UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year 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 No. 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 32256
Jacksonville, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (904) 296-2000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock, $.01 par value None
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 estimated aggregate market value of Common Stock held by
non-affiliates as of June 23, 2000 computed with reference to the last sales
price, was $4,234,000.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (" 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The number of shares of Common Stock outstanding as of June 23, 2000 was 452,473
shares.
Documents incorporated by reference:
DOCUMENT WHERE INCORPORATED
-------- ------------------
Proxy Statement Dated June 23, 2000 Part III
<PAGE>
TABLE OF CONTENTS
FORM 10-K
Item
Number CAPTION PAGE
------ ------- ----
PART I
Item 1. BUSINESS 3
Item 2. PROPERTIES 5
Item 3. LEGAL PROCEEDINGS 5
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 5
EXECUTIVE OFFICERS OF THE REGISTRANT 5
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 6
Item 6. SELECTED FINANCIAL DATA 7
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 11
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 11
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 12
Item 11. EXECUTIVE COMPENSATION 12
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 12
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K 12
2
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PART I
Item 1. BUSINESS
Reynolds, Smith and Hills, Inc. ("the Company") is a professional service
firm operating in the engineering, architectural design and environmental
services industry. The Company was incorporated in the state of Florida in 1989.
As used herein, "the Company" refers to Reynolds, Smith and Hills, Inc. and its
subsidiaries.
The Company operates under one segment and provides a full range of
architectural, engineering, planning and environmental services to public and
private sector clients primarily in the southeastern United States. Specific
industry markets are also served nationally and internationally. Services are
provided through the following market-focused programs:
* Transportation - Services are provided to governmental
agencies and private entities and include planning, design,
environmental, and construction engineering and inspection
services for various modes of transportation (including
highways and bridges, mass transit, rail and port).
* Aviation - Services are provided to governmental agencies and
private entities (including air carriers and manufacturers)
and include planning, design, and environmental services for
airfields, terminals, and support buildings.
* Aerospace and Defense - Services are provided to NASA,
Department of Defense, Spaceport Florida Authority and major
aerospace contractors. The Company develops launch and
processing facilities for the Shuttle and expendable vehicles
including the latest multi-use launch pads.
* Public Infrastructure - Services are provided to local
government and quasi-governmental agencies. Services include
planning, evaluation, architectural and engineering design,
permitting, and construction administration for road, water,
wastewater, storm water and solid waste systems. These
services are also for public facilities such as parks and
public buildings.
* Commercial - Services are provided to commercial and
industrial entities engaged in planning, designing and
constructing a wide variety of structures (including office
buildings and office parks, warehouses, distribution and
manufacturing facilities, financial facilities, and data
centers). The Company also provides land development services
to these entities.
* Institutional - Services are provided to public agencies
engaged in educational, governmental, medical and scientific
facilities, and campus master planning. Services include
planning and designing a wide variety of structures including
schools, courthouses, other governmental buildings, and
research and technical facilities.
3
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Competition. The engineering and architectural services industry is
highly competitive. The Company's competitors include large national firms as
well as many small local firms. The Company competes with these firms on the
basis of technical capabilities, qualifications of personnel, reputation,
quality and price. Additionally, a local presence is important in certain areas.
No one firm currently dominates a significant portion of the industry.
Major Customers. For each of the years ended March 31, 2000, 1999 and
1998, approximately 80% of the Company's business was with departments or
agencies of federal, state and local governments. Contracts with the Florida
Department of Transportation provided approximately 30%, 35%, and 35% of total
revenues for each of the fiscal years 2000, 1999 and 1998, respectively. The
loss of a significant client such as the Florida Department of Transportation
would have a material adverse effect on the Company. No other customer accounted
for 10% or more of total revenues.
Backlog. Gross revenue backlog is the estimated revenue from contracts
entered into with clients, less that portion which has been recognized as
revenue. Backlog is subject to revision due to cancellations, modifications or
changes in the scope of projects. There can be no assurance that signed
contracts will ultimately be authorized or will not be canceled by clients in
accordance with their terms. Net revenue backlog is estimated revenue excluding
subconsultant and other direct costs and more accurately reflects the amounts to
be earned for activities performed by the Company.
The Company's gross backlog at March 31, 2000 was $35.7 million
compared to $34.3 million at March 31, 1999. Net backlog was $25.3 million at
March 31, 2000 as compared to $25.7 million at March 31, 1999. Approximately $28
million of services included in the Company's gross backlog as of March 31, 2000
will be performed in fiscal year 2001. The Company will receive additional
revenue in fiscal year 2001 from sales generated during the year which are not
included in the March 31, 2000 backlog.
Governmental Contracts. Some service contracts with departments or
agencies of federal, state, and local governments are subject to renegotiation
of profits or termination at the election of the government. The Company is not
aware of any adjustments that would have a material impact on the Company.
Compliance with Environmental Laws. Compliance with federal, state and
local regulations which have been enacted or adopted relating to the protection
of the environment is not expected to have any material effect upon the capital
expenditures, earnings and competitive position of the Company. However, such
compliance by the Company's clients may require the need for the
environmental-related services that the Company provides.
