-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VA7g6pvxN53jwK/oV12bEwjpgmu9U3i5VpleRTRx6AK0i9UkpwyAx/ewMkjWXKPD fOg2Baby8CQ7skA5bFR/+w== 0000903423-03-001093.txt : 20031223 0000903423-03-001093.hdr.sgml : 20031223 20031223172544 ACCESSION NUMBER: 0000903423-03-001093 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031218 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COVANTA ENERGY CORP CENTRAL INDEX KEY: 0000073902 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 135549268 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03122 FILM NUMBER: 031071965 BUSINESS ADDRESS: STREET 1: 40 LANE ROAD CITY: FAIRFIELD STATE: NJ ZIP: 07004 BUSINESS PHONE: 2128686100 MAIL ADDRESS: STREET 1: 40 LANE ROAD CITY: FAIRFIELD STATE: NJ ZIP: 07004 FORMER COMPANY: FORMER CONFORMED NAME: OGDEN CORP DATE OF NAME CHANGE: 19920703 8-K 1 cov-8k_1223.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 8-K ----------------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): December 18, 2003 Covanta Energy Corporation - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-3122 13-5549268 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File (IRS Employer of Incorporation) Number) Identification No.) 40 Lane Road, Fairfield, New Jersey 07004 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (973) 882-9000 Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. As previously reported, on September 5, 2003, Covanta Energy Corporation, a Delaware corporation ("Covanta" or the "Company") and certain of its subsidiaries (collectively, the "Sellers") executed an ownership interest purchase agreement (as amended, the "Original Agreement") with certain affiliates of ArcLight Energy Partners Fund I, L.P. and Caithness Energy, L.L.C (collectively, the "Stalking Horse Buyers") providing, among other things, for the sale of the Sellers' interests in Heber Geothermal Company, Heber Field Company, Second Imperial Geothermal Company, and Mammoth-Pacific L.P (a non-debtor affiliate of Covanta) (the "Geothermal Business") for a purchase price of $170,000,000, subject to higher or better offers. The Original Agreement entitled the Stalking Horse Buyers to a break-up fee of $5,375,000 (the "Break-Up Fee") in the event that a higher or better offer was chosen in the auction. On September 29, 2003, the United States Bankruptcy Court for the Southern District of New York (the "Court") entered an order approving the competitive bidding and auction procedures, including the Break-Up Fee, for the purpose of obtaining the highest or best offer for the Geothermal Business (the "Bidding Procedures Order"). On November 19, 2003, the Court held an auction to consider bids for the Geothermal Business pursuant to the Court-approved bidding procedures. During the auction, Covanta and its creditor representatives considered various bids for the Geothermal Business. Following the auction, Covanta, with the consent of its creditor representatives, determined that the bid submitted by certain affiliates of Ormat Nevada, Inc. ("Ormat"), which offered a purchase price of $214,000,000, subject to a working capital adjustment, represented the highest or best offer for the Geothermal Business. On November 21, 2003, the Court entered an order approving the sale of the Geothermal Business to Ormat pursuant to a purchase agreement that was executed on November 21, 2003 (the "Purchase Agreement"). Because Ormat's bid was determined to be the highest or best offer for the Geothermal Business, as required by the Original Agreement and the Bidding Procedures Order, Covanta will pay the Stalking Horse Buyers the Break-Up Fee. On December 18, 2003 Covanta sold the Geothermal Business to Ormat pursuant to the Purchase Agreement for cash consideration of $214,000,000, subject to a working capital adjustment. Ormat is a power technology firm in the area of distributed generation using locally available energy sources, including geothermal energy. The Geothermal Business consists of assets and liabilities related to the generation and sale of electrical output and the production and sale of geothermal fluid, including related equity interests and partnership interests and certain contracts and leases. Specific assets included in the sale a 100% ownership in the Heber Geothermal power plant, having a nameplate capacity of 52 MW and located near Heber in Imperial County, Southern California, 100% ownership in the lessee position of the SIGC geothermal power plant having a nameplate capacity of 48 MW, adjacent to the Heber Geothermal plant, and 50% ownership interest in the 40 MW Mammoth Geothermal power plant, located near the city of Mammoth, Mono County, California. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of business acquired: Not applicable. (b) Pro forma financial information: Pro forma financial information for the Registrant, including the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002, the Unaudited Pro Forma Statement of Operations for the nine months ended September 30, 2003 and the Unaudited Pro Forma Balance Sheet as of September 30, 2003 and the Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements, are filed herewith. (c) Exhibits: Not applicable. