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The article below indicates that because of 911, security companies' revenue will increase by at least 29%. It's very important to consider where that money is going.When we went to England after Christmas, I looked at all the uniforms the incompetent security personnel were wearing as they detained Les and me for "random searches". There was one lady who went through our check-in baggage, who appeared to be of Middle-Eastern origin and could hardly speak English. Then there were three black people who did the body search when we were randomly selected as we boarded. They ran the metal detectors over us and ignored the ballpoint pen Les was carrying. They had us take off our shoes, and seemed to be having fun playing a new game. I suspect none of these people was adequately trained and were probably not making more than $6 an hour. I kept wondering how the contract was awarded to their employer and how much the contract paid versus how much the contractor had to bear in expenses--significant profit I would bet. Oh, the main contractor in Houston's Bush International was Huntleigh.Los Angeles:http://www.flysafernow.com/release.cfm?ID=1004 Huntleigh workers do not earn enough to meet a basic family budget. For example, Pre-Board Screeners who check baggage for weapons and explosives, typically earn annually from $14,000 in Oakland to $19,000 in Los Angeles. Workers do not earn all-important family medical benefits, nor do they enjoy a voice at work to make sure passenger and workplace safety issues are enforced. This combination of low wages and high stress work results in an alarmingly high turnover rate. A U.S. General Accounting Office Survey reported a turnover rate among screeners at LAX of 88% annually and at Sea-Tac of 140% annually.Boston:http://www.bostonphoenix.com/boston/news_features/this_just_in/documents/01812080.htm One question on everyone’s mind as we try to comprehend what happened in New York and Washington is this: how could two airplanes have been hijacked from Logan Airport? Well, I have a partial answer: airport security sucks. Two weeks ago, I went to Logan Airport to test airline security. I succeeded in getting my cell phone through three gates without inspection. My phone could have been a bomb. And I could have brought it on a plane.Seattle:http://www.commondreams.org/views01/0926-08.htm Up until now in the United States, airport security has been handled by the airlines themselves, which contract with security services, such as Huntleigh Corporation, the largest airport security provider in the country. Huntleigh also happens to be one of three security contractors at Sea-Tac Airport. These agencies pay between $6 and $10 per hour, in most cases do not provide any benefits, do not support unionization, and provide what many employees and critics agree is inadequate training. In most other countries, certainly those in Europe and the Middle East which have had more immediate experiences with terrorism, airport security is considered a matter of national importance. Security personnel are trained professionals, not over-worked minimum-wage earners in Captain Kangaroo jackets.
ICTS International N.V. (ICTS) implements passenger risk evaluation and classification procedures, known as profiling, mainly for the European operators of major U.S. airlines. ICTS also provides security consulting, training and auditing for airlines and airports and provides other security services. The company provides U.S. airport services such as pre-departure screening, skycaps, wheelchair attendants, agents, guards, janitorial personnel, maintenance, ramp and shuttle services. ICTS serves over 60 airlines and about 100 airports in Europe and North America. ICTS' Risk Analysis through Profiling System (RAPS) was first adopted for use by American Airlines in 1986 and TWA in 1987. RAPS later became a source for certain security standards mandated by the United States Federal Aviation Administration for U.S. airline operations. ICTS' profiling procedures are performed by deploying trained security personnel, who interview passengers, inspect their luggage and monitor and restrict access to aircraft and other vulnerable areas.In early January 1999, ICTS acquired 80% of Huntleigh Corp., based in St. Louis, MO, for about $5.9 million. The remaining 20% will be acquired during the ensuing three and a half years, with the purchase price for the remaining equity based on Huntleigh's performance. Huntleigh is a major provider of aviation services in the U.S., serving a wide variety of clients at 46 U.S. airports, including substantially all international aviation gateways in the U.S., with revenues in excess of $43 million a year.In December 1999 ICTS acquired Gilat Communication Ltd. to form a new company in which ICTS will have an 80.1% interest. The new subsidiary will provide Interactive Distance Learning (IDL) solutions to the aviation industry, with special focus on airlines and airports operators specific training needs in Europe and the US. In January 2001, ICTS announced that it had completed an agreement with Civas Civil Aviation Security Services GmbH, under which Civas acquired, in two stages, 100% of the shares of ICTS's subsidiary, ICTS Europe Holdings B.V. The purchase price was $100 million in cash, subject to certain adjustments. In the transaction, 45% of the shares of ICTS Europe were sold. The sale of the remaining 55% will completed on Dec. 31, 2003.
