<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to________
Commission file number 0-5423
DYCOM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-1277135
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4440 PGA Boulevard, Palm Beach Gardens, Florida 33410
(Address of principal executive office) (Zip Code)
(407) 627-7171
(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 __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of March 8, 1996
_____ __________________________________
Common Stock, par value $0.33 1/3 8,558,945
<PAGE> 2
DYCOM INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
________
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
January 31, 1996 and July 31, 1995 3
Condensed Consolidated Statements of
Operations for the Three Months Ended
January 31, 1996 and 1995 4
Condensed Consolidated Statements of
Operations for the Six Months Ended
January 31, 1996 and 1995 5
Condensed Consolidated Statements of
Cash Flows for the Six Months Ended
January 31, 1996 and 1995 6-7
Notes to Condensed Consolidated
Financial Statements 8-12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13-15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
EXHIBIT INDEX 18
</TABLE>
<PAGE> 3
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
January 31, July 31,
1996 1995
____ ____
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 4,937,972 $ 4,306,675
Accounts receivable, net 11,996,541 16,330,477
Costs and estimated earnings in
excess of billings 5,233,764 5,223,425
Deferred tax assets 828,499 385,755
Other current assets 1,336,105 1,396,201
------------ ------------
Total current assets 24,332,881 27,642,533
------------ ------------
PROPERTY AND EQUIPMENT, net 19,010,360 18,802,563
------------ ------------
OTHER ASSETS:
Intangible assets, net 4,916,989 4,994,535
Other 343,259 353,227
------------ ------------
Total other assets 5,260,248 5,347,762
------------ ------------
TOTAL $ 48,603,489 $ 51,792,858
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,934,612 $ 5,607,567
Notes payable 4,689,643 4,955,080
Billings in excess of costs and
estimated earnings 100,951
Accrued self-insured claims 2,478,484 2,266,855
Income taxes payable 242,132 621,483
Other accrued liabilities 6,007,541 6,585,387
------------ ------------
Total current liabilities 17,352,412 20,137,323
NOTES PAYABLE 10,975,628 13,870,064
ACCRUED SELF-INSURED CLAIMS 6,964,096 6,598,372
DEFERRED TAX LIABILITIES 137,401
------------ ------------
Total liabilities 35,429,537 40,605,759
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.33 1/3 per share:
50,000,000 shares authorized; 8,554,331
and 8,543,990 shares issued and
outstanding, respectively 2,851,444 2,847,997
Additional paid-in capital 24,323,845 24,293,309
Retained deficit (14,001,337) (15,954,207)
------------ ------------
Total stockholders' equity 13,173,952 11,187,099
------------ ------------
TOTAL $ 48,603,489 $ 51,792,858
============= ============
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 4
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
___________________________
January 31, January 31,
1996 1995
____ ____
<S> <C> <C>
REVENUES:
Contract revenues earned $ 32,648,532 $ 33,515,513
Other, net 182,931 277,370
------------ ------------
Total 32,831,463 33,792,883
------------ ------------
EXPENSES:
Costs of earned revenues
excluding depreciation 26,288,815 27,473,391
General and administrative 3,536,240 3,510,445
Depreciation and amortization 1,402,884 1,357,717
------------ ------------
Total 31,227,939 32,341,553
------------ ------------
INCOME BEFORE INCOME TAXES 1,603,524 1,451,330
------------ ------------
PROVISION FOR INCOME TAXES:
Current 507,593 344,358
Deferred 111,699
------------ ------------
Total 619,292 344,358
------------ ------------
NET INCOME $ 984,232 $ 1,106,972
============ ============
NET INCOME PER COMMON SHARE $ 0.12 $ 0.13
====== ======
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 5
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
___________________________
January 31, January 31,
1996 1995
____ ____
<S> <C> <C>
REVENUES:
Contract revenues earned $ 70,014,522 $ 69,727,447
Other, net 422,524 488,035
------------ ------------
Total 70,437,046 70,215,482
------------ ------------
EXPENSES:
Costs of earned revenues
excluding depreciation 56,904,334 56,693,045
General and administrative 7,434,399 7,016,100
Depreciation and amortization 2,779,304 3,106,804
------------ ------------
Total 67,118,037 66,815,949
------------ ------------
INCOME BEFORE INCOME TAXES 3,319,009 3,399,533
------------ ------------
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 1,671,481 1,353,334
Deferred (305,342)
------------ ------------
Total 1,366,139 1,353,334
------------ ------------
NET INCOME $ 1,952,870 $ 2,046,199
============ ============
NET INCOME PER COMMON SHARE $ 0.23 $ 0.24
====== ======
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 6
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
___________________________
January 31, January 31,
1996 1995
____ ____
<S> <C> <C>
Increase (Decrease) in Cash and equivalents from:
OPERATING ACTIVITIES:
Net income $ 1,952,870 $ 2,046,199
