<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 June 30, 1997
-------------
( ) 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
- ------------------------------------------------------------------------------
(State of incorporation) (I.R.S. employer identification number)
251 South Lake Avenue, Pasadena, California 91101
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(626) 449 - 2171
- ------------------------------------------------------------------------------
(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 August 11, 1997: 25,753,654
Page 1
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JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page No.
_______________________________________________________________________________
Part I - Financial Information
<S> <C>
Item 1. Financial Statements:
Consolidated Condensed Balance
Sheets as of June 30, 1997
and September 30, 1996 3
Consolidated Condensed Statements
of Income for the Three Months
and Nine Months Ended June 30,
1997 and 1996 4
Consolidated Condensed Statements of
Cash Flows for the Nine Months
Ended June 30, 1997 and 1996 5
Notes to Consolidated Condensed
Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 10
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
</TABLE>
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT JUNE 30, 1997 AND SEPTEMBER 30, 1996
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
-------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 80,321 $ 62,865
Marketable securities 20,005 2,764
Receivables 296,508 276,668
Deferred income taxes 39,208 37,564
Prepaid expenses and other 4,128 3,783
- ----------------------------------------------- -------- --------
Total current assets 440,170 383,644
- ----------------------------------------------- -------- --------
Property, Equipment and
Improvements, Net 89,332 79,009
- ----------------------------------------------- -------- --------
Other Noncurrent Assets:
Goodwill, net 47,951 40,481
Other 73,308 69,371
- ----------------------------------------------- -------- --------
Total other noncurrent assets 121,259 109,852
- ----------------------------------------------- -------- --------
$650,761 $572,505
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank $ 2,947 $ 694
Accounts payable 44,425 60,799
Accrued liabilities 152,648 110,061
Customers' advances in excess
of related revenues 64,079 47,052
Income taxes payable 9,044 9,469
- ----------------------------------------------- -------- --------
Total current liabilities 273,143 228,075
- ----------------------------------------------- -------- --------
Long-term Debt 33,892 36,300
- ----------------------------------------------- -------- --------
Deferred Gains on Real Estate Transactions 410 1,025
- ----------------------------------------------- -------- --------
Other Deferred Liabilities 28,034 23,718
- ----------------------------------------------- -------- --------
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 - 25,795,499 and
25,745,329 shares, respectively 25,795 25,745
Additional paid-in capital 51,264 49,191
Retained earnings 238,786 207,639
Other 1,128 1,039
- ----------------------------------------------- -------- --------
316,973 283,614
Less, cost of common stock held
in treasury (63,300 and 10,000
shares, respectively) 1,691 227
- ----------------------------------------------- -------- --------
Total stockholders' equity 315,282 283,387
- ----------------------------------------------- -------- --------
$650,761 $572,505
======== ========
</TABLE>
See the accompanying notes.
Page 3
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands, except per-share information)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
--------------------- --------------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $430,177 $436,820 $1,301,561 $1,394,962
- -------------------------------- -------- -------- ---------- ----------
Costs and Expenses:
Direct costs of contracts 373,230 383,458 1,136,143 1,239,584
Selling, general and
administrative expenses 38,351 36,710 112,073 107,225
Interest income, net (1,253) (339) (2,628) (673)
Other (income) expense, net 31 (194) (749) (529)
- -------------------------------- -------- -------- ---------- ----------
410,359 419,635 1,244,839 1,345,607
-------- -------- ---------- ----------
Income before taxes 19,818 17,185 56,722 49,355
- -------------------------------- -------- -------- ---------- ----------
Income Tax Expense 7,848 6,805 22,462 19,545
- -------------------------------- -------- -------- ---------- ----------
Net Income $ 11,970 $ 10,380 $ 34,260 $ 29,810
================================ ======== ======== ========== ==========
Net Income Per Share $ .46 $ .40 $ 1.32 $ 1.15
================================ ======== ======== ========== ==========
</TABLE>
See the accompanying notes.
