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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
Commission file number 1-7427
VERITAS DGC INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0343152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3701 KIRBY DRIVE, SUITE #112, HOUSTON, TEXAS 77098
(Address of principal executive offices) (Zip Code)
</TABLE>
(713) 512-8300
(Registrant's telephone number, including area code)
NO CHANGES
(Former name, former address and former fiscal year, if changed since last
report)
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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The number of shares of the Company's common stock (the "Common
Stock"), $.01 par value, outstanding at May 31, 1997 was 18,865,901 (including
2,378,551 Veritas Energy Services Inc. exchangeable shares which are identical
to the Common Stock in all material respects.)
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<PAGE> 2
VERITAS DGC INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
July 31, 1996 and April 30, 1997 1
Consolidated Statements of Operations -
For the Three and Nine Months Ended April 30, 1996 and 1997 3
Consolidated Statements of Cash Flows -
For the Nine Months Ended April 30, 1996 and 1997 4
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 13
PART II. Other Information
Item 1. Legal Proceedings 18
Item 6. Exhibits and Reports on Form 8-K 18
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VERITAS DGC INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except par value and number of shares)
<TABLE>
<S> <C>
July 31, April 30,
1996 1997
----------- -------------
ASSETS (AS COMBINED - SEE NOTE 2)
Current assets:
Cash and short-term investments $ 10,072 $ 14,131
Restricted cash investments 327 542
Accounts and notes receivable (net of allowance for
doubtful accounts: July, $740; April, $484) 65,447 100,789
Materials and supplies inventory 1,659 2,541
Prepayments and other 8,199 9,306
----------- -------------
Total current assets 85,704 127,309
Property and equipment 165,104 234,584
Less accumulated depreciation 86,094 112,286
----------- -------------
Property and equipment - net 79,010 122,298
Multi-client data library 25,628 27,250
Investments in and advances to joint venture 1,463 770
Goodwill (net of accumulated amortization:
July, $2,214; April, $2,601) 3,674 3,287
Other assets 3,113 7,120
----------- -------------
Total $ 198,592 $ 288,034
=========== =============
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
<PAGE> 4
<TABLE>
<CAPTION>
July 31, April 30,
1996 1997
-------------- --------------
(AS COMBINED - SEE NOTE 2)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 13,739 $ 484
Accounts payable - trade 27,454 44,462
Accrued interest 313 381
Other accrued liabilities 19,905 30,580
Income taxes payable 1,814 2,375
------------ --------------
Total current liabilities 63,225 78,282
Non-current liabilities:
Long-term debt - less current maturities 27,351 79,001
Other non-current liabilities 2,093 3,103
------------ --------------
Total non-current liabilities 29,444 82,104
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized:
400,000 shares; none issued
Common stock, $.01 par value; authorized:
40,000,000 shares; issued: 11,334,352 shares and
16,482,016 shares (excluding 2,378,551
Exchangeable Shares) at July and April, respectively 113 165
Additional paid-in capital 104,469 108,108
Retained earnings (from August 1, 1991
with respect to Digicon Inc.) 2,275 20,036
Cumulative foreign currency translation adjustment (934) (661)
------------ --------------
Total stockholders' equity 105,923 127,648
------------ --------------
Total $ 198,592 $ 288,034
============ ==============
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
<PAGE> 5
<TABLE>
<CAPTION>
VERITAS DGC INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
April 30, April 30,
------------------------------- -----------------------------
1996 1997 1996 1997
------------- -------------- ------------ -------------
(As combined - See Note 2)
<S> <C> <C> <C> <C>
Revenues $ 59,140 $ 86,843 $ 181,683 $ 253,939
Costs and expenses:
Cost of services 45,001 63,344 145,104 189,646
Depreciation and amortization 6,953 10,142 20,000 28,662
Selling, general and administrative 1,854 3,221 5,258 7,603
Other expense:
Interest 1,101 2,104 3,775 5,334
Merger related costs 597
Other 226 535 270 811
-------------- ------------ -------- -----------
Total costs and expenses 55,135 79,346 174,407 232,653
-------------- ------------ -------- -----------
Income before provision for income
taxes and equity in (earnings) loss
of 50% or less-owned companies
and joint ventures 4,005 7,497 7,276 21,286
Provision for income taxes 1,159 1,341 2,287 4,260
Equity in (earnings) loss of 50% or less-
owned companies and joint ventures 23 70 (793) (735)
-------------- ------------ -------- -----------
Net income $ 2,823 $ 6,086 $ 5,782 $ 17,761
-------------- ------------ -------- -----------
Per share of common stock:
Income per share of common stock $ .16 $ .32 $ .33 $ .95
============== ============ ======== ===========
Weighted average shares 17,986 18,819 17,754 18,611
============== ============ ======== ===========
Cash dividends None None None None
============== ============ ======== ===========
</TABLE>
- ----------------------------
See Notes to Unaudited Consolidated Financial Statements.
3
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VERITAS DGC INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
-------------------------
1996 1997
-------- ---------
(As combined - See Note 2)
<S> <C> <C>
Operating activities:
Net income 5,782 17,761
Non-cash items included in net income:
Depreciation and amortization 20,000 28,662
Amortization of deferred gain on sale/leaseback (103)
Loss on disposition of property and equipment 606 783
Equity in earnings of 50% or less-owned
companies and joint ventures (793) (735)
Write-down of multi-client data library to market 297 989
Change in operating assets/liabilities:
Accounts and notes receivable 4,973 (35,342)
Materials and supplies inventory (1,550) (882)
Prepayments and other (1,401) (1,107)
Multi-client data library 2,422 (2,611)
Other (2,749) (1,588)
Accounts payable - trade (3,115) 9,303
Accrued interest (67) 68
Other accrued liabilities (568) 10,675
Income taxes payable (847) 561
Other non-current liabilities (820) 1,010
--------- --------
Total cash provided by operating activities 22,067 27,547
Financing activities:
Borrowing of senior notes 75,000
Debt issue costs (2,765)
Borrowings of long-term debt 2,290 781
Payments of long-term debt (10,500) (25,584)
Net payments under credit agreements (3,467) (8,118)
Payment of secured term loans (10,072)
Net proceeds from sale of common stock 816 3,691
Net proceeds from sale of treasury stock 3,972
--------- --------
Total cash provided (used) by financing activities (6,889) 32,933
</TABLE>
-------------------------
See Notes to Unaudited Consolidated Financial Statements.
4
<PAGE> 7
VERITAS DGC INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
--------------------------
1996 1997
--------- ----------
(As combined - See Note 2)
<S> <C> <C>
Investing activities:
(Increase) decrease in restricted cash investments 331 (215)
(Increase) decrease in investment in and advances to joint venture (269) 1,428
Purchase of property and equipment (12,070) (59,063)
Sale of property and equipment 650 812
Other (22)
------- -------
Total cash used by investing activities (11,380) (57,038)
Currency (gain) loss on foreign cash (77) 617
------- -------
Change in cash and cash equivalents 3,721 4,059
Beginning cash and cash equivalents balance 6,691 10,072
------- -------
Ending cash and cash equivalents balance 10,412 14,131
</TABLE>
- --------------------
See Notes to Unaudited Consolidated Financial Statements.
5
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VERITAS DGC INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
----------------------------
1996 1997
--------- ----------
(As combined - See Note 2)
<S> <C> <C>
Schedule of non-cash investing and financing activities:
Increase in property and equipment for:
Equipment purchase obligations $5,529 $6,388
Accounts payable - trade 232 7,705
Accounts and notes receivable - deferred credits utilized 866
Supplemental disclosures of cash flow information:
Cash paid for:
Interest -
Senior notes 3,494
Revolving credit agreements 1,408 236
Secured term loans 363 274
Equipment purchase obligations 1,428 755
Other 620 278
Income taxes 4,614 1,589
</TABLE>
6
<PAGE> 9
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Opinion of Management
In the opinion of Management, the accompanying unaudited consolidated
financial statements contain all adjustments of a normal and recurring
nature necessary to present fairly the financial position of Veritas
DGC Inc. and subsidiaries (the "Company") at April 30, 1997, and the
results of its operations and its cash flows for the three and nine
months ended April 30, 1996 and 1997. The results of operations for
any interim period are not necessarily indicative of the results to be
expected for a full year as such results could be affected by changes
in demand for geophysical services and products, which is directly
related to the level of oil and gas exploration and development
activity. Governmental actions, foreign currency exchange rate
fluctuations, seasonal factors, weather conditions and equipment
problems also could impact future operating results.
Earnings Per Share
Weighted average shares and earnings per share for all periods
presented have been restated to reflect the effect of shares issuable
upon exchange of Veritas Energy Services Inc. exchangeable shares.
Earnings per share are based on the weighted average number of
shares of common stock and Exchangeable Shares. Shares issuable upon
the conversion of stock options and warrants, which are common stock
equivalents, are disregarded since the treasury stock method of
calculation resulted in dilution of less than 3%.
Multi-Client Data Library
The Company collects and processes certain seismic data for its own
account to which it retains all ownership rights and which it resells
to clients on a non-transferable, non-exclusive basis. The Company
may obtain precommitted sales contracts to help fund the cash
requirements of these surveys which generally last from 5 to 7
months. The Company capitalizes a portion of the survey costs using
an estimated sales method. Under that method the amount capitalized
equals actual costs incurred less costs attributed to the precommitted
sales contracts based on the percentage of total estimated costs to
total estimated sales multiplied by actual sales. The capitalized
cost of multi-client data library is likewise charged to operations
in the period subsequent sales occur based on the percentage of total
estimated costs to total estimated sales multiplied by actual sales.
Beginning in fiscal 1997, the Company changed the estimated life
of its
7
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multi-client data library so that any costs remaining 24 months
after completion of a survey are charged to operations over a
period not to exceed 24 months. The Company periodically reviews
the carrying value of the multi-client data library to assess
whether there has been a permanent impairment of value and
records losses when the total estimated costs exceed total estimated
sales or when it is determined that estimated sales would not be
sufficient to cover the carrying value of the asset.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121
"Accounting for Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." This statement establishes accounting
standards for the impairment of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. This statement is effective for
financial statements with fiscal years beginning after December 15,
1995. The Company implemented this statement at the beginning of the
fiscal year 1997. Implementation of this pronouncement did not have a
material effect on the Company's consolidated financial statements.
In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock
Based Compensation." This statement establishes a fair value method
of accounting for stock-based compensation plans either through
recognition or disclosure. This statement is effective for fiscal
years beginning after December 15, 1995. The Company will be required
to implement this statement for the fiscal year 1997. The Company
intends to adopt this standard by disclosing the pro forma net income
(loss) and net income (loss) per share amounts assuming the fair value
method was adopted on August 1, 1995. The adoption of this statement
will have no material impact on the Company's consolidated financial
statements.
In February 1997, the FASB issued SFAS No. 128 "Earnings per Share."
