1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 				 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Quarterly Period ended December 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____to____ Commission file number 0-6079 		AMELCO CORPORATION			 (Exact name of registrant as specified in its charter) California 99-0068616	 ------------ ----------------- (State or other jurisdiction of					 	(I.R.S. Employer incorporation or organization)			 		 	 Identification No.) 19208 South Vermont Avenue Gardena, California 90248 --------------------------- ---------- (Address of principal executive offices) (Zip Code) 					 							 (310) 327-3070			 (Registrant's telephone number, including area code) Not Applicable	 (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ____ ----- 			 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. <CATION> Outstanding at 	 Class of Common Stock December 31, 1996	 --------------------- ----------------- Common Stock, without par value 1,443,088 	 2 AMELCO CORPORATION AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE ---- Consolidated Balance Sheets- December 31, 1996 and September 30, 1996 3 Consolidated Statements of Earnings - Three months ended December 31, 1996 and 1995 4 Consolidated Statements of Cash Flow- Three months ended December 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. Other Information 9 Signature Page 9 	 3 Amelco Corporation and Subsidiaries	 Consolidated Balance Sheets 			 (Unaudited) December 31, September 30, 1996 1996 -------------- ------------- Assets - ------- Cash (note 4) $4,229,000 3,841,000 Receivables, net (note 2) 17,929,000 23,485,000 Inventories 65,000 62,000 Investment in and advances to joint ventures 243,000 138,000 Costs and recognized profits in excess of billings on uncompleted contracts 8,090,000 6,121,000 Deferred tax assets 200,000 216,000 Prepaid expenses and other 231,000 174,000 ------------- ------------ Total Current Assets 30,987,000 34,037,000 Note receivable from related party, noncurrent 3,262,000 3,271,000 Other notes receivable and noncurrent investments 307,000 307,000 Property, plant and equipment, net 2,236,000 2,273,000 Other assets 198,000 158,000 ------------- ------------ Total Assets $36,990,000 40,046,000 ============= ============ Liabilities and Stockholders' Equity - ------------------------------------ Short term borrowings $900,000 600,000 Current portion of long term debt 62,000 61,000 Accounts payable 9,204,000 11,942,000 Accrued expenses 2,468,000 2,803,000 Federal and state income taxes 50,000 - Billings in excess of costs and recognized profits on uncompleted contracts 6,494,000 7,000,000 Other current liabilities 180,000 281,000 ------------ ------------ Total Current Liabilities 19,358,000 22,687,000 Long term debt, excluding current portion 2,062,000 2,079,000 Minority interest in subsidiary 30,000 28,000 Stockholders' equity: Common stock, without par value, authorized 3,000,000 shares,issued 2,214,008 5,535,000 5,535,000 Additional paid-in capital 7,427,000 7,427,000 Retained earnings 5,590,000 5,302,000 ------------ ------------ 18,552,000 18,264,000 Less treasury shares (3,012,000) (3,012,000) ------------ ------------ Total stockholders' equity 15,540,000 15,252,000 ------------ ------------ Total Liabilities and Stockholders' Equity $36,990,000 40,046,000 ============ ============ 4 Amelco Corporation and Subsidiaries Consolidated Statements of Earnings Three Months Ended December 31, 1996 and 1995 (Unaudited) 		 1996 1995 ------------- ------------ Revenues $22,394,000 27,478,000 Costs and operating expenses 19,304,000 24,959,000 ------------- ------------ Gross profit 3,090,000 2,519,000 General and administrative expenses 2,589,000 2,209,000 ------------- ------------ Operating income 501,000 310,000 ------------- ------------ Other income (expense): Interest expense (73,000) (109,000) Other, net 59,000 120,000 ------------- ------------ Total other income (expense) (14,000) 11,000 ------------- ------------ Earnings before income taxes 487,000 321,000 Income tax expense 197,000 131,000 Minority interest in earnings of subsidiary 2,000 3,000 ------------- ------------ Net earnings $288,000 187,000 ============= ============ Earnings per share: Net earnings per common share $0.20 $ 0.13 ============= ============ Weighted average number of common shares outstanding during the period 1,443,000 1,444,000 ============= ============ 				 				 5				 Amelco Corporation and Subsidiaries Consolidated Statements of Cash Flows Three Months Ended December 31, 1996 and 1995	 (Unaudited) 				 1996 1995 ------------ ----------- Cash flows from operating activities: - ------------------------------------- Net earnings $288,000 187,000 ----------- ----------- Adjustments to reconcile income to net cash provided (used) by operating activities: Depreciation and amortization 97,000 100,000 Gain on sale of assets (1,000) - (Increase) decrease in assets and increase (decrease) in liabilities: Accounts receivable 5,556,000 660,000 Investment in and advances to joint venture (105,000) 40,000 Inventories (3,000) 6,000 Costs and recognized profits in excess of billings on uncompleted contracts (1,969,000) (1,131,000) Prepaid expenses (57,000) (593,000) Other assets (40,000) (38,000) Accounts payable and accrued expenses (3,073,000) (2,086,000) Billings in excess of costs and recognized profits on uncompleted contracts (506,000) 999,000 Income taxes payable 66,000 74,000 Other liabilities (101,000) (79,000) ------------ ----------- Total adjustments (136,000) (2,048,000) ------------ ----------- Net cash provided (used) by operating activities $152,000 (1,861,000) ------------ ----------- Cash flows from investing activities: - ------------------------------------- Decrease (increase) in notes receivable and other investments 9,000 (42,000) Increase (decrease) in minority interest 2,000 3,000 Proceeds from sale of assets 1,000 - Capital expenditures (60,000) (116,000) ----------- ---------- Net cash (used) by investing activities $(48,000) (155,000) ----------- ---------- Cash flows from financing activities: - ------------------------------------ Borrowings under revolving line of credit, net 300,000 1,050,000 Repayments of long term debt (16,000) (11,000) Borrowings under short term note payable - 638,000 Repayments of short term note payable - (228,000) ----------- ---------- Net cash provided by financing activities $284,000 1,449,000 ----------- ---------- Net increase (decrease) in cash and cash equivalents 388,000 (567,000) Cash and cash equivalents at beginning of year 3,841,000 3,863,000 ----------- ---------- Cash and cash equivalents at end of year $4,229,000 3,296,000 =========== ========== 6 Amelco Corporation and Subsidiaries Notes to Consolidated Financial Statements 			 1. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments necessary to present fairly the Company's financial position as of December 31, 1996 and September 30, 1996, the results of its operations for the three months ended December 31, 1996 and 1995 and changes in cash flow for the three months ended December 31, 1996 and 1995. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 1996. 2. Retentions: Contract retentions which are collectible upon the owner's approval of contract performance on construction contracts are included under receivables and amount to $6,113,000 and $6,521,000 at December 31, 1996 and September 30, 1996, respectively.	 										 3. Backlog: The backlog of uncompleted contracting work was approximately $98,812,000 on contracts in force as of December 31, 1996, compared with $89,517,000 as of September 30, 1996, inclusive of the Company's proportionate share of contract backlog from joint ventures amounting to $720,000 and $26,000 at December 31, 1996 and September 30, 1996, respectively. 4. Cash: Cash balances at December 31, 1996 include approximately $2,262,000 in restricted time deposits maintained in lieu of retention which will be released upon completion of the related construction projects. Interest income on these deposits are credited to the Company. 7				 Amelco Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources and Liquidity - ------------------------------ Cash balances increased from $3,841,000 at September 30, 1996 to $4,229,000 at December 31, 1996. This increase in cash of $388,000 consisted primarily of $152,000 provided by operating activities and $284,000 by financing activities. These increases were offset by $48,000 used by investing activities. Cash provided by operating activities consisted primarily of decreases in accounts receivables aggregating $5,556,000 and net earnings from operating activities of $288,000. This change was offset by decreases in accounts payable and accrued expenses aggregating 3,073,000, a decrease in billings in excess of costs and recognized profits on uncompleted contracts of $506,000 and an increase costs and recognized profits in excess of billings on uncompleted contracts of $1,969,000. Net cash provided by financing activities included primarily an increase of $300,000 in borrowings under the Company's lines of credit which was offset by repayments of long term debt of $16,000. Net cash used by investing activities consisted primarily of capital expenditures of $60,000. 	 The Company's construction backlog amounted to approximately $98,812,000 at December 31, 1996, of which approximately $80.1 million was in California, $5.2 million was in Hawaii and the Pacific Basin, and $13.5 million in other continental U. S. states. The Company's revolving lines of credit aggregating $7,000,000 are scheduled to be renewed in March 1997. At December 31, 1996, there was $900,000 borrowed under these lines of credit. Management believes that the present liquidity of the Company together with the availability of the aforementioned lines of credit are adequate to provide the necessary working capital to fund the Company's operations in the near term future. 8 Amelco Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations - --------------------- 	Consolidated revenues decreased by 18.5% in the three month period ended December 31, 1996 as compared to the prior year. The change in the three month period results primarily from revenue decreases of approximately $4.3 million from the California operations and $0.7 million from the Hawaii and Pacific operations. These changes in revenue volume reflect primarily the degree of success in bidding on new work as well as the scheduling requirements of the customer, and are not necessarily indicative of revenue volume or profitability in future periods. 	 Gross profits increased by $571,000 in the three month period ended December 31, 1996 as compared to the previous period. Gross profits as a percentage of revenue were 13.8% and 9.2% in the three month periods ended December 31, 1996 and 1995, respectively. The change in gross margins reflects higher margins realized on construction work performed in the current quarter in both the California and Hawaii markets as compared to the previous period. The Company has experienced highly competitive conditions in the commercial and industrial construction market. This is expected to continue. Management's ability to enhance profit margins in its business is largely limited to its ability to identify profitable bidding opportunities, estimate accurately during the bidding stage and upon award, to effectively manage jobsite performance. 	General and administrative expenses for the three month period ended December 31, 1996 increased by approximately $380,000 as compared to the previous period. The change reflects primarily increases in staffing levels, compensation costs and estimating expenses. Staffing level changes included increases in project management, project engineers and administrative jobsite staff in response to the requirements of ongoing contracts in progress. 	Interest expense decreased by $36,000 in the three month period ended December 31, 1996 due primarily to lower levels of borrowings under the Company's lines of credit as compared to the previous period. Other income (expense), net decreased by $61,000 due primarily to a decrease in interest income earned on short term cash investments. 9 Part II Other Information No events occurred during the three (3) month period ended December 31, 1996 which are reportable under this part. 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. 	 Amelco Corporation Date: February 14, 1997 By /s/ Patrick T. Miike	 ------------------------ Patrick T. Miike Chief Financial Officer, Vice President-Finance and Treasurer