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, 1996
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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, 1996: 25,618,522
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, 1996
and September 30, 1995 3
Consolidated Condensed Statements
of Income for the Three Months
and Nine Months Ended June 30,
1996 and 1995 4
Consolidated Condensed Statements of
Cash Flows for the Nine Months
Ended June 30, 1996 and 1995 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 11
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT JUNE 30, 1996 AND SEPTEMBER 30, 1995
(Dollars in thousands, except share information)
(Unaudited)
June 30, September 30,
1996 1995
-------- -------------
ASSETS
Current Assets:
Cash and cash equivalents $ 79,905 $ 39,118
Marketable securities 2,764 2,806
Receivables 272,929 292,108
Deferred income taxes 35,600 31,980
Prepaid expenses and other 3,625 2,602
-------- --------
Total current assets 394,823 368,614
-------- --------
Property, Equipment and
Improvements, Net 80,993 80,115
-------- --------
Other Noncurrent Assets:
Goodwill, net 40,756 41,882
Other 66,838 43,336
-------- --------
Total other noncurrent assets 107,594 85,218
-------- --------
$583,410 $533,947
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 8,455 $ 16,632
Accounts payable 60,728 63,767
Accrued liabilities 118,203 109,168
Customers' advances in excess
of related revenues 53,859 54,496
Income taxes payable 10,084 11,212
-------- --------
Total current liabilities 251,329 255,275
-------- --------
Long-term Debt 35,949 17,799
-------- --------
Deferred Gain on Real Estate Transaction 1,230 1,845
-------- --------
Other Deferred Liabilities 21,874 20,267
-------- --------
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 -
25,740,266 and 25,495,711
shares, respectively 25,740 25,496
Additional paid-in capital 49,102 43,957
Retained earnings 197,302 168,203
Other 884 1,105
-------- --------
Total stockholders' equity 273,028 238,761
-------- --------
$583,410 $533,947
======== ========
See the accompanying notes.
Page 3
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands, except per-share information)
(Unaudited)
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
-------------------- ------------------------
1996 1995 1996 1995
-------- -------- ---------- ----------
Revenues $436,820 $444,626 $1,394,962 $1,253,728
-------- -------- ---------- ----------
Costs and Expenses:
Direct costs of contracts 383,458 395,005 1,239,584 1,114,528
Selling, general and
administrative expenses 36,710 35,543 107,225 101,064
Interest (income)
expense, net (339) (44) (673) (12)
Other (income)
expense, net (194) 213 (529) (353)
-------- -------- ---------- ----------
419,635 430,717 1,345,607 1,215,227
-------- -------- ---------- ----------
Income before taxes 17,185 13,909 49,355 38,501
-------- -------- ---------- ----------
Provision for Income Taxes 6,805 5,507 19,545 15,247
-------- -------- ---------- ----------
Net Income $ 10,380 $ 8,402 $ 29,810 $ 23,254
======== ======== ========== ==========
Net Income Per Share $.40 $.33 $1.15 $.92
======== ======== ========== ==========
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, 1996 AND 1995
(In thousands)
(Unaudited)
1996 1995
--------- ---------
Cash Flows from Operating Activities:
Net income $ 29,810 $ 23,254
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 13,002 11,173
Amortization of deferred gains (615) (615)
Gains (losses) on disposals of
assets (103) 22
Changes in assets and liabilities, net:
Receivables 18,794 (7,288)
Prepaid expenses and other (1,029) 325
Accounts payable (2,960) (23,254)
Accrued liabilities 8,604 2,321
Customers' advances (580) 12,681
Income taxes payable (1,123) (666)
Deferred income taxes (3,620) (971)
-------- --------
Net cash provided 60,180 16,982
-------- --------
Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (13,237) (28,076)
Net increase in investments (21,456) (2,571)
Net increase in other noncurrent assets (2,355) (3,997)
Proceeds from sales of marketable
securities 145 129
-------- --------
Net cash used (36,903) (34,515)
-------- --------
Cash Flows from Financing Activities:
Exercise of stock options 5,220 3,386
Bank borrowings (repayments), net 10,579 (935)
Other, net 1,631 (505)
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Net cash provided 17,430 1,946
-------- --------
Effect of Exchange Rate Changes 80 100
-------- --------
Increase (Decrease) in Cash and Cash
Equivalents 40,787 (15,487)
Cash and Cash Equivalents at the Beginning
of the Period 39,118 45,612
-------- --------
Cash and Cash Equivalents at the End
of the Period $ 79,905 $ 30,125
======== ========
See the accompanying notes.
Page 5
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
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, 1996 and September 30, 1995,
its consolidated results of operations for the three months and nine months
ended June 30, 1996 and 1995, and its consolidated cash flows for the nine
months ended June 30, 1996 and 1995.
