
Water Act, the Comprehensive Environmental Response Compensation and
Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA).
Although Ogden's operations are occasionally subject to proceedings and
orders pertaining to emissions into the environment and other environmental
violations, Ogden believes that it is in substantial compliance with existing
environmental laws and regulations and to the best of its knowledge neither
Ogden nor any of its operations have been named as a potential responsible
party at any site.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of Ogden during
the fourth quarter of 1994.
EXECUTIVE OFFICERS OF OGDEN
Set forth below are the names, ages, position and office, and year
appointed, of all "executive officers" (as defined by Rule 3b-7 of the
Securities Exchange Act of 1934) of Ogden as of March 31, 1995:
CONTINUALLY
AN OGDEN
POSITIONS & AGE AS OF OFFICER
NAME OFFICE HELD 3/31/95 SINCE
===========================================================================
Ralph E. Ablon Chairman of 78 1962
the Board
R. Richard Ablon President & 45 1987
Chief Executive
Officer
CONTINUALLY
AN OGDEN
POSITIONS & AGE AS OF OFFICER
NAME OFFICE HELD 3/31/95 SINCE
===========================================================================
Constantine G.Caras Executive Vice 56 1991
President & Chief
Administrative Officer
Scott G. Mackin President & Chief 38 1992
Operating Officer,
Ogden Projects, Inc.,
a wholly-owned
subsidiary of Ogden
Philip G. Husby Senior Vice 48 1991
President, Treasurer &
Chief Financial Officer
Lynde H. Coit Senior Vice 40 1991
President & General
Counsel
David L. Hahn Senior Vice President 43 1995
Rodrigo Arboleda Senior Vice President 54 1995
Robert M. DiGia Vice President, 70 1965
Controller & Chief
Accounting Officer
Nancy R. Christal Vice President- 36 1992
Investor Relations
Kathleen Ritch Vice President & 52 1981
Secretary
There is no family relationship by blood, marriage or adoption (not more
remote than first cousins) between any of the above individuals and any Ogden
director, except that R. Richard Ablon, an Ogden director and President and
Chief Executive Officer, is the son of Ralph E. Ablon, an Ogden director and
Chairman of the Board.
The term of office of all officers shall be until the next election of
directors and until their respective successors are chosen and qualified.
There are no arrangements or understandings between any of the above
officers and any other person pursuant to which any of the above was selected
as an officer.
Except as set forth below, the foregoing table lists the principal
occupation and employment of the named individual and the position or similar
position that he/she has held since January 1, 1990:
Ralph E. Ablon has been Chairman of the Board of Ogden since 1962 and
served as its Chief Executive Officer prior to May 1990.
R. Richard Ablon has been President and Chief Executive Officer of Ogden
since May 1990. From January, 1987 to May 1990, he was President and Chief
Operating Officer, Operating Services, Ogden. Mr. Ablon has served as
Chairman of the Board and Chief Executive Officer of Ogden Projects, Inc.,
since November 1990.
Constantine G. Caras has been Executive Vice President and Chief
Administrative Officer since July 1990. Since September 1986 he has served
as Executive Vice President of Ogden Services Corporation.
Scott G. Mackin has been considered an Executive Officer of Ogden since
1992. He has been President and Chief Operating Officer of Ogden Projects,
Inc. since January 1991. From November 1990 to January 1991, he was Co-
President, Co-Chief Operating Officer, General Counsel and Secretary at
Ogden Projects, Inc. Between 1987 and 1990 Mr. Mackin served in various
executive capacities of Ogden Projects, Inc.
Philip G. Husby has been Senior Vice President and Chief Financial Officer
of Ogden since January 1, 1991. From April 1987 to December 31, 1990, he
served as Senior Vice President and Chief Administrative Officer of Ogden
Financial Services, Inc., an Ogden subsidiary.
Lynde H. Coit has been a Senior Vice President and General Counsel of Ogden
since January 17, 1991. From April 1989 to January 1991, he was Senior
Vice President and General Counsel of Ogden Financial Services, Inc., an
Ogden subsidiary. From January 1988 to March 1989, he was a partner of the
law firm of Nixon, Hargrave, Devans & Doyle and prior thereto he was
employed by that firm.
David L. Hahn was elected Senior Vice President of Ogden in January 1995.
