SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000
Commission File Number 0-30911
THE PBSJ CORPORATION
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(Exact name of Registrant as specified in its charter)
FLORIDA 59-1494168
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
2001 N.W. 107th AVENUE
MIAMI, FLORIDA 33172-2507
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(Address of principal executive offices) (Zip Code)
(305) 592-7275
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.0033 Par Value)
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(Title of class)
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
filings for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ ]
The number of shares of Common Stock outstanding as of November 30,
2000 was 1,894,970. The aggregate market value of the voting stock held by
non-affiliates of the registrant based on the $53.60 closing price for the
registrant's Common Stock on December 15, 2000 was approximately $16,203,548.
Directors, executive officers and 10% or greater shareholders are considered
affiliates for purposes of this calculation but should not necessarily be deemed
affiliates for any other purpose.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Report on Form 10-K incorporates information by reference from
the registrant's definitive Proxy Statement to be used in conjunction with its
fiscal 2001 Annual Meeting of Shareholders.
<PAGE>
PART I
ITEM 1. BUSINESS
General
The PBSJ Corporation and its subsidiaries is an employee-owned
professional services organization that provides a broad range of planning,
design and construction services to a variety of public and private sector
clients. Our four major business segments are transportation, environmental,
civil engineering and construction management, representing 41%, 20%, 26% and
13%, respectively, of our fiscal 2000 revenues. We utilize our expertise in
engineering, planning, management, environmental, architectural and surveying
disciplines to solve complex problems in each of these basic service areas. We
provide these services through our staff of over 2,300 professional, technical
and support personnel. We believe our multi-disciplinary approach to problems
facilitates our ability to effectively meet the needs of our clients.
Since our founding in 1960, we have grown from a small civil
engineering practice with operations only in South Florida to a national design
firm offering a full range of engineering, architectural and planning services
throughout the United States. Evidencing this, in 2000, Engineering News-Record
ranked PBSJ 12th on its list of the top 100 pure design firms (traditional
design firms with no construction capability) in the United States, based on
design revenue. During fiscal 2000, we provided services to approximately 3,000
clients in the public and private sectors. Approximately 95% of our clients had
previously used our services. In fiscal 2000, 69% of our net revenues were
derived from the public sector and 31% from the private sector.
We have built an organization composed of highly skilled professionals
and top level technical and administrative personnel with a wide variety of
scientific, engineering, architectural and management resources. These resources
enable us to develop and implement innovative long-term solutions to the complex
problems of our clients, many of which are the subject of public concern and
extensive governmental regulation. We assist our clients in responding to these
concerns, in obtaining governmental permits and approvals and in complying with
applicable laws and regulations.
We began operations on February 29, 1960. Our holding company, The PBSJ
Corporation, was incorporated in 1973. We engage in business primarily through
two wholly-owned subsidiaries: Post, Buckley, Schuh & Jernigan, Inc., a Florida
corporation (through which we provide the majority of our engineering,
architectural and planning services) and PBS&J Construction Services, Inc.
(through which we provide the majority of our construction management services).
In addition, we have two other active subsidiaries: Seminole Development
Corporation (through which we hold title to all our real property); and Post,
Buckley International, Inc. (through which we provide services to our
international clients). In this Form 10-K, all references to "PBSJ" or "our"
operations refer to The PBSJ Corporation and its wholly-owned subsidiaries and
the activities of these entities on a consolidated basis. Our executive offices
are located at 2001 N.W. 107th Avenue, Miami, Florida.
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Acquisitions
Throughout our history, PBSJ has made selected strategic
acquisitions to increase the firm's geographic presence in the West and Central
regions, to enhance its technical capabilities firm-wide and to solidify our
operations in the Eastern region. Once we acquire a firm it is integrated and
consolidated into our existing operations and the subsidiary ceases to exist as
a separate operating entity. The following acquisitions occurred in the last
three years:
o August 1997 - Espey, Huston & Associates, Inc.
Our acquisition of EH&A, a 374-person firm headquartered in
Austin, Texas with offices in Houston, Dallas, Nashville,
Cincinnati, Charlotte and Newport News, significantly advanced
our strategic program of geographic and technical
diversification. EH&A's strong environmental engineering,
ecological science, and cultural resources capabilities
rounded out the land development services that PBSJ already
offered in Texas. The EH&A acquisition also provided PBSJ with
a nationally recognized presence in the aviation services
market.
o December 1997 - Kercheval and Associates, Inc.
Our acquisition of Kercheval, a 100-person firm headquartered
in San Diego, California with offices in California, Nevada
and Alabama, strengthened our capabilities in Southern
California and provided a strong entry into the
telecommunications market. Kercheval's operations primarily
involved transportation, telecommunications and civil and
structural engineering projects.
Effective October 1, 1998, we merged the following subsidiaries into
our wholly owned subsidiary, Post, Buckley, Schuh & Jernigan, Inc., a Florida
corporation: Post, Buckley, Schuh & Jernigan, Inc., a Texas corporation, Post,
Buckley, Schuh & Jernigan, Inc., a California corporation, Post, Buckley, Schuh
& Jernigan, Inc., a Nevada corporation, Post, Buckley, Schuh & Jernigan, Inc. of
Arizona, Coastal Environmental Services, Inc., Kercheval and effective January
15, 1999, we merged Survey Resources, Inc. and EH&A into Post Buckley Schuh and
Jernigan.
Through our strategic acquisitions, PBSJ has developed solid technical
expertise, in both core services and emerging markets, and a nationwide presence
that allows us to respond to clients in our "local" markets with the advantages
of a national firm. Although we do not currently have any probable plans with
respect to any additional material acquisitions, we will continue to evaluate
possible strategic acquisitions of engineering or related service businesses in
connection with our plan to diversify our sources of business and the geographic
areas in which we operate.
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Business Segments
The following table sets forth our revenues, in thousands, from each of
our four basic business segments for each of the three years ended September 30,
2000, 1999, and 1998, and the approximate percentage of our total revenues
attributable to each business segment:
<TABLE>
<CAPTION>
2000 1999 1998
---------------- ---------------- ----------------
(Dollars in Thousands)
Revenues % Revenues % Revenues %
-------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Transportation $106,580 41% $ 87,464 37% $ 82,651 37%
Environmental 52,757 20 61,278 25 51,377 23
Civil Engineering 69,026 26 65,336 27 62,547 28
Construction Management 34,162 13 27,339 11 26,806 12
</TABLE>
Transportation
Industry Overview
The need to modernize and upgrade the transportation infrastructure in
the United States has been a source of continued business for us through the
last ten years. Fueling the initial growth in this market was the Intermodal
Surface Transportation Efficiency Act ("ISTEA") of 1991. ISTEA established
funding for mass transportation and public transit programs, introduced the
Congestion Mitigation and Air Quality program to provide funding for areas that
have not yet met air quality standards under the Clean Air Act to meet air
quality deadlines and included funding for alternative-fuel transit buses. In
1998, ISTEA was reauthorized as the Transportation Equity Act for the 21st
Century ("TEA-21"). TEA-21 earmarks $218 billion for highway and transit
projects over the next six years. Although a U.S. federal program, TEA-21
provides state and local governments considerable flexibility in project
selection.
Our Services
Our activities in this area generally involve planning, design, right
of way acquisitions, development and design of intelligent transportation
services and program construction management services for highways, including
interstate, primary, and arterial roads and toll facilities, bridges, transit,
airports and port facilities. We currently serve 15 state departments of
transportation throughout the U.S. and three foreign agencies.
Our Program Management group provides many of our governmental clients
the necessary resources to manage large infrastructure programs from concept
through construction. Our services include planning, programming, and contract
support. During production we develop design standards, manage projects, perform
design reviews and develop cost estimates. We (1) facilitate environmental
permitting, by advising clients of the permitting requirements and assisting in
the completion of the permit applications and the resolution of any issues
raised by the applicable regulatory agency issuing the permit, (2) coordinate
right-of-way administration and (3) provide construction management oversight.
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During 2000, projects in our Transportation Division included:
o Overseeing all project planning and pre-construction
requirements and activities and providing bond support
services for the Florida Turnpike's capital improvement
program including coordinating acquisition of the necessary
rights-of-way, and reviewing construction drawings and cost
estimates.
o Providing general engineering consulting services to the
Orlando-Orange County Expressway Authority, including the
opening of Part A of State Road (S.R). 429 and the initial
construction of Part C of S.R. 429, as well as construction on
the Goldenrod Extension and S.R. 528 interchange.
o In support of the Florida Department of Transportation and the
Florida 2012 Olympic Committee's bid for the 2012 summer
Olympics, identifying transportation solutions to link events
planned along the I-4 corridor between Tampa and Orlando.
o Completing main lane and frontage road plans and aesthetic
design guidelines for SH 45 in Travis and Williamson Counties
for the Texas Turnpike Authority, a division of the Texas
Department of Transportation.
o Designing 25 miles of Nevada Department of Transportation's
I-15 widening project between Las Vegas and the California
state line.
Environmental
Industry Overview
Over the past twenty-five years, significant environmental laws at the
federal, state and local levels have been enacted in response to public concern
over the environment. Those laws and their implementation through regulation
affect numerous industrial and governmental actions and form a key market driver
for the products and services of our Environmental business segment.
Two of these federal environmental water regulations, The Safe Drinking
Water Act of 1974 and the Safe Drinking Water Act Amendments of 1996, have
brought substantial changes to the regulation and financing of water systems.
Pursuant to these amendments, Congress has authorized nearly $9.6 billion
through 2003 to be allotted to states to create low interest loan funds for
installing and upgrading drinking water treatment facilities. The Federal Water
Pollution Control Act of 1972 also established a system of standards, permits
and enforcement procedures for the discharge of pollutants from industrial and
municipal wastewater sources. According to the EPA's survey of wastewater and
sewage treatment needs issued in 1996, as much as $139.5 billion will be needed
for construction and upgrade of wastewater treatment facilities by the year
2016.
Our Services
Our Environmental business segment focuses on the delivery of planning,
design and construction management services for private and public sector
clients. Included in this division's services are:
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Air Quality Management Flood Insurance Studies
Chemical Testing Analysis Hazardous and Solid Waste
Management
Cultural Resources Assessments Information Solutions
Ecological Studies Wastewater Treatment
Environmental Toxicology Analysis Water Resources
Flood Control Facility Planning and Water Supply and Treatment
Design
During 2000, projects in our Environmental business segment included:
o A multi-year contract with the Federal Emergency Management
Agency ("FEMA") to serve as Flood Map Production Coordination
Contractor for FEMA's Central Region V (Illinois, Indiana,
Michigan, Ohio, Minnesota and Wisconsin), Central Region VI
(Texas, Oklahoma, Arkansas, Louisiana and New Mexico) and
Central Region VII (Nebraska, Kansas, Idaho and Missouri).
o Providing support to the Water Replenishment District of
Southern California, including completion of a water resources
master plan concept report and assisting in the implementation
of a $60 million capital improvements program.
o A contract with the San Antonio River Authority to perform
hydrologic, hydraulic, water quality and environmental
services to assist them in developing a concept design to
restore and enhance the historic San Antonio River in San
Antonio, Texas.
o Developing Sarasota County, Florida's Reclaimed Water Aquifer
Storage Recovery (RWASR) program through preparation of the
Class V RWASR well construction permit application and
assistance in obtaining program funding.
o Designing the Washington Suburban Sanitary Commission's
20-million-gallons-per-day advanced Seneca Wastewater
Treatment Plant in Montgomery County, Maryland which utilizes
biological nutrient removal.
Civil Engineering
Industry Overview
A strong and long-running national economic expansion has fueled demand
for services from our Civil Engineering business segment. As private sector
companies have spent increased dollars on corporate relocations and office,
commercial, industrial and residential development and public sector agencies
have allocated additional funds to replace aging infrastructure and revitalize
their urban cores,
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the demand for engineering and design services has grown. One example of this
growth is the increase in design revenues generated by the top 500 design firms.
According to Engineering News-Record, in 1999 ENR's top 500 design firms
generated $33.2 billion in design revenue from U.S.-based projects, up 15.3%
from the $28.8 billion generated by these same firms in 1998. By offering a wide
range of design and engineering services, PBSJ believes it is well positioned to
serve these companies.
