CRSS INC. History

Address:

1177 West Loop South, Suite 800
Houston, Texas 77027
U.S.A.

Telephone: (713) 552-2000

Public Company
Incorporated: 1946 as Caudill Rowlett
Employees: 2,200
Sales: $472 million in 1991
Stock Exchanges: New York

Company History:

CRSS began as a two-partner architectural firm in Austin in 1946, and over the following decades grew into one of the largest contractors in the United States, with business all over the world. During the 1980s, CRSS diversified greatly and began providing architectural, engineering, construction management, environmental and financial services to governmental and private sector clients in the United States and in countries from Argentina to Zaire. The firm is also one of the largest private producers of power in the United States.

In 1946 two Texas A & M University professors, Bill Caudill and John Rowlett, joined together to form the architectural firm of Caudill Rowlett. The following year, the firm added the name of partner Wallie Scott to its name, and became Caudill Rowlett Scott. During the post-World War II era the United States faced a shortage of classrooms as a result of rising enrollments and aging facilities. Rowlett, who had a degree in education in addition to his architecture degree, and Caudill, who wrote the book Space and Teaching, saw great opportunities in designing and building new kinds of schools. In 1948 the firm designed their first school, Huston Elementary in Blackwell, Oklahoma.

Throughout the first decade of its existence, the firm focused on designing innovative buildings for schools. Caudill Rowlett Scott designed the first elementary schools built specifically to accommodate air conditioning--in San Angelo, Texas--and built the country's first all-glass gymnasium for Moore Junior High School in Tyler, Texas, in 1953. The firm tapped into new architectural and educational thinking to build schools, and in the early 1950s also designed two small hospitals in Texas. Before it became a popular management tool, the firm understood the need for pre-design analysis, or problem-seeking: anticipating potential problems before buildings were designed and built. In 1948, for example, the firm sent workers to observe how the old school was used in Blackwell, Oklahoma, before building a new one.

In 1957 the firm moved to Houston from College Station, Texas, formally changed its name, and reorganized itself into three divisions, CRS Design, Inc., CRS Production, Inc., and CRS Supervision, Inc. The firm continued to thrive through the 1950s and 1960s, which were years of record school and hospital construction in the United States.

CRS also benefitted from another development: the growth of the oil business that enriched countries in the Middle East. CRS first went to the Middle East in 1964, accepting a $25,000 job to set a site for the King Fahad University of Petroleum & Minerals. This would be the first of many jobs in Saudi Arabia and in the Middle East. In 1965, CRS received a commission to build faculty housing units and design campus buildings at King Fahad University. By 1969 the firm had designed three classroom buildings, laboratory buildings, a student union, and an amphitheater on the site. By 1992 the firm had done over $20 billion in construction in the Middle East.

In the late 1960s, as the boom in school construction started to wane, CRS branched out into the health care market and broadened its planning and design capabilities. To adapt to its new focus on design, the firm renamed itself again in 1970, incorporating in Delaware and becoming CRS Design Associates. The following year CRS made its initial public offering of 350,000 shares at $12 a share on the American Exchange. With the resultant infusion of cash, CRS began a strategy of expansion, and it immediately began acquiring other businesses, especially in construction management and design. Under the leadership of Chairman Thomas A. Bullock, one of the original partners, CRS would acquire ten companies over the next eleven years; these companies were businesses as diverse as interior design, water resource engineering, and pulp and paper, and their acquisition transformed the nature, size, and role of the company.

In 1971, the first year it publicly reported revenues and profits, CRS had revenues of $8.79 million and net income of $955,000, up from $6.465 million and $500,000 the year before. In 1972, CRS made its first major post-public offering acquisition, buying A.A. Mathews, a construction engineering firm specializing in tunnel design with offices in Los Angeles, New York, Washington, D.C., and Rome. With this stroke CRS moved into the civil engineering market. The same year, CRS also bought a water resources engineering company, Stevens, Thompson & Runyan, Inc., which had offices in Oregon, Washington, and Idaho, for 232,000 common shares and $1.65 million in cash. With these acquisitions, CRS's businesses boomed. By 1973, revenues totalled $17.1 million and brought the firm a net income of $1.464 million.

