Document kD9oajnLX3XB9Kpj4x1Q77RnO

* ^ ICF KAISER INTERNATIONAL. INC ' 1993 Annual- report ICF INTERNATIONAL. INC. AND SUBSIDIARIES . FINANCIAL HIGHLIGHTS*1) Gross revenue ' Service revenlie1 ^ Operating income (loss) Net income (loss)l-i) Net income (lois) per common share . Primary Fully diluted ' Weighted average number of common shares outstanding, assuming full dilution Total assets' Working capital Long-term liabilities Redeemable preferred stock shareholders' equity 1993 1992 1991 1990 $678,882 384,985 \ 22,744 (In thousands, except per share data) . $710,873 ' $624,976 ' $503,904 379,826 363,318 278,255 (43,963) 33,287 . ` 22,563 8,639 . (40,516) .` ' 14,291 8,794 0.16 0.16 ' -(2.25) . (2.25) 0.71 0.68` ' 0.57 0.57 1989(2) . $292,866 124,328 13,845 6,524 0.46 0.45 21,272 295,578 87,845 , 75,602 44,824 58,521 19,085 20,308 15,527 ' - 318,947 357,457 . .237,057 . 66,065 74,754 43,430 ..85,675 . 109,820 ' -53,019 45,161 26,498-' 3,997 ' 51,151- . 88,839 58,503 - 14,389 140,751 27,253 40,440 3,997 19,595 (11 Gross revenue anti service revenue for the fiscal.year ended Fetruary'29,1992, exclude businesses discontinued by tbe Company in fiscal 1992; the financial data for fiscal years 1989 through 1991 include-results for the entire Company. In addition, in fistal 1992, the Company adopted Statement of Financial Accounting Standards No. 109, Accoimtmo. forJncome Taxes. See "Managements Discussion and*Analysis of Financial Condition and Results of * Operations/* '. ' (2) Includes the effect, from June 1988 of the acquisition of ICF Kaiser Engineers. . (3V Service revenue is calculated by deducting the costs of subcontracted services and reimbursable direct costs from the gross revenue.and adding the Company's share of the, income of j'oint ventures and affiliated companies. " (+) Fiscal year 1992 reflects an after-tax charge of $52.4 million associated witk the disposa^and restructuring of certain businesses.  LETTER- TO SHAREHOLDERS jame> 0. Edwards Chairman and ChrefExecutive Officer Fiscal 1993 was a transition year for ICF Kaiser. We completed our strategic restructuring, returned to prof itability, and positioned the Lomp'any for future growth. With the sale, of our health-policy consulting and specialty-software businesses, ICF Kaiser completed the operational restructuring we announced in July 1991- Imple menting this program was difficult and at times painful. During the period, management time had to be diverted to. ensure that the restructuring'todh place in-an orderly but expeditous manner,.t'o prepare the discontinued businesses for sale, and to negotiate the best possible prices for those' businesses.- However, as a result of these efforts, ICF Kaiser is a more focused company,' .and -one that is better organized to compete successfully in its primary marhets: environment, infrastructure, industry, and energy. Within these marhets, ICF Kaiser has compiled a record of consulting service, achievement in engineering and construction management, and operating'profitability for many years. Fiscal 1993 was a difficult" year in the-marhets ICF Kaiser serves. The sluggish global economy throughout most of the year affected all of our businesses; demand in our industrial marhet was particularly weah.. This situation has been exacerbated by the change in Administration in the United States, which has resulted in a slowdown in environ mental spending, in both the public and private sectors, as m- government personnel and priorities are put in place. Xe\ ertheless, the Company increased service revenue and returned to profitability. Gross revenue derived from the*- marhets --. as" well as our smaller consulting practices -- totalled $679 million in fiscal 1993; Gross revenue for the year decreased 4.5 percent from fiscal 1992, as a number of large projects were winding down Or were completed durinc the year. .Service revenue, which excludes materials and sub contracted costs, was $385 million, compared to last war's service revenue of $380 million. By marhet, ICF Kaiser's service revenue was: environment S242 million; infrastruc ture $67 million;.industry $49 million; and other marhets $27 million.- Public concern_ about environmental quality, the Clinton Administration's plans to increase public spending on infrastructure projects, and the need of many industrial corporations in the United States and abroad to impruu- production efficiencies and comply with applicable environ mental regulations - all ma'he for great growth potential for 'ICF Kaiser. " '' Rebuilding Our Financial Strength ICF Kaiser returned to profitability in fiscal 1993 op both an operating and net basis. For its fiscal year ended February 28, 1993, ICF Kaisers operating income was $22.7 million, versus an operating.loss.of $44.0 million for - the prior fiscal year. The Company reported net income of $8.6 million and earnings per share of S0.16 in fiscal 199 a. versus a prior-year net loss of $40.5 million ($2.25 per share). The prior year's loss includes an after-tax charge of $c2.4 -million associated with the disposal and restructuring of certain businesses. Proceeds from the sale of discontinued businesses and other steps tahen by management enabled the Company to end fiscal 1993 with a significantly stronger balance sheet. ln particular, we reduced our debt outstanding by 5:36 million since the first quarter of fiscal 1993, thus lowering our debt a? a percentage of total capital to 42.percent. We realize the bottom-line results for fiscal 1993 were inadequate, and we are tahing actions to improve them. These actions include the redeployment of funds that were generated bv the sale of businesses during the past 1$ months hack into ICF Kaiser's continuing operations. How rapidly and effec tively we put these funds to work will have a significant impact -on'our'short- and longer-term business performance. We will find business development opportunities to invest in, both internally and externally, to enhance ICF Kaiser's position in its marhets. , Also, in order to serve our clients better,- changing market conditions require that we increase our ownership of or rights'to new technologies. ICF Kaiser has built its reputation on knowing the latest advancements in environmental tech nologies, 'This must be continued and broadened.. In all the markets we serve, the successful.engineering and construction companies of the 1990s will be those that understand and have the rights to the most advanced technologies. In addition to building our future through investment and growth, we continually must find ways to minimize our cost of operations. Throughout the year, we constantly review our direct labor and overhead costs to ensure that they are in balance with regard to existing and expected market condi tions. There are, however, .other areas that are under review for possible cost-cutting, including ICF. Kaiser's capital structure, which carries higher costs resulting primarily from our opera tional restructuring. As with our business operations, we will look for opportunities to restructure- the balance sheet in an effort to lower our capital costs, facilitate business operations, and improve the Company's return to shareholders. ICF Kaiser Is. Market-Driven . ICF Kaiser sells consulting, engineering, and construc tion services to its primary markets of environment, infra structure, industry, and energy. Each of these markets is different and thus requires market-specific responses. Starting in late 1992, demand in the U.S. environ mental market softened during the transition in the federal government. As would be expected, the transition to a new Administration resulted in a temporary spending slowdown as appointees were confirmed and new priorities set. This period also waj used by parts of industry to delay environmental expenditures. There are many indications,. however, that demand in this market will returri to prior spending and' growth levels. On the federal side, the combined fiscal 199-i environ mental budget requests of the U.S. Environmental Protection Agency, and the U.S. Departments of Energy (DOE) and Defense (DOD) show an increase to more than $13 billion. DOE and DOD together intend to spend more than S200 - billion over.the next three decades to restore the environmen tal integrity of military bases and weapons-facilities worldwide. . In this past year, ICF Kaiser generated $321 million of gross tevenue from federally sponsored contracts, and we expect to increase.this amount in fiscal 1994. ' In the private sector, improving economic condition; and the expectation of totigher regulatory enforcement should result in an acceleration of environmental spending. ICF Kaiser is aggressively pursuing new private-sector work, both .the cleanup of existing hazardous waste sites and the redesign ing of production processes to minimize waste generation. Our increased marketing efforts already have brought in several important new contracts, including the remediation of a 27-acre site in Virginia.. . President Clinton has raised the public's awareness of ' and concern for the nation's infrastructure, but he is not the first.to realize the need to rebuild and expand the country's network of highways, bridges, and mass transit.systems. In 1991, the federal government budgeted $151 billion to be . spent through 1997 under programs mandated by. the Intermodal Surface Transportation Efficiency Act (ISTEA). ICF Kaiser's-infrastructure revenue grew by 15 percent in fiscal 1-993. The Company already is benefiiting from .. ISTEA through a new contract to serve as management . consultant for preliminary design of a light rail system planned -for downtown Chicago. Internationally, ICF Kaiser won a $20 million contract to design and build a light rail transit line in Manila, Philippines. Adso, our joint venture in Taipei, Taiwan, which is building an $18 billion, 88-kilometer rail system, was awarded a $33 million extension on its contract. ICF Kaiser is one of the few companies in. the world that can engineer and build the most complex transportation, hydroelectric, and water management projects. m The market for ICF Kaiser's industrial services is built around our bistory in the metals and mining businesses, including steel, aluminum, and copper. Our clients in tbis market bave been affected by low prices worldwide foremost metals. We were proud, however, to win tbe' only major U.S. copper project awarded last year --a 29-montb, multimillion dollar contract to perform engineering and procurement, services on a project to develop a copper concentrating plant for tbe Magma Nevada Mining Company.. ICF Kaiser also completed a large-scale pulverized coal injection facilit y for U .5. Steel wbicb, as an operating com pany, will provide us with a revenue stream for more than a decade. Although demand in tbe industrial market may continue ter be soft for some time, we see opportunities in gold mining and refining, and in environmental projects in basic industries, steel, and-other minerals markets. Through Kaiser, Engineers' 79-year history in mining and minerals, and its experience in designing and managing some of tbe largest projects in tbe world, ICF Kaiser .is in a strong position to capitalize on that expertise when the market rebounds. Finally, ICF Kaiser's global capabilities, wbicb cross all market areas, continue to expand through -direct investments ' arid strategic business relationships. Currently our emphasis remains on specific countries in tbe Pacific Rim, Western and Eastern Europe, and, more recently,`Latin America. ICF Kaiser has established a strong presence in Eastern . Europe arid tbe former Soviet republics through front-end consultingprojects; this' presence places us in an excellent position to. . compete for the larger engineering and constructiori projects that should develop as economies un the region strengthen. Throughout our restructuring, and for more than two decades prior to it, ICF Kaiser has benefitted from the ideas, management skills, and dedication of its president, William C. Stitt. In April 1993, Bill resigned from the Company. His efforts and accomplishments were- integral in building ICF Kaiser from a five-person operation to a worldwide consulting,, engineering, and construction company. Bill' leaves behind a company with a sharper strategic ' focus, with greatly-strengthened financial capability, "and with .a renewed commitment-to growth. Going forward, we will work to capitalize fully on our worldwide franchise, our strong position in the growth markets- of the . 