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UNITED STATES
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 QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1996
_______________
UTILX CORPORATION
COMMISSION FILE NUMBER 0-16821
DELAWARE 91-1171716
(State of Incorporation) (I.R.S. Employer
Identification Number)
22404 - 66TH AVENUE SOUTH
P. O. BOX 97009
KENT, WASHINGTON 98064-9709 (206) 395-0200
(Address of Principal Executive Offices) (Registrant's Telephone Number)
Indicate by checkmark whether the Registrant has (1) 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 (2) been subject to such filing requirements for the
past 90 days. Yes X No
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As of September 30, 1996, 7,188,409 shares of Common Stock were outstanding.
The total number of pages in this Form 10-Q is 14.
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TABLE OF CONTENTS
ITEM PAGE
---- ----
PART I
1. Financial Statements
Consolidated Balance Sheet
September 30, 1996 and March 31, 1996............................ 3
Consolidated Statement of Operations
For the Three Months Ended
September 30, 1996 and 1995...................................... 4
Consolidated Statement of Operations
For the Six Months Ended
September 30, 1996 and 1995...................................... 5
Consolidated Statement of Cash Flows
For the Six Months Ended
September 30, 1996 and 1995...................................... 6
Notes to Consolidated Financial Statements....................... 7
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 9
PART II
1. Legal Proceedings................................................ 13
2. Changes in Securities............................................ 13
3. Defaults Upon Senior Securities.................................. 13
4. Submission of Matters to a Vote of Security Holders.............. 13
5. Other............................................................ 13
6. Exhibits......................................................... 13
Signatures.............................................................. 14
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTILX CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30 AND MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
ASSETS
SEPTEMBER 30 MARCH 31
------------ --------
Current assets:
Cash and cash equivalents............... $ 1,129 $ 495
Accounts receivable, trade, net......... 13,658 10,659
Materials, supplies and inventories..... 6,046 8,128
Income taxes receivable................. 1,019
Prepaid expenses and other ............. 399 216
------- -------
Total current assets................. 21,232 20,517
Equipment and improvements, net........... 9,503 9,113
Other assets, net......................... 844 994
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Total assets......................... $31,579 $30,624
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank ................... $ 750 $ 2,500
Accounts payable ....................... 1,769 1,912
Accrued liabilities..................... 4,323 2,756
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Total current liabilities ........... 6,842 7,168
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Commitments and Contingencies
Stockholders' equity:
Common Stock, $0.01 par value
(authorized 25,000,000 shares)....... 72 72
Common Stock Warrants................... 936 936
Additional paid-in capital ............. 17,399 17,399
Retained earnings....................... 7,109 5,940
Unearned compensation................... (51) (76)
Cumulative foreign currency translation
adjustment............................. (728) (815)
------- -------
Total stockholders' equity........... 24,737 23,456
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Total liabilities and
stockholders' equity.............. $31,579 $30,624
------- -------
------- -------
Common Stock issued and outstanding..... 7,188,409 7,184,116
(See Notes to Consolidated Financial Statements)
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UTILX CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1996 1995
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Revenues.................................... $15,549 $11,119
Cost of revenues............................ 13,029 9,866
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Gross profit............................... 2,520 1,253
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Operating expenses:
Selling, general and administrative........ 1,845 1,846
Research and engineering................... 178 161
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Total operating expenses................ 2,023 2,007
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Operating income (loss)..................... 497 (754)
Other income (expense), net................. 25 64
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Income (loss) before income taxes............ 522 (690)
Income tax provision (benefit)............... 6 (197)
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Net income (loss)............................ $ 516 $ (493)
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Earnings (loss) per share (Note 2):
Primary.................................... $ .07 $ (.07)
Fully diluted............................. $ .07 $ (.07)
Weighted average number of shares (Note 2):
Primary.................................... 7,330 7,185
Fully diluted............................. 7,345 7,185
(See Notes to Consolidated Financial Statements)
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UTILX CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1996 1995
------- -------
Revenues..................................... $30,673 $22,873
Cost of revenues............................. 25,273 20,107
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Gross profit............................... 5,400 2,766
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Operating expenses:
Selling, general and administrative........ 3,832 3,903
Research and engineering................... 371 321
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Total operating expenses................ 4,203 4,224
