<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTER ENDED MARCH 31, 1996
Commission File No. 0-18350
GRANITE CONSTRUCTION INCORPORATED
State of Incorporation: I.R.S. Employer Identification
Delaware Number: 77-0239383
Corporate Administration:
585 West Beach Street
Watsonville, California 95076
(408) 724-1011
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of May 8, 1996.
Class Outstanding
- -------------------------------- ------------------
Common Stock, $0.01 par value 18,088,107 shares
This report on Form 10-Q, including all exhibits, contains 19 pages. The exhibit
index is located on page 18 of this report.
<PAGE> 2
GRANITE CONSTRUCTION INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance
Sheets as of March 31, 1996 and
December 31, 1995 ................................. 4
Condensed Consolidated Statements
of Income for the Three Months
Ended March 31, 1996 and 1995 ..................... 5
Condensed Consolidated Statements
of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 ..................... 6
Notes to the Condensed Consolidated
Financial Statements .............................. 7-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations ..................................... 11-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ................................. none
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 Information ................................. none
Item 6. Exhibits and Reports on Form 8-K .................. 16
Exhibit Index ..................................... 18
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
3
<PAGE> 4
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
MARCH 31, December 31,
1996 1995
- -----------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 14,705 $ 22,410
Short-term investments 25,922 44,582
Accounts receivable 110,184 142,055
Costs and estimated earnings in excess of billings 25,243 16,147
Inventories 12,719 10,180
Deferred income taxes 16,717 16,717
Equity in joint ventures 2,067 210
Other current assets 5,037 5,953
----------------------
Total current assets 212,594 258,254
- ---------------------------------------------------------------------------------------
Property and equipment 184,417 175,220
- ---------------------------------------------------------------------------------------
Other assets 22,402 21,270
- ---------------------------------------------------------------------------------------
$419,413 $454,744
=======================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 13,437 $ 13,948
Accounts payable 52,382 68,056
Billings in excess of costs and estimated earnings 35,851 43,730
Accrued expenses and other current liabilities 47,128 55,341
----------------------
Total current liabilities 148,798 181,075
- ---------------------------------------------------------------------------------------
Long-term debt 39,357 39,494
- ---------------------------------------------------------------------------------------
Deferred income taxes 24,270 24,270
- ---------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock, $0.01 par value, authorized
3,000,000 shares, none outstanding - -
Common stock, $0.01 par value, authorized 27,000,000
shares; 1996 - issued 18,128,465 shares, outstanding
18,088,107 shares; 1995 - issued 17,897,018 shares,
outstanding 17,884,268 shares 181 179
Additional paid-in capital 36,954 32,715
Retained earnings 177,211 180,341
----------------------
214,346 213,235
Unearned compensation (6,617) (3,330)
Treasury stock (741) -
----------------------
206,988 209,905
- ---------------------------------------------------------------------------------------
$419,413 $454,744
=======================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Revenue $153,749 $105,273
Cost of revenue 139,107 91,562
----------------------
GROSS PROFIT 14,642 13,711
General and administrative expenses 15,485 13,056
----------------------
OPERATING PROFIT (843) 655
- -----------------------------------------------------------------------------
Other income (expense)
Interest income 1,954 1,462
Interest expense (941) (480)
Gain on sales of property
and equipment 413 291
Other, net 7 (9)
----------------------
1,433 1,264
- -----------------------------------------------------------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 590 1,919
Provision for income taxes 224 691
- -----------------------------------------------------------------------------
NET INCOME $ 366 $ 1,228
=============================================================================
Net income per share $ 0.02 $ 0.07
Weighted average shares
of common stock 17,966 17,658
Dividends per share $ 0.19 $ 0.03
=============================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED- IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 366 $ 1,228
Add (deduct) noncash items included in net income:
Depreciation, depletion and amortization 8,947 7,054
Gain on sales of property and equipment (413) (291)
Decrease in unearned compensation 492 389
Cash provided by (used in):
Accounts and notes receivable 30,798 26,718
Inventories (2,539) (253)
Equity in joint ventures (1,857) 3,435
Other assets 594 469
Accounts payable (15,674) (7,624)
Billings in excess of costs and estimated earnings, net (16,975) (16,284)
Accrued expenses (8,213) (10,305)
----------------------
Net cash provided (used) by operating activities (4,474) 4,536
- ------------------------------------------------------------------------------------------------
Investing Activities
Additions to property and equipment (18,004) (9,407)