1990s, our access to leading-edge technologies,' and our single most important asset, our employees. In July-1991, we initiated a restructur ing that we explained could take twt> years to complete -- and it has.-We appreciate your support through these difficult times, . arid we look forward to returning ICTF Kaiser'to the level of , double-digit growth that characterized our Company for more than 15 years. .. Ckainnan and Ckief Executive Officer iti lI l i i j 1I I [ MANAGEMENT'S- DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Overview ' ICF's net income for the year ended February 28, 1993 (fiscal 1993) was$8..6 million, or $0.16 per share, compared to a net loss of $40.5 million, or ($2.25) per share, forthe year ended February 29, 1992 (fiscal'19,92). Net income in fiscal 1993 was adversely impacted hy a net $1.3 million pretax - addition to the' provision for restructuring and disposal' of . businesses and a $0.9 million pretax loss, on the sale of ICF's minority interest in a U.K.-based engineering concern, offset by a SO. 1-million net credit for the unusual items discussed in Note Q to the consolidated financial statements. Excluding the effect of these non-recurring items, net income for fiscal 1993 was $9.9 million, or $0.22 per share. In fiscal 1993, the Cpmpany completed a restructuring program'begun in fiscal, 1992. The loss in fiscal 1992 reflects a $73.4 million. .provision for restructuring and disposal of businesses ($52.4 million after tax). After excluding the effects of this provision for restructuring and disposal of businesses and the $6.3. million ($3.6 million aftertax) unusual item recorded in fiscal 1992, ICF's core businesses contributed $8:3 million net income, or $0.31 per share in fiscal 1992. In fiscal 1993, the Company successfully completed several large industrial projects. The completion of these projects enabled service revenues to reach record levels for the first half of fiscal 1993. However, in the second half of fiscal 1993, because of the completion of these projects and a slowdown in government contracting which accompanied the change in Presidential. Administrations, recovery of the ` Company's overhead and administrative costs was lower than anticipated. In response, management performed a compre hensive review of its indirect cost structure, which led to a reduction of ICF's administrative and overhead employment base hy 13 percent, resulting in a one-time $0.6 million charge for severance in the fourth quarter. ICF management believes that these overhead cost reductions will allow the Companyto match more closely its costs to its direct labor and revenue base, while preparing for further growth as 'tke econ- omy improves and the pace of government spending increases to expected levels. Despite the aforementioned cost pressures during fiscal 1993, including the heavy periodic- cost of preparing and defending its successful hid for the engineer/constructor con tract at the U.S. Department of Energy's ("DOE") Hanford nuclear facility (discussed below), as well as the costs associated with completing its restructuring program, the Company was able to increase its net income, excluding the -impact of unusual and other non-recurring items, in fiscal 1993 as compared to fiscal 199.2. This increase ($9.9 million vs. $8.3 million) was attributed to a greater management focus on continuing businesses, reduced interest costs, and the suc cessful completion of ICF's project to construct a large indus trial facility, offset hy a previously reported cost overrun on a large industrial project. Outlook Similar to many companies in its industry, ICF experi enced the impact of slowing demand in several of its hey markets in fiscal 1993. The Company nonetheless continued to win a number of new environmental, infrastructure, indus trial, and energy contracts during fiscal 1993. These addi tions have brought ICF's backlog to approximately-$1.0 billion. The renfewal of the Company's engineer/constructor contract at DOE's Hanford nuclear site, which is currently under a losing bidder's proteston which-the Company believes it will prevail, adds an additional $200 million to the backlog for a total of $1.2 billion. ICF's performance in fiscal 1994 will be affected by several factors: government spending on environment and infrastructure; private-sector spending on environmental cleanup; industrial spending in the basic industries served by ICF Kaiser Engineers, including steel, aluminum and minerals; and ICF's redeployment of the proceeds from the sale of its discontinued businesses. While the industrial spending is likely to improve only with a significant upturn in the prices for basic materials, there are several initiatives which could'affect the other- factors. These include: additional cleanup efforts at' various DOE sites; significant potential spending for .environmental cleanup at those military bases which are targeted for closing by the U.S. government; as well .as additional spending in Eastern European and Pacific Rim countries. The prospects for nearterm growth are uncertain because of the timing of the above factors and the recent sale of two income-producing busi nesses in fiscal 1993 (Lewin-ICF, Inc. and'an interest in Acer Group Limited).'As a result, the Company expects results for the first quarter of fiscal 1994, ending May 31, 1993, to be - comparable to the results of the fourth quarter of fiscal 1993 (discussed below). However, the Company believes that an improving economy, the new Presidential Administration, with its public'commitment to improving the environment and shoring up the nation's infrastructure, coupled with the Company's strong position in its core markets, present signifi-" cant .opportunities for profitable growth in the future. Gross Revenue . ' Gross revenue represents services provided to customers with whom the Company has a primary contractual relation ship. Included in gross revenue are costs of certain services . subcontracted to third parties as well as certain other reimbur sable direct project costs, such as materials procured by the Company on behalf of its customers. .1993 Decrease ' 1992 Increase 1991 (Dollars in thousands) Gross ." . revenue $678,882 (4.5%) $710,873 13.7% $624,976 Comparison of Fiscal 1QQ3 to Fiscal 1QQ2 -- Gross revenue , was $678.9 million irf fiscal 1993, a $32.0 million or 4.5% reduction from $710.9 millionin fiscal 1992. This decrease ' in ICF's gross revenue is primarily attributable to ICF's Kaiser . Engineers Australia Pty-Ltd. ("KEA") subsidiary, which is successfully winding down its natural gas liquefaction project in northwest Australia ahead of schedule ($37.5 million); the completion of a large industrial project in the first half of fiscal 1993 ($34.2 million); and the impact of several other projects nearing completion; offset by an increase in ICF's project to manage the construction of a large industrial facility ($26.6 million) and an increase in ICF's engineer/constructor ser vices to the DOE at its Hanford sitp ($21.6 million). Comparison of Fiscal 1QQ2 to Fiscal 1991--ICF's gross revenue increased to $710.9 million in. fiscal 1992 from $625.0 million for fiscal 1991- Excludingthe gross revenues' from those businesses discontinued in' fiscal 1992 under the restructuring plan, fiscal 1991 revenues would have been $541.5 million. The $169.4 million or 31.3% increase in comparable gross revenues is partially attributable ($35. mil lion) to the. Company owning 100% of KEA in all of fiscal 1992 whereas the Company did not acquire the remaining 50% interest in KEA it did not already own until the third quarter of fiscal year 1991. Prior to this acquisition, ICF's initial 50% interest in KEA was accounted for under the equity method through the second quarter of fiscal year 1991. Additional growth in ICF's gross revenues for this period are attributable to the start-up of several large industrial projects ($116 million) and ICF's engineer/constructor services at its Hanford site ($29 million). Service Revenue Service revenue is derived by deducting the Costs of subcontracted services arid direct project costs from gross revenue and adding the Company's share of the income of joint ventures and affiliated companies. ICF believes it is appropriate to analyze operating-margins and other ratios in relation to service revenue because such revenue and-ratios reflect the worh directly performed by the Company and. because the percentage relationship between gross revenue and operating, expenses can vary from period to period. 