FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or
15(d) of the Securities Exchange Act of 1934
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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Commission file number 0-2315
EMCOR Group, Inc.
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(Exact name of registrant as
specified in its charter)
Delaware 11-2125338
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
101 Merritt Seven Corporate Park 06851-1060
----------------------
Norwalk, Connecticut (Zip Code)
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(Address of principal executive
offices)
(203) 849-7800
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(Registrant's telephone number)
N/A
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(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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days. Yes X No __
Applicable Only To Issuers Involved In Bankruptcy Proceedings During
The Previous Five Years
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Indicate by check mark whether the registrant has filed all documents
required to be filed by Section 12, 13 or 15(d) of the Securities and Exchange
Act of 1934, subsequent to the distribution of securities under a plan confirmed
by a court. Yes X No __
Applicable Only To Corporate Issuers
------------------------------------
Number of shares of Common Stock outstanding as of the close of business on
May 1, 1998: 10,722,829 shares.
EMCOR GROUP, INC.
INDEX
Page No.
PART I - Financial Information
Item 1 Financial Statements
Condensed consolidated balance sheets -
as of March 31, 1998 and December 31, 1997 1
Condensed consolidated statements of operations -
three months ended March 31, 1998 and 1997 3
Condensed consolidated statements of cash flows -
three months ended March 31, 1998 and 1997 4
Condensed consolidated statement of stockholders'
equity and comprehensive income (loss) -
three months ended March 31, 1998 and 1997 5
Notes to condensed consolidated financial statements 6
Item 2 Management's discussion and analysis of financial condition and
results of operations 11
PART II - Other Information
Item 1 Legal Proceedings 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 6 Exhibits and Reports on Form 8-K 13
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
- ------------------------------------------------------------
March 31, December 31,
1998 1997
(Unaudited)
- ------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $123,888 $49,376
Accounts receivable, net 494,628 480,997
Costs and estimated earnings in
excess of billings on
uncompletedcontracts 75,825 73,974
Inventories 6,735 7,363
Prepaid expenses and other 9,999 10,951
-----------------------------
Total Current Assets 711,075 622,661
-----------------------------
Investments, Notes and Other
Long-Term Receivables 6,726 5,901
Property, Plant and Equipment, Net 27,568 27,164
Other Assets 7,248 4,928
-----------------------------
Total Assets $752,617 $660,654
=============================
See notes to condensed consolidated financial statements.
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
- ------------------------------------------------------------
March 31, December
1998 31,
(Unaudited) 1997
- ------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Borrowings under working capital $-- $9,497
credit lines
Current maturities of long-term
debt 6,339 927
Accounts payable 237,257 239,117
Billings in excess of costs and
estimated earnings on
uncompleted contracts 127,352 112,833
Accrued payroll and benefits 58,809 49,058
Other accrued expenses and
liabilities 47,069 45,163
-----------------------
Total Current Liabilities 476,826 456,595
-----------------------
Long-Term Debt 117,091 63,212
Other Long-Term Obligations 46,733 45,524
Stockholders' Equity:
Common stock, $.01 par value,
30,000,000 shares authorized,
10,700,493 shares and 9,590,827
shares issued and outstanding
or issuable at March 31, 1998
and December 31, 1997,
respectively 107 96
Warrants 2,154 2,154
Capital surplus 107,473 87,107
Accumulated Other Comprehensive
Income 47 (195)
Retained earnings 2,186 6,161
-----------------------
Total Stockholders' Equity 111,967 95,323
-----------------------
Total Liabilities and Stockholders'
Equity $752,617 $660,654
=======================
See notes to condensed consolidated financial statements.
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts) (Unaudited)
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Three months ended March 31, 1998 1997
- ------------------------------------------------------------
Revenues $493,923 $433,770
Costs and Expenses:
Cost of sales 449,683 394,705
Selling, general and
administrative 40,305 35,623
-------------------------
489,988 430,328
-------------------------
Operating Income 3,935 3,442
Interest Expense, Net 2,406 3,008
-------------------------
Income Before Income Taxes 1,529 434
Provision For Income Taxes 727 178
-------------------------
Income Before Extraordinary Item 802 256
Extraordinary Item - Loss on
Early Extinguishment of Debt,
Net of Income Taxes (4,777) --
-------------------------
Net (Loss) Income $(3,975) $256
=========================
Per Share Information:
Basic Earnings (Loss) Per Share:
Income Before Extraordinary Item $0.08 $0.03
Extraordinary Item - Loss on
Early Extinguishment of Debt,
Net of Income Taxes (0.49) --
-------------------------
Basic (Loss) Earnings Per Share $(0.41) $0.03
=========================
Diluted Earnings (Loss) Per Share:
Income Before Extraordinary Item $0.08 $0.03
Extraordinary Item - Loss on
Early Extinguishment of Debt,
Net of Income Taxes (0.49) --
-------------------------
Diluted (Loss) Earnings Per Share $(0.41) $0.03
=========================
See notes to condensed consolidated financial statements.
