<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996 Commission File No. 1-12248
ICF KAISER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 54-1437073
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9300 Lee Highway, Fairfax, Virginia 22031-1207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (703) 934-3600
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
On April 30, 1996, there were 21,856,748 shares of ICF Kaiser International,
Inc. Common Stock, par value $0.01 per share, outstanding.
<PAGE>
ICF KAISER INTERNATIONAL, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
<S> <C>
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995.................. 3
Consolidated Statements of Operations -
Three Months Ended March 31, 1996 and 1995............ 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995............ 5
Notes to Consolidated Financial Statements............ 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 7-11
Part II - Other Information
Item 1. Legal Proceedings.................................. 11
Item 2. Changes in Securities.............................. 11
Item 3. Defaults Upon Senior Securities.................... 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information.................................. 11
Item 6. Exhibits and Reports on Form 8-K................... 11
</TABLE>
2
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
- ---------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 30,900 $ 16,357
Contract receivables, net 215,081 228,239
Prepaid expenses and other current assets 12,376 20,911
Deferred income taxes 10,933 11,934
--------- ---------
Total Current Assets 269,290 277,441
--------- ---------
Fixed Assets
Furniture, equipment, and leasehold improvements 45,381 42,909
Less depreciation and amortization (34,718) (33,369)
--------- ---------
10,663 9,540
--------- ---------
Other Assets
Goodwill, net 49,660 49,259
Investments in and advances to affiliates 10,515 10,213
Due from officers and employees 1,100 1,053
Other 20,398 22,011
--------- ---------
81,673 82,536
--------- ---------
$361,626 $369,517
========= =========
LIABILITIES AND SHAREHOLDERS'EQUITY
Current Liabilities
Current portion of long-term debt $ 24 $ 5,041
Accounts payable and subcontractors payable 78,817 86,429
Accrued salaries and employee benefits 59,261 53,060
Accrued interest 3,837 7,414
Other accrued expenses 11,295 18,594
Income taxes payable 663 801
Deferred revenue 11,872 14,327
Other 6,316 7,186
--------- ---------
Total Current Liabilities 172,085 192,852
--------- ---------
Long-term Liabilities
Long-term debt, less current portion 129,173 120,112
Other 5,833 5,706
--------- ---------
135,006 125,818
--------- ---------
Commitments and Contingencies
Minority Interests in Subsidiaries 3,906 2,633
Redeemable Preferred Stock,
liquidation value $20,000 19,838 19,787
Common Stock, par value $.01 per share:
Authorized-90,000,000 shares
Issued and outstanding- 21,812,747 and 21,263,828 shares 218 213
Additional Paid-in Capital 65,693 64,654
Notes Receivable Related to Common Stock (1,732) (1,732)
Retained Earnings (Deficit) (32,109) (32,894)
Cumulative Translation Adjustment (1,279) (1,814)
--------- ---------
$361,626 $369,517
========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
----------------------------
(Unaudited)
<S> <C> <C>
GROSS REVENUE $ 311,119 $189,130
Subcontract and direct material costs (167,318) (91,585)
Equity in income of joint ventures
and affiliated companies 724 1,297
--------- ---------
SERVICE REVENUE 144,525 98,842
OPERATING EXPENSES
Direct cost of services and overhead 118,645 84,239
Administrative and general 15,805 12,693
Depreciation and amortization 2,607 2,307
--------- ---------
OPERATING INCOME (LOSS) 7,468 (397)
OTHER INCOME (EXPENSE)
Interest income 230 514
Interest expense (4,100) (4,001)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS 3,598 (3,884)
Income tax provision (benefit) 1,001 (832)
--------- ---------
INCOME (LOSS) BEFORE MINORITY INTERESTS 2,597 (3,052)
Minority interests in net income of subsidiaries 1,273 -
--------- ---------
NET INCOME (LOSS) 1,324 (3,052)
Preferred stock dividends and accretion 539 539
--------- ---------
NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS $ 785 $ (3,591)
========= =========
Primary and Fully Diluted
Net Income (Loss) Per Common Share $0.04 $(0.17)
========= =========
Primary and Fully Diluted Weighted Average
Common and Common Equivalent Shares Outstanding 21,732 21,307
========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
