UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
________________________________
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 29, 2000.
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to _________.
Commission File Number 0-18655
EXPONENT, INC.
--------------
(Exact name of registrant as specified in its charter)
Delaware 77-0218904
-------- ----------
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
149 Commonwealth Drive, Menlo Park, California 94025
----------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (650) 326-9400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 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 or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing sale price of the Common Stock as reported on
the NASDAQ National Market on March 16, 2001, was approximately $57,548,798. For
purposes of this determination, shares of Common Stock held by each officer and
director and by each person who owns 10% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
The number of shares of the issuer's Common Stock outstanding as of March 16,
2001 was 6,463,045.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's Annual Report to Stockholders for its fiscal
year ended December 29, 2000, are incorporated by reference in Parts II and
IV of this Form 10-K to the extent stated herein.
(2) Portions of the Registrant's definitive Proxy Statement for the
Registrant's 2001 Annual Meeting of Stockholders to be held on May 24,
2001, are incorporated by reference into Part III of this Form 10-K.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains, and incorporates by reference,
certain "forward-looking" statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended thereto under) that are based on the beliefs of the Company's
management, as well as assumptions made by and information currently available
to the Company's management. Such forward-looking statements are subject to the
safe harbor created by the Private Securities Litigation Reform Act of 1995.
When used in this document and in the documents incorporated herein by
reference, the words "anticipate," "believe," "estimate," "expect" and similar
expressions, as they relate to the Company or its management, are intended to
identify such forward-looking statements. Such statements reflect the current
views of the Company or its management with respect to future events and are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, the Company's actual results, performance, or achievements could
differ materially from those expressed in, or implied by, any such forward-
looking statements. Factors that could cause or contribute to such material
differences include those discussed elsewhere in this Report and in the
documents incorporated herein by reference. The inclusion of such forward-
looking information should not be regarded as a representation by the Company or
any other person that the future events, plans, or expectations contemplated by
the Company will be achieved. The Company undertakes no obligation to release
publicly any updates or revisions to any such forward-looking statements that
may reflect events or circumstances occurring after the date of this Report.
2
PART I
------
Item 1. Business
GENERAL
Exponent, Inc., incorporated in Delaware in 1989 ("Exponent", and, together
with its operating groups, the "Company"), is a science and engineering
consulting firm that provides solutions to complex problems. Our
multidisciplinary team of scientists, physicians, engineers, and business
consultants brings together more than 70 different disciplines to solve
complicated issues facing industry and business today.
The Exponent Failure Analysis Associates group ("FaAA") services clients in
a variety of areas including litigation support and technology development. FaAA
provides services in areas such as vehicle evaluation and testing, materials
science and mechanical design analysis, civil engineering and thermal sciences.
It also assists military organizations in utilizing existing commercial
technologies and developing new technologies.
The company provides services in the epidemiology arena with Exponent
Health Group ("EHG"). EHG provides epidemiology services on a wide variety of
topics, including occupational and environmental health concerns, pharmaceutical
and medical device issues, and health-related consumer product safety.
The Company's Exponent Environmental Group ("EEG") is a scientific and
engineering consulting group that specializes in providing scientific solutions
for complex environmental problems.
The Company's BCS Wireless group ("BCS") specializes in the installation
and maintenance of wireless communication networks. During 1999, a decision was
made to divest BCS and the Company sold certain assets of BCS in May of 2000.
In September 2000, the Company acquired all of the outstanding capital
stock of Lockwood-Singh & Associates, Inc., a Los Angeles based geotechnical
engineering and geologic consulting firm. Following the acquisition, the net
assets and staff of Lockwood-Singh & Associates, Inc. became part of Exponent's
Civil Engineering practice.
In December 2000, the Company merged FaAA, EEG, EHG and the remaining
assets of BCS, which previously had been wholly owned subsidiaries, into
Exponent, Inc., the parent company. This change will have no effect on the
reporting of the Company's operating segments.
CLIENTS
General
The Company serves clients in manufacturing, transportation, technology,
utilities, energy, insurance, government, health, environmental and other
sectors of the economy. During 2000, 1999 and 1998 approximately 21%, 20% and
29%, respectively, of the Company's gross revenues from continuing operations
were derived from professional services provided to clients, organizations and
insurers related to the transportation industry. Additionally, during 2000 and
1999 the Company derived approximately 24% and 12%, respectively, of gross
revenues from continuing operations from professional services provided to
government agencies and contractors.
Many of the Company's engagements are initiated by lawyers or insurance
companies whose
3
clients anticipate or are engaged in litigation over an alleged failure of their
products, equipment or services. The Company has seen its services in failure
prevention and technology evaluation grow as the technological complexity of
products has increased over the years.
Pricing and Terms of Engagements
The Company provides its services on either a fixed-price basis or on a
"time and expenses" basis, charging hourly rates for each staff member involved
in a project based on his or her skill and experience. The Company's standard
rates for professionals range from $30 to $750 per hour. The Company's
engagement agreements typically provide for monthly billing, require payment of
the Company's invoices within 30 days of receipt and permit clients to terminate
an engagement at any time. Clients normally agree to indemnify Exponent's work
and its personnel against liabilities arising out of the use or application of
the results of the Company's work or recommendations.
SERVICES
The Company provides services in the following areas:
. Biomechanics . Industrial Structures
. Civil . Information Management
. Data Analysis . Marine and Aviation
. Electrical . Materials Science and Mechanical
. Environmental Design Analysis
. Health . Technology Development
. Health Risk . Thermal Sciences
. Human Factors . Vehicle Evaluation and Testing
. Hydrology . Visual Communications
Biomechanics
Biomechanics uses engineering and science to determine how people become
injured and to determine what injuries can be expected when people are exposed
to a certain incident or environment. The analyses encompasses: claimed injury,
injury mechanisms and injury prevention; effectiveness of restraint systems;
ergonomic design evaluation; low-speed and high-speed automotive collisions,
cardiovascular devices; helmet effectiveness; occupational injuries;
recreational sports injuries; evaluation of implant designs; cardiovascular
medicine and failure; and human body dynamics.
