FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Fiscal Year Ended March 27, 1998
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period from ______ to ______
Commission File Number 1-11075
DAMES & MOORE GROUP
(Exact name of registrant as specified in its charter)
Delaware 95-4316617
(State of incorporation) (I.R.S. Employer Identification No.)
911 Wilshire Boulevard, Suite 700
Los Angeles, California 90017
(Address of principal executive offices) (Zip Code)
(213) 996-2200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Stock, $0.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates on June 5, 1998, based on the closing price on the New York
Stock Exchange was $212,502,889. For this purpose, all executive officers
and directors of the registrant were considered affiliates, as were all
beneficial owners of more than 10% of the registrant's common stock. As of
June 5, 1998, 18,358,430 shares of the registrant's common stock
were outstanding.
Documents Incorporated by Reference
Portions of the registrant's definitive proxy statement for the annual meeting
of shareholders of the registrant to be held on August 10, 1998 are
incorporated by reference into Part III hereof. The definitive proxy
statement will be filed with the Securities and Exchange Commission within
120 days after March 27, 1998.
PART I
Item 1. Business
Development of Business
Dames & Moore Group (the "Company") is the successor to the businesses of
Dames & Moore, Incorporated, a Delaware corporation, and Dames & Moore,
a California limited partnership. Originally organized in 1938, the
Dames & Moore partnership incorporated on March 12, 1992, concurrent with a
public offering and sale of 2,500,000 shares of its common stock. The
Company's common stock has been publicly traded since that date and is
currently listed on the New York Stock Exchange. Dames & Moore, Inc.
changed its name to Dames & Moore Group in August 1997 to reflect the
expanding nature of the overall company and its services in becoming a
preeminent full-service engineering, consulting and construction
management organization. Dames & Moore Inc. now exists as one of the
Dames & Moore Group companies, focused on the general engineering and
consulting business.
Since Dames & Moore's incorporation in 1992, the Company has acquired and
formed a number of businesses to expand and diversify its service areas.
Dames & Moore Group is currently comprised of a global network of companies
including: Dames & Moore; Walk Haydel; O'Brien Kreitzberg, BRW;
DecisionQuest; SRA Technologies; and Dames & Moore Ventures. Significant
acquisitions and activities contributing to this expansion within the last
five years are listed below:
Aman Environmental Construction (AECI), a firm based in Covina, California,
specializing in demolition, environmental remediation, and construction was
acquired in April 1993.
Hardcastle & Richards, a company based in Melbourne, Australia providing
design engineering and project management services throughout Australia
and South-East Asia, was acquired in March 1995.
O'Brien Kreitzberg, a San Francisco-based company providing project and
construction management, was acquired in March 1995.
Walk Haydel, a New Orleans-based company providing project management and
process/chemical engineering, was acquired in April 1995.
Dames & Moore Ventures was established in April 1996 to make equity
investments in areas which the Company has expertise.
DecisionQuest, a Torrance, California-based company providing strategic
business communications, trial strategy consulting, graphics, litigation
support and behavioral science services, was acquired in May 1996.
BRW, a Minneapolis-based firm, specializing in project planning, design and
construction-phase services for transportation and infrastructure projects,
was acquired in May 1996.
HYA, an engineering firm specializing in water reclamation and reuse with
main offices in Pasadena, California, was acquired in June 1996.
Cleveland Wrecking Company (CWC), one of the largest demolition contractors
in the U.S., control was obtained in March 1997 by acquiring their bank
debt, secured by all assets of CWC, and foreclosing on certain assets.
LeBron Associates, a San Juan, Puerto Rico-based firm specializing in
transportation, civil, architectural, industrial and environmental
engineering, was acquired in June 1997.
SRA Technologies, a Falls Church, Virginia-based company providing
research, services and products for the life sciences industry, was
acquired in June 1997.
Fourth Dimension Interactive, Inc., (4DI), providing and deploying
applications for Web technology, was formed in September 1997.
LRE Engineering, Inc., an Atlanta, Georgia-based firm specializing in civil
engineering for infrastructure and transportation projects, was acquired
in March 1998.
With regards to dispositions, Dames & Moore Ventures 9.9% interest in
Glencoe Insurance Ltd., a company originally formed to offer earthquake
insurance in California, was sold in August 1997. Glencoe's majority
partner, Renaissance Reinsurance, Ltd., shifted the emphasis of the Glencoe
portfolio away from the earthquake insurance market which no longer
aligned with the Company's objectives.
Financial Information
Consolidated financial statements are provided in Item 8 of this Annual Report
on Form 10-K.
Description of Business
The Dames & Moore Group of companies combines the resources of preeminent
professional service companies and provides world-class solutions for a wide
array of projects both globally and locally. These companies and their
associated subsidiaries provide discrete as well as integrated full-service
capabilities.
Service Areas
Dames & Moore Group's expertise spans a wide range of businesses and industries.
Significant service areas include:
General Engineering and Consulting: architecture, civil and structural
engineering, geotechnical engineering, seismic risk management and
earthquake engineering, mining engineering, radiological engineering,
offshore engineering, electrical and instrumentation engineering,
mechanical engineering, power systems engineering, water and wastewater
engineering, agricultural policy and strategy, strategic environmental
management, air quality and atmospheric services, environmental health
and toxicology, project financial analysis, permitting and licensing,
regulatory compliance, remediation, and contaminated property
rehabilitation.
Process and Chemical Engineering: process selection and optimization,
conceptual designs, process engineering and design of advanced process
controls, facility start-up, process safety management, pollution
prevention system design, and economic feasibility studies.
Transportation: transportation planning, traffic engineering,
roadway/highway design, bridge design, transit design, intelligent
transportation systems, intermodal facilities, pedestrian facilities/urban
design, railroads, airports and ports and harbors.
Construction and Program Management: program and project management,
construction management, value engineering, design-build, general
contracting, demolition, estimating, cost and schedule control, contract
administration, quality assurance/control, dispute resolution and litigation
support, and community relations.
Specialty Engineering and Consulting in the areas of: clinical laboratory
services, including contract research, analysis and management services; and
communications and information services, including strategic communications,
information management and technology, expert witness support, litigation
support, and presentation graphics.
Dames & Moore Group marketing and business development activities take place
through personnel assigned to each of the Company's offices. In addition to
these local efforts, there are marketing activities focused on U.S. Federal
government agencies, as well as a firmwide marketing program targeting
multinational clients. These multinational clients benefit from the
Company's worldwide expertise, its breadth of services, and the coordination
and cross-selling activities of the Dames & Moore Group companies. These
capabilities, coupled with the Company's broad distribution of global offices,
allow the Company to mobilize quickly and provide timely advice to clients
whose sites and decision makers are located in widely dispersed geographic
areas. The Company's global resources are particularly valuable when clients
find it necessary to react quickly to changing economic conditions, merger
or acquisition opportunities, natural or environmental crises, or pressures
imposed by governmental agencies and/or the public.
Much of the Company's environmental business is generated either directly or
indirectly as a result of Federal and state laws, regulations, and programs
related to environmental issues. Accordingly, a reduction of these laws and
regulations, or changes in governmental policies regarding the funding,
implementation or enforcement of these programs, could have a material effect
on the Company's business. Environmental laws, regulations and enforcement
policies remained essentially unchanged during fiscal year 1998, including
further deferral of congressional reauthorization of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(Superfund Act). The outlook for congressional action on Superfund
legislation in fiscal year 1999 remains unclear.
The experts at Dames & Moore Group bring vision and value to every stage of
project development. We understand our clients' business and help them to
reach their goals, design creative solutions, engineer results, reduce risks,
manage construction, control costs, and deliver results.
Clients
The Company serves a broad range of clients in both the private and public
sectors, and has a history of successfully meeting the needs of its clients,
many of whom it has served continuously for decades. The Company seeks to
develop clientele that recognize the value of high-quality professional
services delivered in a cost-effective and timely manner.
Dames & Moore Group's client base is diverse spanning numerous sectors and
industries. Examples of our services for specific industries are:
General Business and Industry: capital project development and
implementation; environmental due diligence for mergers, acquisitions,
and divestitures; portfolio risk assessment; information technology
applications; and contaminated property development.
Oil and Gas: process design for expanding and debottlenecking refineries;
engineering and environmental support for developing production fields and
pipelines; infrastructure design; and offshore platform top-side design and
decommissioning.
Power: complete engineering and related services for utilities, independent
power producers, natural gas transporters and industrial power generators.
Manufacturing: facility design, modernization, and waste minimization.
Infrastructure/Development: urban design for livable communities, water
resource development, wastewater treatment and reclamation, and solid waste
management.
Transportation: engineering and program and construction management for
airports and mass transit, highways and bridges, and ports and harbors.
Government: program/project management, military planning and base closure
support, remediation and decommissioning.
Natural Resources: mine planning and engineering, and policy and strategy
development for the agribusiness and forestry sectors.
Litigation: expert witnesses, trial strategy and graphics, and dispute
resolution.
Pharmaceutical and Biotechnology: clinical laboratory analyses, biomedical
research and drug development support.
Given the wide variety of Dames & Moore Group's clients, the Company
continually monitors markets and industries to identify the greatest areas of
growth and revenue potential. Businesses in general are continuing to reduce
costs by downsizing and outsourcing non-core activities. This trend creates
significant opportunities for Dames & Moore Group and is expanding the ways
the Company provides value and services to our clients. Dames & Moore Group,
with its wide array of capabilities and expertise, is able to provide the
full spectrum of capabilities required to maximize participation in this
outsourcing trend.
Additionally, while the market for environmental consulting and remediation
services is generally flat, business in some sectors is expected to grow.
Growth is predicted in the commercial sectors primarily driven by financial
institutions, property transfer activity and the high-technology industries.
Another emerging growth area is civil and facilities engineering where the
Company is well positioned to serve clients with site development, water,
wastewater, and solid waste management services.
Other examples of markets presenting growth potential are the energy,
infrastructure and transportation sectors. There continues to be many
opportunities in the energy industry where companies refocus their operations
through a combination of major capital projects, mergers, acquisitions and
divestitures as well as internal improvement. These trends result in a
variety of new assignments for Dames & Moore Group with opportunities in
high-value oil and gas services, new options for power producers and
customers resulting from privatization activities and growth in Asia where some
of the largest energy, manufacturing and infrastructure, projects in the
world are being carried out.
Infrastructure markets are also strong with the solid domestic and
international economies continuing to fuel record levels of capital spending
in both the U.S. and abroad. Dames & Moore Group's full-service engineering,
environmental program and construction management services along with our
demolition and property redevelopment capabilities provide clients with
comprehensive solutions on an international level.
Government funding for non-highway transportation projects continues to trend
upward, with significant resources being directed toward mass transit,
intelligent transportation systems, airport upgrades and other projects.
Transportation agencies continue to extend their resources by outsourcing
work. Opportunities with railroads also are increasing due to consolidation
and outsourcing in the U.S. and the trend toward privatization in the
international arena. With the majority of the funding allocated by state and
local governments, a presence in local markets is fundamental to winning a
substantial portion of the transportation business. For larger projects,
however, a company with a national presence, financial stability and
management expertise has a significant advantage. Dames & Moore Group brings
both the local and national strengths necessary to this industry.
Finally, Dames & Moore Group continually searches for other diverse
opportunities with the development of new markets and advanced technologies
that extend our business. Some examples of these activities are the application
of behavioral science capabilities to help clients factor public perceptions of
possible actions into their initial planning and decision-making;
the development of technology for new gene expression methods; and the
customization of existing information technology to provide clients with
cost-efficient data base solutions.
Backlog
As of March 27, 1998, the Company estimates that the backlog of future net
revenues, from contracts in existence and authorized funded orders, was
approximately $345,000,000. The entire backlog is expected to be
substantially completed within the next twelve months. There can be no
assurance, however, that some of this work will not be postponed or canceled.
Competition
The Company believes that the principal competitive factors in the areas of
services it offers are reputation, experience, breadth and quality of
services offered, technical proficiency, proximity of offices, consulting
fees and total project costs, and ability to provide clear statements of
problems, alternative solutions and definitive recommendations. The Company
is engaged in highly competitive markets in all of its service areas. Given
the expanding demand for some of the services provided by the Company, it is
likely that additional competitors will emerge. At the same time,
consolidation continues to occur in the environmental business, particularly
in the United States due to mergers. The Company believes that it will
retain the ability to compete effectively with other firms that provide
similar services by continuing to offer a broad range of high-quality
consulting and environmental, transportation, and engineering and construction
management services through its worldwide network of offices.
Regulation
The Company's clients and, to a lesser extent, the Company are subject to
environmental laws and regulations. These laws and regulations are directly
related to the demand for many of the services offered by the Company. In
addition, the laws and regulations often subject the Company to stringent
regulation in the conduct of its operations. The principal environmental
legislation affecting the Company and its clients are:
National Environment Policy Act of 1969 ("NEPA")
Resource Conservation and Recovery Act of 1976 ("RCRA")
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("Superfund")
The Superfund Amendments and Reauthorization Act of 1986 ("SARA")
Although the liabilities imposed by the Superfund Act (and other environmental
legislation) are more directly related to the Company's clients, they could
under certain circumstances give rise to liability on the part of the Company
as a result of the Company's efforts in completing clients' assignments that
involve transportation or disposal of contaminated samples or other hazardous
materials belonging to its clients. Liabilities imposed by the Superfund Act
can be joint and several where other parties are involved. In the opinion of
management, it is unlikely that the Company's activities will result in any
liability under either the Superfund Act or other environmental legislation
in an amount which will have a material adverse effect on the Company's
results of operations or financial condition, and management is not aware of
any current activity by the Company which is likely to result in any such
liability.
In the ordinary course of its business, the Company and members of its
professional staff are subject to a variety of state, local, and foreign
licensing and permit requirements. The Company believes that it is in
substantial compliance with those requirements.
The Company's consulting services involve professional judgments about the
nature of soil conditions and other physical conditions, including the extent
to which toxic and hazardous materials are present, and about the probable
effect of procedures to mitigate problems or otherwise impact those
conditions. If those judgments and resulting recommendations do not result
in the anticipated consequences, losses to the Company's clients can occur for
which the Company may be liable. In addition, the Company's projects often
involve hazardous and highly regulated materials, the improper
characterization, handling, or disposal of which could constitute violations of
Federal, state or local statutes, and result in criminal fines and penalties.
The Company through a wholly owned subsidiary insures the Company's risks for
professional liability, workers compensation, and general and automobile
claims up to certain policy limits. Claims in excess of these limits are
covered by unrelated insurance carriers. Management believes its self
insurance reserves combined with its insurance coverage are adequate for its
present operations. Management has no reason to believe that adequate
coverage will not continue to be available, but there can be no assurance
that it will be. There also can be no assurance that the Company's
liabilities will not exceed the policy limits. However, insurance has been
provided without lapse for many years for limits far in excess of losses
sustained.
Employees
As of March 27, 1998, the Company had approximately 5,550 employees worldwide.
Approximately 70% perform professional or technical services, while the
remaining 30% perform administrative and support services. The company
considers its relations with its employees to be excellent.
International Business
Dames & Moore Group currently derives 14.5% of its net revenues from
international operations, continuing its strong upward trend. The Company is
focused on expanding its clientele and business operations for a variety of
services in Europe, Latin America, Australia, the Middle East, the former
Soviet Union and Asia.
The Company, however, cannot provide any guaranty of future growth from
international operations. Risks inherent in foreign operations, such as
foreign currency fluctuations, exchange controls and changes in governments
resulting in delays and/or canceled projects, contribute to uncertainty
regarding future growth. Dames & Moore Group, however, has achieved
its third straight year of revenue growth from international operations,
and carefully monitors all foreign markets in which it is involved to be
able to respond quickly to any changing conditions.
Further financial information regarding revenues generated from international
business can be found in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Item 2. Properties
The Company operates entirely in leased premises. The Company leases 124
office properties in the United States and 39 office properties in foreign
countries.
Item 3. Legal Proceedings
The Company in the ordinary course of business is a defendant in various
lawsuits involving claims typically filed against engineering and consulting
professionals, primarily alleging professional errors or omissions. The
Company through a wholly owned subsidiary insures the Company's risks for
professional liability, workers compensation, and general and automobile
claims up to certain policy limits. Claims in excess of these limits are
covered by unrelated insurance carriers. Management makes estimates and
assumptions that affect the reported amount of liability and the disclosure
of contingent liabilities. As claims develop, it is possible that the
ultimate results of these claims may differ from management's estimates.
In the opinion of management, based upon information it presently possesses,
the resolution of these claims will not have a material adverse effect on
the Company's consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's security holders during
the fourth quarter of the fiscal year ended March 27, 1998.
Item S-K 401(b). Executive Officers of the Company
Set forth below is certain information about the Company's executive officers
as of June 5, 1998. Each executive officer holds office until his or her
resignation or removal by the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
- ---------------- --- ------------------------
<S> <C> <C>
George D. Leal 64 Chairman of the Board
Arthur C. Darrow 54 Chief Executive Officer, President
and Director
Henry Klehn, Jr. 61 Executive Vice President -
Corporate Development
Robert M. Perry 66 Executive Vice President -
Corporate Affairs and Director
Mark A. Snell 41 Executive Vice President and
Chief Financial Officer
Leslie S. Puget 43 Corporate Controller
</TABLE>
GEORGE D. LEAL has been employed by the Company since 1959, and has served
as Chairman of the Board since 1981 and as Chief Executive Officer from 1981
through 1994. Mr. Leal has bachelor's and master's degrees in civil
engineering from Santa Clara University and the California Institute of
Technology, respectively, and a master's degree in business administration
from the University of Chicago.
ARTHUR C. DARROW has been employed by the Company since 1973. He has served
as a director since 1994 and as Chief Executive Officer and President since
January 1995. Between 1993 and 1994, he served as President and Chief
Operating Officer; between 1991 and 1993, as Senior Vice President - Western
North America Division; and between 1988 and 1991, as the Company's Western
Region General Manager and Division Manager - Western North America. He has
bachelor's and master's degrees in geology from the University of California-
Santa Barbara.
HENRY KLEHN, Jr. has been employed by the Company since 1960. He has served
as Executive Vice President - Corporate Development since 1993. Between 1983
and 1993, he served as Chief Operating Officer and as an Executive Vice
President since 1991. He has a bachelor's degree in geological engineering
and a master's degree in engineering science from the University of
California-Berkeley.
ROBERT M. PERRY has been employed by the Company since 1955. He has served
as a director since 1981, and as Executive Vice President since 1995.
Between 1978 and 1995, he served as Chief Financial Officer. He has a
bachelor's degree in civil engineering from the University of Michigan.
MARK A. SNELL has served as Executive Vice President and Chief Financial
Officer of the Company since September, 1996. Prior to joining the Company,
he served as Executive Director and Chief Financial Officer at the
international law firm of Latham & Watkins from 1993 to 1996, and as
Executive Vice President and Chief Financial Officer at World Oil Corporation
from 1990 to 1993. Mr. Snell, a CPA, holds a bachelor of science degree
from San Diego State University.
LESLIE S. PUGET has served as Corporate Controller of the Company since 1995.
