-----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, KnCfg6Nac+EJ1lqjfLk6kGf1LlIX3AduPgwheT9FcdGk75wkSrtXrBDcIXzcXTkB Yha7xrWu98v1Qn8jrLAvgA== 0000928385-99-001832.txt : 19990518 0000928385-99-001832.hdr.sgml : 19990518 ACCESSION NUMBER: 0000928385-99-001832 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: SEC FILE NUMBER: 001-12248 FILM NUMBER: 99628712 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, 1999 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 May 11, 1999, there were 24,833,890 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, 1999 and December 31, 1998.......................... 3 Consolidated Statements of Operations and Comprehensive Income (Loss)- Three Months Ended March 31, 1999 and 1998.................... 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1999 and 1998.................... 5 Notes to Consolidated Financial Statements.................... 6-16 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations..................................... 17-26 Item 3 Quantitative and Qualitative Disclosures About Market Risk.... 26 Part 11 - Other Information Item 1. Legal Proceedings............................................. 26 Item 2. Changes in Securities and Use of Proceeds..................... 26 Item 3. Defaults Upon Senior Securities............................... 26 Item 4. Submission of Matters to a Vote of Security Holders........... 26 Item 5. Other Information............................................. 26 Item 6. Exhibits and Reports on Form 8-K.............................. 26-27
2 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except shares)
====================================================================================================================== March 31, December 31, 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- (Uaudited) Assets Current Assets Cash and cash equivalents $ 14,282 $ 15,248 Contract receivables, net 214,312 234,320 Prepaid expenses and other current assets 13,831 11,918 Deferred income taxes 34,205 34,673 Net assets of discontinued operations 66,458 65,862 --------- -------- Total Current Assets 343,088 362,021 --------- -------- Fixed Assets Furniture, equipment, and leaseholds 17,498 17,970 Less depreciation and amortization (13,184) (13,665) --------- -------- 4,314 4,305 --------- -------- Other Assets Goodwill, net 22,967 23,323 Investments in and advances to affiliates 7,708 7,571 Capitalized software development costs 1,533 1,618 Other 12,119 12,745 --------- -------- 44,327 45,257 --------- -------- Total Assets $ 391,729 $ 411,583 ========= ======== Liabilities and Shareholders' Equity (Deficit) Current Liabilities Debt currently payable $ 36,876 $ 30,729 Accounts payable 168,036 179,451 Accrued salaries and benefits 31,231 31,141 Other accrued expenses 59,162 46,865 Deferred revenue 13,037 36,847 Income taxes payable 2,422 2,147 --------- -------- Total Current Liabilities 310,764 327,180 Long-term Liabilities Long-term debt 137,610 137,488 Other 8,704 9,584 --------- -------- Total Liabilities 457,078 474,252 --------- -------- Commitments and Contingencies Minority Interest 2,582 449 Shareholders' Equity (Deficit) Preferred stock - - Common stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding- 23,790,995 and 24,257,828 shares 238 242 Additional paid-in capital 75,218 75,422 Notes receivable collateralized by common stock - (638) Accumulated deficit (140,476) (134,757) Accumulated other comprehensive income (loss) (2,911) (3,387) --------- -------- Total Shareholders' Equity (Deficit) (67,931) (63,118) --------- -------- Total Liabilities and Shareholders' Equity (Deficit) $ 391,729 $ 411,583 ========= ======== =====================================================================================================================
See notes to consolidated financial statements. 3 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share amounts) - ---------------------------------------------------------------------------------------------------------------------------------- Three Months Ended March 31, ------------------------------------ 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Gross Revenue $225,497 $ 256,839 Subcontract and direct material costs (162,858) (183,334) -------- --------- Service Revenue 62,639 73,505 Operating Expenses Direct labor and fringe benefits 48,459 53,465 Group overhead 10,937 11,283 Corporate general and administrative 3,804 3,844 Depreciation and amortization 1,481 1,592 Other unusual charges 895 - -------- --------- Operating Income (Loss) (2,937) 3,321 Other Income (Expense) Interest income 268 466 Interest expense (5,852) (4,821) Equity in net income of unconsolidated subsidiaries 1,520 1,027 -------- --------- Income (Loss) From Continuing Operations Before Income Taxes and Minority Interest (7,001) (7) Income tax (benefit) (1,020) (468) -------- --------- Income (Loss) From Continuing Operations (5,981) 461 Before Minority Interest Minority interest in net income of subsidiaries 2,082 2,511 -------- --------- Income (Loss) Before Discontinued Operations (8,063) (2,050) Income from discontinued operations (net of tax of $1,546 and $1,617, respectively) 2,344 2,495 -------- --------- Net Income (Loss) $ (5,719) $ 445 ======== ========= Basic and Fully Diluted Earnings (Loss) Per Share: Continuing operations $ (0.34) $ (0.08) Discontinued operations 0.10 0.10 -------- --------- $ (0.24) $ 0.02 ======== ========= Weighted average shares for basic earnings per share 24,068 23,925 Effect of dilutive stock options - 1,571 -------- --------- Weighted average shares for diluted earnings per share 24,068 25,496 ======== ========= Comprehensive Income (Loss) Net Income (Loss) $ (5,719) $ 445 Other Comprehensive Income (Loss) Foreign currency translation adjustments 467 554 -------- --------- Total Comprehensive Income (Loss) $ (5,252) $ 999 ========= ========= - ----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. 4 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows
- ------------------------------------------------------------------------------------------------------------------- Three Months Ended March 31, ----------------------------- 1999 1998 - ------------------------------------------------------------------------------------------------------------------- (Unaudited) Operating Activities Net income (loss) $ (5,719) $ 445 Adjustments to reconcile net income (loss) to net cash (used in) operating activities: Income from discontinued operations (2,344) (2,495) Depreciation and amortization 1,481 1,592 Provision (credit) for losses (2,555) 667 Provision for deferred income taxes 468 780 Note receivable write-off 638 - Earnings in excess of cash distributions from joint ventures and affiliated companies (137) 539 Minority interest in net income of subsidiaries 2,082 2,511 Changes in operating assets and liabilities, net of acquisitions and dispositions: Contract receivables, net 19,880 22,936 Prepaid expenses and other current assets (1,653) 2,960 Accounts payable and accrued expenses 11,550 (19,017) Deferred revenue (23,810) 1,393 Income tax payable 275 158 -------- -------- Net Cash Provided by Operating Activities 156 12,469 -------- -------- Investing Activities Investments in subsidiaries and affiliates, net of cash acquired - 3,841 Sales of subsidiaries and/or investments - 2,400 Investments in net assets of discontinued operations (596) (2,424) Purchases of fixed assets (557) (1,033) -------- -------- Net Cash Provided by (Used in) Investing Activities (1,153) 2,784 -------- -------- Financing Activities Borrowings under revolving credit facility 57,064 35,000 Principal payments on revolving credit facility (50,942) (34,500) Change in book overdraft (6,117) 5,988 Distribution of income to minority interest 51 (3,071) Proceeds from issuances of common stock 38 47 -------- -------- Net Cash Provided by Financing Activities 94 3,464 -------- -------- Effect of Exchange Rate Changes on Cash (63) 74 -------- -------- Increase (Decrease) in Cash and Cash Equivalents (966) 18,791 Cash and Cash Equivalents at Beginning of Period 15,248 20,009 -------- -------- Cash and Cash Equivalents at End of Period $ 14,282 $ 38,800 ======== ======== Supplemental cash flow information is as follows: Cash payments for interest $ - $ 90 Cash payments for income taxes 28 - Non-cash transactions: Issuance of common stock - 8,455 Reacquisition of common stock (247) (218) - --------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. 5 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements of ICF Kaiser International, Inc. and subsidiaries (the Company), except for the December 31, 1998 balance sheet (derived from audited financial statements), are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Company's audited consolidated financial statements and footnotes thereto for the year ended December 31, 1998 and the information included in the Company's Annual Report to the Securities and Exchange Commission (SEC) on Form 10-K for the year ended December 31, 1998. Certain reclassifications have been made to the prior period financial statements to conform them to the presentation used in the March 31, 1999 financial statements. 2. Earnings Per Share Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding for the period. The assumed proceeds from the exercise of dilutive securities are used to purchase common stock at the average market price during the period. The difference between the number of shares assumed issued and the number of shares assumed purchased is added to the basic EPS denominator in order to derive the diluted EPS denominator. The Company's common stock equivalents that would be antidilutive have been excluded from the fully diluted EPS calculation. 3. Segment Information The Company uses several segments for internal management reporting purposes. The segments are compiled based on the similarities in each of their underlying services, customers, and regulatory environments. The segment operating results represent all activities that were controllable by the respective segment business leaders and that had sole direct benefit to the respective segment. Operating activities that are deemed to benefit more than one segment are not managed by segment business leaders but are instead managed by the Company's corporate overhead structure and are not allocated to the segments. The accounting policies of the operating segments are the same as those described in the Company's summary of significant accounting policies. Discontinued Operating Segments: Pursuant to a plan intended to respond to significant liquidity constraints followed by substantial cost overruns on four fixed price projects, the Company announced its intention to sell two of its major operating segments. As of the date of this report, the Company has either completed or has committed to complete the sales of the two segments. The net financial position and operating results of the two segments have been presented in the accompanying financial statements as discontinued operations for the entire period. All prior period financial information has also been restated to conform to the current presentation. . Sale of the Environment and Facilities Management Group (EFM): On April 9, 1999, the Company sold the majority of the active contracts and investments, and transferred a substantial number of employees of EFM, to The IT Group, Inc. (IT) for a cash purchase price of $82 million, less $8 million which was retained by IT for EFM's working capital requirements. EFM contracts that were not sold to IT will be completed by the Company in the near term. The gain on the sale has not been reflected in the accompanying financial statements. . Intent to sell the Consulting Group: On March 8, 1999, the Company signed a non-binding letter of intent for the sale of its Consulting Group to CM Equity Partners, L.P. and the Group's management. While final terms of the sale are being negotiated, the transaction is expected to be completed by mid-year 1999. Continuing Business Segments: For purposes of providing segment information, the Company's continuing business segments are: . the Engineers and Constructors Group (E&C), which provides engineering and construction services to commercial and federal, state, and local entities in the areas of industry, infrastructure, transportation, water, and clean- room technologies; 6 . the Kaiser-Hill Company, LLC (Kaiser-Hill), a 50% owned subsidiary, which performs and manages the Department of Energy's multibillion-dollar management contract at Rocky Flats. The Company, through a majority representation on Kaiser-Hill's board of directors, has a controlling interest in Kaiser-Hill and therefore consolidates Kaiser-Hill's results of operations with those of its now only other remaining business segment, E&C. Although the Company has a controlling interest in Kaiser-Hill, as defined by generally accepted accounting principles, the subsidiary's operations are primarily directed by its own dedicated management team. Neither the management of the Company nor the management of the other 50% owner has an active role in Kaiser-Hill's day-to-day operations. After the effective discontinuance of the operations discussed above, the financial information for Kaiser-Hill represents a substantial portion of many components of the Company's financial statements. Accordingly, management believes that a separate presentation of Kaiser-Hill's financial statements is meaningful in interpreting the financial results of the remaining core E&C operations. See Note 5 for the condensed financial statements of Kaiser-Hill Company, LLC. Financial data for the three months ended March 31 for the remaining business segments are as follows (in thousands):
1999 Kaiser-Hill E&C TOTAL ---- ----------- ----------- ---------- Gross revenue........................................................ $ 145,103 $ 80,344 $ 225,497 Subcontracts and materials.......................................... (110,341) (52,517) (162,858) --------- -------- --------- Service revenue...................................................... 34,762 27,877 62,639 Operating expenses: Direct labor and fringe............................................. 30,622 17,837 48,459 General and administrative.......................................... -- 10,937 10,937 --------- -------- --------- Segment income....................................................... $ 4,140 $ (897) 3,243 ========= ======== Reconciliation of segment income to operating income (loss) from continuing operations: Corporate overhead.................................................. 3,804 Depreciation and amortization....................................... 1,481 Other unusual charges............................................... 895 --------- Operating income (loss) from continuing operations................... $ ( 2,937) ========= 1998 ---- Gross revenue........................................................ $ 141,042 $115,797 $ 256,839 Subcontracts and materials.......................................... (105,356) (77,978) (183,334) --------- -------- --------- Service revenue...................................................... 35,686 37,819 73,505 Operating expenses: Direct labor and fringe............................................. 30,686 22,779 53,465 General and administrative.......................................... -- 11,283 11,283 --------- -------- --------- Segment income....................................................... $ 5,000 $ 3,757 8,757 ========= ======== Reconciliation of segment income to operating income from continuing operations: Corporate overhead.................................................. 3,844 Depreciation and amortization....................................... 1,592 Other unusual charges............................................... 0 --------- Operating income from continuing operations.......................... $ 3,321 =========