Civil
Civil engineering investigates all types of structural, geotechnical,
geological, geomechanical, construction and building problems, from major
catastrophes to simple performance failures. The scientific investigation of
these events provides a thorough assessment of damage, as well as expert
analysis of causation to be used for purposes of retrofit, repair, claims
adjustment or litigation. The analysis provides a comprehensive evaluation of
structural failures that include site condition and assessment surveys, advanced
theoretical and numerical modeling techniques, dynamic testing and analysis,
reliability and risk analysis, material testing, and repair solutions.
Earthquake engineering encompasses safety and damage assessment, seismic
analysis and design, post-earthquake reconnaissance and field inspection of all
types of structures, analysis of earthquake ground motion, investigation of
structural failures, development of remedial repairs and mitigation measures,
investigation protocol development and disaster management services.
4
Geotechnical, geological, geomechanical engineering and groundwater
hydrology encompasses problems with soil, rock and fluids as they related to the
structures that they support. Applied earth sciences analysis encompasses
problems associated with landslides, earthwork construction, foundations,
retaining walls, oil-well distress, tunnels and pipelines.
Structural engineering encompasses comprehensive evaluations, including
state-of-the-art structural analyses, site condition and assessment surveys,
dynamic testing and vibration measurement, computer animated reconstruction,
reliability and risk analyses, advanced theoretical and numeric modeling, due
diligence consulting and component or material testing. Once the root cause of
the failure is known, and when the extent and severity of the distress is fully
assessed, optimal repair options are recommended.
Data Analysis
Data analysis quantifies how machines, vehicles, consumer products and
components behave in the real world to directly measure risk. Most of the risk
analysis is based on information from in-house databases of over 350 million
computerized records, one of the world's largest collections of accident and
incident records. The analysis encompasses: accident data analysis; automotive
safety design and evaluations; database development; epidemiological research
and analysis; fire risk, property loss and insurability; health risk assessment
and epidemiology; safety assessment; statistical modeling and analysis; survey
design and analysis; system reliability and failure probability; work injury;
and consumer product safety.
Electrical
Electrical encompasses accident reconstruction, component and printed
circuit board failure analysis, electrical system design analysis, equipment
failure investigation, and patent evaluation and infringement review. Typical
investigations include: automotive electronics; printed circuit boards;
telecommunication electronics; semiconductor devices; power supplies and
batteries; prototypes; transportation systems; electric power systems; electric
equipment and energy conservation equipment and interruptible power systems.
Environmental
Environmental includes ecological and human health risk assessment; air
quality evaluation; site investigation and liability management; natural
resource damage assessment; and water resources and quality management.
Air quality evaluation encompasses accident reconstruction; air quality
management; chemical release analyses; combustion calculations and modeling;
computer modeling of plume dynamics; statistical analyses; visualization,
animation, and geographic information systems; indoor air quality assessment;
risk analyses; uncertainty evaluation; expert testimony and litigation support.
Site investigation and liability management encompasses site assessments;
remedial investigations/feasibility studies; Resource Conservation and Recovery
Act facility investigation/corrective measure studies; natural attenuation
studies; groundwater and surface water modeling; bench scale testing; transport
and fate analysis; air quality monitoring; bio availability studies; sediment
investigations; remedial alternatives analysis; remediation/redevelopment
oversight; and economic analysis.
Water resources and water quality management encompasses groundwater,
surface water, and vadose-zone analyses; environmental transport and fate
analyses; natural attenuation and degradation
5
studies; river and reservoir water quality analyses; groundwater remedial
investigations; watershed and basin-scale hydrological modeling and management;
site-specific hydrology and geochemical evaluations; flood and stormwater
planning and management; sediment transport analyses; dam failure analyses; and
water supply reliability and resource planning and management.
Health
Health services provide solutions to complex health problems from client
consultation to clinical trials, health care evaluations, literature reviews and
epidemiological studies. Health research includes reproductive effects, cancer,
injuries and health effects from workplace exposures, pharmacoepidemiolgy and
infectious disease control. Epidemiology, exposure assessment and occupational
medicine expertise is used to evaluate occupational and environmental health
issues. Decision analysis, cost-benefit, risk-benefit and outcome analysis is
applied to assist health care companies in evaluating health care and with
strategic planning and technology assessment.
Epidemiology is the science of studying disease within a population.
Through the principles of epidemiology, analyses are performed on the
interaction of host, agent and environment to reach conclusions about the causes
and occurrence of disease in human populations. Epidemiology services encompass
designing and conducting occupational and environmental studies to evaluate the
health effects of community and workplace exposures, work-related disease and
injury; conducting decision analysis for alternative forms of medical
treatments; designing, conducting and interpreting clinical trials; consulting
on product safety; and evaluating quality of health care.
Healthcare evaluation provides various approaches to accreditation, program
evaluation and cost-effectiveness analyses. These approaches encompass
statistical analysis; survey design and analysis; accreditation applications;
cost-effectiveness analysis; performance indicators; accreditation requirements;
outcome measurements; disease management; quality improvement; clinical practice
guidelines; and program evaluation.
Medical technology assessments provide a comprehensive and independent
assessment of medical devices and technologies. These assessments encompass
clinical indications; materials selection; technology (engineering) review; FDA
and other regulatory hurdles; target condition epidemiology; pricing and
reimbursement issues; cost effectiveness; complications and/or failure modes
(liability); marketing strategy; and competing technologies.
Health Risk
Health risk assessments and related analyses are a critical component of
many environmental regulatory decisions. The results of such analyses help
determine the need for and nature of remedial actions at hazardous waste sites,
support the derivation of cleanup levels, and assist in permitting new
facilities and developing closure plans for solid waste management units and
facilities that are going out of service. Human health toxicology services
encompass comprehensive multi-pathway risk assessments; screening-level risk
evaluations; derivation of risk-based cleanup levels; deterministic and
probabilistic exposure assessments; toxicity assessments and data evaluation;
risk assessment strategy development and review; research and development to
address sources of uncertainty; bio availability studies; fish consumption
surveys and studies; and toxic tort, class action and general litigation
support.
