<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED
SEPTEMBER 30, 1995
---------------------------
UTILX CORPORATION
COMMISSION FILE NUMBER 0-16821
DELAWARE 91-1171716
(State of Incorporation) (I.R.S. Identification Number)
22404 - 66TH AVENUE SOUTH
P. O. BOX 97009
KENT, WASHINGTON 98064-9709 (206) 395-0200
(Address of Principal Executive Offices) (Telephone Number)
---------------------------
Securities registered pursuant to Section 12(b) or (g) of the Act:
COMMON STOCK, .01 PAR VALUE THE NASDAQ STOCK MARKET, INC.
(Class of Security) (Exchange on Which Registered)
---------------------------
The registrant 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 and has
been subject to such filing requirements for the past 90 days.
As of September 30, 1995, 7,185,095 shares of Common Stock were outstanding.
The total number of pages in this Form 10-Q is 12
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ITEM PAGE
PART I
1. Financial Statements
Consolidated Balance Sheet
September 30, 1995 and March 31, 1995 . . . . . . . . . . . . . . . 3
Consolidated Statement of Operations
For the Three Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Operations
For the Six Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows
For the Six Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . 6
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . 9
PART II
1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTILX CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30 AND MARCH 31, 1995
(IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
------------ --------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . $ 736 $ 840
Accounts receivable, trade, net. . . . . . . 9,979 11,525
Materials, supplies and inventories. . . . . 10,153 8,486
Income taxes receivable. . . . . . . . . . . 1,165 786
Current portion of deferred income taxes . . 2,829 2,829
Prepaid expenses and other . . . . . . . . . 330 177
------- -------
Total current assets . . . . . . . . . . . 25,192 24,643
Equipment and improvements, net. . . . . . . . . 8,409 9,489
Other assets . . . . . . . . . . . . . . . . . . 1,166 1,216
------- -------
Total assets . . . . . . . . . . . . . . . . $34,767 $35,348
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank . . . . . . . . . . . . $ 900
Accounts payable . . . . . . . . . . . . . . 2,227 $ 2,346
Accrued liabilities. . . . . . . . . . . . . 3,863 4,224
------- -------
Total current liabilities. . . . . . . . . 6,990 6,570
Long-term portion of deferred income taxes . . . 708 708
------- -------
Total liabilities. . . . . . . . . . . . . . 7,698 7,278
------- -------
Commitments and Contingencies
Stockholders' equity:
Convertible Preferred Stock
(no shares issued and outstanding)
Common Stock, $0.01 par value
(authorized 25,000,000 shares) . . . . . . 72 72
Common Stock Warrants. . . . . . . . . . . . 936 936
Additional paid-in capital . . . . . . . . . 17,403 17,404
Retained earnings. . . . . . . . . . . . . . 9,476 10,429
Unearned compensation. . . . . . . . . . . . (123) (158)
Cumulative foreign currency translation
adjustment . . . . . . . . . . . . . . . . (695) (613)
------- -------
Total stockholders' equity . . . . . . . . 27,069 28,070
------- -------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . . . $34,767 $35,348
------- -------
------- -------
Common Stock issued and outstanding. . . . . . . 7,185,095 7,185,012
</TABLE>
(See Notes to Consolidated Financial Statements)
-3-
<PAGE>
UTILX CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(IN THOUSANDS, EXCEPT AMOUNTS PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . $11,119 $12,177
Cost of revenues . . . . . . . . . . . . . . . . 9,866 9,899
------- -------
Gross profit . . . . . . . . . . . . . . . . . . 1,253 2,278
------- -------
Operating expenses:
Selling, general and administrative. . . . . 1,846 1,671
Research and engineering . . . . . . . . . . 161 368
------- -------
Total operating expenses . . . . . . . . . 2,007 2,039
------- -------
Operating income (loss). . . . . . . . . . . . . (754) 239
Other income (expense), net. . . . . . . . . . . 64 (125)
