-----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, Msm0BZAmj+t0xTs12xoQphylY2gWEIE7yPxT4pujmMv38s5dHpQV+lYRF1qEJ+9R zHPrzjQgWqzN4T7H1sHcxA== /in/edgar/work/0000928385-00-003190/0000928385-00-003190.txt : 20001122 0000928385-00-003190.hdr.sgml : 20001122 ACCESSION NUMBER: 0000928385-00-003190 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAISER GROUP INTERNATIONAL INC CENTRAL INDEX KEY: 0000856200 STANDARD INDUSTRIAL CLASSIFICATION: [4955 ] IRS NUMBER: 541437073 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12248 FILM NUMBER: 774077 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 KAISER INTERNATIONAL INC DATE OF NAME CHANGE: 19930811 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 0001.txt QUARTERLY REPORT 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 September 30, 2000 Commission File No. 1-12248 KAISER GROUP INTERNATIONAL, INC. (formerly 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) 934-3300 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 No X On October 31, 2000, there were 23,414,328 shares of Kaiser Group International, Inc. Common Stock, par value $0.01 per share, outstanding. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. KAISER GROUP INTERNATIONAL, INC. INDEX TO FORM 10-Q
Page Part I - Financial Information Item 1. Financial Statements: Consolidated Balance Sheets - September 30, 2000 and December 31, 1999................................... 3 Consolidated Statements of Operations and Comprehensive (Loss) Three and Nine Months Ended September 30, 2000 and 1999.................... 4 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2000 and 1999.............................. 5 Notes to Consolidated Financial Statements................................. 6-18 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................. 19-26 Item 3 Quantitative and Qualitative Disclosures About Market Risk................. 27 Part 11 - Other Information Item 1. Legal Proceedings................................................................. 27 Item 2. Changes in Securities and Use of Proceeds......................................... 27 Item 3. Defaults Upon Senior Securities................................................... 27 Item 4. Exhibits and Reports on Form 8-K.................................................. 27
- -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 2 KAISER GROUP INTERNATIONAL, INC. Debtor-In-Possession Consolidated Balance Sheets (In thousands, except shares)
September 30, December 31, 2000 1999 ---- ---- (Unaudited) Assets Current Assets Cash and cash equivalents $ 42,437 $ 26,391 Restricted cash 15,933 16,386 Contract receivables, net 22,847 158,319 Prepaid expenses and other current assets 1,543 5,350 --------- --------- Total Current Assets 82,760 206,446 --------- --------- Fixed Assets Furniture, equipment, and leaseholds 3,993 14,224 Less depreciation and amortization (3,493) (11,403) --------- --------- 500 2,821 --------- --------- Other Assets Goodwill, net -- 17,581 Investments in and advances to affiliates 6,368 10,040 Notes receivable 6,550 6,550 Capitalized software development costs 1,338 1,601 Other 3,445 8,524 --------- --------- 17,701 44,296 --------- --------- Total Assets $ 100,961 $ 253,563 ========= ========= Liabilities and Shareholders' Equity (Deficit) Liabilities Not Subject To Compromise Current Liabilities Accounts payable $ 7,282 $ 119,556 Accrued salaries and benefits 4,516 27,249 Other accrued expenses 6,650 26,921 Deferred revenue -- 9,015 Income taxes payable 542 6,597 --------- --------- Total Current Liabilities 18,990 189,338 Long-term Liabilities Long-term debt - 124,218 Other - 7,577 Liabilities Subject To Compromise 159,492 - --------- --------- Total Liabilities 178,482 321,133 Commitments and Contingencies Minority Interest - 2,333 Shareholders' Equity (Deficit) Preferred stock - - Common stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding- 23,414,328 and 23,655,500 shares at September 30, 2000 and December 31, 1999, respectively 234 237 Additional paid-in capital 73,360 73,643 Accumulated deficit (151,140) (140,681) Accumulated other comprehensive income (loss) 25 (3,102) --------- --------- Total Shareholders' Equity (Deficit) (77,521) (69,903) --------- --------- Total Liabilities and Shareholders' Equity (Deficit) $ 100,961 $ 253,563 ========= =========
See notes to consolidated financial statements. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 3 KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Debtor-In-Possession Consolidated Statements of Operations (In thousands, except per share amounts)
Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, ------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- (Unaudited) Gross Revenue $ -- $ 206,046 $ 271,385 $ 516,343 Subcontract and direct material costs -- (161,710) (195,367) (401,277) Equity in net income of unconsolidated subsidiaries 2,121 -- 2,621 -- -------- --------- --------- --------- Service Revenue 2,121 44,336 78,639 115,066 Operating Expenses Direct labor and fringe benefits -- 40,299 63,426 102,620 Selling, general and administrative 1,343 1,685 6,389 6,791 Depreciation and amortization 822 864 2,467 3,962 Restructuring and/or reorganization charges 2,462 -- 4,377 10,694 -------- --------- --------- --------- Operating Income (Loss) (2,506) 1,488 1,980 (9,001) Other Income (Expense) Interest income 793 858 1,966 1,465 Interest expense -- (4,592) (8,445) (16,801) -------- --------- --------- --------- Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest and Extraordinary Item (1,713) (2,246) (4,499) (24,337) Income tax benefit (expense) 7,672 276 8,420 364 -------- --------- --------- --------- Income (Loss) From Continuing Operations Before Minority Interest and Extraordinary Item 5,959 (1,970) 3,921 (23,973) Minority interest in net income of subsidiaries -- (2,118) (5,999) (6,323) -------- --------- --------- --------- Income (Loss) Before Discontinued Operations, and Extraordinary Item 5,959 (4,088) (2,078) (30,296) Income (loss) from discontinued operations, net of tax (755) 771 1,089 2,034 Gain (loss) on sale of discontinued operations, net of tax (9,435) (2,556) (9,435) 46,199 -------- --------- --------- --------- Income (Loss) before Extraordinary Item (4,231) (5,873) (10,424) 17,937 Extraordinary item, net of tax (35) -- (35) (698) -------- --------- --------- --------- Net Income (Loss) $ (4,266) $ (5,873) $ (10,459) $ 17,239 ======== ========= ========= ========= Basic and Diluted Earnings (Loss) Per Share: Continuing operations, net of tax $ 0.26 $ (0.18) $ (0.09) $ (1.27) Discontinued operations, net of tax (0.44) (0.07) (0.36) 2.02 Extraordinary item, net of tax -- -- -- (0.03) -------- --------- --------- --------- $ (0.18) $ (0.25) $ (0.45) $ 0.72 ======== ========= ========= ========= Weighted average shares for basic earnings per share 23,255 23,823 23,270 23,927 Effect of dilutive stock options -- -- -- -- -------- --------- --------- --------- Weighted average shares for diluted earnings per share 23,255 23,823 23,270 23,927 ======== ========= ========= ========= Comprehensive Income (Loss Net Income (Loss) $ (4,266) $ (5,873) $ (10,424) $ 17,239 Other Comprehensive Income (Loss) Change in cumulative foreign translation adjustments 2,793 313 3,127 446 -------- --------- --------- --------- Total Comprehensive Income (Loss) $ (1,473) $ (5,560) $ (7,297) $ 17,685 ======== ========= ========= =========
See notes to consolidated financial statements. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 4 KAISER GROUP INTERNATIONAL, INC. Debtor-In-Possession Consolidated Statements of Cash Flows (In thousands)
Nine Months Ended September 30, ------------------- 2000 1999 -------- -------- (Unaudited) Operating Activities Net income (loss) $(10,459) $ 17,239 Adjustments to reconcile net (loss) to net cash (used in) operating activities: Income from discontinued operations (1,815) (2,034) (Gain) Loss on sale of discontinued operations 9,435 (46,199) Depreciation and amortization 2,467 4,016 Provision (credit) for losses - (27,904) Extraordinary items 35 698 Provision for deferred income taxes - 34,673 Note receivable write-off - 638 Earnings in excess of cash distributions from joint ventures and affiliated companies (3,571) (1,688) Minority interest in net income of subsidiaries 5,999 6,323 Changes in operating assets and liabilities, net of amounts sold: Contract receivables, net 7,174 (17,513) Prepaid expenses and other current assets (2,016) (7,592) Accounts payable and accrued expenses (10,081) (13,583) Deferred revenue (7,253) (8,221) Income tax payable (2,125) 1,209 -------- -------- Net Cash (Used in) Operating Activities (12,210) (59,938) -------- -------- Investing Activities Proceeds from sales of discontinued operations 37,717 135,316 Purchases of fixed assets (666) (659) -------- -------- Net Cash Provided by Investing Activities 37,051 134,657 -------- -------- Financing Activities Borrowings under revolving credit facility - 57,064 Principal payments on revolving credit facility - (92,584) (Provision) release of cash collateral for performance guarantee 455 (21,000) Redemption of Senior Notes (1,000) -- Change in book overdraft - 1,195 Distribution of income to minority interest (8,250) - Proceeds from issuance of common stock - 38 -------- -------- Net Cash (Used in) Financing Activities (8,795) (55,287) -------- -------- Effect of Exchange Rate Changes on Cash (--) 76 Increase in Cash and Cash Equivalents 16,046 19,508 Cash and Cash Equivalents at Beginning of Period 26,391 15,248 -------- -------- Cash and Cash Equivalents at End of Period $ 42,437 $ 34,756 ======== ======== Supplemental cash flow information is as follows: Cash payments for interest $ 27 $ 3,295 Cash payments for income taxes 2,171 - Reacquisition of common stock - (337)
See notes to consolidated financial statements. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 5 KAISER GROUP INTERNATIONAL, INC. AND SUBSIDIARIES DEBTOR-IN-POSSESSION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements of Kaiser Group International, Inc. and subsidiaries (the Company), except for the December 31, 1999 balance sheet (derived from audited financial statements), 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. With respect to the Company's financial statements for periods ended prior to December 31, 1999, such adjustments consist of normal and recurring adjustments and reclassifications to be consistent with the September 30, 2000 presentation. With respect to the Company's financial statements for the period ended September 30, 2000, such adjustments consist of normal and recurring adjustments as well as other adjustments that are consistent with the American Institute of Certified Public Accountants' Statement of Position (SOP) 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, to reflect the filing of voluntary petitions by the Company and certain of its subsidiaries under Chapter 11 of the United States Bankruptcy Code on June 9, 2000. These statements should be read in conjunction with the Company's audited consolidated financial statements and footnotes thereto for the year ended December 31, 1999 and the information included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Recent Changes in Accounting Affecting Comparability of Financial Statements - ---------------------------------------------------------------------------- Investment in Kaiser-Hill: Prior to June 8, 2000, through a designated majority representation on Kaiser-Hill Company, LLC's board of managers, the Company had a controlling interest in Kaiser-Hill and therefore consolidated Kaiser-Hill's results of operations with those of its only other remaining business segment, the Engineers and Constructors Group. Effective June 8, 2000, the Company adopted the equity method of accounting for Kaiser-Hill coincident with its signing of an agreement whereby the other 50% owner has the right to designate 3 out of the 5 members of Kaiser-Hill's board of managers. The Company retains the right to designate 2 out of the 5 members of Kaiser-Hill's board of managers. Accordingly, the financial information contained herein for Kaiser-Hill is reflected on a consolidated basis for all periods presented through June 8, 2000, and financial information for periods after June 8, 2000 is reflected on the equity basis. Discontinued Engineering Operations: As more fully described herein, in two separate transactions completed during the three months ended September 30, 2000, the Company sold the majority of its Engineering Operations pursuant to its Plan of Reorganization as filed with the Bankruptcy Court. Accordingly, the financial results of the divested operations have been presented in the accompanying financial statements as "discontinued operations" for all periods presented. 