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 29, 1996
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) 856-5500
______________________________________________________________________
(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 29, 1996 (excluding 2,700,698
Class A treasury shares): 5,834,727 449,875
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
March 29, 1996 Dec. 29, 1995
ASSETS
Current assets:
Cash and cash equivalents $ 6,494,000 $ 8,674,000
Accounts receivable, net of allowance
for doubtful accounts of $1,955,000 and
$2,005,000, respectively 24,636,000 24,717,000
Unbilled revenue 9,259,000 10,086,000
Inventories 12,600,000 11,548,000
Deferred income taxes 5,360,000 5,860,000
Other current assets 4,438,000 4,901,000
---------- ----------
Total current assets 62,787,000 65,786,000
---------- ----------
Property, plant and equipment, at cost 78,181,000 77,826,000
Less accumulated depreciation and
amortization 33,907,000 33,855,000
---------- ----------
44,274,000 43,971,000
---------- ----------
Deferred income taxes 605,000 605,000
Other assets 1,321,000 1,320,000
Intangible assets 34,977,000 33,662,000
----------- -----------
Total Assets $143,964,000 $145,344,000
=========== ===========
<PAGE>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,809,000 $ 5,143,000
Salaries and wages 4,734,000 4,158,000
Income taxes 1,431,000 1,670,000
Estimated liability for contract losses 3,171,000 3,171,000
Contractual billings in excess of
recognized revenue 580,000 639,000
Other accrued liabilities 13,531,000 16,196,000
---------- ----------
Total current liabilities 30,256,000 30,977,000
---------- ----------
Long-term debt 2,148,000 2,226,000
Other long-term liabilities 6,705,000 7,068,000
Self-insured retention 2,639,000 2,592,000
Commitments and contingencies - -
Stockholders' equity:
Common stock 8,985,000 8,985,000
Capital in excess of par value 38,492,000 38,492,000
Retained earnings 95,296,000 95,507,000
Treasury stock (40,557,000) (40,503,000)
----------- -----------
102,216,000 102,481,000
----------- -----------
Total Liabilities and Stockholders' Equity $143,964,000 $145,344,000
=========== ===========
The accompanying notes are an integral part of the consolidated condensed
financial statements.
<PAGE>
Gilbert Associates, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended
---------------------------------
March 29, 1996 March 31, 1995
Total revenue $ 43,897,000 $ 64,584,000
---------- ----------
Costs and expenses:
Cost of revenue 33,728,000 48,010,000
Selling, general and administrative 8,483,000 14,555,000
---------- ----------
Total costs and expenses 42,211,000 62,565,000
---------- ----------
Income before provision for taxes on income 1,686,000 2,019,000
Provision for taxes on income 640,000 885,000
--------- ---------
Net income $ 1,046,000 $ 1,134,000
========= =========
Per share of common stock:
Net income $0.17 $0.16
Cash dividends $0.20 $0.20
Average number of shares of common stock 6,285,782 6,956,124
The accompanying notes are an integral part of the consolidated condensed
financial statements.
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended
----------------------------
March 29, March 31,
1996 1995
Cash flows from operating activities:
Net income $ 1,046,000 $ 1,134,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Items not affecting cash 1,662,000 1,877,000
Changes in current assets and
current liabilities (687,000) (45,000)
Other,net (315,000) (241,000)
---------- ----------
Net cash provided by operating
activities 1,706,000 2,725,000
--------- ---------
Cash flows from investing activities:
Payments for acquisition of XEL Corporation (954,000) -
Payments for property, plant and equipment (1,696,000) (1,178,000)
Proceeds from sale of property, plant
and equipment 469,000 -
----------- -----------
Net cash used for investing activities (2,181,000) (1,178,000)
----------- -----------
Cash flows from financing activities:
Payments under note payable - (2,000,000)
Issuance of treasury stock in connection
with stock option, award and purchase
plans - 99,000
Payments to acquire treasury stock (54,000) (242,000)
Cash dividends paid (1,257,000) (1,391,000)
Other, net (394,000) (135,000)
----------- -----------
Net cash used for financing activities (1,705,000) (3,669,000)
----------- -----------
Net decrease in cash and cash equivalents (2,180,000) (2,122,000)
Cash and cash equivalents at beginning
of period 8,674,000 7,427,000
---------- ---------
Cash and cash equivalents at end of period $ 6,494,000 $ 5,305,000
========== =========
Supplemental cash flow disclosures:
Income taxes paid, net of refunds
received $ 380,000 $ 170,000
=========== =========
The accompanying notes are an integral part of the 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 statements of
operations and the consolidated condensed statements of cash flows as of March
31, 1995 have been reclassified to conform with the 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. Business segment information:
Three Months Ended
------------------------------
March 29, 1996 March 31, 1995
-------------- --------------
In (000's)
- -----------
Revenues:
Technical Services $ 21,581 $ 51,546
Telecommunication 20,168 11,851
Real Estate 2,139 1,475
Other 9 (288)
------ -------
$ 43,897 $ 64,584
Operating Profit:
Technical Services 1,004 2,501
Telecommunication 1,374 1,531
Real Estate 518 (103)
Other (1,210) (1,910)
------- -------
$ 1,686 $ 2,019
======= =======
Segment operating profit is total revenue less operating expenses, including
intangible amortization, and excludes interest expense and general corporate
expenses.
