SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ________ to ________
Commission file number 0-3062
GUY F. ATKINSON COMPANY OF CALIFORNIA
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE
(State or other jurisdiction of 94-1649018
incorporation or organization) (IRS Employer Identification No.)
1001 Bayhill Drive, San Bruno, California 94066
(Address of principal executive offices) (zip code)
Registrants' telephone number, including area code - (415) 876-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Common stock as of August 13, 1996
Issued and outstanding - 8,976,467 shares
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
Guy F. Atkinson Company of California
Consolidated Balance Sheets
(in thousands of dollars except share and per share amounts)
June 30, December 31,
1996 1995
(unaudited)
ASSETS
Current assets
Cash and short-term investments $3,909 $39,804
Accounts receivable 112,867 76,196
Costs and estimated earnings in excess of billings 7,695 28,751
Inventories and unamortized costs on contracts 26,068 20,987
Investments in joint ventures 37,109 32,272
Other current assets 6,361 5,244
Total current assets 194,009 203,254
Property, plant and equipment
At cost:
Land 2,570 2,683
Buildings 10,387 11,203
Construction equipment 34,582 36,036
Other equipment 8,318 7,478
55,857 57,400
Less accumulated depreciation 28,356 28,163
Total property, plant and equipment, net 27,501 29,237
Other assets 2,354 2,353
Total assets $223,864 $234,844
See accompanying notes
Page 1
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Guy F. Atkinson Company of California
Consolidated Balance Sheets
(in thousands of dollars except share and per share amounts)
June 30, December 31,
1996 1995
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable, including current portion of
long-term debt $3,006 $844
Accounts payable 71,281 86,671
Billings in excess of costs and estimated earnings 17,290 20,300
Accrued federal and foreign income taxes 8,735 5,020
Other accrued expenses 28,894 28,145
Deferred income taxes 248 248
Due to joint ventures 212 730
Total current liabilities 129,666 141,958
Non-current liabilities
Long-term debt, less current portion 1,663 1,917
Deferred income taxes 88 88
Postretirement healthcare and postemployment
benefit obligations 7,423 7,423
Total liabilities 138,840 151,386
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; 8,974,467 outstanding at June 30,
1996 and 8,951,154 at December 31, 1995 1,895 1,895
Paid-in capital 13,107 13,085
Accumulated translation adjustment (4,403) (4,446)
Unearned compensation - (400)
Additional pension liability (344) (344)
Retained earnings 74,769 73,668
Total stockholders' equity 85,024 83,458
Total liabilities and stockholders' equity $223,864 $234,844
See accompanying notes Page 2
<PAGE>
Guy F. Atkinson Company of California
Consolidated Statements of Income (unaudited)
(in thousands of dollars except share and per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenue $128,714 $86,434 $227,899 $176,172
Cost of revenue 115,787 79,170 206,347 161,970
Gross margin 12,927 7,264 21,552 14,202
General and administrative expenses 10,113 8,882 19,991 17,687
Income (loss) from operations 2,814 (1,618) 1,561 (3,485)
Other income (expense)
Interest income 703 1,040 1,557 2,086
Interest expense (152) (57) (309) (258)
Miscellaneous (375) 1,046 247 1,130
Total other income (expense) 176 2,029 1,495 2,958
Income (loss) before income taxes 2,990 411 3,056 (527)
Provision for income taxes 1,406 (310) 1,955 (261)
Net income (loss) $1,584 $721 $1,101 ($266)
Net income (loss) per share $0.17 $0.08 $0.12 ($0.03)
Average number of shares and
common stock equivalents
utilized in net income (loss) per
share calculation 9,403,000 9,033,000 9,328,000 8,917,000
See accompanying notes
Page 3
<PAGE>
Guy F. Atkinson Company of California
Consolidated Statements of Cash Flows (unaudited)
(in thousands of dollars except share and per share amounts)
Six Months Ended June 30, 1996 1995
Operating activities
Net income (loss) $1,101 ($266)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 5,974 1,242
Deferred income taxes - 7
(Gain) on dispositions of property, plant and
equipment (2,759) (2,821)
Changes in operating assets and liabilities:
Accounts receivable (36,664) (10,084)
Inventories and unamortized costs on contracts (5,080) 865
Investments in joint ventures (5,354) 2,918
Other current assets (1,117) (505)
Accounts payable and accrued expenses (14,646) 9,010
Accrued income taxes 3,715 (2,682)
Billings in excess of costs and estimated
earnings, net 18,044 20,002
Other, net 56 55
Net cash provided by (used in) operating activities (36,730) 17,741
Cash flows from investing activities:
Property, plant and equipment expenditures (6,637) (10,470)
Proceeds from dispositions of property, plant
and equipment 5,160 6,651
(Decrease) in other assets, net (1) (1,269)
Net cash (used in) investing activities (1,478) (5,088)
Cash flows from financing activities:
Short-term borrowings 2,200 -
Long-term debt repayments (293) (412)
Common stock issuance related to stock option
awards 422 -
Cash dividends paid - (17,835)
Net cash provided by (used in) financing activities 2,329 (18,247)
Effect of exchange rate changes on cash (16) 463
Net (decrease) in cash and short-term investments ($35,895) ($5,131)
Supplementary information:
Cash paid (received) during the year for:
Interest $300 $293
Federal, foreign and state income taxes (2,258) 3,857
See accompanying notes Page 4
<PAGE>
Guy F. Atkinson Company of California
Notes to Consolidated Financial Statements
(in thousands of dollars except share and per share amounts)
Financial Statement Content
The information contained herein reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation of results for the
interim periods.
