<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, 1997 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, 1997, there were 22,410,987 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
Page
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996................................3
Consolidated Statements of Operations -
Three Months Ended March 31, 1997 and 1996..........................4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996..........................5
Notes to Consolidated Financial Statements.......................6-13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................14-18
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........18
Part II - Other Information
Item 1. Legal Proceedings..................................................18
Item 2. Changes in Securities..............................................18
Item 3. Defaults Upon Senior Securities....................................18
Item 4. Submission of Matters to a Vote of Security Holders................18
Item 5. Other Information..................................................18
Item 6. Exhibits and Reports on Form 8-K...................................18
2
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except shares)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
March 31, December 31,
1997 1996
- --------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 20,208 $ 16,761
Contract receivables, net 215,028 223,278
Prepaid expenses and other current assets 10,204 27,096
Deferred income taxes 11,324 9,739
-------- --------
Total Current Assets 256,764 276,874
-------- --------
Fixed Assets
Furniture, equipment, and leasehold improvements 49,587 48,410
Less depreciation and amortization (37,851) (37,208)
-------- --------
11,736 11,202
-------- --------
Other Assets
Goodwill, net 49,105 49,699
Investments in and advances to affiliates 6,242 6,443
Due from officers and employees 674 716
Other 21,122 21,039
-------- --------
77,143 77,897
-------- --------
$345,643 $365,973
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 26 $ 43
Accounts payable and subcontractors payable 60,122 67,679
Accrued salaries and employee benefits 48,982 45,779
Accrued interest 4,453 47
Other accrued expenses 17,842 21,479
Income taxes payable 821 852
Deferred revenue 21,295 21,829
Other 7,023 5,268
-------- --------
Total Current Liabilities 160,564 162,976
-------- --------
Long-term Liabilities
Long-term debt, less current portion 137,643 156,519
Other 5,290 5,432
-------- --------
142,933 161,951
-------- --------
Commitments and Contingencies
Minority Interests in Subsidiaries 7,173 6,154
Common Stock, par value $.01 per share:
Authorized-90,000,000 shares
Issued and outstanding-22,434,640 and 22,311,842
shares 224 223
Additional Paid-in Capital 67,158 66,983
Notes Receivable Related to Common Stock (1,732) (1,732)
Retained Earnings (Deficit) (29,191) (29,238)
Cumulative Translation Adjustment (1,486) (1,344)
-------- --------
$345,643 $365,973
======== ========
- --------------------------------------------------------------------------------
</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,
----------------------------
1997 1996
- --------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
GROSS REVENUE $ 265,957 $ 311,119
Subcontract and direct material costs (162,266) (167,318)
Equity in income of joint ventures
and affiliated companies 287 724
--------- ---------
SERVICE REVENUE 103,978 144,525
OPERATING EXPENSES
Direct cost of services and overhead 81,685 118,645
Administrative and general 13,326 15,805
Depreciation and amortization 2,369 2,607
--------- ---------
OPERATING INCOME 6,598 7,468
OTHER INCOME (EXPENSE)
Interest income 339 230
Interest expense (4,353) (4,100)
--------- ---------
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 2,584 3,598
Income tax provision 568 1,001
--------- ---------
INCOME BEFORE MINORITY INTERESTS 2,016 2,597
Minority interests in net income of subsidiaries 1,969 1,273
--------- ---------
NET INCOME 47 1,324
Preferred stock dividends and accretion - 539
--------- ---------
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS $ 47 $ 785
========= =========
PRIMARY AND FULLY DILUTED
NET INCOME PER COMMON SHARE $ 0.00 $ 0.04
========= =========
PRIMARY AND FULLY DILUTED WEIGHTED AVERAGE
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 22,319 21,732
========= =========
- --------------------------------------------------------------------------------
</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,
----------------------------
1997 1996
- -----------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 47 $ 1,324
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,369 2,607
Provision for losses on contract receivables 447 443
Provision for deferred income taxes (1,585) 1,001
Earnings less than (in excess of) cash distributions from
joint ventures and affiliated companies 302 (379)
Minority interests in net income of subsidiaries 1,969 1,273
Unusual items, net - 2,958
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Contract receivables, net 7,803 12,742
Prepaid expenses and other current assets 344 654
Other assets (1,146) 334
Accounts payable and accrued expenses (3,308) (7,210)
Income taxes payable (31) (138)
Deferred revenue (534) (2,490)
Other liabilities 1,720 (1,219)
Other operating activities 81 68
---------- ----------
Net Cash Provided by Operating Activities 8,478 11,968
---------- ----------
INVESTING ACTIVITIES
Sales of subsidiaries and subsidiary assets 16,540 -
Purchases of fixed assets (892) (999)
Investments in subsidiaries and affiliates, net of cash
acquired (118) (51)
---------- ----------
Net Cash Provided by (Used in) Investing Activities 15,530 (1,050)
---------- ----------
FINANCING ACTIVITIES
Borrowings under credit facility 23,000 12,000
Principal payments on credit facility and other borrowings (42,000) (8,000)
Distribution of income to minority interest (950) -
Proceeds from issuances of common stock 60 126
Repurchases of common stock (252) -
Preferred stock dividends - (990)
Debt issuance costs (277) -
Other financing activities - (46)
---------- ----------
Net Cash Provided by (Used in) Financing Activities (20,419) 3,090
---------- ----------
Effect of Exchange Rate Changes on Cash (142) 535
---------- ----------
Increase in Cash and Cash Equivalents 3,447 14,543
Cash and Cash Equivalents at Beginning of Period 16,761 16,357
---------- ----------
Cash and Cash Equivalents at End of Period $ 20,208 $ 30,900
========== ==========
SUPPLEMENTAL INFORMATION:
Cash payments for interest $ 281 $ 7,656
Cash payments (refunds) for income taxes $ 9 $ 137
NON-CASH TRANSACTIONS:
Issuance of common stock in connection with
an acquisition $ - $ 350
Issuance of common stock pursuant to agreements
with employees $ 287 $ 500
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
- ------------------------
The accompanying consolidated financial statements of ICF Kaiser International,
Inc. and subsidiaries (the Company), except for the December 31, 1996 balance
sheet, are unaudited and have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. These statements should be read in conjunction
with the Company's audited consolidated financial statements and footnotes
thereto for the year ended December 31, 1996 and the information included in the
Company's Annual Report to the Securities and Exchange Commission (SEC) on Form
10-K for the year ended December 31, 1996.