The levels of corporate overhead reflected in the costs reported above were incurred by the Company prior to the completion of the sales of the recently discontinued segments. Subsequent to those sales, corporate overhead as well as segment overhead will need to be restructured and reduced to levels appropriate for the Company's remaining core E&C operations. 7 4. Condensed Financial Information for Kaiser-Hill Company, LLC Unaudited financial information for the 50%-owned, controlled and consolidated Kaiser-Hill subsidiary as of March 31, 1999 and December 31, 1998 and for each of the three months then ended are as follows (see Note 3): BALANCE SHEETS --------------
MARCH 31, December 31, 1999 1998 ---- ---- Assets Cash and cash equivalents.................................................... $ 5,770 $ 3,644 Contract receivables, net.................................................... 125,528 127,163 -------- -------- Total Assets.................................................... 131,298 130,807 LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities Accounts payable........................................................... 110,944 115,730 Accrued salaries and benefits............................................ 13,779 12,666 -------- -------- Total Liabilities..................................................... 124,723 128,396 Commitments and contingencies Net Assets................................................................... $ 6,575 $ 2,411 ======== ======== INCOME STATEMENTS ----------------- FOR THE THREE MONTHS ENDED MARCH 31, 1999 1998 ---- ---- Gross Revenue................................................................ $ 145,103 $ 141,042 Subcontract and direct material costs.................................... (110,341) (105,356) --------- --------- Service Revenue.............................................................. 34,762 35,686 Operating Expenses Direct labor and fringe benefits......................................... 30,622 30,686 --------- --------- Operating Income Before Income Tax........................................... $ 4,140 $ 5,000 ========= ========= Minority's interest in Kaiser-Hill net income................................ $ 2,070 $ 2,500 ========= ========= Company's interest in Kaiser-Hill net income................................. $ 2,070 $ 2,500 ========= ========= STATEMENTS OF CASH FLOWS ------------------------ FOR THE THREE MONTHS ENDED MARCH 31, Operating Activities 1999 1998 ----- ---- Net Income................................................................... $ 4,140 $ 5,000 Changes in operating assets and liabilities: Accounts receivable, net............................................. 1,635 10,195 Accounts payable and accrued expenses................................ (3,673) (6,747) ------- ------- Net cash provided by operating activities................................. 2,102 8,448 ------- ------- Financing Activities Distributions to shareholders........................................... - (3,968) ------- ------- Net cash used in financing activities..................................... - (3,968) ------- ------- Increase in cash and cash equivalents........................................ 2,126 4,556 Cash and cash equivalents at beginning of period............................. 3,644 10,181 ------- ------- Cash and cash equivalents at end of period................................... $ 5,746 $14,661 ======= =======
8 5. Contingencies Certain Contracts: In March 1998, the Company entered into a $187 million maximum price contract to construct a shipbuilding facility. The Company subsequently learned that estimated costs to perform the contract as reflected in actual proposed subcontracts were approximately $30 million higher than the cost estimates used as the basis for contract negotiation between the Company and the customer. After learning this, the Company advised the customer that it was not required to perform the contract in accordance with its terms. Negotiations with the customer resulted in an interim agreement under which both parties reserved their rights and, on a day-to-day basis, the Company continued to execute certain transitional on-site activities. The customer terminated the interim agreement with the Company effective August 14, 1998. In October 1998, the customer presented an initial draft of a claim against the Company requesting payment for estimated damages and entitlements pursuant to the terminated contract. The Company and the customer are currently discussing the customer's draft claim. No provision for loss for this matter has been included in the Company's financial results to date as management does not believe that it has sufficient information at this time to reasonably estimate the outcome as there has not yet been significant activity in the negotiation process. As a result of uncertainties surrounding the costs to complete certain large fixed-price contracts, including the Nitric Acid Projects, the Company established $66.0 million in reserves intended to cover its estimate of the nitric acid contract cost overruns. Although management believes that, based on information currently available, an adequate provision for loss reserves for these fixed-price contracts has been reflected in the financial statements, no assurance can be given that the full amount of any claims will be realized or that the loss provision is entirely adequate. Acquisition Contingency: The ICF Kaiser common shares exchanged for the stock of ICT Spectrum in the March, 1998 acquisition, carry the guarantee that the fair market value of each share of stock will reach $5.36 by March 1, 2001. In the event that the fair market value does not attain the guaranteed level, the Company is obligated to make up the shortfall either through the payment of cash or by issuing additional shares of common stock with a total value equal to the shortfall, depending upon the Company's preference. Pursuant to the terms of the Agreement, however, the total number of contingently issuable shares of common stock cannot exceed an additional 1.5 million. Given that the quoted fair market value of the stock at March 31, 1999 was [$0.75] per share, and that the Company's current debt instruments restrict the amount of cash that can be used for acquisitions, the assumed issuance of an additional 1.5 million shares would not completely extinguish the purchase price contingency. The Company therefore would be required to obtain an amendment to current debt instruments or replace them in order to complete a cash fill-up. Any future distribution of cash or common stock would be recorded as a charge to the Company's paid-in-capital. Until the earlier of the contingent purchase price resolution or March 1, 2001, any additional shares assumed to be issued because of shortfalls in fair market value will be included in the Company's diluted earnings per share calculations, unless they are antidilutive. The exchanged shares also contain restrictions preventing their sale prior to March 1, 2001. On March 29, 1999, one ex-ICT Spectrum shareholder, individually and on behalf of all others similarly situated, filed a class action lawsuit alleging false and misleading statements made in a private offering memorandum, and otherwise, in connection with the Company's acquisition of ICT Spectrum in 1998. Litigation, Claims and Assessments: 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, adequate reserves have been provided for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The continued adequacy of reserves is reviewed periodically as progress on such matters ensues. 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. The Company has provided for its estimate of the potential effect of these investigations, and the continued adequacy of reserves is reviewed periodically as progress on such matters ensues. 9 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 pending audits related to fiscal years 1986 forward, the government has asserted, among other things, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. The Company is actively working with the government to resolve these issues. The Company has provided for its estimate of the potential effect of issues that have been quantified, including its estimate of disallowed costs for the periods currently under audit and for periods not yet audited. Neither the government nor the Company, however, has quantified many of the issues, and others are qualitative in nature, and their potential financial impact, if any, is not quantifiable by the government or the Company at this time. The adequacy of provisions for reserves is reviewed periodically as progress with the government on such matters ensues. Contract warranties and performance guarantees: In the course of the Company's normal business activities, many of its contracts contain provisions for warranties and performance guarantees. As progress on contracts ensues, the Company regularly updates the estimates of the costs to perform such contingencies and reserves a proportionate amount of the total related contract value until such time as the contingency is resolved. Discontinued Operations Indemnities: In connection with the sales of the discontinued operations, the Company has made commitments to indemnify the buyers of those businesses on certain matters, including, but not limited to amounts incurred, if any, relating to unfavorable settlements and outcomes from government audits. The Company intends to provide for estimates of such contingencies at the time it records the gains from the respective sales. 6. Guarantor Subsidiaries Pursuant to SEC rules regarding publicly held debt, the Company is required to provide financial information for wholly owned subsidiaries of ICF Kaiser International, Inc. (Subsidiary Guarantors) which unconditionally guarantee the payment of the principal, premium, if any, and interest on the Company's Senior Subordinated Notes and Series B Senior Notes. The Subsidiary Guarantors are Cygna Consulting Engineers and Project Management, Inc; ICF Kaiser Government Programs, Inc; Systems Applications International, Inc; EDA, Incorporated; Global Trade & Investment, Inc; ICF Kaiser Europe, Inc; ICF Kaiser/Georgia Wilson, Inc; ICF Kaiser Overseas Engineering, Inc; ICF Kaiser Engineers Pacific, Inc; ICF Kaiser Remediation Company; and ICF Kaiser Advanced Technology, Inc. ICF Kaiser Remediation Company was included in the sale of the EFM Group to IT on April 9, 1999 and accordingly will no longer be a guarantor. Presented below is condensed consolidating financial information for ICF Kaiser International, Inc. (Parent Company), the Subsidiary Guarantors, and the Non- Guarantor Subsidiaries. The information, except for the December 31, 1998 condensed consolidating balance sheet, is unaudited. Investments in subsidiaries have been presented using the equity method of accounting. The Company does not have a formal tax-sharing arrangement with its subsidiaries and has allocated taxes to its subsidiaries based on the Company's overall effective tax rate. 10 ICF Kaiser International, Inc. and Subsidiaries Condensed Consolidating Balance Sheet March 31, 1999 (In thousands)
- --------------------------------------------------------------------------------------------------------------------------------- ICF Kaiser International, Parent Subsidiary Non-Guarantor Discontinued Inc. Company Guarantors Subsidiaries Operations Eliminations Consolidated --------- ---------- -------------- ------------ ------------ --------------- Unaudited Assets Current Assets Cash and cash equivalents $ 440 $ 5,569 $ 8,292 $ (19) $ - $ 14,282 Contract receivables, net (347) 132,870 135,404 (53,615) - 214,312 Intercompany receivables, net 190,419 12,253 (202,672) - - 0 Prepaid expenses and other current assets 4,050 456 9,326 89 - 13,831 Deferred income taxes 30,096 3,284 825 - - 34,205 Net assets of discontinued operations - - - 66,458 - 66,458 --------- --------- --------- --------- ---------- --------- Total Current Assets 224,658 154,432 (48,915) 12,913 - 343,088 --------- --------- --------- --------- ---------- --------- Fixed Assets Furniture, equipment, and leaseholds 4,891 3,219 35,362 (25,974) - 17,498 Less depreciation and amortization (4,122) (2,963) (29,884) 23,785 - (13,184) --------- --------- --------- --------- ---------- --------- 769 256 5,478 (2,189) - 4,314 --------- --------- --------- --------- ---------- --------- Other Assets Goodwill, net - 8,545 40,031 (25,609) - 22,967 Investment in and advances to affiliates (60,090) 14 12,805 (5,242) 60,221 7,706 Capitalized software development costs 3,968 1,103 (3,538) 1,533 Other 5,238 22 6,960 (101) - 12,119 --------- --------- --------- --------- ---------- --------- (50,884) 8,581 60,899 (34,490) 60,221 44,327 --------- --------- --------- --------- ---------- --------- Total Assets $ 174,543 $ 163,269 $ 17,462 $ (23,766) $ 60,221 $ 391,729 ========= ========= ========= ========= ========== ========= Liabilities and Shareholders' Equity Current Liabilities Debt currently payable $ 36,876 $ - $ - $ - $ - $ 36,876 Accounts payable and other accrued expenses 56,341 116,029 67,965 (13,137) - 227,198 Accrued salaries and employee benefits 4,666 15,291 19,502 (8,228) - 31,231 Other 2,507 895 14,458 (2,401) - 15,459 --------- --------- --------- --------- ---------- --------- Total Current Liabilities 100,390 132,215 101,925 (23,766) - 310,764 Long-term Liabilities Long-term debt, less current portion 137,609 - 1 - - 137,610 Other 1,955 26 6,723 - - 8,704 --------- --------- --------- --------- ---------- --------- Total Liabilities 239,954 132,241 108,649 (23,766) - 457,078 --------- --------- --------- --------- ---------- --------- Minority Interests in Subsidiaries - 2,582 - - - 2,582 Shareholders' Equity Common Stock 225 8,179 122 - (8,288) 238 Additional Paid-in Capital 74,996 2,596 58,544 - (60,918) 75,218 Accumulated Earnings (Deficit) (140,632) 17,998 (147,269) - 129,427 (140,476) Other Equity - (327) (2,584) - - (2,911) --------- --------- --------- --------- ---------- --------- Total Shareholders' Equity (65,411) 28,446 (91,187) - 60,221 (67,931) --------- --------- --------- --------- ---------- --------- Total Liabilities and Shareholders' Equity $ 174,543 $ 163,269 $ 17,462 $ (23,766) $ 60,221 $ 391,729 ========= ========= ========= ========= ========== =========
11 ICF Kaiser International, Inc. and Subsidiaries Condensed Consolidating Statement of Operations Three Months Ended March 31, 1999 (In thousands)
