-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, A9dxDw0qFySgYA072oYH5E5dOvWa6Q0ZpUg1aYX5dp+N/r8PgqjcfjEHcXsn3p4f IGqgmy4YGErliiQiqG94nw== 0000950109-94-001023.txt : 19940701 0000950109-94-001023.hdr.sgml : 19940701 ACCESSION NUMBER: 0000950109-94-001023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICF KAISER INTERNATIONAL INC CENTRAL INDEX KEY: 0000856200 STANDARD INDUSTRIAL CLASSIFICATION: 4955 IRS NUMBER: 541437073 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12248 FILM NUMBER: 94535150 BUSINESS ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 MAIL ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 FORMER COMPANY: FORMER CONFORMED NAME: ICF INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL & RESEARCH CORP /DE/ DATE OF NAME CHANGE: 19910314 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ================================================================================ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1994 Commission File No. 1-12248 ICF KAISER INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 54-1437073 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9300 Lee Highway, Fairfax, Virginia 22031-1207 ----------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (703) 934-3600 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- On June 20, 1994, there were 20,961,850 shares of ICF Kaiser International, Inc. Common Stock, par value $0.01 per share, outstanding. ================================================================================
ICF KAISER INTERNATIONAL, INC. INDEX TO FORM 10-Q Page ---- Part I - Financial Information Item 1. Financial Statements: Consolidated Balance Sheets - May 31, 1994 and February 28, 1994....................... 3 Consolidated Statements of Operations - Three Months Ended May 31, 1994 and 1993................. 4 Consolidated Statements of Cash Flows - Three Months Ended May 31, 1994 and 1993................. 5 Notes to Consolidated Financial Statements............... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 7-9 Part II - Other Information Item 1. Legal Proceedings........................................ 10 Item 2. Changes in Securities.................................... 10 Item 3. Defaults Upon Senior Securities.......................... 10 Item 4. Submission of Matters to a Vote of Security Holders...... 10 Item 5. Other Information........................................ 10 Item 6. Exhibits and Reports on Form 8-K......................... 10
2 ICF Kaiser International, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands)
May 31, February 28, 1994 1994 ------------------------- (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 18,267 $ 25,509 Contract receivables, net 130,275 128,166 Prepaid expenses and other current assets 13,978 20,451 Deferred income taxes 15,697 16,053 --------- --------- Total Current Assets 178,217 190,179 --------- --------- Fixed Assets Furniture, equipment and leasehold improvements 41,226 40,630 Less depreciation and amortization (26,434) (24,955) --------- --------- 14,792 15,675 --------- --------- Other Assets Goodwill, net 49,423 49,916 Investments in and advances to affiliates 6,017 5,600 Due from officers and employees 2,094 1,830 Other 18,329 17,998 --------- --------- 75,863 75,344 --------- --------- $ 268,872 $ 281,198 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 39,399 $ 52,073 Accrued salaries and employee benefits 22,627 23,439 Accrued interest 5,847 2,108 Current portion of long-term debt 863 1,088 Income taxes payable 1,751 1,511 Deferred revenue 7,634 8,462 Other 9,506 10,773 --------- --------- Total Current Liabilities 87,627 99,454 --------- --------- Long-term Liabilities Long-term debt, less current portion 121,875 121,954 Other 8,400 8,798 --------- --------- 130,275 130,752 --------- --------- Commitments and Contingencies Redeemable Preferred Stock 20,263 20,212 Common Stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding-20,961,850 and 20,924,588 shares 209 209 Additional Paid-in Capital 63,678 63,572 Notes Receivable Related to Common Stock (1,732) (1,732) Retained Earnings (Deficit) (29,863) (29,528) Cumulative Translation Adjustment (1,585) (1,741) --------- --------- $ 268,872 $ 281,198 ========= =========
