<PAGE>
FORM 10-Q
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 September 30, 1999
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: 0-19239
LawGibb Group, Inc.
-------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-0537111
- ------------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1105 Sanctuary Parkway, Suite 300, Alpharetta, GA 30004
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(770) 360-0600
(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 |_|
The number of shares of Common Stock of the Company, par value $1.00 per share,
outstanding at November 12, 1999 was 2,619,236.
<PAGE>
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
as of September 30, 1999 and December 31,1998.........................1
Condensed Consolidated Statements of Income
and Comprehensive Income for the Quarters and Nine-Month Periods
Ended September 30, 1999 and 1998.....................................2
Condensed Consolidated Statements of Cash Flows
for the Nine-Month Periods Ended September 30, 1999 and 1998..........3
Notes to Condensed Consolidated
Financial Statements..................................................4
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS..........................................6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK...................................9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................10
SIGNATURE ...................................................11
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
LAWGIBB GROUP, INC.
(unaudited - dollars in thousands, except per share data)
Assets September 30, December 31,
1999 1998
------------------ ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,992 $ 11,022
Billed fees receivable, net of allowance 60,853 55,346
Unbilled work in progress 30,469 31,464
Other current assets 7,254 9,041
------------------ ------------------
Total current assets 108,568 106,873
Property and equipment, net 17,353 23,442
Equity investments 1,482 1,587
Goodwill, net 12,846 13,250
Other assets 5,333 5,759
------------------ ------------------
Total Assets $ 145,582 $ 150,911
================== ==================
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 1,004 $ 902
Accounts payable 12,596 15,858
Billings in excess of costs and fees earned on
contracts in progress 14,468 13,805
Current portion of long-term debt 4,535 5,220
Other accrued expenses 17,548 16,745
Other current liabilities 13,973 15,283
------------------ -------------------
Total current liabilities 64,124 67,813
Long-term debt 24,238 41,979
Deferred income taxes 1,992 1,983
Minority interest in equity of subsidiaries 190 208
Cumulative convertible redeemable preferred stock -
issued and outstanding: 963,398 shares in
1999 and 1998 9,902 9,886
Shareholders' equity:
Common stock--$1 par value: authorized: 10,000,000
shares; issued and outstanding: 2,619,171 shares
in 1999 and 2,045,870 shares in 1998
2,619 2,046
Additional paid-in capital 29,044 18,046
Retained earnings 21,177 15,931
Accumulated other comprehensive income (7,704) (6,981)
------------------ -------------------
45,136 29,042
------------------ -------------------
Total Liabilities and Shareholders' Equity $ 145,582 $ 150,911
================== ===================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LAWGIBB GROUP, INC.
(unaudited - in thousands, except per share data)
For the Quarters For the Nine Months
Ended September 30 Ended September 30
---------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gross fees $ 76,243 $ 79,462 $ 228,237 $ 230,972
Less: Cost of outside services 12,346 9,817 30,394 26,559
--------------- --------------- --------------- ---------------
Net fees 63,897 69,645 197,843 204,413
Direct costs and expenses:
Payroll 19,306 20,303 59,837 60,442
Job related expenses 7,655 8,396 22,103 23,895
--------------- --------------- --------------- ---------------
Gross profit 36,936 40,946 115,903 120,076
Indirect costs and expenses:
Payroll 15,106 16,053 47,088 47,298
Other expenses 18,329 19,310 55,083 59,600
--------------- --------------- --------------- ---------------
Operating income 3,501 5,583 13,732 13,178
Other income (expense):
Interest expense (648) (1,038) (2,621) (3,229)
Deferred financing costs (17) (31) (63) (92)
Other income (expense) (143) (104) (93) 133
--------------- --------------- --------------- ---------------
Income before income taxes and
equity investments 2,693 4,410 10,955 9,990
Income tax provision (1,131) (1,829) (4,601) (4,396)
Equity investments 20 16 2 9
--------------- --------------- --------------- ---------------
Net income 1,582 2,597 6,356 5,603
Less: Preferred stock dividend and
accretion (282) (283) (846) (847)
--------------- --------------- --------------- ---------------
Net income available to
common shareholders $ 1,300 $ 2,314 $ 5,510 $ 4,756
=============== =============== =============== ===============
Basic earnings per common share $ .50 $ 1.13 $ 2.46 $ 2.45
=============== =============== =============== ===============
Diluted earnings per common share $ .38 $ .81 $ 1.77 $ 1.87
=============== =============== =============== ===============
Statements of Comprehensive Income
Net income $ 1 ,582 $ 2,597 $ 6,356 $ 5,603
Other comprehensive income:
Foreign currency translation
adjustment 936 797 (723) 788
--------------- --------------- --------------- ---------------
Comprehensive income $ 2,518 $ 3,394 $ 5,633 $ 6,391
=============== =============== =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LAWGIBB GROUP, INC.
