<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (date of earliest event reported) August 14, 1995
EMCOR Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-2315 11-2125338
................................................................
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
101 Merritt Seven Corporate Park, Norwalk, CT 06851
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code (203) 849-7800
N/A
................................................................
(Former name or former address, if changed since last report.)
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ITEM 5: OTHER EVENTS
Without acknowledging it is of importance to security holders, the following
financial statements of Dyn Specialty Contracting, Inc. ("Dyn") and its
subsidiaries are provided for informational purposes only (Dyn is a wholly
owned subsidiary of EMCOR, Group Inc.).
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
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June 30, 1995 (Unaudited)
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<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,331
Accounts receivable, net 71,611
Costs and estimated earnings in excess of billings
on uncompleted contracts 16,908
Inventories 710
Prepaid expenses 624
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Total current assets 98,184
PROPERTY, PLANT, AND EQUIPMENT - Net 2,915
OTHER ASSETS 3,750
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TOTAL ASSETS $104,849
========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term liabilities
and capital lease obligations $ 1,090
Accounts payable 24,416
Current portion of related parties accounts
payable 4,250
Billings in excess of costs and estimated
earnings on uncompleted contracts 25,637
Accrued payroll and benefits 6,917
Other accrued expenses and liabilities 7,437
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Total current liabilities 69,747
CAPITAL LEASE OBLIGATIONS 22
LONG-TERM LIABILITIES 3,371
LONG-TERM LIABILITIES- RELATED PARTIES 3,752
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Total liabilities 76,892
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $1 par value, 100 shares
authorized, issued, and outstanding 1
Additional paid-in capital and retained
earnings 27,956
--------
Total stockholder's equity 27,957
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $104,849
========
</TABLE>
See notes to condensed consolidated financial statements.
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands)
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Three Months Ended June 30, 1995 (Unaudited)
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<TABLE>
<S> <C>
CONSTRUCTION REVENUES $ 71,393
COSTS AND EXPENSES:
Cost of construction 65,146
Selling, general and administrative 6,430
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71,576
OPERATING LOSS (183)
OTHER EXPENSES:
Interest expense, net 98
Management fee - related party 722
Net asset charge - related party 948
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NET LOSS ($ 1,951)
========
</TABLE>
See notes to condensed consolidated financial statements.
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands)
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Six Months Ended June 30, 1995 (Unaudited)
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<TABLE>
<S> <C>
CONSTRUCTION REVENUES $145,179
COSTS AND EXPENSES:
Cost of construction 132,908
Selling, general and administrative 13,066
--------
145,974
OPERATING LOSS (795)
OTHER EXPENSES:
Interest expense, net 218
Management fee - related party 1,439
Net asset charge - related party 2,078
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NET LOSS ($4,530)
========
</TABLE>
See notes to condensed consolidated financial statements.
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(In Thousands)
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Six Months Ended June 30, 1995 (Unaudited)
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<TABLE>
<CAPTION>
Additional
Paid-In
Capital
and
Common Retained
Stock Earnings Total
------ -------- ------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $1 $32,486 $32,487
Net loss - (4,530) (4,530)
------ -------- -------
BALANCE, JUNE 30, 1995 $1 $27,956 $27,957
------ -------- -------
</TABLE>
See notes to condensed consolidated financial statements.
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
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Six Months Ended June 30, 1995 (Unaudited)
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<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($4,530)
Non-cash expenses 647
Changes in operating assets and liabilities 1,488
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Net cash used in operating activities (2,395)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant, and equipment 29
Purchases of property, plant, and equipment (316)
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Net cash used in investing activities (287)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings under working capital credit line (5,000)
Repayments of long-term liabilities and capital lease
obligations (48)
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Net cash used in financing activities (5,048)
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DECREASE IN CASH AND CASH EQUIVALENTS (7,730)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,061
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,331
=======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 453
=======
</TABLE>
See notes to condensed consolidated financial statements.
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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NOTE A, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization and Principles of Consolidation - Dyn Specialty Contracting, Inc.
(the "Company") is a wholly owned subsidiary of EMCOR Group, Inc. (formerly JWP
Inc.). JWP Inc. emerged from Chapter 11 of the United States Bankruptcy Code on
December 15, 1994 and changed its name to EMCOR Group, Inc. ("EMCOR").
The Company and its subsidiaries specialize in the design, distribution,
integration, installation, and maintenance of complex electrical systems.
Services are provided to a broad range of commercial, industrial, and
institutional customers throughout the United States.
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries. The Company's subsidiaries consist of the
following legal entities: Dynalectric Company; Dynalectric Company of Nevada;
Contra Costa Electric, Inc.; B&B Contracting and Supply Company; and KDC Inc.,
(formerly JWP Systems/Kirkwood Electric Co., Inc.). Significant intercompany
accounts and transactions have been eliminated.
Revenue Recognition - Revenues on long-term contracts are recognized on the
percentage-of-completion method. Percentage of completion is measured
principally by the percentage of labor costs incurred and accrued to date for
each contract to the estimated total labor costs for such contract, while
percentage of completion on other contracts is measured by the percentage of
costs incurred and accrued to date for each contract to the estimated total cost
of completion of each such contract. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in contract performance and estimated profitability may
result in revisions to costs and income and are recognized in the period in
which the revisions are determined.
Inventories - Inventories, which consist primarily of construction materials,
are stated at the lower of cost or market. Cost is determined principally by
using average costs.
Property, Plant and Equipment - Property, plant, and equipment is stated at
cost. Depreciation and amortization are provided using accelerated and
straight-line methods over estimated useful lives.
