SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
----- Securities Exchange Act of 1934
For the quarterly period ended November 30, 1998 or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _____________ to _____________
Commission file number 0-16169
HARDING LAWSON ASSOCIATES GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 68-0132062
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7655 Redwood Boulevard
Novato, California 94945
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 892-0821
Indicate by check mark whether the registrant (1) has filed all reports required
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
At January 7, 1999 the registrant had issued and outstanding an aggregate of
4,876,396, shares of its common stock.
<PAGE>
INDEX
HARDING LAWSON ASSOCIATES GROUP, INC.
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
November 30, 1998 (Unaudited) and May 31, 1998.......................3
Condensed Consolidated Statements of Income -
Three and Six Months Ended November 30, 1998
and November 30, 1997 (Unaudited)....................................4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended November 30, 1998 and
November 30, 1997 (Unaudited)........................................5
Notes to Condensed Consolidated Financial Statements
November 30, 1998 (Unaudited)........................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.................12
Item 6. Exhibits and Reports on Form 8-K....................................13
SIGNATURES ..................................................14
INDEX TO EXHIBITS ..................................................15
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
HARDING LAWSON ASSOCIATES GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
November 30, 1998 May 31, 1998
- ----------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $15,281 $15,118
Accounts receivable 30,909 28,976
Unbilled work in progress 12,455 13,863
Less allowances for receivables and unbilled work (2,327) (1,836)
Prepaid expenses 1,385 1,196
Deferred income taxes 2,659 2,708
- ----------------------------------------------------------------------------------------------------------------
Total current assets 60,362 60,025
- ----------------------------------------------------------------------------------------------------------------
Equipment 25,942 24,892
Less accumulated depreciation (20,866) (19,571)
- ----------------------------------------------------------------------------------------------------------------
Net equipment 5,076 5,321
- ----------------------------------------------------------------------------------------------------------------
Deposits and other assets 11,196 11,272
- ----------------------------------------------------------------------------------------------------------------
Total assets $76,634 $76,618
================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,165 $6,381
Accrued expenses 5,195 5,350
Accrued compensation 8,046 7,794
Billings in excess of costs and estimated
earnings on uncompleted contracts 5,780 5,352
Income taxes payable 661 468
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 25,847 25,345
- ----------------------------------------------------------------------------------------------------------------
Other liabilities 1,113 1,084
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 26,960 26,429
- ----------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Minority interest in subsidiaries 398 401
- ----------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock--$.01 par value;
authorized shares 1,000,000;
issued and outstanding--none
Common stock--$.01 par value; authorized shares 10,000,000; issued and
outstanding--4,836,297 and 5,009,018 at November 30, 1998
and May 31, 1998, respectively 48 50
Additional paid-in capital 17,248 18,891
Retained earnings 32,212 31,059
Foreign currency translation adjustment (232) (212)
- ----------------------------------------------------------------------------------------------------------------
Total shareholders' equity 49,276 49,788
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $76,634 $76,618
================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HARDING LAWSON ASSOCIATES GROUP, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross revenue $40,697 $33,628 $80,140 $65,446
Less: Cost of outside services 13,900 12,348 25,662 22,485
- -------------------------------------------------------------------------------------------------------------------
Net revenue 26,797 21,280 54,478 42,961
- -------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Payroll and benefits 18,690 13,917 37,623 28,509
General expenses 7,987 6,098 15,089 11,860
- -------------------------------------------------------------------------------------------------------------------
Total costs and expenses 26,677 20,015 52,712 40,369
- -------------------------------------------------------------------------------------------------------------------
Operating income 120 1,265 1,766 2,592
Interest in loss of unconsolidated
subsidiaries -- -- -- (50)
Interest income, net 106 243 219 507
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes
and minority interest 226 1,508 1,985 3,049
Provision for income taxes 96 637 836 1,282
Minority interest (9) (20) (3) (44)
- -------------------------------------------------------------------------------------------------------------------
Net income $139 $891 $1,152 $1,811