Employees. At March 31, 2000 the Company employed approximately 470
persons.
4
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Item 2. PROPERTIES
The Company leases its principal office space in Jacksonville, Florida,
and seven branches occupy leased office space in the following Florida
locations: Fort Myers, Merritt Island, Miami, Orlando, Plantation, Tallahassee,
and Tampa. The Company also maintains leased offices in Flint, Michigan,
Houston, Texas, Naperville, Illinois, Duluth, Minnesota, and Charlotte, North
Carolina. In addition, the Company leases space for construction sites at
approximately six locations in Florida. These leases expire at various dates
through fiscal year 2005. The current facilities are sufficient for the
operation of the business.
Item 3. LEGAL PROCEEDINGS
The Company is subject to lawsuits that arise in the normal course of
business involving claims typical of those filed against engineering and
architectural professions, alleging primarily professional errors and/or
omissions. The Company maintains professional liability insurance which insures
against risk within the policy limits. There can be no assurances that the
policy limits are sufficient to cover all claims. There are no legal proceedings
pending or, to the knowledge of the Company, threatened against the Company
which in management's opinion would have a material adverse effect on the
Company's financial condition, results of operations, or cash flow.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter ended
March 31, 2000.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following persons serve as the executive officers of the Company:
Name Age Position Held
Leerie T. Jenkins, Jr. 51 Chairman of the Board and Chief
Executive Officer
David K. Robertson 48 Chief Operating Officer, Executive
Vice President, Secretary,
Treasurer, and Director
Kenneth R. Jacobson 50 Chief Financial Officer, Executive
Vice President, and General
Counsel
J. Ronald Ratliff 51 Executive Vice President and Director
Darold F. Cole 58 Senior Vice President and Director
5
<PAGE>
Mr. Jenkins' principal positions are Chairman of the Board and Chief
Executive Officer of the Company, which he has held since 1990. He holds a
Masters and Bachelors degree in Landscape Architecture from the University of
Michigan and University of Georgia, respectively.
Mr. Robertson's principal positions are Chief Operating Officer, which
he has held since June 1999, Secretary, Treasurer, and Director of the Company,
which he has held since 1990. From 1990 to 1999, Mr. Robertson also held the
position of Chief Financial Officer. He graduated from Florida State University
with a degree in Business.
Mr. Jacobson joined the Company in December 1999 and his principal
positions are Chief Financial Officer, Executive Vice President, and General
Counsel. Prior to joining the Company, Mr. Jacobson was a Senior Partner at the
law firm of Jacobson & Beavers from 1986 to 1999. Mr. Jacobson serves as a
member on several companies' board of directors, including Pisgah Astronomical
Research Institute, a non-profit scientific research entity. He graduated from
Georgia Tech with a degree in Industrial Management. He received a Juris
Doctorate degree from Wake Forest University and an MBA from the University of
North Carolina.
Mr. Ratliff's principal positions are Executive Vice President, to
which he was appointed in June 1999, and Director of the Company which he has
held since 1990. From 1990 to 1999, Mr. Ratliff served as Senior Vice President
of the Company. He holds a Masters degree in Urban and Regional Planning, and
Bachelors degrees in Geology and Urban and Regional Planning from the University
of South Florida.
Mr. Cole's principal positions are Senior Vice President and Director
of the Company, which he has held since 1990. He holds a degree in Electrical
Engineering from Kansas State University.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's securities are not presently traded on any public stock
exchange or other public market. The Company had 221 shareholders of record at
March 31, 2000, including persons owning stock through the Company's 401(k)
plan. The Company pays no dividends on its common stock but instead reinvests
earnings into the Company to fund growth.
6
<PAGE>
Item 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction
with the financial statements of the Company, including the notes thereto, and
Management"s Discussion and Analysis of Financial Condition and Results of
Operations.
<TABLE>
SELECTED FINANCIAL DATA
(in thousands, except per share data)
YEAR ENDED MARCH 31
2000 1999 1998 1997 1996
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Gross revenue $51,818 $42,919 $37,122 $39,065 $34,070
Net service revenue 38,102 31,583 26,734 27,397 25,595
Net income 790 581 567 593 92
Common stock per share data:
Basic earnings per share 1.76 1.29 1.25 1.30 .20
Weighted average shares of
common stock outstanding 448,000 452,000 455,000 455,000 451,000
BALANCE SHEET DATA:
Working capital 3,960 3,508 3,926 2,781 1,935
Total assets 16,717 13,926 13,310 12,680 12,521
Long-term debt (less current portion) 100 200 0 7 76
Common stockholders' equity 7,301 6,460 5,908 5,337 4,741
</TABLE>
7
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage of net service revenue
represented by the items in the Company's consolidated statements of income:
Year Ended March 31,
------------------------------------
2000 1999 1998
---- ---- ----
Gross revenue 136.0% 135.9% 138.9%
Subcontract and other
direct costs 36.0 35.9 38.9
------- ------- ------
Net service revenue 100.0 100.0 100.0
Cost of services 38.5 37.8 39.2
------- ------- ------
Gross profit 61.5 62.2 60.8
Selling, general, and
administrative expenses 57.9 59.3 57.4
------- ------- ------
Operating income 3.6 2.9 3.4
Other income (expense) --- .2 .4
------- ------- ------
Income before income taxes 3.6 3.1 3.8
Income tax expense 1.5 1.3 1.7
------- ------- ------
Net income 2.1% 1.8% 2.1%
======= ======= ======
Gross revenue for fiscal 2000 was $51.8 million as compared to $42.9
million for fiscal 1999. This $8.9 million increase (21%) was due primarily to
increased revenues in the aviation, aerospace/defense, and institutional
programs. Current and prior year marketing efforts in these programs resulted in
several large project awards in fiscal 2000. Revenue for fiscal 1999 was $42.9
million as compared to $37.1 million for fiscal 1998. This 16% increase was due
primarily to increased revenues in the transportation and institutional
programs. An approximate breakdown of gross revenues by program is set forth
below.
