SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. - 20549
_________________________
FORM 10-Q/A
(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, 1995
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
March 31, 1995 (excluding 2,034,571
Class A treasury shares): 5,671,477 1,279,252
<PAGE>
GILBERT ASSOCIATES, INC.
INDEX
Part I. Financial Information Pages
Item I.
Consolidated Condensed Balance Sheets at
March 31, 1995 and December 30, 1994 (unaudited) 3
Consolidated Condensed Statements of Operations for the
three month periods ended March 31, 1995
and April 1, 1994 (unaudited) 4
Consolidated Condensed Statements of Cash Flows
for the three month periods ended March 31, 1995
and April 1, 1994 (unaudited) 5
Notes to Consolidated Condensed Financial Statements 6
Item II.
Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
<PAGE>
Part I. Financial Information
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS Mar. 31, 1995 Dec. 30, 1994
Current assets:
Cash and cash equivalents $ 5,305,000 $ 7,427,000
Accounts receivable, net of allowance
for doubtful accounts of $2,603,000 and
$2,677,000, respectively 29,905,000 33,452,000
Unbilled revenue 21,604,000 19,570,000
Inventories 6,846,000 6,761,000
Deferred income taxes 4,420,000 4,420,000
Other current assets 5,731,000 5,918,000
---------- ----------
Total current assets 73,811,000 77,548,000
---------- ----------
Property, plant and equipment 83,190,000 93,602,000
Less accumulated depreciation and amortization 41,281,000 51,534,000
---------- ----------
41,909,000 42,068,000
Deferred income taxes 1,610,000 1,610,000
Other Assets 2,607,000 2,441,000
Goodwill 23,254,000 23,418,000
------------ ------------
TOTAL ASSETS $143,191,000 $147,085,000
============ ============
See accompanying notes to consolidated condensed financial statements.
<PAGE>
Consolidated Condensed Balance Sheets (continued)
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ - $ 2,000,000
Accounts payable 4,246,000 3,784,000
Salaries and wages 8,361,000 8,239,000
Income taxes 2,212,000 1,496,000
Estimated liability for contract losses 3,716,000 5,272,000
Contractual billings in excess of
recognized revenue 1,859,000 2,474,000
Other accrued liabilities 10,762,000 11,400,000
---------- ----------
Total current liabilities 31,156,000 34,665,000
---------- ----------
Long-term debt 842,000 871,000
Self-insured retention 5,481,000 5,331,000
Other long-term liabilities 6,597,000 6,704,000
Commitments and contingencies - -
Stockholders' equity:
Common stock 8,985,000 8,985,000
Capital in excess of par value 38,673,000 38,707,000
Retained earnings 83,598,000 83,854,000
Treasury stock (32,141,000) (32,032,000)
------------ ------------
Total stockholders' equity 99,115,000 99,514,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $143,191,000 $147,085,000
============ =============
See accompanying notes to consolidated condensed financial statements.
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
Mar. 31, 1995 Apr. 1, 1994
Revenue:
Professional services revenue $ 50,636,000 $ 61,636,000
Communication equipment sales 11,849,000 11,629,000
Other income 2,099,000 1,587,000
---------- ----------
64,584,000 74,852,000
---------- ----------
Costs and expenses:
Professional services costs 39,488,000 47,396,000
Communication equipment costs 7,722,000 7,949,000
Selling, general and administrative
expenses 13,703,000 15,770,000
Depreciation and amortization 1,606,000 1,704,000
Interest expense 46,000 56,000
---------- ----------
62,565,000 72,875,000
Income before provision ---------- ----------
for taxes on income 2,019,000 1,977,000
Provision for taxes on income 885,000 810,000
------------ ------------
Net income $ 1,134,000 $ 1,167,000
============ ============
Per share of common stock:
Net Income $.16 $.17
Cash dividends $.20 $.20
Average number of shares of common
stock outstanding 6,956,124 7,028,261
See accompanying notes to consolidated condensed financial statements.