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization 2,779,304 3,106,804
Gain on disposal of assets (242,710) (211,465)
Deferred income taxes (305,342)
Changes in assets and liabilities:
Accounts receivable, net 4,333,936 1,146,038
Unbilled revenues, net (111,290) (1,253,466)
Other current assets 60,095 68,737
Other assets 9,968 56,817
Accounts payable (1,672,956) (50,043)
Accrued self-insured claims and
other liabilities (1,246) (455,314)
Accrued income taxes (379,351) 808,908
------------ ------------
Net cash inflow from operating activities 6,423,278 5,263,215
------------ ------------
INVESTING ACTIVITIES:
Capital expenditures (3,436,122) (2,565,695)
Proceeds from sales of assets 770,029 665,057
------------ ------------
Net cash outflow from investing activities (2,666,093) (1,900,638)
------------ ------------
FINANCING ACTIVITIES:
Borrowing on bank lines-of-credit 500,000
Principal payments on notes payable
and bank lines-of-credit (3,159,872) (2,207,433)
Exercise of stock options 33,984
------------ ------------
Net cash outflow from financing activities (3,125,888) (1,707,433)
------------ ------------
NET CASH INFLOW FROM ALL ACTIVITIES 631,297 1,655,144
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 4,306,675 2,625,783
------------ ------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 4,937,972 $ 4,280,927
============ ============
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 7
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
___________________________
January 31, January 31,
1996 1995
____ ____
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid during the period for:
Interest $ 851,364 $ 961,573
Income taxes 2,061,403 660,025
Property and equipment acquired and financed
with short-term notes payable $ 31,286
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 8
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--Unaudited
1. The accompanying condensed consolidated balance sheets of Dycom
Industries, Inc. ("Dycom" or the "Company") as of January 31, 1996 and July
31, 1995, the related condensed consolidated statements of operations for
the three and six months ended January 31, 1996 and 1995 and the condensed
consolidated statements of cash flows for the six months ended January 31,
1996 and 1995 reflect all normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of such statements.
The results of operations for the six months ended January 31, 1996 are not
necessarily indicative of the results which may be expected for the entire
year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION-- The condensed consolidated financial statements
include Dycom Industries, Inc. and its subsidiaries, all of which are
wholly-owned. The Company's operations consist primarily of telecommunication
and utility services contracting. All material intercompany accounts and
transactions have been eliminated.
REVENUE-- Income on long-term contracts is recognized on the
percentage-of-completion method based primarily on the ratio of contract
costs incurred to date to total estimated contract costs. As some of these
contracts extend over one or more years, revisions in cost and profit
estimates during the course of the work are reflected in the accounting
period in which the facts which require the revision become known. At the
time a loss on a contract becomes known, the entire amount of the estimated
ultimate loss is accrued. Income on short-term unit contracts is
recognized as the related work is completed. Work-in-process on unit
contracts is based on management's estimate of work performed but not
billed.
"Costs and estimated earnings in excess of billings" represent the excess
of contract revenues recognized under the percentage-of-completion method
of accounting for long-term contracts and work-in-process on unit contracts
over billings to date. For those contracts in which billings exceed
contract revenue recognized to date, such excesses are included in the
caption "Billings in excess of costs and estimated earnings".
CASH AND EQUIVALENTS-- Cash and equivalents include cash balances in excess
of the daily requirements which are invested in overnight repurchase
agreements, certificates of deposits, and various other financial
instruments having a maturity of three months or less. For purposes of the
condensed consolidated statements of cash flows, the Company considers
these amounts to be cash equivalents.
PROPERTY AND EQUIPMENT-- Property and equipment are stated at cost, reduced
in certain cases by valuation reserves. Depreciation and amortization are
computed over the estimated useful life of the assets utilizing the
straight-line method. The estimated useful lives of the assets are:
buildings--20-31 years; leasehold improvements--the term of the respective
lease or the estimated useful life of the improvement, whichever is
shorter; vehicles--3-7 years; equipment and machinery--3-10 years; and
furniture and fixtures--3-10 years. Maintenance and repairs are expensed
as incurred; expenditures that enhance the value of the property or extend
their useful lives are capitalized. When assets are sold or retired, the
cost and the accumulated depreciation are removed from the accounts and the
resulting gain or loss is included in income.