------- -------
Income (loss) before income taxes. . . . . . . . (690) 114
Income tax provision (benefit) . . . . . . . . . (197) 50
------- -------
Net income (loss). . . . . . . . . . . . . . . . $ (493) $ 64
------- -------
------- -------
Earnings (loss) per share (Note 2):
Primary. . . . . . . . . . . . . . . . . . . $ (.07) $ .01
Fully diluted. . . . . . . . . . . . . . . . $ (.07) $ .01
Weighted average number of shares (Note 2):
Primary. . . . . . . . . . . . . . . . . . . 7,185 7,176
Fully diluted. . . . . . . . . . . . . . . . 7,185 7,177
</TABLE>
(See Notes to Consolidated Financial Statements)
-4-
<PAGE>
UTILX CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(IN THOUSANDS, EXCEPT AMOUNTS PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . $22,873 $24,108
Cost of revenues . . . . . . . . . . . . . . . . 20,107 19,965
------- -------
Gross profit . . . . . . . . . . . . . . . . . . 2,766 4,143
------- -------
Operating expenses:
Selling, general and administrative. . . . . 3,903 3,590
Research and engineering . . . . . . . . . . 321 733
------- -------
Total operating expenses . . . . . . . . . 4,224 4,323
------- -------
Operating income (loss). . . . . . . . . . . . . (1,458) (180)
Other income (expense), net. . . . . . . . . . . 132 (180)
------- -------
Income (loss) before income taxes. . . . . . . . (1,326) (360)
Income tax provision (benefit) . . . . . . . . . (373) (137)
------- -------
Net income (loss). . . . . . . . . . . . . . . . $ (953) $ (223)
------- -------
------- -------
Earnings (loss) per share (Note 2):
Primary. . . . . . . . . . . . . . . . . . . $ (.13) $ (.03)
Fully diluted. . . . . . . . . . . . . . . . $ (.13) $ (.03)
Weighted average number of shares (Note 2):
Primary. . . . . . . . . . . . . . . . . . . 7,185 7,197
Fully diluted. . . . . . . . . . . . . . . . 7,185 7,199
</TABLE>
(See Notes to Consolidated Financial Statements)
-5-
<PAGE>
UTILX CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . $ (953) $ (223)
Adjustments to reconcile to net cash used by
operating activities:
Depreciation and amortization. . . . . . . . 1,794 1,637
Net book value of drilling systems sold. . . 38
Other noncash (income) expenses, net . . . . (61) (33)
Changes in:
Accounts receivable, trade . . . . . . . . 1,517 (586)
Materials, supplies and inventories. . . . (1,705) (2,648)
Prepaid expenses and other . . . . . . . . (132) (381)
Income taxes payable, net. . . . . . . . . (374) (789)
Accounts payable . . . . . . . . . . . . . (181) 947
Accrued liabilities. . . . . . . . . . . . (293) 97
------- -------
Total adjustments. . . . . . . . . . . . . . 565 (1,718)
------- -------
Net cash used by operating activities. (388) (1,941)
------- -------
INVESTING ACTIVITIES:
Cost of additions to equipment . . . . . . . (629) (2,836)
Proceeds from sale of equipment. . . . . . . 31 119
Sales of short-term investments. . . . . . . 3,733
------- -------
Net cash provided (used) by investing
activities . . . . . . . . . . . . . . (598) 1,016
------- -------
FINANCING ACTIVITIES:
Net borrowings on note payable to bank . . . 900
Issuance of common stock . . . . . . . . . . 1 148
Repurchase of common stock . . . . . . . . . (2) (235)
------- -------
Net cash provided (used) by financing
activities . . . . . . . . . . . . . . 899 (87)
------- -------
CUMULATIVE TRANSLATION ADJUSTMENT
OF FOREIGN CURRENCY TRANSACTIONS . . . . . . (17) 51
------- -------
Net decrease in cash and cash equivalents. . (104) (961)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . 840 2,673
------- -------
End of period. . . . . . . . . . . . . . . . $ 736 $ 1,712
------- -------
------- -------
</TABLE>
(See Notes to Consolidated Financial Statements)
-6-
<PAGE>
UTILX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. FINANCIAL STATEMENT PRESENTATION
In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
and operating results for the three-month and six-month periods ended September
30, 1995 and 1994. The statements should be read in conjunction with the March
31, 1995 audited consolidated financial statements included in the fiscal 1995
Annual Report on Form 10-K.
