<PAGE>
As filed with the Securities and Exchange Commission on November 30, 1995
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
REGISTRATION STATEMENT
on Form S-1
UNDER
THE SECURITIES ACT OF 1933
______________
ICF KAISER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 8711 54-1437073
(State of Incorporation) SIC Code (I.R.S. Employer
Identification No.)
9300 LEE HIGHWAY
FAIRFAX, VIRGINIA 22031-1207
(703) 934-3600
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
______________
Paul Weeks, II, Esq.
Senior Vice President, General Counsel and Secretary
ICF Kaiser International, Inc.
9300 Lee Highway, Fairfax, Virginia 22031-1207
(703) 934-3600
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
______________
Approximate date of commencement of proposed sale to the public. From time
to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
______________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of each class Amount to be registered Proposed maximum offering Proposed maximum Amount of
of securities to be registered price per price(*) aggregate offering registration fee
share (*)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,197,033 shares $3.50 $4,189,615.50 $1,444.70
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase (**) n/a n/a n/a
Rights
====================================================================================================================================
</TABLE>
(*) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the average
of the high and low prices for the Common Stock on the New York Stock Exchange
Composite Tape on November 28, 1995.
(**) Each share of Common Stock issued by the Registrant has one associated non-
detachable Preferred Stock Purchase Right.
______________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
================================================================================
<PAGE>
ICF KAISER INTERNATIONAL, INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-1 Item Number and Caption Location in Prospectus
-------------------------------- ----------------------
<S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus Inside Front Cover Page
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges Prospectus Summary; Risk Factors
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Outside Front Cover Page;
Selling Shareholders
8. Plan of Distribution Outside Front Cover Page
9. Description of Securities to be Registered Description of Capital Stock
10. Interest of Named Experts and Counsel Legal Matters; Experts
11. Information with Respect to the Registrant Prospectus Summary; Risk Factors;
Market Prices and Dividend Policy;
Selected Consolidated Financial Data;
Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Business; Management;
Executive Compensation; Security
Ownership; Consolidated Financial
Statements and Notes thereto.
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Not Applicable
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1995
PROSPECTUS
ICF KAISER INTERNATIONAL, INC.
1,197,033 SHARES OF COMMON STOCK
______________
This Prospectus covers the resale by shareholders of up to 1,197,033 shares
of ICF Kaiser International, Inc. ("ICF Kaiser" or the "Company") Common Stock,
par value $0.01 per share (the "Common Stock") issued in, or to be issued in,
the three distinct and separate transactions described below.
______________
SEE "RISK FACTORS" ON PAGES 10-14 OF THIS PROSPECTUS FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
______________
(1) EDA. This Prospectus covers the resale of up to 722,500 shares of
Common Stock which were issued by the Company pursuant to the terms of an
Agreement and Plan of Merger (the "Merger") dated as of July 28, 1995 (the "EDA
Merger Agreement"), by and among ICF Kaiser; EDA, Incorporated, a Maryland
corporation ("EDA"); ICF Kaiser Disappearing, Inc., a Maryland corporation
("ICFKDI"); and each of the shareholders of EDA (namely Terry B. Soesbee, Daniel
A. Milliron, Igor Livshin, Doug A. Huppert, and Timothy V. Treadwell). The
individual EDA shareholders hereinafter are referred to as the "EDA Selling
Shareholders". As a result of the Merger, ICFKDI merged into EDA, the separate
existence of ICFKDI ceased, and EDA was the surviving corporation. As the
surviving corporation, EDA became a wholly owned subsidiary of ICF Kaiser.
On July 28, 1995, the effective date of the Merger, each EDA Selling
Shareholder exchanged the shares of EDA common stock owned immediately prior
thereto into his pro rata share of 191,250 shares of ICF Kaiser Common Stock
(the "EDA Closing Shares"). In addition, each EDA Selling Shareholder received
his pro rata share of cash consideration at the Merger closing (the "Closing")
and his right to receive his share of the EDA Earn-out Shares as defined below
(if any) required to be paid within two years from the Closing.
A total of 191,250 EDA Closing Shares issued at the Closing are being
registered for resale. An additional 531,250 shares of Common Stock (the "EDA
Earn-out Shares") also are being registered for resale; this number has been
determined by dividing the agreed upon value of Common Stock to be issued
following an earn-out period of no longer than two years ($2,125,000) by $4.00
per share. The actual number of EDA Earn-out Shares to be issued will be
determined by calculating the average closing price of ICF Kaiser Common Stock
on the New York Stock Exchange for the twenty (20) days prior to the second
anniversary of the Closing (provided that the first $300,000 of the value of the
EDA Earn-out Shares shall be valued at $4.00 per share).
All of the EDA Closing Shares may be offered for sale by the EDA Selling
Shareholders. Of the 531,250 EDA Earn-out Shares, 75,000 shares may be
delivered to the EDA Selling Shareholders in January 1996 if certain conditions
are met. If such conditions are not met, the 75,000 shares will be added to the
remaining 456,250 EDA Earn-out Shares. The EDA Earn-out Shares are being held
in escrow pending the meeting of the conditions for their delivery to the EDA
Selling Shareholders. All such shares may be offered for sale by the EDA
Selling Shareholders if delivered to the EDA Selling Shareholders by the escrow
agent pursuant to the EDA Merger Agreement. The Company will not receive any of
the proceeds from the sale of either the EDA Closing Shares or the EDA Earn-out
Shares.
The Company has been advised by the EDA Selling Shareholders that there are
no underwriting arrangements with respect to the sale of the EDA Closing Shares
or the EDA Earn-out Shares, that such Shares will be sold from time to time in
public sales at then-prevailing prices or at prices related to the then-current
market price, or in private transactions at negotiated prices. The EDA Closing
Shares and the EDA Earn-out Shares may be sold through purchases by a broker or
dealer as principal and resold by such broker or dealer for its account pursuant
to
-3-
<PAGE>
this Prospectus or in ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by the EDA Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from the
EDA Selling Shareholders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or dealers may
be deemed to be "underwriters" within the meaning of the Securities Act of 1993
(the "Securities Act") in connection with such sales. See "Selling
Shareholders."
(2) BALCH. The Prospectus also covers the resale of up to 396,167 shares
of Common Stock (the "Balch Shares") which are to be issued by the Company
pursuant to the terms of an Agreement dated as of March 21, 1995 (the "Balch
Agreement"), by and between Mr. John G. Balch ("Mr. Balch" and a "Selling
Shareholder") and Excell Development Construction, Inc. ("Excell"), a Delaware
corporation and an indirect, wholly owned subsidiary of the Company. Of the
Balch Shares, 121,167 shares may be offered for sale by Mr. Balch and 275,000
are required to be pledged as security for loans between Mr. Balch and Excell.
The Company will not receive any of the proceeds from the sale of shares by Mr.
Balch. The Company has been advised by Mr. Balch that there are no underwriting
arrangements with respect to the sale of the Balch Shares, that such Balch
Shares will be sold from time to time in public sales at then prevailing prices
or at prices related to the then-current market price or in private transactions
at negotiated prices. The Balch Shares may be sold through purchases by a
broker or dealer as principal and resold by such broker or dealer for its
account pursuant to this Prospectus or in ordinary brokerage transactions and
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Selling Shareholder may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from the Selling Shareholder in amounts to be negotiated
immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. See "Selling
Shareholders."
(3) IPC. The Prospectus also covers the resale of 78,366 shares of Common
Stock (the "IPC Shares") which are to be issued by the Company pursuant to the
terms of a Binding Memorandum of Understanding by and among ICF Kaiser; ICF
Kaiser Engineers, Inc., a Delaware corporation and a wholly owned subsidiary of
ICF Kaiser; The IPC Company, a Texas corporation ("IPC"); and six IPC
shareholders (hereinafter referred to as the "IPC Selling Shareholders".
Pursuant to the Binding Memorandum of Understanding, the Company will issue
78,366 shares of Common Stock to IPC (the "IPC Shares") in return for
substantially all of IPC's assets, excluding certain accounts receivable which
will be conveyed to an IPC shareholder to liquidate his loan to IPC. The
Company's subsidiary will assume only specified, listed contractual obligations
in connection with the asset purchase. The Company has been advised by IPC that
all of the 78,366 IPC Shares will be distributed to the IPC Selling Shareholders
by IPC in connection with the liquidation of IPC or as an IPC dividend. All
such IPC Shares may be offered for sale by the IPC Selling Shareholders if
delivered to the IPC Selling Shareholders in the liquidation or by dividend.
Neither the Company nor its subsidiary will receive any of the proceeds from
the sale of the IPC Shares.
The Company has been advised by IPC and the IPC Selling Shareholders that
there are no underwriting arrangements with respect to the sale of the IPC
Shares, that such IPC Shares will be sold from time to time in public sales at
then prevailing prices or at prices related to the then-current market price or
in private transactions at negotiated prices. The IPC Shares may be sold
through purchases by a broker or dealer as principal and resold by such broker
or dealer for its account pursuant to this Prospectus or in ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, brokers or dealers engaged by IPC or the IPC Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers
or dealers will receive commissions or discounts from such sellers in amounts to
be negotiated immediately prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales. See "Selling
Shareholders."
-4-
<PAGE>
ICF Kaiser's Common Stock is traded on the New York Stock Exchange under
the symbol "ICF". The last sale price reported for such Common Stock on November
27, 1995, as quoted on the New York Stock Exchange Composite Tape, was $3.75.
__________________
The date of this Prospectus is _____________ ___, 1995.
-5-
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), with respect to the Shares
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the
Registration Statement and in the exhibits and schedules thereto. For further
information about the Company and the Shares, reference is made to the
Registration Statement. The Registration Statement may be inspected and copied
at the Commission's Public Reference Room, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, 7 World Trade Center, New York, New York 10048; and
Chicago Regional Office, 500 West Madison Street, Chicago, Illinois 60661. The
statements contained in this Prospectus about the contents of any contract or
other document filed as an exhibit to the Registration Statement are not
complete, each such statement being qualified in all respects by such reference.
Copies of each such document may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the charges prescribed by
the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements, and other information filed by the Company can
be inspected and copied at the Commission's Public Reference Room and Regional
Offices set forth above, and copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
The Common Stock has been traded on the New York Stock Exchange since
September 14, 1993, and reports, proxy material, and other information
concerning the Company may be inspected at the office of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
__________________
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
OF THE SECURITIES OTHER THAN THE COMMON STOCK TO WHICH IT RELATES OR A
SOLICITATION TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE OTHER INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
-6-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Available Information...........................................6
Prospectus Summary..............................................8
The Company.....................................................8
Risk Factors...................................................10
Market Prices and Dividend Policy..............................15
Selected Consolidated Financial Data...........................16
Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................18
Business.......................................................25
Management.....................................................39
Executive Compensation.........................................44
Security Ownership.............................................51
Selling Shareholders...........................................54
Description of Capital Stock...................................56
Description of the Indenture...................................64
Description of the Credit Facility.............................74
Legal Matters..................................................76
Experts........................................................76
Consolidated Financial Information............................F-1
</TABLE>
-7-
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
THE COMPANY
ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its
other operating subsidiaries, is one of the nation's largest engineering,
construction, and consulting services companies, providing fully integrated
engineering, construction and consulting services to public- and private-sector
clients in the related markets of environment, infrastructure, and industry. The
"Company" or "ICF Kaiser" in this Prospectus may refer to ICF Kaiser
International, Inc. and/or any of its wholly owned operating subsidiaries. For
its most recent fiscal year ended February 28, 1995 (fiscal 1995), ICF Kaiser
reported gross and service revenue of $862 million and $460 million,
respectively. Service revenue is derived by deducting the costs of subcontracted
services and direct project costs from gross revenue and adding the Company's
share of income (loss) of joint ventures and affiliated companies. During the
three years ended February 28, 1995, the Company operated predominantly in one
industry segment, in which it provided engineering, construction, consulting,
and other professional services. The Company estimates that of its fiscal 1995
$460 million service revenue, approximately 58% was attributable to
environmental services and another 23% to related management & operations
services, 10% to infrastructure-related work, 6% to industrial work, and 3% to
other consulting services.
The Company's headquarters is located at 9300 Lee Highway, Fairfax,
Virginia 22031-1207, and its telephone number is (703) 934-3600. The Company's
regional headquarters are located at 1800 Harrison St., Oakland, California
94612-3430, (510) 419-6000 and at Four Gateway Center, Pittsburgh, Pennsylvania
15222-1207, (412) 497-2000. Other major offices include Universal City,
California; Denver, Colorado; Jacksonville, Florida; Boston, Massachusetts;
Woodbridge, New Jersey; Los Alamos, New Mexico; Houston, Texas; and Richland,
Washington. The Company's major international offices are located in Perth,
Australia; London, England; Paris, France; Mexico City, Mexico; Lisbon,
Portugal; Moscow, Russia; and Taipei, Taiwan. As of October 31, 1995, ICF Kaiser
employed approximately 5,000 persons. An additional approximately 2,500
employees are part of Kaiser-Hill Company, LLC, a limited liability company
located in Colorado and owned equally by the Company and CH2M Hill Companies
Ltd.
The Company is organized into three business groups, each providing the
services discussed below. In addition, the Company's International Operations
Group works with these business groups developing international clients and
establishing strategic relationships through joint ventures and marketing
agreements. The Company's international clients include both private firms and
foreign government agencies; in fiscal year 1995, foreign operations accounted
for approximately 6.3% of the Company's consolidated gross revenue.
SUMMARY CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of the Company for each year in
the five-year period ended February 28, 1995, have been derived from the
Company's consolidated financial statements, which have been audited by Coopers
& Lybrand L.L.P., independent accountants. This information should be read in
conjunction with the Consolidated Financial Statements and the related notes
thereto appearing elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The selected
consolidated financial data of the Company as of August 31, 1995 and 1994 and
for the six-month periods then ended have been prepared on the same basis as the
Consolidated Financial Statements and, in the opinion of the Company, include
all normal and recurring adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the information set forth therein.
Operating results for the six months ended August 31, 1995 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1995. Certain reclassifications have been made to the prior period
financial statements to conform to the presentation used in the August 31, 1995
financial statements. The six-month data set forth below is unaudited.
-8-
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended Year ended February 28,
August 31, ----------------------------------------------------------------
----------
1995 1994 1995 1994/(1)/ 1993 1992/(1)(3)/ 1991/(1)/
---- ---- ---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA: (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenue...................... $461,257 $419,452 $861,518 $651,657 $678,882 $710,873 $624,976
Service revenue /(2)/.............. 223,143 223,069 459,786 382,708 391,528 385,942 363,318
Operating income (loss)............ 9,259 7,492 13,688 (5,230) 22,744 (43,963) 33,287
Income (loss) before income taxes,
minority interests and
extraordinary item................ 2,214 936 1,239 (12,877) 14,894 (54,310) 24,018
Income (loss) before minority
interests and extraordinary item.. 1,218 (395) (1,661) (12,528) 8,639 (40,516) 14,291
Net income (loss) before
extraordinary item................ 738 (395) (1,661) (12,528) 8,639 (40,516) 14,291
Net income (loss) /(3)/............ 738 (395) (1,661) (18,497) 8,639 (40,516) 14,291
Net income (loss) available for
common shareholders............... (339) (1,472) (3,815) (25,322) 3,346 (42,932) 13,434
PRIMARY NET INCOME (LOSS)
PER COMMON SHARE:
Before extraordinary item and
redemption of redeemable
preferred stock................. $ (0.02) $ (0.07) $ (0.18) $ (0.83) $ 0.16 $ (2.25) $ 0.71
Extraordinary loss on early
extinguishment of debt........... --- --- --- (0.29) --- --- ---
Redemption of redeemable
preferred stock.................. --- --- --- (0.09) --- --- ---
-------- -------- -------- -------- -------- -------- --------
Total.......................... $ (0.02) $ (0.07) $ (0.18) $ (1.21) $ 0.16 $ (2.25) $ 0.71
======== ======== ======== ======== ======== ======== ========
FULLY DILUTED NET INCOME
(LOSS) PER COMMON SHARE:
Before extraordinary item
and redemption of redeemable
preferred stock.................. $ (0.02) $ (0.07) $ (0.18) $ (0.83) $ 0.16 $ (2.25) $ 0.68
Extraordinary loss on early
extinguishment of debt........... --- --- --- (0.29) --- --- ---
Redemption of redeemable
preferred stock.................. --- --- --- (0.09) --- --- ---
-------- -------- -------- -------- -------- -------- --------
Total.......................... $ (0.02) $ (0.07) $ (0.18) $ (1.21) $ 0.16 $ (2.25) $ 0.68
======== ======== ======== ======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding,
assuming full dilution............ 21,445 20,941 20,957 20,886 21,272 19,085 20,308
BALANCE SHEET DATA (END OF PERIOD):
Total assets....................... $319,874 $267,107 $281,422 $281,198 $293,076 $318,947 $357,457
Working capital.................... 82,474 88,767 91,640 87,648 85,861 65,623 72,266
Long-term liabilities.............. 126,942 129,610 133,130 130,752 75,602 85,675 109,820
Redeemable preferred stock......... 19,719 20,314 19,617 20,212 44,824 45,161 26,498
Shareholders' equity............... 27,174 29,630 27,624 30,780 58,521 51,151 88,839
</TABLE>
____________________________
(1) Gross revenue and service revenue for the fiscal year ended February 29,
1992, exclude businesses discontinued by the Company in fiscal year 1992;
the financial data for fiscal year 1991 includes results for the entire
Company. In fiscal year 1994, the Company adopted Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement
Benefits Other than Pensions. In fiscal year 1992, the Company adopted
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.
(2) Service revenue is derived by deducting the costs of subcontracted services
and direct project costs from gross revenue and adding the Company's share
of the equity in income of unconsolidated joint ventures and affiliated
companies.
(3) Fiscal year 1992 reflects an after-tax charge of $52.4 million associated
with the disposal and restructuring of certain businesses.
-9-
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider the
following, as well as other information contained in this Prospectus.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE AND INCUR DEBT; PREFERRED STOCK TERMS
At August 31, 1995, the Company had total indebtedness of $121.5 million,
representing 72.1% of total capitalization. This high degree of leverage may
have important consequences to the holders of the Common Stock. In particular,
at least in the near term: (i) a substantial portion of the Company's cash flow
from operations will be required for the payment of interest expense; (ii) the
level of the Company's indebtedness may make it difficult to obtain additional
financing in the future for working capital, acquisitions, capital expenditures,
repayment of debt, or other purposes; and (iii) the level of the Company's
leverage may make it more difficult for the Company's subsidiaries to obtain
performance and similar bonds related to certain activities. The Company is more
leveraged than many of its competitors, which may leave the Company less able to
take advantage of market opportunities or withstand weakness in its markets. The
ability of the Company to meet its debt service and other obligations will
depend largely on the future performance of the Company, which will be subject
in part to prevailing economic and competitive conditions, government spending
patterns, and to other factors beyond its control.
The Company has a bank credit agreement (the "Credit Agreement") under
which it may have cash loans and letters of credit that require the Company to
comply with certain financial and non-financial covenants; these covenants limit
additional indebtedness, investments, and acquisitions. The indenture (the
"Indenture") for the Company's $125,000,000 of 12% Senior Subordinated Notes due
2003 (the "Notes") limits the Company's ability to incur additional indebtedness
and make restricted payments, including dividends on capital stock and certain
payments in connection with investments and acquisitions. These limitations in
the Indenture are based in part on the Company's consolidated net income (as
defined in the Indenture) during the period since August 31, 1993; the loss
incurred by the Company during fiscal year 1994 has the effect of making these
limitations more restrictive than they had been when the Notes were issued. See
"Description of the Indenture" and "Description of the Credit Facility."
In addition to the restrictive covenants under the Credit Agreement and the
Indenture, the agreements governing the Company's Series 2D Senior Preferred
Stock ("Series 2D Preferred Stock"), provide that certain restrictive covenants
described in the following paragraph become operative while the Company is in
arrears with respect to any dividend on such preferred stock for a period in
excess of 100 days or if the Company has failed to make a mandatory redemption.
The Company is obligated to redeem all outstanding shares of the Series 2D
Preferred Stock on January 13, 1997. See "Description of Capital Stock--Series
2D Preferred Stock."
The Indenture permits the quarterly dividends due on the Series 2D
Preferred Stock through August 31, 1995, to be made without regard to whether
the covenants in the Indenture would otherwise permit the payment of such
dividends; as of the date of this Prospectus, dividends due after August 31,
1995, are not permitted because the Company has not met the required covenants
in the Indenture. A supplement to the Indenture would be required before post-
August 31, 1995, dividends could be paid.
In the event the Company is in arrears with respect to any dividend payable
on the Series 2D Preferred Stock for a period in excess of 100 days or fails to
make a mandatory redemption, the holders of Series 2D Preferred Stock will have
the exclusive right to elect two additional directors. In addition, until such
an arrearage or failure to make a mandatory redemption is cured, if 33% or more
of the then outstanding Series 2D Preferred Stock (or securities issued in
exchange therefor) is held by an Initial Holder, the Company becomes subject to
certain restrictive covenants. Without the consent of the Initial Holder, such
covenants would prohibit the Company from, among other things: disposing of
assets for consideration of more than $1 million in a single transaction;
entering into mergers; making acquisitions; guaranteeing any obligation in
excess of $1 million; or incurring indebtedness other than as permitted pursuant
to the Indenture governing the Notes. Further, under such circumstances, the
-10-
<PAGE>
Initial Holder is relieved from the limitations described below on its right to
acquire additional voting securities of the Company, to subject Series 2D
Preferred Stock to a voting trust, or to solicit proxies in opposition to the
Company's Board of Directors. See "Description of Capital Stock--Provisions
Affecting Changes of Control and Extraordinary Transactions."
As a consequence of all of the above, the Company can incur only limited
additional indebtedness, and there are significant restrictions on the Company's
ability to make acquisitions and invest in joint ventures. During the next
several years it likely will be necessary for the Company to issue additional
equity securities to fund any significant acquisitions and to invest significant
amounts in joint ventures. Additional financing for the Company generally will
have to take the form of raising additional equity capital, refinancing existing
debt, incurring other permitted indebtedness, or obtaining significant proceeds
from the sale of assets.
PLEDGE OF ASSETS
As collateral under the Company's Credit Agreement, the Company and most of
its subsidiaries have granted a security interest in substantially all of their
accounts receivable and certain other assets.
DEPENDENCE ON KEY CUSTOMERS AND FEDERAL GOVERNMENT CONTRACTS
A substantial portion of ICF Kaiser's revenues are derived from services
performed directly or indirectly under contracts with various agencies and
departments of the Federal government. During fiscal year 1995, approximately
73% of the Company's consolidated gross revenue was derived from contracts with
the U.S. Government. During fiscal 1995 the U.S. Department of Energy ("DOE")
accounted for approximately 60% of consolidated gross revenue; the U.S.
Department of Defense ("DOD"), the U.S. Environmental Protection Agency ("EPA"),
and other Federal agencies collectively accounted for approximately 13% of the
Company's consolidated gross revenue.
Contracts made with the U.S. Government generally are subject to annual
approval of funding. Limitations imposed on spending by Federal government
agencies, which might result from efforts to reduce the Federal deficit or for
other reasons, may limit the continued funding of the Company's existing Federal
government contracts and may limit the ability of the Company to obtain
additional contracts. These limitations, if significant, could have a material
adverse effect on the Company.
The Company is subject to audit with respect to costs incurred and charged
to the Federal government. In one such audit, the government has asserted that
certain costs claimed as reimbursable under government contracts were not
allocated in accordance with government cost accounting standards. Management
believes that the potential effect of disallowed costs, if any, for the periods
currently under audit and for periods not yet audited has been adequately
provided for and will not have a material adverse effect on the Company's
financial condition, results of operations, or cash flows.
All Federal contracts may be terminated by the U.S. Government at any time,
with or without cause. There can be no assurance that existing or future Federal
government contracts would not be terminated or that the government will
continue to use the Company's services at levels comparable to current use.
DEPENDENCE ON ENVIRONMENTAL REGULATION
A substantial portion of the Company's business has been generated either
directly or indirectly as a result of Federal and state laws, regulations and
programs related to environmental issues. Accordingly, a reduction in the number
or scope of these laws and regulations, or changes in government policies
regarding the funding, implementation or enforcement of such laws, regulations
and programs, could have a material adverse effect on the Company's business. In
addition, any significant effort by the DOE to reduce the role of private
contractors in environmental projects could have a material adverse effect on
the Company.
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<PAGE>
POTENTIAL ENVIRONMENTAL LIABILITY
The assessment, analysis, remediation, handling, management, and disposal
of hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or other
regulatory action. These risks include potentially large civil and criminal
liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients.
Potential Liabilities Arising Out of Environmental Laws and Regulations
All facets of the Company's business are conducted in the context of a
rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to regulation by a
number of Federal agencies, including EPA and the Occupational Safety and Health
Administration, as well as applicable state and local regulatory agencies. The
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
addresses cleanup of sites at which there has been a release or threatened
release of hazardous substances into the environment. Increasingly, there are
efforts to expand the reach of CERCLA to make environmental contractors
responsible for cleanup costs by claiming that environmental contractors are
owners or operators of hazardous waste facilities or that they arranged for
treatment, transportation, or disposal of hazardous substances. Several recent
court decisions have accepted these claims. Should the Company be held
responsible under CERCLA for damages caused while performing services or
otherwise, it may be forced to bear such liability by itself, notwithstanding
the potential availability of contribution or indemnity from other parties. The
Resource Conservation and Recovery Act ("RCRA") governs hazardous waste
generation, treatment, transportation, storage, and disposal. RCRA, or EPA-
approved state programs at least as stringent, govern waste handling activities
involving wastes classified as "hazardous." Substantial fees and penalties may
be imposed under RCRA and similar state statutes for any violation of such
statutes and the regulations thereunder.
Potential Liabilities Involving Clients and Third Parties
In performing services for its clients, the Company could potentially be
liable for breach of contract, personal injury, property damage, and negligence
(including improper or negligent performance or design, failure to meet
specifications, and breaches of express or implied warranties). The damages
available to a client, should it prevail in its claims, are potentially large
and could include consequential damages.
Environmental contractors, in connection with work performed for clients,
potentially face liabilities to third parties from various claims, including
claims for property damage or personal injury stemming from a release of
hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including through a sudden and accidental release or
discharge of contaminants or pollutants during the performance of services;
through the inability, despite reasonable care, of a remedial plan to contain or
correct an ongoing seepage or release of pollutants; through the inadvertent
exacerbation of an existing contamination problem; or through reliance on
reports or recommendations prepared by the Company. Personal injury claims could
arise contemporaneously with performance of the work or long after completion of
the project as a result of alleged exposure to toxic or hazardous substances. In
addition, increasing numbers of claimants assert that companies performing
environmental remediation should be adjudged strictly liable, i.e., liable for
damages even though its services were performed using reasonable care, on the
grounds that such services involved "abnormally dangerous activities."
Clients frequently attempt to shift various of the liabilities arising out
of remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and for
environmental fines and penalties. The Company has endeavored to protect itself
from potential liabilities resulting from pollution or environmental damage by
obtaining indemnification from its private-sector clients and intends to
continue this practice in the future. Under most of these contracts, the Company
has been successful in obtaining
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<PAGE>
such indemnification; however, such indemnification generally is not available
if such liabilities arise as a result of breaches by the Company of specified
standards of care or if the indemnifying party has insufficient assets to cover
the liability. The Company will continue its efforts to minimize the risks and
potential liability associated with its remediation activities by performing all
remediation contracts in a professional manner and by carefully reviewing any
and all remediation contracts it signs in an effort to ensure that its
environmental clients accept responsibility for their own environmental
problems.
For EPA contracts involving field services in connection with Superfund
response actions, the Company is eligible for indemnification under Section 119
of CERCLA, for pollution and environmental damage liability resulting from
release or threatened release of hazardous substances. Some of the Company's
clients (including private clients, DOD, and DOE) are Potentially Responsible
Parties (PRPs) under CERCLA. Under the Company's contracts with these PRPs, the
Company has the right to seek contribution from these PRPs for liability imposed
on the Company in connection with its work at these clients' CERCLA sites and,
with respect to Federal government clients, generally qualifies for the
limitations on liabilities under CERCLA Section 119(a). In addition, in
connection with contracts involving field services at 10 of DOE's weapons
facilities, including the DOE's Hanford site, the Company is indemnified under
the Price-Anderson Act, as amended, against liability claims arising out of
contractual activities involving a nuclear incident. Recently, EPA has
constricted significantly the circumstances under which it will indemnify its
contractors against liabilities incurred in connection with CERCLA projects.
There are other proposals both in Congress and at the regulatory agencies to
further restrict indemnification of contractors from third-party claims.
Kaiser-Hill Company, LLC (a limited liability company owned equally by the
Company and CH2M Hill Companies, Ltd.) signed a Performance Based Integrating
Management contract with DOE. The terms of that contract provide that Kaiser-
Hill shall not be held responsible for, and DOE shall pay all costs associated
with, any liability (including without limitation, a claim involving strict or
absolute liability and any civil fine or penalty, expense, or remediation cost,
but limited to those of a civil nature), which may be incurred by, imposed on,
or asserted against Kaiser-Hill arising out of any act or failure to act,
condition, or exposure which occurred before Kaiser-Hill assumed responsibility
on July 1, 1995 ("pre-existing conditions"). To the extent the acts or
omissions of Kaiser-Hill constitute willful misconduct, lack of good faith, or
failure to exercise prudent business judgment on the part of Kaiser-Hill's
managerial personnel cause or add to any liability, expense, or remediation cost
resulting from pre-existing conditions, Kaiser-Hill shall be responsible, but
only for the incremental liability, expense, or remediation caused by Kaiser-
Hill. The Kaiser-Hill contract further provides that Kaiser-Hill shall be
reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky
Flats contract and for liabilities (and expenses incidental to such liabilities,
including litigation costs) to third parties not compensated by insurance or
otherwise. The exception to this reimbursement provision applies to liabilities
caused by the willful misconduct or lack of good faith of Kaiser-Hill's
managerial personnel or the failure to exercise prudent business judgment by
Kaiser-Hill's managerial personnel.
In connection with its services to its environmental, infrastructure, and
industrial clients, the Company works closely with Federal and state government
environmental compliance agencies, and occasionally contests the conclusions
those agencies reach regarding the Company's compliance with permits and related
regulations. To date, the Company never has paid a fine in a material amount or
had liability imposed on it for pollution or environmental damage in connection
with its services. However, there can be no assurance that the Company will not
have substantial liability imposed on it for any such damage in the future.
COMPETITION
The market for the Company's services is highly competitive. The Company
and its subsidiaries compete with many other firms ranging from small firms to
large multinational firms having substantially greater financial, management,
and marketing resources than the Company. Other competitive factors include
quality of services, technical qualifications, reputation, geographic presence,
price, and the availability of key professional personnel.
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<PAGE>
FLUCTUATIONS IN QUARTERLY FINANCIAL RESULTS AND CHANGE IN FISCAL YEAR END
The Company's quarterly financial results may be affected by a number of
factors, including the commencement and completion or termination of major
projects. Accordingly, results for any one quarter are not necessarily
indicative of results for any other quarter or for the year. The Company has
changed its fiscal year end from February 28 to December 31, effective December
31, 1995. The Company will report the results of its 10-month fiscal period
(March 1 to December 31, 1995) on an Annual Report on Form 10-K to be filed with
the SEC no later than March 30, 1996.
ATTRACTION AND RETENTION OF PROFESSIONAL PERSONNEL
The Company's ability to retain and expand its staff of qualified
professionals will be an important factor in determining the Company's future
success. The market for these professionals, especially environmental
professionals, is competitive. There can be no assurance that the Company will
continue to be successful in its efforts to attract and retain such
professionals.
CHANGE OF CONTROL PROVISIONS
In the event of a Change of Control (as defined in the Indenture), the
Company would be required, subject to certain conditions, to offer to purchase
all outstanding Notes at a price equal to 101% of the principal amount thereof,
plus accrued interest thereon. As of August 31, 1995, the Company did not have
sufficient funds available to purchase all the Notes were they to be tendered in
response to an offer made as a result of such a Change of Control. There can be
no assurance that, at the time of a Change of Control, the Company will have
sufficient cash to repay all amounts due under the Notes. If a Change of Control
should occur, the rights of the holders of the Notes to receive payment for
their Notes upon a Change of Control Offer would be subject to the prior payment
rights of holders of any Senior Indebtedness (as defined in the Indenture). The
terms of the Credit Agreement prohibit the optional payment or prepayment or any
redemption of the Notes. If, following a Change of Control, the Company has
insufficient funds to purchase all the Notes tendered pursuant to such an offer,
or is prohibited from purchasing the Notes pursuant to the terms of any Senior
Indebtedness (as defined in the Indenture), an event of default in respect of
the Notes would occur. The Change of Control provisions of the Indenture may
have the effect of discouraging attempts by a person or group to take control of
the Company.
The Company's Amended and Restated Certificate of Incorporation, By-laws,
Shareholder Rights Plan and certain other agreements contain provisions that
could have the effect of delaying or preventing a change of control of the
Company or affect the Company's ability to engage in certain extraordinary
transactions.
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<PAGE>
MARKET PRICES AND DIVIDEND POLICY
Since September 14, 1993, the Common Stock has been traded on the New York
Stock Exchange (NYSE) under the symbol "ICF". From December 14, 1989, to
September 13, 1993, the Common Stock was traded on the NASDAQ National Market
System. At November 1, 1995, there were 1,250 shareholders of record; the
Company believes that there are approximately 5,200 beneficial owners of Common
Stock.
On November 27, 1995, the closing price of the Common Stock as reported by
the NYSE was $3.75. The following table sets forth, for the periods indicated,
the high and low bid information for the Common Stock as reported on the NASDAQ
National Market System and the high and low sales prices on the NYSE Composite
Tape:
<TABLE>
<CAPTION>
==========================================================================================
COMMON STOCK PRICE
HIGH LOW
<S> <C> <C>
Fiscal Year Ended February 28, 1994
First Quarter................................. $6.875 $ 4.75
Second Quarter................................ 5.50 3.75
Third Quarter (September 1 - September 13).... 4.875 4.375
Third Quarter (September 14 - November 30).... 5.375 4.00
Fourth Quarter................................ 5.00 3.625
Fiscal Year Ended February 28, 1995
First Quarter................................. $3.875 $ 2.25
Second Quarter................................ 2.625 2.00
Third Quarter................................. 4.125 2.375
Fourth Quarter................................ 4.375 2.625
March 1 to December 31, 1995
First Quarter................................. $ 5.00 $ 3.75
Second Quarter................................ 4.625 3.75
Third Quarter (through November 27, 1995).... 4.75 3.25
==========================================================================================
</TABLE>
The Corporation's Transfer Agent and Registrar is First Chicago Trust
Company of New York, Mail Suite 4692, P.O. Box 2534, Jersey City, NJ 07303-2534.
The Shareholder Relations telephone number is (201) 324-0498.
The Company has never paid cash dividends on its Common Stock. The Board of
Directors anticipates that no cash dividends will be paid on its Common Stock
for the foreseeable future and that the Company's earnings will be retained for
use in the business. The Board of Directors determines the Company's Common
Stock dividend policy based on the Company's results of operations, payment of
dividends on preferred stock, financial condition, capital requirements, and
other circumstances. The Company's debt agreements allow dividends to be paid on
its capital stock provided that the Company complies with certain limitations
imposed by the terms of such agreements. See "Description of Capital Stock--
Series 2D Senior Preferred Stock" and "Description of the Indenture--Certain
Covenants--Limitations on Restricted Payments." See Note F to the Consolidated
Financial Statements.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of the Company for each year in
the five-year period ended February 28, 1995, have been derived from the
Company's consolidated financial statements, which have been audited by Coopers
& Lybrand L.L.P., independent accountants. This information should be read in
conjunction with the Consolidated Financial Statements and the related notes
thereto appearing elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The selected
consolidated financial data of the Company as of August 31, 1995 and 1994 and
for the six-month periods then ended have been prepared on the same basis as the
Consolidated Financial Statements and, in the opinion of the Company, include
all normal and recurring adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the information set forth therein.
Operating results for the six months ended August 31, 1995 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1995. Certain reclassifications have been made to the prior period
financial statements to conform to the presentation used in the August 31, 1995
financial statements. The six-month data set forth below is unaudited.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended Year ended February 28,
August 31, ----------------------------------------------------------
----------
1995 1994 1995 1994/(1)/ 1993 1992/(1)/(3)/ 1991/(1)/
---- ---- ---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA: (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenue........................... $461,257 $419,452 $861,518 $651,657 $678,882 $710,873 $624,976
Service revenue /(2)/................... 223,143 223,069 459,786 382,708 391,528 385,942 363,318
Operating income (loss)................. 9,259 7,492 13,688 (5,230) 22,744 (43,963) 33,287
Income (loss) before income taxes,
minority interests and
extraordinary item..................... 2,214 936 1,239 (12,877) 14,894 (54,310) 24,018
Income (loss) before minority
interests and extraordinary item....... 1,218 (395) (1,661) (12,528) 8,639 (40,516) 14,291
Net income (loss) before
extraordinary item.................... 738 (395) (1,661) (12,528) 8,639 (40,516) 14,291
Net income (loss) /(3)/................. 738 (395) (1,661) (18,497) 8,639 (40,516) 14,291
Net income (loss) available for
common shareholders.................... (339) (1,472) (3,815) (25,322) 3,346 (42,932) 13,434
PRIMARY NET INCOME (LOSS) PER COMMON
SHARE:
Before extraordinary item and
redemption of redeemable preferred
stock................................ $ (0.02) $ (0.07) $ (0.18) $ (0.83) $ 0.16 $ (2.25) $ 0.71
Extraordinary loss on early
extinguishment of debt............... --- --- --- (0.29) --- --- ---
Redemption of redeemable preferred
stock................................ --- --- --- (0.09) --- --- ---
-------- -------- -------- -------- -------- -------- --------
Total........................ $ (0.02) $ (0.07) $ (0.18) $ (1.21) $ 0.16 $ (2.25) $ 0.71
======== ======== ======== ======== ======== ======== ========
FULLY DILUTED NET INCOME (LOSS) PER
COMMON SHARE:
Before extraordinary item and
redemption of redeemable
preferred stock....................... $ (0.02) $ (0.07) $ (0.18) $ (0.83) $ 0.16 $ (2.25) $ 0.68
Extraordinary loss on early
extinguishment of debt................ --- --- --- (0.29) --- --- ---
Redemption of redeemable preferred
stock................................. --- --- --- (0.09) --- --- ---
-------- -------- -------- -------- -------- -------- --------
Total........................ ($0.02) $ (0.07) $ (0.18) $ (1.21) $ 0.16 $ (2.25) $ 0.68
======== ======== ======== ======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding,
assuming full dilution................ 21,445 20,941 20,957 20,886 21,272 19,085 20,308
BALANCE SHEET DATA (END OF PERIOD):
Total assets............................ $319,874 $267,107 $281,422 $281,198 $293,076 $318,947 $357,457
Working capital......................... 82,474 88,767 91,640 87,648 85,861 65,623 72,266
Long-term liabilities................... 126,942 129,610 133,130 130,752 75,602 85,675 109,820
Redeemable preferred stock.............. 19,719 20,314 19,617 20,212 44,824 45,161 26,498
Shareholders' equity.................... 27,174 29,630 27,624 30,780 58,521 51,151 88,839
</TABLE>
________________________
(1) Gross revenue and service revenue for the fiscal year ended February 29,
1992, exclude businesses discontinued by the Company in fiscal year 1992;
the financial data for fiscal year 1991 includes results for the entire
Company. In fiscal year 1994, the Company adopted Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement
Benefits Other than Pensions. In fiscal year 1992, the Company adopted
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.
(2) Service revenue is derived by deducting the costs of subcontracted services
and direct project costs from gross revenue and adding the Company's share
of the equity in income of unconsolidated joint ventures and affiliated
companies.
(3) Fiscal year 1992 reflects an after-tax charge of $52.4 million associated
with the disposal and restructuring of certain businesses.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
ICF Kaiser is one of the nation's largest engineering, construction, and
consulting services companies, with experience in providing full-service
environmental cleanup, remediation, and project management services. The Company
provides services to domestic and foreign clients in both the private and public
sectors.
Financial Results
ICF Kaiser's operating income of $9.3 million for the six months ended
August 31, 1995 was a $1.8 million increase from the $7.5 million of operating
income reported for the six months ended August 31, 1994. The increase in
operating income primarily resulted from a $5.4 million improvement in
engineering and construction operations. This improvement was partially due to
income generated from a major transit project to be constructed in the
Philippines, which includes operating revenues which had been previously
deferred pending commencement of the project. Costs related to the development
of this project had been expensed in prior periods. Operating income (before
minority interests) also increased by $1.8 million for the six months ended
August 31, 1995 as a result of earnings under the Performance Based Integrating
Management Contract at the U.S. Department of Energy's (DOE) Rocky Flats
Environmental Technology Site in Colorado (Rocky Flats). This DOE contract was
awarded in April 1995 to Kaiser-Hill Company, LLC (Kaiser-Hill), a limited
liability company owned equally by ICF Kaiser and CH2M Hill Companies, Ltd.
(CH2M Hill).
Operating income improvements were partially offset by a $3.9 million
decrease in income in 1995 as compared to 1994 from other environmental
operations, primarily resulting from a decline in private-sector environmental
work, due to continued regulatory uncertainty. The Company believes that the
Federal environmental projects have also been delayed temporarily by Federal
government budgetary uncertainties. Operating income was further negatively
impacted by a significant increase in marketing efforts in the six months ended
August 31, 1995 compared to the six months ended August 31, 1994. Management
believes that ICF Kaiser's continuing investment in its business development
activities should result in increased contract awards in both the public and
private sectors of its business.
ICF Kaiser had operating income of $13.7 million and a net loss before
extraordinary item of $1.7 million ($0.18 net loss per share) for the year ended
February 28, 1995 (fiscal 1995) compared with an operating loss of $5.2 million
and a $12.5 million net loss before extraordinary item ($0.83 net loss per
share) for the year ended February 28, 1994 (fiscal 1994). Operating income in
fiscal 1995 was $10.2 million higher than fiscal 1994, exclusive of the unusual
items in fiscal 1994. The operating income increase in fiscal 1995 reflects
improvements in each of the Company's businesses over fiscal 1994, including an
increase in fees at the Company's operations at the DOE's Hanford, Washington,
site (Hanford). These gains were somewhat offset by a high level of marketing
expense associated with proposing and bidding major contracts, including the
Company's successful pursuit through Kaiser-Hill of the Rocky Flats contract at
the DOE's Environmental Technology Site in Colorado. Gains in operating income
growth were offset by substantially higher nonoperating costs, including
interest expense, due to the fiscal 1994 refinancing, and income tax expense
(see Results of Operations).
Business Conditions and Backlog
The Company's contract backlog increased significantly to $4.5 billion at
August 31, 1995 compared to $1.4 billion at February 28, 1995. The increase in
backlog benefited from the April 1995 award of the five-year Kaiser-Hill
contract which increased contract backlog by $3.0 billion. In August 1995, ICF
Kaiser signed a contract estimated at $330 million to perform environmental
restoration work at Federal installations for the U.S. Army Corps of Engineers
(USACE), Baltimore District. This Total Environmental Restoration Contract
(TERC) is for four years with two three-year options. The contract is a cost
reimbursement delivery order contract, and the fee structure includes a
combination of cost plus fixed fee, award fee, and incentive fees. In August
1995, ICF Kaiser
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<PAGE>
also signed a five-year contract estimated at $50 million to provide
environmental services to USACE, Savannah District.
With the award of the Kaiser-Hill contract and the Company's continued work
at DOE's Hanford, ICF Kaiser is now actively participating in two of DOE's major
environmental cleanup efforts and at eight of DOE's other 18 major weapons
facilities. ICF Kaiser recently expanded its environmental cleanup contract base
with the U.S. Department of Defense (DOD) with the award of the USACE Baltimore
TERC and USACE Savannah contracts discussed above. The Company expects that the
experience and reputation it earns under these contracts will continue to
enhance its position as a major participant in the field of environmental
cleanup and large program management.
The Company also expects its increased level of business development
activity in the consulting group to result in expanded consulting services.
Other major current business initiatives include a significant effort to enhance
the Company's management information systems. ICF Kaiser believes these
endeavors, combined with other ongoing efforts described above, should
positively impact the Company's future performance.
RESULTS OF OPERATIONS
The following table summarizes key elements in the Consolidated Statements
of Operations for the six months ended August 31, 1995 and 1994, and for the
years ended February 28, 1995, 1994, and 1993 (dollars in millions):
<TABLE>
<CAPTION>
Six Months Ended Year Ended
August 31, February 28,
------------------ --------------------------------
1995 1994 1995 1994 1993
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE $461.3 $419.5 $861.5 $651.7 $678.9
SERVICE REVENUE $223.1 $223.1 $459.8 $382.7 $391.5
SERVICE REVENUE AS A
PERCENTAGE OF GROSS REVENUE 48.4% 53.2% 53.4% 58.7% 57.7%
EXPENSES AS A PERCENTAGE
OF SERVICE REVENUE:
Direct cost of services and overhead 83.5% 84.9% 85.5% 84.6% 80.0%
Administrative and general 10.1% 9.7% 9.5% 12.0% 11.2%
Depreciation and amortization 2.2% 2.1% 2.0% 2.5% 2.7%
Unusual items, net -- -- -- 2.3% --
Cost of disposal of businesses, net -- -- -- -- 0.3%
OPERATING INCOME (LOSS) 4.1% 3.4% 3.0% (1.4)% 5.8%
---------------------------------------------------------------------------------------------------
</TABLE>
Gross revenue represents services provided to customers with whom the
Company has a primary contractual relationship. Included in gross revenue are
costs of certain services subcontracted to third parties and other reimbursable
direct project costs, such as materials procured by the Company on behalf of its
customers.
Service revenue is derived by deducting the costs of subcontracted services
and direct project costs from gross revenue and adding the Company's share of
the equity in income of unconsolidated joint ventures and affiliated companies.
ICF Kaiser believes that it is appropriate to analyze operating margins and
other ratios in relation to service revenue because such revenue and ratios
reflect the work performed directly by the Company.
Operating profits (fees) generated by the Hanford and Kaiser-Hill contracts
are based on performance and not revenue. A change in revenue between periods is
likely to be disproportionate to the change in the fees. Consequently, changes
in revenue may have an exaggerated impact on the Company's margins as measured
on a percentage basis. In addition, because Kaiser-Hill is a consolidated
subsidiary of ICF Kaiser, the operating income
-19-
<PAGE>
includes the portion of income generated under the Kaiser-Hill contract
attributable to CH2M Hill. CH2M Hill's interest in Kaiser-Hill is reflected as a
minority interest in ICF Kaiser's financial statements (see Note B to the
Consolidated Financial Statements).
Revenue
Comparison of Six Months ended August 31, 1995, to Six Months ended August
31, 1994. Gross revenue for the six months ended August 31, 1995 increased $41.8
million, or 10.0%, to $461.3 million. The increase in gross revenue was
attributable to the commencement of work under the Kaiser-Hill contract which
generated $82.8 million in gross revenue during the current fiscal year. The
increase was partially offset by a $48.3 million reduction in gross revenue
under the Hanford contract due to Federal budget reductions which caused a
decrease in services provided by the Company at the Hanford site. This reduced
level of Hanford activity is expected to continue and may be reduced further in
future periods; however, a reduction in the Hanford budget is not expected to
have a significant impact on operating income due to the nature of the fee
structure under the DOE contract.
Service revenue remained constant for the six month periods ended August
31, 1995 and 1994. A decrease in service revenue under the Hanford contract was
largely offset by service revenue generated under the Kaiser-Hill contract.
Service revenue as a percentage of gross revenue decreased to 48.4% for the six
months ended August 31, 1995 from 53.2% for the six months ended August 31,
1994. The decrease in service revenue as a percentage of gross revenue is a
result of the nature of the Kaiser-Hill contract. A significant portion of the
gross revenue derived from the Kaiser-Hill contract includes the costs of
services subcontracted to third parties.
Comparison of Fiscal 1995 to Fiscal 1994. Gross revenue for fiscal 1995
increased 32.2% to $861.5 million, while service revenue increased 20.1% to
$459.8 million, versus fiscal 1994. These increases were attributable to the
work performed at Hanford ($208.8 million of the gross revenue increase and
$97.4 million of the service revenue increase). The Hanford revenue increases
were offset partially by a decrease in the Company's engineering and
construction revenue ($14.1 million gross revenue and $10.8 million service
revenue). Service revenue as a percentage of gross revenue decreased to 53.4%
for the year ended February 28, 1995, from 58.7% for fiscal 1994, primarily
because under an October 1993 amendment to the Hanford contract, ICF Kaiser
absorbed tasks utilizing a much higher proportion of subcontractors than Company
personnel.
