United States
SECURITIES AND EXCHANGE COMMISSION
to
Under
THE SECURITIES ACT OF 1933
CANADA | 8711 | Not Applicable | ||
(State or Other Jurisdiction of | (Primary Standard Industrial | (IRS Employer | ||
Incorporation or Organization) | Classification Code Number) | Identification Number) |
10160 – 112 Street, Edmonton, Alberta, Canada, T5K 2L6, (780) 917-7000
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Jeffrey S. Lloyd
Vice President, Secretary and General Counsel
10160 – 112 Street,
Edmonton, Alberta, Canada, T5K 2L6
(780) 917-7000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Christopher J. Cummings, Esq. | ||
Shearman & Sterling LLP | C.N. Franklin Reddick III, Esq. | |
Commerce Court West | Akin Gump Strauss Hauer & Feld LLP. | |
199 Bay Street, Suite 4405 | 2029 Century Park East, 22nd Floor | |
Toronto, ON, Canada M5L 1E8 | Los Angeles, CA 90067 | |
(416) 360-8484 | (310) 728-3204 |
Approximate date of commencement of proposed sale of the securities to the public:As promptly as practicable after this Registration Statement becomes effective and upon consummation of the transactions described in the enclosed prospectus.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
We look forward to your support. | |
Sincerely, | |
Aram H. Keith | |
Chairman of the Board and Chief Executive Officer |
(1) the approval of the Agreement and Plan of Merger and Reorganization, dated as of April 14, 2005, as amended May 9, 2005, among Stantec Inc., Keith and Stantec Consulting California Inc., a wholly-owned subsidiary of Stantec, a copy of which is attached as Appendix A to the enclosed proxy statement/prospectus; and | |
(2) to transact such other business as may properly come before the special meeting, including authority to adjourn or postpone the special meeting to another time and place for the purpose of soliciting additional proxies. |
By Order of the Board of Directors | |
Gary C. Campanaro | |
Secretary |
Page | ||||
Additional Information | 1 | |||
Presentation of Financial and Other Information | 2 | |||
Exchange Rate Data | 2 | |||
Questions and Answers About the Merger | 3 | |||
Summary | 8 | |||
The Companies | 8 | |||
Comparative Per Share Market Price and Exchange Rate Data | 9 | |||
The Merger | 9 | |||
The Special Meeting | 10 | |||
The Merger Agreement | 10 | |||
Other Agreements | 10 | |||
Recommendation of Keith’s Board of Directors | 10 | |||
Opinion of Keith’s Financial Advisor | 10 | |||
Interests of Keith and Stantec Executive Officers and Directors in the Merger | 11 | |||
Material U.S. Federal Income Tax Consequences | 11 | |||
Material Canadian Federal Income Tax Consequences | 12 | |||
Accounting Treatment of the Merger | 12 | |||
Regulatory Matters Related to the Merger | 13 | |||
No Solicitation | 13 | |||
Conditions to the Merger | 13 | |||
Termination | 14 | |||
Termination Fee | 14 | |||
Comparison of Shareholder Rights | 14 | |||
Risk Factors | 15 | |||
Forward-Looking Statements | 27 | |||
Selected Historical and Pro Forma Consolidated Financial Data of Stantec Inc. | 29 | |||
Selected Historical Consolidated Financial Data of The Keith Companies, Inc. | 30 | |||
Comparative Per Share Data | 31 | |||
Dividends | 32 | |||
Comparative Per Share Market Price | 32 | |||
Management’s Discussion and Analysis of the Financial Condition and Results of Operations of Stantec | 34 | |||
Description of Stantec’s Business | 47 | |||
Management of Stantec | 56 | |||
Information Concerning the Special Meeting | 67 | |||
Keith Special Meeting | 67 | |||
Date, Time and Place | 67 | |||
Purpose of the Special Meeting | 67 | |||
Record Date; Voting Power | 67 | |||
Required Vote; Quorum; How to Vote | 67 | |||
Revocation of Proxy | 68 |
Page | |||||
Exchange of Share Certificates | 69 | ||||
Questions About Voting Your Shares | 69 | ||||
Miscellaneous | 69 | ||||
The Merger | 70 | ||||
Background of The Merger | 70 | ||||
Recommendation of the Keith Board of Directors | 75 | ||||
Reasons for Keith’s Board Recommendation | 75 | ||||
Opinion of Keith’s Financial Advisor | 77 | ||||
Reasons for Stantec’s Board Recommendation | 83 | ||||
Interests of Keith’s and Stantec’s Executive Officers and Directors in the Merger | 84 | ||||
Material U.S. Federal Income Tax Consequences of the Merger | 86 | ||||
Material Canadian Federal Income Tax Consequences of the Merger | 93 | ||||
Anticipated Accounting Treatment | 94 | ||||
Regulatory Matters Related to the Merger | 95 | ||||
Merger Fees, Costs and Expenses | 95 | ||||
Dissenters’ Rights | 95 | ||||
Stock Exchange Listing | 97 | ||||
Resale of Stantec Common Shares | 97 | ||||
The Merger Agreement | 98 | ||||
Structure of the Merger | 98 | ||||
Effective Time and Closing of the Merger | 98 | ||||
Surviving Corporation Governing Documents, Officers and Directors | 98 | ||||
Merger Consideration | 98 | ||||
Representations and Warranties | 99 | ||||
Conduct of Business Pending the Merger | 101 | ||||
Additional Agreements | 102 | ||||
Conditions to the Merger | 104 | ||||
Termination, Amendment and Waiver | 106 | ||||
General Provisions | 106 | ||||
Other Agreements | 107 | ||||
Beneficial Ownership of Securities | 108 | ||||
Description Of Stantec Share Capital | 109 | ||||
Comparison of Shareholders’ Rights | 110 | ||||
Experts | 123 | ||||
Legal Matters | 124 | ||||
Shareholder Proposals | 124 | ||||
Enforceability of Civil Liabilities | 124 | ||||
Where You Can Find More Information | 125 | ||||
Index to Consolidated Financial Statements | F-1 | ||||
Appendix A — Agreement and Plan of Merger among Stantec, Stantec Consulting California Inc. and Keith, dated as of April 14, 2005, as amended May 9, 2005 | A-1 | ||||
Appendix B — Opinion of Bear, Stearns & Co. Inc. | B-1 | ||||
Appendix C — Stockholders Support Agreement | C-1 | ||||
Appendix D — Dissenters’ Rights and Procedures | D-1 |
The Keith Companies, Inc. 19 Technology Drive Irvine, California, USA 92618-2334 Phone: (949) 923-6001 Attention: Investor Relations | Stantec Inc. 10160-112 Street Edmonton, Canada, T5K 2L6 Phone: (780) 917-7000 Attention: Investor Relations | The Altman Group, Inc. 1275 Valley Brook Avenue Lyndhurst, NJ 07071 Phone: (201) 806-2205 Attention: Charlotte Brown |
Years Ended December 31, | ||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
Average(1) | US$ | 0.6725 | US$ | 0.6443 | US$ | 0.6368 | US$ | 0.7186 | US$ | 0.7701 |
(1) | The average of the exchange rates on the last day of each month during the year indicated. |
Month | ||||||||||||||||||||||||
Dec. 2004 | Jan. 2005 | Feb. 2005 | March 2005 | April 2005 | May 2005 | |||||||||||||||||||
High | US$ | 0.8434 | US$ | 0.8346 | US$ | 0.8134 | US$ | 0.8322 | US$ | 0.8233 | US$ | 0.8082 | ||||||||||||
Low | US$ | 0.8063 | US$ | 0.8050 | US$ | 0.7962 | US$ | 0.8024 | US$ | 0.7957 | US$ | 0.7872 |
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Q1: | What am I being asked to vote on? |
A1: | You are being asked to vote to approve the Agreement and Plan of Merger and Reorganization and its terms, which is referred to in this proxy statement/prospectus as the merger agreement, dated as of April 14, 2005, as amended May 9, 2005, among Stantec, Keith and Stantec Consulting, a newly formed, wholly-owned subsidiary of Stantec. If the merger is completed, Keith will no longer be a public company. |
Q2: | What consideration will be paid in connection with merger? |
A2: | The merger consideration to be paid by Stantec includes a fixed amount of cash equal to US$11.00 per share of Keith common stock, as well as Stantec common shares, which as of June 20, 2005, had a value of approximately US$11.59. The number of shares that Stantec will issue as merger consideration is partly fixed and partly variable. The fixed component is equal to 0.23 Stantec common shares per share of Keith common stock. The variable component is equal to an amount of Stantec common shares equal to US$5.50 per share of Keith common stock, based on the 20-day average trading price of Stantec common shares prior to the merger. As a consequence, the actual number of Stantec common shares that will be issued in the merger and that you may receive as merger consideration is not known at this time. Based on the closing sale price of Stantec common shares and the U.S. dollar-Canadian dollar exchange rate as of June 20, 2005, 0.23 Stantec common shares had a value of approximately US$6.09 and US$5.50 equaled approximately 0.21 Stantec common shares. |
The 20-day average trading price of Stantec common shares means the simple average of the daily weighted average sales price of Stantec common shares on the Toronto Stock Exchange, as reported by Bloomberg L.P., for each of the 20 consecutive trading days ending on, and including, the second trading day prior to the merger. The weighted average sales price for each trading day is converted from Canadian dollars to U.S. dollars at the inverse of the noon buying rate quoted by the Federal Reserve Bank of New York on such trading day. |
Q3: | What will I receive in the merger? |
A3: | You will have the right to select the form of merger consideration you will receive by electing one of the following options: |
Option 1:a mix of cash and Stantec common shares; | |
Option 2:all Stantec common shares; or | |
Option 3:all cash. | |
Because Stantec will pay a fixed amount of cash and will issue a specific amount of shares in connection with the merger, the actual consideration you will receive will not be known until after all |
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shareholder elections have been made. Once all elections have been made, the following procedure will be used to determine the actual form of merger consideration that you will receive: |
(1) | If you elect Option 1 (a mix of cash and Stantec common shares), you will receive US$11.00 and the amount of Stantec common shares described in answer 2 above, regardless of the number of Keith shareholders that elect this option. | |
(2) | If you elect Option 2 (all Stantec common shares) you will receive 0.23 Stantec common shares per share of Keith common stock plus a variable amount of Stantec common shares equal to US$16.50 per share of Keith common stock, based on the 20-day average trading price of Stantec common shares. However, if the number of Stantec common shares that Keith shareholders elect to receive is greater than the total number of Stantec common shares that Stantec is required to issue, then you will receive a proportionate allocation of Stantec common shares and cash based on the formula set out in Section 2.01(e) of the merger agreement. | |
(3) | If you elect Option 3 (all cash) you will receive US$16.50 cash plus cash equal to the value of 0.23 Stantec common shares, based on the 20-day average trading price of Stantec common shares. However, if the amount of cash that Keith shareholders elect to receive is greater than the total amount of cash that Stantec is required to pay, then you will receive a proportionate allocation of cash and Stantec common shares based on the formula set out in Section 2.01(f) of the merger agreement. | |
Based on the closing sale price of Stantec common shares and the U.S. dollar-Canadian dollar exchange rate as of June 20, 2005, for each share of Keith common stock a holder who elects to receive (1) a mix of cash and Stantec common shares will receive US$11.00 and approximately 0.44 Stantec common shares, (2) all Stantec common shares will receive approximately 0.85 Stantec common shares and (3) all cash will receive approximately US$22.59, subject to pro rata adjustment in the case of (2) and (3). | |
If you do not make an election, you will be deemed to have elected, and will receive, Option 1, a mix of cash and Stantec common shares. | |
You will not receive any fractional Stantec common shares in the merger. Instead, Stantec will pay you cash for any fractional Stantec common share you would have otherwise received, taking into account all shares of Keith common stock you own. | |
If, for some reason, the merger would not qualify as a tax-free reorganization under the provisions of Section 368(a) of the United States Internal Revenue Code of 1986, as amended, referred to in this proxy statement/prospectus as the Code, Stantec has the option, at its sole discretion, to complete the merger by paying cash merger consideration of US$22.00 per share of Keith common stock rather than the merger consideration described above. In such circumstances, you would receive US$22.00 in cash for each and every share of Keith common stock you own. In the event that Stantec exercises this option, Keith and Stantec will recirculate a revised proxy statement/ prospectus and resolicit the vote of Keith shareholders to approve the merger. If the merger does not qualify as a tax-free reorganization and Stantec does not exercise its option to pay all cash, Keith will not be obligated to consummate the merger. Furthermore, in such situation Stantec and Keith will not consummate the merger without recirculating a revised proxy statement/ prospectus and resoliciting the vote of Keith shareholders to approve the merger. | |
Q4: | How does the Keith board of directors recommend that I vote? |
A4: | The Keith board of directors unanimously recommends that you vote“FOR” approval of the merger agreement and its terms. |
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Q5: | Why is the Board of Directors recommending that I vote for approval of the merger agreement? |
A5: | The board of directors of Keith believes the merger consideration is fair and that the merger is in the best interests of Keith stockholders. For a more detailed explanation of the beliefs of the board of directors of Keith, see “The Merger — Keith’s Reasons for the Merger.” |
Q6: | What vote of Keith’s shareholders and what vote of Stantec shareholders is required in connection with the merger? |
A6: | Approval of the merger agreement requires the affirmative vote of the holders of at least a majority of Keith’s outstanding common stock. Aram H. Keith, Margie R. Keith and The Aram H. Keith and Margie R. Keith Revocable Trust entered into a Stockholders Support Agreement pursuant to which the shareholders granted Stantec an irrevocable proxy to vote their shares of Keith common stock, representing approximately 17% of the outstanding shares of Keith common stock, in favor of the merger. No vote of Stantec shareholders is required (or will be sought) in connection with the merger. |
Q7: | What happens if I do not vote? |
A7: | IF YOU DO NOT VOTE YOUR SHARES, THAT WILL BE THE EQUIVALENT OF A VOTE AGAINST APPROVAL OF THE MERGER AGREEMENT AND, THEREFORE, WILL BE THE SAME AS A VOTE AGAINST THE MERGER. |
Q8: | When do you expect the merger to be completed? |
A8: | We expect to complete the merger as promptly as practicable after we receive approval of Keith shareholders at the special meeting. We currently anticipate closing the transaction in the third calendar quarter of 2005. |
Q9: | What do I need to do now? |
A9: | After carefully reading and considering the information contained in the proxy statement/prospectus, please fill out, sign and date the proxy card, and then mail your signed proxy card in the enclosed prepaid envelope as soon as possible so that your shares may be voted at the special meeting. |
Q10: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? |
A10: | You should instruct your broker to vote your shares. Please check with your broker and follow the voting procedures your broker provides. Your broker will advise you whether you may submit voting instructions by telephone or internet. If you do not instruct your broker, your broker will generally not have the discretion to vote your shares without your instructions. Because approval of the merger agreement requires an affirmative vote of the holders of at least a majority of the outstanding shares of Keith common stock, these so-called “broker non-votes,” where the broker does not vote for or against approval of the merger agreement, have the same effect as votes cast against approval of the merger agreement. See “The Special Meeting — Required Vote; Quorum; How to Vote.” |
Q11: | May I change my vote after I have mailed my signed proxy card? |
A11: | Yes. You may change your vote at any time before your proxy is voted at the special meeting. You can do this in several ways. You can send a written notice stating that you want to revoke your proxy, or you can complete and submit a new proxy card. If you choose either of these methods, you must submit your notice of revocation or your new proxy card to: |
The Altman Group, Inc. 1275 Valley Brook Avenue Lyndhurst, NJ 07071 Phone: (201) 806-2205 Attention: Charlotte Brown |
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You can also attend the special meeting and vote in person. Simply attending the special meeting, however, will not revoke your proxy; you must vote at the special meeting. | |
If you have instructed a broker to vote your shares, you must follow the voting procedures received from your broker to change your vote. |
Q12: | If I want to attend the special meeting, what do I do? |
A12: | You must come to 19 Technology Drive, Irvine, California 92618, at 10:30 a.m. Pacific Time, on [ ], 2005. |
Q13: | Should I send in my stock certificates now? |
A13: | No. If the merger is completed and you hold any Keith stock certificates, you will receive written instructions for exchanging those Keith stock certificates for the merger consideration. You may not have received any stock certificates because your shares of Keith common stock were directly registered. The written instructions you will receive will advise you what to do if your shares were directly registered. |
Q14: | What if I cannot find my stock certificate? |
A14: | There will be a procedure for you to elect to receive your merger consideration even if you lost one or more of your Keith stock certificates. This procedure, however, may take time to complete. In order to ensure that you will be able to receive your merger consideration promptly after the merger is completed, if you cannot locate your Keith stock certificates after looking for them carefully, we urge you to contact Keith’s transfer agent, U.S. Stock Transfer Corporation, as soon as possible and follow the procedure for replacing your Keith’s stock certificates. U.S. Stock Transfer Corporation, can be reached at 1-800-835-8778, or you can write to U.S. Stock Transfer Corporation at the following address: 1745 Gardena Avenue, Glendale, CA 91204-2991. |
Q15: | Can I dissent and require appraisal of my shares? |
A15: | Dissenters’ rights will be available under Chapter 13 of the California Corporations Code, referred to in this proxy statement/prospectus as the CCC, for Keith shareholders in connection with the merger if demands for payment are made with respect to 5% or more of the outstanding Keith common stock. In general, to preserve their dissenters’ rights, Keith shareholders who wish to exercise these rights must: |
• | deliver a written demand to Keith for purchase of their shares of Keith common stock, which must be received by Keith no later than the date of the special meeting; | |
• | vote their shares of Keith common stock “AGAINST” approval of the merger proposal; | |
• | continuously hold their shares of Keith common stock from the date they make the demand through the closing of the merger; and | |
• | comply with the other provisions of Chapter 13 of the CCC. | |
If, after the effective time of the merger, that shareholder withdraws or otherwise loses the right to demand purchase of its shares of Keith common stock, those shares shall be treated as if they had been converted as of the effective time of the merger into the right to receive the merger consideration. See “The Merger — Dissenters’ Rights” beginning on page 95. | |
The text of the CCC governing dissenters’ rights is attached to this proxy statement/prospectus as Appendix D. Your failure to comply with the procedures described in Appendix D will result in the loss of your dissenters’ rights. | |
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Q16: | Are there risks that I should consider in deciding whether to vote for approval of the merger agreement? |
A16: | Yes. We have set forth in the section entitled “Risk Factors” beginning on page 15 of this proxy statement/prospectus a number of risk factors that you should consider carefully in connection with the merger. |
Q17: | Will Keith common stock continue to be traded on the Nasdaq National Market after the merger is completed? |
A17: | No. If the merger is consummated, Keith common stock will no longer be listed for trading on the Nasdaq National Market. However, Stantec has applied to list Stantec common shares for trading on the New York Stock Exchange. |
Q18: | Who can help answer my additional questions about the merger? |
A18: | If you have questions about the merger, you should contact any of the following: |
The Keith Companies, Inc. 19 Technology Drive Irvine, California, USA 92618-2334 Phone: (949) 923-6001 Attention: Investor Relations | Stantec Inc. 10160-112 Street Edmonton, Canada, T5K 2L6 Phone: (780) 917-7000 Attention: Investor Relations | The Altman Group, Inc. 1275 Valley Brook Avenue Lyndhurst, NJ 07071 Phone: (201) 806-2205 Attention: Charlotte Brown |
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Stantec Consulting California Inc. |
The Keith Companies, Inc. |
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Stantec | Keith | |||||||
Common Shares | Common Stock | |||||||
At April 14, 2005 | US$ | 23.15 | US$ | 16.85 | ||||
At [ ] | US$ | [ | ] | US$ | [ | ] |
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Interests of Keith and Stantec Executive Officers and Directors in the Merger |
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• | Keith’s shareholders having affirmatively voted to approve the merger agreement by the requisite vote; | |
• | the Toronto Stock Exchange having approved the listing of the Stantec common shares to be issued in connection with the merger (Stantec has received conditional approval to list such Stantec common shares on the Toronto Stock Exchange); | |
• | the registration statement of which this proxy statement/ prospectus is a part having been declared effective under the Securities Act of 1933, and no stop order or proceeding seeking a stop order being pending by or before the Securities and Exchange Commission; and | |
• | no injunction, order or other legal restraint or prohibition preventing the consummation of the merger being in effect and no statute, rule, regulation or order by any U.S. or foreign governmental entity being in effect which makes the consummation of the merger illegal. |
• | the other party having performed in all material respects its obligations under the merger agreement and its representations and warranties in the merger agreement being true and correct as of the closing of the merger, except for failures to be true and correct that would not reasonably be expected to have a material adverse effect (as defined in the merger agreement); | |
• | there shall not have been a material adverse change in the business of the other party since the date of the merger agreement; |
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• | the other party shall have delivered an officer’s certificate attesting to compliance of such other party with its representations, warranties and covenants under the merger agreement and to the absence of a material adverse change in such other party’s business; and | |
• | each party having received an opinion from its U.S. tax counsel that: |
• | the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. |
• | Keith shall have deposited with the Exchange Agent for the benefit of the holders of Keith common stock the lesser of (1) US$18,000,000 and (2) the maximum amount of cash that would not preclude the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; | |
• | Keith shall have at least US$40,000,000 of cash or cash equivalents, less the amount of cash deposited with the Exchange Agent; | |
• | the number of dissenting shares shall be less than 5% of the issued and outstanding shares of Keith common stock; and | |
• | Keith shall have terminated its existing 401(k) plan. |
• | the merger is not consummated by December 31, 2005, unless the party seeking to terminate the merger agreement has failed to comply with the merger agreement and that failure has been the cause of, or resulted in, the failure of the merger to occur on or before December 31, 2005; | |
• | Keith shareholders fail to adopt the merger agreement at the special meeting; or | |
• | the other party breaches its representations, warranties, covenants or agreements contained in the merger agreement; provided, however, that the non-breaching party may not terminate the agreement prior to the expiration of 15 days from the date that notice of the breach is provided to such other party and as long as such other party is exercising its best efforts to cure the breach. |
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(1) a mix of cash and stock equal to (A) US$11.00 in cash, (B) 0.23 common shares of Stantec and (C) that number of Stantec common shares equal to US$5.50, based on the 20-day average trading price of Stantec common shares prior to the merger; | |
(2) all Stantec common shares equal to (A) 0.23 Stantec common shares and (B) that number of Stantec common shares equal to US$16.50, based on the 20-day average trading price of Stantec common shares prior to the merger; or | |
(3) all cash equal to (A) US$16.50 and (B) cash equal to the value of 0.23 common shares, based on the 20-day average trading price of Stantec common shares prior to the merger. |
• | changes in the business, operations or prospects of Stantec or Keith; | |
• | changes in economic conditions and the outlook for economic conditions; | |
• | market reaction to the proposed merger; and | |
• | the timing of the consummation of the merger. |
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Failure to complete the merger could negatively impact the price of Keith common stock and Keith’s future business and operations. |
• | failure to complete the merger may seriously harm investors’ and analysts’ perception of Keith’s underlying business and prospects which could seriously harm Keith’s stock price; | |
• | the price of the Keith common stock, which currently reflects a premium as a result of the proposed merger, may decline to price ranges similar to, or below, those that existed prior to the announcement of the merger; | |
