-----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, HOKMpXfxd5ua3PMMliafe4j+Q95IOkxz6tVwzfPqASVQxlaQ/UVecRfVNJuRhie4 M9TP3/Ka+102T+3oUWRrwA== 0000866273-96-000015.txt : 19961016 0000866273-96-000015.hdr.sgml : 19961016 ACCESSION NUMBER: 0000866273-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATRIX SERVICE CO CENTRAL INDEX KEY: 0000866273 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 731352174 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18716 FILM NUMBER: 96643103 BUSINESS ADDRESS: STREET 1: 10701 E UTE ST CITY: TULSA STATE: OK ZIP: 74116-1517 BUSINESS PHONE: 9188388822 MAIL ADDRESS: STREET 1: 10701 E UTE ST CITY: TULSA STATE: OK ZIP: 74116-1517 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended August 31, 1996 Commission File number 0-l87l6 MATRIX SERVICE COMPANY (Exact name of registrant as specified in its charter) DELAWARE 73-1352l74 (State of incorporation) (I.R.S. Employer Identification No.) l070l E. Ute St., Tulsa, Oklahoma 74ll6-l5l7 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (9l8) 838-8822 Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during the preceding l2 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of October 14, 1996, there were 9,491,153 shares of the Company's common stock, $.0l par value per share, issued and 9,319,572 shares outstanding. PART I.- FINANCIAL INFORMATION ITEM 1. Financial Statements Matrix Service Company Condensed Consolidated Statements of Income (in thousands, except share and per share data) [CAPTION] Three Months Ended August 31 ----------------------- (unaudited) 1996 1995 --------- --------- Revenues $39,630 $43,161 Cost of revenues 35,665 38,840 -------- -------- Gross profit 3,965 4,321 Selling, general and administrative expenses 2,459 2,591 Goodwill and noncompete amortization 216 279 -------- -------- Operating income 1,290 1,451 Other income (expense): Interest income 29 30 Interest expense (114) (216) Other (49) 38 -------- -------- Income before income tax expense 1,156 1,303 Provision for federal and state income tax expense 524 752 -------- -------- Net income $632 $551 ======== ======== Net income per common and common equivalent shares: Primary $0.07 $0.06 Fully diluted $0.07 $0.06 Weighted average common and common equivalent shares outstanding: Primary 9,523,982 9,400,625 Fully diluted 9,523,982 9,405,226 See Notes to Condensed Consolidated Financial Statements
Matrix Service Company Condensed Consolidated Balance Sheets (in thousands)
August 31, May 31, 1996 1996 ----------- --------- (unaudited) ASSETS: Current assets: Cash and cash equivalents $ 1,376 $ 1,899 Accounts receivable 26,085 29,205 Costs and estimated earnings in excess of billings on uncompleted contracts 11,705 12,122 Inventories 4,783 4,149 Prepaid expenses 278 179 Deferred taxes 995 995 Income tax receivable 338 609 --------- -------- Total current assets 45,560 49,158 Investment in undistributed equity of a foreign joint venture 374 374 Property, plant and equipment at cost: Land and buildings 14,436 14,528 Construction equipment 22,936 23,414 Transportation equipment 5,275 4,990 Furniture and fixtures 2,749 2,806 Construction in progress 1,623 189 -------- -------- 47,019 45,927 Less accumulated depreciation 18,017 17,065 -------- -------- Net property, plant and equipment 29,002 28,862 Goodwill, net of accumulated amortization 26,906 27,033 Other assets 316 330 --------- --------- Total assets $102,158 $105,757 ========= ========= See Notes to Condensed Consolidated Financial Statements
Matrix Service Company Condensed Consolidated Balance Sheets (in thousands)
August 31, May 31, 1996 1996 ------------ --------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 7,145 $ 9,026 Billings on uncompleted contracts in excess of costs and estimated earnings 5,108 4,353 Accrued expenses 6,125 7,780 Current portion of long-term debt 1,619 1,629 --------- --------- Total current liabilities 19,997 22,788 Long-term debt: Bank credit agreement 1,000 2,000 Acquisition notes payable 264 397 Term note payable 2,178 2,450 --------- --------- Total long-term debt 3,442 4,847 Deferred income taxes 5,041 5,088 Stockholders' equity: Common stock 95 95 Additional paid-in capital 50,927 50,927 Retained earnings 24,234 23,617 Cumulative translation adjustment (108) (107) --------- --------- 75,148 74,532 Less: Treasury stock, at cost 1,470 1,498 --------- --------- Total stockholders' equity 73,678 73,034 --------- --------- Total liabilities and stockholders' equity $102,158 $105,757 ======== ======== See Notes to Condensed Consolidated Financial Statements