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
Mar. 31, 1995 Apr. 1, 1994
Cash flows from operating activities:
Net income $ 1,134,000 $ 1,167,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Items not affecting cash 1,877,000 2,049,000
Changes in current assets and
current liabilities (45,000) (2,491,000)
Other, net (241,000) (486,000)
--------- ----------
Net cash provided by operating activities 2,725,000 239,000
--------- ----------
Cash flows from investing activities:
Payment for acquisition of GENSYS Corporation - (1,500,000)
Payments for property, plant and equipment (1,178,000) (1,270,000)
--------- ---------
Net cash used for investing activities (1,178,000) (2,770,000)
--------- ---------
Cash flows from financing activities:
Payments under note payable (2,000,000) (5,000,000)
Issuance of treasury stock in connection
with stock option, award and
purchase plans 99,000 431,000
Payments to acquire treasury stock (242,000) (520,000)
Cash dividends paid (1,391,000) (1,407,000)
Long-term debt payments (29,000) (286,000)
Other, net (106,000) (412,000)
--------- ---------
Net cash used for financing activities (3,669,000) (7,194,000)
--------- ---------
Net decrease in cash and cash equivalents (2,122,000) (9,725,000)
Cash and cash equivalents at beginning of period 7,427,000 10,716,000
--------- ----------
Cash and cash equivalents at end of period $ 5,305,000 $ 991,000
=========== ===========
Supplemental cash flow disclosures:
Income taxes paid, net of refunds received $ 170,000 $ (449,000)
See accompanying notes to consolidated condensed financial statements.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The financial statements furnished herein reflect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of financial position and results of operations for the
interim periods. Such adjustments are of a normal recurring nature.
The consolidated condensed statement of cash flow
has been restated to conform with the current period 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. During the first quarter of 1994, the company paid the former
stockholders of GENSYS $1,500,000 as part of the April 1, 1991
purchase agreement, which resulted in an increase in goodwill of
$1,360,000, net of an income tax benefit of $140,000.
4. Other accrued liabilities as of March 31, 1995 and December 30, 1994
include a $2,200,000 reserve for costs associated with resolving a
series of claims filed by former employees of a subsidiary which was
closed in 1988. Also included in other accrued liabilities are
accruals relating primarily to health care and workers' compensation
which amounted to $3,530,000 and $3,494,000 at March 31, 1995 and
December 30, 1994, respectively.
5. On March 2, 1995, the company announced that it signed an agreement
in principle to sell its largest subsidiary, Gilbert/Commonwealth,
Inc. (G/C), to The Parsons Corporation for $46,000,000 subject to
certain adjustments. On March 30, 1995, a formal agreement to
purchase G/C was signed. As part of the agreement, the buyer will
sign a 10 year lease for 200,000 square feet of office space from
the company. The agreement is contingent upon a favorable
shareholder vote of the company's Class B shareholders, which is
anticipated to occur late in the second quarter of 1995. Assuming
this transaction is approved by the shareholders, the operations of
G/C beginning April 1, 1995, will be excluded from the company's
results of operations. The company anticipates recognizing a gain,
after income taxes, of approximately $20,000,000 or $2.88 per share.
The purchase price will increase or decrease on a dollar-for-dollar
basis to the extent that the agreed upon stockholders' equity of G/C
as of March 31, 1995 exceeds or is less than $15,000,000.
6. On March 13, 1995, the company announced that the Board of Directors
authorized the repurchase of up to $15,000,000 worth of its common
stock. The repurchases will be made from time to time in the open
market as well as from the company employees. The $15,000,000
program replaces the previously announced $6,000,000 Class A common
stock repurchase program.
<PAGE>
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations
Net income declined $33,000 and earnings per share decreased by $.01 in
the current quarter as compared to the first quarter of 1994. The
slight decline in earnings relates primarily to lower operating results
within the professional services segment offset in part by improvements
within the communication equipment segment.
The professional services segment reported a 18% decrease in revenue in
the first quarter of 1995 as compared to the same period in 1994. The
decline is primarily due to large decreases in services provided to the
nuclear power industry and public utility clients. The gross profit
percentage decreased from 23% to 22% in the current quarter due
primarily to lower margins realized on services provided to the U. S.
Government.
The communication equipment segment revenue increased 2% in the first
quarter of 1995 as compared to the same period in 1994 due primarily to
higher international sales and increased revenue from the Instrument
Associates, Inc. division. The gross profit percentage increased from
32% in the first quarter of 1994 to 35% in the current quarter. The
increase is due primarily to the benefits realized as a result of
consolidating operations and sales of higher margin products.
Other income increased 32% in the first quarter of 1995 compared to the
same period last year due primarily to higher income derived from a
joint venture within the professional services segment. The joint venture
is comprised of Gilbert/Commonwealth and two unrelated companies, and was
specifically established to service one contract. Each company has equal
voting rights and G/C receives 51% of the joint venture's profit, if any.
The contract expires at the end of 1996 and has an option for two additional
years.
Selling, general and administrative expenses declined 13% in the current
quarter compared to the first quarter of 1994. The decline is primarily
due to the lower business activity within the power industry.
Depreciation and amortization decreased 6% in the first quarter of 1995
compared to the same period last year due primarily to lower goodwill
amortization as a result of the 1994 third quarter goodwill write-off.
Income before provision for taxes on income increased 2% in the first
quarter of 1995 compared to the same period in 1994 due primarily to
higher results within the communication equipment segment, which was
offset in part by a decline within the professional services segment.