<PAGE> 9
INTANGIBLE ASSETS-- The excess of the purchase price over the fair market
value of the tangible net assets of acquired businesses (goodwill) is
amortized on the straight-line method over 40 years. The appropriateness
of the carrying value of intangible assets is continually reviewed and
adjusted where appropriate. The ongoing assessment of intangible assets
for impairment is based on the recoverability of such amounts through
future operations.
Intangible assets are net of accumulated amortization of $918,727 at January
31, 1996 and $841,182 at July 31, 1995. Amortization expense for the six
month periods ended January 31, 1996 and 1995 was $77,545.
SELF-INSURED CLAIMS LIABILITY-- The Company is primarily self-insured, up
to certain limits, for automobile and general liability, workers'
compensation, and employee group health claims. A liability for unpaid
claims and associated expenses, including incurred but not reported losses,
is actuarially determined and reflected in the condensed consolidated
financial statements as an accrued liability. The self-insured claims
liability includes incurred but not reported losses of $5,179,000 and
$5,072,000 at January 31, 1996 and July 31, 1995, respectively. The
determination of such claims and expenses and the appropriateness of the
related liability is continually reviewed and updated.
INCOME TAXES-- The Company and its subsidiaries file a consolidated
federal income tax return. Deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax rates
to differences between the financial statement carrying value and the tax
basis of the Company's existing assets and liabilities. The effect on
deferred taxes of a change in tax law or rates is recognized in income in the
period that includes the enactment date.
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. Management has
evaluated the available evidence about future taxable income and other
possible sources of realization of deferred tax assets. The valuation
allowance recorded in the financial statements reduces deferred tax assets to
an amount that represents management's best estimate of the amount of such
deferred tax assets that more likely than not will be realized. Accordingly,
at January 31, 1996 and July 31, 1995, deferred tax assets are net of a
valuation allowance of $1,786,518.
PER SHARE DATA-- Per common share amounts are computed on the basis of
weighted average shares of common stock outstanding, plus common stock
equivalent shares arising from the effect of dilutive stock options, using the
treasury stock method. In the three and six month periods ended January 31,
1996 and 1995, stock options did not impact the per share amounts as they were
either insignificant or antidilutive. The weighted average number of
shares was 8,553,189 and 8,528,990 for the three month periods ended January
31, 1996 and 1995, respectively, and 8,549,986 and 8,528,990 for the six month
periods ended January 31, 1996 and 1995, respectively.
<PAGE> 10
3. ACCOUNTS RECEIVABLE
Accounts receivable, net consist of the following:
<TABLE>
<CAPTION>
January 31, July 31,
1996 1995
____ ____
<S> <C> <C>
Contract billings $ 11,278,039 $ 15,222,897
Retainage 1,194,963 1,201,454
Other receivables 377,639 773,704
------------ ------------
Total 12,850,641 17,198,055
Less allowance for doubtful accounts 854,100 867,578
------------ ------------
Accounts receivable, net $ 11,996,541 $ 16,330,477
============ ============
</TABLE>
4. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS
The accompanying condensed consolidated balance sheets include costs and
estimated earnings on contracts in progress, net of progress billings as
follows:
<TABLE>
<CAPTION>
January 31, July 31,
1996 1995
____ ____
<S> <C> <C>
Costs incurred on contracts in progress $ 21,685,653 $ 20,862,665
Estimated earnings thereon 129,942 609,280
------------ ------------
21,815,595 21,471,945
Less billings to date 16,581,831 16,349,471
------------ ------------
$ 5,233,764 $ 5,122,474
============ ============
Included in the accompanying condensed
consolidated balance sheets under
the captions:
Costs and estimated earnings in
excess of billings $ 5,233,764 $ 5,223,425
Billings in excess of costs and
estimated earnings (100,951)
------------ ------------
$ 5,233,764 $ 5,122,474
============ ============
</TABLE>
<PAGE> 11
5. PROPERTY AND EQUIPMENT
The accompanying condensed consolidated balance sheets include the following
property and equipment:
<TABLE>
<CAPTION>
January 31, July 31,
1996 1995
____ ____
<S> <C> <C>
Land $ 1,723,527 $ 1,723,527
Buildings 2,265,252 2,223,627
Leasehold improvements 782,079 750,955
Vehicles 22,016,526 21,381,527
Equipment and machinery 19,446,994 19,711,023
Furniture and fixtures 3,131,812 2,930,467
------------ ------------
Total 49,366,190 48,721,126
Less accumulated depreciation and
amortization 30,355,830 29,918,563
------------ ------------
Property and equipment, net $ 19,010,360 $ 18,802,563
============ ============
</TABLE>
Certain subsidiaries of the Company entered into lease arrangements accounted
for as capitalized leases. The carrying value of capital leases at January
31, 1996 and July 31, 1995 was $295,226 and $326,704, respectively, net of
accumulated depreciation at January 31, 1996 and July 31, 1995 of $67,316 and
$33,538, respectively. Capital leases are included as a component of
equipment and machinery.