Our Services
Our Civil Engineering business segment provides general civil
engineering services to public and private clients. Included in these services
are (1) site suitability studies, (2) master infrastructure engineering and
planning, (3) site engineering, (4) regulatory permitting and (5) disaster
planning and response. Within our Civil Engineering Division, we also have three
additional service groups: Surveying Engineering, Planning and Landscape
Architecture, and Architecture.
Our Surveying Engineering group provides clients GPS-based surveying,
mobile surveying for roadways and other hard surfaces, land platting,
right-of-way mapping, construction layout and control, boundary and topographic
surveys, control networks, tunnel surveying, commercial land title surveys,
hydrographic surveying, movement detection and deformation surveys, and rail and
mass transit surveys.
Our Planning and Landscape Architecture group provides clients master
land use planning, site planning, urban and regional planning, urban design,
environmental planning, cultural resource identification, and landscape
architecture.
Our Architecture group provides clients architectural design, space
planning and interior design, as well as electrical, mechanical and structural
engineering services.
During 2000, projects in our Civil Engineering business segment
included:
o Completed architecture design criteria package for the Florida
Department of Transportation, Turnpike District's new
104,800-square-foot headquarters and three support facilities
at the Turkey Lake Service Plaza on Florida's Turnpike. The
project was constructed under the design-build procurement
process.
o Under general consultant contract, began developing design
criteria package for improvements to the Florida Department of
Transportation Office of Toll Operations Toll Data Center in
Boca Raton, Florida. The project entails renovation of a
17,000-square-foot building and a two-story addition of
approximately 14,000 square feet.
o Provided engineering design services for two high schools,
three middle schools, and five elementary schools for the
Clark County School District in Nevada.
o Completed civil engineering design, permitting, and limited
construction administration services for Opryland Hotel
Florida, a 1,400-room hotel and 380,000-square-foot convention
center complex in Osceola County, Florida.
o Developed a comprehensive set of aesthetic design guidelines
for the Texas Turnpike Authority's new 21-mile toll road
system in only six months.
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Construction Management
Industry Overview
The demand for our construction management services has also been
fueled by the legislation and industry trends that are driving the growth in our
Transportation and Environmental business segments, including ISTEA and TEA-21.
These trends have resulted in a large number of infrastructure projects
throughout the U.S. which are subject to increasingly complex governmental
regulations. The role of the construction manager has become increasingly
important to the success of these projects, requiring a new level of versatility
and a wide range of skills. Both public and private sector entities are under
pressure to complete these projects at accelerated schedules, resulting in a
myriad of project delivery systems. With limited in-house staff, these entities
must rely on experienced construction managers to complete the project on time
and within budget.
Our Services
In the area of construction management, we provide a wide range of
services as an agent for our clients, including contract administration,
inspection, field testing, scheduling/estimating, instituting project controls
and quality assessment. Although we do not construct or build any projects, we
may act as the program director of a project whereby on behalf of the owner of
the project, we provide scheduling, cost estimating and construction observation
services for the project, or our services may be limited to providing
construction consulting.
During 2000, projects in our Construction Management Division included:
o Providing construction engineering and inspection services to
the Departments of Transportation in Alabama, Colorado,
Nevada, Texas, Florida and North Carolina.
o Providing construction administration to the Clark County
(Nevada) Department of Public Works.
o Providing comprehensive services, including cost estimating,
scheduling and construction claims reviews, to the school
boards of Miami-Dade County and Broward County, Florida.
o Providing construction-related services to BellSouth
throughout Florida and Georgia, including quality assurance
inspections, verification of contractor's invoices, damage
inspections and responding to natural disasters.
o Providing comprehensive construction quality assurance
services to the New Mexico Highway Department for Interstate
re-construction in Albuquerque.
o Providing construction inspection services nationally to the
National Park Service and Federal Highway Administration's
Central Lands Division.
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Other Services
In addition to our four national business segments, we have developed a
National Information Solutions Division to address the digital infrastructure
needs of our clients. Our services include: training, database analysis, system
programming, land planning and design and geographic information systems. Recent
projects which have allowed our information solutions to address client needs
include:
o Continued development of the Florida Department of
Transportation Turnpike District's Turnpike Asset Management
System, which will utilize an interactive Internet-based
mapping application.
o Implementing a Geographic Permit Management and Compliance
System for the City of Tucson, Arizona that will track all
environmental permit requirements and water quality monitoring
data.
Clients
Through our four national business segments, we provide our services to
a broad range of clients, including state, local and municipal agencies, the
Federal government and private sector businesses. Our state and local government
clients include approximately 15 state departments of transportation, water
utilities, local power generators, waste water treatment agencies, environmental
protection agencies, schools and colleges, law enforcement, judiciary, hospitals
and healthcare providers. We provide services to Federal agencies, including the
Army Corps of Engineers, Environmental Protection Agency, Navy, Air Force, Coast
Guard, United States Postal Service, Federal Emergency Management Agency and
Department of Energy, and local entities. Our contracts with federal, state and
local entities are subject to various methods of determining fees and costs. See
"Contract Pricing and Terms of Engagement" for a further discussion of our
pricing arrangements with governmental clients.
Our private sector clients include retail and commercial,
entertainment, railroad, petro-chemical, food, telecommunications, oil and gas,
power, semi-conductor, transportation, technology, public utility, mining and
forest products entities. The table below indicates the revenue generated, by
client type, for each of the three years ended September 30, 2000, 1999 and
1998.
<TABLE>
<CAPTION>
2000 1999 1998
-------------------- -------------------- --------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Domestic
Local and state agencies........ $170,641 65% $155,245 64% $138,496 62%
Federal agencies................ 8,611 3 4,828 2 8,935 4
Private businesses.............. 81,383 31 79,668 33 71,482 32
International..................... 1,890 1 1,676 1 4,468 2
-------- -------- -------- -------- -------- --------
Total........................... $262,525 100% $241,417 100% $223,381 100%
======== ======== ======== ======== ======== ========
</TABLE>
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In 2000, we derived approximately 17% of our net earned revenue from
various districts and departments of the Florida Department of Transportation
(the "FDOT") under numerous contracts. While we believe the loss of any
individual contract would not have a material adverse effect on our results of
operations and would not adversely impact our ability to continue work under our
other contracts with the FDOT, the loss of all the FDOT contracts would have a
material adverse effect on our results of operations by causing a material
decrease in our revenues and profits.
International Business
During fiscal 2000, revenues from our international operations were
approximately $1.9 million, or less than 1% of our total revenues. We currently
have on-going projects in three countries (Venezuela, India and Argentina).
Although we do not currently have any plans to expand our international
operations, we anticipate that our international operations will continue at
this same level.
Marketing
Marketing activities are conducted by key operating and executive
personnel, including specifically assigned business development personnel, as
well as through professional personnel who develop and maintain new and existing
client relationships. Our continued ability to compete successfully in the areas
in which we do business is largely dependent upon aggressive marketing, the
development of information regarding client requirements, the submission of
responsive cost-effective proposals and the successful completion of contracts.
Information concerning private and governmental requirements is obtained, during
the course of contract performance, from formal and informal briefings, from
participation in activities of professional organizations, and from literature
published by the government and other organizations.
Contract Pricing and Terms of Engagement
We earn our revenues for the various types of services we provide
through cost-plus, time-and- materials, fixed price contracts, and contracts
which combine any of the methods.
Cost-Plus Contracts. Under our cost-plus contracts, we charge clients
negotiated rates based on our direct and indirect costs. Labor costs and
subcontractor services are the principal components of our direct costs. Federal
Acquisition Regulations, which are applicable to all Federal government
contracts and which are partially incorporated in many local and state agency
contracts, limit the recovery of certain specified indirect costs or contracts
subject to such regulations. In negotiating a cost-plus contract, we estimate
all recoverable direct and indirect costs and then add a profit component, which
is either a percentage of total recoverable costs or a fixed negotiated fee, to
arrive at a total dollar estimate for the project. We receive payment based on
the total actual number of labor hours expended. If the actual total number of
labor hours is lower than estimated, the revenues from that project will be
lower than estimated. If the actual labor hours expended exceed the initial
negotiated amount, we must obtain a contract modification to receive payment for
such overage. During fiscal 2000, approximately 57% of our contracts were
cost-plus contracts, primarily with federal, state and local government
agencies.
Cost-plus contracts covered by Federal Acquisition Regulations and
certain state and local agencies require an audit of actual costs and provide
for upward or downward adjustments if actual recoverable costs differ from
billed recoverable costs. There are no open or pending audits by federal or
state authorities as of October 31, 2000. The result of our last audit for the
year ended September 30,
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1999 resulted in no adjustments. Our contracts with governmental entities, once
executed, are not subject to renegotiation of profits at the election of the
government, however, they are subject to continued funding. Our contracts
generally provide that we receive our profit on a periodic basis through the
course of the project. Therefore, if a governmental agency fails to fund for a
successive year, our profit will have been proportionally received as
recognized.
Time-and-Materials Contracts. Under our time-and-materials contracts,
we negotiate hourly billing rates and charge our clients based on actual time
expended. In addition, clients reimburse us for the actual out-of-pocket costs
of materials and other direct incidental expenditures incurred in connection
with performing the contract. Our profit margins on time-and-materials contracts
fluctuate based on actual labor and overhead costs directly charged or allocated
to contracts compared with negotiated billing rates. During fiscal 2000,
approximately 28% of our contracts were time-and-materials contracts, primarily
with private sector clients.
Fixed-Price Contracts. Under our fixed-price contracts, clients pay us
an agreed sum negotiated in advance for the specified scope of work. Under
fixed-price contracts, we make no payment adjustments if we over-estimate or
under-estimate the number of labor hours required to complete the project,
unless there is a change of scope in the work to be performed. Accordingly, our
profit margin will increase to the extent the number of labor hours and other
costs are below the contracted amounts. The profit margin will decrease and we
may realize a loss on the project if the number of labor hours required and
other costs exceed the estimate. During fiscal 2000, approximately 15% of our
contracts were fixed-price contracts, primarily with private sector clients.
Competition
We face active competition in all areas of our business. As we provide
a wide array of engineering, architectural, planning and construction management
services to companies in various industries throughout the United States, we
encounter a different group of competitors in each of our markets. Our
competitors include (1) national and regional design firms like PBSJ that
provide a wide range of design services to clients in all industries, including
CH2M Hill and Parsons Brickenhoff, (2) industry specific firms that provide
design as well as other services to customers in a specific industry, for
example environmental firms such as Montgomery Watson, Camp Dresser and McKee,
Inc., and (3) local firms that provide some or all of our services in one of our
markets. Some of our competitors are larger, more diversified firms having
substantially greater financial resources and larger professional and technical
staffs than ours. Competition for major contracts is frequently intense and may
entail public submittals and multiple presentations by numerous firms seeking to
be awarded the contract. The extent of competition which we will encounter in
the future will vary depending on changing customer requirements in terms of
types of projects and technological developments. It has been our experience
that the principal competitive factors for the type of service business in which
we engage are a firm's demonstrated ability to perform certain types of
projects, the client's own previous experience with competing firms, and the
firm's size and financial condition and the cost of the particular proposal.
No one firm currently dominates a significant portion of the sectors in
which we compete. Given the expanding demand for some of the services provided
by PBSJ, it is likely that additional competitors will emerge. At the same time,
consolidation continues to occur in certain of the sub-segments of the industry
in the United States , including the environmental-focused firms.
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We believe that we will retain the ability to compete effectively with
other firms that provide similar services by continuing to offer a broad range
of high-quality consulting and environmental, transportation, and engineering
and construction management services through our network of offices. Among other
things, the wide range of expertise which we possess permits us to remain
competitive in obtaining government contracts despite shifts in governmental
spending emphasis. Our multi-disciplinary capabilities enable us to compete more
effectively for clients whose projects require that the expertise of
professionals in a number of different disciplines be brought to bear in the
problem solving effort. We believe that our ability to offer our services over a
large part of the United States is a positive factor in enabling us to attract
and retain clients who have a need for our services in different parts of the
country.
