FORM 10-Q/A
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-3122
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Ogden Corporation
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(Exact name of registrant as specified in its charter)
Delaware 13-5549268
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(State or other jurisdiction of I.R.S. Employer Identification
incorporation or organization) Number)
Two Pennsylvania Plaza, New York, New York 10121
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(Address or principal executive office) (Zip Code)
(212)-868-6100
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(Registrant's telephone number including
area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)
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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the issuer's classes of common
stock, as of June 30, 1995; 48,860,434 shares of Common Stock, $.50 par value
per share.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE><CAPTION>
FOR THE SIX MONTHS FOR THE THREE MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
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(In Thousands of Dollars, Except per Share Data)
<S> <C> <C> <C> <C>
Service revenues $ 762,455 $ 679,159 $386,147 $349,556
Net sales 238,951 215,701 135,724 116,921
Construction revenues 41,355 112,177 17,376 61,241
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Total revenues 1,042,761 1,007,037 539,247 527,718
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Operating costs and expenses 623,362 528,801 319,884 269,390
Costs of goods sold 216,853 188,846 123,867 103,301
Construction costs 31,251 103,776 11,957 57,359
Selling, administrative and
general expenses 70,616 66,019 34,136 34,967
Debt service charges 55,531 50,236 29,383 25,033
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Total costs and expenses 997,613 937,678 519,227 490,050
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Consolidated operating income 45,148 69,359 20,020 37,668
Interest income 7,342 4,791 3,431 2,410
Interest expense (14,544) (10,834) (7,493) (5,933)
Other income (deductions)-net 116 (153) 488 (9)
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Income before income taxes
and minority interests 38,062 63,163 16,446 34,136
Less: income taxes 16,747 25,897 7,236 13,996
minority interests (1,259) 4,298 (1,072) 2,500
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Income before cumulative effect
of change in accounting principle 22,574 32,968 10,282 17,640
Cumulative effect of change in
accounting principle (net of
income taxes of $1,100) (1,520)
-------- --------- -------- -------
Net income $ 22,574 $ 31,448 $ 10,282 $17,640
======== ========= ======== =======
EARNINGS (LOSS) PER COMMON SHARE:
Income before cumulative effect
of change in accounting principle $ .46 $ .75 $ .21 $ .40
Cumulative effect of change in
accounting principle (.03)
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Total $ .46 $ .72 $ .21 $ .40
======== ========= ======== =======
EARNINGS (LOSS) PER COMMON
SHARE-ASSUMING FULL DILUTION:
Income before cumulative effect
of change in accounting principle $ .46 $ .74 $ .21 $ .40
Cumulative effect of change in
accounting principle (.03)
-------- -------- -------- -------
Total $ .46 $ .71 $ .21 $ .40
======== ======== ======== =======
</TABLE>
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<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1995 1994
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(In Thousands of Dollars)
ASSETS
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Current Assets:
Cash and cash equivalents $ 110,913 $ 117,359
Marketable securities available for sale 17,224 86,676
Restricted funds held in trust 107,808 104,700
Receivables (less allowances: 1995,
$43,132 and 1994, $32,783) 555,448 572,039
Deferred income taxes 26,603 26,451
Other 95,692 88,672
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Total current assets 913,688 995,897
Property, plant and equipment-net 1,889,273 1,884,774
Restricted funds held in trust 213,680 203,244
Unbilled service and other receivables 180,551 171,441
Unamortized contract acquisition costs 149,272 133,172
Goodwill and other intangible assets 112,364 100,416
Other assets 152,650 155,942
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Total assets $ 3,611,478 $ 3,644,886
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Current portion of long-term debt $ 4,369 $ 3,483
Current portion of project debt 50,917 45,279
Dividends payable 15,267 13,637
Accounts payable 95,167 93,362
Federal income taxes payable 10,141
Accrued expenses 328,863 346,997
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Total current liabilities 494,583 512,899
Long-term debt 320,816 304,393
Project debt 1,568,869 1,593,988
Deferred income taxes 280,590 281,065
Other liabilities 196,705 196,305
