UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 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 0-18984
REYNOLDS, SMITH AND HILLS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2986466
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4651 Salisbury Road, Jacksonville, Florida 32256
------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (904) 296-2000
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 outstanding of the registrant's Common stock, par value
$.01 per share, at June 30, 1997 was 455,000 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED JUNE 30
- --------------------------------------------------------------------------------
1997 1996
----------- -----------
Gross Revenue $ 9,514,000 $10,567,000
Subcontract and Other
Direct Costs 2,804,000 3,238,000
----------- -----------
NET SERVICE REVENUE 6,710,000 7,329,000
Cost of Services 2,711,000 2,985,000
----------- -----------
GROSS PROFIT 3,999,000 4,344,000
Selling, General and
Administrative Expenses 3,783,000 3,824,000
----------- -----------
OPERATING INCOME 216,000 520,000
OTHER INCOME (EXPENSE):
Interest and other income 22,000 5,000
Interest expense (1,000) (14,000)
----------- -----------
INCOME BEFORE INCOME TAXES 237,000 511,000
INCOME TAX EXPENSE 105,000 211,000
----------- -----------
NET INCOME $ 132,000 $ 300,000
=========== ===========
NET INCOME PER COMMON SHARE $ .29 $ .66
=========== ===========
AVERAGE COMMON SHARES
OUTSTANDING 455,000 455,000
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, March 31,
ASSETS 1997 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,042,000 $ 1,459,000
Accounts receivable, net of allowance
for doubtful accounts of $142,000
and $127,000 3,581,000 3,682,000
Unbilled service revenue 3,690,000 3,955,000
Prepaid expenses and other current assets 70,000 210,000
Deferred income taxes 166,000 166,000
----------- -----------
Total current assets 9,549,000 9,472,000
Property and equipment, net 2,131,000 2,202,000
Other assets 52,000 62,000
Identifiable intangible assets, net of
accumulated amortization of
$867,000 and $852,000 171,000 186,000
Cost in excess of net assets of acquired
business, net of accumulated
amortization of $159,000
and $154,000 753,000 758,000
----------- -----------
TOTAL ASSETS $12,656,000 $12,680,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of
long-term debt $ 35,000 $ 69,000
Accounts payable 2,298,000 2,080,000
Accrued payroll 314,000 633,000
Accrued incentive compensation 712,000 570,000
Accrued expenses 1,492,000 1,401,000
Unearned service revenue 1,721,000 1,938,000
----------- -----------
Total current liabilities 6,572,000 6,691,000
Long-term debt -- 7,000
Deferred Income Taxes 281,000 281,000
Other Liabilities 334,000 364,000
----------- -----------
Total liabilities 7,187,000 7,343,000
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 4,000,000
shares authorized, 455,000 issued
and outstanding 5,000 5,000
Paid-in capital 3,537,000 3,537,000
Retained Earnings 1,927,000 1,795,000
----------- -----------
Total shareholders' equity 5,469,000 5,337,000
----------- -----------
$12,656,000 $12,680,000
=========== ===========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE THREE MONTHS ENDED JUNE 30
1997 1996
---------- ----------
OPERATING ACTIVITIES:
Net income $ 132,000 $ 300,000
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 188,000 178,000
Gain on disposal of fixed assets -- (1,000)
Deferred rent charges (27,000) (23,000)
Change in operating assets and liabilities:
Accounts receivable and unbilled
service revenue 366,000 667,000
Other assets and prepaid expenses 147,000 158,000
Accounts payable and accrued expenses 129,000 (43,000)
Unearned service revenue (217,000) 552,000
---------- ----------
Net cash provided by operating activities 718,000 1,788,000
---------- ----------
INVESTING ACTIVITIES:
Capital expenditures (94,000) (22,000)
Proceeds from sale of fixed assets -- 3,000
---------- ----------
Net cash used by investing activities (94,000) (19,000)
---------- ----------
FINANCING ACTIVITIES:
Repayments of long-term debt (41,000) (124,000)
Net change in credit line payable
to bank -- (415,000)
---------- ----------
Net cash used by financing activities (41,000) (539,000)
---------- ----------
NET INCREASE IN CASH 583,000 1,230,000
CASH AT BEGINNING OF PERIOD 1,459,000 263,000
---------- ----------
CASH AT END OF PERIOD $2,042,000 $1,493,000
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 1997
1) The accompanying unaudited financial statements, in the opinion of
management, include all adjustments (consisting of normal recurring
accruals) necessary to present fairly the results of operations and
financial position of the Company for the periods indicated. However,
certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial
statements be read in conjunction with the financial statements,
schedules, and notes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended March 31, 1997.
