-----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, Hr+JDU/jGQOMmPI6fHF1ZTNnUQa3Oc7J+Tw5LpHO3ngx8r01J7bNKfAiGv92+Yn4 sku7KJUOtt6+xra7wmLxSg== 0000928385-96-000242.txt : 19960401 0000928385-96-000242.hdr.sgml : 19960401 ACCESSION NUMBER: 0000928385-96-000242 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICF KAISER INTERNATIONAL INC CENTRAL INDEX KEY: 0000856200 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 541437073 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12248 FILM NUMBER: 96541577 BUSINESS ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 MAIL ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 FORMER COMPANY: FORMER CONFORMED NAME: ICF INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL & RESEARCH CORP /DE/ DATE OF NAME CHANGE: 19910314 10-K 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from March 1, 1995 to December 31, 1995 Commission File No. 1-12248 ICF KAISER INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 54-1437073 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9300 Lee Highway, Fairfax, Virginia 22031-1207 ----------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (703) 934-3600 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.01 per share Preferred Stock Purchase Rights Securities registered pursuant to Section 12(g) of the Act: None 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 Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------- -------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of Common Stock held by non-affiliates of the registrant was $48.6 million based on the New York Stock Exchange Composite Tape closing price of such stock ($2.75) on March 6, 1996. On March 6, 1996, there were 21,794,220 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the ICF Kaiser International, Inc. Proxy Statement for the 1996 Annual Meeting of Shareholders are incorporated by reference in Part III hereof. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 1 PART I Item 1. Business ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its other operating subsidiaries, is one of the nation's largest engineering, construction, and consulting services companies, providing fully integrated engineering, construction, program management, and consulting services to public- and private-sector clients in the related markets of environment, infrastructure, energy, and industry. The "Company" or "ICF Kaiser" in this Report refers to ICF Kaiser International, Inc. and/or any of its consolidated subsidiaries. The Company changed its fiscal year to a calendar-based fiscal year effective December 31, 1995. Consequently, this Report on Form 10-K is a transition report covering the period from March 1, 1995, to December 31, 1995. For the ten months ended December 31, 1995, ICF Kaiser reported gross and service revenue of $917 million and $426 million, respectively. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the income of unconsolidated joint ventures and affiliated companies. During the ten months ended December 31, 1995, and the two years ended February 28, 1995, the Company operated predominantly in one industry segment, in which it provided engineering, construction, program management, consulting, and other professional services.
Fiscal Year Ended Ten Months Ended ------------------------------------ December 31, 1995 February 28, 1995 February 28, 1994 ----------------- ----------------- ------------------ Gross revenue............ $916,744,000 $861,518,000 $651,657,000 Service revenue.......... $425,896,000 $459,786,000 $382,708,000 Operating income (loss).. $ 17,505,000 $ 13,688,000 $ (5,230,000) Assets................... $369,517,000 $281,422,000 $281,198,000
As of December 31, 1995, the Company's contract backlog totaled approximately $4.4 billion compared to $1.4 billion as of February 28, 1995. Most of the Company's backlog relates to public-sector environmental projects that span from one to five years. Approximately 30% of the $4.4 billion backlog is expected to be worked off during the fiscal year ending December 31, 1996. See "Backlog" section of this Report. The Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, and its telephone number is (703) 934-3600. The Company's four regional headquarters are located at 1800 Harrison St., Oakland, California 94612-3430 Telephone (510) 419-6000; 6440 Southpoint Parkway, Jacksonville, FL 32216 Telephone (904) 279-7200; Four Gateway Center, Pittsburgh, Pennsylvania 15222-1207 Telephone (412) 497-2000; and 3D International Tower, 1900 West Loop South, Suite 1350, Houston, TX 77027 Telephone (713) 623-5000. Other offices include Tempe, Arizona; Livermore, Los Angeles, Rancho Cordova, Richmond, San Diego, San Francisco, San Rafael, and Universal City, California; Golden and Lakewood, Colorado; Washington, DC; Ft. Lauderdale, Miami, Orlando and Tampa, Florida; Atlanta, Georgia; Idaho Falls, Idaho; Chicago, Illinois; Gary, Indiana; Ruston, Louisiana; Abingdon, Baltimore, and Silver Spring, Maryland; Boston, Massachusetts; Kansas City, Missouri; Ely and Las Vegas, Nevada; Iselin, New Jersey; New York, New York; Albuquerque and Los Alamos, New Mexico; Morrisville, North Carolina; Cincinnati, Ohio; Dallas, Texas; Richmond, Virginia; Port Orchard, Richland, and Seattle, Washington. The Company's international offices are located in Brisbane, Perth and Sydney, Australia; Rio de Janeiro, Brazil; Prague, Czech Republic; London, England; Paris, France; Mexico City, Mexico; Lisbon, Portugal; Moscow, Russia; and Taipei, Taiwan. As of March 1, 1996, ICF Kaiser employed approximately 7,500 persons. ICF Kaiser International, Inc. is a Delaware corporation incorporated in 1987 under the name American Capital and Research Corporation. It is the successor to ICF Incorporated, a nationwide consulting firm organized in 1969. In 1988, the Company acquired the Kaiser Engineers business which dates from 1914. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 2 Strategic Considerations The following points are important to understanding the Company's business and strategy: Full Front-end Capability. The Company's front-end skills include policy ------------------------- analysis and consulting; scientific analysis and health/risk assessments; facility siting and environmental assessments; remedial investigations and feasibility studies; and engineering design. By possessing these skills, the Company's involvement at the outset of any project places it in a position to participate in any follow-on engineering and construction work. High Value-added Services. The Company adds high value within those markets ------------------------- that relate to environmental services through specialized environmental knowledge that (i) helps clients understand environmental threats and opportunities and alternative ways in which each can be managed; (ii) allows creation of customized solutions for the clients' environmental problems; and (iii) combines problem identification, solution, and implementation. Access to Technologies. The Company has access to technologies that play a ---------------------- critical role in both the cleanup of existing waste sites and in the reduction of waste generated by ongoing and new production processes. These technologies relate to reducing and monitoring emissions, bioremediation, and industrial process technologies that can help minimize waste, reduce costs, and improve the quality of a finished product. To assist clients better and to increase its overall participation in clients' projects, the Company continues to expand its access to environmental and process technologies through various methods, including licensing and joint ventures. Strategic Relationships. The Company has established business ----------------------- relationships through joint ventures, marketing agreements, and direct equity investments that extend its presence and reduce its business development risks. These relationships are particularly important in the management of the Company's international operations, and they help reduce the cost and risks associated with the Company's entering new geographic regions. The Company provides its fully integrated capabilities to clients through its operating groups. FEDERAL PROGRAMS GROUP U.S. Department of Energy (DOE). An important DOE mission has changed over ------------------------------- the years--from nuclear weapons production to environmental cleanup of former nuclear weapons production sites. To help accomplish DOE's cleanup goals pursuant to this new mission, the Company actively supports DOE at the following facilities: the Argonne National Laboratory, the Idaho National Engineering Laboratory, Lawrence Livermore National Laboratory, the Los Alamos National Laboratory, the Mound Plant Site, the Oak Ridge National Laboratory, the two Sandia National Laboratories, the Rocky Flats Environmental Technology Site, and the Hanford Nuclear Reservation (the last two facilities are described in more detail below). The services provided by the Company include (i) conducting comprehensive assessments related to environment, safety, and health; (ii) quality assurance; (iii) security and safeguards; (iv) assessing, managing, and remediating existing hazardous and solid wastes, radioactive materials, highly volatile chemical compounds, unidentified mixed wastes, and exploded/unexploded munitions; and (v) architect, engineer, construction, and site operations services. During the ten months ended December 31, 1995, the Company, through Kaiser- Hill Company, a limited liability company owned equally by the Company and CH2M Hill Companies, Ltd. (Kaiser-Hill), won DOE's Performance Based Integrating Management contract at the DOE's Rocky Flats Environmental Technology Site near Golden, Colorado. Rocky Flats is a former DOE nuclear weapons production facility. Under the five-year contract which began on July 1, 1995, Kaiser-Hill oversees plutonium stabilization and storage, environmental restoration, waste management, decontamination and decommissioning, site safety and security, and construction activities of subcontractor companies. Under the performance-based contract signed by Kaiser-Hill, the concept of which was developed in the DOE's 1994 Contract Reform Initiative, 85% of Kaiser-Hill's fees are based on performance, while only 15% are fixed. Kaiser-Hill's contract commits it to dealing with urgent risks first, and measurable results in the following "urgent risk" areas will help determine its incentive fee: stabilize plutonium and plutonium residues for specified time frames; consolidate plutonium in a single building; and clean up and remove all high-risk "hot spot" contamination. Finally, Kaiser-Hill is expected to reduce the number of employees at the site within the first 18 months of the contract, with a further reduction by the end of the contract term. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 3 Since 1987, the Company, through its wholly owned subsidiary ICF Kaiser Hanford Company, has been assisting DOE clean up its former nuclear weapons production site at the Hanford Nuclear Reservation in Richland, Washington. Under its contract, ICF Kaiser Hanford Company will provide architect, engineer, construction, and site operation services at the site through March 1997. The fees the Company is eligible to earn are based on six-month performance reviews; the Company also has the opportunity to earn incentive fees related to technology transfers and efficiency savings. In October 1995, the Company announced that ICF Kaiser Hanford Company was teaming with Raytheon and other nationally known firms in bidding on the DOE's request for proposals for its new management and integration contract at the Hanford Site. Assuming there is no delay in the bidding process, DOE expects that the new contract could be in place as early as October 1996. U.S. Department of Defense. DOD estimates that its environmental expense -------------------------- will be directed primarily to cleaning up hundreds of military bases with thousands of contaminated sites. There is an urgent need to ensure that the hazardous wastes present at these sites (often located near population centers) do not pose a threat to the surrounding population, and, in connection with the closure of many of the bases, there is an economic incentive to make sure that the environmental restoration enables the sites of the former bases to be developed commercially by the private sector. In August 1995, the Company was awarded a contract estimated at $330 million to perform environmental restoration work at Federal installations for the U.S. Army Corps of Engineers (USACE), Baltimore District. This Total Environmental Restoration Contract (TERC) is for four years with two, three-year options. The contract is a cost reimbursement delivery order contract, and the fee structure includes a combination of cost plus fixed fee, award fee, and incentive fees. In August 1995, the Company also signed a five-year contract estimated at $50 million to provide environmental services to USACE, Savannah District. Other Federal Government Work. Under a variety of smaller contracts, the ----------------------------- Company provides the Federal government with numerous other services. Under a contract with the U.S. Environmental Protection Agency (EPA) awarded in 1995, the Company will continue to manage the EPA's quality assurance laboratory in Las Vegas, Nevada, and provide the laboratory with analytical support. The Company also supports the EPA's Superfund program under several Alternative Remedial Contracting Strategy (ARCS) contracts for remedial planning services. Architectural, engineering, and construction management services for facilities and infrastructure (such as post offices, court houses, and prisons) are provided to the U.S. Postal Service, Department of Justice, and General Services Administration. ICF KAISER ENGINEERS GROUP Environmental Consulting and Engineering Services. Demand for the ------------------------------------------------- Company's non-Federal environmental consulting and engineering services is driven by a number of factors: the need to improve the quality of the environment; environmental regulation and enforcement; and increased liability associated with pollution-related injury and damage. Significant environmental laws have been enacted in response to public concern over the environment, and these laws and the implementing regulations affect nearly every industrial activity. Increasingly strict Federal, state, and local government regulation has forced private industry and state and local agencies to clean up contaminated sites, to bring production facilities into compliance with current environmental regulations, and to minimize waste generation on an ongoing basis. Although growth in this private-sector market is being hampered by uncertainty over continuing Federal regulations, the Company generates new business by increasing the types of services it sells to existing clients, by targeting new markets for the Company's full-service capabilities, and by expanding the types of services the Company offers. The Company's environmental services have progressed beyond study and analysis to remediation. Following on its established market position in the consulting and front-end analysis phase of environmental services, the Company now offers alternative remediation approaches that may involve providing on-site waste containment, on-site treatment, management of on-site/off-site remediation, or waste removal. The Company also designs new processes (and redesigns ongoing production processes) to minimize or eliminate the generation of hazardous waste. Currently the Company provides site investigations and feasibility studies, compliance planning and audits, risk assessment, permitting, community relations services, and construction and construction management. See "Potential Environmental Liability" section of this Report. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 4 Industry Services. ICF Kaiser's engineering design, project management, ----------------- and construction services to the industrial market involve work with the steel, aluminum, alumina, copper, iron, and other minerals and metals industries as well as chemicals, petrochemicals, and refineries. In the coke, coal, and coal chemicals area, ICF Kaiser's services have included inspection of coke plants for environmental compliance, facility design and construction, and equipment sales and services. The Company has provided services related to coal cleaning, handling, and environmental controls. ICF Kaiser also designed, built, and now operates and jointly owns a pulverized coal injection facility under a multiyear tolling agreement. The international industry market provides opportunities for the Company's industrial services. The Company's largest industrial project will be a mini- mill project for Nova Hut, a.s, an integrated steel maker based in the Ostrava region of the Czech Republic. Under a two-year contract signed in March 1996, the Company will oversee the construction of the mini-mill as well as future production and environmental upgrades to Nova Hut's existing integrated steel- making facilities. The Company will provide project management, engineering, procurement, construction management, start-up, commissioning, and training services. This initial phase of the mini-mill project, which is scheduled to initiate production in December 1997, is part of a two-phase endeavor in which the second phase will provide Nova Hut with the capability of producing 1 million metric tons per year of hot rolled steel product. The Company also is assisting the International Finance Corporation in securing the financing for the mini-mill that has an estimated initial phase capital cost of approximately $275 million. Infrastructure Services. The Company also is helping rebuild the ----------------------- infrastructure of roads, highways, transit systems, harbors, airports, facilities, and buildings in domestic and international markets. Budget constraints at the Federal, state, and local government levels have hindered infrastructure market growth, but the Company remains active in major U.S. metropolitan areas: Chicago (light rail transit system); Pittsburgh (busway and light rail projects); San Francisco (commuter rail line extension); Atlanta (general engineering consulting services to the Metropolitan Atlanta Rapid Transit Authority); Miami (Intermodal Transit Center, a project that will tie together air, light/heavy rail, buses, highway systems, and parking facilities). The major ports of many of the world's cities have serious water pollution problems, and ICF Kaiser is helping to improve the condition of many harbors and waterways. In its largest harbor project, the Company continues as the construction manager of the cleanup of Boston Harbor, one of the largest environmental projects in the country, under a contract extension that runs through 1998. Since the inception of the project in 1988, the Company has served as its construction manager, and currently manages construction workers, engineers, architects, and support personnel working to construct a wastewater treatment plant on Deer Island in Boston Harbor. Internationally, the Company's large-scale construction infrastructure skills are at work in Portugal where the Company as part of a joint venture provides project and construction management services for the modification and reconstruction of the main rail link between the cities of Lisbon and Oporto. Those skills also are at work in the Philippines where the Company as part of a joint venture provides front-to-back-end services for a light rail transit line in Manila. CONSULTING GROUP The ICF Kaiser Consulting Group draws upon the talents of its multi- disciplinary professional staff to support customers within four primary lines of business. Environmental consulting services assist customers in developing plans and --------------------------------- policies, evaluating options for managing environmental responsibilities in the most cost-effective manner, and identifying and employing the best available technologies and practices. Life-cycle management strategies are emphasized. The group has special expertise in such areas as industrial and municipal waste management, air pollution control, chemical accident prevention, and ground- water and drinking water management. Global environmental issues are also a particular area of focus within the group. Working with U.S. and international organizations that fund global environmental work and with numerous private sector organizations, the Consulting Group has conducted projects in over thirty countries and has been actively involved in supporting international environmental treaties. The group has achieved great success in implementing technology transfer programs through the creation of effective public-private partnerships. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 5 Working on global change issues for the EPA since 1982, the Company supports the EPA's Global Change Division, providing services related to the reduction of methane and other greenhouse gases. The Consulting Group also provides technical and regulatory support to the EPA's Office of Solid Waste, focusing on human health and ecological risk assessment and waste characterization. In-career education and training programs range in subject matter from ----------------------------------------- highly technical areas to broader, skill-based and management-oriented training. The Consulting Group's expertise in the development and delivery of workplace training, combined with expert knowledge in a wide variety of technologies and programmatic areas, enables it to provide high impact training that is specifically tailored to the needs of each customer organization. Environmental management programs cover regulation, technology, information reporting, emergency response, and pollution prevention. Information management programs assist clients in developing decision ------------------------------- support systems which facilitate the collection and use of information to track performance, identify opportunities, and improve decision making. The group offers a number of sophisticated simulation models and proprietary applications, such as its electric utility Integrated Planning Model. By combining consulting expertise with information technology skills, the group helps its customers deal with the unique challenges of their business environment. Energy and natural resource management services support the development of ----------------------------------------------- corporate and technical plans for managing power resources and energy projects, provide economic assessments of short- and long-term market conditions for various fuels, and serve as an expert foundation in litigation and regulatory proceedings. The group assists its customers in identifying market opportunities, commercializing new technologies, and developing public policy. Its contributions involve linking an in-depth understanding of the energy markets with an ongoing involvement with energy technology. The ICF Kaiser Consulting Group serves customers in domestic and international markets, including both public- and private-sector organizations. Among its major customers are U.S. government agencies, especially the EPA; U.S. private sector organizations, particularly major energy producers such as utilities and oil companies; and governments and businesses around the world, as well as various multinational banks, development organizations, and treaty organizations. Competition and Contract Award Process The markets in which the Company operates are very competitive. The Company's competitors range from small local firms to large multinational companies. The Company believes that no single firm or small number of firms dominates its markets. Competition for private-sector work generally is based on several factors, including quality of work, reputation, price, and marketing approach. The Company's objective is to establish and maintain a strong competitive position in its areas of operations by adhering to its basic philosophy of delivering high-quality work in a timely fashion within its clients' budget constraints. Most of the Company's contracts with public-sector clients are awarded through a competitive bidding process that places no limit on the number or type of offerors. The process usually begins with a government Request for Proposal (RFP) that delineates the size and scope of the proposed contract. Proposals are evaluated by the government on the basis of technical merit (for example, response to mandatory solicitation provisions, corporate and personnel qualifications, and experience) and cost. The Company believes that its experience and ongoing work strengthen its technical qualifications and, thereby, enhance its ability to compete successfully for future government work. In both the private and public sectors, the Company, acting either as a prime contractor or as a subcontractor, may join with other firms to form a team that competes for a single contract or submits a single proposal. Because a team of firms almost always can offer a stronger set of qualifications than any firm standing alone, these teaming arrangements often are very important to the success of a particular competition or proposal. The Company maintains a large network of business relationships with other companies and has drawn repeatedly upon these relationships to form winning teams. