EXHIBIT 13
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
SEPTEMBER 30, 1996
SELECTED HIGHLIGHTS
For Fiscal Years Ended September 30
(Dollars in thousands, except per-share information)
1996 1995 1994
----------- ----------- -----------
Revenues $1,798,970 $1,723,057 $1,165,754
Net income 40,360 32,242 18,767
---------- ---------- ----------
Per-share information:
Net income $ 1.56 $ 1.27 $ 0.75
Net book value 10.93 9.41 7.96
Closing year-end stock
price 22.50 24.875 24.375
---------- ---------- ----------
Total assets $ 572,505 $ 533,947 $ 504,364
Stockholders' equity 283,387 238,761 200,433
Return on average equity 15.46% 14.68% 10.03%
Stockholders of record 1,965 2,971 2,635
---------- ---------- ----------
Backlog:
Engineering services $ 845,300 $ 828,400 $ 793,060
Total 2,750,200 2,625,000 2,500,000
---------- ---------- ----------
Permanent staff 7,350 7,600 6,940
---------- ---------- ----------
Net income for fiscal 1994 included special charges totaling $10,200, or $0.40
per share.
Selected Financial Data
- -----------------------
For Fiscal Years Ended September 30
(In thousands, except per-share information)
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Results of Operations:
Revenues $1,798,970 $1,723,057 $1,165,754 $1,142,926 $1,106,427
Net income 40,360 32,242 18,767 28,670 26,605
---------- ---------- ---------- ---------- ----------
Financial Position:
Current ratio 1.68 to 1 1.44 to 1 1.41 to 1 1.61 to 1 1.56 to 1
Working capital $ 155,569 $ 113,339 $ 106,058 $ 100,688 $ 92,706
Current assets 383,644 368,614 367,485 264,949 258,206
Total assets 572,505 533,947 504,364 351,020 316,731
Long-term debt 36,300 17,799 25,000 - -
Stockholders' equity 283,387 238,761 200,433 173,797 139,813
Return on average equity 15.46% 14.68% 10.03% 18.28% 21.56%
Backlog:
Engineering services $ 845,300 $ 828,400 $ 793,060 $ 736,600 $ 647,100
Total 2,750,200 2,625,000 2,500,000 1,858,600 1,760,000
---------- ---------- ---------- ---------- ----------
Per-share Information:
Net income $ 1.56 $ 1.27 $ 0.75 $ 1.15 $ 1.11
Stockholders' equity 10.93 9.41 7.96 6.96 5.81
---------- ---------- ---------- ---------- ----------
Average Number of Common
and Common Stock
Equivalents Outstanding 25,921 25,384 25,173 24,964 24,070
---------- ---------- ---------- ---------- ----------
Net income for fiscal 1994 included special charges totaling $10,200, or $0.40
per share.
Net income for fiscal 1992 included a net gain of $2,118, or $0.09 per share,
from the sale of 40 percent of the Company's holdings of the common stock of
Genetics Institute, Inc.
Selected Financial Data
- -----------------------
For Fiscal Years Ended September 30
(In thousands, except per-share information)
1991 1990 1989 1988 1987
---------- ---------- -------- -------- --------
Results of Operations:
Revenues $1,036,289 $ 881,757 $793,577 $757,410 $320,307
Net income 20,385 14,390 10,220 6,552 3,512
---------- ---------- -------- -------- --------
Financial Position:
Current ratio 1.41 to 1 1.24 to 1 1.24 to 1 1.18 to 1 1.42 to 1
Working capital $ 60,580 $ 39,544 $ 32,965 $ 22,021 $ 26,657
Current assets 206,576 202,404 172,489 143,951 89,629
Total assets 260,142 253,707 212,680 179,642 116,849
Long-term debt - - 6,332 9,244 12,277
Stockholders' equity 106,936 82,964 58,806 37,503 30,967
Return on average equity 21.47% 20.30% 21.22% 19.14% 12.13%
Backlog:
Engineering services $ 457,300 $ 329,400 $222,830 $154,950 $ 87,736
Total 1,605,000 1,343,300 970,010 822,252 351,554
---------- ---------- -------- -------- --------
Per-share Information:
Net income $ 0.86 $ 0.64 $ 0.48 $ 0.34 $ 0.18
Stockholders' equity 4.50 3.70 2.74 1.93 1.62
---------- ---------- -------- -------- --------
Average Number of Common
and Common Stock
Equivalents Outstanding 23,763 22,439 21,501 19,390 19,150
---------- ---------- -------- -------- --------
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The following table sets forth total revenues from each of the industry groups
and markets serviced by the Company for each year in the three year period ended
September 30, 1996 (in thousands):
1996 1995 1994
---------- ---------- ----------
Chemicals $ 452,448 $ 377,731 $ 315,991
Refining 417,739 480,472 372,769
Semiconductor 268,520 264,492 83,477
Buildings and
infrastructure 189,834 174,183 88,228
Pulp and paper 170,553 85,476 7,258
Pharmaceuticals and
biotechnology 147,840 123,683 97,301
Federal programs 145,275 175,200 175,846
Other 6,761 41,820 24,884
---------- ---------- ----------
$1,798,970 $1,723,057 $1,165,754
========== ========== ==========
The following table sets forth total revenues from each of the types of services
the Company provides its clients for each year in the three year period ended
September 30, 1996 (in thousands):
1996 1995 1994
---------- ---------- ----------
Engineering services $ 627,622 $ 588,399 $ 476,491
Field services:
Construction 925,681 881,574 456,750
Maintenance 245,667 253,084 232,513
---------- ---------- ----------
$1,798,970 $1,723,057 $1,165,754
========== ========== ==========
1996 Compared to 1995:
- ----------------------
Consolidated revenues increased 4.4 percent from 1995 to 1996. Revenues from
the Company's engineering services increased 6.7 percent from 1995 to 1996. The
Company considers the level of engineering services it provides an important
indicator of the Company's overall financial performance because engineering
services absorb a significant portion of the Company's general and
administrative expenses. The Company also believes that engineering services
activity is a leading indicator of possible future opportunities to provide
construction and construction management services. The increase in engineering
services revenues from 1995 to 1996 was evidenced by an increase in the number
of professional services hours billed to projects. The Company billed 12.8
million hours to projects in 1996; this was 0.8 million more hours than the
number billed last year.
Revenues from field services activities increased 3.2 percent from 1995 to 1996.
