<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 June 30, 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 July 31, 1997, there were 22,436,572 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>
<S> <C>
Page
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996.............................. 3
Consolidated Statements of Operations -
Six Months Ended June 30, 1997 and 1996.......................... 4
Consolidated Statements of Operations -
Three Months Ended June 30, 1997 and 1996........................ 5
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996.......................... 6
Notes to Consolidated Financial Statements....................... 7-16
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 17-23
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......
243
Part II - Other Information
Item 1. Legal Proceedings................................................. 23
Item 2. Changes in Securities............................................. 23
Item 3. Defaults Upon Senior Securities................................... 23
Item 4. Submission of Matters to a Vote of Security Holders............... 24
Item 5. Other Information................................................. 24
Item 6. Exhibits and Reports on Form 8-K.................................. 25
</TABLE>
2
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
================================================================================
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 12,355 $ 16,761
Contract receivables, net 246,799 223,278
Prepaid expenses and other current assets 9,416 27,096
Deferred income taxes 12,764 9,739
---------- ----------
Total Current Assets 281,334 276,874
---------- ----------
Fixed Assets
Furniture, equipment, and leasehold improvements 50,874 48,410
Less depreciation and amortization (38,108) (37,208)
---------- ----------
12,766 11,202
---------- ----------
Other Assets
Goodwill, net 48,511 49,699
Investments in and advances to affiliates 6,676 6,443
Due from officers and employees 796 716
Other 20,570 21,039
---------- ----------
76,553 77,897
---------- ----------
$ 370,653 $ 365,973
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 22 $ 43
Accounts payable and subcontractors payable 87,937 73,320
Accrued salaries and employee benefits 45,875 45,779
Accrued interest 17 47
Other accrued expenses 13,302 15,838
Income taxes payable 620 852
Deferred revenue 26,777 21,829
Other 8,040 5,268
---------- ----------
Total Current Liabilities 182,590 162,976
---------- ----------
Long-term Liabilities
Long-term debt, less current portion 141,767 156,519
Other 4,928 5,432
---------- ----------
146,695 161,951
---------- ----------
Commitments and Contingencies
Minority Interests in Subsidiaries 6,866 6,154
Common Stock, par value $.01 per share:
Authorized-90,000,000 shares
Issued and outstanding- 22,410,749 and 22,311,842 shares 224 223
Additional Paid-in Capital 66,980 66,983
Notes Receivable Related to Common Stock (1,732) (1,732)
Retained Earnings (Deficit) (29,188) (29,238)
Cumulative Translation Adjustment (1,782) (1,344)
---------- ----------
$ 370,653 $ 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>
Six Months Ended June 30,
-----------------------------
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
GROSS REVENUE $ 507,543 $ 643,439
Subcontract and direct material costs (294,818) (350,716)
Equity in income of joint ventures
and affiliated companies 834 2,144
---------- ----------
SERVICE REVENUE 213,559 294,867
OPERATING EXPENSES
Direct cost of services and overhead 166,977 240,963
Administrative and general 27,853 32,515
Depreciation and amortization 4,742 5,306
---------- ----------
OPERATING INCOME 13,987 16,083
OTHER INCOME (EXPENSE)
Interest and investment income 1,016 423
Interest expense (9,157) (8,311)
---------- ----------
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 5,846 8,195
Income tax provision 1,134 2,295
---------- ----------
INCOME BEFORE MINORITY INTERESTS 4,712 5,900
Minority interests in net income of subsidiaries 4,662 2,943
---------- ----------
NET INCOME 50 2,957
Preferred stock dividends and accretion - 1,092
---------- ----------
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS $ 50 $ 1,865
========== ==========
NET INCOME PER COMMON SHARE:
PRIMARY $ 0.00 $ 0.09
========== ==========
FULLY DILUTED $ 0.00 $ 0.09
========== ==========
WEIGHTED AVERAGE
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
PRIMARY 22,370 21,785
========== ==========
FULLY DILUTED 22,468 21,785
========== ==========
</TABLE>
================================================================================
See notes to consolidated financial statements.
4
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------
1997 1996
---------- ---------
(Unaudited)
<S> <C> <C>
GROSS REVENUE $ 241,586 $ 332,320
Subcontract and direct material costs (132,552) (183,398)
Equity in income of joint ventures
and affiliated companies 547 1,420
--------- ---------
SERVICE REVENUE 109,581 150,342
OPERATING EXPENSES
Direct cost of services and overhead 85,292 122,318
Administrative and general 14,527 16,710
Depreciation and amortization 2,373 2,699
--------- ---------
OPERATING INCOME 7,389 8,615
OTHER INCOME (EXPENSE)
Interest and investment income 677 193
Interest expense (4,804) (4,211)
--------- ---------
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 3,262 4,597
Income tax provision 566 1,294
--------- ---------
INCOME BEFORE MINORITY INTERESTS 2,696 3,303
Minority interests in net income of subsidiaries 2,693 1,670
--------- ---------
NET INCOME 3 1,633
Preferred stock dividends and accretion - 553
--------- ---------
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS $ 3 $ 1,080
========= =========
NET INCOME PER COMMON SHARE:
PRIMARY $ 0.00 $ 0.05
========= =========
FULLY DILUTED $ 0.00 $ 0.05
========= =========
WEIGHTED AVERAGE
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
PRIMARY 22,441 21,846
========= =========
FULLY DILUTED 22,556 21,846
========= =========
</TABLE>
===============================================================================
See notes to consolidated financial statements.
5
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 50 $ 2,957
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,742 5,306
Provision for losses on contract receivables 871 826
Provision for deferred income taxes (3,025) 561
Earnings less than (in excess of) cash distributions from
joint ventures and affiliated companies 87 (286)
Minority interests in net income of subsidiaries 4,662 2,943
Unusual items, net - 1,528
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Contract receivables, net (24,392) 8,147
Prepaid expenses and other current assets 1,140 3,041
Other assets (1,935) 475
Accounts payable and accrued expenses 12,583 (13,466)
Income taxes payable (232) (169)
Deferred revenue 4,948 (1,844)
Other liabilities 2,495 (121)
Other operating activities 105 147
---------- ----------
Net Cash Provided by Operating Activities 2,099 10,045
---------- ----------
INVESTING ACTIVITIES
Sales of subsidiary and subsidiary assets 16,540 -
Sale of fixed assets - 22
Purchases of fixed assets (2,683) (3,089)
Investments in subsidiaries and affiliates, net of cash acquired (345) (725)
---------- ----------
Net Cash Provided by (Used in) Investing Activities 13,512 (3,792)
---------- ----------
FINANCING ACTIVITIES
Borrowings under credit facility 38,000 27,000
Principal payments on credit facility and other borrowings (53,000) (32,000)
Distribution of income to minority interest (3,950) (823)
Proceeds from issuances of common stock 109 213
Repurchases of common stock (252) -
Preferred stock dividends - (1,478)
Debt issuance costs (486) (375)
Other financing activities - (46)
---------- ----------
Net Cash Used in Financing Activities (19,579) (7,509)
---------- ----------
Effect of Exchange Rate Changes on Cash (438) 84
---------- ----------
Decrease in Cash and Cash Equivalents (4,406) (1,172)
Cash and Cash Equivalents at Beginning of Period 16,761 16,357
---------- ----------
Cash and Cash Equivalents at End of Period $ 12,355 $ 15,185
========== ==========
SUPPLEMENTAL INFORMATION:
Cash payments for interest $ 9,521 $ 7,904
Cash payments (refunds) for income taxes $ 230 $ 401
NON-CASH TRANSACTIONS:
Issuance of common stock pursuant to agreements with employees $ 287 $ 500
Reacquisition of common stock $ 227 $ -
Issuance of common stock in connection with an acquisition $ - $ 350
</TABLE>
================================================================================
See notes to consolidated financial statements.
6
<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, consisting of normal recurring
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. Certain reclassifications have been made to the prior period
financial statements to conform to the presentation used in the June 30, 1997
financial statements.
2. Net Income Per Common Share
Net income per common share was computed under the treasury stock method for the
six and three months ended June 30, 1997 and the modified treasury stock method
for the six and three months ended June 30, 1996, 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.
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.
7
<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, 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, which are subject to audit by the U.S. government. As a result
of pending audits related to fiscal years 1986 forward, the 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
in 1997 to modify certain financial ratios, to extend the termination date of
the credit facility from June 30, 1998, to December 31, 1998, and to permit
certain investments and acquisitions.
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. 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 the
Subsidiary Guarantors would not provide additional information that is material
to investors. Therefore, the Subsidiary Guarantors are combined in the
presentation below.