Backlog
Our backlog for services as of September 30, 2000 was estimated to be
approximately $268.9 million. We define backlog as contracted task orders less
previously recognized revenue on such task orders. U.S. government agencies, and
many state and local governmental agencies, operate under annual fiscal
appropriations and fund various contracts only on an incremental basis. Our
ability to realize revenues from our backlog depends on the availability of
funding for various federal, state and local government agencies.
A majority of our customer orders or contract awards and additions to
contracts previously awarded are received or occur at random during the year and
may have varying periods of performance. The comparison of backlog amounts on
the same date in successive years is not necessarily indicative of trends in our
business or future revenues.
The major components of our operating costs are payroll and
payroll-related costs. Since our business is dependent upon the reputation and
experience of our personnel and adequate staffing, a reasonable backlog is
important for the scheduling of operations and for the maintenance of a
fully-staffed level of operations.
Regulation
Compliance with federal, state and local regulations which have been
enacted or adopted relating to the protection of the environment is not expected
to have any material effect upon the capital expenditures, earnings and
competitive position of PBSJ.
Personnel
As of October 31, 2000, we employed 2,337 persons. Most of our
employees are professional or technical personnel having specialized training
and skills, including engineers, architects, analysts, scientists, management
specialists, technical writers and skilled technicians. Although many of our
personnel are highly specialized in certain areas and while there is a
nationwide shortage of certain qualified technical personnel, we are not
currently experiencing any material difficulty in obtaining the personnel we
require to perform under our contracts. We believe that our future growth and
success will depend, in large part, upon our continued ability to attract and
retain highly qualified personnel. We believe our employee relations to be good.
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Liabilities and Insurance
When we perform services for our clients, we can become liable for
breach of contract, personal injury, property damage and negligence. Such claims
could include improper or negligent performance or design, failure to meet
specifications and breaches of express or implied warranties. Our clients often
require us to contractually assume liabilities for damage or personal injury to
the client, third parties and their property and for fines and penalties.
Because our projects are typically large enough to affect the lives of many
people, the damages available to a client or third parties are potentially large
and could include punitive and consequential damages. For example, our
transportation projects involve services that affect not only our client, but
also many end users of those services.
We seek to protect PBSJ from potential liabilities by obtaining
indemnification, where possible, from our public and private sector clients.
However, even when we obtain such indemnification, it is generally not available
if we fail to satisfy specified standards of care in performing our services or
if the indemnifying person has insufficient assets to cover the liability.
Therefore, we also seek to protect PBSJ by maintaining a full range of insurance
coverage, including worker's compensation, general and professional liability
(including pollution liability) and property coverage. Our professional
liability coverage is on a claims made basis (which means that the policy
provides liability coverage for all claims made during the policy period,
regardless of when the action occurred), while the rest of our insurance
coverage is on an occurrence basis (which means that the policy provides
liability coverage only for injury or damage arising from an action that occurs
during the policy period, regardless of when the claim is actually made). Our
professional liability insurance provides for annual coverage of up to $30
million with an annual deductible of $1.5 million. Based upon our previous
experience with such claims and lawsuits, we believe our insurance coverage is
adequate for all our present operational activities, although there can be no
assurances that such coverage will prove to be adequate in all cases. A
successful claim or claims in an amount in excess of our insurance coverage for
which there is not coverage could have a material adverse effect on our results
of operation.
ITEM 2. PROPERTIES
We own our executive offices located at 2001 N.W. 107th Avenue, Miami,
Florida 33172 which consists of approximately 100,000 square feet of office
space. We own three additional office buildings in Ft. Myers, Florida,
Homestead, Florida and Hollywood, Florida through our wholly-owned subsidiary,
Seminole Development Corporation. All of these properties are currently being
leased to third parties. We are in the process of constructing a 90,000 square
foot facility in Maitland, Florida which will replace office space we are
currently leasing in Winter Park, Florida.
We lease an additional 60 offices in 16 states in the United States and
Puerto Rico. Aggregate lease payments during fiscal year 2000 were approximately
$9.2 million.
We believe that substantially all of our property and equipment are, in
general, well maintained and in good operating condition. They are considered
adequate for present needs, and as supplemented by planned construction, are
expected to remain adequate for the near future.
We are of the opinion that we, or our subsidiaries, have clear title to
the properties owned and used in our business, subject to liens for current
taxes and easements, restrictions and other liens which do not materially
detract from the value of the properties or our interest in the properties or
the use of those properties in our business.
13
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ITEM 3. LEGAL PROCEEDINGS
We are party to various legal proceedings arising from our operations.
We believe that we have sufficient professional liability insurance such that
the outcome of any of these proceedings, individually and in the aggregate, will
not have a material adverse effect on our financial position or results of
operations. However, if our insurance company were to deny coverage for a
significant judgment or if a judgment were entered against us in an amount
greater than our coverage, it could adversely affect our results of operations.
Based upon our previous experience with claims and lawsuits, we believe our
insurance coverage is adequate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDERS MATTERS
Market Information
There is no established public trading market for our common stock.
As of September 30, 2000 there were no shares of common stock that were
subject to outstanding warrants or options to purchase, or securities
convertible into, our common stock, and no shares of our common stock could be
sold pursuant to Rule 144 under the Securities Act. No shares of our common
stock are being, or have been, publicly offered.
As of September 30, 2000, there were 1,895,950 shares of common stock
outstanding and held of record by 340 shareholders.
Dividends
Each share of our common stock is entitled to share equally in any
dividends declared by our board of directors. Pursuant to the terms of our
credit agreement, we cannot declare or pay dividends in excess of 50% of our net
income. We have not in the past paid cash dividends on our common stock and have
no present intention of paying cash dividends on our common stock in the
foreseeable future. All earnings are retained for investment in our business.
14
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected historical financial data as of
and for the years ended September 30, 2000, 1999, 1998, 1997 and 1996. The
financial data for each of the fiscal years has been derived from, and is
qualified by reference to, our audited financial statements which
PricewaterhouseCoopers LLP, our independent certified public accountants, have
audited. You should read the information set forth below in conjunction with our
consolidated Financial Statements, including the notes thereto, and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Engineering fees $ 262,525 $ 241,417 $ 223,381 $ 172,644 $ 143,731
Net earned revenues 196,830 180,637 167,133 131,423 110,080
Net income 10,490 5,446 4,474 4,000 3,363
Redeemable common stock per
share data:
Basic and diluted earnings per share $ 5.62 $ 2.87 $ 2.40 $ 2.16 $ 1.78
Weighted average shares of
redeemable common stock
outstanding 1,867,331 1,896,533 1,861,022 1,852,051 1,892,996
Balance Sheet Data (at end of period):
Working capital $ 18,752 $ 31,721 $ 20,545 $ 19,186 $ 14,802
Total assets 120,306 103,835 96,425 83,457 63,601
Long-term debt (less current
portion) 10,800 13,337 8,589 11,064 3,414
Total stockholders' equity 49,198 45,270 37,613 31,508 27,782
Cash dividends per common share -- -- -- -- --
</TABLE>
15
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ITEM. 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operation
The following table sets forth the percentage of net earned service
revenue represented by the items in our consolidated statements of income:
Year ended September 30,
2000 1999 1998
-------- -------- --------
Engineering fees 133.4% 133.6% 133.6%
Direct expenses 33.4 33.6 33.6
-------- -------- --------
Net earned revenue 100.0 100.0 100.0
Costs and Expenses:
Direct salaries 37.1 36.7 36.8
Selling, general and
administrative expenses 56.2 58.4 58.5
-------- -------- --------
Operating income 6.7 4.9 4.7
Interest expense (.6) (.6) (.7)
Other, net (.4) .6 .5
-------- -------- --------
Income before income taxes 5.7 4.9 4.5
Provision for income taxes 0.3 1.9 1.8
-------- -------- --------
Net income 5.4% 3.0% 2.7%
======== ======== ========
A summary of operating results is as follows for each of the years
ended September 30 (dollars in thousands):
2000 1999 1998
--------- --------- ---------
Engineering fees ............. $ 262,525 $ 241,417 $ 223,381
Direct expenses .............. 65,695 60,780 56,248
--------- --------- ---------
Net earned revenue ........... 196,830 180,637 167,133
Costs and expenses ........... 183,748 171,637 159,349
--------- --------- ---------
Operating income ............. 13,082 9,000 7,784
Other expenses ............... (2,003) (54) (360)
Provision for income taxes.... 589 3,500 2,950
--------- --------- ---------
Net income ................... $ 10,490 $ 5,446 $ 4,474
========= ========= =========
16
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Segment Results of Operations
Our businesses are reported as four segments, reflecting our management
methodology and structure. The accounting policies of the segments are the same
as those described in the footnotes to the accompanying consolidated financial
statements. We evaluate performance based on operating profit of the respective
segments. In fiscal years 2000 and 1999, general and administrative costs are a
combination of its' actual relative direct expenses and an allocation of
corporate expenses. In fiscal year 1998, general and administrative costs were
allocated to the segments based on each segment's direct costs as a percentage
of total direct costs. In fiscal 1998, we estimated our engineering fee
allocations to each segment based on estimates of the segments' historical
engineering fees as a percentage of total engineering fees. The discussion that
follows is a summary analysis of the primary changes in operating results by
segment for 2000 as compared to 1999 and 1999 as compared to 1998.
Transportation
2000 % Change 1999 % Change 1998
---- -------- ---- -------- ----
(Amounts in Thousands)
Engineering Fees .......... $106,580 21.9% $87,464 5.8% $82,651
Direct Expenses ........... 29,397 31.4 22,364 7.5 20,812
Net Earned Revenue ........ 77,183 18.6 65,100 5.3 61,839
Costs and Expenses ........ 68,632 11.1 61,784 5.6 58,482
Operating Income .......... $ 8,551 157.9% $ 3,316 -1.2% $ 3,357
2000 Compared To 1999
Engineering fees of $106.6 million for 2000 increased 21.9% as compared
to 1999. Higher volumes from continued strength in the transportation services
market and engineering fees from new projects were the primary contributors to
this increase during 2000.
Reported net earned revenue was $77.2 million during 2000 as compared
to $65.1 million in 1999, representing an increase of 18.6%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue was 38.1% in
2000 as compared to 34.3% in 1999. The increase in direct expenses and direct
expenses as a percentage of net earned revenue is due to the increased use of
subconsultants as a result of the significant growth in engineering fees. Higher
engineering fees discussed above offset by increased subconsultant expenses were
the primary contributors for the overall 2000 increase compared to 1999.
Reported operating income was $8.6 million in 2000 as compared to $3.3
million in 1999, representing an increase of 157.9%. Operating income as a
percentage of net earned revenue was 11.1% in 2000 as compared to 5.1% in 1999.
The increase in operating income and operating income as a percentage of net
earned revenue is due to improved operating efficiencies, a more accurate method
of allocating general and administrative costs and improved collections,
allowing for a reduction in the
17
<PAGE>
allowance for doubtful accounts. Operating efficiencies were obtained due to our
ability during fiscal 2000 to obtain significant revenue growth without
incurring the same level of direct salaries and general and administrative
expenses. Direct salaries increased due to additional staff required to support
our internal growth, while the increase in general and administrative expenses
increased primarily due to annual increases in pay rates and an accrual of
bonuses and insurance expenses relating to our medical plan. Under the old
method of general and administrative cost allocation, operating income would
have been $3.2 million less. Due to improved collections during fiscal year
2000, our total allowance for doubtful accounts decreased approximately $2.6
million, from $4.9 million at September 30, 1999 to $2.3 million at September
30, 2000. This segment's allocation from the adjustment in the allowance for
doubtful accounts approximated $962,000, or 18.4% of the 157.9% increase in
operating income in 2000.
1999 Compared to 1998
Engineering fees for 1999 were $87.5 million compared to $82.7 million
for 1998, which represented a 5.8% increase. Higher volumes from continued
strength in the transportation services market and engineering fees from new
projects were the primary contributors to this increase during 1999.
Reported net earned revenue was $65.1 million during 1999 as compared
to $61.8 million in 1998, representing an increase of 5.3%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue was 34.3% in
1999 as compared to 33.6% in 1998. The increase in direct expenses of 7.5% has a
direct relationship with the increase in engineering fees. In addition, the use
of subconsultants increased during this period.