Comparison of Fiscal 1994 to Fiscal 1993. Gross and service revenue
declined 4.0% and 2.2%, respectively, to $651.7 million and $382.7 million in
fiscal 1994 primarily due to the successful completion of two large industrial
projects during fiscal 1993 ($81.3 million and $9.2 million, respectively); a
significant decline in other engineering and construction business ($38.1
million and $21.9 million, respectively); the sale of a subsidiary under a
fiscal 1992-1993 restructuring plan during the third quarter of fiscal 1993
($14.4 million and $10.3 million, respectively); a decline in the Company's
energy engineering business ($11.8 million and $9.6 million, respectively); and
the general impact of reduced government spending, loss of business days due to
severe weather in the East and the Los Angeles earthquake, and a sluggish
economy. The decrease was offset partially by a significant increase in ICF
Kaiser's services provided at Hanford ($120.8 million and $52.4 million,
respectively). This increase was due primarily to the amendment of ICF Kaiser's
contract with the U.S. Department of Energy, which was effective October 1,
1993. Service revenue as a percentage of gross revenue increased as the Company
continued its concerted efforts to shift more non-Hanford work from
subcontractors to Company personnel. Equity in income of joint ventures and
affiliated companies, and consequently service revenue, declined due to the
successful early completion of a natural gas liquefaction project on Australia's
Northwest Shelf ($2.8 million) and the sale of the Company's interest in Acer
Group Limited ($1.6 million), partially offset by $1.1 million of income from
the Company's interest in an entity that owns a coal pulverization facility.
Operating Expenses
Comparison of Six Months ended August 31, 1995, to Six Months ended August 31,
1994. Direct cost of services and overhead decreased $3.1 million between the
six-month periods ended August 31, 1995 and 1994. A
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$22.6 million reduction in Hanford costs attributable to the Federal budget
reductions discussed above was substantially offset by the $18.5 million
increase in costs on the Kaiser-Hill contract. The Company's direct cost of
services and overhead as a percentage of service revenue for the six months
ended August 31, 1995 was comparable to the same period in the prior year.
Administrative and general expense increased $1.1 million, or 4.9%, between
the six-month periods ended August 31, 1995 and 1994 and increased from 9.7% to
10.1% as a percentage of service revenue. The increase in these costs is
primarily attributable to the Company's increased commitment to its marketing
activities, including filling several key marketing positions within the Company
and the relatively high level of marketing expense associated with proposing and
bidding large scale DOD and DOE contracts.
Comparison of Fiscal 1995 to Fiscal 1994. The Company's direct cost of
services and overhead was relatively flat as a percentage of service revenue in
fiscal 1995 versus fiscal 1994. Excluding Hanford, direct cost of services and
overhead decreased to 76.2% of service revenue in fiscal 1995 from 79.2% in
fiscal 1994. Administrative and general expense decreased $2.1 million. The
decrease in these costs is attributable primarily to management cost-cutting
initiatives.
A restructuring plan initiated in fiscal 1994 to respond to operating
losses included downsizing the work force, consolidating office space,
renegotiating significant leases, and restructuring certain international
operations. Management expects to complete office space consolidation plans in
1996. All other actions have been substantially completed as of February 28,
1995. Management will continue to focus on cost reduction and containment
efforts.
Comparison of Fiscal 1994 to Fiscal 1993. The Company's direct cost of
services and overhead increased to 84.6% of service revenue in fiscal 1994 from
80.0% in fiscal 1993. The relatively fixed nature of certain of the Company's
indirect costs (e.g., office rent) and the timing of the implementation of
action plans for certain operating units developed in fiscal 1994 delayed the
impact of cost reductions in the fourth quarter. ICF Kaiser also increased its
commitment to marketing in fiscal 1994, which contributed to the overall
increase in administrative and general expense.
Depreciation and amortization expense decreased $1.2 million to $9.6
million for the year ended February 28, 1994, primarily as the result of the
write-off of certain software assets in the third quarter of fiscal 1993.
Interest Expense
ICF Kaiser's interest expense net of interest income (net interest) for the
year ended February 28, 1995, increased $6.3 million from fiscal 1994 due to a
recapitalization that took place in the fourth quarter of fiscal 1994 (also see
Liquidity and Capital Resources). The increase in net interest was impacted
favorably by $1.3 million in refunds of interest from the Internal Revenue
Service (IRS) recorded in the third quarter of fiscal 1995 associated with the
Company's tax liabilities and those of an acquired company.
ICF Kaiser's interest expense for the year ended February 28, 1994,
decreased 4.8% from fiscal 1993. The decrease is attributable to both the
reduced average amount of debt outstanding and lower prevailing interest rates.
Income Tax Expense
Comparison of Six Months ended August 31, 1995, to Six Months ended August 31,
1994. ICF Kaiser's income tax provision for the six months ended August 31, 1995
was $1.0 million versus $1.3 million for the comparable period in the previous
year. The $0.3 million decrease occurred despite an increase in pretax income
between periods. The decrease is primarily due to a reduction in permanent
differences (such as the nondeductibility of goodwill) as a percentage of pretax
income and a reduction in controlled foreign corporation losses. The six months
ended August 31, 1994 also included a repatriation of overseas funds to the
U.S., which could not be
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currently offset by foreign tax credits, resulting in additional income taxes
for the six months ended August 31, 1994.
Comparison of Fiscal 1995 to Fiscal 1994. ICF Kaiser's income tax provision
for fiscal 1995 was $2.9 million, even though pretax income was $1.2 million.
This is due to several factors including the repatriation of overseas funds to
the United States during fiscal 1995 that currently could not be offset by
foreign tax credits and permanent differences, such as the nondeductibility of
goodwill amortization. Nondeductible permanent differences comprise a very high
percentage of pretax income. As such, the traditional percentage relationship
between income tax expense and pretax income is not meaningful. It is
anticipated that the combination of projected pretax income levels and the
current level of permanent differences will result in the Company's effective
tax rate continuing to be above traditional levels in the near-term future.
Because of the reported fiscal 1994 losses, a $3.3 million valuation
allowance was established in fiscal 1994 for deferred tax assets. In fiscal
1995, although pretax income increased $14.1 million to $1.2 million (with a
corresponding increase in taxable income), the Company has maintained the
valuation allowance.
As of February 28, 1995, the Company had deferred tax assets related to net
operating loss carryforwards of $2.2 million, of which $0.4 million expire in
fiscal 2004 and $1.8 million expire in 2009. Additionally, the Company has $1.1
million of tax credit carryforwards, the majority of which do not expire.
Management believes that the Company's expected levels of pretax earnings, when
adjusted for nondeductible expenses such as goodwill amortization, will generate
sufficient future taxable income to realize the $13.6 million deferred tax asset
within the next five years.
Comparison of Fiscal 1994 to Fiscal 1993. ICF Kaiser's effective tax rate
decreased to 2.7% in fiscal 1994 from 42% in fiscal 1993 because the book loss
included a high level of nondeductible expenses, such as goodwill amortization,
differences between the book and tax basis of businesses sold, and losses from
controlled foreign corporations. This impact was magnified by the unanticipated
decline in operating results in the fourth quarter of fiscal 1994. A $3.3
million valuation allowance was established in fiscal 1994 for deferred tax
assets. The valuation allowance was established due to the extraordinary item
and recent operating results. As of February 28, 1994, the Company had deferred
tax assets related to net operating loss carryforwards of $4.3 million, of which
$0.4 million were scheduled to expire in fiscal 2004 and $3.9 million in 2009.
The Company also had recorded $0.9 million of tax credit carryforwards, the
majority of which do not expire.
Extraordinary Item
The Company completed a recapitalization program in the fourth quarter of
fiscal 1994 that resulted in a $6.0 million extraordinary charge (net of $0 tax
benefit) for the early extinguishment of debt and a $1.9 million charge to net
income available for common shareholders to repurchase the Company's Series 2C
Senior Preferred Stock. These charges reduced earnings per share by $0.38 for a
total loss of $1.21 per share in fiscal 1994 (see Liquidity and Capital
Resources).
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended August 31, 1995, cash and cash equivalents
increased $1.0 million to $29.3 million at August 31, 1995. Operating
activities generated $9.8 million in cash primarily due to the receipt of $13.4
million from DOE for payment of accrued employee benefits acquired pursuant to
the Kaiser-Hill contract; this was offset by an increase in contract receivables
and an interest payment of $7.5 million on the Company's 12% Senior Subordinated
Notes. Other uses of cash included $5.0 million for net repayments on the
Company's Credit Facility; $2.1 million for acquisitions and investments in
joint ventures and affiliates; and $1.0 million in payments of other outstanding
debt.
During the year ended February 28, 1995, the U.S. Environmental Protection
Agency approved the Company's revised provisional billing rates for fiscal years
1991 through 1994, thus authorizing the Company to submit
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invoices on cost-plus contracts with U.S. government agencies for work performed
during these approved years. The Company has collected in excess of $4 million
as of August 31, 1995 on these contracts.
Cash and cash equivalents increased $2.7 million in fiscal 1995 to $28.2
million, and the Company's working capital and current ratio have improved since
fiscal 1994. Cash and working capital increased in fiscal 1995 due to an
increased focus on cash management. Additional reasons for the cash and working
capital improvements include cash from operating activities, the receipt of
proceeds from a fiscal 1994 disposition ($2.6 million), refunds from the IRS
($3.5 million), and the use of the Company's Credit Facility ($5.0 million).
The improvement was offset partially by cash payments for the settlement of
several outstanding liabilities related to prior dispositions.
The Company has a $60 million revolving credit facility (the Credit
Facility) provided by a consortium of banks (the Banks). ICF Kaiser
International, Inc. and certain of its subsidiaries, which are guarantors of the
Credit Facility, granted the Banks security interests in their accounts
receivable and certain other assets. The Credit Facility limits the payment of
cash dividends, requires the maintenance of specified financial ratios, and has
a $20 million limitation on cash borrowings. ICF Kaiser and the Banks entered
into amendments in 1995 that modified financial ratios and
other terms of the Credit Facility. The Credit Facility contains Eurodollar and
alternate base interest rate alternatives with margins dependent upon the
Company's financial operating results and expires on October 31, 1996. As of
August 31, 1995, there were no outstanding borrowings under the Credit Facility,
except for letters of credit, and the Company had $34.0 million of available
credit under the Credit Facility. As of February 28, 1995, there were $5.0
million in borrowings outstanding under the Credit Facility, in addition to
letters of credit, and the Company had $30.3 million of available credit under
the Credit Facility.
In the fourth quarter of fiscal 1994, the Company issued $125,000,000 of
12% Senior Subordinated Notes due 2003 and 600,000 warrants, each to purchase
one share of the Company's common stock at $5.00 per share. The net proceeds
were used, in part, to retire the Company's 13.5% Senior Subordinated Notes due
1999 and associated warrants, to repurchase preferred stock, and to repay the
outstanding balance on the Company's then-existing revolving credit facility.
For the past several years, the Company has had ongoing negotiations,
filings, and litigation with the IRS related to settlement of its tax
liabilities and the liabilities associated with acquired companies. As noted in
the Results of Operations, the cash and income impact has been favorable to the
Company. Further, the Company's previous tax losses and its resultant net
operating loss carryforward position, will limit Federal income tax payments
required in the near future.
In addition, the Company prevailed at the trial court level in a tax refund
litigation matter against the IRS that was subsequently appealed by the Federal
government. The Company is currently engaged in discussions with the Department
of Justice concerning the possible settlement of this litigation. It cannot be
predicted whether or when this matter can be resolved; the resolution of this
matter could have a material favorable impact on the Company's liquidity and
financial results.
Management believes that current projected levels of cash flows and the
availability of financing, including borrowings under the Credit Facility, will
be adequate to fund operations throughout the next 12 months. ICF Kaiser is
currently considering alternative sources of financing to achieve cost savings
and provide greater flexibility in growing and managing the Company's
businesses.
IMPACT OF NEW ACCOUNTING STANDARD
The Company adopted Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions (SFAS No.
106), effective March 1, 1993. The Company's postretirement benefit obligation
extends to only a limited group of retirees (and their spouses) who joined ICF
Kaiser through an acquisition, and whose benefits are limited to a fixed amount
per person. SFAS No. 106 requires that companies accrue postretirement benefits
over the period benefits are earned. The Company has elected the prospective
transition method and is amortizing its $14.2 million transition obligation over
14.5 years,
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the average remaining life expectancy of the retirees and their spouses. The
Company's ongoing expense under SFAS No. 106 includes the interest component and
the amortization of the transition obligation.
EFFECTS OF INFLATION
The majority of the Company's contracts are cost reimbursable and,
therefore, the inflation rate in the United States, as well as in other
countries in which the Company operates, generally has relatively little impact
on operating margins; however, as a professional services company, the Company
is more labor-intensive than an industrial firm. To attract and maintain the
high-caliber professional staff it needs, the Company must structure its
compensation programs competitively. The wage-demand effects of inflation, which
have been minimal in the past several years, would be felt almost immediately in
the Company's costs.
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BUSINESS
ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its
other operating subsidiaries, is one of the nation's largest engineering,
construction, and consulting services companies, providing fully integrated
engineering, construction and consulting services to public- and private-sector
clients in the related markets of environment, infrastructure, and industry. The
"Company" or "ICF Kaiser" in this Prospectus may refer to ICF Kaiser
International, Inc. and/or any of its wholly owned operating subsidiaries. For
its most recent fiscal year ended February 28, 1995 (fiscal 1995), ICF Kaiser
reported gross and service revenue of $862 million and $460 million,
respectively. Service revenue is derived by deducting the costs of subcontracted
services and direct project costs from gross revenue and adding the Company's
share of income (loss) of joint ventures and affiliated companies. The Company
estimates that of its fiscal 1995 $460 million service revenue, approximately
58% was attributable to environmental services and another 23% to related
management & operations services, 10% to infrastructure-related work, 6% to
industrial work, and 3% to other consulting services.
During the three and one-half years ended August 31, 1995, the Company
operated predominantly in one industry segment, in which it provided
engineering, construction, consulting, and other professional services.
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
------------------ ---------------------------------------------------------
August 31, 1995 February 28, 1995 February 28, 1994 February 28, 1993
--------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Gross revenue............ $461,257,000 $861,518,000 $651,657,000 $678,882,000
Service revenue.......... $223,143,000 $459,786,000 $382,708,000 $391,528,000
Operating income (loss).. $ 9,259,000 $ 13,688,000 $ (5,230,000) $ 22,744,000
Assets................... $319,874,000 $281,422,000 $281,198,000 $293,076,000
</TABLE>
As of August 31, 1995, the Company's contract backlog totaled approximately
$4.5 billion, up from $1.6 billion as of February 28, 1995. In April 1995,
Kaiser-Hill was awarded the Performance Based Integrating Management contract at
the DOE's Rocky Flats Environmental Technology Site near Denver, Colorado. This
contract represents approximately $3.0 billion of the Company's total backlog.
See "Backlog."
The Company's headquarters is located at 9300 Lee Highway, Fairfax,
Virginia 22031-1207, and its telephone number is (703) 934-3600. The Company's
regional headquarters are located at 1800 Harrison St., Oakland, California
94612-3430, (510) 419-6000 and at Four Gateway Center, Pittsburgh, Pennsylvania
15222-1207, (412) 497-2000. Other offices include Tempe, Arizona; Livermore,
Oakland, Rancho Cordova, San Francisco, San Rafael, and Universal City,
California; Colorado Springs, Denver, and Lakewood, Colorado; Cheshire,
Connecticut; Washington, DC; Homestead, Jacksonville, Miami, and Tampa, Florida;
Atlanta, Georgia; Chicago, Illinois; Gary, Indiana; Ruston, Louisiana; Abingdon
and Baltimore, Maryland; Boston, Massachusetts; Ely and Las Vegas, Nevada;
Woodbridge, New Jersey; New York, New York; Albuquerque and Los Alamos, New
Mexico; Raleigh, North Carolina; Cincinnati, Ohio; Houston, Texas; Port Orchard,
Richland, and Seattle, Washington. The Company's major international offices are
located in Perth, Australia; London, England; Paris, France; Mexico City,
Mexico; Lisbon, Portugal; Moscow, Russia; and Taipei, Taiwan. As of October 31,
1995, ICF Kaiser employed approximately 5,000 people; another 2,500 employees
are located at Kaiser-Hill in Colorado.
STRATEGIC CONSIDERATIONS
The following points are important to understanding the Company's business
and strategy:
Full Front-end Capability. The Company's front-end skills include policy
analysis and consulting; scientific analysis and health/risk assessments;
facility siting and environmental assessments; remedial investigations and
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feasibility studies; and engineering design. By possessing these skills, the
Company's involvement at the outset of any project places it in a position to
participate in any follow-on engineering and construction work.
High Value-added Services. The Company adds high value within those markets
that relate to environmental services through specialized environmental
knowledge that (i) helps clients understand environmental threats and
opportunities and alternative ways in which each can be managed; (ii) allows
creation of customized solutions for the clients' environmental problems; and
(iii) combines problem identification, solution, and implementation.
Access to Technology. The Company has access to new technologies that play
a critical role in both the cleanup of existing waste sites and in the reduction
of waste generated by ongoing and new production processes. These key
technologies relate to reducing and monitoring emissions, bioremediation, and
industrial process technologies that can help minimize waste, reduce costs, and
improve the quality of a finished product. To assist clients better and to
increase its overall participation in clients' projects, the Company continues
to expand its access to leading environmental and process technologies through
various methods, including licensing and joint ventures.
Strategic Relationships. The Company has established business relationships
through joint ventures, marketing agreements, and direct equity investments that
extend its presence and reduce its business development risks. These
relationships are particularly important in the management of the Company's
international operations, and they help reduce the cost and risks associated
with the Company's entering new geographic regions.
FEDERAL PROGRAMS GROUP
U.S. Department of Energy. An important DOE mission has changed over the
years--from nuclear weapons production to environmental cleanup of former
nuclear weapons production sites. To help accomplish DOE's cleanup goals
pursuant to this new mission, the Company actively supports DOE at 10 of its 18
major weapons facilities, including the Argonne National Laboratory, the Idaho
National Engineering Laboratory, Lawrence Livermore National Laboratory, the Los
Alamos National Laboratory, the Mound Plant Site, the Oak Ridge National
Laboratory, the two Sandia National Laboratories, the Rocky Flats Environmental
Technology Site, and the Hanford, Washington, Site (the last Sites are described
in more detail below). The services provided by the Company include (i)
conducting comprehensive assessments related to environment, safety, and health;
(ii) quality assurance; (iii) security and safeguards; and (iv) assessing,
managing, and remediating existing hazardous and solid wastes, radioactive
materials, highly volatile chemical compounds, unidentified mixed wastes, and
exploded/unexploded munitions.
During fiscal 1995, the Company, together with Colorado-based CH2M Hill
Companies, Ltd., created Kaiser-Hill Company, LLC (Kaiser-Hill) which
successfully pursued, and in April 1995 won, DOE's Performance Based Integrating
Management contract at the DOE's Rocky Flats Environmental Technology Site near
Golden, Colorado. Rocky Flats is a former DOE nuclear weapons production
facility. Under the five-year contract, Kaiser-Hill (in which the Company has a
50% interest) will oversee plutonium stabilization and storage, environmental
restoration, waste management, decontamination and decommissioning, site safety
and security, and construction activities of subcontract companies. Principal
members of the Kaiser-Hill team include BNFL, Inc., Babcock & Wilcox Co.,
Morrison Knudsen Corp., Westinghouse Electric Corporation, DynCorp, Wackenhut
Services Incorporated, and Quanterra Environmental Services. On May 1, 1995, the
Kaiser-Hill team began a transition onto the Site under a relatively small,
separate contract, and the team assumed management and operating
responsibilities from the existing contractor on July 1, 1995.
Under the performance-based contract signed by Kaiser-Hill, the concept
which was developed in the DOE's 1994 Contract Reform Initiative, 85% of Kaiser-
Hill's fees will be based on performance, while only 15% are fixed. Kaiser-
Hill's contract commits it to dealing with urgent risks first, and measurable
results in the following "urgent risk" areas will help determine its incentive
fee: stabilize plutonium and plutonium residues by 1998; consolidate plutonium
in a single building by 2000; and by 1998, clean up and remove all high-risk
"hot spot" contamination.
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Kaiser-Hill also has committed to substantial short-term achievements in cleanup
and weapons materials management, and, over the next two years, is expected to
ship highly enriched uranium off-site, release 4,100 acres of land to the
public, and remediate five hazardous sites. Finally, Kaiser-Hill is expecting to
reduce the 6,000 employees at the site to 3,500 in the first 18 months of the
contract, and further to 2,000 by the end of the contract term.
Since 1987, the Company, through its wholly owned subsidiary ICF Kaiser
Hanford Company, has been assisting DOE with the cleanup of its former nuclear
weapons productions site at the Hanford Nuclear Reservation in Richland,
Washington. In connection with an October 1993 contract amendment and in order
to reduce duplication of work and to improve management control and efficiency
of operation, DOE, with the Company's concurrence, assigned management of
substantially all aspects of the contract to Westinghouse Hanford Company,
another management and operating contractor at DOE's Hanford site. Since that
time, the subsidiary has been a subcontractor of Westinghouse Hanford. This
business relationship has been extended to Rocky Flats, where Westinghouse is a
member of the Kaiser-Hill team under the DOE contract described above.
In October 1995, the Company announced that its subsidiary ICF Kaiser
Hanford Company was teaming with five other nationally known firms in bidding on
the DOE's new management and integration contract at the Hanford site. The other
firms include Raytheon Company, Newport News Shipbuilding (a Tenneco Company),
Boeing Information Services, Siemens Power Corp., and CH2M Hill Companies. The
Company expects that DOE will formally request proposals for the Hanford
contract in December 1995, and that the new contract will be in place in October
1996. It is expected that two other teams also will bid on the new contract; one
of those teams already has been announced and includes Westinghouse Hanford
Company (the incumbent management and operations contractor at the site).
An example of the Company's other work for DOE is its three-year contract
signed in October 1994 to conduct audits and assessments of a variety of
programs and activities at the Los Alamos National Laboratory, located in New
Mexico. Under the contract the Company conducts comprehensive assessments
related to environment, safety, and health; the assessments ensure that the
laboratory is in compliance with Federal and state regulations, as well as DOE
orders. The Company also conducts environmental audits of areas ranging from
air quality to waste management and from the packaging and transportation of
hazardous materials to training and certification and safety and health
assessments ranging from aviation safety to fire protection and from facility
maintenance to industrial hygiene. The Company has been performing this type of
work at Los Alamos since 1989.
U.S. Department of Defense. DOD estimates that its environmental expense
will be directed primarily to cleaning up hundreds of military bases with
thousands of contaminated sites. There is an urgent need to ensure that the
hazardous wastes present at these sites (often located near population centers)
do not pose a threat to the surrounding population, and, in connection with the
closure of many of the bases, there is an economic incentive to make sure that
the environmental restoration enables the sites of the former bases to be
developed commercially by the private sector.
In August 1995, the Company was awarded a contract estimated at $330
million to perform environmental restoration work at Federal installations for
the U.S. Army Corps of Engineers (USACE), Baltimore District. This Total
Environmental Restoration Contract (TERC) is for four years with two, three-year
options. The contract is a cost reimbursement delivery order contract, and the
fee structure includes a combination of cost plus fixed fee, award fee, and
incentive fees. In August 1995, the Company also signed a five-year contract
estimated at $50 million to provide environmental services to USACE, Savannah
District.
The Company also supports the U.S. Army's Installation Restoration Program,
Base Closure and Realignment Program, as well as environmental initiatives. The
Company evaluates the extent of environmental contamination at Army
installations, performs remedial investigations and feasibility studies, designs
cleanup remedies (as required), and ensures proper permitting and regulatory
compliance in the Army Environmental Center's Region 5 (Delaware, Maryland, West
Virginia, Virginia, and the District of Columbia). The contract was signed in
1994 and adds to an existing contract that the Company has been working under
since 1989. Under another five-year contract signed in fiscal year 1991, the
Company is providing environmental services at U.S. Air Force facilities;
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hazardous and toxic wastes site investigations and remediations are being or
have been conducted at Andersen AFB, Guam; Wortsmith AFB, Michigan; Kirtland
AFB, New Mexico; Fairchild AFB, Washington; Pease AFB, New Hampshire; and
McClennan AFB, California.
Examples of other DOD work include evaluating environmental contamination,
performing remedial investigations and feasibility studies, and designing
remedies at Picatinny Arsenal in New Jersey, Cornhusker Army Ammunition Plant in
Nebraska, and Aberdeen Proving Ground in Maryland. Similar work is being
performed at Fort Dix in New Jersey and the Milan Army Ammunition Plan in
Tennessee where the Company designed a ground-water extraction and treatment
system for the remediation of contaminated ground water. The treatment facility
extracts contaminated ground water, removes explosives compounds and toxic
metals, and reinjects the ground water into the aquifer.
Other Federal Government Work. Under a variety of smaller contracts, the
Company provides the Federal government with numerous other services. Under a
contract with the U.S. Environmental Protection Agency (EPA) awarded in fiscal
1995, the Company will continue to manage the EPA's quality assurance laboratory
in Las Vegas, Nevada, and to provide the laboratory with analytical support.
The Company has operated the laboratory since it won this analytical support
contract in 1989; the laboratory is the only laboratory designated by EPA to
provide quality assurance services to the more than 100 EPA-contracted Superfund
laboratories. Under the Superfund program, EPA designates sites that have
severe hazardous waste contamination, and oversees the sites' cleanup while
pursuing parties responsible for the contamination. The Company has provided
analytical support to this program since 1987, when it won an Environmental
Service Assistance Teams (ESAT) contract to manage and support analytical
chemistry laboratory work for the EPA's Superfund, RCRA, and other programs.
See "Environmental Regulation."
ICF KAISER ENGINEERS GROUP
Environmental Consulting and Engineering Services. Demand for the Company's
non-Federal environmental consulting and engineering services is driven by a
number of factors: the need to improve the quality of the environment;
environmental regulation and enforcement; and increased liability associated
with pollution-related injury and damage. Significant environmental laws have
been enacted in response to public concern over the environment, and these laws
and the implementing regulations affect nearly every industrial activity.
Increasingly strict Federal, state, and local government regulation has forced
private industry and state and local agencies to clean up contaminated sites, to
bring production facilities into compliance with current environmental
regulations, and to minimize waste generation on an ongoing basis. Although
growth in this private-sector market is being hampered by uncertainty over
continuing Federal regulations, such as Superfund and the Clean Water Act, the
Company generates new business by increasing the types of services it sells to
existing clients, by targeting new markets for the Company's full-service
capabilities, and by expanding the types of services the Company offers.
The Company's environmental services have progressed beyond study and
analysis to remediation. Following on its established market position in the
consulting and front-end analysis phase of environmental services, the Company
now offers alternative remediation approaches that may involve providing on-site
waste containment, on-site treatment, management of on-site/off-site
remediation, or waste removal. The Company also designs new processes (and
redesigns ongoing production processes) to minimize or eliminate the generation
of hazardous waste. Currently the Company provides environmental investigation,
risk assessment, community relations services, and feasibility studies to a
leading industrial corporation to investigate and remediate chrome processing
ore residues in New Jersey. The Company also has been awarded significant
contracts by a Fortune 200 chemical manufacturer for environmental assessment
and remediation work at sites located in West Virginia and Massachusetts.
Internationally, the Company designed and is installing the ground-water and
soil remediation system at a former pigment manufacturing facility in a suburb
of Paris.
Industry Services. ICF Kaiser's engineering design, project management, and
construction services to the industrial market historically have involved work
with the steel, aluminum, alumina, copper, tin, and other metals industries. In
the coke, coal, and coal chemicals area, ICF Kaiser's services have included
inspection of coke plants
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for environmental compliance, facility design and construction, and equipment
sales and services. The Company has provided services related to coal cleaning,
handling, and environmental controls. ICF Kaiser also designed, built, and now
operates and jointly owns a pulverized coal injection facility which provides
pulverized coal for use in a blast furnace under a multiyear tolling agreement.
In fiscal 1995 the Company's industrial operations suffered because of the
low demand for metals and mining industries products over the past few years.
The demand cycle for these products, in the Company's opinion, bottomed out in
the last year and one-half and is now on the upswing. In October 1994 the
Company was awarded a contract to perform construction management services for
the development of the Magma Nevada Mining Company's planned $300 million copper
concentrator plant in Ely, Nevada. The Company completed detail design and
equipment procurement for the plant under a contract signed in September 1992.
The international industry market is providing increased opportunities for
the Company's services. In November 1994 the Company announced that it had been
awarded a four-and-one-half year contract to provide design, equipment and
materials, and limited site services for a PHOSAM ammonia recovery plant located
at Baoshan Iron and Steel Corporation in Shanghai, the People's Republic of
China. The PHOSAM process removes ammonia from coke oven gas and provides a
high-purity ammonia product; major users of ammonia include the plastics
manufacturing, fertilizer, and refrigeration industries. The Company's largest
industrial project will be a hot strip mini-mill to be completed for Nova Hut,
a.s., in the Ostrava region of the Czech Republic. In October 1994 the Company
began providing preliminary engineering services and assisting the International
Finance Corporation in securing the financing for the mini-mill that has an
estimated total capital cost of approximately $290 million. Once financing is
obtained, the Company will provide project management, process design, and
construction management services under a Turnkey Construction and Operational
Support contract. The mini-mill is scheduled to be completed in early 1998 with
a design annual capacity of 1.0 million metric tons to satisfy the domestic
demand for hot strip steel products in the Czech Republic.
Infrastructure Services. The Company also is helping rebuild the global
infrastructure of roads, highways, transit systems, harbors, airports,
facilities, and buildings. Budget constraints at the Federal, state, and local
government levels have hindered infrastructure market growth, but the Company
remains active in major U.S. metropolitan areas. In Chicago, the Company (as
part of a joint venture) serves as program manager of the design of the Central
Area Circulator, a light rail transit system planned for downtown Chicago; the
Company has worked in Chicago infrastructure programs since 1981. In Pittsburgh,
the location of a regional headquarters of the Company, the Company has provided
services to the busway that links downtown Pittsburgh to the Pittsburgh
International Airport and has performed construction management services for
various Port Authority of Allegheny County light rail projects. In San
Francisco, the Company is preparing the conceptual design of and a draft
environmental impact statement for a commuter rail line extension. In Atlanta,
the Company (as part of a joint venture) is continuing its general engineering
consulting services to the Metropolitan Atlanta Rapid Transit Authority (MARTA).
The joint venture has served as the general engineering consultant to MARTA
since 1976, and under a contract extension signed in 1994, the joint venture
will focus on extending the system to a northern suburb. In Miami, the Company
is the leading contractor for Miami's Intermodal Transit Center, a project that
will tie together air, rail, and highway systems in South Florida.
Internationally, the Company's large-scale construction infrastructure
skills are at work in Portugal where the Company (as part of a joint venture) in
1994 was awarded a project and construction management services contract for the
modification and reconstruction of the main rail link between the cities of
Lisbon and Oporto.
The major ports of many of the world's cities have serious water pollution
problems, and ICF Kaiser is part of several cities' efforts to improve the
condition of their harbors and waterways. The Company continues as the
construction manager of the cleanup of Boston Harbor, one of the largest
environmental projects in the country. Since the inception of the project in
1988, the Company has served as its construction manager, and currently manages
more than 2,200 construction workers, engineers, architects, and support
personnel working to construct the second largest wastewater treatment plant in
the United States on Deer Island in Boston Harbor. The Company
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believes that after its successful years as construction manager, it is in an
excellent position to win the next three-year phase of this infrastructure
project.
Another developing area for the Company in the infrastructure market
involves facilities engineering, architectural, and construction services. This
work includes such structures as retail centers, Federal courthouses, wastewater
treatment plants, and maximum-security prisons. Early in 1995, the Company
announced that it would be providing design services for a new prison in
Corcoran, California, that will be the largest prison in the state and one of
the largest prisons in the U.S.
CONSULTING GROUP
The ICF Kaiser Consulting Group draws upon the talents of its multi-
disciplinary professional staff to support customers within four primary lines
of business.
ENVIRONMENTAL CONSULTING SERVICES assist customers in developing plans and
policies, evaluating options for managing environmental responsibilities in the
most cost-effective manner, and identifying and employing the best available
technologies and practices. Life-cycle management strategies are emphasized.
The Group has special expertise in such areas as industrial and municipal waste
management, air pollution control, chemical accident prevention, and ground-
water and drinking water management.
Global environmental issues are also a particular area of focus within the
Group. Working with nearly every U.S. and international funding organization
and with numerous private sector organization, the Group has conducted projects
in over thirty countries, and has been actively involved in supporting virtually
every major international environmental treaty completed to date. The Group has
achieved great success in implementing technology transfer programs through the
creation of effective public-private partnerships.
Working on global change issues for the EPA since 1982, the Company
announced in November 1994 that it had been awarded a three-year contract to
support the EPA's Global Change Division, providing support related to the
reduction of methane and other greenhouse gases. Also in November 1994, the
Consulting Group announced that it had been awarded a new three-and-one-half
year contract to provide technical and regulatory support to the EPA's Office of
Solid Waste, focusing on human health and ecological risk assessment and waste
characterization.
IN-CAREER EDUCATION AND TRAINING PROGRAMS range in subject matter from
highly technical areas to broader, skill-based and management-oriented training.
The Group's expertise in the development and delivery of workplace training,
combined with expert knowledge in a wide variety of technologies and
programmatic areas, enables it to provide high impact training that is
specifically tailored to the needs of each customer organization. Environmental
management programs cover regulation, technology, information reporting,
emergency response, and pollution prevention.
INFORMATION MANAGEMENT PROGRAMS assist clients in developing decision
support systems which facilitate the collection and use of information to track
performance, identify opportunities, and improve decision making. The Group
offers a number a number of sophisticated simulation models and proprietary
applications, such as its electric utility Integrated Planning Model. By
combining consulting expertise with information technology skills, the Group
helps its customers deal with the unique challenges of their business
environment.
ENERGY AND NATURAL RESOURCE MANAGEMENT SERVICES support the development of
corporate and technical plans for managing power resources and energy projects,
provide economic assessments of short- and long-term market conditions for
various fuels, and serve as an expert foundation in litigation and regulatory
proceedings. The Group assists its customers in identifying market
opportunities, commercializing new technologies, and developing public policy.
Its contributions involve linking an in-depth understanding of the energy
markets with an ongoing involvement with energy technology.
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The ICF Kaiser Consulting Group serves customers in U.S. and international
markets, including both public- and private-sector organizations. Among its
major customers are U.S. government agencies, such as EPA, DOE, DOD, DOT, HUD,
and others; U.S. private sector organizations, particularly major energy
producers such as utilities and oil companies; and governments and businesses
around the world, as well as various multinational banks, development
organizations, and treaty organizations.
COMPETITION AND CONTRACT AWARD PROCESS
The markets in which the Company operates are very competitive. The
Company's competitors range from small local firms to large multinational
companies. The Company believes that no single firm or small number of firms
dominates its markets.
Competition for private-sector work generally is based on several factors,
including quality of work, reputation, price, and marketing approach. The
Company's objective is to establish and maintain a strong competitive position
in its areas of operations by adhering to its basic philosophy of delivering
high-quality work in a timely fashion within its clients' budget constraints.
Most of the Company's contracts with public-sector clients are awarded
through a competitive bidding process that places no limit on the number or type
of offerors. The process usually begins with a government Request for Proposal
(RFP) that delineates the size and scope of the proposed contract. Proposals are
evaluated by the government on the basis of technical merit (for example,
response to mandatory solicitation provisions, corporate and personnel
qualifications, and experience) and cost. The Company believes that its
experience and ongoing work strengthen its technical qualifications and,
thereby, enhance its ability to compete successfully for future government work.
In both the private and public sectors, the Company, acting either as a
prime contractor or as a subcontractor, may join with other firms to form a team
that competes for a single contract or submits a single proposal. Because a team
of firms almost always can offer a stronger set of qualifications than any firm
standing alone, these teaming arrangements often are very important to the
success of a particular competition or proposal. The Company maintains a large
network of business relationships with other companies and has drawn repeatedly
upon these relationships to form winning teams.
The Company's subsidiaries operate under a number of different types of
contract structures with its private- and public-sector clients, the most common
of which are Cost Plus and Fixed Price. Under Cost Plus contracts, the Company's
costs are reimbursed with a fee (either fixed or percentage of cost) and/or an
incentive or award fee offered to provide inducement for effective project
management. A variation of Cost Plus contracts are time and materials contracts
under which the Company is paid at a specified fixed hourly rate for direct
labor hours worked. Under Fixed Price contracts, the Company is paid a
predetermined amount for all services provided as detailed in the design and
performance specifications agreed to at the project's inception.
CUSTOMERS
The Company's clients include DOD, DOE, and EPA; major corporations in the
energy, transportation, chemical, steel, aluminum, mining, and manufacturing
industries; utilities; and a variety of state and local government agencies
throughout the United States. A substantial portion of the Company's work is
repeat business from existing clients. In many cases, the Company has worked for
the same client for many years, providing different services at different times.
DOE accounted for approximately 60% of the Company's consolidated gross revenue
during fiscal 1995; DOD, EPA, and other Federal agencies collectively accounted
for another approximately 13%. The Federal government accounted for
approximately 73% of the Company's consolidated gross revenue in fiscal year
1995, 65% in fiscal year 1994, and 47% in fiscal year 1993.
The Company's international clients include both private firms and foreign
government agencies in such countries as Australia, France, Portugal, and
Taiwan. In fiscal year 1995, foreign operations accounted for
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approximately 6.3% of the Company's consolidated gross revenue. For information
concerning gross revenue, operating income, and identifiable assets of the
Company's business by geographic area, see Note O to the Consolidated Financial
Statements.
BACKLOG
Backlog refers to the aggregate amount of gross contract revenue remaining
to be earned pursuant to signed contracts extending beyond one year. At August
31, 1995, the Company's contract backlog was approximately $4.5 billion in gross
revenue, up from approximately $1.4 billion in gross revenue at February 28,
1995, and $1.5 billion at August 31, 1994. Of the $4.5 billion in total backlog,
the Company expects that approximately 10.0% of the total backlog at August 31,
1995, will be worked off during calendar year 1995. Because of the nature of its
contracts, the Company is unable to calculate the amount or timing of service
revenue that might be earned pursuant to these contracts. The Company believes
that backlog is not a predictor of future gross or service revenue.
As discussed above, in April 1995 Kaiser-Hill was awarded the Performance
Based Integrating Management contract at the DOE Rocky Flats Site. This contract
represents approximately $3.0 billion of the total backlog.
Differences in contracting practices between the public and private sectors
result in ICF Kaiser's backlog being weighted heavily toward contracts
associated with agencies of the Federal government. Backlog under contracts with
agencies of the Federal government that extend beyond the government's current
fiscal year includes the full contract amount, including in many cases amounts
anticipated to be earned in option periods and certain performance fees, even
though annual funding of the amounts under such contracts generally must be
appropriated by Congress before the agency may expend funds during any year
under such contracts. In addition, the agency must allocate the appropriated
funds to these specific contracts and thereafter authorize work or task orders
to be performed under these specific contracts. Such authorizations are
generally for periods considerably shorter than the duration of the work the
Company expects to perform under a particular contract and generally cover only
a percentage of the contract revenue. Because of these factors, the amount of
Federal government contract backlog for which funds have been appropriated and
allocated, and task orders issued, at any given date is a substantially smaller
amount than the total Federal government contract backlog as of that date. In
the event that option periods under any given contract are not exercised or
funds are not appropriated, allocated, or authorized to be spent under any given
contract, the amount of backlog attributable to that contract would not result
in revenue to the Company. All contracts and subcontracts with agencies of the
Federal government are subject to termination, reduction, or modification at any
time at the discretion of the government agency.
ENVIRONMENTAL REGULATION
Significant environmental laws have been enacted in response to public
concern over the environment. These laws and the implementing regulations affect
nearly every industrial activity. Efforts to comply with the requirements of
these laws have increased demand for the Company's services. The principal
Federal legislation having the most significant effect on the Company's business
includes the following:
THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT.
CERCLA, as amended by the Superfund Amendments and Reauthorization Act,
established the Superfund program to clean up hazardous waste sites and provides
for penalties and punitive damages for noncompliance with EPA orders. Superfund
may impose strict liability (joint and several as well as individual) on certain
hazardous substance waste owners, operators, disposal "arrangers," transporters,
and disposal facility owners and operators (Potentially Responsible Parties or
PRPs) for the costs of removal or remedial action; for other necessary response
costs and damages for injury, destruction, or loss of natural resources; and for
the cost of any health effects study. Under certain circumstances Federal funds
may be used to pay for the cleanup.
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THE RESOURCE CONSERVATION AND RECOVERY ACT (RCRA). RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984 (HSWA), provides a comprehensive
scheme for the regulation of hazardous waste from the time of generation to its
ultimate disposal (and sometimes thereafter), as well as the regulation of
persons engaged in the treatment, storage, and disposal of hazardous waste. The
RCRA scheme includes both a permitting and a manifest tracking system and
detailed regulations on the handling, treatment, transportation, storage, and
disposal of hazardous waste. Regulations have been issued pursuant to RCRA in
the following areas (among others) of importance to the Company: permitting
remediation of releases associated with underground storage tanks; municipal
solid waste disposal; waste minimization; treatment; transportation; and
disposal of hazardous waste. HSWA has increased (to an estimated 100,000) the
number of hazardous waste generators subject to RCRA. HSWA also imposes land
disposal restrictions/bans on certain listed and characteristic hazardous wastes
that do not meet specified treatment standards.
THE CLEAN AIR ACT. Under the Clean Air Act of 1970, as amended, EPA is
empowered to establish and enforce National Ambient Air Quality Standards and
limits on the emissions of various pollutants from specific types of facilities.
The Clean Air Act Amendments of 1990 require certain sources emitting an air
pollutant regulated under the Clean Air Act to obtain an operating permit, which
includes enforceable emissions limitations and compliance schedules. The Clean
Air Act also addresses substantial expanded regulation of vehicle emissions,
hazardous air pollutant emissions, stratospheric ozone protection, acid rain
minimization (through the use of limitations on sulfur dioxide and nitrogen
oxide emissions) and related enforcement issues. The use of "marketable
allowances" to establish limits on total emissions while maintaining maximum
market flexibility reflects a shift in environmental policy from command and
control management to a more flexible approach.
THE SAFE DRINKING WATER ACT. Under the Safe Drinking Water Act and its
subsequent reauthorizations, EPA is empowered to set drinking water standards
for community water supply systems in the United States. The Act requires that
EPA set maximum ground-water contamination levels for specified, and previously
unregulated, toxic substances and also requires EPA to establish a priority list
every three years of contaminants that may cause adverse health effects and may
require regulation. Water supply systems are required to begin monitoring
within defined time limits following the publication of the final regulations.
The Act also requires that EPA set criteria specifying when utilities using
surface water supplies should filter their water and issue national primary
drinking water regulations requiring all utilities to disinfect their water.
THE CLEAN WATER ACT. The Clean Water Act established a system of standards,
permits, and enforcement procedures for the discharge of pollutants to surface
water from industrial, municipal, and other wastewater sources. EPA sets
discharge standards for certain industrial and municipal wastewater discharges
and provides for Federal grants to assist municipalities in complying with
treatment requirements. Key areas for which regulations recently have been
issued or are proposed include industrial wastewater pretreatment, surface water
toxics control, wastewater sludge disposal, and stormwater discharges. In cases
of noncompliance, EPA may assess administrative penalties and may sue for court-
ordered compliance and penalties. Under the Ocean Dumping Ban Act of 1988,
regulatory revisions to the Clean Water Act were made to eliminate ocean dumping
of sludge.
THE TOXIC SUBSTANCE CONTROL ACT (TSCA). TSCA, enacted in 1976, establishes
requirements for identifying and controlling toxic chemical hazards to human
health and the environment. EPA has identified more than 60,000 chemical
substances (out of more than five million known chemical compounds) that were
manufactured or processed for commercial use in the United States in 1985. In
addition, more than 1,000 new chemicals are introduced each year. TSCA
authorizes EPA, in certain circumstances, to require testing of existing and new
chemicals used in commerce to determine their human health and environmental
effects. TSCA also gives EPA authority to prohibit or limit certain activities
associated with producing, distributing, and using a chemical that is found to
pose an unreasonable risk of injury to human health or the environment.
THE FEDERAL INSECTICIDE, FUNGICIDE, AND RODENTICIDE ACT (FIFRA). FIFRA
focuses on the health-based risk of pesticides and requires the registration of
all pesticides, with a heavy emphasis on scientific data and risk assessment.
Under FIFRA, EPA establishes regulations that can include labeling restrictions,
use restrictions, or
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an outright ban of the pesticide following a risk/benefit analysis. The 1972
amendments substantially increased the scope of the Act to include biotechnology
and to expand the authority of EPA.
POTENTIAL ENVIRONMENTAL LIABILITY
The assessment, analysis, remediation, handling, management, and disposal
of hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or other
regulatory action. These risks include potentially large civil and criminal
liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients.
Potential Liabilities Arising Out of Environmental Laws and
Regulations
All facets of the Company's business are conducted in the context of a
rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to regulation by a
number of Federal agencies, including EPA and the Occupational Safety and Health
Administration, as well as applicable state and local regulatory agencies.
As discussed above, CERCLA addresses cleanup of sites at which there has
been a release or threatened release of hazardous substances into the
environment. Increasingly, there are efforts to expand the reach of CERCLA to
make environmental contractors responsible for cleanup costs by claiming that
environmental contractors are owners or operators of hazardous waste facilities
or that they arranged for treatment, transportation, or disposal of hazardous
substances. Several recent court decisions have accepted these claims. Should
the Company be held responsible under CERCLA for damages caused while performing
services or otherwise, it may be forced to bear such liability by itself,
notwithstanding the potential availability of contribution or indemnity from
other parties.
RCRA, also discussed above, governs hazardous waste generation, treatment,
transportation, storage, and disposal. RCRA, or EPA-approved state programs at
least as stringent, govern waste handling activities involving wastes classified
as "hazardous." Substantial fees and penalties may be imposed under RCRA and
similar state statutes for any violation of such statutes and the regulations
thereunder.
Potential Liabilities Involving Clients and Third Parties
In performing services for its clients, the Company could potentially be
liable for breach of contract, personal injury, property damage, and negligence
(including improper or negligent performance or design, failure to meet
specifications, and breaches of express or implied warranties). The damages
available to a client, should it prevail in its claims, are potentially large
and could include consequential damages.
Environmental contractors, in connection with work performed for clients,
potentially face liabilities to third parties from various claims, including
claims for property damage or personal injury stemming from a release of
hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including through a sudden and accidental release or
discharge of contaminants or pollutants during the performance of services;
through the inability, despite reasonable care, of a remedial plan to contain or
correct an ongoing seepage or release of pollutants; through the inadvertent
exacerbation of an existing contamination problem; or through reliance on
reports or recommendations prepared by the Company. Personal injury claims could
arise contemporaneously with performance of the work or long after completion of
the project as a result of alleged exposure to toxic or hazardous substances. In
addition, increasing numbers of claimants assert that companies performing
environmental remediation should be adjudged strictly liable, i.e., liable for
damages even though its services were performed using reasonable care, on the
grounds that such services involved "abnormally dangerous activities."
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Clients frequently attempt to shift various of the liabilities arising out
of remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and for
environmental fines and penalties. The Company has endeavored to protect itself
from potential liabilities resulting from pollution or environmental damage by
obtaining indemnification from its private-sector clients and intends to
continue this practice in the future. Under most of these contracts, the Company
has been successful in obtaining such indemnification; however, such
indemnification generally is not available if such liabilities arise as a result
of breaches by the Company of specified standards of care or if the indemnifying
party has insufficient assets to cover the liability. In fiscal 1995 the Company
formed a new subsidiary, ICF Kaiser Remediation Company, through which the
Company intends to increase its remediation activities performed for public-and
private-sector clients. The Company will continue its efforts to minimize the
risks and potential liability associated with its remediation activities by
performing all remediation contracts in a professional manner and by carefully
reviewing any and all remediation contracts it signs in an effort to ensure that
its environmental clients accept responsibility for their own environmental
problems.
For EPA contracts involving field services in connection with Superfund
response actions, the Company is eligible for indemnification under Section 119
of CERCLA, for pollution and environmental damage liability resulting from
release or threatened release of hazardous substances. Some of the Company's
clients (including private clients, DOD, and DOE) are Potentially Responsible
Parties (PRPs) under CERCLA. Under the Company's contracts with these PRPs, the
Company has the right to seek contribution from these PRPs for liability imposed
on the Company in connection with its work at these clients' CERCLA sites and,
with respect to Federal government clients, generally qualifies for the
limitations on liabilities under CERCLA Section 119(a). In addition, in
connection with contracts involving field services at 10 of DOE's weapons
facilities, including the DOE's Hanford site, the Company is indemnified under
the Price-Anderson Act, as amended, against liability claims arising out of
contractual activities involving a nuclear incident. Recently, EPA has
constricted significantly the circumstances under which it will indemnify its
contractors against liabilities incurred in connection with CERCLA projects.
There are other proposals both in Congress and at the regulatory agencies to
further restrict indemnification of contractors from third-party claims.
As discussed above, Kaiser-Hill (a limited liability company owned equally
by the Company and CH2M Hill Companies, Ltd.) signed a Performance Based
Integrating Management contract with the DOE. The terms of that contract provide
that Kaiser-Hill shall not be held responsible for, and DOE shall pay all costs
associated with, any liability (including without limitation, a claim involving
strict or absolute liability and any civil fine or penalty, expense, or
remediation cost, but limited to those of a civil nature), which may be incurred
by, imposed on, or asserted against Kaiser-Hill arising out of any act or
failure to act, condition, or exposure which occurred before Kaiser-Hill assumed
responsibility on July 1, 1995 ("pre-existing conditions"). To the extent the
acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good
faith, or failure to exercise prudent business judgment on the part of Kaiser-
Hill's managerial personnel cause or add to any liability, expense, or
remediation cost resulting from pre-existing conditions, Kaiser-Hill shall be
responsible, but only for the incremental liability, expense, or remediation
caused by Kaiser-Hill.
