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, 1993
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 1-10282
OGDEN PROJECTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3213657
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 Lane Road, Fairfield, NJ 07007-2615
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code 201-882-9000
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
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 as of February 28, 1994 was $92,396,739.
The number of shares of the registrant's Common Stock outstanding as of
February 28, 1994 was 38,009,544 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, 1993 (Parts II and IV).
(2) Portions of the Registrant's 1994 Proxy Statement to be filed
with the Securities and Exchange Commission (Part III).
PART I
Item 1. BUSINESS
Ogden Projects, Inc. and its subsidiaries (the "Company") provide waste
disposal services throughout the United States. Its principal business,
conducted through wholly-owned subsidiaries, including Ogden Martin
Systems, Inc. ("OMS"), is providing waste-to-energy services. Waste-to-
energy facilities combust municipal solid waste to make saleable energy in
the form of electricity or steam. Approximately 84.2% of the Company's
common stock is held by Ogden Corporation ("Ogden").
The Company was organized as a wholly-owned subsidiary of Ogden in 1984.
Through OMS, it holds the exclusive rights to use the proprietary
technology (the "Martin Technology") of Martin GmbH fur Umwelt-und
Energietechnik of Germany ("Martin") in the United States, other Western
Hemisphere locations, and Israel. In addition, the Company has exclusive
rights to use the Martin Technology only on a full service design,
construct, and operate basis in Germany, the Netherlands, Denmark, Norway,
Sweden, Finland, Poland, and Italy. See "Waste-to-Energy Services -- (h)
The Cooperation Agreement". The Martin Technology is used in over 150
waste-to-energy facilities operating worldwide, principally in Europe, the
Far East, and the United States. Worldwide and in the United States, the
Martin Technology is the leading waste-to-energy technology in terms of
daily municipal solid waste processing capacity as determined from
information available to the Company from Martin and other sources.
The Company completed construction of its first waste-to-energy facility in
1986 and currently operates 25 waste-to-energy projects at 24 locations.
Three facilities are under construction. The Company is the owner or lessee
of 17 of these projects. Additional projects are in various stages of
development. See "Waste-to-Energy Services -- (e) The Company's Waste-to-
Energy Projects."
In 1993 the Company acquired the United States waste-to-energy business of
Asea Brown Boveri Inc. through the acquisition of the stock of one of its
indirect, wholly-owned subsidiaries. By virtue of the acquisition, the
Company became the operator of three facilities. These three facilities do
not employ the Martin Technology. The Company owns and operates four
additional facilities that do not utilize the Martin Technology.
The Company has been awarded three additional projects that are not yet
under construction. See "Waste-To-Energy Services -- The Company's Waste-
to-Energy Projects" herein. The Company has taken preliminary steps toward
expanding its waste-to-energy business internationally. It also is pursuing
opportunities to develop independent power projects that utilize fuels
other than waste. In addition, the Company is pursuing opportunities to
operate and maintain water and wastewater processing facilities. See
"Other Services" herein.
Waste-To-Energy Services
In most cases, the Company, 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 Company
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 are
awarded by Client Communities pursuant to competitive procurement. The
Company has also built and is operating projects that were not
competitively bid. Following award of the project, the Client Community and
the winning vendor must agree upon the final terms of the Service
Agreement.
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 the
Company's control and, accordingly, implementation of an awarded project is
not assured, or may occur only after substantial delays. The Company 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 the Company has made
contractual arrangements with communities that provide partial recovery of
development costs if the project fails to go into construction for reasons
beyond the Company's 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.
Pursuant to the Service Agreement, the Operating Subsidiary designs the
facility, generally applies for the principal permits required for its
construction and operation, and helps to arrange for financing. The
Operating Subsidiary 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 the Company's 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.
Under the Service Agreement, 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.
The Service Agreement requires the Client Community 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. See "Waste-to-Energy Services -- (d) Revenues and Income."
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.
Ogden typically guarantees each Operating Subsidiary's performance under
its respective Service Agreement.
(b) Other Arrangements for Providing Waste-to-Energy Services. The Company
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, the Company must
obtain sufficient waste under contracts with haulers or communities to
ensure sufficient project revenues. The Company 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. The Company's current contracts
with waste suppliers for these two facilities provide that the fee charged
for waste disposal service is subject to increase to a limited extent in
the event that costs of operation increase as a result of Unforeseen
Circumstances. On the other hand, the Company 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, the
Company believes that such projects carry both greater risks and greater
potential rewards than projects in which there is a Client Community. As a
result of the declining number of municipal procurements in the United
States, which is anticipated to continue in the near future, such projects
are likely to become more common.
(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 the Company'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 the
Company.
The Operating Subsidiaries are able to realize value from facilities owned
by them either by selling the facilities and leasing them from the
purchaser for extended terms or by selling limited partnership interests in
the entity owning the facility. The Company has taken advantage of these
financing mechanisms by selling its interests in Tulsa I and Tulsa II to a
leveraged lessor and leasing the facility back under a long term lease. In
addition, in 1991, limited partnership interests in, and the related tax
benefits of, the partnership that owns the Huntington, New York, facility
were sold to third party investors. In 1992 the Company sold the subsidiary
that held the remaining limited partnership interests in, and certain
related tax benefits of, that partnership. Under the limited partnership
agreement, an Operating Subsidiary is the general partner and retains
responsibility for the operation and maintenance of the facility. The
Operating Subsidiary retained 85% of the residual value of the facility
after the initial term of the Service Agreement. In 1991, the Company
acquired a facility from Blount, Inc. which was sold through a sale-
leaseback arrangement. An Operating Subsidiary is the owner of the
facility under construction in Onondaga, New York, and a sale of equity
interests in such facility is under consideration.
(d) Revenues and Income. During the construction period, for 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. Construction revenues also include amounts
relating to sales of limited partnership interests and related tax benefits
in facilities not yet in commercial operation as well as other amounts
received with respect to activities conducted by the Company prior to the
commencement of commercial operation.
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, the
Company 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.
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 Company. 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, the Company may be entitled to fee
adjustments to reflect certain Unforeseen Circumstances.
Information about construction revenues, construction costs, service
revenues, and operating costs for all of the Company's operations for each
of the three years ended December 31, 1993, 1992, and 1991 are presented in
the Company's Statements of Consolidated Income incorporated by reference
to Part IV of this report.
(e) The Company's Waste-to-Energy Projects. Certain information with
respect to the Company's projects as of February 28, 1994 is summarized in
the following table:
THE COMPANY'S WASTE-TO-ENERGY PROJECTS
Tons Boiler Commencement
In Operation Per Day Units of Operations
Tulsa,OK(I)(1)............. 750 2 1986
Haverhill/Lawrence,
MA-RDF(8)................. 950 1 1984
Marion County, OR.......... 550 2(2) 1987
Hillsborough County, FL(3). 1,200 3(2) 1987
Tulsa, OK(II)(1)(4)........ 375 1 1987
Bristol, CT................ 650 2(2) 1988
Alexandria/Arlington, VA... 975 3 1988
Indianapolis, IN........... 2,362 3(2) 1988
Hennepin County, MN (1)(5). 1,000 2 1990
Stanislaus County, CA...... 800 2 1989
Babylon, NY................ 750 2(2) 1989
Haverhill, MA-Mass Burn.... 1,650 2 1989
Warren County, NJ (5)...... 400 2 1990
Kent County, MI(3)......... 625 2(2) 1990
Wallingford, CT(5)......... 420 3(2) 1990
Fairfax County, VA......... 3,000 4(2) 1990
Huntsville, AL(3).......... 690 2(2) 1990
Lake County, FL............ 528 2(2) 1990
Lancaster County, PA(3).... 1,200 3(2) 1991
Pasco County, FL(3)........ 1,050 3(2) 1991
Huntington, NY (6)......... 750 3(2) 1991
Hartford, CT (3)(7)(8)..... 2,000 3 1989
Detroit, MI (1)(8)(9)...... 3,300 3 1989
Honolulu, HI (1)(8)........ 2,160 2 1990
Union County, NJ(3)(11)... 1,440 3 1994
Total................ 29,575
Estimated
Unrecognized
Construction
Revenues as
of 12/31/93
Scheduled (In
Tons Boiler Commencement thousands
Under Construction Per Day Units of Operations of dollars)
Onondaga County, NY....... 990 3(2) 1995 N/A
Lee County, FL(3)......... 1,200 3(2) 1994 $ 46,269
Montgomery County, MD (3). 1,800 3(2) 1995 $177,988
Total..................... 3,990
Estimated
Construction
Expected Revenues (In
Awarded--Not Yet Commencement thousands of
Under Construction Construction dollars)
Mercer County, NJ (3)..... 1,450 2 1994 $154,866
Clark County, OH (10)..... 1,750 2 1995 N/A
Halifax, Nova Scotia (3).. 550 2 1994 $ 99,620*
Total................. 3,750
*Expressed in Canadian Dollars.