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands) (Unaudited)
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Three months ended March 31, 1998 1997
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CASH FLOWS FROM OPERATIONS:
Net income $(3,975) $256
Extraordinary Item - Loss on Early
Extinguishment of Debt,
Net of Income Taxes 4,777 --
Non-cash expenses 3,322 2,363
Changes in operating assets and
liabilities 15,430 4,216
--------------------
NET CASH PROVIDED BY OPERATIONS 19,554 6,835
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Convertible Subordinated
Notes 115,000 --
Net proceeds from sale of common stock 22,485 --
Debt issuance costs (4,074) --
Payment of Series C Notes (61,854) --
Premiums paid on early extinguishment
of debt (2,437) --
Payment of working capital credit
lines (9,497) --
Borrowings under working capital
credit lines -- 5,100
Payments of long-term debt and
capital lease obligation (150) (62)
Exercise of stock options 56 --
--------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 59,529 5,038
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and
equipment, net (2,348) (2,317)
Proceeds from sale of businesses and
other assets -- 14
Acquisition of businesses (1,398) --
Decrease in investments, notes and
other long-term receivables (825) 797
--------------------
NET CASH USED IN INVESTING ACTIVITIES (4,571) (1,506)
--------------------
INCREASE IN CASH AND CASH EQUIVALENTS 74,512 10,367
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 49,376 50,705
--------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $123,888 $61,072
====================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Paid For:
Interest $1,697 $2,074
Income Taxes $159 $15
See notes to condensed consolidated financial statements.
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE
INCOME (LOSS)
(In Thousands) (Unaudited)
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Accumulated Retained
Other Earnings/
Common Capital Comprehensive Acquisition Comprehensive
Total Stock Warrants Surplus Income (1) Deficit Income (Loss)
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Balance, $95,323 $96 $2,154 $87,107 $(195) $6,161
January 1, 1998
Comprehensive
income(loss):
Net loss (3,975) -- -- -- -- (3,975) $(3,975)
Foreign currentcy
translation
adjustments 242 -- -- -- 242 -- 242
----------
Comprehensive loss -- -- -- -- -- -- $(3,733)
==========
NOL utilization 551 -- -- 551 -- --
Issuance of
common stock 22,485 11 -- 22,474 -- --
Tax effect of
extraordinary item (2,715) -- -- (2,715) -- --
Common stock issued
under stock
option plans 56 -- -- 56 -- --
-------- ------- ------ ------ ----------- -------
Balance, March
31, 1998 $111,967 $107 $2,154 $107,473 $47 $2,186
======== ======= ====== ======== =========== =======
Balance,
January 1, 1997 $83,883 $95 $2,154 $81,672 $1,378 $(1,416)
Comprehensive income (loss)
- ---------------------------
Net income 256 -- -- -- -- 256 $256
Foreign
currency
translation
adjustments (316) -- -- -- (316) -- (316)
----------
Comprehensive income -- -- -- -- -- -- $(60)
==========
NOL utilization 148 -- -- 148 -- --
------ ------- ------ -------- ----------- --------
Balance, March
31, 1997 $83,971 $95 $2,154 $81,820 $1,062 $(1,160)
======== ======= ====== ======= =========== =========
(1) Represents foreign currency translation adjustments.
See notes to condensed consolidated financial statements.
