-----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, FbF+2TL2yc0vrsiqP4Lgeh5skyv3Xr7bn2DBEhyI+jTHnG4nB3t00jxAtX7X1Kut SeKmFjRtzpDEwthrQPM0Gw== /in/edgar/work/20000821/0000912057-00-038498/0000912057-00-038498.txt : 20000922 0000912057-00-038498.hdr.sgml : 20000922 ACCESSION NUMBER: 0000912057-00-038498 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGDEN CORP CENTRAL INDEX KEY: 0000073902 STANDARD INDUSTRIAL CLASSIFICATION: [4581 ] IRS NUMBER: 135549268 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03122 FILM NUMBER: 706624 BUSINESS ADDRESS: STREET 1: TWO PENNSYLVANIA PLZ - 25TH FLR CITY: NEW YORK STATE: NY ZIP: 10121 BUSINESS PHONE: 2128686100 MAIL ADDRESS: STREET 1: TWO PENNSYLVANIA PLZ - 25TH FLR CITY: NEW YORK STATE: NY ZIP: 10121 10-Q 1 a10-q.txt FORM 10-Q FORM 10-Q --------- SECURITIES AND EXCHANGE COMMISSION ---------------------------------- WASHINGTON, D.C. 20549 ---------------------- (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, 2000 - -------------------------------------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 incorporation or organization) Number) TWO PENNSYLVANIA PLAZA, NEW YORK, NEW YORK 10121 ------------------------------------------------- (Address or principal executive office) (Zip Code) (212)-868-6100 ------------------------------------------------- (Registrant's telephone number including area code) NOT APPLICABLE ------------------------------------------------- (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 ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each of the issuer's classes of common stock, as of June 30, 2000; 49,621,946 shares of Common Stock, $.50 par value per share. OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS FOR THE THREE MONTHS ENDED ENDED JUNE 30, JUNE 30, 2000 1999 2000 1999 --------- --------- -------- --------- (In Thousands of Dollars, Except per Share Data) Service revenues $ 435,498 $ 387,622 $ 231,333 $ 204,794 Net sales 19,950 26,538 10,321 13,507 Construction revenues 41,727 67,870 18,881 33,769 Net (loss) gain on disposition of businesses (634) 4,864 --------- --------- --------- --------- Total revenues 496,541 486,894 260,535 252,070 --------- --------- --------- --------- Operating costs and expenses 323,190 266,425 165,668 130,866 Costs of goods sold 18,123 29,139 7,895 15,833 Construction costs 44,269 65,209 22,911 32,934 Selling, administrative and general expenses 49,428 43,062 28,091 23,757 Debt service charges 46,373 46,699 22,879 23,936 --------- --------- --------- --------- Total costs and expenses 481,383 450,534 247,444 227,326 --------- --------- --------- --------- Consolidated operating income 15,158 36,360 13,091 24,744 Equity in net income of investees and joint ventures 7,457 5,944 4,447 2,474 Interest income 2,676 2,797 1,703 702 Interest expense (20,892) (16,373) (11,434) (8,405) Other income (deductions)-net (17,404) 5,174 (17,359) 5,108 --------- --------- --------- --------- Income (loss) from continuing operations before income taxes, minority interests, and the cumulative effect of change in accounting principle (13,005) 33,902 (9,552) 24,623 Income taxes 581 (11,033) (22) (8,029) Minority interests (2,164) (2,542) (840) (326) --------- --------- --------- --------- Income (loss) from continuing operations (14,588) 20,327 (10,414) 16,268 --------- --------- --------- --------- Discontinued operations: Income (loss) from operations of discontinued Aviation and Entertainment segments (net of income taxes YTD, 2000, ($11,544); 1999,$12,425; QTR, 2000, ($ 3,867); 1999,$ 7,783) (26,662) 15,186 (1,352) 8,724 Loss on disposal of Aviation and Entertainment segments, including provision of $8,500 for operating losses through disposition, (less applicable income taxes of ($1,210)) (65,137) (65,137) --------- --------- --------- --------- Income (loss) from discontinued operations (91,799) 15,186 (66,489) 8,724 --------- --------- --------- --------- Cumulative effect of change in accounting principle (net of income taxes of $1,313) (3,820) --------- --------- --------- --------- Net Income (Loss) (106,387) 31,693 (76,903) 24,992 --------- --------- --------- --------- Other Comprehensive Income, Net of Tax: Foreign currency translation adjustments (7,700) (7,357) (2,826) (1,152) Unrealized holding losses arising during period (17) (549) (429) --------- --------- --------- --------- Other comprehensive income (7,717) (7,906) (2,826) (1,581) --------- --------- --------- --------- Comprehensive income (loss) $(114,104) $ 23,787 $ (79,729) $ 23,411 ========= ========= ========= ========= BASIC EARNINGS PER SHARE: Income (loss) from continuing operations $ (0.30) $ 0.41 $ (0.21) $ 0.33 Income (loss) from discontinued operations (1.85) 0.31 (1.34) 0.18 Cumulative effect of change in accounting principle (0.08) --------- --------- --------- --------- Net Income (loss) $ (2.15) $ 0.64 $ (1.55) $ 0.51 ========= ========= ========= ========= DILUTED EARNINGS PER SHARE: Income (loss) from continuing operations $ (0.30) $ 0.41 $ (0.21) $ 0.33 Income (loss) from discontinued operations (1.85) 0.31 (1.34) 0.17 Cumulative effect of change in accounting principle (0.08) --------- --------- --------- --------- Net Income (Loss) $ (2.15) $ 0.64 $ (1.55) $ 0.50 ========= ========= ========= =========
OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, DECEMBER 31, 2000 1999 ----------- ------------ (In Thousands of Dollars) ASSETS - ------ Current Assets: Cash and cash equivalents $ 119,553 $ 101,020 Restricted cash - intended to repay debt 177,548 Restricted funds held in trust 102,701 103,662 Receivables (less allowances: 2000, $25,666 and 1999, $17,942) 272,746 294,051 Inventories 10,504 10,767 Deferred income taxes 36,939 36,189 Other 84,827 79,052 Net assets of discontinued operations 221,939 568,146 ----------- ----------- Total current assets 1,026,757 1,192,887 Property, plant and equipment-net 1,817,050 1,841,811 Restricted funds held in trust 150,372 166,784 Unbilled service and other receivables 160,512 159,457 Unamortized contract acquisition costs 94,576 94,998 Goodwill and other intangible assets 15,445 12,520 Investments in and advances to investees and joint ventures 201,744 180,523 Other assets 69,971 78,168 ----------- ----------- Total Assets $ 3,536,427 $ 3,727,148 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities: Current Liabilities: Current portion of long-term debt $ 114,425 $ 113,815 Current portion of project debt 124,039 80,383 Accounts payable 56,099 75,169 Accrued expenses, etc 332,032 360,155 Deferred income 36,518 45,806 ----------- ----------- Total current liabilities 663,113 675,328 Long-term debt 340,809 344,945 Project debt 1,317,023 1,390,832 Deferred income taxes 382,468 380,812 Deferred income 177,342 182,663 Other liabilities 142,909 127,559 Minority interests 33,569 33,309 Convertible subordinated debentures 148,650 148,650 ----------- ----------- Total Liabilities 3,205,883 3,284,098 ----------- ----------- Shareholders' Equity: Serial cumulative convertible preferred stock, par value $1.00 per share; authorized 4,000,000 shares; shares outstanding: 36,742 in 2000, and 39,246 in 1999, net of treasury shares of 29,820 in 2000 and 1999 37 39 Common stock, par value $.50 per share; authorized, 80,000,000 shares; shares outstanding: 49,621,946 in 2000 and 49,468,195 in 1999, net of treasury shares of 4,281,697 and 4,405,103 in 2000 and 1999, respectively 24,811 24,734 Capital surplus 185,472 183,915 Earned surplus 148,761 255,182 Accumulated other comprehensive income (28,537) (20,820) ----------- ----------- Total Shareholders' Equity 330,544 443,050 ----------- ----------- Total Liabilities and Shareholders' Equity $ 3,536,427 $ 3,727,148 =========== =========== OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Six Months Ended Year Ended June 30, 2000 December 31, 1999 Shares Amounts Shares Amounts ------------------- ----------------------- (In Thousands of Dollars, Except Per Share Amounts) Serial Cumulative Convertible Preferred Stock, Par Value $1.00 Per Share; authorized 4,000,000 Shares: Balance at beginning of period 69,066 $ 69 72,038 $ 73 Shares converted into common stock (2,504) (2) (2,972) (4) ----------- ------------ ------------ ------------ Total 66,562 67 69,066 69 Treasury shares (29,820) (30) (29,820) (30) ----------- ------------ ------------ ------------ Balance at end of period (aggregate involuntary liquidation value - 2000, $740) 36,742 37 39,246 39 ----------- ------------ ------------ ------------ Common Stock, Par Value $.50 Per Share; Authorized, 80,000,000 shares: Balance at beginning of