Prior to a two-year professional sabbatical, she served as Vice President of
Finance for Cushman Realty Corporation from 1985 to 1993 and as Controller
from 1982 to 1985. Ms. Puget, a CPA, holds a bachelor of science degree
from the University of Illinois at Urbana-Champaign.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock is traded on the New York Stock Exchange under the
symbol DM. As of June 5, 1998, the Company's common stock was held by 321
holders of record. The following table reflects the high and low sales
prices and cash dividends per share for fiscal years 1998 and 1997:
<TABLE>
<CAPTION>
High Low Dividends
-------- ------- -----------
<S> <C> <C> <C>
1998
Fourth quarter $13 1/2 $12 1/8 $0.03
Third quarter 13 3/8 11 15/16 0.03
Second quarter 13 7/8 11 3/4 0.03
First quarter 13 1/4 11 3/8 0.03
1997
Fourth quarter $14 3/4 $11 5/8 $0.03
Third quarter 15 1/8 12 3/8 0.03
Second quarter 13 10 5/8 0.03
First quarter 12 7/8 10 7/8 0.03
</TABLE>
The Company expects to continue its policy of paying regular quarterly cash
dividends, subject to the right of the Board of Directors to change the
policy depending on future earnings and financial condition of the Company,
capital requirements and other factors.
On March 4, 1998, the Company issued from its treasury 163,107 shares of its
common stock as consideration for its acquisition of all of the issued and
outstanding shares of LRE Engineering, Inc. The securities were exempt from
registration under Section 4(2) of the Securities Act of 1933 because they
were offered and sold in a transaction that did not involve a public offering.
Item 6. Selected Financial Data
The following table sets forth selected financial data for the Company (in
thousands, except per share amounts):
<TABLE>
<CAPTION> Fiscal Year Ended
--------------------------------------------------
March 27, March 28, March 29, March 31, March 25,
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings data:
Gross revenues $703,902 $653,378 $556,763 $382,681 $370,646
Net revenues 482,504 454,408 396,495 268,969 253,817
Earnings from
operations 42,813 36,861 36,901 28,797 33,956
Net earnings 19,330 18,540 22,098 17,879 21,878
Earnings per share
-Basic $ 1.08 $ 0.91 $ 0.99 $ 0.79 $ 0.97
Earnings per share
-Diluted 1.07 0.91 0.98 0.79 0.97
Cash dividends per share 0.12 0.12 0.12 0.12 0.12
Weighted average share
-Basic 17,890 20,287 22,385 22,500 22,500
Weighted average shares
-Diluted 18,048 20,446 22,537 22,586 22,561
Financial position data:
Current assets $228,129 $208,254 $216,191 $155,338 $154,702
Current liabilities 98,559 92,837 70,377 59,115 34,398
Net working capital 129,570 115,417 145,814 96,223 120,304
Total assets 386,361 358,282 317,279 224,627 180,119
Long-term debt 132,010 128,542 75,000 2,336 -
Shareholders' equity 149,909 131,623 167,947 161,630 144,650
Backlog: $345,000 $290,000 $252,000 $120,000 $116,000
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in thousands)
From time to time, the Company or its representatives may make
forward-looking statements in this report or elsewhere relating to such
matters as anticipated financial performance, including projections of
revenues, expenses, earnings, liquidity, capital resources or other
financial items; business plans, objectives and prospects; technological
developments; and similar matters. Forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 frequently
are identified by the use of terms such as "expect", "believe", "estimate",
"may", "should", "will" or similar expressions.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experiences to differ materially from the anticipated
results or other expectations expressed in the forward-looking statements
made by the Company or its representatives. The risks and uncertainties that
may affect the operations, performance, development and results of the
Company's business include the following, among other factors: (a) the ability
to attract and retain qualified professional personnel; (b) potential
liability for engineering services; (c) potential liability for consulting
services relating to toxic and hazardous materials and the ability to insure
such risks; (d) dependence on environmental regulation including decreased
revenues that may result from a reduction in laws, regulations and programs
related to environmental issues or from changes in governmental policies
regarding the funding, implementation or enforcement of such laws,
regulations and programs; (e) increasing competition faced by the Company in
its service areas; (f) periodic fluctuations in general business conditions
and in demand for the types of services provided by the Company; and (g)
foreign operations which expose the Company to political, economic and other
uncertainties such as fluctuating currency values and exchange controls of
foreign countries.
Operations and Acquisitions
Dames & Moore Group (the "Group") operating results during fiscal 1998 were
affected by increasingly competitive market conditions in its environmental
business sector, by the acquisitions of complementary professional service
and contracting businesses, and by the continued integration of the service
capabilities of companies acquired in previous years. The overall net
revenue base of the Group increased 6.2% in fiscal 1998, with 5.2%
attributable to acquisitions, and 1.0% resulting from internal growth.
General Engineering and Consulting:
The general engineering and consulting division of the Group provides
environmental and specialized engineering services to private sector clients
and government agencies through a worldwide network of offices. Demand for
environmental services is influenced by expenditures of private sector
clients and public agencies for site and environmental studies related
to the construction of new facilities, remediation of contaminated sites and
facilities, modernization and upgrading of existing facilities, and
engineering and environmental due diligence related to acquisitions, mergers
and property transfers. Specialized services provided by the general
engineering and consulting division include structural and earthquake
engineering, geotechnical engineering, and other services.
During fiscal 1998, a principal factor affecting the demand for these
services was the restraint on environmental spending exercised by both public
sector and private sector clients. Environmental laws, regulations and
enforcement policies remained essentially unchanged during fiscal 1998, and
Congress once again failed to act on reauthorization of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(Superfund Act). As a result, net revenues of the company's general
engineering and consulting division remained virtually unchanged in the
United States. However, international net revenues continued the growth of the
previous three years, increasing approximately 6.4% during fiscal 1998.
This sustained growth trend reflects increased worldwide demand for engineering
and environmental services related to major capital investment projects and
increased opportunities in developing countries.
The engineering and environmental services of the Group have experienced
little growth in domestic markets over the last three fiscal years. This is
due to the market conditions and regulatory factors discussed above, and to
intense competition for available projects in both the private and public
sector. On the other hand, demand for services in international markets
has increased, and our general engineering and consulting units operating in
international markets achieved record levels of revenues and profits in
fiscal 1998. Profitability of international operations was enhanced by a
restructuring undertaken last fiscal year, and the cost reductions and other
improvements achieved will also serve to enhance international profitability
in future years. Assuming that no specific action will be taken to reauthorize
Superfund legislation or require stricter enforcement of existing
environmental regulations, the outlook for the foreseeable future is that
domestic business volume of the Group's general engineering and consulting
division will remain relatively stable and profit margins will remain under
pressure. International business opportunities primarily in Europe are
expected to remain strong and to produce increased revenues and profits once
again in fiscal 1999. However, the increase will likely be reduced by the
continued instability in Southeast Asia. In fiscal 1998, the net revenues of
Dames & Moore Group's general engineering and consulting services division
constituted 57.9% of the Group's total net revenues, compared to 61.1% of net
revenues in fiscal 1997.
Construction Services:
The construction services division provides program, project and construction
management services for public sector projects of all sizes and complexity.
The division continued its domestic public sector work in fiscal 1998 and,
as part of the Group's strategic plan, was successful in expanding its
services internationally and into the private sector. A restructuring
initiated last fiscal year reduced staff levels and closed some offices, and
was successful in contributing to the division's increased profitability
during the year. Net revenues increased by 9.1% as a result of the award of
several significant construction management contracts. The division's
backlog is strong, and revenues are expected to increase further during
fiscal 1999.
At the close of fiscal 1997, the Company acquired control of Cleveland
Wrecking Company (CWC), a demolition contractor. CWC's operations together
with Aman Environmental Construction, Inc. (AECI) now provide a full range
of site demolition, decommissioning, clean-up, closure and redevelopment
services on a nationwide basis.
During fiscal 1998, the net revenues for construction services were 19.5% of
the Group's total net revenues compared to fiscal 1997 net revenues of 18.0%
Process and Chemical Engineering:
The process and chemical engineering division provides process engineering
and design services to the oil and gas, petrochemical, and pulp and paper
industries, and to the federal government. During fiscal 1998, the
division's revenues were adversely impacted by a slowdown in oil and gas
drilling in the Gulf of Mexico, but various other developments in the
petroleum and petrochemical industries produced increased business
opportunities. Overall, the division's net revenues in fiscal 1998 declined
slightly from fiscal 1997. Profitability also declined due to retention of
staff in anticipation of the start-up of major projects. Initiation of these
projects and other new opportunities are expected to result in increased
revenues and profits in fiscal 1999. Net revenues from process and chemical
engineering accounted for 10.9% of total Group net revenues in fiscal 1998,
compared to 11.6% in the proceeding year.
Transportation:
The transportation division provides project planning, design and
construction-phase engineering services for transportation and infrastructure
projects throughout the United States. During fiscal 1998, market conditions
for transportation engineering services remained strong but competitive. The
division was successful in being awarded several important projects. A
direct comparison of this division's net revenues in fiscal 1998 with the
previous year's net revenues is not possible since BRW was acquired during
the first quarter of fiscal 1997. However, partial year revenues have been
essentially equivalent to those of the comparable period of the prior year.
Transportation services represents 7.0% of the Group's net revenues in fiscal
1998, compared to 6.5% in fiscal 1997.
Specialty Companies:
DecisionQuest (DQ) specializes in support services for corporate clients
involved in litigation. These services include strategy consulting,
development of case themes, juror analysis and selection, preparation of
demonstrative trial graphics, and witness preparation. Since its acquisition
in fiscal 1997, DQ has also pursued joint activities with other Group
companies and has completed joint projects for selected clients. A full
year-to-year comparison is not possible since DQ was acquired in the first
quarter of fiscal 1997. The company's outlook is for expanded business
opportunities in fiscal 1999 and in future years.
The principal acquisition completed in fiscal 1998 was SRA Technologies (SRA),
a company which provides life science services to both government agencies
and private sector clients. The company's services, which are based on
biological processes, range from clinical laboratory testing to contract
research analysis. In fiscal 1998, SRA revenues were affected by funding
pressures on existing government contracts and lower than anticipated
revenues from clinical trials contracts. Nevertheless, the company operated
profitably, and expects increased opportunity and slowly growing revenues in
fiscal 1999.
During the year, the company formed Fourth Dimension Interactive, Inc. (4DI),
a new company, using technology developed in the general engineering and
consulting division. 4DI develops management systems for large data bases
using Internet technology.
The specialty companies constituted 4.7% of the Group's net revenues in
fiscal 1998 while net revenues were 2.9% of the Group's total net revenues
in fiscal 1997.
Dames & Moore Ventures:
As a means of diversifying its business interests while drawing upon the
skills of the Company's general engineering and consulting business,
Dames & Moore Ventures (DMV) was established in fiscal 1997, to make equity
investments in areas related to the Company's expertise. One such investment
is Dames & Moore/Brookhill L.L.C.(DMB), whose principal business activity is
to acquire environmentally distressed properties, perform on-site
remediation, and develop or sell the remediated properties. During fiscal
1998, DMB acquired, remediated, and sold properties, and at year-end
continued to hold ten properties for future development and/or sale.
Expenses incurred during the year exceeded profits from the sale
of the properties. DMV also divested its equity interest in Glencoe
Insurance, Ltd., a company formed to offer earthquake insurance in California.
Acquisitions:
The Group companies that have been acquired in recent years provide a wide
variety of engineering and specialized services. The principal acquired
companies providing construction and related services include O'Brien
Kreitzberg, Aman Environmental Construction, Inc., and Cleveland Wrecking
Company. Process and chemical engineering consists primarily of Walk Haydel,
transportation consists primarily of BRW (although O'Brien Kreitzberg
also provides services to this sector) and specialty businesses which are
comprised of DecisionQuest and SRA Technologies. SRA was acquired in fiscal
1998, and the other companies were acquired in previous years.
Outlook
In addition to the operations and acquisitions discussed above, Dames & Moore
Group made several smaller acquisitions and initiated a number of internal
activities during fiscal 1998 that are expected to produce increased revenues
in future years. The Group's continuing investment in strategic growth
initiatives, combined with the complementary services offered by newly
acquired companies, new ventures, and limited restructuring of ongoing
operations, should produce broader business opportunities in fiscal 1999 and
the years ahead. However, the ultimate demand for the Company's services will
be dependent on a continuation of economic growth in the United States and
worldwide, public and private sector capital investment, enforcement of
environmental regulations, and the Group's ability to meet the competitive
demands of the market for full-service engineering, environmental,
transportation, construction management, and litigation support services.
Dames & Moore Group has a worldwide network of 233 offices located in 29
countries. The company is staffed by over 5,500 employees.
Year 2000
The Company has been evaluating and working to resolve the potential impact,
if any, caused by the year 2000 on the processing of date-sensitive
information by the Company's and other computerized information systems which
affect the Company's operations. Based on preliminary information, costs of
addressing potential problems and the affects of becoming year 2000 compliant
is not currently expected to have a materially adverse impact on the Company's
financial position, results of operations or cash flows in future periods.
Results of Operations
The Company uses a 52-53 week fiscal year ending the last Friday in March.
The fiscal years were comprised of 52 weeks each for 1998, 1997 and 1996.
In performing its services, the Company routinely incurs direct project costs
for services subcontracted to third parties, equipment purchases for its
clients and travel expenses. The Company is generally reimbursed by its
clients for a handling fee plus the direct project costs. In accordance
with traditional practices of the engineering and consulting industry, the
Company deducts these costs from gross revenues to arrive at net revenues.
The Company believes net revenues are a more accurate measure of revenues
derived directly from the Company's services.
<TABLE>
<CAPTION>
1998 Increase 1997 Increase 1996
-------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C>
Net Revenues $482,504 6.2% $454,408 14.6% $396,495
</TABLE>
During fiscal 1998 the growth in net revenues of 6.2%, as compared to fiscal
1997 was a result of completed acquisitions which contributed $23,606 of the
increase, or 5.2%. The remaining increase of $4,490, or 1%, represents
growth in the Company's construction and project management, demolition, and
international business groups.
The growth in net revenues in fiscal 1997 as compared to fiscal 1996 was
primarily a result of acquisitions during the year, which contributed
$48,219 of the increase, or 12.2% The remaining increase of $9,694, or
2.4%, represents growth from the Company's existing lines of business.
<TABLE>
<CAPTION>
1998 Increase 1997 Increase 1996
------- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Salaries and Related Costs $337,474 6.8% $315,896 13.2% $278,989
</TABLE>
The increase in salaries and related costs in fiscal 1998 as compared to fiscal
1997 was primarily a result of acquisitions which represents $15,668, or 5%.
The remaining increase represents additional hiring, primarily where net
revenues have been growing, and annual salary increases. As a percentage
of net revenues, salaries and related costs represent 69.9% of net revenues.
Salaries and related costs increased by 13.2% in fiscal 1997 as compared to
fiscal 1996. Acquisitions accounted for $31,429 of the increase, or 11.3%.
The remaining increase of $5,478, or 1.9%, consists of expanded hiring in our
international operations and annual salary increases, which were offset by
lower profit-sharing contributions and incentive bonuses. Salaries and
related costs represent 69.5% of net revenues.
<TABLE>
<CAPTION>
1998 Increase 1997 Increase 1996
------- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
General Expenses $88,401 2.5% $86,275 21.3% $71,114
</TABLE>
General expenses increased by 2.5% in fiscal 1998 as compared to fiscal 1997.
Acquisitions previously completed represent the entire increase in fiscal
1998. Due to one-time costs noted below, fiscal 1997 general expenses were
higher than normal. General expenses represent 18.3% of net revenues.
General expenses in fiscal 1997 increased by 21.3%; of this amount $10,873, or
15.3%, was due to new acquisitions. Expansion of business development
activities, new offices and one-time costs for an image program and
consultant fees all contributed to increased costs. As a percentage of net
revenues, general expenses represent 19% in fiscal 1997.
<TABLE>
<CAPTION>
1998 Increase 1997 Increase 1996
------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Depreciation and Amortization $9,216 4.3% $8,832 41.2% $6,257
</TABLE>
The depreciation and amortization increase of 4.3% in fiscal 1998 as compared
to fiscal 1997 was also a result of completed acquisitions. As a percentage
of net revenues, depreciation and amortization represent 1.9% in fiscal 1998.
New acquisitions were responsible for $1,455, or 23.2%, of the increase in
depreciation and amortization in fiscal 1997. The balance of the increase is
due to new purchases of office equipment, computer equipment and leasehold
improvements, mostly for companies acquired in fiscal 1996 and 1995.
Depreciation and amortization represents 1.9% of net revenues for fiscal 1997.
<TABLE>
<CAPTION>
1998 Increase 1997 Increase 1996
------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Amortization of Goodwill $4,600 18.2% $3,893 20.4% $3,234
</TABLE>
Amortization of goodwill grew $371, or 9.5%, due to fiscal 1998 and 1997
acquisitions; future acquisitions will continue this trend. The balance of
the increase is due to the write-off of the remaining goodwill of a
previously acquired small business, which has been discontinued, and the
capitalization of additional goodwill related to contingent amounts due on
previously acquired companies.
The increase in fiscal 1997 as compared to fiscal 1996 was entirely due to
completed acquisitions.
<TABLE>
<CAPTION>
1998 Increase 1997 Decrease 1996
------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Earnings from Operations $42,813 16.1 $36,861 (0.1%) $36,901
</TABLE>
The Company's operating margin as a percentage of net revenues was 8.9% for
fiscal 1998, 8.1% for fiscal 1997, and 9.3% for fiscal 1996. Adversely
impacting the operating margin in fiscal 1997 is the restructuring charge
and associated costs including the staffing imbalance that led up to the
restructuring. Other previously mentioned administrative charges also
contributed to the decline. The Company's operating margin as a percentage
of net revenues would have been 8.7% in fiscal 1997 without the restructuring
charge.
<TABLE>
<CAPTION>
1998 Decrease 1997 Decrease 1996
------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Investment and Other Income $997 (50.5%) $2,014 (38.5%) $3,274
</TABLE>
Investment and other income declined in fiscal 1998, as compared to fiscal
1997 due to a reduction of interest income from the interim investment of
long-term borrowings that was awaiting deployment to fund acquisitions and
stock repurchases. In fiscal 1997 the Company acquired the majority interest
in a company which it previously held a minority interest; as a result their
operating results are now a part of earnings from operations.
The decline in investment and other income in fiscal 1997 as compared to
fiscal 1996 is a result of the Company's liquidation of the captive insurance
subsidiary's equity portfolio during fiscal 1997 and the subsequent
reinvestment in less volatile but lower yielding investments.
<TABLE>
<CAPTION>
1998 Increase 1997 Increase 1996
------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Interest Expense $10,292 39.3% $7,386 159.7% $2,844
</TABLE>
The Company has utilized borrowings to fund acquisitions, related business
ventures and purchases of treasury stock, including the 3,700,000 shares
from Hochtief A.G. in fiscal 1997. Accordingly, interest expense has
increased, and it is anticipated that it will continue to increase.
See Liquidity and Capital Resources.
<TABLE>
<CAPTION>
1998 Increase 1997 Decrease 1996
------ -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Income Taxes $14,188 9.6% $12,949 (15.0%) $15,233
</TABLE>
Income tax expense as a percentage of earnings before income taxes was 42.3%
in fiscal 1998, 41.1% in fiscal 1997, and 40.8% in fiscal 1996. Goodwill
amortization related to stock acquisitions is not deductible for tax
purposes, which has resulted in an increasingly higher income tax rate as a
percentage of earnings.
