x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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77-0218904
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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149 COMMONWEALTH DRIVE, MENLO PARK, CALIFORNIA
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94025
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||
(Address of principal executive office)
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(Zip Code)
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Registrant’s telephone number, including area code
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(650) 326-9400
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Large accelerated filer ¨
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Accelerated filer x
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Non-accelerated filer ¨
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Smaller reporting company ¨
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(Do not check if a smaller
|
|||
reporting company)
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Page
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements (unaudited):
|
|
Condensed Consolidated Balance Sheets
July 1, 2011 and December 31, 2010
|
3
|
|
Condensed Consolidated Statements of Income
Three and Six Months Ended July 1, 2011 and July 2, 2010
|
4
|
|
Condensed Consolidated Statements of Comprehensive Income
Three and Six Months Ended July 1, 2011 and July 2, 2010
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5
|
|
Condensed Consolidated Statements of Cash Flows
Three and Six Months Ended July 1, 2011 and July 2, 2010
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6
|
|
Notes to Condensed Consolidated Financial Statements
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7
|
|
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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15
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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24
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Item 4.
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Controls and Procedures
|
25
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PART II – OTHER INFORMATION
|
||
Item 1A.
|
Risk Factors
|
25
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Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
25
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Item 6.
|
Exhibits
|
26
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Signatures
|
27
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July 1,
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December 31,
|
|||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 69,453 | $ | 106,549 | ||||
Short-term investments
|
25,569 | - | ||||||
Accounts receivable, net of allowance for doubtful accounts of $2,136 and $2,126 at July 1, 2011 and December 31, 2010, respectively
|
76,737 | 72,034 | ||||||
Prepaid expenses and other assets
|
7,860 | 10,585 | ||||||
Deferred income taxes
|
7,195 | 5,426 | ||||||
Total current assets
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186,814 | 194,594 | ||||||
Property, equipment and leasehold improvements, net
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27,731 | 27,267 | ||||||
Goodwill
|
8,607 | 8,607 | ||||||
Deferred income taxes
|
13,626 | 12,940 | ||||||
Deferred compensation plan assets
|
19,604 | 15,068 | ||||||
Other assets
|
443 | 416 | ||||||
Total assets
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$ | 256,825 | $ | 258,892 | ||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$ | 8,847 | $ | 9,715 | ||||
Accrued payroll and employee benefits
|
36,235 | 41,888 | ||||||
Deferred revenues
|
4,831 | 6,131 | ||||||
Total current liabilities
|
49,913 | 57,734 | ||||||
Other liabilities
|
803 | 413 | ||||||
Deferred compensation
|
19,425 | 15,068 | ||||||
Deferred rent
|
2,016 | 1,877 | ||||||
Total liabilities
|
72,157 | 75,092 | ||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par value; 100,000 shares authorized; 16,427 shares issued at July 1, 2011 and December 31, 2010
|
16 | 16 | ||||||
Additional paid-in capital
|
106,090 | 96,089 | ||||||
Accumulated other comprehensive loss
|
(131 | ) | (451 | ) | ||||
Retained earnings
|
163,717 | 156,086 | ||||||
Treasury stock, at cost; 2,762 and 2,431 shares held at July 1, 2011 and December 31, 2010, respectively
|
(85,024 | ) | (67,940 | ) | ||||
Total stockholders’ equity
|
184,668 | 183,800 | ||||||
Total liabilities and stockholders’ equity
|
$ | 256,825 | $ | 258,892 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
July 1,
2011
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July 2,
2010
|
July 1,
2011
|
July 2,
2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Revenues before reimbursements
|
$ | 60,573 | $ | 55,128 | $ | 124,756 | $ | 110,329 | ||||||||
Reimbursements
|
4,533 | 5,311 | 13,823 | 9,516 | ||||||||||||
Revenues
|
65,106 | 60,439 | 138,579 | 119,845 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Compensation and related expenses
|
38,508 | 34,060 | 81,208 | 71,840 | ||||||||||||
Other operating expenses
|
5,704 | 5,388 | 11,486 | 10,607 | ||||||||||||
Reimbursable expenses
|
4,533 | 5,311 | 13,823 | 9,516 | ||||||||||||
General and administrative expenses
|
