<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 March 31, 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)
(818) 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 May 12, 1997: 25,743,567
Page 1
<PAGE>
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 March 31, 1997
and September 30, 1996 3
Consolidated Condensed Statements
of Income for the Three Months
and Six Months Ended March 31,
1997 and 1996 4
Consolidated Condensed Statements of
Cash Flows for the Six Months
Ended March 31, 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 4. Submission of Matters to a Vote
of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
</TABLE>
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT MARCH 31, 1997 AND SEPTEMBER 30, 1996
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
- ----------------------------------------------- --------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $100,324 $ 62,865
Marketable securities - 2,764
Receivables 276,824 276,668
Deferred income taxes 39,204 37,564
Prepaid expenses and other 4,214 3,783
- ----------------------------------------------- -------- --------
Total current assets 420,566 383,644
- ----------------------------------------------- -------- --------
Property, Equipment and
Improvements, Net 83,115 79,009
- ----------------------------------------------- -------- --------
Other Noncurrent Assets:
Goodwill, net 41,960 40,481
Other 72,134 69,371
- ----------------------------------------------- -------- --------
Total other noncurrent assets 114,094 109,852
- ----------------------------------------------- -------- --------
$617,775 $572,505
=============================================== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank $ 2,458 $ 694
Accounts payable 48,759 60,799
Accrued liabilities 124,883 110,061
Customers' advances in excess
of related revenues 64,782 47,052
Income taxes payable 10,562 9,469
- ----------------------------------------------- -------- --------
Total current liabilities 251,444 228,075
- ----------------------------------------------- -------- --------
Long-term Debt 35,068 36,300
- ----------------------------------------------- -------- --------
Deferred Gains on Real Estate Transactions 615 1,025
- ----------------------------------------------- -------- --------
Other Deferred Liabilities 27,151 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 - 25,755,841 and
25,745,329 shares, respectively 25,756 25,745
Additional paid-in capital 50,439 49,191
Retained earnings 226,860 207,639
Other 808 1,039
- ----------------------------------------------- -------- --------
303,863 283,614
Less, cost of common stock held
in treasury (15,000 and 10,000
shares, respectively) 366 227
- ----------------------------------------------- -------- --------
Total stockholders' equity 303,497 283,387
- ----------------------------------------------- -------- --------
$617,775 $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 Six Months Ended March 31, 1997 and 1996
(In thousands, except per-share information)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended March 31, Ended March 31,
---------------------- -------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------
Revenues $437,735 $487,021 $871,384 $958,142
- -----------------------------------------------------------------------------------------
Costs and Expenses:
Direct costs of contracts 382,705 434,303 762,913 856,126
Selling, general and
administrative expenses 37,269 36,542 73,721 70,516
Interest income, net (709) (44) (1,374) (334)
Other income, net (437) (138) (780) (335)
- -----------------------------------------------------------------------------------------
418,828 470,663 834,480 925,973
- -----------------------------------------------------------------------------------------
Income before taxes 18,907 16,358 36,904 32,169
- -----------------------------------------------------------------------------------------
Provision for Income Taxes 7,487 6,478 14,614 12,739
- -----------------------------------------------------------------------------------------
Net Income $ 11,420 $ 9,880 $ 22,290 $ 19,430
=========================================================================================
Net Income Per Share $.44 $.38 $.86 $.75
=========================================================================================
</TABLE>
See the accompanying notes.
Page 4
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 22,290 $ 19,430
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 9,375 8,269
Amortization of deferred gains (410) (410)
(Gains) losses on disposals of assets (697) 54
Changes in assets and liabilities, net:
Receivables 18,940 10,752
Prepaid expenses and other
current assets (399) (1,246)
Accounts payable (12,176) 10,279
Accrued liabilities 12,819 312
Customers' advances 599 (3,127)
Income taxes payable 1,126 (2,976)
Deferred income taxes (1,640) (1,535)
Other, net 161 -
- ------------------------------------------------------------------------
Net cash provided 49,988 39,802
- ------------------------------------------------------------------------
Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (9,697) (10,017)
Net increase in other noncurrent assets (1,441) (1,270)
Proceeds from sales of marketable securities 3,551 -
Acquisitions of businesses (2,673) -
Increase in investments (507) (21,717)
- ------------------------------------------------------------------------
Net cash used (10,767) (33,004)
- ------------------------------------------------------------------------
Cash Flows from Financing Activities:
Exercises of stock options 4,955 4,687
Purchases of treasury stock (5,961) -
Net increase in short-term borrowings 198 -
Net increase in long-term borrowings - 18,820
Other, net (323) (44)
- ------------------------------------------------------------------------
Net cash provided (used) (1,131) 23,463
- ------------------------------------------------------------------------
Effect of Exchange Rate Changes (631) (75)
- ------------------------------------------------------------------------
Increase in Cash and Cash Equivalents 37,459 30,186
Cash and Cash Equivalents at the Beginning
of the Period 62,865 39,118
- ------------------------------------------------------------------------
Cash and Cash Equivalents at the End
of the Period $100,324 $ 69,304
========================================================================
</TABLE>
See the accompanying notes.