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The pro forma financial information represents, in the opinion of management, all adjustments necessary to present the Company's pro forma results of operations and financial position in accordance with Article 11 of Regulation S-X and is based upon available information and certain assumptions considered reasonable under the circumstances. The pro forma statements of operations also exclude any gains on the sale of the Geothermal Business (as defined above), and any other non-recurring charges or credits attributable to the transaction. The unaudited pro forma condensed consolidated financial statements present financial information for Covanta giving effect to the sale of the Geothermal Business, which was effective as of December 18, 2003. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2003 is presented as if the transaction occurred on that date. The historical amounts were derived from unaudited financial statements included in Covanta's quarterly report on Form 10-Q for the period ended September 30, 2003. The unaudited pro forma consolidated statement of operations for the year ended December 31, 2002 is presented as if the transaction had occurred on December 31, 2001. The historical amounts were derived from audited financial statements included in Covanta's annual report on Form 10-K for the year ended December 31, 2002. The pro forma financial statements should be read in conjunction with the Company's unaudited consolidated financial statements and notes thereto included in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2003 and audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, filed on November 14, 2003 and March 31, 2003, respectively. The pro forma information may not necessarily be indicative of what the Company's financial position or results of operations would have been had the transaction been in effect as of and for the periods presented, nor is such information necessarily indicative of the Company's results of operations or financial position for any future period or date. COVANTA ENERGY CORPORATION (DEBTOR IN POSSESSION) AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 Business To Be Pro Forma As Reported Disposed Adjustment Pro Forma ----------- -------- ---------- --------- (In Thousands of Dollars, Except Per Share Amounts) Service revenues $390,270 $ 153 $ - $390,117 Electricity and steam sales 277,669 54,233 223,436 Construction revenues 11,194 - 11,194 Other revenues-net 8 - 8 -------- -------- -------- Total revenues 679,141 54,386 624,755 -------- -------- -------- Plant operating expenses 411,336 10,722 400,614 Construction costs 15,412 - 15,412 Depreciation and amortization 62,794 6,862 55,932 Debt service charges-net 59,933 961 58,972 Other operating costs and expenses 4,685 - 4,685 Net gain on sale of businesses (1,136) - (1,136) Selling, administrative and general expenses 27,815 7,919 19,896 Other (income) expense-net 13,801 - 13,801 -------- -------- -------- Total costs and expenses 594,640 26,464 568,176 -------- -------- -------- Equity in income from unconsolidated investments 17,921 2,026 15,895 -------- -------- -------- Operating income (loss) 102,422 29,948 72,474 Interest expense (net of interest income of $3,074, and excluding post-petition contractual interest of $728) (30,686) (483) (30,203) Reorganization items (60,726) (3,300) (57,426) -------- -------- -------- Income (loss) from continuing operations before income taxes, minority interests, discontinued operations and the cumulative effect of change in accounting principle 11,010 26,165 (15,155) Income tax (expense) benefit (4,124) - (10,728) (1) 6,604 Minority interests (6,648) - - (6,648) -------- -------- --------- -------- Income (loss) from continuing operations before discontinued operations and change in accounting principle $ 238 $ 26,165 $ (10,728) $ (15,199) ======== ======== ========== ========== Basic income (loss) per share: Income (loss) from continuing operations $ - $ 0.53 $ 0.22 $ (0.31) ======== ======== ========== ========== Diluted income (loss) per share: Income (loss) from continuing operations $ - $ 0.53 $ 0.22 $ (0.31) ======== ======== ========== ==========
COVANTA ENERGY CORPORATION (DEBTOR IN POSSESSION) AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEAR ENDED DECEMBER 31, 2002 Business To Be Pro Forma As Reported Disposed Adjustment Pro Forma ----------- -------- ---------- --------- (In Thousands of Dollars, Except Per Share Amounts) Service revenues $ 514,450 $ 235 $ - $ 514,215 Electricity and steam sales 363,290 65,229 298,061 Construction revenues 42,277 - 42,277 Other revenues-net 263 - 263 ---------- --------- ---------- Total revenues 920,280 65,464 854,816 ---------- --------- ---------- Plant operating expenses 539,409 8,033 531,376 Construction costs 42,699 - 42,699 Depreciation and amortization 89,363 9,088 80,275 Debt service charges-net 88,293 1,928 86,365 Other operating costs and expenses 23,352 - 23,352 Net loss on sale of businesses 1,943 - 1,943 Selling, administrative and general expenses 55,003 9,406 45,597 Project development expenses 3,844 - 3,844 Other (income) expense-net 15,908 (24) 15,932 Write-down of assets held for use 101,211 - 101,211 Obligations related to assets held for sale 46,000 - 46,000 ---------- --------- ---------- Total costs and expenses 1,007,025 28,431 978,594 ---------- --------- ---------- Equity in income from unconsolidated investments 25,076 2,321 22,755 ---------- --------- ---------- Operating income (loss) (61,669) 39,354 (101,023) Interest expense (net of interest income of $3,074 and excluding post-petition contractual interest of $728) (46,754) (1,859) (44,895) Reorganization items (49,106) - (49,106) ---------- --------- ---------- Income (loss) from continuing operations before income taxes, minority interests, discontinued operations and the cumulative effect of change in accounting principle (157,529) 37,495 (195,024) Income tax (expense) benefit 13,446 - (15,082) (1) 28,528 Minority interests (9,104) - - (9,104) ---------- --------- ---------- ---------- Loss from continuing operations before discontinued operations and change in accounting principle $(153,187) $ 37,495 $ (15,082) $(175,600) ---------- --------- ---------- ---------- Basic Income (loss) per share: Income (loss) from continuing operations $ (3.08) $ 0.75 $ 0.30 $ (3.53) ========== ========= ========== ========== Diluted Income (loss) per share: Income (loss) from continuing operations $ (3.08) $ 0.75 $ 0.30 $ (3.53) ========== ========= ========== ==========