- --------------------------------------------------------------------------------------------------------------------------------- Parent Subsidiary Non-Guarantor Discontinued Company Guarantors Subsidiaries Operations ----------- ---------- ------------- ------------ (Unaudited) Gross Revenue $ 21 $ 156,509 $ 125,368 $ (56,401) Subcontract and direct material costs (71) (116,301) (67,942) 21,456 ----------- ---------- ------------- ------------ Service Revenue (50) 40,208 57,426 (34,945) Operating Expenses Operating expenses 2,362 33,406 57,718 (30,286) Depreciation and amortization 780 245 1,251 (795) Other unusual charges 895 - - - ----------- ---------- ------------- ------------ Operating Income (Loss) (4,087) 6,557 (1,543) (3,864) Other Income (Expense) Interest income 57 77 134 - Interest expense (5,798) (46) (8) - Equity in net income of unconsolidated subsidiaries 4,543 - 2,608 - ----------- ---------- ------------- ------------ Income (Loss) From Continuing Operations Before Income Taxes and Minority Interest (5,285) 6,588 1,191 (3,864) Income tax expense (benefit) 0 13 487 (1,520) ----------- ---------- ------------- ------------ Income (Loss) From Continuing Operations Before Minority Interest (5,285) 6,575 704 (2,344) Minority interests in net income of subsidiaries - 2,082 - - ----------- ---------- ------------- ------------ Income (Loss) Before Discontinued Operations (5,285) 4,493 704 (2,344) Income from discontinued operations (net of tax) - - - 2,344 ----------- ---------- ------------- ------------ Net Income (Loss) $ (5,285) $ 4,493 $ 704 $ - =========== ========== ============= ============ - --------------------------------------------------------------------------------------------------------- ICF Kaiser International, Inc. Eliminations Consolidated ------------ ---------------- Gross Revenue $ - $ 225,497 Subcontract and direct material costs - (162,858) ------------ ---------------- Service Revenue - 62,639 Operating Expenses Operating expenses - 63,200 Depreciation and amortization 1,481 Other unusual charges - 895 ------------ ---------------- Operating Income (Loss) - (2,937) Other Income (Expense) Interest income - 268 Interest expense - (5,852) Equity in net income of unconsolidated subsidiaries (5,631) 1,520 ------------ ---------------- Income (Loss) From Continuing Operations Before Income Taxes and Minority Interest (5,631) (7,001) Income tax expense (benefit) - (1,020) ------------ ---------------- Income (Loss) From Continuing Operations Before Minority Interest (5,631) (5,981) Minority interests in net income of subsidiaries - 2,082 ------------ ---------------- Income (Loss) Before Discontinued Operations (5,631) (8,063) Income from discontinued operations (net of tax) - 2,344 ------------ ---------------- Net Income (Loss) $ (5,631) $ (5,719) ============ ================
12 ICF Kaiser International, Inc. and Subsidiaries Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 1999 (In thousands)
- ---------------------------------------------------------------------------------------------------------------------------- Parent Subsidiary Non-Guarantor Discontinued Company Guarantors Subsidiaries Operations ----------- ---------- ------------- ------------ (Unaudited) Net Cash Provided by (Used in) Operating Activities $ (2,017) $ 1,704 $ 4,697 $ (4,228) ----------- ---------- ------------- ------------ Investing Activities Investments in subsidiaries and affiliates, net of cash acquired - - (4,374) 4,374 Sales of subsidiaries and/or investments - - - - Investments in net assets of discontinued operations - - - (596) Purchases of fixed assets - - (1,007) 450 ----------- ---------- ------------- ------------ Net Cash Provided by (Used in) Investing Activities - - (5,381) 4,228 ----------- ---------- ------------- ------------ Financing Activities Borrowings under credit facility 57,064 - - - Principal payments on credit facility (50,942) - - - Change in book overdraft (6,117) - - - Distribution of income to minority interest - 51 - - Proceeds from issuances of common stock 38 - - - ----------- ---------- ------------- ------------ Net Cash Provided by (Used in) Financing Activities 43 51 - - ----------- ---------- ------------- ------------ Effect of Exchange Rate Changes on Cash - - (63) - ----------- ---------- ------------- ------------ Increase (Decrease) in Cash and Cash Equivalents (1,974) 1,755 (747) - Cash and Cash Equivalents at Beginning of Period 2,414 3,814 9,039 (19) ----------- ---------- ------------- ------------ Cash and Cash Equivalents at End of Period $ 440 $ 5,569 $ 8,292 $ (19) =========== ========== ============= ============ - ---------------------------------------------------------------------------------------------------- ICF Kaiser International, Inc. Eliminations Consolidated ------------ ------------------- Net Cash Provided by (Used in) Operating Activities $ - $ 156 ------------ ------------- Investing Activities Investments in subsidiaries and affiliates, net of cash acquired - - Sales of subsidiaries and/or investments - - Investments in net assets of discontinued operations - (596) Purchases of fixed assets - (557) ------------ ------------- Net Cash Provided by (Used) in Investing Activities - (1,153) ------------ ------------- Financing Activities Borrowings under credit facility - 57,064 Principal payments on credit facility - (50,942) Change in book overdraft - (6,117) Distribution of income to minority interest - 51 Proceeds from issuances of common stock - 38 ------------ ------------- Net Cash Used in Financing Activities - 94 ------------ ------------- Effect of Exchange Rate Changes on Cash - (63) ------------ ------------- Increase (Decrease) in Cash and Cash Equivalents - (966) Cash and Cash Equivalents at Beginning of Period - 15,248 ------------ ------------- Cash and Cash Equivalents at End of Period $ - $ 14,282 ============ =============
13 ICF Kaiser International, Inc. and Subsidiaries Condensed Consolidating Balance Sheet March 31, 1998 (In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------ ICF Kaiser Parent Subsidiary Non-Guarantor Discontinued International, Company Guarantors Subsidiaries Operations Eliminations Inc. Consolidated ------- ---------- ------------ ---------- ------------ ----------------- Assets Current Assets Cash and cash equivalents $ 2,414 $ 3,814 $ 9,039 $ (19) $ - $ 15,248 Contract receivables, net (5,283) 133,618 155,743 (49,758) - 234,320 Intercompany receivables, net 184,700 10,943 (195,643) - - - Prepaid expenses and other current assets 2,185 431 10,225 (923) - 11,918 Deferred income taxes 30,367 3,245 1,061 - - 34,673 Net assets of discontinued operations - - - 65,862 - 65,862 --------- --------- --------- --------- ---------- ----------- Total Current Assets 214,383 152,051 (19,575) 15,162 - 362,021 --------- --------- --------- --------- ---------- ----------- Fixed Assets Furniture, equipment, and leaseholds 4,589 3,456 35,951 (26,026) - 17,970 Less depreciation and amortization (4,040) (3,155) (30,216) 23,746 - (13,665) --------- --------- --------- --------- ---------- ----------- 549 301 5,735 (2,280) - 4,305 --------- --------- --------- --------- ---------- ----------- Other Assets Goodwill, net - 8,745 40,547 (25,969) - 23,323 Investment in and advances to affiliates (64,556) 14 6,494 (157) 65,776 7,571 Capitalized software development costs 4,296 766 (3,444) 1,618 Other 4,910 523 8,094 (782) - 12,745 --------- --------- --------- --------- ---------- ----------- (55,350) 9,282 55,901 (30,352) 65,776 45,257 --------- --------- --------- --------- ---------- ----------- Total Assets $ 159,582 $ 161,634 $ 42,061 $ (17,470) $ 65,776 $ 411,583 ========= ========= ========= ========= ========== =========== Liabilities and Shareholders' Equity Current Liabilities Debt currently payable $ 30,729 $ - $ - $ - $ - $ 30,729 Accounts payable and other accrued expenses 39,759 121,833 72,160 (7,436) - 226,316 Accrued salaries and employee benefits 7,818 13,997 16,116 (6,790) - 31,141 Other 1,910 1,282 38,966 (3,164) - 38,994 --------- --------- --------- --------- ---------- ----------- Total Current Liabilities 80,216 137,112 127,242 (17,390) - 327,180 Long-term Liabilities Long-term debt, less current portion 137,487 - 1 - - 137,488 Other 2,000 26 7,638 (80) - 9,584 --------- --------- --------- --------- ---------- ----------- Total Liabilities 219,703 137,138 134,881 (17,470) - 474,252 --------- --------- --------- --------- ---------- ----------- Minority Interests in Subsidiaries - 449 - - - 449 Shareholders' Equity Common Stock 230 8,179 121 - (8,288) 242 Additional Paid-in Capital 75,200 2,596 58,544 - (60,918) 75,422 Accumulated Earnings (Deficit) (134,913) 13,542 (148,368) - 134,982 (134,757) Other Equity (638) (270) (3,117) - - (4,025) --------- --------- --------- --------- ---------- ----------- Total Shareholders' Equity (60,121) 24,047 (92,820) - 65,776 (63,118) --------- --------- --------- --------- ---------- ----------- Total Liabilities and Shareholders' Equity $ 159,582 $ 161,634 $ 42,061 $ (17,470) $ 65,776 $ 411,583 ========= ========= ========= ========= ========== ===========
14 ICF Kaiser International, Inc. and Subsidiaries Condensed Consolidating Statement of Operations Three Months Ended March 31, 1998 (In thousands)
- ------------------------------------------------------------------------------------------------------------------------------ Parent Subsidiary Non-Guarantor Discontinued Company Guarantors Subsidiaries Operations Eliminations (Unaudited) -------- ---------- ------------ ---------- ------------ Gross Revenue $ (164) $ 146,340 $ 159,080 $ (48,417) $ - Subcontract and direct material costs (175) (107,396) (91,449) 15,686 - -------- --------- --------- --------- --------- Service Revenue (339) 38,944 67,631 (32,731) - Operating Expenses Operating expenses 4,288 32,600 59,580 (27,876) - Depreciation and amortization 663 292 1,380 (743) - -------- --------- --------- --------- --------- Operating Income (Loss) (5,290) 6,052 6,671 (4,112) - Other Income (Expense) Interest income 131 123 270 - (58) Interest expense (4,816) (46) (12) - 53 Equity in net income of unconsolidated subsidiaries 10,593 - 2,084 - (11,650) -------- --------- --------- --------- --------- Income (Loss) From Continuing Operations Before Income Taxes and Minority Interest 618 6,129 9,013 (4,112) (11,655) Income tax expense (benefit) 173 1,716 2,523 (1,617) (3,263) -------- --------- --------- --------- --------- Income (Loss) From Continuing Operations Before Minority Interest 445 4,413 6,490 (2,495) (8,392) Minority interests in net income of subsidiaries - 2,538 (27) - - -------- --------- --------- --------- --------- Income (Loss) Before Discontinued Operations 445 1,875 6,517 (2,495) (8,392) Income from discontinued operations (net of tax) - - - 2,495 - -------- --------- --------- --------- --------- Net Income (Loss) $ 445 $ 1,875 $ 6,517 $ - $ (8,392) ======== ========= ========= ========= ========= - -------------------------------------------------------------------------- ICF Kaiser International, Inc. Consolidated ------------------- Gross Revenue $ 256,839 Subcontract and direct material costs (183,334) --------- Service Revenue 73,505 Operating Expenses Operating expenses 68,592 Depreciation and amortization 1,592 Operating Income (Loss) 3,321 Other Income (Expense) Interest income 466 Interest expense (4,821) Equity in net income of unconsolidated subsidiaries 1,027 Income (Loss) From Continuing Operations Before Income Taxes and Minority Interest (7) Income tax expense (benefit) (468) Income (Loss) From Continuing Operations Before Minority Interest 461 Minority interests in net income of subsidiaries 2,511 Income (Loss) Before Discontinued Operations (2,050) Income from discontinued operations (net of tax) 2,495 Net Income (Loss) $ 445 =========
15 ICF Kaiser International, Inc. and Subsidiaries Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 1998 (In thousands) - ------------------------------------------------------------------------------------------------------------------------------------ Parent Subsidiary Non-Guarantor Discontinued Company Guarantors Subsidiaries Operations (Unaudited) Net Cash Provided by (Used in) Operating Activities $ (3,558) $ 7,586 $ 6,450 $ 1,991 --------- -------- -------- -------- Investing Activities Investments in subsidiaries and affiliates, net of cash acquired 3,841 - - - Sales of subsidiaries and/or investments 2,400 - - - Investments in net assets of discontinued operations - (2,424) Purchases of fixed assets (369) - (1,108) 444 ------- ------- -------- -------- Net Cash Provided by (Used in) Investing Activities 5,872 - (1,108) (1,980) ------- ------- -------- -------- Financing Activities Borrowings under credit facility 35,000 - - - Principal payments on credit facility (34,500) - - - Change in book overdraft 5,988 - - - Distribution of income to minority interest - (3,071) - - Proceeds from issuances of common stock 47 - - - ------- ------- ------- -------- Net Cash Provided by (Used in) Financing Activities 6,535 (3,071) - - ------- ------- ------- -------- Effect of Exchange Rate Changes on Cash - - 74 - ------- ------- ------- -------- Increase in Cash and Cash Equivalents 8,849 4,515 5,416 11 Cash and Cash Equivalents at Beginning of Period (4,843) 10,259 14,604 (11) ------- ------- ------- -------- Cash and Cash Equivalents at End of Period $ 4,006 $14,774 $20,020 $ - ======= ======= ======= ======== ICF Kaiser International, Inc. Eliminations Consolidated ------------ ------------------ Net Cash Provided by (Used in) Operating Activities $ - $ 12,469 -------- --------- Investing Activities Investments in subsidiaries and affiliates, net of cash acquired - 3,841 Sales of subsidiaries and/or investments - 2,400 Investments in net assets of discontinued operations - (2,424) Purchases of fixed assets - (1,033) -------- --------- Net Cash Used in Investing Activities - 2,784 -------- --------- Financing Activities Borrowings under credit facility - 35,000 Principal payments on credit facility - (34,500 Change in book overdraft - 5,988 Distribution of income to minority interest - (3,071 Proceeds from issuances of common stock - 47 -------- --------- Net Cash Used in Financing Activities - 3,464 -------- --------- Effect of Exchange Rate Changes on Cash - 74 -------- --------- Increase (Decrease) in Cash and Cash Equivalents - 18,791 Cash and Cash Equivalents at Beginning of Period - 20,009 -------- --------- Cash and Cash Equivalents at End of Period $ - $ 38,800 ========= =========
