<PAGE>
1995
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________________ to ___________________
Commission File Number 1-7463
Jacobs Engineering Group Inc.
(Exact name of Registrant as specified in its charter)
Delaware 95-4081636
(State of incorporation) (I.R.S. employer identification number)
251 South Lake Avenue, Pasadena, California 91101
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (818) 449-2171
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $1 par value New York Stock Exchange
Indicate by check-mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. (X) YES ( ) NO
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 Form 10-K or any amendment
to this Form 10-K. (X)
___________________
The aggregate market value of the Registrant's voting stock held by non-
affiliates was approximately $498,658,700 as of December 26, 1995, based upon
the last reported sales price on the New York Stock Exchange. For this purpose,
the Registrant considers Dr. Joseph J. Jacobs to be its only affiliate.
As of December 26, 1995, the Registrant had outstanding 25,507,521 shares of its
common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part II: Annual Report for the fiscal year ended September 30, 1995, only
portions of which are incorporated by reference.
Part III: Proxy Statement for the Annual Meeting of Shareholders to be filed
with the Securities and Exchange Commission within 120 days after the close of
the Registrant's fiscal year, only portions of which are incorporated by
reference.
- --------------------------------------------------------------------------------
<PAGE>
PART I
Item 1. BUSINESS
General
- -------
Jacobs Engineering Group Inc. (the "Company") is one of the largest
professional service firms in the United States providing engineering, design
and consulting services; construction and construction management services; and
process plant maintenance services to a broad range of industrial, commercial
and governmental clients throughout the United States, the United Kingdom and
Ireland. Additionally, the Company owns a 40% interest in an engineering and
design firm headquartered in Bombay, India.
The Company focuses its services on selected industry groups and markets
including chemical, pharmaceutical and biotechnology; petroleum refining;
semiconductor; federal programs; pulp and paper; and buildings and
infrastructure (this includes transportation and health care projects,
commercial and governmental buildings, and other industrial projects).
The Company is a Delaware corporation and was originally incorporated
in 1957 as a successor to a business organized by Dr. Joseph J. Jacobs in 1947.
The Company's common stock has been publicly held since 1970 and currently is
listed on the New York Stock Exchange.
Recent acquisitions
- -------------------
In July 1994, the Company acquired the engineering and construction
management services businesses from CRSS Inc. (the engineering business is
referred to as "Sirrine" and the construction management business is referred to
as "CRSS Constructors"). These businesses provide comprehensive design,
engineering and construction management services to government and commercial
customers in the pulp and paper, semiconductor, and buildings and infrastructure
markets, among others, primarily within the continental United States.
Services provided
- -----------------
The Company offers three broad categories of professional services:
engineering (which includes design, consulting and other related services);
construction and construction management; and plant maintenance. The Company
will often establish a relationship with a client where it is awarded a contract
for the initial phases of an engineering and/or construction project. These
services may include feasibility studies, consulting or design work. Because of
the range of technical expertise the Company possesses, it is often retained for
additional work as the project develops. The scope of services provided by the
Company, therefore, ranges from consulting to complete single-responsibility
contracts.
The following table sets forth the total revenues of the Company from
each of its three basic service categories for the five years ended September
30, 1995 (in thousands of dollars):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Engineering Services $ 313,849 $ 355,483 $ 453,247 $ 476,491 $ 588,399
Field Services:
Construction 499,081 503,406 424,259 456,750 881,574
Maintenance 223,359 247,538 265,420 232,513 253,084
---------- ---------- ---------- ---------- ----------
$1,036,289 $1,106,427 $1,142,926 $1,165,754 $1,723,057
========== ========== ========== ========== ==========
</TABLE>
Engineering
-----------
The Company employs all of the engineering and related disciplines to
engineer and design modern process plants (including projects for clients in the
chemicals, pharmaceutical and biotechnology, refining, food, and minerals and
fertilizers industries), semiconductor facilities, pulp and paper plants, and
other facilities (such as high technology manufacturing operations and other
specialized plants).
In the environmental area, the Company employs all of the requisite
engineering, scientific, public health and related skills to consult,
investigate, study, manage and provide remedial engineering for major
environmental programs. The Company's capabilities in process engineering and
construction combined with its environmental expertise allow it to offer its
clients a wide range of services as a single-
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source provider. Accordingly, the Company has been awarded contracts requiring a
combination of traditional process engineering and environmental services.
The Company also employs all of the professional and technical expertise
necessary to provide a broad range of consulting services including: performing
pricing studies, market analyses and financial projections necessary in
determining the feasibility of a project; performing gasoline reformulation
modeling; analyzing and evaluating layout and mechanical designs for complex
processing plants; analyzing automation and control systems; analyzing,
designing and executing biocontainment strategies; developing and performing
process protocols in respect of Federal Drug Administration mandated
qualification/validation requirements; and performing geological and
metallurgical studies.
Also included in the category of "Engineering" are all of the related
support services necessary for the proper and effective delivery of the
Company's engineering and related services. Among these are cost engineering,
planning, scheduling, procurement, estimating, project accounting, quality and
safety.
Construction
------------
The Company provides traditional field construction as well as construction
management services to private and public sector clients in virtually all of the
industries to which it provides engineering services. The Company can also
provide its clients with Advanced Construction Technology ("ACT")(R). ACT is an
advanced form of off-site engineering, design, fabrication and assembly, and
field erection. ACT provides clients with an alternative approach to traditional
methods of engineering and construction which can significantly reduce new plant
costs. In the environmental area, recent contract awards from clients in the
public sector require the Company to provide environmental remedial construction
services.
The Company's field construction activities are focused primarily on those
construction projects for which the Company has performed the engineering and
design work. By focusing its construction efforts on such projects, the Company
avoids the risk of constructing complex plants based on designs prepared by
others. The financial risk to the Company of constructing complex plants based
on designs prepared by third parties may be particularly significant on fixed-
price contracts.
The Company actively markets all of its services to clients on projects
where the scope of services required is within the Company's fields of
expertise. The Company believes that by integrating and bundling its services
(i.e., providing design, engineering and construction services on the same
project) it can price its services more competitively and can enhance the
overall contract profitability. The Company also believes that clients benefit
from such an approach because they can look to the Company as a single-source
provider of design/build services. However, the Company will continue to pursue
construction-only projects where it can negotiate pricing and other contract
terms acceptable to the Company.
In the area of construction management, the Company can provide a wide range
of services to its customers. The Company may act as the program director,
whereby it oversees, on behalf of the owner of the project, the complete
planning, design and construction phases of the project. Or, its services may be
limited to providing construction consulting, estimating, scheduling or value
engineering services. The Company's capabilities in the area of construction
management were greatly enhanced during 1994 when it completed the acquisition
of CRSS Constructors. As a result of that acquisition, the Company broadened its
geographic presence and expanded both its client base and the industry groups to
which it can provide and market its construction management services.
Maintenance
-----------
Maintenance generally refers to all of the tasks required to keep a plant in
day-to-day operations, including the repair and replacement of pumps, piping,
heat exchangers and other equipment. It also includes "turnaround" work which
involves major refurbishment which can only be performed when the plant is shut
down. Since shutdowns are expensive to the owners of the plant, turnaround work
will often require maximizing the number of craftsmen that can work efficiently
on a project on a 24 hours per day,
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seven days per week basis. The Company employs sophisticated computer scheduling
and programming to complete turnaround projects quickly and it maintains contact
with a large pool of skilled craftsmen it can hire as needed on maintenance and
turnaround projects.
Although the profit margins that can be realized from maintenance services
are generally lower than those associated with the other services the Company
provides, the costs to support maintenance activities are also generally lower
than those associated with the Company's other services. Furthermore, since
maintenance contracts are normally cost-reimbursable in nature, they present
less risk to the Company. Additionally, although engineering and construction
projects may be of a short-term nature, maintenance services often result in
long-term relationships with clients. For example, the Company has been
providing maintenance services at several major process plants for over 30
years. This aspect of maintenance services greatly reduces the selling costs in
respect of such services.
Industry groups and markets
- ---------------------------
The Company has chosen to focus its efforts on the following industry groups
and markets: chemical and pharmaceutical (which includes biotechnology);
refining; semiconductor; environmental; facilities; and pulp and paper. The
Company believes these industry groups and markets have sufficient common needs
to permit cross-utilization of the Company's resources which help to mitigate
the negative effects of a downturn in a single industry.
The following table sets forth the total revenues of the Company from each
of these industry groups and markets for the five years ended September 30, 1995
(in thousands of dollars):
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Chemical and
pharmaceutical $ 419,311 $ 351,336 $ 386,522 $ 407,806 $ 500,792
Refining 216,865 362,005 404,462 372,769 480,472
Semiconductor 56,634 120,022 70,249 83,477 264,492
Federal programs 67,940 105,608 161,964 175,846 175,200
Buildings and infrastructure 252,171 104,800 87,968 93,716 174,805
Pulp and paper - - - 7,256 85,476
Other 23,368 62,656 31,761 24,884 41,820
---------- ---------- ---------- ---------- ----------
$1,036,289 $1,106,427 $1,142,926 $1,165,754 $1,723,057
========== ========== ========== ========== ==========
</TABLE>
In the area of federal programs, the Company historically has provided
primarily engineering services. However, certain of the more recent contracts
awarded to the Company also include construction and project management
services for the remediation of hazardous wastes. Maintenance services are
provided primarily to the chemical and refining industries.
Chemical and pharmaceutical
---------------------------
The Company furnishes its full line of services to its clients operating in
the chemical, pharmaceutical and biotechnology industries. Typical projects in
the chemical area include bulk chemical production facilities involving various
petrochemicals, aromatics and derivatives, monomers and polymers. In the
pharmaceutical and biotechnology area, typical projects include sterile fill,
pharmaceutical manufacturing facilities and biotechnology laboratories and pilot
plants. Also included in this category of business are process projects for
clients in the food industry. Over the past several years, the Company has
expanded this area of its business through acquisitions and internal growth.
The scope of services the Company can provide its clients in these markets
include feasibility studies, preliminary and detailed design and engineering
services, construction, and construction management services. The Company can
also provide conceptual design services with emphasis on production strategy,
current good manufacturing practices ("cGMP") compliance, regulatory compliance
and qualification/validation services for pharmaceutical and biotechnology
research, development and production facilities. Accordingly, the Company is
fully capable of executing multi-million dollar, single-responsibility projects
in the areas of pharmaceuticals and biotechnology.
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<PAGE>
Refining
--------
The Company provides its full line of services to its clients in the
petroleum refining industry. Typical projects in the refining area include
retrofits, revamps or expansion of existing plants, upgrading individual process
units within refineries, new construction and maintenance services. The Company
also provides a broad range of consulting services to its clients, including
feasibility and multi-client studies.
Over the past several years, many of the Company's contract awards in the
refining area have been for plants producing oxygenates and other high-octane
fuel blending components for gasoline (such components are required by the Clean
Air Act of 1990 in reformulated gasolines in order to reduce the emissions of
unburned hydrocarbons and carbon monoxide from automobiles), as well as plants
that hydrotreat various fuel fractions to reduce the sulfur content of blended
products. The Company has completed several major projects to design, engineer,
procure and construct methyl tertiary butyl ether ("MTBE") units and tertiary
amyl butyl ether ("TAME") units for a number of major refiners at facilities
located throughout the United States. The Company has also utilized its off-
site construction capabilities in the construction and installation of these
units. The use of off-site construction can help decongest the construction
site and allow for parallel construction to proceed simultaneously with the
modular activity.