Proceeds from sales of property and equipment 645 632
Additions to notes receivable (74) (443)
Repayments of notes receivable 143 170
Additions to investments and other assets (178) (304)
Purchases of short-term investments (9,382) (11,474)
Maturities of short-term investments 28,042 12,885
----------------------
Net cash provided (used) by investing activities 1,192 (7,941)
- ------------------------------------------------------------------------------------------------
Financing Activities
Repayments of long-term debt (648) (522)
Employee stock options exercised 247 -
Purchase of treasury stock (526) -
Dividends paid (3,496) (587)
----------------------
Net cash used by financing activities (4,423) (1,109)
- ------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (7,705) (4,514)
Cash and cash equivalents at beginning of period 22,410 17,649
----------------------
Cash and cash equivalents at end of period $ 14,705 $ 13,135
================================================================================================
Supplementary Information
Cash paid during the year for:
Interest $ 941 $ 480
Income taxes 265 2
================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION: The condensed consolidated financial statements
included herein have been prepared by Granite Construction Incorporated
(the "Company"), without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted, although the Company believes the disclosures
which are made are adequate to make the information presented not
misleading. Further, the condensed consolidated financial statements
reflect, in the opinion of management, all normal recurring adjustments
necessary to present fairly the financial position at March 31, 1996
and the results of operations and cash flows for the periods presented.
The December 31, 1995 condensed consolidated balance sheet data was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Interim results are subject to significant seasonal variations and the
results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year.
2. SHORT-TERM INVESTMENTS:
<TABLE>
<CAPTION>
Held-To-Maturity Held-To-Maturity
March 31, 1996 December 31, 1995
(Unaudited)
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and Agency
Obligations $ 1,996 $1 $ - $ 1,997 $ 8,938 $6 $ - $ 8,944
Commercial Paper 1,999 1 - 2,000 10,897 3 (6) 10,894
Municipal Bonds 2,007 - (1) 2,006 2,012 4 - 2,016
Foreign Banker's Acceptances 3,793 2 - 3,795 8,703 2 - 8,705
Domestic Banker's Acceptances 6,446 2 - 6,448 1,996 4 - 2,000
------------------------------------------- ------------------------------------------
16,241 6 (1) 16,246 32,546 19 (6) 32,559
------------------------------------------- ------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Available-For-Sale Available-For-Sale
March 31, 1996 December 31, 1995
(Unaudited)
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and Agency
Obligations 3,362 - - 3,362 4,859 45 - 4,904
Municipal Bonds 4,368 31 (2) 4,397 5,226 74 (32) 5,268
Domestic Banker's Acceptances 1,951 3 (13) 1,941 1,951 13 - 1,964
------------------------------------------- ------------------------------------------
9,681 34 (15) 9,700 12,036 132 (32) 12,136
------------------------------------------- ------------------------------------------
Total Short-Term Investments $25,922 $40 $(16) $25,946 $44,582 $151 $(38) $44,695
=========================================== ==========================================
</TABLE>
7
<PAGE> 8
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
2. SHORT-TERM INVESTMENTS, CONTINUED:
There were no sales of investments classified as available-for-sale for
the three months ended March 31, 1996. At March 31, 1996, scheduled maturities
of investments are as follows (unaudited):
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Held-To- Available-
Maturity For-Sale Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Within one year 16,241 $6,238 $22,479
After one year through five years - 3,443 3,443
-------------------------------------------------------------------------------
$16,241 $9,681 $25,922
===============================================================================
</TABLE>
For the three months ended March 31, 1996 and 1995, purchases and
maturities of short-term investments were as follows:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31,1996 March 31, 1995
(Unaudited) (Unaudited)
Held-To- Available Held-To- Available
Maturity For Sale Total Maturity For Sale Total
------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 7,177 $ 2,205 $ 9,382 $ 9,489 $1,985 $ 11,474
Maturities 23,000 5,042 28,042 11,900 985 12,885
------------------------------------------- -------------------------------------------
Net change $(15,823) $(2,837) $(18,660) $(2,411) $1,000 $(1,411)
=========================================== ===========================================
</TABLE>
3. ACCOUNTS RECEIVABLE:
<TABLE>
<CAPTION>
MARCH 31, December 31,
1996 1995
-------------------------
(UNAUDITED)
<S> <C> <C>
Construction contracts
Completed and in progress $ 54,370 $ 81,240
Retentions 41,906 41,777
------------------------
96,276 123,017
Construction material sales 8,736 12,380
Other 6,217 7,556
------------------------
111,229 142,953
Less allowance for doubtful accounts 1,045 898
------------------------
$110,184 $142,055
========================
</TABLE>
8
<PAGE> 9
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
4. INVENTORIES: Inventories consist primarily of quarry products valued at
the lower of average cost or market.