Page 5
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1997 and September 30, 1996,
and its consolidated results of operations for the three months and six
months ended March 31, 1997 and March 31, 1996, and its consolidated cash
flows for the six months ended March 31, 1997 and March 31, 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. In addition, the Company acquired a controlling
interest in an affiliated entity located in India. Both of these
acquisitions are accounted for as purchases. The results of operations of
these businesses since their respective dates of acquisition were not
material.
3. Included in receivables at March 31, 1997 and September 30, 1996 were
unbilled amounts totaling $66,930,200 and $50,770,100, respectively.
4. Property, equipment and improvements are stated at cost and consisted of
the following at March 31, 1997 and September 30, 1996 (in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Land $ 10,024 $ 10,028
Buildings 38,772 38,762
Equipment 107,814 100,874
Leasehold improvements 15,403 12,812
------------------------------------------------------------------
172,013 162,476
Less - accumulated depreciation
and amortization 88,898 83,467
------------------------------------------------------------------
$ 83,115 $ 79,009
========================================================================
</TABLE>
Page 6
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
5. Other assets consisted of the following at March 31, 1997 and September 30,
1996 (in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Prepaid pension costs $11,736 $11,201
Cash surrender value of life
insurance policies 22,286 20,758
Investments 34,635 35,000
Miscellaneous 3,477 2,412
------------------------------------------------------------------
$72,134 $69,371
========================================================================
</TABLE>
6. During the six months ended March 31, 1997 and 1996, the Company made cash
payments of $1,053,700 and $1,355,200, respectively, for interest and
$14,278,100 and $16,457,200, respectively, for income taxes.
7. Net income per share for the three months and six months ended March 31,
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 Six months Ended
March 31, March 31,
-------------------- --------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average number of shares
of common stock
outstanding 25,684 25,581 25,703 25,546
Average number of shares
of common stock
equivalents outstanding 251 400 215 355
------ ------ ------ ------
25,935 25,981 25,918 25,901
====== ====== ====== ======
</TABLE>
Page 7
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 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 March 31, 1997 (the "second quarter of
1997") were $437.7 million; this was $49.3 million less than the amount for the
three months ended March 31, 1996 (the "second quarter of 1996"). For the six
months ended March 31, 1997, revenues totaled $871.4 million; this was $86.8
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 both the second quarter of 1997 and the
six months ended March 31, 1997 were higher as compared to the corresponding
periods last year.
As a percent of revenues, direct costs of contracts were 87.4% for the second
quarter of 1997, as compared to 89.2% for the second quarter of 1996. For the
six months ended March 31, 1997, direct costs of contracts were 87.6% of
revenues, as compared to 89.4% for the six months ended March 31, 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 second quarter
of 1997 totaled $37.3 million; this was $0.7 million more than the amount for
the second quarter of 1996. For the six months ended March 31, 1997, SG & A
expenses totaled $73.7 million; this was $3.2 million more than the amount for
the six months ended March 31, 1996. In general, these variances were due to
higher spending in support of the increased engineering services discussed
above, combined with an increase in sales and marketing activity.
The Company's operating profit (defined as revenues, less costs of contracts and
SG & A expenses) was $17.8 million for the second quarter of 1997; this was $1.6
million more than the amount for the first quarter of 1996. For the six months
ended March 31, 1997, the Company's operating profit was $34.8 million; this was
$3.3 million more than the amount for the six months ended March 31, 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
MARCH 31, 1997
Interest income, net totaled $0.7 million for the second quarter of 1997; this
was $0.7 million more than the amount for the second quarter of 1996. For the
six months ended March 31, 1997, net interest income totaled $1.4 million; this
was $1.0 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. In addition, the
amount of short-term bank debt outstanding during the first half of 1997 was
substantially less than the average amount outstanding during the corresponding
period last year, which caused an overall reduction in the amount of interest
expense.