2. Reorganization Developments On June 9, 2000, the Company announced its intention to sell the majority of its Engineering Operations in two separate transactions (described below). Also on June 9, 2000, the Company announced that it would effect these sales as well as a debt restructuring of its Senior and Senior Subordinated Notes through a voluntary and pre-arranged bankruptcy. Accordingly, on June 9, 2000, Kaiser Group International, Inc. and 38 of its wholly-owned domestic subsidiaries (the Debtor Entities) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company's subsidiaries that did not file petitions for relief under Chapter 11 are referred to herein as the Non-Debtor Entities. Since then, the Company has continued to operate the Non-Debtor Entities' businesses in the ordinary course and has operated the Debtor Entities' businesses as debtors-in-possession. As such, the Debtor Entities are authorized to operate their businesses in the ordinary course but may not engage in transactions outside the ordinary course of business without Bankruptcy Court approval. In accordance with its announced intentions and following the requisite Bankruptcy Court approvals, the sales of the Company's Engineering Operations were effected as follows: . The Infrastructure and Facilities Sale: The Bankruptcy Court approved the sale of the Infrastructure and Facilities line of business on July 17, 2000. On July 28, 2000, Kaiser completed the sale of its Infrastructure and Facilities line of business, which provided engineering services to clients around the world in the transit and transportation, facilities management, water/wastewater treatment, and microelectronics and clean technology sectors. In this transaction, substantially all of the assets of this business were sold to Tyco Group S.A.R.L., the EarthTech unit of Tyco International Ltd., for a cash purchase price of $30 million. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 6 . The Metals, Mining and Industry Sale: The Bankruptcy Court approved the sale of the Metals, Mining and Industry line of business on August 17, 2000. Effective as of August 18, 2000, Kaiser completed the sale of its Metals, Mining and Industry line of business, which provided engineering services to clients around the world in the alumina/aluminum, iron and steel, and mining industry sectors. In this transaction, substantially all of the assets of this business were sold to Hatch Associates, Inc., a subsidiary of The Hatch Group of Canada, for a cash purchase price of $7.0 million. Although the Company has not finalized its accounting for the transactions, it has to date recognized a net loss for financial reporting purposes of approximately $(0.9) million. After adjusting this loss for items that are not deductible for federal income tax purposes such as associated goodwill and intangible asset write-offs totaling $19.0 million, the transactions resulted in income tax expense of approximately $8.5 million, resulting in a total loss after tax for financial reporting purposes of approximately $(9.4) million from the collective sales. As a result of the Company's June 9, 2000 bankruptcy filings, (i) all then existing debts, liabilities and obligations of the Debtor Entities (collectively, "Pre-petition Indebtedness") matured and became due and payable, and (ii) all acts to collect Pre-petition Indebtedness and to enforce other existing contractual obligations of the Debtor Entities were stayed. Under the Bankruptcy Code, the Debtor Entities generally may not currently make payments on Pre-petition Indebtedness. Liabilities and obligations incurred after the commencement of the bankruptcy cases in connection with the operation of the Debtor Entities' business generally enjoy priority in right to payment over Pre- petition Indebtedness and may be paid by the Debtor Entities in the ordinary course of business. Under the Bankruptcy Code, the Debtor Entities may, subject to certain conditions, assume or reject executory contracts existing at the commencement of the bankruptcy cases. The rejection of an executory contract is treated as a breach thereof occurring immediately before the filing of the Debtor Entities' bankruptcy petitions. Any liabilities of the Debtor Entities arising as a result of the rejection of the executory contracts will be treated as Pre-petition Indebtedness. The Debtor Entities have filed a consolidated plan of reorganization with the Bankruptcy Court. On August 17, 2000, the Bankruptcy Court approved a disclosure document prepared by the Company for use in soliciting acceptances of the Plan of Reorganization by affected creditors and shareholders, who approved the plan. There remain outstanding certain objections to the plan of reorganization, which has not yet been confirmed by the Bankruptcy Court. On the afternoon of Thursday, November 16, 2000, the Bankruptcy Court continued the hearing on confirmation of the Plan of Reorganization of Kaiser Group International, Inc. and 38 of its subsidiaries until 10:00 a.m. on December 5, 2000. The Company's plan of reorganization, as well as the public record of all bankruptcy court documents, can be accessed via the internet at www.deb.uscourts.gov. Although -------------------------------------------------------- material changes are not expected, the plan of reorganization is subject to change until such time as it is confirmed by the Bankruptcy Court. In general, the proposed plan of reorganization contemplates: . the cash payment of certain ordinary course liabilities, up to $20,000 per creditor, incurred prior to June 9, 2000; . the payment, with a combination of cash, preferred stock and newly issued common stock, for most Pre-Petition Indebtedness not included in the class described above. This creditor class will consist largely of the Company's Senior Subordinated Notes and certain other claims for contingent or disputed liabilities existing as of June 9, 2000 (collectively, the Class 4 Claims). The issuance of new preferred stock and new common stock to this class of creditors would result in substantial dilution to the common stockholders that existed immediately prior to the effectiveness of the plan of reorganization; and . the issuance to current common shareholders and the other equity interests of shares in the reorganized company which would comprise, in the aggregate, 15% of the common shares outstanding after the distribution of new issued common shares to the Class 4 claims as described above. Immediately following the completion of the bankruptcy and asset sales described above, the reorganized Company will be engaged in or own only a limited number of activities or assets, primarily consisting of: . the completion of an engineering and construction services contract for the construction of a steel mini-mill in the Czech Republic. This contract is expected to be completed during late 2000 through the Company's Netherlands subsidiary, although warranty obligations will exist for a period following final acceptance of the mini-mill. . the performance of a contract for the closure of DOE's Rocky Flats site through Kaiser-Hill, and . the holding of a minority ownership interest in ICF Consulting Group Inc. (the consulting division that the Company sold in 1999) as well as the promissory notes received in connection with that sale. In the event that a plan of reorganization is not confirmed by the Bankruptcy Court and a restructuring plan is not consummated, the ability of the Company to continue as a going concern depends on the success of and cash flows generated by the retained activities summarized above and on the ability to meet creditor obligations. The Company's alternative would be to seek to confirm a modified plan of reorganization or to liquidate the business and distribute available proceeds. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 7 The accompanying financial statements have been prepared on a going concern basis, which, except as disclosed, contemplates continuity of retained operations, the realization of assets and the discharge of liabilities in the ordinary course of business or pursuant to Bankruptcy Court orders. Until the Company has an approved plan of reorganization, the realization of assets and the ultimate resolution of the Company's contingent liabilities (Note 6) could materially change the amounts currently recorded in the financial statements. The financial statements do not give effect to any adjustments to the carrying value of assets, or amounts and classification of liabilities that might be necessary as a consequence of the outcome from the bankruptcy proceedings. In addition, valuation methods used in Chapter 11 reorganization processes vary depending on the purpose for which they are prepared and may differ from methods used solely for purposes of GAAP, the basis on which the accompanying financial statements are prepared. Accordingly, the values and assumptions used to set forth amounts in the accompanying financial statements may not be indicative of the values and assumptions presented to or used by the Bankruptcy Court. As a result, valuations of the Company based on the accompanying financial statements may be significantly different than valuations used by the Company in determining the amounts to be received, if any by each class of creditor under a plan of reorganization. As a result of the Chapter 11 filing, the financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the classification of liabilities that might result should the Company not be successful in attempts to enact the critical actions summarized above. Upon the effectiveness of the Company's Plan of Reorganization, the principles of the AICPA's Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" will be applied in the form of "fresh start accounting" whereby the Company's overall fair market value ("Reorganization Value") will be allocated to the successor company's net assets using the purchase method of accounting. 3. Condensed financial information for the Company's Debtor and Non-Debtor Entities is as follows:
Statements of Operations Non- - ------------------------ ---- For the period from June 9, 2000 (Petition Date) through September 30, 2000, Debtor Debtor - ---------------------------------------------------------------------------- ------ ------ Entities Entities Total -------- -------- ----- Gross revenue................................................................. $ -- $ -- $ -- Subcontracts and materials................................................... (--) (--) (--) Equity in unconsolidated subsidiaries........................................ -- 2,621 2,621 -------- -------- -------- Service revenue............................................................... -- 2,621 2,621 Operating expenses: Direct labor and fringe...................................................... -- -- -- Selling, general and administrative.......................................... 1,790 -- 1,790 Depreciation and amortization................................................ 972 277 1,249 Reorganization costs......................................................... 3,565 -- 3,565 -------- -------- -------- Operating income.(loss)...................................................... $ (6,327) $ 2,344 $ (3,983) ======== ======== ======== Net income.(loss)............................................................ $ (4,166) $ 1,471 $ (2,695) ======== ======= ======== Non- ---- Debtor Debtor ------ ------ Balance Sheets as of September 30, 2000 Entities Entities Total - --------------------------------------- -------- -------- ----- Assets (Unaudited) Cash and cash equivalents.................................................... $ 37,468 $ 4,969 $ 42,437 Restricted cash.............................................................. 13,262 2,671 15,933 Contract receivables, net.................................................... 145 22,702 22,847 Other current assets......................................................... 1,032 511 1,543 Other long-term assets....................................................... 18,201 -- 18,201 ---------- -------- -------- Total Assets................................................................ $ 70,108 $ 30,853 $100,961 ========== ======== ======== Liabilities Liabilities Not Subject To Compromise Accounts payable............................................................. 1,090 6,192 7,282 Accrued salaries and benefits................................................ 4,516 -- 4,516 Other current liabilities.................................................... 542 6,650 7,192 ---------- -------- -------- Total Liabilities Not Subject To Compromise................................. 6,148 12,842 18,990 Liabilities Subject To Compromise............................................. 159,492 -- 159,492 ---------- -------- -------- Total Liabilities........................................................... 165,640 12,842 178,482 Commitments and contingencies Minority Interest............................................................. -- -- -- ---------- -------- -------- Net Assets.................................................................... $ (95,532) $ 18,011 $(77,521) ---------- -------- --------