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Operating income (loss)...................... 1,197 (1,458)
Other income (expense), net.................. (16) 132
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Income (loss) before income taxes............ 1,181 (1,326)
Income tax provision (benefit)............... 12 (373)
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Net income (loss)............................ $ 1,169 $ (953)
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Earnings (loss) per share (Note 2):
Primary.................................... $ .16 $ (.13)
Fully diluted.............................. $ .16 $ (.13)
Weighted average number of shares (Note 2):
Primary.................................... 7,264 7,185
Fully diluted............................. 7,271 7,185
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UTILX CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
1996 1995
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OPERATING ACTIVITIES:
Net income (loss).............................. $ 1,169 $ (953)
Adjustments to reconcile to net cash provided
by (used by) operating activities:
Depreciation and amortization ............... 1,822 1,794
Other non-cash (income) expenses, net........ 31 (61)
Changes in assets and liabilities ........... 1,416 (1,168)
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Total adjustments ........................... 3,269 (565)
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Net cash provided by (used by)
operating activities...................... 4,438 (388)
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INVESTING ACTIVITIES:
Cost of additions to equipment ................ (2,071) (629)
Proceeds from sale of equipment................ 5 31
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Net cash used by investing activities...... (2,066) (598)
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FINANCING ACTIVITIES:
Net borrowings (repayments) on note payable.... (1,750) 900
Issuance of Common Stock ...................... 1 1
Purchase of Common Stock ...................... (1) (2)
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Net cash provided by (used by) financing
activities............................... (1,750) 899
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CUMULATIVE TRANSLATION ADJUSTMENT OF FOREIGN
CURRENCY TRANSACTIONS........................... 12 (17)
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Net increase (decrease) in cash and
cash equivalents.............................. 634 (104)
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CASH AND CASH EQUIVALENTS:
Beginning of period............................ 495 840
------- -------
End of period.................................. $ 1,129 $ 736
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------- -------
(See Notes to Consolidated Financial Statements)
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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, 1996 and 1995. The statements should be read in conjunction
with the March 31, 1996 audited consolidated financial statements included in
the fiscal 1996 Annual Report on Form 10-K.
2. EARNINGS 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, 1996 and March 31, 1996
consists of the following:
SEPTEMBER 30, 1996 MARCH 31, 1996
------------------ --------------
(IN THOUSANDS)
Materials and Supplies $4,944 $5,233
Work in Process 381 1,077
Finished Goods 1,487 2,753
Less allowance for potentially obsolete
or overstocked inventory (766) (935)
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$6,046 $8,128
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4. NOTE PAYABLE TO BANK
The Company has a committed credit facility of $5,000,000 with Seattle-First
National Bank of Washington ("Seafirst"). The agreement is collateralized by
the Company's inventory and accounts receivable. 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. Borrowings bear interest at the Seafirst prime rate, the
LIBOR rate plus 1.40%, or other specified rates, at the Company's option.
The Company pays a commitment fee of up to 0.125% on the unused portion of
the facility. This line of credit currently expires on November 30, 1996.
The Company anticipates that it will be able to negotiate an extension of
this line of credit.
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5. COMMITMENTS AND CONTINGENCIES
INTERNAL REVENUE SERVICE AUDIT. The Company's Federal income tax returns for
fiscal 1993, 1994 and 1995 are currently under examination by the Internal
Revenue Service. Recently, the Internal Revenue Service Agent has indicated
that no adjustment is advised to the fiscal 1994 income tax return. The
ultimate outcome of the examination cannot be predicted with certainty at
this time. It is the opinion of management that the ultimate disposition of
this matter will not have a material adverse effect on the consolidated
financial position, results of operations or liquidity of the Company.
OTHER MATTERS. The Company is involved in matters of litigation, both as
plaintiff and as 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. In April 1996, an amended complaint was filed adding
as plaintiffs certain relatives of the injured person. The plaintiffs have
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. Prior to the April 1996
amendment, the Company received a settlement offer near the limits of the
Company's insurance policy. The Company is defending this matter. A
co-defendant has tendered its defense in this litigation to the Company's
insurer, which has accepted the tender under reservation of rights.
Management expects that these matters will not have a materially adverse
effect on the consolidated financial position, results of operation or
liquidity of the Company.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR SECOND QUARTER
OF FISCAL YEAR 1997
COMPARED TO SECOND QUARTER
OF FISCAL YEAR 1996
----------------------------------------
REVENUES:
CONSOLIDATED revenues increased 40% in the second quarter of fiscal 1997,
compared to the same period in fiscal 1996. Consolidated revenues increased
34% in the first six months of fiscal 1997, compared to the same period in
fiscal 1996.
