-----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, NKOb9q2RyYOrMbthP5EQLfzQRClHbA0EP4ka8Scmhi+z9MUlS+9cnFL9ooKbSNf2 YOHGdTApMobMP8A6u4oo/A== 0000067215-96-000002.txt : 19960614 0000067215-96-000002.hdr.sgml : 19960614 ACCESSION NUMBER: 0000067215-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960613 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: 96580466 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: P O BOX 3524 STREET 2: SUITE 860 CITY: WEST PALM BEACH STATE: FL ZIP: 33402 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 April 30, 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) (561) 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 June 7, 1996 _____ __________________________________ Common Stock, par value $0.33 1/3 8,583,843 2 DYCOM INDUSTRIES, INC. INDEX
Page No. ________ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets- April 30, 1996 and July 31, 1995 3 Condensed Consolidated Statements of Operations for the Three Months Ended April 30, 1996 and 1995 4 Condensed Consolidated Statements of Operations for the Nine Months Ended April 30, 1996 and 1995 5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 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 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)
April 30, July 31, 1996 1995 ____ ____ ASSETS CURRENT ASSETS: Cash and equivalents $ 4,836,484 $ 4,306,675 Accounts receivable, net 11,572,613 16,330,477 Costs and estimated earnings in excess of billings 7,074,731 5,223,425 Deferred tax assets 929,745 385,755 Other current assets 1,290,037 1,396,201 ------------ ------------ Total current assets 25,703,610 27,642,533 ------------ ------------ PROPERTY AND EQUIPMENT, net 18,752,976 18,802,563 ------------ ------------ OTHER ASSETS: Intangible assets, net 4,878,218 4,994,535 Other 299,097 353,227 ------------ ------------ Total other assets 5,177,315 5,347,762 ------------ ------------ TOTAL $ 49,633,901 $ 51,792,858 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,334,507 $ 5,607,567 Notes payable 3,753,154 4,955,080 Billings in excess of costs and estimated earnings 100,951 Accrued self-insured claims 2,733,953 2,266,855 Income taxes payable 1,096,964 621,483 Other accrued liabilities 7,280,953 6,585,387 ------------ ------------ Total current liabilities 18,199,531 20,137,323 NOTES PAYABLE 9,505,352 13,870,064 ACCRUED SELF-INSURED CLAIMS 6,967,192 6,598,372 ------------ ------------ Total liabilities 34,672,075 40,605,759 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, par value $.33 1/3 per share: 50,000,000 shares authorized; 8,579,181 and 8,543,990 shares issued and outstanding, respectively 2,859,726 2,847,997 Additional paid-in capital 24,399,287 24,293,309 Retained deficit (12,297,187) (15,954,207) ------------ ------------ Total stockholders' equity 14,961,826 11,187,099 ------------ ------------ TOTAL $ 49,633,901 $ 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 ___________________________ April 30, April 30, 1996 1995 ____ ____ REVENUES: Contract revenues earned $ 34,529,891 $ 35,880,085 Other, net 860,754 648,252 ------------ ------------ Total 35,390,645 36,528,337 ------------ ------------ EXPENSES: Costs of earned revenues excluding depreciation 27,426,818 29,758,702 General and administrative 3,638,872 3,407,562 Depreciation and amortization 1,359,242 1,354,643 ------------ ------------ Total 32,424,932 34,520,907 ------------ ------------ INCOME BEFORE INCOME TAXES 2,965,713 2,007,430 ------------ ------------ PROVISION (BENEFIT) FOR INCOME TAXES: Current 1,500,211 785,876 Deferred (238,648) 170,252 ------------ ------------ Total 1,261,563 956,128 ------------ ------------ NET INCOME $ 1,704,150 $ 1,051,302 ============ ============ NET INCOME PER COMMON SHARE $ 0.20 $ 0.12 ====== ====== See notes to condensed consolidated financial statements--unaudited.
5 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Nine Months Ended ___________________________ April 30, April 30, 1996 1995 ____ ____ REVENUES: Contract revenues earned $104,544,413 $105,607,532 Other, net 1,283,278 1,136,287 ------------ ------------ Total 105,827,691 106,743,819 ------------ ------------ EXPENSES: Costs of earned revenues excluding depreciation 84,331,152 86,451,747 General and administrative 11,073,271 10,423,662 Depreciation and amortization 4,138,546 4,461,447 ------------ ------------ Total 99,542,969 101,336,856 ------------ ------------ INCOME BEFORE INCOME TAXES 6,284,722 5,406,963 ------------ ------------ PROVISION (BENEFIT) FOR INCOME TAXES: Current 3,171,692 2,139,210 Deferred (543,990) 170,252 ------------ ------------ Total 2,627,702 2,309,462 ------------ ------------ NET INCOME $ 3,657,020 $ 3,097,501 ============ ============ NET INCOME PER COMMON SHARE $ 0.43 $ 0.36 ====== ====== See notes to condensed consolidated financial statements--unaudited.