16 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview During the three months ended March 31, 1999, the Company made significant progress toward completion of four large fixed price contracts, involving the construction of plants to produce nitric acid (the Nitric Acid Projects), which caused the Company to recognize contract cost overruns in 1998 totaling $66.0 million. A significant amount of management activities have since been focused on responding to the various cash flow consequences stemming from the substantial loss. Management has now addressed the predominant issues related to completing the Nitric Acid Projects and funding the related cost overruns. Three of the four plants were complete and operating in 1998, while the fourth became operational on April 15, 1999. The Company entered into arrangements with several of the Nitric Acid Project customers and subcontractors in order to minimize the remaining cost uncertainties. The Company may also continue to pursue claims recoveries against certain subcontractors, but has not included any estimate for recoveries in the total recorded cost overrun. Anticipating the cash flow and liquidity issues that would result from the Nitric Acid Project cost overruns and from significant ensuing restructuring activities, the Company proceeded down two parallel paths addressing liquidity; one intended to recognize significant cash from values inherent in the Company's businesses; the other, involving the Company's revolving credit, was intended to bridge short term needs. In 1999, the Company announced its intention to sell the two major operating segments described below: . On March 8, 1999, the Company entered into a definitive asset purchase agreement (the EFM Agreement) with The IT Group, Inc. (IT) for the sale of the Company's Environment and Facilities Management Group (EFM). Pursuant to the terms of the EFM Agreement, on April 9, 1999, the Company sold the majority of the active contracts and investments, and transferred a substantial number of employees to IT, for a purchase price of $82 million, less $8 million to be retained by IT for EFM's working capital requirements. IT also acquired the Company's interest in various operating leases for equipment and facilities used by EFM. . Also in March 1999, the Company announced its intention to sell its Consulting Group. On March 8, 1999, a non-binding letter of intent was signed with CM Equity Partners, L.P. (CMEP), an equity investment firm based in New York City, and the Group's management for the sale of the majority of the assets associated with the Consulting Group. Although terms of the sale are not completely negotiated, the Company expects to sell 90% of the Consulting Group for an amount in excess of $70 million. The sale is expected to be completed by mid-year 1999. The accompanying quarterly financial statements reflect these segments' operations as "discontinued" and present the results separate from those of the Company's continuing operations. The erosion on the Nitric Acid Projects, combined with recent growth in the Company's federal government business, pushed the Company to maximum available borrowing levels and resulted in restrictive amendments to the recently secured revolving line of credit. The amendments now limit cash borrowing and letter of credit access only up to an aggregate of $30 million and require $10 million in cash collateral for existing letters of credit. The Company's revolving credit facility expires on June 30, 1999. Additionally, until the completion of the sale of the discontinued Consulting Group segment, the Company has had and may continue to extend the average age of its vendor obligations and to carefully manage all cash disbursement activity. The payment delays to trade creditors may, at least in the short term, have a negative impact upon the Company's current and future ability to generate and secure business opportunities. The Company is actively exploring means by which the available cash proceeds from the sale of the Consulting Group may be used to facilitate transactions that would reduce the Company's outstanding debt to levels supportable over the long term by anticipated cash flows from operations remaining after the sale of the Consulting Group. Such transactions may include proposals for the exchange of cash, new debt, and equity for some or all of the Company's outstanding notes. Some of the net cash proceeds from the completed sale of EFM and the pending Consulting Group sale has been and will continue to be used to pay down the cash borrowings on the Company's revolving line of credit and contribute to resolving existing liquidity constraints. The Company also will continue to pursue reductions in its cost structure. This effort, together with an increased focus on risk mitigation and effective resource allocation, are aimed at improving the profitability of the Company's remaining operations. The Company is committed to implementing proper management controls and the processes necessary to deliver high-quality, profitable projects throughout its 17 operations. A plan that management began implementing late in 1998 provides for the discontinuance of unprofitable market areas, the realignment of staff within the Company to meet current needs, and the reduction of significant overhead costs in light of the divestitures of two of its operating groups. The Company anticipates that it will recognize a future charge for additional costs of the restructuring once the plan is fully developed. The Company ended the first quarter of 1999 with approximately $1.8 billion in contract backlog for its continuing operations; $1.3 billion for Kaiser-Hill and $0.5 billion for E&C. The backlog of the discontinued EFM and Consulting Groups approximated [$600] million and [$500] million, respectively, as of March 31, 1999. Results of Continuing Operations Gross Revenue The Company's gross revenue by operating group for each of the three month periods ended March 31 are as follows (in millions):
1999 1998 ------ ------ Kaiser-Hill........................................... $145.1 $141.0 Engineering and Construction (E&C).................... 80.4 115.8 ------ ------ Total............................................ $225.5 $256.8 ====== ======
Kaiser-Hill Kaiser-Hill is a 50% owned, board-controlled and consolidated joint venture between ICF Kaiser International, Inc. and CH2M Hill formed solely to perform the U.S. Department of Energy's Rocky Flats Closure Project awarded in late 1995. The contract is cost-plus incentive fee in nature. Accordingly, the changes in gross revenue earned by Kaiser-Hill during the comparable periods are largely reflective of increased levels of reimburseable subcontractor costs being incurred as the contract progress ensues. Engineers & Constructors Group (E&C) The E&C Group provides design engineering, procurement, and construction services to domestic and international clients in the industrial, water, transportation and transit, infrastructure, and semi-conductor (or clean room technologies) markets. The decrease in gross revenue of $35.4 million during the three months ended March 31, 1999 compared to 1998 is comprised primarily of the following: . a decline of $31.1 million in gross revenue generated by the Company's construction management activities specializing in fabrication plants and other facilities for semiconductor and microelectronics customers. . an increase of $12.3 million in gross revenue generated by the Nova Hut steel mini-mill contract in the Czech Republic primarily from completing activities of the project involving the procurement of significant amounts of subcontracted labor and direct materials. Currently contracted portions of this project are expected to be completed during the latter half of 1999. . a reduction of $13.8 million in gross revenue recognized from the Nitric Acid Projects, partially reflective of the decreasing volume of activity on the projects as they neared completion and partially of the reversal of revenue as a result of changes in estimates of contract losses at completion. Service Revenue The Company's service revenue for the three months ended March 31, as well as the related percentage of service revenue to gross revenue, is as follows (in millions): 1998 ---- 1999 1998 CHANGE ----- ----- ------ Kaiser-Hill................................... $34.7 24% $35.7 25% (3)% Engineering and Construction (E&C)............ 27.9 35% 38.8 33% (26)% ----- ----- $62.6 28% $73.5 29% (15)% ===== =====
18 Kaiser-Hill - ------------ Kaiser-Hill's service revenue is generated in part by fees earned as a percentage of costs incurred to execute the project and in part by incentive fees earned for attaining specified contract performance thresholds. The incentive fees are not based on incurred costs. The service revenue decrease of $0.9 million during the three months ended March 31, 1999 compared to 1998 is reflective of changes in recorded incentive fee estimates between the periods as current phases of the contract contain increased minimum performance levels. Engineers & Constructors Group (E&C) - ------------------------------------- The decrease in service revenue of $9.9 million during the three months ended March 31, 1999 compared to the same quarter in 1998 is comprised primarily of: . a reduction of $1.8 million previously generated from the Nitric Acid Projects. The Projects generated no service revenue in 1999, largely reflective of the large provisions for cost overruns recorded during 1998 and of the fact that the last phases of the contracts were more subcontractor intensive. The related service revenue recognized during the three months ended March 31, 1998 was on two Nitric Acid Projects for which, as of March 31, 1998, the Company had not yet projected losses at completion.. Although management believes that adequate provision for loss reserves and profit estimates for these fixed-price contracts has been reflected in these results, no assurance can be given that there will be no additional future adjustments. . a reduction of $2.2 million generated by the Asia-Pacific activities. The effect on profits of this service revenue decline was somewhat offset by increases over the prior quarter in Australian joint venture activities. The Company records its ownership percentage of the joint venture's results as equity in net income of unconsolidated subsidiaries. . a reduction of $1.0 million representing the late 1998 discontinuance of certain E&C operations in several foreign markets. . other total net reductions of $4.9 million as current projects neared completion compared to the same period in 1998 or entered phases requiring proportionately more subcontractor and direct material costs than the Group's own professional services. This result reflects the overall decline in the Group's contract backlog and is the primary contributor to the Company's operating losses for the three months ended March 31, 1999 - since much of the direct labor that was previously deployed on such projects is decreasingly utilized. Operating Expenses Segment operating expenses as a percentage of service revenue for each of the three months ended March 31 are as follows:
KAISER-HILL E&C ----------- --- 1999 1998 1999 1998 ------ ------- ------- ------- Service Revenue . 100% 100% 100% 100% Operating Expenses Direct labor and fringe benefits.................... 88% 86% 64% 60% Group overhead...................................... - - 39% 30% ---- ---- ---- ---- Segment income........................................ 12% 14% (3)% 10% ==== ==== ==== ====
The segment operating results include all direct and overhead activities that are typically controllable by the respective segment's business leaders and consist of activities that had sole direct benefit to the respective segment. Operating activities that are deemed to benefit more than one segment are not managed by segment business leaders but are instead managed by the Company's corporate overhead structure and are not allocated to the segments but instead classified as corporate overhead on the Company's income statement. The decline in Kaiser-Hill's operating income as a percentage of service revenue for the three months ended March 31, 1999 versus 1998 is again indicative of the profit-earning nature of the underlying contract - some profit is earned as a percent of actual costs incurred and some profit is earned based on incentives for attaining specified, qualitative contract performance thresholds. Therefore, total profits may vary as a percentage of service revenue. The reduced profit percentage of 12% above reflects changes in recorded incentive fee estimates included in service 19 revenue as compared to the same period in 1998 due to the current phase of the contract containing increased minimum performance levels required to earn the incentive fees. Actual direct labor of Kaiser-Hill remained consistent quarter over quarter at $30.6 million. The declining E&C results, quarter over quarter, stem from lower gross margins being earned on projects and significant increases and volumes of indirect labor, resulting from completion of projects and the declining backlog prohibiting the redeployment of direct labor to more profitable projects. There were no significant changes, quarter over quarter (amounts not depicted above), in corporate general and administrative expense. However in light of the significant 1998 contract overruns and ensuing activities directed at resolving the resulting liquidity issues, the Company has been incurring costs that it ordinarily would not incur without these strains. Such costs, including divestiture-related expenses of professional fees as well as increased bank fees, and fines and penalties, have been presented as unusual items in the accompanying income statement. It should also be noted that the levels of corporate overhead incurred during the three months ended March 31, 1999 and 1998 were for the Company's organization and size prior to the completion of the sales of the recently discontinued segments. Subsequent to those sales, however, corporate overhead and general and administrative spending will need to be restructured and reduced to levels appropriate for the Company's continuing core E&C operations. Management believes it can significantly reduce or "right-size" these costs. The plan is currently being developed and should take effect beginning late in the second quarter of 1999 - essentially following the completion of the sales of the two discontinued business segments. Interest Expense The Company's average outstanding debt and the related average effective interest rates for three months ended March 31, 1999 were $175.8 million and 13.3%, respectively, and $143.8 million and 13.4%, respectively for the three months ended March 31, 1998. The increased borrowings were primarily necessary to fund cost overruns on the Nitric Acid Projects and is the direct cause of the $1.0 million increase in interest expense during the first quarter of 1999 compared to the first quarter of 1998. Income Tax Expense The net effect of the income tax activity for the three months ended March 31, 1999 was to continue with recently established practice of not recognizing current financial statement benefits created by the future deductibility of net operating losses, created largely by domestic operations in the current period. Rather, the Company only provided for income taxes that will be due as a result of current period foreign earnings. In addition to this quarter's operating losses, the Company's balance sheet contains a deferred tax asset totaling $34.7 million. The asset is comprised of total future income tax credits of $60.0 million less $25.3 million in valuation allowances. The valuation allowances have been recorded to reflect the current uncertainty over the Company's ability to realize and use all of the net operating loss deductions in the future. Management believes, however, that future earnings, including anticipated gains from the sales of the discontinued segments will generate sufficient taxable income within the next year to realize the entire net $34.7 million deferred tax asset in addition to $24.1 million of benefits currently included in the valuation allowance. The income tax provision for the three months ended March 31, 1998 was computed using an estimated average effective income tax rate of 28%. The effective rate method was used at March 31, 1998, because the Company had not yet estimated that it would incur significant net operating losses in 1998. Had the losses been projected as of the end of March, 1998, the Company would have only recorded income tax expense on foreign earnings similar to the methodology used for the three months ended March 31, 1999. The income tax provision for all periods presented excludes the minority's interest in Kaiser-Hill's operating income because it is only 50% owned and is a flow-through entity for income tax purposes. 20 Results of Discontinued Operations The operating results of the two discontinued segments has been included in the accompanying financial statements, in accordance with generally accepted accounting principles, in the form of their net results only. Summarized results for the discontinued segments is as follows (in thousands):
