SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
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 0-3062
GUY F. ATKINSON COMPANY OF CALIFORNIA
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE
(State or other jurisdiction of 94-1649018
incorporation or organization) (IRS Employer Identification No.)
1001 Bayhill Drive, San Bruno, California 94066
(Address of principal executive offices) (zip code)
Registrants' telephone number, including area code - (415) 876-1000
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, and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Common stock as of August 11, 1995
Issued and outstanding - 8,951,154 shares
<PAGE>
ATKINSON COMPANY OF CALIFORNIA
AND SUBSIDIARY COMPANIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Consolidated Balance Sheets June 30, December 31,
(thousands of dollars) 1995 1994
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments $ 73,310 $ 78,441
Accounts receivable 43,210 33,150
Costs and estimated earnings in excess
of billings 2,646 4,338
Inventories and unamortized costs on
contracts in progress 19,171 20,062
Investments in joint ventures 37,600 40,503
Deferred income taxes 12 23
Other current assets 3,663 3,163
Total current assets 179,612 179,680
Property, plant and equipment, at cost 48,749 51,896
Less accumulated depreciation 25,723 34,345
23,026 17,551
Deferred income taxes 90 88
Other assets 3,663 2,395
$ 206,391 $199,714
LIABILITIES
Current Liabilities:
Notes payable, including current
portion of long-term obligations $ 563 $ 662
Accounts payable 54,708 43,998
Billings in excess of costs and
estimated earnings 35,231 16,920
Accrued expenses 22,424 24,240
Accrued federal & foreign income taxes 4,232 6,953
Due to joint ventures 127 103
Total current liabilities 117,285 92,876
Long-term obligations, less current portion 1,886 2,199
Postemployment benefit obligations and
postretirement health care obligations 7,651 7,651
Total liabilities 126,822 102,726
STOCKHOLDERS' EQUITY
Capital stock 1,894 1,894
Paid-in capital 12,857 13,185
Accumulated translation adjustment (4,600) (5,249)
Unearned compensation (375) (736)
Retained earnings 69,793 87,894
79,569 96,988
$ 206,391 $ 199,714
See accompanying notes
</TABLE>
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
Consolidated Statements of Operations (unaudited)
(thousands of dollars except
per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 86,434 $123,429 $176,172 $250,600
Cost of revenue 79,170 116,393 161,970 237,715
Gross margin 7,264 7,036 14,202 12,885
General and administrative expense 8,882 9,158 17,687 17,667
(Loss) from operations (1,618) (2,122) (3,485) (4,782)
Other income (expense), net:
Interest expense (57) (653) (258) (1,520)
Miscellaneous, net 2,086 (118) 3,216 823
Total other income (expense), net 2,029 (771) 2,958 (697)
Income (loss) from continuing operations
before taxes and the cumulative
effect of changes in accounting 411 (2,893) (527) (5,479)
(Benefit) for income taxes
(based on estimated annual
effective tax rates) (310) (229) (261) (686)
Income (loss) from continuing operations
before the cumulative effect of
changes in accounting 721 (2,664) (266) (4,793)
Discontinued operations,
net of income taxes - 1,670 - 3,041
Income (loss) before the cumulative
effect of changes in accounting 721 (994) (266) (1,752)
Cumulative effect of changes in accounting:
Postemployment benefit costs - - - (739)
Net income (loss) $ 721 $ (994) $ (266) $ (2,491)
See accompanying notes
</TABLE>
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
Consolidated Statements of Operations (unaudited), continued
(thousands of dollars except
per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Income (loss) per share of common stock
from continuing operations before
the cumulative effect of changes
in accounting $ 0.08 $ (0.30) $ (0.03) $ (0.54)
Income per share of common stock
from discontinued operations - 0.19 - 0.34
Income (loss) per share of common stock
before the cumulative effect of
changes in accounting 0.08 (0.11) (0.03) (0.20)
Cumulative effect of changes in
accounting per share - - - (0.08)
Net income (loss) per share $ 0.08 $ (0.11) $ (0.03) $ (0.28)
Average number of shares and
common stock equivalents utilized
in net income per share calculations 9,033 8,780 8,917 8,827
See accompanying notes
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND SUBSIDIARY COMPANIES
