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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

     
(Mark One)    
     
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended April 26, 2003
     
    OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to _______

Commission file number 0-5423

DYCOM INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)
     
Florida   59-1277135
 
(State of incorporation)   (IRS Employer Identification No.)
     
4440 PGA Boulevard, Suite 500
Palm Beach Gardens, Florida 		  33410
 
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (561) 627-7171

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 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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     
Class
 
Common Stock, par value $0.33 1/3 per share		   Outstanding as of May 30, 2003
 
47,873,320

 

TABLE OF CONTENTS

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
CERTIFICATION
CERTIFICATION
Certification of C.E.O.
Certification of CFO

Table of Contents

DYCOM INDUSTRIES, INC.

INDEX

             
          Page No.
         
    PART I   FINANCIAL INFORMATION    
             
    Item 1.   Financial Statements
 
        Condensed Consolidated Balance Sheets - April 26, 2003 and July 27, 2002   3
             
        Condensed Consolidated Statements of Operations for the Three Months Ended April 26, 2003 and April 27, 2002   4
             
        Condensed Consolidated Statements of Operations for the Nine Months Ended April 26, 2003 and April 27, 2002   5
             
        Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 26, 2003 and April 27, 2002   6-7
             
        Notes to Condensed Consolidated Financial Statements   8-18
             
    Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   19-28
             
    Item 3.   Quantitative and Qualitative Disclosures about Market Risk   29
             
    Item 4.   Controls and Procedures   29
             
    PART II   OTHER INFORMATION    
             
    Item 6.   Exhibits and Reports on Form 8-K   30
             
    SIGNATURES   31
             
    CERTIFICATIONS   32-35

2

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

                   
      April 26,   July 27,
      2003   2002
     
 
ASSETS
 
                
CURRENT ASSETS:
                
Cash and equivalents
   $ 118,031,804     $ 116,052,139  
Accounts receivable, net
     105,289,340       86,443,183  
Costs and estimated earnings in excess of billings
     30,985,814       33,349,021  
Deferred tax assets, net
     7,907,353       8,680,848  
Inventories
     2,766,329       5,643,275  
Income tax receivable
     7,297,181       460,093  
Other current assets
     7,599,337       6,107,688  
 
    
     
 
Total current assets
     279,877,158       256,736,247  
 
    
     
 
 
                
PROPERTY AND EQUIPMENT, net
     91,753,595       110,451,873  
 
    
     
 
 
                
OTHER ASSETS:
                
Goodwill, net
     106,615,836       106,615,836  
Intangible assets, net
     797,391       1,126,555  
Accounts receivable, net
     21,531,559       21,587,727  
Deferred tax assets, net non-current
     6,692,784       13,042,372  
Other
     9,036,125       4,992,743  
 
    
     
 
Total other assets
     144,673,695       147,365,233  
 
    
     
 
TOTAL
   $ 516,304,448     $ 514,553,353  
 
    
     
 
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
                
CURRENT LIABILITIES:
                
Accounts payable
   $ 25,706,240     $ 26,611,259  
Notes payable
     14,535       78,672  
Billings in excess of costs and estimated earnings
     1,107,871       354,061  
Accrued self-insured claims
     9,560,637       8,462,759  
Customer advances
     84,829       5,013,028  
Other accrued liabilities
     28,802,800       30,031,673  
 
    
     
 
Total current liabilities
     65,276,912       70,551,452  
 
    
     
 
 
                
NOTES PAYABLE
     23,263       29,698  
ACCRUED SELF-INSURED CLAIMS
     12,033,837       10,813,956  
OTHER LIABILITIES
     1,617,574       1,861,383  
 
    
     
 
Total liabilities
     78,951,586       83,256,489  
 
    
     
 
 
                
COMMITMENTS AND CONTINGENCIES, Note 9
                
 
                
STOCKHOLDERS’ EQUITY:
                
Preferred stock, par value $1.00 per share:
                
 
1,000,000 shares authorized: no shares issued and outstanding
     —       —  
Common stock, par value $0.33 1/3 per share:
                
 
150,000,000 shares authorized: 47,871,525 and 47,846,403 issued and outstanding, respectively
     15,957,169       15,948,790  
Additional paid-in capital
     334,807,238       334,547,396  
Retained earnings
     86,588,455       80,800,678  
 
    
     
 
Total stockholders’ equity
     437,352,862       431,296,864  
 
    
     
 
TOTAL
   $ 516,304,448     $ 514,553,353  
 
    
     
 

See notes to condensed consolidated financial statements—unaudited.

3

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                 
    For the Three Months Ended
   
    April 26,   April 27,
    2003   2002
   
 
REVENUES:
                
Contract revenues earned
   $ 139,665,894     $ 169,751,754  
 
    
     
 
 
                
EXPENSES:
                
Costs of earned revenues, excluding depreciation
     109,265,873       127,018,704  
General and administrative
     17,771,918       20,018,899  
Depreciation and amortization
     8,885,456       10,207,899  
 
    
     
 
Total
     135,923,247       157,245,502  
 
    
     
 
 
                
Interest income, net
     345,808       505,394  
Other income, net
     645,824       578,216  
 
    
     
 
 
                
INCOME BEFORE INCOME TAXES
     4,734,279       13,589,862  
 
    
     
 
 
                
PROVISION FOR INCOME TAXES:
                
     Current
     (7,114,149 )     5,419,867  
     Deferred
     9,064,269       457,703  
 
    
     
 
Total
     1,950,120       5,877,570  
 
    
     
 
 
                
NET INCOME
   $ 2,784,159     $ 7,712,292  
 
    
     
 
 
                
EARNINGS PER COMMON SHARE:
                
Basic earnings per share
   $ 0.06     $ 0.17  
 
    
     
 
Diluted earnings per share
   $ 0.06     $ 0.17  
 
    
     
 
 
                
SHARES USED IN COMPUTING EARNINGS PER COMMON SHARE
                
     Basic
     47,871,508       46,472,492  
 
    
     
 
     Diluted
     47,873,053       46,601,092  
 
    
     
 

See notes to condensed consolidated financial statements—unaudited.

