SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 29, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P. O. Box 1498, Reading, Pennsylvania 19603
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area (610) 856-5500
Securities registered pursuant to Section 12 (g) of the Act:
Class A Common Stock, par value $1.00 per share
(Title of Class)
Class B Common Stock, par value $1.00 per share
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. x
<PAGE>
Item 10. Directors and Executive Officers of the Registrant
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The names, ages and present positions of the directors and executive
officers of the Company as well as other relevant information are set forth
below:
Year In Which
First Became
Name Age Position With Company Director
John W. Boyer, Jr. . . . . 67 ----- 1984
Timothy S. Cobb . . . . . . 54 Chairman of the Board, 1993
President & Chief
Executive Officer
Thomas F. Hafer . . . . . . 47 Vice President, General ----
Counsel & Secretary
Donald E. Lyons . . . . . 66 ----- 1989
Alexander F. Smith . . . . 67 ----- 1970
Paul H. Snyder . . . . . . . 49 Vice President & Chief 1995
Financial Officer
James W. Stratton . . . . 59 ----- 1984
James A. Sutton . . . . . . 61 ----- 1986
Donald K. Wilson, Jr. . . . 60 ----- 1990
Mr. Boyer retired in May 1993 as Chairman of Philadelphia Suburban
Corporation whose principal subsidiary, Philadelphia Suburban Water
Company, is a regulated water utility. Mr. Boyer served in various senior
executive positions with that company since 1981. He is a director of
Philadelphia Suburban Corporation, Betz Laboratories, Inc. and Rittenhouse
Trust Company. Since 1993, Mr. Boyer has been Distinguished Visiting
Professor of Finance, Eastern College, St. Davids, Pennsylvania.
Mr. Cobb has been Chief Executive Officer of the Company since March
1994 and President and Chief Operating Officer of the Company since October
1993. He served as President of Gilbert/Commonwealth, Inc., then a
subsidiary of the Company, from January 1991 to September 1993 and as
President of GAI-Tronics, a subsidiary of the Company, from June 1988 to
December 1991.
Mr. Hafer has been Vice President of the Company since September, 1995. He
has served as General Counsel and Corporate Secretary of the Company since
February, 1994. Mr. Hafer has served as President of Green Hills Management
Company, a division of the Company, since September, 1993. He served as Vice
President of Green Hills Management Company from February, 1991 through
September, 1993.
For five years prior to his retirement in 1987, Mr. Lyons served as
Chief Executive Officer and President of the Power Systems Group of
Combustion Engineering, Inc., a supplier of technology, equipment and
services to the power and process industries. Mr. Lyons is also a director
of Nuclear Support Services, Inc.
For more than five years prior to his retirement as President in
October, 1993 and as Chief Executive Officer of the Company in March of
1994, Mr. Smith served as President and Chief Executive Officer of the
Company. Mr. Smith also serves as a director of Stratton Monthly Dividend
Shares, Inc., Stratton Growth Fund, Inc. and Stratton Small Cap Yield Fund.
<PAGE>
Mr. Snyder has been Chief Financial Officer of the Company since August
1995. He served as Vice President and Chief Financial Officer of The
Dreyfus Corporation from August 1994 until joining the Company. For more
than five years prior to joining Dreyfus, Mr. Snyder served as Senior Vice
President and Chief Financial Officer of Mellon PSFS.
Since 1972, Mr. Stratton has been Chairman and Chief Executive Officer
of Findatex, a financial services firm, and President of the Stratton
Management Company, investment advisors. Mr. Stratton is also a director
of Stratton Growth Fund, Inc., Stratton Monthly Dividend Shares, Inc.,
Stratton Small Cap Yield Fund, UGI Corporation, Amerigas Propane Inc., Alco
Standard Corp. and Teleflex Inc.
Mr. Sutton is Chairman of the Board of Directors of UGI Corporation, a
diversified Pennsylvania-based natural gas and electric utility with non-
utility operations in industrial gases and propane. He has served in
various executive positions with UGI since 1982. Mr. Sutton is also a
director of Amerigas Propane Inc.