NORTH AMERICAN OPERATIONS. Revenues from FlowMole drilling operations in
North America increased 14% to $9.7 million in the second quarter of fiscal
1997, compared to $8.5 million in the same period of fiscal 1996. Revenues
from CableCure services in North America increased to $3.7 million in the
second quarter of fiscal 1997, compared to $1.4 million in the same period of
fiscal 1996.
Revenues from FlowMole drilling operations in North America increased 11% in
the first six months of fiscal 1996 compared to the same period of fiscal
1996. Revenues from CableCure services in North America increased $7.2
million in the first six months of fiscal 1997 compared to $2.2 million in
the same period of fiscal 1996.
The increased revenues in FlowMole operations were attributed to increased
demand for FlowMole services and the Company's ability to maintain a higher
level of drilling crews than in the prior year to meet the demand. In fiscal
1996, under a previously commenced program to consolidate crews and improve
training in order to improve average crew performance, the Company reduced
its crew levels during the first and second quarters. When demand for
services increased in subsequent quarters, revenue growth was partially
constrained by the need to add and train new crew members. The time required
to add and train new FlowMole crews could also constrain revenue growth if
demand should exceed capacity in future periods. In addition, the Company
has expanded its capacity for non-drilling services such as trenching, which
has also increased demand. Continued strong demand for CableCure services,
primarily under "Test, Treat or Replace" contracts, contributed to the
increased CableCure revenue levels. Customers choosing Test, Treat or Replace
contracts also contributed to the increased demand for FlowMole services.
INTERNATIONAL OPERATIONS. Revenues from international operations increased
to $2.2 million in the second quarter of fiscal 1997, compared to $1.2
million in the same period of fiscal 1996. This increase is connected to an
increase in equipment sales. Increased revenues from European CableCure
operation offset decreases in revenues from drilling operations in the United
Kingdom and decreases in spare parts sales in Asia. Revenues from
international operations increased to $4.3 million for the first six months
of fiscal 1997 compared to $3.5 million in the same period of fiscal 1996.
This increase was related to an increase in equipment sales and in revenue
from European CableCure operations.
Equipment sales revenue was $2.1 million during the first six months of
fiscal 1997. As discussed under "Review and Outlook", the Company has sold
substantially all of its inventory of new equipment. The Company has not yet
placed an order with an outside manufacturer for additional equipment to be
held for sale. Although the Company expects to place such an order in the
next few months, due to existing inventory levels and manufacturing lead
times, the Company expects a substantial reduction in revenue from equipment
sales in the remainder of fiscal 1997, compared to levels of such revenue in
the first six months of fiscal 1997.
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GROSS PROFIT
Gross profit increased 101% in the second quarter of fiscal 1997, compared to
the same period in fiscal 1996. Gross profit increased 95% in the first six
months of fiscal 1997, compared to the same period of fiscal 1996.
NORTH AMERICAN OPERATIONS. Gross profit from FlowMole and CableCure
operations increased dramatically due to the higher combined revenue levels
generated in fiscal 1997, compared to the same period of fiscal 1996. Fixed
costs of North American operations, including equipment depreciation,
facilities costs and field administrative salaries, were spread over higher
revenue levels, increasing gross profit as a percentage of revenue.
INTERNATIONAL OPERATIONS. Gross profit from international operations for the
second quarter of fiscal 1997 increased due to the increased revenues from
equipment sales. Gross profit for the first six months of fiscal 1997
increased as a result of increased revenues from equipment sales as well as
European CableCure operations. In addition, CableCure operations in Europe
provide a relatively high gross margin, which has served to improve
international gross margin as a percent of international revenue.
OPERATING EXPENSES AND OTHER INCOME (EXPENSES)
Total operating expenses increased 1% in the second quarter of fiscal 1997,
compared to the same period of fiscal 1996. Total operating expenses
decreased 1% in the first six months of fiscal 1997 compared to the same
period of fiscal 1996. Selling, general and administrative expenses remained
level in both periods. Provisions for royalty payments under the Company's
exclusive CableCure license increased to over $200,000 in each of the first
two quarters of fiscal 1997. There were no such provisions in the same
periods of fiscal 1996. Decreases in selling, general and administrative
expenses in other areas, primarily due to reduced headcount resulting from
the Company's restructuring announced on April 2, 1996, offset the higher
royalty expense. Research and engineering expenses increased as the Company
continued prototype testing of its new Series G Drill.
