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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
for the fiscal year ended
December 31, 1993
Commission file number 1-5642
DRAVO CORPORATION
A PENNSYLVANIA CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NUMBER 25-0447860
3600 ONE OLIVER PLAZA
PITTSBURGH, PENNSYLVANIA 15222-2682
TELEPHONE (412) 566-3000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Class: Registered:
Common Stock, $1.00 Par Value New York Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
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,and (2) has been subject to such filing
requirements for the past 90 days. Yes XX . No_____.
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. XX
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Common shares outstanding as of March 15, 1994: 14,851,819
Aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 15, 1994: $180,078,305
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1993 are incorporated by reference to the extent set forth in Parts I, II and IV
of this Report. Portions of the Proxy Statement for Annual Meeting of
Shareholders on April 28, 1994 are incorporated by reference to the extent set
forth in Part III of this Report.
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<PAGE>
TABLE OF CONTENTS
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<TABLE>
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Page
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PART I Item 1. Business 3-6
Item 2. Properties 7-8
Item 3. Legal Proceedings 9-11
Item 4. Submission of Matters to a Vote 11
of Security Holders
PART II Item 5. Market for the Registrant's Common Stock and 12-18
Related Stockholder Matter
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of Financial 18
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data 18
Item 9. Disagreements on Accounting and Financial 18
Disclosure
PART III Item 10. Directors and Executive Officers of the 19
Registrant
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners 20
and Management
Item 13. Certain Relationships and Related Transactions 20
PART IV Item 14. Exhibits, Financial Statement Schedules and 21-26
Reports on Form 8-K
Signatures 27
Independent Auditors' Report on Schedules 28
Schedule III. Condensed Financial Information of 30-37
Registrant
Schedule V. Property, Plant and Equipment 38, 39
Schedule VI. Accumulated Depreciation, Depletion and 40, 41
Amortization of Property, Plant and
Equipment
Schedule IX. Short-term Borrowings 42, 43
Schedule X. Supplementary Income Statement Information 44
Table of Contents for documents filed herein as Exhibits 4, 10, 11, 45
13, 21, 23, and 24
</TABLE>
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PART I
ITEM 1. BUSINESS
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(a) General Development of the Business
Dravo Corporation was incorporated in Pennsylvania in 1936 to consolidate
several related corporations then operating various elements of a business
started in 1891 by F. R. Dravo. Its corporate offices are located at 3600 One
Oliver Plaza, Pittsburgh, Pennsylvania 15222-2682, and its telephone number is
412-566-3000. As used herein, the term Dravo includes its consolidated
subsidiaries unless otherwise indicated. In December, 1987, Dravo's Board of
Directors approved a major restructuring program which concentrated Dravo's
future direction exclusively on opportunities involving its natural resources
business. The plan included the sale or other disposition of the former
Engineering and Construction segment, as well as the sale of the former
Materials Handling and Systems segment approved earlier. All units scheduled
for sale were sold by the end of 1989. The remainder of these businesses have
been presented as discontinued operations in the financial statements.
As a result of this restructuring program, Dravo is a natural resources company
operating principally in the United States. Activities include the production
of aggregates for construction and industrial uses and lime for industrial,
utility, municipal and construction applications. All of the properties on
which the company's reserves are located are physically accessible for the
purposes of mining, dredging and hauling. Operations are principally carried on
by two wholly-owned subsidiaries, Dravo Basic Materials Company, Inc. (Dravo
Basic Materials) and Dravo Lime Company (Dravo Lime).
Dravo Basic Materials is a leading producer of construction aggregates in the
Ohio Valley and Gulf Coast regions. Principal products include sand and gravel,
crushed limestone, shell, slag, ready-mixed concrete, concrete block, industrial
filler material and poultry feed calcium supplement. The organization markets
approximately 20 million tons of aggregates annually.
The company's Ohio Valley operations are located in Cincinnati, Ohio;
Pittsburgh, Pennsylvania; Parkersburg, West Virginia; Cave In Rock, Illinois and
Smithland, Kentucky. Activity in all of the Ohio Valley locations is
historically lower in the first quarter than the remainder of the year because
of a seasonal construction market and winter weather conditions.
Three land-based sand and gravel quarries are owned and operated in the
Cincinnati area; two in the Pittsburgh area, one owned and one leased; and one
is owned in the West Virginia area. A new owned limestone quarry is currently
being developed east of Cincinnati. Also, two dredges are currently operating
on the Ohio River under leases held by various governmental agencies and private
individuals.
The Cave In Rock limestone quarry is operated under a long-term lease with
Lafarge Corporation. The quarry is located next to the Ohio River approximately
100 miles from the Ohio's junction with the Mississippi River. Reserves are
estimated at 82 million tons, and the facility has an ultimate production
capacity in excess of four million tons per year. The company markets the Cave
In Rock aggregate along the Ohio, Mississippi and Tennessee river systems and
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ITEM 1. BUSINESS (CONTINUED)
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the Gulf Coast. The company also supplies Lafarge's cement plant at Joppa,
Illinois with kiln feed stone.
The company owns and operates the Smithland, Kentucky limestone quarry located
on the Cumberland River near its confluence with the Ohio River. This facility
has limestone reserves of approximately 204 million tons and annual production
capacity of more than four million tons.
Dravo Basic Materials produces and markets its products in the southern United
States in a number of metropolitan and rural areas. Production facilities
include three limestone quarries and five sand and gravel quarries in Alabama
and one limestone quarry and a river dredging operation in Florida. Aggregates
are marketed from distribution facilities in Tampa, Pensacola and Jacksonville,
Florida; Brunswick and Savannah, Georgia; Mobile, Birmingham, Montgomery and
Auburn, Alabama; New Orleans, Baton Rouge, Westlake, Convent, Houma and Morgan
City, Louisiana. Aggregates from the Cave In Rock, Illinois and Smithland,
Kentucky facilities are also being marketed in the Gulf Coast area. A crushed
slag plant is operated in Tennessee.
The company imports limestone from a leased quarry located in The Bahamas.
Reserves at this facility are estimated at 45 million tons, while production
capacity is over two million tons annually.
Dravo Basic Materials Company resumed shell dredging operations along the Gulf
Coast in late 1992 after reaching a joint partnership agreement late in the year
with the current reef shell leaseholder. The new leaseholder replaced the
operator who was awarded the lease when it was auctioned by the State of
Louisiana in 1991. The joint partnership agreement allows Dravo Basic Materials
to once again participate in a market in which it has had substantial success
historically because of reef shell's desirability for a number of construction
and chemical applications.
The company completed the sale of its asphaltic concrete operation located in
Mobile and Loxley, Alabama in the first half of 1992.
Dravo Lime, one of the nation's largest lime producers with annual capacity of
over two million tons, owns and operates two plants in Kentucky and one in
Alabama. The largest, a million-ton-per-year facility in Maysville, Kentucky,
produces lime that is particularly efficient in removing sulphur dioxide from
power plant stack gases. Most of Maysville's output is committed under long-
term contracts with utility companies in the Ohio Valley. All contracts contain
provisions for price escalation. Owned reserves at the Maysville site are
considered adequate to sustain the current three kiln production for
approximately thirty years. The Maysville plant also has options on additional
reserves adequate to sustain production in excess of fifty years. Dravo Lime's
Black River integrated lime facility located along the Ohio River at Butler,
Kentucky has an annual quicklime capacity of 660,000 tons-per-year. The
facility is currently being expanded to increase its capacity by 700,000 tons.
The increased tonnage will be used, in part, to supply 450,000 tons of lime
annually
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ITEM 1. BUSINESS (CONTINUED)
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to American Electric Power's Gavin Station under a 15-year agreement commencing
the second quarter of 1995. Reserves at this facility are considered adequate
to sustain current production levels in excess of one hundred years. The
company's Longview plant, located near Birmingham, Alabama, completed an
expansion in April, 1991 that increased its annual production capacity to
approximately 550,000 tons per year.
The additional production is used primarily to meet the needs of a long-term
contract with Mineral Technologies, Inc., formerly Pfizer Specialty Minerals
Inc., for the production of precipitated calcium carbonate for the pulp and
paper industry. The remainder of Longview's production is marketed to the
aluminum, steel, chemical and other industries and for use in water
purification, soil stabilization and road building applications. Limestone at
the Longview operation comes from an above-ground quarry with recoverable
reserves estimated to last twenty-three years at the current production rate.
Ultimately, Dravo Lime expects to convert Longview to an underground mine,
providing access to additional reserves that would support the current
production rate for over one hundred years.
Dravo Lime maintains and operates distribution terminals in Aliquippa and
Butler, Pennsylvania; Porterfield, Ohio; Brunswick, Georgia; Tampa,
Jacksonville, Fort Lauderdale and Sanford, Florida; and Baton Rouge, Louisiana.
Dravo Lime stopped marketing Calcilox/R/ in 1992 due to a shortage of suitable
low cost raw material. Calcilox is a stabilizing agent used in converting sludge
produced in plant air pollution reduction systems into a material suitable for
landfill operations.
(b) Competitive Conditions
Dravo encounters substantial competition in all its operations but believes that
its past experience, strategically located reserves and technical expertise
gives it certain competitive advantages. Dravo, through its subsidiary Dravo
Lime, is engaged in the supply of lime for use in utility sulphur dioxide stack
gas scrubbers. Dravo Lime's research and development expenditures for 1993 were
$4.2 million, while spending for 1994 is expected to exceed $3.3 million. The
company expects the research, much of which is being conducted jointly with
utility customers, to lower both the capital and operating costs of the
proprietary Thiosorbic/R/ scrubbing systems. Other research projects are aimed
at increasing the range of applications of proprietary reagents for use in
reducing stack gas emissions and at producing and recovering a saleable by-
product. Dravo believes that in this field its long-term contracts, accumulated
experience and technical skill have provided it a competitive advantage.
Several firms with which Dravo competes have greater resources and income.
Dravo competes with other firms for qualified professional personnel,
particularly those with technological skills.
(c) Corporate Development
Dravo's corporate development policy encompasses growth through investment in
existing businesses, internal development and acquisition. Additionally, to the
extent that business units no longer meet management's long-term profitability
performance criteria and business strategies, or do not contribute significantly
to corporate objectives or balance, a policy of divestiture is followed.
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ITEM 1. BUSINESS (CONTINUED)
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Continuing operations of Dravo Corporation, which are principally domestic in
nature, function in one segment, a natural resources business, involved in the
production, processing and supply of construction materials, primarily
aggregates, as well as lime for environmental, chemical and metallurgical
applications. Dravo's position as the world's leading producer of lime for flue
gas desulfurization applications was enhanced by the passage of the 1990 Clean
Air Act Amendments.
Further information required by this item is incorporated by reference to the
information set forth under the captions indicated below in the 1993 Annual
Report to Shareholders which accompanies this report:
<TABLE>
<CAPTION>
Caption in Annual Report Page No.
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<S> <C>
Results of Operations 8 - 10
Note 15: Research and Development 29
Employees at Year-End 31
</TABLE>
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<PAGE>
ITEM 2. PROPERTIES
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The following is a listing of principal offices, plants and mines used in
operations:
<TABLE>
<CAPTION>
Owned or
Use Location Leased
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<S> <C> <C>
Executive and general Mobile, Alabama Leased
offices Pittsburgh, Pennsylvania Leased
Production facilities:
Limestone Auburn, Alabama Owned/Leased
Cherokee, Alabama Leased
Maylene, Alabama Owned/Leased
Grand Bahamas, B.I. Leased
Perry, Florida Owned/Leased
Cave In Rock, Illinois Leased
Smithland, Kentucky Owned/Leased
Lynchburg, Ohio Owned
Lime Saginaw, Alabama Owned
Butler, Kentucky Owned
Maysville, Kentucky Owned
Sand and gravel Montgomery, Alabama
and environs Owned/Leased
Chattahoochee, Florida Owned/Leased
Cincinnati, Ohio and
environs Owned/Leased
Pittsburgh, Pennsylvania
and environs Owned/Leased
Parkersburg, West Virginia
and environs Owned/Leased
Slag Mt. Pleasant, Tennessee Leased
Aggregate distribution
sites Mobile, Alabama Owned/Leased
Jacksonville, Florida Leased
Pensacola, Florida Owned
Tampa, Florida Leased
Brunswick, Georgia Leased
Savannah, Georgia Leased
Baton Rouge, Louisiana Leased
Calumet, Louisiana Leased
Convent, Louisiana Leased
Hahnville, Louisiana Leased
Harvey, Louisiana Leased
Houma, Louisiana Owned/Leased
Westlake, Louisiana Leased
Bellaire, Ohio Leased
Cincinnati, Ohio Leased
Charleroi, Pennsylvania Owned
McKeesport, Pennsylvania Leased
</TABLE>
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<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
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<TABLE>
<CAPTION>
Owned or
Use Location Leased
--- -------- ------
<S> <C> <C>
Aggregate distribution
sites (continued) Neville Island, Pennsylvania Owned
Charleston, West Virginia Owned
Merrill, West Virginia Owned
New Martinsville, West Virginia Owned
Parkersburg, West Virginia Owned/Leased
Ravenswood, West Virginia Leased
St. Mary's, West Virginia Owned
Lime distribution sites Ft. Lauderdale, Florida Leased
Jacksonville, Florida Leased
Sanford, Florida Leased
Tampa, Florida Owned
Brunswick, Georgia Owned/Leased
Savannah, Georgia Leased
Baton Rouge, Louisiana Owned
Porterfield, Ohio Leased
Aliquippa, Pennsylvania Owned
Butler, Pennsylvania Leased
</TABLE>
Offices and plants associated with businesses treated herein as discontinued
operations have been excluded from this presentation.
Mineral reserves include sand, gravel and limestone. The following table shows
a summary of the company's reserves at December 31, 1993 and tonnage produced
in 1993.
<TABLE>
<CAPTION>
(Tons in millions)
Recoverable 1993
Reserves Production
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<S> <C> <C>
Underground Mines:
Owned 496.9 4.5
Quarries and Other:
Owned 99.1 5.5
Leased and Licensed 525.2 12.8
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1,121.2 22.8
======= ====
</TABLE>
In addition to tonnage produced, the company purchased approximately 900,000
tons of aggregate material under various agreements.
Additional information required by this item is incorporated by reference to the
information set forth under Item 1(a) "General Development of the Business" on
pages 3 - 6 of this Form 10-K.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS
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The company filed an action in 1981 to collect on a promissory note issued by
Meladuras Portuguesa, C. A. (Melaport) and its principal, Alberto Caldera
(Caldera). In 1985, Melaport and Caldera filed a counterclaim for damages
alleging the company breached a contract between Melaport and the company
relating to engineering and procurement services rendered between 1973 and 1978
for a sugar cane processing facility. The Fifth Civil, Mercantile and Traffic
Court of First Instance for the Federal District and State of Miranda, Venezuela
ruled partially in favor of Melaport's counterclaim. The ruling was upheld by
the Seventh Court of Appeals in Civil, Mercantile and Traffic Matters for the
Judicial Circuit of the Federal District and State of Miranda on September 25,
1992 and by the Supreme Court of Justice of Venezuela on July 8, 1993. The
lower courts' ruling does not specify damages to be paid but identifies the
following categories of damages to which Caldera and Melaport are entitled: (1)
the losses suffered by Melaport from the time it commenced operations in 1974 to
1978; (2) the value of certain equipment and other assets which had been pledged
by Melaport to secure borrowings in connection with the project; and (3) the
value of approximately 540 acres of land which a corporation controlled by
Caldera had mortgaged to secure the borrowing. The amount of damages in these
three categories is to be established by an appraisal process conducted by the
trial court; damages are to be adjusted for inflation since the counterclaim was
filed in 1985 and for interest at 12 percent per year. The company is preparing
to vigorously pursue the appraisal proceedings. While opposing counsel has
asserted that the damages are in excess of $35 million, the company at this time
cannot predict the results of the appraisal proceedings. The company has no
assets in Venezuela and will challenge the enforcement in the United States if
judgment is finally issued by the Venezuelan Courts. On November 2, 1993, the
company filed suit against Melaport and Caldera in the United States District
Court for the Western District of Pennsylvania, seeking an injunction and a
declaratory judgment with respect to the proceedings in Venezuela. The company
is requesting a determination that any judgment in the Venezuelan proceedings is
not enforceable against the company and is also seeking indemnification for all
costs, expenses, losses and damages incurred and which may be incurred by the
company in the Venezuelan proceedings and the costs and expenses of the United
States District Court action. On February 25, 1994, Melaport and Caldera filed
a motion asking the Court to dismiss the suit based on the lack of personal
jurisdiction over the defendants and based on the doctrines of forum non
conveniens, res judicata and judicial estoppel. It also asked the Court to
dismiss, as premature, the company's demand for injunctive and declaratory
relief. The company intends to vigorously pursue this action. If the ruling of
the Venezuelan Courts is successfully enforced against the company in the United
States, the liability would be material to the company.
The company has been notified by the U. S. Environmental Protection Agency (EPA)
that the EPA considers the company as a potentially responsible party (PRP) for
soil and groundwater contamination at three subsites within the Hastings Ground
Water Contamination Site, Hastings, Nebraska. With respect to the Colorado
Avenue subsite, in the vicinity of a fabrication facility formerly operated by
the company, the EPA has issued an administrative order dated September 28,
1990, to the company and one other PRP to remedy soil contamination. The EPA
has also issued a unilateral administrative order, effective March 28, 1993,
directing the company and the other PRP to conduct the interim groundwater
remediation required by EPA's record of decision. The company has been
complying with these orders while reserving its right to seek reimbursement from
the United States for its
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ITEM 3. LEGAL PROCEEDINGS (CONTINUED)
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costs if it is determined it is not liable for response costs or if it is
required to incur costs because of arbitrary, capricious or unreasonable
requirements imposed by EPA.
A contribution claim related to this subsite was filed by the company in the
Nebraska District Court against two other parties who are named PRPs, Burlington
Northern Railroad and the Zuber Company, but were not served with the EPA's
orders. After the company filed its suit, the EPA, over the company's
objection, entered into a de minimis settlement agreement with these two PRPs
providing for, among other things, contribution protection in return for access
to their contaminated property. EPA based its decision on the lack of any
evidence indicating these PRPs contributed to contamination at the site, but
provided for reconsideration of its decision if such evidence was uncovered.
Subsequently, the District Court granted motions for summary judgment filed by
these two PRPs based on the contribution protection provisions in their de
minimis settlements with the EPA, and the PRPs withdrew their counterclaims.
The Eighth Circuit Court of Appeals affirmed this decision on January 12, 1994.
The company has also notified the EPA and each PRP of its intent to challenge
the decision by the EPA to issue the de minimis order without receiving
reimbursement for a share of the response and remediation costs but has not yet
filed suit.
The company, along with a number of others, is considered a PRP with respect to
subsites at the municipally-owned North and South Landfills. The North Landfill
closed before the company commenced operations but a predecessor may have used
this landfill to dispose of hazardous materials. On December 31, 1991 the EPA
issued a formal demand to the company and other PRPs for reimbursement of costs
the EPA has incurred at this subsite and has also solicited an offer to conduct
or finance remedial work at this subsite for both soil and groundwater
contamination. The company has rejected the EPA's demand to reimburse the EPA
for its costs and decided not to submit the offer requested. No PRP at this
subsite has agreed to pay the EPA's response costs. As a result, statutory
interest is being added to the EPA's response costs. Other PRPs, including the
local municipality, have agreed to perform the remedial investigation and to
design soil and groundwater remediation remedies at this subsite, but no party
has agreed to conduct the remediation. Only minimal investigation has been
conducted at the South Landfill, and it is not evident that remedial work is
warranted. In January, 1994 the EPA sent a specific notice to the company that
the EPA considered it and three other parties PRPs at this subsite. The letter
invited the company and the other PRPs to make an offer to conduct a remedial
investigation and the feasibility study (RI/FS) of this subsite and stated that
the EPA was in the process of preparing a workplan for the RI/FS.
In October of 1990, the company notified its primary and excess general
liability insurance carriers of the claims by the EPA at the Colorado Avenue and
North Landfill subsites. Although one primary carrier agreed to pay for a part
of the company's defense, it has not done so and has refused to pay for expenses
the company has already incurred. The company's other primary carrier has
declined coverage altogether. On August 10, 1992, the company filed suit in the
Alabama District Court against The Hartford Insurance Company and Liberty Mutual
Insurance Company seeking a declaratory judgment that the company is entitled to
a defense and indemnity under its contracts of insurance (including certain
excess policies provided by one of the primary carriers). This complaint is
limited to the EPA's claims at the Colorado Avenue subsite. The suit has been
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS (CONTINUED)
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amended to include as a defendant Bituminous Casualty Corporation the excess
liability carrier of the company's predecessor at the site. An investigation of
the coverage provided by the primary carrier of the company's predecessor is
also underway. An award of punitive damages is being sought against Hartford
and Liberty Mutual for their bad faith in failing to investigate the company's
claim and/or denying the company's claim. The case is proceeding in accordance
with a case management order issued by the District Court Magistrate assigned to
handle pretrial matters. In February of 1994, the company notified its primary
and excess insurers of EPA's specific notice that it considered the company a
PRP at the South Landfill Subsite, inviting the company to make an offer to
conduct an RI/FS at the site, and notifying the company that EPA was in the
process of preparing a workplan for the RI/FS. The company has joined with the
other PRPs in recommending the use of regional institutional controls for
remediation of groundwater at all of the Hastings Ground Water Contamination
Subsites.
A dispute between the company and the Southeast Resource Recovery Facility
(SERRF) in Long Beach, California over a contract to design, construct and
demonstrate a resource recovery facility has given rise to two lawsuits. On
October 17, 1989, the company instituted an action against the SERRF Authority
and the City of Long Beach seeking recovery of escrow funds and reimbursement
for change orders, extra work, delays and other increased costs. On October 19,
1989, the SERRF Authority and the City of Long Beach filed suit against the
company and its surety, The Insurance Company of North America, seeking among
other things, damages for breach of contract. Both lawsuits are now pending in
the U.S. District Court for the Central District of California. On February 25,
1994, the principal parties to these lawsuits signed a Memorandum of Intent
containing the terms of settlement to be entered into among the parties. The
settlement is subject to the approval of the U. S. District Court.
On February 21, 1990, the company filed suit against Continental Energy
Associates (CEA), the owner of a cogeneration facility in Hazleton,
Pennsylvania, Continental Cogeneration Corporation (CCC), the owner's general
partner, and Swiss Bank Corporation, the project's lender. The company claims
damages for breach of contract and unjust enrichment arising out of the
termination of the company's contract to construct, as part of the facility, a
coal gasification plant. On February 23, 1990, CEA and CCC filed suit against
the company which as amended seeks damages for breach of contract, negligent
misrepresentation, fraud and tortious interference with the contract of surety.
The lawsuits have been consolidated in the Court of Common Pleas of Luzerne
County, Pennsylvania.
Other information required by this item is incorporated by reference to the
information set forth under the caption Note 8: "Contingent Liabilities" in the
Notes to Consolidated Financial Statements on pages 21 through 23 of the 1993
Annual Report to Shareholders which accompanies this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
There were no matters submitted to a vote of security holders for the three
months ended December 31, 1993.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS
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Information required by this item is incorporated by reference to the
information set forth under the captions indicated below in the 1993 Annual
Report to Shareholders which accompanies this report:
<TABLE>
<CAPTION>
Caption in Annual Report Page No.
- ------------------------ --------
<S> <C>
Common Stock Market Price 11
Shareholders at year-end 31
Dividends 10, 31
</TABLE>
Description of Dravo Capital Stock
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General
Under its Restated Articles of Incorporation ("the Articles"), as amended, Dravo
is authorized to issue 1,878,870 shares of preference stock, par value $1.00 per
share, and 35,000,000 shares of common stock, par value $1.00 per share. At
December 31, 1993 issued preference and common shares were 232,386 and
14,967,824, respectively.
The Board of Directors has by resolutions established four series of preference
stock: $2.20 Cumulative Convertible Series A Preference Stock ("Series A
Preference Stock"), consisting of 26,817 shares, issued on September 1, 1970;
$2.475 Cumulative Convertible Series B Preference Stock ("Series B Preference
Stock"), consisting of 165,516 shares, issued on June 12, 1973; Series C
Preference Stock consisting of 200,000 shares, which are issuable pursuant to
the exercise of the rights to purchase stock described below; and Series D
Cumulative Convertible Exchangeable Preference Stock ("Series D Preference
Stock") consisting of 200,000 shares, issued on September 21, 1988. All of the
shares of Series A Preference Stock were converted into shares of common stock
on April 2, 1978. 32,386 shares of Series B Preference Stock and 200,000 shares
of Series D Preference Stock are presently issued and outstanding. No shares of
Series C Preference Stock have been issued or are outstanding. Other series of
preference stock may be created by resolutions of the Board of Directors with
such dividend, liquidation, redemption, sinking fund and conversion rights as
shall be specified therein.
Dividend Rights
The holders of the preference stock are entitled to cumulative dividends,
payable quarterly, which must be paid and the next quarterly dividend set apart
before any dividends (except dividends in common stock or any other stock
ranking after
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<PAGE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS (CONTINUED)
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Dividend Rights (continued)
the preference stocks as to dividends and assets) are declared, or paid, or
monies set apart for the payment of dividends on any class of stock ranking
after the preference stock as to dividends or assets. The rate of dividends
payable upon the Series B Preference Stock is $2.475 per annum. The rate of
dividends payable upon the Series C Preference Stock is an amount per share
(rounded to the nearest cent) equal to the greater of $10.00 or 100 times the
aggregate per share amount of all cash and non-cash dividends or other
distributions, other than a dividend or distribution payable in shares of common
stock, paid on the common stock in the immediately preceding quarter, subject to
adjustment in certain events. The rate of dividends payable upon the Series D
Preference Stock is 12.35 percent per annum or $12.35 per share, which rate
shall be increased by 2 percent per annum if such dividends are not paid on any
quarterly dividend payment date until accrued and unpaid dividends on the Series
D Preference Stock are paid.
The holders of the common stock are entitled to such dividends as may be
declared by the Board of Directors out of assets properly available for that
purpose. No common stock dividends have been declared since April, 1987.
Other information required by this item is incorporated by reference to the
information set forth under the caption "Note 5: Notes Payable", in the Notes
to Consolidated Financial Statements on page 20 of the 1993 Annual Report to
Shareholders which accompanies this report.
Voting Rights
Each share of the common stock and the preference stock is entitled to one vote,
which is cumulative in the election of directors. The Board of Directors is
divided into three classes, and approximately one third of the directors are
elected each year for three year terms. The effect of such classification of
the Board is to increase the number of shares, voted cumulatively, necessary to
elect directors. If dividends on the preference stock shall be unpaid or in
arrears for six quarterly dividend periods, the holders of the preference stock
voting as a class shall have the right to elect two additional directors.
Liquidation Rights
In the event of the voluntary or involuntary liquidation or dissolution of
Dravo, or the sale or other disposition of substantially all of its assets, the
holders of the Series B Preference Stock shall be entitled to receive the sum of
$55 per share plus all accumulated and unpaid dividends thereon; the holders of
Series C Preference Stock shall be entitled to receive $100 per share plus all
accrued and unpaid dividends plus an amount equal to the holder's pro rata share
of the amount that would be available for distribution after payment of all
liabilities,
-13-
<PAGE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS (CONTINUED)
-------
Liquidation Rights (continued)
liquidation preferences and a distribution on the common stock, if any, as
determined according to a formula; and the holders of Series D Preference Stock
shall be entitled to receive $100 per share plus all accumulated and unpaid
dividends thereon. The holders of any other series of preference stock which
may be issued shall be entitled to receive the amounts provided for in the
resolutions creating such series. The holders of the common stock shall share
ratably in the remaining assets, if any.
No Preemptive Rights and Non-assessability
No preemptive rights attach to the common stock or the preference stock.
Neither the holders of the common stock nor the preference stock are liable to
further calls or assessment by Dravo.
Redemption and Sinking Fund Provisions
There are no redemption provisions with respect to the common stock. The Series
B Preference Stock may be redeemed, in whole or in part, at the option of Dravo,
on not less than 60 days notice, on any quarterly dividend payment date by the
payment of $55 per share and all accumulated and unpaid dividends to the
redemption date. The Series C Preference Stock may be redeemed as a whole, but
not in part, at the option of Dravo, at any time, at a cash price per share
based upon the average market value, as defined and adjusted, of the common
stock plus all accrued but unpaid dividends. The Series D Preference Stock may
be redeemed in whole or in part at the option of Dravo at any time after
September 21, 1996, by the payment of $100 per share and all accumulated and
unpaid dividends to the redemption date, so long as the current market price (as
defined in the Certificate of Designations, Preferences and Rights for the
Series D Preference Stock) of the common stock on the date the Board decides to
redeem the shares is at least 175 percent of the then effective conversion price
for the Series D Preference Stock. Commencing on the first quarterly dividend
payment date after September 21, 1998 and annually thereafter, Dravo is required
to redeem 50,000 shares of Series D Preference Stock in cash at the redemption
price of $100 per share plus all accumulated and unpaid dividends. Dravo is
also required (unless certain conditions are met) to redeem all of the then
outstanding shares of Series D Preference Stock in cash at $100 per share plus
all accumulated and unpaid dividends (a) if Dravo declares or pays or sets apart
for payment any dividends or makes any other distribution in cash or other
property on or in respect of the common stock or any other class or series of
the capital stock of Dravo ranking junior to the Series D Preference Stock as to
payment of dividends ("Junior Dividend Stock"), or sets apart money for any
sinking fund or analogous fund for the redemption or purchase of any Junior
Dividend Stock and (b) upon any merger or consolidation of Dravo if, in
connection therewith, the holders of the common stock receive cash, debt
instruments or preference stock of the surviving entity which ranks on a parity
with or senior to the Series D Preference stock with respect to liquidation,
dissolution or winding up or dividends. There are no sinking fund provisions
with respect to the common stock or the Series B Preference Stock, Series C
Preference Stock or Series D Preference Stock.
-14-
<PAGE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS (CONTINUED)
-------
Conversion
The Series B Preference Stock is presently convertible at any time prior to
redemption at the option of the holder into common stock on the basis of 3.216
shares of common stock for each share of Series B Preference Stock, subject to
equitable adjustment in the event of certain changes affecting the common stock.
The Series D Preference Stock is presently convertible at any time prior to
redemption at the option of the holder into common stock on the basis of 8.0
shares of common stock for each share of Series D Preference Stock, subject to
adjustment in the event of certain changes affecting the common stock. The
Series D Preference Stock is convertible or exchangeable in whole at any time by
Dravo for an equal face amount of Dravo Senior Subordinated Convertible Notes
due September 21, 2001 containing the same conversion rights, transfer
restrictions and other terms (other than voting rights) as the Series D
Preference Stock. There are no conversion rights with respect to the Series C
Preference Stock or the common stock.
Rights to Purchase Series C Preference Stock
The Series C Preference Stock is issuable pursuant to the exercise of rights to
purchase Series C Preference Stock. On April 4, 1986, the Board of Directors
declared a distribution of one right for each outstanding share of common stock
to shareholders of record at the close of business on April 17, 1986 (the
"Record Date") and with respect to each share of common stock that may be issued
by Dravo prior to the Distribution Date described below or the earlier
redemption or expiration of the rights. Each right entitles the registered
holder, following the occurrence of certain events described below, to purchase
from Dravo a unit consisting of one one-hundredth of a share (a "Unit") of
Series C Preference Stock at a purchase price of $60 per Unit, subject to
adjustment (the "Purchase Price"). The descriptions and terms of the rights are
set forth in a rights agreement (the "Rights Agreement") between Dravo and PNC
Bank, N. A. (formerly Pittsburgh National Bank), as the rights agent.
Initially, the rights will be attached to all common stock certificates
representing shares then outstanding, and no separate rights certificates will
be distributed. The rights will separate from the common stock and a
distribution date will occur upon the earlier of (a) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20 percent or more of the outstanding shares of common stock of
Dravo (the "Stock Acquisition Date"), or (b) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 30 percent or more of such outstanding shares of
common stock. Until the distribution date, (i) the rights will be evidenced by
the common stock certificates and will be transferred with and only with such
common stock certificates, (ii) new common stock certificates issued after the
Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificate for common
stock outstanding will also constitute the transfer of the rights associated
with the common stock represented by such certificate.
-15-
<PAGE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS (CONTINUED)
-------
Rights to Purchase Series C Preference Stock (continued)
The rights are not exercisable until the distribution date and will expire at
the close of business on April 17, 1996, unless earlier redeemed by Dravo as
described below.
In the event that, at any time following the distribution date, (a) Dravo is the
surviving corporation in a merger with an Acquiring Person and its common stock
is not changed or exchanged, (b) an Acquiring Person becomes the beneficial
owner of 30 percent or more of the then outstanding shares of common stock, (c)
an Acquiring Person engages in one or more "self-dealing" transactions as set
forth in the Rights Agreement, or (d) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than one percent (e.g., a reclassification of
securities, reverse stock split or recapitalization of Dravo), each holder of a
right will thereafter have the right to receive, upon exercise, common stock
(or, in certain circumstances, cash, property or other securities of Dravo)
having a value equal to two times the Purchase Price of the right.
Notwithstanding any of the foregoing, (i) rights are not exercisable following
the occurrence of any of the events set forth in this paragraph until such time
as the rights are no longer redeemable by Dravo as set forth below, and (ii)
following the occurrence of any of the events set forth above, all rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the stock acquisition date, (i) Dravo
is acquired in a merger or other business combination transaction in which Dravo
is not the surviving corporation (other than a merger described in the preceding
paragraph), or (ii) 50 percent or more of Dravo assets or earning power is sold
or transferred, each holder of a right (except rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the right. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of units of Series C Preference Stock
or other securities or property issuable, upon exercise of the rights are
subject to adjustment from time to time to prevent dilution. No fractional
units may be issued and, in lieu thereof, an adjustment in cash may be made
based on the market price of the Series C Preference Stock on the last trading
date prior to the date of exercise.
At any time until ten days following the stock acquisition date, Dravo may
redeem the rights in whole, but not in part, at a price of $.01 per right.
Under certain circumstances set forth in the Rights Agreement, the decision to
redeem shall require the concurrence of a majority of the continuing directors,
as defined. After the redemption period has expired and prior to the occurrence
of a Triggering Event, Dravo's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 10 percent or less of the
outstanding
-16-
<PAGE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- ------------------------------------------------------------------------
MATTERS (CONTINUED)
-------
Rights to Purchase Series C Preference Stock (continued)
shares of common stock in a transaction or series of transactions not involving
Dravo. Immediately upon action of the Board of Directors ordering redemption of
the rights, with, where required, the concurrence of the continuing directors,
the rights will terminate and the only right of the holders of rights will be to
receive the $.01 redemption price.
Until a right is exercised, the holder thereof, as such, will have no rights as
a shareholder of Dravo, including, without limitation, the right to vote or to
receive dividends.
Other than those provisions relating to the principal economic terms of the
rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of Dravo prior to the distribution date. Thereafter, the
provisions of the Rights Agreement may be amended by the Board (in certain
circumstances, with the concurrence of the continuing directors) in order to
cure any ambiguity, to make changes which do not adversely affect the interests
of holders of rights (excluding the interests of any Acquiring Person), to
suspend the effectiveness of the provision of the Rights Agreement pursuant to
which certain rights become void as described above, or to shorten or lengthen
any time period under the Rights Agreement; provided, however, that no amendment
to adjust the time period governing redemption shall be made at such time as the
rights are not redeemable.
The rights may have the effect of preventing or discouraging some attempts to
acquire control of Dravo. The rights could cause substantial dilution to a
person or group that attempts to acquire control of Dravo on terms not approved
by its Board of Directors, unless the offer is conditioned on a substantial
percentage of rights being tendered to and acquired by the Acquiring Person.
The rights should not interfere with any merger or other business combination
approved by the Board of Directors prior to the expiration of the redemption
period since the rights may be redeemed by Dravo prior to the expiration of such
period and Dravo may suspend the provisions that in certain circumstances
prevent an Acquiring Person from exercising its rights. The rights could
interfere with a negotiated transaction after an acquisition of 20 percent or
more voting power if the rights were not redeemed. The rights will not prevent
a holder of a controlling interest from exercising control over Dravo.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from Dravo upon the request of any
shareholder. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
Other Information
Dravo may purchase shares of the preference stock whether or not any dividend
arrearage shall exist with respect thereto, and may hold and dispose of such
shares in such manner as it may elect.
