-----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, Dp/P4UKUqJa7SvMNu2ruNWydnKrLBt+EIGOuX2gWiEAR6HNkwfBABdsHgWQLWaBH 7wPdJ3W+Sh6CXfmMvGJukA== 0000912057-97-027552.txt : 19970814 0000912057-97-027552.hdr.sgml : 19970814 ACCESSION NUMBER: 0000912057-97-027552 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UTILX CORP CENTRAL INDEX KEY: 0000821361 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 911171716 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16821 FILM NUMBER: 97658557 BUSINESS ADDRESS: STREET 1: 22404 66TH AVE S CITY: KENT STATE: WA ZIP: 98064-9709 BUSINESS PHONE: 2063950200 FORMER COMPANY: FORMER CONFORMED NAME: FLOWMOLE CORP DATE OF NAME CHANGE: 19910609 10-Q 1 FORM 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 ------------------------ UTILX CORPORATION COMMISSION FILE NUMBER 0-16821 DELAWARE 91-1171716 (State of Incorporation) (I.R.S. Employer Identification Number) 22404 - 66TH AVENUE SOUTH P. O. BOX 97009 KENT, WASHINGTON 98064-9709 (253) 395-0200 (Address of Principal Executive Offices) (Registrant's Telephone Number) Indicate by checkmark whether the Registrant has (1) 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 and (2) been subject to such filing requirements for the past 90 days. Yes X No --- --- As of June 30, 1997, 7,184,631 shares of Common Stock were outstanding. The total number of pages in this Form 10-Q is 12. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS ITEM PAGE ---- ---- PART I 1. Financial Statements Consolidated Balance Sheet June 30, 1997 and March 31, 1997...................... 3 Consolidated Statement of Operations For the Three Months Ended June 30, 1997 and 1996................................ 4 Consolidated Statement of Cash Flows For the Three Months Ended June 30, 1997 and 1996................................ 5 Notes to Consolidated Financial Statements............ 6 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 7 PART II 1. Legal Proceedings..................................... 11 2. Changes in Securities................................. 11 3. Defaults Upon Senior Securities....................... 11 4. Submission of Matters to a Vote of Security Holders... 11 5. Other................................................. 11 6. Exhibits.............................................. 11 Signatures........................................................... 12 -2- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS UTILX CORPORATION CONSOLIDATED BALANCE SHEET JUNE 30 AND MARCH 31, 1997 (IN THOUSANDS, EXCEPT SHARES) (UNAUDITED) ASSETS JUNE 30 MARCH 31 Current assets: Cash and cash equivalents................... $ 713 $ 1,490 Accounts receivable, trade, net............. 16,556 15,873 Materials, supplies and inventories......... 8,883 7,715 Income taxes receivable, net................ 524 469 Prepaid expenses and other.................. 327 184 --------- --------- Total current assets..................... 27,003 25,731 Equipment and improvements, net............... 9,232 9,446 Other assets, net............................. 676 735 --------- --------- Total assets............................. $ 36,911 $ 35,912 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable to bank........................ $ 3,585 $ 985 Accounts payable............................ 3,019 3,737 Accrued liabilities......................... 3,783 4,449 --------- --------- Total current liabilities................ 10,387 9,171 --------- --------- Commitments and Contingencies Stockholders' equity: Common Stock, $0.01 par value (authorized 25,000,000 shares)........... 72 72 Common Stock Warrants....................... 936 936 Additional paid-in capital.................. 17,390 17,390 Retained earnings........................... 8,640 8,908 Unearned compensation....................... (3) Cumulative foreign currency translation adjustment............................. (514) (562) --------- --------- Total stockholders' equity............... 26,524 26,741 --------- --------- Total liabilities and stockholders' equity................................. $ 36,911 $ 35,912 --------- --------- --------- --------- Common Stock issued and outstanding......... 7,184,631 7,184,631 (See Notes to Consolidated Financial Statements) -3- UTILX CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) 1997 1996 ------- ------- Revenues......................................... $18,767 $15,124 Cost of revenues................................. 16,867 12,244 ------- ------- Gross profit........................... 1,900 2,880 ------- ------- Operating expenses: Selling, general and administrative.... 1,938 1,988 Research and engineering............... 158 192 ------- ------- Total operating expenses............. 2,096 2,180 ------- ------- Operating income (loss).......................... (196) 700 Other income (expense), net...................... (71) (41) ------- ------- Income (loss) before income taxes................ (267) 659 Income tax provision............................. 1 6 ------- ------- Net income (loss)................................ $ (268) $ 653 ------- ------- ------- ------- Earnings (loss) per share (Note 2): Primary................................ (.04) .09 Fully diluted.......................... (.04) .09 Weighted average number of shares (Note 2): Primary................................ 7,185 7,198 Fully diluted.......................... 7,185 7,198 (See Notes to Consolidated Financial Statements) -4- UTILX CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996 (IN THOUSANDS) (UNAUDITED) 1997 1996 ------- ------- OPERATING ACTIVITIES: Net income (loss)........................... $ (268) $ 653 Adjustments to reconcile to net cash provided by (used by) operating activities: Depreciation and amortization......... 990 897 Other non-cash (income) expenses, net. 3 7 Changes in assets and liabilities..... (3,404) 1,714 ------- ------- Total adjustments..................... (2,411) 2,618 ------- ------- Net cash provided by (used by) operating activities.................................. (2,679) 3,271 ------- ------- INVESTING ACTIVITIES: Cost of additions to equipment.............. (703) (935) Proceeds from sale of equipment............. 5 ------- ------- Net cash used by investing activities. (703) (930) ------- ------- FINANCING ACTIVITIES: Net borrowings (repayments) on note payable. 2,600 (1,400) ------- ------- Net cash provided by (used by) financing activities................ 2,600 (1,400) ------- ------- EFFECT ON CASH FLOWS OF FOREIGN CURRENCY TRANSACTIONS.................................. 5 12 ------- ------- Net increase (decrease) in cash and cash equivalents............................... (777) 953 ------- ------- CASH AND CASH EQUIVALENTS: Beginning of period......................... 1,490 495 ------- ------- End of period............................... $ 713 $ 1,448 ------- ------- ------- ------- (See Notes to Consolidated Financial Statements) -5- UTILX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. FINANCIAL STATEMENT PRESENTATION In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position and operating results for the three-month periods ended June 30, 1997 and 1996. The statements should be read in conjunction with the March 31, 1997 audited consolidated financial statements included in the fiscal 1997 Annual Report on Form 10-K. 2. EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Financial Accounting Standard No. 128, "Earnings Per Share." This statement will change the computation, presentation and disclosure requirements for earnings per share ("EPS"). The statement will be effective for interim and annual reporting periods ending after December 15, 1997. This statement will replace "primary" EPS with" basic" EPS, the principal difference being the exclusion of common stock equivalents in the computation of basic EPS. In addition, this statement will require the dual presentation of basic and diluted EPS on the face of the consolidated statement of operations. EPS computed pursuant to the statement is not expected to be materially different from the historical earnings per share previously presented. Primary earnings per share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock of UTILX Corporation, $0.01 par value per share (the "Common Stock") and, when dilutive, common stock equivalents outstanding during the period. Common stock equivalents include shares issuable upon exercise of the Company's stock options and certain warrants. Fully diluted earnings per share is computed based on the weighted average number of shares of Common Stock and common stock equivalents outstanding during the period taking into consideration maximum potential dilution. 3. MATERIALS, SUPPLIES AND INVENTORIES Materials, supplies and inventories at June 30 and March 31, 1997 consists of the following: (In thousands) June 30, 1997 March 31, 1997 ------------- -------------- Raw and Spare Parts $ 7,356 $ 6,729 Work in Process 820 562 Finished Goods 1,108 918 Less allowance for potentially obsolete or overstocked inventory (401) (494) -------- -------- $ 8,883 $ 7,715 -------- -------- -------- -------- 4. NOTE PAYABLE TO BANK The Company has a committed credit facility of $5,000,000 with Seattle-First National Bank of Washington ("Seafirst"). The agreement is collateralized by the Company's inventory and accounts receivable. The credit agreement requires that the Company maintain certain financial covenants, including requirements to maintain certain levels of tangible net worth, current ratio, and debt ratio. Borrowings bear interest at the Seattle-First prime rate, the LIBOR rate plus 1.40%, or other specified rates, at the Company's option. The Company pays a -6- commitment fee of up to 0.125% on the unused portion of the facility. This line of credit currently expires on June 30, 1998. The Company currently anticipates that it will be able to negotiate an extension of this line of credit. The Company requested and was granted a temporary commitment to increase the credit facility to $10,000,000 until October 1, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR FIRST QUARTER OF FISCAL YEAR 1998 COMPARED TO FIRST QUARTER OF FISCAL YEAR 1997 REVENUES Consolidated revenues increased 24% in the first quarter of fiscal 1998, compared to the same period in fiscal 1997. NORTH AMERICAN OPERATIONS. Revenues from FlowMole drilling operations in North America increased to $12.2 million in the first quarter of fiscal 1998, compared