8
<PAGE>
FY 2000 FY 1999 FY 1998
Transportation $19,500,000 $19,000,000 $16,600,000
Aviation 8,300,000 3,900,000 3,200,000
Aerospace/Defense 4,900,000 2,700,000 2,700,000
Public Infrastructure 3,900,000 3,700,000 5,000,000
Commercial 5,100,000 5,200,000 5,700,000
Institutional 10,100,000 8,400,000 3,900,000
Total $51,800,000 $42,900,000 $37,100,000
For each of the fiscal years ended March 31, 2000, 1999, and 1998,
approximately 80% of the Company's revenues were generated from public sector
clients. For the fiscal years ended March 31, 2000, 1999, and 1998,
approximately 30%, 35%, and 35%, respectively, of the Company's revenues
resulted from services provided to the Florida Department of Transportation.
Subcontract and other direct costs were 36%, 36% and 39% of net service
revenues for fiscal years 2000, 1999, and 1998, respectively. The 21% and 9%
increases in fiscal 2000 and fiscal 1999 correspond to the increases in gross
revenues.
Net service revenue more accurately reflects revenue for services
performed by the Company. Net service revenue was $38.1 million for fiscal 2000,
$31.6 million for fiscal 1999, and $26.7 million for fiscal 1998. The respective
21% and 18% increases correspond to the increases in gross revenues.
Cost of services represents direct labor costs associated with the
generation of net service revenues. Cost of services, as a percentage of net
service revenue, remained consistent at 39%, 38%, and 39%, respectively for
fiscal years ended March 31, 2000, 1999, and 1998. Gross profit, as a result,
also remained consistent 61%, 62% and 61% for fiscal years 2000, 1999, and 1998,
respectively.
Selling, general and administrative (SG&A) expenses consist of labor
costs of production 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 remained consistent as a
percentage of net service revenue ranging from approximately 57% to 59% for each
of the three previous fiscal years.
SG&A expenses increased to $22.1 million in fiscal 2000 from $18.7
million in fiscal 1999. This 18% increase was due primarily to increases in
9
<PAGE>
personnel and associated costs. The number of employees grew to 470 from 420
throughout the year as a result of the increased workload. Other increases in
SG&A expenses were experienced in rent expense relating to the new and expanded
offices discussed below, hiring and relocation, communication, reprographic,
depreciation, and office supplies expense. Also, as a result of the Company"s
increased earnings in fiscal 2000, incentive compensation increased $500,000
from fiscal 1999.
SG&A expenses increased 22% to $18.7 million in fiscal 1999 from $15.3
million in fiscal 1998. This increase was due primarily to increases in
personnel expenses relating to increased workload. The Orlando and Ft. Myers,
Florida offices moved into larger office space, and new offices were established
in Flint, Michigan, Houston, Texas, and Naperville, Illinois. As a result, there
were increases in office rent, telephone, computer equipment leases, software
license, and travel expenses. The Company also acquired an eleven person
architectural firm in Miami, Florida that also resulted in increases in payroll
and related benefits, travel, and amortization of goodwill. There were also
increases in professional fees related to project litigation.
Net income was $790,000 in 2000, $581,000 in 1999, and $567,000 in
1998. The increase in fiscal 2000 was primarily a result of increased net
service revenues. Fiscal 1999 net revenues increased from fiscal 1998 but were
offset by increases in costs of services and general and administrative
expenses, resulting in comparable net income for 1999 and 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital measurements are set forth below:
March 31
---------------
2000 1999 1998
------- ------- ------
Working capital (in thousands) $3,960 $3,508 $3,926
Current ratio 1.45:1 1.53:1 1.59:1
Ratio of liabilities to equity 1.29:1 1.16:1 1.25:1
Cash flows from operations were positive for the fiscal year ended
March 31, 2000 due primarily to net income. Increases in accounts receivable and
unbilled service revenue were offset by increases in accounts payable and
unearned service revenue. Combined days outstanding for accounts receivable and
unbilled service revenue were 75 days and 79 days for the fiscal years ended
March 31, 2000 and 1999, respectively. For the fiscal year ended March 31, 1999
cash flows from operations were negative as a result of increased accounts
receivable and unbilled services revenue. The increases in those account
balances were in conjunction with the increase in the Company"s revenue. For the
fiscal year ended March 31, 1998 cash flows from operations were positive.