2. EARNINGS (LOSS) PER SHARE
Primary earnings per share is computed by dividing net income (loss) by the
weighted average number of shares of Common Stock of UTILX Corporation, $0.01
par value per share (the "Common Stock"), and common stock equivalents
outstanding during the period. Common stock equivalents, when dilutive, include
shares issuable upon exercise of the Company's stock options and certain
warrants. Fully diluted earnings per share is computed based on the weighted
average number of shares of Common Stock and common stock equivalents
outstanding during the period taking into consideration maximum potential
dilution.
3. MATERIALS, SUPPLIES AND INVENTORIES
Materials, supplies and inventories at September 30, 1995 and March 31, 1995 are
classified as follows:
<TABLE>
<CAPTION>
(In thousands)
September 30, 1995 March 31, 1995
------------------ --------------
<S> <C> <C>
Raw Materials and Spare Parts $ 4,891 $ 4,886
Work in Process 2,828 2,184
Finished Goods 2,434 1,416
------- -------
Total $ 10,153 $ 8,486
------- -------
------- -------
</TABLE>
4. FLOWMOLE ENVIRONMENTAL SERVICES CORPORATION
The Company records its 50% share of the results of the operations of FlowMole
Environmental Services Corporation ("FESC") using the equity method of
accounting.
Summary unaudited financial information for FESC for the six months ended
September 30, 1995 and 1994, is as follows:
(In thousands)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues $ 1,682 $ 190
------- -------
------- -------
Net income (loss) $ 144 $ (366)
------- -------
------- -------
</TABLE>
-7-
<PAGE>
5. NOTE PAYABLE TO BANK
The Company has obtained a renewal of its committed, uncollateralized credit
facility of $5,000,000. The credit agreement requires that the Company maintain
certain financial covenants, including requirements to maintain certain levels
of tangible net worth, current ratio and debt ratio. This line of credit now
expires on November 30, 1996.
6. DEFERRED INCOME TAXES
In order to realize the carrying amount of its net deferred tax assets at
September 30, 1995, the Company will be required to generate certain amounts of
taxable income in future years. As required by Statement of Financial
Accounting Standards No. 109, management estimates that it is more likely than
not that the company will be able to generate sufficient taxable income in
future years and, accordingly, has not provided a valuation allowance as of
September 30, 1995. This estimate is required to be updated on a quarterly
basis, and a change in management's estimate could result in a decision to
establish a valuation reserve in the future.
7. LITIGATION
The Company is involved in matters of litigation, both as a plaintiff and as a
defendant, all arising in the ordinary course of business. In August 1995, the
Company was named a defendant in litigation filed in the United States District
Court for the Southern District of Texas on behalf of a person alleging serious
personal injury in June 1994 while performing work at a Company work site. The
plaintiff has alleged negligence, gross negligence and breach of contract by the
Company. The complaint requests an unspecified amount of damages in excess of
$50,000 and punitive damages, plus interest and costs. The Company is defending
this matter. Management expects that these matters will not have a materially
adverse effect on the consolidated financial position, results of operations or
liquidity of the Company.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS THROUGH
THE END OF THE SECOND QUARTER OF
FISCAL YEAR 1996 COMPARED TO
FISCAL YEAR 1995
REVENUES:
Consolidated revenues decreased 8.7% in the second quarter of fiscal 1996,
compared to the same period in fiscal 1995. Consolidated revenues decreased
5.1% in the first six months of fiscal 1996, compared to the same period in
fiscal 1995.