• | costs related to the merger, such as legal, accounting, financial advisory and financial printing fees must be paid by Keith, even if the merger is not completed; | |
• | Keith may be required to pay Stantec a termination fee of US$3.0 million plus its expenses, if the merger agreement is terminated in certain circumstances; | |
• | the diversion of Keith’s management’s attention from the day-to-day business of Keith and the unavoidable disruption to Keith’s employees and its relationships with customers may, in turn, detract from Keith’s ability to grow revenue and minimize costs and lead to a loss of market position that Keith could be unable to regain; | |
• | Keith management may not pursue operating plans and acquisitions and other opportunities that could be beneficial to Keith; | |
• | the announcement of the merger could have an adverse effect on Keith’s revenue in the near-term if customers delay, defer or cancel contracts pending resolution of the merger; if this were to occur, Keith’s results of operations and quarterly revenue could be substantially below the expectations of market analysts and could cause a reduction in the trading price of the Keith common stock; and | |
• | Keith would not realize the benefits it expects to receive by being part of a combined company with Stantec, as well as the potentially enhanced financial and competitive position Keith believes would result from the merger. |
An election to receive all shares or all cash may not result in a payment in all shares or all cash. |
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The fairness opinion provided by Bear Stearns was given as of the date of the merger agreement and does not reflect subsequent changes in circumstances. |
The fairness opinion provided by Bear Stearns is based on various assumptions and is subject to various limitations. |
Keith’s shareholders may receive a lower return on their investment after the merger. |
Stantec and Keith may experience difficulties in integrating Keith’s business with the existing operations of Stantec and so may not realize the anticipated benefits of the merger. |
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Uncertainties associated with the merger or Stantec as a new owner may cause Keith to lose customers. |
Uncertainties associated with the merger may cause a loss of employees. |
Keith’s directors and officers have conflicts of interest in recommending the merger to Keith’s shareholders and may have different interests than you in approving the merger agreement. |
• | future employment arrangements; | |
• | severance benefits in the merger; | |
• | receipt of unvested Stantec restricted common shares in exchange for unvested Keith restricted common stock; | |
• | acceleration of the vesting of stock options as a result of the merger; and | |
• | indemnification against certain liabilities arising both before and after the merger. |
Stantec is governed by the laws of Canada and a substantial portion of its assets are, and many of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the United States in Canada. |
Stantec expects to maintain its status as a “foreign private issuer” under the rules and regulations of the SEC and, thus, will be exempt from a number of rules under the Securities Exchange Act of 1934 and will be permitted to file less information with the SEC than a company incorporated in the United States. |
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Stantec common shares are not currently listed on any U.S. stock exchange or quotation system and its listing application may not be approved. As a result, there may not be a liquid market for Stantec’s common shares in the United States. |
The merger agreement contains provisions that may discourage other companies from trying to acquire Keith for greater merger consideration. |
We may be unsuccessful in our goal to increase the size and profitability of our operations, which could lead to a reduction in our market share and our competitiveness as our industry consolidates. |
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If we are unable to effectively manage our growth, we may experience a decline in our revenue and profitability. |
From time to time, we have pursued and may continue to pursue and invest in business opportunities that are not directly within our core competencies. These new business opportunities may require a disproportionate amount of management’s time to develop profitably and may not perform as expected. |
We may be unable to secure the additional capital required to fund our acquisition strategy, which could lead to a reduction in our market share and our competitiveness. |
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The professional consulting services industry is highly competitive, which could have a negative impact on our profit margins and our market share. |
Economic downturns could have a negative impact on our businesses as our clients may curtail investment in infrastructure projects. |
A significant portion of our revenue is derived from clients in the real estate industry. Consequently, our business could suffer materially if there is a downturn in the real estate market. |
• | changes in employment levels and other general economic conditions; | |
• | changes in interest rates and in the availability, cost and terms of financing; | |
• | the impact of present or future environmental, zoning or other laws and regulations; | |
• | changes in real estate tax rates and assessments and other operating expenses; | |
• | changes in levels of government infrastructure spending and fiscal policies; and | |
• | natural or manmade disasters and other factors which are beyond our control. |
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We derive significant revenue from contracts with government agencies. Any disruption in government funding or in our relationship with those agencies could adversely affect our business. |
We may have difficulty in attracting and retaining qualified professionals, which may harm our reputation in the marketplace and restrict our ability to implement our business strategy. |
If we are unable to engage qualified subcontractors, we may lose projects, revenue and clients. |
The nature of our business exposes us to potential liability claims and contract disputes, which may reduce our profits. |
22
Our insurance may not cover all claims for which we may be liable and expenses related to insurance coverage may adversely impact our profitability. |
If we experience delays and/ or defaults in customer payments, we could suffer liquidity problems or we could be unable to recover our expenditures. |
We bear the risk of cost overruns in a significant number of our contracts. We may experience reduced profits or, in some cases, losses under these contracts if costs increase above our estimates. |
23
Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future earnings. |
Because we report our results in Canadian dollars and a substantial portion of our revenue and expenses are recorded in U.S. dollars, our results are subject to currency exchange risk. |
We may not be able to adequately protect our intellectual property, which could force us to take costly protective measures such as litigation. |
24
Adverse weather conditions and natural or other disasters may cause a delay or elimination of our net revenue which otherwise would have been recognized and adversely affect our profitability. |
One of our primary competitive advantages is our reputation and experience. If our reputation is damaged due to client dissatisfaction, our ability to win additional business may be materially damaged. |
Because Stantec’s business is more diverse than Keith’s in terms of geographic presence and professional service offerings, Stantec’s share price could be impacted by different factors than those that affect the price of Keith common stock. |
Our share price has historically been subject to volatility. As a result, the price of our common shares may decrease in the future due to a number of company and industry specific or general economic factors. |
25
Our share price could be adversely affected if a large number of our common shares are offered for sale or sold. |
If we need to sell or issue additional common shares and/ or incur additional debt to finance future acquisitions, your stock ownership could be diluted and our results of operations could be adversely affected. |
26
• | difficulties in integrating Stantec and Keith and in achieving anticipated cost savings and growth opportunities; | |
• | difficulties in implementing Stantec’s business strategy, including difficulties in the identification of suitable acquisition candidates, satisfactory completion of acquisitions and the successful integration of acquisition targets; | |
• | the inability to secure additional capital financing to fund our acquisition growth strategy. | |
• | increase in competition by United States, Canadian and international competitors; | |
• | the impact of adverse economic conditions and future catastrophic events; | |
• | delays, cancellations, or suspension of, or changes in the scope of, existing contracts; | |
• | changes in the level of government funding for infrastructure projects both within North America and abroad; | |
• | limited availability of qualified professional personnel and qualified subcontractors; | |
• | loss of key employees or customers due to the merger; | |
• | future litigation or regulatory action; | |
• | delays or defaults in customer payments for services performed; | |
• | cost overruns on fixed-price, guaranteed maximum price, or unit price contracts; | |
• | exposure to risks inherent in doing business in countries other than Canada and the United States; | |
• | fluctuation in interest rates and exchange rates; | |
• | protection of intellectual property; | |
• | adverse changes in future results of operations, liquidity and financial position; and | |
• | fluctuations in the market price of Keith common stock or Stantec common shares. |
27
28
Years Ended December 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
Pro Forma | Pro Forma | ||||||||||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2004 | 2004 | 2005 | 2005 | |||||||||||||||||||||||||||||
(In thousands of Canadian dollars, except for share data) | |||||||||||||||||||||||||||||||||||||
Statement of Income Data: | |||||||||||||||||||||||||||||||||||||
Gross revenue | C$ | 265,568 | C$ | 356,942 | C$ | 428,456 | C$ | 459,942 | C$ | 520,879 | C$ | 658,619 | C$ | 117,317 | C$ | 141,144 | C$ | 175,293 | |||||||||||||||||||
Net revenue | 221,263 | 298,772 | 365,148 | 391,396 | 449,151 | 575,657 | 103,566 | 119,133 | 150,913 | ||||||||||||||||||||||||||||
Income before income taxes | 20,867 | 27,306 | 33,095 | 39,628 | 44,660 | 54,639 | 8,896 | 10,362 | 12,323 | ||||||||||||||||||||||||||||
Net income | 11,226 | 15,370 | 20,192 | 25,070 | 30,190 | 36,070 | 5,658 | 6,735 | 7,937 | ||||||||||||||||||||||||||||
Earnings per share — diluted | 0.76 | 0.88 | 1.07 | 1.31 | 1.59 | 1.58 | 0.30 | 0.35 | 0.34 | ||||||||||||||||||||||||||||
Weighted average shares outstanding — diluted | 14,851,022 | 17,378,646 | 18,799,484 | 19,118,016 | 19,007,289 | 22,867,289 | 19,176,483 | 19,424,308 | 23,284,308 |
As of March 31, | |||||||||||||||||||||||||||||
As of December 31, | |||||||||||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2005 | |||||||||||||||||||||||
(In thousands of Canadian dollars) | |||||||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||
Total assets | C$ | 179,161 | C$ | 217,492 | C$ | 299,001 | C$ | 326,575 | C$ | 362,100 | C$ | 344,719 | C$ | 576,764 | |||||||||||||||
Total long-term debt, including current portion and bank indebtedness | 26,375 | 39,518 | 62,256 | 61,726 | 33,975 | 28,527 | 119,483 | ||||||||||||||||||||||
Net assets | 92,233 | 107,450 | 151,426 | 160,528 | 189,056 | 197,084 | 305,249 | ||||||||||||||||||||||
Capital stock | 60,259 | 61,555 | 83,973 | 84,281 | 87,656 | 88,138 | 199,275 |
29
Three Months Ended | ||||||||||||||||||||||||||||||
Years Ended December 31, | March 31, | |||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2004 | 2005 | ||||||||||||||||||||||||
(U.S. dollars in thousands, except for share data) | ||||||||||||||||||||||||||||||
Statement of Income Data : | ||||||||||||||||||||||||||||||
Gross revenue | US$ | 57,835 | US$ | 74,314 | US$ | 106,487 | US$ | 99,950 | US$ | 105,346 | US$ | 24,496 | US$ | 27,838 | ||||||||||||||||
Net revenue | 53,381 | 66,844 | 91,598 | 90,744 | 96,754 | 22,463 | 25,907 | |||||||||||||||||||||||
Costs of revenue | 34,118 | 42,655 | 59,286 | 58,359 | 60,363 | 14,482 | 16,117 | |||||||||||||||||||||||
Gross profit | 19,263 | 24,189 | 32,312 | 32,385 | 36,391 | 7,981 | 9,790 | |||||||||||||||||||||||
Selling, general and administrative expenses | 11,078 | 14,330 | 19,535 | 21,070 | 23,013 | 5,591 | 6,843 | |||||||||||||||||||||||
Income from operations | 8,185 | 9,859 | 12,777 | 11,315 | 13,378 | 2,390 | 2,947 | |||||||||||||||||||||||
Interest (expense) income, net | (310 | ) | 289 | 431 | 264 | 481 | 69 | 186 | ||||||||||||||||||||||
Other income (expense), net | 44 | (54 | ) | 625 | 259 | 46 | (1 | ) | 14 | |||||||||||||||||||||
Income before provision for income taxes and discontinued operations | 7,919 | 10,094 | 13,833 | 11,838 | 13,905 | 2,458 | 3,147 | |||||||||||||||||||||||
Provision for income taxes | 3,199 | 3,916 | 5,397 | 4,617 | 5,468 | 959 | 1,202 | |||||||||||||||||||||||
Income from continuing operations | 4,720 | 6,178 | 8,436 | 7,221 | 8,437 | 1,499 | 1,945 | |||||||||||||||||||||||
Loss from discontinued operations, net of income taxes | — | 329 | 628 | — | 430 | — | — | |||||||||||||||||||||||
Net income | US$ | 4,720 | US$ | 5,849 | US$ | 7,808 | US$ | 7,221 | US$ | 8,007 | US$ | 1,499 | US$ | 1,945 | ||||||||||||||||
Earnings per share from continuing operations — diluted | US$ | 0.89 | US$ | 0.87 | US$ | 1.07 | US$ | 0.91 | US$ | 1.05 | US$ | 0.19 | US$ | 0.24 | ||||||||||||||||
Earnings per share — diluted | US$ | 0.89 | US$ | 0.82 | US$ | 0.99 | US$ | 0.91 | US$ | 1.00 | US$ | 0.19 | US$ | 0.24 | ||||||||||||||||
Weighted average shares outstanding — diluted | 5,299,679 | 7,092,505 | 7,868,877 | 7,957,344 | 8,039,457 | 8,004,901 | 8,119,308 |
As of December 31, | |||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | ||||||||||||||||||||
(U.S. dollars in thousands) | |||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||
Working capital | US$ | 7,343 | US$ | 38,781 | US$ | 39,613 | US$ | 47,416 | US$ | 55,472 | US$ | 57,315 | |||||||||||||
Total assets | 33,312 | 71,492 | 82,226 | 87,536 | 97,969 | 99,008 | |||||||||||||||||||
Total debt, excluding issuable common stock | 5,745 | 1,912 | 70 | — | — | — | |||||||||||||||||||
Total shareholders’ equity | 18,239 | 53,733 | 63,612 | 71,962 | 81,921 | 84,153 |
30
Year Ended | Three Months Ended | ||||||||
December 31, 2004 | March 31, 2005 | ||||||||
Statement of Operations Data: | |||||||||
Net income from operations per diluted share: | |||||||||
Stantec | C$ | 1.59 | C$ | 0.35 | |||||
Keith | C$ | 1.37 | C$ | 0.29 | |||||
Stantec pro forma | C$ | 1.58 | C$ | 0.34 | |||||
Keith merger equivalent(1) | C$ | 0.74 | C$ | 0.16 | |||||
Balance Sheet Data: | |||||||||
Net book value per diluted share: | |||||||||
Stantec | C$ | 9.95 | C$ | 10.15 | |||||
Keith | C$ | 13.32 | C$ | 12.71 | |||||
Stantec pro forma | C$ | 13.11 | |||||||
Keith merger equivalent(1) | C$ | 6.16 |
(1) | The Keith merger equivalent per diluted share represents the Stantec pro forma per share amount that is attributable to one share of Keith common stock that has been exchanged for 0.47 Stantec common shares calculated as described above. As the holders of Keith common stock will receive a combination of cash and Stantec common shares, the exchange ratio excludes the cash portion of the merger consideration. |
31
Stantec | Keith | |||||||||||||||
High | Low | High | Low | |||||||||||||
Quarter Ended | ||||||||||||||||
June 30, 2005 (through June 20, 2005) | C$ | 32.99 | C$ | 27.65 | US$ | 22.25 | US$ | 16.25 | ||||||||
March 31, 2005 | C$ | 29.25 | C$ | 24.50 | US$ | 17.43 | US$ | 15.25 | ||||||||
December 31, 2004 | C$ | 26.48 | C$ | 20.35 | US$ | 18.75 | US$ | 13.60 | ||||||||
September 30, 2004 | C$ | 27.15 | C$ | 20.60 | US$ | 15.49 | US$ | 13.25 | ||||||||
June 30, 2004 | C$ | 29.39 | C$ | 24.20 | US$ | 14.89 | US$ | 13.50 | ||||||||
March 31, 2004 | C$ | 27.39 | C$ | 22.20 | US$ | 14.86 | US$ | 13.45 | ||||||||
December 31, 2003 | C$ | 23.48 | C$ | 19.11 | US$ | 14.46 | US$ | 11.55 | ||||||||
September 30, 2003 | C$ | 21.48 | C$ | 17.55 | US$ | 13.39 | US$ | 9.85 | ||||||||
June 30, 2003 | C$ | 20.15 | C$ | 15.50 | US$ | 11.16 | US$ | 9.23 | ||||||||
March 31, 2003 | C$ | 18.24 | C$ | 14.50 | US$ | 13.00 | US$ | 9.00 | ||||||||
Year Ended | ||||||||||||||||
December 31, 2004 | C$ | 29.39 | C$ | 20.35 | US$ | 18.75 | US$ | 13.25 | ||||||||
December 31, 2003 | C$ | 23.48 | C$ | 14.50 | US$ | 14.46 | US$ | 9.00 | ||||||||
December 31, 2002 | C$ | 20.50 | C$ | 12.87 | US$ | 16.15 | US$ | 8.91 | ||||||||
December 31, 2001 | C$ | 14.25 | C$ | 7.25 | US$ | 26.00 | US$ | 7.26 | ||||||||
December 31, 2000 | C$ | 8.00 | C$ | 5.25 | US$ | 8.50 | US$ | 3.06 |
32
Stantec | Keith | |||||||||||||||
High | Low | High | Low | |||||||||||||
May 31, 2005 | C$ | 30.70 | C$ | 28.02 | US$ | 21.56 | US$ | 20.35 | ||||||||
April 30, 2005 | C$ | 29.45 | C$ | 27.65 | US$ | 21.33 | US$ | 16.25 | ||||||||
March 31, 2005 | C$ | 29.25 | C$ | 27.32 | US$ | 17.35 | US$ | 16.40 | ||||||||
February 28, 2005 | C$ | 28.00 | C$ | 24.61 | US$ | 17.15 | US$ | 15.25 | ||||||||
January 31, 2005 | C$ | 26.40 | C$ | 24.50 | US$ | 17.43 | US$ | 16.70 | ||||||||
December 31, 2004 | C$ | 26.48 | C$ | 24.25 | US$ | 18.49 | US$ | 16.35 |
33
34
35
Measure | Expected Range | Result Achieved | ||||||
Debt to equity ratio(1) | At or below 0.5 to 1 | <0.0 | ||||||
Return on equity(2) | At or above 14 | % | 17.3 | % | ||||
Net income as % of net revenue | At or above 5 | % | 6.7 | % | ||||
Gross margin as % of net revenue | Between 52 and 54 | % | 54.2 | % | ||||
Administrative and marketing expenses as % of net revenue | Between 39 and 41 | % | 40.9 | % | ||||
Effective income tax rate | Between 36.5 and 37.5 | % | 32.4 | % |
(1) | Debt to equity ratio is calculated as long-term debt plus current portion of long-term debt plus bank indebtedness less cash, all divided by shareholders’ equity. |
(2) | Return on equity is calculated as net income for the year divided by average shareholders’ equity over each of the last four quarters. |
36
Quarter Ended March 31, | ||||||||
2005 | 2004 | |||||||
(in millions of Canadian dollars, | ||||||||
except per share data) | ||||||||
Gross revenue | 141.1 | 117.3 | ||||||
Net income | 6.7 | 5.7 | ||||||
Earnings per share — basic | 0.36 | 0.31 | ||||||
Earnings per share — diluted | 0.35 | 0.30 | ||||||
Cash dividends declared per common share | — | — | ||||||
Total assets — as at March 31 | 344.7 | 323.4 | ||||||
Outstanding common shares — as at March 31 | 18,933,019 | 18,464,818 | ||||||
Outstanding share options — as at March 31 | 1,006,499 | 1,323,666 |
37
Quarter Ended March 31, | ||||||||||||
Percentage of Net | ||||||||||||
Revenue | Percentage | |||||||||||
Increase | ||||||||||||
2005 | 2004 | 2005 vs. 2004 | ||||||||||
Gross revenue | 118.5% | 113.3% | 20.3 | % | ||||||||
Net revenue | 100.0% | 100.0% | 15.0 | % | ||||||||
Direct payroll costs | 45.7% | 45.9% | 14.6 | % | ||||||||
Gross margin | 54.3% | 54.1% | 15.5 | % | ||||||||
Administrative and marketing expenses | 43.0% | 42.3% | 17.0 | % | ||||||||
Depreciation of property and equipment | 2.3% | 2.5% | 5.3 | % | ||||||||
Amortization of intangible assets | 0.2% | 0.1% | 73.7 | % | ||||||||
Net interest expense | 0.1% | 0.7% | (88.9 | )% | ||||||||
Foreign exchange losses | 0.1% | 0.0% | n/a | |||||||||
Share of income from associated companies | 0.1% | 0.1% | (45.6 | )% | ||||||||
Income before income taxes | 8.7% | 8.6% | 16.5 | % | ||||||||
Income taxes | 3.0% | 3.1% | 12.0 | % | ||||||||
Net income for the period | 5.7% | 5.5% | 19.0 | % |
Gross Revenue | Q1 2005 vs. Q1 2004 | |||
(in thousands of | ||||
Canadian dollars) | ||||
Increase (decrease) in gross revenue due to: | ||||
Acquisitions completed in current and prior two years | C$ | 23,209 | ||
Net internal growth | 3,267 | |||
Impact of foreign exchange rates on revenue earned by foreign subsidiaries | (2,649 | ) | ||
Total increase in gross revenue | C$ | 23,827 | ||
38
2004 | 2003 | 2002 | ||||||||||
(In millions of Canadian dollars, | ||||||||||||
except per share data) | ||||||||||||
Gross revenue | 520.9 | 459.9 | 428.5 | |||||||||
Net income | 30.2 | 25.1 | 20.2 | |||||||||
Earnings per share — basic | 1.63 | 1.37 | 1.12 | |||||||||
Earnings per share — diluted | 1.59 | 1.31 | 1.07 | |||||||||
Cash dividends declared per common share | — | — | — | |||||||||
Total assets | 362.1 | 326.6 | 299.0 | |||||||||
Total long-term debt | 34.0 | 44.6 | 62.3 | |||||||||
Outstanding common shares — as at December 31 | 18,871,085 | 18,327,284 | 18,282,720 | |||||||||
Outstanding share options — as at December 31 | 1,071,333 | 1,479,100 | 1,296,200 |
39
Percentage of Net Revenue | Percentage Increase | |||||||||||||||||||
2004 vs. | 2003 vs. | |||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
Gross revenue | 116.0 | % | 117.5 | % | 117.3 | % | 13.2 | % | 7.3 | % | ||||||||||
Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 14.8 | % | 7.2 | % | ||||||||||
Direct payroll costs | 45.8 | % | 46.9 | % | 47.6 | % | 12.0 | % | 5.7 | % | ||||||||||
Gross margin | 54.2 | % | 53.1 | % | 52.4 | % | 17.2 | % | 8.6 | % | ||||||||||
Administrative and marketing expenses | 40.9 | % | 39.5 | % | 39.9 | % | 18.7 | % | 6.4 | % | ||||||||||
Depreciation of property and equipment | 2.7 | % | 2.5 | % | 2.6 | % | 20.9 | % | 4.3 | % | ||||||||||
Amortization of intangible assets | 0.2 | % | 0.2 | % | 0.3 | % | 0.2 | % | (14.3 | )% | ||||||||||
Net interest expense | 0.6 | % | 0.7 | % | 0.7 | % | 6.4 | % | 0.3 | % | ||||||||||
Foreign exchange (gains) losses | 0.0 | % | 0.2 | % | 0.0 | % | (115.3 | )% | 743.9 | % | ||||||||||
Share of income from associated | ||||||||||||||||||||
companies | (0.1 | )% | (0.1 | )% | (0.1 | )% | (33.6 | )% | 63.4 | % | ||||||||||
Income before income taxes | 9.9 | % | 10.1 | % | 9.0 | % | 12.7 | % | 19.7 | % | ||||||||||
Income taxes | 3.2 | % | 3.7 | % | 3.5 | % | (0.6 | )% | 12.8 | % | ||||||||||
Net income | 6.7 | % | 6.4 | % | 5.5 | % | 20.4 | % | 24.2 | % |
2004 vs. 2003 | 2003 vs. 2002 | |||||||
Gross revenue(in millions of Canadian dollars) | ||||||||
Increase (decrease) due to: | ||||||||
Acquisitions completed in current and prior two years | C$ | 42.3 | C$ | 41.0 | ||||
Net internal growth | 30.0 | 10.2 | ||||||
Impact of foreign exchange | (11.3 | ) | (19.8 | ) | ||||
Total increase over prior year | C$ | 61.0 | C$ | 31.4 | ||||
2004 vs. 2003 | 2003 vs. 2002 | |||||||
Net revenue(in millions of Canadian dollars) | ||||||||
Increase (decrease) due to: | ||||||||
Acquisitions completed in current and prior two years | C$ | 36.4 | C$ | 36.7 | ||||
Net internal growth | 31.3 | 7.0 | ||||||
Impact of foreign exchange | (9.9 | ) | (17.4 | ) | ||||
Total increase over prior year | C$ | 57.8 | C$ | 26.3 | ||||
40
41
42
43
Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 Year | 2 - 3 Years | 4 - 5 Years | 5 Years | ||||||||||||||||
(In thousands of Canadian dollars) | ||||||||||||||||||||
Long-term debt(1) | C$ | 33,975 | C$ | 12,820 | C$ | 19,585 | C$ | 1,459 | C$ | 111 | ||||||||||
Interest on debt(2) | 2,824 | 1,479 | 1,269 | 76 | — | |||||||||||||||
Other liabilities | 19,868 | 3,050 | 6,079 | 3,400 | 7,339 | |||||||||||||||
Operating lease commitments | 207,666 | 29,509 | 50,301 | 34,211 | 93,645 | |||||||||||||||
Total contractual obligations | C$ | 264,333 | C$ | 46,858 | C$ | 77,234 | C$ | 39,146 | C$ | 101,095 | ||||||||||
(1) | Does not include C$90,956,000 of debt expected to be incurred under our credit facility in connection with the merger. |
(2) | Based on an estimated average interest rate of 5.42% per year. Does not include interest on C$90,956,000 of debt expected to be incurred under our credit facility in connection with the merger at an expected interest rate of approximately 4.1% per year. |
44
45
46
47
1. architecture & interior design; | |
2. buildings engineering; | |
3. facilities planning & operations; | |
4. program & project management; | |
5. strategic management; | |
6. environmental infrastructure; | |
7. environmental management; | |
8. bio/pharmaceuticals; | |
9. manufacturing/ industrial; | |
10. power resources & chemicals; | |
11. infrastructure management & pavement engineering; | |
12. transportation infrastructure; | |
13. transportation planning & traffic engineering; | |
14. planning & landscape architecture; | |
15. urban land engineering; | |
16. surveys; and | |
17. quality control/assurance. |
48
• | assimilative capacity | |
• | wastewater collection systems | |
• | municipal & industrial wastewater treatment | |
• | infiltration & inflow/ CSO | |
• | odor and corrosion control | |
• | wastewater pumping | |
• | water treatment | |
• | water storage | |
• | distribution systems | |
• | water reclamation & reuse |
49
• | environmental site management | |
• | environmental assessment | |
• | water resources management | |
• | heritage and natural resource assessment | |
• | waste management | |
• | risk assessment | |
• | health and safety | |
• | air quality assessment | |
• | ecotoxicology and GLP testing | |
• | microbiology laboratory |
50
Year | Business Acquired | Services Provided | Location | |||
2004 | The Sear-Brown Group, Inc. | engineering, planning, and architectural | New York, Ohio, | |||
services | Pennsylvania | |||||
and Puerto Rico | ||||||
2004 | GBR Architects Limited | architectural design services | Manitoba | |||
2004 | Dunlop Architects Inc. | architectural design services | Ontario | |||
2004 | Shaflik Engineering Ltd. | electrical engineering services | British Columbia | |||
specializing in traffic and sport facility | ||||||
lighting | ||||||
2003 | Ecological Services Group | environmental management services | Ontario | |||
Inc. | ||||||
2003 | APAI Architecture Inc. | architectural design services | British Columbia | |||
2003 | Optimum Energy | engineering management consulting | Alberta | |||
Management Inc. | services | |||||
2003 | Inner Dimension Design | interior design services | Saskatchewan | |||
Associates Inc. | ||||||
2002 | McCartan Consulting Ltd. | mechanical engineering services | Saskatchewan | |||
2002 | Webster & Simmonds | surveying services | Ontario | |||