-----------------------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 1,324 $(3,052)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,607 2,307
Provision for losses on contract receivables 443 390
Provision for deferred income taxes 1,001 (1,231)
Earnings less than (in excess of) cash distributions from joint
ventures and affiliated companies (379) (920)
Unusual items 2,958 -
Minority interests in net income of subsidiaries 1,273 -
Changes in operating assets and liabilities,
net of acquisitions:
Contract receivables, net 12,742 (8,785)
Prepaid expenses and other current assets 654 (1,972)
Other assets 334 4
Accounts payable and accrued expenses (7,210) 8,741
Income taxes payable (138) 474
Deferred revenue (2,490) 406
Other liabilities (1,219) (407)
Other operating activities 68 -
------- -------
Net Cash Provided by (Used in) Operating Activities 11,968 (4,045)
------- -------
INVESTING ACTIVITIES
Purchases of fixed assets (999) (561)
Investments in subsidiaries and affiliates, net of cash acquired (51) (255)
------- -------
Net Cash Used in Investing Activities (1,050) (816)
------- -------
FINANCING ACTIVITIES
Borrowings under credit facility agreement 12,000 5,000
Principal payments on credit facility agreement (8,000) -
Principal payments on other borrowings - (260)
Reacquisition of senior subordinated notes and related warrants (46) -
Proceeds from issuances of common stock 126 99
Preferred stock dividends (990) (488)
------- -------
Net Cash Provided by Financing Activities 3,090 4,351
------- -------
Effect of Exchange Rate Changes on Cash 535 (80)
------- -------
Increase (Decrease) in Cash and Cash Equivalents 14,543 (590)
Cash and Cash Equivalents at Beginning of Period 16,357 27,967
------- -------
Cash and Cash Equivalents at End of Period $30,900 $27,377
======= =======
SUPPLEMENTAL INFORMATION:
Cash payments for interest $ 7,656 $ 7,596
Cash payments (refunds) for income taxes $ 137 $ (857)
NON-CASH TRANSACTIONS:
Issuance of common stock in connection with an acquisition $ 350 $ -
Issuance of common stock pursuant to an agreement with a
former employee $ 500 $ -
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying consolidated financial statements of ICF Kaiser International,
Inc. and subsidiaries (the Company) (including Kaiser-Hill Company, LLC,
effective July 1, 1995), except for the December 31, 1995 balance sheet, are
unaudited and have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. These statements should be read in conjunction with the
Company's audited consolidated financial statements and footnotes thereto for
the ten months ended December 31, 1995 and the information included in the
Company's Transition Report to the Securities and Exchange Commission on Form
10-K for the ten months ended December 31, 1995. Certain reclassifications have
been made to the prior period financial statements to conform to the
presentation used in the March 31, 1996 financial statements.
Note B - Significant Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note C- Minority Interests in Subsidiaries
Certain of the Company's 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 the Company's
consolidated financial statements and the outside parties' interests are
reflected as minority interests.
Note D - 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. The adjustments required by the modified
treasury stock method and for acquisition-related contingencies were anti-
dilutive for the loss period presented and immaterial to the income period
presented. Therefore, the adjustments were excluded from earnings per share
computations.
Note E - Long-term Debt
The Company recently completed negotiations to replace its Credit Facility with
Chemical Bank. The Company's new $40 million revolving credit facility became
effective May 6, 1996 and replaced the former Credit Facility which was due to
expire October 31, 1996. The new credit facility expires June 30, 1998 and is
provided by a lead bank and two other banks (the Banks) with terms and covenants
similar to those under the former Credit Facility. ICF Kaiser International,
Inc. and certain of its subsidiaries, which are guarantors of the new credit
facility, have granted the Banks a security interest in their accounts
receivable and certain other assets. The new credit facility limits the
payments of cash dividends on common stock and requires the maintenance of
specified financial ratios. Total available credit is determined from a
borrowing base calculation based on eligible accounts receivable (billed and
unbilled).
