-----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, H2+jdhGqmqEXpYIWJxQqaFqc/EOrp26I6w2J501tOPN9/yhdYOulfc5XPnwp+s51 +gmaPptMb0W1k0bYlQzOng== 0000950149-96-000629.txt : 19960517 0000950149-96-000629.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950149-96-000629 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRANITE CONSTRUCTION INC CENTRAL INDEX KEY: 0000861459 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 770239383 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18350 FILM NUMBER: 96566337 BUSINESS ADDRESS: STREET 1: 585 WEST BEACH ST CITY: WATSONVILLE STATE: CA ZIP: 95076 BUSINESS PHONE: 4087241011 MAIL ADDRESS: STREET 1: 585 WEST BEACH ST CITY: WATSONVILLE STATE: CA ZIP: 95076 10-Q 1 FORM 10-Q FOR PERIOD ENDING MARCH 31, 1996 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTER ENDED MARCH 31, 1996 Commission File No. 0-18350 GRANITE CONSTRUCTION INCORPORATED State of Incorporation: I.R.S. Employer Identification Delaware Number: 77-0239383 Corporate Administration: 585 West Beach Street Watsonville, California 95076 (408) 724-1011 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 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 May 8, 1996. Class Outstanding - -------------------------------- ------------------ Common Stock, $0.01 par value 18,088,107 shares This report on Form 10-Q, including all exhibits, contains 19 pages. The exhibit index is located on page 18 of this report. 2 GRANITE CONSTRUCTION INCORPORATED INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 ................................. 4 Condensed Consolidated Statements of Income for the Three Months Ended March 31, 1996 and 1995 ..................... 5 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 ..................... 6 Notes to the Condensed Consolidated Financial Statements .............................. 7-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ..................................... 11-14 PART II. OTHER INFORMATION Item 1. Legal Proceedings ................................. none 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 Information ................................. none Item 6. Exhibits and Reports on Form 8-K .................. 16 Exhibit Index ..................................... 18
2 3 PART I. FINANCIAL INFORMATION 3 4 GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)
- ----------------------------------------------------------------------------------------- MARCH 31, December 31, 1996 1995 - ----------------------------------------------------------------------------------------- (UNAUDITED) ASSETS Current assets Cash and cash equivalents $ 14,705 $ 22,410 Short-term investments 25,922 44,582 Accounts receivable 110,184 142,055 Costs and estimated earnings in excess of billings 25,243 16,147 Inventories 12,719 10,180 Deferred income taxes 16,717 16,717 Equity in joint ventures 2,067 210 Other current assets 5,037 5,953 ---------------------- Total current assets 212,594 258,254 - --------------------------------------------------------------------------------------- Property and equipment 184,417 175,220 - --------------------------------------------------------------------------------------- Other assets 22,402 21,270 - --------------------------------------------------------------------------------------- $419,413 $454,744 ======================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 13,437 $ 13,948 Accounts payable 52,382 68,056 Billings in excess of costs and estimated earnings 35,851 43,730 Accrued expenses and other current liabilities 47,128 55,341 ---------------------- Total current liabilities 148,798 181,075 - --------------------------------------------------------------------------------------- Long-term debt 39,357 39,494 - --------------------------------------------------------------------------------------- Deferred income taxes 24,270 24,270 - --------------------------------------------------------------------------------------- Stockholders' equity Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding - - Common stock, $0.01 par value, authorized 27,000,000 shares; 1996 - issued 18,128,465 shares, outstanding 18,088,107 shares; 1995 - issued 17,897,018 shares, outstanding 17,884,268 shares 181 179 Additional paid-in capital 36,954 32,715 Retained earnings 177,211 180,341 ---------------------- 214,346 213,235 Unearned compensation (6,617) (3,330) Treasury stock (741) - ---------------------- 206,988 209,905 - --------------------------------------------------------------------------------------- $419,413 $454,744 =======================================================================================