8
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
June 30, 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 $ (1,133) $ 2,553 $ 11,435 $ (500) $ 12,355
Contract receivables, net 249 97,134 149,416 - 246,799
Intercompany receivables, net 103,585 7,949 (111,534) - -
Prepaid expenses and other current assets 4,758 28 4,763 (133) 9,416
Deferred income taxes 12,764 - - - 12,764
-------- -------- --------- -------- ----------
Total Current Assets 120,223 107,664 54,080 (633) 281,334
-------- -------- --------- -------- ----------
Fixed Assets
Furniture, equipment, and leasehold improvements 9,363 2,198 39,313 - 50,874
Less depreciation and amortization (4,715) (2,097) (31,296) - (38,108)
-------- -------- --------- -------- ----------
4,648 101 8,017 - 12,766
-------- -------- --------- -------- ----------
Other Assets
Goodwill, net - - 48,511 - 48,511
Other 80,214 2,246 21,820 (76,238) 28,042
-------- -------- --------- -------- ----------
80,214 2,246 70,331 (76,238) 76,553
-------- -------- --------- -------- ----------
$205,085 $110,011 $ 132,428 $(76,871) $ 370,653
======== ======== ========= ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ - $ - $ 22 $ - $ 22
Accounts payable and other accrued expenses 12,751 65,909 22,579 - 101,239
Accrued salaries and employee benefits 3,322 23,419 19,134 - 45,875
Other 7,700 243 27,543 (32) 35,454
-------- -------- --------- -------- ----------
Total Current Liabilities 23,773 89,571 69,278 (32) 182,590
-------- -------- --------- -------- ----------
Long-term Liabilities
Long-term debt, less current portion 142,356 - - (589) 141,767
Other 2,672 34 2,222 - 4,928
-------- -------- --------- -------- ----------
145,028 34 2,222 (589) 146,695
-------- -------- --------- -------- ----------
Minority Interests in Subsidiaries - 6,866 - - 6,866
Common Stock 224 108 166 (274) 224
Additional Paid-in Capital 66,980 224 61,119 (61,343) 66,980
Retained Earnings (Deficit) (29,188) 13,208 1,425 (14,633) (29,188)
Other Equity (1,732) - (1,782) - (3,514)
-------- -------- --------- -------- ----------
$205,085 $110,011 $ 132,428 $(76,871) $ 370,653
======== ======== ========= ======== ==========
</TABLE>
9
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING 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>
10
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Six Months Ended June 30, 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 $ 223 $ 271,844 $ 235,476 $ - $ 507,543
Subcontract and direct material costs (301) (188,848) (105,669) - (294,818)
Equity in income of joint ventures and
affiliated companies and subsidiaries 12,978 - 761 (12,905) 834
------- --------- --------- -------- ---------
SERVICE REVENUE 12,900 82,996 130,568 (12,905) 213,559
OPERATING EXPENSES
Operating expenses 11,182 72,959 110,689 - 194,830
Depreciation and amortization 1,143 370 3,229 - 4,742
------- --------- --------- -------- ---------
OPERATING INCOME 575 9,667 16,650 (12,905) 13,987
OTHER INCOME (EXPENSE)
Interest and investment income 399 347 316 (46) 1,016
Interest expense (9,143) (24) (31) 41 (9,157)
------- --------- --------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS (8,169) 9,990 16,935 (12,910) 5,846
Income tax provision (benefit) (8,219) 2,078 7,275 - 1,134
------- --------- --------- -------- ---------
INCOME BEFORE MINORITY INTERESTS 50 7,912 9,660 (12,910) 4,712
Minority interests in net income of subsidiarie - 4,662 - - 4,662
------- --------- --------- -------- ---------
NET INCOME AVAILABLE FOR
COMMON SHAREHOLDERS $ 50 $ 3,250 $ 9,660 $(12,910) $ 50
======= ========= ========= ======== =========
</TABLE>
11
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Six Months Ended June 30, 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 $ 1,192 $ 266,399 $ 375,848 $ - $ 643,439
Subcontract and direct material costs (363) (168,210) (182,143) - (350,716)
Equity in income of joint ventures and
affiliated companies and subsidiaries 5,513 - 2,405 (5,774) 2,144
------- --------- --------- ---------- ---------
SERVICE REVENUE 6,342 98,189 196,110 (5,774) 294,867
OPERATING EXPENSES
Operating expenses (4,045) 91,863 185,663 (3) 273,478
Depreciation and amortization 1,115 585 3,606 - 5,306
------- --------- --------- ---------- ---------
OPERATING INCOME 9,272 5,741 6,841 (5,771) 16,083
OTHER INCOME (EXPENSE)
Interest and investment income 145 140 273 (135) 423
Interest expense (8,268) (101) (38) 96 (8,311)
------- --------- --------- ---------- ---------
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS 1,149 5,780 7,076 (5,810) 8,195
Income tax provision (benefit) (1,808) 1,069 3,034 - 2,295
------- --------- --------- ---------- ---------
INCOME BEFORE MINORITY INTERESTS 2,957 4,711 4,042 (5,810) 5,900
Minority interests in net income of
subsidiaries - 3,038 (95) - 2,943
------- --------- --------- ---------- ---------
NET INCOME 2,957 1,673 4,137 (5,810) 2,957
Preferred stock dividends and accretion 1,092 - - - 1,092
------- --------- --------- ---------- ---------
NET INCOME AVAILABLE FOR
COMMON SHAREHOLDERS $ 1,865 $ 1,673 $ 4,137 $ (5,810) $ 1,865
======= ========= ========= ========== =========
</TABLE>
12
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended June 30, 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 $ (234) $114,811 $127,009 $ - $ 241,586
Subcontract and direct material costs (127) (71,074) (61,351) - (132,552)
Equity in income of joint ventures and
affiliated companies and subsidiaries 7,212 - 538 (7,203) 547
------- -------- -------- ---------- ----------
SERVICE REVENUE 6,851 43,737 66,196 (7,203) 109,581
OPERATING EXPENSES
Operating expenses 6,373 38,157 55,289 - 99,819
Depreciation and amortization 602 184 1,587 - 2,373
------- -------- -------- ---------- ----------
OPERATING INCOME (LOSS) (124) 5,396 9,320 (7,203) 7,389
OTHER INCOME (EXPENSE)
Interest income 309 222 164 (18) 677
Interest expense (4,855) 54 (21) 18 (4,804)
------- -------- -------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS (4,670) 5,672 9,463 (7,203) 3,262
Income tax provision (benefit) (4,673) 1,150 4,089 - 566
------- -------- -------- ---------- ----------
INCOME BEFORE MINORITY INTERESTS 3 4,522 5,374 (7,203) 2,696
Minority interests in net income of subsidiaries - 2,693 - - 2,693
------- -------- -------- ---------- ----------
NET INCOME AVAILABLE FOR
COMMON SHAREHOLDERS $ 3 $ 1,829 $ 5,374 $ (7,203) $ 3
======= ======== ======== ========== ==========
</TABLE>
13
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended June 30, 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 $ 639 $ 133,766 $ 197,915 $ - $ 332,320
Subcontract and direct material costs (46) (82,493) (100,859) - (183,398)
Equity in income of joint ventures and
affiliated companies and subsidiaries 2,961 - 1,558 (3,099) 1,420
------- ---------- ------------ ------------ -------------------
SERVICE REVENUE 3,554 51,273 98,614 (3,099) 150,342
OPERATING EXPENSES
Operating expenses (2,150) 47,635 93,543 - 139,028
Depreciation and amortization 693 230 1,776 - 2,699
------- ---------- ------------ ------------ -------------------
OPERATING INCOME 5,011 3,408 3,295 (3,099) 8,615
OTHER INCOME (EXPENSE)
Interest income 49 102 130 (88) 193
Interest expense (4,183) (63) (14) 49 (4,211)
------- ---------- ------------ ------------ -------------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS 877 3,447 3,411 (3,138) 4,597
Income tax provision (benefit) (756) 674 1,376 - 1,294
------- ---------- ------------ ------------ -------------------
INCOME BEFORE MINORITY INTERESTS 1,633 2,773 2,035 (3,138) 3,303
Minority interests in net income of subsidiaries - 1,704 (34) - 1,670
------- ---------- ------------ ------------ -------------------
NET INCOME 1,633 1,069 2,069 (3,138) 1,633
Preferred stock dividends and accretion 553 - - - 553
------- ---------- ------------ ------------ -------------------
NET INCOME AVAILABLE FOR
COMMON SHAREHOLDERS $ 1,080 $ 1,069 $ 2,069 $ (3,138) $ 1,080
======= ========== ============ ============ ===================
</TABLE>
14
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 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 $ 23,088 $ (8,234) $ (12,749) $ (6) $ 2,099
-------- ---------- ------------- ------------ ------------------
INVESTING ACTIVITIES
Sales of subsidiaries and subsidiary assets - 2,763 13,777 - 16,540
Purchases of fixed assets (872) - (1,811) - (2,683)
Investments in subsidiaries and affiliates,
net of cash acquired - - (345) - (345)
-------- ---------- ------------- ------------ ------------------
Net Cash Provided by (Used) in Investing Activities (872) 2,763 11,621 - 13,512
-------- ---------- ------------- ------------ ------------------
FINANCING ACTIVITIES
Borrowings under credit facility 38,000 - - - 38,000
Principal payments on credit facility (53,000) - - - (53,000)
Distribution of income to minority interest - (3,950) - - (3,950)
Proceeds from issuances of common stock 109 - - - 109
Repurchases of common stock (252) - - - (252)
Debt issuance costs (486) - - - (486)
-------- ---------- ------------- ------------ ------------------
Net Cash Used in Financing Activities (15,629) (3,950) - - (19,579)
-------- ---------- ------------- ------------ ------------------
Effect of Exchange Rate Changes on Cash - - (438) - (438)
-------- ---------- ------------- ------------ ------------------
Increase (Decrease) in Cash and Cash Equivalents 6,587 (9,421) (1,566) (6) (4,406)
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 $ (1,133) $ 2,553 $ 11,435 $ (500) $ 12,355
======== ========== ============= ============ ==================
</TABLE>
15
<PAGE>
ICF Kaiser International, Inc. and Subsidiaries
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 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 $ (491) $5,990 $ 4,633 $ (87) $10,045
------- ------ ------- ------- -------
INVESTING ACTIVITIES
Purchases of fixed assets (1,366) (84) (1,639) - (3,089)
Investments in subsidiaries and affiliates,
net of cash acquired - - (725) - (725)
Sale of fixed assets - - 22 - 22
------- ------ ------- ------- -------
Net Cash Used in Investing Activities (1,366) (84) (2,342) - (3,792)
------- ------ ------- ------- -------
FINANCING ACTIVITIES
Borrowings under credit facility 27,000 - - - 27,000
Principal payments on credit facility (32,000) - - - (32,000)
Distribution of income to minority interest - (823) - - (823)
Proceeds from issuances of common stock 213 - - - 213
Preferred stock dividends (1,478) - - - (1,478)
Debt issuance costs (375) - - (375)
Other financing activities - - (46) - (46)
------- ------ ------- ------- -------
Net Cash Used in Financing Activities (6,640) (823) (46) - (7,509)
------- ------ ------- ------- -------
Effect of Exchange Rate Changes on Cash - - 84 - 84
------- ------ ------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents (8,497) 5,083 2,329 (87) (1,172)
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 $(4,369) $6,098 $14,907 $(1,451) $15,185
======= ====== ======= ======= =======
</TABLE>
16
<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 results by operating group for the six and three months
ended June 30, 1997 and 1996 are as follows (in millions):
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
------------------------- ---------------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Federal programs $ 10.9 $ 17.9 $ 5.4 $ 8.2
Engineering and construction 10.2 9.0 6.4 5.3
Consulting 7.0 5.8 3.5 3.2
------ ------ ------ ------
28.1 32.7 15.3 16.7
Corporate costs (14.1) (16.6) (7.9) (8.1)
------ ------ ------ ------
Total operating income $ 14.0 $ 16.1 $ 7.4 $ 8.6
====== ====== ====== ======
</TABLE>
Six Months Ended June 30, 1997 Versus Six Months Ended June 30, 1996
The decrease in income from federal programs primarily resulted from the
termination of the Company's contract to perform services at the U.S. Department
of Energy's (DOE) Hanford, Washington, Site (Hanford) in 1996. The Hanford
contract had a $9.4 million decrease in income between the six-month periods.