A significant aspect of the Company's service to this industry is in the
area of contract maintenance. The Company has contracts with several major oil
refiners for on-site maintenance and turnaround activities. Many of these
contracts are evergreen in nature and tend to be extended over many years.
Over the past several years, the Company has broadened this area of its
business through internal growth and acquisitions. One acquisition completed in
1993 expanded the Company's geographic presence to include the West Coast
refining market; the acquisition also added to its client base.
Semiconductor
-------------
The Company provides engineering, procurement, construction, and
construction management services to its clients in the semiconductor industry.
Typical projects in this industry include multi-million dollar state-of-the-art
wafer fabrication and crystal growing facilities used to produce microprocessors
for computers and other consumer electronic devices. Generally, projects in the
semiconductor industry are more complex than other facilities projects and have
greater emphasis on cleanroom, and similar high-end technology.
The Company's capabilities in the semiconductor business were significantly
enhanced in 1994 when it completed the acquisition of Sirrine. As a result of
that acquisition, the Company added to its U.S. domestic engineering and design
capabilities, as well as broadened its client base. Furthermore, the Company's
traditional skills in the areas of construction and construction management
augmented Sirrine's traditional engineering and design capabilities in this
market.
Federal programs
----------------
The Company believes it is one of the leading providers in the United States
of environmental engineering and consulting services, including hazardous waste
management and cleanup. The environmental business currently represents an
important part of the Company's operations and, as a result of growing public
concern over the nation's environment, combined with increased legislative
pressure to move more rapidly towards actual site cleanup, the Company believes
demand for environmental services will continue to grow, particularly in the
areas of compliance and site remediation.
The Company is currently providing environmental services for a number of
U.S. federal government agencies including the Department of Energy; the
Department of Defense; and the Environmental Protection Agency. In the private
sector, the Company provides consulting, environmental studies, remedial design
and project management services, such as the design and
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construction of waste minimization programs relating to existing process plants,
and the design and construction of waste and wastewater treatment facilities.
Typical projects for the U.S. government include the preparation of
feasibility studies and performing remedial investigation, engineering, design
and remediation services on several national programs. Many of the Company's
contracts relate to the Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA" or "Superfund") and the related Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), as reauthorized in 1990.
More recently, the Company has been awarded multi-year contracts from the U.S.
Air Force to provide full-service remedial action services for the U.S. Air
Force Center for Environmental Excellence ("AFCEE") at several bases located in
the U.S., as well as a "nationwide" award to provide services under the U.S.
Base Realignment and Closure ("BRAC") program. And in 1995, the Company was
awarded the Alaska TERC (Total Environmental Restoration Contract). The Alaska
TERC is a multi-year program to provide engineering and site cleanup services
throughout that state. The Company also provides project management services
over site cleanup activities at various government installations, as well as
detailed scientific and support services, groundwater restoration management and
action plans, and services relating to the decommissioning of nuclear production
and armament facilities.
Many of the projects for the U.S. government span several years. For larger
programs, the scope of services are such that the Company sometimes teams with
other companies in order to execute the project.
Buildings and infrastructure
----------------------------
Buildings and infrastructure refers to those contracts requiring the Company
to provide comprehensive architectural, engineering, design, construction and/or
construction management services for projects such as high technology
manufacturing operations, specialized plants for clients in the food industry,
research and development facilities that require technically complex structures,
civic centers, correctional facilities, health care facilities and
transportation systems, as well as multi-purpose buildings for industrial,
commercial and government clients.
The Company's capabilities in the facilities area were greatly enhanced in
1994 when it completed the acquisition of CRSS Constructors. As a result of
that acquisition, the Company broadened its geographic presence and expanded
both its client base and the industry groups to which it can provide and market
its construction management services.
Pulp and Paper
--------------
The Company's capabilities in the area of pulp and paper result from its
acquisition of Sirrine in July 1994.
The Company provides a broad range of engineering and construction services
to its clients in the pulp and paper industry. Additionally, the Company
provides strategic planning and conceptual studies for many of its clients, as
well as environmental services relating to compliance with EPA emission
standards. Typical projects in the pulp and paper area range from small mill
projects to complex, multi-million dollar paper machine rebuilds, mill
expansions and construction of new facilities. Such projects encompass all areas
of a mill, including woodyards, pulping and bleaching, papermaking, chemical
recovery, material handling and power and steam generation. In the area of
papermaking, the Company's expertise includes tissue and towel, coated and
uncoated fine papers, newsprint and linerboard. The Company's expertise also
includes the converting and packaging of paper products for consumer use. The
Company has been instrumental in the design and installation of state-of-the-art
facilities for recycle fiber, deinking and pulp bleaching. Chemical recovery and
power generation are an integral part of the papermaking process. The Company
has broad experience in these areas and has applied its expertise in the
engineering and construction of such facilities for the pulp and paper industry.
Although a substantial portion of the Company's pulp and paper revenues in
1995 were derived from engineering, procurement and construction management
services, the Company is actively pursuing the expansion of its services to
include construction services.
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Backlog
- -------
For information regarding the Company's backlog, reference should be made to
Item 7. - Management's Discussion and Analysis of Financial Condition and
Results of Operations, incorporated by reference in this report.
Customers
- ---------
For the years ended September 30, 1991, 1992, 1993, 1994 and 1995, revenues
from federal government agencies accounted for 6.3%, 9.4%, 14.1%, 15.4% and
11.4%, respectively, of total revenues. Due to the amount of pass-through costs
(see "Contracts" below) that may be incurred on construction projects, it is not
unusual for a customer in the private sector to account for more than ten
percent of revenues in any given year. For the years ended September 30, 1991
and 1992, one customer in the private sector accounted for 11.4% and 12.5%,
respectively, of total revenues (a second customer accounted for 10.8% of total
revenues in 1992), and a different customer accounted for 11.6% and 13.1% of
total revenues in 1994 and 1995, respectively. No single customer in the private
sector accounted for ten percent or more of total revenues in 1993.
Foreign operations
- ------------------
For the years ended September 30, 1991, 1992, 1993, 1994 and 1995, revenues
from projects outside of North America were approximately 8.4%, 16.3%, 10.8%,
5.6% and 5.4%, respectively, of total revenues. For the years ended September
30, 1992 and prior, substantially all such revenues related to the Company's
offices in Ireland. Beginning with the year ended September 30, 1993, such
revenues related primarily to the Company's offices in the UK and Ireland.
The increase in revenues from projects outside North America from 1991 to
1992 was due primarily to a large construction project executed out of the
Company's Dublin office and included a substantial portion of pass-through
costs. That project was completed early in fiscal 1993.
The Company also has operations in India through its 40% interest in an
engineering and design firm specializing in projects for clients in the
chemical, pharmaceuticals and petroleum refining markets. The Company has
executed contracts jointly with the Indian company, and expects to expand this
activity in the future. The Company accounts for the Indian company using the
equity method.
Contracts
- ---------
While there is considerable variation in the pricing provisions of the
contracts undertaken by the Company, they can generally be grouped into three
broad categories: Cost-plus; guaranteed maximum price and fixed-price. The
following table sets forth the percentages of total revenues represented by
these types of contracts during the five years ended September 30, 1994:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Cost-plus 79% 87% 90% 83% 88%
Guaranteed maximum price 2 4 3 8 1
Fixed-price 19 9 7 9 11
</TABLE>
In accordance with industry practice, most of the Company's contracts are
subject to termination at the discretion of the client. Contracts typically
provide for reimbursement of costs incurred and payment of fees earned through
the date of such termination.
When the Company is directly responsible for engineering, design,
procurement and construction of a project or the maintenance of a process plant,
the Company reflects the cost of materials, equipment and subcontracts in both
revenues and costs. On other projects, where the client elects to pay for such
items directly, these amounts are not reflected in either revenues or costs.
The approximate amounts of such costs included in revenues for the years ended
September 30, 1991, 1992, 1993, 1994 and 1995 were $641.9 million, $659.2
million, $610.7 million, $629.0 million and $1,001.3 million, respectively.
Cost-plus contracts
-------------------
Cost-plus contracts provide for reimbursement of costs incurred by the
Company plus a predetermined fee, or a fee based on a percentage of the costs
incurred. The Company prefers this type of contract since it believes that the
primary basis for its selection should be its technical expertise and
professional qualifications rather than price considerations.
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Guaranteed maximum price contracts
----------------------------------
Guaranteed maximum price contracts are performed in the same manner as
cost-plus contracts; however, the total actual cost plus the fee cannot exceed
the guaranteed price negotiated with the customer. If the total actual cost of
the contract exceeds the guaranteed maximum price, then the Company will bear
all or a portion of the excess. In those cases where the total actual cost and
fee are less than the guaranteed price, the Company will often share the savings
on a predetermined basis with the client.
Fixed-price contracts
---------------------
Fixed-price contracts include both "negotiated fixed-price" contracts and
"lump sum bid" contracts. Under a negotiated fixed-price contract, the Company
is first selected as the contractor, and then the contract price is negotiated.
Negotiated fixed-price contracts frequently exist in single-responsibility
arrangements where the Company has the opportunity to perform engineering and
design work before negotiating the total price of the project. Under lump sum
bid contracts, the Company must bid against other contractors based upon
specifications furnished by the customer. This type of pricing presents certain
inherent risks, including the possibility of ambiguities in the specifications,
problems with new technologies and economic and other changes that may occur
over the contract period, that are reduced by the negotiation process. Thus,
although both types of contracts involve a firm price for the customer, the lump
sum bid contract provides the greater degree of risk to the Company. However,
because of economies that may be realized during the contract term, both
negotiated fixed-price and lump sum bid contracts may offer greater profit
potential than the other types of contracts.
Competition
- -----------
The Company is engaged in a highly competitive business. Some of its
competitors are larger than the Company, or are subsidiaries of larger
companies, and may possess greater resources than the Company. Furthermore,
because the engineering aspect of the business does not usually require large
amounts of capital, there is relative ease of market entry for a new potential
entrant possessing acceptable professional qualifications. Accordingly, the
Company competes with both national and international firms in sizes ranging
from very large to a wide variety of small, regional and specialty firms.
The extent of the Company's competition varies according to the industries
and markets it serves, as well as the regions in which the Company is located.
The Company's largest competitors for engineering, construction and maintenance
services for process plants include such well-known companies as Bechtel Group,
Inc., Fluor Corporation, Foster-Wheeler Corp., Raytheon Engineers, M.W. Kellogg,
Parsons Co., Brown & Root, Inc., and John Brown. In the semiconductor industry,
the Company's principal competitor is Industrial Design Corporation. In the area
of pulp and paper, the Company's principal competitors include Fluor, BE&K,
Brown & Root, and Rust International. In the area of environmental engineering
and hazardous waste cleanup, the Company's principal competitors include many of
the companies listed above, as well as Morrison Knudsen Corp., and other
specialized companies such as IT Corporation, ICF Kaiser and Roy F. Weston, Inc.
The Company's principal competitors for buildings and infrastructure work also
include many of the companies listed above, as well as Turner Construction Co.
and The Austin Co.
Employees
- ---------
At September 30, 1995, the Company had approximately 7,600 full-time
employees. Additionally, as of September 30, 1995, there were also
approximately 6,900 persons employed by the Company in the field on a project
basis. The number of such field employees varies in relation to the number and
size of the maintenance and construction projects in progress at any particular
time.