In 1973, CRS and a joint venture partner, McGaughy, Marshall & McMillan, were awarded one of the largest Middle Eastern projects ever, to provide full architectural and engineering services for the King Abdulaziz Military Academy near Riyadh. By 1976, the firm had 761 employees, and revenues of $33 million, with a net income of $2.3 million. As the firm brought in more construction and engineering contracts, the numbers continued to rise. In 1979, the firm had $50 million in revenues and $2.85 million in net income.

In 1978, CRS acquired Clark, Dietz & Associates-Engineers, an Illinois-based civil engineering firm that specialized in environmental engineering, for $5.25 million. That year CRS melded the four engineering firms it had purchased in the last five years into one, STRAAM Engineers. CRS continued to develop its international business, completing massive works at King Fahad University in Saudi Arabia. Indeed, in the 1970s, about 70 percent of CRS's revenue derived from international orders, most of which came from building schools, hospitals, and other institutions in the Middle East.

Also in 1978, Saudi businessman Gaith Pharaon bought a large stake in CRS, buying about 20 percent of the firm's shares at about $20 per share. Although he became the firm's biggest shareholder, the eight original partners still owned a larger share between them, and were basically left in control. But changing conditions in the world economy and marketplace forced CRS to transform itself in the 1980s. It went into the decade heavily reliant on foreign construction business. But by the end of the decade, it would focus more on domestic design and power generation.

Military orders would continue to play an important role in the company's growth in the 1980s, just as they had in the 1970s. In 1980 CRS received a contract of about $56 million from the U.S. Air Force to provide furnishings and equipment for the Saudi Arabian F-15 aircraft program. And the following year CRS received a subcontract to formulate the master plan and construction logistics planning for an MX missile base in the western United States, which contributed significantly to the firm's revenues of $76 million and income of $5.25 million in 1981.

That same year CRS acquired Geren Associates, an architectural and engineering firm based in Fort Worth, Texas. To develop its domestic construction business, CRS bought four general contracting firms the following year: Metro Southwest Construction, based in Dallas, and Western Empire Construction, Colo-Macco, and Summit Constructors, all of which were based in Denver. This move greatly expanded CRS's regional coverage.

By 1981 orders from the Middle East had slipped while other areas of business had grown, and only one quarter of CRS's revenues came from projects in the Middle East. Still, the 1980s brought lucrative Middle Eastern contracts to CRS. Between 1982 and 1987, CRS managed a five-member international consortium of firms that planned, designed, and did construction management for a $2.1 billion project for Saudi Arabia's Ministry of the Interior to provide 12,000 housing units.

In 1982, CRS began acquisition talks with J.E. Sirrine, a privately-held mill architect and engineering company based in South Carolina that had been in existence since 1902. But CRS canceled the talks in March 1982. In 1983, though, the talks were revived and the sale went through. Sirrine has been CRS's most important acquisition, and it has helped change the direction of the company. At the time, Sirrine's main appeal was that it had a large domestic business, and that it represented new geographic and business areas. Sirrine provided engineering services to the growing pulp and paper, tobacco and chemicals business in the southeastern United States. More importantly, though, Sirrine was a major power plant designer. After the acquisition, in October 1983, CRS Group formally changed its name to CRS Sirrine, Inc.

In the early 1980s, CRS also looked to expand its interior design business. To achieve that end, in 1983 CRS acquired Environmental Planning & Research, a firm that specialized in interior design. CRS Sirrine received one of its first major power-plant construction contracts in 1983, the year that utilities were deregulated and private concerns were allowed to erect power plants. CRS Sirrine would be a major beneficiary of this policy change.