Cash Equivalents - For purposes of the condensed consolidated statement of cash
flows, the Company considers all highly liquid instruments with original
maturities of three months or less to be cash equivalents.
Other - The bonding company that was the source of surety bonds for the Company
and its subsidiaries terminated its surety business as of January 1994. As a
result, these corporations were without any
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surety bonding facilities for most of 1994. In November 1994 the Company entered
into an arrangement with a new surety bonding company to provide surety bonds
for the Company and its subsidiaries. The absence of available surety bonding
for the Company and its subsidiaries for most of 1994 resulted in a significant
reduction in their backlog. The new surety bonding arrangement has allowed the
Company and its subsidiaries to obtain new contracts thereby increasing backlog.
NOTE B, DEBT
Credit Agreement - On December 14, 1994, EMCOR and the Company and its
subsidiaries entered into a credit agreement (the "Dyn Credit Agreement") with a
group of lenders. The Dyn Credit Agreement provides the Company with a secured
revolving loan facility in the maximum aggregate principal amount of
$10,000,000. Borrowings under the Dyn Credit Agreement bear interest at the rate
of 15% per annum. The Dyn Credit Agreement requires quarterly commitment fee
payments of $100,000. The Dyn Credit Agreement terminates on June 14, 1996.
There were no borrowings outstanding under the Dyn Credit Agreement at June 30,
1995.
Borrowings under the Dyn Credit Agreement are secured, among other things, by
substantially all of the assets of the Company and its subsidiaries and the
capital stock of the Company and its subsidiaries.
The Dyn Credit Agreement requires the Company and its subsidiaries to follow
certain procedures with regard to deposits in and transfers from its various
bank accounts. The agreement contains certain covenants, the most restrictive
of which require the Company to maintain minimum levels of backlog during the
term of the Dyn Credit Agreement and to limit aggregate losses from operations.
Long-Term Debt - In connection with the purchase in 1988 by a subsidiary of the
Company of certain assets, the subsidiary incurred a contingent obligation to a
bank evidenced by a note (the "Contingent Note") in a maximum amount of
$988,112. The Contingent Note is noninterest-bearing and is payable in annual
installments, based upon the level of the subsidiary's annual pre-tax earnings.
The Contingent Note expires March 31, 1996. No amounts have been paid in respect
of the Contingent Note. The total amount of the Contingent Note is shown as a
current liability at June 30, 1995 in the accompanying condensed consolidated
balance sheet.
NOTE C, INCOME TAXES
EMCOR and its domestic subsidiaries, including the Company, file a consolidated
Federal income tax return. The Company has substantial net operating loss carry-
forwards ("NOL") and therefore no income tax provision has been provided for in
the accompanying condensed consolidated statements of operations for the three
or six month periods ended June 30, 1995.
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NOTE D, RELATED PARTY TRANSACTIONS
The principal insurance coverage for the Company and its subsidiaries is
provided under plans administered by EMCOR. Additionally, EMCOR charges the
Company and its subsidiaries an assessment for the capital used in its
operations, a management fee, and an allocation for income taxes (see Note C).
The balance due to EMCOR represents the cumulative unpaid amount of charges for
insurance, cost of capital, management fees, and taxes.
Other balances due to and from affiliates of EMCOR represent amounts owed by or
due to the Company as a result of goods and services purchased or sold. Total
revenues from related parties were approximately $0 and $23,000 for the three
and six month periods ended June 30, 1995, respectively.
NOTE E, STOCKHOLDER'S EQUITY
The Company's condensed consolidated financial statements have not been reported
upon separately before 1994. Prior to 1994, the Company's consendsed
consolidated financial statements were only included in the condensed
consolidated financial statements of EMCOR, its parent. As a result, the Company
does not have available a breakdown between the various components of
stockholder's equity. Accordingly, the Company has combined the balances of
additional paid-in capital and retained earnings on the accompanying condensed
consolidated balance sheet and condensed consolidated statement of stockholder's
equity.
NOTE F, LEGAL PROCEEDINGS
The Company's subsidiary, Dynalectric Company, is a defendant in an action
entitled Computran v. Dynalectric, et al., pending in the Superior Court of New
---------------------------------
Jersey, Bergen County, arising out of its participation in a joint venture in
1985. The plaintiff, Computran, a participant in and a subcontractor to the
joint venture, alleges that Dynalectric Company wrongfully terminated it from
the subcontract, fraudulently diverted funds due to Computran, misappropriated
its trade secrets and proprietary information, fraudulently induced it to enter
into the joint venture, and conspired with other defendants to commit acts in
violation of the New Jersey Racketeering Influence and Corrupt Organization Act.
The Company believes that Computran's claims are without merit and Dynalectric
Company is defending this matter vigorously. Dynalectric Company has filed
counter claims against Computran. Discovery is ongoing; no trial date has been
scheduled.
The Company and its subsidiaries are also involved in other legal proceedings
and claims that have arisen in the ordinary course of business.
The Company and its subsidiaries believe they have a number of valid defenses to
these actions and intends to vigorously defend itself in these matters. The
management of the Company does not believe that a significant liability will
result. However, the Company cannot predict the outcome of these actions or the
impact, if any, that the ultimate resolution of such matters will have upon the
Company's financial position or results of operations.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
EMCOR Group, Inc.
August 14, 1995 By s/ Frank T. MacInnis
----------------------------------
Frank T. MacInnis, Chairman of the
Board, President and Chief Executive
Officer
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