The only income under the Hanford contract during the six months ended June 30,
1997 was $1.1 million related to activities associated with the closeout of the
Company's work at Hanford.
The Hanford decrease was offset partially by a $2.7 million increase in 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
17
<PAGE>
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 $1.2 million improvement
in income between the six-month periods primarily due to an increase in the
volume of work, including a substantial increase in revenue from a mini-mill
project for Nova Hut, a.s., an integrated steel maker based in the Ostrava
region of the Czech Republic (see Business Outlook). Excluding the Nova Hut
project, the increase in volume was offset by slightly lower margins in 1997.
Income from consulting operations increased by $1.2 million for the six months
ended June 30, 1997 mainly due to a substantial increase in the utilization of
labor which resulted in a reduction of indirect labor expenses and increased
billable hours. The increase in utilization in 1997 was a direct result of an
increase in the availability of work under both existing and new projects and a
reduction in the total labor assigned to consulting operations. During the six
months ended June 30, 1996, consulting operations were still experiencing some
delays in both task-order assignments and funding of some of the Company's
consulting contracts due to the federal government's operating under a
continuing resolution from October 1995 through April 1996. Those delays
contributed to reduced utilization of labor during the six months ended June 30,
1996, primarily in the first quarter.
Three Months Ended June 30, 1997 Versus Three Months Ended June 30, 1996
The decrease in income from federal programs was primarily due to a $4.7 million
decrease in income from the Hanford contract, which was offset partially by a
$1.6 million increase in income from the Rocky Flats contract. The $1.1 million
increase in income from engineering and construction operations was primarily
due to a significant increase from the Nova Hut project, offset by slightly
lower margins on other work. The significant increase from the Nova Hut project
was due to the Company's signing a contract in June 1997 for the next phase of
the Nova Hut project (see Business Outlook); as a result, the Company recognized
additional revenue in the quarter by combining the two Nova Hut contracts for
profit recognition purposes. The $0.3 million increase in income from consulting
operations was primarily due to the increase in utilization described above. As
explained above, the increase in income from consulting operations was not as
pronounced between the quarters ended June 30, 1997 and 1996.
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 the mini-mill
project for Nova Hut. In June 1997, the Company signed a $160 million contract
with Nova Hut for the next phase of the mini-mill project. Earnings associated
with this contract for the next phase of work have been material to the
Company's engineering and construction operations and are expected to be
material in future periods.
18
<PAGE>
In 1996, the Company initiated an operational efficiency and cost-savings
program with the objective of minimizing the long-term impact associated with
the termination of the Hanford contract (see below). Although engineering and
construction operations reported a significant improvement in operating results
between the six-month periods, those operations continue to produce results
below management's requirements for the ongoing business. As a result, the
Company is in the process of re-evaluating the amount and types of overhead
costs incurred on engineering and construction operations. The objective of
this re-evaluation is to enhance the Company's ability to achieve sufficient and
sustainable levels of profitability in its engineering and construction lines of
business. This evaluation is expected to result in actions during the third
quarter to decrease overhead costs and strengthen the engineering and
construction operations. These actions during the third quarter could include
closing offices at remote locations, merging neighboring offices, and
terminating under-utilized employees. The Company is also reviewing
administrative costs; this review may result in additional terminations.
The Company's contract to perform services at Hanford was terminated by DOE on
October 1, 1996. The impact on cash flows and earnings due to the loss of the
Hanford contract has been material. The Company believes the impact will
continue to be material in 1997 if replacement contracts, in addition to the
Nova Hut contract, are not won or if the Company's continuing cost-savings
programs (including the efforts for engineering and construction operations
discussed above) are 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 six months ended June 30, 1997
and 1996 is as follows (in millions):
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------
1997 1996
---------------- -----------------
Gross Service Gross Service
------ ------- ------ -------
<S> <C> <C> <C> <C>
Federal programs $294.0 $100.5 $478.7 $195.9
Engineering and construction 169.1 78.4 125.6 67.6
Consulting 44.4 34.7 39.1 31.4
------ ------ ------ ------
Total $507.5 $213.6 $643.4 $294.9
====== ====== ====== ======
</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
19
<PAGE>
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 $135.9 million, or 21.1%, to $507.5 million for
the six months ended June 30, 1997 as compared to the six months ended June 30,
1996. The decrease in gross revenue was primarily due to a $184.7 million
decrease in gross revenue from federal programs which was attributable to the
effective termination of the Hanford contract on October 1, 1996. The Hanford
contract experienced a $186.4 million decrease in gross revenue from the
comparable period in 1996.
The decrease in federal programs was offset partially by a $43.5 million
increase in gross revenue from engineering and construction operations primarily
due to a $23.9 million increase in gross revenue from the Nova Hut project and a
$14.4 million increase in gross revenue from the Company's work on nitric acid
plants in 1997. Consulting operations reported a $5.3 million increase in gross
revenue as a result of an increase in the volume of work.
Service revenue decreased by $81.3 million for the six months ended June 30,
1997 as compared to the six months ended June 30, 1996. The $95.4 million
decrease in federal programs was due to an $80.0 million decrease in service
revenue from the Hanford contract and a $19.5 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 a change in the type of work performed at the site. 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 described above.
Service revenue as a percentage of gross revenue decreased to 42.1% for the six
months ended June 30, 1997 from 45.8% for the six months ended June 30, 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 $74.0 million between the six
months ended June 30, 1997 and 1996 primarily due to the loss of the Hanford
contract. The Hanford contract had $70.8 million of direct cost of services and
overhead in 1996.
Administrative and general expense decreased $4.7 million, or 14.3%, between the
six months ended June 30, 1997 and 1996. The decrease is primarily due to a
reduction in labor costs and the Company's unsuccessful efforts in 1996 to re-
new the Hanford contract.
20
<PAGE>
Interest Expense, Preferred Stock Dividends and Accretion
- ---------------------------------------------------------
Interest expense increased $0.8 million between the six months ended June 30,
1997 and 1996 primarily due to the issuance of the Company's Series B Senior
Notes. The increase in interest expense was offset by a $1.1 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 19.4% for the six months
ended June 30, 1997, compared with 28.0% for the six months ended June 30, 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 six months ended June 30, 1997, cash and cash equivalents decreased
$4.4 million to $12.4 million. Operating activities generated $2.1 million in
cash, investing activities provided $13.5 million in cash, and financing
activities used $19.6 million in cash.
Working Capital
- ----------------
The decrease in prepaid expenses and other current assets between June 30, 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 increase in
contract receivables, net was due primarily to the timing of cash receipts from
DOE on the Rocky Flats contract. The increase in accounts payable and
subcontractors payable was due primarily to payments made to subcontractors on
the Rocky Flats contract and an increase in accounts payable on the Nova Hut
contract. The increase in deferred revenue was due primarily to advance
billings and collections on the nitric acid projects.
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 costs
incurred during that year. The Company received approximately $0.4 million on
these billings during the six months ended June 30, 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 billing rate variances for
previous periods.
21
<PAGE>
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
in 1997 to modify certain financial ratios, to extend the termination date of
the credit facility from June 30, 1998, to December 31, 1998, and to permit
certain investments and acquisitions. In 1997, net payments on the credit
facility were $15.0 million. As of June 30, 1997, the Company had $5.5 million
in cash borrowings, $18.7 million of performance letters of credit outstanding,
and $15.8 million of additional credit available under the credit facility.
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. The
$0.1 million initially held in escrow was received in July 1997. These
entities' earnings and cash flows were material to the Company in 1996, and the
absence of these entities' earnings and cash flows will 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 by Kaiser-Hill to a minority interest ($4.0 million) and
purchases of fixed assets ($2.7 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 to expand its existing credit facility and provide additional
capital for long-term objectives.