<TABLE>
<CAPTION>
1998 Increase 1997 Decrease 1996
------- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Net Earnings $19,330 4.3% $18,540 (16.1%) $22,098
</TABLE>
Net earnings as a percentage of net revenues was 4.0% in fiscal 1998, 4.1%
in fiscal 1997 and 5.6% in fiscal 1996. Fiscal 1998 and fiscal 1997 are
lower than fiscal 1996 primarily due to increased interest costs and reduced
income from the investment and other income, previously mentioned. Fiscal
1997 was also affected by the restructuring charge, and administrative
charges previously mentioned.
Liquidity and Capital Resources
Cash and cash equivalents total $9,493 at March 27, 1998, compared to $12,726
at March 28, 1997. The Company's working capital of $129,570 at March 27,
1998 has grown from $115,417 at March 28, 1997. The primary sources of cash
during fiscal 1998 consisted of funds from operations of $19,020, and
proceeds from sales of investments and other property of $7,387.
The primary uses of cash in fiscal 1998 consisted of acquisitions totaling
$13,463 and capital expenditures of $11,958.
Net cash provided by operating activities for fiscal 1998 totaled $19,020
as compared to $5,780 for fiscal 1997. The most significant factor affecting
this increase is the growth in accounts payable, due to a higher dollar
amount for direct costs of outside services and a correlation of the payment
of payables with the Company's longer receivable collection cycle. Advance
payments for rents, insurance and deposits somewhat offset the increase in
operating cash.
Net cash provided by operating activities for fiscal 1997 totaled $5,780 as
compared to $31,834 for fiscal 1996. The decline in cash provided by
operations in fiscal 1997 is attributable to several factors: revenue growth
provided a corresponding increase in accounts receivables, and the Company
settled an obligation of one of its fiscal 1997 acquisitions. Fluctuations
in the deferred tax accounts further reduced cash from operating activities.
Offsetting these uses of cash is the change in the composition of the
Company's marketable securities, which resulted in classifying a portion of
the portfolio as other assets which is reflected as a source of cash.
Investing activities reflects the Company's acquisition and venture programs.
Acquisitions made by the Company in fiscal 1998 and fiscal 1997 have been
smaller-sized companies than those purchased in fiscal 1996, and accordingly,
required less cash. In fiscal 1997 the Company's venture programs reflected
an investment of $5,100 for Glencoe Insurance, Ltd., which was sold in fiscal
1998 generating proceeds of approximately $5,200. Other investments in fiscal
1997 included the purchase of the bank debt of CWC and funding for DMB.
During fiscal 1998 the Company's bank credit agreements were amended and the
termination dates extended. The amendments also provide more flexibility on
limitations on additional indebtedness, and maintenance of certain financial
ratios. In fiscal 1996 the Company secured long-term debt which was used to
repay lines of credit, fund acquisitions and other investments, purchase
treasury stock, including the repurchase of 3,700,000 shares from
Hochtief AG.
For information regarding the Company's long-term debt and purchase of stock
from Hochtief AG, see Notes 6 and 16 to the Consolidated Financial Statements.
The Company's annual plan for fiscal 1999 includes a budget for capital
expenditures of approximately $12,000.
While the Company anticipates continuing capital requirements to support
growth and diversification of services, fund acquisitions and new ventures,
management believes that cash generated from operations and existing lines of
credit will be sufficient to meet requirements for the foreseeable future.
Future acquisition opportunities for larger businesses may require additional
financing, which management believes can be obtained by increasing the existing
lines of credit.
Impact of Inflation
The Company's operations have not been and are not expected to be materially
affected by inflation or changing prices in the foreseeable future.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
Page
Index to Consolidated Financial Statements
and Financial Statement Schedules
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . 18
Consolidated Statements of Financial Position as of
March 27, 1998 and March 28, 1997 . . . . . . . . . . . . . . . . . 19
Consolidated Statements of Earnings for the Years Ended
March 27, 1998, March 28, 1997 and March 29, 1996 . . . . . . . . . 20
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended
March 27, 1998, March 28, 1997 and March 29, 1996 . . . . . . . . . 21
Consolidated Statements of Cash Flows for the Years Ended
March 27, 1998, March 28, 1997 and March 29, 1996 . . . . . . . . . 22
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 23
Supplementary Financial Information - Selected
Quarterly Financial Data (Unaudited). . . . . . . . . . . . . . . 38
Schedule II -- Valuation and Qualifying Accounts . . . . . . . . . . 45
All other schedules are omitted because they are not required, are not
applicable or because the information is included in the Company's
Consolidated Financial Statements or the Notes thereto.
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
Dames & Moore Group
We have audited the consolidated financial statements of Dames & Moore Group
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we have also audited the
financial statement schedule listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dames
& Moore Group and subsidiaries as of March 27, 1998 and March 28, 1997 and
the results of their operations and their cash flows for each of the years
in the three-year period ended March 27, 1998 in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
May 15, 1998
DAMES & MOORE GROUP
Consolidated Statements of Financial Position
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 27, March 28,
Assets 1998 1997
-------- --------
Current:
<S> <C> <C>
Cash and cash equivalents $ 9,493 $ 12,726
Marketable securities 1,031 5,984
Accounts receivable, net of allowance for
doubtful accounts of: 1998-$3,408 and 1997-$3,001 135,298 114,126
Billed contract retentions 10,992 5,095
Unbilled receivables 55,844 56,491
------- -------
Total accounts receivable 202,134 175,712
Deferred income taxes 4,303 4,135
Prepaid expenses and other current assets 11,168 9,697
------- -------
Total current assets 228,129 208,254
Property and equipment, net 23,397 19,594
Goodwill of acquired businesses, net of accumulated
amortization of: 1998-$12,535 and 1997-$8,907 117,849 109,626
Investments in affiliates 4,868 9,270
Other assets 12,118 11,538
------- -------
$386,361 $358,282
======== ========
Liabilities and shareholders' equity
Current:
Current portion of long-term debt $ 9,614 $ 11,560
Accounts payable 31,990 23,021
Accrued payroll and employee benefits 26,364 24,784
Current income taxes payable 6,864 3,145
Accrued expenses and other liabilities 23,727 30,327
------- -------
Total current liabilities 98,559 92,837
Long-term debt 132,010 128,542
Other long-term liabilities 5,883 5,280
Contingencies
Shareholders' equity:
Preferred stock, $0.01 par value,
shares authorized: 1,000,000
shares issued: none - -
Common stock and capital in excess of $0.01 par
value, shares authorized: 27,000,000
shares issued: 1998-22,740,000; 1997-22,726,000 107,512 107,242
Retained earnings 104,952 87,979
Treasury stock: 1998-4,573,000;
1997-4,714,000 shares (61,157) (63,070)
Other shareholders' equity (1,398) (528)
-------- --------
Total shareholders' equity 149,909 131,623
-------- --------
$386,361 $358,282
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
DAMES & MOORE GROUP
Consolidated Statements of Earnings
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 27, March 28, March 29,
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross revenues $703,902 $653,378 $556,763
Direct costs of outside services 221,398 198,970 160,268
------- ------- -------
Net revenues 482,504 454,408 396,495
------- ------- -------
Operating expenses:
Salaries and related costs 337,474 315,896 278,989
General expenses 88,401 86,275 71,114
Depreciation and amortization 9,216 8,832 6,257
Amortization of goodwill 4,600 3,893 3,234
Restructuring costs - 2,651 -
------- -------- -------
439,691 417,547 359,594
------- -------- -------
Earnings from operations 42,813 36,861 36,901
Investment and other income 997 2,014 3,274
Interest expense (10,292) (7,386) (2,844)
------- -------- -------
Earnings before income taxes 33,518 31,489 37,331
Income taxes 14,188 12,949 15,233
------- -------- -------
Net earnings $ 19,330 $ 18,540 $ 22,098
======== ======== ========
Earnings per share:
Basic $ 1.08 $ 0.91 $ 0.99
======== ======== ========
Diluted $ 1.07 $ 0.91 $ 0.98
======== ======== ========
Cash dividends declared per share $ 0.12 $ 0.12 $ 0.12
======== ======== ========
Weighted average number of shares-Basic 17,890 20,287 22,385
======== ======== ========
Weighted average number of shares-Diluted 18,048 20,446 22,537
</TABLE> ======== ======== ========
The accompanying notes are an integral part of the consolidated
financial statements.
DAMES & MOORE GROUP
Consolidated Statements of Changes in Shareholders' Equity
(In thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative Unrealized
Common Stock Retained Treasury Translation Loss on Deferred
Shares Amount Earnings Stock Adjustment Investments Compensation
------ ------ -------- ------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at March 31, 1995 22,608 $105,961 $ 55,915 $ - $ - $ - $(246)
Restricted shares issued
to employees 90 1,080 - - - -
Restricted shares repurchased (12) (237) - - - - (360) -
Net earnings - - 22,098 - - - -
Cash dividends - - (2,718) - - - -
Treasury stock acquired-1,150 - - - (13,859) - - -
Amortization of
deferred compensation - - - - - - 232
------ -------- -------- -------- ------- -------- -------
Balances at March 29, 1996 22,686 $106,804 $ 75,295 $(13,859) $ - $ - $(293)
------ -------- -------- -------- ------- -------- -------
Restricted shares issued
to employees 38 420 - - - - (140)
Exercise of stock options 2 18 - - - - -
Net earnings - - 18,540 - - - -
Cash dividends - - (2,366) - - - -
Treasury stock acquired-4,369 - - - (58,675) - - -
Treasury stock issued-805 - - (3,490) 9,464 - - -
Amortization of
deferred compensation - - - - - - 218
Foreign currency translation
net of tax - - - - (313) - -
------ -------- -------- -------- ------ ------- ------
Balances at March 28, 1997 22,726 $107,242 $ 87,979 $(63,070) $ (313) $ - $(215)
------ -------- -------- -------- ------ ------- ------
Restricted shares issued
to employees 23 365 - - - - (100)
Restricted shares
repurchased (15) (180) - - - - 15
Exercise of stock options 6 85 - - - - -
Net earnings - - 19,330 - - - -
Cash dividends - - (2,168) - - - -
Treasury stock acquired-28 - - - (350) - - -
Treasury stock issued-169 - - (189) 2,263 - - -
Amortization of
deferred compensation - - - - - - 191
Unrealized gain on securities - - - - - 30 -
Foreign currency translation
net of tax - - - - (1,006) - -
------- -------- -------- -------- ------- -------- ------
Balances at March 27, 1998 22,740 $107,512 $104,952 $(61,157) $(1,319) $ 30 $(109)
======= ======== ======== ======== ======= ======== ======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
DAMES & MOORE GROUP
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------
March 27, March 28, March 29,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 19,330 $ 18,540 $ 22,098
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 14,032 12,943 9,723
Unrealized gain on marketable securities - - (1,424)
(Earnings) losses from equity investments 252 (80) (47)
Deferred income taxes (354) (2,437) 5,461
Change in assets and liabilities net of
effects of purchases of businesses:
Marketable securities 5,984 8,952 487
Accounts receivable (21,725) (24,297) (4,162)
Prepaid expenses and other assets (2,496) 1,285 (1,578)
Income tax receivable 593 121 (1,122)
Accounts payable and accrued expenses 3,404 (9,247) 2,398
------- ------- -------
Net cash provided by operating activities 19,020 5,780 31,834
------- ------- -------
Cash flows from investing activities:
Purchases of businesses,net of cash acquired (13,463) (22,118) (37,127)
Purchases of property and equipment (11,958) (9,524) (7,344)
Investments and other assets (3,600) (18,630) 204
Proceeds from sales of investments
and other property 7,387 - -
------ ------- -------
Net cash used in investing activities (21,634) (50,272) (44,267)
------ ------- -------
Cash flows from financing activities:
Repayments on lines of credit (21,000) - (1,638)
Debt issuance costs - - (529)
Proceeds from debt instruments 22,700 62,551 118,347
Principal payments on debt - - (45,683)
Issuance of common stock 364 357 720
Stock repurchased (515) (58,675) (14,015)
Dividends (2,168) (2,366) (2,718)
------- ------- -------
Net cash (used) provided by financing activities (619) 1,867 54,484
------- ------- -------
Net (decrease) increase in cash and
cash equivalents (3,233) (42,625) 42,051
Cash and cash equivalents, beginning of year 12,726 55,351 13,300
------- ------- ------
Cash and cash equivalents, end of year $ 9,493 $ 12,726 $ 55,351
======== ======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 9,785 $ 3,263 $ 2,844
Income taxes paid 10,751 14,810 16,405
Non cash investing activities-
business acquisitions 5,110 9,879 2,595
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
DAMES & MOORE GROUP
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies:
Basis of Presentation:
The consolidated financial statements include the accounts of all
majority-owned domestic and foreign subsidiaries. Investments in
companies in which Dames & Moore Group (the "Company") (formerly known
as Dames & Moore,Inc.) does not have control, but has the ability to
exercise significant influence over operating and financial policies
are accounted for by the equity method. Other investments are
accounted for by the cost method. All significant intercompany
transactions and balances have been eliminated. Certain items in
the prior years' financial statements have been reclassified to be
consistent with the 1998 presentation.
Use of Estimates in the Preparation of Consolidated Financial Statements:
The preparation of the consolidated financial statements, in conformity
with generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Actual
results may differ from the estimates and assumptions used in preparing
the consolidated financial statements.
Cash and Cash Equivalents:
Cash and cash equivalents consist of unrestricted deposits with banks
and highly liquid investments with an original maturity of three months
or less.
Marketable Securities:
Marketable securities consist of equity and debt securities that are
considered either available-for-sale or trading securities as defined
by Statement of Financial Accounting Standard (SFAS) No. 115. Debt
securities with maturity dates beyond a year are classified as Other
Assets. Marketable securities are recorded at fair market value.
Changes in unrealized gains and losses for trading securities are
included in earnings; for available-for-sale securities, they
are charged or credited to shareholders' equity, net of tax. A decline
in the fair value of an available-for-sale security below cost that is
deemed other than temporary is charged to earnings. Management
determines the appropriate classifications of investments at the time
of purchase and reevaluates such designations as of each balance sheet
date.
Depreciation and Amortization:
Property and equipment are depreciated on a straight-line basis over
estimated useful lives ranging from 3 to 10 years and leasehold
improvements are amortized over the lesser of estimated useful lives
or the term of the lease.
Goodwill of Acquired Businesses:
The goodwill of acquired businesses represents the difference between
the purchase cost and the fair value of the net assets of acquired
businesses, and is being amortized on a straight-line basis over 3 to
40 years. The Company annually evaluates the realizability of goodwill
based upon undiscounted forecasted operating earnings over the
remaining amortization period for each investment having a significant
goodwill balance. If an impairment in the value of the goodwill were
to occur, the Company would reflect the impairment through a reduction
in the carrying value of the goodwill based upon the estimated fair
value of the investment. Based upon its most recent analysis, the
Company believes that there is no impairment of goodwill.
Foreign Currency Translation:
The functional currencies for the Company's significant foreign
subsidiaries and branches are their respective local currencies. The
assets and liabilities of these entities are translated into U.S.
dollars using exchange rates in effect at period end. Revenue and
expenses are translated at the average rates of exchange prevailing
during the period. The resulting translation adjustments are reported
as a separate component of shareholders' equity. In situations where
the functional currency is the U.S. dollar, translation adjustments
are included in earnings.
The Company enters into forward foreign currency exchange contracts to
reduce the impact of foreign currency fluctuations on certain project
revenues and costs, and the asset and liability positions of foreign
subsidiaries. The terms of the currency derivatives are generally one
year or less. Commencing in fiscal 1997 the gains or losses from these
contracts are generally also reported as a separate component of
shareholders' equity; previously they were included in earnings.
Recognition of Revenue:
The Company recognizes revenue generally at the time services are
performed. On fixed price contracts, revenue is recognized on the
basis of the estimated percentage of completion of services rendered.
On cost reimbursement contracts, revenue is recognized as costs are
incurred and includes applicable fees earned essentially in the
proportion that costs incurred bear to total estimated final costs.
Materials and subcontract costs reimbursed by clients are included
in gross revenues. Anticipated losses are recognized in the period in
which the losses are reasonably determinable. Substantially all
unbilled receivables are expected to be collected within the next 12
months and retentions at the close of the respective project.
Approximately $796,000 relates to unbilled receivables and contract
retentions not collectible within 12 months, which have been classified
as other assets.
A major portion of contracts with the United States Government, are
subject to audit and adjustment. Revenue has been recorded in amounts
expected to be realized on final settlement. Included in accounts
receivable are revenues from claims where recovery is probable in the
opinion of management. At March 27, 1998, the Company has $3,756,000
of claims receivable which is management's best estimate. Facts and
circumstances may change that could result in the Company receiving
amounts different than those recorded.
Income Taxes:
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Tax provisions are recorded at
statutory rates for taxable items included in the consolidated statements
of earnings regardless of the period such items are reported for tax
purposes. Deferred income taxes are recognized for temporary
differences between financial statement and income tax bases of assets
and liabilities for which income tax effects will be realized in future
years.
Stock-Based Compensation:
Prior to March 30, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. As such, compensation expense would be recorded on the
date of grant only if the current market price of the underlying stock
exceeded the exercise price. On March 30, 1996, the Company adopted
SFAS No. 123, "Accounting for Stock-Based Compensation," which permits
entities to recognize as expense over the vesting period the fair value
of all stock-based awards on the date of grant. Alternatively, SFAS
No. 123 also allows entities to continue to apply the provisions of APB
Opinion No. 25 and provide pro forma net income and pro forma earnings
per share disclosures for employee stock option grants made in fiscal
1996 and future years as if the fair-value-based method defined in SFAS
No. 123 had been applied. The Company has elected to continue to apply
the provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123.
Earnings Per Share:
In February of 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share," which establishes new requirements for
computing and presenting earnings per share information. The Company, as
required, adopted this statement in the third quarter of fiscal 1998.
All earnings per share and weighted average common shares outstanding
information presented in these financial statements and footnotes has
been restated to conform to the new statement. Basic earnings per share
is computed by dividing net earnings by the weighted-average number
of common shares outstanding for the period. Diluted earnings per
share adjusts the weighted-average number of common shares to reflect
the potential dilution that could occur if restricted stock was
unrestricted and the assumed exercise of the dilutive stock options
outstanding. This change did not have a material impact on the
computation of the earnings per share data.
New Accounting Pronoucements:
During 1997, the Financial Accounting Standards Board issued two new
pronouncements: SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income
and its components; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes new standards for
reporting information about operating segments in interim and annual
financial statements. Implementation of these statements are effective
for fiscal years beginning after December 15, 1997, although SFAS No.
131 does not need to be implemented for interim periods. In the initial
year of application, comparative information for earlier years is to be
restated. The Company does not expect that adoption of these standards
will have a material effect on its financial position or results of
operations. However, commencing in fiscal 1999 the Company has
realigned its businesses into similar lines of services which will
differ from the current segment disclosures.
Fiscal Year:
The Company uses a 52-53 week fiscal year ending the last Friday in
March. The fiscal years were comprised of 52 weeks in 1998, 1997 and
1996.
Note 2 - Acquisitions:
On June 24, 1997, the Company acquired SRA Technologies, Inc., a
professional services company providing specialized clinical laboratory
services, contract research, analysis and management services in the
areas of life sciences, environmental health service studies, and
energy. The purchase price of $8,924,000 was paid in cash, and no
additional payments are due. The purchase price in excess of the fair
value of the identifiable assets acquired is classified as goodwill
and is being amortized over 30 years.