EFM CONSULTING --------------------------- ----------------------------- THREE MONTHS ENDED MARCH 31, 1999 1998 1999 1998 ------------- ------------ ------------ --------------- Gross revenue................................................. $ 29,939 $ 22,994 $26,462 $25,423 Subcontracts and materials.................................. (16,377) (10,158) 5,079 (5,528) -------- -------- ------- ------- Service revenue............................................... 13,562 12,836 21,383 19,895 Operating expenses: Direct labor and fringe..................................... 6,975 6,566 9,973 9,404 Group overhead.............................................. 4,722 5,139 8,615 6,767 Depreciation and amortization............................... 455 455 340 288 -------- -------- ------- ------- Segment income before income tax.............................. $ 1,410 $ 676 $ 2,455 $ 3,436 ======== ======== ======= =======
Total segment income from the discontinued operations of $3.9 million and $4.1 million for the three months ended March 31, 1999 and 1998, respectively, is presented in the accompanying income statement net of an applicable 40% income tax rate of $1.6 million and $1.6 million, respectively. Regardless of the income tax expense recognized on the earnings from the discontinued operations, the Company's consolidated tax position has no net current income tax expense (other than for foreign income taxes) - see Income Tax Expense. Therefore, the tax expense attributable to the earnings from the discontinued operations has been offset in the income tax provision from continuing operations by a similar amount of income tax benefit. LIQUIDITY AND CAPITAL RESOURCES Operating activities: Apart from operating cash flows of $2.1 million generated by Kaiser-Hill for the three months ended March 31, 1999, the Company's remaining continuing operations used $2.0 million in cash during the quarter - primarily for the additional funding of the Nitric Acid Project overruns, as well as growth in its federal government contracts which, generally, require that subcontractor invoices be paid by the Company prior to the Company issuing an invoice to the government customer. Investing activities: Fixed asset purchases in the first quarter of 1999 and 1998 consisted largely of the capitalized costs of either purchased or internally developed software necessitated by the Company's software replacement efforts for Year 2000 issues. The cash flows from the operations of the discontinued segments, as well as net changes in working capital and investing activities are all presented net in the Cash Flow Statement as "Investments in Net Assets of Discontinued Operations". During the first quarter of 1998, the Company collected $2.4 million from the sale of its 1997 sale of a remaining minority investment in a pulverized coal injection facility. Also during the first quarter of 1998, the Company acquired cash of approximately $3.8 million when it completed the acquisition of the former ICT Spectrum using common stock. Financing activities: During the first quarter of 1999, the Company's trade payables were aged significantly as operating activities continued to use cash. Including the effects of book overdrafts, all available financing was fully utilized during the entire quarter - therefore there were no net financing cash flows during the quarter. During the first quarter of 1998, Kaiser-Hill distributed $3.1 million to CH2M Hill. As of March 31, 1999, the Company had $36.8 million in cash borrowings and $25.2 million in letters of credit outstanding under the revolver credit line, with no additional availability. 21 Liquidity and Capital Resource Outlook Based on current plans and expectations, management believes that the net cash proceeds from the completed EFM sale and the pending Consulting Group sale will yield sufficient short-term liquidity to bridge the Company's financing needs until such time as the Company can secure other longer-term funding alternatives. Specifically, the cash proceeds from divestitures will be used to retire outstanding cash borrowings from the revolving credit facility, provide required collateral for contract performance guarantees (including letters of credit), pay overdue vendor obligations and contribute to supporting the future working capital requirements and capital expenditures of the Company's remaining operations including the $9.1 million interest obligations due June 30, 1999 to the Series B Senior and the Senior Subordinated Notes. The Company's amended $30 million revolving line of credit (the Amended Revolver) from its current lenders expires June 30, 1999. The terms of the Amended Revolver include similar restrictive financial covenants as the Revolver and in addition require the Company to cash collateralize $10.0 million of its letters of credit previously secured by assets of the Company. To extend the Amended Revolver beyond June 8, 1999, if necessary, through to June 30, 1999 a substantial fee would have to be paid to the Company's existing lenders. Such an extension of the Amended Revolver would be required in the event that the sale of the Consulting Group is not consummated before June 8, 1999. Moreover, based on preliminary discussions with existing and prospective senior lenders, the Company does not presently expect to have available a revolving line of credit after June 30, 1999. Accordingly, following the anticipated close of the sale of the Consulting Group, the Company's present plan is to cash collateralize all of the outstanding letters of credit, as well as any additional letters of credit of the type often required to support certain contract performance obligations, and utilize other available cash for working capital purposes. This situation could limit the availability of letters of credit to support the growth of the Company's business. In the event the Consulting Group sale is not consummated, the Company currently believes the cash flows from ongoing operations of the Consulting Group, Kaiser- Hill, and the E&C Group would most likely generate sufficient collateral, in the form of current trade accounts receivable, to adequately support a borrowing base in the amount needed to secure the size of revolving credit line needed to fund short-term borrowing needs of the Company's for those operations, as well as the letter-of-credit capacity needed primarily by the E&C Group. However, it is difficult to predict with certainty and no assurances can be given as to whether a revolving credit facility would be available to the Company upon such sale or as to the terms on which such a facility might be made available. The Company does not currently have any commitments from lenders for a new line of credit and there can be no assurances as to its ability to secure one. Whether or not the sale of the Consulting Group is completed, management believes that a factor critical to the Company's success in securing a sufficient and affordable working capital facility in the near term is its ability to immediately reduce sufficient overhead costs from remaining operations and achieve improved operating results. Although management has taken certain steps to accomplish these milestones, there can be no assurance that it will be able to do so. In addition, management believes it is necessary for the Company to realign its capital structure. The Company is actively exploring means by which the available cash proceeds from the sale of the Consulting Group may be used to facilitate transactions that would reduce the Company's outstanding debt to levels supportable over the long term by anticipated cash flows from operations remaining after the sale of the Consulting Group. Such transactions may include proposals for the exchange of cash, new debt and equity for some or all of the Company's outstanding notes. Any issuance of new debt could impose restrictive covenants upon the Company's business operations. Additionally, any equity issuance could result in substantial dilution to current holders of the Company's common stock. The Company also will continue to explore options that would provide additional capital for longer-term objectives and operating needs, including the possibility for divestiture of additional operating assets and additional equity infusions. 22 Other Matters Bath Contingency: In March 1998, the Company entered into a $187 million maximum price contract to construct a ship building facility. In May 1998, the Company subsequently learned that estimated costs to perform the contract as reflected in actual proposed subcontracts were approximately $30 million higher than the cost estimates originally used as the basis for contract negotiation between the Company and the customer. After learning this, the Company advised the customer that it was not required to perform the contract in accordance with its terms as a result of a mutual mistake among them in negotiating that contract. In October 1998, the customer presented an initial draft of a claim against the Company requesting payment for estimated damages and entitlements pursuant to the terminated contract. The Company and the customer are currently discussing the customer's draft claim. No provision for loss for this matter has been included in the Company's financial results to date as management does not believe that it has sufficient information to reasonably estimate the outcome as negotiation activity has not been significant to date. Acquisition Contingency: The ICF Kaiser common shares exchanged for the stock of ICT Spectrum in the March, 1998 acquisition, carry the guarantee that the fair market value of each share of stock will reach $5.36 by March 1, 2001. In the event that the fair market value does not attain the guaranteed level, the Company is obligated to make up the shortfall either through the payment of cash or by issuing additional shares of common stock with a total value equal to the shortfall, depending upon the Company's preference. Pursuant to the terms of the Agreement, however, the total number of contingently issuable shares of common stock cannot exceed an additional 1.5 million. Given that the quoted fair market value of the stock at March 31, 1999 was [$1.44] per share, and that the Company's current debt instruments restrict the amount of cash that can be used for acquisitions, the assumed issuance of an additional 1.5 million shares would not completely extinguish the purchase price contingency. The Company therefore would be required to obtain an amendment to current debt instruments or replace them in order to complete a cash fill-up. Any future distribution of cash or common stock would be recorded as a charge to the Company's paid-in-capital. Until the earlier of the contingent purchase price resolution or March 1, 2001, any additional shares assumed to be issued because of shortfalls in fair market value will be included in the Company's diluted earnings per share calculations, unless they are antidilutive. The exchanged shares also contain restrictions preventing their sale prior to March 1, 2001. On March 29, 1999, one ex-ICT Spectrum shareholder, individually and on behalf of all others similarly situated, filed a class action lawsuit alleging false and misleading statements made in a private offering memorandum, and asserting other claims, in connection with the Company's acquisition of ICT Spectrum in 1998. Year-2000 Readiness: Similar to many organizations that use computer programs in their operations, the Company is addressing the impact of the Year-2000 issue on its business. The Year-2000 issue is the result of computer programs that were written using two digits rather than four to identify the year in a date field. Although it is possible that certain programs could function if left uncorrected, there is a significant risk that computer programs will recognize any two digit date containing ''00'' to be referring to the year 1900 rather than the year 2000. This could result in system failures and miscalculations causing disruptions to regular operations. The Company has developed and implemented a plan to achieve Year-2000 readiness. The Year-2000 program, led and coordinated at the corporate level, consists of senior management from all Company disciplines, and is being executed and implemented by teams in each of the Company's operating groups throughout the world. The Company has identified the following five areas in which Year-2000 readiness and/or risk assessment are critical operations: (1) software applications used by management to run and monitor the business (''Internal Systems''); (2) the hardware and related software used internally to run the core business--such as desk-top hardware and software applications, communications networks, and systems used in the operation of office facilities (''Hardware, Network, and Facilities Systems''); (3) software that the Company has either purchased, designed, developed, written, or interfaced, and sold to customers (''Customer Systems''); (4) software used by the Company's significant vendors or subcontractors that could disrupt the flow of the Company's activities in the event that the system malfunctions (''Vendor Systems''); and 23 (5) systems critical to the operations of Kaiser-Hill (''Kaiser-Hill Systems''). Within each category, the Company has identified and assigned criticality priorities to the various systems. Levels of system criticality were defined as those that might have a significant adverse effect to the Company in any of the areas of safety, environmental, legal, financial, and service-delivery capabilities. Internal Systems: Management's ongoing assessment of the majority of its Internal Systems began in 1995 and 1996 with the replacement of its main-frame based financial and project management software systems with new client-server applications which will be Year 2000 ready. The phased conversion to the new systems began in 1996 and will be completed by September 1999. The costs of the new software, external consultants, and the internal cost of implementation labor is being capitalized and amortized over a period of five years. The total remaining costs, excluding internal labor, of this aspect of the Year-2000 project, including