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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 1996
ICF KAISER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware File No. 1-12248 54-1437073
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
9300 Lee Highway
Fairfax, Virginia 22031-1207
(Address of principal executive offices, including zip code)
703-934-3600
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
------------------------------------
Effective December 31, 1996, the Registrant sold the majority of its
equity interests in entities that own and operate a pulverized coal injection
(PCI) facility to affiliates of Constellation Power, Inc., of Baltimore,
Maryland (the "Disposition of PCI"). The PCI facility, which is located at U.S.
Steel Group's Gary Works in Gary, Indiana, provides pulverized coal to four
blast furnaces at the site. The Registrant, which designed and constructed the
PCI facility, has operated it from its start-up in February 1993 to January 1,
1997, when affiliates of Constellation Power began operating it. Affiliates of
Constellation Power have an option to purchase the Registrant's remaining equity
interest in the facility in January 1998. The principle followed in determining
the amount of consideration received was a discounted cash flow analysis. The
expected impact of the Disposition of PCI will be a substantial gain in the
Registrant's fourth quarter 1996 results.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth historical financial information for
the Registrant and pro forma financial information giving effect to the
Disposition of PCI and application of the assumed proceeds therefrom
(collectively, the "Pro Forma Transactions"). The pro forma statement of
operations data are presented as if the Pro Forma Transactions had occurred as
of March 1, 1995, and the pro forma balance sheet is presented as if the Pro
Forma Transactions had occurred on September 30, 1996. The pro forma
adjustments are described in detail in the accompanying notes. These pro forma
results have been prepared for comparative purposes only and do not purport to
indicate what would have occurred had the transactions actually occurred at the
dates indicated, or of results which may occur in the future. This pro forma
financial information should be read in conjunction with the notes thereto and
the historical consolidated financial statements of the Registrant on file with
the U.S. Securities and Exchange Commission.
2
<PAGE>
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 1996
(in thousands)
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pro Forma Adjustments Pro Forma
---------------------------
ICF Kaiser Disposition Other After
Historical of PCI Adjustments Adjustments
-------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 21,022 $ 16,500 $ - $ 37,522
Contract receivables, net 234,168 - - 234,168
Prepaid expenses and other current assets 10,780 - - 10,780
Deferred income taxes 11,938 2,613 - 14,551
---------- --------- ----------- ----------
Total Current Assets 277,908 19,113 - 297,021
---------- --------- ----------- ----------
Fixed Assets
Furniture, equipment, and leasehold improvements 48,839 (1,365) - 47,474
Less depreciation and amortization (36,595) 852 - (35,743)
---------- --------- ----------- ----------
12,244 (513) - 11,731
---------- --------- ----------- ----------
Other Assets
Goodwill, net 50,510 - - 50,510
Investments in and advances to affiliates 12,168 (4,651) - 7,517
Due from officers and employees 986 - - 986
Other 20,719 - - 20,719
---------- --------- ----------- ----------
84,383 (4,651) - 79,732
---------- --------- ----------- ----------
$ 374,535 $ 13,949 $ - $ 388,484
========== ========= =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ - $ - $ - $ -
Accounts payable and subcontractors payable 76,304 - - 76,304
Accrued salaries and employee benefits 59,721 - - 59,721
Accrued interest 4,061 - - 4,061
Other accrued expenses 14,869 - - 14,869
Deferred revenue 14,648 - - 14,648
Other 6,296 3,633 - 9,929
---------- --------- ----------- ----------
Total Current Liabilities 175,899 3,633 - 179,532
---------- --------- ----------- ----------
Long-term Liabilities
Long-term debt, less current portion 133,384 - - 133,384
Other 5,679 - - 5,679
---------- --------- ----------- ----------
139,063 - - 139,063
---------- --------- ----------- ----------
Commitments and Contingencies
Minority Interests in Subsidiaries 6,441 - - 6,441
Redeemable Preferred Stock 19,940 - - 19,940
Common Stock 224 - - 224
Additional Paid-in Capital 67,158 - - 67,158
Notes Receivable Related to Common Stock (1,732) - - (1,732)
Retained Earnings (Deficit) (30,805) 10,316 - (20,489)
Cumulative Translation Adjustment (1,653) - - (1,653)
---------- --------- ----------- ----------
$ 374,535 $ 13,949 $ - $ 388,484
========== ========= =========== ==========
</TABLE>
3
<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations
Nine Months Ended September 30, 1996
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pro Forma Adjustments Pro Forma
---------------------------
ICF Kaiser Disposition Other After
Historical of PCI Adjustments Adjustments
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
GROSS REVENUE $ 1,023,410 $ (3,453) $ - $ 1,019,957
Subcontract and direct material costs (592,295) 752 - (591,543)
Equity in income of joint ventures and
affiliated companies 2,532 (2,025) - 507
------------- ----------- ------------- ------------
SERVICE REVENUE 433,647 (4,726) - 428,921
OPERATING EXPENSES
Direct cost of services and overhead 354,658 (1,290) - 353,368
Administrative and general 49,979 - - 49,979
Depreciation and amortization 7,840 (355) - 7,485
------------- ----------- ------------- ------------
OPERATING INCOME 21,170 (3,081) - 18,089
OTHER INCOME(EXPENSE)
Interest income 944 (12) - 932