The accompanying notes are an integral part of these financial statements. 4 5 GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 1996 1995 - -------------------------------------------------------------------------------- Revenue $153,749 $105,273 Cost of revenue 139,107 91,562 ---------------------- GROSS PROFIT 14,642 13,711 General and administrative expenses 15,485 13,056 ---------------------- OPERATING PROFIT (843) 655 - ----------------------------------------------------------------------------- Other income (expense) Interest income 1,954 1,462 Interest expense (941) (480) Gain on sales of property and equipment 413 291 Other, net 7 (9) ---------------------- 1,433 1,264 - ----------------------------------------------------------------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 590 1,919 Provision for income taxes 224 691 - ----------------------------------------------------------------------------- NET INCOME $ 366 $ 1,228 ============================================================================= Net income per share $ 0.02 $ 0.07 Weighted average shares of common stock 17,966 17,658 Dividends per share $ 0.19 $ 0.03 =============================================================================
The accompanying notes are an integral part of these financial statements. 5 6 GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED- IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 1996 1995 - ------------------------------------------------------------------------------------------------ Operating Activities Net income $ 366 $ 1,228 Add (deduct) noncash items included in net income: Depreciation, depletion and amortization 8,947 7,054 Gain on sales of property and equipment (413) (291) Decrease in unearned compensation 492 389 Cash provided by (used in): Accounts and notes receivable 30,798 26,718 Inventories (2,539) (253) Equity in joint ventures (1,857) 3,435 Other assets 594 469 Accounts payable (15,674) (7,624) Billings in excess of costs and estimated earnings, net (16,975) (16,284) Accrued expenses (8,213) (10,305) ---------------------- Net cash provided (used) by operating activities (4,474) 4,536 - ------------------------------------------------------------------------------------------------ Investing Activities Additions to property and equipment (18,004) (9,407) Proceeds from sales of property and equipment 645 632 Additions to notes receivable (74) (443) Repayments of notes receivable 143 170 Additions to investments and other assets (178) (304) Purchases of short-term investments (9,382) (11,474) Maturities of short-term investments 28,042 12,885 ---------------------- Net cash provided (used) by investing activities 1,192 (7,941) - ------------------------------------------------------------------------------------------------ Financing Activities Repayments of long-term debt (648) (522) Employee stock options exercised 247 - Purchase of treasury stock (526) - Dividends paid (3,496) (587) ---------------------- Net cash used by financing activities (4,423) (1,109) - ------------------------------------------------------------------------------------------------ Decrease in cash and cash equivalents (7,705) (4,514) Cash and cash equivalents at beginning of period 22,410 17,649 ---------------------- Cash and cash equivalents at end of period $ 14,705 $ 13,135 ================================================================================================ Supplementary Information Cash paid during the year for: Interest $ 941 $ 480 Income taxes 265 2 ================================================================================================
The accompanying notes are an integral part of these financial statements. 6 7 GRANITE CONSTRUCTION INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) - -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION: The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the financial position at March 31, 1996 and the results of operations and cash flows for the periods presented. The December 31, 1995 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Interim results are subject to significant seasonal variations and the results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. 2. SHORT-TERM INVESTMENTS:
Held-To-Maturity Held-To-Maturity March 31, 1996 December 31, 1995 (Unaudited) Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair Value Gains Losses Value Value Gains Losses Value ------------------------------------------- ------------------------------------------ U.S. Government and Agency Obligations $ 1,996 $1 $ - $ 1,997 $ 8,938 $6 $ - $ 8,944 Commercial Paper 1,999 1 - 2,000 10,897 3 (6) 10,894 Municipal Bonds 2,007 - (1) 2,006 2,012 4 - 2,016 Foreign Banker's Acceptances 3,793 2 - 3,795 8,703 2 - 8,705 Domestic Banker's Acceptances 6,446 2 - 6,448 1,996 4 - 2,000 ------------------------------------------- ------------------------------------------ 16,241 6 (1) 16,246 32,546 19 (6) 32,559 ------------------------------------------- ------------------------------------------