2. Net Income Per Common Share
- ------------------------------
Net income per common share was computed under the treasury stock method and the
modified treasury stock method for the three months ended March 31, 1997 and
1996, respectively, using net income available for common shareholders and the
weighted average number of common stock and common stock equivalents outstanding
during the periods. 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 under both methods were immaterial.
Therefore, the adjustments were excluded from earnings per share computations
for both periods presented.
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 128, Earnings per Share (SFAS No. 128), effective for
financial statements for both interim and annual periods ending after December
15, 1997. SFAS No. 128 requires the presentation of basic and diluted earnings
per share instead of primary and fully diluted earnings per share. Under the
Company's existing equity structure as of March 31, 1997, the computation of
basic and diluted earnings per share, as defined under SFAS No. 128, results in
earnings per share that is substantially the same as primary and fully diluted
earnings per share as presented in the accompanying financial statements.
3. 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.
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, results of 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 pending audits related to fiscal years 1986 forward, the
6
<PAGE>
government has asserted, among other things, that certain costs claimed as
reimbursable under government contracts either were not allowable or not
allocated in accordance with federal procurement regulations. The Company is
actively working with the government to resolve these issues. The Company has
provided for its estimate of the potential effect of issues that have been
quantified, including its estimate of disallowed costs for the periods currently
under audit and for periods not yet audited. Many of the issues, however, have
not been quantified by the government or the Company, and others are qualitative
in nature, and their potential financial impact, if any, is not quantifiable by
the government or the Company at this time. The Company's provision will be
reviewed periodically as discussions with the government progress.
4. Long-term Debt
- -----------------
The Company's $40 million revolving credit facility is provided by a group of
three banks and expires on December 31, 1998. The credit facility was amended
to modify certain financial ratios and to extend the termination date of the
credit facility from June 30, 1998, to December 31, 1998. The amendment was
effective for the three months ended March 31, 1997.
In March 1997, the Company exchanged its 12% Senior Notes due 2003, Series A for
12% Senior Notes due 2003, Series B that had been registered with the SEC in
January 1997. The terms of the Series B Senior Notes substantially are
identical to the terms of the Series A Senior Notes.
5. Guarantor Subsidiaries
- -------------------------
Four wholly owned subsidiaries of ICF Kaiser International, Inc. (Subsidiary
Guarantors) unconditionally guarantee the payment of the principal, premium, if
any, and interest on the Company's Subordinated Notes and the Series B Senior
Notes (see Note 4). The Subsidiary Guarantors are Cygna Consulting Engineers
and Project Management, Inc.; ICF Kaiser Government Programs, Inc.; PCI
Operating Company, Inc.; and Systems Applications International, Inc.
Presented below is condensed consolidating financial information for ICF Kaiser
International, Inc. (Parent Company), the Subsidiary Guarantors, and the Non-
Guarantor Subsidiaries. The information, except for the December 31, 1996
condensed consolidating balance sheet, is unaudited.
Investments in subsidiaries have been presented using the equity method of
accounting. In the Company's opinion, separate financial statements for
Subsidiary Guarantors would not provide additional information that is material
to investors. Therefore, the Subsidiary Guarantors are combined in the
presentation below.
7
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser
Parent Subsidiary Non-Guarantor International, Inc.
Company Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------- ------------ -------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ (3,756) $ 9,808 $ 14,655 $ (499) $ 20,208
Contract receivables, net 1,429 79,733 133,866 - 215,028
Intercompany receivables, net 126,106 (222) (125,884) - -
Prepaid expenses and other current assets 3,660 186 6,574 (216) 10,204
Deferred income taxes 11,324 - - - 11,324
-------- ------- --------- -------- --------
Total Current Assets 138,763 89,505 29,211 (715) 256,764
-------- ------- --------- -------- --------
Fixed Assets
Furniture, equipment, and leasehold improvements 8,313 2,198 39,076 - 49,587
Less depreciation and amortization (4,374) (2,088) (31,389) - (37,851)
-------- ------- --------- -------- --------
3,939 110 7,687 - 11,736
-------- ------- --------- -------- --------
Other Assets
Goodwill, net - - 49,105 - 49,105
Other 64,222 2,424 21,704 (60,312) 28,038
-------- ------- --------- -------- --------
64,222 2,424 70,809 (60,312) 77,143
-------- ------- --------- -------- --------
$206,924 $92,039 $ 107,707 $(61,027) 345,643
======== ======= ========= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ - $ - $ 26 $ - $ 26
Accounts payable and other accrued expenses 12,867 47,874 17,223 - 77,964
Accrued salaries and employee benefits 5,759 26,883 16,340 - 48,982
Other 10,773 477 22,357 (15) 33,592
-------- ------- --------- -------- --------
Total Current Liabilities 29,399 75,234 55,946 (15) 160,564
-------- ------- --------- -------- --------
Long-term Liabilities
Long-term debt, less current portion 138,331 - - (688) 137,643
Other 2,735 - 2,555 - 5,290
-------- ------- --------- -------- --------
141,066 - 2,555 (688) 142,933
-------- ------- --------- -------- --------
Minority Interests in Subsidiaries - 7,173 - - 7,173
Common Stock 224 108 166 (274) 224
Additional Paid-in Capital 67,158 224 61,119 (61,343) 67,158
Retained Earnings (Deficit) (29,191) 9,300 (10,593) 1,293 (29,191)
Other Equity (1,732) - (1,486) - (3,218)
-------- ------- --------- -------- --------
$206,924 $92,039 $ 107,707 $(61,027) $345,643
======== ======= ========= ======== ========
</TABLE>
8
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser
Parent Subsidiary Non-Guarantor International, Inc.