Minority interest 10,374 10,768
Convertible subordinated debentures 148,650 148,650
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Total liabilities 3,020,587 3,048,068
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SHAREHOLDERS' EQUITY 590,891 596,818
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,611,478 $ 3,644,886
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<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
1995 1994
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(In Thousands of Dollars)
Serial Cumulative Convertible Preferred
Stock, par value $1.00 per share;
authorized, 4,000,000 shares:
shares outstanding: 51,000 in 1995,
54,000 in 1994 $ 51 $ 54
Common Stock, par value $.50 per share;
authorized, 80,000,000 shares:
shares outstanding: 48,860,000 in
1995, 48,777,000 in 1994 24,430 24,388
Capital Surplus 195,653 194,496
Earned Surplus 373,841 381,864
Cumulative Translation Adjustment-Net (1,264) (1,399)
Pension Liability Adjustment (441) (441)
Net Unrealized Loss on Securities Available
For Sale (1,379) (2,144)
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TOTAL SHAREHOLDERS' EQUITY $ 590,891 $ 596,818
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<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30
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1995 1994
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(In Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations $ 88,830 $ 103,960
Management of Operating Assets and Liabilities:
Decrease (Increase) in Assets:
Receivables 10,033 (21,842)
Other assets (33,817) (29,035)
Increase (Decrease) in Liabilities:
Accounts payable (11,302) (3,606)
Accrued expenses (12,036) 6,927
Other liabilities (30,031) 30,749
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Net cash provided by operating
activities 11,677 87,153
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CASH FLOWS FROM INVESTING ACTIVITIES:
Entities purchased, net of cash acquired (16,934) (4,768)
Proceeds from sale of marketable securities
available for sale 87,964 21,211
Purchase of marketable securities available
for sale (19,107) (31,161)
Proceeds from sale of business 12,516
Proceeds from sale of property, plant and equipment 1,537 957
Investments in waste-to-energy facilities (19,139) (45,963)
Other capital expenditures (29,337) (20,970)
Decrease (increase) in non-current receivables 324 (9,780)
Other 163
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Net cash provided by (used in) investing
activities 5,308 (77,795)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Other new debt 15,431 1,875
Decrease in funds held in trust 1,809 30,383
Payment of debt (14,321) (9,589)
Dividends paid (28,967) (27,293)
Other 2,617 35
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Net cash used by financing activities (23,431) (4,589)
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (6,446) 4,769
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 117,359 109,097
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 110,913 $ 113,866
========= =========
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<PAGE>
ITEM 1 - BASIS OF PRESENTATION:
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles. However, in the
opinion of Management, all adjustments consisting of normal recurring
accruals necessary for a fair presentation of the operating results have been
included in the statements.
The accompanying financial statements have been reclassified as to certain
amounts to conform with the 1995 presentation.
OTHER CHARGES
Consolidated operating income includes a charge of $17.1 million at a unit of
Ogden's Technology Services group, Ogden Communications, Inc. ("OCI"),
reflecting the write-off of all related accounts receivables ($10.3 million)
and related costs recorded in connection with a telecommunications project at
OCI. In addition, Ogden became aware that OCI had entered into an agreement
for the sale of inventory that would result in a loss of $3.9 million;
accordingly, the $17.1 million charge included a loss on the disposal of
inventory ($3.9 million). The charge also included costs related to the
curtailment of operations of OCI ($2.9 million), principally lease costs,
leasehold improvements, legal fees, and other costs related to discontinuing
all of OCI's business. Changes in representations made by management of this
unit to Ogden management regarding the collectibility of receivables and
disposition of inventory led to a review of the activities of this unit in
June 1995. As a result of this review, Ogden concluded that contracts and
other documentation did not provide a basis for recovering any of the
accounts receivable related to a telecommunications project and that the sale
of inventory would not recover its full carrying value. These amounts were
charged to sales allowances ($10.3 million) and operating costs ($6.8
million).