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (unaudited)
(thousands of dollars) Six Months Ended June 30,
1995 1994
<S> <C> <C>
Operating activities:
Net (loss) $ (266) $ (2,491)
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Income from discontinued operations - (3,041)
Depreciation, depletion and amortization 1,242 1,076
Deferred income taxes 7 3
Net (gain) on dispositions of property, plant
and equipment (2,821) (499)
Cumulative effect of changes in accounting - 739
Changes in operating assets and liabilities:
Accounts receivable (10,084) 11,286
Inventories and unamortized costs 865 1,258
Investments in joint ventures 2,918 (3,663)
Other current assets (505) (1,767)
Accounts payable and accrued expenses 9,010 7,540
Accrued income taxes (2,682) 76
Billings in excess of costs and estimated
earnings, net 20,002 (2,115)
Other, net 55 (113)
Net cash provided by operating activities
from continuing operations 17,741 8,289
Net cash (used in) operating activities
from discontinued operations - (8,844)
Net cash provided by (used in) operating activities 17,741 (555)
Investing activities:
Property, plant and equipment expenditures (10,470) (862)
Proceeds from dispositions of property, plant
and equipment 6,651 568
Decrease (increase) in other assets, net (1,269) (718)
Net investing activities of discontinued operations - (1,569)
Net cash (used in) investing activities (5,088) (2,581)
Financing activities:
Cash dividends paid (17,835) -
Short-term borrowing repayments, net - 4,653
Long-term debt repayments (412) (294)
Net cash by (used in) financing activities (18,247) 4,359
Effect of exchange rate changes on cash 463 (1,205)
Net increase (decrease) in cash and short-term
investments $ (5,131) $ 18
Supplementary information:
Cash paid during the period for:
Interest $ 293 $ 801
Federal, foreign and state income taxes 3,857 (523)
See accompanying notes
</TABLE>
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Financial Statements
(all dollar amounts are in thousands)
1. The information furnished reflects all adjustments which
are, in the opinion of management, necessary to a fair
statement of results for the interim periods.
2. During 1994, the company sold its principal manufacturing
subsidiary, Lake Center Industries, Inc., its pipe
distribution business, Comco Pipe & Supply Company, and its
oil and gas investments. The results of operations of these
divested businesses are shown separately in the income
statement for 1994 as "Discontinued operations, net of
income taxes".
The summarized results of discontinued operations were as
follows:
Quarter Ended Six Months Ended
June 30, 1994 June 30, 1994
Revenue $ 49,170 $ 91,877
Income from discontinued
operations before taxes 2,726 4,880
Provision for income taxes 1,056 1,839
Income from discontinued
operations $ 1,670 $ 3,041
Income per share of common stock
from discontinued operations $ 0.19 $ 0.34
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Financial Statements
(all dollar amounts are in thousands)
3. The major classifications of inventory are as follows:
June 30, December 31,
1995 1994
Construction materials, parts
and supplies $ 3,208 $ 3,724
Unamortized costs on contracts
in progress 15,963 16,338
$ 19,171 $20,062
4. In 1994, the company recorded an accounting charge of $739 for
postemployment benefits upon the adoption of Statement of
Financial Accounting Standards No. 112.
5. On March 31, 1995, the company paid a special cash dividend of
$2.00 per share to shareholders of record on March 15, 1995.
6. The company has 40,000 shares of restricted stock outstanding
pursuant to the provisions of the Guy F. Atkinson Company of
California Executive Stock Plan. Restrictions on the shares
are progressively removed based on achievement of earnings per
share performance goals.
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Financial Statements
(all dollar amounts are in thousands)
6. (continued)
In the event that performance goals are not achieved, the
restricted shares are progressively subject to forfeiture. The
market value of the outstanding restricted shares has been
recorded as unearned stock grant compensation, a separate
component of stockholders' equity. The unearned compensation
will be charged to general and administrative expense as the
performance goals are met. At June 30, 1995 no such amounts
have been charged.