nonrecurring costs associated with the historical archival of main-frame-based computer data, is estimated to be less than $1.0 million. Hardware, Network and Facilities Systems: The Company is finalizing the inventory and assessment of these systems and is currently in the replacement mode. Estimated costs of $0.2 million will be incurred to replace these critical systems, primarily including the replacement of embedded technology in items such as telephone switches. The Company will most likely finance the majority of this obligation through operating leases just as it does for the majority of its annual ongoing needs for technology updates for desk-top hardware and software. Accordingly, the charges will be expensed as the lease financing is paid. Customer Systems: The Company also is assessing the risk surrounding Year-2000 readiness in its customer systems, i.e. risk that may have been created through the Company's contracts for services in which the Company's professionals wrote and delivered software source code, or procured third party software for modification and/or resale to customers. Based on the service orientations of the Company's business, which historically did not make wide use of computer software applications, management does not anticipate significant contract exposures emanating from the improper functioning of delivered source code that would still be covered under nonexpired contract warranty provisions. There can be no assurances that the Company's customers would be unable to seek such compensation even if the contracts do not provide for it. Vendor Systems: The Company is also corresponding with all vendors and subcontractors related to the Vendor Systems that have been identified through reasonable risk assessment techniques as critical to the Company's operations regarding their Year-2000 readiness. Compliance assessment in this area will be ongoing throughout 1999. The Company will devise contingency plans in the event it believes significant risk to a disruption of service to the Company is not being adequately mitigated. Currently, management does not anticipate the need for contingency plans. Of course, the ability of parties to be compensated for monetary or other damages resulting from Year-2000 readiness risks is unknown. Kaiser-Hill Systems: Kaiser-Hill also has a Year-2000 readiness program, separate from that of the Company. The United States Department of Energy (DOE) owns all property and equipment at the Rocky Flats Environmental Technology Site near Denver, Colorado. While DOE bears the Year-2000 risk at Rocky Flats, Kaiser-Hill manages and uses the DOE property in its execution of the site closure contract. One work element of the Rocky Flats contract requires that Kaiser-Hill plan and execute DOE's Year-2000 readiness activities at the site. Costs incurred by Kaiser-Hill in the execution of the readiness activities are fully reimbursed by the DOE. Additionally, Kaiser-Hill is eligible for performance award fees for attaining certain plan performance milestones, and is susceptible to penalties in the event certain plan milestones are not attained. Successful progress on the plan execution to date has resulted in Kaiser-Hill being awarded $0.5 million in performance award fees through March 31, 1999, as well as attaining reductions to the total amount of potential penalties, limiting the remaining potential penalty exposure to $0.5 million. Although there can be no guarantee of complete readiness by the beginning of the year 2000, the Company believes each of the business areas described above will be Year-2000 ready or be substantially ready by November 1999 such that further remediation and testing, if any, will not be significant. In the event the Company does not complete its program, or fails to properly identify and modify critical business applications, there may be an interruption to the Company's business that may have a material adverse affect on its business, future financial condition and results of 24 operations. In addition, Year-2000-related disruptions in the general economy may also have a materially adverse effect on the Company's future financial condition and results of operations. At this time, the Company has not developed a ''worst case'' scenario or an overall Year-2000 contingency plan but will do so when, if ever, management believes such plans are warranted. Management believes that the majority of the risks to its critical business operations are within the Company's control and ability to address. (see ''Forward-Looking Information'' below). Forward-Looking Statements From time to time, certain disclosures in reports and statements released by the Company, or statements made by its officers or directors, will be forward- looking in nature. These forward-looking statements may contain information related to the Company's intent, belief, or expectation with respect to contract awards and performance, potential acquisitions and joint ventures, and cost- cutting measures. In addition, these forward-looking statements contain a number of factual assumptions made by the Company regarding, among other things, future economic, competitive, and market conditions. Because the accurate prediction of any future facts or conditions may be difficult and involve the assessment of events beyond the Company's control, actual results may differ materially from those expressed or implied in such forward-looking statements. The Company is availing itself of the safe harbor provisions provided in the Private Securities Litigation Reform Act of 1995 by cautioning readers that the forward-looking statements that use words such as the Company ''believes,'' ''anticipates,'' ''expects,'' ''estimates,'' and ''believes'' are subject to certain risks and uncertainties which could cause actual results of operations to differ materially from expectations. These forward-looking statements will be contained in the Company's federal securities laws filings or in written or oral statements made by the Company's officers and directors to press, potential investors, securities analysts, and others. Any such written or oral forward- looking statements should be considered in context with the risk factors discussed below: . the Company requires access to a revolving credit line to fund short-term borrowing needs of the Company's total remaining operations, as well as the letter of credit capacity needed primarily by the E&C Group. The Company may not be able to generate collateral to support a borrowing base of sufficient size to obtain such credit or may not be able to improve operating results enough, by removing overhead costs or otherwise, to be able to obtain such credit. . the Company may be precluded from attaining other satisfactory contract performance guarantee mechanisms, such as performance bonding capabilities. . the Company may consider the sale of various operating groups in order togenerate liquidity sufficient to meet its obligations. In the event that planned sales of operations cannot be consummated on a timely basis, the Company will need access to other sources of working capital to adequately fund its remaining operations. . the Company may not be able to maintain the existing volume or size of contracts and may not be able to realize increased contract performance levels. The Company is involved in a number of fixed-price contracts under which the Company can benefit from cost savings or performance efficiencies, but if certain pricing and performance assumptions prove inaccurate, unrecoverable cost overruns can occur. . the Company may not be awarded new contracts for which it is competing in its established markets or these awards may be delayed; in addition, the Company may not be able to win contracts in new markets it chooses to target. General economic conditions in the international arena, especially Asia and Latin America, could negatively impact the Company's current international business and its ability to expand in international markets. . the Company's EFM and Consulting Groups are very dependent on federal government contracts, which are subject to annual funding approvals and cost audits, and may be terminated at any time, with or without cause; a large number of federal government contracts are included in the Company's contract backlog, which potentially means that not all contract backlog will become future revenue of the Company; 25 . the Company may not be able to make acquisitions and or enter into joint ventures, and if made, acquisitions and joint ventures may take more time to contribute favorably to the Company's financial results than was formerly assumed. The Company is highly leveraged and is subject to restrictive covenants that limit its ability to fund potential acquisitions and joint ventures beyond certain levels established in its debt agreements. . a large portion of the Company's business has been and is generated either directly or indirectly as a result of federal and state environmental laws, regulations, and programs; a reduction in the number or scope of these laws, regulations, or programs could materially affect the Company's business. In addition, environmental work poses risks of large civil and criminal liabilities for violations of environmental laws and regulations, and liabilities to customers and to third parties for damages arising from the Company's performing environmental services to its clients. A large fine or penalty imposed on the Company could negatively impact contract performance fees under certain existing contracts or otherwise negatively affect the Company's financial results. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company does not believe that it has significant exposures to market risk. The majority of its foreign contracts are denominated and executed in the applicable local currency. The interest rate risk associated with the majority of the Company's borrowing activities is fixed, however, a 10% increase or decrease in the average annual prime rate would result in an increase or decrease of .72% multiplied by the weighted-average amount of fluctuating rate borrowings outstanding during a period. Part II - Other Information Item 1. Legal Proceedings As previously reported in the Annual Report on Form 10-K for the year ended December 31, 1998. Item 2. Changes in Securities (a) None (b) None (c) None (d) Not applicable Item 3. Defaults Upon Senior Securities (a) See Management's Discussion and Analysis of Financial Condition and Results of Operations. (b) None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits filed as part of this report are listed below: No. 4(a)(8) Eighth Supplemental Indenture dated as of April 9, 1999 No. 4(f)(3) Third Supplemental Indenture dated as of April 9, 1999 No. 4(g) Form of 12% Senior Note due 2003, Series B No. 21 Consolidated Subsidiaries of the Registrant as of April 12, 1999 No. 27 Financial Data Schedule 26 (b) Reports on Form 8-K On March 10, 1999, ICF Kaiser filed a Form 8-K referencing the Letter of Intent with CM Equity Partners, L.P. and a Definitive Purchase Agreement for the assets of the company's Environmental and Facilities Management Group with The IT Group. On April 23, 1999, ICF Kaiser filed a Form 8-K referencing the sale of the majority of the active contracts and investments of its Environmental and Facilities Management Group with The IT Group. On May 12, 1999, ICF Kaiser filed a Form 8-K referencing changes in senior management. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. ICF KAISER INTERNATIONAL, INC. (Registrant) Date: May 17, 1999 /s/ Timothy P. O'Connor ----------------------- Timothy P. O'Connor Senior Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer) 27 EX-4.A.8 2 EXHIBIT 4(A) (8) EXHIBIT 4(a)(8) ================================================================================ ICF KAISER INTERNATIONAL, INC., Issuer and CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC., Guarantor ICF KAISER GOVERNMENT PROGRAMS, INC., Guarantor SYSTEMS APPLICATIONS INTERNATIONAL, INC., Guarantor EDA, INCORPORATED, Guarantor GLOBAL TRADE & INVESTMENT, INC., Guarantor ICF KAISER EUROPE, INC., Guarantor ICF KAISER / GEORGIA WILSON, INC., Guarantor ICF KAISER OVERSEAS ENGINEERING, INC., Guarantor ICF KAISER ENGINEERS PACIFIC, INC., Guarantor ICF KAISER REMEDIATION COMPANY, Guarantor ICF KAISER ADVANCED TECHNOLOGY, INC., Guarantor TO THE BANK OF NEW YORK, Trustee _______________ Eighth Supplemental Indenture Dated as of April 9, 1999 to Indenture dated as of January 11, 1994 _______________ $125,000,000 12% Senior Subordinated Notes due 2003 ================================================================================ THIS EIGHTH SUPPLEMENTAL INDENTURE, dated as of April 9, 1999, is entered into by and among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"), THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), and the following GUARANTORS (the "Subsidiary Guarantors"): Cygna Consulting Engineers and Project Management, Inc., a Delaware corporation ("Cygna"); ICF Kaiser Government Programs, Inc., a Delaware corporation ("ICFK-GP"); Systems Applications International, Inc., a Delaware corporation "(SAI") EDA, Incorporated, a Maryland corporation ("EDA"); Global Trade & Investment, Inc., a Delaware corporation ("Global"); ICF Kaiser Europe, Inc., a Delaware corporation ("ICFK Europe"); ICF Kaiser / Georgia Wilson, Inc., a Delaware corporation ("ICFK/GW"); ICF Kaiser Overseas Engineering, Inc., a Delaware corporation ("ICFK Overseas"); ICF Kaiser Engineers Pacific, Inc., a Delaware corporation ("ICFK Pacific"); ICF Kaiser Remediation Company, a Delaware corporation ("Remcon"); and ICF Kaiser Advanced Technology, Inc., an Idaho Corporation ("Advanced Tech"). WITNESSETH: WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture dated as of January 11, 1994 (as amended and supplemented to date, the "Indenture"), for the purpose of issuing $125,000,000 of 12% Senior Subordinated Notes due 2003 (the "Notes"); WHEREAS, the Company has entered into an Asset Purchase Agreement with The IT Group, Inc. dated March 8, 1999 providing for the sale of certain of the assets of, including the stock of certain subsidiaries included in, the Company's Environment & Facilities Management Group (the "EFM Agreement"); WHEREAS, the EFM Agreement provides for the sale, among other things, of the stock of ICF Kaiser Remediation Company, a Delaware corporation ("Remcom"), which is a Subsidiary Guarantor; WHEREAS, the terms of the EFM Agreement require that Remcom be released from its obligations as a Subsidiary Guarantor under the Indenture; WHEREAS, the Company and its Restricted Subsidiaries intend to use the proceeds of the transaction contemplated by the EFM Agreement in a manner consistent with Section 5.09 of the Indenture; WHEREAS, the execution and delivery of this Eighth Supplemental Indenture has been duly authorized by the Board of Directors of the Company on February 26, 1999; 2 WHEREAS, the Company and the Subsidiary Guarantors have determined that it is desirable to enter into this Eighth Supplemental Indenture and have requested the Trustee to join with them in the execution of this Eighth Supplemental Indenture; and WHEREAS, the Trustee has accepted the trusts created by this Eighth Supplemental Indenture and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS EIGHTH 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 Supplemental Indenture, the receipt of which is hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among the Company, the Subsidiary Guarantors, and the Trustee, as follows: 1. Terms defined in the Indenture are used herein as therein defined. 