-----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, MPwd+nwFEo+WXnTfsOOAwspuD6o5vnqIDQqArmQV7H+znDWeZZRUgOpv5zBPpGan TGXEps9cPkiIU6IXqf3yrQ== 0000950005-95-000246.txt : 19951017 0000950005-95-000246.hdr.sgml : 19951017 ACCESSION NUMBER: 0000950005-95-000246 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951016 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARDING ASSOCIATES INC CENTRAL INDEX KEY: 0000818968 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 680132062 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16169 FILM NUMBER: 95580753 BUSINESS ADDRESS: STREET 1: 7655 REDWOOD BLVD CITY: NOVATO STATE: CA ZIP: 94945 BUSINESS PHONE: 4158920821 MAIL ADDRESS: STREET 1: 7655 REDWOOD BLVD CITY: NOVATO STATE: CA ZIP: 94945 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of ----- the Securities Exchange Act of 1934 For the quarterly period ended August 31, 1995 or Transition Report Pursuant to Section 13 or 15(d) of ----- of the Securities Exchange Act of 1934 For the transition period from to ---------- ---------- Commission file number 0-16169 HARDING ASSOCIATES, INC. (Exact name of registrant as specified in its charter) Delaware 68-0132062 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7655 Redwood Boulevard Novato, California 94945 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 892-0821 Indicate by check mark whether the registrant (1) has filed all reports required 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 --- --- At October 6, 1995 the registrant had issued and outstanding an aggregate of 4,844,656 shares of its common stock. 1 INDEX HARDING ASSOCIATES, INC. Page PART I. FINANCIAL INFORMATION ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets - August 31, 1995 (Unaudited) and May 31, 1995....................3 Condensed Consolidated Statements of Income - Three Months Ended August 31, 1995 and August 31, 1994 (Unaudited) ................................4 Condensed Consolidated Statements of Cash Flows - Three Months Ended August 31, 1995 and August 31, 1994 (Unaudited).....................................5 Notes to Condensed Consolidated Financial Statements August 31, 1995 (Unaudited).....................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K................................9 SIGNATURES ...........................................................10 INDEX TO EXHIBITS ...........................................................11 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HARDING ASSOCIATES, INC. Condensed Consolidated Balance Sheets (In thousands, except share data) - ------------------------------------------------------------------------------- August 31, 1995 May 31, 1995 - ------------------------------------------------------------------------------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $12,253 $12,648 Accounts receivable 27,929 28,343 Unbilled work in progress 7,521 6,935 Less allowances for receivables and unbilled work (1,522) (1,553) Prepaid expenses 1,560 925 Deferred income taxes 2,214 2,235 - ------------------------------------------------------------------------------- Total current assets 49,955 49,533 - ------------------------------------------------------------------------------- Equipment 21,512 21,208 Less accumulated depreciation (17,118) (16,766) - ------------------------------------------------------------------------------- Net equipment 4,394 4,442 - ------------------------------------------------------------------------------- Deposits and other assets 6,831 6,813 - ------------------------------------------------------------------------------- Total assets $61,180 $60,788 - ------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,054 $ 3,383 Accrued expenses 4,833 5,642 Accrued compensation 4,488 6,518 Income taxes payable 1,191 621 - ------------------------------------------------------------------------------- Total current liabilities 14,566 16,164 - ------------------------------------------------------------------------------- Other liabilities 2,059 1,715 - ------------------------------------------------------------------------------- Total liabilities 16,625 17,879 - ------------------------------------------------------------------------------- Commitments and Contingencies -- -- Minority interest in subsidiary 219 224 - ------------------------------------------------------------------------------- Shareholders' equity: Preferred stock--$.01 par value; authorized shares 1,000,000; issued and outstanding--none -- -- Common stock--$.01 par value; authorized shares 10,000,000; issued and outstanding--4,844,656 and 4,719,320 at August 31, 1995 and May 31, 1995, respectively 48 47 Additional paid-in capital 18,139 17,424 Retained earnings 26,149 25,214 - ------------------------------------------------------------------------------- Total shareholders' equity 44,336 42,685 - ------------------------------------------------------------------------------- Total liabilities and shareholders' equity $61,180 $60,788 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 3 HARDING ASSOCIATES, INC. Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) - ------------------------------------------------------------------------------- Three Months Ended August 31, 1995 1994 - ------------------------------------------------------------------------------- Gross revenue $31,748 $33,380 Less: Cost of outside services 9,040 10,369 - ------------------------------------------------------------------------------- Net revenue 22,708 23,011 - ------------------------------------------------------------------------------- Costs and expenses: Payroll and benefits 15,310 15,392 General expenses 6,042 6,167 - ------------------------------------------------------------------------------- Total costs and expenses 21,352 21,559 - ------------------------------------------------------------------------------- Operating income 1,356 1,452 Interest income, net 176 19 - ------------------------------------------------------------------------------- Income before provision for income taxes and minority interest 1,532 1,471 Provision for income taxes 602 581 Minority interest (5) --- - ------------------------------------------------------------------------------- Net income $ 935 $ 890 - ------------------------------------------------------------------------------- Net income per common share $ .19 $ .18 - ------------------------------------------------------------------------------- Weighted average common shares outstanding 4,804 4,824 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 4