- -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 8 4. Earnings Per Share Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding. The assumed proceeds from the exercise of dilutive securities are used to purchase common stock at the average market price during the period. The difference between the number of shares assumed issued and the number of shares assumed purchased is added to the basic EPS denominator in order to derive the diluted EPS denominator. The Company's common stock equivalents that would be antidilutive have been excluded from the fully diluted EPS calculation. 5. Liabilities Subject to Compromise ("Pre-petition Indebtedness") As a result of the commencement of the Debtor Entities' bankruptcy cases, (i) all then existing debts, liabilities and obligations of the Debtor Entities (collectively, Pre-petition Indebtedness) matured and became due and payable, and (ii) all acts to collect Pre-petition Indebtedness and to enforce other existing contractual obligations of the Debtor Entities were stayed. Pre- petition Indebtedness has been reflected on the Company's Consolidated Balance Sheet at September 30, 2000 as Liabilities Subject to Compromise consisting of the following (in thousands): Debtor ------ Entities -------- Liabilities Subject to Compromise: (Unaudited) Accounts payable............................. $ 5,100 Accrued interest expense..................... 7,988 Other accrued expenses....................... 22,838 Notes payable................................ 123,566 -------- Total Liabilities subject to compromise.. $159,492 ======== All amounts presented above may be subject to future adjustments depending on Bankruptcy Court's actions, further developments with respect to disputed claims, determination as to the security of certain claims, the value of any collateral securing such claims, or other events. The Bankruptcy Court established August 15, 2000 as a date ("bar date") for the majority of unsecured creditors to file with the court a notice of the amount and nature of their claims. Under the Bankruptcy Code, liabilities and obligations first incurred after the commencement of the bankruptcy cases in connection with the operation of the Debtor Entities' business generally enjoy priority in the right to payment over Pre-petition Indebtedness and may be paid by the Company in the ordinary course of business. Such liabilities are reflected on the Company's Consolidated Balance Sheet as Liabilities Not Subject to Compromise. Under the Bankruptcy Code, the Debtor Entities may, subject to certain conditions, assume or reject executory contracts, including property and equipment leases, existing at the commencement of the bankruptcy cases. The rejection of an executory contract or lease is treated as a breach thereof occurring immediately before the filing of the debtors' bankruptcy petitions, and liabilities of the Debtor Entities arising as a result of the rejection of executory contracts and leases will ultimately be included in Liabilities Subject to Compromise. Reorganization and Restructuring Costs During the three and nine months ended September 30, 2000 the Company incurred approximately $2.5 million and $4.5 million, respectively, in costs associated with its bankruptcy activities - including third-party professional fees, court fees, printing and mailing costs, and severance and staff retention costs among others. During the nine months ended September 30, 1999, the Company recognized unusual charges totaling $10.7 million incurred as part of activities aimed at addressing the restructuring of its debt and the reorganization of its remaining operations that were undertaken prior to the inception of the bankruptcy. 6. Contingencies Litigation, Claims and Assessments Contingencies: In the course of the Company's normal business activities, various claims or charges have been 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. The Company anticipates being able to resolve and/or settle matters within this category of contingency during the course of its bankruptcy process. Until such resolution, however, in the opinion of management, the financial statements contain adequate provisions for reserves for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The continued adequacy of reserves is reviewed periodically - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 9 as progress on such matters ensue. Bath Contingency: In March 1998, Kaiser entered into a $197 million maximum price contract to construct a ship building facility for Bath Iron Works, Inc. ("Bath"). In May 1998, Kaiser learned that the costs of subcontractors to perform the contract were approximately $30 million higher than the estimated costs previously known, and Kaiser terminated the contract on the basis of mutual mistake between the contracting parties. Bath subsequently asserted a claim based on site conditions that allegedly should have been identified by Kaiser and its subcontractors. In March 2000, Bath filed claims aggregating $38 million in the United States District Court for the District of Maine. In August 2000, an agreement was reached among Kaiser, its insurer and Bath in settlement of the potential claims. The agreement of the parties was also approved by the Bankruptcy Court and accordingly, there will be no allowed claim arising from the terminated Bath contract. Acquisition Contingency: The Kaiser common shares exchanged for the stock of ICT Spectrum in the March, 1998 acquisition carry the guarantee that the fair market value of each share of stock will reach $5.36 by March 1, 2001. In the event that the fair market value does not attain the guaranteed level, the Company is obligated to make up the shortfall either through the payment of cash or by issuing additional shares of common stock with a total value equal to the shortfall, depending upon the Company's preference. Pursuant to the terms of the Agreement, however, the total number of contingently issuable shares of common stock cannot exceed an additional 1.5 million. In December, 1999, the Company and certain former Company employees and shareholders of ICT Spectrum agreed to amend the applicable agreements in a manner that had the result of reducing the amount of the taxable gain created by former shareholder-employees' involuntary departures from the Company. As permitted per the agreement, the shareholders agreed to allow the Company to retain some of the vested shares as payment of the income tax withholding in lieu of cash. In total, the Company retained 255,669 shares and recorded the transaction as a $1.37 million reduction to goodwill and paid-in-capital. The former shareholders of ICT Spectrum have submitted a claim in bankruptcy against the Company. Pursuant to the Company's Plan of Reorganization, the Company believes that the claim will be treated as a Class 5 Equity Interest. On March 29, 1999, one ex-ICT Spectrum shareholder, individually and on behalf of all others similarly situated, filed a class action lawsuit in the U.S. District Court for the District of Idaho alleging false and misleading statements made in a private offering memorandum, and otherwise, in connection with the Company's acquisition of ICT Spectrum in 1998. The court denied the Company's motion to dismiss this suit. As a result of the bankruptcy, this case has been stayed as to the Company. Government contract contingencies: In the past, Kaiser had a number of cost-reimbursement contracts with the U.S. government that have been the subject of audits by the U.S. government. The U.S. government has asserted, among other things, that some costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Effective as of August 28, 2000, Kaiser and the respective governmental agencies reached an agreement to settle this potential claim, without the return by Kaiser of any money previously reimbursed to Kaiser by the U.S. government. Also pursuant to the settlement agreement, the U. S. government will not assert any further Claim in the Bankruptcy Cases arising from these U.S. government cost- reimbursement contracts and Kaiser waives the right to additional payments from the U.S. The Bankruptcy Court has also approved the settlement agreement. Contract warranties and performance guaranty contingencies: In the course of the Company's normal business activities, many of its contracts contain provisions for warranties and performance guarantees. As progress on contracts ensues, the Company regularly updates the estimates of the costs to perform such contingencies and reserves a proportionate amount of the total related contract value until such time as the contingency is resolved. 7. Guarantor Subsidiaries Until the completion of the Company's bankruptcy process and pursuant to SEC rules regarding publicly held debt, the Company is required to provide financial information for wholly owned subsidiaries of Kaiser Group International, Inc. (Subsidiary Guarantors) which unconditionally guarantee the payment of the principal, premium, if any, and interest on the Company's Senior Subordinated Notes and Series B Senior Notes. The Subsidiary Guarantors are Cygna Consulting Engineers and Project Management, Inc; Kaiser Government Programs, Inc; Global Trade & Investment, Inc; Kaiser Europe, Inc; Kaiser/Georgia Wilson, Inc; Kaiser Overseas Engineering, Inc; EDA Incorporated, Inc.; Kaiser Engineers Pacific, Inc; and Kaiser Advanced Technology, Inc. Condensed consolidating financial information for Kaiser Group International, Inc. (Parent Company), the Subsidiary Guarantors, and the Non-Guarantor Subsidiaries follow on pages 11-18. The information, except for the December 31, 1999 condensed consolidating balance sheet, is unaudited. Investments in subsidiaries have been presented using the equity method of accounting. The Company does not have a formal tax- sharing arrangement with its subsidiaries and has allocated taxes to its subsidiaries based on the Company's overall effective tax rate. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 2000. Page 10 10 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Balance Sheet September 30, 2000 (In thousands)
Kaiser Group Parent Subsidiary Non-Guarantor International, Inc. Company Guarantors Subsidiaries Eliminations Consolidated ----------- ------------ ------------- -------------- ------------------ (Unaudited) Assets Current Assets Cash and cash equivalents $ 37,392 $ 3 $ 5,042 $ - $ 42,437 Restricted Cash 13,237 - 2,696 - 15,933 Contract receivables, net (2,066) 1,424 23,489 - 22,847 Intercompany receivables, net 133,577 34,306 (167,883) - - Prepaid expenses and other current assets 568 48 927 - 1,543 Deferred income taxes - - - - - --------- ------- --------- ------------ --------- Total Current Assets 182,708 35,781 (135,729) - 82,760 --------- ------- --------- ------------ --------- Fixed Assets Furniture, equipment, and leasehold improvements 3,593 45 355 - 3,993 Less depreciation and amortization (3,116) (40) (337) - (3,493) --------- ------- --------- ------------ --------- 477 5 18 - 500 --------- ------- --------- ------------ --------- Other Assets Goodwill, net - - - - - Investment in and advances to affiliates (131,907) 501 16,087 121,687 6,368 Notes receivable 6,550 - - - 6,550 Capitalized software development costs 1,338 - - - 1,338 Other 2,083 - 1,362 - 3,445 --------- ------- --------- ------------ --------- (121,936) 501 17,449 121,687 17,701 --------- ------- --------- ------------ --------- Total Assets $ 61,249 $36,287 $(118,262) $121,687 $ 100,961 ========= ======= ========= ============ ========= Liabilities and Shareholders' Equity Current Liabilities Accounts payable and other accrued expenses $ 6,736 $ 131 $ 7,065 $ - $ 13,932 Accrued salaries and employee benefits (16,364) 2,096 18,784 - 4,516 Interest Payable - - - - - Deferred revenue - - - - - Income taxes payable 3,506 (3,160) 196 - 542 --------- ------- --------- ------------ --------- Total Current Liabilities (6,122) (933) 26,045 - 18,990 Long-term Liabilities Long-term debt - - - - Other - - - - - Liabilities subject to compromise 145,105 2,504 11,883 - 159,492 --------- ------- --------- ------------ --------- Total Liabilities 138,983 1,571 37,928 - 178,482 --------- ------- --------- ------------ --------- Minority Interest - - - - - Shareholders' Equity (Deficit) Common Stock 222 6,811 117 (6,916) 234 Additional Paid-in Capital 73,342 2,372 48,284 (50,638) 73,360 Accumulated Earnings (Deficit) (151,298) 25,533 (204,616) 179,241 (151,140) Accumulated other comprehensive income (loss) - - 25 - 25 --------- ------- --------- ------------ --------- Total Shareholders' Equity (77,734) 34,716 (156,190) 121,687 (77,521) --------- ------- --------- ------------ --------- Total Liabilities and Shareholders' Equity $ 61,249 $36,287 $(118,262) $121,687 $ 100,961 ========= ======= ========= ============ =========
11 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Balance Sheet December 31, 1999 (In thousands) - --------------------------------------------------------------------------------
Kaiser Group Parent Subsidiary Non-Guarantor International, Inc. Company Guarantors Subsidiaries Eliminations Consolidated ------- ---------- ------------- ------------ ------------------- Assets Current Assets Cash and cash equivalents $ 11,472 $ 8,008 $ 6,911 $ - $ 26,391 Restricted Cash 13,816 - 2,570 - 16,386 Contract receivables, net (3,698) 106,841 55,176 - 158,319 Intercompany receivables, net 194,308 17,466 (211,774) - - Prepaid expenses and other current assets 554 949 3,847 - 5,350 Deferred income taxes - - - - - --------- -------- --------- ----------- --------- Total Current Assets 216,452 133,264 (143,270) - 206,446 --------- -------- --------- ----------- --------- Fixed Assets Furniture, equipment, and leasehold improvements 3,520 1,115 9,589 - 14,224 Less depreciation and amortization (3,057) (1,013) (7,333) - (11,403) --------- -------- --------- ----------- --------- 463 102 2,256 - 2,821 --------- -------- --------- ----------- --------- Other Assets Goodwill, net - 3,029 14,552 - 17,581 Investment in and advances to affiliates (144,683) 1 8,844 145,878 10,040 Notes receivable 6,550 6,550 Capitalized software development costs 1,601 - 1,601 Other 3,403 587 4,534 - 8,524 --------- -------- --------- ----------- --------- (133,129) 3,617 27,930 145,878 44,296 --------- -------- --------- ----------- --------- Total Assets $ 83,786 $136,983 $(113,084) $145,878 $ 253,563 ========= ======== ========= =========== ========= Liabilities and Shareholders' Equity Current Liabilities Accounts payable and other accrued expenses $ 21,587 $ 94,542 $ 30,348 $ - $ 146,477 Accrued salaries and employee benefits (11,788) 17,126 21,911 - 27,249 Deferred revenue 761 778 7,476 9,015 Income taxes payable 11,195 (3,160) (1,438) - 6,597 --------- -------- --------- ----------- --------- Total Current Liabilities 21,755 109,286 58,297 - 189,338 Long-term Liabilities Long-term debt 124,217 - 1 - 124,218 Other 4,781 - 2,796 - 7,577 --------- -------- --------- ----------- --------- Total Liabilities 150,753 109,286 61,094 - 321,133 --------- -------- --------- ----------- --------- Minority Interest - 2,333 - - 2,333 Shareholders' Equity (Deficit) Common Stock 227 6,809 114 (6,913) 237 Additional Paid-in Capital 73,644 2,372 48,266 (50,639) 73,643 Accumulated Earnings (Deficit) (140,838) 16,545 (219,818) 203,430 (140,681) Accumulated other comprehensive income (loss) - (362) (2,740) - (3,102) --------- -------- --------- ----------- --------- Total Shareholders' Equity (66,967) 25,364 (174,178) 145,878 (69,903) --------- -------- --------- ----------- --------- Total Liabilities and Shareholders' Equity $ 83,786 $136,983 $(113,084) $145,878 $ 253,563 ========= ======== ========= =========== =========