The Company's investment in capital assets has been primarily in
information technology. In fiscal year 2000, approximately $850,000 was expended
on technology equipment and applications.
10
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The Company has in place a line of credit that provides for borrowings
up to $2,000,000 at March 31, 2000, with interest at the lower of the bank's
prime rate plus .1% or LIBOR plus 2.8%. There were no borrowings outstanding
under the line of credit at March 31, 2000. In addition, the Company has also
secured a committed credit facility of $2,000,000 which may be used for the
acquisition or merger of other architectural/engineering companies. The interest
rate on this facility is the lower of the bank"s prime rate or LIBOR plus 2.55%.
These borrowing agreements, which expire September 30, 2000, contain covenants
related to working capital and debt to net worth. The Company is in compliance
with all provisions of these lines of credit and expects that the agreements
will be renewed.
The Company believes that its existing financial resources, together
with its cash flow from operations and its unused bank line of credit, will
provide sufficient capital to fund its operations for fiscal 2001. This
statement is based on information that is currently available.
YEAR 2000
The Company experienced no significant problems with either its
internal or third-party information technology when the date changed from 1999
to 2000. The primary operating systems (general ledger, payroll, and
communications) and applications related to the development and processing of
architectural and engineering documents, functioned properly at the change of
century beginning January 1, 2000. The costs associated with Year 2000
activities were not material to the Company's financial position or results of
operations. The Company will continue to monitor its internal and external
information systems, however, based on operations since January 1, 2000, the
Company does not expect any significant impact to its ongoing business as a
result of the Year 2000 issue.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company believes that its exposure to market risks is immaterial.
The Company holds no market-risk sensitive instruments for trading purposes. At
present, the Company does not employ any derivative financial instruments, other
financial instruments or derivative commodity instruments to hedge any market
risk, and the Company does not currently plan to employ them in the near future.
To the extent that the Company has borrowings outstanding under either of its
credit facilities, there may be market risk relating to the amounts of
borrowings due to the fact that interest rates under the credit facilities are
variable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated Financial Statements of the registrant are set forth
beginning on page 15 of this report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
11
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PART III
Items 10 through 13.
The information required by Items 10 through 13 is included in the
Company's definitive proxy statement dated June 23, 2000 and is incorporated
herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
PAGE
(a)(1) Financial Statements
Independent Auditors' Report 15
Consolidated Statements of Income, years ended
March 31, 2000, 1999 and 1998 16
Consolidated Balance Sheets as of March 31,
2000 and 1999 17
Consolidated Statements of Shareholders' Equity,
years ended March 31, 2000, 1999
and 1998 18
Consolidated Statements of Cash Flows, years
ended March 31, 2000, 1999 and 1998 19
Notes to Consolidated Financial Statements 20
(a)(2) Financial Statement Schedule
Independent Auditors' Report 28
Schedule II - Valuation and Qualifying Accounts 29
(a)(3) Exhibits
3.1* Articles of Incorporation of the Company, as amended
3.2* By-Laws of the Company
12
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10.1** Reynolds, Smith and Hills, Inc. Amended and Restated 1991 Employee
Stock Bonus Plan
10.2** Reynolds, Smith and Hills, Inc. Amended and Restated 1991 Nonqualified
Stock Option Plan
10.3** Reynolds, Smith and Hills, Inc. Amended and Restated 1991 Incentive
Stock Option Plan
21 List of Subsidiaries 30
23 Consent of Deloitte & Touche LLP 31
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 copies of this
report distributed to shareholders and others.
* Filed in connection with and incorporated by reference to Registration
Statement on Form 10 (filed January 15, 1991).
** Filed in connection with and incorporated by reference to the Company's
September 30, 1997 Quarterly Report on Form 10-Q (filed November 12, 1997).
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended March 31, 2000.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Reynolds, Smith and Hills, Inc.
Dated: June 23, 2000 By /s/Kenneth R. Jacobson
------------- ----------------------
Kenneth R. Jacobson
Chief Financial Officer, Executive Vice
President, and General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Capacity Date
/s/ Leerie T. Jenkins, Jr. Chairman of the Board June 23, 2000
------------------------- and Chief Executive Officer
(Principal Executive Officer)
/s/ David K. Robertson Chief Operating Officer, Executive
------------------------- Vice President, Secretary, Treasurer,
and Director June 23, 2000
/s/ Kenneth R. Jacobson Chief Financial Officer, Executive
------------------------- Vice President, and General Counsel
(Principal Financial and
Accounting Officer) June 23, 2000
/s/ Darold F. Cole Director June 23, 2000
-------------------------
Darold F. Cole
/s/ Ronald Ratliff Director June 23, 2000
-------------------------
J. Ronald Ratliff
Director
-------------------------
David E. Thomas, Jr.
------------------------- Director
R. Ray Goode
------------------------- Director
James W. Apthorp
14
<PAGE>
INDEPENDENT AUDITORS" REPORT
The Board of Directors and Shareholders
Reynolds, Smith and Hills, Inc.
