-----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, S2LzER2ilXo63AvH4JJafR1bs4B53ypOcgF/tpzY1zxwoe8k+oCm/ALkatqmcvpz qLfOXDItWsbQeNundCaOtg== 0000927356-96-001023.txt : 19961113 0000927356-96-001023.hdr.sgml : 19961113 ACCESSION NUMBER: 0000927356-96-001023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEADOW VALLEY CORP CENTRAL INDEX KEY: 0000934749 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 880328443 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25428 FILM NUMBER: 96658045 BUSINESS ADDRESS: STREET 1: PO BOX 60726 CITY: PHOENIX STATE: AZ ZIP: 85082 BUSINESS PHONE: 702866024375400 MAIL ADDRESS: STREET 1: P O BOX 60726 CITY: PHOENIX STATE: AZ ZIP: 85082 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1996 ------------------------------------- Commission File Number 0-25428 ---------------------- MEADOW VALLEY CORPORATION - -------------------------------------------------------------------------------- (Exact Name of registrant as specified in its charter) NEVADA 88-0328443 - -------------------------------------------------------------------------------- (State or other Jurisdiction of (I.R.S.Employer Identification Number) incorporation or organization) 4411 South 40th Street, Suite D-11, Phoenix, AZ 85040 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (602) 437-5400 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 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 --------- --------- Number of shares outstanding of the issuer's common stock: Class Outstanding at November 4, 1996 ----- ------------------------------- Common Stock, $.001 par value 3,601,250 shares MEADOW VALLEY CORPORATION INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
PART I. FINANCIAL INFORMATION Page Number ----- Item 1. Financial Statements Condensed Consolidated Statements of Operations - Nine Months Ended September 30, 1996 and September 30, 1995 3 Condensed Consolidated Statements of Operations - Three Months Ended September 30, 1996 and September 30, 1995 4 Condensed Consolidated Balance Sheets - As of September 30, 1996 and December 31, 1995 5 Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1996 and September 30, 1995 6 Notes to Condensed Consolidated Financial Statements 7- 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13
2 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------- 1996 1995 ---------------------------------- (UNAUDITED) (UNAUDITED) Contract Revenues....................... $ 98,670,783 $66,164,437 Cost of Contract Revenues............... 95,848,306 63,408,858 ---------------------------------- Gross Profit............................ 2,822,477 2,755,579 General and Administrative Expenses..... 2,095,156 1,188,910 ---------------------------------- Income from Operations.................. 727,321 1,566,669 ---------------------------------- Other Income (Expense): Interest income......................... 492,200 312,226 Interest expense - related party........ (433,434) (907,687) Other income............................ 70,926 16,703 Offering costs.......................... - (173,000) ---------------------------------- 129,692 (751,758) ---------------------------------- Income before income taxes.............. 857,013 814,911 Income taxes............................ 317,095 298,257 ---------------------------------- Net Income.............................. $ 539,918 $ 516,654 ================================== Net Income per share.................... $ .15 $ .44 ================================== Weighted Average Common Shares Outstanding............................ 3,601,250 1,175,000 ==================================
3 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, ---------------------------------- 1996 1995 ---------------------------------- (UNAUDITED) (UNAUDITED) Contract Revenues....................... $ 37,604,862 $ 27,109,870 Cost of Contract Revenues............... 36,243,175 25,838,503 ---------------------------------- Gross Profit............................ 1,361,687 1,271,367 General and Administrative Expenses..... 817,833 441,644 ---------------------------------- Income from Operations.................. 543,854 829,723 ---------------------------------- Other Income (Expense): Interest income......................... 180,953 80,674 Interest expense - related party........ (167,590) (304,473) Other income............................ 28,921 24,982 ---------------------------------- 42,284 (198,817) ---------------------------------- Income before income taxes.............. 586,138 630,906 Income tax expense...................... 216,872 230,175 ---------------------------------- Net Income.............................. $ 369,266 $ 400,731 ================================== Net Income per share.................... $ .10 $ .34 ================================== Weighted Average Common Shares Outstanding............................ 3,601,250 1,175,000 ==================================