At June 30, 1995, the company had options outstanding with
respect to 735,152 shares of common stock at exercise prices
ranging from $6.55 to $11.95 per share. The right to exercise
these options vests progressively over a four year period
commencing with the date of issue and expiring ten years from
the date of issue. In addition, there were stock warrants
outstanding for 387,500 shares of common stock with an
exercise price of $7.00 expiring in 1998.
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Financial Statements
(all dollar amounts are in thousands)
7. Net primary earnings per share of common and common stock
equivalents are calculated using the weighted average number
of common shares outstanding, excluding restricted shares for
which performance goals have not been met, plus the net
additional number of shares which would be issuable upon the
exercise of stock options and warrants, assuming that the
company used the proceeds received to repurchase outstanding
shares at market prices.
8. On March 7, 1995, a complaint asserting breach of contract and
other wrongdoing in connection with the company's sale of its
manufacturing subsidiary, Lake Center Industries, Inc., was
filed against the company and its financial advisor by an
unsuccessful bidder for Lake Center. The plaintiffs allege
they have suffered actual damages of $290 in connection with
preparing their bid and also seek to recover $7,000 on a
theory of unjust enrichment, together with an additional
$10,000 in punitive damages. The company will vigorously
defend this suit, which it believes to be without merit and
further believes that the outcome will not have a material
adverse effect on its financial condition.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations (all dollar amounts are in thousands unless
otherwise stated)
Quarter ended June 30, 1995 vs. quarter ended June 30, 1994
Revenue: The company's revenue of $86 million in the second
quarter of 1995 was 30% lower than the corresponding figure of $123
million in the second quarter of 1994. This reduction in revenue
was attributable to the completion of certain industrial
construction projects in 1994, while new contract awards (amounting
to $360 million in the first two quarters of 1995) are not yet
making a significant contribution to revenue. The backlog of
uncompleted contracts amounted to $495 million at June 30, 1995,
representing an increase of 65% over the restated June 30, 1994
backlog of $300 million. The restatement of June 30, 1994 backlog
is in respect of a $293 million contract award which was removed
from backlog due to its unlikely prospects of proceeding.
Gross margin: The company's gross margin of $7,264
increased by 3% in the second quarter of 1995 over the
corresponding $7,036 in 1994. The percentage of gross margin to
revenue increased to 8.4% in 1995 from 5.7% in 1994 reflecting a
more profitable mix of construction contracts in 1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, continued
General and administrative expense: General and
administrative expenses of $8,882 were 3% lower than the
corresponding figure of $9,158 in 1994. This was due to reductions
in corporate overhead expense implemented in the fourth quarter of
1994, somewhat offset by the cost of increased construction
business development efforts for Asia, the Middle East and South
America, as well as the ongoing costs of implementation of the
company's new accounting and information systems.
Other income (expense): Interest expense decreased to $57 in
the second quarter of 1995, from $653 in the second quarter of
1994, primarily due to the company having retired all of its short-term
debt in the fourth quarter of 1994. Miscellaneous income of
$2,086 in 1995 was principally due to gains from the disposition of
property and other surplus assets, amounting to $1,900, together
with interest income net of losses on foreign exchange.
Income taxes and net income: The company had income from
continuing operations before taxes and the cumulative effect of
changes in accounting of $411 in 1995 compared to a loss of $2,893
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, continued
in 1994. Income taxes gave rise to a benefit of $310 in 1995
compared to a benefit of $229 in 1994. The 1995 tax benefit was
due to the recovery of foreign income taxes previously paid, while
the 1994 tax benefit was due to the allocation of income taxes to
discontinued operations.
In 1994, discontinued operations, net of income taxes,
provided income of $1,670.
Net income for the second quarter of 1995 was $721, compared
to a net loss of $994 for the corresponding period of 1994.
