<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 0-18655
EXPONENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0218904
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation)
149 COMMONWEALTH DRIVE, MENLO PARK, CALIFORNIA 94025
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (650) 326-9400
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 5, 2000
Common Stock $.001 par value 6,687,382 shares
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EXPONENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2000 and December 31, 1999
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................. $ - $ -
Accounts receivable, net .................................. 37,294 38,494
Prepaid expenses and other assets ......................... 3,163 2,345
Deferred income taxes ..................................... 1,389 1,389
-------- --------
Total current assets ................................... 41,846 42,228
Property, equipment and leasehold improvements, net ............. 30,758 29,468
Goodwill ........................................................ 7,669 7,851
Deferred income taxes ........................................... 365 365
Other assets .................................................... 527 540
-------- --------
$ 81,165 $ 80,452
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities .................. $ 3,853 $ 4,040
Current installments of long-term obligations ............. 355 415
Accrued payroll and employee benefits ..................... 8,405 11,101
Deferred revenues ......................................... 4,730 -
-------- --------
Total current liabilities .............................. 17,343 15,556
Long-term obligations, net of current installments .............. 779 4,139
Other obligations ............................................... 510 609
-------- --------
Total liabilities ...................................... 18,632 20,304
-------- --------
Stockholders' equity:
Common stock .............................................. 8 8
Additional paid-in capital ................................ 33,434 33,406
Accumulated other comprehensive losses .................... (80) (66)
Retained earnings ......................................... 36,627 34,470
Treasury shares, at cost, 1,178,514 and 1,223,231 shares at
March 31, 2000 and December 31, 1999, respectively ... (7,456) (7,670)
-------- --------
Total stockholders' equity .......................... 62,533 60,148
-------- --------
$ 81,165 $ 80,452
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
EXPONENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters Ended March 31, 2000 and April 2, 1999
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
March 31, 2000 April 2, 1999
-------------- -------------
<S> <C> <C>
Revenues ................................................. $ 26,126 $ 23,815
-------- --------
Operating expenses:
Compensation and related expenses ................... 16,242 15,168
Other operating expenses ............................ 4,003 3,945
General and administrative expenses ................. 2,592 2,274
-------- --------
22,837 21,387
-------- --------
Operating income .................................. 3,289 2,428
Other income (expense) ................................... 369 357
-------- --------
Income from continuing operations
before income taxes ............................. 3,658 2,785
Income taxes ............................................. 1,517 1,154
-------- --------
Income from continuing operations ................. 2,141 1,631
Discontinued operations:
Income (loss) from operation of BCS Wireless, Inc.
(net of taxes of $40 and ($200), respectively) .... 56 (282)
-------- --------
Net income ........................................ $ 2,197 $ 1,349
======== ========
Income per share from continuing operations:
Basic $ 0.32 $ 0.23
Diluted $ 0.30 $ 0.23
Income (loss) per share from discontinued operations:
Basic $ 0.01 $ (0.04)
Diluted $ 0.01 $ (0.04)
Net income per share:
Basic $ 0.33 $ 0.19
Diluted $ 0.31 $ 0.19
Shares used in per share computations:
Basic 6,681 7,076
Diluted 7,075 7,176
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
EXPONENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Quarters Ended March 31, 2000 and April 2, 1999
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31, 2000 April 2, 1999
-------------- -------------
<S> <C> <C>
Net income ..................................... $ 2,197 $ 1,349
Other comprehensive loss - foreign currency
translation adjustments .................... (14) (26)
------- -------
Comprehensive income ........................... $ 2,183 $ 1,323
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
EXPONENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters Ended March 31, 2000 and April 2, 1999
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
March 31, 2000 April 2, 1999
--------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income ...................................................... $ 2,197 $ 1,349
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ............................ 1,097 1,103
