-----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, D9acPrKoDVbWQdo+bbkIwVs7hZhnJ7KYq1eaH4Jdn0w9I5ruZgYPjwVche69PToT hJWh6pR62qU2Mzv/ogaPdg== 0000700923-96-000008.txt : 19960508 0000700923-96-000008.hdr.sgml : 19960508 ACCESSION NUMBER: 0000700923-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960507 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MYR GROUP INC CENTRAL INDEX KEY: 0000700923 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 363158643 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08325 FILM NUMBER: 96556925 BUSINESS ADDRESS: STREET 1: 2550 W GOLF STE 200 CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 BUSINESS PHONE: 7082901891 MAIL ADDRESS: STREET 1: 2550 W GOLF ROAD STREET 2: SUITE 200 CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 FORMER COMPANY: FORMER CONFORMED NAME: MYERS L E CO GROUP DATE OF NAME CHANGE: 19920703 10-Q 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 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 1-8325 MYR GROUP INC. (Exact name of registrant as specified in its charter) Delaware 36-3158643 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) No.) 2550 W. Golf Road, Suite 200 Rolling Meadows, Illinois 60008 (Address of principal executive offices) (Zip Code) (847) 290-1891 Registrant's telephone number, include 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 and 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of May 4, 1996: 3,187,443 MYR GROUP INC. I N D E X PART I. Financial Information Page No. Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 2 Condensed Consolidated Statements of Operations - Three Months Ended March 31, 1996 and 1995 3 Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 1996 and 1995 4 Notes to Condensed Consolidated Financial Statements 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II. Other Information Item 1. Legal Proceedings 8 Item 6. Exhibits and Reports on Form 8-K 8 SIGNATURE 9 Part I, Item 1 Financial Information MYR Group Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 31 Dec. 31 1996 1995 (Unaudited) * ASSETS Current assets: Cash and cash equivalents $ 714 $ 703 Contract receivables including retainage 43,718 51,114 Costs and estimated earnings in excess of billings on uncompleted contracts 16,584 14,851 Deferred income taxes 4,602 4,602 Other current assets 1,737 1,594 Total current assets 67,355 72,864 Property and equipment: 60,581 61,625 Less accumulated depreciation 38,643 38,481 21,938 23,144 Intangible assets 2,590 2,681 Other assets 3,043 3,145 Total assets $ 94,926 $ 101,834 LIABILITIES Current Liabilities: Current maturities of long-term debt 8,590 $ 9,178 Accounts payable 5,320 13,886 Billings in excess of costs and estimated earnings on uncompleted contracts 4,962 5,042 Accrued insurance 13,122 13,053 Other current liabilities 18,465 16,215 Total current liabilities 50,459 57,374 Deferred income taxes 2,861 2,861 Other liabilities 394 391 Long-term debt: Revolver and other debt 3,000 3,021 Term loan 5,000 5,000 Industrial revenue bond 890 890 Subordinated convertible debentures 5,679 5,679 Total long-term debt 14,569 14,590 SHAREHOLDERS' EQUITY Common stock and additional paid-in capital 9,242 9,248 Retained earnings 19,333 19,326 Treasury stock (1,524) (1,548) Shareholders' notes receivable (408) (408) Total shareholders' equity 26,643 26,618 Total liabilities and shareholders' equity $ 94,926 $ 101,834 *Condensed from audited financial statements The "Notes to Condensed Consolidated Financial Statements" are an integral part of this statement. MYR Group Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands except per share amounts) (Unaudited) Three Months Ended March 31 1996 1995 Contract revenue $ 64,376 $ 56,051 Contract cost 57,946 49,398 Gross profit 6,430 6,653 Selling, general and administrative expense 5,718 5,713 Income from operations 712 940 Other income (expense) Interest income 6 22 Interest expense (410) (465) Gain on sale of property and equipment 131 26 Miscellaneous (163) (103) Income before taxes 276 420 Income tax expense 110 168 Net income $ 166 252 Earnings per share $ .05 $ .08 Dividends per common share $ .05 $ .041 Weighted average common shares and common share equivalents outstanding 3,411 3,379 The "Notes to Condensed Consolidated Financial Statements" are an integral part of this statement. MYR Group Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Ended March 31 1996 1995 CASH FLOWS FROM OPERATIONS Net income $ 166 $ 252 Adjustments to reconcile net income to cash flows from operations Depreciation and amortization 1,555 1,408 Amortization of intangibles 91 75 Gain from disposition of assets (131) (27) Changes in assets and liabilities (705) 1,448 Cash flows from operations 976 3,156 CASH FLOWS FROM INVESTMENTS Expenditures for property and equipment (416) (477) Proceeds from disposition of assets 196 38 Cash used in acquisition, net of cash acquired - (12,995) Cash flows from investments (220) (13,434) CASH FLOWS FROM FINANCING Repayments of long term debt (608) (13,950) Proceeds from issuance of debt - 19,500 Proceeds from exercise of stock options 19 - Decrease (increase) in deferred compensation 3 (8) Increase in other assets - 28 Dividends paid (159) (132) Cash flows from financing (745) 5,438 Increase (decrease) in cash and cash equivalents 11 (4,840) Cash and cash equivalents at beginning of year 703 6,115 Cash and cash equivalents at end of period $ 714 $ 1,275 The "Notes to Condensed Consolidated Financial Statements" are an integral part of this statement. MYR Group Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1 - Basis of Presentation The condensed consolidated balance sheet, statement of operations and statement of cash flows include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of results for the interim period. The results of operations for the three month period ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. In December 1995, the Company effected a four-for-three stock split in the form of a stock dividend. The $838,000 par value of the additional shares issued was transferred from additional paid-in capital to common stock. Amounts relating to number of shares and amounts per share have been adjusted for 1995 to reflect the stock split. 