SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K/A
/X/ Annual report pursuant to Section 15(d) of the Securities and Exchange
Act of 1934 For the fiscal year ended December 31, 2000.
/ / Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission file number: 1-3122
A. Full title of the plan and the address of the plan, if different from
that if the issuer named below:
Resource Recovery 401(k) Plan
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Covanta Energy Corporation
40 Lane Road
Fairfield, NJ 07007
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the Resources Recovery 401(k)
Plan) have duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
Resource Recovery 401(k) Plan
Administrative Committee
By: /s/ Louis M. Walters
-------------------------
Louis M. Walters
Member of the Resource Recovery
401(k) Plan Administrative Committee
Date : July 2, 2001
Resource Recovery
401(k) Plan
Independent Auditors' Report
Financial Statements
Years Ended December 31, 2000 and 1999
Supplemental Schedule
Year Ended December 31, 2000
RESOURCE RECOVERY 401(k) PLAN
TABLE OF CONTENTS
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INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999:
Statements of Net Assets Available for Benefits
Statements of Changes in Net Assets Available for Benefits
Notes to Financial Statements
SUPPLEMENTAL SCHEDULE FOR THE
YEAR ENDED DECEMBER 31, 2000:
Schedule of Assets Held for Investment Purposes at End of Year
INDEPENDENT AUDITORS' REPORT
Resource Recovery 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of the Resource Recovery 401(k) Plan (the "Plan") as of December 31, 2000 and
1999, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2000
and 1999, and the changes in net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2000 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 15, 2001
RESOURCE RECOVERY 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
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2000 1999
ASSETS -
Investments (See Note 3) $48,363,668 $46,940,538
----------- -----------
RECEIVABLES:
Employer contributions 80,252 138,944
Participant contributions 194,478 324,349
----------- -----------
Total receivables 274,730 463,293
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $48,638,398 $47,403,831
=========== ===========
See notes to financial statements.
RESOURCE RECOVERY 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2000 AND 1999
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2000 1999
ADDITIONS:
Additions to net assets attributed to:
Investment Income:
Net (depreciation) appreciation in fair value of
investments (See Note 3) $ (3,295,444) $ 3,401,755
Interest and dividends 2,063,823 1,096,089
------------ ------------
(1,231,621) 4,497,844
------------ ------------
Contributions:
Participant 3,806,494 3,602,836
Employer 1,512,821 1,604,636
Rollovers -- 52,122
------------ ------------
5,319,315 5,259,594
Net transfer from other plans -- 39,395,641
------------ ------------
Total additions 4,087,694 49,153,079
------------ ------------
DEDUCTIONS -
Deductions from net assets attributed to:
Administrative expenses (30,470) (14,997)
Distributions to participants (2,822,657) (1,734,251)
------------ ------------
Total deductions (2,853,127) (1,749,248)
------------ ------------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 1,234,567 47,403,831
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 47,403,831 --
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 48,638,398 $ 47,403,831
============ ============
See notes to financial statements.
RESOURCE RECOVERY 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999
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1. DESCRIPTION OF THE PLAN
The following is a description of the Resource Recovery 401(k) Plan (the
"Plan"). Participants should refer to the Plan document for more complete
information.
a. General Information - The Plan is a defined contribution employee
savings plan providing for both employer and employee contributions.
Prior to adoption of the Plan on January 1, 1999, Covanta Energy
Services, Inc. (the"Company", formerly Ogden Resource Recovery Support
Services, Inc.) was included in the Ogden 401(k) Plan (the "Prior
Plan"). It was determined that it was in the best interest of the
Company and its employees to adopt the Plan, such plan being
substantially similar to, and a continuation of the Prior Plan.
Accordingly, effective January 1, 1999 the Prior Plan assets
pertaining to the Company were transferred to the Plan. All service
credited to an individual as a participant under the Prior Plan was
credited to such individual under the Plan; provided, that such
individual became a Participant of the Plan on or after January 1,
1999. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974.