Matrix Service Company Condensed Consolidated Cash Flow Statements (in thousands)
Three Months Ended August 31 (unaudited) -------------------- 1996 1995 -------- -------- Cash flow from operating activities: Net income $ 632 $ 551 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,392 1,428 Changes in current assets and liabilities increasing (decreasing) cash: Accounts receivable 3,120 1,433 Costs and estimated earnings in excess of billings on uncompleted contracts 417 (2,548) Inventories (634) 379 Prepaid expenses (99) (107) Accounts payable (1,881) (1,185) Billings on uncompleted contracts in excess of costs and estimated earnings 755 403 Taxes and other accruals (1,432) 1,716 Other (2) 7 --------- -------- Net cash provided by operating activities 2,268 2,077 Cash flow from investing activities: Capital expenditures (1,459) (713) Proceeds from sale of equipment 21 8 Acuisition of subsidiary, net of cash acquired 47 - -------- -------- Net cash used in investing activities (1,391) (705) Matrix Service Company Condensed Consolidated Cash Flow Statements (in thousands) Three Months Ended August 31 (unaudited) ---------------------- 1996 1995 ---------- -------- Cash flows from financing activities: Repayment of acquisition payables (133) (964) Repayment of equipment notes (10) (12) Issuance of long-term debt 1,000 1,000 Repayments of long-term debt (2,272) (2,272) Issuance of stock 14 3 -------- ------- Net cash used in financing activities (1,401) (2,245) Cumulative translation adjustment 1 16 -------- ------- Decrease in cash and cash equivalents (523) (857) Cash and cash equivalents at beginning of period 1,899 1,976 -------- ------- Cash and cash equivalents at end of period $1,376 $1,119 ======== ======= See Notes to Condensed Consolidated Financial Statements
MATRIX SERVICE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE A - BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant inter-company balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-0l of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, the information furnished reflects all adjustments, consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The accompanying financial statements should be read in conjunction with the audited financial statements for the year ended May 3l, 1996, included in the Company's Annual Report on Form 10-K for the year then ended. The Company's business is seasonal; therefore, results for any interim period may not necessarily be indicative of future operating results. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Three Months Ended August 31, 1996 Compared to Three Months Ended August 31, 1995 Revenues for the quarter ending August 31, 1996 were $39.6 million as compared to revenues of $43.2 million for the quarter ended August 31, 1995, representing a decrease of approximately $3.5 million or 8.2%. The decrease is due principally to decreased revenues from the Company's new construction of aboveground storage tanks as compared with the same period in 1995 as a result of less new tank work in the West Coast area for the current period. Gross profit increased to $4.0 million for the quarterly period ending August 31, 1996. Gross profit as a percentage of revenues remained flat at 10% for the 1996 period compared to the 1995 period. The Company is experiencing some improvement in the demand for its products and services in its established markets. Selling, general and administrative expenses decreased to $2.5 million for the quarterly period ending August 31, 1996 from expenses of $2.6 million for the quarterly period ended August 31, 1995, a decrease of $132 thousand or approximately 5% and representing as a percentage of revenues, an increase to 6.2% for the 1996 period from 6.0% for the 1995 period. The decrease in expenses for the 1996 period was due to decreases in administrative costs as compared with the 1995 period. The amortization of noncompetition expense decreased for the 1996 period as compared to the 1995 period due to the expiration of certain noncompetition agreements at May 31, 1996, which were fully amortized at May 31, 1996. Operating income decreased to $1.3 million for the quarterly period ending August 31, 1996 from income of $1.5 million for the quarterly period ended August 31, 1995, or a decrease of $161 thousand. The decrease was due to a lower gross profit, partially offset by lower administrative costs and lower expenses from the amortization of noncompetition agreements. Interest expense decreased to $114 thousand for the quarterly period ending August 31, 1996 from $216 thousand