1993 Increase 1992 Increase 1991 (Dollars in thousands) Service ' ; revenue $384,985 1.4% $379,826 4.5% Percentage of gross . . revenue 56,7% 53.4% ' $363,318 58.1% Comparison ofFiscal Year 1993 to Fiscal 1ear 1992-- Fiscal 1993 service revenue increased slightly oyer fiscal 1992 service revenue (1.4%'). Also, service revenue as a percentage ` of gross revenue increased, indicating that a greater portion of ICF's.gross revenue is being provided by iCF and its personnel rather than subcontractors. The majority of the projects that were completed or neared completion in .fiscal 1992 had a significant percentage of their gross revenues being generated from subcontracted worh and material costs. In fiscal 1993, the service revenue on the completed projects was offset by increased environment and infrastructure-related service revenue of $9.8 million and $8.3 million, respectively. Comparison ofFiscal Year 1993 to Fiscal Year 1991 -- Service revenue increased $63.0 million in fiscal 1992 over core businesses in fiscal 1991 ($316.8 million). Kaiser Engineers Hanford Company accounted. for $27.3. million of this increase, while the remaining growth is attributable to internal worh at other DOE facilities and private sector contracts. In addition, equity in income of joint ventures and affiliated . companies, which is a component of service revenue, decreased to $6.0- million in- fiscal year 1992 from S8;2 million, in fiscal 1991, primarily due to a $3.3'million . decrease in income from a joint venture caused by a negotiated increase in the cost of-services provided to the joint venture. The decrease in earnings from this joint venture was offset by income earne'd on services provided to the joint venture by ICF. Service revenue as a percentage of gross revenue is lower in fiscal 1992 as compared to fiscal 1991 due to several large construction projects that were ongoing in fiscal 1992 that carried a higher percentage of subcontracted worh. Operating Expenses- ' ________________ 1993 . 1992 1991 (Expenses are expressed as a percentage of service revenue) Service revenues (in millions)--excluding discontinued businesses ' S385.0 $379-8 $316.8 Direct cost of services and .- . overhead ' ' ' 78.0% ' . 76.7% - 73.4%. Administrative and general 13.0% 14.8% 12.6% Depreciation-and amortization 2.8% 2.4% 2.2% Costs of restructuring and , disposal of businesses 0.3% 19-3%. -- Unusual items " 0.0%. (1.7)% --"* As mentioned above, tbe Company believes that it is appropriate to analyze operating margins and other ratios in relation to service revenue because sucb revenue reflects tbe work directly performed by tbe Company. For comparative purposes, operating expenses as a percentage of service revenue for fiscal 1991;are computed for continuing businesses only. Direct cost of services and overhead includes.the cost to tbe Company of professional and administrative staff hours', including labor-related overhead costs, that are directly Ichargeable to client projects. Tbe percentage of these costs to service.revenue increased in fiscal 1993 because of the mix of ' contracts whose costs were more directly chargeable to client, projects. Fiscal 1992 was higher than fiscal 1991 as a result of the increase in revenue realized, from the recognition of fees and. contingency reductions on two large projects.' The percentage of service revenue represented by administrative and general expenses, mpst of which is charge able to client projects, decreased in fiscal 1993 as a result of a lower level, of costs associated with the restructuring'effort which began in fiscal 1992 and was completed in fiscal 1993. The portion of depreciation and amortization relating . to amortization of goodwill and intangibles was $3.3 million, $2.9 million,, and $2.8 million in. fiscal 1993, 1992, and 1991, respectively. The increase in depreciation and amortiz ation expense in fiscal 1993 compared to fiscal 1992 was the Jresult of a full year of amortization of certain goodwill and intangible assets acquired in' fiscal 1992. At February 28, 1993, the. Company had a-net balance of $61.1 million of goodwill and intangible assets that are amortized over periods ranging from five to 40 years, down from $64.1 million at the end of fiscal 1992. ' Fourth Quarter Results During the quarter ended February 28, 1993, the Company successfully completed several industrial projects, including a project to construct a large industrial facility. The winding down of several industrial project's, despite the recog nition of their completion fees, as well as a general slowdown in government contracting, resulted in gross and service revenue declining 4.5% and 3.5% from the third quarter to $150.9 million and$91,4 million, respectively. ICF's operating income and net income for the quarter ended February 28, 1993, were $5.2 million and $1.5 million, respectively, or $0.01 per -share. .Operating income and net income were $4.6 million and $1.9 million, respec tively, or $0.06 per share in the fourth quarter of fiscal 1992. Operating income in the fourth quarter of fiscal 1993 bene fited from $1.4 million, in unusual items (a $2.0 million adjustment to pre-acquisition contingencies offset by a $0.6 million severance charge) as well as a completion fee related to ICF's project to construct a large industrial facility. Addi tionally, in the fourth quarter the Company recorded a pretax loss of $0.9 million.on the sale of its investment in Acer, a U.K.-based engineering firm, and a $0.4 million charge for 'the curtailment and settlement of a portion of KEA's defined benefit pension liability. Interest Expense 1993 Decrease T992 Decrease 1991 Interest income $1,708 Interest expense 8,629 (Dollars in thousands) " ` $ 1,931 ' 10,'778 $ 1,995 11,264 Net interest . " expense $6,921 '(21.8%) .$ 8,847 (4.6%) $ 9,269 Net interest expense decreased in fiscal 1993 primarily as the result of lower prevailing interest fates and using proceeds from the sale of a'health consulting subsidiary and- other discontinued businesses to pay down the -Company's 'credit faci.lity. The sale of the health consulting subsidiary occurred on November 30, 1992. The Company also sold its minority investment in a U.K.-based engineering concern on February 21, 1993. As a result of the timing of these transactions, the Company expects fiscal 1994 interest expense to be lower than fiscal 1993 if prevailing interest rates remain stable. . * Interest expense for corebusinesses was slightly lower'in fiscal 1992 as compared to fiscal 1991 since the Company . had increased- borrowings under the credit facility to make several acquisitions in fiscal 1991-' o Discontinued Businesses .*'''. Company may recognize the' transition obligation imme At February 28, 1993, tbe Company bas sold or otherwise disposed of all businesses discontinued under ICF's restructuring'plan. In fisca1 1992, tbe Board of Directors approved management's recommendation to discontinue cer tain nOn-core businesses, resulting in a $73.4 million provi sion for restructuring and disposal of businesses to provide for operating losses of discontinued businesses through disposal; .. losses on the disposal of those businesses included in the plan at that time; and one-time restructuring charges for closing and consolidating certain operations of core businesses. In fiscal 1993, ICF increased the provision for restructuring and disposal of businesses by an additional $1.3 million to provide for the combined impact of the sale of a health consulting diately as a change in accounting principle or prospectively by amortizing the transition obligation over the remaining life expectancy of the covered retirees. The Company has not vet determined which method it will adopt. Preliminary estimates* indicate that the transition obligation would be approximately $15 million ($9 million after tax). Substantially all employees eligible for these benefits have retired. As such; the Company's future expense under SFAS No'. 106 isexpected to be limited , to the interest component of postemployment benefit cost, plus any amortization of the transition obligation, should ICF elect to amortize the transition obligation over the retirees' life' expectancy. The Company currently recognizes the cost of such benefits as paid. subsidiary determined to be outside of the Company's core businesses and the revisions to-the-estimates of remaining Liquidity and Capital Resource's liabilities relating to discontinued businesses. The Company's.ope'rating activities .used $16.6 million in cash in fiscal 1993 and provided $17.7 million of cash in Income Tax Expense ' . fiscal 1992.' The use of cash in fiscal 1993 and the cash * _________________ 1993 1992 iQQl (Dollars in thousands) Income tax expense (benefit) $6,255 $(13,794) $9,727 Effective tax (benefit) rate ..42.0% (25.4%) 40.5% provided in 1992 were primarily results of changes in deferred revenue, which were attributable to two major, contracts that had significant contract advances in fiscal 1992 and were substantially complete in fiscal 1993. -ICF uses bank financing to supplement its ability to The $6.3 million tax provision for fiscal 1993 differs from the statutory rate primarily as a result of state income taxes and.the amortization of goodwill. In fiscal 1992, ICF adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, effective March 1, 1991. The impact of adoption was to increase the deferred tax benefit by $6.5 million. The $13.8 million tax benefit recorded for fiscal 1992' relates to the operating losses of discontinued businesses and the available benefits from the expected dispo sition of these businesses, net of $8.6 million of taxes applica ble to tbe core businesses. The overall benefit rate of 25.4% in fiscal 1992 differs from, the statutory rate primarily due to differences between the tax and booh basis of various assets of - discontinued businesses. meet ongoing working capital requirements. At February 28, 1993, ICF's.level of working capital had increased $21.8 million from February 29, 1992. This increase is primarily the result of the sale of businesses, offset by the reduction in ICF's long-term debt, redeemable preferred stock, and .pay ment of preferred stock, dividends. ICF. has a $11*6 million Revolving Credit Facility ("Credit Facility") with a consortium of banks. Principal terms include: interest based on the prime rate of interest or LIBOR; certain financial performance covenants; the grant ing of.a security interest in the Company's and certain subsidiaries' accounts receivable and certain other general intangibles; and the pledge of the capital stock' of certain, subsidiaries of the Company. At February 28, 1993, ICF had $23 million of availability under the Credit Facility. The Impact of New Accounting Standards Credit Facility expires on March 31, 1994. The Company is in the process of negotiating a replacement facility with a The Company will adopt Statement of Financial multi-year .term that the Company expects to have in place Accounting Standards No. 106, Employers' Accounting for during the summer of. 1993. Postretirement Benefits ("SFAS No. 106")` in the first quarter ' ' At February 28, 1993) ICF has $30 million of 13.5% of fiscal 1994. The Company's postemployment obligation' senior subordinated notes outstanding, upon which the Com extends only to a limited group of retirees (and their-sp'ouses) pany is subject to certain business and financial covenants. who joined ICF through an acquisition and their benefits are The subordinated notes may not be prepaid at the Company s limited to a fixed amount per employee and spouse. The option prior to May 15, '1996. Subsequent to that date, tbe Company may prepay them at a premium, kinder certain circumstances, which include certain members of senior mariajement decreasing their ownership of the Company's com mon stock or