____________________
(1) Facility is owned by an owner/trustee pursuant to a sale/leaseback
arrangement.
(2) 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.
(3) Facility is owned (or, with respect to facilities not under
construction, is to be owned) by the Client Community.
(4) Phase II of the Tulsa facility, which was financed as a separate
project, expanded the capacity of the facility from two to three
units.
(5) Operating Subsidiaries were purchased after completion, and use a
mass-burn technology that is not the Martin Technology.
(6) Owned by a limited partnership in which the limited partners are not
affiliated with the Company. See "Waste-to-Energy Services -- (c)
Project Financing."
(7) Under contracts with the Connecticut Resource Recovery Authority and
Northeast Utilities, the Company operates only the boiler and turbine
for this facility.
(8) Operating contracts were acquired after completion. Facility uses a
refuse-derived fuel technology and does not employ the Martin
Technology.
(9) In addition, the Company is presently constructing environmental
improvements to the Detroit Facility. The total price for this
project is approximately $117,800,000 (subject to escalation), and the
Company expects construction to be completed by April 1996.
(10) On May 19, 1993, the Company entered into a Development
Agreement, a Steam Purchase and Sale Agreement, and an Operation
and Maintenance Agreement with Ohio Edison Company. On June 8,
1993, the Company entered into a Host Community Agreement for the
Construction and Operation of a Waste-to-Energy Incinerator with
the Clark County Solid Waste Management District. This contract
is the subject of litigation brought by a local landfill in which
an intermediate appellate court recently enjoined performance by
the County. The County and the Company are determining whether
to appeal to the Ohio Supreme Court or whether to rebid the
Project. The Company is in the process of procuring additional
waste contracts for the facility.
(11) This facility is substantially complete and is processing waste.
The Company expects to recognize an additional $7.2 million in
construction revenues in 1994.
(f) Markets and Competition. The Company 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 MSW. For certain projects, the Company may market its
services directly to private firms in the business of MSW collection and/or
disposal.
The quantity of MSW generated in 1993 in the United States was estimated to
be 201 million tons. This amount is projected to increase to approximately
222 million tons by the year 2000. During 1993, approximately 16% of the
total MSW generated was processed in waste-to-energy facilities and
approximately 1% was incinerated without energy recovery; and approximately
17% was recycled. The remainder was landfilled. The Company believes that
no single waste disposal technique can properly manage all MSW and that an
effective waste management program should include waste minimization,
recycling, and in many circumstances waste to energy to utilize as much
waste as possible for reuse and energy production.
Steps to minimize the quantity of MSW produced are being taken at the
manufacturing and consumer levels. Some jurisdictions, for example, have
banned the use of certain plastic containers. These efforts have not yet
had an appreciable impact on the quantities of MSW being generated.
Increased recycling is a goal of many state and local governments, and some
have legislated ambitious mandatory targets. The Company believes that
increased recycling is an important aspect of waste disposal planning in
the United States and that the amount of MSW recycled in the United States
will continue to grow. However, the Company believes that the inherent
limitations on the types of materials that can successfully be recycled
will continue to require municipalities to use other disposal methods such
as waste to energy or landfilling for much of the waste produced. Most of
the Company's facilities have been sized to accommodate the accomplishment
of communities recycling goals.
Waste-to-energy facilities compete with other disposal methods, such as
landfills. In most of the markets the Company serves, the cost of waste-
to-energy services is competitive with 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 the Company's pricing, which is based on long-term
contracts. 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. See "Regulation"
herein.
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 the Company 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. The Company
believes that the large-scale facilities being contracted for today are
primarily mass-burn systems. Although the Company operates four RDF
projects, these were all acquired after construction. The Company does not
intend to develop any new RDF facilities.
Since 1989 there has been a decline in the number of communities requesting
proposals for waste-to-energy facilities. The Company 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: the economic downturn which adversely
affected local government finances and slowed waste generation;
uncertainties about the impact of recycling on the waste stream; and
concerns arising from the Clean Air Act Amendments of 1990 and the
regulatory actions currently being proposed pursuant to its terms. In
addition, there was aggressive opposition to proposed waste disposal
projects of all types by individuals and organizations during this period.
The Company believes that legislative developments, increased public
acceptance of the safety and cost effectiveness of waste-to-energy, and
economic recovery will resolve many of these uncertainties. The Company
also believes that waste-to-energy facilities and recycling are
complimentary methods of managing a community's waste disposal needs. The
fact that many of the Company'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.
In response to the decline in the number of requests for proposals, the
Company has sought projects for which there are no sponsoring Client
Communities. See "Waste-to-Energy Services -- (b) Other Arrangements for
Providing Waste-to-Energy Services." In 1993, the Company negotiated a
waste disposal agreement with Clark County, Ohio, for the disposal of MSW
at such a project. The Company also completed negotiation of contracts
with Ohio Edison Company pursuant to which Ohio Edison leases a site to the
Company 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 herein under "Waste-to-Energy Services -- (e) the Company's
Waste-to-Energy Projects."
There is substantial competition within the waste-to-energy field. The
Company competes with a number of firms, some of which have greater
financial resources than the Company. 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. The Company believes it is the largest operator of
large scale (greater than 400 tons per day) waste-to-energy facilities.
There are presently 77 such facilities in the United States. The Company
believes Wheelabrator Technologies, Inc., which operates 14 such facilities
is the second largest operator. Waste-to-energy facilities are also
operated by other private companies and municipalities. Approximately 16%
of the nation's waste is disposed of at waste-to-energy facilities. The
balance of waste not recycled is disposed of by landfilling. The
landfilling industry is dominated by several large companies of which Waste
Management, Inc. and Browning Ferris, Inc. are the largest.
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.
The principal factors influencing selection of vendors for governmentally
sponsored waste-to-energy projects are technology, financial strength,
performance guarantees, experience, reputation for environmental
compliance, service, and price.
(g) 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. The Company 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, the Company 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 the Company. There are several unexpired
patents related to the Martin Technology including: (i) Apparatus for
Discharging Cinders from an Incinerator - expires 9/20/94; (ii) Apparatus
for the Processing of Slag - expires 2/14/95; (iii) Grate Bar for Grate
Linings, especially in Incinerators - expires 2/9/99; (iv) Method and
Arrangement for Reducing NOx Emissions from Furnaces - expires 7/19/00; (v)
Method and Apparatus for Regulating the Furnace Output of Incineration
Plants - expires 9/4/07; (vi) Method for Regulating the Furnace Output in
Incineration Plants - expires 1/1/08; and (vii) Feed Device with Filling
Hopper and Adjoining Feed Chute for Feeding Waste to Incineration Plants -
expires 4/23/08. More importantly, the Company believes that it is
Martin's know-how in manufacturing grate components and in designing and
operating mass-burn facilities and Martin's worldwide reputation in the
waste-to-energy field and the Company's know-how in operating waste-to-
energy facilities, rather than the use of patented technology, that is
important to the Company's competitive position in the waste-to-energy
industry in the United States. The Company 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 the Company's financial condition or competitive
position.
(h) The Cooperation Agreement. Under an agreement between the Company and
Martin (the "Cooperation Agreement"), the Company has the exclusive right
to use the Martin Technology in waste-to-energy facilities 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 the Company has exclusive rights to use the Martin
Technology, but only on a full service design, construct, and operate
basis. The Company may not use any other technology to market, develop, or
build refuse incineration facilities without Martin's permission. The
Company may, however, acquire, own, commission, and/or operate facilities
that use technology other than the Martin technology that have been
constructed by entities other than the Company or its affiliates. Martin
is obligated to assist the Company 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 OMS or any direct or indirect
parent of OMS not approved by its respective board of directors. Although
termination would not affect the rights of the Company 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 the Company's right to use the Martin
Technology could have a material adverse effect on the Company's future
business and prospects.
