SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File number 0-3062
GUY F. ATKINSON COMPANY OF CALIFORNIA
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 94-1649018
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1001 Bayhill Drive, San Bruno, California 94066
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 876-1000
Securities Registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 par value
(Title of Class)
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 (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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of January 31, 1996, the aggregate market value of the voting stock
held by nonaffiliates of the registrant was $59,100,688 based on closing
sale prices on the NASDAQ National Market System. This calculation does not
reflect a determination that certain persons are affiliates of the registrant
for any other purpose.
The number of shares of common stock, $0.01 par value, outstanding as of
January 31, 1996 was 8,956,154.
Items 10, 11, 12 and 13 of Part III incorporate information by reference
from the definitive proxy statement for the Annual Meeting of Shareholders to
be held on April 18, 1996.
<PAGE>
PART I
Items 1 & 2. Business and Properties.
Guy F. Atkinson Company of California was incorporated in
Delaware in 1995 as a successor in interest to a California
corporation of the same name that was incorporated in 1967, as the
successor in interest to Guy F. Atkinson Company, a Nevada
corporation organized in December 1934.
The Company provides a full range of engineering, procurement,
construction and related services to worldwide clients in the
power, industrial and commercial building, pulp and paper, mining
and infrastructure markets. The Company also operates a small
business involved in the manufacture of heavy duty industrial
intercoms, and it is also developing a water and wastewater
treatment business. The Company previously operated businesses in
automobile parts manufacturing, distribution of industrial pipe,
and oil and gas exploration and production. These operations were
sold in the fourth quarter of 1994.
The Company's executive offices are located at 1001 Bayhill
Drive, 2nd Floor, San Bruno, California 94066. The telephone
number is 415/876-1000.
Guy F. Atkinson Company of California (the parent
corporation), establishes general policy direction, and provides
planning and coordination, accounting and audit control, treasury
functions, insurance services, legal services, personnel and
benefits administration, public relations, and other management
services for its operating divisions and subsidiaries.
The Company's construction operations and activities are best
summarized through a discussion of its markets, construction
operations, and some of the projects in which the Company
participated in 1995.
Markets:
The Company competes for construction work in the public and
private sectors in the U.S., Canada and internationally. In 1995,
the Company's construction revenues were approximately 60 percent
from the private sector and 40 percent from the public sector.
Competition within the construction industry is based
primarily on price, reputation for quality, experience,
reliability, and the financial strength of the contractor. The
markets served by the Company are competitive and require
substantial resources, in particular, highly skilled and
experienced technical personnel. Further, domestic construction
activity depends to a significant degree on the general state of
the U.S. economy and, more specifically, on the relevant market
industry segments and their economic condition and future planning.
As a result of economic changes within its markets, the Company's
level of work will vary year to year. By diversifying its services
to various markets and expanding the international markets, the
Company is able to moderate the effects of fluctuations in its
markets.
The Company sells its capabilities on the basis of price using
the bidding process, contract negotiation, or a combination of
both. It also sells its capabilities through additional
incremental services its markets may require, such as design and
engineering or turnkey packages with design, construction,
procurement, and advice on financial structure and sources. While
these services may be offered by the Company, more typically they
are offered through an alliance or in association with other firms.
Projects are staffed by management supplied by the Company and
by hourly craft personnel mostly obtained in a local labor market.
Trained hourly employees are normally available in the vicinity of
the Company's projects. However, substantial training must be
undertaken in those locations where experienced labor is not
available.
The Company frequently participates in joint ventures with
other contractors to share risks and combine financial, technical,
and other resources. When the Company undertakes work in a joint
venture it may act as sponsor or lead contractor, in which case it
manages the work. If not the sponsor, the Company's participation
is normally limited to assistance in estimating and policy
management and sharing on a pro-rata basis the financial risks and
rewards of the work. In 1995, 18 percent of the Company's
construction revenue was derived from work performed in joint
ventures.
The Company performs its construction work under prime
contracts that take various forms. These contractual arrangements
include fixed-unit or lump-sum price, cost-reimbursable, fixed or
percentage fee, or maximum price contracts. Contracts are either
competitively bid and awarded or individually negotiated. In
performing as a general contractor, the Company undertakes the
planning and scheduling of projects, marshals the required
personnel, procures materials, awards and administers subcontracts,
and directs and manages the construction project. In the case of
a construction management contract, the Company monitors and
coordinates the progress of the work and assists the owner where
other prime contractors are employed to build the project. In a
growing part of the industry, it acts as a turnkey contractor
taking responsibility for engineering design, construction, and
procurement of equipment ("EPC"), and provides other operating
services from inception through delivery of a completed project.
Construction Operations:
Through four construction divisions and subsidiaries in the
U.S. and Canada, Atkinson provides full service worldwide
construction and related engineering services to heavy civil,
industrial, commercial, energy, natural resources, utility, and
government clients. The Company generally competes for work that
is complex in engineering and significant in the scope of services
required. Its acquisition of work is facilitated by its excellent
reputation, diversity of services, technical expertise, and
worldwide geographic coverage.
Atkinson Construction, headquartered in San Bruno, California,
is one of the largest U.S. contractors of heavy civil projects,
serving both public and private sectors, working not only in the
U.S., but also internationally. The division performs general
construction services for hydroelectric power development, bridges,
highways, dams, water and wastewater treatment facilities, and
tunnels and shafts for power, transportation, and water conveyance.
The Company's primary domestic industrial construction
division, Walsh Construction Company, with headquarters in
Trumbull, Connecticut, is a major provider of design-construct
services to both the power and building markets. Its power
experience includes geothermal and cogeneration development, using
fuels ranging from gas and coal to municipal solid waste and
biomass. Its buildings are equally diverse, embracing commercial,
industrial, institutional and R&D laboratory facilities.
The Company services Canada's industrial construction markets
through its Commonwealth Construction Company division, which has
its head office in Burnaby, British Columbia. Commonwealth serves
a variety of industrial markets including pulp and paper, mining,
metallurgical processing, water and wastewater treatment, and
energy throughout the Americas and Southeast Asia. Commonwealth is
also active in markets for power generation and process facilities
for oil and gas, chemical and petrochemical, as well as, general
industrial construction.
Through Monterey Construction Company, operating from San
Bruno, California, the Company provides merit-shop services to
heavy civil and infrastructure construction markets.
The following is a discussion of the types of construction in
which the Company is involved and a partial listing of 1995
construction projects to illustrate the breadth of its capabilities
and services.
Heavy Civil
Heavy civil work provides a significant portion of the
Company's revenues. Projects requiring a high degree of
organization and complex engineering are well-matched to the
Company's long standing expertise. The Company's heavy civil work
includes the building of dams, hydroelectric developments, bridges,
locks, tunnels, shafts, highways, and other large infrastructure-related
projects.
The Company believes that work within the public sector for
infrastructure development and rehabilitation, major transportation
projects, power development, water and wastewater treatment, locks
and dams, and underground construction will continue to be
important markets for it in the 1990s. The Company performs this
type of work throughout the U.S., Canada, and internationally.
The Company continued its work in 1995 as a participant of a
joint venture in Venezuela on the Macagua II hydroelectric
facility, a major power development for the Venezuelan government.
The Company began construction of a two-unit, 42 megawatt
hydroelectric power plant on an existing lock and dam on the Ohio
River in West Virginia. In Washington, the Company continued work
for the U.S. Corps of Engineers constructing new intake structures
for a dam, as well as tunnel excavation, and removal of a
cofferdam. In Oregon, work by the Company continued on a contract
for a 10 megawatt powerhouse addition to a hydroelectric project,
and in Arizona, it completed work on the rehabilitation of a large
dam structure.
Late in 1995, as sponsor of a joint venture, the Company was
awarded a contract to provide all construction services for a 1.7
mile-long, 285-foot-high rockfill dam, and an associated saddle dam
that will form the largest water storage reservoir in Southern
California. Also, late in the year, a joint venture led by the
Company was awarded a contract for lock construction on the Ohio
River in Illinois. Work on both these projects will start in 1996.
In 1995, the Company was at work on or completed a number of
infrastructure projects located in various geographic locations.
Exemplifying its work in this market, the Company worked on or
completed projects in the State of Washington for a new balanced
drawbridge structure and approaches, and, two stages of a High
Occupancy Vehicle (HOV) roadway featuring the latest in
Surveillance Control and Driver Information Systems (SC&DI). In
California, the Company worked on the retrofit of an earthquake
damaged freeway in San Francisco completing one project and
starting a second. In Nevada, the Company was part of a joint
venture that finished construction on a runway extension at
McCarran International Airport.
The Company has broad experience in underground construction,
making it a prime competitor for work related to power generation,
transportation, water supply, and mining. In 1995, the Company was
active on several joint venture projects in Boston, Massachusetts,
two of which involved underground or tunneling construction. One
project entails construction of two cut-and-cover tunnels over a
depressed roadway and the second involves construction of an
effluent outfall tunnel. The Company is also part of a joint
venture handling excess excavated and dredged soil and sediment
materials from other projects in the Boston area with placement on
a island for future development of a park.
In 1995, the Company also completed a contract to enlarge
existing railroad tunnels for Conrail in Pennsylvania.
Industrial
Typically, the Company competes for work ranging from
modernization to new construction of industrial facilities, power
generating stations, installation of mineral processing facilities,
commercial and institutional building construction, academic
centers, research facilities, and chemical and manufacturing
plants. Its industrial construction business provides feasibility
studies, design/build services, value-engineering, construction
management information systems, general construction services,
construction management, start-up and operation services as the
markets may require.
The Company's industrial construction business serves a broad
range of markets and clients. These markets are very competitive,
serviced by numerous well-established and highly competent
contractors, and they are driven by their own set of strategic and
economic market factors. Some of these factors can translate into
diminished capital spending for construction programs and/or delays
in planned projects. For example, recent construction activity
within the resources development industries has emphasized
modernization and upgrading of facilities and compliance with
environmental standards. In response, the Company promotes its
record of reliable performance, quality, safety, and its
capabilities in scheduling and cost control as integral services.
The Company was engaged in several significant pulp and paper
mill projects during 1995, including a 150,000 ton-per-year
recycle/de-inking pulp mill in Maryland, for which the Company and
its joint-venture partners provided engineering, procurement, and
construction services, as well as start-up and initial operation.
The Company also began work in Indonesia on a 1,500-ton-per-day
greenfield kraft pulp mill and associated effluent treatment
facilities. In addition, it completed a fast-track rebuild and
conversion of a paper machine for a client in British Columbia,
Canada.
