-----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, KGL5gjQPrU6OSyKulCRtgVaGQBNGpBnh+RNDVLJNdPXhPu932to1/jeJcIAAS3ju M8JBgvcFm1lN3LFP9kbCTg== 0000950129-01-001436.txt : 20010315 0000950129-01-001436.hdr.sgml : 20010315 ACCESSION NUMBER: 0000950129-01-001436 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010131 FILED AS OF DATE: 20010314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERITAS DGC INC CENTRAL INDEX KEY: 0000028866 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 760343152 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07427 FILM NUMBER: 1568337 BUSINESS ADDRESS: STREET 1: 10300 TOWN PARK DR CITY: HOUSTON STATE: TX ZIP: 77072 BUSINESS PHONE: 7135128300 MAIL ADDRESS: STREET 1: 10300 TOWN PARK DR CITY: HOUSTON STATE: TX ZIP: 77072 FORMER COMPANY: FORMER CONFORMED NAME: DIGICON INC DATE OF NAME CHANGE: 19920703 10-Q 1 h84927e10-q.txt VERITAS DGC INC. - DATED JANUARY 31, 2001 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2001 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 1-7427 VERITAS DGC INC. (Exact name of registrant as specified in its charter) DELAWARE 76-0343152 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 10300 TOWN PARK HOUSTON, TEXAS 77072 (Address of principal executive offices) (Zip Code) (832) 351-8300 (Registrant's telephone number, including area code) (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: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. The number of shares of the Company's common stock, $.01 par value, outstanding at February 28, 2001 was 31,811,794 (including 1,764,389 Veritas Energy Services Inc. exchangeable which are identical to the Common Stock in all material respects). ================================================================================ 2 VERITAS DGC INC. AND SUBSIDIARIES FORM 10-Q INDEX
Page Number ----------- PART I. Financial Information Item 1. Financial Statements Consolidated Statements of Income and Comprehensive Income - For the Three and Six Months Ended January 31, 2001 and 2000 1 Consolidated Balance Sheets - January 31, 2001 and July 31, 2000 2 Consolidated Statements of Cash Flows - For the Six Months Ended January 31, 2001 and 2000 3 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk 13 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 14 Signatures 17
3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VERITAS DGC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED JANUARY 31, JANUARY 31, ------------------------ ------------------------ 2001 2000 2001 2000 ---------- ---------- ---------- ---------- (In thousands) REVENUES $ 134,415 $ 91,023 $ 245,714 $ 159,700 COSTS AND EXPENSES: Cost of services 94,428 60,584 170,596 103,325 Research and development 2,504 2,078 4,673 4,040 Depreciation and amortization 16,225 18,460 33,330 36,838 Selling, general & administrative 6,846 4,267 12,349 7,710 Interest expense 3,542 3,499 7,058 6,990 Other income (2,518) (196) (4,045) (1,175) ---------- ---------- ---------- ---------- Total costs and expenses 121,027 88,692 223,961 157,728 Income before provision for income taxes and equity in (earnings) loss of joint venture 13,388 2,331 21,753 1,972 Provision for income taxes 6,287 1,078 9,633 1,063 Equity in (earnings) loss of joint venture (119) 83 (108) 319 ---------- ---------- ---------- ---------- Net income before extraordinary item 7,220 1,170 12,228 590 Extraordinary loss on debt repurchase (net of tax, $95) 187 ---------- ---------- ---------- ---------- Net income $ 7,220 $ 1,170 $ 12,228 $ 403 Other comprehensive income (loss) (net of tax - $0 in both periods) Foreign currency translation adjustments 392 1,665 (1,512) 2,237 Unrealized gain (loss) on investments-available for sale 964 68 3,301 (1,279) ---------- ---------- ---------- ---------- Comprehensive income $ 8,576 $ 2,903 $ 14,017 $ 1,361 ========== ========== ========== ========== PER SHARE: BASIC Net income per common share before extraordinary item $ .24 $ .05 $ .42 $ .02 Loss per common share from extraordinary item (.01) ---------- ---------- ---------- ---------- Net income per common share $ .24 $ .05 $ .42 $ .02 ========== ========== ========== ========== Weighted average common shares 30,479 24,474 29,153 24,554 ========== ========== ========== ========== DILUTED Net income per common share before extraordinary item $ .23 $ .05 $ .41 $ .02 Loss per common share from extraordinary item (.01) ---------- ---------- ---------- ---------- Net income per common share $ .23 $ .05 $ .41 $ .02 ========== ========== ========== ========== Weighted average common shares 31,272 25,893 29,961 25,049 ========== ========== ========== ==========
See Notes to Consolidated Financial Statements 1 4 VERITAS DGC INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JANUARY 31, JULY 31, 2001 2000 ------------ ------------ Unaudited (In thousands) ASSETS Current assets: Cash and cash equivalents $ 96,362 $ 43,154 Restricted cash investments 206 Accounts and notes receivable (net of allowance: January $1,843; July $1,749) 141,819 117,242 Materials and supplies inventory 4,577 5,055 Prepayments and other 13,617 6,435 Investments-available for sale 7,285 3,984 ------------ ------------ Total current assets 263,660 176,076 Property and equipment 422,355 409,284 Less accumulated depreciation 272,776 262,706 ------------ ------------ Property and equipment - net 149,579 146,578 Multi-client data library 259,677 231,274 Investment in and advances to joint venture 2,558 1,949 Goodwill (net of accumulated amortization: January $5,708; July $4,984) 10,049 11,064 Deferred tax asset 34,062 34,064 Long term notes receivable (net of allowance: $1,000 in both periods) 3,081 3,579 Other assets 12,416 7,224 ------------ ------------ Total $ 735,082 $ 611,808 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 64 $ 106 Accounts payable - trade 48,881 37,434 Accrued interest 3,855 3,856 Other accrued liabilities 38,235 39,620 Income taxes payable 10,820 2,116 ------------ ------------ Total current liabilities 101,855 83,132 Non-current liabilities: Long-term debt - less current maturities 135,000 135,000 Other non-current liabilities 10,784 10,732 ------------ ------------ Total non-current liabilities 145,784 145,732 Stockholders' equity: Preferred stock, $.01 par value; authorized: 1,000,000 shares; none issued Common stock, $.01 par value; authorized: 40,000,000 shares; issued: 28,882,221 shares at January and 25,069,834 shares at July (excluding exchangeable shares of 1,764,396 at January and 2,014,205 at July) 289 251 Additional paid-in capital 359,653 269,355 Accumulated earnings (from August 1, 1991 with respect to Digicon Inc.) 133,361 121,133 Accumulated comprehensive income: Cumulative foreign currency translation adjustment (5,283) (3,771) Unrealized gain (loss) on investments-available for sale 1,686 (1,615) Unearned compensation (612) (597) Treasury stock, at cost: 93,927 shares at January and 104,175 shares at July (1,651) (1,812) ------------ ------------ Total stockholders' equity 487,443 382,944 ------------ ------------ Total $ 735,082 $ 611,808 ============ ============
See Notes to Consolidated Financial Statements 2 5 VERITAS DGC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
SIX MONTHS ENDED JANUARY, 31 -------------------------- 2001 2000 ----------- ----------- (In thousands) OPERATING ACTIVITIES: Net income $ 12,228 $ 403 Non-cash items included in net income: Depreciation and amortization 33,330 36,838 Net (gain) loss on disposition of property and equipment (1,053) 108 Equity in (earnings) loss of joint venture (109) 319 Amortization of multi-client data library 381 471 Deferred taxes 2 (3,983) Amortization of unearned compensation 292 319 Change in operating assets/liabilities: Accounts and notes receivable (24,212) (6,545) Materials and supplies inventory 501 444 Prepayments and other (7,174) (2,186) Multi-client data library (28,515) (53,999) Accounts payable and other accrued liabilities 9,120 4,632 Income taxes payable 8,786 (5,750) Other non-current liabilities 117 3,889 Other assets (5,192) 3,924 Other (1,688) (1,917) ----------- ----------- Total cash used in operating activities (3,186) (23,033) FINANCING ACTIVITIES: (Payments)/borrowings from long-term debt (42) 39 Senior notes issue costs (34) Net proceeds from sale of common stock 89,690 3,859 ----------- ----------- Total cash provided by financing activities 89,648 3,864 INVESTING ACTIVITIES: Decrease in restricted cash investments 206 102 Acquisitions, net of cash received (2,947) Purchase of property and equipment (35,889) (22,994) Sale of property and equipment 2,409 2,880 ----------- ----------- Total cash used in investing activities (33,274) (22,959) Currency loss on foreign cash 20 (60) ----------- ----------- Change in cash and cash equivalents 53,208 (42,188) Beginning cash and cash equivalents balance 43,154 73,447 ----------- ----------- Ending cash and cash equivalents balance $ 96,362 $ 31,259 =========== ===========
See Notes to Consolidated Financial Statements 3 6 VERITAS DGC INC. AND SUBSIDIARIES SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
SIX MONTHS ENDED JANUARY 31, -------------------------- 2001 2000 ----------- ---------- (In thousands) SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Increase in property and equipment for accounts payable - trade $ 645 $ 3,108 Utilization of net operating loss carryforwards existing prior to the quasi-reorganization resulting in an increase (decrease) in: Deferred tax asset valuation allowance (1,088) Additional paid-in capital 1,088 Treasury stock issued for future services resulting in an increase in: Additional paid-in-capital 146 37 Unearned compensation 307 610 Stock and options issued for purchase of Enertec Resource Services Inc. (net of cash received) 25,189 Stock issued for purchase of Fairweather Geophysical, LLC 500 Settlement of and interest payments from investments-available for sale 892 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (received) for: Interest - Senior notes 6,582 6,581 Equipment purchase obligations 5 3 Other 472 559 Income taxes 941 9,389
