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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
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
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)
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<S> <C>
Delaware 02-0324047
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
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100 River Ridge Drive, Norwood, MA 02062
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (781) 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
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At March 13, 1998 the registrant had issued and outstanding an aggregate of
8,370,874 shares of its common stock.
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FLUOR DANIEL GTI, INC.
FORM 10-Q
TABLE OF CONTENTS
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PART I FINANCIAL INFORMATION PAGE NUMBER
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Item 1 Financial Statements
Condensed Consolidated Balance Sheets
January 31, 1998 (Unaudited) and October 31, 1997 ...............................................1-2
Condensed Consolidated Statements of Operations
Quarter ended January 31, 1998 (Unaudited) and January 31, 1997 (Unaudited)........................3
Condensed Consolidated Statements of Cash Flows
Quarter ended January 31, 1998 (Unaudited) and January 31, 1997 (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
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Item 1. Financial Statements
FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
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January 31, October 31,
Assets 1998 1997
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(unaudited)
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Current assets:
Cash and cash equivalents $10,135 $ 3,588
Marketable securities 2,895 7,396
Accounts receivable, less allowance of $1,984 at
January 31, 1998 and $2,049 at October 31, 1997 36,879 38,548
Unbilled revenues 21,270 25,567
Deferred income taxes 1,300 1,328
Other current assets 2,884 3,125
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Total current assets 75,363 79,552
Deferred income taxes 3,508 3,508
Property, plant and equipment, net 6,145 6,624
Goodwill, net of accumulated amortization of $1,652 at
January 31, 1998 and $1,456 October 31, 1997 11,453 11,654
Other assets 1,648 1,798
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Total assets $98,117 $103,136
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(Continued on next page.)
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FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
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<CAPTION>
January 31, October 31,
Liabilities and Stockholders' Equity 1998 1997
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(unaudited)
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Current liabilities:
Accounts payable $ 3,444 $ 8,266
Accrued salaries and benefits 4,295 5,553
Advance billings on contracts 439 380
Other accrued liabilities 6,247 5,465
Income taxes payable 71 109
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Total current liabilities 14,496 19,773
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued -- --
Common stock, $.001 par value, 25,000,000 shares
authorized, 8,370,874 issued and outstanding at January 31, 1998;
8,323,790 issued and outstanding at October 31, 1997 8 8
Capital in excess of par value 82,445 82,162
Retained earnings 1,898 1,581
Cumulative currency translation adjustment (730) (388)
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Total stockholders' equity 83,621 83,363
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Total liabilities and stockholders' equity $98,117 $103,136
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The accompanying notes are an integral part of the financial statements.
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FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
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Quarter ended
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January 31, January 31,
1998 1997
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Revenues $46,947 $47,594
Cost of revenues 38,808 38,341
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Gross profit 8,139 9,253
Selling, general and administrative expenses 7,411 9,398
License and other income(expense) (323) 170
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Income before investment and interest income 405 25
Investment and interest income, net 144 89
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Income before income taxes 549 114
Provision for income taxes 232 52
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Net income $ 317 $ 62
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Basic and diluted earnings per common share $ .04 $ .01
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Shares used to compute basic earnings per common share 8,355 8,213
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Shares used to compute diluted earnings per common share 8,371 8,213
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The accompanying notes are an integral part of the financial statements.
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FLUOR DANIEL GTI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Quarter ended
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January 31, January 31,
1998 1997
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Cash Flows From Operating Activities
Net income $ 317 $ 62
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 881 1,188
Deferred taxes 28 -
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues 5,966 2,154
Other current assets 241 88
Other assets 123 (99)
Accounts payable (4,822) (315)
Accrued salaries and benefits (1,258) (673)
Other accrued liabilities 782 756
Advanced billing on contracts 59 (97)
Income taxes payable (38) (146)
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Net Cash provided by Operating Activities 2,279 2,918
Cash Flows From Investing Activities
Purchase of marketable securities (99) (3,500)
Sale of marketable securities 4,600 3,650
Expenditures for property, plant and equipment (334) (641)
Sale of property, plant and equipment 133 69
Other 28 (219)
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Net Cash provided by (used in) Investing Activities 4,328 (641)
Cash Flows From Financing Activities
Proceeds from sale of stock under employee stock purchase plans 283 427
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Net Cash provided by Financing Activities 283 427
Effect of Exchange Rate Changes on Cash and Cash Equivalents (343) (75)
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Net Increase in Cash and Cash Equivalents 6,547 2,629
Cash and Cash Equivalents at Beginning of Fiscal Year 3,588 2,552
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Cash and Cash Equivalents at End of Period $10,135 $ 5,181
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The accompanying notes are an integral part of the financial statements.