period 53,873,298 26,937 53,507,952 26,754 Exercise of stock options 155,801 78 Shares issued for acquisition 15,390 8 191,800 96 Conversion of preferred shares 14,955 7 17,745 9 ----------- ------------ ------------ ------------ Total 53,903,643 26,952 53,873,298 26,937 ----------- ------------ ------------ ------------ Treasury shares at beginning of period 4,405,103 2,203 4,561,963 2,281 Purchase of treasury shares 102,000 51 Issuance of restricted stock (123,406) (62) Exercise of stock options (258,860) (129) ----------- ------------ ------------ ------------ Treasury shares at end of period 4,281,697 2,141 4,405,103 2,203 ----------- ------------ ------------ ------------ Balance at end of period 49,621,946 24,811 49,468,195 24,734 ----------- ------------ ------------ ------------ Capital Surplus: Balance at beginning of period 183,915 173,413 Exercise of stock options 8,061 Issuance of restricted stock 1,390 Shares issued for acquisition 172 4,904 Purchase of treasury shares (2,458) Conversion of preferred shares (5) (5) ------------ ------------ Balance at end of period 185,472 183,915 ------------ ------------ Earned Surplus: Balance at beginning of period 255,182 367,984 Net Loss (106,387) (81,961) ------------ ------------ Total 148,795 286,023 ------------ ------------ Preferred dividends-per share 2000, $.9375 and 1999,$3.35 34 137 Common dividends-per share 1999, $.625 30,704 ------------ ------------ Total dividends 34 30,841 ------------ ------------ Balance at end of period 148,761 255,182 ------------ ------------ Cumulative Translation Adjustment-Net (28,363) (20,663) ------------ ------------ Minimum Pension Liability Adjustment (307) (307) ------------ ------------ Net Unrealized Gain on Securities Available For Sale 133 150 ------------ ------------ CONSOLIDATED SHAREHOLDERS' EQUITY $ 330,544 $ 443,050 ============ ============
OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2000 1999 ----------- --------- (In Thousands of Dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(106,387) $ 31,693 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities of Continuing Operations: Loss (income) from discontinued operations 91,799 (15,186) Depreciation and amortization 51,294 42,568 Deferred income taxes (1,188) 14,632 Cumulative effect of change in accounting principle 3,820 Other 8,176 (14,720) Management of Operating Assets and Liabilities: Decrease (Increase) in Assets: Receivables (5,628) (4,804) Inventories 110 3,482 Other assets (1,183) 3,302 Increase (Decrease) in Liabilities: Accounts payable (17,399) 22,398 Accrued expenses (37,397) (23,639) Deferred income (10,138) (609) Other liabilities 11,885 (45,199) --------- --------- Net cash provided by (used in) operating activities of continuing operations (16,056) 17,738 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of business and other 4,848 9,760 Proceeds from sale of property, plant and equipment 3,626 345 Proceeds from sale of marketable securities available for sale 3,692 44,685 Entities purchased, net of cash acquired (69,494) Investments in facilities (17,908) (21,480) Other capital expenditures (9,645) (7,914) Decrease in other receivables 3,501 338 Distributions from investees and joint ventures 5,828 7,600 Increase in investments in and advances to investees and joint ventures (19,740) (20,992) --------- --------- Net cash used in investing activities of continuing operations (25,798) (57,152) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings for facilities 61,605 3,816 New debt 1,755 65,318 Decrease (increase) in funds held in trust 17,369 (7,421) Increase in restricted cash (177,548) Payment of debt (95,444) (23,501) Dividends paid (34) (30,762) Purchase of treasury shares (2,509) Proceeds from exercise of stock options 3,412 Other (1,904) (3,324) --------- --------- Net cash provided by (used in) financing activities of continuing operations (194,201) 5,029 --------- --------- Net cash provided by (used in) discontinued operations 254,588 (85,851) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,533 (120,236) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 101,020 181,169 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 119,553 $ 60,933 ========= ========= OGDEN CORPORATION AND SUBSIDIARIES JUNE 30, 2000 ITEM 1 - BASIS OF PRESENTATION The accompanying unaudited 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. On January 1, 1999 Ogden Corporation (hereinafter together with its consolidated subsidiaries referred to as "Ogden" or the "Company") adopted the American Institute of Certified Public Accountants Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-Up Activities". This SOP established accounting standards for these costs and requires they generally be expensed as incurred. The effect of the adoption of this SOP was a charge of $3,820,000 net of income taxes of $1,313,000 recorded as a cumulative effect of change in accounting principle in the accompanying financial statements. The accompanying financial statements for the prior periods have been reclassified as to certain amounts to conform with the 2000 presentation. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 established accounting and reporting standards for derivative instruments and for hedging activities. The Company will adopt SFAS No. 133 on January 1, 2001 and is in the process of determining the impact that adoption of this SFAS will have on the Company's financial position and results of operations. In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." This SAB provides guidance on the recognition, presentation, and disclosure of revenue, and will be implemented by the Company in the quarter ending December 31, 2000. The Company continues to study the SAB, however, it is anticipated that its adoption will 1 not materially affect the Company's consolidated financial position and results of operations. DISCONTINUED OPERATIONS: On September 29, 1999, the Board of Directors of the Company approved a plan to dispose of all of the operations of the Entertainment and Aviation segments and to report the results of operations from those segments prospectively as Discontinued Operations. Information for two segments previously reflected under the segment headings "Energy" and "Other" are now reported as Continuing Operations and will continue to be reported under those headings. At June 30, 2000, the Company had approximately $222,000,000 in net assets associated with its discontinued operations. In addition, the Company had associated debt with respect to the discontinued operations of approximately $39,000,000. Since September 29, 1999 the Company has retained financial advisors to assist it in determining how best to group the assets to maximize sales proceeds. As part of that process, in the second quarter of 2000, the Company closed transactions for the sales of its Themed Parks and Attractions, including its Jazzland theme park, its Food and Beverage/Venue Management business and its airport privatization business in Argentina. Further, the Company announced the sale of its Aviation Ground Service business and expects to close that sale transaction within the next sixty days. The Company is currently in various phases of negotiations with respect to the disposition of the remaining Aviation and Entertainment businesses. Finally, certain aspects of the businesses will require the Company to pay monies to terminate leases or cancel other contractual commitments. As a result of the final negotiations on the above-mentioned transactions and contract, and the progress made on the sale of the other Aviation and Entertainment businesses, the Company revised the net realized value of these segments and reported a net charge of $65,100,000 which includes $7,300,000 representing estimated after tax operating losses of the discontinued operations from July 1, 2000 through their respective anticipated dates of disposal. This, combined with net losses of $1,400,000 from those segments' operations, resulted in a loss from discontinued operations of $66,500,000 for the three months ended June 30, 2000. 