Transactions related to OCI which were recorded in 1994 and the first quarter
of 1995 and which were ultimately not realized are not material.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
Operations:
Revenues for the first six months of 1995 were $35,700,000 higher than the
comparable period of 1994 primarily due to increased revenues of $47,600,000
in Aviation Services, reflecting the acquisition in 1995 of four airline
catering kitchens in the Canary and Baleric Islands, an air range and pilot
training systems company, and an airline cargo operation in the U.K. in late
1994, as well as the start up of ground service operations in Brazil;
$21,000,000 in Technology Services primarily due to increased customer
activity and new contracts in the Atlantic
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<PAGE>
Design group; $16,500,000 in Independent Power Services reflecting the
acquisition of Second Imperial Geothermal Company (SIGC), a geothermal power
plant, in the fourth quarter of 1994; $13,500,000 in Waste-to-Energy
Services chiefly associated with the commencement of full commercial
operations of the Union County facility which was in start-up operations
during the first quarter of 1994, revenues generated at the Lee County and
Onondaga facilities, which commenced commercial operations in December 1994
and March 1995, respectively; and $5,600,000 in Facility Management Services
reflecting new accounts and increased customer activity. These increases
were partially offset by a decrease of $70,800,000 in construction revenues
due primarily to completion of the Union County and Lee County facilities in
May and December 1994, respectively, and from reduced construction activity
at the Montgomery County facility as that project nears completion.
Consolidated operating income for the first six months of 1995 was
$24,200,000 lower than the comparable period of 1994 primarily due to a
charge of $17,100,000 taken by a unit of Technology Services, Ogden
Communications, Inc. ("OCI"). This charge includes the write-off of
receivables and related costs recorded in connection with a project for the
assembly and installation of telecommunications equipment, as well as a
reduction in the carrying value of other inventory acquired by this unit.
Changes in representations made by management of this unit to Ogden
management regarding the collectibility of receivables and disposition of
inventory led to a review of the activities of the unit in June 1995.
Following this review, Ogden management concluded that contracts and other
documentation did not provide a basis for recovering the full value of
amounts related to the telecommunications project and that the full value of
the other inventory acquired by this unit would not be realized. Activities
of this unit have been curtailed and operating and financial management have
been relieved of their duties. Additionally, Entertainment Services income
was $4,600,000 lower chiefly associated with lower income from the Ottawa
Palladium, the late start of the hockey and baseball spring training seasons,
and lower attendance at sporting events; Environmental Services income was
$2,000,000 lower chiefly associated with reduced activity in the laboratory
analysis group; and Waste-to-Energy Services income (service revenues less
operating costs and debt service charges) was $3,800,000 lower primarily due
to planned turbine outages at the Detroit and Haverhill facilities, and lower
margins at the Union County facility which was in a start-up phase in 1994
which produced higher margins, which were partially offset by the full
commercial operation of the Lee County and Onondaga facilities. These
decreases were partially offset by increased construction income of
$1,700,000 on the Montgomery County and the Detroit facilities; and
$1,100,000 in the Independent Power group primarily due to the acquisition of
SIGC in December 1994. Selling, administrative and general expenses for the
six months ended June 30, 1995 were $4,600,000 higher than the comparable
period of 1994 chiefly associated with expenses of companies acquired in
transactions accounted for as purchases during the period July 1, 1994
through June 30, 1995 and increased overhead costs and marketing efforts
related to international markets for
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<PAGE>
both the Projects and Services segments. Debt service charges for the six
months ended June 30, 1995 increased $5,300,000 over the comparable period of
1994 reflecting primarily an increase of $3,000,000 due to the Onondaga
facility being in full commercial operation during 1995 and $2,300,000
reflecting the project debt assumed as part of the SIGC acquisition. Two
interest rate swap agreements entered into as hedges against interest rate
exposure on two series of adjustable rate project debt resulted in lower debt
service charges of $165,000 in the first six months of 1995 and additional
debt service charges of $1,000,000 in the comparable period of 1994.
Interest income for the first six months of 1995 was $2,600,000 higher than
the comparable period of 1994 primarily reflecting interest earned on loans
made in the second half of 1994. Interest expense for the first six months
of 1995 was $3,700,000 higher than the comparable period of 1994, chiefly
associated with higher interest rates on variable rate debt, higher
borrowings, and a net reduction of $1,400,000 in income received on two
interest rate swap agreements covering notional amounts of $100,000,000 each.
One swap agreement expired in March 1994. The other swap agreement expires
on December 16, 1998. These swap agreements were entered into in order to
convert Ogden's fixed rate $100,000,000 9.25% debentures into variable rate
debt. During the first six months of 1995, Ogden paid $400,000 on the
remaining swap while in the first six months of 1994 Ogden received
$1,000,000 on the two swaps.