In 1995, the Company was active in the building market as work
continued on the interior renovation of buildings at the City
College of New York on behalf of the Dormitory Authority of New
York. In La Jolla, California, construction continued on a full-service
contract for a 20-story, 238-unit residential continuing-care community for
seniors.
The Company continues to contract for a significant amount of
work for cogeneration and other types of industrial power
generating facilities. Exemplifying this, are a 40-megawatt
cogeneration powerplant in New York for which the Company provided
engineering, procurement, and construction services. During the
year, construction was completed on a design/build 49.5-megawatt
cogeneration plant in Montana. In California, work continued on a
new central utilities plant on the San Francisco medical campus of
the University of California, while construction started on a two-unit,
125 megawatt cogeneration facility in Sacramento.
Work also began on a coal-processing plant in Wyoming, for
which the Company is providing balance-of-plant engineering and all
procurement and construction services.
Due to the types of construction the Company undertakes, its
work is, to some extent, seasonal. Typically, less can be
accomplished in winter than in other seasons. Accordingly, the
Company plans construction to mitigate, where possible, the effects
of weather.
Revenues from contracts with the U.S. government, principally
for construction services, provided revenues of $9.8 million in
1995, equal to 2.4 percent of the Company's consolidated revenues.
Those contracts are terminable at the election of the U.S.
government.
In certain instances, the Company has guaranteed facility
completion by a scheduled acceptance date and/or achievement of
certain acceptance and performance testing levels. Failure to meet
any such schedule or performance requirements could result in
significant additional costs, thus eroding expected project profit
margins.
The Company also owns substantial quantities of construction
equipment located at the sites of its projects or at owned or
leased storage yards. Raw materials required for the Company's
construction projects are normally available in the open market for
purchase or lease and may be obtained from local sources.
Working Capital:
The Company often obtains working capital for its construction
projects by pricing mechanisms that provide capital early in the
project for mobilization and start-up costs. However, contract
terms may also necessitate, in some cases, an infusion of working
capital from the Company from time to time during the course of
construction. In addition, working capital may be provided from
internal Company sources or outside borrowing to finance the cost
of work for which pricing negotiations are incomplete or
responsibility is disputed by the owner. It is also customary in
the construction industry for owners to withhold sums as retention
until the work is completed. This retention can range from 5
percent to 15 percent of the contract price.
Backlog:
The approximate value of the Company's firm backlog of
contracts as of December 31, 1995 and December 31, 1994 was $642
million and $310 million, respectively. The $332 increase in
backlog from 1994 to 1995 is attributable to new contract awards in
1995 amounting to $749 million, more than double the same period in
1994.
The dollar value of the backlog is not necessarily indicative
of the future earnings of the Company related to the performance of
such work. Backlog includes only those contracts for which work is
proceeding, or for which the Company has received a notice to
proceed, but there can be no assurance that cancellations or
adjustments in the scope of work will not occur.
Other Operations:
The Company's construction-related operations include Atkinson
Dynamics Company, based in South San Francisco, California, which
designs, manufactures, and repairs heavy-duty, extreme-service
industrial intercoms. These intercoms are used primarily by
general industrial and manufacturing companies, and government and
public safety agencies.
The Company is developing a water and wastewater treatment
business, Microsep International Corporation, based in Burnaby,
British Columbia, which uses patented technologies to offer
environmental solutions to both industrial and municipal sanitation
markets.
Geographic Area Information:
The Financial Statement (Item 8 of this Report) note entitled
"Geographic Area Information," found at page 22 thereof, sets forth
for the fiscal years 1993 through 1995 the Company's revenue,
profits, and assets with respect to the geographic areas in which
the Company operates.
Approximately 9 percent of the Company's revenues during the
fiscal year were attributable to its Canadian operations, with a
further 9 percent attributable to its operations in Asia. The
Company believes the construction risks of these operations are
similar to those presented by domestic projects. The Company
recognizes that foreign work may present financial and political
risks which must be specially considered. The Company attempts,
through its foreign exchange risk management and pricing
arrangements, to mitigate these risks and achieve a satisfactory
profit.
Employees
The number of employees of the Company during the fiscal year
varied substantially from time to time, depending on work volume,
the status of completion of construction contracts, weather, and
season. The average number of such employees was 1,101, including
employees of joint ventures sponsored by the Company. The number
of salaried employees averaged 499 during the same period.
Executive Officers of the Registrant.
Jack J. Agresti (58) has been Chief Executive Officer and
President since April, 1994. He was President and Chief Operating
Officer of the Company from April, 1991 to April, 1994. He was
Executive Vice President of the Company from April, 1990 to April,
1991 and Group Vice President of the Company from February, 1985 to
April, 1990.
William J. Carlson (52) has been Senior Vice President of the
Company since April, 1991. From February, 1991 to the present he
has also served as President and General Manager of Guy F. Atkinson
Construction Company. From August, 1986 to February, 1991 he was
Vice President, Executive Vice President, General Manager or
President of the Company's Walsh Construction Company division.
Herbert D. Montgomery (53) is Senior Vice President Finance,
Chief Financial Officer and Treasurer. He joined the Company in
June, 1994. He was Vice President Finance, Treasurer and Chief
Financial Officer from August, 1989 to June, 1994 of Harding
Associates, Inc., an environmental consulting engineering Company.
John F. Huguet (50) has been Senior Vice President of the
Company since April, 1995. From January, 1990 to the present he
has also served as President or President and General Manager of
the Company's Commonwealth Construction Company division.
Thomas J. Walsh, III (45) has been Vice President of the
Company since April, 1995. From September, 1990 to the present he
has also served as President and General Manager or Executive Vice
President of the Company's Walsh Construction Company division.
Therese Ambrusko (48) has been Vice President of the Company
since April, 1995. From March, 1989 to the present she has also
served as General Counsel or General Counsel and Corporate
Secretary.
James D. Stevens (58) has been Vice President and Chief
Administrative Officer of the Company since Janury, 1985.
Item 3. Legal Proceedings.
On March 7, 1995, a complaint was filed in the Supreme Court
of New York by Valeo and Valeo Engine Cooling against the Company
and its investment banker, Dillon, Read & Co. Inc. in connection
with the Company's sale of its manufacturing subsidiary, Lake Center
Industries, Inc. The Plaintiffs, the unsuccessful bidder for Lake
Center Industries, allege breach of contract and other wrongdoing.
They seek actual damages of two hundred ninety thousand dollars in
connection with preparing their bid, seven million dollars on a
theory of unjust enrichment and ten million dollars in punitive
damages.
Item 4. Submission of Matters to a Vote of Security
Holders
No matters were submitted to a vote of the security
holders during the fourth quarter of 1995.
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters.
(a) The Company's common stock is traded in the over-the-counter market and
is quoted on the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System under the symbol "ATKN." The following table
sets forth the high and low NASDAQ sales prices for such common stock in each
quarterly period during the two most recent fiscal years.
1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Low $ 7.00 $ 7.50 $ 9.38 $ 9.00
High 10.50 9.63 11.00 11.00
1994
Low $ 8.00 $ 8.13 $ 9.50 $ 9.25
High 9.50 11.00 11.00 11.00
(b) The number of holders of record of the Company's
common stock as of January 31, 1996 was 1,292.
(c) dividends declared in 1994 and 1995 are as follows:
1995 1994
Dividends per share by quarter:
First $2.00 $0.00
Second 0.00 0.00
Third 0.00 0.00
Fourth 0.00 0.00
Total Dividends $2.00 $0.00
<PAGE>
Item 6
<TABLE>
Selected Financial Data.
(in thousands except per share amounts)
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Revenue $416,995 $422,969 $345,036 $320,963 $519,290
Income (loss) from continuing operations,
before extraordinary item, and cumulative
effect of changes in accounting 3,609 (52,023) (8,660) (779) (2,633)
Income from discontinued operations 3,238 5,065 2,256 3,869
Gain on disposal of discontinued operations 36,866
Income (loss) before extraordinary item
and cumulative effect of changes in
accounting 3,609 (11,919) (3,595) 1,477 1,236
Extraordinary item: Utilization of tax
loss carryforward 213
Cumulative effect of changes in accounting:
Postretirement healthcare costs (7,096)
Income taxes 12,070
Postemployment benefit costs (739)
Other
Net income (loss) $ 3,609 $(12,658) $ 1,379 $ 1,690 $ 1,236
-------- -------- -------- -------- --------
Loss per share of common stock from
continuing operations, before extraordinary
item and cumulative effect of changes
in accounting $0.39 $(5.86) $(0.99) $(0.09) $(0.30)
Income per share from discontinued operations $ 0.36 $ 0.58 $ 0.26 $ 0.44
Gain per share from disposition of discontinued
operations $ 4.16
Income (loss) per share of common stock
before extraordinary item and cumulative
effect of changes in accounting $0.39 $(1.34) $(0.41) $0.17 $0.14
Extraordinary item per share of common stock 0.02
Cumulative effect per share of common stock
of changes in accounting $(0.08) $0.57
Net income (loss) per share of common stock $0.39 $(1.42) $0.16 $0.19 $0.14
-------- -------- -------- -------- --------
Total Assets $234,844 $199,714 $271,879 $260,206 $272,816
-------- -------- -------- -------- --------
Long-term debt, less current portion $ 1,917 $ 2,199 $ 18,273 $ 18,227 $ 3,417
-------- -------- -------- -------- --------
Notes payable, including current portion
of long-term debt $ 844 $ 662 $ 36,568 $ 41,389 $ 39,475
-------- -------- -------- -------- --------
Dividends per share $2.00
-------- -------- -------- -------- --------
Average number of shares and common stock
equivalents utilized in net income per share
calculations 9,161 8,877 8,788 8,777 8,777
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview of the Business
Guy F. Atkinson Company of California provides a full
range of engineering, procurement, construction and related
services to worldwide clients in the power, industrial and
commercial building, pulp and paper, mining and infrastructure
markets. The Company principally operates through three
construction divisions, Atkinson Construction Company, located in
San Bruno, California; Walsh Construction Company, located in
Trumbull, Connecticut; and Commonwealth Construction Company,
located in Vancouver, Canada.