Company Guarantors Subsidiaries Eliminations Consolidated
----------- ---------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ (7,720) $ 11,974 $ 13,001 $ (494) $ 16,761
Contract receivables, net 183 78,585 144,510 -- 223,278
Intercompany receivables, net 155,653 (2,543) (153,110) -- --
Prepaid expenses and other current assets 4,509 187 22,731 (331) 27,096
Deferred income taxes 12,504 -- (2,765) -- 9,739
----------- --------- ---------- ----------- -----------
Total Current Assets 165,129 88,203 24,367 (825) 276,874
----------- --------- ---------- ----------- -----------
Fixed Assets
Furniture, equipment and leasehold improvements 7,243 2,198 38,969 -- 48,410
Less depreciation and amortization (3,430) (2,079) (31,699) -- (37,208)
----------- --------- ---------- ----------- -----------
3,813 119 7,270 -- 11,202
----------- --------- ---------- ----------- -----------
Other Assets
Goodwill, net -- -- 49,699 -- 49,699
Other 58,494 2,602 21,774 (54,672) 28,198
----------- --------- ---------- ----------- -----------
58,494 2,602 71,473 (54,672) 77,897
----------- --------- ---------- ----------- -----------
$ 227,436 $ 90,924 $ 103,110 $ (55,497) $ 365,973
=========== ========= ========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ -- $ -- $ 43 $ -- $ 43
Accounts payable and other accrued expenses 16,467 53,612 19,079 -- 89,158
Accrued salaries and employee benefits 10,242 22,498 13,039 -- 45,779
Other 4,454 447 23,126 (31) 27,996
----------- --------- ---------- ----------- -----------
Total Current Liabilities 31,163 76,557 55,287 (31) 162,976
----------- --------- ---------- ----------- -----------
Long-term Liabilities
Long-term debt, less current portion 157,306 -- -- (787) 156,519
Other 2,731 -- 2,701 -- 5,432
----------- --------- ---------- ----------- -----------
160,037 -- 2,701 (787) 161,951
----------- --------- ---------- ----------- -----------
Minority Interests in Subsidiaries -- 6,154 -- -- 6,154
Common Stock 223 108 167 (275) 223
Additional Paid-in Capital 66,983 224 44,619 (44,843) 66,983
Retained Earnings (Deficit) (29,238) 7,881 1,680 (9,561) (29,238)
Other Equity (1,732) -- (1,344) -- (3,076)
----------- --------- ---------- ----------- -----------
$ 227,436 $ 90,924 $ 103,110 $ (55,497) $ 365,973
=========== ========= ========== =========== ===========
</TABLE>
9
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser
Parent Subsidiary Non-Guarantor International, Inc.
Company Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------- ------------ -------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
GROSS REVENUE $ 457 $ 157,033 $108,467 $ - $ 265,957
Subcontract and direct material costs (174) (117,774) (44,318) - (162,266)
Equity in income of joint ventures and
affiliated companies and subsidiaries 5,766 - 223 (5,702) 287
------ --------- -------- --------- ---------
SERVICE REVENUE 6,049 39,259 64,372 (5,702) 103,978
OPERATING EXPENSES
Operating expenses 4,809 34,802 55,400 - 95,011
Depreciation and amortization 541 186 1,642 - 2,369
------ --------- -------- --------- ---------
OPERATING INCOME 699 4,271 7,330 (5,702) 6,598
OTHER INCOME (EXPENSE)
Interest income 90 125 152 (28) 339
Interest expense (4,288) (78) (10) 23 (4,353)
------ --------- -------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS (3,499) 4,318 7,472 (5,707) 2,584
Income tax provision (benefit) (3,546) 928 3,186 - 568
------ --------- -------- --------- ---------
INCOME BEFORE MINORITY INTERESTS 47 3,390 4,286 (5,707) 2,016
Minority interests in net income of subsidiaries - 1,969 - - 1,969
------ --------- -------- --------- ---------
NET INCOME AVAILABLE FOR
COMMON SHAREHOLDERS $ 47 $ 1,421 $ 4,286 $ (5,707) 47
====== ========= ======== ========= =========
</TABLE>
10
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 1996
(In thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
ICF Kaiser
Parent Subsidiary Non-Guarantor International, Inc.
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ -------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
GROSS REVENUE $ 553 $ 132,633 $ 177,933 $ -- $ 311,119
Subcontract and direct material costs (317) (85,717) (81,284) -- (167,318)
Equity in income of joint ventures and
affiliated companies and subsidiaries 2,552 -- 847 (2,675) 724
------- ---------- ------------ ------------ -----------
SERVICE REVENUE 2,788 46,916 97,496 (2,675) 144,525
OPERATING EXPENSES
Operating expenses (1,895) 44,228 92,120 (3) 134,450
Depreciation and amortization 422 355 1,830 -- 2,607
------- ---------- ------------ ------------ -----------
OPERATING INCOME 4,261 2,333 3,546 (2,672) 7,468
OTHER INCOME (EXPENSE)
Interest income 96 38 143 (47) 230
Interest expense (4,085) (38) (24) 47 (4,100)
------- ---------- ------------ ------------ -----------
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS 272 2,333 3,665 (2,672) 3,598
Income tax provision (benefit) (1,052) 395 1,658 -- 1,001
------- ---------- ------------ ------------ -----------
INCOME BEFORE MINORITY INTERESTS 1,324 1,938 2,007 (2,672) 2,597
Minority interests in net income
of subsidiaries -- 1,334 (61) -- 1,273
------- ---------- ------------ ------------ -----------
NET INCOME 1,324 604 2,068 (2,672) 1,324
Preferred stock dividends and accretion 539 -- -- -- 539
------- ---------- ------------ ------------ -----------
NET INCOME AVAILABLE FOR
COMMON SHAREHOLDERS $ 785 $ 604 $ 2,068 $ (2,672) $ 785
======= ========== ============ ============ ===========
</TABLE>
11
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser
Parent Subsidiary Non-Guarantor International, Inc.