to $9.5 million in the same period of fiscal 1997. Revenues from CableCure services in North America increased to $4.4 million in the first quarter of fiscal 1998, compared to $3.6 million in the same period of fiscal 1997. The increased revenues in FlowMole operations were attributed to increased demand for installation and replacement services and the Company's ability to maintain a higher level of drilling crews than in the prior year to meet the demand. Also, the Company has increased the number of crews performing installation and replacement services using conventional trenching methods. Continued strong demand for repair and restoration services, primarily under "Test, Treat or Replace" contracts, contributed to the increased CableCure revenue levels. Revenues also increased due to the addition of services for the location and repair of faults in electric cables. Customers choosing Test, Treat or Replace contracts also contributed to the increased demand for installation and replacement services. INTERNATIONAL OPERATIONS. Revenues from international operations increased slightly to $2.14 million in the first quarter of fiscal 1998, compared to $2.10 million in the same period of fiscal 1997. Increased revenues from European CableCure operations offset decreased revenues from spare part sales. GROSS PROFIT Gross profit decreased 34% in the first quarter of fiscal 1998, compared to the same period in fiscal 1997. NORTH AMERICAN OPERATIONS. Gross profit from installation and replacement services decreased in the first quarter of fiscal 1998 compared to the same period of fiscal 1997. New employees were hired both for drilling crews and for new conventional trenching crews, including employees being trained for the addition of new drilling crews in the second quarter of fiscal 1998, when newly ordered FlowMole equipment is scheduled to be delivered. Additional hiring and training expenses, which are generally not offset by new revenues until the new crews are deployed to perform work, reduced gross profit as a percentage of revenue in the first quarter of fiscal 1998. Gross profit from repair and restoration services decreased for similar reasons. The Company substantially increased the number of crews involved in the preparation of cables for CableCure injection, including crews -7- starting up new services for location and repair of faults in electric cables. During the quarter, the Company encountered a high percentage of cables where, after testing by Company crews, it was determined that injection would not be cost-effective. As a result, the amount of CableCure revenues produced by per crew decreased, which adversely impacted gross profit for the period. INTERNATIONAL OPERATIONS. Gross profit from international operations in the first quarter of fiscal 1998 increased as a percentage of revenue compared to the same period of the prior year due to a change in mix of international revenues. CableCure operations in Europe provide a relatively high gross margin, which has served to improve international gross margin. OPERATING EXPENSES AND OTHER INCOME (EXPENSES) Total operating expenses decreased 4% in the first quarter of fiscal 1998, compared to the same period of fiscal 1997. Selling, general and administrative expenses decreased 3% compared to the first quarter of fiscal 1997. Research and engineering expenses decreased 18%. The Company's restructuring, as announced on April 2, 1996 involved the elimination of a number of corporate positions over the first half of fiscal 1997, enabling the Company to reduce corporate overhead. Other income (expense), net, was an expense of $71,000 in the first quarter of fiscal 1998, compared to an expense of $41,000 in the same period of the prior year. This increase was a result of increased interest expense due to higher average borrowings on the Company's line of credit. As a result of the foregoing, the Company recorded a pretax loss of $267,000 in the first quarter of fiscal 1998, compared to pretax income of $659,000 in the same period of fiscal 1997. INCOME TAX EXPENSE (BENEFIT) The Company would normally expect an effective income tax rate of approximately 40% on positive pretax income. This exceeds the federal statutory rate of 34% due to the impact of state income taxes and nondeductible expenses. The impact of deductions deferred from prior years and net operating loss carryforwards eliminated most of the Company's income tax provision in the first quarter of fiscal 1997, due to the provision of a valuation allowance at the end of fiscal 1996 against the full amount of the Company's net deferred tax assets. The Company provided for no federal income tax benefit in the first quarter of fiscal 1998 as it continues to provide a valuation allowance against the full amount of its net deferred tax assets. NET INCOME (LOSS) As a result of the foregoing, the Company recorded a net loss of $268,000 in the first quarter of fiscal 1998, compared to a net income of $653,000 in the same period of fiscal 1997. EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Financial Accounting Standard No. 128, "Earnings Per Share." This statement will change the computation, presentation and disclosure requirements for earnings per share ("EPS"). The statement will be effective for interim and annual reporting periods ending after December 15, 1997. This statement will replace "primary" EPS with" basic" EPS, the principal difference being the exclusion of common stock equivalents in the computation of basic EPS. In addition, this statement will require the dual presentation of basic and diluted EPS on the face of the consolidated statement of operations. -8- EPS computed pursuant to the statement is not expected to be materially different from the historical earnings per share previously presented. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1997, the Company had unused sources of liquidity consisting of $713,000 in cash and cash equivalents and an unused balance on its committed line of credit of $1,415,000. The Company has also obtained a temporary increase in its line of credit which provides for an additional $5,000,000 available until October 1, 1997. This compares to $1,490,000 in cash and cash equivalents and an unused balance on its committed line of credit of $4,015,000 at March 31, 1997. Uses of cash during the first quarter of fiscal 1998 primarily related to capital expenditures of $703,000 for equipment to expand the Company's capabilities to perform additional auxiliary services, such as equipment for locating and repairing faults in electric cables. The Company had anticipated the periodic usage of its line of credit throughout fiscal 1998. The Company anticipates that through cash generated by operations, lease financing of certain purchases of new equipment, and the periodic use of its credit facility, it will be able to meet its cash requirements through at least fiscal 1998. The Company has not yet determined whether it will require an extension of its increased line of credit beyond October 1, 1997. REVIEW AND OUTLOOK The Company is experiencing strong demand for its services in North America, and is recruiting personnel to expand its capacity. The second and third quarters of the Company's fiscal year have historically generated its peak revenue levels due to the normal seasonality of work release from utility customers. However, the Company's revenue levels and the weighted average number of FlowMole systems in operation on any given day are also affected by factors which include weather, pricing, competition, customer work release practices, soil and other work difficulty determinants, and permitting. The Company's contracts typically allow for cancellation by the customers on relatively short notice. Therefore, sudden changes in demand may have an immediate adverse impact on the Company's revenue levels. The Company expects to see increased volumes from new customers in calendar year 1997, and some increased volumes from existing customers. The Company expects to continue to rely on a small number of customers for the majority of the Company's North American CableCure revenues, increasing the exposure of the Company to such short term fluctuations in revenues. See also the discussion under "Risk Factors," below. On April 2, 1996, the Company announced the termination of its in-house assembly of new FlowMole drilling equipment. The Company has issued purchase orders to a number of manufacturers for new FlowMole drilling systems to be delivered beginning in the second quarter of fiscal 1998. The Company has at least two suppliers capable of manufacturing each component of the FlowMole drilling system. The Company believes that this will allow it to obtain competitive pricing for equipment and to mitigate any adverse impact of a single supplier's inability to meet delivery schedules or to conform to the Company's quality specifications. The Company has yet to place any equipment into service that was acquired under these new arrangements. Even though the Company is preparing to implement new drilling crews utilizing new equipment, there can be no assurance that delivery schedules will be met or that the quality of the equipment manufactured by such suppliers will be comparable to that of the equipment assembled by the Company through its own operations. This Form 10-Q contains forward looking statements, in addition to those under the caption "Review and Outlook." Such statements are subject to substantial risk. Actual results may vary materially due to risks and uncertainties inherent in the Company's business, including those described under "Review and Outlook," those described under "Risk Factors," below, and additional factors described in Item 7 of the Company's fiscal 1997 Form 10-K filed with the Securities and Exchange Commission. -9- RISK FACTORS COMPETITION. The Company has experienced a long-term trend of declining prices for guided boring ("FlowMole") services, particularly for smaller diameter utility installations, due to competitive pressures and changes in utility bidding practices. This trend has also caused the Company to lower its prices for CableCure injection services, which are priced at a discount to replacement costs, including replacement via guided boring. In addition, the Company's utility customers are increasing their requests for "turnkey" installation, replacement and restoration services, requiring