5. EQUITY IN JOINT VENTURES: The Company participates in various
construction joint venture partnerships. Generally, each construction joint
venture is formed to accomplish a specific project and is dissolved upon
completion of the project. The combined assets, liabilities and net assets of
these ventures are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
MARCH 31, DECEMBER 31,
1996 1995
-----------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Assets
Total $122,814 $125,019
Less other venturers' interest 85,970 87,513
---------------------------------------------------------------------
Company's interest 36,844 37,506
---------------------------------------------------------------------
Liabilities
Total 115,925 124,319
Less other venturers' interest 81,148 87,023
---------------------------------------------------------------------
Company's interest 34,777 37,296
---------------------------------------------------------------------
$ 2,067 $ 210
=====================================================================
</TABLE>
6. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
MARCH 31, December 31,
1996 1995
--------------------------
(UNAUDITED)
<S> <C> <C>
Land $ 14,019 $ 14,019
Quarry property 35,194 35,194
Buildings and leasehold improvements 11,657 11,657
Equipment and vehicles 377,401 361,676
Office furniture and equipment 4,830 4,570
-------------------------
443,101 427,116
Less accumulated depreciation,
depletion and amortization 258,684 251,896
-------------------------
$184,417 $175,220
=========================
</TABLE>
9
<PAGE> 10
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
<TABLE>
<CAPTION>
MARCH 31, December 31,
1996 1995
---------------------------
(UNAUDITED)
<S> <C> <C>
Payroll and related employee benefits $12,153 $21,371
Accrued insurance 17,707 19,957
Income taxes payable 2,455 2,425
Other 14,813 11,588
----------------------
$47,128 $55,341
======================
</TABLE>
8. STOCKHOLDERS' EQUITY: Under the terms of the Company's 1990 Omnibus
Stock and Incentive Plan, 139,798 shares of restricted common stock
were issued and 77,891 shares vested during the three months ended
March 31, 1996. Unearned compensation is amortized over the restriction
periods. Compensation expense related to restricted shares was $492 and
$389 for the three months ended March 31, 1996 and 1995, respectively.
The Company has purchased, in satisfaction of certain officer's income
tax liabilities related to the maturation of restricted stock issues,
40,358 shares which are classified as treasury stock on the
accompanying Condensed Consolidated Balance Sheet at March 31, 1996.
During the three months ended March 31, 1996, employee stock options
for 14,500 shares at $17 per share were exercised.
9. INCOME TAXES: The provision for income taxes is computed using the
anticipated effective tax rate for the year.
10. NET INCOME PER SHARE: Income per share amounts are computed using the
weighted average number of common and common equivalent (dilutive stock
options) shares outstanding during each period. Common share
equivalents are included in the weighted average number of common
shares outstanding only when the effect is not antidilutive.
11. CONTINGENCIES: The Company is currently a party to various claims and
legal proceedings, none of which is considered by management to be
material to the Company's financial position.