Address Biesbosch 225 1181 JC
Amstelveen 1185 ZH
NT
Ticker ICTS
Chief Exec Officer Lior Zouker
Chief Fin Officer Mr. Ranaan Nir See SEC filing below.+++++++++++++++++Gov't to Spend $22B on SecurityBy ALAN FRAM
Associated Press Writer
WASHINGTON (AP)--The federal government will spend $22.2 billion this year for domestic security, 29 percent more than last year, the Congressional Budget Office said Thursday in a first stab at defining what defending the homeland involves.
Domestic security is a growing, mostly undefined program. Members of both parties realize that whoever defines this area of spending can use the designation to protect favored programs or expose others to cuts, or create the impression that the government is spending a lot--or a little--to combat terrorism.
President Bush has said his new budget will propose roughly doubling next year's domestic security spending to $38 billion, suggesting that the White House's interpretation may be narrower than CBO's. Bush's budget will be released Monday.
Congressional Democrats are certain to propose at least as much spending as Bush seeks for such programs for fiscal 2003, which starts Oct. 1. Bush and Congress may well provide more money for this year, too, even as federal deficits are expected for at least the next two years.
``In the aftermath of the Sept. 11 attacks, funding homeland security initiatives has become a top priority,'' said the study, which CBO included in its semiannual report on the economy and federal budget. ``But budgetary resources are limited, and the benefits of increased funding for homeland security must be weighed against other budgetary choices.''
This year's $22.2 billion is $5 billion more than it measured for 2001. It is also four times more than the $7.2 billion that was provided in 1998, the year the White House first began filing annual reports to Congress on what was labeled ``combating terrorism.''
CBO, which is Congress' nonpartisan budget analyst, said one-third of this year's $22.2 billion, or $7.3 billion, is to protect military bases, nuclear materials and other government facilities.
Another 22 percent, or $4.8 billion, is for government purchases of vaccines, grants to local law enforcement and other steps toward preventing or responding to terrorist attacks.
Some 21 percent, or $4.7 billion, is for intelligence and federal law enforcement.
The Defense Department and intelligence agencies received the single biggest share of the overall money, about $9.3 billion. The Department of Health and Human Services got $3.1 billion; the Justice Department $2.6 billion; State Department $1.5 billion; Transportation Department $1.4 billion; and the Energy Department got $1.1 billion.
Overall, Bush and Congress have agreed to provide more than $60 billion since the Sept. 11 attacks to fight terrorism. Much of that money is to be spent over a period of years.
The biggest chunk was a $40 billion anti-terrorism package that Congress completed in December.
Of that total, CBO said, $10.2 billion was for New York City, where two hijacked planes brought down the two World Trade Center towers. Terrorists also crashed a hijacked plane into the Pentagon, while a fourth plunged into a Pennsylvania field.
New York lawmakers said Bush promised them half the $40 billion. Their efforts to win more money are likely to continue this year.
CBO estimated that extra domestic security spending by the government and business is likely to slow economic growth by 0.1 percent annually over the coming decade, because it will increase prices.
CBO said its definition of domestic security was based largely on categories of spending the White House has included in its annual reports on anti-terrorism.
These include money for protecting federal buildings, officials and workers; safeguarding citizens and key facilities such as airports and telecommunications systems; preparing for and responding to terrorist attacks; financing law enforcement and intelligence; and conducting research and development.
In a briefing Wednesday for reporters, CBO Director Dan Crippen said he believed the White House definition of homeland security excludes some categories of spending that CBO includes, such as security for overseas U.S. embassies.
He also said there might be differences in how CBO and the White House count customs fees, revenue that helps pay for some border security services.
AP-NY-01-31-02 0909EST
========
ICTS INTERNATIONAL N.V.
