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, 1996
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, 1997, the aggregate market value of the voting stock held by
nonaffiliates of the registrant was $63,332,422 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, 1997 was 8,987,467.
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 17, 1997.
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business 1-6
2. Properties 6-7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 8
4a. Executive Officers of the Registrant 8
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 9
6. Selected Financial Data 10
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-14
8. Financial Statements and Supplementary Data 15-40
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 40
PART III
10. Directors and Executive Officers of the Registrant 40
11. Executive Compensation 40
12. Security Ownership of Certain Beneficial Owners and
Management 40
13. Certain Relationships and Related Transactions 41
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 41-42
<PAGE>
PART 1
ITEM 1. BUSINESS
Background
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.
Services Provided
The Company provides a full range of engineering, procurement, construction, and
related services internationally, to clients in the power, infrastructure,
industrial and commercial building, pulp and paper, mining, and water and
wastewater treatment markets. The Company previously operated businesses in
automobile parts manufacturing, distribution of industrial pipe, and oil and gas
exploration and production, which were sold in the fourth quarter of 1994.
Operating Structure
The following is a description of the Company's principal operating business
units.
Atkinson Construction Company, headquartered in San Bruno, California, is one of
the largest contractors of heavy civil projects, serving both public and private
sectors, working domestically and internationally. This business unit performs
general construction services for the following markets: hydroelectric power,
bridges, highways, dams, water and wastewater treatment facilities, and tunnels
and shafts applied in mining, power, transportation, and water conveyance.
Walsh Construction Company, headquartered in Trumbull, Connecticut, is a major
provider of design-construct services to both the power and industrial building
markets. It has power and cogeneration experience using fuels ranging from gas,
petroleum coke and coal to municipal solid waste and biomass. Its building
experience embraces industrial, institutional, R&D, laboratory, and commercial
facilities.
Commonwealth Construction Company, headquartered in Burnaby, Canada, serves a
variety of markets including pulp and paper, mining and metallurgical
processing, water and wastewater treatment, and general industrial facilities
throughout the Americas and Southeast Asia.
Monterey Construction Company, operating from San Bruno, California, provides
merit-shop services to heavy civil and infrastructure construction markets.
Microsep International Corporation, headquartered in Burnaby, Canada, provides
water and wastewater treatment equipment and services to the industrial,
municipal and metallurgical processing markets.
Page 1
<PAGE>
Principal Markets
CONSTRUCTION OPERATIONS
Through its worldwide construction divisions and subsidiaries, Atkinson provides
full service construction and related engineering and procurement 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 construction, requiring a broad scope of services. Its
acquisition of work is facilitated by its excellent reputation, diversity of
services, technical expertise, and worldwide geographic coverage.
HEAVY CIVIL CONSTRUCTION
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 facilities, bridges, locks,
mines, tunnels, shafts, highways, railroads and other large
infrastructure-related projects.
The Company believes that domestic and international work for new 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 future.
INDUSTRIAL CONSTRUCTION
The Company's work in the industrial sector includes both modernization and new
construction of facilities for power generation, pulp and paper, mineral
processing and manufacturing, as well as the construction of commercial,
institutional, academic, and research facilities. Its industrial construction
business provides feasibility studies, design/build services, value-engineering,
management information systems, general construction services, construction
management, start-up and operation and maintenance 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 driven by their own set of
strategic and economic market factors. Some of these factors can result in
diminished capital spending for construction programs and/or delays in planned
projects. For example, recent construction activity within the resource
development industries has emphasized modernization and upgrading of facilities
and compliance with environmental standards, rather than construction of new
facilities. In response, the Company promotes its record of reliable
performance, quality, safety, and its capabilities in scheduling and cost
control as integral services.
OTHER OPERATIONS
As an enhancement to its construction capabilities in the water and wastewater
treatment markets, the company uses patented technologies to achieve high-rate
separation of solids from liquids. These processes offer superior effluent
quality and sludge settling capabilities, while resulting in the significantly
reduced size of treatment equipment.
Page 2
<PAGE>
Competitive Conditions and Risk Factors
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 its presence internationally, the Company is able to
moderate some of the effects of fluctuations in its markets.
The Company sells its capabilities on the basis of experience, price using
competitive bidding, and contract negotiation. It also offers additional
incremental services its markets may require, such as design and engineering or
turnkey packages, consisting of 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 all aspects of the work. If it is not the
sponsor, the Company's participation is a shared construction responsibility, or
may be limited to assistance in estimating and policy management and sharing on
a pro-rata basis the financial risks and rewards of the work. In 1996, 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 construct the project. An increasingly popular form
of contract is the "EPC" contract, where the Company acts as a turnkey
contractor taking responsibility for engineering design, procurement of
equipment and construction, and provides other operating services from inception
through to delivery of a completed project.
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 additional costs or liquidated damages, thus
eroding expected project profit margins.
Page 3
<PAGE>
The Company also owns or leases 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 and
may be obtained from local sources.
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. 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 a retention
until the work is completed. This retention usually ranges from 5 percent to 10
percent of the contract price.
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. The Company plans construction to mitigate, where possible, the effects
of weather.
Approximately 20 percent of the Company's revenues during the fiscal year 1996
were generated from foreign operations, principally in Southeast Asia. In
competing for foreign construction opportunities, the Company selects only those
projects which have fundamental construction characteristics and risks similar
to those presented by domestic projects. The Company recognizes that foreign
work may present financial, cultural, and political risks which must be
specifically considered, and it seeks, through foreign exchange and other risk
management programs as well as pricing arrangements, to mitigate these risks to
achieve a reasonable profit.
Construction and Other Activity During 1996
The following is a description of the Company's more significant construction
projects which were either under construction or completed during 1996:
Power
o Construction of a 2,550 megawatt hydroelectric power plant on the Caroni
River in Venezuela.
o Construction of a 42 megawatt hydroelectric power plant on the Ohio River in
West Virginia.
o Engineering, procurement, construction, and commissioning of a 117 megawatt
gas-fired cogeneration facility in Sacramento, California.
o Engineering, procurement, and construction of a 32 megawatt gas-fired
cogeneration facility in Mingo Junction, Ohio.
o Modernization and upgrading of an existing power plant at Yale University in
New Haven, Connecticut.
o Engineering, procurement, construction, and commissioning of a 12 megawatt
gas-fired cogeneration facility at the UCSF medical facility in San
Francisco, California.
Infrastructure - Transportation
o Construction of several stages of High Occupancy Vehicle roadway on
Interstate 5 in Seattle, Washington.
o Construction of a balanced drawbridge spanning the Duwamish River in
Seattle, Washington.
o Earthquake retrofitting of portions of the Interstate 280 viaduct in San
Francisco, California.
Page 4
<PAGE>
Infrastructure - Water & Wastewater
o Sponsor of a joint venture constructing a 1.7 mile long, 285 foot high
rockfill dam, together with an associated saddle dam for a water storage
reservoir in Southern California.
o Sponsor of a joint venture constructing twin 110 by 1,200 foot lock chambers
on the Ohio River at Olmsted, Illinois.
Infrastructure - Tunnels
o Participant in a joint venture constructing a cut-and-cover tunnel section
for Interstate 90 in Boston, Massachusetts.
o Participant in a joint venture constructing a ten mile, 430 feet deep
effluent outfall tunnel beneath Massachusetts Bay.
o Reconstruction and renovation of a two-mile railroad tunnel near Seattle,
Washington.
o Extension of a geological exploratory tunnel adjacent to the Dead Sea in
Israel.
Industrial
o Participant in a joint venture performing engineering, procurement,
construction, and commissioning of a wastepaper and de-inking facility near
Hagerstown, Maryland.
o Construction of a 1,500 tons-per-day bleached hardwood kraft pulp mill in
East Kalimantan, Indonesia.
o Engineering, procurement, and construction of a 500,000 tons-per-year coal
processing facility in Gillette, Wyoming.