(unaudited - dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
------------------------------------
1999 1998
----------------- ---------------
<S> <C> <C>
Operating activities
Net income $ 6,356 $ 5,603
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 5,097 5,019
Provision for losses on receivables 475 399
Deferred income taxes 1 (3,663)
Undistributed income from equity investments 2 (9)
Loss on disposal of property and equipment 100 200
Changes in operating assets and liabilities:
Billed fees receivable (6,628) (3,176)
Unbilled work in progress 1,084 (2,204)
Other current assets 1,754 (191)
Accounts payable and accrued expenses (3,162) 3,320
Billings in excess of costs and fees earned on
contracts in progress 448 (1,099)
----------------- ---------------
Net cash provided by operating activities 5,527 4,199
Investing activities
Cash used for acquisitions - (187)
Purchases of property and equipment (2,461) (4,187)
Proceeds from disposal of property and equipment 3,815 34
Other, net (124) (1,482)
----------------- ---------------
Net cash provided (used) by investing activities 1,230 (5,822)
Financing activities
Net (payments) proceeds on short-term borrowings 127 (305)
Net (payments) proceeds on revolving line of credit and
long-term borrowings (18,393) 2,659
Deferred financing costs - (369)
Proceeds from exercise of stock options 11,727 2,888
Repurchase and retirement of shares (420) (343)
Preferred dividends paid (600) (600)
----------------- ---------------
Net cash provided (used) by financing activities (7,559) 3,930
Effect of exchange rate changes on cash (228) 106
----------------- ---------------
Increase (decrease) in cash and cash equivalents (1,030) 2,413
Cash and cash equivalents at beginning of period 11,022 9,527
----------------- ---------------
Cash and cash equivalents at end of period $ 9,992 $ 11,940
================= ===============
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LAWGIBB GROUP, INC.
(unaudited - dollars in thousands, except per share data)
NOTE 1 - There have been no significant changes in the accounting policies of
the Company during the periods presented. For a description of these policies,
see Note 1 of Notes to Consolidated Financial Statements for the year ended
December 31, 1998 in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "Form 10-K").
NOTE 2 - The unaudited condensed consolidated financial statements presented
herein have been prepared in accordance with the instructions to Form 10-Q and
do not include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the Consolidated Financial Statements and Notes for the year ended December
31, 1998 included in the Form 10-K. The accompanying condensed consolidated
financial statements for the quarter and nine months ended September 30, 1999
and 1998 have not been audited by independent auditors in accordance with
generally accepted auditing standards, but in the opinion of management such
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the Company's consolidated
financial position and results of operations. The results of operations for the
nine months ended September 30, 1999 may not be indicative of the results that
may occur during the year ending December 31, 1999.
NOTE 3 - The Company's operations are conducted principally in the United
States, Europe, and Africa. Accordingly, the Company considers its operating
segments to be defined as United States Operations and International Operations.
For financial reporting purposes, International Operations results are presented
separately for operations in the United Kingdom, Europe, Africa, and other
countries. The net fees for each segment as described in the table below
correspond directly to the net revenues attributable to the geographic areas
that are represented by these segments. Inter-segment revenues related to these
geographic areas were not material. The table that follows represents combined
disclosure for both business segment and geographic area information.