The Company also completed six smaller acquisitions during fiscal 1998
for $5,740,000, one of which included the issuance of 163,107 shares
of the Company's treasury stock. Four of the acquisitions have
additional future payments contingent on future earnings. The total
purchase cost in excess of fair value of identifiable assets acquired
is classified as goodwill and being amortized over the period of
expected benefit, which range from 3 to 20 years.
During fiscal 1997, the Company acquired two companies that have been
operating through newly formed, wholly owned subsidiaries.
DecisionQuest, Inc., acquired on May 3, 1996, is a company engaged in
the business of providing trial strategy, consultation, jury research,
graphic presentations, and other litigation support services to
minimize adverse findings or financial loss in litigation or other
legal proceedings. DecisionQuest, Inc., was acquired for cash plus
additional future payments contingent on future earnings. BRW Group,
Inc., acquired on May 17, 1996, is a company that provides project
planning, design and construction-phase services for transportation
and infrastructure projects. BRW Group, Inc., was acquired with a
combination of cash, 800,000 shares of the Company's treasury stock
and an additional payment contingent on future earnings. The combined
purchase costs total $25,962,000. The purchase cost in excess of the
fair value of the identifiable assets acquired including contingent
payments earned to date is classified as goodwill and is being
amortized over 40 years.
The following schedule summarizes the unaudited pro forma results of
operations as if the acquisitions of SRA Technologies, Inc. had
occurred at the beginning of fiscal 1997 and DecisionQuest, Inc., and
BRW Group, Inc., had occurred at the beginning of fiscal 1996.
Certain adjustments, such as amortization of goodwill, increased
interest expense and income tax have been reflected. (In thousands,
except per share amounts)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Net revenues $468,450 $438,964
Net earnings 19,032 22,193
======== ========
Earnings per share - Basic $ 0.94 $ 0.99
======== ========
Earnings per share - Diluted $ 0.93 $ 0.98
======== ========
</TABLE>
The pro forma information is intended to show how the acquisitions
might have affected historical results of operations if the
transactions had occurred at an earlier time. The pro forma results
are not necessarily indicative of the periods presented or to be
expected in the future.
The Company also completed several smaller acquisitions during fiscal
1997 for $7,939,000 plus future payments contingent on future earnings.
The total purchase cost in excess of fair value of identifiable assets
acquired is classified as goodwill and being amortized over the period
of expected benefit, 15 to 40 years.
All acquisitions have been accounted for as purchases. Results of
operations for all acquisitions have been included in the consolidated
financial statements from the date of the respective acquisition.
Subsequent to year-end, the Company acquired the business of Signet
Testing Labs, a company engaged in providing materials testing and
inspection services to the construction industry. The purchase price
of $5,700,000 included the issuance of 156,991 shares of the Company's
treasury stock. Additional future payments are contingent upon future
earnings.
Note 3 - Investments in Debt and Equity Securities:
The cost and estimated fair value of equity and debt securities by
classification and major category follow. Approximately, $4,536,000 at
March 27, 1998 and $5,503,000 at March 28, 1997 of the U.S. Government
securities have a maturity greater than 1 year but within 5 years, and
are classified as other assets (in thousands):
<TABLE>
<CAPTION>
Estimated
Cost Fair Value
-------- ----------
<S> <C> <C>
At March 27, 1998:
Available-for-sale:
Securities of the U.S. Government $ 4,502 $ 4,536
Equity securities 1,018 1,031
------- -------
$ 5,520 $ 5,567
======= =======
At March 28, 1997:
Available-for-sale:
Securities of the U. S. Government $11,487 $11,487
</TABLE> ======= =======
Note 4 - Investments in Affiliates:
The Company through its subsidiary Dames & Moore Ventures has a 50%
interest in Dames & Moore/Brookhill L.L.C. (DMB) and affiliated
companies. DMB was formed to acquire environmentally impaired
properties and to remediate; to develop, redevelop, or reposition; and
to maintain, operate and lease such properties until their disposition.
In March, 1997, DMB acquired an interest in 24 assets by purchasing
either a fee interest or a property-related mortgage note. During
fiscal 1998 DMB acquired 5 additional assets and sold 19 assets,
resulting in a portfolio of 10 assets as of March 27, 1998.
The March 1997 acquisition was financed with senior debt of $54,082,000,
subordinated debt of $14,922,000 and cash of $3,714,000. Subsequent
acquisitions have been financed 75% with senior debt, 20% subordinated
debt and 5% equity from DMB. The senior debt bears interest at London
Interbank Offshore Rate (LIBOR) plus 275 basis points, and requires
monthly payments of principal and interest. Cash flow from the
properties, including sale proceeds will generally be distributed 80%
to the subordinated lender and 20% to DMB, until the subordinated
lender and DMB each receives its loan advances or capital
contributions, and a return on investment of 20% per annum.
Thereafter, cash flow will be distributed 50% to the subordinated
lender and DMB. The borrowings are all due on December 31, 1999, but
may be extended under certain terms and conditions.
The Company accounts for its investment of $3,144,000 in fiscal 1998
and $2,324,000 in fiscal 1997 in DMB under the equity method of
accounting. Condensed financial information follows (in thousands):
<TABLE>
<CAPTION>
March 27, March 28,
1998 1997
--------- --------
<S> <C> <C>
Mortgage notes receivables $ 4,137 $ 54,693
Property 33,508 17,156
Other assets 17,038 4,371
--------- --------
Total assets $ 54,683 $ 76,220
========= ========
Mortgages payable $ 41,958 $ 69,004
Other liabilities 6,726 2,681
Shareholders' equity 5,999 4,535
--------- --------
Total liabilities and equity $ 54,683 $ 76,220
========= ========
Company's share of equity $ 3,000 $ 2,268
========= ========
Year Ended Year Ended
March 27, 1998 March 28, 1997
-------------- --------------
Revenues $ 18 $ 482
Costs and expenses (1,450) (1,661)
Net gain on asset dispositions 1,061 -
--------- --------
Net loss $ (371) $ (1,179)
========= ========
Company's share of net loss $ (185) $ (590)
</TABLE> ========= ========
During fiscal 1998 the Company sold, for approximately book value, its
9.9% interest in Glencoe Insurance Ltd., a company formed to offer earthquake
insurance in California. The Company accounted for its investment of
$5,144,000 in fiscal 1997 under the equity method of accounting. Equity
investments in other unconsolidated investments amounted to $1,722,000 at
fiscal 1998 and $1,802,000 in fiscal 1997.
Note 5 - Composition of Certain Financial Statement Captions: (in thousands)
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Property and equipment, at cost:
Computer equipment $36,145 $30,411
Office equipment and furniture 13,719 12,398
Technical and field equipment 13,482 9,848
Leasehold improvements 5,847 4,790
------- -------
69,193 57,447
Less accumulated depreciation and amortization 45,796 37,853
------- -------
$23,397 $19,594
======= =======
1998 1997
------- --------
Accrued payroll and employee benefits:
Salaries, wages and related taxes $12,901 $11,530
Accrued vacation 12,192 11,585
Accrued pension costs 1,271 1,669
------- -------
$26,364 $24,784
======= =======
Accrued expenses and other liabilities:
Accrued insurance costs $ 6,913 $ 6,909
Accrued occupancy 4,232 3,240
Accrued interest 4,283 3,973
Deferred acquisition payments 1,639 4,661
Client advances 1,060 3,186
Deferred income 1,640 1,912
Accrued expenses 837 2,785
Other liabilities 3,123 3,661
------- -------
$23,727 $30,327
</TABLE> ======= =======
Note 6 - Long-Term Debt:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Senior Notes:
6.54% Series A notes, due March 29, 2001 $ 40,000 $ 40,000
6.87% Series B notes, due March 29, 2003 30,000 30,000
6.92% Series C notes, due September 29, 2003 10,000 10,000
7.19% Series F notes, due December 16, 2004 10,000 10,000
7.23% Series G notes, due December 16, 2005 10,000 10,000
7.20% Series D notes, due March 29, 2006 5,000 5,000
7.25% Series E notes, due September 29, 2006 15,000 15,000
Lines of credit 20,015 18,560
Other notes payable, due July 1998 1,609 1,542
------- -------
141,624 140,102
Current portion of long-term debt 9,614 11,560
------- -------
$132,010 $128,542
======== ========
</TABLE>
The Senior Notes agreement contains limitations on additional
indebtedness, sales of assets, loans and advances, as well as minimum
net worth requirements and maintenance of certain financial ratios.
Company management believes all such requirements were satisfied as of
March 27, 1998. As a result of a completed interest rate hedge, the
effective interest rate on the Senior Notes will be 6.78% through 2001,
then 6.94% through 2003, 7.07% in 2004, 7.09% in 2005, 7.04% in 2006
and 7.25% in 2007.
The Company has $74,310,000 available for borrowing under the lines of
credit in U.S. dollars, offshore foreign currencies or foreign domestic
currencies, and for the issuance of letters of credit and purchase of
foreign currency exchange contracts. Interest is charged under several
options, including the bank's reference rates or at LIBOR plus a
spread, at the Company's option. The weighted-average interest rate
on short-term borrowings was 6.4% at March 27, 1998. The agreements
contain limitations on additional indebtedness, sales of assets,
acquisitions and capital expenditures, as well as maintenance of
certain financial ratios and minimum net worth requirements. Such
requirements were satisfied as of March 27, 1998. As of March 27,
1998, under these lines, the Company had borrowings of $20,015,000, and
standby letters of credit totaling $19,709,000 principally for project
performance, advance payment guarantees and the Company's domestic
insurance program. The lines of credit come due as follows: $6,797,000
in July 1998, $14,310,000 in February 1999, and $53,203,000 in January
2001. The fair value of the Company's long-term debt approximates
carrying value based on current rates offered to the Company for debt
of the same remaining maturities.
Annual maturities of long-term debt over the next five fiscal years are
as follows: 1999-$9,614,000; 2000-$10,000; 2001-$52,000,000; 2002-none;
and 2003-$30,000,000.
Note 7 - Foreign Currency Contracts:
The Company has entered into foreign exchange forward contracts, all
having maturities of less than one year. The notional amounts noted
below serve solely as a basis for the calculation of payment streams
to be exchanged. The Company is exposed to credit loss in the event
of nonperformance by counter parties for these contracts. The Company
selects major international banks and financial institutions as counter
parties to manage this credit risk. Transaction gains and losses
including the effect of foreign currency contracts and currency
exchange rate conversion were a loss of $206,000 in 1998, a loss of
$222,000 in 1997, and a loss of $433,000 in 1996. (Foreign currency
amounts in thousands)
<TABLE>
<CAPTION> 1998 1997
------ ------
<S> <C> <C>
Australian dollar 1,000 3,000
United States dollar 644 850
British pound - 2,000
</TABLE>
Note 8 - Fair Values of Financial Instruments:
The carrying amount of marketable securities is based on quoted market
prices at the reporting date for those investments and as such equal
fair value. The fair value of the Company's long-term debt is
estimated based on current rates offered to the Company for debt of the
same remaining maturities, which approximates carrying value. All
other financial instruments bear relatively short-term maturities, and
accordingly, the carrying amount of these investments approximates fair
value.
Note 9 - Income Taxes: (in thousands)
Income taxes consist of the following:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
U.S. Federal taxes:
Current $ 9,560 $11,761 $11,126
Deferred (478) (1,736) (529)
------- ------- -------
9,082 10,025 10,597
State and local taxes:
Current 1,706 1,841 2,053
Deferred (115) (166) (97)
------- ------- -------
1,591 1,675 1,956
Non-U.S. taxes:
Current 3,541 1,249 2,680
Deferred (26) - -
------- ------- -------
3,515 1,249 2,680
------- ------- -------
$14,188 $12,949 $15,233
======= ======= =======
</TABLE>
The sources of earnings before income taxes consist of the following:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
U.S. earnings before income taxes $27,438 $31,178 $35,146
Non-U.S. earnings before income taxes 6,080 311 2,185
------- ------- -------
Earnings before income taxes $33,518 $31,489 $37,331
======= ======= =======
Income taxes differ from amounts computed by applying the statutory U.S.
Federal income tax rate of 35% to earnings before income taxes as follows:
<S> <C> <C> <C>
Statutory U.S. Federal income tax $11,731 $11,021 $13,066
State income taxes,
net of Federal benefit 1,034 1,089 1,271
Goodwill 653 499 410
Other 770 340 486
------- ------- -------
Total income taxes $14,188 $12,949 $15,233
======= ======= =======
</TABLE>
Deferred income taxes result from temporary differences in the timing of
the recognition of revenues and expenses for financial statement and
tax return purposes. Management believes that it is more likely than
not, that the results of future operations will generate sufficient
taxable income to realize the deferred tax assets. The significant
components of deferred taxes were as follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Current deferred net tax assets:
Compensation expense $ 3,975 $ 3,698
Litigation reserve 410 718
Accrued expenses 171 960
Allowance for doubtful accounts 918 558
Other 433 344
------- -------
Total current deferred tax assets 5,907 6,278
------- -------
Cash to accrual adjustments
from acquisitions 1,106 1,993
Other 498 150
------- -------
Total current deferred
tax liabilities 1,604 2,143
------- -------
Net current deferred tax assets $ 4,303 $ 4,135
======= =======
Noncurrent deferred net tax liabilities:
Foreign currency translation $ 836 $ -
Other 735 -
------- -------
Total noncurrent deferred
tax assets 1,571 -
------- -------
Depreciation and amortization 2,481 1,840
Other 569 -
------- -------
Total noncurrent deferred tax
liabilities 3,050 1,840
------- -------
Net noncurrent deferred tax
liabilities $ 1,479 $ 1,840
</TABLE> ======= =======
Note 10 - Lease Commitments:
The Company is obligated under various noncancelable leases for office
facilities, furniture and equipment. Certain leases contain renewal
options, escalation clauses and certain other operating expenses of
the properties. In the normal course of business, leases that expire
are expected to be renewed or replaced by leases for other properties.
The following is a schedule by year of future rental payments required
under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of March 27, 1998 (in thousands):
<TABLE>
<CAPTION>
Fiscal Year(s) Total
-------------- -----
<S> <C>
1999 $20,852
2000 17,622
2001 14,768
2002 11,430
2003 8,733
Thereafter 14,950
-------
Total minimum lease payments $88,355
</TABLE> =======
The following schedule shows the composition of total rental expenses for all
operating leases (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Total rental expense $24,365 $23,617 $20,189
Less sublease rentals 140 324 232
------- ------- -------
$24,225 $23,293 $19,957
======= ======= =======
</TABLE>
Note 11 - Contingencies:
The Company in the ordinary course of business is a defendant in
various lawsuits involving claims typically filed against the
engineering and consulting professions, primarily alleging professional
errors or omissions. The Company through a wholly owned subsidiary
insures the Company's risks for professional liability, workers
compensation, and general and automobile claims up to certain policy
limits. Claims in excess of these limits are covered by unrelated
insurance carriers. Management makes estimates and assumptions that
affect the reported amount of liability and the disclosure of
contingent liabilities. As claims develop, it is possible that the
ultimate results of these claims may differ from management's
estimates. In the opinion of management, based upon information it
presently possesses, the resolution of these claims will not have a
material adverse effect on the Company's consolidated financial
position or results of operations.
Note 12 - Stock Option Plans:
Long-Term Incentive Plan
The Company's Amended and Restated 1991 Long-Term Incentive Plan (the
"Plan"), which provides for the granting of stock options and the sale
of restricted stock to officers and key employees of the Company, has
authorized and reserved a total of 2,500,000 shares of common stock for
issuance under this Plan. Stock options granted or restricted stock
sold under the Plan may be granted or sold at a price and for such
terms as determined by the Compensation Committee of the Board of
Directors.
Restricted stock sales are offered to newly elected officers and are
subject to restrictions on transfer and risk of forfeiture until earned
by continued employment. Should employment terminate before ownership
vests, shares are repurchased by the Company at the lesser of the price
originally paid for the stock or its market value on the date of
termination. During the restriction period, holders have the rights of
shareholders, including the right to vote and receive dividends, but
cannot transfer ownership. Restricted stock is generally being issued
at 67% of market value on the date of issuance and vests 3 years after
the issue date. These restricted stock sales give rise to unearned
compensation that is amortized over the vesting period. Through
March 27, 1998, 231,715 shares of restricted stock have been issued
under the Plan.
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Restricted stock issued 23,300 37,751 90,000
Weighted-average fair $12.88 $11.13 $12.00
value of restricted stock
granted during the year
</TABLE>
Non-qualified stock options are granted at fair value at the date of
grant and generally vest 25% per year commencing on the first
anniversary after the grant date. Options expire 10 years after the
grant date, and all awards need to be made by May 22, 2005.
<TABLE>
<CAPTION>
1998 1997 1996
------------------------ ---------------------- ----------------------
Weighted Avg. Weighted Avg. Weighted Avg.
Shares Exercise Price Shares Exercise Price Shares Exercise Price
--------- -------------- ------ -------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of the year 1,678,856 $16.09 1,517,823 $16.87 1,619,874 $17.03
Granted 8,000 12.88 276,554 11.24 40,000 12.63
Exercised (6,902) 11.78 (2,737) 12.00 -
Canceled (90,628) 16.00 (112,784) 14.83 (142,051) 17.48
--------- ---------- ---------
Outstanding at the end
of the year 1,589,326 $16.09 1,678,856 $16.09 1,517,823 $16.87
========= ========= =========
Exercisable at year-end 1,166,549 $17.70 970,941 $18.58 705,678 $19.47
Weighted-average fair
value of options granted
during the year $ 5.46 $ 4.40 $ 5.05
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in 1998, 1997 and 1996,
respectively: expected volatility of 28.28%, 27.15%, and 26.59%;
risk-free interest rates of 6.81%, 6.24%, and 6.04%; expected lives of
6, 5.6, and 6 years and no dividends.
Directors' Stock Option Plan
The Company's amended and restated 1995 Stock Option Plan for
Non-Employee Directors of the Company (the "Plan") has 50,000 shares
of common stock authorized for issuance under the Plan. Shares of
common stock awarded under this Plan are non-qualified stock options,
are granted at fair value at the date the option is granted, vest and
become exercisable in three equal annual installments commencing on
the first anniversary after the grant date. Options expire 10 years
after the grant date.
<TABLE>
<CAPTION>
1998 1997 1996
---------------------- ---------------------- -----------------------
Weighted Avg. Weighted Avg. Weighted Avg.
Shares Exercise Price Shares Exercise Price Shares Exercise Price
------ -------------- ------ -------------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of the year 23,000 $12.97 15,000 $13.63 -
Granted 17,000 13.50 8,000 11.75 15,000 $13.63
Exercised - - - -
------ ------ ------
Outstanding at the end
of the year 40,000 $13.20 23,000 $12.97 15,000 $13.63
====== ====== ======
Exercisable at year-end 12,664 $13.23 4,998 $13.63 None
Weighted-average fair
value of options granted
during the year $ 5.59 $ 4.90 $ 5.60
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in 1998, 1997, and 1996,
respectively: expected volatility of 28.51%, 27.97%, and 26.87%;
risk-free interest rates of 6.3%, 6.4%, and 6.44%; expected lives of
6 years and no dividends.
The following table summarizes both stock option plans' information
on stock options outstanding at March 27, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------- ---------------------
Number Weighted Avg. Number
Range of Outstanding Remaining Weighted Avg. Exercisable Weighted Avg.