Building
o Construction of a six-story, 208,000 square foot chemistry building at the
Storrs campus of the University of Connecticut.
o Renovation and reconstruction of an existing 250,000 square foot building
into new classrooms at the Stamford campus of the University of Connecticut.
o Design and construction of a twenty-story, 238-unit residential
continuing-care facility for seniors in La Jolla, California.
o Construction of two multi-story research laboratory buildings at the Buck
Center for Research into Aging in Novato, California.
o Construction of a six-story research tower and adjoining teaching wing at
the Stony Brook campus of the State University of New York.
Customers
Approximately 54 percent of the Company's construction revenues in 1996 were
from customers in the private sector, with 46 percent from the public sector.
Geographically, approximately 80 percent of the Company's revenues were
generated domestically and 20 percent internationally.
Revenues from contracts with the U.S. Government, principally for construction
services, provided 6 percent of the Company's consolidated revenues. These
contracts are terminable at the election of the U.S. government.
During 1996, 18 percent of the Company's consolidated revenues were generated
from a contract with PT. Kiani Kertas, an Indonesian corporation, to construct a
pulp mill.
Page 5
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Backlog
The approximate value of the Company's firm backlog of contracts as of December
31, 1996 and December 31, 1995 was $609 million and $642 million, respectively.
New contract awards amounted to $436 million and $749 million in 1996 and 1995,
respectively. The dollar value of the backlog is not necessarily indicative of
the future earnings of the Company. Backlog includes only those contracts for
which work is proceeding, or for which the Company has received a "notice to
proceed". There can be no assurance that cancellations or adjustments increasing
or decreasing the scope of work will not occur.
Geographic Area Information
Note 17 to the Consolidated Financial Statements (included under Item 8 of this
Report), sets forth for the fiscal years 1994 through 1996 the Company's
revenue, operating profit (loss), and assets with respect to the geographic
areas in which the Company operates.
Personnel
The number of employees of the Company during fiscal year 1996 varied
substantially depending on work volume, the status of completion of construction
contracts, weather, and season. The average number of such employees was 6,500
including employees of joint ventures sponsored by the Company. The number of
salaried employees averaged 625 during the same period.
<TABLE>
<CAPTION>
ITEM 2. PROPERTIES
Building Lease
Location Use Land Area Square Feet Expires
<S> <C> <C> <C> <C>
1001 Bayhill Drive Executive N/A 29,418 8/2/2003
San Bruno, CA 94066 Offices
1100 Grundy Lane Construction N/A 39,102 7/14/2003
San Bruno, Ca 94066 Divisional
Office
101 Oakview Drive Construction 12.1 acres 43,540 N/A
Trumbull, CT 06611-0400 Divisional
Office
4599 Tillicum Street Construction 23.4 acres 53,438 N/A
Burnaby, BC Divisional
Canada V5J 3J9 Office
10365 Old Placerville Road Construction N/A 7,477 5/31/2000
Suite 210 Regional
Sacramento, CA 95827 Office
Page 6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Building Lease
Location Use Land Area Square Feet Expires
<S> <C> <C> <C> <C>
405 Eccles Avenue Manufacturing N/A 19,384 7/31/1998
South San Francisco, and Sales
CA 94080 Facility
200 Union Blvd., Suite 400 Construction N/A 5,451 10/31/1998
Lakewood, CO 80228 Regional
Office
600 Naches Avenue S.W. Construction N/A 5,428 1/31/1998
Suite 120 Regional
Renton, WA 98057 Office
110 Turnpike Road Construction N/A 3,638 2/28/1999
Suite 110 Regional
Westborough, MA 01581 Office
Twin Towers, Building 2 Construction N/A 1,076 1/31/1998
35 Jabotinsky Street Regional
Ramat Gan, Israel Office
Aspac Center, Suite 701 Construction N/A 1,453 5/1/1997
J1. HR. Rasuna Said Kav. Regional
X-2 No. 4 Office
Jakarta, Indonesia
1404E Tektite Towers 1 Construction N/A 1,397 7/14/1997
PSE Centre Exchange Road Regional
Metro Manila, Phillippines Office
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
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.
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.
Page 7
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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 1996.
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
Jack J. Agresti (59) 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 (53) 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. Prior to February,
1991, he served with the Company's Walsh Construction Company division, as Vice
President from August, 1986, Executive Vice President from February,1989, and
President and General Manager from November, 1989.
Herbert D. Montgomery (54) 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 (51) 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 (46) 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 (49) 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 (59) has been Vice President and Chief Administrative Officer
of the Company since January, 1985.
Page 8
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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.
<TABLE>
<CAPTION>
1996 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Low $ 8.63 $ 10.75 $ 11.00 $ 8.13
High 12.25 14.00 14.00 13.13
1995
Low $ 7.00 $ 7.50 $ 9.38 $ 9.00
High 10.50 9.63 11.00 11.00
</TABLE>
(b) The number of holders of record of the Company's common stock as of
January 31, 1997 was 1,235.
(c) dividends declared in 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
Dividends per share by quarter:
<S> <C> <C>
First $0.00 $2.00
Second 0.00 0.00
Third 0.00 0.00
Fourth 0.00 0.00
----------------------------------------------------------
Total Dividends $0.00 $2.00
----------------------------------------------------------
</TABLE>
Page 9
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands of dollars except share and per share amounts)
- -------------------------------------------------------------------------------------------------------------------
Years ended December 31: 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $468,467 $416,995 $422,969 $345,036 $320,963
- -------------------------------------------------------------------------------------------------------------------
Cost of revenue 424,217 377,823 437,049 326,307 290,661
- -------------------------------------------------------------------------------------------------------------------
Gross margin 44,250 39,172 (14,080) 18,729 30,302
- -------------------------------------------------------------------------------------------------------------------
General and administrative expenses 39,335 38,551 39,080 30,302 33,007
- -------------------------------------------------------------------------------------------------------------------
Restructuring charges - - 4,169 - -
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from operations 4,915 621 (57,329) (11,573) (2,705)
- -------------------------------------------------------------------------------------------------------------------
Interest expense 1,684 904 4,902 3,481 3,100
- -------------------------------------------------------------------------------------------------------------------
Other income (expense) 3,582 5,033 1,450 7,750 5,134
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before
income taxes, extraordinary item and cumulative
effect of changes in accounting 6,813 4,750 (60,781) (7,304) (671)
- -------------------------------------------------------------------------------------------------------------------
Income tax expense (benefit) 1,794 1,141 (8,758) 1,356 108
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
changes in accounting 5,019 3 609 (52,023) (8,660) (779)
- -------------------------------------------------------------------------------------------------------------------
Income from discontinued operations - - 3,238 5,065 2,256
- -------------------------------------------------------------------------------------------------------------------
Gain on disposal of discontinued operations - - 36,866 - -
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item and
cumulative effect of changes in accounting 5,019 3,609 (11,919) (3,595) 1,477
- -------------------------------------------------------------------------------------------------------------------
Extraordinary item: Utilization of tax loss
carryforward - - - - 213
- -------------------------------------------------------------------------------------------------------------------
Cumulative effect of changes in accounting - - (739) 4,974 -
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 5,019 $ 3,609 $(12,658) $ 1,379 $ 1,690
- -------------------------------------------------------------------------------------------------------------------
Income (loss) per share of common stock from
continuing operations, before extraordinary
item, and cumulative effect of changes in
accounting $ 0.54 $ 0.39 $ (5.86) $ (0.99) $ (0.09)
- -------------------------------------------------------------------------------------------------------------------
Income per share from discontinued operations - - 0.36 0.58 0.26
- -------------------------------------------------------------------------------------------------------------------
Gain per share on disposal of discontinued
operations - - 4.16 - -
- -------------------------------------------------------------------------------------------------------------------
Income (loss) per share before extraordinary
item and cumulative effect of changes in
accounting 0.54 0.39 (1.34) (0.41) 0.17
- -------------------------------------------------------------------------------------------------------------------
Extraordinary item per share - - - - 0.02
- -------------------------------------------------------------------------------------------------------------------
Cumulative effect per share of changes in accounting - - (0.08) 0.57 -
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) per share $ 0.54 $ 0.39 $ (1.42) $ 0.16 $ 0.19
- -------------------------------------------------------------------------------------------------------------------
Average number of shares and common stock
equivalents utilized in net income per share
calculations 9,359,000 9,161,000 8,877,000 8,788,000 8,777,000
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 265,223 $234,844 $199,714 $271,879 $260,206
- -------------------------------------------------------------------------------------------------------------------
Long-term debt, less current portion $ 1,210 $ 1,917 $ 2,199 $ 18,273 $ 18,227
- -------------------------------------------------------------------------------------------------------------------
Notes payable, including current portion of
long-term debt $ 33,402 $ 844 $ 662 $ 36,568 $ 41,389
- -------------------------------------------------------------------------------------------------------------------
Special cash dividend of $2.00 per share of
common stock $ - $ 17,835 $ - $ - $ -
- -------------------------------------------------------------------------------------------------------------------
Book value at year-end $ 89,284 $ 83,458 $ 96,988 $109,680 $110,313
- -------------------------------------------------------------------------------------------------------------------
Book value per share $ 9.93 $ 9.37 $ 10.93 $ 12.50 $ 12.57
- -------------------------------------------------------------------------------------------------------------------
High and low prices of stock $ 14.000 $ 11.000 $ 11.000 $ 10.000 $ 10.250
8.125 7.000 8.000 8.250 6.500
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 10
<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 domestically and
internationally, to clients in the power, infrastructure, industrial and
commercial building, pulp and paper, mining, and water and wastewater treatment
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 Burnaby, Canada.