their drilling contractors to take responsibility for switching circuits, terminating circuits, and other non-incidental tasks. These tasks require additional equipment and labor, and the cost increases can offset any price increase the Company is able to negotiate for the expansion of its services. The overall trend of falling prices for guided boring services is expected to continue into the future, as more customers award work based on competitive bidding, more customers require their drilling contractors to perform additional tasks as part of the drilling contract, and more conventional contractors acquire drilling capabilities in order to enter into this segment of the construction industry. This trend will continue to put downward pressure on the market price for CableCure Services. The Company cannot predict the ultimate duration or the magnitude of these decreases. SEASONAL FACTORS. Weather and other seasonal factors may decrease the Company's revenues and profits in any given period. Adverse weather may preclude the Company from operating its FlowMole drilling systems or providing its CableCure services at certain times of the year. In addition, the Company believes that the regular budgetary cycles of certain of its North American utility customers tend to concentrate demand for the Company's services during the third quarter of its fiscal year (the fourth quarter of the calendar year), although other budgetary factors described below may override this trend in any given quarter. As a result of these factors, results of operation in any given fiscal quarter are not necessarily indicative of results in any other fiscal quarter. UTILITIES' BUDGETARY CONSIDERATIONS. Budgetary considerations arising from unfavorable regulatory determinations on matters such as rate-setting, capitalization of services performed by the Company, or siting of power production facilities, or from reductions in new housing starts, reductions in electric utility revenues due to mild weather, and general economic downturns have affected the ability of some of the Company's utility customers to sustain their cable replacement or other maintenance programs and accordingly adversely impact the Company's revenues and profits. Although the Company has broadened its customer base, three customers generate a significant portion of the Company's consolidated revenues, and a small number of customers generate more than half of its CableCure revenues. Because cable replacement, restoration and other maintenance programs are, to a substantial extent, deferrable and the Company's contracts with its utility customers permit termination of orders on relatively short notice, postponement or cancellation of such programs by customers can interject substantial volatility into the Company's revenues and profits. DOW CORNING CORPORATION. The Company purchases its CableCure fluid exclusively from Dow Corning. In May 1995, Dow Corning filed for protection under Chapter 11. While the Company has been informed by Dow Corning that it intends to continue the CableCure business, there can be no assurance that Dow Corning or the bankruptcy court will not take action to amend or terminate the CableCure license agreement. FLORIDA SUBCONTRACT NEGOTIATIONS. The Company is party to an agreement (the "underlying agreement") which requires it to utilize a single Florida-based subcontractor for performance of certain CableCure injection tasks for Florida Power & Light through January 2000. The underlying agreement requires the Company to pay the subcontractor a percentage of the amount charged to Florida Power & Light for certain services defined in the underlying agreement. The Company is in the process of negotiating new terms with this subcontractor, effective April 1, 1997, based on new pricing agreed to between the Company and Florida Power & Light. An interim agreement, subject to retroactive adjustments, was agreed to by the Company and the subcontractor for the period April 1, 1997 to May 31, 1997. Subsequently, the subcontractor is continuing to perform the injection services required by the Company under the underlying agreement while the negotiations continue. The Company believes -10- that payments made to the subcontractor subsequent to April 1, 1997 are in conformity with the underlying agreement. The subcontractor claims to be entitled to a percentage of additional amounts charged to Florida Power & Light. There can be no assurance that the final price settled upon for payments to the subcontractor will not result in an adverse effect on the gross profit realized by the Company under its contract with Florida Power & Light. IMPACT OF INFLATION AND CHANGING PRICES. Inflation has had only a minimal effect on the Company's revenues and expenses and is not expected to have a significant impact on revenues or expenses in fiscal 1998. FOREIGN CURRENCY FLUCTUATIONS. The Company's financial results are affected by fluctuations in certain foreign currencies, particularly the British Pound Sterling and the German Deutschemark. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is involved in litigation matters, both as a plaintiff and as a defendant, arising in the ordinary course of its business. Management expects that these matters will not have a materially adverse effect on the consolidated financial position, results of operations or liquidity of the Company. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 10.39 Loan Modification Agreement between Registrant and Bank of America NW, N.A., doing business as Seafirst Bank, successor by name change to Seattle-First National Bank, dated June 12, 1997. 11.1 Statement Regarding Computation of Per Share Earnings. 27.1 Financial Data Schedule. (b) Reports on Form 8-K: None -11- UTILX CORPORATION 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. UTILX CORPORATION ----------------------------------- (Registrant) Date: July 31, 1997 By: /s/ Craig E. Davies ----------------------------------- Craig E. Davies, President and Chief Executive Officer Date: July 31, 1997 By: /s/ Larry D. Pihl ----------------------------------- Larry D. Pihl, Vice President/Chief Financial Officer -12- EX-10.39 2 EXHIBIT 10.39 As Filed with the Securities and Exchange Commission on August 13, 1997 File No. 0-16821 ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- EXHIBITS TO QUARTERLY REPORT FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 UNDER THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------- UTILX CORPORATION INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.39 Loan Modification Agreement between Registrant and Bank of America NW, N.A., doing business as Seafirst Bank, successor by name change to Seattle-First National Bank, dated June 12, 1997. Filed herewith. 11.1 Statements Regarding Computation of Per Share Earnings. Filed herewith. 27.1 Financial Data Schedule. Filed herewith. EXHIBIT 10.39 SEAFIRST BANK LOAN MODIFICATION AGREEMENT - ------------------------------------------------------------------- This agreement amends the Revolving Note dated December 2, 1994 ("Note") and Credit Agreement dated December 2, 1994 ("Credit Agreement"), each executed by UTILX CORPORATION ("Borrower") in favor of Bank of America National Trust and Savings Association, doing business as Seafirst Bank, successor by merger to Seattle-First National Bank and Bank of America NW, N.A. ("Bank"), regarding a loan in the maximum principal amount of $5,000,000 (the "Loan"). Capitalized terms used in this agreement shall have the meaning given in the Credit Agreement, as modified by any prior modification agreement. For mutual consideration, Borrower and Bank agree to amend the above loan documents as follows: 1. CREDIT LIMIT. Section 1.10 of the Credit Agreement is amended to read as follows: "CREDIT LIMIT shall mean $10,000,000 from June 12, 1997, until October 1, 1997, and thereafter shall mean $5,000,000." 2. NOTE. The Note is amended to provide (a) that Borrower's maximum liability for principal under the Note is changed to $10,000,000; and (b) that Borrower shall repay to Bank on October 1, 1997, the principal amount by which the outstanding principal balance of the Note on that day exceeds $5,000,000. 3. OTHER TERMS. Except as specifically amended by this agreement or any prior amendment, all other terms, conditions, and definitions of the Note, Credit Agreement, and all other notes, security agreements, guaranties, deeds of trust, mortgages, and other instruments or agreements entered into with regard to the Loan shall remain in full force and effect. DATED as of June 12, 1997. Bank: Borrower: SEAFIRST BANK UTILX CORPORATION By: /s/ Terry Jones By: /s/ Larry D. Pihl -------------------- -------------------- Title: Vice President Title: VP, CFO ------------------ ------------------ LOAN MODIFICATION AGREEMENT (UTILX CORPORATlON;u200/15578) EX-11.1 3 EXHIBIT 11.1 EXHIBIT 11.1 UTILX CORPORATION STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Quarter Ended June 30, 1997 1996 Earnings Loss Shares Earnings Shares ------------- ------ -------- ------ (In Thousands, Except Per Share Amounts) Primary earnings (loss) per common share: Net earnings (loss) available for common stock and weighted average common shares outstanding $ (268) 7,185 $ 653 7,185 Stock options and warrants assumed exercised - net 13 ------- ------ ------ ------ Total net earnings (loss) and primary common shares $ (268) 7,185 $ 653 7,198 ------- ------ ------ ------ ------- ------ ------ ------ Primary earnings (loss) per common share $ (.04) $ .09 ------- ------ ------- ------ Fully diluted earnings (loss) per common share: Net earnings (loss) available for common stock and weighted average common shares outstanding $ (268) 7,185 $ 653 7,185 Stock options and warrants assumed exercised - net 13 ------- ------ ------ ------ Total net earnings (loss) and fully diluted common shares $ (268) 7,185 $ 653 7,198 ------- ------ ------ ------ ------- ------ ------ ------ Fully diluted earnings (loss) per common share $ (.04) $ .09 ------- ------ ------- ------
EX-27.1 4 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF UTILX CORPORATION FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAR-31-1998 JUN-30-1997 713 0 16,854 298 8,883 27,003 32,688 23,456 36,911 10,387 0 0 0 72 26,524 36,911 18,767 18,767 16,867 18,963 10 0 61 (267) 1 (268) 0 0 0 (268) (.04) (.04)
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