COVANTA ENERGY CORPORATION (DEBTOR IN POSSESSION) AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2003 Remove Net Pro forma As Reported Assets Sold Adjustments Pro forma ----------- ----------- ----------- --------- (In Thousands of Dollars, Except Share and Per Share Amounts) Assets Current Assets: Cash and cash equivalents $ 138,414 $ (92) $ 199,902 (2) $ 338,408 Restricted funds held in trust 142,681 2,340 - 140,341 Receivables (less allowances: 2003, $23,230) 254,245 13,304 - 240,941 Deferred income taxes 11,200 15 - 11,185 Prepaid expenses and other current assets (less allowance 2003, $3,000) 75,843 121 - 75,722 ---------- --------- ---------- ---------- Total current assets 622,383 15,688 199,902 806,597 Property, plant and equipment-net 1,538,002 71,561 1,466,441 Restricted funds held in trust 152,028 3,003 149,025 Unbilled service and other receivables (less allowances of $2,957 in 2003) 134,441 - - 134,441 Unamortized contract acquisition costs-net 56,390 - - 56,390 Other intangible assets-net 7,213 - - 7,213 Investments in and advance to investees and joint ventures 173,659 41,169 - 132,490 Other assets 56,237 245 - 55,992 ---------- --------- ---------- ---------- Total Assets $2,740,353 $ 131,666 $ 199,902 $2,808,589 ========== ========= ========== ========== Liabilities and Shareholders' Deficit Liabilities: Current Liabilities: Current portion of long-term debt $ 14,788 $ 6,388 $ - $ 8,400 Current portion of project debt 108,695 6,211 - 102,484 Accounts payable 28,424 693 - 27,731 Accrued expenses 232,867 9,515 2,469 (3) 225,821 Deferred income 38,388 - - 38,388 ---------- --------- ---------- ---------- Total current liabilities 423,162 22,807 2,469 402,824 Long-term debt 24,105 - - 24,105 Project debt 1,020,666 15,528 - 1,005,138 Deferred income taxes 243,303 - - 243,303 Deferred income 143,176 - - 143,176 Other liabilities 89,746 2,452 - 87,294 Liabilities subject to compromise 932,746 - - 932,746 Minority interests 40,905 - - 40,905 ---------- --------- ---------- ---------- Total Liabilities 2,917,809 40,787 2,469 2,879,491 ---------- --------- ---------- ---------- Shareholders' Deficit: Serial cumulative convertible preferred stock, par value $1.00 per share, authorized, 4,000,000 shares; shares outstanding: 33,049 in 2003 net of treasury shares of 29,820 in 2003 33 - - 33 Common stock, par value $.50 per share; authorized, 80,000,000 shares; outstanding: 49,824,251 in 2003, net of treasury shares of 4,125,350 in 2003 24,912 - - 24,912 Capital surplus 188,156 - - 188,156 Notes receivable from key employees for common (870) - - (870) stock issuance Unearned restricted stock compensation (14) - - (14) Deficit (392,473) 90,879 197,433 (285,919) Accumulated other comprehensive income 2,800 - - 2,800 ---------- --------- ---------- ---------- Total Shareholders' Deficit (177,456) 90,879 197,433 (70,902) ---------- --------- ---------- ---------- Total Liabilities and Shareholders' Deficit $ 2,740,353 $ 131,666 $ 199,902 $2,808,589 =========== ========= ========== ==========
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION Basis of Presentation The above unaudited pro forma consolidated financial statements present financial information for Covanta giving effect to the sale of the Geothermal Business, which was effective as of December 18, 2003. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2003 is presented as if the transaction occurred on that date. The historical amounts were derived from unaudited financial statement included in Covanta's quarterly report on Form 10-Q for the period ended September 30, 2003. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2002 are presented as if the transaction had occurred on December 31, 2001 and exclude the anticipated gain to be realized. The historical amounts were derived from audited financial statements included in Covanta's annual report on Form 10-K for the year ended December 31, 2002. Unaudited Pro Forma Financial Information (1) Pro forma adjustment for income taxes reflecting the Company's reduction of income tax expense for income generated by the Geothermal Business sold. (2) Reflects the sale on December 18, 2003 of the net assets of Geothermal Business for gross proceeds of $215.2 million less settlement of obligations of approximately $9.9 million and related transaction costs, estimated to be $5.4 million. (3) Reflects the assumption of $2.5 million in state income taxes by Covanta. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. Date: December 23, 2003 COVANTA ENERGY CORPORATION By: /s/ Jeffrey R. Horowitz ------------------------------ Name: Jeffrey R. Horowitz Title: Senior Vice President, General Counsel and Secretary -----END PRIVACY-ENHANCED MESSAGE-----