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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1997
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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 (253) 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
--- ---
As of June 30, 1997, 7,184,631 shares of Common Stock were outstanding.
The total number of pages in this Form 10-Q is 12.
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TABLE OF CONTENTS
ITEM PAGE
---- ----
PART I
1. Financial Statements
Consolidated Balance Sheet
June 30, 1997 and March 31, 1997...................... 3
Consolidated Statement of Operations
For the Three Months Ended
June 30, 1997 and 1996................................ 4
Consolidated Statement of Cash Flows
For the Three Months Ended
June 30, 1997 and 1996................................ 5
Notes to Consolidated Financial Statements............ 6
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 7
PART II
1. Legal Proceedings..................................... 11
2. Changes in Securities................................. 11
3. Defaults Upon Senior Securities....................... 11
4. Submission of Matters to a Vote of Security Holders... 11
5. Other................................................. 11
6. Exhibits.............................................. 11
Signatures........................................................... 12
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTILX CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30 AND MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
ASSETS
JUNE 30 MARCH 31
Current assets:
Cash and cash equivalents................... $ 713 $ 1,490
Accounts receivable, trade, net............. 16,556 15,873
Materials, supplies and inventories......... 8,883 7,715
Income taxes receivable, net................ 524 469
Prepaid expenses and other.................. 327 184
--------- ---------
Total current assets..................... 27,003 25,731
Equipment and improvements, net............... 9,232 9,446
Other assets, net............................. 676 735
--------- ---------
Total assets............................. $ 36,911 $ 35,912
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--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank........................ $ 3,585 $ 985
Accounts payable............................ 3,019 3,737
Accrued liabilities......................... 3,783 4,449
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Total current liabilities................ 10,387 9,171
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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.................. 17,390 17,390
Retained earnings........................... 8,640 8,908
Unearned compensation....................... (3)
Cumulative foreign currency translation
adjustment............................. (514) (562)
--------- ---------
Total stockholders' equity............... 26,524 26,741
--------- ---------
Total liabilities and stockholders'
equity................................. $ 36,911 $ 35,912
--------- ---------
--------- ---------
Common Stock issued and outstanding......... 7,184,631 7,184,631
(See Notes to Consolidated Financial Statements)
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UTILX CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1997 1996
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Revenues......................................... $18,767 $15,124
Cost of revenues................................. 16,867 12,244
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Gross profit........................... 1,900 2,880
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Operating expenses:
Selling, general and administrative.... 1,938 1,988
Research and engineering............... 158 192
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Total operating expenses............. 2,096 2,180
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Operating income (loss).......................... (196) 700
Other income (expense), net...................... (71) (41)
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Income (loss) before income taxes................ (267) 659
Income tax provision............................. 1 6
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Net income (loss)................................ $ (268) $ 653
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Earnings (loss) per share (Note 2):
Primary................................ (.04) .09
Fully diluted.......................... (.04) .09
Weighted average number of shares (Note 2):
Primary................................ 7,185 7,198
Fully diluted.......................... 7,185 7,198
(See Notes to Consolidated Financial Statements)
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UTILX CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
1997 1996
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OPERATING ACTIVITIES:
Net income (loss)........................... $ (268) $ 653
Adjustments to reconcile to net cash
provided by (used by) operating activities:
Depreciation and amortization......... 990 897
Other non-cash (income) expenses, net. 3 7
Changes in assets and liabilities..... (3,404) 1,714
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Total adjustments..................... (2,411) 2,618
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Net cash provided by (used by) operating
activities.................................. (2,679) 3,271
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INVESTING ACTIVITIES:
Cost of additions to equipment.............. (703) (935)
Proceeds from sale of equipment............. 5
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Net cash used by investing activities. (703) (930)
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FINANCING ACTIVITIES:
Net borrowings (repayments) on note payable. 2,600 (1,400)
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Net cash provided by (used by)
financing activities................ 2,600 (1,400)
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EFFECT ON CASH FLOWS OF FOREIGN CURRENCY
TRANSACTIONS.................................. 5 12
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Net increase (decrease) in cash and cash
equivalents............................... (777) 953
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CASH AND CASH EQUIVALENTS:
Beginning of period......................... 1,490 495
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End of period............................... $ 713 $ 1,448
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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 periods ended June 30, 1997 and
1996. The statements should be read in conjunction with the March 31, 1997
audited consolidated financial statements included in the fiscal 1997 Annual
Report on Form 10-K.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128, "Earnings Per Share." This statement will
change the computation, presentation and disclosure requirements for earnings
per share ("EPS"). The statement will be effective for interim and annual
reporting periods ending after December 15, 1997. This statement will
replace "primary" EPS with" basic" EPS, the principal difference being the
exclusion of common stock equivalents in the computation of basic EPS. In
addition, this statement will require the dual presentation of basic and
diluted EPS on the face of the consolidated statement of operations. EPS
computed pursuant to the statement is not expected to be materially different
from the historical earnings per share previously presented.
