Document/Exhibit Description Pages Size
1: 10-K Annual Report 49± 210K
3: EX-10 Exhibit 10.7(D)(I) 9± 37K
4: EX-10 Exhibit 10.7(E)(I) 9± 41K
5: EX-10 Exhibit 10.7(P)(Ii) 58± 254K
6: EX-10 Exhibit 10.7(U)(I) 2± 10K
7: EX-10 Exhibit 10.7(W)(I) 64± 276K
8: EX-10 Exhibit 10.7(W)(Ii) 50± 218K
9: EX-11 Statement re: Computation of Earnings Per Share 2± 10K
10: EX-13 Annual or Quarterly Report to Security Holders 39± 162K
11: EX-21 Subsidiaries of the Registrant 8 38K
12: EX-23 Consent of Experts or Counsel 1 8K
13: EX-27 Financial Data Schedule (Pre-XBRL) 1 7K
2: EX-99 Exhibit Index 7 30K
EX-13 — Annual or Quarterly Report to Security Holders
Exhibit Table of Contents
EXHIBIT 13
Ogden Corporation and Subsidiaries
Management's Discussion and Analysis of Consolidated Operations
At December 31, 1994, in connection with Ogden's acquisition of the
publicly traded shares of Ogden Projects, Inc. (OPI), Ogden reclassified its
business segments. Ogden now classifies its business segments as Services
(formerly "Operating Services") and Projects (formerly "Waste-to-Energy
Operations"). Independent power activities, formerly part of Operating
Services, are now part of Projects, reflecting consolidation of the overall
management of these activities within OPI. Projects now includes
waste-to-energy activities, the independent power business, water and
wastewater projects, and Ogden's construction activities. Within the
Services segment, certain business activities have been reclassified.
The Environmental Services group no longer includes independent power; the
Government Services group has been renamed Technology Services; and all
facility management service contracts for government customers have been
transferred to the Facility Management Services group. The discussion and
analysis that follow reflect these reclassifications.
Operations: Revenues for 1994 were $70,800,000 higher than the
comparable period of 1993, primarily due to increased revenues of
$24,100,000 in Aviation Services reflecting the start-up of operations in
Brazil and increased activity in Venezuela, Chile, and European operations;
$30,200,000 in Technology Services, primarily in the Atlantic Design group
and the Systems Engineering group reflecting several new contracts and
increased customer activity; $18,500,000 in Environmental Services,
primarily reflecting increased activity in the consulting group;
$26,900,000 in waste-to-energy services due primarily to increased revenues
at the Detroit, Michigan; Hartford, Connecticut; and Honolulu, Hawaii,
facilities acquired in January 1993 and the start-up and full
operation of the Union County, New Jersey, facility; $3,800,000 in the
independent power group, reflecting increased geothermal power
production; and $26,100,000, relating to the gain on the sale of limited
partnership interests in and related tax benefits of the Onondaga County,
New York, facility. These increases were partially offset by lower revenues
of $24,800,000 in the Facility Management Services group due primarily to
the loss of several building cleaning contracts and certain utility
maintenance contracts and a reduction in construction revenues of
$35,300,000, primarily due to reduced construction
activity at the Union County facility completed in May 1994, and the Lee
County, Florida, facility completed in December 1994.
Consolidated operating income was $16,200,000 higher than 1993,
primarily due to an increase of $3,500,000 in Technology Services reflecting
several new contracts and increased customer activity in the Atlantic Design
group; an increase of $1,600,000 in waste-to-energy services (service revenues
less operating costs and debt service charges), chiefly associated with the
start-up and full commercial operations of the Union County facility and
partially offset by additional maintenance work at the Detroit facility,
additional provisions totaling $8,000,000 for deferred proposal costs,
litigation and contractor settlement costs, and increased debt service
charges of $1,700,000; an increase of $1,700,000 in independent power,
primarily reflecting increased activity; an increase in construction income
(construction revenues less construction costs) of $2,600,000, primarily due
to increased activity at the Montgomery County, Maryland, facility; and a
gain of $26,100,000 from the sale of limited partnership interests in and
related tax benefits of the Onondaga County facility. These increases were
partially offset by lower earnings of $5,000,000 in Facility Management
Services, reflecting the loss of several building cleaning and utility
maintenance contracts; lower earnings of $2,500,000 in Aviation Services,
reflecting lower margins in the in-flight catering group and a loss on the
devaluation of the Mexican peso, partially offset by increased
earnings in overseas ground services operations; and lower earnings of
$2,200,000 in Entertainment Services, primarily reflecting the effect of
the baseball strike and hockey lockout and start-up of overseas operations,
partially offset by the opening of Arrowhead Pond of Anaheim and several
new customers. Selling, administrative, and general expenses increased
$10,600,000 due primarily to increased overhead costs including marketing
efforts related to new industries and international markets for both the
Projects and Services segments. Debt service charges increased $1,700,000.
This increase was due to higher interest rates resulting from the conversion
of one series of adjustable-rate project debt to fixed rates in 1993 and
higher interest rates resulting from two fixed interest rate swap agreements
entered into as hedges against two series of adjustable-rate project debt.
The swap agreements resulted in additional debt service charges of
$1,400,000 and $1,500,000 in 1994 and 1993, respectively.
Interest income for 1994 was $3,500,000 higher than in 1993, primarily
reflecting interest earned on loans made in the second half of 1994 and
higher interest rates on earnings from investments. Interest expense for 1994
was $3,400,000 higher than in 1993, reflecting higher borrowings and a
reduction of $2,600,000 in income received on two interest rate swap agreements
covering notional amounts of $100,000,000 each. One swap agreement expired in
March 1994. The other swap agreement expires on December 16, 1998. These
swap agreements were entered into in order to convert Ogden's fixed-rate
$100,000,000 9.25% debentures to variable-rate debt. Income received on
these swaps was $800,000 and $3,400,000 in 1994 and 1993, respectively.
The effective income tax rate for 1994 was 44.4%, compared with 45.0%
for 1993. This decrease reflects a charge of $4,100,000 in 1993 reflecting the
adjustment of prior years' deferred income tax balances to the new 35% rate
enacted in 1993 in accordance with Statement of Financial Accounting
Standards (SFAS) 109, offset by $3,600,000 in 1994 due to the recapture of
investment tax credits relating to the sale of certain tax benefits with
respect to the Onondaga County facility. Note 20 to the Consolidated
Financial Statements contains a more detailed reconciliation of the
variances from the Federal statutory income tax rate.
Revenues for 1993 were $270,500,000 higher than the comparable period of
1992, reflecting increased revenues of $30,400,000 in Entertainment Services
primarily due to new contracts and increased customer activity principally at
sports venues; $17,500,000 in Aviation Services, chiefly associated with the
in-flight catering group and the Mexican and European ground handling
operations due to increased customer activity and the start-up of operations
at Schiphol Airport in Holland; and $3,200,000 in Environmental Services,
reflecting the acquisition of a Spanish environmental services company in
1993. Waste-to-energy service revenues increased $60,900,000, primarily due
to the operations of the three waste-to-energy plants acquired from RRS
Holdings, Inc. (RRS), the waste-to-energy subsidiary of Asea Brown Boveri
Inc., on January 8, 1993; independent power production increased $4,100,000,
chiefly associated with increased activity; and construction revenues
increased $161,800,000 due to increased construction activity at the Lee
County, Detroit, and Montgomery County waste-to-energy facilities. These
increases were partially offset by a reduction of $7,700,000, arising from
the sale of limited partnership interests in and related tax benefits of the
Huntington, New York, waste-to-energy facility in 1992.
Consolidated operating income was $8,800,000 higher than 1992, primarily
reflecting an increase in waste-to-energy service income (service
revenues less operating costs and debt service charges) of $9,100,000, chiefly
associated with increased activity at existing facilities, the addition of
three RRS plants in January 1993, and a decrease in debt service charges of
$1,100,000; $500,000 in independent power operations, reflecting increased
production; $14,000,000 in construction income due to increased activity;
$3,900,000 in Entertainment Services due to new contracts and increased
customer activity, principally at sports venues; $1,900,000 at Universal
Ogden, reflecting increased activity in the offshore remote services
business; and $300,000 in Environmental Services, primarily due to the
acquisition of a Spanish environmental services company.
These increases were partially offset by a reduction of $7,700,000,
reflecting the gain in 1992 from the sale of limited partnership interests
in and related tax benefits of the Huntington waste-to-energy facility.
Selling, administrative, and general expenses for both the Projects and
Services segments increased $14,300,000 due to increased overhead costs
including marketing efforts relating to new industries and international
markets. Debt service charges were $1,100,000 lower due primarily to a
repayment of project debt from excess construction proceeds as part of a
refinancing. This decrease was partially offset by higher interest rates
on certain variable-rate debt and higher interest expense resulting from
two interest rate swap agreements entered into in May 1993 as hedges against
interest rate exposure on two series of adjustable-rate project debt.
The interest rate swap agreements resulted in an additional $1,500,000 of
debt service charges in 1993.
In December 1993, the Corporation adopted a plan to discontinue its
fixed-site hazardous waste business. The net charge for all discontinued
operations' activity in 1993, which was not material, has been included in
operating costs and expenses. See Note 21 to the Consolidated Financial
Statements for a more detailed discussion of Discontinued Operations.
Interest income for 1993 was $200,000 lower than 1992, primarily
reflecting income from the investment of the proceeds from the 9.25%
debentures issued in March 1992, partially offset by lower interest rates on
investments and the collection of a subordinated note bearing interest above
the prime rate. Interest expense for 1993 was $600,000 higher than 1992,
primarily reflecting interest costs on the 9.25% debentures issued in March
1992, partially offset by lower interest costs on the Corporation's
variable-rate debt and increased income received on two interest rate swap
agreements covering notional amounts of $100,000,000 each. One swap was
entered into in November 1993. These swaps were entered into in order to
convert Ogden's fixed-rate $100,000,000 9.25% debentures to variable-rate
debt. Income received on these swaps amounted to $3,400,000 and $2,300,000
in 1993 and 1992, respectively.