Provision for doubtful accounts .......................... 766 522
Changes in operating assets and liabilities:
Accounts receivable .................................. 255 (3,693)
Prepaid expenses and other assets .................... (756) 560
Accounts payable and accrued liabilities ............. (1,456) (9)
Accrued payroll and employee benefits ................ (2,691) (1,334)
Deferred revenues .................................... 4,730 -
Income taxes payable ................................. 1,468 360
Other obligations .................................... (128) (97)
Net operating activities of discontinued operations .. (86) 256
-------- --------
Net cash provided by (used in) operating activities 5,396 (983)
-------- --------
Cash flows from investing activities:
Capital expenditures ............................................ (2,128) (890)
Other assets .................................................... 5 (122)
Net investing activities of discontinued operations ............. (41) (12)
-------- --------
Net cash used in investing activities ............. (2,164) (1,024)
-------- --------
Cash flows from financing activities:
Proceeds from borrowings and issuance of
long-term obligations ....................................... 458 17,928
Repayments of borrowings and long-term obligations .............. (3,895) (20,384)
Repurchase of common stock ...................................... (178) (1,764)
Issuance of common stock ........................................ 368 145
Net financing activities of discontinued operations ............. 15 -
-------- --------
Net cash used in financing activities ............. (3,232) (4,075)
-------- --------
Net decrease in cash and cash equivalents .............................. - (6,082)
Cash and cash equivalents at beginning of period ....................... - 6,082
-------- --------
Cash and cash equivalents at end of period ............................. $ - $ -
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
EXPONENT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Quarters Ended
March 31, 2000 and April 2, 1999
Note 1: Summary of Significant Accounting Policies
Basis of Presentation:
Exponent, Inc., together with its subsidiaries (referred to as the
"Company"), is a multidisciplinary organization of scientists, physicians,
engineers and business consultants performing in-depth scientific research and
analysis in over 50 technical disciplines. The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, Exponent Failure Analysis Associates, Inc. ("FaAA"), Exponent
Health Group, Inc. ("EHG"), Exponent Environmental Group, Inc. ("EEG") and BCS
Wireless, Inc. ("BCS") whose results of operations have been accounted for as a
discontinued operation for the quarters ending March 31, 2000 and April 2, 1999.
The Company operates on a 52-53 week fiscal calendar year ending on the Friday
closest to the last day of December.
The accompanying condensed, consolidated financial statements are prepared
in accordance with generally accepted accounting principles and include the
accounts of Exponent, Inc. and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. In the opinion
of management, all adjustments which are necessary for the fair presentation of
the condensed consolidated financial statements have been included and all such
adjustments are of a normal and recurring nature. The operating results for the
fiscal quarters ended March 31, 2000 and April 2, 1999, are not necessarily
representative of the results of future quarterly or annual periods.
Note 2: Discontinued Operations
Effective April 2, 1999 the Company committed to a formal plan to divest
its wholly owned subsidiary, BCS Wireless, Inc. ("BCS"). Accordingly, the
results of operations for BCS for the quarters ending March 31, 2000 and April
2, 1999 have been recorded as a discontinued operation in the condensed
consolidated statements of income. The balance sheet of BCS as of March 31, 2000
includes approximately $2.6 million in accounts receivable and other assets,
$682,000 in capital equipment, $2.9 million in an intercompany payable to the
Company and $388,000 in accounts payable and accrued liabilities associated with
BCS. The decision to divest BCS was made because the Company's management
believed the subsidiary was no longer a strategic fit for the Company.
On May 2, 2000, the Company sold certain assets of BCS for $2.0 million in
cash and the assumption of approximately $740,000 in liabilities. The Company
will retain approximately $400,000 in cash and $1.6 million in net accounts
receivables of BCS. The Company expects to record a gain on the sale of BCS, the
exact amount of which is contingent upon the collection of the outstanding
receivables.
Note 3: Net Income Per Share
Basic per share amounts are computed using the weighted average number of
common shares outstanding during the period. Dilutive per share amounts are
computed using the weighted-average number of common shares and potentially
dilutive securities, using the treasury stock method, even when antidilutive, if
their effect would be dilutive on the per share amount of income from continuing
operations.