Human Factors
Analysis of human behavior and the limitations and capabilities of people
as they use a product or participate in an activity can provide a better
understanding of how accidents occur. The impact of warning labels, other safety
information and training on changing human behavior and reducing accidents
6
is an active area of ongoing research. Human factors services encompasses the
development of warnings and safety information for consumer, medical and work-
related products; analysis of the role of warnings in particular accidents; use
of injury/illness data to identify human behavior associated with accidents; use
of risk analysis to quantify the safety of a product or activity; measurement of
illuminance, luminance and noise levels in work environments; measurement of
human motor performance such as jumping ability, variation in gait, finger pinch
strength and visual-motor control; testing of people's knowledge of hazards and
comprehension of safety information; and analysis of user reaction to complex
information and control systems.
Hydrology
Hydrology is the science of water, its properties, phenomena and
distribution over the earth's surface. Exponent's hydrology services include the
analysis of flood retention facilities (levees, dams, etc.) and the evaluation
of the effects of flood water inundation on different types of structures. The
services also extend to investigating the cause of hillside movement, slope
erosion and other soil movement that may be associated with flooding which may
include distinguishing between damage due to catastrophe and damage that has
been caused by or is related to long-term deterioration, foundation settlement,
slope movement, initial construction defects, or normal expected behavior of a
structure over time. In addition the hydrology practice provides property damage
assessment, geotechnical services, as well as helps develop remedial repairs to
address flood related distress. The hydrology services further include the
development of master plans of drainage to enable cities to coordinate all
aspects of their flood control and surface water needs. This master drainage
plan considers all types of storms and their attendant runoff and provides for
safe transport of the waters off site.
Industrial Structures
The Company has developed an expertise in power plant and industrial
chimneys, not only as a designer, but also as a consultant for maintenance and
repair issues. The industrial structures practice has developed "close to
reality" computer programs, which are frequently used for design of chimneys and
other concrete towers that combine a high degree of safety with superior
economics.
Information Management
Information management covers information systems technology, technical
consulting and application. Services encompass access to one of the largest
private collections of computerized accident and incident data bases in the
world; providing design and installation of customized reports and automated
queries; design and execution of complex queries and technical information in a
particular field, including suggestions for primary research. These services
help to simplify preliminary research and risk analyses by offering access over
the Internet in a streamlined approach to help organizations react quickly to
new circumstances and unanticipated demands.
Marine and Aviation
Aviation analysis includes engineering analyses and design reviews,
accident reconstruction and testing for aircraft, aircraft structures, systems
and auxiliary equipment, as well as spacecraft, satellites and rockets. Services
encompass accident reconstruction; fire cause and origin analysis and
prevention; aerodynamics analysis; materials and corrosion evaluation; aircraft
system testing and evaluation; performance and control calculations; computer
simulation; regulatory analysis; design evaluation; risk analysis and service
life assessment; and wind tunnel testing.
Marine services perform independent engineering analysis and design review,
accident reconstruction and testing for ships, marine structures, offshore
platforms and auxiliary marine equipment.
7
Other services encompass marine materials and corrosion evaluation; sea-states
and weather characterization; regulatory compliance review; structural design
and fabrication process review; risk analysis and service life assessment;
shipyard management and operations review; fire cause and origin analysis and
prevention; structural assessment; management and oversight of vessel
construction; and evaluation of the environmental impact of marine industrial
operations and incidents.
Materials Science and Mechanical Design Analysis
Materials science and engineering is the science of understanding how and
why materials fail in medical, automotive, construction, recreational and other
environments. Areas of expertise include metallurgists, polymer scientists, and
ceramists. Services encompass accident reconstruction; fatigue and fracture
mechanics analysis; fractography; adhesion and coating evaluation; joining and
welding evaluation; bulk and surface chemical analysis; laboratory testing of
metals, plastics, ceramics and glasses; composites (fiberglass, sheet molding
compound and carbon) evaluation; life assessment; corrosion assessment; defect
detection and effect investigation; material characterization, selection and
compatibility assessment; environmental effect assessment; microscopy;
experimental stress analysis; non-destructive evaluation; and fabrication and
material processing.
Mechanical design analysis covers a broad range of services, from
engineering mechanics, energy, risk management and reliability to safety and
process risk management.
Engineering mechanics involves the evaluation of loads on a system or
product, from medical devices to commercial aircraft. Projects range from
modeling fluid flow characteristics in a system to predicting the remaining
lifetime of structures and components and to establishing design and operating
envelopes for processes and technologies. Services encompass component/structure
lifetime prediction; material constitutive modeling, testing and evaluation;
damage assessment; non-destructive evaluation; stress analysis; design review;
finite element analysis; blast and explosion; failure modes and effects
analysis; structural, thermal, and fluid dynamics analysis; vibration evaluation
and rotating equipment; fracture mechanics; medical device assessment; and
impact and penetration.
Energy services encompass creation of innovative maintenance management of
existing electric power plant equipment and systems; assisting power plant
owners and investors in modernization/expansion programs and new plant
development; component and plant condition assessments; and reliability analyses
and economic optimization.
Risk management and reliability focuses on the areas of industrial hazard
assessment, mitigation and prevention, operational reliability, safety hazards,
product quality, and economic risks and benefits. Risk assessments and accident
analysis are performed for the construction, operation, and servicing of
manufacturing plants, processing and storage facilities, and transportation
systems. Techniques used encompass fault-tree and event-tree analysis; failure
modes and effects analysis; operational performance evaluation; statistical
analysis; and probabilistic risk assessments.
Safety and process risk management is the effective way to address safety
issues in chemical and petrochemical industries that store, handle, or process
toxic or flammable materials in quantities that, if released, could have a major
impact on workers, nearby communities, or facilities. These events can have
significant life-safety, environmental, legal, regulatory, and financial
consequences. Services encompass process hazards analysis; mechanical integrity
assessment; determination of blast overpressures and structural assessments;
failure/accident investigation; offshore platform hazards analysis; consequence
modeling; and quantitative risk assessment.