4 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, December 31, 1996 1995 * --------------- --------------- Assets: (UNAUDITED) Current Assets: Cash and cash equivalents.......... $ 2,715,674 $ 5,357,904 Restricted cash.................... 1,888,028 2,629,549 Accounts receivable................ 25,147,353 13,710,390 Prepaid expenses and other......... 525,750 67,000 Note receivable - related party.... 257,575 257,575 Note receivable - other............ 1,818 - Costs and estimated earnings in excess of billings on uncompleted contracts........... 4,354,018 2,721,178 --------------- --------------- Total Current Assets........ 34,890,216 24,743,596 Property and equipment, net............. 4,544,776 1,997,438 Refundable deposits..................... 598,735 48,989 Note receivable - other................. 211,080 - Goodwill, net........................... 1,840,858 1,900,880 Tradename, net.......................... 27,398 - Real Estate............................. - 218,883 --------------- --------------- Total Assets................ $42,113,063 $28,909,786 =============== =============== Liabilities and Stockholders' Equity: Current Liabilities: Obligation under capital lease..... $ 105,887 $ 70,504 Notes payable - other.............. 241,432 - Accounts payable................... 20,217,530 10,985,454 Accrued liabilities................ 1,872,555 1,040,422 Billings in excess of costs and estimated earnings on uncompleted contracts......... 2,578,608 718,794 Income tax payable................. - 609,315 --------------- --------------- Total Current Liabilities... 25,016,012 13,424,489 Deferred income taxes................... 34,245 34,245 Obligation under capital lease.......... 228,953 189,055 Notes payable - other................... 1,031,938 - Note payable - related party............ 3,500,000 3,500,000 --------------- --------------- Total Liabilities........... 29,811,148 17,147,789 --------------- --------------- Stockholders' Equity: Preferred stock - $.001 par value; 1,000,000 shares authorized, none issued and outstanding..... - - Common stock - $.001 par value; 15,000,000 shares authorized, 3,601,250 issued and outstanding.. 3,601 3,601 Additional paid-in capital......... 10,943,569 10,943,569 Capital adjustment................. (799,147) (799,147) Retained earnings.................. 2,153,892 1,613,974 --------------- --------------- Total Stockholders' Equity.. 12,301,915 11,761,997 --------------- --------------- Total Liabilities and Stockholders' Equity....... $42,113,063 $28,909,786 ============== ================ * Derived from audited financial statements
5 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------- 1996 1995 -------------- --------------- Increase (Decrease) in Cash and Cash (UNAUDITED) (UNAUDITED) Equivalents: Cash flows from operating activities: Cash received from customers........ $ 87,478,931 $ 59,753,153 Cash paid to suppliers and employees.......................... (88,660,031) (59,047,487) Interest received................... 509,129 302,183 Interest paid....................... (145,991) (1,138,689) Income taxes paid................... (907,212) (340,298) -------------- --------------- Net cash used in operating activities.................... (1,725,174) (471,138) -------------- --------------- Cash flows from investing activities: Decrease (increase) in restricted cash............................... 741,522 (1,056,533) Purchase of AKR Contracting tradename.......................... (36,531) - Collection of notes receivable - related party...................... - 600,000 Collection of note receivable - other.............................. 435 - Proceeds from sale of property and equipment.......................... 97,008 67,601 Proceeds from sale of rental real estate............................. 16,866 - Purchase of property and equipment.. (1,592,809) (470,386) -------------- --------------- Net cash used in investing activities.................... (773,509) (859,318) -------------- --------------- Cash flows from financing activities: Deferred offering costs............. - (355,466) Repayment of capital lease obligation......................... (73,460) (20,299) Repayment of notes payable - other.. (70,087) - -------------- --------------- Net cash used in financing (143,547) (375,765) -------------- --------------- Net decrease in cash and cash equivalents............................. (2,642,230) (1,706,221) Cash and cash equivalents at beginning of period............................... 5,357,904 4,739,424 -------------- --------------- Cash and cash equivalents at end of period.................................. $ 2,715,674 $ 3,033,203 ============== ===============
