-----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, OnOGEXtuFCj5hJAiIh09NMkd++LShqrYhPkhFbSRVeI440uJYiboNL6uacJICjla NvKDmm3dDfkZsc5vOcYyfA== 0000927356-96-000298.txt : 19960701 0000927356-96-000298.hdr.sgml : 19960701 ACCESSION NUMBER: 0000927356-96-000298 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEADOW VALLEY CORP CENTRAL INDEX KEY: 0000934749 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96564418 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 March 31, 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 May 8, 1996 ----- -------------------------- Common Stock, $.001 par value 3,601,250 shares MEADOW VALLEY CORPORATION INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART I. FINANCIAL INFORMATION Page Number ------ Item 1. Financial Statements Condensed Consolidated Statements of Operations - Three Months Ended March 31, 1996 and March 31, 1995 3 Condensed Consolidated Balance Sheets - As of March 31, 1996 and December 31, 1995 4 Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 1996 and March 31, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10
2 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1996 1995 ------------- ------------- (UNAUDITED) (UNAUDITED) Contract Revenues........................... $ 28,678,057 $ 16,179,064 Cost of Contract Revenues................... 27,338,940 15,635,790 ------------- ------------- Gross Profit................................ 1,339,117 543,274 General and Administrative Expenses......... 650,041 348,482 ------------- ------------- Income from Operations...................... 689,076 194,792 ------------- ------------- Other Income (Expense): Interest income............................. 212,976 154,400 Interest expense - related party............ (115,978) (293,133) Other income (expense)...................... 11,695 (1,825) ------------- ------------- 108,693 (140,558) ------------- ------------- Income before income taxes.................. 797,769 54,234 Income taxes................................ 295,174 27,907 ------------- ------------- Net Income.................................. $ 502,595 $ 26,327 ============= ============= Net Income per share........................ $ .14 $ .02 ============= ============= Weighted Average Common Shares Outstanding.. 3,601,250 1,175,000 ============= =============
3 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 1996 1995 * ------------ ------------ Assets: (UNAUDITED) Current Assets: Cash and cash equivalents........................................ $ 6,460,530 $ 5,357,904 Restricted cash.................................................. 1,832,027 2,629,549 Accounts receivable.............................................. 16,726,726 13,710,390 Prepaid expenses and other....................................... 70,230 67,000 Notes receivable - related parties............................... 257,575 257,575 Costs and estimated earnings in excess of billings on uncompleted contracts......................................... 4,292,116 2,721,178 ------------- ------------ Total Current Assets................................... 29,639,204 24,743,596 Property and equipment, net........................................... 2,341,867 1,997,438 Refundable deposits................................................... 104,277 48,989 Goodwill, net......................................................... 1,880,872 1,900,880 Tradename, net........................................................ 33,486 - Real Estate........................................................... 218,883 218,883 ------------- ------------ Total Assets.............................................. $ 34,218,589 $ 28,909,786 ============= ============= Liabilities and Stockholders' Equity : Current Liabilities: Obligation under capital lease................................... $ 75,840 $ 70,504 Accounts payable................................................. 15,060,861 10,985,454 Accrued liabilities.............................................. 1,420,225 1,040,422 Billings in excess of costs and estimated earnings on uncompleted contracts....................................... 1,421,767 718,794 Income tax payable............................................... 252,945 609,315 ------------- ------------ Total Current Liabilities................................. 18,231,638 13,424,489 Deferred income taxes................................................. 34,245 34,245 Obligation under capital lease........................................ 188,114 189,055 Note payable - related party.......................................... 3,500,000 3,500,000 ------------- ------------ Total Liabilities......................................... 21,953,997 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................................................ 2,116,569 1,613,974 ------------- ------------ Total Stockholders' Equity................................ 12,264,592 11,761,997 ------------- ------------ Total Liabilities and Stockholders' Equity................ $ 34,218,589 $ 28,909,786 ============= ============
* Derived from audited financial statements 4 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1996 1995 ------------- ------------ Increase (Decrease) in Cash and Cash Equivalents: (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Cash received from customers.............................. 24,825,781 $ 12,539,633 Cash paid to suppliers and employees...................... (23,533,044) (14,555,128) Interest received......................................... 175,136 106,571 Interest paid............................................. (32,883) (186,609) Income taxes paid......................................... (651,544) (340,298) ------------- ------------ Net cash provided by (used in) operating activities.. 783,446 (2,435,831) ------------- ------------ Cash flows from investing activities: Decrease (increase) in restricted cash.................... 797,522 (824,544) Purchase of AKR Contracting tradename..................... (36,531) - Proceeds from sale of property and equipment.............. 79,364 - Purchase of property and equipment........................ (502,025) (222,116) ------------- ------------ Net cash provided by (used in) investing activities.. 338,330 (1,046,660) ------------- ------------ Cash flows from financing activities: Deferred offering costs................................... - (190,476) Repayment of capital lease obligation..................... (19,150) - ------------- ------------ Net cash used in financing activities................ (19,150) (190,476) ------------- ------------ Net increase (decrease) in cash and cash equivalents........... 1,102,626 (3,672,967) Cash and cash equivalents at beginning of period............... 5,357,904 4,739,424 ------------- ------------ Cash and cash equivalents at end of period..................... $ 6,460,530 $ 1,066,457 ============= ============
5 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. (MVC), 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 three months ended March 31, 1996 are not necessarily indicative of operating results for the entire year. 3. AKR Contracting Acquisition During the three months ended March 31, 1996, the Company acquired the tradename and certain assets of AKR Contracting in the amount of $35,531 and 74,924, respectively. The tradename amortization is provided for on a straight line basis over three years. The acquisition of the above assets was not material to the Company's financial position. 6 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 and Utah. 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. On January 2, 1996, the Company acquired the tradename and certain assets of AKR Contracting in the amount of $35,531 and 74,924, respectively. AKR Contracting is an unaffiliated company in Phoenix, Arizona specializing in earthwork, grading and paving of residential subdivisions, commercial centers and small public works. Through AKR, the Company expects to increase revenue from the private construction market in which the Company was not previously engaged. The acquisition of the above assets was not material to the Company's financial position. 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 75% of the Company's revenue for the three months ended March 31, 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 March 31, 1996 the Company had backlog of approximately $98 million. RESULTS OF OPERATIONS The following table sets forth, for the three months ended March 31, 1996 and 1995, certain items derived from the Company's Condensed Consolidated Statements of Operations expressed as a percentage of contract revenue.