The Company's traditional markets have been the United
States and Canada, with approximately 60% of its revenues in 1995
derived from the private sector and the balance from the public
sector. The Company sells its construction services on the basis
of price through competitive bidding, negotiated contracts, or a
combination of both. Construction work may be performed under
contract for a fixed-price, price per unit of work performed, cost-
reimbursable plus fee, or other form of contract, with most
contracts being fixed-price. The Company may perform construction
work alone, or in conjunction with full-service design,
engineering, procurement and other services which may include
taking a project from inception through commercial operation.
In performing construction services on a fixed-price
basis, the Company takes certain performance and financial risks,
namely that it can maintain project costs within budget for the
work to be performed, and that payment will be forthcoming for work
performed, including appropriate compensation for work outside the
defined scope of the original contract. In exchange for assuming
this risk, the Company earns a gross margin, from which overhead
and general corporate expenses are met. From time to time,
contract disputes occur, generally arising from work performed
resulting from conditions or circumstances not envisioned in the
original contract. Such disputes may be negotiated to the
satisfaction of both parties, or, on occasion, may lead to
litigation or mediation, which can give rise to unforeseen losses
and additional expense to the Company.
Prior to 1995, the Company operated certain nonconstruction
businesses, engaged in automotive parts manufacturing, pipe distribution,
and oil and gas exploration and production. During 1994, the Company
sold these businesses and refocused on its core construction activities.
Ancillary to its construction activities, the Company
also operates a subsidiary, Microsep International Corporation, a
developing water and wastewater treatment business which offers
environmental solutions to both industrial and municipal sanitation
markets.
Reclassification of Statement of Income
As a result of the Company's sale of substantially all of
its nonconstruction businesses (as explained in the note to the
Financial Statements entitled "Discontinued Operations and
Restructuring"), certain income statement amounts for 1994 and 1993
have been reclassified as discontinued operations. Revenues and
expenses reflect only those amounts attributable to the ongoing
construction and other businesses of the Company, while the net
operating results of the disposed businesses, and the related gain
on disposition, have been shown separately.
Results of Operations (all dollar amounts are in thousands unless
otherwise stated)
Revenue: The Company's revenue of $416,995 in 1995 was
slightly lower than the corresponding figure of $422,969 in 1994,
and 21% higher than the $345,036 of revenue in 1993. This
reduction in revenue was attributable to the completion of certain
industrial construction projects in 1994, while new contract awards
(amounting to $748,887 for 1995) did not begin to make a
contribution to revenue until late in the third quarter. The
backlog of uncompleted contracts amounted to $641,670 at December
31, 1995, representing an increase of 107% over the December 31,
1994 backlog of $309,778 and a 63% increase over the $392,702 at
December 31, 1993. The 1993 backlog has been restated for the
removal of a $293,000 contract award due to its unlikely prospects
of proceeding.
Gross margin: The Company's gross margin was $39,172
in 1995 compared with $(14,080) in 1994 and represents a 109%
improvement over the 1993 gross margin of $18,729. Gross margin in
1994 was adversely impacted by contract dispute settlements, cost
overruns, and the write-down of certain assets, together amounting
to $29,771. The improvement in the 1995 gross margin reflects a
more profitable mix of construction contracts in 1995, as the
Company focuses on higher-margin construction opportunities.
General and administrative expense: General and
administrative expenses of $38,551 were slightly lower than the
corresponding figure of $39,080 in 1994 and represent a 27%
increase over the $30,302 in 1993. The savings from lower 1995
corporate expenses, resulting from cost reduction efforts
implemented in the fourth quarter of 1994, were partially offset by
costs of increased bidding activities and ongoing business-development
efforts in both the construction and water and wastewater treatment
businesses.
Interest income: Interest income, principally from short-term
investments, of $3,784 in 1995, increased almost sixfold over the
corresponding 1994 interest of $563 and is almost four times greater
than the $808 earned in 1993. The increase in investable funds, giving
rise to the higher interest income, can be attributed to cash proceeds
from the 1994 sale of the Company's principal nonconstruction operations.
Miscellaneous: Miscellaneous income in 1995 consists
primarily of gains of $2,138 from property dispositions and $2,079
on the favorable settlement of certain accrued liabilities, offset
by a $3,041 reduction in the carrying value of property.
Miscellaneous income of $887 in 1994 was mainly attributable to
foreign exchange gains, while the 1993 amount of $6,942 was
principally derived from a gain on the disposition of the Company's
headquarters building.
Interest expense: Interest expense declined to $904 in
1995 from $4,902 in 1994 and $3,481 in 1993 due to the repayment of
short-term debt in 1994.
Income taxes: Income taxes gave rise to an expense of
$1,141 in 1995 compared to a benefit of $8,758 in 1994 and an
expense of $1,356 in 1993. The tax expense in 1995 was
attributable to state and foreign income taxes. The 1994 tax
benefit was due to the allocation of income taxes to discontinued
operations, and the 1993 tax expense was attributable to state and
foreign taxes in conjunction with U.S. tax losses for which no net
tax benefit was available.
Discontinued operations: In 1994 and 1993, discontinued
operations provided net income of $3,238 and $5,065 respectively.
Due to the sale of these operations in 1994, the results are for
less than a full year in 1994.
Gain on disposal of discontinued operations: As
explained more fully in the note to the Financial Statements
entitled "Discontinued Operations and Restructuring," the disposal
of the Company's principal nonconstruction operations resulted in
a net after tax gain in 1994 of $36,866.
Net income (loss): In 1995, the Company had income before
the cumulative effect of changes in accounting of $3,609, compared
to losses of $(11,919) in 1994 and $(3,595) in 1993.
As explained more fully in the note to the Financial
Statements entitled "Summary of Significant Accounting Policies -
Changes in Accounting Principles", the Company adopted Statements
of Financial Accounting Standards Nos. 106 and 109 on January 1,
1993, and No. 112 on January 1, 1994, resulting in a net accounting
gain of $4,974 in 1993 and an accounting charge of $739 in 1994.
The Company's net income for 1995 was $3,609 or $0.39 per share,
compared with, after giving effect to accounting changes, a net
loss of $(12,658) or $(1.42) per share in 1994, and net income of
$1,379 or $0.16 per share in 1993.
In 1995, the Company recorded an increase in the
accumulated translation adjustment of stockholders' equity in the
amount of $803 as a result of favorable changes in the exchange
rate of the Canadian dollar, following reductions of $1,808 and
$1,207 in 1994 and 1993 respectively.
In addition, the Company recorded a charge to
stockholders' equity in 1993 with respect to unearned compensation
in the amount of $759 for the issuance of restricted shares of
common stock which would be earned based on certain performance
objectives. As a result of those objectives not being met, this
charge was reduced in 1994 and 1995 by $152 and $336 respectively,
to reflect the forfeiture of a portion of these restricted shares.
In 1994, the charge was increased by $129 to reflect the increase
in value of those restricted shares which remain outstanding. The
adjustments to equity for restricted stock are offset by
corresponding adjustments to paid-in capital.
The Company periodically records a charge or credit to
stockholders' equity with respect to minimum pension liabilities
resulting from changes in the assumed discount rate used to measure
pension liabilities. In 1995, this charge amounted to $344,
compared with a credit of $805 in 1994 and a charge of $805 in
1993. An explanation of the accounting for pension assets and
liabilities is contained in the note to the Financial Statements
entitled "Employees' Pension and Retirement Plans."
<PAGE>
Liquidity and Capital Resources
As reported in the Consolidated Statements of Cash Flows,
operating activities of continuing operations used cash of $6,412
in 1995, compared with a provision of cash of $14,201 in 1994 and
a utilization of cash of $20,844 in 1993. Negative operating cash
in 1995 was attributable to the cash requirements of a
significantly increased backlog of construction work-in-progress at
the end of 1995, compared with 1994 and 1993. Discontinued
operations provided a negative operating cash flow of $3,448 in
1994 and a positive $10,324 in 1993.
Net investing activities in 1995 used $15,191 of cash
compared to the generation of $96,882 in 1994 and $9,137 in 1993.
The utilization of cash in 1995 was due to the acquisition of
construction equipment to service the Company's construction work-
in-progress. In 1994, cash of $100,903 was generated from the sale
of the Company's nonconstruction businesses, while in 1993, $12,000
was generated by the sale of its headquarters building.
Financing activities utilized cash of $17,697 in 1995,
compared with $35,039 in 1994 and $4,775 in 1993. In 1995, the
Company paid a special $2.00 per share dividend amounting to
$17,835. In 1993 and 1994, funds were used principally to pay down
short-term borrowings, which in 1994 were fully retired.
The Company currently has no material commitments for
capital expenditures. However, it anticipates purchasing equipment
in the normal course of its business and meeting liquidity
requirements from internally generated funds or through available
lines of credit. Cash requirements for construction operations are
dependent upon construction contract payment provisions, the volume
of work scheduled for performance, and the timing and success of
dispute resolutions.
On September 29, 1995, the Company secured a two-year $40
million syndicated line of credit. The availability of this line
of credit is reduced by any letters of credit which may be
outstanding under the lines. At December 31, 1995, the Company had
no borrowings outstanding, and $6,793 of standby letters of credit
outstanding. The syndicated line of credit expires on June 30,
1997. The terms of renewal are dependent upon operating results,
future circumstances and events, and conditions in the credit
market at the time of renewal.
The Company reasonably believes that its cash and
invested balances, together with lines of credit, funds generated
from operations including claim settlements, and from investing and
financing activities will be adequate for foreseeable future
requirements.
Item 8. Financial Statements and Supplementary Data.
Reference is made to the Consolidated Balance Sheets,
Consolidated Statements of Stockholders' Equity, Consolidated
Statements of Income, Consolidated Statements of Cash Flows, Notes
to Consolidated Financial Statements and Report of Independent
Accountants bound separately and attached to this Form 10-K.
Item 9. Disagreements on Accounting and Financial
Disclosure.
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant.
Information with respect to directors and certain
executive officers of the Company is incorporated by reference from
the information under the caption "Information with Respect to
Nominees" in the Company's definitive proxy statement for the
Annual Meeting of Shareholders to be held on April 18, 1996
("Annual Meeting"). Information regarding other executive officers
of the Registrant is contained in Item 1 of this 10-K.
Item 11. Executive Compensation.
Incorporated by reference from the information under the
caption "Compensation of Directors and Executive Officers" in the
Company's definitive proxy statement for the Annual Meeting of
Shareholders to be held on April 18, 1996.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
Incorporated by reference from the information to be
included under the captions "Certain Beneficial Ownership of
Securities" and "Stock Ownership of Executive Officers and
Directors" in the Company's definitive proxy statement for the
Annual Meeting of Shareholders to be held April 18, 1996.