Note F - Contingencies
In the course of the Company's normal business activities, various claims or
charges have been asserted and litigation commenced against the Company arising
from or related to properties, injuries to persons, and breaches of contract, as
well as claims related to acquisitions and dispositions. Claimed amounts may
not bear any reasonable relationship to the merits of the claim or to a final
court award. In the opinion of management, 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.
6
<PAGE>
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.
Note G - Unusual Items
As of March 31, 1996, approximately 70 employees have been terminated in the
Company's engineering and international groups and the resulting $0.5 million of
severance payments have been charged against a $1.0 million accrual for
severance recorded during the ten months ended December 31, 1995. At December
31, 1995, the Company also recorded $0.7 million to accrue for consolidation of
office space. As of March 31, 1996, the Company has not yet implemented its
plans for office space consolidation. Management expects that all actions
associated with the termination of employees and office space consolidation will
be completed by December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
ICF Kaiser International, Inc. and Subsidiaries (the Company) is one of the
nation's largest engineering, construction, program management, and consulting
services companies, providing fully integrated capabilities to clients in four
related market areas: environment, infrastructure, industry, and energy. The
Company provides services to domestic and foreign clients in both the private
and public sectors.
Change in Fiscal Year
The Company changed from a fiscal year ending February 28 to a fiscal year
ending December 31, effective December 31, 1995. As a result, the comparative
period financial statements for the three months ended March 31, 1995 have been
restated to conform with the presentation used in the March 31, 1996 financial
statements.
Operating Results for Three Months
The Company's operating income of $7.5 million for the three months ended March
31, 1996 was a $7.9 million increase from the $0.4 million operating loss
recorded for the three months ended March 31, 1995. The increase in operating
income partially resulted from a $2.4 million increase in operating income from
the Company's operations at the Department of Energy's (DOE) Hanford, Washington
site (Hanford). The 1996 results reflect higher award fees earned at Hanford.
An additional $2.6 million of the increase in operating income was due to
earnings (before minority interests) from the Performance Based Integrating
Management Contract at DOE's Rocky Flats Environmental Technology Site in
Colorado (Rocky Flats). The Rocky Flats 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). The 1995
results reflect approximately $1.5 million of bidding costs incurred for the
Rocky Flats contract. Work under the Rocky Flats contract began on July 1,
1995. Other increases in operating income include the recognition of additional
revenues in 1996 as well as a reduction in certain corporate overhead costs.
7
<PAGE>
Operating income from engineering and construction operations declined
$0.9 million from the three months ended March 31, 1995, partially offsetting
the increases discussed above. This decline primarily resulted from increases in
marketing activities in pursuit of large-scale projects.
The Company has expanded its commitment of resources towards marketing efforts
in 1996, resulting in an increase in marketing expenses over 1995 levels.
Management believes that the Company's continuing investment in its business
development activities should result in additional contract awards in both the
public and private sectors of its business.
Business Conditions
The Company's contract backlog decreased slightly to $4.3 billion at March 31,
1996 compared to $4.4 billion at December 31, 1995. The most significant
addition to backlog in the period was from the signing in March 1996 of a two-
year, $102 million contract to provide engineering and construction services for
the initial phase of a $275 million mini-mill project for Nova Hut, a.s., an
integrated steel maker based in the Ostrava region of the Czech Republic. The
Company will oversee the construction of a mini-mill as well as future
production and environmental upgrades to Nova Hut's existing integrated
steelmaking facilities. The Company has been conducting preliminary
engineering for the Nova Hut project since July 1994.
In January 1996, the Company was awarded a three-year contract extension, valued
at more than $78 million, from the Massachusetts Water Resources Authority to
continue providing construction management services for the Boston Harbor
environmental cleanup project. Under the contract extension, the Company will
continue to provide program support services, construction management services,
and coordination for all construction activities through 1998.