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 6 The Company's subsidiaries operate under a number of different types of contract structures with its private- and public-sector clients, the most common of which are Cost Plus and Fixed Price. Under Cost Plus contracts, the Company's costs are reimbursed with a fee (either fixed or percentage of cost) and/or an incentive or award fee offered to provide inducement for effective project management. A variation of Cost Plus contracts are time and materials contracts under which the Company is paid at a specified fixed hourly rate for direct labor hours worked. Under Fixed Price contracts, the Company is paid a predetermined amount for all services provided as detailed in the design and performance specifications agreed to at the project's inception. Customers The Company's clients include: DOE, EPA, and DOD; major corporations in the energy, transportation, chemical, steel, aluminum, mining, and manufacturing industries; utilities; and a variety of state and local government agencies throughout the United States. A substantial portion of the Company's work is repeat business from existing clients. In many cases, the Company has worked for the same client for many years, providing different services at different times. DOE accounted for approximately 68% of the Company's consolidated gross revenue for the ten-month period ended December 31, 1995; EPA accounted for another approximately 6%; and DOD and other Federal agencies collectively accounted for another approximately 4%. The Federal government accounted for approximately 73% of the Company's consolidated gross revenue for the year ended February 28, 1995, and 65% for the year ended February 28, 1994. The Company's international clients include both private firms and foreign government agencies in such countries as Australia, France, Portugal, and Taiwan. For the ten-month period ended December 31, 1995, foreign operations accounted for approximately 4.7% of the Company's consolidated gross revenue. For information concerning gross revenue, operating income, and identifiable assets of the Company's business by geographic area, see Note O to the Consolidated Financial Statements. Backlog Backlog refers to the aggregate amount of gross contract revenue remaining to be earned pursuant to signed contracts extending beyond one year. At December 31, 1995, the Company's contract backlog was approximately $4.4 billion in gross revenue, up from approximately $1.4 billion in gross revenue at February 28, 1995. In April 1995, Kaiser-Hill was awarded the DOE's Performance Based Integrating Management contract at Rocky Flats near Denver, Colorado. This contract represents approximately 62% of the Company's total backlog at December 31, 1995. The Company expects that approximately 30% of the backlog at December 31, 1995, will be worked off during calendar year 1996. Because of the nature of its contracts, the Company is unable to calculate the amount or timing of service revenue that might be earned pursuant to these contracts. The Company believes that backlog is not a predictor of future gross or service revenue. Differences in contracting practices between the public and private sectors result in the Company's backlog being weighted heavily toward contracts associated with agencies of the Federal government. Backlog under contracts with agencies of the Federal government that extend beyond the government's current fiscal year includes the full contract amount, including in many cases amounts anticipated to be earned in option periods and certain performance fees, even though annual funding of the amounts under such contracts generally must be appropriated by Congress before the agency may expend funds during any year under such contracts. In addition, the agency must allocate the appropriated funds to these specific contracts and thereafter authorize work or task orders to be performed under these specific contracts. Such authorizations are generally for periods considerably shorter than the duration of the work the Company expects to perform under a particular contract and generally cover only a percentage of the contract revenue. Because of these factors, the amount of Federal government contract backlog for which funds have been appropriated and allocated, and task orders issued, at any given date is a substantially smaller amount than the total Federal government contract backlog as of that date. In the event that option periods under any given contract are not exercised or funds are not appropriated, allocated, or authorized to be spent under any given contract, the amount of backlog attributable to that contract would not result in revenue to the Company. All contracts and subcontracts with agencies of the Federal government are subject to termination, reduction, or modification at any time at the discretion of the government agency. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 7 Environmental Regulation Significant environmental laws have been enacted in response to public concern over the environment. These laws and the implementing regulations affect nearly every industrial activity. Efforts to comply with the requirements of these laws have increased demand for the Company's services. The principal Federal legislation having the most significant effect on the Company's business includes the following: The Comprehensive Environmental Response, Compensation and Liability Act ------------------------------------------------------------------------ (CERCLA). CERCLA, as amended by the Superfund Amendments and Reauthorization - --------- Act, established the Superfund program to clean up hazardous waste sites and provides for penalties and punitive damages for noncompliance with EPA orders. Superfund may impose strict liability (joint and several as well as individual) on certain hazardous substance waste owners, operators, disposal "arrangers," transporters, and disposal facility owners and operators (Potentially Responsible Parties or PRPs) for the costs of removal or remedial action; for other necessary response costs and damages for injury, destruction, or loss of natural resources; and for the cost of any health effects study. Under certain circumstances Federal funds may be used to pay for the cleanup. The Resource Conservation and Recovery Act (RCRA). RCRA, as amended by the -------------------------------------------------- Hazardous and Solid Waste Amendments of 1984 (HSWA), provides a comprehensive scheme for the regulation of hazardous waste from the time of generation to its ultimate disposal (and sometimes thereafter), as well as the regulation of persons engaged in the treatment, storage, and disposal of hazardous waste. The RCRA scheme includes both a permitting and a manifest tracking system and detailed regulations on the handling, treatment, transportation, storage, and disposal of hazardous waste. Regulations have been issued pursuant to RCRA in the following areas (among others) of importance to the Company: permitting remediation of releases associated with underground storage tanks; municipal solid waste disposal; waste minimization; and treatment, transportation, and disposal of hazardous waste. HSWA has increased the number of hazardous waste generators subject to RCRA. HSWA also imposes land disposal restrictions/bans on certain listed and characteristic hazardous wastes that do not meet specified treatment standards. The Clean Air Act. Under the Clean Air Act of 1970, as amended, EPA is ------------------ empowered to establish and enforce National Ambient Air Quality Standards and limits on the emissions of various pollutants from specific types of facilities. The Clean Air Act Amendments of 1990 require certain sources emitting an air pollutant regulated under the Clean Air Act to obtain an operating permit, which includes enforceable emissions limitations and compliance schedules. The Clean Air Act also addresses substantial expanded regulation of vehicle emissions, hazardous air pollutant emissions, stratospheric ozone protection, acid rain minimization (through the use of limitations on sulfur dioxide and nitrogen oxide emissions) and related enforcement issues. The use of "marketable allowances" to establish limits on total emissions while maintaining maximum market flexibility reflects a shift in environmental policy from command and control management to a more flexible approach. The Safe Drinking Water Act. Under the Safe Drinking Water Act and its ---------------------------- subsequent reauthorizations, EPA is empowered to set drinking water standards for community water supply systems in the United States. The Act requires that EPA set maximum ground-water contamination levels for specified, and previously unregulated, toxic substances and also requires EPA to establish a priority list every three years of contaminants that may cause adverse health effects and may require regulation. Water supply systems are required to begin monitoring within defined time limits following the publication of the final regulations. The Act also requires that EPA set criteria specifying when utilities using surface water supplies should filter their water and issue national primary drinking water regulations requiring all utilities to disinfect their water. The Clean Water Act. The Clean Water Act established a system of -------------------- standards, permits, and enforcement procedures for the discharge of pollutants to surface water from industrial, municipal, and other wastewater sources. EPA sets discharge standards for certain industrial and municipal wastewater discharges and provides for Federal grants to assist municipalities in complying with treatment requirements. Key areas for which regulations recently have been issued or are proposed include industrial wastewater pretreatment, surface water toxics control, wastewater sludge disposal, and stormwater discharges. In cases of noncompliance, EPA may assess administrative penalties and may sue for court- ordered compliance and penalties. Under the Ocean Dumping Ban Act of 1988, regulatory revisions to the Clean Water Act were made to eliminate ocean dumping of sludge. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 8 The Toxic Substance Control Act (TSCA). TSCA, enacted in 1976, establishes --------------------------------------- requirements for identifying and controlling toxic chemical hazards to human health and the environment. EPA has identified more than 60,000 chemical substances (out of more than five million known chemical compounds) that were manufactured or processed for commercial use in the United States in 1985. In addition, more than 1,000 new chemicals are introduced each year. TSCA authorizes EPA, in certain circumstances, to require testing of existing and new chemicals used in commerce to determine their human health and environmental effects. TSCA also gives EPA authority to prohibit or limit certain activities associated with producing, distributing, and using a chemical that is found to pose an unreasonable risk of injury to human health or the environment. The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). FIFRA ---------------------------------------------------------------- focuses on the health-based risk of pesticides and requires the registration of all pesticides, with a heavy emphasis on scientific data and risk assessment. Under FIFRA, EPA establishes regulations that can include labeling restrictions, use restrictions, or an outright ban of the pesticide following a risk/benefit analysis. The 1972 amendments substantially increased the scope of the Act to include biotechnology and to expand the authority of EPA. Potential Environmental Liability The assessment, analysis, remediation, handling, management, and disposal of hazardous substances necessarily involve significant risks, including the possibility of damages or personal injuries caused by the escape of hazardous materials into the environment, and the possibility of fines, penalties or other regulatory action. These risks include potentially large civil and criminal liabilities for violations of environmental laws and regulations, and liabilities to customers and to third parties for damages arising from performing services for clients. Potential Liabilities Arising Out of Environmental Laws and Regulations ----------------------------------------------------------------------- All facets of the Company's business are conducted in the context of a rapidly developing and changing statutory and regulatory framework. The Company's operations and services are affected by and subject to regulation by a number of Federal agencies, including EPA and the Occupational Safety and Health Administration, as well as applicable state and local regulatory agencies. As discussed above, CERCLA addresses cleanup of sites at which there has been a release or threatened release of hazardous substances into the environment. Increasingly, there are efforts to expand the reach of CERCLA to make environmental contractors responsible for cleanup costs by claiming that environmental contractors are owners or operators of hazardous waste facilities or that they arranged for treatment, transportation, or disposal of hazardous substances. Several recent court decisions have accepted these claims. Should the Company be held responsible under CERCLA for damages caused while performing services or otherwise, it may be forced to bear such liability by itself, notwithstanding the potential availability of contribution or indemnity from other parties. RCRA, also discussed above, governs hazardous waste generation, treatment, transportation, storage, and disposal. RCRA, or EPA-approved state programs at least as stringent, govern waste handling activities involving wastes classified as "hazardous." Substantial fees and penalties may be imposed under RCRA and similar state statutes for any violation of such statutes and the regulations thereunder. Potential Liabilities Involving Clients and Third Parties --------------------------------------------------------- In performing services for its clients, the Company could potentially be liable for breach of contract, personal injury, property damage, and negligence (including improper or negligent performance or design, failure to meet specifications, and breaches of express or implied warranties). The damages available to a client, should it prevail in its claims, are potentially large and could include consequential damages. Environmental contractors, in connection with work performed for clients, potentially face liabilities to third parties from various claims, including claims for property damage or personal injury stemming from a release of hazardous substances or otherwise. Claims for damage to third parties could arise in a number of ways, including through a sudden and accidental release or discharge of contaminants or pollutants during the performance of services; through the inability, despite reasonable care, of a remedial plan to contain or correct an ongoing seepage or release of pollutants; through the inadvertent exacerbation of an existing contamination problem; or through reliance on reports or - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 9 recommendations prepared by the Company. Personal injury claims could arise contemporaneously with performance of the work or long after completion of the project as a result of alleged exposure to toxic or hazardous substances. In addition, increasing numbers of claimants assert that companies performing environmental remediation should be adjudged strictly liable, i.e., liable for damages even though its services were performed using reasonable care, on the grounds that such services involved "abnormally dangerous activities." Clients frequently attempt to shift various of the liabilities arising out of remediation of their own environmental problems to contractors through contractual indemnities. Such provisions seek to require the Company to assume liabilities for damage or personal injury to third parties and property and for environmental fines and penalties. The Company has endeavored to protect itself from potential liabilities resulting from pollution or environmental damage by obtaining indemnification from its private-sector clients and intends to continue this practice in the future. Under most of these contracts, the Company has been successful in obtaining such indemnification; however, such indemnification generally is not available if such liabilities arise as a result of breaches by the Company of specified standards of care or if the indemnifying party has insufficient assets to cover the liability. In 1994 the Company formed a new subsidiary, ICF Kaiser Remediation Company, through which the Company intends to increase its remediation activities performed for public- and private-sector clients. The Company will continue its efforts to minimize the risks and potential liability associated with its remediation activities by performing all remediation contracts in a professional manner and by carefully reviewing any and all remediation contracts it signs in an effort to ensure that its environmental clients accept responsibility for their own environmental problems. For EPA contracts involving field services in connection with Superfund response actions, the Company is eligible for indemnification under Section 119 of CERCLA for pollution and environmental damage liability resulting from release or threatened release of hazardous substances. Some of the Company's clients (including private clients, DOE, and DOD) are Potentially Responsible Parties (PRPs) under CERCLA. Under the Company's contracts with these PRPs, the Company has the right to seek contribution from these PRPs for liability imposed on the Company in connection with its work at these clients' CERCLA sites and generally qualifies for the limitations on liabilities under CERCLA Section 119(a). In addition, in connection with contracts involving field services at 10 of DOE's weapons facilities, including the DOE's Hanford site, the Company is indemnified under the Price-Anderson Act, as amended, against liability claims arising out of contractual activities involving a nuclear incident. Recently, EPA has constricted significantly the circumstances under which it will indemnify its contractors against liabilities incurred in connection with CERCLA projects. There are other proposals both in Congress and at the regulatory agencies to further restrict indemnification of contractors from third-party claims. As discussed above, Kaiser-Hill signed a Performance Based Integrating Management contract with the DOE. The terms of that contract provide that Kaiser-Hill shall not be held responsible for, and DOE shall pay all costs associated with, any liability (including without limitation, a claim involving strict or absolute liability and any civil fine or penalty, expense, or remediation cost, but limited to those of a civil nature), which may be incurred by, imposed on, or asserted against Kaiser-Hill arising out of any act or failure to act, condition, or exposure which occurred before Kaiser-Hill assumed responsibility on July 1, 1995 ("pre-existing conditions"). To the extent the acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good faith, or failure to exercise prudent business judgment on the part of Kaiser- Hill's managerial personnel and cause or add to any liability, expense, or remediation cost resulting from pre-existing conditions, Kaiser-Hill shall be responsible, but only for the incremental liability, expense, or remediation caused by Kaiser-Hill. The Kaiser-Hill contract further provides that Kaiser-Hill shall be reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky Flats contract and for liabilities (and expenses incidental to such liabilities, including litigation costs) to third parties not compensated by insurance or otherwise. The exception to this reimbursement provision applies to 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. In connection with its services to its environmental, infrastructure, and industrial clients, the Company works closely with Federal and state government environmental compliance agencies, and occasionally contests the conclusions those agencies reach regarding the Company's compliance with permits and related regulations. To date, the Company never has paid a fine in a material amount or had liability imposed on it for pollution or environmental damage in connection with its services. However, there can be no assurance that the Company will not have substantial liability imposed on it for any such damage in the future. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 10 Insurance The Company has a comprehensive risk management and insurance program that provides a structured approach to protecting the Company. Included in this program are coverages for general, automobile, pollution impairment, and professional liability; for workers' compensation; and for employers and property liability. The Company believes that the insurance it maintains, including self-insurance, is in such amounts and protects against such risks as is customarily maintained by similar businesses operating in comparable markets. At this time, the Company expects to continue to be able to obtain general, automobile, and professional liability; workers' compensation; and employers and property insurance in amounts generally available to firms in its industry. There can be no assurance that this situation will continue, and if insurance of these types is not available, it could have a material adverse effect on the Company. Consistent with industry experience and trends, the Company has found it difficult to obtain pollution insurance coverage, in amounts and on terms that are economically reasonable, against possible liabilities that may be incurred in connection with its conduct of its environmental business. An uninsured claim arising out of the Company's environmental activities, if successful and of sufficient magnitude, could have a material adverse effect on the Company. Regulation of the Company's Business The Company is subject to general Federal regulation with respect to its contracting activities with the Federal government. For example, the Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of such audits, the Federal government asserts, from time to time, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with Federal procurement regulations. Management believes that the potential effect of disallowed costs, if any, for the periods currently under audit and for periods not yet audited has been provided for adequately and will not have a material adverse effect on the Company's financial position, operations, or cash flows. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other Federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe that there will be any material adverse effect on the Company's financial position, operations, or cash flows as a result of these investigations. Federal agencies that are the Company's regular customers (including DOE, EPA, and DOD) have formal policies against awarding contracts that would present actual or potential conflicts of interest with other activities of the contractor. Because the Company provides a broad range of services in environmental and related fields for the Federal government, state governments, and private customers, there can be no assurance that government conflict-of- interest policies will not restrict the Company's ability to pursue business in the future. Because some of the Company's subsidiaries provide the Federal government with nuclear energy and defense-related services, these subsidiaries and a substantial number of their employees are required to have and maintain security clearances from the Federal government. These subsidiaries and their employees have been able to obtain these security clearances in the past, and the Company has no reason to believe that there would be any problems in this area in the future. However, there can be no assurance that the required security clearances will be obtained and maintained in the future. Because of its nuclear energy and defense-related services, the Company is subject to foreign ownership, control, and influence (FOCI) regulations imposed by the Federal government and designed to prevent the release of classified information to contractors who are under foreign control or influence. Under these regulations, FOCI concerns may arise as a result of a variety of factors, including foreign ownership of substantial percentages of the Company's equity securities or debt, a high percentage of foreign revenue, and the number of directors and officers who are not U.S. citizens. Subsidiaries of the Company with facility security clearances or sensitive contracts file reports with the DOE and DOD with respect to events and changes that affect the potential for FOCI. The Company has implemented procedures designed to insulate such subsidiaries from any FOCI that might affect the Company. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 11 There can be no assurance that such measures will prevent FOCI policies from affecting the ability of the Company's subsidiaries to secure and maintain certain types of DOE and DOD contracts. Employees As of March 1, 1996, ICF Kaiser employed approximately 7,500 persons, and the Company believes that its relations with its employees are good. Approximately one-half of the 2,300 employees at the Company's ICF Kaiser Hanford Company subsidiary are represented by unions, including unions under the Hanford Atomic Metals Trades Council (HAMTC), National Building and Construction Trades (BCT), and the Office and Professional Employees International Union (OPEIU). Collective bargaining agreements are in place with the HAMTC, the BCT, the OPEIU, NDT/QC Inspectors, and Escorts/International Guards Units. Of the 7,500 employees, approximately 2,400 persons are employed at Kaiser-Hill in Colorado, of which approximately 1,400 are represented by the United Steelworkers of America, Local 8031. Item 2. Properties All of the Company's operations are conducted either in leased facilities or in facilities provided by the Federal government or other clients. As of December 31, 1995, the Company leased an aggregate of approximately one million square feet of space. The terms of these leases range from month-to-month to 15 years, and some may be renewed for additional periods. Some of the space leased by the Company has been subleased to other entities under subleases expiring from 1996 to 2000. The Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, and its telephone number is (703) 934-3600. The Company's regional headquarters and other offices are listed on page 2 of this Report. Because the Company's operations generally do not require the maintenance of unique facilities, suitable office space is readily available for lease in most of the areas served. The Company believes that adequate space to conduct its operations will be available for the foreseeable future. In 1987, the Company entered into a 15-year lease agreement for its headquarters building in Fairfax, Virginia, containing approximately 200,000 square feet of office space. In 1988, the Company signed a 15-year lease agreement to occupy approximately 100,000 square feet of office space in a new building adjacent to the Virginia headquarters building. In connection with the acquisition of ICF Kaiser Engineers in 1988, ICF Kaiser acquired the lease for ICF Kaiser Engineers' offices in Oakland, California. The lease provides for approximately 142,000 square feet of office space and expires in June 2000. In February 1996, the Company announced that it would re-locate its regional headquarters in Pittsburgh to a new address in Pittsburgh in the second half of 1996 under a lease for 75,000 square feet of office space. The new address will be Gateway View Plaza, 1600 West Carson Street, Pittsburgh, PA 15220. The telephone number will remain the same. The leases for the Company's regional headquarters in Jacksonville, FL, and Houston, TX, expire in 1996 and 1998, respectively. Item 3. Legal Proceedings The Company and its subsidiaries are involved in a number of lawsuits and government regulatory proceedings arising in the ordinary course of its business or arising in connection with the disposition or acquisition of certain businesses and investments. The Company believes that any ultimate liability resulting therefrom will not have a material adverse effect on its financial position, operations, or cash flows. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other Federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe there will be any material adverse effect on the Company's financial position, operations, or cash flows as a result of these investigations. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 12 Item 4. Submission of Matters to a Vote of Security Holders None Item 10. Executive Officers of the Registrant The names of the Company's executive officers and their ages (as of March 6, 1996), principal corporate positions, and business experience are set forth below. George F. Brown, Jr., 49, has been an Executive Vice President of the Company and President of the Company's Consulting Group since 1994. From 1979 to 1994, Dr. Brown had worked with DRI/McGraw-Hill, a consulting services firm. As executive vice president, a position he held with that company since 1985, Dr. Brown had general management responsibilities for strategy and operations worldwide. Before that, he served as group vice president, Government and Health Markets, with overall responsibility for sales, consulting, and products for government and healthcare industry clients. Dr. Brown graduated from Carnegie-Mellon University (B.S., M.S., Ph.D.). Kenneth L. Campbell, 39, has been a Senior Vice President since 1992 and the Treasurer of the Company since 1994. He has held a number of senior management positions with the Company since 1988. From May 1993 to his recent appointment as Treasurer, Mr. Campbell was responsible for the project finance and acquisition activities of the Company. Mr. Campbell first worked for the Company in the early 1980's in a variety of economic consulting positions, rejoining the Company in 1988 to assist with the acquisition of ICF Kaiser Engineers. Mr. Campbell graduated from Wesleyan University (B.A.) and the University of Pennsylvania, Wharton Graduate School of Finance (M.B.A.). James O. Edwards, 52, has been Chairman of the Board and Chief Executive Officer of ICF Kaiser International, Inc. since 1987. He also was President of ICF Kaiser International, Inc. from 1987 to 1990. In 1974, he joined ICF Incorporated, the predecessor of ICF Kaiser International, Inc. and was its Chairman and Chief Executive Officer from 1986 until the 1987 establishment of ICF Kaiser International, Inc. Mr. Edwards graduated from Northwestern University (B.S.I.E.) and Harvard University (M.B.A., High Distinction, George F. Baker Scholar). Michael K. Goldman, 43, has been an Executive Vice President since 1990 and the Chief Administrative Officer of the Company since 1995. He has held senior management positions in several of the Company's operating subsidiaries since 1980. Prior to joining the Company, Mr. Goldman was in the private practice of law. Mr. Goldman graduated from Harvard University (B.A., M.B.A. High Distinction, George F. Baker Scholar) and the University of California at Berkeley (J.D.). Stephen W. Kahane, 45, has been an Executive Vice President of the Company since 1993 and President of the Company's Federal Programs Group since its creation in 1995. He has held senior management positions in several of the Company's operating subsidiaries since 1985. From 1981 to 1985, Dr. Kahane held a number of management positions at Jacobs Engineering Group, Inc.; he headed Environmental and Hazardous Waste Programs and was a Vice President when he left that firm. Dr. Kahane graduated from the University of California (B.A., M.S.P.H., D.Env.). Richard K. Nason, 54, has been an Executive Vice President and the Chief Financial Officer of the Company since December 1994; he had been a Senior Vice President and the Treasurer of the Company from April to December 1994. He joined the Company as Senior Vice President - Internal Audit in June 1993. From 1991 to 1993, Mr. Nason was Executive Vice President and Chief Financial Officer for The Artery Organization, Inc., a private real estate development and management company in Bethesda, Maryland. From 1988 to 1991, Mr. Nason was Senior Vice President for Finance and Planning for Griffin Homes, a real estate development and home building company in California. Mr. Nason was Senior Vice President of Marriott Corporation and its subsidiary Host International, Inc. from 1977 to 1988. Mr. Nason has been a director of ICF Kaiser International, Inc. since June 1995. Mr. Nason graduated cum laude from Washington and Jefferson College (B.A.) and the Wharton Graduate School of Finance and Commerce, University of Pennsylvania (M.B.A.). He also attended the Executive Program at The Darden School, University of Virginia. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 13 Alvin S. Rapp, 55, has been an Executive Vice President and President of the Company's ICF Kaiser Engineers Group since November 1993. Prior to joining the Company, he was a regional group vice president of Jacobs Engineering Group, Inc., an engineering services firm, having joined Jacobs in 1981 as manager of engineering in that company's Baton Rouge, Louisiana office. Prior to joining Jacobs, Mr. Rapp held a variety of management positions with Ciba-Geigy Corporation, U.S.S. Agri-Chemicals, and E.I. du Pont de Nemours & Company, Inc. Mr. Rapp graduated from Christian Brothers College (B.S.E.E.), Memphis, Tennessee. Marcy A. Romm, 37, has been Senior Vice President and Director of Human Resources of the Company since 1993. She has held Human Resources positions at ICF Kaiser since 1984. Ms. Romm graduated from George Washington University (B.A., M.B.A.). Marc Tipermas, 48, has been Executive Vice President and Director of Corporate Development for ICF Kaiser International, Inc. since 1993. He has held senior management positions in several of ICF Kaiser's operating subsidiaries since joining the Company in 1981. From 1977 to 1981, Dr. Tipermas was employed by the U.S. Environmental Protection Agency where he was the Director of the Superfund Policy and Program Management Office from 1980 to 1981. Prior to joining EPA, he was Assistant Professor of Political Science at the State University of New York at Buffalo from 1975 to 1977. Dr. Tipermas has been a director of ICF Kaiser International, Inc. since 1993. Dr. Tipermas graduated from the Massachusetts Institute of Technology (S.B.) and Harvard University (A.M., Ph.D.). David Watson, 52, has been an Executive Vice President and President of the Company's International Operations Group since December 1995. From 1989 to November 1995, he was with Day & Zimmerman International, Inc., an engineering and construction firm. From 1989 to 1993 he was President of that firm's Advanced Dzign Systems; in 1993 he led that firm's venture into the international marketplace by taking the position of President of D&Z International, an off-shore international unit, where he established a strategy to pursue engineering and construction work in China and Russia. Prior to joining Day & Zimmerman, Mr. Watson was with Stearns Catalytic, Inc. and Burmah Oil Company. Mr. Watson graduated from Loughborough University of Technology, Loughborough, Leicestershire, England (B. Tech). Paul Weeks, II, 52, has been Senior Vice President, General Counsel, and Secretary of ICF Kaiser International, Inc. since 1990. He joined ICF Incorporated in May 1987 as its Vice President, General Counsel, and Secretary. From 1973 to 1987 he was employed by Communications Satellite Corporation, where from 1983 to 1987 he was Assistant General Counsel for Corporate Matters. Mr. Weeks graduated from Princeton University (B.S.E.E.) and The National Law Center of George Washington University (J.D.). - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 14 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Since September 14, 1993, the Common Stock has been traded on the New York Stock Exchange (NYSE) under the symbol "ICF". Prior to that date, the Common Stock was traded on the NASDAQ National Market System. At March 6, 1995, the Company's record date for its 1996 Annual Meeting of Shareholders, there were 1,353 shareholders of record; the Company believes that there are approximately 4,850 beneficial owners of Common Stock. On March 18, 1996, the closing price of the Common Stock as reported by the NYSE was $3.00. The following table sets forth, for the periods indicated, the high and low bid information for the Common Stock as reported on the NASDAQ National Market System and the high and low sales prices on the NYSE:
Common Stock Price High Low Fiscal Year Ended February 28, 1994 First Quarter............................... $6.875 $ 4.75 Second Quarter 5.50 3.75 Third Quarter (September 1 - September 13).. 4.875 4.375 Third Quarter (September 14 - November 30).. 5.375 4.00 Fourth Quarter.............................. 5.00 3.625 Fiscal Year Ended February 28, 1995 First Quarter............................... $3.875 $ 2.25 Second Quarter.............................. 2.625 2.00 Third Quarter............................... 4.125 2.375 Fourth Quarter.............................. 4.375 2.625 March 1 to December 31, 1995 First Quarter............................... $5.00 $ 3.75 Second Quarter.............................. 4.625 3.75 Third Quarter............................... 4.75 3.25 December.................................... 4.25 3.125
The Company's Transfer Agent and Registrar is First Chicago Trust Company of New York, Mail Suite 4692, P.O. Box 2534, Jersey City, NJ 07303-2534. The Shareholder Relations telephone number is (201) 324-0498. The Company has never paid cash dividends on its Common Stock. The Board of Directors anticipates that no cash dividends will be paid on its Common Stock for the foreseeable future and that the Company's earnings will be retained for use in the business. The Board of Directors determines the Company's Common Stock dividend policy based on the Company's results of operations, payment of dividends on preferred stock, financial condition, capital requirements, and other circumstances. The Company's debt agreements allow dividends to be paid on its capital stock provided that the Company complies with certain limitations imposed by the terms of such agreements. See Notes F and I to the Consolidated Financial Statements. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 15 Item 6. Selected Financial Data The selected consolidated financial data of the Company for the ten months ended December 31, 1995, and each year in the four-year period ended February 28, 1995, have been derived from the Company's audited consolidated financial statements. This information should be read in conjunction with the Consolidated Financial Statements and the related notes thereto appearing elsewhere in this Report and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the December 31, 1995, financial statements. SELECTED CONSOLIDATED FINANCIAL DATA (in thousands, except per share data)
Ten Months Year Ended February 28, Ended ---------------------------------------------------- December 31, 1995 1995 1994/(1)/ 1993 1992/(2)/ ----------------- ---- ---- ---- ---- Statement of Operations Data: Gross revenue......................................... $916,744 $861,518 $651,657 $678,882 $710,873 Service revenue /(3)/................................. 425,896 459,786 382,708 391,528 385,942 Operating income (loss)............................... 17,505 13,688 (5,230) 22,744 (43,963) Income (loss) before income taxes, minority interests, and extraordinary item............................... 6,303 1,239 (12,877) 14,894 (54,310) Income (loss) before minority interests and extraordinary item................................... 4,212 (1,661) (12,528) 8,639 (40,516) Net income (loss) before extraordinary item........... 2,252 (1,661) (12,528) 8,639 (40,516) Net income (loss) /(2)/............................... 2,252 (1,661) (18,497) 8,639 (40,516) Net income (loss) available for common shareholders... 449 (3,815) (25,322) 3,346 (42,932) Primary and Fully Diluted Net Income (Loss) Per Common Share: Before extraordinary item............................ $0.02 $(0.18) $(0.92) $0.16 $(2.25) Extraordinary loss on early extinguishment of debt... --- --- (0.29) --- --- -------- -------- -------- -------- -------- Total.......................................... $0.02 $(0.18) $(1.21) $0.16 $(2.25) ======== ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding, assuming full dilution............ 21,517 20,957 20,886 21,272 19,085 Balance Sheet Data (end of period): Total assets.......................................... $369,517 $281,422 $281,198 $293,076 $318,947 Working capital....................................... 84,589 91,640 87,648 85,861 65,623 Long-term liabilities................................. 125,818 133,130 130,752 75,602 85,675 Redeemable preferred stock............................ 19,787 19,617 20,212 44,824 45,161 Shareholders' equity.................................. 28,427 27,624 30,780 58,521 51,151
__________________ (1) In fiscal year 1994, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." (2) Fiscal year 1992 reflects an after-tax charge of $52.4 million associated with the disposal and restructuring of certain businesses. (3) Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the equity in income of unconsolidated joint ventures and affiliated companies. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW ICF Kaiser is one of the nation's largest engineering, construction, program management, and consulting services companies, providing fully integrated capabilities to clients in four related market areas: environment, infrastructure, industry, and energy. The Company provides services to domestic and foreign clients in both the private and public sectors. Change in Fiscal Year The Company changed from a fiscal year ending February 28 to a fiscal year ending December 31, effective December 31, 1995. As a result, the accompanying financial statements include consolidated operations for the ten months ended December 31, 1995 and for the years ended February 28, 1995 and 1994. See Note S to the consolidated financial statements for unaudited comparative operating results for the ten months ended December 31, 1994. Financial Review ICF Kaiser's operating income of $17.5 million for the ten months ended December 31, 1995 was a $4.6 million increase from the $12.9 million recorded for the ten months ended December 31, 1994. The increase in operating income (before minority interests) primarily resulted from a $5.7 million improvement in engineering and construction operations and $5.3 million in earnings from the Performance Based Integrating Management Contract at the U.S. Department of Energy's (DOE) Rocky Flats Environmental Technology Site in Colorado (Rocky Flats). The improvement in engineering and construction operations was partially due to a major transit project in the Philippines, operating revenue of which had been previously deferred. Other improvements in engineering and construction operations were due to substantial growth in the group's industrial sector and a reduction in the group's overhead. The Rocky Flats contract was awarded in April 1995 to Kaiser-Hill Company, LLC (Kaiser-Hill), a limited liability company owned equally by ICF Kaiser and CH2M Hill Companies, Ltd. (CH2M Hill). An additional $3.0 million increase in operating income resulted from the Company's operations at DOE's Hanford, Washington site (Hanford). The 1995 results reflect higher award fees earned. A $4.9 million decline in the Company's operating income from other environmental work (excluding the Rocky Flats and Hanford contracts) partially offset the improvements in operating income discussed above between the ten- month periods ended December 31, 1995 and 1994. This decrease in other environmental operations was primarily due to a decline in operating income from private-sector environmental work, increases in bidding and proposal efforts required by large scale U.S. Department of Defense (DOD) and DOE contracts, and temporary delays in Federal environmental projects due to Federal government budgetary uncertainties. The Company's consulting operations also experienced a decline in operating revenues between the ten-month periods ended December 31, 1995 and 1994, resulting in a $0.9 million decrease in operating income for this group. The decrease was caused by a delay in task-order assignments under new contract awards and a significant increase in levels of business development activity. The Federal government's fiscal 1996 budget was not finalized during the ten months ended December 31, 1995, which led to the Federal government operating under a continuing resolution (including two no-work furlough periods) since October 1, 1995. While under this resolution, the assignment of work under task-order contracts has been delayed. A significant company-wide increase in marketing efforts further negatively impacted operating results for the ten months ended December 31, 1995 as compared to the ten months ended December 31, 1994. These efforts were in addition to the marketing activities discussed above within the environmental and consulting operations. Management believes that ICF Kaiser's increased efforts in its business development activities should result in additional contract awards in both the public and private sectors of its business. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 17 Outlook The Company's contract backlog increased significantly to $4.4 billion at December 31, 1995 compared to $1.4 billion at February 28, 1995. The increase in backlog primarily resulted from the April 1995 award of the Rocky Flats contract, which added $3.0 billion to contract backlog. The fee structure for this five-year contract provides for a mixture of base and incentive fees earned through the achievement of cost reductions, attainment of certain milestones, and accomplishment of other goals. In August 1995, ICF Kaiser signed a contract estimated at $330 million to perform environmental restoration work at Federal installations for the U.S. Army Corps of Engineers (USACE), Baltimore District. This Total Environmental Restoration Contract (TERC) is for four years with two, three-year options. The contract is a cost reimbursement delivery order contract, and the fee structure includes a combination of cost plus fixed fee, award fee, and incentive fees. In August 1995, ICF Kaiser also signed a five- year contract estimated at $50 million to provide environmental services to USACE, Savannah District. The Company, through its subsidiary, ICF Kaiser Hanford Company, is currently teaming with five other nationally known firms in bidding on DOE's new management and integration contract at Hanford. The response to DOE's request for proposals is due in March 1996. DOE has indicated that it would like the new contract to be in place in October 1996. The Company's existing contract to perform services at Hanford terminates in March 1997. It is expected that two other teams also will bid on the new contract; one of those teams already has been announced and includes Westinghouse Hanford Company (the incumbent management and operations contractor at the site). If the Company is unsuccessful in its bidding efforts on the new Hanford contract, the impact on ICF Kaiser's operating income after 1996 could be significant. With the award of the Rocky Flats contract and the Company's continued work at Hanford, ICF Kaiser is now actively participating in two of DOE's major environmental cleanup efforts and at seven of DOE's other 18 former weapons facilities. ICF Kaiser recently expanded its environmental cleanup contract base with DOD with the award of the USACE Baltimore TERC and USACE Savannah contracts discussed above. The Company expects that the experience and reputation it earns under these contracts will continue to enhance its position as a major participant in the field of environmental cleanup and large program management. The Company plans to continue its increased level of business development activity in the consulting group and expects that such activity will result in expanded public and private sector consulting services. In October 1995, the Company was awarded a consulting contract worth up to $111 million to support the marketing and communication efforts of the U.S. Environmental Protection Agency's Energy Star programs. The contract is for one year, with four additional one-year options. Other major current business initiatives include significant efforts to enhance the Company's management information systems and increase international marketing. Also, in its efforts to enhance profitability, the Company expects to realign several of its offices and terminate more than 100 employees by December 31, 1996 (see "Unusual Items under Results of Operations"). ICF Kaiser believes these endeavors, combined with other ongoing efforts described above, should positively impact the Company's future performance. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 18 RESULTS OF OPERATIONS The following table summarizes key elements in the Consolidated Statements of Operations for the ten months ended December 31, 1995 and December 31, 1994 (unaudited), and the years ended February 28, 1995 and 1994 (dollars in millions).
Ten Months Ended Year Ended December 31, February 28, ----------------- ----------------- 1995 1994 1995 1994 ---- ---- ---- ---- Gross revenue $916.7 $732.4 $861.5 $651.7 Service revenue $425.9 $392.0 $459.8 $382.7 Service revenue as a percentage of gross revenue 46.5% 53.5% 53.4% 58.7% Operating expenses as a percentage of service revenue: Direct cost of services and overhead 84.5% 86.0% 85.5% 84.6% Administrative and general 9.5% 8.7% 9.5% 12.0% Depreciation and amortization 2.0% 2.0% 2.0% 2.5% Unusual items, net (0.1)% -- -- 2.3% Operating income (loss) as a percentage of service revenue 4.1% 3.3% 3.0% (1.4)%
Gross revenue represents services provided to customers with whom the Company has a primary contractual relationship. Included in gross revenue are costs of services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the income of unconsolidated joint ventures and affiliated companies. ICF Kaiser believes that it is appropriate to analyze operating margins and other ratios in relation to service revenue because such revenue and ratios reflect the work performed directly by the Company. Operating profits (fees) generated by the Hanford and Rocky Flats contracts are based on performance and not revenue. A change in revenue between periods is likely to be disproportionate to the change in the fees. Consequently, changes in revenue may have an exaggerated impact on the Company's margins as measured on a percentage basis. In addition, because Kaiser-Hill is a consolidated subsidiary of ICF Kaiser, the operating income includes the portion of income generated under the Rocky Flats contract attributable to CH2M Hill. CH2M Hill's interest in Kaiser-Hill is reflected as a minority interest in ICF Kaiser's financial statements (see Note B to the consolidated financial statements). Ten Months Ended December 31, 1995 Versus Ten Months Ended December 31, 1994 Revenue Gross revenue for the ten months ended December 31, 1995 increased $184.3 million, or 25.2%, to $916.7 million. The increase in gross revenue was attributable to the commencement of work under the Kaiser-Hill contract which generated $277.7 million in gross revenue during the current year. The increase was partially offset by a $98.6 million reduction in gross revenue under the Hanford contract due to Federal budget reductions at the Hanford site. This reduced level of Hanford activity is expected to continue and may be reduced further during the contract period; however, a reduction in the Hanford budget is not currently expected to have a significant impact on operating income due to the nature of the fee structure under this particular DOE contract. Service revenue increased by $33.9 million for the ten-month period ended December 31, 1995 as compared to the ten months ended December 31, 1994. The increase was due primarily to $91.2 million of service revenue - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 19 generated under the Rocky Flats contract, offset by a $57.8 million decrease in service revenue under the Hanford contract. Service revenue as a percentage of gross revenue decreased to 46.5% for the ten months ended December 31, 1995 from 53.5% for the ten months ended December 31, 1994 as a result of the nature of the Rocky Flats contract. A significant portion of the gross revenue derived from the Rocky Flats contract includes the costs of services subcontracted to third parties. Operating Expenses Direct cost of services and overhead increased $22.8 million between the ten-month periods ended December 31, 1995 and 1994. Costs on the new Rocky Flats contract ($85.3 million) were offset by a $60.9 million reduction in the Hanford contract costs (attributable to the Federal budget reductions discussed above). The remainder of the Company's direct cost of services and overhead as a percentage of service revenue for the ten months ended December 31, 1995 was comparable to the same period in the prior year. Administrative and general expenses increased $6.4 million, or 18.5%, between the ten-month periods ended December 31, 1995 and 1994 and increased from 8.7% to 9.5% as a percentage of service revenue. The increase in these costs is primarily attributable to the Company's increased marketing activities, including filling several key marketing positions and incurring relatively high levels of marketing expense associated with proposing and bidding large-scale DOD and DOE contracts. Interest Expense ICF Kaiser's average debt outstanding and average effective interest rate for the ten months ended December 31, 1995 and 1994 were as follows.