Inventories and Unamortized Costs on Contracts
June 30, December 31,
Inventory classifications are as follows: 1996 1995
(unaudited)
Construction materials and supplies $1,830 $2,812
Unamortized costs on contracts 24,238 18,175
$26,068 $20,987
Stock Options and Warrants
At June 30, 1996, the company had options outstanding with respect to
935,658 shares of common stock at exercise prices ranging from $6.55 to
$11.95 per share. The right to exercise these options vests progressively
over a four year period commencing with the date of issue and expiring
ten years from the date of issue. In addition, there were stock warrants
outstanding for 387,500 shares of common stock with an exercise price
of $7.00 expiring in 1998.
Earnings Per Share
Net primary earnings per share of common and common stock equivalents
are calculated using the weighted average number of common shares
outstanding, plus the net additional number of shares which would be
issuable upon the exercise of stock options and warrants, assuming that
the company used the proceeds received to repurchase outstanding
shares at market prices.
Page 5
<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
On March 7, 1995, a complaint asserting breach of contract and other
wrongdoing in connection with the company's sale of its manufacturing
subsidiary, Lake Center Industries, Inc., was filed against the company and
its financial advisor by an unsuccessful bidder for Lake Center. The
plaintiffs allege they have suffered actual damages of $290 in connection
with preparing their bid and also seek to recover $7,000 on a theory of
unjust enrichment, together with an additional $10,000 in punitive damages.
The company will vigorously defend this suit, which it believes to be
without merit and further believes that the outcome will not have a
material adverse effect on its financial condition.
Page 6
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 7
<PAGE>
Results of Operations
Quarter ended June 30, 1996 vs. Quarter ended June 30, 1995
(in thousands of dollars except share and per share amounts)
Revenue: The company's revenue of $128,714 in the second
quarter of 1996 increased by 49% over the corresponding $86,434 in the
second quarter of 1995. The increase in revenue was attributable to
the substantial volume of new contract awards in 1995 that is making a
significant contribution to revenue in 1996. The backlog of
uncompleted contracts amounted to $540,115 at June 30, 1996,
representing an increase of 9% over the June 30, 1995 backlog of
$495,346.
Gross margin: The company's gross margin of $12,927 increased
by 78% in the second quarter of 1996 over the corresponding $7,264 in
1995. The increase in gross margin was attributable to both the
increased volume of revenue as well as a more profitable mix of
construction contracts in 1996. The percentage of gross margin to
revenue increased to 10.0% in 1996 from 8.4% in 1995.
General and administrative expense: General and administrative
expenses of $10,113 in 1996 were 14% higher than the corresponding figure of
$8,882 in 1995 due to ongoing business development activities in construction,
water and wastewater treatment and increased international market development.
Page 8
<PAGE>
Results of Operations (continued)
Quarter ended June 30, 1996 vs. Quarter ended June 30, 1995
Interest income: Interest income decreased to $703 in 1996 from
$1,040 in 1995 due to the reduced level of cash and short-term
investment balances in 1996, offset in part, by interest earned on a
deferred receivable as discussed in "Liquidity and Capital Resources."
Interest expense: Interest expense increased to $152 in the
second quarter of 1996 from $57 in 1995. The increase was due to the
increased level of borrowings in 1996 compared with 1995.
Miscellaneous: Miscellaneous expense amounted to $375 in 1996,
compared with miscellaneous income of $1,046 in 1995. Miscellaneous
income and expense consists of, among other items, gains and losses
from foreign exchange and property dispositions. The $1,046 in 1995
included a gain of $1,900 from the disposition of surplus real estate.
Income taxes and net income: Income before taxes amounted to $2,990 in
1996, compared with $411 in 1995. Income tax expense was $1,406 in 1996
compared with an income tax benefit of $310 in 1995. The 1996 tax expense was
primarily attributable to foreign income taxes on foreign source income, while
the 1995 tax benefit was due to the recovery of foreign taxes expensed in
earlier years.
Net income for the second quarter of 1996 amounted to $1,584, compared with
$721 in the second quarter of 1995.