Effective February 1, 2000, all of the assets and outstanding loans of
the Plan were transferred from American Express Trust Company (the
"Prior Trustee") to T. Rowe Price Trust Company (the "Trustee"). The
sponsor of the Plan, the Company, determined that it would be in the
best interest of the Company and the Plan, for the assets and
outstanding loans to be held by a separate trustee from the Prior
Trustee.
b. Administration of the Plan - Administrative and Investment Committees
are appointed by the Board of Directors (the "Board") of Covanta
Energy Group, Inc.(formerly Ogden Energy Group, Inc.) and serve
as fiduciaries of the Plan. The Administrative Committee has
responsibility for administering the Plan, and the Investment
Committee has responsibility for reviewing the performance of the
Plan's investments. Costs related to the administration of the Plan
may be paid out of Plan assets if the Company does not pay such
expenses directly.
c. Participation - Full-time employees who are not hourly employees of
participating companies who are not covered under a collective
bargaining agreement with a recognized union and have attained age 21
are eligible to participate in the Plan on the first day of the
calendar month following the date he or she has completed 12 months of
employment and 1,000 hours of service.
d. Contributions - Participants may elect to contribute to the Plan from
one to fifteen percent of their annual compensation on a pre-tax
basis. For 2000 and 1999, participant pre-tax contribution could not
exceed $10,500 and $10,000, respectively, in accordance with Internal
Revenue Service ("IRS") Regulations. The Company matches 100 percent
up to the first 3 percent of a participant's annual compensation which
is invested based on participant investment elections.
A participant's elective contributions and Company contributions are
invested, at the direction of the participant, in accordance with one
of the following options:
o 100 percent in one of the Investment Funds; or
o in more than one Investment Fund allocated in multiples of 1
percent.
If a participant does not make such an election, he or she is deemed
to have elected investment in the Government Securities Fund.
e. Loans to Participants - Loans are made to participants at a minimum of
$500 and up to the lesser of 50 percent of the participant's total
vested account balance (including outstanding loans, if any,) minus
the current loan balance or $50,000 reduced by the highest outstanding
balance of loans during the preceding 12 months, even if repaid, not
to exceed the limitations of the Tax Reform Act of 1986. The terms of
the loans are a minimum of 6 months and a maximum of 5 years or 60
months (10 year maximum on loans for a primary residence).
Participants are prohibited from borrowing funds accumulated in the
Ogden Stock Fund. The maximum number of loans outstanding at one time
for an employee is two loans with only one of the outstanding loans
being a residential loan. The loan interest rate is based on the prime
rate plus 1% on the first business day of each month.
f. Vesting - Vesting of employer contributions to the Plan is determined
based on the period of vesting service by participants commencing on
their date of hire to their date of termination of service in
accordance with the following schedule:
Percent
Years of Vesting Service in the Plan Vested
Less Than one year of vesting service 0%
One but less than two years of vesting service 20
Two but less than three years of vesting service 40
Three but less than four years of vesting service 60
Four but less than five years of vesting service 80
Five or more years of vesting service 100
Participant contributions are immediately 100% vested.
g. Retirement Dates - A participant's normal retirement date is the
participant's sixty-fifth birthday. A participant may elect early
retirement at age 55 with 5 years of credited service.
h. Form of Benefits - A participant can receive payout through one of the
following options: lump sum cash distribution, direct rollover into
another qualified retirement plan or IRA, or transfer in-kind
distribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies followed in the preparation of the
financial statements of the Plan are in conformity with accounting
principles generally accepted in the United States of America. The
following is a description of the more significant of these policies:
a. Investment Funds - During 2000, the Plan included the following funds
in which participants could elect to invest their Plan assets.
o T. Rowe Price Equity Income Fund - This fund invests in stocks
that pay above-average dividends.
