SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1997
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 Identification No.)
Incorporation or Organization)
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 June 12, 1997 the registrant had issued and outstanding an aggregate of
8,323,702 shares of its common stock.
FLUOR DANIEL GTI, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NUMBER
- ------ --------------------- -----------
Item 1 Financial Statements 1
<S> <C>
Condensed Consolidated Balance Sheets
April 30, 1997 (Unaudited) and October 31, 1996 .................................................1-2
Condensed Consolidated Statements of Operations
Quarter ended April 30, 1997 (Unaudited) and April 30, 1996 (Unaudited)............................3
Condensed Consolidated Statements of Operations
Six months ended April 30, 1997 (Unaudited) and April 30, 1996 (Unaudited).........................4
Condensed Consolidated Statements of Cash Flows
Six months ended April 30, 1997 (Unaudited) and April 30, 1996 (Unaudited).........................5
Notes to Condensed Consolidated Financial Statements (Unaudited).......................................6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations................7-8
PART II OTHER INFORMATION
- ------- -----------------
Item 6 Exhibits and Reports on Form 8-K.......................................................................9
Signatures............................................................................................10
</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
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
April 30, October 31,
Assets 1997 1996
- ------ ---- ----
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,502 $ 2,552
Marketable securities 4,852 4,101
Accounts receivable, less allowance of $1,788 at
April 30, 1997 and $1,740 at October 31, 1996 44,332 46,438
Unbilled revenues 20,354 18,917
Deferred income taxes 851 937
Other current assets 2,334 2,525
----------- -----------
Total current assets 77,225 75,470
Deferred income taxes 2,967 2,967
Property, plant and equipment, net 7,030 7,776
Goodwill, net of accumulated amortization of $1,145 at
April 30, 1997 and $860 at October 31, 1996 10,374 10,218
Other assets 3,931 3,962
----------- -----------
Total assets $101,527 $100,393
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-1-
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
April 30, October 31,
Liabilities and Stockholders' Equity 1997 1996
- ------------------------------------ ---- ----
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 8,918 $ 8,034
Accrued salaries and benefits 5,706 4,023
Advance billings on contracts 637 452
Other accrued liabilities 4,873 5,905
Income taxes payable -- 101
---------------- ------------
Total current liabilities 20,134 18,515
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued -- --
Common stock, $.001 par value, 25,000,000 shares
authorized, 8,212,656 issued and outstanding at April 30, 1997;
8,155,832 issued and outstanding at October 31, 1996 8 8
Capital in excess of par value 81,430 81,003
Retained earnings 131 825
Cumulative currency translation adjustment (176) 42
------------- -------------
Total stockholders' equity 81,393 81,878
----------- ----------
Total liabilities and stockholders' equity $101,527 $100,393
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter ended
-------------
April 30 April 30,
1997 1996(1)
---- -------
<S> <C> <C>
Revenues $48,052 $8,178
Cost of revenues 37,588 5,280
--------- -------
Gross profit 10,464 2,898
Selling, general and administrative expenses 12,081 --
Indirect expenses -- 1,972
License and other income 172 --
----------- ----------
Income (loss) before investment and interest income (1,445) 926
Investment and interest income 174 --
----------- ----------
Income (loss) before income taxes (1,271) 926
Provision (benefit) for income taxes (515) 361
----------- --------
Net income (loss) $ (756) $ 565
========== =======
Loss per common share $ (.09) N/A
=========== ========
Shares used to compute loss per common share 8,213 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-
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Six months ended
----------------
April 30 April 30,
1997 1996(1)
---- -------
<S> <C> <C>
Revenues $95,646 $16,486
Cost of revenues 75,929 12,298
--------- --------
Gross profit 19,717 4,188
Selling, general and administrative expenses 21,479 --
Indirect expenses -- 3,491
License and other income 342 --
----------- -----------
Income (loss) before investment and interest income (1,420) 697
Investment and interest income 263 --
----------- ------------
Income (loss) before income taxes (1,157) 697
Provision (benefit) for income taxes (463) 272
----------- ----------
Net income (loss) $ (694) $ 425
========== =========
Loss per common share $ (.08) N/A
=========== ==========
Shares used to compute loss per common share 8,199 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.
-4-
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months ended
----------------
April 30, April 30,
1997 1996(1)
---- -------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (694) $ 425
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 2,210 --
Deferred taxes 86 --
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues 669 (1,157)
Other current assets 191 --
Other assets (50) --
Accounts payable 884 --
Accrued salaries and benefits 1,683 --
Other accrued liabilities (1,032) 92
Advance billings on contracts 185 329
Income taxes payable (101) --
Advances from parent -- 311
------------ -------
Net Cash provided by Operating Activities 4,031 --
Cash Flows From Investing Activities
Purchase of marketable securities (5,701) --
Sale of marketable securities 4,950 --
Expenditures for property, plant and equipment (1,337) --
Sale of property, plant and equipment 166 --
Other (368) --
--------- ----------
Net Cash used in Investing Activities (2,290) --
Cash Flows From Financing Activities
Proceeds from sale of stock under employee stock purchase plans 427 --
--------- ----------
Net Cash provided by Financing Activities 427 --
Effect of Exchange Rate Changes on Cash and Cash Equivalents (218) --
--------- ----------
Net Increase in Cash and Cash Equivalents 1,950 --
Cash and Cash Equivalents at Beginning of Fiscal Year 2,552 --
-------- ----------
Cash and Cash Equivalents at End of Period $4,502 $ --
======= =========
</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.