6. NOTES PAYABLE
Notes and loans payable are summarized by type of borrowings as follows:
<TABLE>
<CAPTION>
January 31, July 31,
1996 1995
____ ____
<S> <C> <C>
Bank Credit Agreement:
Revolving credit facility $ 9,000,000 $ 9,000,000
Term-loan 5,331,711 7,948,469
Equipment acquisition term-loans 1,066,665 1,566,667
Capital lease obligations 266,895 310,008
------------ ------------
Total 15,665,271 18,825,144
Less current portion 4,689,643 4,955,080
------------ ------------
Notes payable--non-current $ 10,975,628 $ 13,870,064
============ ============
</TABLE>
At January 31, 1996, the Company had a bank credit agreement consisting of a
$5.3 million term-loan, a $9.0 million revolving credit facility, a $9.8
million standby letter of credit facility, and a $5.0 million capital
equipment acquisition facility of which $3.7 million was available and
unused. The bank credit agreement contains restrictions which, among other
things, require maintenance of certain financial ratios and covenants,
restrict encumbrances of assets and creation of indebtedness, and limit the
payment of cash dividends. The bank credit agreement restricts the payment of
cash dividends until the term-loan is reduced to $5.0 million; thereafter,
cash dividends are limited to 33 1/3 percent of earnings available for
<PAGE> 12
distribution as dividends. Substantially all of the Company's assets are
pledged as collateral under the terms of the agreement. At January 31, 1996,
the Company was in compliance with all financial covenants and conditions.
The interest on the term-loan and the revolving credit facility is at the
bank's prime rate plus one-half percent (9.00% at January 31, 1996). The
interest on the equipment acquisition term-loans is at the bank's prime rate
plus three-quarters of one percent (9.25% January 31, 1996). Interest costs
incurred on notes payable, all of which were expensed, for the six month
periods ended January 31, 1996 and 1995 were $818,957 and $948,138,
respectively. Such amounts are included in general and administrative
expenses in the accompanying condensed consolidated statements of
operations.
Beginning September 1995, the term-loan quarterly principal payments increased
to $1.0 million from $750,000. The outstanding balance of the equipment
acquisition term-loans is payable quarterly through January 1998.
The revolving credit facility is used to finance working capital and is
payable in March 1998.
At January 31, 1996, the Company had $9.6 million outstanding standby
letters of credit issued as security to the Company's insurance
administrators as part of its self-insurance program. During the quarter
ended January 31, 1996, the capital equipment acquisition facility and the
standby letter of credit facility were renewed for a period of one year
expiring November 30, 1996. In addition, the bank increased the borrowing
capacity of the capital equipment acquisition facility from $3.0 million to
$5.0 million and reduced the interest rate on future borrowings from the
bank's prime rate plus three-quarters of one percent to the bank's prime rate
plus one-half percent. No additional borrowings under the capital equipment
acquisition facility occurred during the quarter ended January 31, 1996.
In addition to the borrowings under the bank credit agreement, certain
subsidiaries have outstanding obligations under capital leases. The
obligations are payable in monthly installments expiring at various dates
through July 1998.
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, certain subsidiaries of the Company have
pending and unasserted claims. Although the ultimate resolution and
liability of these claims cannot be determined, management believes the
final disposition of these claims will not have a material adverse impact on
the Company's consolidated financial condition or results of operations.
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated financial condition and results of operations. The discussion
should be read in conjunction with the condensed consolidated financial
statements and notes thereto.
Results of Operations
Contract revenues for the quarter ended January 31, 1996 decreased 2.6% to
$32.6 million, as compared to $33.5 million for the same quarter last year.