2. Effective upon the closing of the transactions contemplated by the EFM Agreement, Remcom is hereby, and shall be, without further action of, or the execution and delivery of any further documents or instruments by, the Company, the Subsidiary Guarantors of the Trustee, released from the Guarantee dated December 3, 1997 to which it is a party. 3. The following sundry provisions shall be a part of this Eighth Supplemental Indenture: Section 4.01. Effect of Supplemental Indenture. Upon the execution and -------------------------------- delivery of this Eighth Supplemental Indenture by the Company, the Subsidiary Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Eighth 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 4.02. Indenture Remains in Full Force and Effect. Except as ------------------------------------------ supplemented hereby and by the First through Seventh Supplemental Indentures, all provisions in the Indenture shall remain in full force and effect. Section 4.03. Indenture and Supplemental Indentures Construed Together. -------------------------------------------------------- This Eighth Supplemental Indenture is an Indenture supplemental to and in implementation of the Indenture, and the Indenture and all Supplemental Indentures shall henceforth be read and construed together. Section 4.04. Confirmation and Preservation of Indenture. The Indenture as ------------------------------------------ supplemented by the First through Seventh Supplemental Indentures is in all respects confirmed and preserved. Section 4.05 Conflict with Trust Indenture Act. If any provision of this --------------------------------- Eighth 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 Eighth Supplemental Indenture, the provision of such Act shall control. If any provision of this Eighth Supplemental 3 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 Eighth Supplemental Indenture, as the case may be. Section 4.06 Separability Clause. In case any provision in this Eighth ------------------- 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 4.07 Terms Defined in the Indenture. All capitalized terms not ------------------------------ otherwise defined herein shall have the meanings ascribed to them in the Indenture. Section 4.08 Effect of Headings. The Article and Section headings herein ------------------ are for convenience only and shall not affect the construction hereof. Section 4.09 Benefits of Eighth Supplemental Indenture, Etc. Nothing in ----------------------------------------------- this Eighth 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, the First through Eighth Supplemental Indentures, or the Notes. Section 4.10 Successors and Assigns. All covenants and agreements in this ---------------------- Eighth Supplemental Indenture by the Company and the Subsidiary Guarantors shall bind their successors and assigns, whether so expressed or not. Section 4.11 Trustee Not Responsible for Recitals. The recitals contained ------------------------------------ herein shall be taken as the statements of the Company and the Subsidiary Guarantors, and the Trustee assumes no responsibility for their correctness. Section 4.12 Certain Duties and Responsibilities of the Trustee. In -------------------------------------------------- entering into this Eighth 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 4.13 Governing Law. This Eighth 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 4.14 Counterparts. This Eighth 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. 4 IN WITNESS WHEREOF, the parties hereto have caused this Eighth Supplemental Indenture to be duly executed, and the Company, the Subsidiary Guarantors, and the Trustee have caused their respective corporate seals to be hereunto affixed and attested, all as of April 9, 1999. ICF KAISER INTERNATIONAL, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Senior Vice President and Chief Financial Officer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary THE BANK OF NEW YORK, as Trustee By: -------------------------------------- Name: -------------------------------------- Title: -------------------------------------- CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER GOVERNMENT PROGRAMS, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary 5 SYSTEMS APPLICATIONS INTERNATIONAL, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary EDA, INCORPORATED By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary GLOBAL TRADE & INVESTMENT, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER EUROPE, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER / GEORGIA WILSON, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary 6 ICF KAISER OVERSEAS ENGINEERING, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER ENGINEERS PACIFIC, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER REMEDIATION COMPANY By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER ADVANCED TECHNOLOGY, INC. By: /s/ Timothy P. O'Connor -------------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary 7 EX-4.F.3 3 EXHIBIT 4(F) (3) EXHIBIT 4(f)(3) =============================================================================== ICF KAISER INTERNATIONAL, INC., Issuer and CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC., Guarantor ICF KAISER GOVERNMENT PROGRAMS, INC., Guarantor SYSTEMS APPLICATIONS INTERNATIONAL, INC., Guarantor EDA, INCORPORATED, Guarantor GLOBAL TRADE & INVESTMENT, INC., Guarantor ICF KAISER EUROPE, INC., Guarantor ICF KAISER / GEORGIA WILSON, INC., Guarantor ICF KAISER OVERSEAS ENGINEERING, INC., Guarantor ICF KAISER ENGINEERS PACIFIC, INC., Guarantor ICF KAISER REMEDIATION COMPANY, Guarantor ICF KAISER ADVANCED TECHNOLOGY, INC., Guarantor TO THE BANK OF NEW YORK, Trustee _______________ Third Supplemental Indenture Dated as of April 9, 1999 to Indenture dated as of December 23, 1996 _______________ $15,000,000 12% Senior Notes due 2003 =============================================================================== THIS THIRD SUPPLEMENTAL INDENTURE, dated as of April 9, 1999, is entered into by and among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"), THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), and the following GUARANTORS (the "Subsidiary Guarantors"): Cygna Consulting Engineers and Project Management, Inc., a Delaware corporation ("Cygna"); ICF Kaiser Government Programs, Inc., a Delaware corporation ("ICFK-GP"); Systems Applications International, Inc., a Delaware corporation "(SAI") EDA, Incorporated, a Maryland corporation ("EDA"); Global Trade & Investment, Inc., a Delaware corporation ("Global"); ICF Kaiser Europe, Inc., a Delaware corporation ("ICFK Europe"); ICF Kaiser / Georgia Wilson, Inc., a Delaware corporation ("ICFK/GW"); ICF Kaiser Overseas Engineering, Inc., a Delaware corporation ("ICFK Overseas"); ICF Kaiser Engineers Pacific, Inc., a Delaware corporation ("ICFK Pacific"); ICF Kaiser Remediation Company, a Delaware corporation ("Remcon"); and ICF Kaiser Advanced Technology, Inc., an Idaho Corporation ("Advanced Tech"). WITNESSETH: WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture dated as of December 23, 1996 (as amended and supplemented to date, the "Indenture"), for the purpose of issuing $15,000,000 of 12% Senior Notes due 2003 (the "Notes"); WHEREAS, the Company has entered into an Asset Purchase Agreement with The IT Group, Inc. dated March 8, 1999 providing for the sale of certain of the assets of, including the stock of certain subsidiaries included in, the Company's Environment & Facilities Management Group (the "EFM Agreement"); WHEREAS, the EFM Agreement provides for the sale, among other things, of the stock of ICF Kaiser Remediation Company, a Delaware corporation ("Remcom"), which is a Subsidiary Guarantor; WHEREAS, the terms of the EFM Agreement require that Remcom be released from its obligations as a Subsidiary Guarantor under the Indenture; WHEREAS, the Company and its Restricted Subsidiaries intend to use the proceeds of the transaction contemplated by the EFM Agreement in a manner consistent with Section 5.09 of the Indenture; WHEREAS, the execution and delivery of this Third Supplemental Indenture has been duly authorized by the Board of Directors of the Company on February 26, 1999; 2 WHEREAS, the Company and the Subsidiary Guarantors have determined that it is desirable to enter into this Third Supplemental Indenture and have requested the Trustee to join with them in the execution of this Third Supplemental Indenture; and WHEREAS, the Trustee has accepted the trusts created by this Third Supplemental Indenture and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS THIRD 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 Supplemental Indenture, the receipt of which is hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among the Company, the Subsidiary Guarantors, and the Trustee, as follows: 1. Terms defined in the Indenture are used herein as therein defined. 2. Effective upon the closing of the transactions contemplated by the EFM Agreement, Remcom is hereby, and shall be, without further action of, or the execution and delivery of any further documents or instruments by, the Company, the Subsidiary Guarantors of the Trustee, released from the Guarantee dated December 3, 1997 to which it is a party. 3. The following sundry provisions shall be a part of this Third Supplemental Indenture: Section 4.01. Effect of Supplemental Indenture. Upon the execution and -------------------------------- delivery of this Third Supplemental Indenture by the Company, the Subsidiary Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Third 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 4.02. Indenture Remains in Full Force and Effect. Except as ------------------------------------------ supplemented hereby and by the First and Second Supplemental Indentures, all provisions in the Indenture shall remain in full force and effect. Section 4.03. Indenture and Supplemental Indentures Construed Together. -------------------------------------------------------- This Third Supplemental Indenture is an Indenture supplemental to and in implementation of the Indenture, and the Indenture and all Supplemental Indentures shall henceforth be read and construed together. Section 4.04. Confirmation and Preservation of Indenture. The Indenture as ------------------------------------------ supplemented by the First and Second Supplemental Indentures is in all respects confirmed and preserved. Section 4.05 Conflict with Trust Indenture Act. If any provision of this --------------------------------- Third 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 Third Supplemental Indenture, the provision of such Act shall control. If any provision of this Third Supplemental Indenture modifies 3 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 Third Supplemental Indenture, as the case may be. Section 4.06 Separability Clause. In case any provision in this Third ------------------- 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 4.07 Terms Defined in the Indenture. All capitalized terms not ------------------------------ otherwise defined herein shall have the meanings ascribed to them in the Indenture. Section 4.08 Effect of Headings. The Article and Section headings herein ------------------ are for convenience only and shall not affect the construction hereof. Section 4.09 Benefits of Third Supplemental Indenture, Etc. Nothing in this ---------------------------------------------- Third 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, the First through Third Supplemental Indentures, or the Notes. Section 4.10 Successors and Assigns. All covenants and agreements in this ---------------------- Third Supplemental Indenture by the Company and the Subsidiary Guarantors shall bind their successors and assigns, whether so expressed or not. Section 4.11 Trustee Not Responsible for Recitals. The recitals contained ------------------------------------ herein shall be taken as the statements of the Company and the Subsidiary Guarantors, and the Trustee assumes no responsibility for their correctness. Section 4.12 Certain Duties and Responsibilities of the Trustee. In -------------------------------------------------- entering into this Third 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 4.13 Governing Law. This Third 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 4.14 Counterparts. This Third 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. 4 IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, and the Company, the Subsidiary Guarantors, and the Trustee have caused their respective corporate seals to be hereunto affixed and attested, all as of April 9, 1999. ICF KAISER INTERNATIONAL, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Senior Vice President and Chief Financial Officer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary THE BANK OF NEW YORK, as Trustee By: ----------------------- Name: ----------------------- Title: ----------------------- CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER GOVERNMENT PROGRAMS, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary 5 SYSTEMS APPLICATIONS INTERNATIONAL, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary EDA, INCORPORATED By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary GLOBAL TRADE & INVESTMENT, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER EUROPE, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER / GEORGIA WILSON, INC. By: /s/ Timothy P. O'Connor ------------------------ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary 6 ICF KAISER OVERSEAS ENGINEERING, INC. By: /s/ Timothy P. O'Connor -------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER ENGINEERS PACIFIC, INC. By: /s/ Timothy P. O'Connor ------------------------ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER REMEDIATION COMPANY By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary ICF KAISER ADVANCED TECHNOLOGY, INC. By: /s/ Timothy P. O'Connor ----------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: /s/ Sandra D. Little - -------------------- Assistant Secretary 7 EX-4.G 4 EXHIBIT 4(G) EXHIBIT 4(g) THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OR THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. ICF KAISER INTERNATIONAL, INC. 12% SENIOR NOTE DUE 2003, SERIES B CUSIP No. 449244 No. BQ- $_______________ ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for value received promises to pay to CEDE & Co., or registered assigns, the principal sum of _____________________ Dollars on December 31, 2003. Interest Payment Dates: June 30 and December 31 Record Dates: June 15 and December 15 Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or by facsimile by its duly authorized officers. Dated: ICF KAISER INTERNATIONAL, INC. By:_______________________________ By:_______________________________ (SEAL) Trustee's Certificate of Authentication This is one of the Series B Notes referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK as Trustee By: _____________________________ Authorized Signatory 12% SENIOR NOTE DUE 2003, SERIES B Certain capitalized terms used but not defined herein shall have the meanings given to them in the Indenture under which this Note is issued. 1. Interest. ICF Kaiser International, Inc., a Delaware corporation (the "Company," which term shall include any Successor under the Indenture), promises to pay interest on the principal amount of this Note at 12% provided that one percent (1%) additional interest (the "Additional Interest") is payable on the Notes from the date of, and as provided in, the Indenture. 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 measures 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. The Company will pay interest semiannually on June 30 and December 31 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from December 31, 1996; provided, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 30, 1997. The Company shall pay interest on overdue principal from time to time on demand at the rate of 1% per annum in excess of the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal Payments. The Company will pay the principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). The Company, however, may pay such amounts by check payable in such U.S. Legal Tender. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Company may act in any such capacity. 4. Indenture and Guarantees. The Company issued the Notes under an Indenture dated as of December 23, 1996 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date of execution of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. Capitalized and certain other terms used herein and not otherwise defused have the meanings set forth in the Indenture. The Notes are unsecured general obligations of the Company limited to $15,000,000 in aggregate principal amount. Payment on each Note is guaranteed, jointly and severally, by the Guarantors pursuant to Section 5.11 of the Indenture. 5. Optional Redemption. The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the 12month period beginning December 31: Optional Year Redemption Price ------------- ---------------------- 1998 108.0% 1999 106.4% 2000 104.8% 2001 103.2% 2002 101.6%