6 MEADOW VALLEY CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Corporation Meadow Valley Corporation (the "Company") operates primarily as the holding company of Meadow Valley Contractors, Inc. (MCV), a general contractor, primarily engaged in the construction of structural concrete highway bridges and overpasses and the paving of highways and airport runways. The Company acquired all of the outstanding common stock of MVC effective October 1, 1994. 2. Presentation of Interim Information The amounts included in this report are unaudited; however, in the opinion of management, all adjustments necessary for a fair statement of results for the stated periods have been included. These adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Form 10-K under the Securities Exchange Act of 1934 as filed with the Securities and Exchange Commission. The results of operations for the nine months ended September 30, 1996 are not necessarily indicative of operating results for the entire year. 3. Note Receivable-other Following is a summary of note receivable-other at September 30, 1996 8% note receivable, 84 monthly payments in the amount of $1,565.36 commencing July 19, 1996, balloon payment in the amount of $197,282 due June 19, 2003, collateralized by real estate........ $212,898 Less: current portion.................................. 1,818 -------- $211,080 ======== 4. Notes Payable-other Following is a summary of notes payable-other at September 30, 1996 9.33% note payable, first six consecutive payments interest only commencing September 15, 1996, remaining 78 months principle and interest payments of $7,227.38, due in full August 15, 2003............... $420,000 Less: current portion................................... 28,388 -------- $391,612 ======== Following are maturities of long-term debt for each of the next 5 years: 1997............................ $ 28,388 1998............................ 52,394 1999............................ 57,497 2000............................ 63,097 2001............................ 69,242 Subsequent to 2001.............. 149,382 ------- $420,000 ======== 7 MEADOW VALLEY CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. Line of Credit At September 30, 1996 the Company had available from a commercial bank a $2,000,000 operating line of credit ("line of credit") at an interest rate of the commercial bank's prime plus .50%, and a $2,000,000 line of credit at an interest rate of the commercial bank's prime plus .25%. At September 30, 1996, both lines of credit were paid in full. Under the line of credit, the Company is required to maintain certain levels of working capital, to promptly pay all it obligations and not to convey, sell or lease all or substantially all of its assets. The Company was in full compliance with all such covenants at September 30, 1996. The line of credit expires August 15, 1997. 6. Commitments During September 1996, the Company entered into an operating equipment lease agreement. The terms of the lease agreement provides for 120 monthly payments in the amount of $19,079 commencing October 1996. Following are the future minimum lease payments for the next 5 years: 1997......................... $ 228,948 1998......................... 228,948 1999......................... 228,948 2000......................... 228,948 2001......................... 228,948 Subsequent to 2001........... 1,144,740 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company is a heavy construction contractor specializing since 1980 in structural concrete construction of highway bridges and overpasses and the paving of highways and airport runways. The Company generally serves as the prime contractor for public sector customers (such as federal, state and local governmental authorities) in the states of Nevada, Arizona, Utah and New Mexico. The Company believes that specializing in structural concrete construction has contributed significantly to its revenue growth and provides it with an advantage in the competitive bidding process. The Company has historically relied upon a small number of projects to generate a significant portion of its revenue. For instance, revenue generated from five projects represented 62% of the Company's revenue for the three months ended September 30, 1996. Results for any one calendar quarter may fluctuate widely depending upon the stage of completion of the Company's active projects and backlog at the beginning of any one calendar quarter. At September 30, 1996 the Company had backlog of approximately $138 million. RESULTS OF OPERATIONS The following table sets forth, for the nine months and the three months ended September 30, 1996 and 1995, certain items derived from the Company's Condensed Consolidated Statements of Operations expressed as a percentage of contract revenue.