NORTH AMERICAN OPERATIONS. Revenues from FlowMole drilling operations in North
America ("FlowMole operations") decreased 13% to $8.5 million in the second
quarter of fiscal 1996 compared to $9.8 million in the same period of fiscal
1995. Revenues from FlowMole operations were 77% of consolidated revenues in the
second quarter of fiscal 1996 compared to 81% in the same period of fiscal 1995.
Revenues from CableCure services in North America ("CableCure operations")
increased 40% to $1.4 million in the second quarter of fiscal 1996 compared to
$1.0 million in the same period of fiscal 1995.
Revenues from FlowMole drilling operations in North America ("FlowMole
operations") decreased 10.3% in the first six months of fiscal 1996 compared to
the same period of fiscal 1995. Revenues from CableCure services in North
America ("CableCure operations") increased 31% in the first six months of fiscal
1996 compared to the same period of fiscal 1995.
The decrease in revenues in FlowMole operations was attributed to a number of
factors, including crew count, competition and weather. The Company's ability to
add new crews during the quarter was adversely impacted by factors ranging from
the slow process of hiring and training crews, the competitive environment for
bidding work, slow release of work from customers, and weather-related factors
ranging from hurricanes in the Southeastern United States to early snows in
Colorado. The average number of FlowMole crews working during the second quarter
of fiscal 1996 was 48 compared to 55 in the same period of fiscal 1995, and the
Company reached a peak of 62 total crews at the end of the quarter.
Strong demand for CableCure services contributed to the increased revenue
levels. The Company is continuing a program for training crews and attempting
to improve revenue per crew, as part of its efforts to increase capacity in
response to the demand for CableCure services.
INTERNATIONAL OPERATIONS. Revenues from international operations decreased 8% to
$1.2 million in the second quarter of fiscal 1996 compared to $1.3 million in
the same period of fiscal 1995. The decrease was primarily attributed to lower
levels of shipments of equipment and spare parts. Revenues from international
operations increased 10% in the first six months of fiscal 1996 compared to the
same period of fiscal 1995. This increase was primarily due to higher levels of
shipments of equipment during the first quarter of fiscal 1996.
GROSS PROFIT
Gross profit decreased 45% in the second quarter of fiscal 1996, compared to the
same period in fiscal 1995. Gross profit decreased 33% in the first six months
of fiscal 1996, compared to the same period of fiscal 1995.
NORTH AMERICAN OPERATIONS. Gross Profit from FlowMole operations and CableCure
operations decreased primarily due to the lower combined revenue levels
generated in the second quarter of fiscal 1996 compared to the same period of
fiscal
-9-
<PAGE>
1995. Also, the weather-related downtime and start-up costs on new contracts
contributed to a decrease in gross profit. Furthermore, customers are requiring
the Company to perform a higher level of ancillary services in connection with
the typical cable replacement job, contributing to increased labor costs.
INTERNATIONAL OPERATIONS. Overall gross profit from international operations
was essentially unchanged in each of the first two quarters of fiscal 1996
compared to the same periods of fiscal 1995.
OPERATING EXPENSES AND OTHER INCOME (EXPENSES)
Total operating expenses decreased 2% in the second quarter of fiscal 1996
compared to the same period of fiscal 1995. Selling, general and administrative
expenses increased 10%, primarily due to filling new staff positions, including
the replacement of certain sales personnel prior to the beginning of fiscal 1996
that had been temporarily eliminated during the second quarter of fiscal 1995.
Research and engineering expenses decreased by 56% due to lower levels of
consulting expenses and lower consumption of materials in research activities.
Total operating expenses decreased 2% in the first six months of fiscal 1996
compared to the same period of fiscal 1995.
Other income (expense), net was income of $64,000 and $132,000 in the second
quarter and first six months of fiscal 1996, respectively, compared to an
expense of $125,000 and $180,000 in the same periods of fiscal 1995. The
Company recorded a gain from its share of the startup operations of its joint
venture, FlowMole Environmental Services Corporation, in each of the first two
quarters of fiscal 1996 compared to losses in the same periods of fiscal 1995.