===================================================================================================================
Basic net income per share $0.03 $0.18 $0.24 $0.37
===================================================================================================================
Shares used in computing basic net
income per share 4,835 4,971 4,859 4,929
===================================================================================================================
Diluted net income per share $0.03 $0.17 $0.23 $0.36
===================================================================================================================
Shares used in computing diluted net
income per share 4,854 5,133 4,920 5,031
===================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HARDING LAWSON ASSOCIATES GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended November 30,
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES
Net income $1,152 $1,811
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,641 1,246
Net increase in current assets (173) (1,353)
Net increase/(decrease) in current liabilities 1,358 (478)
Other, net 17 (126)
- ----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,995 1,100
- ----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of equipment, net (1,127) (812)
Investment in acquisition (184) (197)
- ----------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,311) (1,009)
- ----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from sale of stock 201 156
Repurchase of common stock (2,702) (180)
- ----------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (2,501) (24)
- ----------------------------------------------------------------------------------------------------------------
Effect of foreign currency translation (20) (90)
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE)
IN CASH AND CASH EQUIVALENTS 163 (23)
Cash and cash equivalents at beginning of period 15,118 24,464
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,281 $24,441
================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
HARDING LAWSON ASSOCIATES GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
November 30, 1998
NOTE 1: BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
without audit by Harding Lawson Associates Group, Inc. (the "Company") in
accordance with generally accepted accounting principles for interim financial
statements and pursuant to the rules of the Securities and Exchange Commission
for Form 10-Q. Certain information and footnotes required by generally accepted
accounting principles for complete financial statements have been omitted. It is
the opinion of management that all adjustments considered necessary for a fair
presentation have been included, and that all such adjustments are of a normal
and recurring nature. For further information, refer to the audited financial
statements and footnotes included in the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1998. Reclassification of certain balances for
the fiscal year ended May 31, 1998 have been made to conform to the November 30,
1998 presentation.
NOTE 2: COMMITMENTS AND CONTINGENCIES
The Company is currently subject to certain claims and lawsuits arising in the
ordinary course of its business. In the opinion of management, adequate
provision has been made for all known liabilities that are currently expected to
result from these claims and lawsuits, and in the aggregate, such claims are not
expected to have a material effect on the financial position of the Company. The
estimates used in establishing these provisions could differ from actual
results. Should these provisions change significantly, the effect on operations
for any quarterly or annual reporting period could be material.
NOTE 3: NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Statement of Financial Accounting Standards No. 131 (SFAS
131), "Disclosures about Segments of an Enterprise and Related Information"
(SFAS 131) was issued and is effective for the year ending May 31, 1999. This
Statement establishes standards for reporting information about operating
segments in annual and interim financial statements. The Company is currently
assessing the impact of SFAS 131 on its financial reporting.
In June 1997, the Statement of Financial Accounting Standards No. 130 (SFAS 130)
"Reporting Comprehensive Income" was issued and is effective for fiscal year
1999. SFAS 130 establishes rules for the reporting of comprehensive income and
its components in financial statements. At present, comprehensive income for the
Company includes net income and translation adjustments on foreign currency.
Comprehensive income for the six months ending November 30 is as follows:
Six Months Ending November 30,
1998 1997
Net income $1,152 $1,811
Foreign currency translation adjustment (20) (90)
------ ------
Comprehensive income $1,132 $1,721
====== ======
<PAGE>
NOTE 4: ACQUISITIONS
On May 8, 1998 the Company acquired all outstanding shares of ABB Environmental
Services, Inc., a consulting and engineering firm, from ABB Services, Inc. Total
consideration of $12.0 million, excluding transaction costs, was paid entirely
in cash. The acquisition was accounted for using the purchase method and
accordingly the purchase price was allocated to the assets and liabilities
acquired based upon their fair market value. The excess of purchase price of the
acquisition over the fair market value of the net assets acquired was recorded
as goodwill. The goodwill will be amortized on a straight-line basis over 20
years.
