Dycom Industries, Inc.

Table of Contents




PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2924
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4434
Item 4.	Controls and Procedures	4535

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	4536
Item 1A.	Risk Factors	4636
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4736
Item 6.	Exhibits	4737

SIGNATURES
	48

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	January 28, 2017			July 30, 2016			April 28, 2018			January 27, 2018
ASSETS
Current assets:
Cash and equivalents	$	29,491		$	33,787		$	57,946		$	84,029
Accounts receivable, net	308,867			328,030			644,980			318,684
Costs and estimated earnings in excess of billings	397,048			376,972
Contract assets							101,163			369,472
Inventories	84,535			73,606			84,260			79,039
Deferred tax assets, net	20,886			22,733
Income tax receivable	26,639			—			15,568			13,852
Other current assets	20,863			16,106			32,165			39,710
Total current assets	888,329			851,234			936,082			904,786

Property and equipment, net	344,120			326,670			416,258			414,768
Goodwill	312,658			310,157			325,840			321,743
Intangible assets, net	185,568			197,879			178,075			171,469
Other	35,768			33,776			26,755			28,190
Total non-current assets	878,114			868,482			946,928			936,170
Total assets	$	1,766,443		$	1,719,716		$	1,883,010		$	1,840,956

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	99,318		$	115,492		$	112,200		$	92,361
Current portion of debt	18,813			13,125			28,875			26,469
Billings in excess of costs and estimated earnings	18,004			19,557
Contract liabilities							5,730			6,480
Accrued insurance claims	39,428			36,844			40,182			53,890
Income taxes payable	452			15,307			1,902			755
Other accrued liabilities	87,137			122,302			86,971			79,657
Total current liabilities	263,152			322,627			275,860			259,612

Long-term debt	740,575			706,202			731,736			733,843
Accrued insurance claims	59,693			52,835			59,865			59,385
Deferred tax liabilities, net non-current	83,352			76,587			62,817			57,428
Other liabilities	4,599			4,178			5,750			5,692
Total liabilities	1,151,371			1,162,429			1,136,028			1,115,960

COMMITMENTS AND CONTINGENCIES, Note 16
COMMITMENTS AND CONTINGENCIES, Note 19

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: 31,420,593 and 31,420,310 issued and outstanding, respectively	10,474			10,473
Common stock, par value $0.33 1/3 per share: 150,000,000 shares authorized: 31,193,069 and 31,185,669 issued and outstanding, respectively							10,398			10,395
Additional paid-in capital	5,332			10,208			11,010			6,170
Accumulated other comprehensive loss	(1,254		)	(1,274		)	(1,234		)	(1,146		)
Retained earnings	600,520			537,880			726,808			709,577
Total stockholders’ equity	615,072			557,287			746,982			724,996
Total liabilities and stockholders’ equity	$	1,766,443		$	1,719,716		$	1,883,010		$	1,840,956

See notes to the condensed consolidated financial statements.	See notes to the condensed consolidated financial statements.						See notes to the condensed consolidated financial statements.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share amounts)

(Unaudited)

For the Three Months Ended
January 28, 2017 January 23, 2016
REVENUES:
Contract revenues $ 701,131
$ 559,470

EXPENSES:
Costs of earned revenues, excluding depreciation and amortization 561,371
450,284
General and administrative (including stock-based compensation expense of $5.3 million and $4.2 million, respectively) 58,191
47,020
Depreciation and amortization 35,705
29,898
Total 655,267
527,202

Interest expense, net (9,181 ) (7,872 )
Other income, net 1,006
1,072
Income before income taxes 37,689
25,468

Provision (benefit) for income taxes:
Current 6,952
(17,418 )
Deferred 7,074
27,413
Total provision for income taxes 14,026
9,995

Net income $ 23,663
$ 15,473

Earnings per common share:
Basic earnings per common share $ 0.75
$ 0.47

Diluted earnings per common share $ 0.74
$ 0.46

Shares used in computing earnings per common share:
Basic 31,531,834
32,662,942

Diluted 32,161,566
33,520,136

See notes to the condensed consolidated financial statements.

~~DYCOM INDUSTRIES, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Dollars in thousands, except share amounts)~~

~~(Unaudited)~~


	For the Six Months Ended						For the Three Months Ended
	January 28, 2017			January 23, 2016			April 28, 2018			April 29, 2017
REVENUES:
Contract revenues	$	1,500,355		$	1,218,738		$	731,375		$	786,338

EXPENSES:
Costs of earned revenues, excluding depreciation and amortization	1,176,361			957,263			599,573			621,475
General and administrative (including stock-based compensation expense of $11.0 million and $8.7 million, respectively)	118,395			98,484
General and administrative (including stock-based compensation expense of $4.9 million and $4.9 million, respectively)							62,283			61,317
Depreciation and amortization	70,252			57,347			43,355			37,411
Total	1,365,008			1,113,094			705,211			720,203

Interest expense, net	(18,248		)	(17,003		)	(10,166		)	(9,382		)
Loss on debt extinguishment	—			(16,260		)
Other income, net	1,946			2,542			7,711			4,793
Income before income taxes	119,045			74,923			23,709			61,546

Provision for income taxes:
Provision (benefit) for income taxes:
Current	35,645			5,184			1,095			25,519
Deferred	8,687			23,442			5,383			(2,769		)
Total provision for income taxes	44,332			28,626			6,478			22,750

Net income	$	74,713		$	46,297		$	17,231		$	38,796

Earnings per common share:
Basic earnings per common share	$	2.37		$	1.41		$	0.55		$	1.24

Diluted earnings per common share	$	2.32		$	1.37		$	0.53		$	1.22

Shares used in computing earnings per common share:
Basic	31,480,660			32,767,088			31,190,366			31,357,124

Diluted	32,180,923			33,703,438			32,407,914			31,909,926

See notes to the condensed consolidated financial statements.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	For the Three Months Ended					For the Six Months Ended					For the Three Months Ended
	January 28, 2017		January 23, 2016			January 28, 2017		January 23, 2016			April 28, 2018			April 29, 2017
Net income	$	23,663	$	15,473		$	74,713	$	46,297		$	17,231		$	38,796
Foreign currency translation gains (losses), net of tax	46		(316		)	20		(357		)
Foreign currency translation losses, net of tax											(88		)	(165		)
Comprehensive income	$	23,709	$	15,157		$	74,733	$	45,940		$	17,143		$	38,631

See notes to the condensed consolidated financial statements.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	For the Six Months Ended						For the Three Months Ended
	January 28, 2017			January 23, 2016			April 28, 2018			April 29, 2017
OPERATING ACTIVITIES:
Net income	$	74,713		$	46,297		$	17,231		$	38,796
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:
Depreciation and amortization	70,252			57,347			43,355			37,411
Deferred income tax provision	8,687			23,442
Deferred income tax provision (benefit)							5,383			(2,769		)
Stock-based compensation	11,015			8,708			4,863			4,915
Bad debt expense, net	141			471
Bad debt (recovery) expense, net							(24		)	98
Gain on sale of fixed assets	(3,172		)	(2,152		)	(8,415		)	(5,048		)
Write-off of deferred financing fees and premium on long-term debt	—			2,017
Amortization of debt discount	8,686			5,928			4,672			4,425
Amortization of debt issuance costs and other	1,634			1,285			887			835
Excess tax benefit from share-based awards	(6,773		)	(11,323		)	—			(1,274		)
Change in operating assets and liabilities:
Accounts receivable, net	19,108			7,797			(8,552		)	(31,164		)
Costs and estimated earnings in excess of billings, net	(30,369		)	(18,221		)
Contract assets, net							(44,133		)	(44,636		)
Other current assets and inventory	(17,659		)	(9,194		)	(10,533		)	(5,680		)
Other assets	753			(3,827		)	(212		)	330
Income taxes receivable/payable	(33,341		)	(24,438		)	(568		)	20,643
Accounts payable	(14,694		)	(15,299		)	13,169			13,338
Accrued liabilities, insurance claims, and other liabilities	(24,790		)	(22,309		)	7,454			12,102
Net cash provided by operating activities	64,191			46,529			24,577			42,322

INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash acquired							(20,917		)	(26,427		)
Capital expenditures	(76,874		)	(90,878		)	(34,497		)	(58,312		)
Proceeds from sale of assets	4,334			2,748			8,011			5,753
Changes in restricted cash	(363		)	(479		)
Cash paid for acquisitions, net of cash acquired	—			(48,804		)
Proceeds from acquisition working capital adjustment	1,825			—
Other investing activities							1,576			628
Net cash used in investing activities	(71,078		)	(137,413		)	(45,827		)	(78,358		)

FINANCING ACTIVITIES:
Proceeds from borrowings on senior credit agreement, including term loans	432,000			449,000			—			208,000
Principal payments on senior credit agreement, including term loans	(401,375		)	(441,000		)	(4,813		)	(146,188		)
Repurchases of common stock	(25,000		)	(69,997		)
Proceeds from issuance of 0.75% convertible senior notes due 2021	—			485,000
Proceeds from sale of warrants	—			74,690
Purchase of convertible note hedges	—			(115,818		)
Principal payments for satisfaction and discharge of 7.125% senior subordinated notes	—			(277,500		)
Debt issuance costs	(70		)	(15,542		)
Repurchase of common stock							—			(37,909		)
Exercise of stock options	488			1,751			67			946
Restricted stock tax withholdings	(10,225		)	(12,146		)	(87		)	(221		)
Excess tax benefit from share-based awards	6,773			11,323			—			1,274
Net cash provided by financing activities	2,591			89,761
Net decrease in cash and equivalents	(4,296		)	(1,123		)
Net cash (used in) provided by financing activities							(4,833		)	25,902
Net decrease in cash and equivalents and restricted cash							(26,083		)	(10,134		)

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	33,787			21,289
CASH AND EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD							90,182			34,899

CASH AND EQUIVALENTS AT END OF PERIOD	$	29,491		$	20,166

CASH AND EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD							$	64,099		$	24,765

~~DYCOM INDUSTRIES, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)~~

~~(Dollars in thousands)~~

~~(Unaudited)~~


	For the Six Months Ended
	January 28, 2017		January 23, 2016
SUPPLEMENTAL DISCLOSURE OF OTHER CASH FLOW ACTIVITIES AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest	$	8,108	$	8,927	$	5,415	$	4,907
Cash paid for taxes, net	$	69,539	$	30,198	$	2,322	$	4,962
Purchases of capital assets included in accounts payable or other accrued liabilities at period end	$	6,302	$	8,310	$	6,769	$	9,579

See notes to the condensed consolidated financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ~~Basis of Presentation and Accounting Policies~~

Basis of Presentation

Dycom Industries, Inc. (“Dycom” or the “Company”) is a leading provider of specialty contracting services throughout the United States and in Canada. The Company provides program management, engineering, construction, maintenance and installation services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.

The accompanying unaudited condensed consolidated financial statements ~~include~~of the ~~results of Dycom~~Company and its subsidiaries, all of which are wholly-owned. All intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included. These financial statementswholly-owned, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Operating results for the interim period are not necessarily indicative of the results expected for any other interim period or for the full fiscal year. These condensed consolidatedannual financial statements and ~~accompanying notes~~ should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the Company’s audited financial statements ~~for the year ended July 30, 2016~~ included in the Company’s ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016,~~January 27, 2018, filed with the SEC on ~~August~~March 2, 2018. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included. This includes all normal and recurring adjustments and elimination of intercompany accounts and transactions. Operating results for the interim period are not necessarily indicative of the results expected for any subsequent interim or annual period.

Accounting Period. In September 2017, the Company’s Board of Directors approved a change in the Company’s fiscal year end from the last Saturday in July to the last Saturday in January. The change in fiscal year end better aligns the Company’s fiscal year with the planning cycles of its customers. For quarterly comparisons, there were no changes to the months in each fiscal quarter. Beginning with fiscal 2019, each fiscal year ends on the last Saturday in January and consists of either 52 or 53 weeks of operations (with the additional week of operations occurring in the fourth fiscal quarter).

The Company refers to the period beginning January 28, 2018 and ending January 26, 2019 as “fiscal 2019”, the period beginning July 30, 2017 and ending January 27, 2018 as the “2018 transition period”, and the period beginning July 31, ~~2016.~~2016 and ending July 29, 2017 as “fiscal 2017”.

Segment ~~Information –~~Information. The Company operates in one reportable segment. Its services are provided by its operating segments on a decentralized basis. Each operating segment consists of a subsidiary (or in certain instances, the combination of two or more subsidiaries). Management of the operating segments report to the Company’s Chief Operating Officer who reports to the Chief Executive Officer, the chief operating decision maker. All of the Company’s operating segments have been aggregated into one reportable segment based on their similar economic characteristics, nature of services and production processes, type of customers, and service distribution methods. The Company’s operating segments provide services throughout the United States and in Canada. Revenues from services provided in Canada were not material during the three or six months ended January 28, 2017 and January 23, 2016. Additionally, the Company had no material long-lived assets in Canada as of January 28, 2017 or July 30, 2016.

~~Accounting Period –~~ The Company’s fiscal year ends on the last Saturday in July. As a result, each fiscal year consists of either 52 weeks or 53 weeks of operations (with the additional week of operations occurring in the fourth quarter). Fiscal 2016 consisted of 53 weeks of operations and fiscal 2017 will consist of 52 weeks of operations.

2. Significant Accounting Policies &and Estimates

Use of ~~Estimates –~~Estimates. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. These estimates are based on the Company’s historical experience and management’s understanding of current facts and circumstances. At the time they are made, the Company believes that such estimates are fair when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole. However, actual results could differ materially from those estimates.

There have been no material changes to the Company’s significant accounting policies and critical accounting estimates described in the Company’s ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016.~~January 27, 2018 except as described below.

Revenue ~~Recognition –~~Recognition. The Company performs a substantial majority of its services under master service agreements and other ~~agreements~~contracts that contain customer-specified service ~~requirements, such as~~requirements. These agreements include discrete pricing for individual tasks including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. Contractual agreements exist when each party involved approves and commits to the agreement, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable. The Company’s services are performed for the sole benefit of its customers, whereby the assets being created or maintained are controlled by the customer and the services the Company performs do not have alternative benefits

for the Company. Revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits provided by the Company. Output measures such as units delivered are utilized to assess progress against specific contractual performance obligations for the majority of the Company’s services. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. For the Company, the output method using units delivered best represents the measure of progress against the performance obligations incorporated within the contractual agreements. This method captures the amount of units delivered pursuant to contracts and is used only when the Company’s performance does not produce significant amounts of work in process prior to complete satisfaction of the performance obligation. For a portion of contract items, representing approximately 5.0% of contract revenues during the three months ended April 28, 2018, units to be completed consist of multiple tasks. For these items, the transaction price is allocated to each task based on relative standalone measurements, such as similar selling prices for similar tasks, or in the alternative, the cost to perform tasks. Revenue is recognized ~~under~~for these ~~arrangements based on units-of-delivery~~items as ~~each unit is completed. The remainder~~the tasks are completed as a measurement of progress in the satisfaction of the ~~Company’s services,~~corresponding performance obligation.

For certain contracts, representing ~~less than 5%~~approximately 2.5% of ~~its~~ contract revenues, ~~during~~ the ~~six months ended January 28, 2017, and less than 10% of its contract revenues during the six months ended January 23, 2016, are performed under contracts using~~Company uses the cost-to-cost measure of progress. These contracts are generally lump sum jobs that are completed over a three to four month period. Under the ~~percentage~~cost-to-cost measure of progress, the extent of progress toward completion ~~method of accounting. Revenue~~ is ~~recognized under these arrangements~~measured based on the ratio of ~~contract~~ costs incurred to date to the total estimated ~~contract~~ costs. Contract costs include direct labor, direct materials, and subcontractor costs, as well as an allocation of indirect costs. Contract revenues are recorded as costs are incurred. For contracts using the cost-to-cost measure of ~~the percentage of completion method of accounting,~~progress, the Company accrues the entire amount of a contract loss, if any, at the time the loss is determined to be probable and can be reasonably estimated. ~~During the six months ended January 28, 2017 and January 23, 2016, there were no material impacts to the Company’s results of operations due to changes in contract estimates.~~

There were no material amounts of unapproved change orders or claims recognized during the six months ended January 28, 2017 or January 23, 2016. The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed. The current liability “Billings in excess of costs and estimated earnings” represents billings in excess of revenues recognized.

~~Goodwill and Intangible Assets~~–Accounts receivable, net. The Company grants credit to its customers, generally without collateral, under normal payment terms (typically 30 to 90 days after invoicing). Generally, invoicing occurs within 45 days after the related services are performed. Accounts receivable represents an unconditional right to consideration arising from the Company’s performance under contracts with customers. Accounts receivable include billed accounts ~~for goodwill~~receivable, unbilled accounts receivable, and ~~other intangibles in accordance with ASC Topic 350,~~ ~~Intangibles - Goodwill and Other~~ ~~(“ASC Topic 350”). Goodwill and other indefinite-lived intangible assets are assessed annually for impairment as~~retainage. The carrying value of such receivables, net of the ~~first day~~allowance for doubtful accounts, represents their estimated realizable value. Unbilled accounts receivable represent amounts the Company has an unconditional right to receive payment for although invoicing is subject to the completion of certain process or other requirements. Such requirements may include the ~~fourth fiscal quarter~~passage of ~~each year,~~time, completion of other items within a statement of work, or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. The Company performs its annual impairment review of goodwill at the reporting unit level. Eachother billing requirements within contract terms. Certain of the Company’s ~~operating segments with goodwill represents~~contracts contain retainage provisions where a ~~reporting unit for the purpose of assessing impairment. If the Company determines the fair value~~portion of the ~~reporting unit’s goodwill or other indefinite-lived intangible assets~~revenue earned is ~~less than their carrying value~~withheld from payment as a ~~result~~form of security until contractual provisions are met. The collectability of retainage is included in the Company’s overall assessment of the ~~tests, an impairment loss is recognized~~collectability of accounts receivable amounts due. The Company expects to collect the outstanding balance of accounts receivable, net (including trade accounts receivable, unbilled accounts receivable, and ~~reflected in operating income or loss in~~retainage) within the ~~consolidated statements~~next twelve months. The Company estimates its allowance for doubtful accounts for specific accounts receivable balances based on historical collection trends, the age of ~~operations during~~outstanding receivables, and the ~~period incurred.~~credit worthiness of the Company’s customers.

~~In accordance with ASC Topic 360,~~ Contract assets.~~Impairment or Disposal of Long-Lived Assets, the Company reviews finite-lived intangible~~ Contract assets for impairment whenever an event occurs or circumstances change that indicates that the carrying amount of such assets may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flowsinclude unbilled amounts typically resulting from arrangements whereby the ~~use of an asset and its eventual disposition. Should an asset not be recoverable, an impairment loss~~right to payment is measured by comparing the fair value of the asset to its carrying value. If the Company determines the fair value of an asset is less than the carrying value, an impairment loss is recognized in operating incomeconditioned on completing additional tasks or ~~loss in the consolidated statements of operations during the period incurred.~~services for a performance obligation.

Contract liabilities. Contract liabilities consist of amounts invoiced to customers in excess of revenue recognized. The ~~Company uses judgment~~Company’s contract asset and liability is reported in ~~assessing whether goodwill~~a net position on a contract by contract basis at the end of each reporting period. As of April 28, 2018 and ~~intangible assets are impaired. Estimates of fair value are~~January 27, 2018, the contract liabilities balance is classified as current based on the ~~Company’s projection~~timing of ~~revenues, operating costs, and cash flows taking into consideration historical and anticipated future results, general economic and market conditions, as well as~~when the ~~impact~~Company expects to complete the tasks for the recognition of planned business or operational strategies. The Company determines the fair value of its reporting units using a weighting of fair values derived equally from the income approach and the market approach valuation methodologies. The income approach uses the discounted cash flow method and the market approach uses the guideline company method. Changes in the Company’s judgments and projections could result in significantly different estimates of fair value, potentially resulting in impairments of goodwill and other intangible assets. The inputs used for fair value measurements of the reporting units and other related indefinite-lived intangible assets are the lowest level (Level 3) inputs. See Note 7, ~~Goodwill and Intangible Assets, for additional information regarding the Company’s annual assessment of goodwill and other indefinite-lived intangible assets and additional disclosure regarding recently acquired operations.~~

~~Other Assets~~– As of January 28, 2017 and July 30, 2016, other non-current assets consist of deferred financing costs related to the Company’s revolving credit facility of $5.6 million and $6.4 million, respectively, insurance recoveries/receivables related to accrued claims of $8.9 million and $5.7 million, respectively, as well as other long-term deposits, prepaid discounts, and other non-current assets totaling $11.8 million and $12.7 million, respectively. Additionally, other non-current assets include $5.4 million and $5.0 million of restricted cash held as collateral in support of the Company’s insurance obligations as of January 28, 2017 and July 30, 2016, respectively. Changes in restricted cash are reported in cash flows used in investing activities in the condensed consolidated statements of cash flows. As of January 28, 2017 and July 30, 2016, other non-current assets also included $4.0 million for an investment in nonvoting senior units of a former customer, which is accounted for using the cost method.revenue.

Fair Value of Financial ~~Instruments –~~Instruments. The Company’s financial instruments primarily consist of cash and equivalents, restricted cash, accounts receivable, income taxes receivable and payable, accounts payable, certain accrued expenses, and long-term debt. The carrying amounts of these items approximate fair value due to their short maturity, except for ~~certain~~the fair value of ~~the~~ Company’s ~~outstanding~~ long-term debt, which is based on observable market-based inputs (Level 2). See Note ~~10,~~13, Debt, for further information regarding the fair value of such financial instruments. The Company’s cash and equivalents are based on quoted market prices in active markets for identical assets (Level 1) as of April 28, 2018 and January ~~28, 2017 and July 30, 2016.~~27, 2018. During the ~~six~~three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016,~~April 29, 2017, the Company had no material nonrecurring fair value measurements of assets or liabilities subsequent to their initial recognition.

~~Recently Issued Accounting Pronouncements~~

3. Accounting Standards

There have been no changes in the expected dates of adoption or estimated effects on the Company’s consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s ~~Annual~~Transition Report on Form 10-K

for the ~~year~~six months ended ~~July 30, 2016~~January 27, 2018, filed with the SEC on ~~August 31, 2016.~~March 2, 2018. Further, there have been no additional accounting standards issued as of the date of this Quarterly Report on Form 10-Q that are applicable to the consolidated financial statements of the Company. Accounting standards adopted during the period are covered in this Quarterly Report on Form ~~10-Q and recently issued accounting pronouncements are discussed below.~~10-Q.

Recently Adopted Accounting Standards

~~Business Combinations~~ Revenue Recognition-. In ~~September 2015,~~May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2015-16,~~ ~~Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments~~2014-09, (“Revenue from Contracts with Customers (Topic 606) (“ASU ~~2015-16”~~2014-09”). ASU ~~2015-16~~No. 2014-09 and related updates are referred to herein as “ASU 2014-09”. ASU 2014-09 replaces numerous requirements in GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the ~~requirement~~new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for ~~an acquirer in a business combination~~those goods or services. The two permitted transition methods under the new standard are the full retrospective method and the modified retrospective method. Under the full retrospective method, the standard would be applied to ~~retrospectively adjust provisional amounts~~each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the ~~acquisition~~earliest period shown. Under the modified retrospective method, the cumulative effect of applying the standard would be recognized at the date ~~with~~of initial application. Effective January 28, 2018, the Company adopted the requirements of ASU 2014-09 using the modified retrospective method. As a ~~corresponding adjustment~~practical expedient, the Company adopted the new standard only for existing contracts as of January 28, 2018, the date of adoption. Any contracts that had expired prior to ~~goodwill when measurement period adjustments are identified.~~January 28, 2018 were not evaluated against the new standard. The new guidance requires an acquirer to recognize adjustments in the reporting period in which the adjustment amounts are determined. The acquirer must record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a resultCompany believes its application of the ~~change~~new standard to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. Additionally, the acquirer must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustments had been recognizedonly those contracts existing as of ~~the acquisition date. The Company adopted ASU 2015-16 during the first quarter of fiscal 2017 and it~~January 28, 2018 did not have a material ~~effect~~impact on adoption.