Reported operating income was $3.3 million as compared to $3.4 million
in 1998, representing a decrease of 1.2%. Operating income as a percentage of
net earned revenue was 5.1% in 1999 as compared to 5.4% in 1998. The decrease is
due to a combination of increased direct salaries and general and administrative
expenses. Direct salaries increased as more employees worked on projects during
1999 as compared to the prior year. General and administrative expenses
increased due to higher expenses relating to the implementation and installation
fees for our information systems upgrade, increased depreciation expense due to
increased purchases and increased insurance expenses relating to our medical
insurance plan. Due to the larger scale of operations for this segment, the
general and administrative expenses had a larger effect on this segment's
operations.
Civil Engineering
2000 % Change 1999 % Change 1998
---- -------- ---- -------- ----
(Amounts in Thousands)
Engineering Fees ............ $69,026 5.6% $65,336 4.5% $62,547
Direct Expenses ............. 15,406 11.3 13,840 -12.1 15,750
Net Earned Revenue .......... 53,620 4.1 51,496 10.0 46,797
Costs and Expenses .......... 54,514 11.7 48,813 8.1 45,120
Operating Income ............ ($894) -133.3% $ 2,683 60.0% $ 1,677
18
<PAGE>
2000 Compared To 1999
Engineering fees of $69.0 million for 2000 increased 5.6% as compared to 1999.
Higher volume in the civil engineering market were the primary reasons for the
increase during 2000.
Reported net earned revenue was $53.6 million during 2000 as compared
to $51.5 million in 1999, representing an increase of 4.1%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue increased to
28.7% in 2000 from 26.9% in 1999. The increase in direct expenses and direct
expenses as a percentage of net earned revenue is due to the increased use of
subconsultants related to the significant growth in engineering fees. Higher
engineering fees discussed above offset by increased subconsultant expenses were
the primary contributors for the overall 2000 increase compared to 1999.
Reported operating income was ($0.9) million in 2000 as compared to
$2.7 million in 1999, representing a decrease of 133.3%. Operating income as a
percentage of net earned revenue was (1.6%) in 2000 as compared to 5.2% in 1999.
The decrease in operating income and operating income as a percentage of net
earned revenue is due primarily to expenses increasing at higher rates than the
engineering fees. The remaining decrease in operating income is due to a more
accurate method of allocating general and administrative costs, offset by
improved collections, allowing for a reduction in the allowance for doubtful
accounts. General and administrative expenses increased due to annual increases
in pay rates and an accrual of bonuses and insurance expenses relating to our
medical plan. Under the old method of general and administrative cost
allocation, operating income would have been $2.6 million higher. Due to
improved collections during fiscal year 2000, our total allowance for doubtful
accounts decreased approximately $2.6 million, from $4.9 million at September
30, 1999 to $2.3 million at September 30, 2000. This segment's allocation from
the adjustment in the allowance for doubtful accounts approximated $806,000,
improving the change in operating income during 2000 from -155.9% to -133.3%.
1999 Compared To 1998
Engineering fees of $65.3 million for 1999 increased 4.5% as compared
to 1998. Higher volumes from continued strength in the civil engineering market,
and engineering fees from new projects were the primary contributors to this
increase during 1999.
Reported net earned revenue was $51.5 million during 1999 as compared
to $46.8 million in 1998, representing an increase of 10%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue was 26.9% in
1999 as compared to 33.6% in 1998. Direct expenses decreased in 1999 because we
lessened our use of subconsultants as compared to the prior year. As a result,
we used our own technical staff to complete projects, thereby increasing direct
salaries significantly in 1999. Higher engineering fees discussed above and a
decrease in subconsultant expenses were the primary contributors for the overall
1999 increase compared to 1998.
Reported operating income was $2.7 million as compared to $1.7 million
in 1998, representing an increase of 60%. Operating income as a percentage of
net earned revenue was 5.2% in 1999 as
19
<PAGE>
compared to 3.6% in 1998. The increase in operating income for this segment is
due to the higher engineering fees as discussed above offset by increased direct
salaries and general and administrative expenses. The increase in direct
salaries was due to more employees working on projects during 1999 as compared
to the prior year. The increase in direct salaries has a negative effect on the
direct expenses as discussed above. Increased general and administrative costs
was primarily due to the implementation and installation fees for our
information systems upgrade, increased depreciation expense due to increased
purchases and increased insurance expenses relating to our medical insurance
plan.
Environmental
2000 % Change 1999 % Change 1998
---- -------- ---- -------- ----
(Amounts in Thousands)
Engineering Fees .......... $52,757 -13.9% $61,278 19.3% $51,377
Direct Expenses ........... 10,987 -26.8 15,009 16.0 12,936
Net Earned Revenue ........ 41,770 -9.7 46,269 20.3 38,441
Costs and Expenses ........ 39,852 -10.0 44,257 20.2 36,830
Operating Income .......... $ 1,918 -4.6% $ 2,012 24.9% $ 1,611
2000 Compared To 1999
Engineering fees of $52.8 million for 2000 decreased 13.9% as compared
to 1999 as a result of a lack of growth, as the segment was unable to obtain a
significant amount of new projects during 2000.
Reported net earned revenue was $41.8 million during 2000 as compared
to $46.3 million in 1999, representing a decrease of 9.7%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue was 26.3% in
2000 as compared to 32.4% in 1999. The decrease in direct expenses and direct
expenses as a percentage of net earned revenue is due to the decreased use of
subconsultants as a result of lower engineering fees and the disallowance of
other expenses that were allowed in prior years. The industry has seen a trend
in some clients becoming less inclined to allow certain direct expenses to be
directly billed on the invoice, such as CADD/computer charges and travel.
Instead, these clients request to have these expenses billed as a part of our
overhead cost recovery. These terms are negotiated with each client on an
individual basis and are stated in each contract.
Reported operating income was $1.9 million in 2000 as compared to $2.0
million in 1999, representing a decrease of 4.6%. Operating income as a
percentage of net earned revenue was 4.6% in 2000 as compared to 4.3% in 1999.
The decrease in operating income is due primarily to a more accurate method of
allocating general and administrative costs, offset by improved collections,
allowing for a reduction in the allowance for doubtful accounts. Under the old
method of general and administrative cost allocation, operating income would
have been $710,000 higher. Due to improved collections during fiscal year 2000,
our total allowance for doubtful accounts decreased approximately $2.6 million,
from $4.9 million at September 30, 1999 to $2.3 million at September 30, 2000.
This segment's allocation
20
<PAGE>
from the adjustment in the allowance for doubtful accounts approximated
$598,000, improving the change in operating income during 2000 from -34.3% to
-4.6%.
1999 Compared To 1998
Engineering fees of $61.3 million for 1999 increased 19.3% as compared
to 1998. Higher volumes from continued strength in the environmental services
sector, and engineering fees from new projects were the primary contributors to
this increase during 1999.
Reported net earned revenue was $46.3 million during 1999 as compared
to $38.4 million in 1998, representing an increase of 20.3%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue was 32.4% in
1999 as compared to 33.7% in 1998. Direct expenses increased 16% from 1998 to
1999 as a direct result of the increase in engineering fees. Direct salaries
increased in 1999 because we used more of our technical staff on projects rather
than subcontractors. As a result, the percentage of direct expenses to net
earned revenue decreased during 1999. Higher engineering fees discussed above
offset by increased subconsultant expenses were the primary contributors for the
overall 1999 increase compared to 1998.
Reported operating income was $2.0 million in 1999 as compared to $1.6
million in 1998, representing an increase of 24.9%. Operating income as a
percentage of net earned revenue was 4.3% in 1999 as compared to 4.2% in 1998.
The increase in operating income is offset by a combination of increased direct
salaries and general and administrative expenses. Direct salaries increased as
more employees worked on projects during 1999 as compared to the prior year.
General and administrative expenses increased due to increased expenses relating
to the implementation and installation fees for our information systems upgrade,
increased depreciation expense due to increased purchases and increased
insurance expenses relating to our medical insurance plan. Due to the larger
scale of operations for this segment, general and administrative expenses had a
larger effect on this segment's operations.
Construction Management
2000 % Change 1999 % Change 1998
---- -------- ---- -------- ----
(Amounts in Thousands)
Engineering Fees ........... $34,162 25.0% $27,339 2.0% $26,806
Direct Expenses ............ 9,905 3.5 9,567 41.7 6,750
Net Earned Revenue ......... 24,257 36.5 17,772 -11.4 20,056
Costs and Expenses ......... 20,750 23.6 16,783 -11.2 18,917
Operating Income ........... $ 3,507 254.6% $ 989 -13.2% $ 1,139
2000 Compared to 1999
Engineering fees of $34.2 million for 2000 increased 25.0% as compared
to 1999. Higher volume and continued growth in the business were the primary
reasons for the increase during 2000.
21
<PAGE>
Reported net earned revenue was $24.3 million during 2000 as compared
to $17.8 million in 1999, representing an increase of 36.5%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue, decreased from
53.9% in 1999 to 40.8% in 2000. The decrease in direct expenses, as a percentage
of net earned revenue, is due to a decrease in subconsultant expenses and the
disallowance of other expenses that were allowed in prior years. The industry
has seen a trend in some clients becoming less inclined to allow certain direct
expenses to be directly billed on the invoice, such as CADD/computer charges and
travel. Instead, these clients request to have these expenses billed as a part
of our overhead cost recovery. These terms are negotiated with each client on an
individual basis and are stated in each contract.
Reported operating income was $3.5 million in 2000 as compared to $1.0
million in 1999, representing an increase of 254.6%. Operating income as a
percentage of net earned revenue was 14.5% in 2000 as compared to 5.6% in 1999.
The increase in operating income and operating income as a percentage of net
earned revenue is due to improved operating efficiencies, a more accurate method
of allocating general and administrative costs and improved collections,
allowing for a reduction in the allowance for doubtful accounts. Operating
efficiencies were obtained due to our ability during fiscal 2000 to obtain
significant revenue growth without incurring the same level of direct salaries
and general and administrative expenses. Direct salaries increased due to
additional staff required to support our internal growth, while the increase in
general and administrative expenses increased primarily due to annual increases
in pay rates and an accrual of bonuses and insurance expenses relating to our
medical plan. Under the old method of general and administrative cost
allocation, operating income would have been $1.8 million less. Due to improved
collections during fiscal year 2000, our total allowance for doubtful accounts
decreased approximately $2.6 million, from $4.9 million at September 30, 1999 to
$2.3 million at September 30, 2000. This segment's allocation from the
adjustment in the allowance for doubtful accounts approximated $234,000, or 9.3%
of the 254.6% increase in operating income in 2000.
1999 Compared to 1998
Engineering fees of $27.3 million for 1999 increased 2.0% as compared
to 1998. Higher volumes from continued strength in the construction services
discipline, and engineering fees from some projects were the primary
contributors to this increase during 1999.
Reported net earned revenue was $17.8 million during 1999 as compared
to $20.1 million in 1998, representing a decrease of 11.4%. Direct expenses
consist of out-of-pocket expenses related to the delivery of services such as
blueprints, reproductions, CADD/computer charges, and travel and subcontractor
expenses. Direct expenses, as a percentage of net earned revenue was 53.9% in
1999 as compared to 33.6% in 1998. Direct expenses increased due to the increase
in subconsultant expenses and the other direct expenses mentioned above related
to projects obtained from the EH&A and Kercheval acquisitions. The segment had
personnel turnover during 1999 and as a result had to increase our use of
subcontractors. Higher engineering fees discussed above offset by increased
subconsultant expenses were the primary contributors for the overall 1999
increase compared to 1998.
Reported operating income was $1.0 million as compared to $1.1 million
in 1998, representing a decrease of 13.2%. Operating income as a percentage of
net earned revenue was 5.6% in 1999 as compared to 5.7% in 1998. General and
administrative expenses increased due to increased expenses relating to the
implementation and installation fees for our information systems upgrade,
increased
22
<PAGE>
depreciation expense due to increased purchases and increased insurance expenses
relating to our medical insurance plan and increased payroll related expenses
due to turnover of administrative personnel. The increase in costs and expense
increased at a higher rate as compared to the engineering fees as a result of
the computer upgrade and turnover of personnel. As a result, operating income
decreased as compared to 1998.