For the Quarters Ended For the Nine Months Ended
September 30 September 30
----------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ------------ -----------
Net Fees
United States Operations $ 42,456 $ 46,281 $ 132,508 $ 134,191
International Operations
United Kingdom 7,301 8,095 22,329 23,824
Europe 3,887 4,294 12,718 12,984
Africa 6,523 7,171 18,998 21,554
Other 3,730 3,804 11,290 11,860
----------- ----------- ------------ -----------
Total $ 63,897 $ 69,645 $ 197,843 $ 204,413
=========== =========== ============ ===========
Operating Income
United States Operations $ 4,100 $ 4,784 $ 12,749 $ 11,548
International Operations
United Kingdom (376) 9 (103) 151
Europe (136) (4) 471 321
Africa (74) 786 435 1,401
Other (13) 8 180 (243)
----------- ----------- ------------ -----------
Total $ 3,501 $ 5,583 $ 13,732 $ 13,178
=========== =========== ============ ===========
September 30, December 31,
1999 1998
----------- -----------
Assets
United States Operations $ 80,146 $ 84,801
International Operations
United Kingdom 35,623 37,373
Europe 7,377 4,875
Africa 14,283 15,636
Other 8,153 8,226
----------- -----------
Total $ 145,582 $ 150,911
=========== ===========
<PAGE>
<TABLE>
<CAPTION>
NOTE 4 - Computation of Earnings Per Share
LAWGIBB GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
For the Quarters Ended For the Nine Months Ended
September 30 September 30
---------------------------------------------------------------------------
1999 1998 1999 1998
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 1,582 $ 2,597 $ 6,356 $ 5,603
Preferred stock dividends and accretion (282) (283) (846) (847)
---------------------------------------------------------------------------
Numerator for basic earnings per share -
income available to common shareholders 1,300 2,314 5,510 4,756
Effect of dilutive securities:
Preferred stock dividends and accretion 283 565
---------------------------------------------------------------------------
Numerator for diluted earnings per
share - income available to common
shareholders $ 1,300 $ 2,597 $ 5,510 $ 5,321
Denominator:
Denominator for basic earnings per share -
weighted-average shares 2,622 2,051 2,239 1,941
Effect of dilutive securities:
Employee stock options 199 90 191 79
Other stock options 115 90 70
Cumulative convertible redeemable
preferred stock and associated
common stock warrants 614 957 588 750
---------------------------------------------------------------------------
Dilutive potential common shares 813 1,162 869 899
---------------------------------------------------------------------------
Denominator for diluted earnings per
share-adjusted weighted-average shares 3,435 3,213 3,108 2,840
===========================================================================
Basic earnings per common share $ .50 $ 1.13 $ 2.46 $ 2.45
===========================================================================
Diluted earnings per common share $ .38 $ .81 $ 1.77 $ 1.87
===========================================================================
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table sets forth, for the quarters and nine months indicated, (i)
the percentage of net fees represented by certain items reflected in the
Company's condensed consolidated statements of income and (ii) the percentage
increase or decrease in each of such items in the 1999 periods from the
comparable periods in the prior year. The Company measures its operating
performance on the basis of net fees since a substantial portion of gross fees
flow through to clients as costs of subcontractors and other project-specific
outside services. Net fees are determined by deducting the cost of these outside
services from gross fees. The following table and the subsequent discussion
should be read in conjunction with the Condensed Consolidated Financial
Statements and Notes to Condensed Consolidated Financial Statements contained
elsewhere in this Form 10-Q.
<TABLE>
<CAPTION>
Qtr to Qtr Year to Year
Dollar Dollar
Quarters Ended Increase Nine Month Periods Ended Increase
September 30 (Decrease) September 30 (Decrease)
-------------------- --------------- ------------------------ ----------------
1999 1998 1999 vs 1998 1999 1998 1999 vs 1998
--------- --------- --------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net fees 100.0% 100.0% (8.3%) 100.0% 100.0% (3.2%)
Gross profit 57.8% 58.8% (9.8%) 58.6% 58.7% (3.5%)
Indirect costs
and expenses 52.3% 50.8% (5.5%) 51.6% 52.3% (4.4%)
Operating income 5.5% 8.0% (37.3%) 6.9% 6.4% 4.2%
Net income 2.5% 3.7% (39.1%) 3.2% 2.7% 13.4%
</TABLE>
Results of Operations
Improved management of indirect costs and expenses resulted in an increase of
13.4% in net income for the nine months ended September 30, 1999, although for
the quarter there was a decrease of 39.1% in net income. Consolidated net fees
of $63.9 million for the third quarter of 1999 represented a 8.3% decrease from
$69.6 million for the same period in 1998. For the nine-month period ended
September 30, 1999, consolidated net fees of $197.8 million represented a 3.2%
decrease from $204.4 million for the same period in 1998. For the nine-month
year-to-date periods, indirect costs and expenses, operating income, and net
income improved as a percentage of net fees compared to 1998.