Mr. Wilson retired in 1994 as Executive Vice President of The Hartford
Steam Boiler Inspection and Insurance Company, which is engaged in
insurance underwriting, investments and engineering. Mr. Wilson has served
in various executive positions with that company since 1970. He is also a
director of Mechanics Savings Bank in Hartford, Connecticut, and Spencer
Turbine Company in Windsor, Connecticut. He is presently serving as a
consultant with American Phoenix Corporation of Connecticut.
Item 11. Executive Compensation and Other Information
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Board Committee Report on Executive Compensation
The Executive Development Committee of the Board assists the Board in
structuring compensation arrangements and incentive plans for the officers
and senior management of the Company. Decisions on compensation and the
grant of incentives are generally made by the three-member Committee, each
of whom is a non-employee director. All decisions by the Committee
relating to the compensation and incentives for the Company's officers are
submitted to the full Board for ratification or revision. Set forth below
is the Committee's report on the 1995 compensation of the Executive
Officers of the Company.
Compensation Policies Toward Executive Officers
In December 1989, the Committee undertook an in-depth review and
revision of the Company's compensation policies for the officers and
management of the Company and its subsidiaries. During that year, Sibson
& Company, Inc., compensation consultants, had studied and reported on the
existing compensation practices involved.
As a result, the Committee determined that, for 1990 and subsequent
years, the compensation policy of the Company would be as follows:
* Salary will be the basic compensation mechanism.
* The Annual Incentive Bonus Program will be used to provide specific
growth oriented incentives and reward above normal performance.
<PAGE>
* Grants of stock options will align management's interest with
shareholders' and encourage long-term investment and interest in
overall Company performance.
* Other programs will encourage ownership and retention of Company stock
by management personnel and employees generally.
The Committee applies these policies directly to the Executive
Officers, presidents of the subsidiary companies and certain other
management personnel. The Committee also reviews the compensation policies
and practices of the subsidiaries for general alignment and appropriateness
across and between subsidiary units. The Committee engaged Sibson &
Company to upgrade this earlier study during 1994 and 1995, and the
compensation consultants recommended continuation of the basic program as
outlined above.
Relationship of Performance Under Compensation Plans
Salaries
Each year the Committee examines the salaries of the officers of the
Company. These are compared with information available about salaries in
the Company's industry, inflation and the performance of the individuals.
Depending upon the officer involved, the Committee may utilize salary
information relating to comparable companies or companies in other
businesses in which subsidiaries of the Company are engaged. The companies
used for these purposes include some, but not all, of the companies in the
Peer Group shown in the tabular representation of the performance graph
below. As necessary, a number of other companies not included in such index
are also used. The various factors considered are not formally weighted and
the Committee uses subjective judgment in making its decisions.
If a salary increase is deemed justified, it is recommended to the
Board. Mr. Cobb's percentage increase for 1995 was 7.1%. Mr. Hafer's
increase of 13.9% for 1995 was higher than usual due to the increased
salary associated with his promotion to Vice President in September of 1995.
Mr. Itin retired from the Company in April of 1995 and Mr. Snyder joined
the Company in August of 1995. The salary levels for Mr. Cobb and the
executive officers were approximately at the industry median.
Annual Bonus Program
In addition to the Executive Officers, the officers and key management
of the Company and its subsidiaries participate in an annual bonus program.
Under the program, incentive bonus awards are made annually based on
performance measured against predetermined targets. For 1995, the targets
for Executive Officers were based on achieving both current financial
performance objectives, and strategic and operational objectives relating
to longer term earnings, with greater weight being given to the current
financial performance objectives. In 1995, the current financial
performance objectives were based upon earnings per share of the Company.
In 1995, Mr. Cobb had a bonus opportunity equal to 100% of his salary.
