-----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, DQGBZLd1i/1Mt5Obc6NWiiTmm+lwBu0rrP12xWgbKoc64hAhOqHIzgxYnhWFlp/c nTI6wPlL1AonJvvdDMexyg== 0000950149-96-001893.txt : 19961118 0000950149-96-001893.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950149-96-001893 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96664937 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 SEPTEMBER 30, 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 SEPTEMBER 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 November 6, 1996.
Class Outstanding Common Stock, $0.01 par value 18,121,253 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 September 30, 1996 and December 31, 1995............................................................4 Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 1996 and 1995.....................................5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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.............................................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)
- -------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, DECEMBER 31, 1996 1995 - -------------------------------------------------------------------------------------------------------------- (UNAUDITED) ASSETS Current assets Cash and cash equivalents $ 38,441 $ 22,410 Short-term investments 22,372 44,582 Accounts receivable 177,233 142,055 Costs and estimated earnings in excess of billings 31,541 16,147 Inventories 13,838 10,180 Deferred income taxes 16,717 16,717 Equity in joint ventures 5,268 210 Other current assets 7,676 5,953 --------------------------- Total current assets 313,086 258,254 - -------------------------------------------------------------------------------------------------------------- Property and equipment 180,802 175,220 - -------------------------------------------------------------------------------------------------------------- Other assets 24,468 21,270 - -------------------------------------------------------------------------------------------------------------- $ 518,356 $ 454,744 ============================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 11,687 $ 13,948 Accounts payable 80,904 68,056 Billings in excess of costs and estimated earnings 58,256 43,730 Accrued expenses and other current liabilities 73,195 55,341 --------------------------- Total current liabilities 224,042 181,075 - -------------------------------------------------------------------------------------------------------------- Long-term debt 39,697 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 18,161,611 shares, outstanding 18,121,253 shares; 1995- issued 17,897,018 shares, outstanding 17,884,268 shares 182 179 Additional paid-in capital 37,321 32,715 Retained earnings 199,219 180,341 --------------------------- 236,722 213,235 Unearned compensation (5,634) (3,115) Treasury stock (741) (215) --------------------------- 230,347 209,905 - -------------------------------------------------------------------------------------------------------------- $ 518,356 $ 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 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 - ----------------------------------------------------------------------------------------------- Revenue $302,646 $306,588 $704,894 $638,545 Cost of revenue 261,830 266,039 620,218 554,580 -------------------------------------------------------- GROSS PROFIT 40,816 40,549 84,676 83,965 General and administrative expenses 17,221 20,334 49,486 50,302 -------------------------------------------------------- OPERATING PROFIT 23,595 20,215 35,190 33,663 - ----------------------------------------------------------------------------------------------- Other income (expense) Interest income 1,698 1,794 5,070 4,523 Interest expense (1,156) (1,046) (2,934) (2,486) Gain on sales of property and equipment 306 387 2,466 909 Other, net (163) (172) (195) (493) -------------------------------------------------------- 685 963 4,407 2,453 - ----------------------------------------------------------------------------------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 24,280 21,178 39,597 36,116 Provision for income taxes 9,227 7,984 15,047 13,362 - ----------------------------------------------------------------------------------------------- NET INCOME $ 15,053 $ 13,194 $ 24,550 $ 22,754 =============================================================================================== Net income per share $ 0.83 $ 0.74 $ 1.36 $ 1.28 Weighted average shares of common stock 18,069 17,879 18,033 17,784 Dividends per share $ 0.06 $ 0.05 $ 0.31 $ 0.23 ===============================================================================================
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)
