SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 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 number 0-15067
FLUOR DANIEL GTI, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 02-0324047
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 River Ridge Drive, Norwood, MA 02062
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (617) 769-7600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
--- ---
At September 10, 1996 the registrant had issued and outstanding an aggregate of
8,155,832 shares of its common stock.
FLUOR DANIEL GTI, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NUMBER
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<S> <C>
Item 1 Financial Statements 1
Condensed Consolidated Balance Sheets
July 31, 1996 (Unaudited) and April 30, 1996 (Unaudited).........................................1-2
Condensed Consolidated Statements of Operations
Quarter ended July 31, 1996 (Unaudited) and July 31, 1995 (Unaudited)..............................3
Condensed Consolidated Statements of Cash Flows
Quarter ended July 31, 1996 (Unaudited) and July 31, 1995 (Unaudited)..............................4
Notes to Condensed Consolidated Financial Statements (Unaudited).......................................5
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations................6-7
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders....................................................8
Item 6 Exhibits and Reports on Form 8-K.......................................................................8
Signatures.............................................................................................9
</TABLE>
1 Prior year comparative financial statements reflect the historical results of
Fluor Daniel Environmental Services, Inc. (FDESI), the predecessor entity for
accounting purposes.
Item 1. Financial Statements
<TABLE>
<CAPTION>
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
July 31, April 30,(1
1996 1996
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ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 5,340 $ --
Marketable securities 650 --
Accounts receivable, less allowances of $2,064
at July 31, 1996 and $0 at April 30, 1996 43,605 1,773
Unbilled revenues 20,040 1,485
Other current assets 6,308 2,107
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Total Current Assets 75,943 5,365
Property, plant and equipment, net 8,120 --
Goodwill, net of accumulated amortization of $726 10,172 --
Other assets 5,004 --
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$99,239 $5,365
======= ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
1 Prior year comparative financial statements reflect the historical results of
Fluor Daniel Environmental Services, Inc. (FDESI), the predecessor entity for
accounting purposes.
-1-
<TABLE>
<CAPTION>
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
July 31, April 30,(1
1996 1996
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LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 7,659 $ --
Accrued salaries and benefits 3,458 80
Other accrued liabilities 6,202 1,856
Income taxes payable 296 --
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Total Current Liabilities 17,615 1,936
Stockholders' Equity
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued -- --
Common stock, $.001 par value, 25,000,000 shares
authorized, 8,155,832 issued at July 31, 1996 and $1.00 par
value,1,000 shares authorized and issued at April 30, 1996 8 1
Capital in excess of par value 80,805 2,694
Retained earnings 757 734
Cumulative currency translation adjustment 54 --
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Total Stockholders' Equity 81,624 3,429
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$99,239 $5,365
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</TABLE>
The accompanying notes are an integral part of the financial statements.
1 Prior year comparative financial statements reflect the historical results of
Fluor Daniel Environmental Services, Inc. (FDESI), the predecessor entity for
accounting purposes.
-2-
<TABLE>
<CAPTION>
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Quarter ended
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July 31, July 31,1
1996 1995
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<S> <C> <C>
Revenue $42,056 $8,397
Cost of sales 32,668 6,285
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Gross profit 9,388 2,112
Selling, general and administrative expenses (9,561) (1,682)
License and other income 37 --
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Income before investment and other income (136) 430
Investment and other income, net 159 --
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Income before provision for income taxes 23 430
Provision for income taxes -- 168
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Net income $ 23 $ 262
========= ========
Earnings per common share $ .00 $ N/A
========= ========
Shares used to compute earnings per common share 8,229 N/A
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
1 Prior year comparative financial statements reflect the historical results of
Fluor Daniel Environmental Services, Inc. (FDESI), the predecessor entity for
accounting purposes.