12. SUBSEQUENT EVENT: On March 5, 1996, the Board of Directors approved a
three for two stock split in the form of a 50% stock dividend payable
on April 19, 1996 to stockholders of record on March 31, 1996. All
references in the financial statements to number of shares and per
share amounts of the Company's common stock have been retroactively
restated to reflect the increased number of shares outstanding.
10
<PAGE> 11
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors affecting the Company's financial position and operating results during
the periods included in the accompanying condensed consolidated financial
statements.
RESULTS OF OPERATIONS
Revenue for the quarter ended March 31, 1996 was $153.8 million, an increase of
$48.5 million, or 46.0%, over last year. The increase is primarily attributable
to revenue generated from a strong backlog in both operating divisions as well
as the addition of the Company's new branch in Utah.
For the three months ended March 31, 1996, revenue from public sector contracts
increased $25.1 million to $109.6 million, or 71.3% of total revenue, from
$84.5 million, or 80.2% of total revenue in 1995. Revenue from private sector
contracts and material sales of $44.2 million, or 28.7% of total revenue, was
up $23.4 million from the three months ended March 31, 1995 level of $20.8
million, or 19.8% of total revenue. Revenue in the Company's primary
geographical area, California, increased to $79.8 million from $62.2 million
last year but decreased as a percent of total revenue to 51.9% from 59.1%. The
decrease as a percentage of total revenue provides a glimpse of the Company's
success in its diversification strategy.
REVENUE BY MARKET SECTOR
THREE MONTHS ENDED MARCH 31
(in millions)
1996 1995
---- ----
Federal $ 5.5 3.6% Federal $ 20.4 19.4%
State 46.0 29.9 State 41.5 39.4
Local 58.1 37.8 Local 22.6 21.4
Private 28.6 18.6 Private 10.7 10.2
Materials 15.6 10.1 Materials 10.1 9.6
------ ----- ------ -----
Total $153.8 100.0% $105.3 100.0%
====== ===== ====== =====
Backlog at March 31, 1996 was $624.3 million, a $20.1 million decrease over
March 31, 1995 and a $34.2 million increase from December 31, 1995. Major
awards for the quarter include a $11.8 million yard and utility relocation
project in San Jose, California; a $12.8 million remediation project in Utah;
and an $18.0 million dam project in Texas.
AWARDS AND BACKLOG
END OF PERIOD
(in millions)
Awards Backlog
------ -------
1992
----
Q1 $ 62.4 $ 286.4
Q2 177.2 333.6
Q3 169.8 316.7
Q4 62.1 245.2
1993
----
Q1 319.6 487.3
Q2 157.4 501.9
Q3 325.2 643.4
Q4 182.7 659.7
1994
----
Q1 111.8 664.7
Q2 149.0 640.1
Q3 194.9 594.9
Q4 128.2 550.2
1995
----
Q1 199.5 644.4
Q2 302.9 720.6
Q3 143.1 557.2
Q4 289.2 590.1
1996
----
Q1 188.0 624.2
11
<PAGE> 12
The public sector backlog decrease to 84.8% of total backlog from 88.9% at
December 31, 1995 and 97.4% at March 31, 1995 reflects the improved private
sector backlog of $95.1 million, or 15.2% of total backlog. This private
sector backlog represents an increase of $29.4 million over December 31, 1995
and an increase of $78.4 million from March 31, 1995.
BACKLOG BY MARKET SECTOR
(in millions)
March 31, 1996 December 31, 1995
-------------- -----------------
Federal $ 37.2 6.0% Federal $ 17.5 3.0%
State 376.6 60.3 State 354.3 60.0
Local 115.4 18.5 Local 152.6 25.9
Private 95.1 15.2 Private 65.7 11.1
------ ----- ------ -----
Total $624.3 100.0% $590.1 100.0%
====== ===== ====== =====
Gross profit for the quarter ended March 31, 1996, was $14.6 million, or 9.5%
of revenue, as compared to $13.7 million, or 13.0% of revenue, for 1995. Last
year's first quarter business was characterized by poor building conditions for
normal contract work, but an unanticipated contribution was made from emergency
repair and cleanup work that resulted from widespread flooding in California,
which contributed to the higher gross profit margin percent of last year. This
year's results reflect a higher volume of construction work.