While revenues from construction activities increased 5.0 percent from last
year, revenues from
maintenance activities were down 2.9 percent from the previous year.
Construction revenues increased during 1996 in spite of the fact the Company
completed construction on two large projects during the year (one for a client
in the refining industry, and another for a client in the semiconductor
industry), and it substantially completed construction on a third major project
(for a client in the buildings and infrastructure industry group). Also
contributing to the increase in field services revenues from 1995 to 1996 was an
$18.2 million increase in subcontract and procurement activity (the costs of
which are included in both revenues and costs).
As a percent of revenues, direct costs of contracts was 88.4 percent in 1996,
versus 89.0 percent in 1995. The percentage relationship between direct costs
of contracts and revenues will fluctuate from year to year depending on a
variety of factors, including the mix of business and services in the years
being compared. In general, the decrease in this percentage relationship from
1995 to 1996 was due to a proportionally higher percentage of the Company's
total business volume coming from engineering services relative to field
services.
The Company's selling, general and administrative ("S,G & A") expenses totalled
$143.5 million for 1996; this was only $6.9 million, or 5.0 percent, more than
the 1995 amount. The increase in S,G & A expenses corresponds to the increase
in the overall business volume discussed above, and reflects the Company's
continuing efforts to control such expenses throughout its operations.
The Company's operating profit (defined as total revenues, less direct costs of
contracts, and selling, general and administrative expenses) totalled $64.6
million for 1996; this was $11.9 million more than the 1995 amount. In general,
the improvement was due to increased business volume, combined with higher
margin rates for the Company's services.
Interest income, net totalled $1.4 million for 1996; this was $1.1 million more
than the 1995 amount. The increase in net interest income was due primarily to
higher levels of cash invested during 1996 as compared to 1995, combined with
slightly better rates of interest earned on such investments.
Other income, net totalled $0.8 million for 1996; this was $0.4 million more
than the 1995 amount. The increase in other income, net was due primarily to
higher gains from sales of marketable securities and other assets in 1996 as
compared to 1995.
1995 Compared to 1994:
- ----------------------
Consolidated revenues increased 47.8 percent from 1994 to 1995. Of the
increase, approximately 55 percent was due to the inclusion in 1995 of a full
twelve-months results of operations of two businesses the Company acquired in
July 1994. The Company purchased substantially all of the assets of CRS Sirrine
Engineers, Inc. ("Sirrine"), subject to certain assumed liabilities, and all of
the issued and outstanding equity securities of CRSS Constructors, Inc. and CRSS
International, Inc. (together, "CRSS Constructors" - see Note 1 to the
Consolidated Financial Statements).
Engineering services revenues increased 23.5 percent from 1994 to 1995. Of the
increase, approximately 76 percent was due to the inclusion of a full twelve-
months of operations of Sirrine. The increase in engineering services revenues
was evidenced by an increase in the number of professional services hours billed
to projects. The Company billed 12.0
million hours to projects in 1995; this was 2.8 million more hours than the
number billed in 1994.
Revenues from field services activities increased 64.6 percent from 1994 to
1995. Most of the increase was due to higher construction activities, and in
particular from projects being executed and managed by Sirrine and CRSS
Constructors. Also contributing to the increase in field services revenues from
1994 to 1995 was a $372.3 million increase in subcontract and procurement
activity.
As a percent of revenues, direct costs of contracts was 89.0 percent in 1995,
versus 87.9 percent in 1994. The increase in this percentage relationship from
1994 to 1995 was due primarily to the acquisition of CRSS Constructors, which
contributed to an increase in field services revenues relative to engineering
services revenues.
The Company's S,G & A expenses totalled $136.6 million for 1995; this was $27.0
million more than the 1994 amount. Most of the increase was attributable to the
effects of the inclusion in 1995 of a full year's results of operations of
Sirrine and CRSS Constructors.
The Company's operating profit totalled $52.7 million for 1995; this was $20.8
million more than 1994. Approximately $15.8 million of the increase relates to
the special charge recorded in 1994 (see below) which decreased operating profit
for that year. The balance of the improvement was due to increased business
volume combined with higher margin rates.
Other income, net totalled $0.3 million for 1995, as compared to other expense,
net of $0.7 million for 1994. The variance was due primarily to higher
employee-benefit related costs recorded in 1994 than in 1995.
Special Charge:
- ---------------
During the fourth quarter of 1994, the Company recorded a special charge
totaling $10.2 million after taxes, or $0.40 per share. In general, the special
charge related to various acquisitions the Company had completed in 1993 and
1994, which added overhead and administrative infrastructures that were in many
cases duplicative of resources already existing within the Company. In 1994,
the Company began to implement plans to consolidate certain of its offices, and
to review where certain projects were being executed. In certain instances,
projects and personnel were re-assigned to other offices within the Company.
During 1995, the Company substantially completed its plans and programs. During
1996 and 1995, the Company charged $2.9 million and $2.2 million, respectively,
of cash expenditures and write-offs against these reserves.
BACKLOG
The following table summarizes the Company's total backlog at September 30,
1996, 1995, and 1994 (in millions):
1996 1995 1994
-------- -------- --------
Engineering services $ 845.3 $ 828.4 $ 793.1
Total 2,750.2 2,625.0 2,500.0
-------- -------- --------
At any given time, backlog represents the amount of revenues the Company expects
to record in the future from performing work under contracts that have been
awarded to it.
With respect to maintenance projects, however, it is the Company's policy to
include in backlog only the amount of revenues it expects to receive during the
succeeding year, regardless of the remaining life of the contract, unless the
Company does not expect the contract to be renewed. With respect to contracts
relating to projects for agencies of the U.S. federal government, it is the
Company's policy to include in backlog the full contract award.
Total backlog at September 30, 1996 included approximately $1.0 billion of
contracts for work to be performed either directly or indirectly for agencies of
the federal government. This compares to approximately $1.1 billion at both
September 30, 1995 and 1994. Most of these contracts extend beyond one year.
In general, these contracts must be funded annually (i.e., the amounts to be
spent under the contract must be appropriated by Congress to the procuring
agency, and then the agency must allot these sums to the specific contracts).
Net of work-off, the Company's backlog increased $125.0 million from 1994 to
1995, and it increased by $125.2 million from 1995 to 1996. Most of the
1995 increase was attributable to new project awards in the semiconductor and
pulp and paper areas of the Company's business. Most of the 1996 increase was
due to new awards in the refining and chemicals areas of the Company's business,
combined with scope expansions on a project in the semiconductor industry.