Consolidated Results
Other income (expenses):
Other income and expenses primarily consists of interest and dividend
income and interest expense. Other expenses were ($2,003,000), ($54,000) and
($360,000) for fiscal years 2000, 1999 and 1998, respectively. This increase is
directly related to an increase in interest rates and a $981,000 loss on the
sale of investments. At September 30, 2000, the fair value our investments in
marketable securities, all of which were classified as available-for-sale, was
approximately $451,000 as compared to approximately $3.9 million at September
30, 1999. This decrease was due to a permanent impairment in the value of the
common stock that we hold in our portfolio, from $344,000 to $41,000, and the
sale of over 90% of our mutual fund portfolio at a loss of $981,000. There were
no factors present at September 30, 1999 that would indicate permanent
impairment of value for the mutual fund and common stock investments. For the
mutual fund portfolio, the net asset value fluctuated during fiscal year 1999
due to the volatility of the stock market. For the common stock investment,
subsequent to September 30, 1999, the investee company reported that it would
restate the prior year's financial statements following an internal review of
revenue recognition for cost-of-completion contracts. The impairment of the
common stock was recorded in fiscal 2000, resulting in a cost basis that equals
the fair market value of the investments at September 30, 2000.
Net Income:
Net income was $10.5 million, $5.4 million and $4.5 million for fiscal
2000, 1999 and 1998, respectively. The percentage of net income to net earned
revenue was 5.3%, 3.0% and 2.7% in fiscal 2000, 1999 and 1998. The 92.6%
increase during fiscal 2000 was a result of internal growth, good economic
conditions, improved efficiencies and a research and development tax credit that
reduced our provision for income taxes from $3.5 million in 1999 to $589,000 in
2000. The 22% increase in fiscal 1999 was a result of an 8% increase in
engineering fees offset by an 8% increase in direct and general and
administrative expenses, in addition to a 5% decrease in interest expense and a
28% increase in other income.
23
<PAGE>
Liquidity and Capital Resources
Cash From Operating Activities
In fiscal 2000, net cash provided by operating activities totaled $26.9
million as compared to ($522,000) in 1999. The significant change is a result of
increases in net income and accounts payable, offset by a decrease in deferred
income taxes. The increase in accounts payable is due to increased growth in the
business, accruals for incentive bonuses that used to be paid out before the end
of the fiscal year and higher medical expenses for our medical program. In
addition, fluctuations in accounts payable are related to direct expenses, where
the timing of payment to subcontractors is directly related to the collection of
related receivables.
Net income of $10.5 million for fiscal 2000 was 92.6% greater than net
income of $5.4 million for fiscal 1999 due to the growth in engineering fees
being greater than the growth in direct and indirect expenses. In addition, the
provision for income taxes was 83.2% less in fiscal 2000 than in fiscal 1999 as
a result of tax credits. Pursuant to the terms of our credit agreement, we
cannot declare or pay dividends in excess of 50% of our net income. We have not
in the past paid cash dividends on our common stock and have no present
intention of paying cash dividends on our common stock in the foreseeable
future. All earnings are retained for investment in our business.
In fiscal 1999 net cash used in operating activities totaled $522,000
as compared to net cash provided by operating activities of $6.4 million for
fiscal 1998. This change is primarily a result of an increase in accounts
receivable and unbilled fees and a decrease in accounts payable.
Net income of $5.4 million for fiscal 1999 was 21.7% greater than net
income of $4.5 million for fiscal 1998 due to increased efficiencies in
production and internal growth.
Approximately 90% of our revenues are billed on a monthly basis. The
remaining amounts are billed when we reach certain stages of completion as
specified in the contract. Payment terms for accounts receivable and unbilled
fees, when billed, are net 30 days. The unbilled fees account increased $2.5
million, from $25.3 million at September 30, 1999 to $27.8 million at September
30, 2000. Similarly, unbilled fees increased $4.3 million from $21.0 million at
September 30, 1998 to $25.3 million at September 30, 1999. The increase in
unbilled fees during both periods is directly related to the increase in
engineering fees. The number of days outstanding for unbilled fees was 39 days,
38 days and 34 days at September 30, 2000, 1999 and 1998, respectively. By
comparison, according to PSMJ Resources, Inc., the average days outstanding for
unbilled fees for design firms of comparable size was 32.8 days in 2000 and 31.3
days in 1999.
The allowance for doubtful accounts decreased approximately $2.6
million from $4.9 million at September 30, 1999 to $2.3 million at September 30,
2000. The number of days sales outstanding for accounts receivable was
approximately 53 days, 54 days and 50 days at September 30, 2000, 1999 and 1998,
respectively. The allowance was reduced due to improved collections of our
accounts receivable balances over 90 days which decreased 37.3% from $10.2
million at September 30, 1999 to $6.4 million at September 30, 2000. This
improvement relates to a decrease in our international activity and better
collections of international project revenue. By comparison, according to PSMJ
Resources, Inc. the average days sales accounts receivables for design firms of
comparable size to us was 67.4 days in 2000 and 73.4 days in 1999.
24
<PAGE>
Cash Flow from Investing Activities
Net cash used in investing activities was $12.8 million in fiscal 2000
as compared to $7.0 million in fiscal 1999. The increase in the use of cash for
investing activities is due largely to the purchase of land and the construction
of a new office building for the Orlando office, offset by the sale of a
substantial portion of our mutual fund portfolio. By comparison net cash used in
fiscal 1999 was $7.0 million, comprised principally of purchases of property and
equipment.
Cash Flow from Financing Activities
Net cash used in financing activities for fiscal 2000 was $13.9
million, as compared to net cash provided by financing activities of $5.7
million in 1999. The increase in cash used in financing activities is
attributable to a smaller amount of proceeds from the issuance of our stock,
combined with the reduction in the bank overdraft, repayment of borrowings and
purchase of our stock. Stock purchases by employees decreased significantly for
the year ended September 30, 2000 due to two items: (i) a reduced number of
shares offered and (ii) employees not being able to purchase stock through our
Profit Sharing Plan as was allowed in the previous year. Bank overdrafts
decreased due to the improved cash flow from operations. The increase in
repayment of borrowings is due to the payoff of the Company's mortgage note.
Net cash provided by financing activities for fiscal 1999 was $5.7
million as compared to $1.7 million in fiscal 1998. The increase in the cash
provided by financing activities is attributable to a net increase in bank
borrowings of $2.6 million, combined with a net increase of $1.3 million in
stock financing.
Capital Resources
On June 30, 1999, we entered into a new revolving line of credit
agreement. The new revolving line of credit increased the availability of funds
from $12 million to $37 million. The expiration of the new revolving line of
credit is June 30, 2002. The interest rate on the revolving line of credit
ranges from LIBOR plus 50 basis points to prime minus 125 basis points if our
funded debt average ratio is less than 2.5 (7.118%, 5.87% and 6.125%) at
September 30, 2000, 1999 and 1998, respectively). The range increases to LIBOR
plus 75 basis points to prime minus 100 basis points if our funded debt coverage
ratio is between 2.5 and 3.0. As of September 30, 2000, we had $7.8 million
outstanding under the revolving line of credit which accrued interest at an
effective rate of 7.115% for the fiscal year ended September 30, 2000. By
comparison, on September 30, 1999, we had $7.7 million outstanding under the
revolving line of credit which accrued interest at an effective rate of 5.87%
for the year ended September 30, 1999.
On June 30, 1999, we also consolidated our term loans. The new term
loan matures on July 31, 2002, and principal is amortized in annual installments
of $2.0 million. Interest on the term loan is either LIBOR plus 75 basis points
or prime minus 100 basis points. As of September 30, 2000, we had $4.0 million
outstanding under the term loan, a $2.0 million decrease from September 30,
1999. For the fiscal year ended September 30, 2000, the effective interest rate
on the term loan was 7.3675 as compared to 6.113% for the year ended September
30, 1999. The revolving line of credit and term loan are collateralized by
substantially all of our assets.
25
<PAGE>
Pursuant to the terms of our credit agreement, we cannot declare or pay
dividends in excess of 50% of our net income.
Our capital expenditures are generally for purchases of property and
equipment. We spent $15.8 million, $7.0 million and $6.7 million on such
expenditures in fiscal years 2000, 1999 and 1998, respectively. The increase in
capital expenditures in fiscal years 2000 and 1999 was a result of increased
leasehold improvements and information technology purchases and construction
costs for the new Orlando office building.
We believe that our existing financial resources, together with our
cash flow from operations and availability under our revolving line of credit,
will provide sufficient capital to fund our operations for fiscal 2000.
Inflation
The rate of inflation has not had a material impact on our operations.
Moreover, if inflation remains at its recent levels, it is not expected to have
a material impact on our operations for the foreseeable future.
Significant Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133
established methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities. SFAS No. 133 is effective for fiscal years beginning after June 15,
2000. We believe that the effect of SFAS No. 133 is immaterial on our operations
and financial position.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 summarizes certain areas of the Staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. We have adopted SAB 101 for each period presented in the
accompanying statement of operations. There are no significant adjustments
posted as a result of the adoption of SAB 101.
Quantitative and Qualitative Disclosures
about Market Risk
We believe that our exposure to market risks is minimal. We do not hold
market-risk sensitive instruments for trading purposes. We do not employ any
derivative financial instruments, other financial instruments or derivative
commodity instruments to hedge any market risk, and we do not currently plan to
employ them in the near future. The interest rate on our revolving line of
credit and term loan ranges from LIBOR plus 50 basis points to prime minus 125
basis points if our funded debt coverage ratio is less than 2.5 (7.118%, 5.87%
and 6.125% at September 30, 2000, 1999 and 1998, respectively). The range
increases to LIBOR plus 75 basis points to prime minus 100 basis points if our
funded debt
26
<PAGE>
coverage ratio is between 2.5 to 3.0. The Company mitigates interest rate risk
by continually monitoring interest rates and electing the lower of the LIBOR or
prime rate option available under the line of credit or term loan. As of
September 30, 2000, the fair value of the debt is consistent with the
outstanding principal balance.
Because the interest rates under our revolving line of credit and term
loan are variable, to the extent that we have borrowings outstanding, there may
be market risk relating to the amount of such borrowings, however, our exposure
is minimal due to the short-term nature of these borrowings.
27
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Certified Public Accountants
To the Board of Directors and
Stockholders of The PBSJ Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity and cash flows present
fairly, in all material respects, the consolidated financial position of The
PBSJ Corporation and subsidiaries (the "Company") at September 30, 2000 and
1999, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended September 30, 2000, in conformity
with accounting principles generally accepted in the United States of America.