6
<PAGE>
The following schedule reconciles both the numerator and denominator of the
Company's calculation for basic and diluted net income per share:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
(In thousands) March 31, 2000 April 2, 1999
-------------- -------------
<S> <C> <C>
Shares used in basic per share computation 6,681 7,076
Effect of dilutive common stock options outstanding 394 100
----- -----
Shares used in diluted per share computation 7,075 7,176
===== =====
</TABLE>
Common stock options to purchase 185,851 and 959,982 shares were excluded from
the diluted per share calculation for the fiscal quarters ended March 31, 2000
and April 2, 1999, respectively, due to their antidilutive effect.
Note 5: Supplemental Cash Flow Information
The following is supplemental disclosure of cash flow information:
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
(In thousands) March 31, 2000 April 2, 1999
-------------- -------------
<S> <C> <C>
Cash paid during period:
Interest $ 93 $149
Income taxes $142 $444
</TABLE>
7
<PAGE>
Note 6: Segment Reporting
The Company is a multidisciplinary organization of scientists, physicians,
engineers and business consultants performing in-depth scientific research and
analysis in a number of technical disciplines. The Company has two operating
segments based on two primary areas of service. One operating segment provides
services in the area of environmental and health risk analysis. This operating
segment provides a wide range of consulting services relating to environmental
and occupational hazards and risks and the impact on both human health and the
environment. The Company's other operating segment is a broader service group
providing scientific and engineering consulting in different practices and
primarily in the area of impending litigation.
Segment information for the quarters ended March 31, 2000 and April 2, 1999
follows:
Revenues
<TABLE>
<CAPTION>
(In thousands) March 31, 2000 April 2, 1999
-------------- -------------
<S> <C> <C>
Environmental and health $ 5,467 $ 4,997
Other scientific and engineering 20,659 18,818
------- -------
Total revenues $26,126 $23,815
======= =======
</TABLE>
Operating income (loss)
<TABLE>
<CAPTION>
(In thousands) March 31, 2000 April 2, 1999
-------------- -------------
<S> <C> <C>
Environmental and health $ 1,006 $ 678
Other scientific and engineering 5,896 5,313
------- -------
Total segment operating income 6,902 5,991
Corporate operating loss (3,613) (3,563)
------- -------
Total operating income $ 3,289 $ 2,428
======= =======
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
This Report contains, and incorporates by reference, certain
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995 and the rules promulgated pursuant to the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended) that are based on the beliefs of the Company's management, as well as
assumptions made by and information currently available to the Company's
management. Such forward-looking statements are subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. When used in
this document and in the documents incorporated herein by reference, the words
"anticipate," "believe," "estimate," "expect" and similar expressions, as they
relate to the Company or its management, are intended to identify such
forward-looking statements. Such statements reflect the current views of the
Company or its management with respect to future events and are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
the Company's actual results, performance, or achievements could differ
materially from those expressed in, or implied by, any such forward-looking
statements. Factors that could cause or contribute to such material differences
include those discussed elsewhere in this Report and in the documents
incorporated herein by reference. The inclusion of such forward-looking
information should not be regarded as a representation by the Company or any
other person that the future events, plans, or expectations contemplated by the
Company will be achieved. The Company undertakes no obligation to release
publicly any updates or revisions to any such forward-looking statements that
may reflect events or circumstances occurring after the date of this Report.
General
The Company derives a majority of its revenues from professional service
activities. Revenues from professional services are principally derived under
"time and expenses" and "fixed-fee" billing arrangements, and are recorded as
work is performed. Professional fees are a function of the total number of hours
billed to clients and the associated hourly billing rates or fixed-fee
arrangement with the client. The Company also derives revenue from net billed
expenses and equipment fees, which consist primarily of fees charged to clients
for use of the Company's equipment and facilities in connection with services
provided. The Company's principal expenses are professional compensation and
related expenses.
Results of Operations
The following discussion should be read in conjunction with the attached
unaudited, condensed, consolidated financial statements and notes thereto and
with the Company's audited consolidated financial statements and notes thereto
for the fiscal year ended December 31, 1999, which is contained in the Company's
fiscal 1999 Annual Report on Form 10-K.
