<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, 1996
-----------------
( ) 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.
- --------------------------------------------------------------------------------
(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, 1997: 25,701,662
Page 1
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JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance
Sheets as of December 31, 1996
and September 30, 1996 3
Consolidated Condensed Statements
of Income for the Three Months
Ended December 31, 1996 and 1995 4
Consolidated Condensed Statements of
Cash Flows for the Three Months
Ended December 31, 1996 and 1995 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
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
</TABLE>
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, 1996 AND SEPTEMBER 30, 1996
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 79,798 $ 62,865
Marketable securities - 2,764
Receivables 259,201 276,668
Deferred income taxes 37,322 37,564
Prepaid expenses and other 3,769 3,783
---------------------------------------------------------------------------
Total current assets 380,090 383,644
----------------------------------------------------------------------------
Property, Equipment and
Improvements, Net 79,030 79,009
----------------------------------------------------------------------------
Other Noncurrent Assets:
Goodwill, net 40,596 40,481
Other 74,270 69,371
----------------------------------------------------------------------------
Total other noncurrent assets 114,866 109,852
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$573,986 $572,505
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank $ 1,464 $ 694
Accounts payable 48,739 60,799
Accrued liabilities 109,829 110,061
Customers' advances in excess
of related revenues 42,529 47,052
Income taxes payable 15,805 9,469
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Total current liabilities 218,366 228,075
----------------------------------------------------------------------------
Long-term Debt 36,798 36,300
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Deferred Gains on Real Estate Transactions 820 1,025
----------------------------------------------------------------------------
Other Deferred Liabilities 23,256 23,718
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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 -
25,727,127 and 25,745,329
shares, respectively 25,727 25,745
Additional paid-in capital 49,047 49,191
Retained earnings 217,554 207,639
Other 3,150 1,039
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295,478 283,614
Less, cost of common stock held
in treasury (10,000 and 31,500
shares, respectively) 732 227
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Total stockholders' equity 294,746 283,387
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$573,986 $572,505
==============================================================================
</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, 1996 AND 1995
(In thousands, except per-share information)
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Revenues $433,649 $471,122
- ------------------------------------------------------------------------
Costs and Expenses:
Direct costs of contracts 380,207 421,823
Selling, general and administrative expenses 36,452 33,974
Interest income, net (665) (290)
Other income, net (342) (197)
----------------------------------------------------------------------
415,652 455,310
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Income before taxes 17,997 15,812
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Provision for Income Taxes 7,127 6,262
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Net Income $ 10,870 $ 9,550
========================================================================
Net Income Per Share $.42 $.37
========================================================================
</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, 1996 AND 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 10,870 $ 9,550
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 4,795 4,086
Amortization of deferred gains (205) (205)
Gains on disposals of assets (203) -
Changes in assets and liabilities, net:
Receivables 18,252 9,372
Prepaid expenses and other
current assets 72 (1,115)
Accounts payable (12,337) 2,820
Accrued liabilities (1,015) 229
Customers' advances (4,772) (111)
Income taxes payable 6,260 4,437
Deferred income taxes 242 (787)
Other, net 79 -
------------------------------------------------------------------------
Net cash provided 22,038 28,276
------------------------------------------------------------------------
Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (3,445) (5,054)
Net increase in other noncurrent assets (2,214) (2,431)
Proceeds from the sale of marketable securities 2,963 -
Net increase in investments (1,677) -
------------------------------------------------------------------------
Net cash used (4,373) (7,485)
------------------------------------------------------------------------
Cash Flows from Financing Activities:
Exercises of stock options 349 265
Purchases of treasury stock (1,540) -
Increase (decrease) in short-term
borrowings 618 (829)
Other, net (462) 192
------------------------------------------------------------------------
Net cash used (1,035) (372)
------------------------------------------------------------------------
Effect of Exchange Rate Changes 303 (52)
- -------------------------------------------------------------------------
Increase in Cash and Cash Equivalents 16,933 20,367
Cash and Cash Equivalents at the Beginning
of the Period 62,865 39,118
- -------------------------------------------------------------------------
Cash and Cash Equivalents at the End
of the Period $ 79,798 $59,485
=========================================================================
</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, 1996
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, 1996 and September 30,
1996, and its consolidated results of operations and cash flows for the
three months ended December 31, 1996 and 1995.
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, 1996 and September 30, 1996 were
unbilled amounts totaling $51,007,300 and $50,770,100, respectively.
3. Property, equipment and improvements are stated at cost and consisted of
the following at December 31, 1996 and September 30, 1996 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
- -------------------------------------------------------------------------
<S> <C> <C>
Land $ 10,215 $ 10,028
Buildings 39,604 38,762
Equipment 103,991 100,874
Leasehold improvements 13,291 12,812
- -------------------------------------------------------------------------
167,101 162,476
Less - accumulated depreciation
and amortization 88,071 83,467
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$ 79,030 $ 79,009
=========================================================================
</TABLE>
Page 6
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1996
4. Other assets consisted of the following at December 31, 1996 and September
30, 1996 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
---------------------------------------------------------------
<S> <C> <C>
Prepaid pension costs $12,000 $11,201
Cash surrender value of life
insurance policies 22,285 20,758
Investments 36,838 35,000
Miscellaneous 3,147 2,412
--------------------------------------------------------------
$74,270 $69,371
===============================================================
</TABLE>
5. During the three months ended December 31, 1996 and 1995, the Company made
cash payments of $605,000 and $584,200, respectively, for interest and
$332,500 and $2,455,500, respectively, for income taxes.