2 - Acquisition On January 3, 1995, the Company completed the acquisition of all the stock of Harlan Electric Company ("Harlan"), pursuant to an Agreement and Plan of Merger dated October 5, 1994. Harlan and its wholly-owned subsidiaries, Sturgeon Electric Company, Inc. and Power Piping Company, are engaged primarily in the installation and maintenance of electrical equipment and lighting systems for commercial, industrial and electrical utility customers and in the erection and maintenance of high and low pressure piping systems for electrical utilities and steel industry customers. All the shares of Harlan were exchanged for $13,612,000 in cash and $5,679,000 of 7% convertible subordinates notes. The principal of each note will be due in three equal installments on January 3, 2000, 2001 and 2002, with interest payable semiannually each year. The notes are convertible into 600,000 shares of the Company's common stock at a price per share of $9.4659. The Company also refinanced $8,756,000 of Harlan debt. The transaction was financed through cash on hand and borrowings under a new $25,000,000 revolving and term credit facility with Harris Trust and Savings Bank and Comerica Bank. The transaction has been accounted for using the purchase method of accounting. 3 - Contingencies The Company has been involved in two lawsuits as a result of errors in the design of four transmission towers by the Company's former engineering subsidiary for City Utilities Commission of Owensboro, Kentucky (OMU). The engineering subsidiary has been sold but the Company retained the rights and obligations related to these lawsuits as part of the sale agreement. One lawsuit (the Kentucky lawsuit) alleged that the engineering subsidiary negligently designed and engineered the towers, and that OMU incurred damages as a result of the redesign and replacement of the four towers. During 1993, OMU agreed to a settlement of the case pursuant to which it accepted payment of $1,300,000 from the Company. The other lawsuit (the New York lawsuit) concerns the insurance coverage of the engineering subsidiary related to the design errors. The Company notified its primary and excess umbrella insurance carriers at the time of the discovery of the design errors. The Company's excess umbrella carrier denied insurance coverage for the damages above the primary carrier's policy limits and filed an action against the Company seeking a declaratory judgment that the umbrella insurance coverage did not apply to the loss on several theories. The Company counterclaimed against the umbrella carrier and, in addition, in a third party action, brought suit against three former insurance brokers which had procured the insurance for the Company. The Company is seeking to recover $550,000 of unreimbursed costs it incurred in the disassembly, redesign and replacement of the towers, the amount of payments it made to OMU, the legal and related expenses it incurred in the Kentucky lawsuit, legal and related expenses it has and will incur in the New York lawsuit, and interest. The approximately $550,000 of unreimbursed costs as well as the $1,300,000 paid to OMU during 1993 is recorded on the Company's books as a non-current asset. Management is of the opinion that the amounts so recorded will be recovered in the New York lawsuit from its excess umbrella insurance carrier and its brokers, individually or collectively. The Company is also involved in various other legal matters which arise in the ordinary course of business, none of which is expected to have a material adverse effect. 4 - Earnings Per Share Earnings per share are based on the weighted average number of common shares and common share equivalents outstanding during the period. Stock options are considered to be common share equivalents. 5 - Changes in Accounting Policy In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation,'' which will be effective for the Company beginning January 1, 1996. SFAS No. 123 requires expanded disclosures of stock-based compensative arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply 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 the required pro forma effect on net income and earnings per share on an annual basis. 6 - Supplemental Quarterly Financial Information (Unaudited) (Dollars in thousands, except per share amounts) 1996 1995 Mar 31. Mar 31. June 30 Sept. 30 Dec. 31 Year Contract Revenue 64,376 56,05 66,638 64,015 80,261 266,965 Gross Profit 6,430 6,653 7,338 7,968 7,588 29,547 Net Income 166 252 1,005 1,248 924 3,429 Net Income per Share: Primary .05 .08 .30 .37 .27 1.01 Fully Diluted .05 .08 .26 .32 .25 .91 Dividends Paid Per Share: .05 .041 .047 .047 .047 .182 Market Price: High 11.00 9.66 10.31 11.91 11.81 11.91 Low 10.00 7.97 8.53 9.19 10.00 7.97 Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months Ending March 31, 1996 (Dollars in thousands) Results of Operations Revenue for the quarter was $64,376, compared to $56,051 in 1995, or an increase of 14.9%. The revenue increase was primarily due to storm work in the northwest, central and northeast sections of the country and increased activity with utilities under alliance agreements. Gross profit for the quarter was $6,430, compared to $6,653 in 1995, or a decrease of 3.4%. Gross profit as a percentage