<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q/A
---------
Quarterly Report Under Section 13 or 15(d)
------------------------------------------
of the Securities Exchange Act of 1934
--------------------------------------
For the Quarterly Period Ended May 31, 1995 Commission File No. O-13965
------------ -------
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
---------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 04-3051642
-------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
320 Needham Street, Newton Upper Falls, Massachusetts 02164
--------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 969-0700
--------------
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
------- -------
Number of Shares of Common Stock
outstanding at June 30, 1995 3,838,842
----------------------
<PAGE> 2
<TABLE>
INDEX
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
<CAPTION>
Page
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets -
May 31, 1995 and February 28, 1995 3
Consolidated Statements of Operations -
Three Months Ended May 31, 1995 and 1994 4
Consolidated Statements of Cash Flows -
Three Months Ended May 31, 1995 and 1994 5
Notes to Consolidated Financial Statements -
May 31, 1995 6-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings 9
Item 4 Submission of Matters to a Vote of
Security Holders 9-10
Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 11
</TABLE>
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
CONSOLIDATED BALANCE SHEETS
May 31, 1995 February 28, 1995
------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,927,000 $ 3,021,000
Restricted cash 1,900,000 1,900,000
Available-for-sale securities 1,783,000 2,033,000
Accounts receivable, net 16,373,000 15,572,000
Due from affiliate 687,000 687,000
Costs and estimated earnings in excess of billings on
uncompleted contracts 5,099,000 5,123,000
Prepaid expenses and other current assets 1,241,000 1,191,000
Refundable income taxes 77,000 493,000
Deferred income taxes 800,000 800,000
------------ ------------
Total current assets 30,887,000 30,820,000
Property and equipment, net 5,783,000 5,938,000
Other assets, net 2,236,000 2,121,000
Due from affiliate 232,000 232,000
------------ ------------
Total assets $ 39,138,000 $ 39,111,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 3,914,000 $ 1,869,000
Current portion of long-term debt 835,000 835,000
Accounts payable and accrued expenses 5,301,000 6,086,000
Accrued payroll and employee benefits 4,197,000 5,448,000
------------ ------------
Total current liabilities 14,247,000 14,238,000
------------ ------------
Long-term debt 2,523,000 2,730,000
Deferred income taxes 458,000 458,000
Stockholders' equity:
Preferred stock - $.01 par value:
Authorized shares 1,000,000
Issued and outstanding - none -- --
Common stock - $.01 par value
Authorized shares 14,000,000
Issued and outstanding 3,838,842 at
May 31, 1995 and 3,824,544 at
February 28, 1995 38,000 38,000
Capital in excess of par value 13,902,000 13,866,000
Unrealized losses on available-for-sale securities (15,000) (14,000)
Retained earnings 7,985,000 7,795,000
------------ ------------
Total stockholders' equity 21,910,000 21,685,000
------------ ------------
Total liabilities and stockholders' equity $ 39,138,000 $ 39,111,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
<TABLE>
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended May 31,
--------------------------
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues $ 16,275,000 $ 13,589,000
Reimbursable expenses 6,198,000 3,428,000
------------------ -----------------
Net revenues 10,077,000 10,161,000
Costs and expenses:
Salaries and related costs 7,570,000 7,354,000
General and administrative
expenses 2,140,000 2,150,000
------------------ -----------------
Income from continuing operations 367,000 657,000
------------------ -----------------
Interest and other income (expense), net:
Interest income 32,000 33,000
Other income (expense) 3,000 17,000
Interest expense (86,000) (55,000)
------------------ ----------------
(51,000) (5,000)
------------------ ----------------
Income from continuing operations before
provision for income taxes 316,000 652,000
Provision for income taxes 126,000 270,000
------------------ -----------------
Net income from continuing operations 190,000 382,000
Discontinued operations (Note 4):
Loss from discontinued operations,
net of income tax benefit -- (110,000)
------------------ -----------------
Net income $ 190,000 $ 272,000
================== =================
Net income per share from continuing
operations $ .05 $ .10
================== =================
Net loss per share from discontinued
operations $ -- $ (.03)
================== =================
Net income per share $ .05 $ .07
================== =================
Weighted average common and common
equivalent shares outstanding 3,839,000 3,797,000
================== =================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
<TABLE>
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended May 31,
--------------------------
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $ 190,000 $ 382,000