Of total backlog at September 30, 1996, the Company estimates that approximately
one-half will be realized as revenues within the next year.
In accordance with industry practice, substantially all of the Company's
contracts may be terminated by the client. However, the Company has not
experienced cancellations which have had a material effect on the reported
backlog amounts. In the situation where a client terminates a contract, the
Company would ordinarily be entitled to receive payment for work performed up to
the date of termination and, in certain instances, may be entitled to allowable
termination and cancellation costs. Additionally, the Company's backlog at any
given time is subject to changes in the scope of services to be provided as well
as increases or decreases in costs relating to the contracts included therein.
EFFECTS OF INFLATION
The effects of inflation on the Company's financial condition and results of
operations have decreased in recent years due primarily to the Company receiving
an increasing amount of its revenues under cost-reimbursable type contracts.
To the extent permitted by competition, the Company continues to mitigate its
exposure to the effects of inflation by, among other things, emphasizing
contracts which are either cost-reimbursable or negotiated fixed-price.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased $23.7 million during 1996.
This compares to a net decrease of $6.5 million during 1995, and a net increase
of $25.1 million during 1994. The current year increase was due primarily to
cash provided by operations ($54.3 million) and financing activities ($9.6
million), offset in part by cash used in investing activities ($40.0 million).
Operations provided $54.3 million of cash and cash equivalents in 1996. This
compares to net contributions of cash of $32.0 million in 1995 and $41.3 million
in 1994. The $22.3 million increase in cash provided by operations from 1995 to
1996 occurred primarily as a result of higher net income ($8.1 million) and
depreciation and amortization expense ($3.1 million), combined with the positive
impact of the timing of cash receipts and payments relating to receivables and
prepaid expenses, and trade payables and liabilities ($9.6 million).
The Company's investing activities used $40.0 million of cash and cash
equivalents in 1996. This compares to net uses of cash of $45.0 million in 1995
and $51.1 million in 1994. The $5.0 million decrease from 1995 to 1996 was due
primarily to the $4.7 million payment the Company made in 1995 to complete the
acquisition of Sirrine and CRSS Constructors; there was no similar payment made
in 1996. Additions to property and equipment decreased $18.3 million from 1995
to 1996. Included in last year's additions was the purchase of real property in
Dublin, Ireland, which included the Company's office building. The total
purchase price was approximately $18.4 million, and was financed entirely with
an Irish Punt mortgage loan. Additions to investments increased $18.7 million
from 1995 to 1996. Included in the 1996 figure is the purchase of a 49 percent
interest in the engineering and construction operations of the Serete Group
(headquartered in France). The purchase price totalled $19.0 million, and was
financed entirely with French Franc-denominated bank debt. The purchase
agreement provides for the Company to increase its ownership interest if the
Serete Group achieves certain operating goals over the two years following the
initial investment.
The Company's financing activities provided $9.6 million of cash and cash
equivalents in 1996. This compares to a net contribution to cash of $6.6
million in 1995 and $34.4 million in 1994. The increase in cash provided from
financing activities from 1995 to 1996 was due primarily to higher cash flows
from the issuance of stock to employees ($1.7 million), increased bank
borrowings, net of repayments ($3.1 million), and other, miscellaneous cash
flows ($1.8 million). Offsetting these amounts in part was cash used to
repurchase the Company's common stock ($3.6 million in 1996). In July 1996, the
Company announced a stock buy-back program of up to 1.0 million shares. During
the remainder of 1996, the Company purchased 160,000 shares of stock in the open
market, most of which were used to fund the share requirements under the
Company's 1989 Employee Stock Purchase Plan.
The Company believes it has adequate capital resources available to fund
operations in 1997 and beyond. The Company's consolidated working capital
position totalled $155.6 million at September 30, 1996; this was $42.2 million
more than the comparable 1995 amount. At September 30, 1996, the Company had a
total of $51.7 million available under all of its short-term bank credit
facilities, against which $0.7 million was outstanding in the form of direct
borrowings (relating entirely to the Company's U.K. subsidiary) and $1.5 million
was utilized in support of outstanding letters of credit.
EFFECT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board adopted Statement of
Financial Accounting Standards No. 123 - Accounting for Stock-Based Compensation
("SFAS No. 123"). SFAS No. 123 allows companies either to continue to account
for stock option awards using existing standards, or they may adopt a new, fair
value based method of accounting as prescribed in SFAS No. 123. The Company
does not intend to change its
method of accounting for stock issued to employees. The pro forma disclosure
requirements of SFAS No. 123 will be effective for the Company beginning next
year.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
(In thousands, except share information)
1996 1995
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 62,865 $ 39,118
Marketable securities 2,764 2,806
Receivables 276,668 292,108
Deferred income taxes 37,564 31,980
Prepaid expenses and other 3,783 2,602
-------- --------
Total current assets 383,644 368,614
-------- --------
Property, Equipment and Improvements, Net 79,009 80,115
-------- --------
Other Noncurrent Assets:
Goodwill, net 40,481 41,882
Other 69,371 43,336
-------- --------
Total other noncurrent assets 109,852 85,218
-------- --------
$572,505 $533,947
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 694 $ 16,632
Accounts payable 60,799 63,767
Accrued liabilities 110,061 109,168
Customers' advances in excess of
related revenues 47,052 54,496
Income taxes payable 9,469 11,212
-------- --------
Total current liabilities 228,075 255,275
-------- --------
Long-term Debt 36,300 17,799
-------- --------
Deferred Gains on Real Estate Transactions 1,025 1,845
-------- --------
Other Deferred Liabilities 23,718 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 - 25,745,329
and 25,495,711 shares, respectively 25,745 25,496
Additional paid-in capital 49,191 43,957
Retained earnings 207,639 168,203
Other 1,039 1,105
-------- --------
283,614 238,761
Less, cost of common stock held
in treasury (10,000 shares in 1996,
none in 1995) 227 -
-------- --------
Total stockholders' equity 283,387 238,761
-------- --------