He was awarded a bonus of 25.5% of his salary. Mr. Hafer had a bonus
opportunity equal to 50% of his salary in 1995. He was awarded a bonus of
27.1% of his salary. Mr. Snyder's bonus was 31.6% of his annual 1995 salary
which was agreed upon as a condition of joining the Company.
<PAGE>
Stock Incentive Plan
In 1995, stock options were granted to 9 employees, managers and
officers of the Company and its subsidiaries. The Executive Officers and
others each received options potentially exercisable for shares of the
Company's common stock. The options granted to Mr. Cobb represented 43.2%
of the total options granted. The grants to Mr. Cobb and the others
are based primarily on each recipient's position and individual
performance although factors are not formally weighted and the Committee
uses subjective judgment in making award grants. Options become exercisable
based upon criteria established by the Committee. The options granted for
1995 cannot be exercised for at least two years following the grant and are
exercisable over fixed periods, none exceeding ten years from the date of
award of the options. The exercise price for each option was based at the
market price of the stock at the time the option was granted.
It is the intent of the Company that stock purchased as a result of
exercise of any such options will be held as a long-term personal asset.
The Company believes that this will better align management's interest with
shareholders in the future performance of the Company.
EXECUTIVE DEVELOPMENT COMMITTEE
John W. Boyer, Jr., Chairman James W. Stratton James A. Sutton
Performance Graph
The following graph shows the cumulative total stockholder return on
the Company's common stock over the last five fiscal years as compared to
the returns of the NASDAQ Market Index and those companies contained within
the Standard Industry Code which must file an Annual Report with the
Securities and Exchange Commission and are publicly traded. The graph
assumes $100 was invested on December 30, 1990 in each company involved and
all dividends are reinvested.
(Tabular representation of Performance Graph is set forth below.)
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Cumulative Total Return
12/90 12/91 12/92 12/93 12/94 12/95
Gilbert Associates, Inc. 100 89 91 73 71 66
PEER GROUP 100 104 89 74 53 74
NASDAQ STOCK MARKET - US 100 161 187 215 210 296
<PAGE>
Summary of Cash and Certain Other Compensation
The following table shows, for fiscal 1993, 1994 and 1995, the cash
compensation paid by the Company, as well as other compensation paid or
accrued for those years, to the Executive Officers of the Company in all
capacities in which they served:
<TABLE>
Summary Compensation Table
Long-Term
Compensation
Annual Securities
Name and Compensation Underlying All Other
Principal Position Year ($)Salary ($)Bonus Options/SAR's(1) ($)Compensation
<S> <C> <C> <C> <C> <C>
T. S. Cobb 1995 $374,998 $95,700 60,000 28,904 (2)
President & Chief 1994 358,762 77,000 10,000 13,904
Executive Officer 1993 284,538 30,700 2,500 17,733
P. H. Snyder 1995 89,423 60,000 10,000 10,357 (2)
Vice President & Chief 1994 --- --- --- ---
Financial Officer 1993 --- --- --- ---
J. R. Itin 1995 149,940 --- --- 193,720 (2)(4)
(former Vice President 1994 272,541 49,500 2,500 28,446
and Chief Financial 1993 262,515 44,000 2,500 35,176
Officer) (3)
T. F. Hafer 1995 169,808 50,200 14,000 23,904 (2)
Vice President, 1994 147,389 27,000 1,500 12,173
General Counsel & 1993 129,166 7,400 750 9,818
Secretary
</TABLE>
____________
(1) See Note 1 to 1994 Stock Option Grants table below.
(2) Includes: (a) for Mr. Cobb, Mr. Snyder, Mr Hafer, and Mr. Itin Company
contributions of $10,500, $4,421, $10,500 and $6,759, respectively, to
their accounts under the Company's Retirement Savings Plan and $3,404,
$1,736, $3,404 and $2,019, respectively, to their accounts in the
Company's Stock Purchase Program; (b) for Mr. Itin, $8,300, as the
above market portion of interest credits on salary deferred under a
deferred compensation arrangement with the Company and (c) for Mr. Cobb, Mr.