Available-For-Sale Available-For-Sale March 31, 1996 December 31, 1995 (Unaudited) Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair Value Gains Losses Value Value Gains Losses Value ------------------------------------------- ------------------------------------------ U.S. Government and Agency Obligations 3,362 - - 3,362 4,859 45 - 4,904 Municipal Bonds 4,368 31 (2) 4,397 5,226 74 (32) 5,268 Domestic Banker's Acceptances 1,951 3 (13) 1,941 1,951 13 - 1,964 ------------------------------------------- ------------------------------------------ 9,681 34 (15) 9,700 12,036 132 (32) 12,136 ------------------------------------------- ------------------------------------------ Total Short-Term Investments $25,922 $40 $(16) $25,946 $44,582 $151 $(38) $44,695 =========================================== ==========================================
7 8 GRANITE CONSTRUCTION INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) - -------------------------------------------------------------------------------- 2. SHORT-TERM INVESTMENTS, CONTINUED: There were no sales of investments classified as available-for-sale for the three months ended March 31, 1996. At March 31, 1996, scheduled maturities of investments are as follows (unaudited):
------------------------------------------------------------------------------- Held-To- Available- Maturity For-Sale Total ------------------------------------------------------------------------------- Within one year 16,241 $6,238 $22,479 After one year through five years - 3,443 3,443 ------------------------------------------------------------------------------- $16,241 $9,681 $25,922 ===============================================================================
For the three months ended March 31, 1996 and 1995, purchases and maturities of short-term investments were as follows:
Three Months Ended Three Months Ended March 31,1996 March 31, 1995 (Unaudited) (Unaudited) Held-To- Available Held-To- Available Maturity For Sale Total Maturity For Sale Total ------------------------------------------- ------------------------------------------- Purchases $ 7,177 $ 2,205 $ 9,382 $ 9,489 $1,985 $ 11,474 Maturities 23,000 5,042 28,042 11,900 985 12,885 ------------------------------------------- ------------------------------------------- Net change $(15,823) $(2,837) $(18,660) $(2,411) $1,000 $(1,411) =========================================== ===========================================
3. ACCOUNTS RECEIVABLE:
MARCH 31, December 31, 1996 1995 ------------------------- (UNAUDITED) Construction contracts Completed and in progress $ 54,370 $ 81,240 Retentions 41,906 41,777 ------------------------ 96,276 123,017 Construction material sales 8,736 12,380 Other 6,217 7,556 ------------------------ 111,229 142,953 Less allowance for doubtful accounts 1,045 898 ------------------------ $110,184 $142,055 ========================
8 9 GRANITE CONSTRUCTION INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) - -------------------------------------------------------------------------------- 4. INVENTORIES: Inventories consist primarily of quarry products valued at the lower of average cost or market. 5. EQUITY IN JOINT VENTURES: The Company participates in various construction joint venture partnerships. Generally, each construction joint venture is formed to accomplish a specific project and is dissolved upon completion of the project. The combined assets, liabilities and net assets of these ventures are as follows:
----------------------------------------------------------------------- MARCH 31, DECEMBER 31, 1996 1995 ----------------------------------------------------------------------- (UNAUDITED) Assets Total $122,814 $125,019 Less other venturers' interest 85,970 87,513 --------------------------------------------------------------------- Company's interest 36,844 37,506 --------------------------------------------------------------------- Liabilities Total 115,925 124,319 Less other venturers' interest 81,148 87,023 --------------------------------------------------------------------- Company's interest 34,777 37,296 --------------------------------------------------------------------- $ 2,067 $ 210 =====================================================================
6. PROPERTY AND EQUIPMENT:
MARCH 31, December 31, 1996 1995 -------------------------- (UNAUDITED) Land $ 14,019 $ 14,019 Quarry property 35,194 35,194 Buildings and leasehold improvements 11,657 11,657 Equipment and vehicles 377,401 361,676 Office furniture and equipment 4,830 4,570 ------------------------- 443,101 427,116 Less accumulated depreciation, depletion and amortization 258,684 251,896 ------------------------- $184,417 $175,220 =========================