2 Net sales and income (loss) from discontinued operations are as follows: Six Months Ended Three Months Ended JUNE 30, JUNE 30, ----------------------- ---------------------- 2000 1999 2000 1999 ---- ---- ---- ---- (In Thousands of Dollars) Revenues $303,049 $370,470 $147,444 $208,748 ======== ======== ======== ======== (Loss) on Disposition of Discontinued Businesses (66,347) (66,347) -------- -------- Income (Loss) Before Income Taxes and Minority Interest (104,466) 27,824 (71,433) 16,983 Provision (Benefit) for Income Taxes (12,754) 12,425 (5,077) 7,783 Minority Interests 87 213 133 476 -------- -------- -------- -------- Income (Loss) from Dis- continued Operations $(91,799) $ 15,186 $(66,489) $ 8,724 ======== ======== ======== ======== Net assets of discontinued operations were as follows: JUNE 30, 2000 DECEMBER 31, 1999 ------------- ----------------- (In Thousands of Dollars) Current Assets $ 118,698 $ 221,200 Property, Plant and Equipment - Net 81,695 375,211 Other Assets 206,939 336,700 Notes Payable, and Current Portion of Long-Term Debt (35,305) (51,081) Other Current Liabilities (110,772) (142,327) Long-Term Debt (3,335) (108,681) Other Liabilities (35,981) (62,876) --------- --------- Net Assets of Discontinued Operations $ 221,939 $ 568,146 ========= ========== SPECIAL CHARGES: As a result of the Company's Board of Directors' plan to dispose of its Aviation and Entertainment businesses and close its New York City headquarters, and its plan to exit other non-core businesses, the Company incurred various expenses in 1999 which were recognized in its continuing and discontinued operations. Of those charges, certain cash charges related to severance costs, mainly for New York City-based employees, and contract termination costs of its former Chairman and Chief Executive Officer, were to be paid over time. The following is a summary of those costs and related payments during the three months ended June 30, 2000 (expressed in thousands of dollars): 3 Additional Provisions Amounts Paid During Three During Three Balance at Months Ended Months Ended Balance at March 31, 2000 June 30, 2000 June 30, 2000 June 30, 2000 -------------- ------------- ------------- ------------- Severance for approximately 230 employees $37,500 $2,400 $2,900 $37,000 Contract Termination 14,400 - 6,200 8,200 ------- ------ ------ ------- $51,900 $2,400 $9,100 $45,200 ======= ====== ====== ======= The additional provisions for severance during the three months ended June 30, 2000 were comprised of $1,200,000 for continuing operations (principally Corporate employees) and $1,200,000 for discontinued operations (Aviation and Entertainment employees). 4 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OPERATIONS: Revenues and income (loss) from continuing operations (expressed in thousands of dollars) by segment for the six months and the three months ended June 30, 2000 and 1999 were as follows: Information Concerning Six Months Ended Three Months Ended Business Segments June 30, June 30, ---------------- ------------------ 2000 1999 2000 1999 ---- ---- ---- ---- (In Thousands of Dollars) - -------------------------------------------------------------------------------- Revenues: Energy $472,381 $449,453 $250,213 $232,385 Other 24,160 37,441 10,322 19,685 -------- -------- -------- -------- Total Revenues 496,541 486,894 260,535 252,070 -------- -------- -------- -------- Income (Loss) from Continuing Operations: Energy 41,500 48,057 31,282 31,243 Other (11,435) (2,571) (8,824) (1,296) -------- -------- -------- -------- Total Income (Loss) from Continuing Operations 30,065 45,486 22,458 29,947 -------- -------- -------- -------- Equity in Net Income of Investees and Joint Ventures: Energy 7,457 5,944 4,447 2,474 -------- -------- --------- -------- Total 37,522 51,430 26,905 32,421 Corporate Unallocated Income and Expenses - net (32,311) (3,952) (26,726) (95) Interest - net (18,216) (13,576) (9,731) (7,703) -------- -------- -------- -------- Income (Loss) from Continuing Operations Before Income Taxes, Minority Interests and the Cumulative Effect of Change in Accounting Principle $(13,005) $33,902 $ (9,552) $ 24,623 ======== ======= ======== ======== 5 REVENUES FROM CONTINUING OPERATIONS Revenues for the quarter ended June 30, 2000 were $8,500,000 higher than the comparable period of 1999. This increase primarily related to an increase in the Energy segment of approximately $17,900,000. The Energy increase was mainly attributable to revenues of $8,100,000 associated with new plants in Thailand and The Philippines that began operations in 1999, an increase of $1,700,000 from the acquisition in June 1999 of an additional 50% interest in a power plant in California, an insurance settlement of $12,200,000 relating to the Lawrence, Massachusetts facility, and net increases at various other facilities of $10,700,000 due to increased production, higher energy pricing and contractual annual escalation adjustments. These increases were partially offset by a reduction in construction revenues of $14,800,000 due mainly to a decrease in waste-to-energy retrofit activity ($8,800,000) and a decrease in civil construction activity ($6,200,000) due to the completion of some projects in 1999 and the first half of 2000. Management anticipates that the remaining civil construction projects will be completed during 2000, with the exception of one project that is expected to continue into 2001. Therefore, the Company anticipates a continued decline in civil construction activity during 2000 as projects are completed. In addition, retrofit construction activity will also decline, as facilities attain compliance with the Clean Air Act Amendments of 1990 which is mandated by the end of 2000. These increases in the Energy segment's revenues were offset by lower revenues of $9,400,000 in the Other segment primarily due to the sale of Applied Data Technology, Inc. ("ADTI") at the end of March 2000, and reduced activity in Datacom's operations chiefly associated with the Chapter XI bankruptcy filing in March 2000 of Genicom Corporation ("Genicom"), its major customer. The $9,600,000 million increase in revenues for the six months ended June 30, 2000 compared to the same period in 1999 was principally attributable to the Energy segment, which increased by approximately $23,000,000. That increase is primarily attributable to revenues of $21,000,000 associated with new plants in Thailand and The Philippines that began operations in 1999, an increase of $6,000,000 from the acquisition of an additional 50% interest in a power plant in California, an insurance settlement of $12,200,000 relating to the Lawrence facility, an increase at the Tulsa facility of $2,200,000 reflecting higher energy pricing and a renegotiated service agreement that became effective April 1999, and increases at various other facilities of $12,600,000 due to 6 increased production, higher energy pricing and contractual annual escalation adjustments. These increases were partially offset by a gain in the comparable period of 1999 of $4,900,000 on the sale of the Company's interest in a joint venture, as well as reduced construction revenues of $26,100,000 which includes a decrease in retrofit activity ($12,800,000), a decrease in civil construction activity ($14,800,000) and an increase in water and wastewater construction ($1,500,000). These increases in the Energy segment's revenues were offset by lower revenues of $13,300,000 in the Other segment mainly due to reduced activity in Datacom's operations and the sale of ADTI at the end of March 2000. CONSOLIDATED OPERATING INCOME FROM CONTINUING OPERATIONS Consolidated operating income from continuing operations for the three months ended June 30, 2000 decreased by approximately $11,700,000 from the comparable quarter of 1999. The Energy segment's income from operations for the three months ended June 30, 2000 was approximately the same as compared to the three months ended June 30, 1999. Energy's income from operations in the 2000 period included the $12,200,000 insurance settlement relating to the Lawrence facility, increases totaling $11,200,000 at several projects including new plants that became operational during 1999, and a decrease in income from construction of $5,100,000 due to reductions in civil construction and retrofit activity. The 1999 period included the receipt of $9,300,000 as payment for the termination and restructuring of a waste-to-energy facility operating contract, and adjustments of $9,000,000 associated with the favorable resolution of matters related to the Heber facility in California. Income from operations in the Other segment decreased $7,500,000 primarily due to lower activity at Datacom, and a $6,500,000 provision against receivables relating to Genicom's Chapter XI bankruptcy proceeding. On August 3, 2000, the Company reached agreement with Genicom whereby the Company paid $10,000 in exchange for a waiver of all preference exposure. As a result, the Company has recorded the $6,500,000 charge representing the difference between the total of its prepetition claims and the amount of the