SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
AMENDMENT NO.1
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 1998
DAMES & MOORE GROUP
(Exact name of registrant as specified in its charter)
Commission File Number 1-11075
DELAWARE 95-4316617
(State of incorporation) (I.R.S. Employer Identification No.)
911 WILSHIRE BOULEVARD, SUITE 700
LOS ANGELES, CALIFORNIA 90017
(Address of principal executive offices) (Zip Code)
(213) 996-2200
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
The Financial Statements, Pro Forma Financial Information and Exhibits
set forth in Dames & Moore Group's Form 8-K dated July 31, 1998 are
hereby amended to read in their entirety as follows:
(a) Financial Statements of Businesses Acquired
Included as Exhibit 99.4 hereto, and incorporated herein by reference
are the audited consolidated financial statements of Radian
International LLC and subsidiaries as of December 31, 1997 and 1996,
and for the years then ended.
Included as Exhibits 99.3 hereto, and incorporated herein by reference
are the consolidated unaudited financial information of Radian
International LLC and subsidiaries as of June 30, 1998 and December
31, 1997; and for the six-month periods ended June 30, 1998 and June
30, 1997.
(b) Pro Forma Financial Information
On July 31, 1998, Dames & Moore Group ("DMG") acquired all of the
membership interests of Radian International LLC ("Radian"). The
purchase price of $117 million was allocated to the estimated fair
value of assets acquired and liabilities assumed, using the purchase
method of accounting. DMG is awaiting additional information related
to the fair value of certain assets acquired, liabilities assumed and
the restructuring plans for Radian. The purchase price in excess of
the fair value of the assets acquired is classified as goodwill and is
being amortized over 40 years.
The following pro forma combined financial statements give the effect
of the acquisition of Radian. The pro forma combined financial
statements are based on historical audited and unaudited consolidated
financial statements and notes thereto of DMG and Radian. The
unaudited pro forma combined financial statements are presented for
illustrative purposes only to show how the acquisitions might have
affected historical results of operations if the transaction had
occurred at an earlier time. The pro forma results are not
necessarily indicative of the combined financial position or results
of operations for future periods or the results that actually would
have been realized had DMG and Radian been combined during the
specified periods. The pro forma combined consolidated financial
information does not reflect any potential cost savings which are
expected to be achieved following the acquisition. The pro forma
combined financial statements, including notes thereto, are qualified
in their entirety by reference to, and should be read in conjunction
with, the historical consolidated financial statements of DMG and
Radian, including the notes thereto, incorporated herein by reference.
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DAMES & MOORE GROUP
AND RADIAN INTERNATIONAL LLC
UNAUDITED PRO FORMA COMBINED AND CONDENSED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DMG RADIAN
June 26, June 30, PRO FORMA PRO FORMA
1998 1998 ADJUSTMENTS COMBINED
------------ ------------- ------------- -------------
ASSETS
Current:
Cash and cash equivalents $ 11,135 $ 1,793 $ $ 12,928
Marketable securities 785 - 785
Accounts receivable, net of allowance
for doubtful accounts 149,169 48,848 198,017
Unbilled receivables 63,678 29,734 93,412
Deferred income taxes 4,303 1,034 1,510 (g) 6,847
