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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
APRIL 2, 1996
Date of Report
(Date of earliest event reported)
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)
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The total number of pages in this Form 8-K is 3.
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ITEM 5. OTHER EVENTS
On April 2, 1996, UTILX-Registered Trademark- Corporation, a Delaware
corporation ("UTILX" or the "Company"), issued a press release to announce that
its Board of Directors approved a plan to eliminate in-house manufacturing and
to outsource that operation in a strategic restructuring designed to permit the
Company to focus on its core FlowMole-Registered Trademark- and CableCure-
Registered Trademark- services for the utility industry. As a result, UTILX
also adopted a workforce reduction plan, eliminating 40 positions at its Kent,
Washington headquarters over the next six months. The Company anticipates that
this restructuring will allow it to reduce operating expenses by approximately
$1.5 million in the next fiscal year.
Previously, UTILX had designed and engineered its own equipment and assembled
the equipment from components fabricated elsewhere. As a result of this
restructuring, the Company plans to outsource the assembly processes. UTILX
will continue to maintain its in-house research and development of advanced
electronic guidance. The Company anticipates implementing its new Series G
Drill in late 1996 or early 1997.
As a result of the restructuring, UTILX will incur an expense of approximately
$125,000 for severance costs and outplacement benefits in the fourth quarter of
its fiscal year ended March 31, 1996. In the fiscal year ended March 31, 1995,
the Company generated $3,430,000 in revenues (6.9 percent of consolidated
revenues) in equipment sales; in the nine months ended December 31, 1995,
equipment sales generated $2,370,000 in revenues (6.6 percent of its
consolidated revenues). Gross profit on such sales, before allocating warranty
provisions, selling costs and other related expenses was $987,000 and $715,000,
respectively. Allocated expenses are estimated at 10% to 15% of equipment sales
revenue. The Company is currently evaluating alternatives for making new
equipment available to its international customers, and cannot predict the level
of any future equipment sales. UTILX will continue to support international
customers with spare parts and warranty services.
Statements which are not historical facts contained in this Form 8-K are forward
looking statements that involve risks and uncertainties. Such risks include,
but are not limited to, the risk that efforts to outsource the assembly of
equipment would result in cost increases, delayed deliveries or decreased
quality. Also, the Company's revenues can be adversely affected by price
competition, weather-related factors or customer cancellations of contracts.
Additionally, the Company's cost of service, including equipment costs, could
also increase and the resulting lower margins could potentially offset the
Company's projected reductions in operating costs. Furthermore, the Company may
not be able to avoid increases in other costs, such as employee benefits and
insurance costs, which also would offset the projected reductions in operating
costs. In addition, costs associated with continuing the provision of spare
parts and warranty services to international customers could exceed any revenues
generated from those activities. Also, the Company provides CableCure services
under an exclusive license with Dow Corning Corporation ("Dow Corning"), and
purchases all of its CableCure fluid from Dow Corning. Dow Corning filed for
protection under Chapter 11 of the Federal Bankruptcy Code in May 1995. The
Company has been informed by Dow Corning that it intends to continue the
CableCure business; however, there can be no assurance that it will continue to
do so. To date, Dow Corning has not filed any motion to assume or reject its
exclusive license agreement with the Company. The Company's rights under the
exclusive license agreement will eventually be determined by the bankruptcy
court.
For a more complete discussion of the risks and uncertainties that affect this
Company's business, please refer to the Company's Form 10-Q for the quarter
ended December 31, 1995, and its Annual Report and Form 10-K for the fiscal year
ended March 31, 1995.
ITEM 6. EXHIBITS
99.1 Press Release.
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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
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(Registrant)
Date: April 10, 1996 By: /s/ Larry D. Pihl
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Larry D. Pihl, Vice President/Chief
Financial Officer
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[UTILX LETTERHEAD]
CONTACT: Larry D. Pihl
Vice President, Chief Financial Officer
206/395-0200
Rosanne Marks
MWW/Savitt
206/689-8505
FOR IMMEDIATE RELEASE
UTILX CORPORATION TO FOCUS ON CORE SERVICE BUSINESSES
COMPANY STRATEGY LEADS TO ELIMINATION OF MANUFACTURING OPERATIONS
KENT, WA -- APRIL 2, 1996 -- In a strategic restructuring designed to permit the
company to focus on its core service businesses, UTILX Corp. today announced
that its Board of Directors has approved a plan to eliminate in-house
manufacturing and to outsource that operation. As a result, UTILX has also
adopted a workforce reduction plan, eliminating 40 positions at its Kent
headquarters over the next six months. The company anticipates that this
restructuring will allow it to reduce operating expenses by approximately $1.5
million in the next fiscal year.
"UTILX's future growth and success will focus on our core FlowMole-
Registered Trademark- and CableCure-Registered Trademark- services for the
utility industry," said Craig E. Davies, UTILX president and CEO. "We believe
that we possess significant opportunities for expanding these services as
utility industry deregulation increases the drive among utilities to reduce
costs and extend the life of their critical infrastructure which, for example,
makes our CableCure service more attractive. We also expect our FlowMole and
CableCure business to benefit from the concentrated focus on these core areas of
the company."
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UTILX TO FOCUS ON CORE SERVICE BUSINESSES--PAGE 2
Previously UTILX had designed and engineered its own equipment and
assembled the equipment from components fabricated elsewhere. As a result of
this restructuring, the company plans to outsource the assembly processes.
"UTILX will continue to maintain the in-house technological excellence upon
which our customers rely to successfully complete their most difficult cable
replacements," Davies said. "For example, we will continue testing on our
prototype of the next generation of drilling equipment -- the Series G drill --
that we now anticipate implementing in late 1996 or early 1997. We will also
maintain our research and development of advanced electronic guidance
technologies, that provide our crews with enhanced productivity and
capabilities."
As a result of the restructuring, UTILX will incur an expense of
approximately $125,000 for severance costs and outplacement benefits in the
fourth quarter of its fiscal year ended March 31, 1996. In the fiscal year
ended March 31, 1995, the company generated $3,430,000 in revenues (6.9 percent
of consolidated revenues) in equipment sales; in the nine months ended December
31, 1995, equipment sales generated $2,370,000 in revenues (6.6 percent of its
consolidated revenues). The company is currently evaluating alternatives for
making new equipment available to its international customers, and cannot
predict the level of any future equipment sales. UTILX will continue to support
international customers with spare parts and warranty services.
UTILX Corporation provides critical services for the renovation of
underground utilities in the U.S. and Canada through a network of regional sales
and service centers. The company also conducts service operations in Europe
through its wholly-owned subsidiary in the United Kingdom. The NASDAQ-listed
company (UTLX) is based in Kent, Washington and employs more than 500 people
worldwide.
Forward looking statements about the company's future performance are
subject to risks and uncertainties, such as sudden changes in utilities' demand
for the company's services due to budgetary or other factors; such risks are
detailed in the company's reports filed with the Securities and Exchange
Commission (SEC).
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