12 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Statement of Operations Three Months Ended September 30, 2000 (In thousands)
==================================================================================================================================== Kaiser Group International, Parent Subsidiary Non-Guarantor Discontinued Inc. Company Guarantor Subsidiaries Operations Eliminations Consolidated --------- ---------- ------------- ------------ ------------ ------------ (Unaudited) Gross Revenue $ 670 $ 3,195 $ 37,734 $ (41,599) $ - $ - Subcontract and direct material costs (522) (898) (28,282) 29,702 - - Equity in income of joint ventures and affiliated companies (1,077) 2,121 2,827 (267) (1,483) 2,121 -------- -------- --------- ---------- --------- --------- Service Revenue (929) 4,418 12,279 (12,164) (1,483) 2,121 Operating Expenses Operating expenses 75 124 14,792 (13,648) - 1,343 Depreciation and amortization 235 28 333 226 - 822 Restructuring charges 2,462 - - - - 2,462 -------- -------- --------- ---------- --------- --------- Operating Income (Loss) (3,701) 4,266 (2,846) 1,258 (1,483) (2,506) Other Income (Expense) Interest income 656 - 137 - - 793 Interest expense - - - - - - -------- -------- --------- ---------- --------- --------- Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest and Extraordinary Item (3,045) 4,266 (2,709) 1,258 (1,483) (1,713) Income tax (expense) benefit 8,249 - (74) - - 8,175 -------- -------- --------- ---------- --------- --------- Income (Loss) From Continuing Operations Before Minority Interest and Extraordinary Item 5,204 4,266 (2,783) 1,258 (1,483) 6,462 Minority interests in net income of subsidiaries - - - - - - -------- -------- --------- ---------- --------- --------- Income (Loss) From Continuing Operations Before Extraordinary Item 5,204 4,266 (2,783) 1,258 (1,483) 6,462 Income from discontinued operations (net of tax) - - - (1,258) - (1,258) Gain on sale of discontinued operations (net of tax) (9,435) - - - - (9,435) -------- -------- --------- ---------- --------- --------- Income (Loss) Before Extraordinary Item (4,231) 4,266 (2,783) - (1,483) (4,231) Extraordinary item, net of tax (35) - - - - (35) -------- -------- --------- ---------- --------- --------- Net Income (Loss) $ (4,266) $ 4,266 $ (2,783) $ - $ (1,483) $ (4,266) ======== ======== ========= ========== ========= =========
13 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Statement of Operations Three Months Ended September 30, 1999 (In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------ Kaiser Group International, Parent Subsidiary Non-Guarantor Discontinued Inc. Company Guarantor Subsidiaries Operations Eliminations Consolidated --------- ---------- ------------- ------------ ------------ ------------ (Unaudited) Gross Revenue $ 2,903 $ 211,863 $ 39,761 $ (48,481) $ - $ 206,046 Subcontract and direct material costs (2,796) (164,502) (16,982) 22,570 - (161,710) Equity in income of joint ventures and affiliated companies (4,013) - 1,796 (838) 3,055 - -------- --------- -------- --------- ------- --------- Service Revenue (3,906) 47,361 24,575 (26,749) 3,055 44,336 Operating Expenses Operating expenses 2,345 42,043 23,006 (25,410) - 41,984 Depreciation and amortization 225 171 522 (54) - 864 Restruturing charges (1,383) - 1,383 - - - -------- --------- -------- --------- ------- --------- Operating Income (Loss) (5,093) 5,147 (336) (1,285) 3,055 1,488 Other Income (Expense) Interest income 614 163 81 - - 858 Interest expense (4,679) 92 (5) - - (4,592) -------- --------- -------- --------- ------- --------- Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest and Extraordinary Item (9,158) 5,402 (260) (1,285) 3,055 (2,246) Income tax (expense) benefit 2,742 565 (3,545) - - (238) -------- --------- -------- --------- ------- --------- Income (Loss) From Continuing Operations Before Minority Interest and Extraordinary Item (6,416) 5,967 (3,805) (1,285) 3,055 (2,484) Minority interests in net income of subsidiaries - (2,118) - - - (2,118) -------- --------- -------- --------- ------- --------- Income (Loss) From Continuing Operations Before Extraordinary Item (6,416) 3,849 (3,805) (1,285) 3,055 (4,602) Income from discontinued operations (net of tax) - 1,285 1,285 Gain on sale of discontinued operations (net of tax) 543 (2,737) (362) - - (2,556) -------- --------- -------- --------- ------- --------- Income (Loss) Before Extraordinary Item (5,873) 1,112 (4,167) - 3,055 (5,873) Extraordinary item, net of tax - - - - - - -------- --------- -------- --------- ------- --------- Net Income (Loss) $ (5,873) $ 1,112 $ (4,167) $ - $ 3,055 $ (5,873) ======== ========= ======== ========= ======= =========
14 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Statement of Operations Nine Months Ended September 30, 2000 (In thousands) - --------------------------------------------------------------------------------
Kaiser Group Parent Subsidiary Non-Guarantor Discontinued International, Inc. Company Guarantors Subsidiaries Operations Eliminations Consolidated ------- ---------- ------------- ----------- ------------ ----------------- Unaudited) Gross Revenue $ 3,182 $ 281,870 $143,506 $(157,173) $ - $ 271,385 Subcontract and direct material costs (2,858) (201,543) (83,164) 92,198 (195,367) Equity in income of joint ventures and affiliated companies 11,681 2,621 3,809 (1,275) (14,215) 2,621 -------- --------- -------- ---------- ----------- --------- Service Revenue 12,005 82,948 64,151 (66,250) (14,215) 78,639 Operating Expenses Operating expenses 9,023 65,647 59,580 (64,435) - 69,815 Depreciation and amortization 715 239 1,513 2,467 Restructuring charges 4,377 - - - - 4,377 -------- --------- -------- ---------- ----------- --------- Operating Income (Loss) (2,110) 17,062 3,058 (1,815) (14,215) 1,980 Other Income (Expense) Interest income 1,286 229 451 - - 1,966 Interest expense (8,414) (27) (4) - - (8,445) -------- --------- -------- ---------- ----------- --------- Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest and Extraordinary Item (9,238) 17,264 3,505 (1,815) (14,215) (4,499) Income tax (expense) benefit 8,249 - (555) - - 7,694 -------- --------- -------- ---------- ----------- --------- Income (Loss) From Continuing Operations Before Minority Interest and Extraordinary Item (989) 17,264 2,950 (1,815) (14,215) 3,195 Minority interests in net income of subsidiaries - (5,999) - - - (5,999) -------- --------- -------- ---------- ----------- --------- Income (Loss) From Continuing Operations Before Extraordinary Item (989) 11,265 2,950 (1,815) (14,215) (2,804) Income from discontinued operations (net of tax) - 1,815 1,815 Gain on sale of discontinued operations (net of tax) (9,435) - - - - (9,435) -------- --------- -------- ---------- ------------ --------- Income (Loss) Before Extraordinary Item (10,424) 11,265 2,950 - (14,215) (10,424) Extraordinary item, net of tax (35) - - - - (35) -------- --------- -------- ---------- ------------ --------- Net Income (Loss) $(10,459) $ 11,265 $ 2,950 $ - $(14,215) $(10,459) ======== ========= ======== ========== ============ =========
15 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Statement of Operations Nine Months Ended September 30, 1999 (In thousands) - --------------------------------------------------------------------------------
Kaiser Group Parent Subsidiary Non-Guarantor Discontinued International, Inc. Company Guarantors Subsidiaries Operations Eliminations Consolidated --------- ---------- ------------ ---------- ------------ ------------------- (Unaudited) Gross Revenue $ 3,524 $ 539,544 $ 240,599 $(267,324) $ - $ 516,343 Subcontract and direct material costs (3,162) (414,072) (118,976) 134,933 (401,277) Equity in income of joint ventures and affiliated companies (30,826) - 6,812 (3,834) 27,848 - -------- --------- --------- --------- --------- --------- Service Revenue (30,464) 125,472 128,435 (136,225) 27,848 115,066 Operating Expenses Operating expenses 7,714 109,097 124,405 (131,805) - 109,411 Depreciation and amortization 1,434 612 2,699 (783) 3,962 Restructuring charges 5,759 1,599 3,336 - - 10,694 -------- --------- --------- --------- --------- --------- Operating Income (Loss) (45,371) 14,164 (2,005) (3,637) 27,848 (9,001) Other Income (Expense) Interest income 677 427 363 (2) - 1,465 Interest expense (16,593) (194) (16) 2 - (16,801) -------- --------- --------- --------- --------- --------- Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest and Extraordinary Item (61,287) 14,397 (1,658) (3,637) 27,848 (24,337) Income tax (expense) benefit 933 255 (2,427) 1,603 - 364 -------- --------- --------- --------- --------- --------- Income (Loss) From Continuing Operations Before Minority Interest and Extraordinary Item (60,354) 14,652 (4,085) (2,034) 27,848 (23,973) Minority interests in net income of subsidiaries - (6,323) - - - (6,323) -------- --------- --------- --------- --------- --------- Income (Loss) From Continuing Operations Before Extraordinary Item (60,354) 8,329 (4,085) (2,034) 27,848 (30,296) Income from discontinued operations (net of tax) - - - 2,034 - 2,034 Gain on sale of discontinued operations (net of tax) 78,291 (2,737) (29,355) - - 46,199 -------- --------- --------- --------- --------- --------- Income (Loss) Before Extraordinary Item 17,937 5,592 (33,440) - 27,848 17,937 Extraordinary item, net of tax (698) - - - - (698) -------- --------- --------- --------- --------- --------- Net Income (Loss) $ 17,239 $ 5,592 $ (33,440) $ - $ 27,848 $ 17,239 ======== ========= ========= ========= ========= =========
16 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2000 (In thousands)
=================================================================================================================================== Non- Kaiser Group Parent Subsidiary Guarantor International, Company Guarantors Subsidiaries Eliminations Inc. Consolidated ------- ---------- ------------ ------------ ----------------- (Unauditied) Net Cash Provided by (Used in) Operating Activities $(11,252) $ 245 $(1,203) $ - $ (12,210) -------- ------- -------- ------- --------- Investing Activities Cash proceeds from investments in subsidiaries and affiliates - - - - - Sales of subsidiaries and/or investments - - - - - Net proceeds from sale of discontinued operations 37,717 - - - 37,717 Purchases of fixed assets - - (666) - (666) -------- ------- -------- ------- --------- Net Cash Provided by (Used in) Investing Activities 37,717 - (666) - 37,051 -------- ------- -------- ------- --------- Financing Activities Borrowings under revolving credit facility - - - - - Principal payments on revolving credit facility - - - - - Release of cash collateral for performance guarantees 455 - - - 455 Redemption of Senior Notes (1,000) - - (1,000) Change in book overdraft - - - - - Distribution of income to minority interest - (8,250) - - (8,250) Payments towards debt issuance/restructuring costs - - - - - Net issuances (repurchases) of common stock - - - - - -------- ------- -------- ------- --------- Net Cash Provided by (Used in) Financing Activities (545) (8,250) - - (8,795) -------- ------- -------- ------- --------- Effect of Exchange Rate Changes on Cash - - - - - -------- ------- -------- ------- --------- Increase (Decrease) in Cash and Cash Equivalents 25,920 (8,005) (1,869) - 16,046 Cash and Cash Equivalents at Beginning of Period 11,472 8,008 6,911 - 26,391 -------- ------- -------- ------- --------- Cash and Cash Equivalents at End of Period $ 37,392 $ 3 $ 5,042 $ - $ 42,437 ======== ======= ======== ======= =========
17 Kaiser Group International, Inc. and Subsidiaries Debtor-In-Possession Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 1999 (In thousands)