See Notes to Consolidated Financial Statements 4 7 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION We provide integrated geophysical services to the petroleum industry worldwide. The accompanying consolidated financial statements include our accounts and the accounts of majority-owned domestic and foreign subsidiaries. Investment in an 80% owned joint venture is accounted for on the equity method due to provisions in the joint venture agreement that give minority shareholders the right to exercise control. All material intercompany balances and transactions have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard requires companies to record derivative financial instruments on the balance sheet as assets or liabilities, as appropriate, at fair value. Gains or losses resulting from changes in the fair values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. We adopted this statement in the first quarter of the current year. Since adoption, we have neither held nor have we issued derivative instruments. In addition, we have not engaged in any hedging activities. 2. DEBT Debt is as follows:
January 31, July 31, 2001 2000 ---------- ---------- (In thousands) Senior notes due October 2003, at 9 3/4% $ 135,000 $ 135,000 Equipment purchase obligations maturing through July 2001, at 8.97% 64 106 ---------- ---------- Total 135,064 135,106 Less current maturities 64 106 ---------- ---------- Due after one year $ 135,000 $ 135,000 ========== ==========
The senior notes are due in October 2003 with interest payable semi-annually at 9 3/4% per annum. The senior notes are unsecured and are effectively subordinated to all of our secured debt, with respect to the assets securing such debt, and to all debt of our subsidiaries whether secured or unsecured. The indenture relating to the senior notes contains certain covenants that limit our ability to, among other things, incur additional debt, pay dividends and complete mergers, acquisitions and sales of assets. Upon a change in control, as defined in the indenture, each holder of the senior notes has the right to require us to purchase all or a portion of such holder's senior note at a price equal to 101% of the aggregate principal 5 8 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) UNAUDITED amount. We have the right to redeem the senior notes, in whole or part. On September 24, 1999, we repurchased $5.5 million of 9 3/4% senior notes on the open market at a price of $5.7 million, resulting in an extraordinary loss of $0.2 million, net of tax. On December 3, 1999, we reissued $1.0 million of 9 3/4% senior notes at a price of $1.0 million. On December 10, 1999, we reissued $4.6 million of 9 3/4% senior notes at a price of $4.7 million. We maintain a revolving credit agreement due July 2001 with commercial lenders that provides for advances up to $50.0 million. Advances are limited by a borrowing base, which is in excess of the credit limit at January 31, 2001 and bears interest, at our election, at LIBOR plus a margin based on certain financial ratios maintained by us or prime rate. Advances are secured by certain accounts receivable. Covenants in the agreement limit, among other things, our right to take certain actions, including creating indebtedness. In addition, the agreement requires us to maintain certain financial ratios. No advances were outstanding at January 31, 2001 and July 31, 2000, under the credit agreement. At January 31, 2001, $4.1 million in letters of credit were outstanding under the facility. Our equipment purchase obligations represent installment loans and capitalized lease obligations primarily related to computer and geophysical equipment. 3. OTHER ACCRUED LIABILITIES Other accrued liabilities consists of the following:
January 31, July 31, 2001 2000 ----------- ---------- (In thousands) Accrued payroll and benefits $ 11,817 $ 9,942 Deferred revenues $ 8,776 $ 15,370 Accrued taxes other than income $ 5,069 $ 4,255
4. OTHER INCOME Other income consists of the following:
Three Months Ended Six Months Ended January 31, January 31, ------------------------ ------------------------ 2001 2000 2001 2000 ---------- ---------- ---------- ---------- (In thousands) Interest income $ (1,634) $ (498) $ (2,635) $ (1,543) Net (gain) loss on disposition of property and (320) 110 (1,053) 108 equipment Net foreign currency exchange losses (gains) (573) 170 (359) 238 Other 9 22 2 22 ---------- ---------- ---------- ---------- Total $ (2,518) $ (196) $ (4,045) $ (1,175) ========== ========== ========== ==========
6 9 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) UNAUDITED 5. EARNINGS PER COMMON SHARE Earnings (losses) per common share - basic and diluted are computed as follows:
Three Months Ended Six Months Ended January 31, January 31, ------------------------ ----------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- (In thousands, except per share amounts) Net income before extraordinary item $ 7,220 $ 1,170 $ 12,228 $ 590 Extraordinary loss on debt repurchase 187 ---------- ---------- ---------- ---------- Net income $ 7,220 $ 1,170 $ 12,228 $ 403 ========== ========== ========== ========== Weighted average common shares 30,479 24,474 29,153 24,554 Basic Net income per common share before extraordinary item $ .24 $ .05 $ .42 $ .02 Loss per common share from extraordinary item (.01) ---------- ---------- ---------- ---------- Net income per common share $ .24 $ .05 $ .42 $ .02 ========== ========== ========== ========== Weighted average common shares - assuming dilution: Weighted average common shares 30,479 24,474 29,153 24,554 Shares issuable from assumed conversion of options 793 1,419 808 495 ---------- ---------- ---------- ---------- Total 31,272 25,893 29,961 25,049 ========== ========== ========== ========== Diluted Net income per common share before extraordinary item $ .23 $ .05 $ .41 $ .02 Loss per common share from extraordinary item (.01) ---------- ---------- ---------- ---------- Net income per common share $ .23 $ .05 $ .41 $ .02 ========== ========== ========== ==========
Veritas Energy Services Inc., exchangeable shares, which were issued in business combinations, and may be exchanged for our common stock and are identical to our common stock in all material respects, are included in the above computations. On October 26, 1999, we filed a prospectus supplement relating to the sale of up to 2.0 million shares of our common stock, from time to time through ordinary brokerage transactions, under a shelf registration. For the six months ended January 31, 2001, we issued approximately 0.1 million shares in connection with these transactions, generating approximately $2.9 million in net proceeds. In October 2000, we completed an offering of 3.1 million shares of common stock under the shelf registration statement, generating $82.4 million in net proceeds. In addition, during the six months ended January 31, 2001, 0.3 million options were exercised, generating $3.9 million in net proceeds, and 0.04 million shares were exercised under the employee stock purchase plan, generating $0.8 million in net proceeds. 7 10 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) UNAUDITED The following options to purchase common shares have been excluded from the computation assuming dilution because the options' exercise prices exceeded the average market price of the underlying common shares as of the date the period ended.
Three Months Ended Six Months Ended January 31, January 31, --------------------------------------- ------------------------------------- 2001 2000 2001 2000 ------------------ ----------------- ------------------- ----------------- Number of options 61,173 823,470 104,028 828,667 Exercise price range $ 28 3/4 - $55 1/8 $15 5/8 - $55 1/8 $27 13/16 - $55 1/8 $16 7/8 - $55 1/8 Expiring through August 2008 November 2008 August 2008 November 2008
6. UNREALIZED GAIN (LOSS) ON INVESTMENTS-AVAILABLE FOR SALE In fiscal year 1999, we exchanged a $4.7 million account receivable from Miller Exploration Company, a publicly traded company, for a long-term note receivable paying 18% interest. The interest rate changed to 9 3/4%, effective October 15, 2000. For the periods April 15, 1999 to October 14, 2000, interest was paid in common stock warrants, with an exercise price of $0.01 per share, in advance, at six-month intervals. Beginning October 15, 2000, interest will be paid in cash after the six-month intervals and no additional warrants will be issued. In addition, in fiscal year 1999, we exchanged an account receivable from Brigham Exploration Company, a publicly traded company, for shares of Brigham common stock. The cost basis of the investments available for sale is determined by the fair market value on the date received.
January 31, 2001 July 31, 2000 ------------------------------------ --------------------------------------- Unrealized Unrealized Cost Basis gain/(loss) Fair Value Cost Basis gain/(loss) Fair Value ---------- ---------- ---------- ---------- ----------- ---------- (In thousands) Brigham common stock $ 4,099 $ 1,581 $ 5,680 $ 4,099 $ (1,411) $ 2,688 Miller warrants 1,500 105 1,605 1,500 (204) 1,296 ---------- ---------- ---------- ---------- ----------- ---------- $ 5,599 $ 1,686 $ 7,285 $ 5,599 $ (1,615) $ 3,984 ========== ========== ========== ========== =========== ==========
8 11 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) UNAUDITED 7. SEGMENT INFORMATION We have two segments, land and marine operations, both of which provide geophysical products and services to the petroleum industry. The two segments have been aggregated as they are similar in their economic characteristics and the nature of their products, production processes and customers. A reconciliation of the reportable segments' results to those of the total enterprise is given below.
