-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CB5UQdgBWqEqGEGszyyK3vahp0jPVBysy759MTX+PI+mTOaWw8GVligysF7D7KMv bmsimijN5n7U69yM98PtGQ== 0000008137-97-000006.txt : 19970325 0000008137-97-000006.hdr.sgml : 19970325 ACCESSION NUMBER: 0000008137-97-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970324 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATKINSON GUY F CO OF CALIFORNIA CENTRAL INDEX KEY: 0000008137 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 941649018 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-03062 FILM NUMBER: 97561779 BUSINESS ADDRESS: STREET 1: 1001 BAYHILL DR STREET 2: P O BOX 593 CITY: SAN BRUNO STATE: CA ZIP: 94066 BUSINESS PHONE: 4158761000 MAIL ADDRESS: STREET 1: P O BO 593 STREET 2: S SAN FRANCISCO 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File number 0-3062 GUY F. ATKINSON COMPANY OF CALIFORNIA (Exact name of registrant as specified in its charter) STATE OF DELAWARE 94-1649018 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 1001 Bayhill Drive, San Bruno, California 94066 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 876-1000 Securities Registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.01 par value (Title of Class) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of January 31, 1997, the aggregate market value of the voting stock held by nonaffiliates of the registrant was $63,332,422 based on closing sale prices on the NASDAQ National Market System. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose. The number of shares of common stock, $0.01 par value, outstanding as of January 31, 1997 was 8,987,467. Items 10, 11, 12 and 13 of Part III incorporate information by reference from the definitive proxy statement for the Annual Meeting of Shareholders to be held on April 17, 1997. GUY F. ATKINSON COMPANY OF CALIFORNIA 1996 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS PAGE PART I Item 1. Business 1-6 2. Properties 6-7 3. Legal Proceedings 7 4. Submission of Matters to a Vote of Security Holders 8 4a. Executive Officers of the Registrant 8 PART II 5. Market for Registrant's Common Equity and Related Stockholder Matters 9 6. Selected Financial Data 10 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-14 8. Financial Statements and Supplementary Data 15-40 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 40 PART III 10. Directors and Executive Officers of the Registrant 40 11. Executive Compensation 40 12. Security Ownership of Certain Beneficial Owners and Management 40 13. Certain Relationships and Related Transactions 41 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 41-42 PART 1 ITEM 1. BUSINESS Background Guy F. Atkinson Company of California was incorporated in Delaware in 1995 as a successor in interest to a California corporation of the same name that was incorporated in 1967, as the successor in interest to Guy F. Atkinson Company, a Nevada corporation organized in December 1934. Services Provided The Company provides a full range of engineering, procurement, construction, and related services internationally, to clients in the power, infrastructure, industrial and commercial building, pulp and paper, mining, and water and wastewater treatment markets. The Company previously operated businesses in automobile parts manufacturing, distribution of industrial pipe, and oil and gas exploration and production, which were sold in the fourth quarter of 1994. Operating Structure The following is a description of the Company's principal operating business units. Atkinson Construction Company, headquartered in San Bruno, California, is one of the largest contractors of heavy civil projects, serving both public and private sectors, working domestically and internationally. This business unit performs general construction services for the following markets: hydroelectric power, bridges, highways, dams, water and wastewater treatment facilities, and tunnels and shafts applied in mining, power, transportation, and water conveyance. Walsh Construction Company, headquartered in Trumbull, Connecticut, is a major provider of design-construct services to both the power and industrial building markets. It has power and cogeneration experience using fuels ranging from gas, petroleum coke and coal to municipal solid waste and biomass. Its building experience embraces industrial, institutional, R&D, laboratory, and commercial facilities. Commonwealth Construction Company, headquartered in Burnaby, Canada, serves a variety of markets including pulp and paper, mining and metallurgical processing, water and wastewater treatment, and general industrial facilities throughout the Americas and Southeast Asia. Monterey Construction Company, operating from San Bruno, California, provides merit-shop services to heavy civil and infrastructure construction markets. Microsep International Corporation, headquartered in Burnaby, Canada, provides water and wastewater treatment equipment and services to the industrial, municipal and metallurgical processing markets. Page 1 Principal Markets CONSTRUCTION OPERATIONS Through its worldwide construction divisions and subsidiaries, Atkinson provides full service construction and related engineering and procurement services to heavy civil, industrial, commercial, energy, natural resources, utility, and government clients. The Company generally competes for work that is complex in engineering and construction, requiring a broad scope of services. Its acquisition of work is facilitated by its excellent reputation, diversity of services, technical expertise, and worldwide geographic coverage. HEAVY CIVIL CONSTRUCTION Heavy civil work provides a significant portion of the Company's revenues. Projects requiring a high degree of organization and complex engineering are well-matched to the Company's long standing expertise. The Company's heavy civil work includes the building of dams, hydroelectric facilities, bridges, locks, mines, tunnels, shafts, highways, railroads and other large infrastructure-related projects. The Company believes that domestic and international work for new infrastructure development and rehabilitation, major transportation projects, power development, water and wastewater treatment, locks and dams, and underground construction will continue to be important markets for it in the future. INDUSTRIAL CONSTRUCTION The Company's work in the industrial sector includes both modernization and new construction of facilities for power generation, pulp and paper, mineral processing and manufacturing, as well as the construction of commercial, institutional, academic, and research facilities. Its industrial construction business provides feasibility studies, design/build services, value-engineering, management information systems, general construction services, construction management, start-up and operation and maintenance services as the markets may require. The Company's industrial construction business serves a broad range of markets and clients. These markets are very competitive, serviced by numerous well-established and highly competent contractors and driven by their own set of strategic and economic market factors. Some of these factors can result in diminished capital spending for construction programs and/or delays in planned projects. For example, recent construction activity within the resource development industries has emphasized modernization and upgrading of facilities and compliance with environmental standards, rather than construction of new facilities. In response, the Company promotes its record of reliable performance, quality, safety, and its capabilities in scheduling and cost control as integral services. OTHER OPERATIONS As an enhancement to its construction capabilities in the water and wastewater treatment markets, the company uses patented technologies to achieve high-rate separation of solids from liquids. These processes offer superior effluent quality and sludge settling capabilities, while resulting in the significantly reduced size of treatment equipment. Page 2 Competitive Conditions and Risk Factors Competition within the construction industry is based primarily on price, reputation for quality, experience, reliability, and the financial strength of the contractor. The markets served by the Company are competitive and require substantial resources, in particular, highly skilled and experienced technical personnel. Further, domestic construction activity depends to a significant degree on the general state of the U.S. economy and, more specifically, on the relevant market industry segments and their economic condition and future planning. As a result of economic changes within its markets, the Company's level of work will vary year to year. By diversifying its services to various markets and expanding its presence internationally, the Company is able to moderate some of the effects of fluctuations in its markets. The Company sells its capabilities on the basis of experience, price using competitive bidding, and contract negotiation. It also offers additional incremental services its markets may require, such as design and engineering or turnkey packages, consisting of design, construction, procurement, and advice on financial structure and sources. While these services may be offered by the Company, more typically they are offered through an alliance or in association with other firms. Projects are staffed by management supplied by the Company and by hourly craft personnel mostly obtained in a local labor market. Trained hourly employees are normally available in the vicinity of the Company's projects. However, substantial training must be undertaken in those locations where experienced labor is not available. The Company frequently participates in joint ventures with other contractors to share risks and combine financial, technical, and other resources. When the Company undertakes work in a joint venture it may act as sponsor or lead contractor, in which case it manages all aspects of the work. If it is not the sponsor, the Company's participation is a shared construction responsibility, or may be limited to assistance in estimating and policy management and sharing on a pro-rata basis the financial risks and rewards of the work. In 1996, 18 percent of the Company's construction revenue was derived from work performed in joint ventures. The Company performs its construction work under prime contracts that take various forms. These contractual arrangements include fixed-unit or lump-sum price, cost-reimbursable, fixed or percentage fee, or maximum price contracts. Contracts are either competitively bid and awarded or individually negotiated. In performing as a general contractor, the Company undertakes the planning and scheduling of projects, marshals the required personnel, procures materials, awards and administers subcontracts, and directs and manages the construction project. In the case of a construction management contract, the Company monitors and coordinates the progress of the work and assists the owner where other prime contractors are employed to construct the project. An increasingly popular form of contract is the "EPC" contract, where the Company acts as a turnkey contractor taking responsibility for engineering design, procurement of equipment and construction, and provides other operating services from inception through to delivery of a completed project. In certain instances, the Company has guaranteed facility completion by a scheduled acceptance date and/or achievement of certain acceptance and performance testing levels. Failure to meet any such schedule or performance requirements could result in additional costs or liquidated damages, thus eroding expected project profit margins. Page 3 The Company also