EMCOR Group, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE A Nature Of Operations
EMCOR Group, Inc. ("EMCOR" or the "Company") is a multinational corporation
involved in mechanical and electrical construction services and facilities
services. EMCOR's subsidiaries specialize in the design, integration,
installation, start-up, testing, operation and maintenance of: (i) distribution
systems for electrical power (including power cables, conduits, distribution
panels, transformers, generators, uninterruptible power supply systems and
related switch gear and control); (ii) lighting systems, including fixtures and
controls; (iii) low-voltage systems, including fire alarm, security,
communications and process control systems; (iv) heating, ventilation, air
conditioning, refrigeration and clean-room process ventilation systems; and (v)
plumbing, process and high-purity piping systems. EMCOR's subsidiaries provide
mechanical and electrical construction and facilities services directly to
end-users (including corporations, municipalities and other governmental
entities, owners/developers, and tenants of buildings) and, indirectly, by
acting as a subcontractor for construction managers, general contractors,
systems suppliers and other subcontractors. Mechanical and electrical
construction services are principally either large installation projects, with
contracts generally in the multi-million dollar range; smaller system
installation projects involving fit-out, renovation and retrofit work; and
maintenance and service. In addition, certain of its subsidiaries operate and
maintain mechanical and/or electrical systems for customers under contracts and
provide other services commonly referred to as facilities services including the
management of facilities and the provision of support services to customers at
the customer's facilities. Mechanical and electrical construction and facilities
services are provided to a broad range of commercial, industrial and
institutional customers through offices located in major markets throughout the
United States, Canada and the United Kingdom and through its joint ventures in
the United Arab Emirates, Saudi Arabia, South Africa, Hong Kong and Macau.
NOTE B Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared
by the Company, without audit, pursuant to the interim period reporting
requirements of Form 10-Q. Consequently, certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
Readers of this report should refer to the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on Form 10-K
filed with the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of a normal
recurring nature) necessary to present fairly the financial position of the
Company and the results of its operations. The results of operations for the
three month period ended March 31, 1998 are not necessarily indicative of the
results to be expected for the year ending December 31, 1998.
NOTE C Long-Term Debt
Long-Term Debt in the accompanying condensed consolidated balance sheets
consists of the following amounts at March 31, 1998 and December 31, 1997 (in
thousands):
March 31, December
1998 31,
1997
------------ ------------
Convertible Subordinated Notes, at 5.75%, due
2005 $115,000 $--
Series C Notes, outstanding face value of
approximately $61.9 million at
December 31, 1997, at 11.0%, discounted
to a 14.0% effective rate, due 2001 -- 56,290
Other 8,430 7,849
------------ ------------
123,430 64,139
Less current maturities (6,339) (927)
------------ ------------
$117,091 $63,212
============ ============
On March 18, 1998, the Company called for the redemption of approximately $61.9
million principal amount of Series C Notes and irrevocably funded such amounts
with the trustee of the Series C Notes. In accordance with the Indenture
governing the Series C Notes, the redemption price of the Series C Notes was
104% of the principal amount redeemed. Accordingly, the Company recorded an
extraordinary loss related to the early retirement of debt. The extraordinary
loss consisted primarily of the write-off of the associated debt discount plus
the redemption premium and costs associated with the redemption, net of income
tax benefits.
The Company has given notification that it will prepay the Supplemental SellCo
Note during May 1998 and, accordingly, the Supplemental SellCo Note is included
in the accompanying condensed consolidated balance sheet as of March 31, 1998 as
a current liability under the caption "Current maturities of long-term debt."
On March 18, 1998, the Company sold, pursuant to an underwritten public
offering, $100.0 million principal amount of 5.75% Convertible Subordinated
Notes (the "Notes"). Interest on the Notes is payable semi-annually commencing
October 1, 1998. The Notes are unsecured indebtedness of the Company and are
convertible into Common Stock of the Company at a conversion price of $27.34 per
share at any time.
On March 24, 1998, the underwriter of the Notes offering exercised in full its
over-allotment option to purchase an additional $15.0 million of Notes and
accordingly an additional $15.0 million principal amount of such notes were
issued.
NOTE D Income Taxes
The Company files a consolidated federal income tax return including all U.S.
subsidiaries. At March 31, 1998, the Company had net operating loss
carryforwards ("NOLs") for U.S. income tax purposes of approximately $170.0
million, which expire in the years 2007 through 2010. The NOLs are subject to
review by the Internal Revenue Service. Future changes in ownership of the
Company, as defined by Section 382 of the Internal Revenue Code, could limit the
amount of NOLs available for use in any one year.
As a result of the adoption of Fresh-Start Accounting, the tax benefit of any
net operating loss carryforwards or net deductible temporary differences which
existed as of the date of the Company's emergence from Chapter 11 in December
1994 will result in a charge to the tax provision (provision in lieu of income
taxes) and be allocated to capital surplus.