Three Months Ended Three Months Ended January 31, 2001 January 31, 2000 --------------------------------------- ---------------------------------------- Segments Corporate Total Segments Corporate Total ---------- ----------- ------------ ------------ ---------- ----------- (In thousands) Revenues $ 134,415 $ 134,415 $ 91,023 $ 91,023 Costs and expenses including joint venture 112,250 8,658 120,908 79,384 9,391 88,775 ---------- ----------- ------------ ------------ ---------- ------------ Net income (loss) before income tax 22,165 (8,658) 13,507 11,639 (9,391) 2,248
Six Months Ended Six Months Ended January 31, 2001 January 31, 2000 --------------------------------------- ---------------------------------------- Segments Corporate Total Segments Corporate Total ---------- ----------- ------------ ------------ ---------- ----------- (In thousands) Revenues $ 245,714 $ 245,714 $ 159,700 $ 159,700 Costs and expenses including joint venture 204,224 19,629 223,853 140,826 17,221 158,047 ---------- ----------- ------------ ------------ ---------- ------------ Net income (loss) before income tax 41,490 (19,629) 21,861 18,874 (17,221) 1,653
8. SUBSEQUENT EVENTS PURCHASE OF RC(2) On February 2, 2001, we acquired Reservoir Characterization Research and Consulting, Inc., ("RC(2)"), a Colorado corporation, in a stock-for-stock transaction. The total purchase price of RC(2) was approximately $34.9 million, consisting of $34.3 million of stock and options. 9 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors. These factors are more fully described in other reports filed with the Securities and Exchange Commission, including our fiscal year 2000 Form 10-K, and include changes in market conditions in the oil and gas industry as well as declines in prices of oil and gas. RESULTS OF OPERATIONS THREE MONTHS ENDED JANUARY 31, 2001 COMPARED WITH THREE MONTHS ENDED JANUARY 31, 2000 Revenues. Revenues increased 48%, from $91.0 million to $134.4 million due to a general increase in exploration spending by our customers in the current quarter. Multi-client revenue increased 25%, from $48.7 million to $60.8 million. This is largely due to increased licensing of multi-client surveys in the Gulf of Mexico and Canada. Contract revenue increased 74%, from $42.3 million to $73.6 million, driven by increased activity in Asia and Canada and increased utilization of land crews. Operating land crews increased from 11 to 18. Cost of services. Cost of services increased 56%, from $60.6 million to $94.4 million primarily as a result of the increase in revenue. Cost of services as a percent of revenues increased from 67% to 70%. This is due to licensing of an increased proportion of lower margin surveys during the quarter. Research and development. Research and development expense increased 19%, from $2.1 million to $2.5 million as a result of our continuing efforts to develop and employ leading edge technologies to improve the quality of our products and services. Depreciation and amortization. Depreciation and amortization expense decreased 12%, from $18.5 million to $16.2 million. In general, this is the result of assets becoming fully depreciated. Net property and equipment decreased by 8%, from $163.0 million to $149.6 million between the comparative income statement periods. Selling, general & administrative. Selling, general and administrative expense increased 58%, from $4.3 million to $6.8 million. The increase relates to relocation and rent expenses associated with the new headquarters facility in Houston, an increase in personnel cost, and expansion of our e-business and health and safety initiatives. Interest expense. Interest expense remained essentially flat, with long-term debt being the same in both quarters. Other income. Other income increased from $0.2 million to $2.5 million. Interest income increased by $1.2 million due to the increase in cash. Gains on the sale of fixed assets resulted in an increase of $0.4 million. Currency gains in the current year versus currency losses in the prior year resulted in an increase of $0.7 million. Income taxes. Income taxes increased from $1.1 million to $6.3 million as a result of our higher earnings in the current quarter with the effective tax rate remaining essentially flat. Equity in (earnings) loss of joint venture. Equity in (earnings) loss of joint venture, related to the Indonesian joint venture, increased from a loss of $83,000 to earnings of $119,000. An increase in marine contract work accounts for the increased profitability in the current quarter. 10 13 SIX MONTHS ENDED JANUARY 31, 2001 COMPARED WITH SIX MONTHS ENDED JANUARY 31, 2000 Revenues. Revenues increased 54%, from $159.7 million to $245.7 million due to a general increase in exploration spending by our customers in the current year. Multi-client revenue increased 48%, from $82.2 million to $122.0 million. This is largely due to expansion of onshore licensing in the U.S. and Canada and continued expansion in the Gulf of Mexico. Contract revenue increased 60%, from $77.5 million to $123.7 million, driven by increased activity in Asia Pacific and Canada and increased utilization of land crews. Operating land crews increased from 11 to 18. Cost of services. Cost of services increased 65%, from $103.3 million to $170.6 million primarily as a result of the increase in revenue. Cost of services as a percent of revenues increased from 65% to 69%. This is due to licensing of an increased proportion of lower margin surveys during the current year. Research and development. Research and development expense increased 18%, from $4.0 million to $4.7 million as a result of our continuing efforts to develop and employ leading edge technologies to improve the quality of our products and services. Depreciation and amortization. Depreciation and amortization expense decreased 10%, from $36.8 million to $33.3 million. In general, this is the result of assets becoming fully depreciated. Net property and equipment decreased by 8%, from $163.0 million to $149.6 million between the comparative income statement periods. Selling, general & administrative. Selling, general and administrative expense increased 60%, from $7.7 million to $12.3 million. The increase relates to relocation and rent expenses associated with the new headquarters facility in Houston, an increase in personnel cost, and expansion of our e-business and health and safety initiatives. Interest expense. Interest expense remained essentially flat, with long-term debt being the same in both quarters. Other income. Other income increased from $1.2 million to $4.0 million. Interest income increased by $1.1 million due to the increase in cash. Gains on the sale of fixed assets resulted in an increase of $1.1 million. Currency gains in the current year versus currency losses in the prior year resulted in an increase of $0.6 million. Income taxes. Income taxes increased from $1.1 million to $9.6 million as a result of our higher earnings in the current year. The decrease in the effective tax rate from 54% to 44% is primarily attributable to income in the current year versus unbenefitted losses in the prior year. Equity in (earnings) loss of joint venture. Equity in (earnings) loss of joint venture, related to the Indonesian joint venture, increased from a loss of $319,000 to earnings of $108,000. An increase in marine contract work accounts for the increased profitability in the current year. LIQUIDITY AND CAPITAL RESOURCES SOURCES AND USES Our internal sources of liquidity are cash, cash equivalents and cash flow from operations. External sources include public financing, equity sales, the unutilized portion of a revolving credit facility, equipment financing and trade credit. We believe that these sources of funds are adequate to meet our liquidity needs for fiscal 2001. 11 14 As of January 31, 2001, we had $135.0 million in senior notes outstanding due in October 2003. These notes contain a change of control provision allowing them to be callable by the holder under certain conditions. We also have a revolving credit facility due July 2001 from commercial lenders that provides advances up to $50.0 million. At January 31, 2001, the borrowing base exceeded the credit limit. Advances bear interest, at our election, at LIBOR plus a margin based on certain financial ratios maintained by us or prime rate. Advances are secured by certain accounts receivable. As of January 31, 2001, there were no outstanding advances under the credit facility, but $4.1 million of the credit facility was utilized for letters of credit. An additional $45.9 million is available for borrowings. We require significant amounts of capital to support our operations and fund capital spending and research and development programs. Our current capital expenditure forecast for fiscal 2001 is $100.0 million, which includes expenditures of approximately $50 million to expand or upgrade current operating equipment. We are forecasting $9.2 million of research and development spending in fiscal 2001. As demand for our geophysical products and services continues to increase during fiscal 2001, we may increase our expenditures and business investments as we take advantage of expansion opportunities. Currently, we are forecasting $60.0 million of net investment in our data library (measured as the change in the balance sheet account) during fiscal year 2001. Because of the elapsed time between survey execution, sale and ultimate cash receipt, multi-client work generally requires greater amounts of working capital than contract work. Depending upon the timing of the sales of the multi-client surveys and the contract terms relating to the collection of the proceeds from such sales, our liquidity may be affected. While we seek pre-funding commitments from customers for a portion of the cost of these surveys, pre-funding levels do not generally affect our library spending. We believe that these multi-client surveys have good long-term revenue, earnings and cash flow potential, but there is no assurance that we will recover the costs of these surveys. We will require substantial cash flow to continue operations on a satisfactory basis, complete our capital expenditure and research and development programs and meet our principal and interest obligations with respect to outstanding indebtedness. While we believe that we have adequate sources of funds to meet our liquidity needs, our ability to meet our obligations depends on our future performance, which, in turn, is subject to many factors beyond our control. Key internal factors affecting future results include utilization levels of acquisition and processing assets and the level of multi-client data library licensing, all of which are driven by the external factors of exploration spending and, ultimately, underlying commodity prices. To ensure that we have available as many financing options as possible, we filed a shelf registration allowing the issuance of up to $200 million in debt, preferred stock or common stock. On October 26, 1999, we filed a prospectus supplement relating to the sale of up to 2.0 million shares of our common stock, from time to time through ordinary brokerage transactions, under the shelf registration. For the six months ended January 31, 2001, we issued approximately 0.1 million shares in connection with these transactions, generating approximately $2.9 million in net proceeds. In addition, in October 2000, we completed an offering of 3.1 million shares of common stock under the shelf registration statement. This offering generated $82.4 million in net proceeds. The total issuance of equity under the shelf registration has been 4.4 million shares generating $112.5 million in net proceeds. OTHER Since our quasi-reorganization with respect to Digicon Inc. on July 31, 1991, the tax benefits of net operating loss carryforwards existing at the date of the quasi-reorganization have been recognized through a direct addition to additional paid-in capital, when realization is more likely than not. Additionally, the utilization of the net operating loss carryforwards existing at the date of the quasi-reorganization is 12 15 subject to certain limitations. For the six months ended January 31, 2001 no amount has been recognized related to these benefits, due to our U.K. operations decreased profitability. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard requires companies to record derivative financial instruments on the balance sheet as assets or liabilities, as appropriate, at fair value. Gains or losses resulting from changes in the fair values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. We adopted this statement in first quarter of the current year. Since adoption, we have neither held nor have we issued derivative instruments. In addition, we have not engaged in any hedging activities. On February 2, 2001, we acquired Reservoir Characterization Research and Consulting, Inc., ("RC(2)"), a Colorado corporation, in a stock-for-stock transaction. The total purchase price of RC(2) was approximately $34.9 million, consisting of $34.3 million of stock and options. We expect this transaction will have a slight dilutive impact in the short term, but we believe the technology acquired is critical to developing the growing market for reservoir services. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK There have been no significant changes that would affect our exposure to market risk since July 31, 2000. 13 16 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) EXHIBITS FILED WITH THIS REPORT: Exhibit 3-A) Restated Certificate of Incorporation with amendments of Veritas DGC Inc. dated August 30, 1996. (Exhibit 3.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated September 16, 1996 is incorporated herein by reference.) 3-B) Certificate of Ownership and Merger of New Digicon Inc. and Digicon Inc. (Exhibit 3-B to Digicon Inc.'s Registration Statement No. 33-43873 dated November 12, 1991 is incorporated herein by reference.) 