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 quarterly period ended June 30, 1996
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 Number 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, Jacksonville, Florida 32256
------------------------------------------------
(Address of principal executive offices)(Zip Code)
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 June 30, 1996 was 455,000 shares.
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
- - --------------------------------------------------------------------------------
THREE MONTHS ENDED
JUNE 30
1996 1995
---- ----
GROSS REVENUE $10,567,000 $8,052,000
SUBCONTRACT AND OTHER DIRECT COSTS 3,238,000 1,877,000
--------- ---------
Net service revenue 7,329,000 6,175,000
COST OF SERVICES 2,985,000 2,528,000
--------- ---------
Gross profit 4,344,000 3,647,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,824,000 3,581,000
--------- ---------
Operating Income 520,000 66,000
OTHER INCOME (EXPENSE):
Interest and other income (expense) 5,000 3,000
Interest expense (14,000) (46,000)
------- -------
Income before income taxes 511,000 23,000
INCOME TAX EXPENSE 211,000 22,000
------- ------
NET INCOME $ 300,000 $ 1,000
=========== ==========
NET INCOME PER COMMON SHARE $ 0.66 $ 0.00
=========== ==========
AVERAGE COMMON SHARES OUTSTANDING 455,000 448,000
======= =======
See accompanying notes to consolidated financial statements.
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
- - --------------------------------------------------------------------------------
ASSETS June 30, 1996 March 31, 1996
- - ------ ------------- --------------
CURRENT ASSETS:
Cash $ 1,493,000 $ 263,000
Accounts receivable, net of allowance
for doubtful accounts of $157,000
and $148,000 4,373,000 5,178,000
Unbilled service revenue 3,450,000 3,312,000
Prepaid expenses 49,000 185,000
Other current assets 8,000 12,000
----- ------
Total current assets 9,373,000 8,950,000
PROPERTY AND EQUIPMENT, net 2,320,000 2,456,000
OTHER ASSETS 71,000 91,000
IDENTIFIABLE INTANGIBLE ASSETS, net of accumulated
amortization of $809,000 and $795,000 228,000 243,000
COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESS,
net of accumulated amortization $137,000
and $131,000 776,000 781,000
------- -------
$12,768,000 $12,521,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - -----------------------------------
CURRENT LIABILITIES:
Notes payable and current portion of
long-term debt $ 365,000 $ 863,000
Accounts payable 2,130,000 2,244,000
Accrued payroll 344,000 639,000
Accrued expenses 1,558,000 1,193,000
Unearned service revenue 2,605,000 2,053,000
Current portion of deferred income taxes 23,000 23,000
------ ------
Total current liabilities 7,025,000 7,015,000
LONG-TERM DEBT 35,000 76,000
DEFERRED INCOME TAXES 223,000 223,000
OTHER LIABILITIES 444,000 466,000
------- -------
Total liabilities 7,727,000 7,780,000
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 4,000,000 shares
authorized, 455,000 issued and outstanding 5,000 5,000
Paid-in capital 3,534,000 3,534,000
Retained earnings 1,502,000 1,202,000
--------- ---------
Total shareholders' equity 5,041,000 4,741,000
--------- ---------
$12,768,000 $12,521,000
=========== ===========
See accompanying notes to consolidated financial statements.