The effective income tax rate for 1993 was 45.0%, compared with a 40.1%
rate for the comparable period of 1992. This increase of 4.9% is chiefly
associated with the Omnibus Budget Reconciliation Act of 1993, signed in
August 1993, which increased the Federal income tax rate from 34% to 35%
retroactively to January 1, 1993. As a consequence, deferred income tax
balances were adjusted to reflect the new tax rate as required by SFAS 109,
which resulted in a one-time charge for Federal income taxes of $4,100,000
in 1993. Note 20 to the Consolidated Financial Statements contains a more
detailed reconciliation of the variances from the Federal statutory income
tax rate.
Capital Investments, Commitments, and Liquidity: During 1994, capital
investments amounted to $119,700,000, of which $76,700,000, inclusive of
restricted funds transferred from funds held in trust, was for Projects'
waste-to-energy operations and $43,000,000 was for normal replacement and
growth in Services, Projects, and for Corporate equipment.
At December 31, 1994, capital commitments amounted to $49,900,000, which
includes commitments for equity investments (over and above restricted
funds provided by revenue bonds issued by municipalities) of $2,600,000 for
Projects' waste-to-energy facilities and $47,300,000 for normal replacement,
modernization, and growth in Services' and Projects' operations.
In 1994, Ogden Corporation's Board of Directors increased from 2,000,000
to 3,200,000 the number of shares authorized to be repurchased by the
Corporation from time to time in the open market. The Corporation has not
purchased any of its shares.
Ogden and certain of its subsidiaries have issued or are party to
performance bonds and guarantees and related contractual obligations undertaken
mainly pursuant to agreements to construct and operate certain waste-to-energy,
entertainment, and other facilities. In the normal course of business,
they are involved in legal proceedings in which damages and other remedies are
sought. Management does not expect that these contractual obligations, legal
proceedings, or any other contingent obligations incurred in the normal
course of business will have a material adverse effect on Ogden's Consolidated
Financial Statements.
During 1994, a subsidiary of the Corporation has entered into a 30-year
facility management contract pursuant to which it has agreed to advance
funds to a customer, if necessary and only upon satisfactory completion of
construction of the facility, to assist refinancing senior secured debt
incurred in connection with construction of the facility. Such refinancing
requirements are not expected to exceed $67,000,000 at maturity of the
senior secured debt, which is expected to be on or about March 1, 2001.
Ogden continues as guarantor of surety bonds and letters of credit totaling
approximately $19,200,000 on behalf of International Terminal Operating Co.
Inc. and has guaranteed borrowings of certain customers amounting to
approximately $20,300,000. Management does not expect that these
arrangements will have a material adverse effect on Ogden's
Consolidated Financial Statements.
Ogden's obligation as guarantor on behalf of Avondale Industries, Inc.,
with respect to $36,000,000 of Industrial Revenue Bonds as well as other
contingent obligations under which Ogden may have been required to purchase
Avondale preferred stock, ended June 1, 1994.
Projects' waste-to-energy facilities are financed to a large degree by
revenue bonds issued by the municipalities for facility construction. Other
capital commitments and payments, if any, required by guarantees, are expected
to be satisfied from cash flow from operations; available funds, including
short-term investments; and the Corporation's unused credit facilities to the
extent needed. At December 31, 1994, the Corporation had $204,000,000 in cash,
cash equivalents, and marketable securities and unused revolving credit lines
of $162,000,000.
Ogden expects to continue its strategy of developing and offering new
services to an increasing number of customers. This strategy includes the
expansion of the waste-to-energy business, independent power generating
capabilities, and the development of water and wastewater treatment projects
as well as the continued development of the Corporation's services product
lines, both in the United States and abroad. Acquisitions are expected to
be a continuing factor in the future growth of Ogden.
[Download Table]
Ogden Corporation and Subsidiaries
Selected Financial Data
December 31, 1994 1993 1992 1991 1990
(In thousands of dollars, except per-share amounts)
Total Revenues $2,110,185 $2,039,337 $1,768,815 $1,567,568 $1,556,406
Income (Loss) From:
Continuing operations 67,826 62,130 60,767 57,604 58,072
Discontinued operations ---- ---- ---- (13,880) (2,160)
Cumulative effect of
changes in
accounting principles (1,520) (5,340) (5,186) --- ---
Net income 66,306 56,790 55,581 43,724 55,912
Earnings (Loss) Per
Common Share:
Continuing operations 1.55 1.43 1.41 1.33 1.36
Discontinued operations --- --- --- (0.32) (0.05)
Cumulative effect of
changes in
accounting principles (0.03) (0.12) (0.12) --- ---
Total 1.52 1.31 1.29 1.01 1.31
Earnings (Loss) Per
Common Share-
Assuming Full Dilution:
Continuing operations 1.54 1.42 1.40 1.32 1.34
Discontinued operations --- --- --- (0.32) (0.05)
Cumulative effect of
changes in
accounting principles (0.03) (0.12) (0.12)
Total 1.51 1.30 1.28 1.00 1.29
Total Assets 3,644,886 3,340,729 3,187,826 2,846,254 2,690,448
Long-Term Obligations 2,047,031 1,946,547 2,003,091 1,781,576 1,682,354
Shareholders' Equity 596,818 l486,267 481,084 478,122 484,482
Shareholders' Equity Per
Common Share 12.21 11.15 11.11 11.09 11.26
Cash Dividends Declared
Per Common Share $1.25 $1.25 $1.25 $1.25 $1.31
Net income in 1993 was reduced by $.08 per share, reflecting the
retroactive effect of the increased Federal income tax rate that was enacted
in August 1993 on the prior years' deferred income tax balances.
[Download Table]
Ogden Corporation and Subsidiaries
Statements of Consolidated Income
For the years ended December 31, 1994 1993 1992
Service revenues $1,414,348,000 $1,367,557,000 $1,283,453,000
Net sales 456,586,000 423,329,000 390,994,000
Construction revenues 213,125,000 248,451,000 86,687,000
Gain on sale of limited
partnership interests 26,126,000 --- 7,681,000
Total revenues 2,110,185,000 2,039,337,000 1,768,815,000
Operating costs and expenses 1,125,303,000 1,073,684,000 989,771,000
Costs of goods sold 405,190,000 376,553,000 359,736,000
Construction costs 194,022,000 231,956,000 84,212,000
Selling, administrative,
and general expenses 135,852,000 125,219,000 110,872,000
Debt service charges 100,358,000 98,664,000 99,734,000
Total costs and expenses 1,960,725,000 1,906,076,000 1,644,325,000
Consolidated operating income 149,460,000 133,261,000 124,490,000)
Interest income 12,709,000 9,181,000 9,359,000
Interest expense (23,655,000) (20,289,000) (19,721,000)
Other income (deductions)-net 850,000 3,348,000 (1,253,000)
Income before income taxes
and minority interests 139,364,000 125,501,000 112,875,000
Less: income taxes 61,883,000 56,526,000 45,255,000
minority interests 9,655,000 6,845,000 6,853,000
Income before cumulative effect
of changes in accounting
principles 67,826,000 62,130,000 60,767,000
Cumulative effect of changes
in accounting principles
(net of income taxes of
$1,100,000 and $3,710,000
for 1994 and 1993, respectively,
and including minority interest
of $6,582,000 for 1992) (1,520,000) (5,340,000) (5,186,000)
Net income $66,306,000 $56,790,000 $55,581,000
Earnings (Loss) Per
Common Share:
Income before cumulative
effect of changes in
accounting principles $1.55 $1.43 $1.41
Cumulative effect of changes
in accounting principles (0.03) (0.12) (0.12)
Total $1.52 $1.31 $1.29
Earnings (Loss) Per Common
Share-Assuming Full Dilution:
Income before cumulative effect
of changes in
accounting principles $1.54 $1.42 $1.40
Cumulative effect of changes in
accounting principles (0.03) (0.12) (0.12)
Total $1.51 $1.30 $1.28
See Notes to Consolidated Financial Statements
[Download Table]
Ogden Corporation and Subsidiaries
Consolidated Balance Sheets
Assets December 31, 1994 1993
Current Assets:
Cash and cash equivalents $117,359,000 $109,097,000
Marketable securities available
for sale 86,676,000 94,247,000
Restricted funds held in trust 104,700,000 132,273,000
Receivables (less allowances: 1994,
$32,783,000 and 1993, $25,547,000) 585,959,000 506,727,000
Deferred income taxes 26,451,000 28,219,000
Other 74,752,000 61,995,000
Total current assets 995,897,000 932,558,000
Property, plant, and equipment-net 1,884,774,000 1,693,801,000
Restricted funds held in trust 203,244,000 227,143,000
Unbilled service and other receivables 171,441,000 145,542,000
Unamortized contract acquisition costs 133,172,000 111,681,000
Goodwill and other intangible assets 100,416,000 83,552,000
Other assets 155,942,000 146,452,000
Total Assets $3,644,886,000 $3,340,729,000
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt $3,483,000 $3,070,000
Current portion of project debt 45,279,000 32,632,000
Dividends payable 13,637,000 13,594,000
Accounts payable 93,362,000 84,917,000
Federal income taxes payable 10,141,000 453,000
Accrued expenses, etc. 346,997,000 295,181,000
Total current liabilities 512,899,000 429,847,000
Long-term debt 304,393,000 276,063,000
Project debt 1,593,988,000 1,518,734,000
Deferred income taxes 281,065,000 227,275,000
Other liabilities 196,305,000 176,682,000
Minority interest 10,768,000 74,111,000
Convertible subordinated debentures 148,650,000 151,750,000
Total Liabilities 3,048,068,000 2,854,462,000
Shareholders' Equity 596,818,000 486,267,000
Total Liabilities and Shareholders'
Equity $3,644,886,000 $3,340,729,000
See Notes to Consolidated Financial Statements
[Download Table]
Ogden Corporation and Subsidiaries
Statements of Shareholders' Equity
For the years ended December 31, 1994 1993 1992
Serial Cumulative Convertible
Preferred Stock, Par Value $1.00
Per Share; Authorized, 4,000,000
Shares:
Balance at beginning of year $57,000 $62,000 $68,000
Shares converted into common stock (3,000) (5,000) (6,000)
Balance at end of year (shares
outstanding: 54,000 in 1994, 57,000
in 1993, 62,000 in 1992; aggregate
involuntary liquidation value-1994,
$1,078,000) l54,000 l57,000 l62,000
Common Stock, Par Value $.50 Per
Share; Authorized, 80,000,000
Shares:
Balance at beginning of year 21,750,000 21,595,000 21,497,000
Acquisition of Ogden Projects,
Inc., minority interests 2,570,000 --- ---
Exercise of stock options, less