As of January 28, 2018, the date of adoption, the Company reclassified $311.7 million of unbilled receivables from contract assets (historically referred to as Costs and Estimated Earnings in Excess of Billings) to accounts receivable, net in accordance with the guidance under ASU 2014-09. As of April 28, 2018, the disclosure of the impact of adoption on the Company’s condensed consolidated ~~financial statements.~~balance sheet is as follows (dollars in thousands):

~~Accounting Standards Not Yet Adopted~~



	April 28, 2018
	As reported		Balances Without Adoption of ASU 2014-09		Effect of Change
Assets
Accounts receivable, net	$	644,980	$	326,973	$	318,007
Contract assets	$	101,163	$	419,170	$	(318,007	)

~~Goodwill~~ ~~- In January 2017, the FASB issued Accounting Standards Update No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment testing. An entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 will be effective for the Company in fiscal 2021 and interim reporting periods within that year. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company expects the adoption of ~~this guidance will not have a material effect on the Company’s consolidated financial statements.~~

~~Business Combinations~~ ~~- In January 2017, the FASB issued Accounting Standards Update No. 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ (“ASU ~~2017-01”). The amendments~~2014-09 resulted in ~~this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted~~balance sheet classification changes for as acquisitions or disposals of assets or businesses. ASU 2017-01 will be effective for the Company in fiscal 2019 and interim reporting periods within that year. Early adoption is permitted for transactionsamounts that have not been ~~reported in financial statements that have been issued or made available~~invoiced to customers but for ~~issuance. The~~which the Company ~~expects~~has satisfied the performance obligation and has an unconditional right to receive payment. Prior to the adoption of ~~this guidance will~~ASU 2014-09, amounts not yet invoiced to customers were included in the Company’s contract assets regardless of rights to payment. These amounts represent unbilled accounts receivable for which the Company has an unconditional right to receive payment although invoicing is subject to the completion of certain process or other requirements. Such requirements may include the passage of time, completion of other items within a statement of work, or other billing requirements within contract terms.

The standard did not have ~~a material effect on~~an impact to opening retained earnings or the Company’s condensed consolidated ~~financial statements.~~

~~Revenue Recognition~~ ~~- In December 2016, the FASB issued Accounting Standards Update No. 2016-20,~~ ~~Technical Corrections and Improvements~~statement of operations as there was no change in timing or amount of revenue recognized under contracts with customers, as compared to ~~Topic 606: Revenue from Contracts with Customers~~ (“ASU 2016-20”). The amendments in this update affect certain aspects of the guidance issued in ASU 2014-09, including impairment testing of contract costs, contract loss provisions, and performance obligation disclosure. ASU 2016-08, 2016-10, ASU 2016-12, and 2016-20 must be adopted concurrently with ASU 2014-09. ASU 2014-09 will be effective for the Company beginning in fiscal 2019 and interim reporting periods within that year, using either the retrospective or cumulative effect transition method. The Company is currently evaluating the transition methods and the effect of the adoption of this guidance on the Company’s ~~consolidated financial statements.~~historical revenue recognition practices.

Restricted ~~Cash~~Cash. - In November 2016, the FASB issued ~~Accounting Standards Update~~ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 is intended to reduce the diversity in practice regarding the classification and presentation of changes in restricted cash within the statement of cash flows. The amendments in this update require that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU 2016-18 ~~will be~~ effective ~~for~~January 28, 2018, the ~~Company in~~first day of fiscal 2019, and interim reporting periods within that year. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected asapplied this change of ~~the beginning of the fiscal year that includes that interim period. The Company expects the adoption of this guidance will not have a material effect on~~presentation retrospectively to the Company’s condensed consolidated ~~financial statements.~~statement of cash flows for the three months ended April 29, 2017.

~~Income Taxes~~ ~~- In October 2016,~~As a result of the ~~FASB issued Accounting Standards Update No. 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers~~retrospective adoption, the beginning-of-period and end-of-period total amounts have been restated to include restricted cash of ~~Assets Other Than Inventory~~ ~~(“ASU 2016-16”). ASU 2016-16 amends the current GAAP prohibition of recognizing current~~$5.4 million, $5.4 million, and deferred income taxes for intra-entity asset transfers until the asset has been sold to an outside party. The update requires an entity to recognize the income tax consequences of an intra-entity transfer for assets other than inventory when the transfer occurs. ASU 2016-16 will be effective for the Company in fiscal 2019 and interim reporting periods within that year. Early adoption is permitted$6.2 million as of ~~the beginning~~January 28, 2017, April 29, 2017, and January 27, 2018, respectively. Restricted cash primarily relates to funding provisions of ~~an interim or annual reporting period. The Company expects the adoption of this guidance will not have a material effect on~~ the Company’s ~~consolidated financial statements.~~insurance program.

Statement of Cash ~~Flows -~~Flows. In August 2016, the FASB issued ~~Accounting Standards Update~~ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ~~ASU 2016-15 is intended~~In an effort to reduce ~~the~~ diversity in practice regarding the classification of certain transactions within the statement of cash ~~flows.~~flows, ASU 2016-15 ~~will be effective for~~addresses eight specific cash flow issues including, among other things, the classification of debt prepayment or debt extinguishment costs. Historically, the Company ~~in fiscal 2019 and interim reporting periods within that year. Early~~has classified certain cash flows related to debt prepayment or debt extinguishment costs as operating activities. Upon adoption of ASU 2016-15, the Company is ~~permitted~~required to classify such cash flows as financing activities. The adoption of ASU 2016-15 as it relates to any of the ~~beginning of an interim or annual reporting period. The Company expects the adoption of this guidance will~~other seven cash flow issues specified does not have a material effect on the Company’s consolidated ~~financial statements.~~statement of cash flows. The Company adopted ASU 2016-15 effective January 28, 2018, the first day of fiscal 2019, on a retrospective basis as required. There was no impact to the Company’s condensed consolidated statement of cash flows for the three months ended April 28, 2018 or April 29, 2017 as a result of the adoption.

The Company also adopted the following Accounting Standards Updates during the three months ended April 28, 2018, neither of which had a material effect on the Company’s consolidated financial statements:



ASU		Adoption Date
2016-16	Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory	January 28, 2018
2017-01	Business Combinations (Topic 805): Clarifying the Definition of a Business	January 28, 2018

Accounting Standards Not Yet Adopted

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 substantially retains the classification for leasing transactions as finance or operating leases. The new guidance establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. For finance leases the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases the lessee would recognize total lease expense on a straight-line basis.

As a result of the adoption of ASU 2016-02, it is expected that the Company's operating leases with terms greater than twelve months will be recognized as lease assets and lease liabilities on its consolidated balance sheet. ASU 2016-02 is not expected to have a material effect on the amount of expense recognized in connection with the Company’s current lease contracts as compared to current practice. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach and will be effective for the Company for the fiscal year ended January 25, 2020 and interim reporting periods within that year. The Company continues to evaluate the impact of adoption.

4. Computation of Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):


	For the Three Months Ended				For the Six Months Ended				For the Three Months Ended
	January 28, 2017		January 23, 2016		January 28, 2017		January 23, 2016		April 28, 2018		April 29, 2017
Net income available to common stockholders (numerator)	$	23,663	$	15,473	$	74,713	$	46,297	$	17,231	$	38,796

Weighted-average number of common shares (denominator)	31,531,834		32,662,942		31,480,660		32,767,088		31,190,366		31,357,124

Basic earnings per common share	$	0.75	$	0.47	$	2.37	$	1.41	$	0.55	$	1.24

Weighted-average number of common shares	31,531,834		32,662,942		31,480,660		32,767,088		31,190,366		31,357,124
Potential shares of common stock arising from stock options, and unvested restricted share units	629,732		857,194		700,263		936,350		602,549		552,802
Potential shares of common stock issuable on conversion of 0.75% convertible senior notes due 2021⁽¹⁾									614,999		—
Total shares-diluted (denominator)	32,161,566		33,520,136		32,180,923		33,703,438		32,407,914		31,909,926

Diluted earnings per common share	$	0.74	$	0.46	$	2.32	$	1.37	$	0.53	$	1.22

Anti-dilutive weighted shares excluded from the calculation of earnings per common share:									Anti-dilutive weighted shares excluded from the calculation of earnings per common share:
Stock-based awards									80,847		96,020
0.75% convertible senior notes due 2021									4,390,735		5,005,734
Warrants									5,005,734		5,005,734
Total									9,477,316		10,107,488

The weighted-average number of common shares outstanding used in the computation of diluted earnings per common share does not include the effect of the following instruments because their inclusion would have been anti-dilutive:

For the Three Months Ended For the Six Months Ended
January 28, 2017 January 23, 2016 January 28, 2017 January 23, 2016
Stock-based awards 58,750
63,357
50,355
61,481
0.75% convertible senior notes due 2021 5,005,734
5,005,734
5,005,734
5,005,734
Warrants 5,005,734
5,005,734
5,005,734
5,005,734
Total anti-dilutive weighted shares excluded from the calculation of earnings per common share
10,070,218

10,074,825
10,061,823
10,072,949

⁽¹⁾Under the treasury stock method, the convertible senior notes will have a dilutive impact on earnings per common share if the Company’s average stock price for the period exceeds the conversion price for the convertible senior notes of $96.89 per share. The warrants associated with the Company’s convertible senior notes will have a dilutive impact on earnings per common share if the Company’s average stock price for the

period exceeds the warrant strike price of $130.43 per share. AsFor the three months ended April 28, 2018, the Company’s average stock price ~~for the three and six months ended January 28, 2017 was below~~of $110.46 exceeded the conversion price for the convertible senior notes. As a result, shares presumed to be issuable under the convertible senior notes ~~and~~that were dilutive during the period are included in the calculation of diluted earnings per share for the three months ended April 28, 2018. As the Company’s average stock price did not exceed the strike price for the warrants, the underlying common shares were anti-dilutive as reflected ~~above. See Note 10,~~ ~~Debt, for additional information related to~~in the ~~Company’s convertible senior notes and warrant transactions.~~table above.

In connection with the offering of the convertible senior notes, the Company entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the notes and offsetting any potential cash payments in excess of the principal amount of the notes. Prior to conversion, the convertible note hedge is not included for purposes of the calculation of earnings per common share as its effect would be anti-dilutive. Upon conversion, the convertible note hedge is expected to offset the dilutive effect of the convertible senior notes when the average stock price for the period is above $96.89 per share. See Note ~~10,~~13, Debt, for additional information related to the Company’s convertible ~~note hedge.~~senior notes, warrant transactions, and hedge transactions.

3.5. Acquisitions

Fiscal ~~2016~~2019. - During ~~August 2015,~~March 2018, the Company acquired ~~TelCom Construction,~~certain assets and assumed certain liabilities of a telecommunications construction and maintenance services provider in the Midwest and Northeast United States for $20.9 million, net of cash acquired. This acquisition expands the Company’s geographic presence within its existing customer base.

Fiscal 2017. During March 2017, the Company acquired Texstar Enterprises, Inc. ~~and an affiliate (together, “TelCom”~~(“Texstar”)~~. The purchase price was $48.8~~ for $26.1 million, ~~paid in cash. TelCom, based in Clearwater, Minnesota,~~net of cash acquired. Texstar provides construction and maintenance services for telecommunications providers ~~throughout~~in the Southwest and

Pacific Northwest United States. This acquisition expands the Company’s geographic presence within its existing customer base. During the fourth quarter of fiscal 2016, the Company acquired NextGen Telecom Services Group, Inc. (“NextGen”) for $5.6 million, net of cash acquired. NextGen provides construction and maintenance services for telecommunications providers in the Northeastern United States. Additionally, during July 2016, the Company acquired certain assets and assumed certain liabilities associated with the wireless network deployment and wireline operations of Goodman Networks Incorporated (“Goodman”) for a cash purchase price of $107.5 million, less an adjustment of approximately $6.6 million for working capital received below a target amount. The acquired operations provide wireless construction services in a number of markets, including Texas, Georgia, and Southern California. The acquisition reinforces the Company’s wireless construction resources and expands the Company’s geographic presence within its existing customer base.

~~Fiscal 2016~~ Purchase Price Allocations

The purchase price allocation of ~~TelCom~~Texstar was completed ~~during~~within the ~~fourth quarter~~12-month measurement period from the date of ~~fiscal 2016. Purchase~~acquisition. Adjustments to provisional amounts were recognized in the reporting period in which the adjustments were determined and were not material. The purchase price ~~allocations~~allocation of the ~~Goodman and NextGen acquisitions are~~business acquired in fiscal 2019 is preliminary and will be completed ~~during fiscal 2017~~ when valuations for intangible assets and other amounts are ~~finalized. In accordance with ASU 2015-16,~~ ~~Business Combinations (Topic 805): Simplifying~~finalized within the ~~Accounting for Measurement-Period Adjustments, the Company will recognize any adjustments to provisional amounts that are identified during the~~12-month measurement period infrom the ~~reporting period in which the adjustments are determined. Additionally, the Company will record, in the same period’s financial statements in which adjustments are recorded, the effect on earnings~~date of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date.

During the six months ended January 28, 2017, the Company recorded adjustments to the fair values assigned to working capital items in connection with the purchase price allocation of the Goodman acquisition and increased the value assigned to goodwill by approximately $2.5 million, net of $1.8 million of proceeds received during the second quarter of fiscal 2017 for a working capital adjustment. The income statement impact during the three and six months ended January 28, 2017 related to these fair value adjustments was not significant and has been recorded in the current period.

acquisition.

The following table summarizes the aggregate consideration paid for businesses acquired in fiscal ~~2016~~2019 and ~~presents the allocation of these amounts to the net tangible and identifiable intangible assets based on their estimated fair values as of the respective dates of acquisition~~fiscal 2017 (dollars in millions):


	2016		2019		2017
Assets
Accounts receivable	$	16.9	$	6.0	$	8.9
Costs and estimated earnings in excess of billings	24.0
Contract assets			—		2.4
Inventories and other current assets	11.9		0.2		0.2
Property and equipment	11.5		0.5		5.6
Goodwill	40.9		4.1		10.1
Intangible assets - customer relationships	94.5		12.3		9.8
Intangible assets - trade names and other	1.8		—		0.7
Total assets	201.5		23.1		37.7

Liabilities
Accounts payable	23.7		2.2		3.2
Accrued and other liabilities	22.4
Accrued and other current liabilities			—		3.4
Deferred tax liabilities, net non-current			—		5.0
Total liabilities	46.1		2.2		11.6

Net Assets Acquired	$	155.4	$	20.9	$	26.1

With respect to the acquisition from Goodman, $20.0 million is escrowed as of January 28, 2017 and is available to the Company for the indemnification obligations of the seller. Of the amount escrowed, $10.0 million will be released to the seller upon the occurrence of certain conditions or the twelve-month anniversary of the closing date. The ~~remaining $10.0 million will be released to the seller when the seller satisfies certain conditions with respect to a dispute~~goodwill associated with the ~~state~~stock purchase of ~~Texas over a sales~~Texstar is not deductible for tax liability of approximately $31.7 million (the “Sales Tax Liability”). Under the asset purchase agreement, Goodman has retained responsibility for this Sales Tax Liability. Should Goodman not resolve this matter, the state may assert that the Company is a successor to the operations and seek to recover from the Company. In such event the Company would seek indemnification for recovery from Goodman, including from the funds contained in the escrow account, for any amount the Company pays.

purposes. Results of businesses acquired ~~during fiscal 2016~~ are included in the condensed consolidated financial statements from their respective dates of acquisition. The revenues and net income of ~~TelCom~~the fiscal 2019 acquisition and ~~NextGen~~Texstar were not material during the three ~~or six~~ months ended ~~January~~April 28, ~~2017~~2018 or ~~January 23, 2016. The acquired operations of Goodman were immediately integrated within the operations of an existing subsidiary. See Note 7,~~ ~~Goodwill and Intangible Assets, for information regarding the goodwill and intangible assets of businesses acquired.~~April 29, 2017.

4. 6. Accounts Receivable, Contract Assets, and Contract Liabilities

The following provides further details on the balance sheet accounts of accounts receivable, net, contract assets, and contract liabilities. See Note 2, Significant Accounting Policies and Estimates, for further information on the Company’s policies related to these balance sheet accounts, as well as its revenue recognition policies.

Accounts Receivable

Accounts receivable consisted of the following (dollars in thousands):


	January 28, 2017			July 30, 2016			April 28, 2018			January 27, 2018
Contract billings	$	279,441		$	297,532
Trade accounts receivable							$	309,724		$	300,271
Unbilled accounts receivable							318,007			—
Retainage	30,733			32,101			18,225			19,411
Total	310,174			329,633			645,956			319,682
Less: allowance for doubtful accounts	(1,307		)	(1,603		)	(976		)	(998		)
Accounts receivable, net	$	308,867		$	328,030		$	644,980		$	318,684

~~The Company grants credit under normal payment terms, generally without collateral, to its customers. The Company expects to collect~~

See Note 3, Accounting Standards, for further information on the ~~outstanding balance of~~comparative unbilled accounts receivable ~~net (including retainage) within~~as of April 28, 2018 and January 27, 2018 as a result of the ~~next twelve months. The Company maintains an allowance for doubtful~~adoption of ASU 2014-09. Trade accounts ~~for estimated losses on uncollected balances.~~ receivable and unbilled accounts receivable increased $2.1 million and $3.9 million, respectively, from the fiscal 2019 acquisition.

During the three ~~and six~~ months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016,~~April 29, 2017, write-offs to the allowance for doubtful accounts, net of recoveries, were not material. ~~There were no material accounts receivable amounts representing claims or other similar items subject to uncertainty as of January 28, 2017 or July 30, 2016.~~

~~During the fourth quarter of fiscal 2016, the Company entered into a customer-sponsored vendor payment program. All eligible accounts receivables from this customer are included in the program~~Contract Assets and payment is received pursuant to a non-recourse sale to a bank partner of the customer. This program effectively reduces the time to collect these receivables as compared to that customer’s standard payment terms. The Company incurs a discount fee to the bank on the payments received that is reflected as an expense component in other income, net, in the condensed consolidated statements of operations. The program has not changed since its inception during the fourth quarter of fiscal 2016.Contract Liabilities

~~5. Costs and Estimated Earnings in Excess of Billings~~

Costs and estimated earnings in excess of billings (“CIEB”) includes revenue for services performed under contracts using the units-of-delivery method of accounting and the cost-to-cost measure of the percentage of completion method of accounting. AmountsNet contract assets consisted of the following (dollars in thousands):

January 28, 2017 July 30, 2016
Costs incurred on contracts in progress $ 348,933
$ 307,826
Estimated to date earnings 86,999
92,226
Total costs and estimated earnings 435,932
400,052
Less: billings to date (56,888 ) (42,637 )
$ 379,044
$ 357,415
Included in the accompanying condensed consolidated balance sheets under the captions:

Costs and estimated earnings in excess of billings $ 397,048
$ 376,972
Billings in excess of costs and estimated earnings (18,004 ) (19,557 )
$ 379,044
$ 357,415



	April 28, 2018		January 27, 2018
Contract assets	$	101,163	$	369,472
Contract liabilities	5,730		6,480
Contract assets, net	$	95,433	$	362,992

AsSee Note 3, Accounting Standards, for further information on the comparative contract assets as of April 28, 2018 and January 27, 2018 as a result of the adoption of ASU 2014-09. Excluding the impact of the adoption of ASU 2014-09, the increase in contract assets is primarily a result of a general increase in services performed during the three months ended April 28, ~~2017,~~2018 under the related contracts as compared to billing requirements met during the period. There were no other material changes in contract assets during the periods. During the three months ended April 28, 2018, the Company ~~expects~~performed services and recognized an immaterial amount of revenue related to its contract liabilities that ~~substantially all~~existed at January 27, 2018.

Customer Credit Concentration

Customers whose combined amounts of trade accounts receivable and contract assets, net exceeded 10% of total combined accounts receivable and contract assets, net as of April 28, 2018 or January 27, 2018 were as follows (dollars in millions):



	April 28, 2018			January 27, 2018
	Amount		% of Total	Amount		% of Total
Comcast Corporation	$	164.2	22.2%	$	166.5	24.5%
Verizon Communications Inc.	$	156.5	21.1%	$	98.2	14.4%
CenturyLink, Inc.	$	120.3	16.3%	$	126.0	18.5%
AT&T Inc.	$	102.8	13.9%	$	79.2	11.6%

The Company believes that none of its ~~CIEB will be billed to~~significant customers were experiencing financial difficulties that would materially impact the collectability of the Company’s total accounts receivable and ~~collected in the normal course of business within the next twelve months. Additionally, there were no material CIEB amounts representing claims or other similar items subject to uncertainty~~contract assets, net as of April 28, 2018 or January ~~28, 2017 or July 30, 2016.~~27, 2018.

6.7. Other Current Assets and Other Assets

Other current assets consisted of the following (dollars in thousands):



	April 28, 2018		January 27, 2018
Prepaid expenses	$	18,461	$	13,167
Insurance recoveries/receivables for accrued insurance claims	911		13,701
Receivables on equipment sales	1,344		31
Deposits and other current assets, including restricted cash	11,449		12,811
Total other current assets	$	32,165	$	39,710

Other assets (long-term) consisted of the following (dollars in thousands):



	April 28, 2018		January 27, 2018
Deferred financing costs	$	3,496	$	3,873
Restricted cash	5,253		5,253
Insurance recoveries/receivables for accrued insurance claims	5,576		6,722
Other non-current deposits and assets	12,430		12,342
Total other assets	$	26,755	$	28,190

Insurance recoveries/receivables represent amounts related to accrued insurance claims that exceed the Company’s loss retention and are covered by insurance. During the three months ended April 28, 2018, total insurance recoveries/receivables decreased approximately $13.9 million related to the settlement of claims.

8. Cash and Equivalents and Restricted Cash

Amounts of cash and equivalents and restricted cash reported in the condensed consolidated statement of cash flows consisted of the following (dollars in thousands):



	April 28, 2018		January 27, 2018
Cash and equivalents	$	57,946	$	84,029
Restricted cash included in:
Other current assets	900		900
Other assets (long-term)	5,253		5,253
Total cash and equivalents and restricted cash	$	64,099	$	90,182

9. Property and Equipment

Property and equipment consisted of the following (dollars in thousands):


	Estimated Useful Lives (Years)	January 28, 2017			July 30, 2016			Estimated Useful Lives (Years)	April 28, 2018			January 27, 2018
Land	—	$	3,475		$	3,475		—	$	3,470		$	3,470
Buildings	10-35	12,021			11,969			10-35	12,437			12,315
Leasehold improvements	1-10	15,118			13,753			1-10	14,696			14,202
Vehicles	1-5	439,263			404,273			1-5	540,862			536,379
Computer hardware and software	1-7	99,129			95,570			1-7	123,306			117,058
Office furniture and equipment	1-10	11,699			10,374			1-10	12,126			11,686
Equipment and machinery	1-10	257,900			242,079			1-10	277,450			273,712
Total		838,605			781,493				984,347			968,822
Less: accumulated depreciation		(494,485		)	(454,823		)		(568,089		)	(554,054		)
Property and equipment, net		$	344,120		$	326,670			$	416,258		$	414,768

Depreciation expense was ~~$29.6~~$37.7 million and ~~$25.2~~$31.2 million for the three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016, respectively, and $58.0 million and $47.9 million for the six months ended January 28,~~April 29, 2017, ~~and January 23, 2016,~~ respectively.