-5-
FLUOR DANIEL GTI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheets as of April 30, 1997 and October
31, 1996, the related condensed consolidated statements of operations for the
quarter and six months ended April 30, 1997 and April 30, 1996, and the related
condensed consolidated statements of cash flows for the six months ended April
30, 1997 and April 30, 1996, have been prepared by Fluor Daniel GTI, Inc. (the
"Company") without audit. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial position, results of operations and changes in cash flows at April 30,
1997 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 October
31, 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 three and six
month periods ended April 30, 1997 are not necessarily indicative of the
operating results for the year.
NOTE 2. Earnings Per Share
Earnings per share for the three and six month periods ended April 30, 1996
is not meaningful.
NOTE 3. Merger and Recapitalization Activities
On May 10, 1996, the Company closed a series of transactions (the "Change
of Control Transactions") pursuant to which it became a majority-owned
subsidiary of Fluor Daniel, Inc. ("Fluor Daniel"), a global construction,
engineering, maintenance and services company. The Change of Control
Transactions included a recapitalization of the Company's common stock, and the
merger of one of the Company's subsidiaries and Fluor Daniel Environmental
Services, Inc. ("FDESI"), a wholly-owned subsidiary of Fluor Daniel that
provides environmental services primarily to agencies of the federal government.
In exchange for FDESI and $35 million in cash, Fluor Daniel received 4,400,000
shares of the Company's "new" common stock and an option to purchase 1,768,970
additional shares at $13.1274 per share that expires on December 11, 1998. In
the recapitalization, each holder of "old" common stock received $8.62 in cash
and .5274 of a share of "new" common stock of the Company. In addition, the
Company entered into a Marketing Agreement with Fluor Daniel, and the Company
changed its name from "Groundwater Technology, Inc." to "Fluor Daniel GTI, Inc."
to emphasize the new relationship.
The merger was treated as a reverse acquisition for accounting purposes,
and therefore, the unaudited April 30, 1996 condensed consolidated statements of
operations and condensed consolidated statements of cash flows reflect the
historical results of FDESI, which is the predecessor entity for accounting
purposes.
Pro forma results for the quarter ended April 30, 1996, presented as though
the merger of FDESI and GTI had occurred on November 1, 1995, were net income of
approximately $663,000 on revenues of approximately $48.2 million. Pro forma
results for the six month period ended April 30, 1996, presented as though the
merger of FDESI and GTI had occurred on November 1, 1995, were net income of
$1,076,000 on revenues of approximately $98.5 million.
NOTE 4. Change in Fiscal Year
The Company changed its year end from April 30 to October 31. Accordingly,
the Company began a new 12-month fiscal year on November 1, 1996.
-6-
FLUOR DANIEL GTI, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
- -------
On May 10, 1996, the Company closed a series of transactions (the "Change
of Control Transactions") pursuant to which it became a majority-owned
subsidiary of Fluor Daniel, Inc. ("Fluor Daniel"), a global construction,
engineering, maintenance and services company. The Change of Control
Transactions included a recapitalization of the Company's common stock, and the
merger of one of the Company's subsidiaries and Fluor Daniel Environmental
Services, Inc. ("FDESI"), a wholly-owned subsidiary of Fluor Daniel that
provides environmental services primarily to agencies of the federal government.
In exchange for FDESI and $35 million in cash, Fluor Daniel received 4,400,000
shares of the Company's "new" common stock and an option to purchase 1,768,970
additional shares at $13.1274 per share that expires on December 11, 1998. In
the recapitalization, each holder of "old" common stock received $8.62 in cash
and .5274 of a share of "new" common stock of the Company. In addition, the
Company entered into a Marketing Agreement with Fluor Daniel, and the Company
changed its name from "Groundwater Technology, Inc." to "Fluor Daniel GTI, Inc."
to emphasize the new relationship.
The merger was treated as a reverse acquisition for accounting purposes,
and therefore, the unaudited April 30, 1996 condensed consolidated statements of
operations and condensed consolidated statements of cash flows reflect the
historical results of FDESI, which is the predecessor entity for accounting
purposes.
The Company changed its year end from April 30 to October 31. Accordingly,
the Company began a new 12-month fiscal year on November 1, 1996.
Results of Operations
- ---------------------
Results for the Quarter Ended April 30, 1997
Revenues for the quarter ended April 30, 1997 were $48.1 million. The
Company experienced continued competition within almost all assessment and
remediation markets.
Gross profit for the three months ended April 30, 1997 was $10.5 million.