6 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended ___________________________ April 30, April 30, 1996 1995 ____ ____ Increase (Decrease) in Cash and equivalents from: OPERATING ACTIVITIES: Net income $ 3,657,020 $ 3,097,501 Adjustments to reconcile net cash provided by operating activities: Depreciation and amortization 4,138,546 4,461,447 Gain on disposal of assets (945,910) (745,390) Deferred income taxes (543,990) 170,252 Changes in assets and liabilities: Accounts receivable, net 4,757,864 (170,179) Unbilled revenues, net (1,952,257) (1,599,064) Other current assets 106,164 (93,864) Other assets 54,130 185,939 Accounts payable (2,273,060) 76,227 Accrued self-insured claims and other liabilities 1,531,484 416,073 Accrued income taxes 475,481 616,594 ------------ ------------ Net cash inflow from operating activities 9,005,472 6,415,536 ------------ ------------ INVESTING ACTIVITIES: Capital expenditures (5,097,060) (4,913,386) Proceeds from sales of assets 2,070,328 1,932,825 ------------ ------------ Net cash outflow from investing activities (3,026,732) (2,980,561) ------------ ------------ FINANCING ACTIVITIES: Borrowing on bank lines-of-credit 1,350,000 Principal payments on notes payable and bank lines-of-credit (5,566,638) (3,141,395) Exercise of stock options 117,707 45,000 ------------ ------------ Net cash outflow from financing activities (5,448,931) (1,746,395) ------------ ------------ NET CASH INFLOW FROM ALL ACTIVITIES 529,809 1,688,580 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 4,306,675 2,625,783 ------------ ------------ CASH AND EQUIVALENTS AT END OF PERIOD $ 4,836,484 $ 4,314,363 ============ ============ See notes to condensed consolidated financial statements--unaudited.
7 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited)
For the Nine Months Ended ___________________________ April 30, April 30, 1996 1995 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NON-CASH INVESTING AND FINANCING ACTIVITIES: Cash paid during the period for: Interest $ 1,200,196 $ 1,453,559 Income taxes 2,753,674 1,702,804 Property and equipment acquired and financed with capital lease obligations $ 153,003 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 April 30, 1996 and July 31, 1995, the related condensed consolidated statements of operations for the three and nine months ended April 30, 1996 and 1995 and the condensed consolidated statements of cash flows for the nine months ended April 30, 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 nine months ended April 30, 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 contract 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 $957,499 at April 30, 1996 and $841,182 at July 31, 1995. Amortization expense for each of the nine month periods ended April 30, 1996 and 1995 was $116,317. 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 $4,404,000 and $5,072,000 at April 30, 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 April 30, 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 nine month periods ended April 30, 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 8,564,660 and 8,540,282 for the three month periods ended April 30, 1996 and 1995, respectively, and 8,554,808 and 8,532,671 for the nine month periods ended April 30, 1996 and 1995, respectively. 10 3. ACCOUNTS RECEIVABLE Accounts receivable, net consist of the following:
April 30, July 31, 1996 1995 ____ ____ Contract billings $ 10,673,623 $ 15,222,897 Retainage 1,263,195 1,201,454 Other receivables 432,046 773,704 ------------ ------------ Total 12,368,864 17,198,055 Less allowance for doubtful accounts 796,251 867,578 ------------ ------------ Accounts receivable, net $ 11,572,613 $ 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:
April 30, July 31, 1996 1995 ____ ____ Costs incurred on contracts in progress $ 24,161,454 $ 20,862,665 Estimated earnings thereon 611,796 609,280 ------------ ------------ 24,773,250 21,471,945 Less billings to date 17,698,519 16,349,471 ------------ ------------ $ 7,074,731 $ 5,122,474 ============ ============ Included in the accompanying condensed consolidated balance sheets under the captions: Costs and estimated earnings in excess of billings $ 7,074,731 $ 5,223,425 Billings in excess of costs and estimated earnings (100,951) ------------ ------------ $ 7,074,731 $ 5,122,474 ============ ============
11 5. PROPERTY AND EQUIPMENT The accompanying condensed consolidated balance sheets include the following property and equipment:
April 30, July 31, 1996 1995 ____ ____ Land $ 1,711,464 $ 1,723,527 Buildings 2,236,322 2,223,627 Leasehold improvements 808,538 750,955 Vehicles 21,349,522 21,381,527 Equipment and machinery 18,931,338 19,711,023 Furniture and fixtures 3,177,525 2,930,467 ------------ ------------ Total 48,214,709 48,721,126 Less accumulated depreciation and amortization 29,461,733 29,918,563 ------------ ------------ Property and equipment, net $ 18,752,976 $ 18,802,563 ============ ============
Certain subsidiaries of the Company entered into lease arrangements accounted for as capitalized leases. The carrying value of capital leases at April 30, 1996 and July 31, 1995 was $276,236 and $326,704, respectively, net of accumulated depreciation at April 30, 1996 and July 31, 1995 of $84,006 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:
April 30, July 31, 1996 1995 ____ ____ Bank Credit Agreement: Revolving credit facility $ 9,000,000 $ 9,000,000 Term-loan 3,199,650 7,948,469 Equipment acquisition term-loans 816,667 1,566,667 Capital lease obligations 242,189 310,008 ------------ ------------ Total 13,258,506 18,825,144 Less current portion 3,753,154 4,955,080 ------------ ------------ Notes payable--non-current $ 9,505,352 $ 13,870,064 ============ ============
At April 30, 1996, the Company had a bank credit agreement consisting of a $3.2 million term-loan, a $9.0 million revolving credit facility, a $9.8 million standby letter of credit facility of which $0.2 million was available and a $5.0 million capital equipment acquisition facility of which $3.9 million was available. 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. Cash dividends are limited to 33 1/3 percent of earnings available for distribution as dividends. No cash dividends have 12 been paid during the nine month period ended April 30, 1996. Substantially all of the Company's assets are pledged as collateral under the terms of the agreement. At April 30, 1996, the Company was in compliance with all financial covenants and conditions. The interest rate on the term-loan and the revolving credit facility is at the bank's prime interest rate plus one-half percent (8.75% at April 30, 1996). The interest rate on the equipment acquisition term-loans is at the bank's prime interest rate plus three-quarters of one percent (9.00% April 30, 1996). The interest rate on equipment acquisition term-loans subsequent to November 30, 1995 is at the bank's prime interest rate plus one-half percent. Interest costs incurred on notes payable, all of which were expensed, for the nine month periods ended April 30, 1996 and 1995 were $1,141,292 and $1,446,187, 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 April 30, 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 interest rate plus three-quarters of one percent to the bank's prime interest rate plus one-half percent. No additional borrowings under the capital equipment acquisition facility occurred during the quarter ended April 30, 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 The Company reported earnings per common share of $0.20 and $0.43 for the three and nine month periods ended April 30, 1996, respectively, as compared to earnings per common share of $0.12 and $0.36, respectively, for the corresponding periods last year. Contract revenues for the quarter ended April 30, 1996 decreased 3.8% to $34.5 million, as compared to $35.9 million for the same quarter last year. The telecommunication services and utility line locating services groups contract revenue decreased 2.8% to $31.9 million for the quarter. The electrical services group contract revenue decreased $0.4 million to $2.6 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 services contracts within the telecommunication services group and loss of certain utility locating contracts. For the nine month period ended April 30, 1996 contract revenues of $104.5 million decreased slightly as compared to the $105.6 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 utility line locating group. The contract revenue mix between telecommunication services, utility line locating services and electrical services for the quarter ended April 30, 1996 was 82%, 10%, and 8%, respectively, and 81%, 11% and 8%, respectively, for the quarter ended April 30, 1995. For the nine-month period ended April 30, 1996, the contract revenue mix between telecommunications services group, utility line locating group and electrical services group was 83%, 9%, and 8%, respectively as compared to 81%, 11%, 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 nine month periods ended April 30, 1996, multi-year comprehensive services contracts included in the telecommunications services group, represented 62% and 64% of total contract revenues, respectively. The Company's backlog of uncompleted work at April 30, 1996 was $231 million as compared to $192 million at April 30, 1995. Contracts awarded during the quarter ended April 30, 1996 include the renewal of two multi-year comprehensive services contract with combined estimated revenues of $21.8 million, two new multi-year utility line locating contracts and the renewal of a multi-year utility line locating contract with combined estimated revenues of $19.6 million, and a new multi-year electrical services contract with estimated revenues of $2.5 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 79% and 83% of contract revenues for the quarters ended April 30, 1996 and 1995, respectively, and 81% and 82% for 14 the nine month periods ended April 30, 1996 and 1995, respectively. For the quarter ended April 30, 1996 costs of earned revenues decreased as a percentage of contract revenues as compared to the same period last year primarily due to lower subcontractors cost. The Company's prime costs of direct labor, materials, subcontractors, and equipment costs remained relatively stable for the nine month periods