7.10. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was ~~$312.7~~$325.8 million and ~~$310.2~~$321.7 million as of April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, respectively. Changes in the carrying amount of goodwill ~~for fiscal 2017~~ were as follows (dollars in thousands):

Goodwill Accumulated Impairment Losses Total
Balance as of July 30, 2016 $ 505,924
$ (195,767 ) $ 310,157
Purchase price allocation adjustments 2,501
—
2,501
Balance as of January 28, 2017 $ 508,425
$ (195,767 ) $ 312,658



	Goodwill		Accumulated Impairment Losses			Total
Balance as of January 27, 2018	$	517,510	$	(195,767	)	$	321,743
Goodwill from fiscal 2019 acquisition	4,097		—			4,097
Balance as of April 28, 2018	$	521,607	$	(195,767	)	$	325,840

The Company’s goodwill resides in multiple reporting ~~units.~~units and primarily consists of expected synergies resulting from acquisitions, including the expansion of the Company’s geographic presence and strengthening of its customer base. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment, ~~as of the first day of the fourth fiscal quarter of each year,~~ or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. The profitability of individual reporting units may suffer periodically due to downturns in customer demand and the level of overall economic activity including, in particular, construction and housing activity. The Company’s customers may reduce capital expenditures and defer or cancel pending projects during times of slowing economic conditions. Additionally, adverse conditions in the economy and future volatility in the equity and credit markets could impact the valuation of the Company’s reporting units. The cyclical nature of the Company’s business, the high level of competition existing within its industry, and the concentration of its revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets.

The Company evaluates current operating results, including any losses, in the assessment of goodwill and other intangible assets. The estimates and assumptions used in assessing the fair value of the reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Changes in judgments and estimates could result in significantly different estimates of the fair value of the reporting units and could result in impairments of goodwill or intangible assets of the reporting units. In addition, adverse changes to the key valuation assumptions contributing to the fair value of the Company’s reporting units could result in an impairment of goodwill or intangible assets.

During July 2016, the Company acquired the wireless network deployment and wireline operations of Goodman for $107.5 million, less an adjustment of approximately $6.6 million for working capital received below a target amount. The purchase price was allocated based on the fair value of the assets acquired and the liabilities assumed on the date of acquisition and was primarily allocated to goodwill and other intangible assets. The acquired operations were immediately integrated with the operations of an existing subsidiary which is a larger, well-established provider of services to the same primary customer. Subsequent to the close of this acquisition, activity levels within the contracts of the acquired operations trended considerably below prior expectations and the Company reduced its near term revenue expectations. As a result of the decline, the Company assessed whether it was more likely than not that the fair value of the reporting unit declined below the reporting unit’s carrying amount. With the immediate integration of the Goodman operations into the Company’s existing subsidiary, which is part of an existing reporting unit, the Company believes its ability to effectively perform services for the customer will provide future opportunities. Further, the acquired contracts remain in effect and the Company has not experienced any adverse changes in customer relations. Additionally, the Company believes that the fair value of the reporting unit containing the recently acquired operations remains substantially in excess of its carrying amount as of January 28, 2017. As a result, the Company determined that it was not more likely than not that the fair value of the reporting unit declined below its carrying amount as of January 28, 2017.

~~The Company performed~~historically completed its annual goodwill impairment assessment as of the first day of the fourth fiscal quarter of each ~~of fiscal 2016, 2015, and 2014 and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any~~year. As a result of the ~~years. Qualitative assessments~~change in the Company’s fiscal year end, the annual goodwill impairment assessment date was changed to the first day of the fiscal quarter ending on ~~reporting units that comprise a substantial portion~~the last Saturday in January, as this became the first day of the Company’s consolidated goodwill balance and on its indefinite-lived intangible asset were performed. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible asset for the purpose of determining whether it is more likely than not that these assets are impaired. The Company considers various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more

~~likely than not that the fair value exceeded carrying value for those reporting units.~~fourth fiscal quarter. For the ~~remaining reporting units,~~2018 transition period, the ~~Company~~assessment was performed ~~the first step~~as of ~~the quantitative analysis described in ASC Topic 350. Under the income approach, the key valuation assumptions used in determining the fair value estimates~~October 29, 2017. As a result of the Company’s ~~reporting units for each annual test were (a) a discount rate based on~~2018 transition period assessment, the Company’s best estimate of the weighted average cost of capital adjusted for certain risks for the reporting units; (b) terminal value based on terminal growth rates; and (c) seven expected years of cash flow before the terminal value.

~~The table below outlines certain assumptions in each of the Company’s fiscal 2016, 2015, and 2014 annual quantitative impairment analyses:~~

2016 2015 2014
Terminal Growth Rate 2.0% - 3.0% 1.5% - 2.5% 1.5% - 3.0%
Discount Rate 11.5% 11.5% 11.5%

The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. The fiscal 2016, 2015, and 2014 analyses used the same discount rate and included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The changes in these inputs from fiscal 2016, 2015 and 2014 had offsetting impacts and the discount rate remained at 11.5%. The Company believes the assumptions used in the impairment analysis each year are reflective of the risks inherent in the business models of its reporting units and within its industry. Under the market approach, the guideline company method develops valuation multiples by comparing the Company’s reporting units to similar publicly traded companies. Key valuation assumptions and valuation multiples used in determining the fair value estimates of the Company’s reporting units rely on (a) the selection of similar companies; (b) obtaining estimates of forecast revenue and earnings before interest, taxes, depreciation, and amortization for the similar companies; and (c) selection of valuation multiples as they apply to the reporting unit characteristics.

~~The~~ Company determined that the fair values of each of the reporting units and the indefinite-lived intangible asset were substantially in excess of their carrying values ~~in the fiscal 2016 annual assessment. Management determined that significant changes were not likely in the factors considered to estimate fair value,~~ and analyzed the impact of such changes were they to occur. Specifically, if there was a 25% decrease in the fair value of any of the reporting units due to a decline in their discounted cash flows resulting from lower operating performance, the conclusion of the assessment would remain unchanged. Additionally, if the discount rate applied in the fiscal 2016 impairment analysis had been 100 basis points higher than estimated for each of the reporting units, and all other assumptions were held constant, the conclusion of the assessment would remain unchanged and there would be no impairment ~~of goodwill.~~had occurred. As of ~~July 30, 2016, the Company believes the goodwill is recoverable for all of the reporting units. As of January~~April 28, ~~2017,~~2018, the Company continues to believe ~~that no impairment has occurred. However,~~the goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units; however, significant adverse changes in the projected revenues and cash flows of a

reporting unit could result in an impairment of ~~goodwill.~~goodwill or the indefinite-lived intangible asset. There can be no assurances that goodwill or the indefinite-lived intangible asset may not be impaired in future periods.

Intangible Assets

The Company’s intangible assets consisted of the following (dollars in thousands):

Weighted Average Remaining Useful Lives (Years) January 28, 2017 July 30, 2016
Gross carrying amount:
Customer relationships 12.3 $ 289,917
$ 289,955
Contract backlog — —
4,780
Trade names 7.6 9,650
9,800
UtiliQuest trade name — 4,700
4,700
Non-compete agreements 2.4 685
685
304,952
309,920
Accumulated amortization:

Customer relationships 112,395
101,012
Contract backlog —
4,666
Trade names 6,556
6,034
Non-compete agreements 433
329
119,384
112,041
Intangible assets, net $ 185,568
$ 197,879

During the second quarter of fiscal 2017, certain contract backlog intangible assets became fully amortized. As a result, the gross carrying amount and the associated accumulated amortization each decreased $4.8 million. This decrease had no effect on the net carrying value of intangible assets as of January 28, 2017.



	April 28, 2018							January 27, 2018
	Weighted Average Remaining Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net
Customer relationships	11.7	$	312,017	$	141,096	$	170,921	$	299,717	$	135,544	$	164,173
Trade names	8.3	10,350		7,992		2,358		10,350		7,872		2,478
UtiliQuest trade name	—	4,700		—		4,700		4,700		—		4,700
Non-compete agreements	2.2	450		354		96		450		332		118
		$	327,517	$	149,442	$	178,075	$	315,217	$	143,748	$	171,469

Amortization of the Company’s customer relationship ~~intangibles and contract backlog~~ intangibles is recognized on an accelerated basis as a function of the expected economic benefit. Amortization for the Company’s other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life. Amortization expense for finite-lived intangible assets was ~~$6.1~~$5.7 million and ~~$4.7~~$6.2 million for the three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016, respectively, and $12.3 million and $9.5 million for the six months ended January 28,~~April 29, 2017, ~~and January 23, 2016,~~ respectively.

As of ~~January~~April 28, ~~2017,~~2018, the Company believes that the carrying amounts of its intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets could be impaired.

8.11. Accrued Insurance Claims

For claims within its insurance program, the Company retains the risk of loss, up to certain limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. With regard to losses occurring in ~~fiscal 2017,~~the twelve month policy period ending January 30, 2019, the Company retains the risk of loss up to $1.0 million on a per occurrence basis for automobile liability, general liability, and workers’ compensation. These retention amounts are applicable to all of the states in which the Company operates, except with respect to workers’ compensation insurance in two states in which the Company participates in state-sponsored insurance funds. Aggregate stop-loss coverage for automobile liability, general liability, and workers’ compensation claims is ~~$103.7~~$78.9 million for ~~fiscal 2017.~~the twelve month policy period ending January 30, 2019.

The Company is party to a stop-loss agreement for losses under its employee group health plan. For calendar year ~~2017,~~2019, the Company retains the risk of loss, on an annual basis, up to the first ~~$400,000~~$400,000 of claims per participant, as well as an annual aggregate amount.

~~The liability~~ Amounts for total accrued insurance claims and related processing costs was $99.1 million and $89.7 million as of January 28, 2017 and July 30, 2016, respectively, of which $59.7 million and $52.8 million, respectively, was long-term and reflected in non-current liabilities in the condensed consolidated balance sheets. Insuranceinsurance recoveries/receivables are as follows (dollars in thousands):



	April 28, 2018		January 27, 2018
Accrued insurance claims - current	$	40,182	$	53,890
Accrued insurance claims - non-current	59,865		59,385
Total accrued insurance claims	$	100,047	$	113,275

Insurance recoveries/receivables:
Current (included in Other current assets)	$	911	$	13,701
Non-current (included in Other assets)	5,576		6,722
Total insurance recoveries/receivables	$	6,487	$	20,423

During the three months ended April 28, 2018, total insurance recoveries/receivables decreased approximately $13.9 million related to ~~accrued~~the settlement of claims ~~as of January 28, 2017 and July 30, 2016 were $8.9 million and $5.7 million, respectively,~~ which were ~~included in non-current other assets in~~paid by the ~~accompanying condensed consolidated balance sheets.~~Company’s insurers. Accrued insurance claims decreased by a corresponding amount.

9.12. Other Accrued Liabilities

Other accrued liabilities consisted of the following (dollars in thousands):


	January 28, 2017		July 30, 2016		April 28, 2018		January 27, 2018
Accrued payroll and related taxes	$	20,327	$	23,908	$	25,522	$	23,010
Accrued employee benefit and incentive plan costs	25,307		40,943		10,010		16,097
Accrued construction costs	26,093		41,123		34,769		24,582
Other current liabilities	15,410		16,328		16,670		15,968
Total other accrued liabilities	$	87,137	$	122,302	$	86,971	$	79,657

~~10.~~13. Debt

The Company’s outstanding indebtedness consisted of the following (dollars in thousands):


	January 28, 2017			July 30, 2016			April 28, 2018			January 27, 2018
Credit Agreement - Revolving facility (matures April 2020)	$	—		$	—		$	—		$	—
Credit Agreement - Term loan facilities (mature April 2020)	376,875			346,250			353,250			358,063
0.75% convertible senior notes, net (mature September 2021)	382,513			373,077			407,361			402,249
	759,388			719,327			760,611			760,312
Less: current portion	(18,813		)	(13,125		)	(28,875		)	(26,469		)
Long-term debt	$	740,575		$	706,202		$	731,736		$	733,843

Senior Credit Agreement

The Company and certain of its subsidiaries are party to a credit agreement with ~~the~~ various lenders, ~~named therein,~~ dated as of December 3, 2012 (as amended as of June 17, 2016, May 20, 2016, April 24, 2015 and September 9, 2015), that matures on April 24, 2020 (as amended, the “Credit Agreement”). The Credit Agreement provides for a $450.0 million revolving facility, $385.0 million in aggregate term loan facilities, and contains a sublimit of $200.0 million for the issuance of letters of credit. During the second quarter of fiscal 2017, the Company entered into an incremental term loan facility under the Credit Agreement in the aggregate principal amount of $35.0 million. The additional term loan is subject to terms and conditions substantially similar to those applicable to the existing term loan facilities. The proceeds are available for general corporate purposes.

Subject to certain conditions the Credit Agreement provides the Company with the ability to enter into one or more incremental facilities, either by increasing the revolving commitments under the Credit Agreement and/or in the form of term loans up to the greater of (i) $150.0 million and (ii) an amount such that, after giving effect to such incremental ~~facility~~facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured leverage ratio does not exceed 2.25 to 1.00. The consolidated senior secured leverage ratio is the ratio of the Company’s consolidated senior secured indebtedness to its trailing twelve month consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined by the Credit Agreement. ~~Payments~~Borrowings under the Credit Agreement are guaranteed by substantially all of the Company’s subsidiaries and secured by the equity interests of the substantial majority of the Company’s subsidiaries.

Borrowings under the Credit Agreement bear interest at the rates described below based upon the Company’s consolidated leverage ratio, which is the ratio of the Company’s consolidated total funded debt to its trailing twelve month consolidated EBITDA, as defined by the Credit Agreement. In addition, the Company incurs certain fees for unused balances and letters of credit at the rates described below, also based upon the Company’s consolidated leverage ratio:



Borrowings - Eurodollar Rate Loans	1.25% - 2.00% plus LIBOR
Borrowings - Base Rate Loans	0.25% - 1.00% plus administrative agent’s base rate⁽¹⁾
Unused Revolver Commitment	0.25% - 0.40%
Standby Letters of Credit	1.25% - 2.00%
Commercial Letters of Credit	0.625% - 1.00%

⁽¹⁾The agent’s base rate is described in the Credit Agreement as the highest of (i) the administrative agent’s prime rate, (ii) the Federal Funds Rate plus 0.50%, and (iii) the Eurodollar rate plus 1.00%, plus an applicable margin.

Standby letters of credit of approximately ~~$57.6~~$48.6 million, issued as part of the Company’s insurance program, were outstanding under the Credit Agreement as of both April 28, 2018 and January ~~28, 2017 and July 30, 2016.~~27, 2018.

The weighted average interest rates and fees for balances under the Credit Agreement as of April 28, 2018 and January ~~28, 2017 and July 30, 2016~~27, 2018 were as follows:


	Weighted Average Rate End of Period		Weighted Average Rate End of Period
	January 28, 2017	July 30, 2016	April 28, 2018	January 27, 2018
Borrowings - Term loan facilities	2.53%	2.49%	3.63%	3.30%
Borrowings - Revolving facility⁽¹⁾	—%	—%	—%	—%
Standby Letters of Credit	1.75%	2.00%	1.75%	1.75%
Unused Revolver	0.35%	0.40%
Unused Revolver Commitment			0.35%	0.35%

⁽¹⁾There were no outstanding borrowings under the revolving facility as of April 28, 2018 or January ~~28, 2017 or July 30, 2016.~~27, 2018.

The Credit Agreement contains a financial covenant that requires the Company to maintain a consolidated leverage ratio of not greater than 3.50 to 1.00, as measured at the end of each fiscal quarter. It provides for certain increases to this ratio as specified in the Credit Agreement in connection with permitted ~~acquisitions on the terms and conditions specified in the Credit Agreement.~~acquisitions. In addition, the Credit Agreement contains a financial covenant that requires the Company to maintain a consolidated interest coverage ratio, which is the ratio of the Company’s trailing twelve month consolidated EBITDA to its consolidated interest expense, as defined by the Credit Agreement, of not less than 3.00 to 1.00, as measured at the end of each fiscal quarter. At both April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, the Company was in compliance with the financial covenants of the Credit Agreement and had ~~additional~~ borrowing availability inunder the revolving facility of ~~$392.4~~$401.4 million as determined by the most restrictive covenant.

0.75% Convertible Senior Notes Due 2021

On September 15, 2015, the Company issued ~~$485.0 million principal amount of~~ 0.75% convertible senior notes due September 2021 (the “Notes”) in a private ~~placement. The Company received net proceeds~~placement in the principal amount of ~~approximately $471.7 million after deducting the initial purchasers’ discount of approximately $13.3~~$485.0 million. The Company used approximately $60.0 million of the net proceeds to repurchase 805,000 shares of its common stock from the initial purchasers of the Notes in privately negotiated transactions. In addition, the Company used approximately $296.6 million of the net proceeds to fund the redemption of all of its 7.125% senior subordinated notes due 2021 and approximately $41.1 million for the net cost of convertible note hedge transactions and warrant transactions as further described below. The remainder of the proceeds of approximately $73.9 million is available for general corporate purposes.

The Notes, governed by the terms of an indenture between the Company and a bank trustee are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company. The Notes bear interest at a rate of 0.75% per year, payable in cash semiannually in March and September, and will mature on September 15, 2021, unless earlier purchased by the Company or converted. In the event the Company fails to perform certain obligations under the indenture, the Notes will accrue additional interest. Certain events are considered “events of default” under the Notes, which may result in the acceleration of the maturity of the Notes, as described in the indenture.

Each $1,000 of principal of the Notes is convertible into 10.3211 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $96.89 per share. The conversion rate is subject to adjustment in certain circumstances, including in connection with specified fundamental changes (as defined in the indenture). In addition, holders of the Notes have the right to require the Company to repurchase all or a portion of their notes on the occurrence of a fundamental change at a price of 100% of their principal amount plus accrued and unpaid interest.

Prior to June 15, 2021, the Notes are convertible by the Note holder under the following circumstances: (1) during any fiscal quarter commencing after October 24, 2015 (and only during such fiscal quarter) if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days period ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on such trading ~~day;~~day ($125.96 assuming an applicable conversion price of $96.89); (2) during the five consecutive business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after June 15, 2021 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their Notes at any time regardless of the foregoing circumstances. Upon conversion, the Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. The Company intends to settle the principal amount of the Notes with cash.

During the three months ended April 28, 2018, the closing price of the Company’s common stock did not meet or exceed 130% of the applicable conversion price of the Notes for at least 20 of the last 30 consecutive trading dates of the quarter. Additionally, no other conditions allowing holders of the Notes to convert have been met as of April 28, 2018. As a result, the Notes were not convertible during the three months ended April 28, 2018 and are classified as long-term debt.

In accordance with ASC Topic 470, Debt ~~(“ASC Topic 470”)~~, certain convertible debt instruments that may be settled in cash upon conversion are required to be ~~separately~~ accounted for as separate liability and equity components. The carrying amount of the liability component is calculated by measuring the fair value of a similar instrument that does not have an associated convertible feature using an indicative market interest rate (“Comparable Yield”) as of the date of issuance. The difference between the principal amount of the notes and the carrying amount represents a debt discount. The debt discount is amortized to interest expense using the Comparable Yield (5.5% with respect to the Notes) using the effective interest rate method over the term of the notes. The Company incurred ~~$4.4~~$4.7 million and ~~$4.1~~$4.4 million of interest expense during the three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016, respectively, and $8.7 million and $5.9 million of interest expense during the six months ended January 28,~~April 29, 2017, ~~and January 23, 2016,~~ respectively, for the non-cash amortization of the debt discount. The liability component of the Notes consisted of the following (dollars in thousands):



	April 28, 2018			January 27, 2018
Liability component
Principal amount of 0.75% convertible senior notes due September 2021	$	485,000		$	485,000
Less: Debt discount	(70,227		)	(74,899		)
Less: Debt issuance costs	(7,412		)	(7,852		)
Net carrying amount of Notes	$	407,361		$	402,249

The equity component of the Notes was recognized at issuance and represents the difference between the principal amount of the Notes and the ~~debt discount, both measured~~fair value of the liability component of the Notes at issuance. The equity component approximated $112.6 million at the time of issuance and its fair value is not remeasured as long as it continues to meet the conditions for equity classification.

The ~~Notes consist~~following table summarizes the fair value of the ~~following components~~Notes, net of the debt discount and debt issuance costs. The fair value of the Notes is based on the closing trading price per $100 of the Notes as of the last day of trading for the respective periods (Level 2), which was $126.61 and $136.01 as of April 28, 2018 and January 27, 2018, respectively (dollars in thousands):

January 28, 2017 July 30, 2016
Liability component
Principal amount of 0.75% convertible senior notes due September 2021 $ 485,000
$ 485,000
Less: Debt discount (92,993 ) (101,679 )
Less: Debt issuance costs⁽¹⁾
(9,494 ) (10,244 )
Net carrying amount of Notes $ 382,513
$ 373,077
Equity Component⁽²⁾
$ 112,554
$ 112,554

⁽¹⁾Original issuance costs of approximately $15.1 million related to the Notes included the initial purchasers’ discount of approximately $13.3 million and approximately $1.8 million paid to third parties. Approximately $11.5 million of issuance costs of the Notes was allocated to the liability component and recorded as a contra-liability, presented net against the carrying amount for the Notes on the Company’s condensed consolidated balance sheet, of which $9.5 million and $10.2 million remained unamortized as of January 28, 2017 and July 30, 2016, respectively. Debt issuance costs attributable to the liability component are amortized to interest expense on the effective interest rate method over the term of the Notes and the expense was not material in all periods presented.

⁽²⁾ Approximately $3.6 million of issuance costs paid to the initial purchasers of the Notes and third parties was allocated to the equity component and recorded net against the equity component in stockholders’ equity on the condensed consolidated balance sheets.

The Company determined that the fair value of the Notes as of January 28, 2017 and July 30, 2016 was approximately $425.2 million and $458.7 million, respectively, based on quoted market prices (level 2), compared to a net carrying amount of $382.5 million and $373.1 million, respectively. The fair value and net carrying amounts as of January 28, 2017 and

~~July 30, 2016 are both reflected net of the debt discount of $93.0 million and $101.7 million, respectively, and debt issuance costs of $9.5 million and $10.2 million, respectively.~~



	April 28, 2018			January 27, 2018
Fair value of principal amount of Notes	$	614,059		$	659,649
Less: Debt discount and debt issuance costs	(77,639		)	(82,751		)
Fair value of Notes	$	536,420		$	576,898

Convertible Note Hedge and Warrant Transactions

In connection with the offering of the Notes, the Company entered into convertible note hedge transactions with counterparties ~~for the purpose of reducing~~to reduce the potential dilution to common stockholders from the conversion of the Notes and offsetting any potential cash payments in excess of the principal amount of the Notes. In the event that shares or cash are deliverable to holders of the Notes upon conversion at limits defined in the indenture, counterparties to the convertible note hedge will be

required to deliver up to 5.006 million shares of the Company’s common stock or pay cash to the Company in a similar amount as the value that the Company delivers to the holders of the Notes based on a conversion price of $96.89 per share. ~~The total cost of the convertible note hedge transactions was $115.8 million.~~

In addition, the Company entered into separately negotiated warrant transactions with the same counterparties as the convertible note hedge transactions whereby the Company sold warrants to purchase, subject to certain anti-dilution adjustments, up to 5.006 million shares of the Company’s common stock at a price of $130.43 per share. The warrants will not have a dilutive effect on the Company’s earnings per share unless the Company’s quarterly average share price exceeds the warrant strike price of $130.43 per share. In this event, the Company expects to settle the warrant transactions on a net share basis whereby it will issue shares of its common stock. ~~The Company received proceeds of approximately $74.7 million from the sale of these warrants.~~

Upon settlement of the conversion premium of the Notes, convertible note hedge, and warrants, the resulting dilutive impact of these transactions, if any, would be the number of shares necessary to settle the value of the warrant transactions above $130.43 per share. The net amounts incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the ~~condensed~~ consolidated balance sheets during ~~the first quarter of~~ fiscal 2016 and are not expected to be remeasured in subsequent reporting periods.