Surveying Ltd. | ||||||
2002 | Cosburn Patterson Mather | engineering and planning services | Ontario | |||
Limited | specializing in the land development and | |||||
real estate industry | ||||||
2002 | GKO Design Consultants | consulting services specializing in | Alberta | |||
Inc. | energy, resources, chemicals and | |||||
pharmaceuticals | ||||||
2002 | M.R.S.F.M. Holdings Ltd. | civil and structural engineering | British Columbia | |||
(Graeme & Murray | consulting services | |||||
Consultants Ltd.) | ||||||
2002 | GeoViro Engineering Ltd. | environmental consulting services | British Columbia |
51
Year | Business Acquired | Services Provided | Location | |||
2002 | Site Consultants, Inc. | civil and environmental engineering, | North Carolina | |||
land use planning and surveying | ||||||
services | ||||||
2002 | English Harper Reta | architectural design services | California | |||
Architects | ||||||
2002 | The RPA Group Limited | project management services | Ontario, Alberta | |||
and British | ||||||
Columbia | ||||||
2002 | Beak International | specialist environmental consulting | Ontario | |||
Incorporated | services |
52
53
Percentage of | Jurisdiction of | |||||
Subsidiary | Voting Shares | Incorporation | ||||
659243 B.C. Ltd. | 100 | British Columbia | ||||
0714993 B.C. Ltd. | 100 | British Columbia | ||||
0715004 B.C. Ltd. | 100 | British Columbia | ||||
0715007 B.C. Ltd. | 100 | British Columbia | ||||
3053837 Nova Scotia Company | 100 | Nova Scotia | ||||
APAI Architecture Inc. | 100 | British Columbia | ||||
Architectura Inc. | 0 | (1) | Alberta | |||
Dunlop Murphy Hilgers Architects Inc. | 50 | Ontario | ||||
GKO Power Engineering Ltd. | 100 | Alberta | ||||
International Insurance Group Inc. | 100 | Barbados | ||||
J. Muller International — Stanley Joint Venture Inc. | 30 | New Brunswick | ||||
Pentacore ADA Consulting, LLC | 100 | Nevada | ||||
Planning & Stantec Limited | 50 | Trinidad & Tobago | ||||
Project Delivery Holdings LLC | 100 | New York | ||||
SB K-12 Architecture and Engineering, P.C. | 0 | (1) | New Jersey | |||
S.B. Long Island Architecture, Engineering and Land Surveying, P.C. | 0 | (1) | New York | |||
SEA, Incorporated | 100 | Nevada | ||||
Spink Corporation, The | 100 | California | ||||
SSBV Consultants Inc. | 33.33 | British Columbia | ||||
Stantec Architecture Inc. | 0 | (1) | North Carolina | |||
Stantec Architecture Ltd. | 0 | (1) | Canada | |||
Stantec Consulting Associates P.C. | 0 | (1) | New York | |||
Stantec Consulting California Inc. | 100 | California | ||||
Stantec Consulting Caribbean Ltd. | 100 | Barbados | ||||
Stantec Consulting Inc. | 100 | Arizona | ||||
Stantec Consulting International Ltd. | 100 | Canada | ||||
Stantec Consulting Ltd. | 100 | Canada | ||||
Stantec Consulting Services Inc. | 100 | New York | ||||
Stantec Engineering (Puerto Rico) P.S.C. | 0 | (1) | Puerto Rico | |||
Stantec Facilities Ltd. | 100 | Alberta | ||||
Stantec Geomatics Ltd. | 50 | (1) | Alberta | |||
Stantec Holdings (Delaware) II Inc. | 100 | Delaware | ||||
Stantec Holdings Ltd. | 100 | Alberta |
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Percentage of | Jurisdiction of | |||||
Subsidiary | Voting Shares | Incorporation | ||||
Stantec International Enterprises Limited | 100 | Bahamas | ||||
Stantec International Limited | 100 | Barbados | ||||
Stantec Technology International Inc. | 100 | Delaware | ||||
Teshmont Consultants Inc. | 50 | Canada |
(1) | We have entered into an agreement with respect to 100% of the voting shares of this subsidiary that allows us to direct control over any disposition of the voting shares of this subsidiary. |
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Name | Age | Position | ||||
Ronald Triffo | 66 | Chairman of the Board | ||||
Anthony P. Franceschini | 54 | President, Chief Executive Officer and Director | ||||
Neilson A. “Dutch” Bertholf, Jr. | 72 | Director | ||||
Robert J. Bradshaw | 57 | Director | ||||
E. John (Jack) Finn | 73 | Director | ||||
William D. Grace | 69 | Director | ||||
Susan E. Hartman | 54 | Director | ||||
Robert R. Mesel | 69 | Director | ||||
Donald W. Wilson | 48 | Vice President & Chief Financial Officer | ||||
Jeffrey S. Lloyd | 40 | Vice President, Secretary & General Counsel |
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• | reviewing and recommending for approval to the board, the annual audited financial statements and other continuous disclosure documents, including: |
a) the financial content of the annual report, | |
b) the annual management information circular and proxy materials, | |
c) the annual information form, and | |
d) the management discussion and analysis section of the annual report; |
• | reviewing and authorizing the release of the quarterly unaudited financial statements including management discussion and analysis, quarterly interim report to shareholders and quarterly press release of our earnings; | |
• | reviewing and recommending for approval to the board, all financial statements, financial reports, and the financial content of prospectuses, and any other reports requiring board approval prior to being submitted to any regulatory authority; |
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• | reviewing the Chief Executive Officer and Chief Financial Officer certification of annual and interim disclosure; | |
• | discussing with management our major financial risk exposures and the steps management has taken to monitor and control such exposures; | |
• | reviewing with management on an annual basis, our obligations pursuant to guarantees that have been issued and material obligations that have been entered into, and the manner in which these guarantees and obligations have been, or should be, disclosed in the financial statements. | |
• | reviewing and assessing, in conjunction with management and the external auditor: |
a) the appropriateness of our accounting policies and financial reporting practices, and considering any available alternatives; | |
b) any significant proposed changes in financial reporting and accounting policies and practices to be adopted by us; | |
c) any new or pending developments in accounting and reporting standards that may affect or impact Stantec; and | |
d) the key estimates and judgments of management that may be material to our financial reporting; |
• | assessing the performance of the external auditor and considering whether to recommend its annual appointment to the board for ultimate recommendation to the shareholders; | |
• | reviewing, approving and executing the annual engagement letter with the external auditor; | |
• | approving the engagement of the external auditor for all non-audit services and the fees for such services, and considering whether any non-audit service compromises the independence of the external audit work; | |
• | reviewing all fees paid to the external auditor for audit services and, if appropriate, recommending the fees for board approval; | |
• | reviewing with the external auditor the results of the annual audit examination; | |
• | reviewing any litigation, claim or other contingency, including tax assessments, that could have a material effect upon our financial position or operating results; | |
• | reviewing annually, or as required, the appropriateness of the system of internal controls and approval policies and practices concerning the expenses of our officers; | |
• | reviewing and approving the expense accounts of our board chair and the chief executive officer; | |
• | reviewing the adequacy of our insurance program; | |
• | reviewing and determining the disposition of any complaints received under our Whistle Blower Policy — Complaint Resolution Process; and | |
• | reviewing and determining the disposition of any complaints received from our shareholders or any regulatory body. |
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• | developments in the area of corporate governance generally; | |
• | composition and size of the board; | |
• | appropriate candidates for nomination to the board; | |
• | providing an orientation and education program for new directors; | |
• | evaluating the performance of the board, any committees, and individual directors; | |
• | considering and approving any requests by an individual director to engage outside experts at our expense. |
• | compensation policies reflecting the rationale for each element of executive pay, including the link between compensation and performance and the level of competitiveness of the total compensation package; | |
• | administration of our Employee Share Option Plan; | |
• | executive management compensation, including bonuses, stock options, pensions and benefits; | |
• | compensation for the Chief Executive Officer; | |
• | senior management performance reviews; | |
• | succession plans for executive management positions. |
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• | 1,600 DSUs a year (400 per quarter); | |
• | An additional C$1,500 per quarter if they chair a board committee; and | |
• | C$1,800 for every board meeting or board committee meeting they attend. |
• Chairman compensation | C$150,000 | |
• Chair and meeting fees | C$114,600 | |
• DSUs (valued at date of issue) | C$257,840 |
Long-Term | |||||||||||||||||||||
Compensation | |||||||||||||||||||||
Awards | |||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||
Securities under | All Other | ||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus(1) | Options(2) | Compensation | ||||||||||||||||
A.P. Franceschini | 2004 | C$ | 375,004 | C$ | 844,350 | nil | C$ | 9,000(3 | ) | ||||||||||||
President & CEO | 2003 | C$ | 367,793 | C$ | 717,338 | 150,000 | C$ | 11,250(4 | ) | ||||||||||||
2002 | C$ | 250,000 | C$ | 748,705 | nil | C$ | 6,500(3 | ) | |||||||||||||
D.W. Wilson | 2004 | C$ | 224,030 | C$ | 250,000 | 5,000 | C$ | 69,439(5 | ) | ||||||||||||
Vice President & CFO | 2003 | C$ | 196,165 | C$ | 195,000 | 6,500 | C$ | 5,500(3 | ) | ||||||||||||
2002 | C$ | 183,787 | C$ | 116,212 | 7,000 | C$ | 5,176(3 | ) | |||||||||||||
R.L. Alarie | 2004 | C$ | 233,649 | C$ | 350,000 | 5,000 | C$ | 3,750(3 | ) | ||||||||||||
Executive Vice-President | 2003 | C$ | 196,165 | C$ | 230,000 | 6,000 | C$ | 5,500(3 | ) | ||||||||||||
Stantec Consulting Ltd. | 2002 | C$ | 175,013 | C$ | 200,000 | 9,000 | C$ | 200,631(6 | ) | ||||||||||||
M.E. Jackson | 2004 | C$ | 218,460 | C$ | 250,000 | 5,000 | C$ | 5,869(3 | ) | ||||||||||||
Senior Vice President | 2003 | C$ | 176,542 | C$ | 205,000 | 8,000 | C$ | 5,100(3 | ) | ||||||||||||
Stantec Consulting Ltd. | 2002 | C$ | 165,009 | C$ | 135,000 | 8,000 | C$ | 200,255(7 | ) | ||||||||||||
W.B. Lester | 2004 | C$ | 230,994 | C$ | 350,000 | 5,000 | C$ | 6,192(3 | ) | ||||||||||||
Executive Vice President | 2003 | C$ | 220,664 | C$ | 350,000 | 7,000 | C$ | 6,000(3 | ) | ||||||||||||
Stantec Consulting Ltd. | 2002 | C$ | 225,000 | C$ | 325,000 | 12,000 | C$ | 5,500(3 | ) |
(1) | Represents bonuses earned and calculated in respect of the indicated financial year. |
(2) | Options to purchase our common shares. See below for further information regarding option grants and exercises during the most recently completed financial 2 year. |
(3) | Represents a payment to the executive officer’s registered retirement savings/employee share purchase plan. |
(4) | Represents a payment to Mr. Franceschini’s registered retirement savings/employee share purchase plan (C$9,000) and a service award (C$2,250) |
(5) | Represents a payment to Mr. Wilson’s registered retirement savings/employee share purchase plan (C$5,980) and a payout of vacation time that Mr. Wilson had accrued but not taken during his time at Stantec (C$63,459). |
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(6) | Represents a payment to Mr. Alarie’s registered retirement savings/employee share purchase plan (C$5,176) and a performance payment arising in connection with the acquisition of PEL Group Inc. by Stantec Consulting Ltd. in 1997 (C$195,455). |
(7) | Represents a payment to Mr. Jackson’s registered retirement savings/employee share purchase plan (C$4,800) and a performance payment arising in connection with the acquisition of PEL Group Inc. by Stantec Consulting Ltd. in 1997 (C$195,455). |
Market Value of | ||||||||||||||||||||
% of Total | Securities | |||||||||||||||||||
Options | Underlying | |||||||||||||||||||
Securities | Granted | Options on the | ||||||||||||||||||
under | to Employees in | Date of Grant | Expiration | |||||||||||||||||
Name | Options(1) | Financial Year | Price (C$/Common Share) | (C$/Security) | Date | |||||||||||||||
A.P. Franceschini | Nil | 0.00% | N/A | N/A | N/A | |||||||||||||||
D.W. Wilson | 5000 | (2) | 2.99% | C$ | 24.50 | C$ | 24.50 | December 14, 2011 | ||||||||||||
R.L. Alarie | 5000 | (2) | 2.99% | C$ | 24.50 | C$ | 24.50 | December 14, 2011 | ||||||||||||
M.E. Jackson | 5000 | (2) | 2.99% | C$ | 24.50 | C$ | 24.50 | December 14, 2011 | ||||||||||||
W.B. Lester | 5000 | (2) | 2.99% | C$ | 24.50 | C$ | 24.50 | December 14, 2011 |
(1) | Options granted under our Employee Share Option Plan to purchase our common shares. |
(2) | 1,667 options are exercisable on December 14, 2005, 1,667 options are exercisable on December 14, 2006, and 1,666 options are exercisable on December 14, 2007. |
Value of Unexercised | ||||||||||||||||
Aggregate | Unexercised Options at | In-the-Money | ||||||||||||||
Securities | Value | Financial Year End | Options at the Fiscal | |||||||||||||
Acquired on | Realized | (#) | Year End(1) | |||||||||||||
Name | Exercise (#) | (C$) | Exercisable/ Unexercisable | Exercisable/ Unexercisable | ||||||||||||
A.P. Franceschini | 240,000 | C$ | 4,214,000 | 112,000 / 90,000 | C$ | 1,732,060 / C$210,300 | ||||||||||
D.W. Wilson | Nil | nil | 26,335 / 11,665 | C$ | 493,258 / C$61,582 | |||||||||||
R.L. Alarie | 4,700 | C$ | 70,560 | 5,000 / 12,000 | C$ | 46,900 / C$67,760 | ||||||||||
M.E. Jackson | Nil | nil | 8,001 / 12,999 | C$ | 78,516 / C$71,064 | |||||||||||
W.B. Lester | 39,000 | C$ | 690,200 | 2,334 / 13,666 | C$ | 12,790 / C$83,390 |
(1) | The closing price of our common shares on the Toronto Stock Exchange on December 31, 2004 was C$26.48. |
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Options | ||||||||||||||||
Plan | Options | Options | Available for | |||||||||||||
Maximum | Outstanding | Exercised | Future Grant | |||||||||||||
Balance as of March 21, 2005 (prior to proposed change) | 1,754,938 | 1,012,833 | 697,365 | 44,740 | ||||||||||||
Percentage of common shares outstanding as of March 21, 2005 (prior to proposed change) | 9.27 | % | 5.35 | % | 3.68 | % | 0.24 | % | ||||||||
Balance as of March 21, 2005 (after proposed change, based upon number of issued and outstanding common shares as of March 21, 2005) | 1,892,718 | 1,012,833 | 0 | 879,885 | ||||||||||||
Percentage of common shares outstanding as of March 21, 2005 (after proposed change) | 10.00 | % | 5.35 | % | 0 | % | 4.65 | % |
Number of Securities Remaining | ||||||||||||
Available for Future Issuance | ||||||||||||
Number of Securities to | Weighted-average Exercise | under Equity Compensation | ||||||||||
be Issued upon Exercise of | Price of Outstanding | Plans (Excluding Securities | ||||||||||
Outstanding Options | Options | Reflected in Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 1,033,833 | C$ | 13.63 | 44,740(1 | ) |
(1) | This number is equal to the maximum number of options to purchase common shares authorized to be issued under the Stantec Employee Share Option Plan (1,754,938) less 676,365 options which have been exercised over the life of the Stantec Employee Share Option Plan less the 1,033,833 options outstanding as at January 31, 2005. |
Number of Options | Strike Price | Vesting Date | Expiry Date | |||||||||
30,000 | C$ | 16.10 | January 3, 2004 | January 3, 2010 | ||||||||
30,000 | C$ | 18.85 | January 3, 2005 | January 3, 2011 | ||||||||
30,000 | C$ | 21.60 | January 3, 2006 | January 3, 2012 | ||||||||
30,000 | C$ | 24.35 | January 3, 2007 | January 3, 2013 | ||||||||
30,000 | C$ | 27.10 | January 3, 2008 | January 3, 2013 |
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• | has unanimously determined that the merger is fair to and in the best interests of Keith and its shareholders; | |
• | has unanimously approved and declared advisable the merger agreement; and | |
• | unanimously recommends that Keith common shareholders vote“FOR” the approval of the merger agreement and its terms; |
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• | sending a written notice to the proxy solicitation agent stating that the earlier proxy is revoked; | |
• | submitting a proxy bearing a later date (using a new proxy card and following the instructions provided on the proxy card); or | |
• | attending the special meeting, revoking your proxy and voting in person. |
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The Keith Companies, Inc. 19 Technology Drive Irvine, California, USA 92618-2334 Phone: (949) 923-6001 Fax: (949) 923-6026 Attention: Investor Relations | The Altman Group, Inc. 1275 Valley Brook Avenue Lyndhurst, NJ 07071 Phone: (201) 806-2205 Attention: Charlotte Brown |
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• | the significant number of conditions to Stantec’s performance of its obligations at closing; | |
• | the absence of a requirement that Keith receive a tax opinion from its counsel as a condition to Keith’s performance of its obligations at closing; | |
• | the requirement that the Stantec common stock be listed on the New York Stock Exchange or the Nasdaq National Market as a condition to Stantec’s performance of its obligations at closing; | |
• | the requirement that key members of Keith management execute employment agreements as a condition to Stantec’s performance of its obligations at closing; | |
• | the treatment of the outstanding stock options and restricted shares of Keith; | |
• | a requirement that Keith have a minimum cash balance at closing of at least US$48 million; | |
• | the limitation on Keith’s ability to terminate the agreement in response to an unsolicited acquisition proposal with superior terms; and | |
• | the obligation to pay Stantec’s expenses in addition to a break-up fee in the event the agreement was terminated in certain circumstances by Keith. |
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• | the current state of Keith’s business, including the fact that continued expansion and geographic and industry diversification, each of which was considered essential to protect its competitive position, would require significant future investment in the expansion of its operations, infrastructure, technology platform and managerial team; | |
• | Keith’s prospects and strategic objectives to expand its market share and diversify its service offerings, which are limited by a shortage of attractive acquisition targets meeting Keith’s acquisition criteria, expansion opportunities and qualified employees; | |
• | Keith’s dependence on the residential real estate market in California and the fact that a decline in demand in this market sector could have a disproportionate effect on its net revenues and profitability; | |
• | the range of possible benefits to Keith shareholders of continuing to operate independently and the timing and the likelihood of accomplishing growth and diversification of Keith’s service offerings by |
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operating independently, and the Keith board of directors’ assessment that the merger with Stantec presented a superior alternative to continuing to operate independently; and | ||
• | the limited attention of the public market to small capitalization stocks outside the technology sector, such as Keith. |
• | the fact that as of April 13, 2005, the trading day prior to approval of the merger by the Keith board of directors, the value of the merger consideration represented a premium of approximately US$4.87, or 28.6% over the US$17.00 closing sale price for Keith common stock as reported on the Nasdaq National Market on April 13, 2005; | |
• | management’s review of the companies which might be expected to be interested in acquiring Keith and management’s discussion with several companies regarding their interest in an acquisition and the preliminary discussion by members of the Keith senior management with certain of these potential acquirors and the lack of any offers to acquire Keith, all of which led the board to believe that the likelihood of obtaining a superior offer, either through an auction or otherwise, was outweighed by the benefits to the Keith shareholders of the merger; | |
• | geographic and industry diversification achieved by a combination with Stantec would reduce Keith’s exposure to cyclicality within the residential real estate service sector; | |
• | the financial presentation and written opinion of Bear Stearns to the Keith board of directors to the effect that, as of April 14, 2005, and based on the qualifications, assumptions, limitations and other matters set forth in its written opinion, the consideration to be received by the public shareholders of Keith pursuant to the merger agreement is fair, from a financial point of view, to those holders (the full text of this opinion, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Bear Stearns in connection with the opinion, is attached as Appendix B to this proxy statement/ prospectus); | |
• | the likelihood that the proposed acquisition would be consummated, in light of the conditions to the parties’ obligations to complete the merger and the reputation and financial capabilities of Stantec; | |
• | the extensive arms-length negotiations between Stantec and Keith, leading the board to believe that the merger consideration offered by Stantec represented the highest amount Stantec would agree to pay and that the terms of the merger agreement and related documents, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, were as favorable to Keith as Stantec would be willing to accept; | |
• | the potential for synergies between Stantec and Keith, which include diversification of service offerings and geographic coverage, Keith’s opportunity to integrate Stantec’s more advanced enterprise reporting and management technology systems and other overhead cost savings, that could lead to improved prospects for growth and revenue generation at Stantec, which would benefit former Keith shareholders; | |
• | the fact that pursuant to the merger agreement, Keith is not prohibited from responding in the manner provided in the merger agreement to certain alternative proposals which the Keith board of directors determines may constitute a superior offer and where Keith’s board of directors determines in good faith, after consultation with independent legal counsel, that failure to respond would cause the members of the Keith board of directors to breach their fiduciary duties under applicable law; and | |
• | the fact that the provisions of the merger agreement allow Keith’s board of directors, under certain circumstances to withdraw its recommendation for the approval of the merger or terminate the merger agreement if it is presented with a superior proposal. |
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• | the risk that the announcement and pendency of the merger could have a material adverse impact on Keith’s business and operations; | |
• | the risk that the merger may not be completed if either Keith’s or Stantec’s legal counsel were not to deliver a tax opinion which is a condition to each of Keith’s and Stantec’s obligation to complete the merger; | |
• | the risk that the merger may not be completed if the Stantec common shares to be issued in the merger are not listed on either the New York Stock Exchange or the Nasdaq National Market, which is a condition to Keith’s obligation to complete the merger; | |
• | the risk that the merger may not be completed if the other conditions to Stantec’s obligation to complete the merger are not satisfied and the right of Stantec to terminate the merger agreement under certain circumstances; | |
• | the fact that the restrictions contained in the merger agreement on Keith’s rights to solicit superior proposals, as well as the US$3.0 million termination fee plus reimbursement of certain Stantec expenses under certain circumstances, presents an additional cost to any other potential acquiror which might be interested in acquiring Keith; and | |
• | the interests that certain of Keith directors and executive officers may have with respect to the merger in addition to their interests as Keith shareholders generally, as described in “The Merger — Interests of Keith’s and Stantec’s Executive Officers and Directors in the Merger.” |
• | reviewed certain publicly available historical financial statements and other business and financial information of Keith and Stantec; |
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• | reviewed certain operating and financial data concerning Keith and Stantec’s business and prospects prepared by the managements of Keith and Stantec, respectively; | |
• | discussed Keith’s business, operations, historical financial results, a range of projected financial results and future prospects with senior executives of Keith; | |
• | reviewed certain projections for Stantec for the year ended December 31, 2005 published by certain equity research analysts; | |
• | discussed Stantec’s business, operations, historical and projected financial results and future prospects with senior executives of Stantec and Keith; | |
• | reviewed the historical prices, trading multiples and trading volumes for Keith’s common stock and Stantec’s common stock; | |
• | reviewed publicly available financial data, stock market performance data and trading multiples of companies generally comparable to Keith and Stantec; | |
• | reviewed the financial terms, to the extent publicly available, of certain mergers and acquisitions transactions involving companies generally comparable to Keith; | |
• | performed discounted cash flow sensitivity analyses based on the range of projected financial results for Keith furnished to it by senior executives of Keith; | |
• | reviewed the potential pro forma impact of the merger on Stantec’s financial results, financial condition and capitalization; | |
• | reviewed the financial terms and conditions of the merger agreement; and | |
• | performed such other studies, analyses, inquiries and investigations as it deemed appropriate. |
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Comparable Company Analysis |
Name | Location | Trading Symbol | ||
Chicago Bridge & Iron Company N.V. | The Netherlands | NYSE: CBI | ||
