-----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, Ns3j5pl5xRUFyhB0nkXchcX/6a70jJfzv5LGa8xoZnaLe9ROn87dP92bOgAT3XnQ jXfAbemhOikLynlR6fnikQ== 0000927356-96-000680.txt : 19960812 0000927356-96-000680.hdr.sgml : 19960812 ACCESSION NUMBER: 0000927356-96-000680 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 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: 96607010 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 June 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 July 30, 1996 ----- ---------------------------- Common Stock, $.001 par value 3,601,250 shares MEADOW VALLEY CORPORATION INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 PART I. FINANCIAL INFORMATION Page Number ------ Item 1. Financial Statements Condensed Consolidated Statements of Operations - Six Months Ended June 30, 1996 and June 30, 1995 3 Condensed Consolidated Statements of Operations - Three Months Ended June 30, 1996 and June 30, 1995 4 Condensed Consolidated Balance Sheets - As of June 30, 1996 and December 31, 1995 5 Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 1996 and June 30, 1995 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 2 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, ---------------------------------- 1996 1995 ---------------- --------------- (UNAUDITED) (UNAUDITED) Contract Revenues....................... $ 61,065,921 $ 39,054,567 Cost of Contract Revenues............... 59,605,131 37,570,355 ---------------- --------------- Gross Profit............................ 1,460,790 1,484,212 General and Administrative Expenses..... 1,277,323 747,266 ---------------- --------------- Income from Operations.................. 183,467 736,946 ---------------- --------------- Other Income (Expense): Interest income......................... 311,247 231,552 Interest expense - related party........ (265,844) (603,214) Other income (expense).................. 42,005 (8,279) Offering costs.......................... - (173,000) ---------------- --------------- 87,408 (552,941) ---------------- --------------- Income before income taxes.............. 270,875 184,005 Income taxes............................ 100,223 68,082 ---------------- --------------- Net Income.............................. $ 170,652 $ 115,923 ================ =============== Net Income per share.................... $ .05 $.10 ================ =============== 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 JUNE 30, --------------------------------- 1996 1995 --------------------------------- (UNAUDITED) (UNAUDITED) Contract Revenues....................... $ 32,387,864 $ 22,875,503 Cost of Contract Revenues............... 32,266,191 21,934,565 ---------------- ----------- Gross Profit............................ 121,673 940,938 General and Administrative Expenses..... 627,282 398,784 ---------------- ----------- Income (loss) from Operations.......... (505,609) 542,154 ---------------- ----------- Other Income (Expense): Interest income......................... 98,271 77,152 Interest expense - related party........ (149,866) (310,081) Other income (expense).................. 30,310 (6,454) Offering costs.......................... - (173,000) ---------------- ----------- (21,285) (412,383) ---------------- ----------- Income (loss) before income taxes....... (526,894) 129,771 Income tax (expense) benefit............ 194,951 (40,175) ---------------- ----------- Net Income (Loss)....................... $ (331,943) $ 89,596 ================ =========== Net Income (Loss) per share............. $ (.09) $ .08 ================ =========== Weighted Average Common Shares Outstanding........................... 3,601,250 1,175,000 ================ ===========
4 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, December 31, 1996 1995* ----------- ------------ Assets: (UNAUDITED) Current Assets: Cash and cash equivalents.......... $ 4,155,995 $ 5,357,904 Restricted cash.................... 2,210,005 2,629,549 Accounts receivable................ 22,080,744 13,710,390 Prepaid expenses and other......... 431,334 67,000 Notes receivable - related parties. 257,575 257,575 Costs and estimated earnings in excess of billings on uncompleted contracts........... 2,730,454 2,721,178 ----------- ------------ Total Current Assets..... 31,866,107 24,743,596 Property and equipment, net............. 3,989,996 1,997,438 Refundable deposits..................... 108,532 48,989 Goodwill, net........................... 1,860,865 1,900,880 Tradename, net.......................... 30,442 - Real Estate............................. 218,883 218,883 ----------- ------------ Total Assets................ $38,074,825 $28,909,786 =========== ============ Liabilities and Stockholders' Equity: Current Liabilities: Obligation under capital lease..... $ 100,869 $ 70,504 Notes payable...................... 207,936 - Accounts payable................... 17,536,914 10,985,454 Accrued liabilities................ 