-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MN2qCPNmmCBhc9QwiYdtT7Snqb/Wb0+m6qc6RJJ6Vgbh6xGKa1lcjOPzkpPL/TXp D1NDdiq//MAWSat780400A== 0000950129-99-001010.txt : 19990318 0000950129-99-001010.hdr.sgml : 19990318 ACCESSION NUMBER: 0000950129-99-001010 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990317 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRATED ELECTRICAL SERVICES INC CENTRAL INDEX KEY: 0001048268 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL WORK [1731] IRS NUMBER: 760542208 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-13783 FILM NUMBER: 99566904 BUSINESS ADDRESS: STREET 1: 515 POST OAK BLVD STREET 2: SUITE 450 CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7138601500 MAIL ADDRESS: STREET 1: 515 POST AOK BLVD STREET 2: SUITE 450 CITY: HOUSTON STATE: TX ZIP: 77027-9408 8-K/A 1 INTEGRATED ELECTRICAL SERVICES, INC. - AMENDMENT 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: March 17, 1999 (Amending Form 8-K dated February 4, 1999) Commission File No. 001-13783 INTEGRATED ELECTRICAL SERVICES, INC. (Exact name of registrant as specified in its charter) DELAWARE 76-0542208 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 515 Post Oak Boulevard Suite 450 Houston, Texas 77027-9408 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (713) 860-1500 2 ITEM 5. OTHER EVENTS In order to comply with the disclosure requirements of the Securities and Exchange Commission regarding the financial statements of businesses acquired, the Company is filing this Amendment to its Current Report on Form 8-K dated February 4, 1999 containing the audited financial statements of Kayton Electric, Inc. 3 INDEX TO FINANCIAL STATEMENTS PAGE ---- KAYTON ELECTRIC, INC. - FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997 AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) Independent Auditors' Report .............................................. 1 Balance Sheets ............................................................ 2 Statements of Earnings and Retained Earnings .............................. 3 Statements of Cash Flows .................................................. 4 Notes to Financial Statements ............................................. 5 4 INDEPENDENT AUDITORS' REPORT The Board of Directors Kayton Electric, Inc.: We have audited the accompanying balance sheet of Kayton Electric, Inc. as of December 31, 1997 and the related statements of earnings and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kayton Electric, Inc. as of December 31, 1997 and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Lincoln, Nebraska January 28, 1998 (November 19, 1998 as to Note 8) 1 5 KAYTON ELECTRIC, INC. Balance Sheets September 30, 1998 (unaudited) and December 31, 1997
SEPTEMBER 30, DECEMBER 31, ASSETS 1998 1997 ----------- ----------- (unaudited) Current assets: Cash $ 601,667 $ 830,628 Accounts receivable, including retainages of $621,799 (unaudited) and $707,935 at September 30, 1998 and December 31, 1997, respectively 1,587,585 2,407,479 Materials for projects in progress 440,000 600,000 Costs and estimated earnings in excess of billings on uncompleted contracts 625,529 428,756 Other current assets 191,000 179,000 ----------- --------- Total current assets 3,445,781 4,445,863 ----------- --------- Property and equipment, at cost 2,385,300 2,315,929 Less accumulated depreciation 1,482,115 1,417,895 ----------- --------- Net property, plant and equipment 903,185 898,034 ----------- --------- Other assets 26,881 7,997 ----------- --------- $ 4,375,847 $ 5,351,894 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 452,940 $ 627,762 Current installments of long-term debt 6,000 66,000 Billings in excess of costs and estimated earnings on uncompleted contracts 614,697 1,030,465 Accrued expenses 473,740 461,938 Other current liabilities 243,937 235,683 ----------- --------- Total current liabilities 1,791,314 2,421,848 Long-term debt -- 546,000 ----------- --------- Total liabilities 1,791,314 2,967,848 ----------- --------- Stockholders' equity: Common stock of $1 par value. Authorized 75,000 shares, issued 60,000 shares 60,000 60,000 Paid-in capital in excess of par value 84,989 84,989 Retained earnings 2,439,544 2,239,057 ----------- --------- Total stockholders' equity 2,584,533 2,384,046 Commitments ----------- ----------- $ 4,375,847 $ 5,351,894 =========== ===========
2 6 KAYTON ELECTRIC, INC Statements of Earnings and Retained Earnings Nine-month periods ended September 30, 1998 and 1997 (unaudited) and year ended December 31, 1997
SEPTEMBER 30, DECEMBER 31, 1998 1997 1997 ------------ ---------- ---------- (unaudited) Contract revenues $ 10,193,439 $10,650,913 $14,991,171 ------------ ----------- ----------- Cost of construction Direct 8,082,121 8,706,306 12,368,485 Indirect 573,222 576,920 775,260 ------------ ----------- ----------- Total cost of construction 8,655,343 9,283,226 13,143,745 ------------ ----------- ----------- Gross profit 1,538,096 1,367,687 1,847,426 General and administrative expenses 711,438 738,029 1,016,369 ------------ ----------- ----------- Operating income 826,658 629,658 831,057 ------------ ----------- ----------- Other income (deductions): Interest and dividend income 25,943 1,083 5,640 Interest expense (390) (11,594) (12,166) Miscellaneous 17,276 22,458 27,624 ------------ ----------- ----------- Total other income (deductions), net 42,829 11,947 21,098 ------------ ----------- ----------- Net earnings 869,487 641,605 852,155 Retained earnings, beginning of year 2,239,057 2,009,652 2,009,652 Dividends paid (669,000) (622,750) (622,750) ------------ ----------- ----------- Retained earnings, end of year $ 2,439,544 $ 2,028,507 $ 2,239,057 ============ =========== ===========