Granite Construction Incorporated | Westonville, California | NYSE: GVA | ||
Jacobs Engineering Group Inc. | Pasadena, California | NYSE: JEC | ||
Michael Baker Corporation | Moon Township, Pennsylvania | AMEX: BKR | ||
Shaw Group, Inc. | Baton Rouge, Louisiana | NYSE: SGR | ||
Tetra Tech, Inc. | Pasadena, California | NASDAQ: TTEK | ||
TRC Companies, Inc. | Windsor, CT | NYSE: TRR | ||
URS Corporation | San Francisco, California | NYSE: URS | ||
Washington Group International, Inc. | Boise, Idaho | NASDAQ: WGII |
Keith(1) | Mean | Median | Harmonic Mean | |||||||||||||
Price to 2005 estimated earnings per share | 18.9 | 17.9 | 16.6 | 16.9 | ||||||||||||
Price to 2006 estimated earnings per share | 17.1 | 16.0 | 15.3 | 15.6 | ||||||||||||
Price to 2005 estimated enterprise value/ EBITDA per share | 8.0 | 7.4 | 6.8 | 7.1 | ||||||||||||
Price to 2006 estimated enterprise value/ EBITDA per share | 7.1 | 6.6 | 6.2 | 6.3 |
(1) | Based on merger consideration of US$21.87 per share, which in turn was based on the closing price of the Stantec common stock on April 14, 2005 assuming an exchange rate of C$1.00 to US$0.808. |
Precedent Transaction Analysis |
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Announcement Date | Acquiror | Target | ||
12/10/2003 | CH2M Hill Companies, Ltd. | Lockwood Greene Engineers, Inc. | ||
12/19/2002 | EMCOR Group, Inc. | Consolidated Engineering Services Inc. | ||
11/20/2001 | MACTEC, Inc. | Law Companies Group, Inc. | ||
03/31/2001 | American Capital Strategies Ltd. | Weston Solutions, Inc. | ||
03/24/2000 | MACTEC, Inc. | Harding Lawson Associates Group, Inc. | ||
05/10/1999 | IT Group, Inc. | EMCON | ||
05/05/1999 | URS Corporation | Dames & Moore Group | ||
05/03/1999 | Investor Group | Isolux-Wat SA |
Keith(1) | Mean | Median | Harmonic Mean | |||||||||||||
Price to Premium, One Week Prior | 27.1 | % | 29.1 | % | 33.3 | % | NM | |||||||||
Enterprise Value to LTM Revenue | 1.42 | x | 0.42 | 0.40 | 0.32 | |||||||||||
Enterprise Value to LTM EBITDA | 9.0 | x | 5.6 | 4.2 | 4.5 | |||||||||||
Equity Value to LTM Net Income | 21.9 | x | 22.8 | 15.6 | 15.3 |
(1) | Based on merger consideration of US$21.87 per share |
Discounted Cash Flow Sensitivity Analysis |
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2006-2008 Revenue Growth Rate | |||||||||||||||||
2006-2008 Operating Margin(1),(2) | 8.0 | % | 10.0 | % | 12.0 | % | 14.0 | % | |||||||||
10.0% | $ | 15.52 | $ | 15.90 | $ | 16.31 | $ | 16.72 | |||||||||
12.0% | $ | 17.42 | $ | 17.90 | $ | 18.41 | $ | 18.93 | |||||||||
14.0% | $ | 19.32 | $ | 19.90 | $ | 20.51 | $ | 21.14 | |||||||||
Perpetual Growth Rate(2),(3) | 8.0 | % | 10.0 | % | 12.0 | % | 14.0 | % | |||||||||
3.00% | $ | 16.96 | $ | 17.42 | $ | 17.90 | $ | 18.39 | |||||||||
3.25% | $ | 17.18 | $ | 17.66 | $ | 18.15 | $ | 18.65 | |||||||||
3.50% | $ | 17.42 | $ | 17.90 | $ | 18.41 | $ | 18.93 | |||||||||
3.75% | $ | 17.66 | $ | 18.16 | $ | 18.68 | $ | 19.22 | |||||||||
4.00% | $ | 17.92 | $ | 18.44 | $ | 18.97 | $ | 19.52 | |||||||||
Discount Rate(1),(3) | 8.0 | % | 10.0 | % | 12.0 | % | 14.0 | % | |||||||||
14.5% | $ | 16.36 | $ | 16.78 | $ | 17.23 | $ | 17.69 | |||||||||
14.0% | $ | 16.86 | $ | 17.32 | $ | 17.79 | $ | 18.28 | |||||||||
13.5% | $ | 17.42 | $ | 17.90 | $ | 18.41 | $ | 18.93 | |||||||||
13.0% | $ | 18.03 | $ | 18.55 | $ | 19.09 | $ | 19.65 | |||||||||
12.5% | $ | 18.72 | $ | 19.28 | $ | 19.85 | $ | 20.45 |
(1) | Assumes a perpetual growth rate of 3.5% |
(2) | Assumes a discount rate of 13.5% |
(3) | Assumes an operating margin of 12.0% |
Relative Contribution Analysis |
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Pro Forma Transaction Analysis |
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• | the combination of Stantec and Keith will make up one of the most diversified design firms in North America and represents a significant step toward Stantec’s goal to become a top 10 global design firm; | |
• | Stantec and Keith are complementary in terms of services and geography and have similar corporate cultures; | |
• | the acquisition serves Stantec’s objective of being a top tier service provider in each market it serves; | |
• | the combination of Stantec’s and Keith’s urban land groups will create a leading service provider for the land development market in North America, with a significant presence in California, Nevada, Arizona, Alberta and Ontario, each a fast growing region with strong land development markets; | |
• | the addition of Keith will increase Stantec’s U.S. operations by about 70% and will provide a solid foundation in California, one of the largest markets in North America; | |
• | Keith’s strong presence in California will provide a significant opportunity to cross-sell Stantec’s public sector services in transportation and environment market segments and position Stantec for further growth in California; | |
• | Keith has a history of profitability; and | |
• | the acquisition of Keith is expected to be accretive to Stantec’s earnings. |
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84
85
• | an individual who is a citizen or resident of the United States for U.S. federal income tax purposes; | |
• | a corporation, or any entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate that is subject to U.S. federal income tax regardless of its source; or | |
• | a trust if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) the trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes. |
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• | banks, insurance companies and financial institutions; | |
• | tax-exempt organizations; | |
• | mutual funds; | |
• | persons that have a functional currency other than the U.S. dollar; | |
• | traders in securities who elect to apply a mark-to-market method of accounting; | |
• | dealers in securities or foreign currency; | |
• | holders of Keith common stock who acquired their Keith common stock in connection with Keith’s stock option plans or in other compensatory transactions; | |
• | holders of Keith common stock who hold their common stock as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment; | |
• | Except to the extent discussed below, U.S. Holders of Keith common stock who will hold 5% or more of either the total voting power or the total value of the outstanding stock of Stantec after the merger, determined after taking into account ownership under the applicable attribution rules of the Code and Treasury regulations (referred to in this proxy statement/ prospectus as 5% transferee shareholders); and | |
• | holders who will hold 10% or more of Stantec equity either directly, indirectly through one or more entities, or as a result of certain constructive ownership rules of the Code, following the merger; |
The Merger |
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• | the sum of the amount of cash and the fair market value, as of the date of the merger, of the Stantec common shares received by the U.S. Holder, minus the adjusted tax basis of the Keith common stock surrendered in exchange therefor, or | |
• | the amount of cash received by the U.S. Holder in the merger (excluding cash received in lieu of fractional Stantec common shares, which is discussed below). |
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89
90
The Reverse-Subsidiary Merger |
91
Ownership of Stantec Common Shares |
92
93
Conversion of Keith Common Stock |
Dividends on Stantec Common Shares |
Disposition of Stantec Common Shares |
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95
• | state the number of shares of Keith common stock the dissenting shareholder holds of record; | |
• | contain a statement of what the dissenting shareholder claims to be the fair market value of the shares as of April 14, 2005, the last trading day before the announcement of the merger, without giving effect to any appreciation or depreciation due to the merger; and | |
• | be received by Keith no later than the date of the special meeting to vote on the merger. |
• | a statement of the price determined by the Keith board of directors to represent the fair market value of the shares; | |
• | a brief description of the procedure that the shareholder must follow, if the shareholder desires to exercise dissenters’ rights; and | |
• | a copy of sections 1300, 1301, 1302, 1303 and 1304 of Chapter 13 of the CCC (which sets out the procedures that must be followed to perfect a shareholder’s dissenters’ rights). |
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97
(i) US$11.00 cash, 0.23 Stantec common shares, referred to as the fixed ratio stock, and that number of Stantec common shares equal to US$5.50 divided by the 20-day average trading price of Stantec common shares on the Toronto Stock Exchange; or | |
(ii) the fixed ratio stock, and that number of Stantec common shares equal to US$16.50 divided by the average 20-day trading price of Stantec common shares on the Toronto Stock Exchange; or | |
(iii) cash equal to the sum of (A) US$16.50 and (B) the product of 0.23 and the average 20-day trading price of Stantec common shares, referred to as the cash payment. |
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• | incorporation, valid existence and qualification to do business of Keith and each of its subsidiaries; | |
• | corporate authorization and validity of the merger agreement and the inapplicability of takeover statutes to the merger; | |
• | capitalization of Keith; | |
• | the absence of any conflict of the merger agreement with Keith’s articles of incorporation or bylaws, with applicable laws or with any material agreement to which Keith or any of its subsidiaries is a party and, subject to certain exceptions set forth in the merger agreement, the absence of governmental consents, filings and approvals necessary to complete the merger; | |
• | the approval by Keith’s board of directors of the merger agreement and the recommendation of the merger agreement by Keith’s board of directors to Keith’s shareholders and the vote required by the shareholders of Keith to complete the merger; | |
• | the proper filing of documents with the Securities and Exchange Commission, referred to as the SEC; |
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• | the general accuracy of financial statements and the absence of undisclosed liabilities; | |
• | accounts receivable, accounts payable, work in progress, accrued project liabilities and revenue recognition; | |
• | the adequacy of internal control over financial reporting; | |
• | the receipt of the opinion of the financial advisor as to the fairness, from a financial point of view, of the merger consideration to Keith’s shareholders; | |
• | the absence of material changes or events in the business of Keith since December 31, 2004; | |
• | the absence of material pending or threatened litigation outstanding against Keith or any of its subsidiaries; | |
• | employee benefit plans; | |
• | labor and employment matters; | |
• | title to leased real property and to assets; | |
• | ownership and validity of intellectual property rights; | |
• | tax matters and the payment of taxes; | |
• | various environmental matters, including compliance with environmental laws; | |
• | validity and effect of, and absence of defaults under, material contracts; | |
• | adequacy of insurance; | |
• | customers and suppliers; | |
• | interested party transactions; and | |
• | brokers’ and finders’ fees related to the merger. |
• | incorporation, valid existence and qualification to do business of Stantec and Stantec Consulting; | |
• | corporate authorization and validity of the merger agreement; | |
• | Stantec’s capitalization; | |
• | the absence of any conflict of the merger agreement with Stantec’s or Stantec Consulting’s articles of incorporation or bylaws, with applicable laws or with any agreement to which Stantec or Stantec Consulting is a party and, subject to certain exceptions set forth in the merger agreement, the absence of governmental consents, filings and approvals necessary to complete the merger; | |
• | Stantec’s and Stantec Consulting’s possession of all permits and regulatory approvals required to conduct its business, and compliance by Stantec and Stantec Consulting with all applicable foreign, federal, state and local laws; | |
• | the proper filing of documents with the Alberta Securities Commission; | |
• | the general accuracy of financial statements and the absence of undisclosed liabilities; | |
• | accounts receivable, accounts payable, work in progress, accrued project liabilities and revenue recognition; | |
• | the adequacy of internal control over financial reporting; | |
• | the absence of material pending or threatened litigation outstanding against Stantec or Stantec Consulting; |
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• | approval of the merger agreement by the sole shareholder of Stantec Consulting and the absence of any requisite vote of Stantec’s shareholders to consummate the transactions contemplated by the merger agreement; | |
• | Stantec Consulting’s operations; | |
• | tax matters; | |
• | approval of the merger and the merger agreement by the board of directors of each of Stantec and Stantec Consulting and approval by the board of directors of Stantec of the registration and listing of Stantec common shares to be issued in connection with the merger; | |
• | the absence of material changes or events in the business of Stantec; | |
• | absence of ownership of Keith shares by Stantec or any of its subsidiaries; | |
• | brokers’ and finders’ fees related to the merger; | |
• | ownership and validity of intellectual property rights; and | |
• | various environmental matters, including compliance with environmental laws. |
• | general economic, political or regulatory conditions or securities markets in general that do not have a disproportionate effect on Keith or Stantec, as applicable; | |
• | the industry in which Stantec and Keith operate that does not have a disproportionate effect on Keith or Stantec, as applicable; or | |
• | the public announcement or consummation of the transactions contemplated by the merger agreement. |
• | operate other than in the ordinary course of business and consistent with past practice; | |
• | change or amend its articles of incorporation or bylaws; | |
• | (1) issue any shares of capital stock, or any options, warrants, convertible securities or rights to acquire any shares of such capital stock or any other ownership interest (except for issuances of Keith common stock issuable pursuant to Keith’s stock awards outstanding on the date of the merger agreement) or (2) sell, pledge, dispose of, grant or encumber any material assets of Keith or any subsidiary; | |
• | split, combine or reclassify any of its capital stock or purchase or otherwise acquire any of its capital stock (other than in connection with the cashless exercise of Keith stock options outstanding on the date of the merger agreement); | |
• | declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any direct or indirect wholly-owned subsidiary to Keith or any other wholly-owned subsidiary; |
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• | hire any additional employees other than in the ordinary course of business or increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for increases in the ordinary course of business in salaries or wages of employees of Keith or any subsidiary who are not directors or officers of Keith or any subsidiary, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer or other employee of Keith or of any subsidiary, or establish or amend any arrangement for the benefit of any current or former director, officer, employee or consultant; | |
• | (1) acquire any corporation or other business organization or any material amount of assets; (2) incur any indebtedness for borrowed money or issue any debt securities or become responsible for the obligations of any person, or make any loans or advances, or grant any security interest in any of its assets except in the ordinary course of business and consistent with past practice; (3) enter into any material contract; (4) authorize certain capital expenditures; or (5) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this paragraph; | |
• | implement or adopt any change in its accounting principles, practices or methods, other than as is consistent with or as may be required by law, GAAP or regulatory guidelines; | |
• | make any tax election or settle or compromise any material United States federal, state, local or non-United States income tax liability; | |
• | discharge any obligation other than the discharge of liabilities (1) reflected or reserved against on the consolidated balance sheet of Keith and its subsidiaries as of March 31, 2005; (2) subsequently incurred in the ordinary course of business and consistent with past practice, or (3) subsequently incurred not in the ordinary course of business which will not exceed US$100,000; | |
• | amend or consent to the termination of any material contract, or amend, waive, modify or consent to the termination of Keith’s or any subsidiary’s rights thereunder; | |
• | commence or settle any material litigation; or | |
• | announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing. |
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103
• | the registration statement having been declared effective under the Securities Act and no stop order or proceeding seeking a stop order being pending by or before the SEC; | |
• | Keith’s shareholders having affirmatively voted to approve the merger agreement by the requisite vote; | |
• | no order preventing the consummation of the merger being in effect; | |
• | any waiting period applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, referred to as the HSR Act, having expired or having been terminated, such waiting period having been terminated effective May 20, 2005; and | |
• | the Stantec common shares to be issued in the merger having been authorized for listing on the Toronto Stock Exchange. Stantec has received conditional approval to list such Stantec common shares on the Toronto Stock Exchange. | |
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• | the representations and warranties of Keith being true and correct when made and as of the effective time; | |
• | Keith having performed in all material respects all of its obligations under the merger agreement; | |
• | all consents, approvals and authorizations legally required to be obtained to consummate the merger having been obtained from all governmental authorities; | |
• | no material adverse effect as defined in the merger agreement having occurred with respect to Keith; | |
• | Keith having deposited with the exchange agent for the benefit of the holders of Keith shares the lesser of (a) US$18,000,000 and (b) the maximum amount of cash that would not preclude the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; | |
• | Keith having at least US$40,000,000 of cash or cash equivalents on deposit (less the amount of cash deposited with the exchange agent); | |
• | the number of dissenting shares being less than 5% of the issued and outstanding Keith shares; | |
• | prior to the effective time, the termination and cancellation of Keith’s plan qualified under Section 401(k) of the Code; however, the board of directors of Keith will not terminate and cancel the 401(k) plan if Stantec provides written notice to that effect to Keith at least two (2) days prior to the effective time; and | |
• | Stantec having received the opinion of Shearman & Sterling LLP, counsel to Stantec, to the effect that, for U.S. federal income tax purposes, the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. | |
• | the representations and warranties of Stantec and Stantec Consulting being true and correct when made and as of the effective time; | |
• | Stantec and Stantec Consulting having performed in all material respects all of their obligations under the merger agreement; | |
• | No material adverse effect as defined in the merger agreement having occurred with respect to Stantec; | |
• | Keith having received the opinion of Akin Gump Strauss Hauer & Feld, counsel to Keith, to the effect that, for U.S. federal income tax purposes, the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code; | |
• | the Stantec common shares to be issued in the merger having been authorized for listing or quotation on the U.S. exchange. |
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• | by mutual written consent of Stantec and Keith; or | |
• | by either Stantec or Keith if: |
• | the effective time has not occurred on or before December 31, 2005; | |
• | Keith’s shareholders fail to approve and adopt the merger agreement at the special meeting; or | |
• | the other party breaches any representation, warranty, covenant or agreement such that the terminating party’s closing conditions are not satisfied and the breach is either not reasonably capable of being cured or has not been cured within 15 days after notice of the breach; |
• | by Stantec if: |
• | (1) Keith’s board of directors withdraws, modifies or changes in a manner adverse to Stantec its recommendation of the approval and adoption of the merger agreement, (2) the board of directors of Keith recommends to the shareholders of Keith a competing transaction or enters into any letter of intent or any agreement accepting any competing transaction, (3) Keith fails to include in the proxy statement the recommendation of Keith’s board of directors in favor of the approval and adoption of the merger agreement and the merger, (4) the board of directors of Keith fails to reaffirm its recommendation in favor of the approval and adoption of the merger agreement and the approval of the merger within five business days after Stantec requests in writing that such recommendation be reaffirmed, (5) through the fault of Keith, the merger is not, prior to December 15, 2005, submitted for the approval of the holders of Keith common stock at the special meeting, (6) Keith intentionally breaches its obligations under “Additional Agreements — No Solicitation of Transactions,” or (7) a tender offer or exchange offer for 15% or more of the outstanding shares of capital stock of Keith is commenced, and Keith’s board of directors fails to recommend against acceptance of such tender offer or exchange offer by its shareholders within 10 days (each of the foregoing being referred to as a triggering event); |
• | by Keith in order to accept a superior proposal of a third party. |
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Before the Merger | After the Merger | |||||||||||||||
Number of | Percentage of | Number of | Percentage of | |||||||||||||
Shares | Class | Shares | Class | |||||||||||||
Beneficially | Beneficially | Beneficially | Beneficially | |||||||||||||
Name of Beneficial Owner(1)(2) | Owned | Owned | Owned | Owned | ||||||||||||
Ronald Triffo | 617,091 | 3.2 | % | 617,091 | 2.7 | % | ||||||||||
Anthony P. Franceschini | 332,025 | 1.7 | % | 332,025 | 1.4 | % | ||||||||||
Aram H. Keith(3) | — | — | 640,385 | 2.8 | % | |||||||||||
Neilson A. “Dutch” Bertholf, Jr. | 10,000 | * | 10,000 | * | ||||||||||||
Robert J. Bradshaw | 55,000 | * | 55,000 | * | ||||||||||||
E. John (Jack) Finn | 29,000 | * | 29,000 | * | ||||||||||||
William D. Grace | 18,000 | * | 18,000 | * | ||||||||||||
Susan E. Hartman | — | — | — | — | ||||||||||||
Robert R. Mesel | 2,500 | * | 2,500 | * | ||||||||||||
Donald W. Wilson | 79,783 | * | 79,783 | * | ||||||||||||
Jeffrey S. Lloyd | 23,683 | * | 23,683 | * | ||||||||||||
Raymond L. Alarie | 14,248 | * | 14,248 | * | ||||||||||||
Mark E. Jackson | 23,194 | * | 23,194 | * | ||||||||||||
W. Barry Lester | 15,709 | * | 15,709 | * | ||||||||||||
All directors and executive officers as a group | 1,220,233 | 6.4 | % | 1,860,618 | 8.1 | % |
* | Indicates less than 1%. |
(1) | Unless otherwise provided, the address for each “Beneficial Owner” is 10160 — 112 Street, Edmonton, Alberta, Canada T5K 2L6. |
(2) | Unless otherwise noted, each person has sole voting and investment power over the shares listed opposite his or her name. |
(3) | Stantec has agreed that, upon consummation of the merger, it will appoint Aram H. Keith, currently Chairman and Chief Executive Officer of Keith, to the Stantec board of directors. Mr. Keith has indicated that he intends to elect to receive a mix of cash and Stantec common shares as merger consideration in exchange for the 1,374,217 shares of Keith common stock he beneficially owns. Based on the closing sale price of Stantec common shares on the Toronto Stock Exchange on May 6, 2005, it is estimated that the Aram H. Keith and Margie R. Keith Revocable Trust, of which Aram H. Keith is a trustee, will receive US$15,116,387 and 640,385 Stantec common shares as merger consideration. |
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• | the laws of California, particularly the California Corporations Code, referred to in this proxy statement/ prospectus as the CCC; | |
• | Keith’s Amended and Restated Articles of Incorporation, referred to in this proxy statement/ prospectus as Keith’s charter; and | |
• | Keith’s Amended and Restated bylaws, referred to in this proxy statement/ prospectus as Keith’s bylaws. |
• | the Canada Business Corporations Act, referred to in this proxy statement/ prospectus as the CBCA; | |
• | Stantec’s Restated Articles of Incorporation, which are referred to in this proxy statement/ prospectus as Stantec’s charter; and | |
• | Stantec’s bylaws, which are referred to in this proxy statement/ prospectus as Stantec’s bylaws. |
Keith |
Stantec |
Keith |
110
Stantec |
Keith |
Stantec |
Keith |
Stantec |
111
Keith |
Stantec |
Keith |
Stantec |
Keith |
112
Stantec |
Keith |
• | Certain increases or decreases in the aggregate number of authorized shares of such class; | |
• | An exchange, reclassification, or cancellation of all or part of the shares of such class, including a reverse stock split but excluding a stock split; | |
• | An exchange, or right of exchange, of all or part of the shares of another class into the shares of such class; | |
• | A change in the rights, preferences, privileges or restrictions of the shares of such class; | |
• | Creation of a new class of shares having rights, preferences or privileges prior to the shares of such class, or an increase in the rights, preferences or privileges or the number of authorized shares of any class having rights, preferences or privileges prior to the shares of such class; | |