common stock utilized 57,000 95,000 76,000
Conversion of preferred shares 11,000 14,000 18,000
Conversion of 5% debentures --- 46,000 4,000
Balance at end of year
(shares outstanding: 48,777,000
in 1994, 43,499,000 in 1993,
43,190,000 in 1992) 24,388,000 21,750,000 21,595,000
Capital Surplus:
Balance at beginning of year 100,223,000 94,659,000 90,551,000
Acquisition of Ogden Projects,
Inc., minority interests 91,876,000 --- ---
Exercise of stock options, less
common stock utilized 2,164,000 3,640,000 2,623,000
Capital transactions of subsidiary
companies-net 241,000 696,000 1,379,000
Conversion of preferred shares (8,000) (10,000) (12,000)
Conversion of 5% debentures --- 1,238,000 118,000
Balance at end of year 194,496,000 100,223,000 l94,659,000
Earned Surplus:
Balance at beginning of year 370,231,000 367,908,000 366,410,000
Net income 66,306,000 56,790,000 55,581,000
Total 436,537,000 424,698,000 421,991,000
Preferred dividends-per share 1994,
1993, and 1992, $3.35 184,000 199,000 213,000
Common dividends-per share 1994,
1993, and 1992, $1.25 54,489,000 54,268,000 53,870,000
Total dividends 54,673,000 54,467,000 54,083,000
Balance at end of year 381,864,000 370,231,000 367,908,000
Cumulative Translation Adjustment-Net (1,399,000) (4,639,000) (2,544,000)
Pension Liability Adjustment (441,000) (928,000) ---
Net Unrealized Loss on Securities
Available For Sale (2,144,000) --- ---
Net Unrealized Loss on Noncurrent
Marketable Equity Securities --- (427,000) (596,000)
Total Shareholders' Equity $596,818,000 $486,267,000 $481,084,000
See Notes to Consolidated Financial Statements
[Download Table]
Ogden Corporation and Subsidiaries
Statements of Consolidated Cash Flows
For the years ended December 31, 1994 1993 1992
Cash Flows From Operating
Activities:
Net income $66,306,000 $56,790,000 $55,581,000
Adjustments to Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 90,545,000 85,643,000 77,048,000
Deferred income taxes 37,704,000 47,598,000 37,547,000
Cumulative effect of changes in
accounting principles 1,520,000 5,340,000 5,186,000
Other 44,062,000 24,653,000 20,322,000
Management of Operating Assets
and Liabilities:
Decrease (Increase) in Assets:
Accounts receivable (72,067,000) (61,559,000) (72,751,000)
Other assets (58,727,000) (36,450,000) (29,684,000)
Increase (Decrease) in Liabilities:
Accounts payable 3,153,000 8,087,000 383,000
Accrued expenses 17,629,000 38,481,000 12,993,000
Deferred income 1,222,000 (1,152,000) (926,000)
Other liabilities 35,218,000 24,315,000 (6,864,000)
Net cash provided by
operating activities 166,565,000 191,746,000 98,835,000
Cash Flows From Investing
Activities:
Entities purchased, net of
cash acquired (32,404,000) (54,224,000) (7,940,000)
Proceeds from sale of marketable
securities available for sale 63,545,000 88,775,000 136,154,000
Purchase of marketable securities
available for sale (56,418,000) (83,084,000) (199,178,000)
Proceeds from sale of business 12,516,000 --- ---
Proceeds from sale of property,
plant, and equipment 2,824,000 8,185,000 1,234,000
Investments in waste-to-energy
facilities (76,686,000) (77,777,000) (29,856,000)
Other capital expenditures (42,961,000) (38,423,000) (34,201,000)
Decrease (increase) in other
receivables (21,127,000) (7,920,000) 12,490,000
Other 268,000 7,111,000 7,658,000
Net cash used in investing
activities (150,443,000) (157,357,000) (113,639,000)
Cash Flows From Financing
Activities:
Borrowings for waste-to-energy
facilities --- --- 225,686,000
Decrease (increase) in funds
held in trust
for waste-to-energy facilities 52,337,000 60,347,000 (132,428,000)
Other new debt 31,589,000 680,000 114,125,000
Payment of debt (38,455,000) (49,973,000) (116,248,000)
Dividends paid (54,630,000) (54,347,000) (54,054,000)
Proceeds from exercise of
stock options 3,524,000 5,366,000 5,000,000
Other (2,043,000) (3,488,000) (1,932,000)
Net cash provided (used) by
financing activities (7,678,000) (41,415,000) 40,149,000
Effect of foreign currency
exchange rate changes
on cash and cash equivalents (182,000) (334,000) (493,000)
Net Increase (Decrease) in Cash
and Cash Equivalents 8,262,000 (7,360,000) 24,852,000
Cash and Cash Equivalents at
Beginning of Year 109,097,000 116,457,000 91,605,000
Cash and Cash Equivalents at
End of Year $117,359,000 $109,097,000 $116,457,000
See Notes to Consolidated Financial Statements
Ogden Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation, Combinations, etc.: The Consolidated
Financial Statements include the accounts of Ogden Corporation and its
subsidiaries (Ogden). Companies in which Ogden has equity investments of
50% or less are accounted for using the "Equity Method," if appropriate.
All intercompany transactions and balances have been eliminated.
On December 29, 1994, in a transaction accounted for as a purchase,
Ogden acquired the minority interest in Ogden Projects, Inc. (OPI), for .84 of
an Ogden common share for each OPI share. The transaction required the
issuance of 5,139,939 shares of Ogden common stock valued at $18.375 per
share on the closing date, for a total purchase price of $94,446,000.
The excess purchase price over the net book value of the minority interest
acquired was allocated to the fair value of the net assets acquired.
During 1994 in other transactions accounted for as purchases, Ogden
subsidiaries acquired the shares of SkyCare Cargo Limited, a cargo
handling company at Heathrow Airport in the United Kingdom; Second Imperial
Geothermal Company; and 60% of the common stock of a Brazilian company
involved in airport, entertainment, and industrial feeding activities
for a total cost of $32,404,000. The operations of these companies have been
included in the accompanying financial statements from the dates of
acquisition. If Ogden had acquired these companies at January 1, 1993,
total revenues, net income, and earnings per share would have been
$2,165,000,000, $76,483,000, and $1.57 and $2,073,000,000, $62,305,000,
and $1.28 for 1994 and 1993, respectively.
Cash and Cash Equivalents: Cash and cash equivalents include all cash
balances and highly liquid investments having original maturities of
three months or less.
Marketable Securities: Ogden adopted Statement of Financial Accounting
Standards (SFAS) 115, "Accounting for Certain Investments in Debt and
Equity Securities," at January 1, 1994. In accordance with SFAS 115,
prior years' financial statements have not been restated to reflect the change
in accounting method. Under this Statement, the Corporation's marketable
securities have been classified as available for sale and are recorded
at current market value with an offsetting adjustment to Shareholders'
Equity. The adoption of this Statement did not have a significant effect
on the Corporation's consolidated financial position. At December 31, 1993,
marketable securities were carried at the lower of cost or market. Net
unrealized losses on noncurrent marketable equity securities were
charged to Shareholders' Equity (see Note 2).
Contracts and Revenue Recognition: Service revenues primarily include
only the fees for cost-plus contracts and the gross billings for fixed-fee
and other types of contracts. Both the service revenues and operating costs
and expenses exclude reimbursed expenditures of $439,195,000,
$432,891,000, and $405,362,000 for the years ended December 31, 1994, 1993,
and 1992, respectively. Subsidiaries engaged in governmental contracting
recognize revenues from cost-plus-fixed-fee contracts on the basis of direct
costs incurred plus indirect expenses and the allocable portion of the fixed
fee. Revenues under time and material contracts are recorded at the
contracted rates as the labor hours and other direct costs are incurred.
Revenues under fixed-price contracts are recognized on the basis of the
estimated percentage of completion of services rendered. Service revenues
also include the fees earned under contracts to operate and maintain the
waste-to-energy facilities and to service the facilities' debt, with
additional fees earned based on excess tonnage processed and energy
generation. Long-term unbilled service receivables related to
waste-to-energy operations are discounted in recognizing the present value
for services performed currently. Such unbilled receivables amounted to
$92,522,000 and $81,082,000 at December 31, 1994 and 1993, respectively.
Subsidiaries engaged in long-term construction contracting record income on the
percentage-of-completion method of accounting and recognize income as
the work progresses. Anticipated losses on contracts are recognized as soon
as they become known. Revenues include the gain on sales of limited
partnership interests in and related tax benefits of waste-to-energy
facilities.
Inventories: Inventories, consisting primarily of finished goods, are
recorded principally at the lower of first-in, first-out cost or market.
Property, Plant, and Equipment: Property, plant, and equipment is
stated at cost. For financial reporting purposes, depreciation is provided by
the straight-line method over the estimated useful lives of the assets,
which range generally from five years for machinery and equipment to 50 years
for waste-to-energy facilities. Accelerated depreciation is generally used
for Federal income tax purposes. Leasehold improvements are amortized by
the straight-line method over the terms of the leases or the estimated
useful lives of the improvements as appropriate. Landfills are amortized based
on the quantities deposited into each landfill compared to the total
estimated capacity of such landfill.
Contract Acquisition Costs: Costs associated with the acquisition of
specific contracts are amortized over their respective terms.
Bond Issuance Costs: Costs incurred in connection with the issuance of
revenue bonds are amortized over the terms of the respective debt issues.
Deferred Charges on Projects: Costs incurred in connection with certain
project development efforts are deferred until the award of the related
project is determined. Costs on awarded projects are deferred until the
commencement of construction, at which time they are either capitalized
in property, plant, and equipment for privately owned facilities or charged
to construction costs for municipally owned facilities. Costs associated
with projects, which are no longer under consideration, are charged to
operating costs.
Restricted Funds: Restricted funds represent proceeds from the
financing of waste-to-energy facilities. Funds are held in trust and
released as expenditures are made or upon satisfaction of conditions provided
under the respective trust agreements.