-17-
<PAGE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS (CONTINUED)
-------
Other Information (continued)
The holders of the preference stock who comply with applicable provisions of law
and object to a merger or consolidation involving Dravo shall have all of the
legal rights of objecting shareholders in a merger or consolidation whether or
not they constitute a class otherwise entitled to such rights.
The transfer agent and registrar for the common stock is Continental Stock
Transfer & Trust Company, New York, NY.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Information required by this item, with the exception of common stock dividends
declared, is incorporated by reference to the information set forth under the
caption "Five-Year Summary" on page 31 of the 1993 Annual Report to Shareholders
which accompanies this report. Dravo has declared no common stock dividends in
the five-year period ending December 31, 1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Information required by this item is incorporated by reference to the
information set forth under the captions "Overview", "Results of Operations",
"Financial Position and Liquidity" and "Outlook" on pages 8 through 11 of the
1993 Annual Report to Shareholders which accompanies this report, to the
information set forth under the caption Note 2: "Discontinued Operations" on
pages 18 and 19, Note 7: "Commitments" on page 21, Note 8: "Contingent
Liabilities" on pages 21 through 23 and Note 13: "Income Taxes" on pages 26
through 28 in the Notes to Consolidated Financial Statements of the Annual
Report to Shareholders, and to Item 3 - "Legal Proceedings" on pages 9 through
11 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
Information required by this item is incorporated by reference to the financial
statements and notes thereto set forth on pages 12 through 29, and the
Independent Auditors' Report set forth on page 30 of the 1993 Annual Report to
Shareholders which accompanies this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
-18-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Information required by this Item as to Directors and nominees for Director is
incorporated by reference to the information set forth under the caption
"Information Concerning Directors and Nominees for Director" in the Registrant's
Proxy Statement for the Annual Meeting of Shareholders on April 28, 1994.
The following information relates to Executive Officers of Dravo Corporation who
are not Directors.
Carl A. Gilbert, Age 52, Senior Vice President since October, 1988 and
President, Dravo Lime Company since February, 1983.
Ernest F. Ladd III, Age 53, Executive Vice President, Finance and Administration
since December, 1989, Vice President, Finance, Treasurer and Controller from
June, 1988 to December, 1989; prior thereto Executive Vice President, Dravo
Natural Resources Company.
John R. Major, age 49, Vice President, Administration since January, 1989; Vice
President, Employee Relations from January, 1988 to January, 1989.
James J. Puhala, Age 51, Vice President, General Counsel and Secretary since
September, 1987.
H. Donovan Ross, Age 53, Senior Vice President since October, 1988 and
President, Dravo Basic Materials Company since July, 1984.
Albert H. Tenhundfeld, Jr., Age 46, Vice President, Finance and Treasurer since
December, 1989; prior thereto Vice President, Finance and Treasurer, Dravo
Natural Resources Company.
Larry J. Walker, Age 41, Controller since December, 1989; Controller, Dravo
Natural Resources Company since July, 1986.
-19-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
Information required by this item is incorporated by reference to the
information set forth under the caption "Executive Compensation" in the
Registrant's Proxy Statement for the Annual Meeting of Shareholders on April 28,
1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
Information required by this item is incorporated by reference to the
information set forth under the captions "Security Ownership of Certain
Beneficial Owners" and "Ownership by Management of Equity Securities" in the
Registrant's Proxy Statement for the Annual Meeting of Shareholders on April 28,
1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Information required by this item is incorporated by reference to the
information set forth under the caption "Information Concerning Directors and
Nominees for Director" in the Registrant's Proxy Statement for the Annual
Meeting of Shareholders on April 28, 1994.
-20-
<PAGE>
PART - IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(a) 1. Financial Statements
The following consolidated financial statements of the registrant are
filed pursuant to Item 8 of this Form 10-K and are incorporated herein by
reference to the page numbers indicated below in the 1993 Annual Report
to Shareholders which accompanies this report.
<TABLE>
<CAPTION>
Description Page No.
----------- --------
<S> <C>
Consolidated Balance Sheets at December 31, 1993 and 1992 12, 13
Consolidated Statements of Operations for the years ended
December 31, 1993, 1992 and 1991 14
Consolidated Statements of Retained Earnings for the years
ended December 31, 1993, 1992 and 1991 15
Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991 16, 17
Notes to Consolidated Financial Statements 18 - 29
Independent Auditors' Report 30
</TABLE>
2. Financial Statement Schedules
The following financial statement schedules of the registrant are
required and are filed pursuant to this item in this Form 10-K.
<TABLE>
<CAPTION>
Schedule Page No.
-------- --------
<S> <C>
Independent Auditors' Report 28
Schedule III. Condensed Financial Information of
Registrant 30 - 37
Schedule V. Property, Plant and Equipment 38, 39
Schedule VI. Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment 40, 41
Schedule IX. Short-Term Borrowings 42, 43
Schedule X. Supplementary Income Statement
Information 44
</TABLE>
-21-
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(CONTINUED)
(a) 3. Exhibits
--------
(3) Articles of Incorporation and By-laws
(i) Articles of Amendment restating Dravo Corporation's Articles of
Incorporation in their entirety and all subsequent amendments
thereto including but not limited to the Statement with Respect to
Shares of Dravo Corporation as filed with the Secretary of the
Commonwealth of Pennsylvania on January 27, 1992 are incorporated
by reference to Exhibit 3.1 of the February 12, 1992 Form 8-K of
the Registrant.
(ii) By-laws of the Registrant as amended October 22, 1992 are
incorporated by reference to Exhibit (3) of the September 30, 1992
Form 10-Q of the Registrant.
(4) Instruments Defining the Rights of Security Holders, including
Indentures
(i) Articles of Amendment restating Dravo Corporation's Articles of
Incorporation, described in Exhibit (3)(i) in this Form 10-K of the
Registrant.
(ii) Shareholders' Rights Agreement dated as of April 4, 1986 between
Dravo Corporation and PNC Bank, N. A. (formerly Pittsburgh National
Bank), as rights agent, incorporated by reference to Exhibit (1) of
the April, 1986 Form 8-K of the Registrant.
(iii) Statement with Respect to Shares - Domestic Business Corporation
amending Section 3(a) of the Certificate of Designations, Preferences
and Rights of Series D Cumulative Convertible Exchangeable Preference
Stock is incorporated by reference to exhibit (4) (ii) of the June
30, 1990 Form 10-Q of the Registrant.
(iv) Form of indemnification agreement between Dravo Corporation and
members of its Board of Directors incorporated by reference to
Exhibit (10)(xvii) of the December 31, 1987 Form 10-K of the
Registrant.
(v) Statement with respect to amended rules for Form S-8 is incorporated
by reference to Exhibit (4)(x) of the December 31, 1990 Form 10-K of
the Registrant.
-22-
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(CONTINUED)
(a) 3. Exhibits (continued)
--------
(4)(vi) Credit and Note and Stock Purchase Agreement dated as of September
21, 1988 by and among Dravo Corporation, its wholly-owned
subsidiaries, Dravo Lime Company and Dravo Basic Materials Company,
Inc. and The Prudential Insurance Company of America and Prudential
Interfunding Corp. is incorporated by reference to Exhibit (4)(i) of
the September 27, 1988 Form 8-K of the Registrant and amendment dated
March 13, 1990 to said agreement is incorporated by reference to
Exhibit (4)(v) of the December 31, 1989 Form 10-K of the Registrant.
(vii) Registration agreement dated as of September 21, 1988 between Dravo
Corporation and The Prudential Insurance Company of America, is
incorporated by reference to Exhibit (4)(vi) to the September 27,
1988 Form 8-K of the Registrant.
(viii) (a) Revolving Line of Credit Agreement with all attendant schedules
and exhibits dated as of September 20, 1990, by and among Dravo
Corporation, Dravo Lime Company, Dravo Basic Materials Company,
Inc., First Alabama Bank, and PNC Bank, N. A. (formerly
Pittsburgh National Bank) is incorporated by reference to Exhibit
(4)(i) of the September 30, 1990 Form 10-Q of the Registrant.
(b) Amendment to Credit and Note and Stock Purchase Agreement dated
as of September 21, 1988 by and among Dravo Corporation, Dravo
Lime Company, Dravo Basic Materials Company, Inc., The Prudential
Insurance Company of America, and Prudential Interfunding Corp.,
is incorporated by reference to Exhibit (4) (ii) of the September
30, 1990 Form 10-Q of the Registrant.
(c) First amendment to the Companies' Pledge Agreement dated
September 20, 1990 of the Credit and Note and Stock Purchase
Agreement dated September 21, 1988 is incorporated by reference
to Exhibit (4)(iii) of the September 30, 1990 Form 10-Q of the
Registrant.
(d) First amendment to the Second Intercreditor Agreement dated
September 20, 1990 of the Credit and Note and Stock Purchase
Agreement dated September 21, 1988 is incorporated by reference
to Exhibit (4)(iv) of the September 30, 1990 Form 10-Q of the
Registrant.
-23-
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(CONTINUED)
(a) 3. Exhibits (continued)
--------
(4) (viii) (e) Intercreditor Agreement dated September 20, 1990 by and among
The Prudential Insurance Company of America, First Alabama Bank,
PNC Bank, N. A. (formerly Pittsburgh National Bank), Mellon
Bank, N. A., and the Royal Bank of Canada is incorporated by
reference to Exhibit (4) (v) of the September 30, 1990 Form 10-Q
of the Registrant.
(ix) (a) Promissory Note dated as of January 4, 1979 between Southern
Industries Corporation and The Prudential Insurance Company of
America.
(b) Loan Agreement dated as of December 1, 1978 between Dravo
Equipment Company and County of Harrison, Ohio.
The Registrant hereby agrees to furnish to the Commission upon
request a copy of each of the instruments listed under the
exhibit (4)(ix), none of which authorizes the issuance of
securities in excess of 10 percent of total assets of the
Registrant and its subsidiaries on a consolidated basis.
(x) Override Agreement, dated January 21, 1992, between Dravo
Corporation, The Prudential Insurance Company of America, First
Alabama Bank, PNC Bank, N. A. (formerly Pittsburgh National Bank)
and Continental Bank, N. A. is incorporated by reference to Exhibit
10.1 of the February 12, 1992 Form 8-K of the Registrant.
(xi) First Amendment, dated March 10, 1993, to the Override Agreement
dated January 21, 1992 between Dravo Corporation, The Prudential
Insurance Company of America, First Alabama Bank, PNC Bank, N.A.
(formerly Pittsburgh National Bank) and Continental Bank N.A. is
incorporated by reference to Exhibit 4 (xi) of the December 31,
1992 Form 10-K of the Registrant.
(xii) Second Amendment, dated March 7, 1994, to the Override Agreement
dated January 21, 1992 is filed herein under separate cover.
(xiii) First Amendment, dated March 7, 1994, to the Amended and Restated
Revolving Credit Agreement dated January 21, 1992 is filed herein
under separate cover.
(xiv) Four copies of the First Amendment To Revolving Note, (one each for
The Prudential Insurance Company of America, First Alabama Bank,
PNC Bank, N.A. and Continental Bank N.A.), dated March 7, 1994, to
the Amended and Restated Revolving Credit Agreement dated January
21, 1992 are filed herein under separate cover.
-24-
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(CONTINUED)
(a) 3. Exhibits (continued)
--------
(10) Material Contracts
(All of the following are Management Contracts or Compensatory Plans
or Arrangements required to be filed as an Exhibit to this Form 10-K.)
(i) Dravo Corporation Executive Death and Disability Income Executive
Benefits Plan (now Executive Benefit Plan), approved by the Board of
Directors on October 23, 1980, incorporated by reference to Exhibit
(10)(i) of the December 31, 1980 Form 10-K of the Registrant, and
amendment thereto dated July 1, 1984, incorporated by reference to
Exhibit (10)(i) of the December 31, 1984 Form 10-K of the
Registrant.
(ii) Dravo Corporation Stock Option Plan of 1978, as amended, incorporated
by reference to Exhibit (10)(vi) of the December 31, 1982 Form 10-K
of the Registrant.
(iii) Dravo Corporation Long-Term Incentive Award Plan of 1983, as amended,
incorporated by reference to Exhibit (10)(iv) of the December 31,
1987 Form 10-K of the Registrant.
(iv) Dravo Corporation Incentive Compensation Plan is incorporated by
reference to Exhibit (10)(v) of the December 31, 1990 Form 10-K of
the Registrant.
(v) Dravo Corporation Employee Stock Option Plan of 1988, incorporated by
reference to the Proxy Statement for the Annual Meeting of
Shareholders on April 28, 1988.
(vi) Agreement dated April 23, 1992 between Dravo Corporation and William
G. Roth, incorporated by reference to Exhibit 10(x) of the December
31, 1992 Form 10-K of the Registrant.
(vii) Agreement dated June 1, 1993 between Dravo Corporation and C. A.
Torbert, Jr. is filed herein under separate cover.
(viii) Agreement dated June 1, 1993 between Dravo Corporation and Ernest F.
Ladd III is filed herein under separate cover.
(ix) Agreement dated June 1, 1993 between Dravo Corporation and Carl A.
Gilbert is filed herein under separate cover.
(x) Agreement dated June 1, 1993 between Dravo Corporation and H.
Donovan Ross is filed herein under separate cover.
(xi) Agreement dated June 1, 1993 between Dravo Corporation and John R.
Major is filed herein under separate cover.
-25-
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(CONTINUED)
(a) 3. Exhibits (continued)
--------
(10) Material Contracts
(xii) Dravo Corporation Stock Option Plan of 1994 is incorporated by
reference to the Proxy Statement for the Annual Meeting of
Shareholders on April 28, 1994.
(11) Statement Re Computation of Per Share Earnings filed under this cover.
(13) 1993 Annual Report to Shareholders attached to this report under this
cover. Except for the pages and information thereof expressly
incorporated by reference in this Form 10-K, the Annual Report to
Shareholders is provided solely for the information of the Securities
and Exchange Commission and is not to be deemed "filed" as part of the
Form 10-K.
(21) Subsidiaries of the Registrant filed under this cover.
(23) Consent of Independent Auditors filed under this cover.
(24) Powers of Attorney are filed herein under separate cover.
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K for the three months ended December
31, 1993.
-26-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DRAVO CORPORATION
March 29, 1994 By:/s/ CARL A. TORBERT, JR.
-----------------------------------------------------------
Carl A. Torbert, Jr., President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*WILLIAM G. ROTH Chairman of the Board
- ----------------------------- and Director March 29, 1994
William G. Roth
/s/ CARL A. TORBERT, JR. President, Chief Executive
- ----------------------------- Officer and Director March 29, 1994
Carl A. Torbert, Jr.
/s/ ERNEST F. LADD III Executive Vice President,
- ----------------------------- Finance & Administration March 29, 1994
Ernest F. Ladd III
/s/ LARRY J. WALKER Controller March 29, 1994
- -----------------------------
Larry J. Walker
*E. EUGENE BISHOP Director March 29, 1994
- -----------------------------
E. Eugene Bishop
*ARTHUR E. BYRNES Director March 29, 1994
- -----------------------------
Arthur E. Byrnes
*JOHN E. DOLAN Director March 29, 1994
- -----------------------------
John E. Dolan
*JACK EDWARDS Director March 29, 1994
- -----------------------------
Jack Edwards
*JAMES C. HUNTINGTON, JR. Director March 29, 1994
- -----------------------------
James C. Huntington, Jr.
*WILLARD L. HURLEY Director March 29, 1994
- -----------------------------
Willard L. Hurley
*WILLIAM E. KASSLING Director March 29, 1994
- -----------------------------
William E. Kassling
*KONRAD M. WEIS Director March 29, 1994
- -----------------------------
Konrad M. Weis
*ROBERT C. WILBURN Director March 29, 1994
- -----------------------------
Robert C. Wilburn
/s/ ERNEST F. LADD III
- ----------------------------------------
*By Ernest F. Ladd III, Attorney-in-fact
</TABLE>
-27-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Dravo Corporation:
Under date of February 16, 1994, we reported on the consolidated balance sheets
of Dravo Corporation and subsidiaries as of December 31, 1993, and 1992, and the
related consolidated statements of operations, retained earnings, and cash flows
for each of the years in the three-year period ended December 31, 1993, as
contained in the 1993 annual report to shareholders. As discussed in Notes 10
and 13 to the consolidated financial statements, effective January 1, 1993, the
company adopted the methods of accounting for postretirement benefits other than
pensions and for income taxes as prescribed by Statements of Financial
Accounting Standard Nos. 106 and 109, respectively. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1993. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited the
related financial statement schedules as listed in answer to Item 14(a)(2).
These financial statement schedules are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
Our audit report on the consolidated financial statements of Dravo Corporation
and subsidiaries referred to above contains an explanatory paragraph that states
that certain lawsuits, claims and assertions have been brought against the
company for environmental costs and contract and claim disputes, the outcome of
which presently cannot be determined.
KPMG PEAT MARWICK
New Orleans, Louisiana
February 16, 1994
-28-
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
-29-
<PAGE>
DRAVO CORPORATION (PARENT COMPANY)
Schedule III - Condensed Financial Information of Registrant
Balance Sheets
<TABLE>
<CAPTION>
(In thousands) December 31,
1993 1992
-------- --------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 37 $ 252
Accounts receivable 569 1,260
Notes receivable 1,200 3,792
Current income tax benefit from affiliates 4,483 8,533
Other current assets 316 650
-------- --------
Total current assets 6,605 14,487
Investments in affiliates 193,954 185,435
Notes receivable 2,900 4,500
Deferred income tax benefit from affiliates 24,853 13,975
Net assets of discontinued operations -- 13,924
Other assets 11,450 10,291
Property, plant and equipment 6,832 6,832
Less accumulated depreciation and
amortization 6,809 6,796
-------- --------
Net property, plant and equipment 23 36
-------- --------
Total assets $239,785 $242,648
======== ========
</TABLE>
See accompanying notes to financial statements.
-30-
<PAGE>
DRAVO CORPORATION (PARENT COMPANY)
Schedule III - Condensed Financial Information of Registrant
Balance Sheets
<TABLE>
<CAPTION>
(In thousands) December 31,
1993 1992
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 1,529 $ 4,448
Accrued insurance 1,197 1,482
Accrued retirement contribution 2,101 476
Accrued loss on leases - discontinued operations 2,448 2,779
Net liabilities of discontinued operations 2,006 6,949
Other current liabilities 246 679
-------- --------
Total current liabilities 9,527 16,813
Advances from affiliates 96,041 98,980
Accrued loss on leases - discontinued
operations 7,854 9,133
Net liabilities of discontinued operations 14,276 --
Other liabilities 2,548 2,772
Redeemable preference stock:
Par value $1, issued 200,000 shares: Series D,
cumulative, convertible, exchangeable
(entitled in liquidation to $20.0 million) 20,000 20,000
Shareholders' equity:
Preference stock, par value $1, authorized
1,878,870 shares: Series B, $2.475 cumulative,
convertible, issued 32,386 and 35,386 shares
(entitled in liquidation to $1.8 million
and $1.9 million); 32 35
Series D, reported above
Common stock, par value $1, authorized 35,000,000
shares; issued 14,967,824 and 14,945,476
shares 14,968 14,945
Other shareholders' equity 74,539 79,970
-------- --------
Total shareholders' equity 89,539 94,950
-------- --------
Total liabilities and shareholders' equity $239,785 $242,648
======== ========
</TABLE>
See accompanying notes to financial statements.
-31-
<PAGE>
DRAVO CORPORATION (PARENT COMPANY)
Schedule III - Condensed Financial Information of Registrant
Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31,
(In thousands) 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
General and administrative
expenses $ (1,046) $(1,750) $ (491)
Interest expense -- -- --
Interest income 49 60 72
-------- ------- --------
Loss from continuing operations
before taxes, affiliate earnings
and extraordinary item (997) (1,690) (419)
Income tax benefit (provision) 27,834 448 (60)
-------- ------- --------
Earnings (loss) from continuing
operations before affiliate earnings
and extraordinary item 26,837 (1,242) (479)
Equity in affiliate earnings 8,565 11,560 12,729
-------- ------- --------
Earnings from continuing operations
before extraordinary item 35,402 10,318 12,250
Loss from discontinued operations, net
of income tax benefit of $0 and $3,568 (35,303) -- (38,537)
Extraordinary item -- 1,573 --
-------- ------- --------
Net earnings (loss) before cumulative
effect of change in accounting principle 99 11,891 (26,287)
Cumulative effect of change in
accounting for income taxes (276) -- --
-------- ------- --------
Net earnings (loss) $ (177) $11,891 $(26,287)
======== ======= ========
</TABLE>
See accompanying notes to financial statements.
-32-
<PAGE>
DRAVO CORPORATION (PARENT COMPANY)
Schedule III - Condensed Financial Information of Registrant
Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Years ended December 31,
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
- -------------------------------------
Earnings from continuing operations $ 35,402 $ 10,318 $ 12,250
Adjustments to reconcile earnings from
continuing operations to net cash provided
(used) by continuing operations activities:
Depreciation and amortization 13 14 46
Equity in earnings of affiliates (8,565) (11,560) (12,729)
Cumulative effect of change in accounting
principle for income taxes (276) -- --
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable 691 (1,245) 259
Decrease in notes receivable -- 450 241
Decrease (increase) in deferred income
tax benefits (6,828) 2,631 2,360
Decrease (increase) in other current
assets 334 (160) (361)
Decrease (increase) in other assets (1,159) 743 (3,579)
Increase (decrease) in accounts payable
and accrued expenses (2,012) (5,715) 875
Decrease in other liabilities (224) (26) (1,441)
-------- -------- --------
Net cash provided (used) by continuing
operations activities 17,376 (4,550) (2,079)
Loss from discontinued operations (35,303) -- (38,537)
Increase (decrease) in net liabilities of
discontinued operations 21,647 (15,009) 35,502
Proceeds from repayment of notes receivable
from sale of discontinued operations 1,992 2,631 11
-------- -------- --------
Net cash used by discontinued operations
activities (11,664) (12,378) (3,024)
Extraordinary item -- 1,573 --
-------- -------- --------
Net cash provided (used) by operating
activities $ 5,712 $(15,355) $ (5,103)
</TABLE>
See accompanying notes to financial statements.
-33-
<PAGE>
DRAVO CORPORATION (PARENT COMPANY)
Schedule III - Condensed Financial Information of Registrant
Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Years ended December 31,
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from investing activities:
- ------------------------------------
Increase (decrease) in advances from
subsidiaries $(2,893) $17,900 $(4,920)
Reduction to cash collateral account -- -- 20,506
Loan made in connection with lease
termination -- -- (8,000)
Other, net (581) 39 24
------- ------- -------
Net cash provided (used) by investing
activities (3,474) 17,939 7,610
Cash flows from financing activities:
- ------------------------------------
Principal payments under long-term notes -- -- (135)
Proceeds from issuance of common stock 101 63 68
Dividends paid (2,554) (2,561) (2,571)
------- ------- -------
Net cash used by financing activities (2,453) (2,498) (2,638)
Net increase (decrease) in cash and cash
equivalents (215) 86 (131)
Cash and cash equivalents at beginning
of year 252 166 297
------- ------- -------
Cash and cash equivalents at end of year $ 37 $ 252 $ 166
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
-34-
<PAGE>
DRAVO CORPORATION (PARENT COMPANY)
Schedule III - Condensed Financial Information of Registrant
Notes to Financial Statements
Notes 1 through 3, 5 through 14 and 16 to Dravo Corporation's Consolidated
Financial Statements have relevance to the parent company financial statements
and should be read in conjunction therewith.
Note 1: Commitments
There was no continuing operations rental expense for 1993, 1992 or 1991. The
minimum future rentals under noncancelable operating leases and minimum future
rental receipts from subleases to third parties as of December 31, 1993 are
indicated in the table below. Of the $19.4 million net minimum payments, $10.1
million has been expensed in connection with discontinued operations.
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1994 $ 10,521
1995 10,659
1996 10,800
1997 10,946
1998 3,695
After 1998 --
--------
Total minimum payments required 46,621
Less: Minimum sublease rental
receipts (27,194)
--------
Net minimum payments $ 19,427
========
</TABLE>
Note 2: Income Taxes
The company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" (SFAS 109) effective January 1, 1993. The
cumulative effect of this change in accounting for income taxes of $276,000 is
determined as of January 1, 1993 and is reported separately in the Statements of
Operations for the year ended December 31, 1993. Prior years financial
statements have not been restated to apply the provisions of SFAS 109.
Dravo Corporation files a consolidated federal income tax return which includes
the parent and consolidated subsidiaries. Dravo Corporation parent company
financial statements recognize current income tax benefits to the extent the
benefits are offset by current income tax liabilities of the consolidated
subsidiaries. Long-term deferred income tax benefits are recognized to the
extent that it is more likely than not that the company will generate sufficient
consolidated taxable income to utilize net operating loss carryforwards prior to
their expiration.
-35-
<PAGE>
Note 2: Income Taxes (continued)
The income tax benefit for the year ended December 31, 1993 is comprised of the
following:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Benefit to offset liabilities of subsidiaries $ 2,981
Change in net deferred tax asset 24,853
-------
$27,834
=======
</TABLE>
Deferred income taxes of $13.9 million at December 31, 1992 represent deferred
benefits offsetting deferred income tax liabilities of the consolidated
subsidiaries. Concurrent with the implementation of SFAS 109, this amount was
reclassified from deferred income taxes to advances from affiliates.
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1993 are
as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Deferred tax assets:
Provision for discontinued operations $ 9,039
Accounts receivable, principally due
to allowance for doubtful accounts 126
Net operating loss carryforwards 59,313
Investment tax credit carryforwards 1,748
Other 2,087
-------
Total gross deferred tax assets 72,313
Less valuation allowance 44,813
-------
Net deferred tax assets after valuation allowance 27,500
Deferred tax liabilities:
Pension accrual 2,647
-------
Total gross deferred tax liabilities 2,647
-------
Net deferred tax asset $24,853
=======
</TABLE>
Management believes it is more likely than not that the net deferred tax asset
of $24.9 million will be realized through the reversal of temporary differences
and through its subsidiaries future income. In order to fully realize the net
deferred tax asset, the parent company and its subsidiaries will need to
generate future taxable income of approximately $73.2 million prior to the
expiration of its net operating loss carryforwards. There can be no assurance,
however, that the parent, or its subsidiaries, will generate any earnings or any
specific level of continued earnings.
-36-
<PAGE>
NOTE 3: DIVIDENDS
- ------------------
Cash dividends paid to the registrant for the respective years ended December
31:
<TABLE>
<CAPTION>
(In thousands)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Consolidated affiliates $ -0- $ -0- $ -0-
50 percent or less owned companies
accounted for by the equity method 586 612 405
</TABLE>
-37-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule V - Property, Plant and Equipment
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
(In thousands)
- ------------------------------------------------------------------------
Column A Column B Column C
- ------------------------------------------------------------------------
Balance at
beginning Additions
Classification of period at cost
- ------------------------------------------------------------------------
<S> <C> <C>
Year ended December 31, 1993
- ----------------------------
Land $ 23,525 $ 236
Mine development 7,959 189
Buildings and improvements 25,804 512
Floating equipment (towboats,
dredges and barges, etc.) 39,026 884
Machinery and other equipment 208,363 11,825
-------- -------
Totals $304,677 $13,646
======== =======
Year ended December 31, 1992
- ----------------------------
Land $ 22,690 $ 866
Mine development 7,364 595
Buildings and improvements 27,091 1,490
Floating equipment (towboats,
dredges and barges, etc.) 48,745 1,130
Machinery and other equipment 208,309 4,373
-------- -------
Totals $314,199 $ 8,454
======== =======
Year ended December 31, 1991
- ----------------------------
Land $ 22,873 $ 5
Mine development 7,364 --
Buildings and improvements 19,497 667
Floating equipment (towboats,
dredges and barges, etc.) 52,306 4,383
Machinery and other equipment 202,887 14,014
-------- -------
Totals $304,927 $19,660
======== =======
</TABLE>
-38-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule V - Property, Plant and Equipment (continued)
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------------
Column A Column D Column E Column F
- -----------------------------------------------------------------------------
Other changes
add (deduct) Balance at
Classification Retirements describe end of period
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Year ended December 31, 1993
- ----------------------------
Land $ 88 $ -- $ 23,673
Mine development -- -- 8,148
Buildings and improvements 1,467 (2,019)(1) 22,830
Floating equipment (towboats,
dredges and barges, etc.) 3,578 640 (1) 36,972
Machinery and other equipment 1,368 1,379 (1) 220,199
------- ------- --------
Totals $ 6,501 $ -- $311,822
======= ======= ========
Year ended December 31, 1992
- ----------------------------
Land $ 31 $ -- $ 23,525
Mine development -- -- 7,959
Buildings and improvements 337 (2,440)(3) 25,804
Floating equipment (towboats,
dredges and barges, etc.) 11,025 176 (3) 39,026
Machinery and other equipment 6,992 2,673 (3) 208,363
------- ------- --------
Totals $18,385 $ 409 $304,677
======= ======= ========
Year ended December 31, 1991
- ----------------------------
Land $ 188 $ -- $ 22,690
Mine development -- -- 7,364
Buildings and improvements 667 3,371 (1) 27,091
Floating equipment (towboats,
dredges and barges, etc.) 4,383 71 (1) 48,745
Machinery and other equipment 4,748 (3,844)(1),(2) 208,309
------- -------- --------
Total $ 9,986 $ (402) $314,199
======= ======== ========
</TABLE>
(1) Transfers between accounts.
(2) $402 represents the establishment of a shell dredging equipment reserve.
(3) $402 represents the write-off of shell dredging equipment against the
reserve. The remaining $7 is an adjustment of asset value.
-39-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
(In thousands)
- -------------------------------------------------------------------
Column A Column B Column C
- -------------------------------------------------------------------
Balance at Additions charged
beginning to costs
Classification of period and expenses
- -------------------------------------------------------------------
<S> <C> <C>
Year ended December 31, 1993
- ----------------------------
Land $ 6,182 $ 422
Mine development 5,427 448
Buildings and improvements 16,160 1,034
Floating equipment (towboats,
dredges and barges, etc.) 32,616 1,599
Machinery and other equipment 129,428 14,482
-------- -------
Totals $189,183 $17,985
======== =======
Year ended December 31, 1992
- ----------------------------
Land $ 5,722 $ 460
Mine development 5,006 421
Buildings and improvements 16,272 1,023
Floating equipment (towboats,
dredges and barges, etc.) 38,406 1,893
Machinery and other equipment 120,282 14,798
-------- -------
Totals $185,688 $18,595
======== =======
Year ended December 31, 1991
- ----------------------------
Land $ 5,187 $ 542
Mine development 4,534 472
Buildings and improvements 14,482 815
Floating equipment (towboats,
dredges and barges, etc.) 40,373 2,061
Machinery and other equipment 112,412 13,824
-------- -------
Totals $176,988 $17,714
======== =======
</TABLE>
-40-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment (continued)
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
(In thousands)
- ----------------------------------------------------------------------------
Column A Column D Column E Column F
- ----------------------------------------------------------------------------
Other changes
add (deduct) Balance at
Classification Retirements describe end of period
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Year ended December 31, 1993
- ----------------------------
Land $ -- $ -- $ 6,604
Mine development -- -- 5,875
Buildings and improvements 1,420 (399)(1) 15,375
Floating equipment (towboats,
dredges and barges, etc.) 3,219 560 (1) 31,556
Machinery and other equipment 1,305 (161)(1) 142,444
------- ------- --------
Totals $ 5,944 $ -- $201,854
======= ======= ========
Year ended December 31, 1992
---------------------------
Land $ -- $ -- $ 6,182
Mine development -- -- 5,427
Buildings and improvements 307 (828)(2) 16,160
Floating equipment (towboats,
dredges and barges, etc.) 7,761 78 (2) 32,616
Machinery and other equipment 6,405 753 (2) 129,428
------- ------- --------
Totals $14,473 $ 3 $189,813
======= ======= ========
Year ended December 31, 1991
- ----------------------------
Land $ 7 $ -- $ 5,722
Mine development -- -- 5,006
Buildings and improvements 620 1,595 (1) 16,272
Floating equipment (towboats,
dredges and barges, etc.) 4,028 -- 38,406
Machinery and other equipment 4,359 (1,595)(1) 120,282
------- ------- --------
Total $ 9,014 $ -- $185,688
======= ======= ========
</TABLE>
(1) Transfers between accounts.
(2) $3 is an adjustment of asset value.
-41-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule IX - Short-term Borrowings
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
(In thousands)
- -------------------------------------------------------------------
Column A Column B Column C
- -------------------------------------------------------------------
Category of Weighted average
aggregate Balance interest rate
short-term at end at end of
borrowings of period period
- -------------------------------------------------------------------
<S> <C> <C>
Year ended December 31, 1993
- ----------------------------
Payable to banks
and other financial
institutions $ -- --
Year ended December 31, 1992
- ----------------------------
Payable to banks
and other financial
institutions $ -- --
Year ended December 31, 1991
- ----------------------------
Payable to banks
and other financial
institutions $ -- --
</TABLE>
-42-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule IX - Short-term Borrowings (continued)
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
(In thousands)
- -------------------------------------------------------------------------------
Column A Column D Column E Column F
- -------------------------------------------------------------------------------
Category of Maximum amount Average amount Weighted average
aggregate outstanding outstanding interest rate
short-term during the during the during the
borrowings period period period
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Year ended December 31, 1993
- ----------------------------
Payable to banks
and other financial
institutions $ -- $ -- --
Payable to banks
and other financial
institutions $ -- $ -- --
Payable to banks
and other financial
institutions $55,000 $49,840 (1) 8.57% (2)
</TABLE>
(1) Calculated by dividing the aggregate short-term borrowings by total
number of days in the year.
(2) Calculated by dividing the average aggregate short-term borrowings into
the related interest expense for the year.
-43-
<PAGE>
DRAVO CORPORATION AND SUBSIDIARIES
Schedule X - Supplementary Income Statement Information
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
(In thousands)
- --------------------------------------------------------------------
Column A Column B
- --------------------------------------------------------------------
Charged to costs
and expenses
Item 1993 1992 1991
- --------------------------------------------------------------------
<S> <C> <C> <C>
1. Maintenance and repairs $34,583 $35,266 $39,242
2. Depreciation and amortization
of intangible assets, preoperating
costs and similar deferral (1) -- -- --
3. Taxes (other than payroll
and income) 4,201 3,880 3,949
4. Royalties 2,480 2,585 4,219
5. Advertising costs (1) -- -- --
</TABLE>
(1) Does not exceed 1% of consolidated revenues in 1993, 1992 or 1991.
-44-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page No.
------- --------
<S> <C>
4. Instruments Defining the Rights of Security Holders,
Including Indentures
(xii) Second Amendment, dated March 7, 1994, to the 1-3
Override Agreement dated January 21, 1992.
(xiii) First Amendment, dated March 7, 1994, to the 4-9
Amended and Restated Revolving Credit Agreement
dated January 21, 1992.
(xiv) Four copies of the First Amendment To Revolving 10-17
Note (one each for The Prudential Insurance
Company of America, First Alabama Bank, PNC Bank,
N.A. and Continental Bank N.A.), dated March 7,
1994, to the Amended and Restated Revolving Credit
Agreement dated January 21, 1992.
10. Material Contracts
(vii) Agreement dated June 1, 1993 between Dravo Corporation 1-15
and C. A. Torbert, Jr.
(viii) Agreement dated June 1, 1993 between Dravo Corporation 16-30
and Ernest F. Ladd III.
(ix) Agreement dated June 1, 1993 between Dravo Corporation 31-45
and Carl A. Gilbert.
(x) Agreement dated June 1, 1993 between Dravo Corporation 46-60
and H. Donovan Ross.
(xi) Agreement dated June 1, 1993 between Dravo Corporation 61-75
and John R. Major.
11. Statement RE Computation of Per Share Earnings 1, 2
13. 1993 Annual Report 8-33
21. Subsidiaries of the Registrant 1
23. Consent of Experts and Counsel 1
24. Powers of Attorney 1-12
</TABLE>
45
<PAGE>
EXHIBIT 4
SECOND AMENDMENT TO OVERRIDE AGREEMENT
THIS SECOND AMENDMENT TO OVERRIDE AGREEMENT (the "Second Amendment") dated as of
the 7th day of March, 1994, by and between FIRST ALABAMA BANK ("FAB"), PNC BANK,
NATIONAL ASSOCIATION (formerly known as Pittsburgh National Bank) ("PNB")
CONTINENTAL BANK N.A. ("Continental"), THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ("Prudential"; FAB, PNB, Continental and Prudential herein collectively
referred to as "Lenders" and each a "Lender"), DRAVO CORPORATION, a Pennsylvania
corporation ("Dravo"), DRAVO LIME COMPANY, a Delaware corporation ("Lime") and
DRAVO BASIC MATERIALS COMPANY, INC., an Alabama corporation ("Basic"; Lime and
Basic are sometimes hereafter collectively referred to as the "Companies").