Net fees from the Company's United States operations decreased 8.2% from $46.3
million for the third quarter of 1998 to $42.5 million for the same period in
1999. For the first nine months of 1999, net fees from the Company's United
States operations decreased 1.3% from $134.2 million for the first nine months
of 1998 to $132.5 million. This decrease is generally reflective of increased
competition in some of the markets served.
Net fees from the Company's International operations decreased 8.6% from $23.4
million for the third quarter of 1998 to $21.4 million for the same period in
1999. For the first nine months of 1999, net fees from the Company's
International operations decreased 7.0% from $70.2 million for the first nine
months of 1998 to $65.3 million for the same period in 1999. Contributing to
this decrease has been the delayed startup of certain projects due to an
earthquake in Eastern Europe and other client delays. The delayed projects are
expected to commence in future periods. Another factor impacting the decrease
has been the strengthening in the value of the United States dollar compared to
the local currencies for these operations. The value of the pound sterling
compared to the United States dollar has declined 2.5% since December 31, 1998.
The Company's gross profit margin of 57.8% for the third quarter of 1999
reflected a small decrease compared to 58.8% for the same period in 1998. For
the nine months ended September 30, 1999, the Company's gross profit margin of
58.6% also reflected a small decrease compared to 58.7% for the same period of
1998. For the nine month period ended September 30, 1999, the gross profit
margin of 64.1% for United States operations decreased compared to 64.8% during
the nine months of 1998. The decrease is generally a result of increased
competitive pressure in some of the U.S. markets. The International Group's
gross profit margin increased to 47.5% from 47.1% for the first nine months of
1999 compared to the same period in 1998, primarily as a result of improved
management of direct costs. Indirect costs and expenses, which include expenses
related to both operations support as well as administrative support functions,
were $102.2 million, or 51.6% of net fees, for the first nine months of 1999,
compared with $106.9 million, or 52.3% of net fees, for the same period in 1998.
This decrease as a percentage of net fees is attributable to the continued
positive impact of the Company's expense reduction initiatives in insurance
costs, professional services, facilities expense, and other areas.
Interest expense was $.65 million and $2.6 million for the third quarter and
first nine months of 1999, respectively. This compares to interest expense of
$1.0 million and $3.2 million for the third quarter and first nine months of
1998, respectively. These decreases were primarily the result of the significant
reduction of the Company's outstanding debt, which has declined 38.1% since
December 31,1998.
The effective income tax rate was 42.0% for the first nine months of 1999,
compared to 44.0% for the first nine months of 1998. This decrease was primarily
attributable to changes in items not deductible for tax purposes.
For the third quarter of 1999, the Company recorded net income of $1.6 million
($.50 per common share - basic and $.38 per common share - diluted) which is a
decrease from $2.6 million in 1998 ($1.13 per common share basic and $.81 per
common share- diluted). For the first nine months of 1999, the Company recorded
net income of $6.4 million ($2.46 per common share - basic and $1.77 per common
share - diluted) which is an increase from $5.6 million in 1998 ($2.45 per
common share - basic and $1.87 per common share - diluted).
Currency Translation
The translation of the Company's foreign subsidiaries' financial statements into
U.S. dollars is done in multiple steps. First, all foreign operations are
measured into the functional currencies of the foreign subsidiaries' operating
environments by utilizing a combination of current, monthly average, and
historic exchange rates, with translation impacts included in income. The
foreign subsidiaries' functional currency financial statements are translated
into U.S. dollars, the Company's reporting currency, utilizing month-end and
monthly average exchange rates, resulting in an adjustment to shareholders'
equity. In addition, transactions denominated in different currencies result in
exchange gains or losses, which are included in income. The impact of foreign
currency translation and exchange transactions included in income was not
significant during the first nine months of 1999. The translation of the
Company's foreign subsidiaries for the first nine months of 1999 resulted in a
change of $.7 million in the foreign currency translation adjustment component
of shareholders' equity. This component is reported on the company's condensed
consolidated balance sheet in the line item entitled Accumulated Other
Comprehensive Income. This movement was caused primarily by the increased
strength of the U.S. dollar relative to the British pound sterling and the South
African rand from December 31, 1998 to September 30, 1999.
