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 January 31, 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
(State or Other Jurisdiction 02-0324047
of Incorporation or Organization) (I.R.S. Employer 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 March 10, 1997 the registrant had issued and outstanding an aggregate of
8,212,656 shares of its common stock.
FLUOR DANIEL GTI, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NUMBER
- ------ --------------------- -----------
<S> <C> <C>
Item 1 Financial Statements 1
Condensed Consolidated Balance Sheets
January 31, 1997 (Unaudited) and October 31, 1996 ............................... 1-2
Condensed Consolidated Statements of Operations
Quarter ended January 31, 1997 (Unaudited) and January 31, 1996 (Unaudited)....... 3
Condensed Consolidated Statements of Cash Flows
Quarter ended January 31, 1997 (Unaudited) and January 31, 1996 (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
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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
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
January 31, October 31,
Assets 1997 1996
- ------ ---- ----
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,181 $ 2,552
Marketable securities 3,951 4,101
Accounts receivable, less allowance of $1,755 at
January 31, 1997 and $1,740 at October 31, 1996 44,639 46,438
Unbilled revenues 18,562 18,917
Deferred income taxes 937 937
Other current assets 2,437 2,525
--------- ---------
Total current assets 75,707 75,470
Deferred income taxes 2,967 2,967
Property, plant and equipment, net 7,303 7,776
Goodwill, net of accumulated amortization of $1,001 at
January 31, 1997 and $860 at October 31, 1996 10,293 10,218
Other assets 4,064 3,962
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Total assets $100,334 $100,393
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</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>
January 31, October 31,
Liabilities and Stockholders' Equity 1997 1996
- ------------------------------------ ---- ----
(unaudited)
Current liabilities:
<S> <C> <C>
Accounts payable $ 7,720 $ 8,034
Accrued salaries and benefits 3,350 4,023
Advance billings on contracts 355 452
Other accrued liabilities 6,661 5,905
Income taxes payable (45) 101
-------- --------
Total current liabilities 18,041 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 January 31, 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 887 825
Cumulative currency translation adjustment (32) 42
-------- --------
Total stockholders' equity 82,293 81,878
-------- --------
Total liabilities and stockholders' equity $100,334 $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
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January 31, January 31,
1997 1996(1)
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<S> <C> <C>
Revenues $47,594 $8,308
Cost of revenues 38,341 7,018
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Gross profit 9,253 1,290
Selling, general and administrative expenses 9,398 --
Indirect expenses -- 1,519
License and other income 170 --
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Income (loss) before investment and interest income 25 (229)
Investment and interest income, net 89 --
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Income (loss) before income taxes 114 (229)
Provision for (benefit from) income taxes 52 (89)
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Net income (loss) $ 62 $ (140)
======= =======
Earnings per common share $ .01 $ N/A
======= ======
Shares used to compute earnings 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 CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Quarter ended
-------------
January 31, January 31,
1997 1996(1)
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Cash Flows From Operating Activities
Net income $ 62 $ (140)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,188 --
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues 2,154 (1,245)
Other current assets 88 --
Other assets (99) --
Accounts payable (315) --
Accrued salaries and benefits (673) 486
Other accrued liabilities 756 --
Advanced billing on contracts (97) --
Income taxes payable (146) --
Advances from parent -- 899
----------- -------
Net Cash provided by Operating Activities 2,918 --
Cash Flows From Investing Activities
Purchase of marketable securities (3,500) --
Sale of marketable securities 3,650 --
Expenditures for property, plant and equipment (641) --
Sale of property, plant and equipment 69 --
Other (219) --
--------- ----------
Net Cash used in Investing Activities (641) --
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 (75) --
---------- ----------
Net Increase in Cash and Cash Equivalents 2,629 --
Cash and Cash Equivalents at Beginning of Fiscal Year 2,552 --
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Cash and Cash Equivalents at End of Period $5,181 $ --
====== =========
</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 January 31, 1997 and
October 31, 1996, the related condensed consolidated statements of operations
for the quarters ended January 31, 1997 and January 31, 1996, and the related
condensed consolidated statements of cash flows for the quarters ended January
31, 1997 and January 31, 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 January
31, 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 period ended
January 31, 1997 are not necessarily indicative of the operating results for the
year.
NOTE 2. Earnings Per Share
Earnings per share for the period ended January 31, 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 January 31, 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 January 31, 1996, presented as
though the merger of FDESI and GTI had occurred on November 1, 1995, were net
income of approximately $413,000 on revenues of approximately $50.2 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.
-5-
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 January 31, 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
Revenues for the quarter ended January 31, 1997 were $47.6 million. The
Company experienced continued competition within almost all assessment and
remediation markets.
Gross profit for the three months ended January 31, 1997 was $9.3 million.
As a percentage of revenues, gross profit for the quarter ended January 31, 1997
was 19.4%. The gross profit for the quarter has been impacted by continued
pricing pressures for services performed.
Selling, general and administrative expenses for the quarter ended January
31, 1997 were $9.4 million. There were no unusual expenses in selling, general
and administrative during this period.
The provision for income taxes at 45.6% for the quarter ended January 31,
1997 is higher than the U.S. statutory rate mainly due to the impact of state
taxes.
Pro forma results for the first quarter ended January 31, 1996, presented
as though the merger of FDESI and GTI had occurred on November 1, 1995, were net
income of approximately $413,000 on revenues of approximately $50.2 million.
Liquidity and Capital Resources
At January 31, 1997, the Company's primary source of liquidity was $9.1
million in cash, cash equivalents and marketable securities. The Company has no
long-term borrowings. At January 31, 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 $2.9 million in net cash for the three months
ended January 31, 1997 principally due to improvements in collections of
receivables. At January 31, 1997, the Company's working capital was $57.7
million. Total assets were $100.3 million at the end of the same period.
-6-
Cash flows from investing activities were impacted by approximately
$641,000 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 January 31, 1997 and estimates
spending for the next three months to be approximately $1.4 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 6. Exhibits and Reports on Form 8-K
(a) On December 18, 1996, the Registrant filed a Current Report on Form
8-K reporting a change in independent accountants from Coopers &
Lybrand LLP to Ernst & Young LLP.
-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: March 14, 1997 /s/ Walter C. Barber
-------------- -------------------------------------
Walter C. Barber
President and Chief Executive Officer
Date: March 14, 1997 /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 SUMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR
THE PERIOD ENDED JANUARY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 5,181
<SECURITIES> 3,951
<RECEIVABLES> 46,394
<ALLOWANCES> 1,755
<INVENTORY> 0
<CURRENT-ASSETS> 75,707
<PP&E> 7,303
<DEPRECIATION> 0
<TOTAL-ASSETS> 100,334
<CURRENT-LIABILITIES> 18,041
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 82,285
<TOTAL-LIABILITY-AND-EQUITY> 100,334
<SALES> 47,594
<TOTAL-REVENUES> 47,594
<CGS> 38,341
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,398
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 114
<INCOME-TAX> 52
<INCOME-CONTINUING> 62
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
