<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report on
FORM 10-Q
(Mark one)
( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1995
-----------------
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to _______
Commission File Number 1-7463
JACOBS ENGINEERING GROUP INC.
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(Exact name of Registrant as specified in its charter)
Delaware 95-4081636
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(State of incorporation) (I.R.S. employer identification number)
251 South Lake Avenue, Pasadena, California 91101
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(Address of principal executive offices) (Zip code)
(818) 449 - 2171
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(Registrant's telephone number, including area code)
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
Number of shares of common stock outstanding at February 12, 1996: 25,537,555
Page 1
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JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
Page No.
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Part I - Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance
Sheets as of December 31, 1995
and September 30, 1995 3
Consolidated Condensed Statements
of Income for the Three Months
Ended December 31, 1995 and 1994 4
Consolidated Condensed Statements of
Cash Flows for the Three Months
Ended December 31, 1995 and 1994 5
Notes to Consolidated Condensed
Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 9
Part II - Other Information 10
Signatures 10
Page 2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1995
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 59,485 $ 39,118
Marketable securities 2,806 2,806
Receivables 282,372 292,108
Deferred income taxes 32,767 31,980
Prepaid expenses and other 3,704 2,602
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Total current assets 381,134 368,614
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Property, Equipment and
Improvements, Net 81,026 80,115
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Other Noncurrent Assets:
Goodwill, net 41,339 41,882
Other 45,435 43,336
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Total other noncurrent assets 86,774 85,218
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$548,934 $533,947
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 15,414 $ 16,632
Accounts payable 66,478 63,767
Accrued liabilities 109,191 109,168
Customers' advances in excess
of related revenues 54,315 54,496
Income taxes payable 15,627 11,212
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Total current liabilities 261,025 255,275
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Long-term Debt 17,545 17,799
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Deferred Gains on Real Estate Transactions 1,640 1,845
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Other Deferred Liabilities 20,458 20,267
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Commitments and Contingencies
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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 -
25,510,721 and 25,495,711 shares,
respectively 25,511 25,496
Additional paid-in capital 44,187 43,957
Retained earnings 177,698 168,203
Other 870 1,105
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Total stockholders' equity 248,266 238,761
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$548,934 $533,947
================================================================================
</TABLE>
See the accompanying notes.
Page 3
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(In thousands, except per-share information)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Revenues $471,122 $412,356
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Costs and Expenses:
Direct costs of contracts 421,823 368,588
Selling, general and administrative expenses 33,974 31,740
Interest expense (income), net (290) 45
Other income, net (197) (103)
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455,310 400,270
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Income before taxes 15,812 12,086
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Provision for Income Taxes 6,262 4,786
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Net Income $ 9,550 $ 7,300
=========================================================================
Net Income Per Share $.37 $.29
=========================================================================
</TABLE>
See the accompanying notes.
Page 4
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 9,550 $ 7,300
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 4,086 3,816
Amortization of deferred gains (205) (205)
Changes in assets and liabilities, net:
Receivables 9,372 11,996
Prepaid expenses and other (1,115) 455
Accounts payable 2,820 (27,811)
Accrued liabilities 229 (5,942)
Customers' advances (111) (2,959)
Income taxes payable 4,437 4,255
Deferred income taxes (787) 322
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Net cash provided (used) 28,276 (8,773)
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Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (5,054) (2,255)
Net increase in other noncurrent assets (2,431) (3,069)
Net increase in investments - (634)
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Net cash used (7,485) (5,958)
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Cash Flows from Financing Activities:
Exercise of stock options 265 162
Bank borrowings (repayments), net (829) (8,735)
Other, net 192 (160)
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Net cash used (372) (8,733)
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Effect of Exchange Rate Changes (52) (22)
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Increase (Decrease) in Cash and Cash
Equivalents 20,367 (23,486)
Cash and Cash Equivalents at the Beginning
of the Period 39,118 45,612
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Cash and Cash Equivalents at the End
of the Period $59,485 $ 22,126
====================================================================
</TABLE>
See the accompanying notes.