The Company recorded an initial deferred tax liability of $43.4 million in connection with the debt discount associated with the Notes and recorded an initial deferred tax asset of $43.2 million in connection with the convertible note hedge transactions. Both the deferred tax liability and deferred tax asset are included in non-current deferred tax liabilities in the condensed consolidated balance sheets. See Note 14, Income Taxes, for additional information regarding the Company’s deferred tax liabilities and assets.

~~7.125% Senior Subordinated Notes - Loss on Debt Extinguishment~~

As of July 25, 2015, Dycom Investments, Inc. (the “Issuer”), a wholly-owned subsidiary of the Company, had outstanding an aggregate principal amount of $277.5 million of 7.125% senior subordinated notes due 2021 (the “7.125% Notes”). The outstanding 7.125% Notes were redeemed on October 15, 2015 (the “Redemption Date”) with a portion of the proceeds from the Notes offering described above. The aggregate amount paid in connection with the redemption was $296.6 million and was comprised of the $277.5 million principal amount of the outstanding 7.125% Notes, $4.9 million for accrued and unpaid interest to the Redemption Date, and approximately $14.2 million for the applicable call premium as defined in the indenture governing the 7.125% Notes. The call premium amount consisted of (a) the present value as defined under the indenture of the sum of (i) approximately $4.9 million representing interest for the period from the Redemption Date through January 15, 2016, and (ii) the redemption price of 103.563% (expressed as a percentage of the principal amount) of the 7.125% Notes at January 15, 2016, minus (b) the principal amount of the 7.125% Notes.

In connection with the redemption of the 7.125% Notes, the Company incurred a pre-tax charge for early extinguishment of debt of approximately $16.3 million during the first quarter of fiscal 2016. This charge is comprised of: (i) $4.9 million for the present value of the interest payments for the period from the Redemption Date through January 15, 2016, (ii) $6.5 million for the excess of the present value of the redemption price over the carrying value of the 7.125% Notes, and (iii) $4.9 million for the write-off of deferred financing charges related to the fees incurred in connection with the issuance of the 7.125% Notes.

~~11.~~14. Income Taxes

The ~~Company accounts~~Company’s interim income tax provisions are based on the effective income tax rate expected to be applicable for ~~income taxes under~~ the ~~asset and liability method. This approach requires~~full fiscal year, adjusted for specific items that are required to be recognized in the ~~recognition of deferred~~period in which they occur. Deferred tax assets and liabilities ~~for~~are based on the ~~expected~~enacted tax rate that will apply in future ~~tax consequences of temporary differences between the carrying amounts and the tax bases of~~periods when such assets and ~~liabilities.~~ liabilities are expected to be settled or realized.

The Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was enacted in December 2017 and includes significant changes to U.S. income tax law. Tax Reform, among other things, reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent. As a result, the Company’s net deferred tax liabilities as of January 27, 2018 were remeasured to reflect the reduced rate under Tax Reform.

The Company’s effective income tax rate of 27.3% and 37.0% for the three months ended April 28, 2018 and April 29, 2017, respectively, differs from the ~~statutory~~applicable U.S. federal corporate income tax rate for ~~the tax jurisdictions where it operates~~each respective period primarily as the result of ~~the impact of~~ non-deductible and non-taxable items, ~~and~~ tax credits recognized in relation to pre-tax ~~results. Measurement~~results, and certain impacts from the vesting and exercise of share-based awards.

The Company’s interpretations of the ~~Company’s tax position is based on~~provisions of Tax Reform could differ from future interpretations and guidance from the ~~applicable statutes, federal~~U.S Treasury Department, the IRS and other regulatory agencies, including state ~~case law, and its interpretations of tax regulations.~~

~~The Company is subject to federal income taxes~~taxing authorities in ~~the United States and the income taxes of multiple state~~ jurisdictions ~~and in Canada. Amounts of pre-tax earnings related to Canadian operations for the three and six months ended January 28, 2017 and January 23, 2016 were not material. With few exceptions,~~where the Company ~~is no longer subject to U.S. federal, state and local, or Canadian income tax examinations for fiscal years ended 2012 and prior. During fiscal 2016,~~operates. Any future adjustments resulting from these factors would impact the ~~Company was notified by the Internal Revenue Service that its federal income tax return for fiscal 2014 was selected for examination. The Company believes its~~Company’s provision for income taxes ~~is adequate; however, any assessment would affect the Company’s results of operations~~ and cash flows. Income taxes receivable totaled $26.6 million and $1.4 million as of January 28, 2017 and July 30, 2016, respectively. Income taxes receivable is included in current assets in the condensed consolidated balance sheets as of July 30, 2016. Income taxes payable totaled $0.5 million and $15.3 million as of January 28, 2017 and July 30, 2016, respectively.

~~As of both January 28, 2017 and July 30, 2016, the Company had total unrecognized tax benefits of $2.4 million resulting from uncertain tax positions. The Company’s~~ effective tax rate ~~will be reduced during future periods if it is determined these tax benefits~~in the period in which they are realizable. The Company had approximately $1.1 million and $1.0 million accrued for the payment of interest and penalties as of January 28, 2017 and July 30, 2016, respectively. Interest expense related to unrecognized tax benefits for the Company for the three and six months ended January 28, 2017 and January 23, 2016 was not material.made.

~~12.~~15. Other Income, Net

The components of other income, net, were as follows (dollars in thousands):


	For the Three Months Ended					For the Six Months Ended					For the Three Months Ended
	January 28, 2017			January 23, 2016		January 28, 2017			January 23, 2016		April 28, 2018			April 29, 2017
Gain on sale of fixed assets	$	1,729		$	1,016	$	3,172		$	2,152	$	8,415		$	5,048
Miscellaneous (expense) income, net	(723		)	56		(1,226		)	390
Miscellaneous (expense), net											(704		)	(255		)
Total other income, net	$	1,006		$	1,072	$	1,946		$	2,542	$	7,711		$	4,793

~~Other~~The Company participates in a customer-sponsored vendor payment program. All eligible accounts receivable from this customer are included in the program and payment is received pursuant to a non-recourse sale to the customer’s bank partner. This program effectively reduces the time to collect these receivables as compared to that customer’s standard payment terms. The Company incurs a discount fee to the bank on the payments received that is reflected as an expense component in other income, net, in the condensed consolidated statements of operations. During each of the three months ended April 28, 2018 and

April 29, 2017, miscellaneous expense, net includes approximately $0.9 million ~~and $1.5 million~~ of discount fee expense ~~during the three and six months ended January 28, 2017, respectively, associated~~incurred in connection with the ~~collection~~non-recourse sale of accounts receivable under ~~a customer-sponsored vendor payment~~this program. The program ~~which the Company began participating in~~has not changed since its inception during ~~the fourth quarter of~~ fiscal 2016.

~~13.~~16. Capital Stock

Repurchases of Common ~~Stock~~Stock. -~~The Company made the following share repurchases during fiscal 2016 and~~During the three months ended ~~January 28, 2017:~~

Period Number of Shares Repurchased
Total Consideration
(In thousands)
Average Price Per Share
Fiscal 2016:

Three months ended October 24, 2015 954,224
$ 69,997
$ 73.35
Three months ended April 23, 2016 1,557,354
$ 100,000
$ 64.21
Fiscal 2017:
Three months ended January 28, 2017 313,006
$ 25,000
$ 79.87

~~In connection with the Notes offering in September 2015,~~April 29, 2017, the Company ~~used approximately $60.0 million of the net proceeds from the Notes to repurchase 805,000~~repurchased and canceled 400,000 shares of its common stock, from the initial purchasers of the Notes in privately negotiated transactions at a price of $74.53 per share, the closing price of Dycom’s common stock on September 9, 2015. The additional $110.0 million spent during fiscal 2016 was for shares repurchased under authorized share repurchase programs.

~~During the second quarter of fiscal 2017, the Company repurchased 313,006 common shares for $25.0 million~~ at an average price of ~~$79.87. All shares repurchased have been canceled. Upon cancellation, the excess over par value is recorded as a reduction in additional paid-in capital until the balance is reduced to zero, with~~$94.77 per share, for $37.9 million. The Company did not repurchase any ~~additional excess recorded to retained earnings. During~~of its common stock during the three months ended ~~January~~April 28, ~~2017, $12.1 million was charged to retained earnings related to the Company’s share repurchases during the period.~~2018. As of ~~January~~April 28, ~~2017, $75.0~~2018, $95.2 million remained available for repurchases through ~~October 2017~~August 2018 under the Company’s April 26, 2016 repurchase program authorization. On February 28, 2017, the Company’s Board of Directors extended the term of this repurchase program through August 2018 and authorized an additional $75.0 million to repurchase shares of the Company’s outstanding common stock in open market or private transactions, including through accelerated share repurchase ~~agreements with one or more counterparties from time to time. As of March 2, 2017, the Company has $150.0 million available for repurchases of the Company’s common stock through August 2018.~~program.

~~Restricted Stock Tax Withholdings~~ - During the six months ended January 28, 2017 and January 23, 2016, the Company withheld 128,783 shares and 156,362 shares, respectively, totaling $10.2 million and $12.1 million, respectively, to meet payroll tax withholdings obligations arising from the vesting of restricted share units. All shares withheld have been canceled. Shares of common stock withheld for tax withholdings do not reduce the Company’s total share repurchase authority.

~~14.~~17. Stock-Based Awards

The Company has certain stock-based compensation plans under which it grants stock-based awards, including common stock, stock options, restricted share units, and ~~performance~~performance-based restricted share units (“Performance RSUs”) to attract, retain, and reward talented employees, officers, and directors, and to align ~~stockholder~~the interests of employees, officers, and ~~employee interests.~~directors with those of the stockholders.

Compensation expense for stock-based awards is based on fair value at the measurement ~~date and~~date. It fluctuates over time as a ~~result~~function of the duration of vesting ~~period~~periods of the stock-based awards and the Company’s performance, as measured by criteria set forth in ~~the~~ performance-based awards. This expense is included in general and administrative expenses in the condensed consolidated statements of operations and the amount of expense ultimately recognized depends on the ~~number~~quantity of awards that actually vest. Accordingly, stock-based compensation expense may vary from ~~fiscal year~~period to ~~fiscal year.~~period.

The performance criteria for ~~target awards are based on~~ the Company’s ~~fiscal year~~performance-based equity awards utilize the Company’s operating earnings (adjusted for certain amounts) as a percentage of contract revenues for the applicable four-quarter period (a “Performance Year”) and its ~~fiscal year~~Performance Year operating cash flow ~~level.~~level (adjusted for certain amounts). Additionally, certain awards include three-year performance goals that, if met, result in supplemental shares awarded. For ~~performance-based restricted share units (“~~Performance ~~RSUs”),~~RSUs, the Company evaluates compensation expense quarterly and recognizes expense for performance-based awards only if it determines it is probable that performance criteria for the awards will be met. In the event the Company determines it is no longer probable that it will achieve certain performance criteria for the awards, it would reverse the associated stock-based compensation expense that it had previously recognized in the period such determination is made.

Stock-based compensation expense and the related tax benefit recognized and realized during the three ~~and six~~ months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016~~April 29, 2017 were as follows (dollars in thousands):


	For the Three Months Ended				For the Six Months Ended				For the Three Months Ended
	January 28, 2017		January 23, 2016		January 28, 2017		January 23, 2016		April 28, 2018		April 29, 2017
Stock-based compensation	$	5,309	$	4,200	$	11,015	$	8,708	$	4,863	$	4,915
Related tax benefit for stock-based compensation	$	2,000	$	1,613	$	4,183	$	3,342
Income tax effect of stock-based compensation									$	1,069	$	1,943

As of ~~January~~April 28, ~~2017,~~2018, the Company had unrecognized compensation expense related to stock options, ~~time-based restricted share units (“RSUs”),~~RSUs, and target Performance RSUs (based on the Company’s estimate of performance goal achievement) of ~~$3.6~~$3.8 million, ~~$10.5~~$11.5 million, and ~~$24.1~~$31.9 million, respectively. This expense will be recognized over a weighted-average number of years of ~~2.9, 2.9,~~2.6, 2.8, and ~~2.2,~~2.5, respectively, based on the average remaining service periods for the awards. As of ~~January~~April 28, ~~2017,~~2018, the Company may recognize an additional ~~$8.2~~$13.4 million in compensation expense in future periods if the maximum amount of Performance RSUs is earned based on certain performance measures being met.

Stock Options

The following table summarizes stock option award activity during the ~~six~~three months ended ~~January~~April 28, ~~2017:~~2018:


	Stock Options				Stock Options
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding as of July 30, 2016	737,267		$	20.99
Outstanding as of January 27, 2018					636,730		$	27.93
Granted	36,914		$	78.46	28,796		$	106.19
Options exercised	(48,543	)	$	10.06	(5,084	)	$	13.15
Canceled	(1,000	)	$	6.83	—		$	—
Outstanding as of January 28, 2017	724,638		$	24.67
Outstanding as of April 28, 2018					660,442		$	31.46

Exercisable options as of January 28, 2017	593,666		$	18.28
Exercisable options as of April 28, 2018					544,423		$	21.71

RSUs and Performance RSUs

The following table summarizes RSU and Performance RSU award activity during the ~~six~~three months ended ~~January~~April 28, ~~2017:~~2018:


	Restricted Stock								Restricted Stock
	RSUs				Performance RSUs				RSUs				Performance RSUs
	Share Units		Weighted Average Grant Price		Share Units		Weighted Average Grant Price		Share Units		Weighted Average Grant Price		Share Units		Weighted Average Grant Price
Outstanding as of July 30, 2016	251,264		$	42.56	625,971		$	47.66
Outstanding as of January 27, 2018									133,896		$	71.81	390,327		$	80.52
Granted	60,485		$	77.76	274,282		$	79.29	39,612		$	106.36	218,628		$	106.19
Share units vested	(107,447	)	$	35.20	(287,593	)	$	40.53	(3,099	)	$	76.98	—		$	—
Forfeited or canceled	(1,223	)	$	29.84	(53,129	)	$	41.18	(3,299	)	$	59.10	(10,437	)	$	81.55
Outstanding as of January 28, 2017	203,079		$	57.01	559,531		$	67.44
Outstanding as of April 28, 2018									167,110		$	80.16	598,518		$	89.88

The total amount of granted Performance RSUs presented above consists of ~~198,140~~158,841 target shares and ~~76,142~~59,787 supplemental shares. During the six months ended January 28, 2017, the Company canceled 49,797 supplemental shares of Performance RSUs outstanding as of July 30, 2016, as a result of the fiscal 2016 performance criteria for attaining those supplemental shares not being met. The total amount of Performance RSUs outstanding as of ~~January~~April 28, ~~2017~~2018 consists of ~~418,939~~431,118 target shares and ~~140,592~~167,400 supplemental shares.

~~15.~~18. Customer Concentration ~~of Credit Risk~~and Revenue Information

Geographic Location

The Company provides services throughout the United States and in Canada. Revenues from services provided in Canada were not material during the three months ended April 28, 2018 or April 29, 2017.

Significant Customers

The Company’s customer base is highly concentrated, with its top five customers during ~~each of~~ the ~~six~~three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016~~April 29, 2017 accounting for approximately ~~75.5%~~78.8% and ~~66.7%~~78.4%, respectively, of its total contract ~~revenues, respectively.~~revenues. Customers whose contract revenues exceeded 10% of total contract ~~revenue~~revenues during the three ~~or six~~ months ended ~~January~~April 28, 2018 or April 29, 2017, ~~or January 23, 2016~~as well as total contract revenues from all other customers combined, were as ~~follows:~~follows (dollars in millions):


					For the Three Months Ended
	For the Three Months Ended		For the Six Months Ended		April 28, 2018			April 29, 2017
	January 28, 2017	January 23, 2016	January 28, 2017	January 23, 2016	Amount		% of Total	Amount		% of Total
AT&T Inc.	28.3%	22.4%	28.7%	20.6%	$	177.0	24.2%	$	213.1	27.1%
Comcast Corporation	16.7%	13.5%	15.8%	12.7%	159.2		21.8	152.9		19.4
CenturyLink, Inc.	16.5%	14.9%	16.1%	15.3%
Verizon Communications Inc.	8.8%	11.9%	9.1%	10.7%	122.1		16.7	66.8		8.5
CenturyLink, Inc.⁽¹⁾					89.7		12.3	146.2		18.6
Total other customers combined					183.4		25.0	207.3		26.4
Total contract revenues					$	731.4	100.0%	$	786.3	100.0%

⁽¹⁾For comparison purposes in the table above, amounts from CenturyLink, Inc. and Level 3 Communications, Inc. have been combined for periods prior to their November 2017 merger.

~~Customers whose combined amounts~~See Note 6, Accounts Receivable, Contract Assets, and Contract Liabilities, for information on the Company’s customer credit concentration and collectability of trade accounts receivable and ~~costs~~contract assets.

Customer Type

Total contract revenues by customer type during the three months ended April 28, 2018 and ~~estimated earnings in excess of billings, net (“CIEB, net”) exceeded 10% of total combined trade receivables and CIEB, net as of January 28,~~April 29, 2017 ~~or July 30, 2016~~ were as follows (dollars in millions):

January 28, 2017 July 30, 2016
Amount % of Total Amount % of Total
Comcast Corporation $ 126.4
18.5% $ 95.3
13.9%
AT&T Inc. $ 118.9
17.4% $ 138.8
20.3%
Windstream Corporation $ 97.6
14.3% $ 79.0
11.5%
CenturyLink, Inc. $ 79.7
11.7% $ 79.0
11.5%
Verizon Communications Inc. $ 63.2
9.3% $ 69.0
10.1%



	For the Three Months Ended
	April 28, 2018			April 29, 2017
	Amount		% of Total	Amount		% of Total
Telecommunications	$	667.2	91.2%	$	725.3	92.2%
Underground facility locating	45.1		6.2	42.1		5.4
Electrical and gas utilities and other	19.1		2.6	18.9		2.4
Total contract revenues	$	731.4	100.0%	$	786.3	100.0%

Remaining Performance Obligations

Master service agreements and other contractual agreements with customers contain customer-specified service requirements, such as discrete pricing for individual tasks. In ~~addition, another customer had combined amounts~~most cases, the Company’s customers are not contractually committed to procure specific volumes of ~~trade accounts receivable and CIEB, net of $75.6 million, or 11.1%, as of January 28, 2017, and $71.5 million, or 10.4%, as of July 30, 2016.~~services under these agreements.

Services are generally performed pursuant to these agreements in accordance with individual work orders. An individual work order generally is completed within one year or in many cases, less than one week. As a result, the Company’s remaining performance obligations under the work orders not yet completed is not meaningful in relation to the Company’s overall revenue at any given point in time. The Company ~~believes~~applies the practical expedient in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”) and does not disclose information about remaining performance obligations that ~~none~~have original expected durations of its significant customers were experiencing financial difficulties that would materially impact the collectability of the Company’s trade accounts receivable and costs in excess of billings as of January 28, 2017. See Note 4, ~~Accounts Receivable,~~ ~~and Note 5,~~ ~~Costs and Estimated Earnings in Excess of Billings,~~ ~~for additional information regarding the Company’s trade accounts receivable and costs and estimated earnings in excess of billings.~~one year or less.

~~16.~~19. Commitments and Contingencies

In May 2013, CertusView Technologies, LLC (“CertusView”), a wholly-owned subsidiary of the Company, filed suit against S & N Communications, Inc. and S&N Locating Services, LLC (together, “S&N”) in the United States District Court for the Eastern District of Virginia alleging infringement of certain United States patents. In January 2015, the District Court granted S&N’s motion for judgment on the pleadings for failure to claim patent-eligible subject matter, and entered final judgment. In May 2015, the District Court reopened the case to allow S&N to proceed with inequitable conduct counterclaims. A bench trial in the District Court on the inequitable conduct counterclaims whereby S&N was seeking additional grounds to find the patents unenforceable took place in March 2016. In August 2016, the District Court ruled against S&N and in favor of CertusView on the inequitable conduct counterclaims and entered final judgment. Subsequent to the judgment being entered, on August 24, 2016, S&N filed a motion requesting the District Court make a finding that the suit was an exceptional case and award S&N recovery of its attorney fees. On September 1, 2016, CertusView appealed to the Federal Circuit Court the January 2015 District Court judgment of patent invalidity. CertusView expects its appeal will be decided during the second half of calendar 2017. Additionally, on November 21, 2016, the District Court denied S&N’s motion for an exceptional case finding while allowing S&N permission to refile after conclusion of CertusView’s appeal to the Federal Circuit Court.

In September 2016, certain former employees of two subcontractors of TESINC, LLC (“TESINC”), a wholly owned subsidiary of the Company, commenced a lawsuit against those subcontractors, TESINC and a customer of TESINC in the United States District Court for the Eastern District of Pennsylvania. The lawsuit alleges that TESINC, its customer and those subcontractors violated the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act of 1968, the Pennsylvania Wage Payment and Collection Law, and the New Jersey Wage and Hour Law by failing to comply with applicable minimum wage and overtime pay requirements as a result of the misclassification of workers as independent contractors. The plaintiffs seek unspecified damages and other relief on behalf of themselves and a putative class of similarly situated workers who had performed work between April 1, 2016 and June 30, 2016. TESINC answered the complaint on November 14, 2016. The parties have commenced early discovery and are scheduled to attend a court-ordered initial settlement conference before a magistrate judge in March 2017. It is too early to evaluate the likelihood of an outcome to this matter or estimate the amount or range of potential loss, if any. The Company intends to vigorously defend itself against this lawsuit.

In March 2016, the Company filed suit against Quanta Services, Inc. (“Quanta”) in the United States District Court for the Southern District of New York alleging violation of certain restrictive covenants, including noncompetition and non-solicitation of employees and customers in a Stock Purchase Agreement executed by the parties in December 2012 (the “SPA”). The Company is seeking equitable and declaratory relief. The Company filed an amended complaint in April 2016. In May 2016, Quanta answered the amended complaint and brought a separate counterclaim against the Company seeking a declaration regarding the permissible boundaries of customer solicitation. Discovery was completed in February 2017. A bench trial in the District Court was held in late February 2017. Post-trial briefs are due to be filed by the parties with the District Court in March 2017. An unfavorable outcome may result in an award of attorneys’ fees, costs, and expenses. The Company believes the

~~counterclaims to be without merit and intends to vigorously advocate its position that Quanta breached the SPA and defend itself against these counterclaims.~~

In April 2016, a former employee of Prince Telecom, LLC (“Prince”), a wholly owned subsidiary of the Company, commenced a lawsuit against Prince in the Superior Court of California under the California Labor Code Private Attorneys General Act (“PAGA”). The lawsuit alleges that Prince violated the California Labor Code by, among other things, failing to pay the California minimum wage, failing to pay for all hours worked (including overtime), failing to provide meal breaks and failing to provide accurate wage statements. The plaintiff seeks to recover all penalties arising from each alleged PAGA violation on behalf of himself and a putative class of current and former employees of Prince who worked as technicians in the State of California in the year preceding the filing date of the lawsuit. In December 2016, the plaintiff’s attorney and Prince agreed to settle the lawsuit for an immaterial amount. The parties are preparing the agreement and intend to seek court approval of the proposed settlement.

