-----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, MacHI/wYzHO3Yi01FaxLZE9k7D3m3htosBnC6yjpNMQbhCKS1h5tnmsVHhKE2dRg ONMdk24+J8EsVob3WT97Og== 0000067215-97-000002.txt : 19970318 0000067215-97-000002.hdr.sgml : 19970318 ACCESSION NUMBER: 0000067215-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970317 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: 97557685 BUSINESS ADDRESS: STREET 1: 4440 PGA BLVD. SUITE 600 STREET 2: FIRST UNION CENTER CITY: PALM BEACH GARDENS STATE: FL ZIP: 33410 BUSINESS PHONE: (561) 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 January 31, 1997 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, Suite 600 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 March 10, 1997 _____ __________________________________ Common Stock, par value $0.33 1/3 8,764,836 2 DYCOM INDUSTRIES, INC. INDEX
Page No. ________ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets- January 31, 1997 and July 31, 1996 3 Condensed Consolidated Statements of Operations for the Three Months Ended January 31, 1997 and 1996 4 Condensed Consolidated Statements of Operations for the Six Months Ended January 31, 1997 and 1996 5 Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31, 1997 and 1996 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, 1997 1996 ASSETS CURRENT ASSETS: Cash and equivalents $ 2,041,607 $ 3,835,479 Accounts receivable, net 16,690,135 13,306,064 Costs and estimated earnings in excess of billings 9,054,636 7,137,212 Deferred tax assets, net 1,388,949 1,261,065 Other current assets 1,334,106 1,248,405 Total current assets 30,509,433 26,788,225 PROPERTY AND EQUIPMENT, net 21,137,847 19,574,410 OTHER ASSETS: Intangible assets, net 4,761,902 4,839,447 Deferred tax assets 716,885 598,887 Other 291,031 272,916 Total other assets 5,769,818 5,711,250 TOTAL $ 57,417,098 $ 52,073,885 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 8,341,821 $ 3,541,789 Notes payable 922,735 2,758,795 Billings in excess of costs and estimated earnings 38,714 Accrued self-insured claims 2,712,464 3,064,229 Income taxes payable 22,280 227,619 Other accrued liabilities 6,035,546 8,151,589 Total current liabilities 18,034,846 17,782,735 NOTES PAYABLE 10,418,921 9,452,630 ACCRUED SELF-INSURED CLAIMS 7,472,858 7,062,150 Total liabilities 35,926,625 34,297,515 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, par value $.33 1/3 per share: 50,000,000 shares authorized; 8,687,901 and 8,601,492 shares issued and outstanding, respectively 2,895,967 2,867,164 Additional paid-in capital 24,855,472 24,473,269 Retained deficit (6,260,966) (9,564,063) Total stockholders' equity 21,490,473 17,776,370 TOTAL $ 57,417,098 $ 52,073,885 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, 1997 1996 REVENUES: Contract revenues earned $ 39,864,847 $ 32,648,532 Other, net 147,227 182,931 Total 40,012,074 32,831,463 Expenses: Costs of earned revenues excluding depreciation 32,578,254 26,288,815 General and administrative 3,531,598 3,536,240 Depreciation and amortization 1,455,934 1,402,884 Total 37,565,786 31,227,939 INCOME BEFORE INCOME TAXES 2,446,288 1,603,524 PROVISION FOR INCOME TAXES: Current 802,462 507,593 Deferred 2,348 111,699 Total 804,810 619,292 NET INCOME $ 1,641,478 $ 984,232 EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Primary $0.19 $0.12 Fully diluted $0.18 $0.12 SHARES USED IN COMPUTING EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Primary 8,869,444 8,553,189 Fully diluted 8,879,222 8,553,189 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, 1997 1996 REVENUES: Contract revenues earned $ 80,140,079 $ 70,014,522 Other, net 239,220 422,524 Total 80,379,299 70,437,046 Expenses: Costs of earned revenues excluding depreciation 64,996,988 56,904,334 General and administrative 7,103,583 7,434,399 Depreciation and amortization 2,944,078 2,779,304 Total 75,044,649 67,118,037 INCOME BEFORE INCOME TAXES 5,334,650 3,319,009 PROVISION (BENEFIT) FOR INCOME TAXES: Current 2,277,436 1,671,481 Deferred (245,883) (305,342) Total 2,031,553 1,366,139 NET INCOME $ 3,303,097 $ 1,952,870 EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Primary $0.37 $0.23 Fully diluted $0.37 $0.23 SHARES USED IN COMPUTING EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Primary 8,886,767 8,549,986 Fully diluted 8,886,902 8,549,986 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, 1997 1996 Increase (Decrease) in Cash and Equivalents from: OPERATING ACTIVITIES: Net income $ 3,303,097 $ 1,952,870 Adjustments to reconcile net cash provided by operating activities: Depreciation and amortization 2,944,078 2,779,304 Gain on disposal of assets (86,506) (242,710) Deferred income taxes (245,883) (305,342) Changes in assets and liabilities: Accounts receivable, net (3,384,071) 4,333,936 Unbilled revenues, net (1,956,138) (111,290) Other current assets (85,701) 