reserve it had previously established. The Company has reached agreement with the purchaser of Genicom regarding the terms under which it will continue to supply product to Genicom. With the resolution of the Genicom bankruptcy, the Company now intends to seek alternatives for the disposition of Datacom. Selling, administrative and general expenses were $4,300,000 higher than the comparable three-month period in 1999. This increase was primarily attributable to an increase in corporate 7 overhead comprised mainly of professional fees, corporate severance, a charge for post-retirement life insurance benefits, and a loss on the termination of the corporate aircraft lease, offset by a decrease of $300,000 in the Energy segment primarily due to a decrease in costs in the civil construction unit resulting from management's plan to discontinue this business. Debt service charges decreased $1,000,000 for the three months ended June 30, 2000 compared to the same period in 1999 due mainly to lower project debt outstanding caused by redemption and maturity of project debt and certain refinancings. The Energy segment has one interest rate swap agreement entered into as a hedge against interest rate exposure on adjustable-rate project debt that resulted in additional debt service expense of $180,000 and $440,000 for the three months ended June 30, 2000 and 1999, respectively. Consolidated operating income for the six months ended June 30, 2000 decreased by $21,200,000 as compared to the six months ended June 30, 1999. The Energy segment's income from operations for the six months ended June 30, 2000 decreased $6,600,000 as compared to the six months ended June 30, 1999. The 2000 period included increases of $13,300,000 at several projects including new plants that became operational during 1999, the $12,200,000 insurance settlement relating to the Lawrence facility, increased overhead and development expenses of $1,400,000 primarily related to the continued growth in the independent power business, and a decrease in income from construction of $5,500,000 due mainly to reductions in civil construction and retrofit activity. Also, in connection with the Clean Air Act Amendments, the Company has shortened the estimated useful lives of certain air pollution control equipment resulting in additional depreciation expense of $2,000,000. The 1999 period included the receipt of $9,300,000 for the termination and restructuring of a waste-to-energy facility operating contract, adjustments of $9,000,000 associated with the favorable resolution of matters related to the Heber facility, and a $4,900,000 gain on the sale of a joint venture interest. Income from operations of the Other segment decreased $8,900,000 for the six months ended June 30, 2000 primarily due to lower activity at Datacom and the $6,500,000 provision against receivables relating to Genicom's Chapter XI bankruptcy proceeding. Selling, administrative and general expenses increased $6,400,000 for the six-month period compared to the 1999 period mainly due to an increase in corporate severance, a loss on termination of the corporate aircraft lease, and an increase in other overhead costs. Debt service charges relating to non-recourse project debt decreased $300,000 for the six months ended June 30, 2000, compared with the same period in 1999 due 8 mainly to lower project debt outstanding on various facilities caused by redemption and maturity of project debt and certain refinancings. The Energy segment's interest rate swap agreement resulted in additional debt service expense of $580,000 and $1,140,000 for the six-month periods ended June 30, 2000 and 1999, respectively. INTEREST INCOME AND EXPENSE Interest income from continuing operations increased $1,000,000 for the three months ended June 30, 2000 compared to the same period in 1999, due mainly to increased interest earned on overnight deposits. Interest income from continuing operations decreased $100,000 for the six months ended June 30, 2000 compared with the same period in 1999, due primarily to interest income earned in the first three months of 1999 on proceeds from an energy contract prepayment partially offset by an increase in interest earned in the three months ended June 30, 2000 on overnight deposits. Interest expense from continuing operations increased $3,000,000 and $4,500,000 for the three-month and six-month periods ended June 30, 2000, respectively, compared to the same periods in 1999. These increases were due mainly to increased borrowings on the Company's revolving line of credit, higher interest rates on adjustable rate debt, and an increase in the Energy segment's interest expense due to an increase in debt related to newly acquired or newly operational plants. In addition, the Company had one interest rate swap agreement covering a notional amount of $1,200,000 which converted the Entertainment segment's $1,200,000 variable rate-debt to a fixed rate, and expires in November 2000. The Company also had two interest rate swap agreements covering a total notional amount of approximately $4,600,000 which converted the Aviation segment's $4,600,000 variable rate-debt to a fixed rate, and expire July 2001. Additional interest expense relating to these swap agreements was $57,000 and $27,000 for the three-month and six-month periods ended June 30, 2000, respectively. EQUITY IN INCOME OF INVESTEES AND JOINT VENTURES Equity in net income of investees and joint ventures increased by $2,000,000 compared to the three months ended June 30, 1999 due mainly to $1,500,000 from new projects or projects that were not owned during the entire 1999 period, and increased generation on existing projects. Equity in net income of investees and joint ventures increased by $1,500,000 compared to the six months ended June 30, 1999 due to earnings of $1,700,000 from new projects or projects not owned during the entire 1999 period and earnings of $1,400,000 9 from increased generation on existing projects, offset by the receipt of $1,600,000 pursuant to a settlement with a customer in the six months ended June 30, 1999. OTHER INCOME (DEDUCTIONS) - NET Other (deductions) - net was ($17,400,000) for both the three-month and six-month periods ended June 30, 2000 compared to other income of $5,200,000 and $5,100,000 for the three-month and six-month periods ended June 30, 1999, respectively. These decreases in income are primarily due to a charge of $11,300,000 in the three months ended June 30, 2000 representing fees and expenses incurred in connection with the waiver by certain creditors of certain covenants, and the extension of credit through July, 2000. Also in the second quarter 2000, the Company recorded $5,500,000 of charges representing other fees and expenses incurred in connection with financing efforts to support its proposed balance sheet recapitalization plan. Also, the 1999 period included a $5,100,000 gain on the sale of an investment. INCOME TAXES The effective income tax rates for continuing operations were (0.2%) and 4.5% for the three-month and six-month periods ended June 30, 2000 as compared to 32.6% and 32.5% for the comparable periods in 1999. These decreases are mainly attributable to higher foreign income taxed at rates lower than the Federal statutory rate. DISCONTINUED OPERATIONS Loss from discontinued operations for the three months ended June 30, 2000 was $66,500,000, a decrease in earnings of $75,200,000 from the comparable period of 1999. Loss before interest and taxes from discontinued operations was ($70,200,000) in the quarter ended June 30, 2000 compared to earnings before interest and taxes of $17,100,000 in the same period of 1999. This $87,300,000 decrease in earnings was chiefly associated with a decrease of $66,300,000 in income reflecting both accrued losses on the disposal of discontinued businesses, and a provision for additional estimated pretax net operating losses from July 1, 2000 through the anticipated dates of sales of the remaining businesses. Also, Entertainment's pretax net operating losses in the three months ended June 30, 2000 exceeded the accrual of $18,000,000 established in March 2000 for estimated future losses through date of disposition by $2,100,000, primarily due to lower than expected results at water parks and food and beverage operations due mainly to the sales of those businesses, and increased legal, accounting and 10 consulting expenses, additional depreciation expense in connection with shortened estimated useful lives of management information systems ("MIS") as well as overhead costs in connection with the discontinuance of the