UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Period Ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 0-18984
REYNOLDS, SMITH AND HILLS, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2986466
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4651 Salisbury Road, Suite 400 32256
Jacksonville, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (904) 296-2000
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. YES [X] NO[ ]
The number of shares outstanding of the registrant's Common Stock, par
value $.01 per share, at December 31, 2000 was 453,140 shares.
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
- --------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
December 31 December 31
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
GROSS REVENUE $ 42,406,000 $ 37,220,000 $ 13,957,000 $ 14,617,000
SUBCONTRACT AND OTHER
DIRECT COSTS 10,229,000 9,290,000 3,234,000 4,323,000
--------------- --------------- --------------- ---------------
Net service revenue 32,177,000 27,930,000 10,723,000 10,294,000
COST OF SERVICES 12,166,000 10,771,000 4,021,000 3,880,000
--------------- --------------- --------------- ---------------
Gross profit 20,011,000 17,159,000 6,702,000 6,414,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 19,110,000 16,098,000 6,502,000 5,783,000
--------------- --------------- --------------- ---------------
Operating income 901,000 1,061,000 200,000 631,000
OTHER INCOME (EXPENSE)
Interest and other income 49,000 33,000 23,000 9,000
Interest expense (9,000) (46,000) (2,000) (17,000)
--------------- --------------- --------------- ---------------
Income before income taxes 941,000 1,048,000 221,000 623,000
INCOME TAX EXPENSE 403,000 418,000 100,000 233,000
--------------- --------------- --------------- ---------------
NET INCOME $ 538,000 $ 630,000 $ 121,000 $ 390,000
=============== =============== =============== ===============
BASIC EARNING PER SHARE $ 1.19 $ 1.41 $ .27 $ .87
--------------- --------------- --------------- ---------------
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 453,000 448,000 453,000 448,000
=============== =============== =============== ===============
See accompanying notes to consolidated financial statements.
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REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
- --------------------------------------------------------------------------------
DEC 31, MARCH 31,
ASSETS 2000 2000
- ------ --------------- ---------------
CURRENT ASSETS:
Cash $ 226,000 $ 457,000
Accounts receivable, net of allowance for doubtful accounts of
$120,000 and $131,000 6,139,000 6,490,000
Unbilled service revenue 6,267,000 5,179,000
Prepaid expenses and other current assets 117,000 159,000
Deferred income taxes 431,000 431,000
--------------- ---------------
Total current assets 13,180,000 12,716,000
PROPERTY AND EQUIPMENT, net 2,400,000 2,513,000
OTHER ASSETS 180,000 180,000
COST IN EXCESS OF NET ASSETS OF ACQUIRED
BUSINESSES, net ofaccumulated amortization
of $388,000 and $313,000 1,233,000 1,308,000
--------------- ---------------
$ 16,993,000 $ 16,717,000
=============== ===============
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 100,000 $ 100,000
Accounts payable 2,078,000 3,120,000
Accrued payroll 1,042,000 466,000
Accrued incentive compensation 653,000 883,000
Accrued expenses 893,000 1,268,000
Unearned service revenue 3,807,000 2,919,000
--------------- ---------------
Total current liabilities 8,573,000 8,756,000
LONG-TERM DEBT 0 100,000
DEFERRED INCOME TAXES 173,000 173,000
OTHER LIABILITIES 351,000 387,000
--------------- ---------------
Total liabilities 9,097,000 9,416,000
--------------- ---------------
SHAREHOLDERS? EQUITY:
Common Stock, $.01 par value, 4,000,000 shares authorized,
453,000 and 448,000 issued and outstanding 5,000 5,000
Paid-in capital 3,627,000 3,570,000
Retained earnings 4,264,000 3,726,000
--------------- ---------------
Total shareholders' equity 7,896,000 7,301,000
--------------- ---------------
$ 16,993,000 $ 16,717,000
=============== ===============
See accompanying notes to consolidated financial statements.
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REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
NINE MONTHS ENDED DECEMBER 31
2000 1999
--------------- --------------
OPERATING ACTIVITIES:
Net income $ 538,000 $ 630,000
Adjustments to reconcile net income to net cash:
Depreciation and amortization 700,000 691,000
Deferred rent charges (36,000) (29,000)
Other 57,000 50,000
Change in operating assets and liabilities:
Accounts receivable and unbilled service revenue (737,000) (2,667,000)
Other assets and prepaid expenses 28,000 35,000
Accounts payable and accrued expenses (1,071,000) 1,106,000
Unearned service revenue 888,000 1,037,000
--------------- --------------
Net cash provided by operating activities 367,000 853,000
--------------- --------------
INVESTING ACTIVITIES:
Capital expenditures (498,000) (839,000)
Other 0 3,000
--------------- --------------
Net cash used by investing activities (498,000) (836,000)
--------------- --------------
FINANCING ACTIVITIES:
Repayments of long-term debt (100,000) (100,000)
Net increase in credit line payable to bank 0 160,000
--------------- --------------
Net cash (used) provided by financing activities (100,000) 60,000
--------------- --------------
NET (DECREASE) INCREASE IN CASH (231,000) 77,000
CASH AT BEGINNING OF PERIOD 457,000 68,000
--------------- --------------
CASH AT END OF PERIOD $ 226,000 $ 145,000
=============== ==============
See accompanying notes to consolidated financial statements.