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EXECUTIVE OFFICERS OF THE COMPANY
Pursuant to the requirements of Item 401(b) and 401(e) of Regulation S-K,
the following information is being furnished with respect to the Company's
executive officers:
<TABLE>
<CAPTION>
Year Joined
Name Age Position with the Company the Registrant
- -------------------------------------- --- ----------------------------------------- --------------
<S> <C> <C> <C>
Joseph J. Jacobs 79 Director and Chairman of the Board 1947
Noel G. Watson 59 President, Chief Executive Officer
and Director 1965
Robert M. Barton 73 Secretary and Director 1957
William R. Kerler 66 Executive Vice President, Operations 1980
Donald J. Boutwell 58 Group Vice President, Field Services 1984
Andrew E. Carlson 62 Group Vice President, Field Services 1990
Socrates S. Christopher 60 President, Jacobs - Sirrine Engineers
(a Division of Jacobs Engineering
Group Inc.) 1994
Arlan C. Emmert 50 Group Vice President, Western Region 1985
Thomas R. Hammond 44 Group Vice President, Central Region 1975
John McLachlan 49 Group Vice President, Northern Region 1974
Richard J. Slater 49 Group Vice President, European Region 1980
Roger L. Williams 57 Group Vice President, Southern Region 1983
Gregory J. Landry 47 Senior Vice President, Quality and Safety 1984
Craig L. Martin 46 Senior Vice President, General Sales
and Marketing 1994
Paul A. Miskimin 55 Senior Vice President, Federal Programs 1987
John W. Prosser, Jr. 50 Senior Vice President, Finance and 1974
Administration and Treasurer
Nazim G. Thawerbhoy 48 Senior Vice President and Controller 1979
William C. Markley, III 50 Vice President, Law 1981
</TABLE>
All of the officers listed in the preceding table serve in their respective
capacities at the pleasure of the Board of Directors and, with the exception of
Messrs. Christopher and Martin, have served in executive capacities with the
Company or have been part of its management for more than five years. Prior to
joining the Company in 1994, Messrs. Christopher and Martin were part of the
management of CRSS Inc. or one of its subsidiaries for at least five years.
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Item 2. PROPERTIES
The Company owns and leases offices for its professional, technical and
administrative staff totalling approximately 1.7 million square feet. The
following is a list of the Company's principal locations:
<TABLE>
<CAPTION>
Country State City
--------------- ------------ ------------
<S> <C> <C>
U.S.A. California Pasadena,
Long Beach,
Martinez, and
Sacramento
Arizona Phoenix
Colorado Denver
Florida Lakeland
Louisiana Baton Rouge
New Mexico Albuquerque
North Carolina Raleigh
Ohio Cincinnati
Oregon Portland
Pennsylvania Philadelphia
South Carolina Greenville, and
Orangeburg
Texas Houston
Tennessee Oak Ridge
Virginia Arlington
United Kingdom - London,
- Glasgow, and
- Manchester
Republic of Ireland - Cork, and
- Dublin
</TABLE>
In addition to these properties, the Company leases smaller, project
offices located throughout the United States. The Company maintains sales
offices at many of its principal locations. The Company has equipment yards
located in Houston, Texas and Baton Rouge, Louisiana. The majority of the
Company's offices are leased. The Company also rents a portion of its
construction equipment on a short-term basis.
Item 3. LEGAL PROCEEDINGS
In the normal course of business, the Company is subject to certain
contractual guarantees and litigation. Generally, such guarantees relate to
construction schedules and plant performance. Most of the litigation involves
the Company as a defendant in workers' compensation, personal injury and other
similar lawsuits. Management believes, after consultation with counsel, that
these guarantees and litigation should not have any material adverse effect on
the Company's consolidated financial statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is hereby incorporated by reference
from the Financial Statements section of the Company's 1995 Annual Report to
Shareholders, copies of which financial statements section is being delivered to
the Commission (but not filed with, except to the extent incorporated herein) as
an Exhibit to this report.
Item 6. SELECTED FINANCIAL DATA
The information required by this Item is hereby incorporated by reference
from the Financial Statements section of the Company's 1995 Annual Report to
Shareholders, copies of which are being delivered to the Commission (but not
filed with, except to the extent incorporated herein) as an Exhibit to this
report.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is hereby incorporated by reference
from the Financial Statements section of the Company's 1995 Annual Report to
Shareholders, copies of which are being delivered to the Commission (but not
filed with, except to the extent incorporated herein) as an Exhibit to this
report.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is hereby incorporated by reference
from the Financial Statements section of the Company's 1995 Annual Report to
Shareholders, copies of which are being delivered to the Commission (but not
filed with, except to the extent incorporated herein) as an Exhibit to this
report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL AND
DISCLOSURE MATTERS
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Paragraph (a) and Paragraphs (c) through (g) of
Item 401 and by Item 405 of Regulation S-K is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A within 120 days after the close of the Company's
fiscal year.
See the information under the caption "Executive Officers of the Company" in
Part I of this report for information required by Paragraph (b) of Item 401 of
Regulation S-K.
Item 11. EXECUTIVE COMPENSATION
The information required by this Item is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A within 120 days after the close of the Company's
fiscal year.
Page 10
<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A within 120 days after the close of the Company's
fiscal year.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A within 120 days after the close of the Company's
fiscal year.
Page 11
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The Company's consolidated financial statements at September 30, 1995
and 1994 and for each of the three years in the period ended September
30, 1995, together with the report of the independent auditors on
those consolidated financial statements are hereby incorporated by
reference from the Financial Statements section of the Company's 1995
Annual Report to Shareholders, copies of which are being delivered to
(but not filed with, except to the extent incorporated herein) the
Commission as an exhibit to this report. See accompanying Index to
Financial Statements and Supporting Schedules.
(b) Not applicable.
(c) Exhibits and Index to Exhibits:
2.1 Purchase Agreement dated July 29, 1994 between Jacobs Engineering
Group Inc. and CRSS Inc. including a schedule of annexes and
exhibits. Filed as Exhibit 1. to the Registrant's Current Report
on Form 8-K dated August 5, 1994 and incorporated herein by
reference.
3.1 Certificate of Incorporation of the Registrant, as amended.
Filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1995 and incorporated herein
by reference.
3.2 Bylaws of the Registrant, as amended. Filed as Exhibit 3.2 to
the Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1995 and incorporated herein by reference.
4.1 See Sections 5 through 18 of Exhibit 3.1.
4.2 See Article II, Section 3.03 of Article III, Article VI and
Section 8.04 of Article VIII of Exhibit 3.2.
4.3 Rights Agreement dated as of December 20, 1990 by and between
Registrant and First Interstate Bank, Ltd. as Rights Agent.
Filed as Exhibit 4.4 to Registrant's Quarterly Report on Form 10-
Q for the period ended June 30, 1995 and incorporated herein by
reference.
10.1 The Jacobs Engineering Group Inc. 1981 Executive Incentive Plan
(As Amended and Restated). Filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1995 and incorporated herein by reference.
10.2 The Jacobs Engineering Group Inc. Incentive Bonus Plan for
Officers and Key Managers. Filed as Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1995 and incorporated herein by reference.
10.3 Agreement dated as of November 30, 1993 between the Registrant
and Dr. Joseph J. Jacobs, and the Agreement dated as of November
30, 1994 between the Registrant and Dr. Joseph J. Jacobs. Filed
as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1995 and incorporated herein by
reference.
(S) 10.4 Agreement dated as of November 30, 1995 between the Registrant
and Dr. Joseph J. Jacobs.
Page 12
<PAGE>
10.5 The Executive Security Program of Jacobs Engineering Group Inc.
Filed as Exhibit 10.4 to the Registrant's Quarterly Report on
Form 10-Q for the period ended June 30, 1995 and incorporated
herein by reference.
10.6 Jacobs Engineering Group Inc. and Subsidiaries 1991 Executive
Deferral Plan, effective June 1, 1991. Filed as Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-Q for the period
ended March 31, 1995 and incorporated herein by reference.
10.7 Jacobs Engineering Group Inc. and Subsidiaries 1993 Executive
Deferral Plan, effective December 1, 1993. Filed as Exhibit 10.6
to the Registrant's Quarterly Report on Form 10-Q for the period
ended March 31, 1995 and incorporated herein by reference.
10.8 The Jacobs Engineering Group Inc. 1989 Employee Stock Purchase
Plan. Filed as Exhibit 10.9 to the Registrant's Quarterly Report
on Form 10-Q for the period ended June 30, 1995 and incorporated
herein by reference.
10.9 Form of Indemnification Agreement entered into between the
Registrant and its officers and directors. Filed as Exhibit
10.10 to the Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1995 and incorporated herein by reference.
10.10 Jacobs Engineering Group Inc. 401(k) Plus Savings Plan and
Trust. Filed as Exhibit 10.11 to the Registrant's Quarterly
Report on Form 10-Q for the period ended March 31, 1995 and
incorporated herein by reference.
(S) 11. Statement of computation of net income per outstanding share
of common stock is hereby incorporated by reference from the
Financial Statements section of the Company's 1995 Annual Report
to Shareholders, copies of which are being delivered to (but not
filed with, except to the extent incorporated herein) the
Commission as an exhibit to this report.
(S) 13. Financial Statements section of Jacobs Engineering Group
Inc. Annual Report to Shareholders for the fiscal year ended
September 30, 1995.
(S) 21. List of Subsidiaries of Jacobs Engineering Group Inc.
(S) 23. Consent of Independent Auditors.
(S) 27.1 Financial Data Schedules.
___________________________________________
(S) Being filed herewith.
Page 13
<PAGE>
UNDERTAKINGS
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned Registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into the Registrant's Registration Statements on Form
S-8 Nos. 33-45914 (filed February 21, 1992) and 33-45927 (filed February 24,
1992):
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by final adjudication of such issue.
Page 14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JACOBS ENGINEERING GROUP INC.
Dated: December 27, 1995 By: NOEL G. WATSON
--------------------------------------
Noel G. Watson
President, Chief Executive Officer and
Director (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
NOEL G. WATSON December 27, 1995
- ---------------------------------- Director and
Noel G. Watson Principal Executive Officer
JOSEPH J. JACOBS Director December 27, 1995
- ----------------------------------
Joseph J. Jacobs
JOSEPH F. ALIBRANDI Director December 27, 1995
- ----------------------------------
Joseph F. Alibrandi
ROBERT M. BARTON Director December 27, 1995
- ----------------------------------
Robert M. Barton
PETER H. DAILEY Director December 27, 1995
- ----------------------------------
Peter H. Dailey
ROBERT B. GWYN Director December 27, 1995
- ----------------------------------
Robert B. Gwyn
LINDA K. JACOBS Director December 27, 1995
- ----------------------------------
Linda K. Jacobs
J. CLAYBURN LaFORCE Director December 27, 1995
- ----------------------------------
J. Clayburn LaForce
DALE R. LAURANCE Director December 27, 1995
- ----------------------------------
Dale R. Laurance
DAVID M. PETRONE Director December 27, 1995
- ----------------------------------
David M. Petrone
JAMES L. RAINEY, JR. Director December 27, 1995
- ----------------------------------
James L. Rainey, Jr.
Senior Vice President
Finance and Administration and
Treasurer (Principal
JOHN W. PROSSER, JR. Financial Officer) December 27, 1995
- ----------------------------------
John W. Prosser, Jr.
Senior Vice President and
Controller (Principal Accounting
NAZIM G. THAWERBHOY Officer) December 27, 1995
- ----------------------------------
Nazim G. Thawerbhoy
</TABLE>
Page 15
<PAGE>
Exhibit 10.4
AGREEMENT
---------
This agreement is made as of the 30th day of November, 1995, between
JACOBS ENGINEERING GROUP, INC. a Delaware corporation ("Company") and JOSEPH J.