Company Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------- ------------ -------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by (Used in) Operating Activities $ 23,517 $ (3,979) $(11,055) $ (5) $ 8,478
-------- -------- -------- ----- --------
INVESTING ACTIVITIES
Sales of subsidiaries and subsidiary assets - 2,763 13,777 - 16,540
Purchases of fixed assets (84) - (808) - (892)
Investments in subsidiaries and affiliates,
net of cash acquired - - (118) - (118)
-------- -------- -------- ----- --------
Net Cash Provided by (Used) in Investing Activities (84) 2,763 12,851 - 15,530
-------- -------- -------- ----- --------
FINANCING ACTIVITIES
Borrowings under credit facility 23,000 - - - 23,000
Principal payments on credit facility (42,000) - - - (42,000)
Distribution of income to minority interest - (950) - - (950)
Proceeds from issuances of common stock 60 - - - 60
Repurchases of common stock (252) - - - (252)
Debt issuance costs (277) - - - (277)
-------- -------- -------- ----- --------
Net Cash Used in Financing Activities (19,469) (950) - - (20,419)
-------- -------- -------- ----- --------
Effect of Exchange Rate Changes on Cash - - (142) - (142)
-------- -------- -------- ----- --------
Increase (Decrease) in Cash and Cash Equivalents 3,964 (2,166) 1,654 (5) 3,447
Cash and Cash Equivalents at Beginning of Period (7,720) 11,974 13,001 (494) 16,761
-------- -------- -------- ----- --------
Cash and Cash Equivalents at End of Period $ (3,756) $ 9,808 $ 14,655 (499) $ 20,208
======== ======== ======== ===== ========
</TABLE>
12
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 1996
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ICF Kaiser
Parent Subsidiary Non-Guarantor International, Inc.
Company Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------- ------------ -------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by (Used in) Operating
Activities $(13,314) $ 17,548 $ 7,783 $ (49) $ 11,968
-------- --------- ---------- ----------- ----------
INVESTING ACTIVITIES
Purchases of fixed assets (303) (52) (644) - (999)
Investments in subsidiaries and affiliates,
net of cash acquired - - (51) - (51)
-------- --------- ---------- ----------- ----------
Net Cash Used in Investing Activities (303) (52) (695) - (1,050)
-------- --------- ---------- ----------- ----------
FINANCING ACTIVITIES
Borrowings under credit facility 12,000 - - - 12,000
Principal payments on credit facility (8,000) - - - (8,000)
Proceeds from issuances of common stock 126 - - - 126
Preferred stock dividends (990) - - - (990)
Other financing activities - - (46) - (46)
-------- --------- ---------- ----------- ----------
Net Cash Provided by (Used in)
Financing Activities 3,136 - (46) - 3,090
-------- --------- ---------- ----------- ----------
Effect of Exchange Rate Changes on Cash - - 535 - 535
-------- --------- ---------- ----------- ----------
Increase (Decrease) in Cash and Cash Equivalents (10,481) 17,496 7,577 (49) 14,543
Cash and Cash Equivalents at Beginning of Period 4,128 1,015 12,578 (1,364) 16,357
-------- --------- ---------- ----------- ----------
Cash and Cash Equivalents at End of Period $ (6,353) $ 18,511 $ 20,155 $ (1,413) $ 30,900
======== ========= ========== =========== ==========
</TABLE>
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
ICF Kaiser International, Inc. and subsidiaries (the Company) provides
engineering, construction, program management, and consulting services primarily
to the public and private environmental, infrastructure, industrial, and energy
markets domestically and internationally.
Financial Review
- ----------------
The Company's operating income by operating group for the three months ended
March 31, 1997 and 1996 is as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Federal programs $ 4.6 $ 8.7
Engineering and construction (0.7) (2.4)
Consulting 2.1 0.8
Other 0.6 0.4
---------- ----------
Total operating income $ 6.6 $ 7.5
========== ==========
</TABLE>
The decrease in operating income from federal programs primarily resulted from
the effective termination of the Company's contract to perform services at the
U.S. Department of Energy's (DOE) Hanford, Washington, Site (Hanford) in 1996
(see below). The Hanford contract had a $4.6 million decrease in operating
income between the three-month periods. The only income under the Hanford
contract in 1997 was $1.0 million related to activities associated with the
final phase of the Company's work at Hanford. Also, federal programs' operating
income decreased $0.4 million because another contract was not renewed after
1996.
The Hanford decrease was offset partially by a $1.1 million increase in
operating income from the Performance Based Integrating Management Contract at
DOE's Rocky Flats Environmental Technology Site in Colorado (Rocky Flats) due to
an increase in fees earned. The Rocky Flats contract was awarded in 1995 to
Kaiser-Hill Company, LLC (Kaiser-Hill), a limited liability company owned
equally by the Company and CH2M Hill Companies, Ltd. (CH2M Hill). Because
Kaiser-Hill is a consolidated subsidiary of the Company, 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.
Engineering and construction operations experienced a $1.7 million improvement
in operating income between the three-month periods principally due to revenue
during the first quarter of 1997 on new business awarded in 1996, a decrease in
indirect expenses, and an increase in operating income from international
operations, primarily due to improved operating results from the Company's
Australian operations. Operating income also increased due to the acquisition
of an engineering company in 1996.
Operating income from consulting operations increased by $1.3 million mainly due
to a substantial increase in the utilization of labor resulting from an increase
in the availability of work under both existing and new projects. During the
first quarter of 1996, the federal government was still operating under a
continuing resolution that had been in place since October 1, 1995. This
contributed to delays in both task-order assignments and funding of some of the
Company's consulting contracts. In addition, the Company was awarded new
consulting business in 1996 that began to generate revenues in late 1996 and
early 1997.
14
<PAGE>
Business Outlook
- ----------------
In March 1996, the Company signed a two-year, $102 million contract to provide
engineering and construction services for the initial phase of a mini-mill
project for Nova Hut, a.s., an integrated steel maker based in the Ostrava
region of the Czech Republic. In May 1997, the Company expects to complete
negotiations with Nova Hut for the next phase of the mini-mill project.
Earnings associated with this contract for the next phase of work are expected
to be material to the Company's operating results.
The Company's contract to perform services at Hanford was effectively terminated
by DOE on October 1, 1996. In response to the reduction and eventual
termination of the Hanford contract, the Company is continuing to maintain and
improve its operational-efficiency and cost-savings programs with the objective
of minimizing the long-term impact associated with the termination of the
Hanford contract. The impact on cash flows and earnings due to the closeout of
the Hanford contract has been material. The Company believes that the impact
will continue to be material in 1997 if replacement contracts are not won or if
the Company's continuing cost-savings program is not successful. There can be
no assurance, however, that the Company will be able to enter into new contracts
or to achieve cost savings that will, in the aggregate, offset the effect of the
loss of the Hanford contract.
