UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report on
FORM 10-Q
(Mark one)
( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1994
-------------
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from_______ to _______
Commission File Number 1-7463
JACOBS ENGINEERING GROUP INC.
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(Exact name of Registrant as specified in its charter)
Delaware 95-4081636
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(State of incorporation) (I.R.S. employer identification number)
251 South Lake Avenue, Pasadena, California 91101
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(Address of principal executive offices) (Zip code)
(818) 449 - 2171
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(Registrant's telephone number, including area code)
Indicate by check-mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
( X ) YES - ( ) NO
Number of shares of common stock outstanding at August 9, 1994: 24,975,456
Page 1
JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
Page No.
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Part I - Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance
Sheets as of June 30, 1994
and September 30, 1993 3
Consolidated Condensed Statements
of Income for the Three Months
and Nine Months Ended June 30,
1994 and 1993 4
Consolidated Condensed Statements of
Cash Flows for the Nine Months
Ended June 30, 1994 and 1993 5
Notes to Consolidated Condensed
Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 10
Part II - Other Information 11
Signatures 11
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT JUNE 30, 1994 AND SEPTEMBER 30, 1993
(UNAUDITED)
1994 1993
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ASSETS
Current Assets:
Cash and cash equivalents $ 13,904,300 $ 20,515,000
Marketable securities 3,096,900 20,061,900
Receivables 221,342,200 201,438,800
Deferred income taxes 20,349,900 19,391,900
Prepaid expenses and other 3,681,900 3,541,200
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Total current assets 262,375,200 264,948,800
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Property, Equipment and
Improvements, Net 54,387,100 43,516,400
Other Assets, Net 51,856,000 42,554,900
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$368,618,300 $351,020,100
=============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 9,279,700 $ 6,206,800
Accounts payable 36,321,600 42,918,500
Accrued liabilities 77,100,800 81,908,000
Customers' advances in excess
of related revenues 25,932,700 22,364,700
Income taxes payable 7,705,300 10,862,400
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Total current liabilities 156,340,100 164,260,400
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Deferred Gains on Real Estate Transactions 2,906,500 3,631,100
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Other Deferred Liabilities 9,566,900 9,332,000
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Commitments and Contingencies
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Stockholders' Equity:
Capital stock:
Preferred stock, $1 par value,
authorized - 1,000,000 shares,
issued and outstanding - none - -
Common stock, $1 par value,
authorized - 60,000,000 shares,
issued and outstanding -
24,975,456 and 24,757,318 shares,
respectively 24,975,500 24,757,300
Additional paid-in capital 34,798,000 30,436,000
Retained earnings 139,298,000 118,555,400
Cumulative foreign currency
translation adjustment 733,300 47,900
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Total stockholders' equity 199,804,800 173,796,600
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$368,618,300 $351,020,100
=============================================================================
See the accompanying notes.
Page 3
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
------------------------------- -----------------------------------
1994 1993 1994 1993
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Revenues $263,768,300 $273,889,800 $797,024,300 $858,798,400
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Costs and Expenses:
Direct costs of contracts 227,162,500 234,877,400 691,750,000 748,126,100
Selling, general and
administrative expenses 24,606,800 27,083,100 69,649,300 76,682,200
Interest income, net (194,000) (390,300) (409,900) (1,080,300)
Other (income) expense, net 147,700 (184,500) (520,800) (1,732,200)
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251,723,000 261,385,700 760,468,600 821,995,800
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Income before taxes 12,045,300 12,504,100 36,555,700 36,802,600
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Provision for Income Taxes 4,770,300 5,243,100 14,700,700 15,402,600
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Net Income $ 7,275,000 $ 7,261,000 $ 21,855,000 $ 21,400,000
========================================================================================================
Net Income Per Share $.29 $.29 $.87 $.86
========================================================================================================
See the accompanying notes.