He has served as Vice President-Marketing of Ogden Services Corporation for
more than the past five years.
Rodrigo Arboleda was elected Senior Vice President of Ogden in January
1995. Since 1992, he has served as Senior Vice President-Business
Development for Latin America of Ogden Services Corporation. From 1989 to
1992 he owned and served as the President and Chief Executive Officer of
Interamerican Consulting Group, Inc., a consulting firm located in Miami,
Florida specializing in management, financing, and restructuring of
troubled companies.
Nancy R. Christal has been Vice President - Investor Relations of Ogden
since February 1992 and served as Ogden's Director, Investor Relations from
January 1991 to February 1992. From April 1990 to January 1991, she was
Director, Investor Relations at Ogden Projects, Inc. From 1985 to March
1990 she served first as Manager and then as Assistant Vice President,
Investor Relations at Chemical Bank.
Part II
Item 5. MARKET FOR OGDEN'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Pursuant to General Instruction G (2), the information called for by this
item is hereby incorporated by reference from Page 49 of Ogden's 1994 Annual
Report to Shareholders.
As of March 1, 1995, the approximate number of Ogden common stock
Shareholders was 12,700.
Item 6. SELECTED FINANCIAL DATA
Pursuant to General Instruction G (2), the information called for by this
item is hereby incorporated by reference from Page 26 of Ogden's 1994 Annual
Report to Shareholders.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pursuant to General Instruction G (2), the information called for by this
item is hereby incorporated by reference from Pages 24 and 25 of Ogden's 1994
Annual Report to Shareholders.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pursuant to General Instruction G (2), the information called for by this
item is hereby incorporated by reference from Pages 26 through 46 and Page 49
of Ogden's 1994 Annual Report to Shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF OGDEN
Pursuant to General Instruction G (3), the information regarding directors
called for by this item is hereby incorporated by reference from Ogden's 1995
Proxy Statement to be filed with the Securities and Exchange Commission.
Item 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G (3), the information called for by this
item is hereby incorporated by reference from Ogden's 1995 Proxy Statement to
be filed with the Securities and Exchange Commission. The information
regarding officers called for by this item is included at the end of Part I
of this document under the heading "Executive Officers of Ogden."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction G (3), the information called for by this
item is hereby incorporated by reference from Ogden's 1995 Proxy Statement to
be filed with the Securities and Exchange Commission.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G (3), the information called for by this
item is hereby incorporated by reference from Ogden's 1995 Proxy statement to
be filed with the Securities and Exchange Commission.
Part IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Listed below are the documents filed as a part of this report:
1). All financial statements contained on pages 27 through 46 and the
Independent Auditors' Report on page 47 of Ogden's 1994 Annual
Report to Shareholders are incorporated herein by reference.
2). Financial statement schedules as follows:
(i) Schedule II - Valuation and Qualifying Accounts for the years ended
December 31, 1994, 1993 and 1992.
3). Those exhibits required to be filed by Item 601 of Regulation S-K:
EXHIBITS
2.0 Plans of Acquisition, Reorganization, Arrangement, Liquidation or
Succession.