3-C) By-laws of New Digicon Inc. dated June 24, 1991. (Exhibit 3-C to Digicon Inc.'s Registration Statement No. 33-43873 dated November 12, 1991 is incorporated herein by reference.) 3-D) Certificate of Amendment to Restated Certificate of Incorporation of Veritas DGC Inc. dated September 30, 1999. (Exhibit 3-D to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is incorporated herein by reference.) 3-F) By-laws of Veritas DGC Inc. as amended and restated March 7, 2000. (Exhibit 3-E to Veritas DGC Inc.'s Form 10-Q for the quarter ended January 31, 2000 is incorporated herein by reference.) 4-A) Specimen certificate for Senior Notes (Series A). (Included as part of Section 2.2 Exhibit 4-B to Veritas DGC Inc.'s Registration Statement No. 333-12481 dated September 20, 1996 is incorporated herein by reference.) 4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes due 2003 of Veritas DGC Inc. between Veritas DGC Inc. and Fleet National Bank, as trustee. (Exhibit 4-B to Veritas DGC Inc.'s Registration Statement No. 333-12481 dated September 20, 1996 is incorporated herein by reference.) 4-C) Specimen Veritas DGC Inc. Common Stock certificate. (Exhibit 4-C to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1996 is incorporated herein by reference.) 4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon Shareholder Services, L.L.C. dated May 15, 1997. (Exhibit 4.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated May 27, 1997 is incorporated herein by reference.) 4-E) Form of Restricted Stock Grant Agreement. (Exhibit 4.8 to Veritas DGC Inc.'s Registration Statement No. 333-48953 dated March 31, 1998 is incorporated herein by reference.) 4-F) Restricted Stock Plan as amended and restated March 7, 2000. (Exhibit 4-F to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 2000 in incorporated herein by reference.) 4-G) Key Contributor Incentive Plan as Amended and Restated dated March 9, 1999. (Exhibit 4.9 to Veritas DGC Inc.'s Registration Statement No. 333-74305 dated March 12, 1999 is incorporated herein by reference.) 14 17 4-H) Specimen for Senior Notes (Series C). (Exhibit 4-K to Veritas DGC Inc.'s Form 10-Q for the quarter ended January 31, 1999 is incorporated herein by reference.) 4-I) Indentures relating to the 9 3/4% Senior Notes due 2003, Series B and Series C of Veritas DGC Inc. between Veritas DGC Inc. and State Street Bank and Trust Company dated October 28, 1998. (Exhibit 4.3 to Veritas DGC Inc.'s Current Report on Form 8-K dated November 12, 1998 is incorporated herein by reference.) 9-A) Voting and Exchange Trust Agreement dated August 30, 1996 among Digicon Inc., Veritas Energy Services Inc. and the R-M Trust Company. (Exhibit 9.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated September 16, 1996 is incorporated herein by reference.) 9-B) Voting and Exchange Trust Agreement dated September 30, 1999 among Veritas DGC Inc., Veritas Energy Services Inc. and the CIBC Mellon Trust Company. 10-A) Support Agreement dated August 30, 1996 between Digicon Inc. and Veritas Energy Services Inc. (Exhibit 10.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated August 30, 1996 is incorporated herein by reference.) 10-B) 1992 Non-Employee Director Stock Option Plan as amended and restated March 7, 2000. (Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 2000 in incorporated herein by reference.) 10-C) 1992 Employee Nonqualified Stock Option Plan as amended and restated March 7, 2000. (Exhibit 10-C to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 2000 is incorporated herein by reference.) 10-D) 1997 Employee Stock Purchase Plan. (Exhibit 4.1 to Veritas DGC Inc.'s Registration Statement No. 333-38377 dated October 21, 1997 is incorporated herein by reference.) 10-E) Restricted Stock Agreement dated April 1, 1997 between Veritas DGC Inc. and Anthony Tripodo. (Exhibit 10-O to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is incorporated herein by reference.) 10-F) Employment Agreement executed by David B. Robson. (Exhibit 10-L to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is incorporated herein by reference.) 10-G) Employment Agreement executed by Stephen J. Ludlow. (Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 1997 is incorporated herein by reference.) 10-H) Employment Agreement executed by Anthony Tripodo. (Refer to Exhibit 10-I to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 1997 is incorporated herein by reference.) 10-I) Employment Agreement executed by Rene M.J. VandenBrand. (Exhibit 10-N to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is incorporated herein by reference.) 10-J) Employment Agreement executed by Timothy L. Wells. (Exhibit 10-J to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is incorporated herein by reference.) 10-K) Credit Agreement among Veritas DGC Inc., as borrower, and Bank One, Texas, N.A., as issuing bank, as a bank and agent for the banks, and the banks therein named dated 15 18 November 1, 1999. (Exhibit 10-N to Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31, 1999 is incorporated herein by reference.) 10-L) Sales agency agreement between Veritas DGC Inc. and Paine Webber Incorporated, dated October 26, 1999. (Exhibit 10-N to Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31, 1999 is incorporated herein by reference.) 10-M) Form of Indemnity Agreement between Veritas DGC Inc. and its executive officers and directors as amended and restated March 7, 2000. (Exhibit 10-M to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 2000 is incorporated herein by reference.) 10-N) Employment Agreement executed by Richard C. White. (Exhibit 10-Q to Veritas DGC Inc's Form 10-Q for the quarter ended January 31, 2000 is incorporated herein by reference.) 10-O) Indemnity Agreement between Veritas DGC Inc. and Richard C. White. (Exhibit 10-Q to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 2000 is incorporated herein by reference.) 10-P) Settlement Agreement between Veritas DGC Inc. and Richard C. White. 10-Q) Deferred Compensation Plan effective January 1, 2001. 10-R) Rabbi Trust Agreement between Veritas DGC Inc. and Austin Trust Company relating to the Deferred Compensation Plan. *10-S) 2001 Key Employee Nonqualified Stock Option Plan effective February 1, 2001. *10-T) 2001 Key Employee Restricted Stock Plan effective February 1, 2001. *27) Financial Data Schedule. * Filed herewith b) REPORTS ON FORM 8-K On January 18, 2001, we filed a Form 8-K reporting the Agreement and Plan of Merger with Reservoir Characterization Research and Consulting, Inc. 16 19 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; thereunto duly authorized, on the 13th day of March 2001. VERITAS DGC INC. By: /s/ David B. Robson ---------------------------------------- DAVID B. ROBSON Chairman of the Board and Chief Executive Officer /s/ Matthew D. Fitzgerald ---------------------------------------- MATTHEW D. FITZGERALD Executive Vice President, Chief Financial Officer and Treasurer 17 20 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10-S) 2001 Key Employee Nonqualified Stock Option Plan effective February 1, 2001. 10-Q) 2001 Key Employee Restricted Stock Plan effective February 1, 2001. 27) Financial Data Schedule
EX-10.Q 2 h84927ex10-q.txt 2001 KEY EMPLOYEE RESTRICTED STOCK PLAN - 2/1/01 1 EXHIBIT 10-T VERITAS DGC INC. 2001 KEY EMPLOYEE RESTRICTED STOCK PLAN ARTICLE I PURPOSE AND TERM The purpose of the Plan is to foster and promote the long-term financial success of Veritas DGC Inc. (the "Company") and its Subsidiaries and to increase stockholder value by: (a) encouraging the commitment of selected key Employees, (b) motivating superior performance of such Employees by means of long-term performance related incentives, (c) encouraging and providing such Employees with a program for obtaining ownership interests in the Company which link and align their personal interests to those of the Company's stockholders, (d) attracting and retaining key Employees by providing competitive incentive compensation opportunities, and (e) enabling key Employees to share in the long-term growth and success of the Company. The Plan shall become effective as of February 1, 2001 (the "Effective Date"). The Plan shall commence on the Effective Date, and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Section 8.5, until all Shares subject to the Plan have been purchased or acquired according to its provisions. No Incentive Awards shall be granted under the Plan after the expiration of ten (10) years from the Effective Date. ARTICLE II DEFINITIONS The words and phrases defined in this Article shall have the meaning set out in Schedule A attached hereto, unless the context in which any such word or phrase appears reasonably requires a broader, narrower or different meaning. ARTICLE III ADMINISTRATION OF THE PLAN 3.1 AUTHORITY OF THE COMMITTEE. Except as may be limited by law and subject to the provisions herein, the Committee shall have full power to (i) select Grantees who shall participate in the Plan; (ii) determine the sizes, duration and types of Incentive Awards; (iii) determine the terms and conditions of Incentive Awards and Restricted Stock Agreements; (iv) determine whether any Shares subject to Incentive Awards will be subject to any restrictions on transfer; (v) construe and interpret the Plan and any Restricted Stock Agreement or other agreement entered into under the Plan; and 2 (vi) establish, amend, or waive rules for the Plan's administration. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. 3.2 MEETINGS. The Committee shall designate a chairman from among its members who shall preside at all of its meetings, and shall designate a secretary, without regard to whether that person is a member of the Committee, who shall keep the minutes of the proceedings and all records, documents, and data pertaining to its administration of the Plan. Meetings shall be held at such times and places as shall be determined by the Committee and the Committee may hold telephonic meetings. The Committee may take any action otherwise proper under the Plan by the affirmative vote, taken with or without a meeting, of a majority of its members. The Committee may authorize any one or more of their members or any officer of the Company to execute and deliver documents on behalf of the Committee. 3.3 DECISIONS BINDING. All determinations and decisions made by the Committee shall be made in its discretion pursuant to the provisions of the Plan, and shall be final, conclusive and binding on all persons including the Company, its shareholders, Employees, Grantees, and their estates and beneficiaries. The Committee's decisions and determinations with respect to any Incentive Award need not be uniform and may be made selectively among Incentive Awards and Grantees, whether or not such Incentive Awards are similar or such Grantees are similarly situated. 3.4 MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to any required stockholder approval requirements, if applicable, the Committee may, in its discretion, provide for the extension of the exercisability of an Incentive Award, accelerate the vesting or exercisability of an Incentive Award, eliminate or make less restrictive any restrictions contained in an Incentive Award, waive any restriction or other provisions of an Incentive Award, or otherwise amend or modify an Incentive Award in any manner that is either (i) not adverse to the Grantee to whom such Incentive Award was granted, or (ii) consented to by such Grantee. 3.5 DELEGATION OF AUTHORITY. The Committee may delegate to any Authorized Officer certain of its duties under the Plan pursuant to such conditions or limitations as the Committee may establish from time to time. 3.6 EXPENSES OF COMMITTEE. The Committee may employ legal counsel, including, without limitation, independent legal counsel and counsel regularly employed by the Company, and other agents as the Committee may deem appropriate for the administration of the Plan. The Committee may rely upon any opinion or computation received from any such counsel or agent. All expenses incurred by the Committee in interpreting and administering the Plan, including, without limitation, meeting expenses and professional fees, shall be paid by the Company. 3.7 SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may, in its absolute discretion, grant Incentive Awards to Grantees -2- 3 on the condition that such Grantees surrender to the Committee for cancellation such other Incentive Awards as the Committee directs. Incentive Awards granted on the condition precedent of surrender of outstanding Incentive Awards shall not count against the limits set forth in Section 4.1 until such time as such previous Incentive Awards are surrendered and canceled. 