Page 4
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
1994 1993
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Cash Flows from Operating Activities:
Net income $ 21,855,000 $ 21,400,000
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 8,775,100 6,320,000
Amortization of deferred gains (724,700) (724,700)
Gains on disposals of property,
equipment and other assets (1,057,800) (1,764,000)
Changes in assets and liabilities, net
of the effects of businesses
acquired:
Receivables (19,470,600) 12,394,200
Prepaid expenses and other (123,800) 1,761,300
Accounts payable (6,716,500) (24,244,700)
Accrued liabilities (5,775,300) (673,300)
Customers' advances 3,487,500 1,822,300
Income taxes payable (3,184,800) 1,176,400
Deferred income taxes (958,000) (2,622,100)
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Net cash provided (used) (3,893,900) 14,845,400
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Cash Flows from Investing Activities:
Additions to property and equipment (19,246,100) (6,983,300)
Increase in notes receivable and other
assets, net (3,606,000) (3,413,900)
Decrease (increase) in marketable
securities, net 17,521,400 (4,566,900)
Decrease (increase) in investments, net (5,000,200) 3,026,000
Cash used to acquire a business, net - (6,722,900)
Other, net 255,200 588,700
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Net cash used (10,075,700) (18,072,300)
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Cash Flows from Financing Activities:
Exercise of stock options 4,246,700 4,044,900
Bank borrowings, net of repayments 2,863,400 1,144,600
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Net cash provided 7,110,100 5,189,500
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Effect of Exchange Rate Changes 248,800 (362,900)
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Increase (decrease) in Cash and Cash
Equivalents (6,610,700) 1,599,700
Cash and Cash Equivalents at the Beginning
of the Period 20,515,000 23,911,300
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Cash and Cash Equivalents at the End
of the Period $ 13,904,300 $ 25,511,000
=============================================================================
See the accompanying notes.
Page 5
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1994
1. The accompanying consolidated condensed financial statements and financial
information included herein have been prepared by the Company, without
audit, pursuant to the interim period reporting requirements of Form 10-Q.
Consequently, certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Readers of this
report should refer to the consolidated financial statements and the notes
thereto incorporated into the Company's latest Annual Report on Form 10-K.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements present fairly its consolidated financial
position at June 30, 1994 and September 30, 1993, its consolidated results
of operations for the three months and nine months ended June 30, 1994 and
1993, and its consolidated cash flows for the nine months ended June 30,
1994 and 1993.
The Company's interim results of operations are not necessarily indicative
of the results to be expected for the full year.
2. Included in receivables at June 30, 1994 and September 30, 1993 were
unbilled amounts totaling $55,827,300 and $38,445,500, respectively.
3. Property, equipment and improvements are carried at cost and consisted of
the following at June 30, 1994 and September 30, 1993:
June 30, September 30,
1994 1993
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Land $ 6,984,600 $ 5,484,600
Buildings 24,868,800 15,520,000
Equipment 66,051,200 60,861,400
Leasehold improvements 11,773,000 11,462,300
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109,677,600 93,328,300
Less - accumulated depreciation
and amortization 55,290,500 49,811,900
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$ 54,387,100 $43,516,400
=========================================================================
Page 6
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1994
4. Other assets consisted of the following at June 30, 1994 and September 30,
1993:
June 30, September 30,
1994 1993
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Goodwill $18,051,800 $17,266,700
Prepaid pension costs 11,084,500 10,864,000
Cash surrender value of life
insurance policies 11,296,700 8,846,000
Investments 8,805,800 3,304,100
Miscellaneous 5,319,000 4,609,900
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54,557,800 44,890,700
Less - accumulated amortization
of goodwill 2,701,800 2,335,800
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$51,856,000 $42,554,900
========================================================================
5. During the nine months ended June 30, 1994 and 1993, the Company made cash
payments of approximately $435,600 and $716,700, respectively, for interest
and approximately $17,600,900 and $15,303,500, respectively, for income
taxes.