owns or leases construction equipment located at the sites of its projects or at owned or leased storage yards. Raw materials required for the Company's construction projects are normally available in the open market and may be obtained from local sources. The Company often obtains working capital for its construction projects by pricing mechanisms that provide capital early in the project for mobilization and start-up costs. However, contract terms may also necessitate, in some cases, an infusion of working capital from the Company from time to time during the course of construction. Working capital may be provided from internal Company sources or outside borrowing to finance the cost of work for which pricing negotiations are incomplete or responsibility is disputed by the owner. It is also customary in the construction industry for owners to withhold a retention until the work is completed. This retention usually ranges from 5 percent to 10 percent of the contract price. Due to the types of construction the Company undertakes, its work is, to some extent, seasonal. Typically, less can be accomplished in winter than in other seasons. The Company plans construction to mitigate, where possible, the effects of weather. Approximately 20 percent of the Company's revenues during the fiscal year 1996 were generated from foreign operations, principally in Southeast Asia. In competing for foreign construction opportunities, the Company selects only those projects which have fundamental construction characteristics and risks similar to those presented by domestic projects. The Company recognizes that foreign work may present financial, cultural, and political risks which must be specifically considered, and it seeks, through foreign exchange and other risk management programs as well as pricing arrangements, to mitigate these risks to achieve a reasonable profit. Construction and Other Activity During 1996 The following is a description of the Company's more significant construction projects which were either under construction or completed during 1996: Power o Construction of a 2,550 megawatt hydroelectric power plant on the Caroni River in Venezuela. o Construction of a 42 megawatt hydroelectric power plant on the Ohio River in West Virginia. o Engineering, procurement, construction, and commissioning of a 117 megawatt gas-fired cogeneration facility in Sacramento, California. o Engineering, procurement, and construction of a 32 megawatt gas-fired cogeneration facility in Mingo Junction, Ohio. o Modernization and upgrading of an existing power plant at Yale University in New Haven, Connecticut. o Engineering, procurement, construction, and commissioning of a 12 megawatt gas-fired cogeneration facility at the UCSF medical facility in San Francisco, California. Infrastructure - Transportation o Construction of several stages of High Occupancy Vehicle roadway on Interstate 5 in Seattle, Washington. o Construction of a balanced drawbridge spanning the Duwamish River in Seattle, Washington. o Earthquake retrofitting of portions of the Interstate 280 viaduct in San Francisco, California. Page 4 Infrastructure - Water & Wastewater o Sponsor of a joint venture constructing a 1.7 mile long, 285 foot high rockfill dam, together with an associated saddle dam for a water storage reservoir in Southern California. o Sponsor of a joint venture constructing twin 110 by 1,200 foot lock chambers on the Ohio River at Olmsted, Illinois. Infrastructure - Tunnels o Participant in a joint venture constructing a cut-and-cover tunnel section for Interstate 90 in Boston, Massachusetts. o Participant in a joint venture constructing a ten mile, 430 feet deep effluent outfall tunnel beneath Massachusetts Bay. o Reconstruction and renovation of a two-mile railroad tunnel near Seattle, Washington. o Extension of a geological exploratory tunnel adjacent to the Dead Sea in Israel. Industrial o Participant in a joint venture performing engineering, procurement, construction, and commissioning of a wastepaper and de-inking facility near Hagerstown, Maryland. o Construction of a 1,500 tons-per-day bleached hardwood kraft pulp mill in East Kalimantan, Indonesia. o Engineering, procurement, and construction of a 500,000 tons-per-year coal processing facility in Gillette, Wyoming. Building o Construction of a six-story, 208,000 square foot chemistry building at the Storrs campus of the University of Connecticut. o Renovation and reconstruction of an existing 250,000 square foot building into new classrooms at the Stamford campus of the University of Connecticut. o Design and construction of a twenty-story, 238-unit residential continuing-care facility for seniors in La Jolla, California. o Construction of two multi-story research laboratory buildings at the Buck Center for Research into Aging in Novato, California. o Construction of a six-story research tower and adjoining teaching wing at the Stony Brook campus of the State University of New York. Customers Approximately 54 percent of the Company's construction revenues in 1996 were from customers in the private sector, with 46 percent from the public sector. Geographically, approximately 80 percent of the Company's revenues were generated domestically and 20 percent internationally. Revenues from contracts with the U.S. Government, principally for construction services, provided 6 percent of the Company's consolidated revenues. These contracts are terminable at the election of the U.S. government. During 1996, 18 percent of the Company's consolidated revenues were generated from a contract with PT. Kiani Kertas, an Indonesian corporation, to construct a pulp mill. Page 5 Backlog The approximate value of the Company's firm backlog of contracts as of December 31, 1996 and December 31, 1995 was $609 million and $642 million, respectively. New contract awards amounted to $436 million and $749 million in 1996 and 1995, respectively. The dollar value of the backlog is not necessarily indicative of the future earnings of the Company. Backlog includes only those contracts for which work is proceeding, or for which the Company has received a "notice to proceed". There can be no assurance that cancellations or adjustments increasing or decreasing the scope of work will not occur. Geographic Area Information Note 17 to the Consolidated Financial Statements (included under Item 8 of this Report), sets forth for the fiscal years 1994 through 1996 the Company's revenue, operating profit (loss), and assets with respect to the geographic areas in which the Company operates. Personnel The number of employees of the Company during fiscal year 1996 varied substantially depending on work volume, the status of completion of construction contracts, weather, and season. The average number of such employees was 6,500 including employees of joint ventures sponsored by the Company. The number of salaried employees averaged 625 during the same period.
ITEM 2. PROPERTIES Building Lease Location Use Land Area Square Feet Expires 1001 Bayhill Drive Executive N/A 29,418 8/2/2003 San Bruno, CA 94066 Offices 1100 Grundy Lane Construction N/A 39,102 7/14/2003 San Bruno, Ca 94066 Divisional Office 101 Oakview Drive Construction 12.1 acres 43,540 N/A Trumbull, CT 06611-0400 Divisional Office 4599 Tillicum Street Construction 23.4 acres 53,438 N/A Burnaby, BC Divisional Canada V5J 3J9 Office 10365 Old Placerville Road Construction N/A 7,477 5/31/2000 Suite 210 Regional Sacramento, CA 95827 Office Page 6
Building Lease Location Use Land Area Square Feet Expires 405 Eccles Avenue Manufacturing N/A 19,384 7/31/1998 South San Francisco, and Sales CA 94080 Facility 200 Union Blvd., Suite 400 Construction N/A 5,451 10/31/1998 Lakewood, CO 80228 Regional Office 600 Naches Avenue S.W. Construction N/A 5,428 1/31/1998 Suite 120 Regional Renton, WA 98057 Office 110 Turnpike Road Construction N/A 3,638 2/28/1999 Suite 110 Regional Westborough, MA 01581 Office Twin Towers, Building 2 Construction N/A 1,076 1/31/1998 35 Jabotinsky Street Regional Ramat Gan, Israel Office Aspac Center, Suite 701 Construction N/A 1,453 5/1/1997 J1. HR. Rasuna Said Kav. Regional X-2 No. 4 Office Jakarta, Indonesia 1404E Tektite Towers 1 Construction N/A 1,397 7/14/1997 PSE Centre Exchange Road Regional Metro Manila, Phillippines Office
ITEM 3. LEGAL PROCEEDINGS The nature of the construction business periodically results in liens, disputes, suits and claims. Certain claims and suits have been brought against the Company in connection with contractual disputes alleging personal injury, property, or other damages. Disputes are generally negotiated to settlement or litigated, with judgments against the Company being either promptly satisfied or appealed. On March 7, 1995, a complaint was filed in the Supreme Court of New York by Valeo and Valeo Engine Cooling, against the Company and its investment banker, Dillon, Read & Co. Inc., in connection with the Company's sale of its manufacturing subsidiary, Lake Center Industries, Inc. The plaintiffs, the unsuccessful bidder for Lake Center Industries, allege breach of contract and other wrongdoing. They seek actual damages of two hundred ninety thousand dollars in connection with preparing their bid, seven million dollars on a theory of unjust enrichment and ten million dollars in punitive damages. Page 7 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the security holders during the fourth quarter of 1996. ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT Jack J. Agresti (59) has been Chief Executive Officer and President since April, 1994. He was President and Chief Operating Officer of the Company from April, 1991 to April, 1994. He was Executive Vice President of the Company from April, 1990 to April, 1991, and Group Vice President of the Company from February, 1985 to April, 1990. William J. Carlson (53) has been Senior Vice President of the Company since April, 1991. From February, 1991 to the present he has also served as President and General Manager of Guy F. Atkinson Construction Company. Prior to February, 1991, he served with the Company's Walsh Construction Company division, as Vice President from August, 1986, Executive Vice President from February,1989, and President and General Manager from November, 1989. Herbert D. Montgomery (54) is Senior Vice President Finance, Chief Financial Officer and Treasurer. He joined the Company in June, 1994. He was Vice President Finance, Treasurer and Chief Financial Officer from August, 1989 to June, 1994 of Harding Associates, Inc., an environmental consulting engineering company. John F. Huguet (51) has been Senior Vice President of the Company since April, 1995. From January, 1990 to the present he has also served as President or President and General Manager of the Company's Commonwealth Construction Company division. Thomas J. Walsh, III (46) has been Vice President of the Company since April, 1995. From September, 1990 to the present he has also served as President and General Manager or Executive Vice President of the Company's Walsh Construction Company division. Therese Ambrusko (49) has been Vice President of the Company since April, 1995. From March, 1989 to the present she has also served as General Counsel or General Counsel and Corporate Secretary. James D. Stevens (59) has been Vice President and Chief Administrative Officer of the Company since January, 1985. Page 8 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) The Company's common stock is traded in the over-the-counter market and is quoted on the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System under the symbol "ATKN." The following table sets forth the high and low NASDAQ sales prices for such common stock in each quarterly period during the two most recent fiscal years.