60,095 Other assets (18,115) 9,968 Accounts payable 4,800,032 (1,672,956) Accrued self-insured claims and other liabilities (2,057,464) (1,246) Accrued income taxes (72,770) (379,351) Net cash inflow from operating activities 3,140,559 6,423,278 INVESTING ACTIVITIES: Capital expenditures (3,978,239) (3,436,122) Proceeds from sale of assets 236,164 770,029 Net cash outflow from investing activities (3,742,075) (2,666,093) FINANCING ACTIVITIES: Borrowing on bank lines-of-credit 1,007,000 Principal payments on notes payable and bank lines-of-credit (2,477,793) (3,159,872) Exercise of stock options 278,437 33,984 Net cash outflow from financing activities (1,192,356) (3,125,888) NET CASH INFLOW FROM ALL ACTIVITIES (1,793,872) 631,297 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 3,835,479 4,306,675 CASH AND EQUIVALENTS AT END OF PERIOD $ 2,041,607 $ 4,937,972 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, 1997 1996 SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NON-CASH INVESTING AND FINANCING ACTIVITIES: Cash paid during the period for: Interest $ 552,828 $ 851,364 Income taxes 2,545,823 2,061,403 Property and equipment acquired and financed with: Capital lease obligations $ 601,024 Income tax benefit related to incentive stock options exercised $ 132,569 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. and subsidiaries ("Dycom" or the "Company") as of January 31, 1997 and July 31, 1996, the related condensed consolidated statements of operations for the three and six months ended January 31, 1997 and 1996 and the condensed consolidated statements of cash flows for the six months ended January 31, 1997 and 1996 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, 1997 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 electric utility services contracting. All material intercompany accounts and transactions have been eliminated. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and revenues and expenses during the period reported. Actual results could differ from those estimates. Estimates are used for the revenue recognition of work-in-process, allowance for doubtful accounts, self-insured claims liability, deferred tax asset valuation allowance, depreciation and amortization, and the estimated lives of assets, including intangible assets. 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 as the facts that 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 revenues 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. The carrying amount reported in the condensed consolidated balance sheets for cash and equivalents approximates its fair value. 9 PROPERTY AND EQUIPMENT-- Property and equipment is stated at cost, reduced in certain cases by valuation reserves. Depreciation and amortization is 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 its useful life are capitalized. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in income. 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. Amortization expense, which is comprised primarily of goodwill, was $77,545 for the six month periods ended January 31, 1997 and 1996. The intangible assets are net of accumulated amortization of $1,073,815 at January 31, 1997 and $996,270 at July 31, 1996. LONG-LIVED ASSETS-- In March 1995, the FASB issued SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires that the long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company adopted the provisions of SFAS No. 121 effective August 1, 1996 and determined that no impairment loss need be recognized. 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 the associated claim 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 $5,120,000 and $4,458,000 at January 31, 1997 and July 31, 1996, 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 provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. A valuation allowance is provided when it is more likely than not that some portion of the Company's deferred tax assets will not be realized. Management has evaluated the available evidence about the Company's 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, 1997 and July 31, 1996, deferred tax assets are net of a valuation allowance of $513,912 and $728,491, respectively. PER SHARE DATA-- Earnings per common and common equivalent share are computed using the weighted average shares of common stock outstanding plus the common stock equivalents arising from the effect of dilutive stock options, using the treasury stock method. 10 CHANGE IN ACCOUNTING PRINCIPLE-- In October, 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based Compensation," which was effective for the Company beginning August 1, 1996. SFAS No. 123 requires expanded disclosures of stock based compensation arrangements with employees and encourages, but does not require, compensation cost to be measured based on the fair value of the equity instrument awarded. Under SFAS No. 123, companies are permitted, however, to continue to apply Accounting Principles Board ("APB") Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose in the annual financial statements the required pro forma effect on net income and earnings per share. 3. ACCOUNTS RECEIVABLE Accounts receivable, net consist of the following:
January 31, July 31, 1997 1996 Contract billings $ 15,263,161 $ 12,305,652 Retainage 1,544,299 1,138,619 Other receivables 581,475 368,677 Total 17,388,935 13,812,948 Less allowance for doubtful accounts 698,800 506,884 Accounts receivable, net $ 16,690,135 $ 13,306,064
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, 1997 1996 Costs incurred on contracts in progress $ 26,117,956 $ 24,272,835 Estimated earnings thereon 525,199 334,905 26,643,155 24,607,740 Less billings to date 17,588,519 17,509,242 $ 9,054,636 $ 7,098,498 Included in the accompanying condensed consolidated balance sheets under the captions: Costs and estimated earnings in excess of billings $ 9,054,636 $ 7,137,212 Billings in excess of costs and estimated earnings (38,714) $ 9,054,636 $ 7,098,498
11 5. PROPERTY AND EQUIPMENT The accompanying condensed consolidated balance sheets include the following property and equipment:
January 31, July 31, 1997 1996 Land $ 1,958,777 $ 1,711,464 Buildings 2,319,810 2,236,322 Leasehold improvements 802,821 743,101 Vehicles 23,328,341 22,153,365 Equipment and machinery 21,797,558 20,033,610 Furniture and fixtures 4,050,337 3,541,638 Total 54,257,644 50,419,500 Less accumulated depreciation and amortization 33,119,797 30,845,090 Property and equipment, net $ 21,137,847 $ 19,574,410
Certain subsidiaries of the Company entered into lease arrangements accounted for as capitalized leases. The carrying value of capital leases at January 31, 1997 and July 31, 1996 was $915,907 and $372,170, respectively, net of accumulated depreciation of $180,700 and $123,413 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, 1997 1996 Bank Credit Agreement: Revolving credit facility $ 9,000,000 $ 9,000,000 Term-loan 2,162,812 Equipment acquisition term-loans 1,486,163 704,167 Capital lease obligations 855,493 344,446 Total 11,341,656 12,211,425 Less current portion 922,735 2,758,795 Notes payable--non-current $ 10,418,921 $ 9,452,630
At January 31, 1997, the Company had a bank credit agreement consisting of a $9.0 million revolving credit facility, a $5.0 million equipment acquisition facility of which $2.7 million was available, and a $9.8 million standby letter of credit facility of which $0.6 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 been paid during the six month period ending January 31, 1997. Substantially all the Company's assets are pledged as collateral under the terms of the agreement. At January 31, 1997, the Company was in compliance with all financial covenants and conditions. 12 The interest rate on the term-loan and the revolving credit facility is at the bank's prime interest rate plus 0.50% (8.75% at January 31, 1997 and July 31, 1996). The interest rate on the outstanding equipment acquisition term-loans are at the bank's prime interest rate plus 0.50% (8.75% at January 31, 1997). The interest rate on equipment acquisition term-loans prior to November 30, 1995 was at the bank's prime interest rate plus 0.75%. The outstanding balance at January 31, 1997 and July 31, 1996 of equipment acquisition term- loans issued prior to November 30, 1995 was $479,000 and $704,000, respectively. Interest costs incurred on notes payable and capital lease obligations, all of which were expensed, for the six month periods ended January 31, 1997 and 1996 were $513,883 and $818,957, respectively. Such amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The outstanding balance of the equipment acquisition term-loans is payable quarterly through January 2001. The revolving credit facility is used to finance working capital and is payable in March 1998. The term-loan was fully paid in December, 1996. At January 31, 1997, the Company had $9.2 million in outstanding standby letters of credit issued as security to the Company's insurance administrators as part of its self-insurance program. The capital equipment acquisition facility and standby letter of credit facility were renewed until February 28, 1997. 