Exercise Prices at 3/27/98 Contractual Life Exercise Price at 3/27/98 Exercise Price
- --------------- ---------- ---------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
$11.13 to $13.63 731,879 7.5 $11.81 281,766 $11.90
$16.65 to $19.50 625,910 5.5 18.97 625,910 18.97
$20.00 to $21.75 271,537 4.0 20.57 271,537 20.57
</TABLE>
Pro-Forma Disclosure
The Company continues to apply APB Opinion No. 25 in accounting for
both of its stock-based compensation plans. Accordingly, no
compensation cost has been recognized for the stock option plans.
There was no material difference in the Company's earnings or earnings
per share had the stock option plans determined compensation cost
based on the fair value at the grant dates consistent with the method
of SFAS No. 123.
Note 13 - Employee Retirement Plans:
The Company and its domestic subsidiaries have several defined
contribution retirement plans covering substantially all of the
Company's U.S. employees with a minimum service requirement.
Depending upon the plan, eligible employees can invest up to 15% of
their earnings; certain plans will match by an equal amount from the
Company generally up to the first 3% of the employee's contribution.
Employer matching contributions for fiscal years 1998, 1997 and 1996
were $2,930,000, $3,315,000 and $2,957,000, respectively.
Profit-sharing contributions to all plans are currently discretionary.
However, prior to January 1, 1997 the largest of the plans had a
profit-sharing contribution that was computed in accordance with a
formula (set forth in the Plan) to provide for an annual contribution
of 6% of pre-tax earnings, as defined. The contributions for 1998,
1997 and 1996 were $1,381,000, $1,684,000 and $2,553,000, respectively.
Certain of the Company's foreign subsidiaries have trusteed retirement
plans covering substantially all of their employees. These pension
plans are not required to report to government agencies pursuant to
ERISA and do not otherwise determine the actuarial value of
accumulated benefits or net assets available for benefits. The
aggregate pension expense for these plans for fiscal years 1998, 1997
and 1996 were $1,498,000, $1,719,000 and $1,369,000, respectively.
Note 14 - Segment Information:
The Company is a worldwide provider of comprehensive engineering,
consulting and construction management services. The Company serves
a broad range of clients in both the private and public sectors.
Net revenues from all agencies and departments of the United States
Government were approximately $66,440,000, $63,183,000 and
$63,313,000 during fiscal years 1998, 1997 and 1996, respectively.
Selected geographic information is summarized as follows (in thousands):
<TABLE>
<CAPTION>
United Other Executive
States Countries Office Total
-------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net revenues 1998 $412,585 $69,919 $ - $482,504
1997 388,671 65,737 - 454,408
1996 340,128 56,367 - 396,495
Earnings from
Operations 1998 $ 48,662 $ 8,223 $(14,072) $ 42,813
1997 49,493 2,330 (14,962) 36,861
1996 45,519 4,480 (13,098) 36,901
Identifiable
Assets 1998 $287,182 $63,310 $35,869 $386,361
1997 268,236 53,435 36,611 358,282
1996 216,510 37,233 63,536 317,279
</TABLE>
Note 15 - Earnings Per Share (EPS): (in thousands)
The following is a reconciliation of the weighted average shares
outstanding used for computing basic and diluted EPS.
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Weighted average shares - Basic EPS 17,890 20,287 22,385
Dilutive securities:
Restricted stock 127 124 130
Stock options 31 35 22
------ ------ ------
Weighted average shares - Diluted EPS 18,048 20,446 22,537
====== ====== ======
</TABLE>
Stock options to purchase 941, 965, and 1,539 shares of common stock as of
March 27, 1998, March 28, 1997 and March 29, 1996, respectively, were
outstanding but were not included in the computation of diluted EPS
because the stock options' exercise price was greater than the average
market price of the common shares.
Note 16 - Stock Repurchases:
The Company's Board of Directors authorized the Company to purchase up to
2,500,000 shares of its common stock on the open market. During fiscal
1998 the Company repurchased 28,700 shares of its common stock and
reissued 169,200 shares of treasury stock. As of March 27, 1998 the
Company had repurchased 1,847,400 shares and reissued 974,500 shares.
The Company may continue to purchase shares on the open market.
On November 19, 1996, the Company acquired all 3,700,000 shares of the
Company's common stock owned by Hochtief Aktiengesellschaft vorm. Gebr.
Helfmann (Hochtief AG). The Company may use the reacquired shares
to facilitate acquisitions or remarket them if market conditions permit.
Note 17 - Common and Preferred Stock:
The Company adopted a Shareholder's Rights Agreement on March 28, 1997
granting, for each outstanding share of common stock, one stock purchase
right ("Right"). Each Right entitles the common stockholder to purchase,
in certain circumstances generally relating to a change in control of the
Company, one two-hundredth of a share of the Company's Series A Junior
Participating Preferred Stock, par value $0.01 per share (the "Series A
Preferred Stock") at the exercise price of $65 per share, subject to
adjustment. Alternatively, the Right holder may purchase common stock
of the Company having a market value equal to two times the exercise
price, or may purchase shares of common stock of the acquiring
corporation having a market value equal to two times the exercise price.
The Series A Preferred Stock confers to its holders rights as to
dividends, voting and liquidation that are in preference to common
stockholders. The Rights are nonvoting, are not presently exercisable
and currently trade in tandem with the common shares. The Rights may be
redeemed at $0.01 per Right by the Company in accordance with the Rights
Agreement. The Rights will expire on March 28, 2007, unless earlier
exchanged or redeemed.
Note 18 - Restructuring Costs:
In fiscal 1997 the Company determined it was necessary to restructure
its international operations, and construction and project management
subsidiary. Included in the restructuring cost are employee severance
and termination costs, costs associated with office closures, losses on
work in progress where there was extensive employee turnover and losses
on other current assets, all of which impact the Company's working
capital. The remaining balance represents losses on long-term assets.
Approximately $464,000 remains to be expended at March 27, 1998 to
complete the restructuring.
DAMES & MOORE GROUP
Supplementary Financial Information
Selected Quarterly Financial Data (Unaudited) (In thousands, except per
share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
1998: Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Gross revenues $171,771 $176,214 $174,974 $180,943
Net revenues 120,075 123,390 119,233 119,806
Earnings from operations 10,556 10,913 11,244 10,100
Net earnings 4,685 5,151 5,153 4,341
======== ======== ======== ========
Earnings per share-Basic $ 0.26 $ 0.29 $ 0.29 $ 0.24
======== ======== ======== ========
Earnings per share-Diluted $ 0.26 $ 0.28 $ 0.29 $ 0.24
======== ======== ======== ========
Weighted average number of
shares-Basic 17,890 17,884 17,873 17,914
======== ======= ======= =======
Weighted average number of
shares-Diluted 18,041 18,047 18,031 18,074
======== ======= ======= =======
1997:
Gross revenues $154,839 $163,110 $168,350 $167,079
Net revenues 108,116 115,373 114,709 116,210
Earnings from operation 9,209 11,528 10,800 5,324
Net earnings 4,981 6,022 5,636 1,901
======== ======== ======== ========
Earnings per share-Basic $ 0.23 $ 0.28 $ 0.28 $ 0.11
======== ======== ======== ========
Earnings per share-Diluted $ 0.23 $ 0.28 $ 0.28 $ 0.10
======== ======== ======== ========
Weighted average number of
shares-Basic 21,456 21,698 20,063 17,933
======== ======== ======== =======
Weighted average number of
shares-Diluted 21,581 21,832 20,253 18,119
</TABLE> ======== ======== ======== =======
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant*
Item 11. Executive Compensation*
Item 12. Security Ownership of Certain Beneficial Owners and Management*
Item 13. Certain Relationships and Related Transactions*
* Information regarding the Executive Officers of the Company is included
in Part I of this Annual Report on Form 10-K. For other information
called for by Items 10-13, reference is made to the Company's definitive
proxy statement for its annual meeting of shareholders, to be held on
August 10, 1998, which will be filed with the Securities and Exchange
Commission within 120 days after March 27, 1998, and which is
incorporated herein by reference, except that the information included
under the captions "Report of the Compensation Committee on Executive
Compensation" and "Stock Performance Graph" is not incorporated herein
by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements and Financial Statement Schedules
Financial statements and financial statement schedules that are filed as part
of this Annual Report on Form 10-K are listed in Item 8 hereof.
(b) Reports on Form 8-K
There have been no reports on Form 8-K filed during the quarter for which
this report on Form 10-K is being filed.
(c) Exhibits
The following exhibits are filed as part of this Annual Report on Form 10-K
or are incorporated by reference herein:
Exhibit
Number Description
- ------- -----------
2.1 Purchase Agreement dated April 6, 1995 for the purchase of shares of
Walk, Haydel & Associates, Inc. (incorporated herein by reference
to Exhibit 2.1 of the Company's Current Report on Form 8-K [File No.
1-11075] filed on April 11, 1995).
3.1 Restated Certificate of Incorporation of Dames & Moore Group as
Amended (incorporated herein by reference to Exhibit 3(i) of the
Company's Quarterly Report on Form 10-Q [File No. 1-11075] for the
quarter ended September 26, 1997).
3.2 Restated Bylaws of Dames & Moore Group (incorporated herein by
reference to Exhibit 3(ii) of the Company's Quarterly Report on
Form 10Q [File No. 1-11075], for the quarter ended September 26,
1997).
4.1 Note Purchase Agreement dated as of March 15, 1996 between the
Company and the Noteholders (incorporated herein by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K [File
No. 1-11075] for the year ended March 29, 1996).
4.2 First Amendment dated as of April 15, 1996, to the Note Purchase
Agreement dated as of March 15, 1996 (incorporated herein by
reference to Exhibit 4.2 of the Company's Annual Report on Form 10-K
[File No. 1-11075] for the year ended March 28, 1997).
4.3 Second Amendment dated as of November 18, 1996 to the Note Purchase
Agreement dated as of March 15, 1996 (incorporated herein by
reference to Exhibit 4.3 of the Company's Annual Report on
Form 10-K [File No. 1-11075] for the year ended March 28, 1997).
4.4 Note Purchase Agreement dated as of December 16, 1996 between the
Company and the Noteholders (incorporated herein by reference to
Exhibit 4.4 of the Company's Annual Report on Form 10-K [File
No. 1-11075] for the year ended March 28, 1997).
4.5 Third Amendment dated as of December 16, 1996, to the Note Purchase
Agreement dated as of March 15, 1996 (incorporated herein by
reference to Exhibit 4.5 of the Company's Annual Report on Form 10-K
[File No. 1-11075] for the year ended March 28, 1997).
4.6 Rights Agreement, dated as of March 28, 1997 between Dames & Moore,
Inc. and ChaseMellon Shareholder Services LLC, which includes the
form of Certificate of Designations of Series A Junior Participating
Preferred Stock of Dames & Moore, Inc. as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of Share Purchase
Rights Plans as Exhibit C. (Incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 24, 1997 [Commission
File No. 1-11075]).
10.1* Trust Agreement for the Deferred Compensation Plan dated December 4,
1993 (incorporated herein by reference to Exhibit 10.2 of the
Company's Quarterly Report on Form 10-Q [File No. 1-11075] for the
quarter ended December 24, 1993).
10.2 First Amended and Restated Credit Agreement dated as of May 24,
1996 between Bank of America National Trust and Savings Association
and the Company (incorporated herein by reference to Exhibit
10.6 of the Company's Annual Report on Form 10-K [File No. 1-11075]
for the year ended March 29, 1996).
10.3* Dames & Moore, Inc. Amended and Restated 1991 Long-Term Incentive
Plan (incorporated herein by reference to Exhibit 10.4 of the
Company's Annual Report on Form 10-K [File No. 1-11075] for the
year ended March 28, 1997).
10.4* Dames & Moore, Inc. 1995 Stock Option Plan for Non-Employee
Directors (incorporated herein by reference to Exhibit 10.5 of the
Company's Annual Report on Form 10-K [File No. 1-11075] for the
year ended March 28, 1997).
10.5 First Amendment to First Amended and Restated Credit Amendment,
between Bank of America National Trust and Savings Association and
the Company (incorporated herein by reference to Exhibit 10.7 of the
Company's Annual Report on Form 10-K [File No. 1-11075] for the year
ended March 28, 1997).
10.6 Second Amendment to First Amended and Restated Credit Agreement,
between Bank of America National Trust and Savings Association and
the Company (incorporated herein by reference to Exhibit 10.8 of the
Company's Annual Report on Form 10-K [File No. 1-11075] for the
year ended March 28, 1997).
10.7 Third Amendment to First Amended and Restated Credit Agreement,
dated November 12, 1997, between Bank of America National Trust and
Savings Association and the Company (incorporated herein by
reference to Exhibit 10.1 of the Company's Quarterly Report on Form
10-Q [File No. 1-11075] for the quarter ended December 26, 1997).
10.8* Employment Agreement dated April 1, 1997 between Dames & Moore, Inc.
and Arthur C. Darrow (incorporated herein by reference to Exhibit 10.9
of the Company's Annual Report on Form 10-K [File No. 1-11075] for
the year ended March 28, 1997).
10.9* Agreement Regarding Severance Payments dated April 1, 1997, 1997 by
and between Dames & Moore, Inc. and Mark A. Snell (incorporated
herein by reference to Exhibit 10.10 of the Company's Annual Report
on Form 10-K [File No. 1-11075] for the year ended March 28, 1997).
10.10 Senior Loan Agreement between DMB/Remediation LLC as Borrower and
PPA Funding Corp., as Senior Lender dated March 11, 1997
(incorporated herein by reference to Exhibit 10.11 of the Company's
Annual Report on Form 10-K [File No. 1-11075] for the year ended
March 28, 1997).
10.11 Greenfields Funding Corp. and DMB/Remediation LLC Subordinated Loan
Agreement dated March 11, 1997 (incorporated herein by reference to
Exhibit 10.12 of the Company's Annual Report on Form 10-K [File No.
1-11075] for the year ended March 28, 1997).
10.12 Revised Exhibit "D" Waterfall to Greenfields Funding Corp. and
DMB/Remediation LLC Subordinated Loan Agreement.
10.13* Dames & Moore Group Deferred Compensation Plan effective May 2, 1998.
21.1 List of Subsidiaries of the Company.
23.1 Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
27.1 Financial Data Schedule (included only in the electronic filing).
27.1A Restated Financial Data Schedule for the interim period of December
27, 1996, in the fiscal year ended March 28, 1997 (included only in
the electronic filing).
*Management compensation agreement.
Exhibits filed herewith or incorporated by reference herein will be furnished
to shareholders of the Company upon written request and for a fee of $.20 per
page, payable in advance. This fee covers only the Company's reasonable
expenses in furnishing such exhibits. Written requests should be addressed
to:
Dames & Moore Group
Investor Relations Department
911 Wilshire Boulevard, Suite 700
Los Angeles, California 90017<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DAMES & MOORE GROUP
Date: June 12, 1998 By /s/ ARTHUR C. DARROW
Arthur C. Darrow
President and
Chief Executive Officer
Date: June 12, 1998 By /s/ MARK A. SNELL
Mark A. Snell
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Company and in the capacities indicated on June 12, 1998.
By /s/ ARTHUR C. DARROW
Arthur C. Darrow
Director
President and
Chief Executive Officer
(Principal Executive Officer)
By /s/ MARK A. SNELL
Mark A. Snell
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By /s/ LESLIE S. PUGET
Leslie S. Puget
Corporate Controller
(Principal Accounting Officer)
<PAGE>
By /s/ GEORGE D. LEAL
George D. Leal, Director
By /s/ ROBERT M. PERRY
Robert M. Perry, Director
By /s/ HARALD PEIPERS
Harald Peipers, Director
By /s/ MICHAEL R. PEEVEY
Michael R. Peevey, Director
By /s/ ANTHONY R. MOORE
Anthony R. Moore, Director
By /s/ URSULA BURNS
Ursula Burns, Director
By /s/ ROBERT E. CLARKE
Robert E. Clarke, Director
By /s/ GARY R. KRIEGER
Gary R. Krieger, Director
By /s/ A. EWAN MACDONALD
A. Ewan Macdonald, Director
By /s/ ARTHUR E. WILLIAMS
Arthur E. Williams, Director
DAMES & MOORE GROUP
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
Fiscal Years Ended March 27, 1998, March 28, 1997 and March 29, 1996
<TABLE>
<CAPTION>
Additions
------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
Description of year expenses accounts Deductions year
____________ --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended March 27, 1998
Allowance for doubtful accounts $3,001,000 $ 915,000 $ - $(508,000) $3,408,000
========== ========== ========= ========== ==========
Year Ended March 28, 1997
Allowance for doubtful accounts $1,886,000 $1,208,000 $465,000(1) $(558,000) $3,001,000
========== ========== ======== ========= ==========
Year Ended March 29, 1996
Allowance for doubtful accounts $1,701,000 $ 378,000 $350,000(1) $(543,000) $1,886,000
========== ========== ======== ========= ==========
</TABLE>
(1) Amount recorded on books of acquired entities at date of acquisition.
EXHIBIT "D"
WATERFALL
Notwithstanding anything to the contrary in the Borrower Operating
Agreement (including Sections 4.1, 4.2 and 4.3), all Borrower Cash shall be
allocated and applied as follows:
1. Applications of Property-Specific Borrower Cash.
To the extent attributable to or arising from specific Approved
Property(ies) (including the operations and dispositions thereof), Borrower
Cash for each calendar month of Borrower shall be applied and disbursed on
each Payment Date as follows (provided, however, that all sums otherwise
payable to DMB shall be subject to any provisions of the Senior Loan Documents
that require such sums to be applied or used instead in a particular manner,
such as on account of Release Shortfalls or to fund the Retained Earnings
Reserve):
1.1 First: to reimburse Subordinated Lender in full for any
Subordinated Loan Advances made by Subordinated Lender to cure any Event of
Default by Borrower;
1.2 Cash Flow from Sales or Refinancing.
(a) Pay 80% toward repayment of any outstanding principal of any
Subordinated Loan Advances relating to the Approved Property which is the
subject of the Sale or Refinancing and 20% to DMB as return of its Capital
Contribution allocated to such Approved Property until DMB has received the
total return of such Capital Contribution allocated to such Approved Property.
(b) Pay 80% toward repayment of any outstanding principal of any
Subordinated Loan Advance from any Approved Property which has a Loan Recovery
Shortfall and 20% to DMB as return of its Capital Contribution allocated to any
Approved Property which has been previously sold where it has any outstanding
Capital Contributions until said Capital Contributions are fully returned.
(c) Pay 80% to the Subordinated Lender and 20% to DMB towards all
accrued and unpaid Basic Interest Disbursement and Supplemental Interest
Disbursement relating to the Approved Property which is the subject of the
Sale or Refinancing.
(d) To pay Administrative Expenses and to repay any Capital
Contributions previously made by DMB to Borrower, or Subordinated Loan
Advances previously made by Subordinated Lender, to pay Administrative
Expenses, in proportion to such Capital Contributions and Subordinated Loan
Advances (the "Administrative Expense Disbursements");
(e) The total remaining amount (the "Net Property Profit") shall
be paid fifty percent (50%) to DMB as additional return on its equity
investment in Borrower and fifty percent (50%) to Subordinated Lender as
Contingent Subordinated Loan Interest.
