-----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, ViEyxiDKwXj8ASa7mTsH8nUAPKoybFA0RNr6OqoHrJpC5ViuiuFm+HZPBW9O13gT bLcnioMTxCj3s7K6ylou9g== 0000067215-96-000001.txt : 19960315 0000067215-96-000001.hdr.sgml : 19960315 ACCESSION NUMBER: 0000067215-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960314 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYCOM INDUSTRIES INC CENTRAL INDEX KEY: 0000067215 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 591277135 STATE OF INCORPORATION: FL FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10613 FILM NUMBER: 96534669 BUSINESS ADDRESS: STREET 1: 4440 PGA BLVD. SUITE 600 STREET 2: FIRST UNION CENTER CITY: PALM BEACH GARDENS STATE: FL ZIP: 33410 BUSINESS PHONE: (407) 627-7171 MAIL ADDRESS: STREET 1: 4440 PGA BOULEVARD SUITE 600 STREET 2: SUITE 860 CITY: PALM BEACH GARDENS STATE: FL ZIP: 33410-6542 FORMER COMPANY: FORMER CONFORMED NAME: MOBILE HOME DYNAMICS INC DATE OF NAME CHANGE: 19820302 10-Q 1 DYCOM INDUSTRIES, INC. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1996 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 0-5423 DYCOM INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Florida 59-1277135 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4440 PGA Boulevard, Palm Beach Gardens, Florida 33410 (Address of principal executive office) (Zip Code) (407) 627-7171 (Registrant's telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of March 8, 1996 _____ __________________________________ Common Stock, par value $0.33 1/3 8,558,945 2 DYCOM INDUSTRIES, INC. INDEX
Page No. ________ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets- January 31, 1996 and July 31, 1995 3 Condensed Consolidated Statements of Operations for the Three Months Ended January 31, 1996 and 1995 4 Condensed Consolidated Statements of Operations for the Six Months Ended January 31, 1996 and 1995 5 Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31, 1996 and 1995 6-7 Notes to Condensed Consolidated Financial Statements 8-12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13-15 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 EXHIBIT INDEX 18
3 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
January 31, July 31, 1996 1995 ____ ____ ASSETS CURRENT ASSETS: Cash and equivalents $ 4,937,972 $ 4,306,675 Accounts receivable, net 11,996,541 16,330,477 Costs and estimated earnings in excess of billings 5,233,764 5,223,425 Deferred tax assets 828,499 385,755 Other current assets 1,336,105 1,396,201 ------------ ------------ Total current assets 24,332,881 27,642,533 ------------ ------------ PROPERTY AND EQUIPMENT, net 19,010,360 18,802,563 ------------ ------------ OTHER ASSETS: Intangible assets, net 4,916,989 4,994,535 Other 343,259 353,227 ------------ ------------ Total other assets 5,260,248 5,347,762 ------------ ------------ TOTAL $ 48,603,489 $ 51,792,858 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,934,612 $ 5,607,567 Notes payable 4,689,643 4,955,080 Billings in excess of costs and estimated earnings 100,951 Accrued self-insured claims 2,478,484 2,266,855 Income taxes payable 242,132 621,483 Other accrued liabilities 6,007,541 6,585,387 ------------ ------------ Total current liabilities 17,352,412 20,137,323 NOTES PAYABLE 10,975,628 13,870,064 ACCRUED SELF-INSURED CLAIMS 6,964,096 6,598,372 DEFERRED TAX LIABILITIES 137,401 ------------ ------------ Total liabilities 35,429,537 40,605,759 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, par value $.33 1/3 per share: 50,000,000 shares authorized; 8,554,331 and 8,543,990 shares issued and outstanding, respectively 2,851,444 2,847,997 Additional paid-in capital 24,323,845 24,293,309 Retained deficit (14,001,337) (15,954,207) ------------ ------------ Total stockholders' equity 13,173,952 11,187,099 ------------ ------------ TOTAL $ 48,603,489 $ 51,792,858 ============= ============ See notes to condensed consolidated financial statements--unaudited.