See accompanying notes to financial statements. 3 7 KAYTON ELECTRIC, INC. Statements of Cash Flows Nine-month periods ended September 30, 1998 and 1997 (unaudited) and year ended December 31, 1997
September 30, December 31, 1998 1997 1997 ------------ ------------ ------------ (unaudited) Cash flows from operating activities: Net earnings $ 869,487 $ 641,605 $ 852,155 ------------ ------------ ------------ Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 180,646 190,825 258,310 Gain from sale of equipment 2,574 4,941 4,941 Changes in assets and liabilities: Accounts receivable 819,894 273,699 (334,935) Materials for projects in progress 160,000 (80,000) 100,000 Costs and estimated earnings in excess of billings on (196,773) (77,198) 84,853 uncompleted contracts Other current assets (12,000) (12,000) (16,000) Other assets (18,884) 3,000 2,403 Accounts payable (174,822) (17,186) 40,312 Billings in excess of costs and estimated earnings on (415,768) 421,341 402,754 uncompleted contracts Accrued expenses 11,801 19,004 55,302 Other current liabilities 8,254 14,801 28,180 ------------ ------------ ------------ Total adjustments 364,922 741,227 626,120 ------------ ------------ ------------ Net cash provided by operating activities 1,234,409 1,382,832 1,478,275 ------------ ------------ ------------ Cash flows from investing activities: Capital expenditures (201,745) (185,957) (247,379) Proceeds from sale of equipment 13,375 5,250 5,250 ------------ ------------ ------------ Net cash used by investing activities (188,370) (180,707) (242,129) ------------ ------------ ------------ Cash flows from financing activities: Principal payments on long-term debt (606,000) (1,235,250) (765,250) Proceeds from long-term debt -- 600,000 730,000 Dividends paid (669,000) (622,750) (622,750) ------------ ------------ ------------ Net cash used by financing activities (1,275,000) (1,258,000) (658,000) ------------ ------------ ------------ Net increase (decrease) in cash (228,961) (55,875) 578,146 Cash, beginning of year/period 830,628 252,482 252,482 ------------ ------------ ------------ Cash, end of year/period $ 601,667 $ 196,607 $ 830,628 ============ ============ ============
4 8 KAYTON ELECTRIC, INC. Notes to Financial Statements September 30, 1998 and 1997 and December 31, 1997 (Data as of and for the nine-months periods ended September 30, 1998 and 1997 is unaudited) (1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Kayton Electric, Inc. (the Company) is engaged in electrical contracting in Nebraska and neighboring states. The length of the Company's contracts is typically less than two years. METHOD OF ACCOUNTING FOR CONTRACTS The Company uses the percentage-of-completion method of accounting for financial reporting and tax purposes. Revenues on contracts are recorded on the basis of the Company's estimates of the percentage of completion of individual contracts, commencing when progress reaches a point where experience is sufficient to estimate final results with reasonable accuracy. Provision for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in estimated profitability are recognized in the period the revisions are determined. MATERIALS FOR PROJECTS IN PROGRESS Materials are stated at the lower of cost or market and are charged to job costs as they are utilized. DEPRECIATION Depreciation is provided by the use of the straight-line depreciation method over the estimated useful lives of the respective assets. INCOME TAXES The Company has elected, under the S Corporation provisions of the Internal Revenue Code, not to pay any income tax on its income and instead, to have its stockholders pay taxes on such income, whether distributed or not. Consequently, no provision has been made in the accompanying financial statements for income taxes on earnings of the Company. USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 5 9 KAYTON ELECTRIC, INC. Notes to Financial Statements September 30, 1998 and 1997 and December 31, 1997 (Data as of and for the nine-months periods ended September 30, 1998 and 1997 is unaudited) WARRANTY COSTS For certain contracts, the Company warrants labor for the first year after installation of new electrical systems. The Company generally warrants labor for 30 days after servicing of existing electrical systems. A reserve for warranty costs is recorded based upon the historical level of warranty claims and management's estimate of future costs. UNAUDITED INTERIM FINANCIAL INFORMATION The interim financial statements for the nine months ended September 30, 1998 and 1997, are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, the unaudited interim financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. (2) CONTRACTS IN PROGRESS Costs incurred to date, estimated earnings and the related progress billings to date of contracts in progress at September 30, 1998 and December 31, 1997 are shown below:
SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------- ------------ Costs incurred to date $ 5,123,025 $5,112,997 Estimated earnings 873,459 739,808 ----------- ---------- 5,996,484 5,852,805 Less progress billings to date 5,985,652 6,454,514 ----------- ---------- $ 10,832 $ (601,709) =========== ==========