Adjustments to reconcile net income to net cash used
by operating activities:
Discontinued operations -- (110,000)
Depreciation and amortization 312,000 339,000
Gain on disposal of equipment (3,000) (17,000)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (801,000) 564,000
Decrease (increase) in costs and estimated earnings
in excess of billings on uncompleted contracts 24,000 (1,007,000)
(Increase) decrease in prepaid expenses (50,000) 174,000
Decrease in refundable income taxes 416,000 --
Decrease in accounts payable and accrued expenses (785,000) (911,000)
Decrease in accrued payroll and employee benefits (1,251,000) (1,051,000)
Decrease in income taxes payable -- (305,000)
----------- -----------
Net cash used by operating activities (1,948,000) (1,942,000)
----------- -----------
Cash flows from investing activities:
Decrease in available-for-sale securities 249,000 281,000
Proceeds from disposal of equipment 3,000 19,000
Acquisition of property and equipment (143,000) (236,000)
(Increase) decrease in other assets (129,000) 209,000
----------- -----------
Net cash (used) provided by investing activities (20,000) 273,000
----------- -----------
Cash flows from financing activities:
Net borrowings under notes payable 2,045,000 1,576,000
Repayment of long-term debt (207,000) (226,000)
Issuance of common stock 36,000 47,000
----------- -----------
Net cash provided by financing activities 1,874,000 1,397,000
----------- -----------
Net decrease in cash and cash equivalents (94,000) (272,000)
Cash and cash equivalents at beginning of year 3,021,000 1,948,000
----------- -----------
Cash and cash equivalents at end of period $ 2,927,000 $ 1,676,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995
NOTE 1 -
- --------
BASIS OF PRESENTATION
---------------------
The accompanying consolidated financial statements have been prepared
without audit by GZA GeoEnvironmental Technologies, Inc. and Affiliate
(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 the accompanying consolidated financial
statements reflect all adjustments (which are normal and recurring)
considered necessary for a fair presentation. For further information
refer to the audited financial statements and footnotes included in
the Company's Annual Report to Stockholders for the year ended
February 28, 1995, as filed with the Securities and Exchange
Commission on June 12, 1995. Operating results for the three month
period ended May 31, 1995 are not necessarily indicative of the
results that may be expected for succeeding periods or for the year
ending February 29, 1996.
NOTE 2 -
- --------
LONG-TERM CONTRACTS
- -------------------
The Company has entered into several long-term private and
government-funded contracts. These contracts are subject to certain
risks regarding ultimate contract values. Management believes that
final negotiation of such contract values, individually and in the
aggregate, will not have a material impact on the financial condition
of the Company.
NOTE 3 -
- --------
AVAILABLE-FOR-SALE SECURITIES
- -----------------------------
On March 1, 1994, the Company adopted SFAS 115. The effect on the
Company's financial statements of adoption of SFAS No. 115 was
immaterial. Net unrealized losses on available-for-sale securities at
May 31, 1995 were approximately $15,000. The maturities of
available-for-sale securities held at May 31, 1995 are $393,000 within
one year and $1,390,000 from one to five years. Certain of these
available-for-sale securities have maturities in excess of one year
and are classified as current assets consistent with their use. Gross
realized gains and losses were immaterial to the Company's operating
results.
6
<PAGE> 7
NOTE 4 -
- --------
DISCONTINUED OPERATIONS
- -----------------------
As reported in the Company's Form 10-K for the fiscal year ended
February 28, 1995, the Company abandoned its specialty construction
business on May 18, 1995 and reported the results of that business as
discontinued operations for the year ended February 28, 1995. The
Company's prior years' operating results, including the results for
the three-month period ended May 31, 1994 reported in this Form 10-Q,
have been restated to reflect continuing operations.
NOTE 5 -
- --------
CONTINGENCIES
- -------------
In May 1995, the Company's subsidiary GZA GeoEnvironmental settled a
lawsuit pending against it by a group of corporations who had
contracted with GZA for professional services. The Company had
estimated its likely range of exposure, if the plaintiffs ultimately
prevailed, at $600,000 to $1,690,000 and had accrued $1,000,000 in its
financial statements for this lawsuit. The Company's net payment in
settlement, after taking into account contributions and credits from
its insurer and subcontractor, will be approximately $925,000. As a
result of the settlement, funds in the amount of $1,690,000 currently
held in a restricted bank account pursuant to a trustee process action
will be released. The Company concurrently settled a related lawsuit
with its insurer regarding the insurer's obligation to defend and
indemnify the Company.