==================================================================================================================================== Non- Kaiser Group Parent Subsidiary Guarantor International, Company Guarantors Subsidiaries Eliminations Inc. Consolidated -------- ---------- ------------ ------------ ----------------- (Unaudited) Net Cash Provided by (Used in) Operating Activities $(61,463) $ 311 $ 1,195 $ - $ (59,938) -------- ---------- ------------- ----------- ------------- Investing Activities Cash proceeds from investments in subsidiaries and affiliates - - - - - Sales of subsidiaries and/or investments - - - - - Net proceeds from sale of discontinued operations 135,316 - - - 135,316 Purchases of fixed assets - - (659 - (659) -------- ---------- ------------- ----------- ------------- Net Cash Provided by (Used in) Investing Activities 135,316 - (659 - 134,657 -------- ---------- ------------- ----------- ------------- Financing Activities Borrowings under revolving credit facility 57,064 - - - 57,064 Principal payments on revolving credit facility (92,584) - - - (92,584) (Provision of) cash collateral for performance guarantees (21,000) - - - (21,000) Change in book overdraft 1,195 - - - 1,195 Distribution of income to minority interest - - - - - Net issuances (repurchases) of common stock 38 - - - 38 -------- ---------- ------------- ----------- ------------- Net Cash Provided by (Used in) Financing Activities (55,287) - - - (55,287) -------- ---------- ------------- ----------- ------------- Effect of Exchange Rate Changes on Cash - - 76 - 76 -------- ---------- ------------- ----------- ------------- Increase (Decrease) in Cash and Cash Equivalents 18,566 311 612 - 19,508 Cash and Cash Equivalents at Beginning of Period 2,414 3,814 9,039 - 15,248 -------- ---------- ------------- ----------- ------------- Cash and Cash Equivalents at End of Period $ 20,980 $ 4,125 $ 9,651 $ - $ 34,756 ======== ========== ============= =========== =============
18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Developments in Corporate Reorganization On June 9, 2000, the Company announced its intention to sell the majority of its Engineering Operations in two separate transactions (described below). Also on June 9, 2000, the Company announced that it would effect these sales as well as a debt restructuring of its Senior and Senior Subordinated Notes through a voluntary and pre-arranged bankruptcy. Accordingly, on June 9, 2000, Kaiser Group International, Inc. and 38 of its wholly-owned domestic subsidiaries (the Debtor Entities) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company's subsidiaries that did not file petitions for relief under Chapter 11 will be referred to herein as the Non-Debtor Entities. Since then, the Company has continued to operate the Non-Debtor Entities' businesses in the ordinary course and has operated the Debtor Entities' businesses as debtors-in-possession. As such, the Debtor Entities are authorized to operate their businesses in the ordinary course but may not engage in transactions outside the ordinary course of business without the Bankruptcy Court's approval. In accordance with its announced intentions and following the requisite Bankruptcy Court approvals, the sales of the Company's Engineering Operations were effected as follows: . The Infrastructure and Facilities Sale: The Bankruptcy Court approved the sale of the Infrastructure and Facilities line of business on July 17, 2000. On July 28, 2000, Kaiser completed the sale of its Infrastructure and Facilities line of business, which provided engineering services to clients around the world in the transit and transportation, facilities management, water/wastewater treatment, and microelectronics and clean technology sectors. In this transaction, substantially all of the assets of this business were sold to Tyco Group S.A.R.L., the EarthTech unit of Tyco International Ltd., for a cash purchase price of $30 million. . The Metals, Mining and Industry Sale: The Bankruptcy Court approved the sale of the Metals, Mining and Industry line of business on August 17, 2000. Effective as of August 18, 2000, Kaiser completed the sale of its Metals, Mining and Industry line of business, which provided engineering services to clients around the world in the alumina/aluminum, iron and steel, and mining industry sectors. In this transaction, substantially all of the assets of this business were sold to Hatch Associates, Inc., a subsidiary of The Hatch Group of Canada, for a cash purchase price of $7.0 million. Although the Company has not finalized its accounting for the transactions, it has to date recognized a net loss for financial reporting purposes of approximately ($0.9) million. After adjusting this loss for items that are not deductible for federal income tax purposes such as associated goodwill and intangible asset write-offs totaling $19.0 million, the transactions generated income tax expense of approximately $8.5 million, resulting in a total after tax loss for financial reporting purposes of approximately $(9.4) million from the collective sales (approximately $8.2 million of this loss has been offset by an equal income tax benefit recognized on previously unbenefitted net operating losses). This loss, in addition to the results of operations prior to the divestitures for these units, has been presented for all periods in the accompanying statements as "discontinued operations". As a result of the Company's June 9, 2000 bankruptcy filings, (i) all then existing debts, liabilities and obligations of the Debtor Entities (collectively, "Pre-petition Indebtedness") matured and became due and payable, and (ii) all acts to collect Pre-petition Indebtedness and to enforce other existing contractual obligations of the Debtor Entities were stayed. Under the Bankruptcy Code, the Debtor Entities generally may not currently make payments on Pre-petition Indebtedness. Liabilities and obligations incurred after the commencement of the bankruptcy cases in connection with the operation of the Debtor Entities' business generally enjoy priority in right to payment over Pre- petition Indebtedness and may be paid by the Debtor Entities in the ordinary course of business. Under the Bankruptcy Code, the Debtor Entities may, subject to certain conditions, assume or reject executory contracts existing at the commencement of the bankruptcy cases. The rejection of an executory contract is treated as a breach thereof occurring immediately before the filing of the Debtor Entities' bankruptcy petitions. Any liabilities of the Debtor Entities arising as a result of the rejection of the executory contracts will be treated as Pre- petition Indebtedness. The Debtor Entities have filed a proposed plan of reorganization with the Bankruptcy Court. On August 17, 2000, the Bankruptcy Court approved a disclosure document prepared by the Company for use in soliciting acceptances of the Plan of Reorganization by affected creditors and shareholders, who approved the plan. There remain outstanding certain objections to the plan of reorganization, which has not yet been confirmed by the Bankruptcy Court. On the afternoon of Thursday, November 16, 2000, the Bankruptcy court continued the hearing on confirmation of the Plan of Reorganization of Kaiser Group International, Inc. and 38 of its subsidiaries until 10:00 a.m. on December 5, 2000. The Company's plan of reorganization, as well as the public record of all bankruptcy court documents, can be accessed via the internet at ------------------------------------ www.deb.uscourts.gov. Although material changes are not expected, the plan - --------------------- of reorganization is subject to change until such time as it is confirmed by the Bankruptcy Court. . the cash payment in full of certain ordinary course liabilities, up to $20,000 per creditor, incurred prior to June 9, 2000; and . the payment, with a combination of cash, preferred stock and newly issued common stock, for most of the Pre-Petition Indebtedness not included in the class described above. This creditor class will consist largely of the Company's Senior - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000 Page 19 Subordinated Notes and certain other claims for contingent or disputed liabilities existing as of June 9, 2000. The issuance of new preferred stock and new common stock to this class of creditors would result in substantial dilution to the common stockholders that existed immediately prior to the effectiveness of the plan of reorganization; and . the issuance to current common shareholders and other equity interests of shares in the reorganized company which would comprise, in the aggregate, 15% of the common shares outstanding after the distribution of new issued common shares to the Class 4 claims as described above. Immediately following the completion of the bankruptcy, the reorganized Company will be engaged in only a limited number of activities, primarily consisting of: . the completion of an engineering and construction services contract for the construction of a steel mini-mill in the Czech Republic. This contract is expected to be completed during late 2000 through the Company's Netherlands subsidiary. . the performance of a contract for the closure of DOE's Rocky Flats site through Kaiser-Hill (See Results of Operations - Kaiser-Hill), and . the holding of a minority ownership interest in ICF Consulting Group Inc. (the consulting division that the Company sold in 1999) as well as the promissory notes received in connection with that sale. In the event that a plan or reorganization is not approved by the Bankruptcy Court and a restructuring plan is not consummated, the ability of the Company to continue as a going concern depends on the success of and cash flows generated by the retained activities summarized above and on the ability to meet creditor obligations. The Company's alternative would be to seek to confirm a modified plan of reorganization or to liquidate the business and distribute available proceeds. The accompanying financial statements have been prepared on a going concern basis, which, except as disclosed, contemplates continuity of retained operations, the realization of assets and the discharge of liabilities in the ordinary course of business or pursuant to Bankruptcy Court orders. Until the Company has an approved plan of reorganization, the realization of assets and the ultimate resolution of the Company's contingent liabilities (Note 6) could materially change the amounts currently recorded in the financial statements. The financial statements do not give effect to any adjustments to the carrying value of assets, or amounts and classification of liabilities that might be necessary as a consequence of the outcome from the bankruptcy proceedings. In addition, valuation methods used in Chapter 11 reorganization processes vary depending on the purpose for which they are prepared and used and may differ from methods used solely for purposes of GAAP, the basis on which the accompanying financial statements are prepared. Accordingly, the values and assumptions used to set forth amounts in the accompanying financial statements may not be indicative of the values and assumptions presented to or used by the Bankruptcy Court. As a result, valuations of the Company based on the accompanying financial statements may be significantly different than valuations used by the Company in determining the amounts to be received, if any by each class of creditor under a plan of reorganization. As a result of the Chapter 11 filing, the financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the classification of liabilities that might result should the Company not be successful in attempts to enact the critical actions summarized above. Upon the effectiveness of the Company's Plan of Reorganization, the principles of the AICPA's Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" will be applied in the form of "fresh start accounting" whereby the Company's overall fair market value ("Reorganization Value") will be allocated to the successor company's net assets using the purchase method of accounting. Results of Retained Operations Kaiser-Hill Kaiser-Hill Company, LLC is a 50% owned joint venture between Kaiser Group International, Inc. and CH2M Hill, formed solely to perform the U.S. Department of Energy's Rocky Flats Closure Project initially awarded in late 1995. Under such contract, Kaiser-Hill serves as the general contractor at the U.S. Department of Energy's Rocky Flats Environmental Technology Site (a former DOE nuclear weapons production facility) near Denver, Colorado. Prior to June 8, 2000, through a designated majority representation on Kaiser-Hill's board of managers, the Company had a controlling interest in Kaiser-Hill and therefore consolidated Kaiser-Hill's results of operations with those of its only other remaining business segment, E&C. Effective June 8, 2000, the Company adopted the equity method of accounting for Kaiser-Hill coincident with its signing of an agreement whereby the other 50% owner has the right to designate 3 out of the 5 members of Kaiser-Hill's board of managers. The Company retains the right to designate 2 out of the 5 members of the Kaiser-Hill board of managers. Accordingly, the financial information contained herein for Kaiser-Hill is reflected on a consolidated basis for all periods presented through June 8, 2000, and financial information for periods after June 8, 2000 is reflected on the equity basis. The Company's accounting for the operating results for each of the three and nine months ended September 30 were as follows (in thousands): - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000 Page 20
2000 1999 ---- ---- Three Months Nine Months Three Months Nine Months ------------ ----------- ------------ ----------- Gross Revenue............................. $ -- $ 271,385 $ 206,046 $ 516,343 Subcontracts and materials............... -- (195,367) (161,710) (401,277) Equity in unconsolidated affiliates...... 2,121 2,621 - - ------ --------- --------- --------- Service Revenue........................... 2,121 78,639 44,336 115,066 Operating Expenses: Direct labor and fringe.................. -- 64,197 40,299 102,620 ------ --------- --------- --------- Operating Income.......................... $2,121 $ 14,442 $ 4,037 $ 12,446 ====== ========= ========= ========= Minority's Interest In Operating Income... -- $ 5,999 $ 2,118 $ 6,323 ------ --------- --------- --------- Operating Income As If Equity Method Had Been Applied Historically............... $2,121 $ 8,620 $ 2,118 $ 6,323 ====== ========= ========= =========