of revenue was 10.0% compared to 11.9% in 1995. The decrease was due to less productive winter working conditions during the current quarter, and the prior period had several jobs with higher margins. Revenue and gross profit comparisons from quarter to quarter and comparable quarters of different periods may be impacted by variables beyond the control of the Company. Such variables include unusual or unseasonable weather and delays in receipt of construction materials on projects where the materials are provided to the Company by its clients. The different mix of the Company's work from period to period can impact gross margin percentage. As the percentage of revenue derived from projects in which the Company supplies materials increases, the gross profit percentage will generally decrease. As the percentage of revenue derived from cost-plus work increases, margins may also decrease since this work involves lower financial risk. Finally, since the Company's revenues are derived principally from providing construction labor services, insurance costs, particularly for workers' compensation, are a significant factor in the Company's contract cost structure. Fluctuations in insurance reserves for claims under the retrospective rated insurance programs can have a significant impact on gross margins, either upward or downward, in the period in which such insurance reserve adjustments are made. Selling, general and administrative expenses for the quarter were $5,718, compared to $5,713 in 1995, and as a percentage of revenue was 8.9% compared to 10.2%. This reduction reflects higher revenue volume spread over a relatively fixed expense base. Net interest expense for the quarter was $404 compared to $443 in 1995. The decrease in interest expense was due to lower average outstanding debt levels in 1996 compared to 1995. Gain on sale of property and equipment was $131 compared to $26 in 1995. The increase was due to the increased number of units sold in conjunction with upgrading our fleet. Other expense for the quarter was $163 compared to $103 in 1995. It primarily covered the amortization of non-competition agreements and goodwill. Income tax expense for the quarter was $110 compared to $168 in 1995. As a percentage of income, the effective rate was 40% in 1996 and 1995. The Company's backlog at March 31, 1996 was $75,700, compared to $69,100 at December 31, 1995, and $62,500 at March 31, 1995. Substantially all the current backlog will be completed within twelve months and by December 31, 1996. Liquidity and Capital Resources Cash flows provided from operations for the quarter amounted to $976, which was used for net capital expenditures of $220, repayment of long-term debt of $608 and dividends paid of $159. The Company's financial condition continues to be strong at March 31, 1996, with working capital of $16,896 compared to $15,490 at December 31, 1995. The Company's current ratio was 1.33:1 at March 31, 1996, compared to 1.27:1 at December 31, 1995. The Company has a $25,000 revolving and term credit facility. As of March 31, 1996, there were $8,700 and $7,500 outstanding under the revolving and term credit facility, respectively. The Company has outstanding letters of credit with Banks totaling $12,769. The Company anticipates that its credit facility, cash balances and internally generated cash flows will continue to be sufficient to fund operations, capital expenditures and debt service requirements. The Company is also confident that its financial condition will allow it to meet long-term capital requirements. Capital expenditures for the quarter were $416 compared to $477 in 1995. Capital expenditures during these periods were used for normal property and equipment additions, replacements and upgrades. Proceeds from the disposal of property and equipment for the quarter amounted to $196 and $38 in 1995. The Company plans to spend approximately $5,000 on capital improvements during 1996. PART II Item 1. Legal Proceedings The April 15, 1996 trial date for the National Union Fire Insurance Company of Pittsburgh, Pennsylvania v. The L.E. Myers Co. Group etal,. The L.E. Myers Co. and LEMCO Engineers was set aside by the U.S. District Court Judge. No new trial date had been set. Item 6. Exhibits and Reports on Form 8-K a. Exhibits filed herewith are listed in the Exhibit Index filed as a part hereof and incorporated herein by reference. b. No reports on Form 8-K were filed by the Company for the 1st Quarter of 1996. 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. MYR Group Inc. Date: May 3, 1996 By: /s/ Elliott C. Robbins, Sr. Vice President, Treasurer, and Chief Financial Officer (duly authorized representative of registrant and principal financial officer) MYR Group Inc. Quarterly Report on Form 10Q for the Quarter Ended March 31, 1996 Exhibit Index Number Description Page (or Reference) 11 Computation of Net Income Per Share 11 27 Financial Data Schedules 12 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. 3-MOS DEC-31-1996 MAR-31-1996 714 0 44,266 548 0 67,355 60,581 38,643 94,926 50,459 14,569 0 0 3,350 23,293 94,926 64,376 64,376 57,946 63,664 163 0 410 276 110 166 0 0 0 166 .05 .05
EX-11 3 MYR Group Inc. Exhibit 11 SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE (In thousands, except per share data) Period Ended March 31 Three Months 1996 1995 Net income $ 166 $ 252 Weighted average number of common shares outstanding during the period 3,187 3,174 Add - common equivalent shares (determined using the "treasury stock" method) representing shares issuable upon exercise of the common stock equivalents 224 205 Weighted average number of shares for income per common share $ 3,411 3,379 Income per common share $ .05 $ .08 MYR Group Inc. -----END PRIVACY-ENHANCED MESSAGE-----