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, 1995
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(_) 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, 1995: 25,324,465
Page 1
JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
Page No.
--------------------------------------------------------------------------
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance
Sheets as of June 30, 1995
and September 30, 1994 3
Consolidated Condensed Statements
of Income for the Three Months
and Nine Months Ended June 30,
1995 and 1994 4
Consolidated Condensed Statements of
Cash Flows for the Nine Months
Ended June 30, 1995 and 1994 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
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT JUNE 30, 1995 AND SEPTEMBER 30, 1994
(UNAUDITED)
1995 1994
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 30,125,200 $ 45,611,600
Marketable securities 2,768,200 2,896,900
Receivables 294,977,100 288,095,200
Deferred income taxes 28,517,100 27,546,100
Prepaid expenses and other 3,022,500 3,334,800
----------------------------------------------- ------------ ------------
Total current assets 359,410,100 367,484,600
----------------------------------------------- ------------ ------------
Property, Equipment and
Improvements, Net 78,708,800 60,002,700
----------------------------------------------- ------------ ------------
Other Noncurrent Assets:
Goodwill, net 37,836,600 38,641,200
Other 45,224,500 38,235,700
----------------------------------------------- ------------ ------------
Total other noncurrent assets 83,061,100 76,876,900
----------------------------------------------- ------------ ------------
$521,180,000 $504,364,200
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 15,813,400 $ 9,238,100
Accounts payable 69,924,200 93,117,100
Accrued liabilities 99,339,700 102,205,600
Customers' advances in excess
of related revenues 60,126,000 47,369,300
Income taxes payable 7,826,300 8,469,600
Deferred income taxes 1,027,700 1,027,700
----------------------------------------------- ------------ ------------
Total current liabilities 254,057,300 261,427,400
----------------------------------------------- ------------ ------------
Long-term Debt 18,067,500 25,000,000
----------------------------------------------- ------------ ------------
Deferred Gains on Real Estate Transactions 2,050,000 2,665,000
----------------------------------------------- ------------ ------------
Other Deferred Liabilities 20,075,800 14,838,500
----------------------------------------------- ------------ ------------
Commitments and Contingencies
-----------------------------------------------
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 -
25,320,647 and 25,094,874 shares,
respectively 25,320,700 25,094,900
Additional paid-in capital 41,018,300 37,251,400
Retained earnings 159,240,700 136,205,600
Other 1,349,700 1,881,400
----------------------------------------------- ------------ ------------
Total stockholders' equity 226,929,400 200,433,300
----------------------------------------------- ------------ ------------
$521,180,000 $504,364,200
============ ============
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,
-------------------------------- ---------------------------------
1995 1994 1995 1994
------------ ---------------- --------------- ---------------
Revenues $444,625,800 $263,768,300 $1,253,727,900 $797,024,300
----------------------------- ------------ ------------ -------------- ------------
Costs and Expenses:
Direct costs of contracts 395,005,000 227,162,500 1,114,528,300 691,750,000
Selling, general and
administrative expenses 35,543,400 24,606,800 101,063,900 69,649,300
Interest (income)
expense, net 168,200 (194,000) 200,100 (409,900)
Other (income)
expense, net - 147,700 (565,000) (520,800)
----------------------------- ------------ ------------ -------------- ------------
430,716,600 251,723,000 1,215,227,300 760,468,600
------------ ------------ -------------- ------------
Income before taxes 13,909,200 12,045,300 38,500,600 36,555,700
----------------------------- ------------ ------------ -------------- ------------
Provision for Income Taxes 5,507,200 4,770,300 15,246,600 14,700,700
----------------------------- ------------ ------------ -------------- ------------
Net Income $ 8,402,000 $ 7,275,000 $ 23,254,000 $ 21,855,000
============================= ============ ============ ============== ============