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.
22
<PAGE>
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 Senior Subordinated Notes. If the
Company achieves and maintains a specified level of earnings, the semiannual
interest requirement will be reduced to $8.4 million. The Company expects to
meet its 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 June 30, 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
(a) None
(b) None
(c) None
Item 3. Defaults Upon Senior Securities
(a) None
(b) None
23
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on Friday, May 2,
1997, at the headquarters of the Company, 9300 Lee Highway, Fairfax, VA 22031.
The only matters voted on were (a) the election of two management-nominee
directors, each to three-year terms expiring at the 2000 Annual Meeting of
Shareholders and (b) the approval of the appointment of Coopers & Lybrand as the
Company's independent public accountants for the fiscal year ended December 31,
1997. The number of votes cast for, against, or withheld, as well as the number
of abstention and broker nonvotes for each of the above-described matters are
set forth below:
<TABLE>
<CAPTION>
Total Total Total Total
Votes Votes For Votes Broker
Votes For (%) Withheld (*) Non-Votes
- ----- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
1. Election of Directors
Tony Coelho 18,320,344 95.90% 783,978 0
Marc Tipermas 18,333,571 95.97% 770,751 0
<CAPTION>
Total Total Total Total Total
Votes Votes For Votes Broker Votes
For (%) Against Non-Votes Abstain
---------- --------- ------------ --------- -------
2. Approval of Independent
Public Accountants 18,733,372 98.06% 279,989 0 90,961
</TABLE>
(*) "Votes Withheld" means that the shareholder marked the box on his/her proxy
card labeled "withheld." This vote total includes situations in which the
shareholder wrote in the name of the individual director for whom he/she did not
want to vote.
Item 5. Other Information
None
24
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed as part of this report are listed below:
No. 10(a)(3) Amendment No. 3 dated June 13, 1997, to the Credit Agreement
dated May 6, 1996
No. 10(a)(4) Amendment No. 4 dated June 19, 1997, to the Credit Agreement
dated May 6, 1996
No. 10(ll) Agreement dated as of May 19, 1997 with James O. Edwards,
Chairman and Chief Executive Officer of the Registrant
No. 10(mm) Agreement dated as of May 19, 1997 with Marc Tipermas, President
and Chief Operating Officer of the Registrant
No. 10(nn) Amended and Restated Employment Agreement dated as of July 1,
1997 with Kenneth L. Campbell, Executive Vice President and Chief
Financial Officer of the Registrant
No. 11 Computation of Primary and Fully Diluted Earnings Per Share
No. 27 Financial Data Schedule
(b) Reports on Form 8-K
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: August 14, 1997 /s/ Kenneth L. Campbell
-------------------------------
Kenneth L. Campbell
Executive Vice President,
and Chief Financial Officer
(Duly authorized officer and
principal financial officer)
25
<PAGE>
Exhibit No. 10(a)(3)
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of June 13, 1997
(this "Amendment"), 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 by the First
Amendment dated as of December 17, 1996, and the Second Amendment dated as of
May 5, 1997 (the "Credit Agreement"), 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 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. The following definitions are hereby added to Section 1.1:
"Hunters Branch Investment" shall mean the Investment by the
Borrower or any Subsidiary in the buildings and associated land at 9300
and/or 9302 Lee Highway, Fairfax, Virginia.
"ICF Kaiser Hunters Branch" shall mean ICF Kaiser Hunters Branch,
Inc., an entity (however denominated) organized under the laws of the
State of Delaware, created in order to own the Hunters Branch Investment.
b. Section 7.6 is hereby amended by the addition of the following new
subsection (h) at the end of such Section:
(h) Borrower or any Subsidiary may make and own the Hunters Branch
Investment, provided that the cash amount of such Hunters Branch
Investment at the closing thereon (excluding transaction costs) shall be
limited to a maximum of $1,500,000, which amount (when used) shall be
deducted from the $5,000,000 aggregate Acquisitions limit set forth in
subsection (d) of this Section 7.6; provided, further, that the Borrower
-----------------
or any Subsidiary may, but is not required to, capitalize any and all
transaction costs related to the Hunters branch Investment without
deducting such capitalized costs from the afore-mentioned Acquisitions
limit; and provided, further, that ICF Kaiser Hunters Branch may make
-----------------
such additional Hunters Branch Investments as are set forth below without
deducting any such Investments from the afore-mentioned Acquisitions
limit:
$600,000 in each of years 1997, 1998, and 1999; and
<PAGE>
$700,000 in each of years 2000, 2001, 2002, 2003, 2004, and 2005.
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
Second Amendment to 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;
3. Representations and Warranties.
-------------------------------
(a) 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.
(b) The Borrower confirms that as of the date of this Third Amendment,
there has been no litigation, administrative proceeding, investigation, business
development, or change in financial condition which could reasonably be expected
to have a material adverse effect on the business, operations, assets or
condition (financial or otherwise) of the Borrower or its Subsidiaries taken as
a whole.
4. Covenants.
----------
(a) The Borrower warrants to the Banks that the Borrower is in
compliance and have 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.
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.
-------------
2
<PAGE>
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/ Linda Pace By: /s/ Brian Haggerty
-------------------------------- ----------------------------
Name: Linda Pace Name: Brian Haggerty
Title: Vice President Title: Vice President
By: /s/ John Sykes
--------------------------------
Name: John Sykes
Title: Assistant Vice President
3
<PAGE>
<TABLE>
<S> <C> <C>
The Subsidiary Guarantors:
CLEMENT INTERNATIONAL CYGNA GROUP, INC. HENRY J. KAISER COMPANY
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
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>
4
<PAGE>
<TABLE>
<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>
5
<PAGE>
Exhibit No. 10(a)(4)
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of June 19, 1997 (this
"Amendment"), 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 by the First
Amendment dated as of December 17, 1996, the Second Amendment dated as of May 5,
1997, and the Third Amendment dated as of June 13, 1997 (the "Credit
Agreement"), 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 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. The following definition is hereby amended in its entirety so that
such definition, as so amended, shall read as follows:
"Single Purpose Subsidiary" shall mean as to any Person, a Subsidiary
of such Person the activities of which, including its Subsidiaries and
partnerships or other entities owned, or the management of which are
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Single Purpose Subsidiary, are limited to
(a) ownership of all or a portion of the interests in a single project
constituting one or more Permitted Businesses, either directly or through
the ownership of the Capital Stock of another Person, and (b) the
development, engineering, design, project management, construction or
operation of such project; ICF Kaiser Brazil Holdings, ICF Kaiser
Participacoes Ltda., and IESA shall be deemed to be Single Purpose
Subsidiaries for all purposes hereunder.
b. The following definitions are hereby added to Section 1.1:
"ICF Kaiser Participacoes Ltda." shall mean the entity (however
denominated) organized under the laws of Brazil which will own
substantially all of the capital stock of IESA following the IESA
Investment.
"ICF Kaiser Brazil Holdings" shall mean ICF Kaiser Brazil Holdings,
Inc., a corporation organized under the laws of the State of Delaware which
will have as its sole purpose the ownership of ICF Kaiser Participacoes
Ltda.
<PAGE>
"IESA" shall mean Internacional de Engenharia S.A., a corporation
organized under the laws of Brazil, together with its subsidiaries IESA-
Tecnologia de Sistemas Ltda., Servap Engenharia e Consultoria Ltda., IESA
Negocios Ltda., IESA Participacoes Ltda., and Project Engineering
Ltd/Cayman Islands.
"IESA Investment" shall mean the Investment in and eventual ownership
of substantially all of the capital stock of IESA by ICF Kaiser
Participacoes Ltda.
c. Clause (1) of Subsection (a) of Section 2.5 is hereby amended by
inserting, at the end of such clause, the following sentence:
The Borrower agrees not to request the issuance of any Letter of Credit for
use by, in connection with, or for IESA, ICF Kaiser Participacoes Ltda.,
and/or ICF Kaiser Brazil Holdings unless the Borrower has obtained the
prior written consent of the Agent for the issuance of such Letter of
Credit.
d. Section 7.2 is hereby amended by the addition of the following
subsection (f) at the end of such Section:
(f) (1) Non-Recourse Indebtedness in the amount of $950,000 incurred by
ICF Kaiser Participacoes Ltda. in order to complete the IESA Investment;
(2) Non-Recourse Indebtedness incurred by IESA and/or ICF Kaiser
Participacoes Ltda. following the IESA Investment; and (3) Indebtedness for
Borrowed Money and other Debt of IESA existing as of the date of the
closing of the IESA Investment; provided that in each of (1), (2), and (3)
--------
above, neither the Borrower nor any Subsidiary other than ICF Kaiser Brazil
Holdings, ICF Kaiser Participacoes Ltda., or IESA shall be permitted (x) to
have any guarantee obligation in respect of such Indebtedness or Debt
otherwise permitted by this subsection or (y) to pledge or grant any lien
or encumbrances on any assets as collateral or security with respect to
such Indebtedness or Debt otherwise permitted by this subsection.
e. Section 7.6 is hereby amended by the addition of the following
subsection (i) at the end of such Section:
(i) ICF Kaiser Participacoes Ltda. may complete the IESA Investment,
provided that any cash from Borrower or any Subsidiary made available to
ICF Kaiser Participacoes Ltda. in connection with the IESA Investment shall
be limited to a maximum of $350,000, which amount (when used) shall be
deducted from the $5,000,000 aggregate Acquisitions limit set forth in
subsection (d) of this Section 7.6.
f. Article VIII (Financial Covenants) is hereby amended by the addition,
at the end of such Article, of the following:
; except as provided below, in all calculations made pursuant to this
Article, the Borrower shall exclude any and all amounts (positive and negative)
attributable to IESA, ICF Kaiser Participacoes Ltda., and/or ICF Kaiser Brazil
Holdings that otherwise might be includible in Capital Expenditures,
Consolidated Fixed Charges, Consolidated Interest Expense, Consolidated Lease
Expenses, Consolidated Net Income, Consolidated Net Worth, EBITDA, Indebtedness
for Borrowed Money, Senior Funded Indebtedness, and Total Capitalization.
