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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. - 20549
_________________________
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 April 1, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-12588
_________________________
GILBERT ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2280922
(State of Incorporation) (IRS Employer
Identification No.)
P.O. Box 1498, Reading, Pennsylvania 19603
(Mailing address of principal executive offices) (Zip Code)
(610) 775-5900
(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.
Yes X No
Class A Class B
Number of shares of each class of
common stock outstanding as of
April 1, 1994 (excluding 1,955,646
Class A treasury shares): 5,684,607 1,345,047
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Part I. Financial Information
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS Apr. 1, 1994 Dec. 31, 1993
Current assets:
Cash and cash equivalents $ 991,000 $ 10,716,000
Accounts receivable, net of allowance
for doubtful accounts of $2,962,000
and $3,427,000, respectively 36,824,000 38,526,000
Unbilled revenue 25,338,000 23,480,000
Inventories 6,619,000 6,402,000
Deferred income taxes 6,115,000 6,115,000
Other current assets 6,474,000 5,751,000
----------- ------------
Total current assets 82,361,000 90,990,000
----------- ------------
Property, plant and equipment 90,466,000 89,475,000
Less accumulated depreciation
and amortization 47,931,000 46,924,000
----------- ------------
42,535,000 42,551,000
----------- ------------
Other assets 2,467,000 2,117,000
Goodwill 36,507,000 35,399,000
----------- ------------
TOTAL ASSETS $163,870,000 $171,057,000
=========== ============
See accompanying notes to consolidated condensed financial statements.
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GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
LIABILITIES & STOCKHOLDERS' EQUITY Apr. 1, 1994 Dec. 31, 1993
Current liabilities:
Notes Payable $ - $ 5,000,000
Current maturities of long-term debt 106,000 280,000
Accounts payable 5,128,000 5,593,000
Salaries and wages 9,946,000 9,469,000
Income taxes 2,987,000 1,868,000
Estimated liability for contract losses 3,854,000 3,813,000
Contractual billings in excess of
recognized revenue 2,319,000 2,194,000
Other accrued liabilities 13,357,000 15,814,000
----------- -----------
Total current liabilities 37,697,000 44,031,000
----------- -----------
Long-term debt 954,000 1,066,000
----------- -----------
Other long-term liabilities, principally
retirement programs 6,664,000 7,036,000
----------- -----------
Deferred income taxes 810,000 810,000
----------- -----------
Commitments and contingencies - -
----------- -----------
Stockholders' equity:
Common stock 8,985,000 8,985,000
Capital in excess of par value 38,813,000 38,932,000
Retained earnings 100,841,000 101,081,000
Foreign currency translation adjustments 43,000 83,000
Treasury stock (30,937,000) (30,967,000)
----------- -----------
Total stockholders' equity 117,745,000 118,114,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $163,870,000 $171,057,000
=========== ===========
See accompanying notes to consolidated condensed financial statements.
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GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
Apr. 1, 1994 Apr. 2, 1993
Revenue:
Engineering and consulting revenue $ 61,636,000 $ 63,590,000
Communication equipment sales 11,629,000 10,097,000
Other income 1,587,000 1,608,000
----------- -----------
74,852,000 75,295,000
----------- -----------
Costs and expenses:
Engineering and consulting costs 47,396,000 48,137,000
Communication equipment costs 7,949,000 6,483,000
Selling, general and administrative
expenses 15,770,000 15,388,000
Depreciation and amortization 1,704,000 1,530,000
Interest expense 56,000 53,000
----------- -----------
72,875,000 71,591,000
----------- -----------
Income before provision
for taxes on income and cumulative
effect of changes in accounting principles 1,977,000 3,704,000
Provision for taxes on income 810,000 1,481,000
----------- -----------
Income before cumulative effect of
changes in accounting principles 1,167,000 2,223,000
Cumulative effect of changes in
accounting principles - (200,000)
----------- -----------
Net income $ 1,167,000 $ 2,023,000
=========== ===========
Per share of common stock:
Income before cumulative effect of
changes in accounting principles $.17 $.30
Cumulative effect of changes in accounting
principles - (.03)
----------- -----------
Net income $.17 $.27
=========== ===========
Cash dividends $.20 $.18
Average number of shares of common
stock outstanding 7,028,261 7,445,256
See accompanying notes to consolidated condensed financial statements.