1,982,900 1,040,422 Billings in excess of costs and estimated earnings on uncompleted contracts......... 1,841,083 718,794 Income tax payable................. - 609,315 ----------- ------------ Total Current Liabilities... 21,669,702 13,424,489 Deferred income taxes................... 34,245 34,245 Obligation under capital lease.......... 240,188 189,055 Notes payable........................... 698,041 - Note payable - related party............ 3,500,000 3,500,000 ----------- ------------ Total Liabilities........... 26,142,176 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.................. 1,784,626 1,613,974 ----------- ------------ Total Stockholders' Equity.. 11,932,649 11,761,997 ----------- ------------ Total Liabilities and Stockholders' Equity....... $38,074,825 $28,909,786 =========== ============
* Derived from audited financial statements 5 MEADOW VALLEY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, ----------------------------- 1996 1995 ------------- ------------- Increase (Decrease) in Cash and Cash (UNAUDITED) (UNAUDITED) Equivalents: Cash flows from operating activities: Cash received from customers....... 53,812,070 $ 35,352,125 Cash paid to suppliers and (53,482,083) (33,944,478) employees......................... 330,785 225,024 Interest received.................. (83,085) (837,800) Interest paid...................... (907,212) (340,298) Income taxes paid.................. ------------- ------------- Net cash provided by (used in) operating activities............. (329,525) 454,573 ------------- ------------- Cash flows from investing activities: Decrease (increase) in restricted cash.............................. 419,544 (1,318,488) Purchase of AKR Contracting tradename......................... (36,531) - Collection of notes receivable - related party..................... - 600,000 Proceeds from sale of property and equipment 83,365 61,677 Purchase of property and equipment. (1,274,944) (317,313) ------------- ------------- Net cash used in investing activities................... (808,566) (974,124) ------------- ------------- Cash flows from financing activities: Deferred offering costs............ - (263,308) Repayment of capital lease obligation........................ (46,338) (11,934) Repayment of notes payable......... (17,480) - ------------- ------------- Net cash used in financing activities................... (63,818) (275,242) ------------- ------------- Net decrease in cash and cash equivalents............................ (1,201,909) (794,793) Cash and cash equivalents at beginning of period.............................. 5,357,904 4,739,424 ------------- ------------- Cash and cash equivalents at end of period................................. $ 4,155,995 $ 3,944,631 ============= =============
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. (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 six months ended June 30, 1996 are not necessarily indicative of operating results for the entire year. 3. Notes Payable Following is a summary of long-term debt at June 30, 1996: 10% note payable with monthly payments of $13,776.74 plus interest.................................................... $647,507 9% note payable with monthly payments of $5,669.49.......... 258,470 --------- 905,977 Less: current maturities included in current liabilities.... 207,936 --------- $698,041 ========== Following are maturities of long-term debt for each of the next 5 years: 1997................................................ $207,936 1998................................................ 215,984 1999................................................ 220,736 2000................................................ 212,158 2001................................................ 49,163 ---------- $905,977 ========== 4. Litigation The Company is defending a claim by a subcontractor whom declared bankruptcy and is seeking to recover costs that were paid by the Company in the amount of $800,000. The Company is vigorously defending its position that the costs were paid by the Company and as such the subcontractor is not entitled to the compensation received by the Company. The Company has accrued a liability in the amount of $180,000 as of June 30, 1996 related to the claim. 5. Related Party Transaction During the three months ended June 30, 1996, the Company acquired approximately $300,000 of equipment from an officer of the Company. 7 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. 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 67% of the Company's revenue for the three months ended June 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 June 30, 1996 the Company had backlog of approximately $115 million. RESULTS OF OPERATIONS The following table sets forth, for the six months and the three months ended June 30, 1996 and 1995, certain items derived from the Company's Condensed Consolidated Statements of Operations expressed as a percentage of contract revenue.