THREE MONTHS ENDED MARCH 31, -------------------------------- 1996 1995 ------------ ------------ Contract revenue 100.0% 100.0% Gross profit 4.7 3.4 General and administrative expense 2.3 2.2. Interest income .8 1.0 Interest expense .4 1.8 Income before income taxes 2.8 .4 Net income after income taxes 1.8 .2
7 THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995 Revenue and Backlog. Revenue increased 77% to $28.7 million for the three months ended March 31, 1996 ("interim 1996") from $16.2 million for the three months ended March 31, 1995 ("interim 1995"). The increase results from a $30.0 million increase in backlog at December 31, 1995 from the prior year. Backlog increased 9% to approximately $98 million at March 31, 1996, from approximately $90 million at March 31, 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 increased from 3.4% for interim 1995 to 4.7% for interim 1996. The increase results primarily from the settlement of a claim which is related to a project completed during 1995 which improved gross profit by 2.2%, offset by a decrease in gross profit margins due to (i) erratic weather conditions that delayed the completion of a project (ii) difficulty in assembling an adequately skilled labor force due to the physical location of a construction site and (iii) cost related plan or specification errors. 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 $348,482 for interim 1995 to $650,041 for interim 1996. The increase results primarily from the 77% growth in revenue and the Company's expansion in the Utah market and the private construction market. Interest Income and Expense. Interest income increased for interim 1996 to $212,976 from $154,400 for interim 1995 due to invested proceeds from the initial public offering, increased cash from operations and higher average interest rates earned during interim 1996. Interest expense decreased for interim 1996 to $115,978 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 $26,327 for interim 1995 to $502,595 for interim 1996. The increase primarily resulted from a higher gross profit margin discussed above together with interest income and interest expense. 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 three months ended March 31, 1996 and 1995, certain items from the condensed consolidated statements of cash flows.
Three months ended March 31, ----------------------- 1996 1995 ----------- ---------- Cash Flows Provided by (Used in) Operating Activities $ 783,446 $(2,435,831) Cash Flows Provided by (Used in) Investing Activities 338,330 (1,046,660) Cash Flows Used in Financing Activities ( 19,150) ( 190,476)
Although the Company expects increased profitability as operations continue to 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. 8 Accounts receivable and net costs in excess of billings ("billings") at March 31, 1996, were approximately $19.6 million versus $15.7 million at March 31, 1995 an increase of 24.8%. Revenues for the same period increased 77%. The outstanding accounts receivable and billings have increased primarily due to the growth in revenue. 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 March 31, 1996. Cash provided by investing activities during interim 1996 was approximately $300,000, and included the release of retentions held in a restricted cash account of approximately $800,000, offset by $500,000 in equipment purchase. During interim 1995 cash used in investing activities included an increase in restricted cash of approximately $800,000 and $200,000 in equipment purchase. Cash used in financing activities during interim 1996 included $19,000 repayment of capital lease obligations. During interim 1995 cash used in financing activities include deferred offering costs of approximately $190,000. The Company currently has commitments in the amount of approximately $180,000 for the purchase of precast forms and equipment. The Company anticipates incurring total costs of approximately $600,000, which include the above, 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 net proceeds of the IPO will be adequate to fund its short term and long term requirements 9 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 March 31, 1996. 10 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 /s/ Kenneth D. Nelson --------------------- Kenneth D. Nelson Chief Financial Officer By /s/ Julie L. Bergo --------------------- Julie L. Bergo Principal Accounting Officer 11 EX-27 2 ARTICLE 5 FDS
5 3-MOS 3-MOS DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 MAR-31-1996 MAR-31-1995 8,292,557 7,987,453 0 0 21,276,417 16,689,143 0 0 0 0 29,639,204 24,743,596 2,714,483 2,331,671 372,616 334,232 34,218,589 28,909,786 18,231,638 13,424,489 3,688,114 3,689,055 0 0 0 0 3,601 3,601 12,260,991 11,758,396 34,218,589 28,909,786 28,678,057 16,179,064 28,678,057 16,179,064 27,338,940 15,635,790 27,338,940 15,635,790 0 0 0 0 115,978 293,133 797,769 54,234 295,174 27,907 0 0 0 0 0 0 0 0 502,595 26,327 .14 .02 0 0 Restricted Cash: At March 31, 1996 and December 31, 1995, the Company had restricted money market and trust accounts in the aggregate amounts of $1,832,027 and $2,629,549, respectively. These funds are held in lieu of retention on some of the Company's construction contracts and will be released to the Company when the contracts are completed.
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