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 June 30, 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.)

100 West Sixth Street, Suite 300, Media, PA

(Address of principal executive offices)

19063

(Zip Code)

(610) 480-8000

(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 ý No o

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

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			June 30, 2004
ASSETS
Current assets:
Cash and cash equivalents		$	12,080	$	19,348
Contract receivables (less allowances for doubtful accounts of $4,938 and $3,636, respectively)		70,905		80,649
Contract receivables due from related parties		14,617		—
Costs and estimated earnings in excess of billings		34,003		56,360
Inventories		8,473		9,940
Deferred income taxes		685		2,240
Other current assets		4,822		23,461
Due from related parties, net		10,907		—
Current assets—discontinued operations		4,262		3,877
Total current assets		160,754		195,875
Property and equipment (less accumulated depreciation of $5,299 and $17,584, respectively)		116,566		125,000
Property and equipment—related parties		7,218		—
Goodwill		68,877		129,038
Intangible assets (less accumulated amortization of $2,600 and $11,169, respectively)		5,400		8,331
Deferred charges and other assets, net		7,309		9,088
Deferred income taxes		1,058		2,262
Noncurrent assets—discontinued operations		395		355
Total assets		$	367,577	$	469,949
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations		$	1,500	$	934
Accounts payable		13,244		17,330
Other current and accrued liabilities		42,701		39,132
Accrued insurance reserves		19,773		22,357
Billings in excess of costs and estimated earnings		8,019		6,164
Deferred revenues		3,393		3,743
Other liabilities—related parties		7,218		—
Current liabilities—discontinued operations		—		521
Total current liabilities		95,848		90,181
Long-term debt and capital lease obligations		162,963		84,322
Long-term debt—related party		—		1,000
Deferred revenues		12,750		17,907
Other long-term liabilities		3,167		5,217
Total liabilities		274,728		198,627
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $.001 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 38,677,610, respectively)		20		39
Additional paid-in capital		91,480		270,490
Retained earnings		1,335		380
Accumulated other comprehensive income		14		413
Total shareholders’ equity		92,849		271,322
Total liabilities and shareholders’ equity		$	367,577	$	469,949

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 March 22 to June 20, 2003 (Predecessor entity— InfraSource Incorporated and Subsidiaries) (Note 1)						Three Months Ended June 30, 2004					For the Period January 1 to June 20, 2003 (Predecessor entity— InfraSource Incorporated and Subsidiaries) (Note 1)						Six Months Ended June 30, 2004
Contract revenues			$	119,746					$	148,227				$	216,669

Part I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at June 30, 2004 and December 31, 2003	2
	Condensed Consolidated Statements of Operations for the periods March 22, 2003 to June 20, 2003 and January 1, 2003 to June 20, 2003 (predecessor entity—InfraSource Incorporated and Subsidiaries) and the three and six months ended June 30, 2004	3
	Condensed Consolidated Statements of Cash Flows for the period January 1, 2003 to June 20, 2003 (predecessor entity—InfraSource Incorporated and Subsidiaries) and six months ended June 30, 2004	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 2.	Changes in Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Submission of Matters to a Vote of Security Holders	41
Item 5.	Other Information	41
Item 6.	Exhibits and Reports on Form 8-K	42
SIGNATURES		43