The net purchase price was allocated as follows (in thousands):
Working capital, net $ 5,604
Equipment 1,114
Other assets 116
Goodwill 5,516
---------
Purchase price, net of cash received $12,350
=======
The following table presents summarized unaudited pro forma operating results
assuming that the Company had acquired ABB Environmental Services, Inc. on June
1, 1997 (in thousands except per share data):
Three months ended Six months ended
November 30,1997 November 30, 1997
Net revenue $30,361 $61,675
Income before income taxes 2,349 4,793
Net income 1,387 2,923
Basic net income per share $0.28 $0.59
Shares used in computing basic
net income per share 4,971 4,929
Diluted net income per share $0.27 $0.58
Shares used in computing diluted
net income per share 5,133 5,031
<PAGE>
HARDING LAWSON ASSOCIATES GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
- ---------------------------------------------------------
The statements in this report that are forward-looking are based on current
expectations, and actual results may differ materially. The forward-looking
statements include those regarding the level of future purchases of fixed
assets, the possible impact of current and future claims against the Company
based upon negligence and other theories of liability, the possibility of the
Company making acquisitions during the next 12 to 18 months and the impact of
becoming year 2000 compliant. Forward-looking statements involve numerous risks
and uncertainties that could cause actual results to differ materially,
including, but not limited to, the possibilities that the demand for the
Company's services may decline as a result of possible changes in general and
industry specific economic conditions and the effects of competitive services
and pricing; one or more current or future claims made against the Company may
result in substantial liabilities; the Company's inability to find and close
acquisitions; and such other risks and uncertainties as are described in reports
and other documents filed by the Company from time to time with the Securities
and Exchange Commission.
Results of Operations
- ---------------------
(In thousands, except share data)
The following table sets forth for the periods indicated, (i) the percentage
that certain items in the condensed consolidated income statements of the
Company bear to net revenues, and (ii) the percentage increase (decrease) in
dollar amount of such items from year to year.
<TABLE>
<CAPTION>
Percentage of Net Revenue Percentage
Three Months Ended Six Months Ended Increase (Decrease)
November 30,November 30, November 30,
Three Months Six Months
1998 1997 1998 1997 1998 vs. 1997 1998 vs. 1997
---- ---- ---- ---- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 100.0% 25.9% 26.8%
Costs and expenses
Payroll and benefits 69.8 65.4 69.1 66.4 34.3 32.0
General expenses 29.8 28.7 27.7 27.6 31.0 27.2
Operating income/margin .4 5.9 3.2 6.0 (90.5) (31.9)
Interest income, net and
interest in loss of uncon-
solidated subsidiaries .4 1.2 .4 1.1 (56.4) (52.1)
Income before income taxes
and minority interest .8 7.1 3.6 7.1 (85.0) (34.9)
Provision for income taxes
and minority interest .3 2.9 1.5 2.9 (85.9) (32.7)
Net income .5 4.2 2.1 4.2 (84.4) (36.4)
</TABLE>
<PAGE>
Second Quarter Comparison for Fiscal Years 1999 and 1998
- --------------------------------------------------------
Net revenue for the fiscal quarter ended November 30, 1998 totaled $26,797, an
increase of 25.9 percent from net revenue of $21,280 for the second quarter of
the prior fiscal year. The increase in net revenue for the quarter ended
November 30, 1998 was attributable to the acquisition of ABB Environmental
Services, Inc. (ABB ES). Net revenue would have been 11.7 percent lower than the
second quarter of the prior year had the acquisition of ABB ES occurred on June
1, 1997. The decline in net revenue for ABB ES for that period was 21.3 percent
compared with the prior year due primarily to the wind down of a large federal
project.
Excluding the acquisition, net revenue was 7.7 percent lower than the same
period in the prior year. This decline reflects an 8 percent increase in net
revenues from domestic industrial sector clients, a 22 percent decrease in net
revenues from international operations and a 20 percent decrease in net revenues
from the public sector. The decrease in net revenue was due to lower demand for
the Company's services, which was partially offset by increased prices. Net
revenue from international operations for the fiscal quarter ended November 30,
1998 was $974 or 4 percent of total net revenue compared to $1,253 or 6 percent
of total net revenue in the same quarter of the prior fiscal year.