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 December 2001. Subsequent to January 31, 1997, the Company concluded negotiations with a group of banks and signed a commitment letter for a new $35.0 million unsecured revolving and term-loan credit facility. This new facility will replace the Company's current bank credit facilities. The new bank credit facility provides the Company credit availability of $10.0 million for revolving working capital loans, $10.0 million for standby letters of credit, $6.0 million for equipment acquisitions, and $9.0 million for a five-year term-loan. The borrowings bear interest at floating interest rates depending on the type of loan. The Company may select interest rates for up to six months at LIBOR plus 1.50% to LIBOR plus 1.75% or, at the prime rate less 1.00% to the prime rate less 0.50%. The new credit agreement requires the Company to meet certain financial ratios and covenants, including debt to tangible net worth ratio, quick ratio, and current ratio. The agreement contains other covenants which limits the payment of cash dividends and restricts the creation of additional indebtedness and encumbrances of assets. 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 and common equivalent share of $0.19 and $0.12 for the quarters ended January 31, 1997 and 1996, respectively. Earnings per common and common equivalent share for the six month periods ended January 31, 1997 and 1996 was $0.37 and $0.23, respectively. Earnings per common share assuming full dilution for the three and six month periods ended January 31, 1997 was $0.18 and $0.37, respectively. This compares to earnings per common and common equivalent share assuming full dilution of $0.12 and $0.23 for the three and six month period ended January 31, 1996. Contract revenues for the quarter ended January 31, 1997 increased 22.1% to $39.9 million as compared to $32.6 million for the same quarter last year. The increase in contract revenues is attributable to increased volume experienced in all service groups. The telecommunication services group contract revenues increased 15.8% to $31.5 million, the utility line locating services group contract revenues increased 32.9% to $3.4 million and the electrical services group contract revenues increased 71.3% to $5.0 million for the current quarter compared to the same quarter last year. For the six month period ended January 31, 1997, contract revenues increased 14.5% to $80.1 million as compared to $70.0 million for the corresponding period last year. The contract revenue growth reflects higher volume in all service groups. Contract revenues increased 10.9% to $64.9 million in the telecommunication services group, 34.5% to $7.8 million in the utility line locating services group, and 31.6% to $7.4 million 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, 1997 was 79%,8%, and 13%, respectively, and 83%, 8% and 9%, respectively, for the quarter ended January 31, 1996. The contract revenue mix reflects a significant increase in the electrical services group due to increased volume in bid jobs. For the six month period ended January 31, 1997, the contract revenue mix between the telecommunication services group, the utility line locating services group and the electrical services group was 81%, 10% and 9%, respectively, compared to 84%, 8%, and 8%, respectively, for the corresponding period last year. Multi-year comprehensive service contracts continue to be the primary source of revenue for the telecommunication services group. For the three and six month periods ended January 31, 1997, multi-year comprehensive service contracts represented 86% and 85% of telecommunication services group contract revenues, respectively, as compared to 88% and 90% for the comparable periods last year. The decline is offset by higher volume associated with premise wiring, inside network installations for office buildings, and other telephony contracting services. The Company's backlog of uncompleted work at January 31, 1997 was $268 million as compared to $201 million at January 31, 1996. During the three month period ending January 31, 1997 various contracts were awarded in the telecommunication services and electrical services group. The contract awards in the telecommunication services group included an extension of a multi-year broadband network installation contract totaling $35 million, a master contract and an extension of an existing master contract totaling $12 million and several bid contracts totaling $6 million. The electrical services group was awarded master contract extensions and bid contracts totaling $4 million. 