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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________________ to____________________
Commission File Number 1-3122
OGDEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-5549268
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two Pennsylvania Plaza, New York, NY 10121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code - (212) 868-6100
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
Common Stock, par value New York Stock Exchange
$.50 per share
$1.875 Cumulative Convertible New York Stock Exchange
Preferred Stock (Series A)
5% Convertible Debentures Due 1993 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K.
[ ]
The aggregate market value of registrant's voting stock, held by non-
affiliates based on the New York Stock Exchange closing price as reported in
the consolidated transaction reporting system as of the close of business on
March 1, 1994 was as follows:
Common Stock, par value $.50 per share $970,959,364
$1.875 Cumulative Convertible
Preferred Stock (Series A) $ 7,683,234
The number of shares of the registrant's Common Stock outstanding as of
March 1, 1994 was 43,535,872 shares.
The following documents are hereby incorporated by reference into this
Form 10-K:
(1) Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1993 (Parts II and IV).
(2) Portions of the Registrant's 1994 Proxy Statement to be filed with the
Securities and Exchange Commission (Part III).
PART I
Item 1. BUSINESS
Ogden Corporation (hereafter together with its consolidated
subsidiaries referred to as "Ogden" or the "Company") has its
offices located at Two Pennsylvania Plaza, New York, New York
10121, pursuant to a lease that expires on April 30, 1998 and which
contains an option by Ogden to renew for an additional five years.
Ogden is a diversified company primarily engaged in providing
services through subsidiaries within each of its Operating Services
and Waste-to-Energy Operations as described below:
I. OPERATING SERVICES
Ogden Services Corporation ("Ogden Services"), a wholly
owned subsidiary of Ogden, provides services through each
of its operating groups. The principal groups and
services provided by each are as follows: (i) Ogden
Aviation Services provides ground services, catering and
fueling of aircraft at domestic and foreign airports;
(ii) Ogden Entertainment Services provides facility
management, concert promotions, food, beverage and
novelty concession services and maintenance services at
amphitheaters, stadiums, arenas and other venues; (iii)
Ogden Environmental and Energy Services provides
independent power generation, engineering and consulting
services in the environmental and energy markets; (iv)
Ogden Government Services and Atlantic Design Company
provides engineering design, drafting and technical
services; building and repairing electronic systems; and
a broad range of technical support, logistics, and
operation and maintenance services; and (v) Ogden
Facility Services provides a broad range of turnkey
facility management, housekeeping, mechanical
maintenance, energy management, security, warehousing,
shipping and receiving services.
In addition, Ogden Services provides the removal or
encapsulation of asbestos from office buildings and other
structures and, through its 50% ownership in Universal
Ogden Services, provides food and housekeeping services
to offshore drilling rigs and logistical support services
to remote industrial campsites in the United States and
abroad.
II. Waste-to-Energy Operations
Ogden Projects, Inc. ("OPI"), an 84.2% owned subsidiary
of Ogden, through its wholly owned subsidiaries, provides
waste disposal services throughout the United States.
Its principal business, conducted largely through its
wholly owned subsidiary, Ogden Martin Systems, Inc.
("OMS") provides waste-to-energy services through
designing, permitting, constructing, assisting in
financing and operating and maintaining waste-to-energy
facilities. These waste-to-energy facilities combust
municipal solid waste to make saleable energy in the form
of electricity or steam. OMS holds the exclusive rights
to market a proprietary mass-burn technology, the
principal feature of which is the reverse-reciprocating
stoker grate upon which the waste is burned. This
technology is used by OPI in most of the waste-to-energy
facilities it designs and constructs in the United States
and abroad. OPI is also pursuing opportunities to
develop independent power projects that utilize fuels
other than waste, as well as pursuing opportunities to
operate and maintain wastes and wastewater processing
facilities.
- -------------------------------------------------------------------
The amounts of revenue from sales and services to
unaffiliated customers, operating profit or loss, and identifiable
assets attributable to each of Ogden's two major operating areas
and foreign operations, if any, for each of the last three fiscal
years are set forth on pages 41 and 42 of Ogden's 1993 Annual
Report to Shareholders certain specified portions of which are
incorporated herein by reference.
OPERATING SERVICES
The operations of Ogden's Operating Services are performed by
Ogden Services Corporation ("Ogden Services") through its five
major operating groups as follows: Ogden Aviation Services; Ogden
Entertainment Services; Ogden Environmental and Energy Services;
Atlantic Design Company and Ogden Government Services; and Ogden
Facility Services. This organizational structure is described in
more detail below.
Ogden Services, through wholly-owned subsidiaries within each
of the foregoing major operating groups, provides a wide range of
services to private and public facilities. Its principal customers
include airlines, transportation terminals, sports arenas,
stadiums, banks, owners and tenants of office buildings, state,
local and Federal governments, universities and other institutions
and large industrial organizations that are leaders in such fields
as plastics, chemicals, drugs, tires, petroleum and electronics.
Ogden Services' bills most of its work on a cost-plus or
fixed-price and time and material basis. Where services are
performed on a cost-plus basis, the customer reimburses the
appropriate Ogden Services' group for all reimbursable expenditures
made in connection with the job (in some instances with a limit on
the reimbursed amount) and also pays a fee, which may be a
percentage of the reimbursable expenditures, a specific dollar
amount, or a combination of the two. Fixed-price contracts, in
most cases, contain escalation clauses increasing the fixed price
in the event, and to the extent, that there are increases in
payroll and related cost.
Many of the contracts in the Ogden Aviation Services and Ogden
Facility Services areas are written on a month-to-month basis or
provide for a longer or indefinite term but are terminable by
either party on notice varying from 30 to 180 days.
OGDEN AVIATION SERVICES
The Ogden Aviation Services group provides specialized support
services to over 200 airlines at 90 cities throughout the United
States, Canada, Mexico, Germany, Czech Republic, The Netherlands,
Brazil, Peru, Chile, Venezuela, New Zealand, Australia and other
locations.
The specialized support services provided by this group
includes comprehensive ground handling, inflight catering and
aviation fueling. These services are performed through contracts
with individual airlines, through consolidated agreements with
several airlines, and contracts with various airport authorities.
Within the area of inflight catering, Ogden Aviation Services
operates 14 inflight kitchens for over 85 airline customers.
Locations include John F. Kennedy International and LaGuardia
Airports in New York; Newark International Airport in New Jersey;
Los Angeles and San Francisco International Airports in California;
Miami International Airport in Florida; Washington Dulles
International near Washington, D.C.; McCarren International in Las
Vegas, Nevada; and Honolulu International in Hawaii. During 1993,
Ogden Aviation Services signed new inflight catering contracts with
Aeromexico, British Airways, EVA Airways, Malev Hungarian Airlines
and Mexicana Airlines, among others. The Ogden Aviation inflight
kitchen at Honolulu International also received a three year
contract from NAVATEK, a Hawaiian cruise line, to provide catering
services for its two cruise ships.
Ogden Aviation Services also operates fueling facilities,
including storage and hydrant fueling systems for the fueling of
aircraft. This operation assists airlines in designing, arranging
financing for, and installing underground fueling systems. These
fueling operation services are principally performed in the North
American market. However, Ogden Aviation Services will begin
providing these services in Latin America following the award of
contracts in Puerto Rico and Panama.
Ground handling services include diversified ramp operations
such as baggage unloading and loading, aircraft cleaning, aircraft
maintenance, flight planning, de-icing, cargo warehouse operations
and passenger-related services such as ticketing, check-in, porter
("skycap") service, passenger lounge operations and other
miscellaneous services.
Global expansion by this service group has resulted in the
start-up of operations at several international locations over the
past several years. For example, in Germany services are performed
at eight different airports throughout the country; service at
Schiphol International Airport in Amsterdam began in 1993;
comprehensive ground handling services are provided at Auckland
International Airport in New Zealand under a ten year licensing
agreement; and services are provided in the Czech Republic through
a 50% interest in a Prague-based airport handling company. In
Canada Ogden Aviation Services provides ground handling and other
related services at the Pearson International Airport in Toronto
and the Mirabel and Dorval Airports in Montreal.
During December 1993 Ogden Aviation Services began providing
comprehensive ground handling services in Caracas, Venezuela at
Simon Bolivar International Airport. Through an 80% owned company
Ogden Aviation also began providing ground handling services at the
Arturo Merino Benitez Airport in Santiago, Chile. Ogden Aviation
continues to perform Air Aruba's aviation ground service operations
at Reina Beatrix International Airport in Aruba through a
corporation jointly owned by Ogden and Air Aruba with Ogden
Aviation Services controlling and performing all day-to-day ground
service operations at the airport.
OGDEN ENTERTAINMENT SERVICES
The Ogden Entertainment Services group provides total facility
management services, concert promotions, food, beverage and novelty
concessions, janitorial, security, parking, and other maintenance
services to a wide variety of public and private facilities located
in the United States, Mexico, Canada and the United Kingdom.
Many of the operating contracts and concession leases under
which this group operates are individually negotiated and vary
widely as to duration. Concession contracts usually provide for
payment by an Ogden Entertainment Services subsidiary of
commissions or rentals based on a stipulated percentage of gross
sales or net profits, sometimes with a minimum rental or payment.
Facility management contracts are usually on a cost-plus fee basis.
Food and beverage service in the United States is provided at
more than 100 stadiums, convention and exposition centers, arenas,
parks, amphitheaters, fairgrounds and racetracks, including the
following: Anaheim Stadium (Anaheim, California); Rich Stadium
(Buffalo, New York); the U.S. Air Arena (Landover, Maryland); the
Milwaukee Exposition and Convention Center (Milwaukee, Wisconsin);
the Los Angeles Convention Center and The Great Western Forum (Los
Angeles, California); the Kingdome (Seattle, Washington);
Philadelphia Veterans Stadium (Philadelphia, Pennsylvania); Market
Square Arena (Indianapolis, Indiana); Target Center (Minneapolis,
Minnesota); McNichols Arena (Denver, Colorado); and Cobo Hall
(Detroit, Michigan).
During 1993 this service group was awarded a ten year contract
to provide concession and novelty services at the Tempe Diablo
Stadium in Tempe, Arizona; a five year contract to provide food,
beverage and novelty services at the University of Oklahoma
Stadium, and the Lloyd Noble Center, located in Norman, Oklahoma;
a ten year contract to provide food and beverage services at
Fiddler's Green Amphitheatre located in Englewood, Colorado; a ten
year contract to provide food, beverage and concession services at
the MGM Grand Gardens Arena located in Las Vegas, Nevada at the MGM
Grand Hotel; and a ten year contract to provide concession and
novelty services at the Sandstone Amphitheatre located in Kansas
City, Missouri. During 1993 Ogden Entertainment Services also
entered a new market pursuant to a ten year contract to provide
food and beverage services at the San Jose Swap Meet, the largest
open-air market in California.
Ogden Entertainment Services also provides food and beverage
services at the 20,000 seat Starlake Amphitheater near Pittsburgh,
Pennsylvania and concession and catering services at zoos located
in Seattle, Washington and Cleveland, Ohio.
Various combinations of security, parking, maintenance and
janitorial services at accounts such as The Great Western Forum;
U.S. Air Arena; and The Palace (Auburn Hills, Michigan) are also
provided by this service group.
Ogden Entertainment Services has facility management
agreements for various convention centers, arenas and public
facilities including the Pensacola Civic Center in Pensacola,
Florida; the Sullivan Arena and Egan Convention Center in
Anchorage, Alaska; and the Rosemont Horizon, near Chicago,
Illinois. In each of these facilities, Entertainment Services
provides a comprehensive support service program. Facility
management agreements are generally billed on a cost-plus fee
basis.
Ogden Entertainment Services, through long-term management and
concession agreements, provides management services, food, beverage
and novelty concessions and maintenance services at the Target
Center in Minneapolis and The Great Western Forum in Los Angeles.
Ogden Entertainment Services through its agreement with the City of
Anaheim provides the exclusive operation of the food, beverage and
novelty concessions at Anaheim Stadium, a 70,000 seat stadium
located in Anaheim, California adjacent to the City's recently
opened Arrowhead Pond (see below for further discussion of
Arrowhead Pond).
In Mexico, this service group has a 27% equity interest in a
company which manages the Sports Palace, a 22,000 seat arena, and
the Autodrome, a 45,000 seat open air facility, located in Mexico
City, as well as the new amphitheater in Monterey Mexico that will
be able to accommodate about 18,000 people. Ogden Entertainment
also owns a 51% equity interest in a company that provides food and
beverage concessions at the Sports Palace, Autodrome and Monterey
Amphitheater.
In Canada, Ogden Entertainment provides food, beverage and
novelty concessions at the Saint John Regional Exhibition Centre
located in New Brunswick, Canada and at Lansdowne Park in Ottawa,
Canada.
The New London Stadium, a 20,000 seat soccer stadium near
London, England, for which Ogden acted as design and marketing
consultants during construction, was opened during 1993. The
Stadium serves as the home stadium for the Millwall Football Club
and Ogden Entertainment Services, through a ten year contract,
provides food and beverage services at the Stadium. Ogden
Entertainment Services also provides design and consulting services
at the 18,000 seat Victoria station Arena in Manchester, England
which Ogden Entertainment will manage and operate pursuant to a 20-
year lease upon its scheduled completion during 1994.
Ogden Entertainment Services also leases and operates a
thoroughbred and harness racetrack in Illinois and five off-track
betting parlors in Illinois where it telecasts races from Fairmount
Park and other racing facilities. Restaurants and other food and
beverage services are provided by Ogden Entertainment Services at
these facilities. Racing days are usually awarded on an annual
basis and a large portion of the track's revenue is derived from
its share of the pari-mutual handle, which can be adjusted by state
legislation. Other income is derived from admission charges,
parking, programs and concessions.
