SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. - 20549
_________________________
FORM 10-Q
(Mark One)
* QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 27, 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
September 27, 1996 (excluding 2,615,633
Class A treasury shares): 5,905,368 464,299
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information Pages
Item I.
Consolidated Condensed Balance Sheets at
September 27, 1996 and December 29, 1995 (unaudited)
Consolidated Condensed Statements of Operations for the
nine month and three month periods ended September 27, 1996
and September 29, 1995 (unaudited)
Consolidated Condensed Statements of Cash Flows
for the nine month periods ended September 27, 1996
and September 29, 1995 (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>
<TABLE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
Sept. 27, 1996 Dec. 29, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,335,000 $ 8,674,000
Accounts receivable, net of allowance
for doubtful accounts of $1,702,000 and
$2,005,000, respectively 26,893,000 24,717,000
Unbilled revenue 6,570,000 10,086,000
Inventories 14,197,000 11,548,000
Deferred income taxes 3,860,000 5,860,000
Other current assets 4,833,000 4,601,000
---------- ----------
Total current assets 60,688,000 65,486,000
---------- ----------
Property, plant and equipment, at cost 77,630,000 77,826,000
Less accumulated depreciation and
amortization 33,112,000 33,855,000
---------- ----------
44,518,000 43,971,000
---------- ----------
Deferred income taxes 605,000 605,000
Other assets 1,279,000 1,320,000
Intangible assets 34,317,000 33,962,000
----------- -----------
Total Assets $ 141,407,000 $ 145,344,000
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,727,000 $ 5,143,000
Salaries and wages 4,512,000 4,158,000
Income taxes 2,265,000 1,670,000
Estimated liability for contract losses 3,032,000 3,171,000
Contractual billings in excess of
recognized revenue 477,000 639,000
Other accrued liabilities 10,473,000 16,196,000
---------- ----------
Total current liabilities 27,486,000 30,977,000
---------- ----------
Long-term debt 1,163,000 2,226,000
Other long-term liabilities 6,994,000 7,068,000
Self-insured retention 2,464,000 2,592,000
Commitments and contingencies - -
Stockholders' equity:
Common stock 8,985,000 8,985,000
Capital in excess of par value 38,098,000 38,492,000
Deferred compensation - restricted stock (416,000) -
Retained earnings 96,553,000 95,507,000
Treasury stock (39,920,000) (40,503,000)
----------- -----------
103,300,000 102,481,000
----------- -----------
Total Liabilities and Stockholders' Equity $ 141,407,000 $ 145,344,000
=========== ===========
The accompanying notes are an integral part of the consolidated condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Nine Months Ended Three Months Ended
Sept. 27, 1996 Sept. 29, 1995 Sept. 27, 1996 Sept. 29, 1995
<S> <C> <C> <C> <C>
Total revenue $ 134,663,000 $ 148,612,000 $ 46,502,000 $ 40,888,000
Costs and expenses:
Cost of revenue 102,244,000 112,611,000 35,361,000 31,273,000
Selling, general and
administrative expenses 25,633,000 30,429,000 7,975,000 7,903,000
----------- ----------- ---------- ----------
Total costs and expenses 127,877,000 143,040,000 43,336,000 39,176,000
----------- ----------- ---------- ----------
Income before gain on sale of
subsidiary and provision
for taxes on income 6,786,000 5,572,000 3,166,000 1,712,000
Gain on sale of subsidiary - 26,542,000 - -
--------- ---------- --------- ---------
Income before provision for
taxes on income 6,786,000 32,114,000 3,166,000 1,712,000
Provision for taxes on income 2,590,000 10,168,000 1,210,000 713,000
--------- ---------- --------- -------
Net income $ 4,196,000 $ 21,946,000 $ 1,956,000 $ 999,000
========= ========== ========= =======
Per share of common stock:
Net income $0.67 $3.28 $0.31 $0.16
Cash dividends $0.50 $0.60 $0.10 $0.20
Average number of shares of common
stock outstanding 6,293,186 6,692,720 6,304,746 6,279,366
The accompanying notes are an integral part of the consolidated condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Nine Months Ended
Sept. 27, Sept. 29,
1996 1995