becoming less active in managing the Company, the subordinated .notes can be required-to be prepaid at a substantial premium. The resignation of ICF's President and Chief Operating Officer on April 26, 1993, potentially created such a circumstance. The holders of the subordinate^ notes have temporarily waived consideration of a prepayment event, and management believes a permanent accommodation will be reached' with regard to this requirement within the waiver period. . Consistent' with measures taken in the Company's business operations, the Company is looking for possible cost savings in its capital structure. As such, the Company will look for opportunities to restructure the balance sheet in an effort to lower our cost of capital and facilitate business operations. During fiscal 1993, ICF completed the sale of all of its remaining discontinued operations and its interest in Acer, generating $35. i million in cash proceeds. These proceeds were primarily used to repay indebtedness and to. increase the Company's working capital position. . Management believes that given current projected levels of cash flow and operating revenues, the availability under the credit facility dr replacement will be adequate to fund opera tions in fiscal, yearl994. Effects of Inflation The majority of the Company's contracts are cost reimbursable and, therefore, the inflation rate in the United States, as well as in other countries in which the Company operates, generally has little impact on operating margins; however, as a professional services firm, the Company is more labor-intensive than an industrial firm. To attract and main tain the high-caliber professional staff it needs, the Company must structure its compensation programs competitively. The "wage-demand effects of inflation are felt almost immediately in the Company's costs. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and shareholders ICF International, Inc. We have audited the accompanying consolidated bal ance sheets of ICF International, Inc. and Subsidiaries as of February 28, 1993 and February 29i 1992 and the related consolidated statements of operations, shareholders'- equity and cash flows for each of the three years in the period endedFebruary 28, 1993- These financial statements are the responsibility of the Company's management. Our respon sibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with, generally accepted auditing standards. Those standard? 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 state ment presentation: We believe 'that our audits provide a reasonable basis for our opinion. .. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ICF International, Inc. and Subsidiaries as of February 28, 1993 and February 29, 1992 and the consolidated results of their operations and their cash flows for each of the three years in the period ended February 28, 1993 in conformity with generally accepted accounting principles. As discussed in Note J to the consolidated financial statements, the Company changed its method of accounting for income taxes for the year ended February 29, 1992. Washington, D.C. April 30, 1993 _ . ICF INTERNATIONAL INC. AND.SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS . ' Current Assets , Cask and cask equivalents Contract receivakles, net Prepaid expenses and otker current assets Refundakle income taxes Deferred income taxes Net current assets of'kusinesses field for disposition Total Current Assets Fixed Assets Furniture, equipment and leasekold improvements Less'allowances for depreciation and amortization- Otker Assets Goodwill, net Investments in and advances to affiliates Due from officers and employees Otker LIABILITIES AND SHAREHOLDERS' EQUITY Current Liakijities . Accounts payakle and accrued expenses Accrued salaries and employee kenefits Current portion of-long-term dekt Income taxes payakle Deferred revenue Otker Total Current Liakilities Long-term Liakilities. Long-term dekt, less current portion ' Sukordinated dekt Otker ` ' Commitments and Contingencies Redeemakle Preferred Stock Preferred Stock Common Stock, par value $.01 per skare: Autkorized--90,000,000 skares ' Issued and outstanding--21,303,807 and 18,270,652 sk'ares Additional Paid-in Capital' Notes Receivakle Related to Common Stock ' Retained Earnings (Deficit) Cumulative Translation Adjustment ESOP- Guaranteed Bank Loan . See notes to consolidated liriancial statements. Fekruary-28, ' Fekruarv 29, 1993 1992 . fin thousands) $'. 8,445 160,681 ' 21,503 1,294 12,553 204,476 ' 40,120 20,440 19,680 53,896 2,207 1,361 13^958 ., 71,422 $295,578 $ 8,516 152,416 ' 21,095 ' ' 2.230 " 14,542 ' " 4,226 ' ' 203,025 41,381 17,730 23,651 55,791 19,488 1,108 15,884 92,271 $318,947 ' $ 60,192 25,804 \ 5,276 1,448 13,804 10,107 -116,631 39,115 30,000 6,487 75,602 44,824. 6,900 213 . 65,040 ' (2,725) (4,206) (i;70i); (5,000) . ' $295,578 S 66,051 ' 24,501 7,187 2,361 23,388 . 13,472 136,960 49,145 30,000 6,530 85,675 45,161 6,900 182 64,382 (3,387) (7,552) ' (1,041) (8,333) $318,947 ICF INTERNATIONAL. INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Revenue . Gross revenue Subcontract and direct material costs Equity in income of joint ventures and affiliated companies Service revenue ' `Year Ended February 28, February 29, February 28, 1993 1992. 1991 (In thousands,' except per share amounts} $678,882 1299,606) 5,709 384,985 $710,873. . (337,056) . 6,009 379,826 - . $624,976 (269,846) 8,188 363,318 Operating expenses Direct cost of services and overhead Administrative and general expenses Depreciation and amortization Costs of restructuring and disposal of businesses, net. Unusual items, net Operating income (loss) Other income (expense) Loss on sale of investment Interest income Interest expense--core businesses . Interest expense--discontinued businesses " - Income (loss) before-income taxes . Income tax provision (benefit) Net income (loss) Preferred stock dividends , Net income (loss) available for common shareholders Net income (loss) per common sha.re Primary '? . Fully diluted See.notes'to consolidated financial statements. . 300,317 . 49,872 . 10,766 1,336 (50) U 291,237-. 56,3399,159 . 73,354 (6,300) ` 22,744 . .... (43,963) .. (929) -- 1,708 1,931 (8,629) -- .(10,778)' (1,500) 14,894 6,255 - (54,310) (13,794) 8,639 5,026 .(40,516) 2,203 . $'' 3,613 $(42,719)- 4 269,020 . 49,573 11,438 -- -- 33,287 -- 1,995 (11,264) -- 24,018 ' '9,727 14,291 857 .$ 13:434 $ 0:16 $ 0.16 $ (2.25) ! $ (2.25) $ 0.71 $ -0.68 MMtMIt mammmtrn CONSOLIDATED 1CFINTERNATIONAL. INC. AND SUBSIDIARIES STATEMENTS OF SHAREHOLDERS' EQUITY. . Series 1 Junior Convertible Preferred Stock Balance at beginning of year Issuance of 69 shares Balance at end of year Common Stock Balance at beginning of year .. Issuance of shares (105,740 in 1993, 1,131,620 in 1992 and 281,852 in 1991)' " Repurchase of shares (44,434 in 1993, 954,961-in *1992 and 1,342,788 in 1991) Issuance of shares to' benefit plans (1,344,123 in 1992 and 666,666 in 1991) Issuance of shares in connection with acquisitions (1,222,826 in 1992 and 1,494,980 in 1991) Exchange of 2,975,542 shares of Class A Common Stock for Series 3 Preferred Stock Conversion of Series 3 Preferred Stock into 2,971,849 shares. Balance at end of year Additional Paid-in .Capital Balance at beginning of' year "- Irlcrease in connection with issuances Decrease in connection, with repurchases ` Increase in connection with acquisitions ' Increase in connection with issuances to benefit plans Tax effect frofn the exercise of non-qualified stock options Other Balance at end of year- Notes Receivable Related to Common Stock Balance at beginning of year Common.stock issued in exchange for notes receivable Payments received on notes receivable Balance at end of year , Retained Earnings-(Deficit) Balance at beginning of year Net income (loss) Preferred stock dividends Preferred stock accretion Adjustment for pooled companies Balance at end of year Cumulative Translation Adjustment Balance at beginning of year Current year adjustment Balance at end of year ESOP Guaranteed Bank Loan Balance at beginning of year (Increase) decrease in loan balance Balance at-end of year . _' .- February 28, 1993 $ 6,900 -- $ 6,900 . $ ' ;i82 1 0 -- - _ 30 . $ 213 Year.nded February 29, 1992 (In thousands) February 28, . 1991 $ -6,900 --. $-- . 6,900 $ 6,900 $ 6,900 $ 185 $ 174 11 (9) "(13) 13 6 12' - 15 (30) . -- _ -- $ 182 $ 185 $ 64,382 619 (354) -- '-- 559 (166) $ 65,040 $ (3,387) -- . 662 '$ (2,725) $ 55,358 ' 5,541 (15,169) 6,789 . 10,376 983 504 . $ 64,382 ' $ 40,780 . 2-,771 (14,950) 20,337 ' 6,251 169 $ 55,358 $ . (911) ' (2,476) -- $ (3,387) $ (544) - (367) -- $ (911) $ (7,552) . 8,639 (5,026) (267) -- .$ (4,206) .$ 35,380 (40,516) (2,203) - (213) .. $ 21,978 14,291 (857) --. (32) $- (7,552) . $ 35,380 $ (1,041) (660) .$ (1,701) $ (260). (781) $ :(1,041) '$ (260) $ - (260) $ (8,333) 3,333 $ (5,000) $ (7,813) (520) .' $ (8,333) ' $ (4,429) (3,384) $ (7,813) ~ee notes to consolidated financial statements. * ICF INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Operating Activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization Provision dor losses on accounts receivable Provision for deferred income taxes Earnings (in excess of) less than ca'sb distributions from joint ventures * Lo=s on sale of investment Increase (decrease) in provision for restructuring and disposal of businesses, net of cash Unusual items * Changes in operating assets and liabilities related to operating activities, net of dispositions: Contract receivables Prepaid expenses and other current assets Other assets ' Accounts payable and accrued expenses Income taxes payable. Deferred revenue Other liabilities Net Cash Provided by (Used in) Operating Activities .. February 28, 1993 $ 8,639 Year Ended February 29, .1992 (In. thousands) $ (40,516) 10,766 2,202 4,311 (3,690) 929 (6,426) (50) 9,159 4,359 (13,925) (1,539) -- 52,289 . (6,300) (1.5,263) 2,655 (25.7) - (8,622) 6 (9)251) (2,505) (16,556) , (23,017) (1,558) . 1,532 31,222 (3,522) 13,898 ' . (4,409) 17,673 February 28, 1991 $' 14,291 11,438 1,667 (4,219) 876 -- `_ (24,091) (4,936) (16,452) . 3,496 4,400 2,623 (4,835) (15,742) Investing Activities Sales of subsidiaries and affiliates Investments in subsidiaries and affiliates, net of cash Purchases of fixed assets, net . Other investing activities . . Net Cash Provided by (Used in) Investing Activities 35,695 ' . ` (1,146) (4,638) 387 30,298 ' 3,965 . (2,515) (3,644) 258 . (1,936) ' _ (21,365) (5,629) (502) (27,496) Financing Activities Proceeds from borrowings Principal payments Proceeds from (uses in) common stock transactions. Proceeds from sale of redeemable preferred stock . ' Proceeds from sale of Series 1 Junior Convertible Preferred-Stock Redemption of redeemable preferred stock Preferred stock dividends - ' Net Cash Provided by (Used in) Financing Activities . Effect of Exchange Rate Changes on Cash Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Period . Cash and Cash Equivalents at End of Period 34,357 (42,965) 130 -- -- (799) (3,876) (13,153) (660) (71) 8,516 $ 8,445 35,108 78,137 (58,925) (57,384) (7,425) (5,410) . . 