Goodwill: Goodwill acquired subsequent to 1970 is being amortized by
the straight-line method over periods ranging from 20 to 40 years. Goodwill
acquired prior to 1970 is not being amortized. Where there has been a
loss of value, goodwill is written off.
Retirement Plans: Ogden and certain subsidiaries have several
retirement plans covering all salaried and hourly employees. Certain
subsidiaries also contribute to multiemployer plans for unionized hourly
employees that cover, among other benefits, pensions and postemployment
health care. During 1992, the cost of retiree health care and life insurance
benefits for employees not covered by multiemployer plans was recognized as
expense as claims were paid. For 1992, these costs were not significant.
Ogden adopted SFAS 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions," as of January 1, 1993. The effect of adopting SFAS 106
is shown in the accompanying financial statements for 1993 as a cumulative
effect of a change in accounting principle and is reflected as a charge
to income of $5,340,000 (see Note 17).
Ogden adopted SFAS 112, "Employers' Accounting for Postemployment
Benefits," as of January 1, 1994. The effect of adopting SFAS 112 is
shown as a cumulative effect of a change in accounting principle and is
reflected as a charge to income of $1,520,000 in 1994.
Income Taxes: Ogden files a consolidated Federal income tax return,
which includes all eligible United States subsidiary companies. Foreign
subsidiaries are taxed according to regulations existing in the
countries in which they do business. Provision has not been made for United
States income taxes on distributions, which may be received from foreign
subsidiaries, that would be substantially offset by foreign tax credits.
Investment credits are accounted for by the "flow-through" method, and
provisions for income taxes have been reduced by the amount of investment
credits earned.
Ogden adopted SFAS 109, "Accounting for Income Taxes," as of January 1,
1992. The effect of adopting SFAS 109 is shown in the accompanying
financial statements as a cumulative effect of a change in accounting
principle and is reflected as a charge to income of $5,186,000 (see Note 20).
Reclassification: The accompanying financial statements have been
reclassified to conform with the 1994 presentation.
2. Investments in Marketable Securities Available for Sale
Ogden adopted SFAS 115, "Accounting for Certain Investments in Debt and
Equity Securities," at January 1, 1994, and has classified its
marketable securities as available for sale and recorded them at current market
value with an offsetting adjustment to Shareholders' Equity. In accordance
with SFAS 115, prior years' financial statements have not been restated to
reflect this change in accounting. At December 31, 1993, marketable
securities were carried at the lower of cost or market. Net unrealized
losses on noncurrent marketable equity securities were charged to
Shareholders' Equity. At December 31, 1993, noncurrent marketable
securities having a cost of $5,549,000 and a market value of $4,846,000
resulted in an unrealized loss of $703,000, which was offset by deferred
income taxes of $276,000. The net valuation allowance of $427,000 was
charged to Shareholders' Equity.
At December 31, 1994 and 1993, marketable equity and debt securities
available for current operations are classified in the balance sheet as
current assets while securities held for noncurrent uses such as
nonqualified pension liabilities and a deferred compensation plan are
classified as long-term assets.
Marketable securities at December 31, 1994 (expressed in thousands of
dollars), include the following:
[Download Table]
Market
Value Cost
Classified as Current Assets:
United States government securities $1,567 $1,736
Tax-exempt municipal bonds 52,158 53,295
Mortgage-backed securities 31,146 31,669
Other securities 1,805 1,954
Total current 86,676 88,654
Classified as Noncurrent Assets:
United States government securities 236 236
Corporate debt securities 12,174 14,122
Total noncurrent 12,410 14,358
Total $99,086 $103,012
Unrealized holding losses at December 31, 1994, amounted to $3,926,000.
Deferred tax benefits on these losses amounted to $1,782,000, resulting
in a net charge of $2,144,000 to Shareholders' Equity.
Proceeds and realized gains and losses from the sales of securities
classified as available for sale for the year ended December 31, 1994,
were $63,545,000, $256,700, and $476,700, respectively. For the purpose of
determining realized gains and losses, the cost of securities sold is
based on specific identification.
3. Restricted Funds Held in Trust
Funds held by trustees from proceeds received from the financing of
waste-to-energy facilities are segregated principally for the construction of
the facilities, debt service reserves for payment of principal and interest
on revenue bonds, capitalized interest for payment of interest generally
during the construction period, and deposits of revenues received. Such
funds are invested principally in United States Treasury bills and notes
and United States government agencies securities.
Fund balances (expressed in thousands of dollars) were as follows:
[Download Table]
1994 1993
Current Noncurrent Current Noncurrent
Construction funds $20,734 --- $52,596 $19,129
Debt service funds 36,803 $165,938 35,851 161,798
Capitalized interest funds 8,847 --- 10,442 8,847
Revenue funds 21,013 --- 19,292 ---
Other funds 17,303 37,306 14,092 37,369
Total $104,700 $203,244 $132,273 $227,143
4. Property, Plant, and Equipment
Property, plant, and equipment (expressed in thousands of dollars)
consisted of the following:
[Download Table]
1994 1993
Land $6,698 $6,853
Waste-to-energy facilities 1,577,147 1,539,373
Geothermal power plant 105,738 ---
Buildings and improvements 155,904 143,165
Machinery and equipment 313,404 285,066
Landfills 9,841 8,464
Construction in progress 161,303 95,789
Total 2,330,035 2,078,710
Less accumulated depreciation and
amortization 445,261 384,909
Property, plant, and equipment-net $1,884,774 $1,693,801
5. Other Assets
Other assets (expressed in thousands of dollars) consisted of the
following:
[Download Table]
1994 1993
Investment in and advances to joint ventures $38,926 $30,239
Unamortized bond issuance costs 29,290 35,581
Spare parts 13,915 12,753
Noncurrent securities available for sale 12,410 5,549
Deferred charges on projects 5,708 12,704
Insurance deposits 5,388 5,388
Other 50,305 44,238
Total $155,942 $146,452
6. Accrued Expenses, etc.
Accrued expenses, etc. (expressed in thousands of dollars), consisted of
the following:
[Download Table]
1994 1993
Debt service charges and interest $38,278 $38,527
Payroll 31,493 28,212
Deferred income 26,843 25,620
Insurance 25,983 24,380
Construction costs 25,442 27,314
Operating expenses 21,802 17,656
Billings in excess of costs 19,167 17,938
Municipalities' share of energy revenues 17,756 18,747
Retainage payable 17,550 4,757
Lease payments 16,193 13,829
Payroll and other taxes 10,533 9,098
Pension and profit sharing 6,499 6,199
Professional fees 4,663 3,807
Other 84,795 59,097
Total $346,997 $295,181
7. Long-Term Debt
Long-term debt (expressed in thousands of dollars) consisted of the
following:
[Download Table]
1994 1993
Adjustable-rate revenue bonds
due 2014 through 2024 $124,755 $124,755
9.25% debentures due 2022 100,000 100,000
Variable-rate revolving credit
lines due 1997 26,820 20,680
Other long-term debt 52,818 30,628
Total $304,393 $276,063
The adjustable-rate revenue bonds are adjusted periodically to reflect
current market rates for similar issues, generally with an upside cap of
15%. The average rate for this debt was 2.79% and 2.24% in 1994 and
1993, respectively. These bonds were issued under agreements that contain
various restrictions, the most significant being the requirement to
maintain Shareholders' Equity of $400,000,000. At December 31, 1994,
Ogden had $196,818,000 in excess of the required amount.
At December 31, 1994, Ogden had a long-term interest rate swap
agreement, covering a notional amount of $100,000,000, which expires
December 16, 1998. This swap was entered into to convert Ogden's fixed-rate
$100,000,000 9.25% debentures due in 2022 to variable-rate debt. Ogden
receives a fixed rate of 5.52% per annum paid on a semi-annual basis and
pays a floating rate of three months LIBOR set in arrears on a quarterly
basis. At December 31, 1994, the three-month LIBOR rate was 6.50%. The
counterparty to this interest rate swap is a major financial
institution. Management believes its credit risk associated with
nonperformance by the counterparty is not significant.
Other long-term debt includes an obligation for approximately
$28,400,000, representing the proceeds of a sale and leaseback arrangement
relating to a waste-to-energy facility. This arrangement is accounted for as a
financing, has an effective interest rate of 5%, and extends through
2017. Additionally, in November 1994, limited partnership interests in and
related tax benefits of the Onondaga County, New York, waste-to-energy
facility were sold. As part of this transaction, $22,450,000 of the
proceeds relating to the sale of the partnership interests have been
accounted for as a financing for accounting purposes. This obligation
has an effective interest rate of 10% and extends through 2015.
The maturities on long-term debt (expressed in thousands of dollars) at
December 31, 1994, were as follows:
[Download Table]
1995 $3,483
1996 7,652
1997 20,784
1998 824
1999 529
Later years 274,604
Total 307,876
Less current portion 3,483
Total long-term debt $304,393
8. Project Debt
Project debt (expressed in thousands of dollars) consisted of the
following:
[Download Table]
1994 1993
Revenue Bonds Issued by and Prime
Responsibility of Municipalities:
4.4-10% serial revenue bonds
due through 2005 $222,036 $239,180
5.4-10% term revenue bonds due through 2019 939,740 934,685
Adjustable-rate revenue bonds
due through 2013 10,875 15,526
Total 1,172,651 1,189,391
Revenue Bonds Issued by Municipal Agencies
with Sufficient Service Revenues Guaranteed
by Third Parties:
4.95-8.9% serial revenue bonds
due through 2007 78,591 85,040
7.25-7.4% term revenue bonds
due 1999 through 2011 106,109 105,610
Adjustable-rate revenue bonds
due through 2011 133,467 138,693
Total 318,167 329,343
Other project debt 103,170 ---
Total long-term project debt $1,593,988 $1,518,734
Project debt associated with the financing of waste-to-energy facilities
is generally arranged by municipalities through the issuance of tax-
exempt and taxable revenue bonds. The category, "Revenue Bonds Issued by and
Prime Responsibility of Municipalities," includes bonds issued with
respect to which debt service is an explicit component of the client
community's obligation under the related service agreement. In the event
that a municipality is unable to satisfy its payment obligations, the
bondholders'recourse with respect to the Corporation is limited to the
waste-to-energy facilities and restricted funds pledged to secure such
obligations. The category, "Revenue Bonds Issued by Municipal Agencies
with Sufficient Service Revenues Guaranteed by Third Parties," includes
bonds issued to finance three facilities for which contractual obligations
of third parties to deliver waste and related third-party power purchase
agreements ensure sufficient revenues to pay debt service, although such
debt service is not an explicit component of a third party's service fee
obligation.