Item 13. Certain Relationships and Related Transactions.
Incorporated by reference from the information under the
caption "Certain Transactions" in the Company's definitive proxy
statement for the Annual Meeting of Shareholders to be held April
18, 1996.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
Reference Page
Bound Attachment
(a) 1. Consolidated Financial Statements.
Report of Independent Accountants. . . . . . . . 2
Consolidated balance sheets at Decem-
ber 31, 1995 and December 31, 1994 . . . . . . 3-4
Consolidated statements of stockholders'
equity for each of the three years in
the period ended December 31, 1995 . . . . . . 5
Consolidated statements of income for
each of the three years in the period
ended December 31, 1995. . . . . . . . . . . . 6-7
Consolidated statements of cash flows
for each of the three years in the
period ended December 31, 1995 . . . . . . . . 8
Notes to financial statements. . . . . . . . . . 9-24
2. Financial Statement Schedules.
None
3. Exhibits.
Exhibit
Number Description
2 Agreement of Merger and Plan of Reorganization dated as
of April 22, 1994 between the Company and Guy F.
Atkinson Company of California, a California
corporation, for the purpose of merging to reincorporate
the California company in the state of Delaware, filed
as an exhibit to the Form 10-K for the period ended
December 31, 1994 (File No. 0-3062) and incorporated
herein by reference.
3.1 Certificate of Incorporation of the Company, filed as an
exhibit to the Form 10-Q of the Company for the period
ended March 31, 1994 (File No. O-3062) and
incorporated herein by reference.
3.2 Bylaws of the Company, filed as an exhibit to the Form
10-Q of the Company for the period ended March 31, 1994
(File No. O-3062) and incorporated herein by reference.
4 Stockholder Rights Agreement, dated as of May 9, 1994,
between the Company and The Bank of New York, as Rights
Agent ("Shareholder Rights Agreement"), filed as an
exhibit to the Form 8-A of the Company filed on May 10,
1994 (File No. O-3062) and incorporated herein by
reference.
10.1 Loan Agreement and Guaranty Agreement, dated December
23, 1991, relating to a loan from the Guy F. Atkinson
Company Federal Credit Union and guaranteed by Guy F.
Atkinson Company, a Nevada corporation, to William J.
Carlson, filed as Exhibit 10.1 to the Company's 1991
Form 10-K (File No. 0-3062) and incorporated herein by
reference.
10.2 Atkinson Corporate Management Incentive Compensation
Plan. Filed as Exhibit 10.4 to the Company's 1988 Form
10-K (File No. 0-3062) and incorporated herein by
reference.
10.3 Guy F. Atkinson Company of California 1990 Executive
Stock Plan as amended and restated filed as Exhibit 10.1
to Form 10-Q of the Company (File No. 0-3062) for the
period ended March 31, 1995 and incorporated herein by
reference.
10.4 Guy F. Atkinson Company of California Common Stock
Purchase Warrant dated May 28, 1993 beween the Company
and Morgan Guaranty Trust Company filed as Exhibit 10.4
to the Company's 1993 Form 10-K (File No. 0-3062) and
incorporated herein by reference.
10.5 Employment Agreement dated as of April 21, 1994, between
the Company and Jack J. Agresti, filed as Exhibit 10.5
to the Company's 1994 Form 10-K (File No. 0-3062) and
incorporated herein by reference.
21 Subsidiaries of the Company
24 Powers of Attorney of certain Directors
27 Financial Data Schedule
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed by the Company
during the last quarter of 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GUY F. ATKINSON COMPANY OF CALIFORNIA
By: /s/ Herbert D. Montgomery
Herbert D. Montgomery
Senior Vice President, Chief
Financial Officer and Treasurer
Date: March 19, 1996.
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
/S/ J. J. Agresti* President and Chief March 19, 1996
J. J. Agresti Executive Officer
/S/ H. D. Montgomery Senior Vice President March 19, 1996
H. D. Montgomery Chief Financial
Officer and Treasurer
(Principal Financial
Officer)
/S/ J. Harrison Controller March 19, 1996
J. Harrison (Principal Accounting
Officer)
/S/ D. E. Atkinson* Director March 19, 1996
D. E. Atkinson
/s/ R. N. Atkinson* Director March 19, 1996
R. N. Atkinson
/S/ W. E. Burch* Director March 19, 1996
W. E. Burch
/S/ J. P. Frazier* Director March 19, 1996
J. P. Frazier
/S/ D. R. Kayser* Director March 19, 1996
D. R. Kayser
/S/ R. J. Turner* Director March 19, 1996
R. J. Turner
/S/ J. F. Whitsett* Director March 19, 1996
J. F. Whitsett
*By:/S/ Therese Ambrusko
Therese Ambrusko,
Attorney-In-Fact
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Guy F. Atkinson Company of California on Post-Effective
Amendment No. 2 to Form S-8 (File No. 33-6296) and Form S-8 (File No.
33-34891) of our report dated February 23, 1996, on our audits of the
consolidated financial statements and financial statement schedule of
Guy F. Atkinson Company of California as of December 31, 1995 and 1994,
and for the years ended December 31, 1995, 1994 and 1993, which report
is included in this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
San Francisco, California
March 14, 1996
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
21 Subsidiaries of the Company
24 Powers of Attorney of certain Directors
27 Financial Data Schedule
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Organized
Under
Corporate Subsidiaries Laws of
--------
Guy F. Atkinson Company Nevada
Atkinson Building Company California
Guy F. Atkinson Company - Overseas Delaware
Guy F. Atkinson Construction Ltd. California
Atkinson Development Company California
Atkinson-International Venezuela, Inc. California
Atkinson Land Company California
Atkinson Middle East, Inc. Nevada
Atkinson Realty, Incorporated California
Atkinson Venezuela, Inc. Delaware
Andrew H. Charles Corporation Delaware
Commonwealth Water Solutions, Inc. California
DWA Fed Oak Inc. California
Offshore Hydro Services, Inc. California
J. E. Record, Inc. Delaware
WBL Solar Corporation California
Walsh-Puerto Rico, Inc. California
Wismer & Becker Contracting Engineers, California
d/b/a Atkinson Mechanical Contractors Co.
Colma Casualty Company Vermont
Guy F. Atkinson Holdings Ltd. Canada
Commonwealth Asia Constructors Ltd. Canada
Commonwealth Asia Pacific Constructors Pte Singapore
Commonwealth Construction Company (1985)
Limited Canada
Commonwealth Pacific Consultants Ltd. Canada
Microsep International Corporation Delaware
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and
appoints Therese Ambrusko and Herbert D. Montgomery, and each of them, his
true and lawful attorney-in-fact, each with full power of substitution, for
him and in his name, place and stead to execute for him and on his behalf in
each of his offices and capacities with Guy F. Atkinson Company of California,
the Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, on Form 10-K, with respect to fiscal year ended December 31, 1995,
together with any amendments thereto on Form 8-K, said report to be filed with
the Securities and Exchange Commission in Washington, D.C., 19549, on or
before March 31, 1996, approving and confirming all that said attorneys-in-
fact do by virtue of these presents.
Dated: February 15, 1996 /s/ Jack J. Agresti
Jack J. Agresti
Dated: February 15, 1996 /s/ Duane E. Atkinson
Duane E. Atkinson
Dated: February 15, 1996 /s/ Ray N. Atkinson
Ray N. Atkinson
Dated: February 15, 1996 /s/ William E. Burch
William E. Burch
Dated: February 15, 1996 /s/ J. Phillip Frazier
J. Phillip Frazier
Dated: February 22, 1996 /s/ Donald R. Kayser
Donald R. Kayser
Dated: February 15, 1996 /s/ Ross J. Turner
Ross J. Turner
Dated: February 15, 1996 /s/ John F. Whitsett
John F. Whitsett
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 and 1994
and
FOR THE THREE YEARS ENDED
DECEMBER 31, 1995, 1994 and 1993
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
AND CONSOLIDATED SUBSIDIARIES
INDEX
Item 8. Financial Statements and Supplementary Data.
(a) Financial Statements
Financial statements of the registrant and consolidated subsidiaries
are included as a separate section of this report. The index to
these financial statements follows:
Page
2 Report of Independent Accountants
Consolidated Financial Statements:
3-4 Balance Sheets, December 31, 1995 and 1994
5 Statements of Stockholders' Equity for the years ended December 31,
1995, 1994 and 1993
6-7 Statements of Income for the years ended December 31, 1995, 1994
and 1993
8 Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993
9-24 Notes to Financial Statements
Financial statement schedules:
Financial Statement schedules are omitted because the conditions requiring
their filing do not exist, or because the required information is given in
the financial statements, including the notes thereto.
Page 1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Guy F. Atkinson Company of California:
We have audited the consolidated balance sheets of Guy F. Atkinson Company of
California and Consolidated Subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of income (loss), changes in stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Guy F. Atkinson
Company of California and Consolidated Subsidiaries as of December 31, 1995
and 1994, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, in 1994
and 1993, the Company adopted Statement of Financial Accounting Standards No.
112, Employers' Accounting for Postemployment Benefits, and Statements of
Financial Accounting Standards No. 106, Employers'Accounting for Postretirement
Benefits Other Than Pensions and No. 109, Accounting for Income Taxes,
respectively.
Coopers & Lybrand L.L.P.
