OGDEN Logo
CONTACT: Eric Berman
Adam Weiner
David Lilly
Kekst and Company
212-521-4800
or:
Raymond Dombrowski
Ogden Corporation
212-868-6000
FOR IMMEDIATE RELEASE
OGDEN CORPORATION REPORTS RESULTS FOR THIRD QUARTER 2000
-- Recurring Base EBIT from Continuing Energy Operations Is $30.7 Million,
Compared to $26.9 Million in 1999 Third Quarter, a 14% Increase --
-- Year-to-Date Recurring Base Energy EBIT Up 27% Over Comparable 1999
Period, To $74.7 Million from $58.8 Million Last Year --
-- Third Quarter Net Loss of $34.4 Million Reflects Discontinued Operations --
NEW YORK, November 14, 2000 - Ogden Corporation (NYSE: OG) today reported
results for the third quarter ended September 30, 2000. Recurring base earnings
before interest and taxes (EBIT) from the Company's continuing Energy operations
were $30.7 million for the quarter, compared to $26.9 million for the comparable
period of 1999. On a consolidated basis, which includes discontinued operations,
the Company reported a net loss of $34.4 million, or a loss of $0.70 per diluted
share, for the quarter.
The third quarter net loss is principally attributable to two items: a $25.3
million currency translation adjustment associated with discontinued operations,
which does not affect the Company's cash position or its anticipated proceeds
from the disposition of its non-core assets; and $27.5 million in write-offs
attributable to a revision in the Company's estimate of realizable proceeds from
the sale of discontinued operations, along with certain contractual commitments
associated with such dispositions.
"Overall, we continue to post strong results in our core Energy operations
during this period of restructuring," said Scott G. Mackin, President and Chief
Executive Officer of Ogden Corporation. "The losses we reported relate purely to
operations we are disposing of as we transform ourselves from a conglomerate
into a pure play energy company. Energy recurring base EBIT is up 27% over the
comparable nine-month period last year, and we expect that we will meet or
modestly exceed our projection of $95 million of recurring base EBIT for the
year. We believe our Energy results demonstrate the validity of our underlying
business premise, which is that this restructuring will result in a company with
excellent growth prospects, generating superior results for shareholders."
Third Quarter Results for Energy
For the three months ended September 30, 2000, Ogden reported EBIT from its
Energy business of $24.9 million on revenues of $233.9 million, compared to EBIT
for last year's comparable period of $20.6 million on revenues of $236.0
million. The third quarter 2000 EBIT results included $5.5 million in losses at
its OEES subsidiary and $0.3 million in additional depreciation in connection
with shortened estimated useful lives of certain air pollution control equipment
resulting from the Clean Air Act Amendments. As previously announced, the
Company is currently winding down OEES' construction operations and has signed a
definitive agreement for the sale of its consulting operations to AMEC. Results
for the Company's Energy operations for the comparable period in 1999 included a
gain of $0.8 million from the sale of the Company's interest in an independent
power production (IPP) joint venture, $2.8 million in losses at OEES, and
charges of $4.3 million primarily related to additional depreciation in
connection with shortened estimated useful lives of certain air pollution
control equipment resulting from the Clean Air Act Amendments.
Adjusting for these items, the recurring base Energy EBIT for the three months
ended September 30, 2000 was $30.7 million, compared to $26.9 million for the
comparable period of 1999, a 14% increase. Recurrent EBIT for Energy, or EBIT
without regard to one-time items, grew significantly as a result of strong
performance and enhanced pricing at numerous IPP and waste-to-energy (WTE)
plants, both in terms of energy pricing and waste disposal pricing where the
company has merchant capacity, plus the full operation of new IPP facilities
during the quarter.
Revenues from continuing Energy operations for the third quarter of 2000 reflect
a decrease of $2.1 million over the comparable period of 1999. The Energy
segment experienced an increase in service revenues of $13.5 million due to
increased production, higher energy rates, and annual escalation adjustments
experienced at several IPP and WTE facilities, an increase of $2.8 million
associated with plants in The Philippines and Thailand that commenced operations
during 1999, and an increase of $1.8 million in the environmental consulting
business. These increases were offset by reduced construction revenues from WTE,
Water and Wastewater and OEES of $19.4 million and a gain in 1999 of $0.8
million from the sale of the Company's interest in an IPP joint venture.
Discussion of Third Quarter Results
In the third quarter, as noted above, the Company recorded special charges of
$25.3 million related to a non-cash currency translation adjustment, and $27.5
million associated with asset values of discontinued operations.