businesses. Aviation's earnings before interest and taxes was $13,100,000 lower primarily reflecting the adjusted gain of $3,500,000 on the sale of the inflight catering operations recognized in the 1999 period, a decrease in European operations of $2,000,000, lower fueling and ground service income of $4,100,000, and increased legal, accounting, consulting and overhead costs of $3,000,000 in connection with the discontinuance of the business. Loss from discontinued operations for the six months ended June 30, 2000 was $91,800,000, a decrease in earnings of $107,000,000. Loss before interest and taxes from discontinued operations was ($102,100,000) in the first half of 2000 compared to $28,700,000 in the first half of 1999. This $130,800,000 decrease in earnings was chiefly associated with a decrease of $66,300,000 reflecting both accrued losses on the disposal of discontinued businesses, and a provision for additional estimated pretax net operating losses from July 1, 2000 through the anticipated dates of sales of the remaining businesses. In addition, the decrease in Entertainment's operations were due to decreases in its food and beverage business of $10,000,000 due mainly to decreases at certain amphitheaters and the sale of the business, a decrease in its Parks operations of $8,200,000 mainly due to the sale of that business, a decrease in venue management operations due mainly to a gain of $6,000,000 recorded in 1999 relating to the Anaheim Pond location, and increased legal, accounting, consulting and overhead costs, and additional depreciation on MIS equipment totaling $8,200,000. Aviation's earnings before interest and taxes was $24,400,000 lower than the first half of 1999 primarily reflecting the adjusted gain of $3,500,000 in the 1999 period on the sale of the inflight catering operations, the gain of $4,000,000 in 1999 on the sale of an interest in the Hong Kong airport operations, a decrease in activity in fueling and ground service operations of $6,700,000, increased legal, accounting, consulting and overhead costs of $7,100,000 in connection with the discontinuance of the business, and a reduction in European operations of $2,600,000. CAPITAL INVESTMENTS AND COMMITMENTS: For the six months ended June 30, 2000, capital investments for continuing operations amounted to $27,600,000, of which $27,300,000 was for Energy operations and $300,000 was for Other operations. At June 30, 2000, capital commitments for continuing operations amounted to $12,000,000 for normal replacement and maintenance 11 in Energy. Other capital commitments for Energy as of June 30, 2000 amounted to approximately $57,800,000. This amount includes a commitment to pay, in 2008, $10,600,000 for a service contract extension at an energy facility. In addition, this amount includes $19,400,000 and $9,600,000, respectively, for two oil-fired projects in India; $3,200,000 for additional equity commitments related to a coal-fired power project in the Philippines; $1,200,000 for a mass-burn waste-to-energy facility in Italy; and $13,800,000 for standby letters of credit in support of debt service reserve requirements. Funding for the additional mandatory equity contributions to the coal-fired power project in the Philippines is being provided through bank credit facilities, which are due to be repaid in 2000. In addition, compliance with the standards and guidelines under the Clean Air Act Amendments of 1990 will require further Energy capital expenditures of approximately $15,000,000 through December 2000, subject to the final time schedules determined by the individual states in which the Company's waste-to-energy facilities are located. Commitments for discontinued operations amounted to $6,650,000 for normal replacement and growth in Aviation ($750,000) and Entertainment ($5,900,000) operations, the latter relating to Entertainment's Jazzland Theme Park in New Orleans, Louisiana. As part of its agreement to sell its themed attractions, the Company agreed to pay to complete the construction of the Jazzland Theme Park. Ogden and certain of its subsidiaries have issued or are party to performance bonds and guarantees and related contractual obligations undertaken mainly pursuant to agreements to construct and operate certain waste-to-energy, entertainment, and other facilities. In the normal course of business, they are involved in legal proceedings in which damages and other remedies are sought. Management does not expect that these contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business will have a material adverse effect on Ogden's Consolidated Financial Statements. The Company did not include its interests in either the Arrowhead Pond in Anaheim, California or the Corel Centre near Ottawa, Canada as part of the sale of its Venue Management business announced in March 2000. The Company manages the Arrowhead Pond under a long-term contract. As part of this contract, the Company is a party, along with the City of Anaheim, to a reimbursement agreement in connection with a 12 letter of credit in the amount of approximately $120,000,000. Under the reimbursement agreement, the Company is responsible for draws, if any, under the letter of credit caused by the Company's failure to perform its duties under its management contract at that venue. The Company is exploring alternatives for disposing of the Arrowhead Pond and Corel Centre, discussed below, along with the related obligations. During 1994, a subsidiary of Ogden entered into a 30-year facility management contract at the Corel Centre pursuant to which it agreed to advance funds to a customer and, if necessary, to assist the customer's refinancing of senior secured debt incurred in connection with the construction of the facility. Ogden is obligated to purchase such secured debt in the amount of $91,500,000 on December 23, 2002, if the debt is not refinanced prior to that time. Ogden is also required to repurchase the outstanding amount of certain subordinated secured debt of such customer on December 23, 2002. At June 30, 2000, the amount outstanding was $48,500,000. In addition, as of June 30, 2000, the Company had guaranteed $3,400,000 of senior secured term debt of an affiliate and principal tenant (the NHL Ottawa Senators) of this customer and had guaranteed up to $3,400,000 of the tenant's secured revolving debt. Further, Ogden is obligated to purchase $20,200,000 of the tenant's secured subordinated indebtedness on January 29, 2004, if such indebtedness has not been repaid or refinanced prior to that time. In October 1999, Ogden also agreed to advance a secured loan to that tenant of up to approximately $8,400,000 if certain events occur, of which $2,000,000 had been advanced at June 30, 2000. Separately, Ogden has guaranteed approximately $3,600,000 of borrowings of a customer of Metropolitan Entertainment Group, an Entertainment joint venture in which Ogden has an equity interest. The Company expects this guarantee to be assumed by the ultimate purchaser of this interest. Management does not expect that these arrangements will have a material adverse effect on Ogden's Consolidated Financial Statements. LIQUIDITY/CASH FLOW: Net cash provided by operating activities of continuing operations was $33,800,000 lower than the comparable period of 1999 primarily reflecting a decrease in income from continuing operations of $34,900,000, a decrease in accounts payable and accrued expenses of $53,600,000, and a decrease in deferred income taxes of $15,800,000. These decreases were partially offset by an increase in other liabilities of $57,100,000, and an increase in depreciation and amortization of $8,700,000. Net cash used in investing activities was $31,400,000 lower primarily relating to a decrease in entities purchased of $69,500,000 partially offset 13 by a decrease in proceeds from sale of marketable securities available for sale of $41,000,000. Net cash used in financing activities was $199,200,000 higher principally due to an increase in restricted cash of $177,500,000, representing a portion of the proceeds from the sales of businesses, and higher net debt payments of $77,700,000, partially offset by lower dividends paid of $30,700,000 and a decrease of $24,800,000 in the use of funds held in trust. Net cash provided by discontinued operations increased $340,400,000 primarily due to proceeds from the sales of businesses and decreases in capital expenditures and acquisitions in Aviation and Entertainment. At June 30, 2000, the Company had approximately $316,000,000 in cash and cash equivalents; $297,000,000 related to continuing operations of which $177,500,000 was restricted and intended for debt repayment. In addition, the Company has a revolving credit facility on which the Company had drawn $50,000,000 at June 30, 2000. The Company has further agreed not to incur any indebtedness other than that incurred under the revolving credit facility. In order to make additional Energy investments other than certain specified permitted investments, the Company will require a substantial majority of its Credit Providers to consent to such investments. The Company's current facility with its principal credit providers was scheduled to expire on July 31, 2000. The Company has agreed with these credit providers to extend the facility from July 31, 2000 through September 30, 2000 while the parties continue to negotiate the terms of a new facility that is expected to continue through May 31, 2002 (the "Proposed New Facility"). Through September 30, 2000, the Company may use an additional $70,000,000 of cash proceeds from asset sales from the cash amounts reflected on the June 30, 2000 balance sheet as "Restricted Cash - Intended to Repay Debt". In addition, the $50 million revolving credit facility provided as part of the original extension has also been extended through September 30, 2000. Certain of the Company's credit providers have indicated that it is their intent to provide credit support as part of the Proposed New Facility for certain springing letters of credit (discussed below) that may be required in the event that the Company's long term debt rating is downgraded below investment grade. Certain obligations of the Company come due by their terms in the period from July 31, 2000 to September 30, 2000. The Company will need to extend these obligations as part of its overall debt refinancing. Failure to obtain the extensions could give rise to defaults pursuant to the terms of the underlying agreements. The Company believes that it has adequate liquidity to fund its operations and make certain investments in new 14 projects through this period. Further, the Company believes that the Proposed New Facility will be sufficient to allow the Company to fund its operations and make certain new investments. In the second quarter of 2000, the Company closed its transactions for the sales of its Theme Parks and Attractions, its Jazzland Theme Park, its Food and Beverage/Venue Management business and its airport privatization business in Argentina. Further, the Company expects to close the sale of it Aviation Ground Services business within the next 60 days. The Company is currently in various phases of negotiations for the remaining Aviation businesses and most other assets included within discontinued operations. The Company has also determined to sell all of the operations currently reflected in the Other segment and decided to sell its domestic Environmental Consulting business and its Spanish subsidiary, and to wind down the operations of its civil construction business, which are reported in its Energy segment. To that end, the Company closed the sale transaction of its ADTI unit at the end of March 2000 and is in various phases of the disposition process for the other operations mentioned above. Accordingly, the Company expects to have sufficient proceeds to fund normal operations (including certain permitted energy investments). The Company continues to explore possible new credit facilities and/or obtaining equity for such purposes, including discussions with its existing Credit Providers. Under certain agreements entered into by the Company, if the Company's outstanding debt securities are no longer rated investment grade, the Company may be required to post additional collateral or letters of credit. The failure to post such letters could result in a forfeiture of certain contracts or could result in a default under the agreements requiring the posting of such letters. Such a default would also be a default under the Company's credit facilities. With the consent of its Credit Providers, the Company could cash collateralize these obligations or potentially utilize sales proceeds for such purpose; alternatively, the Credit Providers could provide such letters directly. The Credit Providers have agreed to work with the Company to explore solutions to this issue should it arise. The Company believes its recent agreement with its Credit Providers is consistent with its prior stated intention of using the proceeds from the sales of the Entertainment and Aviation businesses to pay down existing debt. ANY STATEMENTS IN THIS COMMUNICATION WHICH MAY BE CONSIDERED TO BE "FORWARD LOOKING STATEMENTS," AS THAT TERM IS DEFINED IN THE 15 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 COMMISION AND MORE GENERALLY, GENERAL ECONOMIC CONDITIONS, INCLUDING CHANGES IN INTERST RATES AND THE PERFORMANCE OF THE FINANCIAL MARKETS; CHANGES IN DOMESTIC AND FOREIGN LAWS, REGULATIONS, AND TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS; AND REGIONAL OR GENERAL CHANGES IN ASSET VALUATIONS. 16 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company has various legal proceedings involving matters arising in the ordinary course of business. The Company does not believe that there are any pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company is a party or to which any of its property is subject, the outcome of which would have a material adverse effect on the Company's consolidated position or results of operation. The Company'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 the Company's operations are occasionally subject to proceedings and orders pertaining to emissions into the environment and other environmental violations, the Company believes that it is in substantial compliance with existing environmental laws and regulations. In connection with certain previously divested operations, the Company may be identified, along with other entities, as being among potentially responsible parties responsible for contribution for costs associated with the correction and remediation of environmental conditions at various hazardous waste disposal sites subject to CERCLA. In certain instances the Company may be exposed to joint and several liability for remedial action or damages. The Company's ultimate liability in connection with such environmental claims will depend on many factors, including its volumetric share of waste, the total cost of remediation, the financial viability of other companies that also sent waste to a given site and its contractual arrangement with the purchaser of such operations. The potential costs related to all of the foregoing matters and the possible impact on future operations are uncertain due in part to the complexity of government laws and regulations and their interpretations, the varying costs and effectiveness of cleanup technologies, the uncertain level of insurance or other types of recovery, and the questionable level of the Company's responsibility. Although the ultimate outcome and expense of any litigation, including environmental remediation, is uncertain, the Company believes that the following proceedings will not have a material adverse effect on the Company's consolidated financial position or results of operations. (a) Environmental Matters (i) In an ongoing criminal investigation by the U.S. Department of Justice Ogden has contested that the Company has criminal liability under the Federal Clean Water Act as a result of a spill of aviation fuel from a holding tank in October 1996 at a former tank farm operated by Ogden at Dulles International Airport in Washington, D.C. The Department of Justice Attorney offered to resolve this matter by means of a guilty plea to a misdemeanor under the Clean Water Act. Ogden rejected that offer by letter dated December 16, 1999 and is cooperating with the government to seek a fair and reasonable solution. (ii) In 1999, Ogden Aviation Fueling Company of Virginia, Inc. and Ogden Aviation Services, Inc. were served with a lawsuit entitled "AIRFRANCE, ET. AL. V. OGDEN AVIATION FUELING COMPANY OF VIRGINIA, INC. AND OGDEN AVIATION SERVICES, INC." (Circuit Ct., Fairfax Co., Index No. 183590) in which certain of the airlines seek recovery of cleanup costs arising from a spill of aviation fuel from a holding tank in October 1996 at the former tank farm operated by Ogden at Dulles International Airport for which they reimbursed Ogden. The plaintiffs include United Air Lines, Inc., the largest carrier that operated out of Dulles in 1996, as well as nine other airlines Air France, America West Airlines, Inc., Austrian Airlines, British Airways PLC, Continental Airlines, Inc., Lufthansa