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED JUNE 30
- - --------------------------------------------------------------------------------
1996 1995
---- ----
OPERATING ACTIVITIES:
Net Income $ 300,000 $ 1,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 178,000 190,000
(Gain)loss on disposal of fixed assets (1,000) 0
Deferred rent charges (23,000) (20,000)
Change in operating assets and liabilities:
Accounts receivable and unbilled
service revenue 667,000 (953,000)
Other assets and prepaid expenses 158,000 32,000
Accounts payable and accrued expenses (43,000) (295,000)
Unearned service revenue 552,000 124,000
------- -------
Net cash provided (used) by
operating activities 1,788,000 (921,000)
--------- --------
INVESTING ACTIVITIES:
Capital expenditures (22,000) (233,000)
Proceeds from sale of fixed assets 3,000 0
----- --------
Net cash used by investing activities (19,000) (233,000)
------- --------
FINANCING ACTIVITIES:
Repayments of long-term debt (124,000) (140,000)
Net increase (decrease) in credit line
payable to bank (415,000) 1,098,000
Net proceeds from issuance of common stock 0 1,000
-------- -----
Net cash provided (used) by
financing activities (539,000) 959,000
-------- -------
NET INCREASE (DECREASE) IN CASH 1,230,000 (195,000)
CASH AT BEGINNING OF PERIOD 263,000 577,000
------- -------
CASH AT END OF PERIOD $1,493,000 $ 382,000
========== =========
See accompanying notes to consolidated financial statements.
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 1996
1) The accompanying unaudited 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 generally accepted accounting
principles 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, 1996.
2) Earnings per share of common stock are based on weighted average number of
shares outstanding during each period.
3) Certain reclassifications have been made in the fiscal year 1996 financial
statements to conform to classifications used in the fiscal year 1997
financial statements.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND LIQUIDITY AND CAPITAL RESOURCES
RESULTS OF OPERATIONS
Gross revenue for the first quarter of fiscal 1997 was $10,567,000 as compared
to gross revenue of $8,052,000 for the first quarter of fiscal 1996. This 31%
increase was due primarily to the increased workload in the transportation,
aviation, aerospace and defense, commercial and institutional programs.
Corresponding with this increase was a 72% increase in subcontract and other
direct costs for the first quarter of fiscal 1997 over the same period for
fiscal 1996. Increased use of subconsultants was experienced in the
transportation, aviation, and institutional programs. As a result of the
increase in both gross revenue and other direct costs, net service revenue
increased 19% to $7,329,000 for the first quarter of fiscal 1997 from $6,175,000
for the first quarter of fiscal 1996.
Cost of services represents direct labor costs associated with the generation of
net service revenues. Cost of services, for the first three months of fiscal
1997 was $2,985,000, representing an 18% increase over the same period for
fiscal 1996. Expressed as a percentage of net service revenue, cost of services
remained consistent at 41% for both the first quarter of fiscal 1997 and 1996.
As a result of these factors and increased revenues, gross profit increased 19%
to $4,344,000 in fiscal 1997 from $3,647,000 in fiscal 1996.
Selling, general and administrative (SG&A) expenses consist of labor costs of
operational personnel not utilized on projects (i.e. indirect labor), labor
costs of administrative and support personnel, office rent, depreciation,
insurance and other operating expenses. Selling, general and administrative
expenses for the first quarter of fiscal 1997 were $3,824,000 as compared to
$3,581,000 for the first quarter of fiscal 1996. This 7% increase was due
primarily to increases in compensation and further acquisition and
implementation of computer and communications technology.
Income before income taxes was $511,000 for the first three months of fiscal
1997 versus $23,000 for the same period of fiscal 1996. This increase was
primarily attributable to the increase in net service fees as described above.
Net income was $300,000 for the first three months of fiscal 1997 as compared to
$1,000 for the first three months of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996 the Company had cash of $1,493,000 and additional borrowing
available on the revolving line of credit of $1,750,000. The Company believes
that its existing financial resources, together with its future cash flow from
operations and its unused bank lines of credit, will provide sufficient capital
to fund its operations.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) 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, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1996 REYNOLDS, SMITH AND HILLS, INC.
By /s/ Leerie T. Jenkins, Jr.
--------------------------
Leerie T. Jenkins, Jr.
Chairman of the Board,
President and Chief
Executive Officer
(Principal Executive
Officer)
By /s/ David K. Robertson
----------------------
David K. Robertson
Executive Vice President,
Secretary, Treasurer, Chief
Financial Officer and Director
(Principal Financial and
Accounting Officer)