RESULTS OF OPERATIONS
Revenue
- -------
The Company's revenue by operating group for the three months ended March 31,
1997 and 1996 is as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------
1997 1996
------------------------------------
Gross Service Gross Service
------- ------- ------ -------
<S> <C> <C> <C> <C>
Federal programs $169.4 $ 49.0 $235.7 $ 97.4
Engineering and construction 74.9 37.8 57.4 32.2
Consulting 21.7 17.2 18.0 14.9
------ ------ ------ ------
Total $266.0 $104.0 $311.1 $144.5
====== ====== ====== ======
</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.
Operating profits (fees) generated by certain large government contracts,
including the Rocky Flats and Hanford contracts, are based on performance and
not revenue. A change in revenue between periods is not necessarily
proportionate to the change in the fees earned.
Gross revenue for 1997 decreased $45.1 million, or 14.5%, to $266.0 million.
The decrease in gross revenue was attributable to the effective termination of
the Hanford contract on October 1, 1996. The Hanford contract experienced an
$88.7 million decrease in gross revenue from the comparable quarter in 1996.
The decrease was offset partially by a $25.2 million increase in gross revenue
from the Rocky Flats contract due to an increase in the volume of work
performed. Consulting and engineering and construction operations also reported
increases in gross revenue as a result of an increase in the volume of work.
15
<PAGE>
Service revenue decreased by $40.5 million for 1997 as compared to 1996. The
$48.4 million decrease in federal programs was primarily due to a $40.2 million
decrease in service revenue from the Hanford contract and a $6.9 million
decrease in service revenue from the Rocky Flats contract. The decrease for the
Rocky Flats contract was due to an increase in the use of subcontractors in 1997
hired to support the increase in volume of work. The increase in the use of
subcontractors at Rocky Flats was offset partially by a decrease in direct labor
and associated fringe benefits resulting from staff reductions during 1996. The
decrease in service revenue from federal programs was offset partially by
increases in service revenue from consulting and engineering and construction
operations due to increases in volume of work.
Service revenue as a percentage of gross revenue decreased to 39.1% for 1997
from 46.4% for 1996 due to an increase in the use of subcontractors on 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.
Operating Expenses
- ------------------
Direct cost of services and overhead decreased $37.0 million between 1997 and
1996 primarily due to the loss of the Hanford contract. The Hanford contract
had $35.6 million of direct cost of services and overhead in 1996.
Administrative and general expense decreased $2.5 million, or 15.7%, between
1997 and 1996. The decrease is primarily due to a reduction in staff and a
decrease in proposal and bidding efforts as these efforts near completion on
certain domestic and foreign contracts.
Interest Expense, Preferred Stock Dividends and Accretion
- ---------------------------------------------------------
Interest expense increased $0.3 million primarily due to the issuance of the
Company's 12% Senior Notes due 2003, Series A in December 1996 (Series A Senior
Notes) (see Liquidity and Capital Resources). The increase in interest expense
was offset by a $0.5 million decrease in preferred stock dividends and accretion
resulting from the Company's repurchase of its redeemable preferred stock in
December 1996.
Income Tax Expense
- ------------------
The Company's effective income tax rate decreased to 22.0% for the three months
ended March 31, 1997, compared with 27.8% for the three months ended March 31,
1996. The income tax provision for both periods presented 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 owned partially by an outside party.
This had the effect of decreasing the Company's effective tax rate for 1997 as
compared to 1996 because the proportion of pretax income from Kaiser-Hill to the
Company as a whole was greater in 1997 than 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1997, cash and cash equivalents
increased $3.4 million to $20.2 million. Operating activities generated $8.5
million in cash.
Working Capital
- ---------------
The decrease in prepaid expenses and other current assets between March 31, 1997
and December 31, 1996 was due to the receipt in January 1997 of $16.5 million of
cash proceeds from the December 1996 sale of an investment in entities that own
and operate a pulverized coal injection facility (see below). The decrease in
accounts payable and subcontractors payable was due primarily to the payment of
subcontractor invoices on the Rocky Flats contract. The increase in accrued
interest was due to the timing of interest payments on the Company's 12% Senior
Subordinated Notes due 2003 (Subordinated Notes) and the issuance of the Series
A Senior Notes in December 1996 (see below).
In January 1997, the U.S. Environmental Protection Agency approved the Company's
provisional billing rates for the year ended December 31, 1996, for the rate
variances on cost-plus contracts with U.S. government agencies for
16
<PAGE>
costs incurred during that year. The Company received $0.4 million on these
billings during the three months ended March 31, 1997, and expects to collect in
excess of $3.0 million in future periods. The Company also collected
approximately $1.4 million in 1997 on billings for previous periods.
Credit Facility
- ---------------
The Company's $40 million revolving credit facility is provided by a group of
three banks and expires on December 31, 1998. The credit facility was amended
to modify certain financial ratios and to extend the termination date of the
credit facility from June 30, 1998, to December 31, 1998. The amendment was
effective for the three months ended March 31, 1997. In 1997, net payments on
the credit facility were $19.0 million. As of March 31, 1997, the Company had
$1.5 million in cash borrowings, $19.9 million of performance letters of credit
outstanding, and $17.4 million of additional credit available under the credit
facility.
Senior Notes
- ------------
In March 1997, the Company exchanged its Series A Senior Notes for Series B
Senior Notes that had been registered with the U.S. Securities and Exchange
Commission in January 1997. The terms of the Series B Senior Notes
substantially are identical to the terms of the Series A Senior Notes. Interest
on the Series B Senior Notes will be at a rate of 13% until the Company achieves
and maintains a specified level of earnings, and is paid semiannually.
Other Investing and Financing Activities
- ----------------------------------------
In December 1996, the Company sold the majority portion of its equity interest
in entities that own and operate a pulverized coal injection facility, and
certain related contractual rights, for $16.6 million. The buyer also has an
option to purchase the remaining equity investment for $2.4 million in January
1998. The proceeds from the sale, net of $0.1 million held in escrow, were
received in January 1997 and were reinvested in the Company's business. These
entities' earnings and cash flows were material to the Company in 1996, and the
absence of these entities' earnings and cash flows may have a material impact on
the Company's future earnings and cash flows in 1997 if the Company's cost-
savings and marketing programs are not successful.