9 10 GRANITE CONSTRUCTION INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) - -------------------------------------------------------------------------------- 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
MARCH 31, December 31, 1996 1995 --------------------------- (UNAUDITED) Payroll and related employee benefits $12,153 $21,371 Accrued insurance 17,707 19,957 Income taxes payable 2,455 2,425 Other 14,813 11,588 ---------------------- $47,128 $55,341 ======================
8. STOCKHOLDERS' EQUITY: Under the terms of the Company's 1990 Omnibus Stock and Incentive Plan, 139,798 shares of restricted common stock were issued and 77,891 shares vested during the three months ended March 31, 1996. Unearned compensation is amortized over the restriction periods. Compensation expense related to restricted shares was $492 and $389 for the three months ended March 31, 1996 and 1995, respectively. The Company has purchased, in satisfaction of certain officer's income tax liabilities related to the maturation of restricted stock issues, 40,358 shares which are classified as treasury stock on the accompanying Condensed Consolidated Balance Sheet at March 31, 1996. During the three months ended March 31, 1996, employee stock options for 14,500 shares at $17 per share were exercised. 9. INCOME TAXES: The provision for income taxes is computed using the anticipated effective tax rate for the year. 10. NET INCOME PER SHARE: Income per share amounts are computed using the weighted average number of common and common equivalent (dilutive stock options) shares outstanding during each period. Common share equivalents are included in the weighted average number of common shares outstanding only when the effect is not antidilutive. 11. CONTINGENCIES: The Company is currently a party to various claims and legal proceedings, none of which is considered by management to be material to the Company's financial position. 12. SUBSEQUENT EVENT: On March 5, 1996, the Board of Directors approved a three for two stock split in the form of a 50% stock dividend payable on April 19, 1996 to stockholders of record on March 31, 1996. All references in the financial statements to number of shares and per share amounts of the Company's common stock have been retroactively restated to reflect the increased number of shares outstanding. 10 11 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors affecting the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. RESULTS OF OPERATIONS Revenue for the quarter ended March 31, 1996 was $153.8 million, an increase of $48.5 million, or 46.0%, over last year. The increase is primarily attributable to revenue generated from a strong backlog in both operating divisions as well as the addition of the Company's new branch in Utah. For the three months ended March 31, 1996, revenue from public sector contracts increased $25.1 million to $109.6 million, or 71.3% of total revenue, from $84.5 million, or 80.2% of total revenue in 1995. Revenue from private sector contracts and material sales of $44.2 million, or 28.7% of total revenue, was up $23.4 million from the three months ended March 31, 1995 level of $20.8 million, or 19.8% of total revenue. Revenue in the Company's primary geographical area, California, increased to $79.8 million from $62.2 million last year but decreased as a percent of total revenue to 51.9% from 59.1%. The decrease as a percentage of total revenue provides a glimpse of the Company's success in its diversification strategy. REVENUE BY MARKET SECTOR THREE MONTHS ENDED MARCH 31 (in millions) 1996 1995 ---- ---- Federal $ 5.5 3.6% Federal $ 20.4 19.4% State 46.0 29.9 State 41.5 39.4 Local 58.1 37.8 Local 22.6 21.4 Private 28.6 18.6 Private 10.7 10.2 Materials 15.6 10.1 Materials 10.1 9.6 ------ ----- ------ ----- Total $153.8 100.0% $105.3 100.0% ====== ===== ====== ===== Backlog at March 31, 1996 was $624.3 million, a $20.1 million decrease over March 31, 1995 and a $34.2 million increase from December 31, 1995. Major awards for the quarter include a $11.8 million yard and utility relocation project in San Jose, California; a $12.8 million remediation project in Utah; and an $18.0 million dam project in Texas. AWARDS AND BACKLOG END OF PERIOD (in millions) Awards Backlog ------ ------- 1992 ---- Q1 $ 62.4 $ 286.4 Q2 177.2 333.6 Q3 169.8 316.7 Q4 62.1 245.2 1993 ---- Q1 319.6 487.3 Q2 157.4 501.9 Q3 325.2 643.4 Q4 182.7 659.7 1994 ---- Q1 111.8 664.7 Q2 149.0 640.1 Q3 194.9 594.9 Q4 128.2 550.2 1995 ---- Q1 199.5 644.4 Q2 302.9 720.6 Q3 143.1 557.2 Q4 289.2 590.1 1996 ---- Q1 188.0 624.2 11 12 The public sector backlog decrease to 84.8% of total backlog from 88.9% at December 31, 1995 and 97.4% at March 31, 1995 reflects the improved private sector backlog of $95.1 million, or 