1996 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter - ---- ----------- ----------- ----------- ----------- Low $ 8.63 $ 10.75 $ 11.00 $ 8.13 High 12.25 14.00 14.00 13.13 1995 Low $ 7.00 $ 7.50 $ 9.38 $ 9.00 High 10.50 9.63 11.00 11.00
(b) The number of holders of record of the Company's common stock as of January 31, 1997 was 1,235. (c) dividends declared in 1996 and 1995 were as follows:
1996 1995 ---- ---- Dividends per share by quarter: First $0.00 $2.00 Second 0.00 0.00 Third 0.00 0.00 Fourth 0.00 0.00 ---------------------------------------------------------- Total Dividends $0.00 $2.00 ----------------------------------------------------------
Page 9
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (In thousands of dollars except share and per share amounts) - ------------------------------------------------------------------------------------------------------------------- Years ended December 31: 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------- Revenue $468,467 $416,995 $422,969 $345,036 $320,963 - ------------------------------------------------------------------------------------------------------------------- Cost of revenue 424,217 377,823 437,049 326,307 290,661 - ------------------------------------------------------------------------------------------------------------------- Gross margin 44,250 39,172 (14,080) 18,729 30,302 - ------------------------------------------------------------------------------------------------------------------- General and administrative expenses 39,335 38,551 39,080 30,302 33,007 - ------------------------------------------------------------------------------------------------------------------- Restructuring charges - - 4,169 - - - ------------------------------------------------------------------------------------------------------------------- Income (loss) from operations 4,915 621 (57,329) (11,573) (2,705) - ------------------------------------------------------------------------------------------------------------------- Interest expense 1,684 904 4,902 3,481 3,100 - ------------------------------------------------------------------------------------------------------------------- Other income (expense) 3,582 5,033 1,450 7,750 5,134 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes, extraordinary item and cumulative effect of changes in accounting 6,813 4,750 (60,781) (7,304) (671) - ------------------------------------------------------------------------------------------------------------------- Income tax expense (benefit) 1,794 1,141 (8,758) 1,356 108 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before extraordinary item and cumulative effect of changes in accounting 5,019 3 609 (52,023) (8,660) (779) - ------------------------------------------------------------------------------------------------------------------- Income from discontinued operations - - 3,238 5,065 2,256 - ------------------------------------------------------------------------------------------------------------------- Gain on disposal of discontinued operations - - 36,866 - - - ------------------------------------------------------------------------------------------------------------------- Income (loss) before extraordinary item and cumulative effect of changes in accounting 5,019 3,609 (11,919) (3,595) 1,477 - ------------------------------------------------------------------------------------------------------------------- Extraordinary item: Utilization of tax loss carryforward - - - - 213 - ------------------------------------------------------------------------------------------------------------------- Cumulative effect of changes in accounting - - (739) 4,974 - - ------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 5,019 $ 3,609 $(12,658) $ 1,379 $ 1,690 - ------------------------------------------------------------------------------------------------------------------- Income (loss) per share of common stock from continuing operations, before extraordinary item, and cumulative effect of changes in accounting $ 0.54 $ 0.39 $ (5.86) $ (0.99) $ (0.09) - ------------------------------------------------------------------------------------------------------------------- Income per share from discontinued operations - - 0.36 0.58 0.26 - ------------------------------------------------------------------------------------------------------------------- Gain per share on disposal of discontinued operations - - 4.16 - - - ------------------------------------------------------------------------------------------------------------------- Income (loss) per share before extraordinary item and cumulative effect of changes in accounting 0.54 0.39 (1.34) (0.41) 0.17 - ------------------------------------------------------------------------------------------------------------------- Extraordinary item per share - - - - 0.02 - ------------------------------------------------------------------------------------------------------------------- Cumulative effect per share of changes in accounting - - (0.08) 0.57 - - ------------------------------------------------------------------------------------------------------------------- Net income (loss) per share $ 0.54 $ 0.39 $ (1.42) $ 0.16 $ 0.19 - ------------------------------------------------------------------------------------------------------------------- Average number of shares and common stock equivalents utilized in net income per share calculations 9,359,000 9,161,000 8,877,000 8,788,000 8,777,000 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 265,223 $234,844 $199,714 $271,879 $260,206 - ------------------------------------------------------------------------------------------------------------------- Long-term debt, less current portion $ 1,210 $ 1,917 $ 2,199 $ 18,273 $ 18,227 - ------------------------------------------------------------------------------------------------------------------- Notes payable, including current portion of long-term debt $ 33,402 $ 844 $ 662 $ 36,568 $ 41,389 - ------------------------------------------------------------------------------------------------------------------- Special cash dividend of $2.00 per share of common stock $ - $ 17,835 $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------- Book value at year-end $ 89,284 $ 83,458 $ 96,988 $109,680 $110,313 - ------------------------------------------------------------------------------------------------------------------- Book value per share $ 9.93 $ 9.37 $ 10.93 $ 12.50 $ 12.57 - ------------------------------------------------------------------------------------------------------------------- High and low prices of stock $ 14.000 $ 11.000 $ 11.000 $ 10.000 $ 10.250 8.125 7.000 8.000 8.250 6.500 - 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Page 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview of the Business Guy F. Atkinson Company of California provides a full range of engineering, procurement, construction and related services domestically and internationally, to clients in the power, infrastructure, industrial and commercial building, pulp and paper, mining, and water and wastewater treatment markets. The Company principally operates through three construction divisions, Atkinson Construction Company, located in San Bruno, California; Walsh Construction Company, located in Trumbull, Connecticut; and Commonwealth Construction Company, located in Burnaby, Canada. In 1996, the Company generated 80 percent of its revenues domestically, and 20 percent internationally (primarily from Southeast Asia). Approximately 54 percent of its revenues in 1996 were derived from private sector construction and the balance from the public sector. The Company sells its capabilities on the basis of experience, price using competitive bidding, and negotiated contracts. Construction work may be performed under contract for a fixed price, price per unit of work performed, cost-reimbursable plus fee, or other form of contract, with most contracts being of the fixed price nature. The Company may perform construction work alone, or in conjunction with engineering or other construction companies to offer full service engineering, procurement and construction capabilities. In performing construction services on a fixed price basis, the Company takes certain performance and financial risks, namely that it can maintain project costs within budget for the work to be performed, and that payment will be forthcoming for work performed, including appropriate compensation for work outside the defined scope of the original contract. In exchange for assuming this risk, the Company earns a gross margin, from which overhead and general corporate expenses are met. From time to time, contract disputes occur, generally arising from work performed resulting from conditions or circumstances not envisioned in the original contract. Such disputes may be negotiated to the satisfaction of both parties, or, on occasion, may lead to litigation or mediation, which can give rise to unforeseen additional expense and/or losses to the Company. Reclassification of Statement of Income As a result of the Company's sale of substantially all of its nonconstruction businesses (as explained in note 12 to the Consolidated Financial Statements), certain income statement amounts for 1994 have been reclassified as discontinued operations. Revenues and expenses reflect only those amounts attributable to the ongoing construction business of the Company, while the net operating results of the disposed businesses, and the related gain on disposition, have been shown separately. Results of Operations (all dollar amounts are in thousands unless otherwise stated) Revenue: The Company's revenue of $468,467 in 1996 was 12 percent higher than the corresponding figure of $416,995 in 1995, and 11 percent higher than the $422,969 of revenue in 1994. This increase in revenue in 1996 was a result of the commencement of a number of significant construction contracts which were awarded to the Company during 1995. Page 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED The backlog of uncompleted contracts amounted to $609,340 at December 31, 1996, compared with $641,670 at December 31, 1995 and $309,778 at December 31, 1994. New contract awards during 1996, 1995, and 1994 were $436,137, $748,887, and $340,045 respectively. Gross margin: The Company's gross margin of $44,250 in 1996 was 13 percent higher than the corresponding figure of $39,172 in 1995, and a substantial improvement over the $(14,080) of gross margin in 1994. The increase in gross margin in 1996 compared with 1995 was due to the 12 percent growth in revenue during the period, which, in turn, was attributable to the commencement of a number of significant construction contracts awarded to the Company in 1995. The percentage of gross margin to revenue remained fairly constant during 1996 and 1995. The negative gross margin in 1994 was due to certain contract dispute settlements, cost overruns, and the write-down of certain assets, together amounting to $29,771. General and administrative expense: General and administrative expenses of $39,335 in 1996 increased by 2 percent over the $38,551 recorded in 1995, and by less than 1 percent over the 1994 expense of $39,080. The increase in general and administrative expenses was due to an increased level of business development activities, with particular emphasis on international markets. These higher expenditures were partly offset by the Company's continuing overhead cost reduction efforts. Interest income: Interest income amounted to $1,801 in 1996, compared with $3,784 in 1995, and $563 in 1994. Interest income in 1996 included $1,060 earned on an interest-bearing account receivable as explained under "Liquidity and Capital Resources," and $741 earned from short-term investments. The reduction in interest income from 1995 to 1996 was the result of lower short-term investment balances in 1996 compared with 1995. Interest Expense: Interest expense was $1,684 in 1996, compared with $904 in 1995, and $4,902 in 1994. The increase in interest expense in 1996 compared with 1995 was attributable to the Company's utilization of its lines of credit in 1996; there was no utilization in 1995. Interest expense of $4,902 in 1994 was due to short-term borrowings in that year, together with interest of $1,715 related to an income tax settlement. Miscellaneous: Miscellaneous income of $1,781 in 1996 was principally derived from gains on property dispositions. Income of $1,249 in 1995 included gains on property dispositions of $2,138, a loss of $3,041 on the write-down of a property, and gains of $2,079 on the settlement of certain non-construction claims and disputed items. Miscellaneous income of $887 in 1994 was primarily derived from foreign exchange gains. Income taxes: Income tax expense was $1,794 in 1996, compared with expense of $1,141 in 1995, and a benefit of $8,758 in 1994. Income tax expense in both 1996 and 1995 was attributable to foreign income taxes on foreign source income, together with U.S. state income taxes. The tax benefit in 1994 was due to the allocation of income taxes to discontinued operations. Page 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED Discontinued Operations: In 1994 discontinued operations gave rise to income of $3,238 and a gain on disposition of $36,866. The nature and results of these operations are explained in note 11 to the Consolidated Financial Statements. Changes in Accounting: The results for 1994 include an accounting charge of $739 from the adoption of Statement of Financial Accounting Standards No. 112. Net Income: The Company had net income of $5,019 in 1996, compared with $3,609 in 1995, and a net loss of $12,658 in 1994. Earnings per share were $0.54 in 1996, $0.39 in 1995, and a loss per share of $1.42 in 1994. Liquidity and Capital Resources As reported in the Consolidated Statements of Cash Flows, operating activities utilized $64,110 of cash in 1996, compared with $6,412 in 1995, and net generation of cash of $10,753 in 1994. The utilization of cash by operations in 1996 was attributable to increases in accounts receivable and in inventories and unamortized costs on contracts. With regard to accounts receivable, the Company, at December 31, 1996, had an uncollected balance of approximately $40,000 relating to a contract to construct the first phase of a continuing care retirement facility in Southern California. Subsequent to December 31, 1996, the facility was placed in bankruptcy under Chapter 11 of the Bankruptcy Code. Construction of the residential portion of the facility was completed in June of 1996, with many of the residential units currently occupied. Day-to-day operation of the facility is being performed under the supervision of a court-appointed trustee. As one of the secured creditors, the Company is taking an active role in developing a plan of reorganization for the facility. While there can be no assurance as to the outcome of this matter, based on discussions with potential buyers of the facility, the Company