8
Technology Development
Technology Development draws on our multidisciplinary engineering, testing,
failure analysis and prevention expertise, to help military organizations
identify commercial off-the-shelf technologies which reduce development time and
cost without sacrificing reliability. The group also develops integrated
prototypes, qualifies production processes and initiates upgraded modules as new
technologies emerge.
Thermal Sciences
Fires, explosions and toxic chemical services encompass fire cause, origin
and propagation analysis; combustion and explosion investigations; arson
investigations; chemical reactions and kinetics assessment; chemical processes
review; fire protection evaluation; site investigation and documentation; smoke
and plume propagation modeling; heat transfer and thermodynamics analysis; fluid
mechanics evaluation; heating and cooling equipment design reviews; and full-
scale fire and explosion testing. The information gained from these analyses
provides clients with a means of assessing preventative measures related to the
design of their products as well as evaluating failures when they occur.
Vehicle Evaluation and Testing
Vehicle evaluation and testing covers design analysis, component testing
and accident reconstruction. Projects have included automobiles, buses, trucks,
vans, bicycles, trailers, motorcycles, trains, forklifts, tractors, cranes,
mining and construction equipment, all terrain vehicles and golf carts. Services
encompass accident reconstruction; product validation testing; crash testing;
component testing and evaluation; design analysis; occupant kinematics and
injury analysis; vehicle handling analysis and testing; human performance
assessment; instrumentation and data analysis; risk analysis; fire causation
analysis; and product development.
Visual Communication
Visual communication means the generation, development and production of
visual concepts. Pictures are relied upon - whether printed, displayed on a
computer, projected onto a screen or presented as virtual reality - to reveal
and explain what words alone cannot. The products include animation, graphics,
multimedia, photography and video. Services encompass charts, graphs and tables;
electronic imaging and enhancement; computer animation; photogrammetry; concept
generation and development; site and studio photography; court boards, laser
disks, and CD-ROMs; slides, prints and overhead transparencies; custom
photographic processing; stereo and high-speed photography; video and post-
production; and interactive presentations.
COMPETITION
The marketplace for the Company's services is fragmented and the Company
faces different sources of competition in providing its various services. In
addition, the services the Company provides to some of its clients can be
performed in-house by those clients. However, because of liability and
independence concerns, clients who have the capability to perform such services
themselves often retain the Company or other independent consultants.
In each of the foregoing areas, the Company believes that the principal
competitive factors are technical capability and breadth of services, ability to
deliver services on a timely basis, professional reputation, knowledge of the
litigation process and the ability to offer fixed fee pricing. Although the
Company believes it generally competes favorably in each of these areas, some of
the Company's competitors may be able to provide services acceptable to the
clients at significantly lower prices.
The Company generally believes that the barriers to entry in particular
areas of engineering
9
expertise are low and that for many of its technical disciplines, competition is
increasing. In addition, the Company expects that as a result of these low
barriers, competition may become more intense in other aspects of its business.
In response to competitive forces in the marketplace, the Company continues to
explore new markets for its various technical disciplines.
EMPLOYEES
As of December 29, 2000, the Company's continuing operations employed
approximately 686 full-time and part time employees, including approximately 402
engineering and scientific staff, 142 technical support staff, and 142
administrative and support staff.
The Company's future success depends on its continuing ability to attract
and retain highly qualified technical and managerial personnel. Competition for
such personnel is intense, and there can be no assurance that the Company will
be able to retain its key managerial and technical employees or that it will be
able to attract, assimilate or retain other highly qualified technical and
managerial personnel in the future.
EXECUTIVE OFFICERS
The executive officers of the Company and their ages as of March 29, 2001
are as follows:
Name Age Position
---- --- --------
Michael R. Gaulke 55 President, Chief Executive Officer and
Director
Subbaiah V. Malladi, Ph.D. 54 Chief Technical Officer and Director
Roger L. McCarthy, Ph.D. 52 Chairman Exponent Failure Analysis
Associates and Director
Richard L. Schlenker, Jr. 35 Chief Financial Officer and Corporate
Secretary
Executive officers of the Company are appointed by the Board of Directors
and serve at the discretion of the Board or until the appointment of their
successors. There is no family relationship between any of the directors and
officers of the Company.
Mr. Gaulke joined the Company in September 1992, as Executive Vice
President and Chief Financial Officer. He was named President in March 1993, and
he was appointed as a member of the Board of Directors of the Company in January
1994. He assumed his current role of President and Chief Executive Officer in
June of 1996. From November 1988 to September 1992, Mr. Gaulke served as
Executive Vice President and Chief Financial Officer at Raynet Corporation, a
subsidiary of Raychem Corporation. Prior to joining Raynet, Mr. Gaulke was
Executive Vice President and Chief Financial Officer of Spectra Physics, Inc.,
where he was employed from 1979 to 1988. From 1972 to 1979, Mr. Gaulke served as
a consultant with McKinsey & Company. Mr. Gaulke is a member of the Board of
Directors of Cymer, Inc. and RockShox, Inc.; serves on the Board of Trustees of
the Palo Alto Medical Foundation; and the Board of Advisors of the Whitehead
Institute. Mr. Gaulke received a MBA (1972) in Marketing and Operations from
Stanford University Graduate School of Business and a B.S. (1968) in Electrical
Engineering from Oregon State University.
Subbaiah V. Malladi, Ph.D., joined Exponent Failure Analysis Associates,
Inc. in 1982 as a Senior Engineer, becoming a Senior Vice President in January
1988 and a Corporate Vice President of FaAA in September 1993. In October 1998,
Dr. Malladi was appointed Chief Technical Officer of the Company. Dr. Malladi
has also served as a director of the Company from March 1991 through September
1993. He
10
was re-appointed as a director in April of 1996 and has remained on the Board
since this date. He received a Ph.D. (1980) in Mechanical Engineering from the
California Institute of Technology, M.Tech (1972) in Mechanical Engineering from
the Indian Institute of Technology, B.E. (1970) in Mechanical Engineering from
SRI Venkateswara University, India and B.S. (1966) in Physics, Chemistry and
Mathematics from Osmania University, India. Dr. Malladi is a Registered
Professional Mechanical Engineer in the State of California, and a member of the
following professional organizations: American Institute of Aeronautics and
Astronautics; American Association for the Advancement of Science; Combustion
Institute; and National Fire Protection Association.