Biesbosch 225
1181 JC
Amstelveen, The Netherlands
(Registered with the Chamber of Commerce at
Amsterdam/Haarlem, The Netherlands under No. 33.279.300)The Company is mailing this Proxy
Statement, the Notice, the Annual Report, the form of proxy and the Power of
Attorney to the shareholders on or about May 24, 2001.Number of Shares Percent of
Beneficially Owned Class Owned
Leedan........................ 2,255,000(1) 36.2%
Harmony ....................... 679,443(2) 10.9%
Port of Rostock.............. 390,000(3) 6.3%
---------------------------
(1) Leedan, through wholly-owned subsidiaries, owns approximately 36.2% of the
issued and outstanding Common Shares. Mr. Menachem J. Atzmon and Mr. Ezra Harel
own, directly or indirectly 100% of the outstanding shares of Leedan and may be
deemed to control such company. Leedan, Mr. Atzmon and Mr. Harel may be able to
appoint all the directors of ICTS and control the affairs of ICTS.
(2) Harmony Ventures, B.V. ("Harmony") owns approximately 10.9% of the issued
and outstanding Common Shares. Mr. Menachem J. Atzmon and Mr. Ezra Harel own
100% of the outstanding shares of Harmony and may be deemed to control such
company.
(3) Seehafen Rostock Umschlagsgesellschaft GmbH ("Port of Rostock") owns
approximately 6.3% of the issued and outstanding Common Shares. Mr. Menachem J.
Atzmon and Mr. Ezra Harel own 100% of the outstanding shares of Port of Rostock
and may be deemed to control such company.
ITEM TWO OF THE AGENDA:
ELECTION OF SUPERVISORY BOARD
At the Annual Meeting, eight members of the Supervisory Board are to be
elected to serve until the 2001 Annual Meeting of Shareholders and until their
successors have been elected and qualified. The nominees to be voted on by
Shareholders are Messrs. Ezra Harel, Boaz Harel, Savinoam Avivi, Michael Barnea,
Gerald Gitner, Amos Lapidot, Menachem J. Atzmon and Eli Talmor.THE MANAGEMENT BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE FOLLOWING EIGHT NOMINEES (ITEM 1 ON THE PROXY CARD).
Ezra Harel (50) is the controlling shareholder of Leedan, an investment holding
company. Mr. Ezra Harel had been the Vice Chairman of the Board of Directors of
Rogosin Enterprises Ltd., an affiliate of Leedan ("Rogosin"), since 1994.
Rogosin has been one of the largest independent manufacturers of tire cord in
the world and is now an investment company. He has also served as Chairman of
the Board of Directors of both Dash 200+, a company involved with the conversion
of Boeing 747 aircraft from passenger to cargo use, since 1991, and Tuffy
Associates Inc., an automotive service franchise company, since 1993. Mr. Harel
is the Chairman of the Advisory Board of Port of Rostock.
Boaz Harel (37) has been the managing director of Leedan from 1993 to December
1997. Mr. Boaz Harel is the Chairman of Pioneer, a publicly traded mortgage
warehouse lender trading on NASDAQ, serving in such capacity since November
1996. Pioneer is an affiliate of Leedan. Mr. Boaz Harel is the brother of Mr.
Ezra Harel.
Savinoam Avivi (62) was a member of the Executive Board and Vice President of
Koor Industries Ltd. ("Koor"), having served in those capacities from 1988 to
1999. Mr. Avivi served as a director of Home Centers (DVI) Ltd., a company
publicly traded in Israel and an affiliate of Koor, and various subsidiaries of
Koor. Koor is publicly traded on the New York and Tel Aviv Stock Exchanges and
is the largest industrial conglomerate in Israel. He is currently chairman of
the board of several private companies.
Michael Barnea (45) has been a senior executive and a member of the Board of
Directors of Leedan since 1994. In addition, Mr. Barnea has served as the CEO of
Rogosin since 2000.
Gerald Gitner (55) served as Chairman of Avalon Group, Ltd., an investment
banking firm and President of Avalon Securities Ltd., its affiliate and an NASD
member broker-dealer from 1992 until 1998. Since 1993, he has also been a
director of Trans World Airlines, Inc. In December 1996, he was appointed to
serve as CEO and in February 1997 as Chairman of Trans World Airlines, Inc. He
served as CEO until May 1999. Since May 1985, he has served as the Chairman of
D.G. Associates, Inc. He is a director of Factory Card Outlets, Inc. Mr. Gitner
is a Trustee of Rochester Institute of Technology.