$572,505 $533,947
======== ========
See the accompanying notes.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
(In thousands, except per-share information)
1996 1995 1994
---------- ---------- ----------
Revenues $1,798,970 $1,723,057 $1,165,754
---------- ---------- ----------
Costs and Expenses:
Direct costs of contracts 1,590,906 1,533,832 1,024,361
Selling, general and administrative
expenses 143,456 136,562 109,574
Interest income, net (1,444) (359) (276)
Other (income) expense, net (769) (359) 718
---------- ---------- ----------
1,732,149 1,669,676 1,134,377
---------- ---------- ----------
Income before taxes 66,821 53,381 31,377
---------- ---------- ----------
Income Tax Expense 26,461 21,139 12,610
---------- ---------- ----------
Net Income $ 40,360 $ 32,242 $ 18,767
========== ========== ==========
Net Income Per Share $1.56 $1.27 $0.75
========== ========== ==========
See the accompanying notes.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
(In thousands)
Additional Treasury
Common Paid-in Retained Stock
Stock Capital Earnings Other (at cost)
------- ---------- -------- ------- --------
Balances, September 30, 1993 $24,757 $30,436 $118,555 $ 48 $ -
Net foreign currency
translation adjustment - - - 1,302 -
Net unrealized gains on
marketable securities - - - 531 -
Repurchases of common
stock (59) (265) (1,116) - -
Exercises of stock options,
including the related
income tax benefits 397 7,080 - - -
Net income - - 18,767 - -
------- ------- -------- ------- -------
Balances, September 30, 1994 25,095 37,251 136,206 1,881 -
Net foreign currency
translation adjustment - - - 293 -
Net unrealized gains on
marketable securities - - - 213 -
Repurchases of common
stock (52) (900) (245) - -
Exercises of stock options,
including the related
income tax benefits 392 6,317 - - -
Issuance of restricted stock,
net of amortization 61 1,289 - (1,282) -
Net income - - 32,242 - -
------- ------- -------- ------- -------
Balances, September 30, 1995 25,496 43,957 168,203 1,105 -
Net foreign currency
translation adjustment - - - 8 -
Net unrealized losses on
marketable securities - - - (123) -
Repurchases of common
stock (13) (23) (716) - (3,590)
Exercises of stock options,
including the related
income tax benefits 253 5,028 (208) - 3,363
Issuance of restricted stock,
net of amortization 9 229 - 49 -
Net income - - 40,360 - -
------- ------- -------- ------- -------
Balances, September 30, 1996 $25,745 $49,191 $207,639 $ 1,039 $ (227)
======= ======= ======== ======= =======
See the accompanying notes.
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
(In thousands)
1996 1995 1994
-------- -------- --------
Cash Flows from Operating Activities:
Net income $ 40,360 $ 32,242 $ 18,767
Adjustments to reconcile net income to net
cash flows from operations:
Depreciation and amortization 18,118 15,013 11,973
Amortization of deferred gains (820) (820) (966)
(Gains) losses on disposals of property,
equipment and other assets (259) 22 (1,058)
Changes in assets and liabilities,
excluding the effects of
businesses acquired:
Receivables 15,255 (7,402) (17,506)
Prepaid expenses and other (1,182) 737 510
Accounts payable (2,911) (24,146) 941
Accrued liabilities (1,588) 11,791 505
Customers' advances (7,420) 7,082 14,862
Income taxes payable (1,743) 2,725 (2,427)
Deferred income taxes (3,818) (5,313) (5,474)
Special charge not requiring cash - - 21,140
Other 287 68 -
-------- -------- --------
Net cash provided 54,279 31,999 41,267
-------- -------- --------
Cash Flows from Investing Activities:
Additions to property and equipment (16,694) (34,971) (24,271)
Disposals of property and equipment 745 784 417
Increase in other assets, net (2,689) (3,228) (6,400)
Additions to investments (21,705) (3,001) (5,150)
Proceeds from sales of investments 301 - 642
Purchases of marketable securities - - (873)
Proceeds from sales of marketable
securities - 91 18,040
Acquisitions of businesses - (4,683) (33,513)
-------- -------- --------
Net cash used (40,042) (45,008) (51,108)
-------- -------- --------
Cash Flows from Financing Activities:
Exercises of stock options, including
the related income tax benefits 8,258 6,521 6,824
Purchases of treasury stock (3,590) - -
Increases to long-term debt 18,881 17,799 25,000
Payments on long-term debt - (25,000) -
Increase (decrease) in short-term
borrowings (15,739) 7,242 2,608
Other, net 1,768 - -
-------- -------- --------
Net cash provided 9,578 6,562 34,432
-------- -------- --------
Effect of Exchange Rate Changes (68) (46) 505
-------- -------- --------
Increase (Decrease) in Cash and Cash
Equivalents 23,747 (6,493) 25,096
Cash and Cash Equivalents at Beginning
of Period 39,118 45,611 20,515
-------- -------- --------
Cash and Cash Equivalents at End of Period $ 62,865 $ 39,118 $ 45,611
======== ======== ========
See the accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of Presentation
---------------------
The consolidated financial statements include the accounts of Jacobs
Engineering Group Inc. and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated.
Description of the Business
---------------------------
The Company's principal business is that of providing professional
engineering, construction and construction management, and maintenance services
to its industrial, commercial and government clients. The Company provides its
services from offices located throughout the United States, the United Kingdom
and Ireland, as well as through affiliated entities (investees which the Company
accounts for using the equity method) located throughout Europe and India. The
Company provides its services under cost-reimbursable, cost-reimbursable with a
guaranteed maximum, and fixed-price contracts. The percentage of revenues
realized from each of these types of contracts in each of the years ended
September 30, 1996, 1995, and 1994 was as follows:
1996 1995 1994
----- ----- -----
Cost-reimbursable 82% 88% 83%
Guaranteed maximum 2 1 8
Fixed-price 16 11 9
---- ---- ----
For the years ended September 30, 1996, 1995, and 1994, agencies of the
U.S. federal government accounted for 8.7 percent, 11.4 percent and 15.4
percent, respectively, of total revenues. Within the private sector, no single
client accounted for 10 percent or more of total revenues in 1996. One client
accounted for 13.1 percent and 11.6 percent of total revenues in 1995 and 1994,
respectively.
Revenue Accounting for Contracts
--------------------------------
In general, the Company recognizes revenues at the time services are
performed. On cost-reimbursable contracts, revenue is recognized as costs are
incurred, and includes applicable fees earned through the date services are
provided. On fixed-price contracts, revenues are recorded using the percentage-
of-completion method of accounting by relating contract costs incurred to date
to total estimated contract costs at completion. Contract costs include both
direct and indirect costs. Contract losses are provided for in their entirety
in the period they become known, without regard to the percentage-of-completion.