Roger L. McCarthy, Ph.D., joined the Company in August 1978. Currently, Dr.
McCarthy is Chairman Exponent Failure Analysis Associates and a director of the
Company. From June 1996 to October 1998, he served as Chief Technical Officer of
the Company, director of the Company and Chairman of Exponent Failure Analysis
Associates, Inc. He has been a director of the Company since 1989 and a director
of FaAA since 1980. He was Chief Executive Officer of the Company and FaAA from
1982 to June 1996. He also served as Chairman and President of the Company from
1986 to March 1993. Dr. McCarthy received his Ph.D. (1977), Mech.E. (1975) and
S.M. (1973) from Massachusetts Institute of Technology, and his B.S.E. (1972) in
Mechanical Engineering and A.B. (1972) in Philosophy from the University of
Michigan. Dr. McCarthy is a Registered Professional Engineer in the states of
California and Arizona and a member of the following professional organizations:
American Society of Metals; American Society of Mechanical Engineers (ASME);
Safety Engineering and Risk Analysis Division of ASME; Society of Automotive
Engineers; American Society for Testing and Materials; Human Factors and
Ergonomics Society; National Society of Professional Engineers; American Society
of Heating, Refrigeration and Air-Conditioning Engineers; National Fire
Protection Association; American Welding Society; National Safety Council;
Society for Risk Analysis; and American Statistical Association.
Richard L. Schlenker, Jr. joined the Company in October 1990. Mr. Schlenker
is the Chief Financial Officer and Corporate Secretary for the Company. He was
appointed Chief Financial Officer in July 1999 and was appointed Secretary of
the Company in November 1997. Mr. Schlenker was the Director of Corporate
Development from 1998 until his appointment as CFO. He was the Manager of
Corporate Development from 1996 until 1998. From 1993 to 1996, Mr. Schlenker was
a Business Manager at Exponent Failure Analysis Associates, Inc. where he
managed the business activities for multiple consulting practices within FaAA.
Prior to 1993 he held several different positions in finance and accounting
within the Company. Mr. Schlenker holds a B.S. in Finance from the University of
Southern California.
Item 2. Properties
The Company's Silicon Valley office facilities consist of a 153,738 square
foot building, with office and laboratory space located on a 6.3 acre tract of
land owned by the Company in Menlo Park, California, and an adjacent 27,000
square feet of leased warehouse storage space. The Company's primary facility is
subject to a revolving reducing mortgage note. The note is subject to two
interest rate options of either prime less 1.5% or the fixed LIBOR plus 1.25%
with a term option of one month, two months, three months, six months, nine
months, or twelve months. At December 29, 2000, the principal amount outstanding
on the mortgage note was zero.
The Company's Test and Engineering Center ("TEC") occupies 147 acres in
Maricopa County, Arizona. The Company leases this land from the state of Arizona
under a 30-year lease agreement that expires in January 2028 and has an option
to renew for two fifteen-year periods. In September 1999, the Company completed
construction of a new indoor test facility at the TEC. In October 2000, the
Company completed construction of an engineering and test preparation building
at the TEC. In addition, the Company leases office, warehouse and laboratory
space in 23 other locations in 17 states as well as in Germany. During fiscal
1999, the Company closed down its
11
offices in Moscow and Poland.
Leases for these offices, warehouse and laboratory facilities have terms
generally ranging between one to ten years. Aggregate lease payments in fiscal
2000 for all leased properties were approximately $3,425,000.
Item 3. Legal Proceedings.
From time to time, the Company has been named as a defendant in actions
arising out of its business. The Company is not currently engaged in any such
litigation that management believes would have a material adverse impact on the
Company if resolved adversely to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The information required by this item is incorporated by reference to the
section entitled "Quarterly Stock Data" in the Company's Annual Report to
Stockholders for the year ended December 29, 2000 (the "2000 Annual Report"). An
excerpt from the 2000 Annual Report containing this information has been filed
as Exhibit 13.1 to this Annual Report on Form 10-K.
Item 6. Selected Financial Data
The information required by this item is incorporated by reference to the
section entitled "Financial Summary" in the 2000 Annual Report. An excerpt from
the 2000 Annual Report containing this information has been filed as Exhibit
13.1 to this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
With the exception of the discussion below regarding factors affecting
operating results and the market price of stock, the information required by
this item is incorporated by reference to the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
2000 Annual Report. An excerpt from the 2000 Annual Report containing this
information has been filed as Exhibit 13.1 to this Annual Report on Form 10-K.
FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK
Exponent operates in a rapidly changing environment that involves a number
of uncertainties, some of which are beyond the Company's control. These
uncertainties include, but are not limited to, those mentioned elsewhere in this
report, and the following:
Attraction and Retention of Key Employees
The Company's business involves the delivery of professional services and
is labor-intensive. The Company's success depends in large part upon its ability
to attract, retain and motivate highly qualified technical and managerial
personnel. Qualified personnel are in great demand and are likely to remain a
limited resource for the foreseeable future. There can be no assurance that the
Company can continue to attract sufficient numbers of highly qualified technical
and managerial personnel and to retain existing employees. The loss of a
significant number of the Company's employees could have a material adverse
12
impact on the Company, including its ability to secure and complete engagements.
Customer Concentration
The Company currently derives, and believes that it will continue to
derive, a significant portion of its revenues from clients, organizations and
insurers related to the transportation industry. Transportation industry related
engagements accounted for approximately 21% of the Company's gross revenues for
the fiscal year ended December 29, 2000. In addition, the Company performed
engagements for the government sector, which accounted for approximately 24% of
the Company's gross revenues for the fiscal year ended December 29, 2000. The
loss of any large client, organization or insurer related to either the
transportation industry or government sector could have a material adverse
effect on the Company's business, financial condition and results of operations.