The effective tax rate increased from 41% to 44% from the first quarter
of 1994 to the first quarter of 1995 due to a higher effective state
income tax rate, which in part is due to limitation in loss carrybacks
and carryforwards in certain jurisdictions.
Deregulation in the domestic power utility industry, excess power
generation capacity, demand side management programs and aversion to
nuclear power will continue to put downward pressures on the level of
services provided by the company, particularly to nuclear power related
customers, until additional power generation capacity is needed. If
G/C is divested, the company's reliance on the power industry is reduced
greatly, therefore, any future negative impact as a result of changes in
the power market should not be significant to the company.
As described in Note 5, the company has entered into an agreement to
sell G/C, its largest subsidiary. The sale, if approved by the Class B
shareholders, will be effective April 1, 1995. As a result, the
company's results of operations will exclude G/C beginning April 1,
1995. The immediate impact to the company's operations following the
sale of G/C will result in approximately a 37% decline in total revenue
based upon the financial information for the year ended December 30,
1994 and the three months ended March 31, 1995. This considers
additional annual rental revenue of $3,000,000 as a result of the buyer
signing a ten year lease, but excludes any revenue to be derived from
interest income earned on the sale proceeds. Net income may decline
slightly from the first quarter of 1995. This assumes interest income
earned on sale proceeds will partially offset net income derived from
G/C and the corporate overhead expense that it absorbed. It is,
however, difficult to project the impact to net income and earnings per
share given the uncertainties regarding the amount, if any, of
repurchases of common stock and the price per share thereof, operations
of the company's remaining units, the extent to which corporate overhead
expenses are reduced and possible acquisitions. At this time, no
acquisitions are imminent.
After the sale of G/C, the company's primary future focus will be in the
manufacture and sale of communication equipment and professional
services which may complement our existing professional service
businesses. The company, as a result of the sale, has reduced its reliance
on the power market and does not consider this to be an area of major
focus in the future.
Liquidity and Capital Resources
Working capital decreased $228,000 and cash and cash equivalents declined
$2,122,000 in the first three months of 1995. The decline in cash and
cash equivalents is largely due to the repayment of a $2,000,000 note
payable, which was outstanding under the company's line of credit with
Meridian Bank for four days at an interest rate of 7.38%. The company
does not anticipate requiring outside long-term financing during the next
year. Amounts generated from operations, combined with available cash
and cash equivalents and short-term lines of credit, should provide
adequate working capital to satisfy operating requiremnt, contractual and
lease obligations related to the third quarter 1994 charge and the
contingent payment to former IAI principals. The anticipated cash proceeds
from the disposition of Gilbert/Commonwealth, Inc. (G/C), as discussed in
Note 5, will provide enough cash to satisfy the $15,000,000 stock repurchase
program as described in Note 6.
Unused lines of credit with three banks aggregating $16,500,000 are also
available for short-term cash needs. The short-term lines of credit consist
of the following: Meridian Bank, $10 million, which expires April 30, 1996;
Chemical Bank, $5 million, which expires June 30, 1995; and The Chase
Manhattan Bank, N.A., $3 million, which expires June 30, 1995. At March 31,
1995, the entire Chase line was available, and $9 million and $4.5 million
respectively, were available under the Meridian and Chemical lines.
Outstanding borrowings under these lines bear interest at a function of the
prime rate. The Chemical and Chase lines are used primarily to secure
letters of credit posted by the Company; the Meridian line is used to fund
short-term working capital requirments.
The company estimates that capital expenditures in 1995 will be approximately
$3,000,000, assuming G/C is sold.
<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.
GILBERT ASSOCIATES, INC.
Timothy S. Cobb
President, Chief Executive Officer
and Acting Chief Financial Officer
Date: May 24, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1994
<PERIOD-START> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 5,305,000
<SECURITIES> 0
<RECEIVABLES> 32,508,000
<ALLOWANCES> 2,603,000
<INVENTORY> 6,846,000
<CURRENT-ASSETS> 73,811,000
<PP&E> 83,190,000
<DEPRECIATION> 41,281,000
<TOTAL-ASSETS> 143,191,000
<CURRENT-LIABILITIES> 31,156,000
<BONDS> 0
<COMMON> 8,985,000
0
0
<OTHER-SE> 90,130,000
<TOTAL-LIABILITY-AND-EQUITY> 143,191,000
<SALES> 11,849,000
<TOTAL-REVENUES> 64,584,000
<CGS> 7,722,000
<TOTAL-COSTS> 47,210,000
<OTHER-EXPENSES> 15,309,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,000
<INCOME-PRETAX> 2,019,000
<INCOME-TAX> 885,000
<INCOME-CONTINUING> 1,134,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,134,000
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
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