Snyder and Mr. Hafer, taxable expense reimbursements of $15,000, $4,200 and
$10,000, respectively.
(3) Mr. Itin retired as Vice President, Chief Financial Officer and a
Director of the Company in April 1995.
(4) Includes $140,000 paid to Mr. Itin in connection with his retirement,
and $36,642 paid by the Company pursuant to the Company's Benefit
Equalization Plan (See "Employment Contracts and Termination of Employement
Arrangements" below).
<PAGE>
Stock Options
The following table contains information concerning the stock options
granted to Executive Officers during 1995 under the Company's 1989 Stock
Option Plan:
<TABLE>
1995 Options/SAR Grants in Last Fiscal Year
-------------------------------------------
Individual Grants
---------------------------------------------------------- Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of
Securities Options/SAR's Stock Price
Underlying Granted to Appreciation for
Options/SAR's Employees in Exercise Price Expiration Option Term ($)
Name Granted(1) 1995 Per Share ($) Date 5% 10%
<S> <C> <C> <C> <C> <C>
T. S. Cobb 30,000 21.6 13.25 4/28/02 161,783 377,228
30,000 21.6 12.50 7/28/05 235,875 597,750
T. F. Hafer 7,000 5.0 13.25 4/28/02 37,749 88,020
7,000 5.0 12.50 7/28/05 55,038 139,475
P. H. Snyder 10,000 7.2 12.00 8/7/05 75,480 191,280
</TABLE>
_____________
(1) All options have been granted under the 1989 Gilbert Stock Option Plan.
The exercise price is the fair market value of the stock on the date of
grant.
Aggregate Option Exercises and Year-End Values
The following table shows stock options exercised by Executive Officers
during 1995, including the aggregate value of any gains on the date of
exercise. In addition, this table includes the number of shares covered by
both exercisable and non-exercisable stock options as of December 29, 1995.
Also reported are the values for "in-the-money" options which represent the
positive spread between the exercise price of outstanding stock options and
the year-end price of Company common stock.
<PAGE>
<TABLE>
Aggregate Stock Option/SAR Exercises in 1995,
and Option/SAR Values as of December 29, 1995
Value (in $) of Unexercised
No. of Shares Covered by In-The-Money Stock
Unexercised Options Options/SAR's
at 12/29/95 at 12/29/95(2)
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Shares
Acquired Value Not Not
Name on Exercise Realized Exercisable Exercisable(1) Exercisable Exercisable(1)
<S> <C> <C> <C> <C> <C> <C>
T. S. Cobb --- --- 16,375 70,000 --- ---
T. F. Hafer --- --- 4,875 15,500 --- ---
P. H. Snyder --- --- --- 10,000 --- 5,000
</TABLE>
____________
(1) Future exercise is subject to continued employment by the Company for
up to three years, subject to acceleration for retirement, death or
total disability.
(2) Amounts reflect the December 29, 1995 market price of the Company's
common stock ($12.50) less the exercise price.
There are no Compensation Committee interlocks.
Employment Contracts and Termination of Employment Arrangements
The Company has no formal contracts of employment with its Executive
Officers. In 1989, the Board of Directors adopted a Benefit Equalization
Plan which provides Mr. Itin and others with supplemental retirement
income. None of the current Executive Officers are entitled to receive
benefits under the Plan. Payments under the Plan are made only to the
extent that income from Social Security, the Company-paid portions of Company
retirement plans, and retirement income plans of other employers do not
equal 50% of an individual's average annual salary for the three highest
paid years. Mr. Itin began receiving annual benefits of $73,284 upon his
retirement in July, 1995. The Plan is unfunded and terminates for an
individual upon termination of employment for any reason other than
retirement, death or disability.
The deferred compensation arrangement and the Benefit Equalization Plan
described in the Summary Compensation Table (Notes 2 and 4 respectively)
provide that, in the event of a change of control of the Company, as
defined in such plan, the payments due to Mr. Itin will be accelerated.
The accelerated payments are essentially the present value of the stream of
payments which would have been made had there been no such change of
control.