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 of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
December 1, 2000
Miami, Florida
28
<PAGE>
THE PBSJ CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
Years ended September 30,
Assets 2000 1999
--------- ---------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 173 $ --
Marketable securities 451 3,904
Accounts receivable, net 38,688 37,608
Unbilled fees, net 27,805 25,355
Other current assets 3,063 1,553
--------- ---------
Total current assets 70,180 68,420
Property and equipment, net 29,029 21,203
Cash surrender value of life insurance 5,116 4,856
Deferred income taxes 7,958 2,476
Other assets 8,023 6,880
--------- ---------
Total assets $ 120,306 $ 103,835
========= =========
Liabilities and Stockholder's Equity
Current Liabilities:
Accounts payable and accrued expenses 24,603 9,009
Current portion of long term debt 2,422 4,594
Accrued vacation 4,563 3,695
Deferred income taxes 18,185 15,578
Bank overdrafts 1,655 3,823
--------- ---------
Total current liabilities 51,428 36,699
Long term debt 10,800 13,337
Deferred compensation 5,915 5,090
Other liabilities 2,965 3,439
--------- ---------
Total liabilities 71,108 58,565
--------- ---------
Stockholders' Equity:
Redeemable common stock, par value
$0.0033, 3,000,000 shares authorized,
1,895,950 and 2,073,361 shares issued
and outstanding at September 30, 2000
and 1999, respectively. Redeemable
common stock had a redemption value of
$74,132 and $70,702 at September 30,
2000 and 1999, respectively 6 7
Additional paid in capital 1,176 8,145
Retained earnings 48,971 38,481
Accumulated other comprehensive income 36 (421)
Unearned compensation (991) (942)
--------- ---------
Total stockholders' equity 49,198 45,270
--------- ---------
Total liabilities and stockholders' equity $ 120,306 $ 103,835
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
29
<PAGE>
THE PBSJ CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share data)
<TABLE>
<CAPTION>
Years ended September 30,
STATEMENT OF OPERATIONS DATA: 2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Earned revenue:
Engineering fees $ 262,525 $ 241,417 $ 223,381
Direct expenses 65,695 60,780 56,248
----------- ----------- -----------
Net earned revenue 196,830 180,637 167,133
----------- ----------- -----------
Costs and expenses:
Direct salaries 73,093 66,291 61,538
General and administrative expenses 110,655 105,346 97,811
----------- ----------- -----------
Total costs and expenses 183,748 171,637 159,349
Operating income 13,082 9,000 7,784
----------- ----------- -----------
Other income (expenses):
Interest expense (1,173) (1,162) (1,227)
Other, net (830) 1,108 867
----------- ----------- -----------
Total other expenses (2,003) (54) (360)
Income before income taxes 11,079 8,946 7,424
Provision for income taxes 589 3,500 2,950
----------- ----------- -----------
Net income $ 10,490 $ 5,446 $ 4,474
=========== =========== ===========
Redeemable common stock per share data:
Basic and diluted earnings per share $ 5.62 $ 2.87 $ 2.40
=========== =========== ===========
Weighted average shares of
redeemable common stock outstanding 1,867,331 1,896,533 1,861,022
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
30
<PAGE>
THE PBSJ CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Redeemable Common Stock Additional
------------------------- Paid-in Retained
Shares Amount Capital Earnings
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at September 30, 1997 1,936,425 $ 7 $ 3,712 $ 28,561
Comprehensive income:
Net income 4,474
Total comprehensive income
Sale of stock 143,836 4,056
Purchase of stock (90,889) (2,561)
Note payments
Issuance of restricted stock
net of amortization and
cancellations 3,975 103
---------- ---------- ---------- ----------
Balance at September 30, 1998 1,993,347 $ 7 $ 5,310 $ 33,035
Comprehensive income:
Net income 5,446
Unrealized loss on investments
(net of tax of $198)
Total comprehensive income
Sale of stock 239,329 1 8,150
Purchase of stock (156,268) (1) (5,317)
Issuance of restricted stock
net of amortization and
cancellations (3,047) 2
---------- ---------- ---------- ----------
Balance at September 30, 1999 2,073,361 $ 7 $ 8,145 $ 38,481
Comprehensive income:
Net income 10,490
Unrealized gain on investments
(net of tax of $291)
Total comprehensive income
Sale of stock 22,045 1 861
Purchase of stock (204,422) (2) (7,920)
Issuance of restricted stock
net of amortization and
cancellations 4,966 -- 90 --
---------- ---------- ---------- ----------
Balance at September 30, 2000 1,895,950 $ 6 $ 1,176 $ 48,971
---------- ---------- ---------- ----------
<CAPTION>
Accumulated Note Total
Other Receivable Redeemable
Comprehensive from Unearned Stockholders'
Income (Loss) Shareholders Compensation Equity
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Balance at September 30, 1997 $ 331 $ -- $ (1,103) $ 31,508
Comprehensive income:
Net income 4,474
---------
Total comprehensive income 4,474
Sale of stock (4,056) --
Purchase of stock (2,561)
Note payments 4,056 4,056
Issuance of restricted stock
net of amortization and
cancellations 33 136
---------- ---------- --------- ---------
Balance at September 30, 1998 $ 331 $ -- $ (1,070) $ 37,613
Comprehensive income:
Net income 5,446
Unrealized loss on investments
(net of tax of $198) (752) (752)
---------
Total comprehensive income 4,694
Sale of stock 8,151
Purchase of stock (5,318)
Issuance of restricted stock
net of amortization and
cancellations 128 130
---------- ---------- --------- ---------
Balance at September 30, 1999 $ (421) $ -- $ (942) $ 45,270
Comprehensive income:
Net income 10,490
Unrealized gain on investments
(net of tax of $291) 457 457
---------
Total comprehensive income 10,947
Sale of stock 862
Purchase of stock (7,922)
Issuance of restricted stock
net of amortization and
cancellations -- (49) 41
---------- ---------- --------- ---------
Balance at September 30, 2000 $ 36 $ -- $ (991) $ 49,198
---------- ---------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
NOTE: All common stock is considered redeemable
31
<PAGE>
THE PBSJ CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years ended September 30,
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income $ 10,490 $ 5,446 $ 4,474
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Realized loss (gain) on sale of investments 981 (620) --
Non-cash special charges 57 131 135
Depreciation and amortization 7,916 6,113 5,330
Provision for bad debt and unbillable amounts 294 1,899 1,579
Provision for deferred income taxes (2,875) 880 2,743
Provision for deferred compensation 825 33 557
Net investment in life insurance policies (260) (279) (446)
Change in operating assets and liabilities, net of
acquisitions:
(Increase) in accounts receivable (1,374) (5,617) (4,174)
(Increase) in unbilled fees (2,450) (4,292) (3,686)
(Increase) decrease in other current assets (1,510) 65 22
(Increase) decrease in other assets (1,143) 1,217 (309)
Increase (decrease) in accounts payable and
accrued expenses 15,594 (5,375) (427)
Increase in accrued vacation 868 635 653
(Decrease) increase in other liabilities (474) (758) (80)
--------- --------- ---------
Net cash provided by (used in) operating
activities 26,939 (522) 6,371
--------- --------- ---------
Cash flows from investing activities:
Purchases of marketable securities -- (1,968) --
Proceeds from sale of marketable securities 2,940 1,636 --
Acquisitions, net of cash acquired -- -- (1,285)
Sale of property and equipment -- 350 --
Purchase of property and equipment (15,769) (7,025) (6,748)
--------- --------- ---------
Net cash used in investing activities (12,829) (7,007) (8,033)
--------- --------- ---------
Cash flows from financing activities:
(Decrease) increase in bank overdraft (2,168) 3,823 --
Borrowings under line of credit 102,348 92,975 69,153
Principal payments under line of credit (102,310) (93,345) (65,160)
Principal payments under notes and mortgage
payable (4,747) (614) (3,793)
Proceeds from sale of common stock 862 8,151 4,056
Purchase of common stock (7,922) (5,318) (2,561)
--------- --------- ---------
Net cash (used in) provided by financing
activities: (13,937) 5,672 1,695
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 173 (1,857) 33
Cash and cash equivalents at beginning of year -- 1,857 1,824
--------- --------- ---------
Cash and cash equivalents at end of year $ 173 $ -- $ 1,857
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (in thousands, except for share data)
1. Organization and Summary of Significant Accounting Policies:
Organization and Principles of Consolidation
The consolidated financial statements include the accounts of The PBSJ
Corporation and its wholly- owned subsidiaries, Post, Buckley, Schuh &
Jernigan, Inc., a Florida corporation ("PBS&J"), PBS&J Construction
Services, Inc., Post, Buckley International, Inc., Post Buckley de
Mexico, S.A. de C.V., Seminole Development Corporation and HOH
Associates, Inc. (collectively the "Company"). All material
intercompany transactions and accounts have been eliminated in the
accompanying consolidated financial statements.
During fiscal 1999, PBS&J became the successor to Post, Buckley, Schuh
& Jernigan, Inc., a Texas corporation, Post, Buckley, Schuh & Jernigan,
Inc., a California corporation, Post, Buckley, Schuh & Jernigan, Inc.,
a Nevada corporation, Post, Buckley, Schuh & Jernigan, Inc. of Arizona,
Coastal Environmental Services, Inc., Espey, Huston & Associates, Inc.,
Survey Resources, Inc., and Kercheval and Associates, Inc.
(collectively "Related Entities") through the merger of PBS&J and the
Related Entities of the Company. The acquisition of the Related
Entities has been accounted for in a manner similar to a pooling of
interests since it was acquired from companies under common control.
There was no consideration given by PBS&J for the acquisition of these
Related Entities. The merger does not have an effect on the
accompanying financial statements.
Revenue Recognition
In the course of providing its services, the Company routinely incurs
direct expenses such as subcontracts for services. In addition, the
Company also includes pass-through costs on cost plus contracts which
are customer-reimbursable materials, equipment and subcontractor costs
when the Company determines that it is responsible for engineering
specification, procurement and management of such cost components on
behalf of the customer. These direct expenses are principally passed
through to the Company's clients with minimal or no mark-up and, in
accordance with industry practice, are included in the Company's gross
revenues. Accordingly, the Company also reports net earned revenue,
which is gross revenue less direct expenses. For cost-plus and time and
material contracts, the Company reports fees earned based on actual
labor multiplied by contractual rates or multipliers. For fixed price
contracts, the Company reports fees earned on the percentage of
completion basis which includes revenue on the basis of costs incurred
to date as a percentage of the total estimated costs.
Anticipated losses are recognized in total in the period in which they
became determinable. Accounts receivable is presented net of an
allowance for doubtful accounts of $2,296 and $4,952 at September 30,
2000 and 1999, respectively. Unbilled fees are presented net of an
allowance for estimated unbillable amounts of $611 at September 30,
2000 and 1999.
Capital Structure
The Company has authorized 3,000,000 shares of common stock (par value
$.0033).
The by-laws of the Company require the Company to redeem, at fair
market value, common stock held by shareholders who terminate
employment with the Company. As of September 30, 2000 and 1999, there
is no outstanding redeemable common stock relating to employees no
longer employed by the Company. The redemption value of all outstanding
shares is as follows: September 30, 2000 - $74,132 and September 30,
1999 - $70,702.
33
<PAGE>
Cash and Cash Equivalents
Cash equivalents consist of all highly liquid investments with an
original maturity of three months or less from their dates of purchase.
Cash equivalents consist primarily of money market accounts.
Income Taxes
The Company uses the liability method of accounting for income taxes.
The liability method requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of
temporary differences between tax bases and financial reporting bases
of assets and liabilities. Such differences relate, primarily, to the
Company's use of the accrual method of accounting for financial
reporting purposes, and the cash method of accounting for tax purposes.
Basic and Diluted Earnings Per Share
Basic net income attributable to common stockholders per share has been
computed by dividing net income attributable to common stockholders by
the weighted average number of common shares outstanding. Diluted net
income attributable to common stockholders per share reflects the
potential dilution that could occur assuming the inclusion of dilutive
potential common shares and has been computed by dividing net income
attributable to common stockholders by the weighted average number of
common shares and dilutive potential common shares outstanding.
Dilutive potential common shares include all outstanding restricted
stock awards after applying the treasury stock method. The restricted
stock does not have a material impact on the diluted earnings per share
calculation.
Marketable Securities
Marketable securities consist of equity securities and mutual funds
that are considered available-for-sale and are recorded at fair value.
Changes in unrealized gains and losses for available-for-sale
securities are charged or credited as a component of accumulated other
comprehensive income, net of tax. A decline in the fair value of an
available-for-sale security below cost that is deemed other than
temporary is charged to earnings. Investment security transactions are
recorded on a trade date basis. The cost basis of investments sold is
determined by the specific identification method
Fair Value of Financial Instruments
The fair value of the Company's cash, accounts receivables, unbilled
fees and trade accounts payable approximates book value due to the
short-term maturities of these instruments. The carrying amount of
marketable securities is based on quoted market prices at the reporting
date for those investments and approximates fair value. The fair value
of the Company's debt approximates the carrying value which was based
on similar stated rates, terms and maturities of existing debt as
compared to current market conditions.
34
<PAGE>
Goodwill
Goodwill represents the difference between the purchase price and the
fair value of the net assets of acquired businesses, and is being
amortized on a weighted-average basis over 10 to 20 years. A change in
accounting estimate was made effective October 1, 1999, to change the
maximum useful life of goodwill from 40 years to 20 years. The increase
in amortization expense due to this change was $425 for the year ended
September 30, 2000. Amortization expense relating to goodwill amounted
to $656, $201, $195 for the years ended September 30, 2000, 1999 and
1998, respectively. The Company evaluates the realizability of goodwill
based upon undiscounted forecasted operating earnings over the
remaining amortization period for each investment having a significant
goodwill balance. If an impairment in the value of the goodwill were to
occur, the Company would reflect the impairment through a reduction in
the carrying value of the goodwill based upon the estimated fair value
of the investment. Management believes that no impairment of goodwill
exists at September 30, 2000.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Such estimates include the
allowance for doubtful accounts, unbilled fees, and reserve for
litigation. Actual results could differ from those estimates.
