-----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, AmnfmKA4lrdREm7Hy+Kj8WT7Cf4KOA2nSwu/Q21IV9nZcanmrVYuz/ZBhMFgQ7v1 aw9I5CoQJEUOAgvFcMs5wA== 0000921895-99-000465.txt : 19990624 0000921895-99-000465.hdr.sgml : 19990624 ACCESSION NUMBER: 0000921895-99-000465 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990623 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HARDING LAWSON ASSOCIATES GROUP INC CENTRAL INDEX KEY: 0000818968 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 680132062 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-39023 FILM NUMBER: 99650441 BUSINESS ADDRESS: STREET 1: 7655 REDWOOD BLVD STREET 2: P O BOX 578 CITY: NOVATO STATE: CA ZIP: 94945 BUSINESS PHONE: 4158920821 MAIL ADDRESS: STREET 1: 7655 REDWOOD BLVD CITY: NOVATO STATE: CA ZIP: 94945 FORMER COMPANY: FORMER CONFORMED NAME: HARDING ASSOCIATES INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LIONHEART GROUP INC CENTRAL INDEX KEY: 0001069881 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133790376 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 230 PARK AVE STREET 2: STE 516 CITY: NEW YORK STATE: NY ZIP: 10169 BUSINESS PHONE: 2125995077 MAIL ADDRESS: STREET 1: 230 PARK AVE STREET 2: STE 516 CITY: NEW YORK STATE: NY ZIP: 10169 SC 13D/A 1 SCHEDULE 13D - AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)1 Harding Lawson Associates Group, Inc. - -------------------------------------------------------------------------------- (Name of issuer) COMMON STOCK, $.01 PAR VALUE - -------------------------------------------------------------------------------- (Title of class of securities) 412293-10-2 - -------------------------------------------------------------------------------- (CUSIP number) STEVEN WOLOSKY, ESQ. OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP 505 Park Avenue New York, New York 10022 (212) 753-7200 - -------------------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) June 18, 1999 - -------------------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box o. Note. six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 13 Pages) Exhibit Index on Page 5 - -------- 1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 2 of 13 Pages - ------------------------------- --------------------------- ================================================================================ 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS LIONHEART GROUP, INC. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 254,700 OWNED BY EACH --------------------------------------------------------------- REPORTING PERSON WITH 8 SHARED VOTING POWER -0- --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 254,700 --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 254,700 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.18% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 3 of 13 Pages - ------------------------------- --------------------------- The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned (the "Schedule 13D"). Except as specifically amended by this Amendment No. 1, the Schedule 13D remains in full force and effect. Item 4 is amended to add the following: Item 4. Purpose of Transaction. On June 18, 1999, the Reporting Person sent a Letter to Robert Costello, the Issuer's President and Chief Executive Officer (the "June Letter"), expressing the Reporting Person's dissatisfaction with the financial and stock performance of the Issuer, the decisions made by and the structure of the Issuer's Board and the weakness of the Issuer's business plan. In addition, among other concerns, the Reporting Person states its strong belief that the Issuer must take steps to create a more independent Board and requests a Board seat for the Reporting Person with the Issuer, so that the Reporting Person may monitor the Issuer's Board and promote the interests of the Issuer's stockholders. The description of the June Letter does not purport to be complete, and is qualified in its entirety by reference to the June Letter, which is filed as Exhibit 1 to this Amendment No. 1 to Schedule 13D. Item 7. Material to be filed as Exhibits. 1. Letter dated June 18, 1999 from Lionheart Group, Inc. to Robert Costello, President and Chief Executive Officer of the Issuer. - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 4 of 13 Pages - ------------------------------- --------------------------- SIGNATURES ---------- After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: June 22, 1999 LIONHEART GROUP, INC. By: /s/ C. Duncan Soukup --------------------------------- C. Duncan Soukup President - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 5 of 13 Pages - ------------------------------- --------------------------- EXHIBIT INDEX Page ---- 1. Letter dated June 18, 1999 from 6 Lionheart Group, Inc. to Robert Costello, President and Chief Executive Officer of the Issuer - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 6 of 13 Pages - ------------------------------- --------------------------- 230 PARK AVENUE, SUITE 516 TEL: (212) 599-5077 NEW YORK, NY 10169 FAX: (212) 599-5655 LIONHEART GROUP, INC. Robert Costello President and CEO Harding Lawson Associates Group, Inc. 707 17th Street Suite 2400 Denver, CO 80202 June 18, 1999 Dear Mr. Costello and Members of the Board, Many thanks for taking my call Wednesday, June 9, and for your follow up call the next day. I would like to summarize various observations and concerns we have with the Board of Directors of Harding Lawson Associates Group, Inc. ("HRDG" or the "Company") and its financial performance: 1. Stock Price Performance The attached chart is self-explanatory. An investment in HRDG, made ten years ago, would have yielded a negative -38% return (from the low of $12.84 during June, 1989 to $8.00 at the close of June, 1999). It is hardly surprising, therefore, to see that insiders of HRDG own a paltry 8.8%(2)of its stock. Why, given the Company's poor performance, would they want to own more? The answer is obvious. 