-----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, PptsEAeKmasmZo9q03WX2gaxQ5LsUxily0pGMRMf38torMZ3+iGIrbMZxwCJj2VV tJk3D8xeP7JEyVAfUixSwg== 0000950149-96-001262.txt : 19960816 0000950149-96-001262.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950149-96-001262 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96611732 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 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 JUNE 30, 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 July 31, 1996. Class Outstanding Common Stock, $0.01 par value 18,121,253 shares This report on Form 10-Q, including all exhibits, contains 20 pages. The exhibit index is located on page 19 of this report. 2 GRANITE CONSTRUCTION INCORPORATED INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995......................................................... 4 Condensed Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 1996 and 1995....................................... 5 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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............................................ 16 Item 5. Other Information.............................................. none Item 6. Exhibits and Reports on Form 8-K............................... 17 Exhibit Index.................................................. 19
2 3 PART I. FINANCIAL INFORMATION 3 4 GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Per Share Data)
- ------------------------------------------------------------------------------------------------------------- JUNE 30, December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets Cash and cash equivalents $ 13,664 $ 22,410 Short-term investments 13,792 44,582 Accounts receivable 164,410 142,055 Costs and estimated earnings in excess of billings 31,169 16,147 Inventories 13,290 10,180 Deferred income taxes 16,717 16,717 Equity in joint ventures 7,180 210 Other current assets 5,335 5,953 ------------------------------- Total current assets 265,557 258,254 - ------------------------------------------------------------------------------------------------------------- Property and equipment 189,065 175,220 - ------------------------------------------------------------------------------------------------------------- Other assets 22,394 21,270 - ------------------------------------------------------------------------------------------------------------- $ 477,016 $ 454,744 ============================================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 11,687 $ 13,948 Accounts payable 69,287 68,056 Billings in excess of costs and estimated earnings 53,872 43,730 Accrued expenses and other current liabilities 61,663 55,341 ----------------------------- Total current liabilities 196,509 181,075 - ------------------------------------------------------------------------------------------------------------- Long-term debt 40,364 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 18,160,111 shares, outstanding 18,119,753 shares; 1995- issued 17,897,018 shares, outstanding 17,884,268 shares 182 179 Additional paid-in capital 37,304 32,715 Retained earnings 185,253 180,341 ----------------------------- 222,739 213,235 Unearned compensation (6,125) (3,115) Treasury stock (741) (215) ----------------------------- 215,873 209,905 - ------------------------------------------------------------------------------------------------------------- $ 477,016 $ 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 SIX MONTHS ENDED JUNE 30, JUNE 30, 1996 1995 1996 1995 - --------------------------------------------------------------------------------------------------------- Revenue $ 248,499 $ 226,684 $ 402,248 $ 331,957 Cost of revenue 219,281 196,979 358,388 288,541 --------------------------------------------------------------- GROSS PROFIT 29,218 29,705 43,860 43,416 General and administrative expenses 16,780 16,912 32,265 29,968 --------------------------------------------------------------- OPERATING PROFIT 12,438 12,793 11,595 13,448 - --------------------------------------------------------------------------------------------------------- Other income (expense) Interest income 1,418 1,267 3,372 2,729 Interest expense (837) (960) (1,778) (1,440) Gain on sales of property and equipment 1,747 231 2,160 522 Other, net (39) (312) (32) (321) --------------------------------------------------------------- 2,289 226 3,722 1,490 - --------------------------------------------------------------------------------------------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 14,727 13,019 15,317 14,938 Provision for income taxes 5,596 4,687 5,820 5,378 - --------------------------------------------------------------------------------------------------------- NET INCOME $ 9,131 $ 8,332 $ 9,497 $ 9,560 ========================================================================================================= Net income per share $ 0.51 $ 0.47 $ 0.53 $ 0.54 Weighted average shares of common stock 18,052 17,840 18,017 17,748 Dividends per share $ 0.06 $ 0.15 $ 0.25 $ 0.19 =========================================================================================================
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)
- ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED JUNE 30, ------------------- 1996 1995 - ------------------------------------------------------------------------------------------------------------ Operating Activities Net income $ 9,497 $ 9,560 Add (deduct) noncash items included in net income: Depreciation, depletion and amortization 18,273 14,724 Gain on sales of property and equipment (2,160) (522) Decrease in unearned compensation 984 779 Cash provided by (used in): Accounts and notes receivable (23,858) (24,663) Inventories (3,110) (1,027) Equity in joint ventures (6,970) 305 Other assets 226 705 Accounts payable 1,231 5,098 Billings in excess of costs and estimated earnings, net (3,574) 321 Accrued expenses 6,129 1,595 ------------------------- Net cash provided (used) by operating activities (3,332) 6,875 - ------------------------------------------------------------------------------------------------------------ Investing Activities Additions to property and equipment (31,779) (19,218) Proceeds from sales of property and equipment 1,258 1,283 Additions to notes receivable (114) (1,333) Repayments of notes receivable 226 206 Acquisition of Gibbons Company, net of cash acquired -- 1,567 Additions to investments and other assets (84) (36) Purchases of short-term investments (16,871) (11,427) Maturities of short-term investments 47,661 26,306 ------------------------- Net cash provided (used) by investing activities 297 (2,652) - ------------------------------------------------------------------------------------------------------------ Financing Activities Additions to long-term debt 7,000 -- Repayments of long-term debt (8,391) (1,480) Employee stock options exercised 598 96 Purchase of treasury stock (526) -- Dividends paid (4,392) (1,180) ------------------------- Net cash used by financing activities (5,711) (2,564) - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in cash and cash equivalents (8,746) 1,659 Cash and cash equivalents at beginning of period 22,410 17,649 ------------------------- Cash and cash equivalents at end of period $ 13,664 $ 19,308 ============================================================================================================ Supplementary Information Cash paid during the year for: Interest $ 1,778 $ 1,118 Income taxes 346 1,849 Noncash investing and financing activity: Financed acquisition of Gibbons Company $ -- $ 34,550 ============================================================================================================
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 June 30, 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 six months ended June 30, 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 June 30, 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 $ 2,003 $ - $ (1) $ 2,002 $ 8,938 $6 $ - $ 8,944 Commercial Paper - - - - 10,897 3 (6) 10,894 Municipal Bonds - - - - 2,012 4 - 2,016 Foreign Banker's Acceptances 990 - - 990 8,703 2 - 8,705 Domestic Banker's Acceptances 999 - - 999 1,996 4 - 2,000 ---------------------------------------- ---------------------------------------- 3,992 - (1) 3,991 32,546 19 (6) 32,559 ---------------------------------------- ---------------------------------------- Available-For-Sale Available-For-Sale June 30, 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 7,788 6 (72) 7,722 4,859 45 - 4,904 Municipal Bonds 2,012 13 - 2,025 5,226 74 (32) 5,268 Domestic Banker's Acceptances - - - - 1,951 13 - 1,964 ---------------------------------------- ---------------------------------------- 9,800 19 (72) 9,747 12,036 132 (32) 12,136 ---------------------------------------- ---------------------------------------- Total Short-Term Investments $13,792 $19 $(73) $13,738 $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 six months ended June 30, 1996. At June 30, 1996, scheduled maturities of investments are as follows (unaudited):
- -------------------------------------------------------------------------- Held-To- Available- Maturity For-Sale Total - -------------------------------------------------------------------------- Within one year $3,992 $7,788 $11,780 After one year through five years - 2,012 2,012 - -------------------------------------------------------------------------- $3,992 $9,800 $13,792 ==========================================================================
For the six months ended June 30, 1996 and 1995, purchases and maturities of short-term investments were as follows:
--------------------------------------- --------------------------------------- Six Months Ended Six Months Ended June 30, 1996 June 30, 1995 (Unaudited) (Unaudited) Held-To- Available Held-To- Available Maturity For Sale Total Maturity For Sale Total --------------------------------------- --------------------------------------- Purchases $ 9,542 $ 7,329 $ 16,871 $ 6,692 $ 4,735 $ 11,427 Maturities 36,300 11,361 47,661 20,900 5,406 26,306 ------------------------------------- --------------------------------------- Net change $(26,758) $ (4,032) $(30,790) $(14,208) $ (671) $(14,879) ================================================================================
3. ACCOUNTS RECEIVABLE:
JUNE 30, December 31, 1996 1995 -------------------------- (UNAUDITED) Construction contracts Completed and in progress $ 97,594 $ 81,240 Retentions 44,062 41,777 -------------------------- 141,656 123,017 Construction material sales 16,329 12,380 Other 7,128 7,556 -------------------------- 165,113 142,953 Less allowance for doubtful accounts 703 898 -------------------------- $164,410 $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:
- ----------------------------------------------------------------------------------------- JUNE 30, DECEMBER 31, 1996 1995 - ---------------------------------------------------------- ---------------- ------------ (UNAUDITED) Assets Total $99,787 $125,019 Less other venturers' interest 69,851 87,513 - --------------------------------------------------------------------------------------- Company's interest 29,936 37,506 - --------------------------------------------------------------------------------------- Liabilities Total 75,855 124,319 Less other venturers' interest 53,099 87,023 - --------------------------------------------------------------------------------------- Company's interest 22,756 37,296 - --------------------------------------------------------------------------------------- $ 7,180 $ 210 =======================================================================================
6 PROPERTY AND EQUIPMENT:
JUNE 30, December 31, 1996 1995 ------------------------------- (UNAUDITED) Land $ 13,979 $ 14,019 Quarry property 35,894 35,194 Buildings and leasehold improvements 13,000 11,657 Equipment and vehicles 386,812 361,676 Office furniture and equipment 4,997 4,570 ------------------------------- 454,682 427,116 Less accumulated depreciation, depletion and amortization 265,617 251,896 ------------------------------- $189,065 $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:
JUNE 30, December 31, 1996 1995 ------------------------ (UNAUDITED) Payroll and related employee benefits $19,672 $21,371 Accrued insurance 21,769 19,957 Income taxes payable 8,245 2,425 Other 11,977 11,588 ------------------------ $61,663 $55,341 ========================
8. STOCKHOLDERS' EQUITY: Under the terms of the Company's 1990 Omnibus Stock and Incentive Plan, 209,697 shares of restricted common stock were issued and 116,837 shares vested during the six months ended June 30, 1996. Unearned compensation is amortized over the restriction periods. Compensation expense related to restricted shares was $492 and $390 for the three months ended and $984 and $779 for the six months ended June 30, 1996 and 1995, respectively. During 1996, the Company purchased, in satisfaction of certain officers' income tax liabilities related to the maturation of restricted stock issues, 27,608 shares which are classified as treasury stock. During the six months ended June 30, 1996, employee stock options for 53,450 shares at $11.34 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. STOCK SPLIT: On March 5, 1996, the Board of Directors approved a three for two stock split in the form of a 50% stock dividend paid 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. 13. RECLASSIFICATION: Certain previously reported amounts have been reclassified to conform with the current period presentation. 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. This discussion and analysis of financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements about future federal and state spending levels, pending state and federal legislation and future public and private bidding opportunities. Actual results could differ materially from those projected in the forward-looking statements. RESULTS OF OPERATIONS Revenue for the quarter ended June 30, 1996 was $248.5 million, bringing the six month total to $402.2 million, an increase of $21.8 million, or 9.6% and $70.2 million, or 21.2%, respectively, over the same periods last year. For the six months ended June 30, 1996, revenue from public sector contracts increased $23.0 million to $287.0 million, or 71.4% of total revenue, from $264.0 million, or 79.5% of total revenue in 1995. Revenue from private sector contracts of $73.6 million, or 18.3% of total revenue, was up $38.7 million from the six months ended June 30, 1995 level of $34.9 million, or 10.5% of total revenue. Revenue in the Company's primary geographical area, California, increased to $216.6 million from $203.1 million last year but decreased as a percent of total revenue to 53.8% from 61.1% resulting from the Company's ongoing diversification strategy. [PIE GRAPH] REVENUE BY MARKET SECTOR SIX MONTHS ENDED JUNE 30, (In Millions)
1996 -------------------------- Public $287.0 71.4% Private 73.6 18.3 Materials 41.6 10.3 ---------- -------- $402.2 100.0% ========== ======== 1995 ----------------------------- Public $264.0 79.5% Private 34.9 10.5 Materials 33.1 10.0 ---------- --------- $332.0 100.0% ========== ========
Backlog at June 30, 1996 was $635.8 million, an $84.8 million decrease from June 30, 1995 and a $45.7 million increase from December 31, 1995. New awards for the quarter totaled $259.9 million and do not include a $51.6 million Florida highway contract awarded in July 1996. [GRAPH] 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 188.0 624.3 Q2 259.9 635.8
11 12 The public sector backlog decrease to 84.4% of total backlog from 88.9% at December 31, 1995 and 94.1% at June 30, 1995 reflects the improved private sector backlog of $98.9 million, or 15.6% of total backlog. This private sector backlog represents an increase of $33.2 million over December 31, 1995 and an increase of $56.1 million from June 30, 1995. [PIE GRAPH] BACKLOG BY MARKET SECTOR (In Millions)
June 30, 1996 ---------------------------- Public $536.9 84.4% Private 98.9 15.6 ---------- -------- $635.8 100.0% ========== ======== December 31, 1995 ----------------------------- Public $524.4 88.9% Private 65.7 11.1 ---------- --------- $590.1 100.0% ========== ========