Jacksonville, Florida
We have audited the accompanying consolidated balance sheets of Reynolds, Smith
and Hills, Inc. and its subsidiaries as of March 31, 2000 and 1999 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended March 31, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Reynolds, Smith and Hills, Inc. and
its subsidiaries as of March 31, 2000 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte and Touche LLP
Certified Public Accountants
Jacksonville, Florida
May 26, 2000
15
<PAGE>
<TABLE>
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31
-------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------- --------------- ---------------
<S> <C> <C> <C>
GROSS REVENUE $ 51,818,000 $ 42,919,000 $ 37,122,000
SUBCONTRACT AND OTHER
DIRECT COSTS 13,716,000 11,336,000 10,388,000
--------------- --------------- ---------------
Net service revenue 38,102,000 31,583,000 26,734,000
COST OF SERVICES 14,671,000 11,930,000 10,482,000
--------------- --------------- ---------------
Gross profit 23,431,000 19,653,000 16,252,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 22,080,000 18,716,000 15,337,000
--------------- --------------- ---------------
Operating income 1,351,000 937,000 915,000
OTHER INCOME (EXPENSE)
Interest and other income 30,000 81,000 109,000
Interest expense (56,000) (22,000) (4,000)
--------------- --------------- ---------------
Income before income taxes
1,325,000 996,000 1,020,000
INCOME TAX EXPENSE 535,000 415,000 453,000
--------------- --------------- ---------------
NET INCOME $ 790,000 $ 581,000 $ 567,000
=============== =============== ===============
BASIC EARNING PER SHARE $ 1.76 $ 1.29 $ 1.25
=============== =============== ===============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 448,000 452,000 455,000
=============== =============== ===============
See accompanying notes to consolidated financial statements.
</TABLE>
16
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<TABLE>
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31
-------------------------------------------------------------------------------------------------------------
ASSETS 2000 1999
------ --------------- ---------------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 457,000 $ 68,000
Accounts receivable, net of allowance for doubtful accounts of
$131,000 and $181,000 6,490,000 5,392,000
Unbilled service revenue 5,179,000 4,281,000
Prepaid expenses and other current assets 159,000 195,000
Deferred income taxes 431,000 206,000
--------------- ---------------
Total current assets 12,716,000 10,142,000
PROPERTY AND EQUIPMENT, net 2,513,000 2,294,000
OTHER ASSETS 166,000 41,000
IDENTIFIABLE INTANGIBLE ASSETS, net of accumulated
amortization of $1,023,000 and $966,000 14,000 71,000
COST IN EXCESS OF NET ASSETS OF ACQUIRED
BUSINESSES, net of accumulated amortization of $313,000
and $243,000 1,308,000 1,378,000
--------------- ---------------
$ 16,717,000 $ 13,926,000
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 100,000 $ 100,000
Accounts payable 3,120,000 2,393,000
Accrued expenses 2,617,000 2,503,000
Unearned service revenue 2,919,000 1,639,000
--------------- ---------------
Total current liabilities 8,756,000 6,635,000
LONG-TERM DEBT 100,000 200,000
DEFERRED INCOME TAXES 173,000 170,000
OTHER LIABILITIES 387,000 461,000
--------------- ---------------
Total liabilities 9,416,000 7,466,000
--------------- ---------------
COMMITMENTS AND CONTINGENCIES (Notes 6 and 7)
SHAREHOLDERS' EQUITY:
Common Stock, $.01 par value, 4,000,000 shares authorized,
448,000 and 444,000 issued and outstanding 5,000 4,000
Paid-in capital 3,570,000 3,520,000
Retained earnings 3,726,000 2,936,000
--------------- ---------------
Total shareholders' equity 7,301,000 6,460,000
--------------- ---------------
$ 16,717,000 $ 13,926,000
=============== ===============
See accompanying notes to consolidated financial statements.
</TABLE>
17
<PAGE>
<TABLE>
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------------------------------------
Common Stock
Paid-In Retained
Shares Amount Capital Earnings Total
------------ ------------ -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1997 455,000 $ 5,000 $ 3,537,000 $ 1,795,000 $ 5,337,000
Issuance of common stock, net
of issuance costs --- --- 4,000 --- 4,000
Net income 567,000 567,000
------------ ------------ -------------- --------------- ---------------
BALANCE, MARCH 31, 1998 455,000 5,000 3,541,000 2,362,000 5,908,000
Issuance of common stock,
net of issuance costs 5,000 --- 63,000 --- 63,000
Repurchase of common stock (16,000) (1,000) (84,000) (7,000) (92,000)
Net income 581,000 581,000
------------ ------------ -------------- --------------- ---------------
BALANCE, MARCH 31, 1999 444,000 4,000 3,520,000 2,936,000 6,460,000
Issuance of common stock, net
of issuance costs 4,000 1,000 50,000 --- 51,000
Net income 790,000 790,000
------------ ------------ -------------- --------------- ---------------
BALANCE, MARCH 31, 2000 448,000 $ 5,000 $ 3,570,000 $ 3,726,000 $ 7,301,000
============ ============ ============== =============== ===============
See accompanying notes to consolidated financial statements.