A significant portion of the services provided by the Company to its public
sector clients are performed under a relatively small number of larger contracts
compared to private sector clients. Similar to situations that have occurred in
the past few years, some of these public sector contracts will be substantially
completed during fiscal 1999 and 2000. The Company has been awarded certain
contracts that potentially could offset revenue that will be lost under nearly
completed contracts. However, if the Company is unsuccessful in realizing the
full potential of these contracts or winning new contracts, or if funding delays
are experienced on previously awarded federal contracts, a material decline in
revenue could result.
Operating income for the second quarter of fiscal 1999 was $120, a decrease of
90.5 percent from $1,265 for the same period in fiscal 1998. Operating margin
decreased to approximately 1 percent of net revenue in the current quarter
compared with 6 percent in the second quarter of fiscal 1998. Excluding the
operational results from the acquisition, operating income would have decreased
by $2,041 from the prior year resulting in a negative margin of 3.9 percent. The
decrease in operating income resulted from (i) the lower net revenue discussed
above, (ii) charges of approximately $500 for a severance agreement negotiated
with the Company's former Chief Executive Officer and the related search and
recruitment costs for a successor and (iii) a charge of $200 related to the
write-down of excess premise leases.
Net interest income for the second quarter of fiscal 1999 was $106 compared to
net interest income of $243 in the second quarter of the prior year. Net
interest income was lower primarily due to the Company's decreased cash position
that resulted in lower balances of invested cash. The decrease in cash was due
primarily to cash utilized in the acquisition and, to a lesser extent, the
repurchase of more common stock by the Company than in the prior fiscal year.
The effective tax rate was 42.6 percent for the second quarter of fiscal 1999
and was 42.2 percent in the second quarter of the prior year.
Net income for the quarter was $139 compared with $891 in the second quarter of
1998, a decrease of 84.4 percent. Basic earnings per share were $0.03 on 4,835
basic weighted average shares outstanding compared to $0.18 per share on 4,971
basic weighted average shares outstanding in the same period last year. Diluted
earnings per share were $0.03 on 4,854 diluted weighted average shares
outstanding compared to $0.17 per share on 5,133 diluted weighted average shares
outstanding in the same period last year.
Six Month Comparison for Fiscal Years 1999 and 1998
- ---------------------------------------------------
Net revenue for the six months ended November 30, 1998 amounted to $54,478, an
increase of 26.8 percent from net revenue of $42,961 for the six months ended
November 30, 1997. The increase in net revenue was attributable to the
acquisition of ABB ES. Net revenue would have been 13.2 percent lower than net
revenue for the six months of the prior year had the acquisition of ABB ES
occurred on June 1, 1997.
Excluding the acquisition, net revenue was 7.1 percent lower than the same
period in the prior year. Net revenue from the public sector and international
operations declined by 12 percent and 17 percent, respectively, which was offset
by a 10 percent increase in net revenue from domestic industrial sector clients.
Operating income amounted to $1,766, a decrease of 31.9 percent from operating
income of $2,592 for the first six months of the prior year. The operating
margin decreased to 3.2 percent from 6.0 percent a year ago. Operating income
was adversely affected, in particular, by the $500 in costs associated with the
severance agreement and recruitment costs and the $200 related to the write-down
of excess premise leases discussed above.
Net interest income for the six months ended November 30, 1998 was $219, a
decrease of 56.8 percent from net interest income of $507 for the same period of
the prior fiscal year. The decrease was primarily due to a $10.8 million
decrease in the average cash balance compared to the prior year.
The effective tax rate for the six months ended November 30, 1998 was 42.1
percent, and for the six months ended November 30, 1997 was 42.0 percent.
Net income for the six months was $1,152, a 36.4 percent decrease from net
income of $1,811 for the six month period in the prior year. Basic earnings per
share were $0.24 on 4,859 weighted average basic shares outstanding compared to
$0.37 on 4,929 weighted average basic shares outstanding in the first six month
period of the prior year. Diluted earnings per share were $0.23 on 4,920
weighted average diluted shares outstanding compared to $0.36 per share on 5,031
weighted average diluted shares outstanding in the same period last year.
Liquidity and Capital Resources
- -------------------------------
For the six months ended November 30, 1998, net cash provided by operations was
$3,995 compared to $1,100 for the same period last year. The increase in cash
provided by operations was due primarily to focused billing and collection
efforts on a larger revenue base.