2.1 Agreement and Plan of Merger, dated as of October 31, 1989, among
Ogden, ERCI Acquisition Corporation and ERC International, Inc.*
2.2 Agreement and Plan of Merger among Ogden Corporation, ERC
International, Inc., ERC Acquisition Corporation and ERC
Environmental and Energy Services Co., Inc., dated as of January
17, 1991.*
2.3 Amended and Restated Agreement and Plan of Merger among Ogden
Corporation, OPI Acquisition Corp. and Ogden Projects, Inc., dated
as of September 27, 1994.*
3.0 Articles of Incorporation and By-laws.
3.1 Ogden's Restated Certificate of Incorporation as amended.*
3.2 Ogden's By-Laws, as amended through March 17, 1994.*
4.0 Instruments Defining Rights of Security Holders.
4.1 Fiscal Agency Agreement between Ogden and Bankers Trust Company,
dated as of June 1, 1987, and Offering Memorandum dated June 12,
1987, relating to U.S. $85 million Ogden 6% Convertible
Subordinated Debentures, Due 2002.*
4.2 Fiscal Agency Agreement between Ogden and Bankers Trust Company,
dated as of October 15, 1987, and Offering Memorandum, dated
October 15, 1987, relating to U.S. $75 million Ogden 5-3/4%
Convertible Subordinated Debentures, Due 2002.*
4.3 Indenture dated as of March 1, 1992 from Ogden Corporation to The
Bank of New York, Trustee, relating to Ogden's $100 million debt
offering.*
10.0 Material Contracts
10.1 Credit Agreement by and among Ogden, The Bank of New York, as Agent
and the signatory bank Lenders thereto dated as of September 20,
1993.*
10.2 Stock Purchase Agreement, dated May 31, 1988, between Ogden and
Ogden Projects, Inc.*
10.3 Tax Sharing Agreement, dated January 1, 1989, between Ogden, Ogden
Projects, Inc. and subsidiaries, Ogden Allied Services, Inc. an
subsidiaries, and Ogden Financial Services, Inc. and subsidiaries.*
10.4 Stock Purchase Option Agreement, dated June 14, 1989, between Ogden
and Ogden Projects, Inc. as amended on November 16, 1989.*
10.5 Preferred Stock Purchase Agreement, dated July 7, 1989, between
Ogden Financial Services, Inc. and Image Data Corporation.*
10.6 Rights Agreement between Ogden Corporation and Manufacturers
Hanover Trust Company, dated as of September 20, 1990.*
10.7 Executive Compensation Plans and Arrangements
(a) Ogden Corporation 1986 Stock Option Plan.*
(b) Ogden Corporation 1990 Stock Option Plan.*
(i) Ogden Corporation 1990 Stock Option Plan as Amended and
Restated as of January 19, 1994.*
(c) Ogden Services Corporation Executive Pension Plan.*
(d) Ogden Services Corporation Select Savings Plan.*
(i) Ogden Services Corporation Select Savings Plan Amendment
and Restatement as of January 1, 1995. Transmitted
herewith as Exhibit 10.7 (d)(i).
(e) Ogden Services Corporation Select Savings Plan
Trust.*
(i) Ogden Services Corporation Select Savings Plan Trust
Amendment and Restatement dated as of January 1, 1995.
Transmitted herewith as Exhibit 10.7 (e)(i).
(f) Ogden Services Corporation Executive Pension Plan Trust.*
(g) Changes effected to the Ogden Profit Sharing Plan effective
January 1, 1990.*
(h) Employment Letter Agreement between Ogden and Lynde H. Coit
dated January 30, 1990.*
(i) Employment Agreement between Ogden and R.
Richard Ablon dated as of May 24, 1990.*
(i) Letter Amendment Employment Agreement between Ogden and
R. Richard Ablon dated as of October 11, 1990.*
(j) Employment Agreement between Ogden and C. G. Caras dated as of
July 2, 1990.*
(i) Letter Amendment to Employment Agreement between Ogden
Corporation and C.G. Caras, dated as of October 11,
1990.*
(k) Employment Agreement between Ogden and Philip G. Husby as of
July 2, 1990.*
(l) Termination Letter Agreement between Maria P. Monet and Ogden
dated as of October 22, 1990.*
(m) Letter Agreement between Ogden Corporation and Ogden's
Chairman of the Board, dated as of January 16, 1992.*
(n) Employment Agreement between Ogden and Ogden's Chief
Accounting Officer dated as of December 18, 1991.*
(o) Employment Agreement between Scott G. Mackin and Ogden
Projects, Inc. dated as of January 1, 1994.*
(p) Ogden Corporation Profit Sharing Plan.*
(i) Ogden Profit Sharing Plan as amended and restated January
1, 1991 and as in effect through January 1, 1993.*
(ii) Ogden Profit Sharing Plan as amended and restated
effective as of January 1, 1995. Transmitted herewith as
Exhibit 10.7 (p)(ii).
(q) Ogden Corporation Core Executive Benefit Program.*
(r) Ogden Projects Pension Plan.*
(s) Ogden Projects Profit Sharing Plan.*
(t) Ogden Projects Supplemental Pension and Profit Sharing Plans.*
(u) Ogden Projects Employee's Stock Option Plan.*
(i) Amendment, dated as of December 29, 1994 to the Ogden
Projects Employees' Stock Option Plan. Transmitted
herewith as Exhibit 10.7 (u)(i).