Ten Months Ended ------------------------------------- December 31, 1995 December 31, 1994 ----------------- ----------------- Average debt outstanding $123,701,000 $122,674,000 Average effective interest rate 12.9% 12.8%
The average effective interest rate was comparable between the ten-month periods ended December 31, 1995 and 1994 due to consistent interest rates and indebtedness outstanding between the ten-month periods. The Company's principal debt outstanding consists of 12% Senior Subordinated Notes due 2003 (12% Notes) (see "Liquidity and Capital Resources" for further discussion). Income Tax Expense ICF Kaiser's income tax provision was $2.1 million and $3.0 million for the ten months ended December 31, 1995 and 1994, respectively. Although pretax income for the ten months ended December 31, 1995 was $3.5 million greater than pretax income for the comparable period ended December 31, 1994, the Company's effective tax rate decreased due to a reduction in permanent differences (such as the nondeductibility of goodwill) as a percentage of pretax income, increased foreign tax benefits, and minority interest earnings of a consolidated subsidiary (see Note H to the consolidated financial statements). The ten months ended December 31, 1994 also included a repatriation of overseas funds to the United States which could not then be currently offset by foreign tax credits, resulting in additional income taxes for that period (see "Income Tax Expense" under "Year Ended February 28, 1995 Versus Year Ended February 28, 1994"). Because of the reported losses for the year ended February 28, 1994, a $3.3 million valuation allowance was established in that year for deferred tax assets. Although the level of pretax income has increased substantially since that period (with a corresponding increase in taxable income), the Company has maintained the valuation allowance as of December 31, 1995. At December 31, 1995, the Company had deferred tax assets of $0.7 million related to net operating loss carryforwards, of which $0.5 million expire in the next five years and $0.2 million expire in 2008. Additionally, the Company had deferred tax assets of $2.1 million related to tax credit carryforwards, the majority of - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 20 which expire in 1998 to 2009. Management believes that the Company's expected levels of pretax earnings, when adjusted for nondeductible expenses such as goodwill amortization, will generate sufficient future taxable income to realize the $11.9 million deferred tax asset (net) within the next five years. Unusual Items During the ten months ended December 31, 1995, the Company recorded $0.5 million in additional income (net), consisting of the following unusual items: income in settlement of litigation against the Internal Revenue Service (IRS), associated with an affiliate of an acquired company, net of an accrual for related expenses ($6.8 million) (see "Liquidity and Capital Resources"); a charge to accrue the net settlement cost and legal expenses of other litigation ($4.6 million); a charge to accrue for severance for the termination of 110 employees in the engineering and international groups ($1.0 million); and a charge to accrue for consolidation of office space ($0.7 million). Management expects that all actions associated with the termination of employees and office space consolidation will be completed by December 31, 1996. Year Ended February 28, 1995 Versus Year Ended February 28, 1994 Revenue Gross revenue for the year ended February 28, 1995 increased 32.2% to $861.5 million, while service revenue increased 20.1% to $459.8 million, versus the year ended February 28, 1994. These increases were attributable to the work performed at Hanford ($208.8 million of the gross revenue increase and $97.4 million of the service revenue increase). The Hanford revenue increases were offset partially by a decrease in the Company's engineering and construction revenue ($14.1 million gross revenue and $10.8 million service revenue). Service revenue as a percentage of gross revenue decreased to 53.4% for the year ended February 28, 1995, from 58.7% for the previous year, primarily because under an October 1993 amendment to the Hanford contract, ICF Kaiser absorbed tasks utilizing a much higher proportion of subcontractors than Company personnel. Operating Expenses The Company's direct cost of services and overhead was relatively flat as a percentage of service revenue for the year ended February 28, 1995 versus the previous year. Excluding Hanford, direct cost of services and overhead decreased to 76.2% of service revenue for the year ended February 28, 1995 from 79.2% for the year ended February 28, 1994. Administrative and general expense decreased $2.1 million. The decrease in these costs is attributable primarily to management cost-cutting initiatives. A restructuring plan initiated during the year ended February 28, 1994 to respond to operating losses included downsizing the work force, consolidating office space, renegotiating significant leases, and restructuring certain international operations. All actions have been completed, and there is no further liability outstanding as of December 31, 1995 associated with this plan. Interest Expense ICF Kaiser's interest expense net of interest income (net interest) for the year ended February 28, 1995, increased $6.3 million from the prior year due to a recapitalization that took place in the fourth quarter of the year ended February 28, 1994 (also see "Liquidity and Capital Resources"). The increase in net interest was impacted favorably by $1.3 million in refunds of interest from the IRS recorded in the third quarter of the year ended February 28, 1995 associated with the Company's tax liabilities and those of an acquired company. The increase in net interest was offset partially by a reduction in preferred stock dividends. Income Tax Expense ICF Kaiser's income tax provision for the year ended February 28, 1995 was $2.9 million, even though pretax income was $1.2 million. This is due to several factors including the deemed dividend from the repatriation of overseas - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 21 funds to the United States during the year ended February 28, 1995 that currently could not be offset by foreign tax credits and permanent differences, such as the nondeductibility of goodwill amortization. Nondeductible permanent differences comprised a very high percentage of pretax income. As such, the traditional percentage relationship between income tax expense and pretax income was not meaningful. LIQUIDITY AND CAPITAL RESOURCES During the ten months ended December 31, 1995, cash and cash equivalents decreased $11.9 million to $16.4 million. Cash was primarily used in investing and financing activities for acquisitions and investments in joint ventures and affiliates ($2.0 million); purchases of fixed assets ($1.8 million); payments of dividends ($1.5 million); repurchases by the Company's insurance subsidiary of a portion of the Company's outstanding 12% Notes and related warrants ($1.4 million); and payments of other outstanding debt ($1.2 million). In addition, $6.1 million was used in operating activities. An interest payment of $7.5 million on the Company's 12% Notes was made in June 1995. An additional $7.5 million interest payment on the 12% Notes was due and paid on January 2, 1996. An increase in contract receivables, net between February 28, 1995 and December 31, 1995 was primarily due to $71.9 million in receivables from the commencement of work by Kaiser-Hill under the Rocky Flats contract. An increase in accounts payable, accrued expenses, and accrued salaries and employee benefits was also primarily due to the Rocky Flats contract which had $70.6 million of accounts payable, accrued expenses, and accrued salaries and employee benefits as of December 31, 1995. During the year ended February 28, 1995, the U.S. Environmental Protection Agency approved the Company's revised provisional billing rates for fiscal years 1991 through 1994, thus authorizing the Company to submit invoices on cost-plus contracts with U.S. government agencies for work performed during these approved years. The Company has collected in excess of $4 million as of December 31, 1995 on these contracts. The Company has a $60 million revolving credit facility (the Credit Facility) provided by a consortium of banks (the Banks). ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the Credit Facility, have granted the Banks a security interest in their accounts receivable and certain other assets. The Credit Facility limits the payment of cash dividends, requires the maintenance of specified financial ratios, and has a $20 million limitation on cash borrowings. Total available credit is determined from a borrowing base calculation based on accounts receivable. The Credit Facility was amended in 1995 to modify ratios and certain terms. As of December 31, 1995, the Company had $5.0 million in borrowings outstanding under the Credit Facility, in addition to $7.1 million in letters of credit, and the Company had $23.5 million of available credit under the Credit Facility. As of February 29, 1996, the Company had $9.0 million of borrowings, excluding letters of credit, outstanding under its Credit Facility. The Credit Facility contains Eurodollar and alternate base interest rate alternatives with margins dependent upon the Company's financial operating results, and expires on October 31, 1996. Kaiser-Hill has a $50 million receivables purchase facility to support its working capital requirements under the Rocky Flats contract. The receivables purchase facility requires Kaiser-Hill to maintain a specified tangible net worth and contains certain default provisions for delinquent receivables. Program fees consist of 0.30% per annum of the unused portion of the facility and 0.45% per annum of the used portion of the facility. The receivables purchase facility is non-recourse to Kaiser-Hill's owners, ICF Kaiser and CH2M Hill, and expires on June 30, 1998. In January 1994, the Company issued $125,000,000 of 12% Notes and 600,000 warrants, each to purchase one share of the Company's common stock at $5.00 per share. The net proceeds were used, in part, to retire senior subordinated notes and associated warrants, to repurchase preferred stock, and to repay the outstanding balance on the Company's then-existing revolving credit facility. The recapitalization resulted in a $6.0 million extraordinary charge (net of $0 tax benefit) for the early extinguishment of debt and a $1.9 million charge to net income available for common shareholders to repurchase redeemable preferred stock. As noted above, in November 1995, the Company's insurance subsidiary repurchased $1,450,000 of the 12% Notes and related warrants for $1.4 million. In March 1996, the interest rate on the 12% Notes was increased by one percent until the Company achieves and maintains a specified level of earnings (see Notes F and I to the consolidated financial statements). The 12% Notes mature on December 31, 2003 with semi-annual interest payments. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 22 For the past several years, the Company has had ongoing negotiations, filings, and litigation with the IRS related to settlement of its tax liabilities and the liabilities associated with affiliates of acquired companies. As noted in the "Results of Operations", the cash and income impact have generally been favorable to the Company. Further, the Company's previous tax losses and its resultant net operating loss carryforward position, combined with the effect of tax credit carryovers, should limit Federal income tax payments required in the near future. In one recent tax case, the Company prevailed at the trial court level in a tax refund litigation matter against the IRS. As discussed under "Unusual Items" under "Results of Operations," the Department of Justice recently agreed to pay $6.8 million, net of related expenses, to the Company in settlement of this matter. Management believes that current projected levels of cash flows and the availability of financing, including borrowings under the Company's Credit Facility, will be adequate to fund operations throughout the next twelve months. The Company's Series 2D Senior Preferred Stock is subject to mandatory redemption on January 13, 1997 in the amount of $20 million plus accrued dividends. Because of technical limitations on the payment of dividends contained in the Indenture governing the Company's 12% Notes, the Company did not pay the November 30, 1995 and February 29, 1996 accrued dividends in the aggregate amount of $975,000 until March 1996, following the signing of an amendment to the Indenture which permitted the payment of all accrued and future dividends. As consideration for this amendment, the interest rate on the 12% Notes was increased as discussed above. The Company currently intends to use cash generated from operations (including cash received from the tax refund litigation discussed in the immediately preceding paragraph) to redeem a portion of this preferred stock on or before the redemption date. To redeem the balance of the preferred stock, the Company expects to use funds generated from alternative financing sources. The Company is currently negotiating for replacement or extension of the current Credit Facility and the possible issuance of new equity. Management received a commitment for a replacement of the Company's existing Credit Facility in March 1996 with terms and covenants similar to the existing Credit Facility. IMPACT OF NEW ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's current policy to evaluate all long-lived assets on a periodic basis for asset impairment. Therefore, upon formal adoption of this statement in 1996, management does not expect that there will be a material adverse effect on the Company's financial position or operations. The FASB also recently issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123), which encourages companies to adopt a fair value method of accounting for employee stock options and similar equity instruments. The fair value method requires compensation cost to be measured at the grant date based on the value of the award and is recognized over the service period. Alternatively, SFAS No. 123 requires the provision of pro forma disclosures of net income and earnings per share as if the fair value method had been adopted when the fair value method is not reflected in the financial statements. The Company has not yet determined whether it will adopt a fair value method of accounting for stock-based compensation or provide pro forma disclosures. The impact of the adoption of this statement on the financial statements cannot be reasonably estimated at this time. The requirements of SFAS No. 123 are effective for financial statements for fiscal years beginning after December 15, 1995. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 23 Item 8. Financial Statements and Supplementary Data The Financial Statements and Supplementary Data appear on pages F-1 through F-25 and S-1 hereto. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None PART III Item 10. Directors and Executive Officers of the Registrant Information regarding the directors of the Registrant is included under the caption "Election of Directors" in the Company's Proxy Statement for the 1996 Annual Meeting of Shareholders (the "Proxy Statement) and is incorporated herein by reference. Information regarding executive officers of the Registrant is included under a separate caption in Part I hereof. Information regarding compliance with Section 16(a) of the Exchange Act is included under the caption "Compliance with Section 16(a) of the Securities Exchange Act" in the Company's Proxy Statement and is incorporated herein by reference. Item 11. Executive Compensation Information regarding this item is included under the caption "Executive Compensation" in the Company's Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Information regarding this item is included under the caption "Voting Securities of the Company and Certain Shareholdings" in the Company's Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions Information regarding this item is included under the captions "Compensation Committee Interlocks and Insider Participation," "Certain Transactions with Certain Directors," "Agreements and Transactions with Executive Officers Named in the Summary Compensation Table," and "Agreements and Transactions with Other Executive Officers" in the Company's Proxy Statement and is incorporated herein by reference. - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 24 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) Documents filed as part of this Report
Page 1. Consolidated Financial Statements of ICF Kaiser International, Inc. and Subsidiaries a. Report of Independent Accountants............................................................ F-1 b. Consolidated Balance Sheets as of December 31, 1995, and February 28, 1995................... F-2 c. Consolidated Statements of Operations for the ten months ended December 31, 1995, and for the years ended February 28, 1995 and February 28, 1994...................................... F-3 d. Consolidated Statements of Shareholders' Equity for the ten months ended December 31, 1995, and for the years ended February 28, 1995 and February 28, 1994.............................. F-4 e. Consolidated Statements of Cash Flows for the ten months ended December 31, 1995, and for the years ended February 28, 1995 and February 28, 1994.................................. F-5 f. Notes to Consolidated Financial Statements................................................... F-6 2. Supplemental Schedule Relating to the Consolidated Financial Statements of ICF Kaiser International, Inc. and Subsidiaries for the ten months ended December 31, 1995, and for each of the two years in the period ended February 28, 1995 a. Schedule II: Valuation and qualifying accounts............................................... S-1 All Schedules except the one listed above have been omitted because they are not applicable or not required or because the required information is included elsewhere in the financial statements in this filing. 3. Exhibits (listed according to the number assigned in the table in Item 601 of Regulation S-K).
(b) Exhibits Exhibit No. 3 -- Articles of Incorporation and By-laws 3(a) Certificate of Incorporation of ICF Kaiser International, Inc. (restated through June 26, 1993) (Incorporated by reference to Exhibit No. 3(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as amended through June 23, 1995) (Incorporated by reference to Exhibit No. 3(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1995 filed with the Commission on October 13, 1995) Exhibit No. 4 -- Instruments Defining the Rights of Security Holders, including Indentures 4(a) Indenture dated as of January 11, 1994, between the Registrant and The Bank of New York, as Trustee (Incorporated by reference to Exhibit No. 4(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 1. First Supplemental Indenture dated as of February 17, 1995. (Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 2. Second Supplemental Indenture dated September 1, 1995 (Incorporated by reference to Exhibit No. 4(a) (2) to Registration Statement on Form S-1 Registration No. 33-64655 filed with the Commission on November 30, 1995) - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 25 3. Third Supplemental Indenture dated October 20, 1995 (Incorporated by reference to Exhibit No. 4(a)(3) to Registration Statement on Form S-1 Registration No. 33-64655 filed with the Commission on November 30, 1995) 4. Fourth Supplemental Indenture dated as of March 8, 1996 4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as amended and restated through January 11, 1994) (Incorporated by reference to Exhibit No. 4(e) to Quarterly Report on Form 10-Q Registrant No. 1-2248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(d) Credit Agreement among ICF Kaiser International, Inc., certain Banks, and Chemical Bank (Delaware), as Agent, dated as of December 8, 1993, as amended (see Exhibit No. 10(a)) 4(e) ICF Kaiser International, Inc. Series 2D Warrant, No. 2D-2, dated January 11, 1994 (Incorporated by reference to Exhibit No. 4(f) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(f) Securities Purchase Agreement by and among ICF Kaiser International, Inc., IFINT-USA Inc., and FIMA Finance Management Inc., B.V.I. dated as of December 20, 1990 (Incorporated by reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third quarter of fiscal 1991 filed with the Commission on January 14, 1991) 1. Amendment No. 1 to Securities Purchase Agreement dated as of January 13, 1992 (Incorporated by reference to Exhibit No. 4(e)(1) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third quarter of fiscal 1992 filed with the Commission on January 14, 1992) 2. Amendment No. 2 to Securities Purchase Agreement (Incorporated by reference to Exhibit 4(g)(2) to Amendment No. 2 to Registration Statement on Form S-1 (No. 33-70986) filed with the Commission on December 23, 1993) 4(g) Amended and Restated Registration Rights Agreement dated as of January 13, 1992, between ICF Kaiser International, Inc. and FIMA Finance Management Inc., (Incorporated by reference to Exhibit No. 4(f) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third quarter of fiscal 1992 filed with the Commission on January 14, 1992) 4(h) Rights Agreement, dated as of January 13, 1992, between ICF Kaiser International, Inc. and Office of the Secretary, ICF Kaiser International, Inc. as Rights Agent, including 1. Form of Certificate of Designations of Series 4 Junior Preferred Stock 2. Form of Rights Certificate 3. Summary of Rights to Purchase Preferred Stock (Incorporated by reference to Exhibit No. 4(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third quarter of fiscal 1992 filed with the Commission on January 14, 1992) 4(i) Warrant Agreement dated as of January 11, 1994, between the Registrant and The Bank of New York, as Warrant Agent (Incorporated by reference to Exhibit No. 4(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(j) Form of Warrant expiring December 31, 1998 (Incorporated by reference to Exhibit No. 4(d) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 26 Exhibit No. 10 -- Material Contracts 10(a) Amended and Restated Credit Agreement dated as of December 8, 1993, among the Registrant, the several Lenders from time to time parties thereto, and Chemical Bank, as Agent, including Exhibits thereto (Closing Date: January 11, 1994) (Incorporated by reference to Exhibit No. 10(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 1. Waiver and First Amendment dated as of April 18, 1994 (Incorporated by reference to Exhibit No. 10(a)(1) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 25, 1995.) 2. Second Amendment dated as of August 31, 1994 (Incorporated by reference to Exhibit No. 10(a)(2) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 23, 1995.) 3. Third Amendment dated as of February 28, 1995 (Incorporated by reference to Exhibit No. 10(a)(3) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 23, 1995.) 4. Fourth Amendment dated as of June 28, 1995 (Incorporated by reference to Exhibit No. 10(a)(4) to Registration Statement on Form S-1 Registrant No. 33-64655 filed with the Commission on November 30, 1995.) 5. Fifth Amendment dated as of November 30, 1995 10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995) 2. Amendment No. 2 dated December 15, 1995 10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International Employee Stock Ownership Plan (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 Registrant No. 33-64655 filed with the Commission on November 30, 1995) 10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(d) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(d)(1) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 23, 1995.) 