of interest expense for the quarterly period ended August 31, 1995. The decrease resulted primarily from decreased borrowing under the Company's revolving credit facility and a term loan established on August 24, 1994. During the period there was an average of $1.5 million outstanding under the term loan. Net income increased to $632 thousand for the quarterly period ending August 31, 1996 from net income of $551 thousand for the quarterly period ended August 31, 1995. The increase was due principally to decreased provision for income tax for the 1996 period as compared to the 1995 period. The greater income tax provision for the 1995 period resulted from the tax requirement on certain transactions related to foreign operations which were discontinued during the 1995 period. Liquidity and Capital Resources The Company has financed its operations recently with cash generated by operations and advances under the Company's credit facility. The Company has a credit facility with a commercial bank under which the Company may borrow a total of $20.0 million. The Company may borrow up to $15.0 million under a revolving credit agreement based on the level of the Company's eligible receivables. The agreement provides for interest at the Prime Rate minus one-half of one percent (1/2 of 1%), or a LIBOR based option, and matures on October 31, 1997. At August 31, 1996, the interest rate was 7.75% and the outstanding advances under the revolver totaled $1.0 million. The credit facility also provides for a term loan up to $5.0 million. On October 5, 1994, a term loan of $4.9 million was made to the Company. The term loan is due on August 31, 1999 and is to be repaid in 54 equal payments beginning in March 1995 at an interest rate based upon the Prime Rate. At August 31, 1996, the interest rate on the term loan was 8.25%, and the outstanding balance was $3.3 million. Operations of the Company provided $2.3 million of cash for the three months ended August 31, 1996 as compared with providing cash from operations of $2.1 million for the three months ended August 31, 1995, representing an increase of approximately $193 thousand. The increase was primarily the result of increased collection of accounts receivable of $1.7 million and a net increase of $3.3 million in costs and estimated earnings in excess ofbillings on uncompleted contracts and offset by net decreases of $1.0 million from inventory purchases and a decrease from taxes and other accruals of $3.1 million. Capital expenditures during the three month period ended August 31, 1996 totaled approximately $1.5 million. The Company has invested approximately $421 thousand in transportation equipment to be used to support field operations and $700 thousand for land and a building for a new facility in the Pacific Northwest. In addition, approximately $203 thousand was used to purchase welding and construction equipment for field operations. The Company has currently budgeted approximately $4.3 million for additional capital expenditures during the remainder of fiscal year 1997 primarily to be used to purchase construction equipment. The Company expects to be able to finance such expenditures with available working capital. The Company believes that its existing funds, amounts available for borrowing under its credit facility, and cash generated by operations will be sufficient to meet the Company's working capital needs at least through fiscal 1997 and possibly thereafter unless significant expansions of operations not now planned are undertaken, in which case the Company would arrange additional financing as a part of any such expansion. PART II OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K: A. Exhibit 11 - Computation of earnings per share. B. Reports on Form 8-K: None Signature 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. MATRIX SERVICE COMPANY Date: October 15, 1996 By: /s/C. William Lee ------------------------ C. William Lee Vice President-Finance Chief Financial Officer Signing on behalf of the registrants the registrant's chief financial officer. EX-11 2 STATEMENTS RE COMPUTATION OF EARNINGS PER SHARE [ARTICLE] 5 [MULTIPLIER] 1,000 [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] May-31-1997 [PERIOD-START] Jun-01-1996 [PERIOD-END] Aug-31-1996 [COMMON] 9,524 [NET-INCOME] 632 EX-27 3 ARTICLE 5 FIN. DATA SCHEDULE FOR 1ST QTR 10-Q
5 1,000 3-MOS MAY-31-1997 AUG-31-1996 1,376 0 26,085 0 4,783 45,560 47,019 18,017 102,158 19,997 0 95 0 0 73,583 102,158 39,630 39,630 35,665 35,665 2,675 0 114 1,156 524 0 0 0 0 632 0.07 0.07
-----END PRIVACY-ENHANCED MESSAGE-----