(i) International Business Development. In 1993, the Company continued
the development of its waste-to-energy business in selected international
markets.
The Company opened an office in Munich, Germany, in 1993 and, as indicated
above, extended its right to use the Martin system to develop full service
projects in much of Europe. The Company has not had operations outside the
United States previously, although Ogden Corporation does conduct its
aviation services at several European airports and entertainment services
at several venues. Furthermore, 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. The Company
emphasizes developing projects which it will build and then operate for a
fixed fee. Thus, developing this market will require the Company to both
become better known in Europe and to successfully market its service
concept. The Company believes that its concept of service coupled with the
Company's extensive operational experience offers local government units
more economical service. 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 Company therefore
believes this is an appropriate time to seek to expand its business in
these markets.
(j) Backlog. The Company's backlog as of December 31, 1993 is set forth
under (e) above. As of the same date of the prior year, the estimated
unrecognized construction revenues for projects under construction was
$192,935,000, and the estimated construction revenues for projects awarded
but not yet under construction was $513,488,000 (includes $99,620,000
expressed in Canadian Dollars). The changes reflect construction progress
on four projects. Generally, the construction period for a waste-to-energy
Facility is approximately 28 to 34 months. The backlog does not reflect
the cancellation of projects owned by the Company or the cancellation of
the Quonset Point and Johnston Rhode Island projects. See (f) "Markets and
Competition" herein.
Other Services.
The Company operates transfer stations in connection with some of its
waste-to-energy facilities and, in connection with the Montgomery County,
Maryland, project, the Company will use a railway system to transport MSW
and ash residue to and from the facility. The Company 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.
In 1991, the Company announced that it would discontinue the on-site
remediation business utilizing a mobile technology then conducted by OWTS.
OWTS, which was formed by Ogden in 1986 to conduct on-site remediations of
hazardous wastes using a proprietary incineration process, operated at
sites located in Alaska and California. Certain of these operations
continued into 1993, and certain contractual obligations resulting from the
disposal of assets are expected to conclude in 1994.
In 1993, the Company announced that it would discontinue 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. The Company has ceased all development
activities and in 1994 intends to dispose of the assets related to this
business, primarily a permit to build and operate a hazardous waste
incineration facility which is the subject of a pending approval.
The Company, through its wholly-owned subsidiary, Ogden Power Systems,
Inc., intends to develop, operate and, in some cases, own 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. These power systems may use, among other fuels, wood, tires,
coal, other wastes, or natural gas. The Company believes that its
experience in operating waste-to-energy facilities is applicable to other
forms of power generation. Although, presently the Company does not
operate any alternative energy projects, it is seeking opportunities in
this business, through discussions with potential partners and by making
proposals on projects that the Company believes have a substantial
likelihood of profitable development. The Company currently operates 10
fossil fuel boilers and co-fires coal with MSW at another of its
facilities. The Company does not believe that the development activities
for this business are likely to require a material amount of the assets of
the Company.
Competition for alternative energy projects is intense. Many domestic
utilities and other purchasers of power are required to or elect to select
vendors of power by competitive bidding in which price is the dominant
determination in making an award, thereby reducing returns on such
projects. Consequently, the Company seeks opportunities in which contract
terms are set by negotiation and where the Company is able to stress its
ability to run facilities in a highly reliable manner or where other
considerations such as the Company's willingness to guarantee project
availability are attractive to the power purchaser.
There are numerous companies currently operating alternative power projects
in the United States and internationally today. Many of these companies
are able to commit substantially greater funds to this business and have
greater experience in running alternative power projects using fuels other
than MSW. The Company seeks to compete by entering into joint ventures
with other companies which will as a group have necessary assets available
and experience. Proprietary technologies are not significant in this
business.
The Company, 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
Company's 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.
The Company also intends to develop, operate and, in some cases, own
projects that process recyclable paper products into linerboard for reuse
in the commercial sector. As with the Company's waste-to-energy business,
such 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 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 Company.
Regulation
Environmental regulations. The Company'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"), make the
Company potentially liable for any environmental contamination which may be
associated with its activities or properties (collectively, "Environmental
Remediation Laws").
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. Legal flow control has been challenged in a number of law suites
on the basis that it is a state regulation of interstate commerce
prohibited by the United States Constitution. The decisions on these cases
have not been consistent. However several recent decisions have
invalidated ordinances creating legal flow control. In 1993, the United
States Supreme Court granted an appeal from a decision of a New York State
Court upholding a New York municipality's ordinance requiring that all
waste generated within its jurisdiction be disposed of at a transfer
station operating under contract with the municipality. The case was
argued in December 1993 and a decision is expected during the Court's
Spring 1994 term.
The Company believes that legal flow control is an important tool used by
municipalities in fulfilling their obligations to provide safe and
environmentally sound waste disposal services to their constituencies.
Although a decision invalidating legal flow control would reduce the number
of options local government would have in meeting this obligation, the
Company does not believe it would materially impact the Company'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 the
Company provides disposal services require the Client Community to deliver
stated minimum quantities of waste on a put-or-pay basis. The Company does
not believe these obligations would be negated by an adverse Supreme Court
decision. Furthermore, only a few of the Client Communities served by the
Company rely solely on legal flow control to provide waste to the Company'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 the Company which adopted alternative measures. The Company
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 the Company in Montgomery County, Maryland.
Furthermore, in most of the municipalities where the Company provides
services, information available to the Company indicates that the cost to
the Client Community of waste to energy is competitive with alternative
disposal facilities, and therefore the Company'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. A number of bills
are presently pending in Congress to authorize legal flow control. Whether
Congress will enact legislation on this subject is uncertain.
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, but it remains uncertain whether
Congress will act to authorize such laws.
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 construction and operating 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.
The Environmental Regulatory Laws and regulations and permits issued
pursuant to them also establish operational standards, including specific
limitations upon emissions of certain air and water pollutants. Failure to
meet these standards subject an Operating Subsidiary to regulatory
enforcement actions by the appropriate governmental unit, which could
include fines, and orders limiting or prohibiting operation. To date, the
Company has not incurred material fines, been required to incur material
capital costs or additional expenses, or 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 governmental 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. Most
federal Environmental Regulatory Laws encourage development of new
technology to achieve increasingly stringent standards; they also often
require use of the best available technology at the time a permit is
issued. The federal Prevention of Significant Deterioration of air quality
program requires that new or substantially modified waste-to-energy
facilities of the size constructed by the Company that are located in areas
of the country that are in compliance with national ambient air quality
standards ("NAAQS") employ the Best Available Control Technology ("BACT").
The selection of control technology and the emission limits that must be
achieved are made on a case-by-case basis considering economic impacts,
energy and other environmental impacts and costs, and may include
requirements that certain components of the mixed waste stream be separated
for treatment by other means than combustion in the Operating Subsidiary's
facility. For facilities developed in areas where NAAQS are not met,
federal law requires that control technology capable of achieving the
Lowest Achievable Emission Rate ("LAER") must be employed. LAER means the
most stringent emission limit achievable in practice by emission sources
similar to the facility in question, which does not involve any
consideration of the economic impacts or costs to achieve such a
limitation. Existing facilities in areas where LAER is now required for
new facilities may be required to retro-fit Reasonably Available Control
Technology ("RACT") established by EPA applicable to selected pollutants to
enhance progress toward these areas achieving the NAAQS. RACT is that
technology which EPA or state agencies determine to be available, proven,
reliable, and affordable to reduce targeted emissions from specific types
of existing sources of air emissions within geographic areas in which NAAQS
for the target emissions is not being met. Thus, as new technology is
developed and proven, it must be incorporated into new facilities or major
modifications to existing facilities. This new technology may often be more
expensive than that used previously.