Some of the Company's contracts with the U.S. federal government, as well
as certain contracts with commercial clients, provide that contract costs
(including indirect costs) are subject to audit and adjustment. For all such
contracts, revenues have been recorded based upon those amounts expected to be
realized upon final settlement.
As is common in the industry, the Company executes certain contracts
jointly with third parties through partnerships and joint ventures. For certain
of these contracts, the Company recognizes its proportionate share of venture
revenues, costs and operating income in its consolidated statements of income.
When the Company is responsible for the procurement of materials,
equipment, or subcontracts, it includes such amounts in both revenues and costs.
The approximate amount of such costs included in revenues for each of the years
ended September 30, 1996, 1995, and 1994 was $1,019,499,500, $1,001,277,400 and
$629,001,500, respectively.
Foreign Operations
------------------
Revenues from the Company's U.K. and Irish operations totalled
$176,426,600, $92,514,400 and $64,790,400 for the years ended September 30,
1996, 1995, and 1994, respectively, and were earned from unaffiliated clients
located primarily in Europe.
Operating profit (defined as total revenues, less direct costs of
contracts, and selling, general and administrative expenses) for the U.K. and
Irish operations was approximately $6,494,400, $1,053,300 and $617,900 for 1996,
1995, and 1994, respectively. Identifiable assets of the U.K. and Irish
operations totalled $83,916,600 and $74,265,300 at September 30, 1996 and 1995,
respectively.
Cash Equivalents
----------------
The Company considers all highly liquid investments with original
maturities of less than three months as cash equivalents. Cash equivalents at
September 30, 1996 and 1995 consisted primarily of time certificates of deposit.
Marketable Securities and Investments
-------------------------------------
The Company's investments in equity and debt securities have been
classified as either trading securities (shown as "Marketable securities" in the
accompanying consolidated balance sheets), held-to-maturity securities or
available-for-sale securities (the latter two are included as long-term
investments in "Other noncurrent assets" in the accompanying consolidated
balance sheets). Management determines the appropriate classification of all
its investments at the time of purchase and reviews such designations at each
balance sheet date.
Trading securities are stated at fair value with unrealized gains or losses
included in "Other income, net" in the accompanying consolidated statements of
income. Held-to-maturity securities are carried at cost, or amortized cost if a
premium was paid or a discount received at the time of purchase. Marketable
equity securities not held for trading and debt securities not classified as
held-to-maturity are classified as available-for-sale. Available-for-sale
securities are stated at fair value, with the unrealized gains or losses, net of
taxes, reported in the "Other" component of stockholders' equity. The amount of
unrealized gains, net of taxes, recorded at September 30, 1996 and 1995 totalled
$621,600 and $744,000, respectively.
The following table summarizes certain information regarding the Company's
available-for-sale equity securities at September 30, 1996 and 1995, and for
each of the years then ended (in thousands):
1996 1995
------ ------
Total cost (specific identification
method) $ 368 $ 414
Gross unrealized gains 1,351 1,241
Estimated fair value 1,719 1,655
Gross realized gains 156 -
Gross proceeds from sales 201 -
------ ------
Receivables and Customers' Advances
-----------------------------------
Included in receivables at September 30, 1996 and 1995 were unbilled
amounts of $50,770,100 and $52,790,600, respectively. Unbilled receivables
represent amounts earned under contracts in progress, but not yet billable under
the terms of those contracts. These amounts become billable according to the
contract terms which usually consider the passage of time, achievement of
certain milestones or completion of the project. Included in unbilled
receivables at September 30, 1996 and 1995 were contract retentions totaling
$12,616,000 and $14,710,100, respectively. Substantially all unbilled
receivables are billed and collected in the subsequent fiscal year.
Customers' advances in excess of related revenues represent cash collected
from clients on contracts in advance of revenues earned thereon, as well as
billings to clients in excess of costs and earnings on uncompleted contracts.
Substantially all such amounts are earned in the subsequent fiscal year.
Property, Equipment and Improvements
------------------------------------
Property, equipment and improvements are stated at cost and consisted of
the following at September 30, 1996 and 1995 (in thousands):
1996 1995
-------- --------
Land $ 10,028 $ 10,529
Buildings 38,762 38,976
Equipment 100,874 87,186
Leasehold improvements 12,812 12,319
-------- --------
162,476 149,010
Less - accumulated depreciation
and amortization 83,467 68,895
-------- --------
$ 79,009 $ 80,115
======== ========
Depreciation and amortization are provided using primarily the straight-
line method over the estimated useful lives of the assets, or, in the case of
leasehold improvements, over the remaining term of the lease, if shorter.
Estimated useful lives range from 20 to 40 years for buildings, from 3 to 10
years for equipment and from 4 to 10 years for leasehold improvements.
Other Noncurrent Assets
-----------------------
Goodwill represents the costs in excess of the fair values of the net
assets of acquired companies and is amortized against earnings using the
straight-line method over periods not exceeding 40 years. Goodwill is shown in
the accompanying
consolidated balance sheets net of accumulated amortization of $4,997,700 and
$4,153,800 at September 30, 1996 and 1995, respectively.
Other noncurrent assets consisted of the following at September 30, 1996
and 1995 (in thousands):
1996 1995
------- -------
Prepaid pension costs $11,201 $11,503
Cash surrender value of life
insurance policies 20,758 16,498
Investments 35,000 11,517
Miscellaneous 2,412 3,818
------- -------
$69,371 $43,336
======= =======
During 1996, the Company purchased a 49 percent interest in the engineering
and construction operations of the Serete Group (which is headquartered in
France). The purchase price was approximately $19,000,000. The purchase
agreement provides for the Company to increase its ownership interest if the
Serete Group achieves certain operating goals over the two years following the
initial investment. The Company accounts for its investment in the Serete Group
using the equity method.
Deferred Gains on Real Estate Transactions
------------------------------------------
In 1983, the Company entered into a real estate transaction which
resulted in a gain totaling $12,299,800. Since the transaction involved a long-
term lease agreement, the gain was deferred and is being amortized ratably into
income over the lease term (which ends December 31, 1997).
