<PAGE>
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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
COMMISSION FILE NUMBER 1-13272
SPECIALTY TELECONSTRUCTORS, INC.
(Name of small business issuer in its charter)
NEVADA 85-0421409
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12001 STATE HWY 14 NORTH
CEDAR CREST, NEW MEXICO 87008
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (505) 281-2197
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,092,308 on November 13, 1996
The Index to Exhibits appears on page 7
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<PAGE>
SPECIALTY TELECONSTRUCTORS, INC.
INDEX
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<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
Consolidated Balance Sheets at September 30, 1996 and September 30, 1995 3
(unaudited)
Consolidated Statements of Earnings for the three-month periods ended
September 30, 1996 and September 30, 1995
(unaudited) 4
Consolidated Statements of Cash Flows for the three-month periods ended
September 30, 1996 and September 30, 1995
(unaudited) 5
Consolidated Statements of Changes in Stockholders' Equity
for the three-month periods ended September 30, 1996
and September 30, 1995 (unaudited) 6
Notes to the Consolidated Financial Statements as of
September 30, 1996 and September 30, 1995 (unaudited) 6
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 6
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS 7
ITEM 2. - CHANGES IN SECURITIES 7
ITEM 3. - DEFAULTS UPON SENIOR SECURITIES 7
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 7
ITEM 5. - OTHER INFORMATION 7
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 7
SIGNATURES 7
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SPECIALTY TELECONSTRUCTORS, INC.
Consolidated Balance Sheets
September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Assets
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,682,585 $ 4,023,237
Contracts receivable 4,971,351 3,232,179
Costs and estimated earnings in
excess of billings on
uncompleted contracts 1,651,999 477,600
Other 271,231 -
----------- -----------
Total current assets 8,577,166 7,733,016
Property and equipment, net
of accumulated depreciation
of $970,002 in 1996 and $555,785
in 1995 2,389,169 925,985
Other assets 176,882 181,788
----------- -----------
$11,143,217 $ 8,840,789
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term notes payable $ 933,540 $ 600,000
Current installments of notes
payable to banks 60,792 61,674
Trade accounts payable 1,506,137 862,447
Billings in excess of costs and
estimated earnings on
uncompleted contracts 170,445 403,600
Accrued expenses 459,016 371,769
Current income taxes - 17,070
Deferred income taxes 186,611 -
----------- --------
Total current liabilities 3,316,541 2,316,560
Deferred income taxes 304,407 582,055
Notes payable to banks, excluding
current installments 709,284 171,529
----------- -----------
Total liabilities 4,330,232 3,070,144
=========== ===========
Stockholders' equity:
Common Stock, $0.01 par value.
Authorized 10,000,000 shares;
Issued 4,092,308 40,923 40,923
Additional paid-in-capital 4,166,359 4,166,359
Retained earnings 2,605,703 1,563,363
----------- -----------
Total stockholders' equity 6,812,985 5,770,645
----------- -----------
$11,143,217 $ 8,840,789
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. - FINANCIAL STATEMENTS
SPECIALTY TELECONSTRUCTORS, INC.
Consolidated Statements of Earnings
For the three months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Contract revenues
earned $ 5,460,778 $ 2,980,466
Cost of revenues
earned 4,405,345 2,521,926
----------- -----------
Gross profit 1,055,433 458,540
Selling, general
and administrative
expenses 579,692 412,948
----------- -----------
Earnings from
operations 475,741 45,592
=========== ===========
Other income (deductions):
Interest income 22,776 59,950
Interest expense (33,575) (19,163)
Other, net ( 128) (11,414)
------------ ------------
(10,927) 29,373
Earnings before
income taxes 464,814 74,965
Income taxes 179,600 27,736
----------- -----------
Net earnings $ 285,214 $ 47,229
=========== ===========
Earnings per common share and common equivalent shares:
Net earnings $ .07 $ .01
=========== ===========
Weighted average common shares
outstanding 4,104,336 4,092,114
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. - FINANCIAL STATEMENTS
SPECIALTY TELECONSTRUCTORS, INC.
Consolidated Statements of Cash Flows
For the three months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings 285,214 47,229
Adjustments to reconcile net earnings
to net cash provided (used)by operating
activities:
Depreciation of property 163,359 55,984
and equipment
Amortization of goodwill 23,739 21,361
Gain(loss)on sale of equipment - 12,000
Changes in certain assets
and liabilities:
Contracts receivable 1,471,703 (681,268)
Costs and estimated earnings in
excess of billings on
uncompleted contracts (588,560) (299,000)
Other assets (204,353) 192,100
Trade accounts payable (648,436) 644,666
Billings in excess of costs and
estimated earnings on uncompleted
contracts (66,019) 154,600
Accrued expenses (297,109) 122,000
Current income taxes - 17,070
Deferred income taxes (544,732) (203,800)
---------- ----------
Net cash provided (used)by
operating activities (405,194) 82,942
---------- ---------
Cash flows from investing activities:
Purchases of property
and equipment (395,029) (130,504)
---------- ----------
Net cash used in
investing activities (395,029) (130,504)
---------- ----------
Cash flows from financing activities:
Line of credit with bank, net (966,460) -
Borrowings on notes payable to banks 586,466 -
Principal payments on
notes payable to banks - (16,718)
---------- ----------
Net cash used in financing
activities (380,661) (16,718)
---------- ----------
Net decrease in cash and cash
equivalents (1,180,884) (64,280)
Cash and cash equivalents
at beginning of period 2,863,469 4,087,517
--------- ---------
Cash and cash equivalents
at end of period $1,682,585 $4,023,237
========== ==========
Supplemental disclosure of cash flow information:
Interest paid $ 36,117 $ 19,163
========== ==========
Taxes paid $ 724,332 $ -
========== =========
Noncash transactions -
acquisition of vehicles
in exchange for debt $ - $ 63,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - FINANCIAL STATEMENTS
SPECIALTY TELECONSTRUCTORS,INC.