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GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
Apr. 1, 1994 Apr. 2, 1993
Cash flows from operating activities:
Net income $ 1,167,000 $ 2,023,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Items not affecting cash 1,796,000 1,805,000
Changes in current assets and
current liabilities, net of effects from
acquisitions (2,238,000) 9,652,000
Other, net (486,000) 455,000
---------- ----------
Net cash provided by operating activities 239,000 13,935,000
---------- ----------
Cash flows from investing activities:
Payment for acquisition of GENSYS Corporation (1,500,000) (1,250,000)
Net increase in short-term investments - (6,020,000)
Payments for property, plant and equipment (1,270,000) (864,000)
---------- ----------
Net cash used for investing activities (2,770,000) (8,134,000)
---------- ----------
Cash flows from financing activities:
Repayment of note payable (5,000,000) -
Issuance of treasury stock in connection
with stock option and award plans 431,000 37,000
Payments to acquire treasury stock (520,000) (348,000)
Cash dividends paid (1,407,000) (1,341,000)
Long-term debt payments (286,000) (446,000)
Other, net (412,000) 28,000
---------- ----------
Net cash used for financing activities (7,194,000) (2,070,000)
---------- ----------
Net (decrease)increase in cash and cash equivalents (9,725,000) 3,731,000
Cash and cash equivalents at beginning of period 10,716,000 6,952,000
---------- ----------
Cash and cash equivalents at end of period $ 991,000 $10,683,000
========== ==========
Supplemental cash flow disclosures:
Interest paid $ 35,000 $ 35,000
Income taxes paid, net of refunds received $ (449,000) $ 723,000
See accompanying notes to consolidated condensed financial statements.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The financial statements furnished herein reflect all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of
financial position and results of operations for the interim
periods. The consolidated condensed statement of cash flows has
been reclassified to conform with current year presentation.
2. Net income per share of common stock was determined using the
average number of Class A and Class B shares outstanding. The
effect on net income per share resulting from dilution upon
exercise of outstanding stock options is not material, and
therefore is not shown.
3. In the first quarter of 1993, the company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" (SFAS 106). As a
result, a $900,000 charge (net of $600,000 income tax benefit) or
$.12 per share was recorded by the company as a cumulative effect
of change in accounting principle.
4. In the first quarter of 1993, the company adopted Statement of
Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109). As a result of this change, net income
increased $700,000 or $.09 per share as a cumulative effect of
change in accounting principle.
5. During the first quarter of 1994, the company paid the former
stockholders of GENSYS $1,500,000 as part of the purchase
agreement for achieving certain earnings objectives. This
resulted in an increase in goodwill of $1,360,000, net of an
income tax benefit of $140,000.
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Management's Discussion and Analysis of Results of
Operations and Financial Condition
Net income and earnings per share decreased 48% and 43%
respectively, for the first quarter of 1994 as compared to the
first quarter of 1993, after excluding a net charge to income of
$200,000 ($.03 per share) in 1993. The net charge relates to the
cumulative effect of changes in accounting principles, which are
more fully discussed in Notes 3 and 4 to the consolidated
condensed financial statements. The decline in net income
relates primarily to lower operating results within the
engineering and consulting segment. The favorable relationship
between the change in net income and earnings per share is due to
fewer shares outstanding.
The engineering and consulting segment reported a 3% decrease in
revenue for the first quarter of 1994 as compared to the same
period in 1993. This decrease is primarily due to a decline in
services provided to the nuclear power market. The decline was
partially offset by revenue from SRA Technologies, Inc. (SRA),
which was acquired on December 10, 1993. The gross profit
percentage decreased from 24% in the first quarter of 1993
to 23% in the current quarter due primarily to competitive
pressures, particularly in the nuclear power market.
The communications equipment segment revenue increased 15% for
the first quarter of 1994 as compared to the first quarter of
1993. The increase relates primarily to revenue from Instrument
Associates, Inc. (IAI), which was acquired on December 28, 1993.
The gross profit percentage decreased from 36% in the first quarter
of 1993 to 32% in the current quarter. This decrease is due primarily
to costs associated with consolidating manufacturing operations.
Other income declined 1% compared to the first quarter of last
year due primarily to lower interest income. The decline is
attributed to lower investment balances.
Selling, general and administrative expenses increased 2% in the
current quarter from the first quarter of 1993 primarily due to
the addition of SRA. Depreciation and amortization increased 11%
in the first quarter of 1994 as compared to the same period last
year due primarily to additional amortization associated with the
recent acquisitions.
Income before provision for taxes on income and cumulative effect
of changes in accounting principles decreased 47% in the first
quarter of 1994 as compared to the first quarter of 1993 primarily
due to lower operating results within the engineering and consulting
segment. In order for results to improve, higher revenue volume
and gross profit must be achieved and selling, general and
administrative costs must be reduced to a level consistent with
revenue volume within the engineering and consulting segment.
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The effective tax rate increased from 40% to 41% from the first
quarter of 1993 to the first quarter of 1994. The increase
relates to higher non-deductible expenses coupled with a
decrease in income before provision for taxes on income and
cumulative effect of changes in accounting principles.
Working capital decreased $2,295,000 and cash and cash
equivalents decreased $9,725,000 in the first three months of
1994 primarily due to the repayment of notes payable. The
company does not anticipate requiring outside long-term financing
during the next year. Amounts generated from operations,
combined with the available cash and cash equivalents and short-
term lines of credit, should provide adequate working capital to
satisfy operating requirements, contingent payment to former IAI
principals and the ongoing program to repurchase the company's
Class A common stock, of which approximately $3,500,000 remains.
Unused lines of credit with three banks aggregating $15,815,000
are also available for short-term cash needs. No restrictions on
cash transfers between the company and its subsidiaries exist.
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8K
The registrant was not required to report any items
on Form 8-K during the three months ended April 1, 1994.
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.
GILBERT ASSOCIATES, INC.
/s/J. R. Itin
------------------------------
J. R. Itin
Vice President and
Chief Financial Officer
Date: May 6, 1994