In 1996, the Company generated 80 percent of its revenues domestically,
and 20 percent internationally (primarily from Southeast Asia). Approximately 54
percent of its revenues in 1996 were derived from private sector construction
and the balance from the public sector. The Company sells its capabilities on
the basis of experience, price using competitive bidding, and negotiated
contracts. 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 of the fixed price nature. The Company may
perform construction work alone, or in conjunction with engineering or other
construction companies to offer full service engineering, procurement and
construction capabilities.
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 additional expense and/or losses to
the Company.
Reclassification of Statement of Income
As a result of the Company's sale of substantially all of its
nonconstruction businesses (as explained in note 12 to the Consolidated
Financial Statements), certain income statement amounts for 1994 have been
reclassified as discontinued operations. Revenues and expenses reflect only
those amounts attributable to the ongoing construction business 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 $468,467 in 1996 was 12 percent higher
than the corresponding figure of $416,995 in 1995, and 11 percent higher than
the $422,969 of revenue in 1994. This increase in revenue in 1996 was a result
of the commencement of a number of significant construction contracts which were
awarded to the Company during 1995.
Page 11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The backlog of uncompleted contracts amounted to $609,340 at December
31, 1996, compared with $641,670 at December 31, 1995 and $309,778 at December
31, 1994. New contract awards during 1996, 1995, and 1994 were $436,137,
$748,887, and $340,045 respectively.
Gross margin: The Company's gross margin of $44,250 in 1996 was 13
percent higher than the corresponding figure of $39,172 in 1995, and a
substantial improvement over the $(14,080) of gross margin in 1994. The increase
in gross margin in 1996 compared with 1995 was due to the 12 percent growth in
revenue during the period, which, in turn, was attributable to the commencement
of a number of significant construction contracts awarded to the Company in
1995. The percentage of gross margin to revenue remained fairly constant during
1996 and 1995.
The negative gross margin in 1994 was due to certain contract dispute
settlements, cost overruns, and the write-down of certain assets, together
amounting to $29,771.
General and administrative expense: General and administrative expenses
of $39,335 in 1996 increased by 2 percent over the $38,551 recorded in 1995, and
by less than 1 percent over the 1994 expense of $39,080. The increase in general
and administrative expenses was due to an increased level of business
development activities, with particular emphasis on international markets. These
higher expenditures were partly offset by the Company's continuing overhead cost
reduction efforts.
Interest income: Interest income amounted to $1,801 in 1996, compared
with $3,784 in 1995, and $563 in 1994. Interest income in 1996 included $1,060
earned on an interest-bearing account receivable as explained under "Liquidity
and Capital Resources," and $741 earned from short-term investments. The
reduction in interest income from 1995 to 1996 was the result of lower
short-term investment balances in 1996 compared with 1995.
Interest Expense: Interest expense was $1,684 in 1996, compared with
$904 in 1995, and $4,902 in 1994. The increase in interest expense in 1996
compared with 1995 was attributable to the Company's utilization of its lines of
credit in 1996; there was no utilization in 1995. Interest expense of $4,902 in
1994 was due to short-term borrowings in that year, together with interest of
$1,715 related to an income tax settlement.
Miscellaneous: Miscellaneous income of $1,781 in 1996 was principally
derived from gains on property dispositions. Income of $1,249 in 1995 included
gains on property dispositions of $2,138, a loss of $3,041 on the write-down of
a property, and gains of $2,079 on the settlement of certain non-construction
claims and disputed items. Miscellaneous income of $887 in 1994 was primarily
derived from foreign exchange gains.
Income taxes: Income tax expense was $1,794 in 1996, compared with
expense of $1,141 in 1995, and a benefit of $8,758 in 1994. Income tax expense
in both 1996 and 1995 was attributable to foreign income taxes on foreign source
income, together with U.S. state income taxes. The tax benefit in 1994 was due
to the allocation of income taxes to discontinued operations.
Page 12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Discontinued Operations: In 1994 discontinued operations gave rise to
income of $3,238 and a gain on disposition of $36,866. The nature and results of
these operations are explained in note 11 to the Consolidated Financial
Statements.
Changes in Accounting: The results for 1994 include an accounting
charge of $739 from the adoption of Statement of Financial Accounting Standards
No. 112.
Net Income: The Company had net income of $5,019 in 1996, compared with
$3,609 in 1995, and a net loss of $12,658 in 1994. Earnings per share were $0.54
in 1996, $0.39 in 1995, and a loss per share of $1.42 in 1994.
Liquidity and Capital Resources
As reported in the Consolidated Statements of Cash Flows, operating
activities utilized $64,110 of cash in 1996, compared with $6,412 in 1995, and
net generation of cash of $10,753 in 1994. The utilization of cash by operations
in 1996 was attributable to increases in accounts receivable and in inventories
and unamortized costs on contracts.
With regard to accounts receivable, the Company, at December 31, 1996,
had an uncollected balance of approximately $40,000 relating to a contract to
construct the first phase of a continuing care retirement facility in Southern
California. Subsequent to December 31, 1996, the facility was placed in
bankruptcy under Chapter 11 of the Bankruptcy Code. Construction of the
residential portion of the facility was completed in June of 1996, with many of
the residential units currently occupied. Day-to-day operation of the facility
is being performed under the supervision of a court-appointed trustee. As one of
the secured creditors, the Company is taking an active role in developing a plan
of reorganization for the facility. While there can be no assurance as to the
outcome of this matter, based on discussions with potential buyers of the
facility, the Company believes it will be successful in recovering the full
amount of its receivable. The timing of repayment to the Company will depend on
the terms of the reorganization plan adopted by the bankruptcy court.
In addition, the Company, at December 31, 1996, had unamortized costs of
approximately $24,000 relating to a contract to construct a pulp mill in
Indonesia. This amount represents additional costs resulting from schedule
delays, contract acceleration and other contract changes beyond the Company's
control, for which it is seeking reimbursement. In March of 1997, a portion of
these costs, approximately $10,000, were reimbursed to the Company through a
negotiated settlement. The Company expects to resolve and collect the balance.
