<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, 1999
-----------------
( ) 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)
1111 South Arroyo Parkway, Pasadena, California 91105
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(Address of principal executive offices) (Zip code)
(626) 578 - 3500
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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 10, 2000: 25,980,752
Page 1
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JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I - Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance
Sheets as of December 31, 1999
and September 30, 1999 3
Condensed Consolidated Statements
of Operations for the Three Months
Ended December 31, 1999 and 1998 4
Condensed Consolidated Statements of
Comprehensive (Loss) Income
for the Three Months Ended
December 31, 1999 and 1998 5
Condensed Consolidated Statements of
Cash Flows for the Three Months
Ended December 31, 1999 and 1998 6
Notes to Condensed Consolidated
Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 14
Part II - Other Information
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
</TABLE>
Page 2
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 55,215 $ 53,482
Receivables 589,639 586,005
Deferred income taxes 76,470 76,405
Prepaid expenses and other 13,487 13,728
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Total current assets 734,811 729,620
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Property, Equipment and Improvements, Net 140,216 139,653
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Other Noncurrent Assets:
Goodwill, net 243,459 245,451
Other 103,602 105,462
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Total other noncurrent assets 347,061 350,913
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$1,222,088 $1,220,186
========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 7,873 $ 9,465
Accounts payable 202,861 186,287
Accrued liabilities 308,461 281,967
Customers' advances in excess of related revenues 76,257 93,303
Income taxes payable 7,081 13,960
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Total current liabilities 602,533 584,982
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Long-term Debt 127,712 135,371
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Other Deferred Liabilities 44,811 44,988
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Minority Interests 6,284 6,128
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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 - 26,149,203 shares
and 26,142,992 shares, respectively 26,149 26,143
Additional paid-in capital 68,275 68,049
Retained earnings 353,092 358,958
Accumulated other comprehensive loss (6,048) (3,595)
- ----------------------------------------------------------------------------------------
441,468 449,555
Unearned compensation (720) (838)
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Total stockholders' equity 440,748 448,717
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$1,222,088 $1,220,186
=======================================================================================
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
Page 3
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1999 and 1998
(In thousands, except per-share information)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 809,088 $ 555,172
Costs and Expenses:
Direct costs of contracts (705,358) (486,852)
Selling, general and administrative expenses (73,702) (45,155)
- --------------------------------------------------------------------------
Operating Profit 30,028 23,165
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Other (Expense) Income:
Interest income 350 1,261
Interest expense (2,103) (279)
Miscellaneous income (expense), net 493 (93)
Provision for litigation settlement (38,000) -
- --------------------------------------------------------------------------
Total other (expense) income (39,260) 889
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(Loss) Earnings Before Taxes (9,232) 24,054
Income Tax Benefit (Expense) 3,463 (8,899)
- --------------------------------------------------------------------------
Net (Loss) Earnings $ (5,769) $ 15,155
==========================================================================
Net (Loss) Earnings Per Share:
Basic $ (0.22) $ 0.59
Diluted $ (0.22) $ 0.58
==========================================================================
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
Page 4
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
For the Three Months Ended December 31, 1999 and 1998
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Net (Loss) Earnings $(5,769) $15,155
- -------------------------------------------------------------------------------
Other Comprehensive Income (Loss):
Unrealized holding gains on securities 675 -
Less: reclassification adjustment for gains realized
in net (loss) earnings (900) -
- -------------------------------------------------------------------------------
Unrealized losses on securities, net of
reclassification adjustment (225) -
Foreign currency translation adjustments (2,315) (1,947)
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Other Comprehensive Loss Before Income Taxes (2,540) (1,947)
Income Tax Benefit Relating to Other Comprehensive Loss 87 -
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Other Comprehensive Loss (2,453) (1,947)
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Total Comprehensive (Loss) Income $(8,222) $13,208
===============================================================================
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
Page 5
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 1999 and 1998
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) earnings $ (5,769) $ 15,155
Adjustments to reconcile net (loss) earnings
to net cash flows from operations:
Depreciation and amortization 9,372 6,029
Gains on sales of assets (996) -