General and administrative expenses for the three months ended March 31, 1996
were $15.5 million, or 10.1% of revenue, an increase of $2.4 million, or 18.6%,
over the same period last year but a decrease as a percent of revenue from 12.4%
last year. The increase primarily reflects the addition of overhead from the
Utah branch acquired in the second quarter of 1995 and other costs associated
with a higher volume of work.
The net income for the quarter ended March 31, 1996, was $0.4 million, or $0.02
per share, a decrease of $0.8 million or $0.05 per share from the net income of
$1.2 million, or $0.07 per share (as adjusted for a three for two stock split
effective April 19, 1996) for the same period in 1995. (See Note 12 of the
Notes to the Condensed Consolidated Financial Statements).
SEASONALITY OF BUSINESS
REVENUE AND NET INCOME BY QUARTER
(in millions)
Net Income Revenue
---------- -------
1992
----
Q1 $-3.9 $ 68.0
Q2 2.8 130.0
Q3 4.3 186.7
Q4 0.7 133.6
1993
----
Q1 -4.2 77.5
Q2 - 142.9
Q3 5.8 183.6
Q4 2.9 166.4
1994
----
Q1 -2.1 106.7
Q2 4.6 173.6
Q3 13.6 240.2
Q4 3.3 172.9
1995
----
Q1 1.2 105.3
Q2 8.3 226.7
Q3 13.2 306.6
Q4 5.8 256.2
1996
----
Q1 0.4 153.7
12
<PAGE> 13
OUTLOOK
Very little has changed in our business outlook from what we communicated in the
Outlook section of the Company's 1995 Form 10-K filed in late March. However,
there are a couple of minor updates on issues that may or may not have an impact
on our business going forward, including the effort in Congress to remove the
transportation trust funds from the Federal Unified Budget.
In April, the House of Representatives voted overwhelmingly to take the trust
funds off budget, a bill designed to free up the approximately $30 billion that
has accumulated in the trust fund accounts for the purposes of which these funds
were initially intended, namely highway, airport and transit improvement. The
debate now moves to the Senate, where similar legislation has been introduced.
Passage of the Senate version is expected to be more problematic than the bill
just passed by the House, and it is unclear at this point in time which way the
Clinton Administration is leaning on this issue.
Moreover, momentum is gaining in Congress to repeal the 4.3 cents of the Federal
motor fuels tax, which was part of President Clinton's 1993 deficit reduction
plan. The revenue from this portion of the gas tax does not go into the Highway
Trust Fund but instead goes into the general fund to pay for general government
programs and not transportation. Our industry is advocating transferring the 4.3
cents to the Highway Trust Fund in lieu of repealing it, arguing that the trust
fund is the appropriate place for gas tax receipts, especially given the
tremendous needs for highway improvements. Committees in both the House and
Senate are expected to take up a bill soon.
Also in the Outlook section of our 1995 10-K, we discussed the economic recovery
in California, and pointed out that for the first time since the recession hit
the state in 1990, the state was expected to be in the black with a $900 million
surplus for the year ending June 30th. IT NOW APPEARS, HOWEVER, THAT CALIFORNIA
WILL NOT HAVE A $900 MILLION SURPLUS FOR THE YEAR ENDING JUNE 30, 1996.
According to officials in Sacramento, Governor Wilson's budget was based in part
on revenues anticipated from federal sources to assist state efforts to provide
certain government services such as welfare and immigration. Absent these funds,
the state is expecting to have an operating deficit for the year ending June 30,
1996, the size of which is not determinable at this point in time. Nevertheless,
we continue to see strong signals of economic improvement in California, as
witnessed by the increase in our private sector revenue and backlog in the first
quarter.