As a percentage of revenues, gross profit for the quarter was 21.8%. The gross
profit for the three months has been impacted by continued pricing pressures for
services performed and by an additional charge of $831,000 in labor and salary
costs associated with writing government proposals. These additional costs had
an adverse impact on the gross margins for the quarter.
Selling, general and administrative expenses for the quarter ended April
30, 1997 were $12.1 million. Included in this cost is $583,000 in outside
vendors costs associated with the preparation of government proposals. Also
included is a charge of $830,000 for payroll and benefits related to an overhead
cost reduction plan implemented during the quarter ended April 30, 1997. It is
expected that this overhead cost reduction plan will yield approximately $2
million in annualized salary and benefit savings.
The benefit for income taxes at 40.5% for the quarter ended April 30, 1997
is approximately the combined statutory rate.
Pro forma results for the quarter ended April 30, 1996, presented as though
the merger of FDESI and GTI had occurred on November 1, 1995, were net income of
approximately $663,000 on revenues of approximately $48.2 million.
Results for the Six Months Ended April 30, 1997
Revenues for the six months ended April 30, 1997 were $95.6 million. The
Company experienced continued competition within almost all assessment and
remediation markets for the six months ended.
-7-
Gross profit for the six months ended April 30, 1997 was $19.7 million. As
a percentage of revenues, gross profit for the six months ended was 20.6%. The
gross profit for the six months has been impacted by continued pricing pressures
for services performed and by an additional charge of $1.15 million in labor and
salary costs associated with writing government proposals. These additional
costs had an adverse impact on the gross margins.
Selling, general and administrative expenses for the six months ended April
30, 1997 were $21.5 million. Included in this cost is $583,000 in outside
vendors costs associated with the preparation of government proposals. Also
included is a charge of $830,000 for payroll and benefits related to an overhead
cost reduction plan implemented during the quarter ended April 30, 1997. It is
expected that this overhead cost reduction plan will yield approximately $2
million in annualized salary and benefit savings.
The benefit for income taxes at 40.0% for the six months ended April 30,
1997 is approximately the combined statutory rate.
Pro forma results for the six month period ended April 30, 1996, presented
as though the merger of FDESI and GTI had occurred on November 1, 1995, were net
income of $1,076,000 on revenues of approximately $98.5 million.
Liquidity and Capital Resources
- -------------------------------
At April 30, 1997, the Company's primary source of liquidity was $9.4
million in cash, cash equivalents and marketable securities. The Company has no
long-term borrowings. At April 30, 1997, 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.
Operating activities provided $4.0 million in net cash for the six months
ended April 30, 1997, principally due to improvements in collections of
receivables and increases in accounts payable balances. At April 30, 1997, the
Company's working capital was $56.9 million. Total assets were $101.5 million at
the end of the same period.
Cash flows from investing activities were impacted by approximately $1.3
million 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 April 30, 1997, and estimates
spending for the next three months to be approximately $360,000.
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.
Forward-Looking Information
- ---------------------------
Any of the comments in this Form 10-Q that refer to the Company's estimated or
future results, including its estimates of the cost savings from the overhead
cost reduction plan, are forward-looking and reflect the Company's current
analysis of existing trends and information. Actual results may differ
materially from current expectations or projections based on a number of factors
affecting the Company's businesses. These factors include, in the case of the
overhead cost reduction plan, the ability to achieve estimated staff reductions
while maintaining workflow in the functional areas affected. Other risk factors
affecting the Company's estimated or future results include, but are not limited
to, cost overruns on fixed, maximum, or unit- priced contracts; contract
performance risks; the uncertain timing of awards and contracts; and changes in
environmental regulations; as well as, the enforcement of those regulations.
These forward-looking statements represent the Company's judgement only as of
the date of this Form 10-Q. As a result, the reader is cautioned not to rely on
these forward-looking statements. The Company disclaims any intent or obligation
to update these forward-looking statements.
Additional information concerning these and other factors can be found in the
Company's public periodic filings with the Securities and Exchange Commission.
-8-
FLUOR DANIEL GTI, INC.
PART II
Item 6. Exhibits and Reports on Form 8-K
None
-9-
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: June 13, 1997 /s/Walter C. Barber
---------------------------- -------------------------------------
Walter C. Barber
President and Chief Executive Officer
Date: June 13, 1997 /s/Robert E. Sliney, Jr.
---------------------------- -------------------------------------
Robert E. Sliney, Jr.
Vice President, Treasurer and
Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR
THE PERIOD ENDED APRIL 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<CASH> 4,502
<SECURITIES> 4,852
<RECEIVABLES> 46,120
<ALLOWANCES> 1,788
<INVENTORY> 0
<CURRENT-ASSETS> 2,334
<PP&E> 7,030
<DEPRECIATION> 0
<TOTAL-ASSETS> 101,527
<CURRENT-LIABILITIES> 20,134
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 81,385
<TOTAL-LIABILITY-AND-EQUITY> 101,527
<SALES> 95,646
<TOTAL-REVENUES> 95,646
<CGS> 75,929
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,479
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,157)
<INCOME-TAX> (463)
<INCOME-CONTINUING> (694)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (694)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0
</TABLE>