W I T N E S S E T H:
WHEREAS, Lenders, Dravo and Companies entered into that certain Override
Agreement, dated as of January 21, 1992; and
WHEREAS, said Override Agreement has been heretofore amended by that
certain First Amendment to Override Agreement, dated March 10, 1993; and
WHEREAS, the said Override Agreement, as amended by the said First
Amendment to Override Agreement, shall be hereinafter referred to as the
"Override Agreement"; and
WHEREAS, Lenders, Dravo and Companies desire to amend the Override
Agreement by modifying the terms of a covenant applicable to Dravo as set forth
hereinbelow;
NOW, THEREFORE, in consideration of the premises and by mutual consent,
Lenders, Dravo and Companies agree to amend the Override Agreement as follows:
1. Clause (ii) of Section 4.02 (b) of the Override Agreement is deleted in
its entirety and the following is substituted in place thereof:
"(ii) Dravo shall cause the Discontinued Operations Fixed Charge Coverage Ratio
of Dravo and its Subsidiaries as at the end of each of Dravo's fiscal quarters
to equal or exceed the following values for the fiscal quarter ending during the
following periods:
<TABLE>
<CAPTION>
Minimum Discontinued Operations
Relevant Period Fixed Charge Coverage Ratio
- --------------- -------------------------------
<S> <C>
Closing Date through and
including December 31, 1994 1.30
January 1, 1995 and
thereafter 2.00"
</TABLE>
-1-
<PAGE>
2. Except as modified pursuant hereto, the Override Agreement is hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between the terms of the Second
Amendment and the Override Agreement as in existence immediately prior to the
effectiveness hereof, the terms of this Second Amendment shall control.
3. The parties to this Second Amendment expressly agree that the laws
of the State of New York shall govern the validity, construction, interpretation
and effect of this Second Amendment, without reference to its principles of
conflicts of laws.
4. This Second Amendment may be executed in duplicate counterparts, each
of which shall constitute an original for all purposes, and it shall not be
necessary in making proof of this Second Amendment to produce or account for
more than one such counterpart executed by each party.
IN WITNESS WHEREOF, the parties have hereunto caused their names to be
subscribed by their respective officers thereunto duly authorized this the day
and date first hereinabove mentioned:
FIRST ALABAMA BANK
By: FRED W. TAUL
---------------------------------
Name: Fred W. Taul
Title: Executive Vice President
PNC BANK, NATIONAL ASSOCIATION
By: RICHARD D. RODGERS
---------------------------------
Name: Richard D. Rodgers
Title: Vice President
CONTINENTAL BANK N.A.
By: LYNN W. STETSON
---------------------------------
Name: Lynn W. Stetson
Title: Vice President
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: CATHERINE A. CATES
---------------------------------
Name: Catherine A. Cates
Title: Vice President
-2-
<PAGE>
DRAVO CORPORATION
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
--------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO LIME COMPANY
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
--------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO BASIC MATERIALS COMPANY, INC.
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
--------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
-3-
<PAGE>
FIRST AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
("First Amendment"), dated as of the 7th day of March, 1994, by and between
DRAVO LIME COMPANY, a Delaware corporation ("Lime"), DRAVO BASIC MATERIALS
COMPANY, INC., an Alabama corporation ("Basic"; Lime and Basic herein
collectively referred to as "Borrowers" and each individually as a "Borrower"),
FIRST ALABAMA BANK ("FAB"), PNC BANK, NATIONAL ASSOCIATION (formerly known as
Pittsburgh National Bank) ("PNB"), CONTINENTAL BANK N.A. ("Continental"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"; FAB, PNB, Continental and
Prudential herein collectively referred to as "Lenders", and each individually
as a "Lender"), and FIRST ALABAMA BANK, as agent for the Lenders (in that
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Borrowers, Lenders and Agent entered into that certain Amended and
Restated Revolving Credit Agreement, dated as of the 21st day of January, 1992
(said agreement being referred to herein as the "Revolving Credit Agreement");
and
WHEREAS, Borrowers, Lenders and Agent, being all of the parties to the
Revolving Credit Agreement, desire to amend the Revolving Credit Agreement by
(i) extending the maturity date thereof from January 22, 1995 to April 30, 1995,
(ii) increasing the amount of the Revolving Line of Credit (as defined in the
Revolving Credit Agreement) from $59,000,000.00 to $69,000,000.00, (iii)
increasing the financing commitment of Continental under the Revolving Line of
Credit from $10,000,000.00 to $20,000,000.00 and (iv) modifying related
provisions hereinbelow set forth;
NOW, THEREFORE, in consideration of the premises and by mutual consent,
Borrowers, Lenders and Agent agree to amend the Revolving Credit Agreement as
follows:
1. The maturity or expiry date of January 22, 1995, that is set forth in
the Revolving Credit Agreement with respect to the Revolving Line of Credit (as
defined in the Revolving Credit Agreement), the Letter of Credit facility set
forth in Section 1.3 of the Revolving Credit Agreement, and the FAB Special
Letter of Credit Facility set forth in Section 1.4 of the Revolving Credit
Agreement is hereby extended to April 30, 1995. All references to the maturity
or expiry date of January 22, 1995, in the Revolving Credit Agreement shall be
deemed and each such reference is hereby amended to mean April 30, 1995.
-4-
<PAGE>
2. Effective as of the date hereof, the maximum amount of the Revolving
Line of Credit (as defined in the Revolving Credit Agreement) set forth in the
Revolving Credit Agreement is increased from $59,000,000.00 to $69,000,000.00,
and the maximum financing commitment of Continental thereunder is increased from
$10,000,000.00 to $20,000,000.00.
3. The first sentence of Section 1.6 of the Revolving Credit Agreement is
deleted in its entirety and the following is substituted in place thereof:
"Borrowers agree to pay to Lenders on a basis proportionate with such
respective Lender's Revolving Line of Credit commitment hereunder non-
usage fees (the "Non-Usage Fees") in an aggregate amount equal to one-
half of one percent (1/2 of 1%) per annum on the unutilized portion of
the $69,000,000.00 Revolving Line of Credit payable quarterly in
arrears on the fifth business day following each calendar quarter
during the term of this Agreement."
4. The first sentence of Section 9.1(a) of the Revolving Line of Credit
is deleted in its entirety and the following is substituted in place thereof:
"Lenders agree as between themselves that upon receipt of a request
for an advance hereunder by Borrowers (or either of them), and so long
as there shall exist no Event of Default or Default, FAB will advance
31.88% of such request, PNB will advance 24.64% of such request,
Continental will advance 28.99% of such request, and Prudential will
advance 14.49% of such request; provided, however, in no event shall
the aggregate principal amount of the Revolving Line of Credit loans
made hereunder by Lenders exceed $69,000,000.00."
5. Schedule I to the Revolving Credit Agreement is deleted in its
entirety and the Schedule I attached hereto and made a part hereof is
substituted in place thereof.
6. Schedule II to the Revolving Credit Agreement is deleted in its
entirety and the Schedule II attached hereto and made a part hereof is
substituted in place thereof.
7. The effectiveness of the amendments contained herein shall be subject
to the satisfaction in the opinion of Lenders of Borrowers delivering to each
respective Lender an amendment of the Borrowers' Revolving Notes (as defined in
the Revolving Credit Agreement), duly executed and delivered by each Borrower,
extending the maturity or expiry dates thereof as hereinabove set forth and, in
the case of Continental, increasing the principal sum thereof from
$10,000,000.00 to $20,000,000.00.
-5-
<PAGE>
8. Except as modified pursuant hereto, the Revolving Credit Agreement is
hereby specifically ratified, restated and confirmed by all parties hereto as of
the date hereof. To the extent of conflict between the terms of the First
Amendment and the Revolving Credit Agreement as in existence immediately prior
to the effectiveness hereof, the terms of this First Amendment shall control.
9. The parties to this First Amendment expressly agree that the laws of
the State of New York shall govern the validity, construction, interpretation
and effect of this First Amendment, without reference to its principles of
conflicts of laws.
10. This First Amendment may be executed in duplicate counterparts, each
of which shall constitute an original for all purposes, and it shall not be
necessary in making proof of this First Amendment to produce or account for more
than one such counterpart executed by each party.
11. On the date hereof and in respect of the matters hereinabove set
forth, Borrowers agree to pay to Lenders a credit fee of $200,000.00 ($50,000.00
to each Lender). The foregoing credit fee shall be nonrefundable, and shall
further offset credit fees that will be owed by Borrowers with respect to the
extension until at least January 22, 1996, that is presently under discussion
and review, of the maturity or expiry date hereinabove extended to April 30,
1995.
IN WITNESS WHEREOF, the parties have hereunto caused their names to be
subscribed by their respective officers thereunto duly authorized this the day
and date first hereinabove mentioned.
FIRST ALABAMA BANK, Individually and as
Agent for the Lenders under the Amended and
Restated Revolving Credit Agreement
By: FRED W. TAUL
---------------------------------------
Name: Fred W. Taul
Title: Executive Vice President
PNC BANK, NATIONAL ASSOCIATION
By: RICHARD D. RODGERS
---------------------------------------
Name: Richard D. Rodgers
Title: Vice President
-6-
<PAGE>
CONTINENTAL BANK N. A.
By: LYNN W. STETSON
---------------------------------------
Name: Lynn W. Stetson
Title: Vice President
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: CATHERINE A. CATES
---------------------------------------
Name: Catherine A. Cates
Title: Vice President
DRAVO LIME COMPANY
By: ERNEST F. LADD III
---------------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- ---------------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO BASIC MATERIALS COMPANY, INC.
By: ERNEST F. LADD III
---------------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- ---------------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
-7-
<PAGE>
SCHEDULE I
SCHEDULE I TO REVOLVING CREDIT AGREEMENT
Financing Commitments
- ---------------------
(Expressed in Millions)
<TABLE>
<S> <C>
FIRST ALABAMA BANK
- Revolving Line of Credit and Letters
of Credit Facilities Combined $22.0
PNC BANK, N.A.
- Revolving Line of Credit and Letters
of Credit Facilities Combined 17.0
CONTINENTAL BANK N.A.
- Revolving Line of Credit and Letters
of Credit Facilities Combined 20.0
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
- Revolving Line of Credit and Letters
of Credit Facilities Combined 10.0
-----
TOTAL $69.0
=====
</TABLE>
-8-
<PAGE>
SCHEDULE II
SCHEDULE II TO REVOLVING CREDIT AGREEMENT
Maximum Stated Amount of Letters of Credit
To Be Issued (or Cause To Be Issued) by Lenders
-----------------------------------------------
<TABLE>
<CAPTION>
Stated Amount Lender's Percentage
------------- -------------------
<S> <C> <C>
FIRST ALABAMA BANK $3,921,240.00 31.88%
PNC BANK, N.A. $3,030,720.00 24.64%
CONTINENTAL BANK N.A. $3,565,770.00 28.99%
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA $1,782,270.00 14.49%
------
TOTAL 100.00%
======
</TABLE>
-9-
<PAGE>
FIRST AMENDMENT TO REVOLVING NOTE
WHEREAS, DRAVO LIME COMPANY, a Delaware corporation ("Lime"), DRAVO BASIC
MATERIALS COMPANY, INC., an Alabama corporation ("Basic"; Lime and Basic herein
collectively referred to as "Borrowers" and each individually as a "Borrower"),
FIRST ALABAMA BANK ("FAB"), PNC BANK, NATIONAL ASSOCIATION (formerly known as
Pittsburgh National Bank) ("PNB"), CONTINENTAL BANK N.A. ("Continental"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"; FAB, PNB, Continental and
Prudential herein collectively referred to as "Lenders" and each individually as
a "Lender"), and FIRST ALABAMA BANK, as agent for the Lenders (in that capacity,
the "Agent") entered into that certain Amended and Restated Revolving Credit
Agreement, dated as of January 21, 1992 (said agreement being herein referred to
as the "Revolving Credit Agreement"); and
WHEREAS, pursuant to the foregoing Revolving Credit Agreement, and to
evidence certain indebtedness thereunder, Borrowers executed and delivered to
FAB a Revolving Note (the "Revolving Note") dated January 22, 1992, payable to
the order of FAB in the principal amount of $22,000,000.00; and
WHEREAS, Borrowers, Lenders and Agent have entered into that certain First
Amendment to Amended and Restated Revolving Credit Agreement, of even date
herewith (the "First Amendment to Revolving Credit Agreement"), that among other
things extends the maturity or expiry date of the Revolving Line of Credit (as
defined in the Revolving Credit Agreement, as amended by the First Amendment to
Revolving Credit Agreement) from January 22, 1995 to April 30, 1995; and
WHEREAS, Borrowers and FAB herein agree to modify the terms of the
Revolving Note by extending the maturity or expiry date therein contained from
January 21, 1995 to April 30, 1995;
NOW, THEREFORE, by mutual consent of the parties hereto, the Revolving Note
is hereby amended as follows:
1. The maturity or expiry date of January 21, 1995, that is set forth in
the Revolving Note is hereby extended to April 30, 1995. All references to the
maturity or expiry date of January 21, 1995, in the Revolving Note shall be
deemed and each such reference is hereby amended to mean April 30, 1995.
2. For the purposes of this First Amendment to Revolving Note, unless
otherwise defined herein, all terms used herein, including, but not limited to,
those terms used and/or defined in the recitals hereto, shall have the
respective meanings assigned to such terms in the Revolving Credit Agreement, as
amended by the First Amendment to Revolving Credit Agreement.
-10-
<PAGE>
3. Except as modified pursuant hereto, the Revolving Note is hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between terms of this First Amendment to
Revolving Note and the Revolving Note as in existence immediately prior to the
effectiveness hereof, the terms of this First Amendment to Revolving Note shall
control.
4. This First Amendment to Revolving Note may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
this 7th day of March, 1994.
DRAVO LIME COMPANY
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO BASIC MATERIALS COMPANY, INC.
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
FIRST ALABAMA BANK
By: FRED W. TAUL
--------------------------------
Name: Fred W. Taul
Title: Executive Vice President
-11-
<PAGE>
FIRST AMENDMENT TO REVOLVING NOTE
WHEREAS, DRAVO LIME COMPANY, a Delaware corporation ("Lime"), DRAVO BASIC
MATERIALS COMPANY, INC., an Alabama corporation ("Basic"; Lime and Basic herein
collectively referred to as "Borrowers" and each individually as a "Borrower"),
FIRST ALABAMA BANK ("FAB"), PNC BANK, NATIONAL ASSOCIATION (formerly known as
Pittsburgh National Bank) ("PNB"), CONTINENTAL BANK N.A. ("Continental"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"; FAB, PNB, Continental and
Prudential herein collectively referred to as "Lenders" and each individually as
a "Lender"), and FIRST ALABAMA BANK, as agent for the Lenders (in that capacity,
the "Agent") entered into that certain Amended and Restated Revolving Credit
Agreement, dated as of January 21, 1992 (said agreement being herein referred to
as the "Revolving Credit Agreement"); and
WHEREAS, pursuant to the foregoing Revolving Credit Agreement, and to
evidence certain indebtedness thereunder, Borrowers executed and delivered to
Prudential a Revolving Note (the "Revolving Note") dated January 22, 1992,
payable to the order of Prudential in the principal amount of $10,000,000.00;
and
WHEREAS, Borrowers, Lenders and Agent have entered into that certain First
Amendment to Amended and Restated Revolving Credit Agreement, of even date
herewith (the "First Amendment to Revolving Credit Agreement"), that among other
things extends the maturity or expiry date of the Revolving Line of Credit (as
defined in the Revolving Credit Agreement, as amended by the First Amendment to
Revolving Credit Agreement) from January 22, 1995 to April 30, 1995; and
WHEREAS, Borrowers and Prudential herein agree to modify the terms of the
Revolving Note by extending the maturity or expiry date therein contained from
January 21, 1995 to April 30, 1995;
NOW, THEREFORE, by mutual consent of the parties hereto, the Revolving Note
is hereby amended as follows:
1. The maturity or expiry date of January 21, 1995, that is set forth in
the Revolving Note is hereby extended to April 30, 1995. All references to the
maturity or expiry date of January 21, 1995, in the Revolving Note shall be
deemed and each such reference is hereby amended to mean April 30, 1995.
2. For purposes of this First Amendment to Revolving Note, unless
otherwise defined herein, all terms used herein, including but not limited to,
those terms used/or defined in the recitals hereto, shall have the respective
meanings assigned to such terms in the Revolving Credit Agreement, as amended by
the First Amendment to Revolving Credit Agreement.
-12-
<PAGE>
3. Except as modified pursuant hereto, the Revolving Note is hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between terms of this First Amendment to
Revolving Note and the Revolving Note as in existence immediately prior to the
effectiveness hereof, the terms of this First Amendment to Revolving Note shall
control.
4. This First Amendment to Revolving Note may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
this 7th day of March, 1994.
DRAVO LIME COMPANY
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO BASIC MATERIALS COMPANY, INC.
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: CATHERINE A. CATES
--------------------------------
Name: Catherine A. Cates
Title: Vice President
-13-
<PAGE>
FIRST AMENDMENT TO REVOLVING NOTE
WHEREAS, DRAVO LIME COMPANY, a Delaware corporation ("Lime"), DRAVO BASIC
MATERIALS COMPANY, INC., an Alabama corporation ("Basic"; Lime and Basic herein
collectively referred to as "Borrowers" and each individually as a "Borrower"),
FIRST ALABAMA BANK ("FAB"), PNC BANK, NATIONAL ASSOCIATION (formerly known as
Pittsburgh National Bank) ("PNB"), CONTINENTAL BANK N.A. ("Continental"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"; FAB, PNB, Continental and
Prudential herein collectively referred to as "Lenders" and each individually as
a "Lender"), and FIRST ALABAMA BANK, as agent for the Lenders (in that capacity,
the "Agent") entered into that certain Amended and Restated Revolving Credit
Agreement, dated as of January 21, 1992 (said agreement being herein referred to
as the "Revolving Credit Agreement"); and
WHEREAS, pursuant to the foregoing Revolving Credit Agreement, and to
evidence certain indebtedness thereunder, Borrowers executed and delivered to
Continental a Revolving Note (the "Revolving Note") dated January 22, 1992,
payable to the order of Continental in the principal amount of $10,000,000.00;
and
WHEREAS, Borrowers, Lenders and Agent have entered into that certain First
Amendment to Amended and Restated Revolving Credit Agreement, of even date
herewith (the "First Amendment to Revolving Credit Agreement"), that among other
things extends the maturity or expiry date of the Revolving Line of Credit (as
defined in the Revolving Credit Agreement, as amended by the First Amendment to
Revolving Credit Agreement) from January 22, 1995 to April 30, 1995, and further
increases the financial commitment of Continental thereunder from $10,000,000.00
to $20,000,000.00; and
WHEREAS, Borrowers and Continental herein agree to modify the terms of the
Revolving Note by extending the maturity or expiry date therein contained from
January 21, 1995 to April 30, 1995, and by increasing the maximum principal
amount thereunder from $10,000,000.00 to $20,000,000.00;
NOW, THEREFORE, by mutual consent of the parties hereto, the Revolving Note
is hereby amended as follows:
1. The maturity or expiry date of January 21, 1995, that is set forth in
the Revolving Note is hereby extended to April 30, 1995. All references to the
maturity or expiry date of January 21, 1995, in the Revolving Note shall be
deemed and each such reference is hereby amended to mean April 30, 1995.
2. The principal amount of the Revolving Note is hereby increased from
$10,000,000.00 to $20,000,000.00.
3. For purposes of this First Amendment to Revolving Note, unless
otherwise defined herein, all terms used herein, including but not limited to,
those terms used/or defined in the recitals hereto, shall have the respective
meanings assigned to such terms in the Revolving Credit Agreement, as amended by
the First Amendment to Revolving Credit Agreement.
-14-
<PAGE>
4. Except as modified pursuant hereto, the Revolving Note is hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between terms of this First Amendment to
Revolving Note and the Revolving Note as in existence immediately prior to the
effectiveness hereof, the terms of this First Amendment to Revolving Note shall
control.
5. This First Amendment to Revolving Note may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
this 7th day of March, 1994.
DRAVO LIME COMPANY
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO BASIC MATERIALS COMPANY, INC.
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
CONTINENTAL BANK N.A.
By: LYNN W. STETSON
--------------------------------
Name: Lynn W. Stetson
Title: Vice President
-15-
<PAGE>
FIRST AMENDMENT TO REVOLVING NOTE
WHEREAS, DRAVO LIME COMPANY, a Delaware corporation ("Lime"), DRAVO BASIC
MATERIALS COMPANY, INC., an Alabama corporation ("Basic"; Lime and Basic herein
collectively referred to as "Borrowers" and each individually as a "Borrower"),
FIRST ALABAMA BANK ("FAB"), PNC BANK, NATIONAL ASSOCIATION (formerly known as
Pittsburgh National Bank) ("PNB"), CONTINENTAL BANK N.A. ("Continental"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"; FAB, PNB, Continental and
Prudential herein collectively referred to as "Lenders" and each individually as
a "Lender"), and FIRST ALABAMA BANK, as agent for the Lenders (in that capacity,
the "Agent") entered into that certain Amended and Restated Revolving Credit
Agreement, dated as of January 21, 1992 (said agreement being herein referred to
as the "Revolving Credit Agreement"); and
WHEREAS, pursuant to the foregoing Revolving Credit Agreement, and to
evidence certain indebtedness thereunder, Borrowers executed and delivered to
PNB a Revolving Note (the "Revolving Note") dated January 22, 1992, payable to
the order of PNB in the principal amount of $17,000,000.00; and
WHEREAS, Borrowers, Lenders and Agent have entered into that certain First
Amendment to Amended and Restated Revolving Credit Agreement, of even date
herewith (the "First Amendment to Revolving Credit Agreement"), that among other
things extends the maturity or expiry date of the Revolving Line of Credit (as
defined in the Revolving Credit Agreement, as amended by the First Amendment to
Revolving Credit Agreement) from January 22, 1995 to April 30, 1995; and
WHEREAS, Borrowers and PNB herein agree to modify the terms of the
Revolving Note by extending the maturity or expiry date therein contained from
January 21, 1995 to April 30, 1995;
NOW, THEREFORE, by mutual consent of the parties hereto, the Revolving Note
is hereby amended as follows:
1. The maturity or expiry date of January 21, 1995, that is set forth in
the Revolving Note is hereby extended to April 30, 1995. All references to the
maturity or expiry date of January 21, 1995, in the Revolving Note shall be
deemed and each such reference is hereby amended to mean April 30, 1995.
2. For the purposes of this First Amendment to Revolving Note, unless
otherwise defined herein, all terms used herein, including, but not limited to,
those terms used and/or defined in the recitals hereto, shall have the
respective meanings assigned to such terms in the Revolving Credit Agreement, as
amended by the First Amendment to Revolving Credit Agreement.
-16-
<PAGE>
3. Except as modified pursuant hereto, the Revolving Note is hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between terms of this First Amendment to
Revolving Note and the Revolving Note as in existence immediately prior to the
effectiveness hereof, the terms of this First Amendment to Revolving Note shall
control.
4. This First Amendment to Revolving Note may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
this 7th day of March, 1994.
DRAVO LIME COMPANY
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
DRAVO BASIC MATERIALS COMPANY, INC.
By: ERNEST F. LADD III
--------------------------------
Name: Ernest F. Ladd III
Title: Executive Vice President
ATTEST:
By: BARBARA D. NELSON
- --------------------------------
Name: Barbara D. Nelson
Title: Assistant Secretary
PNC BANK, NATIONAL ASSOCIATION
By: RICHARD D. RODGERS
--------------------------------
Name: Richard D. Rodgers
Title: Vice President
ATTEST:
By: LOUIS K. MCLINDEN, JR.
- --------------------------------
Name: Louis K. McLinden, Jr.
Title: Commercial Banking Officer
-17-
<PAGE>
EXHIBIT 10
AGREEMENT
This Agreement made as of this 1st day of June, 1993 by and between Dravo
Corporation, a Pennsylvania corporation (the "Corporation") and Carl A.
Torbert, Jr. an individual residing in the State of Alabama and an employee of
the Corporation (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined that it
is in the best interests of the Corporation to enter into this Agreement with
the Executive; and
WHEREAS, the Executive desires to obtain certain benefits in the event
his employment is terminated due to a Change-in-Control of the Corporation;
NOW, THEREFORE, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. Definition of Terms. The following terms when used in this Agreement
-------------------
shall have the meaning hereafter set forth:
(a) "Annual Salary Adjustment Percentage" shall mean the mean average
percentage increase in base salary for all elected officers of the
Corporation during the two full calendar years immediately preceding
the time to which such percentage is being applied; provided,
however, that if after a Change-in-Control, as hereinafter defined,
there should be a significant change in the number of elected
officers of the Corporation or in the manner in which they are
compensated, then the foregoing definition shall be changed by
substituting for the phrase "elected officers of the Corporation" the
phrase "persons then performing the functions formerly performed by
the elected officers of the Corporation."
(b) "Cause for Termination" shall mean
(i) the deliberate and intentional failure by the Executive to
devote substantially his entire business time and best efforts to
the performance of his duties (other than any such failure
resulting from the Executive's incapacity due to physical or
mental illness or disability) after a demand for substantial
performance is delivered to the Executive by the Board of
Directors of the Corporation which specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties,
or
(ii) the deliberate and intentional engaging by the Executive in
gross
-1-
<PAGE>
misconduct materially and demonstrably injurious to the
Corporation.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be considered "deliberate and intentional"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was
in the best interests of the Corporation.
(c) "Change-in-Control" shall mean a change in control of the Corporation
of such a nature that it would be required to be reported by the
Corporation in response to item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof ("Exchange Act"); provided, however, that
without respect to the foregoing, such a change in control shall be
deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities;
or
(ii) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Corporation (the "Board") cease for any reason to
constitute at least a Majority thereof unless the election, or
the nomination for election by the Corporation's shareholders,
of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period.
(d) "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given to the
Executive (provided that the Executive shall not have returned
to the performance of the Executive's duties on a full time
basis during such thirty (30) day period);
(ii) if the Executive's employment terminates due to his death
or Retirement, the date of death or Retirement, respectively;
(iii) if the Executive terminates employment upon Good Reason
for Termination, the date specified for termination in any
notice delivered to the Corporation by the Executive; or
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(iv) if the Executive's employment is terminated for any other
reason, the date on which a termination becomes effective
pursuant to a Notice of Termination; provided, however, that
if within thirty (30) days after any Notice of Termination is
given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
(e) "Disability" shall mean such incapacity due to physical or mental
illness or injury as causes the Executive to be absent from his
principal office for the entire portion of 90 consecutive business
days.
(f) "Good Reason for Termination" shall mean:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties inconsistent with
his positions, duties, responsibilities and status with the
Corporation immediately prior to a Change-in-Control, or a
change in his reporting responsibilities, titles or offices as
in effect immediately prior to a Change-in-Control, or any
removal of the executive from or any failure to re-elect the
Executive to any of such positions, except in connection with
the termination of the Executive's employment due to a Cause
for Termination, Disability or Retirement (as hereinafter
defined) or as a result of the Executive's death;
(ii) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change-in-Control
or as the same may be increased from time to time or the
failure by the Corporation to increase such base salary each
year after the year in which the Change-in-Control occurs by
an amount which at least equals, on a percentage basis, the
Annual Salary Adjustment Percentage;
(iii) a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation's
Incentive Compensation Plan as the same may from time to time
prior to a Change-in-Control be modified or superseded by
another plan (the "Incentive Compensation Plan"), or a failure
by the Corporation to continue the Executive as a participant
in the Incentive Compensation Plan on at least the basis and
according
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to the standards in effect immediately prior to the Change-in-
Control or to pay the Executive when due any deferred portion
of a previous award under the Incentive Compensation Plan;
(iv) the Corporation's requiring the Executive to be based
anywhere other than the Corporation's executive offices at
which the Executive has his principal office immediately prior
to the Change-in-Control, except for required travel on the
Corporation's business to an extent substantially consistent
with the Executive's present business travel obligations
immediately prior to the Change-in-Control, or, in the event
the Executive consents to any such relocation of the
Corporation's principal executive offices, the failure by the
Corporation to pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating
to a change of the Executive's principal residence in
connection with such relocation and to indemnify the Executive
against any loss (defined as the difference between the actual
sale price of such residence and the higher of (a) the
Executive's aggregate investment in such residence or (b) the
fair market value of such residence as determined by a real
estate appraiser designated by the Executive and reasonably
satisfactory to the Corporation) realized in the sale of the
Executive's principal residence in connection with any such
change of residence;
(v) the failure by the Corporation to continue in effect any
benefit or compensation plan (including but not limited to the
Corporation's Long-Term Incentive Award Plan of 1983, Stock
Option Plan of 1978, the Employee Stock Option Plan of 1988,
an Executive Benefit Plan), pension plan, life insurance plan,
health and accident plan or disability plan in which the
Executive is participating immediately prior to the Change-in-
Control (provided, however, that there shall not be deemed to
be any such failure if the Corporation substitutes for the
discontinued plan, a plan providing the Executive with
substantially similar benefits), the taking of any action by
the Corporation which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits
under any of such plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive immediately
prior to the Change-in-Control, or the failure by the
Corporation to provide the Executive with the number of paid
vacation days to which the Executive is then entitled on the
basis of years of service with the Corporation in
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accordance with the Corporation's normal vacation policy all
as and to the extent they are in effect immediately prior to
the Change-in-Control;
(vi) the failure of the Corporation to obtain the assumption of
this Agreement by any successor as contemplated in Section
9(c) hereof; or
(vii) any purported termination of the employment of the
Executive by the Corporation which is not (A) due to the
Executive's Disability, death, Retirement (as hereinafter
defined) or in accordance with section 2 hereof, or (B)
effected pursuant to a Notice of Termination satisfying the
requirements of subsection (g) below;
(viii) notwithstanding the foregoing, it shall not be deemed Good
Reason for Termination if the Corporation, acting in good
faith, makes changes to any compensation or benefits plan or
program that is made available on a nondiscriminatory basis to
the salaried employees of the Corporation, which changes do
not apply disproportionately to the elected officers of the
Corporation or those persons then performing the functions
formerly performed by the elected officers of the Corporation.
(g) "Notice of Termination" shall mean a written statement which sets
forth the specific reason for termination and, if such is claimed to
be Cause for Termination, in reasonable detail the facts and
circumstances which indicate that such is Cause for Termination
together with notice of the time and place of the meeting of the
Board of Directors of the Corporation called to consider such matter
in accordance with section 2 hereof.
(h) "Options" shall mean any stock options issued pursuant to the
Corporation's Employee Stock Option Plan of 1988, Long-Term Incentive
Award Plan of 1983, Stock Option Plan of 1978 or any future stock
option plan.
(i) "Retirement" shall mean a termination of the Executive's employment
after age 65 or in accordance with any mandatory retirement
arrangement with respect to an earlier age agreed to by the
Executive.
(j) "Stock Appreciation Rights" shall mean any stock appreciation rights
issued pursuant to the Corporation's Employee Stock Option Plan of
1988, Long-Term Incentive Award Plan of 1983, Stock Option Plan of
1978 or any future stock appreciation rights plan.
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2. "Termination by the Corporation Due to Cause for Termination."
-----------------------------------------------------------
If the Corporation desires to terminate the Executive's employment due to
Cause for Termination, the Corporation shall first deliver a Notice of
Termination to the Executive. Thereafter, the Board of Directors at a
meeting held not less than two weeks nor more than four weeks after the
delivery of the Notice Of Termination shall consider whether cause for
Termination exists. Cause for Termination shall not be deemed to exist
under this Agreement unless and until the Board determines in good faith
by the affirmative vote of not less than three-quarters of the entire
membership of the Board that the Executive has engaged in conduct which is
Cause for Termination. Should the Board determine that Cause for
Termination exists, the Board may at that time or during a period of two
weeks thereafter terminate the Executive's employment due to Cause for
Termination by adopting at such time or during such period by a similar
three-quarters vote a resolution terminating the Executive's employment.
If the Board fails to adopt within such two-week period a resolution
terminating the Executive's employment, then the Corporation shall be
deemed to have waived its right to terminate the Executive due to those
circumstances which constituted the Cause for Termination previously found
to exist by the Board.
3. Termination Payments Following Change-in-Control.
------------------------------------------------
(a) If, during the term of this Agreement, a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall be terminated
(i) due to the Executive's death,
(ii) by the Executive unless terminated for Good Reason for
Termination, or
(iii) by the Corporation in accordance with section 2 hereof or
for Disability or Retirement, then the Corporation shall have
no obligations hereunder to the Executive and the only
obligations of the Corporation to the Executive shall be in
accordance with any other employment agreement applicable to
the Executive and the then various policies, practices and
benefit plans of the Corporation.
(b) If during the term of this Agreement both a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall have terminated other than under the circumstances above
described in Subsection 3(a), then the Corporation shall pay or cause
to be paid on or before the fifth day following the Date of
Termination in cash to the Executive the following sums:
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(i) any unpaid portion of the Executive's full base salary for
the period from the last period for which the Executive was
paid to the Date of Termination;
(ii) any then deferred portions of cash awards (including
deferred awards which but for this provision would not be
payable until subsequent to the Date of Termination) made to
the Executive under the Executive incentive Compensation Plan;
and
(iii) an amount as liquidated damages for lost future
remuneration equal to the product obtained by multiplying
(A) the lesser of
(1) three or
(2) a number equal to the number of calendar months
remaining from the Date of Termination to the date on
which the Executive is 65 years of age (or, if
earlier, the age agreed to by the Executive pursuant
to any prior arrangement) divided by twelve
times
(B) the sum of
(1) the greater of
(i) the Executive's base salary for the year in
effect on the Date of Termination (provided that
in the case of Termination for Good Reason by the
Executive the date immediately preceding the date
of the earliest event which gave rise to the
Termination for Good Reason by the Executive
shall be used instead of the Date of Termination)
or
(ii) the Executive's base salary for the year in
effect on the date of the Change-in-Control;
provided that "base salary for the year" shall be the
amount of base salary for the year established by the
Board of Directors at the beginning of the fiscal
year
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<PAGE>
in question in accordance with the compensation
policies and practices of the Corporation, without
regard to any reduction in the amount actually paid
to the Executive during such year as a result of any
plan of the Corporation to reduce compensation due to
economic considerations, and without regard to any
deferral of compensation payable to the Executive for
services rendered during such year to a subsequent
year.
plus
(2) the greater of
(i) the average annual cash award received by the
Executive under the Executive Incentive
Compensation Plan for the two calendar years
immediately preceding the Date of Termination
(provided that in the case of Termination for
Good Reason by the Executive the date immediately
preceding the date of the event which gave rise
to the Termination for Good Reason by the
Executive shall be used instead of the Date of
Termination;
or
(ii) the average annual cash award received by the
Executive under the Incentive Compensation Plan
for the two calendar years immediately preceding
the date of the Change-in-Control.
(c) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the
Executive pursuant to the terms of this Agreement or otherwise
(collectively the "Total Payments") would not be deductible, in whole
or part, as a result of section 280G of the Internal Revenue Code of
1986, as amended (the "Code") by the Corporation, an affiliate or
other person making such payment or providing such benefit, the
payments due under this Agreement (the "Contract Payments") shall be
reduced until no portion of the Total Payments is not deductible, or
the Contract Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Total Payments the receipt or
enjoyment of which you shall have effectively waived in writing prior
to the date of payment of the Contract Payments shall be taken into
account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to you
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<PAGE>
does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, (iii) the Contract Payments shall be
reduced only to the extent necessary so that the Total Payments
(other than those referred to in clauses (i) or (ii) in their
entirety constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion
of the tax counsel referred to in clause (ii); and (iv) the value of
any non-cash benefit or any deferred payment or benefit included in
the Total Payments shall be determined by the Corporation's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
4. Stock Appreciation Rights and Stock Options.
-------------------------------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant to
section 3(b) hereof, then, in lieu of Stock Appreciation Rights
granted to the Executive (and whether or not they are in tandem with
any Options, but provided that this subsection shall not apply to any
Stock Appreciation Rights in tandem with incentive stock options) that
were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination (which rights and any
related in tandem options shall be cancelled upon the making of the
payment hereafter described), the Executive shall receive an amount in
cash on or before the fifth day following the Date of Termination
equal to the difference, if positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of such stock appreciation rights
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's common stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination;
or
(2) the highest price paid per share for the
Corporation's common stock in the transaction
resulting in the actual Change-in-Control.