There can be no assurance of continued profits from the joint venture.
As a result of the foregoing, the Company recorded a pretax loss of $690,000 in
the second quarter of fiscal 1996 compared to pretax income of $114,000 in the
same period of fiscal 1995. The Company recorded a pretax loss of $1.3 million
in the first six months of fiscal 1996 compared to a pretax loss of $360,000 in
the same period of fiscal 1995.
INCOME TAX EXPENSE (BENEFIT)
The Company's effective income tax rate through the end of the second quarter of
fiscal 1996 was 28%. For the full fiscal year 1995, the Company's effective tax
rate was also 28%. Through the end of the second quarter of fiscal 1995, the
Company's then current estimate of its effective income tax rate was 38%.
NET INCOME (LOSS)
As a result of the foregoing, the Company recorded a net loss of $493,000 in the
second quarter of fiscal 1996 compared to net income of $64,000 in the same
period of fiscal 1995. The Company recorded a net loss of $953,000 in the first
six months of fiscal 1996 compared to a net loss of $223,000 in the same period
of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had unused sources of liquidity consisting of
$736,000 in cash and cash equivalents and an unused balance on its committed
line of credit of $4,100,000. This compares to $840,000 in cash and cash
equivalents and an unused balance on its committed line of credit of $5,000,000
at March 31, 1995. The decrease in cash and increase in the usage of the line of
credit during the first and second quarters of fiscal 1996 were primarily due to
timing factors in carrying amounts of receivables and inventory as well as in
the payment of expenses. The Company anticipates the periodic usage of its line
of credit throughout fiscal 1996. The Company anticipates that through cash
generated by operations, and the periodic use of its credit facility, that it
will be able to meet its cash requirements through at least fiscal 1996. The
line of credit expires on November 30, 1996.
-10-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
EUROPEAN PATENT MATTERS. In May 1989, the Company was granted European Patent
No. 0 195 559 by the European Patent Office covering subject matter related to
the Company's drilling technology similar to two patents previously granted to
the Company in the United States in June 1987 and November 1988. In October
1991, an Opposition Board of the European Patent Office revoked the patent. The
Company disagreed with the decision and appealed the ruling. On October 8,
1993, the Technical Board of Appeal issued a provisional opinion favorable to
the Company, but not final. The Company and opposers both filed statements in
response to the provisional opinion and an oral hearing before the Technical
Board of Appeal was scheduled to take place on October 25, 1995. Prior to the
oral hearing discussions took place between the Company and the opponents
leading to the signing of settlement terms and the withdrawal of the
oppositions. As a result, the Appeal hearing was canceled and the Appeal is
expected to be continued to be conducted by correspondence with the European
Patent Office.
SMET LITIGATION. The Company initiated legal action in January 1988 in the U.S.
Federal District Court in Seattle, Washington against Marc Smet, a former
equipment lessee, certain parties related to Smet and certain unrelated parties,
alleging breach of contract and tortious conduct. In 1991, the Court entered
judgment in the amount of $491,975 against the defendants plus attorneys' fees
in the amount of $191,823 against Marc Smet. In January 1995, a court in
Belgium denied the enforcement of the claim. As part of a settlement, Smet has
withdrawn opposition in the European Patent litigation and the Company has
agreed not to pursue enforcement of the judgment against Smet and related
parties.
EMERSON VS. UTILX CORPORATION, A.B. CHANCE CO., AND CITY OF BRYAN. In August
1995, the Company was named a defendant in litigation filed in the United States
District Court for the Southern District of Texas on behalf of a person alleging
serious personal injury in June 1994 while performing work at a Company work
site. The plaintiff has alleged negligence, gross negligence and breach of
contract by the Company. The complaint requests an unspecified amount of
damages in excess of $50,000 and punitive damages, plus interest and costs. The
Company is defending this matter.