Results of Operations (continued)
Six months ended June 30, 1996 vs. six months ended June 30, 1995
Revenue: Revenue of $227,899 for the six month period of 1996
increased by 29% over the corresponding $176,172 in 1995, due to the
start-up of a number of construction projects in 1995 and 1996 which
are making a significant contribution to revenue in 1996.
Gross margin: The company's gross margin of $21,552 increased
by 52% in the six month period of 1996 over the corresponding figure
of $14,202 in 1995 due to a combination of increased revenue and
improved operating margins.
General and administrative expense: General and administrative expenses of
$19,991 in 1996 were 13% higher than the corresponding $17,687 in 1995 due to
the increased level of business development activities, and increased
development of international market presence as described in the discussion of
general and administrative expense for the quarter.
Interest income: Interest income decreased to $1,557 in the six month
period of 1996 from $2,086 in 1995 due to the reduced level of cash and short-
term investment balances in 1996, offset in part, by interest earned on a
deferred receivable as outlined in the discussion of "Liquidity and Capital
Resources."
Interest expense: Interest expense increased to $309 in 1996 from $258 in
1995 due to a slightly higher average level of borrowings in 1996, compared
with 1995.
Page 9
<PAGE>
Results of Operations (continued)
Six months ended June 30, 1996 vs. six months ended June 30, 1995
Miscellaneous: Miscellaneous income amounted to $247 in 1996,
compared with $1,130 in 1995. The $1,130 in 1995 included a gain of
$1,900 from the disposition of surplus real estate.
Income taxes and net income: Income before taxes amounted to $3,056 in
the six month period of 1996, compared with a loss before taxes of $527 in the
corresponding period of 1995. Income taxes gave rise to an expense of $1,955
in 1996 compared with a benefit of $261 in 1995. The 1996 income tax expense
was primarily attributable to foreign income taxes on foreign source income,
while the 1995 income tax benefit was due to the recovery of foreign taxes
expensed in earlier years.
Net income for the six month period of 1996 amounted to $1,101, compared
with a net loss of $266 in 1995.
Liquidity and Capital Resources
Operating activities utilized cash of $36,730 in the six month period of
1996, compared with $17,741 of cash generated during the corresponding period
of 1995.
The utilization of cash by operating activities in 1996 is attributable to
the cash requirements for mobilization of new construction projects commencing
in the first quarter of 1996, as well as the ongoing cash requirements of
existing projects which are expected to
Page 10
<PAGE>
Results of Operations (continued)
Liquidity and Capital Resources
return cash to the company in the latter part of 1996.
The utilization of cash by operating activities in 1996 is also due to an
account receivable of approximately $30,000 upon which the company has agreed
to accept deferred payment terms in exchange for certain financing fees and
other agreed compensation. This receivable relates to a project to construct
the first phase of a continuing care retirement facility. The funds to repay
the receivable are generated from the sale of residential units in the
facility, and are held in an escrow account to be released and applied
towards payment of the receivable at such time as 60% of the
residential units have been sold. The construction of this facility
is complete, and approximately 51% of the units have been sold to
date.
Investing activities utilized cash of $1,478 in 1996, compared
with $5,088 in 1995 as the company selectively acquired new
construction equipment to service its ongoing construction projects.
The company's 1996 cash requirements for operations of $36,730
and net capital investments of $1,478 were financed by drawing upon
cash and short-term investments amounting to $35,895, and by short-term
borrowing of $2,200.
The company has a two-year $40 million syndicated line of credit
which expires on June 30, 1997. The availability of this line of
credit is reduced by any letters of credit which may be outstanding
under the lines. At June 30, 1996, the company had $2,200 in outstanding
borrowings and $6,773 in outstanding letters of credit.
Page 11
<PAGE>
Results of Operations (continued)
Liquidity and Capital Resources
The company believes that its cash and short-term investments, together
with lines of credit and funds generated from operations and other sources
will be adequate to cover foreseeable future requirements.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,312
<SECURITIES> 597
<RECEIVABLES> 112,867
<ALLOWANCES> 0
<INVENTORY> 26,068
<CURRENT-ASSETS> 194,009
<PP&E> 55,857
<DEPRECIATION> 28,356
<TOTAL-ASSETS> 223,864
<CURRENT-LIABILITIES> 129,666
<BONDS> 1,663
1,895
0
<COMMON> 0
<OTHER-SE> 83,129
<TOTAL-LIABILITY-AND-EQUITY> 223,864
<SALES> 0
<TOTAL-REVENUES> 227,899
<CGS> 0
<TOTAL-COSTS> 206,347
<OTHER-EXPENSES> 19,991
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 309
<INCOME-PRETAX> 3,056
<INCOME-TAX> 1,955
<INCOME-CONTINUING> 1,101
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,101
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0
</TABLE>