Prepaid expenses and other assets 13,285 4,799 481 (e) 27,072
8,507 (f)
Inventories - 5,685 5,685
---------- -------- --------- ---------
Total current assets 242,355 91,893 10,498 344,746
Property and equipment, net 24,305 30,616 54,921
Goodwill of acquired businesses, net 121,896 16,885 (16,885)(a) 132,308
10,412 (b)
Investments in affiliates 7,221 1,735 8,956
Other assets 14,499 16,092 3,078 (d) 33,669
---------- -------- --------- ---------
$410,276 $157,221 $ 7,103 $ 574,600
---------- -------- --------- ---------
---------- -------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Current portion of long-term debt $ 14,281 $ 44,215 $ (44,165)(c) $ 4,331
(10,000)(d)
Accounts payable 35,040 9,557 300 (i) 44,897
Accrued payroll and employee benefits 29,103 15,705 44,808
Current income taxes payable 6,256 336 (1,498)(e) 5,094
Accrued expenses and other liabilities 24,799 4,938 (2,424)(d) 45,696
3,500 (g)
15,000 (h)
(117)(c)
---------- -------- --------- ---------
Total current liabilities 109,479 74,751 (39,404) 144,826
Long-term debt 139,000 - 137,641 (d) 276,641
Other long-term liabilities 6,134 7,815 (553)(d) 13,396
Contingencies
Shareholders' equity:
Preferred stock - - - -
Common stock and capital in excess of $0.01
par value 108,010 102,831 (102,831)(j) 108,010
Retained earnings 108,905 (28,055) (2,607)(e) 93,100
(11,208)(f)
(1,990)(g)
28,055 (j)
Treasury stock (58,614) - (58,614)
Accumulated other comprehensive income (2,016) (121) (2,137)
Other shareholders' equity (622) - (622)
---------- -------- --------- ---------
Total shareholders' equity 155,663 74,655 (90,581) 139,737
---------- -------- --------- ---------
$410,276 $157,221 $ 7,103 $574,600
---------- -------- --------- ---------
---------- -------- --------- ---------
The accompanying notes are an integral part of these pro forma financial
statements.
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DAMES & MOORE GROUP
AND RADIAN INTERNATIONAL LLC
UNAUDITED PRO FORMA COMBINED AND CONDENSED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED
---------------------------
June 26, June 30,
1998 1998 PRO FORMA PRO FORMA
DMG RADIAN ADJUSTMENTS COMBINED
------------ ------------- -------------- -------------
Gross revenues: $189,150 $ 70,091 $ $ 259,241
Direct costs of outside services 60,346 24,779 85,125
-------- -------- ------- ---------
Net revenues 128,804 45,312 - 174,116
-------- -------- ------- ---------
Operating expenses:
Salaries and related costs 90,013 32,057 122,070
General expenses 24,290 8,150 32,440
Depreciation and amortization 2,251 2,677 4,928
Amortization of goodwill 1,187 210 (210)(a) 1,299
112 (k)
-------- -------- ------- ---------
117,741 43,094 (98) 160,737
-------- -------- ------- ---------
Earnings from operations 11,063 2,218 98 13,379
Investment and other income (loss) (155) 1,043 - 888
Interest expense (2,663) (621) 620 (c) (5,216)
(2,552)(l)
-------- -------- ------- ---------
Earnings before income taxes 8,245 2,640 (1,834) 9,051
Income taxes 3,558 51 268 (m) 3,877
-------- -------- ------- ---------
Net earnings $ 4,687 $ 2,589 $(2,102) $ 5,174
-------- -------- ------- ---------
-------- -------- ------- ---------
Cash dividends declared per share $ 0.03 $ 0.03
-------- ---------
-------- ---------
Earnings per share- Basic $ 0.26 $ 0.28
-------- ---------
-------- ---------
Earnings per share - Diluted $ 0.26 $ 0.28
-------- ---------
-------- ---------
Weighted average number of shares - Basic 18,262 18,262
-------- ---------
-------- ---------
Weighted average number of shares - Diluted 18,336 18,336
-------- ---------
-------- ---------
The accompanying notes are an integral part of these pro forma financial
statements.