The Kaiser-Hill contract further provides that Kaiser-Hill shall be
reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky
Flats contract and for liabilities (and expenses incidental to such liabilities,
including litigation costs) to third parties not compensated by insurance or
otherwise. The exception to this reimbursement provision applies to liabilities
caused by the willful misconduct or lack of good faith of Kaiser-Hill's
managerial personnel or the failure to exercise prudent business judgment by
Kaiser-Hill's managerial personnel.
In connection with its services to its environmental, infrastructure, and
industrial clients, the Company works closely with Federal and state government
environmental compliance agencies, and occasionally contests the conclusions
those agencies reach regarding the Company's compliance with permits and related
regulations. To date, the Company never has paid a fine in a material amount or
had liability imposed on it for pollution or environmental damage in connection
with its services. However, there can be no assurance that the Company will not
have substantial liability imposed on it for any such damage in the future.
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INSURANCE
The Company has a comprehensive risk management and insurance program that
provides a structured approach to protecting the Company. Included in this
program are coverages for general, automobile, pollution impairment, and
professional liability; for workers' compensation; and for employers and
property liability. The Company believes that the insurance it maintains,
including self-insurance, is in such amounts and protects against such risks as
is customarily maintained by similar businesses operating in comparable markets.
At this time, the Company expects to continue to be able to obtain general,
automobile, and professional liability; workers' compensation; and employers and
property insurance in amounts generally available to firms in its industry.
There can be no assurance that this situation will continue, and if insurance of
these types is not available, it could have a material adverse effect on the
Company.
Consistent with industry experience and trends, the Company has found it
difficult to obtain pollution insurance coverage, in amounts and on terms that
are economically reasonable, against possible liabilities that may be incurred
in connection with its conduct of its environmental business. An uninsured claim
arising out of the Company's environmental activities, if successful and of
sufficient magnitude, could have a material adverse effect on the Company.
REGULATION OF THE COMPANY'S BUSINESS
The Company is subject to general Federal regulation with respect to its
contracting activities with the Federal government. For example, the Company has
a substantial number of cost-reimbursement contracts with the U.S. government,
the costs of which are subject to audit by the U.S. government. As a result of
such audits, the Federal government asserts, from time to time, that certain
costs claimed as reimbursable under government contracts either were not
allowable or not allocated in accordance with Federal procurement regulations.
Management believes that the potential effect of disallowed costs, if any, for
the periods currently under audit and for periods not yet audited has been
provided for adequately and will not have a material adverse effect on the
Company's financial position, operations, or cashflows.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other Federal laws and regulations. The Company currently is the subject of a
number of U.S. government investigations and is cooperating with the responsible
government agencies involved. No charges presently are known to have been filed
against the Company by these agencies. Management does not believe that there
will be any material adverse effect on the Company's financial position,
operations, or cashflows as a result of these investigations.
Federal agencies that are the Company's regular customers (including DOD,
DOE, and EPA) have formal policies against awarding contracts that would present
actual or potential conflicts of interest with other activities of the
contractor. Because the Company provides a broad range of services in
environmental and related fields for the Federal government, state governments,
and private customers, there can be no assurance that government conflict-of-
interest policies will not restrict the Company's ability to pursue business in
the future.
Because some of the Company's subsidiaries provide the Federal government
with nuclear energy and defense-related services, these subsidiaries and a
substantial number of their employees are required to have and maintain security
clearances from the Federal government. These subsidiaries and their employees
have been able to obtain these security clearances in the past, and the Company
has no reason to believe that there would be any problems in this area in the
future. However, there can be no assurance that the required security clearances
will be obtained and maintained in the future. Because of its nuclear energy and
defense-related services, the Company is subject to foreign ownership, control,
and influence (FOCI) regulations imposed by the Federal government and designed
to prevent the release of classified information to contractors who are under
foreign control or influence. Under these regulations, FOCI concerns may arise
as a result of a variety of factors, including foreign ownership of
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substantial percentages of equity securities or debt, a high percentage of
foreign revenue, and the number of directors and officers who are not U.S.
citizens. Subsidiaries of the Company with facility security clearances or
sensitive DOE contracts file reports with DOD and DOE with respect to events and
changes that affect the potential for FOCI. The Company has implemented
procedures designed to insulate such subsidiaries from any FOCI that might
affect the Company. There can be no assurance that such measures will prevent
FOCI policies from affecting the ability of the Company's subsidiaries to secure
and maintain certain types of DOD and DOE contracts.
EMPLOYEES
As of October 31, 1995, ICF Kaiser employed approximately 5,000 people, and
the Company believes that its relations with its employees are good.
Approximately one-half of the employees at the Company's ICF Kaiser Hanford
Company subsidiary are represented by unions, including unions under the Hanford
Atomic Metals Trades Council (HAMTC), National Building and Construction Trades
(BCT), and the Office and Professional Employees International Union (OPEIU).
Collective bargaining agreements are in place with the HAMTC, the BCT, the
OPEIU, NDT/QC Inspectors, and Escorts/International Guards Units. An additional
2,500 persons are employed at Kaiser-Hill in Colorado, of which approximately
1,400 are represented by the United Steelworkers of America, Local 8031.
PROPERTIES
All of the Company's operations are conducted either in leased facilities
or in facilities provided by the Federal government or other clients. As of
August 31, 1995, the Company leased an aggregate of approximately one million
square feet of space. The terms of these leases range from month-to-month to 15
years, and some may be renewed for additional periods. Some of the space leased
by the Company has been subleased to other entities under subleases expiring
from 1995 to 2000.
The Company's headquarters is located at 9300 Lee Highway, Fairfax,
Virginia 22031-1207, and its telephone number is (703) 934-3600. The Company's
regional headquarters are located at 1800 Harrison Street, Oakland, California
94612-3430, (510) 419-6000 and at Four Gateway Center, Pittsburgh, Pennsylvania
15222-1207, (412) 497-2000. Other offices include Tempe, Arizona; Livermore,
Oakland, Rancho Cordova, San Francisco, San Rafael, and Universal City,
California; Colorado Springs, Denver, and Lakewood, Colorado; Cheshire,
Connecticut; Washington, DC; Homestead, Jacksonville, Miami, and Tampa, Florida;
Atlanta, Georgia; Chicago, Illinois; Gary, Indiana; Ruston, Louisiana; Abingdon
and Baltimore, Maryland; Boston, Massachusetts; Ely and Las Vegas, Nevada;
Woodbridge, New Jersey; New York, New York; Albuquerque and Los Alamos, New
Mexico; Raleigh, North Carolina; Cincinnati, Ohio; Houston, Texas; Port Orchard,
Richland, and Seattle, Washington. The Company's major international offices
are located in Perth, Australia; London, England; Paris, France; Mexico City,
Mexico; Lisbon, Portugal; Moscow, Russia; and Taipei, Taiwan.
Because the Company's operations generally do not require the maintenance
of unique facilities, suitable office space is readily available for lease in
most of the areas served. The Company believes that adequate space to conduct
its operations will be available for the foreseeable future. In 1987, the
Company entered into a 15-year lease agreement for a new headquarters building
in Fairfax, Virginia, containing approximately 200,000 square feet of office
space. In 1988, the Company signed a 15-year lease agreement to occupy
approximately 100,000 square feet of office space in a new building adjacent to
the headquarters building. In connection with the acquisition of ICF Kaiser
Engineers in 1988, ICF Kaiser acquired the lease for ICF Kaiser Engineers'
headquarters building in Oakland, California. The lease provides for
approximately 142,000 square feet of office space and expires in June 2000.
LEGAL PROCEEDINGS
Normally in the Company's business, various claims or charges are asserted
and litigation commenced against the Company arising from or related to
properties, injuries to persons, and breaches of contract, as well as claims
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<PAGE>
related to acquisitions and dispositions of certain businesses and investments.
Claimed amounts may not bear any reasonable relationship to the merits of the
claim or to a final court award. In the opinion of management, an adequate
reserve has been provided for final judgments, if any, in excess of insurance
coverage, that might be rendered against the Company in such litigation and any
ultimate liability resulting therefrom will not have a material adverse effect
on the Company's financial position, operations, or cash flows.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other Federal laws and regulations. The Company currently is the subject of a
number of U.S. government investigations and is cooperating with the responsible
government agencies involved. No charges presently are known to have been filed
against the Company by these agencies. Management does not believe there will be
any material adverse effect on the Company's financial position, operations, or
cashflows as a result of these investigations.
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the cost of which are subject to audit by the U.S.
government. As a result of such audits, the government asserts, from time to
time, that certain costs claimed as reimbursable under government contracts
either were not allowable or not allocated in accordance with Federal
procurement regulations. Management believes that the potential effect of
disallowed costs, if any, for the periods currently under audit and for periods
not yet audited, has been provided for adequately and will not have a material
adverse effect on the Company's financial position, operations, or cash flows.
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<PAGE>
MANAGEMENT
Set forth below is certain information concerning the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
Name Age at October 31, Position(s) with Company
---- 1995 ------------------------
----
<S> <C> <C>
George F. Brown 58 Executive Vice President and President of the Consulting Group
Kenneth L. Campbell 39 Senior Vice President and Treasurer
James O. Edwards 52 Chairman of the Board and Chief Executive Officer
Michael K. Goldman 43 Executive Vice President and Chief Administrative Officer
Stephen W. Kahane 45 Executive Vice President and President of the Federal Programs Group
Richard K. Nason 53 Director, Executive Vice President and Chief Financial Officer
Alvin S. Rapp 55 Executive Vice President and President of the ICF Kaiser Engineers Group
Marcy A. Romm 36 Senior Vice President, Human Resources
Marc Tipermas 47 Director, Executive Vice President and Director of Corporate Development
Paul Weeks, II 52 Senior Vice President, General Counsel and Secretary
Gian Andrea Botta 42 Director
Tony Coelho 53 Director
Maynard H. Jackson 57 Director
Thomas C. Jorling 55 Director
Frederic V. Malek 58 Director
Rebecca P. Mark 41 Director
Robert W. Page, Sr. 68 Director
</TABLE>
OUTSIDE DIRECTORS
Gian Andrea Botta currently is President of EXOR America Inc., a subsidiary
of EXOR Group. He had been Vice President of Acquisitions of EXOR America
(formerly IFINT-USA Inc.) from 1987 to 1993. EXOR Group is the international
investment holding unit of the Agnelli Group, a diversified holding company.
Pursuant to the terms of the Series 2D Senior Preferred Stock, EXOR America has
the right to designate a nominee for election to the Board of Directors. Since
March 1, 1993, Mr. Botta has been EXOR America's nominee to the Board of
Directors. Mr. Botta also is a director of Lear Seating Corporation and a
trustee of Corporate Property Investor. Mr. Botta received a degree in economics
and business administration in 1975 from the University of Torino, Italy.
Tony Coelho currently is Chairman and Chief Executive Officer of Coelho
Associates, LLC, a financial consulting firm. He had been a Managing Director of
Wertheim Schroder & Co. Incorporated, a New York-based international investment
banking and securities firm, from 1989 to 1995. He also served on that firm's
Executive Committee and had been President and Chief Executive Officer of
Wertheim Schroder Investment Services, Inc. From 1979 to 1989, Mr. Coelho was a
member of the U.S. House of Representatives from California, and from 1986 to
1989 he served as House Majority Whip. Mr. Coelho has been a director of ICF
Kaiser International, Inc. since 1990. He also is a director of Circus Circus
Enterprises, Inc.; Crop Growers Corporation; Specialty Retail Group, Inc.;
Service Corporation International; Tanknology Environmental, Inc.; and Tele-
Communications, Inc.
Thomas C. Jorling currently is Vice President, Environmental Affairs of
International Paper Company. Mr. Jorling joined International Paper Company in
1994 following a 28-year career that included serving for seven years as the
Commissioner of the New York State Department of Environmental Conservation.
Prior to that, Mr. Jorling was a professor of environmental studies at Williams
College and a visiting professor at the University of California at Santa Cruz.
In addition, Mr. Jorling served from 1977 to 1979 as Assistant Administrator for
Water and Hazardous Material at the U.S. Environmental Protection Agency. Mr.
Jorling has been a director of ICF Kaiser International, Inc. since August 1995.
Mr. Jorling graduated from the University of Notre Dame (B.S), Washington State
University (M.S.), and Boston College (LL.B.).
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<PAGE>
Maynard H. Jackson currently is Chairman of Jackson Securities
Incorporated, an investment banking firm. Mr. Jackson returned to private
business in 1994 after completing his third term as mayor of Atlanta. He had
served three terms as mayor, from 1974 to 1982 and again from 1990 to 1994. From
1982 to 1990, Mr. Jackson was a managing partner in public finance with the law
firm of Chapman and Cutler; he also managed his own law firm from 1970 to 1974.
Mr. Jackson has been a director of ICF Kaiser International, Inc. since
September 1995. Mr. Jackson graduated from Morehouse College (B.A.) and the
School of Law at North Carolina Central University (J.D.).
Frederic V. Malek is Chairman of Thayer Capital Partners, a merchant bank.
In 1992, he was Campaign Manager, Bush-Quayle '92; he also has been Co-chairman
of the Board of Directors of CB Commercial Group (formerly Coldwell Banker
Commercial Group) since 1989. He was Vice Chairman of Northwest Airlines from
July 1990 to December 1991. He was President of Northwest Airlines from October
1989 to July 1990. From September 1978 to December 1988, Mr. Malek served as
Executive Vice President of Marriott Corporation and from January 1981 to May
1988 as President of Marriott's Hotels and Resorts Division. Mr. Malek has been
a director of ICF Kaiser International, Inc. since 1989. He also serves as a
director of American Management Systems, Inc.; Automatic Data Processing, Inc.;
Avis, Inc.; CB Commercial Group; FPL Group, Inc.; Manor Care, Inc.; National
Education Corp.; Northwest Airlines; and PaineWebber Mutual Funds. Mr. Malek
graduated from the United States Military Academy (B.S.) and Harvard University
(M.B.A.).
Rebecca P. Mark is Chairman, President, and Chief Executive Officer of
Enron Development Corporation. She is responsible for Enron's project
development activities worldwide (excluding the U.S.) in power generation,
pipelines, LNG, and liquid fuels. Ms. Mark joined Enron Corp. in 1982 and joined
Enron Power Corp.'s executive management team when the company was established
in 1986. Before joining Enron, Ms. Mark held executive positions with
Continental Resources Company and First City National Bank of Houston. Ms. Mark
has been a director of ICF Kaiser International, Inc. since 1993. Ms. Mark
graduated from Baylor University (B.S. and M.I.M.) and Harvard University
(M.B.A.).
Robert W. Page, Sr. retired as an Executive Vice President at McDermott
International, Inc., a leading energy service company, in 1993. Prior to
joining McDermott in 1990, Mr. Page served as Assistant Secretary of the Army
for Civil Works. He also served as Chairman of the Panama Canal Commission.
From 1981 to 1987, Mr. Page worked for Kellogg Rust, Inc., of Houston, Texas,
where he held the positions of Chairman and Chief Executive Officer. From 1976
to 1981, Mr. Page was President and Chief Executive of Rust Engineering. Mr.
Page has been a director of ICF Kaiser International, Inc. since 1993. He holds
a B.S. in architectural engineering from Texas A & M University.
EXECUTIVE OFFICERS (THREE OF WHOM ALSO ARE DIRECTORS)
George F. Brown, Jr. has been an Executive Vice President of the Company
and President of the Company's Consulting Group since 1994. From 1979 to 1994,
Dr. Brown had worked with DRI/McGraw-Hill. As executive vice president, a
position he held with that company since 1985, Dr. Brown had general management
responsibilities for strategy and operations worldwide. Before that, he served
as group vice president, Government and Health Markets, with overall
responsibility for sales, consulting, and products for government and healthcare
industry clients. Dr. Brown graduated from Carnegie-Mellon University (B.S.,
M.S., Ph. D.).
Kenneth L. Campbell has been a Senior Vice President since 1992 and the
Treasurer of the Company since 1994. He has held a number of senior management
positions with the Company since 1988. From May 1993 to his recent appointment
as Treasurer, Mr. Campbell has been responsible for the project finance and
acquisition activities of the Company. Mr. Campbell first worked for the
Company in the early 1980's in a variety of economic consulting positions,
rejoining the Company in 1988 to assist with the acquisition of ICF Kaiser
Engineers. Mr. Campbell graduated from Wesleyan University (B.A.) and the
University of Pennsylvania, Wharton Graduate School of Finance (M.B.A.).
-40-
<PAGE>
James O. Edwards has been Chairman of the Board and Chief Executive Officer
of ICF Kaiser International, Inc. since 1987. He also was President of ICF
Kaiser International, Inc. from 1987 to 1990. In 1974, he joined ICF
Incorporated, the predecessor of ICF Kaiser International, Inc. and was its
Chairman and Chief Executive Officer from 1986 until the 1987 establishment of
ICF Kaiser International, Inc. Mr. Edwards graduated from Northwestern
University (B.S.I.E.) and Harvard University (M.B.A., High Distinction, George
F. Baker Scholar).
Michael K. Goldman has been an Executive Vice President since 1990 and the
Chief Administrative Officer of the Company since 1995. He has held senior
management positions in several of the Company's operating subsidiaries since
1980. Prior to joining the Company, Mr. Goldman was in the private practice of
law. Mr. Goldman graduated from Harvard University (B.A., M.B.A. High
Distinction, George F. Baker Scholar) and the University of California at
Berkeley (J.D.).
Stephen W. Kahane has been an Executive Vice President of the Company since
1993 and President of the Company's Federal Programs Group since its creation in
1995. He has held senior management positions in several of the Company's
operating subsidiaries since 1985. From 1981 to 1985, Dr. Kahane held a number
of management positions at Jacobs Engineering Group, Inc.; he headed
Environmental and Hazardous Waste Programs and was a Vice President when he left
that firm. Dr. Kahane graduated from the University of California (B.A.,
M.S.P.H., D.Env.).
Richard K. Nason has been an Executive Vice President and the Chief
Financial Officer of the Company since December 1994; he had been a Senior Vice
President and the Treasurer of the Company from April to December 1994. He
joined the Company as Senior Vice President - Internal Audit in June 1993. From
1991 to 1993, Mr. Nason was Executive Vice President and Chief Financial Officer
for The Artery Organization, Inc., a private real estate development and
management company in Bethesda, Maryland. From 1988 to 1991, Mr. Nason was
Senior Vice President for Finance and Planning for Griffin Homes in California.
Mr. Nason was Senior Vice President of Marriott Corporation and its subsidiary
Host International, Inc. from 1977 to 1988. Mr. Nason has been a director of ICF
Kaiser International, Inc. since June 1995. Mr. Nason graduated cum laude from
Washington and Jefferson College (B.A.) and the Wharton Graduate School of
Finance and Commerce, University of Pennsylvania (M.B.A.). He also attended the
Executive Program at The Darden School, University of Virginia.
Alvin S. Rapp has been President and Chief Executive Officer of the
Company's ICF Kaiser Engineers Group since November 1993. Prior to joining the
Company, he was a regional group vice president of Jacobs Engineering Group,
Inc., having joined Jacobs in 1981 as manager of engineering in that company's
Baton Rouge, Louisiana office. Prior to joining Jacobs, Mr. Rapp held a variety
of management positions with Ciba-Geigy Corporation, U.S.S. Agri-Chemicals, and
E.I. du Pont de Nemours & Company, Inc. Mr. Rapp graduated from Christian
Brothers College (B.S.E.E.), Memphis, Tennessee.
Marcy A. Romm has been Senior Vice President and Director of Human
Resources of the Company since 1993. She has held Human Resources positions at
ICF Kaiser since 1984. Ms. Romm graduated from George Washington University
(B.A., M.B.A.).
Marc Tipermas has been Executive Vice President and Director of Corporate
Development for ICF Kaiser International, Inc. since 1993. He has held senior
management positions in several of ICF Kaiser's operating subsidiaries since
joining the Company in 1981. From 1977 to 1981, Dr. Tipermas was employed by
the U.S. Environmental Protection Agency where he was the Director of the
Superfund Policy and Program Management Office from 1980 to 1981. Prior to
joining EPA, he was Assistant Professor of Political Science at the State
University of New York at Buffalo from 1975 to 1977. Dr. Tipermas has been a
director of ICF Kaiser International, Inc. since 1993. Dr. Tipermas graduated
from the Massachusetts Institute of Technology (S.B.) and Harvard University
(A.M., Ph.D.).
Paul Weeks, II has been Senior Vice President, General Counsel, and
Secretary of ICF Kaiser International, Inc. since 1990. He joined ICF
Incorporated in May 1987 as its Vice President, General Counsel, and Secretary.
From 1973 to 1987 he was employed by Communications Satellite Corporation, where
from 1983 to 1987 he was
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<PAGE>
Assistant General Counsel for Corporate Matters. Mr. Weeks graduated from
Princeton University (B.S.E.E.) and The National Law Center of George Washington
University (J.D.).
COMPENSATION OF OUTSIDE DIRECTORS
Directors who are not employees of the Company are paid $1,000 for
attendance at each meeting of the Board of Directors and $750 for attendance at
each meeting of a committee of the Board of Directors of which the director is a
member. In addition, each non-employee director receives an annual retainer of
$20,000, payable in advance in quarterly installments, and each is reimbursed
for his or her expenses incurred in connection with his or her Board service.
Directors of the Company who also are employees of the Company are not
compensated separately for their service as directors.
Under the ICF Kaiser International, Inc. Non-employee Directors Stock
Option Plan, each director of the Company who is not an employee of the Company
("Non-employee director") receives a five-year option to purchase 3,000 shares
of Common Stock on the day he or she commences his or her initial term of
service as a director. In addition, each Non-employee director elected at or
continuing in office following the Company's Annual Meeting of Shareholders
receives an option to purchase 3,000 shares of Common Stock on the date of the
meeting in each calendar year after the year in which the Non-employee director
received his or her initial option grant. The purchase price of each share of
Common Stock subject to an option granted under the plan is the fair market
value of the Common Stock on the date the option is granted. Each option becomes
fully exercisable at the close of business on the next business day following
the date on which the option was granted. Options are not assignable or
transferable other than by will or by the laws of descent and distribution.
Options are exercisable during an optionee's lifetime only by the optionee or
his or her guardian.
CERTAIN TRANSACTIONS WITH CERTAIN DIRECTORS
The Company's transactions with Mr. Botta and Mr. Edwards are described in
the immediately following section of this Prospectus.
The Company's employment agreements with Mr. Edwards and Dr. Tipermas are
described on pages 49 and 50, respectively, of this Prospectus.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The non-employee directors of the Company who were voting members of the
Compensation Committee during fiscal year 1995 were Tony Coelho (Chairman), Gian
Andrea Botta, and Frederic V. Malek. The full Board of Directors has designated
an employee director of the Company, James O. Edwards (the CEO of the Company)
as an ex-officio, non-voting member of the Committee. SEC rules require that
----------
whenever there is insider participation in compensation decisions, certain
disclosures must accompany the identification of the participating insiders.
The following paragraphs provide these required disclosures with respect to Mr.
Botta (as the representative of EXOR America) and Mr. Edwards (as an employee
director).
MR. BOTTA. Mr. Botta is the President of Exor America, Inc., the holder of
the Company's Series 2D Senior Preferred Stock. The Company is obligated to
redeem the Series 2D Senior Preferred Stock no later than January 13, 1997.
Exor America is an affiliate of the holder of the Company's Series 2D Warrants.
The holder of the Series 2D Warrants, instead of exercising the warrants, will
be able to (a) require the Company to issue it shares of Common Stock with an
aggregate market value equal to the difference between (i) the then-current
market price for the Common Stock and (ii) 90% of the exercise price of the
Series 2D Warrants then in effect, multiplied by the number of Series 2D
Warrants for which the holder is requiring such issuance. In addition, for 15
days prior to and ending on the expiration date of the Series 2D Warrants (July
22, 1997), the holder of the warrants, instead of exercising the warrants or
having Common Stock issued as described in (a) above, will be able to (b)
require the Company to pay it cash in the amount of the difference between the
then-current market price for the Common Stock and the exercise price of the
Series 2D Warrants then in effect, multiplied by the number of Series 2D
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<PAGE>
Warrants for which the holder is requiring that cash payment. If the Company
cannot make the cash payment referred to in (b) above without violating a
covenant or covenants contained in its debt agreements, the Company would be
obligated to make the payment in shares of Common Stock as described in (a)
above. Pursuant to the terms of the Series 2D Senior Preferred Stock, EXOR
America has the right to designate a nominee for election to the Board of
Directors. Since March 1, 1993, Mr. Botta has been EXOR America's nominee to
the Board of Directors.
MR. EDWARDS. As part of his new employment agreement which is described on
page 49 of this Prospectus, Mr. Edwards' then-outstanding indebtedness to the
Company was restructured. Mr. Edwards had been indebted to the Company under
promissory notes dated January 14, 1991, September 22, 1991, and January 24,
1992, in the respective principal amounts (and per annum interest rates) of
$622,740 (at 9%), $50,000 (at 9%), and $150,000 (at 8%) (collectively, the
"Predecessor Notes"). As of December 31, 1994, the accrued interest on the
Predecessor Notes totaled $205,326.27. All of these loans had been provided to
Mr. Edwards pursuant to his previous compensation agreement with the Company in
return for agreements restricting his ability to sell his stock, were secured by
a pledge of 130,665 shares of ICF Kaiser Common Stock (the "Pledged Shares"),
and were non-recourse to Mr. Edwards. Mr. Edwards has signed an amended and
restated promissory note in the amount of $1,028,066.27 dated December 31, 1994,
which is a continuation of the Predecessor Notes, bears interest at 6.34% per
annum, is secured by the Pledged Shares, is non-recourse to Mr. Edwards, and is
due on December 31, 1997 (with accrued interest from December 31, 1994). The
largest aggregate amount of Mr. Edwards' indebtedness to the Company outstanding
at any time since the beginning of fiscal year 1995 (March 1, 1994) was
$1,081,816. It is the Company's intention to retire the debt when the value of
the collateral reaches the amount owed.
In fiscal year 1995, Mr. Edwards had a margin loan with a brokerage firm
that was collateralized by shares of Common Stock owned by Mr. Edwards. When the
Common Stock began trading at a price below $3 per share, the brokerage firm
considered calling for the repayment of the margin loan or selling all or some
of the shares of pledged Common Stock. Following discussions with the brokerage
firm, the Company agreed on a temporary basis to guarantee the repayment of Mr.
Edwards' margin loan with that firm. The guarantee was for an amount not to
exceed $239,000 and expired on September 15, 1994.
Executive compensation paid to Mr. Edwards during fiscal years 1993, 1994,
and 1995 is described on pages 44 - 49 of this Prospectus.
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<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation received by the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company (the "Named Executive Officers") for the three fiscal years ended
February 28, 1995. The table shows the amounts received by each Named Executive
Officer for all three fiscal years or for the entire period the Named Executive
Officer was an executive officer of the Company. Effective October 15, 1995, Mr.
McMinn no longer is an executive officer of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
===================================================================================================================================
Annual Compensation Long-term Compensation
--------------------------------------------------------------------------------------
Awards
- ---------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (i)
- --------------------
Name, Principal Salary Bonus Other Annual Restricted Stock Securities Underlying All Other
Position, ($) ($) Compensation Award(s) Options/SARs (#) Compensation (2)
and Fiscal Year ($)(1) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
James O. Edwards,
Chairman and CEO (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 $324,519 0 (1) 0 53,000 new options $101,450 (2)(3)
97,000 repriced options
- -----------------------------------------------------------------------------------------------------------------------------------
1994 $300,000 0 (1) 0 0 $122,732 (3)
- -----------------------------------------------------------------------------------------------------------------------------------
1993 $275,000 0 (1) 0 0 $125,243 (3)
- -----------------------------------------------------------------------------------------------------------------------------------
Stephen W. Kahane,
Executive Vice President (4)
- -----------------------------------------------------------------------------------------------------------------------------------
1995 $249,423 $ 60,000 (1) 0 66,666 new options $ 2,984 (2)(4)
33,334 repriced options
- -----------------------------------------------------------------------------------------------------------------------------------
1994 $220,000 0 (1) 0 0 $ 22,701 (4)
- -----------------------------------------------------------------------------------------------------------------------------------
1993 $205,000 $ 25,000 (1) 0 15,000 repriced options $ 22,380 (4)
10,000 options
- -----------------------------------------------------------------------------------------------------------------------------------
Douglas W. McMinn
Executive Vice President (5)
- -----------------------------------------------------------------------------------------------------------------------------------
1995 $227,692 $ 24,953 (1) 0 $ 3,022 (2)(5)
- -----------------------------------------------------------------------------------------------------------------------------------
1994 $209,424 $181,706 (1) 0 80,000 options $ 22,105 (5)
- -----------------------------------------------------------------------------------------------------------------------------------
1993 $191,890 0 (1) 0 40,000 repriced options $85,083 (5)
- -----------------------------------------------------------------------------------------------------------------------------------
Alvin S. Rapp
Executive Vice President (6)
- -----------------------------------------------------------------------------------------------------------------------------------
1995 $274,519 $150,000 $200,022 0 $268,607 (2)(6)
(1)(6)
- -----------------------------------------------------------------------------------------------------------------------------------
1994 $ 64,500 $147,159 (1) $418,499 100,000 options $ 35,614 (6)
- -----------------------------------------------------------------------------------------------------------------------------------
Marc Tipermas,
Executive Vice President (7)
- -----------------------------------------------------------------------------------------------------------------------------------
1995 $274,423 $ 45,000 (1) 74,463 new options $ 2,997 (2)(7)
50,537 repriced options
- -----------------------------------------------------------------------------------------------------------------------------------
1994 $220,000 0 (1) 0 0 $ 22,715 (7)
- -----------------------------------------------------------------------------------------------------------------------------------
1993 $210,000 $ 25,000 (1) 0 40,000 repriced options $ 22,980 (7)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The footnotes to this table are on the following page.
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<PAGE>
Footnotes to Summary Compensation Table
(1) Any amounts shown in the "Other Annual Compensation" column for fiscal year
1995 do not include any perquisites and other personal benefits because the
aggregate amount of such compensation for each of the Named Executive Officers
did not exceed the lesser of (i) $50,000 or (ii) 10% of the combined fiscal year
1995 salary and bonus for the Named Executive Officer.
(2) The Company's fiscal 1995 contributions to the Named Executive Officers
pursuant to the Company's Retirement Plan will not be determined or made until
November 15, 1995. The Company will disclose these contributions for the Named
Executive Officers in the 1996 Proxy Statement if the Named Executive Officer is
a Named Executive Officer in calendar 1995.
(3) The amounts shown in column (i) of the table for Mr. Edwards comprise the
following:
1995 $100,000 Special cash payment under Mr. Edwards' December 1990
compensation agreement
$ 1,450 Company match under the Company's Section 401(k) Plan
1994 $100,000 Special cash payment under Mr. Edwards' December 1990
compensation agreement
$ 16,563 Company contribution under the Company's Retirement Plan
for FY94 made in FY95
$ 1,452 Company match under the Company's Section 401(k) Plan
$ 4,717 Company 2% contribution under the Company's Employee Stock
Ownership Plan for FY94 made in FY95
1993 $100,000 Special cash payment under Mr. Edwards' December 1990
compensation agreement
$ 16,089 Company contribution under the Company's Retirement Plan
for FY93 made in FY94
$ 9,154 Company 4% contribution under the Company's Employee Stock
Ownership Plan for FY93 made in FY94
(4) Dr. Kahane's employment agreement with the Company provides for a fiscal
year 1995 bonus in the range of $30,000 to $150,000, of which $30,000 was paid
in May 1994. In September 1994 the Company paid Dr. Kahane his $30,000 minimum
cash bonus for fiscal year 1996 pursuant to his employment agreement. The
amounts shown in column (i) of the table for Dr. Kahane comprise the following:
1995 $ 2,984 Company match under the Company's Section 401(k) Plan
1994 $16,563 Company contribution under the Company's Retirement Plan
for FY94 made in FY95
$ 1,421 Company match under the Company's Section 401(k) Plan
$ 4,717 Company 2% contribution under the Company's Employee Stock
Ownership Plan for FY94 made in FY95
1993 $14,180 Company contribution under the Company's Retirement Plan
for FY93 made in FY94
$ 8,200 Company 4% contribution under the Company's Employee Stock
Ownership Plan for FY93 made in FY94
(5) The amounts shown in column (i) of the table for Mr. McMinn comprise the
following:
1995 $ 3,022 Company match under the Company's Section 401(k) Plan
1994 $14,934 Company contribution under the Company's Retirement Plan
for FY94 made in FY95
$ 861 Company match under the Company's Section 401(k) Plan
$ 4,310 Company 2% contribution under the Company's Employee Stock
Ownership Plan for FY94 made in FY95
1993 $10,673 Company contribution under the Company's Retirement Plan
for FY93 made in FY94
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<PAGE>
$ 7,660 Company 4% contribution under the Company's Employee Stock
Ownership Plan for FY93 made in FY94
$66,750 Company payment to resolve an issue about the expiration
date of certain options granted to Mr. McMinn. The Company
granted Mr. McMinn 20,000 options at $6.80 (expiring
February 28, 1995) in replacement of 20,000 options at
$3.4625 (expiration date at issue) and paid Mr. McMinn the
difference between the exercise prices of these options.
(6) Mr. Rapp joined the Company in November 1993. The amount shown in column
(e) for fiscal year 1995 was an amount reimbursed for the payment of taxes. The
amount shown in column (f) for fiscal year 1994 is the value of 88,105 shares of
Restricted Stock awarded to Mr. Rapp under the Company's Stock Incentive Plan
determined by multiplying the number of shares by the $4.75 closing price per
share of the Company's Common Stock on the New York Stock Exchange on November
8, 1993, the date of the grant. The restriction on these shares was lifted on
November 9, 1994, when they vested; Mr. Rapp owns no other shares of Restricted
Stock as of the end of fiscal year 1995. The amounts shown in column (i) of the
table for Mr. Rapp comprise the following:
1995 $ 2,353 Company match under the Company's Section 401(k) Plan
$ 46,219 Reimbursed expenses associated with relocation from
California to Virginia
$219,155 Forgiveness of interest-free loans made to facilitate the
sale of Mr. Rapp's California residence and his purchase
of a Virginia residence (includes imputed interest
amounts)
$ 880 Reimbursed accounting expenses associated with tax
considerations for Mr. Rapp's employment arrangement
1994 $ 462 Company match under the Company's Section 401(k) Plan
$ 35,152 Reimbursed expenses associated with relocation from
California to Virginia
(7) Dr. Tipermas' employment agreement with the Company provides for a fiscal
year 1995 bonus in the range of $45,000 to $180,000, of which $45,000 was paid
in May 1994. The amounts shown in column (i) of the table for Dr. Tipermas
comprise the following:
1995 $ 2,997 Company match under the Company's Section 401(k) Plan
1994 $16,563 Company contribution under the Company's Retirement Plan
for FY94 made in FY95
$ 1,435 Company match under the Company's Section 401(k) Plan
$ 4,717 Company 2% contribution under the Company's Employee Stock
Ownership Plan for FY94 made in FY95
1993 $14,580 Company contribution under the Company's Retirement Plan
for FY93 made in FY94
$ 8,400 Company 4% contribution under the Company's Employee Stock
Ownership Plan for FY93 made in FY94
-46-
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company's Stock Incentive Plan provides for the grant to key employees
of the Company and its subsidiaries of: (a) non-qualified stock options; (b)
stock appreciation rights; (c) incentive stock options that are designed to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended; (d) restricted shares; and (e) restricted stock units.
No stock appreciation rights, restricted shares, or restricted stock units were
granted to any of the Named Executive Officers in fiscal 1995. The following
stock options were granted to the Named Executive Officers in fiscal 1995.
STOCK OPTIONS GRANTED TO NAMED EXECUTIVE OFFICERS IN FISCAL 1995 (1)
<TABLE>
<CAPTION>
===================================================================================================================================
Individual Grants
(a) (d) (e) (f)
Name Exercise Price Expiration Grant Date
($/Share) Date Present Value ($)
(2)
--------------------------------------------------
(b) (c)% of Total Options
Number of Securities Granted to Employees in
Underlying Options Granted Fiscal Year (%)
(#)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
James O. Edwards 150,000 (3) 18.6 % $2.51 11/15/99 $237,000
- -----------------------------------------------------------------------------------------------------------------------------------
Stephen W. Kahane 100,000 (4) 12.4 % $3.48 11/15/99 $172,000
- -----------------------------------------------------------------------------------------------------------------------------------
Douglas W. McMinn 0 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Alvin S. Rapp 0 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Marc Tipermas 125,000 (5) 15.5 % $3.48 11/15/99 $215,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options were granted at 100% of fair market value on the date of grant.
The optionees may satisfy the exercise price (and taxes, if any) by submitting
currently owned shares and/or cash. The Company's Stock Incentive Plan permits
the granting/awarding of SARs, but none are outstanding.
(2) Grant date present value is determined using the Black-Scholes Model. Since
the Model makes assumptions about future variables, the actual value of the
options may be greater or less than the values stated in the table. The
calculations from which the above values were derived assume no dividend yield,
volatility of approximately 0.6%, exercise at or near the expiration date, and a
risk-free rate of return of 7.0% based on the U.S. Treasury bill rate for five-
year maturities on the date of grant. No downward adjustments were made to the
grant date option values stated in the table to account for potential forfeiture
or the nontransferable nature of these options.
(3) Vesting Schedule: 37,500 increments over four years beginning May 15, 1995.
(4) Vesting Schedule: 25,000 increments over four years beginning March 1,
1995.
(5) Vesting Schedule: 31,250 increments over four years beginning March 1,
1995.
-47-
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
====================================================================================================================================
(a) (b) (c) (d) (e)
Name Shares Acquired Value Number of Securities Underlying Value of Unexercised In-the-Money
on Exercise Realized Unexercised Options/SARs (#)Options/SARs at 2/28/95 ($)
(#) ($) at 2/28/95 Exercisable/Unexercisable
Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James O. Edwards 0 0 0/150,000 $0/$261,000
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen W. Kahane 0 0 0/100,000 $ 0/$77,000
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas W. McMinn 0 0 40,000/50,000 (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Alvin S. Rapp 0 0 20,000/80,000 (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Marc Tipermas 0 0 0/125,000 $ 0/$96,250
====================================================================================================================================
</TABLE>
(1) Calculated using the NYSE closing price of the Common Stock on February 28,
1995 ($4.25 per share) less the per share option exercise price multiplied by
the number of exercisable or unexercisable options, as the case may be.
(2) None of Mr. McMinn's and Mr. Rapp's options are in-the-money.
SENIOR EXECUTIVE OFFICERS SEVERANCE PLAN
In April 1994 the Compensation Committee of the Board of Directors approved
the adoption of the Company's Senior Executive Officers Severance Plan (the
"SEOSP"). In December 1994, the SEOSP was amended to clarify (a) that once an
officer becomes a participant in the SEOSP, he or she will continue to be
eligible for SEOSP benefits throughout his or her employment by the Company and
(b) that the SEOSP is intended to set a minimum severance benefit for the
participant. If a participant is entitled to a greater benefit under his or her
employment agreement with the Company, then such arrangement prevails over the
lower SEOSP benefit.
The eligible participants in the SEOSP are the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, the General Counsel, the Senior Vice President and Director of Human
Resources, and any Executive Vice President and other officers of rank
equivalent to Executive Vice President as designated by the Compensation
Committee. As of October 31, 1995, there are eight persons whose severance
payments are governed by the SEOSP.
A participant is eligible to receive severance payments if the Company
terminates his or her employment without "cause" or if the participant
terminates his or her employment for "good reason." "Cause" and "good reason"
are defined in the SEOSP. Severance benefits equal to three months of average
salary will be paid if the participant's length of employment is three years or
less; severance benefits equal to one month of average salary for each year of
service (up to a maximum of 18 months) will be paid if a participant's length of
employment is four or more years. Average salary is defined in the SEOSP as the
participant's average monthly gross salary excluding all bonus for the six
months prior to employment termination. Severance benefits may be paid under
the SEOSP in two installments or, with the approval of the Compensation
Committee, in a lump sum. The SEOSP provides that severance pay will not be
considered compensation for purposes of the Retirement Plan or the Section
401(k) Plan; severance pay will not increase Years of Service for those Plans'
purposes. No severance benefits have been paid under the Plan since the SEOSP
was adopted.
-48-
<PAGE>
AGREEMENTS AND TRANSACTIONS WITH EXECUTIVE OFFICERS NAMED IN THE SUMMARY
COMPENSATION TABLE (TWO OF WHOM ALSO ARE DIRECTORS)
James O. Edwards. Effective December 31, 1994, the Company entered into a
three-year employment agreement with Mr. Edwards for his services as Chairman
and Chief Executive Officer of the Company. In addition to delineating Mr.
Edwards' areas of responsibility and reporting line, the agreement provides for:
a base salary of $325,000 per year through February 28, 1995, increasing by not
less than $25,000 beginning on March 1, 1995 (with increases beyond $25,000 for
periods after March 1, 1995, to be determined by the Compensation Committee of
the Company's Board of Directors); annual bonus compensation to be determined by
the Compensation Committee; payment on May 15, 1995, of the carryover $100,000
cash payment under Mr. Edwards' 1990 compensation agreement with the Company;
severance payments as provided under the Company's Senior Executive Officers
Severance Plan; eligibility under the Company's employee benefit plans;
cancellation of 97,000 existing options (89,000 of which were vested) to
purchase the Company's Common Stock at exercise prices ranging from $9.51 to
$16.23; the grant of 150,000 options (expiring on November 15, 1999, and vesting
in 37,500 increments over four years beginning May 15, 1995) at fair market
value on the date of grant ($2.51 on September 1, 1994); and a one-year non-
competition period following voluntary or "for cause" employment termination.
The Company's transactions with Mr. Edwards are described on page 43 of this
Prospectus.
Stephen W. Kahane. Effective March 1, 1994, the Company entered into a
three-year employment agreement with Dr. Kahane for his services as an Executive
Vice President and as Group President of the Company's Environment & Energy
Group. In addition to delineating Dr. Kahane's areas of responsibility and
reporting line, the agreement provides for: a minimum base salary of $260,000 in
fiscal year 1996 and $275,000 in fiscal year 1997; annual bonus compensation to
be determined by the Compensation Committee of the Company's Board of Directors
(in amounts specified in the agreement and with minimum cash bonuses of $30,000
to be paid at the beginning of each of fiscal years 1996 and 1997); severance
payments as provided under the Company's Senior Executive Officers Severance
Plan; eligibility under the Company's employee benefit plans; cancellation of
40,000 existing options to purchase the Company's Common Stock at exercise
prices ranging from $8.25 to $9.51; the grant of 100,000 options (vesting in
25,000 increments over four years and expiring on November 15, 1999) at fair
market value on the date of grant ($3.48 on April 4, 1994); and a one-year non-
competition period following voluntary or "for cause" employment termination.
In fiscal year 1995, Dr. Kahane had a margin loan with a brokerage firm
that was collateralized by shares of Common Stock owned by Dr. Kahane. When the
Common Stock began trading at a price below $3 per share, the brokerage firm
considered calling for the repayment of the margin loan (in whole or in part) or
selling all or some of the shares of pledged Common Stock. Following discussions
with the brokerage firm, the Company agreed on a temporary basis to guarantee
the repayment of Dr. Kahane's margin loan with that firm. The guarantee was for
an amount not to exceed $139,000 and expired on September 15, 1994.
Douglas W. McMinn. In November 1993, the Company and Mr. McMinn signed an
employment agreement under which Mr. McMinn provides his services as an
Executive Vice President and Group President of the Company's International
Operations Group for a two-year period ending October 15, 1995. In addition to
specifying Mr. McMinn's salary, bonuses, options, and other benefits, the
agreement provided that if both Mr. McMinn and the Company agree, Mr. McMinn's
employment will be extended for one year on terms comparable to those set forth
in the agreement. The agreement further provided that at the end of the
agreement term, Mr. McMinn had (a) the right to purchase from the Company the
use of the name "Global Trade and Investment, Inc." ("GTI") for a nominal amount
and (b) the option to maintain the existing GTI contracts under the financial
administration of the Company or to terminate such contracts. For those GTI
contracts that continue under the financial administration of the Company, the
agreement provided that Mr. McMinn will receive a specified commission based on
earnings under these contracts. The commissions are to be paid out at six-month
intervals commencing May 15, 1996. Effective October 16, 1995, the Company and
Mr. McMinn signed a new employment agreement pursuant to which Mr. McMinn ceased
being an executive officer of the Company.
-49-
<PAGE>
Alvin S. Rapp. In November 1993, the Company entered into an employment
agreement with Mr. Rapp for his services as an Executive Vice President and as
Group President of the Company's Engineering & Construction Group. In addition
to delineating Mr. Rapp's areas of responsibility and reporting line, the
agreement provides for his salary, bonuses, options, other employee benefits,
and interest-free loans to facilitate the sale of Mr. Rapp's California
residence and the purchase of a new residence near the Company's Virginia
headquarters. As of October 31, 1995, two of these loans had been forgiven
under the terms of the employment agreement because the proceeds from the sale
of Mr. Rapp's California residence were less than anticipated. The third loan
(dated January 20, 1994) has a balance of $300,000 as of October 31, 1995, is
secured by Mr. Rapp's Virginia residence, and is due and payable in full on the
earliest to occur of (a) January 20, 1999, (b) termination of Mr. Rapp's
employment by the Company, (c) provision of reasonably satisfactory substitute
collateral, or (d) the occurrence of a defined event of default. The largest
aggregate amount of Mr. Rapp's indebtedness to the Company outstanding at any
time since the beginning of fiscal year 1995 (March 1, 1994) was $648,546.
Marc Tipermas. Effective March 1, 1994, the Company entered into a three-
year employment agreement with Dr. Tipermas for his services as Executive Vice
President and Director of Corporate Development of the Company. Dr. Tipermas
also is a director of the Company. In addition to delineating Dr. Tipermas'
areas of responsibility and reporting line, the agreement provides for: a
minimum base salary of $290,000 in fiscal year 1996 and $300,000 in fiscal year
1997; annual bonus compensation to be determined by the Compensation Committee
of the Company's Board of Directors (in amounts specified in the agreement and
with a minimum cash bonus of $45,000 to be paid at the beginning of fiscal year
1996); severance payments as provided under the Company's Senior Executive
Officers Severance Plan; eligibility under the Company's employee benefit plans;
cancellation of 60,000 existing options to purchase the Company's Common Stock
at exercise prices ranging from $8.25 to $9.51; the grant of 125,000 options
(vesting in 31,250 increments over four years and expiring on November 15, 1999)
at fair market value on the date of grant ($3.48 on April 4, 1994); and a one-
year non-competition period following voluntary or "for cause" employment
termination.
AGREEMENTS AND TRANSACTIONS WITH OTHER EXECUTIVE OFFICERS
Michael K. Goldman. Effective February 28, 1994, the Company and Mr.
Goldman agreed to terminate Mr. Goldman's Amended Executive and Compensation
Agreements originally signed in December 1990. Effective March 1, 1994, the
Company and Mr. Goldman entered into an employment arrangement under which Mr.
Goldman (a) serves as an employee of the Company at a specified annual salary;
(b) received the $50,000 special cash payment provided for in his December 1990
Compensation Agreement; and (c) was designated, with certain specified
restrictions, as a participant in the Senior Executive Officers Severance Plan.
In addition, all then-unvested options previously granted to Mr. Goldman vested
as of March 1, 1994. The Company and Mr. Goldman also agreed to amend the terms
of Mr. Goldman's outstanding loan with the Company as follows: the principal
shall be due upon demand by the Company but no later than February 28, 1999;
interest from May 16, 1994, shall accrue on the outstanding principal at 6% per
annum; and payment of interest will be deferred until such time as the principal
is due. No interest shall accrue or be payable on such deferred interest. Mr.
Goldman's loan is secured by 33,134 shares of the Company's Common Stock and is
non-recourse to Mr. Goldman. The Company and Mr. Goldman agreed that if the
value of the pledged stock is less than the then-outstanding amount of principal
and interest at the time of loan repayment demand (or February 28, 1999, at the
latest), then the Company will retire the principal and interest by considering
the pledged shares to have been sold back to the Company (within the constraints
set forth in the Company's debt and equity instruments). The outstanding balance
as of October 31, 1995, was $191,647, plus accrued interest. The largest
aggregate amount of Mr. Goldman's indebtedness to the Company outstanding at any
time since the beginning of fiscal year 1995 (March 1, 1994) was $213,570.