Net Income Per Share $.33 $.29 $.92 $.87
============================= ============ ============ ============== ============
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, 1995 AND 1994
(UNAUDITED)
1995 1994
------------- -------------
Cash Flows from Operating Activities:
Net income $ 23,254,000 $ 21,855,000
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 11,172,900 8,775,100
Amortization of deferred gains (615,000) (724,700)
Gains on disposals of property,
equipment and other assets 22,400 (1,057,800)
Changes in assets and liabilities, net:
Receivables (7,288,200) (19,470,600)
Prepaid expenses and other 325,300 (123,800)
Accounts payable (23,254,100) (6,716,500)
Accrued liabilities 2,321,200 (5,775,300)
Customers' advances 12,681,100 3,487,500
Income taxes payable (666,300) (3,184,800)
Deferred income taxes (971,000) (958,000)
-------------------------------------------------- ------------ ------------
Net cash provided (used) 16,982,300 (3,893,900)
-------------------------------------------------- ------------ ------------
Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (28,075,400) (19,246,100)
Net increase in other noncurrent assets (3,997,000) (3,606,000)
Proceeds from sales of marketable
securities, net of purchases 128,700 17,521,400
Net increase in investments (2,570,800) (5,000,200)
Other, net - 255,200
-------------------------------------------------- ------------ ------------
Net cash used (34,514,500) (10,075,700)
-------------------------------------------------- ------------ ------------
Cash Flows from Financing Activities:
Exercise of stock options 3,386,400 4,246,700
Bank borrowings (repayments), net (935,200) 2,863,400
Other, net (505,100) -
-------------------------------------------------- ------------ ------------
Net cash provided 1,946,100 7,110,100
-------------------------------------------------- ------------ ------------
Effect of Exchange Rate Changes 99,700 248,800
-------------------------------------------------- ------------ ------------
Decrease in Cash and Cash Equivalents (15,486,400) (6,610,700)
Cash and Cash Equivalents at the Beginning
of the Period 45,611,600 20,515,000
-------------------------------------------------- ------------ ------------
Cash and Cash Equivalents at the End
of the Period $ 30,125,200 $ 13,904,300
================================================== ============ ============
See the accompanying notes.
Page 5
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
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 contain all adjustments (consisting of only
normal recurring adjustments) necessary for the fair presentation of its
consolidated financial position at June 30, 1995 and September 30, 1994,
its consolidated results of operations for the three months and nine months
ended June 30, 1995 and 1994, and its consolidated cash flows for the nine
months ended June 30, 1995 and 1994.
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, 1995 and September 30, 1994 were
unbilled amounts totalling $69,169,700 and $70,252,200, respectively.
3. Property, equipment and improvements are stated at cost and consisted of
the following at June 30, 1995 and September 30, 1994:
June 30, September 30,
1995 1994
------------ -------------
Land $ 10,666,000 $ 6,963,600
Buildings 38,909,100 24,549,500
Equipment 82,583,500 74,687,100
Leasehold improvements 13,026,500 11,948,800
------------------------------------------ ------------ ------------
145,185,100 118,149,000
Less - accumulated depreciation
and amortization 66,476,300 58,146,300
------------------------------------------ ------------ ------------
$ 78,708,800 $ 60,002,700
============ ============
Page 6
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
4. Other assets consisted of the following at June 30, 1995 and September 30,
1994:
June 30, September 30,
1995 1994
------------ -------------
Prepaid pension costs $11,596,600 $11,378,800
Cash surrender value of life
insurance policies 16,311,200 11,676,700
Investments 11,095,700 8,202,100
Miscellaneous 6,221,000 6,978,100
----------- -----------
$45,224,500 $38,235,700
=========== ===========
5. During the nine months ended June 30, 1995 and 1994, the Company made cash
payments of approximately $1,468,100 and $435,600, respectively, for
interest and approximately $16,284,300 and $17,600,900, respectively, for
income taxes.