If fewer than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at the registered address of such Holder. On and after the redemption date, interest shall cease to accrue on the Notes or portions thereof called for redemption. 6. Offers to Repurchase. (a) Change of Control Offer. In accordance with the terms of the Indenture, upon the occurrence of a Change of Control, the Company will be required to offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest to the date of purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes tendered must be in integral multiples of $1,000. (b) Asset Sale Offer. In accordance with the terms of the Indenture, if the Company or any Restricted Subsidiary consummates an Asset Sale, the Company will, under certain circumstances, be required to utilize a portion of the net proceeds received from such Asset Sale to offer to purchase Notes at a purchase price equal to 100% of the aggregate principal amount of the Notes plus accrued interest to the date fixed for the purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes tendered must be in integral multiples of $1,000. Subject to the provisions described above and compliance with Article 6 of the Indenture, the Company may sell or otherwise dispose of all or substantially all of its assets to a Successor that assumes all of the Company's obligations under the Notes and Indenture, and thereafter be discharged from such obligations. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 9. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at its request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease. 10. Discharge. The Company may be discharged from its obligations under the Indenture and the Notes, except for certain provisions thereof, upon satisfaction of certain conditions specified in the Indenture. 11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of interest on or the principal of the Notes, or any failure to comply with the provisions of the Indenture relating to a Change of Control Offer (as defined in the Indenture)) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency; to provide for the assumption of the Company's obligations to Holders in the case of a merger or acquisition; to provide for uncertificated Notes in addition to or in place of certificated Notes; to make any change that does not adversely affect the legal rights of any Holder; to surrender any right or power conferred upon the Company in the Indenture or the Notes; or to modify, eliminate or add to the provisions of the Indenture or the Notes to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute hereafter enacted. The right of any Holder to participate in any consent required or sought Pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee or the Company in a notice furnished to Holder in accordance with the terms of the Indenture. Without the consent of each Holder affected, the Company may not take certain actions, including: (i) reduce the amount of Notes whose Holders must Consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the Principal of or change the fixed maturity of any Note or alter the provisions with respect to optional redemption or mandatory repurchase of the Notes under the Indenture; (iv) make any Note payable in money other than that stated in this Note; (v) make any change in certain provisions of the Indenture regarding a Change of Control, a waiver of past Defaults and the rights of Holders to receive payment; or (vi) waive a continuing Default or Event of Default in the payment of principal of or interest on the Notes or that resulted from a failure to comply with the Change of Control provisions of the Indenture. 12. Restrictive Covenants. The Indenture contains certain covenants which, among other things, limit: (i) the incurrence of additional Indebtedness by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the repurchase of capital stock or subordinated indebtedness; (iv) the making of certain other distributions, loans and investments; (v) the sale of assets and the sale of the stock of Restricted Subsidiaries; (vi) the creation of restrictions on the ability of Restricted Subsidiaries, to pay dividends or make other payments to the Company; and (vii) the ability of the Company and Restricted Subsidiaries to enter into certain transactions with Affiliates or to merge, consolidate or transfer substantially all assets. These restrictions are subject to important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations. 13. Defaults and Remedies. Events of Default include: default in payment of interest on the Notes for 30 days; default in payment of principal on the Notes; failure by the Company for 60 days after notice to it to comply with any of its other agreements in the Indenture or the Notes; certain defaults under other Indebtedness; certain final judgements that remain undercharged; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be immediately due and payable for an amount equal to 100% of the principal amount of the Notes plus accrued interest to the date of payment, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 14. Trustee Dealing with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 15. No Records Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim ----- based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (-- tenants by the entireties), JT TEN (-- joint tenants with right of survivorship and not as tenants in common), CUST (--Custodian), and U/G/WA (-- Uniform Gifts to Minors Act). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Commission on Uniform Security Identification Procedures, the Company has caused CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made to the accuracy of such numbers as provided on the Notes, and reliance may be placed only on the other identification numbers printed thereon. 19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer GUARANTEE The Guarantors (as defined in the Indenture referred to in the Note upon which this notation is endorsed and each hereinafter referred to as a "Guarantor," which term includes any successor to a Guarantor) have unconditionally guaranteed (such guarantee by each Guarantor being referred to herein as the "Guarantee") (a) the full and prompt payment of the principal of and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. No stockholder, officer, director or incorporator, as such, past, present or future, of any Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantees shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the guarantees are noted shall have been executed by the Trustee under the indenture by the manual signature of its authorized officers. GUARANTORS: CYGNA CONSULTING ENGINEERS AND PROJECTS MANAGEMENT, INC. Attest: BY: ------------------------------------ Name: Title: ICF KAISER GOVERNMENT PROGRAMS, INC. Attest: BY: ------------------------------------ Name: Title: PCI OPERATING COMPANY, INC. Attest: BY: ------------------------------------ Name: Title: SYSTEMS APPLICATIONS INTERNATIONAL, INC. Attest: BY: ------------------------------------ Name: Title: ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ------------------------------------------------------------------------ (Insert assignee's Soc. Sec. or tax I.D. No.) - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint___________________________to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date:___________________ Your Signature: ______________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee: OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and return this form to the Company. If you want to elect to have only part of the Note purchased by the Company pursuant to the Indenture, state the amount you elect to have purchased: $______________________ Date: ______________________ Your Signature: ______________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee: EX-21 5 EXHIBIT 21 Exhibit 21 ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway, Fairfax, Virginia 22031 (703) 934-3600 ICF Kaiser International, Inc.'s consolidated subsidiaries at April 12, 1999, are listed below. Consolidated subsidiaries which are less than wholly owned are indicated by the ownership percentage figure in parentheses following the name of the consolidated subsidiary.
Jurisdiction Consolidated Subsidiary of Formation - ------------------------- -------------- I. Clement International Corporation Delaware I. Cygna Group, Inc. Delaware II. Liability Risk Management, Inc. California I. EDA, Incorporated Maryland I. HBG Hawaii, Inc. Delaware I. HBG International, Inc. Delaware I. ICF Consulting Group, Inc. Delaware I. ICF Incorporated Delaware II. CF/EKO (63.0%) Russia I. ICF Information Technology, Inc. Delaware II. Phase Linear Systems Incorporated Delaware I. ICF Kaiser Development Corporation, Inc. Delaware II. Global Trade & Investment, Inc. Delaware I. ICF Kaiser Engineers Group, Inc. Delaware II. Henry J. Kaiser Company Nevada II. ICF Kaiser Engineers, Inc. Ohio III. Henry J. Kaiser Company (Canada) Ltd. Canada III. ICF Kaiser EFM Holdings, Inc. Delaware III. ICF Kaiser Engineers & Builders, Inc. Delaware 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. (33 1/3%) Pennsylvania III. ICF Kaiser Overseas Engineering, Inc. Delaware III. Kaiser Engineers Limited United Kingdom IV. Kaiser Engineers Technical Services Limited (80%) Cyprus III. Kaiser Engineers and Constructors, Inc. Nevada IV. ICF Kaiser Engenharia e Participacoes Ltda. (99.9%) Brazil V. ICF Kaiser Construcoes e Engenharia Ltda (99.989%) Brazil IV. ICF Pty. Ltd. (50%) Australia IV. Kaiser Engineers Limited (0.02%) U.K. IV. Kaiser Engenharia S.A. (50%) Portugal V. ICF Kaiser Construcoes e Engenharia Ltda (0.01%) Brazil IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand IV. Kaiser Engineers Pty. Ltd. (50%) Australia V. KWA Kenwalt (50%) Australia V. ICF Kaiser Aluterv KFT Hungary
Jurisdiction Consolidated Subsidiary of Formation - ------------------------- -------------- V. ICF Kaiser Engineers Asia Pacific Pty Ltd Australia V. ICF Kaiser Engineers (Hong Kong) Ltd Hong Kong V. ICF Kaiser Engineers (Singapore) Pte Ltd Singapore V. Kaiser Engineers (NZ) Limited (99%) New Zealand III. Kaiser Engineers International, Inc. Nevada IV. ICF Pty. Ltd. (50%) Australia IV. ICF Kaiser Engenharia e Participacoes Ltda.(0.1%) Brazil IV. ICF Kaiser Panama S.A. Panama IV. Kaiser Engenharia S.A. (50%) Portugal IV. Kaiser Engineers Pty. Ltd. (50%) Australia III. Kaiser Engineers Limited (99.98%) U.K. IV. Kaiser Engineers Technical Services Limited (80%) Cyprus IV. Kaiser Engineers (UK) Limited (50%) U.K. III. Kaiser Engineers (UK) Limited (50%) U.K. IV. Kaiser Engineers Technical Services Limited (20%) Cyprus III. KE Services Corporation Delaware III. Kaiser Engenharia e Constructoes Limitada Brazil II. International Waste Energy Systems, Inc. Delaware II. KE Livermore, Inc. Delaware I. ICF Kaiser Engineers Massachusetts, Inc. Delaware I. ICF Kaiser Engineers Pacific, Inc. Nevada I. ICF Kaiser Europe, Inc. Delaware I. ICF Kaiser / Georgia Wilson, Inc. Delaware I. ICF Kaiser Government Programs, Inc. Delaware II. Kaiser-Hill Company, LLC (50%) Colorado III. Kaiser-Hill Funding Company, L.L.C. (98%) Delaware II. Kaiser-Hill Funding Company, L.L.C. (1%) Delaware I. ICF Kaiser Hanford Company Delaware I. ICF Kaiser Holdings Unlimited, Inc. Delaware II. American Venture Investments Incorporated Delaware III. American Venture Holdings, Inc. Delaware II. Cygna Consulting Engineers and Project Management, Inc. California II. Excell Development Construction, Inc. Delaware II. ICF Kaiser DPI Holding Co., Inc. Delaware II. ICF Kaiser Engineers Eastern Europe, Inc. Delaware III. ICF Kaiser Netherlands B.V. (10%) Netherlands II. ICF Kaiser Hunters Branch Leasing, Inc. Delaware II. ICF Kaiser Netherlands B.V. (90%) Netherlands II. ICF Leasing Corporation, Inc. Delaware I. ICF Kaiser Servicios Ambientales, S.A. de C.V. (66 2/3%) Mexico I. ICF Kaiser Technology Holdings, Inc. Delaware II. ICF Kaiser Advanced Technology, Inc. Idaho III. ICF Kaiser Advanced Technology of New Mexico, Inc. New Mexico I. ICF Resources Incorporated Delaware II. ICF R G.P. No. 1, Inc. Delaware
Jurisdiction Consolidated Subsidiary of Formation - ------------------------- ------------- II. Public/Private Policy Analysis, Inc. Delaware I. Monument Select Insurance Company Vermont I. Systems Applications International, Inc. Delaware I. The K.S. Crump Group, Inc. Delaware I. Tudor Engineering Company Delaware
EX-27 6 EXHIBIT 27
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 14,282,000 0 223,965,000 (9,653,000) 0 343,088,000 17,498,000 (13,184,000) 391,729,000 310,764,000 137,610,000 0 0 238,000 (67,931,000) 391,729,000 0 227,017,000 0 211,317,000 17,117,000 0 5,584,000 (7,001,000) (1,020,000) (8,063,000) 2,344,000 0 0 (5,719,000) (.24) (.24) 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. Gross revenue also includes equity in net income of unconsolidated subsidiaries for purpose of this schedule.
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