-50-
<PAGE>
SECURITY OWNERSHIP
<TABLE>
<CAPTION>
================================================================================================================================
Name and Address of 5% Shareholders, Amount and Nature of Beneficial Percent of Aggregate
Directors, and Executive Officers Ownership (a) Class of Stock Voting Power (a)
================================================================================================================================
DIRECTORS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gian Andrea Botta 9,000 shares (b) * *
- --------------------------------------------------------------------------------------------------------------------------------
Tony Coelho 16,000 shares (c) * *
- --------------------------------------------------------------------------------------------------------------------------------
James O. Edwards 379,479 shares (d) 1.8% of Common Stock 1.6 %
- --------------------------------------------------------------------------------------------------------------------------------
Thomas C. Jorling 3,000 shares (e) * *
- --------------------------------------------------------------------------------------------------------------------------------
Maynard H. Jackson 3,000 shares (f)
- --------------------------------------------------------------------------------------------------------------------------------
Frederic V. Malek 30,000 shares (g) * *
- --------------------------------------------------------------------------------------------------------------------------------
Rebecca P. Mark 9,000 shares (h) * *
- --------------------------------------------------------------------------------------------------------------------------------
Richard K. Nason 6,992 shares (i) * *
- --------------------------------------------------------------------------------------------------------------------------------
Robert W. Page, Sr. 9,000 shares (j) * *
- --------------------------------------------------------------------------------------------------------------------------------
Marc Tipermas 228,473 shares (k) 1.1% of Common Stock 1.0 %
- --------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------------
James O. Edwards, 379,479 shares (d) 1.8% of Common Stock 1.6%
Chairman and Chief Executive Officer
- --------------------------------------------------------------------------------------------------------------------------------
Stephen W. Kahane, 140,208 shares (l) * *
Executive Vice President
- --------------------------------------------------------------------------------------------------------------------------------
Douglas W. McMinn, 95,704 shares (m) * *
Executive Vice President
- --------------------------------------------------------------------------------------------------------------------------------
Alvin S. Rapp, 108,180 shares (n) * *
Executive Vice President
- --------------------------------------------------------------------------------------------------------------------------------
Marc Tipermas, 228,473 shares (k) 1.1% of Common Stock 1.0%
Executive Vice President
- --------------------------------------------------------------------------------------------------------------------------------
ALL DIRECTORS AND EXECUTIVE OFFICERS 1,152,173 shares (o) 5.4% of Common Stock 4.8%
AS A GROUP (18 PERSONS)
- --------------------------------------------------------------------------------------------------------------------------------
5% COMMON SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser International, Inc. Employee 2,099,995 shares (p) 9.9% 8.9%
Stock Ownership Trust
- --------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser International, Inc. Retirement 1,038,316 shares (q) 4.9% 4.4%
Plan
- --------------------------------------------------------------------------------------------------------------------------------
FIMA Finance Management, Inc. 2,680,952 warrants (b) 11.2% 11.2%
- --------------------------------------------------------------------------------------------------------------------------------
Mathers & Company, Inc., Mathers Fund, 2,410,569 shares (r) 11.4% 10.2%
Inc., and Henry van der Eb
- --------------------------------------------------------------------------------------------------------------------------------
State of Wisconsin Investment Board 2,055,000 shares (s) 9.7% 8.7%
- --------------------------------------------------------------------------------------------------------------------------------
SERIES 2D SENIOR PREFERRED STOCK
- --------------------------------------------------------------------------------------------------------------------------------
EXOR America, Inc. 200 shares (b) 100% of Series 2D Senior 10.0%
Preferred Stock
- --------------------------------------------------------------------------------------------------------------------------------
________________________________
* = ownership of less than 1% The footnotes to this Table are on the following two pages.
================================================================================================================================
</TABLE>
-51-
<PAGE>
Footnotes to the Security Ownership Table
(a) Except as noted below, all information in the above table is as of October
31, 1995. To calculate the voting percentage, it was assumed that the individual
or entity exercised all of his/her/its exercisable options, but that no other
individuals or entities exercised theirs. A person is deemed to be a beneficial
owner of the Company's stock if that person has voting or investment power (or
voting and investment powers) over any shares of capital stock or has the right
to acquire such shares within 60 days from October 31, 1995. With respect to the
total number of shares held by the Company's Employee Stock Ownership Trust (the
"ESOP"), the share information is current as of August 31, 1995; the unaudited
information with respect to the number of shares allocated to individuals'
accounts is current as of February 28, 1995. With respect to ownership of shares
which are held in the Company's Section 401(k) Plan but allocated to
individuals' accounts, the information is current as of September 30, 1995. For
shares shown in the following footnotes as being held in directed investment
accounts in the Company's Retirement Plan, the beneficial owner shown below
currently has investment but not voting power over those shares; these
individuals will have voting power over the directed investment account shares
beginning in 1996; the Retirement Plan information is current as of September
30, 1995.
(b) Mr. Botta's share ownership includes 9,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options. Mr.
Botta is the President of EXOR America, Inc., 375 Park Avenue, New York, NY
10152, the owner of 200 shares of Series 2D Senior Preferred Stock. FIMA Finance
Management Inc., Citco Building, Wickhams Cay, P.O. Box 662, Road Town, Tortola,
British Virgin Islands, owns Series 2D Warrants for the purchase of 2,680,952
shares of Common Stock. EXOR America and FIMA are wholly owned subsidiaries of
EXOR Group, 2 Blvd. Royal, Luxembourg. The Amended and Restated Certificate of
Incorporation of the Company limits the total vote of the Series 2D Senior
Preferred Stock to 2,380,952 votes. Mr. Botta disclaims beneficial ownership of
the shares of Series 2D Senior Preferred Stock and of the Series 2D Warrants.
(c) Mr. Coelho's share ownership includes 15,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options. He also
owns 1,000 other shares.
(d) Mr. Edwards' share ownership includes 2,575 shares allocated to his ESOP
account, 4,680 shares allocated to his Section 401(k) Plan account, 60,091
shares in his directed investment account under the Retirement Plan, and 37,500
shares that may be acquired within 60 days of October 31, 1995, upon the
exercise of stock options. He also owns 276,633 other shares. Mr. Edwards is a
member of the ESOP Plan Committee and the Retirement Plan Committee; as such, he
has shared investment power over 2,099,995 and 1,038,316 shares held by the ESOP
and Retirement Plan, respectively. Until 1996, he has shared voting power over
the 1,038,316 shares held by the Retirement Plan. Mr. Edwards disclaims
beneficial ownership of the shares held by the ESOP and the Retirement Plan.
(e) Mr. Jorling's share ownership includes 3,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options.
(f) Mr. Jackson's share ownership includes 3,000 that may be acquired within 60
days of October 31, 1995, upon the exercise of stock options.
(g) Mr. Malek's share ownership includes 15,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options. He also
owns 15,000 other shares.
(h) Ms. Mark's share ownership includes 9,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options.
(i) Mr. Nason's share ownership 6,325 shares allocated to his Section 401(k)
Plan account, and 667 shares that may be acquired within 60 days of October 31,
1995, upon the exercise of stock options.
(j) Mr. Page's share ownership includes 9,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options.
(k) Dr. Tipermas' share ownership includes 7,698 shares allocated to his ESOP
account, 7,525 shares in his directed investment account under the Retirement
Plan, and 31,250 shares that may be acquired within 60 days of October 31, 1995,
upon the exercise of stock options. He also owns 182,000 other shares.
-52-
<PAGE>
(l) Dr. Kahane's share ownership includes 6,734 shares allocated to his ESOP
account, 5,952 shares in his directed investment account under the Retirement
Plan, and 25,000 shares that may be acquired within 60 days of October 31, 1995,
upon the exercise of stock options. He also owns 102,522 other shares.
(m) Mr. McMinn's share ownership includes 5,063 shares allocated to his ESOP
account, 40 shares in his directed investment account under the Retirement Plan,
and 50,000 shares that may be acquired within 60 days of October 31, 1995, upon
the exercise of stock options. He also owns 40,601 other shares. As of October
16, 1995, Mr. McMinn no longer is an executive officer of the Company.
(n) Mr. Rapp's share ownership includes 40,000 shares that may be acquired
within 60 days of October 31, 1995, upon the exercise of stock options. He also
owns 68,180 other shares.
(o) This total includes 37,190 shares allocated to ESOP accounts, 11,005 shares
in Section 401(k) Plan accounts, 76,407 shares in directed investment accounts
under the Retirement Plan, and 248,167 shares that may be acquired within 60
days of October 31, 1995, upon the exercise of stock options. The balance of the
shares are owned directly (784,404 shares).
(p) The ESOP Trustee is Vanguard Fiduciary Trust Company, 200 Vanguard Blvd.,
Malvern, PA 19355. All of the shares of Common Stock held by the ESOP are
allocated to individual ESOP participants' accounts and are voted by those
participants. The ESOP Plan Committee has investment power over all of the
shares of Common Stock held by the ESOP, the members of which are James O.
Edwards, Michael K. Goldman, and Marcy A. Romm. Each ESOP Plan Committee member
disclaims beneficial ownership of the shares of Common Stock held by the ESOP.
The individual shareholdings of Mr. Edwards are shown above in footnote
(d). Mr. Goldman beneficially owns 108,178 shares of Common Stock, 25,000 of
which are shares that may be acquired within 60 days of October 31, 1995, upon
the exercise of stock options. Ms. Romm beneficially owns 20,615 shares of
Common Stock, 1,000 of which are shares that may be acquired within 60 days of
October 31, 1995, upon the exercise of stock options. The ESOP Plan Committee's
address is 9300 Lee Highway, Fairfax, VA 22031.
(q) The Retirement Plan Trustee is Vanguard Fiduciary Trust Company, 200
Vanguard Blvd., Malvern, PA 19355. The members of the Retirement Plan Committee
are James O. Edwards, Michael K. Goldman, and Marcy A. Romm; the individual
shareholdings of the members are shown in footnotes (d) and (p). Neither Mr.
Goldman nor Ms. Romm have any shares of Common Stock in his or her directed
investment accounts under the Retirement Plan. Of the 1,038,316 shares of Common
Stock held by the Retirement Plan, a total of 213,124 at August 31, 1995, were
held in directed investment accounts in which the participants have investment
power over their allocated shares. The Retirement Plan Committee has investment
power over the remaining shares held by the Retirement Plan held in the ICF
Stock Fund. Until 1996, the Retirement Plan Committee members will direct the
Trustee how to vote all of the shares of Common Stock held by the Retirement
Plan; thereafter, participants will vote their shares of Common Stock held by
the Retirement Plan in directed investment accounts and their allocated shares
in the ICF Stock Fund.
(r) Mathers & Company, Inc., Mathers Fund, Inc., and Henry van der Eb, 100
Corporate North, Suite 201, Bannockburn, IL 60015. The information with respect
to the shares of Common Stock beneficially owned by Mathers and Company, Inc.
and Mathers Fund, Inc. (firms which are controlled by common officers), and by
Henry van der Eb (President of Mathers and Company and Chairman of the Mathers
Fund, Inc.) is based on a Report on Schedule 13G (Amendment No. 3 dated February
9, 1995) which was filed with the SEC and which reports share ownership as of
December 31, 1994.
(s) State of Wisconsin Investment Board, P.O. Box 7842, Madison, WI 53707. The
information with respect to the shares of Common Stock beneficially owned by the
State of Wisconsin Investment Board is based on a Report on Schedule 13G
(Amendment No. 3 dated February 13, 1995) which was filed with the SEC and which
reports share ownership information as of December 31, 1994.
-53-
<PAGE>
SELLING SHAREHOLDERS (BALCH; EDA SHAREHOLDERS)
<TABLE>
<CAPTION>
====================================================================================================================================
Name Beneficial Beneficial Beneficial Beneficial Number of Shares Beneficial Ownership of
Ownership of Ownership of Ownership of Ownership of of Common Stock Offered Shares of Common Stock
Balch Shares EDA Closing EDA Initial Additional for Sale After Giving Effect to
Shares Earn-out EDA Earn- Proposed Sale
Shares out Shares
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
John G. Balch (a) 396,167 396,167 0
- ------------------------------------------------------------------------------------------------------------------------------------
EDA SELLING SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas A. Huppert 11,475 4,500 27,375 43,350 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Igor Livshin 54,506 21,375 130,031 205,914 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel A. Milliron 59,288 23,250 141,438 223,974 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Terry B. Soesbee 54,506 21,375 130,031 205,912 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy V.Treadwell 11,475 4,500 27,375 43,350 (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 396,167 (a) 191,250 75,000 (b) 456,250(b) 1,118,667 (b)
====================================================================================================================================
</TABLE>
(a) In addition to the 396,167 Balch Shares, Mr. Balch beneficially owns 2,792
shares allocated to his account in the Company's Employee Stock Ownership Plan.
On the effective date of the Registration Statement of which this Prospectus is
a part, Mr. Balch and Excell are obligated to execute a stock pledge agreement
pursuant to which Mr. Balch will pledge 275,000 of the Balch Shares as security
for all loans owed by Mr. Balch to Excell. In satisfaction of all loans owed by
Mr. Balch to Excell, Excell is obligated to accept 55,000 pledged Balch Shares
on each of the first five anniversaries of April 2, 1995, or on such earlier
date(s) as Mr. Balch may elect.
(b) The 531,250 EDA Earn-out Shares are being held in escrow, but may be
offered for sale by the EDA Selling Shareholders if delivered to the EDA Selling
Shareholders at the end of the earn-out period. The number of EDA Earn-out
Shares allocated to each EDA Selling Shareholder was derived by using the same
percentage of the total EDA Closing Shares each individual received pursuant to
the Agreement and Plan of Merger.
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SELLING SHAREHOLDERS (THE IPC COMPANY; IPC SELLING SHAREHOLDERS)
<TABLE>
<CAPTION>
=====================================================================================================================
Name Beneficial Beneficial Number of Beneficial
Ownership Ownership of Shares of Ownership of Shares
of IPC IPC Shares Common of Common Stock
Shares (following Stock Offered After Giving Effect
distribution)(a) for Sale to Proposed Sale
====================================================================================================================
<S> <C> <C> <C> <C>
The IPC Company 78,366 0 0 0
- --------------------------------------------------------------------------------------------------------------------
THE IPC SELLING SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
Carlos E. Camacho (b) 14,184 14,184 0
- --------------------------------------------------------------------------------------------------------------------
Norman P. Kolb (b) 2,482 2,482 0
- --------------------------------------------------------------------------------------------------------------------
Glynn R. Kruger (c) 28,368 28,368 0
- --------------------------------------------------------------------------------------------------------------------
Glynn R. Kruger, Jr. (c) 28,368 28,368 0
- --------------------------------------------------------------------------------------------------------------------
Charles A. Reeves, Jr. (b) 2,482 2,482 0
- --------------------------------------------------------------------------------------------------------------------
Richard H. Street (b) 2,482 2,482 0
- --------------------------------------------------------------------------------------------------------------------
Total 78,366 78,366 78,366 0
====================================================================================================================
</TABLE>
(a) The Company will issue 78,366 shares of Common Stock to IPC (the "IPC
Shares") in return for IPC's assets, excluding substantially all of certain
accounts receivable which will be conveyed to an IPC shareholder to
liquidate his loan to IPC. The Company will assume only specified, listed
contractual obligations in connection with the asset purchase. All of the
78,366 IPC Shares will be distributed to the IPC Selling Shareholders by
IPC in connection with the liquidation of IPC or as an IPC dividend. All
such shares may be offered by sale by the IPC Selling Shareholders if
delivered to the IPC Selling Shareholders in the liquidation or by
dividend.
(b) This individual will become an employee of a wholly owned subsidiary of the
Company following the purchase of substantially all of the IPC Company's
assets by the Company.
(c) This individual or entity is a shareholder of the IPC Company.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 90,000,000 shares
of Common Stock and 2,000,000 shares of preferred stock, par value $0.01 per
share. As of October 31, 1995, the outstanding capital stock of the Company
consisted of 21,260,430 shares of Common Stock and 200 shares of Series 2D
Senior Preferred Stock. The outstanding Common Stock figure excludes the 531,250
escrowed EDA Earn-Out shares.
COMMON STOCK
The following is a summary of the terms of the Company's Common Stock:
Voting. Each share of Common Stock has one vote per share on all matters
submitted to a vote of shareholders. The Company's Amended and Restated
Certificate of Incorporation provides that no action may be taken by the holders
of shares of Common Stock by written consent in lieu of holding a meeting of
shareholders.
Dividends. The Company has never paid cash dividends on its Common Stock.
The Board of Directors anticipates that for the foreseeable future no cash
dividends will be paid on its Common Stock and that the Company's earnings will
be retained for use in the business. The Board of Directors determines the
Company's Common Stock dividend policy based on the Company's results of
operations, payment of dividends on preferred stock (if any is outstanding),
financial condition, capital requirements, and other circumstances. The
Company's debt and credit agreements allow dividends to be paid on its capital
stock provided that the Company complies with certain limitations imposed by the
terms of such agreements. See "Description of the Indenture" and "Description of
Credit Facility."
Other Terms. Holders of Common Stock have no preemptive or other rights to
subscribe for additional shares of Company stock. Upon liquidation, dissolution,
or winding up of the Company, each share of Common Stock will share equally in
assets legally available for distribution to stockholders.
Transfer Agent. The transfer agent and registrar for the Common Stock is
First Chicago Trust Company of New York, 14 Wall Street, Mail Suite 4680, New
York, New York 10005, (201) 324-0498.
Public Market. Since September 14, 1993, the Common Stock has been traded
on the New York Stock Exchange under the symbol "ICF." From December 14, 1989,
to September 13, 1993, the Common Stock was traded on the NASDAQ National
Market.
PREFERRED STOCK
Preferred stock is available for issuance from time to time at the
discretion of the Board of Directors of the Company, without shareholder
approval. For each series of preferred stock it establishes, the Board of
Directors has authority to prescribe the number of shares in that series, the
dividend rate, and the voting rights, conversion privileges, redemption, sinking
fund provisions and liquidation rights, if any, and any other rights,
preferences and limitations of the particular series. The issuance of preferred
stock could decrease the amount earnings and assets available for distribution
to the holders of Common Stock or adversely affect the rights and powers,
including voting rights, of the holders of Common Stock. Additionally, the
issuance of preferred stock could have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
shareholders.
SERIES 2D PREFERRED STOCK
The Company has issued 200 shares of Series 2D Preferred Stock, all of
which are currently outstanding. In connection with the issuance of the Series
2D Preferred Stock, the Company issued Series 2D Warrants for the purchase of
2,680,952 shares of Common Stock to the purchaser of the Series 2D Preferred
Stock (see "Series 2D Warrants" below). The following is a summary of the terms
of the Series 2D Preferred Stock, which ranks prior to
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the Company's Common Stock and Series 4 Junior Preferred Stock (if any is
issued) with respect to dividend rights and rights on liquidation, winding up
and dissolution.
Dividends. The Series 2D Preferred Stock pays cumulative dividends of
$9,750 per $100,000 of liquidation preference per year, payable quarterly.
Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of Series 2D Preferred
Stock are entitled to receive a liquidation preference equal to $100,000 plus
accrued but unpaid dividends per share of Series 2D Preferred Stock before any
distribution is made to the holders of any capital stock of the Company ranking
junior to the Series 2D Preferred Stock.
Redemption. The Company is obligated to redeem all shares of Series 2D
Preferred Stock outstanding on January 13, 1997, for the full liquidation
preference amount, plus accrued and unpaid dividends thereon to the redemption
date. In addition, upon a proposal for or the occurrence of a Change in Control
Event, as defined in the Certificate of Designations creating the Series 2D
Preferred Stock ("Series 2D Certificate of Designations"), the original
purchaser (and current holder) of the shares of Series 2D Preferred Stock (the
"Initial Holder") has the option to require the Company to redeem all or part of
such Initial Holder's shares at a redemption price of $100,000 per share,
together with accrued and unpaid dividends. This Certificate of Designations is
now included in the Company's Amended and Restated Certificate of Incorporation.
The Company at any time and at its option may redeem all, but not less than
all, of the shares of Series 2D Preferred Stock at a redemption price of
$106,250 per share, plus accrued and unpaid dividends thereon to the redemption
date.
If, as of any date the Company elects to redeem the shares of Series 2D
Preferred Stock, an Initial Holder owns any Series 2D Warrants, then the holder
of such shares may elect to receive, in lieu of the applicable redemption price
described above, consideration per share equal to (i) cash in the amount of
$106,249.99, and (ii) one share of a new series of preferred stock, par value
$0.01 per share (the "Series XD Preferred Stock"), of the Company to be created
pursuant to a Certificate of Designations in the form attached as an exhibit to
the Series 2D Certificate of Designations (the "Series XD Certificate of
Designations"). No dividends will be payable with respect to shares of Series XD
Preferred Stock. The liquidation preference for such shares will be $0.01 per
share. Holders of shares of Series XD Preferred Stock would be entitled to vote
together with holders of the Company's Common Stock on all matters to be voted
on by the Company's shareholders. The number of votes entitled to be cast by
holders of such shares of Series XD Preferred Stock is determined separately
with respect to each holder in accordance with formulae set forth in the Series
XD Certificate of Designations. No holder of shares of Series XD Preferred Stock
may transfer any such shares unless such shares are transferred to a Purchaser
Affiliate, as defined in the Securities Purchase Agreement between the Company
and the Initial Holder (the "Securities Purchase Agreement"). The Company must
redeem all outstanding shares of Series XD Preferred Stock at a redemption price
per share equal to the aggregate liquidation preference of such shares on the
first to occur of (i) January 13, 1997 or (ii) the date upon which an Initial
Holder does not hold any Series 2D Warrants.
The Company also has a one-time right to redeem all outstanding shares of
Series 2D Preferred Stock, each share in exchange for (i) a subordinated debt
security (the "Exchange Note") with an aggregate principal amount of $99,999.99
and a minimum interest rate of 9.75%, in the form attached as an exhibit to the
Series 2D Certificate of Designations, bearing interest at a rate that would
preserve the after-Federal income tax return on dividends on the Series 2D
Preferred Stock, (ii) cash in an amount equal to all accrued and unpaid
dividends on the Series 2D Preferred Stock, and (iii) one share of a new series
of preferred stock, par value $0.01 per share (the "Series YD Preferred Stock"),
of the Company to be created pursuant to a Certificate of Designations in the
form attached as an exhibit to the Series 2D Certificate of Designations (the
"Series YD Certificate of Designations"). No dividends will be payable with
respect to shares of Series YD Preferred Stock. The liquidation preference for
such shares will be $0.01 per share. The Company may at any time and at its
option redeem all, but not less than all, the shares of Series YD Preferred
Stock at a redemption price of $0.01 per share. The Company has mandatory
redemption obligations to: (i) redeem all shares of Series YD Preferred Stock
outstanding on January 13, 1997 for the full
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liquidation preference amount, (ii) redeem all or part of the Initial Holder's
Series YD Preferred Stock for the liquidation preference amount if the Initial
Holder exercises its redemption opinion upon the proposal or occurrence of a
Change in Control Event, (iii) concurrently redeem all outstanding Exchange
Notes when Series YD Preferred Stock is redeemed, and (iv) redeem and purchase
outstanding shares of Series YD Preferred Stock pursuant to the Securities
Purchase Agreement. If the holder of such redeemed Series YD Preferred Stock is
an Initial Holder and also holds any outstanding Series 2D Warrants, then such
holder shall receive, for each share of Series YD Preferred Stock redeemed, a
share of Series XD Preferred Stock. Shares of Series XD Preferred Stock may not
be transferred separately from their corresponding Exchange Notes.
The Initial Holder of the Series 2D Preferred Stock has the right, subject
to a 180-day cure period, to require the Company to redeem all shares of Series
2D Preferred Stock (or shares of Series YD Preferred Stock and associated
Exchange Notes, as the case may be) held by it under certain circumstances. This
right is exercisable in the event the Company notifies such affiliates that the
DOD, the DOE or the President of the United States has made a final
determination on the grounds of national security that the Company, by reason of
the ownership of such Company securities by the Initial Holder, should forfeit a
security clearance on a material facility or a material government contract,
and, in the reasonable judgment of the Company's Board of Directors, such
forfeiture will have a material adverse effect on the Company. This right is not
exercisable, however, if the parent organization of the Initial Holder acquires
more than 20% of the voting power of the Company.
Voting. The number of votes entitled to be cast by any holder of Series 2D
Preferred Stock is equal to the total number of shares of Series 2D Preferred
Stock owned by such holder divided by the total number of outstanding shares of
Series 2D Preferred Stock times the total number of shares of Common Stock (not
to exceed 2,380,952, subject to certain adjustments) for which Series 2D
Warrants are outstanding and unexercised. After such time as there are
outstanding Series 2D Warrants exercisable for 2,380,952 or fewer shares of
Common Stock, the voting power of the Series 2D Preferred Stock is reduced as
Series 2D Warrants are exercised. Thus, the Series 2D Preferred Stock has voting
power similar to that of the Common Stock.
In general, holders of shares of Series 2D Preferred Stock vote together
with the holders of Common Stock and are not entitled to vote as a separate
class. However, the affirmative vote of the holders of a majority of the shares
of Series 2D Preferred Stock, voting as a class with the holders of other series
of preferred stock or as a separate class, in accordance with Delaware law,
would be required for the approval of any proposed amendment of the Amended and
Restated Certificate of Incorporation that would change the par value of the
Series 2D Preferred Stock or alter or change the powers, preferences, or special
rights of the Series 2D Preferred Stock so as to affect such holders adversely.
Such a class vote is also required with respect to any proposed merger or
similar transaction involving an amendment of the Company's Amended and Restated
Certificate of Incorporation if the amendment would materially and adversely
affect the powers, preferences, or special rights of the Series 2D Preferred
Stock. Moreover, without the affirmative vote of at least 66 2/3% of the
aggregate voting power of shares of Series 2D Preferred Stock outstanding, the
Company may not (i) authorize or issue preferred stock senior to the Series 2D
Preferred Stock or (ii) authorize or issue equity securities with a mandatory
redemption date earlier than January 13, 1997.
As discussed below (see "Provisions Affecting Changes of Control and
Extraordinary Transactions"), until January 13, 1997 (when the Series 2D
Preferred Stock is required to be redeemed), the Initial Holder has the right to
designate one nominee for election as a director of the Company.
Rights Upon Dividend Default. In the event the Company is in arrears with
respect to any dividend payable on the Series 2D Preferred Stock for a period in
excess of 100 days or fails to make a mandatory redemption, the holders of
Series 2D Preferred Stock will have the exclusive right to elect two additional
directors. In addition, until such an arrearage or failure to make a mandatory
redemption is cured, if 33% or more of the then-outstanding Series 2D Preferred
Stock (or securities issued in exchange therefor) is held by an Initial Holder,
the Company becomes subject to certain restrictive covenants. Such covenants
would prohibit the Company from, among other things: disposing of assets for
consideration of more than $1 million in a single transaction; entering into
mergers; making acquisitions; guaranteeing any obligation in excess of $1
million; or incurring indebtedness other than as
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permitted pursuant to the Indenture governing the Notes without the consent of
such Initial Holder. Further, under such circumstances, the Initial Holder is
relieved from the limitations described below on its right to acquire additional
voting securities of the Company, to subject Series 2D Preferred Stock to a
voting trust, or to solicit proxies in opposition to the Company's Board of
Directors. See "Provisions Affecting Changes of Control and Extraordinary
Transactions". The Company paid the August 31, 1995, regular quarterly dividend
on the Series 2D Preferred Stock on October 27, 1995. The Company will not be
able to pay the November 30, 1995, regular quarterly dividend on the Series 2D
Preferred Stock unless it signs a supplement to the Indenture. See "Description
of the Indenture--Certain Covenants--Limitations on Restricted Payments."
Transferability. The Series 2D Preferred Stock and Series 2D Warrants were
sold in a private placement exempt from registration under the Securities Act.
Thus, there is no pubic market for the Series 2D Preferred Stock (or the Series
XD Preferred Stock, Series YD Preferred Stock or Exchange Notes, if any of such
securities are issued) or the Series 2D Warrants. Transfers of any such
securities are further restricted by the Securities Purchase Agreement, which
grants the Company a right of first offer to purchase any such securities prior
to any transfers to any person other than an Initial Holder.
A registration rights agreement provides the holders of Series 2D Warrants
and the holders of any shares of Common Stock issued upon exercise of Series 2D
Warrants with certain rights to register for resale shares of Common Stock
issued upon exercise of the Series 2D Warrants. These registration rights
include customary demand and incidental registration rights.
Other Terms. Except as set forth above, holders of the Series 2D Preferred
Stock have no preemptive or other rights to subscribe for additional shares of
Company stock.
SERIES 2D WARRANTS
In January 1992, the Company sold to an affiliate of EXOR America Series 2D
Warrants to purchase 2,680,952 shares of Common Stock (subject to adjustment) at
an exercise price of $8.40 per share. The Series 2D Warrants expire in July
1997. In January 1994, the Company issued replacement Series 2D Warrants to the
affiliate of EXOR America exercisable at $6.90 per share (subject to
adjustment). The holder of the Series 2D Warrants is able, in lieu of exercising
such warrants, to require the Company to issue to such holder Common Stock with
an aggregate market value equal to the difference between the then current
market price for the Common Stock and 90% of the exercise price of the Series 2D
Warrants then in effect, multiplied by the number of Series 2D Warrants for
which the holder is requiring such issuance. In addition, on the expiration date
of the Series 2D Warrants, the holder of such warrants will be able, in lieu of
exercising the warrants or having Common Stock issued as described in the
preceding sentence, to require the Company to pay it cash in the amount of the
difference between the then current market price for the Common Stock and the
exercise price of the Series 2D Warrants then in effect, multiplied by the
number of Series 2D Warrants for which the holder is requiring such payment. In
the event that the Company cannot make such cash payment without violating a
covenant or covenants contained in the Indenture, its Credit Agreement, or any
similar agreement relating to indebtedness for borrowed money of the Company,
the Company shall make such payment in Common Stock as described above.
SENIOR SUBORDINATED DEBT WARRANTS
A total of 600,000 Senior Subordinated Debt Warrants (the "Warrants") were
issued by the Company under a warrant agreement (the "Warrant Agreement") dated
as of January 11, 1994, between the Company and The Bank of New York, a New York
banking corporation, as warrant agent (the "Warrant Agent"). Each Warrant
entitles the holder thereof to acquire one share of Common Stock of the Company,
subject to adjustment, upon payment of the exercise price of $5.00 (the
"Purchase Price"), subject to adjustment as described below. All outstanding
Warrants terminate and become void on December 31, 1998 (the "Expiration Date").
The Warrants are subject to the terms contained in the Warrant Agreement;
capitalized terms that are not otherwise defined below are used as defined in
the Warrant Agreement. The Common Stock issuable upon exercise of the Warrants
has been registered with the Commission.
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Non-Surviving Combination. If the Company proposes to enter into a
transaction that would constitute a Non-Surviving Combination if consummated,
the Company must give written notice thereof to the holders promptly after an
agreement is reached with respect to the Non-Surviving Combination but in no
event less than 30 days prior to the consummation thereof. As used herein, a
"Non-Surviving Combination" means any merger, consolidation, or other business
combination by the Company with one or more persons (other than a wholly owned
subsidiary of the Company) in which the Company is not the survivor, or a sale
of all or substantially all of the assets of the Company to one or more such
other persons, if, in connection with any of the foregoing, consideration (other
than consideration which includes Common Stock or securities convertible into,
or exercisable or exchangeable for, Common Stock or rights or options to acquire
Common Stock or such other securities) is distributed to holders of Common Stock
in exchange for all or substantially all of their equity interest in the
Company.
In a Non-Surviving Combination, the surviving entity (the "Survivor") will
be obligated to distribute or pay to each holder of Warrants, upon payment of
the Purchase Price prior to the Expiration Date, the number of shares of stock
or other securities or other property (including any cash) of the Survivor that
would have been distributable or payable on account of the Common Stock if such
holder's Warrants had been exercised immediately prior to such Non-Surviving
Combination (or, if applicable, the record date therefor). Following the
consummation of a Non-Surviving Combination, the Warrants will represent only
the right to receive such shares of stock or other property from the Survivor
upon payment of the Purchase Price prior to the Expiration Date. No transaction
is presently in progress or under negotiation that would constitute a Non-
Surviving Combination.
Adjustment. The number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price are subject to adjustment in
certain events, including (a) a dividend or distribution on the Company's Common
Stock in shares of its Common Stock or a combination, subdivision,
reorganization, or reclassification of Common Stock, (b) the issuance of shares
of Common Stock for a consideration per share less than the market price per
share at the time of issuance, (c) the issuance of rights, warrants, or options
for the purchase of Common Stock or for the purchase of securities convertible
into or exchangeable for Common Stock where the aggregate amount of
consideration (taking into account the consideration received for the issuance
of such right, warrant, or option plus any consideration to be received upon the
exercise thereof and including, in the case of a right, warrant, or option to
purchase a convertible or exchangeable security, any consideration to be
received upon the eventual conversion or exchange of such security for Common
Stock) per share of Common Stock received or receivable by the Company is less
than the market price per share at the time of issuance of such right, warrant,
or option, (d) the issuance of any securities convertible into or exchangeable
for Common Stock where the aggregate amount of consideration (taking into
account the consideration received for the issuance of such convertible or
exchangeable security and the consideration to be received upon the conversion
or exchange thereof) per share of Common Stock received or receivable by the
Company is less than the market price per share of Common Stock on the date of
issuance of such convertible or exchangeable security, and (e) a dividend or
distribution on the Company's Common Stock of cash, evidences of its
indebtedness, other securities, or other properties or assets other than any
cash dividend which, when aggregated with all other cash dividends paid in the
year prior to the declaration of such cash dividend, does not exceed 10% of the
market price per share of Common Stock on the date of such declaration. If the
terms of any of the Company's outstanding rights, warrants, or options for the
purchase of Common Stock or securities convertible into or exchangeable for
Common Stock change, in each case where the issuance thereof caused an
adjustment in the terms of the Warrants (including by way of expiration of such
securities but excluding by way of antidilution provisions thereof triggering an
adjustment of the terms thereof upon the occurrence of an event that would cause
an adjustment of the terms of the Warrant), then the Purchase Price and the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall be readjusted to take account of such change. Notwithstanding the
foregoing, no adjustment in the Purchase Price or the number of shares of Common
Stock issuable upon exercise of Warrants will be required (i) until cumulative
adjustments would result in an adjustment of at least one percent in the
Purchase Price, (ii) for the granting, in a transaction which would otherwise
trigger an adjustment, of any rights, warrants, or options or the issuance of
any Common Stock to officers, directors, or employees of, or consultants or
advisors to, the Company where such issuances are registered with the Commission
on Form S-8 and do not, in the aggregate exceed five percent of the
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number of shares of Common Stock outstanding (assuming the exercise of the
options so granted and all rights, warrants, options, and convertible securities
then outstanding), or (iii) the issuance of Common Stock pursuant to any
dividend reinvestment plan where the purchase price of Common Stock thereunder
is no less than 95% of the market price on the date of issuance.
SHAREHOLDER RIGHTS PLAN
On January 13, 1992, the Board of Directors of the Company declared a
dividend distribution to shareholders of record at the close of business on
January 31, 1992 (the "Record Date") of one Right for each outstanding share of
Common Stock.
Each Right entitles the registered holder of Common Stock to purchase from
the Company a unit consisting of one one hundredth of a share (a "Preferred
Stock Unit") of Series 4 Junior Preferred Stock ("Series 4 Preferred Stock"), at
a purchase price of $50.00 per Preferred Stock Unit ("Purchase Price"), subject
to adjustment. The Rights also are subject to antidilution adjustments. The
description of the Rights is set forth in a Rights Agreement (the "Rights
Agreement") between the Company and the Rights Agent.
A Distribution Date (the "Distribution Date") for the Rights will occur
upon the earlier of (i) 10 business days following a "Stock Acquisition Date,"
which is the public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (such person
or group referred to herein as an "Acquiring Person") or (ii) 10 business days
following the commencement of a tender offer or exchange offer that would if
consummated result in a person or group becoming an Acquiring Person. The Rights
are not exercisable until the Distribution Date and will expire at the close of
business on January 13, 2002, unless earlier redeemed by the Company as
described below.
The Rights Agreement provides, among other things, that the Initial Holder
on the date of the Rights Agreement of the Series 2D Preferred Stock cannot be
deemed an Acquiring Person.
Until the Distribution Date (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such certificates
and (ii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
In the event that, at any time following the Distribution Date, a person
becomes an Acquiring Person, then each holder of a Right (other than the
Acquiring Person) will thereafter have the right to receive, (x) upon exercise
and payment of the Purchase Price, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the Purchase Price of the Right or (y) at the discretion of the Board of
Directors, upon exercise and without payment of the Purchase Price, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to the Purchase Price of the Right. For example,
at a Purchase Price of $50.00 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following the event set forth above would
entitle its holder to purchase $100 worth of Common Stock (or other
consideration, as noted above) for $50.00. Assuming that the Common Stock has a
per share value of $10.00 at such time, the holder of each Right would be
entitled to purchase 10 shares of Common Stock for a total aggregate purchase
price of $50.00. However, Rights are not exercisable following the occurrence of
the event set forth above until such time as the Rights are no longer redeemable
by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a merger with any Person (as defined in the Rights
Agreement) and its Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (iii) 50% or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights
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held by an Acquiring Person or which previously have been exercised 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 Purchase Price of
the Right. The events set forth in this paragraph and in the immediately
preceding paragraph are referred to as the "Triggering Events."
As noted above, following the occurrence of any of the events described
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.
The Purchase Price payable, and the number of Preferred Stock Units or
other securities or property issuable upon exercise of the Rights, are subject
to amendment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series 4
Preferred Stock, (ii) if holders of the Series 4 Preferred Stock are granted
certain rights or warrants to subscribe for Series 4 Preferred Stock or
convertible securities at less than the current market price of the Series 4
Preferred Stock, or (iii) upon the distribution to holders of the Series 4
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent of the
Purchase Price. In addition, to the extent that the Company does not have
sufficient shares of Common Stock issuable upon exercise of the Rights following
the occurrence of a Triggering Event, the Company may, under certain
circumstances, reduce the Purchase Price. No fractional Preferred Stock Units
will be issued and, in lieu thereof, an adjustment in cash will be made.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $0.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors), at any time until 10 business
days following the Stock Acquisition Date. After the redemption period has
expired, the Company's right of redemption may be reinstated if an, Acquiring
Person reduces its beneficial ownership to less than 10% of the outstanding
shares of Common Stock in a transaction or series of transactions not involving
the Company and there are no other Acquiring Persons. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, and without
any notice to the holder of such Rights prior to such redemption, the Rights
will terminate and the only right of the holders of Rights will be to receive
the $0.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Other than those provisions relating to the principal economic terms of the
Rights (except with respect to increasing the Purchase Price under certain
circumstances described in the Rights Agreement), any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board 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) or to shorten or lengthen any
time period under the Rights Agreement. However, no amendment to adjust the time
period governing redemption shall be made when the Rights are not redeemable.
One Right will be distributed to shareholders of the Company for each share
of Common Stock owned of record by them at the close of business on the Record
Date. Until the Distribution Date, the Company will issue a Right with each
share of Common Stock so that all shares of Common Stock will have attached
Rights.
The Rights may be deemed to have certain anti-takeover effects. The Rights
generally may cause substantial dilution to a person or group that attempts to
acquire the Company under circumstances not approved by the Board of Directors
of the Company. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors of the Company since the
Board of Directors may, at its option, at any time
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prior to the close of business on the earlier of (i) the tenth business day
following the Stock Acquisition Date or (ii) January 13, 2002, redeem all but
not less than all of the then outstanding Rights at $0.01 per Right.
PROVISIONS AFFECTING CHANGES OF CONTROL AND EXTRAORDINARY TRANSACTIONS
In addition to the Shareholder Rights Plan, certain provisions of the
Company's Amended and Restated Certificate of Incorporation and By-laws and
other agreements could have the effect of delaying, deferring, or preventing a
change in control of the Company or other extraordinary corporate transaction.
The Company's Amended and Restated Certificate of Incorporation and By-laws
provide for classification of the Board of Directors into three classes, as
nearly equal in number as possible, with one class of directors being elected
each year for three-year terms. Under Delaware law, members of a classified
board may be removed only for cause. Thus, at least two years would be required
to effect a change of control in the Board of Directors, unless a shareholder
had sufficient voting power to amend or repeal the Amended and Restated
Certificate of Incorporation and By-law provisions relating to classification of
the Board of Directors.
In addition, the Amended and Restated Certificate of Incorporation imposes
supermajority voting requirements for certain corporate transactions that apply
if a majority of the Board of Directors has not served in such positions for at
least 12 months. Under those circumstances, the approval of two-thirds of the
voting power of the Company's capital stock would be required in order for the
Company to (i) merge with or consolidate into any other entity, other than a
subsidiary of the Company, (ii) sell, lease or assign all or substantially all
of the assets or properties of the Company, or (iii) amend the voting provisions
of the Amended and Restated Certificate of Incorporation. Other Amended and
Restated Certificate of Incorporation provisions of the type referred to above
include (i) the denial of the right of holders of Common Stock to take action by
written consent in lieu of at a shareholders' meeting and (ii) the ability of
the Board of Directors to determine the rights and preferences (including voting
rights) of the Company's authorized but unissued preferred stock, and then to
issue such stock. Such By-law provisions include those that (i) require advance
nomination of directors, (ii) require advance notice of business to be conducted
at shareholders' meetings, and (iii) provide that shareholders owning at least
50% of the voting power of the capital stock are required to call a special
meeting of shareholders.
With the exception of the provision that authorizes the Board of Directors
to fix the terms of and issue authorized but unissued shares of preferred stock,
the approval of the holders of at least two-thirds of the voting power of the
Company's capital stock is required to amend, alter, or repeal, or to adopt
provisions inconsistent with, the Amended and Restated Certificate of
Incorporation and By-law provisions described above, regardless of whether a
majority of the members of the Board of Directors has served in such positions
for more than 12 months at the time of such action.
The voting and certain other rights of the holders of the Company's Series
2D Preferred Stock may also have the effect of delaying, deferring or preventing
a change of control of the Company. As described in the preceding sections, the
terms of the Series 2D Preferred Stock permit the holders of such stock to
require redemption of the stock upon a "Change of Control Event" as defined
therein (in general, (i) the acquisition of 40% or more of the voting power of
the Company by an unrelated third party, (ii) a change in the composition of a
majority of the Company's directors over a two-year period or (iii) shareholder
approval of (A) a transaction or series of transactions consummated within nine
months which results in the shareholders of the Company prior to such
transaction(s) owning less than 55% of the voting power of the Company, (B)
liquidation of the Company, or (C) sale or disposition of all or substantially
all of the Company's assets). See "Series 2D Preferred Stock".
The agreements relating to the Series 2D Preferred Stock provide that,
until December 20, 1995, the Initial Holder will not, without the consent of a
majority of the Company's directors not designated by the purchaser, (i) acquire
any voting securities of the Company if, after such acquisition, it would
directly or indirectly own or control more than 40% of the voting power of the
Company, (ii) subject the Series 2D Preferred Stock to a voting trust, or (iii)
solicit proxies in opposition to any recommendation of the Company's Board of
Directors. Until January 13, 1997, subject to adjustment, so long as the
purchaser of the Series 2D Preferred Stock (and its
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affiliates) owns 80% of such stock (including securities issuable in exchange
for such stock) or 80% of the Series 2D Warrants or the Common Stock issued upon
exercise of the Series 2D Warrants, such purchaser (and its affiliates) shall be
entitled to designate a nominee for director to serve on the Company's Board of
Directors.
In addition, warrants issued by the Company in 1989 to purchase 275,088
shares of Common Stock, subject to antidilution adjustment (the "Subordinated
Debt Warrants") and the Series 2D Warrants (which are exercisable for 2,680,952
shares of Common Stock, subject to adjustment) provide that, if the Company is a
party to a merger or other extraordinary corporate transaction in which the
Company's outstanding Common Stock is exchanged for securities or other
consideration (including cash), the holders thereof shall have the right to
elect, within 60 days after notice, to receive, at the holder's election, (i)
the consideration which the warrantholder would have received had the warrants
been exercised immediately prior to the transaction or (ii) the number of shares
of the acquiring party's voting stock (with the highest voting power per share
in the case of the Series 2D Warrants) determined by reference to a formula that
gives effect to the fair market value of the consideration paid for the
Company's Common Stock in the transaction. If such a transaction constitutes a
Change of Control Event (as described above), each of the holders of the
Subordinated Debt Warrants and Series 2D Warrants also have the right to
exercise the warrants they hold within the 60-day notice period referred to
above and receive cash in an amount equal to the fair market value of the
highest per share consideration paid in connection with the transaction,
computed as if the warrants had been exercised immediately prior to consummation
of the transaction.
DELAWARE TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law (the "Delaware Takeover
Statute") applies to Delaware corporations with a class of voting stock listed
on a national securities exchange, authorized for quotation on an inter-dealer
quotation system, or held of record by 2,000 or more persons, and restricts
transactions which may be entered into by such a corporation and certain of its
stockholders. The Delaware Takeover Statute provides, in essence, that a
stockholder acquiring more than 15% of the outstanding voting shares of a
corporation subject to the statute (an "Interested Stockholder"), but less than
85% of such shares, may not engage in certain "Business Combinations" with the
corporation for a period of three years subsequent to the date on which the
stockholder became an Interested Stockholder, unless (i) prior to such date the
corporation's board of directors approved either the Business Combination or the
transaction in which the stockholder became an Interested Stockholder or (ii)
the Business Combination is approved by the corporation's board of directors and
authorized by a vote of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder.
The Delaware Takeover Statute defines the term "Business Combination" to
encompass a wide variety of transactions with or caused by an Interested
Stockholder in which the Interested Stockholder receives or could receive a
benefit on other than a pro rata basis with other stockholders, including
mergers, certain asset sales, certain issuances of additional shares to the
Interested Stockholder, transactions with the corporation which increase the
proportionate interest of the Interested Stockholder, or transactions in which
the Interested Stockholder receives certain other benefits.
DESCRIPTION OF THE INDENTURE
The $125,000,000 of 12% Senior Subordinated Notes due 2003 (the "Notes")
were issued pursuant to an Indenture dated as of January 11, 1994, as
supplemented (the "Indenture") between the Company and The Bank of New York, as
trustee (the "Trustee"). The following is a summary of the material terms and
provisions of the Notes. The terms of the Notes include those set forth in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are subject to all
such terms. The following summary does not purport to be a complete description
of the Notes and is subject to the detailed provisions of, and qualified in its
entirety by reference to, the Indenture and the Notes. Capitalized terms that
are used but not otherwise defined herein have the meanings assigned to them in
the Indenture.
General. The Notes are general unsecured obligations of the Company,
subordinated in right of payment to all Senior Indebtedness of the Company. The
Notes bear interest at 12% per annum, payable on June 30 and
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December 31 of each year, to holders of record at the close of business on June
15 or December 15, as the case may be, immediately preceding the relevant
interest payment date. The Notes mature on December 31, 2003. The Trustee is the
Paying Agent and the Registrar under the Indenture.
Ranking. The Indebtedness represented by the Notes is subordinated in
right of payment to all existing and future Senior Indebtedness of the Company,
including without limitation all obligations of the Company under the Credit
Agreement (discussed on pages 74-76 of this Prospectus), and is senior in right
of payment to all indebtedness of the Company that by its terms is expressly
subordinated in right of payment to the Notes. Although the Indenture contains
limitations on the amount of additional Indebtedness which the Company may
incur, under certain circumstances the amount of such Indebtedness could be
substantial and such Indebtedness may be Senior Indebtedness. See "Certain
Covenants-Limitations on Additional Indebtedness."
The Company is a holding company which derives substantially all of its
income from its Subsidiaries. The Company must rely on dividends or other
intercompany transfers from its Subsidiaries to generate the funds necessary to
meet its debt service and other obligations, including payment of principal of
and interest on the Notes. The ability of its Subsidiaries to pay such dividends
or other intercompany transfers is subject to applicable state laws. Claims of
creditors of its Subsidiaries, including trade creditors, secured creditors, and
creditors holding guarantees of its Subsidiaries, and claims of holders of
preferred stock of its Subsidiaries, generally will have priority as to the
assets of its Subsidiaries over the equity interests of the Company and the
holders of Indebtedness of the Company. See "Description of Credit Facility."
If any Senior Indebtedness is disallowed, avoided, or subordinated pursuant to
the provisions of Section 548 of the Bankruptcy Law or any applicable state
fraudulent conveyance law, such Indebtedness nevertheless constitutes Senior
Indebtedness for purposes of the Indenture.
Only Indebtedness of the Company that is Senior Indebtedness ranks senior
to the Notes in accordance with the provisions of the Indenture. The Company has
agreed in the Indenture that it will not issue, assume, guarantee, incur, or
otherwise become liable for (collectively, "issue"), directly or indirectly,
any Indebtedness that is subordinate or junior in ranking in any respect to
Senior Indebtedness unless such Indebtedness is expressly subordinated in right
of payment to the Notes. Unsecured Indebtedness is not deemed to be subordinate
or junior to secured Indebtedness merely because it is unsecured.
The Company may not pay the principal of, premium, if any, or interest on,
the Notes or make any deposit pursuant to the provisions described under
"Discharge of Indenture" and may not repurchase, redeem, defease, or otherwise
retire any Notes (collectively, "pay the Notes") if (i) any Senior
Indebtedness (other than Non-Recourse Indebtedness) is not paid when due or (ii)
any other default on Senior Indebtedness (other than Non-Recourse Indebtedness)
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, (x) the default has been cured or waived
and any such acceleration has been rescinded or (y) such Senior Indebtedness has
been paid in full. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Senior Indebtedness (other than Non-Recourse Indebtedness) pursuant to which the
maturity thereof may be accelerated immediately without further notice (except
such notice as may be required to effect such acceleration) or the expiration of
any applicable grace periods, the Company may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Company and the
Trustee of written notice of such default from the holders of such Senior
Indebtedness, the Agent under the Credit Agreement or the trustee for the
holders of any other Senior Indebtedness specifying an election to effect a
Payment Blockage Period (a "Payment Notice") and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the person or persons who gave such Payment
Notice, (ii) by repayment in full of such Senior Indebtedness, or (iii) because
the default giving rise to such Payment Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the first sentence of this paragraph), unless the holders of
such Senior Indebtedness, the Agent under the Credit Agreement or the trustee
for the holders of any other Senior Indebtedness have accelerated the maturity
of such Senior Indebtedness, the Company may resume payments on the Notes after
such Payment Blockage Period expires. Not more than one Payment Notice may be
given in any consecutive 360-day period, irrespective of the number of defaults
with respect to Senior Indebtedness during such period. No default or event of
default which existed or was continuing
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on the date of the commencement of any Payment Blockage Period with respect to
the Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the holders of such Senior Indebtedness, the Agent under the Credit Agreement or
the trustee for the holders of any other Senior Indebtedness whether or not
within a period of 360 consecutive days unless such default or event of default
shall have been cured or waived for a period of not less than 90 consecutive
days.
Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation or total or partial dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property (whether voluntary or
involuntary), or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Company, the holders of Senior
Indebtedness are entitled to receive payment in full before the holders of the
Notes are entitled to receive any payment. If payment of the Notes is
accelerated because of an Event of Default, the Company or the Trustee shall
promptly notify the holders of Senior Indebtedness, the Agent under the Credit
Agreement and the trustee for the holders of any other Senior Indebtedness of
the acceleration. If the Trustee provides such notice, the Trustee also will
notify the Company of the acceleration.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, Holders of the Notes may recover less, ratably, than
other creditors of the Company.
Optional Redemption of the Notes. The Notes may not be redeemed prior to
December 31, 1998, but will be redeemable at the option of the Company, in whole
or in part, at any time on or after December 31, 1998, at the following
redemption prices (expressed as percentages of principal amount), together with
accrued and unpaid interest thereon to the redemption date, if redeemed during
the 12-month period beginning December 31:
<TABLE>
<CAPTION>
Optional
Year Redemption Price
---- ----------------
<S> <C>
1998 108.0%
1999 106.4
2000 104.8
2001 103.2
2002 101.6
</TABLE>
If less than all of the Notes are to be redeemed at any time, selection of
the Notes to be redeemed will be made by the Trustee from among the outstanding
Notes on a pro rata basis, by lot or by any other method permitted in the
Indenture. Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at the registered address of such Holder. On and after the redemption
date, interest will cease to accrue on the Notes or portions thereof called for
redemption.
Sinking Fund. There is no mandatory sinking fund for the Notes.
Mandatory Offers to Purchase the Notes. The Indenture requires the Company
to offer to purchase all of the outstanding Notes upon the occurrence of a
Change of Control and to offer to purchase a portion of the outstanding Notes
under certain other circumstances. See "Change of Control" and "Certain
Covenants-Limitations on Asset Sales."
Change of Control. Upon the occurrence of a Change of Control, the Company
will offer (a "Change of Control Offer") to purchase all outstanding Notes at
a purchase price equal to 101% of the aggregate principal amount of the Notes,
plus accrued and unpaid interest to the date of purchase.
Within 30 days after any Change of Control, the Company, or the Trustee at
the Company's request, will mail or cause to be mailed to all Holders on the
date of the Change of
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Control a notice stating: (i) that a Change of Control has occurred and that the
Holders have the right to require the Company to purchase any or all of the
outstanding Notes at a purchase price equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (ii)
the circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma historical income, cash flow, and
capitalization after giving effect to such Change of Control); (iii) the
purchase date (which will be no earlier than 30 days nor later than 60 days from
the date such notice is mailed); and (iv) the instructions, determined by the
Company consistent with the Indenture, that Holders must follow in order to have
their Notes purchased. Any Change of Control Offer will be conducted in
compliance with applicable tender offer rules, including Section 14(e) of the
Exchange Act and Rule 14e-1 thereunder. The Change of Control purchase feature
of the Notes in certain circumstances may make it more difficult or may
discourage a sale or takeover of the Company.
Clause (i) of the definition of Change of Control includes the sale, lease,
conveyance, or other disposition of all or "substantially all" of the Company's
assets. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of Notes to require
the Company to repurchase such Notes as a result of a transfer or lease of the
Company's assets to another person may be uncertain.
There can be no assurance that, at the time of a Change of Control, the
Company will have sufficient cash to repay all amounts due under the Notes. If a
Change of Control should occur, the rights of the Holders of the Notes to
receive payment for their Notes upon a Change of Control Offer would be subject
to the prior rights of holders of any Senior Indebtedness. See "Ranking."
CERTAIN COVENANTS
Limitations on Additional Indebtedness. The Indenture provides that (i)
the Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, extend the maturity
of, or otherwise become liable with respect to (collectively, "incur"), any
Indebtedness (including without limitation Acquired Indebtedness), other than
(a) Junior Subordinated Indebtedness incurred by the Company in compliance with
the covenant described in the second sentence of this paragraph or (b)
Indebtedness between the Company and its Wholly Owned Restricted Subsidiaries
(provided that such Indebtedness of the Company to any Wholly Owned Restricted
Subsidiary is expressly subordinated in right of payment to the Notes) or among
such Wholly Owned Restricted Subsidiaries (provided, however, that any
subsequent issue or transfer of any Capital Stock that results in any such
Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned
Restricted Subsidiary) shall be deemed, in each case, to constitute the
incurrence of such Indebtedness by the Company) and (ii) the Company will not
permit any of its Restricted Subsidiaries to issue (except to the Company or any
of its Wholly Owned Restricted Subsidiaries) any Capital Stock having a
preference in liquidation or with respect to the payment of dividends, unless,
after giving effect thereto, the Company's Consolidated Fixed Charge Coverage
Ratio on the date thereof would be at least:
(1) 2.00 to 1, if such date is on or prior to February 29, 1996;
(2) 2.25 to l, if such date is after February 29, 1996 and on or prior to
February 28, 1998; and
(3) 2.50 to 1, if such date is after February 28, 1998,
in each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness or the issuance of such Capital Stock, as the case may
be, and the application of the net proceeds therefrom, had occurred at the
beginning of the four-quarter period used to calculate the Company's
Consolidated Fixed Charge Coverage Ratio. The Indenture also provides that the
Company will not directly or indirectly incur any Junior Subordinated
Indebtedness unless, after giving effect thereto, the Company's Consolidated
Fixed Charge Coverage Ratio on the date thereof would be at least 1.50 to 1, in
each case determined on a pro forma basis as if the incurrence of such
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additional Indebtedness, and the application of the net proceeds therefrom, had
occurred at the beginning of the four-quarter period used to calculate the
Company's Consolidated Fixed Charge Coverage Ratio.
Notwithstanding the immediately preceding paragraph, the Company and its
Restricted Subsidiaries may: (i) incur Indebtedness under the Credit Agreement
in an amount not to exceed $60 million; (ii) incur Indebtedness not otherwise
permitted by any other provision hereof, so long as the aggregate principal
amount of Indebtedness incurred under this clause (ii) does not exceed 7.5% of
the Consolidated Tangible Assets of the Company; and (iii) incur Refinancing
Indebtedness. In addition, notwithstanding the immediately preceding paragraph:
(A) Subsidiaries of the Company that are not Wholly Owned Restricted
Subsidiaries may incur Indebtedness to the Company or any of its Wholly Owned
Restricted Subsidiaries in the amounts and subject to the restrictions described
in clause (iii) of the covenant described under "Limitations on Subsidiary Debt
and Preferred Stock"; and (B) Single Purpose Subsidiaries of the Company may
incur Non-Recourse Indebtedness to the extent permitted by clause (iv) of the
covenant described under "Limitations on Subsidiary Debt and Preferred Stock."
Notwithstanding the two preceding paragraphs, the Company may not incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Junior
Subordinated Indebtedness. In addition, the Company may not incur any secured
Indebtedness which is not Senior Indebtedness unless contemporaneously therewith
effective provision is made to secure the Notes equally and ratably with such
secured Indebtedness for so long as such secured Indebtedness is secured by a
Lien.
Limitations on Subsidiary Debt and Preferred Stock. The Indenture provides
that the Company will not permit any of its Restricted Subsidiaries, directly or
indirectly, to create, incur, assume, guarantee, extend the maturity of, or
otherwise become liable with respect to (collectively, "incur"), any
Indebtedness (which, with respect to any Restricted Subsidiary, includes without
limitation preferred stock of such Restricted Subsidiary) except: (i) guarantees
by any Restricted Subsidiary of the payment of the principal of, premium, if
any, and interest on the Indebtedness incurred pursuant to the Credit Agreement
and in compliance with clause (i) of the second paragraph of the covenant
described under "Limitations on Additional Indebtedness" and with the covenant
described under "Limitations on Guarantees"; (ii) Indebtedness issued to and
held by the Company or a Wholly Owned Restricted Subsidiary of the Company
(provided, however, that any subsequent issue or transfer of any Capital Stock
that results in any such Wholly Owned Restricted Subsidiary ceasing to be a
Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness (other
than to a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to
constitute the incurrence of such Indebtedness by such Restricted Subsidiary);
(iii) Indebtedness to the Company or any of its Wholly Owned Restricted
Subsidiaries incurred by Subsidiaries of the Company that are not Wholly Owned
Restricted Subsidiaries that are engaged in Permitted Businesses in an aggregate
amount (together with all Designated Investments made in Subsidiaries that are
not Wholly Owned Restricted Subsidiaries in compliance with the provisions of
clause (E) of the second paragraph of the covenant described under "Limitations
on Restricted Payments") not to exceed 5% of Consolidated Tangible Assets; and
(iv) Non-Recourse Indebtedness incurred by a Single Purpose Subsidiary.
Limitations on Restricted Payments. The Indenture provides that the
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, make any Restricted Payment if at the time of such
Restricted Payment: (i) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; (ii) the Company would be
unable to incur an additional $1.00 of Senior Indebtedness under the covenant
described in the first sentence of the first paragraph under "Limitations on
Additional Indebtedness;" or (iii) the amount of such Restricted Payment, when
added to the aggregate amount of all Restricted Payments (other than those made
pursuant to the provisions of clauses (A), (C), (D), (E) or (G) of the
immediately following paragraph) made after the date of the Indenture, exceeds
the sum of: (a) 50% of the Company's Consolidated Net Income accrued during the
period since August 31, 1993 (or, if such aggregate Consolidated Net Income
shall be a deficit, minus 100% of such aggregate deficit); plus (b) the
aggregate amount of Net Reductions in Investments attributable to Designated
Investments made by the Company or any Subsidiary subsequent to the date of the
Indenture; provided, however, that (1) the Net Reductions in Investments
attributable to any Designated Investment for purposes of this calculation shall
not exceed the amount of such Designated Investment, (2) to the
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extent that cash or Cash Equivalents included in any Net Reductions in
Investments pursuant to the definition thereof have been or will be included in
the computation of Consolidated Net Income for purposes of determining the
ability of the Company or any of its Restricted Subsidiaries to make Restricted
Payments under clause (iii)(a) of this paragraph, such cash or Cash Equivalents
shall not also be included in computing Net Reductions in Investments for
purposes of this clause (iii)(b), and (3) the Company is not be permitted to
make any Restricted Payment described in clause (i) or (ii) of the definition of
Restricted Payment from any Net Reductions in Investments.
Notwithstanding the foregoing, the provisions of clauses (ii) and (iii) of
the immediately preceding paragraph will not prevent: (A) the Company or any
Wholly Owned Restricted Subsidiary from making Investments in Subsidiaries, in
an aggregate amount not to exceed $4 million, pursuant to contractual
obligations in existence on the date of the Indenture or directly related to
projects in existence on the date of the Indenture; (B) the Company from paying
any dividend within 60 days after the date of its declaration if such dividend
could have been paid on the date of its declaration without violation of this
covenant; (C) the Company from purchasing or redeeming and retiring any shares
of Capital Stock of the Company, and paying accrued and unpaid dividends on such
shares at the time of such repurchase or redemption, in exchange for, or out of
the net proceeds of a substantially concurrent sale (other than to a Subsidiary
of the Company or an employee stock ownership plan) of, shares of Qualified
Capital Stock of the Company; (D) the Company or any Subsidiary from making (1)
Investments pursuant to the provisions of employee benefit plans of the Company
or any of its Subsidiaries in an aggregate amount not to exceed $500,000 in a
fiscal year, or (2) making loans to officers of the Company in connection with
any relocation of residence, approved by a majority of the independent members
of the Board of Directors of the Company, provided that the aggregate amount of
Investments and loans under this clause (D) shall not exceed $1 million in any
fiscal year; (E) the Company or any Wholly Owned Restricted Subsidiary from
making Designated Investments (1) in Subsidiaries that are not Wholly Owned
Restricted Subsidiaries in an aggregate amount (together with Indebtedness
incurred by or on behalf of Subsidiaries that are not Wholly Owned Restricted
Subsidiaries in compliance with the provisions of clause (iii) of the covenant
described under "Limitations on Subsidiary Debt and Preferred Stock") not to
exceed 5% of Consolidated Tangible Assets or (2) in Joint Ventures in an
aggregate amount not to exceed 5% of Consolidated Tangible Assets, provided
that: (1) the Person in whom the Investment is made is engaged only in Permitted
Businesses; (2) the Company, directly or through Wholly Owned Restricted
Subsidiaries of the Company, controls, under an operating and management
agreement or otherwise, the day to day management and operation of such Person
or otherwise has the right to exercise significant influence over the management
and operation of such Person in all material respects (including without
limitation the right to control or veto any material act or decision); and (3)
after giving effect to such Investment, the aggregate amount of Indebtedness and
Investments made by the Company and its Subsidiaries in such Person does not
exceed $5 million; (F) the Company or any Wholly Owned Restricted Subsidiary
from making Designated Investments in Subsidiaries that are not Wholly Owned
Restricted Subsidiaries or in Joint Ventures; provided that such Designated
Investments are made solely from (i) the net proceeds of a substantially
concurrent sale (other than to a Subsidiary of the Company or an employee stock
ownership plan) of shares of Qualified Capital Stock of the Company, (ii) 50% of
the Company's Consolidated Net Income accrued during the period since August 31,
1993, or (iii) the aggregate amount of Net Reductions in Investments (not to
exceed the aggregate amount of such Designated Investments) made by the Company
or any Subsidiary subsequent to the date of the Indenture; (G) the Company from
redeeming for cash all (but not less than all) of the outstanding shares of the
Company's Series 2D Preferred Stock; provided, however, that such redemption
shall not be at a price in excess of the redemption price set forth in Section
17.01 of the Company's Amended and Restated Certificate of Incorporation in
effect as of the date of the Indenture; or (H) the Company from making (1) the
final redemption payment, in an amount not to exceed $799,400, on the 700,000
outstanding shares of ICF Kaiser Engineers Group, Inc. Series l Redeemable
Preferred Stock on September 30, 1994 or from paying on such date accumulated
dividends on such shares in an amount not to exceed $47,950 or (2) payments of
up to seven regularly quarterly dividends, each such quarterly dividend payment
not to exceed $487,500 in the aggregate or $2,437.50 per share on the
outstanding shares of the Company's Series 2D Preferred Stock.
Limitations on Restrictions on Distributions from Subsidiaries. The
Indenture provides that the Company will not, and will not permit any of its
Restricted Subsidiaries to, create or otherwise cause or suffer to exist or
become
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effective any consensual Payment Restriction with respect to any of its
Restricted Subsidiaries, except for (i) Payment Restrictions covering not more
than $1 million in the aggregate of retained earnings of ICF Kaiser Servicios
Ambientales, S.A. de C.V., (ii) any such Payment Restriction contained in
Existing Indebtedness or existing contracts to which the Company or any of its
Restricted Subsidiaries are parties, (iii) any such Payment Restriction under
any agreement evidencing any Acquired Indebtedness that was permitted to be
incurred pursuant to the Indenture, provided that such Payment Restriction only
applies to assets that were subject to such restrictions and encumbrances prior
to the acquisition of such assets by the Company or its Restricted Subsidiaries,
and (iv) any such Payment Restriction arising in connection with Refinancing
Indebtedness; provided that any such Payment Restrictions that arise under such
Refinancing Indebtedness are not, taken as a whole, more restrictive than those
under the agreement creating or evidencing the Indebtedness being refunded or
refinanced.
Limitations on Transactions with Affiliates. The Indenture provides that
the Company will not, and will not permit any of its Restricted Subsidiaries to,
make any loan, advance, guarantee or capital contribution to or for the benefit
of, or sell, lease, transfer, or otherwise dispose of any of its properties or
assets to or for the benefit of, or make any Investment in, or purchase or lease
any property or assets from, or enter into or amend any contract, agreement or
understanding with or for the benefit of, any Affiliate of the Company or any of
its Subsidiaries (each an "Affiliate Transaction"), other than Affiliate
Transactions in the ordinary course of business and consistent with past
practice that are fair to the Company or such Restricted Subsidiary, as the case
may be, and are on terms at least as favorable as would have been obtainable at
such time from an unaffiliated party, unless the Board of Directors of the
Company or such Restricted Subsidiary, as the case may be, pursuant to a Board
Resolution reasonably and in good faith determines that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, and is on terms at least as favorable as would have been obtainable at
such time from an unaffiliated party. In addition, the Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into any Affiliate
Transaction or series of Affiliate Transactions involving or having a value of
more than (i) $1 million unless a majority of the members of the Board of
Directors of the Company who are not affiliated with any other party to such
Affiliate Transaction reasonably and in good faith shall have determined that
such Affiliate Transaction or series of Affiliate Transactions is fair to the
Company or such Restricted Subsidiary, as the case may be, and is on terms at
least as favorable as would have been obtainable at such time from an
unaffiliated party, and (ii) $5 million unless the Company or such Restricted
Subsidiary, as the case may be, has received an opinion from an Independent
Financial Advisor to the effect that the financial terms of such Affiliate
Transaction are fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
The provisions of the foregoing paragraph shall not apply to: (i)
transactions exclusively between or among the Company and any of its Wholly
Owned Restricted Subsidiaries or exclusively between or among any of the
Company's Wholly Owned Restricted Subsidiaries, provided that such transactions
are not otherwise prohibited by the Indenture; (ii) arms-length transactions
between the Company or any of its Wholly Owned Restricted Subsidiaries and the
other owners of any Subsidiary or Joint Venture described in the last sentence
of the definition of Affiliate; and (iii) reasonable compensation,
indemnification, and other benefits paid or made available to officers,
directors and employees of the Company or any Subsidiary for services rendered
in such Person's capacity as an officer, director or employee.
Limitations on Asset Sales. The Indenture provides that the Company will
not, and will not permit any of its Restricted Subsidiaries to, consummate any
Asset Sale unless: (i) the Company or its Restricted Subsidiaries receive
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Capital Stock included in such Asset Sale; (ii) the
aggregate fair market value of the consideration from such Asset Sale (other
than consideration in the form of assumption of Indebtedness of the Company or
one or more of its Restricted Subsidiaries from which the Company or such
Restricted Subsidiaries, as the case may be, are released) that is not in the
form of cash or Cash Equivalents shall not, when aggregated with the fair market
value of all other non-cash or non-Cash Equivalent consideration received by the
Company and its Restricted Subsidiaries from all previous Asset Sales since the
date of the Indenture that have not yet been converted into cash or Cash
Equivalents, exceed 5% of Consolidated Tangible Assets of the Company at the
time of such Asset Sale; and (iii) if the aggregate fair market value of the
assets or Capital Stock to be sold in such Asset Sale exceeds $3 million, such
Asset Sale has been approved by the Company's Board of Directors.
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Within six months after consummation of any such Asset Sale, the Company
shall, or shall cause the applicable Restricted Subsidiary to: (i) reinvest the
cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale in a
manner that would constitute a Related Business Investment; (ii) apply or cause
to be applied the cash and Cash Equivalent portion of the Net Proceeds of such
Asset Sale to repay outstanding Senior Indebtedness of the Company or any
Restricted Subsidiary, provided, however, that any such repayment of
Indebtedness under any revolving credit facility or similar agreement shall
result in a permanent reduction in the lending commitment relating thereto in an
amount equal to the principal amount so repaid; or (iii) apply or cause to be
applied the cash and Cash Equivalent portion of the Net Proceeds of such Asset
Sale that is neither reinvested as provided in clause (i) nor applied to the
repayment of Senior Indebtedness as provided in clause (ii) to the purchase of
Notes tendered to the Company at a purchase price equal to 100% of the principal
thereof, plus accrued interest thereon to the date of purchase, pursuant to an
offer to purchase made by the Company as set forth below (an "Asset Sale Offer"
); provided, however, that the Company may defer the Asset Sale Offer until the
amount subject thereto would be at least $5 million.
Notwithstanding the foregoing provisions: (i) to the extent that any or all
of the Net Proceeds of any Foreign Asset Sale are prohibited or delayed by
applicable local law from being repatriated to the United States, the portion of
such Net Proceeds so affected will not be required to be applied in the manner
set forth in this covenant but may be retained by the applicable Foreign
Subsidiary so long, but only so long, as the applicable local law will not
permit repatriation to the United States (the Company hereby agreeing to cause
the applicable Foreign Subsidiary promptly to take all actions required by the
applicable local law to permit such repatriation) and, once such repatriation of
any of such affected Net Proceeds is permitted under the applicable local law,
such repatriation will be immediately effected and such repatriated Net Proceeds
will be applied in the manner set forth in this covenant; and (ii) to the extent
that the Board of Directors has determined in good faith that repatriation of
any or all of the Net Proceeds of any Foreign Asset Sale would have a material
adverse tax consequence, the Net Proceeds so affected may be retained by the
applicable Foreign Subsidiary for so long as such material adverse tax event
would continue.
Restrictions on Sale of Stock of Subsidiaries. The Indenture provides that
the Company may not sell or otherwise dispose of any of the Capital Stock of any
Restricted Subsidiary of the Company unless: (i) (a)(x) the Company shall retain
ownership of more than 50% of the Common Equity of such Restricted Subsidiary or
(y) all of the Capital Stock of such Restricted Subsidiary shall be sold or
otherwise disposed of; and (b) the Net Proceeds from any such sale or
disposition are applied in a manner consistent with the provisions described
under "Limitations on Asset Sales"; or (ii) the Company elects to treat the
amount of its remaining investment in any such Restricted Subsidiary that has
become a Joint Venture as a result of such sale or disposition as an Investment
in such Joint Venture subject to the provisions described under "Limitations on
Restricted Payments."
Limitations on Mergers and Certain Other Transactions. The Indenture
provides that the Company, in a single transaction or a series of related
transactions, will not (i) consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or assign
any of its obligations under the Notes or the Indenture, to any Person or (ii)
adopt a Plan of Liquidation unless, in either case: (a) the Person formed by or
surviving such consolidation or merger (if other than the Company) or to which
such sale, lease, conveyance or other disposition or assignment shall be made
(or, in the case of a Plan of Liquidation, one Person to which assets are
transferred) (collectively, the "Successor"), is a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia, and the Successor assumes by supplemental indenture in a
form satisfactory to the Trustee all of the obligations of the Company under the
Notes and the Indenture; (b) immediately prior to and immediately after and
giving effect to such transaction and the assumption of the obligations as set
forth in clause (a) above and the incurrence of any Indebtedness to be incurred
in connection therewith, no Default or Event of Default shall have occurred and
be continuing; and (c) immediately after and giving effect to such transaction
and the assumption of the obligations as set forth in clause (a) above and the
incurrence of any Indebtedness to be incurred in connection therewith, and the
use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated
Tangible Net Worth of the Company or the Successor, as the case may be, would be
at least equal to the Consolidated Tangible Net Worth of the Company immediately
prior to such transaction and (2) the Company or the Successor, as the case may
be, could incur at least $1.00 of additional
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Senior Indebtedness under the covenant described under "Limitations on
Additional Indebtedness." In addition, the Indenture provides that the Company
will not permit any Single Purpose Subsidiary that has outstanding Indebtedness
to consolidate or merge with any other Person other than a Person the activities
of which are limited to ownership of a portion of the same project in which the
referent Single Purpose Subsidiary owns an interest. The foregoing provisions of
the Indenture do not prohibit a transaction the sole purpose of which (as
determined in good faith by the Board of Directors and evidenced by a Board
Resolution) is to change the state of incorporation of the Company or a Single
Purpose Subsidiary, as the case may be, and such transaction does not have as
one of its purposes the evasion of the limitations described above.
Limitations on Guarantees. The Indenture provides that the Company will
not permit any of its Restricted Subsidiaries to guarantee any Indebtedness
(other than (i) guarantees permitted under the provisions of clause (i) of the
covenant described under "Limitations on Subsidiary Debt and Preferred Stock"
and (ii) guarantees delivered pursuant to the Credit Agreement by Subsidiaries
of the Company who have delivered similar guarantees prior to the date of the
Indenture) unless the Company causes each such Subsidiary to execute and deliver
to the Trustee, prior to or concurrently with the issuance of such guarantee, a
supplemental indenture, in form satisfactory to the Trustee, pursuant to which
such Subsidiary unconditionally guarantees the payment of principal of, premium,
if any, and interest on the Notes. Any such guarantee shall be subordinated in
right of payment to the guarantee by such Subsidiary pursuant to the Bank Credit
Agreement. One such Subsidiary became a guarantor under the Indenture in
September 1995.
EVENTS OF DEFAULT
"Events of Default" are defined in the Indenture as: (i) failure by the
Company to pay interest on any of the Notes when it becomes due and payable and
the continuance of any such failure for 30 days, whether or not such payment is
prohibited by the provisions described under "Ranking"; (ii) failure by the
Company to pay the principal or premium of any of the Notes when it becomes due
and payable, whether at stated maturity, upon redemption, upon acceleration or
otherwise (including failure to make payment pursuant to a Change in Control
Offer or an Asset Sale Offer), whether or not such payment is prohibited by the
provisions described under "Ranking"; (iii) failure by the Company to comply
with any covenant in the Indenture and continuance of such failure for 60 days
after notice of such failure has been given to the Company by the Trustee or by
the Holders of at least 25% of the aggregate principal amount of the Notes then
outstanding; (iv) failure by the Company or any of its Subsidiaries to make any
payment when due or during any applicable grace period, and the continuation of
such failure for seven days, in respect of any Indebtedness of the Company or
any of its Subsidiaries, other than Non-Recourse Indebtedness of a Single
Purpose Subsidiary, that has an aggregate outstanding principal amount of $2
million or more; (v) a default under any Indebtedness, other than Non-Recourse
Indebtedness of a Single Purpose Subsidiary, whether such Indebtedness now
exists or hereafter shall be created, if (A) such default results in the holder
or holders of such Indebtedness causing such Indebtedness to become due prior to
its stated maturity and (B) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness the maturity of which
has been so accelerated, aggregate $2 million or more at any one time
outstanding; (vi) one or more final judgments or orders that exceed $2 million
in the aggregate for the payment of money have been entered by a court or courts
of competent jurisdiction against the Company or any of its Subsidiaries and
such judgment or judgments have not been satisfied, stayed, annulled, or
rescinded within 60 days of being entered; and (vii) certain events of
bankruptcy, insolvency or reorganization involving the Company or any of its
Subsidiaries.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization involving the Company) shall have
occurred and be continuing under the Indenture, the Trustee by written notice to
the Company, or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding by written notice to the Company and the Trustee, may
declare all amounts owing under the Notes to be due and payable immediately.
Upon such declaration of acceleration, the aggregate principal of and interest
on the outstanding Notes shall immediately become due and payable. If an Event
of Default results from bankruptcy, insolvency or reorganization involving the
Company, all outstanding Notes shall become due and payable without any further
action or notice. In certain cases, the Holders of a majority in aggregate
principal amount of the Notes
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then outstanding may waive an existing Default or Event of Default and its
consequences, except a default in the payment of principal of, premium, if any,
and interest on the Notes.
The Holders may not enforce the provisions of the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power; provided however, that such
direction does not conflict with the terms of the Indenture. The Trustee may
withhold from the Holders notice of any continuing Default or Event of Default
(except any Default or Event of Default in payment of principal of, premium, if
any, or interest on the Notes) if the Trustee determines that withholding such
notice is in the Holders' interest.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture and, upon any Officer of the Company
becoming aware of any Default or Event of Default, a statement specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
MISCELLANEOUS PROVISIONS
Discharge of Indenture. The Indenture permits the Company to terminate all
of its obligations under the Indenture, other than the obligation to pay the
principal of, premium, if any, and interest on the Notes, and certain other
obligations at any time by (i) depositing in trust with the Trustee, under an
irrevocable trust agreement, money, or U.S. government obligations in an amount
sufficient to pay principal of, premium, if any, and interest on the Notes to
their maturity or redemption, as the case may be, and (ii) complying with
certain other conditions, including delivery to the Trustee of an opinion of
counsel or a ruling received from the Internal Revenue Service to the effect
that Holders will not recognize income, gain, or loss for Federal income tax
purposes as a result of the Company's exercise of such right and will be subject
to Federal income tax on the same amount and in the same manner and at the same
times as would have been the case otherwise.
Amendment, Supplement, and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent (which
may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of at least a majority in principal amount of
the Notes then outstanding, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes or that resulted from the failure to comply with the
covenant described under "Change of Control") with the consent (which may
include consents obtained in connection with a tender offer or exchange offer
for Notes) of the Holders of a majority in principal amount of the Notes then
outstanding. Without the consent of any Holder, the Company and the Trustee may
amend or supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders in the case of a merger or acquisition, or to make any change that
does not adversely affect the rights of any Holder.
Without the consent of each Holder affected, the Company may not: (i)
extend the maturity of any Note; (ii) affect the terms of any scheduled payment
of interest on or principal of the Notes (including without limitation any
redemption provisions); (iii) modify or eliminate any of the provisions of the
Indenture relating to a Change of Control; (iv) make any change in the
subordination provisions of the Indenture that adversely affects the rights of
any Holder; or (v) reduce the percentage of Holders necessary to consent to an
amendment, supplement or waiver to the Indenture.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Notes with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.
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Concerning the Trustee. The Indenture contains certain limitations on the
rights of the Trustee, should it become a creditor of the Company, to obtain
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim as security or otherwise. The Trustee is permitted
to engage in other transactions; however, if it acquires any conflicting
interest (as defined in the Indenture), it must eliminate such conflict or
resign. The Holders of a majority in principal amount of the then outstanding
Notes have the right to direct the time, method, and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that, in case an Event of Default
occurs and is not cured, the Trustee is required, in the exercise of its power,
to use the degree of care of a prudent person in similar circumstances in the
conduct of his own affairs. Subject to such provisions, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to the Trustee.
DESCRIPTION OF THE CREDIT FACILITY
Effective on January 11, 1994, the Company entered into a revised revolving
credit and letter of credit facility (the "Credit Agreement"), with a
syndicate of banks (the "Banks"). The agent for the Banks (the "Agent") is
Chemical Bank. Capitalized terms used in this description of the Credit
Agreement and not defined herein have the meanings assigned to them in the
Credit Agreement. The material terms of the Credit Agreement are summarized
below:
Borrowing Availability and Termination Date. Under the Credit Agreement,
loans may be made to the Company and letters of credit may be issued at the
request of the Company for an aggregate amount of the lesser of (i) $60 million,
or (ii) the Borrowing Base (85% of Eligible Billed Accounts Receivable) as
reduced by outstanding additional permitted indebtedness. If the Company sells
assets other than in the ordinary course of business while the Credit Agreement
is in effect, the borrowing availability will be reduced by one-half of the net
proceeds from each sale; provided, however, that there will be no reduction for
the first $10 million in aggregate net proceeds. The Credit Agreement terminates
on October 31, 1996.
Limitation on Cash Borrowings. As the result of an early 1995 amendment to
the Credit Agreement, the Company cannot borrow cash under the Credit Agreement
if the Company holds in excess of $15 million in Restricted Cash or $10 million
in Unrestricted Cash. Essentially Restricted Cash includes cash held in accounts
in foreign countries (usually not repatriated because of adverse tax
consequences) and cash held by the Company's captive insurance subsidiary.
Interest. The Credit Agreement contains Eurodollar and Alternate Base
Rate ("ABR") options, with applicable margins depending on the Company's ratio
of (i) Consolidated Net Income plus Consolidated Interest Expense and income
taxes to (ii) Consolidated Interest Expense.
Fee. The Company pays certain fees and commissions to the Banks, including
a commitment fee of 1/2% per annum on the unused portion of the facility.
Outstanding letters of credit bear a fee equal to the Eurodollar applicable
margin in effect over the payment period.
Collateral. Advances under the Credit Agreement are secured on a first
priority basis by a pledge of all of the billed and unbilled accounts of the
Company and certain of its subsidiaries, as well as certain other tangible and
intangible assets of the Company and of its subsidiaries.
Subsidiary Guarantee. Certain Subsidiaries of the Company (the
"Subsidiary Guarantors") entered into a joint and several guarantee of the
Company's payment obligations under the Credit Agreement. Each of the Subsidiary
Guarantors also agreed to a number of covenants in favor of the Agent, including
covenants (each with specified exceptions) (i) not to create, incur or permit to
exist any Lien on its collateral, (ii) not to sell, transfer, lease or otherwise
dispose of any of its collateral, (iii) not to amend, modify, terminate or waive
any provision of any agreement giving rise to an Account (as defined in the
Credit Agreement) in a manner that could have a
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materially adverse effect upon the value of the Account as collateral, and (iv)
not to grant discounts, compromises or extensions of Accounts except in the
ordinary course of business.
Financial Covenants. The Credit Agreement contains financial covenants that
require the Company to maintain certain financial ratios above or below
specified limits, including, but not limited, to those described below. The
Company and the Banks have not yet agreed on a Credit Agreement amendment to
reflect the Company's fiscal year change. The Company covenants that it will not
allow the ratios of (i) Adjusted Consolidated Net Income to Consolidated Fixed
Charges (the "Fixed Charge Coverage Ratio") and (ii) (x) Consolidated Net Income
plus Consolidated Interest Expense and income taxes to (y) Consolidated Interest
Expense (the "Interest Coverage Ratio"), computed on a consolidated, rolling
four quarters basis to be less than those set forth below:
<TABLE>
<CAPTION>
Period Ending Fixed Charge Coverage Ratio Interest Coverage Ratio
------------- --------------------------- -----------------------
<S> <C> <C>
November 30, 1995 1.10:1.00 1.60:1.00
February 28, 1996 1.15:1.00 1.80:1.00
Thereafter 1.20:1.00 2.00:1.00
</TABLE>
The Company also covenants that it will not allow the ratio of Consolidated
Funded Indebtedness to Consolidated Capital Funds Ratio, on a consolidated,
quarterly basis to exceed those set forth below:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
September 1, 1995 through November 30, 1995 .77:1.0
December 1, 1995 through February 28, 1995 .76:1.0
Thereafter .75:1.0
</TABLE>
Under the Credit Agreement, the Company and its subsidiaries agree not to
assume, incur or create any debt except for (i) debt incurred in conjunction
with the issuance of the Notes, (ii) debt under the Credit Agreement, (iii) up
to $10 million in additional debt (to the extent the Company has unused
Borrowing Base), and (iv) certain other debt specified in the Credit Agreement.
Restrictive Covenants. The Credit Agreement contains certain negative
covenants and restrictions customary for such a facility, including, without
limitation, restrictions on (i) the creation of liens, (ii) mergers and other
extraordinary transactions, (iii) transactions with affiliates and (iv) sale of
assets. Investments in project-related joint ventures will be limited to
$500,000 in any 12-month period, and investments in project finance ventures
will be limited to an aggregate of $12.5 million (minus any outstanding
financing, including letters of credit, related to Kaiser-Hill). In addition,
the Credit Facility limits other acquisitions and investments to an aggregate of
$5 million (plus the net cash proceeds from dispositions of acquisitions and
investments made after January 11, 1994), with any individual acquisition or
investment not to exceed $2 million.
In addition, with certain exceptions, the Company is not permitted to
declare or pay any dividend on its capital stock (other than dividends payable
solely in common stock or rights or other equity securities (not including
preferred stock) of the Company), or pay for the purchase, redemption,
retirement or other acquisition of any shares of any class of the Company's
stock, or make any distribution in respect thereof (such declaration, payments
and other above-referenced transactions hereinafter referred to as "Restricted
Payments"). Permitted Restricted Payments include (i) dividends on capital
stock in amounts which, together with certain permitted redemptions of common
stock, do not exceed the sum of the aggregate amount received by the Company
from the issuance of capital stock after January 11, 1994 and 20% of
Consolidated Net Income for the period commencing September 1, 1993, and (ii)
certain preferred stock dividends, provided that, after giving effect to such
Restricted Payments, no Default or Event of Default will be in existence. The
Company's Subsidiaries may make Restricted Payments to the Company at any time.
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Events of Default. The Credit Agreement provides for various events of
default, including, among others: (i) the failure to make any payment of
principal of, interest on, or any other amount owing in respect of any
obligation under the Credit Agreement when due and payable, (ii) the breach of
certain of the covenants and restrictive covenants contained in the Credit
Agreement; (iii) the failure by the Company or any of its subsidiaries to make a
required payment of principal of, interest on, or under a guarantee obligation
with respect to, any indebtedness in excess of $1 million (other than
indebtedness incurred pursuant to the Credit Agreement); (iv) the failure of the
Company to observe or perform any other condition or agreement relating to
indebtedness or guarantee obligation in excess of $1 million, where such failure
gives the holders the right to accelerate payment thereof; (v) the occurrence of
certain events of insolvency or bankruptcy (voluntary or involuntary); (vi) the
entering of one or more judgments or decrees against the Company or any of its
subsidiaries involving an aggregate liability in excess of $1 million that is
not or are not fully paid, covered by insurance, vacated, discharged or stayed
pending appeal within 60 days of entry; and (vii) the suspension of the Company
or any of its subsidiaries by an agency or branch of the government, but only if
aggregate gross revenues no longer accruing to the Company or a subsidiary as a
result of the suspended contract shall be at least $10 million. In addition, a
Change of Control (as such term is defined in the Indenture governing the Notes)
will be an event of default (i) one day before the Indenture requires the
Company to purchase the Notes following a Change of Control, or (ii) 89 days
after the Change of Control occurs, whichever occurs first.
Other Provisions. Affirmative covenants of the Company and its
Subsidiaries include the obligations to pay their material obligations at or
before maturity. The Company also is required to continue, and to cause its
subsidiaries to continue, to engage in businesses of the same general type as
now conducted.
LEGAL MATTERS
Matters relating to the legality of the 1,197,033 shares of Common Stock
being offered by this Prospectus have been passed upon for the Company by Paul
Weeks, II, Esq., Senior Vice President, General Counsel, and Secretary of the
Company.
As of October 31, 1995, Mr. Weeks owned 27,675 shares of Common Stock, of
which 6,088 are held by the Company's ESOP and allocated to his ESOP account and
863 of which are held in a directed investment account under the Company's
Retirement Plan. As of October 31, 1995, Mr. Weeks had options to purchase
23,667 shares of Common Stock (6,000 of which are exercisable during the 60-day
period beginning October 31, 1995).
EXPERTS
The ICF Kaiser International, Inc. and Subsidiaries consolidated balance
sheets as of February 28, 1995 and 1994, and the consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended February 28, 1995, have been included herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
-76-
<PAGE>
INDEX
Consolidated Financial Statements of ICF Kaiser International, Inc. and
Subsidiaries.
<TABLE>
<S> <C>
a. Report of Independent Accountants.......................................F-2
b. Consolidated Balance Sheets February 28, 1995, February 28, 1994 and
August 31, 1995 (unaudited).............................................F-3
c. Consolidated Statements of Operations for the years ended February 28,
1995, February 28, 1994, and February 28, 1993 and six months ended
August 31, 1995 (unaudited) and August 31, 1994 (unaudited) ............F-4
d. Consolidated Statements of Shareholders' Equity for the years ended
February 28, 1995, February 28, 1994, and February 28, 1993 and six
months ended August 31, 1995 (unaudited)................................F-5
e. Consolidated Statements of Cash Flows for the years ended February 28,
1995, February 28, 1994, and February 28, 1993 and six months ended
August 31, 1995 (unaudited) and August 31, 1994 (unaudited).............F-6
f. Notes to Consolidated Financial Statements .............................F-7
</TABLE>
- --------------------------------------------------------------------------------
Page F-1
<PAGE>
Report of Independent Accounts
To the Board of Directors and Shareholders
ICF Kaiser International, Inc.
We have audited the consolidated balance sheets of ICF Kaiser International,
Inc. and subsidiaries as of February 28, 1995 and 1994, and the related
consolidated statements of operations, shareholder's equity and cash flows for
each of the three years in the period ended February 28, 1995. We have also
audited the financial statement schedule listed in Item 16 of this Form S-1.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ICF Kaiser
International, Inc. and subsidiaries as of February 28, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended February 28, 1995, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
Washington, D.C.
April 28, 1995
- --------------------------------------------------------------------------------
Page F-2
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28, FEBRUARY 28,
1995 1995 1994
----------------- ----------------- -----------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 29,264 $ 28,233 $ 25,509
Contract receivables, net 174,286 139,860 128,166
Prepaid expenses and other current assets 11,129 10,872 17,374
Deferred income taxes 12,681 13,553 16,053
----------------- ----------------- -----------------
Total Current Assets 227,360 192,518 187,102
----------------- ----------------- -----------------
Fixed Assets
Furniture, equipment, and leasehold improvements 42,370 42,557 40,630
Less depreciation and amortization (31,849) (29,648) (24,955)
----------------- ----------------- -----------------
10,521 12,909 15,675
----------------- ----------------- -----------------
Other Assets
Goodwill, net 48,794 47,945 49,916
Investments in and advances to affiliates 9,551 8,022 8,677
Due from officers and employees 1,019 1,826 1,830
Other 22,629 18,202 17,998
----------------- ----------------- -----------------
81,993 75,995 78,421
----------------- ----------------- -----------------
$ 319,874 $ 281,422 $ 281,198
================= ================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 71,832 $ 46,811 $ 52,073
Accrued salaries and employee benefits 52,765 30,549 23,439
Accrued interest 2,609 2,528 2,108
Current portion of long-term debt 152 578 1,088
Income taxes payable 340 644 347
Deferred revenue 8,888 11,013 8,462
Other 8,300 8,755 11,937
----------------- ----------------- -----------------
Total Current Liabilities 144,886 100,878 99,454
----------------- ----------------- -----------------
Long-term Liabilities
Long-term debt, less current portion 121,395 126,733 121,954
Other 5,547 6,397 8,798
----------------- ----------------- -----------------
126,942 133,130 130,752
----------------- ----------------- -----------------
Commitments and Contingencies
Minority Interests in Subsidiaries 1,153 173 -
Redeemable Preferred Stock 19,719 19,617 20,212
Common Stock, par value $.01 per share:
Authorized-90,000,000 shares
Issued and outstanding- 21,232,505, 21,011,369 and 20,924,588 212 210 209
shares
Additional Paid-in Capital 64,580 63,786 63,572
Notes Receivable Related to Common Stock (1,732) (1,732) (1,732)
Retained Earnings (Deficit) (33,682) (33,343) (29,528)
Cumulative Translation Adjustment (2,204) (1,297) (1,741)
----------------- ----------------- -----------------
$ 319,874 $ 281,422 $ 281,198
================= ================= =================
</TABLE>
See notes to consolidated financial statements
ICF Kaiser International, Inc
___________________________________________________________________________
Page F-3
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
SIX MONTHS ENDED AUGUST 31, YEAR ENDED FEBRUARY 28,
------------------------------ ---------------------------------
1995 1994 1995 1994 1993
------------ --------- --------- --------- ----------
UNAUDITED
<S> <C> <C> <C> <C> <C>
GROSS REVENUE $ 461,257 $ 419,452 $ 861,518 $ 651,657 $ 678,882
Subcontract and direct material costs (239,827) (198,403) (405,819) (272,169) (293,063)
Equity in income of joint ventures
and affiliated companies 1,713 2,020 4,087 3,220 5,709
--------- ---------- -------- --------- ---------
SERVICE REVENUE 223,143 223,069 459,786 382,708 391,528
OPERATING EXPENSES
Direct cost of services and overhead 186,345 189,432 393,096 323,828 313,030
Administrative and general 22,617 21,561 43,770 45,842 43,702
Depreciation and amortization 4,922 4,584 9,232 9,559 10,766
Unusual items, net - - - 8,709 (50)
Cost of disposal of businesses, net - - - - 1,336
--------- ---------- -------- --------- ---------
OPERATING INCOME (LOSS) 9,259 7,492 13,688 (5,230) 22,744
OTHER INCOME (EXPENSE)
Gain (loss) on sale of investment - 551 551 (925) (929)
Interest income 1,032 757 1,799 1,490 1,708
Interest expense (8,077) (7,864) (14,799) (8,212) (8,629)
--------- ---------- -------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTERESTS, AND
EXTRAORDINARY ITEM 2,214 936 1,239 (12,877) 14,894
Income tax provision (benefit) 996 1,331 2,900 (349) 6,255
--------- ---------- -------- --------- ---------
INCOME (LOSS) BEFORE MINORITY INTERESTS AND EXTRAORDINARY ITEM 1,218 (395) (1,661) (12,528) 8,639
Minority interests in net income of subsidiaries (480) - - - -
--------- ---------- -------- --------- ---------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 738 (395) (1,661) (12,528) 8,639
Extraordinary loss on early extinguishment of debt - - - (5,969) -
--------- ---------- -------- --------- ---------
NET INCOME (LOSS) 738 (395) (1,661) (18,497) 8,639
Preferred stock dividends and accretion 1,077 1,077 2,154 4,896 5,293
Redemption of redeemable preferred stock - - - 1,929 -
--------- ---------- --------- --------- --------
NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS $ (339) $ (1,472) $ (3,815) $ (25,322) $ 3,346
========= ========== ========= ========= ========
PRIMARY AND FULLY DILUTED NET INCOME (LOSS)
PER COMMON SHARE:
Before extraordinary item and redemption
of redeemable preferred stock $ (0.02) $ (0.07) $ (0.18) $ (0.83) $ 0.16
Extraordinary loss on early extinguishment of debt - - - (0.29) -
Redemption of redeemable preferred stock - - - (0.09) -
--------- ---------- --------- --------- --------
Total $ (0.02) $ (0.07) $ (0.18) $ (1.21) $ 0.16
========= ========== ========= ========= =========
Primary and Fully Diluted Weighted Average
Common and Common Equivalent
Shares Outstanding 21,445 20,941 20,957 20,886 21,272
========= ========== ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
ICF Kaiser International, Inc.
___________________________________________________________________________
Page F-4
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
Series 1 Junior
Convertible Additional
Preferred
Stock Common Stock Paid in
-------------------------- -------------------------------
Shares Par Shares Par Value Capital
Value
---------- ------------ -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 1, 1992 69 $ 6,900 18,270,652 $ 182 $ 64,382
Net income
Preferred stock dividends
Preferred stock accretion
Issuance of common stock 105,740 1 619
Repurchase of common stock (44,434) 0 (354)
Conversion of Series 3 Preferred
Stock into common stock 2,971,849 30 (29)
Payments received on notes
receivable
Decrease in loan balance
Foreign currency translation
adjustment
Tax effect from the exercise of
non-qualified stock options 559
Other (137)
-------- ---------- ----------- ------------ -------------
BALANCE, FEBRUARY 28, 1993 69 6,900 21,303,807 213 65,040
Net loss
Preferred stock dividends
Preferred stock accretion
Redemption of redeemable
preferred stock
Repurchase of preferred stock (69) (6,900) 2,050
Issuance of common stock 231,249 2 1,056
Repurchase of common stock (610,468) (6) (3,716)
Issuance of warrants 900
Repurchase of warrants (1,909)
Payments received on notes
receivable
Decrease in loans balance
Foreign currency translation
adjustment
Other 151
-------- ---------- ----------- ------------ -------------
BALANCE, FEBRUARY 28, 1994 - - 20,924,588 209 63,572
Net loss
Preferred stock dividends
Preferred stock accretion
Issuance of common stock 161,781 2 393
Repurchase of common stock (75,000) (1) (179)
Foreign currency translation
adjustment
----------- ---------- ----------- ------------ -------------
BALANCE, FEBRUARY 28, 1995 - - 21,011,369 210 63,786
Net income
Preferred stock dividends
Preferred stock accretion
Issuance of common stock 283,099 3 1,049
Repurchase of common stock (61,963) (1) (255)
Foreign currency translation
adjustment
----------- ------------- ----------- ------------ -------------
BALANCE, AUGUST 31, 1995 (UNAUDITED) - $ - 21,232,505 $ 212 $ 64,580
=========== ============= =========== ============= =============
<CAPTION>
Notes
Receivable
Related to Retained Cumulative ESOP
Common Earnings Translation Guaranteed
Stock (Deficit) Adjustment Bank Loan
---------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
BALANCE, MARCH 1, 1992 $ (3,387) $ (7,552) $ (1,041) $ (8,333)
Net income 8,639
Preferred stock dividends (5,026)
Preferred stock accretion (267)
Issuance of common stock
Repurchase of common stock
Conversion of Series 3 Preferred
Stock into common stock
Payments received on notes
receivable 662
Decrease in loan balance 3,333
Foreign currency translation
adjustment (660)
Tax effect from the exercise of
non-qualified stock options
Other
----------- ---------- ----------- ------------
BALANCE, FEBRUARY 28, 1993 (2,725) (4,206) (1,701) (5,000)
Net loss (18,497)
Preferred stock dividends (4,670)
Preferred stock accretion (226)
Redemption of redeemable
preferred stock (1,929)
Repurchase of preferred stock
Issuance of common stock
Repurchase of common stock
Issuance of warrants
Repurchase of warrants
Payments received on notes
receivable 993
Decrease in loans balance 5,000
Foreign currency translation
adjustment (40)
Other
----------- ---------- ----------- ------------
BALANCE, FEBRUARY 28, 1994 (1,732) (29,528) (1,741) -
Net loss (1,661)
Preferred stock dividends (1,950)
Preferred stock accretion (204)
Issuance of common stock
Repurchase of common stock
Foreign currency translation
adjustment 444
----------- ---------- ----------- ------------
BALANCE, FEBRUARY 28, 1995 (1,732) (33,343) (1,297) -
Net income 738
Preferred stock dividends (975)
Preferred stock accretion (102)
Issuance of common stock
Repurchase of common stock
Foreign currency translation
adjustment (907)
----------- ----------- ----------- ------------
BALANCE, AUGUST 31, 1995 (UNAUDITED) $ (1,732) $ (33,682) $ (2,204) $ -
=========== =========== =========== ============
</TABLE>
See notes to consolidated financial statements.
