COVANTA ENERGY Logo
FOR IMMEDIATE RELEASE
COVANTA ENERGY CORPORATION REPORTS RESULTS FOR 2000
- Company Posts Recurring Base EBIT of $104 Million for 2000,
30% Increase Over Year-Before Period -
- Results Reflect Company's Transformation to Pure-Play Energy Company -
NEW YORK, March 28, 2001 - Covanta Energy Corporation (NYSE: COV), formerly
known as Ogden Corporation, today reported results for the full year and fourth
quarter ended December 31, 2000.
Recurring base earnings before interest and taxes (EBIT) from the Company's
continuing Energy operations were $104 million for the year 2000, compared to
$80 million for 1999. On a consolidated basis, including the loss from
discontinued operations of $144 million and a non-cash charge for the write-down
of assets held for sale of $77 million, the Company reported a net loss of $229
million, or $4.63 per diluted share, for the year.
"Our 2000 results - including a 30% year-over-year increase in our recurring
base Energy EBIT - demonstrate the continued successful execution of our
strategy to build a solid operating platform for our Energy business and enhance
shareholder value," said Scott G. Mackin, Covanta's President and Chief
Executive Officer. "The adoption of Covanta Energy as our new corporate name
reflects our transformation to a pure-play energy company and our commitment to
continued performance and sustained profitable growth in the independent power
industry."
FULL YEAR RESULTS
FOR THE YEAR
ENERGY: ENDED DECEMBER 31, ($MM)
========================
EBIT 2000 1999
---- ----
Recurring base EBIT 104 80
Non-recurring items (25) (18)
---- ----
Total Energy EBIT 79 62
NON-ENERGY:
Other segment operating loss (26) (23)
Write down of assets (77) --
Unallocated corporate overhead (60) (51)
INTEREST EXPENSE, NET (36) (31)
---- ----
PRE TAX LOSS (120) (43)
INCOME TAX BENEFIT 34 7
---- ----
LOSS FROM CONTINUING OPERATIONS (86) (36)
LOSS FROM DISCONTINUED OPERATIONS (net of tax) (143) (42)
Cumulative effect of change in accounting principle -- (4)
---- ----
CONSOLIDATED NET LOSS $(229) $(82)
====== =====
For the year ended December 31, 2000, the Company reported EBIT from its Energy
business of $79 million on revenues of $946 million, compared to EBIT of $62
million on revenues of $922 million in 1999. As previously announced, the
Company finalized the sale of its OEES consulting business to AMEC, effective
November 17, 2000, and is currently winding-down the two remaining projects in
its OEES construction operations. The 2000 EBIT includes $25 million of
non-recurring charges (net), consisting of $15 million of income principally
associated with the receipt of insurance proceeds, which was more than offset by
$18 million in losses at OEES and $22 million of one-time expenses. The one-time
expenses result primarily from actions taken as a result of an extensive study
by the Company, which examined overall energy operations and the methods of
doing business. As a result, Covanta has reorganized its operating structure,
redirected its development-spending program away from the Asian markets and has
reduced overhead costs across the organization. In concert with these decisions,
the Company announced the closure of its Hong Kong office.
The 1999 results include $18 million of non-recurring items, resulting primarily
from losses and impairment charges at its OEES subsidiary, partially offset by a
gain of $6 million from the sale of the Company's interest in an independent
power production (IPP) joint venture and a net one-time gain of approximately
$20 million principally related to the termination and restructuring of a
service agreement, as well as insurance proceeds from a waste-to-energy (WTE)
plant.
Adjusting for these items, the recurring base Energy EBIT for 2000 was $104
million, compared to $80 million for the comparable period in 1999. The increase
in recurring EBIT of $24 million, or 30%, is largely due to increased production
and favorable energy pricing, primarily at power plants in California, as well
as at other IPP and WTE sites. The increase in recurring EBIT is also
attributable to incremental income from the acquisition of the remaining
interest in the Heber plant in California during 1999, as well as the Company's
Quezon project in The Philippines, which came on stream in the second quarter of
2000. The Quezon project results are included in Energy equity income.
Revenues from continuing Energy operations for the year ended December 31, 2000
reflect an increase of $24 million over the comparable period in 1999. In
addition to the factors noted above, the increase in Energy revenues is also
favorably influenced by annual escalation adjustments at several facilities,
plus incremental revenues realized by the full-year operation in 2000 of plants
in Thailand and The Philippines, partially offset by the reduction in
construction revenues.