19,500 23,470 -- 6,900 (800) . - (799) '.(3,283) , (804) (15,825) 44,110 (781) (260) (869) 9,385 - 612 8,773 $' 8,516 $ 9,385 Supplemental Information:. Cash payments for interest Cash payments (refunds) for income taxes Increase (decrease) of ESOP guaranteed-bank loan I Common stock issued to retirement plan ` '- 9,447 (416) (3,333) 12,313 .7,2-19 5205,787 ' 10,805 7,120 ' 3,384 See-notes`to consolidated financial statements. NOTES TO .. ICF INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED. FINANCIAL STATEMENTS NOTE A-ORGANIZATION ' ` ICF International, Inc. ("ICF" or the "Company") was formed on October 19, 1987, as the holding company for ICF Incorporated and the family of companies developed around ICF Incorporated since its inception (1969). These companies provide consulting, engineering, and program and construction management services primarily to the environ mental,-infrastructure, industrial, and energy markets hoth in the United States and abroad. . ` .. NOTE B-SIGNIFICANT ACCOUNTING POLICIES "Principles of Consolidation: The consolidated financial . statements include all majority-owned subsidiaries of ICF." - Investments in joint ventures and- affiliated companies are- accounted for using the equity method. All significant inter company accounts and transactions have been eliminated. As" discussed in Note C, the consolidated financial statements reflect a provision related to the restructuring and. disposal of certain businesses. The disposal of businesses under the restructuring' program was .completed in fiscal 1993. At February 29, 1992, the net current assets of the businesses discontinued under the restructuring plan are separately reflected as a component of current assets and the estimated net realizable value of the hon-current assets of these busi nesses, net of a provision for future operating'losses and other restructuring provisions, is reflected as a component of other long-term assets. The costs of restructuring and disposal of businesses include the net of revenue and operating expenses of the" discontinued businesses-and estimated future losses, of such businesses. , ' Shareholders' Equity: On June 2/, 1992, the shareholders adopted amendment? to ICF's Certificate of Incorporation which reclassified all of the Class B Common Stock autho rized, issued, and outstanding at that time (nto shares of.Class A Common itock, thereby placing all of ICF's common stock into a single class, which was renamed "Common Stock". The accompanying financial statements reflect the combination of the /,6/0,529 sbares of Class B Common Stock issued and outstanding on June 2/, 1992 into Class A Common Stock as if the reclassification and renaming had occurred ?t the beginning of the periods presented. There" were 9,925,811 shares of Class A and 8,344,841 shares of Class B issued and outstanding at February 29, 1992. Following implementa tion of these amendments, the then-outstanding shares of Series 3 Junior Convertible Preferred. Stock automatically, converted into 2,799,523 shares of ICF Common Stock." Revenue Recognition: "Revenue is recorded on cost-type contracts as costs are incurred. Revenue on time-indmaterials contracts is recognized to" the extent of billable rates times hours delivered plus materials expense incurred. Long term fixed-price contracts generally are accounted for under percentage-of-completion methods, and revenue includes a proportion of the earnings expected to be realized in the ratio that costs incurred bear t'o estimated total costs. Foreign Currency Translation: Results of operations for foreign entities are translated using the average exchange rates - during the period. Assets and liabilities are translated to U. 5. . dollars using the exchange rate in effect at the balance sheet date. Resulting translation adjustments are reflected in share holders' eguity as cumulative translation adjustment. Cash and Cash Equivalents^* ICF considers all highly liquid financial instruments purchased with maturities' of three months or less to be cash .equivalents. Other current assets " include $4,606,000 of restricted cash and short-term invest-, ments which primarily supports a letter of credit for one of ICF's'subsidiaries. * Statement of- Cash Flows: The' consolidated statements of cash flows are prepared on a basis -which separately reflects transactions related to the discontinued businesses. Included in adjustments to reconcile net" income (loss) to net cash provided by-, (used in) operating activities are non-cash expenses of the continuing .businesses "and the non-cash activity related to the.provision for restructuring and disposal of businesses. - Fixed Assets: Furniture and equipment are carried at cost, or assigned value if acquired through a purchase of a business, and are depreciated using the straight-line method over their" " estimated useful lives ranging from three to ten years. Lease' "hold improvements are carried"at cost and are amortized using - the straight-fine method over the remaining lease term. Goodwill: GoodwiU represents the excess of cost over the fair " value of the net assets of acquired businesses.and is amortized using the straight-line method over periods ranging from five .to forty years. Accumulated amortization was $7,147,000 .and $5,584,000 at February 28, 19.93 and February 29, ' 1992, respectively. Income Taxes: ICF uses the accrual method for income tax reportingputposes.Deferred income taxes are provided using the liability method on temporary differences between finan. cial reporting and income tax reporting, which primarily . relate to reserves for adjustments and allowances. If necessary, - management records a valuation allowance for deferred tax assets that may not be realizable. ICF adopted Statement of Financial Accounting Standards No.' 109, Accounting for Income Taxes, ("SFAS No. 109"), at the beginning of-fiscal 1992 (see Note J). Post-Employment Benefits: ICF recognizes the cost of benefit programs, which primarily provide certain supple mental health benefits during retirement, when paid. These benefit programs, which are limited to a fixed monthly, amount per employee and spouse, pertain only to a particular group of employees who joined ICF through an acquisition and are not available to all employees. $1,695,000, $1,418,000 and $1,618,000 have been included in expense in fiscal years 1993, 1992 and 1991, respectively, related to these programs. ICF will adopt Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, in fiscal 1994. Upon adoption, the Company may recognize .the transition obligation immediately as the-cumulative effect of an account ing change or on a prospective basis by amortizing the transition obligation to.expense over the remaining life expec tancy of covered retirees. The. Company has not determined which method it will .adopt. Preliminary estimates indicate that the transition obligation will be approximately $15 million ($9 million after-tax). . ' Net Income (Loss) Per Common Share: Net-income (loss) per common share is computed using net income, available to -. -common shareholders, as adjusted under the modified .treas. ury stock method, and the weighted average number of common stoc,k and common stock equivalents outstanding during the year. Common stock equivalents include stock options and warrants and the potential conversion of convert ible preferred stock. For fiscal 1993 and 1992, the adjust ments required by the modified treasury stock method to net income (loss) available for common shareholders and the . impact of common stock .equivalents on the weighted average number of shares were- anti-dilutive and therefore excluded from earnings per share computations. In computing earnings per share, net income (loss) available to common shareholders is adjusted for the amortization of discounts on senior prerferred Stock. Primary earnings per share was based on 21,272,000, 19,085,000, and 19,289,000 shares in fiscal years 1993, 1992, and 1991, respectively, and fully diluted earnings per share- was based on 21,272,000, 19,085,000, and 20,308,000 shares in fiscal years 1993, 1992, and 1991, respectively. . - Concentrations of Credit Risk: The Company maintains cash balances primarily in overnight Eurodollar deposits and bank certificates of deposit. Short-term investments are-U.S. Government securities having maturities'of less than one year. ICF grants uncollateralized credit to its customers. A.large portion of ICF's receivables are-from the U.S. government . (See Note E). In order to mitigate its credit risk to commercial customers, when practical,'ICF obtains advance funding of ' costs for industrial construction work. . , Reclassification: Certain items in the fiscal 1992 and 1991 financial statements have been reclassified to conform to the - fiscal 1993 presentation. NOTE C--RESTRUCTURING AND DISPOSAL OF BUSINESSES In fiseal 1993, ICF completed its disposal of non-core busi nesses under a restructuring plan which began in the'- first quarter of fisca11992. The plan provided for the sale, liquidation, or other disposition- of certain- businesses outside of the Company's core businesses, and the consolidation of certain operations within the core businesses. The core businesses . primarily provide a broad range of consulting, engineering, and program and construction management services in the environmental, infrastructure, industrial, and energy mar kets. The Company's non-core businesses disposed of under the plan included ICE subsidiaries providing pharmaceutical industry research, health communications and consulting services, geophysical/seismic data processing services, and systems integration services. The original plan was modified in fiscal 1993 to provide for the sale of a health, consulting business determined to he outside the Company's core businesses-and to revise.estimates of potential liabilities related to disposed businesses. The modification to the restructuring plan resulted in a net $1,336,000 charge in fiscal 1993 since the gain on the sale of the health consulting business was offset 'by revisions to the-estimates of remaining potential liabilities relating to discontinued businesses. The charge for the cost'of restructuring and disposal of - businesses, recorded in fiscal 1992 was $73.4 million ($52.4 million after tax), which provided - for operating losses of discontinued businesses and losses on the disposal of those businesses included in the plan at that time, severance and other restructuring costs. In fiscal 1992, the Company alio1 cated interest expense related to discontinued businesses on - the accompanying statement of operations based on the imputed reduction in interest cost from the assumed sale.of the discontinued businesses.' NOTE D-ACQUISITIONS All of the businesses acquired "by tbe Company during tbe three year period ended