Changes in assets and liabilities, net:
Receivables (7,084) (2,616)
Prepaid expenses and other
current assets (701) (1,364)
Accounts payable 21,216 9,580
Accrual of litigation settlement 38,000 -
Accrued liabilities (9,209) (8,250)
Customers' advances (16,032) (7,238)
Income taxes payable (6,700) 3,687
Deferred income taxes (65) 3
Other, net 118 100
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Net cash provided by operating activities 22,150 15,086
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Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (8,319) (11,348)
Proceeds from sales of marketable securities
and investments 1,344 16,445
Purchases of marketable securities and
investments (1,214) (72)
Net increase in other noncurrent assets (1,875) (4,310)
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Net cash (used for) provided by investing activities (10,064) 715
- ----------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 7,907 --
Repayments of long-term borrowings (15,000) --
Exercises of stock options, including the
related income tax benefits 154 527
Net change in short-term borrowings (1,504) (2,339)
Change in other deferred liabilities 66 (57)
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Net cash used for financing activities (8,377) (1,869)
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Effect of Exchange Rate Changes (1,976) (1,105)
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Increase in Cash and Cash Equivalents 1,733 12,827
Cash and Cash Equivalents at Beginning of Period 53,482 101,328
- ----------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 55,215 $ 114,155
==================================================================================
</TABLE>
See the accompanying Notes to Condensed Consolidated Financial Statements.
Page 6
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
1. The accompanying condensed consolidated financial statements and financial
information included herein have been prepared 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 latest Annual Report on Form 10-K of Jacobs Engineering Group Inc.
("Jacobs", or the "Company").
In the opinion of management of the Company, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the Company's consolidated financial position at December
31, 1999 and September 30, 1999, its consolidated results of operations for
the three months ended December 31, 1999 and 1998, its consolidated
comprehensive (loss) income for the three months ended December 31, 1999
and 1998, and its consolidated cash flows for the three months ended
December 31, 1999 and 1998.
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, 1999 and September 30, 1999 were
amounts due under contracts in progress of $253,162,800 and $240,964,600,
respectively, but which were not billed at the respective balance sheet
dates. The Company anticipates that substantially all of such unbilled
amounts will be billed and collected over the next twelve months.
3. Property, equipment and improvements are stated at cost and consisted of
the following at December 31, 1999 and September 30, 1999 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
- ------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 14,579 $ 14,407
Buildings 47,157 47,313
Equipment 170,543 164,538
Leasehold improvements 19,012 18,913
Construction in progress 10,818 10,419
- -----------------------------------------------------------------------------------
262,109 255,590
Accumulated depreciation and amortization (121,893) (115,937)
- -----------------------------------------------------------------------------------
$ 140,216 $ 139,653
===================================================================================
</TABLE>
Page 7
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
4. Other noncurrent assets consisted of the following at December 31, 1999 and
September 30, 1999 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
- --------------------------------------------------------------------
<S> <C> <C>
Prepaid pension costs $ 18,595 $ 18,704
Reimbursable pension costs 11,690 11,059
Cash surrender value of life
insurance policies 29,791 30,228
Investments 29,476 32,024
Notes receivable 6,310 6,597
Miscellaneous 7,740 6,850
- --------------------------------------------------------------------
$103,602 $105,462
====================================================================
</TABLE>
5. The following table reconciles the denominator used to compute basic (loss)
earnings per share to the denominator used to compute diluted (loss)
earnings per share (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended
December 31
---------------------------
1999 1998
- -----------------------------------------------------------------------
<S> <C> <C>
Weighted average shares
outstanding (denominator used
to compute basic EPS) 26,146 25,624
Effect of employee and outside
director stock options - 615
- ---------------------------------------------------------------------
Denominator used to compute
diluted EPS 26,146 26,239
=====================================================================
</TABLE>
6. During the three months ended December 31, 1999 and 1998, the Company made
cash payments of approximately $1,673,200 and $240,000, respectively, for
interest and $2,182,000 and $5,058,000, respectively, for income taxes.
Page 8
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
7. On January 14, 1999, the Company completed its Agreement and Plan of Merger
with Sverdrup Corporation ("Sverdrup"). This transaction was accounted for
as a purchase. Accordingly, the Company's consolidated results of
operations include those of Sverdrup beginning January 1999 (that is, since
the beginning of the Company's second quarter of last fiscal year). For
more information about Sverdrup and the merger transaction, readers of this
Form 10-Q should refer to Note 3 to the Company's 1999 Consolidated
Financial Statements included as Exhibit 13 to its 1999 Annual Report on
Form 10-K.