Page 5
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. The accompanying consolidated condensed financial statements and financial
information included herein have been prepared by the Company, without
audit, pursuant to the interim period reporting requirements of Form 10-Q.
Consequently, certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Readers of this
report should refer to the consolidated financial statements and the notes
thereto incorporated into the Company's latest Annual Report on Form 10-K.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary for the fair presentation of its
consolidated financial position at December 31, 1995 and September 30,
1995, and its consolidated results of operations and cash flows for the
three months ended December 31, 1995 and 1994.
The Company's interim results of operations are not necessarily indicative
of the results to be expected for the full year.
2. Included in receivables at December 31, 1995 and September 30, 1995 were
unbilled amounts totaling $55,763,500 and $52,790,600, respectively.
3. Property, equipment and improvements are stated at cost and consisted of
the following at December 31, 1995 and September 30, 1995 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1995 1995
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<S> <C> <C>
Land $ 10,475 $ 10,529
Buildings 38,781 38,976
Equipment 91,883 87,186
Leasehold improvements 12,592 12,319
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153,731 149,010
Less - accumulated depreciation
and amortization 72,705 68,895
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$ 81,026 $ 80,115
==========================================================================
</TABLE>
Page 6
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1995
4. Other assets consisted of the following at December 31, 1995 and September
30, 1995 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1995 1995
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<S> <C> <C>
Prepaid pension costs $11,111 $11,503
Cash surrender value of life
insurance policies 19,304 16,498
Investments 11,463 11,517
Miscellaneous 3,557 3,818
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$45,435 $43,336
=====================================================================
</TABLE>
5. During the three months ended December 31, 1995 and 1994, the Company made
cash payments of approximately $584,000 and $544,000, respectively, for
interest and approximately $2,456,000 and $300,000, respectively, for
income taxes.
6. For the three months ended December 31, 1995 and 1994, net income per share
has been computed based upon the weighted average number of shares of
common stock and, if dilutive, common stock equivalents outstanding as
follows:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Average number of shares
of common stock
outstanding 25,501,800 25,078,600
Average number of shares
of common stock
equivalents outstanding 300,000 145,000
---------- ----------
25,801,800 25,223,600
========== ==========
</TABLE>
Page 7
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
DECEMBER 31, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with management's
discussion and analysis of financial condition and results of operations
incorporated by reference into the Company's latest Annual Report on Form 10-K.
Results of Operations
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Revenues for the three months ended December 31, 1995 (the "first quarter of
fiscal 1996") were $471.1 million; this was $58.8 million more than the amount
for the three months ended December 31, 1994 (the "first quarter of fiscal
1995"). Revenues from engineering services for the first quarter of fiscal 1996
increased 8.1% as compared to the first quarter of fiscal 1995. The Company
billed approximately 3.2 million professional services hours to projects during
the first quarter of fiscal 1996; this was 0.4 million more hours than were
billed during the corresponding period last year. Revenues from construction
and maintenance services for the first quarter of fiscal 1996 were 17.2% higher
as compared to the first quarter of fiscal 1995. Much of this increase was due
to higher subcontract and procurement activity.
As a percent of revenues, direct costs of contracts were 89.5% for the first
quarter of fiscal 1996, as compared to 89.4% for the first quarter of fiscal
1995. The percentage relationship between direct costs of contracts and
revenues will fluctuate between reporting periods depending on a variety of
factors including the mix of business during the reporting periods being
compared, as well as the level of margins earned from the various services
provided by the Company. The small increase in this percentage relationship
during the current quarter as compared to the corresponding period last year was
due to a higher level of construction and maintenance services relative to
engineering services.
Selling, general and administrative ("SG & A") expenses for the first quarter of
fiscal 1996 totaled $34.0 million; this was $2.2 million more than the amount
for the first quarter of fiscal 1995. The increase was due primarily to higher
levels of S, G & A spending in support of the increased level of business
activity discussed above.