The effective income tax rate for the six months ended June 30, 1995 was 44%
compared to a 41% rate for the comparable period of 1994. This increase of
3% in the tax rate is due primarily to reduced investment tax credits, higher
foreign tax rates and certain non-deductible foreign losses.
Net cash flow provided by operating activities for the first six months of
1995 was $75,500,000 lower than the comparable period of 1994 primarily due
to a net reduction in liabilities of $37,000,000 in connection with decreased
Waste-to-Energy construction activities; $18,000,000 for payments of Federal
alternative minimum taxes; $9,600,000 for the after tax charge in connection
with OCI, discussed above, and $12,000,000 in deferred costs relating to
overseas projects being developed.
Revenues for the three months ended June 30, 1995 were $11,500,000 higher
than the comparable period of 1994, primarily reflecting increased revenues
of $26,100,000 in Aviation Services chiefly associated with the operations of
companies acquired in late 1994 and the early part of 1995 as well as the
start-up of operations in Brazil and increased activity in European
operations; $5,900,000 in Technology Services primarily associated with
increased activity in the Atlantic Design and Systems Engineering groups;
$8,400,000 in Independent Power Services primarily due to the acquisition of
SIGC in the fourth quarter of 1994; $6,200,000 in Waste-to-Energy Services
primarily reflecting revenues generated at the Lee County and Onondaga
facilities, which commenced commercial operations in December 1994 and March
1995, respectively; $5,100,000 in Entertainment Services primarily
reflecting new contracts at Wrigley
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<PAGE>
Field and the Target Center partially offset by reduced customer activity at
other sports venues; $4,300,000 in Facility Management Services primarily
due to new contracts and increased customer activity. These increases were
partially offset by a decrease of $43,900,000 in construction revenues due
primarily to the Lee County facility being completed in December 1994 and
from reduced activity at the Montgomery County facility as that project nears
completion.
Consolidated operating income for three months ended June 30, 1995 was
$17,600,000 lower than the comparable period of 1994 primarily due to a
charge of $17,100,000 taken by OCI, discussed above; $2,900,000 in Waste-to-
Energy Services income (service revenues less operating costs and debt
service charges) primarily due to lower margins at the Union County facility
which was in a start-up phase in 1994 producing higher margins, and reduced
margins at the Hartford facility reflecting contract renegotiations; and
$1,900,000 in Entertainment Services due primarily to lower income at the
Ottawa Palladium, and lower attendance at sporting events. These decreases
were partially offset by increased construction income of $1,500,000 on the
Montgomery County and the Detroit facilities; $1,500,000 in Aviation
Services income primarily due to increased ground services activity in both
the United States and Europe, and $1,100,000 in Technology Services income
chiefly associated with increased activity at Atlantic Design and the Systems
Engineering group. Debt service charges increased $3,200,000 in the second
quarter of 1995 as compared to the same period in 1994 reflecting an increase
of $2,100,000 due primarily to the Onondaga facility being in full commercial
operations during 1995 and $1,100,000 reflecting the project debt assumed as
part of the SIGC acquisition. Two interest rate swap agreements entered into
as hedges against interest rate exposure on two series of adjustable rate
project debt resulted in lower debt service charges of $150,000 in the second
quarter of 1995 and additional debt service charges of $400,000 in the second
quarter of 1994.
Interest income for the three months ended June 30, 1995 was $1,000,000
higher than the comparable period of 1994 primarily reflecting interest
earned on loans made in the second half of 1994. Interest expense for the
three months ended June 30, 1995 was $1,600,000 higher than the comparable
period of 1994, chiefly associated with higher interest rates on variable
rate debt, higher borrowings, and a net reduction of $270,000 in income
received on an interest rate swap agreement covering a notional amount of
$100,000,000 expiring December 16, 1998. This swap agreement was entered
into in order to convert Ogden's fixed rate $100,000,000 9.25% debentures to
variable rate debt. During the three months ended June 30, 1995 Ogden paid
$170,000 on this swap while in 1994 Ogden received $100,000 of income on the
swap.
The effective income tax rate for the three months ended June 30, 1995 was
44% compared to a 41% rate for the comparable period of 1994. This increase
of 3% in the tax rate is due primarily to reduced investment tax credits,
higher foreign tax rates and certain non-deductible foreign losses.