Pursuant to the Amended and Restated Arena Management
Agreement (the "Management Agreement"), between Ogden Facility
Management Corporation of Anaheim ("OFMA"), a wholly owned
subsidiary of Ogden Services, and the City of Anaheim, California
(the "City"), OFMA manages and operates the recently completed
Arrowhead Pond which is owned by the City and located within the
City of Anaheim. The Pond is a multi-purpose facility capable of
accommodating professional basketball and hockey, concerts and
other attractions, and has a maximum seating capacity of
approximately 19,400. Construction of the Pond was financed
through the sale of municipal securities issued by an
instrumentality of the City in January, 1991. OFMA has agreed that
the Pond, under OFMA's management, will generate a minimum amount
of revenues computed in accordance with the 30-year Management
Agreement between the City and OFMA. OFMA's obligations under the
Management Agreement are guaranteed by Ogden. Ogden Entertainment
Services has an agreement with the Walt Disney Company for a 30-
year lease at the Pond where The Walt Disney Company's new National
Hockey League team, the Mighty Ducks, began playing during the
1993/1994 hockey season.
OGDEN ENVIRONMENTAL AND ENERGY SERVICES (OEES)
OEES provides a comprehensive range of environmental,
infrastructure and energy consulting, engineering and design
services to industrial and commercial companies, electric utilities
and governmental agencies. Environmental services include analysis
and characterization, remedial investigations, analytical testing,
engineering and design, data management, project management, and
regulatory assistance to detect, evaluate, solve and monitor
environmental problems and health and safety risks. Infrastructure
services include environmental, civil, geotechnical, transportation
and sanitary engineering, urban and regional planning and storm
water management. Energy services include regulatory assistance,
nuclear safety and engineering, and consulting services relating to
nuclear waste management, security engineering and design services,
and independent power production.
Services are provided to a variety of clients in the public
and private sectors in the United States and abroad. Principal
clients include major Federal agencies, particularly the Department
of Defense and the Department of Energy as well as major
corporations in the chemical, petroleum, transportation, public
utility and health care industries and Federal and state regulatory
authorities. Approximately 30% of OEES's revenues is derived from
contracts or subcontracts with departments or agencies of the
United States Government. United States Government contracts may
be terminated, in whole or in part, at the convenience of the
government or for cause. In the event of a convenience
termination, the government is obligated to pay the costs incurred
by OEES under the contract plus a fee based upon work completed.
As of December 31, 1993, OEES's backlog of orders amounted to
approximately $120 million, of which approximately $37 million
represented government orders that were not yet funded; as of
December 31, 1992, the comparable amounts were $87 million and $14
million, respectively.
This service group continues to provide professional
environmental engineering services, including program management,
to the United States Navy CLEAN Program (Comprehensive Long Term
Environmental Action Navy) pursuant to a $100 million contract
awarded during 1991. Thus far OEES has provided these services in
Hawaii and Guam.
Through Catalyst New Martinsville Hydroelectric Corporation,
OEES manages and operates the New Martinsville Hydroelectric Plant
under a long-term lease with the City of New Martinsville, West
Virginia. The plant has been in operation since 1988 and rated at
approximately 40 megawatts of power. The plant's electrical output
is sold to the Monongahela Power Company under a long-term power
sales agreement.
An OEES subsidiary, as a 50% partner in the Heber Geothermal
Company ("HGC"), a partnership with Centennial Geothermal, Inc.
leases and operates a 47-megawatt (net) power plant in Heber,
California. The power is sold to Southern California Edison. The
working interest in the geothermal field, which is adjacent to and
supplies fluid to the power plant, is owned by a partnership
composed of an OEES subsidiary and Centennial Field, Inc., an
unaffiliated company. Separate subsidiaries of OEES have the
contracts to operate and maintain both the Well field, which
currently produces approximately eight million pounds per hour of
fluid, and the power plant.
During 1993 OEES received a four year contract from the State
of Tennessee's Department of Transportation to survey road and
stream bid profiles and perform underwater inspections and sounding
around bridge foundations; Air Force bases in Ohio, Michigan and
North Carolina were added to OEES' $25.0 million, three year
contract with the U.S. Air Force Center for Environmental
Excellence for the removal of storage tanks and contaminated soil
from Air Force bases across the United States and in U.S.
territories; and, OEES was one of four contractors selected by the
U.S. Air Force to competitively bid for work valued at $195 million
over five years to identify, investigate and remediate
environmental contamination problems at the Kelly Air Force Base,
Texas.
OEES continued the development of its mixed waste analytical
business through the modified portion of its analytical laboratory
in Fort Collins, Colorado which opened during 1993 and analyzes
mixtures of nuclear and non-nuclear hazardous waste. This mixed
waste laboratory provides testing services for the Department of
Energy and other Federal government agencies involved in the clean
up of government facilities.
OEES is continuing to examine the European market for long-
term expansion of all of its services. During 1993 it acquired a
privately-owned environmental, water resources and geotechnical
consulting firm in Spain; was awarded an environmental services
contract by the U.S. Army Corps of Engineers, Europe District, to
provide environmental site assessments in Frankfurt, Germany; and,
pursuant to a one year contract is working with the Chevron
Overseas Petroleum, Inc.'s Tengizchevroil Joint Venture Project and
the Republic of Kazakhstan, Russia to develop an environmental
protection public health and safety plan.
OGDEN GOVERNMENT SERVICES AND ATLANTIC DESIGN COMPANY
Ogden Government Services
The Ogden Government Services group functions through five
operating groups: W.J. Schafer Associates, Inc. ("WJSA"), the
Systems group, the Engineering group, the Biomedical Services
group, and Operations Support Services group. Through these
operating groups Ogden Government Services offers to private
industry and Federal, state and local government agencies a broad
range of engineering and technical support services; biomedical
research and biological repository services; software design,
integration and related services; systems engineering integration,
management and logistics support; consulting, total facility
management; property management; management support services and
software; and maintenance services of all types required to
maintain and operate governmental facilities worldwide.
The WJSA group currently provides technology and engineering
services and consultation in space-based and free electron laser,
high energy systems research to the Ballistic Missile Defense
Organization as well as technical research to the other agencies
within the Department of Defense. During 1993 major awards
included a contract by the Ballistic Missile Defense Organization
to provide technical support to the Innovative Science Technology
Directorate and by the Coleman Research Corporation to provide
system engineering and technical assistance support for the Theater
High Altitude Area Defense Project.
The Engineering and Systems groups provide systems and
software engineering and related services to the U.S. Navy, the
General Services Administration, the Office of Personnel Management
and many other Federal and state agencies. During 1993 these
groups were awarded several large contracts ranging from one to
five years in duration, including contracts by: The Department of
Defense, to assist Unisys Government Systems with its Defense
Enterprise Integration Services program; the Naval Command Control
and Ocean Surveillance Center, to provide systems engineering,
configuration management and other support services for naval
combat systems; the State of Wisconsin to provide software systems
transfer support to its Kids Information Data System; and the
Internal Revenue Service to modernize its tax collection process.
The Operations Support Services group provides custodial
operations and maintenance, building management, logistical
support, construction and repairs, and vehicle maintenance services
to many Federal and state government facilities throughout the
country. The group currently provides perimeter security in the
United States embassies in Panama and the Bahamas as well as
logistic functions at various other bases in the United States
pursuant to contracts with the Department of Defense as well as a
wide variety of operations and maintenance services for the U.S.
Army's European Redistribution facilities located at Nahbollenbach
and Hanau, Germany. During 1993 this group was awarded a complete
facility management contract by the Department of Defense for the
National Information Center, its top-secret facility located in
Washington, D.C.
The Bioservices group operates repositories and provides
services in support of the National Institute of Health, the Walter
Reed Army Institute of Research, the Federal Drug Administration,
the National Institute of Allergy and Infectious Diseases, the
National Cancer Institute and other health agencies.
Atlantic Design Company, Inc. ("Atlantic Design")
Atlantic Design with principal offices located in Charlotte,
North Carolina and engineering facilities located in Livingston,
New Jersey and New York, provides engineering design, drafting and
technical services, as well as turn-key, integrated services in
electronics contract manufacturing and assembly and through its
Lenzar operation in Florida develops and markets medical products
and custom image capturing products. Atlantic Design provides
services to various industries, including such customers as IBM,
Seiko, Compaq, Diasonics, AT&T, E.Systems, Decision Data, LXE and
Pratt and Whitney.
Atlantic Design's services also include the design of
mechanical, electro-mechanical and electronic equipment; technical
writing; engineering analysis; building, testing and repairing
electronic assemblies and equipment; and the development of
prototype equipment for a variety of industries. Atlantic Design's
customers are primarily in the computer, medical and electronic
industries located in the Eastern United States.
During 1993 Atlantic Design was awarded a contract by Sequoia
Pacific Systems to assemble electronic voting booths for the State
of Louisiana as well as contracts from Compaq Computer, Seiko and
AT&T.
OGDEN FACILITY SERVICES
The Ogden Facility Services group (formerly Ogden Building
Services and Ogden Industrial Services) provides a comprehensive
range of facility management, maintenance and manufacturing support
services to industrial, commercial, electric utilities, and
education and institutional customers throughout the United States
and Canada.
The range of services provided include total facility
management; facility operations and maintenance; operations,
maintenance and repair of production equipment; security and
protection; housekeeping; landscaping and grounds care; energy
management; warehousing and distribution; project and construction
management; and skilled craft support services.
Ogden Facility Services' commercial and office building
customers include the World Trade Center and the American Express
Tower in New York, Phillips Petroleum Headquarters in Bartlesville,
Oklahoma, and A.T.& T. at several sites in New Jersey. Facility's
industrial and manufacturing customers include IBM, Chrysler,
Colgate Palmolive, Bridgestone/Firestone, Exxon, Dow Chemical,
American Cyanamid and Martin Marietta.
The group continues to expand its support to the institutional
and educational marketplace. Customers include the University of
Miami; New York University; Clark Atlanta University in Georgia;
and Concordia University in Montreal, Canada.
During 1993 the group was awarded a five year contract by the
Orlando Utility Commission (OUC) to provide support services at
OUC's Orlando and Titusville, Florida plants. Additional awards
included The Bank of New York (Housekeeping Services); Geon
Company, formerly B.F. Goodrich (Warehousing and Distribution
Services); Ameritech (Facility Management) and Ford Stamping Plant
in Chicago Heights, Illinois (Facility Maintenance).
Ogden Facility Services, in conjunction with Ogden Projects,
Inc., also provides services to the waste-to-energy plants in
operation, or being built, by Ogden Martin Systems, Inc. on a cost-
plus basis as negotiated between Ogden Martin and Ogden Facility
Services.
OTHER SERVICES
Ogden Services also provides services relating to the removal
and encapsulation of asbestos-containing materials from office
buildings and other facilities and arranges for the transport of
such material to approved disposal sites. Asbestos-remediation
jobs are being performed principally in the greater Manhattan-New
York metropolitan area. The market for asbestos removal and
encapsulation services by office buildings and large residential
complexes, industrial plants, airports and other public facilities
has been greatly reduced over the past several years and Ogden
Services' continued involvement in this industry is reviewed on an
annual basis.
Through Universal Ogden Services, a joint venture based in
Seattle, Washington, services are provided to a wide range of
facilities where people live for extended periods of time, such as
remote job sites and oil rigs. Food and housekeeping services are
currently provided to offshore oil production platforms and
drilling rigs in the Gulf of Mexico, the North Sea, the West Coast
of Africa and South America, for oil production and drilling
companies. Logistical support services, including catering,
housing, security, operations, and maintenance are provided to
remote industrial campsites located in the United States and
abroad.
WASTE-TO-ENERGY OPERATIONS
OGDEN PROJECTS, INC.
Ogden Projects, Inc. ("OPI"), through its wholly-owned
subsidiaries, provides waste disposal services throughout the
United States. Its principal business, conducted through wholly-
owned subsidiaries, including Ogden Martin Systems, Inc. ("OMS"),
is providing waste-to-energy services. Waste-to-energy facilities
combust municipal solid waste to make saleable energy in the form
of electricity or steam.
OPI was organized as a wholly-owned subsidiary of Ogden
(together with its subsidiaries, "Ogden") in 1984. Through OMS it
holds the exclusive rights to use the proprietary technology (the
"Martin Technology") of Martin GmbH fur Umwelt - und Energietechnik
of Germany ("Martin") in the United States, other Western
Hemisphere locations and Israel. In addition, OPI has exclusive
rights to use the Martin Technology on a full service design,
construct and operate basis in Germany, the Netherlands, Denmark,
Norway, Sweden, Finland, Poland, and Italy. The Martin Technology
is used in over 150 waste-to-energy facilities operating worldwide,
principally in Europe, the Far East and the United States.
OPI completed construction of its first waste-to-energy
facility in 1986 and currently operates twenty-five waste-to-energy
projects at twenty-four locations. Three facilities are under
construction. OPI is the owner or lessee of seventeen of these
projects. Additional projects are in various stages of
development.
During early 1993, OPI acquired all of the United States
waste-to-energy business of Asea Brown Boveri, Inc. through the
acquisition of the stock of one of its indirect, wholly-owned
subsidiaries. By virtue of the acquisition, OPI became the
operator of these facilities. These three facilities do not employ
the Martin Technology. OPI also owns and operates four additional
facilities that do not utilize the Martin technology.
OPI has taken preliminary steps toward expanding its waste-to-
energy business internationally. It is also pursuing opportunities
to develop independent power projects that utilize fuels other than
waste. In addition, OPI is pursuing opportunities to operate and
maintain water and wastewater processing facilities.
WASTE-TO-ENERGY SERVICES
In most cases, OPI, through wholly-owned subsidiaries
("Operating Subsidiaries"), provides waste-to-energy services
pursuant to long term service contracts ("Service Agreements") with
local governmental units sponsoring the waste-to-energy project
("Client Communities"). OPI has projects currently under
development for which there is no sponsoring Client Communities and
may in the future undertake other such projects.