HARDING ASSOCIATES, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) - -------------------------------------------------------------------------------------------------- Three Months Ended August 31, 1995 1994 - -------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 935 $ 890 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 606 849 Net increase in current assets (837) (3,471) Net decrease in current liabilities (788) (369) Other increase (decrease) 146 (93) - -------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 62 (2,194) - -------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Net purchase of equipment (457) (209) - -------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (457) (209) - -------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Repayment of debt -- (1,007) - -------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES -- (1,007) - -------------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (395) (3,410) Cash and cash equivalents at beginning of period 12,648 8,896 - -------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $12,253 $5,486 - -------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
5 HARDING ASSOCIATES, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) August 31, 1995 NOTE 1: BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared without audit by Harding Associates, Inc. (the "Company") in accordance with generally accepted accounting principles for interim financial statements and pursuant to the rules of the Securities and Exchange Commission for Form 10-Q. Certain information and footnotes required by generally accepted accounting principles for complete financial statements have been omitted. It is the opinion of management that all adjustments considered necessary for a fair presentation have been included, and that all such adjustments are of a normal and recurring nature. For further information, refer to the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1995. Reclassification of certain balances for the fiscal year ended May 31, 1995 have been made to conform to the August 31, 1995 presentation. NOTE 2: COMMITMENTS AND CONTINGENCIES On May 19, 1995, the Company filed a lawsuit in Texas State Court, Harris County, Texas, entitled Harding Lawson Associates, Inc., a wholly owned subsidiary of Harding Associates, Inc., vs. Bailey Site Settlors Committee, an unincorporated association, seeking collection of approximately $1.0 million in fees billed for engineering services performed. On June 21, 1995, a lawsuit was filed against the Company in Federal District Court, Jefferson County, Texas, and in Texas State Court, Orange County, Texas, entitled Bailey Site Settlors Committee vs. Harding Lawson Associates. The suit seeks monetary damages in the amount of $7.9 million for alleged breach of contract and negligence in the performance of certain engineering services. The Company believes it has meritorious defenses to this suit. The Company is currently subject to certain other claims and lawsuits arising in the ordinary course of its business. In the opinion of management, adequate provision has been made for all known liabilities that are currently expected to result from these claims and lawsuits, and in the aggregate such claims are not expected to have a material effect on the financial position of the Company. 6 HARDING ASSOCIATES, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- (In thousands, except share data) The following table sets forth, for the periods indicated, (i) the percentage that certain items in the condensed consolidated income statements of the Company bear to net revenues, and (ii) the percentage increase (decrease) in dollar amount of such items from year to year. Percentage of Net Revenue For Three Months Percentage Ended August 31, Increase/(Decrease) ----------------- ------------------- 1995 1994 ---- ---- Net revenue 100.0% 100.0% (1.3)% Costs and expenses Payroll and benefits 67.4 66.9 (0.5) General expenses 26.6 26.8 (2.0) Operating income/margin 6.0 6.3 (6.6) Interest income, net 0.7 0.1 826.3 Income before income taxes and minority interest 6.7 6.4 4.1 Provision for income taxes 2.6 2.5 3.6 Net income 4.1 3.9 5.1 First Quarter Comparison for Fiscal Years 1996 and 1995 - ------------------------------------------------------- Net revenue for the fiscal quarter ended August 31, 1995 totaled $22,708, a decrease of one percent from net revenue of $23,011 for the first quarter of the prior fiscal year. Net revenue for the quarter was adversely affected by lower public sector work that was attributed primarily to reduced infrastructure spending in the California and Washington markets, and a slowdown in federal funding for environmental contracts. The decline in revenue was partially offset by an acquisition completed in November of the prior fiscal year. The decrease in net revenue, excluding the impact of acquisitions, was primarily due to lower demand for the Company's services, partially offset by slightly improved pricing compared to the first quarter of fiscal 1995. Sales of services to public sector clients decreased by approximately 24 percent from the same period in the prior year, partially offset by an increase of approximately 13 percent in net revenue from industrial sector clients. Overall, net revenue from public sector clients accounted for 47 percent of total net revenue compared to 59 percent in the prior year. International operations accounted for five percent of net revenue in the first fiscal quarter of 1996. There were no international sales in the first quarter of the prior year. Operating income amounted to $1,356, a decrease of 6.6 percent from $1,452 for the same period in fiscal 1995. Operating margin decreased to 6.0 percent of net revenue in the current quarter compared to 6.3 percent in the first quarter of 1995. While the Company continued to lower its operating costs, such reductions were not sufficient to offset the effect of lower revenue discussed above. Interest income for the first quarter of fiscal 1996 of $177 before interest expense of $1 was higher compared to interest income of $45 before interest expense of $26 for the first quarter of the last fiscal year. Net interest income was higher due to the Company's increased cash position which resulted in higher balances of invested cash, and to a lessor extent, improved interest rates. 