believes it will be successful in recovering the full amount of its receivable. The timing of repayment to the Company will depend on the terms of the reorganization plan adopted by the bankruptcy court. In addition, the Company, at December 31, 1996, had unamortized costs of approximately $24,000 relating to a contract to construct a pulp mill in Indonesia. This amount represents additional costs resulting from schedule delays, contract acceleration and other contract changes beyond the Company's control, for which it is seeking reimbursement. In March of 1997, a portion of these costs, approximately $10,000, were reimbursed to the Company through a negotiated settlement. The Company expects to resolve and collect the balance. Net investing activities utilized cash of $399 in 1996, compared with $15,191 in 1995, and cash generation of $96,882 in 1994. The utilization of cash in 1995 was attributable to net acquisitions of construction equipment to service the Company's increased backlog of construction work-in-progress. During 1996 expenditures on equipment acquisitions were offset by selective disposals of older equipment. The high level of cash generated from investing activities in 1994 resulted from the sale of the Company's nonconstruction businesses. Page 13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED Financing activities generated $32,427 of cash in 1996, compared with net utilization of $17,697 in 1995, and $35,039 in 1994. During 1996, the Company increased its borrowings against its lines of credit by $32,500, and reduced its cash and invested balances by $31,950 in order to finance cash utilization by operating activities. Cash utilization by financing activities in 1995 and 1994 was attributable to the payment of a special shareholder dividend of $2.00 per share, and the repayment of short-term borrowings. The Company has syndicated lines of credit of $15,000 expiring April 30, 1997 and $40,000 expiring June 30, 1997. The renewal of these lines is currently under negotiation. The availability of these lines of credit is reduced by any letters of credit which may be outstanding against the lines. At December 31, 1996, the Company had $32,500 in outstanding borrowings and $6,221 in outstanding letters of credit. The Company believes that its cash and short-term investments, together with lines of credit and funds generated from operations and other sources, will be adequate to cover foreseeable future requirements. Page 14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (a) Financial Statements Page 16 Report of Independent Accountants 17-18 Consolidated Balance Sheets, as of December 31, 1996 and 1995 19 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 20-21 Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994 22 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 23-39 Notes to Consolidated Financial Statements (b) Financial statement schedules: Financial statement schedules are omitted because the conditions requiring their filing do not exist, or because the required information is given in the financial statements, including the notes thereto. Page 15 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Guy F. Atkinson Company of California: We have audited the consolidated balance sheets of Guy F. Atkinson Company of California and Consolidated Subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Guy F. Atkinson Company of California and Consolidated Subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. San Francisco, California March 17, 1997 Page 16
GUY F. ATKINSON COMPANY OF CALIFORNIA CONSOLIDATED BALANCE SHEETS (in thousands of dollars except share and per share amounts) - ------------------------------------------------------------------------------------------------------------ As of December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,854 $ 39,804 Accounts receivable 118,964 76,196 Costs and estimated earnings in excess of billings 12,511 28,751 Inventories and unamortized costs on contracts in progress 56,601 20,987 Investments in joint ventures 34,076 32,272 Deferred income taxes 225 - Other current assets 3,986 5,244 - ------------------------------------------------------------------------------------------------------------ Total current assets 234,217 203,254 - ------------------------------------------------------------------------------------------------------------ PROPERTY, PLANT AND EQUIPMENT At cost: Land 2,528 2,683 Buildings 10,232 11,203 Construction equipment 32,928 36,036 Other equipment 8,314 7,478 - ------------------------------------------------------------------------------------------------------------ 54,002 57,400 Less accumulated depreciation 25,341 28,163 - ------------------------------------------------------------------------------------------------------------ Total property, plant and equipment, net 28,661 29,237 - ------------------------------------------------------------------------------------------------------------ Other assets 2,345 2,353 - ------------------------------------------------------------------------------------------------------------ Total assets $ 265,223 $ 234,844 - ------------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements
Page 17
GUY F. ATKINSON COMPANY OF CALIFORNIA CONSOLIDATED BALANCE SHEETS (in thousands of dollars except share and per share amounts) - ------------------------------------------------------------------------------------------------------------ As of December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable, including current portion of long-term debt $ 33,402 $ 844 Accounts payable 81,981 86,671 Billings in excess of costs and estimated earnings 21,422 20,300 Accrued payroll 8,843 9,310 Accrued federal & foreign income taxes 8,096 5,020 Other accrued expenses 13,110 18,835 Deferred income taxes - 248 Due to joint ventures 588 730 - ----------------------------------------------------------------------------------------------------------- Total current liabilities 167,442 141,958 - ----------------------------------------------------------------------------------------------------------- NON-CURRENT LIABILITIES Long-term debt, less current portion 1,210 1,917 Deferred income taxes 109 88 Postretirement health care and postemployment benefit obligations 7,178 7,423 - ----------------------------------------------------------------------------------------------------------- Total liabilities 175,939 151,386 - ----------------------------------------------------------------------------------------------------------- Contingencies (Note 16) STOCKHOLDERS' EQUITY Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued or outstanding Common stock, par value $0.01; 20,000,000 shares authorized; 8,987,467 issued and outstanding at December 31, 1996 and 8,951,154 at December 31, 1995 1,896 1,895 Paid-in capital 13,262 13,085 Accumulated translation adjustment (4,526) (4,446) Unearned compensation - (400) Additional pension liability (35) (344) Retained earnings 78,687 73,668 - ----------------------------------------------------------------------------------------------------------- Total stockholders' equity 89,284 83,458 - ----------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $265,223 $234,844 - ----------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements
Page 18
GUY F. ATKINSON COMPANY OF CALIFORNIA CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands of dollars except share and per share amounts) - ------------------------------------------------------------------------------------------------------------ Capital Stock Accumulated Unearned Additional Number Paid-in Translation Compen- Pension Retained of Shares Amount Capital Adjustment sation Liability Earnings - ------------------------------------------------------------------------------------------------------------ Balance, December 31, 1993 8,869,224 $1,894 $12,239 $(3,441) $(759) $ (805) $100,552 Changes for the year - 1994: Net (loss) (12,658) Restricted shares: Forfeited (18,400) (152) 152 Valuation adjustment 129 (129) Issued to pension plan 100,000 969 Foreign currency translation (1,808) Additional minimum pension liability 805 - ----------------------------------------------------------------------------------------------------------- Balance, December 31, 1994 8,950,824 1,894 13,185 (5,249) (736) - 87,894 Changes for the year - 1995: Net income 3,609 Cash dividend - $2.00 per share (17,835) Restricted shares: Forfeited (33,600) (336) 336 Stock options exercised 33,930 1 236 Foreign currency translation 803 Additional minimum pension liability (344) - ----------------------------------------------------------------------------------------------------------- Balance, December 31, 1995 8,951,154 1,895 13,085 (4,446) (400) (344) 73,668 CHANGES FOR THE YEAR - 1996: NET INCOME 5,019 RESTRICTED SHARES: FORFEITED (40,000) (400) 400 STOCK OPTIONS EXERCISED 76,313 1 577 FOREIGN CURRENCY TRANSLATION (80) ADDITIONAL MINIMUM PENSION LIABILITY 309 - ----------------------------------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1996 8,987,467 $1,896 $13,262 $(4,526) $ - $ (35) $78,687 - ----------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements
Page 19
GUY F. ATKINSON COMPANY OF CALIFORNIA CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars except share and per share amounts) - ----------------------------------------------------------------------------------------------------------- Years ended December 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------- Revenue $468,467 $416,995 $422,969 Cost of revenue 424,217 377,823 437,049 - ----------------------------------------------------------------------------------------------------------- Gross margin 44,250 39,172 (14,080) Restructuring charges - - 4,169 General and administrative expenses 39,335 38,551 39,080 - ----------------------------------------------------------------------------------------------------------- Income (loss) from operations 4,915 621 (57,329) Other income (expense) Interest income 1,801 3,784 563 Interest expense (1,684) (904) (4,902) Miscellaneous, net 1,781 1,249 887 - ----------------------------------------------------------------------------------------------------------- Total other income (expense) 1,898 4,129 (3,452) - ----------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before taxes and the cumulative effect of changes in accounting 6,813 4,750 (60,781) Provision (benefit) for income taxes 1,794 1,141 (8,758) - ----------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before the cumulative effect of changes in accounting 5,019 3,609 (52,023) Income from discontinued operations, net of income taxes: Income from discontinued operations - - 3,238 Gain on disposal of discontinued operations - - 36,866 - ----------------------------------------------------------------------------------------------------------- Total income from discontinued operations, net of income taxes - - 40,104 - ----------------------------------------------------------------------------------------------------------- Income (loss) before the cumulative effect of changes in accounting 5,019 3,609 (11,919) Cumulative effect of changes in accounting: Postemployment benefit costs - - (739) - ----------------------------------------------------------------------------------------------------------- Total cumulative effect of changes in accounting - - (739) - ----------------------------------------------------------------------------------------------------------- Net income (loss) $ 5,019 $ 3,609 $(12,658) - ----------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements
Page 20
GUY F. ATKINSON COMPANY OF CALIFORNIA CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars except share and per share amounts) - ----------------------------------------------------------------------------------------------------------- As of December 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------- Income (loss) per share of common stock from continuing operations before cumulative effect of changes in accounting $0.54 $0.39 $(5.86) Income per share of common stock from discontinued operations, net of income taxes - - 4.52 - ------------------------------------------------------------------------------------------------------------ Income (loss) per share of common stock before cumulative effect of changes in accounting 0.54 0.39 (1.34) Cumulative effect per share of common stock of changes in accounting - - (0.08) - ------------------------------------------------------------------------------------------------------------ Net income (loss) per share of common stock $0.54 $0.39 $(1.42) - ------------------------------------------------------------------------------------------------------------ Average number of shares of common stock and common stock equivalents utilized in net income (loss) per share calculation 9,359,000 9,161,000 8,877,000 - ------------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements
Page 21
GUY F. ATKINSON COMPANY OF CALIFORNIA CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars except share and per share amounts) - ---------------------------------------------------------------------------------------------------------- As of December 31, 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income (loss) $ 5,019 $ 3,609 $(12,658) Adjustments to reconcile net income to net cash provided by (used in) operating activities: (Income) from discontinued operations - - (3,238) Restructuring charges - - 4,169 Depreciation, depletion and amortization 4,693 6,666 2,822 Provision for loss on investment in energy properties - - 300 Deferred income taxes (451) 444 1,104 (Gain) on dispositions of property, plant and equipment (3,724) (3,028) (92) (Gain) on disposition of discontinued operations - - (36,866) Cumulative effect of changes in accounting - - 739 Changes in operating assets and liabilities: Accounts receivable (42,832) (43,080) 21,965 Inventories and unamortized costs on contracts (35,619) (963) 15,601 Investments in joint ventures (1,957) 8,845 10,190 Other current assets 1,257 (2,089) 1,557 Accounts payable and accrued expenses (10,524) 46,353 6,525 Accrued income taxes 3,076 (1,877) (7,757) Billings in excess of costs and estimated earnings, net 17,377 (21,033) 10,351 Other, net (425) (259) (511) - ---------------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities from continuing operations (64,110) (6,412) 14,201 Net cash (used in) operating activities from discontinued operations - - (3,448) - ---------------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (64,110) (6,412) 10,753 - ---------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Property, plant and equipment expenditures (10,016) (23,022) (1,852) Proceeds from dispositions of property, plant and equipment 9,609 7,791 1,036 Proceeds from disposition of discontinued operations - - 100,903 Increase (decrease) in other assets, net 8 40 (778) Net investing activities of discontinued operations - - (2,427) - ---------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities (399) (15,191) 96,882 - ---------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Short-term borrowings (repayments), net 32,500 - (34,215) Proceeds of long-term borrowings 50 812 - Long-term debt repayments (700) (911) (678) Common stock issuance related to stock option awards 577 237 - Cash dividends paid - (17,835) - Net financing activities of discontinued operations - - (146) - ---------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 32,427 (17,697) (35,039) - ---------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash 132 663 (1,003) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents $(31,950) $(38,637) $71,593 - ---------------------------------------------------------------------------------------------------------- Supplementary information: Cash paid during the period for: Interest $ 3,826 $ 553 $ 4,798 Federal, foreign and state income taxes 561 2,563 838 Common stock contributed to pension plan - - 969 - ---------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements
Page 22 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF THE BUSINESS The Company provides full service construction and construction-related services in the United States, Canada and internationally, to the following markets: Power generation Industrial and commercial building Pulp and paper Mining Transportation and infrastructure Water and wastewater treatment USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS 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 reporting period. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION The Company conducts business primarily through the following subsidiaries / business units: Atkinson Construction Company Commonwealth Construction Company Walsh Construction Company The consolidated financial statements include Guy F. Atkinson Company of California and its subsidiaries. Investments in joint ventures are recorded on the equity method. Significant transactions between the Company and its subsidiaries are eliminated in consolidation. CONSTRUCTION CONTRACT ACCOUNTING Construction revenue and gross margin, including the Company's share of joint-venture contracts, are recognized using the percentage of completion method. This method applies the ratio of costs incurred to Company engineers' estimates of total costs on a contract-by-contract basis. These estimates include provisions for known and anticipated cost overruns, if any exist or are expected to occur, and may be subject to revision in the normal course of business. Revenue from claims by the Company for additional contract compensation is recorded when agreed to by the owner. Provision is made currently for any anticipated future losses on contracts in progress. The classification of construction contract-related current assets and current liabilities is based on the Company's contract performance cycle, which may exceed one year. Page 23 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED FOREIGN EXCHANGE The Company has assets, liabilities and transactions in foreign currencies, principally the Canadian dollar, which potentially expose it to the risk of foreign exchange gains and losses. The Company evaluates foreign currency transaction risk and will protect against such risks by various hedging strategies where appropriate. The Company does not engage in speculation, nor does it typically hedge nontransaction-related balance sheet exposure. CASH AND CASH EQUIVALENTS Cash equivalents consists of highly-liquid securities with an original maturity of three months or less. INVENTORIES AND UNAMORTIZED COSTS ON CONTRACTS Inventories are valued at the lower of cost (principally first-in, first-out) or market prices. Unamortized costs on contracts include the cost of plant and project facilities to be absorbed over the life of the projects, the estimated value of recoverable assets, and costs related to unpriced change orders and claims for additional contract compensation to the extent their recovery is probable. The amount of costs relating to unpriced change orders and claims that is included in inventories and unamortized costs on contracts is the lesser of the actual amount of costs incurred or the estimated amount that is recoverable as additional compensation. These estimates are based upon management's expectations regarding the probability of future recovery and may be subject to revision in the normal course of business. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are stated at cost. Major improvements and renewals are capitalized, while maintenance and repairs are charged to cost as incurred. The Company depreciates all property, plant, and equipment over its expected useful life on a straight-line basis. The depreciation expense is determined by means of management estimates of expected useful life, salvage value and asset usage. These estimates may be subject to revision in the normal course of business. Included in property, plant, and equipment are capitalized computer software costs, together with the costs of systems implementation, which are being depreciated on a straight-line basis over a five year period. The net book value of computer software and systems implementation at December 31, 1996 is $1,750. Upon sale or retirement of property, plant, and equipment, the related costs and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is included in income. Page 24 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED INCOME TAXES Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities. CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of short-term investments and accounts receivable. The Company places excess cash in U.S. government debt obligations, investment-grade commercial paper and certificates of deposit, in accordance with investment objectives which are designed to preserve principal, meet liquidity needs, minimize credit risk and achieve a satisfactory yield. The Company provides construction services to a large number of public agencies and private sector companies in different industries and geographic areas. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential credit losses, and such losses have been within management's expectations. EARNINGS PER SHARE Earnings per share of common stock and common stock equivalents are calculated using the weighted average number of common shares outstanding, plus (in periods where they have a dilutive effect) the net additional number of shares which would be issuable upon the exercise of stock options and warrants, assuming that the Company used the proceeds received to repurchase outstanding shares at market prices. ADOPTION OF NEW ACCOUNTING STANDARDS In October 1995, Statement of Financial Accounting Standards No. 123, "Accounting for Stock- based Compensation" (SFAS 123) was issued. This statement requires the fair value of stock options and other stock-based compensation issued to employees to be either included as compensation expense in the income statement, or the pro-forma effect on net income and earnings per share to be disclosed in the footnotes to the financial statements. The Company has adopted SFAS 123 on a disclosure basis as explained more fully in note 10 to the financial statements. Page 25 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED NEWLY ISSUED ACCOUNTING STANDARDS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" and No. 129, "Disclosure of Information about Capital Structure." SFAS No. 128 establishes standards for computing and presenting earnings per share (EPS), replacing the presentation of primary EPS with a presentation of basic EPS. SFAS No. 129 consolidates the existing disclosure requirements regarding an entity's capital structure. SFAS No. 128 and No. 129 are effective for financial statements issued for periods ending after December 15, 1997 and accordingly, management has not determined the impact on the Company's financial statements for the year ended December 31, 1996. CHANGES IN ACCOUNTING PRINCIPLES In 1994, the Company recorded an accounting charge of $739 for postemployment benefit costs upon the adoption of SFAS 112. RECLASSIFICATION OF 1995 AND 1994 FINANCIAL STATEMENTS Certain amounts for 1995 and 1994 have been reclassified to conform with the 1996 financial statement presentation and have not affected previously reported net income or stockholders' equity. 2. CASH AND CASH EQUIVALENTS
- ---------------------------------------------------------------------------------------------- Cash and short-term investments consist of the following: 1996 1995 - ---------------------------------------------------------------------------------------------- U.S. government treasury securities $ - $ 256 Investment-grade commercial paper 1,770 25,097 Cash balances 6,084 14,451 - ---------------------------------------------------------------------------------------------- Total cash and short-term investments $ 7,854 $ 39,804 - ----------------------------------------------------------------------------------------------
3. ACCOUNTS RECEIVABLE Accounts receivable include retained percentages of $31,044 and $13,366 at December 31, 1996 and 1995 respectively. The amount for 1996 is expected to be collected as follows: $23,559 in 1997, $7,145 in 1998 and $340 in 2000 and later years. Page 26 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - ---------------------------------------------------------------------------------------------- 4. INVENTORIES AND UNAMORTIZED COSTS ON CONTRACTS
- ---------------------------------------------------------------------------------------------- The major classifications of inventory are as follows: 1996 1995 - ---------------------------------------------------------------------------------------------- Construction materials, parts and supplies $ 1,728 $ 2,812 Unamortized costs on contracts 54,873 18,175 - ---------------------------------------------------------------------------------------------- $ 56,601 $ 20,987 - ----------------------------------------------------------------------------------------------
Unamortized costs on contracts include $8,500 (1995 - $9,414) of costs relating to claims, and $41,767 (1995 - $4,315) of costs relating to unapproved change orders. 5. INVESTMENTS IN JOINT VENTURES The Company participates in various construction joint ventures in the United States, Canada and other countries.
- ---------------------------------------------------------------------------------------------- Net assets of these joint ventures are as follows: Total Company interest Other interest - ---------------------------------------------------------------------------------------------- 1996 ASSETS $ 183,511 $ 68,851 $ 114,660 LIABILITIES 113,729 35,363 78,366 - ---------------------------------------------------------------------------------------------- NET ASSETS $ 69,782 $ 33,488 $ 36,294 - ---------------------------------------------------------------------------------------------- 1995 Assets $ 110,624 $ 38,937 $ 71,687 Liabilities 67,850 7,395 60,455 - ---------------------------------------------------------------------------------------------- Net Assets $ 42,774 $ 31,542 $ 11,232 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Investment in joint ventures is made up as follows: 1996 1995 - ---------------------------------------------------------------------------------------------- Investment in joint ventures $ 34,076 $ 32,272 Due to joint ventures (588) (730) - ---------------------------------------------------------------------------------------------- Net investment $ 33,488 $ 31,542 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Income statement amounts for joint ventures are: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Revenue Sponsored joint ventures $ 146,297 $ 64,769 $ 121,934 Less other venturers' shares 78,724 30,691 62,292 - ---------------------------------------------------------------------------------------------- Company share of sponsored joint ventures 67,573 34,078 59,642 Company share of non-sponsored joint ventures 16,424 40,379 41,322 - ---------------------------------------------------------------------------------------------- Revenue recorded from joint ventures $ 83,997 $ 74,457 $ 100,964 - ----------------------------------------------------------------------------------------------
Page 27
GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - ---------------------------------------------------------------------------------------------- 5. INVESTMENTS IN JOINT VENTURES, CONTINUED Cost of revenue Sponsored joint ventures $ 130,851 $ 57,182 $109,885 Less other venturers' shares 71,221 27,008 49,899 - ---------------------------------------------------------------------------------------------- Company share of sponsored joint ventures 59,630 30,174 59,986 Company share of non-sponsored joint ventures 22,588 38,257 44,835 - ---------------------------------------------------------------------------------------------- Cost of revenue recorded from joint ventures $ 82,218 $ 68,431 $ 104,821 - ---------------------------------------------------------------------------------------------- Gross margin Sponsored joint ventures $ 15,446 $ 7,587 $ 12,049 Less other venturers' shares 7,503 3,683 12,393 - ---------------------------------------------------------------------------------------------- Company share of sponsored joint ventures 7,943 3,904 (344) Company share of non-sponsored joint ventures (6,164) 2,122 (3,513) - ---------------------------------------------------------------------------------------------- Gross margin recorded from joint ventures $ 1,779 $ 6,026 $ (3,857) - ----------------------------------------------------------------------------------------------
The Company's investment in each joint venture consists of cash contributions, plus its share of earnings, minus its share of losses and cash distributions. The Company adjusts its share of earnings from each joint venture, where necessary, to conform with its accounting policies as outlined in note 1 to these financial statements. As a consequence, investments in joint ventures will be subject to estimates regarding total costs to be incurred and the amount of costs relating to unpriced change orders and claims that are probable of recovery as additional contract compensation. These estimates may be subject to revision in the normal course of business. 6. CREDIT AGREEMENTS The Company has short-term credit lines with domestic and foreign banks aggregating $55,000, of which $15,000 expires on April 30, 1997 and $40,000 expires on June 30, 1997. The renewal of these lines is currently under negotiation. The Company's credit agreements provide for commitment and other fees in accordance with standard banking practice, and contain certain restrictive covenants relating to net worth and other criteria. Assets pledged as collateral under the agreements, principally deposit accounts, accounts receivable, equipment and inventories, had a net book value of $139,607 at December 31, 1996.