The following unaudited pro forma financial information presents the
combined results of operations of Jacobs and Sverdrup, after giving effect
to certain adjustments, including amortization of goodwill, additional
interest expense, and related income tax effects, and assuming the
acquisition occurred at the beginning of fiscal year 1999. The pro forma
financial information does not necessarily reflect the results of
operations that would have occurred had Jacobs and Sverdrup constituted a
single entity during fiscal 1999 (in thousands, except per-share data):
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1998
----------------------------
Actual Pro Forma
- -----------------------------------------------------------
<S> <C> <C>
Revenues $555,172 $814,744
Net earnings 15,155 15,615
Earnings per share:
Basic 0.59 0.61
Diluted 0.58 0.62
- ---------------------------------------------------------
</TABLE>
Pro forma financial information for the first quarter of fiscal 2000 ended
December 31, 1999 is not presented as the results of operations for this
period include Sverdrup's operations.
8. Effective September 30, 1999, the Company adopted Statement of Financial
Accounting Standards No. 131 - Disclosure about Segments of an Enterprise
and Related Information ("SFAS 131"). SFAS 131 supercedes Statement of
Financial Accounting Standards No. 14 - Financial Reporting for Segments of
a Business Enterprise ("SFAS 14"). SFAS 131 replaces the "industry
approach" definition of "segment" that was promulgated by SFAS 14 with the
"management approach" to identify an entity's reportable segments. Under
the management approach, an entity's reportable segments are determined by
the internal organization used by the entity's management for making
operating decisions and assessing performance. The Company's business is to
provide professional and technical services. The Company provides its
services from offices located primarily throughout the United States,
Europe, India and Australia. In accordance with the provisions of SFAS 131,
the Company has concluded that its operations may be aggreated into one
reportable segment for purposes of this disclosure.
Page 9
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
December 31, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
- -------
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operation
(incorporated by reference from pages A-4 through A-12 of Exhibit 13 of the
Company's 1999 Annual Report on Form 10-K).
Results of Operations
- ---------------------
The Company's results of operations include the results of Sverdrup's operations
since January 1, 1999. See Note 7 to the accompanying Condensed Consolidated
Financial Statements for additional discussion of the Sverdrup transaction.
The Company recorded a net loss of $5.8 million, or $0.22 per diluted share, for
the three months ended December 31, 1999, compared to net earnings of $15.2
million, or $0.58 per diluted share, for the same period last year.
The net loss during the first quarter of fiscal 2000 included a pre-tax
provision for litigation settlement of $38.0 million. The special, one-time
pre-tax charge of $38.0 million resulted from an agreement in principle with the
United States Department of Justice to settle a previously disclosed
whistleblower suit alleging that the Company improperly charged the U.S.
government for lease costs associated with its former headquarters building,
which the Company sold and leased back in 1982. The pre-tax charge consisted of
the settlement amount of $35.0 million, and related litigation costs of $3.0
million. The settlement is subject to the approval of the office of the U.S.
Attorney General. The Company has denied the government's allegations in the
suit but has agreed to the settlement to avoid the costs and risks of further
litigation. Since the Company vacated this building in late 1997, the
settlement has no continuing impact on its operating results.
Excluding the after-tax impact of this special litigation charge, the Company's
operations during the first quarter of fiscal 2000 resulted in net earnings of
$18.0 million, or $0.68 per diluted share (based on 26,420,000 diluted shares
outstanding).
During the three months ended December 31, 1999, total revenues increased by
$253.9 million, or 45.7%, to $809.1 million, compared to $555.2 million for the
same quarter in fiscal 1999. Approximately 87% of the increase in total
revenues was generated by Sverdrup's operations, with the balance attributable
to the Company's continuing U.S. and European operations (that is, those offices
operating during the comparable periods of both fiscal 2000 and 1999).