Consolidated Statements of Changes in
Stockholders' Equity For the three months
ended September 30, 1995 and 1996
(unaudited)
<TABLE>
<CAPTION>
Common Stock
------------
Additional Retained
Shares Amount Paid-in-capital earnings Total
------ ------ --------------- -------- -----
<S> <C> <C> <C> <C> <C>
Balances as of
June 30, 1995 4,092,308 $40,923 $4,166,359 $1,516,134 $5,723,416
Net earnings - - - 47,229 47,229
--------- ------- ---------- ---------- ----------
Balances as of
September 30, 1995 4,092,308 $40,923 $4,166,359 $1,563,363 $5,770,645
========= ======= ========== ========== ==========
Balances as of
June 30, 1996 4,092,308 $40,923 $4,166,359 $2,320,489 $6,527,771
Net earnings - - - $ 285,214 $ 285,214
--------- ------- ---------- ---------- ----------
Balances as of
September 30, 1996 4,092,308 $40,923 $4,166,359 $2,605,703 $6,812,985
========= ======= ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
SPECIALTY TELECONSTRUCTORS, INC.
Notes to Consolidated Financial Statements
September 30, 1995 and 1996
(Unaudited)
Note 1: Basis of Presentation
The notes to the consolidated financial statements do not present all
disclosures required under generally accepted accounting principles but instead,
as permitted by Securities ad Exchange Commission regulations, presume that
users of the interim financial statements have read or have access to the June
30, 1996 audited consolidated financial statements and that the adequacy of
additional disclosure needed for a fair presentation may be determined in that
context.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair presentation of the results for interim periods. The results
of operations for the three-month period ended September 30, 1996 and 1995
respectively, are not necessarily indicative of the results to be expected for
the full year.
Note 2: Acquisition
On November 1, 1996, a wholly-owned subsidiary of Specialty Teleconstructors,
Inc., purchased most of the assets of Data Cell Systems, Inc., an Arizona
corporation, in exchange for $160,000 in cash and the delivery of 93,400 shares
of common stock of the Company. The purchase price of the assets acquired may be
increased by an amount not to exceed $200,000 in the aggregate if certain
pre-tax earnings targets are achieved by the Company during the three fiscal
years immediately following the date of the acquisition and if certain other
conditions are met. The transaction will be accounted for by the Company as a
purchase.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
For the Three-Month Periods Ended September 30, 1996 and September 30, 1995,
Results of Operations
The Company's revenues for the three-month period ended September 30, 1996,
increased to $5,460,778 as compared to $2,980,446 for the same three-month
period in the prior year, an increase of approximately 83%. Management believes
the increase is related to growth in the Company's wireless infrastructure
building and implementation services business related primarily to an increase
in the installation of facilities related to new PCS systems.
<PAGE>
Gross profit for the three-month period ended September 30, 1996 increased to
$1,055,433 as compared to $458,540 for the same three-month period in the prior
year, an increase of approximately 130%. Gross profit as a percentage of revenue
increased from 15% for the three-month period ended September 30, 1995 to 19%
for the three-month period ended September 30, 1996.
Selling, General and Administrative Expenses as a percentage of revenues
decreased from 14% to 11% for the three-month period ended September 30, 1995
and 1996, respectively. This decrease is a result of operational efficiencies
realized with the increase in revenues.
Net earnings for the three-month period ended September 30, 1996 increased to
$285,214 compared to $47,229 for the same three-month period in the prior year,
an increase of 504%. As a percentage of revenue, net earnings increased to 5%
from 2% in the prior year.
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
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: November 13, 1996
SPECIALTY TELECONSTRUCTORS, INC.
By: /s/MICHAEL R. BUDAGHER
------------------------------
Michael R. Budagher, Chairman of the
Board, President, Chief Executive
Officer and Treasurer
By: /s/DENNIS K. HARTNETT
------------------------------
Dennis K. Hartnett, Chief Accounting
Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,682,585
<SECURITIES> 0
<RECEIVABLES> 4,971,351
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,577,166
<PP&E> 3,359,171
<DEPRECIATION> 970,002
<TOTAL-ASSETS> 11,143,217
<CURRENT-LIABILITIES> 3,316,541
<BONDS> 0
0
0
<COMMON> 40,923
<OTHER-SE> 6,772,062<F1>
<TOTAL-LIABILITY-AND-EQUITY> 11,143,217
<SALES> 5,460,778
<TOTAL-REVENUES> 5,483,554
<CGS> 4,405,345
<TOTAL-COSTS> 4,985,037
<OTHER-EXPENSES> 11,414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,575
<INCOME-PRETAX> 464,814
<INCOME-TAX> 179,600
<INCOME-CONTINUING> 285,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 285,214
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
<FN>
<F1>Other Equity of $6,772,062 is comprised of Additional paid-in Capital of
$4,166,359 and Retained Earnings of $2,605,703.
</FN>
</TABLE>