A.G., Northwest Airlines, Inc., United Parcel Service Co., and Virgin Atlantic Airways, Ltd. The suit claims damages in the amount of at least $731,149.76, plus interest. This dollar amount reflects the portion of the spill cleanup paid by the named plaintiffs. The suit alleges damages on two theories: (1) breach of contract in that Ogden was not authorized under the contract to charge the airlines spill related costs; and (2) equitable relief in that Ogden has been unjustly enriched at the expense of the airlines. Ogden Aviation Services, Inc. filed a motion to dismiss the complaint on the grounds that it was never a party to the fuel service agreements. Ogden Aviation Fueling Company of Virginia, Inc. filed a motion to dismiss the unjust enrichment claim and answered the claim arising under the contract. Both motions to dismiss were denied and the litigation will proceed. Ogden takes the position that fuel spill clean up costs were properly charged back to the plaintiff airlines pursuant to the terms of the controlling agreements and will defend its position in this litigation. (iii) On January 4, 2000 and January 21, 2000, United Air Lines, Inc. ("United") and American Airlines, Inc. ("American) named Ogden New York Services, Inc. ("Ogden New York"), in two separate lawsuits filed in the Supreme Court of the State of New York. The lawsuits seek judgment declaring that Ogden New York is responsible for petroleum contamination at airport terminals formerly or currently leased by United and American. Ogden New York moved to consolidate the two lawsuits on April 27, 2000. Both United and American allege that Ogden negligently caused discharges of petroleum at the airport and that Ogden is obligated to indemnify the airlines pursuant to the Fuel Services Agreements between Ogden and the respective airline. United and American further allege that Ogden is liable under New York's Navigation Law which imposes liability on persons responsible for discharges of petroleum and under common law theories of indemnity and contribution. The United complaint is asserted against Ogden, American, Delta, Northwest and American Eagle. United is seeking $1,540,000 in technical contractor costs and $432,000 in legal expenses related to the investigation and remediation of contamination at the airport, as well as a declaration that Ogden and the airline defendants are responsible for all or a portion of future costs that United may incur. The American complaint, which is asserted against both Ogden and United, sets forth essentially the same legal basis for liability as the United complaint. American is seeking reimbursement of all or a portion of $4,600,000 allegedly expended in cleanup costs and legal fees it expects to incur to complete an investigation and cleanup that it is conducting under an administrative order with the State Department of Environmental Conservation. The estimate of those sums alleged in the complaint is $70,000,000. Ogden disputes the allegations and believes that the damages sought are excessive in view of the Airlines' responsibility for the contamination under their respective leases and permits with the Port Authority. On May 1, 2000 Ogden filed a motion to dismiss the complaints on the ground that the controlling agreements limit the Airlines' recovery against Ogden to the coverage afforded under Ogden's insurance policies. (iv) On December 23, 1999 Allied Services, Inc. was named as a third party defendant in an action filed in the Superior Court of the State of New Jersey. The third-party complaint alleges that Allied generated hazardous substances to a reclamation facility known as the Swope Oil and Chemical Company Site, and that contamination migrated from the Swope Oil Site to the Pennsauken Landfill and surrounding areas. Third-party plaintiffs seek contribution and indemnification from Allied and over 90 other third-party defendants for costs incurred and to be incurred to cleanup the Pennsauken landfill and surrounding areas. As a result of uncertainties regarding the source and scope of contamination, the large number of potentially responsible parties and the varying degrees of responsibility among various classes of potentially responsible parties, the Company's share of liability, if any, cannot be determined at this time. (v) On January 12, 1998, the Province of Newfoundland filed an Information Against Airconsol Aviation Services Limited ("Airconsol") alleging that Airconsol violated provincial environmental laws in connection with a fuel spill on or about January 14, 1997 at Airconsol's fuel facility at the Deer Lake, Canada Airport. Airconsol contested the allegations and prevailed. The Court voided the Information. The Crown has appealed the Court's decision. The Company will continue to contest its alleged liability on appeal. (vi) The Company and/or certain subsidiaries have been advised by various authorities that they are responsible for investigation, remediation and/or corrective action in connection with fueling operations at various airports. Although the Company and/or its subsidiaries do not acknowledge any legal obligation to do so, the Company and/or its subsidiaries are cooperating with the government agencies in each matter to seek fair and reasonable solutions. In addition, the cost to the Company and/or its subsidiaries to comply with applicable environmental laws and regulations is generally reimbursed to the Company and/or its subsidiaries through the airlines. (b) Shareholder Litigation On September 22, October 1, and October 12, 1999, complaints (the "Complaints") denominated as class actions (the "Actions") were filed in the United States District Court for the Southern District of New York against the Company, the Company's former Chairman and Chief Executive, R. Richard Ablon, and Robert M. DiGia (incorrectly identified in the Complaints as the Chief Financial Officer and Senior Vice President of the Company). The Complaints, which are largely identical to one another, are brought by alleged shareholders of the Company and purport to assert claims under the federal securities laws. In general, the Complaints allege that the Company and the individual defendants disseminated false and misleading information during the period of March 11, 1999 through September 17, 1999 (the "Class Period") with respect to the Company's intended reorganization plans and its financial condition. The Complaints seek the certification of a class of all purchasers of Ogden Corporation common stock during the Class Period. By order dated December 22, 1999, the Actions have been consolidated for all purposes and lead plaintiffs and lead counsel have been appointed. On February 28, 2000 plaintiffs filed a consolidated amended compliant (the "Amended Compliant"). The Amended Complaint repeats the allegations made in the original complaints and adds new allegations with respect to the timing of the reporting of certain losses experienced by Ogden. In the Amended Complaint, Plaintiffs have added Raymond E. Dombrowski, Jr., Ogden's Senior Vice President and Chief Financial Officer, as a defendant. There has been no discovery in the Actions. While the Actions are at a very early stage, the Company believes it has meritorious defenses to the allegations made in the Complaints and intends to defend the Actions vigorously. On April 28, 2000 all defendants filed motion to dismiss the Actions, with prejudice. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Annual Meeting of Shareholders of Ogden Corporation was held on June 14, 2000. (b) NAME OF EACH DIRECTOR ELECTED NAME OF EACH OTHER DIRECTOR WHOSE TERM OF OFFICE CONTINUED Norman G. Einspruch Anthony J. Bolland (2001) Homer A. Neal Scott G. Mackin (2001) Joseph A. Tato Judith D. Moyers (2001) Robert R. Womack Robert E. Smith (2001) George L. Farr (2002) Jeffrey F. Friedman (2002) Helmut Volcker (2002) (c) (i) Proposal 1: Election of four directors for a three year term. NAME VOTES FOR VOTES WITHHELD ---- --------- -------------- Norman G. Einspruch 35,478,884 7,411,075 Homer A. Neal 35,533,761 7,356,198 Joseph A. Tato 35,531,866 7,358,093 Robert R. Womack 35,685,443 7,204,516 (ii) Proposal 2: Proposal to approve the adoption of an Executive Performance Incentive Plan. FOR AGAINST ABSTAIN BROKER NON-VOTES --- ------- ------- ---------------- 37,989,992 3,618,675 1,294,623 - 0 - (iii) Proposal 3: Proposal to amend the Ogden Corporation 1999 Stock Incentive Plan. FOR AGAINST ABSTAIN BROKER NON-VOTES --- ------- ------- ---------------- 33,065,660 8,496,646 1,340,850 - 0 - (iv) Proposal 4: Proposal submitted by a shareholder urging the Board of Directors to arrange for the prompt sale of Ogden Corporation to the highest bidder. FOR AGAINST ABSTAIN BROKER NON-VOTES --- ------- ------- ---------------- 2,906,309 20,965,411 7,484,210 11,532,476 (v) Proposal 5: Ratification of the selection of Deloitte & Touche LLP as independent public accountants of the corporation and its subsidiaries for the year 2000. FOR AGAINST ABSTAIN BROKER NON-VOTES --- ------- ------- ---------------- 42,109,727 566,723 226,311 - 0 - ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 3 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 April 8, 1998.