Net investing activities utilized cash of $399 in 1996, compared with
$15,191 in 1995, and cash generation of $96,882 in 1994. The utilization of cash
in 1995 was attributable to net acquisitions of construction equipment to
service the Company's increased backlog of construction work-in-progress. During
1996 expenditures on equipment acquisitions were offset by selective disposals
of older equipment. The high level of cash generated from investing activities
in 1994 resulted from the sale of the Company's nonconstruction businesses.
Page 13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Financing activities generated $32,427 of cash in 1996, compared with
net utilization of $17,697 in 1995, and $35,039 in 1994. During 1996, the
Company increased its borrowings against its lines of credit by $32,500, and
reduced its cash and invested balances by $31,950 in order to finance cash
utilization by operating activities. Cash utilization by financing activities in
1995 and 1994 was attributable to the payment of a special shareholder dividend
of $2.00 per share, and the repayment of short-term borrowings.
The Company has syndicated lines of credit of $15,000 expiring April 30,
1997 and $40,000 expiring June 30, 1997. The renewal of these lines is currently
under negotiation. The availability of these lines of credit is reduced by any
letters of credit which may be outstanding against the lines. At December 31,
1996, the Company had $32,500 in outstanding borrowings and $6,221 in
outstanding letters of credit.
The Company believes that its cash and short-term investments, together
with lines of credit and funds generated from operations and other sources, will
be adequate to cover foreseeable future requirements.
Page 14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements
Page
16 Report of Independent Accountants
17-18 Consolidated Balance Sheets, as of December 31, 1996 and 1995
19 Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994
20-21 Consolidated Statements of Operations for the years ended December 31,
1996, 1995 and 1994
22 Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994
23-39 Notes to Consolidated Financial Statements
(b) 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 15
<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, 1996 and 1995, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. 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, 1996 and
1995, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
San Francisco, California
March 17, 1997
Page 16
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars except share and per share amounts)
- ------------------------------------------------------------------------------------------------------------
As of December 31, 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,854 $ 39,804
Accounts receivable 118,964 76,196
Costs and estimated earnings in excess of billings 12,511 28,751
Inventories and unamortized costs on contracts in progress 56,601 20,987
Investments in joint ventures 34,076 32,272
Deferred income taxes 225 -
Other current assets 3,986 5,244
- ------------------------------------------------------------------------------------------------------------
Total current assets 234,217 203,254
- ------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT At cost:
Land 2,528 2,683
Buildings 10,232 11,203
Construction equipment 32,928 36,036
Other equipment 8,314 7,478
- ------------------------------------------------------------------------------------------------------------
54,002 57,400
Less accumulated depreciation 25,341 28,163
- ------------------------------------------------------------------------------------------------------------
Total property, plant and equipment, net 28,661 29,237
- ------------------------------------------------------------------------------------------------------------
Other assets 2,345 2,353
- ------------------------------------------------------------------------------------------------------------
Total assets $ 265,223 $ 234,844
- ------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
Page 17
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars except share and per share amounts)
- ------------------------------------------------------------------------------------------------------------
As of December 31, 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, including current portion of long-term debt $ 33,402 $ 844
Accounts payable 81,981 86,671
Billings in excess of costs and estimated earnings 21,422 20,300
Accrued payroll 8,843 9,310
Accrued federal & foreign income taxes 8,096 5,020
Other accrued expenses 13,110 18,835
Deferred income taxes - 248
Due to joint ventures 588 730
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 167,442 141,958
- -----------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Long-term debt, less current portion 1,210 1,917
Deferred income taxes 109 88
Postretirement health care and postemployment benefit obligations 7,178 7,423
- -----------------------------------------------------------------------------------------------------------
Total liabilities 175,939 151,386
- -----------------------------------------------------------------------------------------------------------
Contingencies (Note 16)
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; 8,987,467 issued
and outstanding at December 31, 1996 and 8,951,154 at December 31, 1995 1,896 1,895
Paid-in capital 13,262 13,085
Accumulated translation adjustment (4,526) (4,446)
Unearned compensation - (400)
Additional pension liability (35) (344)
Retained earnings 78,687 73,668
- -----------------------------------------------------------------------------------------------------------
Total stockholders' equity 89,284 83,458
- -----------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $265,223 $234,844
- -----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
Page 18
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands of dollars except share and per share amounts)
- ------------------------------------------------------------------------------------------------------------
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, 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
CHANGES FOR THE YEAR - 1996:
NET INCOME 5,019
RESTRICTED SHARES:
FORFEITED (40,000) (400) 400
STOCK OPTIONS EXERCISED 76,313 1 577
FOREIGN CURRENCY TRANSLATION (80)
ADDITIONAL MINIMUM PENSION LIABILITY 309
- -----------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 8,987,467 $1,896 $13,262 $(4,526) $ - $ (35) $78,687
- -----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
Page 19
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars except share and per share amounts)
- -----------------------------------------------------------------------------------------------------------
Years ended December 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $468,467 $416,995 $422,969
Cost of revenue 424,217 377,823 437,049
- -----------------------------------------------------------------------------------------------------------
Gross margin 44,250 39,172 (14,080)
Restructuring charges - - 4,169
General and administrative expenses 39,335 38,551 39,080
- -----------------------------------------------------------------------------------------------------------
Income (loss) from operations 4,915 621 (57,329)
Other income (expense)
Interest income 1,801 3,784 563
Interest expense (1,684) (904) (4,902)
Miscellaneous, net 1,781 1,249 887
- -----------------------------------------------------------------------------------------------------------
Total other income (expense) 1,898 4,129 (3,452)
- -----------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before taxes and
the cumulative effect of changes in accounting 6,813 4,750 (60,781)
Provision (benefit) for income taxes 1,794 1,141 (8,758)
- -----------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before the cumulative
effect of changes in accounting 5,019 3,609 (52,023)
Income from discontinued operations, net of income taxes:
Income from discontinued operations - - 3,238
Gain on disposal of discontinued operations - - 36,866
- -----------------------------------------------------------------------------------------------------------
Total income from discontinued operations, net of income taxes - - 40,104
- -----------------------------------------------------------------------------------------------------------
Income (loss) before the cumulative effect of changes in accounting 5,019 3,609 (11,919)
Cumulative effect of changes in accounting:
Postemployment benefit costs - - (739)
- -----------------------------------------------------------------------------------------------------------
Total cumulative effect of changes in accounting - - (739)
- -----------------------------------------------------------------------------------------------------------
Net income (loss) $ 5,019 $ 3,609 $(12,658)
- -----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
Page 20
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars except share and per share amounts)
- -----------------------------------------------------------------------------------------------------------
As of December 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) per share of common stock from continuing operations
before cumulative effect of changes in accounting $0.54 $0.39 $(5.86)
Income per share of common stock from discontinued operations, net
of income taxes - - 4.52
- ------------------------------------------------------------------------------------------------------------
Income (loss) per share of common stock before cumulative effect of
changes in accounting 0.54 0.39 (1.34)
Cumulative effect per share of common stock of changes in accounting - - (0.08)
- ------------------------------------------------------------------------------------------------------------
Net income (loss) per share of common stock $0.54 $0.39 $(1.42)
- ------------------------------------------------------------------------------------------------------------
Average number of shares of common stock and common stock
equivalents utilized in net income (loss) per share calculation 9,359,000 9,161,000 8,877,000
- ------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
Page 21
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars except share and per share amounts)
- ----------------------------------------------------------------------------------------------------------
As of December 31, 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 5,019 $ 3,609 $(12,658)
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
(Income) from discontinued operations - - (3,238)
Restructuring charges - - 4,169
Depreciation, depletion and amortization 4,693 6,666 2,822
Provision for loss on investment in energy properties - - 300
Deferred income taxes (451) 444 1,104
(Gain) on dispositions of property, plant and equipment (3,724) (3,028) (92)
(Gain) on disposition of discontinued operations - - (36,866)
Cumulative effect of changes in accounting - - 739
Changes in operating assets and liabilities:
Accounts receivable (42,832) (43,080) 21,965
Inventories and unamortized costs on contracts (35,619) (963) 15,601
Investments in joint ventures (1,957) 8,845 10,190
Other current assets 1,257 (2,089) 1,557
Accounts payable and accrued expenses (10,524) 46,353 6,525
Accrued income taxes 3,076 (1,877) (7,757)
Billings in excess of costs and estimated earnings, net 17,377 (21,033) 10,351
Other, net (425) (259) (511)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities from continuing
operations (64,110) (6,412) 14,201
Net cash (used in) operating activities from discontinued operations - - (3,448)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (64,110) (6,412) 10,753
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Property, plant and equipment expenditures (10,016) (23,022) (1,852)
Proceeds from dispositions of property, plant and equipment 9,609 7,791 1,036
Proceeds from disposition of discontinued operations - - 100,903
Increase (decrease) in other assets, net 8 40 (778)
Net investing activities of discontinued operations - - (2,427)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (399) (15,191) 96,882
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Short-term borrowings (repayments), net 32,500 - (34,215)
Proceeds of long-term borrowings 50 812 -
Long-term debt repayments (700) (911) (678)
Common stock issuance related to stock option awards 577 237 -
Cash dividends paid - (17,835) -
Net financing activities of discontinued operations - - (146)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 32,427 (17,697) (35,039)
- ----------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 132 663 (1,003)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $(31,950) $(38,637) $71,593
- ----------------------------------------------------------------------------------------------------------
Supplementary information:
Cash paid during the period for:
Interest $ 3,826 $ 553 $ 4,798
Federal, foreign and state income taxes 561 2,563 838
Common stock contributed to pension plan - - 969
- ----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
Page 22
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
1. 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 anticipated 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 23
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
1. 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 CASH EQUIVALENTS
Cash equivalents consists of highly-liquid securities with an original maturity
of three months or less.