4 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended ___________________________ January 31, January 31, 1996 1995 ____ ____ REVENUES: Contract revenues earned $ 32,648,532 $ 33,515,513 Other, net 182,931 277,370 ------------ ------------ Total 32,831,463 33,792,883 ------------ ------------ EXPENSES: Costs of earned revenues excluding depreciation 26,288,815 27,473,391 General and administrative 3,536,240 3,510,445 Depreciation and amortization 1,402,884 1,357,717 ------------ ------------ Total 31,227,939 32,341,553 ------------ ------------ INCOME BEFORE INCOME TAXES 1,603,524 1,451,330 ------------ ------------ PROVISION FOR INCOME TAXES: Current 507,593 344,358 Deferred 111,699 ------------ ------------ Total 619,292 344,358 ------------ ------------ NET INCOME $ 984,232 $ 1,106,972 ============ ============ NET INCOME PER COMMON SHARE $ 0.12 $ 0.13 ====== ====== See notes to condensed consolidated financial statements--unaudited.
5 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Six Months Ended ___________________________ January 31, January 31, 1996 1995 ____ ____ REVENUES: Contract revenues earned $ 70,014,522 $ 69,727,447 Other, net 422,524 488,035 ------------ ------------ Total 70,437,046 70,215,482 ------------ ------------ EXPENSES: Costs of earned revenues excluding depreciation 56,904,334 56,693,045 General and administrative 7,434,399 7,016,100 Depreciation and amortization 2,779,304 3,106,804 ------------ ------------ Total 67,118,037 66,815,949 ------------ ------------ INCOME BEFORE INCOME TAXES 3,319,009 3,399,533 ------------ ------------ PROVISION (BENEFIT) FOR INCOME TAXES: Current 1,671,481 1,353,334 Deferred (305,342) ------------ ------------ Total 1,366,139 1,353,334 ------------ ------------ NET INCOME $ 1,952,870 $ 2,046,199 ============ ============ NET INCOME PER COMMON SHARE $ 0.23 $ 0.24 ====== ====== See notes to condensed consolidated financial statements--unaudited.
6 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended ___________________________ January 31, January 31, 1996 1995 ____ ____ Increase (Decrease) in Cash and equivalents from: OPERATING ACTIVITIES: Net income $ 1,952,870 $ 2,046,199 Adjustments to reconcile net cash provided by operating activities: Depreciation and amortization 2,779,304 3,106,804 Gain on disposal of assets (242,710) (211,465) Deferred income taxes (305,342) Changes in assets and liabilities: Accounts receivable, net 4,333,936 1,146,038 Unbilled revenues, net (111,290) (1,253,466) Other current assets 60,095 68,737 Other assets 9,968 56,817 Accounts payable (1,672,956) (50,043) Accrued self-insured claims and other liabilities (1,246) (455,314) Accrued income taxes (379,351) 808,908 ------------ ------------ Net cash inflow from operating activities 6,423,278 5,263,215 ------------ ------------ INVESTING ACTIVITIES: Capital expenditures (3,436,122) (2,565,695) Proceeds from sales of assets 770,029 665,057 ------------ ------------ Net cash outflow from investing activities (2,666,093) (1,900,638) ------------ ------------ FINANCING ACTIVITIES: Borrowing on bank lines-of-credit 500,000 Principal payments on notes payable and bank lines-of-credit (3,159,872) (2,207,433) Exercise of stock options 33,984 ------------ ------------ Net cash outflow from financing activities (3,125,888) (1,707,433) ------------ ------------ NET CASH INFLOW FROM ALL ACTIVITIES 631,297 1,655,144 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 4,306,675 2,625,783 ------------ ------------ CASH AND EQUIVALENTS AT END OF PERIOD $ 4,937,972 $ 4,280,927 ============ ============ See notes to condensed consolidated financial statements--unaudited.
7 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited)
For the Six Months Ended ___________________________ January 31, January 31, 1996 1995 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NON-CASH INVESTING AND FINANCING ACTIVITIES: Cash paid during the period for: Interest $ 851,364 $ 961,573 Income taxes 2,061,403 660,025 Property and equipment acquired and financed with short-term notes payable $ 31,286 See notes to condensed consolidated financial statements--unaudited.