EPA has promulgated regulations establishing New Source Performance
Standards ("NSPS") and Emission Guidelines ("EG") applicable to new and
existing municipal waste combustion units with a capacity of greater than
250 tons per day. The EG and NSPS establish limitations upon the flue gas
pollutant concentrations entering the ambient air for particulate matter
(opacity), organics (dioxins and furans), carbon monoxide and acid gases
(sulfur dioxide and hydrogen chloride). The NSPS also establish emissions
limitations for nitrogen oxides. The NSPS apply to facilities beginning
construction after December 20, 1989 and the EG will become effective three
years after each individual state adopts them, but no later than five years
after promulgation. Additional air pollution control equipment is likely to
be required at four of the Company's existing waste-to-energy facilities to
achieve the EG limitations.
The Clean Air Act required EPA to re-evaluate the NSPS and EG for
particulate matter (total and fine), opacity (as appropriate), sulfur
dioxide, hydrogen chloride, oxides of nitrogen, carbon monoxide, dioxins
and dibenzofurans, and to establish new NSPS and EG for lead, cadmium, and
mercury no later than November 15, 1991 for all waste combustion
facilities. Such re-evaluation and regulations were not completed by that
date. These standards must reflect maximum achievable control technology
("MACT") for both new and existing waste-to-energy units. "MACT" means the
maximum degree of reduction in emissions, considering the cost, energy
requirements, and non air quality related health and environmental impacts.
For new facilities, these limits may not be less stringent than the best
performing similar facility. For existing facilities, these limits may not
be less stringent than the performance of the top 12% non-LAER facilities.
The Company cannot predict what standards will be proposed or finally
promulgated, although EPA is reviewing data from existing facilities. The
revised standards for new facilities will become effective six months after
the date of promulgation of the revised standards. Standards for lead,
cadmium, and mercury are expected to be proposed in 1994 under a consent
order entered in 1993 in connection with litigation commenced by several
parties against the EPA.
The Clean Air Act also requires each state to implement a state
implementation plan in conformity with federal law that outlines how areas
out of compliance with NAAQS will be returned to compliance. One aspect of
the state implementation plan must be an operating permit program. Most
states are now in the process of developing or augmenting their
implementation plans to meet these requirements. The state implementation
plans and the operating permits 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.
Changes in Clean Air Act standards can affect the manner in which the
Company operates existing projects and could require significant additional
expenditures to achieve compliance. The Clean Air Act Requirements, which
the Company believes will be issued in final form between 1994 and 1996,
will require capital improvements to the facilities operated by the
Company. The exact timing and cost of such improvements cannot be stated
definitively because State regulations embodying the Clean Air Act
Requirements have generally not been finally adopted. The cost of capital
improvements to meet the Clean Air Act Requirements for facilities owned by
Client Communities will be borne by the Client Communities. For projects
owned or leased by the Company and operated under a Service Agreement, the
Client Community has the obligation to fund such capital improvements, to
which the Company 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 the
Company and not operated pursuant to a Service Agreement, such capital
improvements will cost between $8 million and $15 million. The Company
believes that costs incurred to meet Clean Air Act 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 Environmental Remediation Laws, including CERCLA, may subject the
Company, like other entities that manage waste, to joint and several
liability for the costs of remediating contamination at sites, including
landfills, which the Company has owned, operated, or leased or at which
there has been disposal of residue or other waste handled or processed by
the Company. The Company 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.
Environmental Regulatory Laws, such as RCRA and state and local solid waste
laws, impose significantly more stringent requirements upon disposal of
hazardous waste than upon disposal of MSW and other non-hazardous wastes.
These laws prohibit disposal of hazardous waste other than in small,
household-generated quantities at the Company's municipal solid waste
facilities and generally make disposal of hazardous waste more expensive
than management of non-hazardous waste. 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.
No ash residue from a fully operational facility operated by the Company
has been characterized as hazardous under the present or past prescribed
EPA test procedures and such ash residue is currently disposed of in
permitted landfills as non-hazardous waste. Some state laws or regulations
provide that if prescribed test procedures demonstrate that ash residue has
hazardous characteristics, it must be treated as 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. There is a conflict between
the two federal courts of appeal which have decided whether municipal solid
waste ash residue having hazardous characteristics is subject to RCRA's
provisions for management as a hazardous waste. The Second Circuit Court
of Appeals has held that it is not. The Seventh Circuit Court of Appeals
reached the opposite result. In September 1992, the Administrator of the
EPA officially stated that EPA policy was that waste-to-energy ash residue
was exempt from treatment as a hazardous waste as a matter of law and could
be safely disposed of in MSW landfills that met the EPA's criteria. In
reaching its decision, the Seventh Circuit refused to give deference to the
EPA's policy. An appeal from the Seventh Circuit's determination was filed
in early 1993 in the United States Supreme Court and a decision is expected
during the Court's Spring 1994 term. The Company does not expect that a
decision that requires ash residue having hazardous characteristics to be
managed as a hazardous waste would have significant impacts on the
Company's business. Eight of the Company's facilities are located in
states or dispose of their ash residue in states which require testing to
determine whether such residue must be managed as a hazardous waste under
state law. Furthermore, ash processing technology is available which could
be used to further ensure that ash does not exhibit characteristics of
hazardous waste.
From time to time, state and federal moratoria on waste to energy have been
proposed in legislation, regulation, and by executive action. Generally,
such proposals have not been adopted, and where they have, as in the State
of New Jersey, following the moratorium, waste to energy has continued to
be included in the options available to local municipalities. In 1992, as
previously reported, the State of Rhode Island eliminated waste to energy
from its unique legislation in which the state's solid waste management
plan was enacted as law. As a consequence of this legislation, the Company
brought an action against the state challenging the validity of the change
in the plan which has been settled by the State's agreement to pay the
Company approximately $5.5 million in 1994, a portion of which must be
shared with Blount, Inc., the former developer of the Quonset, Rhode Island
project.
OWTS' business activities were regulated under federal, state, and local
environmental laws governing air and water emissions and the generation,
transportation, storage, treatment, and disposal of solid wastes, and
hazardous and toxic materials. In particular, RCRA, its implementing
regulations, and parallel state laws create a cradle-to-grave system for
regulating hazardous waste; and CERCLA and similar state laws create
programs for remediation of contaminated sites and for the imposition of
liability upon those who owned or operated such sites or who generated or
transported hazardous substances disposed of at such sites. The Company
believes that OWTS's units and projects were operated in compliance in all
material respects with regulatory requirements that apply to its business.
The Company's waste-to-energy 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 electric utilities. PURPA was promulgated
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 are of great importance to the Company 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 the Company'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 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
will not be fully known until any judicial challenges are resolved and
Federal and State regulatory agencies develop policies and promulgate
implementing regulations, the Company 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.
Other Information
(a) Raw Materials. The construction of each of the Company's waste-to-
energy facilities is generally carried out by a general contractor selected
by the Company. The 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 Company generally directs the
procurement of all major equipment utilized in the facility, which
equipment is also generally readily available from many suppliers. The
stoker grates utilized in facilities constructed by the Company are
required to be obtained from Martin pursuant to the Cooperation Agreement.
In connection with the currently operating waste-to-energy facilities, the
Company has entered into long-term waste disposal agreements which obligate
the relevant Client Communities (or in the case of the Haverhill projects,
the private haulers) to deliver specified amounts of waste on an annual
basis. The Company believes that sufficient amounts of waste are being
produced in the United States to support current and future waste-to-energy
projects. Other commodities used in the operation of the Company's
facilities are readily available from many suppliers. See "Regulation"
herein.
(b) Employees. As of February 1, 1994, the Company had 355 full-time
employees. Substantially all of the personnel operating the Company's
waste-to-energy facilities are employees of subsidiaries of an affiliate of
the Company, Ogden Services Corporation ("Ogden Services"). Some of the
employees at certain facilities are employed by subsidiaries of Ogden
Services pursuant to collective bargaining agreements. Each facility's
staff is typically supervised by a Facility Manager who is an employee of a
subsidiary of Ogden Services, and a Manager of Facility Administration, who
is an employee of the Company. There were approximately 1310 employees of
a subsidiary of Ogden Services working at the Company's waste-to-energy
facilities as of February 1, 1994. The Company considers relations with
its employees to be good.