Amos Lapidot (66) is a Major General (reserve) in the Israeli Defense Forces and
has served in the past as Commander-in-Chief of the Israeli Air Force. Mr.
Lapidot has been a Special Assistant to the Israeli Ministry of Defense from
1991 to 1998. He has also been a director of El Al, the official airline of the
state of Israel, since 1995. Mr. Lapidot is President of Technion, Israel
Institute of Technology.
Menachem J. Atzmon (57) is a Chartered accountant (Isr). Mr. Atzmon is a
controlling shareholder of Leedan, an investment holding company. As of 1995 Mr.
Atzmon has served as a Director of Spencer Corporation Ltd., an investment
company. Since 1996 he is the Managing Director of Albermale Investment Ltd. and
Kent Investment Holding Ltd., both investment companies. Since January 1998 he
has served as CEO of Port of Rostock, a company engaged in sea port activities.
He is also the joint managing director of Harmony.
Eli Talmor (51) has been a member of the Supervisory Board of the Company since
December 2000. Dr. Eli Talmor is a professor at the London Business School
specializing in private equity and new ventures. He also is a professor of
finance at the University of California, Irvine. He has previously taught at Tel
Aviv University, UCLA, and the University of
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Wisconsin at Madison. Dr. Talmor served on the board of directors of New
Dimension Software from 1994 to 1999. During his tenure, the company grew,
reflected by a substantial increase of its stock price. This company was
acquired by BMC Software in 1999. Dr. Talmor holds a Ph.D. in Business
Administration from the University of North Carolina at Chapel Hill and a BSc
(Cum Laude) from Technion, Israel Institute of Technology.
The Committee has discussed with Kesselman & Kesselman, the Company's
independent auditors, the matters required to be discussed by SAS 61
(Communications with Audit Committees) regarding the auditor's judgments about
the quality of the Company's accounting principles as applied in its financial
reporting.========
Privatization of Services. There can be no assurance that the trend
toward privatization of services will not diminish or even be reversed. In
addition, the trend by airlines to select a single vendor to provide all or a
large part of their required aviation security services may not continue; even
if it does continue, there can be no assurance that the Company will be selected
as the single vendor to provide such services. The realization of any of these
negative outcomes could have a material adverse effect on the Company's
business, results of operations or financial condition.Unless the context indicates otherwise, all references herein to the
"Company" include ICTS International N.V. ("ICTS" or the "Company"), its
consolidated subsidiaries, Demco Consultants, Ltd. ("Demco", an Israeli
affiliate), Procheck International B.V. ("PI", an affiliate in the Netherlands)
and Ramasso Holdings B.V. ("Ramasso", an affiliate in the Netherlands).
The Company's predecessor, International Consultants on Targeted
Security Holland B.V. ("ICTS Holland"), was founded in the Netherlands in 1987.
Until 1994, subsidiaries and affiliates of ICTS Holland conducted similar
business in which the Company is currently engaged. In connection with the
acquisition of the Company by Leedan as of January 1, 1994, ICTS Holland's
interest in its subsidiaries (other than three minor subsidiaries) was
transferred to ICTS International B.V. ("ICTS International") which became an
indirect wholly-owned subsidiary of Leedan. Thereafter, ICTS International
purchased from a third party all of the outstanding shares of ICTS, which had
been incorporated in the Netherlands in 1992 and which had not conducted any
operations prior to its acquisition by ICTS International. As of January 1,
1996, ICTS acquired all of the assets and assumed all of the liabilities of ICTS
International.
In January 1997 the Company purchased an 82.5% interest in Service
Service, Inc. ("SSI") for approximately $573,000. SSI, a Chicago-based company,
provided passenger check-in services to American Airlines at O'Hare Airport. On
February 25, 1999, the Company acquired the remaining 17.5% of SSI so that it
became a wholly owned subsidiary. SSI is currently inactive.