Page 4
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 34,260 $ 29,810
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 14,398 13,002
Amortization of deferred gains (615) (615)
Gains on disposals of assets (742) (103)
Changes in assets and liabilities, net of
businesses acquired:
Receivables 1,490 18,794
Prepaid expenses and other
current assets (322) (1,029)
Accounts payable (16,795) (2,960)
Accrued liabilities 39,445 8,604
Customers' advances (45) (580)
Income taxes payable (288) (1,123)
Deferred income taxes (1,641) (3,620)
Other, net 244 -
- ------------------------------------------------ -------- --------
Net cash provided 69,389 60,180
- ------------------------------------------------ -------- --------
Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (20,187) (13,237)
Purchases of marketable securities (20,000) -
Proceeds from sales of marketable securities 2,963 145
Increase in investments (1,705) (21,456)
Proceeds from sales of investments 634 -
Net increase in other, noncurrent assets (2,820) (2,355)
Acquisitions of businesses (7,562) -
- ------------------------------------------------ -------- --------
Net cash used (48,677) (36,903)
- ------------------------------------------------ -------- --------
Cash Flows from Financing Activities:
Exercises of stock options 5,878 5,220
Purchases of treasury stock (7,286) -
Net decrease in short-term borrowings (824) (7,792)
Net increase in long-term borrowings - 18,371
Other, net (298) 1,631
- ------------------------------------------------ -------- --------
Net cash provided (used) (2,530) 17,430
- ------------------------------------------------ -------- --------
Effect of Exchange Rate Changes (726) 80
- ------------------------------------------------ -------- --------
Increase in Cash and Cash Equivalents 17,456 40,787
Cash and Cash Equivalents at the Beginning
of the Period 62,865 39,118
- ------------------------------------------------ -------- --------
Cash and Cash Equivalents at the End
of the Period $ 80,321 $ 79,905
================================================ ======== ========
</TABLE>
See the accompanying notes.
Page 5
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
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 June 30, 1997 and
September 30, 1996, and its consolidated results of operations for the
three months and nine months ended June 30, 1997 and June 30, 1996, and its
consolidated cash flows for the nine months ended June 30, 1997 and June
30, 1996.
The Company's interim results of operations are not necessarily
indicative of the results to be expected for the full year.
2. During February 1997, the Company acquired certain physical assets and
contracts of an engineering business with operations in Denver, Colorado
and Santiago, Chile. Also in February 1997, the Company acquired a
controlling interest in an affiliated entity headquartered in Mumbai,
India. Then in April 1997, the Company acquired certain assets and
liabilities of an engineering business headquartered in Green Bay,
Wisconsin.
Each of these acquisitions have been accounted for as purchases.
The initial purchase price allocation, which may be adjusted further,
resulted in goodwill of approximately $7,963,300. The results of
operations of these businesses since their respective dates of acquisition
were not material.
3. Included in receivables at June 30, 1997 and September 30, 1996 were
unbilled amounts totaling $79,847,100 and $50,770,100, respectively.
4. Property, equipment and improvements are stated at cost and consisted of
the following at June 30, 1997 and September 30, 1996 (in thousands):
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
-------- -------------
<S> <C> <C>
Land $ 9,886 $ 10,028
Buildings 37,862 38,762
Equipment 113,828 100,874
Leasehold improvements 14,586 12,812
- ------------------------------------------ -------- --------
176,162 162,476
Less - accumulated depreciation
and amortization 86,830 83,467
- ------------------------------------------ -------- --------
$ 89,332 $ 79,009
======== ========
</TABLE>
Page 6
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
5. Other assets consisted of the following at June 30, 1997 and September 30,
1996 (in thousands):
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
-------- -------------
<S> <C> <C>
Prepaid pension costs $11,993 $11,201
Cash surrender value of life
insurance policies 22,445 20,758
Investments (primarily in affiliates) 34,656 35,000
Miscellaneous 4,214 2,412
- ---------------------------------------------- ------- -------
$73,308 $69,371
======= =======
</TABLE>
6. During the nine months ended June 30, 1997 and 1996, the Company made cash
payments of $1,700,900 and $2,012,600, respectively, for interest and
$22,918,900 and $23,302,400, respectively, for income taxes.
