-----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, GH+GX74apXGduaKWmcmuu4cUpRwhjc8oLYrRKBAroAla1XpNRD2exmPcvGM4A4OT d8eGwIuvUdsTlK6hJC4uXQ== 0000928385-96-000570.txt : 19960517 0000928385-96-000570.hdr.sgml : 19960517 ACCESSION NUMBER: 0000928385-96-000570 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12248 FILM NUMBER: 96566373 BUSINESS ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 MAIL ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 FORMER COMPANY: FORMER CONFORMED NAME: ICF INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL & RESEARCH CORP /DE/ DATE OF NAME CHANGE: 19910314 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 Commission File No. 1-12248 ICF KAISER INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 54-1437073 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9300 Lee Highway, Fairfax, Virginia 22031-1207 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (703) 934-3600 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No On April 30, 1996, there were 21,856,748 shares of ICF Kaiser International, Inc. Common Stock, par value $0.01 per share, outstanding. ICF KAISER INTERNATIONAL, INC. INDEX TO FORM 10-Q
Page Part I - Financial Information Item 1. Financial Statements: Consolidated Balance Sheets - March 31, 1996 and December 31, 1995.................. 3 Consolidated Statements of Operations - Three Months Ended March 31, 1996 and 1995............ 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1996 and 1995............ 5 Notes to Consolidated Financial Statements............ 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 7-11 Part II - Other Information Item 1. Legal Proceedings.................................. 11 Item 2. Changes in Securities.............................. 11 Item 3. Defaults Upon Senior Securities.................... 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information.................................. 11 Item 6. Exhibits and Reports on Form 8-K................... 11
2 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except shares)
March 31, December 31, 1996 1995 - --------------------------------------------------------------------------------------- (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 30,900 $ 16,357 Contract receivables, net 215,081 228,239 Prepaid expenses and other current assets 12,376 20,911 Deferred income taxes 10,933 11,934 --------- --------- Total Current Assets 269,290 277,441 --------- --------- Fixed Assets Furniture, equipment, and leasehold improvements 45,381 42,909 Less depreciation and amortization (34,718) (33,369) --------- --------- 10,663 9,540 --------- --------- Other Assets Goodwill, net 49,660 49,259 Investments in and advances to affiliates 10,515 10,213 Due from officers and employees 1,100 1,053 Other 20,398 22,011 --------- --------- 81,673 82,536 --------- --------- $361,626 $369,517 ========= ========= LIABILITIES AND SHAREHOLDERS'EQUITY Current Liabilities Current portion of long-term debt $ 24 $ 5,041 Accounts payable and subcontractors payable 78,817 86,429 Accrued salaries and employee benefits 59,261 53,060 Accrued interest 3,837 7,414 Other accrued expenses 11,295 18,594 Income taxes payable 663 801 Deferred revenue 11,872 14,327 Other 6,316 7,186 --------- --------- Total Current Liabilities 172,085 192,852 --------- --------- Long-term Liabilities Long-term debt, less current portion 129,173 120,112 Other 5,833 5,706 --------- --------- 135,006 125,818 --------- --------- Commitments and Contingencies Minority Interests in Subsidiaries 3,906 2,633 Redeemable Preferred Stock, liquidation value $20,000 19,838 19,787 Common Stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding- 21,812,747 and 21,263,828 shares 218 213 Additional Paid-in Capital 65,693 64,654 Notes Receivable Related to Common Stock (1,732) (1,732) Retained Earnings (Deficit) (32,109) (32,894) Cumulative Translation Adjustment (1,279) (1,814) --------- --------- $361,626 $369,517 ========= =========
See notes to consolidated financial statements. 3 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Three Months Ended March 31, 1996 1995 ---------------------------- (Unaudited) GROSS REVENUE $ 311,119 $189,130 Subcontract and direct material costs (167,318) (91,585) Equity in income of joint ventures and affiliated companies 724 1,297 --------- --------- SERVICE REVENUE 144,525 98,842 OPERATING EXPENSES Direct cost of services and overhead 118,645 84,239 Administrative and general 15,805 12,693 Depreciation and amortization 2,607 2,307 --------- --------- OPERATING INCOME (LOSS) 7,468 (397) OTHER INCOME (EXPENSE) Interest income 230 514 Interest expense (4,100) (4,001) --------- --------- INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS 3,598 (3,884) Income tax provision (benefit) 1,001 (832) --------- --------- INCOME (LOSS) BEFORE MINORITY INTERESTS 2,597 (3,052) Minority interests in net income of subsidiaries 1,273 - --------- --------- NET INCOME (LOSS) 1,324 (3,052) Preferred stock dividends and accretion 539 539 --------- --------- NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS $ 785 $ (3,591) ========= ========= Primary and Fully Diluted Net Income (Loss) Per Common Share $0.04 $(0.17) ========= ========= Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding 21,732 21,307 ========= =========