The Company, through its subsidiary, ICF Kaiser Hanford Company, is currently
teaming with five other nationally known firms in bidding on DOE's new
management and integration contract at Hanford. The Company's response to DOE's
request for proposals was submitted in March 1996. DOE has indicated that it
would like the new contract to be in place in October 1996. The Company's
existing contract to perform services at Hanford terminates in March 1997. Two
other teams have also bid on the new contract; one of those teams includes
Westinghouse Hanford Company (the incumbent management and operations contractor
at the site). If the Company is unsuccessful in its bidding efforts on the new
Hanford contract, the impact on the Company's operating income after 1996 could
be significant unless the Company can replace such income with new contract
awards.
The Company's consulting group had relatively consistent operating results
between the three month periods ended March 31, 1996 and 1995 despite the delays
in task-order assignments under contract awards due to the federal government
impasse. The federal government's fiscal 1996 budget was not finalized until
April 1996, which led to the federal government operating under a continuing
resolution since October 1, 1995.
During the past six months the prospects for expansion of the Company's
international business have improved. In addition to the above-mentioned Nova
Hut contract, the Company continued a light rail project and was awarded an
airport expansion project in the Philippines. The Company is currently pursuing
international prospects in excess of $2 billion.
The Company has continued in its efforts to enhance profitability of its
engineering business and is currently planning a realignment of several of its
offices and has already terminated approximately 70 employees during the three
months ended March 31, 1996 (see Note G to the consolidated financial
statements). Management believes these endeavors, combined with other ongoing
efforts described above, should positively impact the Company's future
performance.
8
<PAGE>
Results of Operations
The following table summarizes key elements in the Consolidated Statements of
Operations for the three months ended March 31, 1996 and 1995.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
(dollars in millions)
Gross revenue $311.1 $189.1
Service revenue $144.5 $ 98.8
Service revenue as a percentage of
gross revenue 46.4% 52.2%
Operating expenses as a percentage of
service revenue:
Direct cost of services and
overhead 82.1% 85.2%
Administrative and general 10.9% 12.8%
Depreciation and amortization 1.8% 2.3%
Operating income (loss) as a percentage
of service revenue 5.2% (0.4)%
- --------------------------------------------------------------------------------
</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. The
Company 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 Rocky Flats 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 the Company in 1996, operating income includes the portion of
income generated under the Rocky Flats contract attributable to CH2M Hill. CH2M
Hill's interest in Kaiser-Hill is reflected as a minority interest in
subsidiaries in the Company's financial statements (see Note C to the
consolidated financial statements.)
Revenue
Gross revenue for the three months ended March 31, 1996 increased $122.0
million, or 64.5%, to $311.1 million. The increase in gross revenue was
primarily attributable to the commencement of work under the Rocky Flats
contract which generated $129.8 million in gross revenue during the three months
ended March 31, 1996. The increase was partially offset by a $9.9 million
reduction in gross revenue under the Hanford contract due to federal budget
reductions at the Hanford site. This reduced level of Hanford activity is
expected to continue and may be reduced further during the remaining contract
period; 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 this particular DOE contract.
Service revenue increased by $45.7 million for the three-month period ended
March 31, 1996 as compared to the three-month period ended March 31, 1995. The
increase was due primarily to $44.5 million generated under the Rocky Flats
contract, offset by a $2.9 million decrease in service revenue under the Hanford
contract. Service revenue as a percentage of gross revenue decreased to 46.4%
for the three months ended March 31, 1996 from 52.2% for the three months ended
March 31, 1995. The decrease in service revenue as a percentage of gross
revenue is a result of the nature of the Rocky Flats contract. A significant
portion of the gross revenue derived from the Rocky Flats contract includes the
costs of services subcontracted to third parties.
9
<PAGE>
Operating Expenses
Direct cost of services and overhead increased $34.4 million between the three-
month periods ended March 31, 1996 and 1995. Costs of $41.3 million on the new
Rocky Flats contract were offset by a $6.0 million reduction in Hanford costs
attributable to the federal budget reductions discussed above. The Company's
direct cost of services and overhead as a percentage of service revenue for the
three months ended March 31, 1996 was comparable to the same period in the prior
year.