The Company's operating profit (defined as revenues, less costs of contracts and
SG & A expenses) was $15.3 million for the first quarter of fiscal 1996; this
was $3.3 million more than the amount for the first quarter of fiscal 1995. The
increase in operating profit was due to the higher level of business volume
discussed above.
Interest income, net totaled $0.3 million for the first quarter of fiscal 1996;
this was $0.3 million more than the amount for the first quarter of fiscal 1995.
The increase was due to higher average cash balances kept on deposit during the
first quarter of fiscal 1996 as compared to the corresponding period last year.
Page 8
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
DECEMBER 31, 1995
Backlog Information
- -------------------
The following table summarizes the Company's backlog at December 31, 1995 and
1994 (in millions):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Engineering services backlog $ 841.0 $ 813.3
Total backlog 2,663.0 2,525.0
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased $20.4 million during the three
months ended December 31, 1995. This compares to a net decrease of $23.5
million of cash and cash equivalents during the corresponding period last year.
The current year increase in cash and cash equivalents was due to cash provided
by operations ($28.3 million), offset in part by cash used in investing
activities ($7.5 million), financing activities and the effects of exchange rate
changes ($0.4 million total).
Operations contributed $28.3 million of cash and cash equivalents during the
three months ended December 31, 1995. This compares to a net use of cash of
$8.8 million during the three months ended December 31, 1994. The $37.1 million
increase in cash provided by operations in the current period as compared to the
corresponding period last year was due primarily to a $30.6 million decrease in
the amount of cash used to pay-down accounts payable. Also contributing to the
increase in cash provided by operations was a $2.2 million increase in net
income. The balance of the increase was due primarily to the timing of cash
receipts and payments on receivables, and accrued liabilities, respectively.
The Company's investing activities used $7.5 million of cash and cash
equivalents during the three months ended December 31, 1995. This compares to a
net use of cash of $6.0 during the three months ended December 31, 1994. Most
of the variance was attributable to a $2.8 million increase in purchases of
property and equipment, net of disposals.
Cash flows from financing activities used $0.4 million in cash and cash
equivalents during the three months ended December 31, 1995. This compares to a
net use of $8.7 million during the three months ended December 31, 1994. The
variance was due primarily to larger payments made last year to reduce bank debt
as compared to the current fiscal period.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1996 and beyond. At December 31, 1995, the Company's
short-term committed credit facilities totaled $51.4 million through banks in
the U.S. and the U.K., against which $15.4 million was outstanding at that date.
On January 31, 1996, the Company purchased a 49% interest in the engineering and
construction operations of the Serete Group of France. The investment totaled
$18.9 million. In order to finance the investment, the Company amended and
increased an existing short-term credit facility under which the Company
borrowed FRF 96.0 million.
Page 9
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
DECEMBER 31, 1995
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Not applicable.
(b) Reports on Form 8-K:
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JACOBS ENGINEERING GROUP INC.
s/n John W. Prosser, Jr.
_________________________
John W. Prosser, Jr.
Senior Vice President, Finance
and Administration and Treasurer
Date: February 12, 1996
Page 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 59,485
<SECURITIES> 2,806
<RECEIVABLES> 282,372
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 381,134
<PP&E> 153,731
<DEPRECIATION> 72,705
<TOTAL-ASSETS> 548,934
<CURRENT-LIABILITIES> 261,025
<BONDS> 0
0
0
<COMMON> 25,511
<OTHER-SE> 222,755
<TOTAL-LIABILITY-AND-EQUITY> 548,934
<SALES> 0
<TOTAL-REVENUES> 471,122
<CGS> 0
<TOTAL-COSTS> 421,823
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (290)
<INCOME-PRETAX> 15,812
<INCOME-TAX> 6,262
<INCOME-CONTINUING> 9,550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,550
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.37
</TABLE>