San Francisco, California
February 23, 1996
Page 2
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Consolidated Balance Sheets
(in thousands of dollars except share and per share amounts)
<CAPTION>
As of December 31, 1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments $ 39,804 $ 78,441
Accounts receivable 76,196 33,150
Costs and estimated earnings in excess of billings 28,751 4,338
Inventories and unamortized costs on contracts 20,987 20,062
Investments in joint ventures 32,272 40,503
Deferred income taxes - 23
Other current assets 5,244 3,163
-------- --------
Total current assets 203,254 179,680
-------- --------
Property, plant and equipment
At cost:
Land 2,683 3,969
Buildings 11,203 17,371
Construction equipment 36,036 25,361
Other equipment 7,478 5,195
-------- --------
57,400 51,896
Less accumulated depreciation 28,163 34,345
-------- --------
Total property, plant and equipment, net 29,237 17,551
-------- --------
Other assets
Deferred income taxes - 88
Other assets 2,353 2,395
-------- --------
Total other assets 2,353 2,483
-------- --------
Total assets $234,844 $199,714
======== ========
The accompanying notes are an integral part of these financial statements
Page 3
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Consolidated Balance Sheets
(in thousands of dollars except share and per share amounts)
<CAPTION>
As of December 31, 1995 1994
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable, including current portion of long-term debt $ 844 $ 662
Accounts payable 86,671 39,743
Billings in excess of costs and estimated earnings 20,300 16,920
Accrued payroll 9,310 5,276
Accrued federal and foreign income taxes 5,020 6,953
Other accrued expenses 18,835 23,219
Deferred income taxes 248 -
Due to joint ventures 730 103
-------- --------
Total current liabilities 141,958 92,876
-------- --------
Non-current liabilities
Long-term debt, less current portion 1,917 2,199
Deferred income taxes 88 -
Postretirement healthcare and postemployment benefit obligations 7,423 7,651
-------- --------
Total liabilities 151,386 102,726
-------- --------
Stockholders' Equity
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued
or outstanding
Common stock, par value $0.01; 20,000,000 shares authorized; 8,951,154
issued and outstanding at December 31, 1995 and 8,950,824 at
December 31, 1994 1,895 1,894
Paid-in capital 13,085 13,185
Accumulated translation adjustment (4,446) (5,249)
Unearned compensation (400) (736)
Additional pension liability (344) -
Retained earnings 73,668 87,894
-------- --------
Total stockholders' equity 83,458 96,988
-------- --------
Total liabilities and stockholders' equity $234,844 $199,714
======== ========
The accompanying notes are an integral part of these financial statements
Page 4
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Consolidated Statements of Stockholders' Equity
(in thousands of dollars except share and per share amounts)
<CAPTION>
Capital Stock Accumulated Unearned Additional
Number Paid-in Translation Compen- Pension Retained
of Shares Amount Capital Adjustment sation Liability Earnings
--------- ------ ------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 8,777,224 $1,894 $11,480 $(2,234) $ - $ - $99,173
Changes for the year - 1993:
Net income 1,379
Restricted shares:
Issued 92,000 759 (759)
Foreign currency translation (1,207)
Additional minimum pension liability (805)
--------- ------ ------- ------- ----- ----- --------
Balance, December 31, 1993 8,869,224 1,894 12,239 (3,441) (759) (805) 100,552
Changes for the year - 1994:
Net (loss) (12,658)
Restricted shares:
Forfeited (18,400) (152) 152
Valuation adjustment 129 (129)
Issued to pension plan 100,000 969
Foreign currency translation (1,808)
Additional minimum pension liability 805
--------- ------ ------- ------- ----- ----- --------
Balance, December 31, 1994 8,950,824 1,894 13,185 (5,249) (736) - 87,894
Changes for the year - 1995:
Net income 3,609
Cash dividend - $2.00 per share (17,835)
Restricted shares:
Forfeited (33,600) (336) 336
Stock options exercised 33,930 1 236
Foreign currency translation 803
Additional minimum pension liability (344)
--------- ------ ------- ------- ----- ----- --------
Balance, December 31, 1995 8,951,154 $1,895 $13,085 $(4,446) $(400) $(344) $ 73,668
========= ====== ======= ======= ===== ===== ========
The accompanying notes are an integral part of these financial statements
Page 5
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Consolidated Statements of Income
(in thousands of dollars except share and per share amounts)
<CAPTION>
Years ended December 31, 1995 1994 1993
- ------------------------ -------- -------- --------
<S> <C> <C> <C>
Revenue $416,995 $422,969 $345,036
Cost of revenue 377,823 437,049 326,307
-------- -------- --------
Gross margin 39,172 (14,080) 18,729
Restructuring charges - 4,169 -
General and administrative expenses 38,551 39,080 30,302
-------- -------- --------
Income (loss) from operations 621 (57,329) (11,573)
Other income (expense)
Interest income 3,784 563 808
Interest expense (904) (4,902) (3,481)
Miscellaneous 1,249 887 6,942
-------- -------- --------
Total other income (expense) 4,129 (3,452) 4,269
-------- -------- --------
Income (loss) from continuing operations before income taxes and cumulative
effect of changes in accounting 4,750 (60,781) (7,304)
Provision (benefit) for income taxes 1,141 (8,758) 1,356
-------- -------- --------
Income (loss) from continuing operations before cumulative effect of changes
in accounting 3,609 (52,023) (8,660)
Income from discontinued operations, net of income taxes:
Income from discontinued operations - 3,238 5,065
Gain on disposal of discontinued operations - 36,866 -
-------- -------- --------
Total income from discontinued operations, net of income taxes - 40,104 5,065
-------- -------- --------
Income (loss) before cumulative effect of changes in accounting 3,609 (11,919) (3,595)
Cumulative effect of changes in accounting:
Postemployment benefit costs - (739) -
Postretirement healthcare costs - - (7,096)
Income taxes - - 12,070
-------- -------- --------
Total cumulative effect of changes in accounting - (739) 4,974
-------- -------- --------
Net income (loss) $ 3,609 $(12,658) $ 1,379
======== ======== ========
The accompanying notes are an integral part of these financial statements
Page 6
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Consolidated Statements of Income
(in thousands of dollars except share and per share amounts)
<CAPTION>
Years ended December 31, 1995 1994 1993
- ------------------------ -------- -------- --------
<S> <C> <C> <C>
Income (loss) per share of common stock from continuing operations before
cumulative effect of changes in accounting $0.39 $(5.86) $(0.99)
Income per share of common stock from discontinued operations, net of income
taxes - 4.52 0.58
-------- -------- --------
Income (loss) per share of common stock before cumulative effect of changes
in accounting 0.39 (1.34) (0.41)
Cumulative effect per share of common stock of changes in accounting - (0.08) 0.57
-------- -------- --------
Net income (loss) per share of common stock $0.39 $(1.42) $ 0.16
======== ======== ========
Average number of shares of common stock and common stock equivalents
utilized in net income (loss) per share calculation 9,161,000 8,877,000 8,788,000
========= ========= =========
The accompanying notes are an integral part of these financial statements
Page 7
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Consolidated Statement of Cash Flows
(in thousands of dollars except share and per share amounts)
<CAPTION>
Years ended December 31, 1995 1994 1993
- ------------------------ -------- -------- --------
<S> <C> <C> <C>
Operating activities
Net income (loss) $ 3,609 $(12,658) $ 1,379
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
(Income) from discontinued operations - (3,238) (5,065)
Restructuring charges - 4,169 -
Depreciation, depletion and amortization 6,666 2,822 2,684
Provision for loss on investment in energy properties - 300 -
Deferred income taxes 444 1,104 1,729
(Gain) on dispositions of property, plant and equipment (3,028) (92) (7,704)
(Gain) on disposition of discontinued operations - (36,866) -
Cumulative effect of changes in accounting - 739 (4,974)
Changes in operating assets and liabilities:
Accounts receivable (43,080) 21,965 (16,767)
Inventories and unamortized costs on contracts (963) 15,601 21,410
Investments in joint ventures 8,845 10,190 (14,894)
Other current assets (2,089) 1,557 3,668
Accounts payable and accrued expenses 46,353 6,525 (3,772)
Accrued income taxes (1,877) (7,757) 1,395
Billings in excess of costs and estimated earnings, net (21,033) 10,351 698
Other, net (259) (511) (631)
-------- -------- --------
Net cash provided by (used in) operating activities from continuing operations (6,412) 14,201 (20,844)
Net cash provided by (used in) operating activities of discontinued operations - (3,448) 10,324
-------- -------- --------
Net cash provided by (used in) operating activities (6,412) 10,753 (10,520)
-------- -------- --------
Cash flows from investing activities:
Property, plant and equipment expenditures (23,022) (1,852) (2,472)
Proceeds from dispositions of property, plant and equipment 7,791 1,036 14,260
Proceeds from disposition of discontinued operations - 100,903 -
Increase (decrease) in other assets, net 40 (778) (540)
Net investing activities of discontinued operations - (2,427) (2,111)
-------- -------- --------
Net cash provided by (used in) investing activities (15,191) 96,882 9,137
-------- -------- --------
Cash flows from financing activities:
Short-term borrowings (repayments), net - (34,215) (5,785)
Proceeds of long-term borrowings 812 - 453
Long-term debt repayments (911) (678) (1,118)
Common stock issuance related to stock option awards 237 - -
Cash dividends paid (17,835) - -
Net financing activities of discontinued operations - (146) 1,675
-------- -------- --------
Net cash provided by (used in) financing activities (17,697) (35,039) (4,775)
-------- -------- --------
Effect of exchange rate changes on cash 663 (1,003) (1,132)
-------- -------- --------
Net increase (decrease) in cash and short-term investments $(38,637) $ 71,593 $ (7,290)
======== ======== ========
Supplementary information:
Cash paid during the year for:
Interest $ 553 $ 4,798 $ 5,131
Federal, foreign and state income taxes 2,563 838 (533)
Common stock contributed to pension plan - 969 -
======== ======== ========
The accompanying notes are an integral part of these financial statements
Page 8
</TABLE>
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Summary of Significant Accounting Policies
Nature of the Business
- ----------------------
The company provides full service construction and construction-related services
in the United States, Canada and internationally, to the following markets:
Power generation
Industrial and commercial building
Pulp and paper
Mining
Transportation and infrastructure
Water and wastewater treatment
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Principles of Consolidation
- ---------------------------
The company conducts business primarily through the following subsidiaries/
business units:
Atkinson Construction Company
Commonwealth Construction Company
Walsh Construction Company
The consolidated financial statements include Guy F. Atkinson Company of
California and its subsidiaries. Investments in joint ventures are recorded
on the equity method. Significant transactions between the company and its
subsidiaries are eliminated in consolidation.
Construction Contract Accounting
- --------------------------------
Construction revenue and gross margin, including the company's share of joint-
venture contracts, are recognized using the percentage of completion method.
This method applies the ratio of costs incurred to company engineers' estimates
of total costs on a contract-by-contract basis. These estimates include
provisions for known and unknown cost overruns, if any exist or are expected
to occur, and may be subject to revision in the normal course of business.
Revenue from claims by the company for additional contract compensation is
recorded when agreed to by the owner. Provision is made currently for any
anticipated future losses on contracts in progress.
The classification of construction contract-related current assets and
current liabilities is based on the company's contract performance cycle,
which may exceed one year.