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DAMES & MOORE GROUP
AND RADIAN INTERNATIONAL LLC
UNAUDITED PRO FORMA COMBINED AND CONDENSED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
YEARS ENDED
---------------------------
March 27, Dec. 31,
1998 1997 PRO FORMA PRO FORMA
DMG RADIAN ADJUSTMENTS COMBINED
------------ ------------ ------------- --------------
Gross revenues: $ 703,902 $ 287,578 $ $ 991,480
Direct costs of outside services 221,398 115,040 336,438
---------- ---------- -------- -----------
Net revenues 482,504 172,538 655,042
---------- ---------- -------- -----------
Operating expenses:
Salaries and related costs 337,474 123,453 460,927
General expenses 88,401 53,451 (5,150)(o) 136,702
Depreciation and amortization 9,216 10,077 19,293
Amortization of goodwill 4,600 1,018 (1,018)(a) 5,048
448 (k)
Impairment of goodwill - 7,246 (7,246)(n) -
---------- ---------- -------- -----------
439,691 195,245 (12,966) 621,970
---------- ---------- -------- -----------
Earnings (loss) from operations 42,813 (22,707) 12,966 33,072
Investment and other income 997 441 - 1,438
Interest expense (10,292) (2,594) 2,381 (c) (20,754)
(10,249)(l)
---------- ---------- -------- -----------
Earnings (loss) before income taxes 33,518 (24,860) 5,098 13,756
Income taxes 14,188 1,140 (9,436)(m) 5,892
---------- ---------- -------- -----------
Net earnings (loss) $ 19,330 $ (26,000) $ 14,534 $ 7,864
---------- ---------- -------- -----------
---------- ---------- -------- -----------
Earnings per share:
Basic $ 1.08 $ 0.44
---------- -----------
---------- -----------
Diluted $ 1.07 $ 0.44
---------- -----------
---------- -----------
Cash dividends declared per share $ 0.12 $ 0.12
---------- -----------
---------- -----------
Weighted average number of shares - Basic 17,890 17,890
---------- -----------
---------- -----------
Weighted average number of shares - Diluted 18,048 18,048
---------- -----------
---------- -----------
The accompanying notes are an integral part of these pro forma financial
statements.
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NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Note 1- BASIS OF PRESENTATION
The unaudited pro forma combined and condensed statement of
financial position of DMG and Radian has been prepared as if
the acquisition of Radian was completed on June 26, 1998,
and combines DMG's unaudited June 26, 1998 statement of
financial position and Radian's unaudited June 30, 1998
statement of financial position.
The unaudited pro forma combined and condensed statement of
earnings assumes the acquisition took place as of the
beginning of the periods presented. The statement of
earnings ending in June combines DMG's unaudited
consolidated statement of earnings for the three-month
period ended June 26, 1998 and Radian's unaudited
consolidated statement of earnings for the three months
ended June 30, 1998. The statement of earnings ending in
March combines DMG's consolidated statement of earnings for
the year ended March 27, 1998 and Radian's consolidated
statement of earnings for the year ended December 31, 1997.
Note 2- PRO FORMA ADJUSTMENTS
(a) To eliminate goodwill and related amortization recorded at
Radian.
(b) To record the excess of the purchase price and related
acquisition costs over the fair value of assets acquired and
liabilities assumed.
(c) To eliminate the debt, interest expense and related accrued
interest which was not assumed by DMG.
(d) To record the restructured debt obligations, including repayment
of principal and interest and related deferred financing costs
incurred by DMG in connection with the Radian acquisition.
(e) To record the effect to equity and income taxes for the charges
to income resulting from the early extinguishment of DMG's debt.
The pro forma statements of earnings excludes the charge for
early extinguishment of debt due to its non-recurring nature.
(f) Reflects the write-off of purchased in-process research and
development technology costs identified in the preliminary
allocation of the purchase price and the related tax effects.
The pro forma statements of earnings excludes the write-off of
purchased in-process research and development technology costs
due to its non-recurring nature.
(g) To reflect the estimated restructuring charges expected to be
incurred by DMG in connection with the consolidation of certain
facilities, and operations. The amounts recorded are
management's estimates which may be revised upon completion of
the restructuring plan. The pro forma statements of earnings
excludes DMG's restructuring charge due to its non-recurring
nature.