(v) Ogden Projects Core Executive Benefit Program.*
(w) Form of amendments to the Ogden Projects, Inc. Pension Plan
and Profit Sharing Plans effective as of January 1, 1994.*
(i) Form of Amended Ogden Projects, Inc. Profit Sharing Plan,
effective as of January 1, 1994. Transmitted herewith as
Exhibit 10.7 (w)(i).
(ii) Form of Amended Ogden Projects, Inc. Pension Plan,
effective as of January 1, 1994. Transmitted herewith as
Exhibit 10.7 (w)(ii).
10.8 First Amended and Restated Ogden Corporation Guaranty
Agreement made as of January 30, 1992 by Ogden Corporation for
the benefit of Mission Funding Zeta and Pitney Bowes Credit
Corporation.*
10.9 Ogden Corporation Guaranty Agreement as of January 30, 1992 by
Ogden Corporation for the benefit of Allstate Insurance
Company and Ogden Martin Systems of Huntington Resource
Recovery Nine Corporation.*
11 Ogden Corporation and Subsidiaries Detail of Computation of
Earnings Applicable to Common Stock for the years ended
December 31, 1994, 1993 and 1992. Transmitted herewith as
Exhibit 11.
13 Those portions of the Annual Report to Stockholders for the
year ended December 31, 1994, which are incorporated herein by
reference. Transmitted herewith as Exhibit 13.
21 Subsidiaries of Ogden. Transmitted herewith as Exhibit 21.
23 Consent of Deloitte & Touche LLP. Transmitted herewith as
Exhibit 23.
27 Financial Data Schedule (EDGAR Filing Only). Transmitted
herewith as Exhibit 27.
* Incorporated by reference as set forth in the Exhibit Index of this
Annual Report on Form 10-K.
(b) No Reports on Form 8-K were filed by Ogden during the fourth
quarter of 1994. However, on January 3, 1995 Ogden filed a Form 8-K
Current Report pursuant to the merger transaction resulting in
Ogden Projects, Inc. becoming a wholly-owned subsidiary of Ogden
effective December 29, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OGDEN CORPORATION
Date: March 16, 1995 By /S/ R. Richard Ablon
R. Richard Ablon
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.
SIGNATURE TITLE
/S/ Ralph E. Ablon Chairman of the Board & Director
RALPH E. ABLON
/S/ R. Richard Ablon President & Chief Executive Officer
R. RICHARD ABLON and Director
/S/ Philip G. Husby Senior Vice President, Treasurer and
PHILIP G. HUSBY Chief Financial Officer
/S/ Robert M. DiGia Vice President, Controller and Chief
ROBERT M. DIGIA Accounting Officer
/S/ David M. Abshire Director
DAVID M. ABSHIRE
/S/ Norman G. Einspruch Director
NORMAN G. EINSPRUCH
/S/ Constantine G. Caras Director
CONSTANTINE G. CARAS
/S/ Attallah Kappas Director
ATTALLAH KAPPAS
(i)
/S/ Terry Allen Kramer Director
TERRY ALLEN KRAMER
/S/ Maria P. Monet Director
MARIA P. MONET
/S/ Judith D. Moyers Director
JUDITH D. MOYERS
/S/ Homer A. Neal Director
HOMER A. NEAL
/S/ Stanford S. Penner Director
STANFORD S. PENNER
/S/ Jesus Sainz Director
JESUS SAINZ
/S/ Frederick Seitz Director
FREDERICK SEITZ
/S/ Robert E. Smith Director
ROBERT E. SMITH
/S/ Helmut F. O. Volcker Director
HELMUT F.O. VOLCKER
/S/ Abraham Zaleznik Director
ABRAHAM ZALEZNIK
(ii)
INDEPENDENT AUDITORS' REPORT
Ogden Corporation:
We have audited the consolidated financial statements of Ogden Corporation
and subsidiaries as of December 31, 1994 and 1993 and for each of the three
years in the period ended December 31, 1994, and have issued our report
thereon dated February 3, 1995, which report includes an explanatory
paragraph relating to the adoption of Statements of Financial Accounting
Standards No. 106, 109, 112, and 115; such consolidated financial statements
and report are included in your 1994 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedules of Ogden Corporation and subsidiaries, listed
in Item 14. These consolidated financial statement schedules are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/Deloitte & Touche LLP
New York, New York
February 3, 1995
SCHEDULE II
OGDEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
Allowances deducted in the balance sheet
from the assets to which they apply:
Doubtful receivables - current $25,547,000 $ 5,869,000 $10,241,000 <F1> $ 9,047,000 <F4> $32,783,000
31,000 <F2>
142,000 <F3>
Deferred charges on projects 750,000 5,650,000 1,350,000 <F2> 750,000 <F5> 7,000,000
TOTAL $26,297,000 $11,519,000 $11,764,000 $ 9,797,000 $39,783,000
Allowances not deducted:
Provision for consolidation of facilities $ 4,720,000 $ 1,320,000 <F7> $ 3,400,000
Estimated cost of disposal of discontinued
operations 1,008,000 $ 1,485,000 <F6> 1,548,000 <F8> 945,000
Reserves relating to tax indemnification
and other contingencies in connection
with the sale of limited partnership
interests in and related tax benefits of
a waste-to-energy facilty $ 6,000,000 6,000,000
Other 1,477,000 3,500,000 (1,350,000) <F2> 23,000 <F7> 3,604,000
TOTAL $ 7,205,000 $ 9,500,000 $ 135,000 $ 2,891,000 $13,949,000
Notes:
<F1> Reserve for contract billing adjustments.