This statement requires the computation of basic earnings per share
based upon weighted-average common shares outstanding and diluted
earnings per share based upon weighted-average common shares
outstanding and additional common shares that would have been
outstanding if dilutive potential common shares had been issued under
the treasury stock method using average market prices. In addition,
previously reported earnings per share must be restated. This
statement is effective for interim and annual periods ending after
December 15, 1997. Basic earnings per share will not differ from
previously reported primary earnings per share amounts. Diluted
earnings per share will include the effect of using average market
price for the period instead of the higher of average market price or
end of period price under the treasury stock method. In addition,
diluted earnings per share will be presented for all prior periods
where fully diluted earnings per share were not previously required
because dilutive potential common shares did not result in more than
3% dilution. Diluted earnings per share are not expected to differ
materially from basic earnings per share.
8
<PAGE> 11
2. BUSINESS COMBINATION
Veritas DGC Inc. was formerly named Digicon Inc. ("Digicon"). On
August 30, 1996, Digicon and Veritas Energy Services Inc. ("VES"), a
Canadian company, consummated a business combination (the
"Combination").
Presented below is the effect of the pooling of interests on the
Company's reported results of operations. Amounts related to VES have
been converted into the Company's reporting currency, U.S. dollars,
using weighted average exchange rates prevailing during the period and
reflect adjustments for differences between U.S. and Canadian
generally accepted accounting principles ("GAAP") and
reclassifications to conform financial statement presentation.
Canadian to U.S. GAAP adjustments include adjustments to (i) write off
foreign exchange losses on borrowings which are deferred and amortized
over the period of the debt reducing net income by approximately
$47,000 and $154,000 for the three and nine months ended April 30,
1996, respectively, and (ii) reverse the effect of a prior period
adjustment increasing net income by approximately $90,000 for the nine
months ended April 30, 1996. Reclassifications of $6,127,000 and
$23,956,000 for the three and nine months ended April 30, 1996,
respectively, have been made to net amounts billed to customers for
reimbursable costs against VES' revenues.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
April 30, April 30,
1996 1996
---------------------- ----------------------
(In thousands of dollars, except per
share amounts)
<S> <C> <C> <C> <C>
Revenues:
Digicon $ 35,785 $ 112,214
VES 29,482 93,425
Reclassifications (6,127) (23,956)
--------------------- -------------------
Total $ 59,140 $ 181,683
Net income:
Digicon $ 1,864 $ 3,693
VES 1,006 2,153
Adjustments (47) (64)
--------------------- -------------------
Total $ 2,823 $ 5,782
===================== ===================
Net income per share:
As previously reported $ .17 $ .34
===================== ===================
As restated $ .16 $ .33
===================== ===================
</TABLE>
There were no material adjustments to the net assets of VES as a
result of adopting the same accounting principles as the Company.
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<PAGE> 12
During the nine months ended April 30, 1997, the Company incurred
$597,000 of costs associated with the Combination. These costs consist
primarily of professional fees and include $150,000 payable to a
stockholder who was the former Chairman of the Board of Directors for
consulting services rendered in conjunction with the Combination.
3. INVESTMENT IN INDONESIAN JOINT VENTURE
Summarized financial information for the Company's Indonesian joint
venture which is accounted for under the equity method is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
---------------------------- -----------------------------
1996 1997 1996 1997
--------- ---------- ---------- ----------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Revenues $ 494 $ 718 $ 2,311 $ 4,954
Cost of services 424 717 1,213 3,761
Depreciation and amortization 87 79 300 469
Other (40) (8) 5 (11)
-------- --------- ---------- ---------
Total 471 788 1,518 4,219
-------- --------- ---------- ---------
Net income $ 23 $ (70) $ 793 $ 735
======== ========= ========== =========
</TABLE>
4. LONG-TERM DEBT
The Company's long-term debt is as follows:
<TABLE>
<CAPTION>
July 31, April 30,
1996 1997
--------------- ----------------
(As combined - See Note 2)
(In thousands of dollars)
<S> <C> <C>
Senior notes due October 2003, at 9 3/4% $ 75,000
Revolving credit agreement due July 1998, at
LIBOR plus 2% or prime (8.5% at April 30, 1997) $ 11,458 3,340
Secured term loan due July 1999, at prime plus 3/4% 6,000
Secured term loan due July 1999, at prime plus 1/2% 1,240
Secured term loan due July 1999, at prime plus 1/2% 2,832
Equipment purchase obligations maturing through,
September 2000, at a weighted average rate of 9.1%
at April 30, 1997 19,319 1,145
Mortgage note payable due October 2005, at 10% 241
------------- -------------
Total 41,090 79,485
Less current maturities 13,739 484
------------- -------------
Due after one year $ 27,351 $ 79,001
============= =============
</TABLE>
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The senior notes are due in October 2003 with interest payable
semi-annually at 9 3/4%. The senior notes are unsecured and are
effectively subordinated to secured debt of the Company with respect
to the assets securing such debt and to all debt of its subsidiaries
whether secured or unsecured. The indenture relating to the senior
notes contains certain covenants which limit the Company's ability to,
among other things, incur additional debt, pay dividends and complete
mergers, acquisitions and sales of assets. Upon a change in control
of the Company, as defined in the indenture, the holders of the senior
notes have the right to require the Company to purchase all or a
portion of such holder's senior note at a price equal to 101% of the
aggregate principal amount. The Company has the right to redeem the
senior notes, in whole or in part, on or after October 15, 2000.
Under certain conditions, the Company may redeem up to $20.0 million
in aggregate principal amount of the senior notes prior to October 15,
1999.
The revolving credit agreement due July 1998 is with a commercial bank
and, as of April 30, 1997, provides a facility of up to $15.0 million.
In June 1997, the revolving credit agreement was amended to provide
advances up to $25.0 million of which $20.0 million are secured as
discussed below. Advances are secured by substantially all of the
receivables of the Company, bear interest, at the Company's election,
at LIBOR plus two percent or prime rate and are limited by a borrowing
formula. Covenants in the agreement limit, among other things, the
Company's right, without consent of the lender, to take certain
actions, including creating indebtedness and paying dividends, and
limit the Company's capital expenditures in any fiscal year. In
addition, the agreement requires minimum cash flow coverage and the
maintenance of minimum tangible net worth, limits the ratio of funded
debt to total capitalization, and requires the Company to maintain a
minimum current ratio.
The secured term loan due July 1999 was with a commercial bank, was
due in 36 monthly installments of $166,667 plus interest at prime plus
3/4% and was secured by a majority of the assets of the Company
(except those assets directly or indirectly owned by VES). The
secured term loan was paid with proceeds from the senior notes.
The secured term loans due July 1999 provided for advances for
equipment purchases up to Canadian $4.0 million and Canadian $5.5
million, respectively, and advances were payable in 36 equal monthly
installments. Advances bore interest at the prime rates (as defined)
plus 1/2% and were secured by the equipment purchased. The
agreements required VES to maintain certain financial ratios.
Advances under the secured term loans were paid with proceeds from the
senior notes.
The Company's equipment purchase obligations represent installment
loans and capitalized lease obligations primarily related to computer
and seismic equipment. Substantially all the equipment purchase
obligations were paid with proceeds from the senior notes.
The mortgage note was payable in monthly installments of Canadian
$4,800 including interest at 10% and was secured by a building. The
mortgage note was paid with proceeds from the senior notes.
11
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5. COMMITMENTS AND CONTINGENCIES
On May 16, 1997, the Company entered into a 96 month charter agreement
for a vessel which is being constructed by a shipbuilder for the
owner. The charter is noncancellable unless the owner exercises its
right to cancel the shipbuilding contract due to late delivery (in
excess of 180 days of the scheduled delivery time of May 31, 1998).
6. SHAREHOLDER RIGHTS AGREEMENT
On May 27, 1997, the board of directors of the Company declared a
distribution of one right for each outstanding share of common stock
or exchangeable share to shareholders of record at the close of
business on June 12, 1997 and authorized 400,000 shares of a class of
preferred stock to be distributed under a shareholder rights
agreement. Upon the occurrence of certain events enumerated by the
shareholder rights agreement, each right entitles the registered
holder to purchase a fraction of a share of the Company's authorized
preferred stock or the common stock of an acquiring company. The
rights, among other things, will cause substantial dilution to a
person or group that attempts to acquire the Company. The rights
expire on May 15, 2007 but may be redeemed earlier.
7. OTHER EXPENSE
Other expense consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
------------------------------ -----------------------------
1996 1997 1996 1997
---------- ---------- ----------- -----------
(As combined - See Note 2)
(In thousands of dollars)
<S> <C> <C> <C> <C>
Net foreign currency exchange (gain) loss $ (53) $ 253 $ (24) $ 477
Net loss on disposition of
property and equipment 246 344 606 783
Interest income (104) (47) (399) (425)
Other 137 (15) 87 (24)
------------ ----------- ----------- -----------
Total $ 226 $ 535 $ 270 $ 811
============ =========== =========== ===========
</TABLE>
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's internal sources of liquidity are cash, short-term investments
and cash flow from operations. External sources include the unutilized portion
of a revolving credit facility, equipment financing and trade credit.
The Company requires significant amounts of working capital to support its
operations and to fund capital spending and research and development programs.
The Company's foreign operations require greater amounts of working capital
than similar domestic activities, as the average collection period for foreign
receivables is generally longer than for comparable domestic accounts.
Approximately 55% of revenues for the nine months ended April 30, 1997 were
attributable to the Company's export sales and foreign operations. In
addition, the Company has increased its participation in multi-client data
surveys and has significantly expanded its library of multi-client data.
Because of the lead time between survey execution and sale, multi-client data
surveys generally require greater amounts of working capital than contract
work. Depending on timing of future sales of the data and the collection of
the proceeds from such sales, the Company's liquidity will continue to be
affected; however, the Company believes that these non-exclusive surveys have
good long-term sales, earnings and cash flow potential.
The Company maintains a $25.0 million revolving credit facility, as amended
(the "Credit Facility"), with a commercial bank which will mature in July 1998.
Advances up to $20.0 million under the Credit Facility are secured by
substantially all of the Company's receivables. All advances bear interest, at
the Company's election, at LIBOR plus two percent or prime rate and are limited
by a borrowing formula which, based on current levels of receivables, results
in a borrowing base well in excess of the maximum commitment. Covenants in the
Credit Facility prohibit the payment of cash dividends and limit, among other
things, the Company's right to create indebtedness and make capital
expenditures over a certain amount in any fiscal year. In addition, the Credit
Facility requires minimum cash flow coverage and the maintenance of minimum
tangible net worth, limits the ratio of funded debt to total capitalization,
and requires the Company to maintain a minimum current ratio.