ICF Kaiser International, Inc.
___________________________________________________________________________
Page F-5
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED AUGUST 31,
-----------------------------
1995 1994
----------- ----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 738 $ (395)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Extraordinary loss on early extinguishment of debt - -
Depreciation and amortization 4,922 4,584
Provision for losses on contract receivables 939 459
Provision for deferred income taxes 996 1,331
Earnings less than (in excess of) cash distributions from
joint ventures and affiliated companies (640) 1,941
Minority interests in net income of subsidiaries 480 -
(Gain) loss on sale of investment - -
Unusual items, net of cash - -
Decrease in reserve for restructuring and disposal of
businesses, net of cash - -
Changes in operating assets and liabilities related to
operating activities, net of acquisitions and dispositions :
Contract receivables, net (35,128) (7,093)
Prepaid expenses and other current assets (1,375) 1,958
Other assets (4,288) (1,744)
Accounts payable and accrued expenses 46,651 (9,810)
Income taxes payable (304) 179
Deferred revenue (2,125) (810)
Other liabilities (1,084) (1,938)
----------- ----------
Net Cash Provided by (Used in) Operating Activities 9,782 (11,338)
----------- ----------
INVESTING ACTIVITIES
Investments in subsidiaries and affiliates, net of cash acquired (2,060) (100)
Purchases of fixed assets, net (90) (1,436)
Sales of subsidiaries and subsidiary assets 735 2,600
Other investing activities - -
----------- ----------
Net Cash Provided by (Used in) Investing Activities (1,415) 1,064
----------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of senior subordinated notes and
related warrants - -
Principal payments on credit facility (10,000) -
Proceeds from borrowings on credit facility 5,000 -
Principal payments on other borrowings (1,040) (664)
Proceeds from other borrowings 55 -
Subsidiary capital contribution from minority interest 500 -
Reacquisition of senior subordinated notes and related warrants - -
Repurchases of redeemable preferred stock and related warrants - -
Repurchase of preferred stock - -
Repurchases of common stock (255) (180)
Proceeds from issuances of common stock 286 195
Preferred stock dividends (975) (975)
Debt issuance costs - -
Principal payments from notes receivable related to common stock - -
Other financing activities - -
---------- ----------
Net Cash Provided by (Used in) Financing Activities (6,429) (1,624)
---------- ----------
Effect of Exchange Rate Changes on Cash (907) 307
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents 1,031 (11,591)
Cash and Cash Equivalents at Beginning of Period 28,233 25,509
---------- ----------
Cash and Cash Equivalents at End of Period $ 29,264 $ 13,918
========== ==========
SUPPLEMENTAL INFORMATION:
Cash payments for interest $ 7,733 $ 7,276
Cash payments (refunds) for income taxes $ 307 $ (372)
NON-CASH TRANSACTIONS:
Decrease of ESOP guaranteed bank loan $ - $ -
Sale of investment $ - $ 735
<CAPTION>
YEAR ENDED FEBRUARY 28,
------------------------------------------
1995 1994 1993
------------ ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (1,661) $ (18,497) $ 8,639
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Extraordinary loss on early extinguishment of debt - 5,969 -
Depreciation and amortization 9,232 9,559 10,766
Provision for losses on contract receivables 1,320 2,241 2,202
Provision for deferred income taxes 2,500 (714) 4,311
Earnings less than (in excess of) cash distributions from
joint ventures and affiliated companies 972 (1,708) (3,690)
Minority interests in net income of subsidiaries - - -
(Gain) loss on sale of investment (551) 925 929
Unusual items, net of cash - 7,786 (50)
Decrease in reserve for restructuring and disposal of
businesses, net of cash - - (6,426)
Changes in operating assets and liabilities related to
operating activities, net of acquisitions and dispositions :
Contract receivables, net (13,014) 26,292 (12,761)
Prepaid expenses and other current assets 4,471 4,614 3,750
Other assets (1,649) (745) (257)
Accounts payable and accrued expenses 2,218 (10,233) (8,622)
Income taxes payable 297 (2,478) (930)
Deferred revenue 2,551 (2,412) (11,753)
Other liabilities (5,103) (2,660) (2,505)
------------ ---------- -----------
Net Cash Provided by (Used in) Operating Activities 1,583 17,939 (16,397)
------------ ---------- -----------
INVESTING ACTIVITIES
Investments in subsidiaries and affiliates, net of cash acquired (622) (2,755) (1,146)
Purchases of fixed assets, net (2,426) (1,388) (4,638)
Sales of subsidiaries and subsidiary assets 2,600 - 35,695
Other investing activities - - 387
------------ ---------- -----------
Net Cash Provided by (Used in) Investing Activities (448) (4,143) 30,298
------------ ---------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of senior subordinated notes and
related warrants - 121,488 -
Principal payments on credit facility - (45,000) (38,099)
Proceeds from borrowings on credit facility 5,000 10,000 30,000
Principal payments on other borrowings (1,172) (2,010) (4,866)
Proceeds from other borrowings - - 4,357
Subsidiary capital contribution from minority interest - - -
Reacquisition of senior subordinated notes and related warrants - (35,809) -
Repurchases of redeemable preferred stock and related warrants (799) (27,363) (799)
Repurchase of preferred stock - (4,850) -
Repurchases of common stock (180) (3,722) (354)
Proceeds from issuances of common stock 395 1,058 620
Preferred stock dividends (1,950) (5,321) (3,876)
Debt issuance costs (149) (6,307) (159)
Principal payments from notes receivable related to common stock - 993 -
Other financing activities - 151 (136)
------------ --------- -----------
Net Cash Provided by (Used in) Financing Activities 1,145 3,308 (13,312)
------------ --------- -----------
Effect of Exchange Rate Changes on Cash 444 (40) (660)
------------ --------- -----------
Increase (Decrease) in Cash and Cash Equivalents 2,724 17,064 (71)
Cash and Cash Equivalents at Beginning of Period 25,509 8,445 8,516
------------ --------- -----------
Cash and Cash Equivalents at End of Period $ 28,233 $ 25,509 $ 8,445
============ ========= ===========
SUPPLEMENTAL INFORMATION:
Cash payments for interest $ 14,961 $ 10,565 $ 9,447
Cash payments (refunds) for income taxes $ (1,206) $ (106) $ (416)
NON-CASH TRANSACTIONS:
Decrease of ESOP guaranteed bank loan $ - $ (5,000) $ (3,333)
Sale of investment $ 735 $ 2,600 $ -
</TABLE>
See notes to consolidated financial statements.
ICF Kaiser International, Inc
------------------------------------------------------------------------
Page F-6
6
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information relating to the six months ended August 31, 1995 and 1994 is
unaudited)
NOTE A--ORGANIZATION
ICF Kaiser International, Inc. (ICF Kaiser or the Company) was formed on
October 19, 1987, as a holding company for the ICF Kaiser family of companies
developed since inception (1969). These companies provide engineering,
construction, and consulting services primarily to the environmental,
infrastructure, industrial, and energy markets both in the United States and
abroad.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements
include all majority-controlled subsidiaries of ICF Kaiser. Some of ICF Kaiser's
consolidated subsidiaries are partially owned by outside parties. For financial
reporting purposes, the assets, liabilities, results of operations and cash
flows of these subsidiaries are included in ICF Kaiser's consolidated financial
statements and the outside parties' interests are reflected as minority
interests. Investments in unconsolidated joint ventures and affiliated companies
are accounted for using the equity method. The difference between the carrying
value of investments accounted for under the equity method and the Company's
underlying equity is amortized on a straight-line basis over the lives of the
underlying assets. All significant intercompany balances and transactions have
been eliminated.
Change in Fiscal Year: ICF Kaiser will change from a fiscal year ending
February 28 to a calendar-based fiscal year. The current year will end on
December 31, 1995, and the Company will report audited financial results for a
10-month period. Subsequent fiscal years will run from January 1 to December 31.
Interim Financial Information: The financial information presented as of
August 31, 1995 and for the six-month periods ended August 31, 1995 and 1994 is
unaudited but has been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Revenue Recognition: Revenue is recorded on cost-type contracts as costs
are incurred. Revenue on time-and-materials contracts is recognized to the
extent of billable rates times hours delivered plus materials expense incurred.
Revenue on long-term, fixed-price contracts is recognized generally using the
percentage-of-completion method and, therefore, includes a proportion of
expected earnings based on costs incurred to total estimated costs.
Foreign Currency Translation: Results of operations for foreign entities
are translated using the average exchange rates during the period. Assets and
liabilities are translated to U.S. dollars using the exchange rate in effect at
the balance sheet date. Resulting translation adjustments are reflected in
shareholders' equity as cumulative translation adjustment.
Statement of Cash Flows: ICF Kaiser considers all highly liquid financial
instruments purchased with original maturities of three months or less to be
cash equivalents. Other assets included $600,000 of restricted cash and short-
term investments as of August 31, 1995 and February 28, 1995, which supports a
letter of credit for one of ICF Kaiser's subsidiaries.
Fixed Assets: Furniture and equipment are carried at cost, or fair value
at acquisition if acquired through a purchase of a business, and are depreciated
using the straight-line method over their estimated useful lives ranging from
three to 10 years. Leasehold improvements are carried at cost and are amortized
using the straight-line method over the remaining lease term.
Goodwill: Goodwill represents the excess of cost over the fair value of
the net assets of acquired businesses and is amortized using the straight-line
method over periods ranging from five to 40 years. The Company evaluates the
recoverability of goodwill on an annual basis by examining the recoverability of
goodwill through undiscounted
- --------------------------------------------------------------------------------
Page F-7
<PAGE>
operating income. Accumulated amortization was $12,071,000, $11,148,000 and
$9,178,000 at August 31, 1995, February 28, 1995, and February 28, 1994,
respectively.
Income Taxes: The Company provides for deferred income taxes using the
liability method on temporary differences between financial reporting and income
tax reporting, which primarily relate to reserves for adjustments and
allowances. If necessary, management records a valuation allowance for deferred
tax assets. The most significant permanent differences between book and taxable
income are nondeductible goodwill amortization, which generally is not
deductible, the repatriation of overseas funds to the United States, and
differences between the book and tax basis of businesses sold.
Postretirement Benefits: Effective March 1, 1993, ICF Kaiser adopted
Statement of Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions (SFAS No. 106). Prior to the
adoption of SFAS No. 106, ICF Kaiser had been recognizing the cost of
postretirement benefits when paid. The Company elected the prospective
transition method of recognizing the transition obligation (see Note N).
Net Income (Loss) Per Common Share: Net income (loss) per common share is
computed using net income (loss) available for common shareholders, as adjusted
under the modified treasury stock method, and the weighted average number of
common stock and common stock equivalents outstanding during the periods
presented. Common stock equivalents include stock options and warrants and
additional shares which will be or may be issued in connection with
acquisitions, and the potential conversion of convertible preferred stock. The
adjustments required by the modified treasury stock method and for acquisition-
related contingencies were anti-dilutive for all loss periods presented and not
applicable to the income period presented. Therefore the adjustments were
excluded from earnings per share computations.
Concentrations of Credit Risk: The Company maintains cash balances
primarily in overnight Eurodollar deposits, investment-grade commercial paper,
bank certificates of deposit, and U.S. government securities. ICF Kaiser grants
uncollateralized credit to its customers. Approximately one-half of ICF Kaiser's
contract receivables are from the U.S. government (see Note D). When practical
and in order to mitigate its credit risk to commercial customers, ICF Kaiser
obtains advance funding of costs for industrial construction work.
Reclassification: Certain reclassifications have been made to the fiscal
1995, 1994, and 1993 financial statements to conform to the presentation used in
the August 31, 1995 financial statements.
NOTE C--DIVESTITURES
The Company sold a 20% interest in a French subsidiary resulting in a
$551,000 pretax gain in fiscal 1995. In fiscal 1994, ICF Kaiser sold a portion
of its energy engineering business resulting in a $925,000 pretax loss. In
fiscal 1993, the Company sold its investment in Acer Group Limited resulting in
a $929,000 pretax loss.
- --------------------------------------------------------------------------------
Page F-8
<PAGE>
NOTE D--CONTRACT RECEIVABLES
Contract receivables consist of the following (in thousands):
<TABLE>
<CAPTION>
August 31, February 28, February 28,
1995 1995 1994
-------------- -------------- --------------
(Unaudited)
<S> <C> <C> <C>
U.S. Government Agencies:
Currently due $31,389 $36,752 $31,911
Retention 1,984 2,026 2,370
Unbilled 75,633 34,273 29,131
-------------- -------------- --------------
109,006 73,051 63,412
-------------- -------------- --------------
Commercial Clients and state
and municipal governments:
Currently due 52,710 69,317 56,430
Retention 5,119 4,522 5,926
Unbilled 17,981 2,834 12,595
-------------- -------------- --------------
75,810 76,673 74,951
-------------- -------------- --------------
184,816 149,724 138,363
Less allowances for uncollectible
receivables and other adjustments 10,530 9,864 10,197
-------------- -------------- --------------
$174,286 $139,860 $128,166
============== ============== ==============
</TABLE>
U.S. government receivables arise from U.S. government prime contracts
and subcontracts. Unbilled receivables result from revenue that has been earned
but was not billed as of the end of the period. The unbilled receivables can be
invoiced at contractually defined intervals and milestones, as well as upon
completion of the contract or the federal government cost audit. Generally,
retention is not expected to be realized within one year; consistent with
industry practice, these receivables are classified as current. Management
anticipates that the remaining unbilled receivables will be substantially billed
and collected within one year.
NOTE E--JOINT VENTURES AND AFFILIATED COMPANIES
ICF Kaiser has ownership interests in certain unconsolidated corporate
joint ventures and affiliated companies that are engaged in the same general
business as the Company. ICF Kaiser's net investments in and advances to these
corporate joint ventures and affiliated companies are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Ownership
Interest at August 31, February 28, February 28,
August 31, 1995 1995 1995 1994
--------------- ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
Gary PCI Ltd. L.P. 50% $4,833 $4,315 $3,325
LIFAC North America 50% 1,773 1,914 1,914
KJK Joint Venture 33% - - 2,769
Other 20% to 50% 2,945 1,793 669
------------ ------------ ------------
$9,551 $8,022 $8,677
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
Page F-9
<PAGE>
Combined summarized unaudited financial information of all of ICF
Kaiser's corporate joint ventures and affiliated companies is as follows (in
thousands):
<TABLE>
<CAPTION>
February 28, February 28,
1995 1994
-------------- --------------
<S> <C> <C>
Current assets $15,103 $27,041
Non-current assets 12,723 6,608
Current liabilities 15,875 19,034
Non-current liabilities 55 455
Gross revenue 52,616 51,282
Net income 8,430 8,908
</TABLE>
NOTE F--LONG-TERM DEBT
ICF Kaiser's long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
August 31, February 28, February 28,
1995 1995 1994
-------------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
12% senior subordinated notes due 2003 $125,000 $125,000 $125,000
Revolving credit facility (average interest rate of 8.7%
for fiscal 1995) - 5,000 -
Other notes, principal, and interest at varying rates and
installments through 2010 224 1,209 2,381
-------------- ------------ ------------
Total 125,224 131,209 127,381
Less unamortized discount on 12% senior subordinated notes 3,677 3,898 4,339
-------------- ------------ ------------
121,547 127,311 123,042
Less current maturities 152 578 1,088
-------------- ------------ ------------
Long-term debt $121,395 $126,733 $121,954
============== ============ ============
</TABLE>
Scheduled maturities of long-term debt outstanding at February 28, 1995,
are as follows: $578,000 in fiscal 1996, $5,040,000 in fiscal 1997, $32,000 in
fiscal 1998, $25,000 in fiscal 1999, $27,000 in fiscal 2000, and $125,507,000
thereafter.
On January 11, 1994, ICF Kaiser issued 125,000 Units, each Unit
consisting of $1,000 principal amount of the Company's 12% Senior Subordinated
Notes due 2003 (12% Notes) and 4.8 warrants, each to purchase one share of the
Company's common stock at an exercise price of $5.00 per share. The warrants
expire on December 31, 1998, and additional warrants may be issued under certain
anti-dilution provisions. Of the net issue price of $121,487,500 ($125,000,000
less a $3,512,500 discount), $900,000 was allocated to the value of the 600,000
warrants and $120,587,500 to the 12% Notes. The net proceeds were used, in part,
to retire the Company's 13.5% Senior Subordinated Notes due 1999 (13.5% Notes),
to repurchase preferred stock, to repay the outstanding balance on the Company's
then-existing revolving credit facility, and to repurchase warrants associated
with the 13.5% Notes and preferred stock. The recapitalization resulted in a
$6.0 million extraordinary charge (net of $0 tax benefit due to the
unanticipated decline in fiscal 1994's fourth-quarter results) for the early
extinguishment of debt and a $1.9 million charge to retained earnings to
repurchase the Series 2C Senior Preferred Stock.
The Company's payment obligations under the 12% Notes are subordinate to
its obligations under the Company's revolving credit facility. Interest payments
are due semiannually. The 12% Notes may not be prepaid at the Company's option
prior to December 31, 1998. Subsequent to that date, the Company may prepay the
12% Notes at a premium. In addition, the Company agreed to certain business and
financial covenants, including
- --------------------------------------------------------------------------------
Page F-10
<PAGE>
restrictions on indebtedness, dividends, acquisitions, and certain types of
investments and asset sales. At February 28, 1995, the fair value of the 12%
Notes was approximately $110.6 million. The fair value was computed using an
average of recently quoted market prices obtained from financial institutions.
Debt issuance costs of $4.0 million, $4.2 million and $4.6 million associated
with the 12% Notes are classified as other assets at August 31, 1995, February
28, 1995, and February 28, 1994, respectively, in the accompanying balance
sheets. These costs and the discount on the 12% Notes are being amortized over
the life of the notes.
The Company has a $60 million revolving credit facility (the Credit
Facility) provided by a consortium of banks (the Banks). ICF Kaiser
International, Inc. and certain of its subsidiaries, which are guarantors of the
Credit Facility, granted the Banks a security interest in their accounts
receivable and certain other assets. The Credit Facility limits the payment of
cash dividends, requires the maintenance of specified financial ratios, and has
a $20 million limitation on cash borrowings. ICF Kaiser and the Banks entered
into an amendment as of February 28, 1995, that modified financial ratios and
other terms of the Credit Facility. As of August 31, 1995, there were no
outstanding borrowings under the Credit Facility, except for letters of credit,
and the Company had $34.0 million of available credit under the Credit Facility.
As of February 28, 1995, there were $5.0 million in borrowings outstanding under
the Credit Facility, in addition to letters of credit, and the Company had $30.3
million of available credit under the Credit Facility. The Credit Facility
contains Eurodollar and alternate base interest rate alternatives with margins
dependent upon the Company's financial operating results and expires on October
31, 1996. ICF Kaiser had outstanding letters of credit in the amount of $6.6
million and $9.6 million at August 31, 1995 and February 28, 1995, respectively,
principally in support of performance guarantees under certain contracts.
There are 275,088 common stock warrants that were issued with the 13.5%
Notes that remain outstanding following the repurchase of the other warrants in
January 1994. The warrants expire on May 15, 1999, and are exercisable at any
time for shares of ICF Kaiser Common Stock at $6.87 per share. Additional
warrants may be issued under certain anti-dilution provisions.
NOTE G--CONTINGENCIES
Normally in the Company's business, various claims or charges are
asserted and litigation commenced against the Company arising from or related to
properties, injuries to persons, and breaches of contract, as well as claims
related to acquisitions and dispositions. Claimed amounts may not bear any
reasonable relationship to the merits of the claim or to a final court award. In
the opinion of management, an adequate reserve has been provided for final
judgments, if any, in excess of insurance coverage, that might be rendered
against the Company in such litigation.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other federal laws and regulations. The Company currently is the subject of a
number of U.S. government investigations and is cooperating with the responsible
government agencies involved. No charges presently are known to have been filed
against the Company by these agencies. Management does not believe that there
will be any material adverse effect on the Company's financial position,
operations, or cash flows as a result of these investigations.
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. As a result of such audits, the government asserts, from time to
time, that certain costs claimed as reimbursable under government contracts
either were not allowable or not allocated in accordance with federal
procurement regulations. Management believes that the potential effect of
disallowed costs, if any, for the periods currently under audit and for periods
not yet audited, has been provided for adequately and will not have a material
adverse effect on the Company's financial position, operations, or cash flows.
- --------------------------------------------------------------------------------
Page F-11
<PAGE>
NOTE H--INCOME TAXES
The components of income (loss) before income taxes and the related
provision (benefit) for income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
August 31, Year Ended February 28,
------------------------------
1995 1995 1994 1993
----------- -------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Income (loss) before income taxes, minority
interests, and extraordinary item:
Domestic $2,137 $1,217 ($11,894) $13,362
Foreign 77 22 (983) 1,532
----------- -------- ---------- ----------
$2,214 $1,239 ($12,877) $14,894
=========== ======== ========== ==========
Provision (benefit) for income taxes:
Federal:
Current $49 $120 $ - $1,074
Deferred 694 2,328 (652) 3,517
----------- -------- ---------- ----------
743 2,448 (652) 4,591
----------- -------- ---------- ----------
State:
Current 5 100 - 420
Deferred 178 172 (62) 794
----------- -------- ---------- ----------
183 272 (62) 1,214
----------- -------- ---------- ----------
Foreign:
Current 70 180 365 450
----------- -------- ---------- ----------
$996 $2,900 ($349) $6,255
=========== ======== ========== ==========
</TABLE>
The tax effect of the principal temporary differences and carryforwards
that give rise to the Company's deferred tax asset is as follows (in thousands):
<TABLE>
<CAPTION>
August 31, February 28, February 28,
1995 1995 1994
------------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
Reserves for adjustments and allowances $7,875 $8,507 $10,068
Vacation and incentive compensation accruals 3,509 5,443 3,053
Net operating loss carryforwards 2,279 2,247 4,321
Tax credit carryforwards 1,225 1,063 940
Other 1,123 (377) 1,001
------------- ------------ ------------
Deferred income tax asset 16,011 16,883 19,383
Valuation allowance (3,330) (3,330) (3,330)
------------- ------------ ------------
Deferred income tax asset, net $12,681 $13,553 $16,053
============= ============ ============
</TABLE>
Because of the reported fiscal 1994 losses, a $3.3 million valuation
allowance was established in fiscal 1994 for deferred tax assets. In fiscal
1995, although pretax income increased $14.1 million to $1.2 million, the
Company has maintained the valuation allowance. At August 31, 1995, the Company
had deferred tax assets of $2.3 million related to net operating loss
carryforwards, of which $0.4 million expire in fiscal 2004 and $1.9 million
expire in 2009. Additionally, the Company has deferred tax assets of $1.2
million related to tax credit carryforwards, the majority of which do not
expire.
- --------------------------------------------------------------------------------
Page F-12
<PAGE>
The effective income tax (benefit) rate varied from the federal statutory
income tax rate because of the following differences (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
August 31, Year Ended February 28,
------------------------------------
1995 1995 1994 1993
------------ ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Statutory tax rate (benefit) 34.0% 34.0% (34.0%) 34.0%
------------ ---------- ---------- ----------
Changes in tax rate (benefit) from:
Goodwill amortization 8.0 69.9 9.9 5.3
Differences between book and tax basis
of businesses sold - 7.4 7.3 (3.4)
State income taxes 5.0 14.5 (0.3) 5.4
Foreign taxes 2.0 67.8 4.8 (1.4)
Valuation allowance - - 9.2 -
Meals and entertainment 3.3 28.9 1.4 -
Other (7.3) 11.5 (1.0) 2.1
------------ ---------- ---------- ----------
11.0 200.0 31.3 8.0
------------ ---------- ---------- ----------
45.0% 234.0% (2.7)% 42.0%
============ ========== ========== ==========
</TABLE>
The fiscal 1995 tax provision reflects the repatriation of overseas funds
to the United States during fiscal 1995 that currently could not be offset by
foreign tax credits. During fiscal 1995, ICF Kaiser's 1989-1992 tax returns were
accepted as filed, resulting in the receipt of refunds from the Internal Revenue
Service (IRS) with interest. An agreement also was reached with the IRS as to
the amount of interest owed in connection with previously settled years (1977-
1986). The overall impact on pretax earnings was a reduction of net interest
expense of $1.3 million related to interest refunds.
In fiscal 1993, ICF Kaiser reached a favorable settlement with the IRS on
the examination of ICF Kaiser Engineers Group, Inc.'s (KEGI) income tax returns
for 1977-1986. This resolution allowed the Company to adjust a portion of the
amounts previously provided for in connection with the 1988 acquisition of KEGI
and its subsidiaries. The resolution of this pre-acquisition contingency has
been reflected in unusual items in the accompanying statement of operations for
fiscal 1993 (see Note P). The IRS previously had completed its review of KEGI's
1987 and 1988 income tax returns without adjustment. Therefore, all years
through 1988 are closed. In fiscal 1993, ICF Kaiser also reached an agreement
with a former subsidiary to retain its net operating losses, which favorably
reduced the effect of differences between the book and tax basis of the Company.
- --------------------------------------------------------------------------------
Page F-13
<PAGE>
NOTE I--PREFERRED STOCK
Preferred stock of the Company is as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
August 31, February 28, February 28,
1995 1995 1994
---------------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
Redeemable Preferred Stock (of Subsidiary), par value
$0.01 per share; liquidation value $21,280,000;
authorized 3,500,000 shares;
issued and outstanding - 700,000 shares at
February 28, 1994 $ - $ - $799
---------------- ------------ ------------
Series 2D Senior Preferred Stock, par value
$0.01 per share; liquidation value $20,000,000;
200 shares designated, issued, and
outstanding 20,000 20,000 20,000
Less unamortized discount, warrant value, and issue costs (281) (383) (587)
---------------- ------------ ------------
19,719 19,617 19,413
---------------- ------------ ------------
Redeemable Preferred Stock $19,719 $19,617 $20,212
================ ============ ============
</TABLE>
Redeemable Preferred Stock (of Subsidiary): In connection with the
acquisition of KEGI, 3,500,000 shares of KEGI Series 1 Redeemable Preferred
Stock were issued to the KEGI Employee Stock Plan Trust in partial consideration
for ICF Kaiser's purchase of all of the outstanding shares of Series A and
Series P Preferred Stock of KEGI. Dividends on these shares were $0.0685 per
share per annum noncumulative, payable annually. A total of 700,000 shares were
redeemed during each of the fiscal years 1995, 1994, and 1993. The final
redemption was made on September 30, 1994.
Senior Preferred Stock: The Series 2D Senior Preferred Stock (Series 2D
Preferred Stock) together with five-year detachable warrants (Series 2D
Warrants) were issued in fiscal 1992 for a price of $20,000,000 (less a discount
of $100,000). Of the net price of $19,900,000, $400,000 was allocated to the
value of the warrants and $19,500,000 was allocated to the value of the stock.
The value of the Series 2D Preferred Stock was reduced further by issue costs.
Dividends on the Series 2D Preferred Stock are $9,750 per share per
annum, cumulative. Each of the shares has a liquidation preference of $100,000
($20 million in the aggregate). The issue carries voting rights equal to
2,380,952 shares of ICF Kaiser Common Stock. The Series 2D Preferred Stock may
be redeemed at ICF Kaiser's option at 106.25% of the original price and is
subject to mandatory redemption at liquidation value on January 13, 1997.
The Series 2D Warrants expire in May 1997 and may be exercised for
2,680,952 shares of ICF Kaiser Common Stock at an exercise price of $6.90 per
share. In lieu of exercising the warrants, the holder may, at the holder's
option, require the Company to pay it cash or issue shares of ICF Kaiser's
Common Stock equal to the difference between the current market price of the
Company's common stock and 90% of the warrants' current exercise price.
Additional warrants may be issued under certain anti-dilution provisions.
Junior Preferred Stock: The Company has designated 200 shares of Series 1
Junior Convertible Preferred Stock, par value $0.01 per share, with a
liquidation value of $20,000,000 and 500,000 shares of Series 4 Junior Preferred
Stock, par value $0.01 per share, with a liquidation value of $500,000. There
were no shares issued or outstanding on either series as of August 31, 1995,
February 28, 1995, and February 28, 1994.
- --------------------------------------------------------------------------------
Page F-14
<PAGE>
NOTE J--COMMON STOCK
Notes Receivable Related to Common Stock: Notes receivable related to ICF
Kaiser Common Stock pertain to the issuance of promissory notes to certain
members of senior management in accordance with their compensation agreements
collateralized by shares of ICF Kaiser Common Stock.
Shareholder Rights Plan: The Shareholder Rights Plan (Rights Plan) is
designed to provide the Board of Directors (the Board) with the ability to
negotiate with a person or group that might, in the future, make an unsolicited
attempt to acquire control of ICF Kaiser, whether through the accumulation of
shares in the open market or through a tender offer that does not offer an
adequate price. The Rights Plan provides for one Right (Right) for each
outstanding share of ICF Kaiser Common Stock. Each Right entitles the holder to
purchase 1/100 of a share of Series 4 Junior Preferred Stock at a purchase price
of $50. The Rights generally may cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by the Board. The
Rights should not interfere with any merger or other business combination
approved by the Board because the Board may, at its option, following the
acquisition by any person or group of 20% of the outstanding shares of ICF
Kaiser Common Stock, redeem the Rights upon payment of the redemption price of
$0.01 per Right. The Rights are not triggered by the acquisition of beneficial
ownership of more than 20% of ICF Kaiser Common Stock by the initial holder of
the Series 2D Preferred Stock. Unless redeemed earlier by the Board, unexercised
Rights expire on January 13, 2002.
NOTE K--LEASES
Future minimum payments on noncancelable operating leases for office
space, and on other noncancelable operating leases with initial or remaining
terms in excess of one year, were as follows on February 28, 1995 (in
thousands):
<TABLE>
<CAPTION>
Year Ended
February 28,
----------------
<S> <C>
1996 $25,070
1997 19,940
1998 14,861
1999 13,500
2000 13,367
Thereafter 27,193
------------
$113,931
============
</TABLE>
The total rental expense for all operating leases was $31,176,000,
$30,833,000, and $31,567,000 in fiscal years 1995, 1994, and 1993, respectively,
and $14,398,000 and $15,582,000 for the six months ended August 31, 1995 and
1994, respectively. Sublease rental income was $3,944,000, $2,225,000, and
$1,435,000, in fiscal years 1995, 1994, and 1993, respectively, and $1,652,000
and $1,842,000 for the six months ended August 31, 1995 and 1994, respectively.
Minimum future sublease rentals to be received under noncancelable subleases
during fiscal 1996 are approximately $2,916,000.
- --------------------------------------------------------------------------------
Page F-15
<PAGE>
NOTE L--STOCK OPTIONS
The ICF Kaiser Stock Incentive Plan provides for the issuance of options,
stock appreciation rights, restricted shares, and restricted stock units of up
to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock. Awards are made
to employees of ICF Kaiser at the discretion of the Compensation Committee of
the Board. The plan provides that the option price is not to be less than the
fair market value on the date of grant.
Stock option activity under this plan and other options granted is as
follows:
<TABLE>
<CAPTION>
Shares Option Price
------------ ------------------
<S> <C> <C>
Balance, March 1, 1992 1,872,000 $ 3.46 to $17.00
Granted 1,096,000 $ 5.99 to $ 9.59
Canceled (653,000) $ 3.46 to $16.23
Expired (339,000) $ 6.07 to $16.23
Exercised (30,000) $ 8.25
------------
Balance, February 28, 1993 1,946,000 $ 5.99 to $17.00
Granted 390,000 $ 4.17 to $ 6.79
Canceled (10,000) $ 8.25 to $12.83
Expired (30,000) $ 5.04 to $12.83
------------
Balance, February 28, 1994 2,296,000 $ 4.17 to $17.00
Granted 824,000 $ 2.34 to $ 4.41
Canceled (453,000) $ 2.64 to $16.23
Expired (250,000) $ 4.41 to $16.23
------------
Balance, February 28, 1995 2,417,000 $ 2.34 to $17.00
Granted 158,000 $ 4.09 to $ 4.35
Canceled (248,000) $ 8.25
Expired (262,000) $ 2.64 to $16.23
Exercised (3,000) $ 2.64 to $ 2.68
------------
Balance, August 31, 1995 (Unaudited) 2,062,000 $ 2.34 to $17.00
============
Exercisable at August 31, 1995 (Unaudited) 1,124,000 $ 2.34 to $17.00
============
</TABLE>
The number of shares available for the granting of options was 1,969,000,
2,087,000, and 2,525,000 at February 28, 1995, 1994, and 1993, respectively, and
2,321,000 at August 31, 1995. There were 222,000 and 50,000 exercisable options
outstanding at an option price below the fair market values of ICF Kaiser Common
Stock at August 31, 1995 and February 28, 1995, respectively. In July 1995, the
company canceled 248,000 options granted to employees at an exercise price of
$8.25 and granted 83,000 options to them at an exercise price of $4.09. In May
1992, the Company canceled 570,000 options granted to employees at exercise
prices of $14.32 to $16.23 and granted an equal number of options to them at an
exercise price of $8.25.
NOTE M--EMPLOYEE BENEFIT PLANS
ICF Kaiser and certain of its subsidiaries sponsor several benefit plans
covering substantially all employees who meet minimum length of service
requirements. These plans include the ICF Kaiser International, Inc. Retirement
Plan, a defined-contribution profit sharing plan that provides for contributions
by the Company based on a percentage of covered compensation; the ICF Kaiser
International, Inc. Section 401(k) Plan (401(k) Plan), a cash or deferred-
compensation arrangement that allows employees to defer portions of their
salary, subject to certain limitations; and the ICF Kaiser International, Inc.
Employee Stock Ownership Plan (ESOP) under which the Company made contributions
based on a percentage of covered compensation. Effective March 1, 1993, the
- --------------------------------------------------------------------------------
Page F-16
<PAGE>
Company began matching a percentage of eligible employee contributions to the
401(k) Plan. In fiscal 1994, the Company made contributions equal to 20% of the
first 4% of employee contributions to the 401(k) Plan and 2% of covered
compensation to the ESOP. Effective March 1, 1994, the Company increased its
matching contribution to the 401(k) Plan to 50% of the first 4% of employee
contributions and discontinued contributions to the ESOP. Total expense for
these plans for fiscal years 1995, 1994, and 1993 were $6,466,000, $8,041,000,
and $10,220,000, respectively, and $3,516,000 and $3,354,000 for the six months
ended August 31, 1995 and 1994, respectively.
NOTE N--POSTRETIREMENT BENEFITS
ICF Kaiser provides certain benefits, primarily health insurance, to a
limited group of retirees (and their spouses) who joined ICF Kaiser through an
acquisition. The cost of the postretirement benefits is funded when paid and
limited to a fixed amount per retiree or spouse per month. Effective March 1,
1993, ICF Kaiser adopted SFAS No. 106.
The Company elected the prospective transition method of recognizing the
postretirement benefit expenses. Under this method, the Company's $14.2 million
accumulated postretirement benefit obligation (APBO) at March 1, 1993, is being
amortized over 14.5 years, the average remaining life expectancy of the retirees
and their spouses. A discount rate of 7% was used to determine the APBO.
Effective January 1995, the Company reduced its APBO through a reduction
in health care costs for certain participants by offering alternative health
care options that reduced the premiums paid by both the Company and the retiree.
The health care costs for those participants is less than the Company's maximum
per person obligation. A 5% health care cost trend rate was assumed to value the
APBO at February 28, 1995, for all future years until the year 2005 when the
cost will be in excess of the Company's maximum obligation. A one-percentage-
point increase in the health care cost trend rate would increase the APBO at
February 28, 1995, by approximately 2%. Due to changes in assumptions made
during fiscal 1995, including the change in health care options, the APBO was
reduced by approximately $4 million, which will be amortized over the average
remaining life expectancy of the retirees and their spouses.
The funded status of the plan is as follows (in thousands):
<TABLE>
<CAPTION>
August 31, February 28, February 28,
1995 1995 1994
-------------- ---------------- ----------------
(Unaudited)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation $9,449 $9,537 $14,772
Unamortized transition obligation (11,766) (12,257) (13,236)
Unrecognized net gain (loss) 3,994 4,121 (1,271)
-------------- ---------------- ----------------
Accrued postretirement benefit cost $1,677 $1,401 $265
============== ================ ================
</TABLE>
The net periodic postretirement benefit cost consists of the following
(in thousands):
<TABLE>
<CAPTION>
Six Months Ended Year Ended February 28,
--------------------------------
August 31, 1995 1995 1994
------------------- ------------- --------------
(Unaudited)
<S> <C> <C> <C>
Interest cost $319 $920 $938
Amortization of transition obligation 491 980 981
Amortization of unrecognized net gain (127) - -
------------------- ------------- --------------
Net periodic postretirement benefit cost $683 $1,900 $1,919
=================== ============= ==============
</TABLE>
================================================================================
Page F-17
<PAGE>
All service cost related to the retirees' benefits was included in the
Company's transition obligation due to the nature of the plans which prevent
additional employees from participating in them. Prior to the adoption of SFAS
No. 106, postretirement costs were recognized when paid. Postretirement costs
included in expenses in fiscal year 1993 were $1,695,000.
NOTE O--BUSINESS SEGMENT, MAJOR CUSTOMERS, AND FOREIGN OPERATIONS
Business Segment: ICF Kaiser operates predominantly in one industry
segment in which it provides engineering, construction, and consulting services.
Major Customers: Gross revenue from major customers is as follows (in
thousands):
<TABLE>
<CAPTION>
Six Months Ended
August 31, Year Ended February 28,
--------------------- ------------------------------------
1995 1994 1995 1994 1993
--------- --------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
U.S. Department of Energy $290,149 $254,272 $517,478 $312,889 $201,149
U.S. Environmental Protection Agency 32,727 29,960 62,783 63,109 72,382
Other U.S. government agencies 22,977 21,159 44,969 49,105 47,896
--------- --------- ---------- ---------- ----------
Total U.S. government 345,853 305,391 625,230 425,103 321,427
USX Corporation and affiliates 2,624 2,823 5,408 6,880 91,032
--------- --------- ---------- ---------- ----------
$348,477 $308,214 $630,638 $431,983 $412,459
========= ========= ========== ========== ==========
</TABLE>
Foreign Operations: Gross revenue and operating income from foreign sales
(including sales originating in the United States) and foreign assets of all
consolidated subsidiaries and branches were as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended February 28,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Foreign gross revenue:
Europe $16,758 $11,600 $16,698
Pacific 35,189 21,997 33,709
Other 2,122 2,793 2,940
---------- ---------- ----------
$54,069 $36,390 $53,347
========== ========== ==========
Foreign operating income (loss):
Europe $2,600 $1,742 $682
Pacific (350) (1,899) 2,010
Other (44) (255) 158
---------- ---------- ----------
$2,206 $(412) $2,850
========== ========== ==========
Foreign assets:
Europe $9,950 $6,410 $4,565
Pacific 14,813 14,626 13,880
Other 182 14 29
---------- ---------- ----------
$24,945 $21,050 $18,474
========== ========== ==========
</TABLE>
================================================================================
Page F-18
<PAGE>
NOTE P--UNUSUAL ITEMS
In fiscal 1994, the Company completed a corporate reorganization,
performed a comprehensive review of its key business lines and its cost
structure, and designed and implemented action plans intended to return the
Company to long-term profitability. As a result, the Company recorded an $8.7
million pretax charge to cover the cost of downsizing the work force,
consolidating office space, renegotiating significant leases, and restructuring
certain international operations. Management expects to complete office space
consolidation plans in fiscal 1996. All other actions have been substantially
completed as of February 28, 1995.
During the year ended February 28, 1993, the Company recognized the
impact of several unusual items: a $5,000,000 reduction of pre-acquisition
contingencies (see Note H), offset by a charge to accrue the net settlement cost
and legal expenses related to a shareholder lawsuit ($1,400,000); the write-down
to net realizable value of certain software-related assets ($3,000,000); and a
charge for severance and related costs accrued as part of a cost-reduction plan
($550,000).
================================================================================
Page F-19
<PAGE>
NOTE Q--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended February 28, 1995 and
1994 and the six months ended August 31, 1995 is presented in the following
tables (in thousands, except per share amounts):
<TABLE>
<CAPTION>
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
10 Months Ended December 31, 1995
Gross revenue $ 268,274 $ 192,983
Service revenue $ 117,645 $ 105,498
Operating income $ 5,497 $ 3,762
Net income $ 575 $ 163
Primary and fully diluted
net income (loss) per common share
Market price per share: $ 0.00 $ (0.02)
High
Low $ 4.63 $ 5.00
$ 3.75 $ 3.75
Year ended February 28, 1995
Gross revenue $ 206,154 $ 235,912 $ 208,961 $ 210,491
Service revenue $ 111,372 $ 125,345 $ 109,919 $ 113,150
Operating income $ 3,234 $ 2,962 $ 3,273 $ 4,219
Net income (loss) $ (943) $ (323) $ (613) $ 218
Primary and fully diluted
net loss per common share $ (0.07) $ (0.04) $ (0.05) $ (0.02)
Market price per share:
High $ 4.38 $ 4.13 $ 2.63 $ 3.88
Low $ 2.63 $ 2.38 $ 2.00 $ 2.25
Year ended February 28, 1994
Gross revenue $ 197,588 $ 179,227 $ 146,830 $ 128,012
Service revenue $ 100,919 $ 103,910 $ 89,215 $ 88,664
Operating income (loss) $ (13,450) $ 4,147 $ 4,006 $ 67
Net income (loss) before
extraordinary item $ (14,567) $ 1,349 $ 1,347 $ (657)
Net income (loss) $ (20,536) $ 1,349 $ 1,347 $ (657)
Primary and fully diluted
net income (loss) per common share:
Before extraordinary item and redeemable
preferred stock $ (0.74) $ 0.00 $ 0.00 $ (0.09)
Extraordinary loss on early
extinguishment of debt (0.29) - - -
Redemption of redeemable
preferred stock (0.09) - - -
---------- ---------- ---------- ----------
Total $ (1.12) $ 0.00 $ 0.00 $ (0.09)
========== ========== ========== ==========
Market price per share:
High $ 5.00 $ 5.38 $ 5.50 $ 6.88
Low $ 3.63 $ 4.00 $ 3.75 $ 4.75
</TABLE>
At April 18, 1995, there were 20,980,960 shares of common stock outstanding
held by 1,301 holders of record. At November 1, 1995, there were 21,260,430
shares of common stock outstanding held by 1,250 holders of record.
===========================================================================
F-20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
-------------------------------------------
The following table sets forth the estimated expenses payable by the
Registrant with respect to the offering described in this Registration
Statement:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
registration fee $1,444.70
Legal fees and expenses $2,500.00
Accounting fees and expenses $10,000.00
Miscellaneous expenses $5,000.00
---------
Total $18,944.70
=========
</TABLE>
Item 14. Indemnification of Directors and Officers
-----------------------------------------
Under the Delaware General Corporation Law ("Delaware Law"), a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to an action by reason of the person's past or present service as a
director, officer, employee, or agent of the corporation or of the person's past
or present service, at the corporation's request, as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise. Under the Delaware Law, a corporation may indemnify such
persons against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement that are actually and reasonably incurred by that
person in connection with such action. The Delaware Law provides, however, that
such person must have acted in good faith and in a manner that such person
reasonably believed to be in (or not opposed to) the corporation's best
interests. In respect of any criminal action or proceeding, an indemnifiable
person must have no reasonable cause to believe such conduct to be unlawful. In
addition, the Delaware Law permits no indemnification in any action by or in the
right of the corporation where such person has been adjudged liable to the
corporation, unless, and only to the extent that, a court determines that such
person fairly and reasonably is entitled to indemnity for costs the court deems
proper in spite of liability adjudication.
The sections of the Company's Amended and Restated Certificate of
Incorporation and Amended and Restated By-laws relating to indemnification of
directors and officers provide for mandatory indemnification of directors and
officers on generally the same terms as permitted by the Delaware Law.
Item 15. Recent Sales of Unregistered Securities
---------------------------------------
On March 21, 1995, in connection with the termination of the employment
of Mr. John G. Balch from the employ of a subsidiary of the Registrant, the
Registrant agreed to issue 396,167 shares of Common Stock to Mr. Balch; all of
the 396,167 shares were issued on November 15, 1995. All of the shares are
restricted and legended against transfer. The issuance of the shares was
effected without registration, in reliance upon the exemption available under
Section 4(2) of the Securities Act.
On July 28, 1995, in connection with the acquisition of EDA Incorporated,
the Registrant issued an aggregate of 722,500 shares of Common Stock to a total
of five former shareholders of such company, each of whom gave an investment
representation with respect to the Registrant's shares acquired by him. All of
the shares are restricted and legended against transfer. The issuance of the
shares was effected without registration, in reliance upon the exemption
available under Section 4(2) of the Securities Act.
II - 1
<PAGE>
On January 13, 1992, the Registrant sold, for an aggregate purchase price
of $20,000,000, (a) 200 shares of Series 2D Senior Preferred Stock and (b)
Series 2D Warrants expiring January 13, 1997, for the purchase of 2,680,952
shares of Common Stock at an exercise price of $8.40 per share. On January 11,
1994, the Registrant issued replacement Series 2D Warrants at a reduced exercise
price of $6.91. As of the date of this Registration Statement, the replacement
warrants expire on July 22, 1997. All of the shares and the warrants are
restricted and legended against transfer. The issuance of the shares, the
warrants, and the replacement warrants was effected without registration, in
reliance upon the exemption available under Section 4(2) of the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
------------------------------------------
The following exhibits and financial statement schedule are filed as part
of this Registration Statement.
(a) Exhibits
EXHIBIT NO. 3 -- ARTICLES OF INCORPORATION AND BY-LAWS
3(a) Certificate of Incorporation of ICF Kaiser International, Inc.
(restated through June 26, 1993) (Incorporated by reference to
Exhibit No. 3(a) to Quarterly Report on Form 10-Q for the second
quarter of fiscal 1994 filed with the Commission on October 15,
1993)
3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as
amended through June 23, 1995) (Incorporated by reference to Exhibit
No. 3(b) to Quarterly Report on Form 10-Q for the second quarter of
fiscal 1995 filed with the Commission on October 13, 1995)
EXHIBIT NO. 4 -- INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4(a) Indenture dated as of January 11, 1994, between the Registrant and
The Bank of New York, as Trustee (Incorporated by reference to
Exhibit No. 4(a) to Quarterly Report on Form 10-Q for the third
quarter of fiscal 1994 filed with the Commission on January 14,
1994)
1. First Supplemental Indenture dated as of February 17, 1995.
(Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report
on Form 10-K for fiscal year 1995 filed with the Commission on May
23, 1995)
2. Second Supplemental Indenture dated September 1, 1995
3. Third Supplemental Indenture dated October 20, 1995
4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by
reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q
(Registrant No. 1-12248) for the third quarter of fiscal 1994 filed
with the Commission on January 14, 1994)
4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as
amended and restated through January 11, 1994) (Incorporated by
reference to Exhibit No. 4(e) to Quarterly Report on Form 10-Q for
the third quarter of fiscal 1994 filed with the Commission on
January 14, 1994)
4(d) Credit Agreement among ICF Kaiser International, Inc., certain
Banks, and Chemical Bank (Delaware), as Agent, dated as of December
8, 1993, as amended (see Exhibit No. 10(a))
4(e) ICF Kaiser International, Inc. Series 2D Warrant, No. 2D-2, dated
January 11, 1994 (Incorporated by reference to Exhibit No. 4(f) to
Quarterly Report on Form 10-Q for the third quarter of fiscal 1994
filed with the Commission on January 14, 1994)
4(f) Securities Purchase Agreement by and among ICF Kaiser International,
Inc. EXOR America, Inc., and FIMA Finance Management Inc., B.V.I.
dated as of December 20, 1990 (Incorporated by
II - 2
<PAGE>
reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q for
the third quarter of fiscal 1991 filed with the Commission on
January 14, 1991)
1. Amendment No. 1 to Securities Purchase Agreement dated as of January
13, 1992 (Incorporated by reference to Exhibit No. 4(e)(1) to
Quarterly Report on Form 10-Q for the third quarter of fiscal 1992
filed with the Commission on January 14, 1992)
2. Amendment No. 2 to Securities Purchase Agreement (Incorporated by
reference to Exhibit 4(g)(2) to Amendment No. 2 to Registration
Statement on Form S-1 (No. 33-70986) filed with the Commission on
December 23, 1993)
4(g) Amended and Restated Registration Rights Agreement dated as of
January 13, 1992, between ICF Kaiser International, Inc. and FIMA
Finance Management Inc. (Incorporated by reference to Exhibit No.