14 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 82% and 81% of contract revenues for the quarters ended January 31, 1997 and 1996, respectively, and 81% for both six month periods ended January 31, 1997 and 1996. As a percentage of contract revenues, the Company's prime costs of direct labor, materials, subcontractors, and equipment costs were 61% and 59% for the three and six month periods ended January 31, 1997, respectively. This compares to 62% and 61% for the corresponding periods last year. The Company's continued efforts to control costs resulted in improved operating margins. General and administrative expenses remained constant at $3.5 million for the quarter ended January 31, 1997 and 1996. For the six month period ended January 31, 1997 general and administrative expenses decreased $0.3 million to $7.1 million as compared to $7.4 million for the same period last year. This reduction is attributable to lower interest costs of $0.3 million, a reduction in general and group insurance costs of $0.3 million, offset by an increase of $0.1 million in the provision for doubtful accounts and $0.2 in other general and administrative expenses. The Company's 38% effective income tax rate for the six month period ended January 31, 1997 differs from the statutory rate due to state income taxes, the amortization of intangible assets with no tax benefit, other non- deductible expenses for tax purposes and the reduction of $0.2 million in the Company's deferred tax asset valuation allowance. Liquidity and Capital Resources The Company's primary sources of cash and equivalents has historically been from operating activities and the proceeds from the sale of idle and surplus property and equipment. Strong operating results and existing cash balances continued to finance the Company's working capital and capital expenditure requirements. Internally generated sources of funds continue to be the Company's primary source of liquidity as available borrowing capabilities under the bank credit agreement are limited. Net cash flows from operating activities were $3.1 million for the six month period ended January 31, 1997 as compared to $6.4 million for the comparable period last year. This reduction in cash flow from operating activities resulted from the internal financing of revenue growth as noted by the increase in accounts receivable and unbilled revenues which was partially offset by a net increase in accounts payable and other accrued liabilities. The Company's sources of funds provided for capital expenditures of $4.0 million during the six month period ended January 31, 1997. During this period, an additional $0.6 million of equipment was financed by capital leases. These capital expenditures represent the normal replacement of equipment and the start up of a new contract in the telecommunication services group. Aside from these capital expenditures, the Company obtained approximately $1.4 million of equipment under various noncancelable operating leases. At January 31, 1997, the Company had outstanding borrowings under equipment acquisition term-loans aggregating $1.5 million and a revolving credit facility of $9.0 million. During the quarter ended January 31, 1997, the Company paid the final $1.2 million principal payment on its term-loan. This repayment was earlier than the initial scheduled repayment date of March, 1998. The Company borrowed $1.0 million on the equipment acquisition facility to finance the purchase of equipment for the start up of a new master contract during the quarter ended January 31, 1997. The interest rate on the revolving credit facility is at the bank's prime interest rate plus one-half percent (8.75% at January 31, 1997). 15 The interest rate on the outstanding equipment acquisition term-loans is at the bank's prime interest rate plus 0.50% (8.75% at January 31, 1997). The interest rate on the equipment acquisition term-loans prior to November 30, 1995 was at the bank's prime interest rate plus 0.75%. The outstanding principal on equipment acquisition term-loans is payable quarterly through January 2001. The revolving credit facility is used to finance working capital and is payable in March 1998. 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 $0.6 million was available and a $5.0 million capital equipment acquisition facility of which $2.7 million was available at January 31, 1997. The standby letter of credit facility is issued as security to the Company's insurance administrators as part of its self-insurance program. Both facilities were renewed until February 28, 1997. 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, 1997, the Company was in compliance with all financial covenants and conditions. No cash dividends have been paid during the quarter ended January 31, 1997. 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. The Company's bank credit agreement limits the payment of cash dividends to 33 1/3 percent of earnings available for distribution as dividends. Subsequent to January 31, 1997, the Company concluded negotiations with a group of banks and signed a commitment letter for a new $35.0 million unsecured revolving and term-loan credit facility. This new facility will replace the Company's current bank credit facilities. The new bank credit facility provides the Company credit availability of $10.0 million for revolving working capital loans, $10.0 million for standby letters of credit, $6.0 million for equipment acquisitions, and $9.0 million for a five-year term-loan. The borrowings