Six months ended June 30, 1995 vs. six months ended June 30, 1994
Revenue: The company's revenue of $176 million was 30% lower
than the corresponding figure of $251 million in 1994, for the same
reasons outlined in the previous discussion of revenue for the
quarter ended June 30, 1995.
Gross margin: The company's gross margin of $14,202
increased by 10% in the six month period of 1995 over the
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, continued
corresponding figure of $12,885 in 1994. The percentage of gross
margin to revenue improved to 8.1% in 1995 from 5.1% in 1994
reflecting the company's increasing focus on higher margin
construction projects.
General and administrative expense: General and
administrative expense of $17,687 was essentially unchanged from
the $17,667 recorded in 1994. The effect of reduced corporate
overhead was offset by increased business development efforts as
noted in the discussion of general and administrative expense for
the quarter.
Other income (expense): Interest expense declined to $258 in
1995 from $1,520 in 1994 due to the absence of short-term debt on
the company's balance sheet in 1995. Miscellaneous income of
$3,216 in 1995 was attributable to gains from the disposition of
surplus assets of $1,900 and net interest income of $1,826, less
foreign exchange losses and other miscellaneous expenses of $510.
In 1994, miscellaneous income of $823 was derived from gains on
asset sales of $450, together with foreign exchange gains and other
miscellaneous income of $373.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, continued
Income taxes and net income: The company had a loss from
continuing operations before taxes and the cumulative effect of
changes in accounting of $527 in 1995 compared to a loss of $5,479
in 1994. Income taxes resulted in a benefit of $261 in 1995
compared to a benefit of $686 in 1994. The 1995 tax benefit was
due to the recovery of foreign income taxes previously paid, while
the 1994 tax benefit was due to the allocation of income taxes to
discontinued operations.
In 1994, discontinued operations, net of income taxes,
provided income of $3,041, while the adoption of Statement of
Financial Accounting Standards No. 112 resulted in an accounting
charge of $739.
Net loss for the six month period of 1995 was reduced to $266
from $2,491 in the corresponding period of 1994.
Liquidity and Capital Resources
The company's operating activities generated cash of $17,741
in the six month period of 1995 compared with $8,289 from
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, continued
continuing operating activities in the comparable period of 1994.
Net investing activities in 1995 used $5,088 of cash, which,
together with a special $2.00 per share dividend payment
(amounting to $17,835) resulted in a net decrease in cash and
short-term investments of $5,131. In 1994, the cash from
continuing operating activities of $8,289, together with net
borrowings of $4,359, were used to fund investing activities and
discontinued operations.
As of June 30, 1995, the company's short-term lines of credit
amounted to approximately $33,644. The availability of these lines
of credit is reduced by any letters of credit outstanding under the
lines. At June 30, 1995, the company had no outstanding borrowings
and $6,982 in outstanding letters of credit.
The company believes that its cash and short-term investments,
together with lines of credit and funds generated from operations
will be adequate to cover foreseeable future requirements.
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant had duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GUY F. ATKINSON COMPANY OF CALIFORNIA
S/ Herbert D. Montgomery
Senior Vice President,
Chief Financial Officer
and Treasurer
August 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,715
<SECURITIES> 69,575
<RECEIVABLES> 43,210
<ALLOWANCES> 0
<INVENTORY> 19,171
<CURRENT-ASSETS> 179,612
<PP&E> 48,749
<DEPRECIATION> 25,723
<TOTAL-ASSETS> 206,391
<CURRENT-LIABILITIES> 117,285
<BONDS> 1,886
<COMMON> 1,894
0
0
<OTHER-SE> 77,675
<TOTAL-LIABILITY-AND-EQUITY> 206,391
<SALES> 0
<TOTAL-REVENUES> 176,172
<CGS> 0
<TOTAL-COSTS> 161,970
<OTHER-EXPENSES> 17,687
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 258
<INCOME-PRETAX> (527)
<INCOME-TAX> (261)
<INCOME-CONTINUING> (266)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (266)
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