- ------------------------------------------------------------------------------------------- NINE MONTHS ENDED SEPTEMBER 30, 1996 1995 - ------------------------------------------------------------------------------------------- Operating Activities Net income $ 24,550 $ 22,754 Add (deduct) noncash items included in net income: Depreciation, depletion and amortization 27,883 23,167 Gain on sales of property and equipment (2,466) (909) Decrease in unearned compensation 1,475 1,168 Cash provided by (used in): Accounts and notes receivable (38,152) (56,504) Inventories (3,658) (80) Equity in joint ventures (5,058) 2,389 Other assets (1,920) 980 Accounts payable 12,848 16,836 Billings in excess of costs and estimated earnings, net 915 23,331 Accrued expenses 17,661 9,929 ------------------------ Net cash provided by operating activities 34,078 43,061 - ------------------------------------------------------------------------------------------- Investing Activities Additions to property and equipment (38,965) (27,262) Proceeds from sales of property and equipment 7,298 2,063 Additions to notes receivable (639) (1,334) Repayments of notes receivable 535 1,487 Acquisition of Gibbons Company, net of cash acquired -- (1,280) Additions to investments and other assets (1,038) (3,249) Purchases of short-term investments (30,439) (25,961) Maturities of short-term investments 52,649 31,874 ------------------------ Net cash used by investing activities (10,599) (23,662) - ------------------------------------------------------------------------------------------- Financing Activities Additions to long-term debt 7,000 -- Repayments of long-term debt (9,058) (2,667) Employee stock options exercised 615 703 Purchase of treasury stock (526) -- Dividends paid (5,479) (3,850) ------------------------ Net cash used by financing activities (7,448) (5,814) - ------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 16,031 13,585 Cash and cash equivalents at beginning of period 22,410 17,649 ------------------------ Cash and cash equivalents at end of period $ 38,441 $ 31,234 =========================================================================================== Supplementary Information Cash paid during the year for: Interest $ 2,934 $ 2,486 Income taxes 2,950 7,858 Noncash investing and financing activity: Financed acquisition of Gibbons Company $ - $ 31,750 ===========================================================================================
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 September 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 nine months ended September 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 September 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 $ - $ - $ - $ - $ 8,938 $6 $ - $ 8,944 Commercial Paper - - - - 10,897 3 (6) 10,894 Municipal Bonds 6,017 - - 6,017 2,012 4 - 2,016 Foreign Banker's Acceptances 2,982 - - 2,982 8,703 2 - 8,705 Domestic Banker's Acceptances - - - - 1,996 4 - 2,000 -------------------------------------------- --------------------------------------------- 8,999 - - 8,999 32,546 19 (6) 32,559 -------------------------------------------- ---------------------------------------------
Available-For-Sale Available-For-Sale September 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 10,360 4 (43) 10,321 4,859 45 - 4,904 Municipal Bonds 3,013 13 - 3,026 5,226 74 (32) 5,268 Domestic Banker's Acceptances - - - - 1,951 13 - 1,964 -------------------------------------------- --------------------------------------------- 13,373 17 (43) 13,347 12,036 132 (32) 12,136 -------------------------------------------- --------------------------------------------- Total Short-Term Investments $22,372 $17 $(43) $22,346 $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 nine months ended September 30, 1996. At September 30, 1996, scheduled maturities of investments are as follows (unaudited):
- ------------------------------------------------------------------------------------------------- Held-To- Available- Maturity For-Sale Total - ------------------------------------------------------------------------------------------------- Within one year $8,999 $10,360 $19,359 After one year through five years - 3,013 3,013 - ------------------------------------------------------------------------------------------------- $8,999 $13,373 $22,372 =================================================================================================
For the nine months ended September 30, 1996 and 1995, purchases and maturities of short-term investments were as follows:
------------------------------------------- ------------------------------------------- Nine Months Ended Nine Months Ended September 30, 1996 September 30, 1995 (Unaudited) (Unaudited) Held-To- Available Total Held-To- Available Total Maturity For Sale Maturity For Sale ------------------------------------------- ------------------------------------------- Purchases $21,122 $ 9,317 $30,439 $17,393 $ 8,568 $25,961 Maturities 40,300 12,349 52,649 21,900 9,974 31,874 ------------------------------------------- ------------------------------------------- Net change $(19,178) $(3,032) $(22,210) $ (4,507) $(1,406) $(5,913) =========================================== ===========================================
3. ACCOUNTS RECEIVABLE:
SEPTEMBER 30, DECEMBER 31, 1996 1995 --------------------------------- (UNAUDITED) Construction contracts Completed and in progress $ 113,068 $81,240 Retentions 43,273 41,777 --------------------------------- 156,341 123,017 Construction material sales 16,255 12,380 Other 5,356 7,556 --------------------------------- 177,952 142,953 Less allowance for doubtful accounts 719 898 --------------------------------- $ 177,233 $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:
- --------------------------------------------------------------------------------------------------- SEPTEMBER 30, December 31, 1996 1995 - --------------------------------------------------------------------------------------------------- (UNAUDITED) Assets Total $ 74,706 $125,019 Less other venturers' interest 52,294 87,513 - --------------------------------------------------------------------------------------------------- Company's interest 22,412 37,506 - --------------------------------------------------------------------------------------------------- Liabilities Total 57,147 124,319 Less other venturers' interest 40,003 87,023 - --------------------------------------------------------------------------------------------------- Company's interest 17,144 37,296 - --------------------------------------------------------------------------------------------------- $ 5,268 $ 210 ===================================================================================================
6. PROPERTY AND EQUIPMENT:
SEPTEMBER 30, December 31, 1996 1995 --------------------------------------- (UNAUDITED) Land $ 24,315 $ 14,019 Quarry property 25,640 35,194 Buildings and leasehold improvements 12,973 11,657 Equipment and vehicles 384,783 361,676 Office furniture and equipment 5,369 4,570 --------------------------------------- 453,080 427,116 Less accumulated depreciation, depletion and amortization 272,278 251,896 --------------------------------------- $180,802 $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:
SEPTEMBER 30, December 31, 1996 1995 --------------------------------------- (UNAUDITED) Payroll and related employee benefits $21,816 $21,371 Accrued insurance 23,210 19,957 Income taxes payable 15,807 2,425 Other 12,362 11,588 --------------------------------------- $73,195 $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 nine months ended September 30, 1996. Unearned compensation is amortized over the restriction periods. Compensation expense related to restricted shares was $491 and $389 for the three months ended and $1,475 and $1,168 for the nine months ended September 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 nine months ended September 30, 1996, employee stock options for 54,950 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, state and local spending levels, pending state and federal legislation and future public and private bidding opportunities. Actual results could differ materially from those discussed in the forward-looking statements. RESULTS OF OPERATIONS Revenue for the quarter ended September 30, 1996 was $302.7 million, bringing the nine month total to $704.9 million, a decrease of $3.9 million for the quarter, or 1.3%, and an increase $66.4 million for the nine months, or 10.4%, over the same periods last year. REVENUE BY MARKET SECTOR NINE MONTHS ENDED SEPTEMBER 30, (IN MILLIONS)
1996 1995 $ % $ % - - - - Public 503.6 71.5% 494.1 77.4% Private 132.7 18.8% 79.6 12.5% Materials 68.6 9.7% 64.8 10.1% ------------------------------ 704.9 100.0% 638.5 100.0% ==============================
For the nine months ended September 30, 1996, revenue from public sector contracts increased $9.5 million to $503.6 million, or 71.5% of total revenue, from $494.1 million, or 77.4% of total revenue in 1995. Revenue from private sector contracts of $132.7 million, or 18.8% of total revenue, was up $53.1 million from the nine months ended September 30, 1995 level of $79.6 million, or 12.5% of total revenue. Revenue in the Company's primary geographical area, California, decreased to $375.6 million from $378.4 million last year and decreased as a percent of total revenue to 53.3% from 59.3%. Backlog at September 30, 1996 was $715.7 million, a $158.5 million increase from September 30, 1995 and a $125.6 million increase from December 31, 1995. New awards for the quarter totaled $382.5 million. Major awards for the quarter include a $68.9 million interest in a joint venture with Kiewit Pacific Company to build a dam embankment in Southern California, a $51.6 million highway project in Florida, a $19.7 million highway widening near Dallas, Texas, an $18.1 million project on I-4 near Tampa, Florida, and an $18.1 million highway project in Georgia. 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 Q3 382.5 715.7