In October 1996, the Company completed a $75.0 million public offering of
Senior Notes, which generated approximately $72.2 million of net proceeds. The
indenture relating to the Senior Notes (the "Indenture") contains certain
covenants, including covenants that limit the Company's ability to, among other
things, incur additional debt, pay dividends and complete mergers, acquisitions
and sales of assets. Upon a change of control of the Company (as defined in
the Indenture) holders of the Senior Notes have the right to require the
Company to purchase all or a portion of such holder's Senior Note at a price
equal to 101% of the aggregate principal amount. Interest is payable
semi-annually beginning April 1997. Approximately $49.8 million of the net
proceeds from the Senior Notes was used to retire outstanding indebtedness of
the Company. The remaining net proceeds were used to fund a portion of the
Company's $80.0 million capital expenditure budget for fiscal 1997. Of the
Company's $80.0 million capital expenditure budget for fiscal 1997,
approximately $10.3
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<PAGE> 16
million represents capital spending necessary to maintain the Company's
operating equipment and the remainder is for discretionary capital spending,
including approximately $22.0 million for the replacement of older operating
equipment with a view of substantially enhancing operating efficiency and $47.7
million for expansion of its equipment to meet increased demand for seismic
services. It is anticipated that the balance of the 1997 capital expenditure
budget will be financed from internally generated funds, and, if necessary,
from the Credit Facility or other borrowings permitted by the Indenture and
Credit Facility.
In June 1997, the Company has proposed an Offering (the "Offering") of
3,000,000 shares of common stock. Net proceeds from the proposed Offering,
estimated at $62.9 million ($72.4 million if the underwriters' over-allotment
option is exercised in full) would be used to fund a portion of the Company's
1998 capital expenditure program of $75.0 million and other general corporate
purposes, including working capital, possible repurchases of outstanding Senior
Notes and possible acquisitions. No repurchases will be made of outstanding
Senior Notes, except at prices which are, at the time of any such repurchase,
regarded by the Company to be attractive. Accordingly there can be no assurance
that any such repurchases will be made. While the Company regularly evaluates
opportunities to acquire complementary businesses, it has made no present
agreements or commitments, except as described below, with respect to possible
acquisitions and no estimate can be made as to the amount of net proceeds which
ultimately may be used for acquisitions. The Company has recently entered into a
letter of intent to purchase a land acquisition company in the Middle East for
approximately $10.0 million. The acquisition is subject to due diligence and
definitive documentation and there is no assurance that the acquisition will be
consummated.
The Company will require substantial cash flow to continue operations on a
satisfactory basis, complete its capital expenditure and research and
development programs, and meet its principal and interest obligations with
respect to the outstanding indebtedness. The Company anticipates that cash and
short-term investments, cash flow generated from operations, borrowings
permitted under the Indenture and Credit Facility and net proceeds from the
proposed Offering will provide sufficient liquidity to fund these requirements
through fiscal 1998. However, the Company's ability to meet its debt service
and other obligations depends on its future performance, which, in turn, is
subject to general economic conditions, business and other factors beyond the
Company's control. If the Company is unable to generate sufficient cash flow
from operations or otherwise to comply with the terms of the Credit Facility or
the Indenture, it may be required to refinance all or a portion of its existing
debt or obtain additional financing. There can be no assurance that
the Company would be able to obtain such refinancing or financing, or that any
refinancing or financing would result in a level of net proceeds required.
14
<PAGE> 17
Results of Operations
Three Months Ended April 30, 1997 compared with Three Months Ended April 30,
1996.
Revenues. Land and transition zone revenues in the third quarter increased
$12.8 million or 43% over the same period last year. The Company increased the
number of channels used from 15,000 to 22,700 primarily as a result of larger
channel requirements for the U.S. highlands and transition zone markets. The
U.S. and South American land markets continue to experience high activity levels
resulting in contracts with longer terms, improved prices and more weather
protection clauses. An unseasonably high market demand for crews in Canada also
contributed to the increase in revenues in the current quarter. Marine revenues
were $1.5 million or 12% higher than the same quarter of the prior year
primarily due to improved production. The marine vessels Polar Search, Polar
Princess and two of the three vessels in a multi-boat operation have been
upgraded to Syntron equipment and are acquiring multi-client data in the Gulf of
Mexico. Demand remains high in Southeast Asia for the marine vessels Ross Seal
and the Acadian Searcher.
Revenues from the Company's data processing operations increased $6.1 million or
43% over the same period last year. The increased capacity due to the
installation of new KittyHawk, Sun and NEC hardware is being utilized by
expanding workloads from both contract and multi-client data library projects
and introduction of new technology has improved productivity. The Company has
opened two new centers in Australia and Abu Dhabi and will install an NEC
supercomputer in the London center to meet this increasing demand.
Multi-client data sales increased by $7.0 million or 191% over the same period
last year. The higher data sales reflect increased activity levels in the North
Sea and Gulf of Mexico markets. Surveys in the Shetland-Faroes area and the
Gulf of Mexico deepwater basin are planned over the coming months and are in
various stages of prefunding. The Company completed its first land data library
project in the U.S. during the quarter and is preparing additional projects
beginning in the fourth quarter of the current fiscal year.
Operating Expenses. Costs of services increased $18.3 million or 41% over the
same period last year but as a percent of revenues decreased from 76% to 73%.
The improvement in operating margins is attributable to higher prices and
better equipment utilization and production for all service groups as discussed
above.
Depreciation and Amortization. Depreciation and amortization expense increased
46% from $7.0 million to $10.1 million due to the significant 1997 capital
expenditure program which included the upgrade of equipment and increase in
capacity discussed above.
15
<PAGE> 18
Selling, General and Administrative. Selling, general and administrative
expenses increased 74% from $1.9 million to $3.2 million, resulting primarily
from costs incurred in a more aggressive marketing strategy and in implementing
new administrative and accounting data processing systems.
Interest. Interest expense increased $1.0 million due to increased debt levels
to finance the Company's 1997 capital expenditure program.
Other. Other expense increased $309,000 resulting primarily from net foreign
currency losses.
Income Taxes. Provision for income taxes increased $182,000 relating to the
increased profitability of the Company, however, the effective tax rate was
reduced in the current year by restructuring the operations of certain of the
Company's subsidiaries.
Nine Months Ended April 30, 1997 compared with Nine Months Ended April 30,
1996.
Revenues. Land and transition zone data acquisition revenues for the year
increased $39.1 million or 45% over the same period last year. The increase is
attributable to an increase in demand and capacity and improving contract terms
as previously discussed.
Marine acquisition revenues were $10.7 million or 33% higher than the same
period of the prior year primarily due to increased utilization of the
Company's vessels, higher productivity due to upgrading existing vessels with
Syntron equipment and the addition of the Polar Princess in the first quarter
of fiscal 1997.
Data processing operations increased $11.8 million or 28% over the same period
last year due to increased capacity and increased volumes of marine data
available for processing. The Company has substantially upgraded its
processing centers and will be adding a NEC supercomputer in London. The
Company also added new centers in Abu Dhabi, Australia, Ecuador and Oklahoma.
Multi-client data sales rose by $10.7 million or 52% over the same period last
year due to increasing customer interest in the North Sea and Gulf of Mexico
multi-client data surveys, especially in the deepwater and subsalt areas of the
Gulf. The Company also plans to add additional land data library surveys.
Operating Expenses. Costs of services increased $44.5 million or 31%, but as a
percent of revenues decreased from 80% to 75%. The improvement in operating
margins is attributable to higher prices and better equipment utilization and
production for all service groups as discussed above.
Selling, General and Administrative. Selling, general and administrative
expenses increased 45% from $5.3 million to $7.6 million, resulting primarily
from costs incurred in a more aggressive marketing strategy and in implementing
new administrative and accounting data processing systems.
16
<PAGE> 19
Depreciation and Amortization. Depreciation and amortization expense increased
43% from $20.0 million to $28.7 million due to the significant 1997 capital
expenditure program.
Interest. Interest expense increased $1.5 million due to increased debt levels
to finance the Company's 1997 capital expenditure program. The company issued
$75 million of senior notes during the current year.
Merger Related Costs. Merger related costs are a result of the Combination
discussed in Note 2 of Notes to the Unaudited Consolidated Financial
Statements. These costs include $150,000 payable to a stockholder who was the
former chairman of the board of directors for consulting services in connection
with the Combination.
Other. Other expense increased $541,000 primarily due to net foreign currency
exchange losses.
Income Taxes. Provision for income taxes increased from $2.3 million to $4.3
million as a result of increased profitability of the Company, however, the
effective tax rate was reduced in the current year by restructuring the
operations of certain of the Company's subsidiaries.
17
<PAGE> 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to, nor is its property the subject of, any material
pending legal proceedings, as defined by relevant rules and regulations of the
Securities and Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits filed with this report:
2) Combination Agreement dated as of May 10, 1996, between Digicon Inc.
and Veritas Energy Services Inc. (Incorporated herein by reference to
Exhibit 2.1 of Digicon Inc.'s Current Report on Form 8-K dated May
10, 1996)
3-A) Restated Certificate of Incorporation of Veritas DGC Inc. dated
August 30, 1996. (Exhibit 3.1 to Veritas DGC Inc.'s Current Report
on Form 8-K dated September 16, 1996 is incorporated herein by
reference.)
3-B) Certificate of Ownership and Merger of New Digicon Inc. and Digicon
Inc. (Exhibit 3-B to Digicon Inc.'s Registration Statement No.
33-43873 dated November 12, 1991 is incorporated herein by
reference.)
3-C) By-laws of New Digicon Inc. dated June 24, 1991 (Exhibit 3-I to
Digicon Inc.'s Form 10-K for the year ended July 31, 1991, is
incorporated herein by reference.)
4-A) Specimen certificate for Senior Notes. (Included as part of Section
2.2 of Exhibit 4-B to Veritas DGC Inc.'s Registration Statement No.
333-12481 dated September 20, 1996 is incorporated herein by
reference.)
4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes due 2003
of Veritas DGC Inc. between Veritas DGC Inc. and Fleet National
Bank, as trustee. (Exhibit 4-B to Veritas DGC Inc.'s Registration
Statement No. 333- 12481 dated September 20, 1996 is incorporated
herein by reference.)
4-C) Specimen Veritas DGC Inc. common stock certificate. (Exhibit 4-C to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1996, is
incorporated herein by reference.)
4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated as of May 15, 1997. (Incorporated
by reference to Exhibit 4.1 of Veritas DGC Inc.'s Current Report on
Form 8-K filed May 27, 1997)
10-A) Salary Continuation Agreement executed by Nicholas A. C. Bright.
(Incorporated herein by reference to Exhibit 10-E of Digicon Inc.'s
Annual Report on Form 10-K for the year ended July 31, 1994.)
*10-B) Employment Agreement executed by Stephen J. Ludlow.
18
<PAGE> 21
10-C) Asset Purchase Agreement dated August 31, 1994, between Syntron,
Inc. and Digicon Geophysical Corp., Euroseis, Inc., Digicon/GFS Inc.
and Digicon Inc. (Incorporated herein by reference to Exhibit 10-M
of Digicon Inc.'s Annual Report on Form 10-K for the year ended July
31, 1994.)