ITEM 6. EXHIBITS
Exhibits identified below, on file with the Securities and Exchange
Commission, are incorporated herein by reference as exhibits hereto.
INDEX TO EXHIBITS
-----------------
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
10.35 Loan Modification Agreement between Registrant and Seattle-First
National Bank dated October 24, 1995. Filed herewith.
-11-
<PAGE>
UTILX CORPORATION
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.
UTILX CORPORATION
-----------------
(Registrant)
Date: November 11, 1995 By: /s/ Craig E. Davies
----------------------------
Craig E. Davies, President
and Chief Executive Officer
Date: November 11, 1995 By: /s/ Larry D. Pihl
-----------------------------
Larry D. Pihl, Controller and
Chief Accounting Officer
-12-
<PAGE>
EXHIBIT 10.35
LOAN MODIFICATION
SEAFIRST BANK AGREEMENT
This agreement amends the Revolving Note dated December 2, 1994 ("Note")
and Credit Agreement dated December 2, 1994 ("Credit Agreement"), each executed
by UTILX CORPORATION ("Borrower") in favor of SEATTLE-FIRST NATIONAL BANK
("Bank"), regarding a loan in the maximum principal amount of $5,000,000 (the
"Loan"). For mutual consideration, Borrower and Bank agree to amend the above
loan documents as follows:
MATURITY DATE. THE MATURITY DATE OF THE NOTE IS CHANGED TO November 30,
1996. SECTION 1.36 OF THE CREDIT AGREEMENT IS AMENDED TO CHANGE THE TERMINATION
DATE TO November 30, 1996.
COVENANTS. THE FOLLOWING COVENANTS OF THE CREDIT AGREEMENT ARE MODIFIED
AS FOLLOWS:
- Section 7.2 of the Credit Agreement is amended to require Borrower to
maintain, as of each fiscal quarter end, a minimum Tangible Net Worth of not
less than $25,000,000.
- Section 7.3 of the Credit Agreement is amended to require Borrower to
maintain, as of each fiscal quarter end, a ratio of Current Assets to Current
Liabilities of not less than 3.00 to 1.
OTHER TERMS. EXCEPT AS SPECIFICALLY AMENDED BY THIS AGREEMENT OR ANY
PRIOR AMENDMENT, ALL OTHER TERMS, CONDITIONS, AND DEFINITIONS OF THE NOTE,
CREDIT AGREEMENT, AND ALL OTHER SECURITY AGREEMENTS, GUARANTIES, DEEDS OF TRUST,
MORTGAGES, AND OTHER INSTRUMENTS OR AGREEMENTS ENTERED INTO WITH REGARD TO THE
LOAN SHALL REMAIN IN FULL FORCE AND EFFECT.
DATED October 24 , 1995
-------
Bank: Borrower:
SEATTLE-FIRST NATIONAL BANK UTILX CORPORATION
By By /s/ Larry D. Pihl
----------------------------- ------------------------------------
Title Title VP - Chief Financial Officer
----------------------------- ---------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF UTILX CORPORATION FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 736
<SECURITIES> 0
<RECEIVABLES> 10,359
<ALLOWANCES> 380
<INVENTORY> 10,153
<CURRENT-ASSETS> 25,192
<PP&E> 26,436
<DEPRECIATION> 18,027
<TOTAL-ASSETS> 34,767
<CURRENT-LIABILITIES> 6,990
<BONDS> 0
<COMMON> 72
0
0
<OTHER-SE> 26,997
<TOTAL-LIABILITY-AND-EQUITY> 34,767
<SALES> 22,873
<TOTAL-REVENUES> 22,873
<CGS> 20,107
<TOTAL-COSTS> 24,331
<OTHER-EXPENSES> (132)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29
<INCOME-PRETAX> (1,326)
<INCOME-TAX> (373)
<INCOME-CONTINUING> (953)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (953)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