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 or 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
usage. 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, which are
being depreciated on a straight-line basis over a five year period. The net book
value of computer software and systems implementation at December 31, 1996 is
$1,750.
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.
Page 24
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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.
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. 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, 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 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. The Company has adopted
SFAS 123 on a disclosure basis as explained more fully in note 10 to the
financial statements.
Page 25
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
NEWLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" and No. 129,
"Disclosure of Information about Capital Structure." SFAS No. 128 establishes
standards for computing and presenting earnings per share (EPS), replacing the
presentation of primary EPS with a presentation of basic EPS. SFAS No. 129
consolidates the existing disclosure requirements regarding an entity's capital
structure. SFAS No. 128 and No. 129 are effective for financial statements
issued for periods ending after December 15, 1997 and accordingly, management
has not determined the impact on the Company's financial statements for the year
ended December 31, 1996.
CHANGES IN ACCOUNTING PRINCIPLES
In 1994, the Company recorded an accounting charge of $739 for postemployment
benefit costs upon the adoption of SFAS 112.
RECLASSIFICATION OF 1995 AND 1994 FINANCIAL STATEMENTS
Certain amounts for 1995 and 1994 have been reclassified to conform with the
1996 financial statement presentation and have not affected previously reported
net income or stockholders' equity.
<TABLE>
2. CASH AND CASH EQUIVALENTS
<CAPTION>
- ----------------------------------------------------------------------------------------------
Cash and short-term investments consist of the following: 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government treasury securities $ - $ 256
Investment-grade commercial paper 1,770 25,097
Cash balances 6,084 14,451
- ----------------------------------------------------------------------------------------------
Total cash and short-term investments $ 7,854 $ 39,804
- ----------------------------------------------------------------------------------------------
</TABLE>
3. ACCOUNTS RECEIVABLE
Accounts receivable include retained percentages of $31,044 and $13,366 at
December 31, 1996 and 1995 respectively. The amount for 1996 is expected to be
collected as follows: $23,559 in 1997, $7,145 in 1998 and $340 in 2000 and later
years.
Page 26
<PAGE>
<TABLE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- ----------------------------------------------------------------------------------------------
4. INVENTORIES AND UNAMORTIZED COSTS ON CONTRACTS
<CAPTION>
- ----------------------------------------------------------------------------------------------
The major classifications of inventory are as follows: 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Construction materials, parts and supplies $ 1,728 $ 2,812
Unamortized costs on contracts 54,873 18,175
- ----------------------------------------------------------------------------------------------
$ 56,601 $ 20,987
- ----------------------------------------------------------------------------------------------
</TABLE>
Unamortized costs on contracts include $8,500 (1995 - $9,414) of costs relating
to claims, and $41,767 (1995 - $4,315) of costs relating to unapproved change
orders.
5. 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>
1996
ASSETS $ 183,511 $ 68,851 $ 114,660
LIABILITIES 113,729 35,363 78,366
- ----------------------------------------------------------------------------------------------
NET ASSETS $ 69,782 $ 33,488 $ 36,294
- ----------------------------------------------------------------------------------------------
1995
Assets $ 110,624 $ 38,937 $ 71,687
Liabilities 67,850 7,395 60,455
- ----------------------------------------------------------------------------------------------
Net Assets $ 42,774 $ 31,542 $ 11,232
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Investment in joint ventures is made up as follows: 1996 1995
- ----------------------------------------------------------------------------------------------
Investment in joint ventures $ 34,076 $ 32,272
Due to joint ventures (588) (730)
- ----------------------------------------------------------------------------------------------
Net investment $ 33,488 $ 31,542
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Income statement amounts for joint ventures are: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
Revenue
Sponsored joint ventures $ 146,297 $ 64,769 $ 121,934
Less other venturers' shares 78,724 30,691 62,292
- ----------------------------------------------------------------------------------------------
Company share of sponsored joint ventures 67,573 34,078 59,642
Company share of non-sponsored joint ventures 16,424 40,379 41,322
- ----------------------------------------------------------------------------------------------
Revenue recorded from joint ventures $ 83,997 $ 74,457 $ 100,964
- ----------------------------------------------------------------------------------------------
</TABLE>
Page 27
<PAGE>
<TABLE>
<CAPTION>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- ----------------------------------------------------------------------------------------------
5. INVESTMENTS IN JOINT VENTURES, CONTINUED
<S> <C> <C> <C>
Cost of revenue
Sponsored joint ventures $ 130,851 $ 57,182 $109,885
Less other venturers' shares 71,221 27,008 49,899
- ----------------------------------------------------------------------------------------------
Company share of sponsored joint ventures 59,630 30,174 59,986
Company share of non-sponsored joint ventures 22,588 38,257 44,835
- ----------------------------------------------------------------------------------------------
Cost of revenue recorded from joint ventures $ 82,218 $ 68,431 $ 104,821
- ----------------------------------------------------------------------------------------------
Gross margin
Sponsored joint ventures $ 15,446 $ 7,587 $ 12,049
Less other venturers' shares 7,503 3,683 12,393
- ----------------------------------------------------------------------------------------------
Company share of sponsored joint ventures 7,943 3,904 (344)
Company share of non-sponsored joint ventures (6,164) 2,122 (3,513)
- ----------------------------------------------------------------------------------------------
Gross margin recorded from joint ventures $ 1,779 $ 6,026 $ (3,857)
- ----------------------------------------------------------------------------------------------
</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 its accounting policies as outlined in note 1 to
these financial statements. 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 are probable of
recovery as additional contract compensation. These estimates may be subject to
revision in the normal course of business.