2) Earnings per share of common stock are based on weighted average number
of shares outstanding during each period.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Gross revenue for the first three months of fiscal 1998 was $9,514,000 as
compared to gross revenue of $10,567,000 for the first three months of fiscal
1997. This 10% decrease was due primarily to the completion of a few large
projects in the aviation and institutional programs in the later half of fiscal
1997. Offsetting this decrease was a 13% decrease in subcontract and other
direct costs for the first three months of fiscal 1998 over the same period for
fiscal 1997. Decreased use of subconsultants was experienced primarily in the
aviation program as a result of project completion mentioned above. As a result
of the decrease in both gross revenue and other direct costs, net service
revenue decreased 8% to $6,710,000 for the first three months of fiscal 1998
from $7,329,000 for the first three months of fiscal 1997.
Cost of services represents direct labor costs associated with the generation of
net service revenues. Cost of services, for the first three months of fiscal
1998 was $2,711,000, representing a 9% decrease over the same period for fiscal
1997. Expressed as a percentage of net service revenue, cost of services
remained relatively consistent at 40% and 41%, for both the first three months
of fiscal 1998 and 1997, respectively. As a result of the decrease in revenues,
gross profit decreased 8% to $3,999,000 in the first quarter of fiscal 1998 from
$4,344,000 for the first quarter of fiscal 1997.
Selling, general and administrative (SG&A) expenses consist of labor costs of
<PAGE>
operational personnel not utilized on projects (i.e. indirect labor), labor
costs of administrative and support personnel, office rent, depreciation,
insurance and other operating expenses. SG&A expenses for the first three months
of fiscal 1998 were $3,783,000 as compared to $3,824,000 for the first three
months of fiscal 1997. This 1% decrease was due primarily to a slight decrease
in facilities expense.
Income before income taxes was $237,000 for the first three months of fiscal
1998 versus $511,000 for the same period of fiscal 1997. Net income for the
first three months of fiscal 1998 was $132,000 compared to $300,000 for the
first three months of fiscal 1997. These decreases were due primarily to the
decrease in net service fees as described above.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997 the Company had cash of $2,042,000 and additional borrowing
available on the revolving line of credit of $1,750,000. The Company believes
that its existing financial resources, together with its future cash flow from
operations, will provide sufficient capital to fund its operations for the
foreseeable future.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule. This schedule
reports certain financial data in electronic format
for Electronic Data Gathering and Retrieval (EDGAR)
purposes only. This exhibit is not included in this
conforming paper filing.
(b) There were no Form 8-K reports filed during the
quarter for which this report is filed.
<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.
Date: August 13, 1997 REYNOLDS, SMITH AND HILLS, INC.
By /s/ Leerie T. Jenkins, Jr.
--------------------------
Leerie T. Jenkins, Jr.
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
By /s/ David K. Robertson
--------------------------
David K. Robertson
Executive Vice President,
Secretary, Treasurer, Chief
Financial Officer and Director
(Principal Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 2,042,000
<SECURITIES> 0
<RECEIVABLES> 7,413,000
<ALLOWANCES> 142,000
<INVENTORY> 0
<CURRENT-ASSETS> 9,549,000
<PP&E> 5,580,000
<DEPRECIATION> 3,448,000
<TOTAL-ASSETS> 12,656,000
<CURRENT-LIABILITIES> 6,572,000
<BONDS> 0
0
0
<COMMON> 5,000
<OTHER-SE> 5,464,000
<TOTAL-LIABILITY-AND-EQUITY> 12,656,000
<SALES> 0
<TOTAL-REVENUES> 9,514,000
<CGS> 0
<TOTAL-COSTS> 5,515,000
<OTHER-EXPENSES> 3,746,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> 237,000
<INCOME-TAX> 105,000
<INCOME-CONTINUING> 132,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,000
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