2,984 | 2,905 | 6,319 | 5,600 | ||||||||||||
Total operating expenses
|
51,729 | 47,664 | 112,836 | 97,563 | ||||||||||||
Operating income
|
13,377 | 12,775 | 25,743 | 22,282 | ||||||||||||
Other income (expense), net:
|
||||||||||||||||
Interest income, net
|
41 | 66 | 62 | 129 | ||||||||||||
Miscellaneous income (expense), net
|
542 | (560 | ) | 1,534 | 400 | |||||||||||
Total other income (expense), net
|
583 | (494 | ) | 1,596 | 529 | |||||||||||
Income before income taxes
|
13,960 | 12,281 | 27,339 | 22,811 | ||||||||||||
Income taxes
|
5,743 | 5,001 | 11,119 | 9,292 | ||||||||||||
Net income
|
$ | 8,217 | $ | 7,280 | $ | 16,220 | $ | 13,519 | ||||||||
Net income per share:
|
||||||||||||||||
Basic
|
$ | 0.57 | $ | 0.51 | $ | 1.12 | $ | 0.95 | ||||||||
Diluted
|
$ | 0.55 | $ | 0.48 | $ | 1.08 | $ | 0.90 | ||||||||
Shares used in per share computations:
|
||||||||||||||||
Basic
|
14,402 | 14,377 | 14,467 | 14,295 | ||||||||||||
Diluted
|
14,971 | 15,054 | 15,062 | 15,009 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
July 1, 2011
|
July 2, 2010
|
July 1, 2011
|
July 2, 2010
|
|||||||||||||
Net income
|
$ | 8,217 | $ | 7,280 | $ | 16,220 | $ | 13,519 | ||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Foreign currency translation adjustments, net of tax
|
53 | (190 | ) | 293 | (351 | ) | ||||||||||
Unrealized gain (loss) on investments, net of tax
|
26 | (11 | ) | 27 | (28 | ) | ||||||||||
Comprehensive income
|
$ | 8,296 | $ | 7,079 | $ | 16,540 | $ | 13,140 |
Six Months Ended
|
||||||||
July 1,
2011
|
July 2,
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 16,220 | $ | 13,519 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization of property, equipment and leasehold improvements
|
2,132 | 2,151 | ||||||
Amortization of premiums and accretion of discounts on short-term investments
|
57 | 31 | ||||||
Deferred rent
|
(240 | ) | 717 | |||||
Provision for doubtful accounts
|
746 | 956 | ||||||
Stock-based compensation
|
5,934 | 5,093 | ||||||
Deferred income tax provision
|
(2,517 | ) | (1,795 | ) | ||||
Tax benefit for stock plans
|
(2,227 | ) | (2,287 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(5,449 | ) | (9,912 | ) | ||||
Prepaid expenses and other assets
|
3,363 | (7,536 | ) | |||||
Accounts payable and accrued liabilities
|
1,183 | 4,500 | ||||||
Accrued payroll and employee benefits
|
(4,609 | ) | 47 | |||||
Deferred revenues
|
(1,300 | ) | 1,078 | |||||
Net cash provided by operating activities
|
13,293 | 6,562 | ||||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(1,667 | ) | (1,335 | ) | ||||
Purchase of short-term investments
|
(25,581 | ) | - | |||||
Maturity of short-term investments
|
- | 5,080 | ||||||
Net cash (used in) provided by investing activities
|
(27,248 | ) | 3,745 | |||||
Cash flows from financing activities:
|
||||||||
Tax benefit for stock plans
|
2,227 | 2,287 | ||||||
Payroll taxes for restricted stock units
|
(3,473 | ) | (1,896 | ) | ||||
Repurchase of common stock
|
(23,080 | ) | (6,356 | ) | ||||
Exercise of share-based payment awards
|
894 | 2,051 | ||||||
Net cash used in financing activities
|
(23,432 | ) | (3,914 | ) | ||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
291 | (217 | ) | |||||
Net (decrease) increase in cash and cash equivalents
|
(37,096 | ) | 6,176 | |||||
Cash and cash equivalents at beginning of period
|
106,549 | 67,895 | ||||||
Cash and cash equivalents at end of period
|
$ | 69,453 | $ | 74,071 |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Total
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||||||||
Assets
|
||||||||||||||||
Fixed income available-for-sale securities (1)
|
$ | 79,804 | $ | 54,235 | $ | 25,569 | - | |||||||||
Fixed income trading securities held in deferred compensation plan (2)
|
6,905 | 6,905 | - | - | ||||||||||||
Equity trading securities held in deferred compensation plan (2)
|
13,792 | 13,792 | - | - | ||||||||||||
Total
|
$ | 100,501 | $ | 74,932 | $ | 25,569 | $ | - | ||||||||
Liabilities
|
||||||||||||||||
Deferred compensation plan (3)
|
20,518 | 20,518 | - | - | ||||||||||||
Total
|
$ | 20,518 | $ | 20,518 | $ | - | $ | - |
(1)
|
Included in cash and cash equivalents and short-term investments on the Company’s consolidated balance sheet.
|
(2)
|
Included in other current assets and deferred compensation plan assets on the Company’s consolidated balance sheet.
|
(3)
|
Included in accrued liabilities and deferred compensation on the Company’s consolidated balance sheet.
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Total
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||||||||
Assets
|
||||||||||||||||
Money market securities (1)
|
$ | 64,767 | $ | 64,767 | $ | - | $ | - | ||||||||
Fixed income trading securities held in deferred compensation plan (2)
|
4,956 | 4,956 | - | - | ||||||||||||
Equity trading securities held in deferred compensation plan (2)
|
10,423 | 10,423 | - | - | ||||||||||||
Total
|
$ | 80,146 | $ | 80,146 | $ | - | $ | - | ||||||||
Liabilities
|
||||||||||||||||
Deferred compensation plan (3)
|
15,379 | 15,379 | - | - | ||||||||||||
Total
|
$ | 15,379 | $ | 15,379 | $ | - | $ | - |
(1)
|
Included in cash and cash equivalents and short-term investments on the Company’s consolidated balance sheet.
|
(2)
|
Included in other current assets and deferred compensation plan assets on the Company’s consolidated balance sheet.