<C> <C>
<S>
Cash flows from operating activities:
Net income $ 4,196,000 $ 21,946,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of Gilbert/Commonwealth, Inc. - (26,542,000)
Items not affecting cash 6,119,000 5,712,000
Changes in current assets and current liabilities (4,718,000) (3,203,000)
Other, net (236,000) 245,000
--------- ---------
Net cash provided by(used for) operating activities 5,361,000 (1,842,000)
--------- ---------
Cash flows from investing activities:
Payments for acquisition of XEL Corporation (954,000) -
Net increase in short-term investments - (28,974,000)
Proceeds from sale of Gilbert/Commonwealth, Inc. - 45,932,000
Payments for property, plant and equipment (4,930,000) (2,250,000)
Proceeds from sale of property, plant
and equipment 912,000 -
--------- ----------
Net cash provided by(used for) investing activities (4,972,000) 14,708,000
--------- ----------
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 341,000 793,000
Payments to acquire treasury stock (583,000) (9,423,000)
Cash dividends paid (3,150,000) (4,040,000)
Payments of long-term debt (1,134,000) (83,000)
Other, net (202,000) (247,000)
--------- ----------
Net cash used for financing activities (4,728,000) (15,000,000)
--------- ----------
Net decrease in cash and cash equivalents (4,339,000) (2,134,000)
Cash and cash equivalents at beginning of period 8,674,000 7,427,000
--------- ---------
Cash and cash equivalents at end of period $ 4,335,000 $ 5,293,000
========= =========
Supplemental cash flow disclosure:
Income taxes paid, net of refunds received $ (5,000) $ 5,762,000
========= =========
The accompanying notes are an integral part of the consolidated condensed financial
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
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 financial
statements have 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. Earnings per share are computed
independently for each of the quarters presented. Therefore, the sum of the
quarterly earnings per share in 1995 does not equal the total computed for
the year due to the timing of stock repurchases throughout the nine-month
period ended September 29, 1995 and the large gain relative to the G/C sale.
The effect on net income per share resulting from dilution upon exercise of
outstanding stock options and restricted stock is not material, and therefore
is not shown.
An amendment to the Company's Certificate of Incorporation was approved
during the second quarter of 1996 to reduce the number of authorized shares
from 24,000,000 shares to 11,000,000 shares, 10,000,000 shares of which
are common stock and 1,000,000 shares of which are preferred stock. No
preferred stock was outstanding as of September 27, 1996.
3. During the second quarter of 1996, several key employees were issued an
aggregate of 34,500 shares of restricted stock in the Company. The value of
this stock is recorded as deferred compensation in the stockholders' equity
section of the consolidated condensed balance sheets, and will be expensed
over the vesting period. The vesting period will not exceed 10 years and may
be accelerated depending upon the achievement of certain objectives.
4. Business segment information:
Three Months Ended Nine Months Ended
Sept. 27, 1996 Sept. 29, 1995 Sept. 27, 1996 Sept. 29, 1995
In (000's)
Revenues:
Technical Services $22,288 $27,074 $ 65,538 $107,371
Telecommunication 21,939 11,268 62,579 35,087
Real Estate 2,295 1,617 6,582 4,665
Other (20) 929 (36) 1,489
------ ------ ------- -------
$46,502 $40,888 $134,663 $148,612
====== ====== ======= =======
Operating Profit:
Technical Services $ 1,199 $ 1,456 $ 3,592 $ 5,078
Telecommunication 2,209 1,278 5,054 4,323
Real Estate 673 143 1,840 305
Other (915) (1,165) (3,700) (4,134)
----- ----- ----- -----
$ 3,166 $ 1,712 $ 6,786 $ 5,572
===== ===== ===== =====
Segment operating profit is total revenue less operating expenses, including
intangible amortization, and excludes interest expense, general corporate
expenses and interest income. Other operating profit includes a $700,000
positive adjustment associated with a favorable legal settlement. See Note
10 for further information.
