INFRASOURCE SERVICES INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

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 001-32164

INFRASOURCE SERVICES, INC.
(Exact name of registrant as specified in its charter)

Delaware		03-0523754
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

500 West Dutton Mill Road, Aston, PA
(Address of principal executive offices)

19014
(Zip Code)

(610) 619-3000
(Registrant’s telephone number, including area code)

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 o No ý

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

Yes o No ý

At June 11, 2004, there were 39,167,157 shares of InfraSource Services, Inc. Common Stock, par value of $.001, outstanding.

For the Quarter Ended March 31, 2004

FORM 10-Q

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES

Part I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at March 31, 2004 and December 31, 2003	2

	Condensed Consolidated Statements of Operations for the period January 1, 2003 to March 21, 2003 (predecessor entity – InfraSource Incorporated and Subsidiaries) and the three months ended March 31, 2004	3

	Condensed Consolidated Statements of Cash Flows for the period January 1, 2003 to March 21, 2003 (predecessor entity – InfraSource Incorporated and Subsidiaries) and the three months ended March 31, 2004	4

	Notes to Condensed Consolidated Financial Statements	5 - 15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 - 23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 2.	Changes in Securities and Use of Proceeds	25 - 26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Submission of Matters to a Vote of Security Holders	26

Item 5.	Other Information	26

Item 6.	Exhibits and Reports on Form 8-K	26

SIGNATURES		27

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands, except share data)

	December 31, 2003		March 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	12,080	$	16,110
Contract receivables (less allowances for doubtful accounts of $4,057 and $4,057, respectively)	70,905		79,904
Contract receivables due from related parties	14,617		—
Costs and estimated earnings in excess of billings	34,003		58,217
Inventories	8,473		9,356
Deferred income taxes	685		2,236
Other current assets	4,822		17,042
Due from related parties, net	10,907		—
Current assets - discontinued operations	4,262		4,101
Total current assets	160,754		186,966

Property and equipment (less accumulated depreciation of $5,299 and $10,618, respectively)	116,566		125,140
Property and equipment - related parties	7,218		—
Goodwill	68,877		128,426
Intangible assets (less accumulated amortization of $2,600 and $7,147, respectively)	5,400		12,353
Deferred charges and other assets, net	7,309		12,765
Deferred income taxes	1,058		—
Noncurrent assets - discontinued operations	395		332
Total assets	$	367,577	$	465,982

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	1,500	$	1,438
Revolving credit facility borrowings	—		5,000
Accounts payable	13,244		26,808
Other current and accrued liabilities	42,701		38,058
Accrued insurance reserves	19,773		20,368
Billings in excess of costs and estimated earnings	8,019		6,330
Deferred revenues	3,393		3,623
Other liabilities - related parties	7,218		—
Current liabilities - discontinued operations	—		134
Total current liabilities	95,848		101,759

Long-term debt and capital lease obligations	162,963		163,217
Long-term debt - related party	—		1,000
Deferred revenues	12,750		16,571
Deferred income taxes	—		5,549
Other long-term liabilities	3,167		5,364
Total liabilities	274,728		293,460
Commitments and contingencies

Shareholders’ equity:
Preferred stock, $.0001 par value (authorized - 12,000,000 shares; 0 shares issued and outstanding)	—		—
Common stock, $.001 par value (authorized - 120,000,000 shares; issued and outstanding - 19,914,840 and 30,177,610, respectively)	20		30
Additional paid-in capital	91,480		169,663
Retained earnings	1,335		2,407
Accumulated other comprehensive income	14		422
Total shareholders’ equity	92,849		172,522
Total liabilities and shareholders’ equity	$	367,577	$	465,982

See accompanying notes to condensed consolidated financial statements.

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

	For the Period January 1 to March 21, 2003 (Predecessor entity - InfraSource Incorporated and Subsidiaries) (Note 1)		Three Months Ended March 31, 2004

Contract revenues	$	96,923	$	148,621
Contract revenues - related parties	13,679		—
Total contract revenues		110,602		148,621
Cost of revenues	97,183		123,344
Gross profit	13,419		<

For the Quarter Ended March 31, 2004

FORM 10-Q

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES

Table of Contents

PART I – FINANCIAL INFORMATION