Gross profit for the quarter ended June 30, 1996 was $29.2 million, or 11.8% of revenue, as compared to $29.7 million, or 13.1% of revenue, for 1995. The six month gross profit increased $0.5 million to $43.9 million, or 10.9% of revenue versus $43.4 million or 13.1% in 1995. The change in gross profit reflects the successful execution of a higher volume of work, offset partially by the dilutive effect of major projects which contributed to revenues but have yet to reach the 25% completion threshold whereby the Company would begin to recognize earnings. General and administrative expenses for the three months ended June 30, 1996 decreased $0.1 million to $16.8 million, or 6.8% of revenue, as compared to 7.5% of revenue for the same quarter of 1995. For the six months, general and administrative expenses increased $2.3 million to $32.3 million, but went down as a percent of revenue to 8.0% versus 9.0% last year. The six month increase primarily reflects the additional overhead in the first quarter of 1996 from the Utah branch acquired in the second quarter of 1995 and other costs associated with a higher volume of work. Other income increased $2.1 million for the quarter and $2.2 million for the six months ended June 30, 1996 primarily reflecting the Company's share of gains on sales of surplus equipment in joint ventures. Net income for the quarter ended June 30, 1996 was $9.1 million, or $0.51 per share, an increase of $0.8 million or $0.04 per share from the quarter ended June 30, 1995 net income of $8.3 million, or $0.47 per share. For the six months, net income was $9.5 million, or $0.53 per share, a $0.1 million, or $0.01 per share decrease from the prior year net income of $9.6 million, or $0.54 per share (as adjusted for a three for two stock split effective April 19, 1996). (See Note 12 of the Notes to the Condensed Consolidated Financial Statements). [GRAPH] 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 Q2 9.1 248.5
12 13 OUTLOOK Going forward, we are pursuing a number of quality bid opportunities across the country, including a $1.0 billion design-build freeway reconstruction project in Salt Lake City, private toll roads in Minnesota, Delaware and Oregon and numerous highway projects in Florida, California, Nevada, Arizona, lllinois and Texas. Moreover, we anticipate continued improvement in private sector opportunities in many of our geographic markets as California and the mountain states continue to outperform the rest of the country from an economic standpoint. This should translate into increased commercial/residential site development opportunities as well as the potential for a slight margin improvement in our public sector marketplace. We have been successful in growing our business outside our California base, as evidenced by the fact that 45% of our second quarter revenue was contributed by our non-California operations. For example, in Florida the Company now has about $118 million worth of work underway. Our goal is to continue to expand our business throughout the United States. The high level of bidding activity we are currently engaged in is driven in great degree by the strong public sector funding now available from federal, state and local sources. Looking out to next year, Congress is expected to appropriate about $19.6 billion for transportation-related construction in fiscal year 1997, a decrease of less than 1% from the prior year's appropriation. With the current cost-cutting mood of Congress, our industry has been somewhat successful in convincing federal policy makers that continued investment in our transportation infrastructure is vital to a thriving economy. Elsewhere, the debate continues in California as to whether money from the state highway account should be used for the seismic retrofit of the toll bridges in the San Francisco Bay area. Proposition 192, the $2 billion seismic retrofit bond measure approved by voters in March, was supposed to cover the cost of finishing the state's retrofit program. However, just before the election, the state disclosed that the cost of retrofitting the San Francisco - Oakland Bay Bridge was estimated to cost almost double the amount that had been earmarked in Prop 192 to retrofit all of the state's toll bridges. Bay Area politicians want to use the highway account to make up the shortfall while we believe toll revenues should be used to complete the retrofitting of the state's toll bridges. Currently, lawmakers in Sacramento are attempting to forge a compromise. Clearly, tapping the state highway account to pay for the toll bridge retrofit effort would have a significant impact on our California road building business. Also in Washington, there is a move afoot to transfer the 4.3 cents of the federal gasoline tax currently being used for deficit reduction to the highway trust fund, which would provide additional dollars for highway construction. Senator Byrd has authored an amendment that has bipartisan support on Capitol Hill and could likely be acted upon after Congress ends its summer recess. Elsewhere in Washington, the move to take the highway trust funds out of the unified federal budget has passed the House but has stalled in the Senate. 