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, when dilutive, common stock
equivalents outstanding during the period. Common stock equivalents 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 June 30 and March 31, 1997 consists of
the following:
(In thousands)
June 30, 1997 March 31, 1997
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Raw and Spare Parts $ 7,356 $ 6,729
Work in Process 820 562
Finished Goods 1,108 918
Less allowance for potentially
obsolete or overstocked inventory (401) (494)
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$ 8,883 $ 7,715
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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 Seattle-First prime rate, the
LIBOR rate plus 1.40%, or other specified rates, at the Company's option.
The Company pays a
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commitment fee of up to 0.125% on the unused portion of the facility. This
line of credit currently expires on June 30, 1998. The Company currently
anticipates that it will be able to negotiate an extension of this line of
credit. The Company requested and was granted a temporary commitment to
increase the credit facility to $10,000,000 until October 1, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR FIRST QUARTER
OF FISCAL YEAR 1998
COMPARED TO FIRST QUARTER
OF FISCAL YEAR 1997
REVENUES
Consolidated revenues increased 24% in the first quarter of fiscal 1998,
compared to the same period in fiscal 1997.
NORTH AMERICAN OPERATIONS. Revenues from FlowMole drilling operations in
North America increased to $12.2 million in the first quarter of fiscal 1998,
compared to $9.5 million in the same period of fiscal 1997. Revenues from
CableCure services in North America increased to $4.4 million in the first
quarter of fiscal 1998, compared to $3.6 million in the same period of fiscal
1997.
The increased revenues in FlowMole operations were attributed to increased
demand for installation and replacement services and the Company's ability to
maintain a higher level of drilling crews than in the prior year to meet the
demand. Also, the Company has increased the number of crews performing
installation and replacement services using conventional trenching methods.
Continued strong demand for repair and restoration services, primarily under
"Test, Treat or Replace" contracts, contributed to the increased CableCure
revenue levels. Revenues also increased due to the addition of services for
the location and repair of faults in electric cables. Customers choosing
Test, Treat or Replace contracts also contributed to the increased demand for
installation and replacement services.
INTERNATIONAL OPERATIONS. Revenues from international operations increased
slightly to $2.14 million in the first quarter of fiscal 1998, compared to
$2.10 million in the same period of fiscal 1997. Increased revenues from
European CableCure operations offset decreased revenues from spare part sales.
GROSS PROFIT
Gross profit decreased 34% in the first quarter of fiscal 1998, compared to
the same period in fiscal 1997.
NORTH AMERICAN OPERATIONS. Gross profit from installation and replacement
services decreased in the first quarter of fiscal 1998 compared to the same
period of fiscal 1997. New employees were hired both for drilling crews and
for new conventional trenching crews, including employees being trained for
the addition of new drilling crews in the second quarter of fiscal 1998, when
newly ordered FlowMole equipment is scheduled to be delivered. Additional
hiring and training expenses, which are generally not offset by new revenues
until the new crews are deployed to perform work, reduced gross profit as a
percentage of revenue in the first quarter of fiscal 1998.
Gross profit from repair and restoration services decreased for similar reasons.
The Company substantially increased the number of crews involved in the
preparation of cables for CableCure injection, including crews
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starting up new services for location and repair of faults in electric
cables. During the quarter, the Company encountered a high percentage of
cables where, after testing by Company crews, it was determined that
injection would not be cost-effective. As a result, the amount of CableCure
revenues produced by per crew decreased, which adversely impacted gross
profit for the period.
INTERNATIONAL OPERATIONS. Gross profit from international operations in the
first quarter of fiscal 1998 increased as a percentage of revenue compared to
the same period of the prior year due to a change in mix of international
revenues. CableCure operations in Europe provide a relatively high gross
margin, which has served to improve international gross margin.
OPERATING EXPENSES AND OTHER INCOME (EXPENSES)
Total operating expenses decreased 4% in the first quarter of fiscal 1998,
compared to the same period of fiscal 1997. Selling, general and
administrative expenses decreased 3% compared to the first quarter of fiscal
1997. Research and engineering expenses decreased 18%. The Company's
restructuring, as announced on April 2, 1996 involved the elimination of a
number of corporate positions over the first half of fiscal 1997, enabling
the Company to reduce corporate overhead.
Other income (expense), net, was an expense of $71,000 in the first quarter
of fiscal 1998, compared to an expense of $41,000 in the same period of the
prior year. This increase was a result of increased interest expense due to
higher average borrowings on the Company's line of credit.