2. Amendment No. 2 dated December 15, 1995 10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan (Incorporated by reference to Exhibit No. 10(e) to Registration Statement on Form S-1 (Registrant No. 33-64655) filed with the Commission on November 30, 1995) 10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF Kaiser Incorporated (as Tenant), dated January 30, 1987, for the lease of the Registrant's headquarters in Fairfax, Virginia (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 1. First Amendment entered into August 31, 1987 (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 2. Second Amendment entered into September 23, 1987 (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 3. Third Amendment entered into as of February 12, 1990 (Incorporated by reference to Exhibit No. 10(a) to Annual Report on Form 10-K filed with the Commission on April 25, 1990) - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 27 10(g) Lease Agreement between HMCE Associates Limited Partnership (as Landlord) and American Capital and Research Corporation (as Tenant), dated April 27, 1988, for the lease of space in the building adjacent to the Registrant's headquarters in Fairfax, Virginia (Incorporated by reference to Exhibit No. 10(b) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 1. First Amendment entered into July 29, 1988. (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K filed with the Commission on April 25, 1990) 2. Second Amendment entered into as of February 12, 1990 (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K filed with the Commission on April 25, 1990) 3. Third Amendment entered into as of December 22, 1992 (Incorporated by reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993) 10(h) Amended and Restated Lease Agreement by and between Kaiser Engineers, Inc. and 1800 Harrison Limited Partnership, dated as of July 1, 1988, for the lease of the Registrant's offices in Oakland, California (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 (No. 33-31576) filed with the Commission on October 13, 1989) 1. First Amendment made as of March 27, 1991 (Incorporated by reference to Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q (Registrant No. 0-18025) for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 2. Second Amendment made as of June 1992 (Incorporated by reference to Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q (Registrant No. 0-18025) for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 3. Third Amendment made as of April 27, 1993 (Incorporated by reference to Exhibit No. 10(i)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993) 10(i) Guaranty provided by American Capital and Research Corporation to 1800 Harrison Limited Partnership, dated as of March 27, 1991, and First Amendment thereto dated as of June 1992, guaranteeing the performance of Kaiser Engineers, Inc. under an Amended and Restated Lease Agreement by and between Kaiser Engineers, Inc. and the California Public Employee's Retirement System, dated as of July 1, 1988, for the lease of the Registrant's offices in Oakland, California (Incorporated by reference to Exhibit No. 10(b) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and restated as of April 24, 1995) (Incorporated by reference to Exhibit No. 10(k) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995) 10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE Reference No. DE-AC06-87RL1930) (Incorporated by reference to Exhibit No. 10(m) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser Engineers Hanford Company, and Westinghouse Hanford Company, with an effective date of October 1, 1993 (Contract No. DE-A06-93RL12359) (Incorporated by reference to Exhibit No. 10(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 28 1. Modification No. 1 dated October 25, 1993 (Incorporated by reference to Exhibit No. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 25, 1994.) 10(n) Massachusetts Water Resources Authority Agreement with ICF Kaiser Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser Engineers of Massachusetts, Inc. for construction management services for Boston Harbor Project--Deer Island Related Facilities, Contract No. 5622 (June 1990) (Incorporated by reference to Exhibit No. 10(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the second quarter of fiscal 1991 filed with the Commission on October 12, 1990) (Amendment Nos. 1-3 incorporated by reference to Exhibit No. 10(n)(1-3) to Annual Report on Form 10-K Registrant No. 0-18025 for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993) 1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993 [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1994 FILED IN PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(2) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 10(o) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a subsidiary of the Corporation, and the U.S. Department of Energy dated as of April 4, 1995. [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(o) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 10(p) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(f) to Quarterly Report on Form 10-Q Registrant No. 1-12248 (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(p)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995) 2. Amendment No. 2 dated December 15, 1995 10(q) Trust Agreement with Vanguard Fiduciary Trust Company dated as of March 1, 1989, for the ICF Kaiser International, Inc. Section 401(k) Plan (Incorporated by reference to Exhibit No. 28(b) to Registration Statement on Form S-8 (Registration No. 33-51460) filed with the Commission on August 31, 1992) Exhibit No. 10 -- Material Contracts (management contracts, compensatory plans, or arrangements.) 10(aa) Employment Agreement with James O. Edwards dated as of December 31, 1994 (Incorporated by reference to Exhibit No. 10 (bb) to Annual Report on Form 10-K for fiscal 1995 Registrant No. 1-12248 filed with the Commission on May 23, 1995) 10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation Plan: Annual Incentive Plan (dated as of September 29, 1993) (Incorporated by reference to Exhibit No. 10(aa) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option Plan (as amended and restated as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 29 10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the Registrant, dated November 1, 1993 (Incorporated by reference to Exhibit No. 10(ll) to Amendment No. 1 to Registration Statement on Form S-1 (No. 33-70986) filed with the Commission on November 22, 1993) 10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of the Registrant, effective as of March 1, 1994 (Incorporated by reference to Exhibit No. 10(ll) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice President of the Registrant, effective as of March 1, 1994 (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance Plan as approved by the Compensation Committee of the Board of Directors on April 4, 1994, and adopted by the Board of Directors on May 5, 1994 (Incorporated by reference to Exhibit No. 10(nn) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(hh) Employment Agreement with Michael K. Goldman, Executive Vice President of the Registrant, effective as of February 28, 1994. (Incorporated by reference to Exhibit No. 10(jj) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995). 10(ii) Employment Agreement dated May 17, 1993, and February 1, 1995, with Richard K. Nason, Executive Vice President and Chief Financial Officer of the Registrant Exhibit No. 11 -- Computation of Primary and Fully Diluted Earnings Per Share Exhibit No. 21 -- Subsidiaries of the Registrant as of March 1, 1996 Exhibit No. 23 -- Consent of Coopers & Lybrand L.L.P. Exhibit No. 27 -- Financial Data Schedule (c) Reports on Form 8-K None - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 30 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ICF Kaiser International, Inc. (Registrant) Date: March 25, 1996 By /s/ James O. Edwards --------------------------------- James O. Edwards, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. (1) Principal executive officer Date: March 25, 1996 By /s/ James O. Edwards --------------------------------- James O. Edwards, Chairman and Chief Executive Officer (2) Principal financial and accounting officer Date: March 25, 1996 By /s/ Richard K. Nason --------------------------------- Richard K. Nason, Executive Vice President and Chief Financial Officer - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 31 (3) Board of Directors Date: March 25, 1996 By -------------------------------- Gian Andrea Botta, Director Date: March 25, 1996 By /s/ Tony Coelho -------------------------------- Tony Coelho, Director Date: March 25, 1996 By /s/ James O. Edwards -------------------------------- James O. Edwards, Director Date: March 25, 1996 By /s/ Maynard H. Jackson -------------------------------- Maynard H. Jackson, Director Date: March 25, 1996 By /s/ Thomas C. Jorling -------------------------------- Thomas C. Jorling, Director Date: March 25, 1996 By /s/ Frederic V. Malek -------------------------------- Frederic V. Malek, Director Date: March 25, 1996 By /s/ Rebecca P. Mark -------------------------------- Rebecca P. Mark, Director Date: March 25, 1996 By /s/ Richard K. Nason -------------------------------- Richard K. Nason, Director Date: March 25, 1996 By /s/ Robert W. Page, Sr. -------------------------------- Robert W. Page, Sr., Director Date: March 25, 1996 By /s/ Marc Tipermas -------------------------------- Marc Tipermas, Director - -------------------------------------------------------------------------------- ICF Kaiser International, Inc. Report on Form 10-K for the ten months ended December 31, 1995. Page 32 Report of Independent Accountants --------------------------------- To the Board of Directors and Shareholders ICF Kaiser International, Inc. We have audited the consolidated financial statements and financial statement schedule of ICF Kaiser International, Inc. and subsidiaries listed in Item 14(a) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ICF Kaiser International, Inc. and subsidiaries as of December 31, 1995 and February 28, 1995, and the consolidated results of their operations and their cash flows for the ten months ended December 31, 1995, and for each of the two years in the period ended February 28, 1995, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Washington, D.C. March 8, 1996 - -------------------------------------------------------------------------------- F-1 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except shares) - --------------------------------------------------------------------------------
December 31, February 28, 1995 1995 ----------- ----------- ASSETS Current Assets Cash and cash equivalents $ 16,357 $ 28,233 Contract receivables, net 228,239 139,860 Prepaid expenses and other current assets 20,911 10,872 Deferred income taxes 11,934 13,553 -------- -------- Total Current Assets 277,441 192,518 -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements 42,909 42,557 Less depreciation and amortization (33,369) (29,648) -------- -------- 9,540 12,909 -------- -------- Other Assets Goodwill, net 49,259 47,945 Investments in and advances to affiliates 10,213 8,022 Due from officers and employees 1,053 1,826 Other 22,011 18,202 -------- -------- 82,536 75,995 -------- -------- $369,517 $281,422 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long-term debt $ 5,041 $ 578 Accounts payable and subcontractors payable 86,429 33,452 Accrued salaries and employee benefits 53,060 30,549 Accrued interest 7,414 2,528 Other accrued expenses 18,594 13,359 Income taxes payable 801 644 Deferred revenue 14,327 11,013 Other 7,186 8,755 -------- -------- Total Current Liabilities 192,852 100,878 -------- -------- Long-term Liabilities Long-term debt, less current portion 120,112 126,733 Other 5,706 6,397 -------- -------- 125,818 133,130 -------- -------- Commitments and Contingencies Minority Interests in Subsidiaries 2,633 173 Redeemable Preferred Stock, liquidation value $20,000 19,787 19,617 Common Stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding-21,263,828 and 21,011,369 shares 213 210 Additional Paid-in Capital 64,654 63,786 Notes Receivable Related to Common Stock (1,732) (1,732) Retained Earnings (Deficit) (32,894) (33,343) Cumulative Translation Adjustment (1,814) (1,297) -------- -------- $369,517 $281,422 ======== ========
- -------------------------------------------------------------------------------- See notes to consolidated financial statements. F-2 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) - --------------------------------------------------------------------------------
Ten Months Ended Year Ended February 28, December 31, ----------------------- 1995 1995 1994 - ----------------------------------------------------------------------------------------------- Gross Revenue $ 916,744 $ 861,518 $ 651,657 Subcontract and direct material costs (493,971) (405,819) (272,169) Equity in income of joint ventures and affiliated companies 3,123 4,087 3,220 ------------ ----------- ---------- Service Revenue 425,896 459,786 382,708 Operating Expenses Direct cost of services and overhead 359,887 393,096 323,828 Administrative and general 40,647 43,770 45,842 Depreciation and amortization 8,357 9,232 9,559 Unusual items, net (500) - 8,709 ------------ ----------- ---------- Operating Income (Loss) 17,505 13,688 (5,230) Other Income (Expense) Gain (loss) on sale of investment - 551 (925) Interest income 2,053 1,799 1,490 Interest expense (13,255) (14,799) (8,212) ------------ ----------- ---------- Income (Loss) Before Income Taxes, Minority Interests, and Extraordinary Item 6,303 1,239 (12,877) Income tax provision (benefit) 2,091 2,900 (349) ------------ ----------- ---------- Income (Loss) Before Minority Interests and Extraordinary Item 4,212 (1,661) (12,528) Minority interests in net income of subsidiaries 1,960 - - ------------ ----------- ---------- Net Income (Loss) Before Extraordinary Item 2,252 (1,661) (12,528) Extraordinary loss on early extinguishment of debt - - (5,969) ------------ ----------- ---------- Net Income (Loss) 2,252 (1,661) (18,497) Preferred stock dividends and accretion 1,803 2,154 4,896 Redemption of redeemable preferred stock - - 1,929 ------------ ----------- ---------- Net Income (Loss) Available for Common Shareholders $ 449 $ (3,815) $ (25,322) ============ =========== ========== Primary and Fully Diluted Net Income (Loss) Per Common Share: Before extraordinary item $ 0.02 $ (0.18) $ (0.92) Extraordinary loss on early extinguishment of debt - - (0.29) ------------ ----------- ---------- Total $ 0.02 $ (0.18) $ (1.21) ============ =========== ========== Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding 21,517 20,957 20,886 ============ =========== ==========
- -------------------------------------------------------------------------------- See notes to consolidated financial statements. F-3 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands, except shares) - --------------------------------------------------------------------------------
Series 1 Junior Notes Convertible Receivable Preferred Stock Common Stock Additional Related Retained Cumulative ESOP ----------------- --------------------- Paid-in to Common Earnings Translation Guaranteed Shares Par Value Shares Par Value Capital Stock (Deficit) Adjustment Bank Loan ------ --------- ---------- --------- ---------- ---------- ---------- ----------- ---------- Balance, March 1, 1993 69 $ 6,900 21,303,807 $ 213 $ 65,040 $ (2,725) $ (4,206) $ (1,701) $ (5,000) Net loss - - - - - - (18,497) - - Preferred stock dividends - - - - - - (4,670) - - Preferred stock accretion - - - - - - (226) - - Redemption of redeemable preferred stock - - - - - - (1,929) - - Repurchase of preferred stock (69) (6,900) - - 2,050 - - - - Issuances of common stock - - 231,249 2 1,056 - - - - Repurchases of common stock - - (610,468) (6) (3,716) - - - - Issuance of warrants - - - - 900 - - - - Repurchase of warrants - - - - (1,909) - - - - Payments received on notes receivable - - - - - 993 - - - Decrease in loan balance - - - - - - - - 5,000 Foreign currency translation adjustment - - - - - - - (40) - Other - - - - 151 - - - - ------ --------- ---------- --------- ---------- ---------- ---------- ----------- ---------- Balance, February 28, 1994 - - 20,924,588 209 63,572 (1,732) (29,528) (1,741) - Net loss - - - - - - (1,661) - - Preferred stock dividends - - - - - - (1,950) - - Preferred stock accretion - - - - - - (204) - - Issuances of common stock - - 161,781 2 393 - - - - Repurchases of common stock - - (75,000) (1) (179) - - - - Foreign currency translation adjustment - - - - - - - 444 - ------ --------- ---------- --------- ---------- ---------- ---------- ----------- ---------- Balance, February 28, 1995 - - 21,011,369 210 63,786 (1,732) (33,343) (1,297) - Net income - - - - - - 2,252 - - Preferred stock dividends - - - - - - (1,633) - - Preferred stock accretion - - - - - - (170) - - Issuances of common stock - - 314,422 4 1,167 - - - - Repurchases of common stock - - (61,963) (1) (256) - - - - Foreign currency translation adjustment - - - - - - - (517) - Other - - - - (43) - - - - ------ --------- ---------- --------- ---------- ---------- ---------- ----------- ---------- Balance, December 31, 1995 - $ - 21,263,828 $ 213 $ 64,654 $ (1,732) $ (32,894) $ (1,814) $ - ====== ========= ========== ========= ========== ========== ========== =========== ==========
- -------------------------------------------------------------------------------- See notes to consolidated financial statements. F-4 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) - --------------------------------------------------------------------------------
Ten Months Ended Year Ended February 28, December 31, -------------------------- 1995 1995 1994 ------------ --------- --------- OPERATING ACTIVITIES Net income (loss) $ 2,252 $ (1,661) $(18,497) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 8,357 9,232 9,559 Provision for losses on contract receivables 601 1,320 2,241 Provision for deferred income taxes 1,253 2,500 (714) Earnings less than (in excess of) cash distributions from joint ventures and affiliated companies (1,105) 972 (1,708) Minority interests in net income of subsidiaries 1,960 -- -- (Gain) loss on sale of investment -- (551) 925 Unusual items, net of cash (500) -- 7,786 Extraordinary loss on early extinguishment of debt -- -- 5,969 Premium paid on reacquisition of senior subordinated notes -- -- (4,250) Changes in operating assets and liabilities, net of acquisitions: Contract receivables, net (88,743) (13,014) 26,292 Prepaid expenses and other current assets (3,826) 4,471 4,614 Other assets (4,953) (1,268) (745) Accounts payable and accrued expenses 78,801 2,218 (10,233) Income taxes payable 157 297 (2,478) Deferred revenue 3,314 2,551 (2,412) Other liabilities (3,625) (5,103) (2,660) Other operating activities -- 219 418 -------- -------- -------- Net Cash Provided by (Used in) Operating Activities (6,057) 2,183 14,107 -------- -------- -------- INVESTING ACTIVITIES Investments in subsidiaries and affiliates, net of cash acquired (2,010) (622) (2,755) Sales of subsidiaries and subsidiary assets 735 2,600 -- Purchases of fixed assets (1,759) (2,426) (1,388) Proceeds from sales of fixed assets 1,035 -- -- Other investing activities -- (600) -- -------- -------- -------- Net Cash Used in Investing Activities (1,999) (1,048) (4,143) -------- -------- -------- FINANCING ACTIVITIES Borrowings under credit facility agreement 16,000 5,000 10,000 Principal payments on credit facility agreement and other borrowings (17,173) (1,172) (47,010) Proceeds from issuance of senior subordinated notes and related warrants -- -- 121,488 Reacquisition of senior subordinated notes and related warrants (1,363) -- (31,559) Repurchases of redeemable preferred stock and related warrants -- (799) (27,363) Repurchase of preferred stock -- -- (4,850) Subsidiary capital contribution from minority interest 500 -- -- Proceeds from issuances of common stock 406 395 640 Repurchases of common stock (257) (180) (3,722) Principal payments from notes receivable related to common stock -- -- 993 Preferred stock dividends (1,471) (1,950) (5,321) Debt issuance costs -- (149) (6,307) Other financing activities 55 -- 151 -------- -------- -------- Net Cash Provided by (Used in) Financing Activities (3,303) 1,145 7,140 -------- -------- -------- Effect of Exchange Rate Changes on Cash (517) 444 (40) -------- -------- -------- Increase (Decrease) in Cash and Cash Equivalents (11,876) 2,724 17,064 Cash and Cash Equivalents, Beginning of Period 28,233 25,509 8,445 -------- -------- -------- Cash and Cash Equivalents, End of Period $ 16,357 $ 28,233 $ 25,509 -------- -------- --------
- -------------------------------------------------------------------------------- See notes to consolidated financial statements. F-5 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE A--ORGANIZATION AND NATURE OF OPERATIONS ICF Kaiser International, Inc. (ICF Kaiser or the Company) was formed on October 19, 1987, as a holding company for the ICF Kaiser family of companies developed and acquired. These companies provide engineering, construction, program management, and consulting services primarily to the public and private environmental, infrastructure, industry, and energy markets domestically and internationally. NOTE B--SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include all subsidiaries (including Kaiser-Hill Company, LLC, effective July 1, 1995) that are controlled by ICF Kaiser. Certain of ICF Kaiser's subsidiaries are partially owned by outside parties. For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of these subsidiaries are included in ICF Kaiser's consolidated financial statements and the outside parties' interests are reflected as minority interests. Investments in unconsolidated joint ventures and affiliated companies are accounted for using the equity method. The difference between the carrying value of investments accounted for under the equity method and the Company's underlying equity is amortized on a straight-line basis over the lives of the underlying assets. All significant intercompany balances and transactions have been eliminated. Significant Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Change in Fiscal Year: The Company changed from a fiscal year ending February 28 to a fiscal year ending December 31, effective December 31, 1995. As a result, the accompanying financial statements include consolidated operations for the ten months ended December 31, 1995 and for the years ended February 28, 1995 and 1994. Revenue Recognition: Revenue is recorded on cost-type contracts as costs are incurred. Revenue on time-and-materials contracts is recognized to the extent of billable rates times hours delivered plus materials expense incurred. Revenue on long-term, fixed-price contracts is recognized generally using the percentage-of-completion method and, therefore, includes a proportion of expected earnings based on costs incurred to total estimated costs. Foreign Currency Translation: Results of operations for foreign entities are translated using the average exchange rates during the period. Assets and liabilities are translated to U.S. dollars using the exchange rate in effect at the balance sheet date. Resulting translation adjustments are reflected in shareholders' equity as cumulative translation adjustment. Cash Equivalents and Restricted Cash: ICF Kaiser considers all highly liquid financial instruments purchased with original maturities of three months or less to be cash equivalents. Other assets as of December 31, 1995 and February 28, 1995 included $600,000 of restricted cash and short-term investments, which supported a letter of credit for one of ICF Kaiser's subsidiaries. Fixed Assets: Furniture and equipment are carried at cost, or fair value at acquisition if acquired through a purchase of a business, and are depreciated using the straight-line method over their estimated useful lives ranging from three to ten years. Leasehold improvements are carried at cost and are amortized using the straight-line method over the remaining lease term. - -------------------------------------------------------------------------------- F-6 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Goodwill: Goodwill represents the excess of cost over the fair value of the net assets of acquired businesses and is amortized using the straight- line method over periods ranging from five to 40 years. The Company evaluates the recoverability of goodwill on an annual basis by examining undiscounted operating income. Accumulated amortization was $12,785,000 and $11,148,000 at December 31, 1995 and February 28, 1995, respectively. Income Taxes: The Company provides for deferred income taxes using the liability method on temporary differences between financial reporting and income tax reporting, which primarily relate to reserves for adjustments and allowances. If necessary, management records a valuation allowance for deferred tax assets. The most significant permanent differences between book and taxable income are nondeductible goodwill amortization, minority interest earnings of a consolidated subsidiary, the effect of foreign taxes, and differences between the book and tax basis of businesses sold. Income taxes have not been provided for the undistributed earnings of the Company's foreign subsidiaries, because the Company intends to continue the operations and reinvest the undistributed earnings indefinitely. Undistributed earnings of foreign subsidiaries for which income taxes have not been provided amounted to approximately $5.7 million at December 31, 1995. Net Income (Loss) Per Common Share: Net income (loss) per common share is computed using net income (loss) available for common shareholders, as adjusted under the modified treasury stock method, and the weighted average number of common stock and common stock equivalents outstanding during the periods presented. Common stock equivalents include stock options and warrants and additional shares which will be or may be issued in connection with acquisitions. The adjustments required by the modified treasury stock method and for acquisition-related contingencies were anti-dilutive for all loss periods presented and immaterial to the income period presented. Therefore, the adjustments were excluded from earnings per share computations. Concentrations of Credit Risk: The Company maintains cash balances primarily in overnight Eurodollar deposits, investment-grade commercial paper, bank certificates of deposit, and U.S. government securities. ICF Kaiser grants uncollateralized credit to its customers. Approximately 64% of ICF Kaiser's contract receivables at December 31, 1995 are from the U.S. government (see Note D). When practical and in order to mitigate its credit risk to commercial customers, ICF Kaiser obtains advance funding of costs for industrial construction work. Long-Lived Assets: The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's current policy to evaluate all long-lived assets on a periodic basis for asset impairment. Therefore, upon formal adoption of this statement in 1996, management does not expect that there will be a material adverse effect on the Company's financial position or operations. Stock-Based Compensation: The FASB also recently issued Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), which encourages companies to adopt a fair value method of accounting for employee stock options and similar equity instruments. The fair value method requires compensation cost to be measured at the grant date based on the value of the award and is recognized over the service period. Alternatively, SFAS No. 123 requires the provision of pro forma disclosures of net income and earnings per share as if the fair value method had been adopted when the fair value method is not reflected in the financial statements. The Company has not yet determined whether it will adopt a fair value method of accounting for stock-based compensation or provide pro forma disclosures. The impact of the adoption of this statement on the financial statements cannot be reasonably estimated at this time. The requirements of SFAS No. 123 are effective for financial statements for fiscal years beginning after December 15, 1995. - -------------------------------------------------------------------------------- F-7 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Reclassifications: Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the December 31, 1995 financial statements. NOTE C--DIVESTITURES The Company sold a 20% interest in a subsidiary during the year ended February 28, 1995, resulting in a $551,000 pretax gain. During the year ended February 28, 1994, ICF Kaiser sold a portion of its energy engineering business, resulting in a $925,000 pretax loss. NOTE D--CONTRACT RECEIVABLES Contract receivables consist of the following (in thousands): - --------------------------------------------------------------------------------