The Company's interim results of operations are not necessarily indicative
of the results to be expected for the full year.
The Company's consolidated condensed statements of income for both the
three months and nine months ended June 30, 1995 reflect a reclassification
between other income and interest income so as to conform to the fiscal
1995 year-end presentation.
2. Included in receivables at June 30, 1996 and September 30, 1995 were
unbilled amounts totaling $52,532,600 and $52,790,600, respectively.
3. Property, equipment and improvements are stated at cost and consisted of
the following at June 30, 1996 and September 30, 1995 (in thousands):
June 30, September 30,
1996 1995
-------- -------------
Land $ 10,016 $ 10,529
Buildings 38,622 38,976
Equipment 98,961 87,186
Leasehold improvements 12,688 12,319
-------- --------
160,287 149,010
Less - accumulated depreciation
and amortization 79,294 68,895
-------- --------
$ 80,993 $ 80,115
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Page 6
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
4. Other assets consisted of the following at June 30, 1996 and September 30,
1995 (in thousands):
June 30, September 30,
1996 1995
-------- -------------
Prepaid pension costs $11,187 $11,503
Cash surrender value of life
insurance policies 19,707 16,498
Investments 32,883 11,517
Miscellaneous 3,061 3,818
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$66,838 $43,336
======= =======
Included in investments at June 30, 1996 was the Company's purchase of a
49% interest in the engineering and construction operations of the Serete
Group of France. The investment totaled $19.0 million (exclusive of the
related costs of the investment).
5. During the nine months ended June 30, 1996 and 1995, the Company made cash
payments of $2,012,600 and $1,468,100, respectively, for interest and
$23,302,400 and $16,284,300, respectively, for income taxes.
6. Net income per share for the three and nine months ended June 30, 1996 and
1995 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,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Average number of shares
of common stock
outstanding 25,720,600 25,268,900 25,599,200 25,155,100
Average number of shares
of common stock
equivalents outstanding 378,100 143,700 358,100 126,800
---------- ---------- ---------- ----------
26,098,700 25,412,600 25,957,300 25,281,900
========== ========== ========== ==========
Page 7
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1996
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, 1996 (the "third quarter of fiscal
1996") totaled $436.8 million; this was $7.8 million, or 1.8%, less than the
amount for the three months ended June 30, 1995 (the "third quarter of fiscal
1995"). This decline in revenues was due to lower construction and maintenance
activities, and reflects the completion or winding-down of construction
activities on a few large projects. With respect to the Company's engineering
services, revenues for the third quarter of fiscal 1996 were 15.0% higher than
the amount for the third quarter of fiscal 1995. The Company billed
approximately 3.3 million professional services hours to projects during the
third quarter of fiscal 1996; this was 0.2 million more hours than were billed
during the comparable period last year.
For the nine months ended June 30, 1996, revenues totaled $1,395.0 million; this
was $141.2 million, or 11.3%, more than the amount for the nine months ended
June 30, 1995. Revenues from engineering services were 12.8% higher as compared
to last year. The Company billed 9.8 million professional services hours to
projects during the nine months ended June 30, 1996; this was 1.0 million more
hours than were billed during the first nine months of fiscal 1995. Revenues
from construction and maintenance services for the nine months ended June 30,
1996 were 10.5% higher as compared to the corresponding period last year. Most
of this increase was due to higher subcontract and procurement activity on a few
large projects during the first six months of fiscal 1996.
As a percent of revenues, direct costs of contracts were 87.8% for the third
quarter of fiscal 1996, as compared to 88.8% for the third quarter of fiscal
1995. 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. The improvement in this percentage relationship during
the current year as compared to fiscal 1995 was due to a higher level of
engineering services activity relative to construction and maintenance. Direct
costs of contracts totaled 88.9% of revenues for both the nine months ended June
30, 1996 and June 30, 1995.
Page 8
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1996
Selling, general and administrative ("SG & A") expenses for the third quarter of
fiscal 1996 totaled $36.7 million; this was $1.2 million, or 3.3%, more than the
amount for the third quarter of fiscal 1995. For the nine months ended June 30,
1996, SG & A expenses totaled $107.2 million; this was $6.2 million, or 6.1%,
more than the amount for the nine months ended June 30, 1995. In general, these
increases were due to higher levels of SG & A spending in support of the
increased level of the engineering services activity discussed above.
The Company's operating profit (defined as revenues, less costs of contracts and
SG & A expenses) was $16.7 million for the third quarter of fiscal 1996; this
was $2.6 million more than the amount for the third quarter of fiscal 1995.