As if the equity method of accounting for the Kaiser-Hill investment had been applied consistently during each of the periods reported above, the recorded operating results for the Company's 50%-owned Kaiser-Hill subsidiary were approximately $2.1 million and $8.6 million for the three and nine month periods ended September 30, 2000 versus $2.1 million and $6.3 million for the same periods in 1999. The change in the results for the nine months ended September 30, 2000 is largely due to the recognition of $7.0 million performance fee that was awarded to Kaiser-Hill upon the January, 2000 completion and closeout of the original Rocky Flats contract. On January 24, 2000, Kaiser-Hill was awarded the follow-on Rocky Flats contract pursuant to which Kaiser-Hill is providing services that will complete the restoration of the Rocky Flats site and close it to DOE occupation (the Closure Contract). The Closure Contract became effective February 1, 2000 and terminated the remaining period of the former contract as of January 31, 2000. The economic terms of the Closure Contract are significantly different from the former contract in that Kaiser-Hill, in addition to continuing to earn revenue from the reimbursement of the actual costs of its services, will also earn a performance fee based on a combination of the actual costs of completion and on the actual date of physical completion. The Closure Contract will reimburse Kaiser-Hill for the costs it incurs to complete the site closure, currently estimated to range between $3.6 billion and $4.8 billion and, in addition, will pay Kaiser-Hill an incentive fee ranging from $150.0 million to $460.0 million, depending on Kaiser-Hill's ability to control the incurred costs at completion to within the targeted range and its ability to meet the closure goal anytime between March 31, 2006 - March 31, 2007. In addition to recognizing revenue equal to all reimburseable costs incurred on the project, Kaiser-Hill is also recognizing a portion of the total estimated performance fee equal to the proportion of total costs incurred to date as compared to total estimated costs it expects to incur over the life of the project. Until Kaiser-Hill progresses further into the activities of the new contract, it is using the lowest potential fee award of $150.0 million as its basis estimate for recording that element of current revenue and profit on the contract. The use of this conservative fee estimate may change over time as Kaiser-Hill achieves certain milestones and is better able to estimate the ultimate award fee. Other Operating Expenses Operating expenses incurred during the three and nine months ended September 30, 2000 totaled $1.4 million and $6.4 million, respectively, versus $1.7 million and $6.8 million during the same periods in 1999. These expenses were incurred to support the retained operations until their ultimate divestitures at various times in 1999 and 2000 as well as to address the Company's debt resolution and bankruptcy matters and corporate downsizing activities. The nature of the costs in this category were indirect and administrative in nature - thus when the discontinued business units of the Company were sold, functions performed by cost elements in this category were typically already being performed by the buyers' existing administrative functions and thus not included in the sale transactions. Consequently, subsequent to August 2000, these costs have been the focus of reduction efforts by the Company. Depreciation and Amortization Expense Depreciation expense decreased by approximately $1.5 million during the nine months ended September 30, 2000 compared to the same period in 1999, largely as a result of the write-off of approximately $25.0 million of goodwill in the second quarter of 1999 upon the completion of the sales of the Environment and Facilities Management (EFM) and Consulting Groups; the write-off of the unamortized balance of original issuance costs associated with the $14.0 million in Senior Notes that were repurchased in October 1999; the reduction in goodwill of approximately $1.5 million in December 1999 resulting from a change in the purchase price of a business acquired in 1998, and lastly, the write off of approximately $19.0 million in goodwill and intangible assets in the third quarter of 2000 upon the completion of the sales of its Infrastructure and Metals engineering units. Reorganization and Restructuring Costs During the three and nine months ended September 30, 2000 the Company incurred approximately $2.5 million and $4.5 million, - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000 Page 21 respectively, in costs associated with its bankruptcy activities - including third-party professional fees, court fees, printing and mailing costs, and severance and staff retention costs among others. During the nine months ended September 30, 1999, the Company recognized unusual charges totaling $10.7 million incurred as part of activities aimed at addressing the restructuring of its debt and the reorganization of its remaining operations that were undertaken prior to the inception of the bankruptcy. Interest Interest income has been earned on available cash balances that were generated primarily from the divestitures completed either in 1999 or 2000 prior to the use of cash in operations or for bankruptcy-related matters. Interest expense decreased by $5.4 million and $9.2 million during the three and nine month periods ended September 30, 2000, respectively, as compared to the same periods in 1999 as a result of several major transactions involving its outstanding notes. Specifically, the Company: . used some of the sale proceeds in June 1999 to extinguish the entire balance on its revolving credit facility. . repurchased principal amounts of $14.0 million and $1.0 million, plus interest, in October 1999 and September 2000, respectively, in outstanding Senior Notes carrying an effective interest rate of 13%. Net of the write off of unamortized original issue costs, the Company recognized an extraordinary loss on the early extinguishment of debt in the fourth quarter of 1999 and the third quarter of 2000 totaling $(0.7) million and ($0.1) million, respectively. . did not recognized interest expense during the three months ended September 30, under the assumption that no interest will be claimed by the noteholders of the $125 million in outstanding Senior Subordinated Notes for any periods subsequent to June 9, 2000 because such holders filed a claim for indebtedness that included unpaid interest from January 1, 2000 to June 9, 2000 only. Income Tax Expense The income tax provision for all periods presented prior to June 2000 excludes the tax effects on the minority's interest in Kaiser-Hill's operating income because it is owned partially by another company and is a flow-through entity for income tax purposes. Subsequent to June 2000, and effective with the Company's changing its accounting for the Kaiser-Hill investment, the minority's interest is no longer presented. The Company recorded an income tax benefit of $0.4 million and $0.5 million on (losses) from continuing operations of ($1.6) million and ($4.4) million, respectively, during the three months and nine months ended September 30, 2000. During these periods, the Company continued with the established practice of not recognizing current financial statement benefits to be derived by net operating losses unless the likelihood of being able to utilize such deductions in the future was more likely than not. The taxable income resulting from by the sale of the two engineering units during the three months ended September 30, 2000 however, generated certainty over the ability to derive an income tax benefit from available net operating loss carryforwards. Accordingly, the Company reversed approximately $8.2 million of a previously established allowance against the value of unused net operating losses resulting in an estimated $8.2 million income tax benefit during the quarter. The Company still has other available net operating losses that it anticipates exhausting as part of the debt restructuring transaction that it expects to result from the bankruptcy proceedings. As of September 30, 2000, the Company has not recognized the financial statement benefit of the remaining net operating losses. Also included in the tax provisions for the three and nine months ended September 30, 1999, however, are income tax benefits of $0.1 million and $1.6 million, respectively, to offset the same amount of income tax expense that was allocated to the net income from discontinued operations (see Results of Discontinued Operations). Results of Discontinued Operations Concurrent with its bankruptcy filing, the Company announced on June 9, 2000 that it would sell essentially all of its interests in the remaining engineering lines of business, previously providing design, engineering, procurement, and construction and project management services to domestic and international clients in the infrastructure, facilities, metals, mining and industrial markets. The engineering operations were sold in two separate transactions during the third quarter of 2000 for proceeds totaling $36.7 million. Although the Company has not finalized its accounting for the transactions, it has to date recognized a pre-tax net loss for financial reporting purposes of approximately ($0.9) million. After adjusting this loss for items that are not deductible for federal income tax purposes, such as associated goodwill and intangible asset write-offs totaling $19.0 million, the transactions resulted in pre-tax income tax expense of approximately $8.5 million, resulting in a total after tax loss for financial reporting purposes of approximately $(9.4) million. Approximately $8.2 million of this loss has been offset by an equal income tax benefit recognized on previously unbenefitted net operating losses. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000 Page 22 During April and June of 1999, the Company sold its EFM and Consulting operations for proceeds approximating $135.0 million and reported a net gain of $48.8 million. The combined net financial position and operating results of the Engineering, EFM and Consulting Groups have been presented in the accompanying consolidated financial statements as discontinued operations for all periods presented. The net operating results of the discontinued segments, using historical and consistent internal reporting practices, has been included in the accompanying financial statements, in accordance with generally accepted accounting principles. Accordingly, these net results are not intended to reflect the operating results of these businesses had they been treated as stand-alone operations within the Company. Rather, these net results represent the net contributions to the overall Company operations that resulted from providing direct sales and service to customers and do not necessarily include the effects of the allocation of certain administrative and indirect support costs necessary for a stand-alone business. Summarized results for the discontinued segments for the three and nine months ended September 30, 2000 and 1999 are as follows (in thousands):
2000 1999 ---- ---- Three Months Nine Months Three Months Nine Months ------------ ----------- ------------ ----------- (Engineering Operations Only (All Discontinued Operations Prior to Divestiture Dates) Prior to Divestiture Dates) Gross Revenue................................................ $ 41,599 $157,173 $ 48,481 $ 267,324 Subcontracts and materials.................................. (29,702) (92,198) (22,570) (134,933) Equity in unconsolidated subsidiaries....................... 267 1,275 838 3,834 -------- -------- -------- --------- Service Revenue.............................................. 12,164 66,250 26,749 136,225 Operating Expenses: Direct labor and fringe..................................... 8,027 40,180 16,348 76,599 Group overhead.............................................. 5,169 23,225 9,062 55,206 Depreciation and amortization............................... 226 1,030 54 783 -------- -------- -------- --------- Income (loss) from discontinued operations before income tax $ (1,258) $ 1,815 $ 1,285 $ 3,637 ======== ======== ======== =========