2000 Fiscal Quarter Ended March 31, 2000 Compared to 1999 Fiscal Quarter Ended
April 2, 1999
Revenues for the first quarter of fiscal 2000 were $26.1 million compared
to $23.8 million for the same quarter in fiscal 1999, an increase of 9.7%. This
increase was the result of growth in both the environmental and health, and
other scientific and engineering segments during the quarter. Increases in
billable hours and billing rates as well as revenues from several fixed-price
projects, including the Land Warrior project, contributed to the revenue growth
for the quarter.
Compensation and related expenses increased 7.1% to $16.2 million for the
first quarter of fiscal 2000 compared to $15.2 million for the same period in
fiscal 1999. This increase is associated with additions in staff as well as
annual salary increases. In addition, bonus expense, which is a function of
profitability, increased in the first three months of fiscal 2000 as compared to
the same period of fiscal
9
<PAGE>
1999. As a percentage of revenue, total compensation decreased to 62.2% for the
first quarter of fiscal 2000 from 63.7% for the same quarter in fiscal 1999.
Other operating expenses increased by 1.5% to $4.0 million for the first
quarter of fiscal 2000 compared to $3.9 million for the same quarter in fiscal
1999. The increase was largely due to increased occupancy expenses, partially
offset by decreases in computer supplies. The growth in occupancy expenses is
primarily the result of the addition of two new regional offices in California
during the second half of fiscal 1999 and a new lease agreement for the
Company's Seattle area office, which took effect in May 1999. Other operating
expenses decreased to 15.3% of total revenue for the first quarter of fiscal
2000 compared to 16.6% of revenue for the first quarter of fiscal 1999.
General and administrative expenses were $2.6 million for the first quarter
of fiscal 2000 compared to $2.3 million for the same period in fiscal 1999, an
increase of 14.0%. This increase was largely attributable to an increase in the
provision for doubtful accounts, as well as increased travel expenses. These
increases were partially offset by decreases in legal expenses and bank fees.
General and administrative expenses as a percentage of revenue increased
slightly to 9.9% of total revenues for the first quarter of fiscal 2000 compared
to 9.5% for the first quarter of fiscal 1999.
Other income consists primarily of rental income from leasing excess space
in the Company's headquarters building located in Menlo Park, California less
interest expense on the Company's mortgage. Other income for the first quarter
of fiscal 2000 increased by $12,000 or 3.4% over the same quarter of fiscal
1999. This increase is primarily due to a decrease in interest expense of
approximately $200,000 associated with lower mortgage interest in the first
quarter of fiscal 2000. This decrease in interest expense, which was due to
reduced borrowings on the company's revolving reducing note, was partially
offset by a decrease in interest income and a reduction in rental income. The
decrease in interest income is a result of excess cash being used to pay down
the Company's revolving reducing note. Rental income decreased by $143,000 in
the first three months of fiscal 2000 compared to the same period in fiscal 1999
due to the sale of one of the Company's excess facilities in May 1999.
Liquidity and Capital Resources
2000 Fiscal Quarter Ended March 31, 2000 Compared to 1999 Fiscal Quarter Ended
April 2, 1999
The Company's cash management policy is to use all excess operating cash to
pay down the mortgage on the Company's headquarters building. As a result, the
Company had no cash or cash equivalents as of March 31, 2000. The balance on the
Company's mortgage, however, was reduced to $315,000 as of March 31, 2000
compared to the $13.9 million balance as of April 2, 1999. The Company financed
its business for the current period principally through operating cash.
Net cash provided by operating activities was $5.4 million in the first
three months of fiscal 2000 compared to $983,000 used in operating activities
for the comparable period of fiscal 1999. This increase in cash provided by
operating activities was primarily attributable to increased net income,
decreases in accounts receivable, increases in income taxes payable and cash
provided from deferred revenues. These increases were partially offset by
decreases in accounts payable and accrued payroll and employee benefits.
The Company used $2.2 million of cash for investing activities during the
first quarter of fiscal 2000 compared to $1.0 million of cash used in investing
activities during the first quarter of fiscal 1999. This increase in cash used
was primarily a result of increased capital expenditures related to the
construction of an engineering and test preparation building at the Company's
Test and Engineering Center in Phoenix.