-3-
<TABLE>
<CAPTION>
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Quarter ended
-------------
July 31, July 31,(1
1996 1995
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<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 23 $ 262
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,226 --
Loss on fixed assets 59 --
Changes in operating assets and liabilities, net of effects of acquisitions
and discontinued operations:
Accounts receivable and unbilled revenues (4,822) 329
Other current assets 3,080 (1,051)
Other assets (115) --
Accounts payable (2,096) --
Accrued salaries and benefits 668 --
Other accrued liabilities (1,553) 92
Income taxes payable (78) --
Advances from parent -- 368
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Net Cash used in Operating Activities (3,608) --
Cash Flows From Investing Activities
Expenditures for property, plant and equipment (611) --
Purchase of marketable securities (650) --
Investment in joint ventures 102 --
Other (283) --
Cash acquired in merger with Groundwater Technology, Inc. 36,729 --
Cash paid to shareholders (60,102) --
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Net Cash used in Investing Activities (24,815) --
Cash Flows From Financing Activities
Proceeds from sale of stock under employee stock purchase plans
and payments on employee notes 359 --
Cash received from Fluor Daniel, Inc. 33,350 --
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Net Cash provided by Financing Activities 33,709 --
Effect of Exchange Rate Changes on Cash and Cash Equivalents 54 --
------------ ----------
Net Increase in Cash and Cash Equivalents 5,340 --
Cash and Cash Equivalents at Beginning of Fiscal Year -- --
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Cash and Cash Equivalents at End of Period $ 5,340 $ --
======== ==========
Supplemental disclosure of non-cash financing activities:
Received net assets from merger with Groundwater Technology, Inc. $70,858
</TABLE>
The accompanying notes are an integral part of the financial statements.
1 Prior year comparative financial statements reflect the historical results of
Fluor Daniel Environmental Services, Inc. (FDESI), the predecessor entity for
accounting purposes.
-4-
FLUOR DANIEL GTI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheets as of July 31, 1996 and April 30,
1996, the related condensed consolidated statements of operations for the
quarter ended July 31, 1996 and July 31, 1995, and the related condensed
consolidated statements of cash flows for the quarter ended July 31, 1996 and
July 31, 1995, have been prepared by Fluor Daniel GTI, Inc. (the" Company")
without audit. In the opinion of management, all adjustments necessary to
present fairly the financial position, results of operations and changes in cash
flows at July 31, 1996 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested this information be read in
conjunction with the Annual Report on Form 10-K for fiscal year ended April 27,
1996 (SEC File No. 0-15067) and the Proxy Statement/Prospectus dated April 5,
1996, of Groundwater Technology, Inc. ("GTI"), relating to the May 10, 1996
Special Meeting of Stockholders at which the Change of Control Transactions
(defined below) were approved. The results of operations for the period ended
July 31, 1996 are not necessarily indicative of the operating results for the
year.
NOTE 2. Earnings Per Share
Earnings per share for the period ended July 31, 1995 is not meaningful.
NOTE 3. Merger and Recapitalization Activities
On May 10, 1996, Fluor Daniel, Inc. ("Fluor Daniel") and GTI closed a
series of transactions (the "Change of Control Transactions") in which elements
of Fluor Daniel Environmental Services, Inc. ("FDESI"), a wholly owned
subsidiary of Fluor Daniel, were merged with, and became a wholly owned
subsidiary of GTI; and GTI became a majority owned subsidiary of Fluor Daniel.
Under the terms of the Change of Control Transactions, Fluor Daniel acquired 4.4
million shares of GTI's newly recapitalized common stock, or approximately 55
percent interest, in exchange for $33.35 million in cash and ownership of FDESI,
and GTI shareholders received a cash payment of $8.62 per share and .5274 of a
share of the newly recapitalized common stock in exchange for each "old" share
of common stock, resulting in them retaining approximately 45 percent ownership
in GTI. In addition, GTI changed its name to Fluor Daniel GTI, Inc.
The merger was treated as a reverse acquisition for accounting purposes,
and therefore, the unaudited July 31, 1995 condensed consolidated statement of
operations and condensed consolidated statement of cash flows as well as the
unaudited April 30, 1996 condensed consolidated balance sheet reflect the
historical results of FDESI, which is the predecessor entity for accounting
purposes.
Financial results for the quarter ended July 31, 1996 include the
operations of GTI as if the merger and recapitalization had occurred on May 1,
1996. Financial activity for the period May 1, 1996 through May 9, 1996 was not
significant.