LIQUIDITY AND CAPITAL RESOURCES Liquidity and Capital Resources Operating activities: Of the total $12.2 million of cash used in operating activities during the nine months ended September 30, 2000, Kaiser-Hill's earnings in excess of cash distributions represented approximately $3.5 million of the total operating cash shortfall. Kaiser-Hill's cash flows become available to the Company only upon actual periodic distributions of earnings to the Company and to the other 50% owner - however it recognizes revenue ratably over the contract performance period. The remaining $8.7 million was used in Kaiser's Engineering Operations primarily for the funding of continued operating losses, the payment of over $4.5 million for professional fees incurred in connection with its debt restructuring and bankruptcy activities, the payment of the 1999 pension obligation on September 15, 2000 of approximately $2.2 million, and for the payment of $2.2 million in income taxes resulting from the 1999 asset sale gains. The Engineering Operations used $59.9 million in cash during the nine months ended September 30, 1999 from continued operating losses and the funding required to complete the Nitric Acid projects, the payment of $12.2 million in interest expense, the incurrence of $10.7 million of expenses consisting largely of amounts for professional fees, severance, office downsizing and other activities associated with the Company's restructuring. Investing activities: The Engineering Operations were sold in two separate transactions during the third quarter of 2000 for proceeds totaling $36.7 million. Also during the first quarter of 2000, the Company sold its 35% interest in an environmental holding company based in France generating approximately $1.0 million in cash from investing activities. During April and June of 1999, the Company sold its EFM and Consulting operations for proceeds approximating $135.0 million and reported a net gain of $48.8 million. Financing activities: During the nine months ended September 30, 2000, Kaiser- Hill distributed $8.25 million to each of the Company and its other 50% owner - CH2M Hill. The payment to CH2M Hill is reflected in the accompanying Statement of Cash Flows for the period during which the Company consolidated the operations of Kaiser-Hill in its financial statements. On September 12, 2000, the Company repurchased the remaining $1.0 million in outstanding Senior Notes plus accrued interest since January 1, 2000. As of September 30, 2000 the Company had $13.2 in letters of credit outstanding, primarily for the Nova Hut project, collateralized by restricted cash balances. Liquidity and Capital Resource Outlook The Company anticipates that it will have the liquidity necessary to effect the terms of the proposed Plan of Reorganization in the event that it is confirmed. As of August 25, 2000, the Company had already completed the asset sales contemplated in the proposed Plan of Reorganization and invested the portion of the $36.7 million in proceeds not needed for current operations until the remaining elements of the Plan are approved and effected. Post-bankruptcy, the Company's ongoing operations will also be required to fund an - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000 Page 23 existing post-employment medical benefit obligation to certain former retirees of the Company. The Company anticipates that its post-bankruptcy operating liquidity needs will be adequately funded by its remaining assets and investments. After its emergence from bankruptcy, in the event that cash distributions from Kaiser-Hill meet certain thresholds, some amount of such distributions will be used to purchase outstanding preferred stock issued under the Plan of Reorganization to the former holders of the Company's Senior Subordinated Notes. The preferred stock redemptions will be required in the event that such former noteholders exercise put rights, entitling them to certain Kaiser-Hill distributions, that are to be issued by a Non-debtor Subsidiary with the effectiveness of the Company's Plan of Reorganization. After the emergence from bankruptcy and after the initial distribution of preferred stock that is to be issued pursuant to the Plan of Reorganization, the Company will also have a commitment to pay dividends on the preferred stock. The dividends will accrue at 7% of the liquidation preference of the new preferred stock if paid in cash and will accrue at 12% of the existing liquidation preference if paid-in-kind via an increase in the liquidation preference of the preferred stock. In the event that an acceptable Plan of Reorganization is not ultimately confirmed, the Company estimates that its liquidity would be sufficient in the short term for its remaining operations as well as for its debt service requirements and certain pre-bankruptcy contingencies. Over the longer term, the Company would need to obtain resolution to the method by which it would ultimately satisfy the principal obligations on its outstanding Senior Subordinated Notes. Alternatives could include the Company seeking to obtain confirmation of a modified plan of reorganization or to liquidate the business with a distribution of the available proceeds. Other Matters Litigation, Claims and Assessments Contingencies: In the course of the Company's normal business activities, various claims or charges have been 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. The Company anticipates being able to resolve and/or settle matters within this category of contingency during the course of its bankruptcy process. Until such resolution however, in the opinion of management, the financial statements contain adequate provisions for reserves for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The continued adequacy of reserves is reviewed periodically as progress on such matters ensue. Bath Contingency: In March 1998, Kaiser entered into a $197 million maximum price contract to construct a ship building facility for Bath Iron Works, Inc. ("Bath"). In May 1998, Kaiser learned that the costs of subcontractors to perform the contract were approximately $30 million higher than the estimated costs previously known, and Kaiser terminated the contract on the basis of mutual mistake between the contracting parties. Bath subsequently asserted a claim based on site conditions that allegedly should have been identified by Kaiser and its subcontractors. In March 2000, Bath filed claims aggregating $38 million in the United States District Court for the District of Maine. In August 2000, an agreement was reached among Kaiser, its insurer and Bath in settlement of the potential claims. The agreement of the parties was also approved by the Bankruptcy Court and accordingly, there will be no allowed claim arising from the terminated Bath contract. Acquisition Contingency: The Kaiser common shares exchanged for the stock of ICT Spectrum in the March, 1998 acquisition carry the guarantee that the fair market value of each share of stock will reach $5.36 by March 1, 2001. In the event that the fair market value does not attain the guaranteed level, the Company is obligated to make up the shortfall either through the payment of cash or by issuing additional shares of common stock with a total value equal to the shortfall, depending upon the Company's preference. Pursuant to the terms of the Agreement, however, the total number of contingently issuable shares of common stock cannot exceed an additional 1.5 million. In December 1999, the Company and certain former Company employees and shareholders of ICT Spectrum agreed to amend the applicable agreements in a manner that had the result of reducing the amount of the taxable gain created by former shareholder-employees' involuntary departures from the Company. As permitted per the agreement, the shareholders agreed to allow the Company to retain some of the vested shares as payment of the income tax withholding in lieu of cash. In total, the Company retained 255,669 shares and recorded the transaction as a $1.37 million reduction to goodwill and paid-in-capital. The former shareholders of ICT Spectrum have submitted a claim in bankruptcy against the Company. Pursuant to the Company's Plan of Reorganization, the Company believes the claim will be treated as a Class 5 Equity Interest. On March 29, 1999, one ex-ICT Spectrum shareholder, individually and on behalf of all others similarly situated, filed a class action lawsuit in the U.S. District Court for the District of Idaho alleging false and misleading statements made in a private offering memorandum, and otherwise, in connection with the Company's acquisition of ICT Spectrum in 1998. The court denied the Company's motion to dismiss this suit. As a result of the bankruptcy, this case has been stayed as to the Company. Government contract contingencies: In the past, Kaiser had a number of cost-reimbursement contracts with the U.S. government that have been the subject of audits by the U.S. government. The U.S. government has asserted, among other things, that some costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Effective as of August 28, 2000, Kaiser and the respective governmental agencies reached an agreement to settle this potential claim, without the return by Kaiser of any money previously reimbursed to Kaiser by the U.S. government. Also pursuant to the settlement agreement, the U. S. government will not - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 24 assert any further Claim in the Bankruptcy Cases arising from these U.S. government cost-reimbursement contracts and Kaiser waives the right to additional payments from the U.S. The Bankruptcy Court has also approved the settlement agreement. Contract warranties and performance guaranty contingencies: In the course of the Company's normal business activities, many of its contracts contain provisions for warranties and performance guarantees. As progress on contracts ensues, the Company regularly updates the estimates of the costs to perform such contingencies and reserves a proportionate amount of the total related contract value until such time as the contingency is resolved. Forward-Looking Statements From time to time, certain disclosures in reports and statements released by the Company, or statements made by its officers or directors, will be forward- looking in nature. These forward-looking statements may contain information related to the Company's intent, belief, or expectation with respect to contract awards and performance, potential acquisitions and joint ventures, and cost- cutting measures. In addition, these forward-looking statements contain a number of factual assumptions made by the Company regarding, among other things, future economic, competitive, and market conditions. Because the accurate prediction of any future facts or conditions may be difficult and involve the assessment of events beyond the Company's control, actual results may differ materially from those expressed or implied in such forward-looking statements. The Company is availing itself of the safe harbor provisions provided in the Private Securities Litigation Reform Act of 1995 by cautioning readers that forward-looking statements, including those that use words such as the Company "believes," "anticipates," "expects," and "estimates," are subject to certain risks and uncertainties which could cause actual results of operations to differ materially from expectations. These forward-looking statements will be contained in the Company's federal securities laws filings or in written or oral statements made by the Company's officers and directors to press, potential investors, securities analysts, and others. Any such written or oral forward- looking statements should be considered in context with the risk factors discussed herein: Risks Relating to Reorganized Kaiser's Business Uncertainties Exist Relative to the Projected Operating and Non-Operating Results While the Company is in Bankruptcy or Until it Completes the Implementation of the Plan of Reorganization: The Company is currently in Chapter 11, which inherently increases the difficulty in forecasting operating results due to bankruptcy-related uncertainties relating to clients, suppliers and employees of the Company's businesses and the resolution of claims in bankruptcy. In addition, a protraction of the Chapter 11 process may have and will continue to increase the risk and increase the expense of the restructuring process. After its emergence from bankruptcy, in the event that cash distributions from Kaiser-Hill meet certain thresholds, some amount of such distributions will be used to purchase outstanding preferred stock issued under the Plan of Reorganization to the former holders of the Company's Senior Subordinated Notes. The preferred stock redemptions will be required in the event that such former noteholders exercise put rights, entitling them to certain Kaiser-Hill distributions, that are to be issued by a Non-debtor Subsidiary with the effectiveness of the Company's Plan of Reorganization. After the emergence from bankruptcy and after the initial distribution of preferred stock that is to be issued pursuant to the Plan of Reorganization, the Company will also have a commitment to pay dividends on the preferred stock. The dividends will accrue at 7% of the liquidation preference of the new preferred stock if paid in cash and will accrue at 12% of the existing liquidation preference if paid-in-kind via an increase in the liquidation preference of the preferred stock. Reorganized Kaiser Will Be Dependent on Kaiser-Hill's Performance and Nova Hut Project: Reorganized Kaiser's long-term future profitability will be dependent, to a significant extent, on Kaiser-Hill's performance under its new contract with DOE. Kaiser-Hill's contract with the DOE includes a performance fee based upon a combination of the actual costs to complete the site closure and the actual date of completion of the closure. If Kaiser-Hill fails to complete within the target cost for the project and fails to complete the project by March 31, 2007, Kaiser- Hill's fee will be reduced by 30% of the costs incurred after the target date, up to a maximum of $20 million. In the shorter term, reorganized Kaiser's profitability will be dependent, to a significant extent, on the performance of Kaiser's Netherlands subsidiary under its contract for turnkey engineering and construction services relating to a steel mini-mill in the Czech Republic for Nova Hut and on Nova Hut's ability to pay for such services. Nova Hut is currently experiencing financial difficulty. Risks From Special Federal Regulations: Because Kaiser-Hill provides