See notes to consolidated financial statements. 3 ICF Kaiser International, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended May 31, 1994 1993 -------------------------- (Unaudited) Gross Revenue $ 210,491 $ 128,012 Subcontract and direct material costs (98,292) (39,675) Equity in income of joint ventures and affiliated companies 951 327 --------- --------- Service Revenue 113,150 88,664 Operating Expenses Direct cost of services and overhead 95,545 73,796 Administrative and general 11,127 11,879 Depreciation and amortization 2,259 2,422 Unusual item - 500 --------- --------- Operating Income 4,219 67 Other Income (Expense) Interest income 305 410 Interest expense (3,949) (1,651) --------- --------- Income (Loss) Before Income Taxes 575 (1,174) Income tax provision (benefit) 357 (517) --------- --------- Net Income (Loss) 218 (657) Preferred stock dividends and accretion 539 1,336 --------- --------- Net Loss Available for Common Shareholders $ (321) $ (1,993) ========= ========= Primary and Fully Diluted Net Loss Per Common Share $ (0.02) $ (0.09) ========= ========= Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding 20,943 21,023 ========= =========
See notes to consolidated financial statements. 4 ICF Kaiser International, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands)
Three Months Ended May 31, 1994 1993 -------------------------- (Unaudited) Operating Activities Net income (loss) $ 218 $ (657) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,259 2,422 Provision for losses on accounts receivable 237 509 Provision for deferred income taxes 357 (517) Earnings less than (in excess of) cash distributions from joint ventures and affiliated companies (666) 217 Changes in assets and liabilities related to operating activities : Contract receivables, net (2,346) 13,230 Prepaid expenses and other current assets 3,938 3,929 Other assets (1,043) (8) Accounts payable and accrued expenses (9,747) (14,147) Income taxes payable 434 217 Deferred revenue (828) 449 Other liabilities (1,570) (716) -------- -------- Net Cash Provided by (Used in) Operating Activities (8,757) 4,928 -------- -------- Investing Activities Sale of subsidiary assets 2,600 - Purchases of fixed assets, net (357) (246) Investments in subsidiaries and affiliates (88) (2,293) -------- -------- Net Cash Provided by (Used in) Investing Activities 2,155 (2,539) -------- -------- Financing Activities Proceeds from borrowings from credit facility - 10,000 Principal payments on other borrowings (414) (576) Proceeds from (uses in) common stock transactions 106 (2,675) Preferred stock dividends (488) (1,257) -------- -------- Net Cash Provided by (Used in) Financing Activities (796) 5,492 -------- -------- Effect of Exchange Rate Changes on Cash 156 (79) -------- -------- Increase (Decrease) in Cash and Cash Equivalents (7,242) 7,802 Cash and Cash Equivalents at Beginning of Period 25,509 8,445 -------- -------- Cash and Cash Equivalents at End of Period $ 18,267 $ 16,247 ======== ======== Supplemental Information: Cash payments for interest $ 109 $ 2,622 Cash payments (refunds) for income taxes (408) (223)
See notes to consolidated financial statements. 5 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A-BASIS OF PRESENTATION The accompanying consolidated financial statements of ICF Kaiser International, Inc. and subsidiaries (ICF Kaiser or the Company), except for the February 28, 1994 balance sheet, are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Company's audited consolidated financial statements and footnotes thereto for the year ended February 28, 1994 and the information included in the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended February 28, 1994. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the May 31, 1994 financial statements. NOTE B-NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is computed using net income (loss) available to common shareholders, as adjusted under the modified treasury stock method, and the weighted average number of common stock and common stock equivalents outstanding during the periods presented. Common stock equivalents include stock options and warrants and the potential conversion of convertible preferred stock. The adjustments that would be required by the modified treasury stock method to net income (loss) available for common shareholders and to weighted average number of shares were anti-dilutive and therefore excluded from earnings per share computations for the periods presented. NOTE C-CONTINGENCIES Normally in the Company's business, various claims or charges are asserted and litigation commenced against the Company arising from or related to properties, injuries to persons and breaches of contract, as well as claims related to acquisitions and dispositions. Claimed amounts may not bear any reasonable relationship to the merits of the claim or to a final court award. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insurance coverage, which might be rendered against the Company in such litigation. The Company may from time to time be, either individually or in conjunction with other government contractors operating in similar types of businesses, 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 are presently known to have been filed against the Company by these agencies. The Company is unable to predict the outcome of the investigations in which it is currently involved. Management does not believe that there will be any material adverse effect on the Company's financial position as a result of these investigations. The Company has a substantial number of cost reimbursable contracts with the U.S. government, the costs of which are subject to audit by the U. S. government. As a result of such audits, the government asserts from time to time that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Management believes that the potential effect of disallowed costs, if any, for the periods currently under audit and for periods not yet audited has been adequately provided for and will not have a material adverse effect on the Company's financial position. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview ICF Kaiser is one of the nation's largest engineering, construction, and consulting services companies, providing fully integrated services to domestic and foreign clients in the environment, infrastructure, industry, and energy markets, in both the private and public sectors. ICF Kaiser's operating results for the first quarter of fiscal 1995 were significantly better than both the comparable period in fiscal 1994 and the previous quarter (the fourth quarter of fiscal 1994) when the Company reported a $20.5 million net loss. The Company's $4.2 million of operating income is at the highest level since fiscal 1993 and $17.7 million higher than the fourth quarter of fiscal 1994. The improved financial performance from the previous quarter was attributable to several factors including: volume and earnings growth throughout the Company, particularly the Company's operations at the U.S. Department of Energy's Hanford site in Washington (DOE-Hanford), reduction in the Company's indirect cost structure to more appropriately match current operating volume, and implementation of the restructuring plan for certain operations initiated in the fourth quarter of fiscal 1994 in response to weakened market conditions. Management's plan included downsizing the work force, consolidating office space, renegotiating significant leases, and restructuring certain international operations. Over 80% of the originally anticipated downsizing of the work force had been completed as of May 31, 1994. Significant actions have been taken on the other elements of the plan, which should be completed in fiscal 1995. Management will continue its review for additional areas to reduce costs and increase the efficiency of operations. ICF Kaiser's primary markets (environment, infrastructure, industry, and energy) remain extremely competitive; however, over the long-term the Company expects market conditions to improve and its share of these markets to expand. An improving global economy should begin to provide increased demand in the industrial sector, including the metals, mining, and steel industries, which are key consumers of ICF Kaiser's engineering and construction services. Improving economic conditions should also be expected to stimulate demand in the global infrastructure market which is dependent on government funding sources. In addition, a reauthorization of key U.S. environmental laws, which is expected within the next twelve months, and stricter regulatory enforcement should increase the demand for the Company's environmental remediation services. The Company's backlog increased to $1.7 billion as of May 31, 1994 from $1.6 billion as of February 28, 1994. The Company continues to aggressively pursue new business across all of its markets in order to increase backlog and market share. Currently, ICF Kaiser is pursuing and bidding on a variety of large- scale environmental cleanup projects for the U.S. Department of Defense and DOE. The Company's strategy is to combine large-scale projects, such as DOE-Hanford and those environmental cleanup projects currently being pursued, with broad- based growth in the Company's contract base, particularly in the engineering and construction and international areas, while concurrently maintaining a tightly- controlled cost structure. 7 Results of Operations For the quarter ended May 31, 1994, ICF Kaiser's net income was $218,000 and net loss available for common shareholders was $321,000 or $0.02 per share, compared to net loss of $657,000 and net loss available for common shareholders of $1,993,000, or $0.09 per share, for the quarter ended May 31, 1993. The $875,000 increase in net income was achieved despite significantly higher interest expense, primarily through the expansion at DOE-Hanford and the Company's ability to reduce and control operating costs. Each of these elements are discussed in more detail below. The following table summarizes key elements in the Consolidated Statements of Operations for the quarter ended May 31, 1994 and 1993. Certain items in fiscal 1994 have been restated to conform to the fiscal 1995 presentation.