• | In the case of preferred shares, the division of the shares of any class into series having different rights, preferences, privileges or restrictions or the authorization of the board of directors to do so; and | |
• | Cancellation of dividends on the shares of such class which have accrued but have not been paid. |
Stantec |
113
Keith |
Stantec |
Keith |
Stantec |
Keith |
114
Stantec |
Keith |
Stantec |
Keith |
• | were not, immediately prior to the reorganization, listed on a national securities exchange or designated as a Nasdaq National Market security (not including any shares with respect to which there exists any restriction on transfer imposed by the corporation or by any law or regulation); |
115
• | were outstanding on the date for determination of shareholders entitled to vote on the reorganization and were not voted in favor of the reorganization; | |
• | the dissenting shareholder has demanded that the corporation purchase at their fair market value; and | |
• | the dissenting shareholder has submitted to be endorsed with a statement that the shares are dissenting shares. |
Stantec |
• | any amalgamation with another corporation (other than with certain affiliated corporations); | |
• | an amendment to a corporation’s charter to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of shares; | |
• | an amendment to a corporation’s charter to add, change or remove any restriction upon the business or businesses that such corporation may carry on; | |
• | a continuance under the laws of another jurisdiction; | |
• | a sale, lease or exchange of all or substantially all the property of a corporation other than in the ordinary course of business; | |
• | a going-private transaction or a squeeze-out transaction; | |
• | a court order permitting a shareholder to dissent in connection with an application to the court for an order approving an arrangement proposed by a corporation; or | |
• | certain amendments to a corporation’s charter that require a separate class or series vote, provided that a shareholder is not entitled to dissent if an amendment to a corporation’s charter is effected by a court order approving a reorganization or by a court order made in connection with an action for an oppression remedy, unless dissent rights are granted or ordered by the court. |
Keith |
Stantec |
116
Keith |
Stantec |
Keith |
117
Stantec |
Keith |
Stantec |
Keith |
Stantec |
• | the director or officer disclosed his interest in accordance with the CBCA; | |
• | the contract or transaction was approved by the directors; and | |
• | the contract or transaction was reasonable and fair to Stantec at the time it was approved. |
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Keith |
• | In respect of any claim as to which the person is adjudged to be liable to the corporation in the performance of that person’s duty to the corporation and its shareholders, unless the court determines that the person is entitled to indemnity for expenses; | |
• | Amounts paid in settling or otherwise disposing of a pending action without court approval; | |
• | Expenses incurred in defending a pending action which is settled or otherwise disposed of without court approval; | |
• | Where it appears that indemnification would be inconsistent with a provision of the articles, bylaws, a resolution of the shareholders, or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or | |
• | Where it appears that indemnification would be inconsistent with any condition expressly imposed by a court in approving a settlement. |
• | A majority vote of a quorum consisting of directors who are not parties to the proceeding; | |
• | If such a quorum of directors is not obtainable, by independent legal counsel in a written opinion; | |
• | Approval of the shareholders with the shares owned by the person to be indemnified not being entitled to vote; or | |
• | The court in which the proceeding is or was pending upon application made by the corporation, the agent, the attorney or other person rendering services in connection with the defense. |
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Stantec |
(1) that person acted honestly and in good faith with a view to the best interests of the corporation; and | |
(2) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, that person had reasonable grounds for believing that his or her conduct was lawful. |
Keith |
Stantec |
120
Keith |
1) The plaintiff was a shareholder of the corporation at the time of the transaction of which he or she complains. The CCC provides that any shareholder who does not meet this requirement may nevertheless be allowed, in the discretion of the court, to maintain the action if: |
• | there is a strong prima facie case in favor of the claim asserted on behalf of the corporation; | |
• | no other similar action has been or is likely to be instituted; | |
• | the plaintiff acquired the shares before there was disclosure to the public or to the plaintiff of the wrongdoing of which plaintiff complains; | |
• | unless the action can be maintained the defendant may retain a gain derived from defendant’s willful breach of a fiduciary duty; | |
• | the requested relief will not result in unjust enrichment of the corporation or any shareholder of the corporation; and |
2) The plaintiff alleges in the complaint with particularity plaintiff’s efforts to secure from the board the action plaintiff desires, or the reasons for not making such effort, and alleges further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file. |
Stantec |
• | the complainant has given reasonable notice to the directors of the corporation or its subsidiary of the person’s intention to apply to the court if the directors of the corporation or its subsidiary do not bring, diligently prosecute or defend or discontinue the action; | |
• | the person is acting in good faith; and | |
• | it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued. |
Keith |
121
Stantec |
• | any act or omission of a corporation or an affiliate effects a result; | |
• | the business or affairs of a corporation or an affiliate are or have been carried on or conducted in a manner; or | |
• | the powers of the directors of a corporation or an affiliate are or have been exercised in a manner, |
• | a present or former registered holder or beneficial owner of securities of a corporation or any of its affiliates; | |
• | a present or former officer or director of a corporation or any of its affiliates; | |
• | the Director under the CBCA; and | |
• | any other person who in the discretion of the court is a proper person to make such application. |
Keith |
Stantec |
• | acquires, sells, leases, transfers or disposes of an asset; | |
• | acquires or issues treasury securities; | |
• | assumes or transfers a liability; or | |
• | borrows money from or lends money; |
122
• | more detailed disclosure in the proxy material sent to security holders in connection with a related party transaction; | |
• | the preparation of a formal valuation of the subject matter of the related party transaction and any non-cash consideration offered for the subject matter; and | |
• | the inclusion of a summary of the valuation in the proxy material. |
Keith |
• | A corporation as to which an order for relief has been entered under Chapter 7 of the federal bankruptcy law; | |
• | A corporation which has disposed of all of its assets and has not conducted any business for a period of five years immediately preceding the adoption of the resolution electing to dissolve the corporation; or | |
• | A corporation which has issued no shares. |
Stantec |
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124
The Keith Companies, Inc. SEC Filings | Date | |
Annual Report on Form 10-K | Year ended December 31, 2004, as filed on March 10, 2005 | |
Quarterly Report on Form 10-Q | Quarter ended March 31, 2005, as filed on May 10, 2005 | |
Current Report on Form 8-K | Filed on February 14, 2005, April 18, 2005 and May 26, 2005 | |
Schedule 14A Definitive Proxy Statement | Filed on April 12, 2005 |
The Keith Companies, Inc. 19 Technology Drive Irvine, California, USA 92618-2334 Phone: (949) 923-6001 Attention: Investor Relations | Stantec Inc. 10160-112 Street Edmonton, Canada, T5K 2L6 Phone: (780) 917-7000 Attention: Investor Relations | The Altman Group, Inc. 1275 Valley Brook Avenue Lyndhurst, NJ 07071 Phone: (201) 806-2205 Attention: Charlotte Brown |
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Page | ||||
Report of Independent Registered Public Accounting Firm | F-2 | |||
Consolidated Balance Sheets as at December 31, 2004 and December 31, 2003 | F-3 | |||
Consolidated Statements of Income and Retained Earnings for the Years Ended December 31, 2004, 2003 and 2002 | F-4 | |||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002 | F-5 | |||
Notes to Consolidated Financial Statements | F-6 | |||
Consolidated Balance Sheets as at March 31, 2005 (unaudited) and December 31, 2004 | F-25 | |||
Consolidated Statements of Income and Retained Earnings for the Quarters Ended March 31, 2005 and 2004 (unaudited) | F-26 | |||
Consolidated Statements of Cash Flows for the Quarters Ended March 31, 2005 and 2004 (unaudited) | F-27 | |||
Notes to Consolidated Financial Statements (unaudited) | F-28 | |||
Unaudited Pro Forma Condensed Consolidated Financial Statements | F-32 | |||
Unaudited Pro Forma Condensed Consolidated Balance Sheet as at March 31, 2005 | F-33 | |||
Unaudited Pro Forma Condensed Consolidated Statement of Income for the Three Months Ended March 31, 2005 | F-34 | |||
Unaudited Pro Forma Condensed Consolidated Statement of Income for the Year Ended December 31, 2004 | F-35 | |||
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements | F-36 |
F-1
/s/ Ernst & Young LLP | |
Chartered Accountants |
F-2
As at | As at | |||||||
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$ | $ | |||||||
(In thousands of Canadian | ||||||||
dollars) | ||||||||
ASSETS[note 7] | ||||||||
Current | ||||||||
Cash and cash equivalents | 37,890 | 7,343 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $21,095 in 2004 ($16,952 – 2003) | 112,476 | 87,101 | ||||||
Costs and estimated earnings in excess of billings | 40,861 | 67,094 | ||||||
Income taxes recoverable | – | 6,921 | ||||||
Prepaid expenses | 4,165 | 3,246 | ||||||
Future income tax assets[note 14] | 8,532 | 5,924 | ||||||
Other assets[note 6] | 4,831 | – | ||||||
208,755 | 177,629 | |||||||
Property and equipment[note 3] | 48,262 | 67,670 | ||||||
Goodwill[note 4] | 84,694 | 69,696 | ||||||
Intangible assets[note 5] | 6,278 | 5,112 | ||||||
Future income tax assets[note 14] | 6,357 | 3,487 | ||||||
Other assets[note 6] | 7,754 | 2,981 | ||||||
362,100 | 326,575 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current | ||||||||
Bank indebtedness[note 7] | – | 17,151 | ||||||
Accounts payable and accrued liabilities | 78,718 | 68,796 | ||||||
Billings in excess of costs and estimated earnings | 18,832 | 16,882 | ||||||
Income taxes payable | 5,732 | – | ||||||
Current portion of long-term debt[note 8] | 12,820 | 13,416 | ||||||
Future income tax liabilities[note 14] | 10,653 | 10,802 | ||||||
126,755 | 127,047 | |||||||
Long-term debt[note 8] | 21,155 | 31,159 | ||||||
Other liabilities[note 9] | 16,818 | 1,459 | ||||||
Future income tax liabilities[note 14] | 8,316 | 6,382 | ||||||
173,044 | 166,047 | |||||||
Commitments and contingencies[notes 10 and 11] | ||||||||
Shareholders’ equity | ||||||||
Share capital[note 12] | 87,656 | 84,281 | ||||||
Contributed surplus[note 12] | 2,544 | 1,842 | ||||||
Cumulative translation account[note 13] | (19,018 | ) | (13,861 | ) | ||||
Retained earnings | 117,874 | 88,266 | ||||||
189,056 | 160,528 | |||||||
362,100 | 326,575 | |||||||
F-3
Year | Year | Year | ||||||||||
Ended | Ended | Ended | ||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||
2004 | 2003 | 2002 | ||||||||||
$ | $ | $ | ||||||||||
(In thousands of Canadian dollars | ||||||||||||
except per share amounts) | ||||||||||||
Income | ||||||||||||
Gross revenue | 520,879 | 459,942 | 428,456 | |||||||||
Less subconsultant and other direct expenses | 71,728 | 68,546 | 63,308 | |||||||||
Net revenue | 449,151 | 391,396 | 365,148 | |||||||||
Direct payroll costs | 205,513 | 183,471 | 173,609 | |||||||||
Gross margin | 243,638 | 207,925 | 191,539 | |||||||||
Administrative and marketing expenses | 183,739 | 154,788 | 145,515 | |||||||||
Depreciation of property and equipment | 11,986 | 9,912 | 9,502 | |||||||||
Amortization of intangible assets | 927 | 925 | 1,079 | |||||||||
Net interest expense[note 8] | 2,805 | 2,637 | 2,630 | |||||||||
Foreign exchange (gains) losses | (94 | ) | 615 | 73 | ||||||||
Share of income from associated companies | (385 | ) | (580 | ) | (355 | ) | ||||||
Income before income taxes | 44,660 | 39,628 | 33,095 | |||||||||
Income taxes[note 14] | ||||||||||||
Current | 18,065 | 10,050 | 12,949 | |||||||||
Future | (3,595 | ) | 4,508 | (46 | ) | |||||||
14,470 | 14,558 | 12,903 | ||||||||||
Net income for the year | 30,190 | 25,070 | 20,192 | |||||||||
Retained earnings, beginning of the year | 88,266 | 64,240 | 44,690 | |||||||||
Shares repurchased[note 12] | (582 | ) | (1,044 | ) | (642 | ) | ||||||
Retained earnings, end of the year | 117,874 | 88,266 | 64,240 | |||||||||
Earnings per share[note 15] | ||||||||||||
Basic | 1.63 | 1.37 | 1.12 | |||||||||
Diluted | 1.59 | 1.31 | 1.07 |
F-4
Year | Year | Year | ||||||||||
Ended | Ended | Ended | ||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||
2004 | 2003 | 2002 | ||||||||||
$ | $ | $ | ||||||||||
(In thousands of Canadian dollars) | ||||||||||||
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES | ||||||||||||
Cash receipts from clients | 568,897 | 465,114 | 437,354 | |||||||||
Cash paid to suppliers | (169,573 | ) | (156,460 | ) | (128,148 | ) | ||||||
Cash paid to employees | (313,321 | ) | (274,444 | ) | (257,667 | ) | ||||||
Dividends from equity investments | 300 | – | 175 | |||||||||
Interest received | 6,426 | 2,710 | 3,970 | |||||||||
Interest paid | (8,639 | ) | (4,462 | ) | (6,122 | ) | ||||||
Income taxes paid, net | (6,739 | ) | (15,565 | ) | (13,453 | ) | ||||||
Cash flows from operating activities[note 16] | 77,351 | 16,893 | 36,109 | |||||||||
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | ||||||||||||
Business acquisitions, including cash acquired and bank indebtedness assumed[note 2] | (18,845 | ) | (6,046 | ) | (17,409 | ) | ||||||
Cash of joint venture held for sale | – | (369 | ) | – | ||||||||
Purchase of investments held for self-insured liabilities | (9,562 | ) | – | – | ||||||||
Proceeds on disposition of investments | 55 | 195 | 2,158 | |||||||||
Proceeds on disposition of Technology segment | 1,014 | – | – | |||||||||
Proceeds on disposition of subsidiary | – | – | 1,856 | |||||||||
Purchase of property and equipment | (17,488 | ) | (28,713 | ) | (17,444 | ) | ||||||
Proceeds on disposition of property and equipment | 34,672 | 1,444 | 1,612 | |||||||||
Cash flows used in investing activities | (10,154 | ) | (33,489 | ) | (29,227 | ) | ||||||
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES | ||||||||||||
Repayment of long-term debt | (35,546 | ) | (20,592 | ) | (18,619 | ) | ||||||
Proceeds from long-term borrowings | 13,960 | – | 30,540 | |||||||||
Net change in bank indebtedness financing | (17,151 | ) | 17,151 | (14,671 | ) | |||||||
Repurchase of shares for cancellation[note 12] | (720 | ) | (1,392 | ) | (880 | ) | ||||||
Proceeds from issue of share capital[note 12] | 3,490 | 651 | 18,484 | |||||||||
Cash flows from (used in) financing activities | (35,967 | ) | (4,182 | ) | 14,854 | |||||||
Foreign exchange loss on cash held in foreign currency | (683 | ) | (1,081 | ) | (60 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 30,547 | (21,859 | ) | 21,676 | ||||||||
Cash and cash equivalents, beginning of the year | 7,343 | 29,202 | 7,526 | |||||||||
Cash and cash equivalents, end of the year | 37,890 | 7,343 | 29,202 | |||||||||
F-5
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-6
Engineering equipment | 20% - | 30% | declining balance | |||
Business information systems | straight-line over 3 to 5 years | |||||
Office equipment | 20% - | 30% | declining balance | |||
Automotive equipment | 30% | declining balance | ||||
Leasehold improvements | straight-line over term of lease plus one renewal period to a maximum of 15 years or the improvements’ economic life | |||||
Buildings | 4% - | 5% | declining balance |
F-7
F-8
F-9
2. | BUSINESS ACQUISITIONS |
F-10
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Cash consideration | 12,432 | 4,300 | ||||||
Promissory notes | 1,487 | 3,375 | ||||||
Purchase price | 13,919 | 7,675 | ||||||
Assets and liabilities acquired at fair values | ||||||||
Bank indebtedness assumed | (6,413 | ) | (1,746 | ) | ||||
Non-cash working capital | 6,057 | 3,578 | ||||||
Property and equipment | 3,211 | 1,337 | ||||||
Investments – other | 87 | 44 | ||||||
Goodwill | 18,425 | 3,848 | ||||||
Intangible assets | 2,158 | 1,344 | ||||||
Other liabilities | (1,642 | ) | - | |||||
Long-term debt | (8,414 | ) | (646 | ) | ||||
Future income taxes | 450 | (84 | ) | |||||
Net assets acquired | 13,919 | 7,675 | ||||||
3. | PROPERTY AND EQUIPMENT |
December 31, 2004 | December 31, 2003 | |||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||
Cost | Depreciation | Cost | Depreciation | |||||||||||||||||
$000’s | $000’s | $000’s | $000’s | |||||||||||||||||
Engineering equipment | 33,622 | 19,058 | 27,261 | 12,257 | ||||||||||||||||
Business information systems | 9,681 | 1,796 | 7,223 | 328 | ||||||||||||||||
Office equipment | 19,953 | 7,519 | 17,654 | 6,017 | ||||||||||||||||
Automotive equipment | 4,254 | 2,578 | 3,406 | 1,850 | ||||||||||||||||
Leasehold improvements | 11,994 | 2,031 | 6,570 | 1,386 | ||||||||||||||||
Buildings | 1,901 | 594 | 27,191 | 1,553 | ||||||||||||||||
Land | 433 | – | 1,756 | – | ||||||||||||||||
81,838 | 33,576 | 91,061 | 23,391 | |||||||||||||||||
Net book value | 48,262 | 67,670 | ||||||||||||||||||
F-11
4. | GOODWILL |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Goodwill, beginning of year | 69,696 | 72,423 | ||||||
Current year acquisitions | 18,006 | 5,047 | ||||||
Additional purchase price payments | – | 925 | ||||||
Other purchase price adjustments | 419 | (2,124 | ) | |||||
Impact of foreign exchange on goodwill balances | (3,427 | ) | (6,575 | ) | ||||
Goodwill, end of year | 84,694 | 69,696 | ||||||
5. | INTANGIBLE ASSETS |
December 31, 2004 | December 31, 2003 | |||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||||||||||
$000’s | $000’s | $000’s | $000’s | |||||||||||||||||||||
Client relationships | 6,859 | 1,195 | 5,626 | 691 | ||||||||||||||||||||
Contract backlog | 339 | 290 | 905 | 901 | ||||||||||||||||||||
Other intangible assets | 750 | 185 | 266 | 93 | ||||||||||||||||||||
7,948 | 1,670 | 6,797 | 1,685 | |||||||||||||||||||||
Carrying amount | 6,278 | 5,112 | ||||||||||||||||||||||
6. | OTHER ASSETS |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Investments held for self-insured liabilities | 9,562 | – | ||||||
Investment in associated companies | 1,909 | 1,844 | ||||||
Investments – other | 1,114 | 1,137 | ||||||
12,585 | 2,981 | |||||||
Less current portion of investments held for self-insured liabilities | 4,831 | – | ||||||
7,754 | 2,981 | |||||||
7. | BANK INDEBTEDNESS |
F-12
8. | LONG-TERM DEBT |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Non-interest bearing note payable | 111 | 102 | ||||||
Other non-interest bearing notes payable | 7,862 | 14,436 | ||||||
Bank loan | 23,997 | 19,186 | ||||||
Mortgages payable | 1,765 | 10,609 | ||||||
Other | 240 | 242 | ||||||
33,975 | 44,575 | |||||||
Less current portion | 12,820 | 13,416 | ||||||
21,155 | 31,159 | |||||||
F-13
$000’s | ||||
2005 | 12,820 | |||
2006 | 10,968 | |||
2007 | 8,617 | |||
2008 | 1,459 | |||
2009 | – | |||
Thereafter | 111 | |||
33,975 | ||||
9. | OTHER LIABILITIES |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Provision for self-insured liabilities | 5,236 | 2,410 | ||||||
Deferred gain on sale leaseback | 7,073 | – | ||||||
Lease inducement benefits | 4,742 | 1,902 | ||||||
Lease liabilities on exit activity | 2,817 | – | ||||||
19,868 | 4,312 | |||||||
Less current portion included in accrued liabilities | 3,050 | 2,853 | ||||||
16,818 | 1,459 | |||||||
F-14
10. | COMMITMENTS |
$000’s | ||||
2005 | 29,509 | |||
2006 | 26,551 | |||
2007 | 23,750 | |||
2008 | 17,952 | |||
2009 | 16,259 | |||
Thereafter | 93,645 | |||
207,666 | ||||
11. | CONTINGENCIES |
12. | SHARE CAPITAL |
Unlimited common shares, with no par value. | ||
Unlimited preferred shares issuable in series with attributes designated by the Board of Directors. |
Capital Stock | Contributed Surplus | |||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||
# of Shares | $ | # of Shares | $ | # of Shares | $ | $ | $ | $ | ||||||||||||||||||||||||||||
(in thousands of dollars except share amounts) | ||||||||||||||||||||||||||||||||||||
Balance, beginning of the year | 18,327,284 | 84,281 | 18,282,720 | 83,973 | 16,846,340 | 61,555 | 1,842 | 1,247 | 1,205 | |||||||||||||||||||||||||||
Share options exercised for cash | 573,101 | 3,490 | 119,264 | 651 | 29,300 | 148 | ||||||||||||||||||||||||||||||
Shares repurchased under normal course issuer bid | (29,300 | ) | (134 | ) | (74,700 | ) | (343 | ) | (54,600 | ) | (235 | ) | (4 | ) | (5 | ) | (3 | ) | ||||||||||||||||||
Shares issued on acquisitions | – | – | – | – | 261,680 | 3,712 | ||||||||||||||||||||||||||||||
Shares issued under public offering, net of share issue costs | – | – | – | – | 1,200,000 | 18,793 | ||||||||||||||||||||||||||||||
Reclassification of fair value of stock options previously expensed | 19 | – | – | (19 | ) | – | – | |||||||||||||||||||||||||||||
Stock-based compensation expense | 725 | 600 | 45 | |||||||||||||||||||||||||||||||||
Balance, end of the year | 18,871,085 | 87,656 | 18,327,284 | 84,281 | 18,282,720 | 83,973 | 2,544 | 1,842 | 1,247 | |||||||||||||||||||||||||||
F-15
2004 | 2003 | 2002 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Price | Price | Price | ||||||||||||||||||||||
# of Shares | $ | # of Shares | $ | # of Shares | $ | |||||||||||||||||||
Share options, beginning of year | 1,479,100 | 9.28 | 1,296,200 | 6.09 | 1,188,500 | 5.10 | ||||||||||||||||||
Granted | 167,000 | 24.50 | 307,500 | 21.29 | 137,000 | 14.50 | ||||||||||||||||||
Exercised | (573,101 | ) | 6.09 | (119,264 | ) | 5.46 | (29,300 | ) | 5.04 | |||||||||||||||
Cancelled | (1,666 | ) | 18.40 | (5,336 | ) | 12.62 | — | — | ||||||||||||||||
Share options, end of the year | 1,071,333 | 13.34 | 1,479,100 | 9.28 | 1,296,200 | 6.09 | ||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||||
Range of | Remaining | Average | Average | |||||||||||||||||||
Exercise | Contractual | Exercise | Shares | Exercise | ||||||||||||||||||
Prices | Outstanding | Life in | Price | Exercisable | Price | |||||||||||||||||
$ | # | Years | $ | # | $ | |||||||||||||||||
3.50 - 3.60 | 373,000 | 1.8 | 3.56 | 373,000 | 3.56 | |||||||||||||||||
5.20 - 7.00 | 108,100 | 1.1 | 6.07 | 108,100 | 6.07 | |||||||||||||||||
14.50 - 18.85 | 176,733 | 7.6 | 15.51 | 107,822 | 14.95 | |||||||||||||||||
21.00 - 27.10 | 413,500 | 6.8 | 23.14 | 52,167 | 21.00 | |||||||||||||||||
3.50 - 27.10 | 1,071,333 | 4.2 | 13.34 | 641,089 | 7.32 | |||||||||||||||||
F-16
2004 | 2003 | 2002 | ||||||||||||||
Granted at | Granted at | Granted in | Granted at | |||||||||||||
market | market | excess of market | market | |||||||||||||
Risk-free interest rate (%) | 4.07 | 4.48 | 5.04 | 4.35 | ||||||||||||
Expected hold period to exercise (years) | 6.0 | 6.2 | 9.1 | 6.0 | ||||||||||||
Volatility in the price of the Company’s shares (%) | 26.1 | 27.4 | 28.5 | 17.5 | ||||||||||||
Dividend yield | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
Weighted average fair value per option | 8.46 | 7.40 | 6.04 | 4.19 |
13. | CUMULATIVE TRANSLATION ACCOUNT |
2004 | 2003 | 2002 | ||||||||||
$000’s | $000’s | $000’s | ||||||||||
Cumulative translation account, beginning of year | (13,861 | ) | 1,966 | 2,807 | ||||||||
Current year deferred translation adjustment | (5,157 | ) | (15,827 | ) | (841 | ) | ||||||
Cumulative translation account, end of year | (19,018 | ) | (13,861 | ) | 1,966 | |||||||
14. | INCOME TAXES |
2004 | 2003 | 2002 | ||||||||||||
% | % | % | ||||||||||||
Income tax expense at statutory Canadian rates | 34.7 | 36.8 | 39.3 | |||||||||||
Increase (decrease) resulting from: | ||||||||||||||
Loss (income) from associated companies accounted for on the equity basis | (0.3 | ) | (0.6 | ) | (0.3 | ) | ||||||||
Rate differential on foreign income | (2.0 | ) | 0.6 | (0.1 | ) | |||||||||
Non-deductible expenses: | ||||||||||||||
Meals and entertainment | 1.4 | 1.4 | 1.8 | |||||||||||
Stock compensation | 0.6 | 0.6 | – | |||||||||||
Non-taxable foreign income net of non-creditable withholding taxes | (1.3 | ) | (1.6 | ) | (2.4 | ) | ||||||||
Other | (0.7 | ) | (0.5 | ) | 0.7 | |||||||||
32.4 | 36.7 | 39.0 | ||||||||||||
F-17
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$ | $ | |||||||
Future income tax assets | ||||||||
Differences in timing of deductibility of expenses | 9,434 | 6,060 | ||||||
Loss carryforwards | 2,316 | 2,051 | ||||||
Share issue and other financing costs | 237 | 431 | ||||||
Tax cost of property and equipment in excess of carrying value | 684 | 645 | ||||||
Deferred gain on sale of building | 1,518 | – | ||||||
Other | 700 | 224 | ||||||
14,889 | 9,411 | |||||||
Less current portion | 8,532 | 5,924 | ||||||
6,357 | 3,487 | |||||||
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Future income tax liabilities | ||||||||
Cash to accrual adjustments on acquisition of US subsidiaries | 2,091 | 508 | ||||||
Differences in timing of taxability of revenues | 7,702 | 9,955 | ||||||
Carrying value of property and equipment in excess of tax cost | 5,025 | 2,970 | ||||||
Carrying value of intangible assets in excess of tax cost | 2,016 | 1,996 | ||||||
Other | 2,135 | 1,755 | ||||||
18,969 | 17,184 | |||||||
Less current portion | 10,653 | 10,802 | ||||||
8,316 | 6,382 | |||||||
$000’s | ||||
2006 | 22 | |||
2007 | 325 | |||
2008 | 1,454 | |||
2009 | 66 | |||
2010 | 636 | |||
2014 | 1,013 | |||
3,516 | ||||
F-18
15. | EARNINGS PER SHARE |
December 31, | December 31, | December 31, | ||||||||||
2004 | 2003 | 2002 | ||||||||||
# | # | # | ||||||||||
Basic shares outstanding | 18,499,598 | 18,329,960 | 17,987,358 | |||||||||
Share options (dilutive effect of 1,041,333 options; 2003 – 1,419,100; 2002 – 1,296,200) | 507,691 | 788,056 | 812,126 | |||||||||
Diluted shares outstanding | 19,007,289 | 19,118,016 | 18,799,484 | |||||||||
16. | CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES |
2004 | 2003 | 2002 | |||||||||||
$000’s | $000’s | $000’s | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||
Net income for the year | 30,190 | 25,070 | 20,192 | ||||||||||
Add (deduct) items not affecting cash: | |||||||||||||
Depreciation of property and equipment | 11,986 | 9,912 | 9,502 | ||||||||||
Amortization of intangible assets | 927 | 925 | 1,079 | ||||||||||
Future income tax | (3,595 | ) | 4,508 | (46 | ) | ||||||||
Loss on dispositions of investments and property and equipment | (504 | ) | 57 | 89 | |||||||||
Stock-based compensation expense | 894 | 706 | 45 | ||||||||||
Share of income from equity investments | (385 | ) | (580 | ) | (355 | ) | |||||||
Dividends from equity investments | 300 | – | 175 | ||||||||||
39,813 | 40,598 | 30,681 | |||||||||||
Change in non-cash working capital accounts: | |||||||||||||
Accounts receivable | (1,542 | ) | (1,252 | ) | 8,174 | ||||||||
Costs and estimated earnings in excess of billings | 30,218 | (35,239 | ) | (4,673 | ) | ||||||||
Prepaid expenses | 496 | 113 | 29 | ||||||||||
Accounts payable and accrued liabilities | (4,589 | ) | 13,944 | 4,576 | |||||||||
Billings in excess of costs and estimated earnings | 1,600 | 4,951 | (2,147 | ) | |||||||||
Income taxes payable/recoverable | 11,355 | (6,222 | ) | (531 | ) | ||||||||
37,538 | (23,705 | ) | 5,428 | ||||||||||
Cash flows from operating activities | 77,351 | 16,893 | 36,109 | ||||||||||
Income taxes paid during the year in accordance with US GAAP | 10,530 | 18,142 | 14,143 | ||||||||||
F-19
17. | JOINT VENTURES |
Percentage Owned | ||||||||||||
December 31, | December 31, | December 31, | ||||||||||
2004 | 2003 | 2002 | ||||||||||
% | % | % | ||||||||||
yyC.T. Joint Venture | 20 | 20 | 20 | |||||||||
Lockerbie Stanley Inc. | n/a | n/a | 50 | |||||||||
Stantec – S&L Partnership | 50 | 50 | 50 | |||||||||
Colt Stantec Joint Venture | 50 | 50 | 50 | |||||||||
Edmonton International Airports Joint Venture | 33 | 33 | n/a | |||||||||
Pine Creek Consultants Joint Venture | 33 | 33 | n/a | |||||||||
Dunlop Joint Ventures | 33-80 | n/a | n/a |
December 31, | December 31, | December 31, | ||||||||||
2004 | 2003 | 2002 | ||||||||||
$000’s | $000’s | $000’s | ||||||||||
Statements of income: | ||||||||||||
Gross revenue | 1,186 | 11,949 | 11,174 | |||||||||
Subconsultant and other direct expenses | 894 | 9,611 | 12,529 | |||||||||
Administrative and marketing expenses | 217 | 776 | 277 | |||||||||
Net income for the year | 75 | 1,562 | (1,632 | ) | ||||||||
Balance sheets: | ||||||||||||
Current assets | 3,445 | 1,547 | 4,374 | |||||||||
Current liabilities | 2,822 | 1,583 | 5,516 | |||||||||
Statements of cash flows: | ||||||||||||
Cash flows used in operating activities | (274 | ) | (86 | ) | (425 | ) | ||||||
18. | SEGMENTED INFORMATION |
F-20
Property and | Property and | Property and | ||||||||||||||||||||||
Equipment, | Equipment, | Equipment, | ||||||||||||||||||||||
Goodwill, | Goodwill, | Goodwill, | ||||||||||||||||||||||
Gross | Intangible | Gross | Intangible | Gross | Intangible | |||||||||||||||||||
Revenues | Assets | Revenues | Assets | Revenues | Assets | |||||||||||||||||||
2004 | 2004 | 2003 | 2003 | 2002 | 2002 | |||||||||||||||||||
$000’s | $000’s | $000’s | $000’s | $000’s | $000’s | |||||||||||||||||||
Canada | 325,844 | 86,731 | 290,413 | 104,088 | 238,774 | 76,882 | ||||||||||||||||||
United States | 190,362 | 52,032 | 161,655 | 37,815 | 180,296 | 51,509 | ||||||||||||||||||
International | 4,673 | 471 | 7,874 | 575 | 9,386 | 596 | ||||||||||||||||||
520,879 | 139,234 | 459,942 | 142,478 | 428,456 | 128,987 | |||||||||||||||||||
19. | FORWARD CONTRACTS |
20. | SUBSEQUENT EVENTS |
F-21
21. | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES |
a. | Net income and comprehensive income |
2004 | 2003 | 2002 | |||||||||||
$000’s | $000’s | $000’s | |||||||||||
Net income under Canadian and US GAAP | 30,190 | 25,070 | 20,192 | ||||||||||
Other comprehensive income, net of tax: | |||||||||||||
Unrealized foreign exchange loss on translation of self-sustaining foreign operations | (5,157 | ) | (15,827 | ) | (841 | ) | |||||||
Comprehensive income | 25,033 | 9,243 | 19,351 | ||||||||||
Accumulated other comprehensive income, beginning of year | (13,861 | ) | 1,966 | 2,807 | |||||||||
Unrealized foreign exchange loss on translation of self-sustaining foreign operations | (5,157 | ) | (15,827 | ) | (841 | ) | |||||||
Accumulated other comprehensive income, end of year | (19,018 | ) | (13,861 | ) | 1,966 | ||||||||
F-22
b. | Other disclosures required |
i) Accounts payable and accrued liabilities |
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Trade accounts payable | 21,651 | 17,806 | ||||||
Employee and payroll liabilities | 37,188 | 31,276 | ||||||
Accrued liabilities | 19,879 | 19,714 | ||||||
78,718 | 68,796 | |||||||
ii) Allowance for doubtful accounts |
2004 | 2003 | 2002 | ||||||||||
$000’s | $000’s | $000’s | ||||||||||
Balance, beginning of year | 16,952 | 17,316 | 15,755 | |||||||||
Acquired balances | 5,294 | 651 | 2,616 | |||||||||
Provision for doubtful accounts | 6,632 | 4,544 | 3,512 | |||||||||
Deductions | (7,152 | ) | (4,221 | ) | (4,453 | ) | ||||||
Impact of foreign exchange | (631 | ) | (1,338 | ) | (114 | ) | ||||||
Balance, end of year | 21,095 | 16,952 | 17,316 | |||||||||
iii) Income (loss) before income taxes |
2004 | 2003 | 2002 | ||||||||||
$000’s | $000’s | $000’s | ||||||||||
Domestic | 48,111 | 36,583 | 37,548 | |||||||||
Foreign | (3,451 | ) | 3,045 | (4,453 | ) | |||||||
Total | 44,660 | 39,628 | 33,095 | |||||||||
iv) Income tax expense |
2004 | 2003 | 2002 | ||||||||||
$000’s | $000’s | $000’s | ||||||||||
Current tax expense | ||||||||||||
Domestic | 17,724 | 9,474 | 13,968 | |||||||||
Foreign | 341 | 576 | (1,019 | ) | ||||||||
Total | 18,065 | 10,050 | 12,949 | |||||||||
Future tax expense | ||||||||||||
Domestic | (566 | ) | 3,532 | 470 | ||||||||
Foreign | (3,029 | ) | 976 | (516 | ) | |||||||
Total | (3,595 | ) | 4,508 | (46 | ) | |||||||
Total tax expense | ||||||||||||
Domestic | 17,158 | 13,006 | 14,438 | |||||||||
Foreign | (2,688 | ) | 1,552 | (1,535 | ) | |||||||
Total | 14,470 | 14,558 | 12,903 | |||||||||
F-23
v) Self-insured liabilities |
2004 | 2003 | |||||||
$000’s | $000’s | |||||||
Balance, beginning of year | 2,410 | — | ||||||
Current year provision | 2,826 | 2,410 | ||||||
Balance, end of year | 5,236 | 2,410 | ||||||
vi) Long term contracts |
c. | Effects of new accounting pronouncements |
i) Comprehensive Income – New section 1530 becomes effective for our fiscal 2007 year end and establishes standards for the reporting and display of comprehensive income. Unrealized gains on the translation of our self-sustaining foreign operations will be included in comprehensive income. Currently these items are reflected in our cumulative translation account. | |
ii) Financial Instruments – Recognition and Measurement – New section 3855 becomes effective for our fiscal 2007 year end and provides standards for the classification of financial instruments and the related interest, dividends, gains and losses. This section will impact the classification of the Company’s investments held for self-insured liabilities and will require the company to revalue certain investments to fair value with the resulting unrealized gains or losses being reflected through other comprehensive income until realized when the gains or losses will be recognized in net income. This new standard is not expected to have a material effect on the results of operations. | |
iii) Variable Interest Entities – Accounting Guideline 15 is effective for our interim period ending March 31, 2005. As the Company currently consolidates its interests in variable entities, there will be no impact on the financial reporting of the Company other than to amend a policy note – principles of consolidation to include the consolidation of variable interest entities. | |
22. | COMPARATIVE FIGURES |
F-24
March 31 | December 31 | |||||||
2005 | 2004 | |||||||
$ | $ | |||||||
(In thousands of | ||||||||
Canadian dollars) | ||||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current | ||||||||
Cash and cash equivalents | 18,850 | 37,890 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $19,198 in 2005 ($21,095 — 2004) | 104,816 | 112,476 | ||||||
Costs and estimated earnings in excess of billings | 44,031 | 40,861 | ||||||
Income taxes recoverable | 3,915 | — | ||||||
Prepaid expenses | 3,462 | 4,165 | ||||||
Future income tax assets | 8,647 | 8,532 | ||||||
Other assets | 4,755 | 4,831 | ||||||
188,476 | 208,755 | |||||||
Property and equipment | 49,649 | 48,262 | ||||||
Goodwill | 85,752 | 84,694 | ||||||
Intangible assets | 6,053 | 6,278 | ||||||
Future income tax assets | 5,693 | 6,357 | ||||||
Other assets | 9,096 | 7,754 | ||||||
344,719 | 362,100 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current | ||||||||
Accounts payable and accrued liabilities | 62,656 | 78,718 | ||||||
Billings in excess of costs and estimated earnings | 19,422 | 18,832 | ||||||
Income taxes payable | — | 5,732 | ||||||
Current portion of long-term debt(note 3) | 9,507 | 12,820 | ||||||
Future income tax liabilities | 10,015 | 10,653 | ||||||
101,600 | 126,755 | |||||||
Long-term debt(note 3) | 19,020 | 21,155 | ||||||
Other liabilities | 18,780 | 16,818 | ||||||
Future income tax liabilities | 8,235 | 8,316 | ||||||
147,635 | 173,044 | |||||||
Shareholders’ Equity | ||||||||
Share capital(note 4) | 88,138 | 87,656 | ||||||
Contributed surplus(note 4) | 2,740 | 2,544 | ||||||
Cumulative translation account | (18,336 | ) | (19,018 | ) | ||||
Retained earnings | 124,542 | 117,874 | ||||||
197,084 | 189,056 | |||||||
344,719 | 362,100 | |||||||
F-25
For the quarter ended | ||||||||
March 31 | ||||||||
2005 | 2004 | |||||||
$ | $ | |||||||
(In thousands of | ||||||||
Canadian dollars except | ||||||||
per share amounts) | ||||||||
(Unaudited) | ||||||||
INCOME | ||||||||
Gross revenue | 141,144 | 117,317 | ||||||
Less subconsultant and other direct expenses | 22,011 | 13,751 | ||||||
Net revenue | 119,133 | 103,566 | ||||||
Direct payroll costs | 54,439 | 47,540 | ||||||
Gross margin | 64,694 | 56,026 | ||||||
Administrative and marketing expenses | 51,262 | 43,809 | ||||||
Depreciation of property and equipment | 2,764 | 2,624 | ||||||
Amortization of intangible assets | 238 | 137 | ||||||
Net interest expense | 75 | 674 | ||||||
Foreign exchange losses | 61 | 11 | ||||||
Share of income from associated companies | (68 | ) | (125 | ) | ||||
Income before income taxes | 10,362 | 8,896 | ||||||
Income taxes | ||||||||
Current | 3,828 | 4,420 | ||||||
Future | (201 | ) | (1,182 | ) | ||||
3,627 | 3,238 | |||||||
Net income for the period | 6,735 | 5,658 | ||||||
Retained earnings, beginning of period | 117,874 | 88,266 | ||||||
Net income for the period | 6,735 | 5,658 | ||||||
Shares repurchased(note 4) | (67 | ) | (355 | ) | ||||
Retained earnings, end of period | 124,542 | 93,569 | ||||||
Weighted average number of shares outstanding — basic | 18,917,670 | 18,373,983 | ||||||
Weighted average number of shares outstanding — diluted | 19,424,308 | 19,176,483 | ||||||
Shares outstanding, end of period | 18,933,019 | 18,464,818 | ||||||
Earnings per share | ||||||||
Basic | 0.36 | 0.31 | ||||||
Diluted | 0.35 | 0.30 | ||||||
F-26
For the quarter ended | ||||||||
March 31 | ||||||||
2005 | 2004 | |||||||
$ | $ | |||||||
(In thousands of | ||||||||
Canadian dollars) | ||||||||
(Unaudited) | ||||||||
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES | ||||||||
Cash receipts from clients | 151,134 | 124,568 | ||||||
Cash paid to suppliers | (53,263 | ) | (43,866 | ) | ||||
Cash paid to employees | (92,124 | ) | (82,241 | ) | ||||
Dividends from equity investments | 250 | 200 | ||||||
Interest received | 1,264 | 1,747 | ||||||
Interest paid | (1,321 | ) | (2,360 | ) | ||||
Income taxes paid | (13,475 | ) | (2,066 | ) | ||||
Cash flows used in operating activities | (7,535 | ) | (4,018 | ) | ||||
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | ||||||||
Business acquisitions, including cash acquired and bank indebtedness assumed(note 2) | (700 | ) | — | |||||
Purchase of investments held for self-insured liabilities | (1,726 | ) | — | |||||
Proceeds on disposition of investments | 432 | — | ||||||
Purchase of property and equipment | (4,151 | ) | (4,750 | ) | ||||
Proceeds on disposition of property and equipment | 2 | 33 | ||||||
Cash flows used in investing activities | (6,143 | ) | (4,717 | ) | ||||
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES | ||||||||
Repayment of long-term debt | (5,882 | ) | (6,275 | ) | ||||
Net change in bank indebtedness financing | — | 15,342 | ||||||
Repurchase of shares for cancellation(note 4) | (83 | ) | (439 | ) | ||||
Proceeds from issue of share capital(note 4) | 440 | 855 | ||||||
Cash flows from (used in) financing activities | (5,525 | ) | 9,483 | |||||
Foreign exchange gain on cash held in foreign currency | 163 | 53 | ||||||
Net increase (decrease) in cash | (19,040 | ) | 801 | |||||
Cash, beginning of period | 37,890 | 7,343 | ||||||
Cash, end of period | 18,850 | 8,144 | ||||||
F-27
F-28
2005 | 2004 | |||||||
$000’s | $000’s | |||||||
Cash consideration | 700 | — | ||||||
Promissory notes, due 2004 through 2007 | 105 | (205 | ) | |||||
Purchase price | 805 | (205 | ) | |||||
Assets and liabilities acquired at fair values | ||||||||
Non-cash working capital | 263 | 71 | ||||||
Property and equipment | (9 | ) | — | |||||
Goodwill | 606 | (276 | ) | |||||
Future income taxes | (55 | ) | — | |||||
Net assets acquired | 805 | (205 | ) | |||||
March 31 | December 31 | |||||||
2005 | 2004 | |||||||
$000’s | $000’s | |||||||
Non-interest-bearing note payable | 114 | 111 | ||||||
Other non-interest-bearing notes payable | 4,227 | 7,862 | ||||||
Bank loan | 22,236 | 23,997 | ||||||
Mortgages payable | 1,750 | 1,765 | ||||||
Other | 200 | 240 | ||||||
28,527 | 33,975 | |||||||
Less current portion | 9,507 | 12,820 | ||||||
19,020 | 21,155 | |||||||
F-29
Capital Stock | ||||||||||||||||||||||||
Contributed | ||||||||||||||||||||||||
2005 | 2004 | Surplus | ||||||||||||||||||||||
Common | Common | 2005 | 2004 | |||||||||||||||||||||
Shares | Shares | |||||||||||||||||||||||
# | $000’s | # | $000’s | $000’s | $000’s | |||||||||||||||||||
Balance, beginning of year | 18,871,085 | 87,656 | 18,327,284 | 84,281 | 2,544 | 1,842 | ||||||||||||||||||
Share options exercised for cash | 64,834 | 440 | 155,434 | 855 | — | — | ||||||||||||||||||
Stock-based compensation expense | 254 | 178 | ||||||||||||||||||||||
Shares repurchased under normal course issuer bid | (2,900 | ) | (15 | ) | (17,900 | ) | (83 | ) | (1 | ) | (1 | ) | ||||||||||||
Reclassification of fair value of stock options previously expensed | 57 | — | (57 | ) | — | |||||||||||||||||||
Balance, as at March 31 | 18,933,019 | 88,138 | 18,464,818 | 85,053 | 2,740 | 2,019 | ||||||||||||||||||
For the quarter ended | For the quarter ended | |||||||||||||||
March 31, 2005 | March 31, 2004 | |||||||||||||||
Property and | Property and | |||||||||||||||
Equipment, | Equipment, | |||||||||||||||
Goodwill, | Goodwill, | |||||||||||||||
Gross | Intangible | Gross | Intangible | |||||||||||||
Revenues | Assets | Revenues | Assets | |||||||||||||
$000’s | $000’s | $000’s | $000’s | |||||||||||||
Canada | 86,916 | 88,372 | 78,944 | 103,351 | ||||||||||||
United States | 53,156 | 52,616 | 36,615 | 38,673 | ||||||||||||
International | 1,072 | 466 | 1,758 | 492 | ||||||||||||
141,144 | 141,454 | 117,317 | 142,516 | |||||||||||||
F-30
F-31
F-32
Pro Forma | ||||||||||||||||||||
Stantec | Keith | Pro Forma | Consolidated | |||||||||||||||||
US GAAP | US GAAP | Adjustments | US GAAP | |||||||||||||||||
(note 2) | (note 3) | (note 4) | ||||||||||||||||||
(In thousands of Canadian dollars) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current | ||||||||||||||||||||
Cash and cash equivalents | $ | 18,850 | $ | 9,944 | $ | (3,237 | ) | (b | ) | |||||||||||
— | — | 90,956 | (c | ) | ||||||||||||||||
— | — | (109,806 | ) | (d | ) | $ | 6,707 | |||||||||||||
Available for sale securities | 4,755 | 38,944 | — | 43,699 | ||||||||||||||||
Accounts receivable | 104,816 | 19,872 | — | 124,688 | ||||||||||||||||
Costs and estimated earnings in excess of billings | 44,031 | 14,621 | — | 58,652 | ||||||||||||||||
Other current assets | 16,024 | 2,359 | — | 18,383 | ||||||||||||||||
Total current assets | 188,476 | 85,740 | (22,087 | ) | 252,129 | |||||||||||||||
Property and equipment | 49,649 | 5,645 | (687 | ) | (d | ) | 54,607 | |||||||||||||
Goodwill | 85,752 | 28,019 | (28,019 | ) | (d | ) | ||||||||||||||
— | — | 148,609 | (d | ) | 234,361 | |||||||||||||||
Intangible assets | 6,053 | — | 13,338 | (d | ) | 19,391 | ||||||||||||||
Other long-term assets | 14,789 | 900 | 587 | (e | ) | 16,276 | ||||||||||||||
Total assets | 344,719 | 120,304 | 111,741 | 576,764 | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current | ||||||||||||||||||||
Bank indebtedness | — | — | 90,956 | (c | ) | 90,956 | ||||||||||||||
Accounts payable and accrued liabilities | 62,656 | 12,039 | 759 | (d | ) | |||||||||||||||
— | — | 7,892 | (d | ) | ||||||||||||||||
— | — | 1,677 | (e | ) | 85,023 | |||||||||||||||
Other current liabilities | 38,944 | 4,057 | — | 43,001 | ||||||||||||||||
Total current liabilities | 101,600 | 16,096 | 101,284 | 218,980 | ||||||||||||||||
Long-term debt | 19,020 | — | — | 19,020 | ||||||||||||||||
Other long-term liabilities | 27,015 | 1,954 | 4,546 | (d | ) | 33,515 | ||||||||||||||
Total liabilities | 147,635 | 18,050 | 105,830 | 271,515 | ||||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Share capital | 88,138 | 10 | (10 | ) | (d | ) | ||||||||||||||
— | — | (1,090 | ) | (e | ) | |||||||||||||||
— | — | 112,227 | (d | ) | 199,275 | |||||||||||||||
Additional paid in capital | 2,740 | 59,395 | (59,395 | ) | (d | ) | 2,740 | |||||||||||||
Deferred stock compensation | — | (1,637 | ) | (1,335 | ) | (d | ) | (2,972 | ) | |||||||||||
Retained earnings | 124,542 | 44,486 | (3,237 | ) | (b | ) | ||||||||||||||
— | — | (41,249 | ) | (d | ) | 124,542 | ||||||||||||||
Accumulated other comprehensive income | (18,336 | ) | — | — | (18,336 | ) | ||||||||||||||
Total shareholders’ equity | 197,084 | 102,254 | 5,911 | 305,249 | ||||||||||||||||
Total liabilities and shareholders’ equity | 344,719 | 120,304 | 111,741 | 576,764 | ||||||||||||||||
F-33
Pro Forma | ||||||||||||||||||||
Stantec | Keith | Consolidated | ||||||||||||||||||
US GAAP | US GAAP | Pro Forma Adjustments | US GAAP | |||||||||||||||||
(note 2) | (note 3) | (note 4) | ||||||||||||||||||
(In thousands of Canadian dollars except per share amounts) | ||||||||||||||||||||
INCOME | ||||||||||||||||||||
Gross revenue | $ | 141,144 | $ | 34,149 | $ | — | $ | 175,293 | ||||||||||||
Less subconsultant and other direct expenses | 22,011 | 2,369 | — | 24,380 | ||||||||||||||||
Net revenue | 119,133 | 31,780 | — | 150,913 | ||||||||||||||||
Costs of revenue | — | 19,771 | (19,771 | ) | (g) | — | ||||||||||||||
Direct payroll costs | 54,439 | — | 14,100 | (g) | 68,539 | |||||||||||||||
Gross margin | 64,694 | 12,009 | 5,671 | 82,374 | ||||||||||||||||
Administrative and marketing expenses | 51,262 | 8,394 | 5,061 | (g) | ||||||||||||||||
58 | (i) | 64,775 | ||||||||||||||||||
Depreciation of property and equipment | 2,764 | — | 610 | (g) | 3,374 | |||||||||||||||
Amortization of intangible assets | 238 | — | 909 | (f) | 1,147 | |||||||||||||||
Net interest expense (income) | 75 | (228 | ) | 932 | (h) | 779 | ||||||||||||||
Other income, net | (7 | ) | (17 | ) | — | (24 | ) | |||||||||||||
Income before income taxes | 10,362 | 3,860 | (1,899 | ) | 12,323 | |||||||||||||||
Income tax expense | 3,627 | 1,474 | (715 | ) | (j) | 4,386 | ||||||||||||||
Net income | 6,735 | 2,386 | (1,184 | ) | 7,937 | |||||||||||||||
Earnings per share | ||||||||||||||||||||
Basic earnings per share | 0.36 | 0.35 | ||||||||||||||||||
Diluted earnings per share | 0.35 | 0.34 | ||||||||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||
Basic | 18,918 | 3,778 | (k) | 22,696 | ||||||||||||||||
Diluted | 19,424 | 3,860 | (k) | 23,284 |
F-34
Pro Forma | ||||||||||||||||||||
Stantec | Keith | Consolidated | ||||||||||||||||||
US GAAP | US GAAP | Pro Forma Adjustments | US GAAP | |||||||||||||||||
(note 2) | (note 3) | (note 4) | ||||||||||||||||||
(In thousands of Canadian dollars except per share amounts) | ||||||||||||||||||||
INCOME | ||||||||||||||||||||
Gross revenue | $ | 520,879 | $ | 137,740 | $ | — | $ | 658,619 | ||||||||||||
Less subconsultant and other direct expense | 71,728 | 11,234 | — | 82,962 | ||||||||||||||||
Net revenue | 449,151 | 126,506 | — | 575,657 | ||||||||||||||||
Costs of revenue | — | 78,925 | (78,925 | ) | (g) | — | ||||||||||||||
Direct payroll costs | 205,513 | — | 58,989 | (g) | 264,502 | |||||||||||||||
Gross margin | 243,638 | 47,581 | 19,936 | 311,155 | ||||||||||||||||
Administrative and marketing expenses | 183,739 | 30,089 | 17,350 | (g) | ||||||||||||||||
599 | (i) | 231,777 | ||||||||||||||||||
Depreciation of property and equipment | 11,986 | — | 2,586 | (g) | 14,572 | |||||||||||||||
Amortization of intangible assets | 927 | — | 3,874 | (f) | 4,801 | |||||||||||||||
Net interest expense (income) | 2,805 | (629 | ) | 3,729 | (h) | 5,905 | ||||||||||||||
Other income, net | (479 | ) | (60 | ) | — | (539 | ) | |||||||||||||
Income before income taxes | 44,660 | 18,181 | (8,202 | ) | 54,639 | |||||||||||||||
Income tax expense | 14,470 | 7,149 | (3,050 | ) | (j) | 18,569 | ||||||||||||||
Net income | 30,190 | 11,032 | (5,152 | ) | 36,070 | |||||||||||||||
Earnings per share | ||||||||||||||||||||
Basic earnings per share | 1.63 | 1.62 | ||||||||||||||||||
Diluted earnings per share | 1.59 | 1.58 | ||||||||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||
Basic | 18,500 | 3,778 | (k) | 22,278 | ||||||||||||||||
Diluted | 19,007 | 3,860 | (k) | 22,867 |
F-35
1. | Basis of Presentation |
2. | Conversion of Stantec’s Historical Financial Statements to U.S. GAAP |
3. | Conversion of Keith’s Historical Financial Statements to Canadian Dollars |
F-36
U.S. GAAP | U.S. GAAP | |||||||
US$ | C$ | |||||||
(In thousands of dollars) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 8,184 | 9,944 | ||||||
Available-for-sale securities, at fair value | 32,050 | 38,944 | ||||||
Contracts and trade receivables, net of allowance for doubtful accounts of US $1,119 | 16,354 | 19,872 | ||||||
Costs and estimated earnings in excess of billings | 12,033 | 14,621 | ||||||
Prepaid expenses and other current assets | 1,941 | 2,359 | ||||||
Total current assets | 70,562 | 85,740 | ||||||
Equipment and leasehold improvements, net | 4,646 | 5,645 | ||||||
Goodwill | 23,059 | 28,019 | ||||||
Other assets | 741 | 900 | ||||||
Total assets | 99,008 | 120,304 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Trade accounts payable | 1,293 | 1,571 | ||||||
Accrued employee compensation | 5,151 | 6,259 | ||||||
Current portion of deferred tax liabilities | 1,661 | 2,018 | ||||||
Other accrued liabilities | 3,464 | 4,209 | ||||||
Billings in excess of costs and estimated earnings | 1,678 | 2,039 | ||||||
Total current liabilities | 13,247 | 16,096 | ||||||
Deferred tax liabilities | 1,125 | 1,367 | ||||||
Accrued rent | 483 | 587 | ||||||
Total liabilities | 14,855 | 18,050 | ||||||
Shareholders’ equity | ||||||||
Common stock | 8 | 10 | ||||||
Additional paid-in-capital | 48,881 | 59,395 | ||||||
Deferred stock compensation | (1,347 | ) | (1,637 | ) | ||||
Retained earnings | 36,611 | 44,486 | ||||||
Total shareholders’ equity | 84,153 | 102,254 | ||||||
Total liabilities and shareholders’ equity | 99,008 | 120,304 | ||||||
F-37
U.S. GAAP | U.S. GAAP | |||||||
US$ | C$ | |||||||
(In thousands of dollars) | ||||||||
INCOME | ||||||||
Gross revenue | 27,838 | 34,149 | ||||||
Subcontractor costs | 1,931 | 2,369 | ||||||
Net revenue | 25,907 | 31,780 | ||||||
Costs of revenue | 16,117 | 19,771 | ||||||
Gross profit | 9,790 | 12,009 | ||||||
Selling, general and administrative expenses | 6,843 | 8,394 | ||||||
Income from operations | 2,947 | 3,615 | ||||||
Interest income, net | 186 | 228 | ||||||
Other income, net | 14 | 17 | ||||||
Income before provision for income taxes | 3,147 | 3,860 | ||||||
Provision for income taxes | 1,202 | 1,474 | ||||||
Income from continuing operations | 1,945 | 2,386 | ||||||
U.S. GAAP | U.S. GAAP | |||||||
US$ | C$ | |||||||
(In thousands of dollars) | ||||||||
INCOME | ||||||||
Gross revenue | 105,346 | 137,740 | ||||||
Subcontractor costs | 8,592 | 11,234 | ||||||
Net revenue | 96,754 | 126,506 | ||||||
Costs of revenue | 60,363 | 78,925 | ||||||
Gross profit | 36,391 | 47,581 | ||||||
Selling, general and administrative expenses | 23,013 | 30,089 | ||||||
Income from operations | 13,378 | 17,492 | ||||||
Interest income, net | 481 | 629 | ||||||
Other income, net | 46 | 60 | ||||||
Income before provision for income taxes | 13,905 | 18,181 | ||||||
Provision for income taxes | 5,468 | 7,149 | ||||||
Income from continuing operations | 8,437 | 11,032 | ||||||
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4. | Pro Forma Assumptions and Adjustments |
In US | In C | |||||||
$000’s | $000’s | |||||||
Cash consideration | 90,368 | 109,806 | ||||||
Share consideration (3,860,000 of Stantec common shares) | 92,359 | 112,227 | ||||||
Estimated transaction costs | 625 | 759 | ||||||
Total purchase consideration | 183,352 | 222,792 | ||||||
F-39
In US | In C | |||||||
$000’s | $000’s | |||||||
Assets and liabilities acquired: | ||||||||
Cash and cash equivalents | 5,520 | 6,707 | ||||||
Available for sale securities | 32,050 | 38,944 | ||||||
Accounts receivable | 16,354 | 19,872 | ||||||
Costs and estimated earnings in excess of billings | 12,033 | 14,621 | ||||||
Other current assets | 1,941 | 2,359 | ||||||
Property and equipment | 4,081 | 4,958 | ||||||
Other long-term assets | 741 | 900 | ||||||
Goodwill | 122,301 | 148,609 | ||||||
Intangible assets | 10,977 | 13,338 | ||||||
Accounts payable and accrued liabilities | (16,403 | ) | (19,931 | ) | ||||
Other current liabilities including deferred income tax | (3,339 | ) | (4,057 | ) | ||||
Other long-term liabilities including deferred income tax | (5,349 | ) | (6,500 | ) | ||||
Deferred stock compensation | 2,445 | 2,972 | ||||||
Net assets acquired | 183,352 | 222,792 | ||||||
• | Client relationships — C$8,809,000 (US$7,250,000) — the amount allocated was based on the present value of the after tax profit component in identified existing Keith client revenue streams (net of related customer contract backlog) less after tax contributory charges for working capital, capital assets, workforce and software, grossed up for tax savings. The amortization term is estimated to be 10 years based on an evaluation of the duration of the Keith client relationships. | |