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<PAGE>
and
(ii) subtracting therefrom the aggregate of the products
obtained by multiplying the mean between the highest and
lowest quoted selling prices for the Corporation's Common
Stock on the composite tape for the New York Stock Exchange on
each date of grant of such Stock Appreciation Rights times the
number of such Stock Appreciation Rights granted on such date.
(b) If the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof then the Executive may elect, during the 60-day period
from and after a Change of Control (other than a Change of Control
initiated by the Executive), to surrender his rights in any of the
options granted to the Executive provided that this subsection shall
not apply to any Options accompanied by a Stock Appreciation Right
that were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination and, upon such
surrender, the Corporation shall pay to the Executive an amount of
cash with respect to each such option equal to the difference, if
positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of shares of common stock as to which the
option is exercisable
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's Common Stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination
or
(2) the highest price paid per share for Corporation's
Common Stock in the transaction resulting in the
actual Change-in-Control
and
(ii) subtracting therefrom the option price for such Shares of
Common Stock.
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(c) In the event the Executive's employment should terminate under
such circumstances as entitle the Executive to payments pursuant to
Section 3(b) hereof, the Corporation agrees to accelerate and make
immediately exercisable in full all unmatured options held by the
Executive at the Date of Termination, whether or not otherwise
exercisable, effective as of the Date of Termination. In the event
that the Executive has been granted Incentive Stock Options pursuant
to Section 422A(b)(7) of the Internal Revenue Code of 1986 (the
"Code") which would otherwise become immediately exercisable hereunder
but for the limitation imposed by Code Section 422A(b)(7), such
options shall only become exercisable as to the maximum number of
shares permitted by Code Section 422A(b)(7) and the balance of such
options shall become exercisable at the earliest date or dates
thereafter permitted by Code Section 422A(b)(7), with those options
with the lowest exercise prices becoming exercisable at the earliest
date or dates.
5. Retirement Benefits.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof, then, notwithstanding such termination, the
Executive shall be deemed to continue as an active employee
participant in the Corporation's pension plan for salaried employees,
and the benefits payable to him, his surviving spouse or contingent
annuitant shall be calculated as if he had been continuously employed
by the Corporation for those years (including parts thereof)
subsequent to the Date of Termination and prior to the earlier of (i)
three years subsequent to the Date of Termination, and (ii) the
Executive's death or attainment of age 65 (or, if earlier, the age
agreed to by the Executive pursuant to any prior arrangement), at the
covered remuneration set forth in the following sentences of this
subsection. The covered remuneration for any part of a year
remaining after the Date of Termination shall equal the number of
months remaining in such year times the sum determined pursuant to
section 3(b)(iv)(B) hereof and divided by twelve. The covered
remuneration for the first full credited year following the Date of
Termination shall equal the sum determined pursuant to section
3(b)(iv)(B) hereof. The covered remuneration for the first full
credited year after the first full credited year shall equal the sum
of (i) the covered remuneration for the immediately preceding year
plus (ii) the product of the Annual Salary Adjustment percentage for
such credited years times the covered remuneration for the
immediately preceding year.
(b) If for any reason whether by law or the terms of the Corporation's
pension plan, such pension plan cannot either use the above credited
years of service and remuneration above described in subsection 5(a)
for purposes of the Executive's pension benefits (including surviving
spouse and contingent annuitant benefits) or cannot pay the full
amount of benefits which would result from the foregoing subsections,
then the Corporation hereby contractually agrees to pay the
difference between
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(i) the benefits which would be payable if the pension
plan had been able to pay such benefits based upon the
credited years of service and covered remuneration above
described in subsection 5(a),
and
(ii) the benefits, if any, actually paid to the Executive, his
surviving spouse or contingent annuitant by the pension plan.
The Corporation shall not be required to fund its obligation to pay
the foregoing difference.
6. Other Benefit Plans.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof and if the Executive is a participant in the
Corporation's Executive Benefit Plan (or a plan providing comparable
benefits) shall be in effect prior to the Change-in-Control, then the
Executive will be deemed for purposes of such Plan (or, if
applicable, the plan providing comparable benefits) to have
continuously remained in the employ of the Corporation until the
earlier of (i) three years subsequent to the Date of Termination, and
(ii) his death or attainment of age 65 (or the age agreed to by the
Executive pursuant to any prior arrangement), at a total compensation
equal to his total compensation in effect on the Date of Termination
(provided that in the case of Termination for Good Reason by the
Executive the date immediately preceding the date of the earliest
event which gave rise to the Termination for Good Reason by the
Executive shall be used instead of the Date of Termination) and to
have made any required contributions due thereunder. The Executive
will be eligible to receive all benefits under such Plan (or, if
applicable, the plan providing comparable benefits) payable as though
he had so remained in the Corporation's employ and had made any
required contributions notwithstanding that he neither was so
employed nor made any such contributions.
(b) Except with respect to (i) any Stock Appreciation Rights and Stock
Options, as to which payment is provided in Section 4(a) hereof, (ii)
the Corporation's pension plan, which is governed by paragraph 5
hereof, (iii) the Executive Benefit Plan, and (iv) the Incentive
Compensation Plan, the Executive shall be deemed for purposes of all
employee benefits to have remained in the continuous employment of
the Corporation for a period of three years following the Date of
Termination and shall be entitled to all of the benefits provided by
such plans as though he had so remained in the employment of the
Corporation.
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<PAGE>
(c) If for any reason, whether by law or provisions of the Corporation's
employee benefit plans, any benefits which the Executive would be
entitled to under the foregoing subsections of this section 6 cannot
be paid pursuant to such employee benefit plans, then the Corporation
hereby contractually agrees to pay to the Executive the difference
between the benefits which the Executive would have received in
accordance with the foregoing subsections of this section if the
relevant employee benefit plan could have paid such benefit and the
amount of benefits, if any, actually paid by such employee benefit
plan. The Corporation shall not be required to fund its obligation
to pay the foregoing difference.
7. Other Employment.
----------------
(a) The Executive shall have no duty to seek any other employment after
termination of his employment with the Corporation and the
Corporation hereby waives and agrees not to raise or use any defense
based on the position that the Executive had a duty to mitigate or
reduce the amounts due him hereunder by seeking other employment
whether suitable or unsuitable.
(b) Should the Executive obtain other employment, then the only effect of
such on the obligations of the Corporation hereunder shall be that
the Corporation shall be entitled to credit against any payments
which would otherwise be made pursuant to sections 5, 6(a) or 6(b)
hereof, any comparable payments to which the Executive is entitled
under the pension or other employee benefit plans maintained by the
Executive's other employers after termination of his employment with
the Corporation. In no event shall any sums received by the
Executive from any other employment be credited against or otherwise
reduce the amounts payable by the Corporation pursuant to Sections 3
or 4 hereof.
8. Term.
----
(a) This Agreement shall be for a term expiring August 31, 1998 and
shall automatically be extended for successive five year terms at the
end of each preceding term unless termination occurs pursuant to
subsection (b) or (c) below, whichever is applicable.
(b) If a Change-in-Control has occurred, this Agreement shall remain in
effect until terminated on the date which is three years from the
Change-in-Control.
(c) If a Change-in-Control has not occurred, this Agreement shall
terminate if the Executive's employment with the Corporation
terminates for any reason whether such termination of employment is
by the Corporation or
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by the Executive. Otherwise, prior to a Change-in-Control, this
Agreement may only be terminated by the Corporation upon the giving
by the Corporation of notice of termination at least thirty days
prior to the end of the then term, in which event this Agreement
shall terminate at the end of such term.
9. Miscellaneous.
-------------
(a) This Agreement shall be construed under the laws of the Commonwealth
of Pennsylvania.
(b) This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof and may only be
amended or modified by written agreement signed by the parties
hereto.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation,
by agreement in form and substance satisfactory to the executive, to
expressly assume and agree to perform this Agreement in the same
manner required of the Corporation and to perform it as if no such
succession had taken place. Failure of the Corporation to obtain
such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive
to terminate employment due to Good Reason for Termination. As used
in this Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for
in this subsection (c) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Executive or his legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there be no such designee, to his estate.
(e) Any notice or other communication provided for in this Agreement
shall be in writing and, unless otherwise expressly stated herein,
shall be deemed to have been duly given if mailed by United States
registered mail, return receipt requested, postage prepaid addressed
in the case of the Executive to his office at the Corporation with a
copy to his residence and in the case of the Corporation to its
principal executive offices, attention of the Chief Executive
Officer.
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(f) No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and approved by resolution of the
Board of Directors of the Corporation. No waiver by either party
hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. Except for any employment agreement with the
Executive, no agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this
Agreement. To the extent that the provisions of this Agreement are
in conflict with any such employment agreement, following a Change-
in-Control the employment agreement shall automatically be amended in
accordance with this Agreement and the provisions of this Agreement
shall govern.
(g) The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
(h) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
ATTEST: DRAVO CORPORATION
JAMES J. PUHALA By JOHN R. MAJOR
------------------------ ---------------------------
CARL A. TORBERT, JR.
---------------------------
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AGREEMENT
This Agreement made as of this 1st day of June, 1993 by and between Dravo
Corporation, a Pennsylvania corporation (the "Corporation") and Ernest F.
Ladd, III, an individual residing in the State of Alabama and an employee of
the Corporation (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined that it
is in the best interests of the Corporation to enter into this Agreement with
the Executive; and
WHEREAS, the Executive desires to obtain certain benefits in the event
his employment is terminated due to a Change-in-Control of the Corporation;
NOW, THEREFORE, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. Definition of Terms. The following terms when used in this Agreement
-------------------
shall have the meaning hereafter set forth:
(a) "Annual Salary Adjustment Percentage" shall mean the mean average
percentage increase in base salary for all elected officers of the
Corporation during the two full calendar years immediately preceding
the time to which such percentage is being applied; provided,
however, that if after a Change-in-Control, as hereinafter defined,
there should be a significant change in the number of elected
officers of the Corporation or in the manner in which they are
compensated, then the foregoing definition shall be changed by
substituting for the phrase "elected officers of the Corporation" the
phrase "persons then performing the functions formerly performed by
the elected officers of the Corporation."
(b) "Cause for Termination" shall mean
(i) the deliberate and intentional failure by the Executive to
devote substantially his entire business time and best efforts to
the performance of his duties (other than any such failure
resulting from the Executive's incapacity due to physical or
mental illness or disability) after a demand for substantial
performance is delivered to the Executive by the Board of
Directors of the Corporation which specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties,
or
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(ii) the deliberate and intentional engaging by the Executive in
gross misconduct materially and demonstrably injurious to the
Corporation.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be considered "deliberate and intentional"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was
in the best interests of the Corporation.
(c) "Change-in-Control" shall mean a change in control of the Corporation
of such a nature that it would be required to be reported by the
Corporation in response to item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof ("Exchange Act"); provided, however, that
without respect to the foregoing, such a change in control shall be
deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities;
or
(ii) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Corporation (the "Board") cease for any reason to
constitute at least a Majority thereof unless the election, or
the nomination for election by the Corporation's shareholders,
of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period.
(d) "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given to the
Executive (provided that the Executive shall not have returned
to the performance of the Executive's duties on a full time
basis during such thirty (30) day period);
(ii) if the Executive's employment terminates due to his death
or Retirement, the date of death or Retirement, respectively;
(iii) if the Executive terminates employment upon Good Reason
for Termination, the date specified for termination in any
notice delivered to the Corporation by the Executive; or
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(iv) if the Executive's employment is terminated for any
other reason, the date on which a termination becomes
effective pursuant to a Notice of Termination; provided,
however, that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected).
(e) "Disability" shall mean such incapacity due to physical or mental
illness or injury as causes the Executive to be absent from his
principal office for the entire portion of 90 consecutive business
days.
(f) "Good Reason for Termination" shall mean:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties inconsistent with
his positions, duties, responsibilities and status with the
Corporation immediately prior to a Change-in-Control, or a
change in his reporting responsibilities, titles or offices as
in effect immediately prior to a Change-in-Control, or any
removal of the executive from or any failure to re-elect the
Executive to any of such positions, except in connection with
the termination of the Executive's employment due to a Cause
for Termination, Disability or Retirement (as hereinafter
defined) or as a result of the Executive's death;
(ii) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change-in-Control
or as the same may be increased from time to time or the
failure by the Corporation to increase such base salary each
year after the year in which the Change-in-Control occurs by
an amount which at least equals, on a percentage basis, the
Annual Salary Adjustment Percentage;
(iii) a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation's
Incentive Compensation Plan as the same may from time to time
prior to a Change-in-Control be modified or superseded by
another plan (the "Incentive Compensation Plan"), or a failure
by the Corporation to continue the Executive as a participant
in the Incentive Compensation Plan on at least the basis and
according
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to the standards in effect immediately prior to the Change-in-
Control or to pay the Executive when due any deferred portion
of a previous award under the Incentive Compensation Plan;
(iv) the Corporation's requiring the Executive to be based
anywhere other than the Corporation's executive offices at
which the Executive has his principal office immediately prior
to the Change-in-Control, except for required travel on the
Corporation's business to an extent substantially consistent
with the Executive's present business travel obligations
immediately prior to the Change-in-Control, or, in the event
the Executive consents to any such relocation of the
Corporation's principal executive offices, the failure by the
Corporation to pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating
to a change of the Executive's principal residence in
connection with such relocation and to indemnify the Executive
against any loss (defined as the difference between the actual
sale price of such residence and the higher of (a) the
Executive's aggregate investment in such residence or (b) the
fair market value of such residence as determined by a real
estate appraiser designated by the Executive and reasonably
satisfactory to the Corporation) realized in the sale of the
Executive's principal residence in connection with any such
change of residence;
(v) the failure by the Corporation to continue in effect any
benefit or compensation plan (including but not limited to the
Corporation's Long-Term Incentive Award Plan of 1983, Stock
Option Plan of 1978, the Employee Stock Option Plan of 1988,
an Executive Benefit Plan), pension plan, life insurance plan,
health and accident plan or disability plan in which the
Executive is participating immediately prior to the Change-in-
Control (provided, however, that there shall not be deemed to
be any such failure if the Corporation substitutes for the
discontinued plan, a plan providing the Executive with
substantially similar benefits), the taking of any action by
the Corporation which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits
under any of such plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive immediately
prior to the Change-in-Control, or the failure by the
Corporation to provide the Executive with the number of paid
vacation days to which the Executive is then entitled on the
basis of years of service with the Corporation in accordance
with the Corporation's normal vacation policy all as and to
the extent they are in effect immediately prior to the Change-
in-Control;
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(vi) the failure of the Corporation to obtain the
assumption of this Agreement by any successor as contemplated
in Section 9(c) hereof; or
(vii) any purported termination of the employment of the
Executive by the Corporation which is not (A) due to the
Executive's Disability, death, Retirement (as hereinafter
defined) or in accordance with section 2 hereof, or (B)
effected pursuant to a Notice of Termination satisfying the
requirements of subsection (g) below;
(viii) notwithstanding the foregoing, it shall not be deemed Good
Reason for Termination if the Corporation, acting in good
faith, makes changes to any compensation or benefits plan or
program that is made available on a nondiscriminatory basis to
the salaried employees of the Corporation, which changes do
not apply disproportionately to the elected officers of the
Corporation or those persons then performing the functions
formerly performed by the elected officers of the Corporation.
(g) "Notice of Termination" shall mean a written statement which sets
forth the specific reason for termination and, if such is claimed to
be Cause for Termination, in reasonable detail the facts and
circumstances which indicate that such is Cause for Termination
together with notice of the time and place of the meeting of the
Board of Directors of the Corporation called to consider such matter
in accordance with section 2 hereof.
(h) "Options" shall mean any stock options issued pursuant to the
Corporation's Employee Stock Option Plan of 1988, Long-Term Incentive
Award Plan of 1983, Stock Option Plan of 1978 or any future stock
option plan.
(i) "Retirement" shall mean a termination of the Executive's employment
after age 65 or in accordance with any mandatory retirement
arrangement with respect to an earlier age agreed to by the
Executive.
(j) "Stock Appreciation Rights" shall mean any stock appreciation rights
issued pursuant to the Corporation's Employee Stock Option Plan of
1988, Long-Term Incentive Award Plan of 1983, Stock Option Plan of
1978 or any future stock appreciation rights plan.
2. "Termination by the Corporation Due to Cause for Termination."
-----------------------------------------------------------
If the Corporation desires to terminate the Executive's employment due to
Cause for Termination, the Corporation shall first deliver a Notice of
Termination to the Executive. Thereafter, the Board of Directors at a
meeting held not less than two weeks nor more than four weeks after the
delivery of the Notice Of
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<PAGE>
Termination shall consider whether cause for Termination exists. Cause
for Termination shall not be deemed to exist under this Agreement unless
and until the Board determines in good faith by the affirmative vote of
not less than three-quarters of the entire membership of the Board that
the Executive has engaged in conduct which is Cause for Termination.
Should the Board determine that Cause for Termination exists, the Board
may at that time or during a period of two weeks thereafter terminate the
Executive's employment due to Cause for Termination by adopting at such
time or during such period by a similar three-quarters vote a resolution
terminating the Executive's employment. If the Board fails to adopt within
such two-week period a resolution terminating the Executive's employment,
then the Corporation shall be deemed to have waived its right to terminate
the Executive due to those circumstances which constituted the Cause for
Termination previously found to exist by the Board.
3. Termination Payments Following Change-in-Control.
------------------------------------------------
(a) If, during the term of this Agreement, a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall be terminated
(i) due to the Executive's death,
(ii) by the Executive unless terminated for Good Reason for
Termination, or
(iii) by the Corporation in accordance with section 2 hereof or
for Disability or Retirement, then the Corporation shall have
no obligations hereunder to the Executive and the only
obligations of the Corporation to the Executive shall be in
accordance with any other employment agreement applicable to
the Executive and the then various policies, practices and
benefit plans of the Corporation.
(b) If during the term of this Agreement both a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall have terminated other than under the circumstances above
described in Subsection 3(a), then the Corporation shall pay or cause
to be paid on or before the fifth day following the Date of
Termination in cash to the Executive the following sums:
(i) any unpaid portion of the Executive's full base salary for
the period from the last period for which the Executive was
paid to the Date of Termination;
(ii) any then deferred portions of cash awards (including
deferred awards which but for this provision would not be
payable until
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<PAGE>
subsequent to the Date of Termination) made to the Executive
under the Executive incentive Compensation Plan; and
(iii) an amount as liquidated damages for lost future
remuneration equal to the product obtained by multiplying
(A) the lesser of
(1) three or
(2) a number equal to the number of calendar months
remaining from the Date of Termination to the date on
which the Executive is 65 years of age (or, if
earlier, the age agreed to by the Executive pursuant
to any prior arrangement) divided by twelve
times
(B) the sum of
(1) the greater of
(i) the Executive's base salary for the year in
effect on the Date of Termination (provided that
in the case of Termination for Good Reason by the
Executive the date immediately preceding the date
of the earliest event which gave rise to the
Termination for Good Reason by the Executive
shall be used instead of the Date of Termination)
or
(ii) the Executive's base salary for the year in
effect on the date of the Change-in-Control;
provided that "base salary for the year" shall be the
amount of base salary for the year established by the
Board of Directors at the beginning of the fiscal
year in question in accordance with the compensation
policies and practices of the Corporation, without
regard to any reduction in the amount actually paid
to the Executive during such year as a result of any
plan of the Corporation to reduce compensation due to
economic considerations, and without regard to
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<PAGE>
any deferral of compensation payable to the Executive
for services rendered during such year to a
subsequent year.
plus
(2) the greater of
(i) the average annual cash award received by the
Executive under the Executive Incentive
Compensation Plan for the two calendar years
immediately preceding the Date of Termination
(provided that in the case of Termination for
Good Reason by the Executive the date immediately
preceding the date of the event which gave rise
to the Termination for Good Reason by the
Executive shall be used instead of the Date of
Termination;
or
(ii) the average annual cash award received by the
Executive under the Incentive Compensation Plan
for the two calendar years immediately preceding
the date of the Change-in-Control.
(c) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the
Executive pursuant to the terms of this Agreement or otherwise
(collectively the "Total Payments") would not be deductible, in whole
or part, as a result of section 280G of the Internal Revenue Code of
1986, as amended (the "Code") by the Corporation, an affiliate or
other person making such payment or providing such benefit, the
payments due under this Agreement (the "Contract Payments") shall be
reduced until no portion of the Total Payments is not deductible, or
the Contract Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Total Payments the receipt or
enjoyment of which you shall have effectively waived in writing prior
to the date of payment of the Contract Payments shall be taken into
account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to you does not
constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, (iii) the Contract Payments shall be reduced
only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii) in their entirety constitute
reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4) of the Code or are otherwise not
subject to disallowance as
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<PAGE>
deductions, in the opinion of the tax counsel referred to in clause
(ii); and (iv) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be determined
by the Corporation's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
4. Stock Appreciation Rights and Stock Options.
-------------------------------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant to
section 3(b) hereof, then, in lieu of Stock Appreciation Rights
granted to the Executive (and whether or not they are in tandem with
any Options, but provided that this subsection shall not apply to any
Stock Appreciation Rights in tandem with incentive stock options) that
were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination (which rights and any
related in tandem options shall be cancelled upon the making of the
payment hereafter described), the Executive shall receive an amount in
cash on or before the fifth day following the Date of Termination
equal to the difference, if positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of such stock appreciation rights
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's common stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination;
or
(2) the highest price paid per share for the
Corporation's common stock in the transaction
resulting in the actual Change-in-Control.
and
(ii) subtracting therefrom the aggregate of the products
obtained by multiplying the mean between the highest and
lowest quoted selling prices for the Corporation's Common
Stock on the
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<PAGE>
composite tape for the New York Stock Exchange on each date of
grant of such Stock Appreciation Rights times the number of
such Stock Appreciation Rights granted on such date.
(b) If the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof then the Executive may elect, during the 60-day period
from and after a Change of Control (other than a Change of Control
initiated by the Executive), to surrender his rights in any of the
options granted to the Executive provided that this subsection shall
not apply to any Options accompanied by a Stock Appreciation Right
that were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination and, upon such
surrender, the Corporation shall pay to the Executive an amount of
cash with respect to each such option equal to the difference, if
positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of shares of common stock as to which the
option is exercisable
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's Common Stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination
or
(2) the highest price paid per share for Corporation's
Common Stock in the transaction resulting in the
actual Change-in-Control
and
(ii) subtracting therefrom the option price for such Shares of
Common Stock.
(c) In the event the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof, the Corporation agrees to accelerate and make immediately
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<PAGE>
exercisable in full all unmatured options held by the Executive at the
Date of Termination, whether or not otherwise exercisable, effective
as of the Date of Termination. In the event that the Executive has
been granted Incentive Stock Options pursuant to Section 422A(b)(7) of
the Internal Revenue Code of 1986 (the "Code") which would otherwise
become immediately exercisable hereunder but for the limitation
imposed by Code Section 422A(b)(7), such options shall only become
exercisable as to the maximum number of shares permitted by Code
Section 422A(b)(7) and the balance of such options shall become
exercisable at the earliest date or dates thereafter permitted by Code
Section 422A(b)(7), with those options with the lowest exercise prices
becoming exercisable at the earliest date or dates.
5. Retirement Benefits.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof, then, notwithstanding such termination, the
Executive shall be deemed to continue as an active employee
participant in the Corporation's pension plan for salaried employees,
and the benefits payable to him, his surviving spouse or contingent
annuitant shall be calculated as if he had been continuously employed
by the Corporation for those years (including parts thereof)
subsequent to the Date of Termination and prior to the earlier of (i)
three years subsequent to the Date of Termination, and (ii) the
Executive's death or attainment of age 65 (or, if earlier, the age
agreed to by the Executive pursuant to any prior arrangement), at the
covered remuneration set forth in the following sentences of this
subsection. The covered remuneration for any part of a year
remaining after the Date of Termination shall equal the number of
months remaining in such year times the sum determined pursuant to
section 3(b)(iv)(B) hereof and divided by twelve. The covered
remuneration for the first full credited year following the Date of
Termination shall equal the sum determined pursuant to section
3(b)(iv)(B) hereof. The covered remuneration for the first full
credited year after the first full credited year shall equal the sum
of (i) the covered remuneration for the immediately preceding year
plus (ii) the product of the Annual Salary Adjustment percentage for
such credited years times the covered remuneration for the
immediately preceding year.
(b) If for any reason whether by law or the terms of the Corporation's
pension plan, such pension plan cannot either use the above credited
years of service and remuneration above described in subsection 5(a)
for purposes of the Executive's pension benefits (including surviving
spouse and contingent annuitant benefits) or cannot pay the full
amount of benefits which would result from the foregoing subsections,
then the Corporation hereby contractually agrees to pay the
difference between
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(i) the benefits which would be payable if the pension
plan had been able to pay such benefits based upon the
credited years of service and covered remuneration above
described in subsection 5(a),
and
(ii) the benefits, if any, actually paid to the Executive, his
surviving spouse or contingent annuitant by the pension plan.
The Corporation shall not be required to fund its obligation to pay
the foregoing difference.
6. Other Benefit Plans.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof and if the Executive is a participant in the
Corporation's Executive Benefit Plan (or a plan providing comparable
benefits) shall be in effect prior to the Change-in-Control, then the
Executive will be deemed for purposes of such Plan (or, if
applicable, the plan providing comparable benefits) to have
continuously remained in the employ of the Corporation until the
earlier of (i) three years subsequent to the Date of Termination, and
(ii) his death or attainment of age 65 (or the age agreed to by the
Executive pursuant to any prior arrangement), at a total compensation
equal to his total compensation in effect on the Date of Termination
(provided that in the case of Termination for Good Reason by the
Executive the date immediately preceding the date of the earliest
event which gave rise to the Termination for Good Reason by the
Executive shall be used instead of the Date of Termination) and to
have made any required contributions due thereunder. The Executive
will be eligible to receive all benefits under such Plan (or, if
applicable, the plan providing comparable benefits) payable as though
he had so remained in the Corporation's employ and had made any
required contributions notwithstanding that he neither was so
employed nor made any such contributions.
(b) Except with respect to (i) any Stock Appreciation Rights and Stock
Options, as to which payment is provided in Section 4(a) hereof, (ii)
the Corporation's pension plan, which is governed by paragraph 5
hereof, (iii) the Executive Benefit Plan, and (iv) the Incentive
Compensation Plan, the Executive shall be deemed for purposes of all
employee benefits to have remained in the continuous employment of
the Corporation for a period of three years following the Date of
Termination and shall be entitled to all of the benefits provided by
such plans as though he had so remained in the employment of the
Corporation.
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<PAGE>
(c) If for any reason, whether by law or provisions of the Corporation's
employee benefit plans, any benefits which the Executive would be
entitled to under the foregoing subsections of this section 6 cannot
be paid pursuant to such employee benefit plans, then the Corporation
hereby contractually agrees to pay to the Executive the difference
between the benefits which the Executive would have received in
accordance with the foregoing subsections of this section if the
relevant employee benefit plan could have paid such benefit and the
amount of benefits, if any, actually paid by such employee benefit
plan. The Corporation shall not be required to fund its obligation
to pay the foregoing difference.
7. Other Employment.
----------------
(a) The Executive shall have no duty to seek any other employment after
termination of his employment with the Corporation and the
Corporation hereby waives and agrees not to raise or use any defense
based on the position that the Executive had a duty to mitigate or
reduce the amounts due him hereunder by seeking other employment
whether suitable or unsuitable.
(b) Should the Executive obtain other employment, then the only effect of
such on the obligations of the Corporation hereunder shall be that
the Corporation shall be entitled to credit against any payments
which would otherwise be made pursuant to sections 5, 6(a) or 6(b)
hereof, any comparable payments to which the Executive is entitled
under the pension or other employee benefit plans maintained by the
Executive's other employers after termination of his employment with
the Corporation. In no event shall any sums received by the
Executive from any other employment be credited against or otherwise
reduce the amounts payable by the Corporation pursuant to Sections 3
or 4 hereof.
8. Term.
----
(a) This Agreement shall be for a term expiring August 31, 1998 and
shall automatically be extended for successive five year terms at the
end of each preceding term unless termination occurs pursuant to
subsection (b) or (c) below, whichever is applicable.
(b) If a Change-in-Control has occurred, this Agreement shall remain in
effect until terminated on the date which is three years from the
Change-in-Control.
(c) If a Change-in-Control has not occurred, this Agreement shall
terminate if the Executive's employment with the Corporation
terminates for any reason whether such termination of employment is
by the Corporation or by the Executive. Otherwise, prior to a
Change-in-Control, this
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<PAGE>
Agreement may only be terminated by the Corporation upon the giving
by the Corporation of notice of termination at least thirty days
prior to the end of the then term, in which event this Agreement
shall terminate at the end of such term.
9. Miscellaneous.
-------------
(a) This Agreement shall be construed under the laws of the Commonwealth
of Pennsylvania.
(b) This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof and may only be
amended or modified by written agreement signed by the parties
hereto.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation,
by agreement in form and substance satisfactory to the executive, to
expressly assume and agree to perform this Agreement in the same
manner required of the Corporation and to perform it as if no such
succession had taken place. Failure of the Corporation to obtain
such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive
to terminate employment due to Good Reason for Termination. As used
in this Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for
in this subsection (c) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Executive or his legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there be no such designee, to his estate.
(e) Any notice or other communication provided for in this Agreement
shall be in writing and, unless otherwise expressly stated herein,
shall be deemed to have been duly given if mailed by United States
registered mail, return receipt requested, postage prepaid addressed
in the case of the Executive to his office at the Corporation with a
copy to his residence and in the case of the Corporation to its
principal executive offices, attention of the Chief Executive
Officer.
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<PAGE>
(f) No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and approved by resolution of the Board of
Directors of the Corporation. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. Except for any employment agreement with the Executive, no
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. To the
extent that the provisions of this Agreement are in conflict with any
such employment agreement, following a Change-in-Control the
employment agreement shall automatically be amended in accordance
with this Agreement and the provisions of this Agreement shall
govern.
(g) The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
(h) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
ATTEST: DRAVO CORPORATION
JAMES J. PUHALA By JOHN R. MAJOR
---------------------- -----------------------
ERNEST F. LADD III
--------------------------
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AGREEMENT
This Agreement made as of this 1st day of June, 1993 by and between Dravo
Corporation, a Pennsylvania corporation the Corporation") and Carl A. Gilbert,
an individual residing in the State of Alabama an employee of the Corporation
(the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined that it
is in the best interests of the Corporation to enter into this Agreement with
the Executive; and
WHEREAS, the Executive desires to obtain certain benefits in the event
his employment is terminated due to a Change-in-Control of the Corporation;
NOW, THEREFORE, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. Definition of Terms. The following terms when used in this Agreement
-------------------
shall have the meaning hereafter set forth:
(a) "Annual Salary Adjustment Percentage" shall mean the mean average
percentage increase in base salary for all elected officers of the
Corporation during the two full calendar years immediately preceding
the time to which such percentage is being applied; provided,
however, that if after a Change-in-Control, as hereinafter defined,
there should be a significant change in the number of elected
officers of the Corporation or in the manner in which they are
compensated, then the foregoing definition shall be changed by
substituting for the phrase "elected officers of the Corporation" the
phrase "persons then performing the functions formerly performed by
the elected officers of the Corporation."
(b) "Cause for Termination" shall mean
(i) the deliberate and intentional failure by the Executive to
devote substantially his entire business time and best efforts to
the performance of his duties (other than any such failure
resulting from the Executive's incapacity due to physical or
mental illness or disability) after a demand for substantial
performance is delivered to the Executive by the Board of
Directors of the Corporation which specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties,
or
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<PAGE>
(ii) the deliberate and intentional engaging by the Executive in
gross misconduct materially and demonstrably injurious to the
Corporation.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be considered "deliberate and intentional"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was
in the best interests of the Corporation.
(c) "Change-in-Control" shall mean a change in control of the Corporation
of such a nature that it would be required to be reported by the
Corporation in response to item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof ("Exchange Act"); provided, however, that
without respect to the foregoing, such a change in control shall be
deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities;
or
(ii) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Corporation (the "Board") cease for any reason to
constitute at least a Majority thereof unless the election, or
the nomination for election by the Corporation's shareholders,
of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period.
(d) "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given to the
Executive (provided that the Executive shall not have returned
to the performance of the Executive's duties on a full time
basis during such thirty (30) day period);
(ii) if the Executive's employment terminates due to his death
or Retirement, the date of death or Retirement, respectively;
(iii) if the Executive terminates employment upon Good Reason
for Termination, the date specified for termination in any
notice delivered to the Corporation by the Executive; or
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(iv) if the Executive's employment is terminated for any other
reason, the date on which a termination becomes effective
pursuant to a Notice of Termination; provided, however, that
if within thirty (30) days after any Notice of Termination is
given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
(e) "Disability" shall mean such incapacity due to physical or mental
illness or injury as causes the Executive to be absent from his
principal office for the entire portion of 90 consecutive business
days.
(f) "Good Reason for Termination" shall mean:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties inconsistent with
his positions, duties, responsibilities and status with the
Corporation immediately prior to a Change-in-Control, or a
change in his reporting responsibilities, titles or offices as
in effect immediately prior to a Change-in-Control, or any
removal of the executive from or any failure to re-elect the
Executive to any of such positions, except in connection with
the termination of the Executive's employment due to a Cause
for Termination, Disability or Retirement (as hereinafter
defined) or as a result of the Executive's death;
(ii) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change-in-Control
or as the same may be increased from time to time or the
failure by the Corporation to increase such base salary each
year after the year in which the Change-in-Control occurs by
an amount which at least equals, on a percentage basis, the
Annual Salary Adjustment Percentage;
(iii) a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation's
Incentive Compensation Plan as the same may from time to time
prior to a Change-in-Control be modified or superseded by
another plan (the "Incentive Compensation Plan"), or a failure
by the Corporation to continue the Executive as a participant
in the Incentive Compensation Plan on at least the basis and
according
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to the standards in effect immediately prior to the Change-in-
Control or to pay the Executive when due any deferred portion
of a previous award under the Incentive Compensation Plan;
(iv) the Corporation's requiring the Executive to be based
anywhere other than the Corporation's executive offices at
which the Executive has his principal office immediately prior
to the Change-in-Control, except for required travel on the
Corporation's business to an extent substantially consistent
with the Executive's present business travel obligations
immediately prior to the Change-in-Control, or, in the event
the Executive consents to any such relocation of the
Corporation's principal executive offices, the failure by the
Corporation to pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating
to a change of the Executive's principal residence in
connection with such relocation and to indemnify the Executive
against any loss (defined as the difference between the actual
sale price of such residence and the higher of (a) the
Executive's aggregate investment in such residence or (b) the
fair market value of such residence as determined by a real
estate appraiser designated by the Executive and reasonably
satisfactory to the Corporation) realized in the sale of the
Executive's principal residence in connection with any such
change of residence;
(v) the failure by the Corporation to continue in effect any
benefit or compensation plan (including but not limited to the
Corporation's Long-Term Incentive Award Plan of 1983, Stock
Option Plan of 1978, the Employee Stock Option Plan of 1988,
an Executive Benefit Plan), pension plan, life insurance plan,
health and accident plan or disability plan in which the
Executive is participating immediately prior to the Change-in-
Control (provided, however, that there shall not be deemed to
be any such failure if the Corporation substitutes for the
discontinued plan, a plan providing the Executive with
substantially similar benefits), the taking of any action by
the Corporation which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits
under any of such plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive immediately
prior to the Change-in-Control, or the failure by the
Corporation to provide the Executive with the number of paid
vacation days to which the Executive is then entitled on the
basis of years of service with the Corporation in accordance
with the Corporation's normal vacation policy all as and to
the extent they are in effect immediately prior to the Change-
in-Control;
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(vi) the failure of the Corporation to obtain the assumption of
this Agreement by any successor as contemplated in Section
9(c) hereof; or
(vii) any purported termination of the employment of the
Executive by the Corporation which is not (A) due to the
Executive's Disability, death, Retirement (as hereinafter
defined) or in accordance with section 2 hereof, or (B)
effected pursuant to a Notice of Termination satisfying the
requirements of subsection (g) below;
(viii) notwithstanding the foregoing, it shall not be deemed Good
Reason for Termination if the Corporation, acting in good
faith, makes changes to any compensation or benefits plan or
program that is made available on a nondiscriminatory basis to
the salaried employees of the Corporation, which changes do
not apply disproportionately to the elected officers of the
Corporation or those persons then performing the functions
formerly performed by the elected officers of the Corporation.