2. Insider Ownership To add salt to the wound caused by the negative return to shareholders, the largest insider, with 3% of the 8.8%, or 34% of total insider holdings, was Donald Schreuder - who is now no longer with the Company. Why did he received a massive (~$500,000) severance package for his part in trying to run the Company into - -------- (2) 8.8% as of 9/28/98 Proxy - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 7 of 13 Pages - ------------------------------- --------------------------- the ground. Did Mr. Schreuder buy his stock or was it granted as part of his employment package? In fact, whilst on the topic of insider ownership, how much stock have the current insiders actually bought with their own money? How much have they received in option grants or stock issuance? And, how much stock have they sold during their tenure as Directors of the Company and at what prices? The record would indicate that the Board of Directors have failed in exercising their fiduciary obligations. At this juncture, I would refer the Directors to a useful little tome by Hamilton, Motley and Turner titled, "Responsibilities of Corporate Officers and Directors under Federal Securities Laws" and published by CCH Inc. at 4025 W. Peterson Ave., Chicago, IL 60646-6085 Tel. 1-800-TELL-CCH; e-address http://www.cch.com. I highly recommend that all the Company's Director's be issued a copy of this book and take the time to consider not only the benefits associated with being a director of a public company, but also the obligations and, unfortunately, the liabilities associated with such office. The extract from the paragraph I have highlighted states quite clearly, "...directors have responsibility for such matters as setting the policies of the corporation, deciding the contracts to be entered into, determining adequacy of compensation, and deciding how to reach corporate goals." In my humble opinion, the Directors of HRDG, in executing their obligation to shareholders according to the above paragraph, have failed miserably and are guilty of incompetence at best and gross negligence at worst. 3. Corporate Growth and Profitability Perhaps the clearest indication of just how poorly the Board of HRDG has served its shareholders can be seen by taking a closer look at HRDG's financial performance over the past ten years (see attached table). From 1988 to 1998, revenues grew at a compound rate of 4.6%. During the same period, the Company's operating margin fell from 8.5% to 3.9%, whilst net margin deteriorated from 5.6% to 3.1%. - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 8 of 13 Pages - ------------------------------- --------------------------- On a trailing twelve-month (TTM) basis, these figures are even worse, with net margins now down to 1.99%. If the above statistics don't make the Board clearly understand our concerns, the Board should be reminded that, in 1989, the Company recorded a return on equity (ROE) of 15.7%. In 1998, ROE was down to 5.2%, and, on a TTM basis, ROE has dropped to 4.0%. 4. Board Structure In our long-standing investment background, we have not come across a company the size of HRDG that has such a protectionist board and legal structure. We fail to comprehend who is protecting whom from what? Why does HRDG have a staggered Board? The entire Board should be accountable to its shareholders annually. Why does the Company need a Shareholder Rights Plan? Are the Directors concerned that they might loose their "cushy" jobs? Or, are they concerned for the employees that are about to be laid-off in connection with your restructuring plans? Why does the Company have a "no action by written consent" clause? Why does the Company have a 66 2/3% voting clause for the removal of Directors rather than the more usual, simple majority? Suffice it to say, Lionheart believes that these protectionist barriers as well as various others in the Company's Certificate of Incorporation and By-Laws do little but protect an incompetent Board and make the Board feel that it has little accountability to the Company's stockholders, the real owners of the Company. Please consider this letter an official request to have all such protectionist measures removed and that the Company's Certificate of Incorporation and By-Laws be amended to reflect such changes. Should they not be removed by the next stockholder meeting or be put to stockholder vote at its next meeting, Lionheart will submit stockholders proposals to have such matters put to a stockholder vote. 5. Strategic Plan No corporate review would really be complete without a look at the future. - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 9 of 13 Pages - ------------------------------- --------------------------- So what exactly does the Board have in store for stockholders now? My interpretation is that they are still grasping for straws in the wind. On March 17, 1999, the Company issued a press release wherein it was stated that CIBC Oppenheimer had been retained "to assist management in reviewing strategies for the Company and in