|
(3)
|
Included in accrued liabilities and deferred compensation on the Company’s consolidated balance sheet.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
July 1,
2011
|
July 2,
2010
|
||||||||||||
Shares used in basic per share computation
|
14,402 | 14,377 | 14,467 | 14,295 | ||||||||||||
Effect of dilutive common stock options outstanding
|
197 | 280 | 202 | 310 | ||||||||||||
Effect of dilutive restricted stock units outstanding
|
372 | 397 | 393 | 404 | ||||||||||||
Shares used in diluted per share computation
|
14,971 | 15,054 | 15,062 | 15,009 |
Six Months Ended
|
||||||||
(In thousands)
|
July 1, 2011
|
July 2, 2010
|
||||||
Cash paid during period:
|
||||||||
Income taxes
|
$ | 9,242 | $ | 9,278 | ||||
Non-cash investing and financing activities:
|
||||||||
Unrealized gain (loss) on short-term investments
|
$ | 27 | $ | (28 | ) | |||
Vested stock unit awards issued to settle accrued bonuses
|
$ | 4,538 | $ | 3,566 |
July 1,
|
December 31,
|
|||||||
(In thousands)
|
2011
|
2010
|
||||||
Billed accounts receivable
|
$ | 50,452 | $ | 47,198 | ||||
Unbilled accounts receivable
|
28,421 | 26,962 | ||||||
Allowance for doubtful accounts
|
(2,136 | ) | (2,126 | ) | ||||
Total accounts receivable, net
|
$ | 76,737 | $ | 72,034 |
Revenues
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
July 1, 2011
|
July 2, 2010
|
July 1, 2011
|
July 2, 2010
|
||||||||||||
Engineering and other scientific
|
$ | 47,787 | $ | 43,981 | $ | 103,448 | $ | 88,708 | ||||||||
Environmental and health
|
17,319 | 16,458 | 35,131 | 31,137 | ||||||||||||
Total revenues
|
$ | 65,106 | $ | 60,439 | $ | 138,579 | $ | 119,845 |
Operating Income
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
July 1, 2011
|
July 2, 2010
|
July 1, 2011
|
July 2, 2010
|
||||||||||||
Engineering and other scientific
|
$ | 14,274 | $ | 12,143 | $ | 30,504 | $ | 25,146 | ||||||||
Environmental and health
|
4,828 | 5,372 | 10,103 | 9,647 | ||||||||||||
Total segment operating income
|
19,102 | 17,515 | 40,607 | 34,793 | ||||||||||||
Corporate operating expense
|
(5,725 | ) | (4,740 | ) | (14,864 | ) | (12,511 | ) | ||||||||
Total operating income
|
$ | 13,377 | $ | 12,775 | $ | 25,743 | $ | 22,282 |
Capital Expenditures
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
July 1, 2011
|
July 2, 2010
|
July 1, 2011
|
July 2, 2010
|
||||||||||||
Engineering and other scientific
|
$ | 626 | $ | 447 | $ | 961 | $ | 1,048 | ||||||||
Environmental and health
|
121 | 40 | 201 | 82 | ||||||||||||
Total segment capital expenditures
|
747 | 487 | 1,162 | 1,130 | ||||||||||||
Corporate capital expenditures
|
119 | 120 | 505 | 205 | ||||||||||||
Total capital expenditures
|
$ | 866 | $ | 607 | $ | 1,667 | $ | 1,335 |
Depreciation and Amortization
|
||||||||||||||||
Three Months Ended
|
Six Months Ended | |||||||||||||||
(In thousands)
|
July 1, 2011
|
July 2, 2010
|
July 1, 2011
|
July 2, 2010
|
||||||||||||
Engineering and other scientific
|
$ | 642 | $ | 715 | $ | 1,300 | $ | 1,395 | ||||||||
Environmental and health
|
53 | 47 | 104 | 94 | ||||||||||||
Total segment depreciation and amortization
|
695 | 762 | 1,404 | 1,489 | ||||||||||||
Corporate depreciation and amortization
|
373 | 316 | 728 | 662 | ||||||||||||
Total depreciation and amortization
|
$ | 1,068 | $ | 1,078 | $ | 2,132 | $ | 2,151 |
Environmental
|
Engineering and
|
|||||||||||
(In thousands)
|
and health
|
other scientific
|
Total
|
|||||||||
Goodwill
|
$ | 8,099 | $ | 508 | $ | 8,607 |
Revenues
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Engineering and other scientific
|
$ | 47,787 | $ | 43,981 | 8.7 | % | ||||||
Percentage of total revenues
|
73.4 | % | 72.8 | % | ||||||||
Environmental and health
|
17,319 | 16,458 | 5.2 | % | ||||||||
Percentage of total revenues
|
26.6 | % | 27.2 | % | ||||||||
Total revenues
|
$ | 65,106 | $ | 60,439 | 7.7 | % |
Compensation and Related Expenses
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Compensation and related expenses
|
$ | 38,508 | $ | 34,060 | 13.1 | % | ||||||
Percentage of total revenues
|
59.1 | % | 56.4 | % |
Other Operating Expenses
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Other operating expenses
|
$ | 5,704 | $ | 5,388 | 5.9 | % | ||||||
Percentage of total revenues
|
8.8 | % | 8.9 | % |
Reimbursable Expenses
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Reimbursable expenses
|
$ | 4,533 | $ | 5,311 | (14.6 | )% | ||||||
Percentage of total revenues
|
7.0 | % | 8.8 | % |
General and Administrative Expenses
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
General and administrative expenses
|
$ | 2,984 | $ | 2,905 | 2.7 | % | ||||||
Percentage of total revenues
|
4.6 | % | 4.8 | % |
Other Income, Net
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Other income (expense), net
|
$ | 583 | $ | (494 | ) | 218.0 | % | |||||
Percentage of total revenues
|
0.9 | % | (0.8 | )% |
Income Taxes
|
||||||||||||
Three Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Income taxes
|
$ | 5,743 | $ | 5,001 | 14.8 | % | ||||||