(g) "Notice of Termination" shall mean a written statement which sets
forth the specific reason for termination and, if such is claimed to
be Cause for Termination, in reasonable detail the facts and
circumstances which indicate that such is Cause for Termination
together with notice of the time and place of the meeting of the
Board of Directors of the Corporation called to consider such matter
in accordance with section 2 hereof.
(h) "Options" shall mean any stock options issued pursuant to the
Corporation's Employee Stock Option Plan of 1988, Long-Term Incentive
Award Plan of 1983, Stock Option Plan of 1978 or any future stock
option plan.
(i) "Retirement" shall mean a termination of the Executive's employment
after age 65 or in accordance with any mandatory retirement
arrangement with respect to an earlier age agreed to by the
Executive.
(j) "Stock Appreciation Rights" shall mean any stock appreciation rights
issued pursuant to the Corporation's Employee Stock Option Plan of
1988, Long-Term Incentive Award Plan of 1983, Stock Option Plan of
1978 or any future stock appreciation rights plan.
2. "Termination by the Corporation Due to Cause for Termination."
-----------------------------------------------------------
If the Corporation desires to terminate the Executive's employment due to
Cause for Termination, the Corporation shall first deliver a Notice of
Termination to the Executive. Thereafter, the Board of Directors at a
meeting held not less than two weeks nor more than four weeks after the
delivery of the Notice Of
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<PAGE>
Termination shall consider whether cause for Termination exists. Cause
for Termination shall not be deemed to exist under this Agreement unless
and until the Board determines in good faith by the affirmative vote of
not less than three-quarters of the entire membership of the Board that
the Executive has engaged in conduct which is Cause for Termination.
Should the Board determine that Cause for Termination exists, the Board
may at that time or during a period of two weeks thereafter terminate the
Executive's employment due to Cause for Termination by adopting at such
time or during such period by a similar three-quarters vote a resolution
terminating the Executive's employment. If the Board fails to adopt within
such two-week period a resolution terminating the Executive's employment,
then the Corporation shall be deemed to have waived its right to terminate
the Executive due to those circumstances which constituted the Cause for
Termination previously found to exist by the Board.
3. Termination Payments Following Change-in-Control.
------------------------------------------------
(a) If, during the term of this Agreement, a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall be terminated
(i) due to the Executive's death,
(ii) by the Executive unless terminated for Good Reason for
Termination, or
(iii) by the Corporation in accordance with section 2 hereof or
for Disability or Retirement, then the Corporation shall have
no obligations hereunder to the Executive and the only
obligations of the Corporation to the Executive shall be in
accordance with any other employment agreement applicable to
the Executive and the then various policies, practices and
benefit plans of the Corporation.
(b) If during the term of this Agreement both a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall have terminated other than under the circumstances above
described in Subsection 3(a), then the Corporation shall pay or cause
to be paid on or before the fifth day following the Date of
Termination in cash to the Executive the following sums:
(i) any unpaid portion of the Executive's full base salary for
the period from the last period for which the Executive was
paid to the Date of Termination;
(ii) any then deferred portions of cash awards (including
deferred awards which but for this provision would not be
payable until
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<PAGE>
subsequent to the Date of Termination) made to the Executive
under the Executive incentive Compensation Plan; and
(iii) an amount as liquidated damages for lost future
remuneration equal to the product obtained by multiplying
(A) the lesser of
(1) three or
(2) a number equal to the number of calendar months
remaining from the Date of Termination to the date on
which the Executive is 65 years of age (or, if
earlier, the age agreed to by the Executive pursuant
to any prior arrangement) divided by twelve
times
(B) the sum of
(1) the greater of
(i) the Executive's base salary for the year in
effect on the Date of Termination (provided that
in the case of Termination for Good Reason by the
Executive the date immediately preceding the date
of the earliest event which gave rise to the
Termination for Good Reason by the Executive
shall be used instead of the Date of Termination)
or
(ii) the Executive's base salary for the year in
effect on the date of the Change-in-Control;
provided that "base salary for the year" shall be the
amount of base salary for the year established by the
Board of Directors at the beginning of the fiscal
year in question in accordance with the compensation
policies and practices of the Corporation, without
regard to any reduction in the amount actually paid
to the Executive during such year as a result of any
plan of the Corporation to reduce compensation due to
economic considerations, and without regard to any
deferral of compensation payable to the
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Executive for services rendered during such year to a
subsequent year.
plus
(2) the greater of
(i) the average annual cash award received by the
Executive under the Executive Incentive
Compensation Plan for the two calendar years
immediately preceding the Date of Termination
(provided that in the case of Termination for
Good Reason by the Executive the date immediately
preceding the date of the event which gave rise
to the Termination for Good Reason by the
Executive shall be used instead of the Date of
Termination;
or
(ii) the average annual cash award received by the
Executive under the Incentive Compensation Plan
for the two calendar years immediately preceding
the date of the Change-in-Control.
(c) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the
Executive pursuant to the terms of this Agreement or otherwise
(collectively the "Total Payments") would not be deductible, in whole
or part, as a result of section 280G of the Internal Revenue Code of
1986, as amended (the "Code") by the Corporation, an affiliate or
other person making such payment or providing such benefit, the
payments due under this Agreement (the "Contract Payments") shall be
reduced until no portion of the Total Payments is not deductible, or
the Contract Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Total Payments the receipt or
enjoyment of which you shall have effectively waived in writing prior
to the date of payment of the Contract Payments shall be taken into
account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to you does not
constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, (iii) the Contract Payments shall be reduced
only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii) in their entirety constitute
reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4) of the Code or are otherwise not
subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (ii); and
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<PAGE>
(iv) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the
Corporation's independent auditors in accordance with the principles
of sections 280G(d)(3) and (4) of the Code.
4. Stock Appreciation Rights and Stock Options.
-------------------------------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant to
section 3(b) hereof, then, in lieu of Stock Appreciation Rights
granted to the Executive (and whether or not they are in tandem with
any Options, but provided that this subsection shall not apply to any
Stock Appreciation Rights in tandem with incentive stock options) that
were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination (which rights and any
related in tandem options shall be cancelled upon the making of the
payment hereafter described), the Executive shall receive an amount in
cash on or before the fifth day following the Date of Termination
equal to the difference, if positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of such stock appreciation rights
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's common stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination;
or
(2) the highest price paid per share for the
Corporation's common stock in the transaction
resulting in the actual Change-in-Control.
and
(ii) subtracting therefrom the aggregate of the products
obtained by multiplying the mean between the highest and
lowest quoted selling prices for the Corporation's Common
Stock on the composite tape for the New York Stock Exchange on
each date
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<PAGE>
of grant of such Stock Appreciation Rights times the number of
such Stock Appreciation Rights granted on such date.
(b) If the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof then the Executive may elect, during the 60-day period
from and after a Change of Control (other than a Change of Control
initiated by the Executive), to surrender his rights in any of the
options granted to the Executive provided that this subsection shall
not apply to any Options accompanied by a Stock Appreciation Right
that were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination and, upon such
surrender, the Corporation shall pay to the Executive an amount of
cash with respect to each such option equal to the difference, if
positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of shares of common stock as to which the
option is exercisable
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's Common Stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination
or
(2) the highest price paid per share for Corporation's
Common Stock in the transaction resulting in the
actual Change-in-Control
and
(ii) subtracting therefrom the option price for such Shares of
Common Stock.
(c) In the event the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof, the Corporation agrees to accelerate and make immediately
exercisable in full all unmatured options held by the Executive at the
Date
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<PAGE>
of Termination, whether or not otherwise exercisable, effective as of
the Date of Termination. In the event that the Executive has been
granted Incentive Stock Options pursuant to Section 422A(b)(7) of the
Internal Revenue Code of 1986 (the "Code") which would otherwise
become immediately exercisable hereunder but for the limitation
imposed by Code Section 422A(b)(7), such options shall only become
exercisable as to the maximum number of shares permitted by Code
Section 422A(b)(7) and the balance of such options shall become
exercisable at the earliest date or dates thereafter permitted by Code
Section 422A(b)(7), with those options with the lowest exercise prices
becoming exercisable at the earliest date or dates.
5. Retirement Benefits.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof, then, notwithstanding such termination, the
Executive shall be deemed to continue as an active employee
participant in the Corporation's pension plan for salaried employees,
and the benefits payable to him, his surviving spouse or contingent
annuitant shall be calculated as if he had been continuously employed
by the Corporation for those years (including parts thereof)
subsequent to the Date of Termination and prior to the earlier of (i)
three years subsequent to the Date of Termination, and (ii) the
Executive's death or attainment of age 65 (or, if earlier, the age
agreed to by the Executive pursuant to any prior arrangement), at the
covered remuneration set forth in the following sentences of this
subsection. The covered remuneration for any part of a year
remaining after the Date of Termination shall equal the number of
months remaining in such year times the sum determined pursuant to
section 3(b)(iv)(B) hereof and divided by twelve. The covered
remuneration for the first full credited year following the Date of
Termination shall equal the sum determined pursuant to section
3(b)(iv)(B) hereof. The covered remuneration for the first full
credited year after the first full credited year shall equal the sum
of (i) the covered remuneration for the immediately preceding year
plus (ii) the product of the Annual Salary Adjustment percentage for
such credited years times the covered remuneration for the
immediately preceding year.
(b) If for any reason whether by law or the terms of the Corporation's
pension plan, such pension plan cannot either use the above credited
years of service and remuneration above described in subsection 5(a)
for purposes of the Executive's pension benefits (including surviving
spouse and contingent annuitant benefits) or cannot pay the full
amount of benefits which would result from the foregoing subsections,
then the Corporation hereby contractually agrees to pay the
difference between
(i) the benefits which would be payable if the pension plan had
been able to pay such benefits based upon the credited years
of service and covered remuneration above described in
subsection 5(a),
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<PAGE>
and
(ii) the benefits, if any, actually paid to the Executive, his
surviving spouse or contingent annuitant by the pension plan.
The Corporation shall not be required to fund its obligation to pay
the foregoing difference.
6. Other Benefit Plans.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof and if the Executive is a participant in the
Corporation's Executive Benefit Plan (or a plan providing comparable
benefits) shall be in effect prior to the Change-in-Control, then the
Executive will be deemed for purposes of such Plan (or, if
applicable, the plan providing comparable benefits) to have
continuously remained in the employ of the Corporation until the
earlier of (i) three years subsequent to the Date of Termination, and
(ii) his death or attainment of age 65 (or the age agreed to by the
Executive pursuant to any prior arrangement), at a total compensation
equal to his total compensation in effect on the Date of Termination
(provided that in the case of Termination for Good Reason by the
Executive the date immediately preceding the date of the earliest
event which gave rise to the Termination for Good Reason by the
Executive shall be used instead of the Date of Termination) and to
have made any required contributions due thereunder. The Executive
will be eligible to receive all benefits under such Plan (or, if
applicable, the plan providing comparable benefits) payable as though
he had so remained in the Corporation's employ and had made any
required contributions notwithstanding that he neither was so
employed nor made any such contributions.
(b) Except with respect to (i) any Stock Appreciation Rights and Stock
Options, as to which payment is provided in Section 4(a) hereof, (ii)
the Corporation's pension plan, which is governed by paragraph 5
hereof, (iii) the Executive Benefit Plan, and (iv) the Incentive
Compensation Plan, the Executive shall be deemed for purposes of all
employee benefits to have remained in the continuous employment of
the Corporation for a period of three years following the Date of
Termination and shall be entitled to all of the benefits provided by
such plans as though he had so remained in the employment of the
Corporation.
(c) If for any reason, whether by law or provisions of the Corporation's
employee benefit plans, any benefits which the Executive would be
entitled to under the foregoing subsections of this section 6 cannot
be paid pursuant to such employee benefit plans, then the Corporation
hereby
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<PAGE>
contractually agrees to pay to the Executive the difference between
the benefits which the Executive would have received in accordance
with the foregoing subsections of this section if the relevant
employee benefit plan could have paid such benefit and the amount of
benefits, if any, actually paid by such employee benefit plan. The
Corporation shall not be required to fund its obligation to pay the
foregoing difference.
7. Other Employment.
----------------
(a) The Executive shall have no duty to seek any other employment after
termination of his employment with the Corporation and the
Corporation hereby waives and agrees not to raise or use any defense
based on the position that the Executive had a duty to mitigate or
reduce the amounts due him hereunder by seeking other employment
whether suitable or unsuitable.
(b) Should the Executive obtain other employment, then the only effect of
such on the obligations of the Corporation hereunder shall be that
the Corporation shall be entitled to credit against any payments
which would otherwise be made pursuant to sections 5, 6(a) or 6(b)
hereof, any comparable payments to which the Executive is entitled
under the pension or other employee benefit plans maintained by the
Executive's other employers after termination of his employment with
the Corporation. In no event shall any sums received by the
Executive from any other employment be credited against or otherwise
reduce the amounts payable by the Corporation pursuant to Sections 3
or 4 hereof.
8. Term.
----
(a) This Agreement shall be for a term expiring August 31, 1998 and
shall automatically be extended for successive five year terms at the
end of each preceding term unless termination occurs pursuant to
subsection (b) or (c) below, whichever is applicable.
(b) If a Change-in-Control has occurred, this Agreement shall remain in
effect until terminated on the date which is three years from the
Change-in-Control.
(c) If a Change-in-Control has not occurred, this Agreement shall
terminate if the Executive's employment with the Corporation
terminates for any reason whether such termination of employment is
by the Corporation or by the Executive. Otherwise, prior to a
Change-in-Control, this Agreement may only be terminated by the
Corporation upon the giving by the Corporation of notice of
termination at least thirty days prior to the end of the then term,
in which event this Agreement shall terminate at the end of such
term.
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9. Miscellaneous.
-------------
(a) This Agreement shall be construed under the laws of the Commonwealth
of Pennsylvania.
(b) This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof and may only be
amended or modified by written agreement signed by the parties
hereto.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation,
by agreement in form and substance satisfactory to the executive, to
expressly assume and agree to perform this Agreement in the same
manner required of the Corporation and to perform it as if no such
succession had taken place. Failure of the Corporation to obtain
such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive
to terminate employment due to Good Reason for Termination. As used
in this Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for
in this subsection (c) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Executive or his legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there be no such designee, to his estate.
(e) Any notice or other communication provided for in this Agreement
shall be in writing and, unless otherwise expressly stated herein,
shall be deemed to have been duly given if mailed by United States
registered mail, return receipt requested, postage prepaid addressed
in the case of the Executive to his office at the Corporation with a
copy to his residence and in the case of the Corporation to its
principal executive offices, attention of the Chief Executive
Officer.
(f) No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and approved by resolution of the Board of
Directors of the Corporation. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be
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<PAGE>
deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. Except for any
employment agreement with the Executive, no agreements or
representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. To the extent that the
provisions of this Agreement are in conflict with any such employment
agreement, following a Change-in-Control the employment agreement
shall automatically be amended in accordance with this Agreement and
the provisions of this Agreement shall govern.
(g) The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
(h) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
ATTEST: DRAVO CORPORATION
JAMES J. PUHALA By JOHN R. MAJOR
--------------------- ------------------------
CARL A. GILBERT
---------------------------
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<PAGE>
AGREEMENT
This Agreement made as of this 1st day of June, 1993 by and between Dravo
Corporation, a Pennsylvania corporation (the "Corporation") and H. Donovan
Ross, an individual residing in the State of Louisiana and an employee of the
Corporation (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined that it
is in the best interests of the Corporation to enter into this Agreement with
the Executive; and
WHEREAS, the Executive desires to obtain certain benefits in the event
his employment is terminated due to a Change-in-Control of the Corporation;
NOW, THEREFORE, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. Definition of Terms. The following terms when used in this Agreement
-------------------
shall have the meaning hereafter set forth:
(a) "Annual Salary Adjustment Percentage" shall mean the mean average
percentage increase in base salary for all elected officers of the
Corporation during the two full calendar years immediately preceding
the time to which such percentage is being applied; provided,
however, that if after a Change-in-Control, as hereinafter defined,
there should be a significant change in the number of elected
officers of the Corporation or in the manner in which they are
compensated, then the foregoing definition shall be changed by
substituting for the phrase "elected officers of the Corporation" the
phrase "persons then performing the functions formerly performed by
the elected officers of the Corporation."
(b) "Cause for Termination" shall mean
(i) the deliberate and intentional failure by the Executive to
devote substantially his entire business time and best efforts to
the performance of his duties (other than any such failure
resulting from the Executive's incapacity due to physical or
mental illness or disability) after a demand for substantial
performance is delivered to the Executive by the Board of
Directors of the Corporation which specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties,
or
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<PAGE>
(ii) the deliberate and intentional engaging by the Executive in
gross misconduct materially and demonstrably injurious to the
Corporation.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be considered "deliberate and intentional"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was
in the best interests of the Corporation.
(c) "Change-in-Control" shall mean a change in control of the Corporation
of such a nature that it would be required to be reported by the
Corporation in response to item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof ("Exchange Act"); provided, however, that
without respect to the foregoing, such a change in control shall be
deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities;
or
(ii) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Corporation (the "Board") cease for any reason to
constitute at least a Majority thereof unless the election, or
the nomination for election by the Corporation's shareholders,
of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period.
(d) "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given to the
Executive (provided that the Executive shall not have returned
to the performance of the Executive's duties on a full time
basis during such thirty (30) day period);
(ii) if the Executive's employment terminates due to his death
or Retirement, the date of death or Retirement, respectively;
(iii) if the Executive terminates employment upon Good Reason
for Termination, the date specified for termination in any
notice delivered to the Corporation by the Executive; or
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(iv) if the Executive's employment is terminated for any
other reason, the date on which a termination becomes
effective pursuant to a Notice of Termination; provided,
however, that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected).
(e) "Disability" shall mean such incapacity due to physical or mental
illness or injury as causes the Executive to be absent from his
principal office for the entire portion of 90 consecutive business
days.
(f) "Good Reason for Termination" shall mean:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties inconsistent with
his positions, duties, responsibilities and status with the
Corporation immediately prior to a Change-in-Control, or a
change in his reporting responsibilities, titles or offices as
in effect immediately prior to a Change-in-Control, or any
removal of the executive from or any failure to re-elect the
Executive to any of such positions, except in connection with
the termination of the Executive's employment due to a Cause
for Termination, Disability or Retirement (as hereinafter
defined) or as a result of the Executive's death;
(ii) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change-in-Control
or as the same may be increased from time to time or the
failure by the Corporation to increase such base salary each
year after the year in which the Change-in-Control occurs by
an amount which at least equals, on a percentage basis, the
Annual Salary Adjustment Percentage;
(iii) a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation's
Incentive Compensation Plan as the same may from time to time
prior to a Change-in-Control be modified or superseded by
another plan (the "Incentive Compensation Plan"), or a failure
by the Corporation to continue the Executive as a participant
in the Incentive Compensation Plan on at least the basis and
according
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to the standards in effect immediately prior to the Change-in-
Control or to pay the Executive when due any deferred portion
of a previous award under the Incentive Compensation Plan;
(iv) the Corporation's requiring the Executive to be based
anywhere other than the Corporation's executive offices at
which the Executive has his principal office immediately prior
to the Change-in-Control, except for required travel on the
Corporation's business to an extent substantially consistent
with the Executive's present business travel obligations
immediately prior to the Change-in-Control, or, in the event
the Executive consents to any such relocation of the
Corporation's principal executive offices, the failure by the
Corporation to pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating
to a change of the Executive's principal residence in
connection with such relocation and to indemnify the Executive
against any loss (defined as the difference between the actual
sale price of such residence and the higher of (a) the
Executive's aggregate investment in such residence or (b) the
fair market value of such residence as determined by a real
estate appraiser designated by the Executive and reasonably
satisfactory to the Corporation) realized in the sale of the
Executive's principal residence in connection with any such
change of residence;
(v) the failure by the Corporation to continue in effect any
benefit or compensation plan (including but not limited to the
Corporation's Long-Term Incentive Award Plan of 1983, Stock
Option Plan of 1978, the Employee Stock Option Plan of 1988,
an Executive Benefit Plan), pension plan, life insurance plan,
health and accident plan or disability plan in which the
Executive is participating immediately prior to the Change-in-
Control (provided, however, that there shall not be deemed to
be any such failure if the Corporation substitutes for the
discontinued plan, a plan providing the Executive with
substantially similar benefits), the taking of any action by
the Corporation which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits
under any of such plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive immediately
prior to the Change-in-Control, or the failure by the
Corporation to provide the Executive with the number of paid
vacation days to which the Executive is then entitled on the
basis of years of service with the Corporation in accordance
with the Corporation's normal vacation policy all as and to
the extent they are in effect immediately prior to the Change-
in-Control;
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(vi) the failure of the Corporation to obtain the
assumption of this Agreement by any successor as contemplated
in Section 9(c) hereof; or
(vii) any purported termination of the employment of the
Executive by the Corporation which is not (A) due to the
Executive's Disability, death, Retirement (as hereinafter
defined) or in accordance with section 2 hereof, or (B)
effected pursuant to a Notice of Termination satisfying the
requirements of subsection (g) below;
(viii) notwithstanding the foregoing, it shall not be deemed Good
Reason for Termination if the Corporation, acting in good
faith, makes changes to any compensation or benefits plan or
program that is made available on a nondiscriminatory basis to
the salaried employees of the Corporation, which changes do
not apply disproportionately to the elected officers of the
Corporation or those persons then performing the functions
formerly performed by the elected officers of the Corporation.
(g) "Notice of Termination" shall mean a written statement which sets
forth the specific reason for termination and, if such is claimed to
be Cause for Termination, in reasonable detail the facts and
circumstances which indicate that such is Cause for Termination
together with notice of the time and place of the meeting of the
Board of Directors of the Corporation called to consider such matter
in accordance with section 2 hereof.
(h) "Options" shall mean any stock options issued pursuant to the
Corporation's Employee Stock Option Plan of 1988, Long-Term Incentive
Award Plan of 1983, Stock Option Plan of 1978 or any future stock
option plan.
(i) "Retirement" shall mean a termination of the Executive's employment
after age 65 or in accordance with any mandatory retirement
arrangement with respect to an earlier age agreed to by the
Executive.
(j) "Stock Appreciation Rights" shall mean any stock appreciation rights
issued pursuant to the Corporation's Employee Stock Option Plan of
1988, Long-Term Incentive Award Plan of 1983, Stock Option Plan of
1978 or any future stock appreciation rights plan.
2. "Termination by the Corporation Due to Cause for Termination."
-----------------------------------------------------------
If the Corporation desires to terminate the Executive's employment due to
Cause for Termination, the Corporation shall first deliver a Notice of
Termination to the Executive. Thereafter, the Board of Directors at a
meeting held not less than two weeks nor more than four weeks after the
delivery of the Notice Of
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Termination shall consider whether cause for Termination exists. Cause
for Termination shall not be deemed to exist under this Agreement unless
and until the Board determines in good faith by the affirmative vote of
not less than three-quarters of the entire membership of the Board that
the Executive has engaged in conduct which is Cause for Termination.
Should the Board determine that Cause for Termination exists, the Board
may at that time or during a period of two weeks thereafter terminate the
Executive's employment due to Cause for Termination by adopting at such
time or during such period by a similar three-quarters vote a resolution
terminating the Executive's employment. If the Board fails to adopt within
such two-week period a resolution terminating the Executive's employment,
then the Corporation shall be deemed to have waived its right to terminate
the Executive due to those circumstances which constituted the Cause for
Termination previously found to exist by the Board.
3. Termination Payments Following Change-in-Control.
------------------------------------------------
(a) If, during the term of this Agreement, a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall be terminated
(i) due to the Executive's death,
(ii) by the Executive unless terminated for Good Reason for
Termination, or
(iii) by the Corporation in accordance with section 2 hereof or
for Disability or Retirement, then the Corporation shall have
no obligations hereunder to the Executive and the only
obligations of the Corporation to the Executive shall be in
accordance with any other employment agreement applicable to
the Executive and the then various policies, practices and
benefit plans of the Corporation.
(b) If during the term of this Agreement both a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall have terminated other than under the circumstances above
described in Subsection 3(a), then the Corporation shall pay or cause
to be paid on or before the fifth day following the Date of
Termination in cash to the Executive the following sums:
(i) any unpaid portion of the Executive's full base salary for
the period from the last period for which the Executive was
paid to the Date of Termination;
(ii) any then deferred portions of cash awards (including
deferred awards which but for this provision would not be
payable until
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<PAGE>
subsequent to the Date of Termination) made to the Executive
under the Executive incentive Compensation Plan; and
(iii) an amount as liquidated damages for lost future
remuneration equal to the product obtained by multiplying
(A) the lesser of
(1) three or
(2) a number equal to the number of calendar months
remaining from the Date of Termination to the date on
which the Executive is 65 years of age (or, if
earlier, the age agreed to by the Executive pursuant
to any prior arrangement) divided by twelve
times
(B) the sum of
(1) the greater of
(i) the Executive's base salary for the year in
effect on the Date of Termination (provided that
in the case of Termination for Good Reason by the
Executive the date immediately preceding the date
of the earliest event which gave rise to the
Termination for Good Reason by the Executive
shall be used instead of the Date of Termination)
or
(ii) the Executive's base salary for the year in
effect on the date of the Change-in-Control;
provided that "base salary for the year" shall be the
amount of base salary for the year established by the
Board of Directors at the beginning of the fiscal
year in question in accordance with the compensation
policies and practices of the Corporation, without
regard to any reduction in the amount actually paid
to the Executive during such year as a result of any
plan of the Corporation to reduce compensation due to
economic considerations, and without regard to any
deferral of compensation payable to the
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Executive for services rendered during such year to a
subsequent year.
plus
(2) the greater of
(i) the average annual cash award received by the
Executive under the Executive Incentive
Compensation Plan for the two calendar years
immediately preceding the Date of Termination
(provided that in the case of Termination for
Good Reason by the Executive the date immediately
preceding the date of the event which gave rise
to the Termination for Good Reason by the
Executive shall be used instead of the Date of
Termination;
or
(ii) the average annual cash award received by the
Executive under the Incentive Compensation Plan
for the two calendar years immediately preceding
the date of the Change-in-Control.
(c) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the
Executive pursuant to the terms of this Agreement or otherwise
(collectively the "Total Payments") would not be deductible, in whole
or part, as a result of section 280G of the Internal Revenue Code of
1986, as amended (the "Code") by the Corporation, an affiliate or
other person making such payment or providing such benefit, the
payments due under this Agreement (the "Contract Payments") shall be
reduced until no portion of the Total Payments is not deductible, or
the Contract Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Total Payments the receipt or
enjoyment of which you shall have effectively waived in writing prior
to the date of payment of the Contract Payments shall be taken into
account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to you does not
constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, (iii) the Contract Payments shall be reduced
only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii) in their entirety constitute
reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4) of the Code or are otherwise not
subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (ii); and
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<PAGE>
(iv) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the
Corporation's independent auditors in accordance with the principles
of sections 280G(d)(3) and (4) of the Code.
4. Stock Appreciation Rights and Stock Options.
-------------------------------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant to
section 3(b) hereof, then, in lieu of Stock Appreciation Rights
granted to the Executive (and whether or not they are in tandem with
any Options, but provided that this subsection shall not apply to any
Stock Appreciation Rights in tandem with incentive stock options) that
were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination (which rights and any
related in tandem options shall be cancelled upon the making of the
payment hereafter described), the Executive shall receive an amount in
cash on or before the fifth day following the Date of Termination
equal to the difference, if positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of such stock appreciation rights
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's common stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination;
or
(2) the highest price paid per share for the
Corporation's common stock in the transaction
resulting in the actual Change-in-Control.
and
(ii) subtracting therefrom the aggregate of the products
obtained by multiplying the mean between the highest and
lowest quoted selling prices for the Corporation's Common
Stock on the composite tape for the New York Stock Exchange on
each date
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<PAGE>
of grant of such Stock Appreciation Rights times the number of
such Stock Appreciation Rights granted on such date.
(b) If the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof then the Executive may elect, during the 60-day period
from and after a Change of Control (other than a Change of Control
initiated by the Executive), to surrender his rights in any of the
options granted to the Executive provided that this subsection shall
not apply to any Options accompanied by a Stock Appreciation Right
that were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination and, upon such
surrender, the Corporation shall pay to the Executive an amount of
cash with respect to each such option equal to the difference, if
positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of shares of common stock as to which the
option is exercisable
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's Common Stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination
or
(2) the highest price paid per share for Corporation's
Common Stock in the transaction resulting in the
actual Change-in-Control
and
(ii) subtracting therefrom the option price for such Shares of
Common Stock.
(c) In the event the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof, the Corporation agrees to accelerate and make immediately
exercisable in full all unmatured options held by the Executive at the
Date
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<PAGE>
of Termination, whether or not otherwise exercisable, effective as of
the Date of Termination. In the event that the Executive has been
granted Incentive Stock Options pursuant to Section 422A(b)(7) of the
Internal Revenue Code of 1986 (the "Code") which would otherwise
become immediately exercisable hereunder but for the limitation
imposed by Code Section 422A(b)(7), such options shall only become
exercisable as to the maximum number of shares permitted by Code
Section 422A(b)(7) and the balance of such options shall become
exercisable at the earliest date or dates thereafter permitted by Code
Section 422A(b)(7), with those options with the lowest exercise prices
becoming exercisable at the earliest date or dates.
5. Retirement Benefits.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof, then, notwithstanding such termination, the
Executive shall be deemed to continue as an active employee
participant in the Corporation's pension plan for salaried employees,
and the benefits payable to him, his surviving spouse or contingent
annuitant shall be calculated as if he had been continuously employed
by the Corporation for those years (including parts thereof)
subsequent to the Date of Termination and prior to the earlier of (i)
three years subsequent to the Date of Termination, and (ii) the
Executive's death or attainment of age 65 (or, if earlier, the age
agreed to by the Executive pursuant to any prior arrangement), at the
covered remuneration set forth in the following sentences of this
subsection. The covered remuneration for any part of a year
remaining after the Date of Termination shall equal the number of
months remaining in such year times the sum determined pursuant to
section 3(b)(iv)(B) hereof and divided by twelve. The covered
remuneration for the first full credited year following the Date of
Termination shall equal the sum determined pursuant to section
3(b)(iv)(B) hereof. The covered remuneration for the first full
credited year after the first full credited year shall equal the sum
of (i) the covered remuneration for the immediately preceding year
plus (ii) the product of the Annual Salary Adjustment percentage for
such credited years times the covered remuneration for the
immediately preceding year.
(b) If for any reason whether by law or the terms of the Corporation's
pension plan, such pension plan cannot either use the above credited
years of service and remuneration above described in subsection 5(a)
for purposes of the Executive's pension benefits (including surviving
spouse and contingent annuitant benefits) or cannot pay the full
amount of benefits which would result from the foregoing subsections,
then the Corporation hereby contractually agrees to pay the
difference between
(i) the benefits which would be payable if the pension plan had
been able to pay such benefits based upon the credited years
of service and covered remuneration above described in
subsection 5(a),
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<PAGE>
and
(ii) the benefits, if any, actually paid to the Executive, his
surviving spouse or contingent annuitant by the pension plan.
The Corporation shall not be required to fund its obligation to pay
the foregoing difference.
6. Other Benefit Plans.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof and if the Executive is a participant in the
Corporation's Executive Benefit Plan (or a plan providing comparable
benefits) shall be in effect prior to the Change-in-Control, then the
Executive will be deemed for purposes of such Plan (or, if
applicable, the plan providing comparable benefits) to have
continuously remained in the employ of the Corporation until the
earlier of (i) three years subsequent to the Date of Termination, and
(ii) his death or attainment of age 65 (or the age agreed to by the
Executive pursuant to any prior arrangement), at a total compensation
equal to his total compensation in effect on the Date of Termination
(provided that in the case of Termination for Good Reason by the
Executive the date immediately preceding the date of the earliest
event which gave rise to the Termination for Good Reason by the
Executive shall be used instead of the Date of Termination) and to
have made any required contributions due thereunder. The Executive
will be eligible to receive all benefits under such Plan (or, if
applicable, the plan providing comparable benefits) payable as though
he had so remained in the Corporation's employ and had made any
required contributions notwithstanding that he neither was so
employed nor made any such contributions.
(b) Except with respect to (i) any Stock Appreciation Rights and Stock
Options, as to which payment is provided in Section 4(a) hereof, (ii)
the Corporation's pension plan, which is governed by paragraph 5
hereof, (iii) the Executive Benefit Plan, and (iv) the Incentive
Compensation Plan, the Executive shall be deemed for purposes of all
employee benefits to have remained in the continuous employment of
the Corporation for a period of three years following the Date of
Termination and shall be entitled to all of the benefits provided by
such plans as though he had so remained in the employment of the
Corporation.
(c) If for any reason, whether by law or provisions of the Corporation's
employee benefit plans, any benefits which the Executive would be
entitled to under the foregoing subsections of this section 6 cannot
be paid pursuant to such employee benefit plans, then the Corporation
hereby
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contractually agrees to pay to the Executive the difference between
the benefits which the Executive would have received in accordance
with the foregoing subsections of this section if the relevant
employee benefit plan could have paid such benefit and the amount of
benefits, if any, actually paid by such employee benefit plan. The
Corporation shall not be required to fund its obligation to pay the
foregoing difference.
7. Other Employment.
----------------
(a) The Executive shall have no duty to seek any other employment after
termination of his employment with the Corporation and the
Corporation hereby waives and agrees not to raise or use any defense
based on the position that the Executive had a duty to mitigate or
reduce the amounts due him hereunder by seeking other employment
whether suitable or unsuitable.
(b) Should the Executive obtain other employment, then the only effect of
such on the obligations of the Corporation hereunder shall be that
the Corporation shall be entitled to credit against any payments
which would otherwise be made pursuant to sections 5, 6(a) or 6(b)
hereof, any comparable payments to which the Executive is entitled
under the pension or other employee benefit plans maintained by the
Executive's other employers after termination of his employment with
the Corporation. In no event shall any sums received by the
Executive from any other employment be credited against or otherwise
reduce the amounts payable by the Corporation pursuant to Sections 3
or 4 hereof.
8. Term.
----
(a) This Agreement shall be for a term expiring August 31, 1998 and
shall automatically be extended for successive five year terms at the
end of each preceding term unless termination occurs pursuant to
subsection (b) or (c) below, whichever is applicable.
(b) If a Change-in-Control has occurred, this Agreement shall remain in
effect until terminated on the date which is three years from the
Change-in-Control.
(c) If a Change-in-Control has not occurred, this Agreement shall
terminate if the Executive's employment with the Corporation
terminates for any reason whether such termination of employment is
by the Corporation or by the Executive. Otherwise, prior to a
Change-in-Control, this Agreement may only be terminated by the
Corporation upon the giving by the Corporation of notice of
termination at least thirty days prior to the end of the then term,
in which event this Agreement shall terminate at the end of such
term.
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9. Miscellaneous.
-------------
(a) This Agreement shall be construed under the laws of the Commonwealth
of Pennsylvania.
(b) This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof and may only be
amended or modified by written agreement signed by the parties
hereto.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation,
by agreement in form and substance satisfactory to the executive, to
expressly assume and agree to perform this Agreement in the same
manner required of the Corporation and to perform it as if no such
succession had taken place. Failure of the Corporation to obtain
such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive
to terminate employment due to Good Reason for Termination. As used
in this Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for
in this subsection (c) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Executive or his legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there be no such designee, to his estate.
(e) Any notice or other communication provided for in this Agreement
shall be in writing and, unless otherwise expressly stated herein,
shall be deemed to have been duly given if mailed by United States
registered mail, return receipt requested, postage prepaid addressed
in the case of the Executive to his office at the Corporation with a
copy to his residence and in the case of the Corporation to its
principal executive offices, attention of the Chief Executive
Officer.
(f) No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and approved by resolution of the Board of
Directors of the Corporation. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be
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deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. Except for any
employment agreement with the Executive, no agreements or
representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. To the extent that the
provisions of this Agreement are in conflict with any such employment
agreement, following a Change-in-Control the employment agreement
shall automatically be amended in accordance with this Agreement and
the provisions of this Agreement shall govern.