Debt and Short-term Borrowings
The Company reported debt and short-term borrowings of $29.8 million at
September 30, 1999, compared to $48.1 million at December 31, 1998. Debt and
short-term borrowings as a percentage of total capitalization amounted to 35.1%
at September 30, 1999, compared to 55.3% at December 31, 1998.
Liquidity and Capital Resources
While the Company anticipates continuing capital requirements to support growth,
expansion of services, and capital expenditures, the Company believes that its
cash provided by operations and borrowings available under its credit facility
will be sufficient to meet its requirements for the foreseeable future.
The Company's 401(k) Savings Plan (the "Plan") permitted employees to elect to
invest their Plan contributions in Company Common Stock, and provided that the
Company's matching contributions, if any, under the Plan be made in the form of
Company Common Stock. As of May 10, 1996, the Board of Directors of the Company
decided to terminate the use of Company Common Stock under the Plan, whether as
employee contributions or as Company matching contributions. Consistent with
that decision, employees are allowed to trade out of (but not into) shares of
the Company's Common Stock held in their individual 401(k) accounts, in
accordance with Plan provisions. Over the first nine months of 1999, 11,680
shares totaling $331,000 were traded out of the Plan and repurchased by the
Company.
On May 6, 1997, the shareholders of the Company authorized and approved a
transaction between the Company and Virgil R. Williams and James M. Williams,
Jr., each a director of the Company (collectively, the "Investors"), pursuant to
which the Company sold to the Investors (including, in the case of James M.
Williams, a family partnership that he controls) a combination of Preferred
Stock, Common Stock warrants, and options to purchase shares of Common Stock
(the "Options"). The Options are eligible to be exercised in various quantities
and at various prices through December 31, 2006. On June 30, 1999, Virgil R.
Williams and James M. Williams exercised all remaining options to purchase an
aggregate of 584,028 shares of the Company's Common Stock at an exercise price
of $20.00 per share. The proceeds of $11.7 million was used to pay down bank
debt to further position the Company for future growth initiatives.
On September 30, 1999, the Company consummated a transaction to sell its
laboratory facility in Pensacola, Florida for $3.7 million. The proceeds will be
used to pay down bank debt to further position the Company for future growth
initiatives.
Cash Provided by Operations
Cash provided by operations over the first nine months of 1999 of $5.5 million
increased from $4.2 million during the first nine months of 1998. This increase
was primarily due to improved net income and the conclusion in 1998 of tax
payments associated with a change in tax accounting methods.
Capital Expenditures
Capital expenditures during the first nine months of 1999 and the first nine
months of 1998 were $2.5 million and $4.2 million, respectively, reflecting the
Company's continued deliberate approach to capital expenditures. In order to
continue to enhance productivity the Company has continued, and will continue,
its capital spending programs, particularly for computer and other
technology-related equipment. The Company believes that the capital spending
amount allowed by its credit facility ($7.0 million per year) is sufficient to
meet foreseeable requirements.
Dividends
Cash dividends on Common Stock have been and continue to be prohibited under the
current and previous bank credit facilities. As required by the terms of the
Company's outstanding Cumulative Convertible Redeemable Preferred Stock and
permitted by the 1998 credit facility, the Company paid dividends to the holders
of the Preferred Stock. For the third quarter, dividends totaled $0.2 million,
or $0.21 per preferred share. For the nine months ended September 30,1999,
dividends totaled $0.6 million, or $0.62 per preferred share.