In the event of a Refinancing or prepayment without a sale of the
Approved Property, the Net Property Profit will be Fair Market Value of the
Approved Property as defined herein. The Fair Market Value shall be in its
"as is" condition, which may include the fact that the Approved Property is
subject to Environmental Risks. Fair Market Value will be determined by
three appraisals. The Subordinated Lender and DMB shall each select an
appraiser, each within fifteen (15) days of the notice of the prepayment or
Refinancing. Those appraisers will select a third appraiser within ten (10)
days thereafter. All three appraisers shall perform appraisals of the Approved
Property. The Fair Market Value will be equal to the average of the two
appraisals whose valuation is closest together in their determination. The
third appraisal will be disregarded.
1.3 Cash Flow from Operations.
(a) To pay 80% to any unpaid Subordinated Loan Advance and 20% DMB's
Capital Contribution from any Approved Property which has been previously sold;
(b) (i) Eighty percent (80%) to Subordinated Lender on account of
Basic Subordinated Loan Interest attributable to Subordinated Loan Advances
relating to such Property; and (ii) twenty percent (20%) to DMB; but only until
such time as Subordinated Lender and DMB have received (taking into account
the current and all prior Basic Return Disbursements and Supplemental Return
Disbursements) a cumulative annual return of ten percent simple interest
(10%) per annum (calculated based on actual days elapsed divided by 360)
as to its Capital Contribution in such Approved Property(ies) (and
Subordinated Lender has received Basic Subordinated Loan Interest proportionate
thereto) (the "Basic Return Disbursements" payable to DMB);
(c) To pay Administrative Expenses and to repay any Capital
Contributions previously made by DMB to Borrower, or Subordinated Loan Advances
previously made by Subordinated Lender, to pay Administrative Expenses, in
proportion to such Capital Contributions and Subordinated Loan Advances
(the "Administrative Expense Disbursements");
(d) (i) Eighty percent (80%) to Subordinated Lender on account of
Basic Subordinated Loan Interest; and (ii) twenty percent (20%) to DMB until
Subordinated Lender and DMB have received up to an additional cumulative annual
return of ten percent (10%) simple interest per annum (calculated based on
actual days elapsed divided by 360), on such Approved Property until twenty
(20%) percent simple interest has been paid on the Approved Property plus ten
percent (10%) simple interest per annum on all of its other Subordinated Loan
Advances (and DMB has received return on all its Capital Contributions
proportionate thereto) (the "Supplemental Return Disbursements");
(e) Eighty percent (80%) to Subordinated Lender on account of
Subordinated Loan Advances attributable to such Approved Property and twenty
percent (20%) to DMB, to be applied against DMB'S Capital Contributions on
account of Capital Contributions with respect to such Approved Property, until
such time as the principal balance of the Subordinated Loan allocable to such
Approved Property, and DMB's Capital Contribution with respect to such Capital
Contributions in such Approved Property, has each been reduced to zero;
(f) Eighty percent (80%) to Subordinated Lender and twenty percent
(20%) to DMB, until the Loan Recovery Shortfall has been reduced to zero;
(g) The total remaining amount (the "Net Property Profit") shall be
paid fifty percent (50%) to DMB as additional return on its equity investment
in Borrower and fifty percent (50%) to Subordinated Lender as Contingent
Subordinated Loan Interest.
2. Disagreements Regarding Amount of Borrower Cash.
If at any time, pursuant to a good faith dispute, Borrower and
Subordinated Lender fail to agree as to the amount of Borrower Cash available
for distribution pursuant to the Waterfall, then pending resolution of such
disagreement, the Waterfall shall apply only as to the amount of Borrower
Cash that is not in dispute.
DAMES & MOORE GROUP
DEFERRED COMPENSATION PLAN
MASTER PLAN DOCUMENT
Effective May 2, 1998
Copyright 1998
By Compensation Resource Group, Inc.
All Rights Reserved
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions 1
ARTICLE 2 Selection, Enrollment, Eligibility 7
2.1 Selection by Committee 7
2.2 Enrollment Requirements 7
2.3 Eligibility; Commencement of Participation 7
2.4 Termination of Participation and/or Deferrals 7
ARTICLE 3 Deferral Commitments/Company Matching/Crediting Taxes 8
3.1 Minimum Deferrals 8
3.2 Maximum Deferral 8
3.3 Election to Defer; Effect of Election Form 9
3.4 Withholding of Annual Deferral Amounts 9
3.5 Annual Company Matching Amount 9
3.6 Rollovers 10
3.7 Investment of Trust Assets 10
3.8 Vesting 10
3.9 Crediting/Debiting of Account Balances 11
3.10 FICA and Other Taxes 14
3.11 Distributions 14
ARTICLE 4 Short-Term Payout; Unforeseeable Financial Emergencies;
Withdrawal Election 15
4.1 Short-Term Payout 15
4.2 Other Benefits Take Precedence Over Short-Term 15
4.3 Withdrawal Payout/Suspensions for Unforeseeable
Financial Emergencies 15
4.4 Withdrawal Election 15
ARTICLE 5 Retirement Benefit 16
5.1 Retirement Benefit 16
5.2 Payment of Retirement Benefit 16
5.3 Death Prior to Completion of Retirement Benefit 16
ARTICLE 6 Pre-Retirement Survivor Benefit 17
6.1 Pre-Retirement Survivor Benefit 17
6.2 Payment of Pre-Retirement Survivor Benefit 17
ARTICLE 7 Termination Benefit 17
7.1 Termination Benefit 17
7.2 Payment of Termination Benefit 17
ARTICLE 8 Disability Waiver and Benefit 17
8.1 Disability Waiver 17
8.2 Continued Eligibility; Disability Benefit 18
ARTICLE 9 Beneficiary Designation 18
9.1 Beneficiary 18
9.2 Beneficiary Designation; Change; Spousal Consent 18
9.3 Acknowledgement 19
9.4 No Beneficiary Designation 19
9.5 Doubt as to Beneficiary 19
9.6 Discharge of Obligations 19
ARTICLE 10 Leave of Absence 19
10.1 Paid Leave of Absence 19
10.2 Unpaid Leave of Absence 19
ARTICLE 11 Termination, Amendment or Modification 20
11.1 Termination 20
11.2 Amendment 20
11.3 Effect of Payment 21
ARTICLE 12 Administration 21
12.1 Committee Duties 21
12.2 Administration Upon Change In Control 21
12.3 Agents 22
12.4 Binding Effect of Decisions 22
12.5 Indemnity of Committee 22
12.6 Employer Information 22
ARTICLE 13 Other Benefits and Agreements 22
13.1 Coordination with Other Benefits 22
ARTICLE 14 Claims Procedures 23
14.1 Presentation of Claim 23
14.2 Notification of Decision 23
14.3 Review of a Denied Claim 23
14.4 Decision on Review 24
14.5 Legal Action 24
ARTICLE 15 Trust 24
15.1 Establishment of the Trust 24
15.2 Interrelationship of the Plan and the Trust 24
15.3 Distributions From the Trust 24
ARTICLE 16 Miscellaneous 25
16.1 Status of Plan 25
16.2 Unsecured General Creditor 25
16.3 Employer's Liability 25
16.4 Nonassignability 25
16.5 Not a Contract of Employment 25
16.6 Furnishing Information 26
16.7 Terms 26
16.8 Captions 26
16.9 Governing Law 26
16.10 Notice 26
16.11 Successors 26
16.12 Spouse's Interest 26
16.13 Validity 27
16.14 Incompetent 27
16.15 Court Order 27
16.16 Distribution in the Event of Taxation 27
16.17 Insurance 28
16.18 Legal Fees To Enforce Rights After Change in Control 28
<PAGE>
DAMES & MOORE GROUP
DEFERRED COMPENSATION PLAN
Effective May 2, 1998
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees and Directors who
contribute materially to the continued growth, development and future
business success of Dames & Moore Group, a Delaware corporation, and its
subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded
for tax purposes and for purposes of Title I of ERISA, and shall be deemed
to constitute two separate plans, one for Employees and one for Directors.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit
on the records of the Employer equal to the sum of (i) the vested
Deferral Account balance (ii) the vested Company Contribution Account
balance and (iii) the Rollover Account balance. The Account Balance,
and each other specified account balance, shall be a bookkeeping entry
only and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.2 "Annual Bonus" shall mean the sum of the Annual Cash Bonus and the Annual
Stock Bonus.
1.3 "Annual Cash Bonus" shall mean any cash compensation, in addition to
Base Annual Salary relating to services performed during any fiscal
year, whether or not paid in such fiscal year or included on the Federal
Income Tax Form W-2 for such fiscal year, payable to a Participant as
an Employee under any Employer's annual bonus and cash incentive plans,
excluding stock options.
1.4 "Annual Company Contribution Amount" for any one Plan Year shall be the
amount determined in accordance with Section 3.5.
1.5 "Annual Deferral Amount" shall mean that portion of a Participant's Base
Annual Salary, Annual Bonus and Directors Fees that a Participant elects
to have, and is deferred, in accordance with Article 3, for any one Plan
Year. In the event of a Participant's Retirement, Disability (if
deferrals cease in accordance with Section 8.1), death or a Termination
of Employment prior to the end of a Plan Year, such year's Annual
Deferral Amount shall be the actual amount withheld prior to such event.
1.6 "Annual Installment Method" shall be an annual installment payment over
the number of years selected by the Participant in accordance with this
Plan, calculated as follows: The Account Balance of the Participant
shall be calculated as of the close of business on the last business day
of the Plan Year. The annual installment shall be calculated by
multiplying this balance by a fraction, the numerator of which is one,
and the denominator of which is the remaining number of annual payments
due the Participant. By way of example, if the Participant elects a
10-Year Annual Installment Method, the first payment shall be 1/10 of
the Account Balance, calculated as described in this definition. The
following year, the payment shall be 1/9 of the Account Balance,
calculated as described in this definition. Each annual installment
shall be paid no later than 60 days after the end of the applicable
Plan Year.
1.7 "Annual Stock Bonus" shall mean any Stock compensation, in addition to
Base Annual Salary relating to services performed during any fiscal
year, whether or not paid in such fiscal year or included on the Federal
Income Tax Form W-2 for such fiscal year, payable to a Participant as
an Employee under any Employer's annual bonus and cash incentive plans,
excluding stock options.
1.8 "Base Annual Salary" shall mean the annual cash compensation relating to
services performed during any fiscal year, whether or not paid in such
fiscal year or included on the Federal Income Tax Form W-2 for such
fiscal year, excluding bonuses, commissions, overtime, fringe benefits,
stock options, relocation expenses, incentive payments, non-monetary
awards, directors fees and other fees, automobile and other allowances
paid to a Participant for employment services rendered (whether or not
such allowances are included in the Employee's gross income). Base
Annual Salary shall be calculated before reduction for compensation
voluntarily deferred or contributed by the Participant pursuant to all
qualified or non-qualified plans of any Employer and shall be calculated
to include amounts not otherwise included in the Participant's gross
income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant
to plans established by any Employer; provided, however, that all such
amounts will be included in compensation only to the extent that, had
there been no such plan, the amount would have been payable in cash to
the Employee.
1.9 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.10 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.11 "Board" shall mean the board of directors of the Company.
1.12 "Change in Control" shall mean the first to occur of any of the
following events:
(a) Any "person" (as that term is used in Section 13 and 14(d)(2) of
the Securities Exchange Act of 1934 ("Exchange Act")) becomes the
beneficial owner (as that term is used in Section 13(d) of the
Exchange Act), directly or indirectly, of 25% or more of the
Company's capital stock entitled to vote in the election of
directors, provided that such acquisition shall not be deemed to
constitute a Change in Control if such acquisition is approved by
a majority of the directors in office immediately prior to the
date that such 25% threshold is exceeded; or
(b) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of the Company cease
for any reason to constitute at least a majority thereof, unless
the election or the nomination for election by the Company's
shareholders of each new director was approved by a vote of at
least three-quarters of the directors still in office who were
directors at the beginning of the period.
1.13 "Claimant" shall have the meaning set forth in Section 14.1.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.15 "Committee" shall mean the committee described in Article 12.
1.16 "Company" shall mean Dames & Moore Group, a Delaware corporation, and
any successor to all or substantially all of the Company's assets or
business.
1.17 "Company Contribution Account" shall mean (i) the sum of all of a
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting provisions of
this Plan that relate to the Participant's Company Contribution Account,
less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant's
Company Contribution Account.
1.18 "Deduction Limitation" shall mean the following described limitation
on a benefit that may otherwise be distributable pursuant to the
provisions of this Plan. Except as otherwise provided, this limitation
shall be applied to all distributions that are "subject to the Deduction
Limitation" under this Plan. If an Employer determines in good faith
prior to a Change in Control that there is a reasonable likelihood that
any compensation paid to a Participant for a taxable year of the
Employer would not be deductible by the Employer solely by reason of
the limitation under Code Section 162(m), then to the extent deemed
necessary by the Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Employer may defer all or any
portion of a distribution under this Plan. Any amounts deferred
pursuant to this limitation shall continue to be credited/debited with
additional amounts in accordance with Section 3.9 below, even if
such amount is being paid out in installments. The amounts so deferred
and amounts credited thereon shall be distributed to the Participant or
his or her Beneficiary (in the event of the Participant's death) at the
earliest possible date, as determined by the Employer in good faith,
on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which the
distribution is made will not be limited by Section 162(m), or if
earlier, the effective date of a Change in Control. Notwithstanding
anything to the contrary in this Plan, the Deduction Limitation shall
not apply to any distributions made after a Change in Control.
1.19 "Deferral Account" shall mean (i) the sum of all of a Participant's
vested Annual Deferral Amounts, plus (ii) amounts credited in accordance
with all the applicable crediting provisions of this Plan that relate
to the Participant's Deferral Account, less (iii) all distributions made
to the Participant or his or her Beneficiary pursuant to this Plan that
relate to his or her Deferral Account.
1.20 "Director" shall mean any member of the board of directors of any
Employer.
1.21 "Directors Fees" shall mean the annual fees paid by any Employer,
including retainer fees and meetings fees, as compensation for serving
on the board of directors.
1.22 "Disability" shall mean a period of disability during which a
Participant qualifies for permanent disability benefits under the
Participant's Employer's long-term disability plan, or, if a
Participant does not participate in such a plan, a period of disability
during which the Participant would have qualified for permanent
disability benefits under such a plan had the Participant been a
participant in such a plan, as determined in the sole discretion of the
Committee. If the Participant's Employer does not sponsor such a plan,
or discontinues to sponsor such a plan, Disability shall be determined
by the Committee in its sole discretion.
1.23 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.24 "Election Form" shall mean the form established from time to time by
the Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.25 "Employee" shall mean a person who is an employee of any Employer.
1.26 "Employer(s)" shall mean the Company and/or any of its subsidiaries
(now in existence or hereafter formed or acquired) that have been
selected by the Board to participate in the Plan and have adopted the
Plan as a sponsor.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.28 "First Plan Year" shall mean the period beginning May 2, 1998 and
ending on the last Friday of March, 1999.
1.29 "Participant" shall mean any Employee or Director (i) who is selected
to participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs an Election Form and a Beneficiary Designation Form,
(iv) whose signed Election Form and Beneficiary Designation Form are
accepted by the Committee, (v) who commences participation in the Plan,
and (vi) whose entire Account Balance has not been distributed. A
spouse or former spouse of a Participant shall not be treated as a
Participant in the Plan or have an account balance under the Plan,
even if he or she has an interest in the Participant's benefits under
the Plan as a result of applicable law or property settlements
resulting from legal separation or divorce.
1.30 "Plan" shall mean the Company's Deferred Compensation Plan, which shall
be evidenced by this instrument and by each Plan Agreement, as they may
be amended from time to time.
1.31 "Plan Year" shall, except for the First Plan Year, mean a period
beginning on the first day following the end of the preceding Plan Year
and continuing through the last Friday of March of the next year.
1.32 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.33 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after the
earlier of the attainment of (a) age sixty-five (65) or (b) age
fifty-five (55) with ten (10) Years of Service; and shall mean with
respect to a Director, ceasing to be a Director). If a Participant is
both an Employee and a Director, Retirement shall not occur until he or
she Retires as both an Employee and a Director, which Retirement shall
be deemed to be a Retirement as a Director; provided, however, that
such a Participant may elect, at least three years prior to Retirement
and in accordance with the policies and procedures established
by the Committee, to Retire for purposes of this Plan at the time he or
she Retires as an Employee, which Retirement shall be deemed to be a
Retirement as an Employee.
1.34 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.35 "Rollover Account" shall mean (i) the sum of all of a Participant's
Rollover Amount, plus (ii) amounts credited in accordance with all the
applicable crediting provisions of this Plan that relate to the
Participant's Rollover Account, less (iii) all distributions made to
the Participant or his or her Beneficiary pursuant to this Plan that
relate to his or her Rollover Account.
1.36 "Rollover Amount" shall mean the amount determined in accordance with
Section 3.6.
1.37 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.38 "Stock" shall mean Dames & Moore Group common stock, $.01 par value,
or any other equity securities of the Company designated by the
Committee.
1.39 "Stock Ownership Guidelines" shall mean the Stock ownership guidelines
established by the Company for a Participant from time to time.
1.40 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.41 "Termination of Employment" shall mean the severing of employment with
all Employers, or service as a Director of all Employers, voluntarily
or involuntarily, for any reason other than Retirement, Disability,
death or an authorized leave of absence. If a Participant is both an
Employee and a Director, a Termination of Employment shall occur only
upon the termination of the last position held; provided, however, that
such a Participant may elect, at least three years before Termination
of Employment and in accordance with the policies and procedures
established by the Committee, to be treated for purposes of this Plan
as having experienced a Termination of Employment at the time he or she
ceases employment with an Employer as an Employee.
1.42 "Trust" shall mean one or more trusts that may be established between the
Company and a trustee pursuant to the Plan.
1.43 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
1.44 "Years of Service" shall mean the total number of full years in which
a Participant has been employed by one or more Employers. For purposes
of this definition, a year of employment shall be a 365 day period (or
366 day period in the case of a leap year) that, for the first year
of employment, commences on the Employee's date of hiring and that, for
any subsequent year, commences on an anniversary of that hiring date.
Any partial year of employment shall not be counted.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be limited to
a select group of management and highly compensated Employees and
Directors of the Employers, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole
discretion, Employees and Directors to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each
selected Employee or Director shall complete, execute and return to the
Committee, an Election Form and a Beneficiary Designation Form, in
accordance with the guidelines of the Committee, after he or she is
selected to participate in the Plan. In addition, the Committee shall
establish from time to time such other enrollment requirements as it
determines in its sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. Provided an Employee or
Director selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Committee,
including returning all required documents to the Committee within the
specified time period, that Employee or Director shall commence
participation in the Plan on the first day of the accounting period
following the month in which the Employee or Director completes all
enrollment requirements. If an Employee or a Director fails to meet
all such requirements within the period required, in accordance with
Section 2.2, that Employee or Director shall not be eligible to
participate in the Plan until the first day of the Plan Year following
the delivery to and acceptance by the Committee of the required
documents.
2.4 Termination of Participation and/or Deferrals. If the Committee
determines in good faith that a Participant no longer qualifies as a
member of a select group of management or highly compensated employees,
as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
right, in its sole discretion, to (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which
the Participant's membership status changes, (ii) prevent the
Participant from making future deferral elections and/or (iii)
immediately distribute the Participant's then Account Balance as a
Termination Benefit and terminate the Participant's participation in
the Plan.
ARTICLE 3
Deferral Commitments/Company Contribution/Crediting/Taxes
3.1 Minimum Deferrals.
(a) Base Annual Salary, Annual Bonus and Director's Fees. For each
Plan Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus, and/or
Director's Fees, provided that the amounts so elected for
the Plan Year total, in the aggregate, at least $3,000. If an
election is made for less than stated minimum amounts, or if no
election is made, the amount deferred shall be zero.