8 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited 1. The accompanying condensed consolidated balance sheets of Dycom Industries, Inc. ("Dycom" or the "Company") as of January 31, 1996 and July 31, 1995, the related condensed consolidated statements of operations for the three and six months ended January 31, 1996 and 1995 and the condensed consolidated statements of cash flows for the six months ended January 31, 1996 and 1995 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the six months ended January 31, 1996 are not necessarily indicative of the results which may be expected for the entire year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION-- The condensed consolidated financial statements include Dycom Industries, Inc. and its subsidiaries, all of which are wholly-owned. The Company's operations consist primarily of telecommunication and utility services contracting. All material intercompany accounts and transactions have been eliminated. REVENUE-- Income on long-term contracts is recognized on the percentage-of-completion method based primarily on the ratio of contract costs incurred to date to total estimated contract costs. As some of these contracts extend over one or more years, revisions in cost and profit estimates during the course of the work are reflected in the accounting period in which the facts which require the revision become known. At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is accrued. Income on short-term unit contracts is recognized as the related work is completed. Work-in-process on unit contracts is based on management's estimate of work performed but not billed. "Costs and estimated earnings in excess of billings" represent the excess of contract revenues recognized under the percentage-of-completion method of accounting for long-term contracts and work-in-process on unit contracts over billings to date. For those contracts in which billings exceed contract revenue recognized to date, such excesses are included in the caption "Billings in excess of costs and estimated earnings". CASH AND EQUIVALENTS-- Cash and equivalents include cash balances in excess of the daily requirements which are invested in overnight repurchase agreements, certificates of deposits, and various other financial instruments having a maturity of three months or less. For purposes of the condensed consolidated statements of cash flows, the Company considers these amounts to be cash equivalents. PROPERTY AND EQUIPMENT-- Property and equipment are stated at cost, reduced in certain cases by valuation reserves. Depreciation and amortization are computed over the estimated useful life of the assets utilizing the straight-line method. The estimated useful lives of the assets are: buildings--20-31 years; leasehold improvements--the term of the respective lease or the estimated useful life of the improvement, whichever is shorter; vehicles--3-7 years; equipment and machinery--3-10 years; and furniture and fixtures--3-10 years. Maintenance and repairs are expensed as incurred; expenditures that enhance the value of the property or extend their useful lives are capitalized. When assets are sold or retired, the cost and the accumulated depreciation are removed from the accounts and the resulting gain or loss is included in income. 9 INTANGIBLE ASSETS-- The excess of the purchase price over the fair market value of the tangible net assets of acquired businesses (goodwill) is amortized on the straight-line method over 40 years. The appropriateness of the carrying value of intangible assets is continually reviewed and adjusted where appropriate. The ongoing assessment of intangible assets for impairment is based on the recoverability of such amounts through future operations. Intangible assets are net of accumulated amortization of $918,727 at January 31, 1996 and $841,182 at July 31, 1995. Amortization expense for the six month periods ended January 31, 1996 and 1995 was $77,545. SELF-INSURED CLAIMS LIABILITY-- The Company is primarily self-insured, up to certain limits, for automobile and general liability, workers' compensation, and employee group health claims. A liability for unpaid claims and associated expenses, including incurred but not reported losses, is actuarially determined and reflected in the condensed consolidated financial statements as an accrued liability. The self-insured claims liability includes incurred but not reported losses of $5,179,000 and $5,072,000 at January 31, 1996 and July 31, 1995, respectively. The determination of such claims and expenses and the appropriateness of the related liability is continually reviewed and updated. INCOME TAXES-- The Company and its subsidiaries file a consolidated federal income tax return. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates to differences between the financial statement carrying value and the tax basis of the Company's existing assets and liabilities. The effect on deferred taxes of a change in tax law or rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Management has evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets. The valuation allowance recorded in the financial statements reduces deferred tax assets to an amount that represents management's best estimate of the amount of such deferred tax assets that more likely than not will be realized. Accordingly, at January 31, 1996 and July 31, 1995, deferred tax assets are net of a valuation allowance of $1,786,518. PER SHARE DATA-- Per common share amounts are computed on the basis of weighted average shares of common stock outstanding, plus common stock equivalent shares arising from the effect of dilutive stock options, using the treasury stock method. In the three and six month periods ended January 31, 1996 and 1995, stock options did not impact the per share amounts as they were either insignificant or antidilutive. The weighted average number of shares was 8,553,189 and 8,528,990 for the three month periods ended January 31, 1996 and 1995, respectively, and 8,549,986 and 8,528,990 for the six month periods ended January 31, 1996 and 1995, respectively. 10 3. ACCOUNTS RECEIVABLE Accounts receivable, net consist of the following:
January 31, July 31, 1996 1995 ____ ____ Contract billings $ 11,278,039 $ 15,222,897 Retainage 1,194,963 1,201,454 Other receivables 377,639 773,704 ------------ ------------ Total 12,850,641 17,198,055 Less allowance for doubtful accounts 854,100 867,578 ------------ ------------ Accounts receivable, net $ 11,996,541 $ 16,330,477 ============ ============
4. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS The accompanying condensed consolidated balance sheets include costs and estimated earnings on contracts in progress, net of progress billings as follows:
January 31, July 31, 1996 1995 ____ ____ Costs incurred on contracts in progress $ 21,685,653 $ 20,862,665 Estimated earnings thereon 129,942 609,280 ------------ ------------ 21,815,595 21,471,945 Less billings to date 16,581,831 16,349,471 ------------ ------------ $ 5,233,764 $ 5,122,474 ============ ============ Included in the accompanying condensed consolidated balance sheets under the captions: Costs and estimated earnings in excess of billings $ 5,233,764 $ 5,223,425 Billings in excess of costs and estimated earnings (100,951) ------------ ------------ $ 5,233,764 $ 5,122,474 ============ ============
11 5. PROPERTY AND EQUIPMENT The accompanying condensed consolidated balance sheets include the following property and equipment:
January 31, July 31, 1996 1995 ____ ____ Land $ 1,723,527 $ 1,723,527 Buildings 2,265,252 2,223,627 Leasehold improvements 782,079 750,955 Vehicles 22,016,526 21,381,527 Equipment and machinery 19,446,994 19,711,023 Furniture and fixtures 3,131,812 2,930,467 ------------ ------------ Total 49,366,190 48,721,126 Less accumulated depreciation and amortization 30,355,830 29,918,563 ------------ ------------ Property and equipment, net $ 19,010,360 $ 18,802,563 ============ ============
Certain subsidiaries of the Company entered into lease arrangements accounted for as capitalized leases. The carrying value of capital leases at January 31, 1996 and July 31, 1995 was $295,226 and $326,704, respectively, net of accumulated depreciation at January 31, 1996 and July 31, 1995 of $67,316 and $33,538, respectively. Capital leases are included as a component of equipment and machinery. 6. NOTES PAYABLE Notes and loans payable are summarized by type of borrowings as follows:
January 31, July 31, 1996 1995 ____ ____ Bank Credit Agreement: Revolving credit facility $ 9,000,000 $ 9,000,000 Term-loan 5,331,711 7,948,469 Equipment acquisition term-loans 1,066,665 1,566,667 Capital lease obligations 266,895 310,008 ------------ ------------ Total 15,665,271 18,825,144 Less current portion 4,689,643 4,955,080 ------------ ------------ Notes payable--non-current $ 10,975,628 $ 13,870,064 ============ ============
At January 31, 1996, the Company had a bank credit agreement consisting of a $5.3 million term-loan, a $9.0 million revolving credit facility, a $9.8 million standby letter of credit facility, and a $5.0 million capital equipment acquisition facility of which $3.7 million was available and unused. The bank credit agreement contains restrictions which, among other things, require maintenance of certain financial ratios and covenants, restrict encumbrances of assets and creation of indebtedness, and limit the payment of cash dividends. The bank credit agreement restricts the payment of cash dividends until the term-loan is reduced to $5.0 million; thereafter, cash dividends are limited to 33 1/3 percent of earnings available for 12 distribution as dividends. Substantially all of the Company's assets are pledged as collateral under the terms of the agreement. At January 31, 1996, the Company was in compliance with all financial covenants and conditions. The interest on the term-loan and the revolving credit facility is at the bank's prime rate plus one-half percent (9.00% at January 31, 1996). The interest on the equipment acquisition term-loans is at the bank's prime rate plus three-quarters of one percent (9.25% January 31, 1996). Interest costs incurred on notes payable, all of which were expensed, for the six month periods ended January 31, 1996 and 1995 were $818,957 and $948,138, respectively. Such amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. Beginning September 1995, the term-loan quarterly principal payments increased to $1.0 million from $750,000. The outstanding balance of the equipment acquisition term-loans is payable quarterly through January 1998. The revolving credit facility is used to finance working capital and is payable in March 1998. At January 31, 1996, the Company had $9.6 million outstanding standby letters of credit issued as security to the Company's insurance administrators as part of its self-insurance program. During the quarter ended January 31, 1996, the capital equipment acquisition facility and the standby letter of credit facility were renewed for a period of one year expiring November 30, 1996. In addition, the bank increased the borrowing capacity of the capital equipment acquisition facility from $3.0 million to $5.0 million and reduced the interest rate on future borrowings from the bank's prime rate plus three-quarters of one percent to the bank's prime rate plus one-half percent. No additional borrowings under the capital equipment acquisition facility occurred during the quarter ended January 31, 1996. In addition to the borrowings under the bank credit agreement, certain subsidiaries have outstanding obligations under capital leases. The obligations are payable in monthly installments expiring at various dates through July 1998. 