Payment obligations for the revenue bonds, which are nonrecourse
to the Corporation subject to construction and operating performance guarantees
and commitments, are secured by the revenues pledged under various
indentures and are collateralized principally by a mortgage lien and a
security interest in each of the respective waste-to-energy facilities
and related assets. At December 31, 1994, such revenue bonds were
collateralized by property, plant, and equipment with a net carrying
value of $1,568,747,000, credit enhancements of approximately $193,000,000 for
which Ogden has certain reimbursement obligations, and substantially all
restricted funds (see Note 3).
The adjustable-rate revenue bonds are adjusted periodically to reflect
current market rates for similar issues, generally with an upside cap of
15%. The average rate for such revenue bonds was 3.33% and 2.65% in
1994 and 1993, respectively.
At December 31, 1994, Ogden had two interest rate swap agreements
relating to the revenue bonds. These interest rate swaps had notional
amounts at December 31, 1994, of $91,070,000 and $43,765,000, respectively,
which are reduced periodically and expire in May 1999. Under the former swap
agreement, Ogden pays a fixed rate of 3.95% per annum on a semi-annual
basis and receives a floating rate based on an index of tax-exempt,
variable-rate obligations. Under the latter swap agreement, Ogden pays
a fixed rate of 5.25% per annum on a semi-annual basis and receives a
floating rate based on a defined commercial paper rate. At December 31,
1994, the floating rates on the two swaps were 5.53% and 6.03%,
respectively. These swap agreements were entered into to convert from
floating rates to fixed interest rates $91,070,000 of tax-exempt,
adjustable-rate revenue bonds due 1995 to 2011 and $43,765,000 of
taxable adjustable-rate revenue bonds due 1995 to 2011. The counterparties to
these interest rate swaps are major financial institutions. Management
believes the credit risk associated with nonperformance by the
counterparties is not significant.
Other project debt is an obligation of a special-purpose limited
partnership acquired by two special-purpose subsidiaries of Ogden in
December 1994 and represents the lease of a geothermal power plant,
which has been accounted for as a financing. This obligation has an effective
interest rate of 5.3% and extends through 2008 with options to renew for
additional periods and has a fair market value purchase option at the
conclusion of the initial lease term. Payment obligations under this
lease arrangement are limited to assets of the limited partnership and
revenues derived from a power purchase agreement with a third party, which are
expected to provide sufficient revenues to make rental payments. Such
payment obligations are secured by all the assets, revenues, and other
benefits derived from the geothermal power plant, which had a net
carrying value of approximately $114,093,000 at December 31, 1994.
The maturities on project debt (expressed in thousands of dollars) at
December 31, 1994, were as follows:
[Download Table]
1995 $45,279
1996 56,296
1997 61,065
1998 67,338
1999 74,613
Later years 1,334,676
Total 1,639,267
Less current portion 45,279
Total long-term project debt $1,593,988
9. Debt Service Charges
Debt service charges for Ogden's project debt (expressed in thousands of
dollars) consisted of the following:
[Download Table]
1994 1993 1992
Interest incurred on taxable and
tax-exempt borrowings $109,586 $107,846 $99,828
Interest earned on temporary
investment of borrowings
during construction, etc. 6,782 9,985 6,095
Net interest incurred 102,804 97,861 93,733
Interest capitalized during
construction in property,
plant, and equipment 8,893 5,538 753
Interest expense-net 93,911 92,323 92,980
Amortization of bond issuance costs 6,447 6,341 6,754
Debt service charges $100,358 $98,664 $99,734
10. Credit Arrangements
At December 31, 1994, Ogden had unused revolving credit lines amounting
to $162,000,000, of which $155,000,000 is available under its principal
revolving credit line at various borrowing rates including prime, the
London interbank offering rate plus .30%, or certificate-of-deposit
rates plus .425%. Ogden is not required to maintain compensating balances;
however, Ogden pays a facility fee of 3/16 of 1% on its principal
revolving credit line of $175,000,000, which expires October 29, 1997.
11. Convertible Subordinated Debentures
Convertible subordinated debentures (expressed in thousands of dollars)
consisted of the following:
[Download Table]
1994 1993
6% debentures due June 1, 2002 $85,000 $85,000
5 3/4% debentures due October 20, 2002 63,650 66,750
Total $148,650 $151,750
The 6% convertible subordinated debentures are convertible into Ogden
common stock at the rate of one share for each $39.077 principal amount
of debentures. The debentures are redeemable at Ogden's option at 103% of
principal amount during the year commencing June 1, 1994, and at
decreasing prices thereafter.
The 5 3/4% convertible subordinated debentures are convertible into
Ogden common stock at the rate of one share for each $41.772 principal amount
of debentures. The debentures are redeemable at Ogden's option at 100% of
face value. During 1994, the Corporation purchased $3,100,000 face
value of these debentures at prevailing market rates. The net gain on the
acquisition of these securities amounted to $620,000 and is included in
Other Income.
12. Preferred Stock
The outstanding Series A $1.875 Cumulative Convertible Preferred Stock
is convertible at any time at the rate of 5.97626 common shares for each
preferred share. Ogden may redeem the outstanding shares of preferred
stock at $50 per share, plus all accrued dividends. These preferred
shares are entitled to receive cumulative annual dividends at the rate
of $1.875 per share, plus an amount equal to 150% of the amount, if any, by
which the dividend paid or any cash distribution made on the common
stock in the preceding calendar quarter exceeded $.667 per share. During
1994, 1993, and 1992, 3,694, 4,697, and 6,013 preferred shares were converted
into 22,054, 28,046, and 35,908 shares of common stock, respectively.
13. Common Stock and Stock Options
In 1986, Ogden adopted a nonqualified stock option plan (the "1986
Plan"). Under the 1986 Plan, options and/or stock appreciation rights may be
granted to key management employees to purchase Ogden common stock at
prices not less than the fair market value at the time of grant, which
become exercisable during a five-year period from the date of grant,
except for the grant to the Chairman of the Board, which vested in its
entirety six months after the date of the grant. As adopted, and as
adjusted for stock splits, the 1986 Plan calls for up to an aggregate of
2,700,000 shares of Ogden common stock to be available for issuance upon
the exercise of options and stock appreciation rights, which may be
granted over a ten-year period ending March 10, 1996. At December 31,
1994, all of the authorized shares of this plan had been granted.
In October 1990, Ogden adopted the Ogden 1990 Stock Option Plan (the
"1990 Plan"). Under the 1990 Plan, nonqualified options, incentive
stock options, and/or stock appreciation rights and stock bonuses may be
granted to key management employees and outside directors to purchase Ogden
common stock at an exercise price to be determined by the Ogden Compensation
Committee. Pursuant to the 1990 Plan, which was amended in 1994 to
increase the number of shares available by 3,200,000 shares, an
aggregate of 6,200,000 shares of Ogden common stock is available for issuance
upon the exercise of such options, rights, and bonuses, which may be granted
over a ten-year period ending October 11, 2000; 2,382,500 shares were
available for grant at December 31, 1994.
Under the foregoing plans, Ogden issued 4,713,000 limited stock
appreciation rights in conjunction with the stock options granted.
These limited rights are exercisable only during the period commencing on the
first day following the occurrence of any of the following events and
terminate 90 days after such date: the acquisition by any person of 20%
or more of the voting power of Ogden's outstanding securities; the approval
by Ogden shareholders of an agreement to merge or to sell substantially
all of its assets; or the occurrence of certain changes in the
membership of the Ogden Board of Directors. The exercise of these limited
rights entitles participants to receive an amount in cash with respect to each
share subject thereto, equal to the excess of the market value of a
share of Ogden common stock on the exercise date or the date these limited
rights become exercisable, over the related option price.
In connection with the acquisition of ERC International, Inc. (ERCI),
Ogden assumed pre-existing ERCI stock option plans and converted all
options then outstanding into options to acquire shares of Ogden common
stock. No further options will be granted under the ERCI plans. These
options expired in 1993.
In connection with the acquisition of the minority interest of OPI,
Ogden assumed the pre-existing OPI stock option plan then outstanding and
converted these options into options to acquire shares of Ogden common
stock. No further options will be granted under this plan.
Information regarding the Corporation's stock option plans is summarized
as follows:
[Download Table]
Option Available
Price For
Per Share Outstanding Exercisable Grant
1986 Plan:
December 31, 1991,
balance $14.98-28.54 1,226,400 664,400 105,500
Became exercisable --- --- 150,000 ---
Exercised 14.98 (136,400) (136,400) ---
Cancelled 28.54 (10,000) (10,000) 10,000
December 31, 1992,
balance 14.98-28.54 1,080,000 668,000 115,500
Became exercisable --- --- 144,000 ---
Exercised 14.98 (49,313) (49,313) ---
December 31, 1993,
balance 14.98-28.54 1,030,687 762,687 115,500
Granted 22.50 115,500 --- (115,500)
Became exercisable --- --- 134,000 ---
Exercised 14.98 (18,644) (18,644) ---
December 31, 1994,
balance $14.98-28.54 1,127,543 878,043 ---
1990 Plan:
December 31, 1991,
balance 18.31-20.31 2,681,000 498,000 319,000
Granted 21.19 40,000 --- (40,000)
Became exercisable --- --- 539,400 ---
Cancelled $18.31-21.19 (66,000) --- 66,000
December 31, 1992,
balance 18.31-21.19 2,655,000 1,037,400 345,000
Granted 23.56 158,000 --- (158,000)
Became exercisable --- --- 522,900 ---
Exercised 18.31-20.31 (123,000) (123,000) ---
Cancelled $18.31-20.31 (50,000) (4,000) 50,000
December 31, 1993,
balance 18.31-23.56 2,640,000 1,433,300 237,000
Increase in authorized
option shares --- --- --- 3,200,000
Granted 21.50-22.50 1,169,500 --- (1,169,500)
Became exercisable --- --- 507,500 ---
Exercised 18.31-20.31 (109,000) (109,000) ---
Cancelled $18.31-23.56 (115,000) (32,000) 115,000)
December 31, 1994,
balance $18.31-23.56 3,585,500 1,799,800 2,382,500
Conversion of ERCI Plan:
December 31, 1991,
balance 21.05-35.55 137,958 121,715 ---
Became exercisable --- --- 16,243 ---
Exercised 21.05 (15,890) (15,890) ---
Cancelled 21.05-35.55 (51,951) (51,951) ---
December 31, 1992,
balance 21.05-24.74 70,117 70,117 ---
Exercised 21.05 (23,102) (23,102) ---
Cancelled $21.05-24.74 (47,015) (47,015) ---
December 31, 1993 and 1994,
balance --- --- --- ---
Conversion of OPI Plan:
December 29, 1994 $14.17-29.46 266,561 266,561 ---
December 31, 1994,
balance $14.17-29.46 266,561 266,561 ---
Total
December 31, 1994 $14.17-29.46 4,979,604 2,944,404 2,382,500
At December 31, 1994, there were 11,380,791 shares of common stock
reserved for the exercise of stock options and the conversion of
preferred shares and debentures.