Regulation
Public concern over health, safety and preservation of the environment has
resulted in the enactment of a broad range of environmental laws and regulations
by local, state and federal lawmakers and agencies. These laws and the
implementing regulations affect nearly every industry, as well as the agencies
of federal, state and local governments charged with their enforcement. To the
extent changes in such laws, regulations and enforcement or other factors
significantly reduce the exposures of manufacturers, owners, service providers
and others to liability; the demand for environmental services may be
significantly reduced.
Competition
The markets for the Company's services are highly competitive. In addition,
there are relatively low barriers to entry into the Company's markets and the
Company has faced, and expects to continue to face, additional competition from
new entrants into its markets. Competitive pressure could reduce the market
acceptance of the Company's services and result in price reductions that could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Absence of Backlog
Revenues are primarily derived from services provided in response to client
request or events that occur without notice, and engagements, generally billed
on a "time and expenses" basis, are terminable at any time by clients. As a
result, backlog at any particular time is small in relation to the Company's
quarterly or annual revenues and is not a reliable indicator of revenues for any
future periods. Revenues and operating margins for any particular quarter are
generally affected by staffing mix, resource requirements and timing and size of
engagements.
Other Income
The Company currently subleases excess facilities, primarily in its Silicon
Valley headquarters in Menlo Park, California, which have lease terms that
expire within the 2001 - 2003 time periods. In fiscal 2000 and 1999,
miscellaneous rental income associated with these facilities amounted to
approximately 12% and 16%, respectively of income from continuing operations
before income taxes. In early 2001, one sub-lease in the Silicon Valley
headquarters expired and was not renewed. If the Company is not able to rent the
available space in a timely manner, the loss of rental income could have a
material effect on the Company's income from continuing operations. Should the
remaining sub-leases also not be extended, renewed or have their term options
exercised, the loss of additional miscellaneous rental income could also have a
material adverse effect on the Company's operating results.
13
Variability of Quarterly Financial Results
Variations in the Company's revenues and operating results occur from time
to time as a result of a number of factors, such as the significance of client
engagements commenced and completed during a quarter, the number of working days
in a quarter, employee hiring and utilization rates, and integration of
companies acquired. Because a high percentage of the Company's expenses,
particularly personnel and facilities related, are relatively fixed in advance
of any particular quarter, a variation in the timing of the initiation or the
completion of client assignments, at or near the end of any quarter, can cause
significant variations in operating results from quarter to quarter.
Item 7(A) Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to some interest rate risk associated with the
Company's long-term debt obligation on the Company's headquarters building.
Effective February 1, 1999, the Company refinanced its headquarters building
under a new financing agreement. The new mortgage note consists of a revolving
reducing note, secured by the Company's headquarters building, with a borrowing
amount up to $30.0 million. The $30.0 million revolving reducing note is subject
to automatic annual reductions in the amount available to be borrowed of
approximately $1.3 million to $2.1 million per year until January 31, 2008. As
of December 29, 2000, $28.7 million was available to be borrowed. Any
outstanding amounts on the revolving reducing note are due and payable in full
on January 31, 2009. The Company may from time to time during the term of the
note borrow, partially or wholly repay its outstanding borrowings and re-borrow
up to the maximum principal amounts, subject to the reductions in availability
contained in the note. The note is also subject to two interest rate options of
either prime less 1.5% or the fixed LIBOR plus 1.25% with a term option of one
month, two months, three months, six months, nine months, or twelve months.
Interest will be paid on a monthly basis. Principal amounts subject to the prime
interest rate may be repaid at any time without penalty. Principal amounts
subject to the fixed LIBOR rate may also be repaid at any time but are subject
to a prepayment penalty if paid before the fixed rate term or additional
interest if paid after the fixed rate term
The Company's general policy for selecting among the interest rate options
and related terms will be to minimize interest expense. However, given the risk
of interest rate fluctuations, the Company cannot be certain that the lowest
rate option will always be obtained, therefore, consistently minimizing the
Company's interest expense. No sensitivity analysis was performed on the
Company's exposure to interest rate fluctuations, however, given the historical
low volatility of both the prime and LIBOR interest rates, the Company believes
any exposure would be minimal.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements of the Company are incorporated by
reference to the 2000 Annual Report, where such information appears under the
captions "Consolidated Balance Sheets," "Consolidated Statements of Operations,"
"Consolidated Statements of Comprehensive Income," "Consolidated Statements of
Stockholders' Equity," "Consolidated Statements of Cash Flows," "Notes to
Consolidated Financial Statements," and "Independent Auditors' Report" on pages
14 through 29 of such report. An excerpt from the 2000 Annual Report containing
this information has been filed as Exhibit 13.1 to this Annual Report on
Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
14
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
The information required by this item with respect to directors is
incorporated by reference to the Company's definitive Proxy Statement for its
2001 Annual Meeting of Stockholders (the "Proxy Statement") relating to the
section entitled "Proposal No. 1: Election of Directors" and "Other Information
Compliance with Section 16(a) of the Exchange Act." See Item 1 for information
regarding the executive officers of the Company.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to the
section entitled "Executive Officer Compensation" of the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by reference to the
section entitled "Stock Ownership" of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this Annual Report on Form 10-
K.
1. Financial Statements
The following consolidated financial statements of Exponent, Inc. and
subsidiaries and the Independent Auditors' Report are incorporated by
reference to the 2000 Annual Report:
Consolidated Statements of Operations for the years ended December 29,
2000, December 31, 1999 and January 1, 1999;
Consolidated Statements of Comprehensive Income for the years ended
December 29, 2000, December 31, 1999 and January 1, 1999;
Consolidated Balance Sheets as of December 29, 2000 and December 31,
1999;
Consolidated Statements of Stockholders' Equity for the years ended
December 29, 2000, December 31, 1999 and January 1, 1999;
Consolidated Statements of Cash Flows for the years ended December 29,
2000, December 31, 1999 and January 1, 1999; and
Notes to consolidated financial statements.