7. Net income per share for the three months and nine months ended June 30,
1997 and 1996 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>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- --------------------
1997 1996 1997 1996
----- ---- ----- -----
<S> <C> <C> <C> <C>
Average number of shares
of common stock
outstanding 25,741 25,721 25,714 25,599
Average number of shares
of common stock
equivalents outstanding 272 378 241 358
------ ------ ------ ------
26,013 26,099 25,955 25,957
====== ====== ====== ======
</TABLE>
Page 7
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
June 30, 1997
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 June 30, 1997 (the "third quarter of 1997")
were $430.2 million; this was $6.6 million less than the amount for the three
months ended June 30, 1996 (the "third quarter of 1996"). For the nine months
ended June 30, 1997, revenues totaled $1,301.6 million; this was $93.4 million
less than the amount for the corresponding period last year. These differences
were due to lower construction activity, and reflect the completion and/or
winding-down of several large projects during fiscal 1996. However, revenues
from engineering services for the third quarter of 1997 were approximately 7.1%
higher than the amount for the third quarter of 1996. For the nine months ended
June 30, 1997, revenues from engineering services were approximately 2.8% higher
than the comparable 1996 amount.
As a percent of revenues, direct costs of contracts were 86.8% for the third
quarter of 1997, as compared to 87.8% for the third quarter of 1996. For the
nine months ended June 30, 1997, direct costs of contracts comprised 87.3% of
revenues, as compared to 88.9% for the nine months ended June 30, 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
improvements in this percentage relationship during both the current quarter and
the current year-to-date period as compared to the corresponding periods last
year were 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 third quarter of
1997 totaled $38.4 million; this was $1.6 million more than the amount for the
third quarter of 1996. For the nine months ended June 30, 1997, SG & A expenses
totaled $112.1 million; this was $4.8 million more than the amount for the nine
months ended June 30, 1996. Included in the 1997 amounts is $2.1 million of SG
& A expenses associated with businesses acquired during the year. Also
contributing to the increase in SG & A expenses for the current year-to-date
period as compared to the corresponding period last year was higher sales and
marketing activity.
The Company's operating profit (defined as revenues, less direct costs of
contracts and SG & A expenses) was $18.6 million for the third quarter of 1997;
this was $1.9 million more than the amount for the third quarter of 1996. For
the nine months ended June 30, 1997, the Company's operating profit was $53.3
million; this was $5.2 million more than the amount for the nine months ended
June 30, 1996. These increases in operating profit were due primarily to the
higher level of engineering services activity discussed above, combined with
improved margin rates for all of the Company's services.
Page 8
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
June 30, 1997
Interest income, net totaled $1.3 million for the third quarter of 1997; this
was $0.9 million more than the amount for the third quarter of 1996. For the
nine months ended June 30, 1997, net interest income totaled $2.6 million; this
was $2.0 million more than the amount for the comparable period last year. In
general, the increases in net interest income were due to higher average cash
balances kept on deposit during 1997 as compared to 1996, combined with a slight
increase in the average yield earned on the deposits. In addition, the amount
of short-term bank debt outstanding during 1997 was substantially less than the
average amount outstanding during the corresponding period last year, which
contributed to an overall reduction in the amount of interest expense.
Backlog Information
- -------------------
The following table summarizes the Company's backlog at June 30, 1997 and 1996
(in millions):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Engineering services backlog $ 885.0 $ 830.0
Total backlog 2,940.0 2,680.4
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased $17.5 million during the nine
months ended June 30, 1997. This compares to a net increase of $40.8 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 ($69.4 million), offset in part by cash used in investing activities
($48.7 million), financing activities ($2.5 million), and the effect of exchange
rate changes ($0.7 million).