7 HARDING ASSOCIATES, INC. The effective tax rate was 39.3 percent for the first quarter of fiscal 1996 and was 39.5 percent in the first quarter of the prior year. Net income for the quarter was $935 compared with $890 in the first quarter of 1995, an increase of 5 percent. Earnings per share were $0.19 on 4,804,000 weighted average shares outstanding compared to $0.18 per share on 4,824,000 weighted average shares outstanding in the same period last year. Liquidity and Capital Resources - ------------------------------- For the three months ended August 31, 1995, net cash provided by operations was $62 compared to net cash used in operations of $2,194 for the same period last year. The increase in cash provided by operations was primarily due to improvement in the Company's receivables in the current fiscal year compared to the prior fiscal year. Receivable balances in the prior fiscal year were adversely affected by delays in invoicing certain public sector projects due to contractual restraints. The Company made capital expenditures of $457 in the first three months of fiscal 1996 compared to capital expenditures of $209 in the first three months of the prior year. The Company anticipates that its capital expenditures, excluding acquisitions, for the current fiscal year will be at slightly higher levels than those incurred in the prior fiscal year. The Company is a consulting engineering services firm engaged in providing environmental, infrastructure and geotechnical related services, and encounters potential liability including claims for errors and omissions resulting from construction defects, construction cost overruns or environmental or other damage in the normal course of business. The Company is a party to lawsuits and is aware of potential exposure related to certain claims. In the opinion of management, adequate provision has been made for all known liabilities that are currently expected to result from these matters and, in the aggregate, such claims are not expected to have a material adverse impact on the financial position and liquidity of the Company. Prior to May 1994, the Company was provided a professional liability insurance policy through a wholly owned subsidiary of the Company, and as such, was self insured for the liabilities covered by that policy. Currently, the Company is provided a $5 million professional liability insurance policy through an unrelated, rated carrier. At August 31, 1995, the Company had cash on hand and cash equivalents of $12,253. The Company has a $20 million revolving credit line agreement which expires in October 1995. At August 31, 1995, the Company had no borrowings outstanding under its line of credit leaving $20 million available to the Company. At August 31, 1994, the Company had $1 million in borrowings under the credit line. Borrowings were available to the Company at 5.9 percent at August 31, 1995, and at 6.1 percent at May 31, 1995. The Company is in compliance with all covenants pertaining to the credit line agreement, and the Company expects to renew its credit line facility under substantially the same terms and conditions as its existing facility. The Company believes that its available cash and cash equivalents, as well as cash generated from operations and its available credit line, will be sufficient to meet the Company's cash requirements for the balance of the fiscal year. The Company intends to actively continue its search for acquisitions to expand its geographical representation and enhance its technical capabilities. The Company expects to utilize a portion of its liquidity over the next 12 to 18 months for capital expenditures, including acquisitions. 8 HARDING ASSOCIATES, INC. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits -------- The following exhibits are furnished along with this Form 10-Q Quarterly Report for the period ended August 31, 1995: Exhibit No. 11 Computation of Per Share Earnings (Page 12) Exhibit No. 27 Financial Data Schedule (Electronic Filing Only) b. Reports on Form 8-K ------------------- None 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HARDING ASSOCIATES, INC. Date: October 11, 1995 /s/ Donald L. Schreuder ------------------------------------------ Donald L. Schreuder President and Chief Executive Officer (Principal Executive Officer) Date: October 11, 1995 /s/ Gregory A. Thornton ------------------------------------------ Gregory A. Thornton Vice President and Chief Financial Officer (Principal Accounting Officer) 10 EXHIBIT INDEX Sequential Page No. ---------- 11 Computation of Per Share Earnings. 12 27 Financial Data Schedule (Electronic Filing Only) 11 EX-11 2 EX-11 Exhibit No. 11 Computation of Per Share Earnings (In thousands, except per share data) (Unaudited) - -------------------------------------------------------------------------------- Three Months Ended August 31, 1995 1994 - -------------------------------------------------------------------------------- PRIMARY Average shares outstanding 4,761 4,646 Net effect of dilutive stock options based on the modified treasury stock method using the average market price 43 178 - -------------------------------------------------------------------------------- TOTAL 4,804 4,824 - -------------------------------------------------------------------------------- Net income $ 935 $ 890 - -------------------------------------------------------------------------------- Net income per share $ .19 $ .18 - -------------------------------------------------------------------------------- 12 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAY-31-1996 JUN-01-1995 AUG-31-1995 12,253 0 35,450 1,522 0 49,955 21,512 17,118 61,180 14,566 0 48 0 0 44,288 61,180 0 31,748 0 9,040 21,352 0 0 1,532 602 935 0 0 0 935 .19 .19
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