Year-2000
The Company recognizes the need to address potential problems in both
information technology and non-information technology systems, which could
result in improper handling of the date change to the year 2000. As the
Company's core business services are engineering and environmental science
professional consulting services, delivery of these services is not critically
dependent on any mainframe, mini-computer or personal computer-based systems or
software applications. Where computer systems and software applications are used
to support the delivery of services to clients, these systems and applications
are largely personal computer-based and are not considered likely to experience
year-2000 related problems. For certain applications which are used to support
administrative operations of the Company and certain systems and applications
used to support the Company's international operations, year-2000 readiness
projects have been substantially completed.
The Company has spent a total of approximately $150,000 to address known
year-2000 issues. Additionally, the Company does not anticipate a material
adverse effect on the Company's business, results of operations, or financial
condition associated with any currently identified or anticipated year-2000
readiness issue, inclusive of internal systems and software applications and
those systems of other parties with whom the Company does business. As part of
the Company's contingency plan to address year-2000 matters, a centralized task
force has been established to coordinate identification, evaluation, and
implementation of any year-2000 contingency plans or future compliance
requirements. This task force is evaluating all of its major external providers
of essential goods and services for year-2000 readiness. Based on the critical
nature of any goods or services, the task force is developing a contingency plan
regardless of the reported year-2000 readiness of the provider or industry. The
Company expects all phases to be completed during the fourth quarter of 1999.
While the Company is taking steps that it believes to be reasonable and prudent
to assess the year-2000 readiness of third parties with whom the Company does
business, the failure of any of these third parties to correct a material
year-2000 problem could result in an interruption in, or a failure of, certain
normal business activities or operations. Due to the general uncertainty
inherent in the year-2000 problem, resulting in part from the uncertainty of the
year-2000 readiness of third party suppliers and customers, the Company is
unable to determine at this time whether the consequences of year-2000 failures
will have a material impact on the Company's results of operations, liquidity,
or financial condition. Readers are cautioned that forward-looking statements
contained in this year-2000 update should be read in conjunction with the
Company's disclosures under the heading: "Forward Looking Statements," which
follow this section.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 which
represent the Company's expectations or beliefs. These statements by their
nature involve substantial risks and uncertainties, certain of which are beyond
the Company's control. The Company cautions that various factors, including, but
not limited to, the factors described in the Company's filings with the
Securities and Exchange Commission, the uncertain timing of awards and
contracts, increasing competition by foreign and domestic competitors, the
impact of year-2000 issues, general economic and regulatory conditions in each
of the geographic regions served by the Company, industry trends, and other
risks could cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements.
Effect of Inflation
General economic inflation had the effect of increasing the Company's basic
costs of operations. These increased costs were generally recovered through
increases in contract prices.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to various types of market risks in the normal course of
business, including the impact of interest rate changes and foreign currency
exchange rate fluctuations. Except for the effect of foreign currency
translation discussed previously, there have been no material changes in these
exposures during the periods presented. For a description of these market risks,
see "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Form 10-K.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits below are filed as part of this report
27.1 Financial Data Schedule for the nine months ended September 30,1999.
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, LawGibb Group, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LAWGIBB GROUP, INC.
/s/ R.B. Fooshee
- ------------------------------------------------------------
Robert B. Fooshee
Chief Financial Officer and Treasurer
Dated: November 12, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Sep-30-1999
<CASH> 9,992
<SECURITIES> 0
<RECEIVABLES> 64,613
<ALLOWANCES> 3,760
<INVENTORY> 30,469
<CURRENT-ASSETS> 108,568
<PP&E> 60,499
<DEPRECIATION> 43,146
<TOTAL-ASSETS> 145,582
<CURRENT-LIABILITIES> 64,124
<BONDS> 0
9,902
0
<COMMON> 2,619
<OTHER-SE> 42,517
<TOTAL-LIABILITY-AND-EQUITY> 145,582
<SALES> 228,237
<TOTAL-REVENUES> 228,237
<CGS> 0
<TOTAL-COSTS> 81,940
<OTHER-EXPENSES> 101,711
<LOSS-PROVISION> 460
<INTEREST-EXPENSE> 2,621
<INCOME-PRETAX> 10,955
<INCOME-TAX> 4,601
<INCOME-CONTINUING> 6,356
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,356
<EPS-BASIC> 2.46
<EPS-DILUTED> 1.77
</TABLE>