14. Preferred Stock Purchase Rights
On September 20, 1990, the Board of Directors declared a dividend of one
preferred stock purchase right (Right) on each outstanding share of
common stock. Among other provisions, each Right may be exercised to purchase
a one one-hundredth share of a new series of cumulative participating
preferred stock at an exercise price of $80, subject to adjustment. The
Rights may only be exercised after a party has acquired 15% or more of
the Corporation's common stock or commenced a tender offer to acquire 15% or
more of the Corporation's common stock. The Rights do not have voting
rights, expire October 2, 2000, and may be redeemed by the Corporation
at a price of $.01 per Right at any time prior to the acquisition of 15% of
the Corporation's common stock.
In the event a party acquires 15% or more of the Corporation's
outstanding common stock in accordance with certain defined terms, each
Right will then entitle its holder (other than such party) to purchase,
at the Right's then-current exercise price, a number of the Corporation's
common shares having a market value of twice the Right's exercise price.
At December 31, 1994, 48,777,000 preferred stock purchase rights were
outstanding.
15. Sale of Limited Partnership Interests
1994 revenues include $26,100,000 from the sale of limited partnership
interests in and related tax benefits of the Onondaga County waste-to-
energy facility, which was partially offset by the recapture of
investment tax credits and minority interests.
In 1992, revenues included $7,700,000 from the sale of the remaining
limited partnership interests in and related tax benefits of the
Huntington, New York, waste-to-energy facility.
16. Retirement Plans
Ogden has retirement plans that cover substantially all of its
employees. A substantial portion of hourly employees of Ogden Services
Corporation participates in defined contribution plans. Other employees
participate in defined benefit or defined contribution plans.
The defined benefit plans provide benefits based on years of service and
either employee compensation or a flat benefit amount. Ogden's funding
policy for those plans is to contribute annually an amount no less than
the minimum funding required by ERISA. Contributions are intended to
provide not only benefits attributed to service to date but also for
those expected to be earned in the future.
The following table sets forth the defined benefit plans' funded status
and related amounts recognized in Ogden's Consolidated Balance Sheets
(expressed in thousands of dollars):
[Download Table]
1994 1993
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
Accumulated Benefit
Obligation:
Vested $5,408 $ 7,800 $5,356 $8,888
Nonvested 311 413 879 1,511
Total $5,719 $8,213 $6,235 $10,399
Projected benefit
obligation for services
rendered to date $8,278 $11,733 $8,723 $12,889
Plan assets at fair value 7,832 5,138 7,903 7,880
Underfunded projected
benefits $446 $6,595 $820 $5,009
Source of Underfunded
Status:
Unrecognized net (loss)
from past experience
different from that
assumed and effects
of changes
in assumptions $(1,251) $(625) $(1,356) $(1,415)
Unrecognized net
transition asset
(obligation) at
January 1, 1986, being
recognized over 13 years 566 (390) 728 (300)
(Pension liability)
prepaid pension costs (412) (1,997) (192) 228
Unrecognized prior
service costs 651 (3,583) --- (3,522)
Underfunded projected
benefits $446 $6,595 $820 $5,009
At December 31, 1994 and 1993, the accumulated benefit obligation of
certain pension plans exceeded plan assets. As required by SFAS 87, the
Corporation's liability for such excess was $1,677,000 and $2,765,000
at December 31, 1994 and 1993, respectively. These liabilities were
offset by intangible assets and reductions in Shareholders' Equity, net
of income taxes of $441,000 and $928,000 at December 31, 1994 and 1993,
respectively.
Pension costs for Ogden's defined benefit plans included the following
components (expressed in thousands of dollars):
[Download Table]
1994 1993 1992
Service cost on benefits
earned during the period $1,979 $1,610 $1,592
Interest cost on projected
benefit obligation 1,629 1,457 1,301
Net amortization and deferral (436) 40 161
Actual return on plan assets 32 (979) (1,227)
Net periodic pension cost $3,204 $2,128 $1,827
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligations were 8 1/4% and 5% for 1994, 7 1/2% and
4 1/2% for 1993, and 8 1/2% and 5% for 1992, respectively. The expected
long-term rate of return on plan assets was 8% for each year.
Contributions and costs for defined contribution plans are determined by
benefit formulas based on percentage of compensation as well as
discretionary contributions and totaled $12,052,000, $13,061,000, and
$11,397,000 in 1994, 1993, and 1992, respectively. Plan assets at
December 31, 1994, 1993, and 1992, primarily consisted of common stocks,
United States government securities, and guaranteed insurance contracts.
With respect to union employees, the Corporation is required under
contracts with various unions to pay, generally based on hours worked,
retirement, health, and welfare benefits. These multiemployer defined
benefit and defined contribution plans are not controlled or
administered by the Corporation. The amount charged to expense for such
plans during 1994, 1993, and 1992 was $30,100,000, $32,000,000, and
$32,000,000, respectively.
17. Postretirement Health Care and Life Insurance Benefits
In 1992, the Corporation discontinued its policy of providing
postretirement health care and life insurance benefits for all salaried
employees, except those employees who were retired or eligible for
retirement at December 31, 1992, or who were covered under certain
company-sponsored union plans. The Corporation adopted SFAS 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
as of January 1, 1993. SFAS 106 requires the accrual method of
accounting for postretirement health care and life insurance benefits, based
on actuarial determined costs to be recognized over the period from the
date of hire to the full eligibility date of employees who are expected to
qualify for such benefits.
As of January 1, 1993, the Corporation recognized the full amount of its
estimated accumulated postretirement benefit obligation, representing
the present value of the estimated future benefits payable to current
retirees, and a pro rata portion of estimated benefits payable to
eligible active employees after retirement. The effect of recognizing SFAS
106 at January 1, 1993, is shown in the accompanying financial statements as
a cumulative effect of a change in accounting principle and is reflected
as a charge to income of $5,340,000 (net of income taxes of $3,710,000) or
$.12 per share.
For the years ended December 31, 1994 and 1993, the components of the
periodic expense for these benefits were as follows:
[Download Table]
Recognition of Components of Net Periodic Postretirement Benefit Costs
for the Years Ended December 31:
1994 1993
Service costs $162,107 $140,157
Interest 775,142 747,665
Amortization of unrecognized
net loss 67,820 ---
Total $1,005,069 $887,822
As of December 31, 1994 and 1993, the actuarial recorded liabilities for
these postretirement benefits, none of which have been funded, were as
follows:
[Download Table]
Accumulated Postretirement Benefit Obligation:
Retirees $3,884,885 $3,948,954
Eligible active participants 4,581,234 4,957,341
Other active 1,480,725 1,654,000
Total accumulated
postretirement obligation 9,946,844 $10,560,295
Unrecognized net loss 117,947 1,135,080
Accrued postretirement
benefit liability $9,828,897 $9,425,215
The accumulated postretirement benefit obligation was determined using
discount rates of 8 1/4% and 7 1/2%; an estimated increase in
compensation levels of 5% and 4 1/2% for 1994 and 1993, respectively; and a
health care cost rate of approximately 14 1/2%, decreasing in subsequent
years until it reaches 6% in the year 2008 and thereafter. The effect of a
one percentage point increase in the assumed health care cost trend rates
for each future year on the aggregate of the service and interest cost
components of net periodic postretirement health care benefit cost and
the accumulated postretirement benefit obligation for health care benefits
would be $69,248 and $652,360, respectively.
18. Foreign Exchange
Foreign exchange translation adjustments for 1994, 1993, and 1992,
amounting to $3,240,000, $(2,095,000), and $(2,931,000), respectively,
have been credited (charged) directly to Shareholders' Equity. Foreign
exchange transaction adjustments for 1994, amounting to $1,844,000, have
been charged directly to income.
19. Leases
Total rental expense amounted to $77,190,000, $73,138,000, and
$65,822,000 (net of sublease income of $328,000, $2,606,000, and $3,633,000)
for 1994, 1993, and 1992, respectively. Included in rental expense are
amounts based on contingent factors (principally sales) in excess of minimum
rentals, amounting to $15,181,000, $19,836,000, and $14,332,000 for
1994, 1993, and 1992. Principal leases are for leaseholds, sale and leaseback
arrangements on waste-to-energy facilities, trucks and automobiles,
airplane, and machinery and equipment. Some of these operating leases
have renewal options.
The following is a schedule (expressed in thousands of dollars), by
year, of future minimum rental payments required under operating leases that
have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1994:
[Download Table]
1995 $49,978
1996 47,160
1997 42,378
1998 36,660
1999 35,717
Later years 272,174
Total $484,067
These future minimum rental payment obligations include $114,153,000 of
future nonrecourse rental payments that relate to a waste-to-energy facility,
which are supported by third-party commitments to provide sufficient service
revenues to meet such obligations. Also included are $96,520,000 of
nonrecourse rental payments relating to a hydroelectric power generating
facility operated by a special-purpose subsidiary, which are supported by
contractual power purchase obligations of a third party and which are
expected to provide sufficient revenues to make the rent payments. These
nonrecourse rental payments (in thousands of dollars) are due as follows:
[Download Table]
1995 $16,695
1996 18,698
1997 19,197
1998 19,492
1999 20,797
Later years 115,794
Total $210,673
20. Income Taxes
Ogden adopted the provisions of SFAS 109, "Accounting for Income Taxes,"
as of January 1, 1992. SFAS 109 requires recognition of deferred income
tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or income tax
returns. Under this method, deferred income tax liabilities and assets
are based on the difference between the financial statements and the tax
bases of assets and liabilities, using tax rates currently in effect.