<F2> Transfer from other accounts.
<F3> Recoveries of amounts previously written off.
<F4> Write-offs of receivables considered uncollectible.
<F5> Write-offs of unsuccessful development costs.
<F6> Net proceeds from operations and sale of assets relating to discontinued
operations.
<F7> Payments charged to allowances.
<F8> Gain from on-site remediation business utilizing mobile technology.
SCHEDULE II
OGDEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
Allowances deducted in the balance sheet
from the assets to which they apply:
Doubtful receivables - current $19,730,000 $7,682,000 $4,073,000 <F1> $ 6,034,000 <F4> $25,547,000
119,000 <F2> 94,000 <F5>
71,000 <F3>
Deferred charges on projects 750,000 750,000
TOTAL $20,480,000 $7,682,000 $4,263,000 $ 6,128,000 $26,297,000
Allowances not deducted:
Provision for consolidation of facilities $ 6,040,000 $ 1,320,000 <F7> $ 4,720,000
Estimated cost of disposal of discontinued
operations 7,620,000 $1,706,000 $4,061,000 <F6> 12,379,000 <F8> 1,008,000
Other 285,000 1,350,000 158,000 <F7> 1,477,000
TOTAL $13,945,000 $3,056,000 $4,061,000 $13,857,000 $ 7,205,000
Notes:
<F1> Reserve for contract billing adjustments.
<F2> Transfer from other accounts.
<F3> Recoveries of amounts previously written off.
<F4> Write-offs of receivables considered uncollectible.
<F5> Transfer to other accounts.
<F6> Net proceeds from on-site remediation utilizing mobile technology
$3,853,000 and reclassification of liabilities pertaining to fixed-site
hazardous waste business $208,000.
<F7> Payments charged to allowances.
<F8> Gain from on-site remediation business utilizing mobile technology.
SCHEDULE II
OGDEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
Allowances deducted in the balance
sheet from the assets to which they
apply:
Doubtful receivables - current $15,498,000 $3,279,000 $4,121,000 <F1> $ 5,027,000 <F4> $19,730,000
1,841,000 <F2>
18,000 <F3>
Deferred charges on projects 6,500,000 5,750,000 <F5> 750,000
TOTAL $21,998,000 $3,279,000 $5,980,000 $10,777,000 $20,480,000
Allowances not deducted:
Provision for consolidation of facilities $ 7,360,000 $ 1,320,000 <F1> $ 6,040,000
Estimated cost of disposal of discontinued
operations 7,090,000 $ 530,000 <F6> 7,620,000
Other 1,225,000 940,000 <F7> 285,000
TOTAL $15,675,000 $ 530,000 $ 2,260,000 $13,945,000
Notes:
<F1> Reserve for contract billing adjustment.
<F2> Transfer from other accounts.
<F3> Recoveries of amounts previously written off.
<F4> Write-offs of receivables considered uncollectible.
<F5> Write-offs of unsuccessful development efforts.
<F6> Net proceeds from discontinued operations.
<F7> Payments charged to allowances.