(a) Terms and Conditions of Service Agreements. Waste-to-
energy projects are generally awarded by Client Communities
pursuant to competitive procurement. OPI has also built and is
operating projects that were not competitively bid. Following
award, the Client Community and the winning vendor must agree upon
the final terms of the Service Agreement.
Following execution of a Service Agreement between the
Operating Subsidiary and the Client Community, several conditions
must be met before construction commences. These usually include,
among other things, financing the facility, executing an agreement
providing for the sale of the energy produced by the facility,
purchase or lease of the facility site, and obtaining of required
regulatory approvals, including the issuance of environmental and
other permits required for construction. In many respects,
satisfaction of these conditions are not wholly within OPI's
control and accordingly, implementation of an awarded project is
not assured or may occur only after substantial delays. OPI incurs
substantial costs in preparing bids and, if it is the successful
bidder, implementing the project so it meets all conditions
precedent to the commencement of construction. In some instances
OPI has made contractual arrangements with communities that provide
partial recovery of development costs if the project fails to go
into construction for reasons beyond OPI's control.
Each Service Agreement is different in order to reflect the
specific needs and concerns of the Client Community, applicable
regulatory requirements and other factors. The following
description sets forth terms that are generally common to these
agreements.
Pursuant to the Service Agreement, the Operating Subsidiary
designs the facility, generally applies for the principal permits
required for its construction and operation and helps to arrange
for financing. The Operating Subsidiary then constructs and equips
the facility on a fixed price and schedule basis. The actual
construction and installation of equipment is performed by
contractors under the supervision of the Operating Subsidiary. The
Operating Subsidiary bears the risk of costs exceeding the fixed
price of the facility and may be charged liquidated damages for
construction delays, unless caused by the Client Community or
unforeseen circumstances beyond OPI's control, such as changes of
law ("Unforeseen Circumstances"). After the facility successfully
completes acceptance testing, the Operating Subsidiary operates and
maintains the facility for an extended term, generally 20 years or
more.
Under the Service Agreement, the Operating Subsidiary
generally guarantees that the facility will meet minimum processing
capacity and efficiency standards, energy production levels and
environmental standards. The Operating Subsidiary's failure to
meet these guarantees or to otherwise observe the material terms of
the Service Agreement, (unless caused by the Client Community or
Unforeseen Circumstances) may result in liquidated damages to the
Operating Subsidiary or, if the breach is substantial, continuing
and unremedied, the termination of the Services Agreement, in which
case the Operating Subsidiary may be obligated to discharge project
indebtedness.
The Service Agreement requires the Client Community to deliver
minimum quantities of municipal solid waste ("MSW") to the facility
and, regardless of whether that quantity of waste is delivered to
the facility, to pay a service fee. These fees are further
described below. Generally, the Client Community also provides or
arranges for debt financing. Additionally, the Client Community
bears the cost of disposing ash residue from the facility and, in
many cases, of transporting the residue to the disposal site.
Generally, expenses resulting from the delivery of unacceptable and
hazardous waste to the facility and from the presence of hazardous
materials on the site are also borne by the Client Community. In
addition, the Client Community is also generally responsible to pay
increased expenses and capital costs resulting from Unforeseen
Circumstances, subject to limits which may be specified in the
Service Agreement.
Ogden guarantees the Operating Subsidiaries performance of
their respective Service Agreements.
(b) Other arrangements for providing Waste-to-Energy Services.
OPI owns two facilities which are not operated pursuant to Service
Agreements with Client Communities, and is currently developing,
and may undertake in the future, additional such projects. In such
projects, OPI must obtain sufficient waste under contracts with
haulers or communities to ensure sufficient project revenues. OPI
is subject to risks usually assumed by the Client Community, such
as those associated with Unforeseen Circumstances, and the supply
and price of municipal waste to the extent not contractually
assumed by other parties. OPI's current contracts with waste
suppliers for these two facilities provide limited contractual
protection for Unforeseen Circumstances. On the other hand, OPI
generally retains all of the energy revenues and disposal fees for
waste accepted at these facilities. Accordingly, OPI believes that
such projects carry both greater risks and greater potential
rewards than projects in which there is a Client Community. As a
result of the declining number of municipal procurements in the
United States, which is anticipated to continue in the near future,
such projects are likely to become more common.
(c) Project Financing. Financing for projects is generally
accomplished through the issuance of a combination of tax-exempt
and taxable revenue bonds issued by a public authority. If the
facility is owned by an Operating Subsidiary, the authority lends
the bond proceeds to the Operating Subsidiary and the Operating
Subsidiary contributes additional equity to pay the total cost of
the project. For such facilities, project-related debt is included
as a liability in OPI's consolidated financial statements.
Generally, such debt is secured only by the assets of the Operating
Subsidiary and otherwise provides no recourse to OPI.
The Operating Subsidiaries are able to realize value from
facilities owned by them either by selling the facilities and
leasing them from the purchaser for extended terms or by selling
limited partnership interests in the entity owning the facility.
OPI has taken advantage of these financing mechanisms by selling
the interests in Tulsa I and Tulsa II to a leverage lessor and
leasing the facility back under a long term lease. In addition, in
1991, limited partnership interests in, and the related tax
benefits of, the partnership that owns the Huntington, New York
facility were sold to third party investors. In 1992, OPI sold the
subsidiary that held the remaining limited partnership interest in,
and certain related tax benefits of, that partnership. Under the
limited partnership agreement, an Operating Subsidiary is the
general partner and retains responsibility for the operation and
maintenance of the facility. The Operating Subsidiary retained 85%
of the residual value of the facility after the initial term of the
Service Agreement. In 1991, OPI acquired a facility from Blount,
Inc. which was sold through a sale-leaseback arrangement. An
Operating Subsidiary is the owner of the facility under
construction in Onondaga, New York and a sale of equity interests
in such facility is under consideration.
(d) Revenues and Income. During the construction period, for
facilities owned by Client Communities, construction income is
recognized on the percentage-of-completion method based on the
percentage of costs incurred to total estimated costs.
Construction revenues also include amounts relating to sales of
limited partnership interests and related tax benefits in
facilities not yet in commercial operation as well as other amounts
received with respect to activities conducted by OPI prior to the
commencement of commercial operation.
After construction is completed and the facility is accepted,
the Client Community pays the Operating Subsidiary a fixed
operating fee which escalates in accordance with specified indices;
reimburses the Operating Subsidiary for certain costs specified in
the Agreement including taxes and governmental impositions (other
than income taxes), ash disposal and utility expenses; and shares
with the Operating Subsidiary a portion of the energy revenues
(generally 10%) generated by the facility. If the facility is owned
by the Operating Subsidiary, the Client Community also pays as part
of the Service Fee an amount equal to the debt service on the bonds
issued to finance the facility. With respect to such facilities
OPI recognizes as revenue principal on such bonds on a level basis
over the term of the debt. At most facilities, OPI may earn
additional fees from accepting waste from the Client Community or
others utilizing the capacity of the facility which exceeds the
minimum amount of waste committed by the Client Community.
For the projects that are not operated pursuant to a Service
Agreement, tipping fees which are generally subject to escalation
in accordance with specified indices, and energy revenues are paid
to OPI. Electricity generated by these projects is sold to public
utilities, and in one instance, steam and a portion of the
electricity generated is sold to industrial users. Under certain
of the contracts under which waste is provided to these facilities,
OPI may be entitled to fee adjustments to reflect certain
Unforeseen Circumstances.
(e) OPI's Waste-to-Energy Projects. Certain information with
respect to OPI's projects as of February 28, 1994 is summarized in
the following table:
OPI'S WASTE-TO-ENERGY FACILITIES
Tons Boiler Commencement
In Operation Per Day Units Of Operation
Tulsa, OK (I) (1) 750 2 1986
Haverhill/Lawrence
MA-RDF (8) 950 1 1984
Marion County, OR 550 2 (2) 1987
Hillsborough County, FL (3) 1,200 3 (2) 1987
Tulsa, OK (II) (1) (4) 375 1 1987
Bristol, CT 650 2 (2) 1988
Alexandria/Arlington, VA 975 3 1988
Indianapolis, IN 2,362 3 (2) 1988
Hennepin County, MN (1) (5) 1,000 2 1991
Stanislaus County, CA 800 2 1989
Babylon, NY 750 2 (2) 1989
HaverHill, MA-Mass Burn 1,650 2 1989
Warren County, NJ (5) 400 2 1991
Kent County, MI (3) 625 2 (2) 1990
Wallingford, CT (5) 420 3 (2) 1990
Fairfax County, VA 3,000 4 (2) 1990
Huntsville, AL (3) 690 2 (2) 1990
Lake County, FL 528 2 (2) 1990
Lancaster County, PA (3) 1,200 3 (2) 1991
Pasco County, FL (3) 1,050 3 (2) 1991
Huntington, NY (6) 750 3 (2) 1991
Hartford, CT (3) (7)(8) 2,000 3 1989
Detroit, MI (1) (8) (9) 3,300 3 1989
Honolulu, HI (1) (8) 2,160 2 1990
Union County, NJ (3) (11) 1,440 3 1994
TOTAL 29,575
Estimated
Unrecognized
Construction
Revenues as of
Scheduled 12/31/93 (in
Commencement thousands of
Under Construction of Operations dollars)
Onondaga County, NY 990 3 (2) 1995 $ N/A
Lee County, FL (3) 1,200 3 (2) 1994 46,269
Montgomery County, MD(3) 1,800 3 (2) 1995 117,917
TOTAL 3,990
Estimated
Unrecognized
Construction
Revenues as of
Scheduled 12/31/93 (in
Awarded--Not Yet Commencement thousands of
Under Construction of Operations dollars)
Mercer County, NJ (3) 1,450 2 1994 $154,866
Clark County, OH (10) 1,750 2 1995 N/A
Halifax, Nova Scotia (3) 550 2 1994 99,620*
TOTAL 3,750
NOTES:
* Expressed in Canadian Dollars.
(1) Facility is owned by an owner/trustee pursuant to a
leveraged lease arrangement.
(2) Facility has been designed (or, with respect to
facilities and facilities under construction, will be
designed) to allow for the addition of another unit.
(3) Facility is owned (or, with respect to facilities not
under construction is to be owned) by the Client
Community.
(4) Phase II of the Tulsa facility, which was financed as a
separate project, expanded the capacity of the facility
from two to three units.
(5) Operating subsidiaries were purchased after completion
and use a mass-burn technology that is not the Martin
Technology.
(6) Owned by a limited partnership in which certain limited
partners are not affiliated with OPI.
(7) Under contracts with the Connecticut Resource Recovery
Authority and Northeast Utilities, OPI operates only the
boiler and turbine for this facility.
(8) Operating Contracts were acquired after completion.
Facility uses a refuse-derived fuel technology and does
not employ the Martin Technology.
(9) OPI is currently constructing environmental improvements
to the Detroit facility. The total price for this
project is approximately $117,800,000 (subject to
escalation) and construction is expected to be completed
by April 1996.
(10) On May 19, 1993, OPI entered into a Development
Agreement, a Steam Purchase and Sale Agreement and an
Operation and Maintenance Agreement with Ohio Edison
Company. On June 8, 1993, OPI entered into a Host
Community Agreement for the construction and operation of
a waste-to-energy incinerator with the Clark County Solid
Waste Management District. This contract is the subject
of litigation brought by a local landfill in which an
intermediate appellate court recently enjoined
performance by the County. The County and OPI are
determining whether to appeal to the Ohio Supreme Court
or whether to rebid the project. OPI is in the process
of procuring additional waste contracts for the facility.
(11) This facility is substantially complete and is processing
waste. OPI expects to recognize an additional $7.2
million in construction revenues in 1994.
(f) Markets and Competition. OPI markets its services
principally to governmental entities, including city, county and
state governments as well as public authorities or special purpose
districts established by one or more local government units for the
purpose of managing the collection and/or disposal of MSW. For
certain projects, OPI may market its services directly to private
firms in the business of MSW collection and/or disposal.
MSW generated in the United States is processed in waste-to-
energy facilities; incinerated without energy recovery; recycled
and landfilled. OPI believes that no single waste disposal
technique can properly manage all MSW and that an effective waste
management program must include waste minimization, recycling, and
waste-to-energy to utilize as much waste as possible for reuse and
energy production.
Steps to minimize the quantity of MSW produced are being taken
at the manufacturing and consumer levels. Some jurisdictions, for
example, have banned the use of certain plastic containers. These
efforts have not yet had an appreciable impact on the quantities of
MSW being generated.
Increased recycling is a goal of many state and local
governments, and some have legislated ambitious mandatory targets.
OPI believes that increased recycling is an important aspect of
waste disposal planning in the United States and will continue to
grow. However, the inherent limitation on the types of materials
that can successfully be recycled will continue to require
municipalities to use other disposal methods such as waste-to-
energy or landfilling for much of the waste produced. Most of
OPI's facilities have been sized to accommodate the accomplishment
of communities recycling goals.
Waste-to-energy facilities compete with other disposal
methods, such as landfills. Compliance with regulations
promulgated by the United States Environmental Protection Agency
(the "EPA") in 1991 will to some extent increase the cost of
landfilling although landfills may be less expensive, in some
cases, in the short term, than waste-to-energy facilities.
Landfills generally do not commit their capacity for extended
periods. Much of the landfilling done in the United States is done
on a spot market or through short term contracts. Accordingly,
landfill pricing tends to be more volatile as a result of periodic
changes in waste generation and available capacity than OPI's
pricing, which is based on long term contracts. Another factor
effecting the competitiveness of waste-to-energy fees are the
additional charges imposed by Client Communities to support
recycling programs, household hazardous waste collections, citizen
education and similar initiatives. The cost competitiveness of
waste-to-energy facilities also depends on the prices at which the
facility can sell the energy it generates.