The Company has provided a valuation allowance as of March 31, 1998 for the full
amount of the tax benefit of its remaining NOLs and other deferred tax assets.
Income tax expense recorded for the three months ended March 31, 1998 and 1997
represent a provision primarily for federal, foreign and state and local income
taxes. The Company's utilization of NOLs and other deferred tax assets for the
three months ended March 31, 1998 and 1997 of approximately $0.6 million and
$0.1 million, respectively, have been applied to capital surplus.
NOTE E Legal Proceedings
The Company is currently defending a lawsuit that was commenced against the
Dynalectric Company ("Dynalectric"), a subsidiary of the Company, in Superior
Court of New Jersey, Bergen County, arising out of Dynalectric's participation
in a joint venture with the plaintiff, Computran. In the action, which was
instituted in 1988, Computran, a participant in, and a subcontractor to, the
joint venture alleges that Dynalectric wrongfully terminated its subcontract,
fraudulently diverted funds due it, misappropriated its trade secrets and
proprietary information, fraudulently induced it to enter into the joint venture
and conspired with other defendants to commit certain acts in violation of the
New Jersey Racketeering Influence and Corrupt Organization Act. Dynalectric
believes that Computran's claims are without merit and intends to defend this
matter vigorously. Dynalectric has filed counterclaims against Computran. As a
result of a motion made by Dynalectric, the Superior Court of New Jersey ordered
during 1997 that the matters in dispute between Dynalectric and Computran be
resolved by binding arbitration in accordance with an original agreement between
the parties.
In February 1995 as part of an investigation by the New York County District
Attorney's office into the business affairs of Herbert Construction Company
("Herbert"), a general contractor that did business with the Company's
subsidiary, Forest Electric Corporation ("Forest"), a search warrant was
executed at Forest's executive offices. At that time, the Company was informed
that Forest and certain of its officers are targets of the continuing
investigation. Neither the Company nor Forest has been advised of the precise
nature of any suspected violation of law by Forest or its officers. On April 7,
1997, Ted Kohl, a principal of Herbert, pled guilty to one count of money
laundering, one count of offering a false instrument for filing and one count of
filing a false New York State Resident Income Tax Return. DPL Interiors, Inc., a
Company allegedly owned by Mr. Kohl, also pled guilty to one count of failing to
file New York City General Income Tax Returns. Mr. Kohl and DPL Interiors, Inc.
have not yet been sentenced.
Substantial settlements or damage judgements against a subsidiary of the Company
arising out of either of these matters could have a material adverse effect on
the Company's business, operating results and financial condition.
In addition to the above, the Company is involved in other legal proceedings and
claims, asserted by and against the Company, which have arisen in the ordinary
course of business.
The Company believes it has a number of valid defenses to these actions and the
Company intends to vigorously defend or assert these claims and does not believe
that a significant liability will result. However, the Company cannot predict
the outcome thereof or the impact that an adverse result of the matters
discussed above will have upon the Company's financial position or results of
operations.
NOTE F Earnings Per Share
Effective December 31, 1997 the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS No. 128" or the "Statement"), "Earnings Per
Share" ("EPS"), which established standards for computing and presenting EPS.
The Statement replaced the presentation of Primary EPS with a presentation of
Basic EPS, as defined, and Fully Diluted EPS with Diluted EPS, as defined.
The following tables summarize the Company's calculation of Basic EPS and
Diluted EPS for the three month periods ended March 31, 1998 and 1997:
1998
-----------
-----------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- -------------------------------------
Basic EPS
Income before extraordinary
item available to common
stockholders $802,000 9,765,012 $0.08
===========
Effect of Dilutive Securities:
Options -- 363,007
Warrants -- 253,071
----------- -----------
Diluted EPS $802,000 10,381,090 $0.08
=========== =========== ===========
1997
-----------
Income Shares Per Share
(Numerator) (Denominator) Amount
---------- ----------- -------------
Basic EPS
Income before extraordinary
item available to common
stockholders $256,000 9,514,636 $0.03
===========
Effect of Dilutive Securities:
Options -- 427,420
Warrants -- 104,931
---------- -----------
Diluted EPS $256,000 10,046,987 $0.03
========== =========== ===========
For the three month period ended March 31, 1998, the "if converted" amount of
Notes and related after-tax interest expense were excluded from the denominator
and numerator, respectively, in the calculation of Diluted EPS as the effect
would be antidilutive. For the three months ended March 31, 1998, 5,000 options
were excluded from the denominator in the calculation of Diluted EPS as the
effect would be antidilutive.