Page 9
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(All dollar amounts are in thousands except where otherwise noted)
Summary of Significant Accounting Policies (continued)
Foreign Exchange
- ----------------
The company has assets, liabilities and transactions in foreign currencies,
principally the Canadian dollar, which potentially expose it to the risk of
foreign exchange gains and losses. The company evaluates foreign currency
transaction risk and will protect against such risks by various hedging
strategies where appropriate. The company does not engage in speculation,
nor does it typically hedge nontransaction-related balance sheet exposure.
Cash and Short-term Investments
- -------------------------------
Short-term investments consist of debt securities with a maturity of one
year or less, which are classified as "held-to-maturity" and carried at
amortized cost.
Inventories and Unamortized Costs on Contracts
- ----------------------------------------------
Inventories are valued at the lower of cost (principally first-in, first-out)
or market prices. Unamortized costs on contracts include the cost of plant
and project facilities to be absorbed over the life of the projects, the
estimated value of recoverable assets, and costs related to unpriced change
orders and claims for additional contract compensation to the extent their
recovery is probable. The amount of costs relating to unpriced change orders
and claims that is included in inventories and unamortized costs on contracts
is the lesser of the actual amount of costs incurred and the estimated amount
that is recoverable as additional compensation. These estimates are based
upon management's expectations regarding the probability of future recovery
and may be subject to revision in the normal course of business.
Property, Plant, and Equipment
- ------------------------------
Property, plant, and equipment are stated at cost. Major improvements and
renewals are capitalized, while maintenance and repairs are charged to cost
as incurred.
The company depreciates all property, plant, and equipment over its expected
useful life on a straight-line basis. The depreciation expense is determined
by means of management estimates of expected useful life, salvage value and
asset useage. These estimates may be subject to revision in the normal course
of business. Included in property, plant and equipment are capitalized
computer software costs, together with the costs of systems implementation,
in 1995 amounting to $1,581 which are being depreciated on a straight-line basis
over a five year period.
Upon sale or retirement of property, plant, and equipment, the related costs
and accumulated depreciation or amortization are removed from the accounts
and any resulting gain or loss is included in income.
Income Taxes
- ------------
Deferred income taxes are recognized for the tax consequences in future years
of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
Page 10
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Summary of Significant Accounting Policies (continued)
Concentration of Credit Risk
- ----------------------------
Financial instruments that potentially subject the company to concentrations
of credit risk consist principally of short-term investments and accounts
receivable.
The company places excess cash in U.S. and Canadian government debt obligations,
investment-grade commercial paper and certificates of deposit, in accordance
with investment objectives which are designed to preserve principal, meet
liquidity needs, minimize credit risk and achieve a satisfactory yield. The
company provides construction services to a large number of public agencies
and private sector companies in different industries and geographic areas.
The company performs ongoing credit evaluations of its customers and generally
does not require collateral. The company maintains reserves for potential
credit losses, and such losses have been within management's expectations.
Earnings per share
- ------------------
Earnings per share of common stock 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 (in
periods where they have a dilutive effect) 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.
Adoption of New Accounting Standards
- ------------------------------------
In March 1995, Statement of Financial Accounting Standards No. 121, "Accounting
for Long-Lived Assets" (SFAS 121) was issued. The company will adopt this
standard in 1996, the effect of which is not expected to be significant.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-based Compensation" (SFAS 123) was issued. This
statement requires the fair value of stock options and other stock-based
compensation issued to employees to be either included as compensation
expense in the income statement, or the pro-forma effect on net income
and earnings per share to be disclosed in the footnotes to the financial
statements commencing in 1996. The company has elected to adopt SFAS 123 on a
disclosure basis and, as such, the effect of its implementation is not expected
to be significant.
Changes in Accounting Principles
- --------------------------------
In 1994, the company recorded an accounting charge of $739 for postemployment
benefit costs upon the adoption of SFAS 112.
In 1993, the company recorded an accounting charge of $7,096 for postretirement
healthcare costs upon the adoption of SFAS 106 and an accounting gain of $12,070
representing deferred income tax benefits upon the adoption of SFAS 109.
Reclassification of 1994 and 1993 Financial Statements
- ------------------------------------------------------
Certain amounts for 1994 and 1993 have been reclassified to conform with the
1995 financial statement presentation and have not affected previously reported
net income or stockholders' equity.
Page 11
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Cash and Short-Term Investments
- -------------------------------
<CAPTION>
Cash and short-term investments consist of the following: 1995 1994
------- -------
<S> <C> <C>
U.S. government treasury securities $ 256 $ -
Canadian government debt obligations - 13,429
Investment-grade commercial paper 25,097 56,336
Cash balances 14,451 8,676
------- -------
Total cash and short-term investments $39,804 $78,441
======= =======
</TABLE>
Accounts Receivable
Accounts receivable include retained percentages of $13,366 and $8,288 at
December 31, 1995 and 1994 respectively. The amount for 1995 is expected
to be collected as follows: $7,523 in 1996 and $5,843 in 1997.
Inventories and Unamortized Costs on Contracts
<TABLE>
<CAPTION>
The major classifications of inventory are as follows: 1995 1994
------- -------
<S> <C> <C>
Construction materials, parts and supplies $ 2,812 $ 3,724
Unamortized costs on contracts 18,175 16,338
------- -------
$20,987 $20,062
======= =======
</TABLE>
Unamortized costs on contracts include $9,414 (1994 - $13,965) of costs
relating to claims, and $4,315 (1994 - $2,200) of costs relating to unapproved
change orders.
Investments in Joint Ventures
The company participates in various construction joint ventures in the United
States, Canada and other countries.
<TABLE>
<CAPTION>
Net assets of these joint ventures are as follows: Total Company Interest Other Interest
-------- ---------------- --------------
<S> <C> <C> <C>
1995
Assets $110,624 $38,937 $ 71,687
Liabilities 67,850 7,395 60,455
-------- ------- --------
Net assets $ 42,774 $31,542 $ 11,232
======== ======= ========
1994
Assets $190,640 $66,196 $124,444
Liabilities 91,034 25,796 65,238
-------- ------- --------
Net assets $ 99,606 $40,400 $ 59,206
======== ======= ========
Page 12
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Investments in Joint Ventures (continued)
<CAPTION>
Investment in joint ventures is made up as follows: 1995 1994
--------- --------
<S> <C> <C> <C>
Investment in joint ventures $ 32,272 $ 40,503
Due to joint ventures (730) (103)
-------- --------
Net investment $ 31,542 $ 40,400
======== ========
Income statement amounts for joint ventures are: 1995 1994 1993
-------- -------- --------
Revenue
Sponsored joint ventures $143,933 $121,934 $141,239
Less other venturers' shares 90,064 62,292 81,732
-------- -------- --------
Company share of sponsored joint ventures 53,869 59,642 59,507
Company share of non-sponsored joint ventures 20,588 41,322 56,557
-------- -------- --------
Revenue recorded from joint ventures $ 74,457 $100,964 $116,064
======== ======== ========
Cost of revenue
Sponsored joint ventures $129,518 $109,885 $125,135
Less other venturers' shares 81,260 49,899 70,645
-------- -------- --------
Company share of sponsored joint ventures 48,258 59,986 54,490
Company share of non-sponsored joint ventures 20,173 44,835 48,969
-------- -------- --------
Cost of revenue recorded from joint ventures $ 68,431 $104,821 $103,459
======== ======== ========
Gross margin
Sponsored joint ventures $ 14,415 $ 12,049 $ 16,104
Less other venturers' shares 8,804 12,393 11,087
-------- -------- --------
Company share of sponsored joint ventures 5,611 (344) 5,017
Company share of non-sponsored joint ventures 415 (3,513) 7,588
-------- -------- --------
Gross margin recorded from joint ventures $ 6,026 $ (3,857) $ 12,605
======== ======== ========
</TABLE>
The company's investment in each joint venture consists of cash contributions,
plus its share of earnings, minus its share of losses and cash distributions.
The company adjusts its share of earnings from each joint venture, where
necessary, to conform with the percentage of completion method as outlined
in the Summary of Significant Accounting Policies. As a consequence,
investments in joint ventures will be subject to estimates regarding total
costs to be incurred and the amount of costs relating to unpriced change
orders and claims that is recoverable as additional contract compensation.
These estimates may be subject to revision in the normal course of business.
Credit Agreements
The company has short-term credit lines with domestic and foreign banks
aggregating $40,000. The company's credit agreements provide for commitment
and other fees in accordance with standard banking practice, and contain
certain restrictive covenants relating to net worth and other criteria.
Assets pledged as collateral under the agreements, principally deposit
accounts, accounts receivable, equipment and inventories, had a net book
value of $121,214 at December 31, 1995.
Page 13
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Credit Agreements (continued)
At December 31, 1995 and during the year, there were no borrowings outstanding
under the agreements, and the company was in compliance with all covenants.
The company's weighted average interest rate on short-term borrowings was 6.11%
in 1994 and 6% in 1993.
The company is contingently liable under standby letters of credit totaling
$6,793 at December 31, 1995, issued in the normal course of business. These
outstanding letters of credit reduce the amount available for borrowing under
the company's credit agreements.
Accounts Payable
Checks written which have not yet been presented for payment are included in
accounts payable. These amounts were approximately $4,700 and $3,900 at
December 31, 1995 and 1994, respectively.
Long-term Obligations
<TABLE>
<CAPTION>
Long-term obligations consist of the following: 1995 1994
------ ------
<S> <C> <C>
Industrial development bond, 5.95%, due 1998 $ 779 $1,063
Equipment financing agreements and capitalized lease obligations,
8.75% to 10.1%, due 1995-1998 778 290
Subordinated debentures, 6.5%, due 1999 677 784
Real estate mortgage, 8.5% - 152
Promissory notes, 10%, due 2003 527 572
------ ------
2,761 2,861
Less current portion 844 662
------ ------
$1,917 $2,199
====== ======
</TABLE>
Required principal repayments for the years 1996 through 2000 are as follows:
$844, $900, $462, $256 and $72, respectively, with $227 due after 2000.
Financing agreements contain restrictive covenants relating to net worth and
other criteria. Properties and equipment with a net book value of $3,279 at
December 31, 1995, are pledged as collateral for an industrial development
bond and equipment financing agreements.
Operating Leases
The company leases office space, facilities and equipment under various
operating leases. At December 31, 1995, future minimum rental payments
applicable to noncancellable operating leases were as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 3,115
1997 3,093
1998 2,824
1999 1,700
2000 1,569
After 2000 3,866
-------
Total $16,167
=======
</TABLE>
For the years 1995, 1994 and 1993 rental expense amounted to $3,095, $2,861
and $1,568 respectively.