Mass-burn waste-to-energy systems compete with various refuse-
derived fuel ("RDF") systems in which MSW is preprocessed to remove
various non-combustibles and is shredded for sizing prior to
burning. OPI believes that the large-scale facilities being
contracted for today are primarily mass-burn systems. Although OPI
operates four RDF projects, these were all acquired after
construction. OPI does not intend to develop any new RDF
facilities.
Since 1989, there has been a decline in the number of
communities requesting proposals for waste-to-energy facilities.
OPI believes that this decline has resulted from a number of
factors that adversely affected communities willingness to make
long term capital commitments to waste disposal projects, including
uncertainties about the impact of recycling on the waste stream;
concerns arising from the Clean Air Act Amendments of 1990 and the
regulatory actions currently being proposed pursuant to its terms.
In addition, there was aggressive opposition to proposed waste
disposal projects of all types by many individuals and small groups
during this period. OPI believes that legislative developments
increased public acceptance of the safety and cost effectiveness of
waste-to-energy and economic recovery will resolve many of these
uncertainties.
In response to the decline in the number of requests for
proposals, OPI has sought projects for which there are no
sponsoring Client Communities. In 1993, OPI negotiated a waste
disposal agreement with Clark County, Ohio, for the disposal of MSW
at such a project. OPI also completed negotiation of contracts
with Ohio Edison Company pursuant to which Ohio Edison leases a
site to OPI and purchases steam generated at the proposed waste-to-
energy facility. This project is conditional upon obtaining
commitments of additional MSW from other sources.
There is substantial competition within the waste-to-energy
field. OPI competes with a number of firms, some of which have
greater financial resources than OPI. Some competitors have
licenses or similar contractual arrangements for competing
technologies in the waste-to-energy field, and a limited number of
competitors have their own proprietary technology.
Other technologies utilized in mass-burn-type facilities in
the United States include the Von Roll, W+E Umwelltechnik, A.G.,
Takuma, Volund, Steinmueller, Deutsche Babcock, O'Connor and
Detroit Stoker.
The principal factors influencing selection of vendors for
governmentally sponsored projects are technology, financial
strength, performance guarantees, experience, reputation for
environmental compliance, service and price.
(g) Technology. The principal feature of the Martin
Technology is the reverse-reciprocating stoker grate upon which the
waste is burned. The patent for the basic stoker grate technology
used in the Martin Technology expired in 1989. OPI has no
information that would cause it to believe that any other company
uses the basic stoker grate technology that was protected by the
expired patent. OPI believes that unexpired patents on other
portions of the Martin Technology would limit the ability of other
companies to effectively use the basic stoker grate technology in
competition with OPI. More importantly, it is Martin's know-how in
manufacturing grate components and in designing and operating mass-
burn facilities and Martin's worldwide reputation in the waste-to-
energy field, rather than the use of potential technology, that is
important to OPI's competitive position in the waste-to-energy
industry in the United States. OPI does not believe that the
expiration of the patent covering the basic stoker grate technology
will have a material adverse effect on OPI's financial condition or
competitive position.
(h) The Cooperation Agreement. Under an agreement between OPI
and Martin (the "Cooperation Agreement"), OPI has the exclusive
right to use the Martin Technology in waste-to-energy facilities in
the United States, Canada, Mexico, Bermuda, certain Caribbean
countries most of Central and South America and Israel. In
addition, in Germany, Turkey, Saudi Arabia, Kuwait, the
Netherlands, Denmark, Norway, Sweden, Finland, Poland and Italy,
OPI has exclusive rights to use the Martin Technology only on a
full service design, construct and operate basis. OPI may not use
any other technology to design and construct waste-to-energy refuse
incineration facilities without Martin's permission. OPI may,
however, acquire, own, commission and/or operate facilities that
use technology other than the Martin technology that have been
constructed by entities other than OPI. Martin is obligated to
assist OPI in installing, operating and maintaining facilities
incorporating the Martin Technology. The fifteen year term of the
Cooperation Agreement renews automatically each year unless notice
of termination is given, in which case the Cooperation Agreement
would terminate 15 years after such notice. Additionally, the
Cooperation Agreement may be terminated by either party if the
other fails to remedy its material default within 90 days of
notice. The Cooperation Agreement is also terminable by Martin if
there is a "change in control" (as defined in the Cooperation
Agreement) of OMS, or any direct or indirect parent of OMS not
approved by its respective board of directors. Although
termination would not affect the rights of OPI to design,
construct, operate, maintain or repair waste-to-energy facilities
for which contracts have been entered into or proposals made prior
to the date of termination, the loss of OPI's right to use the
Martin Technology could have a material adverse effect on OPI's
future business and prospects. For example, Germany has enacted
legislation which would prevent the landfilling of untreated raw
municipal waste by the end of the decade. OPI therefore believes
this is an appropriate time to seek to expand its business in these
markets.
(i) International Business Developments. In 1993, OPI
continued the development of its waste-to-energy business in
selected international markets. OPI opened an office in Munich,
Germany in 1993 and, as indicated above, extended its right to use
the Martin technology to develop full service projects in much of
Europe. OPI had no operations outside the United States
previously. Furthermore, in Europe, waste-to-energy facilities
have been built as turn-key construction projects and then operated
by local governmental units or by utilities under cost-plus
contracts. OPI emphasizes developing projects which it will build
and then operate for a fixed fee. Some European countries are
seeking to substantially reduce their dependency on landfilling.
(j) Backlog. OPI's backlog as of December 31, 1993 is set
forth under (e) above. As of the same date of the prior year, the
estimated unrecognized construction revenues for projects under
construction was $192,935,000, and the estimated construction
revenues for projects awarded but not yet under construction was
$513,488,000 (includes $99,620,000 expressed in Canadian Dollars).
The changes reflect construction progress on four projects.
Generally, the construction period for a waste-to-energy facility
is approximately 28 to 34 months. The backlog does not reflect the
cancellation of projects owned by OPI or the cancellation of the
Quonset Point and Johnston Rhode Island projects.
OTHER SERVICES
OPI operates transfer stations in connection with its
Montgomery County, Maryland project, and will use a railway system
to transport MSW and ash residue to and from the facility. OPI
leases and operates a landfill located at its Haverhill,
Massachusetts facility, and leases, but does not operate, a
landfill in connection with its Bristol, Connecticut facility.
In 1991, OPI announced that it would discontinue the on-site
remediation business utilizing a mobile technology then conducted
by Ogden Waste Treatment Service, Inc. ("OWTS"). OWTS was formed
by Ogden in 1986 to conduct on-site remediation of hazardous wastes
using a proprietary incineration process. In 1991, OWTS operated
at sites located in Alaska and California. Certain of these
operations continued into 1993; and certain contractual obligations
resulting from the disposal of assets are expected to conclude in
1994.
In 1993, OPI announced that it would discontinue the fixed-
site hazardous waste business it had been conducting through
American Envirotech, Inc. ("AEI"), an indirect subsidiary. AEI
received a permit in 1993 for the construction and operation of a
facility near Houston, Texas (the "RCRA Permit"), which is subject
to a pending appeal in the state of Texas. Substantial and adverse
changes in the market for hazardous waste incineration services
such as those proposed to be provided by AEI, and regulatory
uncertainty stemming from EPA pronouncements apparently
foreshadowing more pervasive regulation, led OPI to conclude that
successful commercial development of the project was unlikely. OPI
has ceased all development activities and in 1994 intends to
dispose of the assets related to this business, primarily a permit
to build and operate a hazardous waste incineration facility.
OPI, through Ogden Power Systems, Inc., a wholly owned
subsidiary, intends to develop, operate and, in some cases, own
power projects which cogenerate electricity and steam or generate
electricity alone for sale to utilities. These power systems may
use, among other fuels, wood, tires, coal, or natural gas as fuel.
OPI does not currently operate any power projects.
OPI, through Ogden Water Systems, Inc., a wholly owned
subsidiary, intends to develop, operate and, in some cases, own
projects that purify water, treat wastewater, and treat and manage
biosolids and compost organic wastes. As with OPI's waste-to-
energy business, water and wastewater projects involve various
contractual arrangements with a variety of private and public
entities including municipalities, lenders, joint venture partners
(which provide financing or technical support), and contractors and
subcontractors which build the facilities.
OPI also intends to develop, operate and, in some cases, own
projects that process recyclable paper products into linerboard for
reuse in the commercial sector. As with OPI's waste-to-energy
business, such projects involve various contractual arrangements
with a variety of private and public entities, including
municipalities, lenders, joint venture partners (which provide
financing or technical support) and contractors and subcontractors
which build the facilities. In addition, such projects require
significant amounts of energy in the form of steam, which may be
provided by present or future waste-to-energy projects operated by
OPI.
REGULATION
(a) Environmental Regulations. OPI's business activities are
pervasively regulated pursuant to Federal, state and local
environmental laws. Federal laws, such as the Clean Air Act and
Clean Water Act, and their state counterparts govern discharges of
pollutants into the air and water. Other Federal, state and local
laws such as the Resource Conservation and Recovery Act ("RCRA")
comprehensively govern the generation, transportation, storage,
treatment and disposal of solid waste, including hazardous waste
(such laws and the regulations thereunder, "Environmental
Regulatory Laws"). The Environmental Regulatory Laws and other
Federal, state and local laws, such as the Comprehensive
Environmental Recovery Response Compensation and Liability Act
("CERCLA"), make OPI potentially liable for any environmental
contamination which may be associated with its activities or
properties (collectively, Environmental Remediation Laws").
Many states have mandated local and regional solid waste
planning, and require that new solid waste facilities may be
constructed only in conformity with such plans. State laws may
authorize the planning agency to require that waste generated
within its jurisdiction be brought to a designated facility which
may help that facility become economically viable but preclude the
development of other facilities in that jurisdiction. Such
ordinances are sometimes referred to as legal flow control. Legal
flow control has been challenged in a number of law suits on the
basis that it is a state regulation of interstate commerce
prohibited by the United States Constitution. The decisions on
these cases have not been consistent. However, several recent
decisions have invalidated ordinances creating legal flow control.
In 1993, the United States Supreme Court granted an appeal from a
decision of a New York State Court upholding a New York
municipality's ordinance requiring that all waste generated within
its jurisdiction be disposed of at a transfer station operating
under contract with the municipality. The case was argued in
December 1993 and a decision is expected during the Court's spring
1994 term.
OPI believes that legal flow control is an important tool used
by municipalities in fulfilling their obligations to provide safe
and environmentally sound waste disposal services to their
constituencies. Although a decision invalidating legal flow
control would reduce the number of options local government would
have in meeting this obligation, OPI does not believe it would
materially impact OPI's existing facilities or its ability to
develop new ones. Most of the contracts pursuant to which OPI
provides disposal services require the Client Community to deliver
stated minimum quantities of waste on a put-or-pay basis. OPI does
not believe these obligations would be negated by an adverse
Supreme Court decision. Furthermore, only a few of the Client
Communities served by OPI rely solely on flow control to provide
waste to OPI's facilities, a factor influenced in part by past
difficulties in enforcing legal flow control ordinances. Although
some municipalities may experience temporary difficulties in
meeting delivery commitments as they address required changes in
their waste disposal plans, such difficulties should not be long-
lived as indicated by the experience of municipalities served by
OPI which determined that it could not enforce its flow control
ordinance and therefore adopted alternative measures. OPI believes
that there are other methods for providing incentives to use
integrated waste systems incorporating waste to energy that do not
entail legal flow control, which incentives should not be affected
by the Court's decision. These include mandating that charges for
utilization of the system be maintained at competitive levels and
that revenue shortfalls be funded from tax revenues or special
assessments on residents. This type of incentive will be utilized
at the facility being constructed, which will be operated by OPI in
Montgomery County Maryland.
Furthermore, in most of the municipalities where OPI provides
services, information available to OPI indicates that the cost to
the Client Community of waste-to-energy is competitive with
alternative disposal facilities, and therefore OPI's facilities
should be able to compete for waste economically. As indicated,
however, certain additional waste disposal services are financed by
the Client Community's increasing the cost for disposal at waste-
to-energy facilities, and these services may have to be paid for by
other mechanisms. A number of bills are presently pending in
Congress to authorize legal flow control. Whether Congress will
enact legislation on this subject is uncertain.
In addition, state laws have been enacted in some
jurisdictions that may also restrict the intrastate and interstate
movement of solid waste. Restrictions on importation of waste from
other states have generally been voided by Federal Courts as
invalid restrictions on interstate commerce. Bills proposed in
past sessions of Congress would authorized such designations and
restrictions. Bills of this nature are expected to be introduced
in the current session of Congress. Similar bills have been
introduced in previous sessions of Congress and it remains
uncertain whether Congress acts to authorize such laws.
The Environmental Regulatory Laws require that many permits be
obtained before the commencement of construction or operation of
any waste-to-energy facility, including: air quality, construction
and operating permits, stormwater discharge permits, solid waste
facility permits in most cases, and, in many cases, wastewater
discharge permits. There can be no assurance that all required
permits will be issued, and the process of obtaining such permits
can often cause lengthy delays, including delays caused by third
party appeals challenging permit issuance.
The Environmental Regulatory Laws and regulations and permits
issued pursuant to them also establish operational standards,
including specific limitations upon emissions of certain air and
water pollutants. Failure to meet these standards subjects an
Operating Subsidiary to regulatory enforcement actions by the
appropriate governmental unit, which could include fines and orders
which could limit or prohibit operations. Certain of the
Environmental Regulatory Laws also authorize suits by private
parties for damages and injunctive relief. Repeated unexcused
failure to comply with environmental standards may also constitute
a default by the Operating Subsidiary under its Service Agreement.
The Environmental Regulatory Laws and governmental policies
governing their enforcement are subject to revision. New
technology may be required or stricter standards may be established
for the control of discharges of air or water pollutants or for
solid waste or ash handling and disposal. Most Federal
Environmental Regularly Laws encourage development of new
technology to achieve increasingly stringent standards; they also
often require use of the best technology available at the time a
permit is issued. The Federal Prevention of Significant
Deterioration of air quality Program requires that new or
substantially modified waste-to-energy facilities of the size
constructed by OPI that are located in areas of the country that
are in compliance with national ambient air quality standards
("NAAQS") employ the Best Available Control Technology ("BACT").