5. Under terms of a loan agreement, agented by CoreStates Bank, N.A., the
Company has a working capital line of credit of $28,000,000 and an
acquisition line of credit of $42,000,000, of which up to $5,000,000 could be
used for additional working capital. The agreement requires maintenance of
certain financial covenants, and the Company pays a commitment fee of one-
eighth of one percent on the unused portion of the lines.
The working capital line of credit is available through April 30, 1997. At
September 27, 1996, $8,743,000 was not committed for stand-by letters of
credit or other reservations. This amount increased to $26,743,000 as a
result of the settlement discussed in Note 9.
The acquisition line of credit is available through May 29, 1998. Any
balance outstanding at that time will convert to a term loan and be amortized
in equal principal payments over the following 60 months.
Interest charges will be based, at the Company's option, on a function of
either LIBOR or the Prime Rate.
6. The components of inventories as of the balance sheet dates are as follows:
Sept. 27, 1996 Dec. 29, 1995
Raw material $ 8,224,000 $ 6,789,000
Work in process 2,174,000 1,732,000
Finished goods 3,799,000 3,027,000
---------- ----------
$14,197,000 $11,548,000
========== ==========
7. Other accrued liabilities includes an accrual relating to workers'
compensation of $2,163,000 and $2,282,000 at September 27, 1996 and December
29, 1995, respectively. Also included in other accrued liabilities at
December 29, 1995, is a reserve of $2,200,000 for costs associated with a
claim that was settled during the third quarter of 1996 and is more fully
discussed in Note 10.
8. On September 30, 1996, the Company acquired the assets of SAFCO's
Electronic Systems Division (ESD). Terms of the acquisition call
for the Company to pay SAFCO shareholders approximately $5
million in cash at closing (subject to certain adjustments), issue
approximately $25 million in notes payable and issue 7 year warrants
exercisable to purchase 555,555 shares of the Company's stock at $18 per
share. Of the $25 million in notes payable, $15 million is to be paid in
early 1997 and the remaining $10 million is to be paid over a 5 year term.
The $10 million note carries a 7% coupon rate. Also, under the terms of the
agreement, the Company will pay SAFCO shareholders additional incremental
amounts through 1999 based upon the achievement of certain revenue and
operating income levels. Any additional payments will increase goodwill.
In connection with the ESD acquisition, $10,300,000, net of $6,500,000 income
tax benefit, of in-process research and development costs will be expensed
during the fourth quarter of 1996. The purchased in-process research and
development had not yet reached technological feasibility and the technology
had no alternative future use as of the date of closing.
The following unaudited consolidated condensed pro forma statement of
operations for the nine month periods ended September 27, 1996 and September
29, 1995 include SAFCO as if it had been acquired at the beginning of each of
the respective periods:
Sept. 27, 1996 Sept. 29, 1995
Revenue $147,362,000 $157,357,000
Net income $4,149,000 $20,571,000
Net income per average
shares outstanding $.66 $3.07
The pro forma statement of operations includes adjustments for elimination of
interest income on cash used in the acquisition, interest expense and
amortization of intangible assets. The pro forma statement of operations
exclude the $10,300,000 in-process research and development write-off
discussed in Note 8. Historically, SAFCO has been highly
seasonal with up to 40% and 65% of its revenues and operating income,
respectively, generated in the last quarter of the calendar year.
9. On October 18, 1996, the Company announced the settlement of a $12,000,000
trial court verdict against the Company and Gilbert/Commonwealth, Inc. of
Michigan relative to a dispute concerning construction management work
performed by the former subsidiary of Gilbert/Commonwealth, Inc. (G/C) in
1987 for Alaska-based Homer Electric Association. Terms of the settlement
call for the Company to be released from all liabilities in exchange for
assignment of the Company's insurance rights to the Plaintiffs. As a result
of this settlement, the Alaska Trial Court released the $15,300,000 security
bond previously posted by the Company. This settlement had no impact on the
Company's results of operations.
10. During the third quarter of 1996, the Company settled a claim filed by a
former employee of a subsidiary which was closed in 1988. The settlement
resulted in an increase in net income of $435,000, net of income taxes of
$265,000, or $.07 per share.
11. 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.
