-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DmRyKr7VfT+AFsb6CTERuUoOEP/cn97WSpBrOXEHef5sHNUOoAc1mVeNX+Boueo3 hSGt4yb5ihIJS1WR4v/Ieg== 0000928385-95-000195.txt : 199507110000928385-95-000195.hdr.sgml : 19950711 ACCESSION NUMBER: 0000928385-95-000195 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950710 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICF KAISER INTERNATIONAL INC CENTRAL INDEX KEY: 0000856200 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 541437073 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12248 FILM NUMBER: 95553024 BUSINESS ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 MAIL ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 FORMER COMPANY: FORMER CONFORMED NAME: ICF INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL & RESEARCH CORP /DE/ DATE OF NAME CHANGE: 19910314 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ================================================================================ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1995 Commission File No. 1-12248 ICF KAISER INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 54-1437073 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9300 Lee Highway, Fairfax, Virginia 22031-1207 ----------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (703) 934-3600 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 _________ --------- On June 30, 1995, there were 21,010,884 shares of ICF Kaiser International, Inc. Common Stock, par value $0.01 per share, outstanding. ================================================================================ ICF KAISER INTERNATIONAL, INC. INDEX TO FORM 10-Q
Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets - May 31, 1995 and February 28, 1995............................. 3 Consolidated Statements of Operations - Three Months Ended May 31, 1995 and 1994....................... 4 Consolidated Statements of Cash Flows - Three Months Ended May 31, 1995 and 1994....................... 5 Notes to Consolidated Financial Statements..................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................ 7-9 PART II - OTHER INFORMATION Item 1. Legal Proceedings............................................. 10 Item 2. Changes in Securities......................................... 10 Item 3. Defaults Upon Senior Securities............................... 10 Item 4. Submission of Matters to a Vote of Security Holders........... 10 Item 5. Other Information............................................. 10 Item 6. Exhibits and Reports on Form 8-K.............................. 10
2 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
May 31, February 28, 1995 1995 - ------------------------------------------------------------------------------------------------------------ (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 20,906 $ 28,233 Contract receivables, net 139,763 139,860 Prepaid expenses and other current assets 9,447 10,872 Deferred income taxes 13,420 13,553 ----------- ---------- Total Current Assets 183,536 192,518 ----------- ---------- Fixed Assets Furniture, equipment, and leasehold improvements 42,173 42,557 Less depreciation and amortization (30,461) (29,648) ----------- ---------- 11,712 12,909 ----------- ---------- Other Assets Goodwill, net 47,453 47,945 Investments in and advances to affiliates 9,021 8,022 Due from officers and employees 656 1,826 Other 21,394 18,202 ----------- ---------- 78,524 75,995 ----------- ---------- $ 273,772 $ 281,422 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 46,173 $ 46,811 Accrued salaries and employee benefits 29,107 30,549 Accrued interest 6,275 2,528 Current portion of long-term debt 321 578 Income taxes payable 307 644 Deferred revenue 8,846 11,013 Other 8,299 8,755 ----------- ---------- Total Current Liabilities 99,328 100,878 ----------- ---------- Long-term Liabilities Long-term debt, less current portion 121,243 126,733 Other 6,478 6,570 ----------- ---------- 127,721 133,303 ----------- ---------- Commitments and Contingencies Redeemable Preferred Stock 19,668 19,617 Common Stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding- 21,010,864 and 21,011,369 shares 210 210 Additional Paid-in Capital 63,709 63,786 Notes Receivable Related to Common Stock (1,732) (1,732) Retained Earnings (Deficit) (33,719) (33,343) Cumulative Translation Adjustment (1,413) (1,297) ----------- ---------- $ 273,772 $ 281,422 =========== ==========
See notes to consolidated financial statements. 3 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Three Months Ended May 31, 1995 1994 ============================== (Unaudited) GROSS REVENUE $ 192,983 $ 210,491 Subcontract and direct material costs (88,406) (98,292) Equity in income of joint ventures and affiliated companies 921 951 ----------- ----------- SERVICE REVENUE 105,498 113,150 OPERATING EXPENSES Direct cost of services and overhead 87,355 95,545 Administrative and general 11,998 11,127 Depreciation and amortization 2,383 2,259 ----------- ----------- OPERATING INCOME 3,762 4,219 OTHER INCOME (EXPENSE) Interest income 561 305 Interest expense (4,027) (3,949) ----------- ----------- INCOME BEFORE INCOME TAXES 296 575 Income tax provision 133 357 ----------- ----------- NET INCOME 163 218 Preferred stock dividends and accretion 539 539 ----------- ----------- NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (376) $ (321) =========== =========== Primary and Fully Diluted Net Loss Per Common Share $ (0.02) $ (0.02) =========== =========== Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding 21,004 20,943 =========== ===========