Other income (expense) net, was income of $25,000 and a net expense of
$16,000 in the second quarter and first six months of fiscal 1997,
respectively, compared to income of $64,000 and $132,000 in the same periods
of fiscal 1996. The Company recorded a gain from its share of the start-up
operations of a joint venture in each of the first two quarters of fiscal
1996 compared to none in the same period in fiscal 1997. This joint venture
ceased operations in the third quarter of fiscal 1996.
INCOME (LOSS) BEFORE INCOME TAXES
As a result of the foregoing, the Company recorded pretax income of $522,000
in the second quarter of fiscal 1997 compared to a pretax loss of $690,000 in
the same period of fiscal 1996. The Company recorded pretax income of $1.2
million in the first six months of fiscal 1997 compared to a pretax loss of
$1.3 million in the same period of fiscal 1996.
INCOME TAX EXPENSE (BENEFIT)
The Company would normally expect an effective income tax rate of
approximately 40% on positive pretax income. This exceeds the federal
statutory rate of 34% due to the impact of state income taxes and
nondeductible expenses. The Company has continued to provide a 100%
valuation allowance for net deferred tax assets (originally established in
the fourth quarter of fiscal 1996). As a result, due to utilization of net
operating loss carryforwards and other deferred tax benefits in fiscal 1997,
the Company has eliminated substantially all of the Company's income tax
provision in the first and second quarters of fiscal 1997. The Company's
effective income tax rate in the second quarter of fiscal 1996 was 28%.
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NET INCOME (LOSS)
As a result of the foregoing, the Company recorded net income of $516,000 in
the second quarter of fiscal 1997 compared to a net loss of $493,000 in the
same period of fiscal 1996. The Company recorded net income of $1.2 million
in the first six months of fiscal 1997 compared to a net loss of $953,000 in
the same period of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had unused sources of liquidity consisting
of $1.1 million in cash and cash equivalents and an unused balance on its
committed line of credit of $4,250,000. This compares to $495,000 in cash
and cash equivalents and unused balance on its committed line of credit of
$2,500,000 at March 31, 1996. Capital expenditures of $2.1 million for
equipment to expand the Company's capabilities to perform additional
auxiliary services, such as trenching and fusion of gas pipes, represents the
primary use of cash during the first six months of fiscal 1997. The net
increases in cash during the first and second quarters of fiscal 1997 were
primarily due to the impact of positive cash flow from operations, including
the collection of Federal Income Tax refunds from the Company's tax return
for fiscal 1995. The Company has anticipated the periodic usage of its line
of credit throughout fiscal 1997. The Company anticipates that through cash
generated by operations and the periodic use of its credit facility, it will
be able to meet its cash requirements through at least fiscal 1997. The line
of credit expires on November 30, 1996. The Company has initiated
discussions for renewal of the line, and anticipates that it will be able to
negotiate a renewal of this line of credit.
REVIEW AND OUTLOOK
The Company is experiencing strong demand for its FlowMole and CableCure
services in North America, and is recruiting personnel to expand its capacity
for the next fiscal quarter. The third quarter of the Company's fiscal year
has historically generated its peak revenue levels due to the normal
seasonality of work release from utility customers. However, the Company's
revenue levels and the weighted average number of FlowMole systems in
operation on any given day are also affected by factors which include
weather, pricing, competition, customer work release practices, soil and
other work difficulty determinants, and permitting. The Company may choose
to increase or decrease its capacity; however, management currently plans to
add crews or equipment when it has a high degree of confidence exists in the
Company's ability to keep the added crews busy. In addition, the Company's
contracts typically allow for cancellation by the customers on relatively
short notice. Therefore, sudden changes in demand may have an immediate
adverse impact on the Company's revenue levels. A small number of customers
generate the majority of the Company's North American CableCure revenues,
increasing the exposure of the Company to such short term fluctuations in
revenues. See also the discussion under "Risk Factors", below.
The Company has announced the termination of its in-house assembly of new
FlowMole drilling equipment. No decision has yet been made as to the vendor
or vendors who will perform such assembly services for the Company in the
future. The Company has sold substantially all its inventory of new drilling
equipment. The nature and timing of the decision regarding future equipment
purchasing may have an impact on the continuation of revenue from equipment
sales in the long term and limited inventory levels will adversely impact
equipment sales revenues in the near future. Also, although the Company
expects to maintain or increase its revenues from spare parts sales to
international customers, such customers may in fact respond to the Company's
decision by turning to other suppliers for equipment and spare parts.