The selection of control technology and the emission limits that
must be achieved are made on a case-by-case basis considering
economic impacts, energy and other environmental impacts and costs,
and may include requirements that certain components of the mixed
waste stream be separated for treatment by means other than
combustion in the Operating Subsidiary's facility. For facilities
developed in areas where NAAQS are not met, Federal law requires
that control technology capable of achieving the Lowest Achievable
Emission Rate ("LAER") must be employed. LAER means the most
stringent emission limit achievable in practice by emission sources
similar to the facility in question, which does not involve any
consideration of the economic impact or cost to achieve such a
limitation. Existing facilities in areas where LAER is now
required for new facilities may be required to retro-fit Reasonably
Available Control Technology ("RACT") established by EPA applicable
to selected pollutants to enhance progress toward these areas
achieving the NAAQS. RACT is that technology which EPA or state
agencies determine to be available, proven, reliable, and
affordable to reduce targeted emissions from specific types of
existing sources of air emissions within geographic areas in which
NAAQS for the target emissions is not being met. Thus, as new
technology is developed and proven, it must be incorporated into
new or modified facilities. This new technology may often be more
expensive than that used previously.
EPA has promulgated regulations establishing New Source
Performance Standards ("NSPS") and Emission Guidelines ("EG")
applicable to new and existing municipal waste combustion units
with a capacity of greater than 250 tons per day, respectively.
The EG and NSPS limit the concentrations of carbon monoxide in
combustion gases and establish limitations upon the flue gas
pollutant concentrations entering the ambient air for particulate
matter (opacity), organics (dioxins and furans), carbon monoxide
and acid gases (sulfur dioxide and hydrogen chloride). The NSPS
also establish emissions limitations for nitrogen oxides. The NSPS
apply to facilities beginning construction after December 20, 1989
and the EG will become effective three years after each individual
state adopts them but no later than five years after promulgation.
Additional air pollution control equipment is likely to be required
at three of OPI's existing waste-to-energy facilities to achieve
the EG limitations.
The Clean Air Act required EPA to re-evaluate the NSPS and EG
for particulate matter (total and fine), opacity (as appropriate),
sulfur dioxide, hydrogen chloride, oxides of nitrogen, carbon
monoxide, dioxins and dibenzofurans and to establish new NSPS and
EG for lead, cadmium, and mercury no later than November 15, 1991
for all waste combustion facilities. Such re-evaluation and
regulations were not completed by that date. These standards must
reflect maximum achievable control technology ("MACT") for both new
and existing waste-to-energy units. MACT means the maximum degree
of reduction in emissions, considering the cost, energy
requirements, and non air quality related health and environmental
impacts. OPI cannot predict what standards will be proposed or
promulgated, although EPA is reviewing data from existing
facilities. The revised standards for new facilities will become
effective six months after the date of promulgation of the revised
standards. Standards for lead, cadmium and mercury are expected
to be proposed in 1994 under a consent order entered in 1993 in
connection with litigation commenced by several parties against the
EPA.
The Clean Air Act also requires each state to implement a
state implementation plan in conformity with Federal law that
outlines how areas are out of compliance with NAAQs will be
returned to compliance. One aspect of the state implementation
plan must be an operating permit program. Most states are now in
the process of developing or augmenting their implementation plans
to meet these requirements. The state implementation plans and the
operating permits issued under them may place new requirements on
waste-to-energy facilities. Under federal law, the new operating
permits may have a term of up to 12 years after issuance or
renewal, subject to review every five years.
Changes in standards can affect the manner in which OPI
operates existing projects and could require significant additional
expenditures to achieve compliance. OPI believes that for a
majority of the facilities operated by its Operating Subsidiaries,
the cost of capital improvements required to meet Clean Air Act
Requirements will not exceed $1 million per facility. Those
improvements are expected to increase the cost of disposal at those
facilities by less than two dollars per ton of MSW processed.
Capital Improvements for four of OPI's earlier Facilities, however,
are expected to cost between $20 million and $44 million. As a
consequence, related cost of disposal increases are expected to
range from six dollars to seventeen dollars per ton of MSW
processed. OPI's estimates are preliminary and depend on whether
Clean Air Act requirements are implemented as currently proposed.
Such expenditures are, in most cases, borne by the Client
Communities. For Facilities owned by OPI equity contributions of
up to 20 percent of the capital costs described herein may be
required. For projects not operated pursuant to a Service
Agreement, such capital costs are the responsibility of OPI. OPI
expects to recover such expenditures through increases in the
tipping fee. In certain cases, there are limitations on the total
amount or type of costs for complying with changes in law that can
be "passed through" to the Client Communities, and if such limits
are exceeded, the Client Community may be able to terminate the
Service Agreement relating to the affected project, in which case
the Client Community would be responsible for retiring or otherwise
providing for the outstanding project debt. OPI does not believe
that any of its Service Agreements will be terminated for this
reason.
The Environmental Remediation Laws, including CERCLA, may
subject OPI, like other entities that manage waste, to joint and
several liability for the costs of remediating contamination at
sites, including landfills, which OPI has owned, operated or
leased, or at which there has been disposal of residue or other
waste handled or processed by OPI. OPI leases and operates a
landfill in Haverhill, Massachusetts and leases a landfill in
Bristol, Connecticut in connection with its projects at those
locations. Some state and local laws also impose liabilities for
injury to persons or property caused by site contamination. Some
Service Agreements provide for indemnification of the Operating
Subsidiaries from some such liabilities.
Environmental Regulatory Laws, such as RCRA and state and
local solid waste laws, impose significantly more stringent
requirements upon disposal of hazardous waste than upon disposal of
MSW and other non-hazardous wastes. These laws prohibit disposal
of hazardous waste, other than in small, household-generated
quantities, at the Company's municipal solid waste facilities and
generally makes disposal of hazardous waste more expensive than
management of non-hazardous waste. The Service Agreements
recognize the potential for improper deliveries of hazardous wastes
and specify procedures for dealing with hazardous waste that is
delivered to a facility. Although certain Service Agreements
require the Operating Subsidiary to be responsible for some costs
related to hazardous waste deliveries, to date, no Operating
Subsidiary has incurred material hazardous waste disposal costs.
No ash residue from a fully operating facility operated by OPI
has been characterized as hazardous under the present or past
prescribed EPA test procedures, and such ash residue is currently
disposed of in permitted landfills as non-hazardous waste. Some
state laws or regulations provide that if prescribed test
procedures demonstrate that ash residue has hazardous
characteristics, it must be treated as hazardous waste. In certain
states, ash residue from certain waste-to-energy facilities of
other vendors or communities has been found to have hazardous
characteristics under these test procedures. There is a conflict
between the two Federal courts which have decided whether municipal
solid waste ash residue having hazardous characteristics is subject
to RCRA'S provisions for management as a hazardous waste. The
Second Circuit Court of Appeals has held that it is not. The
Seventh Circuit Court of Appeals reached the opposite result. In
September 1992, the Administrator of the United States EPA
officially stated that EPA policy was that waste-to-energy ash
residue was exempt from treatment as a hazardous waste as a matter
of law and could be safely disposed of in MSW landfills that met
the EPA's criteria. In reaching its decision, the Seventh Circuit
Court of Appeals refused to give deference to the EPA's policy. An
appeal of this decision was filed in early 1993 in the United
States Supreme Court, and a decision is expected during the Court's
Spring 1994 session. OPI does not expect that a decision that
requires ash residue having hazardous characteristics to be managed
as a hazardous waste would have significant impacts on the OPI's
business. Eight of the Company's facilities are located in states
or dispose of their ash residue in states which require testing to
determine whether such residue must be managed as a hazardous waste
under state law. Furthermore, ash processing technology is
available which could be used to further ensure that ash does not
exhibit characteristics of hazardous waste.
From time to time, state and federal moratoria on waste to
energy have been proposed in legislation, regulation, and by
executive action. Generally, such proposals have not been adopted,
and where they have, as in the State of New Jersey, following the
moratorium, waste to energy has continued to be included in the
options available to local municipalities. In 1992, as previously
reported, the State of Rhode Island eliminated waste to energy from
its unique legislation in which the state's solid waste management
plan was enacted as law. As a consequence of this legislation, OPI
brought an action against the state challenging the validity of the
change in the plan which has been settled by the State's agreement
to pay OPI approximately $5.5 million in 1994, a portion of which
must be shared with Blount, Inc., the former developer of the
Quonset, Rhode Island project.
OWTS' business activities are regulated under Federal, state
and local environmental laws governing air and water emissions and
the generation, transportation, storage, treatment and disposal of
solid wastes, and hazardous and toxic materials. In particular,
RCRA, its implementing regulations and parallel state laws create
a cradle-to-grave system for regulating hazardous waste; and CERCLA
and similar state laws create programs for remediation of
contaminated sites and for the imposition of liability upon those
who owned or operated such sites or who generated or transported
hazardous substances disposed of at such sites. OPI believes that
OWTS's units and projects were operated in compliance in all
material respects with regulatory requirements that apply to its
business.
OPI's waste-to-energy business is subject to the provisions of
the Federal Public Utility Regulatory Policies Act ("PURPA").
Pursuant to PURPA, the Federal Energy Regulatory Commission
("FERC") has promulgated regulations that exempt qualifying
facilities (facilities meeting certain size, fuel and ownership
requirements) from compliance with certain provisions of the
Federal Power Act, the Public Utility Holding Company Act of 1935,
and, except under certain limited circumstances, state laws
regulating the rates charged by electric utilities. PURPA was
promulgated to encourage the development of cogeneration facilities
and small facilities making use of non-fossil fuel power sources,
including waste-to-energy facilities. The exemptions afforded by
PURPA to qualifying facilities from the Federal Power Act and the
Public Utility Holding Company Act of 1935 are of great importance
to the Company and its competitors in the waste-to-energy industry.
State public utility commissions must approve the rates, and
in some instances other contract terms, by which public utilities
purchase electric power from the Company's projects. PURPA
requires that electric utilities purchase electric energy produced
by qualifying facilities at negotiated rates or at a price equal to
the incremental or "avoided" cost that would have been incurred by
the utility if it were to generate power itself or purchase it from
another source. While public utilities are not required by PURPA
to enter into long-term contracts, PURPA creates a regulatory
environment in which such contracts can typically be negotiated.
In October, 1992, Congress enacted, and the President signed
into law, comprehensive energy legislation, several provisions of
which are intended to foster the development of competitive,
efficient bulk power generation markets throughout the country.
Although the impact of the legislation will not be fully known
until any judicial challenges are resolved and Federal and State
regulatory agencies develop policies and promulgate implementing
regulations, OPI believes that, over the long term, the legislation
will create business opportunities both in the waste-to-energy
field as well as in other power generation fields.
OTHER INFORMATION
(a) Raw Materials. The construction of each of OPI's waste-to-
energy facilities is generally carried out by a general contractor
selected by OPI. The general contractor is usually responsible for
the procurement of bulk commodities used in the construction of the
facility, such as steel and concrete. These commodities are
generally readily available from many suppliers. OPI generally
directs the procurement of all major equipment utilized in the
facility, which equipment is also generally readily available from
may suppliers. The stoker grates utilized in facilities
constructed by OPI are required to be obtained from Martin pursuant
to the Cooperation Agreement.
In connection with the currently operating waste-to-energy
facilities, OPI has entered into long-term waste disposal
agreements which obligate the relevant Client Communities (or in
the case of the Haverhill projects, the private haulers) to deliver
specified amounts of waste on an annual basis. OPI believes that
sufficient amounts of waste are being produced in the United States
to support current and future waste-to-energy projects. Other
commodities used in operation of OPI's facilities are readily
available from many suppliers.
Item 2. PROPERTIES
(a) Operating Services
The principal physical properties of Ogden Services are the
fueling installations at various airports in the United States and
Canada and the corporate premises located at Two Pennsylvania
Plaza, New York, New York 10121 under lease, which expires on
April 30, 1998 and which contains an option by Ogden Services to
renew for an additional five years.
Atlantic Design Company's corporate offices are located in
Charlotte, North Carolina. Atlantic Design owns a 51,000 square
foot operating facility on 3.5 acres of land in Vestal, New York.
Atlantic Design also leases operating facilities at various
locations in Florida, New Jersey and New York. The leases range
from a term of one year to as long as ten years.
Ogden Services Corporation, through wholly-owned subsidiaries,
owns and leases buildings in various areas in the United States
which house office, laboratory and warehousing operations. The
leases range from a month-to-month term to as long as five years.
The Ogden Services Corporation in-flight food service
operation facilities, aggregating approximately 600,000 square
feet, are leased, except at Newark, New Jersey; Miami, Florida,;
and Las Vegas, Nevada which are owned.
Ogden Services, through a subsidiary, operates the Fairmount
Park racetrack which conducts thoroughbred and harness racing in
Collinsville, Illinois, eight miles from downtown St. Louis. The
track is on a 150-acre site with a long-term lease expiring in
2017. It also owns a 148-acre site located at East St. Louis,
Illinois.
Ogden Abatement and Decontamination Services owns a 12,000
square-foot warehouse and office facility located in Long Island
City, New York.
Ogden Government Services leases most of its facilities,
consisting almost entirely of office space. This includes an
11-year lease which began in 1986 for its headquarters facility in
Fairfax, Virginia, for approximately 119,000 square feet as well as
office space in other locations throughout the United States under
lease terms of five years or less.
OEES's headquarters is located in Fairfax, Virginia, where
OEES currently occupies approximately 27,000 square feet of space
in the headquarters building of ERC International, Inc. ("ERCI"),
a wholly-owned subsidiary of Ogden. OEES's lease payments include
the cost of certain services and allocations which are shared with
ERCI. OEES has agreed to continue to occupy and sublease from ERCI
not less than 24,000 square feet of space in the building for the
remainder of the lease term expiring in 1997.