bear interest at floating interest rates depending on the type of loan. The Company may select interest rates for up to six months at LIBOR plus 1.50% to LIBOR plus 1.75% or, at the prime rate less 1.00% to the prime rate less 0.50%. The new credit agreement requires the Company to meet certain financial ratios and covenants, including debt to tangible net worth ratio, quick ratio, and current ratio. The agreement contains other covenants which limits the payment of cash dividends and restricts the creation of additional indebtedness and encumbrances of assets. The Company's future operating results and cash flows may be affected by a number of factors including, the Company's success in bidding on future contracts and the Company's ability to effectively manage controllable costs. The Company foresees its capital resources together with existing cash balances, to be sufficient to meet its financial obligations, including the scheduled debt payments under the existing bank credit agreement and capital and operating lease commitments. The new credit agreement negotiated subsequent to January 31, 1997 is expected to support the Company's normal replacement of equipment at its current level of business and to finance internal revenue growth. 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 25, 1996 to consider and take action on the election of three directors to the Company's Board of Directors. The Company's nominees, Messrs. Louis W. Adams, Jr., Steven E. Nielsen, and Thomas R. Pledger were elected. Mr. Adams received 8,034,532 votes for and 48,444 against, Mr. Nielsen received 8,069,532 votes for and 13,444 votes against and Mr. Pledger received 8,067,308 votes for and 15,668 votes against. The directors whose terms continued after the annual meeting are Messrs. Revell, Roseman and 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 18 (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, 1997. 17 SIGNATURES Pursuant to the requirements of the Securities and 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 17, 1997 /s/ Thomas R. Pledger _________________ ____________________________ Thomas R. Pledger Chairman and Chief Executive Officer Date: March 17, 1997 /s/ Steven Nielsen _________________ ____________________________ Steven Nielsen President and Chief Operating Officer Date: March 17, 1997 /s/ Douglas J. Betlach _________________ ____________________________ Douglas J. Betlach Vice President and Chief Financial Officer
18 EXHIBIT INDEX
Number Description ______ ___________ (11) Statement re computation of per share earnings (27) Financial Data Schedule (99) Sixth Modification of Credit Agreement and Consent by Guarantors as of November 30, 1996 to Credit Agreement dated as of April 28, 1993, as Amended, between Dycom Industries, Inc. and First Union National Bank of Florida.
EX-11 2 EXHIBIT 11
EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (WHOLE DOLLARS EXCEPT PER SHARE DATA) January 31, January 31, 1997 1996 THE QUARTERS ENDED JANUARY 31, 1997 AND 1996: Net Income Applicable to Common Stock $ 1,641,478 $ 984,232 ========= ========= Primary Earnings: Weighted average number of common shares outstanding 8,681,410 8,553,189 Common share equivalents arising from stock options 188,034 0 --------- --------- Weighted average number of common shares as adjusted 8,869,444 8,553,189 ========= ========= Net Income per common and common equivalent share $ 0.19 $ 0.12 ========= ========= Fully Diluted Earnings: Weighted average number of common shares outstanding 8,681,410 8,553,189 Common share equivalents arising from stock options 197,812 0 --------- --------- Weighted average number of common shares as adjusted 8,879,222 8,553,189 ========= ========= Net Income per common and common equivalent share $ 0.18 $ 0.12 ========= ========= THE SIX MONTHS ENDED JANUARY 31, 1997 AND 1996: Net Income Applicable to Common Stock $ 3,303,097 $ 1,952,870 ========= ========= Primary Earnings: Weighted average number of common shares outstanding 8,672,931 8,549,986 Common share equivalents arising from stock options 213,836 0 --------- --------- Weighted average number of common shares as adjusted 8,886,767 8,549,986 ========= ========= Net Income per common and common equivalent share $ 0.37 $ 0.23 ========= ========= Fully Diluted Earnings: Weighted average number of common shares outstanding 8,672,931 8,549,986 Common share equivalents arising from stock options 213,971 0 --------- --------- Weighted average number of common shares as adjusted 8,886,902 8,549,986 ========= ========= Net Income per common and common equivalent share $ 0.37 $ 0.23 ========= ========= In the quarter and six month periods ended January 31, 1996, common share equivalents arising from stock options did not impact the per share amounts as they were either insignificant or anti-dilutive.