3.8 INDEMNIFICATION. Each person who is or was a member of the Committee shall be indemnified by the Company against and from any damage, loss, liability, cost and expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan, except for any such act or omission constituting willful misconduct or gross negligence. Such person shall be indemnified by the Company for all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. ARTICLE IV PURPOSE AND TERM 4.1 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS. Subject to adjustment under Section 7.5, there shall be available for Incentive Awards under the Plan an aggregate of 200,000 Shares of Common Stock. The number of Shares of Common Stock subject to Incentive Awards that are forfeited or terminated, or are settled in a manner such that all or some of the Shares covered by the Incentive Award are not issued to a Grantee, shall again immediately become available for Incentive Awards hereunder. The Common Stock available for issuance or transfer under the Plan shall be made available from Shares now or hereafter (a) held in the treasury of the Company, (b) authorized but unissued Shares or (c) Shares to be purchased or acquired by the Company. No fractional Shares shall be issued under the Plan. ARTICLE V ELIGIBILITY The individuals who shall be eligible to receive Incentive Awards shall be those Employees who are not officers (as defined by the Securities and Exchange Commission in Rule 16a-1(f) under the Exchange Act, or any successor rule) or directors of the Company, who have substantial -3- 4 responsibility for the management and growth of the Company or any of its Subsidiaries as the Committee shall determine from time to time. ARTICLE VI RESTRICTED STOCK AWARDS 6.1 GRANT. In consideration for services by the Grantee, Shares of Restricted Stock may be awarded under the Plan by the Committee with such restrictions during the Restriction Period as the Committee designates in its discretion, any of which restrictions may differ with respect to a particular Grantee. Restricted Stock shall be awarded for no additional consideration or such additional consideration as the Committee may determine, which consideration may be less than, equal to or more than the Fair Market Value of the Shares of Restricted Stock on the date of grant. The terms and conditions of each grant of Restricted Stock shall be evidenced by a Restricted Stock Agreement. 6.2 IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED STOCK. Unless otherwise specified in the Grantee's Restricted Stock Agreement, each Incentive Award shall constitute an immediate transfer of the record and beneficial ownership of the Shares of Restricted Stock to the Grantee in consideration of the performance of services as an Employee, entitling such Grantee to all voting and other ownership rights in such Shares subject to any restrictions thereon. As specified in the Restricted Stock Agreement, an Incentive Award may limit the Grantee's dividend rights during the Restriction Period in which the Shares of Restricted Stock are subject to a "substantial risk of forfeiture" (within the meaning given to such term under Code Section 83) and restrictions on transfer. In the Restricted Stock Agreement, the Committee may apply any restrictions to the dividends that the Committee deems appropriate. As determined by the Committee, Shares awarded pursuant to a grant of Restricted Stock may be issued in the name of the Grantee and held, together with a stock power endorsed by the Grantee in blank, by the Committee or the Secretary of the Company (or their delegates) as a depository for safekeeping until such time as the forfeiture restrictions and restrictions on transfer have lapsed. All such terms and conditions shall be set forth in the particular Grantee's Restricted Stock Agreement. The Company or Committee shall issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee. 6.3 RESTRICTIONS (a) Forfeiture of Restricted Stock. Restricted Stock awarded to a Grantee may be subject to the following restrictions until the expiration of the Restriction Period: (i) a restriction that constitutes a "substantial risk of forfeiture" (as defined in -4- 5 Code Section 83), or a restriction on transferability under Code Section 83; and (ii) any other restrictions that the Committee determines are appropriate, including, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee. Any such restrictions shall be set forth in the particular Grantee's Restricted Stock Agreement. (b) Issuance of Certificates. Coincident with or promptly after the grant date with respect to Shares of Restricted Stock, the Company shall cause to be issued a stock certificate, registered in the name of the Grantee to whom such Restricted Stock was granted, evidencing such Shares; provided, however, that the Company shall not cause to be issued such a stock certificate unless it has received a stock power duly endorsed in blank by the Grantee with respect to such Shares. Each such stock certificate shall bear the following legend or any other legend approved by the Company: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE VERITAS DGC INC. RESTRICTED STOCK PLAN AND A RESTRICTED STOCK AGREEMENT DATED _______________, ____ BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND VERITAS DGC INC. RESTRICTIONS ON THE RIGHT TO OWN OR TRANSFER THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE BEEN IMPOSED PURSUANT TO SAID RESTRICTED STOCK AGREEMENT. A COPY OF THE RESTRICTED STOCK AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE HOLDER REQUESTING SUCH COPY. Such legend shall not be removed from the certificate evidencing such Shares of Restricted Stock until such Shares vest pursuant to the terms of the Restricted Stock Agreement. (c) Removal of Restrictions. The Committee, in its discretion, shall have the authority to remove any or all of the restrictions on the Restricted Stock if it determines that, by reason of a change in applicable law or another change in circumstance arising after the grant date of the Restricted Stock, such action is appropriate. -5- 6 6.4 DELIVERY OF SHARES OF COMMON STOCK. Subject to withholding taxes under Section 8.2 and to the terms of the Restricted Stock Agreement, a stock certificate evidencing the Shares of Restricted Stock with respect to which the restrictions in the Restricted Stock Agreement have lapsed or otherwise been satisfied shall be delivered to the Grantee or other appropriate recipient free of restrictions. Such delivery shall be effected for all purposes when the Company shall have deposited such certificate in the United States mail, addressed to the Grantee or other appropriate recipient. 6.5 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK. The Grantee shall be responsible for the payment of any federal, state or other income taxes due in connection with the Grant, whether such taxes are due at the time the Incentive Award is granted or otherwise. ARTICLE VII PROVISIONS RELATING TO PLAN PARTICIPATION 7.1 PLAN CONDITIONS. (a) Restricted Stock Agreement. Each Grantee to whom an Incentive Award is granted shall be required to enter into a Restricted Stock Agreement with the Company, in such a form as is provided by the Committee. The Restricted Stock Agreement shall contain specific terms as determined by the Committee, in its discretion, with respect to the Grantee's particular Incentive Award. Such terms need not be uniform among all Grantees or any similarly-situated Grantees. The Restricted Stock Agreement may include, without limitation, vesting, forfeiture and other provisions particular to the particular Grantee's Incentive Award, as well as, for example, provisions to the effect that the Grantee (i) shall not disclose any confidential information acquired during Employment with the Company, (ii) shall abide by all the terms and conditions of the Plan and such other terms and conditions as may be imposed by the Committee, (iii) shall not interfere with the employment or other service of any employee, (iv) shall not compete with the Company or become involved in a conflict of interest with the interests of the Company, (v) shall forfeit an Incentive Award if terminated for Cause, (vi) shall not be permitted to make an election under Section 83(b) of the Code when applicable, and (vii) shall be subject to any other agreement between the Grantee and the Company regarding Shares that may be acquired under an Incentive Award including, without limitation, an agreement restricting the transferability of Shares by Grantee. A Restricted Stock Agreement shall include such terms and conditions as are determined by the Committee, in its discretion, to be appropriate with respect to any individual Grantee. The Restricted Stock Agreement shall be signed by the Grantee to whom the Incentive Award is made and by an Authorized Officer. -6- 7 (b) No Right to Employment. Nothing in the Plan or any instrument executed pursuant to the Plan shall create any employment rights (including without limitation, rights to continued employment) in any Grantee or affect the right of the Company or a Subsidiary to terminate the employment of any Grantee at any time without regard to the existence of the Plan. (c) Securities Requirements. The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933 of any Shares of Common Stock to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing Shares pursuant to the Plan unless and until the Company is advised by its legal counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities, and the requirements of any securities exchange on which Shares are traded. The Committee may require, as a condition of the issuance and delivery of certificates evidencing Shares pursuant to the terms hereof, that the recipient of such Shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee, in its discretion, deems to be necessary or desirable. 7.2 TRANSFERABILITY. (a) Non-Transferable Awards. No Incentive Award and no right under the Plan, contingent or otherwise, will be (i) assignable, saleable, or otherwise transferable by a Grantee except by will or by the laws of descent and distribution, or (ii) subject to any encumbrance, pledge, lien, assignment or charge of any nature. No transfer by will or by the laws of descent and distribution shall be effective to bind the Company unless the Committee has been furnished with a copy of the deceased Grantee's enforceable will or such other evidence as the Committee deems necessary to establish the validity of the transfer. Any attempted transfer in violation of this Section 7.2(a) shall be void and ineffective. (b) Ability to Exercise Rights. Subject to a valid beneficiary designation pursuant to Section 8.4, only the Grantee (or his legal guardian in the event of Grantee's Disability), or in the event of his death, his estate, may assume any rights of the Grantee hereunder. 7.3 RIGHTS AS A STOCKHOLDER. (a) Stockholder Rights. Except as otherwise provided in his Restricted Stock Agreement for the grant of Restricted Stock, the Grantee (or a permitted transferee of such Grantee) shall have voting and other rights as a stockholder with respect to such Shares of Restricted Stock prior to the lapse of any restrictions thereon. -7- 8 (b) Representation of Ownership. In the case of the exercise of an Incentive Award by a person or estate acquiring the right to exercise such Incentive Award by reason of the death or Disability of a Grantee, the Committee may require evidence as to the ownership of such Incentive Award, or the authority of such person, and may require such consents and releases of taxing authorities as the Committee deems advisable. 7.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK. The exercise of any Incentive Award granted hereunder shall only be effective at such time as legal counsel to the Company shall have determined that the issuance and delivery of Shares of Common Stock pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authorities and the requirements of any securities exchange on which Shares are traded. The Committee may, in its discretion, defer the effectiveness of any exercise of an Incentive Award in order to allow the issuance of Shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Grantee in writing of its decision to defer the effectiveness of the exercise of an Incentive Award. During the period that the effectiveness of an Incentive Award has been deferred, the Grantee may, by written notice to the Committee, withdraw such exercise and obtain the refund of any amount paid with respect thereto. 7.5 CHANGE IN STOCK AND ADJUSTMENTS. (a) Changes in Law or Circumstances. Subject to Section 7.7 (which only applies in the event of a Change in Control), in the event of any change in applicable laws or any change in circumstances which results in or would result in any dilution of the rights granted under the Plan, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan, then, if the Committee should determine, in its absolute discretion, that such change equitably requires an adjustment in the number or kind of shares of stock or other securities or property theretofore subject, or which may become subject, to issuance or transfer under the Plan or in the terms and conditions of outstanding Incentive Awards, such adjustment shall be made in accordance with such determination. Such adjustments may include changes with respect to (i) the aggregate number of Shares that may be issued under the Plan, (ii) the number of Shares subject to Incentive Awards, and (iii) the price per Share for outstanding Incentive Awards. (b) Exercise of Corporate Powers. The existence of the Plan or outstanding Incentive Awards hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalization, reorganization or other changes in the Company's capital structure or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common -8- 9 Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character or otherwise. (c) Recapitalization of the Company. Subject to Section 7.7, if while there are Incentive Awards outstanding, the Company shall effect any subdivision or consolidation of Shares of Common Stock or other capital readjustment, the payment of a stock dividend, stock split, combination of Shares, recapitalization or other increase or reduction in the number of Shares outstanding, without receiving compensation therefor in money, services or property, then the number of Shares available under the Plan and the number of Incentive Awards which may thereafter be exercised shall (i) in the event of an increase in the number of Shares outstanding, be proportionately increased and the price per share of the Incentive Awards awarded shall be proportionately reduced; and (ii) in the event of a reduction in the number of Shares outstanding, be proportionately reduced, and the price per share of the Incentive Awards awarded shall be proportionately increased. The Committee shall take such action and whatever other action it deems appropriate, in its discretion, so that the value of each outstanding Incentive Award to the Grantee