(g) The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
(h) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
ATTEST: DRAVO CORPORATION
JAMES J. PUHALA By JOHN R. MAJOR
---------------------- -------------------------
H. DONOVAN ROSS
----------------------------
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AGREEMENT
This Agreement made as of this 1st day of June, 1993 by and between Dravo
Corporation, a Pennsylvania corporation (the "Corporation") and John R. Major,
an individual residing in the State of Maryland and an employee of the
Corporation (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Corporation has determined that it
is in the best interests of the Corporation to enter into this Agreement with
the Executive; and
WHEREAS, the Executive desires to obtain certain benefits in the event
his employment is terminated due to a Change-in-Control of the Corporation;
NOW, THEREFORE, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. Definition of Terms. The following terms when used in this Agreement
-------------------
shall have the meaning hereafter set forth:
(a) "Annual Salary Adjustment Percentage" shall mean the mean average
percentage increase in base salary for all elected officers of the
Corporation during the two full calendar years immediately preceding
the time to which such percentage is being applied; provided,
however, that if after a Change-in-Control, as hereinafter defined,
there should be a significant change in the number of elected
officers of the Corporation or in the manner in which they are
compensated, then the foregoing definition shall be changed by
substituting for the phrase "elected officers of the Corporation" the
phrase "persons then performing the functions formerly performed by
the elected officers of the Corporation."
(b) "Cause for Termination" shall mean
(i) the deliberate and intentional failure by the Executive to
devote substantially his entire business time and best efforts to
the performance of his duties (other than any such failure
resulting from the Executive's incapacity due to physical or
mental illness or disability) after a demand for substantial
performance is delivered to the Executive by the Board of
Directors of the Corporation which specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties,
or
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(ii) the deliberate and intentional engaging by the Executive in
gross misconduct materially and demonstrably injurious to the
Corporation.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be considered "deliberate and intentional"
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was
in the best interests of the Corporation.
(c) "Change-in-Control" shall mean a change in control of the Corporation
of such a nature that it would be required to be reported by the
Corporation in response to item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof ("Exchange Act"); provided, however, that
without respect to the foregoing, such a change in control shall be
deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities;
or
(ii) during any period of three consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Corporation (the "Board") cease for any reason to
constitute at least a Majority thereof unless the election, or
the nomination for election by the Corporation's shareholders,
of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period.
(d) "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given to the
Executive (provided that the Executive shall not have returned
to the performance of the Executive's duties on a full time
basis during such thirty (30) day period);
(ii) if the Executive's employment terminates due to his death
or Retirement, the date of death or Retirement, respectively;
(iii) if the Executive terminates employment upon Good Reason
for Termination, the date specified for termination in any
notice delivered to the Corporation by the Executive; or
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(iv) if the Executive's employment is terminated for any
other reason, the date on which a termination becomes
effective pursuant to a Notice of Termination; provided,
however, that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected).
(e) "Disability" shall mean such incapacity due to physical or mental
illness or injury as causes the Executive to be absent from his
principal office for the entire portion of 90 consecutive business
days.
(f) "Good Reason for Termination" shall mean:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties inconsistent with
his positions, duties, responsibilities and status with the
Corporation immediately prior to a Change-in-Control, or a
change in his reporting responsibilities, titles or offices as
in effect immediately prior to a Change-in-Control, or any
removal of the executive from or any failure to re-elect the
Executive to any of such positions, except in connection with
the termination of the Executive's employment due to a Cause
for Termination, Disability or Retirement (as hereinafter
defined) or as a result of the Executive's death;
(ii) a reduction by the Corporation in the Executive's base
salary as in effect immediately prior to the Change-in-Control
or as the same may be increased from time to time or the
failure by the Corporation to increase such base salary each
year after the year in which the Change-in-Control occurs by
an amount which at least equals, on a percentage basis, the
Annual Salary Adjustment Percentage;
(iii) a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation's
Incentive Compensation Plan as the same may from time to time
prior to a Change-in-Control be modified or superseded by
another plan (the "Incentive Compensation Plan"), or a failure
by the Corporation to continue the Executive as a participant
in the Incentive Compensation Plan on at least the basis and
according
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<PAGE>
to the standards in effect immediately prior to the Change-in-
Control or to pay the Executive when due any deferred portion
of a previous award under the Incentive Compensation Plan;
(iv) the Corporation's requiring the Executive to be based
anywhere other than the Corporation's executive offices at
which the Executive has his principal office immediately prior
to the Change-in-Control, except for required travel on the
Corporation's business to an extent substantially consistent
with the Executive's present business travel obligations
immediately prior to the Change-in-Control, or, in the event
the Executive consents to any such relocation of the
Corporation's principal executive offices, the failure by the
Corporation to pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating
to a change of the Executive's principal residence in
connection with such relocation and to indemnify the Executive
against any loss (defined as the difference between the actual
sale price of such residence and the higher of (a) the
Executive's aggregate investment in such residence or (b) the
fair market value of such residence as determined by a real
estate appraiser designated by the Executive and reasonably
satisfactory to the Corporation) realized in the sale of the
Executive's principal residence in connection with any such
change of residence;
(v) the failure by the Corporation to continue in effect any
benefit or compensation plan (including but not limited to the
Corporation's Long-Term Incentive Award Plan of 1983, Stock
Option Plan of 1978, the Employee Stock Option Plan of 1988,
an Executive Benefit Plan), pension plan, life insurance plan,
health and accident plan or disability plan in which the
Executive is participating immediately prior to the Change-in-
Control (provided, however, that there shall not be deemed to
be any such failure if the Corporation substitutes for the
discontinued plan, a plan providing the Executive with
substantially similar benefits), the taking of any action by
the Corporation which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits
under any of such plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive immediately
prior to the Change-in-Control, or the failure by the
Corporation to provide the Executive with the number of paid
vacation days to which the Executive is then entitled on the
basis of years of service with the Corporation in accordance
with the Corporation's normal vacation policy all as and to
the extent they are in effect immediately prior to the Change-
in-Control;
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(vi) the failure of the Corporation to obtain the
assumption of this Agreement by any successor as contemplated
in Section 9(c) hereof; or
(vii) any purported termination of the employment of the
Executive by the Corporation which is not (A) due to the
Executive's Disability, death, Retirement (as hereinafter
defined) or in accordance with section 2 hereof, or (B)
effected pursuant to a Notice of Termination satisfying the
requirements of subsection (g) below;
(viii) notwithstanding the foregoing, it shall not be deemed Good
Reason for Termination if the Corporation, acting in good
faith, makes changes to any compensation or benefits plan or
program that is made available on a nondiscriminatory basis to
the salaried employees of the Corporation, which changes do
not apply disproportionately to the elected officers of the
Corporation or those persons then performing the functions
formerly performed by the elected officers of the Corporation.
(g) "Notice of Termination" shall mean a written statement which sets
forth the specific reason for termination and, if such is claimed to
be Cause for Termination, in reasonable detail the facts and
circumstances which indicate that such is Cause for Termination
together with notice of the time and place of the meeting of the
Board of Directors of the Corporation called to consider such matter
in accordance with section 2 hereof.
(h) "Options" shall mean any stock options issued pursuant to the
Corporation's Employee Stock Option Plan of 1988, Long-Term Incentive
Award Plan of 1983, Stock Option Plan of 1978 or any future stock
option plan.
(i) "Retirement" shall mean a termination of the Executive's employment
after age 65 or in accordance with any mandatory retirement
arrangement with respect to an earlier age agreed to by the
Executive.
(j) "Stock Appreciation Rights" shall mean any stock appreciation rights
issued pursuant to the Corporation's Employee Stock Option Plan of
1988, Long-Term Incentive Award Plan of 1983, Stock Option Plan of
1978 or any future stock appreciation rights plan.
2. "Termination by the Corporation Due to Cause for Termination."
-----------------------------------------------------------
If the Corporation desires to terminate the Executive's employment due to
Cause for Termination, the Corporation shall first deliver a Notice of
Termination to the Executive. Thereafter, the Board of Directors at a
meeting held not less than two weeks nor more than four weeks after the
delivery of the Notice Of
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Termination shall consider whether cause for Termination exists. Cause for
Termination shall not be deemed to exist under this Agreement unless and until
the Board determine in good faith by the affirmative vote of not less than
three-quarters of the entire membership of the Board that the Executive has
engaged in conduct which is Cause for Termination. Should the Board determine
that Cause for Termination exists, the Board may at that time or during a
period of two weeks thereafter terminate the Executive's employment due to
Cause for Termination by adopting at such time or during such period by a
similar three-quarters vote a resolution terminating the Executive's
employment. If the Board fails to adopt within such two-week period a
resolution terminating the Executive's employment, then the Corporation shall
be deemed to have waived its right to terminate the Executive due to those
circumstances which constituted the Cause for Termination previously found to
exist by the Board.
3. Termination Payments Following Change-in-Control.
------------------------------------------------
(a) If, during the term of this Agreement, a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall be terminated
(i) due to the Executive's death,
(ii) by the Executive unless terminated for Good Reason for
Termination, or
(iii) by the Corporation in accordance with section 2 hereof or
for Disability or Retirement, then the Corporation shall have
no obligations hereunder to the Executive and the only
obligations of the Corporation to the Executive shall be in
accordance with any other employment agreement applicable to
the Executive and the then various policies, practices and
benefit plans of the Corporation.
(b) If during the term of this Agreement both a Change-in-Control shall
have occurred and the Executive's employment with the Corporation
shall have terminated other than under the circumstances above
described in Subsection 3(a), then the Corporation shall pay or cause
to be paid on or before the fifth day following the Date of
Termination in cash to the Executive the following sums:
(i) any unpaid portion of the Executive's full base salary for
the period from the last period for which the Executive was
paid to the Date of Termination;
(ii) any then deferred portions of cash awards (including
deferred awards which but for this provision would not be
payable until
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<PAGE>
subsequent to the Date of Termination) made to the Executive
under the Executive incentive Compensation Plan; and
(iii) an amount as liquidated damages for lost future
remuneration equal to the product obtained by multiplying
(A) the lesser of
(1) three or
(2) a number equal to the number of calendar months
remaining from the Date of Termination to the date on
which the Executive is 65 years of age (or, if
earlier, the age agreed to by the Executive pursuant
to any prior arrangement) divided by twelve
times
(B) the sum of
(1) the greater of
(i) the Executive's base salary for the year in
effect on the Date of Termination (provided that
in the case of Termination for Good Reason by the
Executive the date immediately preceding the date
of the earliest event which gave rise to the
Termination for Good Reason by the Executive
shall be used instead of the Date of Termination)
or
(ii) the Executive's base salary for the year in
effect on the date of the Change-in-Control;
provided that "base salary for the year" shall be the
amount of base salary for the year established by the
Board of Directors at the beginning of the fiscal
year in question in accordance with the compensation
policies and practices of the Corporation, without
regard to any reduction in the amount actually paid
to the Executive during such year as a result of any
plan of the Corporation to reduce compensation due to
economic considerations, and without regard to any
deferral of compensation payable to
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the Executive for services rendered during such year
to a subsequent year.
plus
(2) the greater of
(i) the average annual cash award received by the
Executive under the Executive Incentive
Compensation Plan for the two calendar years
immediately preceding the Date of Termination
(provided that in the case of Termination for
Good Reason by the Executive the date immediately
preceding the date of the event which gave rise
to the Termination for Good Reason by the
Executive shall be used instead of the Date of
Termination;
or
(ii) the average annual cash award received by the
Executive under the Incentive Compensation Plan
for the two calendar years immediately preceding
the date of the Change-in-Control.
(c) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the
Executive pursuant to the terms of this Agreement or otherwise
(collectively the "Total Payments") would not be deductible, in whole
or part, as a result of section 280G of the Internal Revenue Code of
1986, as amended (the "Code") by the Corporation, an affiliate or
other person making such payment or providing such benefit, the
payments due under this Agreement (the "Contract Payments") shall be
reduced until no portion of the Total Payments is not deductible, or
the Contract Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Total Payments the receipt or
enjoyment of which you shall have effectively waived in writing prior
to the date of payment of the Contract Payments shall be taken into
account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to you does not
constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, (iii) the Contract Payments shall be reduced
only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii) in their entirety constitute
reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4) of the Code or are otherwise not
subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (ii); and
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<PAGE>
(iv) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the
Corporation's independent auditors in accordance with the principles
of sections 280G(d)(3) and (4) of the Code.
4. Stock Appreciation Rights and Stock Options.
-------------------------------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant to
section 3(b) hereof, then, in lieu of Stock Appreciation Rights
granted to the Executive (and whether or not they are in tandem with
any Options, but provided that this subsection shall not apply to any
Stock Appreciation Rights in tandem with incentive stock options) that
were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination (which rights and any
related in tandem options shall be cancelled upon the making of the
payment hereafter described), the Executive shall receive an amount in
cash on or before the fifth day following the Date of Termination
equal to the difference, if positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of such stock appreciation rights
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's common stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination;
or
(2) the highest price paid per share for the
Corporation's common stock in the transaction
resulting in the actual Change-in-Control.
and
(ii) subtracting therefrom the aggregate of the products
obtained by multiplying the mean between the highest and
lowest quoted selling prices for the Corporation's Common
Stock on the composite tape for the New York Stock Exchange on
each date
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<PAGE>
of grant of such Stock Appreciation Rights times the number of
such Stock Appreciation Rights granted on such date.
(b) If the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof then the Executive may elect, during the 60-day period
from and after a Change of Control (other than a Change of Control
initiated by the Executive), to surrender his rights in any of the
options granted to the Executive provided that this subsection shall
not apply to any Options accompanied by a Stock Appreciation Right
that were outstanding for at least six months prior to the Date of
Termination and that were neither subsequently exercised nor expired
by their terms prior to the Date of Termination and, upon such
surrender, the Corporation shall pay to the Executive an amount of
cash with respect to each such option equal to the difference, if
positive, obtained by
(i) taking the product obtained by multiplying
(A) the number of shares of common stock as to which the
option is exercisable
times
(B) the greater of
(1) the mean between the highest and lowest quoted
selling prices for the Corporation's Common Stock on
the composite tape for the New York Stock Exchange on
the trading day immediately preceding the Date of
Termination
or
(2) the highest price paid per share for Corporation's
Common Stock in the transaction resulting in the
actual Change-in-Control
and
(ii) subtracting therefrom the option price for such Shares of
Common Stock.
(c) In the event the Executive's employment should terminate under such
circumstances as entitle the Executive to payments pursuant to Section
3(b) hereof, the Corporation agrees to accelerate and make immediately
exercisable in full all unmatured options held by the Executive at the
Date
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<PAGE>
of Termination, whether or not otherwise exercisable, effective as of
the Date of Termination. In the event that the Executive has been
granted Incentive Stock Options pursuant to Section 422A(b)(7) of the
Internal Revenue Code of 1986 (the "Code") which would otherwise
become immediately exercisable hereunder but for the limitation
imposed by Code Section 422A(b)(7), such options shall only become
exercisable as to the maximum number of shares permitted by Code
Section 422A(b)(7) and the balance of such options shall become
exercisable at the earliest date or dates thereafter permitted by Code
Section 422A(b)(7), with those options with the lowest exercise prices
becoming exercisable at the earliest date or dates.
5. Retirement Benefits.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof, then, notwithstanding such termination, the
Executive shall be deemed to continue as an active employee
participant in the Corporation's pension plan for salaried employees,
and the benefits payable to him, his surviving spouse or contingent
annuitant shall be calculated as if he had been continuously employed
by the Corporation for those years (including parts thereof)
subsequent to the Date of Termination and prior to the earlier of (i)
three years subsequent to the Date of Termination, and (ii) the
Executive's death or attainment of age 65 (or, if earlier, the age
agreed to by the Executive pursuant to any prior arrangement), at the
covered remuneration set forth in the following sentences of this
subsection. The covered remuneration for any part of a year
remaining after the Date of Termination shall equal the number of
months remaining in such year times the sum determined pursuant to
section 3(b)(iv)(B) hereof and divided by twelve. The covered
remuneration for the first full credited year following the Date of
Termination shall equal the sum determined pursuant to section
3(b)(iv)(B) hereof. The covered remuneration for the first full
credited year after the first full credited year shall equal the sum
of (i) the covered remuneration for the immediately preceding year
plus (ii) the product of the Annual Salary Adjustment percentage for
such credited years times the covered remuneration for the
immediately preceding year.
(b) If for any reason whether by law or the terms of the Corporation's
pension plan, such pension plan cannot either use the above credited
years of service and remuneration above described in subsection 5(a)
for purposes of the Executive's pension benefits (including surviving
spouse and contingent annuitant benefits) or cannot pay the full
amount of benefits which would result from the foregoing subsections,
then the Corporation hereby contractually agrees to pay the
difference between
(i) the benefits which would be payable if the pension plan had
been able to pay such benefits based upon the credited years
of service and covered remuneration above described in
subsection 5(a),
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and
(ii) the benefits, if any, actually paid to the Executive, his
surviving spouse or contingent annuitant by the pension plan.
The Corporation shall not be required to fund its obligation to pay
the foregoing difference.
6. Other Benefit Plans.
-------------------
(a) If the Executive's employment should terminate under such
circumstances as entitle the Executive to receive payments pursuant
to section 3(b) hereof and if the Executive is a participant in the
Corporation's Executive Benefit Plan (or a plan providing comparable
benefits) shall be in effect prior to the Change-in-Control, then the
Executive will be deemed for purposes of such Plan (or, if
applicable, the plan providing comparable benefits) to have
continuously remained in the employ of the Corporation until the
earlier of (i) three years subsequent to the Date of Termination, and
(ii) his death or attainment of age 65 (or the age agreed to by the
Executive pursuant to any prior arrangement), at a total compensation
equal to his total compensation in effect on the Date of Termination
(provided that in the case of Termination for Good Reason by the
Executive the date immediately preceding the date of the earliest
event which gave rise to the Termination for Good Reason by the
Executive shall be used instead of the Date of Termination) and to
have made any required contributions due thereunder. The Executive
will be eligible to receive all benefits under such Plan (or, if
applicable, the plan providing comparable benefits) payable as though
he had so remained in the Corporation's employ and had made any
required contributions notwithstanding that he neither was so
employed nor made any such contributions.
(b) Except with respect to (i) any Stock Appreciation Rights and Stock
Options, as to which payment is provided in Section 4(a) hereof, (ii)
the Corporation's pension plan, which is governed by paragraph 5
hereof, (iii) the Executive Benefit Plan, and (iv) the Incentive
Compensation Plan, the Executive shall be deemed for purposes of all
employee benefits to have remained in the continuous employment of
the Corporation for a period of three years following the Date of
Termination and shall be entitled to all of the benefits provided by
such plans as though he had so remained in the employment of the
Corporation.
(c) If for any reason, whether by law or provisions of the Corporation's
employee benefit plans, any benefits which the Executive would be
entitled to under the foregoing subsections of this section 6 cannot
be paid pursuant to such employee benefit plans, then the Corporation
hereby
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contractually agrees to pay to the Executive the difference between
the benefits which the Executive would have received in accordance
with the foregoing subsections of this section if the relevant
employee benefit plan could have paid such benefit and the amount of
benefits, if any, actually paid by such employee benefit plan. The
Corporation shall not be required to fund its obligation to pay the
foregoing difference.
7. Other Employment.
----------------
(a) The Executive shall have no duty to seek any other employment after
termination of his employment with the Corporation and the
Corporation hereby waives and agrees not to raise or use any defense
based on the position that the Executive had a duty to mitigate or
reduce the amounts due him hereunder by seeking other employment
whether suitable or unsuitable.
(b) Should the Executive obtain other employment, then the only effect of
such on the obligations of the Corporation hereunder shall be that
the Corporation shall be entitled to credit against any payments
which would otherwise be made pursuant to sections 5, 6(a) or 6(b)
hereof, any comparable payments to which the Executive is entitled
under the pension or other employee benefit plans maintained by the
Executive's other employers after termination of his employment with
the Corporation. In no event shall any sums received by the
Executive from any other employment be credited against or otherwise
reduce the amounts payable by the Corporation pursuant to Sections 3
or 4 hereof.
8. Term.
----
(a) This Agreement shall be for a term expiring August 31, 1998 and
shall automatically be extended for successive five year terms at the
end of each preceding term unless termination occurs pursuant to
subsection (b) or (c) below, whichever is applicable.
(b) If a Change-in-Control has occurred, this Agreement shall remain in
effect until terminated on the date which is three years from the
Change-in-Control.
(c) If a Change-in-Control has not occurred, this Agreement shall
terminate if the Executive's employment with the Corporation
terminates for any reason whether such termination of employment is
by the Corporation or by the Executive. Otherwise, prior to a
Change-in-Control, this Agreement may only be terminated by the
Corporation upon the giving by the Corporation of notice of
termination at least thirty days prior to the end of the then term,
in which event this Agreement shall terminate at the end of such
term.
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9. Miscellaneous.
-------------
(a) This Agreement shall be construed under the laws of the Commonwealth
of Pennsylvania.
(b) This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof and may only be
amended or modified by written agreement signed by the parties
hereto.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation,
by agreement in form and substance satisfactory to the executive, to
expressly assume and agree to perform this Agreement in the same
manner required of the Corporation and to perform it as if no such
succession had taken place. Failure of the Corporation to obtain
such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive
to terminate employment due to Good Reason for Termination. As used
in this Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for
in this subsection (c) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Executive or his legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there be no such designee, to his estate.
(e) Any notice or other communication provided for in this Agreement
shall be in writing and, unless otherwise expressly stated herein,
shall be deemed to have been duly given if mailed by United States
registered mail, return receipt requested, postage prepaid addressed
in the case of the Executive to his office at the Corporation with a
copy to his residence and in the case of the Corporation to its
principal executive offices, attention of the Chief Executive
Officer.
(f) No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and approved by resolution of the Board of
Directors of the Corporation. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be
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deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. Except for any
employment agreement with the Executive, no agreements or
representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. To the extent that the
provisions of this Agreement are in conflict with any such employment
agreement, following a Change-in-Control the employment agreement
shall automatically be amended in accordance with this Agreement and
the provisions of this Agreement shall govern.
(g) The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
(h) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
ATTEST: DRAVO CORPORATION
A. H. TENHUNDFELD, JR. By JAMES J. PUHALA
---------------------- -------------------------
JOHN R. MAJOR
----------------------------
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EXHIBIT 11
EXHIBIT 11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
- ----------------------------------------------------------
<TABLE>
<CAPTION>
($ in thousands, except per share amounts)
Years ended December 31,
------------------------------------------
1993 1992 1991
-------- ------- --------
<S> <C> <C> <C>
Primary
- -------
Earnings:
Earnings from continuing operations
before extraordinary item $ 35,126 $10,318 $ 12,250
Deduct dividends on preferred stock 2,554 2,561 2,571
-------- ------- --------
Earnings from continuing operations
applicable to common stock 32,572 7,757 9,679
Loss from discontinued operations (35,303) -- (38,537)
Earnings from extraordinary item -- 1,573 --
-------- ------- --------
Net earnings (loss) applicable to
common stock $ (2,731) $ 9,330 $(28,858)
======== ======= ========
Shares:
Weighted average number of common
shares outstanding 14,835 14,820 14,804
Dilutive effect of outstanding
options and rights (as determined
by the application of the treasury
stock method at the average market
price for the year) -- (1) 13 -- (1)
-------- ------- --------
Weighted average number of shares
outstanding, as adjusted 14,835 14,833 14,804
======== ======= ========
Primary earnings (loss) per share:
Continuing operations $ 2.20 $ 0.52 $ 0.65
Discontinued operations (2.38) -- (2.60)
Extraordinary item -- 0.11 --
-------- ------- --------
Net earnings (loss) per share $ (0.18) $ 0.63 $ (1.95)
======== ======= ========
Fully Diluted
- -------------
Earnings:
Net earnings (loss) $ (177) $11,891 $(26,287)
Deduct dividends on preferred stock (2) 2,554 2,561 2,571
-------- ------- --------
Net earnings applicable to common stock $ (2,731) $ 9,330 $(28,858)
======== ======= ========
Shares:
Weighted average number of common
shares outstanding 14,835 14,820 14,804
Dilutive effect of outstanding options
and rights (as determined by the
application of the treasury stock
method at the higher of the ending
or average market price for the year) -- (1) 25 -- (1)
</TABLE>
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EXHIBIT 11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (CONTINUED)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
($ in thousands, except per share amounts)
------------------------------------------
Years ended December 31,
1993 1992 1993
-------- ------- --------
<S> <C> <C> <C>
Fully Diluted (continued)
- -------------------------
Shares (continued):
Shares issuable from assumed exercise
of convertible preference stock (2) -- -- --
------- ------- --------
Weighted average number of shares
outstanding, as adjusted 14,835 14,845 14,804
======= ======= ========
Fully diluted earnings (loss) per share:
Continuing operations $ 2.20 $ 0.52 $ 0.65
Discontinued operations (2.38) -- (2.60)
Extraordinary item -- 0.11 --
------- ------- --------
Earnings (loss) per share $ (0.18) $ 0.63 $ (1.95)
======= ======= ========
Additional Fully Diluted Computation (3)
- ----------------------------------------
Earnings:
Net earnings (loss) $ (177) $11,891 $(26,287)
======= ======= ========
Shares:
Weighted average number of common
shares outstanding 14,835 14,820 14,804
Dilutive effect of outstanding options
and rights (as determined by the
application of the treasury stock
method at the higher of the ending or
average market price for the year) 66 25 13
Shares issuable from assumed exercise of
convertible preference stock 1,710 1,682 1,243
------- ------- --------
Weighted average number of shares
outstanding, as adjusted 16,611 16,527 16,060
======= ======= ========
Fully diluted earnings (loss) per share $ (0.01) $ 0.72 $ (1.64)
======= ======= ========
</TABLE>
(1) The inclusion of outstanding options and rights in this computation would
have an anti-dilutive effect on earnings per share.
(2) The inclusion of preference stock in the fully dilutive computation would
have an anti-dilutive effect on earnings per share.
(3) This calculation is submitted in accordance with Securities Exchange Act
of 1934 Regulation S-K, paragraph 229.601 (b) (11) although it is
contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-
dilutive result in 1993, 1992 and 1991.
-2-
<PAGE>
EXHIBIT 13
FINANCIAL REVIEW
OVERVIEW
One of the most significant events in 1993 for Dravo was the booking of a 15-
year, 450,000-ton-per-year lime supply contract for American Electric Power's
Gavin Station. Shipments under the contract are expected to begin in the second
quarter of 1995. This major contract requires a $62 million expansion at the
company's Black River lime facility located in northern Kentucky. Also, the
company has pending the renewal of several existing contracts which, when
finalized, will raise Dravo's utility lime sales backlog to more than $800
million. Price concessions were granted due to increased competition in the Ohio
Valley utility lime market; however, the renewal was important to maintain
current production cost efficiencies.
Dravo Lime Company's earnings declined from the record 1992 levels principally
because of temporary operating problems at the Black River and Longview
facilities.
Dravo Basic Materials, while having a difficult year overall, had its bright
spots. The subsidiary's northern region, which includes the Pittsburgh,
Parkersburg and Cincinnati areas, had a good year. Demand for construction
aggregates in the Cincinnati area was especially strong. In 1993, the company
brought on-line a new $5 million limestone quarry and processing facility in
Lynchburg, Ohio, to provide low-cost aggregate to the rapidly growing east
Cincinnati area.
Discontinued operations took a toll on the company's financial results. An
additional provision of $35.3 million for discontinued operations was recorded
during the fourth quarter. However, management believes the primary reason for
the provision, the settlement of a 5-year old multi-million dollar lawsuit on a
waste-to-energy plant built for the city of Long Beach, California, is a
positive event in that it removes a major uncertainty regarding the company's
future financial stability and will save millions of dollars in legal fees.
Earnings from continuing operations were $35.1 million, or $2.20 per share.
Included in the earnings results was a $24.9 million deferred tax benefit. Loss
on discontinued operations was $35.3 million or $2.38 per share. Unlike previous
years, there was no extraordinary item reported for the reduction of taxes
through the utilization of loss carryforwards in 1993 because of new rules
governing accounting for income taxes.
In 1992, earnings from continuing operations were $10.3 million, or $.52 per
share. An extraordinary credit of $1.6 million, or $.11 per share, resulted from
the use of loss carryforwards to offset current tax expense.
In 1991, earnings from continuing operations were $12.3 million, or $.65 per
share. Charges for discontinued operations, net of $3.6 million resulting from a
reduction in tax liability associated with the expense provisions, were $38.5
million, or $2.60 per share. Net losses for the year were $26.2 million, or
$1.95 per common share.
RESULTS OF OPERATIONS
CONTINUING OPERATIONS
REVENUE: Revenue of $277.6 million was up $4.6 million over 1992. The increase
is attributable to high demand for construction aggregate in the metropolitan
Cincinnati area and West Virginia. Competition along the Mississippi River and
Gulf Coast continues to be very intense and the company has been unable to
increase revenues in these areas. Lime revenue was up due to continued strength
in the merchant market and increased utility shipments.
In 1992, revenue of $273.0 million was down $22.7 million, or nearly eight
percent, from 1991. Factors contributing to the decrease were the exit from the
shell business at the end of the third quarter of 1991 and asphaltic concrete
business divestiture in early 1992, as well as the effects of reduced
construction activity on sales tonnage and product pricing in most construction
aggregates markets. Lime revenue was up slightly over 1991, reflecting strong
demand in several of the merchant markets served by the company's Black River
and Longview plants, and the first full year of production from a new lime kiln
at the Longview plant. Although most of our utility lime customers used less
lime because of reduced electrical power generation, the impact on revenue was
mitigated by the first full year's effects of extraordinarily high levels of
power production at the Zimmer Station of The Cincinnati Gas & Electric Company
(CG&E).
COSTS AND EXPENSES: Gross profit was down $2.4 million from 1992 levels. An
unusual number of significant operating problems at Dravo Lime's Black River
facility increased production costs during the year. The kilns and equipment at
Black River are older and are requiring more maintenance. With the repairs done
in 1993 and the efficiency that will come with the new kilns and equipment being
installed as part of the $62 million expansion, manufacturing costs at Black
River will drop significantly. Operating problems occurred at the Longview
facility also, although not to the same extent as Black River, and the company
had to occasionally purchase lime from outside sources to fill orders.
Gross profit of $51.7 million in 1992 was down $6.0 million, or ten percent,
from the previous year on lower revenue. The company closed under-performing
aggregate operations located in areas with poor prospects for a short-term
recovery. Personnel costs were lower in 1992 due to staff reductions following
the realignment of divisions within Dravo Basic Materials. Improved efficiencies
resulting from major capital expenditures such as a new lime kiln at Longview;
improvements made at a Cincinnati area aggregates plant; and the availability of
upgraded rolling stock helped reduce the impact of lower revenue.
DRAVO CORPORATION 8
<PAGE>
Selling expense increased $344,000 from 1992 to 1993 and $960,000 from 1991 to
1992. The 1993 increase was due primarily to higher personnel and operating
costs for the company's research center. The 1992 increase was principally the
result of changes in the amount of research and development expense billed to
third parties. These research activities involve a variety of lime-related
technologies, with particular emphasis on pollution control. Depending on the
project, the company may be reimbursed by governmental agencies, public
utilities or private groups for all or a portion of project costs.
General and administrative expenses were down $856,000 compared to 1992. The
expense reduction was partially due to lower interest charges related to the
amortization of the company's non-cancelable lease obligation on a downtown
Pittsburgh office building. Also, medical insurance costs were lower in 1993
due, in part, to educating employees and retirees on the prudent use of medical
benefits. General and administrative expenses were down $2.3 million, or 8
percent, from 1991 to 1992. In addition to personnel reductions made in 1992,
the full effect of a mid-year 1991 work force reduction was realized. And
because the salary pension plan was actuarially over-funded, the company was
able to record net pension income of $567,000 versus an expense in 1991 of $1.2
million.
Equity in earnings of joint ventures reports the company's share in three 50-
percent owned joint ventures: a shell dredging operation located off the
Louisiana coast, a contract phosphate mining operation in Idaho and a small
contract coke operation in Wyoming. The shell operation was negatively impacted
by a six-month delay in a major highway construction project. The joint venture
started shipping shell to the project in December, 1993. The contract phosphate
mining operation's profitability varies depending on mining conditions and
customer requirements.
Other income of $692,000 represents gains on the sale of property in Baton
Rouge, Louisiana and excess floating equipment, mainly barges. Other income in
1992 of $1.7 million resulted primarily from the sale of assets in two
businesses the company exited in 1992: asphalt production in the Mobile area and
the manufacture and sale of Calcilox. A gain was also recorded when the lessee
of 34 hopper barges and covers exercised an option to purchase the equipment.
Most of the other income of $698,000 reported in 1991 was derived from the sale
of a parcel of land in the Cincinnati area.
The decline in interest income over the last two years reflects a lower level of
funds available for investment and lower interest rates.
Interest expense was $9.2 million, or 13 percent, lower in 1993 than last year.
The decrease was due to lower average debt outstanding and an interest rate swap
agreement entered into in February, 1993 that effectively converted $41.8
million of 11.21 percent fixed rate debt to variable rate debt. Interest expense
of $10.5 million in 1992 was $625,000 lower than 1991. The decrease was caused
by a combination of a lower average total debt balance outstanding and lower
interest rates on the company's prime rate-based line of credit.
A benefit for income taxes of $24.9 million was recorded in 1993 under the
provisions of Statement of Financial Accounting Standards 109 (SFAS 109),
"Accounting for Income Taxes." The company was required to adopt SFAS 109
effective January 1, 1993. The Statement requires that deferred income taxes
reflect the tax consequences on future years of temporary differences between
the tax bases of assets and liabilities and their bases for financial reporting
purposes. In addition, SFAS 109 requires the recognition of future tax benefits,
such as net operating loss carryforwards (NOL), to the extent that realization
of such benefits are more likely than not. At January 1, 1993, the company was
in a net deferred tax asset position under SFAS 109, primarily the result of a
$161.2 million NOL.
At January 1, 1993, the company established a valuation allowance for the full
amount of the net deferred tax asset due to uncertainties associated with
unresolved issues related to its discontinued operations. In the fourth quarter
of 1993, the valuation allowance was reduced, resulting in a net deferred tax
asset of $24.9 million. Two factors contributed to the reduction in the
valuation allowance. First was the resolution of the City of Long Beach SERRF
litigation and the ability to quantify, relying upon advice of legal counsel,
the maximum exposure of the remaining discontinued operations issues. Second,
the company was awarded the AEP Gavin contract to supply 450,000 tons of lime
annually for 15 years commencing in 1995. In addition, the company has pending
the renewal of several existing lime supply contracts for periods of up to ten
years. As a result, management believes revenues and income can be reasonably
projected for purposes of determining whether the realization of the asset
resulting from the utilization of NOLs in future years is more likely than not.
See Note 13, Income Taxes, in the Notes to Consolidated Financial Statements for
further details on the determination of the valuation allowance.
EFFECTS OF INFLATION: Inflation rates have been low over the past three years
and as a result have not had a significant impact on the company's operations.
In addition, Dravo Lime's long-term lime supply contracts provide for price
increases based on government published indices and increases for specific
production expenses, such as labor, fuel and electricity. The company's
operations are sensitive to changes in crude oil prices since petroleum products
are used for both the production and distribution of its products.
DISCONTINUED OPERATIONS
Management's assessment of the discontinued operations reserve led to an
increase in the expense provision in 1993 of $35.3 million. The provision was
primarily to cover the settlement agreement with the City of Long Beach, which
included the company giving up its claim to unpaid
9 ANNUAL REPORT 1993
<PAGE>
receivables and interest totalling $18 million. The provision also recognizes an
increase in the estimated environmental cleanup costs at the company's Hastings,
Nebraska, superfund site; write-off of a note receivable due to an unfavorable
court ruling; additional legal fees, primarily to protect the company's
interests in the Continental Energy Associates and Venezuelan matters discussed
in Note 8, Contingent Liabilities; and other discontinued operations expenses.
FINANCIAL POSITION AND LIQUIDITY
The company's balance sheet reflects recording a deferred tax asset of $24.9
million and a discontinued operations provision of $35.3 million in the fourth
quarter of 1993. All known outstanding discontinued operations items have been
classified as current or long-term based on the estimated timing of future cash
receipts and disbursements. At year-end 1993, net current liabilities for
discontinued operations were estimated to be $4.5 million versus $9.7 million at
December 31, 1992. Net long-term liabilities were estimated to be $22.1 million
at year-end 1993 compared to net assets of $4.8 million at December 31, 1992.
Despite the size of the discontinued operations liabilities, they do not pose a
threat to the company's liquidity because cash payments needed to satisfy them
will be spread over several years.
Working capital of $59.5 million was down $608,000 from 1992. Inventories were
down $6.3 million primarily due to an inventory reduction plan implemented by
Dravo Basic Materials. Capital expenditures were $13.6 million in 1993.