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, --------------------- ------------------- 1996 1995 1996 1995 ---------- --------- --------- --------- Contract revenue 100.0% 100.0% 100.0% 100.0% Gross profit 2.4 3.8 .4 4.1 General and administrative expense 2.1 1.9 1.9 1.7 Interest income .5 .6 .3 .3 Interest expense .4 1.5 .5 1.4 Income (loss) before income taxes .4 .5 (1.6) .6 Net income (loss) after income taxes .3 .3 (1.0) .4
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995 Revenue and Backlog. Revenue increased 56% to $61.1 million for the six months ended June 30, 1996 ("interim 1996") from $39.1 million for the six months ended June 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 $88 million of projects during interim 1996 compared to approximately $20 million during interim 1995. Backlog increased 31% to approximately $115 million at June 30, 1996, from approximately $88 million at June 30, 1995. Revenue is impacted in any one period by the backlog at the beginning of the period. 8 Gross Profit. As a percentage of revenue, gross profit decreased from 3.8% for interim 1995 to 2.4% 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 $747,266 for interim 1995 to $1,277,323 for interim 1996. The increase results primarily from the 56% growth in revenue and the Company's expansion in the Utah market, the private construction market, the sand and gravel market and the precast concrete market. Interest Income and Expense. Interest income increased for interim 1996 to $311,247 from $231,552 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 $265,844 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 $115,923 for interim 1995 to $170,652 for interim 1996. The increase primarily resulted from interest income and expense offset by a lower gross profit margin discussed above. THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995 Revenue and Backlog. Revenue increased 42% to $32.4 million for the three months ended June 30, 1996 ("interim 1996") from $22.9 million for the three months ended June 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 31% to approximately $115 million at June 30, 1996, from approximately $88 million at June 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 4.1% for interim 1995 to .4% 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. 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 $398,784 for interim 1995 to $627,282 for interim 1996. The increase results primarily from the 42% growth in revenue and the Company's expansion in the Utah market, the private construction market, the sand and gravel market and the precast concrete market. Interest Income and Expense. Interest income increased for interim 1996 to $98,271 from $77,152 for interim 1995 due to invested proceeds from the initial public offering. Interest expense decreased for interim 1996 to $149,866 due to the repayment of $6.5 million of loans issued in connection with the MVC acquisition. Net Income ( Loss) After Income Taxes. Net income (loss) after income taxes decreased from $89,596 for interim 1995 to $(331,943) for interim 1996. The decrease primarily resulted from a lower gross profit margin discussed above together with interest income and interest expense. 9 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 six months ended June 30, 1996 and 1995, certain items from the condensed consolidated statements of cash flows.
Six months ended June 30, ----------------------------- 1996 1995 ----------------- ---------- Cash Flows Provided by (Used in) Operating Activities $(329,525) $ 454,573 Cash Flows Used in Investing Activities (808,566) (974,124) Cash Flows Used in Financing Activities (63,818) (275,242)
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 June 30, 1996, were approximately $23.0 million versus $14.0 million at June 30, 1995 an increase of 64.3%. Revenues for the same period increased 56%. 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 June 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 $400,000, offset by $1,300,000 in equipment purchases. During interim 1995 cash used in investing activities included an increase in restricted cash of approximately $1,300,000 and $300,000 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 $46,000 repayment of capital lease obligations. During interim 1995 cash used in financing activities include deferred offering costs of approximately $263,000. The Company currently has commitments in the amount of approximately $560,000 for the purchase of a parcel of land related to the ready-mix operations. The Company anticipates incurring total costs of approximately $7,200,000, which include the above, for 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 $1,200,000 will be financed through bank notes and/or other financial instruments. 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. 10 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 June 30, 1996. 11 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 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS 6-MOS DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 JUN-30-1996 JUN-30-1995 6,366,000 0 0 0 25,068,773 0 0 0 0 0 31,866,107 0 4,572,927 0 582,931 0 38,074,825 0 21,669,702 0 4,438,229 0 0 0 0 0 3,601 0 11,929,048 0 38,074,825 0 61,065,921 39,054,567 61,065,921 39,054,567 59,605,131 37,570,355 59,605,131 37,570,355 0 0 0 0 265,884 603,214 270,875 184,005 100,223 68,082 0 0 0 0 0 0 0 0 170,652 115,923 .05 .10 0 0 AT JUNE 30, 1996 THE COMPANY HAD RESTRICTED MONEY MARKET AND TRUST ACCOUNTS IN THE AGGREGATE AMOUNT OF $2,210,005. 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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