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FLUOR DANIEL GTI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of January 31, 1998, the
related condensed consolidated statements of operations and the related
condensed consolidated statements of cash flows for the quarters ended January
31, 1998 and January 31, 1997, 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, 1998 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, 1997 (SEC File No. 0-15067). The results of operations for the period ended
January 31, 1998 are not necessarily indicative of the operating results for the
year.
NOTE 2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128).
SFAS No. 128 redefines the standards for computing earnings per share
information included in the accompanying financial statements. The Company has
adopted SFAS No. 128 for fiscal year 1998 and has presented earnings per share
information for fiscal year 1997 accordingly. The effect of dilutive securities
was immaterial for fiscal years 1998 and 1997.
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FLUOR DANIEL GTI, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Revenues for the quarter ended January 31, 1998 were $46.9 million, a
decrease of 1.5% compared to revenues of $47.6 million for the same period last
year. The Company experienced continued competition within almost all assessment
and remediation markets. Historically, this quarter of the fiscal year generally
results in reduced hours billed due to holidays and vacations.
Gross profit for the three months ended January 31, 1998 was $8.1 million,
a decrease of 12.9% compared to $9.3 million for the same quarter last year. As
a percentage of revenues, gross profit for the quarter ended January 31, 1998
was 17.3% compared to 19.5%. The gross profit for the quarter has been impacted
by continued pricing pressures for services performed which continues to push
the profit margins downward.
Selling, general and administrative expenses for the quarter ended January
31, 1998 were $7.4 million, or 15.8% of revenues, compared to $9.4 million, or
19.7% of revenues . During the second quarter of fiscal year 1997 the Company
initiated a plan to reduce selling, general and administrative costs through
headcount reduction. The impact of this plan accounts for a significant portion
of the reduction in selling, general and administrative costs in fiscal 1998.
There were no unusual expenses in selling, general and administrative during
this period.
License and other expense was for the quarter ended January 31, 1998 was
$323,000 compared to income of $170,000 for the same period last year. The
expense in fiscal 1998 resulted from the write off of $406,000 in uncollectible
advances made to the acquiring company of Fluor Daniel GTI's analytical
laboratory business.
Investment and other income, net, was $144,000 for the quarter ended
January 31, 1998 compared to $89,000 for the same period of the prior year. The
increase is due to interest earned on the Company's marketable securities
portfolio and cash and cash equivalents as well as smaller losses in equity
investments than were experienced in the prior fiscal year.
The provision for income taxes was 42.2% for the quarter ended January 31,
1998 and 45.6% for the comparable period last year. The fiscal 1997 tax rate was
adversely affected by the impact of state taxes.
The Company's operating 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 the
delivery orders issued by contracting government entities, and holidays and
vacation time which limit the amount of time Company personnel and subcontracted
services have in the field.
The Company ended the first quarter with 57 consulting offices in 32 states
and 4 foreign countries. Total employees as of January 31, 1998 were 1,185 as
compared to 1,314 as of the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1998, the Company's primary source of liquidity was $13.0
million in cash, cash equivalents and marketable securities. The Company has no
long-term borrowings. At January 31, 1998, 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 $2.3 million in net cash for the three months
ended January 31, 1998 principally due to collections of receivables. At January
31, 1998, the Company's working capital was $60.9 million. Total assets were
$98.1 million at the end of the same period.
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Cash flows from investing activities were impacted by approximately
$334,000 of expenditures in property, plant and equipment that were made to
upgrade the Company's computer equipment. The Company had no material
commitments for capital expenditures as of January 31, 1998 and estimates
spending for the next nine months to be approximately $1,950,000.
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 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, 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.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No 131, "Disclosures about Segments of and
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 established new
standards for the way that public business enterprises report information about
operating segments in interim financial reports issued to shareholders. This
statement is effective for the Company's fiscal year 1999. The Company is still
evaluating the impact of this new standard.
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FLUOR DANIEL GTI, INC.
PART II
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
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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.
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Date: March 17, 1998 /s/ Walter C. Barber
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Walter C. Barber
President and Chief Executive Officer
Date: March 17, 1998 /s/ Mary C. Stack
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Mary C. Stack
Vice President, Treasurer and
Chief Accounting Officer
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<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 10,135
<SECURITIES> 2,895
<RECEIVABLES> 38,863
<ALLOWANCES> (1,984)
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<PP&E> 6,145
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<CURRENT-LIABILITIES> 14,496
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0
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<CGS> 38,808
<TOTAL-COSTS> 38,808
<OTHER-EXPENSES> 7,411
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<INCOME-TAX> 232
<INCOME-CONTINUING> 317
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<EXTRAORDINARY> 0
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<NET-INCOME> 317
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
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