Backlog Information
- -------------------
The following table summarizes the Company's backlog at March 31, 1997 and 1996
(in millions):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Engineering services backlog $ 878.0 $ 825.0
Total backlog 2,910.9 2,695.0
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased $37.5 million during the six
months ended March 31, 1997. This compares to a net increase of $30.2 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 ($50.0 million), offset in part by cash used in investing activities
($10.8 million), financing activities ($1.1 million), and the effect of exchange
rate changes ($0.6 million).
Operations contributed $50.0 million of cash and cash equivalents during the six
months ended March 31, 1997. This compares to net contributions of cash of
$39.8 million during the six months ended March 31, 1996. The $10.2 million
increase in cash provided by operations during 1997 as compared to 1996 was due
to a $2.9 million increase in net income, combined with the effects 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 $10.8 million of cash and cash
equivalents during the six months ended March 31, 1997. This compares to a net
use of cash of $33.0 million during the six months ended March 31, 1996.
Included in the 1996 figure was the Company's purchase of a 49% interest in the
engineering and construction operations of the Serete Group of France; no
similar transaction was made in 1997. During 1997, the Company sold certain
marketable securities which generated approximately $3.6 million of cash, and it
spent approximately $2.7 million, net, towards the acquisition of two
engineering and construction companies.
Page 9
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1997
Cash flows from financing activities used $1.1 million in cash and cash
equivalents during the six months ended March 31, 1997. This compares to a net
source of cash of $23.5 million during the six months ended March 31, 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 237,600 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 $6.0 million. Since
initiating this repurchase program last year, the Company has bought-back a
total of 397,600 shares of its common stock at a total cost of $9.6 million.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1997 and beyond. At March 31, 1997, the Company's short-
term committed credit facilities totaled $40.9 million through banks in the U.S.
and the U.K., against which $0.9 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 10
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1997
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of stockholders was held on February 11, 1997 at
3:30 p.m. as announced in its Notice of Annual Meeting of Shareholders and Proxy
Statement dated January 3, 1997, copies of which have been filed with the
Commission pursuant to Regulation 14A.
There were three matters voted upon by the stockholders at the annual meeting.
Those matters were:
1. To elect a slate of directors as nominated in the proxy statement
(Messrs. James Clayburn LaForce, David M. Petrone, James L. Rainey,
Jr. and Noel G. Watson);
2. To approve amendments to the 1981 Executive Incentive Plan, and to
reserve an additional 1,200,000 shares for that plan, and to extend
the expiration date of the plan to March 1, 2001; and,
3. To approve the appointment of Ernst & Young LLP as independent
auditors for the year ending September 30, 1997.
The results of the shareholder voting were as follows (all shares voted were
voted by proxy):
With respect to the first matter, the following table presents the results of
the shareholder voting for each of the individual nominees:
<TABLE>
<CAPTION>
Nominee
-----------------------------------------------------
James C. David M. James L. Noel G.
LaForce Petrone Rainey, Jr. Watson
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Shares voting for
the nominee 20,747,083 20,748,726 20,703,588 20,745,008
Shares instructing
the proxy not to
vote for the
nominee 881,627 879,984 925,122 883,702
Shares not voted 4,057,617 4,057,617 4,057,617 4,057,617
---------- ---------- ---------- ----------
Total 25,686,327 25,686,327 25,686,327 25,686,327
========== ========== ========== ==========
</TABLE>
With respect to the second matter, there were 15,485,702 shares which voted in
favor of the amendments (and other changes) to the 1981 Executive Incentive
Plan. There were 3,606,051 shares which voted against the proposition; there
were 127,546 shares instructing the proxy not to vote; there were 2,409,411
broker non-votes; and there were 4,057,617 shares which were not present and for
which no proxies were received.
With respect to the third matter, there were 20,715,908 shares which voted in
favor of the appointment of Ernst & Young LLP as the Company's independent
auditors for the year ending September 30, 1997. There were 811,968 shares
which voted against the appointment; there were 100,834 shares instructing the
proxy not to vote; and there were 4,057,617 shares which were not present and
for which no proxies were received.
Page 11
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1997
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: May 12, 1997
Page 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 100,324
<SECURITIES> 0
<RECEIVABLES> 276,824
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 420,566
<PP&E> 172,013
<DEPRECIATION> 88,898
<TOTAL-ASSETS> 617,775
<CURRENT-LIABILITIES> 251,444
<BONDS> 0
0
0
<COMMON> 25,756
<OTHER-SE> 277,741
<TOTAL-LIABILITY-AND-EQUITY> 617,775
<SALES> 0
<TOTAL-REVENUES> 437,735
<CGS> 0
<TOTAL-COSTS> 382,705
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (709)
<INCOME-PRETAX> 18,907
<INCOME-TAX> 7,487
<INCOME-CONTINUING> 11,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,420
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
