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 June 30, 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
June 30, 1995 (excluding 2,508,419
Class A treasury shares): 5,988,624 488,257
<PAGE>
GILBERT ASSOCIATES, INC.
INDEX
Part I. Financial Information
Item I.
Consolidated Condensed Balance Sheets at
June 30, 1995 and December 30, 1994 (unaudited)
Consolidated Condensed Statements of Operations for the
six month and three month periods ended June 30, 1995
and July 1, 1994 (unaudited)
Consolidated Condensed Statements of Cash Flows
for the six month periods ended June 30, 1995
and July 1, 1994 (unaudited)
Notes to Consolidated Condensed Financial Statements
Item II.
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
Part I. Financial Information
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS June 30, 1995 Dec. 30, 1994
Current assets:
Cash and cash equivalents $ 32,407,000 $ 7,427,000
Short-term investments 15,864,000 -
Accounts receivable, net of allowance
for doubtful accounts of $1,657,000 and
$2,677,000, respectively 18,708,000 33,452,000
Unbilled revenue 12,275,000 19,570,000
Inventories 7,033,000 6,761,000
Deferred income taxes 3,605,000 4,420,000
Other current assets 5,145,000 5,918,000
---------- ----------
Total current assets 95,037,000 77,548,000
Property, plant and equipment 65,624,000 93,602,000
Less accumulated depreciation and amortization 29,198,000 51,534,000
---------- ----------
36,426,000 42,068,000
Deferred income taxes 735,000 1,610,000
Other assets 2,326,000 2,441,000
Goodwill 23,091,000 23,418,000
----------- -----------
TOTAL ASSETS $157,615,000 $147,085,000
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ - $ 2,000,000
Accounts payable 4,139,000 3,784,000
Salaries and wages 4,531,000 8,239,000
Income taxes 8,889,000 1,496,000
Estimated liability for contract losses 3,212,000 5,272,000
Contractual billings in excess of
recognized revenue 603,000 2,474,000
Other accrued liabilities 14,509,000 11,400,000
---------- ----------
Total current liabilities 35,883,000 34,665,000
Long-term debt 812,000 871,000
Self-insured retention 2,967,000 5,331,000
Other long-term liabilities 6,601,000 6,704,000
Stockholders' equity:
Common stock 8,985,000 8,985,000
Capital in excess of par value 38,564,000 38,707,000
Retained earnings 102,017,000 83,854,000
Treasury stock (38,214,000) (32,032,000)
----------- -----------
Total stockholders' equity 111,352,000 99,514,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $157,615,000 $147,085,000
=========== ===========
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Six Months Ended Three Months Ended
June 30, 1995 July 1, 1994 June 30, 1995 July 1, 1994
<S> <C> <C> <C> <C>
Revenue:
Professional services revenue $ 79,229,000 $123,243,000 $ 28,593,000 $ 61,607,000
Communication equipment sales 23,816,000 22,839,000 11,967,000 11,210,000
Other income 4,679,000 2,828,000 2,580,000 1,241,000
----------- ----------- ---------- ----------
107,724,000 148,910,000 43,140,000 74,058,000
Costs and expenses:
Professional services costs 64,092,000 94,985,000 24,604,000 47,589,000
Communication equipment costs 15,760,000 15,599,000 8,038,000 7,650,000
Selling, general and administrative
expenses 21,212,000 31,500,000 7,509,000 15,730,000
Depreciation and amortization 2,709,000 3,421,000 1,103,000 1,717,000
Interest expense 91,000 98,000 45,000 42,000
----------- ----------- ---------- ----------
103,864,000 145,603,000 41,299,000 72,728,000
Income before gain on sale of ----------- ----------- ---------- ----------
subsidiary and provision for
taxes on income 3,860,000 3,307,000 1,841,000 1,330,000
Gain on sale of subsidiary 26,542,000 - 26,542,000 -
----------- ----------- ---------- ----------
Income before provision for taxes
on income 30,402,000 3,307,000 28,383,000 1,330,000
Provision for taxes on income 9,455,000 1,010,000 8,570,000 200,000
---------- --------- ---------- ----------
Net income $ 20,947,000 $ 2,297,000 $ 19,813,000 $ 1,130,000