As of January 1, 1992, Ogden recorded a deferred income tax charge of
$5,186,000 or $.12 per share, which represented a net increase to the
deferred tax liability as of that date. This amount has been included
in the Statements of Consolidated Income as a cumulative effect of a change
in accounting principle.
In August 1993, the Omnibus Budget Reconciliation Act was enacted, which
increased the corporate Federal income tax rate from 34% to 35%
retroactive to January 1, 1993. As a consequence, deferred Federal
income tax balances were adjusted to this new rate as required by SFAS 109,
which resulted in a one-time charge for Federal income taxes of $4,066,000 in
1993.
The components of the provision for income taxes (expressed in thousands
of dollars) were as follows:
[Download Table]
1994 1993 1992
Current:
Federal $10,141 $453 ---
State 11,616 6,999 $5,498
Foreign 2,422 1,476 2,210
Total current $24,179 $8,928 $7,708
Deferred:
Federal $36,520 $43,295 $32,392
State 1,184 4,303 5,155
Total deferred 37,704 47,598 37,547
Total provision for
income taxes $61,883 $56,526 $45,255
The current provision for Federal income tax results principally from
the alternative minimum tax.
The provision for income taxes (expressed in thousands of dollars)
varied from the Federal statutory income tax rate due to the following:
[Download Table]
1994 1993 1992
Percent Percent Percent
of Income of Income of Income
Amount Before Amount Before Amount Before
of Tax Taxes of Tax Taxes of Tax Taxes
Taxes at
statutory rate $48,777 35.0% $43,925 35.0% $38,378 34.0%
Adjustment of
deferred income
tax balances --- --- 4,066 3.2 --- ---
State income taxes,
net of Federal
tax benefit 8,320 6.0 7,346 5.8 7,030 6.2
Recapture (benefit)
of investment
tax credits 1,807 1.3 (1,807) (1.4) --- ---
Other-net 2,979 2.1 2,996 2.4 (153) (.1)
Provision for
income taxes $61,883 44.4% $56,526 45.0% $45,255 40.1%
The components of the net deferred income tax liability (expressed in
thousands of dollars) as of December 31, 1994 and 1993, were as follows:
[Download Table]
1994 1993
Deferred Tax Assets:
Deferred income $16,291 $18,922
Accrued expenses 51,055 46,465
Other liabilities 16,779 17,758
Investment tax credits 31,064 33,844
Alternative minimum tax credits 19,387 9,246
Net operating loss carryforwards 137,488 185,210
Total deferred tax assets 272,064 311,445
Deferred Tax Liabilities:
Unbilled accounts receivable 47,119 44,784
Property, plant, and equipment 445,699 435,580
Other 33,860 30,137
Total deferred tax liabilities 526,678 510,501
Net deferred tax liability $254,614 $199,056
Deferred tax assets and liabilities are presented as follows in the
accompanying balance sheets:
[Download Table]
1994 1993
Net deferred tax liability-
noncurrent $281,065 $227,275
Less net deferred tax
asset-current 26,451 28,219
Net deferred tax liability $254,614 $199,056
At December 31, 1994, for Federal income tax purposes, the Corporation
had investment and energy tax credit carryforwards of approximately
$31,064,000 and net operating loss carryforwards of approximately
$336,744,000, which will expire in 2004 through 2008. Deferred Federal
income taxes have been reduced by the tax effect of these amounts.
21. Discontinued Operations
In December 1991, the Corporation discontinued the on-site remediation
business, utilizing mobile technology, of OPI. During 1993, the
Corporation recognized a pretax gain of $12,379,000 resulting primarily
from the receipt of amounts previously withheld pending satisfactory
completion of obligations under existing contracts and from proceeds
from the sale of assets in excess of previously estimated net realizable
values.
In December 1993, the Corporation discontinued its fixed-site hazardous
waste business. Provision was made in 1993 for the write-down of
assets, primarily development costs, resulting in a pretax loss of $12,629,000.
For the year ended December 31, 1993, the $250,000 net loss from both
discontinued operations is reported as Operating Costs and Expenses in
the Statements of Consolidated Income.
22. Earnings Per Share
Earnings per common share were computed by dividing net income, reduced
by preferred stock dividend requirements, by the weighted average of the
number of shares of common stock and common stock equivalents, where
dilutive, outstanding during each year.
Earnings per common share, assuming full dilution, were computed on the
assumption that all convertible debentures, convertible preferred stock,
and stock options converted or exercised during each year or outstanding
at the end of each year, were converted at the beginning of each year or
at the date of issuance or grant, if dilutive. This computation
provided for the elimination of related convertible debenture interest and
preferred dividends.
The weighted-average number of shares used in computing earnings per
common share was as follows:
[Download Table]
1994 1993 1992
Primary 43,610,000 43,378,000 43,086,000
Assuming full dilution 43,939,000 43,776,000 43,583,000
23. Commitments and Contingent Liabilities
Ogden and certain of its subsidiaries have issued or are party to
performance bonds and guarantees and related contractual obligations
undertaken mainly pursuant to agreements to construct and operate
certain waste-to-energy, entertainment, and other facilities. In the normal
course of business, they are involved in legal proceedings in which
damages and other remedies are sought. Management does not expect that
these contractual obligations, legal proceedings, or any other
contingent obligations incurred in the normal course of business will have a
material adverse effect on Ogden's Consolidated Financial Statements.
During 1994, a subsidiary of the Corporation has entered into a 30-year
facility management contract pursuant to which it has agreed to advance
funds to a customer, if necessary and only upon satisfactory completion
of construction of the facility, to assist refinancing senior secured debt
incurred in connection with construction of the facility. Such
refinancing requirements are not expected to exceed $67,000,000 at
maturity of the senior secured debt, which is expected to be on or about
March 1, 2001. Ogden continues as guarantor of surety bonds and letters
of credit totaling approximately $19,200,000 on behalf of International
Terminal Operating Co. Inc. (ITO) and has guaranteed borrowings of
certain customers amounting to approximately $20,300,000. Management does not
expect that these arrangements will have a material adverse effect on
Ogden's Consolidated Financial Statements.
Ogden's obligation as guarantor on behalf of Avondale Industries, Inc.,
with respect to $36,000,000 of Industrial Revenue Bonds as well as other
contingent obligations under which Ogden may have been required to
purchase Avondale preferred stock, ended June 1, 1994.
As of December 31, 1994, capital commitments amounted to $49,900,000,
which includes commitments for equity investments (over and above
restricted funds provided by revenue bonds issued by municipalities) of
$2,600,000 for waste-to-energy facilities and $47,300,000 for normal
replacement, modernization, and growth in Services and Projects.
24. Information Covering Business Segments
In connection with Ogden's acquisition of the publicly traded shares of
OPI, Ogden's business segments have been reclassified. Ogden now
classifies its business segments as Services and Projects. The Services
segment (formerly "Operating Services") includes principally ground
services, fueling, cargo, food catering, and related services to the
aviation industry; food and beverage, janitorial, maintenance, and other
services related to the management and operations of arenas, stadiums,
amphitheaters, and parks; management, maintenance, security, janitorial,
and related services to commercial office buildings and industrial and
other facilities; and professional technical and environmental
consulting services to a wide range of customers. Independent power
activities, namely, the operation of two geothermal power stations and
related well field activities and a hydroelectric power station, formerly
part of Operating Services, are now included in the Projects segment because
the activities and strategic direction of the business activities of the
Projects segment largely involve power generation.
The Projects segment (formerly "Waste-to-Energy Operations") now
includes all of Ogden's waste-to-energy activities, its independent power
business, its water and wastewater project business, and its construction
activities, all of which activities are now commonly managed by OPI.
The information that follows reflects this reclassification.
Revenues and income from continuing operations (expressed in thousands
of dollars) for the years ended December 31, 1994, 1993, and 1992, were as
follows:
[Download Table]
1994 1993 1992
Revenues:
Services $1,379,450 $1,330,104 $1,278,715
Projects 730,735 709,233 490,100
Total revenues $2,110,185 $2,039,337 $1,768,815
Income from Operations:
Services. $52,719 $63,611 $58,661
Projects 109,775 83,749 75,354
Total income from operations 162,494 147,360 134,015
Corporate unallocated income
and expenses-net (12,184) (10,751) (10,778)
Corporate interest-net (10,946) (11,108) (10,362)
Consolidated Income from
Continuing Operations
Before Income Taxes and
Minority Interest $139,364 $125,501 $112,875
Services' revenues include $248,500,000, $245,100,000, and $251,300,000
from United States government contracts for the years ended December 31,
1994, 1993, and 1992, respectively.
Total revenues by segment reflect sales to unaffiliated customers. In
computing income from operations, none of the following have been added
or deducted: unallocated corporate expenses, nonoperating interest
expenses, interest income, and income taxes.
A summary (expressed in thousands of dollars) of identifiable assets,
depreciation and amortization, and capital additions for the years ended
December 31, 1994, 1993, and 1992, is as follows:
[Download Table]
Identifiable Depreciation and Capital
Assets Amortization Additions
1994
Services $800,011 $39,658 $37,207
Projects 2,556,655 49,061 82,418
Corporate 288,220 1,826 22
Consolidated $3,644,886 $90,545 $119,647
1993
Services $719,964 $35,973 $33,877
Projects 2,361,499 47,186 81,852
Corporate 259,266 2,484 471
Consolidated $3,340,729 $85,643 $116,200
1992
Services $650,030 $32,272 $30,691
Projects 2,261,764 42,166 33,341
Corporate 276,032 2,610 25
Consolidated $3,187,826 $77,048 $64,057
[Download Table]
25. Supplemental Disclosure of Cash Flow Information
(Expressed in thousands of dollars) 1994 1993 1992
Cash Paid for Interest and Income Taxes:
Interest (net of amounts capitalized) $119,997 $117,733 $115,316
Income taxes 8,298 3,197 6,328
Noncash Investing and Financing
Activities:
Conversion of preferred
shares for common shares 3 5 6
Conversion of debentures
for common shares --- 1,287 122
Adjustment to property, plant,
and equipment and deferred
income taxes in connection
with adoption of SFAS 109 --- --- 38,051
Contract acquisition costs, etc. --- 22,539 ---
Future contract obligations --- (22,539) ---
Acquisition of net assets in
connection with merger --- --- 4,375
Purchase of Minority Interest:
Common stock issued 94,446 --- ---
Adjustment to net assets for excess
of purchase price over book value
of net assets acquired 21,589 --- ---
Detail of Entities Acquired:
Fair value of assets acquired 158,212 76,875 9,420
Liabilities assumed (125,808) (22,651) (1,480)
Net cash paid for acquisitions 32,404 54,224 7,940
26. Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS 107,
"Disclosures About Fair Value of Financial Instruments." The estimated
fair-value amounts have been determined using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to develop
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that Ogden would realize in a
current market exchange.