2
<PAGE>
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
Second Amendment to the Security Agreement, and the Loan Documents as amended
hereby, together with such other related papers as the Banks shall reasonably
require;
(b) Legal Opinion. The Banks shall have received a favorable written
opinion of Barbosa & Mussnich, Rio de Janeiro, Brazil, Counsel for Borrower, ICF
Kaiser Holdings Unlimited, Inc., ICF Kaiser Brazil Holdings, and ICF Kaiser
Participacoes Ltda., which shall be addressed to the Banks and be dated the date
of this Fourth Amendment, in substantially the form attached as Exhibit A;
(c) 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;
(d) Other Agreements. Borrower and each Subsidiary Guarantor shall have
executed and delivered each other Loan Document required hereunder;
3. Representations and Warranties.
-------------------------------
(a) 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.
(b) The Borrower confirms that as of the date of this Fourth Amendment,
there has been no litigation, administrative proceeding, investigation, business
development, or change in financial condition which could reasonably be expected
to have a material adverse effect on the business, operations, assets or
condition (financial or otherwise) of the Borrower or its Subsidiaries taken as
a whole.
4. Covenants.
----------
(a) The Borrower warrants to the Banks that the Borrower is in compliance
and have 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.
3
<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/ Linda Pace By: /s/ Brian Haggerty
--------------------------- --------------------------
Name: Linda Pace Name: Brian Haggerty
Title: Vice President Title: Vice President
By: /s/ John Sykes
---------------------------
Name: John Sykes
Title: Assistant Vice President
4
<PAGE>
<TABLE>
<CAPTION>
The Subsidiary Guarantors:
CLEMENT INTERNATIONAL CORPORATION. CYGNA GROUP, INC. HENRY J. KAISER COMPANY
<S> <C> <C>
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 TECHNOLOGY, INC. ICF INCORPORATED
CONSTRUCTION, 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 CORPORATION ICF KAISER ENGINEERS (CALIFORNIA) ICF KAISER ENGINEERS
CORPORATION MASSACHUSETTS, 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 GROUP, INC. ICF KAISER GOVERNMENT ICF KAISER ENGINEERS, INC.
PROGRAMS, 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 UNLIMITED, INC. ICF KAISER HANFORD COMPANY ICF RESOURCES 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>
5
<PAGE>
<TABLE>
<CAPTION>
ICF LEASING CORPORATION, INC. KE SERVICES CORPORATION KE LIVERMORE, INC.
<S> <C> <C>
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 ENGINEERS &
CONSTRUCTORS, INC. INTERNATIONAL, INC. 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 COMPANY PCI OPERATING COMPANY, INC. SYSTEMS APPLICATIONS
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>
6
<PAGE>
Exhibit No. 10 (ll)
May 19, 1997
James O. Edwards
Chairman and Chief Executive Officer
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, VA 22031-1207
Re: Employment Arrangements
-----------------------
Dear Jim:
The purpose of this letter is to set forth our agreement with respect to
your employment by ICF Kaiser International, Inc. (the "Company"). The "ICF
Kaiser International, Inc. Standard Terms and Conditions of Employment for
Executive Personnel" attached hereto as Exhibit A, the "Senior Executive
Officers Severance Plan" (the "SEOSP") attached hereto as Exhibit B, the "Senior
Executive's Incentive Compensation Plan" (the "Senior IC Plan") attached hereto
as Exhibit C, the Long-Term Incentive Compensation Plan for Senior Executives
(the "LTI") attached hereto as Exhibit D, and the ICF Kaiser International,
Inc., Stock Incentive Plan (the "Stock Incentive Plan") attached hereto as
Exhibit E, together with any amendments to such plans during the Employment
Period (as defined herein) that increase the benefits payable thereunder are
incorporated herein by reference. This letter and Exhibits A, B, C, D and E,
together with the amendments referred to in the preceding sentence, are
sometimes hereinafter collectively referred to as this "Agreement."
1. Employment Period; Duties.
-------------------------
(a) Employment and Employment Period. The Company shall employ you
--------------------------------
to serve as Chairman and Chief Executive Officer ("CEO") of the Company for a
period commencing May 1, 1997 (the "Effective Date") and ending December 31,
1999 (the "Employment Period").
(b) Offices, Duties and Responsibilities. You shall be a member of,
------------------------------------
and report to, the Board of Directors of the Company. As Chief Executive
Officer of the Company, you shall have general and active management of the
business of the Company and shall see that all orders and resolutions of the
Board of Directors are carried into effect. Without limiting the generality of
the foregoing, you shall have such powers and duties in the management of the
Company as generally pertain to the office of the Chief Executive Officer,
subject to the overview and control of the Board of Directors.
2. Compensation and Fringe Benefits.
--------------------------------
(a) Base Compensation. The Company shall pay you a minimum base
-----------------
salary at the rate of (i) $400,000 per year for the period from April 1, 1997
through December 31, 1997, (ii) $425,000 per year for the period of January 1,
1998 through December 31, 1998, and (iii) $450,000 per year for the period of
January 1, 1999 through December 31, 1999, in installments in accordance with
the Company's regular practice for compensating executive personnel. The salary
levels in this Section 2(a) shall serve as the salary level for determination of
the severance benefits described in Exhibits A and B.
(b) Non-Qualified Salary Deferral Plan. You will be eligible for
----------------------------------
participation in the Company's Deferred Compensation Plan if and when such a
plan is implemented.
(c) Bonus Compensation. You shall be entitled to receive bonuses as
------------------
determined by the Compensation Committee of the Company's Board of Directors in
accordance with the provisions of the Senior IC and the LTI for the Employment
Period. The Senior IC Plan and the LTI are subject to change in at the
discretion of the Compensation Committee. The EPS target for each year in the
Senior IC Plan and LTI shall be determined by the
<PAGE>
Compensation Committee of the Board of Directors by January 1st of each year. In
any year in which no EPS targets are defined by January 1st, you will be
guaranteed a bonus of at least $100,000 for that year.
(d) Existing Loan. Your existing loan will be amended and restated
-------------
as follows:
a. Due date: December 31, 1999
b. Interest rate: 6.58%, no compounding
c. Principal amount: principal amount of existing loan plus
accrued interest through date of execution of amended and
restated loan.
(e) New Loan. Immediately following the execution of this Agreement
--------
by you and the Company, you will receive an additional loan of $100,000. In
consideration of this $100,000 loan you agree not to sell any ICF Kaiser stock
without prior written approval from the Compensation Committee of the Board of
Directors.
(f) Fringe Benefits. You will be entitled to such fringe benefits as
---------------
are generally made available by the Company to executive personnel. Such
benefits shall (i) include participation in the Company's defined contribution
retirement plan, 401(k) Plan, and health, term life and disability insurance
programs and reimbursement of reasonable expenses incurred in connection with
travel and entertainment related to the Company's business and affairs and (ii)
be paid by the Company in a manner, and to the extent, consistent with past
practice.
3. Restricted Stock. On December 31, 1998, you will be granted 200,000
----------------
shares of restricted stock which will vest on the following schedule: (a)
100,000 shares on December 31, 1999, and (b) 100,000 shares on December 31,
2000. If during the Employment Period your employment is terminated by you for
"good reason" or by the Company without "cause" as those terms are defined in
Exhibits A and B, then (i) if the shares have not been granted, 200,000 shares
will be granted on your termination date, 100,000 shares of which will vest
immediately and, the other 100,000 shares of which will vest on the first
anniversary of your termination date; or (ii) if the shares have been granted,
the share grants will vest (a) 100,000 shares on your termination date, and (b)
100,000 shares on the first anniversary of your termination date. No shares will
be granted nor will any shares vest if during the Employment Period your
employment by the Company has been terminated by the Company for "cause" or by
you without "good reason" on or before the grant or vesting dates. In the event
the Company terminates your Employment Period by reasons of your disability as
provided in Section 5(d) of Exhibit A, then (i) if the shares have not been
granted 150,000 shares of restricted stock will be granted on your termination
date, all of which will vest immediately upon grant, or (ii) if the shares have
been granted, 150,000 shares will vest on your termination date and the balance
will be forfeited. In event of your death, then (i) if the shares have not been
granted, your estate will be paid in cash the value of 150,000 shares at a per
share value determined using the average of the per share closing prices on the
20 days immediately preceding the date of your death, or (ii) if the shares have
been granted, 150,000 shares will vest on the date of your death and the balance
will be forfeited.
4. Non-Competition. You agree that for a period commencing on the
---------------
Effective Date and ending (i) on the date of termination of your employment (x)
by the Company for reasons that do not constitute "cause" as defined in Exhibits
A and B or (y) by you for "good reason" as defined in Exhibits A and B, and (ii)
one year following termination of your employment (x) by the Company for "cause"
or (y) by you for reasons that do not constitute "good reason", provided that
--------
the Company is not in material breach of this Agreement (the "Non-Competition
Period"), you will not, except as otherwise provided herein, engage or
participate, directly or indirectly, as principal, agent, employee, employer,
consultant, stockholder, partner or in any other individual capacity whatsoever,
in the planning for, conduct of or management of, or own any stock or any other
equity investment in or debt of, any business which is competitive with any
business conducted by the Company.