See notes to consolidated financial statements. 4 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Three Months Ended March 31, 1996 1995 ----------------------------- (Unaudited) OPERATING ACTIVITIES Net income (loss) $ 1,324 $(3,052) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,607 2,307 Provision for losses on contract receivables 443 390 Provision for deferred income taxes 1,001 (1,231) Earnings less than (in excess of) cash distributions from joint ventures and affiliated companies (379) (920) Unusual items 2,958 - Minority interests in net income of subsidiaries 1,273 - Changes in operating assets and liabilities, net of acquisitions: Contract receivables, net 12,742 (8,785) Prepaid expenses and other current assets 654 (1,972) Other assets 334 4 Accounts payable and accrued expenses (7,210) 8,741 Income taxes payable (138) 474 Deferred revenue (2,490) 406 Other liabilities (1,219) (407) Other operating activities 68 - ------- ------- Net Cash Provided by (Used in) Operating Activities 11,968 (4,045) ------- ------- INVESTING ACTIVITIES Purchases of fixed assets (999) (561) Investments in subsidiaries and affiliates, net of cash acquired (51) (255) ------- ------- Net Cash Used in Investing Activities (1,050) (816) ------- ------- FINANCING ACTIVITIES Borrowings under credit facility agreement 12,000 5,000 Principal payments on credit facility agreement (8,000) - Principal payments on other borrowings - (260) Reacquisition of senior subordinated notes and related warrants (46) - Proceeds from issuances of common stock 126 99 Preferred stock dividends (990) (488) ------- ------- Net Cash Provided by Financing Activities 3,090 4,351 ------- ------- Effect of Exchange Rate Changes on Cash 535 (80) ------- ------- Increase (Decrease) in Cash and Cash Equivalents 14,543 (590) Cash and Cash Equivalents at Beginning of Period 16,357 27,967 ------- ------- Cash and Cash Equivalents at End of Period $30,900 $27,377 ======= ======= SUPPLEMENTAL INFORMATION: Cash payments for interest $ 7,656 $ 7,596 Cash payments (refunds) for income taxes $ 137 $ (857) NON-CASH TRANSACTIONS: Issuance of common stock in connection with an acquisition $ 350 $ - Issuance of common stock pursuant to an agreement with a former employee $ 500 $ -
See notes to consolidated financial statements. 5 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying consolidated financial statements of ICF Kaiser International, Inc. and subsidiaries (the Company) (including Kaiser-Hill Company, LLC, effective July 1, 1995), except for the December 31, 1995 balance sheet, are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Company's audited consolidated financial statements and footnotes thereto for the ten months ended December 31, 1995 and the information included in the Company's Transition Report to the Securities and Exchange Commission on Form 10-K for the ten months ended December 31, 1995. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the March 31, 1996 financial statements. Note B - 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. Note C- Minority Interests in Subsidiaries Certain of the Company'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 the Company's consolidated financial statements and the outside parties' interests are reflected as minority interests. Note D - 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 the loss period presented and immaterial to the income period presented. Therefore, the adjustments were excluded from earnings per share computations. Note E - Long-term Debt The Company recently completed negotiations to replace its Credit Facility with Chemical Bank. The Company's new $40 million revolving credit facility became effective May 6, 1996 and replaced the former Credit Facility which was due to expire October 31, 1996. The new credit facility expires June 30, 1998 and is provided by a lead bank and two other banks (the Banks) with terms and covenants similar to those under the former Credit Facility. ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the new credit facility, have granted the Banks a security interest in their accounts receivable and certain other assets. The new credit facility limits the payments of cash dividends on common stock and requires the maintenance of specified financial ratios. Total available credit is determined from a borrowing base calculation based on eligible accounts receivable (billed and unbilled). Note F - 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. 