<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) November 13, 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)
Registrant's 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
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
SEPTEMBER 30, 1995 (UNAUDITED)
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<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,660
Accounts receivable, net 74,192
Costs and estimated earnings in excess of billings on uncompleted contracts 17,363
Inventories 698
Prepaid expenses 170
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Total current assets 105,083
PROPERTY, PLANT, AND EQUIPMENT - Net 2,649
OTHER ASSETS 3,750
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TOTAL ASSETS $111,482
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LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt and capital lease obligations $ 1,073
Accounts payable 25,332
Current portion of related parties accounts payable 800
Billings in excess of costs and estimated earnings on uncompleted contracts 29,162
Accrued payroll and benefits 8,203
Other accrued expenses and liabilities 6,727
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Total current liabilities 71,297
LONG-TERM LIABILITIES 1,335
LONG-TERM LIABILITIES - RELATED PARTIES 7,636
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Total liabilities 80,268
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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 31,213
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Total stockholder's equity 31,214
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $111,482
==========
See notes to condensed consolidated financial statements.
</TABLE>
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
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<S> <C>
CONSTRUCTION REVENUES $74,885
COSTS AND EXPENSES:
Cost of construction 66,360
Selling, general and administrative 6,643
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73,003
OPERATING INCOME 1,882
OTHER EXPENSES:
Interest income, net 13
Management fee - related party (716)
Net asset charge - related party 2,078
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NET INCOME $ 3,257
=========
See notes to condensed consolidated financial statements.
</TABLE>
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
- --------------------------------------------------
<S> <C>
CONSTRUCTION REVENUES $220,064
COSTS AND EXPENSES:
Cost of construction 199,268
Selling, general and administrative 19,709
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218,977
OPERATING INCOME 1,087
OTHER EXPENSES:
Interest expense, net 205
Management fee - related party 2,155
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NET LOSS ($1,273)
==========
See notes to condensed consolidated financial statements.
</TABLE>
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
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ADDITIONAL
PAID-IN
CAPITAL AND
RETAINED
COMMON STOCK EARNINGS TOTAL
------------ -------- -------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $1 $32,486 $32,487
Net loss - (1,273) (1,273)
------------ ------- -------
BALANCE, SEPTEMBER 30, 1995 $1 $31,213 $31,214
============ ======= =======
See notes to condensed consolidated financial statements.
</TABLE>
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DYN SPECIALTY CONTRACTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
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<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,273)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,005
Gain on disposals of property, plant and equipment 0
Changes in operating assets and liabilities 2,322
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Net cash provided by operations 2,054
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment 34
Purchases of property, plant and equipment (413)
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Net cash used in investing activities (379)
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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 (76)
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Net cash used in financing activities (5,076)
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DECREASE IN CASH AND CASH EQUIVALENTS (3,401)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,061
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,660
==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 553
==========
See notes to condensed consolidated financial statements
</TABLE>
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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.
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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 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 September
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 as of September 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 and nine month periods ended September 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 Nine month periods ended September 30, 1995.
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 condensed
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.
November 13, 1995 By: /s/ Frank T. MacInnis
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Frank T. MacInnis, Chairman of the
Board, President and Chief Executive
Officer