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BASIS OF PRESENTATION
- ---------------------
1) The accompanying unaudited consolidated financial statements, in the
opinion of management, include all adjustments (consisting of normal
recurring accruals) necessary to present fairly the results of
operations and financial position of the Company for the periods
indicated. However, certain information and note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
omitted. It is suggested that these financial statements be read in
conjunction with the financial statements, schedules, and notes thereto
included in the Company's annual report on Form 10-K for the fiscal
year ended March 31, 2000.
2) Earnings per share of common stock are based on weighted average number
of shares outstanding during each period.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Gross revenue for the first nine months of fiscal 2001 was $42.4
million as compared to $37.2 million for the first nine months of fiscal 2000.
This $5.2 million increase (14%) was due primarily to increased revenues in the
transportation, aviation, aerospace/defense, and commercial programs as a result
of current and prior year marketing efforts.
Gross revenue for the third quarter of fiscal 2001 was $14.0 million as
compared to $14.6 million for the third quarter of fiscal 2000. This 5% decrease
occurred primarily in the institutional program.
Subcontract and other direct costs remained relatively constant at 32%
and 33% of net service revenues for the first nine months of fiscal years 2001
and 2000, respectively. Subcontract and other direct costs were 30% and 42% of
net service revenues for the third quarter of fiscal years 2001 and 2000,
respectively. This decrease for the third quarter was primarily due to a
decrease in subconsultants in the institutional program as well as a decrease in
subconsultants and temporary staffing in the aerospace/defense program.
Net service revenue more accurately reflects revenue for services
performed by the Company. Net service revenue was $32.2 million for the first
nine months of fiscal 2001 compared to $27.9 million for the first nine months
of fiscal 2000. This 15% increase corresponds to the increase in gross revenues.
Net service revenue was $10.7 million for the third quarter of fiscal 2001 as
compared to $10.3 million for the prior years quarter. This 4% increase is a
result of reduced subcontract and other direct costs.
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Cost of services represents direct labor costs associated with the
generation of net service revenues. Cost of services, as a percentage of net
service revenue, remained consistent at 38% for the first nine months and the
third quarter of fiscal 2001 and 2000. Gross profit, as a result, also remained
consistent at 62% for the same periods of fiscal 2001 and 2000.
Selling, general and administrative (SG&A) expenses consist of labor
costs of production personnel not utilized on projects (i.e. indirect labor),
labor costs of administrative and support personnel, office rent, depreciation,
insurance, and other operating expenses. SG&A expenses increased to $19.1
million in the first nine months of fiscal 2001 from $16.1 million in the first
nine months of fiscal 2000. This 19% increase was due primarily to increases in
personnel and associated costs. The number of employees increased to 520 at
December 31, 2000 from 460 at December 31, 1999 as a result of the increased
workload. Other increases in SG&A expenses were experienced in cost of
technology equipment, recruiting costs, office rent, professional fees, and
insurance premiums.
SG&A expenses increased to $6.5 million for the third quarter of fiscal
2001 from $5.8 million for the third quarter fiscal 2000. This 12% increase
occurred for the same reasons as set forth above for the nine-month period for
fiscal years 2001 and 2000.
Net income was $538,000 for the first nine months of fiscal 2001 as
compared to $630,000 for the first nine months of fiscal 2000. Net income was
$121,000 for the third quarter of fiscal 2001 as compared to $390,000 for the
same period of fiscal 2000. These decreases are primarily a result of increased
SG&A expenses.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of December 31, 2000 the Company had cash of $226,000 with $3.0
million of borrowings available under its revolving line of credit.
Operations for the first nine months of fiscal year 2001 generated
cash. Combined days outstanding for accounts receivable and unbilled service
revenue were 81 days and 90 days at December 31, 2000 and 1999, respectively.
The Company believes that its existing financial resources, together
with its cash flow from operations and its unused bank line of credit, will
provide sufficient capital to fund its operations for fiscal 2001. This
statement is based on information that is currently available, however, a
variety of factors could cause actual results to differ materially from expected
results.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk exposures to the Company are not material.
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Item 6. Exhibits and Reports on Form 8-K
(a) There were no Form 8-K reports filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following on behalf of the Registrant in the
capacities indicated.
Reynolds, Smith and Hills, Inc.
Dated: February 9, 2001
/s/ Leerie T. Jenkins, Jr.
- --------------------------------------- Chairman of the Board
Leerie T. Jenkins, Jr. and Chief Executive Officer
(Principal Executive Officer)
/s/ Kenneth R. Jacobson
- ------------------------------------ Chief Financial Officer, Executive
Kenneth R. Jacobson Vice President, and General Counsel
(Principal Financial and
Accounting Officer)
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