6. Net income per share for the three and nine months ended June 30, 1995 and
1994 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,
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Average number of
shares of common
stock outstanding 25,268,900 24,971,300 25,155,100 24,874,900
Average number of
shares of common
stock equivalents
outstanding 143,700 151,300 126,800 260,600
---------- ---------- ---------- ----------
25,412,600 25,122,600 25,281,900 25,135,500
========== ========== ========== ==========
Page 7
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1995
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
---------------------
Revenues for the three months ended June 30, 1995 (the "third quarter of fiscal
1995") were $444.6 million; this was $180.9 million more than the amount for the
three months ended June 30, 1994 (the "third quarter of fiscal 1994"). Most of
the increase was attributable to the operations of Jacobs - Sirrine Engineers
(the operating division formerly known as CRS Sirrine Engineers) and CRSS
Constructors, two businesses the Company acquired during the fourth quarter of
fiscal 1994 (together, the "CRSS acquisition"). Revenues from engineering
services for the third quarter of fiscal 1995 increased 26.4% as compared to the
third quarter of fiscal 1994. The Company billed approximately 3.0 million
professional services hours to projects during the third quarter of fiscal 1995;
this was 0.8 million more hours than were billed during the corresponding period
last year. Revenues from construction and maintenance services for the third
quarter of fiscal 1995 were 95.3% higher as compared to the third quarter of
fiscal 1994.
For the nine months ended June 30, 1995, revenues totaled $1,253.7 million; this
was $456.7 million more than the amount for the nine months ended June 30, 1994.
Most of the increase was attributable to the CRSS acquisition. Revenues from
engineering services for the nine months ended June 30, 1995 were 32.8% higher
than the amount for the corresponding period last year. The Company billed
approximately 8.8 million professional services hours to projects during the
nine months ended June 30, 1995; this was 2.1 million more hours than were
billed during the corresponding period last year. Revenues from construction
and maintenance services for the nine months ended June 30, 1995 were 71.9%
higher as compared to the corresponding period last year.
As a percent of revenues, direct costs of contracts were 88.8% for the third
quarter of fiscal 1995, as compared to 86.1% for the third quarter of fiscal
1994. 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 by the Company. In general, the increase in this percentage
relationship during the current quarter as compared to the corresponding period
last year was due to a higher level of construction and maintenance services
relative to engineering services.
For the nine months ended June 30, 1995, direct costs of contracts were 88.9% of
revenues, as compared to 86.8% for the nine months ended June 30, 1994. The
increase in this percentage relationship during the current nine-month period as
compared to the corresponding period last year was also due primarily to the
effects of an increasing portion of the Company's total business volume coming
from construction and maintenance services relative to engineering services.
Page 8
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1995
Selling, general and administrative ("SG & A") expenses for the third quarter of
fiscal 1995 totalled $35.5 million; this was $10.9 million more than the amount
for the third quarter of fiscal 1994. Most of the increase was attributable to
the SG & A expenses of the operations associated with the CRSS acquisition. For
the nine months ended June 30, 1995, SG & A expenses were $101.1 million; this
was $31.4 million more than the amount for the nine months ended June 30, 1994.
Most of the increase was attributable to the CRSS acquisition. Also
contributing to the increase was slightly higher levels of S,G & A spending by
the other operations of the Company in support of an increased level of business
activity in the current fiscal year as compared to last year.
The Company's operating profit (defined as income before taxes, other income,
net and interest income, net) was $14.1 million for the third quarter of fiscal
1995; this was $2.1 million more than the amount for the third quarter of fiscal
1994. For the nine months ended June 30, 1995, the Company's operating profit
totalled $38.1 million; this was $2.5 million more than the amount for the
corresponding period last year. Generally, operating profits have not
increased in line with revenues because the increase in revenues was due
primarily to higher construction and maintenance activities, which have a higher
portion of pass-through costs. Although the Company continues to workoff
contracts awarded to it over the past year which have very competitively-bid fee
arrangements, engineering services activities during the third quarter of fiscal
1995 generated higher profit margins as compared to the third quarter of fiscal
1994.
Interest expense, net was $0.2 million for both the third quarter of fiscal 1995
as well as the nine months ended June 30, 1995. This compares to net interest
income of $0.2 million and $0.4 million for the third quarter of fiscal 1994 and
the nine months ended June 30, 1994, respectively. The shift from having net
interest income last year to net interest expense this year was due primarily to
the long-term debt incurred last year in connection with the CRSS acquisition.