4(f) to Quarterly Report on Form 10-Q for the third quarter of
fiscal 1992 filed with the Commission on January 14, 1992)
4(h) Rights Agreement dated as of January 13, 1992 between ICF Kaiser
International, Inc. and Office of the Secretary, ICF Kaiser
International, Inc. as Rights Agent, including
1. Form of Certificate of Designations of Series 4 Junior Preferred
Stock
2. Form of Rights Certificate
3. Summary of Rights to Purchase Preferred Stock (Incorporated by
reference to Exhibit No. 4(h) to Quarterly Report on Form 10-Q for
the third quarter of fiscal 1992 filed with the Commission on
January 14, 1992)
4(i) Warrant Agreement dated as of January 11, 1994, between the
Registrant and The Bank of New York, as Warrant Agent (Incorporated
by reference to Exhibit No. 4(c) to Quarterly Report on Form 10-Q
for the third quarter of fiscal 1994 filed with the Commission on
January 14, 1994)
4(j) Form of Warrant expiring December 31, 1998 (Incorporated by
reference to Exhibit No. 4(d) to Quarterly Report on Form 10-Q for
the third quarter of fiscal 1994 filed with the Commission on
January 14, 1994)
EXHIBIT NO. 5 -- LEGAL OPINION
5 Opinion of Paul Weeks, II, Senior Vice President, General Counsel,
and Secretary of the Registrant, as to the legality of the Common
Stock to which this Registration Statement relates
EXHIBIT NO. 7 -- LEGAL OPINION
7 Opinion of Paul Weeks, II, Senior Vice President, General Counsel,
and Secretary of the Registrant re liquidation preference
EXHIBIT NO. 10 -- MATERIAL CONTRACTS
10(a) Amended and Restated Credit Agreement dated as of December 8, 1993,
among the Registrant, the several Lenders from time to time parties
hereto, and Chemical Bank, as Agent, including Exhibits thereto
(Closing Date: January 11, 1994) (Incorporated by reference to
Exhibit No. 10(a) to Quarterly Report on Form 10-Q for the third
quarter of fiscal 1994 filed with the Commission on January 14,
1994)
1. Waiver and First Amendment dated as of April 18, 1994 (Incorporated
by reference to Exhibit No. 10(a)(1) to Annual Report on Form 10-K
for fiscal 1994 filed with the Commission on May 25, 1994)
2. Second Amendment dated as of August 31, 1994 (Incorporated by
reference to Exhibit No. 10(a)(2) to Annual Report on Form 10-K for
fiscal 1995 filed with the Commission on May 23, 1995)
II - 3
<PAGE>
3. Third Amendment dated as of February 28, 1995 (Incorporated by
reference to Exhibit No. 10(a)(3) to Annual Report on Form 10-K for
fiscal 1995 filed with the Commission on May 23, 1995)
4. Fourth Amendment dated as of June 28, 1995.
10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as
amended and restated as of March 1, 1993) (and further amended with
respect to name change only as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q for
the second quarter of fiscal 1994 filed with the Commission on
October 15, 1993)
10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
August 31, 1995, for ICF Kaiser International Employee Stock
Ownership Plan
10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(d) to Quarterly Report on Form 10-Q for the second
quarter of fiscal 1994 filed with the Commission on October 15,
1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(d)(1) to Annual Report on Form 10-K for fiscal 1995
filed with the Commission on May 23, 1995)
10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan
10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF
Incorporated (as Tenant), dated January 30, 1987, for the lease of
the Registrant's headquarters in Fairfax, Virginia (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
1. First Amendment entered into August 31, 1987 (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
2. Second Amendment entered into September 23, 1987 (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
3. Third Amendment entered into as of February 12, 1990 (Incorporated
by reference to Exhibit No. 10(a) to Annual Report on Form 10-K
filed with the Commission on April 25, 1990)
10(g) Lease Agreement between HMCE Associates Limited Partnership (as
Landlord) and the Registrant (as Tenant), dated April 27, 1988, for
the lease of space in the building adjacent to the Registrant's
headquarters in Fairfax, Virginia (Incorporated by reference to
Exhibit No. 10(b) to Registration Statement on Form S-1 (No. 33-
31473) filed with the Commission on October 6, 1989)
1. First Amendment entered into July 29, 1988. (Incorporated by
reference to Exhibit No. 10(b) to Annual Report on Form 10-K for
fiscal 1990 filed with the Commission on April 25, 1990)
2. Second Amendment entered into as of February 12, 1990 (Incorporated
by reference to Exhibit No. 10(b) to Annual Report on Form 10-K for
fiscal 1990 filed with the Commission on April 25, 1990)
3. Third Amendment entered into as of December 22, 1992 (Incorporated
by reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K
for fiscal 1993 filed with the Commission on May 21, 1993)
10(h) Amended and Restated Lease Agreement by and between Kaiser
Engineers, Inc. and 1800 Harrison Limited Partnership, dated as of
July 1, 1988, for the lease of the Registrant's offices in Oakland,
California (Incorporated by reference to Exhibit No. 10(c) to
Registration Statement on Form S-1 (No. 33-31576) filed with the
Commission on October 13, 1989)
1. First Amendment made as of March 27, 1991 (Incorporated by reference
to Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q for the
first quarter of fiscal 1993 filed with the Commission on July 10,
1992)
II - 4
<PAGE>
2. Second Amendment made as of June 1992 (Incorporated by reference to
Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q for the first
quarter of fiscal 1993 filed with the Commission on July 10, 1992)
3. Third Amendment made as of April 27, 1993 (Incorporated by reference
to Exhibit No. 10(i)(3) to Annual Report on Form 10-K for fiscal
year 1993 filed with the Commission on May 21, 1993)
10(i) Guaranty provided by the Registrant to 1800 Harrison Limited
Partnership, dated as of March 27, 1991, and First Amendment thereto
dated as of June 1992, guaranteeing the performance of Kaiser
Engineers, Inc. under an Amended and Restated Lease Agreement by and
between Kaiser Engineers, Inc. and the California Public Employee's
Retirement System, dated as of July 1, 1988, for the lease of the
Registrant's offices in Oakland, California (Incorporated by
reference to Exhibit No. 10(b) to Quarterly Report on Form 10-Q for
the first quarter of fiscal 1993 filed with the Commission on July
10, 1992)
10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and
restated as of April 24,1995) (Incorporated by reference to Exhibit
No. 10(k) to Annual Report on Form 10-K for fiscal year 1995 filed
with the Commission on May 23, 1995)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(l)(1) to Annual Report on Form 10-K for fiscal year
1995 filed with the Commission on May 23, 1995)
10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by
Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE
Reference No. DE-AC06-87RL1930) (Incorporated by reference to
Exhibit No. 10(m) to Annual Report on Form 10-K for fiscal 1995
filed with the Commission on May 23, 1995)
10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser
Engineers Hanford Company, and Westinghouse Hanford Company, with an
effective date of October 1, 1993 (Contract No. DE-A06-93RL12359)
(Incorporated by reference to Exhibit No. 10(a) to Quarterly Report
on Form 10-Q for the second quarter of fiscal 1994 filed with the
Commission on October 15, 1993)
1. Modification No. 1 dated October 25, 1993 (Incorporated by reference
to Exhibit No. 10(n)(1) to Annual Report on Form 10-K for fiscal
1995 filed with the Commission on May 25, 1994)
10(n) Massachusetts Water Resources Authority Agreement with ICF Kaiser
Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser
Engineers of Massachusetts, Inc. for construction management
services for Boston Harbor Project--Deer Island Related Facilities,
Contract No. 5622 (June 1990) (Incorporated by reference to Exhibit
No. 10(h) to Quarterly Report on Form 10-Q for the second quarter of
fiscal 1991 filed with the Commission on October 12, 1990)
(Amendment Nos. 1-3 incorporated by reference to Exhibit No. 10(n)
(1-3) to Annual Report on Form 10-K for the fiscal year ended
February 28, 1993 filed with the Commission on May 21, 1993)
1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993
[IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO.
10(o)(1) to Annual Report on Form 10-K for fiscal 1994 FILED IN
PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A CONTINUING
HARDSHIP EXEMPTION is incorporated herein by reference thereto]
2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE
202 OF REGULATION S-T, THIS EXHIBIT NO. 10(o)(2) to Annual
Report on Form 10-K for fiscal 1995 FILED IN PAPER ON MAY 23,
1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is
incorporated herein by reference thereto]
10(o) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a
subsidiary of the Registrant, and the U.S. Department of Energy
dated as of April 4, 1995.
II - 5
<PAGE>
[IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO.
10(r) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A
CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference
thereto]
10(p) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(f) to Quarterly Report on Form 10-Q (Registrant No.
1-12248) for the second quarter of fiscal 1994 filed with the
Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(p)(1) to Annual Report on Form 10-K for fiscal 1995
filed with the Commission on May 23, 1995)
10(q) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
March 1, 1989, for the ICF Kaiser International, Inc. Section 401(k)
Plan (Incorporated by reference to Exhibit No. 28(b) to Registration
Statement on Form S-8 filed with the Commission on August 31, 1992)
EXHIBIT NO. 10 -- MATERIAL CONTRACTS (MANAGEMENT CONTRACTS, COMPENSATORY PLANS,
OR ARRANGEMENTS.)
10(aa) Employment Agreement with James O. Edwards dated as of December 31,
1994 (Incorporated by reference to Exhibit No. 10(bb) to Annual
Report on Form 10-K for fiscal 1995 filed with the Commission on May
23, 1995)
10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation
Plan: Annual Incentive Plan (dated as of September 29, 1993)
(Incorporated by reference to Exhibit No. 10(aa) to Quarterly Report
on Form 10-Q for the second quarter of fiscal 1994 filed with the
Commission on October 15, 1993)
10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option
Plan (as amended and restated as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q
(Registrant No. 1-12248) for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993)
10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the
Registrant, dated November 1, 1993 (Incorporated by reference to
Exhibit No. 10(ll) to Amendment No. 1 to Registration Statement on
Form S-1 (No. 33-70986) filed with the Commission on November 22,
1993)
10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of
the Registrant, effective as of March 1, 1994 (Incorporated by
reference to Exhibit No. 10(ll) to Annual Report on Form 10-K for
fiscal year 1994 filed with the Commission on May 25, 1994).
10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice
President of the Registrant, effective as of March 1, 1994
(Incorporated by reference to Exhibit No. 10(mm) to Annual Report on
Form 10-K for fiscal 1994 filed with the Commission on May 25,
1994).
10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance
Plan as approved by the Compensation Committee of the Board of
Directors on April 4, 1994, and adopted by the Board of Directors on
May 5, 1994 (Incorporated by reference to Exhibit No. 10(nn) to
Annual Report on Form 10-K for fiscal year 1994 filed with the
Commission on May 25, 1994).
10(hh) Employment Agreement with Michael K. Goldman, Executive Vice
President of the Registrant, effective as of February 28, 1994
(Incorporated by reference to Exhibit No. 10(jj) to Annual Report on
Form 10-K for fiscal 1995 filed with the Commission on May 23, 1995)
II - 6
<PAGE>
10(ii) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(f) to Quarterly Report on Form 10-Q (Registrant No.
1-12248) for the second quarter of fiscal 1994 filed with the
Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(p)(1) to Annual Report on Form 10-K for fiscal 1995
filed with the Commission on May 23, 1995)
EXHIBIT NO. 21 -- SUBSIDIARIES OF THE REGISTRANT AS OF OCTOBER 1, 1995
EXHIBIT NO. 23 -- CONSENTS
23(a) Consent of Coopers & Lybrand L.L.P.
23(b) Consent of Paul Weeks, II (contained in Exhibit No. 5)
EXHIBIT NO. 24 -- POWERS OF ATTORNEY (SEE SIGNATURE PAGES)
(b) Financial Statement Schedule
The following Supplemental Schedule Relating to the Consolidated Financial
Statements of ICF Kaiser International, Inc. and Subsidiaries for each of the
three years in the period ended February 28, 1995.
a. Schedule II: Valuation and qualifying accounts..................S-1
All Schedules except the one listed above have been omitted because they
are not applicable or not required or because the required information is
included elsewhere in the financial statements in this filing.
Item 17. Undertakings
------------
The undersigned Registrant hereby undertakes:
(a)(l) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include a prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or event arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that the undertakings set forth in paragraphs (l)(i) and
- -------- -------
(l)(ii) above do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration statement.
II - 7
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(h) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II - 8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Fairfax,
the Commonwealth of Virginia, on this 17th day of November, 1995.
ICF Kaiser International, Inc.
(Registrant)
Date: November 17, 1995 By /s/ James O. Edwards
-----------------------
James O. Edwards,
Chairman of the Board and
Chief Executive Officer
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc
Tipermas, Richard K. Nason, Kenneth L. Campbell, Paul Weeks, II, and Cynthia L.
Hathaway, and each of them severally, his or her true and lawful attorneys to
execute (in the name of and on behalf of and as attorneys for the undersigned)
this Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
(1) Principal executive officer
Date: November 17, 1995 By /s/ James O. Edwards
------------------------
James O. Edwards,
Chairman and Chief Executive Officer
(2) Principal financial and accounting officer
Date: November 17, 1995 By /s/ Richard K. Nason
------------------------
Richard K. Nason,
Executive Vice President and
Chief Financial Officer
II - 9
<PAGE>
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc
Tipermas, Richard K. Nason, Kenneth L. Campbell, Paul Weeks, II, and Cynthia L.
Hathaway, and each of them severally, his or her true and lawful attorneys to
execute (in the name of and on behalf of and as attorneys for the undersigned)
this Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
(3) The Board of Directors
<TABLE>
<S> <C>
Date: By
_____________________
Gian Andrea Botta,
Director
Date: November 17, 1995 By /s/Tony Coelho
---------------------
Tony Coelho,
Director
Date: November 17, 1995 By /s/James O. Edwards
----------------------
James O. Edwards,
Director
Date: November 17, 1995 By /s/Maynard H. Jackson
---------------------------
Maynard H. Jackson
Director
Date: November 17, 1995 By /s/Thomas C. Jorling
------------------------
Thomas C. Jorling
Director
Date: November 17, 1995 By /s/Frederick V. Malek
---------------------------
Frederic V. Malek,
Director
Date: November 17, 1995 By /s/ Rebecca P. Mark
--------------------------
Rebecca P. Mark,
Director
Date: November 17, 1995 By /s/ Richard K. Nason
-------------------------
Richard K. Nason,
Director
Date: November 17, 1995 By /s/ Robert W. Page, Sr.
----------------------------
Robert W. Page, Sr.
Director
Date: November 17, 1995 By /s/ Marc Tipermas
--------------------------
Marc Tipermas,
Director
</TABLE>
II - 10
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
(in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------
Additions
----------------
Balance at Charged to Balance at
beginning costs and end of
Description of period expenses Other Deductions period
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended February 28, 1995:
Deducted from asset account
Allowance for doubtful
accounts $10,197 $1,406 -- $1,739(1) $ 9,864
Deducted from asset account
and included in other
liabilities
Provision for future losses
on contracts 179 664 -- -- 843
------------------------------------------------------------
$10,376 $2,070 -- $1,739 $10,707
============================================================
Year ended February 28, 1994:
Deducted from asset account
Allowance for doubtful
accounts $ 8,977 $2,509 -- $1,289(2) $10,197
Included in other liabilities
Provision for future losses
on contracts 464 -- -- 285(3) 179
------------------------------------------------------------
$ 9,441 $2,509 -- $1,574 $10,376
============================================================
Year ended February 28, 1993:
Deducted from asset account
Allowance for doubtful
accounts $ 9,361 $3,085 -- $3,469(4) $ 8,977
Included in other liabilities
Provision for future losses
on contracts 2,351 564 -- 2,451(3) 464
------------------------------------------------------------
$11,712 $3,649 -- $5,920 $ 9,441
============================================================
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects amounts written off against the allowance and related accounts
receivable accounts and settlement of doubtful accounts.
(2) Reflects amounts written off against the allowance and related accounts
receivable accounts.
(3) Reflects losses charged against the provision for contract losses.
(4) Reflects amounts written off against the allowance and related accounts
receivable accounts and amounts written off to the provision for
restructuring and disposal of businesses.
================================================================================
ICF Kaiser International, Inc. Page S-1
<PAGE>
Exhibit 4(a)2
================================================================================
ICF KAISER GOVERNMENT PROGRAMS, INC.,Issuer
and
ICF KAISER GOVERNMENT PROGRAMS, INC, Guarantor
TO
THE BANK OF NEW YORK, Trustee
_______________
Second Supplemental Indenture
Dated as of September 1, 1995
_______________
Notes
================================================================================
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of September 1, 1995, by and
among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"),
ICF KAISER GOVERNMENT PROGRAMS, INC., a Delaware corporation ("ICFK-GP" or the
"Guarantor"), and THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee").
WITNESSETH:
WHEREAS, the Guarantor is a Wholly Owned Restricted Subsidiary of the
Company;
WHEREAS, the Guarantor is the 50% owner of Kaiser-Hill Company, LLC, a
Colorado limited liability company ("Kaiser-Hill"), an Unrestricted Subsidiary
of the Company;
WHEREAS, Kaiser-Hill in April 1995 was awarded Performance Based Integrated
Management Contract No. DE-AC34-95RF00825 dated as of April 4, 1995, as amended
or otherwise modified or supplemented, with the U.S. Department of Energy (the
"DOE Contract");
WHEREAS, in order to finance its activities, Kaiser-Hill entered into
arrangements pursuant to which it will sell receivables arising under the DOE
Contract (the "Kaiser-Hill Receivables Financing");
WHEREAS, in connection with the Company's obligation to arrange for the
issuance of standby letters of credit to support in part the Kaiser-Hill
Receivables Financing, a Fourth Amendment dated June 28, 1995, to the Company's
Bank Credit Agreement (the "Fourth Amendment") was entered into by the Company
in order to permit such issuances;
WHEREAS, as a condition to their signing the Fourth Amendment, the banks
and other financial institutions parties to the Bank Credit Agreement required
that the Company cause the Guarantor to become a Subsidiary Guarantor, as such
term is defined in the Bank Credit Agreement, no later than September 30, 1995;
WHEREAS, the Company and the Trustee have heretofore executed and delivered
an Indenture dated as of January 11, 1994 (the "Indenture"), as supplemented,
for the purpose of issuing Notes, and Section 10.01 of the Indenture provides
that the Company (when authorized by a Board Resolution) and the Trustee for the
Notes, at any time and from time to time, may enter into one or more indentures
supplemental thereto, in form satisfactory to such Trustee, for any of the
purposes set forth in said Section 10.01 (each a "Supplemental Indenture"); and
WHEREAS, the Company has determined that Section 5.11 of the Indenture
requires that, prior to or concurrently with the issuance of ICFK-GP's guarantee
executed and delivered pursuant to the Bank Credit Agreement, the Company must
cause ICFK-GP to execute and deliver to the Trustee a Supplemental Indenture
pursuant to which ICFK-GP unconditionally guarantees the payment of principal
of, premium, if any, and interest on the Notes; and
WHEREAS, Section 5.11 of the Indenture further provides that the guarantee
referenced in the immediately preceding clause shall be subordinated in right of
payment to the guarantee granted by ICFK-GP pursuant to the Bank Credit
Agreement; and
<PAGE>
WHEREAS, the Company and ICFK-GP have determined that it is desirable to
enter into this Second Supplemental Indenture; and
2
<PAGE>
WHEREAS, the execution and delivery of this Supplemental Indenture have
been duly authorized by Resolutions of the Boards of Directors of the Company
and ICFK-GP, and the Company and ICFK-GP have requested the Trustee to join with
them in the execution of this Second Supplemental Indenture; and
WHEREAS, the Trustee has accepted the trusts created by this Second
Supplemental Indenture and in evidence thereof has joined in the execution
hereof;
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH, that, in
consideration of the premises and of acceptance by the Trustee of the trusts
created hereby and by the Indenture, and also for and in consideration of the
sum of One Dollar to the Company duly paid by the Trustee at or before the
execution and delivery of this Supplemental Indenture, the receipt of which is
hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among the
Company, the Guarantor, and the Trustee, as follows:
1. Terms defined in the Indenture are used herein as therein defined.
2. The Table of Contents of the Indenture is hereby amended to add the
following exhibit reference:
EXHIBIT B FORM OF GUARANTEE
3. Section 1.01 of the Indenture is hereby amended to add the following
definitions in proper alphabetical order:
"Guarantee" shall mean any guarantee substantially in the form of
Exhibit B to the Indenture executed and delivered by any Restricted
Subsidiary pursuant to the provisions of Section 5.11 of the Indenture; any
such Guarantee shall be subordinated in right of payment to the guarantee
by such Subsidiary pursuant to the Bank Credit Agreement, as and to the
same extent that the Notes are subordinated pursuant to Article 11 of the
Indenture.
"Guarantor" shall mean any Restricted Subsidiary that has executed and
delivered a Guarantee;
"Supplemental Indenture" shall mean any supplemental indenture, in
form satisfactory to the Trustee, executed and delivered pursuant to (a)
Article 10 of the Indenture or (b) Sections 5.11 or 6.01(a)(A) of the
Indenture.
4. Section 5.11 of the Indenture is hereby amended as follows:
The final sentence of Section 5.11 is restated as follows:
3
<PAGE>
Any such guarantee shall be substantially in the form of Exhibit B to
the Indenture and shall be subordinated in right of payment to the
guarantee by such Subsidiary pursuant to the Bank Credit Agreement, as
and to the same extent that the Notes are subordinated pursuant to
Article 11 of the Indenture.
4
<PAGE>
5. The following sundry provisions shall be a part of this Second
Supplemental Indenture:
Section 5.01. Effect of Supplemental Indenture. Upon the execution and
--------------------------------
delivery of this Second Supplemental Indenture by the Company and the Trustee,
the Indenture shall be supplemented in accordance herewith, and this Second
Supplemental Indenture shall form a part of the Indenture for all purposes, and
every Holder of Notes heretofore or hereafter authenticated and delivered under
the Indenture shall be bound thereby.
Section 5.02. Indenture Remains in Full Force and Effect. Except as
------------------------------------------
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
Section 5.03. Indenture and Second Supplemental Indenture Construed
-----------------------------------------------------
Together. This Second Supplemental Indenture is an Indenture supplemental to
- --------
and in implementation of the Indenture, and the Indenture and this Second
Supplemental Indenture shall henceforth be read and construed together.
Section 5.04. Confirmation and Preservation of Indenture. The Indenture
------------------------------------------
as supplemented by this Second Supplemental Indenture is in all respects
confirmed and preserved.
Section 5.05 Conflict with Trust Indenture Act. If any provision of this
---------------------------------
Second Supplemental Indenture limits, qualifies, or conflicts with any provision
of the Trust Indenture Act that is required under such Act to be part of and
govern any provision of this Second Supplemental Indenture, the provision of
such Act shall control. If any provision of this Second Supplemental Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the provision of such Act shall be deemed to apply to the
Indenture as so modified or to be excluded by this Second Supplemental
Indenture, as the case may be.
Section 5.06 Separability Clause. In any case any provision in this
-------------------
Second Supplemental Indenture shall be invalid, illegal, or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 5.07 Terms Defined in the Indenture. All capitalized terms not
------------------------------
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
Section 5.08 Effect of Headings. The Article and Section headings herein
------------------
are for convenience only and shall not affect the construction hereof.
Section 5.09 Benefits of Second Supplemental Indenture, etc. Nothing in
----------------------------------------------
this Second Supplemental Indenture, the Indenture, or the Notes, express or
implied, shall give to any Person, other than the parties hereto and thereto and
their successors hereunder and thereunder and the Holders of the Notes, any
benefit of any legal or equitable right, remedy, or claim under the Indenture,
this Second Supplemental Indenture, or the Notes.
Section 5.10 Successors and Assigns. All covenants and agreements in
----------------------
this Second Supplemental Indenture by the Company and the Guarantor shall bind
their successors and assigns, whether so expressed or not.
5
<PAGE>
Section 5.11 Trustee Not Responsible for Recitals. The recitals
------------------------------------
contained herein shall be taken as the statements of the Company and the
Guarantor, and the Trustee assumes no responsibility for their correctness.
Section 5.12 Certain Duties and Responsibilities of the Trustee. In
--------------------------------------------------
entering into this Second Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee, whether or
not elsewhere herein so provided.
Section 5.13 Governing the Law. This Second Supplemental Indenture shall
-----------------
be governed by and construed in accordance with the laws of the State of New
York, without regard to the conflicts of law principles thereof.
Section 5.14 Counterparts. This Second Supplemental Indenture may be
------------
executed in counterparts, each of which, when so executed, shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and the Company, the Guarantor, and
the Trustee have caused their respective corporate seals to be hereunto affixed
and attested, all as of September 1, 1995.
ICF KAISER INTERNATIONAL, INC.
By: ________________________________
Name: Richard K. Nason
Title: Executive Vice President and
Chief Financial Officer
[Seal]
ATTEST:
___________________________
Assistant Secretary
ICF KAISER GOVERNMENT PROGRAMS, INC.
By: ________________________________
Name: Kenneth L. Campbell
Title: Treasurer
[Seal]
ATTEST:
___________________________
Assistant Secretary
THE BANK OF NEW YORK, as Trustee
By: ________________________________
Name:
Title:
[Seal]
7
<PAGE>
ATTEST:
Assistant Treasurer
8
<PAGE>
Exhibit 4(a)3
================================================================================
ICF KAISER INTERNATIONAL, INC., Issuer
and
ICF KAISER GOVERNMENT PROGRAMS, INC., Guarantor
TO
THE BANK OF NEW YORK, Trustee
_______________
Third Supplemental Indenture
Dated as of October 20, 1995
_______________
Notes
================================================================================
<PAGE>
THIS THIRD SUPPLEMENTAL INDENTURE, dated as of October 20, 1995, by and
among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"),
ICF KAISER GOVERNMENT PROGRAMS, INC., a Delaware corporation ("ICFK-GP" or the
"Guarantor"), and THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee").
WITNESSETH:
WHEREAS, the Company, the Guarantor, and the Trustee have heretofore
executed and delivered an Indenture dated as of January 11, 1994 as
supplemented, (the "Indenture"), for the purpose of issuing Notes. Capitalized
terms used herein and not otherwise defined herein are used as defined in the
Indenture.
WHEREAS, Section 10.02 of the Indenture provides that with the written
consent of the Holders of at least a majority in principal amount of the then-
outstanding Notes, the Company, the Guarantor, and the Trustee for the Notes may
amend the Indenture (such amendment hereinafter referred to as a supplemental
indenture).
WHEREAS, the Company has obtained the written consent of the Holders of at
least a majority of the outstanding Notes as of October 20, 1995, to amend
Section 5.06(b)(H) of the Indenture, with such amendment to be effectuated by a
supplemental indenture hereinafter referred to as the Third Supplemental
Indenture to the Indenture.
WHEREAS, upon the request of the Company and the Guarantor, accompanied by
resolutions of the Boards of Directors of the Company and the Guarantor
authorizing the execution of the Third Supplemental Indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders as aforesaid,
and upon receipt by the Trustee of the documents described in Section 10.06, the
Trustee shall join with the Company and the Guarantor in the execution of the
Third Supplemental Indenture.
WHEREAS, the Company and the Guarantor have determined that it is desirable
to enter into this Third Supplemental Indenture; and
WHEREAS, the execution and delivery of this Third Supplemental Indenture
have been duly authorized by Resolutions of the Boards of Directors of the
Company and of the Guarantor, and the Company and the Guarantor have requested
the Trustee to join with them in the execution of this Third Supplemental
Indenture; and
WHEREAS, the Trustee has accepted the trusts created by this Third
Supplemental Indenture and in evidence thereof has joined in the execution
hereof;
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH, that, in
consideration of the premises and of acceptance by the Trustee of the trusts
created hereby and by the Indenture, and also for and in consideration of the
sum of One Dollar to the Company duly paid by the Trustee at or before the
execution and delivery of this Third Supplemental Indenture, the receipt of
which is hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among
the Company, the Guarantor, and the Trustee, as follows:
1. Terms defined in the Indenture are used herein as therein defined.
2. Section 5.06(b)(H) of the Indenture is hereby amended to increase
from six (6) to seven (7) the number of Series 2D Senior Preferred Stock regular
quarterly dividend payments payable under the provisions of Section 5.06(b)(H)
of the Indenture and to permit the payment of the required dividend on the
seventh such regular quarterly dividend. As amended, Section 5.06(b)(H) of the
Indenture shall read in its entirety as follows:
<PAGE>
(H) the Company from making (1) the final redemption payment, in
an amount not to exceed $799,400, on the 700,000 outstanding shares of ICF
Kaiser Engineers Group, Inc. Series 1 Redeemable Preferred Stock on
September 30, 1994 or from paying on such date accumulated dividends on
such shares in an amount not to exceed $47,950; (2) payments of up to seven
regular quarterly dividends, each such quarterly dividend payment not to
exceed $487,500 in the aggregate or $2,437.50 per share on the outstanding
shares of the Company's Series 2D Senior Preferred Stock; and (3) payment
of a dividend of up to 9.75% on the aggregate unpaid amount of the August
31, 1995, regular quarterly dividend on the Company's Series 2D Senior
Preferred Stock (the "Seventh Dividend") from August 31, 1995, to the date
the Seventh Dividend is paid.
3. The following sundry provisions shall be a part of this Third
Supplemental Indenture:
Section 3.01. Effect of Supplemental Indenture. Upon the execution and
--------------------------------
delivery of this Third Supplemental Indenture by the Company and the Trustee,
the Indenture shall be supplemented in accordance herewith, and this Third
Supplemental Indenture shall form a part of the Indenture for all purposes, and
every Holder of Notes heretofore or hereafter authenticated and delivered under
the Indenture shall be bound thereby.
Section 3.02. Indenture Remains in Full Force and Effect. Except as
------------------------------------------
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
Section 3.03. Indenture and Third Supplemental Indenture Construed
----------------------------------------------------
Together. This Third Supplemental Indenture is an Indenture supplemental to and
- --------
in implementation of the Indenture, and the Indenture and this Third
Supplemental Indenture shall henceforth be read and construed together.
Section 3.04. Confirmation and Preservation of Indenture. The Indenture
------------------------------------------
as supplemented by this Third Supplemental Indenture is in all respects
confirmed and preserved.
Section 3.05 Conflict with Trust Indenture Act. If any provision of this
---------------------------------
Third Supplemental Indenture limits, qualifies, or conflicts with any provision
of the Trust Indenture Act that is required under such Act to be part of and
govern any provision of this Third Supplemental Indenture, the provision of such
Act shall control. If any provision of this Third Supplemental Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the provision of such Act shall be deemed to apply to the
Indenture as so modified or to be excluded by this Third Supplemental Indenture,
as the case may be.
Section 3.06 Separability Clause. In case any provision in this Third
-------------------
Supplemental Indenture shall be invalid, illegal, or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 3.07 Terms Defined in the Indenture. All capitalized terms not
------------------------------
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
Section 3.08 Effect of Headings. The Article and Section headings herein
------------------
are for convenience only and shall not affect the construction hereof.
Section 3.09 Benefits of Third Supplemental Indenture, etc. Nothing in
---------------------------------------------
this Third Supplemental Indenture, the Indenture, or the Notes, express or
implied, shall give to any Person, other
2
<PAGE>
than the parties hereto and thereto and their successors hereunder and
thereunder and the Holders of the Notes, any benefit of any legal or equitable
right, remedy, or claim under the Indenture, this Third Supplemental Indenture,
or the Notes.
Section 3.10 Successors and Assigns. All covenants and agreements in
----------------------
this Third Supplemental Indenture by the Company and the Guarantor shall bind
their successors and assigns, whether so expressed or not.
Section 3.11 Trustee Not Responsible for Recitals. The recitals
------------------------------------
contained herein shall be taken as the statements of the Company and the
Guarantor, and the Trustee assumes no responsibility for their correctness.
Section 3.12 Certain Duties and Responsibilities of the Trustee. In
--------------------------------------------------
entering into this Third Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee, whether or
not elsewhere herein so provided.
Section 3.13 Governing Law. This Third Supplemental Indenture shall be
-------------
governed by and construed in accordance with the laws of the State of New York,
without regard to the conflicts of law principles thereof.
Section 3.14 Counterparts. This Third Supplemental Indenture may be
------------
executed in counterparts, each of which, when so executed, shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, and the Company, the Guarantor, and the Trustee
have caused their respective corporate seals to be hereunto affixed and
attested, all as of October 20, 1995.
ICF KAISER INTERNATIONAL, INC.
By: ________________________________
Name: Richard K. Nason
Title: Executive Vice President and Chief
Financial Officer
[Seal]
ATTEST:
___________________________
Assistant Secretary
ICF KAISER GOVERNMENT PROGRAMS, INC.
By: ________________________________
Name:
Title:
[Seal]
ATTEST:
__________________________
Assistant Secretary
THE BANK OF NEW YORK, as Trustee
By: ________________________________
Name:
Title:
[Seal]
ATTEST:
_________________________
Assistant Treasurer
4
<PAGE>
Exhibit No. 5
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, VA 22031
November 30, 1995
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, VA 22031
Re: ICF Kaiser International, Inc.Registration Statement on Form S-1
----------------------------------------------------------------
Gentlemen:
Referring to the Registration Statement on Form S-1 which ICF Kaiser
International, Inc. (the "Company") has filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the registration for resale of up to 1,197,033 shares of the
Company's Common Stock, par value $0.01 per share, I am of the opinion that:
1. The shares of Common Stock which are to be sold and delivered by the
EDA Selling Shareholders, Mr. Balch, IPC, and the IPC Selling Shareholders
pursuant to the Registration Statement have been duly and validly authorized by
the Company.
2. The shares of Common Stock which are to be sold and delivered by the
EDA Selling Shareholders and Mr. Balch pursuant to the Registration Statement
have been legally issued and are fully paid, and nonassessable.
3. The EDA Earn-out Shares, when issued in accordance with the terms of
the EDA Merger Agreement, will be legally issued, fully paid, and nonassessable.
4. The IPC Shares, when issued in accordance with the terms of the
Binding Memorandum of Understanding, will be legally issued, fully paid, and
nonassessable.
Capitalized terms not otherwise defined herein are as defined in the
Registration Statement. I hereby consent to the filing of this opinion with the
Securities and Exchange Commission as Exhibit No. 5 to the Registration
Statement referred to above and to the use of my name under the heading "Legal
Matters."
Very truly yours,
/s/ Paul Weeks, II
------------------------
Paul Weeks, II
Senior Vice President,
General Counsel and Secretary
<PAGE>
Exhibit No. 7
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031
November 30, 1995
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Re: Registration Statement on Form S-1
----------------------------------
Gentlemen:
I am the Senior Vice President, General Counsel and Secretary of ICF Kaiser
International, Inc., a Delaware corporation (the "Company"), and have been asked
to deliver this opinion in connection with the Company's preparation and filing
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act") of a Registration Statement on Form S-1 (the
"Registration Statement") relating to the registration for resale of up to
1,197,033 shares of Common Stock, $0.01 par value per share, of the Company.
Specifically, you have requested my opinion pursuant to Item 601(b)(7) of
Regulation S-K promulgated under the Securities Act and the Securities Exchange
Act of 1934, as amended.
The Company's Restated Certificate of Incorporation authorizes 2,000,000
shares of preferred stock, par value $0.01 per share ("Preferred Stock"). The
Preferred Stock may be issued in one or more series and with such rights,
powers, preferences and terms and at such times as the Company's Board of
Directors may determine, without further shareholder action.
On January 13, 1992, the Company filed a Certificate of Designations of
Series 2D Senior Preferred Stock with the Secretary of State of Delaware
relating to 200 shares of Series 2D Senior Preferred Stock, par value $0.01 per
share (the "Series 2D Preferred Stock"), all of which are issued and
outstanding.
The Certificate of Designations of the Series 2D Preferred Stock provides,
in part, that upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, no distribution shall be made to the
holders of shares of capital stock of the Company ranking junior to the Series
2D Preferred Stock upon liquidation, dissolution or winding up unless, prior
thereto, the holders of shares of Series 2D Preferred Stock shall have received
$100,000 per share plus any accrued and unpaid dividends and
<PAGE>
Letter to ICF Kaiser International, Inc.
November 30, 1995
Page 2
distributions thereon, whether or not declared (such preferences, the
"Liquidation Preference").
You have asked me to render an opinion under the Delaware General
Corporation Law as to whether, as a matter of law, (i) prior to liquidation,
dissolution or winding up of the affairs of the Company, there will be any
restrictions upon the surplus of the Company available for the payment of
dividends on any class of stock of the Company solely by reason of the fact that
the aggregate Liquidation Preference of the Series 2D Preferred Stock exceeds
the aggregate par value of such Preferred Stock; and (ii) any remedy would be
available to holders of the Series 2D Preferred Stock before or after payment of
any dividend, prior to a liquidation, dissolution or winding up of the Company,
solely by reason of the fact that payment of such dividend would reduce or
reduces surplus of the Company to an amount less than the difference between the
aggregate Liquidation Preference of the Series 2D Preferred Stock and the
aggregate par value of such series of Preferred Stock.
Section 170 of the Delaware General Corporation Law authorizes a Delaware
corporation, subject to any restrictions contained in its certificate of
incorporation, to pay dividends out of its surplus. Surplus is defined by
Section 154 of the Delaware General Corporation Law as the amount by which the
net assets of a corporation exceed its capital. Both net assets, as defined in
Section 154, and capital, as defined in and determined in accordance with
Sections 154 and 244 of the Delaware General Corporation Law, are determined
without reference to the amount of any liquidation preference of any class of
the corporation's stock. Accordingly, the authorization in Section 170 of the
Delaware General Corporation Law for the payment of dividends out of surplus is
not restricted solely by reason of the fact that a class of stock of a
corporation has a liquidation preference in excess of the par value of such
stock.
I am aware of no controlling decision of any court of the State of Delaware
that addresses the question presented for my consideration, but I believe that
such courts would adopt the reasoning set forth herein should the question be
litigated. I note in addition that my opinion as stated herein is supported by
the discussion of the court in Bailey v. Tubize Rayon Corporation, 56 F. Supp.
----------------------------------
418, 423 (D.Del. 1944) (applying Delaware law).
Based upon and subject to the foregoing, and subject to the limitations
stated herein below, I hereby advise you that in my opinion, solely as a matter
of law, under the Delaware General Corporation Law as in effect on the date
hereof:
1. Prior to a liquidation, dissolution or winding up of the Company,
there will be no restriction upon the surplus of the Company available for the
payment of dividends on any class of stock of the Company solely by reason of
the fact that the aggregate
<PAGE>
Letter to ICF Kaiser International, Inc.
November 30, 1995
Page 3
Liquidation Preference of the Series 2D Preferred Stock exceeds the aggregate
par value of such Preferred Stock.
2. No remedy will be available to holders of Series 2D Preferred Stock
either before or after payment of any dividend, prior to a liquidation,
dissolution or winding up of the Company, solely by reason of the fact that
payment of such dividend would reduce or reduces the surplus of the Company to
an amount less than the difference between the aggregate Liquidation Preference
of the Series 2D Preferred Stock and the aggregate par value of such series of
Preferred Stock.
My opinion as stated herein addresses only the question of whether, solely
as matter of law, there exists any restriction upon the surplus available for
payment of dividends, or any remedy would be available to holders of Preferred
Stock before or after payment of dividends, solely by reason of the excess of
the aggregate Liquidation Preference over the aggregate par value of the
Preferred Stock, and I render no opinion on the effect of any contractual or
charter restrictions on payment of dividends on a junior class of stock prior to
payment of all accumulated dividends on or the redemption of a senior class of
stock or the effect of any other charter restriction regarding payment of
dividends or remedies relating thereto.
I am a member of the Bar of the Commonwealth of Virginia and the Bar of the
District of Columbia. I express no opinion herein other than with respect to the
Delaware General Corporation Law.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Paul Weeks, II
-----------------------
Paul Weeks, II
Senior Vice President,
General Counsel and Secretary
<PAGE>
Exhibit 10(a) 4
FOURTH AMENDMENT
----------------
FOURTH AMENDMENT, dated as of June 20, 1995 (this "Amendment"), to the
---------
Credit Agreement, dated as of December 8, 1993 (as amended prior to the date
hereof and as further amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among ICF KAISER INTERNATIONAL, INC. a Delaware
----------------
corporation (the "Borrower"), the lenders parties thereto (the "Lenders") and
-------- -------
CHEMICAL BANK, a New York banking corporation, as agent (in such capacity, the
"Agent").
-----
WITNESSETH:
-----------
WHEREAS, the Company, the Lenders and the Agent are parties to the Credit
Agreement; and
WHEREAS, the Company has requested that the Lenders and the Agent agree to
amend certain provisions of the Credit Agreement, and the Lenders and the Agent
are agreeable to such request upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other valuable consideration the receipt of which is
hereby acknowledged, the Company, the Lenders and the Agent hereby agree as
follows:
1. Definitions. All terms defined in the Credit Agreement shall have
-----------
such defined meanings when used herein unless otherwise defined herein.
2. Amendment of Subsection 1.1. (a) Subsection 1.1 of the Credit
---------------------------
Agreement is hereby amended by adding, in proper alphabetical order, the
following new definitions:
"ICF Kaiser Government Programs": ICF Kaiser Government Programs,
------------------------------
Inc., a Delaware corporation, a wholly owned Subsidiary of the Borrower,
and a 50% owner of Kaiser-Hill.
"K-HFC": Kaiser-Hill Funding Company, L.L.C., a limited liability
-----
company formed under the laws of the State of Delaware, owned in the
following percentages by Kaiser-Hill (98%), ICF Kaiser Government Programs
(1%), and CH2M Hill Federal Group, Ltd. (1%), a wholly owned subsidiary of
CH2M Hill Companies, Ltd.'
"Kaiser-Hill": Kaiser-Hill Company, LLC, a limited liability company
-----------
formed under the laws of the State of Colorado, equally owned by ICF Kaiser
Government Programs and CH2M Hill Federal Group, Ltd., a wholly owned
subsidiary of CH2M Hill Companies, Ltd.
<PAGE>
(b) Subsection 1.1 of the Credit Agreement is hereby further amended
by adding at the end of the definition of "Subsidiary" the following new
sentence:
"Notwithstanding the foregoing definition, the term "Subsidiary" or
"Subsidiaries" shall not include Kaiser-Hill or K-HFC for the purposes
of its use in the definitions of (i) "Consolidated Net Income"
(except, for any period, to the extent by the Borrower or any of its
Subsidiaries (other than Kaiser-Hill or K-HFC)), (ii) "Borrowing Base"
(as incorporated in the term "Domestic Subsidiaries" as used therein)
and (iii) "Capital Expenditure", "Consolidated Interest Expense",
"Consolidated Lease Expense", "Consolidated Net Worth", "Restricted
Cash Amount", and "Unrestricted Cash Amount"."
3. Amendment of Subsection 4.15. Subsection 4.15 of the Credit Agreement
----------------------------
is hereby amended by adding at the end thereof the following sentence:
"Notwithstanding the foregoing, (i) for all purposes under this subsection,
there shall be excluded all amounts allocable to Kaiser-Hill and K-HFC and (ii)
ICF Kaiser Government Programs shall be required to become a Subsidiary
Guarantor prior to September 30, 1995", such that Subsection 4.15 thereafter
reads, as amended:
"4.15 Subsidiaries. the Subsidiaries of the Borrower listed on Schedule
------------
III, as supplemented from time to time, constitute all of the Subsidiaries
of the Borrower. The Borrower and the Subsidiary Guarantors collectively
(a) own (directly and not through other Subsidiaries) at least 90% of the
assets of the Borrower and its consolidated Domestic Subsidiaries on a
consolidated basis and (b) received at least 90% of the gross revenues and
90% of the Consolidated Net Income received by the Borrower and its
consolidated Domestic Subsidiaries on a consolidated basis for the fiscal
quarter most closely preceding the fiscal quarter during which this
representation is made or deemed made. The Borrower and the Domestic
Subsidiaries collectively (a) own (directly and not through other
Subsidiaries) at least 75% of the assets of the Borrower and its
consolidated Subsidiaries on a consolidated basis and (b) received at least
75% of the gross revenues and 75% of the Consolidated Net Income received
by the Borrower and its consolidated Subsidiaries on a consolidated basis
for the fiscal quarter most closely preceding the fiscal quarter during
which this representation is made or deemed made. Notwithstanding the
foregoing, (i) for all purposes under this subsection, there shall be
excluded all amounts allocable to Kaiser-Hill and K-HFC and (ii) ICF Kaiser
Government Programs shall be required to become a Subsidiary Guarantor
prior to September 30, 1995."
4. Amendment of Subsection 6.2. Subsection 6.2 of the Credit Agreement
---------------------------
is hereby amended by adding at the end thereof the following new clause (i) (and
by adjusting the placement of the word "and" and the punctuation at the end of
each clause as appropriate):
<PAGE>
"(j) concurrently with the delivery of the financial statements referred
to in subsections 6.1(a), (b) and (c) for each applicable period
thereunder, consolidated balance sheets and the related statements of
income and retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries excluding all amounts attributable to Kaiser-Hill
and K-HFC (except to the extent that such amounts are required to be
included in the calculation of Consolidated Net Income in accordance
subsection 1.1), such financial statements to be certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end adjustments, in the case of such quarterly financial statements)."
5. Amendment of Subsection 7.2. Subsection 7.2 of the Credit Agreement
---------------------------
is hereby amended by adding at the end thereof the following new clause (k) (and
by adjusting the placement of the word "and" and the punctuation at the end of
each clause as appropriate):
"(k) Indebtedness incurred by Kaiser-Hill and K-HFC, with respect to
which (a) the sole legal recourse for collection of principal, premium, if
any, and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and
(b) neither the Borrower nor any Subsidiary of the Borrower, other than
Kaiser-Hill and K-HFC, is directly or indirectly liable to make any payment
or has any Guarantee Obligation (other than in under letters of credit or
Guarantee Obligations permitted under subsection 7.10(k)(i))."
6. Amendment of Subsection 7.3. Subsection 7.3 of the Credit Agreement
---------------------------
is hereby amended by adding at the end thereof the following new clause (l) (and
by adjusting the placement of the word "and" and the punctuation at the end of
each clause as appropriate):
"(l) Liens created by or securing Indebtedness permitted under and
described in subsection 7.2(k) and Liens directly related to the
assignment, sale, or other disposition of U.S. Department of Energy
receivables by Kaiser-Hill and K-HFC permitted under and described in
subsection 7.6(h)."
7. Amendment of Subsection 7.6. Subsection 7.6 of the Credit Agreement
---------------------------
is hereby amended by adding at the end thereof the following new clause (h) (and
by adjusting the placement of the word "and" and the punctuation at the end of
each clause as appropriate):
"(h) the assignment, sale, or other disposition of U.S. Department of
Energy receivables by Kaiser-Hill and K-HFC in connection with the
financing thereof."
8. Amendment of Subsection 7.10. (a) Subsection 7.10 of the Credit
----------------------------
Agreement is hereby amended by adding to the end thereof the following new
clause (k)
<PAGE>
(and by adjusting the placement of the word "and" and the punctuation at the end
of each clause as appropriate):
"(k) (i) letters of credit or other Guarantee Obligations issued for
the benefit of Kaiser-Hill and K-HFC for the purpose of supporting
financing of ineligible receivables (including unbilled receivables) of
Kaiser-Hill and K-HFC, in an aggregate face amount not to exceed $6,000,000
at any time outstanding, (ii) additional advances, loans, extensions of
credit, capital contributions to, or any other investment in, Kaiser-Hill
and K-HFC by the Borrower of ICF Kaiser Government Programs, in an
aggregate amount not to exceed $1,000,000 at any time outstanding and (iii)
letters of credit or other Guarantee Obligations issued for the benefit of
Kaiser-Hill and K-HFC for the purpose of supporting workers compensation
insurance obligations in an aggregate face amount not to exceed $1,500,000
at any time outstanding; provided that the items permitted under the
foregoing clauses (i), (ii) and (iii) be directly related Kaiser-Hill's
Performance Based Integrating Management contract with the U.S. Department
of Energy at the Rocky Flats Environmental Technology Site near Golden,
Colorado, or Kaiser-Hill's and K-HFC's financing arrangements related
thereto, and provided, further, that the aggregate amount at any time
outstanding pursuant to such clauses (i), (ii) and (iii) shall not exceed
the excess of $12,500,000 over the amount of investments outstanding
pursuant to subsection 7.10(I) at such time, and provided, further, that
except as expressly set forth in this clause (k), the letters of credit,
Guarantee Obligations, advances, loans, extensions of credit, capital
contributions and investments permitted under and described in this clause
(k) shall be neither subject to the limitations of, nor deemed permitted
under, any other clause of subsection 7.10."
9. Representations; No Default. On and as of the date hereof, and after
---------------------------
giving effect to this Amendment, the Company confirms, reaffirms and restates
that the representations and warranties set forth in Section 4 of the Credit
Agreement and in the other Loan Documents are true and correct in all material
respects, provided that the references to the Credit Agreement therein shall be
deemed to be references to this Amendment and to the Credit Agreement as amended
by this Amendment.
10. Conditions to Effectiveness. This Amendment shall become effective on
---------------------------
and as of the date (the "Amendment Effective Date") that the Agent shall have
------------------------
received counterparts of this Amendment, duly executed and delivered by a duly
authorized officer of each of the Company, the Agent, and the Required Lenders,
along with the written consent of each Subsidiary Guarantor in the form attached
hereto.
11. Limited Amendment. Except as expressly waived and amended herein, the
-----------------
Credit Agreement shall continue to be, and shall remain, in full force and
effect. This Amendment shall not be deemed to be a waiver of, or consent to, or
a modification or amendment of, any other term or condition of the Credit
Agreement or any other Loan Document or to prejudice any other right or rights
which the Lenders may now have or may have in the future under or in connection
with the Credit Agreement or any of the
<PAGE>
instruments or agreements referred to therein, as the same may be amended from
time to time.
12. Cost and Expenses. The Company agrees to pay or reimburse the Agent
-----------------
for all its reasonable and customary out-of-pocket costs and expenses incurred
in connection with the preparation, negotiation and execution of this Amendment,
and the consummation of the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of its counsel.