JACOBS ("Jacobs").
In accordance with previous practice, the term for the ending of the
outstanding November 30, 1993 employment agreement between the partie is
extended from September 30, 1999 to September 30, 2000. All of the other
provisions of the agreement shall remain in force.
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed by its duly authorized represenatives and Jacobs has affixed his
signature, as of the date first above written.
JOSEPH J. JACOBS
("Jacobs")
/s/ Joseph J. Jacobs
--------------------------------------
251 S. Lake Ave.
Pasadena, CA 91101
JACOBS ENGINEERING GROUP INC.
("Company")
By /s/ Noel G. Watson
-------------------------------------
Noel G. Watson,
President
By /s/ John W. Prosser, Jr.
-------------------------------------
John W. Prosser, Jr.,
Senior Vice President,
Finance and Administration
1
<PAGE>
Exhibit 13
Jacobs Engineering Group Inc. And Subsidiaries
Consolidated Financial Statements
With Report of Independent Auditors
September 30, 1995
<PAGE>
Selected Highlights
For Fiscal Years Ended September 30
(Dollars in thousands, except per-share information)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $1,723,057 $1,165,754 $1,142,926
Net income 32,242 18,767 28,670
---------- ---------- ----------
Per share information:
Net income $ 1.27 $ 0.75 $ 1.15
Net book value 9.41 7.96 6.96
Closing year-end stock
price 24.875 24.375 23.250
---------- ---------- ----------
Total assets $ 533,947 $ 504,364 $ 351,020
Stockholders' equity 238,761 200,433 173,797
Return on average equity 14.68% 10.03% 18.28%
Stockholders of record 2,971 2,635 2,616
---------- ---------- ----------
Backlog:
Engineering services $ 828,400 $ 793,060 $ 736,600
Total 2,625,000 2,500,000 1,858,600
---------- ---------- ----------
Permanent staff 7,600 6,940 5,310
---------- ---------- ----------
</TABLE>
Net income for fiscal 1994 included special charges totalling $10,200, or $0.40
per share.
<PAGE>
Selected Financial Data
- -----------------------
For Fiscal Years Ended September 30
(In thousands, except per-share information)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Results of Operations:
Revenues $1,723,057 $1,165,754 $1,142,926 $1,106,427 $1,036,289
Net income 32,242 18,767 28,670 26,605 20,385
---------- ---------- ---------- ---------- ----------
Financial Position:
Current ratio 1.44 to 1 1.41 to 1 1.61 to 1 1.56 to 1 1.41 to 1
Working capital $ 113,339 $ 106,058 $ 100,688 $ 92,706 $ 60,580
Current assets 368,614 367,485 264,949 258,206 206,576
Total assets 533,947 504,364 351,020 316,731 260,142
Long-term debt 17,799 25,000 - - -
Stockholders' equity 238,761 200,433 173,797 139,813 106,936
Return on average equity 14.68% 10.03% 18.28% 21.56% 21.47%
Backlog:
Engineering services $ 828,400 $ 793,060 $ 736,600 $ 647,100 $ 457,300
Total 2,625,000 2,500,000 1,858,600 1,760,000 1,605,000
---------- ---------- ---------- ---------- ----------
Per-share Information:
Net income $ 1.27 $ 0.75 $ 1.15 $ 1.11 $ 0.86
Stockholders' equity 9.41 7.96 6.96 5.81 4.50
---------- ---------- ---------- ---------- ----------
Average Number of Common
and Common Stock
Equivalents Outstanding 25,384 25,173 24,964 24,070 23,763
---------- ---------- ---------- ---------- ----------
</TABLE>
Net income for fiscal 1994 included special charges totalling $10,200, or $0.40
per share.
Net income for fiscal 1992 included a net gain of $2,118, or $0.09 per share,
from the sale of 40 percent of the Company's holdings of the common stock of
Genetics Institute, Inc.
<PAGE>
Selected Financial Data
- -----------------------
For Fiscal Years Ended September 30
(Dollars in thousands, except per-share information)
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Results of Operations:
Revenues $ 881,757 $793,577 $757,410 $320,307 $207,589
Net income 14,390 10,220 6,552 3,512 850
---------- -------- -------- -------- --------
Financial Position:
Current ratio 1.24 to 1 1.24 to 1 1.18 to 1 1.42 to 1 1.21 to 1
Working capital $ 39,544 $ 32,965 $ 22,021 $ 26,657 $ 7,890
Current assets 202,404 172,489 143,951 89,629 45,380
Total assets 253,707 212,680 179,642 116,849 75,786
Long-term debt - 6,332 9,244 12,277 941
Stockholders' equity 82,964 58,806 37,503 30,967 26,960
Return on average equity 20.30% 21.22% 19.14% 12.13% 3.16%
Backlog:
Engineering services $ 329,400 $222,830 $154,950 $ 87,736 $ 69,017
Total 1,343,300 970,010 822,252 351,554 236,933
---------- -------- -------- -------- --------
Per-share Information:
Net income $ 0.64 $ 0.48 $ 0.34 $ 0.18 $ 0.04
Stockholders' equity 3.70 2.74 1.93 1.62 1.41
---------- -------- -------- -------- --------
Average Number of Common
and Common Stock
Equivalents Outstanding 22,439 21,501 19,390 19,150 19,066
---------- -------- -------- -------- --------
</TABLE>
<PAGE>
Management's Discussion and Analysis
Results of Operations
The following table sets forth total revenues from each of the industry groups
and markets serviced by the Company for each year in the three year period
ended September 30, 1995 (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Chemical and
pharmaceutical $ 500,792 $ 407,806 $ 386,522
Refining 480,472 372,769 404,462
Semiconductor 264,492 83,477 70,249
Federal programs 175,200 175,846 161,964
Buildings and
infrastructure 174,805 93,716 87,968
Pulp and paper 85,476 7,256 -
Other 41,820 24,884 31,761
---------- ---------- ----------
$1,723,057 $1,165,754 $1,142,926
---------- ---------- ----------
</TABLE>
The following table sets forth total revenues from each of the types of
services the Company provides its customers for each year in the three year
period ended September 30, 1995 (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Engineering services $ 588,399 $ 476,491 $ 453,247
Field services:
Construction 881,574 456,750 424,259
Maintenance 253,084 232,513 265,420
---------- ---------- ----------
$1,723,057 $1,165,754 $1,142,926
---------- ---------- ----------
</TABLE>
1995 Compared to 1994:
- ----------------------
Total revenues increased 47.8 percent from 1994 to 1995. Of the increase,
approximately 55 percent relates to the operations of Sirrine and CRSS
Constructors, two businesses the Company acquired in July 1994 (see Note 2 to
the Consolidated Financial Statements).
Engineering services revenues increased 23.5 percent from 1994 to 1995. Of the
increase, approximately 76 percent was due to the inclusion of a full twelve-
months of operations of Sirrine. Management considers the level of engineering
services it provides an important indicator of the Company's financial
performance because engineering services absorb a significant portion of the
Company's general and administrative expenses. Additionally, the level of
engineering services activity is a leading indicator of possible future
opportunities to provide construction and construction management services. The
increase in engineering services revenues was evidenced by an increase in the
number of professional services hours billed to projects. The Company billed
12.0 million hours to projects in 1995; this was 2.8 million more hours than the
number billed in 1994.
<PAGE>
Revenues from the Company's field services increased 64.6 percent from 1994 to
1995. Most of the increase was due to higher construction activities, and in
particular from projects being executed and managed by Sirrine and CRSS
Constructors. Also contributing to the increase in field services revenues from
1994 to 1995 was a $372.3 million increase in subcontract and procurement
activity (the costs of which are included in both revenues and costs).
As a percent of revenues, direct costs of contracts was 89.0 percent in 1995,
versus 87.9 percent in 1994. The percentage relationship between direct costs
of contracts and revenues will fluctuate from year to year depending on a
variety of factors including the mix of business and services in the years being
compared. In general, the increase in the percentage relationship from 1994 to
1995 was due to a proportionally higher percentage of the Company's total
business volume coming from field services relative to engineering services.
The Company's selling, general and administrative ("S,G & A") expenses totalled
$136.6 million for 1995; this was $27.0 million more than the 1994 amount. Most
of the increase was attributable to the effects of including a full year's
results of operations of Sirrine and CRSS Constructors.
As discussed below, the Company recorded in the fourth quarter last year a
special charge totalling $10.2 million after taxes. As part of this charge,
reserves of approximately $8.7 million were established relating to a number of
office consolidations and cost-reduction initiatives the Company began last
year. During 1995, the Company substantially completed its plans and programs,
and charged approximately $2.2 million of cash expenditures and write-offs
against these reserves. The balance of the reserves relate primarily to
noncancellable lease obligations.
The Company's operating profit (defined as total revenues, less direct costs of
contracts, and selling, general and administrative expenses) totalled $52.7
million for 1995; this was $20.8 million more than 1994. Approximately $15.8
million of the increase relates to the special charge recorded last year which
decreased 1994's operating profit. The balance of the improvement was due to
increased business volume combined with improving margin rates.
Other income, net totalled $0.3 million for 1995, as compared to other expense,
net of $0.7 million for 1994. The variance was due primarily to higher employee
benefit related costs recorded in 1994 than in 1995.
1994 Compared to 1993:
- ----------------------
As mentioned above, the Company recorded in the fourth quarter of 1994 a special
charge totalling $10.2 million after taxes, or $0.40 per share. Of the total
amount recorded, approximately $8.6 million, or $0.34 per share, related to
office consolidations, asset write-downs, and certain other special charges, and
approximately $1.6 million, or $0.06 per share, related to certain third-party
claims and litigation that were settled during the fourth quarter of 1994. In
general, most of the special charge related to the various acquisitions the
Company had completed in 1993 and 1994, which added overhead infrastructures
that were in many cases duplicative of resources already existing within the
Company.
<PAGE>
Therefore, shortly after the acquisition of Sirrine and CRSS Constructors in
July 1994, management implemented a plan to consolidate certain of its offices,
and to review, and re-assign if necessary, where certain projects were being
executed. Additionally, management undertook to evaluate the Company's
continuing business activities relating to a joint venture in the United
Kingdom. Lastly, management reviewed the realizability of assets the Company
acquired in recent years and wrote-down the carrying value of those assets to
their estimated net realizable values. These efforts resulted in the $8.6
million after-tax charge discussed above.
On a consolidated basis, engineering services revenues increased 5.1 percent
from 1993 to 1994. Excluding the effects of the acquisition of Sirrine and CRSS
Constructors, in-house engineering services revenues increased 4.6 percent from
1993 to 1994. The increase in engineering services revenues was evidenced by an
increase in the number of professional services hours billed to projects.
Excluding the effects of the acquisition, the Company billed 8.9 million hours
to projects in 1994; 0.4 million more hours than in 1993.
As a percent of revenues, direct costs of contracts were 87.9 percent in 1994,
versus 87.1 percent in 1993. As discussed above, the percentage relationship
between direct costs of contracts and revenues will fluctuate from year to year
depending on a variety of factors including the mix of business and services in
the years being compared. In general, the increase in this percentage
relationship from 1993 to 1994 was due substantially to the effects of the
special charge the Company recorded in the fourth quarter of 1994.
S,G & A expenses were $109.6 million in 1994, versus $101.5 million in 1993. Of
the $8.1 million increase, $7.7 million relates to the special charge the
Company recorded in the fourth quarter of 1994. Also included in S,G & A
expenses in 1994 is $8.6 million attributable to the operations of Sirrine and
CRSS Constructors.