In May 1995, GZA GeoEnvironmental also settled a pending
lawsuit that had been brought against it by Dr. Anil Kumar, for whom
it had performed professional services. In April 1994, GZA was
awarded a jury verdict in its favor, including $11,800 on its
counterclaim, and the Court subsequently awarded GZA an additional
$275,862 in defense costs, all of which decisions were appealed by Dr.
Kumar. The recent settlement required Dr. Kumar to pay GZA $175,000,
which amount, less legal fees due thereon, was received by GZA on June
21, 1995.
In addition, the Company is a party to several other legal
actions arising in the normal course of business. Management believes
that the outcomes of the legal actions to which it is a party will
not, in the aggregate, have a material adverse effect on the financial
condition of the Company.
The Company's services involve risks of significant liability
for environmental and property damage, personal injury, economic loss,
and costs assessed by regulatory agencies. Claims may potentially be
asserted against the Company under federal and state statutes, common
law, contractual indemnification agreements or otherwise.
7
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------- CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Three Month Comparison for Fiscal Years 1996 and 1995
-----------------------------------------------------
NET REVENUES. The Company's net revenues for the three months ended
May 31, 1995 decreased by approximately $84,000 (0.8%) compared to the
corresponding period in the prior fiscal year. The decrease is
attributable primarily to decreases in the volume of the Company's
engineering consulting business which were offset, in part, by
increases in the volume of the Company's remediation services.
SALARIES AND RELATED COSTS. Salaries and related costs for the three
months ended May 31, 1995 increased by approximately $216,000 (2.9%)
compared to the corresponding period in the prior fiscal year. The
increase reflects primarily increases in compensation rates, health
insurance costs and profit sharing expenses, which were offset, in
part, by a reduction in incentive compensation expense.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the three months ended May 31, 1995 decreased by
approximately $10,000 (0.5%) compared to the corresponding period in
the prior fiscal year. The decrease primarily reflects the receipt of
the funds related to the settlement, in the Company's favor, of the
lawsuit discussed in Note 5, which was offset, in part, by lower
recoveries of expenses on jobs performed during the three months
ended May 31, 1995.
Liquidity and Capital Resources
- -------------------------------
For the three month period ended May 31, 1995, $1,948,000 of net cash
was used by operations, whereas for the three month period ended May
31, 1994, $1,942,000 of net cash was used by operations. The Company
made capital expenditures of approximately $143,000 and $236,000 for
the first three months of fiscal 1996 and 1995, respectively.
The Company's working capital increased from $16,582,000 at
February 28, 1995 to $16,640,000 at May 31, 1995.
At May 31, 1995, the Company had on hand cash and cash equivalents of
$2,927,000, of which approximately $447,000 were invested primarily in
federally tax-exempt bonds. Short-term investments, also invested in
federally tax-exempt bonds, were $1,783,000 at May 31, 1995. The
Company believes that its cash and cash equivalents on hand and cash
generated from operations will be sufficient to meet its cash
requirements for at least the next twelve months.
8
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
- ---------------------------
In May 1995 the Company's subsidiary GZA GeoEnvironmental settled a
lawsuit pending against it by a group of corporations that had
contracted with GZA for professional services. The Company had
estimated its likely range of exposure, if the plaintiffs ultimately
prevailed, at $600,000 to $1,690,000. The Company's net payment in
settlement, after taking into account contributions and credits from
its insurer and subcontractor, will be approximately $925,000. As a
result of the settlement, funds in the amount of $1,690,000 currently
held in a restricted bank account pursuant to a trustee process action
will be released. The Company concurrently settled a related lawsuit
with its insurer regarding the insurer's obligation to defend and
indemnify the Company.
In May 1995 GZA GeoEnvironmental also settled a pending lawsuit that
had been brought against it by Dr. Anil Kumar, for whom it had
performed professional services. In April 1994 GZA was awarded a jury
verdict in its favor, including $11,800 on its counterclaim, and the
Court subsequently awarded GZA an additional $275,862 in defense
costs, all of which decisions were appealed by Dr. Kumar. The recent
settlement required Dr. Kumar to pay GZA $175,000, which amount, less
legal fees due thereon, was received by GZA on June 21, 1995.
The Company is party to several other legal proceedings arising in the
normal course of business. Management believes that the outcome of
these actions will not, individually or in the aggregate, have a
material adverse effect on the financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company held a special meeting in lieu of annual meeting of stockholders
(the "Annual Meeting") on July 11, 1995. At the Annual Meeting, Donald T.