February 28, 1993 were treated as' purchases for financial reporting purposes. Accordingly, the consolidated statements of operations include the operations of the acquired companies from the date of acquisition. The excess of the purchase price over the fait value of the assets arid liabilities for these transactions is reflected as goodwill in the" accompanying balance sheet. In July 1990, ICF acquired all of the outstanding stoch of Kaiser Engineers-Australia Pty. Ltd. ("KEA") that it did not already own for $10.5 million paid.in the form of 617,500 - 'shares of ICF Common Stock. Prior to this purchase, the Company had a 50 percent interest in KEA. In June 1991, in accordance with the provisions of the agreement, ICF repurchased these shares for $10.5 million. The Company's proportionate share of the fair value of the assets acquired and liabilities assumed was $12,372,000 and $7,833,000, respectively. . .' NOTE E-CONTRACT RECEIVABLES - U.5. government agencies: Currently due Retention U nbilled Commercial clients and state and municipal governments: Currently due Retention ' Unbilled Less allowances (or uncollectible receivables and other adjustments February 28, February 29, - 1993 ' 1992 (in thousands) $ 28,563 2,182 28,285 59.030 $ 30,374 2,383 26,864 , 59,621 73,539 9,590 27,499 110,628 169,658 78,802 6,834 16,520 '102,156 161,777 8,977 $160,681 ' 9,361 $152,416 U.S. government receivables arise from U.S. govern ment prime contracts .and subcontracts. Unbilled receivables result from revenues which have been earned but were not billecf as of the end of the year. The unbilled receivables can be '' invoiced at contractually defined intervals upon completion of cost-type contracts for government agencies, completion of federal government overhead audits, upon attaining certain milestones under fixed-price contracts, or upon completion of construction on certain projects. Generally, retention is not expected to be realized within one . year; consistent with industry practice, these receivables are classified as current. Management anticipates that the remaining unbilled receiv ables at February 28, 1993, 'will be substantially billed and collected in fiscal 199.4. NOTE F-JOINT VENTURES AND AFFILIATED COMPANIES . ICF has ownership interests ranging from 20% to 50% in certain joint ventures and affiliated companies that are engaged in the same'general business as the Company. ICF's investments in an d advances to these joint ventures and affiliated companie s is summarized as follows (in thousands); ` Ownership Interest at .February 28, 1993 LIFAG North America KJK joint Venture American Transit Consultants, Inc.' Acer Group Limited Other 50% 33% 33% 20% to 50% Less amounts classified witbin ` current assets* February 28, 1993 - February 29, . 1992 .SI,914 1,735 S 1.212 (744) (883) (291) ' 1,425 4,191 17,846 ' 1,907 '' 19.930 1,984 $2,207 442 $19,488 ' In February. 1993) ICF sold its investment in Acer Group Limited for $17,250,000 resulting in a. $929,000 pretax loss. Combined summarized unaudited financial informa tion of all of ICF's joint ventures and affiliated companies is as follows (in thousands): Current assets Non-current assets Current liabilities Non-current liabilities Gross revenue Net income February 28, February 29, February 28, 1993 1992 1991 ' $ 22,466 20,761 ' 20,630' $128,011 '32,788 105,271 $126,335 45.245 . 101,415 226,944 17,471 ' 28,323 442,142 16,940 28,287 336,228 25,183 NOTH G--INDEBTEDNESS ICF,'s indebtedness is as follows: -- " ' `'. February 28, February 29, 19931992 Revolving credit facility, average interest rate of 6.8% in 1993 and 8.7%. in 1992 . EsOP guaranteed notes, average interest rate of 7.2% in 1993 and 8.8% in 1992 Notes payable, to current and . former shareholders, principal and interest at varying rates and installments through February 1996 Other notes, principal and interest at varying rates and installments through February 2010 (in thousands) . $35,000 $43,099 5,000 .8,333- 748 3,643 1,958 2,942 Total . Less current maturities 44,391 5,276 56,332 . 7.187 Long-term debt $39,115- . $49,145 - Scheduled maturities of long-term debt outstanding at" ..February 28, 1.993, are as follows: $5,276,000 in fiscal 1994,.`$37,821,000 in fiscal 1995, .$663,000 in fiscal ; 1996, $40,000 in fiscal 1997, $32,000 in fiscal 1998 and" . $559,000 thereafter. At February 28, 1993, ICF`s principal working capital financing was a $116 million total revolving credit line provided by a consortium of banks. The same group of banks also provide ICF with-an Employee Stock-Ownership Plan ("ESOP") credit facility (together, the "Credit Facility") of which $5 million is outstanding at February 28, 1993. The margin on the interest payable under the Credit Facility decreases in future periods upon the achievement of certain levels of tangible net worth. The Company and certain of its subsidiaries, which are guarantors of the Credit Facility, granted the consortium of banks a security interest in accounts receivable and certain other general intangibles and pledged the capital stock of certain subsidiaries. The Credit Facility restricts the payment of.ca^i dividends and requires, the maintenance of specified financial ratios, levels of working capital, and levels of tangible net worth. The Credit Facility expires on March 31, 1994.At February 28, 1993, ICF had $23 million of available credit under the Credit Facility. At February 28, 1993, the Company's ESOP"owned 2,656,084 shares of ICF Common Stock, a percentage of which secure the ESOP portion of the Credit Facility. These shares were purchased from the proceeds of Company contri butions and the ESOP portion of the Credit Facility. ICF has guaranteed the ESOP portion of the Credit Facility and is obligated to contribute sufficient,cash.to the ESOP trust to repay this-loan. As such, the EiOP loan is reflected in the Company's long-term debt with a .corresponding reduction in equity. NOTE H-SUBORDINATED DEBT . ICF has outstanding $30,000,000 of 13 .0% senior subordinated notes ("Subordinated Notes") and detachable common stock purchase warrants expiring May 15; 1999 for the purchase of 1,801,681 shares of ICF Common Stock. The Subordinated .Notes require interest payments semi annually at 13.5% of the.outstanding balance and five annual principal payments of $4.5 million beginning May 15, 1994, with the remaining $7.5 million principal due May 15, 1999. The obligations of ICF are guaranteed by certain subsidiaries of ICF (''Guarantors"). These obligations of the Company and the Guarantors are subordinate to their obligations under the Credit Facility. The warrants sold in connection with the Subordinated Notes are exercisable at any time for shares of ICF Common Stock at $6.91 per share. Additional warrants may be issued under certain anti-dilution provisions. In connection with the issuance of the Subordinated Notes, ICF and the Guarantors agreed to certain business and' financial covenants including: restrictions on indebtedness, leases, dividends, and certain types of investments and asset sales; and.the maintenance of certain financial ratios, includ ing, adjusted net worth at increasing levels over time. The Subordinated Notes may not be prepaid at the Company's option prior to May 15, 1996. Subsequent to that date, the Company may prepay the Subordinated Notes at a premium.. Under certain circumstances, which include certain members of senior management decreasing their ownership of the Company's common stock or becoming less active in man aging the Company, the Subordinated Notes are required to be prepaid with 'a substantial premium. ICF's President and Chief Operating Officer resigned on April 26, 1993> which potentially creates such a circumstance. The holders of the Subordinated Notes have temporarily waived the considera tion 'of a-prepayment event, and management believes a permanent accommodation will be.reached with regard to this requirement during the waiver period. . NOTE I-CONTINGENCIES '' As a normal incident of the nature of business in'wbicb tbe Company is engaged, various claims or charges are .asserted and litigation commenced against tbe Company arising from or related to properties, injuries to persons and breaches 'of contract, as well as claims related to acquisitions and dispositions. Claimed amounts may not bear any.reasonable relationship to the merits of the claim or to a final court award. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insur ance coverage, which might be rendered againstthe Company in such litigation. The Company may from time to time be, either indi vidually or in conjunction with other government contractors operating in similar types of businesses, involved in U.S. government investigations for alleged violations of procure ment or other federal laws and .regulations. The Company currently is the subject of a number of.U.S. government investigations and is cooperating with the .responsible govern ment agencies involved. No charges are presently hpown to have been filedagainst the Company by these agencies. The Company is unable to predict the outcome of the investiga tions in which it is currently involved. Management does not believe that there will be any material adverse effect on the Company's financial .position as. a result of these investigations. ' The Company has a substantial number of-U.S. gov ernment contracts, the costs of which are subject-to audit by the U.S. government. In one such audit, the government has asserted that certain costs claimed as reimbursable under government contracts, were not allocated in accordance with government cost accounting standards. Management believes that the potential effect of disallowed costs, if any, for the periods currently under audit and for periods not.yet audited has been adequately provided for and will not have a material adverse effect on the Company's financial position. ICF had outstanding letters of credit in the amount of $32.6 million at February 28, 1993, principally in support of performance guarantees under certain contracts. ICF is also the guarantor of several leasing arrangements involving U.S. government agencies and a former ICF subsidiary. As of February 28, 1993, these leases totaled $8.0 million with expiration dates running through April 1997. NOTE J-INCOME TAXES The components of earnings (loss) before income taxes and the related provision (benefit) for income taxes is as follows (in thousands): February 28, February 29, February 28, ' 1993' 1992 1991 . Earnings (loss), before income taxes: Domestic . Fcfreign $13,362 1,532' $14,894 Provision (benefit) for income taxes: Federal: : Current Deferred. $ .1,074 '3,517 4,591 State:' Current Deferred ' 420 794 1,214 Foreign: Current , 450 $ 6,255 5(60,058) 5,748 S15.7Q9 8,219 5(54,310) ' 524,018 ' $ (2,041) (1.1,261) ' (13,302) 5' 7,952 (3,307) 4,645 (189) (2,664)' (2,853) 1,921 (912) 1,009 2,361 . 