The currency translation adjustment relates to certain foreign assets and
liabilities denominated in foreign currency that the Company marks to market on
its balance sheet each quarter. Because these items have, over time, been
recorded in "Accumulated Other Comprehensive Income" on the Company's balance
sheet, there is no adverse impact on the balance sheet when this item is
recognized in the income statement. This adjustment relates solely to
discontinued operations.
In addition to the above, in the third quarter, the Company recorded a special
charge of $5.2 million related to fees for the previously announced extension of
the Company's bank credit facilities and a non-cash charge of $2.2 million
related to the accelerated depreciation of the New York Corporate MIS System,
which will not be needed on an ongoing basis.
Year-to-Date Results for Energy
For the nine months ended September 30, 2000 Ogden reported EBIT from its Energy
business of $71.7 million, on revenues of $706.3 million, compared to EBIT for
the comparable period in the prior year of $72.1 million on revenues of $685.4
million. The 2000 EBIT results included: 1) $15.2 million in losses at its OEES
subsidiary; 2) $2.3 million in additional depreciation in connection with
shortened estimated useful lives of certain air pollution control equipment
resulting from the Clean Air Act Amendments; and 3) $14.5 million in
nonrecurring income primarily associated with the receipt of insurance proceeds
related to a WTE facility in the first half of 2000. Results for the Company's
Energy operations for the comparable period in 1999 included: 1) a receipt of
$9.3 million for the termination and restructuring of a service agreement at a
WTE facility; 2) a $9.0 million favorable adjustment associated with the
resolution of matters related to an IPP facility; 3) $8.0 million in losses at
OEES; 4) a gain of $5.7 million from the sale of the Company's interest in an
IPP joint venture; 5) a charge of $4.3 million mainly associated with additional
depreciation in connection with shortened estimated useful lives of certain air
pollution control equipment as noted above; and 6) $1.6 million in nonrecurring
income associated with the settlement of a domestic IPP contract.
Adjusting for these items, the recurring base Energy EBIT for the nine months
ended September 30, 2000, was $74.7 million, compared to $58.8 million for the
comparable period of 1999.
Revenues from continuing Energy operations for the first nine months of 2000
reflect an increase of $20.9 million over the comparable period of 1999. The
increase in Energy segment revenues includes: 1) $23.8 million in increased
revenues associated with plants in The Philippines and Thailand that commenced
operations for Ogden during 1999; 2) $7.3 million due to the June 1999
acquisition of an additional 50% interest in a domestic power plant; 3) an
increase of $25.5 million due to increased production, higher energy rates and
annual escalation adjustments at several IPP and WTE facilities; 4) an increase
of $3.3 million at the environmental consulting business; and 5) an increase of
$12.2 million due to insurance proceeds related to a WTE facility. These
increases were offset in part by reduced construction revenues from WTE, Water
and Wastewater and OEES of $45.5 million, and a gain of $5.7 million in 1999
from the sale of the IPP joint venture mentioned above.
Non-Core Asset Sales
"Consistent with our strategy of becoming a pure-play energy company, we have
made substantial progress in the disposition of our non-core assets this
quarter. We have announced agreements to sell our aviation fixed base operations
(FBO) business and our OEES consulting unit, and we expect to close the sale of
our aviation ground services business to John Menzies plc by the end of this
month," said Mr. Mackin. "After we close the Ground Services, FBO and OEES
transactions, and with the disposition of the majority of our Entertainment
businesses and certain other sales behind us, we will have generated
approximately $475 million in cash and eliminated more than $120 million in debt
obligations through our divestiture program. When the Ground Services and FBO
transactions close, we will have approximately $80 million of remaining assets
in discontinued operations, and we are actively engaged in the process of
selling our remaining non-core assets. The closing of some of these sales will
carry over into next year and the sales process for certain assets, like
Datacom, will not commence until the first quarter of 2001."
Outlook
Mr. Mackin continued, "We are very far advanced in the adoption of a term sheet
that extends all of our existing bank facilities through May 31, 2002. We are in
the process of documenting that transaction, and we expect to complete the
documentation in December. We believe this facility will provide the stability
necessary to complete the non-core asset sale program in an effective manner,
allow us to focus on maximizing the results of our existing Energy assets and
further allow for prudent, targeted development, contingent on the Company's
continued success in the non-core asset sales process."