6. CREDIT AGREEMENTS
The Company has short-term credit lines with domestic and foreign banks
aggregating $55,000, of which $15,000 expires on April 30, 1997 and $40,000
expires on June 30, 1997. The renewal of these lines is currently under
negotiation. 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 $139,607 at
December 31, 1996.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Short-term borrowing detail is as follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at end of year $ 32,500 $ - $ -
Maximum amount outstanding during the year 39,700 - 41,901
Average amount outstanding during the year 14,264 - 34,175
Weighted average interest rate at end of year 8.31% - -
Weighted average interest rate during the year 8.32% - 6.11%
</TABLE>
The Company is contingently liable under standby letters of credit totaling
$6,221 at December 31, 1996, issued in the normal course of business. These
outstanding letters of credit reduce the amount available for borrowing under
the Company's credit agreements.
Page 28
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
7. ACCOUNTS PAYABLE
Checks written which have not yet been presented for payment are included in
accounts payable. These amounts were approximately $5,228 and $4,700 at December
31, 1996 and 1995, respectively.
<TABLE>
8. LONG-TERM OBLIGATIONS
<CAPTION>
- ----------------------------------------------------------------------------------------------
Long-term obligations consist of the following: 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial development bond, 5.95%, due 1998 $ 496 $ 779
Equipment financing agreements and capitalized lease obligations,
7% to 10.1%, due 1995-1998 518 778
Subordinated debentures, 6.5%, due 1999 570 677
Technology loan, due 1999 45 -
Promissory notes, 10%, due 2003 483 527
- ----------------------------------------------------------------------------------------------
2,112 2,761
Less current portion 902 844
- ----------------------------------------------------------------------------------------------
$ 1,210 $ 1,917
- ----------------------------------------------------------------------------------------------
</TABLE>
Required principal repayments for the years 1997 through 2001 are as follows:
$902, $592, $305, $75, and $80, respectively, with $158 due after 2001.
Financing agreements contain restrictive covenants relating to net worth and
other criteria. Properties and equipment with a net book value of $3,099 at
December 31, 1996, are pledged as collateral for an industrial development bond
and equipment financing agreements.
The technology loan is from the Canadian Ministry of Industry, Science and
Technology. This loan carries no interest, and is repayable out of royalties of
50 percent on sales of products generated by the loan program.
9. OPERATING LEASES
The Company leases office space, facilities, and equipment under various
operating leases. At December 31, 1996, future minimum rental payments
applicable to noncancellable operating leases were as follows:
1997 $ 4,022
1998 3,799
1999 3,884
2000 1,715
2001 1,483
After 2001 2,383
- --------------------------------------------------------------------------------
Total $ 17,286
- --------------------------------------------------------------------------------
Page 29
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
9. OPERATING LEASES, CONTINUED
For the years 1996, 1995, and 1994 rental expense amounted to $3,658, $3,095,
and $2,861 respectively.
10. RESTRICTED STOCK, STOCK OPTIONS AND WARRANTS
The Company has an Executive Stock Plan under which 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 award. 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.
The Company applies APB Opinion 25 and related interpretations in accounting for
this plan, accordingly, no compensation cost has been recognized in respect
thereof. Had compensation cost for this plan been determined based on the fair
value at the grant dates for awards consistent with the method of FASB Statement
123, the Company's net income and earnings per share would have been reduced to
the pro forma amounts indicated below:
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Net income
As reported $ 5,019 $ 3,609
Pro forma 4,208 3,360
Earnings per share
As reported $ 0.54 $ 0.39
Pro forma 0.45 0.37
The above pro forma amounts were arrived at by determining the fair value of
each option grant using the Black-Scholes option pricing model with the
following assumptions:
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Option price Current market price at date of award
Option fair market value Current market price at date of award
Expected option term 10 YEARS 10 years
Stock price volatility 50.20% 48.70%
Expected dividend yield 0.00% 0.00%
Risk-free rate of return 5.81% 7.06%
The exercise price of all outstanding 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.
Page 30
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
10. RESTRICTED STOCK, STOCK OPTIONS AND WARRANTS, CONTINUED
- --------------------------------------------------------------------------------
Weighted Average
Summary of stock options: Number of shares Exercise Price
- --------------------------------------------------------------------------------
Outstanding at December 31, 1994 421,300 $ 9.96
- --------------------------------------------------------------------------------
Granted in 1995 (1) 371,104 7.77
Forfeited in 1995 64,003 7.42
Exercised in 1995 33,930 7.11
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995 694,471 7.79
- --------------------------------------------------------------------------------
GRANTED IN 1996 312,000 10.08
FORFEITED IN 1996 11,700 7.23
EXERCISED IN 1996 76,313 7.57
- --------------------------------------------------------------------------------
OUTSTANDING AT DECEMBER 31, 1996 918,458 $ 8.59
- --------------------------------------------------------------------------------
EXERCISABLE AT DECEMBER 31, 1996 325,924 $ 8.10
Exercisable at December 31, 1995 271,753 8.30
<TABLE>
- --------------------------------------------------------------------------------
Summary of stock options outstanding and exercisable at December 31, 1996:
- --------------------------------------------------------------------------------
<CAPTION>
Weighted Average
Number Number Remaining
Exercise Price Outstanding Exercisable Contractual Life
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 6.55 181,290 121,942 6.27
7.23 87,100 65,325 6.29
7.81 259,000 64,750 8.30
8.10 10,323 5,162 7.48
10.00 304,500 0 9.13
11.95 68,745 68,745 3.30
13.38 7,500 0 9.64
- ----------------------------------------------------------------------------------------------
918,458 325,924 7.61
- ----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Summary of restricted stock: Number of Shares
- --------------------------------------------------------------------------------
Outstanding at December 31, 1994 73,600
Forfeited in 1995 33,600
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995 40,000
FORFEITED IN 1996 40,000
- --------------------------------------------------------------------------------
OUTSTANDING AT DECEMBER 31, 1996 0
- --------------------------------------------------------------------------------
Total shares available for grant at:
DECEMBER 31, 1996 269,527
December 31, 1995 529,827
Page 31
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
10. RESTRICTED STOCK, STOCK OPTIONS AND WARRANTS, CONTINUED
(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.
11. MISCELLANEOUS INCOME (EXPENSE)
Miscellaneous income (expense) includes those items of income and expense which
are not derived from operations. This category consists of gains or losses from
the disposition of property, plant, and equipment, foreign exchange gains or
losses, and gains or losses resulting from other non-operating items.
Miscellaneous income (expense) in 1996, includes gains of $1,761 on property
dispositions.
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.
12. DISCONTINUED OPERATIONS AND RESTRUCTURING
During 1994 the Company disposed of substantially all 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.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Summarized results of discontinued operations are as
follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ - $ - $170,495
- ----------------------------------------------------------------------------------------------
Income from discontinued operations before taxes - - 6,060
Provision for income taxes - - 2,822
- ----------------------------------------------------------------------------------------------
Income from discontinued operations $ - $ - $ 3,238
- ----------------------------------------------------------------------------------------------
Gain on disposal of discontinued operations before taxes $ - $ - $58,969
Provision for income taxes - - 22,103
- ----------------------------------------------------------------------------------------------
Gain on disposal of discontinued operations $ - $ - $36,866
- ----------------------------------------------------------------------------------------------
</TABLE>
Page 32
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
12. DISCONTINUED OPERATIONS AND RESTRUCTURING, CONTINUED
<CAPTION>
- ----------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share of common stock:
Income from discontinued operations $ - $ - $ 0.36
Gain on disposal of discontinued operations - - 4.16
- ----------------------------------------------------------------------------------------------
Income per share of common stock from discontinued
operations $ - $ - $ 4.52
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Restructuring charges in 1994, amounting to $4,169 are
made up of the following: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
Reductions in staffing levels $ - $ - $ 2,290
Consolidation of offices and facilities - - 698
Abandonment of non-productive assets - - 1,181
- ----------------------------------------------------------------------------------------------
Total restructuring charge $ - $ - $ 4,169
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
13. INCOME TAXES
<CAPTION>
- ----------------------------------------------------------------------------------------------
The consolidated tax provision is made up as follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) from continuing operations before
provision (benefit) for income taxes and
cumulative effect of changes in accounting:
United States $(6,017) $7,008 $(62,969)
Foreign 12,830 (2,258) 2,188
- ----------------------------------------------------------------------------------------------
6,813 4,750 (60,781)
- ----------------------------------------------------------------------------------------------
Provision (benefit) for income taxes
Federal
Current (98) 121 (12,379)
Deferred - - 1,350
State (745) 92 1,170
Foreign
Current 3,090 481 606
Deferred (453) 447 495
- ----------------------------------------------------------------------------------------------
1,794 1,141 (8,758)
- ----------------------------------------------------------------------------------------------
Income (loss) from continuing operations before
cumulative effect of changes in accounting: $ 5,019 $3,609 $(52,023)
- ----------------------------------------------------------------------------------------------
</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.