6. Net income per share for the three months ended December 31, 1996 and 1995
has been computed based upon the weighted average number of shares of
common stock and, if dilutive, common stock equivalents outstanding as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Average number of shares
of common stock
outstanding 25,717 25,502
Average number of shares
of common stock
equivalents outstanding 166 300
------ ------
25,883 25,802
====== ======
</TABLE>
Page 7
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
DECEMBER 31, 1996
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
- ---------------------
Revenues for the three months ended December 31, 1996 (the "first quarter of
1997") were $433.6 million; this was $37.5 million less than the amount for the
three months ended December 31, 1995 (the "first quarter of 1996"). This
decline in revenues was due to lower construction activity, and reflects the
completion and/or winding-down of several large projects during fiscal 1996.
Revenues from engineering services for the first quarter of 1997 were up
slightly as compared to last year.
As a percent of revenues, direct costs of contracts were 87.7% for the first
quarter of 1997, as compared to 89.5% for the first quarter of 1996. 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
improvement in this percentage relationship during the current quarter as
compared to the corresponding period last year was due to a proportionately
higher level of the Company's overall business volume coming from engineering
services relative to construction and maintenance services.
Selling, general and administrative ("SG & A") expenses for the first quarter of
1997 totaled $36.5 million; this was $2.5 million more than the amount for the
first quarter of 1996. The increase in S,G & A expenses was due primarily to an
increase in sales and marketing expenses.
The Company's operating profit (defined as revenues, less costs of contracts and
SG & A expenses) was $17.0 million for the first quarter of 1997; this was $1.7
million more than the amount for the first quarter of 1996. The increase in
operating profit was due primarily to the higher level of engineering services
activity discussed above, combined with improved margin rates for all of the
Company's services.
Interest income, net totaled $0.7 million for the first quarter of 1997; this
was $0.4 million more than the amount for the first quarter of 1996. The
increase was due to higher average cash balances kept on deposit during the
first quarter of 1997 as compared to the corresponding period last year.
Page 8
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
DECEMBER 31, 1996
Backlog Information
- -------------------
The following table summarizes the Company's backlog at December 31, 1996 and
1995 (in millions):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Engineering services backlog $ 852.0 $ 841.0
Total backlog 2,847.0 2,663.0
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased $16.9 million during the three
months ended December 31, 1996. This compares to a net increase of $20.4
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 and the effect of exchange rate changes on cash ($22.3 million in
total), offset in part by cash used in investing activities ($4.4 million) and
financing activities ($1.0 million).
Operations contributed $22.0 million of cash and cash equivalents during the
three months ended December 31, 1996. This compares to net contributions of
cash of $28.3 million during the three months ended December 31, 1995. The $6.2
million decrease in cash provided by operations in the first quarter of 1997 as
compared to the corresponding period last year occurred in spite of a $1.3
million increase in net income, and was due primarily to the timing of cash
receipts and payments relating to the Company's trade receivables, payables and
accrued liabilities.
The Company's investing activities used $4.4 million of cash and cash
equivalents during the three months ended December 31, 1996. This compares to a
net use of cash of $7.5 million during the three months ended December 31, 1995.
Most of the variance was due to a $3.0 million increase in 1997 in cash provided
from sales of marketable securities.
Cash flows from financing activities used $1.0 million in cash and cash
equivalents during the three months ended December 31, 1996. This compares to a
net use of cash of $0.4 million during the three months ended December 31, 1995.
The variance was due primarily to an increase in treasury stock purchases,
offset in part by higher short-term bank borrowings, net of repayments.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1997 and beyond. At December 31, 1996, the Company's
short-term committed credit facilities totaled $51.7 million through banks in
the U.S. and the U.K., against which $1.5 million was outstanding in the form of
direct borrowings (relating entirely to the Company's U.K. subsidiary), and
another $1.5 million was utilized in support of outstanding letters of credit.
Page 9
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
DECEMBER 31, 1996
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27. Financial Data Schedule.
(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, 1997
Page 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 79,798
<SECURITIES> 0
<RECEIVABLES> 259,201
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 380,090
<PP&E> 167,101
<DEPRECIATION> 88,071
<TOTAL-ASSETS> 573,986
<CURRENT-LIABILITIES> 218,366
<BONDS> 0
0
0
<COMMON> 25,727
<OTHER-SE> 269,019
<TOTAL-LIABILITY-AND-EQUITY> 573,986
<SALES> 0
<TOTAL-REVENUES> 433,649
<CGS> 0
<TOTAL-COSTS> 380,207
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (665)
<INCOME-PRETAX> 17,997
<INCOME-TAX> 7,127
<INCOME-CONTINUING> 10,870
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,870
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