12. 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 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.
<PAGE>
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Year to Date - 1996 vs. 1995
During the third quarter of 1996, the Company settled a claim filed by
a former employee, for which it had reserved approximately $2,200,000.
The actual settlement was approximately $1,500,000. Accordingly, the
Company has reversed the remaining $700,000 reserve in the current
quarter, increasing net income by $435,000, or $.07 per share. Also,
during the second quarter of 1995, the Company sold
Gilbert/Commonwealth, Inc. (G/C) for $45,932,000, resulting in an
increase to net income of $18,742,000, or $2.74 per share. 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 12.
Excluding the reversal related to the aforementioned settlement and
the G/C sale mentioned above, net income and earnings per share for
the first nine months of 1996 increased 17% and 25% respectively,
compared to the same period of 1995. The increases in net income and
earnings per share are due primarily to higher operating profits
within the Telecommunication and Real Estate segments and lower
corporate expenses offset in part by reduced Technical Services profit
and lower interest income. The percentage changes in net income and
earnings per share differed due to fewer shares outstanding.
Excluding the former employee settlement, income before gain on sale
of subsidiary and provision for taxes on income increased 9% from the
prior year. The difference in the percentage increase in net income and
income before gain on sale of subsidiary and provision for taxes on income is
primarily due to a lower effective state tax rate.
Total revenue declined 9% in the first nine months of 1996 as compared
to the same period of 1995 due primarily to the absence of G/C and
United Energy Services Corporation (UESC), offset in part by higher
revenue within the Telecommunication segment. The Company decided to
close UESC at the end of 1995.
Third Quarter - 1996 vs. 1995
Excluding the reversal related to the former employee settlement
mentioned above, net income increased 52% and earnings per share
increased 50% in the third quarter of 1996 as compared to the third
quarter of 1995. Excluding the former employee settlement, income
before gain on sale of subsidiary and provision for taxes on income
increased 44% in the third quarter of 1996 compared to the same
quarter in 1995. The difference in the percentage increase in net income
and income before gain on sale of subsidiary and provision for taxes on
income is primarily due to a lower effective state tax rate. The
increase in net income and earnings per share relates primarily to
higher operating profit within the Telecommunication and Real Estate
segments, offset in part by lower interest income, which in 1995 was
higher due to the proceeds on the G/C sale. Revenue increased 14% due
primarily to higher revenue within the Telecommunication segment,
offset in part by a decline within the Technical Services segment.
Telecommunications Segment
The Telecommunication segment's operating profit increased 17% on a
revenue increase of 78% in the first nine months of 1996 as compared
to the same period in 1995. The gross profit percentage decreased
from 38% for the nine month period of 1995 to 35% for the same period
in 1996. The increases in revenue and decreases in gross profit
percentage relate primarily to the inclusion of XEL. The increase in
operating profit for the nine month period relates primarily to the
inclusion of XEL.
For the current quarter, the Telecommunication segment's operating
profit increased 73% on a revenue increase of 95% from the third
quarter of 1995. The increase in operating profit relates primarily
to higher sales from GAI-Tronics and, to a lesser extent, inclusion of
XEL. The gross profit percentage decreased from 37% for the third
quarter of 1995 to 35% in the current quarter. The increase in
revenue and decrease in gross profit relates primarily to the
inclusion of XEL.
The gross profit percentages have changed from prior reports due to a
reclassification of costs within the Telecommunication segment.
Technical Services Segment
The Technical Services segment operating profit declined 29%, with
revenues down 39% in the first nine months of 1996 as compared to the
same period last year. The gross profit percentage declined from 19%
in the first nine months of 1995 to 12% in the same period of 1996.
These declines are primarily the result of the disposals of G/C and
UESC mentioned above.
Revenues declined 18% and the gross profit percentage declined from
15% in the third quarter of 1995 to 12% in the current quarter. These
declines relate primarily to the absence of UESC's operations in the
current quarter. Operating profit decreased 18% from the third
quarter of 1995 as compared to the current quarter due primarily to
the absence of UESC's operations.