4. On October 27, 1995, the Company acquired all of the outstanding capital
stock of XEL Corporation (XEL). As part of the stock purchase agreement, the
Company paid XEL shareholders approximately $954,000 in the first quarter of
1996. Also, under the terms of the agreement, the Company will pay XEL
shareholders additional incremental amounts through 1998 based upon the
achievement of certain earnings and revenue objectives. Any additional amounts
will increase goodwill.
5. Other accrued liabilities as of March 29, 1996 and December 29, 1995 include
a $2,200,000 reserve for costs associated with a claim filed by a former
employee of a subsidiary which was closed in 1988. Also included in other
accrued liabilities are accruals relating to workers' compensation which
amounted to $2,107,000 and $2,282,000 at March 29, 1996 and December 29, 1995,
respectively.
<PAGE>
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
First Quarter - 1996 vs. 1995
Net income for the first quarter of 1996 declined 8% compared to the
first quarter of 1995. The decrease relates primarily to lower
operating profit within the technical services segment offset in part by
higher operating profit within the real estate segment and reduced
corporate expenses. In particular, the technical services segment
results declined due to the absence of Gilbert/Commonwealth, Inc.'s
(G/C) and United Energy Services Corporation's (UESC) earnings. Due to
the sale of G/C last year, the quarter ended March 31, 1995 was the last
quarter that G/C contributed to the Company's earnings. Also, as of
December 29, 1995, the Company decided to close UESC which therefore did
not contribute to the Company's operating results for the current
quarter. Revenue declined 32% in the comparable quarters due to the
absence of G/C and UESC, and was offset in part by higher revenue within
the telecommunications segment. Earnings per share increased 6% in the
first quarter of 1996 compared to the same period in 1995. The
percentage changes in net income and earnings per share differed due to
fewer shares outstanding.
Technical Services Segment
The technical services segment's operating profit declined 60%, with
revenues down 58% in the first quarter of 1996 as compared to the same
period last year. The gross profit percentage declined from 24% in the
first quarter of 1995 to 12% in the first quarter of 1996. These
declines are primarily the result of the disposals of G/C and UESC
mentioned above. The 1995 gross profit percentage has changed from
prior reports due to a reclassification of costs.
The operating profits of the remaining units within the technical
services segment decreased 26% on a 2% decline in revenue in the
comparable first quarters. The gross profit percentage within these
units decreased from 13% in 1995 to 12% in 1996. The decline in
operating profits stems primarily from higher research and development
costs coupled with the slight decline in gross profit percentage.
Telecommunications Segment
The telecommunications segment's operating profit decreased 10% on a
revenue increase of 70% in the first quarter of 1996 as compared to the
same period in 1995. The increase in revenue relates primarily to the
inclusion of XEL Communication's (XEL) revenue. The unfavorable
relationship between the change in operating profit and revenue stems
from break-even operations at XEL and higher selling, general and
administrative expenses within GAI-Tronics. The increase in selling,
general and administrative costs relates primarily to additional costs
associated with the introduction of new products. The gross profit
percentage decreased from 39% in the first quarter of 1995 to 34% in the
current quarter due primarily to the inclusion of XEL. The 1995 gross
profit percentage has changed from prior reports due to a
reclassification of costs within the telecommunications segment.