7. COMMITMENTS AND CONTINGENCIES In the normal course of business, certain subsidiaries of the Company have pending and unasserted claims. Although the ultimate resolution and liability of these claims cannot be determined, management believes the final disposition of these claims will not have a material adverse impact on the Company's consolidated financial condition or results of operations. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's consolidated financial condition and results of operations. The discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto. Results of Operations Contract revenues for the quarter ended January 31, 1996 decreased 2.6% to $32.6 million, as compared to $33.5 million for the same quarter last year. The telecommunication services and utility line locating services groups contract revenue decreased 4.9% to $29.7 million for the quarter. The electrical services group contract revenue increased 28.5% to $2.9 million for the quarter as compared to the corresponding period last year. The decline in total contract revenues is primarily attributed to lower volumes on multi-year comprehensive service contracts within the telecommunications service group, loss of certain utility locating contracts, partiality offset by improved volume in existing unit master contract work in the electrical services group. For the six month period ended January 31, 1996 contract revenues of $70.0 million increased slightly as compared to the $69.7 million reported in the corresponding period last year. The contract revenue mix between telecommunication services, utility line locating services and electrical services over recent years has reflected a steady increase in contract revenues from the telecommunication services group offset by a decline in the electrical services group. The contract revenue mix between telecommunication services, utility line locating services and electrical services for the quarter ended January 31, 1996 was 83%, 8%, and 9%, respectively, and 84%, 9% and 7%, respectively, for the quarter ended January 31, 1995. For the six-month period ended January 31, 1996, the contract revenue mix between telecommunications services group, utility line locating group and electrical services group was 84%, 8%, and 8%, respectively as compared to 82%, 10%, and 8%, respectively, for the corresponding period last year. Contract revenue from multi-year comprehensive services contracts continue to be a significant source of contract revenue. For the three and six month periods ended January 31, 1996, multi-year comprehensive services contracts included in the telecommunications services group, represented 65% of total contract revenues. The Company's backlog of uncompleted work at January 31, 1996 was $201 million as compared to $203 million at January 31, 1995. Contracts awarded during the quarter ended January 31, 1996 include the renewal of two significant multi-year comprehensive services contracts with combined values at $27 million and two new multi-year utility line locating contracts with combined value at $6.0 million. The Company's costs and operating expenses may be affected by a number of factors including contract volumes, character of services rendered, work locations, competition, and changes in productivity. Costs of earned revenues, excluding depreciation, were 81% and 82% of contract revenues for the quarters ended January 31, 1996 and 1995, respectively, and 81% for both six month periods ended January 31, 1996 and 1995. The Company's prime costs of direct labor, materials, subcontractors, and equipment costs remained relatively stable for both the quarter and six month periods ended January 31, 1996 compared to the corresponding periods last year. 14 General and administrative expenses remained stable at $3.5 million for the quarter ended January 31, 1996 and 1995. For the six month period ended January 31, 1996 general and administrative expenses increased $0.4 million to $7.4 million as compared to $7.0 million for the corresponding period last year. This increase is primarily attributable to payroll and payroll taxes which increased by $0.5 million, and general insurance costs which increased by $0.2 million. These increases in general and administrative expenses were partially offset by a $0.2 million decrease in the provision for doubtful accounts and a $0.1 million decrease in interest expense. The Company's 41% effective tax rate for the six month period ended January 31, 1996, is the result of state income taxes, the amortization of intangible assets with no tax benefit, and other non-deductible expenses for tax purposes. The lower effective rate for the same period last year was primarily due to a reversal of a deferred tax asset for which a deferred tax benefit had not been previously recorded. Liquidity and Capital Resources The Company's sources of funds are generated from operations, proceeds from the sale of idle real property and equipment and its available borrowing capabilities under the current bank credit agreement. Cash flow from operating activities increased $1.2 million to $6.4 million in comparison to the same period last year. Improved cash collections contributed to