The operating profits and revenue of the remaining units, Resource
Consultants, Inc. (RCI) and SRA Technologies (SRA), decreased 5% and
4%, respectively, in the first nine months of 1996 as compared to the
same period in 1995. The gross profit percentage on these units was
12% for both nine month periods.
The current quarter operating profits of the remaining units decreased
1% on a similar revenue decline of 1% from the third quarter of 1995.
The gross profit percentage was 12% in both quarters.
Real Estate Segment
The Real Estate segment operating profit was $1,840,000 and $673,000
for the first nine months and third quarter of 1996, respectively, as
compared to $305,000 and $143,000 in the same periods of 1995. The
increases in operating profit are primarily due to revenue increases
of 41% and 42% for the first nine months and current quarter
respectively, when compared to the same periods in 1995, which in turn
relate primarily to a higher rate of leased space. The total square
feet available for lease is approximately 550,000 of which
approximately 94% was leased as of September 27, 1996. Approximately
8% is leased to related subsidiaries. Although the Company has
experienced improved results from the prior year in its real estate
operations, it should be noted that the Company is currently
evaluating its options for monetizing its real estate assets.
Other Income
Other income includes interest income of $242,000 and $73,000 for the
nine and three month periods ended September 27, 1996, respectively,
as compared to $1,219,000 and $590,000 in the same periods of 1995.
Prior year interest income was higher due to increased cash balances
as a result of the G/C sale.
Selling, General and Administration
Selling, general and administrative expenses decreased 16% from the
first nine months of 1995 to the same period of 1996. The large
decline is primarily related to the absence of G/C and UESC, offset in
part by the costs associated with XEL. Research and development
costs, which are included in selling, general and administrative
expenses, increased from $2,369,000 in the first nine months of 1995
to $5,523,000 for the same period in 1996. The increase relates
primarily to XEL.
For the current quarter, selling, general and administrative expenses
increased 1% from the third quarter of 1995 as the costs associated
with XEL were offset by the absence of UESC costs. Research and
development costs increased from $910,000 in the third quarter of 1995
to $1,683,000 in the current quarter due to the addition of XEL.
Provision for Taxes on Income
Excluding the effect of the G/C sale, the provision for taxes on
income decreased from an effective rate of 42% in the first nine
months of 1995 to 38% in the same period of 1996. The effective rate
decreased from 43% in the third quarter of 1995 to 38% in the current
quarter. The decreases relate primarily to lower state taxes.
Liquidity and Capital Resources
Working capital decreased $1,307,000, or 4% in the first nine months
of 1996. Cash and cash equivalents decreased $4,339,000. Amounts
generated from operations, combined with the available cash and cash
equivalents and lines of credit should provide adequate working
capital to satisfy the contingent payments to former IAI principals
and XEL shareholders.
Lines of credit with CoreStates Bank, N.A., are available to fund both
short-term cash needs as well as future acquisitions. These lines are
more fully discussed in Note 5.
The Company estimates that its total capital expenditures in 1996,
excluding acquisitions, will be approximately $8,000,000. However,
only $4,000,000 relates to ongoing operations. The additional
$4,000,000 will be used for one time real estate related expenditures.
No restrictions on cash transfers between the Company and its
subsidiaries exist.
Other
On June 5, 1996, the Board of Directors announced that the Company has
begun to explore strategic options for its remaining units within the
technical services segment. Separate investment banking firms have
been retained to develop strategies for both SRA and RCI. Also, as
previously disclosed, the Company is continuing to explore options for
monetizing its real estate holdings. Alternatives could include an
outright sale, a spin-off or leveraging.
Upon completion of the foregoing, the Company will be focused on
telecommunications.
Final decisions and the execution of plans for the three operations
could take up to one year to complete. In the interim, and until
definite decisions are made, operations at SRA and RCI, along with the
Company's real estate division, will continue normally and their
results will be included in ongoing operations.