Percentage of total revenues
|
8.8 | % | 8.3 | % | ||||||||
Effective tax rate
|
41.1 | % | 40.7 | % |
Revenues
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Engineering and other scientific
|
$ | 103,448 | $ | 88,708 | 16.6 | % | ||||||
Percentage of total revenues
|
74.6 | % | 74.0 | % | ||||||||
Environmental and health
|
35,131 | 31,137 | 12.8 | % | ||||||||
Percentage of total revenues
|
25.4 | % | 26.0 | % | ||||||||
Total revenues
|
$ | 138,579 | $ | 119,845 | 15.6 | % |
Compensation and Related Expenses
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Compensation and related expenses
|
$ | 81,208 | $ | 71,840 | 13.0 | % | ||||||
Percentage of total revenues
|
58.6 | % | 59.9 | % |
Other Operating Expenses
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Other operating expenses
|
$ | 11,486 | $ | 10,607 | 8.3 | % | ||||||
Percentage of total revenues
|
8.3 | % | 8.9 | % |
Reimbursable Expenses
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Reimbursable expenses
|
$ | 13,823 | $ | 9,516 | 45.3 | % | ||||||
Percentage of total revenues
|
10.0 | % | 7.9 | % |
General and Administrative Expenses
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
General and administrative expenses
|
$ | 6,319 | $ | 5,600 | 12.8 | % | ||||||
Percentage of total revenues
|
4.6 | % | 4.7 | % |
Other Income, Net
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Other income, net
|
$ | 1,596 | $ | 529 | 201.7 | % | ||||||
Percentage of total revenues
|
1.2 | % | 0.4 | % |
Income Taxes
|
||||||||||||
Six Months Ended
|
||||||||||||
(In thousands)
|
July 1,
2011
|
July 2,
2010
|
Percent
Change
|
|||||||||
Income taxes
|
$ | 11,119 | $ | 9,292 | 19.7 | % | ||||||
Percentage of total revenues
|
8.0 | % | 7.8 | % | ||||||||
Effective tax rate
|
40.7 | % | 40.7 | % |
Six Months Ended
|
||||||||
July 1,
2011
|
July 2,
2010
|
|||||||
Net cash provided by operating activities
|
$ | 13,293 | $ | 6,562 | ||||
Net cash (used in) provided by investing activities
|
(27,248 | ) | 3,745 | |||||
Net cash used in financing activities
|
(23,432 | ) | (3,914 | ) |
Operating
|
||||||||||||||||
Fiscal
|
lease
|
Capital
|
Purchase
|
|||||||||||||
year
|
commitments
|
leases
|
obligations
|
Total
|
||||||||||||
2011 (remaining portion)
|
$ | 3,101 | $ | 2 | $ | 2,635 | $ | 5,738 | ||||||||
2012
|
6,208 | 4 | - | 6,212 | ||||||||||||
2013
|
3,944 | 2 | - | 3,946 | ||||||||||||
2014
|
3,433 | - | - | 3,433 | ||||||||||||
2015
|
2,344 | - | - | 2,344 | ||||||||||||
Thereafter
|
3,085 | - | - | 3,085 | ||||||||||||
$ | 22,115 | $ | 8 | $ | 2,635 | $ | 24,758 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(in thousands, except percentages)
|
July 1,
2011
|
July 2,
2010
|
July 1,
2011
|
July 2,
2010
|
||||||||||||
Revenues before reimbursements
|
$ | 60,573 | $ | 55,128 | $ | 124,756 | $ | 110,329 | ||||||||
EBITDA
|
$ | 14,987 | $ | 13,293 | $ | 29,409 | $ | 24,833 | ||||||||
EBITDA as a % of revenues before reimbursements
|
24.7 | % | 24.1 | % | 23.6 | % | 22.5 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(in thousands)
|
July 1,
2011
|
July 2,
2010
|
July 1,
2011
|
July 2,
2010
|
||||||||||||
Net income
|
$ | 8,217 | $ | 7,280 | $ | 16,220 | $ | 13,519 | ||||||||
Add back (subtract):
|
||||||||||||||||
Income taxes
|
5,743 | 5,001 | 11,119 | 9,292 | ||||||||||||
Interest income, net
|
(41 | ) | (66 | ) | (62 | ) | (129 | ) | ||||||||
Depreciation and amortization
|
1,068 | 1,078 | 2,132 | 2,151 | ||||||||||||
EBITDA
|
14,987 | 13,293 | 29,409 | 24,833 | ||||||||||||
Stock-based compensation
|
2,119 | 2,001 | 5,934 | 5,093 | ||||||||||||
EBITDAS
|
$ | 17,106 | $ | 15,294 | $ | 35,343 | $ | 29,926 |
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control over Financial Reporting
|
(In thousands, except price per share)
|
Total
Number of
Shares
Purchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Programs
|
Approximate Dollar
Value of Shares That
May Yet Be
Purchased Under the
Programs (1)
|
||||||||||||
April 2 to April 29
|
20 | $ | 41.66 | 20 | $ | 7,027 | ||||||||||
Additional funds authorized for share repurchases
|
$ | 35,000 | ||||||||||||||
April 30 to May 27
|
174 | 40.97 | 174 | $ | 34,898 | |||||||||||
May 28 to July 1
|
191 | 41.82 | 191 | $ | 26,898 | |||||||||||
Total
|
385 | $ | 41.43 | 385 | $ | 26,898 |
(1)
|
On May 22, 2007, the Company’s Board of Directors approved up to $35 million for repurchases of the Company’s common stock. On May 29, 2008, the Company’s Board of Directors authorized an additional $35 million for repurchases of the Company’s common stock. On February 19, 2009, the Company’s Board of Directors authorized an additional $25.1 million for repurchases of the Company’s common stock. On May 25, 2011, the Board of Directors authorized an additional $35.0 million for the repurchase of the Company’s common stock. These plans have no expiration date.
|
(a)
|
Exhibit Index
|
|
10.39
|
First Amendment to the Exponent, Inc. 401(k) Savings Plan (as amended and restated January 1, 2010).