shall not be adversely affected by a corporate event described in this subsection (c). (d) Reorganization of the Company. Subject to Section 7.7, if the Company is reorganized, merged or consolidated, or is a party to a plan of exchange with another corporation, pursuant to which reorganization, merger, consolidation or exchange, stockholders of the Company receive any Shares of Common Stock or other securities or property, or if the Company should distribute securities of another corporation to its stockholders, each Grantee shall be entitled to receive, in lieu of the number of Restricted Stock shares, with a corresponding adjustment to the price per Share of said Incentive Awards, to which he would have been entitled if, immediately prior to such corporate action, such Grantee had been the holder of record of a number of Shares equal to the number of the outstanding Incentive Awards payable in Shares that were previously awarded to him. For this purpose, Shares of Restricted Stock shall be treated the same as unrestricted outstanding Shares of Common Stock. In this regard, the Committee shall take whatever other action it deems appropriate to preserve the rights of Grantees holding outstanding Incentive Awards. (e) Issue of Common Stock by the Company. Except as hereinabove expressly provided in this Section 7.5 and subject to Section 7.7, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon any conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of, or price per Share of, any Incentive Awards then outstanding under previously granted Incentive Awards; provided, however, in -9- 10 such event, outstanding Shares of Restricted Stock shall be treated the same as outstanding unrestricted Shares of Common Stock. (f) Acquisition of the Company. Subject to Section 7.7, in the case of any sale of assets, merger, consolidation or combination of the Company with or into another corporation other than a transaction in which the Company is the continuing or surviving corporation and which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property, or any combination thereof (an "Acquisition"), in the absolute discretion of the Committee, any Grantee who holds an outstanding Incentive Award shall have the right (subject to any limitation applicable to the Incentive Award) thereafter and during the term of the Incentive Award, to receive upon exercise thereof the Acquisition Consideration (as defined below) receivable upon the Acquisition by a holder of the number of Shares which would have been obtained upon exercise of the Incentive Award immediately prior to the Acquisition. The term "Acquisition Consideration" shall mean the kind and amount of shares of the surviving or new corporation, cash, securities, evidence of indebtedness, other property or any combination thereof receivable in respect of one Share upon consummation of an Acquisition. The Committee, in its discretion, shall have the authority to take whatever action it deems appropriate to effectuate the provisions of this subsection (f). (g) Assumption under the Plan of Other Restricted Stock Awards. The Committee, in its absolute discretion, may authorize the assumption and continuation under the Plan of outstanding stock-based incentive awards that were granted under a plan or agreement that is or was maintained by a corporation or other entity that was merged into, consolidated with, or whose stock or assets were acquired by, the Company as the surviving corporation. Any such action shall be upon such terms and conditions as the Committee, in its discretion, may deem appropriate, including provisions to preserve the holder's rights under the previously granted stock-based restricted stock award. Any such assumption and continuation of any such previously granted and unexercised restricted stock award shall be treated as an outstanding Incentive Award under the Plan and shall thus count against the number of Shares reserved for issuance pursuant to Section 4.1. (h) Assumption of Incentive Awards by a Successor. In the event of a dissolution or liquidation of the Company, a sale of all or substantially all of the Company's assets, a merger or consolidation involving the Company in which the Company is not the surviving corporation, or a merger or consolidation involving the Company in which the Company is the surviving corporation but the holders of Shares of Common Stock receive securities of another corporation and/or other property, including cash, the Committee shall, in its absolute discretion, have the right and power to: (i) cancel, effective immediately prior to the occurrence of such corporate event, each outstanding Incentive Award (whether or not then -10- 11 exercisable), and, in full consideration of such cancellation, pay to the Grantee to whom such Incentive Award was granted an amount in cash equal to the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holder of a Share of Common Stock as a result of such event over (B) the Grantee's purchase price, if any, under such Incentive Award; or (ii) provide for the exchange of each Incentive Award outstanding immediately prior to such corporate event (whether or not then exercisable) for another award on some or all of the property for which such Incentive Award is exchanged and, incident thereto, make an equitable adjustment as determined by the Committee, in its discretion, in the purchase price of the Incentive Award, or the number of Shares or amount of cash subject to the Incentive Award or, if deemed appropriate, provide for a cash payment to the Grantee in consideration for the exchange of his Incentive Award. The Committee, in its discretion, shall have the authority to take whatever action it deems appropriate to effectuate the provisions of this subsection (h). 7.6 TERMINATION OF EMPLOYMENT, DEATH AND DISABILITY. (a) Termination of Employment. Unless otherwise expressly provided in his Restricted Stock Agreement, upon Grantee's Retirement or any other Termination of Employment for any reason except due to his death or Disability, any non-vested portion of his outstanding Incentive Award at the time of such termination shall automatically expire and terminate and no further vesting shall occur. (b) Disability or Death. Unless otherwise expressly provided in his Restricted Stock Agreement, upon termination of Employment as a result of the Grantee's Disability or death, any non-vested portion of his Incentive Award shall become 100% vested upon termination of Employment due to Disability or death. (c) Continuation of Incentive Award. Subject to applicable law, in the event that a Grantee ceases to be an Employee, for whatever reason, the Committee and Grantee may mutually agree with respect to any outstanding Incentive Award then held by the Grantee (i) for an acceleration or other adjustment in any vesting schedule applicable to the Incentive Award, or (ii) to any other change in the terms and conditions of the Incentive Award. In the event of any such change to an outstanding Incentive Award, a written amendment to the Grantee's Restricted Stock Agreement shall be required. 7.7 CHANGE IN CONTROL. Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below), the following actions shall automatically occur as of the day -11- 12 immediately preceding the Change in Control date unless otherwise expressly provided in the Grantee's Restricted Stock Agreement: (a) all of the restrictions and conditions of any Incentive Award then outstanding shall be deemed satisfied, and the Restriction Period with respect thereto shall be deemed to have lapsed and expired; and (b) all Restricted Stock shall be 100% vested and deemed earned in full. Notwithstanding any other provision of the Plan, unless expressly provided otherwise in the Grantee's Restricted Stock Agreement, the provisions of this Section 7.7 may not be terminated, amended, or modified to adversely affect any Incentive Award theretofore granted under the Plan without the prior written consent of the Grantee with respect to his outstanding Incentive Award subject, however, to the last paragraph of this Section 7.7. 7.8 EXCHANGE OF INCENTIVE AWARDS. The Committee may, in its discretion, permit any Grantee to surrender outstanding Incentive Awards in order to exercise or realize his rights under other Incentive Awards or in exchange for the grant of new Incentive Awards, or require holders of Incentive Awards to surrender outstanding Incentive Awards (or comparable rights under other plans or arrangements) as a condition precedent to the grant of new Incentive Awards. 7.9 FINANCING. The Company may extend and maintain, or arrange for and guarantee, the extension and maintenance of financing to any Grantee to purchase Shares pursuant to exercise of an Incentive Award upon such terms as are approved by the Committee in its discretion. ARTICLE VIII MISCELLANEOUS PROVISIONS 8.1 FUNDING AND LIABILITY OF COMPANY. No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made, or otherwise to segregate any assets. In addition, the Company shall not be required to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for purposes of the Plan. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto. The Plan shall not be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto. Any liability or obligation of the Company to any Grantee with respect to an -12- 13 Incentive Award shall be based solely upon any contractual obligations that may be created by the Plan and any Restricted Stock Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company, the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by the Plan. 8.2 WITHHOLDING TAXES. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of an Incentive Award. (b) Share Withholding. With respect to tax withholding required upon the lapse of restrictions on Shares of Restricted Stock, or upon any other taxable event arising as a result of any Incentive Awards, Grantees may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Grantee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. (c) Loans. The Committee, in its discretion, may provide for loans, on either a short term or demand basis, from the Company to a Grantee to permit the payment of taxes required by law. 8.3 NO GUARANTEE OF TAX CONSEQUENCES. Neither the Company nor the Committee makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any person participating or eligible to participate hereunder. 8.4 DESIGNATION OF BENEFICIARY BY PARTICIPANT. Each Grantee may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under any Incentive Award is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Committee, and will be effective only when filed by the Grantee in writing with the Committee during the Grantee's lifetime. A Grantee may, from time to time, revoke or change his beneficiary designation by filing a new designation form with the Committee (or its delegate). The last valid designation -13- 14 received shall be controlling; provided, however, that no beneficiary designation, or change or revocation thereof, shall be effective unless received prior to the Grantee's death and in no event shall it be effective as of a date prior to its receipt. Notwithstanding any contrary provision of this Section 8.3, no beneficiary designation made by a married Grantee, other than one under which the surviving lawful spouse of such Grantee is designated as the sole beneficiary, shall be valid and effective without the written consent of such spouse. If no valid and effective beneficiary designation exists at the time of the Grantee's death, or if no designated beneficiary survives the Grantee, or if such designation conflicts with applicable law, the payment of the Grantee's Incentive Award, if earned and payable hereunder, shall be made to the Grantee's surviving lawful spouse, if any, or if there is no such surviving spouse, to the executor or administrator of his estate. If the Committee is in doubt as to the right of any person to receive such amount, the Committee may direct that the amount be paid into any court of competent jurisdiction in an interpleader action, and such payment shall be a full and complete discharge of any liability or obligation of the Plan, Company, Committee or Board therefor. 8.5 AMENDMENT AND TERMINATION. The Board or the Committee shall have the power and authority to terminate or amend the Plan at any time. No termination, amendment, or modification of the Plan shall adversely affect in any material way any outstanding Incentive Award previously granted to a Grantee under the Plan, without the written consent of such Grantee or other designated holder of such Incentive Award. 8.6 REQUIREMENTS OF LAW. The granting of Incentive Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Certificates evidencing Shares of Common Stock delivered under the Plan (to the extent that such Shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules and regulations of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation, and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates to make appropriate reference to such restrictions. 8.7 SUCCESSORS. All obligations of the Company under the Plan with respect to Incentive Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. -14- 15 8.8 MISCELLANEOUS PROVISIONS. (a) No Employee shall have any claim or right to be granted an Incentive Award under the Plan. Neither the Plan, nor any action taken hereunder, shall be construed as giving any Employee any right to receive future Incentive Awards upon the same terms and conditions as previously granted. (b) No Shares of Common Stock shall be issued hereunder unless counsel for the Company is then satisfied that such issuance will be in compliance with federal and state securities laws. (c) The expenses of the Plan shall be borne by the Company. (d) By accepting any Incentive Award, each Grantee and each person claiming by or through him shall be deemed to have indicated his acceptance of the Plan. 8.9 SEVERABILITY. In the event that any provision of the Plan shall be held illegal, invalid or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal, invalid, or unenforceable provision was not included herein. 