During the fourth quarter of fiscal 2016, one of the Company’s subsidiaries ~~which previously~~ceased operations. This subsidiary contributed to a multiemployer pension plan, the Pension, Hospitalization and Benefit Plan of the Electrical Industry - Pension Trust Fund (the “Plan”)~~, a multiemployer pension plan, ceased operations.~~. In October 2016, the Plan demanded payment for a claimed withdrawal liability of approximately $13.0 million. In December 2016, the Company submitted a formal request to the Plan seeking review of the Plan’s withdrawal liability

determination. The Company is disputing the claim of a withdrawal liability demanded by the Plan as it believes there is a statutory exemption available under the Employee Retirement Income Security Act (“ERISA”) for multiemployer pension plans that primarily cover employees in the building and construction industry. ~~However, there~~The Plan has taken the position that the work at issue does not qualify for the statutory exemption. The Company has submitted this dispute to arbitration, as required by ERISA, with a hearing expected sometime in calendar 2018. There can be no assurance that the Company will be successful in asserting the statutory exemption as a ~~defense.~~defense in the arbitration proceeding. As required by ~~the Employee Retirement Income Security Act,~~ERISA, in November 2016, the subsidiary began making monthly payments of ~~the claimed~~a withdrawal liability to the Plan in the amount of approximately $0.1 million. If the Company prevails in disputing the withdrawal liability, all such payments will be refunded to the ~~Company.~~subsidiary.

With respect to the ~~July 2016~~ acquisition from Goodman, ~~$20.0~~$22.5 million isof the purchase price was placed into escrow to cover indemnification claims and working capital adjustments. During fiscal 2017, $2.5 million of escrowed funds were released following resolution of closing working capital and $10.0 million of escrowed funds were released as a result of ~~January 28, 2017 and is available~~Goodman’s resolution of a sales tax liability with the State of Texas. In April 2018, $9.7 million of escrowed funds were released in connection with the resolution of certain indemnification claims, of which Dycom received $1.6 million. There was no impact on the Company’s results of operations related to the ~~Company for the indemnification obligations~~escrow release. As of ~~the seller. Of the amount escrowed, $10.0~~April 28, 2018, approximately $0.3 million ~~will be released to the seller upon the occurrence~~remains in escrow pending resolution of certain conditions or the twelve-month anniversary of the closing date. The remaining $10.0 million will be released to the seller when the seller satisfies certain conditions with respect to a dispute with the state of Texas over a Sales Tax Liability of approximately $31.7 million. Under the asset purchase agreement, Goodman has retained responsibility for this Sales Tax Liability. Should Goodman not resolve this matter, the state may assert that the Company is a successor to the operations and seek to recover from the Company. In such event the Company would seekpost-closing indemnification ~~for recovery from Goodman, including from the funds contained in the escrow account, for any amount the Company pays.~~claims.

From time to time, the Company is party to various ~~other~~ claims and legal ~~proceedings. It~~proceedings arising in the ordinary course of our business. While the resolution of these matters cannot be predicted with certainty, it is the opinion of management, based on information available at this time, that the outcome of any such ~~other pending~~ claims or proceedings will not have a material effect on ~~its~~our financial statements.

Commitments

Performance Bonds and ~~Guarantees -~~Guarantees. The Company has obligations under performance and other surety contract bonds related to certain of its customer contracts. Performance bonds generally provide a customer with the right to obtain payment and/or performance from the issuer of the bond if the Company fails to perform its contractual obligations. As of April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, the Company had ~~$133.7~~$110.2 million and ~~$165.8~~$118.1 million, respectively, of outstanding performance and other surety contract ~~bonds, respectively.~~bonds.

The Company periodically guarantees certain obligations of its subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.

Letters of ~~Credit -~~Credit. The Company has standby letters of credit issued under its Credit Agreement as part of its insurance program. These standby letters of credit collateralize ~~the Company’s~~ obligations to ~~its~~the Company’s insurance carriers in connection with the settlement of potential claims. As of both April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, the Company had ~~$57.6~~$48.6 million of outstanding standby letters of credit issued under the Credit Agreement.

~~17. Subsequent Events~~

As of January 28, 2017, $75.0 million remained available for repurchases through October 2017 under the Company’s April 26, 2016 repurchase program authorization. On February 28, 2017, the Company’s Board of Directors extended the term of this repurchase program through August 2018 and authorized an additional $75.0 million to repurchase shares of the Company’s outstanding common stock in open market or private transactions, including through accelerated share repurchase agreements with one or more counterparties from time to time. As of March 2, 2017, the Company has $150.0 million available for repurchases of the Company’s common stock through August 2018.

Cautionary Note Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q, including any documents incorporated by reference or deemed to be incorporated by reference herein, contains forward-looking statements relating to future events, financial performance, strategies, expectations, and the competitive environment. Words such as ~~“outlook,”~~ “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “forecast,” “target,” “outlook,” “may,” “should,” “could,” ~~“project,” “target”~~ and similar expressions, as well as statements written in the future tense, identify forward-looking statements. They will not necessarily be accurate indications of whether or at what time such performance or results will be achieved.

You should not consider forward-looking statements as guarantees of future performance or results. ~~Forward-looking~~When made, forward-looking statements are based on information available at the time ~~they are made~~ and/or management’s good faith belief ~~at that time~~ with respect to future events. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors, assumptions, uncertainties, and risks that could cause such differences are discussed within Part II, Item 1A, Risk Factors, of this Quarterly Report on Form ~~10-Q,~~10‑Q, as well as Item 1, Business, Item 1A, Risk Factors, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016,~~January 27, 2018, filed with the Securities and Exchange Commission (“SEC”) on ~~August 31, 2016~~March 2, 2018 and other risks outlined in our other periodic filings with the ~~Securities and Exchange Commission.~~SEC. Our forward-looking statements are expressly qualified in their entirety by this cautionary ~~statement. Our forward-looking statements~~statement and are only made as of the date of this Quarterly Report on Form ~~10-Q, and we~~10-Q. We undertake no obligation to update them to reflect new information or events or circumstances arising after such date.

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

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016.~~January 27, 2018. Our ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016~~January 27, 2018 was filed with the Securities and Exchange Commission (“SEC”) on ~~August 31, 2016~~March 2, 2018, and is available on the SEC’s website at www.sec.gov and on our website at www.dycomind.com.

Introduction

We are a leading provider of specialty contracting services throughout the United States and in Canada. Our ~~subsidiary companies~~subsidiaries provide program management, engineering, construction, maintenance, and installation services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. We provide the labor, tools, and equipment necessary to design, engineer, locate, maintain, expand, install, and upgrade the telecommunications infrastructure of our customers.

Significant developments in consumer and business applications within the telecommunications industry, including advanced digital and video service offerings, continue to increase the demand for greater capacity and enhanced reliability from our customers’ wireline and wireless networks. Telecommunications providers outsource a significant portion of their engineering, construction, maintenance, and installation requirements, driving demand for our services.

Telecommunications network operators are increasingly deploying fiber optic cable technology deeper into their networks and closer to consumers and businesses in order to respond to consumer demand, competitive realities, and public policy support. ~~Several large telephone~~Telephone companies ~~have pursued fiber-to-the-premise~~are deploying fiber to the home to enable video offerings and fiber-to-the-node initiatives to compete actively with cable operators. Some telephone companies, which have previously deployed fiber-to-the-node architectures, have definitively transitioned to fiber-to-the-home architectures, while others are beginning to provision video over their fiber-to-the-node architectures.1 gigabit high-speed connections. Cable ~~companies~~operators continue to increase the speeds of their services to residential customers and to deploy fiber to business customers. These deployments are often in anticipation of the customer sales process as confidence and the number of customers ~~with increasing urgency. Overall cable~~continue to increase. Fiber deep deployments to expand capacity as well as new build opportunities and overall capital expenditures ~~new-build opportunities and capacity expansion through fiber-deep deployments~~ are increasing. ~~Many industry participants are deploying networks designed to provision 1 gigabit speeds to individual consumers and some have articulated plans to deploy speeds beyond 1 gigabit.~~

Opportunities exist to improve rural networks as a result of Phase II of the Connect America Fund. This program, administered by the Federal Communications Commission (the “FCC”), will provide $1.676 billion in funding per year through 2020 to price cap carriers and others to expand and support broadband deployments in rural areas. In aggregate, our current customers, including several of our top ten customers, have accepted over $1.496 billion in funding per year under this program. New projects resulting from the Connect America Fund Phase II are in planning, engineering, and construction. These

projects are deploying fiber deeper into rural networks, and more are expected as new multi-year opportunities emerge. These opportunities also include fixed wireless deployments. We expect this program to contribute to demand for services in our industry.

Significant demand for wireless broadband is driven by the proliferation of ~~smart phones~~smartphones and other mobile data devices. To respond to this demand and other advances in technology, wireless carriers are upgrading their networks ~~to 4G technologies~~ and contemplating next generation mobile solutions such as small cells and 5G technologies. Wireless carriers are actively spending on their networks to respond to the significant increase in wireless data traffic, to upgrade network technologies to improve performance and efficiency, and to consolidate disparate technology platforms. These initiatives present long-term opportunities for us with the wireless service providers we serve. As the demand for mobile broadband grows, the amount of wireless traffic that must be “backhauled” over customers’ fiber networks increases and, as a result, carriers are accelerating the deployment of fiber optic cables to cellular sites and small cells. ~~Increasing wireless data traffic and newly~~In addition, emerging wireless technologies are ~~prompting further~~driving significant wireline ~~deployments as wireless~~deployments. A complementary wireline investment cycle is underway to facilitate the deployment of fully converged wireless/wireline networks. The industry effort required to deploy these converged networks is driving demand for the type of services we provide. Wireless construction activity and ~~wireline networks converge. Fiber deployments in contemplation~~support of ~~newly emerging wireless technologies are being considered in many regions~~expanded coverage and capacity is poised to accelerate through the deployment of ~~the country.~~enhanced macro cells and new small cells. These trends are driving demand for ~~our services.~~the type of services we provide.

~~Significant consolidation~~Consolidation and merger activity among telecommunications providers can also provide increased demand for our services as networks are integrated. As a result of ~~recent~~ merger activity, ~~several of our large customers have~~a significant customer has committed to the ~~FCC~~Federal Communications Commission (the “FCC”) to expand and increase broadband network capabilities. These ~~customer~~ activities may further create a competitive response driving long-term demand for our services.

The cyclical nature of the industry we serve may affect demand for our services. The capital expenditure and maintenance budgets of our customers, and the related timing of approvals and seasonal spending patterns, influence our revenues and results of operations. The business ~~demands~~requirements of our customers may affect their capital expenditures and ~~the~~maintenance budgets. Factors affecting our customers include, but are not limited to, demands of their consumers, the introduction of new ~~communication~~communications technologies, the physical maintenance needs of ~~customer~~their infrastructure, the actions of our government and the FCC, ~~and~~ overall economic conditions, ~~may affect the capital expenditures~~ and ~~maintenance budgets of our telecommunications customers.~~merger or acquisition activity. Changes in our mix of customers, contracts, and business activities, as well as changes in the general level of construction activity also drive variations in revenues and results of operations.

Customer Relationships and Contractual Arrangements

We have established relationships with many leading telecommunications providers, including telephone companies, cable ~~television~~ multiple system operators, wireless carriers, ~~telecommunication~~telecommunications equipment and infrastructure providers, and electric and gas utilities. Our customer base is highly concentrated, with our top five customers during ~~each of~~ the ~~six~~three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016,~~April 29, 2017 accounting for approximately ~~75.5%~~78.8% and ~~66.7%~~78.4%, respectively, of our total contract revenues, respectively. Revenues from our largest customer increased to 28.7% as a percentage of total revenue during the six months ended January 28, 2017 from 20.6% during the six months ended January 23, 2016 as a result of growth in services provided for their network deployments.revenues.

The following reflects the percentage of total contract ~~revenue~~revenues from customers who contributed at least 2.5% to our total contract ~~revenue~~revenues during the three ~~or six~~ months ended ~~January~~April 28, ~~2017~~2018 or ~~January 23, 2016:~~April 29, 2017:


	For the Three Months Ended		For the Six Months Ended		For the Three Months Ended
	January 28, 2017	January 23, 2016	January 28, 2017	January 23, 2016	April 28, 2018	April 29, 2017
AT&T Inc.	28.3%	22.4%	28.7%	20.6%	24.2%	27.1%
Comcast Corporation	16.7%	13.5%	15.8%	12.7%	21.8%	19.4%
CenturyLink, Inc.	16.5%	14.9%	16.1%	15.3%
Verizon Communications Inc.	8.8%	11.9%	9.1%	10.7%	16.7%	8.5%
CenturyLink, Inc.⁽¹⁾					12.3%	18.6%
Charter Communications, Inc.					3.9%	3.6%
Windstream Corporation	6.0%	5.5%	5.9%	6.0%	3.3%	4.8%
Charter Communications, Inc.⁽¹⁾	3.6%	6.7%	4.0%	7.2%

⁽¹⁾For comparison purposes, ~~in the above table,~~ revenues from ~~Charter~~CenturyLink, Inc. and Level 3 Communications, Inc.~~, Time Warner Cable Inc., and Bright House Networks, LLC~~ have been combined for periods prior to their ~~May 2016~~November 2017 merger.

In addition, another customer contributed ~~5.0%~~0.9% and ~~6.3%~~3.4% to our total revenue during the three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016, respectively, and 4.6% and 7.5% during the six months ended January 28,~~April 29, 2017, ~~and January 23, 2016,~~ respectively.

We perform a majority of our services under master service agreements and other contracts that contain customer-specified service requirements, such as discrete pricing for individual tasks. We generally possess multiple agreements with each of our significant customers. To the extent that such agreements specify exclusivity, there are often ~~a number of~~ exceptions, including the ~~customer’s~~ ability of the customer to issue work orders valued above a specified dollar amount to other service providers, the performance of work with the customer’s own employees, and the use of other service providers when jointly placing facilities with another utility. In ~~most~~many cases, a customer may terminate an agreement for convenience with written notice. Historically, multi-year master service agreements have been awarded primarily through a competitive bidding process; however, we occasionally are able to extend these agreements through negotiations. Revenues from multi-year master service agreements were approximately 62.3%and ~~63.4%~~64.6% of total contract revenues during the three months ended ~~January~~April 28, 2018 and April 29, 2017, ~~and January 23, 2016, respectively, and 62.5% and 62.1% during the six months ended January 28, 2017 and January 23, 2016,~~ respectively.

We provide the remainder of our services pursuant to contracts for specific projects. These contracts may be long-term (with terms greater than one year) or short-term (with terms ~~generally three to four months in duration)~~less than one year) and often include customary retainage provisions under which the customer may withhold 5% to 10% of the invoiced amounts pending project ~~completion.~~completion and closeout. Revenues from long-term contracts were ~~24.7%~~24.5%, and ~~18.5% of total contract revenues~~24.3% during the three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016, respectively, and 23.9% and 17.6% during the six months ended January 28,~~April 29, 2017, ~~and January 23, 2016,~~ respectively.

Acquisitions

As part of our growth strategy, we may acquire companies that expand, complement, or diversify our business. We regularly review opportunities and periodically engage in discussions regarding possible acquisitions. Our ability to sustain our growth and maintain our competitive position may be affected by our ability to identify, acquire, and successfully integrate companies.

Fiscal ~~2016~~2019. - During ~~August 2015,~~March 2018, we acquired ~~TelCom Construction,~~certain assets and assumed certain liabilities of a telecommunications construction and maintenance services provider in the Midwest and Northeast United States for $20.9 million, net of cash acquired. This acquisition expands our geographic presence within our existing customer base.

Fiscal 2017. During March 2017, we acquired Texstar Enterprises, Inc. ~~and an affiliate (together, “TelCom”~~(“Texstar”)~~. The purchase price was $48.8~~ for $26.1 million, ~~paid in cash. TelCom, based in Clearwater, Minnesota,~~net of cash acquired. Texstar provides construction and maintenance services for telecommunications providers ~~throughout~~in the Southwest and Pacific Northwest United States. This acquisition expands our geographic presence within our existing customer base. During the fourth quarter of fiscal 2016, we acquired NextGen Telecom Services Group, Inc. (“NextGen”) for $5.6 million, net of cash acquired. NextGen provides construction and maintenance services for telecommunications providers in the Northeastern United States. Additionally, during July 2016, we acquired certain assets and assumed certain liabilities associated with the wireless network deployment and wireline operations of Goodman Networks Incorporated (“Goodman”) for a cash purchase price of $107.5 million, less an adjustment of approximately $6.6 million for working capital received below a target amount. The acquired operations provide wireless construction services in a number of markets, including Texas, Georgia, and Southern California. The acquired operations were immediately integrated with the operations of an existing subsidiary which is a larger, well-established provider of services to the same primary customer. The acquisition reinforces our wireless construction resources and expands our geographic presence within our existing customer base. Subsequent to the close of this acquisition, activity levels within the contracts of the acquired operations trended considerably below prior expectations and we reduced our near term revenue expectations. The acquired contracts remain in effect and we have not experienced any adverse changes in customer relations. With the immediate integration of the Goodman operations into our existing subsidiary, we believe our ability to effectively perform services for the customer will provide future opportunities.

With respect to the acquisition from Goodman, $20.0 million is escrowed as of January 28, 2017 and is available to us for the indemnification obligations of the seller. Of the amount escrowed, $10.0 million will be released to the seller upon the occurrence of certain conditions or the twelve-month anniversary of the closing date. The remaining $10.0 million will be released to the seller when the seller satisfies certain conditions with respect to a dispute with the state of Texas over a sales tax liability of approximately $31.7 million (the “Sales Tax Liability”). Under the asset purchase agreement, Goodman has retained responsibility for this Sales Tax Liability. Should Goodman not resolve this matter, the state may assert that we are a successor to the operations and seek to recover from us. In such event we would seek indemnification for recovery from Goodman, including from the funds contained in the escrow account, for any amount we pay.

The results of these businesses acquired are included in the condensed consolidated financial statements from their respective dates of acquisition. The purchase price allocation of ~~TelCom~~Texstar was completed ~~during~~within the ~~fourth quarter~~12-month measurement period from the date of ~~fiscal 2016. Purchase~~acquisition. Adjustments to the provisional allocation were recognized in the reporting period in which the adjustments were determined and were not material. The purchase price ~~allocations~~allocation of the ~~Goodman and NextGen acquisitions are~~fiscal 2019 acquisition is preliminary and will be completed ~~during fiscal 2017~~ when valuations for intangible assets and other amounts are ~~finalized.~~

~~Understanding Our Results~~finalized within the 12-month measurement period from the date of ~~Operations~~

~~The following information is presented in order for the reader to better understand certain factors impacting our results of operations and profitability, and should be read in conjunction with~~ ~~Critical Accounting Policies and Estimates~~ ~~within Item 7,~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as Note 1,~~ ~~Basis of Presentation and Accounting Policies, in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended July 30, 2016 filed with the SEC on August 31, 2016.~~

~~Revenues.~~ We perform a majority of our services under master service agreements and other agreements that contain customer-specified service requirements, such as discrete pricing for individual tasks. We recognize revenue under these arrangements based on units-of-delivery as each unit is completed. The remainder of our services, representing less than 5% of our contract revenues during the six months ended January 28, 2017 and less than 10% of our contract revenues during the six months ended January 23, 2016, are performed under contracts using the cost-to-cost measure of the percentage of completion method of accounting. Revenue is recognized under these arrangements based on the ratio of contract costs incurred to date to total estimated contract costs. For contracts using the cost-to-cost measure of completion, we accrue the entire amount of a contract loss at the time the loss is determined to be probable and can be reasonably estimated. During the six months ended January 28, 2017 and January 23, 2016, there were no material impacts to our results of operations due to changes in contract estimates.

~~Cost of Earned Revenues.~~ Cost of earned revenues includes all direct costs of providing services under our contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment (excluding depreciation), direct materials, insurance costs, and other direct costs. For claims within our insurance program, we retain the risk of loss, up to certain limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health.

~~General and Administrative Expenses~~. General and administrative expenses primarily consist of employee compensation and related expenses, including performance-based compensation and stock-based compensation, legal, consulting and professional fees, information technology and development costs, provision for or recoveries of bad debt expense, acquisition and integration costs of businesses acquired, and other costs not directly related to the provision of our services under customer contracts. We incur information technology and development costs primarily to support and enhance our operating efficiency. To protect our rights, we have filed for patents on certain of our innovations. Our executive management team and the senior management of our subsidiaries perform substantially all of our sales and marketing functions as part of their management responsibilities.

~~Depreciation and Amortization~~. Our property and equipment primarily consist of vehicles, equipment and machinery, and computer hardware and software. We depreciate property and equipment on a straight-line basis over the estimated useful lives of the assets. In addition, we have intangible assets, including customer relationships, contract backlog, trade names, and non-compete intangibles, which we amortize over the estimated useful lives. We recognize amortization of customer relationship intangibles and acquired contract backlog intangibles on an accelerated basis as a function of the expected economic benefit. We recognize amortization of our other finite-lived intangibles on a straight-line basis over the estimated useful life.

~~Loss on Debt Extinguishment.~~ Loss on debt extinguishment for the six months ended January 23, 2016 includes pre-tax charges related to the redemption of our 7.125% senior subordinated notes (the “7.125% Notes”), including the write-off of deferred debt issuance costs on the 7.125% Notes.

~~Interest Expense, Net.~~ Interest expense, net, consists of interest incurred on outstanding variable rate and fixed rate debt and certain other obligations. Interest expense also includes non-cash amortization of our convertible senior notes debt discount and amortization of debt issuance costs. See Note 10, ~~Debt, in the Notes to the Condensed Consolidated Financial Statements for information on the non-cash amortization of the debt discount and debt issuance costs.~~

~~Other Income, Net.~~ Other income, net, primarily consists of gains or losses from sales of fixed assets. Other income, net during the six months ended January 28, 2017 also includes discount fee expense associated with the collection of accounts receivable under a customer-sponsored vendor payment program which we began participating in during the fourth quarter of fiscal 2016.

~~Seasonality and Quarterly Fluctuations.~~ Our revenues and results of operations exhibit seasonality as we perform a significant portion of our work outdoors. Consequently, extended periods of adverse weather, which are more likely to occur during the winter season, impact our operations during our second and third fiscal quarters. In addition, a disproportionate percentage of paid holidays fall within our second fiscal quarter, which decreases the number of available workdays. Because of these factors, we are most likely to experience reduced revenue and profitability during our second and third fiscal quarters.

We experience quarterly variations in revenues and results of operations as a result of other factors as well. Such factors include fluctuations in insurance expense due to changes in claims experience and actuarial assumptions, variances in incentive pay and stock-based compensation expense as a result of operating performance and vesting provisions, and changes in the employer portion of payroll taxes, including unemployment taxes, as a result of reaching statutory limits. Other factors that may contribute to quarterly variations in results of operations include other income recognized as a result of the timing and levels of capital assets sold during the period, income tax expense attributable to levels of taxable earnings, and the impact of disqualifying dispositions of incentive stock option expenses.