Director Compensation
Each Board member, other than officers of the Company or its subsidiaries,
receives an annual retainer of $18,000; committee chairmen receive an
additional $5,000. Each such director also receives $1,000 for each
committee or Board meeting attended. Directors may, at their election,
defer receipt of payment of directors' fees. Deferred directors' fees
accrue interest at the prime rate of interest charged by a major New York
money center bank.
<PAGE>
Item 12. Beneficial Ownership of Equity Securities by Certain Persons
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As of March 31, 1996, the number and percentage of equity securities of
the Company beneficially owned by (i) each of the directors, (ii) each
Executive Officer named in the Summary Compensation Table, and (iii) all
executive officers and directors of the Company as a group are set forth in
the following table:
<TABLE>
Class B Percentage Class A Percentage
Individuals Common Stock of Class(1) Common Stock of Class(1)
<S> <C> <C> <C> <C>
J. W. Boyer, Jr --- --- 1,500 *
T. S. Cobb 35,669 (2)(3) 7.9 --- ---
T. F. Hafer 11,888 (2)(3) 2.6 --- ---
D. E. Lyons 2,960 * --- ---
A. F. Smith 70,818 15.7 5,426 (4) *
P. H. Snyder 6,432 (3) 1.4 --- ---
J. W. Stratton --- --- 2,500 *
J. A. Sutton 2,166 * 266 *
D. K. Wilson, Jr 1,895 * --- ---
All executive officers,
directors as a group 131,828 29.3 9,692 *
</TABLE>
____________
Note: This table does not include shares of restricted stock granted to
Messrs. Cobb, Snyder and Hafer on March 15, 1996. The awards of 18,500, 6,000
and 6,000, respectively, were authorized and approved by the Board of
Directors subject to, and contingent upon Shareholder appoval at the
June 26, 1996 Annual Meeting. Also not reflected in this table are
approximately 40,000 shares of the Company's stock, held by former employees
of the Company's subsidiary, United Energy Services Corporation (UESC). Due
to the ongoing wind-down of UESC's operations, the approximately 40,000
shares of Class B Common Stock held by former UESC employees must be
converted to Class A shares of Common Stock.
(1) Asterisks indicate beneficial ownership of less than 1% of the
outstanding shares of the class.
(2) Includes options held by Mr. Cobb and Mr. Hafer to purchase 22,075
shares and 6,375 shares, respectively, of Class B Common Stock
exercisable within 60 days.
(3) Includes shares purchased on behalf of Mr. Cobb, Mr. Snyder and Mr.
Hafer under the Company's Stock Purchase Program from contributions
made through March 31, 1996 and the Payroll Stock Ownership portion of
the Retirement Savings Plan.
(4) Includes 468 shares owned of record and beneficially by Mr. Smith's
wife, as to which shares he disclaims beneficial ownership.
Bankers Trust Company, 280 Park Avenue, New York, New York 10017 has
advised the Company that at March 31, 1996 it held through controlled
nominees 237,723 shares of the Company's Class B Common Stock, or 52.8% of
the class then outstanding, as trustee on behalf of employees pursuant to
various employee benefit plans of the Company.
<PAGE>
At March 31, 1996, R.S. Newlan and G.E. Troendle, respectively,
President and Executive Vice President of Resource Consultants, Inc., 1960
Gallows Road, Vienna, Virginia 22182, a subsidiary of the Company,
beneficially owned 47,311 and 48,328 shares, respectively, of the
Company's Class B Common Stock, or 10.5% and 10.7%, respectively, of the
class then outstanding. Such amounts include (i) options held by Messrs.
Newlan and Troendle to purchase 13,625 shares and 10,575 shares,
respectively, of Class B Common Stock exercisable within 60 days and (ii)
shares purchased on each of their behalves under the Company's Stock
Purchase Program and the Company's Retirement Savings Plan from contributions
made through March 31, 1996.
Item 13. Certain Relationships and Related Transactions
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None.