For the purpose of this Agreement, a business shall be considered to be
competitive with the business of the Company only if such business is engaged in
providing services (i) similar to (x) any service currently provided by the
Company or provided by the Company during the Employment Period; (y) any service
which in the ordinary course of business during the Non-Competition Period
evolves from or results from enhancements to the services provided by the
Company as of the Effective Date or during the Non-Competition Period; or
<PAGE>
(z) any future service of the Company as to which you materially and
substantially participated in the design or enhancement, and (ii) to customers
and clients of the type served by the Company during the Non-Competition Period.
(a) Non-Solicitation of Employees. During the Non-Competition Period,
-----------------------------
you will not (for your own benefit or for the benefit of any person or entity
other than the Company) solicit, or assist any person or entity other than the
Company to solicit, any officer, director, executive or employee of the Company
or its affiliates to leave his or her employment.
(b) Reasonableness. You acknowledge that (i) the markets served by
--------------
the Company are national and international and are not dependent on the
geographic location of executive personnel or the businesses by which they are
employed, (ii) the length of the Non-Competition Period is related to the length
of the Employment Period and the Company's agreement to provide severance
benefits as set forth in Section 5(b) of Exhibit A and in Exhibit B that, under
certain circumstances, will provide additional compensation to you upon the
termination of this Agreement; and (iii) the above covenants are reasonable on
their face, and the parties expressly agree that such restrictions have been
designed to be reasonable and no greater than is required for the protection of
the Company.
(c) Investments. Nothing in this Agreement shall be deemed to
-----------
prohibit you from owning equity or debt investments in any corporation,
partnership or other entity which is competitive with the Company, provided that
--------
such investments (i) are passive investments and constitute one percent (1%) or
less of the outstanding equity securities of such an entity the equity
securities of which are traded on a national securities exchange or other public
market, or (ii) are approved by the Company.
If you find the terms of your employment, as set forth above
acceptable, please sign a copy of this letter and return it to me. Upon your
acceptance hereof, this letter, together with its Exhibits, will constitute your
employment agreement with the Company.
Very truly yours,
ICF KAISER INTERNATIONAL, INC.
By: /s/ Tony Coelho
-------------------------------
for the Compensation Committee
of the Board of Directors
Accepted and Agreed:
/s/ James O. Edwards
- -------------------------
James O. Edwards
<PAGE>
Exhibit No. 10(mm)
May 19, 1997
Marc Tipermas, Ph.D.
President and Chief Operating Officer
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, VA 22031-1207
Re: Employment Arrangements
-----------------------
Dear Marc:
The purpose of this letter is to set forth our agreement with respect to
your employment by ICF Kaiser International, Inc. (the "Company"). The "ICF
Kaiser International, Inc. Standard Terms and Conditions of Employment for
Executive Personnel" attached hereto as Exhibit A, the "Senior Executive
Officers Severance Plan" (the "SEOSP") attached hereto as Exhibit B, the "Senior
Executive's Incentive Compensation Plan" (the "Senior IC Plan") attached hereto
as Exhibit C, the Long-Term Incentive Compensation Plan for Senior Executives
(the "LTI") attached hereto as Exhibit D, and the ICF Kaiser International,
Inc., Stock Incentive Plan (the "Stock Incentive Plan") attached hereto as
Exhibit E, together with any amendments to such plans during the Employment
Period (as defined herein) that increase the benefits payable thereunder are
incorporated herein by reference. This letter and Exhibits A, B, C, D and E,
together with the amendments referred to in the preceding sentence, are
sometimes hereinafter collectively referred to as this "Agreement."
1. Employment Period; Duties.
-------------------------
(a) Employment and Employment Period. The Company shall employ you
--------------------------------
to serve as President and Chief Operating Officer ("COO") of the Company for a
period commencing May 1, 1997 (the "Effective Date") and ending December 31,
1999 (the "Employment Period").
(b) Offices, Duties and Responsibilities. You shall report to the
------------------------------------
Chief Executive Officer of the Company and shall be a member of all senior
management groups. Your offices shall be in the Executive Suite, which is
currently located on the 12th floor of the Company's headquarters building in
Fairfax, Virginia. You shall have the responsibility to manage the operating
activities of the Company and each of its Operating Groups. Each sentence of
this Section 1(b) is a material provision of this Agreement and a material
inducement to your acceptance of this Agreement.
2. Compensation and Fringe Benefits.
--------------------------------
(a) Base Compensation. The Company shall pay you a minimum base
-----------------
salary at the rate of (i) $350,000 per year for the period from April 1, 1997
through December 31, 1997, (ii) $375,000 per year for the period of January 1,
1998 through December 31, 1998, and (iii) $400,000 per year for the period of
January 1, 1999 through December 31, 1999, in installments in accordance with
the Company's regular practice for compensating executive personnel. The salary
levels in this Section 2(a) shall serve as the salary level for determination of
the severance benefits described in Exhibits A and B.
(b) Non-Qualified Salary Deferral Plan. You will be eligible for
----------------------------------
participation in the Company's Deferred Compensation Plan if and when such a
plan is implemented.
(c) Bonus Compensation. You shall be entitled to receive bonuses as
------------------
determined by the Compensation Committee of the Company's Board of Directors in
accordance with the provisions of the Senior IC Plan and the LTI for the
Employment Period. The Senior IC Plan and the LTI are subject to change at the
discretion of the Compensation Committee. The EPS target for each year in the
Senior IC Plan and LTI shall be determined by the Compensation Committee of the
Board of Directors by January 1st of each year. In any year in which no EPS
targets are defined by January 1st, you will be guaranteed a bonus of at least
$100,000 for that year.
<PAGE>
(d) Upon execution of this Agreement by you and the Company, you will
receive a payment of $50,000 net of all taxes. In consideration of this
payment, you agree not to sell any ICF Kaiser stock during the Employment Period
without prior written approval from the Compensation Committee of the Board of
Directors.
(e) Fringe Benefits. You will be entitled to such fringe benefits as
---------------
are generally made available by the Company to executive personnel. Such
benefits shall (i) include participation in the Company's defined contribution
retirement plan, 401(k) Plan, and health, term life and disability insurance
programs and reimbursement of reasonable expenses incurred in connection with
travel and entertainment related to the Company's business and affairs and (ii)
be paid by the Company in a manner, and to the extent, consistent with past
practice.
3. Restricted Stock. On December 31, 1998, you will be granted 150,000
----------------
shares of restricted stock which will vest on the following schedule: (a) 75,000
shares on December 31, 1999, and (b) 75,000 shares on December 31, 2000. If
during the Employment Period your employment is terminated by you for "good
reason" or by the Company without "cause" as those terms are defined in Exhibits
A and B, then (i) if the shares have not been granted, 150,000 shares will be
granted on your termination date, 75,000 shares of which will vest immediately
and, the other 75,000 shares of which will vest on the first anniversary of your
termination date; or (ii) if the shares have been granted, the share grants will
vest (a) 75,000 shares on your termination date, and (b) 75,000 shares on the
first anniversary of your termination date. No shares will be granted nor will
any shares vest if during the Employment Period your employment by the Company
has been terminated by the Company for "cause" or by you without "good reason"
on or before the grant or vesting dates. In the event the Company terminates
your Employment Period by reasons of your disability as provided in Section 5(d)
of Exhibit A, then (i) if the shares have not been granted 112,500 shares of
restricted stock will be granted on your termination date, all of which will
vest immediately upon grant, or (ii) if the shares have been granted, 112,500
shares will vest on your termination date and the balance will be forfeited. In
event of your death, then (i) if the shares have not been granted, your estate
will be paid in cash the value of 112,500 shares at a per share value determined
using the average of the per share closing prices on the 20 days immediately
preceding the date of your death, or (ii) if the shares have been granted,
112,500 shares will vest on the date of your death and the balance will be
forfeited.
4. Non-Competition. You agree that for a period commencing on the
---------------
Effective Date and ending (i) on the date of termination of your employment (x)
by the Company for reasons that do not constitute "cause" as defined in Exhibits
A and B or (y) by you for "good reason" as defined in Exhibits A and B or (ii)
one year following termination of your employment (x) by the Company for "cause"
or (y) by you for reasons that do not constitute "good reason", provided that
--------
the Company is not in material breach of this Agreement, (the "Non-Competition
Period"), you will not, except as otherwise provided herein, engage or
participate, directly or indirectly, as principal, agent, employee, employer,
consultant, stockholder, partner or in any other individual capacity whatsoever,
in the planning for, conduct of or management of, or own any stock or any other
equity investment in or debt of, any business which is competitive with any
business conducted by the Company.
For the purpose of this Agreement, a business shall be considered to be
competitive with the business of the Company only if such business is engaged in
providing services (i) similar to (x) any service currently provided by the
Company or provided by the Company during the Employment Period; (y) any service
which in the ordinary course of business during the Non-Competition Period
evolves from or results from enhancements to the services provided by the
Company as of the Effective Date or during the Non-Competition; or (z) any
future service of the Company as to which you materially and substantially
participated in the design or enhancement, and (ii) to customers and clients of
the type served by the Company during the Non-Competition Period.