~~Accordingly, operating results for any fiscal period are not necessarily indicative of results we may achieve for any subsequent fiscal period.~~acquisition.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions require the use of judgment as to the likelihood of various future outcomes and, as a result, actual results could differ materially from these estimates. There have been no material changes to our ~~critical~~ accounting policies and critical accounting estimates described in our ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016.~~January 27, 2018 except as described below.

Understanding Our ~~disclosure~~Results of ~~critical accounting policies and estimates with respect to goodwill and other intangible assets~~Operations

The following information is ~~included below~~presented in order for the ~~purpose~~reader to better understand certain factors impacting our results of ~~providing additional disclosure regarding recently acquired operations.~~operations and should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and Critical Accounting Policies and Estimates within Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as Note 1, Basis of Presentation and Accounting Policies, in the Notes to the Consolidated Financial Statements included in our Transition Report on Form 10-K for the six months ended January 27, 2018 filed with the SEC on March 2, 2018.

~~Goodwill~~Accounting Period. In September 2017, our Board of Directors approved a change in the Company’s fiscal year end from the last Saturday in July to the last Saturday in January. The change in fiscal year end better aligns our fiscal year with the planning cycles of our customers. For quarterly comparisons, there were no changes to the months in each fiscal quarter. Beginning with fiscal 2019, each fiscal year ends on the last Saturday in January and ~~Intangible Assets~~consists of either 52 or 53 weeks of operations (with the additional week of operations occurring in the fourth fiscal quarter).

Revenues. ~~. As~~We perform a substantial majority of ~~January~~our services under master service agreements and other contracts that contain customer-specified service requirements. These agreements include discrete pricing for individual tasks including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. Contractual agreements exist when each party involved approves and commits to the agreement, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable. Our services are performed for the sole benefit of our customers, whereby the assets being created or maintained are controlled by the customer and the services we perform do not have alternative benefits for us. Revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits we provide. Output measures such as units delivered are utilized to assess progress against specific contractual performance obligations for the majority of our services. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. For us, the output method using units delivered best represents the measure of progress against the performance obligations incorporated within the contractual agreements. This method captures the amount of units delivered pursuant to contracts and is used only when our performance does not produce significant amounts of work in process prior to complete satisfaction of the performance obligation. For a portion of contract items, representing approximately 5.0% of revenue during the three months ended April 28, ~~2017,~~2018, units to be completed consist of multiple tasks. For these items, the transaction price is allocated to each task based on relative standalone measurements, such as similar selling prices for similar

tasks, or in the alternative, the cost to perform tasks. Revenue is recognized for these items as the tasks are completed as a measurement of progress in the satisfaction of the corresponding performance obligation.

For certain contracts, representing approximately 2.5% of contract revenues, we ~~had approximately $312.7 million~~use the cost-to-cost measure of ~~goodwill, $4.7 million~~progress. These contracts are generally lump sum that are completed over a three to four month period. Under the cost-to-cost measure of ~~indefinite-lived intangible assets~~progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs. Contract costs include direct labor, direct materials, and ~~$180.9 million~~subcontractor costs, as well as an allocation of ~~finite-lived intangible assets, net~~indirect costs. Contract revenues are recorded as costs are incurred. For contracts using the cost-to-cost measure of ~~accumulated amortization. As~~progress, we accrue the entire amount of ~~July 30, 2016,~~a contract loss, if any, at the time the loss is determined to be probable and can be reasonably estimated.

Cost of Earned Revenues. Cost of earned revenues includes all direct costs of providing services under our contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment (excluding depreciation), direct materials, costs of our insurance program, and other direct costs. Under our insurance program, we ~~had $310.2 million~~retain the risk of goodwill, $4.7 million of indefinite-lived intangible assets and $193.2 million of finite-lived intangible assets, net of accumulated amortization. As of July 25, 2015, we had $271.7 million of goodwill, $4.7 million of indefinite-lived intangible assets and $116.2 million of finite-lived intangible assets, net of accumulated amortization. The increase in goodwill during fiscal 2016 is primarily the result of preliminary purchase price allocationsloss, up to certain limits, for matters related to automobile liability, general liability (including damages associated with ~~businesses acquired in fiscal 2016. The increase in net intangible assets is a result~~underground facility locating services), workers’ compensation, and employee group health.

General and Administrative Expenses. General and administrative expenses primarily consist of employee compensation and related expenses, including annual incentive compensation and stock-based compensation, legal, consulting and professional fees, information technology and development costs, provision for or recoveries of bad debt expense, acquisition and integration costs of businesses acquired, ~~during fiscal 2016, partially offset by~~and other costs not directly related to the provision of our services under customer contracts. We incur information technology and development costs primarily to support and enhance our operating efficiency. Our executive management team and the senior management of our subsidiaries perform substantially all of our sales and marketing functions as part of their management responsibilities.

Depreciation and Amortization. Our property and equipment primarily consist of vehicles, equipment and machinery, and computer hardware and software. We depreciate property and equipment on a straight-line basis over the estimated useful lives of the assets. In addition, we have intangible assets, including customer relationships, trade names, and non-compete intangibles, which we amortize over the estimated useful lives. We recognize amortization of customer relationship intangibles ~~during fiscal 2016.~~on an accelerated basis as a function of the expected economic benefit. We recognize amortization of our other finite-lived intangibles on a straight-line basis over the estimated useful life.

Interest Expense, Net. Interest expense, net, consists of interest incurred on outstanding variable rate and fixed rate debt and certain other obligations. Interest expense also includes non-cash amortization of our convertible senior notes debt discount and amortization of debt issuance costs. See Note 7,13, ~~Goodwill and Intangible Assets~~Debt, in the Notes to the Condensed Consolidated Financial Statements ~~in this Quarterly Report~~for information on ~~Form 10-Q~~the non-cash amortization of the debt discount and ~~in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended July 30, 2016.~~debt issuance costs.

~~We account for goodwill~~Other Income, Net. Other income, net, primarily consists of gains or losses from sales of fixed assets. Other income, net also includes discount fee expense associated with the non-recourse sale of accounts receivable under a customer-sponsored vendor payment program.

Seasonality and ~~other intangibles~~Quarterly Fluctuations. Our revenues and results of operations exhibit seasonality as we perform a significant portion of our work outdoors. Consequently, extended periods of adverse weather, which are more likely to occur during the winter, impact our operations during the fiscal quarters ending in ~~accordance with ASC Topic 350,~~ ~~Intangibles - Goodwill~~January and ~~Other~~ ~~(“ASC Topic 350”). Goodwill and other indefinite-lived intangible assets are assessed annually for impairment as~~April. In addition, a disproportionate percentage of paid holidays fall within the ~~first day of the fourth~~ fiscal quarter ending in January, decreasing the number of ~~each year, or more frequently if events occur that would indicate~~available workdays. Because of these factors, we are most likely to experience reduced revenue and profitability during the fiscal quarters ending in January and April compared to the fiscal quarters ending in July and October.

We may also experience variations in our profitability driven by a ~~potential reduction~~number of factors. Such factors include fluctuations in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level. Each of our operating segments with goodwill represents a reporting unit for the purpose of assessing impairment. If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying valueinsurance expense due to changes in claims experience and actuarial assumptions, variances in incentive pay and stock-based compensation expense as a result of ~~the tests, an impairment loss is recognized~~operating performance and ~~reflected in operating income or loss~~vesting provisions, changes in the ~~consolidated statements~~employer portion of payroll taxes as a result of reaching statutory limits, and variances in bad debt expense. Other factors that may contribute to quarterly variations in results of operations include gain on sale of fixed assets from the timing and levels of capital assets sold during the period, ~~incurred.~~changes in levels of depreciation expense, and variations in our effective tax rate.

~~In accordance with ASC Topic 360,~~ ~~Impairment or Disposal of Long-Lived Assets~~, we review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicates that the carrying amount of such assets may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition. Should an asset not be recoverable, an impairment loss is measured by comparing the fair value of the asset to its carrying value. If we determine the fair value of an asset is less than the carrying value, an impairment loss is recognized in operating income or loss in the consolidated statements of operations during the period incurred.

We use judgment in assessing whether goodwill and intangible assets are impaired. Estimates of fair value are based on our projection of revenues, operating costs, and cash flows taking into consideration historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. We determine the fair value of our reporting units using a weighting of fair values derived equally from the income approach and the market approach valuation methodologies. The income approach uses the discounted cash flow method and the market approach uses the guideline company method. Changes in our judgments and projections could result in significantly different estimates of fair value, potentially resulting in impairments of goodwill and other intangible assets. The inputs used for fair value measurements of the reporting units and other related indefinite-lived intangible assets are the lowest level (Level 3) inputs.

Our goodwill resides in multiple reporting units. The profitability of individual reporting units may suffer periodically due to downturns in customer demand and the level of overall economic activity including, in particular, construction and housing activity. Our customers may reduce capital expenditures and defer or cancel pending projects during times of slowing economic conditions. Additionally, adverse conditions in the economy and future volatility in the equity and credit markets could impact the valuation of our reporting units. The cyclical nature of our business, the high level of competition existing within our industry, and the concentration of our revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets.

~~We evaluate current~~Accordingly, operating results including any losses, in the assessment of goodwill and other intangible assets. The estimates and assumptions used in assessing the fair value of the reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Changes in judgments and estimates could result in significantly different estimates of the fair value of the reporting units and could result in impairments of goodwill or intangible assets of the reporting units. In addition, adverse changes to the key valuation assumptions contributing to the fair value of our reporting units could result in an impairment of goodwill or intangible assets.

During July 2016, we acquired the wireless network deployment and wireline operations of Goodman for $107.5 million, less an adjustment of approximately $6.6 million for working capital received below a target amount. The purchase price was allocated based on the fair value of the assets acquired and the liabilities assumed on the date of acquisition and was primarily allocated to goodwill and other intangible assets. The acquired operations were immediately integrated with the operations of an existing subsidiary which is a larger, well-established provider of services to the same primary customer. Subsequent to the close of this acquisition, activity levels within the contracts of the acquired operations trended considerably below prior expectations and we reduced our near term revenue expectations. As a result of the decline, we assessed whether it was more likely than not that the fair value of the reporting unit declined below the reporting unit’s carrying amount. With the immediate integration of the Goodman operations into our existing subsidiary, which is part of an existing reporting unit, we believe our ability to effectively perform services for the customer will provide future opportunities. Further, the acquired contracts remain in effect and we have not experienced any adverse changes in customer relations. Additionally, we believe that the fair value of the reporting unit containing the recently acquired operations remains substantially in excess of its carrying amount as of January 28, 2017. As a result, we determined that it was not more likely than not that the fair value of the reporting unit declined below its carrying amount as of January 28, 2017.

We performed our annual impairment assessment as of the first day of the fourth quarter of each of fiscal 2016, 2015, and 2014 and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any fiscal period are not necessarily indicative of the years. Qualitative assessments on reporting units that comprise a substantial portion of our consolidated goodwill balance and on our indefinite-lived intangible asset were performed. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible assetresults we may achieve for the purpose of determining whether it is more likely than not that these assets are impaired. We consider various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units. For the remaining reporting units, we performed the first step of the quantitative analysis described in ASC Topic 350. Under the income approach, the key valuation assumptions used in determining the fair value estimates of our reporting units for each annual test were (a) a discount rate based on our best estimate of the weighted average cost of capital adjusted for certain risks for the reporting units; (b) terminal value based on terminal growth rates; and (c) seven expected years of cash flow before the terminal value.

~~The table below outlines certain assumptions in each of our~~subsequent fiscal ~~2016, 2015, and 2014 annual quantitative impairment analyses:~~

2016 2015 2014
Terminal Growth Rate 2.0% - 3.0% 1.5% - 2.5% 1.5% - 3.0%
Discount Rate 11.5% 11.5% 11.5%

The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. The fiscal 2016, 2015, and 2014 analyses used the same discount rate and included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The changes in these inputs from fiscal 2016, 2015 and 2014 had offsetting impacts and the discount rate remained at 11.5%. We believe the assumptions used in the impairment analysis each year are reflective of the risks inherent in the business models of our reporting units and within our industry. Under the market approach, the guideline company method develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key valuation assumptions and valuation multiples used in determining the fair value estimates of our reporting units rely on (a) the selection of similar companies; (b) obtaining estimates of forecast revenue and earnings before interest, taxes, depreciation, and amortization for the similar companies; and (c) selection of valuation multiples as they apply to the reporting unit characteristics.

We determined that the fair values of each of the reporting units were substantially in excess of their carrying values in the fiscal 2016 annual assessment. Management determined that significant changes were not likely in the factors considered to estimate fair value, and analyzed the impact of such changes were they to occur. Specifically, if there was a 25% decrease in the fair value of any of the reporting units due to a decline in their discounted cash flows resulting from lower operating performance, the conclusion of the assessment would remain unchanged. Additionally, if the discount rate applied in the fiscal 2016 impairment analysis had been 100 basis points higher than estimated for each of the reporting units, and all other assumptions were held constant, the conclusion of the assessment would remain unchanged and there would be no impairment of goodwill. As of July 30, 2016, we believe the goodwill is recoverable for all of the reporting units. As of January 28, 2017, we continue to believe that no impairment has occurred. However, significant adverse changes in the projected revenues and cash flows of a reporting unit could result in an impairment of goodwill. There can be no assurances that goodwill may not be impaired in future periods.

Certain of our reporting units also have other intangible assets, including customer relationships, contract backlog, trade names, and non-compete intangibles. As of January 28, 2017 and July 30, 2016, we believe that the carrying amounts of these intangible assets, including those of the recently acquired operations, are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets could be impaired.period.

Results of Operations

The results of operations of businesses acquired are included in the condensed consolidated financial statements from their dates of acquisition. The following table sets forth our condensed consolidated statements of operations for the periods indicated and the amounts as a percentage of revenue (totals may not add due to rounding) (dollars in millions):

For the Three Months Ended For the Six Months Ended
January 28, 2017 January 23, 2016 January 28, 2017 January 23, 2016
Revenues $ 701.1
100.0 % $ 559.5
100.0 % $ 1,500.4
100.0 % $ 1,218.7
100.0 %
Expenses:

Cost of earned revenue, excluding depreciation and amortization 561.4
80.1
450.3
80.5
1,176.4
78.4
957.3
78.5
General and administrative 58.2
8.3
47.0
8.4
118.4
7.9
98.5
8.1
Depreciation and amortization 35.7
5.1
29.9
5.3
70.3
4.7
57.3
4.7
Total 655.3
93.5
527.2
94.2
1,365.0
91.0
1,113.1
91.3
Interest expense, net (9.2 ) (1.3 ) (7.9 ) (1.4 ) (18.2 ) (1.2 ) (17.0 ) (1.4 )
Loss on debt extinguishment —
—
—
—
—
—
(16.3 ) (1.3 )
Other income, net 1.0
0.1
1.1
0.2
1.9
0.1
2.5
0.2
Income before income taxes 37.7
5.4

25.5
4.6
119.0
7.9
74.9
6.1
Provision for income taxes 14.0
2.0
10.0
1.8
44.3
3.0
28.6
2.3
Net income $ 23.7
3.4 % $ 15.5
2.8 % $ 74.7
5.0 % $ 46.3
3.8 %

Our fiscal year ends on the last Saturday in July. As a result, each fiscal year consists of either 52 weeks or 53 weeks of operations (with the additional week of operations occurring in the fourth quarter). Fiscal 2016 consisted of 53 weeks of operations and fiscal 2017 will consist of 52 weeks of operations.



	For the Three Months Ended
	April 28, 2018					April 29, 2017
Revenues	$	731.4		100.0	%	$	786.3		100.0	%
Expenses:
Cost of earned revenue, excluding depreciation and amortization	599.6			82.0		621.5			79.0
General and administrative	62.3			8.5		61.3			7.8
Depreciation and amortization	43.4			5.9		37.4			4.8
Total	705.2			96.4		720.2			91.6
Interest expense, net	(10.2		)	(1.4	)	(9.4		)	(1.2	)
Other income, net	7.7			1.1		4.8			0.6
Income before income taxes	23.7			3.2		61.5			7.8
Provision for income taxes	6.5			0.9		22.8			2.9
Net income	$	17.2		2.4	%	$	38.8		4.9	%

Revenues. Revenues ~~increased to $701.1~~were $731.4 million during the three months ended ~~January~~April 28, ~~2017 from $559.5~~2018 compared to $786.3 million during the three months ended ~~January 23, 2016.~~April 29, 2017. Revenues ~~increased in the current period primarily~~ from ~~services for customers deploying 1 gigabit networks, new awards with significant customers, and revenues generated by businesses~~ acquired ~~during fiscal 2016.~~

~~During the three months ended January 28, 2017, total revenues of $13.4 million were generated by~~ businesses that were not owned for the entire period in both the current and prior year quarter were $15.4 million and $7.1 million for the three months ended April 28, 2018 and April 29, 2017, respectively. Additionally, the Company earned approximately $14.8 million of revenues from storm restoration services during the ~~second fiscal~~three months ended April 28, 2018.

Excluding amounts generated by acquired businesses that were not owned for the entire period in both the current and prior year quarter ~~in the prior year. Excluding this amount,~~and amounts from storm restoration services, revenues ~~increased~~decreased by approximately ~~$128.2~~$78.1 million during the three months ended ~~January~~April 28, ~~2017~~2018 as compared to the three months ended ~~January 23, 2016.~~April 29, 2017. Revenues ~~increased~~decreased by ~~approximately $61.0~~$56.4 million ~~for a significant telecommunications customer improving its network and by approximately $41.5 million for a leading cable multiple system operator~~ from installation, maintenance and construction services, including services to provision fiber to small and medium businesses, as well as network improvements. Revenues increased by approximately $32.0 million for a large telecommunications customer ~~primarily reflecting increases~~as a result of decreases in ~~the volume of~~ services performed under existing contracts and ~~new awards. Additionally,~~decreased by $51.0 million for another large telecommunications customer as a result of spending moderation compared to the prior year period. In addition, revenues ~~increased~~decreased by approximately ~~$11.5~~$20.2 million for services performed on a customer’s fiber network and by approximately $13.5 million for services performed for a telecommunications customer in connection with rural services. ~~Revenues~~Partially offsetting these declines, revenues increased by approximately ~~$9.1~~$55.2 million for a ~~customer who recently acquired certain wireline operations from another~~ large telecommunications ~~customer. Partially offsetting these increases, revenues declined by approximately $12.2 million~~customer primarily related to services for ~~services performed for a cable multiple system operator.~~recent awards. All other customers had net ~~decreases~~increases in revenues of ~~$14.7~~$7.8 million on a combined basis during the three months ended ~~January~~April 28, ~~2017,~~2018 as compared to the three months ended ~~January 23, 2016.~~April 29, 2017.

The percentage of our ~~revenue~~revenues by customer type from telecommunications, underground facility locating, and electric and gas utilities and other customers, was approximately ~~92.6%~~91.2%, ~~4.9%~~6.2%, and ~~2.5%~~2.6%, respectively, for the three months ended ~~January~~April 28, ~~2017,~~2018, compared to ~~90.0%~~92.2%, ~~6.0%~~5.4%, and ~~4.0%~~2.4%, respectively, for the three months ended ~~January 23, 2016.~~

Revenues increased to $1.500 billion during the six months ended January 28, 2017 from $1.219 billion during the six months ended January 23, 2016. Revenues increased in the current period primarily from services for customers deploying 1 gigabit networks, new awards with significant customers, and revenues generated by businesses acquired during fiscal 2016.

During the six months ended January 28, 2017 and January 23, 2016, total revenues of $101.2 million and $55.8 million, respectively, were generated by businesses that were not owned for the entire period in both the current and prior year.

Excluding these amounts, revenues increased by approximately $236.3 million during the six months ended January 28, 2017 as compared to the six months ended January 23, 2016. Revenues increased by approximately $152.1 million for a significant telecommunications customer improving its network and by approximately $83.0 million for a leading cable multiple system operator from installation, maintenance and construction services, including services to provision fiber to small and medium businesses, as well as network improvements. Revenues increased by approximately $33.9 million for a large telecommunications customer primarily reflecting increases in the volume of services performed under existing contracts and new awards. Additionally, revenues increased by approximately $19.8 million for a customer who recently acquired certain wireline operations from another large telecommunications customer. Revenues also increased approximately $11.2 million for services performed for a telecommunications customer in connection with rural services. Partially offsetting these increases, revenues declined by approximately $29.0 million for services performed for a cable multiple system operator and by approximately $22.3 million for services performed on a customer’s fiber network. All other customers had net decreases in revenues of $12.4 million on a combined basis during the six months ended January 28, 2017, as compared to the six months ended January 23, 2016.

The percentage of our revenue by customer type from telecommunications, underground facility locating, and electric and gas utilities and other customers, was approximately 92.1%, 5.2%, and 2.7%, respectively, for the six months ended January 28, 2017, compared to 90.5%, 5.8%, and 3.7%, respectively, for the six months ended January 23, 2016.April 29, 2017.

Costs of Earned Revenues.Costs of earned revenues ~~increased~~decreased to ~~$561.4~~$599.6 million, or ~~80.1%~~82.0% of contract revenue, during the three months ended January 28, 2017, compared to $450.3 million, or 80.5% of contract revenue, during the three months ended January 23, 2016. The increase in total costs of earned revenues, during the three months ended ~~January~~April 28, ~~2017 was primarily due~~2018, compared to ~~a higher level~~$621.5 million, or 79.0% of ~~operations, including the operating costs of businesses acquired~~contract revenues, during the ~~fourth quarter of fiscal 2016.~~three months ended April 29, 2017. The primary components of the ~~increase~~decrease were a ~~$89.3~~$5.4 million aggregate ~~increase in direct labor and subcontractor costs, $10.6 million increase in direct material costs, and $11.2 million net increase in other direct costs.~~

As a percentage of contract revenue, direct material costs and other direct costs decreased 1.1%, on a combined basis, primarily as a result of operating leverage on our increased level of operations and mix of work during the three months ended January 28, 2017. Partially offsetting this decrease labor and subcontracted labor costs increased 0.7% of contract revenue during the three months ended January 28, 2017, compared to the three months ended January 23, 2016 primarily resulting from costs incurred as the scale of our operations expanded.

Costs of earned revenues increased to $1.176 billion, or 78.4% of contract revenue, during the six months ended January 28, 2017, compared to $957.3 million, or 78.5% of contract revenue, during the six months ended January 23, 2016. The increase in total costs of earned revenues during the six months ended January 28, 2017 was primarily due to a higher level of operations, including the operating costs of businesses acquired during fiscal 2016. The primary components of the increase were a $184.1 million aggregate increase in direct labor and subcontractor costs and a ~~$16.7~~$22.1 million ~~increase~~decrease in direct material costs, primarily due to a lower level of operations. Partially offsetting these decreases, equipment maintenance and ~~$18.3~~fuel costs combined increased $0.9 million ~~net increase in~~and other direct ~~costs.~~costs increased $4.8 million.

Costs of earned revenues as a percentage of contract revenues increased 2.9% during the three months ended April 28, 2018, compared to the three months ended April 29, 2017. As a percentage of contract revenue, direct material costs and other direct costs decreased 1.5%, on a combined basis, primarily as a result of operating leverage on our increased level of operations and mix of work during the six months ended January 28, 2017. Partially offsetting this decrease,revenues, labor and subcontracted labor costs increased ~~1.4% of contract revenue for~~3.7% during the ~~six~~three months ended ~~January~~April 28, ~~2017, compared to~~2018 primarily resulting from under absorption of costs incurred on large customer programs and the ~~six months ended January 23, 2016. The increase in labor~~productivity impacts of prolonged winter weather conditions that lasted throughout the quarter. Equipment maintenance and ~~subcontracted labor~~fuel costs combined increased 0.4% as a percentage of contract ~~revenue~~revenues and other direct costs, including permitting costs, increased 1.1% as a percentage of contract revenues reflecting

lower operating leverage. Partially offsetting these increases was a decline in the required usage of direct materials which decreased 2.3% as a percentage of contract revenues primarily ~~resulted from costs incurred~~ as ~~the scale~~a result of ~~our operations expanded.~~mix of work.