2. Financial Statement Schedules
The following financial statement schedule of Exponent, Inc. for the
years ended
15
December 29, 2000, December 31, 1999 and January 1, 1999 is filed as
part of this Report on Form 10-K and should be read in conjunction
with the Consolidated Financial Statements of Exponent, Inc.
Description
-----------
Schedule II Valuation and qualifying accounts
Schedules other than those listed above have been omitted since they
are either not required, not applicable, or the information is
otherwise included.
3. Exhibits
(a) The following exhibits are filed as part of, or incorporated by
reference into (as indicated parenthetically), this Annual Report on
Form 10-K:
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to the Company's Registration
Statement on Form S-1 as filed on June 25, 1990,
registration number 33-35562).
3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to the Company's Registration statement on Form S-
1 as filed on June 25, 1990, registration number 33-35562).
4.1 Specimen copy of Common Stock Certificate of the Company
(incorporated by reference to the Company's Registration
Statement on Forms S-1 as filed on June 25, 1990,
registration number 33-35562).
*10.1 1989 Stock Option Plan for Subbaiah. V. Malladi
(incorporated by reference to the Company's Registration
Statement on Form S-1 as filed on June 25, 1990,
registration number 33-35562).
*10.2 Stock Option Agreement, dated May 30, 1989, between the
Company and Subbaiah V. Malladi (incorporated by reference
to the Company's Registration Statement on Form S-1 as filed
on June 25, 1990, registration number 33-35562).
*10.3 Stock Option Agreement dated June 22, 1990, between the
Company and Subbaiah V. Malladi (incorporated by reference
to the Company's Registration Statement on Form S-1 as filed
on June 25, 1990, registration number 33-35562).
*10.4 1990 Stock Option and Rights Plan, as amended through March
31, 1993 (incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended May 28, 1993).
*10.5 Form of Incentive Stock Option Agreement under the 1990
Stock Option and Rights Plan (incorporated by reference to
the Company's Registration Statement on Form S-1 as filed on
June 25, 1990, registration number 33-35562).
*10.6 Form of Nonqualified Stock Option Agreement under the 1990
Stock Option and Rights Plan (incorporated by reference to
the Company's Registration
16
Statement on Form S-1 as filed on June 25, 1990,
registration number 33-35562).
*10.7 Form of Indemnification Agreement entered into or proposed
to be entered into between the Company and its officers and
directors (incorporated by reference to the Company's
Registration Statement on Form S-1 as filed on June 25,
1990, registration number 33-35562).
*10.8 Form of Agreement between the Company and non-employee
members of the Board of Directors, dated March 25, 1991,
regarding exchange of rights to receive shares for
nonqualified stock options (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991).
*10.9 Form of Nonqualified Stock Option Agreement between the
Registrant and non-employee members of the Board of
Directors dated March 25, 1991 (incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991).
*10.10 1991 Restricted Stock Plan (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991).
*10.11 Amendment to Incentive Stock Option Agreement between the
Company and Subbaiah V. Malladi, dated June 27, 1991
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.12 Form of Incentive Stock Option Agreement, between the
Registrant and optionees under the 1990 Stock Option and
Rights Plan, relative to replacement of outstanding options
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.13 Form of Nonqualified Stock Option Agreement, between the
Registrant and non-employee members of the Board of
Directors, relative to replacement of outstanding options
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.14 Amendment to Stock Option Agreement, between the Registrant
and Subbaiah V. Malladi, relative to repricing outstanding
option under 1989 Stock Option Plan for Malladi V. Subbaiah
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.15 Form of Stock Option Agreement between the Company and
Subbaiah V. Malladi, relative to replacement of outstanding
option under 1990 Stock Option and Rights Plan (incorporated
by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1991).
10.16 Zarnowicka Elektrownia Gazowa, joint venture, dated
September 8, 1994 (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 30, 1994).
10.17 Acquisition agreement between Exponent Environmental Group,
Inc. (formerly
17
named Performance Technologies, Incorporated) and Exponent,
Inc. (formerly the Failure Group, Inc.) dated May 16, 1997
(incorporated by reference to the Company's Form 8-K/A filed
on July 30, 1997 which was amendment number 1 to the
Company's Report on Form 8-K filed on May 30, 1997)
*10.18 Exponent, Inc. 1998 Non Statutory Stock Option Plan dated
October 24, 1998 (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1999).
10.19 Revolving reducing note with Wells Fargo Bank dated January
27, 1999.
10.20 Line of credit note with Wells Fargo Bank dated January 27,
1999.
10.21 Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and
restated effective January 2, 1999.
10.22 Exponent, Inc. Employee Stock Purchase Plan, as amended and
restated March 23, 1999.
10.23 Exponent, Inc. 1999 Stock Option Plan.
*10.24 Exponent, Inc. 1999 Restricted Stock Plan.
13.1 Registrant's Annual Report to Stockholders for the fiscal
year ended December 29, 2000.
21.1 List of subsidiaries.
23.1 Report on financial statement schedule and consent of KPMG
LLP, independent auditors.
24.1 Power of attorney (see page 19).
----------------------------------------------------------------------
* Indicates management compensatory plan, contract or
arrangement.
(b) Reports on Form 8-K
None
18
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.
Date: March 29, 2001 EXPONENT, INC.
(Registrant)
/s/ Richard L. Schlenker, Jr.
----------------------------------------------
Richard L. Schlenker, Jr., Chief Financial
Officer and Corporate Secretary
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Michael R. Gaulke as his attorney-
in-fact, with full power of substitution for him in any and all capacities, to
sign any and all amendments to this report on form 10-K, and to file the same,
with the exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
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:
Signature Title Date
--------- ----- ----
/s/ Michael R. Gaulke Chief Executive Officer, President and Director March 29, 2001
---------------------------------
Michael R. Gaulke
/s/ Richard L. Schlenker, Jr. Chief Financial Officer and Corporate Secretary March 29, 2001
--------------------------------- (Principal Financial and Accounting Officer)
Richard L. Schlenker, Jr.