10-D) 1992 Non-Employee Director Stock Option Plan. (Incorporated herein
by reference to Exhibit 10-T of Digicon Inc.'s Amendment No. 3 to
Registration Statement No. 33-54384, dated December 17, 1992.)
10-E) Amended and Restated 1992 Employee Nonqualified Stock Option Plan.
(Incorporated herein by reference to Exhibit 10-E of Veritas DGC
Inc.'s Amendment No. 1 to Registration Statement No. 333-12481,
dated October 2, 1996.)
10-F) Support Agreement dated August 30, 1996, between Digicon Inc. and
Veritas Energy Services Inc. (Incorporated herein by reference to
Exhibit 10.1 of Veritas DGC Inc.'s Current Report on Form 8-K, dated
August 30, 1996.)
10-G) Credit Agreement dated July 18, 1996, among Digicon Inc. and Digicon
Geophysical Corp., Digicon/GFS Inc., Digicon Geophysical Limited and
Digicon Exploration, Ltd., as Borrowers, each of the banks named
therein, and Wells Fargo Bank (Texas), National Association, as
issuing bank, as a bank and as agent for the banks (the "Credit
Agreement") (Incorporated herein by reference to Exhibit 10-G of
Veritas DGC Inc.'s Amendment No. 1 to Registration Statement No.
333-12481, dated October 2, 1996.)
10-H) Letter dated September 27, 1996, from Wells Fargo Bank (Texas),
National Association, agreeing to amend the Credit Agreement
(Incorporated herein by reference to Exhibit 10-H of Veritas DGC
Inc.'s Amendment No. 1 to Registration Statement No. 333-12481,
dated October 2, 1996.)
*10-I) Employment Agreement executed by Anthony Tripodo.
*10-J) Letter dated May 28, 1997, from Wells Fargo Bank (Texas) National
Association, agreeing to amend the Credit Agreement.
*11) Computation of income per common and common equivalent share for the
three and nine months ended April 30, 1996 and 1997.
*27) Financial Data Schedule.
* Filed herewith
b) Reports on Form 8-K
1) A Form 8-K dated May 27, 1997 reported a shareholder rights
agreement approved by the board of directors on May 27, 1997.
19
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VERITAS DGC INC.
---------------------------------------
(Registrant)
Date: June 9, 1997 By: /s/ David B. Robson
------------------------ ---------------------------------------
David B. Robson
(Chairman of the Board
and Chief Executive Officer)
Date: June 9, 1997 By: /s/ Anthony Tripodo
------------------------ ---------------------------------------
Anthony Tripodo
(Chief Accounting and Financial Off
20
<PAGE> 23
EXHIBIT INDEX
*10-B) Employment Agreement executed by Stephen J. Ludlow.
*10-I) Employment Agreement executed by Anthony Tripodo.
*10-J) Letter dated May 28, 1997, from Wells Fargo Bank (Texas), National
Association, agreeing to amend the Credit Agreement.
*11) Computation of income per common and common equivalent share for the
three and nine months ended April 30, 1996 and 1997.
*27) Financial Data Schedule.
* Filed herewith
<PAGE> 1
THIS EMPLOYMENT AGREEMENT entered into as of the 1st day of April A.D. 1997.
BETWEEN:
VERITAS DGC INC., a Delaware corporation,
having an office in Houston, Texas
(hereinafter called the "Company")
OF THE FIRST PART
AND:
STEPHEN J. LUDLOW ("Ludlow")
OF THE SECOND PART
WHEREAS, the Company is engaged in the business of the acquisition and
processing of seismic data and other activities related to the oil and gas
industry and is desirous of engaging the services of Ludlow in the capacity of
President and Chief Operating Officer;
AND WHEREAS the Company and Ludlow have agreed to the compensation,
terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants hereinafter contained, the parties hereto covenant and agree
as follows, namely:
1. The Company agrees to retain the services of Ludlow and Ludlow
hereby agrees to provide managerial services to the Company for a period of
twenty-four (24) months, commencing on the 1st day of April, A.D. 1997 and
continuing until the 31st day of March, A.D. 1999, at which time this Agreement
shall be automatically renewed for successive one (1) year periods on the
anniversary date of the Agreement unless terminated by either party hereto on
written notice to the other, such notice to be delivered at least thirty (30)
days prior to the expiry of the initial twenty-four (24) month period or any
renewal thereof.
In the event that the Company gives notice of non-renewal, or of
termination, other than for just cause under Clause 5 hereof, Ludlow shall be
entitled to receive from the Company within thirty (30) days an amount equal to
twenty- four (24) months compensation at the rate set out in Clause 3(a)(i) or
any amendment thereto.
2. Ludlow shall provide his managerial expertise to the Company
which shall include but not be limited to responsibility for the organization,
financial management, administrative, technical direction, personnel relations
and such other related duties and shall further devote his efforts, time,
attention and ability to the business and affairs of the Company on a full time
and
<PAGE> 2
exclusive basis. Ludlow shall not have any business interest which is in
direct competition with any business of the Company. If, in the reasonable
opinion of the Company, Ludlow does acquire or becomes a competitor of any
business of the Company, Ludlow agrees to immediately take such steps as may be
necessary to divest himself of such interest within thirty (30) days of receipt
of notice from the Company to that effect.
3. (a) The compensation package paid to Ludlow for its
services shall be as follows, namely:
(i) a monthly fee of Eighteen Thousand Seven Hundred
Fifty Dollars ($18,750) payable in two equal installments of Nine Thousand
Three Hundred Seventy-Five Dollars ($9,375.00), such payments being due and
payable on the 15th and last day of each month, commencing April 15, 1997.
(ii) such further and additional payments to Ludlow by way
of bonuses, or other remuneration as from time to time determined by the Board
of Directors of the Company. Any such payments will be based on increased
earnings and cash flow per share achieved by Ludlow, and such other financial
and non-financial targets as the Board of Directors set from year to year.
4. Ludlow shall be reimbursed by the Company for all expenses
actually and properly incurred by him in connection with his duties hereunder,
and for all such expenses he shall furnish statements and voucher to the
Company. Ludlow shall also have a vehicle for use in performing his duties
hereunder, and the Company shall from time to time compensate him for expenses
associated with the said vehicle in a manner determined by the Board of
Directors of the Company.
5. The parties hereto each agree that this Contract may be
terminated by the Company for just cause immediately upon the giving of written
notice by the Company to Ludlow specifying the effective date of termination
and as well specifying the event or events which constitute the "just cause"
for terminating this contract.
6. In consideration of the fees payable to Ludlow hereunder, he
agrees that he shall not at any time during the term of this Agreement nor for
a period of one year thereafter divulge to any person, firm or corporation the
names of any or all of the clients or customers of the Company any special
knowledge, method or confidential information obtained by him during the term
of this Agreement.
7. Any notice to be given pursuant to this Agreement shall be
sufficiently given if served personally, or by facsimile transmission, or
mailed, prepaid and registered, addressed to the proper party as follows:
2
<PAGE> 3
Veritas DGC Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: David B. Robson
Stephen J. Ludlow
2719 Lakeside Village Drive
Missouri City, Texas 77459
The above addresses may be changed at any time hereafter by giving thirty (30)
days written notice as hereinabove provided. The date of the receipt of any
such notice shall be deemed conclusively to be the date of delivery if such
notice is served personally or by facsimile transmission or if mailed, three
(3) days after such mailing. In the event of a known interruption of postal
service, service of notice shall be by delivery only.
8. This Agreement shall be governed by and construed under the
laws of the State of Texas.
9. This Agreement shall inure to the benefit of and binding upon
the Company and its successors and assigns.
10. The parties agree that they have expressed herein their
understanding and agreement covering the subject matter of this Agreement. It
is expressly agreed that no implied covenant, condition, term or reservation
shall be read into this Agreement relating to or concerning the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement, all as of the day, month and year first above written.
VERITAS DGC INC.
By: /s/ David B. Robson
------------------------------------
David B. Robson,
Chairman of the Board and
Chief Executive Officer
/s/ Stephen J. Ludlow
---------------------------------------
Stephen J. Ludlow
3
<PAGE> 1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
by and between Veritas DGC, Inc, a Delaware corporation (hereinafter referred
to as "Employer"), and Tony Tripodo, a resident of Harris County, Texas
(hereinafter referred to as "Employee") effective as of the 1st day of April,
1997.
Attendant to Employee's employment by Employer, Employer and Employee
wish for there to be a complete understanding and agreement between Employer
and Employee with respect to, among other terms, Employee's duties and
responsibilities to Employer; the compensation and benefits owed to Employee;
the fiduciary duties owed by Employee to Employer; Employee's obligation to
avoid conflicts of interest, disclose pertinent information to Employer, and
refrain from using or disclosing Employer's information; and the term of
employment.
NOW, THEREFORE, in consideration of Employee's continued employment by
Employer and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Employer and Employee agree as follows:
1. GENERAL DUTIES OF EMPLOYER AND EMPLOYEE.
1.1 Employer agrees to employ Employee, and Employee agrees to
accept employment by Employer and to serve Employer in an executive capacity as
Executive Vice-President and Chief Financial Officer of Employer. The duties
and responsibilities of Employee include those described for the particular
position in the Bylaws of Employer or other documents of Employer, and such
other or additional duties as may from time-to-time be assigned to Employee by
the Board of Directors of Employer (hereinafter referred to as the "Board") or
any duly authorized committee thereof or an authorized officer of Employer. In
general, Employee shall supervise and be responsible for Employer's treasury,
accounting and financial operations, reports and filings with the Securities
and Exchange Commission, tax, facilities and insurance matters and investor
relations.
1.2 While employed hereunder, Employee shall devote substantially
all of his time, efforts, skills and attention for the benefit of and with his
primary attention to the affairs of Employer in order that he shall faithfully
perform his duties and obligations. The preceding sentence shall not, however,
be deemed to restrict Employee from attending to matters or engaging in
activities not directly related to the business of Employer, provided that (i)
such activities or matters are reasonable in scope and time commitment and not
otherwise in violation of this Agreement, and (ii) Employee shall not become a
director of any corporation or other entity (excluding charitable or other
non-profit organizations) without prior written disclosure to, and consent of,
Employer.
1.3 Employee agrees and acknowledges that he owes a fiduciary duty
of loyalty, fidelity and allegiance to act at all times in the best interests
of Employer and to do no act which would injure Employer's business, its
interests or its reputation.
<PAGE> 2
2. COMPENSATION AND BENEFITS.
2.1 As compensation for services to Employer, Employer shall pay
to Employee during the term of this Agreement a salary at an annual rate of
$180,000. The salary shall be payable in equal installments in arrears twice
each month on the fifteenth and last business day of each month. The Board
shall review Employee's overall annual compensation at least annually with a
view to the adequacy thereof. In addition, Employee shall receive a one-time
bonus of $60,000 following his execution of this Agreement that shall be
payable by Employer on or before April 30, 1997.