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.
|
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
|
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
|
EXPONENT, INC.
|
|
(Registrant)
|
|
Date: August 5, 2011
|
|
/s/ Paul R. Johnston
|
|
Paul R. Johnston, Ph.D., Chief Executive Officer
|
|
/s/ Richard L. Schlenker
|
|
Richard L. Schlenker, Chief Financial Officer
|
Dated: July 26, 2011
|
EXPONENT, INC.
|
|||
By:
|
/s/ Gregory P. Klein
|
|||
Title: Vice President, Human Resources
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Exponent, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Paul R. Johnston | ||
Paul R. Johnston, Ph.D.
|
|||
Chief Executive Officer
|
|||
1.
|
I have reviewed this quarterly report on Form 10-Q of Exponent, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Richard L. Schlenker | ||
Richard L. Schlenker
|
|||
Chief Financial Officer
|
|||
By:
|
/s/ Paul R. Johnston | ||
Paul R. Johnston, Ph.D.
|
|||
Chief Executive Officer
|
|||
By:
|
/s/ Richard L. Schlenker | ||
Richard L. Schlenker
|
|||
Chief Financial Officer
|
|||
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Per Share data |
Jul. 01, 2011
|
Dec. 31, 2010
|
---|---|---|
Accounts receivable, allowance for doubtful accounts | $ 2,136 | $ 2,126 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 16,427 | 16,427 |
Treasury stock, shares | 2,762 | 2,431 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2011
|
Jul. 02, 2010
|
Jul. 01, 2011
|
Jul. 02, 2010
|
|
Revenues: | Â | Â | Â | Â |
Revenues before reimbursements | $ 60,573 | $ 55,128 | $ 124,756 | $ 110,329 |
Reimbursements | 4,533 | 5,311 | 13,823 | 9,516 |
Revenues | 65,106 | 60,439 | 138,579 | 119,845 |
Operating expenses: | Â | Â | Â | Â |
Compensation and related expenses | 38,508 | 34,060 | 81,208 | 71,840 |
Other operating expenses | 5,704 | 5,388 | 11,486 | 10,607 |
Reimbursable expenses | 4,533 | 5,311 | 13,823 | 9,516 |
General and administrative expenses | 2,984 | 2,905 | 6,319 | 5,600 |
Total operating expenses | 51,729 | 47,664 | 112,836 | 97,563 |
Operating income | 13,377 | 12,775 | 25,743 | 22,282 |
Other income (expense), net: | Â | Â | Â | Â |
Interest income, net | 41 | 66 | 62 | 129 |
Miscellaneous income (expense), net | 542 | (560) | 1,534 | 400 |
Total other income (expense), net | 583 | (494) | 1,596 | 529 |
Income before income taxes | 13,960 | 12,281 | 27,339 | 22,811 |
Income taxes | 5,743 | 5,001 | 11,119 | 9,292 |
Net income | $ 8,217 | $ 7,280 | $ 16,220 | $ 13,519 |
Net income per share: | Â | Â | Â | Â |
Basic | $ 0.57 | $ 0.51 | $ 1.12 | $ 0.95 |
Diluted | $ 0.55 | $ 0.48 | $ 1.08 | $ 0.90 |
Shares used in per share computations: | Â | Â | Â | Â |
Basic | 14,402 | 14,377 | 14,467 | 14,295 |
Diluted | 14,971 | 15,054 | 15,062 | 15,009 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jul. 01, 2011
|
Jul. 29, 2011
|
|
Document Information [Line Items] | Â | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jul. 01, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Trading Symbol | EXPO | Â |
Entity Registrant Name | EXPONENT INC | Â |
Entity Central Index Key | 0000851520 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Accelerated Filer | Â |
Entity Common Stock, Shares Outstanding | Â | 13,650,297 |
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Deferred Compensation Plan
|
6 Months Ended |
---|---|
Jul. 01, 2011
|
|
Deferred Compensation Plan |
Note 6: Deferred Compensation Plan
The
Company maintains a nonqualified deferred compensation plan for the
benefit of a select group of highly compensated employees.
Under this plan participants may elect to defer up to 100% of their
compensation. Company assets that are earmarked to pay
benefits under the plan are held in a rabbi trust and are subject
to the claims of the Company’s creditors. As of July 1,
2011 and December 31, 2010, the invested amounts under the plan
totaled $20,697,000 and $15,379,000, respectively. These
assets are classified as trading securities and are recorded at
fair market value with changes recorded as adjustments to other
income and expense.
As
of July 1, 2011 and December 31, 2010, vested amounts due under the
plan totaled $20,518,000 million and $15,379,000, respectively.