Other significant uses of cash in investing and financing activities included
distribution of income to a minority interest ($1.0 million) and purchases of
fixed assets ($0.9 million).
Liquidity and Capital Resources Outlook
- ---------------------------------------
The Company believes that current projected levels of cash flows and the
availability of financing, including borrowings under the Company's credit
facility, will be adequate to fund its current level of operations, including
interest obligations, throughout the next 12 months. The Company currently is
exploring options that would provide additional capital for longer-term
objectives, including replacing some of the Company's long-term debt with
equity.
The credit facility limits the Company's ability to make acquisitions and other
investments, and the Indentures governing the Company's Series B Senior Notes
and Senior Subordinated Notes limit the Company's ability to make restricted
payments, including certain payments in connection with investments and
acquisitions. These credit facility and Indenture limitations mean that during
the next several years, unless the credit facility and Indentures are amended or
replaced, it likely will be necessary for the Company to obtain permission from
lenders or to issue additional equity securities to fund any significant
acquisitions and to invest significant amounts in joint ventures. These
limitations may make it more difficult for the Company to compete effectively in
its markets.
In addition to the cash requirements of the Company's daily operations, the
Company has semiannual interest payments of $9.1 million due in June and
December for the Series B Senior Notes and Subordinated Notes. If the Company
achieves and maintains a specified level of earnings, the semiannual interest
requirement will be reduced to
17
<PAGE>
$8.4 million. The Company expects to meet this interest obligation with either
operating cash flows or borrowings under its credit facility.
IMPACT OF NEW ACCOUNTING STANDARD
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 128, Earnings per Share (SFAS No. 128), effective for
financial statements for both interim and annual periods ending after December
15, 1997. SFAS No. 128 requires the presentation of basic and diluted earnings
per share instead of primary and fully diluted earnings per share. Under the
Company's existing equity structure as of March 31, 1997, the computation of
basic and diluted earnings per share, as defined under SFAS No. 128, results in
earnings per share that is substantially the same as primary and fully diluted
earnings per share as presented in the accompanying financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable to Registrant until 1998.
Part II - Other Information
Item 1. Legal Proceedings
As previously reported in the Annual Report on Form 10-K for the year ended
December 31, 1996.
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
On April 30, 1997, the Company announced that Dr. Marc Tipermas, then currently
an Executive Vice President, the Director of Corporate Development, and a
director of the Company, was elected President and Chief Operating Officer
effective immediately. The Company also announced that effective July 1, 1997,
Mr. Kenneth L. Campbell would become an Executive Vice President and Chief
Financial Officer of the Company; Mr. Campbell was elected a director of the
Company effective May 1, 1997; his term expires in 1999.
On May 2, 1997, Mr. Keith M. Price was elected an outside director of the
Company; his term expires in 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed as part of this report are listed below:
No. 10(a)(2) Amendment No. 2 dated May 5, 1997, to the Credit Agreement dated
May 6, 1996
No. 11 Computation of Primary and Fully Diluted Earnings Per Share
No. 27 Financial Data Schedule
18
<PAGE>
(b) Reports on Form 8-K
1. Report on Form 8-K filed on January 15, 1997, reporting the disposition of
certain assets (together with pro forma financial statements), the issuance of
$15 million Senior Notes due 2003, Series A, and the repurchase of the
Registrant's Series 2D Senior Preferred Stock.
2. Report on Form 8-K filed on February 10, 1997, reporting and filing the
Registrant's preliminary year-end and fourth quarter results and reporting the
resignation of certain directors.
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 14, 1997 /s Michael K. Goldman
---------------------
Michael K. Goldman
Executive Vice President,
Administrative Officer,
and Chief Financial Officer (Acting)
(Duly authorized officer and
principal financial officer)
19
<PAGE>
Exhibit No. 10(a)(2)
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of May 5, 1997 (this
"Agreement"), is entered into by and among ICF KAISER INTERNATIONAL, INC.
("Borrower"), a Delaware corporation, each of its subsidiaries signatories
hereto (each a "Subsidiary Guarantor" and collectively the "Subsidiary
Guarantors"), the banking institutions signatories hereto (each, a "Bank" and
collectively, the "Banks") and CORESTATES BANK, N.A., as agent for the Banks
under this Agreement (in such capacity, the "Agent").
WITNESSETH
----------
WHEREAS, Borrower, each Subsidiary Guarantor, the Banks and the Agent are
parties to a Credit Agreement, dated as of May 6, 1996, as amended as of
December 17, 1996, whereby the Banks have agreed to provide a revolving credit
facility for loans and for letters of credit;
WHEREAS, the Borrower and the Subsidiary Guarantors have requested, and the
Banks and the Agent have agreed, to further amend the Credit Agreement in
certain respects, as provided herein.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT.
------------------------------
a. Clause (1) of Section 2.1(a) is hereby amended to change the Revolver
Termination Date defined therein from June 30, 1998, to December 31, 1998, so
that such clause, as so amended, shall read as follows:
(1) Subject to the terms and conditions hereof, each Bank agrees,
severally and not jointly with the other Banks, to make revolving credit
loans (collectively called the "Revolving Credit Loans" and individually a
"Revolving Credit Loan") to Borrower from time to time during the period
commencing the date hereof and ending on December 31, 1998, or on any
earlier date as provided in Sections 2.7(b) and 10.1 hereof (the "Revolver
Termination Date"), in principal amounts not to exceed at any time
outstanding in the aggregate the amount set forth opposite the name of each
such Bank on Exhibit A hereto under the caption "Revolving Loan Commitment"
(each such amount being hereinafter called such Bank's "Revolving Loan
Commitment" and collectively, the Banks' "Aggregate Revolving Loan
Commitment"). All Loans shall be made by the Banks simultaneously and pro
rata in accordance with the Revolving Loan Commitments. The failure of any
one or more of the Banks to make Revolving Credit Loans in accordance with
its or their obligations shall not relieve the other Banks of their several
obligations under this subsection, but in no event shall the aggregate
amount at any one time outstanding which any Bank shall be required to lend
under this Section 2.1(a), when added to such Bank's Commitment Percentage
of Letter of Credit Outstandings at such time, exceed the amount of such
Bank's Revolving Loan Commitment at that time.