8.10 GENDER, TENSE AND HEADINGS. Whenever the context so requires, words of the masculine gender used herein shall include the feminine and neuter, and words used in the singular shall include the plural. Section headings as used herein are inserted solely for convenience and reference and constitute no part of the interpretation or construction of the Plan. 8.11 GOVERNING LAW. The Plan shall be interpreted, construed and constructed in accordance with the laws of the State of Texas without regard to its conflicts of law provisions, except as may be superseded by applicable laws of the United States. -15- EX-10.S 3 h84927ex10-s.txt 2001 KEY EMPLOYEE NONQUALIFIED STOCK OPTION-2/1/01 1 EXHIBIT 10-S VERITAS DGC INC. 2001 KEY EMPLOYEE NONQUALIFIED STOCK OPTION PLAN ARTICLE I PLAN 1.1 PURPOSE. The Plan is intended to advance the best interests of the Company and its stockholders by providing those persons who have substantial responsibility for the management and growth of the Company and its Subsidiaries with additional incentives and an opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging them to continue in their employment or affiliation with the Company or any of its Subsidiaries. 1.2 TERM OF PLAN. The Plan is effective on February 1, 2001. The Plan shall remain in effect until all Options granted under the Plan have been exercised or expired. ARTICLE II DEFINITIONS The words and phrases defined in this Article shall have the meaning set out in Schedule A attached hereto, unless the context in which any such word or phrase appears reasonably requires a broader, narrower or different meaning. ARTICLE III ELIGIBILITY The individuals who shall be eligible to receive Options shall be those Employees who are not officers (as defined by the Securities and Exchange Commission in Rule 16a-1(f) under the Securities Exchange Act of 1934, or any successor rule) or directors of the Company, who have substantial responsibility for the management and growth of the Company or any of its Subsidiaries as the Committee shall determine from time to time. ARTICLE IV GENERAL PROVISIONS RELATING TO OPTIONS 4.1 AUTHORITY TO GRANT OPTIONS. The Committee may grant Options to those key Employees of the Company or any of its Subsidiaries as it shall from time to time determine, under the terms and conditions of the Plan. Subject only to any applicable limitations set out in the Plan, the number of shares of Common Stock to be covered by any Option to be granted to any person shall be as determined by the Committee. 2 4.2 DEDICATED SHARES. The maximum number of shares of Common Stock with respect to which Options may be granted under the Plan is 2,000,000. Such shares of Common Stock may be treasury shares or authorized but unissued shares. The number of shares stated in this Section 4.2 shall be subject to adjustment in accordance with the provisions of Section 4.5. If any outstanding Option expires for any reason or any Option is surrendered, the shares of Common Stock allocable to the unexercised portion of that Option may again be subject to an Option under the Plan. 4.3 NON-TRANSFERABILITY. Except as specified in the applicable Option Agreement or in a domestic relations court order, an Option shall not be transferable by the Optionee other than by will or under the laws of descent and distribution, and shall be exercisable, during the Optionee's lifetime, only by him. In the discretion of the Committee, any attempt to transfer an Option other than under the terms of the Plan and the applicable Option Agreement may terminate the Option. 4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell or issue any Common Stock under any Option if issuing that Common Stock would constitute or result in a violation by the Optionee or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option, the Company shall not be required to issue any Common Stock unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer the Common Stock except in accordance with applicable law, including receipt of an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any Common Stock covered by the Plan pursuant to applicable securities laws of any country or any political subdivision. In the event the Common Stock issuable on exercise of an Option is not registered, the Company may imprint on the certificate evidencing the Common Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option, or the issuance of shares pursuant thereto, to comply with any law or regulation of any governmental authority. 4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. (a) The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or its rights, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. (b) If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of Common Stock outstanding, without receiving compensation for it in money, services or property, then (i) the number, class or series and per share price of shares of Common Stock subject to outstanding Options under the Plan shall be appropriately adjusted in -2- 3 such a manner as to entitle an Optionee to receive upon exercise of an Option, for the same aggregate cash consideration, the equivalent total number and class or series of shares he would have received had he exercised his Option in full immediately prior to the event requiring the adjustment, and (ii) the number and class or series of shares of Common Stock then reserved to be issued under the Plan shall be adjusted by substituting for the total number and class or series of shares of Common Stock then reserved, that number and class or series of shares of Common Stock that would have been received by the owner of an equal number of outstanding shares of each class or series of Common Stock as the result of the event requiring the adjustment. (c) Unless the transaction constitutes a Change in Control, if while unexercised Options remain outstanding under the Plan (i) the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than an entity that was wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization), (ii) the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its assets to any other person or entity (other than an entity wholly-owned by the Company), (iii) the Company is to be dissolved or (iv) the Company is a party to any other corporate transaction (as defined under section 424(a) of the Code and applicable Department of Treasury Regulations) that is not described in clauses (i), (ii) or (iii) of this sentence (each such event is referred to herein as a "Corporate Change"), then, except as otherwise provided in an Option Agreement or as a result of the Board's effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any Option then outstanding may be exercised, and no later than ten days after the approval by the stockholders of the Company of such Corporate Change, the Board, acting in its sole and absolute discretion without the consent or approval of any Optionee, shall act to effect one or more of the following alternatives, which may vary among individual Optionees and which may vary among Options held by any individual Optionee: 1. accelerate the time at which some or all of the Options then outstanding may be exercised so that such Options may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Board, after which specified date all such Options that remain unexercised and all rights of Optionees thereunder shall terminate; 2. require the mandatory surrender to the Company by all or selected Optionees of some or all of the then outstanding Options held by such Optionees (irrespective of whether such Options are then exercisable under the provisions of the Plan or the Option Agreements evidencing such Options) as of a date, before or after such Corporate Change, specified by the Board, in which event the Board shall thereupon cancel such Options and the Company shall pay to each such Optionee an amount of cash per share equal to the excess, if any, of the per share price offered to stockholders of the Company in connection with such Corporate Change over the exercise prices under such Options for such shares; 3. with respect to all or selected Optionees, have some or all of their then outstanding Options (whether vested or unvested) assumed or have a new Option substituted for some or all of their then outstanding Options (whether vested or unvested) by an entity which is a party to the transaction resulting in -3- 4 such Corporate Change and which is then employing him, or a parent or subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where the excess of the aggregate fair market value of the shares subject to the Option immediately after the assumption or substitution over the aggregate exercise price of such shares is equal to the excess of the aggregate fair market value of all shares subject to the Option immediately before such assumption or substitution over the aggregate exercise price of such shares, and (B) the assumed rights under such existing Option or the substituted rights under such new Option as the case may be will have the same terms and conditions as the rights under the existing Option assumed or substituted for, as the case may be; 4. provide that the number and class or series of shares of Common Stock covered by an Option (whether vested or unvested) theretofore granted shall be adjusted so that such Option when exercised shall thereafter cover the number and class or series of shares of stock or other securities or property (including, without limitation, cash) to which the Optionee would have been entitled pursuant to the terms of the agreement or plan relating to such Corporate Change if, immediately prior to such Corporate Change, the Optionee had been the holder of record of the number of shares of Common Stock then covered by such Option; or 5. make such adjustments to Options then outstanding as the Board deems appropriate to reflect such Corporate Change (provided, however, that the Board may determine in its sole and absolute discretion that no such adjustment is necessary). In effecting one or more of alternatives (3), (4) or (5) above, and except as otherwise may be provided in an Option Agreement, the Board, in its sole and absolute discretion and without the consent or approval of any Optionee, may accelerate the time at which some or all Options then outstanding may be exercised. (d) In the event of an occurrence of a Change in Control, an outstanding Option shall be fully exercisable as of the day immediately preceding the Change in Control unless otherwise expressly provided in the Optionee's Option Agreement. The provisions of this paragraph (d) of Section 4.5 may not be deleted or amended to adversely affect an Option granted under the Plan without the prior written consent of the Optionee to whom the Option was granted, unless the Optionee's Option Agreement expressly provides otherwise. (e) In the event of changes in the outstanding Common Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Option and not otherwise provided for by this Section 4.5, any outstanding Options and any agreements evidencing such Options shall be subject to adjustment by the Board in its sole and absolute discretion as to the number and price of shares of stock or other consideration subject to such Options. In the event of any such change in the outstanding Common Stock, the aggregate number of shares available under the Plan may be appropriately adjusted by the Board, whose determination shall be conclusive. -4- 5 (f) The issue by the Company of shares of stock of any class or series, or securities convertible into shares of stock of any class or series, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon conversion of shares or obligations of the Company convertible into shares or other securities, shall not affect, and no adjustment by reason of such issuance shall be made with respect to, the number, class or series, or price of shares of Common Stock then subject to outstanding Options. 4.6 TYPES OF OPTIONS. All Options granted under the Plan shall be nonqualified stock options that are not intended to satisfy the requirements of section 422 of the Code. ARTICLE V OPTIONS 5.1 EXERCISE PRICE. The price at which Common Stock may be purchased under an Option shall not be less than 100% of the Fair Market Value of the shares of Common Stock on the date the Option is granted. 