* 4 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 principal amount of 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 principal amount of 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 principal amount of 9-1/4% Debentures due 2022.* 10 MATERIAL CONTRACTS 10.1 (a) U.S. $95 million Term Loan and Letter of Credit and Reimbursement Agreement among Ogden, Deutsche Bank AG, New York Branch, and the signatory Banks thereto, dated March 26, 1997.* (b) Credit Agreement by and among Ogden, The Bank of New York, as Agent, and the signatory Lenders thereto dated as of June 30, 1997.* (i) Amendment No. 1 and Waiver No. 1 under Credit Agreement, effective as of August 18, 1999. (ii) Amendment No. 2 to Credit Agreement, effective as of December 20, 1999. (iii) Amendment No. 3 to Credit Agreement, effective as of March 31, 2000. 10.2 Rights Agreement between Ogden Corporation and Manufacturers Hanover Trust Company, dated as of September 20, 1990.* 10.3 Executive Compensation Plans and Agreements. (a) Ogden Corporation 1990 Stock Option Plan Amended and Restated as of January 19, 1994.* (i) Amendment adopted and effective as of September 18, 1997.* (b) Ogden Corporation 1999 Stock Incentive Plan Amended and Restated as of January 1, 2000.* (c) Ogden Services Corporation Select Savings Plan Trust Amendment and Restatement as of January 1, 1995.* (i) Amendment Number One to the Ogden Services Corporation Select Savings Plan, effective January 1, 1998.* (d) Ogden Corporation Restricted Stock Plan and Restricted Stock Agreement.* (e) Ogden Corporation Restricted Stock Plan for Non-Employee Directors and Restricted Stock Agreement.* (f) Ogden Corporation Core Executive Benefit Program.* (g) Ogden Projects Supplemental Pension and Profit Sharing Plans.* (h) Ogden Projects Core Executive Benefit Program.* (i) Ogden Corporation Executive Performance Incentive Plan.* (j) Ogden Key Management Incentive Plan.* 10.4 Employment Agreements (a) Employment Letter Agreement between Ogden Corporation and Lynde H. Coit, Senior Vice President and General Counsel, dated March 1, 1999.* (b) Employment Agreement between R. Richard Ablon, President, Chairman and C.E.O., and Ogden dated as of January 1, 1998.* (c) Separation Agreement between Ogden and Philip G. Husby, Senior Vice President and C.F.O., dated as of September 17, 1998.* (d) Employment Agreement between Scott G. Mackin, Executive Vice President and Ogden Corporation dated as of October 1, 1998.* (e) Employment Agreement between Ogden Corporation and David L. Hahn, Senior Vice President - Aviation, dated December 1, 1995.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and David L. Hahn, Senior Vice President - Aviation effective as of October 1, 1998.* (f) Employment Agreement between Ogden Corporation and Rodrigo Arboleda, Senior Vice President dated January 1, 1997.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and Rodrigo Arboleda, Senior Vice President, effective as of October 1, 1998.* (g) Employment Agreement between Ogden Energy Group, Inc. and Bruce W. Stone, dated May 1, 1999.* (h) Employment Agreements between Ogden and Jesus Sainz, Executive Vice President, effective as of January 1, 1998.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and Jesus Sainz, Executive Vice President, effective as of October 1, 1998.* (i) Employment Agreement between Peter Allen, Senior Vice President, and Ogden Corporation dated July 1, 1998.* (j) Employment Agreement between Ogden Corporation and Raymond E. Dombrowski, Jr., Senior Vice President and C.F.O., dated as of September 21, 1998.* 11 Detail of Computation of Earnings Per Share Applicable to Common Stock. 27 Financial Data Schedule (EDGAR Filing Only). o Incorporated by reference as set forth in the Exhibit Index of this Form 10-Q. (b) Reports on Form 8-K Form 8-K Current Reports filed on May 17, 2000 and June 7, 2000 are incorporated herein by reference. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. OGDEN CORPORATION (Registrant) Date: August 21, 2000 By /s/ RAYMOND E. DOMBROWSKI, JR. -------------------------------- Raymond E. Dombrowski, Jr. Senior Vice President and Chief Financial Officer Date: August 21, 2000 By: /s/ WILLIAM J. METZGER -------------------------------- William J. Metzger Vice President and Chief Accounting Officer EX-11 2 ex-11.txt EXHIBIT 11 EXHIBIT 11 OGDEN CORPORATION AND SUBSIDIARIES DETAIL OF COMPUTATION OF EARNINGS PER SHARE APPLICABLE TO COMMON STOCK
FOR THE SIX MONTHS ENDED JUNE 30, ---------------------------------------------------------------------- 2000 1999 ---------------------------------- ----------------------------------- Loss Shares Per-Share Income Shares Per-Share (Numerator)(Denominator) Amount (Numerator) (Denominator) Amount ---------- ------------- ------ ----------- ------------- ------ (In Thousands, Except per Share Amounts) Income (loss) from continuing operations $(14,588) $20,327 Less: preferred stock dividends 34 70 -------- ------- Basic Earnings (Loss) Per Share (14,622) 49,515 $(0.30) 20,257 49,043 $ 0.41 ------- ------ ------ Effect of Dilutive Securities: Stock options (A) 498 Convertible preferred stock (A) 70 250 6% convertible debentures (A) (A) 5 3/4% convertible debentures (A) (A) -------- ------ -------- ------ Diluted Earnings (Loss) Per Share $(14,622) 49,515 $(0.30) $20,327 49,791 $ 0.41 -------- ------ ------ -------- ------ ------
(A) Anti-dilutive Note: Basic earnings per common share was computed by dividing net income, reduced by preferred stock dividend requirements, by the weighted average of the number of shares of common stock outstanding during each period. Diluted earnings per common share was computed on the assumption that all convertible debentures, convertible preferred stock, and stock options converted or exercised during each period, or outstanding at the end of each period were converted at the beginning of each period or the date of issuance or grant, if dilutive. The computation provides for the elimination of related convertible debenture interest and preferred dividends. EXHIBIT 11 OGDEN CORPORATION AND SUBSIDIARIES DETAIL OF COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED JUNE 30, 2000 1999 ----------------------------------- -------------------------------- Loss Shares Per-Share Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- ------ ----------- ------------- ------ (In Thousands, Except for Share Amounts) Income (loss) from continuing operations $(10,414) $16,268 Less: preferred stock dividends 17 35 -------- ------- Basic Earnings (Loss) Per Share (10,431) 49,534 $(0.21) 16,233 49,126 $0.33 ------ ----- Effect of Dilutive Securities: Stock options (A) 503 Convertible preferred stock (A) 35 249 6% convertible debentures (A) (A) 5 3/4% convertible debentures (A) (A) -------- ------ ------- ------ Diluted Earnings (Loss) Per Share $(10,431) 49,534 $(0.21) $16,268 49,878 $0.33 -------- ------ ------ ------- ------ -----
(A) Anti-dilutive Note: Basic earnings per common share was computed by dividing net income, reduced by preferred stock dividend requirements, by the weighted average of the number of shares of common stock outstanding during each period. Diluted earnings per common share was computed on the assumption that all convertible debentures, convertible preferred stock, and stock options converted or exercised during each period, or outstanding at the end of each period were converted at the beginning of each period or the date of issuance or grant, if dilutive. The computation provides for the elimination of related convertible debenture interest and preferred dividends. EX-27 3 ex-27.txt ART. 5 FDS FOR YEAR 2000 10-K
5 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 119,553 0 298,412 25,666 10,504 1,026,757 2,425,859 608,809 3,536,427 663,113 1,806,482 0 37 24,811 305,696 3,536,427 19,950 496,541 18,123 407,332 0 6,500 20,892 (13,005) (581) (14,588) (91,799) 0 0 (106,387) ($2.15) ($2.15)
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