Page 33
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
13. INCOME TAXES, CONTINUED
<CAPTION>
- ----------------------------------------------------------------------------------------------
Tax differences are summarized as follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision (benefit) at statutory rates $ 2,317 $1,615 $(20,666)
U.S. losses for which no tax benefit was recorded 1,849 - 13,555
Net operating loss utilization - (1,552) -
Foreign taxes (1,709) 916 (390)
State income taxes (737) 61 772
Nondeductible expenses 74 101 68
Tax reimbursements from discontinued operations - - (2,097)
- ----------------------------------------------------------------------------------------------
Provision (benefit) for income taxes $ 1,794 $1,141 $(8,758)
- ----------------------------------------------------------------------------------------------
</TABLE>
No provision has been made for additional income taxes on undistributed earnings
of a foreign subsidiary (which totaled $48,009 at December 31, 1996) because of
reinvestment policies.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Deferred income tax assets (liabilities) are made up as
follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Temporary differences:
Contract recognition method for tax purposes $(1,894) $(2,385) $(3,985)
Depreciation (167) 235 570
Estimated losses and reserves 6,302 6,845 9,602
Employee benefits (7) (494) (676)
Inventory cost capitalization - - 54
Other 54 69 175
- ----------------------------------------------------------------------------------------------
4,288 4,270 5,740
Operating loss carryforward 14,722 12,934 13,633
Foreign tax credits - - 8,266
Alternative minimum tax carryforward 1,395 1,394 1,044
- ----------------------------------------------------------------------------------------------
Deferred income tax asset 20,405 18,598 28,683
Less, valuation allowance (20,289) (18,934) (28,572)
- ----------------------------------------------------------------------------------------------
Net deferred income tax asset (liability) $ 116 $ (336) $ 111
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Deferred income taxes are classified as follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred income tax asset (liability) - current $ 225 $ (248) $ 23
Deferred income tax asset (liability) - long-term (109) (88) 88
- ----------------------------------------------------------------------------------------------
Net deferred income tax asset (liability) $ 116 $ (336) $ 111
- ----------------------------------------------------------------------------------------------
</TABLE>
The Company's net operating loss carryforwards expire as follows:
- --------------------------------------------------------------------------------
Year Amount
- --------------------------------------------------------------------------------
2004 $ 24,647
2006 5,735
2007 3,369
2008 3,660
2011 5,890
- --------------------------------------------------------------------------------
Total $ 43,301
- --------------------------------------------------------------------------------
Page 34
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
14. 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, with Plan assets being invested in a
diversified portfolio of domestic and international equities and fixed-income
securities. 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.
The following table sets forth the defined benefit plans' funded status and
amounts recognized in the Company's financial statements:
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Accumulated benefit obligation: Nonvested $ 3,920 $3,737
Accumulated benefit obligation: Vested 17,327 17,300
- --------------------------------------------------------------------------------
Total accumulated benefit obligation $21,247 $21,037
- --------------------------------------------------------------------------------
Projected benefit obligation for service rendered
to date $24,178 $21,977
Plans' assets at fair market value, primarily
listed stocks and bonds, including $525 (1995 -
$1,000) in restricted shares of common stock of
Guy F. Atkinson Company of California 18,375 16,783
- --------------------------------------------------------------------------------
Excess of projected benefit obligation over plans'
assets 5,803 5,194
Unrecognized net loss from past experience different
from that assumed, and effect of changes in
assumptions (5,043) (5,404)
Remaining portion of unrecognized net assets at
January 1, 1986, being recognized over
approximately 13 years 108 186
Adjustment to recognize minimum liability 2,004 4,278
- --------------------------------------------------------------------------------
Accrued pension expense $ 2,872 $4,254
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Net pension expense is made up as follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service costs - benefits earned during the year $ 1,054 $ 925 $ 1,224
Interest cost on projected benefit obligation 1,633 1,369 1,255
Actual return on plan assets (1,652) (3,404) 416
Net amortization and deferral 608 2,493 (1,127)
- ----------------------------------------------------------------------------------------------
Net pension expense $ 1,643 $1,383 $ 1,768
- ----------------------------------------------------------------------------------------------
</TABLE>
Page 35
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
14. EMPLOYEES' PENSION AND RETIREMENT PLANS, CONTINUED
- --------------------------------------------------------------------------------
Assumptions used in computing the plans' funded status: 1996 1995
- --------------------------------------------------------------------------------
Discount rate 7.5% 7.5%
Expected long-term rate of return on plan assets 9.0% 9.0%
Rate of increase in future compensation levels 4.5% 4.5%
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
The following pension assets and liabilities have
been recorded: 1996 1995
- --------------------------------------------------------------------------------
Addition minimum pension liability $ 2,004 $4,278
Intangible pension asset 1,969 3,934
- --------------------------------------------------------------------------------
Charge to stockholders' equity $ 35 $ 344
- --------------------------------------------------------------------------------
The Company contributes to defined contribution retirement plans and various
defined benefit multiemployer plans on behalf of unionized employees.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Costs of these plans were as follows: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Defined benefit multiemployer plans $ 2,349 $2,652 $ 4,835
Defined contribution retirement plans 1,100 719 981
- ----------------------------------------------------------------------------------------------
Total plan costs $ 3,449 $3,371 $ 5,816
- ----------------------------------------------------------------------------------------------
</TABLE>
Supplementing pension benefits, the Company provides certain healthcare benefits
for retired salaried employees reaching retirement age while working with the
Company.
- --------------------------------------------------------------------------------
The following are the components of postretirement
benefit liability: 1996 1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 5,679 $5,259
Fully eligible employees 549 589
Other active plan participants 494 494
- --------------------------------------------------------------------------------
6,722 6,342
Unrecognized net gain (loss) (482) 140
- --------------------------------------------------------------------------------
Accrued postretirement obligation $ 6,240 $6,482
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Postretirement healthcare expense consists of: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service costs - benefits earned during the period $ 34 $ 27 $ 62
Interest cost on accumulated postretirement benefit
obligation 489 500 462
Net amortization of unrecognized gains (losses) - (9) -
- ----------------------------------------------------------------------------------------------
Net postretirement benefit cost $ 523 $ 518 $ 524
- ----------------------------------------------------------------------------------------------
</TABLE>
Page 36
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
14. EMPLOYEES' PENSION AND RETIREMENT PLANS, CONTINUED
- --------------------------------------------------------------------------------
Assumptions used for postretirement benefit costs
and obligations 1996 1995
- --------------------------------------------------------------------------------
Discount rate 7.5% 7.5%
Medical cost trend rate 5% 9% in 1995
reducing to
6% in 2001
15. 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 $939 at December 31, 1996 and $941 at December 31,
1995. Postemployment benefit expense was $421 in 1996, $333 in 1995, and $228 in
1994.
16. 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 as reserves 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 37
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
16. LITIGATION AND CONTINGENCIES, CONTINUED
<CAPTION>
- --------------------------------------------------------------------------------
The following is a summary of environmental liabilities: 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Reserves for anticipated environmental remediation obligations $ 2,269 $ 3,094
Less expenditures to date 390 252
- ----------------------------------------------------------------------------------------------
$ 1,879 $ 2,842
- ----------------------------------------------------------------------------------------------
</TABLE>
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.