6 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. Note G - Unusual Items As of March 31, 1996, approximately 70 employees have been terminated in the Company's engineering and international groups and the resulting $0.5 million of severance payments have been charged against a $1.0 million accrual for severance recorded during the ten months ended December 31, 1995. At December 31, 1995, the Company also recorded $0.7 million to accrue for consolidation of office space. As of March 31, 1996, the Company has not yet implemented its plans for office space consolidation. Management expects that all actions associated with the termination of employees and office space consolidation will be completed by December 31, 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview ICF Kaiser International, Inc. and Subsidiaries (the Company) 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 comparative period financial statements for the three months ended March 31, 1995 have been restated to conform with the presentation used in the March 31, 1996 financial statements. Operating Results for Three Months The Company's operating income of $7.5 million for the three months ended March 31, 1996 was a $7.9 million increase from the $0.4 million operating loss recorded for the three months ended March 31, 1995. The increase in operating income partially resulted from a $2.4 million increase in operating income from the Company's operations at the Department of Energy's (DOE) Hanford, Washington site (Hanford). The 1996 results reflect higher award fees earned at Hanford. An additional $2.6 million of the increase in operating income was due to earnings (before minority interests) from the Performance Based Integrating Management Contract at DOE's Rocky Flats Environmental Technology Site in Colorado (Rocky Flats). 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). The 1995 results reflect approximately $1.5 million of bidding costs incurred for the Rocky Flats contract. Work under the Rocky Flats contract began on July 1, 1995. Other increases in operating income include the recognition of additional revenues in 1996 as well as a reduction in certain corporate overhead costs. 7 Operating income from engineering and construction operations declined $0.9 million from the three months ended March 31, 1995, partially offsetting the increases discussed above. This decline primarily resulted from increases in marketing activities in pursuit of large-scale projects. The Company has expanded its commitment of resources towards marketing efforts in 1996, resulting in an increase in marketing expenses over 1995 levels. Management believes that the Company's continuing investment in its business development activities should result in additional contract awards in both the public and private sectors of its business. Business Conditions The Company's contract backlog decreased slightly to $4.3 billion at March 31, 1996 compared to $4.4 billion at December 31, 1995. The most significant addition to backlog in the period was from the signing in March 1996 of a two- year, $102 million contract to provide engineering and construction services for the initial phase of a $275 million mini-mill project for Nova Hut, a.s., an integrated steel maker based in the Ostrava region of the Czech Republic. The Company will oversee the construction of a mini-mill as well as future production and environmental upgrades to Nova Hut's existing integrated steelmaking facilities. The Company has been conducting preliminary engineering for the Nova Hut project since July 1994. In January 1996, the Company was awarded a three-year contract extension, valued at more than $78 million, from the Massachusetts Water Resources Authority to continue providing construction management services for the Boston Harbor environmental cleanup project. Under the contract extension, the Company will continue to provide program support services, construction management services, and coordination for all construction activities through 1998. 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 Company's response to DOE's request for proposals was submitted 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. Two other teams have also bid on the new contract; one of those teams 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 the Company's operating income after 1996 could be significant unless the Company can replace such income with new contract awards. The Company's consulting group had relatively consistent operating results between the three month periods ended March 31, 1996 and 1995 despite the delays in task-order assignments under contract awards due to the federal government impasse. The federal government's fiscal 1996 budget was not finalized until April 1996, which led to the federal government operating under a continuing resolution since October 1, 1995. During the past six months the prospects for expansion of the Company's international business have improved. In addition to the above-mentioned Nova Hut contract, the Company continued a light rail project and was awarded an airport expansion project in the Philippines. The Company is currently pursuing international prospects in excess of $2 billion. The Company has continued in its efforts to enhance profitability of its engineering business and is currently planning a realignment of several of its offices and has already terminated approximately 70 employees during the three months ended March 31, 1996 (see Note G to the consolidated financial statements). Management believes these endeavors, combined with other ongoing efforts described above, should positively impact the Company's future performance. 8 Results of Operations The following table summarizes key elements in the Consolidated Statements of Operations for the three months ended March 31, 1996 and 1995.