The Company's operating profit was $31.8 million in 1994, versus $46.1 million
in 1993. The decrease in operating profit from 1993 to 1994 relates primarily to
the special charge the Company recorded in the fourth quarter of 1994. Excluding
the effects of the special charge, the Company's operating profit would have
been $47.7 million for 1994.
Interest income, net was $0.3 million in 1994, versus $1.3 million in 1993. The
decrease in net interest income from 1993 to 1994 was due primarily to a lower
level of cash invested during 1994 as compared to 1993, combined with higher
levels of borrowing activity in 1994 than in 1993.
Other expense, net totalled $0.7 million in 1994. This compares to other
income, net of $2.0 million in 1993. Included in the 1994 amount is
approximately $1.1 million relating to the special charge the Company recorded
in the fourth quarter of 1994.
Backlog
The following table summarizes the Company's total backlog at September 30,
1995, 1994, and 1993 (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Engineering services $ 828.4 $ 793.1 $ 736.6
Total 2,625.0 2,500.0 1,858.6
-------- -------- --------
</TABLE>
<PAGE>
At any given time, backlog represents the amount of revenues the Company expects
to record in the future from performing work under contracts that have been
awarded to it. With respect to maintenance projects, however, it is the
Company's policy to include in backlog only the amount of revenues it expects to
receive during the succeeding year, regardless of the remaining life of the
contract, unless the Company does not expect the contract to be renewed. With
respect to contracts relating to projects for agencies of the U.S. federal
government, it is the Company's policy to include in backlog the full contract
award.
Total backlog at September 30, 1995 included approximately $1.1 billion of
contracts for work to be performed either directly or indirectly for agencies of
the federal government. This compares to approximately $1.1 billion at
September 30, 1994, and $1.0 billion at September 30, 1993. Most of these
contracts extend beyond one year. In general, these contracts must be funded
annually (i.e., the amounts to be spent under the contract must be appropriated
by Congress to the procuring agency, and then the agency must allot these sums
to the specific contracts).
In accordance with industry practice, substantially all of the Company's
contracts may be terminated by the customer. However, the Company has not
experienced cancellations which have had a material effect on the reported
backlog amounts. In the situation where a customer terminates a contract, the
Company would ordinarily be entitled to receive payment for work performed up to
the date of termination and, in certain instances, may be entitled to allowable
termination and cancellation costs. Additionally, the Company's backlog at any
given time is subject to changes in the scope of services to be provided as well
as increases or decreases in costs relating to the contracts included therein.
Of total backlog at September 30, 1995, the Company estimates that approximately
50 percent will be realized as revenues within the next year.
Of the $125.0 million increase in total backlog from 1994 to 1995, most was
attributable to new project awards in the microelectronics and pulp and paper
areas of the Company's business. Of the $641.4 million increase in total
backlog from 1993 to 1994, approximately $326.8 million relates to the
acquisition of Sirrine and CRSS Constructors. The balance of the increase
relates primarily to new federal program awards.
Effects of Inflation
The effects of inflation on the Company's financial condition and results of
operations have decreased in recent years due primarily to the Company receiving
an increasing amount of its revenues under cost-plus type contracts.
To the extent permitted by competition, the Company continues to mitigate its
exposure to the effects of inflation by, among other things, emphasizing
contracts which are either cost-plus or negotiated fixed-price.
Liquidity and Capital Resources
The Company's cash and cash equivalents decreased $6.5 million during 1995.
This compares to a net increase of $25.1 million during 1994, and a net decrease
of $3.4 million in 1993. The current year decrease was due to cash used in
investing activities ($45.0
<PAGE>
million), offset in part by cash provided by operations ($32.0 million) and
financing activities ($6.6 million).
Operations provided $32.0 million of cash and cash equivalents in 1995. This
compares to net contributions of cash of $41.3 million in 1994 and $21.7 million
in 1993. The $9.3 million decrease in cash provided by operations from 1994 to
1995 occurred primarily as a result of a significant reduction in accounts
payable during the year ($24.1 million), offset in part by higher net income
($13.5 million) and depreciation and amortization expense ($3.0 million). The
balance of the net decrease in cash provided by operations was due to the timing
of cash receipts and payments on receivables and accrued liabilities,
respectively.
The Company's investing activities used $45.0 million of cash and cash
equivalents in 1995. This compares to net uses of cash of $51.1 million in 1994
and $24.5 million in 1993. The decrease from 1994 to 1995 in the amount of cash
used for investing purposes was due primarily to a reduction in the amount of
cash used for acquisitions of businesses ($28.8 million), offset in part by
reduced cash flows from sales of marketable securities and long-term investments
($15.6 million, net of additions), and an increase in the amount of cash used
for purchases of property and equipment ($10.3 million, net of disposals).
Included in property and equipment additions in 1995 was the Company's purchase
of an office building located in Dublin, Ireland. The total purchase price was
approximately $18.4 million. In 1994, the Company purchased an office building
in Baton Rouge, Louisiana. The cash purchase price of that building was $10.5
million. The Company was previously the largest lessee in both the Dublin and
Baton Rouge office buildings.
The Company's financing activities provided $6.6 million of cash and cash
equivalents in 1995. This compares to a net contribution to cash of $34.4
million in 1994 and a net use of cash of $0.2 million in 1993. The variance
from 1994 to 1995 was due primarily to bank borrowings (net of repayments) in
1994 which were substantially higher than the 1995 amount. In calendar 1994,
the Company entered into a three-year, $45.0 million revolving credit agreement,
against which it borrowed $25.0 million to complete the acquisition of Sirrine
and CRSS Constructors. During 1995, all amounts owed under the revolver were
repaid in full. However, the Company financed its purchase of the Dublin office
building with a five-year, $17.8 million mortgage note.
The Company believes it has adequate capital resources available to fund
operations in 1995 and beyond. The Company's consolidated working capital
position totalled $113.3 million at September 30, 1995; this was $7.3 million
more than the comparable 1994 amount. In order to hedge against future
fluctuations in rates of exchange of foreign currencies, the Company has
established lines of credit with banks in the United Kingdom providing short-
term, sterling-denominated borrowing capacity. The Company utilizes such
facilities to satisfy the working capital requirements of its U.K. operations.
Additionally, as discussed above, the Company financed its acquisition of its
Dublin offices with debt denominated in Irish Punts. At September 30, 1995, the
Company had a total of $96.8 million available under all of its bank credit
facilities, against which $16.6 million was outstanding in the form of notes
payable (relating entirely to borrowings by the Company's U.K. subsidiary) and
$2.1 million was utilized in support of outstanding letters of credit.
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and 1994
(Dollars in thousands, except per-share information)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 39,118 $ 45,611
Marketable securities 2,806 2,897
Receivables 292,108 288,096
Deferred income taxes 31,980 27,546
Prepaid expenses and other 2,602 3,335
-------- --------
Total current assets 368,614 367,485
-------- --------
Property, Equipment and Improvements, Net 80,115 60,002
-------- --------
Other Noncurrent Assets:
Goodwill, net 41,882 38,641
Other 43,336 38,236
-------- --------
Total other noncurrent assets 85,218 76,877
-------- --------
$533,947 $504,364
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 16,632 $ 9,238
Accounts payable 63,767 93,117
Accrued liabilities 109,168 102,205
Customers' advances in excess of
related revenues 54,496 47,369
Income taxes payable 11,212 8,470
Deferred income taxes - 1,028
-------- --------
Total current liabilities 255,275 261,427
-------- --------
Long-term Debt 17,799 25,000
-------- --------
Deferred Gains on Real Estate Transactions 1,845 2,665
-------- --------
Other Deferred Liabilities 20,267 14,839
-------- --------
Commitments and Contingencies
-------- --------
Stockholders' Equity:
Capital stock:
Preferred stock, $1 par value,
authorized - 1,000,000 shares,
issued and outstanding - none - -
Common stock, $1 par value,
authorized - 60,000,000 shares,
issued and outstanding - 25,495,711
and 25,094,874 shares, respectively 25,496 25,095
Additional paid-in capital 43,957 37,251
Retained earnings 168,203 136,206
Other 1,105 1,881
-------- --------
Total stockholders' equity 238,761 200,433
-------- --------
$533,947 $504,364
======== ========
</TABLE>
See the accompanying notes.
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended September 30, 1995, 1994, and 1993
(Dollars in thousands, except per-share information)
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenues $1,723,057 $1,165,754 $1,142,926
---------- ---------- ----------
Costs and Expenses:
Direct costs of contracts 1,533,832 1,024,361 995,350
Selling, general and administrative
expenses 136,562 109,574 101,519
Interest income, net (359) (276) (1,304)
Other (income) expense, net (359) 718 (1,977)
---------- ---------- ----------
1,669,676 1,134,377 1,093,588
---------- ---------- ----------
Income before taxes 53,381 31,377 49,338
---------- ---------- ----------
Provision for Income Taxes 21,139 12,610 20,668
---------- ---------- ----------
Net Income $ 32,242 $ 18,767 $ 28,670
========== ========== ==========
Net Income Per Share $1.27 $0.75 $1.15
========== ========== ==========
</TABLE>
See the accompanying notes.
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended September 30, 1995, 1994, and 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings Other
-------- ----------- --------- --------
<S> <C> <C> <C> <C>
Balances, September 30, 1992 $23,611 $23,959 $ 89,368 $ 2,874
Adjustments for poolings-of-
interests 821 - 1,506 -
Net foreign currency
translation adjustment - - - (2,826)
Exercise of stock options,
including the related
income tax benefits 372 6,681 - -
Repurchase of common
stock (47) (204) (989) -
Net income - - 28,670 -
------- ------- -------- -------
Balances, September 30, 1993 24,757 30,436 118,555 48
Net foreign currency
translation adjustment - - - 1,302
Unrealized gains on
marketable securities - - - 531
Exercise of stock options,
including the related
income tax benefits 397 7,080 - -
Repurchase of common
stock (59) (265) (1,116) -
Net income - - 18,767 -
------- ------- -------- -------
Balances, September 30, 1994 25,095 37,251 136,206 1,881
Net foreign currency
translation adjustment - - - 293
Unrealized gains on
marketable securities - - - 213
Exercise of stock options,
including the related
income tax benefits 392 6,317 - -
Issuance of restricted stock,
net of amortization 61 1,289 - (1,282)
Repurchase of common
stock (52) (900) (245) -
Net income - - 32,242 -
------- ------- -------- -------
Balances, September 30, 1995 $25,496 $43,957 $168,203 $ 1,105
======= ======= ======== =======
</TABLE>
See the accompanying notes.