NOTE G Common Stock Issuance
On March 18, 1998 the Company sold, pursuant to an underwritten public offering,
1,100,000 of its Common Stock at a price of $21.875 per share. Proceeds received
from the sale of the Common Stock along with proceeds received from the sale of
the Notes were used to redeem the Series C Notes and repay outstanding
borrowings under the Company's working capital credit lines and will be used to
prepay the Supplemental SellCo Note and accrued interest thereon, for possible
acquisitions and for other general corporate purposes.
NOTE H Other
The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"), which requires companies to
report all changes in equity during a period, except those resulting from
investment by owners and distribution to owners, in a financial statement for
the period in which they are recognized. The Company has chosen to disclose
Comprehensive Income, which encompasses net income and foreign currency
translation adjustments, in the condensed consolidated statements of
stockholders' equity and comprehensive income (loss). Prior year financial
information has been restated to conform with the reporting requirements of SFAS
No. 130.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Revenues for the first quarter of 1998 were $493.9 million compared to $433.8
million in the first quarter of 1997. In the first quarter of 1998, the Company
had a net loss of $4.0 million, or a $0.41 loss per basic share and diluted
share, compared to net income of $0.3 million, or $0.03 per basic share and
diluted share, in the first quarter of 1997. The net loss for the first quarter
of 1998 was due primarily to an after-tax charge associated with the early
retirement of approximately $61.9 million of the Company's Series C, which is
reflected in the accompanying condensed consolidated statements of operations
under the caption "Extraordinary Item - Loss on Early Extinguishment of Debt,
Net of Income Taxes."
The Company generated operating income of $3.9 million for the three months
ended March 31, 1998 compared to operating income of $3.4 million in the same
period of the prior year. The $0.5 million improvement in operating income for
the three months ended March 31, 1998 was principally attributable to the
increase in operating volume in the first quarter of 1998 as compared to the
same period in 1997.
SG&A for the quarters ended March 31, 1998 and 1997 were $40.3 million, or 8.2%
of revenues, and $35.6 million, or 8.2% of revenues, respectively. The dollar
increase in SG&A for the three month period ended March 31, 1998 compared to the
same period in 1997 is attributable to the increase in operating volume.
On March 18, 1998, the Company called for the redemption of approximately $61.9
million principal amount of Series C Notes and irrevocably funded such amounts
with the trustee of the SellCo Notes. In accordance with the Indenture governing
the Series C Notes, the redemption price of the Series C Notes was 104% of the
principal amount redeemed. Accordingly, the Company recorded an extraordinary
loss related to the early retirement of debt. The extraordinary loss consisted
primarily of the write-off of the associated debt discount plus the redemption
premium and costs associated with the redemption, net of income tax benefits.
The Company has given notification that it will prepay the Supplemental SellCo
Note during May 1998 and, accordingly, the Supplemental SellCo Note is included
in the accompanying condensed consolidated balance sheet as of March 31, 1998 as
a current liability under the caption "Current maturities of long-term debt."
The Company's backlog was $1,120.7 million at March 31, 1998 and $996.4 million
at December 31, 1997. Between December 31, 1997 and March 31, 1998, the
Company's backlog in Canada increased by $0.3 million, its backlog in the United
Kingdom increased by $43.7 million and its backlog in the United States
increased by $80.3 million.
Liquidity and Capital Resources
On March 18, 1998, the Company sold pursuant to underwritten public offerings,
$100.0 million principal amount of 5.75% Convertible Subordinated Notes (the
"Notes") and 1,100,000 shares of its Common Stock. Interest on the Notes is
payable semi-annually commencing October 1, 1998. The Notes are unsecured
indebtedness of the Company and are convertible into Common Stock of the Company
at a conversion price of $27.34 per share at any time.
On March 24, 1998, the underwriter of the Notes offering exercised in full its
over-allotment option to purchase an additional $15.0 million of Notes and
accordingly an additional $15.0 million principal amount of such notes were
issued.