In April 1997, the Company acquired 5% of ICTS GmbH raising the
Company's ownership to 50% of the outstanding equity in ICTS GmbH. Subsequently,
effective July 1, 1997, the Company acquired the remaining 50% of ICTS GmbH. As
a result of these transactions, effective July 1, 1997, the Company owned,
either directly or through its subsidiaries, 100% of the equity of ICTS GmbH.
In August 1997, the Company acquired 37% of the outstanding shares of
Demco for approximately $1.2 million. In 1998, the Company sold 18% of the Demco
shares, to be reacquired in 1999. Demco, a privately-held firm based in Israel,
is engaged in
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<PAGE>
design, planning and implementation of, and consulting with respect to,
emergency systems and contingency procedures for government agencies and large
organizations.
In November 1997, the Company entered into a series of transactions
discussed below with John Bryce Systems Ltd. and Advanced Maintenance Systems
Ltd. ("AMS" and, together with John Bryce Systems Ltd., "John Bryce"), both
Israeli companies under common control. At the time of the transactions
discussed above, John Bryce was an Israel-based software specialist with a focus
on the aviation industry. The Company made a commitment to provide up to $2,915
million of loans to John Bryce, and fulfilled this commitment, in the course of
1998 and 1999. In exchange for such loans, in November 1997 the Company
acquired, for $500,000, a ten- year, John Bryce zero coupon bond with a face
value at maturity of $1.062 million for $500,000. The Company was granted a
four-year option to purchase a 51% equity interest in John Bryce. In January
2000 the Company exercised such option for approximately $2.7 million.
Subsequently, the Company sold its shares in John Bryce to Gilat Communications,
Ltd. ("Gilat") in consideration for 388,189 unregistered common shares of Gilat
(since this transaction, these shares have been registered), while retaining its
51% interest in AMS. Gilat is a publicly traded company with securities listed
on NASDAQ National Market under the symbol "GICOF".
As of January 1, 1999 the Company acquired 80% of the issued and
outstanding capital stock of Huntleigh USA Corporation ("Huntleigh") and in
January 2001 the Company exercised its option to acquire the remaining 20% at an
agreed upon price formula, so that Huntleigh is now a wholly owned subsidiary.
Huntleigh is a provider of aviation services in the United States.
In March 2000 the Company exchanged its one-third ownership interest
in APS Data & Screening Systems B.V. ("APS") in exchange for 16% of the
outstanding common shares of PI. As a result, the Company currently owns 65% of
PI. APS was a joint venture established by the Company, PI and AMS.
On October 5, 2000 the Company signed an agreement with Civas, whereby
Civas is to acquire in two stages, 100% of the shares of ICTS Europe, for a
purchase price of US $100 million (subject to certain upward or downward
adjustments as described below), in cash. As a first stage Civas acquired from
the Company 45% of the outstanding shares in ICTS Europe for a payment of $45
million U.S. dollars in cash on January 3, 2001. The sale of the remaining 55%
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of shares in ICTS Europe held by ICTS is to be completed on December 31, 2003.
The consideration for the purchase of those shares is to be adjusted in
accordance with an agreed upon formula based on the results of operations of
ICTS Europe during the period from January 1, 2001 until December 31, 2003 (the
"Second Stage"). The adjustment may not reduce the amount payable for those
shares to less than $44 million U.S. dollars or increase it to more than $66
million U.S. dollars.
In 2001 ICTS in a series of transactions agreed to purchase from AMS
48 shares of common stock of APS representing 1/3 of the outstanding shares of
APS and all outstanding shares of Trainsoft Ltd. for 225 Euros. In addition as
part of this transaction, ICTS has agreed for John Bryce Systems Ltd. ("JBS") to
pay directly to AMS all future net dividends due to ICTS that are actually paid
to ICTS for up to an amount of $200,000. JBS board and shareholders passed
resolutions on January 16, 2000 to authorize and declare a dividend subject to
JBS's cash flow. Immediately after and subsequent to this transaction, ICTS
agreed to sell all its shares in AMS to certain shareholders of AMS. The
transactions have been executed by all parties involved except for one that
requires the approval of the Tel Aviv District Court prior to its execution of
this agreement. The application seeking such court's approval was submitted on
April 30, 2001.