Administrative and general expense increased $3.1 million, or 24.5%, between the
three-month periods ended March 31, 1996 and 1995 but decreased from 12.8% to
10.9% as a percentage of service revenue. The increase in these costs is
primarily attributable to the Company's increased commitment to marketing
activities in 1996, 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. The decrease in
administrative and general expenses as a percentage of service revenue is
attributed to the increase in service revenue in 1996 from the Rocky Flats
contract which does not have a proportionate increase in administrative and
general expenses.
Income Tax Expense
The Company's income tax provision was $1.0 million for the three months ended
March 31, 1996 compared with an income tax benefit of $0.8 million for the three
months ended March 31, 1995. For the three months ended March 31, 1995,
permanent differences (such as the nondeductibility of goodwill) significantly
reduced the Company's income tax benefit in a loss period. In 1996, due to
higher pretax income levels, the relative effect of permanent differences on the
effective tax rate is significantly decreased. The three months ended March 31,
1995 also included the effect of a repatriation of overseas funds to the United
States which could not then be currently offset by foreign tax credits,
resulting in an additional reduction of the income tax benefit for that period.
The income tax provision for the three months ended March 31, 1996 was computed
by excluding the minority interest in Kaiser-Hill's income because Kaiser-Hill
is a flow-through entity for tax purposes and is partially owned by an outside
party.
Liquidity and Capital Resources
During the three months ended March 31, 1996, cash and cash equivalents
increased $14.5 million to $30.9 million. Operating activities generated $12.0
million in cash, primarily from operations at Kaiser-Hill. Other operating
sources of cash included $7.0 million received from the Internal Revenue Service
(IRS) in settlement of litigation, while significant operating uses of cash
included a $7.5 million interest payment on the Company's Senior Subordinated
Notes (Senior Notes) and $3.7 million of payments for settlement costs of
litigation. During the quarter, net borrowings under the Credit Facility
provided $4.0 million in cash. Overall, cash was used in investing and
financing activities for purchases of fixed assets ($1.0 million) and payment of
dividends ($1.0 million). The next interest payment on the Senior Notes is due
in June 1996.
A decrease in contract receivables, net between December 31, 1995 and March 31,
1996 was primarily due to the timing of the sale of receivables under the
Kaiser-Hill receivables purchase facility at the end of March 1996. A decrease
in other accrued expenses was primarily due to payments for settlement costs of
litigation. The decrease in prepaid expenses and other current assets in 1996
was attributable to the $7.0 million received from the IRS referred to above.
The IRS settlement is included in unusual items on the Statement of Cash Flows.
On May 6, 1996, the Company replaced its Credit Facility. The new $40 million
revolving credit facility (New Facility) replaced the Credit Facility which was
due to expire October 31, 1996. The New Facility expires June 30, 1998 and is
provided by a lead bank and two other banks (the Banks) with terms and covenants
similar to those under the Credit Facility. ICF Kaiser International, Inc. and
certain of its subsidiaries, which are guarantors of the New Facility, granted
the Banks a security interest in their accounts receivable and certain other
assets. The New Facility limits the payments of cash dividends on common stock
and requires the maintenance of specified financial ratios. Total available
credit is determined from a borrowing base calculation based on eligible
accounts receivable (billed and unbilled).
10
<PAGE>
Management believes that current projected levels of cash flows and the
availability of financing, including New Facility borrowings, will be adequate
to fund operations throughout the next twelve months. The Company's Series 2D
Senior Preferred Stock is subject to mandatory redemption on January 13, 1997 in
the amount of $20 million plus accrued dividends. The Company currently intends
to use cash generated from operations and alternative financing sources to
redeem this preferred stock on or before the redemption date. As of March 31,
1996, the Company had $9.0 million of borrowings, excluding letters of credit,
outstanding under the Credit Facility. As of May 7, 1996, the Credit Facility
was terminated (as discussed above) and all borrowings were repaid. As of May
7, 1996, cash borrowings outstanding under the New Facility were $5.5 million
and letters of credit outstanding were $17.1 million.