Net cash used for financing activities was $3.2 million for the first
quarter of fiscal 2000 compared to $4.1 million for the same quarter of fiscal
1999. This decrease in cash used in financing
10
<PAGE>
activities is due to a reduction in the amount of shares of Company common stock
repurchased during the period. The Company purchased $178,000 in shares during
the first quarter of fiscal 2000 as compared to $1.8 million purchased during
the same period of 1999. This decrease in shares purchased was partially offset
by an increase in the use of excess cash to repay outstanding debt.
The Company's long-term obligations at March 31, 2000 consisted primarily
of the obligation on the $30.0 million revolving mortgage note of $315,000 and
the long-term portion of an insurance financing agreement in the amount of
$372,000.
Management believes that its revolving note, together with funds generated
from operations, will provide adequate cash to fund the Company's anticipated
cash needs through at least the next twelve-month period.
11
<PAGE>
FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK
Exponent operates in a rapidly changing environment that involves a number
of uncertainties, some of which are beyond the Company's control. These
uncertainties include, but are not limited to, those mentioned elsewhere in this
report, and the following:
Attraction and Retention of Key Employees
The Company's business involves the delivery of professional services and
is labor-intensive. The Company's success depends in large part upon its ability
to attract, retain and motivate highly qualified technical and managerial
personnel. Qualified personnel are in great demand and are likely to remain a
limited resource for the foreseeable future. There can be no assurance that the
Company can continue to attract sufficient numbers of highly qualified technical
and managerial personnel and to retain existing employees. The loss of a
significant number of the Company's employees could have a material adverse
impact on the Company, including its ability to secure and complete engagements.
Absence of Backlog
Revenues are primarily derived from services provided in response to client
request or events that occur without notice, and engagements, generally billed
on a "time and expenses" basis, are terminable at any time by clients. As a
result, backlog at any particular time is small in relation to its quarterly
revenues and is not a reliable indicator of revenues for any future periods.
Revenues and operating margins for any particular quarter are generally affected
by staffing mix, resource requirements and timing and size of engagements.
Competition
The markets for the Company's services are highly competitive. In addition,
there are relatively low barriers to entry into the Company's markets and the
Company has faced, and expects to continue to face, additional competition from
new entrants into its markets. Competitive pressure could reduce the market
acceptance of the Company's services and result in price reductions that could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Other Income
The Company currently subleases excess facilities, primarily in its Menlo
Park, California headquarters, that have lease terms that expire within the 2000
to 2003 time period. In the first quarters of fiscal 2000 and 1999,
miscellaneous rental income associated with these facilities amounted to
approximately 8.6% and 16.4%, respectively, of income from continuing operations
before income taxes. The sale of one of these excess facilities in May 1999
reduced the amount of future rental income, however much of the impact of this
reduction was offset by corresponding reductions in facility operating costs,
depreciation and interest expense. Should the remaining subleases not be
extended, renewed or have their term options exercised, the loss of additional
miscellaneous rental income could have a material adverse effect on the
Company's operating results.
Regulation
Public concern over health, safety and preservation of the environment has
resulted in the enactment of a broad range of environmental laws and regulations
by local, state and federal lawmakers and agencies. These laws and the
implementing regulations affect nearly every industry, as well as the agencies
of federal, state and local governments charged with their enforcement. To the
extent changes in such laws, regulations and enforcement or other factors
significantly reduce the exposures of
12
<PAGE>
manufacturers, owners, service providers and others to liability, the demand for
environmental services may be significantly reduced.
Variability of Quarterly Financial Results
Variations in the Company's revenues and operating results occur from time
to time as a result of a number of factors, such as the significance of client
engagements commenced and completed during a quarter, the number of working days
in a quarter, employee hiring and utilization rates, and integration of
companies acquired. Because a high percentage of the Company's expenses,
particularly personnel and facilities related, are relatively fixed in advance
of any particular quarter, a variation in the timing of the initiation or the
completion of client assignments, at or near the end of any quarter, can cause
significant variations in operating results from quarter to quarter.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to some interest rate risk associated with the
Company's long-term debt obligation on the Company's headquarters building.