2.2 Employee shall be reimbursed in accordance with Employer's
normal expense reimbursement policy for all of the actual and reasonable costs
and expenses incurred by him in the performance of his services and duties
hereunder, including, but not limited to, travel and entertainment expenses.
Employee shall furnish Employer with all invoices and vouchers reflecting
amounts for which Employee seeks Employer's reimbursement.
2.3 Employee shall be entitled to participate in all insurance and
retirement plans, incentive compensation plans (at a level appropriate to his
position) and such other benefit plans or programs as may be in effect from
time-to-time for the key management employees of Employer including, without
limitation, those related to savings and thrift, retirement, welfare, medical,
dental, disability, salary continuance, accidental death, travel accident, life
insurance, incentive bonus, membership in business and professional
organizations and luncheon clubs, reimbursement of business and entertainment
expenses, physical examinations, and financial, legal and tax counseling. In
addition, during the term of this Agreement, Employer shall pay on behalf of
Employee monthly membership dues, but not other charges or expenses, relating
to Employee's membership in the Houstonian Club.
2.4 Employer shall indemnify Employee for claims and expenses to
the extent provided in Employer's Bylaws.
2.5 On the date hereof, Employee shall receive a number of
nonqualified options ("Options") to purchase shares of Employer's common stock,
par value $.01 per share ("Common Stock"), equal to two times Employee's base
salary divided by the fair market value (as determined in accordance with the
Plan, which is hereinafter defined) of the Common Stock, rounded to the nearest
whole Option. Thereafter, Employee shall be entitled to participate in
Employer's key contributor plan (at a level appropriate to his position) as may
be in effect from time-to-time. The Options received by Employee pursuant to
the first sentence of this Section 2.5 shall be subject to the terms and
provisions of the Plan. As used herein, "Plan" shall mean the 1992 Amended and
Restated Employee Nonqualified Stock Option Plan of Employer, as the same may
be amended from to time.
2.6 All salary, bonus and other payments made by Employer to
Employee pursuant to this Agreement, including, without limitation, any payment
made pursuant to Section 4.5(b)(ii), shall be subject to such payroll and
withholding deductions as may be required by law and other
2
<PAGE> 3
deductions applied generally to employees of Employer for insurance and other
employee benefit plans in which Employee participates.
3. FIDUCIARY DUTY; CONFIDENTIALITY.
3.1 In keeping with Employee's fiduciary duties to Employer,
Employee agrees that he shall not knowingly become involved in a conflict of
interest, or upon discovery thereof, allow such a conflict to continue.
Moreover, Employee agrees that he shall disclose to the Board any facts which
might involve a conflict of interest that has not been approved by the Board.
3.2 As part of Employee's fiduciary duties to Employer, Employee
agrees to protect and safeguard Employer's information, ideas, concepts,
improvements, discoveries, and inventions and any proprietary, confidential and
other information relating to Employer or its business not generally available
to the public (collectively, "Confidential Information") and, except as may be
expressly required by Employer, Employee shall not, either during his
employment by Employer or thereafter, directly or indirectly, use for his own
benefit or for the benefit of another, or disclose to another, any Confidential
Information, except as may be required by any applicable law, rule, regulation
or order.
3.3 Upon termination of his employment with Employer, or at any
other time upon request, Employee shall immediately deliver to Employer all
documents embodying any of Employer's Confidential Information.
4. TERM AND TERMINATION.
4.1 The term of Employee's employment hereunder shall be for a
period of two years, commencing April 1, 1997 and ending March 31, 1999 unless
earlier terminated in accordance with the terms of this Agreement; provided,
that beginning April 1, 1999 and on each April 1st thereafter, such term of
employment shall be extended automatically for an additional one-year period
unless Employer or Employee gives the other notice of intent to terminate this
Agreement at least thirty days prior to such April 1st.
4.2 This Agreement shall terminate upon Employee's death.
4.3 Employer may terminate this Agreement by reason of Employee's
Disability (as hereinafter defined) after such condition of Disability has
existed for at least 180 consecutive days. Employer shall give to Employee
sixty days notice of its intention to effect such termination pursuant to this
Section 4.3. As used in this Agreement, "Disability" shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended, or any successor provision.
4.4 (a) Employer may terminate this Agreement upon the
determination by a majority of the entire Board that Cause (as hereinafter
defined) exists therefor. As used in this Agreement, "Cause" means (i) the
willful and continued failure by Employee substantially to perform his
3
<PAGE> 4
obligations under this Agreement (other than any such failure resulting from
his incapacity due to physical and mental illness) after a demand for
substantial performance has been delivered to him by the Board which
specifically identifies the manner in which the Board believes Employee has not
substantially performed such provisions, (ii) Employee's willfully engaging in
conduct materially and demonstrably injurious to the property or business of
Employer, including without limitation, fraud, misappropriation of funds or
other property of Employer, other willful misconduct, gross negligence or
commission of a felony or other crime of moral turpitude, or (iii) Employee's
breach of this Agreement. If the Board determines that Cause exists, the
parties agree that such determination shall be subject to inquiry or dispute
only as to its reasonableness. If the Board makes such determination, Employer
may (A) terminate this Agreement effective immediately or at a subsequent date
or (B) condition Employee's continued employment upon such considerations or
requirements as may be reasonable under the circumstances and place a
reasonable limitation upon the time within which Employee shall comply with
such considerations or requirements.
(b) Employee shall have the right to terminate this
Agreement and his employment hereunder at any time for "Good Reason," which for
purposes of this Agreement means Employer's failure to comply with any of the
provisions of Section 2 of this Agreement and which failure is not remedied
within thirty days after receipt of written notice from Employee.
4.5 (a) Upon termination of this Agreement by Employer for
Cause, by Employee other than for Good Reason, or due to the death or
Disability of Employee, all compensation and benefits shall cease upon the date
of termination other than: (i) those benefits that are provided by retirement
and benefit plans and programs specifically adopted and approved by Employer
for Employee that are earned and vested by the date of termination, (ii) the
pro rata annual salary through the date of termination, and (ii) medical and
similar benefits the continuation of which is required by applicable law.
(b) Upon termination of (i) Employee's employment by
Employer at any time other than for Cause or (ii) this Agreement by Employee
for Good Reason during the term hereof, the obligations of Employer and
Employee under Sections 1 and 2 shall terminate as of the date this Agreement
is terminated, and Employer shall pay or provide to Employee (i) the pro rata
annual salary through the date of termination, (ii) within thirty days of said
termination, a severance benefit equal to eighteen months of Employee's annual
salary and (iii) medical and similar benefits as required by applicable law.
5. VACATION.
5.1 Employee will be entitled to paid vacation of not less than
three weeks each year in accordance with Employer's policy and guideline
manual. Employee acknowledges receipt from Employer of a copy of said manual.
Vacation may also be taken by Employee at the time and for the periods as may
be mutually agreed upon between Employer and Employee.
4
<PAGE> 5
6. MISCELLANEOUS.
6.1 All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered by hand, by facsimile, by express courier service or by
registered or certified mail, return receipt requested to the addresses set
forth below in this Section 7.1. All such notices and other communications
shall, if delivered by hand, be deemed given when actually received; if
delivered by facsimile, be deemed given if transmitted by telecopier during
normal business hours, otherwise on the next succeeding business day; and if
delivered by mail, be deemed given on the earlier of (a) when received or (b)
three business days after being so mailed.
If to Employer, to:
Veritas DGC, Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: David B. Robson
If to Employee, to:
Mr. Tony Tripodo
247 Tamerlane
Houston, Texas 77024
or to such other names or addresses as Employer or Employee, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section.
6.2 This Agreement shall be binding upon and inure to the benefit
of Employer, its successors, legal representatives and assigns, and upon
Employee, his heirs, executors, administrators, representatives and assigns;
provided, however, Employee agrees that his rights, duties and obligations
hereunder are personal to him and may not be assigned by him without the
express written consent of Employer.
6.3 This Agreement supersedes, replaces and merges all previous
agreements and discussions relating to the same or similar subject matters
between Employee and Employer and constitutes the entire agreement between
Employee and Employer with respect to the subject matter of this Agreement.
This Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative of
Employer or by any written agreement unless signed by an officer of Employer
who is expressly authorized by the Board to execute such document.
6.4 If any provision of this Agreement or application thereof to
anyone or under any circumstances shall be determined to be invalid or
unenforceable, such invalidity or unenforceability
5
<PAGE> 6
shall not affect any other provisions or applications of this Agreement which
can be given effect without the invalid or unenforceable provision or
application. In addition, if any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, unenforceable, unreasonable,
unduly restrictive or overly broad, the parties intend that such court modify
said provision so as to render it valid, enforceable, reasonable and not unduly
restrictive or overly broad.
6.5 The internal laws of the State of Texas will govern the
interpretation, validity, enforcement and effect of this Agreement without
regard to the place of execution or the place for performance thereof, and
Employer and Employee agree that the state and federal courts situated in
Harris County, Texas shall have personal jurisdiction over Employer and
Employee to hear all disputes arising under this Agreement. This Agreement is
to be at least partially performed in Harris County, Texas, and, as such,
Employer and Employee agree that venue shall be proper with the state or
federal courts in Harris County, Texas to hear such disputes. In the event
either Employer or Employee is not able to effect service of process upon the
other with respect to such disputes, Employer and Employee expressly agree that
the Secretary of State for the State of Texas shall be an agent of Employer
and/or Employee to receive service of process on behalf of Employer and/or
Employee with respect to such disputes.
[SIGNATURE PAGE FOLLOWS]
6
<PAGE> 7
IN WITNESS WHEREOF, the undersigned intending to be legally bound,
have executed this Agreement as of the date first written above.
EMPLOYER:
VERITAS DGC, INC.
By: /s/ David B. Robson
--------------------------------
David B. Robson
Chairman of the Board and
Chief Executive
EMPLOYEE:
/s/ Tony Tripodo
-----------------------------------
Tony Tripodo
7
<PAGE> 1
FIRST AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
AND OTHER LOAN DOCUMENTS
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
OTHER LOAN DOCUMENTS (the "Amendment"), dated as of May 28, 1997, is among
VERITAS DGC INC., DIGICON GEOPHYSICAL CORP., VERITAS DGC LAND INC., DIGICON
GEOPHYSICAL LIMITED, DIGICON EXPLORATION, LTD. and VERITAS ENERGY SERVICES
PARTNERSHIP, as borrowers (collectively, "Borrowers," and each a "Borrower"),
and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a national banking
association as a bank (in such capacity, a "Bank," and together with each of
the other banks or other lending institutions which is or which may become a
signatory to the Agreement (as hereinafter defined), collectively the "Banks"),
as issuing bank (in such capacity, together with its successors in such
capacity, the "Issuing Bank"), and as agent for itself, the Issuing Bank and
any other Banks (in such capacity, together with its successors in such
capacity, the "Agent").
RECITALS:
A. The Borrowers, the Bank, the Issuing Bank and the Agent have
entered into that certain Amended and Restated Credit Agreement (the
"Agreement") dated as of October 21, 1996.