The telecommunication services and utility line locating services groups
contract revenue decreased 4.9% to $29.7 million for the quarter. The
electrical services group contract revenue increased 28.5% to $2.9 million for
the quarter as compared to the corresponding period last year. The decline in
total contract revenues is primarily attributed to lower volumes on multi-year
comprehensive service contracts within the telecommunications service group,
loss of certain utility locating contracts, partiality offset by improved
volume in existing unit master contract work in the electrical services group.
For the six month period ended January 31, 1996 contract revenues of $70.0
million increased slightly as compared to the $69.7 million reported in the
corresponding period last year.
The contract revenue mix between telecommunication services, utility line
locating services and electrical services over recent years has reflected a
steady increase in contract revenues from the telecommunication services
group offset by a decline in the electrical services group. The contract
revenue mix between telecommunication services, utility line locating services
and electrical services for the quarter ended January 31, 1996 was 83%, 8%,
and 9%, respectively, and 84%, 9% and 7%, respectively, for the quarter ended
January 31, 1995. For the six-month period ended January 31, 1996, the
contract revenue mix between telecommunications services group, utility line
locating group and electrical services group was 84%, 8%, and 8%, respectively
as compared to 82%, 10%, and 8%, respectively, for the corresponding period
last year. Contract revenue from multi-year comprehensive services contracts
continue to be a significant source of contract revenue. For the three and
six month periods ended January 31, 1996, multi-year comprehensive services
contracts included in the telecommunications services group, represented 65%
of total contract revenues.
The Company's backlog of uncompleted work at January 31, 1996 was $201
million as compared to $203 million at January 31, 1995. Contracts awarded
during the quarter ended January 31, 1996 include the renewal of two
significant multi-year comprehensive services contracts with combined values
at $27 million and two new multi-year utility line locating contracts with
combined value at $6.0 million.
The Company's costs and operating expenses may be affected by a number of
factors including contract volumes, character of services rendered, work
locations, competition, and changes in productivity. Costs of earned
revenues, excluding depreciation, were 81% and 82% of contract revenues for
the quarters ended January 31, 1996 and 1995, respectively, and 81% for both
six month periods ended January 31, 1996 and 1995. The Company's prime costs
of direct labor, materials, subcontractors, and equipment costs remained
relatively stable for both the quarter and six month periods ended January 31,
1996 compared to the corresponding periods last year.
<PAGE> 14
General and administrative expenses remained stable at $3.5 million for the
quarter ended January 31, 1996 and 1995. For the six month period ended
January 31, 1996 general and administrative expenses increased $0.4 million to
$7.4 million as compared to $7.0 million for the corresponding period last
year. This increase is primarily attributable to payroll and payroll taxes
which increased by $0.5 million, and general insurance costs which increased
by $0.2 million. These increases in general and administrative expenses were
partially offset by a $0.2 million decrease in the provision for doubtful
accounts and a $0.1 million decrease in interest expense.
The Company's 41% effective tax rate for the six month period ended January
31, 1996, is the result of state income taxes, the amortization of intangible
assets with no tax benefit, and other non-deductible expenses for tax
purposes. The lower effective rate for the same period last year was
primarily due to a reversal of a deferred tax asset for which a deferred tax
benefit had not been previously recorded.
Liquidity and Capital Resources
The Company's sources of funds are generated from operations, proceeds from
the sale of idle real property and equipment and its available borrowing
capabilities under the current bank credit agreement. Cash flow from
operating activities increased $1.2 million to $6.4 million in comparison
to the same period last year. Improved cash collections contributed to the
increase in cash flow.
The Company's sources of funds provided for capital expenditures of $3.4
million during the six month period ended January 31, 1996. These capital
expenditures resulted from the normal replacement of equipment. Aside from
these capital expenditures, the Company obtained approximately $0.9 million of
equipment under various noncancelable operating leases.
At January 31, 1996, the Company had outstanding borrowings under a term-loan
of $5.3 million, equipment acquisition term-loans aggregating $1.1
million, and a revolving credit facility of $9.0 million. Interest on the
term-loan and revolving credit facility is at the bank's prime rate plus
one-half percent (9.00% at January 31, 1996). The interest on the equipment
acquisition term-loans is at the bank's prime rate plus three-quarters of
one percent (9.25% at January 31, 1996). During the six month period ended
January 31, 1996, the Company reduced its outstanding debt balance by $3.2
million, which included a $0.6 million prepayment of the term-loan
principal utilizing the proceeds received from the sale of equipment.