17. GEOGRAPHIC AREA AND SIGNIFICANT CUSTOMER INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Summarized geographic area information: 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
United States $ 374,479 $ 332,409 $ 388,969
Canada 3,769 37,136 16,700
Asia 85,425 37,158 -
Other areas 4,794 10 292 17,300
- ----------------------------------------------------------------------------------------------
Total revenue $ 468,467 $ 416,995 $ 422,969
- ----------------------------------------------------------------------------------------------
Operating profit (loss):
United States $ 1,010 $ 9,312 $ (41,000)
Canada (4,207) (4,561) 2,100
Asia 17,565 3,194 -
Other areas 347 2,099 1,700
- ----------------------------------------------------------------------------------------------
Total operating profit (loss) 14,715 10,044 (37,200)
- ----------------------------------------------------------------------------------------------
General corporate (expense) (6,218) (4,390) (18,679)
Interest (expense) (1,684) (904) (4,902)
- ----------------------------------------------------------------------------------------------
Income (loss) from continuing operations before
taxes and cumulative effect of changes in
accounting $ 6,813 $ 4,750 $ (60,781)
- ----------------------------------------------------------------------------------------------
</TABLE>
Page 38
<PAGE>
GUY F. ATKINSON COMPANY OF CALIFORNIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
17. GEOGRAPHIC AREA AND SIGNIFICANT CUSTOMER INFORMATION, CONTINUED
<CAPTION>
<S> <C> <C> <C>
Identifiable assets:
United States $ 150,853 $ 144,062 $ 98,600
Canada 30,785 28,656 15,400
Asia 65,181 20,222 -
Other areas 7,800 6,893 10,700
Corporate assets 11,579 45,011 75,014
- ----------------------------------------------------------------------------------------------
Total assets $ 266,198 $ 234,844 $ 199,714
- ----------------------------------------------------------------------------------------------
</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, accrued and deferred income taxes, and corporate
properties and equipment.
The Company derived 6.1 percent in 1996, 2.4 percent in 1995, and 5.0 percent in
1994, of its revenue from contracts with the U.S. government.
During 1996, the Company derived 18 percent of its revenue from a contract with
PT. Kiani Kertas, an Indonesian corporation.
<TABLE>
18. QUARTERLY FINANCIAL DATA - UNAUDITED
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1996 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $99,185 $128,714 $126,011 $114,557
- --------------------------------------------------------------------------------------------------------
GROSS MARGIN 8,625 12,927 10,944 11,754
- --------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (483) $ 1,584 $ 1,001 $ 2,917
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE OF COMMON STOCK $ (0.05) $ 0.17 $ 0.11 $ 0.31
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<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
- --------------------------------------------------------------------------------------------------------
</TABLE>
Page 39
<PAGE>
<TABLE>
18. QUARTERLY FINANCIAL DATA - UNAUDITED, CONTINUED
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1994 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
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 17, 1997
("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 17, 1997.
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 17, 1997.
Page 40
<PAGE>
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 17, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page Number
(a) Documents Filed as Part of this Report
1. Consolidated Financial Statements
Report of Independent Accountants..............................16
Consolidated balance sheets at December
31, 1996 and December 31, 1995..............................17-18
Consolidated statements of stockholders'
equity for each of the three years in the
period ended December 31, 1996.................................19
Consolidated statements of operations for each
of the three years in the period ended
December 31, 1996...........................................20-21
Consolidated statements of cash flows for
each of the three years in the period ended
December 31, 1996..............................................22
Notes to financial statements...............................23-39
2. Financial Statement Schedules
All schedules have been omitted since the required information is
not present or not present in amounts sufficient to require
submission of the schedule, or because the information required
is included in the consolidated financial statements and notes
thereto.
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. 0-3062) 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. 0-3062)
and incorporated herein by reference.
Page 41
<PAGE>
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. 0-3062) 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 between 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
23 Consent of Independent Public Accountants
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 1996.
Page 42
<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 21, 1997
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 Executive Officer March 21, 1997
J. J. Agresti
/s/ H. D. Montgomery Senior Vice President, Chief Financial March 21, 1997
H. D. Montgomery Officer and Treasurer
(Principal Financial Officer)
/s/ J. Harrison Controller March 21, 1997
J. Harrison (Principal Accounting Officer)
/s/ D. E. Atkinson* Director March 21, 1997
D. E. Atkinson
/s/ R. N. Atkinson* Director March 21, 1997
R. N. Atkinson
/s/ W. E. Burch* Director March 21, 1997
W. E. Burch
/s/ J. P. Frazier* Director March 21, 1997
J. P. Frazier
/s/ D. R. Kayser* Director March 21, 1997
D. R. Kayser
Page 43
<PAGE>
/s/ R. J. Turner* Director March 21, 1997
R. J. Turner
/s/ J. F. Whitsett* Director March 21, 1997
J. F. Whitsett
*By: /s/ Therese Ambrusko
Therese Ambrusko,
Attorney-In-Fact
Page 44
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
21 Subsidiaries of the Company
23 Consent of Independent Public Accountants
24 Powers of Attorney of certain Directors
27 Financial Data Schedule
Page 45
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Organized
Corporate Subsidiaries Under Laws of
Atkinson Building Company California
Guy F. Atkinson Company Nevada
Guy F. Atkinson Company - Overseas Delaware
Guy F. Atkinson Construction Ltd. California
Guy F. Atkinson Holdings Ltd. Canada
Atkinson-International Venezuela, Inc. California
Atkinson Land Company California
Atkinson Middle East, Inc. Nevada
Atkinson Overseas, Inc. California
Atkinson South America, Inc. California
Andrew H. Charles Corporation Delaware
Colma Casualty Company Vermont
Commonwealth Asia Constructors Ltd. Canada
Commonwealth Asia Pacific Constructors Pte. Ltd. Singapore
Commonwealth Construction Company (1985) Limited Canada
Commonwealth Pacific Consultants Ltd. Canada
International Water Solutions Corporation Cook Islands
International Water Technology, Inc. Cook Islands
J. E. Record, Inc. Delaware
Microsep International (Australia) Pty Ltd. Australia
Microsep International (Canada) Corporation Canada
Microsep International Corporation Delaware
Microsep International (Thailand) Limited Thailand
Offshore Hydro Services, Inc. California
Walsh-Puerto Rico, Inc. California
WBL Solar Corporation California
Wismer & Becker Contracting Engineers, California
d/b/a Atkinson Mechanical Contractors Co.
Page 46
<PAGE>
EXHIBIT 23
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
March 17, 1997, on our audits of the consolidated financial statements of Guy F.
Atkinson Company of California as of December 31, 1996 and 1995, and for the
years ended December 31, 1996, 1995 and 1994, which report is included in this
Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
San Francisco, California
March 21, 1997
Page 47
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 6084
<SECURITIES> 1770
<RECEIVABLES> 118964
<ALLOWANCES> 0
<INVENTORY> 56601
<CURRENT-ASSETS> 234217
<PP&E> 54002
<DEPRECIATION> 23341
<TOTAL-ASSETS> 265223
<CURRENT-LIABILITIES> 167442
<BONDS> 1210
0
0
<COMMON> 1896
<OTHER-SE> 87388
<TOTAL-LIABILITY-AND-EQUITY> 265223
<SALES> 0
<TOTAL-REVENUES> 468467
<CGS> 0
<TOTAL-COSTS> 424217
<OTHER-EXPENSES> 39335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1684
<INCOME-PRETAX> 6813
<INCOME-TAX> 1794
<INCOME-CONTINUING> 5019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5019
<EPS-PRIMARY> .54
<EPS-DILUTED> 0
</TABLE>