15.2% of total backlog. This private sector backlog represents an increase of $29.4 million over December 31, 1995 and an increase of $78.4 million from March 31, 1995. BACKLOG BY MARKET SECTOR (in millions) March 31, 1996 December 31, 1995 -------------- ----------------- Federal $ 37.2 6.0% Federal $ 17.5 3.0% State 376.6 60.3 State 354.3 60.0 Local 115.4 18.5 Local 152.6 25.9 Private 95.1 15.2 Private 65.7 11.1 ------ ----- ------ ----- Total $624.3 100.0% $590.1 100.0% ====== ===== ====== ===== Gross profit for the quarter ended March 31, 1996, was $14.6 million, or 9.5% of revenue, as compared to $13.7 million, or 13.0% of revenue, for 1995. Last year's first quarter business was characterized by poor building conditions for normal contract work, but an unanticipated contribution was made from emergency repair and cleanup work that resulted from widespread flooding in California, which contributed to the higher gross profit margin percent of last year. This year's results reflect a higher volume of construction work. General and administrative expenses for the three months ended March 31, 1996 were $15.5 million, or 10.1% of revenue, an increase of $2.4 million, or 18.6%, over the same period last year but a decrease as a percent of revenue from 12.4% last year. The increase primarily reflects the addition of overhead from the Utah branch acquired in the second quarter of 1995 and other costs associated with a higher volume of work. The net income for the quarter ended March 31, 1996, was $0.4 million, or $0.02 per share, a decrease of $0.8 million or $0.05 per share from the net income of $1.2 million, or $0.07 per share (as adjusted for a three for two stock split effective April 19, 1996) for the same period in 1995. (See Note 12 of the Notes to the Condensed Consolidated Financial Statements). SEASONALITY OF BUSINESS REVENUE AND NET INCOME BY QUARTER (in millions) Net Income Revenue ---------- ------- 1992 ---- Q1 $-3.9 $ 68.0 Q2 2.8 130.0 Q3 4.3 186.7 Q4 0.7 133.6 1993 ---- Q1 -4.2 77.5 Q2 - 142.9 Q3 5.8 183.6 Q4 2.9 166.4 1994 ---- Q1 -2.1 106.7 Q2 4.6 173.6 Q3 13.6 240.2 Q4 3.3 172.9 1995 ---- Q1 1.2 105.3 Q2 8.3 226.7 Q3 13.2 306.6 Q4 5.8 256.2 1996 ---- Q1 0.4 153.7 12 13 OUTLOOK Very little has changed in our business outlook from what we communicated in the Outlook section of the Company's 1995 Form 10-K filed in late March. However, there are a couple of minor updates on issues that may or may not have an impact on our business going forward, including the effort in Congress to remove the transportation trust funds from the Federal Unified Budget. In April, the House of Representatives voted overwhelmingly to take the trust funds off budget, a bill designed to free up the approximately $30 billion that has accumulated in the trust fund accounts for the purposes of which these funds were initially intended, namely highway, airport and transit improvement. The debate now moves to the Senate, where similar legislation has been introduced. Passage of the Senate version is expected to be more problematic than the bill just passed by the House, and it is unclear at this point in time which way the Clinton Administration is leaning on this issue. Moreover, momentum is gaining in Congress to repeal the 4.3 cents of the Federal motor fuels tax, which was part of President Clinton's 1993 deficit reduction plan. The revenue from this portion of the gas tax does not go into the Highway Trust Fund but instead goes into the general fund to pay for general government programs and not transportation. Our industry is advocating transferring the 4.3 cents to the Highway Trust Fund in lieu of repealing it, arguing that the trust fund is the appropriate place for gas tax receipts, especially given the tremendous needs for highway improvements. Committees in both the House and Senate are expected to take up a bill soon. Also in the Outlook section of our 1995 10-K, we discussed the economic recovery in California, and pointed out that for the first time since the recession hit the state in 1990, the state was expected to be in the black with a $900 million surplus for the year ending June 30th. IT NOW APPEARS, HOWEVER, THAT CALIFORNIA WILL NOT HAVE A $900 MILLION SURPLUS FOR THE YEAR ENDING JUNE 30, 1996. According to officials in Sacramento, Governor Wilson's budget was based in part on revenues anticipated from federal sources to assist state efforts to provide certain government services such as welfare and immigration. Absent these funds, the state is expecting to have an operating deficit for the year ending June 30, 1996, the size of which is not determinable at this point in time. Nevertheless, we continue to see strong signals of economic improvement in California, as witnessed by the increase in our private sector revenue and backlog in the first quarter. We are very pleased with the quality and quantity of our public sector bidding opportunities going forward and they include, as we have previously discussed, several large design-build projects in California, Utah, Minnesota and New Jersey. We continue to look for acquisition candidates that support our strategies to diversify our business either geographically or by industry segment. In summary, we continue to move forward on our strategy to grow the company through acquisitions and we are encouraged by the near-term opportunity to improve our financial performance through current operations. 