6. Net income per share for the three and nine months ended June 30, 1994 and
1993 has been computed based upon the weighted average number of shares of
common stock and, if dilutive, common stock equivalents outstanding as
follows:
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------- -----------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Average number of
shares of common
stock outstanding 24,971,300 24,643,600 24,874,900 24,481,200
Average number of
shares of common
stock equivalents
outstanding 151,300 385,300 260,600 472,100
---------- ---------- ---------- ----------
25,122,600 25,028,900 25,135,500 24,953,300
========== ========== ========== ==========
7. On July 29, 1994, the Company completed the acquisition of the engineering
and construction management businesses of CRSS Inc. The purchase price was
initially $33,513,000, but will be adjusted in the fourth quarter based on
the results of an audit of the businesses acquired. The Company financed
the acquisition using working capital and funds obtained under a line of
credit with a bank.
The businesses acquired provide engineering and design services to clients
in the pulp and paper, microelectronics, process and pharmaceutical
industries, among others, as well as construction and construction
management services to the public/institutional markets including criminal
justice, healthcare, education and transportation infrastructure.
The acquisition will be accounted for as a purchase.
Page 7
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1994
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with management's
discussion and analysis of financial condition and results of operations
incorporated by reference into the Company's latest Annual Report on Form 10-K.
Results of Operations
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Revenues for the three months ended June 30, 1994 (the "third quarter of 1994")
were $263.8 million; $10.1 million less than the amount for the three months
ended June 30, 1993 (the "third quarter of 1993"). The decrease was
attributable primarily to a 16.1% decrease in maintenance revenues and a 4.7%
decrease in construction revenues, offset in part by a 6.3% increase in
engineering services revenues. The Company billed 2.3 million professional
service hours to projects during the third quarter of 1994; 4.8% more hours as
compared to the third quarter of 1993.
For the nine months ended June 30, 1994, revenues totaled $797.0 million; $61.8
million less than the amount for the nine months ended June 30, 1993. The
decrease was due primarily to a 14.1% decrease in construction revenues and a
11.8% decrease in maintenance revenues, offset in part by a 5.4% increase in
engineering services revenues. The Company billed 6.7 million professional
service hours to projects during the nine months ended June 30, 1994; 5.4% more
hours as compared to the corresponding period last year.
As a percent of revenues, direct costs of contracts were 86.1% for the third
quarter of 1994, as compared to 85.8% for the third quarter of 1993. The
percentage relationship between direct costs of contracts and revenues will
fluctuate between reporting periods depending on a variety of factors including
the mix of business during the reporting periods being compared, as well as the
level of margins earned from the various services provided in the various
industry groups and markets serviced by the Company. The increase in this
percentage relationship in the third quarter of 1994 as compared to the third
quarter of 1993 was due primarily to the effects of increased competition for
all of the Company's services.
For the nine months ended June 30, 1994, direct costs of contracts were 86.8% of
revenues, as compared to 87.1% for the nine months ended June 30, 1993. The
improvement in this percentage relationship during the current nine-month period
as compared to the corresponding period last year was due primarily to the
effects of an increasing portion of the Company's total business volume coming
from engineering services relative to construction and maintenance.
Selling, general and administrative ("SG & A") expenses for the third quarter of
1994 were $24.6 million; $2.5 million less than the amount for the third quarter
of 1993. For the nine months ended June 30, 1994, SG & A expenses were $69.6
million; $7.0 million less than the amount for the nine months ended June 30,
1993. These decreases were due primarily to the effects of integrating the
operations of the businesses the Company acquired last year, as well as other
operating efficiencies.
Page 8
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1994
The Company's operating profit (defined as income before taxes, other income,
net and interest income, net) was $12.0 million for the third quarter of 1994;
$0.1 million more than the amount for the third quarter of 1993. For the nine
months ended June 30, 1994, the Company's operating profit totaled $35.6
million; $1.6 million more than the amount for the corresponding period in 1993.
In general, the increases in operating profit were attributable primarily to
lower SG & A expenses, offset in part by lower margins on projects.
Interest income, net was $0.2 million for the third quarter of 1994; $0.2
million less than the amount for the third quarter of 1993. The decrease was
due primarily to lower levels of cash invested in interest-bearing accounts.