The Form 10-Q 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; the Company's ability to implement
strategic options for SRA, RCI and its real estate holdings, and the
timing thereof; with respect to the Technical Services segment, its
dependence on the U.S. government as a customer; and with respect
to the Telecommunication segment, the uncertain effect of the
Telecommunications Act of 1996, technology change, and risks of product
development and commercialization difficulties. Further information on the
factors that could affect the future financial performance of the Company
are included in the Company's Form 8-K filed with the Securities and
Exchange Commission on July 8, 1996.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
The Company announced the settlement of a $12,000,000 trial court judgement
against the Company. This is more fully discussed in Note 9 to the
consolidated condensed financial statements in Part I.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Restated Certification of Incorporation filed with the
State of Delaware on September 20, 1996.
(b) Reports on Form 8-K:
The Company filed Form 8-K on July 8, 1996 regarding the
"safe habor" provision of the Private Securities
Litigation Reform Act of 1995.
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: November 8, 1996
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GILBERT ASSOCIATES, INC.
It is hereby certified that:
1. (a) The present name of the corporation (hereinafter called the
"Corporation") is GILBERT ASSOCIATES, INC.
(b) The name under which the Corporation was originally
incorporated was "G/C Holdings, Inc."; and the date of filing of the
original certificate of incorporation of the Corporation with the Secretary
of State of the State of Delaware was February 14, 1984.
2. This Amended and Restated Certificate of Incorporation, which
amends and restates the Corporation's Certificate of Incorporation in its
entirety, has been duly adopted pursuant to the provisions of Sections 242
and 245 of the General Corporation Law of the State of Delaware. The
provisions of the Restated Certificate of Incorporation are as follows:
FIRST: The name of this Corporation is:
GILBERT ASSOCIATES, INC.
SECOND: Its registered office in the State of Delaware is located in
the City of Dover in the County of Kent, in the State of Delaware. The
name of its registered agent is the United States Corporation Company, 32
Loockerman Square, Suite L-100, in the said City of Dover.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is eleven million (11,000,000)
shares, of which (i) ten million (10,000,000) shares shall be any
combination of Class A common stock, par value $1.00 per share, and Class B
common stock, par value $1.00 per share, and (ii) one million (1,000,000)
shares shall be Preferred Stock, par value $1.00 per share. The Board is
hereby empowered to cause the Preferred Stock to be issued from time to
time for such consideration as it may from time to time fix, and to cause
such Preferred Stock to be issued in series with such voting rights,
designations, preferences, qualifications, limitations, restrictions,
conversion rights and other special or relative rights as designated by the
Board in the resolution providing for the issue of such series. Shares of
Preferred Stock of any one series shall be identical in all respects.
The powers, preferences, rights, and the qualifications, limitations
or restrictions with respect to common stock are set forth below.
(a) Class B Common Stock of the Corporation may be held only by:
(1) An active employee of (i) the Corporation, (ii) of a
corporation in which the Corporation directly owns 100% of the voting
shares, or (iii) of a corporation, in an unbroken chain of corporations, in
which the Corporation indirectly (through the Corporation's ownership of
100% of the voting shares of all intermediate corporations in that chain)
owns 100% of the voting shares, each such employee being hereinafter
referred to as an "Active Employee";
(2) Directors of the Corporation ("Directors"); or
(3) Trusts for the exclusive benefit of an Active Employee or
Active Employees if the terms of the trust provide that the Trustee shall
vote all full shares of Class B Common Stock credited to the account of
said Active Employee or Active Employees only in accordance with the
written direction of said Active Employee or Active Employees (hereinafter
referred to as "Eligible Trusts"). A trust shall be deemed to be for the
exclusive benefit of an Active Employee even though the trust makes
provision for the holding of shares after an Active Employee ceases to be
such for such period as may be necessary in order to effectuate
distribution to him, or upon death, to his designated beneficiary.
(b) At such time as (i) any person shall cease to be an Active
Employee, (ii) any Director shall cease to hold that position, or (iii) any
Eligible Trust which is a registered holder of Class B Common Stock ceases
to be an Eligible Trust for any reason whatsoever, each share of Class B
Common Stock of the Corporation held by or for such Active Employee,
Director or Eligible Trust shall be converted forthwith and automatically
into one share of Class A Common Stock.
