<PAGE> 1
UNITED STATES
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 May 31, 1997
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 0-17882
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3051642
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
320 Needham Street, Newton Upper Falls, Massachusetts 02164
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 969-0700
----------------------------------------------------
(Registrant's telephone number, including area code)
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of Shares of Common Stock outstanding at June 30, 1997 4,013,548
------------------
<PAGE> 2
INDEX
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
Page
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
- - Consolidated Balance Sheets -
May 31, 1997 and February 28, 1997 3
- - Consolidated Statements of Operations - (unaudited)
Three Months Ended May 31, 1997 and 1996 4
- - Consolidated Statements of Cash Flows - (unaudited)
Three Months Ended May 31, 1997 and 1996 5
- - Notes to Consolidated Financial Statements -
May 31, 1997 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings 8
Item 6 Exhibits and Reports on Form 8-K 8
SIGNATURES 9
2
<PAGE> 3
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MAY 31, 1997 FEBRUARY 28, 1997
------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,822,000 $ 4,229,000
Available-for-sale securities 3,252,000 3,456,000
Accounts receivable, net 13,206,000 13,059,000
Costs and estimated earnings in excess of billings on
uncompleted contracts 7,993,000 6,953,000
Prepaid expenses and other current assets 362,000 371,000
Deferred income taxes 1,057,000 1,057,000
----------- -----------
Total current assets 27,692,000 29,125,000
Property and equipment, net 5,449,000 5,514,000
Other assets, net 919,000 896,000
----------- -----------
Total assets $34,060,000 $35,535,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 3,302,000 $ 5,255,000
Accrued payroll and expenses 3,883,000 4,064,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 2,444,000 2,266,000
Income taxes payable 303,000 363,000
----------- -----------
Total current liabilities 9,932,000 11,948,000
Deferred income taxes 330,000 330,000
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value;
Authorized share 1,000,000;
Issued and outstanding - none
Common Stock, $.01 par value;
Authorized shares 14,000,000;
Issued and outstanding - 4,013,548 at
May 31, 1997 and 3,948,794 at
February 28, 1997 40,000 39,000
Capital in excess of par value 14,372,000 14,202,000
Unrealized losses on available-for-sale securities (3,000) (7,000)
Retained earnings 9,389,000 9,023,000
----------- -----------
Total stockholders' equity 23,789,000 23,257,000
----------- -----------
Total liabilities and stockholders' equity $34,060,000 $35,535,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
<TABLE>
CONSOLIDATED STATEMENTS OPERATIONS
<CAPTION>
THREE MONTHS ENDED MAY 31,
1997 1996
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
Revenues $ 12,856,000 $ 13,469,000
Reimbursable expenses 3,267,000 3,510,000
------------ ------------
Net revenues 9,589,000 9,959,000
Costs and expenses:
Salaries and related costs 6,795,000 7,162,000
General and administrative expenses 2,256,000 2,453,000
------------ ------------
Income from continuing operations 538,000 344,000
------------ ------------
Other income (expense)
Interest income 72,000 63,000
Interest expense - (30,000)
------------ ------------
Total other income, net 72,000 33,000
------------ ------------
Income from continuing operations before
provision for income taxes 610,000 377,000
Provision for income taxes 244,000 151,000
------------ ------------
Net income $ 366,000 $ 226,000
============ ============
Net income per share $ 0.09 $ 0.06
------------ ------------
Weighted average common and
Common equivalent shares outstanding 3,988,000 3,901,000
------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended May 31,
1997 1996
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $ 366,000 $ 226,000
Adjustments to reconcile net income from continuing
Operations to net cash used by operating activities:
Depreciation and amortization 294,000 329,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (147,000) 242,000
Increase in costs and estimated earnings
in excess of billings on uncompleted contracts (862,000) (1,964,000)
Decrease (increase) in prepaid expenses 9,000 (38,000)
Decrease in refundable income taxes - 49,000
Decrease in accounts payable, trade (1,953,000) (1,221,000)
Decrease in accrued payroll and expenses (181,000) (285,000)
Decrease in income taxes payable (60,000) -
----------- -----------
Net cash used by operating activities (2,534,000 (2,662,000)
----------- -----------
Cash flows from investing activities:
Decrease (increase) in available-for-sale securities 204,000 (250,000)
Decrease in due from affiliate - 307,000
Acquisition of property and equipment (225,000) (321,000)
Increase in other assets (23,000) (14,000)
----------- -----------
Net cash used by investing activities (44,000) (278,000)
----------- -----------
Cash flows from financing activities:
Net borrowings under notes payable - 378,000
Repayment of long-term debt - (202,000)
Proceeds from issuance of common stock, net 171,000 177,000
----------- -----------
Net cash provided by financing activities 171,000 353,000
----------- -----------
Net decrease in cash and cash equivalents (2,407,000) (2,587,000)
Cash and cash equivalents at beginning of year 4,229,000 3,318,000
----------- -----------
Cash and cash equivalents at end of period $ 1,822,000 $ 731,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements were 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 are 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,
1997, as filed with the Securities and Exchange Commission on May 29,
1997. Operating results for the three month period ended May 31, 1997
are not necessarily indicative of the results that may be expected for
succeeding periods or for the year ending February 28, 1998.