B. Pursuant to the Agreement, Digicon (Malaysia) Sdn. Bhd, a
company organized under the laws of the Federation of Malaysia ("Digicon
("Malaysia)") and Euroseis, Inc., a Delaware corporation ("Euroseis," and
together with Digicon (Malaysia), collectively the "Guarantors," and each a
"Guarantor") each executed a Guaranty (each a "Guaranty," and collectively the
"Guaranties") dated as of October 21, 1996 which guaranteed to the Agent the
payment and performance of the Obligations (as defined in the Agreement).
C. The Borrowers, the Bank, the Issuing Bank and the Agent now
desire to amend the Agreement as herein set forth.
D. Each Guarantor desires to consent to this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE ARTICLE I
Definitions
1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
<PAGE> 2
ARTICLE ARTICLE II
Amendments
1 Amendment to Recitals. The fifth paragraph of the Recitals to
the Agreement is amended by deleting the reference to "$15,000,000" and
inserting in lieu thereof a reference to "$25,000,000."
2 Amendment to Definitions.
(a) The following definitions are added, in alphabetical
order, to the Definitions contained in Appendix A to the Agreement:
"Consolidated Net Tangible Assets" has the meaning ascribed to
such term in the Indenture.
"Indenture" means the Indenture dated October 23, 1996 between
Veritas DGC and Fleet National Bank, a national banking association,
as such Indenture existed on October 23, 1996, without taking into
account any amendments, modifications thereof or supplements thereto,
unless such amendment, modification or supplement has the effect of
increasing the Maximum Bank Credit Amount, increasing the Permitted
Subsidiary Indebtedness, or eliminating or reducing the restrictions
containing in the Indenture with respect to incurring Indebtedness (as
defined in the Indenture) to the Banks or securing such Indebtedness
(as defined in the Indenture) to the Banks.
"Maximum Bank Credit Amount" has the meaning ascribed to such
term in the Indenture.
"Permitted Subsidiary Indebtedness" has the meaning ascribed
to such term in the Indenture.
"Restricted Subsidiary" has the meaning ascribed to such term
in the Indenture.
"Rights Distribution Plan" means the Shareholder Rights Plan
being presented to the shareholders of the Borrower at the Annual
Meeting of Shareholders to be held on Wednesday, May 21, 1997, the
principal terms, conditions and provisions of which are set out in an
Executive Summary delivered to the Agent and its counsel on May 19,
1997 (which Executive Summary contains the terms, conditions and
provisions to which the Agent and the Banks have consented).
"Secured Obligations" means (i) while the Indenture is in
effect, the Obligations other than that portion of principal amount of
the Obligations which exceeds, at the time of the determination
thereof, the greater of (a) the greater of (1) 10% of Veritas DGC's
Consolidated Net Tangible Assets, or (2) the Maximum Bank Credit
Amount and (b) any less restrictive prohibition as may be found in the
Indenture as a result of an amendment that
-2-
<PAGE> 3
would change the definition of Indenture found in this Agreement and
(ii) after the termination of the Indenture, or after the elimination
of the applicable restrictions therein contained regarding the
granting of Liens by Restricted Subsidiaries to secure Indebtedness
(as defined in the Indenture) to Banks and the incurrence of
Indebtedness (as defined in the Indenture) to the Banks, the
Obligations.
(b) The definition of "Eligible Domestic/Eligible
Accounts" is amended by adding to the end of clause (s) thereof the
words: "to secure the Secured Obligations."
3 Amendment to Article IV.
(a) The following is added to Section 4.10 prior to subsection (a)
thereof:
Subject to the limitations set forth at Section 4.11, the
Borrowers agree as follows:
(b) The following new Sections 4.11 and 4.12 are added to the
Agreement:
Section 4.11 Limitations on Joint and Several Liability
for the Obligations. No Borrower other than Veritas DGC shall
be liable for any Obligations in excess of the sum of (a) the
Secured Obligations plus (b) the Permitted Subsidiary
Indebtedness.
Section 4.12 Application of Payments. All principal
payments shall first be applied to that principal portion of
the Obligations that does not constitute Secured Obligations,
but neither the Agent nor any Bank shall be required to keep
any separate records in respect thereof, such agreement about
application to apply automatically.
4 Amendment to Section 6.1. Section 6.1 is hereby amended by
deleting the reference therein to "Obligations" and by inserting a reference to
"Secured Obligations" in lieu thereof.
5 Amendment to Section 10.4. Section 10.4 is amended by adding
at the end of the introductory clause thereof the words: "and except for the
Rights Distribution Plan".
6 Increase of Revolving Credit Commitment. The reference to
"Revolving Credit Commitment: $15,000,000" opposite the signature line of the
Bank in the Agreement is deleted and a reference to "Revolving Credit
Commitment: $25,000,000" is inserted in lieu thereof.
7 Amendment to Exhibits. Exhibit "A" and "D" to the Agreement
are deleted and Exhibits "A" and "D" attached hereto are substituted therefor,
respectively.
-3-
<PAGE> 4
8 Amendment to Other Loan Documents.
(a) Each reference in the Loan Documents (other than the
Agreement and the Guaranties) to "Obligations" is deleted and a
reference to "Secured Obligations" is inserted in lieu thereof.
(b) Paragraph 1.(a) in each Guaranty is amended by adding
the following after the first sentence thereof:
; provided, however, that the Guaranteed Indebtedness shall
not exceed the sum of the "Secured Obligations," as defined in
the Credit Agreement, plus the "Permitted Subsidiary
Indebtedness," as defined in the Credit Agreement.
ARTICLE ARTICLE III
Conditions Precedent
1 Conditions. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent:
(a) The Agent and the Bank shall have received all of the
following, each dated (unless otherwise indicated) the date of this
Amendment, in form and substance satisfactory to Agent and the Bank:
(1) Amendment Fee. An amendment fee of $36,000;
(2) Amendment. This Amendment executed by all
parties and consented to in writing by each Guarantor;
(3) Note. A new Note reflecting the increase
Commitment executed by the Borrowers and payable to the order
of the Bank;
(4) Resolutions. Resolutions of the Board of
Directors of each Borrower (or each corporate partner of such
Borrower if such Borrower is a partnership) certified by such
Person's Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance by such Borrower of
this Amendment and the other Loan Documents to which such
Borrower is or is to be a party hereunder;
(5) Incumbency Certificate. A certificate of
incumbency certified by the Secretary or an Assistant
Secretary of each Borrower (or each corporate partner of such
Borrower if such Borrower is a partnership) certifying the
names of the officers of such Borrower (or each corporate
partner of such Borrower if Borrower is a partnership)
authorized to sign this Amendment and each of the other Loan
Documents to which such Borrower is or is to be a party
hereunder (including the certificates contemplated herein)
together with specimen signatures of such officers
-4-
<PAGE> 5
and certifying that such articles of incorporation, articles
of association, partnership agreement, bylaws or memorandum of
association, as applicable, of such Borrower, in the
respective forms delivered to the Agent in connection with the
October 21, 1996 closing of the Agreement, have not been
amended or modified and remain in full force and effect;
(6) Governmental Certificates. Certificates of
the appropriate government officials of the state or country
of incorporation or organization of each Borrower (other than
Veritas Energy Services Partnership) as to the existence and
good standing, as applicable, of each Borrower, each dated
within 10 days prior to the date of this Amendment;
(7) Opinion of Counsel. A favorable opinion of
Porter & Hedges confirming that this Amendment and the Note
are the legal, valid and binding obligations of the Borrowers
and the Guarantors, as applicable, and otherwise satisfactory
to Agent;
(8) Additional Information. The Agent and the
Bank shall have received such additional documents,
instruments and information as they or their legal counsel,
Winstead Sechrest & Minick P.C., may request; and
(b) The representations and warranties contained herein
and in all other Loan Documents, as amended hereby, shall be true and
correct as of the date hereof as if made on the date hereof;
(c) No Event of Default shall have occurred and be
continuing and no event or condition shall have occurred that with the
giving of notice or lapse of time or both would be an Event of
Default.
(d) All corporate proceedings taken in connection with
the transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be
satisfactory to Agent and Bank and their legal counsel, Winstead
Sechrest & Minick P.C.
ARTICLE ARTICLE IV
Ratifications, Representations and Warranties
1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement (and, as applicable, the Loan Documents) and except as
expressly modified and superseded by this Amendment, the terms and provisions
of the Agreement and the Loan Documents are ratified and confirmed and shall
continue in full force and effect. The Borrowers, the Agent and the Bank agree
that the Agreement (and, as applicable, the Loan Documents) as amended hereby
shall continue to be legal, valid, binding and enforceable in accordance with
its (their) terms.
-5-
<PAGE> 6
2 Representations and Warranties. Each Borrower hereby
represents and warrants to the Agent and the Bank that (i) the execution,
delivery and performance of this Amendment and any and all other Loan Documents
executed or delivered, or both, in connection herewith have been authorized by
all requisite corporate or partnership, as applicable, action on the part of
each Borrower and will not violate, as applicable, the articles of
incorporation, articles of association, memorandum of association, partnership
agreement, or bylaws of such Borrower, (ii) the representations and warranties
contained in the Agreement, as amended hereby, and any other Loan Document are
true and correct on and as of the date hereof as though made on and as of the
date hereof, (iii) no Event of Default has occurred and is continuing and no
event or condition has occurred that with the giving of notice or lapse of time
or both would be an Event of Default, and (iv) such Borrower is in full
compliance with all covenants and agreements contained in the Agreement as
amended hereby.
ARTICLE ARTICLE V
Miscellaneous
1 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan
Document including any Loan Document furnished in connection with this
Amendment shall survive the execution and delivery of this Amendment and the
other Loan Documents, and no investigation by the Agent, the Bank or the
Issuing Bank or any closing shall affect the representations and warranties or
the right of any such Person to rely upon them.
2 Reference to Agreement. Each of the Loan Documents, including
the Agreement and any and all other agreements, documents, or instruments now
or hereafter executed and delivered pursuant to the terms hereof or pursuant to
the terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
3 Expenses. As provided in the Agreement, each Borrower jointly
and severally agrees to pay on demand all reasonable costs and expenses
incurred by the Agent or the Bank, or both, in connection with the preparation,
negotiation, and execution of this Amendment and the other Loan Documents
executed pursuant hereto and any and all amendments, modifications, and
supplements thereto, including without limitation the costs and fees of the
Agent's and the Bank's legal counsel, and all costs and expenses incurred by
the Agent or the Bank, or both, in connection with the enforcement or
preservation of any rights under the Agreement, as amended hereby, or any other
Loan Document, including without limitation the reasonable costs and fees of
the Agent's or the Bank's legal counsel or legal counsel for both.