OEES leases an aggregate of approximately 347,000 square feet
of office and laboratory space in 40 separate locations in 17
states in the United States. OEES's leases are generally short
term in nature, with terms which range from five to ten years or
less and include (i) the headquarters office described above, (ii)
office and laboratory space in Nashville and Oak Ridge, Tennessee;
San Diego, California; Pensacola, Florida; and Phoenix, Arizona,
and (iii) laboratory office space owned in Fort Collins, Colorado.
In addition to its Fairfax, Virginia headquarters, OEES maintains
regional headquarters in San Diego, California and Nashville,
Tennessee.
Many of the other Ogden Services' facilities operate from
leased premises located principally within the United States.
(b) Waste-to-Energy Operations
OPI's principal executive offices are located in Fairfield,
New Jersey in an office building located on a 5.4-acre site owned
by OPI.
The following table summarizes certain information relating to
the locations of the properties owned or leased by OPI or its
subsidiaries as of January 31, 1994 (1).
Approximate
Location Site Size Site Use Nature of Interest
Fairfield, New Jersey 5.4 Office Space Own
Marion County, Oregon 15.2 Waste-to-Energy Own (2)
facility
Alexandria/Arlington, VA 3.3 Waste-to-Energy Acquiring the
facility Alexandria
Authority's & the
Arlington
Authority's interest
under Site Lease
(expires Oct. 1,
2025) pursuant to
Conditional Sales
Agreement.
Bristol, Connecticut 18.2 Waste-to-Energy Own (2)
facility
Bristol, Connecticut 35.0 Landfill Site Lease
(expires July 1,
2014)
Indianapolis, Indiana 23.5 Waste-to-Energy Site lease (expires
facility Dec., 2008 subject
to four 5-year
renewal option) (2)
Stanislaus County, 16.5 Waste-to-Energy Site Lease (expires
California facility Aug 20, 2021 subject
to 15-year renewal
option) (2)
Babylon, New York 9.5 Waste-to-Energy Site Lease (expires
facility Dec. 19, 2010, with
renewal options)
Haverhill, Massachusetts 12.7 Waste-to-Energy Site Lease (expires
facility March 16, 1997,
subject to sixteen
5-year renewal
options) (2)
Haverhill, Massachusetts 16.8 RDF processing Site Lease (expires
facility March 16, 1997,
subject to sixteen
5-year renewal
options) (2)
Haverhill, Massachusetts 20.2 Landfill Site Lease
(expires March 16,
1997, subject to
sixteen 5-year
renewal options) (2)
Lawrence, Massachusetts 11.8 RDF power plant Own (2)
Lake County, Florida 15.0 Waste-to-Energy Own (2)
facility
Wallingford, Connecticut 10.3 Waste-to-Energy Site Lease (expires
facility Dec. 1, 2026) (2)
Fairfax County, Virginia 22.9 Waste-to-Energy Acquiring Fairfax
facility Authority's interest
under Site Lease
(expires March 10,
2016) pursuant to
Conditional Sales
Agreement
Imperial County, California 83.0 Undeveloped Own
Land
Huntington, New York 13.0 Waste-to-Energy Site Lease (expires
facility Oct. 28, 2012,
subject to
successive renewal
terms through Jan.
28, 2029) (2)
Warren County, New Jersey 19.8 Waste-to-Energy Site Lease (expires
facility Nov. 16, 2005
subject to two
10-year renewal
options) (2)
Hennepin County, Minnesota 14.6 Waste-to-Energy Lease of site and
facility facility (expires
Oct. 1, 2017 subject
to renewals to Dec.
20, 2024) (2) (3)
Stockton, California 4.5 Contaminated Site Lease
soil (expired February 1,
remediation 1994)
facility
(discontinued)
Tulsa, OK 22.0 Waste-to-Energy Lease of site and
facility facility (expires
April 30, 2012
subject to renewal
options to August 2,
2026) (2) (3)
Harris County, TX 14.0 Undeveloped Own
Land
Onondaga, New York Facility Site Site lease expires
contemporaneously
with service
agreement, subject
to renewal options
to May 9, 2020 (2)
NOTES:
(1) Two facilities, located in Detroit, Michigan and Honolulu, Hawaii and
not listed in the table, were initially owned by political subdivisions
and were sold to leveraged lessors. The lessors entered into lease
agreements with the respective Operating Subsidiaries, all of which
lease obligations, including the obligation to pay rent, are passed
through to the Client Communities.
(2) Indicates that the Operating Subsidiary's ownership or leasehold
interest is subject to material liens in connection with the financing
of the related project.
(3) Sublease of site expires contemporaneously with facility lease.
OTHER INFORMATION
COMPETITION AND GENERAL BUSINESS CONDITIONS
Ogden's businesses can be adversely affected by general
economic conditions, war, inflation, adverse competitive
conditions, governmental restriction and controls, natural
disasters, energy shortages, weather, the adverse financial
condition of customers and suppliers, various technological changes
and other factors over which Ogden has no control.
The economic climate can adversely affect several of Ogden's
operations, including reduced requests by communities for waste-to-
energy facilities at Ogden Projects, Inc., fewer airline flights
and flight cancellations in the Ogden Aviation Services group; cost
cutting and budget reductions in the Ogden Government Services and
Ogden Facility Services groups; and, reduced event attendance in
the Ogden Entertainment Services group.
EQUAL EMPLOYMENT OPPORTUNITY
In recent years, governmental agencies (including the Equal
Employment Opportunity Commission) and representatives of minority
groups and women have asserted claims against many companies,
including some Ogden subsidiaries, alleging that certain persons
have been discriminated against in employment, promotions,
training, or other matters. Frequently, private actions are
brought as class actions, thereby increasing the practical
exposure. In some instances, these actions are brought by many
plaintiffs against groups of defendants in the same industry,
thereby increasing the risk that any defendant may incur liability
as a result of activities which are the primary responsibility of
other defendants. Although Ogden and its subsidiaries have
attempted to provide equal opportunity for all of its employees,
the combination of the foregoing factors and others increases the
risk of financial exposure.
EMPLOYEE AND LABOR RELATIONS
As of January 31, 1994, Ogden and its subsidiaries employed
approximately 41,800 people.
Certain employees at Ogden subsidiaries are covered by
collective bargaining agreements with various unions. During 1993,
Ogden subsidiaries successfully renegotiated collective bargaining
agreements in certain of its business sectors with no strike-
related loss of service. Ogden does not anticipate any significant
labor disputes in any of its service areas in 1994.
INTERNATIONAL TERMINAL OPERATING CO. INC.
Since April 1983, Ogden has owned 50% of the outstanding
shares of International Terminal Operating Co. Inc. (ITO), which is
engaged in providing stevedoring and related terminal services for
loading and unloading containerized and breakbulk cargo in the
United States. Because of severely depressed industry conditions,
as well as the possibility of high pension liabilities under
multiemployer plans, it does not appear likely that Ogden will be
able to recover its investment in the foreseeable future. Ogden
previously recorded a $28.5 million loss to fully reserve its
entire investment. Ogden is contingently liable for up to $19.2
million as guarantor under certain of ITO's surety bonds and
letters of credit.
AVONDALE INDUSTRIES, INC.
Pursuant to Ogden's sale of Avondale Industries, Inc.,
(Avondale) in 1985, Ogden continues as guarantor of tax-exempt
Industrial Revenue Bonds (IRBs), amounting to approximately
$36,000,000 on behalf of Avondale. The IRBs are secured by a
letter of credit which expires June 16, 1994 issued for the account
of Ogden. These IRBs are redeemable (unless remarketed) at the
option of the bondholders or Avondale on June 1, 1994, and annually
thereafter through June 1, 2001. The IRBs are subject to a
mandatory call for redemption on June 1, 1994 if the existing
letter of credit is not extended or replaced or the IRBs otherwise
refinanced. If the IRBs are redeemed, Ogden may be required to
purchase Avondale preferred stock. In addition, Ogden may also be
required to purchase Avondale preferred stock in connection with
certain litigation and income tax matters.
Item 3. LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS
(a) Legal Proceedings
Ogden and its subsidiaries are parties to various legal
proceedings involving matters arising in the ordinary course of
business. Ogden does not believe that there are any pending legal
proceedings for damages against Ogden and its subsidiaries, the
outcome of which would have a material adverse effect on Ogden and
its subsidiaries on a consolidated basis.
(b) Environmental Matters
Ogden conducts regular inquiries of its subsidiaries regarding
litigation and environmental violations which include determining
the nature, amount and likelihood of liability for any such claims,
potential claims or threatened litigation.
In the ordinary course of its business, subsidiaries of Ogden
may become involved in Federal, state, and local proceedings
relating to the laws regulating the discharge of materials into the
environment and the protection of the environment. These include
proceedings for the issuance, amendment, or renewal of the licenses
and permits pursuant to which the subsidiary operates. Such
proceedings also include actions brought by individuals or local
governmental authorities seeking to overrule governmental decisions
on matters relating to the subsidiaries' operations in which the
subsidiary may be, but is not necessarily, a party. Most
proceedings brought against an Ogden subsidiary by governmental
authorities under these laws relate to alleged technical violations
of regulations, licenses, or permits pursuant to which the
subsidiary operates. At September 30, 1993, an Ogden subsidiary
was involved in one such proceeding in which the subsidiary
believes sanctions involved may exceed $100,000. Ogden believes
that such proceeding will not have a material adverse effect on
Ogden and its subsidiaries on a consolidated basis.
Ogden's operations are subject to various Federal, state and
local environmental laws and regulations, including the Clean Air
Act, the Clean Water Act, the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA) and Resource Conservation
and Recovery Act (RCRA). Although Ogden's operations are
occasionally subject to proceedings and orders pertaining to
emissions into the environment and other environmental violations,
Ogden believes that it is in substantial compliance with existing
environmental laws and regulations and to the best of its knowledge
neither Ogden nor any of its operations have been named as a
potential responsible party at any site.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of
Ogden during the fourth quarter of 1993.
EXECUTIVE OFFICERS OF OGDEN
Set forth below are the names, ages, position and office, and
year appointed, of all "executive officers" (as defined by Rule 3b-
7 of the Securities Exchange Act of 1934) of Ogden as of March 31,
1994:
CONTINUALLY AN
POSITIONS & AGE AS OF OGDEN OFFICER
NAME OFFICE HELD 3/31/94 SINCE
=================================================================
Ralph E. Ablon Chairman of 77 1962
the Board
R. Richard Ablon President & 44 1987
Chief Executive
Officer
Constantine G.Caras Executive Vice 55 1991
President & Chief
Administrative Officer
Scott G. Mackin President & Chief 37 1992
Operating Officer,
Ogden Projects, Inc.,
an 84.2% - owned sub-
sidiary of Ogden
Philip G. Husby Senior Vice 47 1991
President & Chief
Financial Officer
Lynde H. Coit Senior Vice 39 1991
President & General
Counsel
Robert M. DiGia Vice President, 69 1965
Controller & Chief
Accounting Officer
Nancy R. Christal Vice President- 35 1992
Investor Relations
Kathleen Ritch Vice President &
Secretary 51 1981
There is no family relationship by blood, marriage or adoption
(not more remote than first cousins) between any of the above
individuals and any Ogden director, except that R. Richard Ablon,
an Ogden director and President and Chief Executive Officer, is the
son of Ralph E. Ablon, an Ogden director and Chairman of the Board.
The term of office of all officers shall be until the next
election of directors and until their respective successors are
chosen and qualified.
There are no arrangements or understandings between any of the
above officers and any other person pursuant to which any of the
above was selected as an officer.
Except as set forth below, the foregoing table lists the
principal occupation and employment of the named individual and the
position or similar position that he/she has held since January 1,
1989:
Ralph E. Ablon has been Chairman of the Board of Ogden since
1962 and served as its Chief Executive Officer prior to May
1990.
R. Richard Ablon has been President and Chief Executive
Officer of Ogden since May 1990. From January, 1987 to May
1990, he was President and Chief Operating Officer, Operating
Services, Ogden. Mr. Ablon has served as Chairman of the
Board and Chief Executive Officer of Ogden Projects, Inc., an
84.2% owned subsidiary, since November 1990.
Constantine G. Caras has been Executive Vice President and
Chief Administrative Officer since July 1990. Since September
1986 he has served as Executive Vice President of Ogden
Services Corporation.
Scott G. Mackin was made an Executive Officer of Ogden during
1992. He has been President and Chief Operating Officer of
Ogden Projects, Inc. since January 1991. From November 1990
to January 1991, he was Co-President, Co-Chief Operating
Officer, General Counsel and Secretary of Ogden Projects, Inc.
Between 1987 and 1990 Mr. Mackin served in various executive
capacities of Ogden Projects, Inc.
Philip G. Husby has been Senior Vice President and Chief
Financial Officer of Ogden since January 1, 1991. From April
1987 to December 31, 1990, he served as Senior Vice President
and Chief Administrative Officer of Ogden Financial Services,
Inc., an Ogden subsidiary.
Lynde H. Coit has been a Senior Vice President and General
Counsel of Ogden since January 17, 1991. From April 1989 to
January 1991, he was Senior Vice President and General Counsel
of Ogden Financial Services, Inc., an Ogden subsidiary. From
January 1988 to March 1989, he was a partner of the law firm
of Nixon, Hargrave, Devans & Doyle and prior thereto he was
employed by that firm.
Nancy R. Christal has been Vice President - Investor Relations
of Ogden since February 1992 and served as Ogden's Director,
Investor Relations from January 1991 to February 1992. From
April 1990 to January 1991, she was Director, Investor
Relations at Ogden Projects, Inc. From 1985 to March 1990 she
served first as Manager and then as Assistant Vice President,
Investor Relations at Chemical Bank.