The Company's 2000 non-energy results include pre-tax charges of $77 million,
resulting from the write-down of assets held for sale at December 31, 2000 to
their expected net realizable value. The expected unrealized gains from the sale
of the remaining non-core assets will be recorded in the results from continuing
operations, as such sales occur throughout 2001.
FOURTH QUARTER RESULTS
For the fourth quarter 2000, the Company recorded recurring base EBIT of $29
million, compared to $21 million for the comparable period in 1999. Including
losses from discontinued operations and other special charges, the Company
reported a net loss of $89 million, or $1.79 per diluted share, for the fourth
quarter. The fourth quarter net loss is principally attributable to the asset
write-downs described above.
FOR THE THREE MONTHS
ENDED DECEMBER 31, ($MM)
========================
ENERGY:
EBIT 2000 1999
---- ----
Recurring base EBIT 29 21
Non-recurring items (22) (32)
---- ----
Total Energy EBIT 7 (11)
NON-ENERGY:
Other Segment operating loss (11) (20)
Write down of assets (77) --
Unallocated corporate overhead (15) (43)
INTEREST EXPENSE, NET (9) (9)
---- ----
PRE TAX LOSS (105) (83)
INCOME TAX BENEFIT 31 18
---- ----
LOSS FROM CONTINUING OPERATIONS (74) (65)
LOSS FROM DISCONTINUED OPERATIONS (net of tax) (15) (41)
---- ----
CONSOLIDATED NET LOSS $(89) $(106)
===== ======
For the three months ended December 31, 2000, the Company reported EBIT from its
Energy business of $7 million, on revenues of $240 million, compared to a loss
before interest and taxes in the comparable period of 1999 of $11 million, on
revenues of $237 million. The fourth quarter 2000 EBIT reflects $22 million of
non-recurring charges, including $3 million in losses at OEES and charges of $19
million related to the actions taken as a result of the restructuring study
previously noted. The 1999 results include $32 million of non-recurring items,
resulting from $36 million of losses and impairment charges at OEES, and a net
one-time gain of approximately $4 million, principally related to insurance
proceeds from a WTE plant.
Adjusting for these items, the recurring base Energy EBIT for the three months
ended December 31, 2000, was $29 million, compared to $21 million for the
comparable period of 1999. The increase in recurring EBIT of $8 million, or 38%,
is primarily related to strong performance and enhanced pricing at a number of
IPP and WTE sites, including power plants located in California. In addition,
earnings before interest and taxes were favorably impacted by enhanced results
at several facilities in The Philippines (primarily at Quezon) and at the
Company's power plant at Haripur.
Revenues from continuing Energy operations for the three months ended December
31, 2000 increased $3 million over the comparable period of 1999. The increase
in Energy revenues is primarily due to increased production, higher energy rates
and annual escalation adjustments at several facilities, which contributed
approximately $23 million. This increase was offset, in part, by a $7 million
decrease in revenues following the disposition of the OEES consulting business,
a $5 million anticipated reduction in construction revenues and an $8 million
gain in 1999 related to insurance proceeds from a WTE facility.
MASTER CREDIT FACILITY
On March 14, 2001, the Company completed a master credit facility. The facility,
which matures May 31, 2002, is secured and includes a revolving credit facility
of approximately $146 million and coordinates the administration of the
Company's existing credit facilities.
NON-CORE ASSET SALES
Covanta continues to make progress in its non-core asset sales process. Since
the end of the third quarter, as previously announced, the Company completed the
sale of its Fixed Base Operations business to the Latsis Group of Greece for
approximately $27 million, the sale of its Aviation Ground Services business to
John Menzies plc for approximately $105 million and the sale of the consulting
operations of OEES to AMEC for approximately $18 million. As of December 31,
2000, as a result of the non-core asset sales process, the Company had received
in excess of $440 million in cash proceeds and reduced related debt by
approximately $119 million. In addition, during February 2001, the Company
completed the sale of its interest in an Aviation ground handling operations
joint venture at Rome's Fiumicino Airport for approximately $10 million.
Numerous efforts are under way to conclude the sale of all non-core assets
during 2001.