5(13,794) 4,073 S 9,727 The tax effect of the principal significant temporary differences and carryforwards that give rise to the Company's deferred tax asset is as follows (in thousands): Bad debt reserve Vacation accrual Contract loss reserve Insurance reserves Incentive compensation accrual Tax operating loss .carryforwards Tax .credit carryforwards Other * Total deferred tax benefit* February 28, February 29. 1993 199*2 . " $ 4,141 2,991 . 863 ' 1,368 1,047 -- 1,247 896 5 3,149 '2,995 1,536 988. ' . 821 3,185 1,400 468 " $12,553. S14.542 The effective income tax (benefit) rate varied from the federal statutory income tax rate over the last three years because of the following differences: February 28, .February 29, February 28, 1993 1992 1991 Statutory tax rate (benefit) ' Changes in tax rate (benefit) from: Differences between book . and tax basis of businesses sold State income taxes Goodwill amortization . Foreign taxes Other 34.0% " (34.0%) . (3.4) . 8.6 5.4 (1.6) 5.3 (1.4) 2.1 : 8.0 42.0% 2.6 . 0.3 (1.3) 8.6 . '(25.4%) 34.0% _ .. 2.8 5.0 (1.5) - 0.2 6..5 40.5% In fiscal 1993, ICF reached a favorable settlement with1 the Internal Revenue Service ("IRS") on the examination of ICF Kaiser Engineers Group, Inc's. ("KEGI") income taxreturns .for 1977--1986. The IRS had previously completed its review of KEGI's 1984 and -1988 income tax returns without adjustment. As such, all years through 1988 are closed. In fiscal 1992, a' foreign tax audit of a KEGI- controlled foreign corporation was resolved, favorably for KEGI. These resolutions allowed the Company to adjust a portion of the amounts previously provided for in connection with the acquisition of KEGI and its subsidiaries. The resolu tion of .these pre-acquisition contingencies has been reflected in unusual items.in the accompanying statements of opera tions for fiscal' 1993 and 1992 (see-Note Q). Also, in fiscal 1993 ICF reached an agreement with a former-subsidiary to ' retain their net operating losses, which favorably reduced the effect of differences between, the booh and tax basis of the Company. . Carryforwards of net operating losses, business credits, capital losses and foreign tax credits' of acquired companies related to periods prior to their acquisition are greatly limited under Section 382 of the Internal Revenue Code. These" carryforwards, to the extent utilized'in the future, if any, will be treated as a reduction of goodwill. As discussed in Note B, ICF adopted SFAS No.'109 effective March 1,.199T. The impact to ICF of.adopting iFAi No. 109 in fiscal 1992 was to increase the deferred tax benefit by $6.5 million. There was- no cumulative impact resulting .from the adoption of SFAS "No. 109 as `of the beginning of fiscal 1992, since all of the items giving rise to the additional benefit occurred in fiscal 1992, namely the costs associated with the restructuring. s NOTEK-LEASES : 1 - Future minimum payments on noncancelable operating leases for office space, and on other noncancelable operating leases with initial or remaining terms in excess of one year, were as follows on February 28, 1993 (in thousands): . Year Ended February 28 1994 1995 1996 1997 1998 Thereafter ' - . Operating ' Leases 8 27,535 24,146 18,738 15,816 12,674 . 48,285 3147,194 The total rental expense for all operating leases was $31,567,000, $32,582,000 and $28,213,000-in fiscal years 1993, 1992 and 1991, respectively. Sublease rental income was $1,435,000, $1,079,000 and $1,243,000 in fiscal years 1993, .1992 and 1991, respectively. Minimum future sublease rentals to be received under noncancelable subleases during fiscal 1994 are approximately $2,276,000. NOTE L - PREFERRED STOCK ' Preferred Stock of the Companyis as follows: February 28, Pebmary 29, _ ________________1993 1992 Redeemable Preferred Stock (of. Subsidiary) par value $0.01 per share;' liquidation value . $21,280,000; authorized 3,500,000 shares; issued and outstanding *-- 1,400,000 and 2; 100,000 shares (in thousands) .. $ 1,59.9 S 2,398 Series 2C Senior Preferred Stock, par value $0.01 per'share; liquidation value $25,000,000; 250 shares designated, issued and outstanding Less unamortized discount, warrant value,-and i'ssue costs * 25,000 (984) 24,016 25,000 (1,342) 23,658. Series 2D Senior Preferred Stock, par value $0.01 per share; liquidation value $20,000,000; 200 shares designated, issued and, outstanding Less unamortized discount,'warrant value, and issue costs 20,000 (791). 20,000 (895) 19,209 19,105 Redeemable Preferred Stock $44,824 $45,161 Series 1 Junior Convertible ' Preferred Stock, par value $0.01 per share; liquidation value $20,000,000; designated 200 shares; issued and outstanding -- 69 shares Series 4 Junior Preferred Stock, par value $0.01 per share; liquidation value $500,000; designated . 500,000; no shares outstanding (see Note M) $ 6,900 . $ 6,900 ---- Preferred Stock . $ 6,900 $ 6,900 Redeemable Preferred Stock (of Subsidiary): In connec tion with the acquisition of KEGI, 3,500,000 shares of KEGI Series 1 Redeemable Preferred Stock were issued to the KEGI Employee Stock Plan Trust in partial consideration for ICF's purchase of all of the outstanding shares of Series A and Series P Preferred Stock of KEGI. Dividends on these shares are $0.0685 per share per annum noncumulative, payable annually. 700,000 shares were redeemed during each of the fiscal years 1993, 1992 and 1991. Two additional redemp tions are scheduled for September 30, 1993 and 1994. These shares are callable by ICF at any time-through September 1994, at a price of $1.0817 per share as. of February 28, 1993-,' and thereafter at a price adjusted to maintain a specified net present value. Senior Preferred Stock: In' fiscal 1992, ICF issued 250 shares of Series 2C Senior Preferred Stock (the "Series 2C Preferred Stock") with five-year detachable warrants expiring in-December 1995 (the "Series 2C Warrants") in exchange for 250 shares of Series 2A Senior Preferred Stock with fiveyear detachable warrants. The Series 2C Warrants may be exercised for 2,976,190 shares of ICF Common Stock at an exercise'price of $8.40 per share. In conjunction with the issuance of the Series 2G Preferred Stock and Series 2C Warrants) ICF also issued 200 shares of Series 2D.Senior Preferred Stock (the "Series 2D Preferred Stock") together with five-year detachable warrants . expiring in January 1997 (the. "Series 2D Warrants") for a . price of $20,000,000 (less a discount of $100,000). The Series 2D Warrants may he exercised for 2,680,952 shares of ICF Common Stock at an exercise price of $8.40 per share. Of the net price of $19,900,000, $400,000 was allocated to the value of the warrants and $19;500,000 was allocated to the stock. Dividends on both the Series 2C Preferred Stock and the Series 2D Preferred Stpck are $9,750 per share per annum, cumulative. Each of the shares has a liquidation preference of $100,000 ($45 million in aggregate). The issues . carry voting rights equal to 2,173,913 and 2,380,952 shares of ICF Common Stock, respectively. The Series 2C'Preferred Stock and the Series 2D Preferred Stock may be redeemed at ICF s option at 106.25% of the original price and are subject to mandatory redemption at liquidation value on December20, 1995, and January 13., 1997, respectively. Additional, warrants may be-issued under certain anti-dilution provisions contained in the related agreements. Series 1 Junior Convertible Preferred Stock: In July 1990, the Board designated 200 shares of preferred stock as '. Series 1 Junior Convertible Preferred Stock. Dividends on these shares' are $9,250 per share per annum," cumulative, payable quarterly. Each of the shares has a liquidation prefer- ence of $100,000 ($20,000,000 in the aggregate, assuming all of the shares are issued); is convertible into 6,667 shares of .ICF Common Stock; and is entitled to one vote per share of ICF Common Stock into which it is convertible. In addition, H upon their'issuance these shares were callable hv the Company NOTE N-STOCK OPTIONS at a price of S109,250 per share; thereafter,' these'shares are callable at a price declining 1 percentperyearto$100,000-per . share on and after August 31, 2001. . The ICF Stbck.Incentive Plan provides for the issuance of .options, stock appreciation rights, restricted shares, and restricted stock units of up to an aggregate of 6,000,000 NOTE >1--COMMON STOCK shares of ICF' Common .Stock. Awards are made to employees of ICF at the discretion of the Compensation Committee of Notes Receivable Related to Common Stock: Notes, the Board. The'Plan provides that the option price is not tp be receivable related to ICF Common Stock pertain to the less than the fair market value on the date of grant. In May issuance of ICF Common Stock in exchange for promissory . 1992, the Company cancelled 570,000 options granted to notes from certain members of senior management in accor .employees at exercise prices of $14.32 - $16.23 and granted dance with -their compensation agreements. The notes are ' an equal number of options to them at an exercise'price of secured by shares of ICF .Common Stock. $8.25. ' Shareholder Rights Plan: In fiscal 1992, the Board created a shareholder Rights Plan (""Rights Plan"), which is designed', Stock option activity under this Plan and other options . granted for the last three years is as follows: . to provide the Board with the ability to negotiate with a person Shares Option-Price or group that might, in the future, make an unsolicited attempt to acquire control of ICF/ whether through the accumulation of shares in the open market orthrough a tender offer which does not offer an,adequate price.-The Rights Plan provides for one Right ("Right") for each outstanding share of ICF Common Stock and each share of ICF Common' Stock Balance, March 1, 1990 Granted Cancelled Expired Exercised ' 1,296,000 $3.46 to $10.00 722,000 $9.29 to $14=46 (20,000) $9.10 ' (87,000) S6.07 tb $12.83 (.155,000). S3.46 to S 9.51 Balance, February 28, 1991, -1,-756,000 $3.46 to $14.46 into which the Series 1 Preferred Stock, is convertible. Each Right entitles the holder to purchase 1/100 of a share of Series 4 Junior Preferred Stock at a purchase" price of $50... The Rights generally may cause substantial dilution to a person or Granted Cancelled Expired Exercised * 950,000 ' $6:07 to S17.00 (134,000)' $6.07 to $16.23 (95,000) $6.07 to $9.51 . (605,000) $4.00 to $8.46 group that attempts to acquire the Company on. terms not Balance, February 29, 1992 ' ' 1,872,000 $3.46 to' S17.00 approved by the Board. The Rights should not interfere with any merger or other business combination approved bv the Board because the Board may, at its option, at any time prior to the tenth business day following the' acquisition by any person or group of 20% of the shares of ICF Common Stock,* redeem the Rights upon payment of the redemption price of Granted Cancelled Expired Exercised ' Balance', February 28, 1993 1,096,000 . $5.99 to $9.59 . (653,000) $3.46 to S16.23 (339,000) $6.07 to. $16.23 . (30,000) $8:25 1,946,000 S5.99 to 51 / .00 $0.01 per Right. The Rights are not triggered by tbe acquisi tion. of-beneficial, ownership of more than 20% of ICF Common Stock by the initial holder of the Series 2C and 2D Exercisable at. February 28,1993. - 1,364,000 $5.99'to S17.00 Preferred'Stock-. Unless redeemed earlier by the Board, unex-. 