11 12 While the public sector backlog increased in total dollars from December 31, 1995, as a percent of total it remained approximately the same. The private sector backlog represents an increase of $15.3 million over December 31, 1995 and an increase of $43.3 million from September 30, 1995. BACKLOG BY MARKET SECTOR ($ MILLIONS)
September 30, 1996 December 31, 1995 $ % $ % - - - - Public 634.7 88.7% 524.4 88.9% Private 81.0 11.3% 65.7 11.1% ----------------------------------------- 715.7 100.0% 590.1 100.0% =========================================
Gross profit for the quarter ended September 30, 1996 was $40.8 million, or 13.5% of revenue, as compared to $40.5 million, or 13.2% of revenue, for 1995. The nine month gross profit increased $0.7 million to $84.7 million, or 12.0% of revenue versus $84.0 million or 13.1% in 1995. General and administrative expenses for the three months ended September 30, 1996 decreased $3.1 million to $17.2 million, or 5.7% of revenue, as compared to 6.6% of revenue for the same quarter of 1995. This decrease primarily relates to lower costs in the branch division associated with regionalization efforts and the absence of a $1.5 million write-off the Company took in 1995 associated with a lease abandonment. For the nine months, general and administrative expenses decreased $0.8 million to $49.5 million and went down as a percent of revenue to 7.0% versus 7.9% last year. Other income decreased $0.3 million for the quarter but increased $2.0 million for the nine months ended September 30, 1996 primarily reflecting the Company's share of gains on sales of surplus equipment in joint ventures in the second quarter. SEASONALITY OF BUSINESS REVENUE AND NET INCOME BY QUARTER ($ MILLIONS)
NET REVENUE INCOME ------- ------ 1992 Q1 $ 68.0 $(3.9) Q2 130.0 2.8 Q3 186.7 4.3 Q4 133.6 0.7 1993 Q1 77.5 (4.2) Q2 142.9 - Q3 183.6 5.8 Q4 166.4 2.9 1994 Q1 106.7 (2.1) Q2 173.6 4.6 Q3 240.2 13.6 Q4 172.9 3.3 1995 Q1 105.3 1.2 Q2 226.7 8.3 Q3 306.6 13.2 Q4 256.2 5.8 1996 Q1 153.7 0.4 Q2 248.5 9.1 Q3 302.7 15.1
Net income for the quarter ended September 30, 1996 was $15.1 million, or $0.83 per share, an increase of $1.9 million or $0.09 per share from the quarter ended September 30, 1995 net income of $13.2 million, or $0.74 per share. The 14.1% increase in net income is attributable to the successful execution of work and the recognition of earnings on major projects that reached the 25% stage of completion during the quarter. For the nine months, net income was $24.6 million, or $1.36 per share, a $1.8 million, or $0.08 per share increase from the prior year net income of $22.8 million, or $1.28 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). 12 13 OUTLOOK In the wake of the November elections, there were a number of outcomes at the federal, state and local level which could provide positive implications for the Company in the long-term. At the federal level, we believe that by reelecting President Clinton and keeping the Republicans in control of Congress, there may be another opportunity to transfer 4.3 cents of the federal gasoline tax currently being used for deficit reduction to the highway trust as well as taking the highway trust funds out of the federal unified budget, providing the potential for increased highway expenditures. At the state level, voters in California approved Proposition 204, which provides $1.1 billion to restore and recharge the Sacramento Delta and the San Francisco Bay. There will be a number of water-related projects that will accompany this effort, especially in the area of water treatment. Also in California, voters approved Proposition 209, the California Civil Rights Initiative, which would, among other things, put an end to minority and women-owned businesses from receiving preferential treatment in state contracting. As expected, the enactment of Proposition 209 has been challenged in court. It is unclear at this point in time what effect, if any, Prop. 209 will have on our business in California, as most projects contracted with the state contain Federal funding which would not be affected by its passage. At the local level, voters in Santa Clara County, California approved two measures that could remove the current obstacles for increasing county sales tax for transportation improvements. Measure A detailed specific projects that voters "advised" county supervisors to undertake if any additional sales tax