Substantially all of the Company's assets are pledged as collateral in support
of these facilities.
In addition, the Company has available a $9.8 million standby letter of
credit facility and a $5.0 million capital equipment acquisition facility
of which $3.7 million is available and unused at January 31, 1996. The
standby letter of credit facility is issued as security to the Company's
insurance administrators as part of its self-insurance program. The
Company had outstanding standby letters of credit of $9.6 million against
the standby letter of credit facility at January 31, 1996. During the quarter
ended January 31, 1996, the capital equipment acquisition facility and the
standby letter of credit facility were renewed for a period of one year
expiring November 30, 1996. In addition, the bank increased the borrowing
capacity of the capital equipment acquisition facility from $3.0 million to
$5.0 million and reduced the interest rate on future borrowings from the
bank's prime rate plus three-quarters of one percent to the bank's prime rate
plus one-half percent. No additional borrowings under the capital equipment
acquisition facility occurred during the quarter ended January 31, 1996.
<PAGE> 15
The bank credit agreement contains provisions regarding minimum working
capital, tangible net worth, debt-to-equity ratios and certain other
financial covenants. At January 31, 1996, the Company was in compliance with
all financial covenants and conditions.
Cash flow generated from operations will continue to be the Company's primary
source of funds as available borrowing capabilities under the bank credit
agreement are limited. The Company foresees these available sources of funds
along with existing cash balances to be sufficient to meet its financial
obligations, including the scheduled debt payments under the bank credit
agreement and operating lease commitments, and to support the Company's normal
replacement of equipment at its current level of business. The Company's
future operating results and cash flows may be affected by a number of
factors. These factors include the Company's success in bidding on future
contracts, and the Company's ability to effectively manage controllable costs.
No cash dividends have been paid during the six month period ended January 31,
1996. The board will determine future dividend policies based on financial
condition, profitability, cash flow, capital requirements, and business
outlook, as well as other factors relevant at the time. In addition, the
Company's bank credit agreement prohibits, without prior approval of the bank,
the declaration or payment of any cash dividends until the term-loan is
reduced to $5.0 million; thereafter, cash dividends are limited to 33 1/3
percent of earnings available for distribution as dividends.
<PAGE> 16
PART II. OTHER INFORMATION
__________________________
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of the Company was held on November 27,
1995 to consider and take action on the election of two directors to the
Company's Board of Directors.
The Company's nominees, Messrs. Walter L. Revell and Ronald L. Roseman were
elected. Mr. Revell received 7,384,625 votes for and 25,421 against, and Mr.
Roseman received 7,381,272 votes for and 28,774 against. The directors whose
terms continued after the annual meeting are Messrs. Louis W. Adams, Jr.,
Thomas R. Pledger, and Ronald P. Younkin.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibits furnished pursuant to the requirements of Form 10-Q:
See Exhibit Index on Page 17
(b) Reports On Form 8-K
No reports on Form 8-K were filed on behalf of the Registrant during the
quarter ended January 31, 1996.
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DYCOM INDUSTRIES, INC.