(c) Dependence on Ogden. Ogden has provided, at no cost to the Company,
guarantees of performance of the obligations of the Operating Subsidiaries
for their waste-to-energy projects and has provided other forms of credit
support. Such credit support is typically required in connection with the
Company's proposals to Client Communities, and without such credit support
for future projects, there is no assurance that the Company could continue
to compete effectively in the waste-to-energy industry. Credit support has
also been provided in connection with acquisitions made by the Company.
Ogden also provided certain guarantees with respect to OWTS operations.
Ogden has also supported the Company by providing other guarantees related
to project financing and project energy agreements, by providing support
services in areas such as investor relations, tax, legal, internal audit,
cash management, employee benefits administration, and insurance, and by
funding working and other capital requirements, including the equity
requirements of Company-owned projects, to the extent not provided by the
Company. The Company pays a fee for these services. Under the cash
management arrangements the Company is charged interest by Ogden if it is a
net borrower from, or is paid interest by Ogden if it is a net depositor
with, Ogden. Ogden has further supported the Company by providing certain
personnel, either directly or through a subsidiary. Substantially all of
the personnel utilized by the Company in operating its waste-to-energy
facilities are provided on a cost-plus basis by Ogden Services under the
technical and budgetary supervision of the Company.
The Board of Directors of Ogden has adopted a Statement of Intent providing
that it intends to continue to provide support services to the Company.
However, the Statement of Intent does not represent a contractual
obligation of Ogden and there can be no assurance that Ogden will continue
to provide such support.
Item 2. PROPERTIES
The Company's principal executive offices are located in Fairfield,
New Jersey, in an office building located on a 5.4-acre site owned by the
Company.
The following table summarizes certain information relating to
the locations of the properties owned or leased by the Company or its
subsidiaries as of January 31, 1994(1).
Approximate
Site Size Nature of
Location in Acres Site Use Interest
Fairfield, New Jersey 5.4 Office space Own
Marion County, Oregon 15.2 Waste-to-energy
facility Own (2)
Alexandria/Arlington, 3.3 Waste-to-energy Acquiring the
Virginia facility Alexandria
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 (2)
facility
Bristol, Connecticut 35.0 Landfill Site lease
(expires July
1, 2014)
Indianapolis, Indiana 23.5 Waste-to-energy Site lease
facility (expires Dec.,
2008 subject to
four 5-year
renewal
options) (2)
Stanislaus County, 16.5 Waste-to-energy Site lease
California facility (expires Aug.
20, 2021
subject to 15-
year renewal
option) (2)
Babylon, New York 9.5 Waste-to-energy Site lease
facility (expires Dec.
19, 2010, with
renewal
options)
Haverhill, 12.7 Waste-to-energy Site lease
Massachusetts facility (expires Mar.
16, 1997,
subject to
sixteen 5-year
renewal
options) (2)
Haverhill, 16.8 RDF processing Site lease
Massachusetts facility (expires Mar.
16, 1997,
subject to
sixteen 5-year
renewal
options) (2)
Haverhill, 20.2 Landfill Site lease
Massachusetts (expires Mar.
16, 1997,
subject to
sixteen 5-year
renewal
options) (2)
Lawrence, Massachusetts 11.8 RDF power plant Own (2)
Lake County, Florida 15.0 Waste-to-energy Own (2)
facility
Wallingford, Connecticut 10.3 Waste-to-energy Site lease
facility (expires Dec.
1, 2026) (2)
Fairfax County, Virginia 22.9 Waste-to-energy Acquiring
facility Fairfax
Authority's
interest under
Site Lease
(expires Mar.
10, 2016)
pursuant to
Conditional
Sale Agreement
Imperial County, 83.0 Undeveloped land Own
California
Huntington, New York 13.0 Waste-to-energy Site lease
facility (expires Oct.
28, 2012,
subject to
successive
renewal terms
through Jan.
28, 2029)(2)
Warren County, 19.8 Waste-to-energy Site lease
New Jersey facility (expires Nov.
16, 2005
subject to two
ten-year
renewals)(2)
Hennepin County, 14.6 Waste-to-energy Leases of site
Minnesota facility and facility
(expires Oct.
1, 2017 subject
to renewal
options to
December 20,
2024)(2)(3)
Stockton, California 4.5 Contaminated soil Site lease
(expired
remediation
facility
February 1,
1994)
(discontinued)
Tulsa, Oklahoma 22.0 Waste-to-energy Leases of site
facility and facility
(expires April
30, 2012
subject to
renewal options
to August 2,
2026)(2)(3)
Harris County, Texas 14.0 Undeveloped land Own
Onondaga, New York Facility site Site lease
expires
contempora-
neously with
service
agreement,
subject to
renewal options
to May 9,
2020(2)
_______________________
(1) Two Facilities, located in Detroit, Michigan and Honolulu, Hawaii and
not listed in the table, were initially owned by political
subdivisions and were sold to leveraged lessors. The lessors entered
into lease agreements with the respective Operating subsidiaries, all
of which lease obligations, including the obligation to pay rent, are
passed through to the client communities.
(2) The Operating Subsidiary's ownership or leasehold interest is subject
to material liens in connection with the financing of the related
project.
(3) Sublease of site expires contemporaneously with facility lease. The
Company believes that its properties and equipment are generally well
maintained, in good operating condition, and adequate for its present
needs. The Company regularly upgrades and modernizes facilities and
equipment and expands its facilities as necessary.
Item 3. LEGAL PROCEEDINGS
In the ordinary course of its business, the Company becomes 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 Company operates.
Such proceedings also include actions brought by individuals or local
governmental authorities seeking to overrule governmental decisions on
matters relating to the Company's operations in which the Company may be,
but is not necessarily, a party. Most proceedings brought against the
Company by governmental authorities under these laws relate to alleged
technical violations of regulations, licenses, or permits pursuant to which
the Company operates. To date the Company, has resolved the proceedings to
which it is a party through settlements that generally involve the payment
of civil fines or penalties and, in some instances, changing operational
procedures. None of these resolutions require the Company to make any
material capital expenditures. At September 30, 1993, the Company was
involved in one such proceeding in which the Company believes sanctions
involved may exceed $100,000. The Company believes that such proceeding
will not have a material adverse effect on it or its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers (as defined by Rule 3b-7 of the Securities Exchange
Act of 1934) of the Company are named in the table below. Officers are
appointed by the Board of Directors and serve at the discretion of the
Board.
Name Position Age
R. Richard Ablon Chairman of the Board and Chief 44
Executive Officer
Scott G. Mackin President and Chief Operating Officer 37
Bruce W. Stone Executive Vice President and Managing
Director 46
William C. Mack Executive Vice President 47
John M. Klett Executive Vice President--Operations 47
Gloria A. Mills Executive Vice President--Business
Development 54
William E. Whitman Executive Vice President, Chief
Financial Officer and Treasurer 38
Brian A. Delle Donne Senior Vice President 37
Jeffrey R. Horowitz Senior Vice President, General Counsel
and Secretary 44
Kenneth G. Torosian Vice President and Controller 32
Information about the executive officers of the Company is set forth below:
Mr. Ablon has been Chairman of the Board and Chief Executive Officer of the
Company since November 1990. Since May 1990, he has been President and
Chief Executive Officer of Ogden. From January 1987 to May 1990, he was
President- and Chief Operating Officer, Operating Services, Ogden.
Mr. Mackin has been President and Chief Operating Officer of the Company
since January 1991. From November 1990 to January 1991, he was Co-
President, Co-Chief Operating Officer, General Counsel and Secretary of the
Company. From 1988 to November 1990, he was First Executive Vice President
and Managing Director, General Counsel of the Company and since December
1989 Secretary of the Company. From 1987 to 1988, he was Vice President
and General Counsel of the Company, and from 1987 to May 1989, he was
Secretary of the Company.
Mr. Stone has been Executive Vice President and Managing Director of the
Company since January 1991. From November 1990 to January 1991, he was Co-
President and Co-Chief Operating Officer of the Company. From 1988 through
November 1990, he was First Executive Vice President and Managing Director-
- -Project Implementation of the Company.
Mr. Mack has been Executive Vice President of the Company since January
1991. He was Secretary of the Company from January 1991 until November
1991. From 1988 to January 1991, he was First Executive Vice President and
Managing Director--Operations of the Company.