December 31, February 28, 1995 1995 ------------ ------------ U.S. government agencies: Currently due $ 26,162 $ 36,752 Retention 1,870 2,026 Unbilled 123,890 34,273 -------- -------- 151,922 73,051 -------- -------- Commercial clients and state and municipal governments: Currently due 64,121 69,317 Retention 5,361 4,522 Unbilled 16,270 2,834 -------- -------- 85,752 76,673 -------- -------- 237,674 149,724 Less allowances for uncollectible receivables 9,435 9,864 -------- -------- $228,239 $139,860 ======== ========
- -------------------------------------------------------------------------------- U.S. government receivables arise from U.S. government prime contracts and subcontracts. The significant increase in the unbilled U.S. government receivables is due primarily to a contract between the U.S. Department of Energy (DOE) and Kaiser-Hill Company, LLC (Kaiser-Hill) to perform services at DOE's Rocky Flats Environmental Technology Site in Colorado. Unbilled receivables result from revenue that has been earned but was not billed as of the end of the period. The unbilled receivables can be invoiced at contractually defined intervals and milestones, as well as upon completion of the contract or the federal government cost audit. Generally, retention is not expected to be realized within one year; consistent with industry practice, these receivables are classified as current. Management anticipates that the remaining unbilled receivables will be substantially billed and collected within one year. - -------------------------------------------------------------------------------- F-8 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE E--JOINT VENTURES AND AFFILIATED COMPANIES ICF Kaiser has ownership interests in certain unconsolidated corporate joint ventures and affiliated companies. The Company's net investments in and advances to these corporate joint ventures and affiliated companies are summarized as follows (in thousands): - --------------------------------------------------------------------------------
Ownership Interest at December 31, December 31, February 28, 1995 1995 1995 ------------ ------------ ------------ Gary PCI Ltd. L.P. 50% $ 5,257 $ 4,315 LIFAC North America 50% 1,535 1,914 Other 20% to 50% 3,421 1,793 ------- ------- $10,213 $ 8,022 ======= =======
- -------------------------------------------------------------------------------- Combined summarized financial information of all of ICF Kaiser's corporate joint ventures and affiliated companies is as follows (in thousands): - --------------------------------------------------------------------------------
December 31, February 28, February 28, 1995 1995 1994 ------------ ------------ ------------ Current assets $19,082 $15,103 $27,041 Non-current assets 42,400 12,723 6,608 Current liabilities 31,703 15,875 19,034 Non-current liabilities 446 55 455 Gross revenue 41,262 52,616 51,282 Net income 6,606 8,430 8,908
- -------------------------------------------------------------------------------- F-9 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE F--LONG-TERM DEBT ICF Kaiser's long-term debt is as follows (in thousands): - --------------------------------------------------------------------------------
December 31, February 28, 1995 1995 ------------ ------------ 12% senior subordinated notes due 2003 $123,550 $125,000 Revolving credit facility (interest at 9.0% at December 31, 1995) 5,000 5,000 Other notes, with interest at varying rates, payable in installments through 1998 92 1,209 -------- -------- 128,642 131,209 Less unamortized discount on 12% senior 3,489 3,898 subordinated notes -------- -------- 125,153 127,311 Less current maturities 5,041 578 -------- -------- Long-term debt $120,112 $126,733 ======== ========
- -------------------------------------------------------------------------------- Scheduled maturities of long-term debt outstanding at December 31, 1995, are as follows: $5,041,000 in 1996, $21,000 in 1997, $30,000 in 1998, and $123,550,000 in 2003. On January 11, 1994, ICF Kaiser issued 125,000 Units, each Unit consisting of $1,000 principal amount of the Company's 12% Senior Subordinated Notes due 2003 (12% Notes) and 4.8 warrants, each to purchase one share of the Company's common stock at an exercise price of $5.00 per share. The warrants expire on December 31, 1998, and additional warrants may be issued under certain anti- dilution provisions. Of the net issue price of $121,487,500 ($125,000,000 less a $3,512,500 discount), $900,000 was allocated to the value of the 600,000 warrants and $120,587,500 to the 12% Notes. The net proceeds were used, in part, to retire the Company's 13.5% Senior Subordinated Notes due 1999 (13.5% Notes), to repurchase preferred stock, to repay the outstanding balance on the Company's then-existing revolving credit facility, and to repurchase warrants associated with the 13.5% Notes and preferred stock. The recapitalization resulted in a $6.0 million extraordinary charge (net of $0 tax benefit due to the unanticipated decline in fiscal 1994's fourth-quarter results) for the early extinguishment of debt and a $1.9 million charge to net income available for common shareholders to repurchase the Series 2C Senior Preferred Stock. In November 1995, the Company's insurance subsidiary repurchased 1,450 of the Units for $1.4 million. In March 1996, the interest rate on the 12% Notes was increased by one percent until the Company achieves and maintains a specified level of earnings (see Note I). - -------------------------------------------------------------------------------- F-10 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The Company's obligations under the 12% Notes are subordinate to its obligations under the Company's revolving credit facility. Interest payments are due semiannually. The 12% Notes may not be prepaid at the Company's option prior to December 31, 1998. Subsequent to that date, the Company may prepay the 12% Notes at a premium. In addition, the Company agreed to certain business and financial covenants, including restrictions on indebtedness, dividends, acquisitions, and certain types of investments and asset sales. At December 31, 1995, the fair value of the 12% Notes was approximately $116.4 million. The fair value was computed using an average of recently quoted market prices obtained from financial institutions. Net debt issuance costs of $3.8 million and $4.2 million associated with the 12% Notes are classified as other assets at December 31, 1995 and February 28, 1995, respectively, in the accompanying balance sheets. These costs and the discount on the 12% Notes are being amortized over the life of the notes. The Company has a $60 million revolving credit facility (the Credit Facility) provided by a consortium of banks (the Banks). ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the Credit Facility, granted the Banks a security interest in their accounts receivable and certain other assets. The Credit Facility limits the payment of cash dividends, requires the maintenance of specified financial ratios, and has a $20 million limitation on cash borrowings. Total available credit is determined from a borrowing base calculation based on accounts receivable. ICF Kaiser and the Banks entered into amendments in 1995 that modified financial ratios and other terms of the Credit Facility. As of December 31, 1995, there were $5.0 million in borrowings outstanding under the Credit Facility, in addition to letters of credit, and the Company had $23.5 million of available credit under the Credit Facility. The Credit Facility contains Eurodollar and alternate base interest rate alternatives with margins dependent upon the Company's financial operating results, and expires on October 31, 1996. The outstanding letters of credit were $7.1 million at December 31, 1995, and issued principally to support performance guarantees under certain contracts. One of the Company's subsidiaries has a $50 million receivables purchase facility to support the working capital requirements of the subsidiary under its contract. The receivables purchase facility requires the subsidiary to maintain a specified tangible net worth and contains certain default provisions for delinquent receivables. Program fees consist of 0.30% per annum of the unused portion of the facility and 0.45% per annum of the used portion of the facility. The receivables purchase facility is non-recourse to ICF Kaiser International, Inc. and expires on June 30, 1998. There are 275,088 common stock warrants that were issued with the 13.5% Notes that remained outstanding following the repurchase of the other warrants in January 1994. The warrants expire on May 15, 1999, and are exercisable at any time for shares of ICF Kaiser Common Stock at $6.87 per share. Additional warrants may be required to be issued under certain anti-dilution provisions. NOTE G--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. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. - -------------------------------------------------------------------------------- F-11 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe that there will be any material adverse effect on the Company's financial position, operations, or cash flows as a result of these investigations. The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of such audits, the government asserts, from time to time, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Management believes that the potential effect of disallowed costs, if any, for the periods currently under audit and for periods not yet audited, has been provided for adequately and will not have a material adverse effect on the Company's financial position, operations, or cash flows. - -------------------------------------------------------------------------------- F-12 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE H--INCOME TAXES The components of income (loss) before income taxes and minority interests and the related provision (benefit) for income taxes are as follows (in thousands): - -------------------------------------------------------------------------------- Ten Months Ended Year Ended February 28, December 31, ---------------------- 1995 1995 1994 ------- ------ -------- Income (loss) before income taxes, minority interests, and extraordinary item: Domestic $ 7,419 $1,217 $(11,894) Foreign (1,116) 22 (983) ------- ------ -------- $ 6,303 $1,239 $(12,877) ======= ====== ======== Provision (benefit) for income taxes: Federal: Current $ 171 $ 120 $ - Deferred 2,020 2,328 (652) ------- ------ -------- 2,191 2,448 (652) ------- ------ -------- State: Current 258 100 - Deferred 293 172 (62) ------- ------ -------- 551 272 (62) ------- ------ -------- Foreign: Current 409 180 365 Deferred (1,060) - - ------- ------ -------- (651) 180 365 ------- ------ -------- $ 2,091 $2,900 $ (349) ======= ====== ======== - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F-13 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The tax effects of the principal temporary differences and carryforwards that give rise to the Company's deferred tax asset are as follows (in thousands): - --------------------------------------------------------------------------------
December 31, February 28, 1995 1995 ------------ ------------ Reserves for adjustments and allowances $ 8,984 $ 8,507 Vacation and incentive compensation accruals 6,655 5,443 Litigation settlement (2,676) - Joint ventures (1,969) (1,610) Net operating loss carryforwards 711 2,247 Tax credit carryforwards 2,077 1,063 Other 1,482 1,233 ------- ------- Deferred income tax asset 15,264 16,883 Valuation allowance (3,330) (3,330) ------- ------- Deferred income tax asset, net $11,934 $13,553 ======= =======
- -------------------------------------------------------------------------------- Because of the reported losses for the year ended February 28, 1994, a $3.3 million valuation allowance was established in that year for deferred tax assets. Although the level of pretax income has increased substantially since that period (with a corresponding increase in taxable income), the Company has maintained the valuation allowance. At December 31, 1995, the Company had deferred tax assets of $0.7 million related to net operating loss carryforwards, of which $0.5 million expire within the next five years and $0.2 million expire in 2008. Additionally, the Company has deferred tax assets of $2.1 million related to tax credit carryforwards, the majority of which expire in 1998 to 2009. Management believes that the Company's expected levels of pretax earnings, when adjusted for nondeductible expenses such as goodwill amortization, will generate sufficient future taxable income to realize the $11.9 million deferred tax asset (net) within the next five years. - -------------------------------------------------------------------------------- F-14 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The effective income tax (benefit) rate varied from the federal statutory income tax rate because of the following differences: - --------------------------------------------------------------------------------
Ten Months Ended Year Ended February 28, December 31, ----------------------- 1995 1995 1994 ----------- ---------- ----------- Statutory tax rate (benefit) 34.0% 34.0% (34.0)% ----- ----- ------ Changes in tax rate (benefit) from: Goodwill amortization 11.7 69.9 9.9 Minority interest earnings of a consolidated subsidiary (11.0) - - Differences between book and tax basis of businesses sold - 7.4 7.3 State income taxes 5.8 14.5 (0.3) Foreign taxes (benefit) (9.2) 67.8 4.8 Valuation allowance - - 9.2 Business meals, entertainment, and dues 5.1 30.9 1.4 R&D credits (5.5) - - Subsidiary preferred dividends - 1.9 0.1 Adjustment of prior years' accruals 2.1 3.8 (2.4) Other 0.2 3.8 1.3 ----- ----- ------ (0.8) 200.0 31.3 ----- ----- ------ 33.2% 234.0% (2.7)% ===== ===== ======
- -------------------------------------------------------------------------------- One of the Company's consolidated subsidiaries, Kaiser-Hill, is a flow- through entity for tax purposes and is partially owned by an outside party. Accordingly, the provision for income taxes in the accompanying financial statements was computed based on the Company's taxable share of Kaiser-Hill's income. The tax rate effect of the outside party's share of income is reflected above as minority interest earnings of a consolidated subsidiary. Kaiser-Hill began operations during the ten months ended December 31, 1995. The tax provision for the year ended February 28, 1995 reflects the deemed dividend from the repatriation of overseas funds to the United States that currently could not be offset by foreign tax credits. For the past several years, the Company has had ongoing negotiations, filings, and litigation with the Internal Revenue Service (IRS) related to settlement of its tax liabilities and the liabilities associated with affiliates of acquired companies. During the year ended February 28, 1995, ICF Kaiser's 1989-1992 tax returns were accepted as filed, resulting in the receipt of refunds from the IRS with interest. An agreement also was reached with the IRS as to the amount of interest owed in connection with previously settled years (1977-1986). The overall impact on pretax earnings for the year ended February 28, 1995 was a reduction of net interest expense of $1.3 million related to interest refunds. - -------------------------------------------------------------------------------- F-15 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE I--PREFERRED STOCK Preferred Stock of the Company is as follows (in thousands): - --------------------------------------------------------------------------------
December 31, February 28, 1995 1995 ------------ ------------ Series 2D Senior Preferred Stock, par value $0.01 per share; liquidation value $20,000,000; 200 shares designated, issued, and outstanding $20,000 $20,000 Less unamortized discount, warrant value, and issue costs (213) (383) ------- ------- Redeemable Preferred Stock $19,787 $19,617 ======= =======
- -------------------------------------------------------------------------------- Series 2D Senior Preferred Stock: The Series 2D Senior Preferred Stock (Series 2D Preferred Stock) together with five-year detachable warrants (Series 2D Warrants) were issued in fiscal 1992 for a price of $20,000,000 (less a discount of $100,000). Of the net price of $19,900,000, $400,000 was allocated to the value of the warrants and $19,500,000 was allocated to the value of the stock. The value of the Series 2D Preferred Stock was reduced further by issue costs. Dividends on the Series 2D Preferred Stock are $9,750 per share per annum, cumulative. Each of the shares has a liquidation preference of $100,000 ($20 million in the aggregate). The issue carries voting rights equal to 2,380,952 shares of ICF Kaiser Common Stock. The Series 2D Preferred Stock may be redeemed at ICF Kaiser's option at 106.25% of the original price and is subject to mandatory redemption at liquidation value on January 13, 1997. Because of technical limitations on the payment of dividends contained in the Indenture governing the Company's 12% Notes (see Note F), the Company did not pay the November 30, 1995 and February 29, 1996 accrued dividends in the aggregate amount of $975,000. Dividends in arrears at December 31, 1995 were $487,500. If dividends are in arrears in excess of 100 days or redemption does not occur in January 1997, the holder of the Series 2D Preferred Stock will have the exclusive right to elect two additional directors and to prohibit or limit the Company from taking certain specified extraordinary actions without the holder's consent. In March 1996, the Company and the holders of the 12% Notes amended the Indenture to permit payment of all accrued but unpaid dividends (which were then paid) and all future dividends. As consideration for this amendment, the interest rate on the 12% Notes was increased by one percent from March 1996 until the Company achieves and maintains a specified level of earnings. The Series 2D Warrants expire in November 1997 and may be exercised for 2,680,952 shares of ICF Kaiser Common Stock at an exercise price of $6.90 per share. In lieu of exercising the warrants, the holder may, at the holder's option, require the Company to pay it cash or issue shares of ICF Kaiser's Common Stock equal to the difference between the current market price of the Company's common stock and 90% of the warrants' current exercise price. In the event that the Company cannot make a cash payment to the holder of the warrants without violating certain covenants contained in the Company's agreements relating to certain indebtedness, the Company will make such payment in common stock. Additional warrants may be issued under certain anti-dilution provisions. - -------------------------------------------------------------------------------- F-16 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Junior Preferred Stock: The Company has authorized 200 shares of Series 1 Junior Convertible Preferred Stock, par value $0.01 per share, with a liquidation value of $20,000,000 and 500,000 shares of Series 4 Junior Preferred Stock, par value $0.01 per share, with a liquidation value of $500,000. There were no shares issued or outstanding on either series as of December 31, 1995 and February 28, 1995. NOTE J--COMMON STOCK Notes Receivable Related to Common Stock: Notes receivable related to ICF Kaiser Common Stock pertain to promissory notes from certain current and former members of senior management in accordance with their compensation agreements collateralized by shares of ICF Kaiser Common Stock. Shareholder Rights Plan: The Shareholder Rights Plan (Rights Plan) is designed to provide the Board of Directors (the Board) with the ability to negotiate with a person or group that might, in the future, make an unsolicited attempt to acquire control of ICF Kaiser, whether through the accumulation of shares in the open market or through a tender offer that does not offer an adequate price. The Rights Plan provides for one Right (Right) for each outstanding share of ICF Kaiser Common Stock. Each Right entitles the holder to purchase 1/100 of a share of Series 4 Junior Preferred Stock at a purchase price of $50. The Rights generally may cause substantial dilution to a person or group that attempts to acquire the Company on terms not approved by the Board. The Rights should not interfere with any merger or other business combination approved by the Board because the Board may, at its option, following the acquisition by any person or group of 20% of the outstanding shares of ICF Kaiser Common Stock, redeem the Rights upon payment of the redemption price of $0.01 per Right. The Rights are not triggered by the acquisition of beneficial ownership of more than 20% of ICF Kaiser Common Stock by the initial holder of the Series 2D Preferred Stock. Unless redeemed earlier by the Board, unexercised Rights expire on January 13, 2002. Other: At December 31, 1995, ICF Kaiser was obligated to issue 396,167 shares of the Company's common stock pursuant to an agreement with a former employee. Accordingly, this liability has been recognized in the accompanying financial statements. The shares were issued in March 1996. 275,000 of these shares are being held by the Company pursuant to a pledge agreement as security for an amount receivable from the former employee. - -------------------------------------------------------------------------------- F-17 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE K--LEASES Future minimum payments on noncancelable operating leases for office space and on other noncancelable operating leases with initial or remaining terms in excess of one year are as follows on December 31, 1995 (in thousands): - --------------------------------------------------------------------------------
1996 $ 24,066 1997 19,949 1998 17,366 1999 15,701 2000 12,586 Thereafter 20,312 --------- $ 109,980 =========