This Form 10-Q contains forward looking statements, in addition to those
under the caption "Review and Outlook". Such statements are subject to
substantial risk. Actual results may vary materially due to risks and
uncertainties inherent in the Company's business, including those described
under "Review and Outlook," those described under "Risk Factors" below, and
additional descriptions included in Item 7 of the Company's fiscal 1996 Form
10-K filed with the Securities and Exchange Commission.
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RISK FACTORS
COMPETITION. The Company has experienced a long-term trend of declining
prices for guided boring services, particularly for smaller diameter utility
installations, due to competitive pressures and changes in utility bidding
practices. This trend has also caused the Company to lower its prices for
CableCure injection services, which are priced at a discount to replacement
costs, including replacement via guided boring. In addition, the Company's
utility customers are increasing their requests for "turnkey" installation,
replacement and restoration services, requiring their drilling contractors to
take responsibility for switching circuits, terminating circuits, and other
non-incidental tasks. These tasks require additional equipment and labor,
and the cost increases can offset any price increase the Company is able to
negotiate for the expansion of its services. The trend of falling prices for
guided boring services is expected to continue into the future, as more
customers award work based on competitive bidding, more customers require
their drilling contractors to perform additional tasks as part of the
drilling contract, and more conventional contractors acquire drilling
capabilities in order to enter into this segment of the construction
industry. This trend will continue to put downward pressure on the market
price for CableCure services. The Company cannot predict the ultimate
duration or the magnitude of these decreases.
SEASONAL FACTORS. Weather and other seasonal factors may decrease the
Company's revenues and profits in any given period. Adverse weather may
preclude the Company from operating its FlowMole drilling systems or
providing its CableCure services at certain times of the year. In addition,
the Company believes that the regular budgetary cycles of certain of its
North American utility customers tend to concentrate demand for the Company's
services during the third quarter of its fiscal year (the fourth quarter of
the calendar year), although other budgetary factors described below may
override this trend in any given quarter. As a result of these factors,
results of operation in any given fiscal quarter are not necessarily
indicative of results in any other fiscal quarter.
UTILITIES' BUDGETARY CONSIDERATIONS. Budgetary considerations arising from
unfavorable regulatory determinations on matters such as rate-setting,
capitalization of services performed by the Company, or siting of power
production facilities, or from reductions in new housing starts, reductions
in electric utility revenues due to mild weather, and general economic
downturns, have affected the ability of some of the Company's utility
customers to sustain their cable replacement or other maintenance programs
and, accordingly, adversely impact the Company's revenues and profits.
Although the Company has broadened its customer base, one customer, Virginia
Electric and Power Company, continues to generate a significant portion of
the Company's consolidated revenues, and a small number of customers generate
more than half of its CableCure revenues. Because cable replacement,
restoration and other maintenance programs are, to a substantial extent,
deferrable and the Company's contracts with its utility customers permit
termination of orders on relatively short notice, postponement or
cancellation of such programs by customers can interject substantial
volatility into the Company's revenues and profits.
DOW CORNING CORPORATION. In May 1995, Dow Corning Corporation ("Dow
Corning") filed for protection under Chapter 11 of the United States
Bankruptcy Code and began to operate as a debtor in possession. To date, Dow
Corning has not filed any motion to assume or reject the exclusive license
agreement with the Company, and the Company is unaware of any orders in the
bankruptcy court to date which pertain to the exclusive license agreement.
Management of Dow Corning has repeatedly indicated to the Company that it
intends to continue conducting the business with the Company, and the Company
is currently unaware of any facts which would lead it to believe that Dow
Corning intends to discontinue the relationship. However, there can be no
guarantee that the CableCure license agreement will not be amended or
rejected during the course of the bankruptcy proceeding.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
EMERSON, ET AL. V. UTILX CORPORATION, A. B. CHANCE CO., THE CITY OF
BRYAN AND PAUWELS TRANSFORMERS, INC. 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. In April
1996, an amended complaint was filed adding as additional plaintiffs certain
relatives of the injured person. The plaintiffs have 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. Prior to the April 1996 amendment, the
Company received a settlement offer near the limits of the Company's
insurance policy. The Company is defending this matter. The City of Bryan,
a co-defendant, has tendered its defense in this litigation to the Company's
insurer, which has accepted the tender under reservation of rights.