NINE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- -------------------- 1996 1995 1996 1995 -------- -------- -------- ------- Contract revenue 100.0% 100.0% 100.0% 100.0% Gross profit 2.9 4.2 3.6 4.7 General and administrative expense 2.1 1.8 2.2 1.6 Interest income .5 .5 .5 .3 Interest expense .4 1.4 .4 1.1 Income before income taxes .9 1.2 1.6 2.3 Net income after income taxes .5 .8 1.0 1.5
NINE MONTHS ENDED SEPTEMBER, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1995 Revenue and Backlog. Revenue increased 49% to $98.7 million for the nine months ended September 30, 1996 ("interim 1996") from $66.2 million for the nine months ended September 30, 1995 ("interim 1995"). The increase results from a $30.0 million increase in backlog at December 31, 1995 from the prior year and the award of approximately $100 million of projects during interim 1996 compared to approximately $58 million during interim 1995. Backlog increased 38% to approximately $138 million at September 30, 1996, from approximately $100 million at September 30, 1995. Revenue is impacted in any one period by the backlog at the beginning of the period. 9 Gross Profit. As a percentage of revenue, gross profit decreased from 4.2% for interim 1995 to 2.9% for interim 1996. The decrease results primarily from cost overruns attributable to (i) omission of costs from bid estimates (ii) erratic weather conditions that delayed the completion of a project (iii) difficulty in assembling an adequately skilled labor force due to the physical location of a construction site (iv) erroneous assumptions at bid time regarding the Company's construction productivity (v) cost related plan or specification errors and (vii) inadequate field and corporate supervision, offset by a 2.2% increase in gross profit margins due to the settlement of a claim which is related to a project completed during 1995. The Company is requesting additional compensation for costs incurred related to plan or specification errors based upon the Company's contractual right. Gross profit margins are affected by construction delays and difficulties due to weather conditions, availability of materials, the timing of work performed by other subcontractors and the physical and geological condition of the construction site. General and Administrative. General and administrative expenses increased from $1,188,910 for interim 1995 to $2,095,156 for interim 1996. The increase results primarily from the 49% growth in revenue and the Company's expansion in the Utah market, the private construction market, the sand and gravel market, the precast concrete market and the ready-mix concrete market. Interest Income and Expense. Interest income increased for interim 1996 to $492,200 from $312,226 for interim 1995 due to invested proceeds from the initial public offering and increased amounts being held in retention during interim 1996. Interest expense decreased for interim 1996 to $433,434 due to the repayment of $6.5 million of loans issued in connection with the MVC acquisition. Net Income After Income Taxes. Net income after income taxes increased from $516,654 for interim 1995 to $536,918 for interim 1996. The increase primarily resulted from interest income and expense offset by a lower gross profit margin discussed above. THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1995 Revenue and Backlog. Revenue increased 39% to $37.6 million for the three months ended September 30, 1996 ("interim 1996") from $27.1 million for the three months ended September 30, 1995 ("interim 1995"). The increase results from a $30.0 million increase in backlog at December 31, 1995 from the prior year and continued growth in backlog during interim 1996 . Backlog increased 38% to approximately $138 million at September 30, 1996, from approximately $100 million at September 30, 1995. Revenue is impacted in any one period by the backlog at the beginning of the period. Gross Profit. As a percentage of revenue, gross profit decreased from 4.7% for interim 1995 to 3.6 for interim 1996. The decrease results primarily from cost overruns attributable to two projects that were completed or substantially completed during interim 1996. The cost overruns were the result of cost related plan or specification errors, omission of costs from bid estimates and inadequate field and corporate supervision. General and Administrative. General and administrative expenses increased from $441,644 for interim 1995 to $817,833 for interim 1996. The increase results primarily from the 39% growth in revenue and the Company's expansion in the Utah market, the private construction market, the sand and gravel market, the precast concrete market and the ready-mix concrete market. Interest Income and Expense. Interest income increased for interim 1996 to $180,953 from $80,674 for interim 1995 due to invested proceeds from the initial public offering and increased amounts held in retention. Interest expense decreased for interim 1996 to $167,590 due to the repayment of $6.5 million of loans issued in connection with the MVC acquisition. Net Income After Income Taxes. Net income after income taxes decreased from $400,731 for interim 1995 to $369,266 for interim 1996. The decrease primarily resulted from a lower gross profit margin discussed above together with the increase in general and administrative expense. 