OUTLOOK
Based on the performance of the Company's Energy business in 2000, Covanta
currently expects recurring earnings per share (EPS) for 2001 for its Energy
business of between $1.18 and $1.22. Embedded in this EPS projection is an
expectation that recurring base Energy EBIT will aggregate approximately $120 to
$123 million. The projected 17% growth in year-over-year EBIT is primarily due
to a full year's operation of the Quezon facility, partial year operation of two
new generating plants located in Asia, and one plant located in Europe and
reduced overhead throughout the Company's operations, partially offset by lower
construction revenues, reduced contribution from the Mammoth project, our
50%-owned geothermal facility in California, and increased depreciation and
operating costs as a result of Clean Air Act retrofits coming on-line.
* * *
Covanta Energy Corporation, formerly known as Ogden Corporation, is an
internationally recognized designer, developer, owner and operator of power
generation projects and provider of related infrastructure services. The
Company's independent power business develops, structures, owns, operates and
maintains projects that generate power for sale to utilities and industrial
users worldwide. Its waste-to-energy facilities convert municipal solid waste
into energy for numerous communities, predominantly in the United States. The
Company also offers single-source design/build/operate capabilities for water
and wastewater treatment infrastructures. Additional information about Covanta
can be obtained via the Internet at www.covantaenergy.com, or through the
Company's automated information system at 866-COVANTA (268-2682).
Certain statements included in this news release are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Forward-looking statements above
include, but are not limited to, expected earnings and future financial
performance. Although Covanta believes that its expectations are reasonable, it
can give no assurance that these expectations will prove to have been correct.
Factors that could cause Covanta's actual results to differ materially from
those contemplated in the forward-looking statements above include, among
others, the following:
-- Economic, capital market and other business conditions effecting power
generation enterprises specifically and commerce generally including interest,
inflation and exchange rates; weather conditions; creditworthiness of customers
and suppliers, changes in fuel costs and supply; unscheduled outages;
environmental incidents; electric transmission restraints; and risks and
uncertainties associated with the recently deregulated energy industry;
-- Trade, monetary, fiscal, taxation, energy regulation and environmental
policies of governments, agencies and similar organizations in geographic areas
where Covanta has a financial interest;
-- Financial or regulatory accounting principles or policies imposed by the
Financial Accounting Standards Board, the Securities and Exchange Commission,
the Federal Energy Regulatory Commission and similar entities with regulatory
oversight, including without limitation the impact of newly adopted FASB 133
relating to accounting for derivatives which is effective beginning January 1,
2001. The impact of FASB 133 will vary between accounting periods based on
changes in pricing of various items bought and sold by the Company.
-- Cost and other effects of legal and administrative proceedings,
settlements, investigations and claims;
-- Limitations on Covanta's ability to control the development or operation
of projects in which Covanta has less than 100% interest;
-- The lack of operating history at development projects provides only a
limited basis for management to project the results of future operations;
-- Risks associated with timely completion of development projects, including
obtaining competitive contracts, obtaining regulatory and permitting approvals,
local opposition, and construction delays;
-- Factors associated with operating in foreign countries, including
political instability and risk of war, expropriation and nationalization,
renegotiation or nullification of existing contracts; changes in law; and the
ability to convert foreign currency into United States dollars;
-- Factors which would affect the performance of the Company's remaining
assets and liabilities relating to the aviation and entertainment businesses,
including the demand for its fueling services, utilization of the Corel and
Anaheim arenas and indemnity and other claims relating to disposed of
operations.
-- Other business or investment considerations that may be disclosed from
time to time in Covanta's Securities and Exchange Commission filings or in other
publicly disseminated written documents.
Covanta undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
The foregoing review of factors that could cause Covanta's actual results to
differ materially from those contemplated in the forward-looking statements
included in this news release should not be construed as exhaustive. For more
information regarding these risks and uncertainties, review Covanta's filings
with the Securities and Exchange Commission.