Net Income Per Share
--------------------
For the years ended September 30, 1996, 1995, and 1994, net income per
share has been computed based on the weighted average number of shares of common
stock and, if dilutive, common stock equivalents outstanding as follows (in
thousands):
1996 1995 1994
------ ------ ------
Average number of
shares of common
stock outstanding 25,613 25,208 24,916
Average number of
common stock
equivalents outstanding 308 176 257
------ ------ ------
25,921 25,384 25,173
====== ====== ======
Business Combination
--------------------
Effective July 31, 1994, the Company acquired the engineering and
construction management services businesses of CRSS Inc. in a transaction
accounted for as a purchase. The cash purchase price was $38,196,200 (of which,
$4,683,200 was paid in fiscal 1995). The funds used to acquire the businesses
were provided by operations and long-term debt. The purchase price was
allocated to the assets and liabilities acquired based on their estimated fair
values, and the Company's consolidated results of operations include the results
of the acquired businesses since the date of acquisition.
Concentrations of Credit Risk / Use of Estimates
------------------------------------------------
The Company's cash balances and short-term investments are maintained in
accounts held by major banks and financial institutions in the U.S. and Europe.
Also, as is customary in the industry, the Company grants uncollateralized
credit to its clients, which include the federal government and large, multi-
national corporations operating in a broad range of industries. In order to
mitigate its credit risk, the Company continually evaluates the credit
worthiness of its major commercial clients.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that necessarily affect certain amounts reported in its consolidated
financial statements. The more significant estimates affecting amounts reported
in the consolidated financial statements relate to revenues under long-term
construction contracts and self-insurance accruals. Actual results could differ
from those estimates.
2. NOTES PAYABLE TO BANKS AND LONG-TERM DEBT
Short-term Credit Arrangements
------------------------------
At September 30, 1996, the Company had $51,660,000 available through
multiple bank lines of credit, under which the Company may borrow on an
overdraft or short-term basis. Interest under these lines is determined at the
time of borrowing based on the banks' prime or base rates, rates paid on
certificates of deposit, the banks' actual costs of funds or other variable
rates. The agreements require payment of a fee of 0.25 percent of the average
unused portion of the facilities, as well as require the Company to maintain
certain minimum levels of working capital and net worth. Two of the agreements
limits borrowings by the amount of letters of credit outstanding under the
facility. Borrowings under the lines are unsecured and the lines generally
extend through March 1997.
Other information regarding the lines of credit for the years ended
September 30, 1996, 1995, and 1994 was as follows (dollars in thousands):
1996 1995 1994
-------- -------- --------
Amount outstanding at
year end $ 694 $16,587 $ 9,152
Weighted average interest
rate at year end 7.00% 7.63% 6.18%
Weighted average borrowings
outstanding during the
year $12,270 $12,328 $ 9,685
Weighted average interest
rate during the year 7.10% 7.11% 5.45%
Maximum amount outstanding
during the year $17,406 $28,203 $24,763
------- ------- -------
Long-term Debt and Credit Arrangements
---------------------------------------
Long-term debt consisted of the following at September 30, 1996 and 1995
(in thousands):
1996 1995
------- -------
Mortgage loan, due May 2000 $17,640 $17,799
Borrowings under the Company's
unsecured, $45,000 revolving
credit agreement 18,660 -
------- -------
$36,300 $17,799
======= =======
The mortgage loan was incurred in connection with the purchase of the
Company's real property located in Dublin, Ireland, and is secured by the
property. The loan bears interest at variable rates for selected periods from
one to twelve months based on the Dublin Interbank Offered Rate, and is payable
at the end of each selected period. The interest rate in effect at September
30, 1996 was 6.27 percent.
Borrowings under the revolving credit agreement bear interest at either
fixed rates offered by the banks at the time of borrowing, or at variable rates
based on the agent bank's base rate, LIBOR or the latest federal funds rate.
The agreement requires the Company to maintain a minimum tangible net worth of
at least $160,000,000 plus 50 percent of consolidated net income after October
1, 1994, a minimum coverage ratio of certain defined fixed charges and a minimum
ratio of debt to tangible net worth. The
agreement also restricts the payment of cash dividends and requires the Company
to pay a facility fee of 0.15 percent of the total amount of the commitment. The
agreement extends through December 1997.
Interest expense for the years ended September 30, 1996, 1995, and 1994 was
$2,777,400, $2,216,000 and $792,000, respectively, and has been included with
interest income in the accompanying consolidated statements of income. Interest
payments made during each of these years totalled $2,552,300, $2,044,500 and
$595,400, respectively.
3. STOCK PLANS
The Company's 1989 Employee Stock Purchase Plan (the "1989 ESPP") provides
for the granting of options to participating employees to purchase shares of the
Company's common stock. The participants' purchase price is the lower of 90
percent of the common stock's closing market price on either the first or last
day of the option period (as defined). A summary of shares issued through the
1989 ESPP for the years ended September 30, 1996, 1995, and 1994 follows:
1996 1995 1994
----------- ----------- -----------
Aggregate purchase price $6,310,960 $5,604,570 $4,837,480
Shares purchased 290,430 314,300 222,210
---------- ---------- ----------
At September 30, 1996, there were 1,320,612 shares reserved for issuance
under the 1989 ESPP.
The Company has an incentive stock plan (the "1981 Plan") which provides
for the issuance of shares of common stock to employees and outside directors.
Under the 1981 Plan, the Company may grant four types of incentive awards:
incentive stock options, nonqualified stock options, stock appreciation rights,
and restricted stock. At September 30, 1996, there were 2,271,673 shares of
common stock reserved for issuance under the 1981 Plan, and there were 484,350
shares available for future awards at that date (839,300 shares were available
at September 30, 1995).
The Company issued 9,000 and 61,000 shares of restricted stock under the
1981 Plan during 1996 and 1995, respectively. Upon issuance of restricted
stock, unearned compensation equivalent to the market value of the stock issued
(determined on the date of grant) is charged to stockholders' equity and
subsequently amortized against income over the periods during which the
restrictions lapse ($353,200 and $67,500 of compensation expense was recognized
in 1996 and 1995, respectively). The restrictions generally relate to the
recipient's ability to sell or otherwise transfer the stock. There are also
restrictions that subject the stock to forfeiture back to the Company until
earned by the recipient through continued employment. The restrictions lapse
over five years.