13 14 Locally in California, the fate of using county sales tax for transportation improvements will most likely be decided in November in Santa Clara County. Under the confines of Propositions 13 and 62, any special tax, like one raised for the specific purpose of transportation improvement, must have a two-thirds majority to pass. In an effort to get around this obstacle, the Santa Clara County Supervisors recently approved putting two measures on the November ballot. The first would increase the general sales tax by one-half cent. The other is advisory only and would indicate the voters' preference to the Supervisors, detailing specific projects that could be completed with the additional sales tax monies. The ability of 17 other California counties to renew their sales tax- based transportation improvement programs will hinge on what happens this Fall in Santa Clara County. Finally, recognizing that we are heavily dependent on the sometimes whimsical political process for public sector funding, we intend to diversify our sources of revenue and profits over a broader range of markets while at the same time retaining a tight focus on heavy civil construction and aggregate materials production. The intent is to provide a better balance between public and private markets and take advantage of opportunities in other construction sectors. LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------------------------------------------- DOLLARS IN THOUSANDS 1996 1995 - -------------------------------------------------------------------- Cash and cash equivalents, June 30 $ 13,664 $ 19,308 Net cash provided (used) by: Operating activities (3,332) 6,875 Investing activities 297 (2,652) Financing activities (5,711) (2,564) - --------------------------------------------------------------------
Cash used by operating activities of $3.3 million for the six months ended June 30, 1996 represents a $10.2 million decrease from the 1995 amount for the same period. The decrease primarily reflects the change to equity in construction joint ventures and net cash used in the performance of contracts. 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 $2.9 million primarily reflecting a $15.9 million increase in net maturities of short-term investments offset by a $12.6 million increase in cash used to purchase property and equipment. Cash used in financing activities decreased $3.1 million primarily reflecting the increase of $3.2 million in dividends paid in 1996 due to the increased quarterly dividend and special dividend declared in the first quarter of 1996. Repayments of long-term debt increased $6.9 million and were offset by borrowings of $7.0 million. The Company's current borrowing capacity under its restated revolving line of credit is $50 million of which $32.5 million was available on June 30, 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 At the Company's Annual Meeting of Shareholders on May 20, 1996, the following members were elected to the Board of Directors:
AFFIRMATIVE NEGATIVE VOTES WITHHELD VOTES VOTES ABSTAINED NONVOTE ----- ----- --------- ------- Richard C. Solari 14,420,565 - 167,378 3,500,165 David H. Watts 14,421,915 - 166,028 3,500,165 Joseph J. Barclay 14,505,465 - 82,478 3,500,165 Brian C. Kelly 14,369,900 - 218,043 3,500,165
The following proposal was approved at the Company's Annual Meeting:
AFFIRMATIVE NEGATIVE VOTES WITHHELD VOTES VOTES ABSTAINED NONVOTE ----- ----- --------- ------- To ratify the appointment of Coopers & Lybrand, L.L.P. as the independent accountants of the Company for the fiscal year ending December 31, 1996 14,516,043 65,490 6,410 3,500,165
16 17 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 17 18 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: August 14, 1996 William E. Barton ----------------------- Vice President and Chief Financial Officer 18 19 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: --------------------------- Date: August 14, 1996 William E. Barton ----------------------- Vice President and Chief Financial Officer 18 20 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE - ------ ----------- ---- 11 Computation of Net Income per Common and Common Equivalent Share..................................................... 20
19 21 EXHIBIT 11 GRANITE CONSTRUCTION INCORPORATED COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (in Thousands, Except Per Share Data)
- ----------------------------------------------------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1996 1995 1996 1995 - ----------------------------------------------------------------------------------------- Weighted average common shares outstanding 17,985 17,790 17,941 17,706 Computation of incremental outstanding shares: Net effect of dilutive stock options based on treasury stock method 67 50 76 42 - ----------------------------------------------------------------------------------------- Weighted average common shares outstanding, as adjusted 18,052 17,840 18,017 17,748 ========================================================================================= Net income $ 9,131 $ 8,332 $ 9,497 $ 9,560 ========================================================================================= Net income per common and common equivalent share $ 0.51 $ 0.47 $ 0.53 $ 0.54 =========================================================================================
20 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 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 FORM 10-Q, JUNE 30, 1996. 1,000 U.S. DOLLARS 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1 13,664 13,792 165,113 703 13,290 265,557 454,682 265,617 477,016 196,509 40,364 0 0 182 215,691 477,016 402,248 402,248 358,388 390,653 0 0 1,778 15,317 5,820 9,497 0 0 0 9,497 0.53 0.53
-----END PRIVACY-ENHANCED MESSAGE-----