Goldberg, Thomas W. Philbin and Irvine G. Reinig II were elected to three-year
terms as Class I directors of the Company. Following the Annual Meeting, M.
Joseph Celi, Lawrence Feldman, Lewis Mandell and Leonard M. Seale continued in
office as Class II directors and Timothy W. Devitt, Paul F. Gorman and Michael
A. Powers continued in office as Class III directors of the Company.
The Company's Class I, Class II and Class III directors will serve until the
annual meetings of stockholders of the Company in 1998, 1997, and 1996,
respectively, and thereafter until successors are elected and have qualified.
9
<PAGE> 10
The number of votes cast in favor of and withheld from each nominee for
election as a director at the Annual Meeting were as follows:
Nominee Votes For Votes Withheld
- ------- --------- --------------
D. T. Goldberg 2,347,739 533,247
I. G. Reinig 2,751,214 129,772
T. W. Philbin 2,830,472 50,508
At the Annual Meeting, the stockholders of the Company also approved the
Company's 1995 Stock Incentive Plan, approved the amendment of the Company's
1992 Employee Stock Purchase Plan to increase the number of shares reserved for
issuance thereunder by 100,000, and ratified the appointment of Coopers &
Lybrand as the Company's independent public accountants for the fiscal year
ending February 29, 1996. The number of votes cast for and against and
abstaining from voting on each such proposal were as follows:
Proposal Votes For Votes Against Abstaining
- -------- --------- ------------- ----------
Approval of 1995 Stock
Incentive Plan 1,480,063 716,862 23,154
Amendment of 1992
Employee Stock
Purchase Plan 1,670,926 524,311 24,842
Ratification of
Independent Public
Accountants 2,754,589 52,068 77,029
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
None
(b) Reports on Form 8-K
The Company did not file any report on Form 8-K during the
three month period ended May 31, 1995.
10
<PAGE> 11
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.
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
---------------------------------------
Date: July 14, 1995 /s/ JOSEPH P. HEHIR
----------------------------------------
JOSEPH P. HEHIR, Chief Financial Officer
and Treasurer (Chief Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF GZA GEOENVIRONMENTAL
TECHNOLOGIES, INC. FOR THE THREE MONTHS ENDED MAY 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> MAY-31-1995
<EXCHANGE-RATE> 1
<CASH> 2,927,000
<SECURITIES> 1,783,000
<RECEIVABLES> 17,072,000
<ALLOWANCES> 699,000
<INVENTORY> 0
<CURRENT-ASSETS> 30,887,000
<PP&E> 14,149,000
<DEPRECIATION> 8,366,000
<TOTAL-ASSETS> 39,138,000
<CURRENT-LIABILITIES> 14,247,000
<BONDS> 0
<COMMON> 38,000
0
0
<OTHER-SE> 21,872,000
<TOTAL-LIABILITY-AND-EQUITY> 39,138,000
<SALES> 16,275,000
<TOTAL-REVENUES> 16,275,000
<CGS> 6,198,000
<TOTAL-COSTS> 6,198,000
<OTHER-EXPENSES> 9,695,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 86,000
<INCOME-PRETAX> 316,000
<INCOME-TAX> 126,000
<INCOME-CONTINUING> 190,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190,000
<EPS-PRIMARY> .05
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF GZA GEOENVIRONMENTAL
TECHNOLOGIES, INC. FOR THE THREE MONTHS ENDED MAY 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> MAY-31-1994
<EXCHANGE-RATE> 1
<CASH> 3,021,000
<SECURITIES> 2,033,000
<RECEIVABLES> 16,100,000
<ALLOWANCES> 528,000
<INVENTORY> 0
<CURRENT-ASSETS> 30,820,000
<PP&E> 13,507,000
<DEPRECIATION> 7,569,000
<TOTAL-ASSETS> 39,111,000
<CURRENT-LIABILITIES> 14,238,000
<BONDS> 0
<COMMON> 38,000
0
0
<OTHER-SE> 21,647,000
<TOTAL-LIABILITY-AND-EQUITY> 39,111,000
<SALES> 13,589,000
<TOTAL-REVENUES> 13,589,000
<CGS> 3,428,000
<TOTAL-COSTS> 3,428,000
<OTHER-EXPENSES> 9,426,000
<LOSS-PROVISION> 78,000
<INTEREST-EXPENSE> 55,000
<INCOME-PRETAX> 652,000
<INCOME-TAX> 270,000
<INCOME-CONTINUING> 382,000
<DISCONTINUED> (110,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272,000
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