o T. Rowe Price Stable Value Fund ("Stable Value Fund") - This fund
invests in investment contracts issued by high-quality insurance
companies and banks.
o T. Rowe Price U. S. Treasury Money Fund ("U. S. Treasury Money
Fund") - This fund invests primarily in short-term U. S. Treasury
securities.
o Fidelity Magellan Fund - This fund invests in common stock of
domestic, foreign and multinational companies of all sizes. The
fund may also invest in bonds.
o T. Rowe Price International Stock Fund - This fund invests in
established non-U.S. companies.
o T. Rowe Price Balanced Fund - This fund invests approximately 60%
in stocks and 40% in bonds.
o T. Rowe Price Spectrum Income Fund - This fund invests in five U.
S. bond funds, two international bond funds, a money market fund
and an income-oriented stock fund.
o T. Rowe Price Blue Chip Growth Fund - This fund invests in large
and medium-sized blue chip growth companies.
o T. Rowe Price Equity Index 500 Fund - This fund invests in the
500 stocks that make up the S&P 500 Index.
o T. Rowe Price Small-Cap Value Fund - This fund invests in small
companies that appear to be undervalued.
o T. Rowe Price New Horizons Fund - This aggressive fund seeks high
long-term growth. It invests in small-company stocks and takes a
growth approach to investing. This fund is subject to the abrupt
and unpredictable market movements associated with small-company
stocks.
o Ogden Stock Fund - This fund invests in Covanta Energy
Corporation ("Covanta", formerly Ogden Corporation) common stock,
traded on the New York Stock Exchange.
o T. Rowe Price Mid-Cap Growth Fund - This fund invests at least
65% of its assets in a diversified portfolio of common stocks of
mid-cap companies whose earnings T. Rowe Price expects to grow at
a faster rate than the average company.
o T. Rowe Price Science & Technology Fund - This fund invests at
least 65% of its assets in the common stocks of companies
expected to benefit from the development, advancement and use of
science and technology.
Shares in group trust funds were determined on the basis of the
initial asset contribution to the trust by each participating plan,
adjusted for subsequent contributions, distributions and allocated
income and realized and unrealized gains and losses. Allocation of
income, realized and unrealized gains and losses and administrative
expenses were determined monthly on the basis of each plan's
proportionate share in the Plan assets stated at fair value.
b. Investment Funds - During 1999, the Plan included the following funds
in which participants could elect to invest their Plan assets:
o Ogden Stock Fund ("Stock Fund") - Investments in common stock of
Covanta, but does maintain a small cash balance
invested in a money market fund for liquidity purposes.
o Fiduciary Capital Management Fixed Income Fund ("Fixed Income
Fund") - Investment contracts with insurance companies and banks
which provide for a guaranteed return on principal invested over
a specified time period.
o American Express Equity Index Fund II ("AMEX Equity Fund") -
Investments in a collective trust consisting of a diversified
portfolio of equity securities.
o AXP Mutual Fund Balanced Portfolio ("AXP Mutual Fund") -
Investments in a mutual fund consisting primarily of common
stock, preferred stock and debt securities.
o Templeton Foreign Fund ("Templeton Fund") - Investments in a
mutual fund consisting primarily of established, non-U.S.
companies.
o AXP Growth Fund ("AXP Growth Fund") - Investments in a mutual
fund seeking to provide long-term growth of capital primarily in
growth, improving, and technology companies.
o AXP New Dimensions Fund ("AXP Dimensions Fund") - Investments in
a mutual fund which invests primarily in common stocks of U.S.
and foreign companies in which economic and technical changes may
take place.
o AET U.S. Government Securities Fund II ("Government Securities
Fund") - Investments in a collective money market fund, managed
to provide maximum current income consistent with conserving
capital and maintaining high liquidity.
c. Investment Valuation - Investments in securities listed on national
securities exchanges are valued at closing composite prices published
for the last business day of the year. Investments in guaranteed
investment contracts included in the Stable Value Fund are stated at
fair value which approximates contract value. Investments in the U. S.