Additions to property, plant and equipment included $2.8 million for a new
aggregate quarry and production plant near Cincinnati, routine equipment
improvements and rolling stock replacements.
The company has on hand and access to sufficient funds to meet its anticipated
operating and capital needs. Cash and cash equivalents were $808,000 and
$970,000 at yearend 1993 and 1992, respectively. To minimize interest charges,
cash balances are kept low through a banking arrangement that uses excess cash
held in the company's accounts to reduce the amount of overnight borrowing
on a revolving credit facility agreement.
The $59 million revolving credit/letter of credit facility is provided by a
consortium of lenders that includes First Alabama Bank, PNC Bank, N.A.,
Continental Bank, N.A. and The Prudential Insurance Company of America. Interest
on the revolver is equal to First Alabama Bank's base lending rate plus 1.25
percent. The credit facility, originally scheduled to expire on January 21,
1995, has been extended to April 30, 1995 as an interim measure; however,
simultaneously with the closing of the $62 million lease financing for the Black
River expansion, discussed below, the company expects to increase the facility
to $64 million and extend the term to January 21, 1996. At December 31, 1993,
$36.5 million of revolver debt and $10 million in letters of credit were
borrowed against the $59 million debt capacity.
In February, 1993, the company entered into an interest rate swap agreement with
Continental Bank, N.A. on $41.8 million of 11.21 percent fixed rate long-term
notes payable. The swap converts the fixed rate debt to variable rate debt
determined by adding 6.57 percent to the three month London Interbank Offered
Rate. The swap agreement reduced 1993's interest expense $474,000.
The company is currently negotiating the terms of a $62 million leveraged
operating lease to be used to finance an expansion project at Dravo Lime's Black
River facility. The expansion will increase production capacity by 700,000 tons-
per-year, the majority to be used to supply the new AEP Gavin contract. While
final documentation has not yet been completed, the basic terms of the lease
provide for a 20-year rental schedule with options to renew for an additional
12 years. The company will have a fixed price option to purchase the equipment
at the end of 32 years. The financing is expected to close in April, 1994 and
have an effective interest rate of approximately 9 percent.
Obligations under the company's January, 1992 debt restructuring are secured by
a pledge of the stock of Dravo Basic Materials Company and Dravo Lime Company
along with their accounts receivable and finished goods inventories.
Additionally, certain contract rights, patents and mortgages on the company's
Maysville, Black River, Three Rivers and Longview plants, excluding a new kiln
at Longview completed in 1991, have been pledged as collateral. The agreements
contain uniform restrictive covenants that require the company on a consolidated
basis, and Dravo Basic Materials and Dravo Lime on a combined basis, to maintain
minimum working capital levels; restrict incurrence of debt, liens, and lease
obligations; restrict the sale of significant assets; and as to Dravo Basic
Materials and Dravo Lime, limit payment of dividends or making of loans to the
company. At December 31, 1993, approximately $157.4 million of Dravo Basic
Materials and Dravo Lime net assets were restricted as to payment of dividends
or loans to the company. These restrictions are not expected to have an adverse
impact on the ability of the company to meet its cash obligations.
In November, 1992, the Financial Accounting Standards Board (FASB) issued
Statement 112, "Employers' Accounting for Postemployment Benefits." See Note 10,
Postretirement and Postemployment Benefits, in the Notes to Consolidated
Financial Statements for a discussion of the statement and its impact on the
company's financial condition.
DIVIDENDS
The company may not declare common stock dividends until cumulative earnings
from continuing operations after September 30, 1991, excluding gains from the
sale of capital assets, exceed $40 million or cumulative losses from
discontinued operations after September 30, 1991, whichever is higher, and then
only to the extent of 50 percent of such earnings. At December 31, 1993,
cumulative
DRAVO CORPORATION 10
<PAGE>
earnings from continuing operations since September 30, 1991 exceeded cumulative
discontinued operations losses during the same time period by $1.8 million. No
common stock dividends were declared in 1993 nor are any contemplated. Dividends
on the $3.0875 cumulative, convertible, exchangeable, Series D Preference Stock
were declared quarterly throughout 1993, 1992 and 1991. Quarterly dividends were
also declared on the $2.4750 cumulative convertible Series B Preference Stock in
each of the last three years. All declared preference dividends have been paid
timely.
COMMON STOCK MARKET PRICE
The principal market on which Dravo's common stock is traded is the New York
Stock Exchange. The high and low common stock sales prices for each quarterly
period in 1993 and 1992 as reported for New York Stock Exchange composite
transactions were:
<TABLE>
<CAPTION>
1993 1992
QUARTER HIGH LOW HIGH LOW
- ------- ------ ------ ------ -----
<S> <C> <C> <C> <C>
First 10 1/4 8 3/4 10 1/2 7 5/8
Second 11 3/4 8 3/4 10 1/4 7 3/4
Third 12 3/8 9 3/8 8 7/8 6 5/8
Fourth 12 1/2 10 1/8 9 5/8 7 3/8
</TABLE>
OUTLOOK
CONTINUING OPERATIONS: The long awaited clean air standards for power plant
sulfur dioxide emissions enacted by Congress in 1990 become effective January 1,
1995. Dravo will spend nearly $62 million in 1994 increasing the production
capacity of its Black River mine and processing plant to provide lime that its
customers will need to meet the new standards. In 1993, our lime business faced
aggressive price competition for utility lime contracts. While it was important
for Dravo to win the new Gavin contract, it was equally important to maintain
the customer base already existing from long-term lime supply contracts that
were approaching expiration. Those contracts are being renegotiated, all at
lower prices that will impact 1994 profit margins.
Although Dravo Basic Materials continues to face intense competition in all its
markets, aggressive price competition is expected to remain particularly fierce
in the Gulf Coast and Mississippi River corridor markets. An improving economy
and increased appropriations for highway, bridge and other infrastructure
repairs and improvements should provide some support for earnings. In a move
designed to complement the traditional road building and construction markets
that the company has relied upon for many years, Dravo Basic Materials has
identified industrial uses for its aggregates products. The company anticipates
seeing results from those efforts, as well as new initiatives, in 1994.
For Dravo to achieve its earnings goal in 1994, expenses must be reduced. A
company-wide program of consolidation and expense reduction will call upon
operating and administrative employees to lower expenses wherever possible.
DISCONTINUED OPERATIONS: The company formerly operated a fabrication facility in
Hastings, Nebraska. The federal Environmental Protection Agency (EPA) has
notified the company it believes the company is a potentially responsible party
(PRP) for the cleanup of soil and groundwater contamination at three subsites in
the Hastings area. The company held talks with the EPA in 1992 as to the scope
of cleanup required and to determine if the EPA would be willing to accept an
amount, to be paid by the company, other PRPs and the company's insurance
carriers, over time, that would discharge the company from any further cleanup
at the subsites. The company discontinued the discussions with the EPA when its
insurance carriers refused coverage responsibility. The company has since
brought legal action against its insurance carriers whom it believes had
coverage responsibility for the time the company owned the Hastings facility.
Two insurance carriers have approached the company concerning a settlement. The
company intends to pursue a settlement of this matter which will involve a group
of named PRPs and insurance carriers. See Note 2, Discontinued Operations, in
the Notes to Consolidated Financial Statements for further discussion of the
company's estimate of total cleanup costs and its share of those costs.
No progress was made toward settling disputes between the company and
Continental Energy Associates (CEA) regarding construction of a coal
gasification facility in Hazleton, Pennsylvania. The company is preparing for
litigation in this matter.
The Venezuelan Supreme Court upheld a lower court ruling in the litigation with
Alberto Caldera and Meladuras Portuguesa C.A. (Melaport). Under Venezuelan law,
damages are to be established by an appraisal process. The company has filed
suit in United States District Court challenging the enforcement of any judgment
in the United States which may result from the Venezuelan litigation.
See Note 8, Contingent Liabilities, in the Notes to Consolidated Financial
Statements for further discussion of these and other discontinued operations
activities.
Management believes the company's provision for losses on discontinued
operations is adequate at this time. However, in establishing the provision and
monitoring it, management has estimated the costs of exiting discontinued
businesses and pursuing the company's rights through litigation. A ruling by the
courts or a settlement of the disputes that is adverse to Dravo's position, or
other unforeseen developments, could require a future additional provision for
discontinued operations.
11 ANNUAL REPORT 1993
<PAGE>
CONSOLIDATED BALANCE SHEETS
DRAVO CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31,
(IN THOUSANDS) 1993 1992
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 808 $ 970
Accounts receivable, net of allowance
for uncollectibles of $897 and $777 44,225 38,815
Notes receivable (Note 14) 3,318 6,718
Inventories (Note 4) 57,536 63,847
Other current assets 2,417 3,138
-------- --------
Total current assets 108,304 113,488
Advances to and equity in joint ventures 4,348 2,193
Notes receivable (Note 14) 6,870 8,130
Net assets of discontinued operations
(Notes 2 and 14) -- 13,924
Other assets 17,729 15,924
Deferred income taxes 24,853 --
Property, plant and equipment:
Land 23,673 23,525
Mine development 8,148 7,959
Building and improvements 22,830 25,804
Floating equipment 36,972 39,026
Machinery and other equipment 220,199 208,363
-------- --------
311,822 304,677
Less accumulated depreciation and
amortization 201,854 189,813
-------- --------
Net property, plant and equipment 109,968 114,864
-------- --------
Total assets $272,072 $268,523
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
DRAVO CORPORATION 12
<PAGE>
CONSOLIDATED BALANCE SHEETS
DRAVO CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31,
(IN THOUSANDS) 1993 1992
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term notes (Notes 5 and 14) $ 4,488 $ 4,717
Accounts payable--trade 28,622 29,135
Income taxes 23 43
Accrued insurance 3,049 3,395
Accrued retirement contribution 2,101 476
Net liabilities of discontinued operations (Note 2) 2,006 6,949
Accrued loss on leases--discontinued operations (Note 2) 2,448 2,779
Other current liabilities 6,113 5,932
-------- --------
Total current liabilities 48,850 53,426
Long-term notes (Notes 5 and 14) 88,520 88,052
Other liabilities 3,033 2,962
Net liabilities of discontinued operations (Note 2) 14,276 --
Accrued loss on leases--discontinued operations (Note 2) 7,854 9,133
Redeemable preference stock (Notes 6 and 14):
Par value $1, issued 200,000 shares, cumulative,
convertible, exchangeable Series D
(entitled in liquidation to $20.0 million) 20,000 20,000
Shareholders' equity (Notes 6 and 12):
Preference stock, par value $1, authorized 1,878,870
shares: Series B, $2.475 cumulative, convertible,
issued 32,386 and 35,386 shares (entitled in
liquidation to $1.8 million and $1.9 million);
Series D, reported above 32 35
Common stock, par value $1, authorized 35,000,000 shares;
issued 14,967,824 and 14,945,476 shares 14,968 14,945
Other capital 63,260 65,960
Retained earnings 13,119 15,850
Treasury stock at cost; common shares 119,221 (1,840) (1,840)
-------- --------
Total shareholders' equity 89,539 94,950
-------- --------
Total liabilities and shareholders' equity $272,072 $268,523
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
13 ANNUAL REPORT 1993
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
DRAVO CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenue $277,590 $272,979 $295,684
Cost of revenue 228,266 221,232 237,964
-------- -------- --------
Gross profit 49,324 51,747 57,720
Selling expenses 7,602 7,258 6,298
General and administrative expenses 24,058 24,914 27,189
-------- -------- --------
Earnings from operations 17,664 19,575 24,233
Other income (expense):
Equity in earnings (loss) of joint ventures (18) 411 383
Other income 692 1,683 698
Interest income 1,327 1,598 1,977
Interest expense (9,194) (10,548) (11,173)
-------- -------- --------
Net other expense (7,193) (6,856) (8,115)
-------- -------- --------
Earnings before taxes from continuing
operations 10,471 12,719 16,118
Income tax expense (benefit) (Note 13) (24,655) 2,401 3,868
-------- -------- --------
Earnings from continuing operations 35,126 10,318 12,250
Loss on discontinued operations, net of
income tax benefit of $0 and $3,568 (Note 2) 35,303 -- 38,537
-------- -------- --------
Earnings (loss) before extraordinary item (177) 10,318 (26,287)
Extraordinary item (Note 13) -- 1,573 --
-------- -------- --------
Net earnings (loss) (177) 11,891 (26,287)
Preference dividends 2,554 2,561 2,571
-------- -------- --------
Net earnings (loss) available for common stock $ (2,731) $ 9,330 $(28,858)
-------- -------- --------
Weighted average shares outstanding 14,835 14,833 14,804
-------- -------- --------
Primary earnings (loss) per share:
Continuing operations $ 2.20 $ 0.52 $ 0.65
Discontinued operations (2.38) -- (2.60)
Extraordinary item -- 0.11 --
-------- -------- --------
Net earnings (loss) $ (0.18) $ 0.63 $ (1.95)
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
DRAVO CORPORATION 14
<PAGE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
DRAVO CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Retained earnings at beginning of year $15,850 $ 6,520 $ 35,378
Net earnings (loss) (177) 11,891 (26,287)
------- ------- -------
$15,673 18,411 9,091
<CAPTION>
Dividends declared: 1993 1992 1991
- ------------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Series B preference stock $ 2.475 $ 2.475 $ 2.475 84 91 101
Series D preference stock 12.350 12.350 12.350 2,470 2,470 2,470
------- ------- --------
2,554 2,561 2,571
------- ------- --------
Retained earnings at end
of year $13,119 $15,850 $ 6,520
======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
15 ANNUAL REPORT 1993
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
DRAVO CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
(IN THOUSANDS) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Earnings from continuing operations $ 35,126 $ 10,318 $ 12,250
Adjustments to reconcile earnings from
continuing operations to net cash
provided by continuing operations
activities:
Depreciation and amortization 17,985 18,595 17,714
Gain on sale of assets (692) (1,683) (698)
Equity in joint ventures (2,155) 49 21
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable (5,410) 1,638 (1,321)
Decrease (increase) in notes
receivable 1,008 (647) 321
Decrease (increase) in
inventories 6,311 (4,197) (1,477)
Decrease (increase) in other
current assets 721 (400) 367
Increase in other assets (2,373) (680) (3,795)
Increase in deferred income taxes (24,853) -- --
Increase (decrease) in accounts
payable and accrued expenses 947 (5,322) 3,362
Decrease in income taxes payable (20) (575) (553)
Increase (decrease) in other
liabilities 71 329 (1,199)
-------- -------- --------
Total adjustments (8,460) 7,107 12,742
-------- -------- --------
Net cash provided by continuing
operations activities 26,666 17,425 24,992
-------- -------- --------
Loss from discontinued operations (35,303) -- (38,537)
Increase (decrease) in net liabilities
of discontinued operations 21,647 (15,009) 35,502
Proceeds from repayment of notes
receivable from sale of
discontinued operations 1,992 2,631 11
-------- -------- --------
Net cash used by discontinued
operations activities (11,664) (12,378) (3,024)
-------- -------- --------
Net cash provided by extraordinary
item -- 1,573 --
-------- -------- --------
Net cash provided by operating
activities 15,002 6,620 21,968
-------- -------- --------
Cash flows from investing activities:
Proceeds from sale of assets 1,249 5,591 1,670
Additions to property, plant and
equipment (13,646) (8,454) (19,660)
Reductions to cash collateral account -- -- 20,506
Loans made in connection with lease
termination -- -- (8,000)
Other, net (553) (363) 1,082
-------- -------- --------
Net cash used by investing activities $(12,950) $ (3,226) $ (4,402)
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
DRAVO CORPORATION 16
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
DRAVO CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
(IN THOUSANDS) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Net borrowing (repayment) under revolving
credit agreements $ 4,600 $ 3,700 $ (4,700)
Principal payments under long-term notes (4,446) (5,702) (4,005)
Principal payments under long-term notes
secured by future mineral production -- -- (7,342)
Principal payments under capital lease
obligations (306) (142) (1,045)
Proceeds from issuance of long-term notes 391 122 2,819
Proceeds from borrowing under capital
lease obligations -- 388 --
Proceeds from issuance of common stock 101 63 68
Dividends (2,554) (2,561) (2,571)
-------- -------- --------
Net cash used by financing activities (2,214) (4,132) (16,776)
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents (162) (738) 790
Cash and cash equivalents at beginning
of year 970 1,708 918
-------- -------- --------
Cash and cash equivalents at end of year $ 808 $ 970 $ 1,708
======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 9,195 $ 10,722 $ 11,208
Income tax 487 1,333 1,119
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
17 ANNUAL REPORT 1993
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: The consolidated financial statements include the
accounts of Dravo Corporation and its majority-owned subsidiaries (the company).
The principal subsidiaries are Dravo Basic Materials Company, Inc., and Dravo
Lime Company. Dravo Basic Materials is a leading producer of construction
aggregates in the Ohio Valley and Gulf Coast regions. Dravo Lime is one of the
nation's largest lime producers.
PRINCIPLES OF CONSOLIDATION: Significant intercompany balances and transactions
have been eliminated in the consolidation process.
CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, the company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
INVENTORIES: Inventories are valued at average production cost or market,
whichever is lower. The cost of products produced includes raw materials, direct
labor and operating overhead.
PROPERTY, PLANT, EQUIPMENT AND DEPRECIATION: Property, plant and equipment are
stated at cost. The cost of buildings, equipment and machinery is depreciated
over estimated useful lives on a straight-line basis. For income tax purposes,
depreciation is calculated principally on an accelerated basis. Expenditures for
maintenance and repairs which do not materially extend the lives of assets are
expensed currently. The asset cost and accumulated depreciation are removed from
the accounts for assets sold or retired, and any resulting gain or loss is
included in other income and expense.
INTANGIBLE ASSETS: Intangible assets include agreements, goodwill, and
unrecognized prior service cost on the company's pension plans. Amortization is
on a straight line basis, generally five to ten years, over estimated useful
lives, or in the case of unrecognized prior service costs, the average future
service period.
INCOME TAXES: Effective January 1, 1993, the company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The statement requires that deferred income taxes reflect the tax
consequences on future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts. Prior to 1993, provisions
were made for deferred income taxes where differences existed between the time
transactions affected taxable income and the time those transactions entered
into the determination of income for financial statement purposes.
EARNINGS PER SHARE: Primary earnings per share are based on net earnings less
preference dividends declared in the year, divided by the weighted average sum
of common shares outstanding during the year and common share equivalents.
Shares exercisable as employee stock options and stock appreciation rights are
considered common share equivalents except when their inclusion would be anti-
dilutive. Primary common share equivalents are calculated based on the average
common stock price for the year. Fully diluted earnings per share are based on
net earnings, divided by the sum of the weighted average number of common shares
outstanding during the year, weighted average number of shares resulting from
the assumed conversion of issued preference shares to common shares and common
share equivalents. Fully diluted common share equivalents are calculated based
on the higher of the average or ending common stock price for the year. Fully
diluted earnings per share are anti-dilutive in 1993, 1992 and 1991 and are not
presented.
NOTE 2: DISCONTINUED OPERATIONS
In December, 1987, Dravo's Board of Directors approved a major restructuring
program which concentrated the company's future direction exclusively on
opportunities involving its natural resources business. The company took an
additional provision of $35.3 million related to discontinued operations in the
fourth quarter of 1993.
In 1985, the company contracted with a governmental authority to design,
construct and operate a resource recovery facility in Long Beach, California. A
dispute arose with the authority as to whether the design and construction
contract was, in fact, properly completed and whether certain retainers and
escrows were owed to the company. The company's sale of its contractual interest
to operate the Long Beach resource recovery facility spawned a lawsuit filed by
the purchaser seeking to avoid payments of the purchase price. Early in 1994,
the company reached a Memorandum of Intent to settle all litigation with the
facility's owner and its operator. The agreement, which is subject to final
approval by the United States District Court, necessitated the write-off of
receivables from the owner and payables to the operator netting $16 million. In
addition, the company will pay the owner $498,000, and the operator $55,000,
annually for 20 years starting in 1999 and 1995, respectively. The estimated
present value of the payments, or $4.7 million, is included in the discontinued
operations provision.
The company has received updated estimates of the potential soil and groundwater
cleanup costs at its former operations in Hastings, Nebraska. The company and
several other entities have been named by the U.S.
DRAVO CORPORATION 18
<PAGE>
Environmental Protection Agency (EPA) as Potentially Responsible Parties (PRPs)
at the Hastings site. Estimated total cleanup costs, including capital outlays
and future maintenance costs for soil and groundwater remediation of
approximately $17 million, are based on independent engineering studies.
Currently there are five named PRPs, including the company, at the Hastings
site. Two have entered de minimis agreements with the EPA. The company has
assumed that it will participate in 33 percent of the soil and groundwater
cleanup costs. The company believes, based on its investigation, that there are
a number of other firms who could be named as PRPs in the future. The
discontinued operations provision included an additional $2.3 million to reflect
the company's estimated share of the revised cleanup cost estimates. The
company's estimated share of the costs is based upon its assessment of the total
cleanup costs, its potential exposure, and the viability of the other named
PRPs. The company has commenced litigation against several insurance carriers
who maintained liability coverage for the Hastings plant while the company owned
the facility. Two carriers recently requested settlement discussions. No assumed
recovery from insurance carriers has been included in the provision for
discontinued operations.
The company had previously recorded a receivable of $2.2 million, plus interest,
from Regional Waste System (RWS) of Portland, Maine related to the settlement of
disputes over construction of a waste-to-energy plant. RWS paid $2.2 million
into an escrow account and filed a claim against the company alleging that
certain obligations undertaken by the company in the settlement had not been
properly completed. Early in 1994, a jury ruled in RWS's favor and awarded it
$1.7 million of the escrow balance. The discontinued operations provision
included the write-down of the receivable to reflect the jury award.
An additional amount was also provided for estimated legal fees anticipated to
pursue various lawsuits and claims, the most significant of which are the
Hastings insurance litigation, Continental Energy Associates (CEA) and
Venezuelan matters discussed in Note 8, Contingent Liabilities.
No loss provision has been made for the CEA and Venezuelan disputes because it
is not possible to determine the outcome of these matters or to estimate with
any degree of probability the range of potential costs which may be involved.
Claims against the company, which management believes are grossly overstated,
exceed $45 million.
The company received cash proceeds of $2.0 million in 1993, $2.6 million in 1992
and $11,000 in 1991 from the repayment of notes received from the previous sales
of discontinued businesses. The remaining assets and liabilities at December 31,
1993 and December 31, 1992 of the discontinued operations relate to non-
cancelable leases, environmental, insurance, legal and other matters associated
with exiting the engineering and construction business and are presented below:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992
-------- --------
<S> <C> <C>
Current assets:
Accounts and retainers
receivable $ 23 $ 23
Other 3,512 2,925
-------- --------
Total current assets 3,535 2,948
-------- --------
Accounts and retainers
receivable 472 18,268
Other 309 4,765
Total assets $ 4,316 $ 25,981
======== ========
Current liabilities:
Accounts and retainers
payable $ 178 $ 758
Accrued loss on leases 2,448 2,779
Other 5,363 9,139
-------- --------
Total current
liabilities 7,989 12,676
-------- --------
Accounts and retainers
payable 4,745 2,012
Accrued loss on leases 7,854 9,133
Other 10,312 7,097
-------- --------
Total liabilities $ 30,900 $ 30,918
======== ========
Net liabilities and
accrued loss on leases
of discontinued
operations $(26,584) $ (4,937)
======== ========
</TABLE>
NOTE 3: ACQUISITIONS AND DISPOSITIONS
In March, 1992, the company sold its asphaltic concrete operation in Loxley,
Alabama to Mobile Asphalt Company (MAC). During the second quarter of 1992, MAC
completed the terms of the sales agreement by purchasing certain assets related
to the company's asphalt operation in Mobile, Alabama. A pre-tax gain of
$894,000 was recognized for these transactions.
NOTE 4: INVENTORIES
Inventories for the respective years ended December 31 are classified as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992
------- -------
<S> <C> <C>
Finished goods $40,660 $45,225
Work in process 3,092 2,908
Materials and supplies 13,784 15,714
------- -------
Net inventories $57,536 $63,847
======= =======
</TABLE>
19 ANNUAL REPORT 1993
<PAGE>
NOTE 5: NOTES PAYABLE
Notes payable at December 31 include the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992
------- -------
<S> <C> <C>
Short-term:
Current portion of
long-term notes $ 4,488 $ 4,411
Current portion of
obligations under
capital leases -- 306
------- -------
4,488 4,717
Long-term:
Variable rate revolving
line of credit, due
1995 36,500 31,900
9.95% notes, payable
through 1995 5,200 7,600
11.21% notes, payable
through 2002 41,800 41,800
Variable rate note,
payable through 1996 8,139 9,982
Other notes, payable
through 2008 1,369 1,181
Obligations under
capital leases -- 306
------- -------
93,008 92,769
Deduct: Current portion
of notes and leases 4,488 4,717
------- -------
Total $88,520 $88,052
======= =======
</TABLE>
The following is a description of the terms and conditions of the company's
major debt instruments:
The $36.5 million note payable is borrowed under a $59.0 million revolving
credit/letter of credit facility with First Alabama Bank, PNC Bank, N.A.,
Continental Bank, N.A. and The Prudential Insurance Company of America. Interest
on the revolver is equal to First Alabama Bank's base lending rate plus 1.25
percent. The credit facility is scheduled to expire on April 30, 1995.
The 9.95 percent promissory notes require quarterly interest payments and annual
principal repayments of $2.4 million. The agreement provides for optional
prepayments, within certain limits.
The 11.21 percent term notes require quarterly interest payments and annual
principal repayments in the amount of $6.0 million beginning January, 1996.
Obligations under the revolving credit/letter of credit facility, the 11.21
percent term notes and the 9.95 percent promissory notes are secured by a pledge
of the stock of Dravo Basic Materials Company and Dravo Lime Company along with
their accounts receivable and finished goods inventories. Additionally, certain
contract rights, patents and mortgages on the company's Maysville, Black River,
Three Rivers and Longview plants (except the kiln pledged under the variable
rate note) have been pledged as collateral. The agreements contain uniform
restrictive covenants that require the company on a consolidated basis, and
Dravo Basic Materials and Dravo Lime on a combined basis, to maintain minimum
working capital levels; restrict incurrence of debt, liens and lease
obligations; restrict the sale of significant assets and as to Dravo Basic
Materials and Dravo Lime, limit payment of dividends or making of loans to the
company. The company may not declare common stock dividends until cumulative
earnings from continuing operations after September 30, 1991, excluding gains
from the sale of capital assets, exceed $40.0 million or cumulative losses from
discontinued operations after September 30, 1991, whichever is higher, and then
only to the extent of 50 percent of such earnings. At December 31, 1993,
cumulative earnings from continuing operations since September 30, 1991 exceeded
cumulative discontinued operations losses during the same time period by $1.8
million. No dividends on common stock were declared nor are any contemplated.
The variable rate note is secured by a lime kiln at the company's Longview lime
facility. Principal payments of $154,000 plus interest on the outstanding
balance are due monthly through May, 1996. A balloon payment of $3.8 million
will be due June, 1996. The note was converted to a variable rate from a fixed
rate of 11.0 percent in July, 1992. Interest on the note is equal to First
Alabama Bank's base lending rate plus 2.5 percent with a floor of 8.0 percent
and a ceiling of 11.5 percent.
At December 31, 1993 approximately $157.4 million of Dravo Basic Materials and
Dravo Lime net assets were restricted as to payment of dividends or loans to the
company. Assets pledged under certain notes and leases had a book value of
$146.1 million at December 31, 1993.
In February, 1993, the company entered into an interest rate swap agreement with
Continental Bank, N.A. on the $41.8 million fixed rate long-term notes payable.
This transaction has been accounted for as a hedge of those notes. The swap
provides that Continental will pay the company interest at 11.21 percent based
on a notional amount of $41.8 million. In return, the company will pay
Continental the three month London Interbank Offered Rate (LIBOR) plus 6.57
percent on the same $41.8 million notional amount. The company's rate, which is
adjusted on the twenty-third day of each February, May, August, and November, is
currently 10.02 percent. The company can unwind the swap at anytime prior to its
expiration in February, 1996. If the swap is unwound prior to the expiration
date, the company would record either a gain or loss based on the bond yield on
the termination date. On December 31, 1993, the company was in a gain position.
Differences between the fixed rate paid to the company and the floating rate
paid by the company will be accounted for as adjustments to interest expense
while the swap is in force.
Amounts payable on long-term debt due in 1994 and thereafter are: 1994, $4.5
million; 1995, $4.9 million; 1996, $10.7 million; 1997 $6.2 million; 1998, $6.1
million; and after 1998, $24.1 million.
DRAVO CORPORATION 20
<PAGE>
NOTE 6: REDEEMABLE PREFERENCE STOCK
The company has outstanding 200,000 shares of cumulative, convertible,
exchangeable, Series D Preference Stock. Cumulative dividends of $3.0875 per
share are payable quarterly. Each share of preference stock may be converted, at
the option of the holder, into 8.0 shares of common stock. The stock is also
exchangeable, at the option of the company, for 12.35 percent Senior
Subordinated Convertible notes due September 21, 2001. The 12.35 percent senior
subordinated notes would contain the same conversion rights, restrictions and
other terms as the preference stock.
The company may redeem the stock, in whole or in part, after January 21, 1996
for $100 per share plus accrued dividends, provided that the market price of
common stock as of the date of the decision to redeem the shares, as defined in
the Certificate of Designations, Preferences and Rights for the Series D
Preference Stock, shall be at least equal to 175 percent of the conversion price
for the preference stock. Mandatory annual redemption of the lesser of 50,000
shares or the number of shares then outstanding begins September 21, 1998 at
$100 per share plus accrued dividends. In the event of liquidation of the
company, the holders of outstanding Series D Preference Stock shall be entitled
to receive a distribution of $100 per share plus accrued dividends.
The company had outstanding 32,386 and 35,386 shares of cumulative, convertible
Series B Preference Stock on December 31, 1993 and 1992, respectively.
Cumulative annual dividends of $2.475 per share are payable quarterly. Each
share of Series B Preference Stock may be converted at the option of the holder
to 3.216 shares of common stock. In the event of the company's liquidation, the
holders of the Series B Preference Stock are entitled to $55 per share plus all
accumulated and unpaid dividends.
NOTE 7: COMMITMENTS
Total rental expenses for 1993, 1992 and 1991 were $34.4 million, $33.1 million
and $35.8 million, respectively. The minimum rentals under noncancelable
operating leases for these years were $17.5 million, $18.9 million and $21.1
million, respectively. The minimum future rentals under noncancelable operating
leases and future rental receipts from subleases to third parties as of December
31, 1993 are indicated in the following table. Of the $35.6 million net minimum
payments, $10.1 million has been expensed in connection with discontinued
operations.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1994 $ 16,437
1995 14,693
1996 13,549
1997 12,513
1998 4,737
After 1998 915
--------
Total minimum payments
required 62,844
Less: Sublease rental
receipts (27,194)
--------
Net minimum payments $ 35,650
========
</TABLE>
At December 31, 1993 and 1992, the company had outstanding letters of credit
totaling $10.0 million.
NOTE 8: CONTINGENT LIABILITIES
The company has been notified by the Federal Environmental Protection Agency
(EPA) that the EPA believes the company is a potentially responsible party (PRP)
for the cleanup of soil and groundwater contamination at three subsites in
Hastings, Nebraska, one of the EPA's priority sites for taking remedial action
under the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA).
At one of these subsites, a municipal landfill, the company, after a limited
investigation, has determined that it believes it disposed of no hazardous
substances at the particular site and has so informed the EPA. On December 31,
1991, the EPA sent a formal demand to the company as well as other PRPs at this
subsite demanding that they reimburse the EPA for already incurred response
costs in the amount of $1.2 million, and requesting that the PRPs submit a good
faith proposal to perform soil and groundwater remediation at this subsite. The
company has rejected the EPA's demand and decided not to submit the offer
requested by the EPA. No PRP at this subsite has agreed to pay the EPA's
response costs. As a result, statutory interest is being added to the EPA's
response costs. Other PRPs, including the local municipality, have agreed to
perform the remedial investigation and to design soil and groundwater
remediation remedies at this subsite, but no party has agreed to conduct the
remediation.
At the second subsite, the company, again after a limited investigation,
concluded that release of contaminants from this subsite is not sufficient to
warrant the taking of remedial action. In January, 1994 the EPA sent a specific
notice to the company that the EPA considered it and three other parties PRPs at
this subsite. The letter invited the company and the other PRPs to make an offer
to conduct a remedial investigation and feasibility study (RI/FS) of this
subsite and stated that the EPA was in the process of preparing a workplan for
the RI/FS.
With respect to the third subsite, the company, along with one other PRP, has
been served with administrative orders directing it to undertake soil
remediation and interim
21 ANNUAL REPORT 1993
<PAGE>
groundwater remediation at that subsite. The company is currently complying with
these orders while reserving its right to seek reimbursement from the United
States for its costs if it is determined it is not liable for response costs or
if it is required to incur costs because of arbitrary, capricious or
unreasonable requirements imposed by the EPA. The issuance of the order
concerning interim groundwater remediation followed many months of unresolved
negotiations with the EPA, the other PRP and the company's insurers with respect
to the EPA's demands that the company and the other PRP either finance or
voluntarily undertake the interim groundwater remediation as well as their
liability to complete the soil remediation and to pay for past response costs.
The EPA has taken no legal action with respect to its demand that the company
and the other PRP pay its past response costs. A third PRP has been notified by
the EPA that the EPA regards it as potentially liable under Section 107(a) of
CERCLA for costs the EPA has incurred or will incur in responding to the release
and threat of release at this subsite. A total of five parties have been named
by the EPA as PRPs at this subsite.
A contribution claim related to this subsite against two of the PRPs was
dismissed by the Nebraska District Court after they entered a de minimis
settlement with the EPA providing for, among other things, contribution
protection in return for access to their property. The Eighth Circuit Court of
Appeals recently affirmed the dismissal. The de minimis settlement agreement
does provide for the loss of contribution protection if evidence is developed
that these two PRPs contributed to contamination at this subsite.
The company may proceed against other parties at the subsite who have not been
named by the EPA as PRPs or who have not contributed to the company's cost in
complying with the EPA's administrative orders.
The company, along with other PRPs from various other subsites, has recommended
that the EPA adopt area-wide institutional controls as the permanent remedy at
the site. No formal response to this proposal has been received by the PRPs.
The company notified its primary and excess general liability insurance carriers
of the claims by the EPA at the first and third subsites. Although one primary
carrier agreed to pay for a part of the company's defense, it has not done so
and has refused to pay for expenses the company has already incurred. The
company's other primary carrier has declined coverage altogether. On August 10,
1992 the company filed suit in the Alabama District Court against its primary
liability insurance carriers seeking a declaratory judgment that the company is
entitled to a defense and indemnity under its contracts of insurance (including
certain excess policies provided by one of the primary carriers). This complaint
is limited to the EPA's claims at the third subsite. The suit has been amended
to include as a defendant the excess liability carrier of the company's
predecessor at the site. An investigation of the coverage provided by the
primary carrier of the company's predecessor is also underway. An award of
punitive damages is being sought against two of these carriers for their bad
faith in failing to investigate the company's claim and/or denying the company's
claim. The case is proceeding in accordance with a case management order issued
by the District Court Magistrate assigned to handle pretrial matters. The
company has notified its primary and excess general liability carrier, as well
as the excess carrier of its predecessor, of the receipt of its notice of
potential liability at the second subsite.
Estimated total cleanup costs, including capital outlays and future maintenance
costs for soil and groundwater remediation of approximately $17 million, are
based on independent engineering studies. The company has assumed that it will
participate in 33 percent of the costs.
Included in the discontinued operations provision is the company's estimate of
its share of the likely cost of soil and groundwater remediation at these three
subsites. The company's estimated share of the costs is based on its assessment
of the total cleanup costs, its potential exposure, and the viability of other
named PRPs.
On May 27, 1993 the company was also notified by the EPA that the company might
be liable for costs incurred by the United States in responding to a release or
threatened release of hazardous substances at a non-operating research facility
in Golden, Colorado. The notice, which was received without any advance
indication that the EPA regarding the company as a potentially liable party,
gave the company seven days to express its intent to conduct or participate in
actions at the site.
The company, whose engineering and construction division dealt with the research
facility on specific projects from 1968 to 1980, is one of about ninety non-
governmental former clients of the research facility to receive such notices.
The United States has indicated it also regards a state educational institution
associated with the research facility and various federal agencies as
potentially liable for the cleanup.