General and Administrative Expenses. General and administrative expenses increased to ~~$58.2~~$62.3 million, or ~~8.3%~~8.5% of contract ~~revenue,~~revenues, during the three months ended ~~January~~April 28, ~~2017,~~2018, compared to ~~$47.0~~$61.3 million, or ~~8.4%~~7.8% of contract ~~revenue,~~revenues, during the three months ended ~~January 23, 2016.~~April 29, 2017. The increase in total general and administrative expenses during the three months ended ~~January~~April 28, ~~2017~~2018 primarily resulted from ~~higher legal fees and~~ increased payroll costs and the costs of businesses acquired in fiscal 2019 and 2017, partially offset by lower performance-based compensation costs. ~~Additionally, stock-based compensation increased to $5.3 million during the three months ended January 28, 2017, compared to $4.2 million during the three months ended January 23, 2016.~~ The ~~decrease~~increase in total general and administrative expenses as a percentage of contract ~~revenue is due~~revenues reflects lower absorption of certain office and support costs in relation to ~~operating leverage on our increased level of operations.~~

~~General and administrative expenses increased to $118.4 million, or 7.9% of contract revenue,~~lower revenues during the ~~six~~three months ended ~~January~~April 28, 2017, compared to $98.5 million, or 8.1% of contract revenue, during the six months ended January 23, 2016. The increase in total general and administrative expenses during the six months ended January 28, 2017 primarily resulted from increased payroll and performance-based compensation costs and higher legal fees. Additionally, stock-based compensation increased to $11.0 million during the six months ended January 28, 2017, compared to $8.7 million during the six months

~~ended January 23, 2016. The decrease in general and administrative expenses as a percentage of contract revenue is due to operating leverage on our increased level of operations.~~2018.

Depreciation and Amortization.Depreciation expense was $37.7 million, or 5.1% of contract revenues, during the three months ended April 28, 2018, compared to $31.2 million, or 4.0% of contract revenues, during the three months ended April 29, 2017. The increase in depreciation expense during the three months ended April 28, 2018 is primarily due to the addition of fixed assets during the last twelve months that support our expanded in-house workforce and ~~amortization~~the normal replacement cycle of fleet assets. Amortization expense was ~~$35.7~~$5.7 million and ~~$29.9~~$6.2 million during the three months ended ~~January~~April 28, ~~2017~~2018 and January 23, 2016, respectively, and totaled 5.1% and 5.3% of contract revenue, respectively. Depreciation and amortization was $70.3 million and $57.3 million during the six months ended January 28,April 29, 2017, and January 23, 2016, respectively, and totaled 4.7% of contract revenue during each of the six months ended January 28, 2017 and January 23, 2016. The increase in depreciation and amortization expense during the three and six months ended January 28, 2017 is a result of the addition of fixed assets during fiscal 2017 and fiscal 2016 and the incremental expense of businesses acquired during fiscal 2016. Amortization expense was $6.1 million and $4.7 million during the three months ended January 28, 2017 and January 23, 2016, respectively, and was $12.3 million and $9.5 million during the six months ended January 28, 2017 and January 23, 2016, respectively.

Interest Expense, Net. Interest expense, net was ~~$9.2~~$10.2 million and ~~$7.9~~$9.4 million during the three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016,~~April 29, 2017, respectively. Interest expense includes approximately ~~$4.4~~$4.7 million and ~~$4.1~~$4.4 million ~~during the three months ended January 28, 2017 and January 23, 2016, respectively,~~ for the non-cash amortization of debt discount associated with our convertible senior ~~notes.~~notes during the three months ended April 28, 2018 and April 29, 2017, respectively. Excluding this amortization, interest expense, net increased to $5.5 million during the three months ended April 28, 2018 from $5.0 million during the three months ended April 29, 2017 as a result of a higher interest rate environment during the current period.

Other Income, Net. Other income, net was $7.7 million and $4.8 million during the three months ended ~~January~~April 28, 2018 and April 29, 2017, ~~from $3.7 million during the three months ended January 23, 2016, primarily due to higher debt balances outstanding during the current period.~~

~~Interest expense, net was $18.2 million and $17.0 million during the six months ended January 28, 2017 and January 23, 2016,~~ respectively. Interest expense includes approximately $8.7 million and $5.9 million during the six months ended January 28, 2017 and January 23, 2016, respectively, for the non-cash amortization of debt discount associated with our convertible senior notes. Excluding this amortization, interest expense, net decreased to $9.6 million during the six months ended January 28, 2017 from $11.1 million during the six months ended January 23, 2016, primarily due to the lower interest coupon rate on the convertible senior notes issued in September 2015 compared to the previously outstanding 7.125% Notes. See Note 10, ~~Debt, in Notes to the Condensed Consolidated Financial Statements for additional information regarding the Company’s debt transactions.~~

~~Loss on Debt Extinguishment.~~ In connection with the redemption of our 7.125% Notes, we incurred a pre-tax charge for early extinguishment of debt of approximately $16.3 million during the first quarter of fiscal 2016. See Note 10, ~~Debt, in Notes to the Condensed Consolidated Financial Statements for additional information regarding the Company’s debt transactions.~~

~~Other Income, Net~~. Other income, net was $1.0 million and $1.1 million during the three months ended January 28, 2017 and January 23, 2016, respectively, and $1.9 million and $2.5 million during the six months ended January 28, 2017 and January 23, 2016, respectively. Other income, net reflects approximately $0.9 million and $1.5 million of discount fee expense during the three and six months ended January 28, 2017, respectively, associated with the collection of accounts receivable under a customer-sponsored vendor payment program which we began participating in during the fourth quarter of fiscal 2016. These costs were partially offset by increasesThe increase in other income, ~~based on~~net is primarily a function of the number of assets sold and prices obtained for those assets during the three ~~and six~~ months ended ~~January~~April 28, ~~2017,~~2018, compared to the ~~prior year periods.~~three months ended April 29, 2017. Gain on sale of fixed assets was $8.4 million during the three months ended April 28, 2018, compared to $5.0 million during the three months ended April 29, 2017. Other income, net also reflects approximately $0.9 million of discount fee expense during each of the three months ended April 28, 2018 and April 29, 2017 associated with the non-recourse sale of accounts receivable under a customer-sponsored vendor payment program.

Income ~~Taxes~~Taxes.. The following table presents our income tax provision and effective income tax rate for the three ~~and six~~ months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016~~April 29, 2017 (dollars in millions):


	For the Three Months Ended						For the Six Months Ended							For the Three Months Ended
	January 28, 2017			January 23, 2016			January 28, 2017			January 23, 2016				April 28, 2018			April 29, 2017
Income tax provision	$	14.0		$	10.0		$	44.3		$	28.6		Income tax provision	$	6.5		$	22.8
Effective income tax rate	37.2		%	39.2		%	37.2		%	38.2		%	Effective income tax rate	27.3		%	37.0		%

Fluctuations in our effective income tax rate were primarily attributable to the difference in ~~income~~the applicable U.S. federal corporate tax ~~rates from state to state, non-deductible~~rate for each respective period as a result of the Tax Cuts and ~~non-taxable items, certain dispositions~~Jobs Act of incentive stock option exercises, and production-related tax deductions recognized in relation to our pre-tax results during the periods. We had total unrecognized tax benefits of approximately $2.4 million as of both January 28, 2017 and July 30, 2016 which, if recognized, would favorably affect our effective tax rate.2017.

Net ~~Income~~Income.. Net income was ~~$23.7~~$17.2 million for the three months ended ~~January~~April 28, ~~2017,~~2018, compared to ~~$15.5~~$38.8 million for the three months ended ~~January 23, 2016. Net income~~April 29, 2017.

Non-GAAP Adjusted EBITDA. Non-GAAP Adjusted EBITDA was ~~$74.7~~$73.7 million, or 10.1% of contract revenues, for the ~~six~~three months ended ~~January~~April 28, ~~2017,~~2018, compared to ~~$46.3~~$108.2 million, or 13.8% of contract revenues, for the ~~six~~three months ended ~~January 23, 2016.~~April 29, 2017.

Adjusted EBITDA is a Non-GAAP measure, as defined by Regulation G of the SEC. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, and certain non-recurring items. Management believes Adjusted EBITDA is a helpful measure for comparing the Company’s operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates. The following table provides a reconciliation of net income to Non-GAAP Adjusted EBITDA (dollars in thousands):



	For the Three Months Ended
	April 28, 2018			April 29, 2017
Net income	$	17,231		$	38,796
Interest expense, net	10,166			9,382
Provision for income taxes	6,478			22,750
Depreciation and amortization expense	43,355			37,411
Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”)	77,230			108,339
Gain on sale of fixed assets	(8,415		)	(5,048		)
Stock-based compensation expense	4,863			4,915
Non-GAAP Adjusted EBITDA	$	73,678		$	108,206

Liquidity and Capital Resources

We are subject to concentrations of credit risk relating primarily to our cash and equivalents, accounts receivable, and ~~costs and estimated earnings in excess of billings.~~contract assets. Cash and equivalents primarily include balances on deposit with banks and totaled ~~$29.5~~$57.9 million as of April 28, 2018, compared to $84.0 million as of January ~~28, 2017, compared to $33.8 million as of July 30, 2016.~~27, 2018. We maintain our cash and equivalents at financial institutions we believe to be of high credit quality. To date, we have not experienced any loss or lack of access to cash in our operating accounts.

In connection with the issuance of the 0.75% convertible senior notes due September 2021, we entered into privately-negotiated convertible note hedge transactions with certain counterparties. We are subject to counterparty risk with respect to these convertible note hedge transactions. The hedge counterparties are financial institutions, and we are subject to the risk that they might default under the convertible note hedge transactions. To mitigate that risk, we contracted with institutional counterparties who met specific requirements under our risk assessment process. Additionally, the transactions are subject to a netting arrangement, which also reduces credit risk.

Sources of Cash. Our sources of cash are operating activities, long-term debt, equity offerings, stock option proceeds, bank borrowings, and proceeds from the sale of idle and surplus equipment and real property. Cash flow from operations is primarily influenced by demand for our services and operating margins, but can also be influenced by working capital needs associated with the services that we provide. In particular, working capital needs may increase when we have growth in operations and where project costs, primarily associated with labor, equipment, materials, and subcontractors, are required to be paid before the related customer balances owed to us are invoiced and collected. Our working capital (total current assets less total current liabilities, excluding the current portion of debt) was ~~$644.0~~$689.1 million as of April 28, 2018, compared to $671.6 million as of January ~~28, 2017, compared to $541.7 million as of July 30, 2016.~~27, 2018.

Capital resources are used primarily to purchase equipment and maintain sufficient levels of working capital to support our contractual commitments to customers. We periodically borrow from and repay our revolving credit facility depending on our cash requirements. We currently intend to retain any earnings for use in the business ~~including for~~and other capital allocation strategies which may include investment in acquisitions and ~~consequently~~share repurchases. Consequently, we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Our level of capital expenditures can vary depending on the customer demand for our services, the replacement cycle we select for our equipment, and overall growth. We intend to fund these expenditures primarily from operating cash flows, availability under our credit agreement and cash on hand.

Sufficiency of Capital Resources. We believe that our capital resources, including existing cash balances and amounts available under our credit agreement, are sufficient to meet our financial obligations. These obligations include interest payments required on our convertible senior notes and outstanding term loan facilities and revolver borrowings under our credit agreement, working capital requirements, and the normal replacement of equipment at our ~~current~~expected level of operations for at least the next twelve months. Our capital requirements may increase to the extent we seek to grow by acquisitions that involve consideration other than our stock, or to the extent we repurchase our common stock, repay credit agreement borrowings, or repurchase or convert our convertible senior notes. Changes in financial markets or other components of the economy could adversely impact our ability to access the capital markets, in which case we would expect to rely on a combination of available

cash and our credit agreement to provide short-term funding. Management regularly monitors the financial markets and assesses general economic conditions for possible impact on our financial position. We believe our cash investment policies are prudent and expect that any volatility in the capital markets would not have a material impact on our cash investments.

Net Cash Flows. The following table presents our net cash flows for the ~~six~~three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016~~April 29, 2017 (dollars in millions):


	For the Six Months Ended						For the Three Months Ended
	January 28, 2017			January 23, 2016			April 28, 2018			April 29, 2017
Net cash flows:
Provided by operating activities	$	64.2		$	46.5		$	24.6		$	42.3
Used in investing activities	$	(71.1	)	$	(137.4	)	$	(45.8	)	$	(78.4	)
Provided by financing activities	$	2.6		$	89.8
(Used in) Provided by financing activities							$	(4.8	)	$	25.9

Cash Provided by Operating Activities. ~~During the six months ended January 28, 2017, net cash provided by operating activities was $64.2 million.~~ Non-cash items in the cash flows from operating activities during the current and prior periods

were primarily depreciation and amortization, stock-based compensation, amortization of debt discount and debt issuance costs, ~~write-off of deferred financing fees and premium on long-term debt,~~ deferred income taxes, gain on sale of fixed assets, and bad debt expense. ~~Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $101.0 million of operating cash flow during~~

During the ~~six~~three months ended ~~January~~April 28, 2017. Working capital changes that used operating cash flow during the six months ended January 28, 2017 included increases in net costs and estimated earnings in excess of billings of $30.4 million resulting from an increase in the volumes of activity and the related revenue from several of our top customers during fiscal 2017. In addition, there was a net increase in income tax receivable of $33.3 million primarily as a result of the timing of annual estimated tax payments made during the six months ended January 28, 2017. Decreases in accounts payable and accrued liabilities used $14.7 million and $24.8 million, respectively, of operating cash flow primarily resulting from the timing of payments, including for amounts paid for annual incentive compensation during October 2016. Net increases in other current assets and other non-current assets combined used $16.9 million of operating cash flow during the six months ended January 28, 2017 primarily for costs that coincide with the beginning of our fiscal year and increases of inventory. Working capital changes that provided operating cash flow during the six months ended January 28, 2017 were decreases in accounts receivable of $19.1 million from customer collection activity.

Our days sales outstanding (“DSO”) for accounts receivable is calculated based on the ending accounts receivable divided by the average daily revenue for the most recently completed quarter. Contract payment terms vary by customer and primarily range from 30 to 90 days after invoicing. Our DSO for accounts receivable was 40 days as of January 28, 2017, compared to 52 days as of January 23, 2016. During the fourth quarter of fiscal 2016, we began participating in a customer-sponsored vendor payment program. All eligible accounts receivables from this customer are included in the program and payment is received pursuant to a non-recourse sale to a bank partner of the customer. This program effectively reduces the time to collect these receivables as compared to that customer’s standard payment terms. The program has not changed since its inception during the fourth quarter of fiscal 2016. Our DSO for costs and estimated earnings in excess of billings (“CIEB”) was 49 days and 47 days as of January 28, 2017 and January 23, 2016, respectively.

Our CIEB balances are maintained at a detailed task-specific level or project level and are evaluated regularly for realizability. Such amounts are invoiced in the normal course of business according to contract terms that consider the completion of specific tasks and the passage of time. Project delays for commercial issues such as permitting, engineering changes, incremental documentation requirements, or difficult job site conditions can extend the time needed to complete certain work orders, which may delay invoicing to the customer for work performed. We were not experiencing any material project delays or other circumstances that would impact the realizability of the CIEB balance as of January 28, 2017 or July 30, 2016. Additionally, there were no material amounts of CIEB related to claims or unapproved change orders as of January 28, 2017 or July 30, 2016. As of January 28, 2017, we believe that none of our significant customers were experiencing financial difficulties that would impact the realizability of our CIEB or the collectability of our trade accounts receivable

~~During the six months ended January 23, 2016,~~2018, net cash provided by operating activities was ~~$46.5~~$24.6 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used ~~$85.5~~$43.4 million of operating cash ~~flow. The primary working capital sources of cash~~ flow ~~were decreases in accounts receivable of $7.8 million.~~during the three months ended April 28, 2018. Working capital changes that used operating cash flow during the ~~six~~three months ended ~~January 23, 2016 were~~April 28, 2018 included increases in ~~costs~~accounts receivable and ~~estimated earnings in excess~~contract assets, net of ~~billings of $18.2 million.~~$8.6 million and $44.1 million, respectively. Additionally, decreases in accrued liabilities used $22.3 million of operating cash flow primarily resulting from amounts paid for annual incentive compensation during October 2015 and working capital changes of businesses acquired in the first quarter of fiscal 2016. In addition, net increases in other current ~~assets~~ and ~~other~~ non-current assets combined used ~~$13.0~~$10.7 million of operating cash flow during the ~~six~~three months ended ~~January 23, 2016~~April 28, 2018 primarily for inventory and ~~for prepaid~~other costs ~~during~~that coincide with the ~~period. Decreases in accounts payable~~beginning of ~~$15.3 million used operating cash flow during the six months ended January 23, 2016 due to the timing of cash payments. Furthermore, there was~~our fiscal year. In addition, a net increase in income tax receivable used $0.6 million of ~~$24.4 million~~operating cash flow during the three months ended April 28, 2018 primarily as a result of the timing of estimated tax payments ~~made~~. Working capital changes that provided operating cash flow during the ~~six~~three months ended April 28, 2018 included increases in accounts payable and accrued liabilities of $13.2 million and $7.5 million, respectively, primarily resulting from the timing of payments.

On January ~~23, 2016.~~28, 2018, the first day of fiscal 2019, we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The adoption of ASU 2014-09 resulted in balance sheet classification changes for amounts that have not been invoiced to customers but for which we have satisfied the performance obligation and have an unconditional right to receive payment. Prior to the adoption of ASU 2014-09, amounts not yet invoiced to customers were included in our contract assets, historically referred to as Costs and Estimated Earnings in Excess of Billings, regardless of rights to payment. These amounts represent unbilled accounts receivable for which we have an unconditional right to receive payment although invoicing is subject to the completion of certain process or other requirements. Such requirements may include the passage of time, completion of other items within a statement of work, or other billing requirements within contract terms. Upon adoption, unbilled receivable amounts are included in accounts receivable, net. We adopted ASU 2014-09 using the modified retrospective method. Under the modified retrospective method, balances as of April 28, 2018 reflect the adoption of ASU 2014-09, while prior period balances are not adjusted and continue to be reported in accordance with our historical accounting policies.

To reflect the adoption of ASU 2014-09 and maintain comparability between periods, days sales outstanding (“DSO”) is calculated based on the ending balance of total accounts receivable (including unbilled accounts receivable) and contract assets, net of contract liabilities, divided by the average daily revenue for the most recently completed quarter. Our DSO was 92 days and 90 days as of April 28, 2018 and April 29, 2017, respectively.

See Note 6, Accounts Receivable, Contract Assets, and Contract Liabilities, for further information on our accounts receivable and contract asset balances as of April 28, 2018 and January 27, 2018. We believe that none of our significant customers were experiencing financial difficulties that would materially impact the collectability of our total accounts receivable and contract assets, net as of April 28, 2018 or January, 27, 2018.

During the three months ended April 29, 2017, net cash provided by operating activities was $42.3 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $35.1 million of operating cash flow during the three months ended April 29, 2017. Working capital changes that used operating cash flow during the three months ended April 29, 2017 included increases in accounts receivable and contract assets, net (formerly Costs and Estimated Earnings in Excess of Billings) of $31.2 million and $44.6 million, respectively. Additionally, net increases in other current and non-current assets combined used $5.4 million of operating cash flow during the three months ended April 29, 2017. Working

capital changes that provided operating cash flow during the three months ended April 29, 2017 were increases in accounts payable and accrued liabilities of $13.3 million and $12.1 million, respectively, primarily resulting from the timing of payments. In addition, a net decrease in income tax receivable provided $20.6 million of operating cash flow during the three months ended April 29, 2017 primarily as a result of the timing of estimated tax payments.

Cash Used in Investing Activities. Net cash used in investing activities was ~~$71.1~~$45.8 million during the ~~six~~three months ended ~~January~~April 28, ~~2017,~~2018, compared to ~~$137.4~~$78.4 million during the ~~six~~three months ended ~~January 23, 2016.~~April 29, 2017. During the ~~six~~three months ended ~~January~~April 28, ~~2017~~2018 and ~~January 23, 2016,~~April 29, 2017, capital expenditures ~~of $76.9~~were $34.5 million and ~~$90.9 million, respectively, were offset in part by proceeds from the sale of assets of $4.3 million and $2.7~~$58.3 million, respectively, primarily as a result of spending for new work opportunities and the replacement of certain fleet assets. ~~During~~These expenditures were offset in part by proceeds from the ~~second quarter~~sale of ~~fiscal~~assets of $8.0 million and $5.8 million during the three months ended April 28, 2018 and April 29, 2017, respectively. Additionally, we received ~~$1.8~~$1.6 million of escrowed funds during the three months ended April 28, 2018 in ~~proceeds for working capital adjustments~~connection with the resolution of certain indemnification claims related to the Goodman acquisition. ~~Restricted cash, primarily related to funding provisions of our insurance program, increased approximately $0.4 million and $0.5 million during~~During the ~~six~~three months ended ~~January~~April 28, ~~2017 and January 23, 2016, respectively. Additionally, during the six months ended January 23, 2016,~~2018, we paid ~~$48.8~~$20.9 million in connection with the acquisition of ~~TelCom.~~certain assets and assumption of certain liabilities of a telecommunications construction and maintenance services provider, net of cash acquired. During the three months ended April 29, 2017, we paid $26.4 million for the acquisition of Texstar, net of cash acquired. Other investing activities provided approximately $0.6 million of cash flow during the three months ended April 29, 2017.

Cash (Used in) Provided by Financing Activities. Net cash ~~provided by~~used in financing activities was ~~$2.6~~$4.8 million during the ~~six~~three months ended ~~January~~April 28, ~~2017. We received $35.0 million in proceeds from an incremental term loan facility entered into during~~2018. During the ~~period and~~three months ended April 28, 2018, we made principal payments of ~~$4.4~~$4.8 million on our ~~aggregate~~ term loan ~~facilities during the six months ended January 28, 2017.~~facilities. Additionally, we repurchased 313,006 shares of our common stock in open market transactions, at an average price of $79.87, for $25.0 million. Other financing activities during the six months ended January 28, 2017 included $0.5 million received from the exercise of stock options and $6.8 million received for excess tax benefits, primarily from the vesting of restricted share units. We withheld shares and paid ~~$10.2~~$0.1 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the ~~six~~three months ended ~~January~~April 28, ~~2017.~~2018. Partially offsetting these uses, we received $0.1 million from the exercise of stock options during the three months ended April 28, 2018.