/s/ Roger L. McCarthy Chairman Exponent Failure Analysis Associates and March 29, 2001
--------------------------------- Director
Roger L. McCarthy
/s/ Subbaiah V. Malladi Chief Technical Officer and Director March 29, 2001
---------------------------------
Subbaiah V. Malladi
/s/ Edward J. Keith Chairman of the Board March 29, 2001
---------------------------------
Edward J. Keith
/s/ Samuel H. Armacost Director March 29, 2001
---------------------------------
Samuel H. Armacost
/s/ Barbara M. Barrett Director March 29, 2001
---------------------------------
Barbara M. Barrett
/s/ Jon R. Katzenbach Director March 29, 2001
---------------------------------
Jon R. Katzenbach
19
EXPONENT, INC.
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
Additions Deletions
----------------------- -------------------------
Accounts
Balance at Provision Increase Charged off Reduction Balance
Beginning of Charged to in Net of in at End of
Year Expenses Provision Recoveries Provision Year
--------------------------------------------------------------------------------
Year Ended December 29, 2000
Allowance for Doubtful Accounts ....... $1,527 $2,217 $13 ($1,595) $ - $2,162
Year Ended December 31, 1999
Allowance for Doubtful Accounts........ $1,000 $2,727 $ - ($2,197) $ (3) $1,527
Year Ended January 1, 1999
Allowance for Doubtful Accounts........ $1,000 $2,167 $ - ($2,167) $ - $1,000
20
EXHIBIT INDEX
The following exhibits are filed as part of, or incorporated by
reference into (as indicated parenthetically), the Annual Report on Form 10-K:
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to the Company's Registration
Statement on Form S-1 as filed on June 25, 1990,
registration number 33-35562).
3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to the Company's Registration statement on Form S-
1 as filed on June 25, 1990, registration number 33-35562).
4.1 Specimen copy of Common Stock Certificate of the Company
(incorporated by reference to the Company's Registration
Statement on Forms S-1 as filed on June 25, 1990,
registration number 33-35562).
*10.1 1989 Stock Option Plan for Subbaiah. V. Malladi
(incorporated by reference to the Company's Registration
Statement on Form S-1 as filed on June 25, 1990,
registration number 33-35562).
*10.2 Stock Option Agreement, dated May 30, 1989, between the
Company and Subbaiah V. Malladi (incorporated by reference
to the Company's Registration Statement on Form S-1 as filed
on June 25, 1990, registration number 33-35562).
*10.3 Stock Option Agreement dated June 22, 1990, between the
Company and Subbaiah V. Malladi (incorporated by reference
to the Company's Registration Statement on Form S-1 as filed
on June 25, 1990, registration number 33-35562).
*10.4 1990 Stock Option and Rights Plan, as amended through March
31, 1993 (incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended May 28, 1993).
*10.5 Form of Incentive Stock Option Agreement under the 1990
Stock Option and Rights Plan (incorporated by reference to
the Company's Registration Statement on Form S-1 as filed on
June 25, 1990, registration number 33-35562).
*10.6 Form of Nonqualified Stock Option Agreement under the 1990
Stock Option and Rights Plan (incorporated by reference to
the Company's Registration Statement on Form S-1 as filed on
June 25, 1990, registration number 33-35562).
*10.7 Form of Indemnification Agreement entered into or proposed
to be entered into between the Company and its officers and
directors (incorporated by reference to the Company's
Registration Statement on Form S-1 as filed on June 25,
1990, registration number 33-35562).
*10.8 Form of Agreement between the Company and non-employee
members of the Board of Directors, dated March 25, 1991,
regarding exchange of rights to receive shares for
nonqualified stock options (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31,
21
1991).
*10.9 Form of Nonqualified Stock Option Agreement between the
Registrant and non-employee members of the Board of
Directors dated March 25, 1991 (incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991) .
*10.10 1991 Restricted Stock Plan (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991).
*10.11 Amendment to Incentive Stock Option Agreement between the
Company and Subbaiah V. Malladi, dated June 27, 1991
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.12 Form of Incentive Stock Option Agreement, between the
Registrant and optionees under the 1990 Stock Option and
Rights Plan, relative to replacement of outstanding options
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.13 Form of Nonqualified Stock Option Agreement, between the
Registrant and non-employee members of the Board of
Directors, relative to replacement of outstanding options
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.14 Amendment to Stock Option Agreement, between the Registrant
and Subbaiah V. Malladi, relative to repricing outstanding
option under 1989 Stock Option Plan for Malladi V. Subbaiah
(incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1991).
*10.15 Form of Stock Option Agreement between the Company and
Subbaiah V. Malladi, relative to replacement of outstanding
option under 1990 Stock Option and Rights Plan (incorporated
by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1991).
10.16 Zarnowicka Elektrownia Gazowa, joint venture, dated
September 8, 1994 (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 30, 1994).
10.17 Acquisition agreement between Exponent Environmental Group,
Inc. (formerly named Performance Technologies, Incorporated)
and Exponent, Inc. (formerly the Failure Group, Inc.) dated
May 16, 1997 (incorporated by reference to the Company's
Form 8-K/A filed on July 30, 1997 which was amendment number
1 to the Company's Report on Form 8-K filed on May 30, 1997)
*10.18 Exponent, Inc. 1998 Non Statutory Stock Option Plan dated
October 24, 1998 (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1999).
10.19 Revolving reducing note with Wells Fargo Bank dated January
27, 1999.
22
10.20 Line of credit note with Wells Fargo Bank dated January 27,
1999.
10.21 Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and
restated effective January 2, 1999.
10.22 Exponent, Inc. Employee Stock Purchase Plan, as amended and
restated March 23, 1999.
10.23 Exponent, Inc. 1999 Stock Option Plan.
*10.24 Exponent, Inc. 1999 Restricted Stock Plan.
13.1 Registrant's Annual Report to Stockholders for the fiscal
year ended December 29, 2000.
21.1 List of subsidiaries.
23.1 Report on financial statement schedule and consent of KPMG
LLP, independent auditors.
24.1 Power of attorney (see page 19).
----------------------------------------------------------------------
* Indicates management compensatory plan, contract or
arrangement.
23