Also contributing to the change was increased bank borrowings by the Company's
foreign subsidiaries to fund increased working capital requirements.
Backlog Information
-------------------
The following table summarizes the Company's backlog at the dates indicated (in
millions):
June 30, 1995 June 30, 1994
------------- -------------
Engineering services backlog $ 862.8 $ 714.6
Total backlog 2,563.0 1,970.0
Page 9
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1995
Liquidity and Capital Resources
-------------------------------
The Company's cash and cash equivalents decreased $15.5 million during the nine
months ended June 30, 1995. This compares to a net decrease of $6.6 million
during the corresponding period last year. The current year decrease in cash
and cash equivalents was comprised of cash used in investing activities ($34.5
million), offset in part by cash provided by operations ($17.0 million),
financing activities ($1.9 million) and the effects of exchange rate changes
($0.1 million).
Operations contributed $17.0 million of cash and cash equivalents during the
nine months ended June 30, 1995. This compares to a net use of cash of $3.9
million during the nine months ended June 30, 1994. The $20.9 million increase
in cash provided by operations, as compared to last year, was due primarily to a
$1.4 million increase in net income, a $2.4 million increase in depreciation and
amortization expense, and the timing of cash receipts and payments on
receivables, and accrued liabilities and payables, respectively.
The Company's investing activities used $34.5 million of cash and cash
equivalents during the nine months ended June 30, 1995. This compares to a net
use of cash of $10.1 million for the nine months ended June 30, 1994. The
Company's sales (net of purchases) of marketable securities and investments
generated $15.0 million less cash in the current year as compared to last year.
Also contributing to the variance was an increase of $8.8 million in additions
to property and equipment (net of disposals). Most of the increase in property
and equipment was attributable to the purchase of the Company's offices in
Dublin, Ireland. The purchase price for the property (known locally as "Merrion
House") totalled (Irish) (Pounds)11.3 million (including costs of the
transaction). The Company was previously a tenant in Merrion House.
Cash flows from financing activities contributed $1.9 million in cash and cash
equivalents during the nine months ended June 30, 1995. This compares to net
contributions of $7.1 million during the nine months ended June 30, 1994. Most
of the variance was due to reduced bank borrowings during the current fiscal
year as compared to last year. During the nine months ended June 30, 1995, the
Company paid-off in full all amounts outstanding under its $45.0 million
revolving credit agreement, which was negotiated primarily to finance the CRSS
acquisition. This long-term debt was replaced in part, however, by a five-year
mortgage loan taken in connection with the purchase of Merrion House. Also
contributing to the reduction in cash provided by financing activities during
the current fiscal period as compared to last year was a reduction in cash
provided by the exercise of stock options.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1995 and beyond. At June 30, 1995, the Company's short-
term committed credit facilities totaled $44.0 million through banks in the U.S.
and the U.K., against which $15.8 million was outstanding at that date.
Page 10
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
June 30, 1995
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (all are being filed herewith):
3.1 Certificate of Incorporation of Jacobs Engineering Group
Inc., as amended.
3.2 Bylaws of Jacobs Engineering Group Inc., as amended.
4.4 Rights Agreement dated as of December 20, 1990 by and between
Jacobs Engineering Group Inc. and First Interstate Bank, Ltd.
as Rights Agent.
10.1 The Jacobs Engineering Group Inc. 1981 Executive Incentive
Plan (As Amended and Restated).
10.2 The Jacobs Engineering Group Inc. Incentive Bonus Plan for
Officers and Key Managers.
10.3 Agreement dated as of November 30, 1993, and Agreement dated
as of November 30, 1994, between Jacobs Engineering Group
Inc. and Joseph J. Jacobs.
10.4 The Executive Security Program of Jacobs Engineering Group
Inc.
10.9 The Jacobs Engineering Group Inc. 1989 Employee Stock
Purchase Plan.
10.10 Form of Indemnification Agreement entered into between
the Registrant and its officers and directors.
27. Financial Data Schedule.
(b) Reports on Form 8-K:
Not applicable.
Page 11
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, 1995
Page 12