the Federal government with nuclear energy and defense-related services, it and a number of its employees are required to have and maintain security clearances from the Federal government. There can be no assurance that the required security clearances will be obtained and maintained in the future. In addition, Kaiser- Hill is subject to foreign ownership, control and influence regulations imposed by the Federal government and designed to prevent the release of classified information to contractors subject to foreign ownership, influence and control. There can be no assurance that foreign ownership, influence and control concerns will not affect the ability of Kaiser-Hill to maintain its DOE contract. Potential Substantial Liabilities and Costs Associated With Kaiser-Hill's DOE Contract: Under the DOE contract, Kaiser-Hill is responsible for, and DOE will not pay for costs associated with, liabilities caused by the willful misconduct or lack of good faith of Kaiser-Hill's managerial personnel or the failure to exercise prudent business judgment by Kaiser-Hill's managerial personnel. If Kaiser-Hill were found liable for any of these reasons, the associated costs could be substantial. Absence of a Business Plan Beyond Kaiser-Hill and Nova Hut Project: Apart from the risks associated with Kaiser-Hill's performance under its new contract with the DOE, the performance of Kaiser Netherlands on the Nova Hut project, and Nova Hut's ability to pay Kaiser Netherlands, reorganized Kaiser's long-term future profitability will be dependent, to a significant extent, on its ability to - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 25 develop a business plan for ongoing operations. It is possible that Kaiser's ongoing business plan will be limited to completing the Nova Hut project and participating in the activities of Kaiser-Hill. It is also possible that the Board of Directors of reorganized Kaiser will consider whether Kaiser should attempt to take advantage of its successful history of performing in the government services market, both independently and through Kaiser-Hill, in order to develop a new revenue base. Certain Bankruptcy-Related Considerations Risk That The Plan Will Not Be Confirmed: Although Kaiser believes that the plan of reorganization will satisfy all requirements necessary for confirmation by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will reach the same conclusion. There can also be no assurance that modifications of the plan of reorganization will not be required for confirmation, that such negotiations would not adversely affect the holders of claims and equity interests, or that such modifications would not necessitate the re-solicitation of votes. Risk Factors Related to Estimates and Assumptions As with any plan of reorganization or other financial transaction, there are certain risk factors that must be considered. All risk factors cannot be anticipated, some events will develop in ways that were not foreseen, and many or all of the assumptions that have been used in connection with the plan of reorganization will not be realized exactly as assumed. Holders of allowed claims and equity interests should be aware of some of the principal risks associated with the contemplated reorganization: . There is a risk that one of more of the required conditions or obligations under the plan of reorganization will not occur, be satisfied or waived, as the case may be, resulting in the inability to confirm the plan of reorganization. . The total amount of all claims filed in the Bankruptcy Cases may be materially in excess of the estimated amounts of allowed claims assumed in the development of the plan of reorganization. The actual amount of all allowed claims in any class may differ significantly from the estimates. Accordingly, the amount and timing of the distributions that will ultimately be received by any particular holder of an allowed claim in any class may be materially and adversely affected should the estimates be exceeded as to any class. . A number of other uncertainties may adversely impact reorganized Kaiser's future operations including, without limitation, economic recession, adverse regulatory agency actions, acts of God, or similar circumstances. Many of these factors will be substantially beyond reorganized Kaiser's control, and a change in any factor or combination of factors could have a material adverse effect on reorganized Kaiser's financial condition, cash flows, and results of operations. . There can be no assurance that reorganized Kaiser will be able to continue to generate sufficient funds to meet its obligations, notwithstanding the significant improvements in reorganized Kaiser's operations and financial condition. Although reorganized Kaiser's financial projections assume that reorganized Kaiser will generate sufficient funds to meet its working capital needs for the foreseeable future, its ability to gain access to additional capital, if needed, cannot be assured. Other Risks . The Company may not be able to obtain satisfactory contract performance guarantee mechanisms, such as performance bonds. . The Company has been involved in a number of fixed-price contracts under which the Company can benefit from cost savings or performance efficiencies. The Company's revenue and profit recognition policies are based on making a series of assumptions including aspects relative to contract pricing and performance capabilities. The Company's contract to construct the Nova Hut steel mini-mill in the Czech Republic includes such aspects. In the event that such assumptions cannot be met or change as contract progress ensues, the Company may have to make downward adjustments to revenue and profit already recognized in the financial statements. Possible results of changes in such assumptions could include the inability to realize all contract performance fees or other incentives already recognized as revenue in the financial statements, and may result in other unrecoverable cost overruns. . The Company has several significant contingent liabilities arising out of prior operations and contracts, its 1998 acquisition of ICT Spectrum Constructors, Inc. and the dispositions of its Environment and Facilities Management and Consulting Groups. The Company anticipates resolving these contingencies during its bankruptcy processes, however, adverse resolution of one or more of those contingencies could adversely affect the Company's financial performance and condition. . The Company generally grants uncollateralized credit to its customers and is therefore subject to risks of financial instability on the part of its customers. In certain cases, the Company secures project specific insurance policies related to various insurable risks such as certain non-payment due to insolvency of the customer. Negative changes in the financial condition of its customers could expose the Company to adverse financial consequences. - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 26 Item 3. Quantitative and Qualitative Information about Market Risk Market Risk The Company does not believe that it has significant exposures to market risk. The majority of its foreign contracts are denominated and executed in the applicable local currency. The interest rate risk associated with the majority of the Company's borrowing activities is fixed. Part II - Other Information Item 1. Legal Proceedings On June 9, 2000 the Company, including various of its subsidiaries, filed a voluntary "pre-packaged" Chapter 11 reorganization in The United States Bankruptcy Court for the District of Delaware case nos. 00-2263 through 00- 2301. Item 2. Changes in Securities (a) None (b) None (c) None (d) Not applicable Item 3. Defaults Upon Senior Securities (a) In light of the fact that the Company filed a voluntary "pre-packaged" Chapter 11 reorganization, the Company did not make its June 30, 2000 interest payment due on either the Company's 12% Senior Notes due 2002 or its 12% Senior Subordinated Notes due 2003. (b) 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. 21 Consolidated Subsidiaries of the Registrant as of November 1, 2000. No. 27 Financial Data Schedule (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. KAISER GROUP INTERNATIONAL, INC. Date: November 20, 2000 /s/ Timothy P. O'Connor -------------------------------------------------- Timothy P. O'Connor Executive Vice President, Chief Financial Officer and Chief Administrative Officer (Duly authorized officer and principal financial officer) - -------------------------------------------------------------------------------- Kaiser Group International, Inc. Report on Form 10-Q for the Third Quarter ending September 30, 2000. Page 27 EX-21 2 0002.txt EXHIBIT 21 EXHIBIT 21 ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway, Fairfax, Virginia 22031 (703) 934-3600 ICF Kaiser International, Inc.'s consolidated subsidiaries are listed below. Consolidated subsidiaries which are less than wholly owned are indicated by the ownership percentage figure in parentheses following the name of the consolidated subsidiary.
Jurisdiction Consolidated Subsidiary of Formation - ------------------------- -------------- I. Cygna Group, Inc. Delaware II. Liability Risk Management, Inc. California I. EDA, Incorporated Maryland I. HBG Hawaii, Inc. Delaware I. HBG International, Inc. Delaware I. ICF Kaiser Development Corporation, Inc. Delaware II. Global Trade & Investment, Inc. Delaware I. ICF Kaiser Engineers Group, Inc. Delaware II. Henry J. Kaiser Company Nevada II. ICF Kaiser Engineers, Inc. Ohio III. Henry J. Kaiser Company (Canada) Ltd. Canada III. Kaiser Engineers & Builders, Inc. Delaware III. Kaiser Engineers (California) Corporation Delaware III. Kaiser Engineers Corporation New York III. Kaiser Engineers of Michigan, Inc. Michigan III. ICF Kaiser International Planning & Design, Inc. (33 1/3%) Pennsylvania III. Kaiser Overseas Engineering, Inc. Delaware III. Kaiser Engineers Limited United Kingdom IV. Kaiser Engineers Technical Services Limited (80%) Cyprus III. Kaiser Engineers and Constructors, Inc. Nevada IV. ICF Kaiser Engenharia e Participacoes Ltda. (99.9%) Brazil V. ICF Kaiser Construcoes e Engenharia Ltda (99.989%) Brazil IV. ICF Pty. Ltd. (50%) Australia IV. Kaiser Engineers Limited (0.02%) U.K. IV. Kaiser Engenharia S.A. (50%) Portugal V. ICF Kaiser Construcoes e Engenharia Ltda (0.01%) Brazil IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand IV. Kaiser Engineers Pty. Ltd. (50%) Australia V. KWA Kenwalt (50%) Australia V. ICF Kaiser Aluterv KFT Hungary V. ICF Kaiser Engineers Asia Pacific Pty Ltd Australia V. ICF Kaiser Engineers (Hong Kong) Ltd Hong Kong V. ICF Kaiser Engineers (Singapore) Pte Ltd Singapore V. Kaiser Engineers (NZ) Limited (99%) New Zealand III. Kaiser Engineers International, Inc. Nevada IV. ICF Pty. Ltd. (50%) Australia IV. ICF Kaiser Engenharia e Participacoes Ltda.(0.1%) Brazil IV. ICF Kaiser Panama S.A. Panama IV. Kaiser Engenharia S.A. (50%) Portugal
IV. Kaiser Engineers Pty. Ltd. (50%) Australia III. Kaiser Engineers Limited (99.98%) U.K. IV. Kaiser Engineers Technical Services Limited (80%) Cyprus IV. Kaiser Engineers (UK) Limited (50%) U.K. III. Kaiser Engineers (UK) Limited (50%) U.K. IV. Kaiser Engineers Technical Services Limited (20%) Cyprus III. KE Services Corporation Delaware III. Kaiser Engenharia e Constructoes Limitada Brazil II. International Waste Energy Systems, Inc. Delaware II. KE Livermore, Inc. Delaware I. Kaiser Engineers Massachusetts, Inc. Delaware I. ICF Kaiser Engineers Pacific, Inc. Nevada I. Kaiser Europe, Inc. Delaware I. ICF Kaiser / Georgia Wilson, Inc. Delaware I. Kaiser Government Programs, Inc. Delaware II. Kaiser K-H Holdings, Inc. Delaware III. Kaiser-Hill Company, LLC (50%) Colorado IV. Kaiser-Hill Funding Company, L.L.C. (98%) Delaware III. Kaiser-Hill Funding Company, L.L.C. (1%) Delaware I. Kaiser Hanford Company Delaware I. Kaiser Holdings Unlimited, Inc. Delaware II. American Venture Investments Incorporated Delaware III. American Venture Holdings, Inc. Delaware II. Cygna Consulting Engineers and Project Management, Inc. California II. Excell Development Construction, Inc. Delaware II. Kaiser DPI Holding Co., Inc. Delaware II. Kaiser Engineers Eastern Europe, Inc. Delaware III. ICF Kaiser Netherlands B.V. (10%) Netherlands II. Kaiser Hunters Branch Leasing, Inc. Delaware II. ICF Kaiser Netherlands B.V. (90%) Netherlands II. Leasing Corporation, Inc. Delaware I. ICF Kaiser Servicios Ambientales, S.A. de C.V. (66 2/3%) Mexico I. Kaiser Technology Holdings, Inc. Delaware II. ICF Kaiser Advanced Technology, Inc. Idaho III. ICF Kaiser Advanced Technology of New Mexico, Inc. New Mexico I. Kaiser R G.P. No. 1, Inc. Delaware I. Monument Select Insurance Company Vermont I. Phase Linear Systems Incorporated Delaware I. Tudor Engineering Company Delaware
EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 Represents gross revenue which includes costs of certain services contracted to third parties and other reimbursable direct project costs, such as materials procured by the company on behalf of its customers. Gross revenue also includes equity in net income of unconsolidated subsidiaries for purpose of this schedule. 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 42,437,000 0 32,205,000 (9,358,000) 0 82,760,000 3,993,000 (3,493,000) 100,961,000 178,482,000 0 0 0 234,000 (77,287,000) 100,961,000 0 274,006,000 0 (195,367,000) 26,695,000 0 (6,479,000) (4,499,000) (7,694,000) (2,804,000) (7,620,000) 0 0 (10,459,000) (.45) (.45)
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