The Company made capital expenditures of $1,127 in the first six months of
fiscal 1999 compared to capital expenditures of $1,009 in the first six months
of the prior year. The Company anticipates that its capital expenditures,
excluding acquisitions, for the current fiscal year will be approximately the
same as those incurred in the prior fiscal year. In the first six months of
1999, the Company made a payment of $118 related to an acquisition completed in
fiscal 1994 compared with payments made in the prior period of $197 related to
that acquisition.
At November 30, 1998 the Company had cash on hand and cash equivalents of
$15,281. The Company has a $20 million revolving credit line agreement that
expires in November 2000. At November 30, 1998 and 1997, the Company had no
borrowings outstanding under its line of credit. Borrowings were available to
the Company at an interest rate of 5.6 percent at November 30, 1998, and 5.7
percent at May 31, 1998. The Company is in compliance with all covenants
pertaining to the credit line agreement.
On March 7, 1996 the Board of Directors of the Company approved a Common Stock
Repurchase Program ("1996 Program") that authorized the Company to purchase up
to a maximum of 500,000 shares of stock on the open market for the purpose of
funding the Company's various employee stock programs. The Company repurchased
260,000 shares during the first six months of fiscal 1999 at an average price of
$9.12 compared to 21,300 shares repurchased at an average price of $8.45 during
the first six months of fiscal 1998. There are 4,500 shares which remain
available to be repurchased under the 1996 Program. On September 25, 1998, the
Board authorized management to repurchase up to 500,000 shares over the next
four years.
The Company is a consulting engineering services firm engaged in providing
environmental, infrastructure, geotechnical and construction related services,
and encounters potential liability including claims for errors and omissions
resulting from design or construction defects, construction cost overruns or
environmental or other damage in the normal course of business. The Company is a
party to lawsuits and is aware of potential exposure related to certain claims.
In the opinion of management, adequate provision has been made for all known
liabilities that are currently expected to result from these matters and in the
aggregate such claims are not expected to have a material impact on the
financial position and liquidity of the Company. Currently, the Company is
provided a $10 million per occurrence, $15 million aggregate contractor's
operations and professional services insurance policy through an unrelated,
rated carrier. The Company also maintains a general liability insurance policy
with an unrelated, rated carrier.
The Company believes that its available cash and cash equivalents, as well as
cash generated from operations and its available credit line, will be sufficient
to meet the Company's cash requirements for the balance of the fiscal year. The
Company intends to actively continue its search for acquisitions to expand its
geographical representation and enhance its technical capabilities. The Company
expects to utilize a portion of its liquidity over the next 12 to 18 months for
capital expenditures, including acquisitions and investments in aligned
businesses.
Year 2000 Compliance
- --------------------
Computer systems and software have historically been coded to accept only two
digit entries for the year in the date code. These two digit codes must accept a
four-digit code in order to insure that systems do not confuse the year 2000
with the year 1900 and either shutdown or perform incorrect calculations as a
result of the problem.
The Company has completed several tasks related to the year 2000 compliance
issue and is on schedule to complete the remaining tasks prior to December 31,
1999. Included in the year 2000 program is an inventory of the Company's
hardware and software. The Company expects to complete this inventory and
assessment of the year 2000 problem relative to each piece of hardware and
software by June 30, 1999. During the second quarter of fiscal 1999, the Company
substantially completed the upgrade of its major information technology system
(an accounting and project management system) to be year 2000 compliant. Other
upgrades of equipment and software are currently scheduled as part of normal
business operations. Non-information technology used by the Company (such as
telephone and security systems) is also being assessed for year 2000 compliance
and required upgrades to such hardware and software are being prioritized for
resolution. The assessment and remediation of non-information technology is
scheduled to be completed by December 31, 1999. The Company considers risk in
this area to be minimal. Contingency plans will be developed in regard to year
2000 compliance if the Company determines that compliance is not likely to
occur.