Part II - Other Information
Item 1. Legal Proceedings
As previously reported in the Transition Report on Form 10-K for the
ten months ended December 31, 1995.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed as part of this report are listed below:
No.10 (n) (3) Amendment No. 6 to the Agreement with the Massachusetts Water
Resources Authority for Construciton Management Services
(January 1996)
No. 11 Computation of Primary and Fully Diluted Earnings Per Share
No. 27 Financial Data Schedule
(b) Report on Form 8-K
Report on Form 8-K filed on March 12, 1996, reporting financial results for
the ten months ended December 31, 1995.
11
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report of Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized.
ICF KAISER INTERNATIONAL, INC.
(Registrant)
Date: May 15, 1996 /s/ Richard K. Nason
-------------------------
Richard K. Nason
Executive Vice President and
Chief Financial Officer
(Duly authorized officer and
principal financial officer)
12
<PAGE>
AMENDMENT NO. 6
TO THE AGREEMENT BETWEEN THE
MASSACHUSETTS WATER RESOURCES AUTHORITY AND
ICF KAISER ENGINEERS, INC.
THROUGH ITS WHOLLY OWNED SUBSIDIARY OF
ICF KAISER ENGINEERS OF MASSACHUSETTS, INC. FOR
CONSTRUCTION MANAGEMENT SERVICES (CONTRACT NO. 5622)
WHEREAS, the Massachusetts Water Resources Authority (hereinafter, the
"Authority" or "MWRA") and ICF Kaiser Engineers, Inc., through its wholly owned
subsidiary of ICF Kaiser Engineers of Massachusetts, Inc. (the "Consultant" or
"Construction Manager" or "CM") (MWRA and the Consultant are jointly referred to
as the "parties") entered into an Agreement dated July 9, 1990 (the "Agreement")
pursuant to which the Consultant agreed to provide Construction Management
Services in connection with the Boston Harbor Project - Deer Island Related
Facilities; and
WHEREAS, the parties entered into Amendment No. 1 to the Agreement on
September 10, 1991 to provide for the implementation and necessary
administration of a Substance Abuse Prevention Program ("SAPP") and to allow for
the indemnification of the Consultant in its role as administrator of the SAPP;
and
WHEREAS, the parties entered into Amendment No. 2 to the Agreement on
September 15, 1992 to provide for adjustment in the contract compensation
amounts in accordance with the Authority's Internal Audit Unit's preliminary
audit findings and to provide for additional staff resources to perform work
within and beyond the original scope of the Agreement; and
WHEREAS, the parties entered into Amendment No. 3 to the Agreement on
December 11, 1992 to provide for resident engineering and inspection services
for the Construction Packages ("CPs") commencing approximately between July 1,
1992 and December 31, 1995; and
WHEREAS, the parties entered into Amendments No. 4 and 4A to the
Agreement on December 2, 1993 to provide the resources required for management
and coordination of additional resident engineering and inspection services
authorized under Amendment No. 3 and to provide for additional staff resources
to perform work within and beyond the original scope of the Agreement; and
WHEREAS, the parties entered into Amendment No. 5 to the Agreement on
September 6, 1994 to provide the resources required for management and
coordination of Inter-CP Testing activities and to provide for additional staff
resources to perform work within and beyond the original scope of the Agreement.
WHEREAS, the parties now wish to amend that Agreement to exercise the
Authority's right to extend the Agreement beyond the original term through the
first, full, three year optional period (January 1, 1996 - December 31, 1998)
for the performance and remuneration of construction management services as
fully described herein.