See notes to consolidated financial statements. 4 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Three Months Ended May 31, 1995 1994 ================================ (Unaudited) OPERATING ACTIVITIES Net income $ 163 $ 218 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 2,383 2,259 Provision for losses on contract receivables 480 237 Provision for deferred income taxes 133 357 Earnings in excess of cash distributions from joint ventures and affiliated companies (465) (666) Changes in operating assets and liabilities related to operating activities: Contract receivables, net (383) (2,346) Prepaid expenses and other current assets 644 4,231 Other assets (2,247) (1,336) Accounts payable and accrued expenses 1,667 (9,747) Income taxes payable (337) 434 Deferred revenue (2,167) (828) Other liabilities (438) (1,570) ---------- ---------- Net Cash Used in Operating Activities (567) (8,757) ---------- ---------- INVESTING ACTIVITIES Sale of subsidiaries and subsidiary assets 735 2,600 Investments in subsidiaries and affiliates (847) (88) Purchases of fixed assets, net (110) (357) ---------- ---------- Net Cash Provided by (Used in) Investing Activities (222) 2,155 ---------- ---------- FINANCING ACTIVITIES Principal payments on credit facility (5,000) - Principal payments on other borrowings (857) (414) Proceeds from issuances of common stock 169 106 Repurchases of common stock (246) - Preferred stock dividends (488) (488) ---------- ---------- Net Cash Used in Financing Activities (6,422) (796) ---------- ---------- Effect of Exchange Rate Changes on Cash (116) 156 ---------- ---------- Decrease in Cash and Cash Equivalents (7,327) (7,242) Cash and Cash Equivalents at Beginning of Period 28,233 25,509 ---------- ---------- Cash and Cash Equivalents at End of Period $ 20,906 $ 18,267 ========== ========== SUPPLEMENTAL INFORMATION: Cash payments for interest $ 178 $ 109 Cash payments (refunds) for income taxes $ 326 $ (408)
See notes to consolidated financial statements. 5 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying consolidated financial statements of ICF Kaiser International, Inc. and subsidiaries (ICF Kaiser or the Company), except for the February 28, 1995 balance sheet, are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Company's audited consolidated financial statements and footnotes thereto for the year ended February 28, 1995 and the information included in the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended February 28, 1995. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the May 31, 1995 financial statements. NOTE B - NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is computed using net income (loss) attributable to common shareholders, as adjusted under the modified treasury stock method, and the weighted average number of common stock and common stock equivalents outstanding during the periods presented. Common stock equivalents include stock options and warrants. The adjustments required by the modified treasury stock method to net income (loss) attributable to common shareholders and the impact of common stock equivalents on the weighted average number of shares were anti-dilutive for all periods presented and, therefore, are excluded from earnings per share computations. NOTE C - CONTINGENCIES Normally in the Company's business, various claims or charges are asserted and litigation commenced against the Company arising from or related to properties, injuries to persons, and breaches of contract, as well as claims related to acquisitions and dispositions. Claimed amounts may not bear any reasonable relationship to the merits of the claim or to a final court award. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe that there will be any material adverse effect on the Company's financial position, operations, or cash flows as a result of these investigations. The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of such audits, the government asserts, from time to time, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Management believes that the potential effect of disallowed costs, if any, for the periods currently under audit and for periods not yet audited, has been provided for adequately and will not have a material adverse effect on the Company's financial position, operations, or cash flows. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW ICF Kaiser is one of the nation's largest engineering, construction, and consulting services companies, providing fully integrated services to domestic and foreign clients in the environment, infrastructure, industry, and energy markets, in both the private and public sectors. ICF Kaiser's operating income of $3.8 million for the quarter ended May 31, 1995 was a $0.4 million decrease from the $4.2 million of operating income reported for the quarter ended May 31, 1994. The lower operating income reflects a decline in revenue from environmental operations primarily resulting from a decline in private-sector environmental work, combined with slower funding under certain public-sector contracts. The Company believes that the federal environmental projects have been slowed temporarily by federal government budgetary uncertainties; however, the Company believes that continued investment in its business development activities should result in higher backlog. Operating income was further impacted by a significant increase in marketing efforts in the quarter ended May 31, 1995 versus the quarter ended May 31, 1994 and by continued low staff utilization. Offsetting these negative income impacts was an improvement in engineering and construction operations due to operating revenues which had been previously deferred pending commencement of a major transit project in the Philippines (costs related to the development of this project had been expensed in prior periods). The Company's contract backlog increased significantly to $4.3 billion at May 31, 1995 compared to $1.4 billion at February 28, 1995. In April 1995, Kaiser- Hill Company, LLC (Kaiser-Hill), a limited liability company owned equally by ICF Kaiser and CH2M Hill Companies, Ltd., was awarded the Performance Based Integrating Management contract at the U.S. Department of Energy's (DOE) Rocky Flats Environmental Technology Site in Colorado (Rocky Flats). The five-year contract increased contract backlog by $3.0 billion and is expected to generate between $1.5 million and $9 million in annual pretax profit to ICF Kaiser. The fee structure for this contract will provide for a mixture of base and incentive fees earned through the achievement of cost reductions, attainment of certain milestones, and accomplishment of other goals. With the recent award of the Rocky Flats contract and the Company's continued work at DOE's Hanford, Washington site (Hanford), ICF Kaiser is now actively participating in two of DOE's major environmental cleanup efforts, as well as working at eight of the other 18 DOE major weapons facilities. The Company expects these operations to provide a stable operating income base upon which the Company can build. Management intends to continue its pursuit of major federal environmental cleanup contracts similar to Rocky Flats and Hanford. The Company also intends to develop new business opportunities such as international and private-sector expansion of consulting services and expansion of remediation capabilities. The Company strongly believes that these endeavors, combined with the Company's ongoing efforts to enhance financial and system controls and increase market development activities, should progressively move the Company forward. 7 RESULTS OF OPERATIONS The following table summarizes key elements in the Consolidated Statements of Operations for the three months ended May 31, 1995 and 1994.
Three Months Three Months Ended Ended May 31, 1995 May 31, 1994 --------------------------------------- (Dollars in millions) GROSS REVENUE $193.0 $210.5 SERVICE REVENUE $105.5 $113.2 SERVICE REVENUE AS A PERCENTAGE OF GROSS REVENUE 54.7% 53.8% OPERATING EXPENSES AS A PERCENTAGE OF SERVICE REVENUE: Direct cost of services and overhead 82.8% 84.4% Administrative and general 11.4% 9.8% Depreciation and amortization 2.3% 2.0% OPERATING INCOME 3.6% 3.7%
Gross revenue represents services provided to customers with whom the Company has a primary contractual relationship. Included in gross revenue are costs of certain services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the income of joint ventures and affiliated companies. ICF Kaiser believes that it is appropriate to analyze operating margins and other ratios in relation to service revenue because such revenue and ratios reflect the work performed directly by the Company. Operating profits generated by the Hanford contract are based on performance and not revenue. A change in revenue between periods is likely to be disproportionate to the change in operating income. Consequently, changes in revenue may have an exaggerated impact on the Company's margins as measured on a percentage basis. Revenue Gross revenue for the quarter ended May 31, 1995 decreased $17.5 million, or 8.3%, to $193.0 million, while service revenue decreased $7.7 million, or 6.8%, to $105.5 million, from the comparable period in the prior year. These decreases were attributable to a decline in work performed at Hanford ($29.1 million reduction in gross revenue and $10.2 million reduction in service revenue) due to federal budget reductions which caused a decrease in services provided by the Company at the Hanford site. This reduced level of Hanford activity is expected to continue and may be reduced further in future periods; however, a reduction in the Hanford budget is not expected to have a significant impact on operating income due to the nature of the fee structure. The Hanford decrease was offset partially by an increase in the Company's engineering and construction revenue ($6.3 million increase in gross revenue and $4.2 million increase in service revenue) primarily due to the recognition of revenues on the Philippines project and an increase in revenues on projects in the basic industries sector. 