Registrant
<TABLE>
<S> <C>
Date: March 14, 1996 /s/ Thomas R. Pledger
_________________ ____________________________
Thomas R. Pledger
Chairman and Chief Executive
Officer
Date: March 14, 1996 /s/ Ronald L. Roseman
_________________ ____________________________
Ronald L. Roseman
President and Chief Operating
Officer
Date: March 14, 1996 /s/ Douglas J. Betlach
_________________ ____________________________
Douglas J. Betlach
Vice President and Chief
Financial Officer
</TABLE>
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
______ ___________
<S> <C>
27 Financial Data Schedule
99 Fifth Modification of Credit Agreement and Consent by
Guarantors as of November 30, 1995 to Credit Agreement
dated as of April 28, 1993, as Amended, between
Dycom Industries, Inc. and First Union National Bank
of Florida.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DYCOM
INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET AT JANUARY 31, 1996 AND
THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED
JANUARY 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067215
<NAME> DYCOM INDUSTRIES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JAN-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,937,972
<SECURITIES> 0
<RECEIVABLES> 12,473,002
<ALLOWANCES> 854,100
<INVENTORY> 5,233,764
<CURRENT-ASSETS> 24,332,881
<PP&E> 49,366,190
<DEPRECIATION> 30,355,830
<TOTAL-ASSETS> 48,603,489
<CURRENT-LIABILITIES> 17,352,412
<BONDS> 15,665,271
0
0
<COMMON> 2,851,444
<OTHER-SE> 10,322,508
<TOTAL-LIABILITY-AND-EQUITY> 48,603,489
<SALES> 0
<TOTAL-REVENUES> 70,014,522
<CGS> 0
<TOTAL-COSTS> 56,904,334
<OTHER-EXPENSES> 2,779,304
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 818,957
<INCOME-PRETAX> 3,319,009
<INCOME-TAX> 1,366,139
<INCOME-CONTINUING> 1,952,870
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,952,870
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
<PAGE> 1
FIFTH MODIFICATION OF CREDIT AGREEMENT
THIS FIFTH MODIFICATION OF CREDIT AGREEMENT (the "Modifica-
tion") is entered into as of the 30th day of November, 1995 by and
between DYCOM INDUSTRIES INC., a Florida corporation ("Borrower")
and FIRST UNION NATIONAL BANK OF FLORIDA, a National Banking
Association ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender entered into a certain Credit
Agreement dated as of April 28, 1993, which was amended by First
Modification dated December 13, 1993 and by Second Modification
dated April 7, 1994 and by Third Modification dated November 30,
1994, and by Fourth Modification dated July 31, 1995 (as amended,
the "Credit Agreement"); and
WHEREAS, Borrower has requested that Lender amend the Credit
Agreement to (i) extend and modify the Standby Letter of Credit
Facility referenced in Section 4; and (ii) extend and modify the
Equipment Acquisition Facility referenced in Section 5; and (iii)
modify certain of the financial covenants contained in Section 9;
and
WHEREAS, Lender is willing to amend the Credit Agreement as
more particularly set forth herein.
NOW THEREFORE, for good and valuable considerations, the
receipt of which is hereby acknowledged, the parties do hereby
modify the Credit Agreement, as follows:
1. Standby Letter of Credit Facility. The expiration date
of the Standby Letter of Credit Facility referenced in Section 4 of
the Credit Agreement is hereby extended to November 30, 1996.
Accordingly, Section 4.01 of the Credit Agreement as previously
modified by the Third Modification is modified by inserting therein
the date "November 30, 1996." Sections 4.02 and 4.06 of the Credit
Agreement as previously modified by the Third Modification are
amended by inserting therein the date of "November 30, 1997."
2. Equipment Acquisition Facility.
(a) Amount. The maximum outstanding amount of the
Equipment Acquisition Advance is hereby increased to Five Million
Dollars ($5,000,000). Therefore, the figure of $3,000,000 which
appears in Section 5.03 is hereby deleted and in lieu thereof the
figure of $5,000,000 is hereby inserted.
(b) Capital Leases. The total outstanding Capital Lease
obligations of Borrower and Subsidiaries at any time, whether now
existing or hereafter acquired, shall be deducted from the amount
of available Equipment Acquisition Advance under Section 5.03 in
order to determine the maximum available amount under Section 5.03
at any time.
<PAGE> 2
(c) Expiration. The expiration date of the Equipment
Acquisition Facility referenced in Section 5 of the Credit
Agreement as previously modified by the Third Modification is
hereby extended to November 30, 1996. Accordingly, paragraph 5.01
of the Credit Agreement as previously modified by the Third
Modification is amended to insert the date "November 30, 1996."
(d) Term. The maximum term of any Equipment Acquisition
Advance is four years or November 30, 2000, whichever occurs first.
The principal of each Equipment Acquisition Advance shall be
payable in equal quarterly installments with the Borrower selecting
a term of either one, two, three or four years from the date of the
Advance, provided that in any event the final quarterly payment
cannot be due later than November 30, 2000. Accrued interest shall
be payable quarterly as specified in Section 5 of the Credit
Agreement.
(e) Interest Rate. The applicable interest rate prior
to maturity or default for all Equipment Acquisition Advances
funded after the date hereof shall be the Lender's Prime Rate plus
one-half of one percent (.50%), adjusted with each change in the
Prime Rate.