Net cash provided by financing activities was ~~$89.8~~$25.9 million during the ~~six~~three months ended ~~January 23, 2016. The primary source of cash provided by financing activities during~~April 29, 2017. During the ~~six~~three months ended January 23, 2016 was the $485.0 million principal amount of 0.75% convertible senior notes due 2021 (the “Notes”) issued in a private placement in September 2015. During the six months ended January 23, 2016, we paid approximately $15.5 million in total issuance costs, including the initial purchasers’ discount on the Notes and third party fees and expenses related to our financing transactions. We used approximately $277.5 million of the net proceeds from the Notes issuance to fund the redemption of our 7.125% senior subordinated notes. Furthermore, in connection with the offering of the Notes, we entered into convertible note hedge transactions with counterparties for a total cost of approximately $115.8 million. We also entered into separately negotiated warrant transactions with the same counterparties as the convertible hedge transactions, and received proceeds of approximately $74.7 million from the sale of these warrants. Refer to Note 10, ~~Debt, in the Notes to the Condensed Consolidated Financial Statements for additional discussion of these debt transactions. Borrowings~~April 29, 2017, borrowings under our credit agreement, net of repayments, were ~~$8.0 million during the six months ended January 23, 2016.~~

~~During the six months ended January 23, 2016, we~~$61.8 million. We repurchased ~~954,224~~400,000 shares of our common stock in open market transactions, at an average price of ~~$73.35~~$94.77 per share, for ~~approximately $70.0~~$37.9 million. ~~In addition, we~~Other financing activities during the three months ended April 29, 2017 included $0.9 million received ~~$1.8 million~~ from the exercise of stock options and $1.3 million received for excess tax benefits, ~~of $11.3 million~~ primarily from the exercises of stock options and vesting of restricted share ~~units during the six months ended January 23, 2016. Furthermore, we~~units. We withheld ~~restricted share units~~shares and paid ~~$12.1~~$0.2 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the ~~six~~three months ended ~~January 23, 2016.~~April 29, 2017.

Compliance with Credit ~~Agreement and Indenture.~~Agreement. We are party to a credit agreement with ~~the~~ various lenders, ~~named therein,~~ dated as of December 3, 2012 (as amended as of June 17, 2016, May 20, 2016, April 24, 2015, and September 9, 2015), that matures on April 24, 2020. The credit agreement provides for a $450.0 million revolving facility, $385.0 million in aggregate term loan facilities, and contains a sublimit of $200.0 million for the issuance of letters of credit. During the second quarter of fiscal 2017, we entered into an incremental term loan facility under the credit agreement in the aggregate principal amount of $35.0 million. The additional term loan is subject to terms and conditions substantially similar to those applicable to the existing term loan facilities. The proceeds are available for general corporate purposes.

Subject to certain conditions the credit agreement provides us with the ability to enter into one or more incremental facilities, either by increasing the revolving commitments under the credit agreement and/or in the form of term loans up to the greater of (i) $150.0 million and (ii) an amount such that, after giving effect to such incremental ~~facility~~facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured leverage ratio does not exceed 2.25 to 1.00. The consolidated senior secured leverage ratio is the ratio of our consolidated senior secured indebtedness to our trailing twelve-month consolidated ~~earnings before interest, taxes, depreciation, and amortization (“EBITDA”),~~EBITDA, as defined by the credit agreement. ~~Payments~~Borrowings under the credit agreement are guaranteed by substantially all of our subsidiaries and secured by the equity interests of the substantial majority of our subsidiaries.

Borrowings under our credit agreement bear interest at rates described below based upon our consolidated leverage ratio, which is the ratio of our consolidated total funded debt to our trailing twelve month consolidated EBITDA, as defined by the credit agreement. In addition, we incur certain fees for unused balances and letters of credit at rates described below, also based upon our consolidated leverage ratio:



Borrowings - Eurodollar Rate Loans	1.25% - 2.00% plus LIBOR
Borrowings - Base Rate Loans	0.25% - 1.00% plus administrative agent’s base rate⁽¹⁾
Unused Revolver Commitment	0.25% - 0.40%
Standby Letters of Credit	1.25% - 2.00%
Commercial Letters of Credit	0.625% - 1.00%

⁽¹⁾The agent’s base rate is described in the credit agreement as the highest of (i) the administrative agent’s prime rate, (ii) the Federal Funds Rate plus 0.50%, and (iii) the Eurodollar rate plus 1.00%, plus an applicable margin.

The weighted average interest rates and fees for balances under the credit agreement as of April 28, 2018 and January ~~28, 2017 and July 30, 2016~~27, 2018 were as follows:


	Weighted Average Rate End of Period		Weighted Average Rate End of Period
	January 28, 2017	July 30, 2016	April 28, 2018	January 27, 2018
Borrowings - Term loan facilities	2.53%	2.49%	3.63%	3.30%
Borrowings - Revolving facility⁽¹⁾	—%	—%	—%	—%
Standby Letters of Credit	1.75%	2.00%	1.75%	1.75%
Unused Revolver	0.35%	0.40%
Unused Revolver Commitment			0.35%	0.35%

⁽¹⁾There were no outstanding borrowings under the revolving facility as of April 28, 2018 or January ~~28, 2017 or July 30, 2016.~~27, 2018.

The credit agreement contains a financial covenant that requires us to maintain a consolidated leverage ratio of not greater than 3.50 to 1.00, as measured at the end of each fiscal quarter. It provides for certain increases to this ratio as specified in the credit agreement in connection with permitted ~~acquisitions on the terms and conditions specified in the credit agreement.~~acquisitions. In addition, the credit agreement contains a financial covenant that requires us to maintain a consolidated interest coverage ratio, which is the ratio of our trailing twelve-month consolidated EBITDA to our consolidated interest expense, as defined by the credit agreement, of not less than 3.00 to 1.00, as measured at the end of each fiscal quarter. At both April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, we were in compliance with the financial covenants of our credit agreement and had ~~additional~~ borrowing availability in the revolving facility of ~~$392.4~~$401.4 million as determined by the most restrictive covenant.

Contractual Obligations. The following table sets forth our outstanding contractual obligations as of ~~January~~April 28, ~~2017~~2018 (dollars in thousands):


	Less than 1 Year		Years 1 – 3		Years 3 – 5		Greater than 5 Years		Total		Less than 1 Year		Years 1 – 3		Years 3 – 5		Greater than 5 Years		Total
0.75% convertible senior notes due September 2021	$	—	$	—	$	485,000	$	—	$	485,000	$	—	$	—	$	485,000	$	—	$	485,000
Credit agreement – revolving facility	—		—		—		—		—		—		—		—		—		—
Credit agreement – term loan facilities	18,813		62,562		295,500		—		376,875		28,875		324,375		—		—		353,250
Fixed interest payments on long-term debt⁽¹⁾	3,638		7,275		7,275		—		18,188		3,637		7,275		1,819		—		12,731
Operating lease obligations	21,937		28,791		9,446		4,283		64,457		25,499		26,567		9,036		3,239		64,341
Employment agreements	11,405		10,582		329		—		22,316		12,212		6,096		251		—		18,559
Purchase and other contractual obligations⁽²⁾	43,615		—		—		—		43,615		35,689		835		—		—		36,524
Total	$	99,408	$	109,210	$	797,550	$	4,283	$	1,010,451	$	105,912	$	365,148	$	496,106	$	3,239	$	970,405

⁽¹⁾Includes interest payments on our $485.0 million principal amount of 0.75% convertible senior notes due 2021 outstanding and excludes ~~any~~ interest payments on our variable rate debt. Variable rate debt as of ~~January~~April 28, ~~2017~~2018 consisted of ~~$376.9~~$353.3 million outstanding under our term loan facilities.

⁽²⁾~~Purchase~~We have committed capital for the expansion of our vehicle fleet in order to accommodate manufacturer lead times. As of April 28, 2018, purchase and other contractual obligations ~~primarily represent obligations under agreements~~includes approximately $32.9 million for issued orders with delivery dates scheduled to ~~purchase vehicles and equipment that have not been received as of January 28, 2017.~~occur over the next twelve months. We have excluded contractual obligations under the multi-employer defined pension plans that cover certain of our employees, as these obligations are determined based on our future union employee payrolls, which cannot be reliably determined as of ~~January~~April 28, ~~2017.~~2018.

Our condensed consolidated balance sheet as of ~~January~~April 28, ~~2017~~2018 includes a long-term liability of approximately ~~$59.7~~$59.9 million for accrued insurance claims. This liability has been excluded from the table above ~~table~~ as the timing of payments is uncertain.

The liability for unrecognized tax benefits for uncertain tax positions was ~~$2.4~~approximately $3.3 million as of both April 28, 2018 and January ~~28, 2017 and July 30, 2016~~27, 2018 and is included in other liabilities in the condensed consolidated balance ~~sheet.~~sheets. This amount has been excluded from the contractual obligations table because we are unable to reasonably estimate the timing of the resolution of the underlying tax positions with the relevant tax authorities.

Performance Bonds and ~~Guarantees~~Guarantees. – We have obligations under performance and other surety contract bonds related to certain of our customer contracts. Performance bonds generally provide a customer with the right to obtain payment and/or performance from the issuer of the bond if we fail to perform our contractual obligations. As of April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018 we had ~~$133.7~~$110.2 million and ~~$165.8~~$118.1 million of outstanding performance and other surety contract bonds, respectively. The estimated cost to complete projects secured by our outstanding performance and other surety contract bonds was approximately ~~$32.0~~$34.7 million as of ~~January~~April 28, ~~2017.~~2018. Additionally, we have periodically guaranteed certain obligations of our subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.

Letters of ~~Credit~~Credit. – We have standby letters of credit issued under our credit agreement as part of our insurance program. These letters of credit collateralize ~~our~~ obligations to our insurance carriers in connection with the settlement of potential claims. As of both April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, we had ~~$57.6~~$48.6 million outstanding standby letters of credit issued under our credit agreement.

Backlog. Our backlog consists of the estimated uncompleted portion of services to be performed under contractual agreements with our customers and totaled ~~$5.112~~$5.877 billion and ~~$6.031~~$5.847 billion at April 28, 2018 and January ~~28, 2017 and July 30, 2016,~~27, 2018, respectively. We expect to complete ~~46.2%~~50.6% of the ~~January~~April 28, ~~2017~~2018 total backlog during the next twelve months. Our backlog estimates represent amounts under master service agreements and other contractual agreements for services projected to be performed over the terms of ~~the contracts and~~contracts. These estimates are generally based on contract terms ~~our historical experience with customers~~ and ~~more generally, our experience~~assessments regarding the timing of the services to be provided. In the case of master service agreements, backlog is calculated based on the work performed in ~~similar procurements. The~~the preceding twelve month period, when available. When estimating backlog for newly initiated master service agreements and other long and short term contracts, we also consider the anticipated scope of the contract and information received from the customer in the procurement process. A significant majority of our backlog estimates comprise services under master service agreements and ~~long-term~~other long term contracts.

Revenue estimates included in our backlog can be subject to change because of project accelerations, contract cancellations, or delays due to various factors, including, but not limited to, commercial issues such as permitting, engineering changes, incremental documentation requirements, difficult job site conditions, and adverse weather. These factors can also

~~cause revenue to be realized in different periods or in different amounts from those originally reflected in backlog.~~ In many instances, our customers are not contractually committed to procure specific volumes of services under a contract. Revenue estimates reflected in our backlog can be subject to change due a number of factors, including contract cancellations or changes in the amount of work we estimated to be performed at the time of calculating the backlog amount. In addition, revenue reflected in our backlog may be realized in different periods from those previously reported due to these factors as well as project accelerations or delays due to various reasons, including, but not limited to, commercial issues such as permitting, engineering revisions, difficult job site conditions, and adverse weather. The amount or timing of our backlog can also be impacted by the merger or acquisition activity of our customers. While we did not experience any material cancellations during the ~~six~~three months ended ~~January~~April 28, ~~2017~~2018 or ~~January 23, 2016,~~April 29, 2017, many of our customers may cancel our contracts upon written notice regardless of whether or not we are in default. The amount of backlog related to uncompleted projects in which a provision for estimated losses was recorded is not material.

Backlog is not a measure defined by United States generally accepted accounting principles; however, it is a common measurement used in our industry. Our methodology for determining backlog may not be comparable to the methodologies used by others.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate and Market Price ~~Risk~~Risk. -We are exposed to market risks related to interest rates on our cash and equivalents and interest rates and market price sensitivity on our debt obligations. We monitor the effects of market changes on interest rates and manage interest rate risks by investing in short-term cash equivalents with market rates of interest and by maintaining a mix of fixed and variable rate debt obligations.

Our credit agreement permits borrowings at a variable rate of interest. On ~~January~~April 28, ~~2017,~~2018, we had variable rate debt outstanding under our credit agreement of ~~$376.9~~$353.3 million under our term loan facilities. Interest related to these borrowings fluctuates based on LIBOR or the base rate of the bank administrative agent of the credit agreement. At the current level of borrowings, for every 50 basis point change in the interest rate, interest expense associated with such borrowings would correspondingly change by approximately ~~$1.9~~$1.8 million annually.

In September 2015, we issued $485.0 million principal amount of convertible senior notes (the “Notes”), which bear a fixed rate of interest of 0.75%. Due to the fixed rate of interest on the Notes, changes in interest rates would not have an impact on the related interest expense. However, there exists market risk sensitivity on the fair value of the fixed rate Notes with respect to changes in market interest rates. Generally, the fair value of the fixed rate Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the Notes is affected by the price and volatility of our common stock and will generally increase or decrease as the market price of our common stock changes.

The following table summarizes the carrying amount and fair value of the Notes, net of the debt discount and debt issuance costs. The fair value of the Notes as of January 28, 2017 and July 30, 2016 was approximately $425.2 million and $458.7 million, respectively, based on quoted market prices (level 2), compared to a net carrying amount of $382.5 million and $373.1 million, respectively. The fair value and net carrying amounts as of January 28, 2017 and July 30, 2016 are both reflected net of the debt discount of $93.0 million and $101.7 million, respectively, and debt issuance costs of $9.5 million and $10.2 million, respectively. The fair values of the Notes as of January 28, 2017 and July 30, 2016 were determinedis based on the closing trading ~~prices~~price per $100 of the Notes as of the last day of trading for the respective periods (Level 2), which ~~were $108.81~~was $126.61 and ~~$117.65, respectively.~~ $136.01 as of April 28, 2018 and January 27, 2018, respectively (dollars in thousands):



	April 28, 2018			January 27, 2018
Principal amount of Notes	$	485,000		$	485,000
Less: Debt discount and debt issuance costs	(77,639		)	(82,751		)
Net carrying amount of Notes	$	407,361		$	402,249

Fair value of principal amount of Notes	$	614,059		$	659,649
Less: Debt discount and debt issuance costs	(77,639		)	(82,751		)
Fair value of Notes	$	536,420		$	576,898

A hypothetical 50 basis point change in the market interest rates in effect would result in an increase or decrease in the fair value of the Notes of approximately ~~$11.9~~$8.4 million, calculated on a discounted cash flow basis as of ~~January~~April 28, ~~2017.~~2018.

In connection with the issuance of the Notes, we entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the Notes and offsetting any potential cash payments in excess of the principal amount of the Notes. In the event that shares or cash are deliverable to holders of the Notes upon conversion at limits defined in the indenture governing the Notes, counterparties to the convertible note hedge will be required to deliver to us up to 5.006 million shares of our common stock or pay cash to us in a similar amount as the value that we deliver to the holders of the Notes based on a conversion price of $96.89 per share. The convertible note hedge is intended to offset potential dilution from the Notes.

We also entered into separately negotiated warrant transactions with the same counterparties as the convertible note hedge transactions whereby we sold warrants to purchase, subject to certain anti-dilution adjustments, up to 5.006 million shares of our common stock at a price of $130.43 per share. We expect to settle the warrant transactions on a net share basis. See Note ~~10,~~13, Debt, in Notes to the Condensed Consolidated Financial Statements for additional discussion of these debt transactions.

We also have market risk for foreign currency exchange rates related to our operations in Canada. As of ~~January~~April 28, ~~2017,~~2018, the market risk for foreign currency exchange rates was not significant as our operations in Canada were not material.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of ~~January~~April 28, ~~2017,~~2018, the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of ~~January~~

April 28, ~~2017,~~2018, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and (2) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

Effective January 28, 2018, we implemented ASC Topic 606, Revenue from Contracts with Customers. While the adoption of this new revenue recognition guidance did not have a significant effect on our results of operations, financial condition or cash flows, we implemented certain changes to internal controls related to our revenue recognition processes during the three months ended April 28, 2018. There ~~were~~have been no other changes in ~~the Company’s~~our internal control over financial reporting ~~(as defined in Rule 13a-15(f) under the Exchange Act) that occurred~~ during the ~~Company’s most recent fiscal quarter~~three

months ended April 28, 2018 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

In September 2016, certain former employees of two subcontractors of TESINC, LLC (“TESINC”), a wholly owned subsidiary of the Company, commenced a lawsuit against those subcontractors, TESINC and a customer of TESINC in the United States District Court for the Eastern District of Pennsylvania. The lawsuit alleges that TESINC, its customer and those subcontractors violated the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act of 1968, the Pennsylvania Wage Payment and Collection Law, and the New Jersey Wage and Hour Law by failing to comply with applicable minimum wage and overtime pay requirements as a result of the misclassification of workers as independent contractors. The plaintiffs seek unspecified damages and other relief on behalf of themselves and a putative class of similarly situated workers who had performed work between April 1, 2016 and June 30, 2016. TESINC answered the complaint on November 14, 2016. The parties have commenced early discovery and are scheduled to attend a court-ordered initial settlement conference before a magistrate judge in March 2017. It is too early to evaluate the likelihood of an outcome to this matter or estimate the amount or range of potential loss, if any. We intend to vigorously defend ourselves against this lawsuit.

District Court was held in late February 2017. Post-trial briefs are due to be filed by the parties with the District Court in March 2017. An unfavorable outcome may result in an award of attorneys’ fees, costs, and expenses. We believe the counterclaims to be without merit and intend to vigorously advocate our position that Quanta breached the SPA and defend ourselves against these counterclaims.

From time to time, ~~we are~~the Company is party to various ~~other~~ claims and legal ~~proceedings. It~~proceedings arising in the ordinary course of our business. While the resolution of these matters cannot be predicted with certainty, it is the opinion of management, based on information available at this time, that the outcome of any such ~~other pending~~ claims or proceedings will not have a material effect on our financial statements.

Item 1A. Risk Factors.

~~The risk factors presented below update,~~Our business is subject to a variety of risks and ~~should be considered~~uncertainties. These risks are described elsewhere in ~~addition to,~~this Quarterly Report on Form 10-Q or our other filings with the ~~risk factors previously disclosed in~~Securities and Exchange Commission, including Part 1,I, Item 1A of our ~~Annual~~Transition Report on Form 10-K for the ~~year~~six months ended ~~July 30, 2016.~~January 27, 2018. The risks identified in such reports have not changed in any material respect.

~~Several of our subsidiaries participate in multiemployer pension plans under which we could incur material liabilities in certain circumstances~~. Pursuant to collective bargaining agreements, several of our subsidiaries participate in various multiemployer pension plans that generally provide defined pension benefits to covered employees. Because of the nature of multiemployer plans, there are risks associated with participation in these plans that differ from single-employer plans. Assets contributed by an employer to a multiemployer plan are not segregated into a separate account and are not restricted to provide benefits only to employees of that contributing employer. Under the Employee Retirement Income Security Act (“ERISA”), absent an applicable exemption, a contributing employer to an underfunded multiemployer plan is liable upon withdrawal from a plan for its proportionate share of the plan’s unfunded vested liability. In addition, if any of the plans in which we participate become significantly underfunded, as defined by the Pension Protection Act of 2006, we may be required to make additional cash contributions in the form of higher contribution rates or surcharges related to the underfunding of those plans.

During the fourth quarter of fiscal 2016, one of our subsidiaries, which previously contributed to the Pension, Hospitalization and Benefit Plan of the Electrical Industry - Pension Trust Fund (the “Plan”), a multiemployer pension plan, ceased operations. In October 2016, the Plan demanded payment for a claimed withdrawal liability of approximately ~~$13.0 million~~. In December 2016, we submitted a formal request to the Plan seeking review of the Plan’s withdrawal liability determination. We are disputing the claim of a withdrawal liability demanded by the Plan as we believe there is a statutory exemption available under ERISA for multiemployer pension plans that primarily cover employees in the building and construction industry. However, there can be no assurance that we will be successful in asserting the statutory exemption as a defense. As required by ERISA, in November 2016, the subsidiary began making monthly payments of a withdrawal liability to the Plan in the amount of approximately $0.1 million. If we prevail in disputing the withdrawal liability all such payments will be refunded to us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) During the three months ended ~~January~~April 28, ~~2017, we~~2018, the Company did not sell any ~~of our~~ equity securities that were not registered under the Securities Act of 1933.

(b) Not applicable.

(c) The following table summarizes the ~~Company's~~Company’s purchase of its common stock during the three months ended ~~January~~

April 28, ~~2017:~~2018:

Period
Total Number of Shares Purchased⁽¹⁾
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 30, 2016 - November 26, 2016 —
$ —
—
⁽⁴⁾
November 27, 2016 - December 24, 2016
112,493⁽²⁾

$ 78.64
—
⁽⁴⁾
December 25, 2016 - January 28, 2017
313,006⁽³⁾

$ 79.87
—
⁽⁴⁾



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 28, 2018 - February 24, 2018	—	$	—	—	⁽³⁾
February 25, 2018 - March 24, 2018	783⁽²⁾	$	110.31	—	⁽³⁾
March 25, 2018 - April 28, 2018	—	$	—	—	⁽³⁾

⁽¹⁾All shares repurchased have been subsequently canceled.

⁽²⁾Represents shares withheld to meet payroll tax withholdings obligations arising from the vesting of restricted share units. Shares withheld do not reduce ~~our~~the Company’s total share repurchase authority.

⁽³⁾ ~~During the second quarter of fiscal 2017, the Company repurchased 313,006 common shares for $25.0 million at an average price of $79.87.~~

⁽⁴⁾As of ~~January~~April 28, ~~2017, $75.0~~2018, $95.2 million remained available for repurchases through ~~October 2017~~August 2018 under the Company’s April 26, 2016 repurchase program authorization. On February 28, 2017, the Company’s Board of Directors extended the term of this repurchase program through August 2018 and authorized an additional $75.0 million to repurchase shares of the Company’s outstanding common stock in open market or private transactions, including through accelerated share repurchase ~~agreements with one or more counterparties from time to time. As of March 2, 2017, the Company has $150.0 million available for repurchases of the Company’s common stock through August 2018.~~program.

Item 6. Exhibits.

Exhibits furnished pursuant to the requirements of Form 10-Q:



Exhibit Number

10.1 +	~~Lender Joinder~~ Letter Agreement ~~to Credit Agreement,~~by and between Dycom Industries, Inc. and Richard B. Vilsoet, dated as of ~~January 26, 2017,~~March 28, 2018 (incorporated by ~~and among MUFG Union Bank N.A., as the New Lender,~~reference to Dycom Industries, Inc.~~, as~~’s Current Report on Form 8-K filed with the ~~Borrower, the subsidiaries of Dycom Industries, Inc. identified therein, and Bank of America, N.A., as Administrative Agent.~~
	SEC on March 30, 2018).
12.1 +	Computation of Ratio of Earnings to Fixed Charges.

31.1 +	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 +	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 +	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 +	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 +	The following materials from the Registrant’s ~~Annual~~Quarterly Report on Form 10-Q for the quarter ended ~~January~~April 28, ~~2017~~2018 formatted in eXtensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

+	Filed herewith

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.



		DYCOM INDUSTRIES, INC.
		Registrant

Date:	~~March 2, 2017~~May 23, 2018	/s/ Steven E. Nielsen
		Name: Title:	Steven E. Nielsen ~~Title:~~ President and Chief Executive Officer

Date:	~~March 2, 2017~~May 23, 2018	/s/ H. Andrew DeFerrari
		Name: Title:	H. Andrew DeFerrari ~~Title:~~ Senior Vice President and Chief Financial Officer



Florida		59-1277135
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11780 US Highway 1, Suite 600, Palm Beach Gardens, FL		33408
(Address of principal executive offices)		(Zip Code)



Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Emerging growth company ¨



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~January~~April 28, ~~2017~~2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________