* * *
Contacts: Investor Relations:
-------------------
Louis M. Walters, 973-882-7260
Media Relations:
Eric Berman, Adam Weiner, David Lilly
Kekst & Company, 212-521-4800
-- TABLES FOLLOW --
OGDEN CORPORATION
EARNINGS
(000's Omitted)
Quarter ended December 31,
----------------------------------
2000 1999
--------------- ---------------
ENERGY SEGMENT:
REVENUE
Energy Operations $ 216,921 $ 202,746
OEES 22,995 33,946
--------- ---------
TOTAL ENERGY REVENUE 239,916 236,692
--------- ---------
DIRECT COSTS
Energy Operations 196,453 163,953
OEES 24,407 66,322
--------- ---------
TOTAL ENERGY DIRECT COSTS 220,860 230,275
--------- ---------
GROSS MARGIN
Energy Operations 20,468 38,793
OEES (1,412) (32,376)
--------- ---------
TOTAL ENERGY GROSS MARGIN 19,056 6,417
% of Revenue 7.94% 2.71%
S.G.& A.
Energy Operations 17,095 13,691
OEES 1,444 3,985
--------- ---------
TOTAL ENERGY S.G.& A. 18,539 17,676
ENERGY OPERATING INCOME 517 (11,259)
% of Revenue 0.22% -4.76%
ENERGY EQUITY INCOME 8,257 3,633
Minority interests (1,632) (2,998)
--------- ---------
ENERGY EBIT 7,142 (10,624)
OTHER SEGMENT*-
Operating Loss (10,564) (20,591)
Write down of assets (77,240)
Unallocated corporate overhead (14,960) (43,339)
Interest-Net (9,258) (8,891)
--------- ---------
Pre-tax loss (104,880) (83,445)
Income taxes 31,146 18,475
--------- ---------
LOSS FROM CONTINUING OPERATIONS (73,734) (64,970)
--------- ---------
LOSS FROM DISCONTINUED OPERATIONS (14,793) (40,968)
--------- ---------
COMPANY NET LOSS) $ (88,527) $(105,938)
========= =========
EPS-Continuing operations
Basic $ (1.49) $ (1.31)
Fully Diluted $ (1.49) $ (1.31)
EPS-Discontinued operations
Basic $ (0.30) $ (0.83)
Fully Diluted $ (0.30) $ (0.83)
*Other Segment Revenues total $13,077 and $21,141 for the
quarters ended December 31, 2000 and 1999, respectively.
OGDEN CORPORATION
EARNINGS
(000's Omitted)
Year ended December 31,
------------------------------
2000 1999
-------------- --------------
ENERGY SEGMENT:
REVENUE
Energy Operations $830,911 $777,056
OEES 115,275 145,043
-------------- --------------
TOTAL ENERGY REVENUE 946,186 922,099
-------------- --------------
DIRECT COSTS
Energy Operations 697,474 629,400
OEES 123,897 173,437
-------------- --------------
TOTAL ENERGY DIRECT COSTS 821,371 802,837
-------------- --------------
GROSS MARGIN
Energy Operations 133,437 147,656
OEES (8,622) (28,394)
-------------- --------------
TOTAL ENERGY GROSS MARGIN 124,815 119,262
% of Revenue 13.19% 12.93%
S.G.& A.
Energy Operations 55,918 48,700
OEES 9,384 15,960
-------------- --------------
TOTAL ENERGY S.G.& A. 65,302 64,660
-------------- --------------
ENERGY OPERATING INCOME 59,513 54,602
% of Revenue 6.29% 5.92%
ENERGY EQUITY INCOME 24,071 13,005
Minority interests (4,781) (6,176)
-------------- --------------
ENERGY EBIT 78,803 61,431
OTHER SEGMENT*-
Operating Loss (26,218) (22,731)
Write down of assets (77,240)
Unallocated corporate overhead (59,768) (51,210)
Interest-Net (35,347) (30,697)
-------------- --------------
Pre-tax loss (119,770) (43,207)
Income taxes 34,149 6,917
-------------- --------------
LOSS FROM CONTINUING OPERATIONS (85,621) (36,290)
-------------- --------------
LOSS FROM DISCONTINUED OPERATIONS (143,664) (41,851)
Cumulative effect of change in accounting principle - (3,820)
-------------- --------------
COMPANY NET LOSS $ (229,285) $ (81,961)
============== ==============
EPS-Continuing operations
Basic $ (1.73) $ (0.74)
Fully Diluted $ (1.73) $ (0.74)
EPS-Discontinued operations
Basic $ (2.90) $ (0.85)
Fully Diluted $ (2.90) $ (0.85)
EPS-Cumulative effect of change in accounting principle
Basic $ (0.08)
Fully Diluted $ (0.08)
* Other Segment Revenues total $49,728 and $78,251 for the years ended
December 31, 2000 and 1999, respectively.