- -------------------------------------------------------------------------------- Three Months Ended March 31, 1996 1995 - -------------------------------------------------------------------------------- (dollars in millions) Gross revenue $311.1 $189.1 Service revenue $144.5 $ 98.8 Service revenue as a percentage of gross revenue 46.4% 52.2% Operating expenses as a percentage of service revenue: Direct cost of services and overhead 82.1% 85.2% Administrative and general 10.9% 12.8% Depreciation and amortization 1.8% 2.3% Operating income (loss) as a percentage of service revenue 5.2% (0.4)% - --------------------------------------------------------------------------------
Gross revenue represents services provided to customers with whom the Company has a primary contractual relationship. Included in gross revenue are costs of certain services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the equity in income of unconsolidated joint ventures and affiliated companies. The Company 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 the Company in 1996, 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 subsidiaries in the Company's financial statements (see Note C to the consolidated financial statements.) Revenue Gross revenue for the three months ended March 31, 1996 increased $122.0 million, or 64.5%, to $311.1 million. The increase in gross revenue was primarily attributable to the commencement of work under the Rocky Flats contract which generated $129.8 million in gross revenue during the three months ended March 31, 1996. The increase was partially offset by a $9.9 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 remaining contract period; however, a reduction in the Hanford budget is not expected to have a significant impact on operating income due to the nature of the fee structure under this particular DOE contract. Service revenue increased by $45.7 million for the three-month period ended March 31, 1996 as compared to the three-month period ended March 31, 1995. The increase was due primarily to $44.5 million generated under the Rocky Flats contract, offset by a $2.9 million decrease in service revenue under the Hanford contract. Service revenue as a percentage of gross revenue decreased to 46.4% for the three months ended March 31, 1996 from 52.2% for the three months ended March 31, 1995. The decrease in service revenue as a percentage of gross revenue is 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. 9 Operating Expenses Direct cost of services and overhead increased $34.4 million between the three- month periods ended March 31, 1996 and 1995. Costs of $41.3 million on the new Rocky Flats contract were offset by a $6.0 million reduction in Hanford costs attributable to the federal budget reductions discussed above. The Company's direct cost of services and overhead as a percentage of service revenue for the three months ended March 31, 1996 was comparable to the same period in the prior year. Administrative and general expense increased $3.1 million, or 24.5%, between the three-month periods ended March 31, 1996 and 1995 but decreased from 12.8% to 10.9% as a percentage of service revenue. The increase in these costs is primarily attributable to the Company's increased commitment to marketing activities in 1996, including filling several key marketing positions within the Company, and the relatively high level of marketing expense associated with proposing and bidding large scale DOD and DOE contracts. The decrease in administrative and general expenses as a percentage of service revenue is attributed to the increase in service revenue in 1996 from the Rocky Flats contract which does not have a proportionate increase in administrative and general expenses. Income Tax Expense The Company's income tax provision was $1.0 million for the three months ended March 31, 1996 compared with an income tax benefit of $0.8 million for the three months ended March 31, 1995. For the three months ended March 31, 1995, permanent differences (such as the nondeductibility of goodwill) significantly reduced the Company's income tax benefit in a loss period. In 1996, due to higher pretax income levels, the relative effect of permanent differences on the effective tax rate is significantly decreased. The three months ended March 31, 1995 also included the effect of a repatriation of overseas funds to the United States which could not then be currently offset by foreign tax credits, resulting in an additional reduction of the income tax benefit for that period. The income tax provision for the three months ended March 31, 1996 was computed by excluding