(b) Short Plan Year. Notwithstanding the foregoing, if a Participant
first becomes a Participant after the first day of a Plan Year,
or in the case of the first Plan Year of the Plan itself,
the minimum Base Annual Salary deferral shall be an amount equal
to the minimum set forth above, multiplied by a fraction, the
numerator of which is the number of complete months remaining in
the Plan Year and the denominator of which is 12.
3.2 Maximum Deferral.
(a) Base Annual Salary, Annual Bonus and Directors Fees. For each
Plan Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus and/or
Directors Fees up to the following maximum percentages for each
deferral elected:
Deferral Maximum Amount
Base Annual Salary 75%
Annual Bonus 100%
Directors Fees 100%
Notwithstanding the foregoing, (i) the Committee in is sole
discretion may announce additional limitations on a Participant's
maximum deferral elections for a Plan Year, and (ii) if a
Participant first becomes a Participant after the first day of a
Plan Year, or in the case of the first Plan Year of the Plan
itself, the maximum Annual Deferral Amount, with respect to Base
Annual Salary, Annual Bonus and Directors Fees shall be limited
to the amount of compensation not yet earned by the Participant as
of the date the Participant submits a Plan Agreement and Election
Form to the Committee for acceptance.
3.3 Election to Defer; Effect of Election Form.
(a) First Plan Year. In connection with a Participant's commencement
of participation in the Plan, the Participant shall make an
irrevocable deferral election for the Plan Year in which the
Participant commences participation in the Plan, along with such
other elections as the Committee deems necessary or desirable
under the Plan. For these elections to be valid, the Election
Form must be completed and signed by the Participant, timely
delivered to the Committee (in accordance with Section 2.2 above)
and accepted by the Committee.
(b) Subsequent Plan Years. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such other
elections as the Committee deems necessary or desirable under the
Plan, shall be made by timely delivering to the Committee, in
accordance with its rules and procedures, before the end of the
Plan Year preceding the Plan Year for which the election is made,
a new Election Form. If no such Election Form is timely delivered
for a Plan Year, the Annual Deferral Amount shall be zero for
that Plan Year.
3.4 Withholding of Annual Deferral Amounts. For each Plan Year, the Base
Annual Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Base Annual Salary payroll in equal
amounts, as adjusted from time to time for increases and decreases in
Base Annual Salary. The Annual Bonus portion of the Annual Deferral
Amount shall be withheld at the time the Annual Bonus is or otherwise
would be paid to the Participant, whether or not this occurs during
the Plan Year itself. One quarter (25%) of the Directors Fees
portion of the Annual Deferral Amount shall be deemed withheld and
credited to the Deferral Account each fiscal quarter of the Plan Year.
3.5 Annual Company Contribution Amount. For each Plan Year, an Employer,
in its sole discretion, may, but is not required to, credit any amount
it desires to any Participant's Company Contribution Account under
this Plan, which amount shall be for that Participant the Annual
Company Contribution Amount for that Plan Year. The amount so credited
to a Participant may be smaller or larger than the amount credited to
any other Participant, and the amount credited to any Participant for a
Plan Year may be zero, even though one or more other Participants
receive an Annual Company Contribution Amount for that Plan Year. The
Annual Company Contribution Amount, if any, shall be credited as of the
close of business on the day selected by the Committee, in its sole
discretion. If a Participant is not employed by an Employer as of the
last day of a Plan Year other than by reason of his or her Retirement
or death, the Annual Company Contribution Amount for that Plan Year
shall be zero.
3.6 Rollovers. If a Participant is a participant in the Dames & Moore
Group deferred compensation plan effective December 4, 1993 (the "1993
Plan") and has an account balance in the 1993 Plan on May 1, 1998,
that account balance, as determined as of that date, shall be
transferred on such date to and added to the Participant's Account
Balance under this Plan, and shall thereafter be governed by the terms
and conditions of this Plan, and shall be referred to as the "Rollover
Amount." In addition, any elections made by the Participant with
respect to his or her account balance under the 1993 Plan shall apply
to the Rollover Amount under this Plan and any elections made by the
Participant with respect to his or her 1998 annual deferral amount
under the 1993 Plan shall apply to the Participant's 1998 Annual
Deferral Amount under this Plan.
3.7 Investment of Trust Assets. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable Trust
Agreement, including the disposition of stock and reinvestment of the
proceeds in one or more investment vehicles designated by the Committee.
3.8 Vesting.
(a) A Participant shall at all times be 100% vested in (i) the Base
Annual Salary and Annual Cash Bonus portion of his or her Annual
Deferral Amount, and (ii) his or her Rollover Account.
(b) A Participant shall be vested in (i) the Annual Stock Bonus
portion of his or her Annual Deferral Amount and (ii) his or her
Annual Company Contribution Amount in accordance with the
following schedule:
Years of Service subsequent to the date the Vested Percentage of
Annual Stock Bonus portion of the Annual Annual Stock Bonus Portion of
Deferral Amount or the Annual Company the Annual Deferral Amount or
Contribution Amount is first credited to the Annual Company
Participant's Account Balance Contribution Amount
Less than 3 years 0%
3 years or more 100%
(c) Notwithstanding anything to the contrary contained in this
Section 3.8, in the event of a Participant's (i) death, (ii)
Disability, (iii) Retirement or (iv) Termination of the Plan,
a Participant's nonvested Annual Stock Bonus portion of his or
her Annual Deferral Amount and nonvested Annual Company
Contribution Amount shall become vested in accordance with the
following schedule:
Years of Service subsequent to the date the Vested Percentage of Annual
Annual Stock Bonus portion of the Annual Stock Bonus Portion of the
Deferral Amount or the Annual Company Annual Deferral Amount or
Contribution Amount is first credited to the Annual Company
Participant's Account Balance Contribution Amount
Less than 1 year 0%
1 or more, but less than 2 33 1/3%
2 or more, but less than 3 66 2/3%
3 or more 100%
(d) Notwithstanding anything to the contrary contained in this Section
3.8, in the event of a Change in Control, a Participant's Company
Contribution Account and Annual Stock Bonus portion of his or her
Annual Deferral Amount shall immediately become 100% vested (if
it is not already vested in accordance with the above vesting
schedule).
(e) Notwithstanding subsection (e), the vesting schedule for a
Participant's Company Contribution Account and Annual Stock Bonus
portion of his or her Annual Deferral Amount shall not be
accelerated to the extent that the Committee determines that
such acceleration would cause the deduction limitations of
Section 280G of the Code to become effective. In the event that
all of a Participant's Annual Stock Bonus portion of his or her
Annual Deferral Amount is not vested pursuant to such a
determination, the Participant may request independent
verification of the Committee's calculations with respect to the
application of Section 280G. In such case, the Committee must
provide to the Participant within 15 business days of such a
request an opinion from a nationally recognized accounting firm
selected by the Participant (the "Accounting Firm"). The opinion
shall state the Accounting Firm's opinion that any limitation in
the vested percentage hereunder is necessary to avoid the limits
of Section 280G and contain supporting calculations. The cost of
such opinion shall be paid for by the Company.
3.9 Crediting/Debiting of Account Balances. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) Election of Measurement Funds. Except as otherwise provided in
Section 3.9(f) below, a Participant, in connection with his or
her initial deferral election in accordance with Section 3.3(a)
above, shall elect, on the Election Form, one or more Measurement
Fund(s) (as described in Section 3.9(c) below) to be used to
determine the additional amounts to be credited to his or her
Account Balance for the first Plan Year or portion thereof in
which the Participant commences participation in the Plan and
continuing thereafter for each subsequent Plan Year in which the
Participant participates in the Plan, unless changed in
accordance with the next sentence. Except as otherwise provided
in Section 3.9(f) below, commencing with the first Plan Year that
follows the Participant's commencement of participation in the
Plan and continuing thereafter for each Plan Year in which the
Participant participates in the Plan, no later than the next
to last business day of the Plan Year, the Participant may (but
is not required to) elect, by submitting an Election Form to the
Committee that is accepted by the Committee, to add or delete one
or more Measurement Fund(s) to be used to determine the
additional amounts to be credited to his or her Account Balance,
or to change the portion of his or her Account Balance allocated
to each previously or newly elected Measurement Fund. If an
election is made in accordance with the previous sentence,
it shall apply to the next Plan Year and continue thereafter for
each subsequent Plan Year in which the Participant participates
in the Plan, unless changed in accordance with the previous
sentence.
(b) Proportionate Allocation. In making any election described in
Section 3.9(a) above, the Participant shall specify on the
Election Form, in increments of five percentage points (5%),
the percentage of his or her Account Balance to be allocated to
a Measurement Fund (as if the Participant was making an
investment in that Measurement Fund with that portion of his or
her Account Balance).
(c) Measurement Funds. Except as otherwise provided in Section
3.9(f) below, the Participant may elect one or more of the
following measurement funds (the "Measurement Funds"), for the
purpose of rediting additional amounts to his or her Account
Balance:
(1) The Moody's Fund (described as a fund earning interest at the
rate determined by the Committee that is equal to the average
of the twelve "Moody's Seasoned Corporate Bond" rates that
are most recently published prior to the beginning of that
Plan Year. The "Moody's Seasoned Corporate Bond" rate is
an arithmetic average of yields of representative bonds,
including industrials, public utilities, Aaa, Aa, A and Baa
bonds, published by Moody's Investors Service, Inc. or any
successor to that service); or
(2) The Company Stock Fund (described as a fund deemed fully
invested in Company Stock with any dividends deemed
reinvested in additional shares of Stock).
As necessary, the Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund. Each
such action will take effect as of the first day of the
Plan Year that follows by thirty (30) days the day on which
the Committee gives Participants advance written notice of
such change.
(d) Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be determined
by the Committee, in its reasonable discretion, based on the
performance of the Measurement Funds themselves. A Participant's
Account Balance shall be credited or debited on a daily basis
based on the performance of each Measurement Fund selected by the
Participant, as determined by the Committee in its sole
discretion, as though (i) a Participant's Account Balance on the
first day of a Plan Year were invested in the Measurement Fund(s)
selected by the Participant, in the percentages applicable to such
Plan Year, as of the close of business on the first business day
of such Plan Year, at the closing price on such date; (ii) the
Base Annual Salary and Annual Bonus portion of the Annual Deferral
Amount that was actually deferred during any Plan Year were
invested in the Measurement Fund(s) selected by the Participant,
in the percentages applicable to such Plan Year, no later than
the close of business on the third business day after the day
on which such amounts are actually deferred from the Participant's
Base Annual Salary or Annual Bonus, as the case may be, through
reductions in his or her payroll, at the closing price on such
date; and (iii) any distribution made to a Participant that
decreases such Participant's Account Balance ceased being
invested in the Measurement Fund(s), in the percentages
applicable to such Plan Year, no earlier than three business days
prior to the distribution, at the closing price on such date.
The Participant's Annual Company Contribution Amount shall be
credited to his or her Company Contribution Account for purposes
of this Section 3.9(d) as of the close of business on the day
selected by the Committee, in its sole discretion. One quarter
(25%) of the Directors Fees portion of the Participant's Annual
Deferral Amount shall be credited to his or her Deferral Account
for purposes of this Section 3.9(d) each fiscal quarter of the
Plan Year, as of the close of business on a business day in such
fiscal quarter of the Plan Year selected by the Committee, in its
sole discretion.
(e) No Actual Investment. Notwithstanding any other provision of this
Plan that may be interpreted to the contrary, the Measurement
Funds are to be used for measurement purposes only, and a
Participant's election of any such Measurement Fund, the
allocation to his or her Account Balance thereto, the calculation
of additional amounts and the crediting or debiting of such
amounts to a Participant's Account Balance shall not be considered
or construed in any manner as an actual investment of his or her
Account Balance in any such Measurement Fund. In the event that
the Company or the Trustee (as that term is defined in the Trust),
in its own discretion, decides to invest funds in any or all of
the Measurement Funds, no Participant shall have any rights in or
to such investments themselves. Without limiting the foregoing,
a Participant's Account Balance shall at all times be a
bookkeeping entry only and shall not represent any investment
made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of
the Company.
(f) Special Rule for the Annual Stock Bonus Portion of the Annual
Deferral Amount. Notwithstanding any provision of this Plan that
may be construed to the contrary, the Participant's Annual Stock
Bonus portion of his or her Annual Deferral Amount must be
allocated to the Company Stock Fund at all times prior to
distribution from the Plan.
3.10 FICA and Other Taxes.
(a) Base Annual Salary and Annual Cash Bonus Portion of the Annual
Deferral Amount. For each Plan Year in which the Base Annual
Salary and Annual Cash Bonus portion of the Annual Deferral
Amount is being withheld from a Participant, the Participant's
Employer(s) shall withhold from that portion of the Participant's
Base Annual Salary and Annual Cash Bonus that is not being
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Base Annual Salary and/or Annual Bonus portion of the Annual
Deferral Amount. If necessary, the Committee may reduce the
Annual Deferral Amount in order to comply with this Section 3.10.
(b) Annual Stock Bonus Portion of the Annual Deferral Amount and
Annual Company Contribution Amount: When a participant becomes
vested in a portion of his or her Annual Company Contribution
Amount or Annual Stock Bonus portion of his or her Annual Deferral
Amount or Annual Company Contribution Amount, the Participant's
Employer(s) shall withhold from the Participant's Base Annual
Salary and/or Annual Bonus that is not deferred, in a manner
determined by the Employer(s), the Participant's share of FICA
and other employment taxes. If necessary, the Committee may
reduce the Account Balance in order to comply with this Section
3.10.
3.11 Distributions. The Participant's Employer(s), or the trustee of the
Trust, shall withhold from any payments made to a Participant under
this Plan all federal, state and local income, employment and other
taxes required to be withheld by the Employer(s), or the trustee of
the Trust, in connection with such payments, in amounts and in a manner
to be determined in the sole discretion of the Employer(s) and the
trustee of the Trust.
ARTICLE 4
Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election
4.1 Short-Term Payout. In connection with each election to defer an Annual
Deferral Amount, a Participant may irrevocably elect to receive a future
"Short-Term Payout" from the Plan with respect to such Annual Deferral
Amount. Subject to the Deduction Limitation, the Short-Term Payout
shall be a lump sum payment in an amount that is equal to the Annual
Deferral Amount plus amounts credited or debited in the manner provided
in Section 3.9 above on that amount, determined at the time that the
Short-Term Payout becomes payable (rather than the date of a Termination
of Employment). Subject to the Deduction Limitation and the other
terms and conditions of this Plan, each Short-Term Payout elected shall
be paid out during a 60 day period commencing immediately after the
last day of any Plan Year designated by the Participant that is at
least five Plan Years after the Plan Year in which the Annual
Deferral Amount is actually deferred.
4.2 Other Benefits Take Precedence Over Short-Term. Should an event occur
that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a
Short-Term Payout election under Section 4.1 shall not be paid in
accordance with Section 4.1 but shall be paid in accordance with the
other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies.
If the Participant experiences an Unforeseeable Financial Emergency,
the Participant may petition the Committee to (i) suspend any deferrals
required to be made by a Participant and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the lesser of
the Participant's Account Balance, calculated as if such Participant
were receiving a Termination Benefit, or the amount reasonably needed
to satisfy the Unforeseeable Financial Emergency. If, subject to the
sole discretion of the Committee, the petition for a suspension and/or
payout is approved, suspension shall take effect upon the date of
approval and any payout shall be made within 60 days of the date of
approval. The payment of any amount under this Section 4.3 shall not
be subject to the Deduction Limitation.
4.4 Withdrawal Election. A Participant (or, after a Participant's death,
his or her Beneficiary) may elect, at any time, to withdraw all of his
or her Account Balance, calculated as if there had occurred a
Termination of Employment as of the day of the election, less a
withdrawal penalty equal to 10% of such amount (the net amount shall be
referred to as the "Withdrawal Amount"). This election can be made at
any time, before or after Retirement, Disability, death or Termination
of Employment, and whether or not the Participant (or Beneficiary) is in
the process of being paid pursuant to an installment payment schedule.
If made before Retirement, Disability or death, a Participant's
Withdrawal Amount shall be his or her Account Balance calculated as if
there had occurred a Termination of Employment as of the day of the
election. No partial withdrawals of the Withdrawal Amount shall be
allowed. The Participant (or his or her Beneficiary) shall make this
election by giving the Committee advance written notice of the election
in a form determined from time to time by the Committee. The
Participant (or his or her Beneficiary) shall be paid the Withdrawal
Amount within 60 days of his or her election. Once the Withdrawal
Amount is paid, the Participant's participation in the Plan shall
terminate and the Participant shall not be eligible to participate in
the Plan in the future. The payment of this Withdrawal Amount shall
not be subject to the Deduction Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 Payment of Retirement Benefit. A Participant, in connection with his
or her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or
pursuant to an Annual Installment Method of 5, 10 or 15 years.
The Participant may annually change his or her election to an
allowable alternative payout period by submitting a new Election Form
to the Committee, provided that any such Election Form is submitted at
least 3 years prior to the Participant's Retirement and is accepted by
the Committee in its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the Retirement
Benefit. If a Participant does not make any election with respect to
the payment of the Retirement Benefit, then such benefit shall be
payable in a lump sum. The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days after the
last day of the Plan Year in which the Participant Retires. Any
payment made shall be subject to the Deduction Limitation.
5.3 Death Prior to Completion of Retirement Benefit. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of years and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in a lump
sum, if requested by the Beneficiary and allowed in the sole discretion
of the Committee, that is equal to the Participant's unpaid remaining
Account Balance.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation,
the Participant's Beneficiary shall receive a Pre-Retirement Survivor
Benefit equal to the Participant's Account Balance if the Participant
dies before he or she Retires, experiences a Termination of Employment
or suffers a Disability.
6.2 Payment of Pre-Retirement Survivor Benefit. The Pre-Retirement
Survivor Benefit shall be paid in a lump sum. Despite the foregoing,
if the Participant's Account Balance at the time of his or her death
is more than $25,000, payment of the Pre-Retirement Survivor Benefit
may be made, in the sole discretion of the Committee, in a lump sum or
pursuant to an Annual Installment Method of not more than 5 years.
The lump sum payment shall be made, or installment payments shall
commence, no later than 60 days after the Committee is provided with
proof that is satisfactory to the Committee of the Participant's death.
Any payment made shall be subject to the Deduction Limitation.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal
to the Participant's Account Balance if a Participant experiences
a Termination of Employment prior to his or her Retirement, death or
Disability.
7.2 Payment of Termination Benefit. The lump sum payment shall be made no
later than 60 days after the last day of fiscal quarter during which
the Participant experiences the Termination of Employment. Any payment
made shall be subject to the Deduction Limitation.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver.
(a) Waiver of Deferral. A Participant who is determined by the
Committee to be suffering from a Disability shall be excused from
fulfilling that portion of the Annual Deferral Amount commitment
that would otherwise have been withheld from a Participant's
Base Annual Salary, Annual Bonus and/or Directors Fees for the
remainder of the Plan Year during which the Participant first
suffers a Disability. During the period of Disability, the
Participant shall not be allowed to make any additional deferral
elections, but will continue to be considered a Participant for
all other purposes of this Plan.