Stock option activity and other related information for the 1981 Plan for
the years ended September 30, 1996, 1995, and 1994 follows:
1996 1995 1994
----------- ----------- -----------
Options outstanding at
beginning of year 1,576,059 1,412,959 1,237,000
Options granted 406,000 324,000 438,000
Options exercised (134,686) (77,400) (174,941)
Options expired (60,050) (83,500) (87,100)
---------- ---------- ----------
Options outstanding at
end of year 1,787,323 1,576,059 1,412,959
========== ========== ==========
Average price of options
exercised $10.96 $10.27 $ 9.30
Range of prices of options
outstanding $ 5.31 - $ 4.25 - $ 4.25 -
$28.56 $28.20 $28.20
Average price of options
outstanding $21.68 $19.80 $19.63
Options exercisable 781,653 637,229 413,919
---------- ---------- ----------
Options outstanding at September 30, 1996 consisted entirely of
nonqualified stock options. The 1981 Plan allows participants to satisfy the
exercise price on exercises of stock options by tendering to the Company shares
of the Company's common stock already owned by the participants. Shares so
tendered are retired and canceled by the Company and are shown as repurchases of
common stock in the accompanying consolidated statements of stockholders'
equity.
4. SAVINGS, DEFERRED COMPENSATION AND PENSION PLANS
Savings Plans
-------------
The Company maintains employee savings plans (qualified 401(k) retirement
plans) covering substantially all of the Company's domestic, nonunion employees.
Company contributions to these plans totalled $8,000,100, $7,719,400 and
$6,000,200 for the years ended September 30, 1996, 1995, and 1994, respectively.
Deferred Compensation Plans
---------------------------
The Company's Executive Security Plan ("ESP") and Executive Deferral
Plans ("EDP") are nonqualified deferred compensation programs that provide
benefits payable to directors, officers and certain key employees or their
designated beneficiaries at specified future dates, upon retirement or death.
Benefit payments under both plans are funded by a combination of contributions
from participants and the Company, and most of the participants are covered by
life insurance policies with the Company designated as the beneficiary. Amounts
charged to expense relating to these programs for the years ended September 30,
1996, 1995, and 1994 were $1,781,200, $1,601,000 and $5,568,000, respectively.
Included in other deferred liabilities in the accompanying consolidated balance
sheets at September 30, 1996 and 1995 was $19,092,700 and $17,597,200,
respectively, relating to the ESP and EDP plans.
Pension Plans
-------------
In the United States, the Company contributes to various trusteed pension
plans covering hourly construction employees under industry-wide agreements.
Contributions are based on the hours worked by employees covered under these
agreements and are charged to direct costs of contracts on a current basis.
Information from the plans' administrators is not available to permit the
Company to determine its share of unfunded benefits, if any. Company
contributions to these plans totalled $3,538,900, $5,044,400 and $2,631,900 for
the years ended September 30, 1996, 1995, and 1994, respectively.
The Company's U.K. subsidiary sponsors a contributory defined benefit
pension plan covering substantially all permanent, full-time employees at least
21 years of age. Benefits are based on length of service and the employee's
highest average salary for any three consecutive years in the plan, or, if
higher, the employee's salary in the final year in the plan. The Company's
funding policy is to fund the actuarially-determined accrued benefits, allowing
for projected compensation increases using the projected unit method. The
following table presents the funded status of the plan as of September 30, 1996
and 1995 (in thousands):
1996 1995
-------- -------
Fair value of plan assets $84,996 $77,330
------- -------
Actuarial present value of
benefit obligations (all
vested) 69,604 68,121
------- -------
Accumulated benefit obligation 69,604 68,121
Effect of projected
compensation increases 2,368 2,081
------- -------
Projected benefit obligation 71,972 70,202
------- -------
Plan assets in excess of
projected benefit obligation 13,024 7,128
Unrecognized (gains) losses (1,823) 4,375
------- -------
Prepaid pension asset $11,201 $11,503
======= =======
The components of net periodic pension cost (benefit) for each of the years
ended September 30, 1996, 1995, and 1994 were as follows (in thousands):
1996 1995 1994
--------- -------- --------
Service costs $ 1,258 $ 1,283 $ 1,206
Interest 5,624 5,399 4,878
Actual return on plan assets (14,242) (8,092) (3,816)
Net amortization and deferral 7,418 1,530 (2,347)
-------- ------- -------
Net pension cost (benefit) $ 58 $ 120 $ (79)
======== ======= =======
The significant actuarial assumptions used in determining the funded status
of the plan were as follows: weighted average discount rate - 8 percent;
weighted average rate of increase in compensation - 6 percent; and, weighted
average rate of return on pension assets - 8.5 percent. At September 30, 1996,
the majority of the plan's assets were invested in equity securities (primarily
those of companies trading in the U.K.) and fixed income securities.
5. PROVISION FOR INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes.
Accordingly, deferred tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
For the years ended September 30, 1996, 1995, and 1994, the provisions for
income taxes consisted of the following (in thousands):
1996 1995 1994
-------- -------- --------
Taxes currently payable:
Federal $22,927 $19,071 $13,196
State 5,316 4,026 2,912
Foreign 1,577 1,359 246
------- ------- -------
29,820 24,456 16,354
------- ------- -------
Taxes deferred:
Federal (2,768) (2,870) (3,057)
State (591) (447) (687)
------- ------- -------
(3,359) (3,317) (3,744)
------- ------- -------
$26,461 $21,139 $12,610
======= ======= =======
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and their related amounts used for income tax purposes. The significant
components of the Company's deferred tax assets (liabilities) at September 30,
1996 and 1995 were as follows (in thousands):
1996 1995
-------- --------
Assets:
Liabilities relating to employee
benefit plans $21,733 $17,711
Self-insurance reserves 11,038 9,396
Contract revenues and costs 5,559 4,044
Accruals for office
consolidations and other
special charges 914 2,102
Deferred gains on real
estate transactions 293 657
------- -------
Total deferred tax assets 39,537 33,910
------- -------
Liabilities:
Depreciation and amortization (3,816) (2,225)
Unremitted foreign earnings (1,102) (1,102)
State income and franchise taxes (1,410) (1,039)
Other, net (271) (233)
------- -------
Total deferred tax liabilities (6,599) (4,599)
------- -------
Net deferred tax asset $32,938 $29,311
======= =======
The reconciliations of the tax provisions recorded for the years ended
September 30, 1996, 1995, and 1994 to those based on the federal statutory rate
were as follows (in thousands):
1996 1995 1994
-------- -------- --------
Statutory amount $23,388 $18,683 $10,982
------- ------- -------
State taxes, net of
the federal benefit 3,071 2,326 1,447
Other, net 2 130 181
------- ------- -------
$26,461 $21,139 $12,610
======= ======= =======
Rate used to compute
statutory amount 35.00% 35.00% 35.00%
======= ======= =======
For the years ended September 30, 1996, 1995, and 1994, the Company paid
approximately $30,940,000, $22,153,000 and $20,351,000, respectively, in income
taxes.