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<PAGE>
Capital Investments, Commitments and Liquidity:
During the first six months of 1995, capital investments amounted to
$48,400,000 of which $19,100,000, inclusive of restricted funds transferred
from funds held in trust, was for waste-to-energy facilities and $29,300,000
was for normal replacement and growth in Services and Projects operations.
At June 30, 1995, capital commitments amounted to $53,900,000, which includes
commitments for equity investments (over and above restricted funds provided
by revenue bonds issued by municipalities) of $100,000 for waste-to-energy
facilities and $53,800,000 for normal replacement, modernization, and growth
in Services' and Projects' operations.
Ogden and certain of its subsidiaries have issued or are party to performance
bonds and guarantees and related contractual obligations undertaken mainly
pursuant to agreements to construct and operate certain waste-to-energy,
entertainment, and other facilities. In the normal course of business, they
are involved in legal proceedings in which damages and other remedies are
sought. Management doe not expect that these contractual obligations, legal
proceedings, or any other contingent obligations incurred in the normal
course of business will have a material adverse effect on Ogden's
Consolidated Financial Statements.
During 1994, a subsidiary of the Corporation entered into a 30-year facility
management contract pursuant to which it has agreed to advance funds to a
customer, if necessary and only upon satis-
factory completion of construction of the facility, to assist refinancing
senior secured debt incurred in connection with construction of the facility,
completion of construction is scheduled for the first quarter of 1996, and
such refinancing requirements are not expected to exceed $75,000,000 at
maturity of the senior secured debt, which is expected to be on or about
March 1, 2001. Ogden continues as guarantor of surety bonds and letters of
credit totaling approximately $19,200,000 on behalf of International Terminal
Operating Co. Inc. and guaranteed borrowings of certain customers amounting
to approximately $22,200,000. Management does not expect that these
arrangements will have a material adverse effect on Ogden's Consolidated
Financial Statements.
Projects' waste-to-energy facilities are financed to a large degree by
revenue bonds issued by the municipalities for facility construction. Other
capital commitments and payments, if any, required by guarantees, are
expected to be satisfied from cash flow from operations; available funds,
including short-term invest- ments; and the Corporation's unused credit
facilities to the extent needed. At June 30, 1995, the Corporation had
$128,000,000 in cash, cash equivalents, and marketable securities and unused
revolving credit lines of $159,000,000.
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<PAGE>
Six Months Three Months
Information Concerning Ended June 30, Ended June 30,
Business Segments 1995 1994 1995 1994
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(In Thousands of Dollars)
Revenues:
Services:
Aviation Services $ 236,406 $ 188,780 $123,580 $ 97,456
Entertainment Services 122,187 120,670 71,071 65,972
Environmental Services 70,215 66,827 36,718 35,919
Technology Services 113,671 92,712 54,609 48,670
Facility Management Services 180,888 175,246 91,531 87,185
Other Services 2,817 6,284 841 2,821
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Total Services 726,184 650,519 378,350 338,023
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Projects:
Waste-To-Energy Services 242,384 228,853 125,952 119,794
Independent Power 32,029 15,488 17,103 8,660
Water and Wastewater 809 466
Construction Activities 41,355 112,177 17,376 61,241
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Total Projects 316,577 356,518 160,897 189,695
---------- ---------- -------- --------
Total Revenues $1,042,761 $1,007,037 $539,247 $527,718
========== ========== ======== ========
Income From Operations:
Services $ 9,465 $ 30,281 $ (2,081)$ 14,466
Projects 41,710 44,023 25,521 25,640
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Total Income from Operations 51,175 74,304 23,440 40,106
Corporate unallocated expenses-net (5,911) (5,098) (2,932) (2,447)
Corporate interest-Net (7,202) (6,043) (4,062) (3,523)
----------- --------- -------- --------
Income Before Income Taxes and
Minority Interests $ 38,062 $ 63,163 $ 16,446 $ 34,136
========== ========== ======== ========
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<PAGE>
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
OGDEN CORPORATION
(Registrant)
Date: April 9, 1996 By:/S/Philip G. Husby
-------------------------
Philip G. Husby
Senior Vice President and
Chief Financial Officer
Date: April 9, 1996 By:/S/Robert M. DiGia
--------------------------
Robert M. DiGia
Vice President,
Controller and Chief
Accounting Officer
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