Changes in the liability are recorded as adjustments to
compensation expense. During the three and six months ended
July 1, 2011 the Company recognized an increase to compensation
expense of $221,000 and $872,000, respectively, as a result of
changes in the market value of the trust assets, with the same
amount being recorded as other income, net. During the three and
six months ended July 2, 2010 the Company recognized a decrease to
compensation expense of $881,000 and $313,000, respectively, as a
result of changes in the market value of the trust assets, with the
same amount being recorded as other expense, net.
|
Goodwill
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
Note 11: Goodwill
Below
is a breakdown of goodwill reported by segment as of July 1,
2011:
There
were no changes in the carrying amount of goodwill for the three
and six months ended July 1, 2011. There were no goodwill
impairments or gains or losses on disposals for any portion of the
Company’s reporting units during the three and six months
ended July 1, 2011.
|
Fair Value Measurements
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
Note 2: Fair Value Measurements
The
Company measures certain financial assets and liabilities at fair
value on a recurring basis, including available-for-sale fixed
income securities, trading fixed income and equity securities held
in its deferred compensation plan and the liability associated with
its deferred compensation plan. The fair value of these
certain financial assets and liabilities was determined using the
following inputs at July 1, 2011 (in thousands):
The
fair value of these certain financial assets and liabilities was
determined using the following inputs at December 31, 2010 (in
thousands):
Fixed
income available-for-sale securities at July 1, 2011 primarily
represent obligations of state and local government agencies.
Included in fixed income available-for-sale securities are
$54,235,000 of money market securities classified as cash
equivalents. Fixed income and equity trading securities
represent mutual funds held in the Company’s deferred
compensation plan. See Note 6 for additional information
about the Company’s deferred compensation plan.
As
of July 1, 2011, the Company held state and municipal bonds
with a fair value of $25,569,000 and an amortized cost of
$25,524,000. The unrealized gain recorded in accumulated
other comprehensive income for the three months and six months
ended July 1, 2011 was $56,000 and $57,000, respectively. The
unrealized loss recorded in accumulated other comprehensive income
for the three months and six months ended July 1, 2011 was $11,000
and $12,000, respectively. There were no securities in a
continuous unrealized loss position for more than twelve
months. Contractual maturities for these bonds range from 0.9
to 2.25 years. There were no available-for-sale investments
as of December 31, 2010.
At
July 1, 2011 and December 31, 2010, the Company did not have any
assets valued using significant unobservable inputs.
The
carrying amount of the Company’s accounts receivable, other
assets and accounts payable approximates their fair values.
There were no other-than-temporary impairments or credit losses
related to available-for-sale securities during the first six
months of 2011 and 2010.
|
Accounts Receivable, Net
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net |
Note 8: Accounts Receivable, Net
At
July 1, 2011 and December 31, 2010, accounts receivable, net, was
comprised of the following:
|
Inventory
|
6 Months Ended |
---|---|
Jul. 01, 2011
|
|
Inventory |
Note 9: Inventory
At
July 1, 2011, the Company had $142,000 of raw materials inventory
included in prepaid expenses and other current assets on its
condensed consolidated balance sheet. At December 31, 2010,
the Company had $1,630,000 and $1,225,000 of finished goods and raw
materials inventory, respectively, included in prepaid expenses and
other current assets on its condensed consolidated balance
sheet.
|
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MC+D[N$M.QDZ\($RD.!!27,M'HL0Z[\@LSK0'WG2?SYN_O7`SU8'7&BKPI=1O
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M,T\S3S-/,T\S_Z)'LJ#PTK)'K2MP;3?ISNGW`E6SH5_2D6[T:D[V"D[\OAOU
M;*2:#0LD;W>-;HO:VQ&T]Q+:G<&`H$W0WD=H=_L$;8+V7D+;/(@^TM2*_IGJ
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CTM5Z''L%1"P3`X$W/.#X>)/.E1!`X+YS+9OP!3)LRDNE/$DB8-\E6A`@E
MB*GSR=3QGH2(/`QVE0`!8]%F8TWZ)$AM-E(E=+I#X[C?7UH)&H)O!L:P;:XR
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M^=QS?X";%``-\'6P]8G!SWH^6?WD8[?11+0#-IN[GN$M%`LHLSR9*0);"`NY
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M[U<8'V#L](5-_O6"N?;WS^\U3;WLM-MM#?YH_P>,=O?[U[OK[]JE_AWI5P>J
M]EU]\
Supplemental Cash Flow Information
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2011
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Supplemental Cash Flow Information |
Note 7: Supplemental Cash Flow Information
The
following is supplemental disclosure of cash flow
information:
|
Net Income Per Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2011
|
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Net Income Per Share |
Note 3: Net Income Per Share
Basic
per share amounts are computed using the weighted-average number of
common shares outstanding during the period. Diluted per
share amounts are calculated using the weighted-average number of
common shares outstanding during the period and, when dilutive, the
weighted-average number of potential common shares from the
issuance of common stock to satisfy outstanding restricted stock
units and the exercise of outstanding options to purchase common
stock using the treasury stock method.
The
following schedule reconciles the shares used to calculate basic
and diluted net income per share:
There
were no options excluded from the diluted per share calculation for
the three and six months ended July 1, 2011. Common stock
options to purchase 60,000 shares were excluded from the diluted
per share calculation for the three and six months ended July 2,
2010, due to their antidilutive effect. The weighted-average
exercise price for the antidilutive shares was $31.01 for the three
and six months ended July 2, 2010.
|
Stock-Based Compensation
|
6 Months Ended |
---|---|
Jul. 01, 2011
|
|
Stock-Based Compensation |
Note 4: Stock-Based Compensation
Restricted Stock Units
Restricted
stock unit grants are designed to attract and retain employees, and
to better align employee interests with those of the
Company’s stockholders. For a select group of
employees, up to 40% of their annual bonus is settled with fully
vested restricted stock unit awards. Under these fully vested
restricted stock unit awards, the holder of each award has the
right to receive one share of the Company’s common stock for
each fully vested restricted stock unit four years from the date of
grant. Each individual who receives a fully vested restricted
stock unit award is also granted a matching number of unvested
restricted stock unit awards. Unvested restricted stock unit
awards are also granted for select new hires and promotions.