Three Months Ended Three Months Ended May 31, 1994 May 31, 1993 ----------------------------------------- (Dollars in millions) Gross revenue $210.5 $128.0 Service revenue $113.2 $ 88.7 Service revenue as a percentage of gross 53.8% 69.3% revenue Operating expenses as a percentage of service revenue: Direct cost of services and overhead 84.4% 83.2% Administrative and general 9.8% 13.4% Depreciation and amortization 2.0% 2.7% Unusual item - 0.6% Operating income 3.7% 0.1%
Gross revenue represents services provided to customers with whom the Company has a primary contractual relationship. Included in gross revenue are costs of certain services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the income of joint ventures and affiliated companies. ICF Kaiser believes that it is appropriate to analyze operating margins and other ratios in relation to service revenue because such revenue and ratios reflect the work performed directly by the Company. 8 Revenue Gross revenue for the quarter increased 64.4% to $210.5 million, while service revenue increased 27.6% to $113.2 million, versus the comparable period last year. The increase is primarily attributable to the work performed at DOE- Hanford ($87.5 million gross and $31.2 million service), which was significantly expanded through an October 1993 amendment to the contract. Service revenue increased 12.1% from the fourth quarter of fiscal 1994 due to the expansion at DOE-Hanford and Company-wide growth. Service revenue as a percentage of gross revenue decreased to 53.8% for the quarter ended May 31, 1994 from 69.3% for the comparable period last year, primarily because under the amended DOE-Hanford contract, ICF Kaiser absorbed a business segment from the prime contractor which utilizes a much higher proportion of subcontractors than company personnel. Expenses The Company's direct cost of services and overhead increased $21.7 million to 84.4% of service revenue due primarily to the DOE-Hanford expansion. Administrative and general expense decreased $0.8 million from 13.4% to 9.8% of service revenue as the DOE-Hanford expansion had a negligible effect on corporate administrative and general expense. The decrease in these costs is attributable to the impact of management cost-cutting initiatives, which heavily affected administrative staff functions. ICF Kaiser's interest expense for the quarter ended May 31, 1994 increased $2.3 million from the comparable period last year due to the recapitalization program completed in the fourth quarter of fiscal 1994. The increase in interest expense was partially offset by a reduction in preferred dividends. ICF Kaiser's effective tax rate increased to 62% in the first quarter of fiscal 1995 from 44% in the first quarter of fiscal 1994. The effective tax rate in fiscal 1995 is higher than it has been in past income-producing years because permanent differences, such as the nondeductibility of goodwill, comprise a much higher percentage of pretax income than in prior years. As income increases, the effective tax rate should decrease as these permanent differences become less significant in relation to total pretax income. Liquidity and Capital Resources During the first quarter of fiscal 1995, cash and cash equivalents decreased $7.2 million to $18.3 million at May 31, 1994; however, working capital remained constant. Operating activities used $8.8 million of cash in the first quarter which was partially offset by the receipt of $2.6 million of proceeds from the sale of a subsidiary's assets in the fourth quarter of fiscal 1994. The utilization of cash in operations was primarily due to a significant pay down of accounts payable in the first quarter, which was compounded by an increase in receivables. In the prior year's first quarter, both payables and receivables decreased because of the Company's decreasing volume. The first interest payment ($7.5 million) on the Company's 12% Senior Subordinated Notes issued in the fourth quarter of fiscal 1994 will be made on June 30, 1994. Management believes that current projected levels of cash flows and operating revenues and the availability of borrowings under the Company's credit facility will be adequate to fund operations throughout the next twelve months. 9 Part II - Other Information Item 1. Legal Proceedings As previously reported in the Report on Form 10-K for the year ended February 28, 1994. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits filed as part of this report are listed below: ----------------------------------------------------------- None (b) Report on Form 8-K ------------------ A Report on Form 8-K (Date of Report: April 22, 1994) was filed with the Commission on April 25, 1994, reporting the Company's financial results for the fiscal year ended February 28, 1994. 10 Signatures ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report of Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. ICF KAISER INTERNATIONAL, INC. (Registrant) Date: June 21, 1994 /s/ Ronald R. Spoehel ------------------------------ Ronald R. Spoehel Senior Vice President, Chief Financial Officer (Acting), and Treasurer (Duly authorized officer and principal financial officer) 11 -----END PRIVACY-ENHANCED MESSAGE-----