Real Estate Segment
The real estate segment reported an operating profit for the first
quarter of 1996 as compared to a loss in the same period of 1995. The
increase in operating profit is primarily due to a revenue increase of
45%, which in turn relates primarily to a higher level of leased space.
The total square feet available for lease is approximately 550,000 of
which approximately 96% is leased as of March 29, 1996. Approximately
8% is leased to related subsidiaries. Although the Company anticipates
increased results from the prior year, it should be noted that the
Company is currently exploring its options to monetize its real estate
assets.
Selling, General and Administration
Selling, general and administrative expenses decreased 42% from first
quarter of 1995 to the current quarter. The large decline is primarily
related to the absence of G/C and UESC as well as lower corporate costs,
offset in part by the costs associated with XEL.
Income before Provision for Taxes
Income before provision for taxes decreased 16% in the first quarter of
1996 compared to the same period in 1995. The decrease relates
primarily to the absence of earnings from G/C and UESC, offset in part
by higher operating profit within the real estate segment and reduced
corporate expenses.
Provision for Taxes
The provision for taxes on income decreased from an effective rate of
44% in the first quarter of 1995 to 38% in the first quarter of 1996.
The decrease relates primarily to lower state taxes.
Liquidity and Capital Resources
Working capital decreased $2,278,000, or 7% in the first quarter of
1995. Cash and cash equivalents decreased $2,180,000. The decreases
relate primarily to higher payments for property, plant and equipment
and the payment to former XEL shareholders (Note 4). Amounts generated
from operations, combined with the available cash and cash equivalents
and short-term lines of credit should provide adequate working capital
at least through 1996, including capital expenditures as discussed
below, and to satisfy the contingent payments to former Instrument
Associates, Inc. principals and XEL shareholders.
Lines of credit with two banks aggregating $28,000,000 are available for
short-term cash needs. The short-term lines of credit consist of the
following: Meridian Bank, $25,000,000, which expires April 30, 1997;
and The Chase Manhattan Bank, N.A., $3,000,000, which expires
June 30, 1996. At March 29, 1996, the entire Chase line was available
and $6,329,000 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 current Meridian line is used to fund
short-term working capital requirements as well as secure stand-by
letters of credit . The Company expects to establish a credit facility
during 1996 which would be used to fund further acquisitions as well as
other working capital requirements. The Company estimates that its
total capital expenditures in 1996 will be approximately $8,800,000.
However, only $4,400,000 relates to ongoing operations. The additional
$4,400,000 will be used for one time real estate related expenditures.
No restrictions on cash transfers between the Company and its
subsidiaries exist.
The Form 10Q contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the
Company. Such statements are only predictions and involve risks and
uncertainties, and actual events or performance may differ materially.
Potential risks and uncertainties include, without limitation: the
effect of general economic conditions, the impact of competitive
products, services and pricing, and demand and market acceptance risks
of current and new products and services; with respect to the Technical
Services segment, its dependence on the U.S. government as a customer;
and with respect to the Telecommunications segment, the uncertain effect
of the Telecommunications Act of 1996, technology change, and risks of
product development and commercialization difficulties.
<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 Company filed Form 8-K on March 8, 1996 regarding the
adoption of a new dividend policy.
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/Paul H. Snyder
Paul H. Snyder
Vice President and
Chief Financial Officer
Date: August 2, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1997
<PERIOD-END> MAR-29-1996
<CASH> 6,494,000
<SECURITIES> 0
<RECEIVABLES> 26,591,000
<ALLOWANCES> 1,955,000
<INVENTORY> 12,600,000
<CURRENT-ASSETS> 62,787,000
<PP&E> 78,181,000
<DEPRECIATION> 33,907,000
<TOTAL-ASSETS> 143,964,000
<CURRENT-LIABILITIES> 30,256,000
<BONDS> 0
0
0
<COMMON> 8,985,000
<OTHER-SE> 93,231,000
<TOTAL-LIABILITY-AND-EQUITY> 143,964,000
<SALES> 20,168,000
<TOTAL-REVENUES> 43,897,000
<CGS> 13,224,000
<TOTAL-COSTS> 33,728,000
<OTHER-EXPENSES> 8,483,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,000
<INCOME-PRETAX> 1,686,000
<INCOME-TAX> 640,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,046,000
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
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