NOW THEREFORE, the parties hereby agree that the Agreement dated July
9, 1990 as amended on September 10, 1991, September 15, 1992 December 11, 1992,
December 2, 1993, and September 6, 1994 is further amended as follows:
1. Article 2.2 of the Agreement entitled Timely Performance is amended as
follows:
-1-
<PAGE>
a. Delete in its entirety the second sentence of Article 2.2.1 and
substitute therefor the following new second sentence: "The term of
this Agreement shall be from the date of a fully executed copy of the
Agreement or an earlier date or another date if so stipulated in a
Notice to Proceed to the Consultant, through December 31, 1998."
2. Attachment A of the Agreement, entitled CM Scope of Services is
amended as follows:
a. Delete in its entirety "Amendment No. 5 - Attachment A, Scope of
Services" consisting of 58 pages and substitute therefor "Amendment
No. 6 - Attachment A, CM Scope of Services" consisting of 59 pages.
3. Attachment B of the Agreement entitled Key Project Personnel is
amended as follows:
a. Delete in its entirety "Amendment No. 5 - Attachment B, Key Project
Personnel" consisting of 1 page and substitute therefor "Amendment No.
6 - Attachment B, Key Project Personnel" consisting of 1 page.
4. Attachment C of the Agreement entitled Project Schedule is amended as
follows:
a. Delete in its entirety "Attachment C, Project Schedule (Revision 1)"
consisting of 9 pages and substitute therefor "Amendment No. 6 -
Attachment C, Project Schedule" consisting of 11 pages.
5. Attachment D of the Agreement entitled Subconsultants is amended as
follows:
a. Delete in its entirety "Amendment No. 5 - Attachment D,
Subconsultants" consisting of 1 page and substitute therefor
"Amendment No. 6 - Attachment D, Subconsultants" consisting of 1 page.
6. Attachment E of the Agreement entitled Compensation is amended as
follows:
a. Delete in its entirety "Amendment No. 5 - Table of Contents"
consisting of 1 page and substitute therefor "Amendment No. 6 -
Table of Contents" consisting of 1 page.
b. Delete in its entirety the Narrative Text of "Attachment E (Revision
1)" as included in Amendment No. 3 and as further amended in
Amendments No. 4 and 4A, and 5 consisting of 21 pages. Substitute
therefor "Amendment No. 6 - Attachment E - Compensation" Narrative
Text consisting of 23 pages.
c. Add a new "Table E-1 Total Contract thru Amendment No. 6" for ICF
Kaiser Engineers of Massachusetts, Inc. consisting of 2 pages.
d. Add a new "Table E-1 Amendment No. 6 only" for ICF Kaiser Engineers
of Massachusetts, Inc. consisting of 2 pages.
e. Add a new "Table E-1 Total Contract thru Amendment No. 6" consisting
of two pages for each of the following firms: Architectural Engineers,
Inc.; ASEC Corporation; Briggs Associates; CH2M Hill; Coast & Harbor
Associates, Inc.; DMC Engineering, Inc.; Enviroscience, Inc.;
Howard/Stein - Hudson Associates (field); Howard/Stein - Hudson
Associates (home); I.T.O. Corporation of New England; MBE (To Be
Determined); Professional Services Group (field); Professional
Services Group (home); Regina Villa Associates (field); Regina Villa
Associates (home); SEA Consultants, Inc.; Stone & Webster Civil and
Transportation Services, Inc. (field); Stone & Webster Civil and
Transportation Services, Inc. (home); Stull & Lee, Inc.; Don Todd
Associates, Inc.; and Williams-Russell and Johnson, Inc.
-2-
<PAGE>
f. Add a new "Table E-1 Amendment No. 6 only" consisting of two pages for
each of the following firms: Architectural Engineers, Inc.; ASEC
Corporation; Briggs Associates; CH2M Hill; Coast & Harbor Associates,
Inc.; DMC Engineering, Inc.; Enviroscience, Inc.; Howard/Stein -
Hudson Associates (field); I.T.O. Corporation of New England; MBE (To
Be Determined); Professional Services Group (field); Professional
Services Group (home); Regina Villa Associates (field); Regina Villa
Associates (home); SEA Consultants, Inc.; Stone & Webster Civil and
ransportation Services, Inc. (field); Stone & Webster Civil and
Transportation Services, Inc. (home); Stull & Lee, Inc.; Don Todd
Associates, Inc.; Williams- Russell and Johnson, Inc.; and Whidden
Memorial Hospital.