"Overall, we are pleased with how our core Energy business is performing. As we
have said, our goal, over the long run, is to achieve a 20% to 30% growth rate
in EPS, which is in line with our IPP peers. Until the asset sales process and
our transformation to a pure-play energy company is completed, we are targeting
a growth rate in recurring base Energy EBIT of 10%. For the full year 2001, we
expect recurring base Energy EBIT of approximately $105 million. Our growth is
premised upon intrinsic growth in our portfolio, having our Quezon project on
line for a full year versus a partial year in 2000, and certain smaller plants
under construction in Asia and Europe coming on line. We also have new project
prospects and, blending in considerable third party equity at the IPP project
level, we intend to take to financial closing certain projects next year that
will provide additional growth. We remain very confident that our strategy of
transforming Ogden into a focused energy company is the right strategy, and one
that is working."
* * *
Ogden Energy Group, a division of Ogden Corporation, is a global developer/owner
and operator of independent power projects and provides related infrastructure
services. On September 17, 1999, Ogden announced its intent to sell its
Entertainment and Aviation businesses to focus exclusively on its role as a
leading energy company. Ogden Water Systems, a wholly owned unit of Ogden Energy
Group, offers communities single-source design/build/operate services for water
and wastewater treatment infrastructure. Additional information about Ogden can
be obtained via the Internet at www.ogdencorp.com, or through the Company's
automated information system at (888) 643-3612.
Any statements in this communication, which may be considered to be "forward
looking statements", as that term is defined in the Private Securities
Litigation Reform Act of 1995, are subject to certain risk and uncertainties.
The factors that could cause actual results to differ materially from those
suggested by any such statements include, but are not limited to, those
discussed or identified from time to time in the Company's public filings with
the Securities and Exchange Commission and more generally, general economic
conditions, including changes in interest rates and the performance of the
financial markets; changes in domestic and foreign laws, regulations, and taxes;
changes in competition and pricing.
In accordance with the requirements of the Securities and Exchange Commission's
Regulation FD, guidance as to anticipated financial results and other material
information regarding the Company will be provided in the form of public press
releases, publicly available filings with the SEC or publicly accessible
conference calls with members of the Company's management. These press releases,
filings and conference calls will be archived on the Company's website and the
SEC filings will be available through the SEC's website. The Company will enter
a "quiet period" on the fifteenth day before the end of each fiscal quarter,
which will extend through the date of the next quarterly release of financial
results, during which the Company would not expect to comment about future
events or anticipated financial results.
-- Tables Follow --
<PAGE>
OGDEN CORPORATION
EARNINGS
(000's Omitted)
<TABLE>
Nine Months ended September 30,
--------------------------------
2000 1999
-------------- --------------
ENERGY SEGMENT:
REVENUE
<S> <C> <C>
Energy Operations $ 613,990 $ 574,310
OEES 92,280 111,097
-------------- --------------
TOTAL ENERGY REVENUE 706,270 685,407
-------------- --------------
DIRECT COSTS
Energy Operations 501,021 465,447
OEES 99,490 107,115
-------------- --------------
TOTAL ENERGY DIRECT COSTS 600,511 572,562
-------------- --------------
GROSS MARGIN
Energy Operations 112,969 108,863
OEES (7,210) 3,982
-------------- --------------
TOTAL ENERGY GROSS MARGIN 105,759 112,845
% of Revenue 14.97% 16.46%
S.G.& A.
Energy Operations 38,823 35,009
OEES 7,940 11,975
-------------- --------------
TOTAL ENERGY S.G.& A. 46,763 46,984
-------------- --------------
ENERGY OPERATING INCOME 58,996 65,861
% of Revenue 8.35% 9.61%
ENERGY EQUITY INCOME 15,814 9,372
Minority interests (3,149) (3,178)
-------------- --------------
ENERGY EBIT 71,661 72,055
OTHER SEGMENT:
Revenue 36,651 57,110
Operating income (loss) (15,654) (2,140)
Unallocated corporate overhead (44,808) (7,871)
Interest-Net (26,089) (21,806)
-------------- --------------
Pre-tax income (loss) (14,890) 40,238
Income taxes 3,003 (11,558)
-------------- --------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (11,887) 28,680
-------------- --------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (128,871) (883)
Cumulative effect of change in accounting principle - (3,820)
-------------- --------------
COMPANY NET INCOME (LOSS) $ (140,758) $ 3,977
============== ==============
EPS-Continuing operations
Basic $ (0.24) $ 0.59
Fully Diluted $ (0.24) $ 0.58
EPS-Discontinued operations
Basic $ (2.60) $ (0.02)
Fully Diluted $ (2.60) $ (0.02)
EPS-Cumulative effect of change in accounting principle
Basic $ (0.08)
Fully Diluted $ (0.08)
</TABLE>