NOTE 2 - CONTINGENCIES
The Company is a party to several legal actions arising in the normal
course of business. Management believes that the outcomes of legal
actions to which it is a party will not, in the aggregate, have a
material adverse effect on the results of operations or 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.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH COMPARISON FOR FISCAL YEARS 1998 AND 1997
- - NET REVENUES. The Company's net revenues for the three months ended
May 31, 1997 decreased by approximately $370,000 (3.7%) compared to the
corresponding period in the prior fiscal year. The decrease is
attributable primarily to a decrease of $102,000 in the volume of the
Company's drilling services and lower prices received for engineering
consulting and remediation contract activities.
- - SALARIES AND RELATED COSTS. Salaries and related costs for the three
months ended May 31, 1997 decreased by approximately $367,000 (5.1%)
compared to the corresponding period in the prior fiscal year. The
decrease reflects a reduction in payroll and health insurance cost as a
result of reduction in the numbers of professional and support staff
personnel.
- - GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the three months ended May 31, 1997 decreased by
approximately $197,000 (8.0%) compared to the corresponding period in
the prior fiscal year. The decrease reflects lower claims and legal
expenses which were offset by increased bad debt accruals. The prior
year included a $175,000 charge as a result of the Company's decision
to close the Gainesville, Florida drilling operation.
LIQUIDITY AND CAPITAL RESOURCES
For the three month period ended May 31, 1997, $2,534,000 of net cash
was used by operations, whereas for the three month period ended May
31, 1996, $2,662,000 of net cash was used by operations . The Company
made capital expenditures of approximately $225,000 and $321,000 for
the first three months of fiscal 1998 and 1997, respectively.
The Company's working capital increased from $17,177,000 at February
28, 1997 to $17,760,000 at May 31, 1997.
At May 31, 1997, the Company had cash on hand and cash equivalents of
$1,822,000, and short-term investments of $3,252,000. These investments
consist primarily of tax-exempt municipal bonds, taxable U.S. Treasury
Notes and other bonds and commercial paper. The Company believes that
its cash on hand and cash equivalents and future cash generated from
operations will be sufficient to meet its cash requirements for at
least the next twelve months.
7
<PAGE> 8
PART II. OTHER INFORMATION
ITEM I. LEGAL PROCEEDINGS.
The Company is party to several 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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(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, 1997.
8
<PAGE> 9
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 11, 1997
----------------------------------------
JOSEPH P. HEHIR, Chief Financial Officer
and Treasurer (Chief Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF THE REGISTRANT AT MAY 31, 1997 AND
FEBRUARY 28, 1997 AND CONSOLIDATED STATEMENTS OF OPERATIONS OF THE REGISTRANT
FOR THE THREE MONTH PERIOD ENDED MAY 31, 1997 AND 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS IN THE FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED MAY 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> MAY-31-1997
<CASH> 1,822,000
<SECURITIES> 3,252,000
<RECEIVABLES> 13,206,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,692,000
<PP&E> 5,449,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,060,000
<CURRENT-LIABILITIES> 9,932,000
<BONDS> 0
0
0
<COMMON> 40,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,060,000
<SALES> 0
<TOTAL-REVENUES> 12,856,000
<CGS> 0
<TOTAL-COSTS> 12,318,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 610,000
<INCOME-TAX> 244,000
<INCOME-CONTINUING> 366,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 366,000
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