g. Delete in its entirety "Table E-4 Summary and Detail" consisting of
94 pages and substitute therefor "Table E-4 Summary and Detail
Amendment #6" consisting of 148 pages.
h. Delete in its entirety "Table E-5 Estimated Direct Reimbursement Costs
Summary" consisting of 1 page and substitute therefor "Table E-5
Estimated Direct Reimbursement Costs Summary Amendment #6" consisting
of 1 page.
i. Delete in its entirety "Table E-6 Estimated Extraordinary Reimbursable
Expenses" consisting of 2 pages and substitute therefor "Table E-6
Estimated Extraordinary Reimbursable Expenses Amendment #6" consisting
of 2 pages.
j. Add a new table "Table E-12 Project Specific Indirect Cost Rates"
consisting of 1 page.
7. Attachment G of the Agreement entitled 314 CMR 11: Division of Water
Control; and 40 CFR ch. 1 (7/1/86 edition) is amended as follows:
a. Delete in its entirety and substitute therefor "310 CMR 41.00"
consisting of 31 pages.
8. Attachment H of the Agreement entitled ICF Kaiser Engineers of
Massachusetts, Inc. Standard Personnel Pay Policy is amended as follows:
a. Delete in its entirety and substitute therefor a revised policy "ICF
Kaiser Engineers of Massachusetts, Inc. Standard Personnel Pay Policy
Amendment #6", consisting of 32 pages.
All of the Attachments and Tables referenced in Items 1 through 8
above are attached to this Amendment and incorporated herein.
Neither execution of this Amendment No. 6, nor previous payments to
the Consultant, shall constitute a waiver by the Authority of any right it may
have against the Consultant for deficient Consultant performance during the
entire term of the Agreement.
All other terms and conditions of the Agreement remain the same.
IN WITNESS WHEREOF, the parties have executed this Amendment
No. 6 this 30th day of January, 1996.
-3-
<PAGE>
EXHIBIT 11
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Net income (loss) available for
common shareholders $ 785,000 $ (3,591,000)
=========== ============
Weighted average of common shares
outstanding not included in
amounts below 21,731,739 21,031,698
Weighted average of common shares
issuable pursuant to an agreement
with a former employee - 275,000
----------- ------------
Weighted average of common and
common equivalent shares
outstanding, as adjusted 21,731,739 21,306,698
or or
21,732,000 21,307,000
=========== ============
Net income (loss) per common share $ 0.04 $ (0.17)
=========== ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 30,900,000
<SECURITIES> 0
<RECEIVABLES> 226,945,000
<ALLOWANCES> 11,864,000
<INVENTORY> 0
<CURRENT-ASSETS> 269,290,000
<PP&E> 45,381,000
<DEPRECIATION> 34,718,000
<TOTAL-ASSETS> 361,626,000
<CURRENT-LIABILITIES> 172,085,000
<BONDS> 129,173,000<F1>
19,838,000
0
<COMMON> 218,000
<OTHER-SE> 30,572,000
<TOTAL-LIABILITY-AND-EQUITY> 361,626,000
<SALES> 0
<TOTAL-REVENUES> 311,119,000<F2>
<CGS> 0
<TOTAL-COSTS> 118,645,000<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 443,000
<INTEREST-EXPENSE> 4,100,000
<INCOME-PRETAX> 3,598,000
<INCOME-TAX> 1,001,000
<INCOME-CONTINUING> 1,324,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,324,000
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
<FN>
<F1>Excludes current portion of bonds, mortgages, and similar debt.
<F2>Represents gross revenue which includes costs of certain services
subcontracted to third parties and other reimbursable direct project costs,
such as materials procured by the Company on behalf of its customers.
<F3>Excludes subcontract and direct material costs of $167,318,000.
</TABLE>