Pro forma results for the first quarter ended July 31, 1995, presented as
though the merger of FDESI and Groundwater Technology, Inc. had occurred on May
1, 1995, were net income of approximately $646,000 on gross revenues of
approximately $52.0 million.
NOTE 4. Change in Fiscal Year
The Company has changed its year end from April 30 to October 31.
Accordingly, the Company will report the stub period on October 31, 1996 and
will begin a new 12-month fiscal year on November 1, 1996.
-5-
FLUOR DANIEL GTI, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
On May 10, 1996, Fluor Daniel, Inc. ("Fluor Daniel") and GTI closed a
series of transactions (the "Change of Control Transactions") in which elements
of Fluor Daniel Environmental Services, Inc. ("FDESI"), a wholly owned
subsidiary of Fluor Daniel, were merged with, and became a wholly owned
subsidiary of GTI; and GTI became a majority owned subsidiary of Fluor Daniel.
Under the terms of the Change of Control Transactions, Fluor Daniel acquired 4.4
million shares of GTI's newly recapitalized common stock, or approximately 55
percent interest, in exchange for $33.35 million in cash and ownership of FDESI,
and GTI shareholders received a cash payment of $8.62 per share and .5274 of a
share of the newly recapitalized common stock in exchange for each "old" share
of common stock, resulting in them retaining approximately 45 percent ownership
in GTI. In addition, GTI changed its name to Fluor Daniel GTI, Inc.
The merger was treated as a reverse acquisition for accounting purposes,
and therefore, the unaudited July 31, 1995 condensed consolidated statement of
operations and condensed consolidated statement of cash flows as well as the
unaudited April 30, 1996 condensed consolidated balance sheet reflect the
historical results of FDESI, which is the predecessor entity for accounting
purposes.
Financial results for the quarter ended July 31, 1996 include the
operations of GTI as if the merger and recapitalization had occurred on May 1,
1996. Financial activity for the period May 1, 1996 through May 9, 1996 was not
significant.
Pro forma results for the first quarter ended July 31, 1995, presented as
though the merger of FDESI and Groundwater Technology, Inc. had occurred on May
1, 1995, were net income of approximately $646,000 on gross revenues of
approximately $52.0 million.
The Company has changed its year end from April 30 to October 31.
Accordingly, the Company will report the stub period on October 31, 1996 and
will begin a new 12-month fiscal year on November 1, 1996.
The Company's services are primarily related to the assessment and
remediation of contaminated soil and groundwater for customers in a variety of
industries and for federal and state governments. The demand for the Company's
services is a result of governmental regulation and enforcement related to
hazardous contaminants in the environment.
Revenue includes fees billed for services provided directly by the Company
and fees charged by the Company for arranging and managing subcontractor
services. Cost of sales includes professional salaries incurred in rendering
services to customers, other direct labor, purchases of equipment and materials
and certain direct and indirect overhead costs. Selling, general and
administrative expenses includes management salaries, facility costs, and
clerical and administrative overhead. License and other income includes license
and royalty income earned on the Company's intellectual property and income from
direct equity investments in the environmental industry.
The Company's results may fluctuate from quarter to quarter. Factors
influencing such variations include: spending decisions by major customers,
delays in the release of committed projects, modifications of delivery orders
issued by contracting government entities, weather, holidays and vacation time.
The Company ended the first quarter with 58 consulting offices in 31 states
and 6 foreign countries. Additionally, the Company's joint venture with a German
company had offices in Germany, Austria and Hungary. Total employees as of July
31, 1996 was 1,421.
Revenue for the quarter ended July 31, 1996 was $42.1 million. The Company
continued to experience a decrease in work from petroleum customers. The Company
experienced a decrease in work from the federal government as well as continued
competition within almost all assessment and remediation markets.
-6-
Gross profit for the three months ended July 31, 1996 was $9.4 million. As
a percentage of revenue, gross profit for the quarter ended July 31, 1996 was
22.3%. The gross profit for the quarter has been impacted by continued pricing
pressures for services performed and it is not expected that the Company's
performance would dramatically improve in the near term.