Page 14
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Restricted Stock, Stock Options and Warrants
Under the provisions of the company's Executive Stock Plan, the Board of
Directors can grant nonqualified and incentive stock options, restricted stock
and stock appreciation rights for up to 1,300,000 shares to key executives at
the current market price on the date of the grant. No awards may be granted
after April 15, 2005. The right to exercise options granted vests 25 percent
on each of the first four annual anniversary dates of the grant and expires
after 10 years. Restrictions on restricted stock are progressively removed
based on achievement of earnings per share performance goals.
At December 31, 1995 the market value of the restricted shares in issue
amounted to $400 which has been recorded as "Unearned compensation," a
component of stockholders' equity (offset by an identical increase in paid-in
capital). Unearned compensation is amortized as the performance goals are met
and charged to general and administrative expenses, or reversed in conjunction
with any forfeitures of restricted shares. Performance goals with respect to
1995 were not met and no amounts were amortized in 1995. In accordance with
plan provisions, 40,000 restricted shares, with a market value of $400 as of
December 31, 1995, will be forfeited and returned to the company in March of
1996.
The exercise price of all oustanding options and warrants issued prior to
March 31, 1995 were repriced as a consequence of the special $2.00 per share
dividend paid on that date.
<TABLE>
<CAPTION>
Summary of stock options Number of Shares Price per Share
---------------- ---------------
<S> <C> <C>
Outstanding at December 31, 1993 310,300 $8.50 - $15.50
Granted in 1994 116,000 8.50
Forfeited in 1994 5,000 8.50 - 15.50
------- --------------
Outstanding at December 31, 1994 421,300 8.50 - 15.50
------- --------------
Granted in 1995 (1) 371,104 6.55 - 11.95
Forfeited in 1995 64,003 6.55 - 11.95
Exercised in 1995 33,930 6.55 - 7.23
------- --------------
Outstanding at December 31, 1995 694,471 6.55 - 11.95
------- --------------
Exercisable at December 31, 1995 268,821 6.55 - 11.95
Exercisable at December 31, 1994 184,675 $6.55 - $11.95
Summary of restricted stock Number of Shares
----------------
Outstanding at December 31, 1993 92,000
Forfeited in 1994 18,400
-------
Outstanding at December 31, 1994 73,600
Forfeited in 1995 33,600
-------
Outstanding at December 31, 1995 40,000
-------
Total shares available for grant at:
December 31, 1995 529,827
December 31, 1994 5,100
</TABLE>
(1) Includes 109,104 additional options issued in conjunction with the
repricing formula resulting from the $2.00 per share dividend paid on
March 31, 1995.
In 1994, 100,000 shares of restricted stock with a market value of $969 were
contributed to the company's pension plan.
The company has issued stock warrants, expiring in 1998, for 387,500 shares
exercisable at $7.00 per share in conjunction with renewal of a 1993 credit
facility.
Page 15
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Other Income
Miscellaneous income (expense) in 1995 includes gains of $2,138 on property
dispositions, a loss of $3,041 on the write-down of a property, and gains of
$2,079 on the favorable settlement of certain accrued liabilities.
Miscellaneous income (expense) in 1993, includes a gain in the amount of
$7,243 on sale of the company's headquarters property.
Discontinued Operations and Restructuring
During 1994 the company disposed of its nonconstruction operations,
specifically its manufacturing subsidiary, Lake Center Industries, Inc.; its
pipe distribution business, Comco Pipe & Supply Company; and its oil and gas
interests. The results of operations of these businesses are shown separately
in the income statement as "income from discontinued operations" for each of
the years presented. The balance sheets of the company at December 31, 1994
and 1993 have not been restated.
<TABLE>
<CAPTION>
Summarized results of discontinued operations are as follows: 1995 1994 1993
---- -------- --------
<S> <C> <C> <C>
Revenue $ - $170,495 $173,554
==== ======== ========
Income from discontinued operations before taxes - 6,060 7,818
Provision for income taxes - 2,822 2,753
---- -------- --------
Income from discontinued operations $ - $ 3,238 $ 5,065
==== ======== ========
Gain on disposal of discontinued operations before taxes $ - $ 58,969 $ -
Provision for income taxes - 22,103 -
---- -------- --------
Gain on disposal of discontinued operations $ - $ 36,866 $ -
==== ======== ========
Per share of common stock:
Income from discontinued operations $ - $ 0.36 $ 0.58
Gain on disposal of discontinued operations - 4.16 -
---- -------- --------
Income per share of common stock from discontinued operations $ - $ 4.52 $ 0.58
==== ======== ========
Restructuring charges in 1994, amounting to $4,169 are made up of
the following:
Reductions in staffing levels $2,290
Consolidation of offices and facilities 698
Abandonment of non-productive assets 1,181
------
Total restructuring charge $4,169
======
Page 16
</TABLE>
<PAGE>
<TABLE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Income Taxes
<CAPTION>
The consolidated tax provision is made up as follows: 1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
Income (loss) from continuing operations before provision (benefit)
for income taxes and cumulative effect of changes in accounting:
United States $ 3,201 $(62,969) $(15,710)
Foreign 1,549 2,188 8,406
------- -------- --------
4,750 (60,781) (7,304)
------- -------- --------
Provision (benefit) for income taxes
Federal
Current 121 (12,379) (3,277)
Deferred - 1,350 1,115
State 92 1,170 500
Foreign
Current 481 606 2,404
Deferred 447 495 614
------- -------- --------
1,141 (8,758) 1,356
------- -------- --------
Income (loss) from continuing operations before cumulative effect
of changes in accounting: $ 3,609 $(52,023) $ (8,660)
======= ======== ========
</TABLE>
The current benefit in 1994 of $12,379 was attributable to the intraperiod
allocation of taxes to the gain on disposal of discontinued operations, see
"Discontinued Operations and Restructuring."
The provisions for income taxes are different than the amounts computed by
applying the statutory federal income tax rate of 34 percent.
<TABLE>
<CAPTION>
Tax differences are summarized as follows: 1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
Provision (benefit) at statutory rates $ 1,615 $(20,666) $ (2,483)
U.S. losses for which no tax benefit was recorded - 13,555 5,541
Net operating loss utilization (1,552) - -
Foreign taxes 916 (390) 1,186
State income taxes 61 772 330
Nondeductible expenses 101 68 79
Reconciliation of previous tax estimates - - (1,404)
Tax reimbursements from discontinued operations - (2,097) (1,893)
------- -------- --------
Provision (benefit) for income taxes $ 1,141 $ (8,758) $ 1,356
======= ======== ========
</TABLE>
No provision has been made for additional income taxes on undistributed
earnings of a foreign subsidiary (which totaled $34,688 at December 31, 1995)
because of reinvestment policies.
Page 17
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Income Taxes (continued)
In the first quarter of 1993, the company adopted SFAS 109, "Accounting for
Income Taxes," and recorded a gain of $12,070 represented by an increase in
deferred income tax assets of $33,016, less a valuation allowance of $20,946.
<TABLE>
<CAPTION>
Deferred income tax assets (liabilities) are made up as follows: 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Temporary differences:
Contract recognition method for tax purposes $(2,385) $(3,985) $ (788)
Depreciation 235 570 1,547
Estimated losses and reserves 6,845 9,602 (507)
Employee benefits (494) (676) 635
Inventory cost capitalization - 54 675
Other 69 175 (287)
------- ------- -------
4,270 5,740 1,275
Operating loss carryforward 12,934 13,633 20,769
Foreign tax credits - 8,266 11,094
Alternative minimum tax carryforward 1,394 1,044 1,044
------- ------- -------
Deferred income tax asset 18,598 28,683 34,182
Less, valuation allowance 18,934 28,572 23,366
------- ------- -------
Net deferred income tax asset (liability) $ (336) $ 111 $10,816
======= ======= =======
Deferred income taxes are classified as follows: 1995 1994 1993
------- ------- -------
Deferred income tax asset (liability) - current $ (248) $ 23 $ (342)
Deferred income tax asset (liability) - long-term (88) 88 11,158
------- ------- -------
Net deferred income tax asset (liability) $ (336) $ 111 $10,816
======= ======= =======
</TABLE>
SFAS 109 provides that deferred income tax benefits be reduced by a valuation
allowance with respect to any benefits that, based on available evidence, are
not expected to be realized. The gain recorded upon adoption of SFAS 109 was
based on tax strategies which included the sale of those assets associated with
discontinued operations. During 1994 those strategies were implemented and the
related gains recognized. As required by the standard, the company has
evaluated the available evidence as defined by SFAS 109, and has increased the
valuation allowance.
<TABLE>
The company's net operating loss carryforwards expire as follows:
<CAPTION>
Year Amount
-------
<S> <C>
2004 $25,277
2006 5,735
2007 3,369
2008 3,660
-------
Total $38,041
=======
</TABLE>
Page 18
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Employees' Pension and Retirement Plans
The company maintains defined benefit pension plans covering substantially all
U.S. salaried employees and certain hourly employees. Benefits are generally
based on years of service and compensation during the last five years of
employment. The company's funding policy is to contribute annually amounts
deductible for income tax purposes. The company records expenses and
liabilities for these plans based upon assumptions regarding current and future
interest rates, inflation rates,life expectancy and expected returns on plan
assets. These estimates may be subject to revision in the normal course of
business.
The company provides an excess benefit plan for defined benefits in excess of
qualified plan limits imposed by federal tax law. In addition, the company
maintains defined contribution plans covering salaried and certain hourly
employees. Participation in the defined contribution programs is generally
voluntary and the company matches employee contributions, based on covered
payroll, up to specified limits.