5.2 DURATION OF OPTIONS. An Option shall not be exercisable after the earlier of (i) the term of the Option specified in the Option Agreement (which shall not exceed ten years from the date the Option is granted), or (ii) the period of time specified herein or in the Optionee's Option Agreement that follows the Optionee's Retirement, Disability, death or other Termination of Employment. Unless an Optionee's Option Agreement specifies otherwise, the Optionee's Option shall not continue to vest after the date of the Optionee's Termination of Employment for any reason other than the death or Disability of the Optionee. (a) General Term of Option. Unless the Option Agreement specifies a shorter term, an Option shall expire on the tenth anniversary of the date the Option is granted. (b) Early Termination of Option Due to Termination of Employment (Other Than for Death, Disability or Retirement). Except as may be otherwise expressly provided in an Option Agreement, an Option shall terminate on the earlier of (1) the date of the expiration of the general term of the Option or (2) the date that is three months after the date of the Optionee's Termination of Employment for any reason other than the death, Disability or Retirement of the Optionee, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Common Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment. Whether a leave of absence, or absence on military or government service, shall constitute a Termination of the Employment shall be determined by the Committee at the time thereof. (c) Early Termination of Option Due to Death or Disability. Unless his Option Agreement specifies otherwise, in the event an Optionee incurs a Termination of the Employment due to death or Disability, the Optionee's Option shall terminate on the earlier of (1) the date of expiration of the general term of the Option or (2) the first anniversary of the date of the Optionee's Termination of Employment due to death or Disability. -5- 6 (d) Early Termination of Option Due to Retirement. Unless the Option Agreement specifies otherwise, upon the Optionee's Retirement, the Optionee's Option shall terminate on the earlier of (1) the expiration of the general term of the Option or (2) three years after the date of the Optionee's Termination of Employment due to Retirement. After the death of an Optionee, his executors, administrators or any person or persons to whom the Optionee's Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the termination of the Option to exercise the Option, in respect to the number of shares that the Optionee would have been entitled to exercise if the Optionee exercised the Option prior to his death or, if the Option is fully exercisable under Section 5.3, in respect of all of the remaining shares subject to the Option. 5.3 AMOUNT EXERCISABLE. Each Option may be exercised at the time, in the manner and subject to the conditions the Committee specifies in the Option Agreement in its sole discretion. If an Optionee incurs a Termination of Employment due to death or Disability, the Optionee's Option will be immediately exercisable in full upon the date of the Termination of Employment. 5.4 EXERCISE OF OPTIONS. Each Option shall be exercised by the delivery of written notice to the Committee setting forth the number of shares of Common Stock with respect to which the Option is to be exercised, together with: (a) cash, certified check, bank draft or postal or express money order payable to the order of the Company for an amount equal to the exercise price under the Option, (b) Mature Shares with a Fair Market Value on the date of exercise equal to the exercise price under the Option, (c) an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee) or (d) except as specified below, any other form of payment which is acceptable to the Committee, and specifying the address to which the certificates for the shares are to be mailed. As promptly as practicable after receipt of written notification and payment, the Company shall deliver to the Optionee certificates for the number of shares with respect to which the Option has been exercised, issued in the Optionee's name. If Mature Shares are used for payment by the Optionee, the aggregate Fair Market Value of the shares of Common Stock tendered must be equal to or less than the aggregate exercise price of the shares being purchased upon exercise of the Option, and any difference must be paid by cash, certified check, bank draft or postal or express money order payable to the order of the Company. Delivery of the shares shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited the certificates in the United States mail, addressed to the Optionee, at the address specified by the Optionee. Whenever an Option is exercised by exchanging Mature Shares owned by the Optionee, the Optionee shall deliver to the Company certificates registered in the name of the Optionee representing a number of shares of Common Stock legally and beneficially owned by the Optionee, free of all liens, claims and encumbrances of every kind, accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by the certificates (with signature guaranteed by a commercial bank or trust company or by a brokerage firm having a membership on a registered national stock exchange). The delivery of certificates upon -6- 7 the exercise of Options is subject to the condition that the person exercising the Option provide the Company with the information the Company might reasonably request pertaining to exercise, sale or other disposition. The Committee may permit an Optionee to elect to pay the exercise price upon exercise of an Option by authorizing a third-party broker to sell all or a portion of the shares of Common Stock acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the exercise price and any applicable tax withholding resulting from such exercise. The Committee shall not permit an Optionee to pay his exercise price upon the exercise of an Option by having the Company reduce the number of shares of Common Stock that will be delivered to the Optionee pursuant to the exercise of the Option. In addition, the Committee shall not permit an Optionee to pay his exercise price upon the exercise of an Option by using shares of Common Stock other than Mature Shares. An Option may not be exercised for a fraction of a share of Common Stock. 5.5 SUBSTITUTION OPTIONS. Options may be granted under the Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of or affiliated with the Company or any Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or any Subsidiary, or the acquisition by the Company or any Subsidiary of the assets of the employing corporation, or the acquisition by the Company or any Subsidiary of stock of the employing corporation as the result of which it becomes a Subsidiary. The terms and conditions of the substitute Options granted may vary from the terms and conditions set out in the Plan to the extent the Committee, at the time of grant, may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted. 5.6 NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a stockholder with respect to Common Stock covered by his Option until the date a stock certificate is issued for the Common Stock. ARTICLE VI ADMINISTRATION The Plan shall be administered by the Committee. All questions of interpretation and application of the Plan and Options shall be subject to the determination of the Committee. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members shall be as effective as if it had been made by a majority vote at a meeting properly called and held. In carrying out its authority under the Plan, the Committee shall have full and final authority and discretion, including but not limited to the following rights, powers and authorities, to: (a) determine the persons to whom and the time or times at which Options will be granted; -7- 8 (b) determine the number of shares of Common Stock covered by each Option; (c) determine the terms, provisions and conditions of each Option, which need not be identical; (d) accelerate the time at which any outstanding Option may be exercised; (e) prescribe, amend and rescind rules and regulations relating to administration of the Plan; and (f) make all other determinations and take all other actions deemed necessary, appropriate or advisable for the proper administration of the Plan. The actions of the Committee in exercising all of the rights, powers, and authorities set out in this Article and all other Articles of the Plan, when performed in good faith and in its sole judgment, shall be final, conclusive and binding on all parties. ARTICLE VII AMENDMENT OR TERMINATION OF PLAN The Board or the Committee may amend, terminate or suspend the Plan at any time, in its sole and absolute discretion. ARTICLE VIII RC(2) OPTIONS In order to carry out the terms of the Agreement and Plan of Merger By and Among Veritas DGC Inc., RC(2) Acquisition Corp., and Reservoir Characterization Research and Consulting, Inc. ("RC(2)") dated as of January 15, 2001, this Plan shall include under its terms each of the Exchanged Options outstanding at the Effective Time without any further action on the part of any holder thereof. (For purposes of this Article VIII, the terms "Exchanged Options," "Effective Time" and "Exchange Ratio" have that meaning assigned to them in the Agreement and Plan of Merger). After the Effective Time, each Exchanged Option, when exercised, will be exercisable to purchase that number of shares of Common Stock determined by multiplying the number of shares of RC(2) common stock subject to such Exchanged Option by the Exchange Ratio, at an exercise price per share of Common Stock equal to the exercise price per share of such Exchanged Option immediately prior the Effective Time, divided by the Exchange Ratio. If the foregoing calculation results in an option being exercisable for a fractional share of Common Stock, then the number of shares of Common Stock subject to such option will be rounded to the nearest whole number of shares. If the calculation results in an exercise price per share that is a fraction of a cent, the exercise price will be rounded to the nearest cent. The term, vesting, exercisability, and all other terms and conditions of the Exchanged Options will otherwise be unchanged and shall operate in accordance with their terms, notwithstanding anything to the contrary contained herein. -8- 9 ARTICLE IX MISCELLANEOUS 9.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set aside nor shall a trust fund of any kind be established to secure the rights of any Optionee under the Plan. All Optionees shall at all times rely solely upon the general credit of the Company for the payment of any benefit which becomes payable under the Plan. 9.2 NO EMPLOYMENT OBLIGATION. The granting of any Option shall not constitute an employment contract, express or implied, nor impose upon the Company or any Subsidiary any obligation to employ or continue to employ, or utilize the services of, any Optionee. The right of the Company or any Subsidiary to terminate the employment of any person shall not be diminished or affected by reason of the fact that an Option has been granted to him. 9.3 FORFEITURE. Notwithstanding any other provisions of the Plan, if the Committee finds by a majority vote after full consideration of the facts that the Optionee, before or after termination of his employment relationship with the Company or a Subsidiary for any reason committed or engaged in willful misconduct, gross negligence, a breach of fiduciary duty, fraud, embezzlement, theft, a felony, a crime involving moral turpitude or proven dishonesty in the course of his employment by the Company or a Subsidiary, which conduct damaged the Company or Subsidiary, the Optionee shall forfeit all outstanding Options, and all exercised Options if the Company has not yet delivered a stock certificate to the Optionee with respect thereto. The decision of the Committee as to the cause of the Optionee's discharge, the damage done to the Company or a Subsidiary shall be final. No decision of the Committee, however, shall affect the finality of the discharge of the Optionee by the Company or a Subsidiary in any manner. 9.4 TAX WITHHOLDING. The Company or any Subsidiary shall be entitled to deduct from other compensation payable to each Optionee any sums required by federal, state or local tax law to be withheld with respect to the grant or exercise of an Option, or lapse of restrictions on Restricted Common Stock. In the alternative, the Company may require the Optionee to pay such sums for taxes directly to the Company or any Subsidiary in cash or by check within ten days after the date of exercise or lapse of restrictions. In the discretion of the Committee, and with the consent of the Optionee, the Company may reduce the number of shares of Common Stock issued to the Optionee upon his exercise of an Option to satisfy the tax withholding obligations of the Company or a Subsidiary; provided that the Fair Market Value of the shares held back shall not exceed the Company's or the Subsidiary's minimum statutory withholding tax obligations. The Company shall have no obligation upon exercise of any Option until the Company or a Subsidiary has received payment sufficient to cover all tax withholding amounts due with respect to that exercise. Neither the Company nor any Subsidiary shall be obligated to advise an Optionee of the existence of the tax or the amount which it will be required to withhold. 9.5 WRITTEN AGREEMENT. Each Option shall be embodied in a written agreement which shall be subject to the terms and conditions of the Plan and shall be signed by the Optionee and by a member of the Committee or an executive officer of the Company on behalf -9- 10 of the Company. The agreement may contain any other provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms of the Plan. 9.6 GENDER. If the context requires, words of one gender when used in the Plan shall include the other and words used in the singular or plural shall include the other. 9.7 HEADINGS. Headings of Articles and Sections are included for convenience of reference only and do not constitute part of the Plan and shall not be used in construing the terms of the Plan. 9.8 OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect any other stock option, incentive or other compensation or benefit plans in effect for the Company or any Subsidiary, nor shall the Plan preclude the Company from establishing any other forms of incentive compensation arrangements for Employees. 9.9 OTHER OPTIONS. The grant of an Option shall not confer upon an Optionee the right to receive any future or other Options under the Plan, whether or not Options may be granted to similarly situated Employees, or the right to receive future Options upon the same terms or conditions as previously granted. 9.10 GOVERNING LAW. The provisions of the Plan shall be construed, administered and governed under the laws of the State of Texas. -10- EX-27 4 h84927ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUL-31-2001 AUG-01-2000 JAN-31-2001 96,362 7,285 141,819 1,843 4,577 263,660 422,355 272,776 735,082 101,855 0 0 0 289 489,154 735,082 0 245,714 0 170,596 53,365 0 0 21,753 9,633 12,228 0 0 0 12,228 .42 .41
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