Stock Based Compensation
Non-vested, restricted stock awarded to certain employees is measured
at the estimated fair value of the stock at the grant date.
Property and Equipment
Property and equipment are stated at cost. Major renewals and
improvements are capitalized, while repairs and maintenance are
expensed as incurred. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the shorter of the terms of
the leases or their estimated useful lives. Cost and accumulated
depreciation of property and equipment retired or sold are eliminated
from the accounts at the time of retirement or sale and the resulting
gain or loss is recorded in income.
Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash, accounts
receivable and unbilled fees. The Company places its cash with high
credit quality financial institutions. At times, such amounts may be in
excess of the FDIC insurance limits.
Work performed for governmental entities accounted for approximately
69%, 66% and 66% of engineering fees for the years ended September 30,
2000, 1999 and 1998. For the years ended September 30, 2000, 1999 and
1998, approximately 17%, 15% and 17%, respectively, of net earned
revenue was derived from various districts of the Florida Department of
Transportation (FDOT) under numerous contracts. While the loss of any
individual contract would not have a material adverse effect on our
results of operations and would not adversely impact the Company's
ability to continue work under other contracts with the FDOT, the loss
of all the FDOT contracts could have a material adverse effect on
results of operations. Ongoing credit evaluations of customers are
performed and generally no collateral is required. The Company provides
an allowance for doubtful accounts based upon factors
35
<PAGE>
surrounding the credit risk of specific customers, historical trends
and other information. Actual losses have historically been within
management's expectations and estimates.
Comprehensive Income
In 1999, the Company implemented Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive Income,"
which establishes standards for the reporting and display of
comprehensive income and its components in a full set of general
purpose financial statements. This statement requires that an
enterprise (a) classify items of other comprehensive income, such as
unrealized holding gains and losses on investments, by their nature in
the financial statements and (b) display the accumulated balance of
other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet.
The entire accumulated other comprehensive income consisted of
unrealized holding gains and losses on investments as of September 30,
2000, 1999 and 1998. The components of the unrealized gain on
investments was as follows for the years ended September 30, 2000, 1999
and 1998:
September 30
--------------------------
Unrealized gain on investments: 2000 1999 1998
------ ------ ------
Holding loss arising during period, net of tax ($524) ($132) $ --
Reclassification adjustment, net of tax 981 620 --
------ ------ ------
Net (loss) gain recognized in other
comprehensive income, net of tax $ 457 ($752) $ --
====== ====== ======
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS
No. 133 established methods of accounting for derivative financial
instruments and hedging activities related to those instruments as well
as other hedging activities. SFAS No. 133 is effective for fiscal years
beginning after June 15, 2000. The Company believes that the effect of
SFAS No. 133 is immaterial on the operations and financial position of
the Company.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB101"). SAB 101 summarizes certain areas of the Staff's
views in applying generally accepted accounting principles to revenue
recognition in financial statements. The Company has adopted SAB101 for
each period presented in the accompanying statement of operations.
There are no significant adjustments posted as a result of the adoption
of SAB101.
2. Marketable Securities:
At September 30, 2000 and 1999, the Company held investments in
marketable securities classified as available-for-sale which consisted
of mutual funds and equity securities. Available-for-sale securities at
September 30, 2000 and 1999 consisted of the following:
36
<PAGE>
Fair Unrealized
Cost Value (Loss) / Gain
------ ------ ------
September 30, 2000
Mutual funds $ 281 $ 410 $ 129
Common stock 41 41 0
------ ------ ------
Total $ 322 $ 451 $ 129
====== ====== ======
September 30, 1999
Mutual funds $3,905 $3,560 $ (345)
Common stock 618 344 (274)
------ ------ ------
Total $4,523 $3,904 $ (619)
====== ====== ======
3. Property and Equipment:
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
September 30,
Estimated ---------------------
Useful Lives 2000 1999
---------------- --------- ---------
<S> <C> <C> <C>
Land - $ 2,226 $ 596
Building and building improvements 10 to 31.5 years 11,117 4,633
Furniture and equipment 5 to 7 years 34,029 32,969
Computer equipment under capital lease 3 years 1,786 1,786
Vehicles 3 years 3,113 3,042
Leasehold improvements 10 years 6,173 5,574
--------- ---------
58,444 48,600
Less accumulated depreciation and amortization (29,415) (27,397)
--------- ---------
$ 29,029 $ 21,203
========= =========
</TABLE>
Depreciation and amortization expense relating to property and
equipment amounted to $7,916, $5,908 and $5,131 for the years ended
September 30, 2000, 1999 and 1998, respectively. Building and building
improvements includes $6,484 of construction in progress for the new
Orlando office building which will be occupied beginning December of
2000. Included in the $6,484 of construction in progress is
approximately $197 in capitalized interest. Accumulated depreciation
related to the computer equipment amounted to $893 and $310 at
September 30, 2000 and 1999, respectively.
4. Acquisition:
On December 1, 1997, the Company acquired all of the outstanding stock
of Kercheval and Associates, Inc. (a California corporation) for
$1,324.
The acquisition was accounted for using the purchase method of
accounting, and the results of operations have been included since the
date of acquisition. The Company has recorded goodwill in the amount of
$65 related to Kercheval, which is the cost in excess of fair value of
net assets acquired in this purchase transaction.
5. Income Taxes:
37
<PAGE>
Provisions for income taxes consisted of the following:
Years Ended September 30,
-----------------------------
2000 1999 1998
------- ------- -------
Current $ 3,464 $ -- $ 207
Deferred (2,875) 3,500 2,743
------- ------- -------
$ 589 $ 3,500 $ 2,950
======= ======= =======
Included in the 2000, 1999 and 1998 provisions for income taxes are
deferred state taxes of $261, $581 and $454, respectively. The current
portions of state taxes was $838, $0 and $0 for the years ended
September 30, 2000, 1999 and 1998, respectively. A reconciliation of
the income tax provision to taxes computed at the U.S. federal
statutory rate is as follows:
2000 1999 1998
------- ------- -------
U.S. Statutory Rate 35.0% 35.0% 35.0%
Federal Tax Credits (35.5) 0.0 0.0
State Taxes, net of Federal Tax Benefit 3.9 3.9 3.9
Nondeductible Expenses 3.9 0.2 0.9
Other (2.0) 0.0 0.0
------- ------- -------
Effective tax rate 5.3% 39.1% 39.8%
======= ======= =======
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities
consisted of the following:
September 30,
---------------------
2000 1999
-------- --------
Deferred tax liabilities:
Accounts receivable $ 14,435 $ 14,665
Unbilled fees 10,816 8,316
Depreciation 1,381 836
Other 1,192 841
-------- --------
Gross deferred tax liabilities 27,824 24,658
-------- --------
Deferred tax assets:
Accounts payable and accrued expenses (7,670) (5,538)
Net operating loss carryforwards -- (1,806)
Compensation (588) (900)
Federal tax credit carryforwards (5,885) --
Deferred credits (2,301) (2,120)
Other liabilities (1,153) (1,192)
-------- --------
Gross deferred tax assets (17,597) (11,556)
-------- --------
Net deferred tax liabilities $ 10,227 $ 13,102
======== ========
38
<PAGE>
6. Deferred Compensation Plans:
The Company maintains deferred compensation/consulting plans which
cover certain present key officers and employees and provides for
payments upon retirement, death, or disability. The contracts fixed a
minimum level for retirement benefits to be paid to participants based
on age at retirement with the Company. The deferred compensation plans
are funded through life insurance and are being provided for currently.
Total annual cash surrender value increase for the years ended
September 30, 2000, 1999 and 1998 for the plans amounted to $260, $279
and $446, respectively. Total compensation expense, included in general
and administrative expenses, related to the plans amounted to $959,
$566 and $557 in fiscal years 2000, 1999 and 1998, respectively.
7. Employee Benefit Plan:
The Company has a qualified contributory profit-sharing and employee
stock ownership plan (the "Plan") providing benefits for all eligible
employees. During 1999, the Plan was amended to include an employer
matching contribution up to 3% of the participants' eligible
compensation. Prior to 1999, the Plan included an employer matching
contribution, equal to 1% of the participants' eligible compensation.
The Company's matching contribution was $2,377, $1,831 and $909 for the
years ended September 30, 2000, 1999 and 1998, respectively. In
addition, the Company accrued an additional $700, $400 and $1,631 at
September 30, 2000, 1999 and 1998, respectively, as discretionary
contributions to the profit sharing plan.
8. Restricted Stock:
Restricted stock is offered to existing employees, which are subject to
restrictions on transfer, and risk of forfeiture until earned by
continued employment. The restricted stock is subject to total
forfeiture if the employee ceases to be employed prior to the maturity
date of the restricted stock, except in certain limited circumstances
described in the individual restricted stock award agreement. During
the restriction period, holders have the rights of shareholders,
including the right to vote, but cannot transfer ownership. Restricted
stock is recorded at fair value on the date of issuance. The stock
vests over the service period, which is usually 5 years. The issuance
of restricted stock gives rise to unearned compensation that is
amortized over the vesting period. Through September 30, 2000 and 1999,
96,433 and 95,283 shares of restricted stock have been issued, of which
17,593 and 7,227 shares had vested or had been canceled. Unearned
compensation is shown as a reduction of stockholders' equity in the
accompanying financial statements. The total amount of compensation
expense recognized under these agreements during 2000, 1999 and 1998
was $181, $280 and $183, respectively.
39
<PAGE>
9. Long Term Debt:
September 30,
2000 1999
------- -------
Line of credit unused availability of $29,242,
and $29,113 at September 30, 2000 and 1999,
respectively $ 7,758 $ 7,720
Term loan due in annual installments of $2,000
through July 31, 2002. Interest at LIBOR
plus 75 basis points or prime minus 50 basis
points (7.3675% and 6.1125% at September 30,
2000 and 1999, respectively) 4,000 6,000
Mortgage note payable due in monthly installments
of $36, including interest at 6.87%,
collateralized by real property, unpaid
principal due May 31, 2000 -- 2,044
Notes payable to current and former stockholders
due in monthly and quarterly installments with
interest of 7.25% through 2002 137 527
Capital lease of equipment, interest accrues
at 8.3%, collateralized by certain equipment,
due in monthly payments of principal and
interest of $36 1,327 1,640
------- -------
13,222 17,931
Less current portion 2,422 4,594
------- -------
$10,800 $13,337
======= =======
Scheduled maturities are as follows:
2001 - $2,422; 2002 - $10,197; 2003 - $406; and 2004 - 197.
On June 30, 1999, the Company entered into a new line of credit
agreement with a bank. The line of credit replaced a line of credit
with two other banks and increased the availability of funds from $12
million to $37 million. The expiration date on the new line of credit
is June 30, 2002. The interest rate ranges from LIBOR plus 50 basis
points to prime minus 125 basis points if the Company's funded debt
coverage ratio is less than 2.5 (7.1175% and 5.87% at September 30,
2000 and 1999, respectively). The range increases to LIBOR plus 75
basis points to prime minus 100 basis points if the Company's funded
debt coverage ratio is between 2.5 to 3.0. The line of credit contains
clauses requiring the maintenance of various covenants and financial
ratios.
Additionally, on June 30, 1999, the Company consolidated the term loans
with one bank. The line of credit and term loans are collateralized by
substantially all the assets of the Company.
40
<PAGE>
10. Commitments and Contingencies:
The Company is obligated under various noncancelable leases for office
facilities, furniture and equipment. Certain leases contain renewal
options, escalation clauses and certain other operating expenses of the
properties. In the normal course of business, leases that expire are
expected to be renewed or replaced by leases for other properties. As
of September 30, 2000, the future minimum annual rental commitments
under operating and capital leases are as follows:
Capitalized Operating
Year ending September 30 Leases Leases
------------------------ -------- --------
2001 $ 438 $ 8,642
2002 438 6,489
2003 438 4,591
2004 218 1,666
2005 - 800
-------- --------
Total minimum lease payments 1,532 $ 22,188
========
Less: amount representing interest 205
--------
Present value of minimum lease payments $ 1,327
========
Total rent expense included in general and administrative expenses was
$10,668, $8,903 and $8,089 for fiscal years ended 2000, 1999 and 1998,
respectively.