(b) Return to Work. If a Participant returns to employment, or
service as a Director, with an Employer, after a Disability
ceases, the Participant may elect to defer an Annual Deferral
Amount for the Plan Year following his or her return to employment
or service and for every Plan Year thereafter while a Participant
in the Plan; provided such deferral elections are otherwise
allowed and an Election Form is delivered to and accepted by the
Committee for each such election in accordance with Section 3.3
above.
8.2 Continued Eligibility; Disability Benefit. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed, or in the service of an Employer as a
Director, and shall be eligible for the benefits provided for in
Articles 4, 5, 6 or 7 in accordance with the provisions of those
Articles. Notwithstanding the above, the Committee shall have the
right to, in its sole and absolute discretion and for purposes of this
Plan only, and must in the case of a Participant who is otherwise
eligible to Retire, deem the Participant to have experienced a
Termination of Employment, or in the case of a Participant who is
eligible to Retire, to have Retired, at any time (or in the case of a
Participant who is eligible to Retire, as soon as practicable) after
such Participant is determined to be suffering a Disability, in which
case the Participant shall receive a Disability Benefit equal to his or
her Account Balance at the time of the Committee's determination;
provided, however, that should the Participant otherwise have been
eligible to Retire, he or she shall be paid in accordance with
Article 5. The Disability Benefit shall be paid in a lump sum within
60 days of the last day of the Plan Year in which the Committee
exercises such right. Any payment made shall be subject to the
Deduction Limitation.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary
designated under this Plan may be the same as or different from the
Beneficiary designation under any other plan of an Employer in which
the Participant participates.
9.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by
that Participant's spouse and returned to the Committee. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The
Committee shall be entitled to rely on the last Beneficiary Designation
Form filed by the Participant and accepted by the Committee prior to his
or her death.
9.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in
writing by the Committee or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion,
to cause the Participant's Employer to withhold such payments until
this matter is resolved to the Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to be
considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of
absence from the employment of the Employer, the Participant shall
continue to be considered employed by the Employer and the Participant
shall be excused from making deferrals until the earlier of the date
the leave of absence expires or the Participant returns to a paid
employment status. Upon such expiration or return, deferrals shall
resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any,
made for that Plan Year. If no election was made for that Plan Year,
no deferral shall be withheld.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Although each Employer anticipates that it will continue
the Plan for an indefinite period of time, there is no guarantee that
any Employer will continue the Plan or will not terminate the Plan at
any time in the future. Accordingly, each Employer reserves the right
to discontinue its sponsorship of the Plan and/or to terminate the Plan
at any time with respect to any or all of its participating Employees
and Directors, by action of its board of directors. Upon the
termination of the Plan with respect to any Employer, the Plan Agreements
of the affected Participants who are employed by that Employer, or in the
service of that Employer as Directors, shall terminate and their
Account Balances, determined as if they had experienced a Termination
of Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which a Participant was eligible to Retire,
then with respect to that Participant as if he or she had Retired on the
date of Plan termination, shall be paid to the Participants as follows:
Prior to a Change in Control, if the Plan is terminated with respect to
all of its Participants, an Employer shall have the right, in its sole
discretion, and notwithstanding any elections made by the Participant,
to pay such benefits in a lump sum or pursuant to the Annual Installment
Method of up to 15 years, with amounts credited and debited during the
installment period as provided herein. If the Plan is terminated with
respect to less than all of its Participants, an Employer shall be
required to pay such benefits in a lump sum. After a Change in
Control, the Employer shall be required to pay such benefits in a lump
sum. The termination of the Plan shall not adversely affect any
Participant or Beneficiary who has become entitled to the payment of
any benefits under the Plan as of the date of termination; provided
however, that the Employer shall have the right to accelerate
installment payments without a premium or prepayment penalty by paying
the Account Balance in a lump sum or pursuant to an Annual Installment
Method using fewer years (provided that the present value of all
payments that will have been received by a Participant at any given
point of time under the different payment schedule shall equal or exceed
the present value of all payments that would have been received at that
point in time under the original payment schedule).
11.2 Amendment. Dames & Moore Group may, at any time, amend or modify the
Plan in whole or in part with respect to that Employer by the action of
its board of directors; provided, however, that: (i) no amendment or
modification shall be effective to decrease or restrict the value of a
Participant's Account Balance in existence at the time the amendment or
modification is made, calculated as if the Participant had experienced
a Termination of Employment as of the effective date of the amendment
or modification or, if the amendment or modification occurs after the
date upon which the Participant was eligible to Retire, the Participant
had Retired as of the effective date of the amendment or modification,
and (ii) no amendment or modification of this Section 11.2 or Section
12.2 of the Plan shall be effective. The amendment or modification of
the Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of
the amendment or modification; provided, however, that the Employer
shall have the right to accelerate installment payments by paying the
Account Balance in a lump sum or pursuant to an Annual Installment
Method using fewer years (provided that the present value of all
payments that will have been received by a Participant at any given
point of time under the different payment schedule shall equal or
exceed the present value of all payments that would have been received
at that point in time under the original payment schedule).
11.3 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan participation shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. Except as otherwise provided in this Article 12,
this Plan shall be administered by a Committee that shall consist of
the Board, or such committee as the Board shall appoint. Members of
the Committee may be Participants under this Plan. The Committee
shall also have the discretion and authority to (i) make, amend,
interpret, and enforce all appropriate rules and regulations for the
administration of this Plan and (ii) decide or resolve any and all
questions including interpretations of this Plan, as may arise in
connection with the Plan, or any facts relating to the Plan. Any
individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Committee shall be entitled
to rely on information furnished by a Participant or the Company.
12.2 Administration Upon Change In Control. For purposes of this Plan,
the Company shall be the "Administrator" at all times prior to the
occurrence of a Change in Control. Upon and after the occurrence of
a Change in Control, the "Administrator" shall be an independent third
party selected by the Trustee and approved by the individual who,
immediately prior to such event, was the Company's Chief Executive
Officer or, if not so identified, the Company's highest ranking officer
(the "Ex-CEO"). The Administrator shall have the discretionary
power to determine all facts and questions arising in connection with
the administration of the Plan and the interpretation of the Plan and
Trust including, but not limited to benefit entitlement determinations;
provided, however, upon and after the occurrence of a Change in Control,
the Administrator shall have no power to direct the investment of Plan
or Trust assets or select any investment manager or custodial firm for
the Plan or Trust. Upon and after the occurrence of a Change in
Control, the Company must: (1) pay all reasonable administrative
expenses and fees of the Administrator; (2) indemnify the Administrator
against any costs, expenses and liabilities including, without
limitation, attorney's fees and expenses arising in connection with
the performance of the Administrator hereunder, except with respect to
matters resulting from the gross negligence or willful misconduct of
the Administrator or its employees or agents; and (3) supply full and
timely information to the Administrator or all matters relating to the
Plan, the Trust, the Participants and their Beneficiaries, the Account
Balances of the Participants, the date of circumstances of the
Retirement, Disability, death or Termination of Employment of the
Participants, and such other pertinent information as the Administrator
may reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement appointed) by the
Trustee only with the approval of the Ex-CEO. Upon and after
a Change in Control, the Administrator may not be terminated by the
Company.
12.3 Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may
be counsel to any Employer.
12.4 Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest
in the Plan.
12.5 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee, any Employee to whom the
duties of the Committee may be delegated, and the Administrator against
any and all claims, losses, damages, expenses or liabilities arising
from any action or failure to act with respect to this Plan, except in
the case of willful misconduct by the Committee, any of its members,
any such Employee or the Administrator.
12.6 Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full
and timely information to the Committee and/or Administrator, as the
case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of its Participants, and such other
pertinent information as the Committee or Administrator may reasonably
require.
ARTICLE 13
Other Benefits and Agreements
13.1 Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in
addition to any other benefits available to such Participant
under any other plan or program for employees of the Participant's
Employer. The Plan shall supplement and shall not supersede, modify
or amend any other such plan or program except as may otherwise be
expressly provided.
ARTICLE 14
Claims Procedures
14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within 60 days
after such notice was received by the Claimant. All other claims
must be made within 180 days of the date on which the event that caused
the claim to arise occurred. The claim must state with particularity
the determination desired by the Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 Review of a Denied Claim. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
14.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood
by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
Trust
15.1 Establishment of the Trust. The Company may establish a Trust, and may
at least annually transfer over to the Trust such assets as the Company
determines, in its sole discretion, are necessary to provide, on a
present value basis, for its respective future liabilities created with
respect to the Annual Deferral Amounts and Company Contribution Amounts
for such Company's Participants for all periods prior to the transfer,
as well as any debits and credits to the Participants' Account Balances
for all periods prior to the transfer, taking into consideration
the value of the assets in the trust at the time of the transfer.
15.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
shall govern the rights of a Participant to receive distributions
pursuant to the Plan. The provisions of the Trust shall govern the
rights of the Employers, Participants and the creditors of the
Employers to the assets transferred to the Trust. The Company shall
at all times remain liable to carry out its obligations under the Plan.
15.3 Distributions From the Trust. Dames & Moore Group's obligations under
the Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust, and any such distribution shall reduce the
Company's obligations under this Plan.
ARTICLE 16
Miscellaneous
16.1 Status of Plan. The Plan is intended to be a plan that is not
qualified within the meaning of Code Section 401(a) and that "is
unfunded and is maintained by an employer primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employee" within the meaning of ERISA
Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be
administered and interpreted to the extent possible in a manner
consistent with that intent.
16.2 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For
purposes of the payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general, unpledged
unrestricted assets of the Employer. An Employer's obligation under
the Plan shall be merely that of an unfunded and unsecured promise to
pay money in the future.
16.3 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan, as entered into between the
Employer and a Participant. An Employer shall have no obligation to a
Participant under the Plan except as expressly provided in the Plan.
16.4 Nonassignability. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be, unassignable and non-transferable. No part
of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, be transferable by operation of law in the event of
a Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or
otherwise.
16.5 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged
to be an "at will" employment relationship that can be terminated at
any time for any reason, or no reason, with or without cause, and with
or without notice, unless expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a Participant
the right to be retained in the service of any Employer, either
as an Employee or a Director, or to interfere with the right of any
Employer to discipline or discharge the Participant at any time.
16.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem necessary.
16.7 Terms. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where
they would so apply; and whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were
used in the plural or the singular, as the case may be, in all cases
where they would so apply.
16.8 Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State
of California without regard to its conflicts of laws principles.
16.10 Notice. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in writing
and hand-delivered, or sent by registered or certified mail, to the
address below:
Controller
Dames & Moore Group
911 Wilshire Blvd., Suite 700
Los Angeles, CA 90017
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Participant.
16.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns
and the Participant and the Participant's designated Beneficiaries.
16.12 Spouse's Interest. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable
by such spouse in any manner, including but not limited to such
spouse's will, nor shall such interest pass under the laws of
intestate succession.
16.13 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed
and enforced as if such illegal or invalid provision had never been
inserted herein.
16.14 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition
of that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the
care and custody of such minor, incompetent or incapable person.
The Committee may require proof of minority, incompetence, incapacity
or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the
account of the Participant and the Participant's Beneficiary,
as the case may be, and shall be a complete discharge of any liability
under the Plan for such payment amount.
16.15 Court Order. The Committee is authorized to make any payments
directed by court order in any action in which the Plan or the
Committee has been named as a party. In addition, if a court
determines that a spouse or former spouse of a Participant has an
interest in the Participant's benefits under the Plan in connection
with a property settlement or otherwise, the Committee, in its sole
discretion, shall have the right, notwithstanding any election made
by a Participant, to immediately distribute the spouse's or former
spouse's interest in the Participant's benefits under the Plan to
that spouse or former spouse.
16.16 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable for
federal or state income tax purposes to the Participant prior
to receipt, a Participant may petition the Committee before a
Change in Control, or the trustee of the Trust after a Change in
Control, for a distribution of that portion of his or her
benefit that has become taxable. Upon the grant of such a
petition, which grant shall not be unreasonably withheld (and,
after a Change in Control, shall be granted), a Participant's
Employer shall distribute to the Participant immediately
available funds in an amount equal to the taxable portion of his
or her benefit (which amount shall not exceed a Participant's
unpaid Account Balance under the Plan). If the petition is
granted, the tax liability distribution shall be made within 90
days of the date when the Participant's petition is granted.
Such a distribution shall affect and reduce the benefits
to be paid under this Plan.
(b) Trust. If the Trust terminates and benefits are distributed
from the Trust to a Participant, the Participant's benefits
under this Plan shall be reduced to the extent of such
distributions.
16.17 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for
and procure insurance on the life of the Participant, in such
amounts and in such forms as the Trust may choose. The Employers or
the trustee of the Trust, as the case may be, shall be the sole owner
and beneficiary of any such insurance. The Participant shall have no
interest whatsoever in any such policy or policies, and at the request
of the Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the
insurance company or companies to whom the Employers have applied
for insurance.
16.18 Legal Fees To Enforce Rights After Change in Control. The Company
and each Employer is aware that upon the occurrence of a Change in
Control, the Board or the board of directors of a Participant's
Employer (which might then be composed of new members) or a shareholder
of the Company or the Participant's Employer, or of any successor
corporation might then cause or attempt to cause the Company, the
Participant's Employer or such successor to refuse to comply with its
obligations under the Plan and might cause or attempt to cause the
Company or the Participant's Employer to institute, or may institute,
litigation seeking to deny Participants the benefits intended under
the Plan. In these circumstances, the purpose of the Plan could be
frustrated. Accordingly, if, following a Change in Control, it should
appear to any Participant that the Company, the Participant's Employer
or any successor corporation has failed to comply with any of its
obligations under the Plan or any agreement thereunder or, if
the Company, such Employer or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation
or other legal action designed to deny, diminish or to recover from
any Participant the benefits intended to be provided, then the Company
and the Participant's Employer irrevocably authorize such Participant
to retain counsel of his or her choice at the expense of the Company
and the Participant's Employer (who shall be jointly and severally
liable) to represent such Participant in connection with the
initiation or defense of any litigation or other legal action,
whether by or against the Company, the Participant's Employer
or any director, officer, shareholder or other person affiliated with
the Company, the Participant's Employer or any successor thereto in
any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document
as of May 2, 1998.
"Company"
Dames & Moore Group, a Delaware corporation
By:/s/ Mark A. Snell
Title: Executive Vice President and
Chief Financial Officer
DAMES & MOORE GROUP
EXHIBIT 21.1 LIST OF SUBSIDIARIES
The following is a list of subsidiaries of Dames & Moore Group, except as
indicated, each of the subsidiaries is wholly owned by the Company, unless
otherwise noted.
State or other jurisdiction
Name of incorporation or organization
---- --------------------------------
Domestic Subsidiaries:
Aman Environmental Construction, Inc. California
Bovay Northwest, Inc. Washington
BRW Group, Inc. Delaware
Cleveland Wrecking Company California
Color Cave, Inc. California
Contracting Resources International, Inc. Delaware
DM Investors, Inc. Delaware
Dames & Moore America, L.P.* California
Dames & Moore Foreign Branch Operations, Inc. Delaware
Dames & Moore Group (NY), Inc. New York
Dames & Moore Group, Ohio Ohio
Dames & Moore, Inc. Delaware
Dames & Moore Lebron, LLP Delaware
Dames & Moore Management Company California
Dames & Moore Servicing Company California
Dames & Moore Ventures California
DecisionQuest Inc. California
DQ Squared, Inc. California
Fourth Dimension Interactive, Inc. Delaware
O'Brien-Kreitzberg Inc. California
Seismic Risk Insurance Services, Inc. California
Signet Testing Laboratories, Inc. Delaware
SRA Technologies, Inc. District of Columbia
Walk, Haydel & Associates, Inc. Louisiana
Foreign Subsidiaries:
AACM Central Europe Limited Hungary
Ashact, Dames & Moore Ltd. United Kingdom
Ashact Projects Ltd. United Kingdom
Bureau voor Milieumanagement BV The Netherlands
Dames & Moore Argentina S.A.** Argentina
Dames & Moore B.V. The Netherlands
Dames & Moore (BVI) Ltd British Virgin Islands
Dames & Moore, Canada Canada
Dames & Moore Chile Ltda. Chile
Dames & Moore Foreign Sales Corporation, Ltd. Bermuda
Dames & Moore GmbH & Co KG Germany
Dames and Moore Iberia SA Spain
Dames & Moore International SRL Italy
Dames & Moore International SRL Venezuela
Dames & Moore (Malaysia) Sdn Bhd Malaysia
Dames & Moore Puerto Rico Puerto Rico
Dames & Moore Pty. Ltd. Australia
Dames & Moore SRL France
Dames & Moore Singapore Singapore
Dames & Moore Thailand Thailand
Dames & Moore United Kingdom United Kingdom
Food & Agriculture International Ltd. United Kingdom
Forestry Technical Services PTY Limited Australia
HDML Pty Ltd. Australia
Hollingsworth Dames & Moore (PNG) Pty Ltd Papua New Guinea
International Agriculture Pty. LTD. Australia
Norecol, Dames & Moore, Inc. Canada
O'Brien Kreitzberg Ltd. United Kingdom
Professional Insurance Limited Bermuda
PT Dames & Moore Indonesia Indonesia
Saudi Arabian Dames & Moore Saudi Arabia
* Dames & Moore America: Dames & Moore Management Company 92% - General
partner and Professional Insurance Limited 8% - Limited partner.
** Dames & Moore, Inc. has a 70% interest in this Company.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES. THIS SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS AND
RELATED NOTES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-27-1998
<PERIOD-END> MAR-27-1998
<CASH> 9,493
<SECURITIES> 1,031
<RECEIVABLES> 205,542
<ALLOWANCES> 3,408
<INVENTORY> 0
<CURRENT-ASSETS> 228,129
<PP&E> 69,193
<DEPRECIATION> 45,796
<TOTAL-ASSETS> 386,361
<CURRENT-LIABILITIES> 98,559
<BONDS> 0
0
0
<COMMON> 107,512
<OTHER-SE> 42,397
<TOTAL-LIABILITY-AND-EQUITY> 386,361
<SALES> 703,902
<TOTAL-REVENUES> 703,902
<CGS> 0
<TOTAL-COSTS> 221,398
<OTHER-EXPENSES> 439,691
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,292
<INCOME-PRETAX> 33,518
<INCOME-TAX> 14,188
<INCOME-CONTINUING> 19,330
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,330
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES. THIS SCHEDULE IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES. EARNINGS PER SHARE DATE HAS BEEN RESTATED TO CONFORM WITH SFAS 123
WHICH ESTABLISHES NEW REQUIREMENTS FOR COMPUTING EPS INFORMATION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-END> DEC-27-1996
<CASH> 22,708
<SECURITIES> 9,007
<RECEIVABLES> 176,087
<ALLOWANCES> 3,060
<INVENTORY> 0
<CURRENT-ASSETS> 219,447
<PP&E> 19,682
<DEPRECIATION> 0
<TOTAL-ASSETS> 356,598
<CURRENT-LIABILITIES> 99,851
<BONDS> 0
0
0
<COMMON> 107,242
<OTHER-SE> 24,627
<TOTAL-LIABILITY-AND-EQUITY> 356,598
<SALES> 486,299
<TOTAL-REVENUES> 486,299
<CGS> 0
<TOTAL-COSTS> 148,101
<OTHER-EXPENSES> 306,661
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,990
<INCOME-PRETAX> 28,245
<INCOME-TAX> 11,606
<INCOME-CONTINUING> 16,639
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,639
<EPS-PRIMARY> .79
<EPS-DILUTED> .78
</TABLE>