<PAGE>
b. Article VIII is hereby amended in its entirety so that such
Article, as so amended, shall read as follows:
VIII. FINANCIAL COVENANTS
-------------------
Borrower covenants and agrees that, without the prior written consent of
the Required Banks, from and after the date hereof and so long as the Revolving
Loan Commitments are in effect or any Obligations remain unpaid or outstanding,
Borrower will not:
8.1 Fixed Charge Coverage.
----------------------
(a) Permit, as of the end of the first fiscal quarter of 1997, the
ratio of (i) EBITDA less Capital Expenditures plus Consolidated Lease Expenses
of Borrower and its Subsidiaries for such quarter, to (ii) Consolidated Fixed
Charges for such quarter to be less than 1.05:1.0.
(b) Permit, as of the end of the second fiscal quarter of 1997, the
ratio of (i) EBITDA less Capital Expenditures plus Consolidated Lease Expenses
of Borrower and its Subsidiaries for the six month period ending on June 30,
1997, to (ii) Consolidated Fixed Charges for the six month period ending on June
30, 1997, to be less than 1.05:1.0.
(c) Permit, as of the end of the third fiscal quarter of 1997, the
ratio of (i) EBITDA less Capital Expenditures plus Consolidated Lease Expenses
of Borrower and its Subsidiaries for the nine month period ending on September
30, 1997, to (ii) Consolidated Fixed Charges for the nine month period ending on
September 30, 1997, to be less than 1.05:1.0.
(d) Permit, as of the end of any fiscal quarter ending in the period
set forth below for the immediately preceding four fiscal quarters, the ratio of
(i) EBITDA less Capital Expenditures plus Consolidated Lease Expenses of
Borrower and its Subsidiaries for such period, to (ii) Consolidated Fixed
Charges for such period to be less than the ratio set forth below:
Fiscal Quarters Ending
----------------------
October 1, 1997 through December 31,1998 1.20:1.0
8.2 Interest Coverage.
------------------
(a) Permit, as of the end of the first fiscal quarter of 1997, the
ratio of (i) EBITDA for such period, to (ii) Consolidated Interest Expense for
such quarter to be less than 1.5:1.0.
(b) Permit, as of the end of the second fiscal quarter of 1997, the
ratio of (i) EBITDA for the six months ending June 30, 1997, to (ii)
Consolidated Interest Expense for the six months ending June 30, 1997, to be
less than 1.5:1.0.
(c) Permit, as of the end of the third fiscal quarter of 1997, the
ratio of (i) EBITDA for the nine months ending September 30, 1997, to (ii)
Consolidated Interest Expense for the nine months ending September 30, 1997, to
be less than 1.5:1.0.
2
<PAGE>
(d) Permit, as of the end of any fiscal quarter ending in the period
set forth below for the immediately preceding four fiscal quarters, the ratio of
(i) EBITDA for such period, to (ii) Consolidated Interest Expense for such
period to be less than the ratio set forth below:
Fiscal Quarter Ending
---------------------
October 1, 1997 through December 31,1998 1.75:1.0
8.3 Senior Funded Indebtedness to EBITDA.
-------------------------------------
(a) Permit, as of the end of the first fiscal quarter of 1997, the
ratio of (i) Senior Funded Indebtedness on the last day of such period, to (ii)
four (4) times EBITDA for such quarter to be greater than 2.5:1.0.
(b) Permit, as of the end of the second fiscal quarter of 1997, the
ratio of (i) Senior Funded Indebtedness on the last day of the six months ending
June 30, 1997, to (ii) two (2) times EBITDA for the six months ending June 30,
1997, to be greater than 2.5:1.0.
(c) Permit, as of the end of the third fiscal quarter of 1997, the
ratio of (i) Senior Funded Indebtedness on the last day of the nine months
ending September 30, 1997, to (ii) one and one-third (1 1/3) times EBITDA for
the nine months ending September 30, 1997, to be greater than 2.5:1.0.
(d) Permit, as of the end of any fiscal quarter ending in the period
set forth below, the ratio of Senior Funded Indebtedness on the last day of any
such fiscal quarter to EBITDA as of such day for the immediately preceding four
fiscal quarters to be greater than the ratio set forth below:
Fiscal Quarter Ending
---------------------
October 1, 1997 through December 31,1998 2.5:1.0
8.4 Indebtedness for Borrowed Money to Total Capitalization. Permit
--------------------------------------------------------
the ratio of Indebtedness for Borrowed Money to Total Capitalization on the last
day of any fiscal quarter to be greater than .86:1.0.
8.5 Indebtedness for Borrowed Money to EBITDA.
------------------------------------------
(a) Permit, as of the end of the first fiscal quarter of 1997, the
ratio of (i) Indebtedness for Borrowed Money on the last day of such period, to
(ii) four (4) times EBITDA for such quarter to be greater than 6.75:1.0.
(b) Permit, as of the end of the second fiscal quarter of 1997, the
ratio of (i) Indebtedness for Borrowed Money on the last day of the six months
ending June 30, 1997, to (ii) two (2) times EBITDA for the six months ending
June 30, 1997, to be greater than 6.75:1.0.
(c) Permit, as of the end of the third fiscal quarter of 1997, the
ratio of (i) Indebtedness for Borrowed Money on the last day of the nine months
ending September 30, 1997, to (ii) one and one-third (1 1/3) times EBITDA for
the nine months ending September 30, 1997, to be greater than 6.75:1.0.
3
<PAGE>
(d) Permit, as of the end of any fiscal quarter ending in the period
set forth below, the ratio of Indebtedness for Borrowed Money on the last day of
any such fiscal quarter to EBITDA as of such day for the immediately preceding
four fiscal quarters to be greater than the ratio set forth below:
Fiscal Quarter Ending
---------------------
October 1, 1997 through December 31,1997 6.5:1.0
January 1, 1998 through December 31, 1998 5.75:1.0
2. CONDITIONS PRECEDENT. The Amendment to the Credit Agreement contained
---------------------
in Section 1 hereof shall be effective upon satisfaction of the following
conditions precedent.