Mr. Klett has been Executive Vice President--Operations of the Company
since January 1991. From January 1990 to January 1991, he was Executive
Vice President--Plant Operations of OMS. From March 1989 to January 1990,
he was Senior Vice President--Plant Operations of OMS.
Ms. Mills has been Executive Vice President--Business Development of the
Company since January 1991. From 1988 to January 1991, she was First
Executive Vice President and Managing Director--Marketing of the Company.
Mr. Whitman has been Executive Vice President of the Company since
February, 1994 and Chief Financial Officer and Treasurer of the Company
since September 1990. He was also Senior Vice President of the Company
from December 1990 through February 1994 and Vice President of the Company
from September 1990 through December 1990. From January 1990 to September
1990, he was Assistant Vice President, Facility Administration of OMS.
From November 1987 to January 1990, he was first a Senior Cost Analyst,
then Director, Facility Administration, of the Company.
Mr. Delle Donne has been Senior Vice President of the Company since May
1990, and has been President and Chief Operating Officer of OWTS since
November 1989. From October 1987 through October 1989, he was Director,
Marketing at Westinghouse Environmental Services.
Mr. Horowitz has been a Senior Vice President and General Counsel of the
Company since July, 1991 and Secretary since November 1991. From 1982 until
1991 he was a partner in the law firm of Schnader, Harrison, Segal and
Lewis.
Mr. Torosian has been Vice President of the Company since February 1992 and
Controller of the Company since November 1987.
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
The information required by this item is incorporated herein by
reference to the material captioned "Price Range of Common Stock and
Dividend Data" on page 44 of the Company's 1993 Annual Report to
Stockholders.
As of February 28, 1994, there were 5,103 holders of record of
the Company's Common Stock.
Item 6. SELECTED FINANCIAL DATA.
The information required by this item is incorporated herein by
reference to the material captioned "Selected Financial Data" on page 24 of
the Company's 1993 Annual Report to Stockholders.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
The information required by this item is incorporated herein by
reference to the material captioned "Management's Discussion and Analysis
of Consolidated Operations" on pages 22 and 23 of the Company's 1993 Annual
Report to Stockholders.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is incorporated herein by
reference to pages 25 through 42 and 44 of the Company's 1993 Annual Report
to Stockholders. For other financial statements and schedules required
under this item, reference is made to Item 14 of this Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
(a) Directors. The information with respect to directors
required by this item is incorporated herein by reference to the Company's
1994 Proxy Statement to be filed with the Securities and Exchange
Commission.
(b) Executive Officers. The information with respect to
officers required by this item is included at the end of PART I of this
document under the heading Executive Officers of the Company.
Item 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated herein by
reference to the Company's 1994 Proxy Statement to be filed with the
Securities and Exchange Commission.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated herein by
reference to the Company's 1994 Proxy Statement to be filed with the
Securities and Exchange Commission.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated herein by
reference from the Company's 1994 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. Consolidated Financial Statements and the Independent
Auditors' Report incorporated herein by reference to pages 25 through 42 of
the Company's 1993 Annual Report to Stockholders:
Independent Auditors' Report.
Consolidated Balance Sheets, December 31, 1993 and
1992.
Statements of Consolidated Income for the Years Ended
December 31, 1993, 1992, and 1991.
Statements of Consolidated Cash Flows for the Years
Ended December 31, 1993, 1992, and 1991.
Statements of Common Stockholders' Equity for the Years
Ended December 31, 1993, 1992, and 1991.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules:
Independent Auditors' Report
Schedule II - Amounts Receivable from Related Parties
and Underwriters, Promoters, and Employees other than
Related Parties.
Schedule V - Property, Plant, and Equipment.
Schedule VI - Accumulated Depreciation, Depletion, and
Amortization of Property, Plant, and Equipment.
Schedule VIII - Valuation and Qualifying Accounts.
Schedule X - Supplementary Income Statement
Information.
Schedules, other than those listed above, have been
omitted because of the absence of conditions under
which they are required or because the required
information is included in the financial statements or
the notes thereto.
3. Exhibits:
3.1 Third Restated Certificate of Incorporation.*
(i) Certificate of Retirement of Stock and
Reduction of Capital, dated March 1, 1990.*.
(ii) Certificate of Retirement of Stock and
Reduction of Capital, dated April 26, 1990.*
(iii) Certificate of Ownership and Merger,
dated December 1, 1989.*
3.2 Third Restated By-Laws of Ogden Projects, Inc. as amended.*
4.1 (a) Trust Indenture, dated as of December 1, 1986, and
amended and restated as of July 1, 1987, between
Shawmut Bank, N.A., as trustee, and Massachusetts
Industrial Finance Agency.*
(i) Amendment No. 2, dated as of April 1, 1992,
to Amended and Restated Trust Indenture, as
amended, between Shawmut Bank, N.A., as
trustee, and Massachusetts Industrial Finance
Agency.*
(ii) Supplemental and Amending Trust Indenture,
dated as of May 1, 1992, between Shawmut
Bank, N.A., as trustee, and Massachusetts
Industrial Finance Agency.*
(b) OHA Loan Agreement, dated as of December 1, 1986,
and as amended as of August 1, 1988, between Ogden
Haverhill Associates and Massachusetts Industrial
Finance Agency.*
(i) Amendment No. 2, dated as of May 1, 1992, to
the OHA Loan Agreement, as amended, between
Ogden Haverhill Associates and Massachusetts
Industrial Finance Agency.*
(c) OHA (Ogden Haverhill Project) Massachusetts
Industrial Finance Agency Series A Note, dated
December 23, 1986, and as amended as of August 1,
1988 (Amendment incorporated by reference to
Exhibit No. 4.1(e)), by Ogden Haverhill Associates
to Shawmut Bank, N.A., as trustee.*
(d) OHA (Ogden Haverhill Project) Massachusetts
Industrial Finance Agency Series B Note, dated
December 23, 1986, and as amended as of August 1,
1988 (Amendment incorporated by reference to
Exhibit No. 4.1(e)), by Ogden Haverhill Associates
to Shawmut Bank, N.A., as trustee.*
(e) OHA (Ogden Haverhill Project) Massachusetts
Industrial Finance Agency Series C Note, dated
December 23, 1986, and as amended as of August 1,
1988, by Ogden Haverhill Associates to Shawmut
Bank, N.A., as trustee.*
(i) Amendment No. 2, dated as of May 29, 1992, to
OHA (Ogden Haverhill Project) Massachusetts
Industrial Finance Agency Series C Note, as
amended , by Ogden Haverhill Associates to
Shawmut Bank, N.A., as trustee.*
(f) SBR Loan Agreement, dated as of December 1, 1986,
and as amended through August 1, 1988, between SBR
Associates and Massachusetts Industrial Finance
Agency.*
(i) Amendment No. 2, dated as of May 1, 1992, to
SBR Loan Agreement, as amended, between SBR
Associates and Massachusetts Industrial
Finance Agency.*
(g) SBR (Ogden Haverhill Project) Massachusetts
Industrial Finance Agency Series D Note, dated
December 23, 1986, and as amended as of August 1,
1988, by SBR Associates to Shawmut Bank, N.A., as
trustee.*
(i) Amendment No. 2, dated as of May 28, 1992, to
SBR (Ogden Haverhill Project) Massachusetts
Industrial Finance Agency, Series D Note, as
amended, by SBR Associates to Shawmut Bank,
N.A., as trustee.*
(h) Letter of Credit and Reimbursement Agreement,
dated as of December 1, 1986, between Ogden Martin
Systems of Haverhill, Inc. and Union Bank of
Switzerland, New York Branch.*
(i) Reimbursement Agreement Amendment, dated
August 1, 1988, between Ogden Martin Systems
of Haverhill, Inc. and Union Bank of
Switzerland, New York Branch.*
(ii) Second Reimbursement Agreement Amendment,
dated August 1, 1989, between Ogden Martin
Systems of Haverhill, Inc. and Union Bank of
Switzerland, New York Branch.*
(iii) Third Reimbursement Agreement, dated
October 13, 1989, between Ogden Martin
Systems of Haverhill, Inc. and Union
Bank of Switzerland, New York Branch.*
(iv) Fourth Reimbursement Agreement Amendment,
dated as of September 23, 1991, between Ogden
Martin Systems of Haverhill, Inc. and Union
Bank of Switzerland, New York Branch.*
(v) Fifth Reimbursement Agreement Amendment,
dated as of May 1, 1992, between Ogden Martin
Systems of Haverhill, Inc. and Union Bank of
Switzerland, New York Branch.*
(i) Reimbursement Agreement, dated as of May 31, 1989,
between Ogden Haverhill Properties, Inc. and Swiss
Bank Corporation, New York Branch.*
(i) First Amendment to the Reimbursement
Agreement dated as of May 28, 1992 between
Ogden Haverhill Properties, Inc. and Swiss
Bank Corporation, New York Branch.*
4.2 (a) Second Amended and Restated Trust Indenture, dated
as of February 1, 1989, between the Fairfax County
Economic Development Authority and Crestar Bank,
as trustee.*
(b) Conditional Sale and Security Agreement, dated as
of February 1, 1988, between the Fairfax County
Solid Waste Authority and Ogden Martin Systems of
Fairfax, Inc.*
4.3 Specimen Stock Certificate for Company's Common
Stock.*
4.4 Demand Note, dated May 31, 1989, by Company to
Ogden Corporation.*
4.5 Demand Note, dated December 19, 1984, by Company
to Bouldin Development Corporation.*
10.1 Tax Sharing Agreement, dated as of January 1,
1989, among Ogden Corporation, Company and
Subsidiaries, Ogden Allied Services, Inc. and
Subsidiaries, and Ogden Financial Services, Inc.