monies were made available. Measure B raised the general sales tax by one-half cent. The measures, in tandem, were designed to get around the stipulations of Propositions 13 and 62 which require that any special tax, like one raised for the specific purpose of transportation improvement, be approved by a two-thirds majority. Raising the general sales tax requires only a simple majority to pass. Measures A and B may serve as precedents for seventeen other California counties looking to renew their sales tax-based transportation improvement programs. It is widely anticipated, however, that these measures will be challenged in court. Turning to the private sector, we would expect to see continued improvement as economists expect California to lead the rest of the U.S. in job and economic growth. Economic activity continues to be robust in the mountain states, all of which should beget ample bidding opportunities for commercial/residential site development projects. It should be noted, however, that the real estate sector of the economy, which has historically led the state out of recession, is actually lagging the recovery at this time. The bidding outlook going forward is very bright, especially in our Heavy Construction Division, where as part of joint ventures we are currently estimating two projects valued at approximately $1 billion each, and three other projects valued in excess of $100 million each. As we have stated in the past, this high level of bidding activity reflects the strong public funding now available from federal, state and local sources. 13 14 LIQUIDITY AND CAPITAL RESOURCES
- ------------------------------------------------------------------------------- DOLLARS IN THOUSANDS 1996 1995 - ------------------------------------------------------------------------------- Cash and cash equivalents, September 30 $ 38,441 $ 31,234 Net cash provided (used) by: Operating activities 34,078 43,061 Investing activities (10,599) (23,662) Financing activities (7,448) (5,814) - -------------------------------------------------------------------------------
Cash provided by operating activities of $34.1 million for the nine months ended September 30, 1996 represents a $9.0 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 provided from the performance of contracts. Changes in cash provided from operations reflect seasonal variations based on the amount and progress of work being performed. Cash used by investing activities in 1996 improved $13.1 million primarily reflecting a $16.3 million increase in net maturities of short-term investments and $5.2 million additional proceeds in sales of property and equipment offset by an $11.7 million increase in cash used to purchase property and equipment. Cash used in financing activities decreased $1.6 million primarily reflecting the increase of $1.6 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 $6.4 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 September 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 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: November 14, 1996 William E. Barton Vice President and Chief Financial Officer 17 18 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE 11 Computation of Net Income per Common and Common Equivalent Share..............................................19
18 EX-11 2 COMPUTATION OF NET INCOME 1 EXHIBIT 11 GRANITE CONSTRUCTION INCORPORATED COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (UNAUDITED -- IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 - --------------------------------------------------------------------------------------------------- Weighted average common shares outstanding 18,008 17,811 17,962 17,738 Computation of incremental outstanding shares: Net effect of dilutive stock options based on treasury stock method 61 68 71 47 - --------------------------------------------------------------------------------------------------- Weighted average common shares outstanding, as adjusted 18,069 17,879 18,033 17,785 =================================================================================================== Net income $15,053 $13,194 $24,550 $22,754 =================================================================================================== Net income per common and common equivalent share $ 0.83 $ 0.74 $ 1.36 $ 1.28 ===================================================================================================
EX-27 3 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, SEPTEMBER 30, 1996. 1,000 U.S. DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 38,441 22,372 177,952 719 13,838 313,086 453,080 272,278 518,356 224,042 39,697 0 0 182 230,165 518,356 704,894 704,894 620,218 669,704 0 0 2,934 39,597 15,047 24,550 0 0 0 24,550 1.36 1.36
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