10 LIQUIDITY AND CAPITAL RESOURCES The Company's primary need for capital has been to finance expansion and capital expenditures. Historically, the Company's primary source of cash has been from operations. Revenue growth has required additional capital to finance expanded receivables, retentions and capital expenditures and address fluctuations in the work-in-process billing cycle, wherein costs and estimated earnings on contracts in progress have exceeded billing. The following table sets forth for the nine months ended September 30, 1996 and 1995, certain items from the condensed consolidated statements of cash flows. Nine months ended September 30, ------------------------- 1996 1995 ------------ ---------- Cash Flows Used in Operating Activities $(1,725,174) $(471,138) Cash Flows Used in Investing Activities (773,509) (859,318) Cash Flows Used in Financing Activities (143,547) (375,765) Although the Company expects increased profitability as operations improve, cash may be reduced to finance receivables and for customer cash retention required under contract subject to completion. In general, cash flows from projects are negative until a project is approximately 15% complete, then become positive during the middle approximately 70% of the project, and again become negative during the final approximately 15% of the project. Management continually monitors the Company's cash requirements to maintain adequate cash reserves, and the Company believes that its cash balances were and are sufficient. Accounts receivable and net costs in excess of billings ("billings") at September 30, 1996, were approximately $26.9 million versus $16.6 million at September 30, 1995 an increase of 62%. Revenues for the same period increased 49%. The outstanding accounts receivable and billings have increased primarily due to the growth in revenue and increased cash retention required under contract subject to completion of the project. The Company contracts primarily with public sector customers, which it believes significantly reduces exposure to conventional bad debts. Accordingly, based on the Company's history of no material delays in the collection of accounts receivable, no allowance was established for potentially uncollectible accounts at September 30, 1996. Cash used by investing activities during interim 1996 was approximately $800,000, and included the release of retentions held in a restricted cash account of approximately $700,000, offset by $1,600,000 in property and equipment purchases. During interim 1995 cash used in investing activities included an increase in restricted cash of approximately $1,000,000 and $470,000 in equipment purchase offset by the collection of related party notes receivable of approximately $600,000. Cash used in financing activities during interim 1996 included approximately $73,000 repayment of capital lease obligations and $70,000 repayment of notes payable - other. During interim 1995 cash used in financing activities include deferred offering costs of approximately $355,000. The Company currently has available from a commercial bank a $2,000,000 operating line of credit ("line of credit") at an interest rate of the commercial bank's prime plus .50%, and a $2,000,000 line of credit at an interest rate of the commercial bank's prime plus .25%. At September 30, 1996, both lines of credit were paid in full. Under the line of credit, the Company is required to maintain certain levels of working capital, to promptly pay all it obligations and not to convey, sell or lease all or substantially all of its assets. The Company was in full compliance with all such covenants and there are no material covenants or restrictions in the line of credit which the company believes would impair it operations. The line of credit expires August 15, 1997. The Company anticipates incurring total costs related to the ready-mix operations of approximately $7,200,000, which include the acquisition of land, equipment and batch plant. The batch plant and its related equipment in the amount of approximately $6,000,000 will be financed primarily through operating leases. The land totaling approximately 11 $1,200,000 will be financed through bank notes and/or other financial instruments, which includes $132,000 of capital expenditures incurred and $420,000 financed during interim 1996. The Company anticipates incurring total costs of approximately $600,000, which includes $180,000 of capital expenditures incurred during interim 1996, for the acquisition of equipment and construction of a precast manufacturing facility. The facility and its related equipment will be financed with the proceeds of the IPO. Management believes that the Company's cash reserves are sufficient to fund its cash requirements for the next 12 months and that the Company's current working capital combined with the remaining net proceeds of the IPO and other available financial sources will be adequate to fund its short term and long term requirements. 12 PART 11. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended September 30, 1996. 13 SIGNATURE Pursuant to the requirements of the Securities Exchange Act as of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEADOW VALLEY CORPORATION (Registrant) By ____________________________ Kenneth D. Nelson Chief Financial Officer By ____________________________ Julie L. Bergo Principal Accounting Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS 9-MOS DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 SEP-30-1996 SEP-30-1995 4,603,702 0 0 0 30,286,514 0 0 0 0 0 34,890,216 0 5,318,393 0 773,617 0 42,113,063 0 25,016,012 0 4,760,891 0 0 0 0 0 3,601 0 12,298,314 0 42,113,063 0 98,670,783 66,164,437 98,670,783 66,164,437 95,848,306 63,408,858 95,848,306 63,408,858 0 0 0 0 433,434 907,687 857,013 814,911 317,095 298,257 0 0 0 0 0 0 0 0 539,918 516,654 .15 .44 0 0
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