and Subsidiaries.*
10.2 (a) Amended and Restated Cooperation Agreement, dated
April 30, 1983 and amended and restated as of
April 1, 1985, and as further amended through
May 25, 1989 between Ogden Martin Systems, Inc.
and Martin GmbH fur Umwelt- und Energietechnik of
West Germany (confidential status has been granted
for certain provisions thereof pursuant to
Commission Order No. 810132).*
(i) Amendment to Section 5.3.1 of the Amended and
Restated Cooperation Agreement, effective as
of January 1, 1989, between Ogden Martin
Systems, Inc. and Martin GmbH fur Umwelt- und
Energietechnik of West Germany (confidential
status has been granted for certain
provisions thereof pursuant to Rule 24b-2.)*
(ii) Amendment No. 6 to Amended and Restated
Cooperation Agreement, effective as of
January 1, 1991, between Ogden Martin
Systems, Inc. and Martin GmbH fur Umwelt-und
Energietechnik of West Germany.*
(b) Rights of First Refusal, dated June 2, 1989, among
Walter Josef Martin, Anneliese Martin, Johannes
Josef Edmund Martin and Ogden Martin Systems,
Inc.*
10.3 Ogden Projects, Inc. Directors' Stock Option Plan.*
10.4 Letter Agreement, dated October 5, 1990, between David L.
Sokol and Ogden Corporation.*
10.5 Ogden Projects, Inc. Employees' Stock Option Plan.*
10.6 Ogden Corporation Pension Plan, as amended and
restated, effective as of January 1, 1988.*
10.7 Ogden Corporation Supplementary Deferred Benefit Plan,
adopted December 13, 1976, and amended as of January 5,
1988.*
10.8 Ogden Corporation Stock Option Plan, effective as of March
11, 1986.*
10.9 Ogden Corporation 1990 Stock Option Plan, effective as of
October 11, 1990.*
10.10 Ogden Projects, Inc. Pension Plan effective as of
January 1, 1989.*
(i) Amendment to Ogden Projects, Inc. Pension
Plan effective as of January 1, 1994.
10.11 Form of Supplementary Deferred Benefit Plan of Ogden
Projects, Inc. effective as of January 1, 1989.*
10.12 Ogden Projects, Inc. Profit Sharing Plan effective as
of January 1, 1989.*
(i) Ogden Projects Profit Sharing Plan amendment
by Unanimous Written Consent of the
Administrative Committee, dated March 7,
1990.*
(ii) Amendment to Ogden Projects, Inc. Profit
Sharing Plan effective as of January 1, 1994.
10.13 Ogden Allied Services Saving and Security Plan, as
amended and restated, effective as of August 1, 1986.*
10.14 Ogden Services Corporation Profit Sharing Plan, as
amended and restated, effective as of January 1, 1989,
as further amended July 18, 1990.*
10.15 (a) Ogden Services Corporation Executive Pension
Plan, effective as of January 1, 1989.*
(b) Ogden Services Corporation Executive Pension Plan
Trust Agreement, dated as of October 1, 1990,
between Ogden Services Corporation and The Bank of
New York.*
10.16 (a) Ogden Services Corporation Select Savings
Plan, dated as of October 1, 1990.*
(b) Ogden Services Corporation Select Savings Plan
Trust Agreement, dated as of October 1, 1990,
between Ogden Services Corporation and The Bank of
New York.*
10.17 Form of Supplemental Defined Benefit Plan of Ogden
Allied Services effective as of January 1, 1989.*
10.18 Ogden Environmental Services Pension Plan effective as
of January 1, 1989.*
10.19 Ogden Environmental Services Profit Sharing Plan
effective as of January 1, 1989.*
(i) Ogden Environmental Services Profit Sharing
Plan amendment by Unanimous Written Consent
of the Administrative Committee, dated March
7, 1990.*
10.20 Form of Supplementary Deferred Benefit Plan of Ogden
Environmental Services, Inc., effective as of January
1, 1989.*
10.21 Stock Purchase Agreement, dated as of May 31, 1989,
between Company and Ogden Corporation.*
10.22 Stock Purchase Option Agreement, dated June 14, 1989,
between Ogden Corporation and Company.*
(i) Amendment to Stock Purchase Option Agreement,
dated November 16, 1989, between Ogden
Corporation and Company.*
10.23 Employment Agreement, dated as of June 1, 1990, between
Company and William C. Mack.*
10.24 Employment Agreement, dated as of June 1, 1990, between
Company and Scott G. Mackin.*
(i) Employment Agreement dated January 1, 1994
between Company and Scott G. Mackin.
10.25 Employment Agreement, dated as of June 1, 1990, between
Company and Gloria A. Mills.*
10.26 Employment Agreement, dated as of June 1, 1990, between
Company and Bruce W. Stone.*
10.27 Employment Agreement, dated as of June 1, 1990, between
Company and John M. Klett.*
10.28 Employment Agreement, dated as of May 24, 1990, between
Ogden Corporation and R. Richard Ablon, as amended
October 11, 1990.*
10.29 Agreement and Plan of Merger dated September 20, 1990
by and among Ogden Environmental Services of Houston,
Inc., Ogden Acquisition Company and American
Envirotech, Inc.*
(i) Amendment dated June 12, 1991 by and among
Ogden Environmental Services of Houston,
Inc., Ogden Acquisition Company, and American
Envirotech, Inc.*
10.30 Ogden Projects, Inc. Core Executive Benefit Program.*
13.0 Annual Report to Stockholders for the year ended
December 31, 1993.
21.0 Subsidiaries of the Company.
24.0 Consent of Deloitte & Touche.
_______________
* Incorporated by reference as set forth in the Exhibit Index of this
Annual Report on Form 10-K.
Note:
Long term debt instruments of the Company and its consolidated subsidiaries
under which the total amount of securities authorized do not exceed 10% of
the total assets of the Company and its subsidiaries on a consolidated
basis will be furnished to the Commission upon request.
(b) The Company filed the following reports on Form 8-K during the
quarter ended December 31, 1993:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OGDEN PROJECTS, INC.
By:/s/ R. Richard Ablon
Chairman and Chief Executive Officer
Date: March 29, 1994
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
Company in the capacities indicated on March 29, 1994.