Interest expense (12,829) - 408 (a) (12,421)
------------- ----------- ------------- ------------
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS 9,285 (3,093) 408 6,600
Income tax provision 840 (928) 2,068 (b) 1,980
------------- ----------- ------------- ------------
INCOME BEFORE MINORITY INTERESTS 8,445 (2,165) (1,660) 4,620
Minority interests in net income of subsidiaries 4,725 - - 4,725
------------- ----------- ------------- ------------
NET INCOME(LOSS) 3,720 (2,165) (1,660) (105)
Preferred stock dividends and accretion 1,631 - - 1,631
------------- ----------- ------------- ------------
NET INCOME(LOSS) AVAILABLE
FOR COMMON SHAREHOLDERS $ 2,089 $ (2,165) $ (1,660) $ (1,736)
============= =========== ============= ============
Primary and Fully Diluted
Net Income(Loss) Per Common Share $ 0.10 $ (0.08)
============= ============
Primary and Fully Diluted Weighted Average
Common and Common Equivalent Shares Outstanding 21,955 21,955
========== ============
</TABLE>
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<PAGE>
Unaudited Pro Forma Consolidated Statement of Operations
Ten Months Ended December 31, 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pro Forma Adjustments Pro Forma
-----------------------------------
ICF Kaiser Disposition Other After
Historical of PCI Adjustments Adjustments
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GROSS REVENUE $ 916,744 $ (4,004) $ - $ 912,740
Subcontract and direct material costs (493,971) 753 - (493,218)
Equity in income of joint ventures
and affiliated companies 3,123 (1,240) - 1,883
----------- ------------ -------------- --------------
SERVICE REVENUE 425,896 (4,491) - 421,405
OPERATING EXPENSES
Direct cost of services and overhead 359,887 (1,292) - 358,595
Administrative and general 40,647 - - 40,647
Depreciation and amortization 8,357 (433) - 7,924
Unusual items, net (500) - - (500)
----------- ------------ -------------- --------------
OPERATING INCOME 17,505 (2,766) - 14,739
Other Income (Expense)
Gain on sale of investment - 11,336 - 11,336
Interest income 2,053 (10) - 2,043
Interest expense (13,255) - 363 (a) (12,892)
----------- ------------ -------------- --------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS 6,303 8,560 363 15,226
Income tax provision 2,091 1,712 (758) (b) 3,045
----------- ------------ -------------- --------------
INCOME BEFORE MINORITY INTERESTS 4,212 6,848 1,121 12,181
Minority Interests in net income of subsidiaries 1,960 - - 1,960
----------- ------------ -------------- --------------
NET INCOME 2,252 6,848 1,121 10,221
Preferred stock dividends and accretion 1,803 - - 1,803
----------- ------------ -------------- --------------
NET INCOME AVAILABLE
FOR COMMON SHAREHOLDERS $ 449 $ 6,848 $ 1,121 $ 8,418
----------- ------------ -------------- --------------
Primary and Fully Diluted Net Income
Per Common Share: $ 0.02 $ 0.39
----------- --------------
Primary and Fully Diluted Weighted Average
Common and Common Equivalent
Shares Outstanding 21,517 21,517
----------- --------------
</TABLE>
5
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Notes To Unaudited Pro Forma Consolidated Financial Statements
Column 1 has been prepared from the Registrant's historical
consolidated financial statements on file with the U.S. Securities and Exchange
Commission. Column 2 has been prepared from the Registrant's accounts and
represents the effect of the Disposition of PCI and the entities associated with
the Disposition (including the option exercisable in 1998). Column 3 represents
unaudited pro forma adjustments that the Registrant considers necessary to give
effect to the Pro Forma Transactions other than the Disposition of PCI. Column
4 represents the unaudited pro forma results of operations and financial
position of the Registrant after giving effect to the Pro Forma Transactions.
(a) To record, as a result of the Pro Forma Transactions, the effect of
the reduction in interest expense of the Registrant's credit facility.
It is assumed that proceeds from the Disposition of PCI will be
reinvested in the Registrant's business activities and that such
activities will provide funds to allow the Registrant to reduce
borrowings under the credit facility.
(b) To record the net effect on the income tax provision.
Item 5. Other events
------------
As reported in item 2 above, the Registrant sold the majority of its
equity interests in entities that own and operate a pulverized coal injection
(PCI) facility to affiliates of Constellation Power, Inc., of Baltimore,
Maryland; the expected impact of the Disposition of PCI will be a substantial
gain in the Registrant's fourth quarter 1996 results.
On December 23, 1996, the Registrant sold 15,000 units of 12% Senior
Notes due in the year 2003, and associated warrants to purchase 105,000 shares
of the Registrant's common stock. The approximately $14 million in net proceeds
from the offering, together with borrowings under the Registrant's credit
facility, were used on December 30, 1996, to repurchase $20 million of Series 2D
Senior Preferred Stock, owned by EXOR America, Inc. of New York City. The Series
2D Senior Preferred Stock had a mandatory redemption date of January 13, 1997,
and represented approximately 10 percent of the total shareholders vote. On
December 30, 1996, the Registrant also repurchased (for a nominal price) all of
the 2,680,952 Series 2D Warrants held by an affiliate of EXOR America. Following
these repurchases, Mr. Gian Andrea Botta, the President of EXOR America,
resigned from the Registrant's Board of Directors effective December 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
ICF KAISER INTERNATIONAL, INC.
(Registrant)
/s/ Richard K. Nason
------------------------
Richard K. Nason
Executive Vice President and
Chief Financial Officer
Date: January 15, 1997
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