The Company is involved in legal actions arising in the ordinary course
of business. The Company maintains a full range of insurance coverage,
including worker's compensation, general and professional liability
(including pollution liability) and property coverage. The Company
insurance policies may offset the amount of loss exposure from legal
actions.
As of September 30, 2000, there were approximately 15 cases pending
against the Company, where plaintiffs allege damages resulting from the
Company's engineering services. The plaintiffs' allegations of
liability in those cases seek recovery for damages caused by the
Company based on various theories of negligence, contributory
negligence or breach of contract.
As of September 30, 2000, the Company had a reserve of approximately
$3.0 million for all potential and existing liabilities that, in
management's opinion, are probable. The Company expects to pay these
liabilities over the next one to three years. Management is of the
opinion that the liabilities ultimately resulting from such existing
and other pending proceedings, lawsuits and claims should not
materially affect the Company's financial position, results of
operations or cash flows.
41
<PAGE>
11. Supplemental Cash Flow Information:
Years ended September 30,
2000 1999 1998
------- ------- -------
Cash paid during the year for:
Interest $ 1,092 $ 1,115 $ 1,366
Income taxes 929 33 2,170
Non-cash investing activities:
Computer equipment acquired
through capital leases -- 1,786 --
Investments received in the
sale of fixed assets -- 618 --
Details of acquisition:
Fair value of assets acquired $ -- $ -- $ 4,121
Goodwill -- -- 65
Liabilities assumed -- -- (2,862)
------- ------- -------
Cash paid -- -- 1,324
Less: cash acquired -- -- (39)
------- ------- -------
Net cash paid for acquisitions $ -- $ -- $ 1,285
======= ======= =======
12. Segment Reporting
Financial information relating to the Company's operations by service
is as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 2000
Transportation Construction Civil Environmental Total
<S> <C> <C> <C> <C> <C>
Engineering fees $106,580 $34,162 $69,026 $52,757 $262,525
Net earned revenue 77,183 24,257 53,620 41,770 196,830
Operating income 8,551 3,507 (894) 1,918 13,082
Depreciation and amortization 3,214 1,030 2,081 1,591 7,916
Total assets 48,842 15,655 31,632 24,177 120,306
Capital expenditures 6,402 2,052 4,146 3,169 15,769
<CAPTION>
Year Ended September 30, 1999
Transportation Construction Civil Environmental Total
<S> <C> <C> <C> <C> <C>
Engineering fees $87,464 $27,339 $65,336 $61,278 $241,417
Net earned revenue 65,100 17,772 51,496 46,269 180,637
Operating income 3,316 989 2,683 2,012 9,000
Depreciation and amortization 2,262 672 1,834 1,345 6,113
Total assets 38,263 11,411 30,953 23,208 103,835
Capital expenditures 2,589 772 2,094 1,570 7,025
<CAPTION>
Year Ended September 30, 1998
Transportation Construction Civil Environmental Total
<S> <C> <C> <C> <C> <C>
Engineering fees $82,651 $26,806 $62,547 $51,377 $223,381
Net earned revenue 61,839 20,056 46,797 38,441 167,133
Operating income 3,357 1,139 1,677 1,611 7,784
Depreciation and amortization 2,299 780 1,148 1,103 5,330
Total assets 41,588 14,107 20,770 19,960 96,425
Capital expenditures 2,910 987 1,453 1,398 6,748
</TABLE>
42
<PAGE>
Prior to fiscal 2000, general and administrative costs were allocated
based on each segment's direct costs, as a percentage of total direct
costs. Beginning with fiscal 2000, each segment's general and
administrative costs are a combination of its' actual relative direct
expenses and an allocation of corporate expenses based on the same
percentage noted above. As a result, the operating income for each
segment represented the segment's actual expenses plus an allocation of
corporate overhead. The effect of this charge on operating income at
September 30, 2000 was as follows:
Operating Income Under Old Method of General and Administrative Expense
Allocation:
Transportation Construction Civil Environmental
-------------- ------------ ----- -------------
$5,311 $1,702 $3,440 $2,629
43
<PAGE>
13. Allowance for Doubtful Accounts and Estimatable Unbillable Amounts
The activity in the allowance for doubtful and estimatable unbillable
amounts were as follows:
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT
DESCRIPTION YEAR EXPENSES DEDUCTIONS END OF YEAR
----------- ---- -------- ---------- -----------
<S> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 2000
Allowance for doubtful accounts $ 4,952 $ 294 $(2,950) $ 2,296
Allowance for estimatable unbillable amounts 611 0 0 611
------- ------- ------- -------
$ 5,563 294 $(2,950) $ 2,907
======= ======= ======= =======
YEAR ENDED SEPTEMBER 30, 1999
Allowance for doubtful accounts $ 4,954 $ 1,262 $(1,264) $ 4,952
Allowance for estimatable unbillable amounts 295 637 (321) 611
------- ------- ------- -------
$ 5,249 $ 1,899 $(1,585) $ 5,563
======= ======= ======= =======
YEAR ENDED SEPTEMBER 30, 1998
Allowance for doubtful accounts $ 4,128 $ 1,579 $ (753) $ 4,954
Allowance for estimatable unbillable amounts 295 0 (0) 295
------- ------- ------- -------
$ 4,423 $ 1,579 $ (753) $ 5,249
======= ======= ======= =======
</TABLE>
14. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------------------------------------------------------------------------------
9/30 6/30 3/31 12/31 9/30 6/30 3/31 12/31
------- ------- ------- ------- ------- ------- ------- -------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Engineering fees $68,251 $68,122 $67,462 $58,690 $64,646 $59,814 $59,513 $57,444
Net earned revenues 50,041 50,059 51,407 45,323 48,463 44,961 44,547 42,666
Net income 4,486 2,101 2,560 1,343 1,410 1,214 1,657 1,165
Redeemable Common stock per
share data:
Basic and diluted earnings per share $ 2.40 $ 1.13 $ 1.37 $ .72 $ .75 $ .64 $ .87 $ .61
</TABLE>
44
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Proxy Statement for the 2001 Annual
Meeting of Shareholders to be held January 20, 2001, a copy of which will be
filed with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Proxy Statement for the 2001 Annual
Meeting of Shareholders to be held January 20, 2001, a copy of which will be
filed with the Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Proxy Statement for the 2001 Annual
Meeting of Shareholders to be held January 20, 2001, a copy of which will be
filed with the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Proxy Statement for the 2001 Annual
Meeting of Shareholders to be held January 20, 2001, a copy of which will be
filed with the Securities and Exchange Commission.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following is a list of financial information filed as a part of
this Report:
(1) Consolidated Financial Statements - The following
financial statements of PBSJ Corporation and its
subsidiaries are contained in Item 8 of this Form
10-K:
1. Report of PricewaterhouseCoopers LLP,
Independent Accountants.
2. Consolidated Balance Sheet at September 30,
2000 and 1999.
3. Consolidated Statement of Operations for
each of the three years in the period ended
September 30, 2000.
45
<PAGE>
4. Consolidated Statement of Stockholders'
Equity at September 30, 2000, 1999 and 1998.
5. Consolidated Statement of Cash Flows for
each of the three years in the period ended
September 30, 2000.
6. Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules - The financial
statement schedule information is included as part of
the Notes to Consolidated Financial Statements
contained in Item 8 of this Form 10-K.
(3) Exhibits including those incorporated by reference:
Exhibit
Number Description
------ -----------
3.1 - Articles of Incorporation, as amended (*)
3.2 - Amended and Restated Bylaws (*)
4.1 - Form of Specimen Stock Certificate (*)
10.1 - The PBSJ Employee Profit Sharing and Stock Ownership Plan and Trust (**)
10.2 - Supplemental Income Plan effective as of January 12, 1988 (*)
10.3 - Consulting/Supplemental Retirement/Death Benefits Agreement, dated
November 6, 1987, between the Registrant and H. Michael Dye, as amended
on October 16, 1989, March 1, 1993, February 6, 1995, May 19, 1998 and
November 22, 1999 (*)
10.4 - Supplemental Retirement/Death Benefits Agreement, dated December 17,
1987, between the Registrant and Robert J. Paulsen (*)
10.5 - Supplemental Income Agreement, dated as of July 29, 1996, between the
Registrant and Robert J. Paulsen (*)
10.6 - Employment/Retirement Benefits Agreement, dated February 15, 1999,
between the Registrant and William W. Randolph (*)
10.7 - Supplemental Retirement/Death Benefits Agreement, dated December 17,
1987, between the Registrant and Richard A. Wickett, as amended on
April 27, 1989, May 19, 1998 and November 22, 1999 (*)
10.8 - Supplemental Retirement/Death Benefits Agreement dated December 17,
1987, between the Registrant and John B. Zumwalt, III, as amended on
May 19, 1998 and November 22, 1999 (*)
10.9 - Agreement, dated as of April 1, 1993, between the Registrant and John
B. Zumwalt, III (*)
10.10 - Split Dollar Life Insurance Agreement dated February 1, 1999, by and
between The Randolph Insurance Trust and the Registrant (*)
10.11 - Credit Agreement, dated as of June 28, 1996, by and among Nationsbank,
N.A., Suntrust Bank, Miami, N.A., Post, Buckley, Schuh and Jernigan,
Inc., The PBSJ Corporation, and the subsidiaries named therein, as
amended on July 3, 1997 and June 30, 1999 (*)
46
<PAGE>
Exhibit
Number Description
------ -----------
10.12 - Lease Agreement, dated as of March 25, 1998, by and between Post,
Buckley, Schuh & Jernigan, Inc. and Highwoods/Florida Holdings L.P. as
successor in interest to Cypress-Tampa II L.P., as amended on May 26,
1998, December 26, 1998, November 29, 1999 and March 1, 2000 (*)
10.13 - Lease Agreement, dated as of November 23, 1999, by and between Post,
Buckley, Schuh & Jernigan, Inc. and 1560 N. Orange Ltd. (*)
10.14 - The PBSJ Corporation Stock Ownership Plan (**)
21 - Subsidiaries (*)
27.1 - Financial Data Schedule - September 30, 2000 (***)
---------------
(*) Previously filed with the Registration Statement on Form 10 filed with
the Commission on June 27, 2000.
(**) Previously filed with the Amended Registration Statement on Form 10-A
filed with the Commission on September 26, 2000.
(***) Filed herewith.
(b) Reports on Form 8-K:
None.
47
<PAGE>
III. SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
The PBSJ Corporation
Date: December 15, 2000 By: /s/ H. MICHAEL DYE
-------------------------------
H. Michael Dye
Chairman and Chief Executive
Officer
(Principal Executive Officer)
Date: December 15, 2000 By: /s/ Richard A. Wickett
-------------------------------
Richard A. Wickett
Vice Chairman and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
48
<PAGE>
POWER OF ATTORNEY
The undersigned directors and officers of The PBSJ Corporation hereby
constitute and appoint H. Michael Dye and Richard A. Wickett and each of them
with full power to act without the other and with the power of substitution, our
attorneys-in-fact with full power to execute in our name and behalf in the
capacities indicated below this Form 10-K and any and all amendments thereto and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and hereby ratify and
confirm all that such attorneys-in-fact, or any of them, or their substitutes
shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on December 15, 2000.
Signature Capacity Date
------------------------ --------------------------------- -----------------
/s/ H. Michael Dye Chairman of the Board December 15, 2000
------------------------ and Chief Executive Officer
H. Michael Dye (Principal Executive Officer)
/s/ Richard A. Wickett Vice Chairman of the Board, December 15, 2000
------------------------ Vice President and
Richard A. Wickett Chief Financial Officer
/s/ William W. Randolph Vice President December 15, 2000
------------------------
William W. Randolph
/s/ John B. Zumwalt President/Chief Operating Officer December 15, 2000
------------------------
John B. Zumwalt
/s/ David A. Twiddy Executive Vice President December 15, 2000
------------------------
David A. Twiddy
/s/ Robert J. Paulsen Senior Vice President/Secretary December 15, 2000
------------------------
Robert J. Paulsen
49
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
27.1 Financial Data Schedule