(a) Evidence of Authorization. The Banks shall have received copies
certified by the Secretary or Assistant Secretary of Borrower and each
Subsidiary Guarantor of all corporate or other action taken by such party to
authorize its execution and delivery and performance of this Amendment, the
Security Agreement and the Loan Documents as amended hereby together with such
other related papers as the Banks shall reasonably require.
(b) Documents. The Agent shall have received all certificates,
instruments and other documents then required to be delivered pursuant to any
Loan Documents, in each instance in form and substance reasonably satisfactory
to the Agent and the Banks.
(c) Other Agreements. Borrower and each Subsidiary Guarantor shall
have executed and delivered each other Loan Document required hereunder.
(d) Change. No material adverse change shall have occurred in the
financial condition or prospects of Borrower since December 31, 1996.
3. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Borrower confirms the accuracy of the representations and warranties
made in Article 3 of the Credit Agreement as of the date originally given and
restates to the Banks such representations and warranties, as previously
amended, on and as of the date hereof as if originally given on such date.
4. COVENANTS.
----------
(a) The Borrower warrants to the Banks that the Borrower is in
compliance and has complied with all covenants, agreements and conditions in
each Loan Document on and as of the date hereof, that no Potential Default or
Event of Default has occurred and is continuing on the date hereof and that,
upon the consummation of the transactions contemplated hereby, no Potential
Default or Event of Default shall have occurred and be continuing.
(b) The Borrowers shall provide to the Agent and its representatives
all requested access and assistance as shall be reasonably necessary for such
due diligence review as the Agent shall determine is necessary or advisable,
including without limitation a collateral audit.
4
<PAGE>
5. EFFECT OF AGREEMENT.
--------------------
This Agreement amends the Loan Documents only to the extent and in the
manner herein set forth, and in all other respects the Loan Documents are
ratified and confirmed.
6. COUNTERPARTS.
-------------
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures hereto
were upon the same instrument.
7. GOVERNING LAW.
--------------
This Agreement and all rights and obligations of the parties hereunder
shall be governed by and be construed and enforced in accordance with the laws
of Pennsylvania without regard to principles of conflict of law.
IN WITNESS WHEREOF, Borrower and the Banks have caused this Agreement to
be executed by their proper corporate officers thereunto duly authorized as of
the day and year first above written.
CORESTATES BANK, N.A. ICF KAISER INTERNATIONAL, INC.
By: /s/ John D. Brady By: /s/ Michael K. Goldman
Name: John D. Brady Name: Michael K. Goldman
Title: Assistant Vice President Title: Executive Vice President
BHF-BANK AKTIENGESELLSCHAFT SIGNET BANK
By: /s/ John Sykes By: /s/ Brian M. Haggerty
Name: John Sykes Name: Brian M. Haggerty
Title: Assistant Vice President Title: Vice President
By: /s/ Tony Heyman
Name: Tony Heyman
Title: Assistant Treasurer
5
<PAGE>
The Subsidiary Guarantors:
<TABLE>
<CAPTION>
<S> <C> <C>
CLEMENT INTERNATIONAL CYGNA GROUP, INC. HENRY J. KAISER
CORPORATION. COMPANY
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
EXCELL DEVELOPMENT ICF INFORMATION ICF INCORPORATED
CONSTRUCTION, INC. TECHNOLOGY, INC.
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
ICF KAISER ENGINEERS ICF KAISER ENGINEERS ICF KAISER ENGINEERS
CORPORATION (CALIFORNIA) MASSACHUSETTS, INC.
CORPORATION
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
ICF KAISER ENGINEERS ICF KAISER GOVERNMENT ICF KAISER ENGINEERS,
GROUP, INC. PROGRAMS, INC. INC.
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
ICF KAISER HOLDINGS ICF KAISER HANFORD ICF RESOURCES
UNLIMITED, INC. COMPANY INCORPORATED
By: /s/ Timothy P. O'Connor By: /s/ Paul Weeks, II By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Paul Weeks, II Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Secretary Title: Assistant Treasurer
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ICF LEASING KE SERVICES KE LIVERMORE, INC.
CORPORATION, INC. CORPORATION
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
KAISER ENGINEERS AND KAISER ENGINEERS CYGNA CONSULTING
CONSTRUCTORS, INC. INTERNATIONAL, INC. ENGINEERS & PROJECT
MANAGEMENT, INC.
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
TUDOR ENGINEERING PCI OPERATING COMPANY, SYSTEMS APPLICATIONS
COMPANY INC. INTERNATIONAL, INC.
By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor By: /s/ Timothy P. O'Connor
----------------------- ----------------------- -----------------------
Name: Timothy P. O'Connor Name: Timothy P. O'Connor Name: Timothy P. O'Connor
Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
</TABLE>
7
<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,
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
Net income available for common shareholders $ 47,000 $ 785,000
========== ==========
Weighted average of common shares
outstanding not included in
amounts below 22,310,796 21,731,739
Weighted average of common shares
issuable on exercise of outstanding
stock options 8,224 --
---------- ----------
Weighted average of common and
common equivalent shares
outstanding, as adjusted 22,319,020 21,731,739
or or
22,319,000 21,732,000
========== ==========
Net income per common share $ 0.00 $ 0.04
========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-30-1997
<CASH> 21,208,000
<SECURITIES> 0
<RECEIVABLES> 224,567,000
<ALLOWANCES> 9,539,000
<INVENTORY> 0
<CURRENT-ASSETS> 256,764,000
<PP&E> 49,587,000
<DEPRECIATION> 37,851,000
<TOTAL-ASSETS> 345,643,000
<CURRENT-LIABILITIES> 160,564,000
<BONDS> 137,643,000<F1>
0
0
<COMMON> 224,000
<OTHER-SE> 34,749,000
<TOTAL-LIABILITY-AND-EQUITY> 345,643,000
<SALES> 0
<TOTAL-REVENUES> 265,957,000<F2>
<CGS> 0
<TOTAL-COSTS> 81,685,000<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 447,000
<INTEREST-EXPENSE> 4,353,000
<INCOME-PRETAX> 2,584,000
<INCOME-TAX> 568,000
<INCOME-CONTINUING> 47,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,000
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
<FN>
<F1>Excludes current portion of bonds, mortgage, 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 cost of $162,266,000.
</FN>
</TABLE>