the minority interest in Kaiser-Hill's income because Kaiser-Hill is a flow-through entity for tax purposes and is partially owned by an outside party. Liquidity and Capital Resources During the three months ended March 31, 1996, cash and cash equivalents increased $14.5 million to $30.9 million. Operating activities generated $12.0 million in cash, primarily from operations at Kaiser-Hill. Other operating sources of cash included $7.0 million received from the Internal Revenue Service (IRS) in settlement of litigation, while significant operating uses of cash included a $7.5 million interest payment on the Company's Senior Subordinated Notes (Senior Notes) and $3.7 million of payments for settlement costs of litigation. During the quarter, net borrowings under the Credit Facility provided $4.0 million in cash. Overall, cash was used in investing and financing activities for purchases of fixed assets ($1.0 million) and payment of dividends ($1.0 million). The next interest payment on the Senior Notes is due in June 1996. A decrease in contract receivables, net between December 31, 1995 and March 31, 1996 was primarily due to the timing of the sale of receivables under the Kaiser-Hill receivables purchase facility at the end of March 1996. A decrease in other accrued expenses was primarily due to payments for settlement costs of litigation. The decrease in prepaid expenses and other current assets in 1996 was attributable to the $7.0 million received from the IRS referred to above. The IRS settlement is included in unusual items on the Statement of Cash Flows. On May 6, 1996, the Company replaced its Credit Facility. The new $40 million revolving credit facility (New Facility) replaced the Credit Facility which was due to expire October 31, 1996. The New Facility expires June 30, 1998 and is provided by a lead bank and two other banks (the Banks) with terms and covenants similar to those under the Credit Facility. ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the New Facility, granted the Banks a security interest in their accounts receivable and certain other assets. The New Facility limits the payments of cash dividends on common stock and requires the maintenance of specified financial ratios. Total available credit is determined from a borrowing base calculation based on eligible accounts receivable (billed and unbilled). 10 Management believes that current projected levels of cash flows and the availability of financing, including New Facility borrowings, 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. The Company currently intends to use cash generated from operations and alternative financing sources to redeem this preferred stock on or before the redemption date. As of March 31, 1996, the Company had $9.0 million of borrowings, excluding letters of credit, outstanding under the Credit Facility. As of May 7, 1996, the Credit Facility was terminated (as discussed above) and all borrowings were repaid. As of May 7, 1996, cash borrowings outstanding under the New Facility were $5.5 million and letters of credit outstanding were $17.1 million. Part II - Other Information Item 1. Legal Proceedings As previously reported in the Transition Report on Form 10-K for the ten months ended December 31, 1995. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits filed as part of this report are listed below: No.10 (n) (3) Amendment No. 6 to the Agreement with the Massachusetts Water Resources Authority for Construciton Management Services (January 1996) No. 11 Computation of Primary and Fully Diluted Earnings Per Share No. 27 Financial Data Schedule (b) Report on Form 8-K Report on Form 8-K filed on March 12, 1996, reporting financial results for the ten months ended December 31, 1995. 11 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report of Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. ICF KAISER INTERNATIONAL, INC. (Registrant) Date: May 15, 1996 /s/ Richard K. Nason ------------------------- Richard K. Nason Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer) 12 EX-10.N.3 2 EXHIBIT 10(N)(3) AMENDMENT NO. 6 TO THE AGREEMENT BETWEEN THE MASSACHUSETTS WATER RESOURCES AUTHORITY AND ICF KAISER ENGINEERS, INC. THROUGH ITS WHOLLY OWNED SUBSIDIARY OF ICF KAISER ENGINEERS OF MASSACHUSETTS, INC. FOR CONSTRUCTION MANAGEMENT SERVICES (CONTRACT NO. 5622) WHEREAS, the Massachusetts Water Resources Authority (hereinafter, the "Authority" or "MWRA") and ICF Kaiser Engineers, Inc., through its wholly owned subsidiary of ICF Kaiser Engineers of Massachusetts, Inc. (the "Consultant" or "Construction Manager" or "CM") (MWRA and the Consultant are