Part II
Item 5. MARKET FOR OGDEN'S COMMON EQUITY & RELATED STOCKHOLDER
MATTERS
Pursuant to General Instruction G (2), the information called
for by this item is hereby incorporated by reference from Page 47
of Ogden's 1993 Annual Report to Shareholders.
As of March 1, 1994, the approximate number of Ogden common
stock Shareholders was 12,700.
Item 6. SELECTED FINANCIAL DATA
Pursuant to General Instruction G (2), the information called
for by this item is hereby incorporated by reference from Page 24
of Ogden's 1993 Annual Report to Shareholders.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Pursuant to General Instruction G (2), the information called
for by this item is hereby incorporated by reference from Pages 22
and 23 of Ogden's 1993 Annual Report to Shareholders.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pursuant to General Instruction G (2), the information called
for by this item is hereby incorporated by reference from Pages 24
through 44 and Page 47 of Ogden's 1993 Annual Report to
Shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF OGDEN
Pursuant to General Instruction G (3), the information
regarding directors called for by this item is hereby incorporated
by reference from Ogden's 1994 Proxy Statement to be filed with the
Securities and Exchange Commission.
Item 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G (3), the information called
for by this item is hereby incorporated by reference from Ogden's
1994 Proxy Statement to be filed with the Securities and Exchange
Commission. The information regarding officers called for by this
item is included at the end of Part I of this document under the
heading "Executive Officers of Ogden."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Pursuant to General Instruction G (3), the information called
for by this item is hereby incorporated by reference from Ogden's
1994 Proxy Statement to be filed with the Securities and Exchange
Commission.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G (3), the information called
for by this item is hereby incorporated by reference from Ogden's
1994 Proxy statement to be filed with the Securities and Exchange
Commission.
Part IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Listed below are the documents filed as a part of this
report:
1). All financial statements contained on pages 25 through
44 and the Independent Auditors' Report on page 45 of
Ogden's 1993 Annual Report to Shareholders are
incorporated herein by reference.
2). Financial statement schedules as follows:
(i) Schedule II - Amounts Receivable from Related
Parties and Underwriters, Promoters and
Employees other than Related Parties for the
years ended December 31, 1993, 1992 and 1991.
(ii) Schedule V - Property, Plant and Equipment for
years ended December 31, 1993, 1992 and 1991.
(iii) Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property, Plant
and Equipment for the years ended December 31,
1993, 1992 and 1991.
(iv) Schedule VIII - Valuation and Qualifying
Accounts for the years ended December 31,
1993, 1992 and 1991.
(v) Schedule IX - Short-Term Borrowings for the
year ended December 31, 1991.
(vi) Schedule X - Supplementary Income Statement
Information for the years ended December 31,
1993, 1992 and 1991.
3). Those exhibits required to be filed by Item 601 of
Regulation S-K:
EXHIBITS
3.0 Articles of Incorporation and By-laws.
3.1 Ogden's Restated Certificate of Incorporation as
amended.*
3.2 Ogden's By-Laws, as amended through March 17, 1994
transmitted herewith as Exhibit 3.2.
4.0 Instruments Defining Rights of Security Holders.
4.1 Fiscal Agency Agreement between Ogden and Bankers
Trust Company, dated as of June 1, 1987, and
Offering Memorandum dated June 12, 1987, relating
to U.S. $85 million Ogden 6% Convertible
Subordinated Debentures, Due 2002.*
4.2 Fiscal Agency Agreement between Ogden and Bankers
Trust Company, dated as of October 15, 1987, and
Offering Memorandum, dated October 15, 1987,
relating to U.S. $75 million Ogden 5-3/4%
Convertible Subordinated Debentures, Due 2002.*
4.3 Indenture dated as of March 1, 1992 from Ogden
Corporation to The Bank of New York, Trustee,
relating to Ogden's $100 million debt offering.*
10.0 Material Contracts
10.1 Agreement and Plan of Merger, dated as of October
31, 1989, among Ogden, ERCI Acquisition Corporation
and ERC International, Inc.*
10.2 Credit Agreement by and among Ogden, The Bank of
New York, as Agent and the signatory bank Lenders
thereto dated as of September 20, 1993.
Transmitted herewith as Exhibit 10.2.
10.3 Stock Purchase Agreement, dated May 31, 1988,
between Ogden and Ogden Projects, Inc.*
10.4 Tax Sharing Agreement, dated January 1, 1989,
between Ogden, Ogden Projects, Inc. and
subsidiaries, Ogden Allied Services, Inc. an
subsidiaries, and Ogden Financial Services, Inc.
and subsidiaries.*
10.5 Stock Purchase Option Agreement, dated June 14,
1989, between Ogden and Ogden Projects, Inc. as
amended on November 16, 1989.*
10.6 Preferred Stock Purchase Agreement, dated July 7,
1989, between Ogden Financial Services, Inc. and
Image Data Corporation.*
10.7 Rights Agreement between Ogden Corporation and
Manufacturers Hanover Trust Company, dated as of
September 20, 1990.*
10.8 Executive Compensation Plans and Arrangements
(a) Ogden Corporation 1986 Stock Option Plan
(Filed as Exhibit (10) (k) to Ogden's Form 10-
K for the fiscal year ended December 31, 1985)
(b) Ogden Corporation 1990 Stock Option Plan
(Filed as Exhibit (10) (j))**
(c) Ogden Services Corporation Executive Pension
Plan (Filed as Exhibit (10) (k))**
(d) Ogden Services Corporation Select Savings Plan
(Filed as Exhibit (10) (L))**
(e) Ogden Services Corporation Select Savings Plan
Trust (Filed as Exhibit (10) (M))**
(f) Ogden Services Corporation Executive Pension
Plan Trust (Filed as Exhibit (10) (N))**
(g) Changes effected to the Ogden Profit Sharing
Plan effective January 1, 1990 (Filed as
Exhibit (10) (O))**
(h) Employment Letter Agreement between Ogden and
an Executive officer dated January 30, 1990
(Filed as Exhibit (10) (p))**
(i) Employment Agreement between Ogden and R.
richard Ablon dated as of May 24, 1990 (Filed
as Exhibit (10) (R))**
(i) Letter Amendment Employment Agreement
between Ogden and R. Richard Ablon dated
as of October 11, 1990 (Filed as Exhibit
(10) (R) (i))**
(j) Employment Agreement between Ogden and C. G.
Caras dated as of July 2, 1990 (Filed as
Exhibit (10) (S))**
(i) Letter Amendment to Employment Agreement
between Ogden Corporation and C.G. Caras,
dated as of October 11, 1990 (Filed as
Exhibit (10) (S) (i).**
(k) Employment Agreement between Ogden and Philip
G. Husby as of July 2, 1990 (Filed as Exhibit
(10) (T))**
(l) Termination Letter Agreement between Maria P.
Monet and Ogden dated as of October 22, 1990
(Filed as Exhibit (10) (V)**
(m) Letter Agreement between Ogden Corporation and
Ogden's Chairman of the Board, dated as of
January 16, 1992 (Filed as Exhibit (10.2) (P)
to Ogden Form 10-K for the fiscal year ended
December 31, 1991)
(n) Employment Agreement between Ogden and Ogden's
Chief Accounting Officer dated as of December
18, 1991 (Filed as Exhibit (10.2) (Q) to Ogden
Form 10-K for fiscal year ended December,
1991)
(o) Employment Agreement between Scott G. Mackin
and Ogden Projects, Inc. dated as of January
1, 1994. Transmitted herewith as Exhibit 10.8
(o).
(p) Ogden Corporation Profit Sharing Plan (Filed
as Exhibit (10.8) (P))***
(i) Ogden Profit Sharing Plan as amended and
restated January 1, 1991 and as in effect
through January 1, 1993. Transmitted
herewith as Exhibit 10.8 (p) (i).
(q) Ogden Corporation Core Executive Benefit
Program (Filed as Exhibit 10.8 (Q))***
(r) Ogden Projects Pension Plan (Filed as Exhibit
10.8 (R))***
(s) Ogden Projects Profit Sharing Plan (Filed as
Exhibit 10.8 (S))***
(t) Ogden Projects Supplemental Pension and Profit
Sharing Plans (Filed as Exhibit 10.8 (T))***
(u) Ogden Projects Employee's Stock Option Plan
(Filed as Exhibit 10.8 (U))***
(v) Ogden Projects Core Executive Benefit Program
(Filed as Exhibit 10.8 (V))***
(w) Form of amendments to the Ogden Projects, Inc.
Pension Plan and Profit Sharing Plans
effective as of January 1, 1994. Transmitted
herewith as Exhibit 10.8 (w).
** Filed as Exhibits with Ogden's Form 10-K for
fiscal year ended December 31, 1990.
*** Filed as Exhibits with Ogden's Form 10-K for
fiscal year ended December 31, 1992.
10.9 Agreement and Plan of Merger among Ogden
Corporation, ERC International, Inc., ERC
Acquisition Corporation and ERC Environmental and
Energy Services Co., Inc., dated as of January 17,
1991.*
10.10 First Amended and Restated Ogden Corporation
Guaranty Agreement made as of January 30, 1992 by
Ogden Corporation for the benefit of Mission
Funding Zeta and Pitney Bowes Credit Corporation.*
10.11 Ogden Corporation Guaranty Agreement as of January
30, 1992 by Ogden Corporation for the benefit of
Allstate Insurance Company and Ogden Martin Systems
of Huntington Resource Recovery Nine Corporation.*
11 Ogden Corporation and Subsidiaries Detail of
Computation of Earnings Applicable to Common Stock
for the years ended December 31, 1993, 1992 and
1991. Transmitted herewith as Exhibit 11.
13 Those portions of the Annual Report to Stockholders
for the year ended December 31, 1993, which are
incorporated herein by reference. Transmitted
herewith as Exhibit 13.
21 Subsidiaries of Ogden. Transmitted herewith as
Exhibit 21.
24 Consent of Deloitte & Touche. Transmitted herewith
as Exhibit 24.
* Incorporated by reference as set forth in the Exhibit Index
of this Annual Report on Form 10-K.
(b) No Reports on Form 8-K were filed by Ogden during
the fourth quarter of 1992.
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
OGDEN CORPORATION
March 17, 1994 By /S/ R. Richard Ablon
R. Richard Ablon
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on March
17, 1994.
SIGNATURE TITLE
/S/ Ralph E. Ablon Chairman of the Board & Director
RALPH E. ABLON
/S/ R. Richard Ablon President & Chief Executive Officer
R. RICHARD ABLON and Director
/S/ Philip G. Husby Senior Vice President and Chief
PHILIP G. HUSBY Financial Officer
/S/ Robert M. DiGia Vice President, Controller and Chief
ROBERT M. DIGIA Accounting Officer
/S/ David M. Abshire Director
DAVID M. ABSHIRE
/S/ Norman G. Einspruch Director
NORMAN G. EINSPRUCH
/S/ Constantine G. Caras Director
CONSTANTINE G. CARAS
/S/ Rita R. Fraad Director
RITA R. FRAAD
/S/ Attallah Kappas Director
ATTALLAH KAPPAS
Director
TERRY ALLEN KRAMER
/S/ Maria P. Monet Director
MARIA P. MONET
Director
JUDITH D. MOYERS
/S/ Homer A. Neal Director
HOMER A. NEAL
/S/ Stanford S. Penner Director
STANFORD S. PENNER
/S/ Frederick Seitz Director
FREDERICK SEITZ
/S/ Robert E. Smith Director
ROBERT E. SMITH
/S/ Abraham Zaleznik Director
ABRAHAM ZALEZNIK
SCHEDULE II
OGDEN CORPORATION AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT END
DEDUCTIONS OF PERIOD
BALANCE AT
BEGINNING AMOUNTS AMOUNTS NOT
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
A. Kanaby (A) $ 14,000 $7,000 $ 7,000
D. Warg (A) 62,000 62,000
L. Coit (B) 290,000 290,000
J. Callahan (C) 612,000 612,000
NOTES:
(A) Relocation loans, non-interest bearing, non-collateralized promissory notes.
(B) Mortgage loan, collateralized promissory note, bearing interest at 8% per
annum.
(C) Mortgate loan, non-interest bearing, collateralized promissory note.
SCHEDULE II
OGDEN CORPORATION AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT END
DEDUCTIONS OF PERIOD
BALANCE AT
BEGINNING AMOUNTS AMOUNTS NOT
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
A. Kanaby (A) $ 19,000 $ 5,000 $ 14,000
D. Warg (A) $103,000 41,000 27,000 $35,000
L. Coit (B) 785,000 290,000 785,000 290,000
J. Callahan (C) 612,000 612,000
NOTES:
(A) Relocation loans, non-interest bearing, non-collateralized promissory notes.
(B) Mortgage loans, collateralized promissory notes, bearing interest at 8% per
annum.
(C) Mortgage loan, non-interest bearing, collateralized promissory note.
SCHEDULE II
OGDEN CORPORATION AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT END
DEDUCTIONS OF PERIOD
BALANCE AT
BEGINNING AMOUNTS AMOUNTS NOT
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
A. Kanaby (A) $162,000 $113,000 $30,000 $ 19,000
L. Coit (B) 785,000 785,000
B. Delle Donne (C) 175,000 175,000
W. Willis (D) $380,000 380,000
NOTES:
(A) Relocation loans, non-interest bearing, non-collateralized promissory notes.
(B) Mortgage loans, collateralized promissory notes, bearing interest at 8% per
annum.
(C) Mortgage loan, collateralized promissory note, bearing interest at 8.5% per
annum.
(D) Promissory note, bearing interest at prime rate.