4 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
-6-
<PAGE> 7
5 GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS AMENDMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AMENDMENT
HAS BEEN ENTERED INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR
ALL PURPOSES IN HARRIS COUNTY, TEXAS. SUBJECT TO THE ARBITRATION PROVISIONS
FOUND IN THE LOAN DOCUMENTS, WHICH REMAIN IN FULL FORCE AND EFFECT, ANY ACTION
OR PROCEEDING AGAINST ANY BORROWER UNDER OR IN CONNECTION WITH ANY OF THE LOAN
DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS.
EACH BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT
ANY SUCH COURT IS AN INCONVENIENT FORUM. EACH BORROWER AGREES THAT SERVICE OF
PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 14.12 OF THE AGREEMENT. NOTHING HEREIN OR IN ANY OF THE
OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF THE AGENT, THE ISSUING BANK OR
THE BANKS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR, SUBJECT TO
THE ARBITRATION PROVISIONS FOUND IN THE LOAN DOCUMENTS, WHICH REMAIN IN FULL
FORCE AND EFFECT, SHALL LIMIT THE RIGHT OF SUCH PERSONS TO BRING ANY ACTION OR
PROCEEDING AGAINST A BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS
IN OTHER JURISDICTIONS. SUBJECT TO SECTION 15.20 OF THE AGREEMENT, ANY ACTION
OR PROCEEDING BY THE BORROWERS AGAINST ANY OF THE AGENT, THE ISSUING BANK OR
THE BANKS SHALL BE BROUGHT ONLY IN A COURT LOCATED IN HARRIS COUNTY, TEXAS.
6 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Agent, the Bank, the Issuing Bank and each
Borrower and their respective successors and assigns, except no Borrower may
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Agent, the Bank and the Issuing Bank.
7 Counterparts. This Amendment and the Joinder and Consent of
the Guarantors may be executed in one or more counterparts, each of which when
so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same instrument.
8 Effect of Waiver. No consent or waiver, express or implied,
by the Agent, the Bank or the Issuing Bank to or for any breach of or deviation
from any covenant, condition or duty by any Borrower or any Guarantor shall be
deemed a consent or waiver to or of any other breach of the same or any other
covenant, condition or duty.
-7-
<PAGE> 8
9 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
10 Non-Application of Chapter 15 of Texas Credit Code. The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Annotated Texas
Statutes, Article 5069-15) are specifically declared by the parties not to be
applicable to this Amendment or any of the Loan Documents or the transactions
contemplated hereby.
11 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY
NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed and delivered as of the date first written above.
BORROWERS:
VERITAS DGC INC., a Delaware corporation
By: /s/ Anthony Tripodo
-------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: (713) 512-8701
Telephone No.: (713) 512-8820
Attention: Chief Financial Officer
-8-
<PAGE> 9
DIGICON GEOPHYSICAL CORP., a Delaware
corporation
By: /s/ Anthony Tripodo
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: (713) 512-8701
Telephone No.: (713) 512-8820
Attention: Chief Financial Officer
VERITAS DGC LAND INC., a Mississippi
corporation
By: /s/ Anthony Tripodo
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: (713) 512-8701
Telephone No.: (713) 512-8820
Attention: Chief Financial Officer
-9-
<PAGE> 10
DIGICON GEOPHYSICAL LIMITED, a company
organized under the laws of England
and Wales
By: /s/ Allan C. Pogach
------------------------------------
Allan C. Pogach, Director
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: (713) 512-8701
Telephone No.: (713) 512-8820
Attention: Chief Financial Officer
DIGICON EXPLORATION, LTD., a Delaware
corporation
By: /s/ Anthony Tripodo
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
Address for Notices:
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Fax No.: (713) 512-8701
Telephone No.: (713) 512-8820
Attention: Chief Financial Officer
VERITAS ENERGY SERVICES PARTNERSHIP
a Partnership by its duly authorized
Partner
By: VERITAS GEOPHYSICAL LTD.
Per: /s/ Lawrence C. Fichtner
-------------------------------
Lawrence C. Fichtner,
Director
-10-
<PAGE> 11
-and-
By: VERITAS SEISMIC (1987) LTD.
Per:/s/ Lawrence C. Fichtner
---------------------------
Lawrence C. Fichtner,
Director
-and
By: CANEX INFORMATION SERVICES LTD.
Per:/s/ Lawrence C. Fichtner
---------------------------
Lawrence C. Fichtner,
Director
Address for Notices:
Suite 300
615-3 Avenue S.W.
Calgary, Alberta T2P 0G6, CANADA
Fax No.: (402) 266-9359
Telephone No.: (403) 266-9350
AGENT:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /s/ J. Alan Alexander
-------------------------------------
J. Alan Alexander
Vice President
Address for Notices
1000 Louisiana, Third Floor
MAC 5002-031
Houston, Texas 77002
Fax No.: (713) 520-7912
Telephone No.: (713) 250-1651
Attention: J. Alan Alexander
<PAGE> 12
ISSUING BANK:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /s/ J. Alan Alexander
------------------------------------
J. Alan Alexander
Vice President
Address for Notices
1000 Louisiana, Third Floor
MAC 5002-031
Houston, Texas 77002
Fax No.: (713) 520-7912
Telephone No.: (713) 250-1651
Attention: J. Alan Alexander
BANKS:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /s/ J. Alan Alexander
------------------------------------
J. Alan Alexander
Vice President
Address for Notices
1000 Louisiana, Third Floor
MAC 5002-031
Houston, Texas 77002
Fax No.: (713) 520-7912
Telephone No.: (713) 250-1651
Attention: J. Alan Alexander
-12-
<PAGE> 13
JOINDER AND CONSENT
Each Guarantor hereby consents and agrees to the foregoing Amendment,
consents, in particular, to the provisions of Section 2.6(b) of the Amendment
and agrees that its Guaranty and all other Loan Documents to which it is a
party shall remain in full force and effect as amended by the Amendment and
shall continue to be the legal, valid and binding obligation of such Guarantor
enforceable against such Guarantor in accordance with its terms as amended by
the Amendment.
GUARANTORS:
The common seal of DIGICON )
(MALAYSIA) SDN. BHD. was )
hereto affixed in the presence )
of _______________________ )
DIGICON (MALAYSIA) SDN. BHD.
By:
------------------------------------
Director
By:
------------------------------------
Director/Secretary
EUROSEIS, INC.
By:
------------------------------------
Anthony Tripodo, Executive Vice
President and Chief Financial Officer
-13-
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit Description of Exhibit Section
------- ---------------------- -------
Exhibit "A" Form of Revolving Credit Note 2.3 of Amendment;
2.2 of Agreement
Exhibit "D" Revolving Credit Advance Request Form 2.3 of Amendment;
7.2(a) of Agreement
</TABLE>
-14-
<PAGE> 15
EXHIBIT "A"
Form of Revolving Credit Note
<PAGE> 16
REVOLVING CREDIT NOTE
$25,000,000.00 Houston, Texas May 28, 1997
FOR VALUE RECEIVED, the undersigned, VERITAS DGC INC., a Delaware
corporation, formerly known as Digicon Inc., DIGICON GEOPHYSICAL CORP., a
Delaware corporation, VERITAS DGC LAND INC., a Mississippi corporation,
formerly known as Digicon/GFS, Inc., DIGICON GEOPHYSICAL LIMITED, a company
organized under the laws of England and Wales, DIGICON EXPLORATION, LTD., a
Delaware company and VERITAS ENERGY SERVICES PARTNERSHIP, a partnership
organized under the laws of Alberta, Canada (collectively the "Borrowers," and
individually each a "Borrower"), hereby jointly and severally promise to pay to
the order of WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION (the "Bank"), at
the Agent's office located at 1000 Louisiana, Houston, Texas 77002 for the
account of the Applicable Lending Office of the Bank, in lawful money of the
United States of America and in immediately available funds, the principal
amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00) or such
lesser amount as shall equal the aggregate unpaid principal amount of the
Revolving Credit Advances made by the Bank to the Borrowers under the Credit
Agreement referred to below, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the amount of each such
Revolving Credit Advance, at such office, in like money and funds, for the
period commencing on the date of such Revolving Credit Advance until such
Revolving Credit Advance shall be paid in full, at the rates per annum and on
the dates provided in the Credit Agreement.
The Borrowers hereby authorize the Bank to endorse on the Schedule
annexed to this Note the amount of Revolving Credit Advances made to the
Borrowers by the Bank and payments of principal in respect of such Revolving
Credit Advances, which endorsements shall, in the absence of manifest error, be
conclusive as to the outstanding principal amount of all such Revolving Credit
Advances; provided, however, that the failure to make such notation with
respect to any such Revolving Credit Advance or payment shall not limit or
otherwise affect the obligations of the Borrowers under the Credit Agreement or
this Note.
This Note is one of the Revolving Credit Notes refereed to in the
Amended and Restated Credit Agreement dated as of even date herewith, among the
Borrowers, the Bank and certain other banks parties thereto and Wells Fargo
Bank (Texas), National Association, as Agent for the Bank and certain other
banks (such Amended and Restated Credit Agreement, as amended by that certain
First Amendment to Credit Agreement dated of even date herewith, as the same
may be amended, modified, or supplemented from time to time, being referred to
herein as the "Credit Agreement"), and evidences Revolving Credit Advances made
by the Bank thereunder. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and also for prepayments of Revolving Credit Advances
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement.
REVOLVING CREDIT NOTE - Page 1
<PAGE> 17
Capitalized terms used in this Note have the respective meanings assigned to
them in the Credit Agreement.
Notwithstanding anything to the contrary contained herein, no
provision of this Note shall require the payment or permit the collection of
interest in excess of the Maximum Rate. If any excess of interest in such
respect is herein provided for, or shall be adjudicated to be so provided, in
this Note or otherwise in connection with this loan transaction, the provisions
of this paragraph shall govern and prevail, and neither the Borrowers nor the
sureties, guarantors, successors or assigns of the Borrowers shall be obligated
to pay the excess amount of such interest, or any other excess sum paid for the
use, forbearance or detention of sums loaned pursuant hereto. If for any
reason interest in excess of the Maximum Rate shall be deemed charged, required
or permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced
by this Note; and, if the principal amount hereof has been paid in full, any
remaining excess shall forthwith be paid to the Borrowers. In determining
whether or not the interest paid or payable exceeds the Maximum Rate, the
Borrowers and the Bank shall, to the extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
indebtedness evidenced by this Note so that the interest for the entire term
does not exceed the Maximum Rate.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THIS NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS.
The Borrowers and each surety, guarantor, endorser, and other party
ever liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, diligence in collecting, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way,
at any time, with one or more of the foregoing parties without notice to any
other party, and to grant any such party any extensions of time for payment of
any of said indebtedness, or to release or substitute part or all of the
collateral securing this Note, or to grant any other indulgences or
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
This Note is executed in renewal, extension and increase of, but not
in novation or discharge of, that certain Revolving Credit Note dated October
21, 1996, executed by the Borrowers and payable to the order of the Bank in the
original principal amount of $15,000,000, which Revolving Credit Note was
executed in renewal and extension of, but not in novation or discharge of, that
certain Revolving Credit Note dated July 18, 1996, executed by the Borrowers
(other than Veritas
REVOLVING CREDIT NOTE - Page 2
<PAGE> 18
Energy Services Partnership) and payable to the order of the Bank in the
original principal amount of $15,000,000.