260,000 shares of the total options outstanding at ercised Rights expire on January 1$, 2002.. February 28, 1993 were at an option price below'the fair-- . market value of ICF Common Stock at February 28, 1993. Common Stock Issued in Connection with Acquisi tions: In fiscal .1992, ICF issued an additional 500,000 shares of ICF Common Stock to the seller'of Primark Capital Group Inc., (renamed Health and Sciences Network, Inc.) to settle ICF!s obligation to.repurchase ICF Common Stock originally issued in the acquisition. ICF. also issued 123,022 shares and 202;042 options-to purchase shares to the former shareholders of Cygna Group, Inc. in satisfaction of a provi sion in the agreement under which ICF acquired this com pany. These transactions were charged to goodwill. e NOTE O--EMPLOYEE BENEFIT PLANS ; ICF and certain of its subsidiaries sponsor several benefit plans covering substantially all employees wbo meet minimum length of service requirements. These plans include: the.ICF International, Inc. Retirement Plan ("Retirement Plan"), a defined contribution profit-sharing plan that provides for contributions by the Company based on a percentage of covered compensation; the ICF International, Inc. Employee Stock Ownership Plan under which the Com pany, made contributions in the'form of cash; and a cash or deferred compensation arrangement. 401 (k) plan (the "401(k) Plan") which allowed employees to defer portions of their salary, subject to certain limitations, with no additional or matching contribution by the Company. The Company has , contributed 4% of covered compensation to the ESOP. Effective March 1, 1993, the Company's contribution to the EsOP was changed to 2% of covered compensation and the Company will begin to match a percentage of eligible employee contribution's to the 401 (k) Plan for eligible employees. Total contributions to the Retirement Plan and the ESOP'totaled $10,220,000, $10,440,000 and $10,973,000 for fiscal 1993, 1992 and 1991, respectively. NOTE P-BUSINESS' SEGMENT, MAJOR CUSTOMERS AND foreign Operations Business Segment: ICF operates predominantly in one industry segment, in which it provides consulting, environ mental, engineering, apd other professional services. ' Major Customers: Gross revenue from major customers was as follows (in thousands): ` Fiscal Year 1993 1992 ' 1991 U.S. Department of Energy U,5. Environmental Protection Agency Other U.S. Government agencies $201,149 $188,196 $120,972 72,382 70,686 61,492 .47,896 39,792 68,557 Total U.'S. Government * USX Corporation and affiliates 321,427 298,674 251,021 90,185 97,767 26,004 .$411,612 $396,441 $277,025 Foreign Operations:Gros?' revenue and operating income from foreign sales (including sales originating in the United States) and foreign assets of all consolidated subsidiaries and ' branches were-as follows (in thousands): - Foreign gross revenue Europe . Pacific Other . Foreign operating income Europe Pacific Other Foreign assets Europe Pacific Other ' Fiscal Year 1993 ' 1992 1991 $16,698 $ 35,475 $29,139 33,709- '.67,904 55,082 2,940 - 2,646 7,012 $53,347' $106,025 891.233 $ 682 $ 2,010 . 158 $ 2,850 $ 689 S. 1,085 5,224 5,820 160 1,314 6,073 S' 8,219' $ 4,565 $ 6,505 S 6,650 13,880 36,130 44,817 29 65. 95 $18,474. $ 42,700 S51.562 NOTE Q-UNUSUAL ITEMS ' During the year ended February'28, 1993,.the Com pany recognized the impact of several unusual items:, a $5,000,000 adjustment to.pre-acquisition contingencies (see Note J), offset by a charge to accrue the net settlement cost and legal expenses related to a shareholder. lawsuit ($1,400,000),the writedown to net realizable value of certain software-related assets ($3,000,000), and a charge for sever ance and related costs accrued as part of a cost reduction plan ($550,000). ' ' '' In fiscal 1992, due to the favorable resolution of a foreign tax audit and management's evaluation bf the status of; an IRS appeal, the Company adjusted a portion of the amounts previously provided for in connection'with the acqui sition of the related companies. NOTE R--SELECTED QUARTERLY FINANCIAL INFORMA TION (UNAUDITED) 'Quarterly financial information for fiscal years 1993' and 1992 is presented-in. the following tables (in thousands, except per share amounts): 4th Qtr 3rd Qtr 2ndQtr 1st Qtr 1993- ' - Gross revenue $150,921 $158,086 `$172,55l' $197,324 Service revenue , 91,413 94,687 94;890 103,995 Net income 1,518 2,206 1.897 3;018 Net income per common share: Primary Fully diluted s $ 0.01 g 0.0l` $ 0.04 $ 0.03 $ 0.08 0.04 ' 0.03- $ - 0.08 Market price per share: High Low 3 .8.50 s $ 5.88 S '7.50 s 4.00 s 7.75 $ 10.88 5.00 $ 7.25 ICF adopted SFAS No. 109 in the fourth quarter of fiscal 1992, requiring retroactive application to March 1, ; 19.91, and a restatement of .the third quarter, resulting in a decrease to third quarter net loss availahie to common share holders of $ 1.8 million, or. $0.10 per.common share. The remainder'of the impact was attributable to the fourth quarter of fiscal 1992. At April 13, 1993, there were 21,336,585 shares of common stock outstanding held by 1,221 holders bf record. 1992' ' Gross revenue ' $194,712 $190,124 $172,800 $153,237 Service revenue 86,371 102,199 95,538 95,il8 Net income (loss) . 1,934- (15,841) . 2,500- (29,109) 'Net income (loss) per common share: Primary Fully diluted $ 0.06 $ (0.87) $ s ' 0.06 S' (0.87) S 0.10 $'. (1.60) 0.10' $ (1.60) Market price per share: ' High Low ' - $ 11.00 $ 10.00 $ 16.75 $ 18.50 s 6.25 $ 6.50 S 8.00 $ 14.25 . As described in Note C, in fiscal 1992 ICF recorded a $73..4 million pretax charge for the restructuring and disposal of certain businesses. These costs and the elimination of the revenues and earnings of these businesses make direct com parisons to the results for fiscal years 1993 and 1991 less isiful. ; The sum of net income (loss) per common share for the four quarters of fiscal 1992 does not equal the loss per common share for the year due to changes -in the number of shares of common stock and common stock equivalents. outstanding during the year. - ' ICF INTERNATIONAL INC. AND SUBSIDIARIES CORPORATE INFORMATION Office of the Chairman James O'. Edwards . Chief Executive Officer Michael J. Rowny Executive Vice President and Chief Financial Officer Marc Tipermas Executive-Vice President and Director, Corporate Development. Corporate Management and Staff Sara B. Brenner Vice President,.. Corporate Communications Nicholas Burakow * Senior Vice President, International Kenneth L. Campbell Senior Vice President, Corporate Development Michael K. Goldnian Executive Vice President Cynthia L. Hathaway Vice President and Assistant General Counsel Martin A. Levine ` ' , Vice President and Director of Taxes ' Douglas W. McMinn Executive Vice President, International Marilyn F. Meigs. Vice President . Norman- A. -Perry. Senior Vice President, and Corporate Controller - Marcy A. Romm Senior Vice President, Human Resources Ronald R. Spoehel . Senior Vice President and Treasurer Paul Weeks, II ; Senior Vice President,' General Counsel, and Secretary James P. Zeumer Director, Investor Relations Business Managers John-G. Balch Chief Executive Officer, Excell Development Construction, Inc. Michael C. Barth President,.ICF Information Technology, Inc.' C. Shepherd Burton President, Systems Applications. International Division'bf ICF Kaiser Engineers, Inc. Ray A. Fortney President, Cygna Group,, Inc. Richard T. French President, Kaiser Engineers Hanford Company , ' Robert N. Janopaul President, Infrastructure Group of ICF Kaiser Engineers, Inc. Stephen W. Kahane. President, Environment Group of ICF Kaiser Engineers, Inc. Kenneth B. Kolsky President, ICE Incorporated. - Raymond E. List, P.E. Chairman,.iCF Kaiser Engineers, Inc. Robert H. Nordlinger Managing Director, Kaiser Engineers Australia Pty. Ltd. ' ,, George`D. O'Brien Chairman, Infrastructure Group-of ICF Kaiser Engineers,- Inc. Peter J. Qffringa, P.E. Executive -Vice President of Technical Operations, ICF Kaiser Engineers, Inc. Kenneth A. Schweets . President, ICE Resources Incorporated' Marc-Tipermas Chairman, Environment Group of ICF Kaiser Engineers; Iric. John Williams, P.E. President, Tudor Engineering Company ' . 'Board of Directors James O. Edwards Chairman and Chief Executive Officer, ` ICF International, Inc. Gian-Andrea Botta President, IFINT-USA Inc. Tony Coelho Managing Director, Wertheim Schroder . & Co. Incorporated Frederic V Malek Chairman, Thayer Capital Partners Robert W. Page, Sr. . Executive Vice President, McDermott International, Inc. Michael J. Rowny Executive .Vice President and Chief Financial Officer, ICF International, Inc. Annual Shareholders' Meeting Tlie Company's annual meeting of share holders is scheduled, for Saturday, June . - 26, 1993, at 9:00 a.m. at ICF Kaiser . International's headquarters in Fairfax, A'irginia.. 10-K Report - ICF Kaiser International files an annual .report on Form 10-K with the Securi ties and Exchange Commission. A copy of.the report may he obtained without . charge bjr writing to: Stock ListingICF Kaiser International's Common Stoch trades in the NASDAQ National Market System under the symbol ICFI. The table below sets forth, by quarter, sales prices of the Company's publicly traded stock as reported by the NASDAQ National Market System,. . The last sales price reported on May 10, 1993, was S5.19per share, atwhichtime there were 20,726,117 shares of Com mon Stock held hy 1,206- holders of record. The Company believes that there are approximately 5,500 beneficial holders of Common Stock. Fiscal. Year Ended First Quarter * Second Quarter Third Quarter Fourth Quarter February 28, 1993 High Low $10.88 ' ' 7.75 7.50 8.5.0 $7.25. 5.00 4.00 5.88 James P. Zeumer .` Director, Investor Relations ICF Kaiser International, Inc. . 9300 Leg Highway Fairfax, Virginia 22031-1207 USA '- ' Transfer Agent First Chicago Trust Company of- New York ' 30 West Broadway . New York, New, York 10007-2192 212/791-6422' February 29, 1992 High - Low $18.50 16.75 10.00 11.00 $14.25 8.00 . . 6.50 . -6.25 For More Information Financial analysts, stockbrokers, and interested investors who want informa- " tion about ICF Kaiser International should contact: . James P. Zeumer , Director, Investor Relations ICF Kaiser International, Inc. 9300 Lee Highway. Fairfax, Virginia 22031-1207 USA 703/934-3208 ' ` To receive general information abo.ut ICF Kaiser International or its subsid iaries, contact: Sara Brenner Vice President, 'Corporate Communications ICF Kaiser International, Ine. 9300 Lee'Highway Fairfax, Virginia 22031-1207 USA" 703/934-3004- ' Worldwide Headquarter* ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 USA 703/934-3600 Printed on Recycled Paper/Printed witk Soy Ini? /7/`