Page 10
<PAGE>
Revenues from project services activities, which includes design, engineering
and agency construction management services, increased by $186.7 million, or
81%, to $417.3 million during the first quarter of fiscal 2000, compared to
$230.6 million during the same period last year. Approximately 78% of the
increase in project service revenues during the current period was generated by
Sverdrup's operations, with the balance attributable to the Company's continuing
U.S. and European operations.
Revenues from construction services were relatively flat at $236.7 million
compared to $241.5 million for the same period in fiscal 1999.
Revenues from O&M activities increased by $47.6 million, or 59%, to $128.2
million during the first quarter of fiscal 2000, compared to $80.6 million for
the same period in fiscal 1999. Substantially all of the increase in O&M
revenues during the current fiscal quarter as compared to last year was
generated by Sverdrup's operations. During the first quarter of fiscal 2000, the
Company realized revenues of $26.8 million from process, scientific and systems
consulting services. Prior to the merger with Sverdrup in the second quarter of
fiscal 1999, the Company's revenues from process, scientific and systems
consulting service activities were minimal.
As a percentage of revenues, direct costs of contracts decreased to 87.2% for
the three months ended December 31, 1999, compared to 87.7% for the same period
last year. 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 period, compared to the same period last year, was due primarily to
the relatively higher margins on Sverdrup's project services. Also contributing
to the improvement was the favorable effect of the proportionately higher
margins earned on the new volume of project service activities generated,
relative to construction service activities.
Selling, general and administrative ("SG & A") expenses for the first quarter of
fiscal 2000 increased by $28.5 million, or 63.2%, to $73.7 million, compared to
$45.2 million for the first quarter of fiscal 1999. The increase in SG & A
expenses during the three months ended December 31, 1999 was due almost entirely
to the results of operations of Sverdrup. Although as a percentage of revenues
SG & A expenses for the current quarter increased to 9.1% from 8.1% for the same
period last year, this percentage is lower on a sequential basis (that is,
compared to 10.4% for the quarter ended September 30, 1999) and reflects the
Company's continuing efforts to control costs.
During the first quarter of fiscal 2000, the Company's operating profit (defined
as revenues, less direct costs of contracts and SG & A expenses) increased by
$6.9 million, or 29.6%, to $30.0 million, compared to $23.2 million for the
first quarter of fiscal 1999. The increase in the Company's operating profit
for the first quarter of fiscal 2000 compared to the same period last year was
due primarily to the increase in business volume, combined with an increase in
margin rates, as discussed above.
Page 11
<PAGE>
The Company recorded $1.8 million of net interest expense during the three
months ended December 31, 1999, compared to net interest income of $1.0 million
during the same period last year. During the prior fiscal period ended December
31, 1998, the Company was a net investor of excess cash. During the current
fiscal period ended December 31, 1999, the Company was a net borrower of cash as
a result of the merger with Sverdrup Corporation. The Company financed a portion
of the merger consideration by borrowing $165.0 million under a new $230.0
million revolving credit facility. Outstanding borrowings under this facility
was reduced to $110.5 million at December 31, 1999. Also contributing to the
increase in interest expense during the current period as compared to the same
period last year was $19.9 million of Sverdrup pre-merger indebtedness that was
assumed by the Company at closing of the merger transaction.
The Company recorded $0.5 million of net miscellaneous income during the three
months ended December 31, 1999, compared to net miscellaneous expense of $0.1
million during the same period in fiscal 1999. The increase in net miscellaneous
income during the current quarter compared to the same quarter in fiscal 1999
was due primarily to gains realized on the sales of marketable equity
securities.
During the first quarter of fiscal 2000, the Company recorded a net income tax
benefit of $3.5 million, compared to a net income tax expense of $8.9 million
for the first quarter of fiscal 1999. The Company recorded a tax benefit of
$14.3 million in connection with the $38.0 million special litigation charge
discussed above. The Company's overall effective tax rate was 37.5% for the
first quarter of fiscal 2000. This compares to an effective tax rate of 37.0%
for the first quarter of fiscal 1999.
Backlog Information
- -------------------
The following table summarizes the Company's backlog at December 31, 1999 and
1998 (in millions):
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Professional services $1,959.0 $1,022.0
Total backlog 4,339.0 3,335.0
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased by $1.7 million to $55.2
million during the three months ended December 31, 1999. This compares to a net
increase of $12.8 million during the three months ended December 31, 1998.