As a result of the foregoing, the Company recorded a pretax loss of $267,000
in the first quarter of fiscal 1998, compared to pretax income of $659,000 in
the same period of fiscal 1997.
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 impact of deductions deferred from prior years
and net operating loss carryforwards eliminated most of the Company's income
tax provision in the first quarter of fiscal 1997, due to the provision of a
valuation allowance at the end of fiscal 1996 against the full amount of the
Company's net deferred tax assets. The Company provided for no federal
income tax benefit in the first quarter of fiscal 1998 as it continues to
provide a valuation allowance against the full amount of its net deferred tax
assets.
NET INCOME (LOSS)
As a result of the foregoing, the Company recorded a net loss of $268,000 in
the first quarter of fiscal 1998, compared to a net income of $653,000 in the
same period of fiscal 1997.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128, "Earnings Per Share." This statement will change
the computation, presentation and disclosure requirements for earnings per share
("EPS"). The statement will be effective for interim and annual reporting
periods ending after December 15, 1997. This statement will replace "primary"
EPS with" basic" EPS, the principal difference being the exclusion of common
stock equivalents in the computation of basic EPS. In addition, this statement
will require the dual presentation of basic and diluted EPS on the face of the
consolidated statement of operations.
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EPS computed pursuant to the statement is not expected to be materially
different from the historical earnings per share previously presented.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had unused sources of liquidity consisting of
$713,000 in cash and cash equivalents and an unused balance on its committed
line of credit of $1,415,000. The Company has also obtained a temporary
increase in its line of credit which provides for an additional $5,000,000
available until October 1, 1997. This compares to $1,490,000 in cash and cash
equivalents and an unused balance on its committed line of credit of
$4,015,000 at March 31, 1997. Uses of cash during the first quarter of
fiscal 1998 primarily related to capital expenditures of $703,000 for
equipment to expand the Company's capabilities to perform additional
auxiliary services, such as equipment for locating and repairing faults in
electric cables. The Company had anticipated the periodic usage of its line
of credit throughout fiscal 1998. The Company anticipates that through cash
generated by operations, lease financing of certain purchases of new
equipment, and the periodic use of its credit facility, it will be able to
meet its cash requirements through at least fiscal 1998. The Company has not
yet determined whether it will require an extension of its increased line of
credit beyond October 1, 1997.
REVIEW AND OUTLOOK
The Company is experiencing strong demand for its services in North America,
and is recruiting personnel to expand its capacity. The second and third
quarters of the Company's fiscal year have 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'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. The Company
expects to see increased volumes from new customers in calendar year 1997,
and some increased volumes from existing customers. The Company expects to
continue to rely on a small number of customers for 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.
On April 2, 1996, the Company announced the termination of its in-house
assembly of new FlowMole drilling equipment. The Company has issued purchase
orders to a number of manufacturers for new FlowMole drilling systems to be
delivered beginning in the second quarter of fiscal 1998. The Company has at
least two suppliers capable of manufacturing each component of the FlowMole
drilling system. The Company believes that this will allow it to obtain
competitive pricing for equipment and to mitigate any adverse impact of a
single supplier's inability to meet delivery schedules or to conform to the
Company's quality specifications. The Company has yet to place any equipment
into service that was acquired under these new arrangements. Even though the
Company is preparing to implement new drilling crews utilizing new equipment,
there can be no assurance that delivery schedules will be met or that the
quality of the equipment manufactured by such suppliers will be comparable
to that of the equipment assembled by the Company through its own operations.
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 factors described in Item 7 of the Company's fiscal 1997 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 ("FlowMole") 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 overall 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, three customers
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. The Company purchases its CableCure fluid
exclusively from Dow Corning. In May 1995, Dow Corning filed for protection
under Chapter 11. While the Company has been informed by Dow Corning that it
intends to continue the CableCure business, there can be no assurance that
Dow Corning or the bankruptcy court will not take action to amend or
terminate the CableCure license agreement.
FLORIDA SUBCONTRACT NEGOTIATIONS. The Company is party to an
agreement (the "underlying agreement") which requires it to utilize a single
Florida-based subcontractor for performance of certain CableCure injection
tasks for Florida Power & Light through January 2000. The underlying
agreement requires the Company to pay the subcontractor a percentage of the
amount charged to Florida Power & Light for certain services defined in the
underlying agreement. The Company is in the process of negotiating new terms
with this subcontractor, effective April 1, 1997, based on new pricing agreed
to between the Company and Florida Power & Light. An interim agreement,
subject to retroactive adjustments, was agreed to by the Company and the
subcontractor for the period April 1, 1997 to May 31, 1997. Subsequently,
the subcontractor is continuing to perform the injection services required by
the Company under the underlying agreement while the negotiations continue.