4

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                 
    For the Nine Months Ended
   
    April 26,   April 27,
    2003   2002
   
 
REVENUES:
                
Contract revenues earned
   $ 435,300,405     $ 475,848,662  
 
    
     
 
 
                
EXPENSES:
                
Costs of earned revenues, excluding depreciation
     344,203,995       363,963,332  
General and administrative
     53,495,604       51,361,823  
Depreciation and amortization
     30,175,506       27,929,732  
 
    
     
 
Total
     427,875,105       443,254,887  
 
    
     
 
 
                
Interest income, net
     990,863       2,111,011  
Other income, net
     2,349,093       1,373,051  
 
    
     
 
 
INCOME BEFORE INCOME TAXES
     10,765,256       36,077,837  
 
    
     
 
 
                
PROVISION FOR INCOME TAXES:
                
     Current
     (2,145,610 )     15,139,828  
     Deferred
     7,123,090       192,055  
 
    
     
 
Total
     4,977,480       15,331,883  
 
    
     
 
 
                
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
     5,787,776       20,745,954  
 
    
     
 
 
                
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF $12,116,700 INCOME TAX BENEFIT
     —       (86,929,342 )
 
    
     
 
 
                
NET INCOME (LOSS)
   $ 5,787,776     $ (66,183,388 )
 
    
     
 
 
                
EARNINGS (LOSS) PER COMMON SHARE:
                
Basic earnings per share before cumulative effect of change in accounting principle
   $ 0.12     $ 0.47  
Cumulative effect of change in accounting principle
     —       (1.97 )
 
    
     
 
Basic earnings (loss) per share
   $ 0.12     $ (1.50 )
 
    
     
 
Diluted earnings per share before cumulative effect of change in accounting principle
   $ 0.12     $ 0.47  
Cumulative effect of change in accounting principle
     —       (1.97 )
 
    
     
 
Diluted earnings (loss) per share
   $ 0.12     $ (1.50 )
 
    
     
 
 
                
SHARES USED IN COMPUTING EARNINGS (LOSS) PER COMMON SHARE
                
     Basic
     47,868,094       44,115,148  
 
    
     
 
     Diluted
     47,871,173       44,236,812  
 
    
     
 

See notes to condensed consolidated financial statements-unaudited.

5

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                   
      For the Nine Months Ended
     
      April 26,   April 27,
      2003   2002
     
 
Increase (Decrease) in Cash and Equivalents from:
                
OPERATING ACTIVITIES:
                
Net Income (Loss)
   $ 5,787,776     $ (66,183,388 )
Adjustments to reconcile net cash provided by operating activities:
                
 
Cumulative effect of change in accounting principle, net
     —       86,929,342  
 
Depreciation and amortization
     30,175,506       27,929,732  
 
Provision for bad debts
     655,102       954,663  
 
Gain on disposal of assets
     (1,600,789 )     (750,913 )
 
Deferred income taxes
     7,123,090       192,055  
Change in operating assets and liabilities, net of acquisitions and divestitures:
                
(Increase) decrease in operating assets:
                
 
Accounts receivable, net
     (19,445,091 )     36,808,880  
 
Unbilled revenues, net
     3,117,017       6,230,771  
 
Income tax receivable
     (6,808,641 )     —  
 
Other current assets
     1,385,298       2,606,934  
 
Other assets
     (4,043,382 )     (804,784 )
Increase (decrease) in operating liabilities:
                
 
Accounts payable
     (905,019 )     (9,169,258 )
 
Customer advances
     (4,928,199 )     (2,225,275 )
 
Accrued self-insured claims and other liabilities
     845,077       (9,921,956 )
 
Accrued income taxes
     —       (2,144,512 )
 
    
     
 
Net cash inflow from operating activities
     11,357,745       70,452,291  
 
    
     
 
 
                
INVESTING ACTIVITIES:
                
 
Capital expenditures
     (14,297,449 )     (9,718,929 )
 
Proceeds from sale of assets
     4,750,167       3,829,034  
 
Acquisition expenditures, net of cash acquired
     —       1,968,453  
 
    
     
 
Net cash outflow from investing activities
     (9,547,282 )     (3,921,442 )
 
    
     
 
 
                
FINANCING ACTIVITIES:
                
 
Principal payments on notes payable and bank lines-of-credit
     (70,572 )     (61,401,624 )
 
Exercise of stock options
     185,348       889,714  
 
Acquisition of treasury stock
     —       (1,150,407 )
 
Other
     54,426       —  
 
    
     
 
Net cash inflow (outflow) from fina