(a) Non-Solicitation of Employees. During the Non-Competition
-----------------------------
Period, you will not (for your own benefit or for the benefit of any person or
entity other than the Company) solicit, or assist any person or entity other
than the Company to solicit, any officer, director, executive or employee of the
Company or its affiliates to leave his or her employment.
(b) Reasonableness. You acknowledge that (i) the markets served by
--------------
the Company are national and international and are not dependent on the
geographic location of executive personnel or the businesses by which they are
employed, (ii) the length of the Non-Competition Period is related to the length
of the Employment Period and the Company's agreement to provide severance
benefits as set forth in Section 5(b)
<PAGE>
of Exhibit A and in Exhibit B that, under certain circumstances, will provide
additional compensation to you upon the termination of this Agreement; and (iii)
the above covenants are reasonable on their face, and the parties expressly
agree that such restrictions have been designed to be reasonable and no greater
than is required for the protection of the Company.
(c) Investments. Nothing in this Agreement shall be deemed to
-----------
prohibit you from owning equity or debt investments in any corporation,
partnership or other entity which is competitive with the Company, provided that
--------
such investments (i) are passive investments and constitute one percent (1%) or
less of the outstanding equity securities of such an entity the equity
securities of which are traded on a national securities exchange or other public
market, or (ii) are approved by the Company.
If you find the terms of your employment, as set forth above acceptable,
please sign a copy of this letter and return it to me. Upon your acceptance
hereof, this letter, together with its Exhibits, will constitute your employment
agreement with the Company.
Very truly yours,
ICF KAISER INTERNATIONAL, INC.
By: /s/ Tony Coelho
-------------------------------
for the Compensation Committee
for the Board of Directors
Accepted and Agreed:
/s/ Marc Tipermas
- ----------------------
Marc Tipermas
<PAGE>
Exhibit No. 10 (nn)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AGREEMENT is made as of the 1st day of July, 1997, by and between
ICF Kaiser International, Inc., a Delaware corporation (the "Company"), on the
one hand, and Kenneth L. Campbell, a resident of Fairfax County, Virginia (the
"Executive"), on the other hand.
WHEREAS, ICF Kaiser desires to employ Executive in a new position, and
Executive desires to assume such new position, on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, the Company,
on the one hand, and Executive, on the other hand, agree as follows:
1. Employment Period; Duties.
--------------------------
The Company shall employ the Executive to serve as Executive Vice
President and Chief Financial Officer of the Company for a period of three years
commencing July 1, 1997 (the "Employment Period").
2. Compensation and Fringe Benefits.
---------------------------------
(a) Base Compensation. For the period from the beginning of the
------------------
Employment Period to June 30, 1998, the Company shall pay Executive a base
salary at the rate of $270,000 per year; for the period July 1, 1998 to June 30,
1999, the Company shall pay Executive a base salary at the rate of $285,000 per
year; for the period July 1, 1999, to June 30, 2000, the Company shall pay
Executive a base salary at the rate of $300,000 per year, all in accordance with
the Company's regular practice for compensating senior management personnel.
(b) Bonus Compensation. The Company shall grant to Executive
-------------------
30,000 shares of the Company's common stock, par value $0.01 per share ("Common
Stock"), pursuant to the Company's Stock Incentive Plan. Such shares shall not
vest, and shall not be transferable, unless Executive remains as an employee of
the Company through and including July 1, 1999, provided that such shares shall
vest and become immediately transferable if at any time prior to July 1, 1999,
(a) Executive's employment by the Company is terminated (i) by the Company for
any reason other than "cause" (as defined in Section 5 below), (ii) by
Executive for "good reason" (as defined in Section 5 below), or (iii) by
Executive in order to accept employment at a total compensation substantially in
excess of that provided by the Employment Agreement, as amended, provided that
the Company has been given the opportunity to match substantially such higher
total compensation and has declined to do so, or (b) Executive dies or becomes
disabled (as defined in Section 6 below). For calendar year 1997, the Executive
will participate in the Long-Term Incentive Compensation Plan for Senior
Executives and the Annual Incentive Compensation Plan for Senior Executives as
described in Attachment A; any bonus is dependent upon the Company's achievement
of its profit target and the Executive's personal achievement of performance
criteria associated with his position and shall be pro-rated to adjust for the
portion of the year that Executive was employed by the Company. For future
years (calendar year 1998 and beyond), any bonus will be determined by the
Compensation Committee of the Board of Directors. Bonus awards may be comprised
of cash, stock options and/or restricted stock.
(c) Fringe Benefits. The Executive shall be entitled to such
----------------
fringe benefits as are generally made available by the Company to senior
management personnel. Such benefits shall include participation in the Company's
defined contribution retirement plan, Section 401(k) Plan, and health, term life
and disability insurance programs. The Executive also will be reimbursed for
reasonable expenses incurred in connection with travel and entertainment related
to the Company's business and affairs which will be paid by the Company in a
manner, consistent with past practice and as amended by any subsequent changes
of Company Policy. For the retirement plan, credit will be given for prior years
of service for purpose of vesting.
3. Stock Options.
--------------
<PAGE>
(a) On or before May 2, 1997, the Company will grant to the
Executive non-qualified stock options under the Company's Consultants, Agents,
and Part-time Employees Stock Plan to purchase 100,000 shares of Common Stock,
at a purchase price equal to the average of the closing prices of the Common
Stock on the New York Stock Exchange on each of the 20 days ending the day
immediately preceding the grant date. Such options will be represented by a
Stock Option Agreement in the form customarily used by the Company for such
agreements, containing the following provisions:
(i) Option Term. The options will expire at five years from
-----------
date of grant. All unexercised vested options shall expire 90 days after the
Executive ceases being employed by the Company for any reason.
(ii) Vesting. Twenty-five percent (25%) of the options vest on
-------
each of July 1, 1998, 1999, 2000 and 2001.
(iii) Exercise. Subject to applicable securities laws and
--------
regulations, all vested options are exercisable at any time prior to their
expiration.
(b) If the price per share of the Common Stock (as adjusted for
splits, reverse spits or stock dividends) on July 1, 1999, (or if the Common
Stock is not publicly traded on July 1, 1999, on the first day thereafter that
shares of Common Stock are publicly traded) is less than $6.00, the Company
shall grant to the Executive on July 2, 1999, non-qualified stock options under
the Company's Stock Incentive Plan to purchase an additional 100,000 shares of
the Company's common stock, par value $0.01 per share ("Common Stock"), at a
purchase price equal to the average of the closing prices of the Common Stock on
the New York Stock Exchange on each of the 20 days ending on the day immediately
preceding the grant date. Such options will be represented by a Stock Option
Agreement in the form customarily used by the Company for such agreements,
containing the following provisions:
(i) Option Term. The options expire 5 years from the date of
-----------
grant. All unexercised vested options shall expire 90 days after the Executive
ceases being employed by the Company for any reason.
(ii) Vesting. The options vest as follows:
-------
<TABLE>
<CAPTION>
# of Options
Grant Date Vesting Date Vested
---------- ------------ ------------
<S> <C> <C>
07/02/99 07/02/99 50,000
07/02/99 07/01/00 addt'l 25,000
07/02/99 07/01/01 addt'l 25,000
</TABLE>
(iii) Exercise. Subject to applicable securities laws and
--------
regulations, all vested options are exercisable at any time prior to their
expiration.
4. Restrictions on Certain Activities
----------------------------------
(a) Restrictions in Respect of Company Securities. Executive
---------------------------------------------
agrees that for a period commencing the first day of the Employment Period and
running through one year following termination of the Executive's employment by
the Company for any reason, whether by action of the Executive or the Company
(the "Restriction Period"), the Executive will not:
(i) acquire, directly or indirectly, or serve as an
employee, director, officer, manager, partner, adviser, consultant or agent of
any person, entity or group which acquires directly or indirectly, any voting
securities of the Company if, following such acquisition, such Executive,
together with his affiliates, or such person, entity or group would directly or
indirectly be the Beneficial Owners under Rule 13d-3 under the Securities
Exchange Act of 1934 of voting securities of the Company representing in the
aggregate more than 20% of the total combined voting power of all issued and
outstanding securities of the Company; or
<PAGE>
(ii) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act) in opposition to any recommendation of the Board of Directors of the
Company.
(b) Non-Solicitation of Employees. During the Restriction
-----------------------------
Period, the Executive will not (for his own benefit or for the benefit of any
person or entity other than the Company) solicit, or assist any person or entity
other than the Company to solicit, any officer, director, executive or employee
of the Company to leave his or her employment.
(c) Investments. Nothing in this Agreement shall be deemed to
-----------
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with the Company,
provided that such investments (i) are passive investments and constitute five
- --------
percent (5%) or less of the outstanding equity securities of such an entity the
equity securities of which are traded on a national securities exchange or other
public market, or (ii) are approved by the Company.
5. Termination
-----------
(a) Either the Corporation or the Executive may terminate this
Agreement, with or without "cause", upon 30 days' prior written notice.
(b) In the event the Corporation elects to terminate this
Agreement without "cause", or the Executive elects to terminate this Agreement
for "good reason", subject to the provisions of Section 6, the Corporation shall
pay to the Executive, in addition to any amounts paid or payable under other
provisions of this Agreement or any other agreements between the Corporation and
the Executive, one of the following amounts: (i) a severance payment of $540,000
if the termination occurs within the first year of the Employment Period; (ii) a
severance payment equal to the remaining term of whole months of the Employment
Period times the average monthly base salary paid to the Executive for the 12-
month period immediately preceding the termination if the termination occurs
within the second year of the Employment Period; or (iii) a severance payment
equal to 12 times the average monthly base salary paid to the Executive for the
12-month period immediately preceding the termination if the termination occurs
within the third year of the Employment Period. Such severance will be issued in
two cash payments (with deduction of such amount as may be required to be
withheld under applicable law and regulations): one-half within ten working days
of termination, the other one-half one year from the date of termination,
provided the Executive has not breached Section 4 of this Agreement. In such
event, all unvested options will vest in full on the effective date of
termination and expire 90 days after the effective date of termination.