OTHER. The Company is involved in other litigation matters, both as a
plaintiff and as a defendant, arising in the ordinary course of its business.
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.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 25, 1996, the Company held its 1996 Annual Meeting of Stockholders
at which the stockholders took the following action: (1) Stanley J.
Bright was reelected to the Company's Board of Directors for a three year
term expiring in 1999 by a vote of 6,452,350 "for" and 66,991 "against",
and William M. Weisfield was reelected to the Company's Board of Directors
for a three year term expiring in 1999 by a vote of 6,452,850 "for" and
66,491 "against", and (2) the appointment of the accounting firm of Coopers
& Lybrand L.L.P. as the Company's auditors for fiscal year 1997 was
ratified and approved by a vote of 6,446,625 "for", 58,749 "against" and
13,967 "abstaining".
ITEM 5. OTHER
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 11.1 Statement Regarding Computation of Per Share Earnings.
27.1 Financial Data Schedule.
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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 4, 1996 By: /s/ Craig E. Davies
------------------------------------
Craig E. Davies, President and Chief
Executive Officer
Date: November 4, 1996 By: /s/ Larry D. Pihl
------------------------------------
Larry D. Pihl, Vice President/Chief
Financial Officer
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EXHIBIT 11.1
UTILX CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Quarter Ended September 30,
---------------------------------------------------
1996 1995
Earnings
Earnings Shares (Loss) Shares
-------- ------ ------- ------
(In Thousands, Except Per Share Amounts)
<S> <S> <C> <C> <C>
Primary earnings (loss) per common share:
Net earnings (loss) available for common
stock and weighted average common shares
outstanding $ 516 7,187 $ (493) 7,185
Stock options and warrants assumed exercised - net 143
------ ------- ------- ------
Total net earnings (loss) and primary common shares $ 516 7,330 $ (493) 7,185
------ ------- ------- ------
------ ------- ------- ------
Primary earnings (loss) per common share $ .07 $ (.07)
------ -------
------ -------
Fully diluted earnings (loss) per common share:
Net earnings (loss) available for common stock
and weighted average common shares outstanding $ 516 7,187 $ (493) 7,185
Stock options and warrants assumed exercised - net 158
------ ------- ------- ------
Total net earnings (loss) and fully diluted common shares $ 516 7,345 $ (493) 7,185
------ ------- ------- ------
------ ------- ------- ------
Fully diluted earnings (loss) per common share $ .07 $ (.07)
------ -------
------ -------
</TABLE>
<PAGE>
UTILX CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Six Months Ended September 30,
--------------------------------------
1996 1995
Earnings
Earnings Shares (Loss) Shares
-------- ------ -------- ------
(In Thousands, Except Per Share Amounts)
Primary earnings (loss) per common
share:
Net earnings (loss) available for
common stock and weighted average
common shares outstanding $1,169 7,185 $(953) 7,185
Stock options and warrants assumed
exercised - net 79
------ ----- ----- -----
Total net earnings (loss) and
primary common shares $1,169 7,264 $(953) 7,185
------ ----- ----- -----
------ ----- ----- -----
Primary earnings (loss) per common
share $ .16 $(.13)
------ -----
------ -----
Fully diluted earnings (loss) per
common share:
Net earnings (loss) available for
common stock and weighted average
common shares outstanding $1,169 7,185 $(953) 7,185
Stock options and warrants assumed
exercised - net 86
------ ----- ----- -----
Total net earnings (loss) and fully
diluted common shares $1,169 7,271 $(953) 7,185
------ ----- ----- -----
------ ----- ----- -----
Fully diluted earnings (loss) per
common share $ . 16 $(.13)
------ -----
------ -----
<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, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,129
<SECURITIES> 0
<RECEIVABLES> 13,943
<ALLOWANCES> 285
<INVENTORY> 6,046
<CURRENT-ASSETS> 21,232
<PP&E> 30,540
<DEPRECIATION> 21,037
<TOTAL-ASSETS> 31,579
<CURRENT-LIABILITIES> 6,842
<BONDS> 0
0
0
<COMMON> 72
<OTHER-SE> 24,665
<TOTAL-LIABILITY-AND-EQUITY> 31,579
<SALES> 30,673
<TOTAL-REVENUES> 30,673
<CGS> 25,273
<TOTAL-COSTS> 29,476
<OTHER-EXPENSES> 16
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 1,181
<INCOME-TAX> 12
<INCOME-CONTINUING> 1,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,169
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