For the years ended September 30, 1996, 1995, and 1994, consolidated income
(loss) before income taxes included $4,707,100, $380,200 and ($3,017,500),
respectively, from foreign operations. U.S. income taxes, net of applicable
credits, have been provided on the undistributed profits of foreign
subsidiaries, except in those instances where such profits are expected to be
permanently reinvested (the amount of such profits expected to be permanently
reinvested totalled $9,094,000 at September 30, 1996). Should these earnings be
repatriated, approximately $2,447,000 of income taxes would be payable.
6. COMMITMENTS AND CONTINGENCIES
The Company leases certain of its facilities and equipment under operating
leases with net aggregate future lease payments of $77,486,900 at September 30,
1996 payable as follows (in thousands):
Year ending September 30,
1997 $24,624
1998 18,124
1999 14,074
2000 11,193
2001 6,113
Thereafter 8,728
-------
82,856
Less - amounts representing
sublease income 5,369
-------
$77,487
=======
Rent expense for the years ended September 30, 1996, 1995, and 1994 was
approximately $27,190,200, $24,601,700 and $22,235,500, respectively, and was
offset by sublease income of approximately $2,313,500, $1,326,700 and
$1,085,100, respectively.
The Company maintains insurance coverage for various aspects of its
business and operations. The Company has elected, however, to retain a portion
of losses that occur through the use of various deductibles, limits and
retentions under its insurance programs. This situation may subject the Company
to some future liability for which it is
only partially insured, or completely uninsured. The Company intends to mitigate
any such future liability by continuing to exercise prudent business judgment in
negotiating the terms and conditions of its contracts.
The Company has entered into an employment agreement expiring September 30,
2001 with the Chairman of its Board of Directors. The agreement provides for
base payments of $432,000 per year to either the Chairman or, in the event of
his death, his beneficiary. The agreement also provides that the Chairman may
participate in any bonus plan sponsored by the Company, specifies certain
promotional and other activities to be performed by the Chairman in the event he
leaves employment with the Company and contains other provisions, including some
intended to prevent the Chairman from entering into any form of competition with
the Company.
In the normal course of business, the Company is subject to certain
contractual guarantees and litigation. Generally, such guarantees relate to
construction schedules and plant performance. Most of the litigation involves
the Company as a defendant in workers' compensation, personal injury, and other
similar lawsuits. Management believes, after consultation with counsel, that
these guarantees and litigation should not have any material adverse effect on
the Company's consolidated financial statements.
Letters of credit outstanding at September 30, 1996 totalled $33,714,500.
7. COMMON AND PREFERRED STOCK
Pursuant to the Company's 1990 Stockholder Rights Plan, each outstanding
share of common stock has attached to it one stock purchase right (a "Right").
Each Right entitles the common stockholder to purchase, in certain circumstances
generally relating to a change in control of the Company, one two-hundredth of a
share of the Company's Series A Junior Participating Cumulative Preferred Stock,
par value $1.00 per share (the "Series A Preferred Stock") at the exercise price
of $90 per share, subject to adjustment. Alternatively, the Right holder may
purchase common stock of the Company having a market value equal to two times
the exercise price, or may purchase shares of common stock of the acquiring
corporation having a market value equal to two times the exercise price.
The Series A Preferred Stock confers to its holders rights as to dividends,
voting and liquidation which are in preference to common stockholders. The
Rights are nonvoting, are not presently exercisable and currently trade in
tandem with the common shares. The Rights may be redeemed at $0.01 per Right by
the Company in accordance with the Rights Plan. The Rights will expire on
December 20, 2000, unless earlier exchanged or redeemed.
8. OTHER FINANCIAL INFORMATION
Accrued liabilities at September 30, 1996 and 1995 consisted of the
following (in thousands):
1996 1995
-------- --------
Accrued payroll and
related liabilities $ 60,772 $ 57,418
Insurance liabilities 27,888 24,254
Office consolidations
and other special
charge reserves 4,677 10,143
Other 16,724 17,353
-------- --------
$110,061 $109,168
======== ========
9. QUARTERLY DATA - UNAUDITED
Summarized quarterly financial information for the years ended September
30, 1996, 1995, and 1994 is presented below (in thousands, except per-share
amounts):
First Second Third Fourth Fiscal
1996 Quarter Quarter Quarter Quarter Year
---- -------- -------- -------- --------- ----------
Revenues $471,121 $487,021 $436,820 $404,008 $1,798,970
Income
before
taxes 15,811 16,358 17,185 17,467 66,821
Net income 9,550 9,880 10,380 10,550 40,360
Net income
per share .37 .38 .40 .41 1.56
Stock price:
High 25.375 29.375 28.375 27.375 29.375
Low 21.500 24.750 25.625 19.625 19.625
-------- -------- -------- -------- ----------
1995
----
Revenues $412,356 $396,746 $444,626 $469,329 $1,723,057
Income
before
taxes 12,086 12,505 13,909 14,881 53,381
Net income 7,300 7,552 8,402 8,988 32,242
Net income
per share .29 .30 .33 .35 1.27
Stock price:
High 24.250 20.750 22.250 25.750 25.750
Low 16.875 17.250 19.125 21.625 16.875
-------- -------- -------- -------- ----------
1994
----
Revenues $260,610 $272,646 $263,768 $368,730 $1,165,754
Income (loss)
before
taxes 12,339 12,172 12,045 (5,179) 31,377
Net income
(loss) 7,280 7,300 7,275 (3,088) 18,767
Net income
(loss) per
share .29 .29 .29 (.12) .75
Stock price:
High 26.625 26.875 24.500 24.750 26.875
Low 22.000 23.250 18.000 19.875 18.000
-------- -------- -------- -------- ----------
Beginning August 1, 1994, the Company's results of operations include the
results of certain businesses acquired from CRSS Inc. - see Note 1 above. Net
income for the fourth quarter of 1994 included special charges totaling
$10,200,000, or $0.40 per share.
The Company's common stock is listed on the New York Stock Exchange. At
September 30, 1996, there were 1,965 shareholders of record.
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Jacobs Engineering Group Inc.
We have audited the accompanying consolidated balance sheets of Jacobs
Engineering Group Inc. and subsidiaries as of September 30, 1996 and 1995, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Jacobs Engineering
Group Inc. and subsidiaries at September 30, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1996, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Los Angeles, California
October 30, 1996