On June 8, 1993 the company responded to the EPA's notice of potential liability
by stating that it does not believe it is a responsible party at the site. The
company has also declined to participate in remedial actions at the site. In
December, 1993 the company received a Waste-In list for this subsite and Notice
of Planned De Minimis Settlement Offer for Eligible Parties Associated with the
Subsite. On the basis of the alleged volumetric contribution of waste attributed
to the company by the EPA, the company believes it will be offered a de minimis
settlement at this subsite.
There are no reliable estimates of the cost of remediation at this site.
DRAVO CORPORATION 22
<PAGE>
The company has notified its insurance carriers of its receipt of the EPA's
notice of potential liability. The company's primary carriers have notified the
company of their intent to investigate the company's claim, requested additional
information and reserved all of their rights and defenses.
In 1990, the company filed an action now pending in Luzerne County, Pennsylvania
alleging breach of contract and unjust enrichment arising out of the termination
of a Turnkey Construction Contract for the Hazleton Gasification Facility
Expansion. The suit named as defendants Continental Energy Associates (CEA), the
project owner, Continental Cogeneration Corporation(CCC), the general partner of
CEA, and Swiss Bank Corporation, the project lender. CEA and CCC filed a
separate suit against the company which, as amended, seeks damages for breach
of contract, negligent design and construction, negligent misrepresentation,
fraud and tortious interference with the contract of surety. The two suits,
along with a third separate action commenced by CEA and CCC against the
company's surety, the Insurance Company of North America, have been
consolidated. Documents produced by CEA and CCC during the course of discovery
allege claims at an amount from approximately $10 million to approximately $35
million. However, the construction contract contains a provision limiting
damages to the value of the contract (a net of approximately $10 million) which
the company would seek to have specifically enforced. The company continues to
vigorously assert its claims and to deny any liability.
The company filed an action in 1981 to collect on a promissory note issued by
Meladuras Portuguesa, C.A. (Melaport) and its principal, Alberto Caldera
(Caldera). In 1985, Melaport and Caldera filed a counterclaim for damages
alleging the company breached a contract between Melaport and the company
relating to engineering and procurement services rendered between 1973 and 1978
for a sugar cane processing facility. A local Venezuelan court ruled partially
in favor of Melaport's counterclaim. The ruling was upheld by a Venezuelan
appeals court on September 25, 1992 and by the Venezuelan Supreme Court on July
8, 1993. The court ruling does not specify damages to be paid but does identify
certain categories of damages to which Caldera and Melaport are entitled: (1)
the losses suffered by Melaport from the time it commenced operations in 1974 to
1978; (2) the value of certain equipment and other assets which had been pledged
by Melaport to secure borrowing in connection with the project; (3) the value of
approximately 540 acres of land which a corporation controlled by Caldera had
mortgaged to secure the borrowings. The amount of damages in these three
categories will be established by an appraisal process conducted by the trial
court. Damages will be adjusted for inflation since the counterclaim was filed
in 1985 and for interest at 12 percent per year.
While the opposing counsel has asserted that the damages are in excess of $35
million, the company at this time cannot predict the result of the appraisal
proceedings.
The company has no assets in Venezuela and will challenge the enforcement in the
United States if a judgment is finally issued by the Venezuelan courts. On
November 2, 1993, the company filed suit against Melaport and Caldera in the
United States District Court for the Western District of Pennsylvania, seeking
an injunction and a declaratory judgment with respect to the proceedings in
Venezuela. The company is requesting a determination that any judgment in the
Venezuelan proceedings is not enforceable against the company and is also
seeking indemnification for all costs, expenses, losses and damages incurred and
which may be incurred by the company in the Venezuelan proceedings and the costs
and expenses of the United States District Court action. On February 25, 1994,
Melaport and Caldera filed a motion asking the Court to dismiss the suit based
on the lack of personal jurisdiction over the defendants and based on the
doctrines of forum non conveniens, res judicata and judicial estoppel. It also
asked the Court to dismiss, as premature, the company's demand for injunctive
and declaratory relief. If the ruling of the Venezuelan Courts is successfully
enforced against the company in the United States, the liability would be
material to the company.
If these lawsuits, claims and assertions, discussed above, are sustained against
the company, material charges would be recorded in the company's financial
statements. However, in some instances, it is not possible to determine the
outcome of these matters or to estimate with any degree of certainty the range
of potential costs which may be involved. In other instances, based upon the
knowledge the company has of these lawsuits, claims and assertions, management
believes the ultimate disposition of these matters will not result in material
charges to earnings in excess of amounts recorded in the financial statements.
Other claims and assertions made against the company will be resolved, in the
opinion of management, without material additional charges to earnings.
The company has asserted claims, both in lawsuits and in administrative
proceedings for contract adjustments under various contracts, which management
believes to be meritorious, but no estimate can be made at present of the timing
or the amount of recovery.
NOTE 9: RETIREMENT PLANS
The company has several defined benefit plans covering substantially all
employees. Benefits for the salaried plan are based on salary and years of
service, while hourly plans are based on negotiated benefits and years of
service. The company's funding policy is to make contributions as are necessary
to provide assets sufficient to meet the benefits to be paid to plan members in
accordance with the requirements of the Employee Retirement Income Security Act
of 1974. Plan assets are composed primarily of government securities and
corporate debt and equities.
23 ANNUAL REPORT 1993
<PAGE>
The status of combined employee pension benefit plans as of December 31, 1993
and 1992 is shown below:
<TABLE>
<CAPTION>
1993 1992
---------------------------------------------- -----------------------------------------------
PLANS WHICH HAVE PLANS WHICH HAVE PLANS WHICH HAVE PLANS WHICH HAVE
FUNDED ASSETS IN EXCESS ACCUMULATED BENEFIT FUNDED ASSETS IN EXCESS ACCUMULATED BENEFIT
OF ACCUMULATED OBLIGATIONS IN EXCESS OF ACCUMULATED OBLIGATIONS IN EXCESS
BENEFIT OBLIGATIONS OF FUNDED ASSETS BENEFIT OBLIGATIONS OF FUNDED ASSETS
----------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
Actuarial present value of
projected benefit
obligation:
Vested employees $161,662 $22,109 $143,692 $19,623
Nonvested employees 397 2,859 28 2,886
-------- ------- -------- -------
Accumulated benefit
obligation 162,059 24,968 143,720 22,509
Effect of projected future
salary increases 4,241 1,051 4,071 1,398
-------- ------- -------- -------
Total projected benefit
obligation 166,300 26,019 147,791 23,907
Plan assets 168,699 20,360 153,400 19,226
-------- ------- -------- -------
Assets in excess of (less
than) projected
benefit obligation $ 2,399 $(5,659) $ 5,609 $(4,681)
======== ======= ======== =======
Prepaid (accrued) pension
expense $ 9,860 $(4,801) $ 9,037 $(3,487)
Unamortized net asset
(liability) existing at date
of adoption of SFAS No. 87 1,375 (897) 2,062 (972)
Unrecognized net gain (loss)
from actuarial experience (8,836) (4,186) (5,490) (1,956)
Adjustment to recognize
minimum liability -- 4,225 -- 1,734
-------- ------- -------- -------
$ 2,399 $(5,659) $ 5,609 $(4,681)
======== ======= ======== =======
</TABLE>
The components of 1993, 1992 and 1991 net periodic pension (income) expense are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) YEARS ENDED DECEMBER 31,
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Service cost of benefits
earned during the year $ 901 $ 900 $ 784
Interest cost on projected
benefit obligation 14,431 14,101 14,352
Actual return on plan assets (30,951) (12,540) (30,301)
Net amortization (deferral) 15,566 (3,028) 16,390
-------- -------- --------
Net pension (income)/
expense for year $ (53) $ (567) $ 1,225
======== ======== ========
</TABLE>
The following assumptions were used for the valuation of the pension obligations
as of December 31:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.5% 8.5% 8.5%
Expected long-term rate of
return on assets 8.0% 9.0% 9.0%
Rate of increase in
compensation levels 5.0% 6.0% 6.0%
</TABLE>
NOTE 10: POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The company and certain subsidiaries provide health care and life insurance
benefits for retired employees. Employees may become eligible for certain
benefits if they meet eligibility qualifications while working for the company.
Currently, the company pays all costs increases for employees who retired prior
to 1985 and who have not elected to participate in a new plan in which they pay
cost increases, in exchange for expanded benefits, in excess of a specified
amount. For employees retiring after 1984, the company's liability is limited to
a fixed contribution amount for each participant or dependent. This amount is
reduced significantly when the participant becomes eligible for Medicare
coverage. The company has made no commitment to adjust the amount of its
contributions.
The company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS
106) effective January 1, 1993. The statement requires that an accrual be made
for the expected cost of providing postretirement benefits to the employee and
the employee's beneficiaries and covered dependents during the years that an
employee renders employment services. The restructuring and downsizing that
occurred over the past several years have left the company with a large
population of retired employees compared to active employees. Because of this,
DRAVO CORPORATION 24
<PAGE>
the expense the company recognized as a result of implementing SFAS 106 was not
materially different from the previous practice of expensing postretirement
benefits on a pay-as-you-go basis. The cost of postretirement benefits other
than pensions was $4.9 million in 1993, $4.5 million in 1992 and $4.7 million in
1991.
No funds are segregated for future postretirement obligations. The company is
amortizing its accumulated postretirement benefit obligation (APBO) over a 20
year period. The APBO was calculated using a discount rate of 7.5 percent and a
health care cost trend rate of 11.5 percent in 1993, gradually declining to 6.5
percent in 1999. An increase in the health care cost trend rate of one percent
would increase the APBO at December 31, 1993 by $1.4 million and the total
service and interest rate components of the 1993 postretirement benefit cost by
$116,000.
Postretirement benefit cost for 1993 includes the following components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Service cost--benefits earned during the period $ 177
Interest cost on accumulated postretirement
benefit obligation 2,887
Amortization of accumulated postretirement
benefit obligation 1,789
-------
Postretirement benefit cost $ 4,853
=======
</TABLE>
The company's postretirement benefit plans funded status reconciled with the
amount included in the company's consolidated balance sheet at December 31, 1993
is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Accumulated postretirement benefit obligation:
Retirees and related beneficiaries $34,190
Other fully eligible participants 888
Other active participants not fully eligible 4,887
-------
Accumulated postretirement benefit obligation 39,965
Unrecognized transition obligation (33,994)
Unrecognized loss (5,136)
-------
Accrued postretirement benefit liability $ 835
=======
</TABLE>
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 112 "Employers' Accounting for Postemployment Benefits"
(SFAS No. 112) in November, 1992. The company must adopt SFAS No. 112 effective
January 1, 1994. The Statement requires accrual of the estimated cost of
benefits provided by the employer to former or inactive employees, including
their beneficiaries and covered dependents, after employment but before
retirement. A reliable estimate of SFAS No. 112's impact on the company's
financial condition has not been determined, but management believes the effect,
based on the company's current postemployment benefit programs, will not be
material.
NOTE 11: STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND PERFORMANCE SHARES
The following summary shows the changes in outstanding common stock options and
stock appreciation rights (collectively, rights):
<TABLE>
<CAPTION>
1978 1983 1988
PLAN PLAN PLAN TOTAL
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Outstanding at
December 31, 1992 55,100 198,650 912,000 1,165,750
Granted -- 70,000 88,000 158,000
Exercised -- -- (12,700) (12,700)
Forfeited (1,900) (10,200) -- (12,100)
------ ------- ------- ---------
Outstanding at
December 31,
1993 53,200 258,450 987,300 1,298,950
====== ======= ======= =========
</TABLE>
Prices per share of outstanding rights at December 31, 1992 were $5.94 to
$19.31; a grant was awarded during 1993 at a price of $11.13. Rights were
exercised during the year at $7.94. Rights were forfeited during 1993 at prices
between $11.25 and $19.31. Rights outstanding at December 31, 1993 are
exercisable at prices ranging from $5.94 to $19.31 per share.
Of the stock appreciation rights and options outstanding from the 1978, 1983 and
1988 plans, 53,200, 188,450 and 836,800 shares, respectively, were exercisable
at December 31, 1993. The exercise of options does not necessitate a charge or
credit to income.
Under the 1978 Plan and 1988 Plan for executives and key employees, options may
be granted either alone or in tandem with related stock appreciation rights, or
stock appreciation rights may be granted separately. The 1983 Plan provides for
the granting of options, stock appreciation rights (either separate or in tandem
with a related option), and performance shares. The price of stock options and
the basis of stock appreciation rights so granted is the fair market value on
the date of grant. Any incremental value of stock appreciation rights and
performance shares granted is recognized as expense, while a decline in the
market value of the stock is recognized as a reduction in expense to the extent
previously recognized. There was no change in the incremental value during the
last three years.
25 ANNUAL REPORT 1993
<PAGE>
No additional grants can be made from the 1978 or 1983 plans, both of which have
expired. At December 31, 1993 and 1992, there were 0 and 88,000 shares,
respectively, available for granting common stock options and/or stock
appreciation rights under the 1988 plan. There were no performance shares
outstanding at December 31, 1993 and 1992.
NOTE 12: SHAREHOLDERS' EQUITY
Shareholders' equity at December 31 is presented below:
<TABLE>
<CAPTION>
PREFERENCE COMMON OTHER TREASURY
(IN THOUSANDS) STOCK STOCK CAPITAL SHARES
---------- ------- ------- --------
<S> <C> <C> <C> <C>
Balance, January 1, 1991 $42 $14,923 $65,910 $(1,969)
Common shares issued through:
Retirement of Series B
preference stock (9,648) (3) 10 (7)
Common stock options exercised
(4,000) 3 65
Recognition of minimum liability
on pension plan 24
--- ------- ------- -------
Balance, December 31, 1991 $39 $14,933 $65,930 $(1,904)
Common shares issued through:
Retirement of Series B
preference stock (12,864) (4) 12 (9)
Common stock options exercised
(4,000) 64
Recognition of minimum liability
on pension plan 39
--- ------- ------- -------
Balance, December 31, 1992 $35 $14,945 $65,960 $(1,840)
=== ======= ======= =======
Common shares issued through:
Retirement of Series B
preference stock (9,648) (3) 10 (7)
Common stock options exercised
(12,700) 13 88
Recognition of minimum liability
on pension plan (2,781)
--- ------- ------- -------
Balance, December 31, 1993 $32 $14,968 $63,260 $(1,840)
=== ======= ======= =======
</TABLE>
NOTE 13: INCOME TAXES
Income before taxes and provisions for income tax expense (benefit) from
continuing operations at December 31 are:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
Income before
taxes $ 10,471 $12,719 $16,118
-------- ------- -------
Current federal
income taxes $ -- $ 5,237 $ 2,885
Deferred federal
income taxes (24,853) (3,664) 983
Current state
income taxes 198 828 --
-------- ------- -------
Total $(24,655) $ 2,401 $ 3,868
======== ======= =======
</TABLE>
The provisions for income tax benefit from discontinued operations at December
31 are:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
Current federal
income taxes $ -- $ -- $(1,781)
Deferred federal
income taxes -- -- (1,787)
-------- ------- -------
Total $ -- $ -- $(3,568)
======== ======= =======
</TABLE>
DRAVO CORPORATION 26
<PAGE>
The actual income tax expense attributable to earnings from continuing
operations for the years ended December 31, 1993, 1992 and 1991 differed from
the amounts computed by applying the U. S. federal tax rate of 34 percent to
pretax earnings from continuing operations as a result of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
Computed "expected"
tax expense $ 3,560 $ 4,325 $ 5,480
Alternative minimum tax -- -- 300
Percentage depletion (3,374) (2,641) (2,015)
State income taxes, net of
federal income
tax benefit 131 546 --
Other items (119) 171 103
Benefit of operating
loss carryforwards (24,853) -- --
-------- ------- -------
Provision (benefit)
for income tax $(24,655) $2,401 $ 3,868
======== ======= =======
</TABLE>
The significant components of the deferred income tax benefit attributable to
income from continuing operations for the year ended December 31, 1993 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993
--------
<S> <C>
Deferred tax expense (exclusive of the effects
of other components listed below) $ (2,431)
Decrease in beginning-of-the-year balance of the
valuation allowance for deferred tax assets (22,422)
--------
Total $(24,853)
========
</TABLE>
For the years ended December 31, 1992 and 1991, deferred income tax (benefit)
expense of ($3.7 million) and $983,000, respectively, results from timing
differences in the recognition of income and expense for income tax and
financial reporting purposes. The sources and tax effects of those timing
differences are presented below:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1992 1991
------- -----
<S> <C> <C>
Book depreciation in excess
of tax depreciation $(4,783) $(437)
Differences in book and tax basis
for inventories 695 (10)
Pension contribution in excess
of book expense 755 922
State income taxes 177 521
Expenses allowable for taxes
when paid (589) (62)
Other 81 49
------- -----
Total $(3,664) $ 983
======= =====
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1993 are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993
--------
<S> <C>
Deferred tax assets:
Provision for discontinued operations $ 9,039
Accounts receivable, principally due to
allowance for doubtful accounts 439
Inventories, principally due to additional
costs inventoried for tax purposes
pursuant to the Tax Reform Act of 1986 214
Compensated absences, principally due to
accrual for financial reporting purposes 758
Net operating loss carryforwards 59,313
Investment tax credit carryforwards 2,992
Other 2,025
--------
Total gross deferred tax assets 74,780
Less valuation allowance (31,663)
--------
Net deferred tax assets 43,117
--------
Deferred tax liabilities:
Properties and equipment, principally due
to depreciation 15,603
Pension accrual 2,647
Other 14
--------
Total gross deferred tax liabilities 18,264
--------
Net deferred tax asset $ 24,853
========
</TABLE>
The net change in the total valuation allowance for the year ended December 31,
1993 was a decrease of $22.4 million.
The company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," (SFAS 109) effective January 1, 1993. The
statement requires that deferred income taxes reflect the tax consequences on
future years of differences between the tax bases of assets and liabilities and
their bases for financial reporting purposes. In addition, SFAS 109 requires the
recognition of future tax benefits, such as net operating loss carryforwards
(NOLs), to the extent that realization of such benefits are more likely than
not. There was no cumulative effect of this accounting change at the time of
adoption.
27 ANNUAL REPORT 1993
<PAGE>
The company had NOLs of approximately $174.4 million at December 31, 1993
because of losses associated with discontinued businesses. These carryforwards,
which management expects will be fully utilized, expire as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
2002 $18,039
2003 76,662
2004 39,012
2005 17,428
2006 7,336
2007 2,744
2008 13,228
-------
</TABLE>
Under the provisions of SFAS 109, NOLs represent temporary differences that
enter into the calculation of deferred tax assets and liabilities. At January 1,
1993, primarily as a result of the NOLs, the company was in a net deferred tax
asset position under SFAS 109. The full amount of the deferred tax asset was
offset by a valuation allowance due to uncertainties associated with unresolved
issues related to discontinued operations.
In the fourth quarter of 1993, the company reduced its valuation allowance
resulting in a net deferred tax asset of $24.9 million. Two factors contributed
to the reduction in the valuation allowance. First was the resolution of long-
standing litigation between the company and the City of Long Beach, California
regarding a waste-to-energy plant the company built for the city and the ability
to quantify, relying upon advice of legal counsel, the potential financial
impact of the remaining uncertainties associated with previously discontinued
operations. Second, the company was awarded a contract to supply American
Electric Power's Gavin plant with 450,000 tons of lime annually for 15 years
commencing in 1995. In addition, the company has pending the renewal of several
existing contracts. When they are finalized, utility lime sales backlog will
exceed $800 million. At that point, long-term contracts will account for more
than 50 percent of the company's annual lime revenue. As a result, the company
believes that revenues and income from its lime subsidiary can be reasonably
projected over the life of its long-term contracts for purposes of determining
whether the realization of the asset resulting from the utilization of NOLs in
future years is more likely than not.
Income projections for the contract lime business were based on historical
information adjusted for contract terms. Projections for the non-contract lime
business were based on the last three year's results. The company projected
future income for its aggregates business based on the last three year's
results, a period of low profitability for Dravo Basic Materials.
In assessing the valuation allowance, estimates were made as to the potential
financial impact on the company should adverse judgments be rendered in the
remaining substantive uncertainties associated with discontinued operations. The
significant uncertainties involve litigation related to contract claims and
environmental matters and are discussed more fully in Note 8, Contingent
Liabilities. Management's position in these cases is to vigorously pursue its
claims and to contest the asserted claims and liability for environmental
cleanup. In determining the appropriate valuation allowance, however, management
has used the upper limit of the potential financial impact estimated for these
matters. Claims against the company in these matters, which management believes
are grossly overstated, exceed $45 million.
In addition to projecting future income, the company considered an appropriate
tax planning strategy as permitted by SFAS 109. A tax planning strategy is an
action that a company ordinarily might not implement but would implement, if
necessary, to realize a tax benefit for an NOL before it expires. The tax
planning strategy must be prudent and feasible. In early 1992, the company
explored the option of retiring long-term debt by exercising a sale and
leaseback of the above-ground assets at its Maysville mine and lime production
facility. The terms received from a commercial bank at that time and an
independent appraisal indicated the sale leaseback would create taxable income
in excess of $70 million. The consideration of this tax planning strategy,
supported by the company's forecast that it will generate sufficient future
taxable income to realize the entire deferred tax asset prior to expiration of
any NOLs without implementing the strategy, results in the assessment that the
realization of a $24.9 million net deferred tax asset is more likely than not.
In order to fully realize the net deferred tax asset, the company will need to
generate future taxable income of approximately $73.2 million prior to the
expiration of the NOLs. Historically, Dravo Basic Materials and Dravo Lime's
combined cumulative taxable earnings for the past five years total $64.7
million. There can be no assurance, however, that the company will generate any
earnings or any specific level of continuing earnings.
Tax benefits of $8.8 million for investment tax credits expiring in 1994 and
later are also being carried forward.
The company recorded an extraordinary credit of $1.6 million for the year ended
December 31, 1992, representing the recognition of income tax benefits resulting
from the utilization of net operating loss carryforwards for financial reporting
purposes. In 1991, a $3.6 million tax benefit from utilization of net operating
loss carryforwards was netted against the provision for loss on discontinued
operations.
DRAVO CORPORATION 28
<PAGE>
NOTE 14: FAIR VALUE OF FINANCIAL INSTRUMENTS
The company has estimated the fair value of certain on- and off-balance sheet
financial instruments. The estimated fair value of financial instruments with
extended maturities are presented below:
<TABLE>
<CAPTION>
1993 1992
----------------- -----------------
CARRYING FAIR CARRYING FAIR
(IN THOUSANDS) VALUE VALUE VALUE VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Notes payable $93,008 $95,659 $92,769 $93,890
Series D
Preference Stock 20,000 23,544 20,000 22,504
Off-balance sheet
financial
instrument:
Interest rate swap -- 123 -- --
-------- ------- -------- -------
</TABLE>
The carrying amounts of notes receivable approximate fair value. The fair value
of notes payable and the Series D preference stock is based upon the amount of
future cash flows associated with each instrument discounted using the company's
estimated borrowing rate for similar debt instruments of comparable maturity.
The Preference Stock fair value also includes an estimated factor to value the
conversion feature. The fair value of the interest rate swap is the estimated
amount the company would have received if it had terminated the agreement on
December 31, 1993.
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
NOTE 15: RESEARCH AND DEVELOPMENT
Research and development activity for the years ended December 31 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Total research and
development expense $4,166 $3,833 $3,852
Billings to third
parties 1,915 1,804 2,854
------ ------ ------
Net research and
development expense $2,251 $2,029 $ 998
====== ====== ======
</TABLE>
NOTE 16: INTERIM FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(UNAUDITED, IN MILLIONS, FIRST SECOND THIRD FOURTH
EXCEPT EARNINGS PER SHARE) QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
1993
Revenue $ 61.8 $70.2 $76.1 $ 69.5
Gross profit 10.3 13.9 13.9 11.2
Earnings before taxes from continuing
operations 0.4 4.0 4.5 1.6
Provision (benefit) for income taxes -- 0.3 0.2 (25.1)
Earnings from continuing operations 0.4 3.7 4.3 26.7
Discontinued operations -- -- -- (35.3)
Net earnings (loss) 0.4 3.7 4.3 (8.6)
Earnings (loss) per share:
Continuing operations (0.02) 0.21 0.24 1.77
Discontinued operations -- -- -- (2.38)
Net earnings (loss) (0.02) 0.21 0.24 (0.61)
----- ----- ------ ------
1992
Revenue $ 61.5 $70.6 $73.4 $ 67.5
Gross profit 10.3 14.9 15.0 11.5
Earnings before taxes and extraordinary
item 1.0 4.8 5.1 1.8
Provision for income taxes 0.3 1.3 0.6 0.2
Earnings before extraordinary item 0.7 3.5 4.5 1.6
Extraordinary item 0.2 0.9 0.1 0.4
Net earnings 0.9 4.4 4.6 2.0
Earnings per share:
Continuing operations 0.01 0.19 0.26 0.06
Extraordinary item 0.01 0.06 0.01 0.03
Net earnings 0.02 0.25 0.27 0.09
----- ----- ----- -----
</TABLE>
29 ANNUAL REPORT 1993
<PAGE>
MANAGEMENT'S REPORT
The consolidated financial statements and other financial information appearing
in this Annual Report were prepared by the management of Dravo Corporation,
which is responsible for their integrity and objectivity. These financial
statements have been prepared in conformity with generally accepted accounting
principles and include amounts that are based on informed judgments and
estimates of the expected effects of events and transactions.
Dravo maintains a system of internal controls to provide reasonable assurance as
to the reliability of the financial records and the protection of assets. This
internal control system is supported by written policies and procedures that
communicate the details of the control system, by careful selection and training
of qualified personnel, and by a broad program of internal audits. In addition,
the company's business ethics policy requires employees to maintain the highest
level of ethical standards in the conduct of the company's business and their
compliance is regularly monitored.
The company's financial statements have been audited by KPMG Peat Marwick,
independent certified public accountants. As stated in their report, their audit
was made in accordance with generally accepted auditing standards and included
such study and evaluation of the company's system of internal accounting
controls as they considered necessary to determine the nature, timing and extent
of the auditing procedures required for expressing an opinion on the company's
financial statements.
The Board of Directors, acting through its Audit Committee composed exclusively
of outside directors, reviews and monitors the company's financial reports and
accounting practices. The Board of Directors, upon the recommendation of the
Audit Committee, appoints the independent certified public accountants subject
to ratification by the shareholders. The Audit Committee meets periodically with
management, the internal auditors and the independent auditors. These meetings
include discussions of internal accounting control, results of audit work and
the quality of financial reporting. Financial management as well as the internal
auditors and independent auditors have full and free access to the Audit
Committee.
INDEPENDENT AUDITORS' REPORT
[LOGO OF KPMG PEAT MARWICK]
The Board of Directors and Shareholders
Dravo Corporation:
We have audited the accompanying consolidated balance sheets of Dravo
Corporation and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of operations, retained earnings and cash flows for each
of the years in the three-year period ended December 31, 1993. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dravo Corporation
and subsidiaries at December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Notes 10 and 13 to the consolidated financial statements,
effective January 1, 1993, the company adopted the methods of accounting for
postretirement benefits other than pensions and for income taxes prescribed by
Statements of Financial Accounting Standards Nos. 106 and 109, respectively.
As discussed in Note 8 to the consolidated financial statements, certain
lawsuits, claims and assertions have been brought against the company for
environmental costs and contract and claim disputes, the outcome of which
presently cannot be determined.
/S/ KPMG PEAT MARWICK
KPMG Peat Marwick
New Orleans, Louisiana
February 16, 1994
DRAVO CORPORATION 30
<PAGE>
FIVE-YEAR SUMMARY
<TABLE>
<CAPTION>
(AMOUNTS IN MILLIONS,
EXCEPT PER SHARE YEARS ENDED DECEMBER 31,
DATA AND AVERAGE MINERAL
RESOURCE PRICES) 1993 1992 1991 1990 1989
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Summary of operations:
Revenue $ 277.6 $ 273.0 $ 295.7 $ 295.9 $279.5
Gross profit 49.3 51.7 57.7 59.3 54.1
Interest expense 9.2 10.5 11.2 9.8 9.7
Depreciation expense 18.0 18.6 17.7 16.2 15.6
Earnings from continuing
operations before
provision for income taxes
and extraordinary item 10.5 12.7 16.1 19.7 17.8
Provision (benefit) for
income taxes (24.6) 2.4 3.9 3.9 3.1
Earnings from continuing
operations before
extraordinary item 35.1 10.3 12.2 15.8 14.7
Loss from discontinued
operations, net of
income taxes (35.3) -- (38.5) -- --
Extraordinary item, net of
income taxes -- 1.6 -- 3.9 3.1
Net earnings (loss) (0.2) 11.9 (26.3) 19.7 17.8
-------- -------- -------- -------- ------
Dividends declared 2.6 2.6 2.6 2.6 2.6
Capital expenditures,
continuing operations 13.6 8.5 19.7 34.1 12.4
-------- -------- -------- -------- ------
Employees at year-end 1,416 1,421 1,556 1,713 1,733
-------- -------- -------- -------- ------
Summary of financial
position:
Total assets $ 272.1 $ 268.5 $ 271.8 $ 299.8 $285.4
Working capital 59.5 60.1 45.6 10.0 15.1
Long-term obligations and
redeemable preference stock 108.5 108.1 109.7 74.7 81.7
Total debt and redeemable
preference stock 113.0 112.8 114.4 128.7 111.6
Property, plant and
equipment, net 110.0 114.9 128.5 127.9 117.4
Shareholders' equity 89.5 95.0 85.5 114.3 97.1
-------- -------- -------- ------- ------
Per common share data:
Earnings from continuing
operations $ 2.20 $ 0.52 $ 0.65 $ 0.90 $ 0.82
Loss from discontinued
operations (2.38) -- (2.60) -- --
Extraordinary item -- 0.11 -- 0.26 0.20
-------- -------- -------- -------- ------
Net earnings (loss) (0.18) 0.63 (1.95) 1.16 1.02
Book value 6.15 6.27 5.63 7.57 6.41
-------- -------- -------- -------- ------
Shareholders at year end 3,442 3,736 3,893 4,079 4,307
-------- -------- -------- -------- ------
Mineral resources (in
millions of tons):
Proven and probable
reserves
Total reserves 1,121.2 1,142.1 1,074.7 1,102.7 957.2
Tons mined 22.8 25.4 24.7 26.6 23.6
Average market price $ 6.01 $ 5.85 $ 6.31 $ 6.01 $ 6.19
-------- -------- -------- -------- ------
</TABLE>
31 ANNUAL REPORT 1993
<PAGE>
BOARD OF DIRECTORS
William G. Roth
Chairman,
Dravo Corporation
Carl A. Torbert, Jr.
President and Chief Executive Officer,
Dravo Corporation
E. Eugene Bishop
Chairman of the Board,
Morrison's Restaurants, Inc.
Arthur E. Byrnes
Chairman,
Deltec Asset Management Corporation
John E. Dolan
Retired Vice Chairman,
Engineering and Construction,
American Electric Power Service Corporation
Jack Edwards
Senior Partner,
Hand, Arendall, Bedsole, Greaves & Johnston
James C. Huntington, Jr.
Retired Senior Vice President,
American Standard, Inc.
Willard L. Hurley
Retired Chairman and Chief Executive Officer,
First Alabama Bancshares, Inc.
William E. Kassling
Chairman, Chief Executive Officer and President,
Westinghouse Air Brake Company
Konrad M. Weis
Retired President and Chief Executive Officer,
Bayer USA, Inc.
Robert C. Wilburn
President and Chief Executive Officer,
The Colonial Williamsburg Foundation
PRINCIPAL EXECUTIVES
William G. Roth
Chairman
Carl A. Torbert, Jr.
President and Chief Executive Officer
Ernest F. Ladd III
Executive Vice President,
Finance and Administration
Carl A. Gilbert
Senior Vice President
H. Donovan Ross
Senior Vice President
John R. Major
Vice President, Administration
James J. Puhala
Vice President, General Counsel and Secretary
Albert H. Tenhundfeld, Jr.
Vice President, Finance and Treasurer
Larry J. Walker
Controller
DRAVO CORPORATION 32
<PAGE>
HEADQUARTERS
3600 One Oliver Plaza
Pittsburgh, PA 15222-2682
Telephone: 412 566-3000
FAX: 412 566-3116
61 St. Joseph Street
Mobile, Alabama 36602
Telephone: 205 438-3531
FAX: 205 432-2162
Listing of Common Stock
New York Stock Exchange (DRV)
Transfer Agent and Registrar
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
800-509-5586
ANNUAL MEETING
The annual Shareholders' Meeting of Dravo Corporation will be held on Thursday,
April 28, 1994 at the Westin William Penn Hotel, Pittsburgh, Pennsylvania.
Formal notice of the meeting and proxy material is being mailed to shareholders.
ADDITIONAL REPORTS
More detailed information on the company's business is available in its Form
10-K filed annually with the Securities and Exchange Commission. Shareholders
desiring a copy of this report for the most recent fiscal year may obtain it,
without charge, by contacting the Investor Relations Department at 412 566-5530.
Design
Mizrahi Design Associates
Photography
John C. Evans
Printing
Hoechstetter Printing Company Inc., Pittsburgh, PA
<PAGE>
EXHIBIT 21
EXHIBIT 21. SUBSIDIARIES OF THE REGISTRANT
- -------------------------------------------
<TABLE>
<CAPTION>
Percentage
State or country of voting
in which securities
incorporated owned
---------------- ----------
<S> <C> <C>
Registrant:
Dravo Corporation Pennsylvania --
Subsidiaries of Dravo Corporation:
Dravo Basic Materials
Company, Inc. Alabama 100%
Dravo Equipment Company Delaware 100
Dravo Leasing Company, Inc. Delaware 100
Dravo Lime Company Delaware 100
Potomac Sand and Gravel Company District of Columbia 80
Princeton Ridge, Inc. New Jersey 100
Subsidiaries of Dravo Basic Materials
Company, Inc.:
Tideland Industries, Inc. Louisiana 100
Atchafalaya Mining Company, Inc. Louisiana 100
Dravo Bahama Rock, Ltd. Commonwealth of the
Bahamas 100
Dravo Natural Resources Company Delaware 50
Subsidiary of Dravo Lime Company:
Dravo Natural Resources Company Delaware 50
</TABLE>
-1-
<PAGE>
EXHIBIT 23
Exhibit 23. Consents of Experts and Counsel
- --------------------------------------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Dravo Corporation:
We consent to incorporation by reference in the registration statements No. 33-
23632 on Form S-8, No. 33-17356 on Form S-3, No. 2-84462 on Form S-8, Amendment
No. 1 to No. 2-87555 on Form S-8/S-3, No. 2-64137 on Form S-8, and No. 2-71993
on Form S-16 amended by Form S-3 of Dravo Corporation, of our report dated
February 16, 1994 relating to the consolidated balance sheets of Dravo
Corporation and subsidiaries as of December 31, 1993 and 1992 and the related
consolidated statements of operations, retained earnings, and cash flows and
related schedules for each of the years in the three-year period ended December
31, 1993 which report appears in, or is incorporated by reference in, the
December 31, 1993 annual report on Form 10-K of Dravo Corporation. Our reports
refers to the adoption of the methods of accounting for postretirement benefits
other than pensions and for income taxes prescribed by Statements of Financial
Accounting Standards Nos. 106 and 109, respectively.
Our report dated February 16, 1994 contains an explanatory paragraph that states
that certain lawsuits, claims and assertions have been brought against the
company for environmental costs and contract and claim disputes, the outcome of
which presently cannot be determined.
KPMG PEAT MARWICK
New Orleans, Louisiana
March 29, 1994
-1-
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
E. EUGENE BISHOP
--------------------------
-1-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
ARTHUR E. BYRNES
--------------------------
-2-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
JOHN E. DOLAN
--------------------------
-3-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
JACK EDWARDS
---------------------------
-4-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
JAMES C. HUNTINGTON, JR.
-----------------------------
-5-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
WILLARD L. HURLEY
-----------------------------
-6-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
WILLIAM E. KASSLING
----------------------------
-7-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
WILLIAM G. ROTH
-------------------------
-8-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
CARL A. TORBERT, JR.
-------------------------
-9-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
KONRAD M. WEIS
------------------------
-10-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
ROBERT C. WILBURN
--------------------------
-11-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute
and appoint Carl A. Torbert, Jr., Ernest F. Ladd III and James J. Puhala, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities (including his capacity as a director and/or
officer of Dravo Corporation), to sign the Form 10-K Annual Report of Dravo
Corporation for the year ended December 31, 1993 and any and all amendments
thereto, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
WITNESS the due execution hereof this 27th day of January, 1994.
ERNEST F. LADD III
---------------------------
-12-