Treasury Money Fund is stated at cost plus investment income which
approximates fair value. Other investments are stated at fair value as
determined by the Trustee.
d. Investment Transactions and Investment Income - Investment
transactions are accounted for on the date purchases or sales are
executed. Realized and unrealized gains and losses are determined
based on the fair value of assets at the beginning of the Plan year.
Dividend income is accounted for on the ex-dividend date. Interest
income is recorded on the accrual basis as earned.
e. United States Federal Income Taxes - The Plan and trust are intended
to be qualified under Section 401(a) and tax-exempt under Section
501(a) of the Internal Revenue Code (the "Code"), respectively. The
Plan Administrator believes that the Plan is currently designed and
being operated in compliance with the applicable requirements of the
Code. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
f. Distributions to Participants - Benefits are recorded when paid.
g. General - The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of
America. These principles require management to make certain estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the reported
amounts of changes in net assets available for benefits during the
reporting period. Actual results could differ from those estimates.
h. Accounting for Derivative Instruments - The Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133, as amended and interpreted, established
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
and hedging activities. It requires entities, including employee
benefit plans, to recognize all derivatives as either assets or
liabilities in the statement of financial position and to measure
those instruments at fair value.
This Statement is effective for fiscal years after June 15, 2000.
Management has determined that the implementation of SFAS No. 133 will
have no effect on the Plan's financial statements.
3. INVESTMENTS
The following is a summary of the Plan's investments held by the Trustee at
December 31, 2000 that represent 5 percent or more of the Plan's net
assets:
Investments at fair value determined by quoted market price:
Ogden Stock Fund $ 5,440,134
Stable Value Fund 5,688,474
Fidelity Magellan Fund 9,837,890
T. Rowe Price Balanced Fund 3,170,106
T. Rowe Price Blue Chip Growth Fund 2,756,836
T. Rowe Price Equity Index 500 Fund 9,596,725
T. Rowe Price Spectrum Income Fund 2,420,617
Investments at estimated fair value by the Trustee - Loan Fund 3,901,875
The Stable Value Fund primarily invests in investment contracts providing a
guaranteed return on principal invested over a specified time period. The
crediting interest rates at December 31, 2000 for the various investment
contracts ranged from 5.88% to 7.83%. The average yields of the Stable
Value Fund for the year ended December 31, 2000 was 6.58%. All investment
contracts in the Stable Value Fund are fully benefit-responsive and are
recorded at their fair values. Generally, fair value approximates contract
value contributions made plus interest accrued at the contract rates less
withdrawals and fees. If, however, an event has occurred that may impair
the ability of the contract issuer to perform in accordance with the
contract terms, fair value may be less than the contract value.
During 2000, the Plan's investments (including gains and losses on
investments bought and sold as well as held during the year) depreciated in
value by $3,295,444 as follows:
2000
Fidelity Magellan Fund $(1,105,005)
T. Rowe Price International Stock Fund (476,736)
T. Rowe Price Equity Income Fund 802
Ogden Stock Fund 108,645
T. Rowe Price Balanced Fund (10,954)
T. Rowe Price New Horizons Fund (285,885)
T. Rowe Price Spectrum Income Fund 53,765
T. Rowe Price Blue Chip Growth Fund (211,384)
T. Rowe Price Equity Index 500 Fund (670,437)
T. Rowe Price Small-Cap Value Fund (3,731)
T. Rowe Price Science & Technology Fund (780,118)
T. Rowe Price Mid-Cap Growth Fund (23,427)
American Express Income Fund II (formerly Fixed Income Fund 109,021
-----------
$(3,295,444)
===========
The following is a summary of the Plan's investments held by the Former
Trustee at December 31, 1999 that represent 5 percent or more of the Plan's
net assets.