- -------------------------------------------------------------------------------- The total rental expense for all operating leases was $24,950,000, $31,176,000, and $30,833,000 for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994, respectively. Sublease rental income was $3,189,000, $3,944,000, and $2,225,000, for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994, respectively. Minimum future sublease rentals to be received under noncancelable subleases during 1996 are approximately $1,967,000. NOTE L--STOCK OPTIONS The ICF Kaiser Stock Incentive Plan provides for the issuance of options, stock appreciation rights, restricted shares, and restricted stock units of up to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock. Awards are made to employees of ICF Kaiser at the discretion of the Compensation Committee of the Board. The plan provides that the option price is not to be less than the fair market value on the date of grant. Stock option activity under this plan and other options granted for the periods indicated is as follows: - -------------------------------------------------------------------------------- F-18 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Shares Option Price --------- --------------- Balance, March 1, 1993 1,946,000 $5.99 to $17.00 Granted 390,000 $4.17 to $ 6.79 Canceled (10,000) $8.25 to $12.83 Expired (30,000) $5.04 to $12.83 --------- Balance, February 28, 1994 2,296,000 $4.17 to $17.00 Granted 824,000 $2.34 to $ 4.41 Canceled (453,000) $2.64 to $16.23 Expired (250,000) $4.41 to $16.23 --------- Balance, February 28, 1995 2,417,000 $2.34 to $17.00 Granted 678,000 $3.50 to $ 4.42 Canceled (257,000) $8.25 Expired (382,000) $2.64 to $16.23 Exercised (4,000) $2.64 to $ 2.68 --------- Balance, December 31, 1995 2,452,000 $2.34 to $17.00 ========= Exercisable at December 31, 1995 1,090,000 $2.34 to $17.00 ========= - -------------------------------------------------------------------------------- At December 31, 1995, 1,985,835 shares were available for the granting of options. There were 242,000 exercisable options outstanding at an option price below the fair market value of ICF Kaiser Common Stock at December 31, 1995. In March 1995, the Company canceled 257,000 options granted to employees at an exercise price of $8.25 and granted 86,000 options to them at an exercise price of $4.09. - -------------------------------------------------------------------------------- F-19 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE M--EMPLOYEE BENEFIT PLANS ICF Kaiser and certain of its subsidiaries sponsor a number of benefit plans covering substantially all employees who meet minimum length of service requirements. These plans include the ICF Kaiser International, Inc. Retirement Plan (Retirement Plan), a defined-contribution profit sharing plan that provides for contributions by the Company based on a percentage of covered compensation; the ICF Kaiser International, Inc. Section 401(k) Plan (401(k) Plan), a cash or deferred-compensation arrangement that allows employees to defer portions of their salary, subject to certain limitations; and the ICF Kaiser International, Inc. Employee Stock Ownership Plan (ESOP) under which the Company made contributions based on a percentage of covered compensation. Effective March 1, 1993, the Company made contributions equal to 20% of the first 4% of employee contributions to the 401(k) Plan and 2% of covered compensation to the ESOP. Effective March 1, 1994, the Company increased its matching contribution to the 401(k) Plan to 50% of the first 4% of employee contributions and discontinued contributions to the ESOP. Total expense for these plans for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994 was $5,711,000, $6,466,000, and $8,041,000, respectively. As of December 31, 1995, the Retirement Plan, 401(k) Plan, and ESOP owned 1,036,437, 175,937, and 2,104,240 shares, respectively, of ICF Kaiser Common Stock. Certain of the Company's employees are covered by union-sponsored, collectively bargained, multi-employer pension plans. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or terms of the plans. Pension expense for these plans was $3,676,000, $2,525,000, and $2,150,000 for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994, respectively. NOTE N--OTHER POSTRETIREMENT BENEFITS The Company provides certain postretirement benefits to a limited group of retirees. The cost of these benefits is funded when paid and limited to a fixed amount per participant. The Company adopted Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, as of March 1, 1993, and recorded the transition obligation on the delayed recognition basis. The funded status of the plan is as follows (in thousands): - --------------------------------------------------------------------------------
December 31, February 28, 1995 1995 ------------ ------------ Accumulated postretirement benefit obligation (APBO) $ 7,843 $ 9,537 Unamortized transition obligation (11,427) (12,257) Unrecognized net gain 5,554 4,121 -------- -------- Accrued postretirement benefit cost $ 1,970 $ 1,401 ======== ========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F-20 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The net periodic postretirement benefit cost consists of the following (in thousands): - -------------------------------------------------------------------------------- Ten Months Ended Year Ended February 28, December 31, ----------------------- 1995 1995 1994 ------------ ------ ------ Interest cost $ 541 $ 920 $ 938 Amortization of transition obligation 830 980 981 Amortization of unrecognized net gain (214) - - ------ ------ ------ Net periodic postretirement benefit cost $1,157 $1,900 $1,919 ====== ====== ====== - -------------------------------------------------------------------------------- All service cost related to the participants' benefits was included in the transition obligation. The discount rate at both December 31, 1995 and February 28, 1995 was 7%. The 1995 health care cost trend rate is 5%, effective until 2008 when the cost will be in excess of the Company's maximum obligation. If the trend rate was increased by 1% for each year, the APBO as of December 31, 1995 would increase by approximately 3%. Due to changes in assumptions made, including reductions in premiums paid by the Company, the APBO was reduced by approximately $1.6 million during the ten months ended December 31, 1995. These reductions in the APBO will be amortized over the average remaining life expectancy of the plan's participants. NOTE O--BUSINESS SEGMENT, MAJOR CUSTOMERS, AND FOREIGN OPERATIONS Business Segment: ICF Kaiser operates predominantly in one industry segment in which it provides engineering, construction, program management, and consulting services. Major Customers: Gross revenue from major customers is as follows (in thousands): - -------------------------------------------------------------------------------- Ten Months Ended Year Ended February 28, December 31, ----------------------- 1995 1995 1994 ------------ ---------- -------- U.S. Department of Energy $623,149 $517,478 $312,889 U.S. Environmental Protection Agency 55,527 62,783 63,109 Other U.S. government agencies 41,182 44,969 49,105 -------- -------- -------- Total U.S. government $719,858 $625,230 $425,103 ======== ======== ======== - -------------------------------------------------------------------------------- F-21 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Foreign Operations: Gross revenue and operating income from foreign operations and foreign assets of all consolidated subsidiaries and branches were as follows (in thousands): - -------------------------------------------------------------------------------- Ten Months Ended Year Ended February 28, December 31, ------------------------ 1995 1995 1994 -------- -------- -------- Foreign gross revenue: Europe $ 14,237 $ 16,758 $ 11,600 Pacific 28,002 35,189 21,997 Other 1,189 2,122 2,793 -------- -------- -------- 43,428 54,069 36,390 Domestic gross revenue 873,316 807,449 615,267 -------- -------- -------- Total gross revenue $916,744 $861,518 $651,657 ======== ======== ======== Foreign operating income (loss): Europe $ 1,426 $ 2,600 $ 1,742 Pacific 2,511 (350) (1,899) Other 20 (44) (255) -------- -------- -------- 3,957 2,206 (412) Domestic operating income (loss) 13,548 11,482 (4,818) -------- -------- -------- Total operating income (loss) $ 17,505 $ 13,688 $ (5,230) ======== ======== ======== Foreign assets: Europe $ 12,905 $ 9,950 $ 6,410 Pacific 11,024 14,813 14,626 Other 137 182 14 -------- -------- -------- 24,066 24,945 21,050 Domestic assets 345,451 256,477 260,148 -------- -------- -------- Total assets $369,517 $281,422 $281,198 ======== ======== ======== - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F-22 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE P--UNUSUAL ITEMS During the ten months ended December 31, 1995, the Company recorded $0.5 million in additional income (net), consisting of the following unusual items: income in settlement of litigation against the IRS, associated with an affiliate of an acquired company, net of an accrual for related expenses ($6.8 million); a charge to accrue the net settlement cost and legal expenses of other litigation ($4.6 million); a charge to accrue for severance for the termination of 110 employees in the engineering and international groups ($1.0 million); and a charge to accrue for consolidation of office space ($0.7 million). As a part of management's continuing efforts to identify areas in which costs can be reduced, the Company has chosen to terminate a group of underutilized employees and consolidate office space. Management expects that all actions associated with the termination of employees and office space consolidation will be completed by December 31, 1996. During the year ended February 28, 1994, the Company completed a corporate reorganization, performed a comprehensive review of its key business lines and its cost structure, and designed and implemented action plans intended to return the Company to long-term profitability. As a result, the Company recorded an $8.7 million pretax charge to cover the cost of downsizing the work force ($2.5 million), consolidating office space and renegotiating significant leases ($5.1 million), and restructuring certain international operations ($1.1 million). All actions have been completed, and there is no further liability outstanding as of December 31, 1995 associated with this plan. NOTE Q--SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information is as follows (in thousands): - --------------------------------------------------------------------------------
Ten Months Ended Year Ended February 28, December 31, ------------------------ 1995 1995 1994 -------- -------- -------- Cash payments for interest $ 7,898 $ 14,961 $ 10,565 Cash payments (refunds) for income taxes 1,306 (1,026) (106) Non-cash transactions: Issuance of common stock in connection with an acquisition 765 - - Decrease of ESOP guaranteed bank loan - - (5,000) Sale of investment - 735 2,600
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F-23 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE R--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial information for full fiscal quarters for the ten months ended December 31, 1995 and the year ended February 28, 1995 is presented in the following tables (in thousands, except per share amounts): - --------------------------------------------------------------------------------
Ten Months Ended December 31, 1995: Third Second First Quarter Quarter Quarter -------- -------- ------- Gross revenue $319,870 $268,274 $192,983 Service revenue $147,391 $117,645 $105,498 Operating income $ 5,815 $ 5,497 $ 3,762 Net income $ 896 $ 575 $ 163 Primary and fully diluted net income (loss) per common share $ 0.02 $ 0.00 $ (0.02) Market price per share: High $ 4.75 $ 4.63 $ 5.00 Low $ 3.25 $ 3.75 $ 3.75
Year Ended February 28, 1995: Fourth Third Second First Quarter Quarter Quarter Quarter -------- -------- -------- -------- Gross revenue $206,154 $235,912 $208,961 $210,491 Service revenue $111,372 $125,345 $109,919 $113,150 Operating income $ 3,234 $ 2,962 $ 3,273 $ 4,219 Net income (loss) $ (943) $ (323) $ (613) $ 218 Primary and fully diluted net income (loss) per common share $ (0.07) $ (0.04) $ (0.05) $ (0.02) Market price per share: High $ 4.38 $ 4.13 $ 2.63 $ 3.88 Low $ 2.63 $ 2.38 $ 2.00 $ 2.25
- -------------------------------------------------------------------------------- At February 29, 1996 there were 21,398,053 shares of common stock outstanding held by 1,356 holders of record. - -------------------------------------------------------------------------------- F-24 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE S--COMPARATIVE STATEMENT OF OPERATIONS INFORMATION (UNAUDITED) Unaudited operating results for the ten months ended December 31, 1994 are as follows (in thousands): - -------------------------------------------------------------------------------- GROSS REVENUE $ 732,370 Subcontract and direct material costs (343,369) Equity in income of joint ventures and affiliated companies 2,995 --------- SERVICE REVENUE 391,996 OPERATING EXPENSES Direct cost of services and overhead 337,120 Administrative and general 34,292 Depreciation and amortization 7,688 --------- OPERATING INCOME 12,896 OTHER INCOME (EXPENSE) Gain on sale of investment 551 Interest income 1,492 Interest expense (12,138) --------- INCOME BEFORE INCOME TAXES 2,801 Income tax provision 2,962 --------- NET LOSS $ (161) ========= - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F-25 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES (in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ---------------------------------------------------------------------------------------------------------------------- Additions ------------------------ Balance at Charged to Balance at beginning costs and end of Description of period expenses Other Deductions period - ---------------------------------------------------------------------------------------------------------------------- Ten months ended December 31, 1995: Deducted from asset account Allowance for doubtful accounts $9,864 $601 $62 (4) $1,092 (1) $9,435 Deducted from asset account and included in other liabilities Provision for future losses on contracts 843 1,119 545 (5) 233 (3) 2,274 -------------------------------------------------------------------------- $10,707 $1,720 $607 $1,325 $11,709 ========================================================================== Year ended February 28, 1995: Deducted from asset account Allowance for doubtful accounts $10,197 $1,406 -- $1,739 (1) $9,864 Deducted from asset account and included in other liabilities Provision for future losses on contracts 179 664 -- -- 843 -------------------------------------------------------------------------- $10,376 $2,070 -- $1,739 $10,707 ========================================================================== Year ended February 28, 1994: Deducted from asset account Allowance for doubtful accounts $8,977 $2,509 -- $1,289 (2) $10,197 Included in other liabilities Provision for future losses on contracts 464 -- -- 285 (3) 179 -------------------------------------------------------------------------- $9,441 $2,509 -- $1,574 $10,376 ==========================================================================
(1) Reflects amounts written of against the allowance and related accounts receivable accounts and settlement of doubtful accounts. (2) Reflects amounts written off against the allowance and related accounts receivable accounts. (3) Reflects losses charged against the provision for contract losses. (4) Reflects net allowance for doubtful accounts from the purchase of a subsidiary. (5) Reflects provision for future contract losses provided for in connection with the purchase of a subsidiary. S-1 EX-4.A4 2 EXHIBIT 4(A)(4) Exhibit 4(a)(4) THIS FOURTH SUPPLEMENTAL INDENTURE, dated as of March 8, , 1996, by and among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"), ICF KAISER GOVERNMENT PROGRAMS, INC., a Delaware corporation ("ICFK-GP" or the "Guarantor"), and THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"). WITNESSETH: WHEREAS, the Company, the Guarantor, and the Trustee have heretofore executed and delivered an Indenture dated as of January 11, 1994 as supplemented, (the "Indenture"), for the purpose of issuing Notes. Capitalized terms used herein and not otherwise defined herein are used as defined in the Indenture. WHEREAS, Section 10.02 of the Indenture provides that with the written consent of the Holders of at least a majority in principal amount of the then- outstanding Notes, the Company, the Guarantor, and the Trustee for the Notes may amend the Indenture (such amendment hereinafter referred to as a supplemental indenture). WHEREAS, the Company has obtained the written consent of the Holders of at least a majority of the outstanding Notes as of March 8, 1996, to amend Section 5.06(b)(H) of the Indenture, with such amendment to be effectuated by a supplemental indenture hereinafter referred to as the Fourth Supplemental Indenture to the Indenture. WHEREAS, upon the request of the Company and the Guarantor, accompanied by resolutions of the Boards of Directors of the Company and the Guarantor authorizing the execution of the Fourth Supplemental Indenture, and upon the filing with the Trustee of evidence of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 10.06, the Trustee shall join with the Company and the Guarantor in the execution of the Fourth Supplemental Indenture. WHEREAS, the Company and the Guarantor have determined that it is desirable to enter into this Fourth Supplemental Indenture; and WHEREAS, the execution and delivery of this Fourth Supplemental Indenture have been duly authorized by Resolutions of the Boards of Directors of the Company and of the Guarantor, and the Company and the Guarantor have requested the Trustee to join with them in the execution of this Fourth Supplemental Indenture; and WHEREAS, the Trustee has accepted the trusts created by this Fourth Supplemental Indenture and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH, that, in consideration of the premises and of acceptance by the Trustee of the trusts created hereby and by the Indenture, and also for and in consideration of the sum of One Dollar to the Company duly paid by the Trustee at or before the execution and delivery of this Fourth Supplemental Indenture, the receipt of which is hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among the Company, the Guarantor, and the Trustee, as follows: 1. Terms defined in the Indenture are used herein as therein defined. 2. Section 5.06(b)(H) of the Indenture is hereby deleted in its entirety, and the following new Section 5.06(H) of the Indenture shall be substituted therefor: (H) the Company from (1) making all regular quarterly dividends, each such quarterly dividend payment not to exceed $487,500 in the aggregate or $2,437.50 per share, on the outstanding shares of the Company's Series 2D Senior Preferred Stock; and (2) making all payments of any dividends of up to 9.75% on the aggregate unpaid amount of any regular quarterly dividend on the outstanding shares of the Company's Series 2D Senior Preferred Stock from the date such regular quarterly dividend should have been paid to the date of the payment of such dividend; in consideration thereof, and except as provided below, the ------------------------------------------------------ Company shall increase the Interest payable on the Notes by one percent (1%) (the "Additional Interest") from March 8, 1996, such Additional Interest payable as provided for in the Notes. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company will measure its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. 3. The following sundry provisions shall be a part of this Fourth Supplemental Indenture: Section 3.01. Effect of Supplemental Indenture. Upon the -------------------------------- execution and delivery of this Fourth Supplemental Indenture by the Company and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Fourth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. Section 3.02. Indenture Remains in Full Force and Effect. ------------------------------------------ Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. Section 3.03. Indenture and Fourth Supplemental Indenture Construed ----------------------------------------------------- Together. This Fourth Supplemental Indenture is an Indenture supplemental to - --------- and in implementation of the Indenture, and the Indenture and this Fourth Supplemental Indenture shall henceforth be read and construed together. Section 3.04. Confirmation and Preservation of Indenture. The ------------------------------------------ Indenture as supplemented by this Fourth Supplemental Indenture is in all respects confirmed and preserved. Section 3.05 Conflict with Trust Indenture Act. If any --------------------------------- provision of this Fourth Supplemental Indenture limits, qualifies, or conflicts with any provision of the Trust Indenture Act that is required under such Act to be part of and govern any provision of this Fourth Supplemental Indenture, the provision of such Act shall control. If any provision of this Fourth Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of such Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Fourth Supplemental Indenture, as the case may be. Section 3.06 Separability Clause. In case any provision in this ------------------- Fourth Supplemental Indenture shall be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 3.07 Terms Defined in the Indenture. All capitalized ------------------------------ terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. Section 3.08 Effect of Headings. The Article and Section ------------------ headings herein are for convenience only and shall not affect the construction hereof. Section 3.09 Benefits of Fourth Supplemental Indenture, etc. ----------------------------------------------- Nothing in this Fourth Supplemental Indenture, the Indenture, or the Notes, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Notes, any benefit of any legal or equitable right, remedy, or claim under the Indenture, this Fourth Supplemental Indenture, or the Notes. Section 3.10 Successors and Assigns. All covenants and agreements ---------------------- in this Fourth Supplemental Indenture by the Company and the Guarantor shall bind their successors and assigns, whether so expressed or not. Section 3.11 Trustee Not Responsible for Recitals. The recitals ------------------------------------ contained herein shall be taken as the statements of the Company and the Guarantor, and the Trustee assumes no responsibility for their correctness. Section 3.12 Certain Duties and Responsibilities of the Trustee. --------------------------------------------------- In entering into this Fourth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided. Section 3.13 Governing Law. This Fourth Supplemental Indenture ------------- shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law principles thereof. Section 3.14 Counterparts. This Fourth Supplemental Indenture ------------ may be executed in counterparts, each of which, when so executed, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, and the Company, the Guarantor, and the Trustee have caused their respective corporate seals to be hereunto affixed and attested, all as of March 8, 1996. EX-10.A5 3 EXHIBIT 10(A)(5): 5TH AMNDMNT TO CREDIT AGRMNT EXHIBIT 10(a)(5) FIFTH AMENDMENT FIFTH AMENDMENT, dated as of November 30, 1995 (this "Amendment"), to the Credit Agreement, dated as of December 8, 1993 (as amended prior to the date hereof and as further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among ICF KAISER INTERNATIONAL, INC. a Delaware corporation (the "Borrower"), the lenders parties thereto (the "Lenders") and CHEMICAL BANK, a New York banking corporation, as agent (in such capacity, the "Agent"). WITNESSETH: WHEREAS, the Company, the Lenders and the Agent are parties to the Credit Agreement; and WHEREAS, the Company has requested that the Lenders and the Agent agree to amend certain provisions of the Credit Agreement, and the Lenders and the Agent are agreeable to such request upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other valuable consideration the receipt of which is hereby acknowledged, the Company, the Lenders and the Agent hereby agree as follows: 1. Definitions. All terms defined in the Credit Agreement shall have such defined meanings when used herein unless otherwise defined herein. 2. Amendment of Subsection 7.1. (a) Subsection 7.1 of the Credit Agreement is hereby amended by deleting such subsection 7.1 in its entirety and inserting in lieu thereof the following new subsection 7.1: "7.1 Financial Condition Covenants. (a) Fixed Charge Coverage. Permit, for each of (i) the fiscal quarters ending on each of February 28, 1995 and May 31, 1995, (ii) the period of two consecutive fiscal quarters ending on August 31, 1995, (iii) the period of three consecutive fiscal quarters ending on November 30, 1995, (iv) the period, ending on the Company's new fiscal year-end of December 31, 1995, comprised of the three consecutive fiscal periods ending on November 30, 1995 and the calendar month of December, 1995, (v) the fiscal period commencing on March 1, 1995 and ending on March 31, 1996, (vi) the fiscal period commencing on June 1, 1995 and ending on June 30, 1996, (vii) the fiscal period commencing on September 1, 1995 and ending on September 30, 1996, (viii) the fiscal period commencing on December 1, 1995 and ending on December 31, 1996, and (xi) each period of four consecutive fiscal quarters ending thereafter, the ratio of (i) sum of (A) Adjusted Consolidated Net Income for such period plus (B) Consolidated Lease Expense for such period minus (C) Capital Expenditures for such period to (ii) the sum of (A) Consolidated Fixed Charges for such period plus (B) the aggregate amount of dividends paid in cash on shares of each class of preferred Capital Stock of the Borrower during such period, to be less than the ration set forth opposite such Test Period below:
Fixed Charge Period Ending Coverage Ratio February 28, 1995 1.00:1.00 May 31, 1995 1.00:1.00 August 31, 1995 1.05:1.00 December 31, 1995 1.10:1.00 March 31, 1996 1.15:1.00 Thereafter 1.20:1.00
(b) Interest Coverage. Permit, for each of (i) the fiscal quarters ending on each of February 28, 1995 and May 31, 1995, (ii) the period of two consecutive fiscal quarters ending on August 31, 1995, (iii) the period of three consecutive fiscal quarters ending on November 30, 1995, (iv) the period, ending on the Company's new fiscal year-end of December 31, 1995, comprised of the three consecutive fiscal periods ending on November 30, 1995 and the calendar month of December, 1995, (v) the fiscal period commencing on March 1, 1995 and ending on March 31, 1996, (vi) the fiscal period commencing on September 1, 1995 and ending on December 31, 1996, and (xi) each period of four consecutive fiscal quarters ending thereafter, the ratio (the "Interest Coverage Ratio") of (A) Adjusted Consolidated Net Income for such period to (B) Consolidated Interest Expense for such period, to be less than the ratio set forth opposite the last day of such period below:
Interest Period Ending Coverage Ratio February 28, 1995 1.40:1.00 May 31, 1995 1.45:1.00 August 31, 1995 1.50:1.00 December 31, 1995 1.60:1.00 March 31, 1996 1.80:1.00 Thereafter 2.00:1.00
(c) Consolidated Funded Indebtedness to Consolidated Capital Funds. Permit the ratio of Consolidated Funded Indebtedness to Consolidated Capital Funds on the last day of any fiscal quarter ending during any "Test Period" set forth below to be greater than the ratio set forth opposite such period below:
Test Period Ratio Closing Date through May 31, 1994 .76:1.0 June 1, 1994 through November 30, 1994 .75:1.0 December 1, 1994 through August 31, 1995 .78:1.0 September 1, 1995 through December 31, 1995 .77:1.0 January 1, 1996 through March 31, 1996 .76:1.0 Thereafter .75:1.0"
3. Interpretation. For avoidance of doubt in connection with delivery of Applicable Margin Certificates, quarterly financial reports, and certain representations and warranties, references in the Credit Agreement to the "most recently ended" fiscal quarter or period (or similar formulation) shall, after November 30, 1995 and before December 31, 1995, refer to the fiscal year period ended on such date. Financial statements will be delivered both for the fiscal quarter ended November 30, 1995, and for the fiscal year period ending December 31, 1995. 4. Representations; No Default. On and as of the date hereof, and after giving effect to this Amendment, the Company confirms, reaffirms and restates that the representations and warranties set forth in Section 4 of the Credit Agreement and in the other Loan Documents are true and correct in all material respects, provided that the references to the Credit Agreement therein shall be deemed to be references to this Amendment and to the Credit Agreement as amended by this Amendment. 5. Conditions to Effectiveness. This Amendment shall become effective on and as of the date (the "Amendment Effective Date") that the Agent shall have received counterparts of this Amendment, duly executed and delivered by a duly authorized officer of each of the Company, the Agent, and the Required Lenders, along with the written consent of each Subsidiary Guarantor in the form attached hereto. 6. Limited Amendment. Except as expressly waived and amended herein, the Credit Agreement shall continue to be, and shall remain, in full force and effect. This Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document or to prejudice any other right or rights which the Lenders may now have or may have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein, as the same may be amended from time to time. 7. Costs and Expenses. The Company agrees to pay or reimburse the Agent for all its reasonable and customary out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of this Amendment, and the consummation of the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of its counsel. 8. Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. EX-10.B2 4 EXHIBIT 10(B)(2): ESOP EXHIBIT 10(b)(2) EMPLOYEE STOCK OWNERSHIP PLAN ----------------------------- Amendment No. 2 dated December 15, 1995 1. Sections 1.2 and 1.35 of the Plan are amended by substituting "December" for "February", and by adding at the end thereof: There shall be a short Plan Year beginning March 1, 1995 and ending December 31, 1995 2. Section 1.46 of the Plan is amended by substituting "Vanguard Fiduciary Trust Company" for the named individual trustees, effective August 31, 1995. 3. Section 1.47 of the Plan is deleted in its entirety, and the following language is substituted therefor, effective August 31, 1995: 1.48 "Valuation Date" shall mean the most current date with respect to which the Trustee determines the fair value of the assets comprising the Trust or any portion thereof, in accordance with the Trustee's procedures, as they may be amended from time to time, provided, however, that a Valuation Date shall occur at least once per Plan Year. Under current procedures, a Valuation Date generally occurs on each business day of the Trustee. 4. Section 2.1 of the Plan is amended by adding the following sentence at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending on December 31, 1995, the 1,000 Hours of Service requirement shall be satisfied by completion of the 648 Hours of Service. 5. Section 3.5 of the Plan is amended by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending on December 31, 1995, a Participant shall be credited with a Year of Service if his Period of Service includes December 31, 1995. 6. Section 4.1 of the Plan is amended by adding at the end thereof: When a contribution is made in a form other than cash, until such contribution is reduced to cash, a Participant's Account shall contain an allocable share of such contribution, provided that an allocation of Company Stock shall be in whole shares, with the value of any fractional shares to be allocated in cash. For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, a Participant shall satisfy the 1,000 Hours of Service requirement if he has completed 648 Hours of Service. 7. Section 4.4 of the Plan is amended by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, the limits under (S)415 shall be pro-rated as required under the applicable regulations. 8. Section 7.1 of the Plan is hereby amended by deleting the phrase "including fractional shares" and by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, a Participant who has completed 648 Hours of Service shall satisfy the 1,000 Hours of Service requirement. 9. Section 7.3 of the Plan is further amended by adding the following language at the end thereof: Notwithstanding any other provision of the Plan, the Trustee may credit the contribution for a Plan Year as of the date such contribution is actually received by the Trustee, subject to any required approval by the Internal Revenue Service. 10. Section 8.4(a) of the Plan is amended by deleting the second sentence thereof and substituting the following language therefor, effective August 31, 1995: The Vested portion of a Participant's Account shall be computed as soon as practicable after receipt of authorized distribution instructions, as of the applicable Valuation Date under the Trustee's procedures, as they may be amended from time to time. 11. Section 9.7 of the Plan is hereby amended by deleting the last sentence of subsection (a) thereof and substituting the following therefor: In the absence of receipt of such written direction with respect to any such shares three (3) business days before the exercise of any shareholder rights, the Committee shall vote any allocated but uninstructed shares in the exercise of its sole discretion. 12. Section 9.7(d) of the Plan is amended by adding the following language at the end thereof: In the absence of receipt of such written direction three (3) business days prior to the exercise of such shareholder rights, the Committee shall exercise such rights in its sole discretion. 13. A restatement to reflect these changes, and other amendments since April 24, 1995, is authorized; any conforming changes to the Plan Trust are also authorized. EX-10.D2 5 EXHIBIT 10(D)(2): RETIREMENT PLAN EXHIBIT 10(d)(2) RETIREMENT PLAN --------------- Amendment No. 2 dated December 15, 1995 1. Sections 1.2 and 1.36 of the Plan are amended by substituting "December" for "February", and by adding at the end thereof: There shall be a short Plan Year beginning March 1, 1995 and ending December 31, 1995 2. Section 1.47 of the Plan is amended by substituting "Vanguard Fiduciary Trust Company" for "U.S. Trust Company of California, N.A.", effective August 31, 1995. 3. Section 1.48 of the Plan is deleted in its entirety, and the following language is substituted therefor, effective August 31, 1995: 1.48 "Valuation Date" shall mean the most current date with respect to which the Trustee determines the fair value of the assets comprising the Trust or any portion thereof, in accordance with the Trustee's procedures, as they may be amended from time to time, provided, however, that a Valuation Date shall occur at least once per Plan Year. Under current procedures, a Valuation Date generally occurs on each business day of the Trustee. 4. Section 2.1 of the Plan is amended by adding the following sentence at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending on December 31, 1995, the 1,000 Hours of Service requirement shall be satisfied by completion of 648 Hours of Service. 5. Section 3.5 of the Plan is amended by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending on December 31, 1995, a Participant shall be credited with a Year of Service if his Period of Service includes December 31, 1995. 6. Section 4.1 of the Plan is amended by deleting the last sentence thereof and substituting the following language therefor: When a contribution is made in a form other than cash, until such contribution is reduced to cash, a Participant's Account shall contain an allocable share of such contribution, provided that an allocation of Company Stock shall be in whole shares, with the value of any fractional shares to be allocated in cash. For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, a Participant shall satisfy the 1,000 Hours of Service requirement if he has completed 648 Hours of Service. 7. Section 4.4 of the Plan is amended by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, the limits under (S)415 shall be pro-rated as required under the applicable regulations. 8. Section 6.1 of the Plan is amended by deleting it in its entirety and substituting the following language therefor, effective as soon as practicable after the adoption of this amendment: Participants may direct the investment of assets in their Account in specific investments that have been approved by the Committee, in accordance with procedures provided by the Trustee and authorized by the Committee, except for assets that have been contributed in a form other than cash, and have not been reduced to cash. Participants' Accounts shall be invested as directed by each Participant in Directed Investment Sub-Accounts, which shall be charged or credited as appropriate with the net earnings, gains, losses and expenses as well as appreciation or depreciation in market value during each Plan Year attributable to such Sub-Accounts. Such amounts shall not be considered in determining Trust gains or losses, apart from such Sub-Accounts. 9. Section 6.2 of the Plan is hereby amended by deleting the first sentence thereof and substituting the following language therefor: A Participant may notify the Committee in writing on such form and in such manner as determined by the Committee that he elects to have that portion of his Account available for investment direction invested in whole shares of the stock of the Company, to be held under the Plan in the ICF Stock Fund, and the Committee shall direct the Trustee to invest such portion accordingly at such time and on such terms as the Committee may determine. 10. Section 7.1 of the Plan is hereby amended by deleting the phrase "including fractional shares" and by adding the following language at the end thereof: For the purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, a Participant who has completed 648 Hours of Service shall satisfy the 1,000 Hours of Service requirement. 11. Section 7.2 of the Plan is hereby amended by deleting the first sentence thereof and substituting the following language therefor, effective August 31, 1995: A Valuation Date occurs as of each Anniversary Date, and more frequently in accordance with the procedures of the Trustee, which currently generally provide a Valuation Date on each business day of the Trustee. 12. Section 7.2 of the Plan is further amended by adding the following language at the end thereof: Notwithstanding any other provision of the Plan, the Trustee may credit the contribution for a Plan Year as of the date such contribution is actually received by the Trustee, subject to any required approval by the internal Revenue Service. 13. Section 7.6(b) of the Plan is hereby amended effective August 31, 1995, by deleting the phrase "allocated to his Account for" and substituting therefor "contributed to his Account during". 14. Section 8.4(a) of the Plan is amended by deleting the second sentence thereof and substituting the following language therefor, effective August 31, 1995: The Vested portion of a Participant's Account shall be computed as soon as practicable after receipt of authorized distribution instructions, as of the applicable Valuation Date under the Trustee's procedures, as they may be amended from time to time. 15. Section 8.10(c) is hereby amended by adding the following language at the end thereof: The Committee may delegate to the Trustee the function of approval of loans, in accordance with the terms of the Plan. 16. Section 9.7(A) of the Plan is hereby amended, effective as of the date of adoption of this amendment, by deleting the word "The" in the first sentence thereof and substituting therefor, "With respect to Company Stock that is not allocated to a Participant's Account, or that is not in a Directed Investment Sub-Account, and for which written voting instructions have been received three (3) business days before a shareholder right is to be exercised, the". 17. Section 9.7(B) of the Plan is amended, effective as of the date of adoption of this amendment, by adding the following as the first sentence thereof: (B) A Participant or Beneficiary will have the right to direct the Trustee to take or refrain from taking any action with respect to the shares of Company Stock allocated to his Directed Investment Sub- Account, provided that the Committee retains the right to direct the Trustee with respect to such shares of Company Stock for which written instructions are not received three business days before the exercise of a shareholder right. The remainder of subsection (B) remains unchanged. 18. A restatement to reflect these changes, and any other amendments since April 24, 1995, is authorized; any conforming changes to the Plan Trust are also authorized. EX-10.P2 6 EXHIBIT 10(P)(2): AMNDMNT #2 TO 401(K) EXHIBIT 10(p)(2) SECTION 401(k) PLAN ------------------- Amendment No. 2 dated December 15, 1995 1. Section 4.10 of the Plan is amended by adding the following new Section 4.10(c): (c) Excess Deferrals. To the extent necessary to comply with the limits ---------------- set forth in Sections 4.7 and 4.8 of the Plan, Matching Contributions shall be forfeited. Such forfeited amounts shall be used to reduce the Company's future contributions to the Plan. 2. Section 9.7 of the Plan is hereby amended by deleting the last sentence of subsection (a) thereof and substituting the following therefor: In the absence of receipt of such written direction with respect to any such shares three (3) business days before the exercise of any shareholder rights, the Committee shall vote any allocated but uninstructed shares in the exercise of its sole discretion. 3. Section 9.7 of the Plan is further amended by deleting subsection (c) thereof, renaming subsection (d) as subsection (c), and adding the following language at the end thereof: In the absence of receipt of such written direction three (3) business days prior to the exercise of such shareholder rights, the Committee shall exercise such rights in its sole discretion. 4. A restatement to reflect this change and any other amendments since April 24, 1995, is authorized; any conforming changes to the Plan Trust are authorized. EX-10.II 7 EXHIBIT 10 (II) EXHIBIT 10(ii) [LETTERHEAD OF ICF INTERNATIONAL, INC. APPEARS HERE] May 17, 1993 Mr. Richard K. Nason 1791 Brookside Lane Vienna, VA 22182 Dear Dick: It was good to speak with you again over the weekend and to discuss the features of our initial offer. We continue to believe that you could become a valuable part of our management team. We would like to modify the terms of our initial proposal, and this letter will replace the previous offer for your employment at ICF. 1. Position. You would serve as Senior Vice President, Internal Audit. In -------- this role, you will be responsible for establishing and implementing the internal audit function, which will encompass financial, EDP, operations, and investigatory audits. You would report directly to the Audit Committee of the Board of Directors and the Chief Executive Officer. 2. Compensation. Your base pay would be paid biweekly at a rate of $150,000 ------------ per year. You would be eligible to receive a bonus after the end of ICF's 1994 fiscal year (February 28, 1994), ranging from 0-$25,000, based on your performance and the performance of the company. The Board and the CEO will jointly develop an FY 1994 performance plan for you, based on your input as to the initial priorities and scope of the risk analysis. your compensation would be reviewed effective March 1, 1994. Bonuses are granted only to the extent that the company has generated sufficient profits and only to those officers whose performance throughout the year is rated excellent to outstanding. Bonus ranges indicate the minimum and maximum value of bonus awards. Bonus awards may be comprised of cash and/or stock options. It is the policy to make bonus payments only to eligible staff who are employed by ICF International when bonuses are distributed. [LETTERHEAD OF ICF INTERNATIONAL, INC. APPEARS HERE] Mr. Richard K. Nason May 17, 1993 Page 2 3. Benefits. You will be eligible for a full benefit package which includes -------- health insurance, disability insurance, life insurance, dental insurance, an Employee Stock Purchase Plan, a retirement plan, and a 401(k) plan. A summary of these programs is included in the benefits brochure previously sent to you. Dick, I feel that you could be a major contributor to the company and I look forward to the opportunity of working with you. Please feel free to call me with any questions that you might have -- my office number is 703/934-3105. I look forward to hearing from you soon. Sincerely, /s/ Michael J. Rowny Executive Vice President an Chief Financial Officer MEMORANDUM TO: Cynthia Hathaway DATE: February 1, 1995 FROM: Marcy Romm SUBJECT: Richard Nason - Stock Option Grants - 1995 - 1996 Effective today, we have reached agreement with Richard Nason that, as a result of his promotion to Chief Financial Officer, the following nonqualified stock option grants are to be made: Grant #1: - -------- Grant: 50,000 Nonqualified Stock Options Grant (Strike) Price: Equal to the average of the closing prices 20 days immediately preceding the above effective date Term: 5 years Vesting: These options will vest 25% annually from the above effective date, (e.g., February 1, 1996, 12,500 shares will be available for exercise). Termination: 90 days to exercise available/vested options only. Non-vested options will be forfeited. - ------------------------------------------------------------------------------- Grant #2: - -------- Same as above, except all dates one year later. - ------------------------------------------------------------------------------- As part of this Agreement, Richard Nason will also receive a salary of $200,000 starting December 1, 1994, and $225,000 starting March 1, 1995 with a bonus range of 0 - $100,000 annually. EX-11 8 EXHIBIT 11 EXHIBIT 11 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
Ten Months Ended Year Ended ----------------------------- ------------------------------- December 31, December 31, February 28, February 28, 1995 1994 1995 1994 ------------ ------------- ------------- ------------- (Unaudited) Net income (loss) available for common shareholders $ 449,000 $ (1,956,000) $ (3,815,000) $(25,322,000) =========== ============ ============ ============ Weighted average of common shares outstanding not included in amounts below 21,131,763 20,947,656 20,957,443 20,885,622 Weighted average of common shares issuable pursuant to an agreement with a former employee 385,152 -- -- -- ----------- ------------ ------------ ------------ Weighted average of common and common equivalent shares outstanding, as adjusted 21,516,915 20,947,656 20,957,443 20,885,622 or or or or 21,517,000 20,948,000 20,957,000 20,886,000 =========== ============ ============ ============ Net income (loss) per common share $ 0.02 $ (0.09) $ (0.18) $ (1.21) =========== ============ ============ ============
EX-21 9 EXHIBIT 21: SUBSIDIARIES EXHIBIT 21 ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway, Fairfax, VA 22031 (703) 934-3600
Jurisdiction Wholly Owned Subsidiaries: of Formation: - -------------------------- ------------- I. CLEMENT INTERNATIONAL CORPORATION Delaware I. CYGNA GROUP, INC. Delaware II. Liability Risk Management, Inc. California I. EDA, INCORPORATED Maryland I. ICF CANNON ASSOCIATES, INC. Delaware I. ICF CONSULTING ASSOCIATES, INC. Delaware I. ICF INCORPORATED Delaware I. ICF INFORMATION TECHNOLOGY, INC. Delaware II. Phase Linear Systems Incorporated Delaware I. ICF KAISER DEFENSE PROGRAMS, INC. Delaware I. ICF KAISER DEVELOPMENT CORPORATION, INC. Delaware II. Global Trade & Investment, Inc. Delaware I. ICF KAISER ENGINEERS MASSACHUSETTS, INC. Delaware I. ICF KAISER GOVERNMENT PROGRAMS, INC. Delaware I. ICF KAISER HANFORD COMPANY Delaware I ICF KAISER HOLDINGS UNLIMITED, INC. Delaware II. Cygna Consulting Engineers and Project Management, Inc. California II. Excell Development Construction, Inc. Delaware III. International Systems, Inc. Colorado II. ICF Kaiser Engineers Eastern Europe, Inc. Delaware III. ICF Kaiser Netherlands B.V. (10%) Netherlands II. ICF Kaiser Netherlands B.V. (90%) Netherlands II. ICF Leasing Corporation, Inc. Delaware I. ICF RESOURCES INCORPORATED Delaware II. ICF R G.P. No. 1, Inc. Delaware II. HBG Hawaii, Inc. Delaware II. HBG International, Inc. Delaware I. KAISER ENGINEERS PACIFIC, INC. Nevada I. MONUMENT SELECT INSURANCE COMPANY Vermont I. SYSTEMS APPLICATIONS INTERNATIONAL, INC. Delaware I. TUDOR ENGINEERING COMPANY Delaware
Jurisdiction Wholly Owned Subsidiaries (continued): of Formation: - ------------------------------------- ------------- I. ICF KAISER ENGINEERS GROUP, INC. Delaware II. Henry J. Kaiser Company Nevada II. ICF Florida First, Inc. Delaware II. ICF Kaiser Engineers, Inc. Ohio III. ICF Kaiser Engineers (California) Corporation Delaware III. ICF Kaiser Engineers Corporation New York III. ICF Kaiser Engineers of Michigan, Inc. Michigan III. ICF Kaiser International Planning & Design, Inc. Pennsylvania III. ICF Kaiser Remediation Company Delaware III. Kaiser Engineers Australia Pty. Limited (50%) Australia IV. Kaiser Engineers (NZ) Ltd (99%) New Zealand III. Kaiser Engineers and Constructors, Inc. Nevada IV. ICF Pty. Ltd. (50%) Australia IV. Kaiser Engineers Limited (0.02%) U.K. IV. Kaiser Engineers Australia Pty. Limited (50%) Australia IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand IV. Kaiser Engineers Pty. Ltd. (50%) Australia IV. Kaiser Ingenieria de Chile Limitada (51%) Chile III. Kaiser Engineers International, Inc. Nevada IV. ICF Pty. Ltd. (50%) Australia IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal IV. Kaiser Engineers Pty. Ltd. (50%) Australia IV. Kaiser Ingenieria de Chile Limitada (49%) Chile 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. Kaiser Engenharia e Constructoes Limitada Brazil III. KE, Inc. Philippines III. KE, Inc. (dba in Massachusetts: Kaiser Engineers Co.) Delaware III. KE Services Corporation Delaware III. La Compagnie Henry J. Kaiser Company (Canada) Ltee. Canada III. Overseas Constructors & Engineers, Inc. Delaware III. PCI Operating Company, Inc. Delaware II. ICF Technology Incorporated Delaware II. International Waste Energy Systems, Inc. Delaware II. KE Livermore, Inc. Delaware
-Page 2 of 2- Current as of March 1, 1996 EX-23 10 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of ICF Kaiser International, Inc. (the Company) on Form S-8 [Registration Nos. 33-42677 (Non-employee Directors Stock Option Plan), 33-42678 (Stock Incentive Plan), 33-51460 (Section 401(k) Plan), 33-60663 (Retirement Plan), 33-60661 and 33-65351 (Employee Stock Ownership Plan), 33-60665 (Consultants, Agents, and Part Time Employees Stock Plan) and 33-51812 (Employee Stock Purchase Plan)] and on Form S-3 [Registration No. 33-51677 (600,000 Warrants)] of our report dated March 8, 1996, on our audits of the consolidated financial statements and financial statement schedule of ICF Kaiser International, Inc. and Subsidiaries as of December 31, 1995 and February 28, 1995, and for the ten months ended December 31, 1995 and for the years ended February 28, 1994 and 1995, which report is included in the Company's Transition Report on Form 10-K. Coopers & Lybrand L.L.P. Washington, D.C. March 29, 1996 EX-27 11 EXHIBIT 27
5 1 U.S DOLLARS 10-MOS DEC-31-1995 MAR-01-1995 DEC-31-1995 1 16,357,000 0 237,674,000 9,435,000 0 277,441,000 42,909,000 33,369,000 369,517,000 192,852,000 120,112,000 19,787,000 0 213,000 28,214,000 369,517,000 0 916,744,000 0 359,887,000 0 601,000 13,255,000 6,303,000 2,091,000 2,252,000 0 0 0 2,252,000 0.02 0.02 Excludes current portion of bonds, mortgages, and similar debt. Represents gross revenue which includes costs of certain services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Excludes subcontract and direct material costs of $493,971,000.
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