<TABLE>
The following table sets forth the defined benefit plans' funded status and
amounts recognized in the company's financial statements:
<CAPTION>
1995 1994
------- -------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation: Nonvested $ 3,737 $ 3,097
Accumulated benefit obligation: Vested 17,300 11,447
------- -------
Total accumulated benefit obligation $21,037 $14,544
======= =======
Projected benefit obligation for service rendered to date $21,977 $16,414
Plans' assets at fair market value, primarily listed stocks and
bonds, including $1,000 in restricted shares of common stock
of Guy F. Atkinson Company of California 16,783 12,379
Excess of projected benefit obligation over plans' assets 5,194 4,035
Unrecognized net loss from past experience different from
that assumed, and effect of changes in assumptions (5,404) (4,042)
Remaining portion of unrecognized net assets at January 1,
1986, being recognized over approximately 13 years 186 263
Adjustment to recognize minimum liability 4,278 1,909
------- -------
Accrued pension expense $ 4,254 $ 2,165
======= =======
Net pension expense is made up as follows: 1995 1994 1993
------- ------- -------
Service costs - benefits earned during the year $ 925 $ 1,224 $ 1,539
Interest cost on projected benefit obligation 1,369 1,255 1,738
Actual return on plan assets (3,404) 416 (1,352)
Net amortization and deferral 2,493 (1,127) (40)
------- ------- -------
Net pension expense $ 1,383 $ 1,768 $ 1,885
======= ======= =======
</TABLE>
Page 19
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
<TABLE>
Employees' Pension and Retirement Plans (continued)
<CAPTION>
Assumptions used in computing the plans' funded status: 1995 1994
------ ------
<S> <C> <C>
Discount rate 7.5% 8.5%
Expected long-term rate of return on plan assets 9.0% 9.0%
Rate of increase in future compensation levels 4.5% 4.5%
</table?
In accordance with SFAS No. 87, the company has recorded an additional minimum
pension liability to reflect the excess of accumulated benefits over the fair
market value of plan assets. A corresponding amount has been recorded as an
intangible pension asset, except to the extent that the additional minimum
liability exceeds related unrecognized prior service costs, in which case the
excess is charged to stockholders' equity.
</TABLE>
<TABLE>
<CAPTION>
The following pension assets and liabilities have been recorded: 1995 1994
------ ------
<S> <C> <C>
Additional minimum pension liability $4,278 $1,909
Intangible pension asset 3,934 1,909
------ ------
Charge to stockholders' equity $ 344 $ -
====== ======
</TABLE>
<TABLE>
The company contributes to defined contribution retirement plans and various
defined benefit multiemployer plans on behalf of unionized employees.
<CAPTION>
Costs of these plans were as follows: 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Defined benefit multiemployer plans $2,652 $4,835 $3,358
Defined contribution retirement plans 719 981 2,122
Total plan costs ------ ------ ------
$3,371 $5,816 $5,480
====== ====== ======
</TABLE>
<TABLE>
Supplementing pension benefits, the company provides certain healthcare benefits
for retired salaried employees reaching retirement age while working with the
company.
<CAPTION>
The following are the components of postretirement benefit liability: 1995 1994
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $5,259 $5,072
Fully eligible employees 589 507
Other active plan participants 494 384
------ ------
6,342 5,963
Unrecognized net gain 140 752
------ ------
Accrued postretirement obligation $6,482 $6,715
====== ======
</TABLE>
Page 20
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Employees' Pension and Retirement Plans (continued)
<TABLE>
<CAPTION>
Postretirement healthcare expense consists of: 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service costs - benefits earned during the period $ 27 $ 62 $ 60
Interest cost on accumulated postretirement benefit obligation 500 462 530
Net amortization of unrecognized gains (losses) (9) - -
---- ---- ----
Net postretirement benefit cost $518 $524 $590
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Assumptions used for postretirement benefit costs and obligations: 1995 1994
---- ----
<S> <C> <C>
Discount rate 7.5% 8.5%
Medical cost trend rate % in 1995 10% in 1994
reducing to reducing to
6% in 2001 5% in 2004
</TABLE>
Postemployment Benefits
The company provides certain postemployment benefits, such as self-insured
disability benefits to former and inactive employees. The liability for
postemployment benefits was $941 at December 31, 1995 and $936 at December 31,
1994. Postemployment benefit expense was $333 in 1995, $228 in 1994 and $206
in 1993.
Litigation and Contingencies
Litigation
- ----------
The nature of the construction business periodically results in liens, disputes,
suits and claims. Certain claims and suits have been brought against the
company in connection with contractual disputes, alleging personal injury,
property or other damages. Disputes are generally negotiated to settlement
or litigated, with judgments against the company being either promptly
satisfied or appealed. Company policy is to accrue amounts for any liabilities
which it believes will result from claims and suits against the company. These
amounts are based upon management's estimates of the most likely outcome of
such claims and suits, and may be materially different from the amounts asserted
by the claimants.
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.
Environmental Liabilities
- -------------------------
The company has certain potential environmental remediation obligations with
respect to properties which have been sold. In recording the sale of these
properties, the company set aside a portion of the sale proceeds to cover the
potential future costs of such environmental remediation which may become
necessary. The portion of the sale proceeds which was set aside was based
upon management's best estimate of potential future costs, if any. These
estimates may be subject to revision in the normal course of business.
Page 21
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Litigation and Contingencies (continued)
Self-Insurance Programs
- -----------------------
The company is insured for workers' compensation, automobile and general
liability losses through a risk retention program, with excess liability
insurance to cover more significant liability exposures. The company sets
aside reserves for estimated losses to be incurred from both asserted and
unasserted claims. These estimates are based on historical claims data and
may be subject to revision in the normal course of business.
<TABLE>
Geographic Area Information
<CAPTION>
Summarized geographic area information: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenue:
United States $332,409 $388,969 $279,036
Canada 37,136 16,700 33,800
Asia 37,158 - -
Other areas 10,292 17,300 32,200
-------- -------- --------
Total revenue $416,995 $422,969 $345,036
======== ======== ========
Operating profit (loss):
United States $ 9,312 $(41,000) $(12,100)
Canada (4,561) 2,100 2,100
Asia 3,194 - -
Other areas 2,099 1,700 6,900
-------- -------- --------
Total operating profit (loss) 10,044 (37,200) (3,100)
-------- -------- --------
General corporate (expense) (4,390) (18,679) (723)
Interest (expense) (904) (4,902) (3,481)
-------- -------- --------
Income (loss) from continuing operations before taxes and
cumulative effect of changes in accounting $ 4,750 $(60,781) $ (7,304)
======== ======== ========
Identifiable assets:
United States $144,062 $ 98,600 $198,200
Canada 18,656 15,400 31,500
Asia 20,222 - -
Other areas 6,893 10,700 10,600
Corporate assets 45,011 75,014 31,579
-------- -------- --------
Total assets $234,844 $199,714 $271,879
======== ======== ========
</TABLE>
Operating profit (loss) is total revenue less operating expenses, excluding
corporate general and administrative expense, corporate miscellaneous expense,
interest expense, and income taxes. Identifiable assets by geographic area
are those that are used in the company's operations in each area. Corporate
assets are principally cash and short-term investments, accrued and deferred
income taxes, and corporate properties and equipment.
The company derived 2.4 percent in 1995, 5.0 percent in 1994 and 4.3 percent
in 1993, of total revenue from contracts with the U.S. government.
Page 22
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
<TABLE>
Quarterly Financial Data - Unaudited
<CAPTION>
1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 89,738 $ 86,434 $ 91,364 $149,459
======== ======== ========= ========
Gross margin 6,938 7,264 10,818 14,152
-------- -------- --------- --------
Net income (loss) (987) 721 1,215 2,660
======== ======== ========= ========
Net income (loss) per share of common stock (0.11) 0.08 0.13 0.29
======== ======== ========= ========
1994 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Revenue $127,171 $123,429 $109,942 $ 62,427
======== ======== ======== ========
Gross margin 5,849 7,036 1,908 (28,873)
(Loss) from continuing operations before cumulative effect of
changes in accounting (2,129) (2,664) (7,700) (39,530)
Income (loss) from discontinued operations 1,371 1,670 396 (199)
Gain on disposal of discontinued operations - - 2,611 34,255
-------- -------- -------- --------
(Loss) before cumulative effect of changes in accounting (758) (994) (4,693) (5,474)
Cumulative effect of changes in accounting (739) - - -
-------- -------- -------- --------
Net (loss) (1,497) (994) (4,693) (5,474)
======== ======== ======== ========
(Loss) per share of common stock from continuing
operations before cumulative effect of changes in accounting (0.24) (0.30) (0.87) (4.45)
Income per share of common stock from discontinued
operations 0.15 0.19 0.34 3.84
-------- -------- -------- --------
(Loss) per share of common stock before cumulative effect of
changes in accounting (0.09) (0.11) (0.53) (0.61)
Cumulative effect per share of common stock of changes in
accounting (0.08) - - -
-------- -------- -------- --------
Net (loss) per share of common stock (0.17) (0.11) (0.53) (0.61)
======== ======== ======== ========
</TABLE>
Page 23
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
<TABLE>
Quarterly Financial Data - Unaudited (continued)
<CAPTION>
1993 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 82,025 $ 70,908 $ 89,497 $102,606
======== ======== ======== ========
Gross margin 4,518 5,895 5,376 2,940
(Loss) from continuing operations before cumulative effect of
changes in accounting (487) (1,277) (758) (6,138)
Income from discontinued operations 1,617 1,581 841 1,026
-------- -------- -------- --------
Income (loss) before cumulative effect of changes in accounting 1,130 304 83 (5,112)
Cumulative effect of changes in accounting 4,974 - - -
-------- -------- -------- --------
Net income (loss) $ 6,104 $ 304 $ 83 $ (5,112)
======== ======== ======== ========
(Loss) per share of common stock from continuing operations
before cumulative effect of changes in accounting $ (0.05) (0.15) (0.09) (0.70)
Income per share of common stock from discontinued
operations 0.18 0.18 0.10 0.12
-------- -------- -------- --------
Income (loss) per share of common stock before cumulative
effect of changes in accounting 0.13 0.03 0.01 (0.58)
Cumulative effect per share of common stock of changes in
accounting 0.57 - - -
-------- -------- -------- --------
Net income (loss) per share of common stock $ 0.70 $ 0.03 $ 0.01 $ (0.58)
======== ======== ======== ========
</TABLE>
Page 24
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 14,451
<SECURITIES> 25,353
<RECEIVABLES> 76,196
<ALLOWANCES> 0
<INVENTORY> 20,987
<CURRENT-ASSETS> 203,254
<PP&E> 57,400
<DEPRECIATION> 28,163
<TOTAL-ASSETS> 234,844
<CURRENT-LIABILITIES> 141,958
<BONDS> 1,917
<COMMON> 1,895
0
0
<OTHER-SE> 81,563
<TOTAL-LIABILITY-AND-EQUITY> 234,844
<SALES> 0
<TOTAL-REVENUES> 416,995
<CGS> 0
<TOTAL-COSTS> 377,823
<OTHER-EXPENSES> 38,551
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 904
<INCOME-PRETAX> 4,750
<INCOME-TAX> 1,141
<INCOME-CONTINUING> 3,609
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,609
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0
</TABLE>