8 Operating Expenses Direct cost of services and overhead decreased $8.1 million for the quarter ended May 31, 1995 to $87.4 million from $95.5 million for the comparable period in the prior year. This decrease was primarily due to a reduction in direct labor at Hanford attributable to the federal budget reductions discussed above. The Company's direct cost of services and overhead as a percentage of service revenue for the quarter ended May 31, 1995 was substantially the same as for the comparable period in the prior year. Administrative and general expense increased $0.9 million between years and increased from 9.8% to 11.4% as a percentage of service revenue. The increase in these costs is primarily attributable to the Company's increased commitment to the development of marketing activities, including filling several key marketing positions within the Company and the relatively high level of marketing expense associated with proposing and bidding large scale U.S. Department of Defense and DOE contracts. Income Tax Expense ICF Kaiser's effective tax rate was 45% for the quarter ended May 31, 1995, a decrease from 62% for the quarter ended May 31, 1994. The decrease in the effective tax rate is primarily due to a reduction in losses of controlled foreign corporations and an increase in recognition of tax credits. LIQUIDITY AND CAPITAL RESOURCES During the first three months of the current fiscal year, cash and cash equivalents decreased $7.3 million to $20.9 million at May 31, 1995. The repayment of the outstanding balance on the Company's credit facility used $5.0 million of cash; payment of other outstanding debt used $0.9 million; investments in joint ventures and affiliates used $0.8 million; and increases in other assets used $2.2 million, primarily due to a settlement with former employees and the award of the Rocky Flats contract. The cash position was improved by $0.7 million from proceeds received during the quarter ended May 31, 1995 from the previously recognized sale of a 20% interest in a French subsidiary which occurred in the prior year. During the year ended February 28, 1995, the U.S. Environmental Protection Agency approved the Company's revised provisional billing rates for fiscal years 1991 through 1994, thus authorizing the Company to submit invoices on cost-plus contracts with U.S. government agencies for work performed during these approved years. The Company collected $1.1 million during the three months ended May 31, 1995 on these contracts and expects to collect up to an additional $3.0 million through December 1995. Management believes that current projected levels of cash flows and the availability of financing, including borrowings under the Company's credit facility, will be adequate to fund operations throughout the next twelve months. As of May 31, 1995, there were no outstanding borrowings under the credit facility, except for letters of credit; however, the Company borrowed $5.0 million under its credit facility on June 30, 1995. A $7.5 million interest payment on the Company's 12% Senior Subordinated Notes due 2003 was made in June 1995. 9 PART II - OTHER INFORMATION Item 1. Legal Proceedings As previously reported in the Report on Form 10-K for the year ended February 28, 1995. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits filed as part of this report are listed below: ----------------------------------------------------------- No. 27 Financial Data Schedule (b) Report on Form 8-K ------------------ Report on Form 8-K (Date of Event: June 23, 1995) reporting a decision to change the Company's fiscal year end from February 28 to December 31, effective December 31, 1995 (filed with the Commission on July 7, 1995). 10 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report of Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. ICF KAISER INTERNATIONAL, INC. (Registrant) Date: July 11, 1995 /s/ Richard K. Nason ----------------------------- Richard K. Nason Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer) 11 EX-27 2 EXHIBIT 27
5 1 U.S. DOLLARS 3-MOS FEB-28-1996 MAR-01-1995 MAY-31-1995 1 20,906,000 0 149,782,000 10,019,000 0 183,536,000 42,173,000 30,461,000 273,772,000 99,328,000 121,243,000 210,000 19,668,000 0 26,845,000 273,772,000 0 192,983,000 0 87,355,000 0 480,000 4,027,000 296,000 133,000 163,000 0 0 0 163,000 (0.02) (0.02) Excludes current portion of bonds, mortgages, and similar debt. Represents gross revenue which includes costs of certain services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Excludes subcontract and direct material costs of $88,406,000.
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