========== ========= ========== ==========
Per share of common stock:
Net income $3.04 $.33 $2.90 $.16
Cash dividends $.40 $.40 $.20 $.20
Average number of shares of common
stock outstanding 6,899,398 7,020,944 6,842,671 7,013,628
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30, 1995 July 1,1994
Cash flows from operating activities:
Net income $ 20,947,000 $ 2,297,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of Gilbert/Commonwealth, Inc. (26,542,000) -
Other items not affecting cash 4,700,000 3,865,000
Changes in current assets and
current liabilities 5,581,000 (321,000)
Other, net (36,000) (191,000)
---------- ---------
Net cash provided by operating activities 4,650,000 5,650,000
---------- ---------
Cash flows from investing activities:
Payment for acquisition of GENSYS Corporation - (1,500,000)
Net increase in short-term investments (15,864,000) -
Proceeds from sale of Gilbert/Commonwealth, Inc. 45,932,000 -
Payments for property, plant and equipment (1,472,000) (2,787,000)
----------- ----------
Net cash provided by(used for) investing
activities 28,596,000 (4,287,000)
----------- ----------
Cash flows from financing activities:
Payments under note payable (2,000,000) (5,000,000)
Issuance of treasury stock in connection
with stock option and award plans 544,000 880,000
Payments to acquire treasury stock (3,864,000) (1,512,000)
Cash dividends paid (2,784,000) (2,809,000)
Other, net (162,000) (660,000)
---------- ---------
Net cash used for financing activities (8,266,000) (9,101,000)
---------- ---------
Net increase(decrease) in cash and cash equivalents 24,980,000 (7,738,000)
Cash and cash equivalents at beginning of period 7,427,000 10,716,000
---------- ----------
Cash and cash equivalents at end of period $ 32,407,000 $ 2,978,000
========== =========
Supplemental cash flow disclosure:
Income taxes paid, net of refunds received $ 372,000 $ 1,035,000
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.
2. Net income per share of common stock was determined using the
average number of Class A and Class B shares outstanding. Earnings
per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share
in 1995 do not equal the total computed for the year due to the
timing of stock repurchases throughout the six month period ended
June 30, 1995 and the large gain relative to the G/C sale which was
recorded in the second quarter. 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. Other accrued liabilities as of June 30, 1995 includes $3,004,000
related to the pending settlement of stock repurchases in connection
with the $15,000,000 stock repurchase program described in Note 5.
Other accrued liabilities as of June 30, 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 to workers' compensation which amounted to
$2,498,000 and $2,138,000 at June 30, 1995 and December 30, 1994,
respectively.
4. On June 16, 1995, the company's Class B shareholders approved the
sale of the Gilbert/Commonwealth, Inc. (G/C) subsidiary to The
Parsons Corporation (Parsons) and on June 20, 1995, the company
completed the sale for a total purchase price of $45,932,000. The
purchase price was adjusted downward by $1,227,000 from the amount
previously disclosed in the company's Proxy Statement dated May 26,
1995 primarily due to unanticipated severance costs incurred by G/C
subsequent to May 26, 1995. The sale of G/C resulted in a
$18,742,000 gain, net of income taxes of $7,800,000, or $2.74 per
share. The tax benefit of a $8,758,000 capital loss carryforward,
for which a valuation allowance was previously recorded, was
recognized to reflect utilization of the carryforward associated
with this transaction.
As part of the agreement, the buyer has signed a ten year lease with
the company for 200,000 square feet of office space. The
consolidated condensed statements of operations exclude the results
of G/C subsequent to March 31, 1995, the effective date of sale
pursuant to the agreement with Parsons.