Liquidity and Capital Resources
At July 31, 1996, the Company's primary source of liquidity was $6.0
million in cash, cash equivalents and marketable securities. The Company has no
long-term borrowings. At July 31, 1996, the Company had a line of credit with a
bank providing for borrowings up to $10.0 million through April 30, 1999. There
have been no borrowings under the line of credit.
The Company used $3.6 million in net cash to fund operating activities
during the three months ended July 31, 1996. The use of cash to fund operating
activities was principally due to the increase in accounts receivable and the
payout of accrued liabilities related to routine activities. At July 31, 1996,
the Company's working capital was $58.3 million. Total assets were $99.2 million
at the end of the same period.
Cash flows from investing activities were impacted by approximately
$611,000 of expenditures in property, plant and equipment that were made to
upgrade the Company's computer and rental equipment. The Company had no material
commitments for capital expenditures as of July 31, 1996 and estimates spending
for the next three months to be approximately $1.5 million.
Funding requirements for operations are expected to be met from existing
cash, cash equivalents, marketable securities and cash generated from
operations. The Company believes that cash provided from these sources will be
sufficient to meet its operating requirements for the near term.
-7-
FLUOR DANIEL GTI, INC.
PART II
Item 4. Submission of Matters to a Vote of Security Holders.
(a) A Special Meeting of the Registrant was held on May 10, 1996.
(b) At the Special Meeting, the number of directors was set at seven, and
the following individuals were elected as directors by a vote of
4,487,482 shares voting in the affirmative, 98,555 shares voting
against and 84,793 shares abstaining, to hold office until the next
annual meeting of stockholders or until their successors are duly
elected and qualified: Walter C. Barber, Allan S. Bufferd, Robert P.
Schechter, Ernie Green, David L. Myers, James C. Stein and J. Michal
Conaway.
(c) At the Special Meeting, by a vote of 4,487,482 shares voting in the
affirmative, 98,555 shares voting against and 84,793 shares
abstaining, the stockholders approved and adopted the transactions
contemplated by the Investment Agreement by and among Fluor Daniel,
Inc., Fluor Daniel Environmental Services, Inc., the Registrant and
GTI Acquisition Corporation dated as of December 11, 1995, as amended,
which also constituted approval of the Amended and Restated
Certificate of Incorporation, amendments to the By-Laws, the issuance
of New Common Stock to Fluor Daniel, Inc., and the treatment and
disposition of outstanding stock options and rights under, and certain
amendments to, the Registrant's stock plans in connection with the
transactions, all as more fully described in the Registrant's Proxy
Statement/Prospectus dated April 5, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits are required to be filed herewith.
(b) On May 28, 1996, the Registrant filed a Current Report on Form 8-K
reporting a change of control under Item 1, the acquisition of assets
under Item 2, including financial statements of the acquired business
under Item 7, and a change of fiscal year under Item 8.
-8-
FLUOR DANIEL GTI, INC.
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.
FLUOR DANIEL GTI, INC.
Date: September 16, 1996 /s/ Walter C. Barber
------------------ -----------------------------
Walter C. Barber
President and Chief Executive
Officer
Date: September 16, 1996 /s/ Robert E. Sliney, Jr.
------------------ ----------------------------
Robert E. Sliney, Jr.
Vice President, Treasurer
and Chief Financial Officer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR
THE PERIOD ENDED JULY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 5,340
<SECURITIES> 650
<RECEIVABLES> 45,669
<ALLOWANCES> 2,064
<INVENTORY> 0
<CURRENT-ASSETS> 75,943
<PP&E> 8,120
<DEPRECIATION> 0
<TOTAL-ASSETS> 99,239
<CURRENT-LIABILITIES> 17,615
<BONDS> 0
8
0
<COMMON> 0
<OTHER-SE> 81,624
<TOTAL-LIABILITY-AND-EQUITY> 99,239
<SALES> 42,056
<TOTAL-REVENUES> 42,056
<CGS> 32,668
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,561
<LOSS-PROVISION> 0
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</TABLE>