the increase in cash flow. The Company's sources of funds provided for capital expenditures of $3.4 million during the six month period ended January 31, 1996. These capital expenditures resulted from the normal replacement of equipment. Aside from these capital expenditures, the Company obtained approximately $0.9 million of equipment under various noncancelable operating leases. At January 31, 1996, the Company had outstanding borrowings under a term-loan of $5.3 million, equipment acquisition term-loans aggregating $1.1 million, and a revolving credit facility of $9.0 million. Interest on the term-loan and revolving credit facility is at the bank's prime rate plus one-half percent (9.00% at January 31, 1996). The interest on the equipment acquisition term-loans is at the bank's prime rate plus three-quarters of one percent (9.25% at January 31, 1996). During the six month period ended January 31, 1996, the Company reduced its outstanding debt balance by $3.2 million, which included a $0.6 million prepayment of the term-loan principal utilizing the proceeds received from the sale of equipment. Substantially all of the Company's assets are pledged as collateral in support of these facilities. In addition, the Company has available a $9.8 million standby letter of credit facility and a $5.0 million capital equipment acquisition facility of which $3.7 million is available and unused at January 31, 1996. The standby letter of credit facility is issued as security to the Company's insurance administrators as part of its self-insurance program. The Company had outstanding standby letters of credit of $9.6 million against the standby letter of credit facility at January 31, 1996. During the quarter ended January 31, 1996, the capital equipment acquisition facility and the standby letter of credit facility were renewed for a period of one year expiring November 30, 1996. In addition, the bank increased the borrowing capacity of the capital equipment acquisition facility from $3.0 million to $5.0 million and reduced the interest rate on future borrowings from the bank's prime rate plus three-quarters of one percent to the bank's prime rate plus one-half percent. No additional borrowings under the capital equipment acquisition facility occurred during the quarter ended January 31, 1996. 15 The bank credit agreement contains provisions regarding minimum working capital, tangible net worth, debt-to-equity ratios and certain other financial covenants. At January 31, 1996, the Company was in compliance with all financial covenants and conditions. Cash flow generated from operations will continue to be the Company's primary source of funds as available borrowing capabilities under the bank credit agreement are limited. The Company foresees these available sources of funds along with existing cash balances to be sufficient to meet its financial obligations, including the scheduled debt payments under the bank credit agreement and operating lease commitments, and to support the Company's normal replacement of equipment at its current level of business. The Company's future operating results and cash flows may be affected by a number of factors. These factors include the Company's success in bidding on future contracts, and the Company's ability to effectively manage controllable costs. No cash dividends have been paid during the six month period ended January 31, 1996. The board will determine future dividend policies based on financial condition, profitability, cash flow, capital requirements, and business outlook, as well as other factors relevant at the time. In addition, the Company's bank credit agreement prohibits, without prior approval of the bank, the declaration or payment of any cash dividends until the term-loan is reduced to $5.0 million; thereafter, cash dividends are limited to 33 1/3 percent of earnings available for distribution as dividends. 16 PART II. OTHER INFORMATION __________________________ Item 4. Submission of Matters to a Vote of Security Holders. The annual meeting of shareholders of the Company was held on November 27, 1995 to consider and take action on the election of two directors to the Company's Board of Directors. The Company's nominees, Messrs. Walter L. Revell and Ronald L. Roseman were elected. Mr. Revell received 7,384,625 votes for and 25,421 against, and Mr. Roseman received 7,381,272 votes for and 28,774 against. The directors whose terms continued after the annual meeting are Messrs. Louis W. Adams, Jr., Thomas R. Pledger, and Ronald P. Younkin. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibits furnished pursuant to the requirements of Form 10-Q: See Exhibit Index on Page 17 (b) Reports On Form 8-K No reports on Form 8-K were filed on behalf of the Registrant during the quarter ended January 31, 1996. 17 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. DYCOM INDUSTRIES, INC. Registrant Date: March 14, 1996 /s/ Thomas R. Pledger _________________ ____________________________ Thomas R. Pledger Chairman and Chief Executive Officer Date: March 14, 1996 /s/ Ronald L. Roseman _________________ ____________________________ Ronald L. Roseman President and Chief Operating Officer Date: March 14, 1996 /s/ Douglas J. Betlach _________________ ____________________________ Douglas J. Betlach Vice President and Chief Financial Officer
18 EXHIBIT INDEX
Number Description ______ ___________ 27 Financial Data Schedule 99 Fifth Modification of Credit Agreement and Consent by Guarantors as of November 30, 1995 to Credit Agreement dated as of April 28, 1993, as Amended, between Dycom Industries, Inc. and First Union National Bank of Florida.
EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DYCOM INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET AT JANUARY 31, 1996 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000067215 DYCOM INDUSTRIES, INC. 1 U.S. DOLLAR 6-MOS JUL-31-1996 JAN-31-1996 1 4,937,972 0 12,473,002 854,100 5,233,764 24,332,881 49,366,190 30,355,830 48,603,489 17,352,412 15,665,271 0 0 2,851,444 10,322,508 48,603,489 0 70,014,522 0 56,904,334 2,779,304 0 818,957 3,319,009 1,366,139 1,952,870 0 0 0 1,952,870 0.23 0.23
EX-99 3 EXHIBIT 99 1 FIFTH MODIFICATION OF CREDIT AGREEMENT THIS FIFTH MODIFICATION OF CREDIT AGREEMENT (the "Modifica- tion") is entered into as of the 30th day of November, 1995 by and between DYCOM INDUSTRIES INC., a Florida corporation ("Borrower") and FIRST UNION NATIONAL BANK OF FLORIDA, a National Banking Association ("Lender"). W I T N E S S E T H: WHEREAS, Borrower and Lender entered into a certain Credit Agreement dated as of April 28, 1993, which was amended by First Modification dated December 13, 1993 and by Second Modification dated April 7, 1994 and by Third Modification dated November 30, 1994, and by Fourth Modification dated July 31, 1995 (as amended, the "Credit Agreement"); and WHEREAS, Borrower has requested that Lender amend the Credit Agreement to (i) extend and modify the Standby Letter of Credit Facility referenced in Section 4; and (ii) extend and modify the Equipment Acquisition Facility referenced in Section 5; and (iii) modify certain of the financial covenants contained in Section 9; and WHEREAS, Lender is willing to amend the Credit Agreement as more particularly set forth herein. NOW THEREFORE, for good and valuable considerations, the receipt of which is hereby acknowledged, the parties do hereby modify the Credit Agreement, as follows: 1. Standby Letter of Credit Facility. The expiration date of the Standby Letter of Credit Facility referenced in Section 4 of the Credit Agreement is hereby extended to November 30, 1996. Accordingly, Section 4.01 of the Credit Agreement as previously modified by the Third Modification is modified by inserting therein the date "November 30, 1996." Sections 4.02 and 4.06 of the Credit Agreement as previously modified by the Third Modification are amended by inserting therein the date of "November 30, 1997." 2. Equipment Acquisition Facility. (a) Amount. The maximum outstanding amount of the Equipment Acquisition Advance is hereby increased to Five Million Dollars ($5,000,000). Therefore, the figure of $3,000,000 which appears in Section 5.03 is hereby deleted and in lieu thereof the figure of $5,000,000 is hereby inserted. (b) Capital Leases. The total outstanding Capital Lease obligations of Borrower and Subsidiaries at any time, whether now existing or hereafter acquired, shall be deducted from the amount of available Equipment Acquisition Advance under Section 5.03 in order to determine the maximum available amount under Section 5.03 at any time. 2 (c) Expiration. The expiration date of the Equipment Acquisition Facility referenced in Section 5 of the Credit Agreement as previously modified by the Third Modification is hereby extended to November 30, 1996. Accordingly, paragraph 5.01 of the Credit Agreement as previously modified by the Third Modification is amended to insert the date "November 30, 1996." (d) Term. The maximum term of any Equipment Acquisition Advance is four years or November 30, 2000, whichever occurs first. The principal of each Equipment Acquisition Advance shall be payable in equal quarterly installments with the Borrower selecting a term of either one, two, three or four years from the date of the Advance, provided that in any event the final quarterly payment cannot be due later than November 30, 2000. Accrued interest shall be payable quarterly as specified in Section 5 of the Credit Agreement. (e) Interest Rate. The applicable interest rate prior to maturity or default for all Equipment Acquisition Advances funded after the date hereof shall be the Lender's Prime Rate plus one-half of one percent (.50%), adjusted with each change in the Prime Rate. 3. Section 9.06, Capital Expenditures, is modified to provide that Borrower shall not permit the aggregate Capital Expenditures made by it and the Subsidiaries to exceed during a period set forth below the amount set forth opposite such period below: Period Amount From August 1, 1995 to July 31, 1996 $8,000,000 From August 1, 1996 to July 31, 1997 $9,000,000 From August 1, 1997 to July 31, 1998 $10,000,000 4. Section 12.01. Limitation