The estimated fair value (expressed in thousands of dollars) of
financial instruments at December 31, 1994 and 1993, is summarized as follows:
[Download Table]
1994 1993
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
Assets:
Cash and cash equivalents $117,359 $117,359 $109,097 $109,097
Marketable securities-
available for sale 99,086 99,086 98,953 98,792
Receivables 757,400 761,092 652,270 658,006
Restricted funds 307,944 306,876 359,416 366,006
Other assets 33,875 32,885 29,808 28,709
Liabilities:
Long-term debt 307,876 298,648 279,133 274,467
Convertible subordinated
debentures 148,650 119,770 151,750 142,919
Project debt 1,639,267 1,661,813 1,551,366 1,691,939
Other liabilities 34,906 34,906 30,839 29,714
Off Balance-Sheet
Financial Instruments:
Unrealized losses on
interest rate
swap agreements --- 9,355 --- 832
Unrealized gains on
interest rate
swap agreements --- 8,716 --- ---
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate that value:
For cash and cash equivalents, the carrying value of these amounts is a
reasonable estimate of their fair value. The fair value of long-term
unbilled receivables is estimated by using a discount rate that
approximates the current rate for comparable notes. Marketable
securities' fair values are based on quoted market prices or dealer
quotes. The fair value of restricted funds held in trust is based on
quoted market prices of the investments held by the trustee. The fair
value of noncurrent receivables is estimated by discounting the future
cash flows using the current rates at which similar loans would be made
to such borrowers based on the remaining maturities, consideration of
credit risks, and other business issues pertaining to such receivables.
Other assets, consisting primarily of insurance and escrow deposits and
other miscellaneous financial instruments used in the ordinary course of
business, are valued based on quoted market prices or other appropriate
valuation techniques.
Fair values for short-term debt and long-term debt were determined based
on interest rates that are currently available to the Corporation for
issuance of debt with similar terms and remaining maturities for debt
issues that are not traded or quoted on an exchange. With respect to
convertible subordinated debentures, fair values are based on quoted
market prices. The fair value of project debt is estimated based on
quoted market prices for the same or similar issues. Other borrowings
and liabilities are valued by discounting the future stream of payments
using the incremental borrowing rate of the Corporation. The fair value of
the Corporation's interest rate swap agreements is the estimated amount that
the Corporation would receive or pay to terminate the swap agreements at
the reporting date based on third-party quotations. The fair value of
Ogden financial guarantees provided on behalf of ITO and customers (see
Note 23) would be zero because Ogden receives no fees associated with
such commitments.
The fair-value estimates presented herein are based on pertinent
information available to management as of December 31, 1994 and 1993.
Although management is not aware of any factors that would significantly
affect the estimated fair-value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since
that date, and current estimates of fair value may differ significantly
from the amounts presented herein.
Independent Auditors' Report
Deloitte & Touche LLP Two World Financial Center
New York, NY 10281
The Board of Directors and Shareholders of Ogden Corporation:
We have audited the accompanying consolidated balance sheets of Ogden
Corporation and subsidiaries as of December 31, 1994 and 1993 and the
related statements of shareholders' equity, consolidated income and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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 financial position of the companies at December 31, 1994
and 1993 and the results of their operations and cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1994 the
Corporation changed its methods of accounting for postemployment benefits to
conform with Statement of Financial Accounting Standards No. 112
and for certain investments in debt and equity securities to conform
with Statement of Financial Accounting Standards No. 115. In 1993, the
Corporation changed its method of accounting for postretirement benefits
other than pensions to conform with Statement of Financial Accounting Standards
No. 106 and in 1992 changed its method of accounting for income taxes to
conform with Statement of Financial Accounting Standards No. 109.
February 3, 1995
Ogden Corporation and Subsidiaries
Report of Management
Ogden's management is responsible for the information and representations
contained in this annual report. Management believes that the financial
statements have been prepared in conformity with generally accepted
accounting principles appropriate in the circumstances to reflect in all
material respects the substance of events and transactions that should be
included and that the other information in the annual report is consistent
with those statements. In preparing the financial statements, management
makes informed judgments and estimates of the expected effects of events and
transactions currently being accounted for.
In meeting its responsibility for the reliability of the financial
statements, management depends on the Corporation's internal control
structure. This structure is designed to provide reasonable assurance that
assets are safeguarded and transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of
financial statements in accordance with generally accepted accounting
principles. In designing control procedures, management recognizes that
errors or irregularities may nevertheless occur. Also, estimates and judgments
are required to assess and balance the relative cost and expected benefits
of such controls. Management believes that the Corporation's internal control
structure provides reasonable assurance that errors or irregularities that
could be material to the financial statements are prevented and would be
detected within a timely period by employees in the normal course of
performing their assigned functions.
The Board of Directors pursues its oversight role for these
financial statements through the Audit Committee, which is composed solely of
nonaffiliated directors. The Audit Committee, in this oversight role,
meets periodically with management to monitor their responsibilities. The
Audit Committee also meets periodically with the independent auditors and the
internal auditors, both of whom have free access to the Audit Committee without
management present.
The independent auditors elected by the shareholders express an
opinion on our financial statements. Their opinion is based on procedures
they consider to be sufficient to enable them to reach a conclusion as to
the fairness of the presentation of the financial statements.
R. Richard Ablon Philip G. Husby
President and Senior Vice President,
Chief Executive Officer Chief Financial Officer, and
Treasurer
[Enlarge/Download Table]
Ogden Corporation and Subsidiaries
Quarterly Results of Operations
1994 Quarter Ended March 31 June 30 Sept. 30 Dec. 31
(In thousands of dollars, except per share amounts)
Total revenues $479,319 $527,718 $546,699 $556,449
Gross profit $ 87,946 $ 97,668 $ 98,578 $101,478
Income before cumulative effect
of change in accounting principle $ 15,328 $ 17,640 $ 18,742 $ 16,116
Cumulative effect of change in accounting principle (1,520)
Net Income $ 13,808 $ 17,640 $ 18,742 $ 16,116
Earnings (Loss) Per Common Share:
Income before cumulative effect of
change in accounting principle $ 0.35 $ 0.40 $ 0.43 $ 0.37
Cumulative effect of change in accounting principle (0.03)
Total $ 0.32 $ 0.40 $ 0.43 $ 0.37
Earnings (Loss) Per Common Share -
Assuming Full Dilution:
Income before cumulative effect of change in
accounting principle $ 0.34 $ 0.40 $ 0.43 $ 0.37
Cumulative effect of change in accounting principle (0.03)
Total $ 0.31 $ 0.40 $ 0.43 $ 0.37
1993 Quarter Ended March 31 June 30 Sept. 30 Dec. 31
(In thousands of dollars, except per-share amounts)
Total revenues $458,491 $516,157 $540,856 $523,833
Gross profit $ 82,240 $ 86,330 $ 94,105 $ 94,469
Income before cumulative effect of change in
accounting principle $ 13,822 $ 16,092 $ 14,723 $ 17,493
Cumulative effect of change in accounting principle (5,340)
Net income $ 8,482 $ 16,092 $ 14,723 $ 17,493
Earnings (Loss) Per Common Share:
Income before cumulative effect of change in
accounting principle $ 0.32 $ 0.37 $ 0.34 $ 0.40
Cumulative effect of change in accounting principle (0.12)
Total $ 0.20 $ 0.37 $ 0.34 $ 0.40
Earnings (Loss) Per Common Share -
Assuming Full Dilution:
Income before cumulative effect of change in
accounting principle $ 0.31 $ 0.37 $ 0.34 $ 0.40
Cumulative effect of change in accounting principle (0.12)
Total $ 0.19 $ 0.37 $ 0.34 $ 0.40
Notes: Net income was reduced by $.10 per share ($4,300,000) for the
September 30, 1993 quarter reflecting the retroactive effect of the increased
Federal income tax rate. The $.10 per-share reduction includes $.08 per share
for a net one-time charge due to the adjustment of prior years' deferred income
tax balances and $.02 per share for the 1% increase in tax rate for the first
nine months of 1993.
The cumulative effect of changes in accounting principles reflects the
adoption of SFAS 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," effective January 1, 1993, and SFAS 112, "Employers'
Accounting for Postemployment Benefits," effective January 1, 1994.
[Download Table]
Ogden Corporation and Subsidiaries
Price Range of Stock and Dividend Data
1994 1993
High Low High Low
Common:
First Quarter 24 3/8 21 1/4 24 1/8 21 1/2
Second Quarter 23 3/8 19 7/8 26 1/2 22 1/8
Third Quarter 23 1/8 20 1/2 27 21 5/8
Fourth Quarter 21 5/8 17 3/4 26 22
Preferred:
First Quarter 137 137 Not Traded
Second Quarter 128 1/2 128 1/2 146 146
Third Quarter 131 1/2 131 1/2 145 131 1/2
Fourth Quarter 122 122 Not Traded
Quarterly common stock dividends of $.3125 per share were paid to shareholders
of record for the four quarters of 1994 and 1993, the dividends for the last
quarters of 1994 and 1993 being paid in January of the subsequent years.
Quarterly dividends of $.8376 were paid for the four quarters of 1994 and 1993
on the $1.875 preferred stock.
Ogden common and $1.875 preferred stocks are listed on the New York Stock
Exchange.
Dates Referenced Herein and Documents Incorporated by Reference
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