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 1995, 1994, and 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 32,242 $ 18,767 $ 28,670
Adjustments to reconcile net income to net
cash flows from operations:
Depreciation and amortization 15,013 11,973 8,812
Amortization of deferred gains (820) (966) (966)
(Gains) losses on disposals of property,
equipment and other assets 22 (1,058) (2,148)
Changes in assets and liabilities,
excluding the effects of
businesses acquired:
Receivables (7,402) (17,506) 7,941
Prepaid expenses and other 737 510 418
Accounts payable (24,146) 941 (18,827)
Accrued liabilities 11,791 505 (4,572)
Customers' advances 7,082 14,862 3,291
Income taxes payable 2,725 (2,427) 2,689
Deferred income taxes (5,313) (5,474) (3,638)
Special charge not requiring cash - 21,140 -
Other 68 - -
-------- -------- --------
Net cash provided 31,999 41,267 21,670
-------- -------- --------
Cash Flows from Investing Activities:
Additions to property and equipment (34,971) (24,271) (9,930)
Disposals of property and equipment 784 417 1,187
Increase in other assets, net (3,228) (6,400) (3,665)
Additions to investments (3,001) (5,150) -
Proceeds from sales of investments - 642 2,721
Purchases of marketable securities - (873) (7,453)
Proceeds from sales of marketable
securities 91 18,040 -
Acquisitions of businesses (4,683) (33,513) (7,405)
-------- -------- --------
Net cash used (45,008) (51,108) (24,545)
-------- -------- --------
Cash Flows from Financing Activities:
Exercise of stock options, including the
related income tax benefits 6,521 6,824 6,544
Net borrowings (repayments) of
bank debt 41 27,608 (6,762)
-------- -------- --------
Net cash provided (used) 6,562 34,432 (218)
-------- -------- --------
Effect of Exchange Rate Changes (46) 505 (303)
-------- -------- --------
Increase (Decrease) in Cash and Cash
Equivalents (6,493) 25,096 (3,396)
Cash and Cash Equivalents at Beginning
of Period 45,611 20,515 22,754
Adjustment for Poolings-of-Interests - - 1,157
-------- -------- --------
Cash and Cash Equivalents at End of Period $ 39,118 $ 45,611 $ 20,515
======== ======== ========
</TABLE>
See the accompanying notes.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
1. Accounting Policies
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Jacobs
Engineering Group Inc. and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated.
Revenue Accounting for Contracts
--------------------------------
The Company's principal business is that of providing professional
engineering, construction and construction management, and maintenance
services under cost-plus, cost-plus with a guaranteed maximum, and fixed-price
contracts. The percentage of revenues realized from each of these types of
contracts in each of the years ended September 30, 1995, 1994, and 1993 was as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Cost-plus 88% 83% 90%
Guaranteed maximum 1 8 3
Fixed-price 11 9 7
---- ---- ----
</TABLE>
Revenues are recorded based on the percentage-of-completion method of
accounting by relating contract costs incurred to date to total estimated
contract costs at completion (contract costs include both direct and indirect
costs). Contract losses are provided for in their entirety in the period they
become known, without regard to the percentage-of-completion. When the
Company is responsible for the procurement of materials, equipment, or
subcontracts, it includes such amounts in both revenues and costs. The
approximate amount of such costs included in revenues for each of the years
ended September 30, 1995, 1994, and 1993 was $1,001,277, $629,001 and
$610,731, respectively.
As is common in the industry, the Company executes certain contracts
jointly with third parties through partnerships and joint ventures. For
certain of these contracts, the Company recognizes its proportionate share of
venture revenues, costs and operating income in its consolidated statements of
income.
Foreign Operations
------------------
The Company conducts its business from offices located
throughout the continental United States, the United Kingdom and Ireland.
Revenues from the Company's U.K. and Irish operations totalled $92,514,
$64,790 and $120,410 for the years ended September 30, 1995, 1994, and 1993,
respectively, and were earned from unaffiliated customers located primarily in
Europe.
Operating profit (defined as total revenues, less direct costs of
contracts, and selling, general and administrative expenses) for the U.K. and
Irish operations was approximately $1,053, $618 and $2,164 for 1995, 1994, and
1993, respectively. Identifiable assets of the U.K. and Irish operations
totalled $74,265 and $44,903 at September 30, 1995 and 1994, respectively.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
Customers
---------
For the years ended September 30, 1995, 1994, and 1993, agencies of the
federal government accounted for 11.4 percent, 15.4 percent, and 14.1 percent,
respectively, of total revenues. Within the private sector, one customer
accounted for 13.1 percent and 11.6 percent of total revenues in 1995 and
1994, respectively. No single customer accounted for more than 10 percent of
revenues in 1993.
Cash Equivalents
----------------
The Company considers all highly liquid investments with original
maturities of less than three months as cash equivalents. Cash equivalents at
September 30, 1995 and 1994 consisted primarily of time certificates of
deposit.
Marketable Securities and Investments
-------------------------------------
The Company's investments in equity and debt securities have been
classified as either trading securities (shown as "Marketable securities" in
the accompanying consolidated balance sheet), held-to-maturity securities or
available-for-sale securities (the latter two are included as long-term
investments in "Other noncurrent assets" in the accompanying consolidated
balance sheet). Management determines the appropriate classification of all
its investments at the time of purchase and reviews such designations at each
balance sheet date.
The Company's investment in trading securities are stated at fair value
with unrealized gains or losses included in "Other income, net" in the
accompanying consolidated statement of income. Held-to-maturity securities
are carried at cost, or amortized cost if a premium was paid or a discount
received at the time of purchase. Marketable equity securities not held for
trading and debt securities not classified as held-for-maturity are classified
as available-for-sale. Available-for-sale securities are stated at fair
value, with the unrealized gains or losses, net of taxes, reported in the
"Other" component of stockholders' equity. The amount of unrealized gains,
net of taxes, recorded at September 30, 1995 and 1994 totalled $744 and $531,
respectively.
The following table summarizes certain information regarding the
Company's available-for-sale equity securities at September 30, 1995 and 1994,
and for each of the years then ended:
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Total cost (specific identification
method) $ 414 $ 380
Gross unrealized gains 1,241 890
Estimated fair value 1,655 1,270
Gross realized gains - 484
Gross proceeds from sales - 621
------ ------
</TABLE>
Included in investments at September 30, 1994 were $5,000 of 8.5 percent
convertible notes issued by a private company. These notes were converted
into 8.5 percent preferred stock during 1995.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
Receivables and Customers' Advances
-----------------------------------
Included in receivables at September 30, 1995 and 1994 were unbilled
amounts of $52,791 and $70,252, respectively. Unbilled receivables represent
amounts earned under contracts in progress, but not yet billable under the
terms of those contracts. These amounts become billable according to the
contract terms which usually consider the passage of time, achievement of
certain milestones or completion of the project. Included in unbilled
receivables at September 30, 1995 and 1994 were contract retentions totalling
$14,710 and $22,065, respectively. Substantially all unbilled receivables are
billed and collected in the subsequent fiscal year.
Customers' advances in excess of related revenues represent cash
collected from customers on contracts in advance of revenues earned thereon,
as well as billings to customers in excess of costs and earnings on
uncompleted contracts. Substantially all such amounts are earned in the
subsequent fiscal year.
Property, Equipment and Improvements
------------------------------------
Property, equipment and improvements are stated at cost and consisted
of the following at September 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Land $ 10,529 $ 6,964
Buildings 38,976 24,549
Equipment 87,186 74,687
Leasehold improvements 12,319 11,949
-------- --------
149,010 118,149
Less - accumulated depreciation
and amortization 68,895 58,147
-------- --------
$ 80,115 $ 60,002
-------- --------
</TABLE>
Depreciation and amortization are provided using primarily the straight-
line method over the estimated useful lives of the assets, or, in the case of
leasehold improvements, over the remaining term of the lease, if shorter.
Estimated useful lives range from 20 to 40 years for buildings, from 3 to 10
years for equipment and from 4 to 10 years for leasehold improvements.
Other Noncurrent Assets
-----------------------
Goodwill represents the costs in excess of the fair values of the net
assets of acquired companies and is amortized against earnings using the
straight-line method over periods not exceeding 40 years. Goodwill is shown
in the accompanying consolidated balance sheets net of accumulated
amortization of $4,154 and $2,850 at September 30, 1995 and 1994,
respectively.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
Other noncurrent assets consisted of the following at September 30, 1995
and 1994:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Prepaid pension costs $11,503 $11,379
Cash surrender value of life
insurance policies 16,498 11,677
Investments 11,517 8,202
Deferred income taxes - 1,105
Miscellaneous 3,818 5,873
------- -------
$43,336 $38,236
======= =======
</TABLE>
Income Taxes
------------
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes ("SFAS
No. 109"), which it adopted prospectively effective October 1, 1993. The
cumulative effect as of that date of adopting SFAS No. 109 was not material.
SFAS 109 requires an asset and liability approach to accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities, and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Prior to
the adoption of SFAS No. 109, the Company recorded income tax expense using
the deferral method. Under this method, deferred tax expense was based on
items of income and expense that were reported in different years in the
Company's financial statements and tax returns, and were measured at the tax
rate in effect in the year the difference originated.
Deferred Gains on Real Estate Transactions
------------------------------------------
In 1983, the Company entered into a real estate transaction which
resulted in a gain totalling $12,300. Since the transaction involved a long-
term lease agreement, the gain was deferred and is being amortized ratably
into income over the lease term (which ends December 31, 1997).
Concentrations of Credit Risk
-----------------------------
The Company's cash balances and short-term investments are maintained in
accounts held by major banks and financial institutions in the U.S. and
Europe.
As is customary in the industry, the Company grants uncollateralized
credit to its customers, which include the federal government and large,
multi-national corporations operating in a broad range of industries. In
order to mitigate its credit risk, the Company continually evaluates the
credit worthiness of its major commercial customers.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
Net Income Per Share
--------------------
For the years ended September 30, 1995, 1994, and 1993, net income per
share has been computed based on the weighted average number of shares of
common stock and, if dilutive, common stock equivalents outstanding as follows
(in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Average number of
shares of common
stock outstanding 25,208 24,916 24,524
Average number of
common stock
equivalents outstanding 176 257 440
------ ------ ------
25,384 25,173 24,964
====== ====== ======
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
2. Business Combinations
Effective July 31, 1994, the Company acquired the engineering and
construction management services businesses of CRSS Inc. In the transaction,
the Company purchased substantially all of the assets of CRS Sirrine
Engineers, Inc. ("Sirrine"), subject to certain assumed liabilities, and all
of the issued and outstanding equity securities of CRSS Constructors, Inc. and
CRSS International, Inc. (together, "CRSS Constructors"). The cash purchase
price was $38,196 (of which, $4,683 was paid in fiscal 1995). The funds used
to acquire the businesses were provided by operations and long-term debt.
The acquisition was accounted for as a purchase. Accordingly, the
purchase price was allocated to the assets and liabilities acquired based on
their estimated fair values, and resulted in goodwill of approximately
$27,772. The Company's consolidated results of operations include the results
of operations of Sirrine and CRSS Constructors since the date of acquisition.
The following table presents certain unaudited pro forma combined
information of the Company, Sirrine and CRSS Constructors assuming the
acquisition of Sirrine and CRSS Constructors occurred at the beginning of the
fiscal periods presented. It does not purport to be indicative of the results
that actually would have occurred had the acquisition been completed at the
beginning of such periods, nor is it intended to be a projection of future
results of operations:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Revenues $1,505,713 $1,416,376
Net income $ 18,664 $ 27,866
Earnings per share $ 0.74 $ 1.12
---------- ----------
</TABLE>
In 1993, the Company acquired several businesses in three separate
transactions. Two of the acquisitions were accounted for as poolings-of-
interests. Due to the immateriality of the pooled businesses, however, the
Company's consolidated results of operations for periods prior to 1993 were
not restated, and the acquisitions were reflected in the accompanying
consolidated financial statements as an adjustment to 1993 beginning balances.
The third acquisition completed that year was accounted for as a purchase.
Accordingly, the Company's consolidated results of operations include the
results of operations of that business from the date of acquisition.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
3. Notes Payable to Banks and Long-term Debt
Short-term Credit Arrangements
------------------------------
At September 30, 1995, the Company had $51,797 available through multiple
bank lines of credit, under which the Company may borrow on an overdraft or
short-term basis. Interest under these lines is determined at the time of
borrowing based on the banks' prime or base rates, rates paid on certificates
of deposit, the banks' actual costs of funds or other variable rates. The
agreements require payment of a fee of 0.25 percent of the average unused
portion of the facilities, as well as require the Company to maintain certain
minimum levels of working capital and net worth. One of the agreements limits
borrowings by the amount of letters of credit outstanding under the facility.