At such time as any share or shares of Class B Common Stock of the
Corporation are sold or transferred, by operation of law or otherwise, to
anyone, including the Corporation, who is not an Active Employee, a
Director or an Eligible Trust, each share of the share or shares of Class B
Common Stock of the Corporation so sold or transferred shall be converted
forthwith and automatically into one share of Class A Common Stock of the
Corporation.
(c) The Board of Directors of the Corporation may, if the Board
deems it advisable and in the interest of the Corporation, permit any share
or shares of Class A Common Stock of the Corporation held by any Active
Employee, Director or Eligible Trust to be converted into Class B Common
Stock of the Corporation, share for share.
(d) Anyone desirous of having shares of Class B Common Stock of
the Corporation held by an Eligible Trust may submit evidence to the Board
of Directors to establish that said trust is in fact an Eligible Trust and
the determination by the Board of Directors as to whether the Trust is in
fact an Eligible Trust shall be final and conclusive. Moreover, the Board
of Directors may at any time require a trustee to establish that the trust
is an Eligible Trust and the Board's determination shall be final and
conclusive.
(e) Upon conversion of any share of stock of one class into a
share of stock of the other class, the share of stock of the class so
converted into the other shall be restored to the status of an authorized
and unissued share of its class.
(f) No holder of Class B Common Stock of the Corporation,
desirous of selling or transferring any share or shares of such Class B
Common Stock of the Corporation, shall have the power to sell or transfer
any such share or shares unless and until he shall first have offered the
same for sale to the Corporation at the actual price at which it is
proposed to sell or transfer the same. Such offer shall be made in writing
signed by such stockholder and sent by mail to the Corporation at its
principal place of business, and shall remain good for acceptance by the
Corporation for a period of thirty days from the date of receipt thereof
and shall be accompanied by a written offer signed by the proposed
purchaser, giving his name and address and his offering price. Any pledgee
of any share or shares of Class B Common Stock of the Corporation, before
bringing any suit, action or proceedings, or doing any act to foreclose his
pledge, shall first offer such stock for sale to the Corporation at the
fair market value for such stock. Such offer shall remain good for
acceptance by the Corporation for a period of thirty days after receipt
thereof. In case any offer above referred to shall not be accepted by the
Corporation within such thirty day period, such share or shares may be sold
or transferred to such proposed purchaser. Neither the transfer by an
Active Employee of Class B Common Stock to an Eligible Trust or the
transfer or other distribution by an Eligible Trust of Class B Common Stock
to a beneficiary of such Eligible Trust shall be deemed to constitute a
sale or transfer of such stock for purposes of this subparagraph (f).
The provisions contained herein shall be embodied in, written, printed
or stamped on each certificate of the Class B Common Stock of the
Corporation, and thereupon shall be part thereof, binding upon each and
every present or future holder or owner thereof.
(g) Except as otherwise provided by law, the entire voting power
for the election of directors and all other purposes shall be vested
exclusively in the holders of the Class B Common Stock of the Corporation,
each of whom shall be entitled to one vote for each share of Class B Common
Stock of the Corporation held by him of record; provided, however, that
during such period or periods as there shall be no Class B Common Stock of
the Corporation issued and outstanding, and only during such period or
periods, the holders of Class A Common Stock shall be entitled to one vote
for each share of Class A Common Stock held by him of record. The amount
of the authorized stock of any class or classes of stock, and the amount of
the capital stock which may be issued and outstanding at any time, may be
increased or decreased by the affirmative vote of the holders of a majority
of the outstanding Class B Common Stock.
(h) The holders of any share or shares of Class A Common Stock of
the Corporation shall not be, as to such share or shares, subject to any of
the restrictions upon sale or transfer imposed upon holders of Class B
Common Stock by subparagraph (f) of this ARTICLE FOURTH.
(i) Except as hereinbefore provided, the powers, preferences and
rights and the qualifications, limitations or restrictions of the Class A
Common Stock of the Corporation and the Class B Common Stock of the
Corporation shall be in all respects identical, share for share.
FIFTH: The minimum amount of capital with which the Corporation will
commence business is ONE THOUSAND DOLLARS ($1,000).