- ---------------------------------------------------------------------------------------------- Short-term borrowing detail is as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Balance at end of year $ 32,500 $ - $ - Maximum amount outstanding during the year 39,700 - 41,901 Average amount outstanding during the year 14,264 - 34,175 Weighted average interest rate at end of year 8.31% - - Weighted average interest rate during the year 8.32% - 6.11%
The Company is contingently liable under standby letters of credit totaling $6,221 at December 31, 1996, issued in the normal course of business. These outstanding letters of credit reduce the amount available for borrowing under the Company's credit agreements. Page 28 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 7. ACCOUNTS PAYABLE Checks written which have not yet been presented for payment are included in accounts payable. These amounts were approximately $5,228 and $4,700 at December 31, 1996 and 1995, respectively. 8. LONG-TERM OBLIGATIONS
- ---------------------------------------------------------------------------------------------- Long-term obligations consist of the following: 1996 1995 - ---------------------------------------------------------------------------------------------- Industrial development bond, 5.95%, due 1998 $ 496 $ 779 Equipment financing agreements and capitalized lease obligations, 7% to 10.1%, due 1995-1998 518 778 Subordinated debentures, 6.5%, due 1999 570 677 Technology loan, due 1999 45 - Promissory notes, 10%, due 2003 483 527 - ---------------------------------------------------------------------------------------------- 2,112 2,761 Less current portion 902 844 - ---------------------------------------------------------------------------------------------- $ 1,210 $ 1,917 - ----------------------------------------------------------------------------------------------
Required principal repayments for the years 1997 through 2001 are as follows: $902, $592, $305, $75, and $80, respectively, with $158 due after 2001. Financing agreements contain restrictive covenants relating to net worth and other criteria. Properties and equipment with a net book value of $3,099 at December 31, 1996, are pledged as collateral for an industrial development bond and equipment financing agreements. The technology loan is from the Canadian Ministry of Industry, Science and Technology. This loan carries no interest, and is repayable out of royalties of 50 percent on sales of products generated by the loan program. 9. OPERATING LEASES The Company leases office space, facilities, and equipment under various operating leases. At December 31, 1996, future minimum rental payments applicable to noncancellable operating leases were as follows: 1997 $ 4,022 1998 3,799 1999 3,884 2000 1,715 2001 1,483 After 2001 2,383 - -------------------------------------------------------------------------------- Total $ 17,286 - -------------------------------------------------------------------------------- Page 29 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 9. OPERATING LEASES, CONTINUED For the years 1996, 1995, and 1994 rental expense amounted to $3,658, $3,095, and $2,861 respectively. 10. RESTRICTED STOCK, STOCK OPTIONS AND WARRANTS The Company has an Executive Stock Plan under which the Board of Directors can grant nonqualified and incentive stock options, restricted stock, and stock appreciation rights for up to 1,300,000 shares to key executives at the current market price on the date of the award. No awards may be granted after April 15, 2005. The right to exercise options granted vests 25 percent on each of the first four annual anniversary dates of the grant and expires after 10 years. The Company applies APB Opinion 25 and related interpretations in accounting for this plan, accordingly, no compensation cost has been recognized in respect thereof. Had compensation cost for this plan been determined based on the fair value at the grant dates for awards consistent with the method of FASB Statement 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below: - -------------------------------------------------------------------------------- 1996 1995 - -------------------------------------------------------------------------------- Net income As reported $ 5,019 $ 3,609 Pro forma 4,208 3,360 Earnings per share As reported $ 0.54 $ 0.39 Pro forma 0.45 0.37 The above pro forma amounts were arrived at by determining the fair value of each option grant using the Black-Scholes option pricing model with the following assumptions: - -------------------------------------------------------------------------------- 1996 1995 - -------------------------------------------------------------------------------- Option price Current market price at date of award Option fair market value Current market price at date of award Expected option term 10 YEARS 10 years Stock price volatility 50.20% 48.70% Expected dividend yield 0.00% 0.00% Risk-free rate of return 5.81% 7.06% The exercise price of all outstanding options and warrants issued prior to March 31, 1995 were repriced as a consequence of the special $2.00 per share dividend paid on that date. Page 30 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 10. RESTRICTED STOCK, STOCK OPTIONS AND WARRANTS, CONTINUED - -------------------------------------------------------------------------------- Weighted Average Summary of stock options: Number of shares Exercise Price - -------------------------------------------------------------------------------- Outstanding at December 31, 1994 421,300 $ 9.96 - -------------------------------------------------------------------------------- Granted in 1995 (1) 371,104 7.77 Forfeited in 1995 64,003 7.42 Exercised in 1995 33,930 7.11 - -------------------------------------------------------------------------------- Outstanding at December 31, 1995 694,471 7.79 - -------------------------------------------------------------------------------- GRANTED IN 1996 312,000 10.08 FORFEITED IN 1996 11,700 7.23 EXERCISED IN 1996 76,313 7.57 - -------------------------------------------------------------------------------- OUTSTANDING AT DECEMBER 31, 1996 918,458 $ 8.59 - -------------------------------------------------------------------------------- EXERCISABLE AT DECEMBER 31, 1996 325,924 $ 8.10 Exercisable at December 31, 1995 271,753 8.30 - -------------------------------------------------------------------------------- Summary of stock options outstanding and exercisable at December 31, 1996: - --------------------------------------------------------------------------------
Weighted Average Number Number Remaining Exercise Price Outstanding Exercisable Contractual Life - ---------------------------------------------------------------------------------------------- $ 6.55 181,290 121,942 6.27 7.23 87,100 65,325 6.29 7.81 259,000 64,750 8.30 8.10 10,323 5,162 7.48 10.00 304,500 0 9.13 11.95 68,745 68,745 3.30 13.38 7,500 0 9.64 - ---------------------------------------------------------------------------------------------- 918,458 325,924 7.61 - ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Summary of restricted stock: Number of Shares - -------------------------------------------------------------------------------- Outstanding at December 31, 1994 73,600 Forfeited in 1995 33,600 - -------------------------------------------------------------------------------- Outstanding at December 31, 1995 40,000 FORFEITED IN 1996 40,000 - -------------------------------------------------------------------------------- OUTSTANDING AT DECEMBER 31, 1996 0 - -------------------------------------------------------------------------------- Total shares available for grant at: DECEMBER 31, 1996 269,527 December 31, 1995 529,827 Page 31 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 10. RESTRICTED STOCK, STOCK OPTIONS AND WARRANTS, CONTINUED (1) Includes 109,104 additional options issued in conjunction with the repricing formula resulting from the $2.00 per share dividend paid on March 31, 1995. In 1994, 100,000 shares of restricted stock with a market value of $969 were contributed to the Company's pension plan. The Company has issued stock warrants, expiring in 1998, for 387,500 shares exercisable at $7.00 per share in conjunction with renewal of a 1993 credit facility. 11. MISCELLANEOUS INCOME (EXPENSE) Miscellaneous income (expense) includes those items of income and expense which are not derived from operations. This category consists of gains or losses from the disposition of property, plant, and equipment, foreign exchange gains or losses, and gains or losses resulting from other non-operating items. Miscellaneous income (expense) in 1996, includes gains of $1,761 on property dispositions. Miscellaneous income (expense) in 1995 includes gains of $2,138 on property dispositions, a loss of $3,041 on the write-down of a property, and gains of $2,079 on the favorable settlement of certain accrued liabilities. 12. DISCONTINUED OPERATIONS AND RESTRUCTURING During 1994 the Company disposed of substantially all of its nonconstruction operations, specifically its manufacturing subsidiary, Lake Center Industries, Inc.; its pipe distribution business, Comco Pipe & Supply Company; and its oil and gas interests. The results of operations of these businesses are shown separately in the income statement as "Income from discontinued operations" for each of the years presented.
- ---------------------------------------------------------------------------------------------- Summarized results of discontinued operations are as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Revenue $ - $ - $170,495 - ---------------------------------------------------------------------------------------------- Income from discontinued operations before taxes - - 6,060 Provision for income taxes - - 2,822 - ---------------------------------------------------------------------------------------------- Income from discontinued operations $ - $ - $ 3,238 - ---------------------------------------------------------------------------------------------- Gain on disposal of discontinued operations before taxes $ - $ - $58,969 Provision for income taxes - - 22,103 - ---------------------------------------------------------------------------------------------- Gain on disposal of discontinued operations $ - $ - $36,866 - ----------------------------------------------------------------------------------------------
Page 32 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 12. DISCONTINUED OPERATIONS AND RESTRUCTURING, CONTINUED
- ---------------------------------------------------------------------------------------------- 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Per share of common stock: Income from discontinued operations $ - $ - $ 0.36 Gain on disposal of discontinued operations - - 4.16 - ---------------------------------------------------------------------------------------------- Income per share of common stock from discontinued operations $ - $ - $ 4.52 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Restructuring charges in 1994, amounting to $4,169 are made up of the following: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Reductions in staffing levels $ - $ - $ 2,290 Consolidation of offices and facilities - - 698 Abandonment of non-productive assets - - 1,181 - ---------------------------------------------------------------------------------------------- Total restructuring charge $ - $ - $ 4,169 - ----------------------------------------------------------------------------------------------
13. INCOME TAXES
- ---------------------------------------------------------------------------------------------- The consolidated tax provision is made up as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Income (loss) from continuing operations before provision (benefit) for income taxes and cumulative effect of changes in accounting: United States $(6,017) $7,008 $(62,969) Foreign 12,830 (2,258) 2,188 - ---------------------------------------------------------------------------------------------- 6,813 4,750 (60,781) - ---------------------------------------------------------------------------------------------- Provision (benefit) for income taxes Federal Current (98) 121 (12,379) Deferred - - 1,350 State (745) 92 1,170 Foreign Current 3,090 481 606 Deferred (453) 447 495 - ---------------------------------------------------------------------------------------------- 1,794 1,141 (8,758) - ---------------------------------------------------------------------------------------------- Income (loss) from continuing operations before cumulative effect of changes in accounting: $ 5,019 $3,609 $(52,023) - ----------------------------------------------------------------------------------------------
The current benefit in 1994 of $12,379 was attributable to the intraperiod allocation of taxes to the gain on disposal of discontinued operations, see "Discontinued Operations and Restructuring." The provisions for income taxes are different than the amounts computed by applying the statutory federal income tax rate of 34 percent. Page 33 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 13. INCOME TAXES, CONTINUED
- ---------------------------------------------------------------------------------------------- Tax differences are summarized as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Provision (benefit) at statutory rates $ 2,317 $1,615 $(20,666) U.S. losses for which no tax benefit was recorded 1,849 - 13,555 Net operating loss utilization - (1,552) - Foreign taxes (1,709) 916 (390) State income taxes (737) 61 772 Nondeductible expenses 74 101 68 Tax reimbursements from discontinued operations - - (2,097) - ---------------------------------------------------------------------------------------------- Provision (benefit) for income taxes $ 1,794 $1,141 $(8,758) - ----------------------------------------------------------------------------------------------
No provision has been made for additional income taxes on undistributed earnings of a foreign subsidiary (which totaled $48,009 at December 31, 1996) because of reinvestment policies.