</TABLE>
18
<PAGE>
<TABLE>
REYNOLDS, SMITH AND HILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31
----------------------------------------------------------------------------------------------------------------
2000 1999 1998
-------------- --------------- --------------
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 790,000 $ 581,000 $ 567,000
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 934,000 817,000 760,000
Deferred income taxes (222,000) (23,000) (128,000)
Loss (gain) on disposal of fixed assets 24,000 11,000 (2,000)
Deferred rent charges (51,000) (63,000) 155,000
Change in operating assets and liabilities:
Accounts receivable and unbilled
service revenue (1,996,000) (1,832,000) (156,000)
Other assets and prepaid expenses (89,000) 37,000 (9,000)
Accounts payable and accrued expenses 868,000 303,000 (67,000)
Unearned service revenue 1,280,000 (415,000) 116,000
-------------- --------------- --------------
Net cash provided (used) by operating activities 1,538,000 (584,000) 1,236,000
-------------- --------------- --------------
INVESTING ACTIVITIES:
Capital expenditures (1,052,000) (1,185,000) (269,000)
Purchase of subsidiary 0 (387,000) 0
Proceeds from sale of fixed assets 3,000 6,000 4,000
-------------- --------------- --------------
Net cash used by investing activities (1,049,000) (1,566,000) (265,000)
-------------- --------------- --------------
FINANCING ACTIVITIES:
Repayments of long-term debt (100,000) (55,000) (69,000)
Repurchase of common stock 0 (92,000) 0
Net proceeds from issuance of common stock 0 1,000 3,000
-------------- --------------- --------------
Net cash used by financing activities (100,000) (146,000) ( 66,000)
-------------- --------------- --------------
NET INCREASE (DECREASE) IN CASH 389,000 (2,296,000) 905,000
CASH AT BEGINNING OF YEAR 68,000 2,364,000 1,459,000
-------------- --------------- --------------
CASH AT END OF YEAR $ 457,000 $ 68,000 $ 2,364,000
============== =============== ==============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
CASH PAID:
Interest paid $ 57,000 $ 20,000 $ 4,000
Income taxes paid 930,000 383,000 471,000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Note payable - owner financing ----- 300,000 -----
Stock bonuses issued 50,000 62,000 -----
See accompanying notes to consolidated financial statements.
</TABLE>
19
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - Reynolds, Smith and Hills, Inc. (the Company)
is a professional service firm operating in the engineering and
architectural design services industry. The Company provides a full
range of architectural, engineering, planning and environmental
services.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
Revenue Recognition - Revenue from contract services is recognized on
the percentage-of-completion method. Revenue is recorded as costs are
incurred, and profit is recognized on each contract based on the
percentage that incurred costs bear to estimated total costs. In the
event of an anticipated loss, the entire amount of the loss is charged
to current operations.
The Company incurs subcontract and other direct costs (out-of-pocket
expenses) some of which are passed through directly to its clients. The
Company believes that revenue excluding subcontract and other direct
costs, more accurately reflects the amounts earned for activities
performed by the Company. Accordingly, the Company reports such costs
as a reduction of gross revenue to arrive at net service revenue.
Unbilled service revenue represents revenues recognized in excess of
amounts billed. Unearned service revenue represents billings in excess
of revenues recognized. Unbilled service revenues which will not be
collected during the next year are not significant.
Property and Equipment - Property and equipment is stated at cost.
Depreciation is computed principally on the straight-line method over
the estimated useful lives of the assets. Property and equipment is
periodically reviewed by management for impairment whenever changes in
circumstances indicate that the carrying value may not be recoverable.
20
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
Identifiable Intangible Assets - Identifiable intangible assets consist
of values allocated to key employees, contract backlog, proposals, and
a covenant not to compete and are being amortized on a straight-line
basis over periods of two to ten years.
Cost in Excess of Net Assets of Acquired Businesses - Cost in excess of
net assets of acquired businesses is being amortized on the
straight-line method over periods varying from fifteen to forty years.
The carrying value of cost in excess of net assets of acquired business
is periodically reviewed by management and impairment, if any, is
recognized when the projected undiscounted cash flows are less than the
carrying value.
Income Taxes - The Company and its subsidiaries file consolidated
Federal income tax returns. Deferred income taxes result from temporary
differences which arise from certain transactions being reported in
different periods for financial statement purposes than for tax
purposes. Deferred tax assets and liabilities are recognized using an
asset and liability approach and are based on differences between the
financial statement and tax basis of assets and liabilities using
presently enacted tax rates.
Basic Earnings Per Share - Basic earnings per share is computed by
dividing net income by the weighted average number of common shares
outstanding. Options outstanding to purchase common stock had no
significant dilutive effect.
Cash Equivalents - The Company considers cash on hand and cash held in
banks subject to immediate withdrawal to represent cash.
New Accounting Standard - In 1998 the Financial Accounting Standards
Board issued SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities" which establishes accounting and reporting
standards for such activities. In 1999 the FASB deferred the effective
date of the standard to fiscal years beginning after June 15, 2000.