Effective February 1, 1999, the Company refinanced its headquarters building
under a new financing agreement. The new mortgage note consists of a revolving
reducing note, secured by the Company's headquarters building, with a borrowing
amount up to $30.0 million. The $30.0 million revolving reducing note is subject
to automatic annual reductions in the amount available to be borrowed of
approximately $1.3 million to $2.1 million per year until January 31, 2008. As
of December 31, 1999, $26.4 million was available to be borrowed. Any
outstanding amounts on the revolving reducing note are due and payable in full
on January 31, 2009. The Company may from time to time during the term of the
note borrow, partially or wholly repay its outstanding borrowings and re-borrow
up to the maximum principal amounts, subject to the reductions in availability
contained in the note. The note is also subject to two interest rate options of
either prime less 1.5% or the fixed LIBOR plus 1.25% with a term option of one
month, two months, three months, six months, nine months, or twelve months.
Interest will be paid on a monthly basis. Principal amounts subject to the prime
interest rate may be repaid at any time without penalty. Principal amounts
subject to the fixed LIBOR rate may also be repaid at any time but are subject
to a prepayment penalty if paid before the fixed rate term or additional
interest if paid after the fixed rate term.
In February of 1999, the Company also entered into a line of credit
agreement with a borrowing amount up to $5.0 million. The $5.0 million line of
credit is subject to two interest rate options of either the prime rate in
effect from time to time, or a fixed rate determined by the lender to be 2.75%
above LIBOR, with a term option of one month, two months, three months, six
months, nine months or twelve months. The line of credit agreement expired on
February 15, 2000. The Company did not renew the line of credit portion of its
financing agreement.
The Company's general policy for selecting among the interest rate options
and related terms will be to minimize interest expense. However, given the risk
of interest rate fluctuations, the Company cannot be certain that the lowest
rate option will always be obtained, therefore, consistently minimizing the
Company's interest expense. No sensitivity analysis was performed on the
Company's exposure to interest rate fluctuations, however, given the historical
low volatility of both the prime and LIBOR interest rates, the Company believes
any exposure would be minimal.
13
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended March 31, 2000.
14
<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.
EXPONENT, INC.
(Registrant)
Date: May 12, 2000 /s/ Richard L. Schlenker
------------------------------------------------
Richard L. Schlenker, Chief Financial Officer
15
<PAGE>
Index to Exhibits
Exhibit
Number Description
- ------ -----------
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY
REPORT ON 10Q FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 39,073
<ALLOWANCES> 1,779
<INVENTORY> 0
<CURRENT-ASSETS> 41,846
<PP&E> 64,372
<DEPRECIATION> 33,614
<TOTAL-ASSETS> 81,165
<CURRENT-LIABILITIES> 17,343
<BONDS> 779
0
0
<COMMON> 8
<OTHER-SE> 62,525
<TOTAL-LIABILITY-AND-EQUITY> 81,165
<SALES> 0
<TOTAL-REVENUES> 26,126
<CGS> 0
<TOTAL-COSTS> 16,242
<OTHER-EXPENSES> 6,595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> 3,658
<INCOME-TAX> 1,517
<INCOME-CONTINUING> 2,141
<DISCONTINUED> 56
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,197
<EPS-BASIC> .33
<EPS-DILUTED> .31
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM QUARTERLY REPORT ON
10-Q FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-02-1999
<PERIOD-END> APR-02-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 37,156
<ALLOWANCES> 1,019
<INVENTORY> 0
<CURRENT-ASSETS> 41,078
<PP&E> 65,124
<DEPRECIATION> 32,981
<TOTAL-ASSETS> 82,875
<CURRENT-LIABILITIES> 12,609
<BONDS> 12,221
0
0
<COMMON> 8
<OTHER-SE> 58,037
<TOTAL-LIABILITY-AND-EQUITY> 82,875
<SALES> 0
<TOTAL-REVENUES> 23,815
<CGS> 0
<TOTAL-COSTS> 15,168
<OTHER-EXPENSES> 6,219
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 245
<INCOME-PRETAX> 2,785
<INCOME-TAX> 1,154
<INCOME-CONTINUING> 1,631
<DISCONTINUED> (282)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,349
<EPS-BASIC> .19
<EPS-DILUTED> .19
</TABLE>