This increase in operating profit was due primarily to the increased level of
engineering services revenues relative to construction and maintenance in the
third quarter of fiscal 1996 as compared to the third quarter of fiscal 1995.
For the nine months ended June 30, 1996, the Company's operating profit totaled
$48.2 million; this was $10.0 million more than the amount for the nine months
ended June 30, 1995. This increase was also due to an increase in the relative
proportion of engineering services business in fiscal 1996 versus fiscal 1995,
as well as to a slight improvement in margin rates on those services during the
current fiscal year as compared to last year. Also contributing to the increase
in operating profit was a lower level of overall SG & A spending relative to the
business volume.
Interest income, net totaled $0.3 million for the third quarter of fiscal 1996;
this was $0.3 million more than the amount for the third quarter of fiscal 1995.
For the nine months ended June 30, 1996, interest income, net totaled $0.7
million; this was $0.7 million more than the amount for the nine months ended
June 30, 1995. In general, these increases in net interest income was due to
higher average cash balances on deposit during the current fiscal year as
compared to the corresponding periods last year.
Other income, net totaled $0.2 million for the third quarter of fiscal 1996;
this was $0.4 million more than the amount for the third quarter of fiscal 1995.
The amount for the third quarter of fiscal 1996 included higher gains from sales
of investments as compared to the third quarter of fiscal 1995.
Backlog Information
- -------------------
The following table summarizes the Company's backlog at the dates indicated (in
millions):
At June 30,
-----------
1996 1995
-------- --------
Engineering services backlog $ 830.0 $ 862.8
Total backlog 2,680.4 2,563.0
Page 9
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1996
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased $40.8 million during the nine
months ended June 30, 1996. This compares to a net decrease of $15.5 million of
cash and cash equivalents during the corresponding period last year. The
current year increase in cash and cash equivalents was due primarily to cash
provided by operations ($60.2 million) and financing activities ($17.4 million),
offset in part by cash used in investing activities ($36.9 million).
Operations contributed $60.2 million of cash and cash equivalents during the
nine months ended June 30, 1996. This compares to a net contribution of $17.0
million of cash and cash equivalents during the nine months ended June 30, 1995.
The $43.2 million increase from 1995 to 1996 in cash provided by operations was
due primarily to a $6.6 million increase in net income, a $26.1 million increase
in collections of customer receivables, and a $26.6 million reduction in cash
used to pay-down trade payables and accrued liabilities. Off-setting these
items in part was a $13.3 million net reduction in customer advances and other
items totaling $2.8 million.
The Company's investing activities used $36.9 million of cash and cash
equivalents during the nine months ended June 30, 1996. This compares to a net
use of cash of $34.5 million during the nine months ended June 30, 1995. For
the nine months ended June 30, 1996, additions to property and equipment, net of
disposals, totaled $14.8 million less than the comparable amount for last year.
Included in the fiscal 1995 figure is the Company's purchase of its offices in
Dublin, Ireland, for approximately $18.4 million. For the nine months ended
June 30, 1996, additions to investments totaled $18.9 million more than the
comparable amount for last year. Included in the fiscal 1996 figure is the
Company's purchase of a 49% interest in the engineering and construction
operations of the Serete Group of France. The investment was completed
effective January 31, 1996 and totaled $19.0 million.
Cash flows from financing activities generated $17.4 million in cash and cash
equivalents during the nine months ended June 30, 1996. This compares to a net
contribution of cash of $1.9 million during the nine months ended June 30, 1995.
Most of the variance was attributable to additional bank borrowings incurred in
connection with the Company's investment in the Serete Group discussed above.
Shortly before the end of the third quarter of fiscal 1996, however, the Company
paid-off $8.5 million of the outstanding short-term bank debt of its U.K.
subsidiary, and it paid-off the remaining balance of such loans, $7.8 million,
in July 1996. Effective April 5, 1996, the Company amended its $45.0 million,
long-term, revolving credit agreement to allow multi-currency borrowings, as
well as extending the termination date of the agreement to August 31, 1997. In
connection with this amendment, the Company also reduced the borrowing limit
under one of its short-term credit facilities.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1996 and beyond. At June 30, 1996, the Company's short-
term committed credit facilities totaled $51.6 million, and are available
through banks in the U.S. and the U.K. At June 30, 1996, $9.9 million of the
Company's short-term credit facilities were utilized, either through direct
borrowings or in the form of committed letters of credit.
Page 10
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
JUNE 30, 1996
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27. Financial Data Schedule.
(b) Reports on Form 8-K:
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/ John W. Prosser, Jr.
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John W. Prosser, Jr.
Senior Vice President, Finance
and Administration and Treasurer
Date: August 12, 1996
Page 11