- ---------------------------------------------------------------------------------------------- Deferred income tax assets (liabilities) are made up as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Temporary differences: Contract recognition method for tax purposes $(1,894) $(2,385) $(3,985) Depreciation (167) 235 570 Estimated losses and reserves 6,302 6,845 9,602 Employee benefits (7) (494) (676) Inventory cost capitalization - - 54 Other 54 69 175 - ---------------------------------------------------------------------------------------------- 4,288 4,270 5,740 Operating loss carryforward 14,722 12,934 13,633 Foreign tax credits - - 8,266 Alternative minimum tax carryforward 1,395 1,394 1,044 - ---------------------------------------------------------------------------------------------- Deferred income tax asset 20,405 18,598 28,683 Less, valuation allowance (20,289) (18,934) (28,572) - ---------------------------------------------------------------------------------------------- Net deferred income tax asset (liability) $ 116 $ (336) $ 111 - ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------- Deferred income taxes are classified as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Deferred income tax asset (liability) - current $ 225 $ (248) $ 23 Deferred income tax asset (liability) - long-term (109) (88) 88 - ---------------------------------------------------------------------------------------------- Net deferred income tax asset (liability) $ 116 $ (336) $ 111 - ----------------------------------------------------------------------------------------------
The Company's net operating loss carryforwards expire as follows: - -------------------------------------------------------------------------------- Year Amount - -------------------------------------------------------------------------------- 2004 $ 24,647 2006 5,735 2007 3,369 2008 3,660 2011 5,890 - -------------------------------------------------------------------------------- Total $ 43,301 - -------------------------------------------------------------------------------- Page 34 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 14. EMPLOYEES' PENSION AND RETIREMENT PLANS The Company maintains defined benefit pension plans covering substantially all U.S. salaried employees and certain hourly employees. Benefits are generally based on years of service and compensation during the last five years of employment. The Company's funding policy is to contribute annually amounts deductible for income tax purposes, with Plan assets being invested in a diversified portfolio of domestic and international equities and fixed-income securities. The Company records expenses and liabilities for these plans based upon assumptions regarding current and future interest rates, inflation rates, life expectancy and expected returns on plan assets. These estimates may be subject to revision in the normal course of business. The Company provides an excess benefit plan for defined benefits in excess of qualified plan limits imposed by federal tax law. In addition, the Company maintains defined contribution plans covering salaried and certain hourly employees. Participation in the defined contribution programs is generally voluntary and the Company matches employee contributions, based on covered payroll, up to specified limits. The following table sets forth the defined benefit plans' funded status and amounts recognized in the Company's financial statements: - -------------------------------------------------------------------------------- 1996 1995 - -------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Accumulated benefit obligation: Nonvested $ 3,920 $3,737 Accumulated benefit obligation: Vested 17,327 17,300 - -------------------------------------------------------------------------------- Total accumulated benefit obligation $21,247 $21,037 - -------------------------------------------------------------------------------- Projected benefit obligation for service rendered to date $24,178 $21,977 Plans' assets at fair market value, primarily listed stocks and bonds, including $525 (1995 - $1,000) in restricted shares of common stock of Guy F. Atkinson Company of California 18,375 16,783 - -------------------------------------------------------------------------------- Excess of projected benefit obligation over plans' assets 5,803 5,194 Unrecognized net loss from past experience different from that assumed, and effect of changes in assumptions (5,043) (5,404) Remaining portion of unrecognized net assets at January 1, 1986, being recognized over approximately 13 years 108 186 Adjustment to recognize minimum liability 2,004 4,278 - -------------------------------------------------------------------------------- Accrued pension expense $ 2,872 $4,254 - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------- Net pension expense is made up as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Service costs - benefits earned during the year $ 1,054 $ 925 $ 1,224 Interest cost on projected benefit obligation 1,633 1,369 1,255 Actual return on plan assets (1,652) (3,404) 416 Net amortization and deferral 608 2,493 (1,127) - ---------------------------------------------------------------------------------------------- Net pension expense $ 1,643 $1,383 $ 1,768 - ----------------------------------------------------------------------------------------------
Page 35 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 14. EMPLOYEES' PENSION AND RETIREMENT PLANS, CONTINUED - -------------------------------------------------------------------------------- Assumptions used in computing the plans' funded status: 1996 1995 - -------------------------------------------------------------------------------- Discount rate 7.5% 7.5% Expected long-term rate of return on plan assets 9.0% 9.0% Rate of increase in future compensation levels 4.5% 4.5% - -------------------------------------------------------------------------------- In accordance with SFAS No. 87, the Company has recorded an additional minimum pension liability to reflect the excess of accumulated benefits over the fair market value of plan assets. A corresponding amount has been recorded as an intangible pension asset, except to the extent that the additional minimum liability exceeds related unrecognized prior service costs, in which case the excess is charged to stockholders' equity. - -------------------------------------------------------------------------------- The following pension assets and liabilities have been recorded: 1996 1995 - -------------------------------------------------------------------------------- Addition minimum pension liability $ 2,004 $4,278 Intangible pension asset 1,969 3,934 - -------------------------------------------------------------------------------- Charge to stockholders' equity $ 35 $ 344 - -------------------------------------------------------------------------------- The Company contributes to defined contribution retirement plans and various defined benefit multiemployer plans on behalf of unionized employees.
- ---------------------------------------------------------------------------------------------- Costs of these plans were as follows: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Defined benefit multiemployer plans $ 2,349 $2,652 $ 4,835 Defined contribution retirement plans 1,100 719 981 - ---------------------------------------------------------------------------------------------- Total plan costs $ 3,449 $3,371 $ 5,816 - ----------------------------------------------------------------------------------------------
Supplementing pension benefits, the Company provides certain healthcare benefits for retired salaried employees reaching retirement age while working with the Company. - -------------------------------------------------------------------------------- The following are the components of postretirement benefit liability: 1996 1995 - -------------------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees $ 5,679 $5,259 Fully eligible employees 549 589 Other active plan participants 494 494 - -------------------------------------------------------------------------------- 6,722 6,342 Unrecognized net gain (loss) (482) 140 - -------------------------------------------------------------------------------- Accrued postretirement obligation $ 6,240 $6,482 - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------- Postretirement healthcare expense consists of: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Service costs - benefits earned during the period $ 34 $ 27 $ 62 Interest cost on accumulated postretirement benefit obligation 489 500 462 Net amortization of unrecognized gains (losses) - (9) - - ---------------------------------------------------------------------------------------------- Net postretirement benefit cost $ 523 $ 518 $ 524 - ----------------------------------------------------------------------------------------------
Page 36 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 14. EMPLOYEES' PENSION AND RETIREMENT PLANS, CONTINUED - -------------------------------------------------------------------------------- Assumptions used for postretirement benefit costs and obligations 1996 1995 - -------------------------------------------------------------------------------- Discount rate 7.5% 7.5% Medical cost trend rate 5% 9% in 1995 reducing to 6% in 2001 15. POSTEMPLOYMENT BENEFITS The Company provides certain postemployment benefits, such as self-insured disability benefits to former and inactive employees. The liability for postemployment benefits was $939 at December 31, 1996 and $941 at December 31, 1995. Postemployment benefit expense was $421 in 1996, $333 in 1995, and $228 in 1994. 16. LITIGATION AND CONTINGENCIES Litigation The nature of the construction business periodically results in liens, disputes, suits and claims. Certain claims and suits have been brought against the Company in connection with contractual disputes, alleging personal injury, property or other damages. Disputes are generally negotiated to settlement or litigated, with judgments against the Company being either promptly satisfied or appealed. Company policy is to accrue amounts for any liabilities which it believes will result from claims and suits against the Company. These amounts are based upon management's estimates of the most likely outcome of such claims and suits, and may be materially different from the amounts asserted by the claimants. On March 7, 1995, a complaint asserting breach of contract and other wrongdoing in connection with the Company's sale of its manufacturing subsidiary, Lake Center Industries, Inc., was filed against the Company and its financial advisor by an unsuccessful bidder for Lake Center. The plaintiffs allege they have suffered actual damages of $290 in connection with preparing their bid, and also seek to recover $7,000 on a theory of unjust enrichment together with an additional $10,000 in punitive damages. The Company will vigorously defend this suit, which it believes to be without merit, and further believes that the outcome will not have a material adverse effect on its financial condition. Environmental Liabilities The Company has certain potential environmental remediation obligations with respect to properties which have been sold. In recording the sale of these properties, the Company set aside a portion of the sale proceeds as reserves to cover the potential future costs of such environmental remediation which may become necessary. The portion of the sale proceeds which was set aside was based upon management's best estimate of potential future costs, if any. These estimates may be subject to revision in the normal course of business. Page 37 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 16. LITIGATION AND CONTINGENCIES, CONTINUED
- -------------------------------------------------------------------------------- The following is a summary of environmental liabilities: 1996 1995 - ---------------------------------------------------------------------------------------------- Reserves for anticipated environmental remediation obligations $ 2,269 $ 3,094 Less expenditures to date 390 252 - ---------------------------------------------------------------------------------------------- $ 1,879 $ 2,842 - ----------------------------------------------------------------------------------------------
Self-Insurance Programs The Company is insured for workers' compensation, automobile and general liability losses through a risk retention program, with excess liability insurance to cover more significant liability exposures. The Company sets aside reserves for estimated losses to be incurred from both asserted and unasserted claims. These estimates are based on historical claims data and may be subject to revision in the normal course of business. 17. GEOGRAPHIC AREA AND SIGNIFICANT CUSTOMER INFORMATION
- ---------------------------------------------------------------------------------------------- Summarized geographic area information: 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Revenue: United States $ 374,479 $ 332,409 $ 388,969 Canada 3,769 37,136 16,700 Asia 85,425 37,158 - Other areas 4,794 10 292 17,300 - ---------------------------------------------------------------------------------------------- Total revenue $ 468,467 $ 416,995 $ 422,969 - ---------------------------------------------------------------------------------------------- Operating profit (loss): United States $ 1,010 $ 9,312 $ (41,000) Canada (4,207) (4,561) 2,100 Asia 17,565 3,194 - Other areas 347 2,099 1,700 - ---------------------------------------------------------------------------------------------- Total operating profit (loss) 14,715 10,044 (37,200) - ---------------------------------------------------------------------------------------------- General corporate (expense) (6,218) (4,390) (18,679) Interest (expense) (1,684) (904) (4,902) - ---------------------------------------------------------------------------------------------- Income (loss) from continuing operations before taxes and cumulative effect of changes in accounting $ 6,813 $ 4,750 $ (60,781) - ----------------------------------------------------------------------------------------------