During the first quarter of fiscal 2000, the Company experienced net cash
outflows from investing activities, financing activities and the effect on cash
of exchange rate changes, of $10.1 million, $8.4 million and $2.0 million,
respectively, offset in part by net cash inflows from operations of $22.2
million.
Page 12
<PAGE>
Operations contributed $22.2 million of cash and cash equivalents during the
first quarter of fiscal 2000. This compares to a net contribution of $15.1
million during the same period last year. The $7.1 million increase in cash
provided by operations in the first quarter of fiscal 2000 as compared to the
first quarter of fiscal 1999 was due primarily to an increase of $25.7 million
relating to the timing of cash receipts and payments within the Company's
working capital accounts, and an increase of $3.3 million in depreciation and
amortization expense.
As discussed above, included in the Company's consolidated results of operations
for the three months ended December 31, 1999 is a non-cash charge of $38.0
million relating to the settlement of certain litigation. The Company expects
that it will fund this settlement during the second quarter of fiscal 2000.
The Company's investing activities resulted in net cash outflows of $10.1
million during the three months ended December 31, 1999. This compares to net
cash inflows of $0.7 million during the same period last year. The $10.8
million net increase in cash used for investing activities in the first quarter
of fiscal 2000 as compared to the first quarter of fiscal 1999, was due
primarily to a $15.1 million decrease in proceeds from sales of marketable
securities and investments. The proceeds of $16.4 million from sales of
marketable securities and investments in the prior year period were used to
partially fund the merger with Sverdrup and pay down indebtedness relating to
the merger. Partially offsetting these cash outflows were a decrease of $3.0
million in net addition to property and equipment and a $2.4 million net
decrease in other noncurrent assets.
The Company's financing activities resulted in net cash outflows of $8.4 million
during the first quarter of fiscal 2000. This compares to net cash outflows of
$1.9 million during the first quarter of fiscal 1999. The $6.5 million net
increase in cash used for financing activities in the current period as compared
to the same period last year was due primarily to the repayments of long-term
borrowings of $15.0 million, partially offset by proceeds from long-term
borrowings of $7.9 million.
The Company believes it has adequate capital resources to fund its operations
for the remainder of fiscal 2000 and beyond. The Company's consolidated working
capital position was $132.3 million at December 31, 1999. As discussed above,
the Company obtained a long-term $230.0 million revolving credit facility during
the second quarter of fiscal 1999, against which $110.5 million was outstanding
at December 31, 1999 in the form of direct borrowings. These borrowings related
to the Sverdrup merger indebtedness, and other refinanced amounts that were
outstanding under an old $45.0 million revolving credit agreement. At December
31, 1999, the Company had $43.3 million available through committed short-term
credit facilities, of which $17.1 million was outstanding at that date in the
form of direct borrowings and letters of credit.
In December 1999, the Company announced that it had reactivated its stock
repurchase program. The program, which was suspended in September 1998 because
of the then pending merger transaction with Sverdrup, authorizes the Company to
buy-back up to 3,000,000 shares of its common stock in the open market. As of
December 31, 1999, 1,233,200 shares had been repurchased under the program. The
Company will finance the repurchases from existing credit facilities and
available cash balances.
Year 2000 Readiness - Update
- ----------------------------
The Company substantially completed its Year 2000 compliance program prior to
December 31, 1999. (Readers should refer to pages A-9 through A-11 of Exhibit 13
to the Company's 1999 Annual Report on Form 10-K for a more complete discussion
of the Company's Year 2000 Readiness program). The Company made the transition
to the year 2000 without any significant disruptions to its systems or
operations. The Company continues to monitor the impact of Year 2000 on its
operations, and a contingency plan for critical business applications and
continuing project operations is in place in the event unidentified issues cause
business disruptions. The Company also continues to monitor the Year 2000
readiness of its clients, suppliers, subcontractors and vendors.
Page 13
<PAGE>
The failure to identify and correct a Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. However, the Company does not expect such failures to have a
materially adverse effect on its results of operations or financial condition.