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(h) To reflect the estimated restructuring charges expected to be
incurred in connection with the Radian acquisition. The
restructuring plans include the consolidation of certain
facilities, and operations. Furthermore, additional insurance
reserves have been reflected, due to Radian's adoption of DMG's
insurance programs. The amounts recorded are management's
estimates which may be revised upon completion of the
restructuring plan and reflected as a charge to purchase price.
(i) To reflect estimated costs of the transaction.
(j) To reflect the elimination of Radian's equity accounts.
(k) To record amortization of goodwill over 40 years, based upon the
estimated balance of goodwill.
(l) To record the incremental interest cost and amortized financing
costs on the restructured debt obligations incurred by DMG in
connection with the Radian acquisition.
(m) Radian is a limited liability company and therefore is not
directly subject to most income taxes. The tax liability flows
through to DMG, therefore a provision for income taxes is being
recorded including a provision for the pro forma adjustments
based upon an estimated combined tax rate.
(n) To eliminate the charge to earnings for impairment of goodwill,
due to its non-recurring nature.
(o) To eliminate the restructuring charge recorded by Radian,
due to its non-recurring nature.
Note 3- NONRECURRING CHARGES
DMG will also be incurring charges for the consolidation of
certain facilities and operations. Management has estimated
these costs to be $1,990,000 net of taxes; additionally, a
charge for in-process research and development technology
costs of $11,208,000 net of taxes will be recorded; both of
these charges have been reflected in the pro forma balance
sheet but not the pro forma statement of earnings.
Note 4- LONG-TERM DEBT
The funding of the Radian acquisition resulted in the early
extinguishment of DMG's Senior Notes and certain bank lines of
credit. DMG's new long-term debt facility includes a term
commitment of $265,000,000 and a revolving commitment of
$75,000,000. Interest is charged under several options,
including the bank's reference rate or at LIBOR plus a spread,
at the Company's option. Interest is payable quarterly for
reference rate borrowings and for LIBOR borrowings the earlier
of the last day of the interest rate period or three months
from the first day of the interest rate period. The agreement
contains limitations on additional indebtedness, sales of
assets, acquisitions and capital expenditures, as well as
maintenance of certain financial ratios. The term loan
requires quarterly principal payments commencing on June 30,
1999, with the
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unpaid balance of $140,000,000 due in full on June 30, 2004.
The revolving commitment also matures on June 30, 2004.
Furthermore, mandatory principal pre-payments or commitment
reductions are required in the event of the occurrence of
certain transactions, as defined in the agreement.
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(c) Exhibits:
2.1 Equity Purchase Agreement by and among Dow Environmental, Inc.,
TCM Technologies, Inc. and Radian Acquisition Corp. dated as of
June 23, 1998 (incorporated herein by reference to Exhibit 10.2
of the Company's Quarterly Report on Form 10-Q [File No.
1-11075] for the quarter ended June 26, 1998).
4.1 Credit Agreement among Dames & Moore Group, as Borrower, The
Several Lenders from Time to Time Parties Hereto and Canadian
Imperial Bank of Commerce, as Administrative Agent, dated as of
July 31, 1998 (incorporated herein by reference to Exhibit 4.1
of the Company's Current Report on Form 8-K [File No. 1-11075]
July 31, 1998).
23.1 Consent of Deloitte & Touche LLP
99.1 Press Release dated June 24, 1998 (incorporated herein by
reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K [File No. 1-11075] July 31, 1998).
99.2 Press Release dated August 3, 1998 (incorporated herein by
reference to Exhibit 99.2 of the Company's Current Report on
Form 8-K [File No. 1-11075] July 31, 1998).
99.3 Unaudited consolidated balance sheet of Radian International
LLC and subsidiaries as of June 30, 1998 and the related
consolidated statements of operations and cash flows for the
six-month periods ended June 30, 1998 and June 30, 1997.
99.4 Audited consolidated balance sheets of Radian International LLC
and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, members' equity
and cash flows for the years then ended.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunder duly authorized.
DAMES & MOORE GROUP
Date: October 7, 1998 MARK A. SNELL
----------------------------
Mark A. Snell
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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