The Company has undertaken an analysis of its vendors and suppliers to determine
potential areas of risk with regard to their failure to achieve year 2000
compliance, and is preparing an assessment document to be sent to the
appropriate vendors to assess the impact of the year 2000 problem as it relates
to third party goods and services. The Company is also inventorying software and
equipment that the Company has supplied under contracts or relationships with
its clients and is in the process of discussing with them possible year 2000
issues. Contingency plans will also be developed as appropriate to deal with any
potential problems that may be identified.
The costs associated with the year 2000 compliance issue have not been material
and generally fall within normally anticipated operating and capital spending.
The Company currently estimates the costs of becoming year 2000 compliant will
not be material to the financial position of the Company. Although the Company
does not currently anticipate the costs of year 2000 compliance to be material,
it cannot ensure year 2000 compliance by third parties. The Company cannot
predict with accuracy at this time the extent to which its vendors and clients
will become compliant. In the event that the Company's vendors and/or clients
fail to become year 2000 compliant, the resulting effects on the Company's
financial position could be adversely affected.
<PAGE>
HARDING LAWSON ASSOCIATES GROUP, INC.
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the Registrant was held on November 4, 1998 and three
proposals were presented to security holders for a vote; election of two
directors, approval of the Non-employee Director Compensation Stock Plan, and
ratification of the appointment of independent auditors.
The six-member Board of Directors is divided into three classes. Each year one
of the classes stands for election to a term of three years. The class standing
for election at the 1998 annual meeting was Class II, consisting of two
incumbent directors: Richard D. Puntillo and James M. Edgar. The terms for Class
I Directors, Retired Rear Admiral Stuart F. Platt and Donald K. Stager, expire
in 2000, and the terms for Class III Directors, Richard S. Harding and Ross A.
Anderson, expire in 1999.
The following table lists the votes cast:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For Withheld
Proposal 1
Election of Directors
Richard D. Puntillo 3,749,812 240,542
James M. Edgar 3,749,939 240,415
For Against Abstain Non-Vote
Proposal 2
1998 Stock Option Plan 2,782,526 400,377 130,133 677,338
Proposal 3
Ratification of Ernst & Young LLP
Independent Auditors 3,966,157 23,023 1,174 0
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following exhibits are furnished along with this
Form 10-Q Quarterly Report for the period ended
November 30, 1998:
Exhibit No. 11 Computation of Net Income Per Share
Exhibit No. 27 Financial Data Schedule
b. Reports on Form 8-K
During the period covered by this Report on Form
10-Q, the Company filed a Current Report on Form 8-K,
dated October 2, 1998, describing changes in
executive officers of the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARDING LAWSON ASSOCIATES GROUP, INC.
Date: January 11, 1999 /s/ Gregory A. Thornton
------------------------ ------------------------------------------
Gregory A. Thornton
President, Chief Executive Officer,
and Chief Financial Officer
(Principal Executive and Accounting Officer)
<PAGE>
HARDING LAWSON ASSOCIATES GROUP, INC.
EXHIBIT INDEX
Exhibit No.
11 Computation of Net Income Per Share
27 Financial Data Schedule
<TABLE>
<CAPTION>
Exhibit No. 11
HARDING LAWSON ASSOCIATES GROUP, INC.
Computation of Net Income Per Share
(In thousands, except per share data)
(Unaudited)
Six Months Ended November 30,
1998 1997
<S> <C> <C>
Weighted average basic shares outstanding 4,859 4,929
Net effect of dilutive stock options
based on the treasury stock method. 61 102
TOTAL 4,920 5,031
===================================================================================================================
Net income $1,152 $1,811
===================================================================================================================
Basic net income per share $0.24 $0.37
===================================================================================================================
Diluted net income per share $0.23 $0.36
===================================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 15281
<SECURITIES> 0
<RECEIVABLES> 43364
<ALLOWANCES> 2327
<INVENTORY> 0
<CURRENT-ASSETS> 60362
<PP&E> 25942
<DEPRECIATION> 20866
<TOTAL-ASSETS> 76634
<CURRENT-LIABILITIES> 25847
<BONDS> 0
0
0
<COMMON> 48
<OTHER-SE> 49228
<TOTAL-LIABILITY-AND-EQUITY> 76634
<SALES> 0
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<EPS-PRIMARY> 0.24
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</TABLE>