jointly referred to as the "parties") entered into an Agreement dated July 9, 1990 (the "Agreement") pursuant to which the Consultant agreed to provide Construction Management Services in connection with the Boston Harbor Project - Deer Island Related Facilities; and WHEREAS, the parties entered into Amendment No. 1 to the Agreement on September 10, 1991 to provide for the implementation and necessary administration of a Substance Abuse Prevention Program ("SAPP") and to allow for the indemnification of the Consultant in its role as administrator of the SAPP; and WHEREAS, the parties entered into Amendment No. 2 to the Agreement on September 15, 1992 to provide for adjustment in the contract compensation amounts in accordance with the Authority's Internal Audit Unit's preliminary audit findings and to provide for additional staff resources to perform work within and beyond the original scope of the Agreement; and WHEREAS, the parties entered into Amendment No. 3 to the Agreement on December 11, 1992 to provide for resident engineering and inspection services for the Construction Packages ("CPs") commencing approximately between July 1, 1992 and December 31, 1995; and WHEREAS, the parties entered into Amendments No. 4 and 4A to the Agreement on December 2, 1993 to provide the resources required for management and coordination of additional resident engineering and inspection services authorized under Amendment No. 3 and to provide for additional staff resources to perform work within and beyond the original scope of the Agreement; and WHEREAS, the parties entered into Amendment No. 5 to the Agreement on September 6, 1994 to provide the resources required for management and coordination of Inter-CP Testing activities and to provide for additional staff resources to perform work within and beyond the original scope of the Agreement. WHEREAS, the parties now wish to amend that Agreement to exercise the Authority's right to extend the Agreement beyond the original term through the first, full, three year optional period (January 1, 1996 - December 31, 1998) for the performance and remuneration of construction management services as fully described herein. NOW THEREFORE, the parties hereby agree that the Agreement dated July 9, 1990 as amended on September 10, 1991, September 15, 1992 December 11, 1992, December 2, 1993, and September 6, 1994 is further amended as follows: 1. Article 2.2 of the Agreement entitled Timely Performance is amended as follows: -1- a. Delete in its entirety the second sentence of Article 2.2.1 and substitute therefor the following new second sentence: "The term of this Agreement shall be from the date of a fully executed copy of the Agreement or an earlier date or another date if so stipulated in a Notice to Proceed to the Consultant, through December 31, 1998." 2. Attachment A of the Agreement, entitled CM Scope of Services is amended as follows: a. Delete in its entirety "Amendment No. 5 - Attachment A, Scope of Services" consisting of 58 pages and substitute therefor "Amendment No. 6 - Attachment A, CM Scope of Services" consisting of 59 pages. 3. Attachment B of the Agreement entitled Key Project Personnel is amended as follows: a. Delete in its entirety "Amendment No. 5 - Attachment B, Key Project Personnel" consisting of 1 page and substitute therefor "Amendment No. 6 - Attachment B, Key Project Personnel" consisting of 1 page. 4. Attachment C of the Agreement entitled Project Schedule is amended as follows: a. Delete in its entirety "Attachment C, Project Schedule (Revision 1)" consisting of 9 pages and substitute therefor "Amendment No. 6 - Attachment C, Project Schedule" consisting of 11 pages. 5. Attachment D of the Agreement entitled Subconsultants is amended as follows: a. Delete in its entirety "Amendment No. 5 - Attachment D, Subconsultants" consisting of 1 page and substitute therefor "Amendment No. 6 - Attachment D, Subconsultants" consisting of 1 page. 6. Attachment E of the Agreement entitled Compensation is amended as follows: a. Delete in its entirety "Amendment No. 5 - Table of Contents" consisting of 1 page and substitute therefor "Amendment No. 6 - Table of Contents" consisting of 1 page. b. Delete in its entirety the Narrative Text of "Attachment E (Revision 1)" as included in Amendment No. 3 and as further amended in Amendments No. 4 and 4A, and 5 consisting of 21 pages. Substitute therefor "Amendment No. 6 - Attachment E - Compensation" Narrative Text consisting of 23 pages. c. Add a new "Table E-1 Total Contract thru Amendment No. 6" for ICF Kaiser Engineers of Massachusetts, Inc. consisting of 2 pages. d. Add a new "Table E-1 Amendment No. 6 only" for ICF Kaiser Engineers of Massachusetts, Inc. consisting of 2 pages. e. Add a new "Table E-1 Total Contract thru Amendment No. 6" consisting of two pages for each of the following firms: Architectural Engineers, Inc.; ASEC Corporation; Briggs Associates; CH2M Hill; Coast & Harbor Associates, Inc.; DMC Engineering, Inc.; Enviroscience, Inc.; Howard/Stein - Hudson Associates (field); Howard/Stein - Hudson Associates (home); I.T.O. Corporation of New England; MBE (To Be Determined); Professional Services Group (field); Professional Services Group (home); Regina Villa Associates (field); Regina Villa Associates (home); SEA Consultants, Inc.; Stone & Webster Civil and Transportation Services, Inc. (field); Stone & Webster Civil and Transportation Services, Inc. (home); Stull & Lee, Inc.; Don Todd Associates, Inc.; and Williams-Russell and Johnson, Inc. -2- f. Add a new "Table E-1 Amendment No. 6 only" consisting of two pages for each of the following firms: Architectural Engineers, Inc.; ASEC Corporation; Briggs Associates; CH2M Hill; Coast & Harbor Associates, Inc.; DMC Engineering, Inc.; Enviroscience, Inc.; Howard/Stein - Hudson Associates (field); I.T.O. Corporation of New England; MBE (To Be Determined); Professional Services Group (field); Professional Services Group (home); Regina Villa Associates (field); Regina Villa Associates (home); SEA Consultants, Inc.; Stone & Webster Civil and ransportation Services, Inc. (field); Stone & Webster Civil and Transportation Services, Inc. (home); Stull & Lee, Inc.; Don Todd Associates, Inc.; Williams- Russell and Johnson, Inc.; and Whidden Memorial Hospital. g. Delete in its entirety "Table E-4 Summary and Detail" consisting of 94 pages and substitute therefor "Table E-4 Summary and Detail Amendment #6" consisting of 148 pages. h. Delete in its entirety "Table E-5 Estimated Direct Reimbursement Costs Summary" consisting of 1 page and substitute therefor "Table E-5 Estimated Direct Reimbursement Costs Summary Amendment #6" consisting of 1 page. i. Delete in its entirety "Table E-6 Estimated Extraordinary Reimbursable Expenses" consisting of 2 pages and substitute therefor "Table E-6 Estimated Extraordinary Reimbursable Expenses Amendment #6" consisting of 2 pages. j. Add a new table "Table E-12 Project Specific Indirect Cost Rates" consisting of 1 page. 7. Attachment G of the Agreement entitled 314 CMR 11: Division of Water Control; and 40 CFR ch. 1 (7/1/86 edition) is amended as follows: a. Delete in its entirety and substitute therefor "310 CMR 41.00" consisting of 31 pages. 8. Attachment H of the Agreement entitled ICF Kaiser Engineers of Massachusetts, Inc. Standard Personnel Pay Policy is amended as follows: a. Delete in its entirety and substitute therefor a revised policy "ICF Kaiser Engineers of Massachusetts, Inc. Standard Personnel Pay Policy Amendment #6", consisting of 32 pages. All of the Attachments and Tables referenced in Items 1 through 8 above are attached to this Amendment and incorporated herein. Neither execution of this Amendment No. 6, nor previous payments to the Consultant, shall constitute a waiver by the Authority of any right it may have against the Consultant for deficient Consultant performance during the entire term of the Agreement. All other terms and conditions of the Agreement remain the same. IN WITNESS WHEREOF, the parties have executed this Amendment No. 6 this 30th day of January, 1996. -3- EX-11 3 EXHIBIT 11 EXHIBIT 11 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
Three Months Ended March 31, ---------------------------- 1996 1995 ------------ ------------ (Unaudited) Net income (loss) available for common shareholders $ 785,000 $ (3,591,000) =========== ============ Weighted average of common shares outstanding not included in amounts below 21,731,739 21,031,698 Weighted average of common shares issuable pursuant to an agreement with a former employee - 275,000 ----------- ------------ Weighted average of common and common equivalent shares outstanding, as adjusted 21,731,739 21,306,698 or or 21,732,000 21,307,000 =========== ============ Net income (loss) per common share $ 0.04 $ (0.17) =========== ============
EX-27 4 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 30,900,000 0 226,945,000 11,864,000 0 269,290,000 45,381,000 34,718,000 361,626,000 172,085,000 129,173,000 19,838,000 0 218,000 30,572,000 361,626,000 0 311,119,000 0 118,645,000 0 443,000 4,100,000 3,598,000 1,001,000 1,324,000 0 0 0 1,324,000 0.04 0.04 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 $167,318,000.
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