We are very pleased with the quality and quantity of our public sector bidding
opportunities going forward and they include, as we have previously discussed,
several large design-build projects in California, Utah, Minnesota and New
Jersey. We continue to look for acquisition candidates that support our
strategies to diversify our business either geographically or by industry
segment.
In summary, we continue to move forward on our strategy to grow the company
through acquisitions and we are encouraged by the near-term opportunity to
improve our financial performance through current operations.
13
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
DOLLARS IN THOUSANDS 1996 1995
-----------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents, March 31 $14,705 $13,135
Net cash provided (used) by:
Operating activities (4,474) 4,536
Investing activities 1,192 (7,941)
Financing activities (4,423) (1,109)
-----------------------------------------------------------------------
</TABLE>
Cash used by operating activities of $4.5 million for the three months ended
March 31, 1996 represents a $9.0 million decrease from the 1995 amount for the
same period. The decrease primarily reflects increased cash to pay accounts
payable and an increase in inventories due to better first quarter weather in
1996. Changes in cash provided from operations reflect seasonal variations based
on the amount and progress of work being performed.
Cash provided by investing activities in 1996 improved $9.1 million reflecting a
$17.2 million increase in net maturities of short-term investments offset by an
$8.6 million increase in cash used to purchase property and equipment.
Cash used in financing activities decreased $3.3 million primarily reflecting
the increase in dividends paid in 1996 due to the increased quarterly dividend
from $0.03 for the first quarter of 1995 to $0.06 per share plus the special
cash dividend of $0.13 per common share that was declared during the first
quarter of 1996 (all per share amounts have been restated for the effect of a
three for two stock split effective April 19, 1996. See Note 12 of the Notes to
the Condensed Consolidated Financial Statements).
The Company's current borrowing capacity under its restated revolving line of
credit is $50 million of which $40.8 million was available on March 31, 1996.
The Company believes that its current cash balances combined with cash flows
from operations and cash available under its revolving credit agreements will be
sufficient to meet its operating needs, anticipated capital expenditure plans
and other financial commitments at least through 1996.
14
<PAGE> 15
PART II. OTHER INFORMATION
15
<PAGE> 16
ITEM 1. LEGAL PROCEEDINGS
None
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 INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 11 - Computation of Net Income per Common and
Common Equivalent Share
b) Reports on Form 8-K
None
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRANITE CONSTRUCTION INCORPORATED
By: /s/ William E. Barton
---------------------------------------------
Date: May 8, 1996 William E. Barton
----------------- Vice President, Secretary and
Chief Financial Officer
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
11 Computation of Net Income per
Common and Common Equivalent
Share........................................ 19
27 Financial Data Schedule
</TABLE>
18
<PAGE> 1
EXHIBIT 11
GRANITE CONSTRUCTION INCORPORATED
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Weighted average common shares outstanding 17,897 17,622
Computation of incremental outstanding shares:
Net effect of dilutive stock options based
on treasury stock method 69 36
- --------------------------------------------------------------------------------
Weighted average common shares outstanding,
as adjusted 17,966 17,658
================================================================================
Net income $ 366 $1,228
================================================================================
Net income per common and common
equivalent share $ 0.02 $ 0.07
================================================================================
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF
INCOME, AND NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q, MARCH 31, 1996
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 14,705
<SECURITIES> 25,922
<RECEIVABLES> 111,229
<ALLOWANCES> 1,045
<INVENTORY> 12,719
<CURRENT-ASSETS> 212,594
<PP&E> 443,101
<DEPRECIATION> 258,684
<TOTAL-ASSETS> 419,413
<CURRENT-LIABILITIES> 148,798
<BONDS> 39,357
<COMMON> 181
0
0
<OTHER-SE> 206,807
<TOTAL-LIABILITY-AND-EQUITY> 419,413
<SALES> 153,749
<TOTAL-REVENUES> 153,749
<CGS> 139,107
<TOTAL-COSTS> 154,592
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 941
<INCOME-PRETAX> 590
<INCOME-TAX> 224
<INCOME-CONTINUING> 366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 366
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