Borrowings under the lines are unsecured and the lines generally extend
through March 1996.
Other information regarding the lines of credit for the years ended
September 30, 1995, 1994, and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Amount outstanding at
year end $16,587 $ 9,152 $ 6,207
Weighted average interest
rate at year end 7.63% 6.18% 6.89%
Weighted average borrowings
outstanding during the
year 12,328 $ 9,685 $ 6,369
Weighted average interest
rate during the year 7.11% 5.45% 6.32%
Maximum amount outstanding
during the year $28,203 $24,763 $12,300
------- ------- -------
</TABLE>
Long-term Debt and Credit Arrangements
--------------------------------------
Long-term debt consisted of the following at September 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Mortgage loan, due May 2000 $17,799 $ -
Borrowings under the Company's
unsecured, $45,000 revolving
credit agreement - 25,000
------- -------
$17,799 $25,000
======= =======
</TABLE>
The mortgage loan was incurred in connection with the purchase of the
Company's real property located in Dublin, Ireland, and is secured by the
property. The loan bears interest at variable rates for selected periods from
one to twelve months based on the Dublin Interbank Offered Rate (6.93 percent
at September 30, 1995). Interest is payable at the end of each selected
period.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
Borrowings under the revolving credit agreement bear interest at either
fixed rates offered by the banks at the time of borrowing, or at variable
rates based on the agent bank's base rate, LIBOR or the latest federal funds
rate. The agreement requires the Company to maintain a minimum tangible net
worth of at least $160,000, plus 50 percent of consolidated net income after
October 1, 1994, a minimum coverage ratio of certain defined fixed charges and
a minimum ratio of debt to tangible net worth. The agreement also restricts
the payment of cash dividends and requires the Company to pay a facility fee
of 0.15 percent of the total amount of the commitment. The agreement extends
through December 1997.
Interest expense for the years ended September 30, 1995, 1994, and 1993
was $2,216, $792 and $845, respectively, and has been included with interest
income in the accompanying consolidated statements of income. Interest
payments made during each of these years totalled $2,045, $595 and $1,058,
respectively.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
4. Stock Plans
The Company's 1989 Employee Stock Purchase Plan (the "1989 ESPP")
provides for the granting of options to participating employees to purchase a
maximum of 1,406,777 shares of the Company's common stock. The participants'
purchase price is the lower of 90 percent of the common stock's closing market
price on either the first or last day of the option period (as defined).
During 1995, a total of 314,298 shares of common stock were sold to
participating employees at an average price of $17.83 per share. Through
September 30, 1995, a total of 1,295,739 shares have been sold to employees
under the 1989 ESPP, and there were 111,038 shares reserved for issuance at
that date.
The Company has an incentive stock plan (the "1981 Plan") which provides
for the issuance of shares of common stock to employees and outside directors.
Under the 1981 Plan, the Company may grant four types of incentive awards:
incentive stock options, nonqualified stock options, stock appreciation
rights, and restricted stock. At September 30, 1995, there were 2,415,359
shares of common stock reserved for issuance under the 1981 Plan, and there
were 839,300 shares available for future awards at that date (1,140,800 shares
were available at September 30, 1994).
During 1995, the Company issued 61,000 shares of restricted stock under
the 1981 Plan. Upon issuance of restricted stock, unearned compensation
equivalent to the market value of the stock issued (determined on the date of
grant) is charged to stockholders' equity and subsequently amortized against
income over the periods during which the restrictions lapse ($67 of
compensation expense was recognized in 1995). The restrictions generally
relate to the recipient's ability to sell or otherwise transfer the stock.
There are also restrictions that subject the stock to forfeiture back to the
Company until earned by the recipient through continued employment. The
restrictions lapse over five years.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
Stock option activity and other related information for the 1981 Plan for
the years ended September 30, 1995, 1994, and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Options outstanding at
beginning of year 1,412,959 1,237,000 1,088,600
Options granted 324,000 438,000 350,300
Options exercised (77,400) (174,941) (169,800)
Options expired or canceled (83,500) (87,100) (32,100)
---------- ---------- ----------
Options outstanding at
end of year 1,576,059 1,412,959 1,237,000
========== ========== ==========
Average price of options
exercised $ 10.27 $ 9.30 $ 7.94
Range of prices of options
outstanding $ 4.25 - $ 4.25 - $ 4.25 -
$ 28.20 $ 28.20 $ 28.25
Average price of options
outstanding $ 19.80 $ 19.63 $ 17.82
Options exercisable 637,229 413,919 269,800
---------- ---------- ----------
</TABLE>
Options outstanding at September 30, 1995 consisted entirely of
nonqualified stock options. The 1981 Plan allows participants to satisfy the
exercise price on exercises of stock options by tendering to the Company
shares of the Company's common stock already owned by the participants.
Shares so tendered are retired and canceled by the Company and are shown as
repurchases of common stock in the accompanying consolidated statements of
stockholders' equity.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
5. Savings, Deferred Compensation and Pension Plans
Savings Plans
-------------
The Company maintains employee savings plans (qualified 401(k)
retirement plans) covering substantially all of the Company's domestic,
nonunion employees. Contributions to these plans totalled $7,719, $6,000 and
$5,602 for the years ended September 30, 1995, 1994, and 1993, respectively.
Deferred Compensation Plans
---------------------------
The Company's Executive Security Plan ("ESP") and Executive Deferral
Plans ("EDP") are nonqualified deferred compensation programs that provide
benefits payable to directors, officers and certain key employees or their
designated beneficiaries at specified future dates, upon retirement or death.
Benefit payments under both plans are funded by a combination of contributions
from participants and the Company, and most of the participants are covered by
life insurance policies with the Company designated as the beneficiary.
Amounts charged to expense relating to these programs for the years ended
September 30, 1995, 1994, and 1993 were $1,601, $5,568 and $1,971,
respectively. Included in other deferred liabilities in the accompanying
consolidated balance sheets at September 30, 1995 and 1994 was $17,597 and
$12,460, respectively, relating to the ESP and EDP plans.
Pension Plans
-------------
In the United States, the Company contributes to various trusteed
pension plans covering hourly construction employees under industry-wide
agreements. Contributions are based on the hours worked by employees covered
under these agreements and are charged to direct costs of contracts on a
current basis. Information from the plans' administrators is not available to
permit the Company to determine its share of unfunded benefits, if any.
Contributions to these plans totalled $5,044, $2,632 and $2,181 for the years
ended September 30, 1995, 1994, and 1993, respectively.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
The Company's U.K. subsidiary sponsors a contributory defined benefit
pension plan covering substantially all permanent, full-time employees at
least 21 years of age. Benefits are based on length of service and the
employee's highest average salary for any three consecutive years in the plan,
or, if higher, the employee's salary in the final year in the plan. The
Company's funding policy is to fund the actuarially-determined accrued
benefits, allowing for projected compensation increases using the projected
unit method. The following table presents the funded status of the plan as of
September 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Fair value of plan assets $77,330 $75,579
------- -------
Actuarial present value of
benefit obligations (all
vested) 68,121 61,210
------- -------
Accumulated benefit obligation 68,121 61,210
Effect of projected
compensation increases 2,081 1,786
------- -------
Projected benefit obligation 70,202 62,996
------- -------
Plan assets in excess of
projected benefit obligation 7,128 12,583
Unrecognized (gains) losses 4,375 (1,204)
------- -------
Prepaid pension asset $11,503 $11,379
======= =======
</TABLE>
The components of net periodic pension cost (benefit) for each of the
years ended September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Service costs $ 1,283 $ 1,206
Interest 5,399 4,878
Actual return on plan assets (8,092) (3,816)
Net amortization and deferral 1,530 (2,347)
------- -------
Net periodic pension cost (benefit) $ 120 $ (79)
======= =======
</TABLE>
The significant actuarial assumptions used in determining the funded
status of the plan were as follows: weighted average discount rate - 8
percent; weighted average rate of increase in compensation - 6 percent; and,
weighted average rate of return on pension assets - 8.5 percent. At September
30, 1995, the majority of the plan's assets were invested in equity securities
of companies trading in the U.K. and other European stock markets.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
6. Provision for Income Taxes
As discussed in Note 1 above, the Company adopted SFAS No. 109 effective
October 1, 1993. Prior year financial statements were not restated to reflect
this change in accounting principle.
For the years ended September 30, 1995, 1994, and 1993, the provisions
for income taxes consisted of the following:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Taxes currently payable:
Federal $19,071 $13,196 $17,553
State 4,026 2,912 4,162
Foreign 1,359 246 687
------- ------- -------
24,456 16,354 22,402
------- ------- -------
Taxes deferred:
Federal (2,870) (3,057) (1,544)
State (447) (687) (190)
------- ------- -------
(3,317) (3,744) (1,734)
------- ------- -------
$21,139 $12,610 $20,668
======= ======= =======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and their related amounts used for income tax
purposes. The significant components of the Company's deferred tax assets
(liabilities) at September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Assets:
Liabilities relating to employee
benefit plans $17,711 $14,121
Self-insurance reserves 9,396 9,451
Contract revenues and costs 4,044 800
Accruals for office
consolidations and other
special charges 2,102 2,997
Deferred gains on real
estate transactions 657 1,105
Other, net - 177
------- -------
Total deferred tax assets 33,910 28,651
------- -------
Liabilities:
Depreciation and amortization (2,225) (922)
Unremitted foreign earnings (1,102) (1,102)
State income and franchise taxes (1,039) (1,028)
Other, net (233) -
------- -------
Total deferred tax liabilities (4,599) (3,052)
------- -------
Net deferred tax asset $29,311 $25,599
======= =======
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
The reconciliations of the tax provisions recorded for the years ended
September 30, 1995, 1994, and 1993 to those based on the federal statutory
rate were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Statutory amount $18,683 $10,982 $17,144
State taxes, net of
the federal benefit 2,326 1,447 2,592
Other, net 130 181 932
------- ------- -------
$21,139 $12,610 $20,668
------- ------- -------
Rate used to compute
statutory amount 35.00% 35.00% 34.75%
======= ======= =======
</TABLE>
For the year ended September 30, 1993, deferred income taxes were
provided for the following timing differences in the amounts indicated:
Accrued liabilities - $1,363 benefit; deferred gains on real estate
transactions - $315 expense; contract revenues and costs - $76 expense; and,
other items - $762 net benefit.
For the years ended September 30, 1995, 1994, and 1993, the Company paid
approximately $22,153, $20,351 and $18,882, respectively, in income taxes.
For the years ended September 30, 1995, 1994, and 1993, consolidated
income (loss) before income taxes included $380, ($3,017) and $2,729,
respectively, from foreign operations. Included in consolidated retained
earnings at September 30, 1995 were undistributed earnings of foreign
subsidiaries of approximately $9,094 for which no provision has been made for
federal income taxes as management has determined these earnings to be
indefinitely reinvested to expand its foreign operations. Should these
earnings be repatriated, approximately $2,447 of taxes would be payable.