This Note is secured as provided in the Credit Agreement and is
entitled to all the benefits of the Credit Agreement and all other Loan
Documents.
VERITAS DGC INC.
By:
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
DIGICON GEOPHYSICAL CORP.
By:
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
VERITAS DGC LAND INC.
By:
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
DIGICON GEOPHYSICAL LIMITED
By:
------------------------------------
Allan C. Pogach,
Director
DIGICON EXPLORATION, LTD.
By:
------------------------------------
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
REVOLVING CREDIT NOTE - Page 3
<PAGE> 19
VERITAS ENERGY SERVICES
PARTNERSHIP, a Partnership by
a duly authorized Partner
By: VERITAS GEOPHYSICAL LIMITED
Per:
------------------------------
Lawrence C. Fichtner,
Director
- and -
By: VERITAS SEISMIC (1987) LTD.
Per:
------------------------------
Lawrence C. Fichtner,
Director
- and -
By: CANEX INFORMATION SERVICES LTD.
Per:
------------------------------
Lawrence C. Fichtner,
Director
- BORROWERS -
REVOLVING CREDIT NOTE - Page 4
<PAGE> 20
Schedule
<TABLE>
<CAPTION>
Unpaid
Amount of Principal
Date Made Amount of Principal Balance
or Paid Advance Page of Note
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
</TABLE>
REVOLVING CREDIT NOTE - Page 5
<PAGE> 21
EXHIBIT "D"
Revolving Credit Advance Request Form
<PAGE> 22
REVOLVING CREDIT ADVANCE REQUEST FORM
Date: ________________, 199__
TO: WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
Ladies and Gentlemen:
The undersigned Borrowers hereby refer to the Amended and Restated
Credit Agreement dated as of October 21, 1996 among the borrowers listed on the
signature line hereof (the "Borrowers"), Wells Fargo Bank (Texas), National
Association, as agent (the "Agent"), and the Banks and the Issuing Bank
signatories thereto, as the same may be amended, modified, supplemented or
restated from time to time (the "Credit Agreement") and gives you irrevocable
notice pursuant to Section 4.1 of the Credit Agreement, of the Revolving Credit
Advance specified below:
<TABLE>
<S> <C>
A. REVOLVING CREDIT ADVANCE REQUEST INFORMATION:
1. Revolving Credit Commitment $25,000,000.00
2. Borrowing Base breakdown by company calculated as of
the last month end:
(a) Veritas DGC Inc.
(i) Eligible Domestic/Domestic Accounts $______________________________
(ii) Eligible Domestic/Foreign Accounts $______________________________
(b) Digicon Geophysical Corp.
(i) Eligible Domestic/Domestic Accounts $______________________________
(ii) Eligible Domestic/Foreign Accounts $______________________________
(c) Veritas DGC Land Inc.
(i) Eligible Domestic/Domestic Accounts $______________________________
</TABLE>
REVOLVING CREDIT ADVANCE REQUEST FORM - Page 1
<PAGE> 23
<TABLE>
<S> <C>
(ii) Eligible Domestic/Foreign Accounts $______________________________
(d) Digicon Exploration, Ltd.
(i) Eligible Domestic/Domestic Accounts $______________________________
(ii) Eligible Domestic/Foreign Accounts $______________________________
(iii) Eligible Foreign/Foreign Accounts $______________________________
(e) Digicon Geophysical Limited
(i) Eligible Foreign/Foreign Accounts $______________________________
(f) Digicon (Malaysia) Sdn. Bhd.
(i) Eligible Foreign/Foreign Accounts $______________________________
(g) Veritas Energy Services Partnership
(i) Eligible Foreign/Foreign Accounts $______________________________
3. Borrowing Base calculation $______________________________
(a) Eligible Domestic/Domestic Accounts
(i) Sum of 2(a)(i), 2(b)(i), 2(c)(i) and
2(d)(i) $______________________________
(ii) 80% of 3(a)(i) above $______________________________
(b) Eligible Domestic/Foreign Accounts
(i) Sum of 2(a)(ii), 2(b)(ii), 2(c)(ii)
and 2(d)(ii) $______________________________
(ii) 70% of 3(b)(i) above $______________________________
</TABLE>
REVOLVING CREDIT ADVANCE REQUEST FORM - Page 2
<PAGE> 24
<TABLE>
<S> <C>
(c) Eligible Foreign/Foreign Accounts
(i) Sum of 2(d)(iii), 2(e)(i), 2(f)(i)
and 2(g)(i) $______________________________
(ii) 50% of 3(c)(i) above $______________________________
(d) Aggregate Borrowing Base (sum of 3(a)(ii),
3(b)(ii) and 3(c)(ii) above) $______________________________
4. Principal amount outstanding under the Revolving
Credit Note prior to Requested Revolving Credit
Advance $______________________________
5. Total amount of Requested Revolving Credit Advance $______________________________
6. Remaining Availability under Revolving Credit
Commitment after Requested Revolving Credit Advance $______________________________
7. Amount of Prime Rate Advance . . . $________ requested on __________, 199___.
8. Amount of Eurodollar Rate Advance with Interest
Period of:
(i) one month of $____ requested to be made on _____________, 199___.
(ii) two months of $____ requested to be made on _____________, 199___.
(iii) three months of $____ requested to be made on _____________, 199___.
9. Amount of Secured Obligations
(i) Maximum Bank Credit Amount $______________________________
(ii) Amount equal to 10% of Consolidated Net
Tangible Assets $______________________________
(iii) Greater of (i) or (ii) $______________________________
(iv) Permitted Subsidiary Indebtedness $______________________________
</TABLE>
REVOLVING CREDIT ADVANCE REQUEST FORM - Page 3
<PAGE> 25
<TABLE>
<S> <C>
(v) Sum of (iii) and (iv) $______________________________
</TABLE>
The Borrowers confirm that they have granted a Lien to the Agent
pursuant to the Loan Documents to secure the Secured Obligations and that no
Borrower has taken any action to cause such Lien to become unperfected.
The Borrowers hereby represent, warrant and agree, pursuant to the
Credit Agreement, that the delivery of this Revolving Credit Advance Request
Form and the acceptance by the Borrowers of the proceeds of the Revolving
Credit Advance constitutes a representation and warranty by the Borrowers that,
on the date of such Revolving Credit Advance, and before and after giving
effect thereto and to the application of proceeds therefrom, all conditions
precedent set forth in Article VII of the Credit Agreement have been satisfied
and that all the representations and warranties of the Borrowers set forth in
Article VIII of the Credit Agreement remain true and correct on and as of the
date of such Revolving Credit Advance with the same force and effect as if such
representations and warranties had been made on and as of such date.
Immediately after the Revolving Credit Advance to which this Revolving
Credit Advance Request Form relates, no Default or Event of Default shall have
occurred and be continuing.
The proceeds of Revolving Credit Advances which are the subject of
this Revolving Credit Advance Request Form will be used for the purposes
permitted under the Credit Agreement.
All capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in Appendix A to the Credit Agreement.
VERITAS DGC INC.
DIGICON GEOPHYSICAL CORP.
VERITAS DGC LAND INC.
DIGICON GEOPHYSICAL LIMITED
DIGICON EXPLORATION, LTD.
VERITAS ENERGY SERVICES PARTNERSHIP
By:____________________________________
Authorized Signatory for and on
behalf of each of the Borrowers
REVOLVING CREDIT ADVANCE REQUEST FORM - Page 4
<PAGE> 1
EXHIBIT 11
COMPUTATION OF INCOME
PER COMMON AND COMMON EQUIVALENT SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
--------------------------- ----------------------------
1996 1997 1996 1997
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
PRIMARY INCOME PER SHARE:
Weighted average shares of common stock
outstanding (1) 17,986 18,819 17,754 18,611
========== =========== =========== ===========
Primary income per share $ .16 $ .32 $ .33 $ .95
========== =========== =========== ===========
FULLY DILUTED INCOME PER SHARE:
Weighted average shares of common stock
outstanding (1) 17,986 18,819 17,754 18,611
Shares issuable from assumed conversion of:
Warrants 154 32 154 95
Stock options (1) 81 301 80 342
---------- ----------- ----------- -----------
Weighted average shares of common
stock outstanding, as adjusted 18,221 19,152 17,988 19,048
========== =========== =========== ===========
Fully diluted income per share $ .15 (2) $ .32 (2) $ .32 (2) $ .93 (2)
========== =========== =========== ===========
NET INCOME FOR PRIMARY AND
FULLY DILUTED COMPUTATION:
Net income (3) $ 2,823 $ 6,086 $ 5,782 $ 17,761
========== =========== =========== ===========
</TABLE>
_______________
(1) Weighted average shares of common stock outstanding and shares issuable
from the assumed conversion of stock options for all periods have been
restated to include exchangeable shares and VES options (See Note 2 of
Notes to the Unaudited Consolidated Financial Statements) on an
equivalent share basis.
(2) This calculation is submitted in accordance with Item 601(b)11 of
Regulation S-K although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because warrants and options result in dilution of less
than 3%.
(3) As combined - See Note 2 of Notes to the Unaudited Consolidated Financial
Statement.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM (A) VERITAS DGC INC'S
FORM 10-Q FOR THE NINE MONTHS ENDED APRIL 30, 1997 (NINE MONTHS ENDED APRIL 30,
1996 RESTATED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) 10-Q.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> JUL-31-1996 JUL-31-1997
<PERIOD-START> AUG-01-1995 AUG-01-1996
<PERIOD-END> APR-30-1996 APR-30-1997
<CASH> 10,072 14,131
<SECURITIES> 0 0
<RECEIVABLES> 66,187 101,273
<ALLOWANCES> 740 484
<INVENTORY> 1,659 2,541
<CURRENT-ASSETS> 85,704 127,309
<PP&E> 165,104 234,584
<DEPRECIATION> 86,094 112,286
<TOTAL-ASSETS> 198,592 288,034
<CURRENT-LIABILITIES> 63,225 78,282
<BONDS> 27,351 79,001
0 0
0 0
<COMMON> 113 165
<OTHER-SE> 105,810 127,483
<TOTAL-LIABILITY-AND-EQUITY> 198,592 288,034
<SALES> 0 0
<TOTAL-REVENUES> 181,683 253,939
<CGS> 0 0
<TOTAL-COSTS> 145,104 189,646
<OTHER-EXPENSES> 25,528 37,673
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,775 5,334
<INCOME-PRETAX> 7,276 21,286
<INCOME-TAX> 2,287 4,260
<INCOME-CONTINUING> 5,782 17,761
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,782 17,761
<EPS-PRIMARY> .33 .95
<EPS-DILUTED> .33 .95
</TABLE>