6 10 KAYTON ELECTRIC, INC. Notes to Financial Statements September 30, 1998 and 1997 and December 31, 1997 (Data as of and for the nine-months periods ended September 30, 1998 and 1997 is unaudited) Included in the accompanying balance sheets at September 30, 1998 and December 31, 1997, under the following captions:
SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------- ------------ Costs and estimated earnings in excess of billings on contracts in progress $ 625,529 $ 428,756 Billings in excess of costs and estimated earnings on contracts in progress (614,697) (1,030,465) ------------- ------------ $ 10,832 $ (601,709) ============= ============
(3) PROPERTY, PLANT AND EQUIPMENT A summary of the major classifications of property, plant and equipment at September 30, 1998 and December 31, 1997 is shown below:
SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------- ------------ Land $ 51,556 $ 51,556 Vehicles and equipment 1,473,259 1,436,386 Tools 750,088 728,730 Office equipment 110,397 99,257 ------------- ------------ $2,385,300 $2,315,929 ============= ============
7 11 KAYTON ELECTRIC, INC. Notes to Financial Statements September 30, 1998 and 1997 and December 31, 1997 (Data as of and for the nine-months periods ended September 30, 1998 and 1997 is unaudited) (4) LONG-TERM DEBT AND NOTES PAYABLE Long-term debt at September 30, 1998 and December 31, 1997 is shown below:
SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------- ------------ Note payable to bank, due in monthly principal installments of $5,000 through May 2008, interest at a variable rate (9.5% at December 31, 1997), due semiannually, by asset of the Company - paid in 1998 $ -- $ 600,000 Note payable to a corporation, due in annual principal installments of $6,000 through April 1999, interest a fixed rate of 6.00%, due annually, secured by 6,000 12,000 real estate property of the Company ------------- ------------ Total long-term debt 6,000 612,000 Less current installments 6,000 66,000 ------------- ------------ Long-term debt, excluding current installments $ -- $ 546,000 ============= ============
The Company has a $300,000 operating line of credit with a financial institution with an interest rate of 8.95%. At September 30, 1998 and December 31, 1997, there was no outstanding balance on the line of credit. The operating line of credit expires on May 1, 1999 and is secured by the assets of the Company. (5) DEFERRED COMPENSATION The Company has deferred compensation agreements with certain key employees. The Company has elected to fund the agreements by purchasing life insurance policies for each employee. The cash surrender value of the policies is included in other current assets and the deferred compensation liability is included in other current liabilities in the financial statements. (6) RELATED PARTY TRANSACTIONS The Company has entered into lease agreements with a shareholder for the use of certain land and buildings. The leases expire June 30, 1999. The Company incurred $24,320 and $15,300 of lease expense related to this property for each of the nine-month periods ended September 30, 1998 and 1997 and $20,400 for the year ended December 31, 1997. 8 12 KAYTON ELECTRIC, INC. Notes to Financial Statements September 30, 1998 and 1997 and December 31, 1997 (Data as of and for the nine-months periods ended September 30, 1998 and 1997 is unaudited) (7) 401(K) PROFIT SHARING PLAN AND TRUST The Company has a 401(k) plan covering substantially all employees with one year of service and who have attained twenty-one years of age. Each participant may elect to contribute a percentage of their total compensation, not to exceed the Internal Revenue Service limitations. The Company contributes matching funds at a rate of $.50 for each dollar of the first 3% of the participant's contribution. The employer may also make an additional discretionary matching contribution each year. Company contributions to the plan are shown below:
SEPTEMBER 30, SEPTEMBER 30 DECEMBER 31, 1998 1997 1997 ------------- ------------ ------------ Matching contributions $20,493 $ 23,010 $ 30,027 Discretionary contribution -- -- 8,000 ------------- ------------ ------------ Total employer contributions $20,493 $ 23,010 $ 38,027 ============= ============ ============
(8) SUBSEQUENT EVENT On November 19, 1998, all the Company's common stock was sold to an unrelated purchaser, Integrated Electrical Services, Inc. and the Company became a subsidiary of Integrated Electrical Services, Inc. 9 13 ITEM 7. EXHIBITS. (c) Exhibits. 23.1 Consent of KPMG Peat Marwick LLP 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 16, 1999. INTEGRATED ELECTRICAL SERVICES, INC. By: /s/ J. PAUL WITHROW J. Paul Withrow VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER 15 EXHIBIT INDEX Exhibit Description ------- ----------- 23.1 Consent of KPMG Peat Marwick LLP EX-23.1 2 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Board of Directors Kayton Electric, Inc. We consent to the incorporation by reference of our report dated January 28, 1998 (November 19, 1998 as to note 8) on the financial statements of Kayton Electric, Inc. included in this Form 8-K/A, into Integrated Electrical Services, Inc.'s previously filed Registration Statements on Form S-8 (File Nos. 333-67113, 333-45447 and 333-45449). KPMG Peat Marwick LLP Lincoln, Nebraska March 17, 1999 -----END PRIVACY-ENHANCED MESSAGE-----