Beginning October 1, 1986, the Company began providing for federal income
taxes, net of available credits, on foreign earnings.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
7. Commitments and Contingencies
The Company leases certain of its facilities and equipment under
operating leases with net aggregate future lease payments of $97,438 at
September 30, 1995 payable as follows:
<TABLE>
<CAPTION>
Year ending September 30,
<S> <C>
1996 $25,529
1997 22,364
1998 15,207
1999 12,034
2000 9,273
Thereafter 14,850
-------
99,257
Less - amounts representing
sublease income 1,819
-------
$97,438
=======
</TABLE>
Rent expense for the years ended September 30, 1995, 1994, and 1993 was
approximately $24,602, $22,235 and $19,338, respectively, and was offset by
sublease income of approximately $1,327, $1,085 and $1,547, respectively.
The Company maintains insurance coverage for various aspects of its
business and operations. The Company has elected, however, to retain a portion
of the expected losses through the use of various deductibles, limits and
retentions under its insurance programs. This situation may subject the
Company to some future liability for which it is only partially insured, or
completely uninsured. The Company intends to mitigate any such future
liability by continuing to exercise prudent business judgment in negotiating
the terms and conditions of its contracts.
The Company has entered into an employment agreement expiring September
30, 2000 with the Chairman of its Board of Directors. The agreement provides
for base payments of $432 per year to either the Chairman or, in the event of
his death, his beneficiary. The agreement also provides that the Chairman may
participate in any bonus plan sponsored by the Company, specifies certain
promotional and other activities to be performed by the Chairman in the event
he leaves employment with the Company and contains other provisions, including
some intended to prevent the Chairman from entering into any form of
competition with the Company.
In the normal course of business, the Company is subject to certain
contractual guarantees and litigation. Generally, such guarantees relate to
construction schedules and plant performance. Most of the litigation involves
the Company as a defendant in workers' compensation, personal injury, and
other similar lawsuits. Management believes, after consultation with counsel,
that these guarantees and litigation should not have any material adverse
effect on the Company's consolidated financial statements.
Letters of credit outstanding at September 30, 1995 totalled $31,664.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
8. Common and Preferred Stock
Pursuant to the Company's 1990 Stockholder Rights Plan, each outstanding
share of common stock has attached to it one stock purchase right (a "Right").
Each Right entitles the common stockholder to purchase, in certain
circumstances generally relating to a change in control of the Company, one
two-hundredth of a share of the Company's Series A Junior Participating
Cumulative Preferred Stock, par value $1.00 per share (the "Series A Preferred
Stock") at the exercise price of $90 per share, subject to adjustment.
Alternatively, the Right holder may purchase common stock of the Company
having a market value equal to two times the exercise price, or may purchase
shares of common stock of the acquiring corporation having a market value
equal to two times the exercise price.
The Series A Preferred Stock confers to its holders rights as to
dividends, voting and liquidation which are in preference to common
stockholders. The Rights are nonvoting, are not presently exercisable and
currently trade in tandem with the common shares. The Rights may be redeemed
at $0.01 per Right by the Company in accordance with the Rights plan. The
Rights will expire on December 20, 2000, unless earlier exchanged or redeemed.
9. Other Financial Information
Accrued liabilities at September 30, 1995 and 1994 consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Accrued payroll and
related liabilities $ 57,418 $43,931
Insurance reserves 24,254 25,107
Office consolidations
and other special
charge reserves 10,143 16,671
Other 17,353 16,496
-------- --------
$109,168 $102,205
======== ========
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per-share information)
10. Quarterly Data - Unaudited
Summarized quarterly financial information for the years ended
September 30, 1995, 1994, and 1993 is presented below:
<TABLE>
<CAPTION>
First Second Third Fourth Fiscal
1995 Quarter Quarter Quarter Quarter Year
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $412,356 $396,746 $444,626 $469,329 $1,723,057
Income
before
taxes 12,086 12,505 13,909 14,881 53,381
Net income 7,300 7,552 8,402 8,988 32,242
Net income
per share .29 .30 .33 .35 1.27
Stock price:
High 24.250 20.750 22.250 25.750 25.750
Low 16.875 17.250 19.125 21.625 16.875
-------- -------- -------- -------- ----------
1994
Revenues $260,610 $272,646 $263,768 $368,730 $1,165,754
Income
before
taxes 12,339 12,172 12,045 (5,179) 31,377
Net income
(loss) 7,280 7,300 7,275 (3,088) 18,767
Net income
(loss)
per share .29 .29 .29 (.12) .75
Stock price:
High 26.625 26.875 24.500 24.750 26.875
Low 22.000 23.250 18.000 19.875 18.000
-------- -------- -------- -------- ----------
1993
Revenues $298,612 $286,296 $273,890 $284,128 $1,142,926
Income
before
taxes 11,952 12,346 12,504 12,536 49,338
Net income 6,917 7,222 7,261 7,270 28,670
Net income
per share .28 .29 .29 .29 1.15
Stock price:
High 31.000 29.875 28.375 25.250 31.000
Low 24.375 25.750 20.000 20.000 20.000
-------- -------- -------- -------- ----------
</TABLE>
The Company's results of operations for fiscal 1994 include the results
of operations of CRS Sirrine Engineers, Inc., CRSS Constructors, Inc. and CRSS
International, Inc. beginning August 1, 1994 - see Note 2 above.
Net income for the fourth quarter of 1994 included special charges
totalling $10,200, or $0.40 per share.
Net income for the first three quarters of 1993 differs from amounts
originally reported during that year due to certain acquisitions accounted for
as poolings-of-interests - see Note 2 above.
The Company's common stock is listed on the New York Stock Exchange. At
September 30, 1995, there were 2,971 shareholders of record.
<PAGE>
Report of Ernst & Young LLP,
Independent Auditors
The Board of Directors and Stockholders
Jacobs Engineering Group Inc.
We have audited the accompanying consolidated balance sheets of Jacobs
Engineering Group Inc. and subsidiaries as of September 30, 1995 and 1994, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Jacobs Engineering
Group Inc. and subsidiaries at September 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1995, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Los Angeles, California
November 3, 1995
<PAGE>
MANAGEMENT'S RESPONSIBILITIES FOR FINANCIAL REPORTING
The consolidated financial statements and other information included in this
annual report have been prepared by management, which is responsible for their
fairness, integrity, and objectivity. The consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior years and contain some amounts that are
based upon management's best estimates and judgment. The financial information
contained elsewhere in this report has been prepared in a manner consistent with
the preparation of the financial statements.
In meeting its responsibility for the fair presentation of the Company's
financial statements, management necessarily relies on the Company's system of
internal accounting controls. This system is designed to provide reasonable,
but not absolute, assurance that assets are safeguarded and that transactions
are executed in accordance with management's instructions and are properly
recorded in the Company's books and records. The concept of reasonable
assurance is based on the recognition that in any system of internal controls,
there are certain inherent limitations and that the cost of such systems should
not exceed the benefits to be derived. We believe the Company's system of
internal accounting controls is cost-effective and provides reasonable assurance
that material errors and irregularities will be prevented, or detected and
corrected on a timely basis.
The Company's consolidated financial statements have been audited by independent
auditors, whose report thereon was based on examinations conducted in accordance
with generally accepted auditing standards and is presented on the preceding
page. As part of their audit, the independent auditors perform a review of the
Company's system of internal accounting controls for the purpose of determining
the amount of reliance to place on those controls relative to the audit tests
they perform.
The Company's Board of Directors, through its Audit Committee which is composed
entirely of nonemployee directors, meets regularly with both management and the
independent auditors to review the Company's financial results and to ensure
that both management and the independent auditors are properly performing their
respective functions.
<PAGE>
EXHIBIT 21
JACOBS ENGINEERING GROUP INC.
PARENTS AND SUBSIDIARIES
The following table sets forth all subsidiaries of the Company other than
inactive and insignificant subsidiaries that, considered in the aggregate, would
not constitute a significant subsidiary, including the percentage of issued and
outstanding voting securities beneficially owned by the Company.
Jacobs Engineering Company, a California corporation.................. 100%
Jacobs Engineering Group of Ohio, Inc., an Ohio corporation........... 100%
Jacobs Services Company, a California corporation..................... 100%
Jacobs Engineering, Inc., a Delaware corporation...................... 100%
Jacobs Computing Services Limited, A Republic of Ireland company.... 100%
Pegasus Engineering Holdings Limited, a Republic of Ireland company. 100%
Jacobs/Pegasus Engineering Limited, a Republic of Ireland company. 100%
Forgael Limited, a Republic of Ireland company.................... 100%
Jacobs International Limited, Inc., a Panama corporation.............. 100%
Jacobs International Limited, a Republic of Ireland company......... 100%
Jacobs Engineering Limited, an English company...................... 100%
JE Professional Resources Limited, an English company............. 100%
Jacobs/H&G Engineering Limited, an English company................ 100%
Jacobs/Humphreys & Glasgow Limited, an English company............ 100%
Jacobs Constructors, Inc., a Louisiana corporation.................... 100%
Jacobs Constructors of California Inc., a California corporation.... 100%
Jacobs Maintenance, Inc., a Louisiana corporation................... 100%
Jay Property Systems, Inc., a California corporation.................. 100%
JE Merit Constructors, Inc., a Texas corporation...................... 100%
JE Remediation Technologies, Inc., a Louisiana corporation.......... 100%
JE Professional Resources, Inc., a California corporation............. 100%
The Pace Consultants, Inc., a Texas corporation....................... 100%
Payne & Keller Company, Inc., a Louisiana corporation................. 100%
Jacobs Applied Technology, Inc., a Delaware corporation............... 100%
Applied Engineering Company - Ohio, Inc., a South
Carolina corporation.............................................. 100%
Triad Technologies, Inc., a Delaware corporation...................... 100%
Willow Street Properties, Inc., a California corporation.............. 100%
CRSS Constructors, Inc., a Delaware corporation....................... 100%
CRSS International, Inc., a South Carolina corporation................ 100%
CRSS of New York, Inc., a New York corporation........................ 100%
Jacobs Engineering Foreign Sales Corporation, a Barbados corporation.. 100%
All subsidiaries are included in the Consolidated Financial Statements.
Dr. Joseph J. Jacobs may be deemed to be a "parent" of Jacobs Engineering
Group Inc. under the federal securities laws. Refer to Item 12 of the
accompanying report on Form 10-K for information about Dr. Jacobs' share
ownership and position with the Company.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Jacobs Engineering Group Inc. of our report dated November 3, 1995 included
in the 1995 Annual Report to Shareholders of Jacobs Engineering Group Inc.
We also consent to the incorporation by reference in both the Registration
Statement (Form S-8 No. 33-45914) pertaining to the Jacobs Engineering Group
Inc. 1981 Executive Incentive Plan and in the Registration Statement (Form S-8
No. 33-45927) pertaining to the Jacobs Engineering Group Inc. 1989 Employee
Stock Purchase Plan of our report dated November 3, 1995 with respect to the
consolidated financial statements of Jacobs Engineering Group Inc. and
subsidiaries incorporated by reference in the Annual Report (Form 10-K) for the
year ended September 30, 1995.
ERNST & YOUNG LLP
Los Angeles, California
December 27, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 39,118
<SECURITIES> 2,806
<RECEIVABLES> 292,108
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 368,614
<PP&E> 149,010
<DEPRECIATION> 68,895
<TOTAL-ASSETS> 533,947
<CURRENT-LIABILITIES> 255,275
<BONDS> 0
<COMMON> 25,496
0
0
<OTHER-SE> 213,265
<TOTAL-LIABILITY-AND-EQUITY> 533,947
<SALES> 0
<TOTAL-REVENUES> 1,723,057
<CGS> 0
<TOTAL-COSTS> 1,533,832
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (359)
<INCOME-PRETAX> 53,381
<INCOME-TAX> 21,139
<INCOME-CONTINUING> 32,242
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,242
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