In 1983 CRS and Dravo Corp. received a contract for $106 million to build a waste-to-energy industrial power plant at the Norfolk Naval Shipyard in Portsmouth, Virginia. The following year, 1984, it received a $105 million contract from Virginia Electric & Power to convert and upgrade an oil-operated plant to coal usage. Despite the acquisition of new business in the early and mid-1980s, CRS's performance suffered somewhat from the recession in the United States and the decline in the Middle East construction markets. Largely because of the Sirrine acquisition, revenues grew from $98 million in 1982 to $306 million in fiscal 1984. But the firm's profits did not grow quite so quickly. They dropped from $5.3 million in fiscal 1983 to $4.2 million in 1984, and the stock fell almost in half between 1983 and 1985. By 1985, though, despite the poor profit numbers, CRS Sirrine had grown to become the biggest U.S. architectural design firm, the biggest U.S. construction management company, and the biggest interior architecture designer.

Throughout the 1980s CRS expanded its construction business into Asia, designing a 37-story office tower in China, buildings in South Korea, and establishing an office in Hong Kong to deal with increased orders. But in 1987 CRS sharply reduced the size of its staff at its Hong Kong office, which had run 25 projects between 1984 and 1987. In 1985, CRS Sirrine's stock, which had been listed on the American Stock Exchange, was moved up to the New York Stock Exchange. The 1980s also saw CRS Sirrine continue to develop its cogeneration business. In 1987, it signed a joint venture with Transco Energy Co. to develop a $155 million, 260-megawatt cogenerating facility in Hopewell, Virginia. While it brought new contracts, 1987 also brought a stock market crash, which hurt the firm's finances. CRS Sirrine had planned an offering of 1.3 million shares, but it withdrew the offer in the face of a bear market. CRS Sirrine needed the cash infusion, because its balance books were showing a loss for the first time. In 1987, the firm lost $32 million on revenues of $332 million. CRS Sirrine's profits had been hurt by its dependence on the foreign and domestic energy sector. That year, in an effort to gain more control over its labor costs CRS Sirrine cut staff, the firm eliminated its pension plan and adopted an innovative performance-based compensation plan. In 1988 profits rebounded, to $13.9 million on revenues of $478.3 million. CRS Sirrine continued to reap huge defense contracts. In 1988, it and Metcalf & Eddy received an $815.7 million contract from the Air Force for construction-management service in Saudi Arabia. That year, CRS Sirrine was the twenty-second biggest Air Force contractor. The firm also continued to branch out. In 1988 CRS Sirrine formed a limited partnership, NaTec Ltd. with another firm, Industrial Resources, to develop a process to combat acid rain pollutants. The following year, the firm formed a joint venture with a London based company to develop finance and operate power-generating plants.

In 1989, Bruce Wilkinson, who had joined the firm as a vice-president in 1978, took over the post of chairman, replacing Thomas A. Bullock, the long-serving executive who had been one of the initial eight founding partners. That year, CRS Sirrine decided to change its name once again: to CRSS. In 1989, CRSS had income of $617 million and a net income of $13.9 million. By the following year CRSS was the second-biggest general building contractor in the United States, tallying $3.102 billion in contracts. Education continued to be a good part of its businesses, as did cogeneration, specialty health care and high-tech commercial facilities.

CRSS's concentration on cogeneration in the 1980s paid off. By 1991, CRSS Capital, Inc., the subsidiary that concentrates on cogeneration, ranked in the top 15 independent energy producers in America, with two cogeneration facilities and three small power production facilities. The two cogeneration facilities were the Viking Energy of Northumberland facility in Northumberland, Pennsylvania, and the Hopewell Cogeneration facility in Hopewell, Virginia. Despite showing profits of $15.7 million on revenues of $496 million in 1990, the recession hit the firm's 1991 balance sheets, as CRSS earned $8.9 million on revenues of $472 million.

Principal Subsidiaries: CRSS Architects, Inc.; CRS Sirrine Engineers, Inc.; CRSS Constructors, Inc.; CRSS Inc.; CRSS Civil Engineers, Inc.; CRSS Capital, Inc.; CRSS International, Inc.; CRSS of Illinois, Inc.; CRSS of New York, Inc.; CRS Group (Saudi Arabia) Ltd.; CRS Group (Bermuda) Ltd.; CRSS (UK) Ltd.; Group International (Bermuda), Ltd.

CRSS INC. History

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