evaluating alternatives to maximize shareholder value." Nearly three months and untold dollars later, we have heard nothing from the Company as to what Oppenheimer has achieved. Maybe someone should remind the Board that part of their fiduciary and legal obligations and ask them, "Why did the Company retain Oppenheimer?" Maybe we could take a page out of Warren Buffet's book of "never use an Investment Bank, except to raise money". My own opinion (for free!) is that the best deals (purchase or sale) are done when and where initiated by Management - not by Investment Bankers. I was happy to hear from you during our telephone conversation that you actually concur with this opinion. Maybe a quick chat by the Board with the new CEO could have saved us a lot of money and avoided the waste of unnecessary retention of investment bankers! Regarding relocation of the Company's business from California to Colorado: sounds great, but here too, I would state for the record that clearing up the issue of leases, related overhead, and excess personnel expense does not address, nor resolve, the bigger issues of whether or not HRDG has the right business mix (Private vs. Public sector), is in the best areas of the broadly defined "Engineering Industry", or should remain independent at all. Your statement regarding interest in Transportation Infrastructure and Water treatment confirms my own opinion that the current business mix will not lead to higher margins or growth. 6. Conclusion I would like to see a strategic review and a plan for the future of the Company addressed to its stockholders. As this is unlikely to happen for all the obvious, and probably a few less obvious reasons, I am hereby requesting a Board seat in order to monitor our substantial investment in HRDG, to represent the interests of - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 10 of 13 Pages - ------------------------------- --------------------------- the Company's institutional and other key stockholders, and, if need be, to act as a thorn in the side of the Company's lax and incompetent Board. I look forward to your response and to meeting you in New York on June 25, 1999, and your seriously addressing the issues raised. Sincerely, D. Soukup President cc: Heartland Advisors Franklin Resources TCW Group Tweedy Browne Company - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 11 of 13 Pages - ------------------------------- --------------------------- Ten Year Growth Chart and Weekly Volume Chart [Described pursuant to Rule 304 of Regulation S-T] The ten-year growth chart tracks the Company's stock growth over the ten-year period beginning in mid-1989 and continuing up to June 18, 1999. The chart compares the Company's stock's weekly performance during this period against the performance of the Standard & Poor 500 Index Fund (the "S&P500") and illustrates how a $1 investment in the S&P500 would have shown a return of over 300% at the end of the ten-year period while an investment in the Company's stock would have resulted in a loss of 7% over the same period. The weekly volume chart illustrates the weekly trading volume of the Company during the same ten year period as the chart described above. The chart shows a decrease in the trading volume of the Company's stock after late 1992, with the exception of short bursts of activity in mid-1995, mid-1996 and late-1997. - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 12 of 13 Pages - ------------------------------- --------------------------- Selected Financials Harding Lawson Assoc. Group, Inc. HRDG Selected Financials
TTM 1998 1997 1996 1995 1994 1993 --- ---- ---- ---- ---- ---- ---- Revenues 102,182 83,451 84,276 85,655 92,455 79,944 82,605 % change -1.0% -1.6% -7.4% 15.6% -3.2% -0.8% EBIT 9,608 3,220 4,112 839 4,595 1,353 580 % of Revenues 9.4% 3.9% 4.9% 1.0% 5.0% 1.7% 0.7% Net Income 1,948 2,566 2,396 897 2,968 1,002 497 % of Revenues 1.9% 3.1% 2.8% 1.0% 3.2% 1.3% 0.6% Book Value 49,276 49,788 46,602 44,357 42,685 38,975 39,541 % change 6.8% 5.1% 3.9% 9.5% -1.4% 4.7% ROE 4.0% 5.2% 5.1% 2.0% 7.0% 2.6% 1.3%
1992 1991 1990 1989 1988 ---- ---- ---- ---- ---- Revenues 83,257 72,449 68,996 53,157 38,464 % change 14.9% 5.0% 29.8% 38.2% EBIT 7,147 6,688 6,716 4,846 3,271 % of Revenues 8.6% 9.2% 9.7% 9.1% 8.5% Net Income 3,917 4,522 4,537 3,301 2,170 % of Revenues 4.7% 6.2% 6.6% 6.2% 5.6% Book Value 37,761 32,422 27,005 21,048 17,747 % change 16.5% 20.1% 28.3% 18.6% ROE 10.4% 13.9% 16.8% 15.7% 12.2%
10 Year Compound Growth Rate Calculation - ---------------------------------------- Revenues Net Income Book Value 1988 53,157 2,170 17,747 1998 83,451 2,566 49,788 % Change 57.0% 18.2% 180.5% 10 Yr. Compound Gr. Rate 4.6% 1.7% 10.9% - ------------------------------- --------------------------- CUSIP No. 412293-10-2 13D Page 13 of 13 Pages - ------------------------------- --------------------------- Hamilton, Motley and Turner, Responsibilities of Corporate Officer and Directors under Federal Securities Laws, 14. " Even under statutes providing that the business and affairs shall be "managed" by the board of directors, it is recognized that actual operation is a function of management and that the board's responsibility is limited to overseeing the operation. Generally, under state law, directors have responsibility for such matters as setting the policies of the corporation, deciding the contracts to be entered into, determining adequacy of compensation, and deciding how to reach corporate goals." -----END PRIVACY-ENHANCED MESSAGE-----