• | Contract backlog — C$3,801,000 (US$3,128,000) — the amount allocated was based on the present value of the after tax profit component represented in existing contract backlog less after tax contributory charges for working capital, capital assets, workforce and software, grossed up for tax | |
F-40
savings. The amortization term is estimated to be 18 months which is based on the term over which contract backlog has historically been completed; and | ||
• | Value of favorable premise leases — C$728,000 (US$599,000) — the amount allocated was based on the present value of after tax cash flows for the difference between the actual lease rates and the fair value lease rates as determined by comparable properties that were on the market at the time the assessment was completed, grossed up for tax savings. The amortization period of 47 months was based on the terms of the underlying leases. | |
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F-42
A-1
Page | ||||||
ARTICLE I The Merger | ||||||
Section 1.01. | The Merger | 1 | ||||
Section 1.02. | Effective Time; Closing | 1 | ||||
Section 1.03. | Effect of the Merger | 2 | ||||
Section 1.04. | Articles of Incorporation; By-laws | 2 | ||||
Section 1.05. | Directors and Officers | 2 | ||||
ARTICLE II Conversion of Securities; Exchange of Certificates | ||||||
Section 2.01. | Conversion of Securities | 2 | ||||
Section 2.02. | Exchange of Certificates | 5 | ||||
Section 2.03. | Stock Transfer Books | 7 | ||||
Section 2.04. | Company Stock Options | 7 | ||||
Section 2.05. | Company Restricted Stock | 7 | ||||
Section 2.06. | [Reserved] | 7 | ||||
Section 2.07. | Dissenting Shares | 8 | ||||
Section 2.08. | [Reserved] | 8 | ||||
Section 2.09. | Affiliates | 8 | ||||
ARTICLE III Representations and Warranties of the Company | ||||||
Section 3.01. | Organization and Qualification; Subsidiaries | 8 | ||||
Section 3.02. | Articles of Incorporation and By-laws | 9 | ||||
Section 3.03. | Capitalization | 9 | ||||
Section 3.04. | Authority Relative to This Agreement | 10 | ||||
Section 3.05. | No Conflict; Required Filings and Consents | 10 | ||||
Section 3.06. | Permits; Compliance | 10 | ||||
Section 3.07. | SEC Filings; Financial Statements | 11 | ||||
Section 3.08. | Absence of Certain Changes or Events | 12 | ||||
Section 3.09. | Absence of Litigation | 12 | ||||
Section 3.10. | Employee Benefit Plans | 12 | ||||
Section 3.11. | Labor and Employment Matters | 14 | ||||
Section 3.12. | Real Property; Title to Assets | 15 | ||||
Section 3.13. | Intellectual Property | 15 | ||||
Section 3.14. | Taxes | 15 | ||||
Section 3.15. | Environmental Matters | 16 | ||||
Section 3.16. | [Reserved] | 16 | ||||
Section 3.17. | Material Contracts | 16 | ||||
Section 3.18. | Insurance | 17 | ||||
Section 3.19. | Board Approval; Vote Required | 17 | ||||
Section 3.20. | Customers and Suppliers | 18 | ||||
Section 3.21. | [Reserved] | 18 | ||||
Section 3.22. | Interested Party Transactions | 18 | ||||
Section 3.23. | Opinion of Financial Advisor | 18 | ||||
Section 3.24. | Brokers | 18 |
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ARTICLE IV Representations and Warranties of Parent and Merger Sub | ||||||
Section 4.01. | Corporate Organization | 18 | ||||
Section 4.02. | Articles of Incorporation and By-Laws | 18 | ||||
Section 4.03. | Capitalization | 19 | ||||
Section 4.04. | Authority Relative to This Agreement | 19 | ||||
Section 4.05. | No Conflict; Required Filings and Consents | 19 | ||||
Section 4.06. | Permits; Compliance | 20 | ||||
Section 4.07. | ASC Filings; Financial Statements | 20 | ||||
Section 4.08. | Absence of Certain Changes or Events | 21 | ||||
Section 4.09. | Absence of Litigation | 22 | ||||
Section 4.10. | Stockholder Vote | 22 | ||||
Section 4.11. | Operations of Merger Sub | 22 | ||||
Section 4.12. | Taxes | 22 | ||||
Section 4.13. | Board Approval | 22 | ||||
Section 4.14. | [Reserved] | 22 | ||||
Section 4.15. | Ownership of Company Common Stock | 22 | ||||
Section 4.16. | Brokers | 22 | ||||
Section 4.17. | Intellectual Property | 23 | ||||
Section 4.18. | Environmental Matters | 23 | ||||
ARTICLE V Conduct of Business Pending the Merger | ||||||
Section 5.01. | Conduct of Business by the Company Pending the Merger | 23 | ||||
Section 5.02. | Conduct of Business by Parent Pending the Merger | 25 | ||||
ARTICLE VI Additional Agreements | ||||||
Section 6.01. | Registration Statement; Proxy Statement | 25 | ||||
Section 6.02. | Company Stockholders’ Meeting | 26 | ||||
Section 6.03. | Access to Information; Confidentiality | 26 | ||||
Section 6.04. | No Solicitation of Transactions | 27 | ||||
Section 6.05. | Employee Benefit Matters | 28 | ||||
Section 6.06. | Directors’ and Officers’ Indemnification and Insurance | 29 | ||||
Section 6.07. | Notification of Certain Matters | 29 | ||||
Section 6.08. | Company Affiliates | 29 | ||||
Section 6.09. | Further Action; Reasonable Best Efforts | 30 | ||||
Section 6.10. | Plan of Reorganization | 30 | ||||
Section 6.11. | Obligations of Merger Sub | 31 | ||||
Section 6.12. | Consents of Accountants | 31 | ||||
Section 6.13. | Listing | 31 | ||||
Section 6.14. | Subsequent Financial Statements | 31 | ||||
Section 6.15. | Public Announcements | 31 | ||||
Section 6.16. | Board of Directors of Parent | 31 | ||||
Section 6.17. | Company Contribution | 31 | ||||
Section 6.18. | Unvested Company Restricted Stock | 31 |
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Page | ||||||
ARTICLE VII Conditions to the Merger | ||||||
Section 7.01. | Conditions to the Obligations of Each Party | 32 | ||||
Section 7.02. | Conditions to the Obligations of Parent and Merger Sub | 32 | ||||
Section 7.03. | Conditions to the Obligations of the Company | 33 | ||||
ARTICLE VIII Termination, Amendment and Waiver | ||||||
Section 8.01. | Termination | 34 | ||||
Section 8.02. | Effect of Termination | 35 | ||||
Section 8.03. | Fees and Expenses | 35 | ||||
Section 8.04. | Amendment | 36 | ||||
Section 8.05. | Waiver | 36 | ||||
ARTICLE IX General Provisions | ||||||
Section 9.01. | Non Survival of Representations, Warranties and Agreements | 36 | ||||
Section 9.02. | Notices | 36 | ||||
Section 9.03. | Certain Definitions | 37 | ||||
Section 9.04. | Severability | 41 | ||||
Section 9.05. | Entire Agreement; Assignment | 42 | ||||
Section 9.06. | Parties in Interest | 42 | ||||
Section 9.07. | Specific Performance | 42 | ||||
Section 9.08. | Governing Law | 42 | ||||
Section 9.09. | Headings | 42 | ||||
Section 9.10. | Counterparts | 42 | ||||
Section 9.11. | Waiver of Jury Trial | 42 |
iii
1
(i) (A) 0.23 common shares, without par value, of Parent (“Parent Common Stock”) (the “Fixed Ratio Stock”) and (B) that number of shares of Parent Common Stock equal to US$16.50 divided by the Average Stock Price (the “Floating Ratio Stock” and, together with the Fixed Ratio Stock, the “Exchange Stock”); or | |
(ii) cash equal the sum of (A) US$16.50 and (B) the product of (x) 0.23 and (y) Average Stock Price (the “Cash Payment”); or | |
(iii) (A) US$11.00, (B) the Fixed Ratio Stock and (C) that number of Parent Common Stock equal to US$5.50 divided by the Average Stock Price (the “US$5.50 Stock” and, together with the Fixed Ratio Stock, the “Mixed Election Stock”); or | |
(iv) such other combination of shares of Parent Common Stock and cash determined in accordance with Section 2.01(e) or Section 2.01(f) |
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(i) cash per Share equal the Cash Payment (a “Cash Election”); or | |
(ii) the number of shares, or fraction thereof, of Parent Common Stock per Share equal to the Exchange Stock (a “Stock Election”); or | |
(iii) the “Mixed Consideration” per Share, which consists of US$11.00 in cash and the Mixed Election Stock (a “Mixed Election”, and together with the Cash Election and the Stock Election, the “Elections”); |
(i) a number of shares (the “Pro Rata Number of Shares”) of Parent Common Stock equal to the quotient determined by (A) the difference of the Aggregate Stock Amount minus the number of shares of Parent Common Stock to be issued in exchange for Mixed Election Shares, divided by (B) the number of Stock Election Shares; and |
3
(ii) an amount in cash equal to the product of (A) the difference of (x) the Exchange Stock, minus (y) the Pro Rata Number of Shares, multiplied by (B) the Average Stock Price; |
(i) an amount in cash (the “Pro Rata Amount of Cash”) equal to the quotient determined by (A) the difference of the Aggregate Cash Amount minus the amount of cash to be paid in exchange for Mixed Election Shares, divided by (B) the number of Cash Election Shares; and | |
(ii) a number of shares of Parent Common Stock equal to the quotient of (A) the difference of (x) the Cash Payment, minus (y) the Pro Rata Amount of Cash, divided by (B) the Average Stock Price; |
(i) Parent or the Company receives written notice from its counsel specified in Article VII to the effect that such counsel is unlikely to be able to deliver a tax opinion required pursuant to Section 7.02(l) or Section 7.03(e), as the case may be, on the date of the Effective Time; and |
4
(ii) instead of depositing the Aggregate Cash Amount and the Aggregate Stock Amount in accordance with Section 2.02(a), Parent deposits, or causes to be deposited (including as contemplated by Section 7.02(f)), with the Exchange Agent (as defined below), for the benefit of the holders of Shares, for exchange in accordance with this Article II through the Exchange Agent, cash in an amount equal to US$22.00 per Share, |
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9
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(i) all employer and employee contributions to each Non-U.S. Benefit Plan required by law or by the terms of such Non-U.S. Benefit Plan have been made, or, if applicable, accrued in accordance with normal accounting practices, and a pro rata contribution for the period prior to and including the date of this Agreement has been made or accrued; | |
(ii) the fair market value of the assets of each funded Non-U.S. Benefit Plan, the liability of each insurer for any Non-U.S. Benefit Plan funded through insurance or the book reserve established for any Non-U.S. Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the benefits determined on any ongoing basis (actual or contingent) accrued to the date of this Agreement with respect to all current and former participants under such Non-U.S. Benefit Plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Non-U.S. Benefit Plan, and no Transaction shall cause such assets or insurance obligations to be less than such benefit obligations; and | |
(iii) each Non-U.S. Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities. Each Non-U.S. Benefit Plan has been operated in full compliance with all applicable non-United States laws. |
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(i) each “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company and its Subsidiaries; | |
(ii) each contract and agreement which is likely to involve consideration of more than US$5,000,000, in the aggregate, in any 12-month period; | |
(iii) any employment or consulting agreement or any other written agreement with any other officer, employee or consultant with annual compensation in excess of US$100,000 or which includes a change of control provision or provides for severance obligations upon termination; | |
(iv) all management contracts (excluding contracts (i) for employment or (ii) which involve consideration of less than US$100,000 in any 12-month period or (iii) which are terminable with no more than 90 days notice without payment of a termination fee), including any contracts involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company or |
16
any Subsidiary or income or revenues related to any product of the Company or any Subsidiary to which the Company or any Subsidiary is a party; | |
(v) all contracts and agreements with any Governmental Authority to which the Company or any Subsidiary is a party that are not for professional services or not otherwise in the ordinary course of business; | |
(vi) all contracts and agreements that limit, or purport to limit, the ability of the Company or any Subsidiary to compete in any line of business or in any geographic area; | |
(vii) all material contracts or arrangements that result in any person or entity holding a power of attorney from the Company or any Subsidiary that relates to the Company, any Subsidiary or their respective businesses, excluding any power of attorney entered into in the ordinary course of business consistent with past practice; and | |
(viii) all other contracts and agreements, whether or not made in the ordinary course of business, which the breach, non-performance, amendment, termination or the absence of would, individually, have a Company Material Adverse Effect. |
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25
26
27
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(a) Registration Statement. The Registration Statement shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceeding for that purpose shall have been initiated by the SEC. | |
(b) Company Stockholder Approval. This Agreement shall have been approved and adopted by the requisite affirmative vote of the stockholders of the Company in accordance with the CCC and the Company’s Articles of Incorporation. | |
(c) No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, judgment, decree, executive order or award (an “Order”) which is then in effect and has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger. | |
(d) U.S. Antitrust Approvals and Waiting Periods. Any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated. | |
(e) TSX Listing. The shares of Parent Common Stock to be issued in the Merger shall have been authorized for listing on the TSX, subject to official notice of issuance. |
(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall have been true and correct when made and shall be true and correct as of the Effective Time, with the same force and effect as if made as of the Effective Time (other than such representations and warranties as are made as of another date which shall be true and correct as of such date), except where the failure to be so true and correct (without giving effect to any limitations or qualification as to “materially” (including the word “material”) or “Company Material Adverse Effect” set forth therein) would not, individually or in the aggregate, have a Company Material Adverse Effect. | |
(b) Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time. | |
(c) Officer Certificate. The Company shall have delivered to Parent a certificate, dated the date of the Closing, signed by the Chief Executive Officer of the Company, certifying as to the satisfaction of the conditions specified in Sections 7.02(a), 7.02(b) and 7.02(e). | |
(d) Consents. All consents, approvals and authorizations legally required to be obtained to consummate the Merger shall have been obtained from and made with all Governmental Entities. | |
(e) Material Adverse Effect. No Company Material Adverse Effect shall have occurred since the date of this Agreement. | |
(f) Company Contribution. The Company shall have deposited, or shall have caused to be deposited, with the Exchange Agent for the benefit of the holders of the Company Common Stock the lesser of (i) $18,000,000 and (ii) the maximum amount of cash that would not preclude the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code. |
32
(g) Company Cash Balance. The Company shall have at least $40,000,000 of cash on deposit in cash or cash equivalents, less the amount of cash deposited with the Exchange Agent pursuant to Section 2.04 and Section 7.02(f). | |
(h) Dissenting Shares. The number of Dissenting Shares shall be less than 5% of the issued and outstanding Shares. | |
(i) Cancellation of Company 401(k) Plan. Prior to the Effective Time, the Company Board shall have duly adopted a resolution providing for the termination and cancellation, as of the day immediately preceding the date on which the Effective Time occurs, of the Company’s Plan qualified under Section 401(k) of the Code (the “401(k) Plan”) and provided a certified copy of such resolution to Parent, which is reasonably satisfactory to Parent. Notwithstanding the foregoing, the Board of Directors of the Company shall not act to terminate and cancel the 401(k) Plan if Parent provides written notice to that effect to the Company at least two (2) days prior to the Effective Time. | |
(j) Taxes. Subject to Section 2.01(k), Parent shall have received the opinion of Shearman & Sterling LLP, counsel to Parent, based upon representations of Parent and the Company, and normal assumptions, to the effect that, for federal income tax purposes, the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code and that each of Parent, Merger Sub and the Company will be a party to the reorganization within the meaning Section 368(b) of the Code, which opinion shall not have been withdrawn or modified in any material respect. The issuance of such opinion shall be conditioned on receipt by Shearman & Sterling LLP of representation letters from each of Parent and Company contemplated in Section 6.10. Each such representation letter shall be dated on or before the date of such opinion and shall not have been withdrawn or modified in any material respect as of the Effective Time. |
(a) Representations and Warranties. The representations and warranties of Parent and Merger Sub contained in this Agreement shall have been true and correct when made and shall be true and correct as of the Effective Time, with the same force and effect as if made as of the Effective Time (other than such representations and warranties as are made as of another date which shall be true and correct as of such date), except where the failure to be so true and correct (without giving effect to any limitations or qualification as to “materially” (including the word “material”) or “Parent Material Adverse Effect” set forth therein) would not, individually or in the aggregate, have a Parent Material Adverse Effect. | |
(b) Agreements and Covenants. Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time. | |
(c) Material Adverse Effect. No Parent Material Adverse Effect shall have occurred since the date of this Agreement. | |
(d) Officer Certificate. Parent shall have delivered to the Company a certificate, dated the date of the Closing, signed by the President or any Vice President of Parent, certifying as to the satisfaction of the conditions specified in Sections 7.03(a), 7.03(b) and 7.03(c). | |
(e) Taxes. Subject to Section 2.01(k), the Company shall have received the opinion of Akin Gump Strauss Hauer & Feld LLP, counsel to the Company, based upon representations of Parent and the Company, and normal assumptions, to the effect that, for federal income tax purposes, the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code and that each of Parent, Merger Sub and the Company will be a party to the reorganization within the meaning Section 368(b) of the Code, which opinion shall not have been withdrawn or modified in any material respect. The issuance of such opinion shall be conditioned on receipt by Akin Gump Strauss Hauer & Feld LLP of representation letters from each of Parent and Company contemplated in Section 6.10. Each such |
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representation letter shall be dated on or before the date of such opinion and shall not have been withdrawn or modified in any material respect as of the Effective Time. | |
(f) U.S. Exchange Listing. The shares of Parent Common Stock to be issued in the Merger shall have been authorized for listing or quotation, as the case may be, on the U.S. Exchange, subject to official notice of issuance. |
34
(i) if Parent shall terminate this Agreement pursuant to Section 8.01(c); or | |
(ii) if the Company shall terminate this Agreement pursuant to Section 8.01(g); |
35
Stantec Inc. | |
10160 — 112 Street | |
Edmonton, Alberta T5K 2L6 | |
Canada | |
Attention: Jeffrey S. Lloyd | |
Facsimile No: (780) 917-7330 | |
Email: jlloyd@stantec.com |
Shearman & Sterling LLP | |
Commerce Court West | |
Suite 4405, P.O. Box 247 | |
Toronto, Canada M5L 1E8 | |
Attention: Christopher J. Cummings, Esq. | |
Facsimile No: (416) 360 2958 | |
Email: ccummings@shearman.com |
36
The Keith Companies, Inc. | |
19 Technology Drive | |
Irvine, CA 92618 | |
U.S.A. | |
Attention: Aram H. Keith | |
Facsimile No: (949) 923-6026 | |
Email: aram.keith@keithco.com |
Akin Gump Strauss Hauer & Feld LLP | |
2029 Century Park East | |
Suite 2400 | |
Los Angeles, CA 90067-3012 | |
Attention: C.N. Franklin Reddick III, Esq. | |
Facsimile No: (310) 229 1001 | |
Email: freddick@akingump.com | |
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Defined Term | Location of Definition | |||
Action | §3.09 | |||
“affiliate” | §2.09 | |||
Aggregate Cash Amount | §2.01 | (b) | ||
Aggregate Stock Amount | §2.01 | (b) | ||
ASC | §4.07 | (a) | ||
Average Stock Price | §2.01 | (a) | ||
Agreement | Preamble | |||
Blue Sky Laws | §3.05 | (b) | ||
Canadian GAAP | §4.07 | (b) | ||
Cash Election | §2.01 | (e) | ||
Cash Election Share | §2.01 | (e) | ||
Cash Payment | §2.01 | (a) | ||
CCC | Recitals | |||
Certificate of Merger | §1.02 | |||
Certificates | §2.02 | (b) | ||
Change in the Company Recommendation | §6.04 | (c) | ||
Closing | §1.02 | |||
Code | Recitals | |||
Company | Preamble | |||
Company Affiliate | §6.08 | |||
Company Board | Recitals | |||
Company Common Stock | §2.01 | (a) | ||
Company Designated Director | §6.16 | |||
Company Disclosure Schedule | Article III | |||
Company Licensed Intellectual Property | §3.13 | (a) | ||
Company Owned Intellectual Property | §3.13 | (a) | ||
Company Permits | §3.06 | |||
Company Preferred Stock | §3.03 | (a) | ||
Company Recommendation | §6.01 | (b) | ||
Company Restricted Stock | §2.05 | |||
Company SEC Reports | §3.07 | (a) | ||
Company Stock Awards | §3.03 | (a) | ||
Company Stock Options | §2.04 | (a) | ||
Company Stock Option Plans | §2.04 | (a) | ||
Company Stockholders’ Meeting | §6.01 | (a) | ||
Company Triggering Event | §8.01 | |||
Competing Transaction | §6.04 | (d) | ||
Confidentiality Agreement | §6.03 | (b) | ||
Dissenting Shareholder | §2.07 | (a) | ||
Dissenting Shares | §2.07 | (a) | ||
Effective Time | §1.02 |
39
Defined Term | Location of Definition | |||
Election Deadline | §2.01 | (i) | ||
Elections | §2.01 | (c) | ||
Environmental Permits | §3.15 | |||
ERISA | §3.10 | (a) | ||
Exchange Act | §3.07 | (a) | ||
Exchange Agent | §2.02 | (a) | ||
Exchange Fund | §2.02 | (a) | ||
Exchange Stock | §2.01 | (a) | ||
Expenses | §8.03 | (a) | ||
Fee | §8.03 | (b) | ||
Fixed Ratio Stock | §2.01 | (a) | ||
Floating Ratio Stock | §2.01 | (a) | ||
Form of Election | §2.01 | (c) | ||
Forward LLC Merger | §2.01 | (l) | ||
GAAP | §3.07 | (b) | ||
Governmental Authority | §3.05 | (b) | ||
Holder Representative | §2.01 | (c) | ||
HSR Act | §3.05 | (b) | ||
Insurance Policies | §3.18 | |||
IRS | §3.10 | (a) | ||
Law | §3.05 | (a) | ||
Leased Real Property | §3.12 | (a) | ||
Leases | §3.12 | (a) | ||
Material Contracts | §3.17 | (a) | ||
Merger | Recitals | |||
Merger Consideration | §2.01 | (a) | ||
Merger LLC | §2.01 | (l) | ||
Merger Sub | Preamble | |||
Mixed Consideration | §2.01 | (c) | ||
Mixed Election | §2.01 | (c) | ||
Mixed Election Share | §2.01 | (d) | ||
Mixed Election Share | §2.01 | (a) | ||
Multiemployer Plan | §3.10 | (b) | ||
Multiple Employer Plan | §3.10 | (b) | ||
Non-U.S. Benefit Plan | §3.10 | (g) | ||
Notice of Superior Proposal | §6.04 | (c) | ||
Nasdaq | §6.13 | |||
NYSE | §6.13 | |||
Option Consideration | §2.04 | |||
Option Exchange Fund | §2.04 | |||
Order | §7.01 | (c) | ||
Parent | Preamble | |||
Parent Board | Recitals | |||
Parent Common Stock | §2.01 | (a) |
40
Defined Term | Location of Definition | |||
Parent Licensed Intellectual Property | §4.17 | |||
Parent Owned Intellectual Property | §4.17 | |||
Parent Permits | §4.06 | |||
Parent Preferred Stock | §4.03 | (a) | ||
Parent Reports | §4.07 | (a) | ||
Parent Stock Option Plans | §4.03 | (a) | ||
Parent 2004 Balance Sheet | §4.07 | (c) | ||
Plans | §3.10 | (a) | ||
Potential Dissenting Shareholder | §2.07 | (a) | ||
Potential Dissenting Shares | §2.07 | (a) | ||
Pro Rata Amount of Cash | §2.01 | (f) | ||
Pro Rata Number of Shares | §2.01 | (e) | ||
Proxy Statement | §6.01 | (a) | ||
Registration Statement | §6.01 | (a) | ||
Representatives | §6.03 | (a) | ||
Reverse-Subsidiary Merger | §2.01 | (k) | ||
SEC | §3.07 | (a) | ||
Securities Act | §3.07 | (a) | ||
Significant Subsidiary | §6.04 | (d) | ||
Shares | §2.01 | (a) | ||
Stock Election | §2.01 | (c) | ||
Stock Election Share | §2.01 | (e) | ||
Stockholder | Recitals | |||
Subsidiary | §3.01 | (a) | ||
Superior Proposal | §6.04 | (e) | ||
Support Agreement | Recitals | |||
Surviving Corporation | §1.01 | |||
Terminating Company Breach | §8.01 | (e) | ||
Terminating Parent Breach | §8.01 | (f) | ||
Transactions | Recitals | |||
TSX | §2.01 | (a) | ||
Unvested Options | §2.04 | |||
U.S. Exchange | §6.13 | |||
2004 Balance Sheet | §3.07 | (c) | ||
401(k) Plan | §7.02 | (i) | ||
US$5.50 Stock | §2.01 | (a) |
41
42
STANTEC INC. |
By | /s/ Anthony P. Franceschini |
Name: Anthony P. Franceschini |
Title: | President & CEO |
By | /s/ Jeffrey S. Lloyd |
Name: Jeffrey S. Lloyd |
Title: | Vice President, Secretary & General Counsel |
STANTEC CONSULTING CALIFORNIA INC. |
By | /s/ Anthony P. Franceschini |
Name: Anthony P. Franceschini |
Title: | President |
By | /s/ Michael Slocombe |
Name: Michael J. Slocombe |
Title: | Secretary |
KEITH COMPANIES, INC. |
By | /s/ Aram H. Keith |
Name: Aram H. Keith |
Title: | CEO |
By | /s/ Gary Campanaro |
Name: Gary Campanaro |
Title: | Secretary |
43
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED APRIL 14, 2005 BETWEEN THE REGISTERED HOLDER HEREOF AND PARENT, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF PARENT.” |
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933.” |
Very truly yours, | |
Name: | |
By: |
STANTEC INC. |
By | /s/ Anthony P. Franceschini |
Name: Anthony P. Franceschini | |
Title: President & CEO |
By | /s/ Jeffrey S. Lloyd |
Name: Jeffrey S. Lloyd | |
Title: Secretary, Vice President & General Counsel | |
STANTEC CONSULTING CALIFORNIA INC. |
By | /s/ Anthony P. Franceschini |
Name: Anthony P. Franceschini | |
Title: President |
By | /s/ Michael Slocombe |
Name: Michael Slocombe | |
Title: Secretary | |