Management has not yet determined the impact of SFAS No. 133 on the
presentation of its financial statements.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at March 31:
2000 1999
---- ----
Leasehold improvements $ 349,000 $ 245,000
Equipment 6,147,000 6,194,000
------------ ------------
6,496,000 6,439,000
Accumulated depreciation (3,983,000) (4,145,000)
------------ ------------
$ 2,513,000 $ 2,294,000
============ ============
21
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
3. ACCRUED EXPENSES
Accrued expenses consist of the following at March 31:
2000 1999
---- ----
Accrued payroll $ 466,000 $ 792,000
Accrued vacation pay 363,000 360,000
Accrued incentive compensation 883,000 398,000
Other 905,000 953,000
---------- ----------
$ 2,617,000 $ 2,503,000
========== ==========
4. DEBT
Long-term debt consists of the following at March 31:
2000 1999
---- ----
Note payable; interest at 8%
maturing May 7, 2001
$100,000 due annually $ 200,000 $ 300,000
Less current portion ( 100,000) ( 100,000)
----------- ----------
Total long-term debt $ 100,000 $ 200,000
=========== ==========
At March 31, 2000, the Company had $2,000,000 of borrowing available
under a credit line, with interest at the lower of the bank's prime rate plus
.1% or LIBOR plus 2.8%. In addition, the Company has secured a committed credit
facility of $2,000,000 which is reserved for the potential acquisition or merger
of other architectural/engineering firms. The interest rate on this facility is
the lower of the bank's prime rate or LIBOR plus 2.55%. These borrowing
agreements, which expire September 30, 2000, require the Company to be in
compliance with financial covenants relating to working capital and debt to net
worth. Substantially all of the Company's tangible assets are pledged as
security.
22
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
5. INCOME TAXES
The provision for income taxes for the years ended March 31 consist of
the following:
2000 1999 1998
---- ---- ----
Current:
Federal $ 629,000 $ 354,000 $ 454,000
State 128,000 84,000 93,000
Deferred:
Federal (184,000) ( 19,000) ( 78,000)
State ( 38,000) ( 4,000) ( 16,000)
--------- ---------- ---------
$ 535,000 $ 415,000 $ 453,000
========= ========== =========
The differences between the provision for income taxes and income taxes
computed using the U.S. Federal statutory rate are as follows:
2000 1999 1998
---- ---- ----
Amount computed
using statutory rate $ 450,000 $ 339,000 $ 347,000
Increase in taxes
resulting from:
State income taxes 68,000 53,000 44,000
Goodwill amortization 8,000 9,000 9,000
Meals and entertainment 59,000 53,000 40,000
Other ( 50,000) (39,000) 13,000
--------- --------- ---------
$ 535,000 $ 415,000 $ 453,000
========= ========= =========
The following table identifies net deferred taxes recognized in the
Company's balance sheet at March 31:
2000 1999
---- ----
Deferred tax asset $ 680,000 $ 545,000
Deferred tax liability (422,000) (509,000)
---------- ----------
Total deferred taxes $ 258,000 $ 36,000
========== ==========
23
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
The types of temporary differences and their related tax effects which
create deferred taxes at March 31 are summarized as follows:
2000 1999
---- ----
Assets:
Allowance for doubtful accounts $ 50,000 $ 69,000
Allowance for warranty claims 109,000 92,000
Excess rental expense over payments 75,000 95,000
Accruals not currently deductible 446,000 289,000
--------- ---------
$ 680,000 $ 545,000
========= =========
Liability:
Excess of tax over book depreciation $(249,000) $(288,000)
Accrued Liabilities ( 59,000) ( 71,000)
Capitalized expenses (114,000) (150,000)
--------- ----------
$(422,000) $ (509,000)
========= ==========
6. LEASES
The Company leases certain facilities and equipment under
noncancellable leases expiring in various years through 2005. Some of
the operating leases provide that the Company pay taxes, maintenance,
insurance and other occupancy costs. Rent expense for the years ended
March 31, 2000, 1999 and 1998 amounted to $2,567,000, $2,402,000 and
$2,157,000, respectively.
Future minimum payments under noncancellable operating leases are as
follows:
Operating
Leases
---------
2001 $ 2,556,000
2002 2,199,000
2003 1,799,000
2004 563,000
2005 235,000
------------
Total minimum payments $ 7,352,000
============
24
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
7. CONTINGENCIES
The Company is subject to lawsuits involving claims typical of those
filed against engineering and architectural professions. In
management's opinion the potential losses not covered by insurance
would not be material to the Company's financial position, results of
operations, or cash flow.
For each of the years ended March 31, 2000, 1999 and 1998,
approximately 80% of the Company's business is with departments or
agencies of Federal, state and local governments. For the same periods
approximately 30%, 35% and 35%, respectively, of the Company's gross
revenues resulted from services provided to the Florida Department of
Transportation. These contracts may be subject to renegotiation or
termination at the election of the government. The Company is subject
to examinations by representatives of certain governmental agencies for
which it provides services. In management's opinion the results of any
examination would not have a significant effect on the Company's
financial position.