3. Section 9.06, Capital Expenditures, is modified to
provide that Borrower shall not permit the aggregate Capital
Expenditures made by it and the Subsidiaries to exceed during a period
set forth below the amount set forth opposite such period below:
Period Amount
From August 1, 1995
to July 31, 1996 $8,000,000
From August 1, 1996
to July 31, 1997 $9,000,000
From August 1, 1997
to July 31, 1998 $10,000,000
4. Section 12.01. Limitation of Debt is modified to
add the following additional sentence at the end of Section 12.02,
as follows:
Provided, however, that Borrower and Subsidiaries
shall be entitled to enter into Capital Leases from time to time,
for so long as the aggregate outstanding Capital Leases (both now
existing and hereafter created) of Borrower and Subsidiaries never
exceed One Million Dollars ($1,000,000) at any one time. For the
purpose of determining the amount of outstanding Capital Leases the
total obligation of each Capital Lease shall be computed in
accordance with GAAP.
5. All requirements contained in Section 9 regarding
testing of compliance and the furnishing of Compliance Certificates
shall remain in effect and are hereby reaffirmed.
6. Except as expressly modified herein, the Credit
Agreement as previously amended is hereby reaffirmed in its entirety.
<PAGE> 3
DYCOM INDUSTRIES INC.
By: /s/ Thomas R. Pledger
Its: Chairman and Chief Executive Officer
Agreed:
FIRST UNION NATIONAL BANK
OF FLORIDA
By: /s/ Raul Martinez
Its: Vice President
<PAGE> 4
CONSENT BY GUARANTORS
THIS CONSENT BY GUARANTORS is executed as of the 30th day of
November, 1995 by the following corporations:
a. Advance Leasing of Guilford, Inc., a Florida
corporation
b. Ansco & Associates, Inc., a Florida corporation
c. Coastal Plains, Inc., a Georgia corporation
d. Fiber Cable, Inc., a Delaware corporation
e. Globe Communications, Inc., a North Carolina
corporation
f. Ivy H. Smith Company, a Florida corporation
g. Kohler Construction Company, Inc., a Florida
corporation
h. Prime Utility Contractors, Inc., an Alabama
corporation
i. Signal Construction Company, Inc., a Florida
corporation
j. Southeastern Electric Construction, Inc., a Florida
corporation
k. Star Construction, Inc., a Tennessee corporation
l. S.T.S., Inc., a Florida corporation
m. TESINC, Inc., an Arizona corporation
(collectively the "Guarantors"), in favor of FIRST UNION NATIONAL
BANK OF FLORIDA (the "Lender").
W I T N E S S E T H:
WHEREAS, as of April 28, 1993, the Guarantors executed
Guaranty Agreements in favor of Lender pertaining to the Credit
Agreement and the Loan Documents referenced therein executed by
Dycom Industries Inc., a Florida corporation ("Borrower") and
Lender; and
WHEREAS, the Credit Agreement was modified by First Amendment
dated December 13, 1993, Second Amendment dated April 7, 1994,
Third Amendment dated November 30, l994 and Fourth Modification
dated July 31, 1995; and
WHEREAS, Borrower has requested that Lender execute and
deliver a Fifth Modification of Credit Agreement; and
WHEREAS, as a pre-condition to executing the Fifth
Modification of Credit Agreement, Lender has required that the
Guarantors consent to the Fifth Modification of Credit Agreement;
and
WHEREAS, it is to the benefit of Guarantors that Lender
consent and execute the Fifth Modification of Credit Agreement.
NOW THEREFORE, for good and valuable considerations, the
receipt of which is hereby acknowledged, the Guarantors hereby
agree as follows:
<PAGE> 5
1. The Guarantors do hereby consent and agree to the terms
and conditions of the Fifth Modification of Credit Agreement, a
copy of which is attached hereto as Exhibit "A" and incorporated by
reference herein. Guarantors agree that the Guaranty Agreements
previously executed by Guarantors shall remain in full force and
effect and shall apply to all advances under the Fifth Modification
of Credit Agreement.
2. Guarantors do hereby reaffirm in full their respective
Guaranties.
IN WITNESS WHEREOF, this document has been duly executed as of
the day and year first set forth above.
Advance Leasing of Guilford, Inc.
By: /s/ Thomas R. Pldeger
Its: Vice President
Ansco & Associates, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Coastal Plains, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Fiber Cable, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Globe Communications, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Ivy H. Smith Company
By: /s/ Thomas R. Pledger
Its: Vice President
Kohler Construction Company, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
<PAGE> 6
Prime Utility Contractors, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Signal Construction Company, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Southeastern Electric Construction, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
Star Construction, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
S.T.S., Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
TESINC, Inc.
By: /s/ Thomas R. Pledger
Its: Vice President