THE KEITH COMPANIES, INC. |
By | /s/ Aram H. Keith |
Name: Aram H. Keith | |
Title: Chief Executive Officer |
By | /s/ Gary Campanaro |
Name: Gary Campanaro | |
Title: Secretary |
B-1
§ | reviewed the Merger Agreement; | |
§ | reviewed the Company’s Annual Reports to Shareholders and Annual Reports on Form 10-K for the years ended December 31, 2002, 2003 and 2004, its preliminary results for the quarter ended March, 31, 2005 and its Current Reports on Form 8-K for the three years ended the date hereof; | |
§ | reviewed Stantec’s Proxy Circular, Annual Information Form and Annual Reports to Shareholders for the years ended December 31, 2002, 2003 and 2004 and its interim financial reports for the three years ended the date hereof; | |
§ | reviewed certain operating and financial information relating to the Company’s business and prospects, including an operating budget for the year ended December 31, 2005, as prepared and provided to us by the Company’s management; |
B-2
§ | met with certain members of the Company’s senior management to discuss the Company’s business, operations, historical financial results, a range of projected financial results and future prospects; | |
§ | reviewed certain operating and financial information relating to Stantec’s business and prospects, as prepared and provided to us by Stantec’s management; | |
§ | reviewed certain projections for Stantec for the year ended December 31, 2005, published by certain equity research analysts, selected by us following discussions with Stantec’s senior management; | |
§ | met with certain members of senior management of Stantec and the Company to discuss Stantec’s business, operations, historical and projected financial results and future prospects; | |
§ | reviewed the historical prices, trading multiples and trading volumes of the shares of Company Common Stock and Stantec Common Stock; | |
§ | reviewed publicly available financial data, stock market performance data and trading multiples of companies which we deemed generally comparable to the Company and Stantec; | |
§ | reviewed the terms of recent mergers and acquisitions of companies which we deemed generally comparable to the Company; | |
§ | performed discounted cash flow sensitivity analyses based on the ranges of projected financial results for the Company furnished to us by the Company’s senior management; | |
§ | reviewed the pro forma financial results, financial condition and capitalization of Stantec giving effect to the Merger; and | |
§ | conducted such other studies, analyses, inquiries and investigations as we deemed appropriate. |
B-3
Very truly yours, | |
Bear, Stearns & Co. Inc. |
By: | /s/ Neil B. Morganbesser |
Senior Managing Director |
B-4
C-1
1. | Representations and Warranties of the Stockholders. Each Stockholder hereby, jointly and severally, represents and warrants to Parent and Purchaser as follows: |
(a) | The Trust is a trust duly organized, validly existing and in good standing under the laws of the State of California. The Trust has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Trust and the performance by the Trust of its obligations hereunder have been duly and validly authorized by all necessary action, and no other proceedings on the part of the Trust are necessary to authorize this Agreement or to perform its obligations hereunder. This Agreement has been duly executed and delivered by the Trust and, assuming the due authorization, execution and delivery by Parent and Purchaser, constitutes the legal, valid and binding obligation of the Trust, enforceable against the Trust in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy insolvency and similar laws affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or equity). |
(b) | The execution and delivery of this Agreement by the Trust do not, and the performance of this Agreement by the Trust will not, (A) conflict with or violate the organizational documents of the Trust, (B) assuming that all consents, approvals, authorizations and other actions described in subsection (c) have been obtained and all filings and obligations described in subsection (c) have been made, conflict with or violate any Law applicable to the Trust or by which any property or asset of the Trust is bound or affected, or (C) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on |
C-2
any property or asset of the Trust pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation. | ||
(c) | The execution and delivery of this Agreement by each Stockholder does not, and the performance of this Agreement by each Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except for applicable requirements, if any, of the Securities Act of 1933, as amended, the Exchange Act and the HSR Act. | |
(d) | With respect to Aram H. Keith and Margie R. Keith (each an “Individual”), this Agreement has been duly executed and delivered by each Individual and, assuming the due authorization, execution and delivery by Parent and Purchaser, constitutes the legal, valid and binding obligation of each Individual, enforceable against each Individual in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy insolvency and similar laws affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or equity). | |
(e) | Except for shares of Company Common Stock held directly by the Trust, the Individuals do not own, either directly or beneficially, any shares of Company Common Stock. |
2. | Grant of Proxy. Each Stockholder, by this Agreement, with respect to his, her or its Shares, hereby agrees, and to secure such agreement, grants an irrevocable proxy to Parent (and agrees to execute such documents or certificates evidencing such proxy as Parent may reasonably request) to vote, at any meeting of the stockholders of the Company, and in any action by written consent of the stockholders of the Company, all of such Stockholder’s Shares (i) in favor of the approval and adoption of the Merger Agreement and approval of the Merger, (ii) against any action, agreement or transaction (other than the Merger Agreement or the Merger) or proposal (including any Superior Proposal) that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or that could result in any of the conditions to the Company’s obligations under the Merger Agreement not being fulfilled, and (iii) in favor of any other matter necessary to the consummation of the Merger and considered and voted upon by the stockholders of the Company. Each Stockholder further agrees to cause such Stockholder’s Shares to be voted in accordance with the foregoing. THIS PROXY IS IRREVOCABLE AND SECURES THE PERFORMANCE BY THE STOCKHOLDERS OF THE DUTIES SET FORTH HEREIN. Each Stockholder acknowledges receipt and review of a copy of the Merger Agreement. | |
3. | Transfer of Shares. Each Stockholder agrees that he, she or it shall not, directly or indirectly, (a) sell, assign, transfer (including by operation of law), lien, pledge, dispose of or otherwise encumber any of the Shares or otherwise agree to do any of the foregoing, (b) deposit any Shares into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with respect thereto that is inconsistent with this Agreement, (c) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect acquisition or sale, assignment, transfer (including by operation of law) or other disposition of any Shares or (d) take any action that would make any representation or warranty of such Stockholder herein untrue or incorrect in any material respect or have the effect of preventing or disabling the Stockholder from performing his, her or its obligations hereunder. | |
4. | No Solicitation of Transactions. None of the Stockholders shall, directly or indirectly, (a) solicit, initiate or encourage the submission of, any Competing Transaction or (b) participate in any discussions or negotiations regarding, or furnish to any person, any information with respect to, or otherwise cooperate in any way with respect to, or assist or participate in, facilitate or encourage, any unsolicited proposal that constitutes, or may reasonably be expected to lead to, a Superior Proposal; provided, however, that nothing in this Section 3 shall prevent Aram H. Keith, in his capacity as a director and executive officer of the Company from, engaging in any activity permitted pursuant to Section 6.04 of the Merger Agreement. Each Stockholder shall, and shall |
C-3
direct his, her or its representatives and agents to, immediately cease and terminate any discussions or negotiations with any parties that may be ongoing with respect to any Competing Transaction. | ||
5. | Information for Proxy Statement/ Prospectus; Disclosure. Each Stockholder authorizes and agrees to permit Parent and Purchaser to publish and disclose in the Proxy Statement/ Prospectus and related filings under the securities laws such Stockholder’s identity and ownership of Shares and the nature of his, her or its commitments, arrangements and understandings under this Agreement and any other information required by applicable Law. | |
6. | Termination. The obligations of the Stockholders under this Agreement shall terminate upon the earlier of (i) the Effective Time and (ii) upon the termination of the Merger Agreement. Nothing in this Section 7 shall relieve any party of liability for any breach of this Agreement occurring prior to the time of such termination. | |
7. | Miscellaneous. Notwithstanding anything to the contrary contained herein, no action of a Stockholder in his, her or its capacity as a director or executive officer of the Company shall constitute a breach of this Agreement. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the transactions contemplated hereby are consummated; all notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy, e-mail or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at their addresses as specified on the signature page(s) of this Agreement; if any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party; this Agreement and the Merger Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof; this Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise), except that Parent may assign all or any of its rights and obligations hereunder to any affiliate of Parent,provided,however, that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations; this Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement; the parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity; this Agreement shall be governed by, and construed in accordance with, the laws of the State of California applicable to contracts executed in and to be performed in that State; this Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement; from time to time, at the request of Parent, in the case of any Stockholder, or at the request of the Stockholders, in the case of Parent and Purchaser, and without further consideration, each party shall execute and deliver or cause to be executed and delivered such additional documents and instruments and take all such further action as may be reasonably necessary or desirable to give effect to the rights, duties and obligations of the parties set forth in this Agreement;each of the parties hereto hereby waives to the fullest extent permitted by applicable law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this agreement. |
C-4
Stantec Inc. |
By: | /s/Anthony P. Franceschini |
Name: Anthony P. Franceschini |
Title: | President & CEO |
By: | /s/Jeffrey S. Lloyd |
Name: Jeffrey S. Lloyd |
Title: | Vice President, Secretary & General Counsel |
Stantec Consulting California Inc. |
By: | /s/Anthony P. Franceschini |
Name: Anthony P. Franceschini |
Title: | President |
By: | /s/Michael J. Slocombe |
Name: Michael J. Slocombe |
Title: | Secretary |
Aram H. Keith and Margie R. Keith Revocable Trust |
By: | /s/Aram H. Keith |
Aram H. Keith, as Trustee |
By: | /s/Margie R. Keith — Trustee |
Margie R. Keith, as Trustee | |
/s/Aram H. Keith | |
Aram H. Keith | |
/s/Margie R. Keith | |
Margie R. Keith |
C-5
Number of Shares of Company | ||||
Common Stock Owned | ||||
Name of Stockholder | Beneficially | |||
ARAM H. KEITH AND MARGIE R. KEITH REVOCABLE TRUST DATED OCTOBER 23, 1989 | 1,366,217 | |||
ARAM H. KEITH | 1,366,217 | |||
MARGIE R. KEITH | 1,366,217 |
C-6
D-1
(1) | Which were not immediately prior to the reorganization or short-form merger either (A) listed on any national securities exchange certified by the Commissioner of Corporations under subdivision (o) of Section 25100 or (B) listed on the National Market System of the NASDAQ Stock Market, and the notice of meeting of shareholders to act upon the reorganization summarizes this section and Sections 1301, 1302, 1303 and 1304; provided, however, that this provision does not apply to any shares with respect to which there exists any restriction on transfer imposed by the corporation or by any law or regulation; and provided, further, that this provision does not apply to any class of shares described in subparagraph (A) or (B) if demands for payment are filed with respect to 5 percent or more of the outstanding shares of that class. | |
(2) | Which were outstanding on the date for the determination of shareholders entitled to vote on the reorganization and (A) were not voted in favor of the reorganization or, (B) if described in subparagraph (A) or (B) of paragraph (1) (without regard to the provisos in that paragraph), were voted against the reorganization, or which were held of record on the effective date of a short-form merger; provided, however, that subparagraph (A) rather than subparagraph (B) of this paragraph applies in any case where the approval required by Section 1201 is sought by written consent rather than at a meeting. | |
(3) | Which the dissenting shareholder has demanded that the corporation purchase at their fair market value, in accordance with Section 1301. | |
(4) | Which the dissenting shareholder has submitted for endorsement, in accordance with Section 1302. |
D-2
D-3
(a) | The corporation abandons the reorganization. Upon abandonment of the reorganization, the corporation shall pay on demand to any dissenting shareholder who has initiated proceedings in good faith under this chapter all necessary expenses incurred in such proceedings and reasonable attorneys’ fees. | |
(b) | The shares are transferred prior to their submission for endorsement in accordance with Section 1302 or are surrendered for conversion into shares of another class in accordance with the articles. | |
(c) | The dissenting shareholder and the corporation do not agree upon the status of the shares as dissenting shares or upon the purchase price of the shares, and neither files a complaint or intervenes in a pending action as provided in Section 1304, within six months after the date on which notice of the approval by the outstanding shares or notice pursuant to subdivision (i) of Section 1110 was mailed to the shareholder. |
D-4
(d) | The dissenting shareholder, with the consent of the corporation, withdraws the shareholder’s demand for purchase of the dissenting shares. |
D-5
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. Indemnification of Officers and Directors
Under theCanada Business Corporations Act(the “CBCA”), a corporation may indemnify a present or former director or officer of such corporation or another individual who acts or acted at the corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity. The corporation may advance moneys to the director, officer or other individual for the costs, charges and expenses of any such proceeding. The corporation may not indemnify an individual unless the individual acted honestly and in good faith with a view to the best interests of the corporation, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the corporation’s request and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful. The individual shall repay any moneys advanced to him or her if he or she does not fulfill the above conditions. Such indemnification and advances may be made in connection with a derivative action only with court approval. Such individual is entitled to indemnification or advances from the corporation as a matter of right in respect of all costs, charges and expenses reasonably incurred by him in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which he is subject by reason of being or having been a director or officer of the corporation or another entity as described above if the individual was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done and if the individual fulfils the conditions set forth above.
The bylaws of Stantec Inc. (the “Registrant”) provide that, subject to the CBCA, the Registrant shall indemnify a director or officer of the Registrant, a former director or officer of the Registrant, or another individual who acts or acted at the Registrant’s request as a director or officer, or an individual acting in a similar capacity, of another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Registrant or other entity if: (a) the individual acted honestly and in good faith with a view to the best interests of the Registrant or, as the case may be, to the best interests of the other entity for with the individual acted as a director or officer or in a similar capacity at the Registrant’s request; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful. The Registrant shall advance the necessary moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to previously. The individual shall repay the moneys if the individual does not fulfill the previously named conditions. The Registrant shall also indemnify such person in such other circumstances as the CBCA permits or requires.
The Registrant maintains directors’ and officers’ liability insurance which insures the directors and officers of the Registrant and its subsidiaries against certain losses resulting from any wrongful act committed in their official capacities for which they become obligated to pay to the extent permitted by applicable law.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that, in the opinion of the U.S. Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
The exhibits listed in the exhibits index, appearing elsewhere in this registration statement, have been filed as part of this registration statement.
ITEM 21. Exhibits and Financial Statement Schedules
(a) The following documents are exhibits to the registration statement.
Exhibit | ||
Number | Description of Document | |
2.1*† | Agreement and Plan of Merger and Reorganization, dated as of April 14, 2005, as amended May 9, 2005, among Stantec Inc., The Keith Companies, Inc. and Stantec Consulting California Inc., a wholly-owned subsidiary of Stantec Inc. (attached as Appendix A to the proxy statement/prospectus which is part of this Registration Statement). | |
3.1* | Articles of Incorporation of Stantec Inc. | |
3.2* | Bylaws of Stantec Inc. | |
4.1* | Form of Stantec Inc. common share certificate. | |
5.1** | Opinion of Fraser Milner Casgrain LLP as to the legality of the securities being registered. | |
8.1** | Opinion of Shearman & Sterling LLP as to certain U.S. federal income tax matters. | |
8.2** | Opinion of Akin Gump Strauss Hauer & Feld LLP as to certain U.S. federal income tax matters. | |
10.1* | Employment Agreement, dated as of January 31, 2005, between Stantec Consulting Ltd. and Raymond L. Alarie. | |
10.2* | Contract Amending Agreement, dated as of February 27, 2003, between Stantec Inc. and Anthony P. Franceschini. | |
10.3* | Employment Agreement, dated as of January 1, 2003, between Stantec Inc. and Anthony P. Franceschini. | |
10.4* | Employment Agreement, dated as of December 19, 2002, between Stantec Consulting Ltd. and W. Barry Lester. | |
10.5* | Employment Agreement, dated as of October 31, 2001, between Stantec Consulting Ltd. and Mark Jackson. | |
10.6* | Employment Agreement, dated as of October 31, 2001, between Stantec Consulting Ltd. and Jeffrey S. Lloyd. | |
10.7* | Employment Agreement, dated as of October 31, 2001, between Stantec Consulting Ltd. and Donald W. Wilson | |
10.8** | Credit Agreement, dated June 21, 2004, between Stantec Inc. and Canadian Imperial Bank of Commerce | |
21.1* | Subsidiaries of Stantec Inc. | |
23.1** | Consent of Ernst & Young LLP – Independent Registered Public Accounting Firm. | |
23.2** | Consent of KPMG LLP – Independent Registered Public Accounting Firm. | |
23.3** | Consent of Fraser Milner Casgrain LLP (included in Exhibit 5.1). | |
23.4** | Consent of Shearman & Sterling LLP (included in Exhibit 8.1). | |
23.5** | Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 8.2). | |
23.6* | Consent of Bear, Stearns & Co. Inc. (included in Exhibit 99.4). | |
24.1* | Powers of Attorney (included on the signature page of this Registration Statement). | |
99.1* | Form of proxy card for the special meeting of shareholders of The Keith Companies, Inc. | |
99.2* | Form of Letter to the shareholders of The Keith Companies, Inc. (included in the proxy statement/prospectus which is part of this Registration Statement). | |
99.3* | Form of Notice of Special Meeting of shareholders of The Keith Companies, Inc. (included in the proxy statement/prospectus which is part of this Registration Statement). | |
99.4*** | Consent of Aram H. Keith. |
* | Previously filed. | |
† | The registrant hereby agrees to furnish to the Commission a copy of any omitted schedule to the Merger Agreement. | |
** | Filed herewith. | |
*** | To be filed by amendment. |
(b) Financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements of Stantec Inc. and the notes thereto.
(c) The opinion of Bear, Stearns & Co. Inc. is incorporated as Appendix B to the proxy statement/prospectus which is part of this Registration Statement.
II - 2
ITEM 22. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; | |||
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |||
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished,providedthat the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.
The registrant undertakes that every prospectus (i) that is filed pursuant to the paragraph immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
Insofar as indemnification for liabilities under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the proxy statement/prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
II - 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Edmonton, Province of Alberta, Canada, on June 23, 2005.
STANTEC INC. (Registrant) | ||||||
By: | /s/ Jeffrey S. Lloyd | |||||
Name: | Jeffrey S. Lloyd | |||||
Title: | Vice President, Secretary and General Counsel |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
* Anthony P. Franceschini | President, Chief Executive Officer and Director (principal executive officer) | June 23, 2005 | ||
* Donald W. Wilson | Vice President and Chief Financial Officer (principal financial and accounting officer) | June 23, 2005 | ||
* Ronald Triffo | Chairman of the Board of Directors | June 23, 2005 | ||
* Neilson A. Bertholf, Jr. | Director | June 23, 2005 | ||
* Robert J. Bradshaw | Director | June 23, 2005 | ||
* E. John Finn | Director | June 23, 2005 | ||
* William D. Grace | Director | June 23, 2005 | ||
* Susan E. Hartman | Director | June 23, 2005 | ||
* Robert R. Mesel | Director | June 23, 2005 | ||
*By: /s/ Jeffrey S. Lloyd | ||||
Attorney-in-Fact |
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the Authorized Representative has signed this Registration Statement, solely in its capacity as the duly authorized representative of Stantec Inc. on June 23, 2005.
STANTEC CONSULTING INC. | ||||||
By: | /s/ Michael J. Slocombe | |||||
Name: Michael J. Slocombe | ||||||
Title: Secretary |
EXHIBIT INDEX
Exhibit | ||
Number | Description of Document | |
2.1*† | Agreement and Plan of Merger and Reorganization, dated as of April 14, 2005, as amended May 9, 2005, among Stantec Inc., The Keith Companies, Inc. and Stantec Consulting California Inc., a wholly-owned subsidiary of Stantec Inc. (attached as Appendix A to the proxy statement/prospectus which is part of this Registration Statement). | |
3.1* | Articles of Incorporation of Stantec Inc. | |
3.2* | Bylaws of Stantec Inc. | |
4.1* | Form of Stantec Inc. common share certificate. | |
5.1** | Opinion of Fraser Milner Casgrain LLP as to the legality of the securities being registered. | |
8.1** | Opinion of Shearman & Sterling LLP as to certain U.S. federal income tax matters. | |
8.2** | Opinion of Akin Gump Strauss Hauer & Feld LLP as to certain U.S. federal income tax matters. | |
10.1* | Employment Agreement, dated as of January, 2005, between Stantec Consulting Ltd. and Raymond L. Alarie. | |
10.2* | Contract Amending Agreement, dated as of February 27, 2003, between Stantec Inc. and Anthony P. Franceschini. | |
10.3* | Employment Agreement, dated as of January 1, 2003, between Stantec Inc. and Anthony P. Franceschini. | |
10.4* | Employment Agreement, dated as of December 19, 2002, between Stantec Consulting Ltd. and W. Barry Lester. | |
10.5* | Employment Agreement, dated as of October 31, 2001, between Stantec Consulting Ltd. and Mark Jackson. | |
10.6* | Employment Agreement, dated as of October 31, 2001, between Stantec Consulting Ltd. and Jeffrey S. Lloyd. | |
10.7* | Employment Agreement, dated as of October 31, 2001, between Stantec Consulting Ltd. and Donald W. Wilson. | |
10.8** | Credit Agreement, dated as of June 21, 2004 between Stantec Inc. and Canadian Imperial Bank of Commerce. | |
21.1* | Subsidiaries of Stantec Inc. | |
23.1** | Consent of Ernst & Young LLP – Independent Registered Public Accounting Firm. | |
23.2** | Consent of KPMG LLP – Independent Registered Public Accounting Firm. | |
23.3** | Consent of Fraser Milner Casgrain LLP (included in Exhibit 5.1). | |
23.4** | Consent of Shearman & Sterling LLP (included in Exhibit 8.1). | |
23.5** | Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 8.2). | |
23.6* | Consent of Bear, Stearns & Co. Inc. | |
24.1* | Powers of Attorney (included on the signature page of this Registration Statement). | |
99.1* | Form of proxy card for the special meeting of shareholders of The Keith Companies, Inc. | |
99.2* | Form of Letter to the shareholders of The Keith Companies, Inc. (included in the proxy statement/prospectus which is part of this Registration Statement). | |
99.3* | Form of Notice of Special Meeting of shareholders of The Keith Companies, Inc. (included in the proxy statement/prospectus which is part of this Registration Statement). | |
99.4*** | Consent of Aram H. Keith. |
* | Previously filed. | |
† | The registrant hereby agrees to furnish to the Commission a copy of any omitted schedule to the Merger Agreement. | |
** | Filed herewith. | |
*** | To be filed by amendment. |