Forward-Looking Statements
- --------------------------
Statements included in this Quarterly Report on Form 10-Q that are not based on
historical facts are "forward-looking statements", as that term is discussed in
the Private Securities Litigation Reform Act of 1995. These statements are
based on management's current estimates, expectations and projections about the
issues discussed, the industries in which the Company operates and the services
it provides. By their nature, such forward-looking statements involve risks and
uncertainties. The Company cautions the reader that a variety of factors could
cause business conditions and results to differ materially from what is
contained in its forward-looking statements. These factors include, but are not
necessarily limited to, the following: increase in competition by foreign and
domestic competitors; availability of qualified engineers and other professional
staff needed to execute contracts; the timing of new awards and the funding for
such awards; the ability of the Company to meet performance or schedule
guarantees; cost overruns on fixed, maximum or unit priced contracts; the
outcome of pending and future litigation and governmental proceedings; the
cyclical nature of the individual markets in which the Company's customers
operate; the successful closing and/or subsequent integration of any merger or
acquisition transaction; the amount of any contingent consideration the Company
may be required to pay in the future in connection with the Sverdrup merger
(including the availability of financing that may be required); and the
Company's success in dealing with any Year 2000 issues. The preceding list is
not all-inclusive, and the Company undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Readers of this Form 10-Q should also read the Company's most recent Annual
Report on Form 10-K for a further description of the Company's business, legal
proceedings and other information that describes factors that could cause actual
results to differ from such forward-looking statements.
Page 14
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 2000 Annual Meeting of Shareholders was held at the Company's
headquarters on February 8, 2000, as previously announced in its Notice of
Annual Meeting of Shareholders and Proxy Statement dated January 3, 2000, copies
of which have been filed with the Commission pursuant to Regulation 14A.
There were four 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
(Noel G. Watson, Dr. James Clayburn LaForce, David M. Petrone and
James L. Rainey, Jr.);
2. To approve the Company's 1999 Stock Incentive Plan;
3. To approve the Company's 1999 Outside Director Stock Plan; and,
4. To approve the appointment of Ernst & Young LLP as independent
auditors for the year ending September 30, 2000.
The results of the shareholder voting were as follows (all shares voted were
voted by proxy):
<TABLE>
<CAPTION>
Votes Against Broker
Votes For or Withheld Abstentions Non-votes
------------ ------------- ----------- ---------
<S> <C> <C> <C> <C>
1. Election of Directors:
Noel G. Watson 22,855,780 445,105 -0- -0-
Dr. James Clayburn LaForce 22,869,638 431,247 -0- -0-
David M. Petrone 22,870,718 430,167 -0- -0-
James L. Rainey, Jr. 22,870,239 430,646 -0- -0-
2. Approval of the Company's
1999 Stock Incentive Plan 12,278,853 8,237,662 72,954 2,711,416
3. Approval of the Company's
1999 Outside Director
Stock Plan 15,226,782 5,286,902 81,885 2,705,316
4. Ratification of the
Appointment of
Ernst & Young LLP
as independent
auditors 22,892,090 383,711 25,084 -0-
</TABLE>
The Directors who did not stand for election at the Annual Meeting and whose
terms of office continued after the Annual Meeting were: Drs. Joseph J. Jacobs,
Linda K. Jacobs and Dale R. Laurance; Messrs. Richard E. Beumer, Joseph F.
Alibrandi, Peter H. Dailey, Robert B. Gwyn and William R. Kerler; and Ms. Linda
Fayne Levinson.
Page 15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27. Financial Data Schedule.
(b) Reports on Form 8-K:
None.
Page 16
<PAGE>
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: February 11, 2000
Page 17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 55,215
<SECURITIES> 0
<RECEIVABLES> 589,639
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 734,811
<PP&E> 262,109
<DEPRECIATION> 121,893
<TOTAL-ASSETS> 1,222,088
<CURRENT-LIABILITIES> 602,533
<BONDS> 127,712
0
0
<COMMON> 26,149
<OTHER-SE> 414,599
<TOTAL-LIABILITY-AND-EQUITY> 1,222,088
<SALES> 0
<TOTAL-REVENUES> 809,088
<CGS> 0
<TOTAL-COSTS> 705,358
<OTHER-EXPENSES> 38,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,103
<INCOME-PRETAX> (9,232)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,769)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,769)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