For the nine months ended June 30 1994, interest income, net totaled $0.4
million; $0.7 million less than the amount for the corresponding period last
year. The decrease was due primarily to higher borrowings by the Company's U.K.
subsidiary, combined with lower levels of cash invested in interest-bearing
accounts.
Other expense, net was $0.1 million for the third quarter of 1994, as compared
to other income, net of $0.2 million for the third quarter of 1993. For the
nine months ended June 30, 1994, other income, net was $0.5 million; $1.2
million less than the amount for the corresponding period last year. The lower
amounts of other income in the current fiscal year resulted primarily from gains
from sales of marketable securities and other assets recorded last year.
Backlog Information
- - -------------------
The following table summarizes the Company's backlog at the dates indicated (in
millions):
June 30, 1994 June 30, 1993
------------- -------------
Engineering services backlog $ 714.6 $ 733.6
Total backlog 1,970.0 1,805.0
Liquidity and Capital Resources
- - -------------------------------
The Company's cash and cash equivalents decreased $6.6 million during the nine
months ended June 30, 1994. This compares to a net increase of $1.6 million
during the corresponding period last year. The current year decrease in cash
and cash equivalents was due primarily to cash used in operations ($3.9 million)
and investing activities ($10.1 million), offset in part by cash provided by
financing activities ($7.1 million) and the effects of exchange rate changes
($0.2 million).
Operations used $3.9 million of cash and cash equivalents during the nine months
ended June 30, 1994. This compares to a net contribution of cash of $14.8
million for the nine months ended June 30, 1993. The decrease in cash provided
by operations in the current year as compared to last year was due primarily to
the timing of cash receipts and payments on receivables and accrued liabilities
and payables, respectively.
Page 9
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1994
The Company's investing activities used $10.1 million of cash and cash
equivalents during the nine months ended June 30, 1994. This compares to net
uses of cash of $18.1 million for the nine months ended June 30, 1993.
Additions to property and equipment were $12.3 million higher in the current
year as compared to last year, and was due primarily to the acquisition of an
office building in Baton Rouge, Louisiana. The cash purchase price of the
building was $10.5 million; the Company was previously the principal lessee in
the building. Net additions to long-term investments were $8.0 million higher
in the current year as compared to last year, and relates primarily to an
investment in a newly-formed real estate investment company which will focus on
providing facilities for companies in the biotechnology industry. These uses
were offset in part by $22.1 million more of cash generated by sales of
marketable securities that had been held for investment purposes in the current
year as compared to last year. Also contributing to the reduction in cash used
in investing activities was $6.7 million used last year towards the acquisition
of a business; no similar transaction occurred during the first nine months of
1994.
Cash flows from financing activities contributed $7.1 million in cash and cash
equivalents during the nine months ended June 30, 1994. This compares to net
contributions of $5.2 million for the nine months ended June 30, 1993. The
variance was due to a combination of higher short-term bank borrowings in 1994,
as well as to an increase in the level of stock option exercises.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1994 and beyond. At June 30, 1994, the Company's committed
credit facilities totaled $43.4 million through banks in the U.S. and the U.K.,
against which $9.3 million was outstanding as notes payable to banks.
On July 24, 1994, in connection with the acquisition discussed in Note 7 to the
Consolidated Condensed Financial Statements, the Company amended one of its
existing short-term credit facilities and increased the borrowing capacity under
the facility by $55.0 million. Later in the fourth quarter of this fiscal year,
the Company expects to complete a definitive, three-year revolving credit
agreement which will replace that portion of the amended short-term facility
used to finance the acquisition.
Page 10
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1994
PART II - OTHER INFORMATION
Not applicable.
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 thereunto duly authorized.
JACOBS ENGINEERING GROUP INC.
s/n John W. Prosser, Jr.
___________________________
John W. Prosser, Jr.
Senior Vice President, Finance
and Administration and Treasurer
Date: August 9, 1994
Page 11