SCHEDULE V
OGDEN CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT OTHER CHANGES BALANCE AT
BEGINNING ADDITIONS ADD (DEDUCT) END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
Operations other than waste to energy:
Land $ 1,805,000 $ 1,000 $ 1,804,000
Building and improvements 94,321,000 $ 5,523,000 4,818,000 $ (7,000) (B) 95,019,000
Machinery and equipment 249,877,000 28,865,000 19,884,000 3,185,000 (A) 262,050,000
7,000 (B)
Total $ 346,003,000 $34,388,000 $24,703,000 $ 3,185,000 $ 358,873,000
Waste-to-energy operations:
Land $ 5,049,000 $ 5,049,000
Waste-to-energy facilities 1,538,762,000 $ 611,000 1,539,373,000
Building and improvements 39,498,000 4,420,000 $ 4,228,000 (C) 48,146,000
Machinery and equipment 19,228,000 4,066,000 $ 278,000 23,016,000
Landfills 8,306,000 158,000 8,464,000
Construction in progress 24,993,000 73,292,000 (2,496,000) (D) 95,789,000
Total $1,635,836,000 $82,547,000 $ 278,000 $ 1,732,000 $1,719,837,000
Notes:
(A) Entities purchased.
(B) Reclassification to machinery and equipment.
(C) Represents $2,496,000 from the reclassification of construction in progress upon completion and $1,732,000 from the acquisition
of the capital stock of RRS Holdings, Inc.
(D) Reclassification of construction in progress upon completion.
SCHEDULE V
OGDEN CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT OTHER CHANGES BALANCE AT
BEGINNING ADDITIONS ADD (DEDUCT) END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
Operations other than waste to energy:
Land $ 1,873,000 $ 68,000 $ 1,805,000
Building and improvements 82,539,000 $ 8,238,000 2,721,000 $ 6,265,000 (B) 94,321,000
Machinery and equipment 234,917,000 22,527,000 8,237,000 1,727,000 (A) 249,877,000
(1,057,000)(E)
Construction in progress 6,262,000 3,000 (6,265,000)(B)
Total $ 325,591,000 $30,768,000 $11,026,000 $ 670,000 $ 346,003,000
Waste-to-energy operations:
Land $ 5,049,000 $ 5,049,000
Waste-to-energy facilities 1,491,791,000 $ 9,804,000 $ 101,000 $ 37,268,000 (C) 1,538,762,000
Building and improvements 27,075,000 8,556,000 3,867,000 (B) 39,498,000
Machinery and equipment 16,168,000 3,430,000 370,000 19,228,000
Landfills 8,166,000 140,000 8,306,000
Construction in progress 10,054,000 16,441,000 (1,502,000)(D) 24,993,000
Total $ 1,558,303,000 $38,371,000 $ 471,000 $ 39,633,000 $1,635,836,000
Notes:
(A) Entities purchased.
(B) Reclassification of construction in progress upon completion.
(C) Represents $39,633,000 from adjustment to acquired property, plant and equipment to pretax amounts upon adoption of Statement
of Financial Accounting Standards No. 109 and $(2,365,000) from adjustment of accruals.
(D) Represents $(3,867,000) from the reclassification of construction in progress upon completion and $2,365,000 from adjustment of
accruals.
(E) Transferred to other assets.
Prior-year amounts have been reclassified to conform with the 1993 presentation.
SCHEDULE V
OGDEN CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT OTHER CHANGES BALANCE AT
BEGINNING ADDITIONS ADD (DEDUCT) END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
Operations other than waste to energy:
Land $ 2,018,000 $ 145,000 $ 1,873,000
Building and improvements 78,399,000 $ 7,972,000 4,247,000 $ 324,000 (B) 82,539,000
91,000 (A)
Machinery and equipment 220,992,000 22,183,000 15,271,000 7,013,000 (A) 234,917,000
Construction in progress 7,691,000 6,000 1,111,000 (324,000)(B) 6,262,000
Total $ 309,100,000 $30,161,000 $20,774,000 $ 7,104,000 $ 325,591,000
Waste-to-energy operations:
Land $ 5,158,000 $ (109,000)(C) $ 5,049,000
Waste-to-energy facilities 1,042,702,000 $ 659,000 448,430,000 (D) 1,491,791,000
Building and improvements 26,516,000 559,000 27,075,000
Machinery and equipment 12,626,000 3,612,000 $ 70,000 16,168,000
Landfills 8,371,000 107,000 (312,000)(C) 8,166,000
Construction in progress 178,621,000 68,944,000 (237,511,000)(E) 10,054,000
Total $1,273,994,000 $ 73,881,000 $ 70,000 $ 210,498,000 $1,558,303,000
Notes:
(A) Entities purchased.
(B) Reclassification of construction in progress upon completion.
(C) Adjustment of accruals.
(D) Represents $238,723,000 from the reclassification of construction in progress upon completion, $202,974,000 from the
acquisition of the capital stock of Blount Energy Resource Corp., $8,300,000 from contract cost adjustment, and
$(1,567,000) from adjustment of accruals.
(E) Represents $(238,723,000) from the reclassification of construction in progress upon completion and $1,212,000 from adjustment
of accruals.
SCHEDULE VI
OGDEN CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES BALANCE AT
BEGINNING COST AND ADD (DEDUCT) END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS DESCRIBE PERIOD
Operations other than waste to energy:
Building and improvements $ 45,830,000 $ 6,851,000 $ 2,156,000 $ (58,000) (B) $ 50,467,000
Machinery and equipment 166,535,000 25,255,000 16,258,000 2,377,000 (A) 177,967,000
58,000 (B)
Total $212,365,000 $32,106,000 $18,414,000 $2,377,000 $228,434,000
Waste-to-energy operations:
Waste-to-energy facilities $ 98,475,000 $35,134,000 $133,609,000
Building and improvements 2,073,000 384,000 $ 359,000 (C) 2,816,000
Machinery and equipment 11,761,000 2,277,000 $ 264,000 604,000 (C) 14,378,000
Landfills 5,309,000 363,000 5,672,000
Total $117,618,000 $38,158,000 $ 264,000 $ 963,000 $156,475,000
Notes:
(A) Entities purchased.
(B) Reclassification to machinery and equipment.
(C) Amount capitalized.
SCHEDULE VI
OGDEN CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES BALANCE AT
BEGINNING COST AND ADD (DEDUCT) END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS DESCRIBE PERIOD
Operations other than waste to energy:
Building and improvements $ 41,001,000 $ 6,086,000 $1,257,000 $ 45,830,000
Machinery and equipment 150,692,000 23,143,000 7,163,000 $ 450,000 (A) 166,535,000
(587,000)(D)
Total $191,693,000 $29,229,000 $8,420,000 $(137,000) $212,365,000
Waste-to-energy operations:
Waste-to-energy facilities $ 62,352,000 $34,551,000 $ 10,000 $1,582,000 (B) $ 98,475,000
Building and improvements 1,647,000 68,000 358,000 (C) 2,073,000
Machinery and equipment 9,357,000 2,094,000 322,000 632,000 (C) 11,761,000
Landfills 5,277,000 32,000 5,309,000
Total $ 78,633,000 $36,745,000 $ 332,000 $2,572,000 $117,618,000
Notes:
(A) Entities purchased.
(B) Adjustment to acquired property, plant and equipment to pretax amounts upon adoption of Statement of Financial Standards
No. 109.
(C) Amounts capitalized.
(D) Transferred to other assets.
SCHEDULE VI
OGDEN CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES BALANCE AT
BEGINNING COST AND ADD (DEDUCT) END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS DESCRIBE PERIOD
s>
Operations other than waste to energy:
Building and improvements $ 37,425,000 $ 5,707,000 $ 2,131,000 $ 41,001,000
Machinery and equipment 139,072,000 22,137,000 12,336,000 $1,819,000 (A) 150,692,000
Total $176,497,000 $27,844,000 $14,467,000 $1,819,000 $191,693,000
Waste-to-energy operations:
Waste-to-energy facilities $ 35,441,000 $26,911,000 $62,352,000
Building and improvements 1,243,000 46,000 $ 358,000 (B) 1,647,000
Machinery and equipment 6,425,000 1,656,000 $ 58,000 1,334,000 (B) 9,357,000
Landfills 5,138,000 609,000 (470,000)(C) 5,277,000
Total $ 48,247,000 $29,222,000 $ 58,000 $1,222,000 $78,633,000
Notes:
(A) Entities purchased.
(B) Amount capitalized.
(C) Adjustment of accruals.
SCHEDULE VIII
OGDEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
Allowances deducted in the balance sheet
from the assets to which they apply:
Operations other than waste to energy:
Doubtful receivables - current $14,954,000 $7,502,000 $ 119,000 (C) $ 4,326,000 (B) $18,226,000
71,000 (D) 94,000 (F)
Waste-to-energy operations:
Doubtful receivables 4,776,000 180,000 4,073,000 (E) 1,708,000 (B) 7,321,000
Deferred charges on projects 750,000 750,000
TOTAL $20,480,000 $7,682,000 $4,263,000 $ 6,128,000 $26,297,000
Allowances not deducted:
Operations other than waste to energy:
Provision for consolidation of facilities $ 6,040,000 $ 1,320,000 (A) $ 4,720,000
Sundry 285,000 158,000 (A) 127,000
Waste-to-energy operations:
Estimated cost of disposal of discontinued
operations 7,620,000 $1,706,000 $4,061,000 (G) 12,379,000 (H) 1,008,000
Other 1,350,000 1,350,000
TOTAL $13,945,000 $3,056,000 $4,061,000 $13,857,000 $ 7,205,000
Notes:
(A) Payments charged to allowances.
(B) Write-offs of receivables considered uncollectible.
(C) Transfer from other accounts.
(D) Recoveries of amounts previously written off.
(E) Reserve for contract billing adjustments.
(F) Transfer to other accounts.
(G) Net proceeds from on-site remediation utilizing mobile technology $3,853,000 and reclassification of liabilities pertaining to
fixed-site hazardous waste business $208,000.
(H) Gain from on-site remediation business utilizing mobile technology.
SCHEDULE VIII
OGDEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
Allowances deducted in the balance
sheet from the assets to which they
apply:
Operations other than waste to energy:
Doubtful receivables - current $14,967,000 $3,014,000 $1,841,000 (C) $ 4,886,000 (B) $14,954,000
18,000 (D)
Waste-to-energy operations:
Doubtful receivables 531,000 265,000 4,121,000 (E) 141,000 (B) 4,776,000
Deferred charges on projects 6,500,000 5,750,000 (F) 750,000
TOTAL $21,998,000 $3,279,000 $5,980,000 $10,777,000 $20,480,000
Allowances not deducted:
Operations other than waste to energy:
Provision for consolidation of facilities $ 7,360,000 $ 1,320,000 (A) $ 6,040,000
Sundry 1,225,000 940,000 (A) 285,000
Waste-to-energy operations:
Estimated cost of disposal of discontinued
operations 7,090,000 $ 530,000 (G) 7,620,000
TOTAL $15,675,000 $ 530,000 $ 2,260,000 $13,945,000
Notes:
(A) Payments charged to allowances.
(B) Write-offs of receivables considered uncollectible.
(C) Transfer from other accounts.
(D) Recoveries of amounts previously written off.
(E) Reserve for contract billing adjustments.
(F) Write-offs of unsuccessful development efforts.
(G) Net proceeds from discontinued operations.
SCHEDULE VIII
OGDEN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
Allowances deducted in the balance
sheet from the assets to which they
apply:
Operations other than waste to energy:
Doubtful receivables - current $13,462,000 $ 7,642,000 $1,000,000 (D) $7,281,000 (B) $14,967,000
144,000 (E)
Waste-to-energy operations:
Doubtful receivables 163,000 406,000 38,000 (B) 531,000
Deferred charges on projects 6,500,000 6,500,000
TOTAL $13,625,000 $14,548,000 $1,144,000 $7,319,000 $21,998,000
Allowances not deducted:
Operations other than waste to energy:
Provision for consolidation of facilities $ 8,680,000 $1,320,000 (A) $ 7,360,000
Sundry 1,393,000 38,000 (A) 1,225,000
130,000 (C)
Waste-to-energy operations:
Estimated cost of disposal of discontinued
operations $ 7,090,000 7,090,000
TOTAL $10,073,000 $ 7,090,000 $1,488,000 $15,675,000
Notes:
(A) Payments charged to allowances.
(B) Write-offs of receivables considered uncollectible.
(C) Transfer to other accounts.
(D) Transfer from other accounts.
(E) Recoveries of amounts previously written off.
SCHEDULE IX
OGDEN CORPORATION AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE YEAR ENDED DECEMBER 31, 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST
SHORT-TERM END OF INTEREST DURING DURING RATE DURING
BORROWINGS PERIOD RATE PERIOD(A) PERIOD (B) PERIOD (C)
Borrowings
from banks $9,675,000 $6,166,000 8.05
Notes:
(A) The maximum amount outstanding during the year represents the maximum
amount at any month end.
(B) The average amount outstanding is equal to average monthly outstanding
balances.
(C) The weighted average interest rate is the actual interest on short-term
debt divided by the average short-term debt outstanding.
SCHEDULE X
OGDEN CORPORATIONS AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
COLUMN A-ITEM COLUMN B
CHARGED TO COSTS AND EXPENSES
1993 1992 1991
Maintenance and repairs:
Operations other than waste to energy $17,802,000 $17,514,000 $17,512,000
Waste-to-energy operations 55,161,000 40,873,000 36,019,000
Total $72,963,000 $58,387,000 $53,531,000
INDEPENDENT AUDITOR'S REPORT
Ogden Corporation:
We have audited the consolidated financial statements of Ogden Corporation
and subsidiaries as of December 31, 1993 and 1992 and for each of the three
years in the period ended December 31, 1993, and have issued our report
thereon dated February 2, 1994, which report includes an explanatory
paragraph relating to the adoption of Statements of Financial Accounting
Standards No. 106 and No. 109; such consolidated financial statements and
report are included in your 1993 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedules of Ogden Corporation and subsidiaries, listed
in Item 14. These consolidated financial statement schedules are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/Deloitte & Touche
February 2, 1994