5. 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. From March 13, 1995 to June 30, 1995, the company has
repurchased $6,802,000 of common stock. At June 30, 1995,
$3,004,000 of the $6,802,000 related to repurchases pending
settlement which are recorded in other accrued liabilities, and were
paid in July of 1995. There remains $8,198,000 of authorized stock
repurchases available under the current program.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Continued
6. During the second quarter of 1994, the company closed foreign
subsidiaries and settled certain contractual issues which had been
previously reserved. The combination of these two events increased
net income by $75,000 or $.01 per share. Income before provision
for taxes on income was reduced by $525,000. Of this amount,
$1,100,000 related primarily to a reserve for a lease obligation and
severance costs, which was partially offset by a $700,000 favorable
outcome on the aforementioned contract settlement. These amounts
were recorded in selling, general and administrative expenses. The
provision for taxes on income was reduced by $600,000 primarily due
to a federal income tax deduction associated with the closure of
foreign subsidiaries.
7. The company adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities". This pronouncement had no cumulative effect on the
consolidated condensed financial statements. The market value of
the short-term investments, which are classified as available for
sale, closely approximates amortized cost, and therefore no
adjustment has been made.
<PAGE>
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations
On June 20, 1995, the company consummated the previously announced sale
of Gilbert/Commonwealth, Inc.(G/C) for $45,932,000. This transaction
increased net income by $18,742,000 or $2.74 per share. In accordance
with the sales agreement, G/C's results of operations are excluded from
the consolidated condensed statement of operations from April 1, 1995
forward. This sales transaction is more fully discussed in Note 4.
Excluding the G/C sale and a $75,000 increase in net income or $.01 per
share relative to closing foreign subsidiaries and settlement of certain
contractual issues in the second quarter of 1994 (Note 6), net income
and earnings per share were comparable for the six month periods ended
1995 and 1994. Higher operating profits within the communication
equipment segment coupled with increased interest income derived from
the G/C sale proceeds offset the lost operating profits from G/C.
Excluding the above mentioned items, net income and earnings per share
increased 2% and 7%, respectively, in the second quarter of 1995
compared to the same period in 1994. The increases are due primarily to
higher operating profits within the communication equipment segment and
interest income which were partially offset by the absence of G/C. The
favorable relationship between the change in net income and earnings per
share is due to a fewer number of shares outstanding.
The professional services segment revenue decreased 36% and 54% for the
six and three month periods in 1995, respectively, as compared to the
same periods in 1994. These decreases are primarily due to the sale of
G/C and, to a much lesser extent, declines in services provided to the
nuclear power market. The gross profit percentage decreased to 19% from
23% in the six month period ended 1995 compared to the same period as
last year. Current quarter gross profit was 14% compared to 23% in the
second quarter of 1994. These declines are primarily due to the absence
of G/C and lower margins realized on services provided to the U.S.
Government.
The communication equipment segment sale increased 4% and 7% for the six
and three month periods in 1995, respectively, as compared to the same
periods in 1994. The increases relate primarily to higher international
sales and increased revenue from the Instrument Associates, Inc.
division. The gross profit percentage increased to 34% in the first six
months of 1995 compared to 32% reported in the same period as last year.
The current quarter gross profit percentage was 33% compared to 32% in
the second quarter of 1994. These improvements are due primarily to the
benefits realized from consolidating operations.
Other income increased 65% and 108% in the both the six and three month
periods of 1995, respectively, as compared to the same periods in 1994.
The increases relate primarily to higher office space rental revenue and
interest income. As a result of the G/C sale, the buyer agreed to lease
200,000 square feet of office space for ten years. This lease resulted
in $750,000 of additional rental revenue in the current quarter. Total
office space rental revenue, from unrelated tenants, for the six and
three month periods ended June 30, 1995 were $2,054,000 and $1,416,000,
respectively. Interest income increased due to the fact the buyer
agreed to pay interest on the sale proceeds from May 1, 1995 through
financial closing, which occurred on June 20, 1995. Interest income was
$629,000 and $570,000 for the first half of 1995 and current quarter of
1995 compared to $88,000 and $35,000, respectively, in the same periods
last year.