These unvested restricted stock unit awards generally cliff vest
four years from the date of grant, at which time the holder of each
award will have the right to receive one share of the
Company’s common stock for each restricted stock unit award
provided the holder of each award has met certain employment
conditions. In the case of retirement at 59½ years or
older, all unvested restricted stock unit awards will continue to
vest, provided that the holder of each award does all consulting
work through the Company and does not become an employee for a past
or present client, beneficial party or competitor of the
Company.
The
value of these restricted stock unit awards is determined based on
the market price of the Company’s common stock on the date of
grant. The value of fully vested restricted stock unit awards
issued is recorded as a reduction to accrued bonuses. The
portion of bonus expense that the Company expects to settle with
fully vested restricted stock unit awards is recorded as
stock-based compensation during the period the bonus is
earned. The Company recorded stock-based compensation expense
associated with accrued bonus awards of $1,295,000 and $1,155,000
during the three months ended July 1, 2011 and July 2, 2010,
respectively. For the six months ended July 1, 2011 and July
2, 2010, the Company recorded stock-based compensation expense
associated with accrued bonus awards of $2,714,000 and $2,236,000,
respectively. The value of the unvested restricted stock unit
awards granted is recognized on a straight-line basis over the
shorter of the four-year vesting period or the period between the
grant date and the date the award recipient turns 59½.
If the award recipient is 59½ years or older on the date of
grant, the value of the entire award is expensed upon grant.
The Company recorded stock-based compensation expense associated
with the unvested restricted stock unit awards
of $680,000 and $689,000 during the three months ended July 1,
2011 and July 2, 2010, respectively. The Company recorded
stock-based compensation expense associated with the unvested
restricted stock unit awards of $2,923,000 and $2,538,000
during the six months ended July 1, 2011 and July 2, 2010,
respectively.
Stock Options
Stock
options are granted for terms of ten years and generally vest 25%
per year over a four-year period from the grant date. The
Company grants options at exercise prices equal to the fair value
of the Company’s common stock on the date of grant. The
Company recorded stock-based compensation expense of $144,000 and
$157,000 during the three months ended July 1, 2011 and July 2,
2010, respectively, associated with stock option grants. The
Company recorded stock-based compensation expense of $297,000 and
$319,000 during the six months ended July 1, 2011 and July 2, 2010,
respectively, associated with stock option grants.
The
Company uses the Black-Scholes option-pricing model to determine
the fair value of options granted. The determination of the
fair value of stock-based awards on the date of grant using an
option-pricing model is affected by the Company’s stock price
as well as assumptions regarding a number of complex and subjective
variables. These variables include expected stock price
volatility over the term of the award, actual and projected
employee stock option exercise behaviors, the risk-free interest
rate and expected dividends.
The
Company used historical exercise and post-vesting forfeiture and
expiration data to estimate the expected term of options
granted. The historical volatility of the Company’s
common stock over a period of time equal to the expected term of
the options granted was used to estimate expected volatility.
The risk-free interest rate used in the option-pricing model was
based on United States Treasury zero-coupon issues with remaining
terms similar to the expected term on the options. The
Company does not anticipate paying any cash dividends in the
foreseeable future and therefore used an expected dividend yield of
zero in the option-pricing model. The Company is required to
estimate forfeitures at the time of grant and revise those
estimates in subsequent periods if actual forfeitures differ from
those estimates. Historical data was used to estimate
pre-vesting option forfeitures and stock-based compensation expense
was recorded only for those awards that are expected to vest.
All share-based payment awards are recognized on a straight-line
basis over the requisite service periods of the
awards.
|
Contingencies
|
6 Months Ended |
---|---|
Jul. 01, 2011
|
|
Contingencies |
Note 12: Contingencies
In
July of 2008, the Company was served with a writ by a former
client. The writ did not articulate a claim. The
Company met with the former client in November of 2008 and again in
January of 2009 and learned in those discussions of potential
claims against the Company arising out of the testimony delivered
by one of the Company’s employees. The former client
claims that this testimony contributed to an adverse verdict
against them. Given the uncertainty as to whether the
claimant will choose to pursue one or more claims against the
Company, and the nature of the potential claims against the
Company, an estimated loss cannot be determined at this time.
The Company believes it has a strong defense against all such
potential claims and intends to vigorously defend itself.
Further, the Company believes that some of the potential claims
would be covered by insurance. Although the Company’s
ultimate liability in this matter (if any) cannot be determined,
based upon information currently available, the Company believes,
after consultation with legal counsel, the ultimate resolution of
these potential claims will not have a material adverse effect on
its financial condition, results of operations or
liquidity.
In
March of 2010, a lawsuit was filed against the Company which
alleges, among other things, that the Company failed to provide
rest and meal periods, failed to furnish accurate itemized wage
statements, failed to keep accurate payroll records, incurred
waiting time penalties, conducted unfair business practices and
failed to comply with certain other California Labor Code
requirements. In March of 2011, the Company entered into a
preliminary agreement to settle these claims. The financial
impact of the preliminary settlement did not have a material effect
on the Company’s financial condition, results of operations
or liquidity.