Notwithstanding the provisions of the Annual Incentive Compensation Plan for
Senior Executives or other bonus plan, if the Company terminates Executive
without cause or if Executive terminates this Agreement for good reason, the
Company shall pay Executive a bonus as provided in Section 2 (b) above for that
year based on the following: if Executive is employed by the Company for at
least one day and less than 183 days in the year, the Company shall pay
Executive one half of the full year's bonus earned; and if Executive is employed
by the Company for more than 182 days in the year, the Company shall pay
Executive the full year's bonus earned. Any such bonus shall be paid when other
similar bonuses are paid for that year. All other compensation and benefits
provided for in this Agreement shall cease upon such termination.
(c) In the event the Corporation terminates this Agreement for
"cause" or the Executive terminates this Agreement without "good reason", the
Executive's rights hereunder shall cease as of the effective date of such
termination.
(d) For purposes of this Agreement, the Executive shall be
considered to have "good reason" to terminate this Agreement if (i) without his
express written consent, the responsibilities, compensation or benefits of the
Executive are substantially reduced (except in connection with the termination
of his employment voluntarily by the Executive or by the Company for "cause" or
under the circumstances described in Section 6 hereof), (ii) without the
Executive's express written consent the Corporation's principal executive
offices shall have been relocated outside the Washington, DC metropolitan area,
or the Executive shall be based anywhere other than the Washington, DC
metropolitan area (except for required travel on the Company's business, or
(iii) a majority of the Board of Directors of the Company is not comprised of
"Continuing Directors," where a "Continuing Director" of
<PAGE>
the Company as of any date means a member of the Board of Directors of the
Company who (x) was a member of the Board of Directors of the Company on the
effective date of this Agreement or (y) was nominated for election or elected to
the Board of Directors of the Company with the affirmative vote of at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election. For purposes of this Agreement, the Corporation shall
have "cause" to terminate the Executive's employment hereunder upon (i) the
continued, willful and deliberate failure of the Executive to perform his
duties, in a manner substantially consistent with the manner prescribed by the
Board of Directors or the Chief Executive Officer of the Corporation (other than
any such failure resulting from his incapacity due to physical or mental
illness), (ii) the engaging by the Executive in misconduct materially and
demonstrably injurious to the Corporation, (iii) the conviction of the Executive
of commission of a felony, whether or not such felony was committed in
connection with the Corporation's business or (iv) the circumstances described
in Section 6 hereof, in which case the provisions of Section 6 shall govern the
rights and obligations of the parties.
6. Disability; Death.
------------------
(a) If, prior to the expiration or termination of the Employment
period, the Executive shall be unable to perform his duties by reason of
disability or impairment of health for at least six consecutive calendar months,
the Corporation shall have the right to terminate this Agreement by giving
written notice to the Executive to that effect, but only if at the time such
notice is given such disability or impairment is still continuing. After giving
such notice, the Employment Period shall terminate with the payment of the
Executive's base compensation for the month in which notice is given. In the
event of a dispute as to whether the Executive is disabled within the meaning of
this Section 6(a), either party may from time to time request a medical
examination of the Executive by a doctor appointed by the Chief of Staff of a
hospital selected by mutual agreement of the parties, or as the parties may
otherwise agree, and the written medical opinion of such doctor shall be
conclusive and binding upon the parties as to whether the Executive has become
disabled and the date when such disability arose. The cost of any such medical
examinations shall be borne by the Corporation.
(b) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, the Corporation shall pay to the Executive's
estate his base compensation through the end of the month in which the
Executive's death occurred, at which time the Employment Period shall terminate
without further notice and the Corporation shall have no further obligations
hereunder.
(c) Nothing contained in this Section 6 shall impair or
otherwise affect any rights and interests of the Executive under any
compensation plan or arrangement of the Corporation which may be adopted by the
Board of Directors of the Corporation.
7. Other Terms and Conditions
--------------------------
The Company's Standard Terms and Conditions of Employment for
Executive Personnel (Attachment B) is incorporated herein by reference.
8. Enforcement
-----------
Executive agrees that the Company's remedies at law for any breach
or threat of breach by him of the provisions of Sections 2, 3 or 4 of Attachment
B and Section 4 hereof will be inadequate, and that the Company shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of Sections 2, 3 or 4 of Attachment B and Section 4 hereof and to enforce
specifically the terms and provisions thereof, in addition to any other remedy
to which the Company may be entitled at law or equity.
9. Notices
-------
Any notice required or permitted under this Agreement shall be
deemed to have been effectively made or given if in writing and personally
delivered or mailed properly addressed in a sealed envelope, postage prepaid by
certified or registered mail. Unless otherwise changed by notice, notice shall
be properly addressed to Executive:
<PAGE>
Kenneth L. Campbell
9482 Deramus Farm Court
Vienna, Virginia 22182
and properly addressed to the Company is addressed to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attn: James O. Edwards
with a copy to:
Paul Weeks II
Senior Vice President, Secretary
and General Counsel
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
10. Award to Prevailing Party in Dispute
------------------------------------
In the event either of the parties to this Agreement commences
any action or proceeding arising out of, or relating in any way to, this
Agreement, the prevailing party shall be entitled to recover, in addition to any
other relief awarded to such party, his or its costs, expenses and reasonable
attorney's fees.
11. Miscellaneous
-------------
This Agreement, its Attachments, and the Option Agreement(s)
constitute the entire agreement, and supersede all prior agreements, of the
parties hereto relating to the subject matter hereof, and there are no written
or oral terms or representations made by either party other than those contained
herein. The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Virginia. The headings
contained herein are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first written.
Executive ICF Kaiser International, Inc.
/s/ Kenneth L. Campbell /s/ James O. Edwards
---------------------------- -------------------------------------
Kenneth L. Campbell James O. Edwards
Chairman and Chief
Executive Officer
<PAGE>
EXHIBIT 11
1 of 2
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1997 1996
------------ -----------
(Unaudited)
<S> <C> <C>
Primary:
Net income available for common shareholders $ 3,000 $ 1,080,000
============ ===========
Weighted average of common shares
outstanding not included in
amounts below 22,425,393 21,845,748
Weighted average of common shares
issuable on exercise of outstanding
stock options and warrants 15,610 -
------------ -----------
Weighted average of common and
common equivalent shares
outstanding, as adjusted 22,441,003 21,845,748
or or
22,441,000 21,846,000
============ ===========
Net income per common share $ 0.00 $ 0.05
============ ===========
Fully Diluted:
Net income available for common shareholders $ 3,000 $ 1,080,000
============ ===========
Weighted average of common shares
outstanding as adjusted for primary
computation 22,441,003 21,845,748
Weighted average of additional common
shares issuable on exercise of
outstanding stock options and warrants 115,258 -
------------ -----------
Weighted average of common and
common equivalent shares
outstanding, as adjusted 22,556,261 21,845,748
or or
22,556,000 21,846,000
============ ===========
Net income per common share $ 0.00 $ 0.05
============ ===========
</TABLE>
<PAGE>
EXHIBIT 11
2 of 2
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
1997 1996
------------ -----------
(Unaudited)
<S> <C> <C>
Primary:
Net income available for common shareholders $ 50,000 $ 1,865,000
============ ===========
Weighted average of common shares
outstanding not included in
amounts below 22,353,667 21,785,315
Weighted average of common shares
issuable on exercise of outstanding
stock options and warrants 16,397 -
------------ -----------
Weighted average of common and
common equivalent shares
outstanding, as adjusted 22,370,064 21,785,315
or or
22,370,000 21,785,000
============ ===========
Net income per common share $ 0.00 $ 0.09
============ ===========
Fully Diluted:
Net income available for common shareholders $ 50,000 $ 1,865,000
============ ===========
Weighted average of common shares
outstanding as adjusted for primary
computation 22,370,064 21,785,315
Weighted average of additional common
shares issuable on exercise of
outstanding stock options and warrants 97,828 -
------------ -----------
Weighted average of common and
common equivalent shares
outstanding, as adjusted 22,467,892 21,785,315
or or
22,468,000 21,785,000
============ ===========
Net income per common share $ 0.00 $ 0.09
============ ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,355,000
<SECURITIES> 0
<RECEIVABLES> 256,812,000
<ALLOWANCES> 10,013,000
<INVENTORY> 0
<CURRENT-ASSETS> 281,334,000
<PP&E> 50,874,000
<DEPRECIATION> 38,108,000
<TOTAL-ASSETS> 370,653,000
<CURRENT-LIABILITIES> 182,590,000
<BONDS> 141,767,000<F1>
0
0
<COMMON> 224,000
<OTHER-SE> 34,278,000
<TOTAL-LIABILITY-AND-EQUITY> 370,653,000
<SALES> 0
<TOTAL-REVENUES> 507,543,000<F2>
<CGS> 0
<TOTAL-COSTS> 166,977,000<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 871,000
<INTEREST-EXPENSE> 9,157,000
<INCOME-PRETAX> 5,846,000
<INCOME-TAX> 1,134,000
<INCOME-CONTINUING> 50,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,000
<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 $294,818,000.
</FN>
</TABLE>