Signature Title
/s/ R. Richard Ablon Chairman of the Board and
R. Richard Ablon Chief Executive Officer
/s/ Scott G. Mackin President, Chief Operating
Scott G. Mackin Officer and Director
/s/ Bruce W. Stone Executive Vice President,
Bruce W. Stone Managing Director and Director
/s/ William E. Whitman Executive Vice President,
William E. Whitman Chief Financial Officer and Treasurer
(Chief Financial Officer)
/s/ Kenneth G. Torosian Vice President and Controller
Kenneth G. Torosian (Chief Accounting Officer)
/s/ William M. Batten Director
William M. Batten
/s/ Constantine G. Caras Director
Constantine G. Caras
/s/ Lynde H. Coit Director
Lynde H. Coit
/s/ Philip G. Husby Director
Philip G. Husby
/s/ Robert E. Smith Director
Robert E. Smith
/s/ Jeffrey F. Friedman Director
Jeffrey F. Friedman
DELOITTE &
TOUCHE
One World Trade Center Facsimile:(212)524-0890
New York, New York 10048-0601 International & Domestic
Telephone:(212)669-5000 Telex: 4995706
1633 Broadway Facsimile:(212)489-6944
New York, New York 10019-6754 International & Domestic
Telephone:(212)489-1600 Telex: 4995706
INDEPENDENT AUDITORS' REPORT
Ogden Projects, Inc.
We have audited the consolidated financial statements of Ogden Projects,
Inc. and subsidiaries as of December 31, 1993 and 1992 and for each of the
three years in the period ended December 31, 1993, and have issued our
report thereon dated February 2, 1994, which report includes an explanatory
paragraph relating to the adoption of Statement of Financial Accounting
Standards No. 109; such consolidated financial statements and report are
included in your 1993 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedules of Ogden Projects, Inc. and subsidiaries, listed in
Item 14. These consolidated financial statement schedules are the
responsibility of the Company'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
February 2, 1994
SCHEDULE II
OGDEN PROJECTS, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1991
Column A Column B Column C Column D Column E
BALANCE AT DEDUCTIONS BALANCE AT END OF PERIOD
BEGINNING AMOUNTS AMOUNTS
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT NON-CURRENT
Brian Delle Donne (A) $175,000 $175,000
Notes:
(A) Mortgage Loan, Collateralized Promissory Note, bearing interest at 8.5% per
annum.
SCHEDULE V
OGDEN PROJECTS, INC. AND SUBSIDIARIES
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(In thousands of dollars)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT OTHER BALANCE AT
BEGINNING ADDITIONS CHANGES END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD/(DEDUCT) PERIOD
YEAR ENDED DECEMBER 31, 1993
Land $ 5,049 $ 5,049
Waste-to-energy facilities 1,538,762 $ 611 1,539,373
Buildings and improvements 39,498 4,420 $ 4,228 (A) 48,146
Machinery and equipment 19,228 4,066 $278 23,016
Landfills 8,306 158 8,464
Construction in progress 24,993 73,292 (2,496)(B) 95,789
TOTAL $1,635,836 $82,547 $278 $ 1,732 $1,719,837
YEAR ENDED DECEMBER 31, 1992
Land $ 5,049 $ 5,049
Waste-to-energy facilities 1,491,791 $ 9,804 $101 $ 37,268 (C) 1,538,762
Buildings and improvements 27,075 8,556 3,867 (B) 39,498
Machinery and equipment 16,168 3,430 370 19,228
Landfills 8,166 140 8,306
Construction in progress 10,054 16,441 (1,502)(D) 24,993
TOTAL $1,558,303 $38,371 $471 $ 39,633 $1,635,836
YEAR ENDED DECEMBER 31, 1991
Land $ 5,158 $ (109)(E) $ 5,049
Waste-to-energy facilities 1,042,702 $ 659 448,430 (F) 1,491,791
Buildings and improvements 26,516 559 27,075
Machinery and equipment 12,626 3,612 $ 70 16,168
Landfills 8,371 107 (312)(E) 8,166
Construction in progress 178,621 68,944 (237,511)(G) 10,054
TOTAL $1,273,994 $73,881 $ 70 $210,498 $1,558,303
NOTES:
(A) Represents $2,496 from the reclassification of construction in progress upon completion and $1,732
from the acquisition of the capital stock of RRS Holdings, Inc.
(B) Reclassification of construction in progress upon completion.
(C) Represents $39,633 from adjustment to acquired property, plant, and equipment to pretax amounts
upon adoption of Statement of Financial Accounting Standards No. 109 and $(2,365) from adjustment
of accruals.
(D) Represents $(3,867) from the reclassification of construction in progress upon completion and
$2,365 from adjustment of accruals.
(E) Adjustment of accruals.
(F) Represents $238,723 from the reclassification of construction in progress upon completion,
$202,974 from the acquisition of the capital stock of Blount Energy Resource Corp., $8,300 from
contract cost adjustment, and $(1,567) from adjustment of accruals.
(G) Represents $(238,723) from the reclassification of construction in progress upon completion and
$1,212 from adjustment of accruals.
Prior-year amounts have been reclassified to conform with the 1993 presentation.
SCHEDULE VI
OGDEN PROJECTS, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(In thousands of dollars)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COST AND CHANGES END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS ADD/(DEDUCT) PERIOD
YEAR ENDED DECEMBER 31, 1993
Waste-to-energy facilities $ 98,475 $35,134 $133,609
Buildings and improvements 2,073 384 $359 (A) 2,816
Machinery and equipment 11,761 2,277 $264 604 (A) 14,378
Landfills 5,309 363 5,672
TOTAL $117,618 $38,158 $264 $963 $156,475
YEAR ENDED DECEMBER 31, 1992
Waste-to-energy facilities $ 62,352 $34,551 $ 10 $1,582 (B) $ 98,475
Buildings and improvements 1,647 68 358 (A) 2,073
Machinery and equipment 9,357 2,094 322 632 (A) 11,761
Landfills 5,277 32 5,309
TOTAL $ 78,633 $36,745 $332 $2,572 $117,618
YEAR ENDED DECEMBER 31, 1991
Waste-to-energy facilities $ 35,441 $26,911 $ 62,352
Buildings and improvements 1,243 46 $ 358 (A) 1,647
Machinery and equipment 6,425 1,656 $ 58 1,334 (A) 9,357
Landfills 5,138 609 (470) (C) 5,277
TOTAL $ 48,247 $29,222 $ 58 $1,222 $ 78,633
NOTES:
(A) Amount capitalized.
(B) Adjustment to acquired property, plant, and equipment to pretax amounts upon adoption of Statement
of Financial Accounting Standards No. 109.
(C) Adjustment of accruals.
SCHEDULE VIII
OGDEN PROJECTS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(In thousands of dollars)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
YEAR ENDED DECEMBER 31, 1993
Allowances deducted from assets to
which they apply:
Deferred charges on projects $ 750 $ 750
Doubtful receivables 4,776 $ 180 $4,073 (A) $ 1,708 (C) 7,321
Allowances not deducted:
Estimated cost of disposal
of discontinued operations 7,620 1,706 4,061 (B) 12,379 (D) 1,008
Other 1,350 1,350
TOTAL RESERVES $13,146 $ 3,236 $8,134 $14,087 $10,429
YEAR ENDED DECEMBER 31, 1992
Allowances deducted from assets to
which they apply:
Deferred charges on projects $ 6,500 $ 5,750 (E) $ 750
Doubtful receivables 531 $ 265 $4,121 (A) 141 (C) 4,776
Allowances not deducted:
Estimated cost of disposal
of discontinued operations 7,090 530 (F) 7,620
TOTAL RESERVES $14,121 $ 265 $4,651 $ 5,891 $13,146
YEAR ENDED DECEMBER 31, 1991
Allowances deducted from assets to
which they apply:
Deferred charges on projects $ 6,500 $ 6,500
Doubtful receivables $ 163 406 $ 38 (C) 531
Allowances not deducted:
Estimated cost of disposal
of discontinued operations 7,090 7,090
TOTAL RESERVES $ 163 $13,996 $ 38 $14,121
NOTES:
(A) Reserve for contract billing adjustments.
(B) Net proceeds from on-site remediation utilizing mobile technology $3,853 and reclassification
of liabilities pertaining to fixed-site hazardous waste business $208.
(C) Write-offs of receivables considered uncollectible.
(D) Gain from on-site remediation business utilizing mobile technology.
(E) Write-offs of unsuccessful development efforts.
(F) Net proceeds from on-site remediation utilizing mobile technology.
SCHEDULE X
OGDEN PROJECTS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
COLUMN A COLUMN B
CHARGED TO COSTS AND EXPENSES
ITEM 1993 1992 1991
Maintenance and repairs $55,161,000 $40,873,000 $36,019,000
Royalties 7,452,000 5,901,000 4,750,000