Proceeds received from the sale of the Notes along with proceeds from the sale
of the Common Stock were used to redeem the Series C Notes and repay outstanding
borrowings under the Company's working capital credit lines and will be used to
prepay the Supplemental SellCo Note and accrued interest thereon, for possible
acquisitions and for other general corporate purposes.
The Company's consolidated cash balance increased by $74.5 million from $49.4
million at December 31, 1997 to $123.9 million at March 31, 1998, primarily as a
result of the net proceeds received from the sale of Common Stock and Notes
offset by the repayment of debt noted above. The March 31, 1998 cash balance
included approximately $5.8 million in a foreign subsidiary's bank account which
is available only to support its operations. The Company generated positive
operating cash flow for the three months ended March 31, 1998 due to
improvements in working capital which were used, along with proceeds from the
sale of Common Stock and Notes, to fund capital expenditures and redeem
approximately $61.9 million of Series C Notes.
As of March 31, 1998 the Company's total borrowing capacity under its revolving
credit facility was $100.0 million. The Company had approximately $27.2 million
of letters of credit outstanding as of that date. There were no revolving loans
outstanding as of March 31, 1998.
This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Reform Act of 1995. These
forward-looking statements involve risks and uncertainties, that could cause
actual results to differ materially from those in any such forward-looking
statements. Such factors include, but are not limited to, adverse changes in
general economic conditions, including changes in the specific markets for the
Company's services, adverse business conditions, decreased or lack of growth in
the mechanical and electrical construction and facilities services industries,
increased competition, pricing pressures, risks associated with foreign
operations and other factors.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The information in Note E to the Company's March 31, 1998 Notes to Condensed
Consolidated Financial Statements (unaudited) regarding legal proceedings is
hereby incorporated herein by reference thereto.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On February 12, 1998 the Company held a special meeting of the
stockholders.
(b) At the special meeting the stockholders voted on a proposal to amend the
Restated Certificate of Incorporation that would amend Article Fourth
thereof to increase the number of authorized shares of Common Stock from
13,700,000 shares to 30,000,000 shares. 7,736,744 shares were voted in
favor of adoption of the amendment, 373,892 shares were voted against
adoption of the amendment and no shares abstained from voting thereon.
There were no broker non-votes.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 4(a) Seventh Amendment dated as of April 14, 1998 to Credit
Agreement dated as of June 19, 1996 among EMCOR Group,
Inc., certain of its subsidiaries and Harris Trust and
Savings Bank, individually and as agent, and the lenders,
which are or become parties thereto.
Exhibit 4(b) Subordinated Indenture dated as of March 18, 1998
("Indenture") between EMCOR Group, Inc.
and State Street Bank and Trust Company, as Trustee.
Exhibit 4(c) First Supplemental Indenture dated as of March 18, 1998,
to Indenture between EMCOR Group, Inc. and State Street
Bank and Trust Company, as Trustee.
Exhibit 10(a) Employment Agreement made as of January 1, 1998 between
Frank T. MacInnis and EMCOR Group, Inc.
Exhibit 10(b) Employment Agreement made as of January 1, 1998 between
Jeffrey M. Levy and EMCOR Group, Inc.
Exhibit 10(c) Employment Agreement made as of January 1, 1998 between
Leicle E. Chesser and EMCOR Group, Inc.
Exhibit 10(d) Employment Agreement made as of January 1, 1998 between
Thomas D. Cunningham and EMCOR Group, Inc.
Exhibit 10(e) Employment Agreement made as of January 1, 1998 between
R. Kevin Matz and EMCOR Group, Inc.
Exhibit 10(f) Employment Agreement made as of January 1, 1998 between
Mark A. Pompa and EMCOR Group, Inc.
Exhibit 10(g) Letter Agreement made as of January 1, 1998 between
Sheldon I. Cammaker and EMCOR Group, Inc.
Exhibit No. 11. Computation of Earnings Per Common Share and Common
Equivalent Share for the three month period ended March
31, 1998.
Exhibit No. 27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1998.
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.
EMCOR GROUP, INC.
----------------------------
(Registrant)
Date: May 4, 1998 By: /s/FRANK T. MacINNIS
----------------------------
Frank T. MacInnis
Chairman of the Board of
Directors and
Chief Executive Officer
Date: May 4, 1998 By: /s/LEICLE E. CHESSER
----------------------------
Leicle E. Chesser
Executive Vice President
and Chief Financial Officer