Investments at fair value as determined by quoted market price:
Stock Fund $ 3,447,877
AXP Growth Fund 11,726,578
AMEX Equity Fund 11,316,493
AXP Mutual Fund 3,226,609
Templeton Fund 2,507,349
Government Securities Fund 2,689,523
Investments at contract value as determined by
the Trustee - Fixed Income Fund 6,781,103
Investments at estimated fair value as determined by
the Trustee -Loan Fund 3,391,894
Loans to participants at December 31, 2000 and 1999, which comprise the
Loan Fund, are reported at cost, which approximates fair value.
The Fixed Income Fund invests in investment contracts providing a
guaranteed return on principal invested over a specified time period. The
crediting interest rates at December 31, 1999 for the various investment
contracts ranged from 7.74% to 4.82%. The average yields of the Fixed
Income Fund for the year ended December 31, 1999 was 6.91%. All investment
contracts in the Fixed Income Fund are fully benefit-responsive and are
recorded at contract value which equals principal plus accrued interest. If
the investment contracts were reported at fair value, the investment
contracts in the Fixed Income Fund would have approximated $1,784,491 at
December 31, 1999.
4. PLAN TERMINATION
The Company expects to continue the Plan indefinitely, but reserves the
right to modify, suspend, or terminate the Plan at any time, which includes
the right to vary the amount of, or to terminate, the Company's
contributions to the Plan. In no event shall assets of the Plan be used for
any purpose other than to benefit participants or beneficiaries. In the
event of the Plan's termination or discontinuance of contributions
thereunder, the interest of each participant to benefits accrued to such
date, to the extent then funded, is fully vested and nonforfeitable.
5. TAX STATUS
The Plan has not yet received a favorable IRS determination letter;
however, the Plan Administrator is in the process of submitting an
application requesting confirmation that the Plan and related trust are
designed in accordance with applicable sections of the Code. The Plan
Administrator believes that the plan is currently being operated in
compliance with the applicable requirements of the Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statments.
******
RESOURCE RECOVERY 401(k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 2000
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Description Number of Market
Identity of Issue of Investment Share / Units Value
MUTUAL FUNDS:
T. Rowe Price Equity
Income Fund Mutual Fund 4,159 $ 102,607
T. Rowe Price
Stable Value Fund GIC 5,688,474 5,688,474
T. Rowe Price
U.S. Treasury Money Fund Mutual Fund 117,237 117,237
Fidelity Magellan Fund Mutual Fund 86,347 9,837,890
T. Rowe Price
International Stock Fund Mutual Fund 145,634 2,114,604
T. Rowe Price
Balanced Fund Mutual Fund 165,368 3,170,106
T. Rowe Price
Spectrum Income Fund Mutual Fund 224,756 2,420,617
T. Rowe Price
Blue Chip Growth Fund Mutual Fund 81,443 2,756,836
T. Rowe Price
Equity Index 500 Fund Mutual Fund 270,330 9,596,725
T. Rowe Price
Small Cap Value Fund Mutual Fund 12,822 245,410
T. Rowe Price
New Horizons Fund Mutual Fund 50,714 1,211,563
T. Rowe Price
Science & Technology Fund Mutual Fund 40,825 1,452,150
T. Rowe Price
Mid-Cap Growth Fund Mutual Fund 7,727 307,440
COMMON STOCKS:
*Ogden Corporation Common Stock 353,830 5,440,134
PARTICIPANT LOANS:
Participant Loans Loans N/A 3,901,875
-----------
TOTAL ASSETS HELD FOR
INVESTMENTS $48,363,668
===========
*Party-in-interest
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-36658, 33-36657, 33-54143, 333-19641, 333-82801 and 333-40140 of Covanta
Energy Corporation (formerly Ogden Corporation) on Form S-8 of our report dated
June 15, 2001, appearing in this Annual Report on Form 11-K of the Resource
Recovery 401(k) Plan for the year ended December 31, 2000.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 27, 2001