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The private property of stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
EIGHTH: It is further provided for the management of the business and
the conduct of the affairs of the Corporation, and for the purpose or
creating, defining, limiting and regulating the powers of the Corporation,
the directors and the stockholders:
(a) No employee of the Corporation shall be eligible to be a
director unless he is a holder of Class B Common Stock of the Corporation.
(b) The Board of Directors shall have power:
(1) To fix and determine, and from time to time to vary, the
amount to be reserved as working capital; to determine whether any and if
any, what part of any surplus shall be declared and paid as dividends; to
determine the date or dates for the declaration and payment of dividends,
and to direct and determine the use and disposition of any surplus;
(2) To make, alter, amend, suspend and repeal the Bylaws of
the Corporation;
(3) To designate three or more of their number to constitute
an Executive Committee, which Committee, to such extent as may be provided
by resolution of the directors or by the Bylaws of the Corporation, shall
have, and may exercise any or all of the powers of the Board of Directors
in the management of the business and affairs of the Corporation, including
the power to authorize its seal to be affixed to all papers which may
require it.
(c) Any officer elected or appointed by the stockholders or by
the Board of Directors or by any Committee may be removed (except from the
office of director) at any time, with or without cause, in such manner as
may be provided in the Bylaws. Any other officer or employee of the
Corporation other than a director may be removed at any time with or
without cause by the Board of Directors in such manner as may be provided
in the Bylaws or by any Committee or superior officer upon whom such power
of removal may be conferred by the Bylaws or by authority of the Board of
Directors.
(d) A director or officer of this Corporation shall not be
disqualified by his office from dealing or contracting with the
Corporation, either as a vendor, purchaser or otherwise, nor shall any
transaction or contract of this Corporation be void or voidable by reason
of the fact that any director or officer of the Corporation, any firm of
which any director or officer is a member or employee, or any Corporation
of which any director or officer is a shareholder, director, officer or
employee, is in any way interested in such transaction or contract,
provided that such transaction or contract is or shall be authorized,
ratified, or approved either (1) by vote of a majority or a quorum of the
Board of Directors or of the Executive Committee without counting in such
majority or quorum any director so interested or member or employee of a
firm so interested or a shareholder, director, officer or employee of a
Corporation so interested, or (2) by vote at a stockholders' meeting of the
holders of record of a majority of all the outstanding shares of capital
stock of the Corporation having full voting power or by writing or writings
signed by a majority of such holders; nor shall any director or officer be
liable to account to the Corporation for any profits realized by and from
or through any such transaction, or contract of this Corporation
authorized, ratified or approved as aforesaid by reason of the fact that he
or any firm of which he is a member or employee, or any Corporation of
which he is a shareholder, director, officer, or employee was interested in
such transaction or contract.
(e) No holder of stock of this Corporation of any class shall be
entitled as of right to purchase or subscribe for any part of the unissued
stock of the Corporation, or any stock of the Corporation of any class to
be issued by reason of any increase of the authorized capital stock of the
Corporation, or of any bonds, debentures, certificates of indebtedness, or
other securities convertible into stock of the Corporation, or any stock of
the Corporation purchased by the Corporation or by its nominee or nominees.
(f) The Corporation may in its Bylaws confer upon its directors
in addition to the foregoing, and in addition to the powers and authorities
expressly conferred upon them by statute, such powers as are not required
by the laws of the State of Delaware to be exercised by the stockholders.
(g) No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by
such director as a director. Notwithstanding the foregoing, a director
shall be liable to the extent provided by applicable law (i) for breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) any willful or
negligent payment of dividends or purchase or redemption of stock in
violation of the limitation imposed on such actions by the General
Corporation Law of Delaware or the Certificate of Incorporation or (iv) for
any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of these provisions shall apply to or
have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
NINTH: Meetings of stockholders may be held without the State of
Delaware, if the Bylaws so provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as from time to time may be designated
by the Board of Directors.
TENTH: This Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the said Corporation has made under its corporate
seal and signed by T. S. Cobb, its President, the foregoing certificate on
the ____ day of _______, 1996.
GILBERT ASSOCIATES, INC.
By:_____________________________
President
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