ended April 30, 1996 compared to the corresponding period last year. General and administrative expenses for the quarter ended April 30, 1996 increased $0.2 million to $3.6 million as compared to $3.4 million reported in the corresponding period last year. This increase is primarily attributable to group insurance costs which increased by $0.2 million and other general expenses which increased by $0.2 million. The increase in general and administrative expenses was partially offset by a $0.2 million decrease in interest expense. For the nine month period ended April 30, 1996 general and administrative expenses increased $0.7 million to $11.1 million as compared to $10.4 million for the corresponding period last year. This increase is primarily attributable to payroll and payroll taxes which increased by $0.5 million, general insurance costs which increased by $0.2 million, and other general expenses which increased by $0.5 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 $0.3 million decrease in interest expense. The Company's 41.8% effective tax rate for the nine month period ended April 30, 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. Liquidity and Capital Resources The Company's sources of funds are generated from operations, proceeds from the sale of idle real property and surplus equipment and its available borrowing capabilities under the current bank credit agreement. Cash flow from operating activities increased $2.6 million to $9.0 million in comparison to the same period last year. Improved receivable collections contributed to the increase in cash flow during this period. The Company's sources of funds provided for capital expenditures of $5.1 million during the nine month period ended April 30, 1996. These capital expenditures resulted from the normal replacement of equipment. Aside from these capital expenditures, the Company obtained approximately $2.2 million of equipment under various noncancelable operating leases. At April 30, 1996, the Company had outstanding borrowings under a term-loan of $3.2 million, equipment acquisition term-loans aggregating $0.8 million, and a revolving credit facility of $9.0 million. The interest rate on the term-loan and revolving credit facility is at the bank's prime interest rate plus one-half percent (8.75% at April 30, 1996). The interest rate on the equipment acquisition term-loans is at the bank's prime interest rate plus three-quarters of one percent (9.00% at April 30, 1996). During the nine month period ended April 30, 1996, the Company reduced its outstanding debt balance by $5.6 million, which included a $1.7 million prepayment of the term-loan principal utilizing the proceeds received from the sale of surplus equipment and real property. 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 of which $0.2 million is available and a $5.0 million capital equipment acquisition facility of which $3.9 million is available at April 30, 15 1996. The standby letter of credit facility is 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 interest rate plus three-quarters of one percent to the bank's prime interest rate plus one-half percent. No additional borrowings under the capital equipment acquisition facility occurred during the quarter ended April 30, 1996. The bank credit agreement contains provisions regarding minimum working capital, tangible net worth, debt-to-equity ratios and certain other financial covenants. At April 30, 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, such as, 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 nine month period ended April 30, 1996. The Company's Board of Directors 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. Cash dividends are limited to 33 1/3 percent of earnings available for distribution as dividends under the terms of the bank credit agreement. 16 PART II. OTHER INFORMATION __________________________ 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 18 (b) Reports On Form 8-K No reports on Form 8-K were filed on behalf of the Registrant during the quarter ended April 30, 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: June 13, 1996 /s/ Thomas R. Pledger _________________ ____________________________ Thomas R. Pledger Chairman and Chief Executive Officer Date: June 13, 1996 /s/ Ronald L. Roseman _________________ ____________________________ Ronald L. Roseman President and Chief Operating Officer Date: June 13, 1996 /s/ Douglas J. Betlach _________________ ____________________________ Douglas J. Betlach Vice President and Chief Financial Officer
18 EXHIBIT INDEX
Number Description ______ ___________ (27) Financial Data Schedule
EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DYCOM INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30, 1996 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000067215 DYCOM INDUSTRIES, INC. 1 U.S. DOLLAR 9-MOS JUL-31-1996 APR-30-1996 1 4,836,484 0 11,936,818 796,251 7,074,731 25,703,610 48,214,709 29,461,733 49,633,901 18,199,531 13,258,506 0 0 2,859,726 12,102,100 49,633,901 0 105,827,691 0 84,331,152 4,138,546 102,902 1,141,292 6,284,722 2,627,702 3,657,020 0 0 0 3,657,020 .43 .43
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