Operations contributed $69.4 million of cash and cash equivalents during the
nine months ended June 30, 1997. This compares to net contributions of cash of
$60.2 million during the nine months ended June 30, 1996. The $9.2 million
increase in cash provided by operations during 1997 as compared to 1996 was due
to a $4.5 million increase in net income, and a $1.4 million increase in
depreciation and amortization expense. Also contributing to the increase in
cash provided by operations during 1997 as compared to 1996 were the effects
resulting from the timing of cash receipts and payments relating to the
Company's trade receivables, payables and accrued liabilities.
The Company's investing activities used $48.7 million of cash and cash
equivalents during the nine months ended June 30, 1997. This compares to a net
use of cash of $36.9 million during the nine months ended June 30, 1996. Net of
disposals, the Company spent $20.2 million in additions to property and
equipment during the nine months ended June 30, 1997. This is $6.9 million more
than the amount spent during the comparable period last year. However, included
in the 1997 figure is approximately $3.8 million of additions originating from
the Company's newly-acquired Indian subsidiary.
Page 9
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
June 30, 1997
The Company's 1996 investing activities included the purchase of a 49% interest
in the engineering and construction operations of the Serete Group of France for
approximately $19.0 million. No similar transaction of that magnitude occurred
during the first nine months of 1997; however, the Company spent $7.6 million in
cash acquiring several businesses. Subsequent to June 30, 1997, the Company
completed the acquisition of the remaining interest in the Serete Group. Total
cash paid for the balance of the business was approximately $9.5 million. In
addition, at the time of closing, the Company loaned to the former majority
owner of the Serete Group approximately $12.5 million.
The Company's 1997 investing activities included the deposit of $20.0 million
with a U.S. bank under a managed investment program. The investment manager has
full investment and dispositive powers over the securities included in the
program. The program emphasizes the preservation of capital through investment-
grade, marketable debt instruments which have maximum maturities of ten years.
Cash flows from financing activities used $2.5 million in cash and cash
equivalents during the nine months ended June 30, 1997. This compares to a net
source of cash of $17.4 million during the nine months ended June 30, 1996.
Included in the 1996 figure were bank borrowings made under the Company's long-
term revolving credit agreement used to finance the purchase of its 49% interest
in the Serete Group. During 1997, the Company repurchased 292,900 shares of its
common stock under a buy-back program it initiated during the second half of
1996. Total cost of the shares repurchased during 1997 was $7.3 million. Since
initiating this repurchase program last year, the Company has bought-back a
total of 445,900 shares of its common stock at a total cost of $10.9 million.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1997 and beyond. At June 30, 1997, the Company's short-
term committed credit facilities totaled $40.9 million through banks located
primarily in the U.S. and the U.K., against which $0.5 million was outstanding
in the form of direct borrowings (relating entirely to the Company's U.K.
subsidiary), and another $4.9 million was utilized in support of outstanding
letters of credit.
Page 10
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
June 30, 1997
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/ John W. Prosser, Jr.
___________________________
John W. Prosser, Jr.
Senior Vice President, Finance
and Administration and Treasurer
Date: August 12, 1997
Page 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 80,321
<SECURITIES> 20,005
<RECEIVABLES> 296,508
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 440,170
<PP&E> 176,162
<DEPRECIATION> 86,830
<TOTAL-ASSETS> 650,761
<CURRENT-LIABILITIES> 273,143
<BONDS> 0
0
0
<COMMON> 25,795
<OTHER-SE> 289,487
<TOTAL-LIABILITY-AND-EQUITY> 650,761
<SALES> 0
<TOTAL-REVENUES> 430,177
<CGS> 0
<TOTAL-COSTS> 373,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,253)
<INCOME-PRETAX> 19,818
<INCOME-TAX> 7,848
<INCOME-CONTINUING> 11,970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,970
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