8. EMPLOYEE BENEFIT PLAN
The Company sponsors a Profit Sharing Plan that qualifies under Section
401(k) of the Internal Revenue Code. The Plan allows participating
employees to contribute from 2% to 15% of their earned compensation to
the plan. The Company contributes to the plan 50% of each participant's
contribution, up to the 6% level of the participant's contribution. In
fiscal 2000 the Company's matching percentage was increased to 50% from
25%. For the years ended March 31, 2000, 1999 and 1998, the Company
contributed $362,000, $161,000 and $163,000, respectively. Participants
in the plan have the option to purchase shares of the Company's common
stock. At March 31, 2000, 96,000 shares of Company stock have been
issued and 294,000 shares are reserved for future issuance under the
plan.
9. STOCK BONUS AND OPTION PLAN
The Company has a stock bonus plan that provides for the awarding of
the Company's common stock to selected employees. At March 31, 2000,
29,000 shares are reserved for future issuance under the plan.
The Company has considered SFAS No. 123 and has determined that its
application is not material to the financial statements.
25
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
The Company has stock option plans that provide to selected employees
the granting of incentive and non-qualified options to purchase the
Company's common stock. A summary of option transactions is shown
below.
2000 1999
------------------------ -----------------
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
------- -------- ------- --------
Outstanding at
beginning of year 29,000 $12 36,400 $12
Options granted 14,000 15 3,000 14
Options exercised --- n/a ( 100) 10
Options forfeited ( 4,000) 11 (10,300) 11
------- --------
Outstanding at
end of year 39,000 $13 29,000 $12
======= ========
Options exercisable at
year end 14,000 11,200
The following table summarizes information about stock options outstanding at
March 31, 2000:
<TABLE>
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 3/31/00 Life (years) Price at 3/31/00 Price
------------- ---------------- ------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
$11.00-$11.99 11,000 5.3 11.38 6,000 11.28
$12.00-$12.99 5,000 6.3 12.59 2,000 12.52
$14.00-$14.99 10,000 2.8 14.03 6,000 14.00
$15.00-$15.99 12,000 9.4 15.00 --- n/a
$16.00-$16.99 1,000 4.5 16.50 --- n/a
------- -------
39,000 6.0 13.50 14,000 12.60
====== =======
</TABLE>
26
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
Remaining non-exercisable stock options as of March 31, 2000 become
available as follows:
2001 9,000
2002 6,000
2003 5,000
2004 3,000
2005 2,000
-------
25,000
At March 31, 2000, 110,000 stock options are reserved for future
issuance under the plans.
10. FINANCIAL INSTRUMENTS
The Company used the following methods and assumptions to estimate the
fair value of the following financial instrument:
Debt. Interest rates that are currently available to the
Company for issuance of debt with similar terms and remaining
maturities are used to estimate fair value for debt
instruments. The Company believes the carrying amount is a
reasonable estimate of such fair value.
11. RELATED PARTY TRANSACTION
On February 2, 2000, the Company loaned $108,000 to eleven officers for
the purpose of purchasing company stock from other shareholders. The
loans are being repaid over six years, with interest only being paid in
the first year. Interest is being charged at 8.5%.
27
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Reynolds, Smith and Hills, Inc.
Jacksonville, FL
We have audited the accompanying consolidated financial statements of Reynolds,
Smith and Hills, Inc. and its subsidiaries as of March 31, 2000 and 1999 and for
each of the three years in the period ended March 31, 2000, and have issued our
report thereon dated May 26, 2000; such report is included elsewhere in this
Form 10-K. Our audits also included the consolidated financial statement
schedule of Reynolds, Smith and Hills, Inc., listed in Item 14. This
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Deloitte and Touche LLP
Certified Public Accountants
Jacksonville, FL
May 26, 2000
28
<PAGE>
<TABLE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
REYNOLDS, SMITH AND HILLS, INC.
ADDITIONS: DEDUCTIONS:
BALANCE AT CHARGED TO COST BALANCE AT
BEGINNING OF AND END
DESCRIPTION PERIOD EXPENSES WRITE-OFFS OF PERIOD
--------------------------------- ----------------- ------------------ ------------------ ----------------
<S> <C> <C>
Year ended March 31, 2000:
Allowance for
Doubtful accounts $181,000 ----- ($50,000) $131,000
Year ended March 31, 1999:
Allowance for
Doubtful accounts $162,000 $29,000 ($10,000) $181,000
Year ended March 31, 1998:
Allowance for
doubtful accounts $127,000 $70,000 ($35,000) $162,000
</TABLE>
29
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
Exhibit 21
List of Material Subsidiaries
1. Reynolds, Smith and Hills CS, Incorporated
(a Florida corporation)
30
<PAGE>
REYNOLDS, SMITH AND HILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements number
33-33536, 33-40551, 33-40552, 33-40553, 33-40554, 33-51100, 33-51102, 33-51320,
and 333-40237 of Reynolds, Smith and Hills, Inc. on Form S-8 of our report dated
May 26, 2000 appearing in this Annual Report on form 10-K of Reynolds, Smith and
Hills, Inc. for the years ended March 31, 2000, 1999 and 1998.
/s/ Deloitte and Touche LLP
Certified Public Accountants
Jacksonville, FL
June 23, 2000
31