Page 38 GUY F. ATKINSON COMPANY OF CALIFORNIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars except share and per share amounts) - -------------------------------------------------------------------------------- 17. GEOGRAPHIC AREA AND SIGNIFICANT CUSTOMER INFORMATION, CONTINUED
Identifiable assets: United States $ 150,853 $ 144,062 $ 98,600 Canada 30,785 28,656 15,400 Asia 65,181 20,222 - Other areas 7,800 6,893 10,700 Corporate assets 11,579 45,011 75,014 - ---------------------------------------------------------------------------------------------- Total assets $ 266,198 $ 234,844 $ 199,714 - ----------------------------------------------------------------------------------------------
Operating profit (loss) is total revenue less operating expenses, excluding corporate general and administrative expense, corporate miscellaneous expense, interest expense, and income taxes. Identifiable assets by geographic area are those that are used in the Company's operations in each area. Corporate assets are principally cash, accrued and deferred income taxes, and corporate properties and equipment. The Company derived 6.1 percent in 1996, 2.4 percent in 1995, and 5.0 percent in 1994, of its revenue from contracts with the U.S. government. During 1996, the Company derived 18 percent of its revenue from a contract with PT. Kiani Kertas, an Indonesian corporation. 18. QUARTERLY FINANCIAL DATA - UNAUDITED
- -------------------------------------------------------------------------------------------------------- 1996 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER - -------------------------------------------------------------------------------------------------------- REVENUE $99,185 $128,714 $126,011 $114,557 - -------------------------------------------------------------------------------------------------------- GROSS MARGIN 8,625 12,927 10,944 11,754 - -------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ (483) $ 1,584 $ 1,001 $ 2,917 - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) PER SHARE OF COMMON STOCK $ (0.05) $ 0.17 $ 0.11 $ 0.31 - --------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------- 1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter - -------------------------------------------------------------------------------------------------------- Revenue $89,738 $86,434 $91,364 $149,459 - --------------------------------------------------------------------------------------------------------- Gross margin 6,938 7,264 10,818 14,152 - -------------------------------------------------------------------------------------------------------- Net income (loss) $ (987) $ 721 $ 1,215 $ 2,660 - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- Net income (loss) per share of common stock $ (0.11) $ 0.08 $ 0.13 $ 0.29 - --------------------------------------------------------------------------------------------------------
Page 39 18. QUARTERLY FINANCIAL DATA - UNAUDITED, CONTINUED
- -------------------------------------------------------------------------------------------------------- 1994 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter - -------------------------------------------------------------------------------------------------------- Revenue $127,171 $123,429 $109,942 $62,427 - -------------------------------------------------------------------------------------------------------- Gross margin 5,849 7,036 1,908 (28,873) (Loss) from continuing operations before cumulative effect of changes in accounting (2,129) (2,664) (7,700) (39,530) Income (loss) from discontinued operations 1,371 1,670 396 (199) Gain on disposal of discontinued operations - - 2,611 34,255 - -------------------------------------------------------------------------------------------------------- (Loss) before cumulative effect of changes in accounting (758) (994) (4,693) (5,474) Cumulative effect of changes in accounting (739) - - - - -------------------------------------------------------------------------------------------------------- Net (loss) $(1,497) $ (994) $(4,693) $(5,474) - -------------------------------------------------------------------------------------------------------- (Loss) per share of common stock from continuing operations before cumulative effect of changes in accounting $ (0.24) $ (0.30) $ (0.87) $ (4.45) Income per share of common stock from discontinued operations 0.15 0.19 0.34 3.84 - -------------------------------------------------------------------------------------------------------- (Loss) per share of common stock before cumulative effect of changes in accounting (0.09) (0.11) (0.53) (0.61) Cumulative effect per share of common stock of changes in accounting (0.08) - - - - -------------------------------------------------------------------------------------------------------- Net (loss) per share of common stock $ (0.17) $ (0.11) $ (0.53) $ (0.61) - --------------------------------------------------------------------------------------------------------
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information with respect to directors and certain executive officers of the Company is incorporated by reference from the information under the caption "Information with Respect to Nominees" in the Company's definitive proxy statement for the Annual Meeting of Shareholders to be held on April 17, 1997 ("Annual Meeting"). Information regarding other executive officers of the Registrant is contained in Item 1 of this 10-K. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference from the information under the caption "Compensation of Directors and Executive Officers" in the Company's definitive proxy statement for the Annual Meeting of Shareholders to be held on April 17, 1997. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference from the information to be included under the captions "Certain Beneficial Ownership of Securities" and "Stock Ownership of Executive Officers and Directors" in the Company's definitive proxy statement for the Annual Meeting of Shareholders to be held April 17, 1997. Page 40 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference from the information under the caption "Certain Transactions" in the Company's definitive proxy statement for the Annual Meeting of Shareholders to be held April 17, 1997. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Page Number (a) Documents Filed as Part of this Report 1. Consolidated Financial Statements Report of Independent Accountants..............................16 Consolidated balance sheets at December 31, 1996 and December 31, 1995..............................17-18 Consolidated statements of stockholders' equity for each of the three years in the period ended December 31, 1996.................................19 Consolidated statements of operations for each of the three years in the period ended December 31, 1996...........................................20-21 Consolidated statements of cash flows for each of the three years in the period ended December 31, 1996..............................................22 Notes to financial statements...............................23-39 2. Financial Statement Schedules All schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. 3. Exhibits Exhibit Number Description 2 Agreement of Merger and Plan of Reorganization dated as of April 22, 1994 between the Company and Guy F. Atkinson Company of California, a California corporation, for the purpose of merging to reincorporate the California company in the state of Delaware, filed as an exhibit to the Form 10-K for the period ended December 31, 1994 (File No. 0-3062) and incorporated herein by reference. 3.1 Certificate of Incorporation of the Company, filed as an exhibit to the Form 10-Q of the Company for the period ended March 31, 1994 (File No. 0-3062) and incorporated herein by reference. 3.2 Bylaws of the Company, filed as an exhibit to the Form 10-Q of the Company for the period ended March 31, 1994 (File No. 0-3062) and incorporated herein by reference. Page 41 4 Stockholder Rights Agreement dated as of May 9, 1994, between the Company and The Bank of New York, as Rights Agent ("Shareholder Rights Agreement"), filed as an exhibit to the Form 8-A of the Company filed on May 10, 1994 (File No. 0-3062) and incorporated herein by reference. 10.1 Loan Agreement and Guaranty Agreement, dated December 23, 1991, relating to a loan from the Guy F. Atkinson Company Federal Credit Union and guaranteed by Guy F. Atkinson Company, a Nevada corporation, to William J. Carlson, filed as Exhibit 10.1 to the Company's 1991 Form 10-K (File No. 0-3062) and incorporated herein by reference. 10.2 Atkinson Corporate Management Incentive Compensation Plan. Filed as Exhibit 10.4 to the Company's 1988 Form 10-K (File No. 0-3062) and incorporated herein by reference. 10.3 Guy F. Atkinson Company of California 1990 Executive Stock Plan as amended and restated filed as Exhibit 10.1 to Form 10-Q of the Company (File No. 0-3062) for the period ended March 31, 1995 and incorporated herein by reference. 10.4 Guy F. Atkinson Company of California Common Stock Purchase Warrant dated May 28, 1993 between the Company and Morgan Guaranty Trust Company filed as Exhibit 10.4 to the Company's 1993 Form 10-K (File No. 0-3062) and incorporated herein by reference. 10.5 Employment Agreement dated as of April 21, 1994, between the Company and Jack J. Agresti, filed as Exhibit 10.5 to the Company's 1994 Form 10-K (File No. 0-3062) and incorporated herein by reference. 21 Subsidiaries of the Company 23 Consent of Independent Public Accountants 24 Powers of Attorney of certain Directors 27 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed by the Company during the last quarter of 1996. Page 42 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. GUY F. ATKINSON COMPANY OF CALIFORNIA By: /s/ Herbert D. Montgomery Herbert D. Montgomery Senior Vice President, Chief Financial Officer and Treasurer Date: March 21, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ J. J. Agresti* President and Chief Executive Officer March 21, 1997 J. J. Agresti /s/ H. D. Montgomery Senior Vice President, Chief Financial March 21, 1997 H. D. Montgomery Officer and Treasurer (Principal Financial Officer) /s/ J. Harrison Controller March 21, 1997 J. Harrison (Principal Accounting Officer) /s/ D. E. Atkinson* Director March 21, 1997 D. E. Atkinson /s/ R. N. Atkinson* Director March 21, 1997 R. N. Atkinson /s/ W. E. Burch* Director March 21, 1997 W. E. Burch /s/ J. P. Frazier* Director March 21, 1997 J. P. Frazier /s/ D. R. Kayser* Director March 21, 1997 D. R. Kayser Page 43 /s/ R. J. Turner* Director March 21, 1997 R. J. Turner /s/ J. F. Whitsett* Director March 21, 1997 J. F. Whitsett *By: /s/ Therese Ambrusko Therese Ambrusko, Attorney-In-Fact Page 44 INDEX TO EXHIBITS Exhibit Number Description 21 Subsidiaries of the Company 23 Consent of Independent Public Accountants 24 Powers of Attorney of certain Directors 27 Financial Data Schedule Page 45 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Organized Corporate Subsidiaries Under Laws of Atkinson Building Company California Guy F. Atkinson Company Nevada Guy F. Atkinson Company - Overseas Delaware Guy F. Atkinson Construction Ltd. California Guy F. Atkinson Holdings Ltd. Canada Atkinson-International Venezuela, Inc. California Atkinson Land Company California Atkinson Middle East, Inc. Nevada Atkinson Overseas, Inc. California Atkinson South America, Inc. California Andrew H. Charles Corporation Delaware Colma Casualty Company Vermont Commonwealth Asia Constructors Ltd. Canada Commonwealth Asia Pacific Constructors Pte. Ltd. Singapore Commonwealth Construction Company (1985) Limited Canada Commonwealth Pacific Consultants Ltd. Canada International Water Solutions Corporation Cook Islands International Water Technology, Inc. Cook Islands J. E. Record, Inc. Delaware Microsep International (Australia) Pty Ltd. Australia Microsep International (Canada) Corporation Canada Microsep International Corporation Delaware Microsep International (Thailand) Limited Thailand Offshore Hydro Services, Inc. California Walsh-Puerto Rico, Inc. California WBL Solar Corporation California Wismer & Becker Contracting Engineers, California d/b/a Atkinson Mechanical Contractors Co. Page 46 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Guy F. Atkinson Company of California on Post-Effective Amendment No. 2 to Form S-8 (File No. 33-6296) and Form S-8 (File No. 33-34891) of our report dated March 17, 1997, on our audits of the consolidated financial statements of Guy F. Atkinson Company of California as of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994, which report is included in this Annual Report on Form 10-K. Coopers & Lybrand L.L.P. San Francisco, California March 21, 1997 Page 47 EX-27 2
5 1000 12-MOS DEC-31-1996 DEC-31-1996 6084 1770 118964 0 56601 234217 54002 23341 265223 167442 1210 0 0 1896 87388 265223 0 468467 0 424217 39335 0 1684 6813 1794 5019 0 0 0 5019 .54 0
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