13. Counterparts. This Amendment may be executed by one or more of the
------------
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
14. Governing Law. This amendment shall be governed by, and construed and
-------------
interpreted in accordance with, the laws of the state of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
<PAGE>
Exhibit 10(c)
T R U S T A G R E E M E N T
------------------------------
THIS AGREEMENT OF TRUST (the "Agreement") effective as of the 31st day of
August, 1995, by and between ICF Kaiser International, Inc. (the "Company"), and
VANGUARD FIDUCIARY TRUST COMPANY, a trust company incorporated under Chapter 10
of the Pennsylvania Banking Code (the "Trustee"),
WITNESSETH
----------
WHEREAS, the Company has adopted and is maintaining the ICF Kaiser
International, Inc. Employee Stock Ownership Plan (the "Plan") for the exclusive
benefit of its Employees; and
WHEREAS, the Employee Stock Ownership Plan Committee (the "Committee") is
the fiduciary named in the Plan as having the authority to control and manage
the operation and administration of the Plan;
WHEREAS, the Company and the Trustee deem it necessary and desirable to
enter into a written agreement of trust;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto, intending to be legally bound, hereby agree and declare as
follows:
ARTICLE I
CONTINUATION OF THE TRUST
Section 1.1. This Trust Agreement relates to the trust, established
pursuant to the Plan, that is intended to be tax-exempt under Section 501(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Company and the
Trustee hereby agree that the Trust Fund will continue to be held in trust and
administered, invested, and distributed for the benefit of Participants and
their Beneficiaries under the terms and conditions of this Trust Agreement. The
Company and the Trustee hereby agree that the trust will consist of such
contributions of cash and voting common stock or any class of capital stock
convertible into voting stock of the Employer ("Company Stock") as shall from
time to time be paid to the Trustee under the Plan and such earnings, income and
appreciation as may accrue thereon, which, less payments made by the Trustee to
carry out the purposes of the Plan, are referred to herein as the "Fund". The
Trustee shall carry out the duties and responsibilities herein specified, but
shall be under no duty to determine whether the amount of any contribution by
the Company or any Participant is in accordance with the terms of the Plan nor
shall the Trustee be responsible for the collection of any contributions
required under the Plan.
Section 1.2. The Fund shall be held, invested, reinvested and administered
by the Trustee in accordance with the terms of the Plan and this Agreement
solely in the interest of Participants and their Beneficiaries and for the
exclusive purpose of providing benefits to Participants and their Beneficiaries
and defraying reasonable expenses of administering the Plan. Except as provided
in Section 5.2, no assets of the Plan shall inure to the benefit of the Company.
<PAGE>
Section 1.3. The Trustee shall pay benefits and expenses from the Fund
only upon the written direction of the Committee. The Trustee shall be fully
entitled to rely on such directions furnished by the Committee, and shall be
under no duty to ascertain whether the directions are in accordance with the
provisions of the Plan.
ARTICLE II
INVESTMENT OF THE FUND
Section 2.1. The Fund shall be invested primarily in Company Stock. Each
Qualified Participant, as defined in the Plan, shall have the right to diversify
his account, in accordance with the provisions of the Plan and Section
401(a)(28) of the Code, by directing the investment by the Trustee of amounts
eligible for diversification among any one or more of the available Investment
Funds. All investment directions by Participants shall be timely furnished to
the Trustee by the Committee, except to the extent such directions are
transmitted telephonically or otherwise by Participants directly to the Trustee
or its delegate in accordance with rules and procedures established and approved
by the Committee and communicated to the Trustee. In making any investment of
the assets of the Fund, the Trustee shall be fully entitled to rely on such
directions furnished to it by Participants in accordance with the Committee's
approved rules of procedure, and shall be under no duty to make any inquiry or
investigation with respect thereto. It is specifically intended under the Plan
and this Agreement that the Trustee shall have no discretionary authority to
determine the investment of the assets of the Fund.
Section 2.2. To the extent to which the Fund is not invested in Company
Stock, the Committee shall have the exclusive authority and discretion to select
the investment funds ("Investment Funds") available for investment under the
Plan. In making such selection, the Committee shall use the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims. The Committee
shall notify the Trustee in writing of the selection of the Investment Funds
currently available for investment under the Plan, and any changes thereto.
Section 2.3. Subject to the provisions of Sections 2.1 and 2.2, the
Trustee shall have the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
(a) to invest promptly in Company Stock, and to the extent allowable and
appropriate, in securities of or guaranteed by the United States of
America, or any agency thereof, in short-term commercial paper, or in
certificates of deposit, or in mutual funds holding such securities, or the
Trustee may temporarily hold the funds in cash; and to invest and reinvest
all or a part of the Fund in accordance with Qualified Participants'
investment directions in any available Investment Fund selected by the
Committee without restriction to investments authorized for fiduciaries,
including, without limitation on the amount that may be invested therein,
any common, collective or commingled trust fund maintained by the Trustee.
Any investment in, and any terms and conditions of, any common, collective
or commingled trust fund available only to employee trusts which meets the
requirements of the Code or corresponding provisions of subsequent income
- 2 -
<PAGE>
tax laws of the United States, shall constitute an integral part of this
Agreement and the Plan;
(b) to dispose of all or any part of the investments, securities, or
other property which may from time to time or at any time constitute the
Fund in accordance with the investment directions by Participants or the
Committee furnished to it pursuant to Section 2.1 or the written directions
by the Committee furnished to it pursuant to Section 1.3, and to make,
execute and deliver to the purchasers thereof good and sufficient deeds of
conveyance therefor, and all assignments, transfers and other legal
instruments, either necessary or convenient for passing the title and
ownership thereto, free and discharged of all trusts and without liability
on the part of such purchasers to see to the application of the purchase
money;
(c) to hold cash uninvested to the extent necessary to pay benefits or
expenses of the Plan;
(d) to cause any investment of the Fund to be registered in the name of
the Trustee or the name of its nominee or nominees or to retain such
investment unregistered or in a form permitting transfer by delivery;
provided that the books and records of the Trustee shall at all times show
that all such investments are part of the Fund;
(e) except as provided further in Article IV hereof with respect to
shares of Company Stock that are held by the Fund, to vote in person or by
proxy with respect to all shares of the mutual funds which are held by the
Plan solely in accordance with directions furnished to it by the Committee,
and to vote in person or by proxy with respect to all other securities
credited to a Participant's separate accounts under the Plan solely in
accordance with directions furnished to it by the Participant;
(f) to consult and employ any suitable agent to act on behalf of the
Trustee and to contract for legal, accounting, clerical and other services
deemed necessary by the Trustee to manage and administer the Fund according
to the terms of the Plan and this Agreement;
(g) to pay from the Fund all taxes imposed or levied with respect to the
Fund or any part thereof under existing or future laws, provided that at
least ten days prior to the making of any such payment the Trustee must
mail notice to the Committee of its intention to make such payment, and to
contest the validity or amount of any tax, assessment, claim or demand
respecting the Fund or any part thereof;
(h) to commingle the Company Stock held in the Trust with Company Stock
held in other trusts forming part of other qualified employee benefit plans
maintained by the Company; and
(i) to borrow funds and/or to contract for the purchase of Company Stock
which qualifies under Section 409(l) of the Code to be paid for in
installments, subject to the limitations set forth in the Plan.
- 3 -
<PAGE>
Section 2.4. Except as may be authorized by regulations promulgated by the
Secretary of Labor, the Trustee shall not maintain the indicia of ownership in
any assets of the Fund outside of the jurisdiction of the district courts of the
United States.
ARTICLE III
DUTIES AND RESPONSIBILITIES
Section 3.1. The Trustee and the Committee shall each discharge their
assigned duties and responsibilities under this Agreement and the Plan solely in
the interest of Participants and their Beneficiaries in the following manner:
(a) for the exclusive purpose of providing benefits to Participants and
their Beneficiaries and defraying reasonable expenses of administering the
Plan;
(b) with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; and
(c) in accordance with the provisions of the Plan and this Trust
Agreement insofar as they are consistent with the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Section 3.2. The Trustee shall keep full and accurate accounts of all
receipts, investments, disbursements and other transactions hereunder, including
such specific records as may be agreed upon in writing between the Committee and
the Trustee. All such accounts, books and records shall be open to inspection
and audit at all reasonable times by any authorized representative of the
Committee. A Participant may examine only those individual account records
pertaining directly to him.
Section 3.3. Within 90 days after the end of each Plan Year or within 90
days after its removal or resignation, the Trustee shall file with the Committee
a written account of the administration of the Fund showing all transactions
effected by the Trustee subsequent to the period covered by the last preceding
account to the end of such Plan Year or date of removal or resignation and all
property held at its fair market value at the end of the accounting period.
Upon approval of such accounting by the Committee, neither the Company nor the
Committee shall be entitled to any further accounting by the Trustee. The
Committee may approve such accounting by written notice of approval delivered to
the Trustee or by failure to express objection to such accounting in writing
delivered to the Trustee within 90 days from the date on which the accounting is
delivered to the Committee.
Section 3.4. In accordance with the terms of the Plan, the Trustee shall
open and maintain separate accounts in the name of each Participant in order to
record all contributions by or on behalf of the Participant under the Plan and
any earnings, losses and expenses attributable thereto. The Committee shall
furnish the Trustee with written instructions enabling the Trustee to allocate
properly all contributions and other amounts under the Plan to the separate
accounts of Participants. In making such allocation, the
- 4 -
<PAGE>
Trustee shall be fully entitled to rely on the instructions furnished by the
Committee and shall be under no duty to make any inquiry or investigation with
respect thereto.
Section 3.5. The Trustee will determine, and report to the Committee
within 30 days of the last day of each Plan Year, the current fair market value
of the assets and liabilities of the Trust Fund as of the last day of the Plan
Year. If such statement is in unaudited form, the Trustee shall provide an
audited statement as soon as reasonably practicable. The Committee may retain
an independent appraiser to value employer securities held in the Fund if such
appraiser is acceptable to the Trustee, and the Trustee may retain an
independent appraiser to value employer securities held in the Fund if the
Committee does not retain an appraiser acceptable to the Trustee; provided that,
an independent appraiser shall only be retained to value employer securities
held in the Fund that are not readily publicly tradable. The Trustee shall
furnish each Participant with statements at least annually, or more frequently
as may be agreed upon with the Company, reflecting the current fair market value
of the Participant's separate accounts under the Plan.
Section 3.6. The Trustee shall not be required to determine the facts
concerning the eligibility of any Participant to participate in the Plan, the
amount of benefits payable to any Participant or Beneficiary under the Plan, or
the date or method of payment or disbursement. The Trustee shall be fully
entitled to rely solely upon the written advice and directions of the Committee
as to any such question of fact.
Section 3.7. Unless resulting from the Trustee's negligence, willful
misconduct, lack of good faith, or breach of its fiduciary duties under this
Agreement or ERISA, the Company shall indemnify and save harmless the Trustee
from, against, for and in respect of any and all damages, losses, obligations,
liabilities, liens, deficiencies, costs and expenses, including without
limitation, reasonable attorney's fees incident to any suit, action,
investigation, claim or proceedings suffered, sustained, incurred or required to
be paid by the Trustee in connection with the Plan or this Agreement. If the
Trustee receives notice of any claim, action or proceeding against the Trustee
in respect to which indemnity may be sought against the Company hereunder, the
Trustee shall give the Company reasonably prompt notice thereof. The Company
will have the right to participate in or to elect to assume, at its expense and
by its counsel, the defense of any claim, action or proceeding against the
Trustee and the Trustee will cooperate in good faith in such defense. If the
Company elects to assume the defense of any claim, action or proceeding against
the Trustee, the Company will not be liable for any legal expenses subsequently
incurred by the Trustee in connection with the defense thereof unless the
Trustee notifies the Company that the Company's defense is unsatisfactory to the
Trustee.
Section 3.8. If the Company eliminates or limits the authority of the
Committee to administer the Plan or to give instructions to the Trustee, all
references in this Trust Agreement to the Committee shall become references to
the Company or such other person or entity designated by the Company.
ARTICLE IV
VOTING AND OTHER RIGHTS OF COMPANY STOCK
- 5 -
<PAGE>
Section 4.1. The Committee shall be the Named Fiduciary within the meaning
of ERISA Section 402(a)(2) for purposes of all shareholder action authorized or
permitted to be taken with respect to Company Stock held in the Trust, except
with respect to Company Stock allocated to a Participant's separate account.
The powers and duties of the Committee as Named Fiduciary for this purpose will
include, without limitation, the powers and duties to direct the Trustee with
respect to the acceptance or rejection of a tender offer for shares of Company
Stock; the sale of shares of Company Stock under any other circumstances to any
person, including the Company, provided that a sale to the Company or other
"disqualified person" within the meaning of Section 4975 of the Code or "party
in interest" within the meaning of ERISA Section 3(14) is made at a price which
is not less than adequate consideration as defined in ERISA Section 3(18) and no
commission is charged with respect to the sale; and the exercise of any options,
warrants or other rights in connection with shares of Company Stock held in the
Trust.
Each Participant and Beneficiary shall direct the Trustee to take or to
refrain from taking any action with respect to the shares of Company Stock
allocated to the Participant's separate account in the Company Stock Fund that
the Committee could have directed the Trustee to take or refrain from taking.
In the absence of such written direction with respect to any shares allocated to
a Participant's separate account, those shares shall not be voted. The
Committee will adopt from time to time whatever procedures it determines to be
appropriate in order to exercise its powers and duties under this Section and
may retain advisors and consultants (including, without limitation, legal
counsel and financial advisors) who are independent of the Company, the Board
and the Trustee to the extent the Committee determines such independent advice
to be necessary or appropriate.
Upon receipt of instructions from the Committee or Participants, the
Trustee shall vote or exercise the right with respect to such stock in
accordance with such instructions. If practicable, the Trustee shall vote the
combined fractional shares (or fractional rights to shares) allocated to all
Participants' accounts to reflect, to the extent possible, the direction of the
Participants holding fractional shares (or fractional rights to shares).
ARTICLE V
PROHIBITION OF DIVERSION
Section 5.1. Except as provided in Section 5.2 of this Article, at no time
prior to the satisfaction of all liabilities with respect to Participants and
their Beneficiaries under the Plan shall any part of the corpus or income of the
Fund be used for, or diverted to, purposes other than for the exclusive benefit
of Participants or their Beneficiaries, or for defraying reasonable expenses of
administering the Plan.
Section 5.2. The provisions of Section 5.1 notwithstanding, contributions
made by the Company under the Plan may be returned to the Company under the
following conditions:
(a) If a contribution is made by mistake of fact, such contribution may be
returned to the Company within one year of the payment of such
contribution; and
(b) Contributions to the Plan are specifically conditioned upon their
deductibility under the Code. To the extent a deduction is disallowed for
any such
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<PAGE>
contribution, it may be returned to the Company within one year after the
disallowance of the deduction. Contributions which are not deductible in
the taxable year in which made but are deductible in subsequent taxable
years shall not be considered to be disallowed for purposes of this
subsection.
ARTICLE VI
COMMUNICATION WITH COMMITTEE AND COMPANY
Section 6.1. Whenever the Trustee is permitted or required to act upon the
directions or instructions of the Committee, the Trustee shall be entitled to
act upon any written communication signed by any person or agent designated to
act as or on behalf of the Committee. Such person or agent shall be so
designated either under the provisions of the Plan or in writing by the
Committee and their authority shall continue until revoked in writing. The
Trustee shall incur no liability for failure to act on such person's or agent's
instructions or orders without written communication, and the Trustee shall be
fully protected in all actions taken in good faith in reliance upon any
instructions, directions, certifications and communications believed to be
genuine and to have been signed or communicated by the proper person.
Section 6.2. The Company shall notify the Trustee in writing as to the
appointment, removal or resignation of any person designated to act as or on
behalf of the Committee. After such notification, the Trustee shall be fully
protected in acting upon the directions of, or dealing with, any person
designated to act as or on behalf of the Committee until it receives notice to
the contrary. The Trustee shall have no duty to inquire into the qualifications
of any person designated to act as or on behalf of the Committee.
ARTICLE VII
TRUSTEE'S COMPENSATION
Section 7.1. The Trustee shall be entitled to reasonable compensation for
its services as is agreed upon with the Company. If approved by the Committee,
the Trustee shall also be entitled to reimbursement for all direct expenses
properly and actually incurred on behalf of the Plan. Such compensation or
reimbursement shall be paid to the Trustee out of the Fund unless paid directly
by the Company.
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
Section 8.1. The Trustee may resign at any time by written notice to the
Chairman of the Committee or to the Secretary of the Board which shall be
effective 30 days after delivery unless prior thereto a successor Trustee shall
have been appointed.
Section 8.2. The Trustee may be removed by the Board at any time upon 30
days written notice to the Trustee; such notice, however, may be waived by the
Trustee.
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<PAGE>
Section 8.3. The appointment of a successor Trustee hereunder shall be
accomplished by and shall take effect upon the delivery to the resigning or
removed Trustee, as the case may be, of written notice of the Committee
appointing such successor Trustee, and an acceptance in writing of the office of
successor Trustee hereunder executed by the successor so appointed. Any
successor Trustee may be either a corporation authorized and empowered to
exercise trust powers or one or more individuals. All of the provisions set
forth herein with respect to the Trustee shall relate to each successor Trustee
so appointed with the same force and effect as if such successor Trustee had
been originally named herein as the Trustee hereunder. If within 30 days after
notice of resignation shall have been given under the provisions of this article
a successor Trustee shall not have been appointed, the resigning Trustee or the
Company may apply to any court of competent jurisdiction for the appointment of
a successor Trustee.
Section 8.4. Upon the appointment of a successor Trustee, the resigning or
removed Trustee shall transfer and deliver the Fund to such successor Trustee,
after reserving such reasonable amount as it shall deem necessary to provide for
its expenses in the settlement of its account, the amount of any compensation
due to it and any sums chargeable against the Fund for which it may be liable.
If the sums so reserved are not sufficient for such purposes, the resigning or
removed Trustee shall be entitled to reimbursement for any deficiency from the
successor Trustee and the Company who shall be jointly and severally liable
therefor.
ARTICLE IX
INSURANCE COMPANIES
Section 9.1. If any contract issued by an insurance company shall form a
part of the Trust assets, the insurance company shall not be deemed a party to
this Agreement. A certification in writing by the Trustee as to the occurrence
of any event contemplated by this Agreement or the Plan shall be conclusive
evidence thereof and the insurance company shall be protected in relying upon
such certification and shall incur no liability for so doing. With respect to
any action under any such contract, the insurance company may deal with the
Trustee as the sole owner thereof and need not see that any action of the
Trustee is authorized by this Agreement or the Plan. Any change made or action
taken by an insurance company upon the direction of the Trustee shall fully
discharge the insurance company from all liability with respect thereto, and it
need not see to the distribution or further application of any moneys paid by it
to the Trustee or paid in accordance with the direction of the Trustee.
ARTICLE X
AMENDMENT AND TERMINATION OF THE TRUST AND PLAN
Section 10.1. The Company may, by delivery to the Trustee of an instrument
in writing, amend, terminate or partially terminate this Agreement at any time;
provided, however, that no amendment shall increase the duties or liabilities of
the Trustee without the Trustee's consent; and, provided further, that no
amendment shall divert any part of the Fund to any purpose other than providing
benefits to Participants and their Beneficiaries or defraying reasonable
expenses of administering the Plan.
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<PAGE>
Section 10.2. If the Plan is terminated, the Trustee shall make
distributions from the Fund in such manner and at such times as the Committee
shall direct in writing. Notwithstanding complete discontinuance of
contributions to the Plan by the Company, the Trust shall be continued, and
benefits shall be distributed at such time and in such manner as though
contributions had not been discontinued, unless the Committee shall direct
otherwise in writing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. Unless the context of this Agreement clearly indicates
otherwise, the terms defined in the Plan shall, when used herein, have the same
meaning as in the Plan.
Section 11.2. Except as otherwise required in the case of any qualified
domestic relations order within the meaning of Section 414(p) of the Code, the
benefits or proceeds of any allocated or unallocated portion of the assets of
the Fund and any interest of any Participant or Beneficiary arising out of or
created by the Plan either before or after the Participant's retirement shall
not be subject to execution, attachment, garnishment or other legal or judicial
process whatsoever by any person, whether creditor or otherwise, claiming
against such Participant or Beneficiary. No Participant or Beneficiary shall
have the right to alienate, encumber or assign any of the payments or proceeds
or any other interest arising out of or created by the Plan and any action
purporting to do so shall be void. The provisions of this Section shall apply
to all Participants and Beneficiaries, regardless of their citizenship or place
of residence.
Section 11.3. Nothing contained in this Agreement or in the Plan shall
require the Company to retain any Employee in its service.
Section 11.4. Any person dealing with the Trustee may rely upon a copy of
this Agreement and any amendments thereto certified to be true and correct by
the Trustee.
Section 11.5. The Trustee hereby acknowledges receipt of a copy of the
Plan. The Company will cause a copy of any amendment to the Plan to be
delivered to the Trustee.
Section 11.6. The construction, validity and administration of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania,
except to the extent that such laws have been specifically superseded by ERISA.
Section 11.7. This Trust Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and to this Trust Agreement were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Attest: VANGUARD FIDUCIARY TRUST COMPANY
/s/ Meredith Mueller By /s/ R. Gregory Barton
- --------------------- ----------------------
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<PAGE>
Attest: ICF KAISER INTERNATIONAL, INC.
/s/ Sheryl A. Summa By /s/ Marcy A. Romm
- -------------------- ---------------------------
1189473
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<PAGE>
Exhibit 10(e)
T R U S T A G R E E M E N T
------------------------------
THIS AGREEMENT OF TRUST (the "Agreement") effective the 31st day of August,
1995, by and between ICF Kaiser International, Inc. (the "Company"), and
VANGUARD FIDUCIARY TRUST COMPANY, a trust company incorporated under Chapter 10
of the Pennsylvania Banking Code (the "Trustee"),
WITNESSETH
----------
WHEREAS, the Company has adopted and is maintaining the ICF Kaiser
International, Inc. Retirement Plan (the "Plan") for the exclusive benefit of
its Employees; and
WHEREAS, the Retirement Plan Committee (the "Committee") is the fiduciary
named in the Plan as having the authority to control and manage the operation
and administration of the Plan;
WHEREAS, the Company and the Trustee deem it necessary and desirable to
enter into a written agreement of trust;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto, intending to be legally bound, hereby agree and declare as
follows:
ARTICLE I
CONTINUATION OF THE TRUST
Section 1.1. This Trust Agreement relates to the trust, established
pursuant to the Plan, that is intended to be tax-exempt under Section 501(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Company and the
Trustee hereby agree that the Trust Fund will continue to be held in trust and
administered, invested, and distributed for the benefit of Participants and
their Beneficiaries under the terms and conditions of this Trust Agreement. The
Company and the Trustee hereby agree that the trust will consist of such
contributions of cash and Company Stock as shall from time to time be paid to
the Trustee under the Plan and such earnings, income and appreciation as may
accrue thereon, which, less payments made by the Trustee to carry out the
purposes of the Plan, are referred to herein as the "Fund". The Trustee shall
carry out the duties and responsibilities herein specified, but shall be under
no duty to determine whether the amount of any contribution by the Company or
any Participant is in accordance with the terms of the Plan nor shall the
Trustee be responsible for the collection of any contributions required under
the Plan.
Section 1.2. The Fund shall be held, invested, reinvested and administered
by the Trustee in accordance with the terms of the Plan and this Agreement
solely in the interest of Participants and their Beneficiaries and for the
exclusive purpose of providing benefits to Participants and their Beneficiaries
and defraying reasonable expenses of administering the Plan. Except as provided
in Section 5.2, no assets of the Plan shall inure to the benefit of the Company.
<PAGE>
Section 1.3. The Trustee shall pay benefits and expenses from the Fund
only upon the written direction of the Committee. The Trustee shall be fully
entitled to rely on such directions furnished by the Committee, and shall be
under no duty to ascertain whether the directions are in accordance with the
provisions of the Plan.
ARTICLE II
INVESTMENT OF THE FUND
Section 2.1. The Committee shall have the exclusive authority and
discretion to select the investment funds ("Investment Funds") available for
investment under the Plan. In making such selection, the Committee shall use the
care, skill, prudence and diligence under the circumstances then prevailing that
a prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims. The
Committee shall notify the Trustee in writing of the selection of the Investment
Funds currently available for investment under the Plan, and any changes
thereto.
Section 2.2. Each Participant shall have the right, in accordance with the
provisions of the Plan, to direct the investment by the Trustee of all amounts
allocated to the separate accounts of the Participant under the Plan among any
one or more of the available Investment Funds. The Committee shall have the
right, in accordance with the provisions of the Plan, to direct the investment
by the Trustee of amounts allocated to the separate accounts of Participants who
failed to furnish timely instructions to the Trustee and amounts that have not
been allocated to Participants' separate accounts. All investment directions by
Participants or the Committee shall be timely furnished to the Trustee by the
Committee, except to the extent such directions are transmitted telephonically
or otherwise by Participants or the Committee directly to the Trustee or its
delegate in accordance with rules and procedures established and approved by the
Committee and communicated to the Trustee. In making any investment of the
assets of the Fund, the Trustee shall be fully entitled to rely on such
directions furnished to it by Participants or the Committee in accordance with
the Committee's approved rules and procedures, and shall be under no duty to
make any inquiry or investigation with respect thereto. If the Trustee receives
any contribution under the Plan that is not accompanied by instructions
directing its investment, the Trustee shall immediately notify the Committee of
that fact, and the Trustee shall hold the contribution in accordance with the
Committee's investment direction pending receipt of proper investment
directions. It is specifically intended under the Plan and this Agreement that
the Trustee shall have no discretionary authority to determine the investment of
the assets of the Fund.
Section 2.3. Subject to the provisions of Sections 2.1 and 2.2, the
Trustee shall have the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
(a) to invest and reinvest all or a part of the Fund in accordance with
Participants' or the Committee's investment directions in any available
Investment Fund selected by the Committee, subject to any limitations
adopted by the Committee, without restriction to investments authorized for
fiduciaries, including, without limitation on the amount that may be
invested therein, any common, collective or commingled trust fund
maintained by the Trustee. Any investment
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<PAGE>
in, and any terms and conditions of, any common, collective or commingled
trust fund available only to employee trusts which meets the requirements
of the Code, or corresponding provisions of subsequent income tax laws of
the United States, shall constitute an integral part of this Agreement and
the Plan;
(b) to dispose of all or any part of the investments, securities, or
other property which may from time to time or at any time constitute the
Fund in accordance with the investment directions by Participants or the
Committee furnished to it pursuant to Section 2.2 or the written directions
by the Committee furnished to it pursuant to Section 1.3, and to make,
execute and deliver to the purchasers thereof good and sufficient deeds of
conveyance therefor, and all assignments, transfers and other legal
instruments, either necessary or convenient for passing the title and
ownership thereto, free and discharged of all trusts and without liability
on the part of such purchasers to see to the application of the purchase
money;
(c) to hold cash uninvested to the extent necessary to pay benefits or
expenses of the Plan;
(d) to cause any investment of the Fund to be registered in the name of
the Trustee or the name of its nominee or nominees or to retain such
investment unregistered or in a form permitting transfer by delivery;
provided that the books and records of the Trustee shall at all times show
that all such investments are part of the Fund;
(e) except as provided further in Article IV hereof with respect to
shares of voting common stock or any class of capital stock convertible
into voting stock of the Employer ("Company Stock") that are held by the
Fund, to vote in person or by proxy with respect to all shares of the
mutual funds which are held by the Plan solely in accordance with
directions furnished to it by the Committee, and to vote in person or by
proxy with respect to all other securities credited to a Participant's
separate accounts under the Plan solely in accordance with directions
furnished to it by the Participant or the Committee, where the Participant
has not furnished timely directions;
(f) upon the written direction of the Committee, to apply for, purchase,
hold or transfer any life insurance, retirement income, endowment or
annuity contract;
(g) to consult and employ any suitable agent to act on behalf of the
Trustee and to contract for legal, accounting, clerical and other services
deemed necessary by the Trustee to manage and administer the Fund according
to the terms of the Plan and this Agreement;
(h) upon the written direction of the Committee, to make loans from the
Fund to Participants in amounts and on terms approved by the Trustee in
accordance with the provisions of the Plan and pursuant to procedures
approved by the Committee; provided that the Committee shall have the
responsibility for collecting all loan repayments required to be made under
the Plan and for furnishing the Trustee with copies of all promissory notes
evidencing such loans;
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<PAGE>
(i) to pay from the Fund all taxes imposed or levied with respect to the
Fund or any part thereof under existing or future laws, provided that at
least ten days prior to the making of any such payment the Trustee must
mail notice to the Committee of its intention to make such payment, and to
contest the validity or amount of any tax, assessment, claim or demand
respecting the Fund or any part thereof; and
(j) to commingle the Company Stock held in the Trust with Company Stock
held in other trusts forming part of other qualified employee benefit plans
maintained by the Company.
Section 2.4. Except as may be authorized by regulations promulgated by the
Secretary of Labor, the Trustee shall not maintain the indicia of ownership in
any assets of the Fund outside of the jurisdiction of the district courts of the
United States.
ARTICLE III
DUTIES AND RESPONSIBILITIES
Section 3.1. The Trustee and the Committee shall each discharge their
assigned duties and responsibilities under this Agreement and the Plan solely in
the interest of Participants and their Beneficiaries in the following manner:
(a) for the exclusive purpose of providing benefits to Participants and
their Beneficiaries and defraying reasonable expenses of administering the
Plan;
(b) with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; and
(c) in accordance with the provisions of the Plan and this Trust
Agreement insofar as they are consistent with the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Section 3.2. The Trustee shall keep full and accurate accounts of all
receipts, investments, disbursements and other transactions hereunder, including
such specific records as may be agreed upon in writing between the Committee and
the Trustee. All such accounts, books and records shall be open to inspection
and audit at all reasonable times by any authorized representative of the
Committee. A Participant may examine only those individual account records
pertaining directly to him.
Section 3.3. Within 90 days after the end of each Plan Year or within 90
days after its removal or resignation, the Trustee shall file with the Committee
a written account of the administration of the Fund showing all transactions
effected by the Trustee subsequent to the period covered by the last preceding
account to the end of such Plan Year or date of removal or resignation and all
property held at its fair market value at the end of the accounting period.
Upon approval of such accounting by the Committee, neither the Company nor the
Committee shall be entitled to any further accounting by the Trustee. The
Committee may approve such accounting by written
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<PAGE>
notice of approval delivered to the Trustee or by failure to express objection
to such accounting in writing delivered to the Trustee within 90 days from the
date on which the accounting is delivered to the Committee.
Section 3.4. In accordance with the terms of the Plan, the Trustee shall
open and maintain separate accounts in the name of each Participant in order to
record all contributions by or on behalf of the Participant under the Plan and
any earnings, losses and expenses attributable thereto. The Committee shall
furnish the Trustee with written instructions enabling the Trustee to allocate
properly all contributions and other amounts under the Plan to the separate
accounts of Participants. In making such allocation, the Trustee shall be fully
entitled to rely on the instructions furnished by the Committee and shall be
under no duty to make any inquiry or investigation with respect thereto.
Section 3.5. The Trustee will determine, and report to the Committee
within 30 days of the last day of each Plan Year, the current fair market value
of the assets and liabilities of the Trust Fund as of the last day of the Plan
Year. If such statement is provided in unaudited form, the Trustee shall
provide an audited statement as soon as reasonably practicable. The Committee
may retain an independent appraiser to value employer securities held in the
Fund if such appraiser is acceptable to the Trustee, and the Trustee may retain
an independent appraiser to value employer securities held in the Fund if the
Committee does not retain an appraiser acceptable to the Trustee; provided that,
an independent appraiser shall only be retained to value employer securities
held in the Fund that are not readily publicly tradable. The Trustee shall
furnish each Participant with statements at least annually, or more frequently
as may be agreed upon with the Company, reflecting the current fair market value
of the Participant's separate accounts under the Plan.
Section 3.6. The Trustee shall not be required to determine the facts
concerning the eligibility of any Participant to participate in the Plan, the
amount of benefits payable to any Participant or Beneficiary under the Plan, or
the date or method of payment or disbursement. The Trustee shall be fully
entitled to rely solely upon the written advice and directions of the Committee
as to any such question of fact.
Section 3.7. Unless resulting from the Trustee's negligence, willful
misconduct, lack of good faith, or breach of its fiduciary duties under this
Agreement or ERISA, the Company shall indemnify and save harmless the Trustee
from, against, for and in respect of any and all damages, losses, obligations,
liabilities, liens, deficiencies, costs and expenses, including without
limitation, reasonable attorney's fees incident to any suit, action,
investigation, claim or proceedings suffered, sustained, incurred or required to
be paid by the Trustee in connection with the Plan or this Agreement. If the
Trustee receives notice of any claim, action or proceeding against the Trustee
in respect to which indemnity may be sought against the Company hereunder, the
Trustee shall give the Company reasonably prompt notice thereof. The Company
will have the right to participate in or to elect to assume, at its expense and
by its counsel, the defense of any claim, action or proceeding against the
Trustee and the Trustee will cooperate in good faith in such defense. If the
Company elects to assume the defense of any claim, action or proceeding against
the Trustee, the Company will not be liable for any legal expenses subsequently
incurred by the Trustee in connection with the defense thereof unless the
Trustee notifies the Company that the Company's defense is unsatisfactory to the
Trustee.
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<PAGE>
Section 3.8. If the Company eliminates or limits the authority of the
Committee to administer the Plan or to give instructions to the Trustee, all
references in this Trust Agreement to the Committee shall become references to
the Company or such other person or entity designated by the Company.
ARTICLE IV
VOTING AND OTHER RIGHTS OF COMPANY STOCK
Section 4.1. (a) The Committee shall be the Named Fiduciary within the
meaning of ERISA Section 402(a)(2) for purposes of all shareholder action
authorized or permitted to be taken with respect to Company Stock held in the
Trust. The powers and duties of the Committee as Named Fiduciary for this
purpose will include, without limitation, the powers and duties to direct the
Trustee with respect to the acceptance or rejection of a tender offer for shares
of Company Stock; the sale of shares of Company Stock under any other
circumstances to any person, including the Company, provided that a sale to the
Company or other "disqualified person" within the meaning of Section 4975 of the
Code or "party in interest" within the meaning of ERISA Section 3(14) is made at
a price which is not less than adequate consideration as defined in ERISA
Section 3(18) and no commission is charged with respect to the sale; and the
exercise of any options, warrants or other rights in connection with shares of
Company Stock held in the Trust.
(b) The Committee will also have the power, in its discretion, to permit
each Participant and Beneficiary to direct the Trustee to take or to refrain
from taking any action with respect to the shares of Company Stock allocated to
the Participant's separate account in the Company Stock Fund (including, but not
limited to, the right to sell or retain shares in a public or private tender
offer) that the Committee could have directed the Trustee to take or refrain
from taking. If the Committee permits Participants and Beneficiaries to direct
the Trustee in connection with any matter relating to Company Stock held in the
Trust, the Committee will nevertheless retain the power and duty to direct the
Trustee with respect to shares of Company Stock allocated to the separate
accounts of Participants and Beneficiaries who fail to furnish timely
instructions to the Trustee and with respect to any shares of Company Stock that
have not been allocated to separate Participants' accounts. The Committee will
adopt from time to time whatever procedures it determines to be appropriate in
order to exercise its powers and duties under this Section and may retain
advisors and consultants (including, without limitation, legal counsel and
financial advisors) who are independent of the Company, the Board and the
Trustee to the extent the Committee determines such independent advice to be
necessary or appropriate. The Committee may, in its discretion, delegate, in
whole or in part, any power or duty allocated to it pursuant to this Section to
another person or entity, who will act as an Independent Fiduciary and will
exercise such power or duty to the same extent as it could have been exercised
by the Committee. The persons or entities to which such powers and duties may be
delegated will include, without limitation, the Board or any committee of the
Board, any other person or entity that meets the requirements of an investment
manager under ERISA Section 3(38), or any other person or entity that the
Committee determines in good faith has the requisite knowledge and experience
concerning the matter with respect to which the delegation is made. The
Committee may also remove any fiduciary to whom it has delegated any power or
duty and exercise such power or duty itself or appoint a successor fiduciary.
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<PAGE>
(c) Upon receipt of instructions from the Committee or Participants, the
Trustee shall vote or exercise the right with respect to such stock in
accordance with Committee or Participant instructions. All shares (and
fractional shares) of Company Stock in the Company Stock Fund for which the
Trustee has not received timely voting or exercise directions shall be voted or
exercised by the Trustee in the same proportion that the shares (and fractional
shares) of Company Stock in the Company Stock Fund for which the Trustee
received timely voting or exercise directions from Participants are to be voted
or exercised, except in the case where the Trustee determines that to do so
would be inconsistent with the provisions of Title I of ERISA. Notwithstanding
anything herein to the contrary, in the event of a tender offer for Company
Stock, the Trustee shall not tender any shares (or fractional shares) of Company
Stock in the Company Stock Fund for which it does not receive timely directions
to tender such shares (or fractional shares), except in the case where the
Trustee determines that to do so would be inconsistent with the provisions of
Title I of ERISA.
ARTICLE V
PROHIBITION OF DIVERSION
Section 5.1. Except as provided in Section 5.2 of this Article, at no time
prior to the satisfaction of all liabilities with respect to Participants and
their Beneficiaries under the Plan shall any part of the corpus or income of the
Fund be used for, or diverted to, purposes other than for the exclusive benefit
of Participants or their Beneficiaries, or for defraying reasonable expenses of
administering the Plan.
Section 5.2. The provisions of Section 5.1 notwithstanding, contributions
made by the Company under the Plan may be returned to the Company under the
following conditions:
(a) If a contribution is made by mistake of fact, such contribution may
be returned to the Company within one year of the payment of such
contribution; and
(b) Contributions to the Plan are specifically conditioned upon their
deductibility under the Code. To the extent a deduction is disallowed for
any such contribution, it may be returned to the Company within one year
after the disallowance of the deduction. Contributions which are not
deductible in the taxable year in which made but are deductible in
subsequent taxable years shall not be considered to be disallowed for
purposes of this subsection.
ARTICLE VI
COMMUNICATION WITH COMMITTEE AND COMPANY
Section 6.1. Whenever the Trustee is permitted or required to act upon the
directions or instructions of the Committee, the Trustee shall be entitled to
act upon any written communication signed by any person or agent designated to
act as or on behalf of the Committee. Such person or agent shall be so
designated either under the provisions of the Plan or in writing by the
Committee and their authority shall continue until revoked in writing. The
Trustee shall incur no liability for failure to act on such person's
- 7 -
<PAGE>
or agent's instructions or orders without written communication, and the Trustee
shall be fully protected in all actions taken in good faith in reliance upon any
instructions, directions, certifications and communications believed to be
genuine and to have been signed or communicated by the proper person.
Section 6.2. The Company shall notify the Trustee in writing as to the
appointment, removal or resignation of any person designated to act as or on
behalf of the Committee. After such notification, the Trustee shall be fully
protected in acting upon the directions of, or dealing with, any person
designated to act as or on behalf of the Committee until it receives notice to
the contrary. The Trustee shall have no duty to inquire into the qualifications
of any person designated to act as or on behalf of the Committee.
ARTICLE VII
TRUSTEE'S COMPENSATION
Section 7.1. The Trustee shall be entitled to reasonable compensation for
its services as is agreed upon with the Company. If approved by the Committee,
the Trustee shall also be entitled to reimbursement for all direct expenses
properly and actually incurred on behalf of the Plan. Such compensation or
reimbursement shall be paid to the Trustee out of the Fund unless paid directly
by the Company.
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
Section 8.1. The Trustee may resign at any time by written notice to the
Chairman of the Committee or to the Secretary of the Board which shall be
effective 30 days after delivery unless prior thereto a successor Trustee shall
have been appointed.
Section 8.2. The Trustee may be removed by the Board at any time upon 30
days written notice to the Trustee; such notice, however, may be waived by the
Trustee.
Section 8.3. The appointment of a successor Trustee hereunder shall be
accomplished by and shall take effect upon the delivery to the resigning or
removed Trustee, as the case may be, of written notice of the Committee
appointing such successor Trustee, and an acceptance in writing of the office of
successor Trustee hereunder executed by the successor so appointed. Any
successor Trustee may be either a corporation authorized and empowered to
exercise trust powers or one or more individuals. All of the provisions set
forth herein with respect to the Trustee shall relate to each successor Trustee
so appointed with the same force and effect as if such successor Trustee had
been originally named herein as the Trustee hereunder. If within 30 days after
notice of resignation shall have been given under the provisions of this article
a successor Trustee shall not have been appointed, the resigning Trustee or the
Company may apply to any court of competent jurisdiction for the appointment of
a successor Trustee.
Section 8.4. Upon the appointment of a successor Trustee, the resigning or
removed Trustee shall transfer and deliver the Fund to such successor Trustee,
after
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<PAGE>
reserving such reasonable amount as it shall deem necessary to provide for its
expenses in the settlement of its account, the amount of any compensation due to
it and any sums chargeable against the Fund for which it may be liable. If the
sums so reserved are not sufficient for such purposes, the resigning or removed
Trustee shall be entitled to reimbursement for any deficiency from the successor
Trustee and the Company who shall be jointly and severally liable therefor.
ARTICLE IX
INSURANCE COMPANIES
Section 9.1. If any contract issued by an insurance company shall form a
part of the Trust assets, the insurance company shall not be deemed a party to
this Agreement. A certification in writing by the Trustee as to the occurrence
of any event contemplated by this Agreement or the Plan shall be conclusive
evidence thereof and the insurance company shall be protected in relying upon
such certification and shall incur no liability for so doing. With respect to
any action under any such contract, the insurance company may deal with the
Trustee as the sole owner thereof and need not see that any action of the
Trustee is authorized by this Agreement or the Plan. Any change made or action
taken by an insurance company upon the direction of the Trustee shall fully
discharge the insurance company from all liability with respect thereto, and it
need not see to the distribution or further application of any moneys paid by it
to the Trustee or paid in accordance with the direction of the Trustee.
ARTICLE X
AMENDMENT AND TERMINATION OF THE TRUST AND PLAN
Section 10.1. The Company may, by delivery to the Trustee of an instrument
in writing, amend, terminate or partially terminate this Agreement at any time;
provided, however, that no amendment shall increase the duties or liabilities of
the Trustee without the Trustee's consent; and, provided further, that no
amendment shall divert any part of the Fund to any purpose other than providing
benefits to Participants and their Beneficiaries or defraying reasonable
expenses of administering the Plan.
Section 10.2. If the Plan is terminated in whole or in part, or if the
Company permanently discontinues its contributions to the Plan, the Trustee
shall distribute the Fund or any part thereof in such manner and at such times
as the Committee shall direct in writing. In the absence of receipt of such
written directions within 90 days after the effective date of such termination,
the Trustee shall distribute the Fund in accordance with the provisions of the
Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. Unless the context of this Agreement clearly indicates
otherwise, the terms defined in the Plan shall, when used herein, have the same
meaning as in the Plan.
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<PAGE>
Section 11.2. Except as otherwise required in the case of any qualified
domestic relations order within the meaning of Section 414(p) of the Code, the
benefits or proceeds of any allocated or unallocated portion of the assets of
the Fund and any interest of any Participant or Beneficiary arising out of or
created by the Plan either before or after the Participant's retirement shall
not be subject to execution, attachment, garnishment or other legal or judicial
process whatsoever by any person, whether creditor or otherwise, claiming
against such Participant or Beneficiary. No Participant or Beneficiary shall
have the right to alienate, encumber or assign any of the payments or proceeds
or any other interest arising out of or created by the Plan and any action
purporting to do so shall be void. The provisions of this Section shall apply
to all Participants and Beneficiaries, regardless of their citizenship or place
of residence.
Section 11.3. Nothing contained in this Agreement or in the Plan shall
require the Company to retain any Employee in its service.
Section 11.4. Any person dealing with the Trustee may rely upon a copy of
this Agreement and any amendments thereto certified to be true and correct by
the Trustee.
Section 11.5. The Trustee hereby acknowledges receipt of a copy of the
Plan. The Company will cause a copy of any amendment to the Plan to be
delivered to the Trustee.
Section 11.6. The construction, validity and administration of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania,
except to the extent that such laws have been specifically superseded by ERISA.
Section 11.7. This Trust Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and to this Trust Agreement were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Attest:
/s/ Nancy D. Higgs By/s/ Raymond J. Klapinsky
- ------------------------ -------------------------------------
Attest: VANGUARD FIDUCIARY TRUST CO.
/s/ Sheryl A. Summa By/s/ Michael K. Goldman
- ------------------------ ----------------------------------
ICF KAISER INTERNATIONAL, INC.
1180343
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<PAGE>
Exhibit 21
ICF KAISER INTERNATIONAL, INC.
9300 Lee Highway, Fairfax, VA 22031
(703) 934-3600
<TABLE>
<CAPTION>
Jurisdiction
Wholly Owned Subsidiaries: of Formation:
- -------------------------- -------------
<S> <C>
I. CLEMENT INTERNATIONAL CORPORATION Delaware
I. CYGNA GROUP, INC. Delaware
II. Liability Risk Management, Inc. California
I. EDA, INCORPORATED Maryland
I. GLOBAL TRADE & INVESTMENT, INC. Delaware
I. ICF CANNON ASSOCIATES, INC. Delaware
I. ICF CONSULTING ASSOCIATES, INC. Delaware
I. ICF INCORPORATED Delaware
I. ICF INFORMATION TECHNOLOGY, INC. Delaware
II. Phase Linear Systems Incorporated Delaware
I. ICF KAISER DEVELOPMENT CORPORATION, INC. Delaware
I. ICF KAISER ENGINEERS MASSACHUSETTS, INC. Delaware
I. ICF KAISER GOVERNMENT PROGRAMS, INC. Delaware
I. ICF KAISER HANFORD COMPANY Delaware
I ICF KAISER HOLDINGS UNLIMITED, INC. Delaware
II. Cygna Consulting Engineers and Project Management, Inc. California
II. Excell Development Construction, Inc. Delaware
III. International Systems, Inc. Colorado
II. ICF Kaiser Engineers Eastern Europe, Inc. Delaware
III. ICF Kaiser Netherlands B.V. (10%) Netherlands
II. ICF Kaiser Netherlands B.V. (90%) Netherlands
II. ICF Leasing Corporation, Inc. Delaware
I. ICF RESOURCES INCORPORATED Delaware
II. ICF R G.P. No. 1, Inc. Delaware
II. HBG Hawaii, Inc. Delaware
II. HBG International, Inc. Delaware
I. KAISER ENGINEERS PACIFIC, INC. Nevada
I. MONUMENT SELECT INSURANCE COMPANY Vermont
I. TUDOR ENGINEERING COMPANY Delaware
</TABLE>
- Page 1 of 2 -
<PAGE>
ICF KAISER INTERNATIONAL, INC.
<TABLE>
<CAPTION>
Jurisdiction
WHOLLY OWNED SUBSIDIARIES: (CONTINUED): of Formation:
- --------------------------------------- -------------
<S> <C>
I. ICF KAISER ENGINEERS GROUP, INC. Delaware
II. Henry J. Kaiser Company Nevada
II. ICF Florida First, Inc. Delaware
II. ICF Kaiser Engineers, Inc. Ohio
III. ICF Kaiser Engineers (California) Corporation Delaware
III. ICF Kaiser Engineers Corporation New York
III. ICF Kaiser Engineers of Michigan, Inc. Michigan
III. ICF Kaiser International Planning & Design, Inc. Pennsylvania
III. ICF Kaiser Remediation Company Delaware
III. Kaiser Engineers Australia Pty. Limited (50%) Australia
IV. Kaiser Engineers (NZ) Ltd (99%) New Zealand
III. Kaiser Engineers and Constructors, Inc. Nevada
IV. ICF Pty. Ltd. (50%) Australia
IV. Kaiser Engineers Limited (0.02%) U.K.
IV. Kaiser Engineers Australia Pty. Limited (50%) Australia
IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal
IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand
IV. Kaiser Engineers Pty. Ltd. (50%) Australia
IV. Kaiser Ingenieria de Chile Limitada (51%) Chile
III. Kaiser Engineers International, Inc. Nevada
IV. ICF Pty. Ltd. (50%) Australia
IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal
IV. Kaiser Engineers Pty. Ltd. (50%) Australia
IV. Kaiser Ingenieria de Chile Limitada (49%) Chile
III. Kaiser Engineers Limited (99.98%) U.K.
IV. Kaiser Engineers Technical Services Limited (80%) Cyprus
IV. Kaiser Engineers (UK) Limited (50%) U.K.
III. Kaiser Engineers (UK) Limited (50%) U.K.
IV. Kaiser Engineers Technical Services Limited (20%) Cyprus
III. Kaiser Engenharia e Constructoes Limitada Brazil
III. KE, Inc. Philippines
III. KE, Inc. (dba in Massachusetts: Kaiser Engineers Co.) Delaware
III. KE Services Corporation Delaware
III. La Compagnie Henry J. Kaiser Company (Canada) Ltee. Canada
III. Overseas Constructors & Engineers, Inc. Delaware
III. PCI Operating Company, Inc. Delaware
III. Temporary Engineering Services, Inc. Delaware
II. ICF Technology Incorporated Delaware
II. International Waste Energy Systems, Inc. Delaware
II. KE Livermore, Inc. Delaware
</TABLE>
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<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-1 of
our report dated April 28, 1995, on our audits of the financial statements of
ICF Kaiser International, Inc. We also consent to the reference to our firm
under the caption "Experts".
Coopers & Lybrand L.L.P.
Washington, D.C.
November 30, 1995