EX-27 3
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DYCOM INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET AT JANUARY 31, 1997 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000067215 DYCOM INDUSTRIES, INC. 1 U.S. DOLLARS 6-MOS JUL-31-1997 JAN-31-1997 1 2,041,607 0 16,807,460 698,800 9,054,636 30,509,433 54,257,644 33,119,797 57,417,098 18,034,846 11,341,656 0 0 2,895,967 18,594,506 57,417,098 0 80,140,079 0 64,996,988 2,944,078 0 541,029 5,334,650 2,031,553 3,303,097 0 0 0 3,303,097 .37 .37
EX-99 4 EXHIBIT 99 1 EXHIBIT 99 SIXTH MODIFICATION OF CREDIT AGREEMENT THIS SIXTH MODIFICATION OF CREDIT AGREEMENT (the "Modification") is entered into as of the 30th day of November, 1996 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, and by Fifth Modification dated November 30, 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; 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 February 28, 1997. Accordingly, Section 4.01 of the Credit Agreement as previously modified is modified by inserting therein the date "February 28, 1997." Sections 4.02 and 4.06 of the Credit Agreement as previously modified are amended by inserting therein the date of "February 28, 1997." 2 2. Equipment Acquisition Facility. (a) Expiration. The expiration date of the Equipment Acquisition Facility referenced in Section 5 of the Credit Agreement as previously modified is hereby extended to February 28, 1997. Accordingly, paragraph 5.01 of the Credit Agreement as previously modified is amended to insert the date "February 28, 1997." (b) Term. The maximum term of any Equipment Acquisition Advance is four years or February 28, 2001, 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 February 28, 2001. Accrued interest shall be payable quarterly as specified in Section 5 of the Credit Agreement. 3. Except as expressly modified herein, the Credit Agreement as previously amended is hereby reaffirmed in its entirety. DYCOM INDUSTRIES INC. By: /s/ Thomas R. Pledger _________________________________ Its: Chairman and CEO Agreed: FIRST UNION NATIONAL BANK OF FLORIDA By: /s/ Robert D. Bridges __________________________________ Its: Sr. Vice President 3 CONSENT BY GUARANTORS THIS CONSENT BY GUARANTORS is executed as of the 30th day of November, 1996 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, Fourth Modification dated July 31, 1995, and Fifth Amendment dated November 30, 1995; and WHEREAS, Borrower has requested that Lender execute and deliver a Sixth Modification of Credit Agreement; and WHEREAS, as a pre-condition to executing the Sixth Modification of Credit Agreement, Lender has required that the Guarantors consent to the Sixth Modification of Credit Agreement; and 4 WHEREAS, it is to the benefit of Guarantors that Lender consent and execute the Sixth Modification of Credit Agreement. NOW THEREFORE, for good and valuable considerations, the receipt of which is hereby acknowledged, the Guarantors hereby agree as follows: 1. The Guarantors do hereby consent and agree to the terms and conditions of the Sixth 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 Sixth 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. Pleder _______________________________ Its:Vice President Ansco & Associates, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Coastal Plains, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Fiber Cable, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President 5 Globe Communications, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Ivy H. Smith Company By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Kohler Construction Company, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Prime Utility Contractors, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Signal Construction Company, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Southeastern Electric Construction, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President Star Construction, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President 6 S.T.S., Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President TESINC, Inc. By: /s/ Thomas R. Pleder _______________________________ Its:Vice President -----END PRIVACY-ENHANCED MESSAGE-----