13 14 LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------------------------- DOLLARS IN THOUSANDS 1996 1995 ----------------------------------------------------------------------- Cash and cash equivalents, March 31 $14,705 $13,135 Net cash provided (used) by: Operating activities (4,474) 4,536 Investing activities 1,192 (7,941) Financing activities (4,423) (1,109) -----------------------------------------------------------------------
Cash used by operating activities of $4.5 million for the three months ended March 31, 1996 represents a $9.0 million decrease from the 1995 amount for the same period. The decrease primarily reflects increased cash to pay accounts payable and an increase in inventories due to better first quarter weather in 1996. Changes in cash provided from operations reflect seasonal variations based on the amount and progress of work being performed. Cash provided by investing activities in 1996 improved $9.1 million reflecting a $17.2 million increase in net maturities of short-term investments offset by an $8.6 million increase in cash used to purchase property and equipment. Cash used in financing activities decreased $3.3 million primarily reflecting the increase in dividends paid in 1996 due to the increased quarterly dividend from $0.03 for the first quarter of 1995 to $0.06 per share plus the special cash dividend of $0.13 per common share that was declared during the first quarter of 1996 (all per share amounts have been restated for the effect of a three for two stock split effective April 19, 1996. See Note 12 of the Notes to the Condensed Consolidated Financial Statements). The Company's current borrowing capacity under its restated revolving line of credit is $50 million of which $40.8 million was available on March 31, 1996. The Company believes that its current cash balances combined with cash flows from operations and cash available under its revolving credit agreements will be sufficient to meet its operating needs, anticipated capital expenditure plans and other financial commitments at least through 1996. 14 15 PART II. OTHER INFORMATION 15 16 ITEM 1. LEGAL PROCEEDINGS None 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 INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit 11 - Computation of Net Income per Common and Common Equivalent Share b) Reports on Form 8-K None 16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GRANITE CONSTRUCTION INCORPORATED By: /s/ William E. Barton --------------------------------------------- Date: May 8, 1996 William E. Barton ----------------- Vice President, Secretary and Chief Financial Officer 17 18 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE - ------ ----------- ---- 11 Computation of Net Income per Common and Common Equivalent Share........................................ 19 27 Financial Data Schedule
18 EX-11 2 COMPUTATION OF NET INCOME PER COMMON STOCK 1 EXHIBIT 11 GRANITE CONSTRUCTION INCORPORATED COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 1996 1995 - -------------------------------------------------------------------------------- Weighted average common shares outstanding 17,897 17,622 Computation of incremental outstanding shares: Net effect of dilutive stock options based on treasury stock method 69 36 - -------------------------------------------------------------------------------- Weighted average common shares outstanding, as adjusted 17,966 17,658 ================================================================================ Net income $ 366 $1,228 ================================================================================ Net income per common and common equivalent share $ 0.02 $ 0.07 ================================================================================
19 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF INCOME, AND NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q, MARCH 31, 1996 1,000 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 14,705 25,922 111,229 1,045 12,719 212,594 443,101 258,684 419,413 148,798 39,357 181 0 0 206,807 419,413 153,749 153,749 139,107 154,592 0 0 941 590 224 366 0 0 0 366 0.02 0.02
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