Excluding the 1994 adjustment relative to the closure of foreign
subsidiaries and settlement of certain contractual issues, selling,
general and administrative expenses declined 32% and 51% in both the six
and three month periods of 1995, respectively, as compared to the same
periods in 1994. The decreases relate primarily to the sale of G/C, and
to a lesser extent, the lower business activity within the nuclear power
market. Depreciation and amortization declined 21% and 36% in the six
and three month periods in 1995, respectively, as compared to the same
periods in 1994, due primarily to the sale of G/C and lower goodwill
amortization as a result of the 1994 third quarter goodwill write-off.
Prior to the above mentioned 1994 adjustment, income before gain on sale
of subsidiary and provision for taxes on income for both the six and
three month periods ended June 30, 1995 remain at essentially the same
level as compared to the same periods last year. The lack of G/C's
results of operations from April 1, 1995 forward was offset by higher
results from the communication equipment segment and increased interest
income.
Excluding the sale of G/C and the 1994 adjustment mentioned above, the
effective tax rates for both the six and three month periods of 1995
were 43% and 42%, respectively, compared to 42% and 43% in the same
periods as last year.
Liquidity and Capital Resources
Working capital and cash and cash equivalents increased $16,271,000 and
$24,980,000, respectively, due primarily to the G/C sale. 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, contractual and lease
obligations related to the third quarter 1994 charge, contingent payment
to former IAI principals, income taxes on the G/C sale and the
$15,000,000 stock repurchase program. As of June 30, 1995, the company
has repurchased $6,802,000 of stock, of which $3,004,000 is recorded in
other accrued liabilities.
Lines of credit with two banks aggregating $13,000,000 are also
available for short-term cash needs. The short-term lines of credit
consist of the following: Meridian Bank, $10,000,000, which expires
April 30, 1996; and The Chase Manhattan Bank, N.A., $3,000,000, which
expires June 30, 1996. At June 30, 1995, the entire Chase line was
available and $8,900,000 was available under the Meridian line.
Outstanding borrowings under these lines bear interest at a function of
the prime rate. The Chase line is used primarily to secure stand-by
letters of credit posted by the company. The Meridian line is used to
fund short-term working capital requirements as well as secure stand-by
letters of credit. Currently, the company does not anticipate requiring
outside long-term financing, however, long-term financing may be
required if the company makes an acquisition.
The company estimates that capital expenditures in 1995 will be
approximately $3,000,000. No restrictions on cash transfers between the
company and its subsidiaries exist.
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
(1) The registrant filed Form 8-K on April 19, 1995
regarding the resignation of James R. Itin as Vice
President, Chief Financial Officer and a Director of the
company.
(2) The registrant filed Form 8-K on June 20, 1995 regarding
the completion of the sale of Gilbert/Commonwealth to
The Parsons Corporation.
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 and
Acting Chief Financial Officer
Date: July 31, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1994
<PERIOD-END> JUN-30-1995
<CASH> 32,407,000
<SECURITIES> 15,864,000
<RECEIVABLES> 32,640,000
<ALLOWANCES> 1,657,000
<INVENTORY> 7,033,000
<CURRENT-ASSETS> 95,037,000
<PP&E> 65,624,000
<DEPRECIATION> 29,198,000
<TOTAL-ASSETS> 157,615,000
<CURRENT-LIABILITIES> 35,883,000
<BONDS> 0
<COMMON> 8,985,000
0
0
<OTHER-SE> 102,367,000
<TOTAL-LIABILITY-AND-EQUITY> 157,615,000
<SALES> 23,816,000
<TOTAL-REVENUES> 107,724,000
<CGS> 15,760,000
<TOTAL-COSTS> 79,852,000
<OTHER-EXPENSES> 23,921,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91,000
<INCOME-PRETAX> 3,860,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 26,542,000
<CHANGES> 0
<NET-INCOME> 20,947,000
<EPS-PRIMARY> 3.04
<EPS-DILUTED> 3.04
</TABLE>