of Debt is modified to add the following additional sentence at the end of Section 12.02, as follows: Provided, however, that Borrower and Subsidiaries shall be entitled to enter into Capital Leases from time to time, for so long as the aggregate outstanding Capital Leases (both now existing and hereafter created) of Borrower and Subsidiaries never exceed One Million Dollars ($1,000,000) at any one time. For the purpose of determining the amount of outstanding Capital Leases the total obligation of each Capital Lease shall be computed in accordance with GAAP. 5. All requirements contained in Section 9 regarding testing of compliance and the furnishing of Compliance Certificates shall remain in effect and are hereby reaffirmed. 6. Except as expressly modified herein, the Credit Agreement as previously amended is hereby reaffirmed in its entirety. 3 DYCOM INDUSTRIES INC. By: /s/ Thomas R. Pledger Its: Chairman and Chief Executive Officer Agreed: FIRST UNION NATIONAL BANK OF FLORIDA By: /s/ Raul Martinez Its: Vice President 4 CONSENT BY GUARANTORS THIS CONSENT BY GUARANTORS is executed as of the 30th day of November, 1995 by the following corporations: a. Advance Leasing of Guilford, Inc., a Florida corporation b. Ansco & Associates, Inc., a Florida corporation c. Coastal Plains, Inc., a Georgia corporation d. Fiber Cable, Inc., a Delaware corporation e. Globe Communications, Inc., a North Carolina corporation f. Ivy H. Smith Company, a Florida corporation g. Kohler Construction Company, Inc., a Florida corporation h. Prime Utility Contractors, Inc., an Alabama corporation i. Signal Construction Company, Inc., a Florida corporation j. Southeastern Electric Construction, Inc., a Florida corporation k. Star Construction, Inc., a Tennessee corporation l. S.T.S., Inc., a Florida corporation m. TESINC, Inc., an Arizona corporation (collectively the "Guarantors"), in favor of FIRST UNION NATIONAL BANK OF FLORIDA (the "Lender"). W I T N E S S E T H: WHEREAS, as of April 28, 1993, the Guarantors executed Guaranty Agreements in favor of Lender pertaining to the Credit Agreement and the Loan Documents referenced therein executed by Dycom Industries Inc., a Florida corporation ("Borrower") and Lender; and WHEREAS, the Credit Agreement was modified by First Amendment dated December 13, 1993, Second Amendment dated April 7, 1994, Third Amendment dated November 30, l994 and Fourth Modification dated July 31, 1995; and WHEREAS, Borrower has requested that Lender execute and deliver a Fifth Modification of Credit Agreement; and WHEREAS, as a pre-condition to executing the Fifth Modification of Credit Agreement, Lender has required that the Guarantors consent to the Fifth Modification of Credit Agreement; and WHEREAS, it is to the benefit of Guarantors that Lender consent and execute the Fifth Modification of Credit Agreement. NOW THEREFORE, for good and valuable considerations, the receipt of which is hereby acknowledged, the Guarantors hereby agree as follows: 5 1. The Guarantors do hereby consent and agree to the terms and conditions of the Fifth Modification of Credit Agreement, a copy of which is attached hereto as Exhibit "A" and incorporated by reference herein. Guarantors agree that the Guaranty Agreements previously executed by Guarantors shall remain in full force and effect and shall apply to all advances under the Fifth Modification of Credit Agreement. 2. Guarantors do hereby reaffirm in full their respective Guaranties. IN WITNESS WHEREOF, this document has been duly executed as of the day and year first set forth above. Advance Leasing of Guilford, Inc. By: /s/ Thomas R. Pldeger Its: Vice President Ansco & Associates, Inc. By: /s/ Thomas R. Pledger Its: Vice President Coastal Plains, Inc. By: /s/ Thomas R. Pledger Its: Vice President Fiber Cable, Inc. By: /s/ Thomas R. Pledger Its: Vice President Globe Communications, Inc. By: /s/ Thomas R. Pledger Its: Vice President Ivy H. Smith Company By: /s/ Thomas R. Pledger Its: Vice President Kohler Construction Company, Inc. By: /s/ Thomas R. Pledger Its: Vice President 6 Prime Utility Contractors, Inc. By: /s/ Thomas R. Pledger Its: Vice President Signal Construction Company, Inc. By: /s/ Thomas R. Pledger Its: Vice President Southeastern Electric Construction, Inc. By: /s/ Thomas R. Pledger Its: Vice President Star Construction, Inc. By: /s/ Thomas R. Pledger Its: Vice President S.T.S., Inc. By: /s/ Thomas R. Pledger Its: Vice President TESINC, Inc. By: /s/ Thomas R. Pledger Its: Vice President -----END PRIVACY-ENHANCED MESSAGE-----