In
addition to the above matters, the Company is a party to various
other legal actions from time to time and may be contingently
liable in connection with claims and contracts arising in the
normal course of business, the outcome of which the Company
believes, after consultation with legal counsel, will not have a
material adverse effect, individually or in the aggregate, on its
financial condition, results of operations or liquidity. All
legal costs associated with litigation are expensed as
incurred.
|
Treasury Stock
|
6 Months Ended |
---|---|
Jul. 01, 2011
|
|
Treasury Stock |
Note 5: Treasury Stock
On
May 22, 2007, the Company’s Board of Directors approved up to
$35 million for repurchases of the Company’s common
stock. On May 29, 2008, the Company’s Board of
Directors authorized an additional $35 million for repurchases of
the Company’s common stock. On February 19, 2009, the
Company’s Board of Directors authorized an additional $25.1
million for the repurchase of the Company’s common
stock. On May 25, 2011, the Company’s Board of
Directors authorized an additional $35 million for the repurchase
of the Company’s common stock.
The
Company repurchased 566,727 shares of its common stock for
$23,080,000 during the six months ended July 1, 2011. The
Company repurchased 219,578 shares of its common stock for
$6,110,000 during the six months ended July 2, 2010. As of
July 1, 2011, the Company had remaining authorization under its
stock repurchase plans of $26,898,000 to repurchase shares of
common stock.
The
Company reissued 236,382 shares of its treasury stock with a cost
of approximately $5,997,000 to settle restricted stock unit awards,
stock options and purchases under the Employee Stock Purchase Plan
during the six months ended July 1, 2011. The Company
reissued 348,966 shares of its treasury stock with a cost of
$7,812,000 to settle restricted stock unit awards, stock options
and purchases under the Employee Stock Purchase Plan during the six
months ended July 2, 2010.
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2011
|
Jul. 02, 2010
|
Jul. 01, 2011
|
Jul. 02, 2010
|
|
Net income | $ 8,217 | $ 7,280 | $ 16,220 | $ 13,519 |
Other comprehensive income (loss): | Â | Â | Â | Â |
Foreign currency translation adjustments, net of tax | 53 | (190) | 293 | (351) |
Unrealized gain (loss) on investments, net of tax | 26 | (11) | 27 | (28) |
Comprehensive income | $ 8,296 | $ 7,079 | $ 16,540 | $ 13,140 |
Basis of Presentation
|
6 Months Ended |
---|---|
Jul. 01, 2011
|
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Basis of Presentation |
Note 1: Basis of Presentation
Exponent,
Inc. (referred to as the “Company” or
“Exponent”) is an engineering and scientific consulting
firm that provides solutions to complex problems. The Company
operates on a 52-53 week fiscal year ending on the Friday closest
to the last day of December.
The
accompanying unaudited condensed consolidated financial statements
are prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial
information, the instructions to Form 10-Q and Article 10 of
Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not contain all the information and notes
required by accounting principles generally accepted in the United
States of America for complete financial statements. In the
opinion of management, all adjustments which are necessary for the
fair presentation of the condensed consolidated financial
statements have been included and all such adjustments are of a
normal and recurring nature. The operating results for the
three and six months ended July 1, 2011 are not necessarily
representative of the results of future quarterly or annual
periods. The following information should be read in
conjunction with the audited consolidated financial statements and
accompanying notes thereto included in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31,
2010.
The
unaudited condensed consolidated financial statements include the
accounts of Exponent, Inc. and its subsidiaries, which are wholly
owned. All intercompany accounts and transactions have been
eliminated in consolidation.
Authorized Capital Stock. In a letter dated May 23,
2006, the Company committed to stockholders to limit its use of
authorized capital stock to 40 million common shares, and 2 million
preferred shares, unless the approval of the Company’s
stockholders is subsequently obtained, such as through a further
amendment to the Company’s authorized capital
stock.
Use of Estimates. The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America 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 period.
Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements. In
October 2009, the Financial Accounting Standards Board
(“FASB”) issued a new revenue recognition standard for
arrangements with multiple deliverables. The new standard permits
entities to initially use management’s best estimate of
selling price to value individual deliverables when those
deliverables do not have vendor specific objective evidence of fair
value or when third-party evidence is not available.
Additionally, the new standard modifies the manner in which the
transaction consideration is allocated across the separately
identified deliverables by no longer permitting the residual method
of allocating arrangement consideration. Also in October
2009, the FASB amended the accounting standards for revenue
recognition to exclude software contained within certain qualifying
tangible products from the scope of the software revenue
recognition guidance if the software is essential to the tangible
product's functionality. Effective January 1, 2011, the
Company adopted these standards. The adoption of these
standards did not have a material impact on the Company’s
consolidated financial position, results of operations or cash
flows.
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Segment Reporting
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Jul. 01, 2011
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Segment Reporting |
Note 10: Segment Reporting
The
Company has two operating segments based on two primary areas of
service. One operating segment is a broad service group
providing technical consulting in different practices primarily in
the areas of engineering and technology development. The
Company’s other operating segment provides services in the
area of environmental, epidemiology and health risk analysis.
This operating segment provides a wide range of consulting services
relating to environmental hazards and risks and the impact on both
human health and the environment.
Segment
information for the three and six months ended July 1, 2011 and
July 2, 2010 follows:
No
single customer comprised more than 10% of the Company’s
revenues during the three and six months ended July 1, 2011 and
July 2, 2010, respectively. No single customer comprised more
than 10% of the Company’s accounts receivable at July 1, 2011
or at December 31, 2010.
|