The Company believes
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that payments made to the subcontractor subsequent to April 1, 1997 are in
conformity with the underlying agreement. The subcontractor claims to be
entitled to a percentage of additional amounts charged to Florida Power &
Light. There can be no assurance that the final price settled upon for
payments to the subcontractor will not result in an adverse effect on the
gross profit realized by the Company under its contract with Florida Power &
Light.
IMPACT OF INFLATION AND CHANGING PRICES. Inflation has had only a
minimal effect on the Company's revenues and expenses and is not expected to
have a significant impact on revenues or expenses in fiscal 1998.
FOREIGN CURRENCY FLUCTUATIONS. The Company's financial results are
affected by fluctuations in certain foreign currencies, particularly the
British Pound Sterling and the German Deutschemark.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in 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
None.
ITEM 5. OTHER
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.39 Loan Modification Agreement between Registrant and Bank of
America NW, N.A., doing business as Seafirst Bank,
successor by name change to Seattle-First National
Bank, dated June 12, 1997.
11.1 Statement Regarding Computation of Per Share Earnings.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
None
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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: July 31, 1997 By: /s/ Craig E. Davies
-----------------------------------
Craig E. Davies, President and
Chief Executive Officer
Date: July 31, 1997 By: /s/ Larry D. Pihl
-----------------------------------
Larry D. Pihl, Vice President/Chief
Financial Officer
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As Filed with the Securities and Exchange Commission on August 13, 1997
File No. 0-16821
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
EXHIBITS
TO
QUARTERLY REPORT FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------
UTILX CORPORATION
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.39 Loan Modification Agreement between Registrant and Bank of
America NW, N.A., doing business as Seafirst Bank,
successor by name change to Seattle-First National
Bank, dated June 12, 1997. Filed herewith.
11.1 Statements Regarding Computation of Per Share Earnings.
Filed herewith.
27.1 Financial Data Schedule. Filed herewith.
<PAGE>
EXHIBIT 10.39
SEAFIRST BANK LOAN MODIFICATION
AGREEMENT
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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 Bank of America
National Trust and Savings Association, doing business as Seafirst Bank,
successor by merger to Seattle-First National Bank and Bank of America NW,
N.A. ("Bank"), regarding a loan in the maximum principal amount of $5,000,000
(the "Loan"). Capitalized terms used in this agreement shall have the
meaning given in the Credit Agreement, as modified by any prior modification
agreement. For mutual consideration, Borrower and Bank agree to amend the
above loan documents as follows:
1. CREDIT LIMIT. Section 1.10 of the Credit Agreement is amended to read as
follows: "CREDIT LIMIT shall mean $10,000,000 from June 12, 1997, until
October 1, 1997, and thereafter shall mean $5,000,000."
2. NOTE. The Note is amended to provide (a) that Borrower's maximum
liability for principal under the Note is changed to $10,000,000; and (b)
that Borrower shall repay to Bank on October 1, 1997, the principal amount by
which the outstanding principal balance of the Note on that day exceeds
$5,000,000.
3. 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 notes, 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 as of June 12, 1997.
Bank: Borrower:
SEAFIRST BANK UTILX CORPORATION
By: /s/ Terry Jones By: /s/ Larry D. Pihl
-------------------- --------------------
Title: Vice President Title: VP, CFO
------------------ ------------------
LOAN MODIFICATION AGREEMENT (UTILX CORPORATlON;u200/15578)
<PAGE>
EXHIBIT 11.1
UTILX CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Quarter Ended June 30,
1997 1996
Earnings Loss Shares Earnings Shares
------------- ------ -------- ------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Primary earnings (loss) per common share:
Net earnings (loss) available for common
stock and weighted average common
shares outstanding $ (268) 7,185 $ 653 7,185
Stock options and warrants assumed
exercised - net 13
------- ------ ------ ------
Total net earnings (loss) and primary
common shares $ (268) 7,185 $ 653 7,198
------- ------ ------ ------
------- ------ ------ ------
Primary earnings (loss) per common share $ (.04) $ .09
------- ------
------- ------
Fully diluted earnings (loss) per common
share:
Net earnings (loss) available for common
stock and weighted average common
shares outstanding $ (268) 7,185 $ 653 7,185
Stock options and warrants assumed
exercised - net 13
------- ------ ------ ------
Total net earnings (loss) and fully diluted
common shares $ (268) 7,185 $ 653 7,198
------- ------ ------ ------
------- ------ ------ ------
Fully diluted earnings (loss) per common share $ (.04) $ .09
------- ------
------- ------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF UTILX CORPORATION FOR THE THREE MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
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