UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

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

Commission File Number 0-5423

(Exact name of registrant as specified in its charter)

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

11770 US Highway 1, Suite 101, Palm Beach Gardens, Florida		33408
(Address of principal executive offices)		(Zip Code)

(561) 627-7171

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock		Outstanding shares November 25, 2009
Common stock, par value of $0.33 1/3		39,019,094

 

 

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		28
Item 3. Quantitative and Qualitative Disclosures About Market Risk		41
Item 4. Controls and Procedures		41
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		42
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 6. Exhibits		43
Signatures		44
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		October 24,				July 25,
		2009				2009
		(Dollars in thousands)
ASSETS
CURRENT ASSETS:
Cash and equivalents		$	120,483			$	104,707
Accounts receivable, net			113,008				116,968
Costs and estimated earnings in excess of billings			57,500				67,111
Deferred tax assets, net			15,335				15,779
Income taxes receivable			2,144				7,016
Inventories			7,774				8,303
Other current assets			12,724				7,323
Total current assets			328,968				327,207
Property and equipment, net			136,811				142,132
Goodwill			157,851				157,851
Intangible assets, net			54,441				56,056
Other			10,264				10,211
Total non-current assets			359,367				366,250
TOTAL		$	688,335			$	693,457
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	28,093			$	28,977
Current portion of debt			615				926
Billings in excess of costs and estimated earnings			180				151
Accrued insurance claims			27,084				27,386
Income taxes payable			2,317				—
Other accrued liabilities			39,761				52,590
Total current liabilities			98,050				110,030
LONG-TERM DEBT			135,350				135,377
ACCRUED INSURANCE CLAIMS			31,058				29,759
DEFERRED TAX LIABILITIES, net non-current			23,892				22,910
OTHER LIABILITIES			4,936				4,758
Total liabilities			293,286				302,834
COMMITMENTS AND CONTINGENCIES, Notes 9, 10, and 15
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: 39,017,290 and 38,998,513 issued and outstanding, respectively			13,006				12,999
Additional paid-in capital			172,954				172,112
Accumulated other comprehensive income			123				69
Retained earnings			208,966				205,443
Total stockholders’ equity			395,049				390,623
TOTAL		$	688,335			$	693,457

See notes to the condensed consolidated financial statements.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands, except per share amounts)
REVENUES:
Contract revenues		$	259,116			$	333,967
EXPENSES:
Costs of earned revenues, excluding depreciation and amortization			209,971				268,646
General and administrative (including stock-based compensation expense of $1.0 million and $1.5 million, respectively)			23,502				27,540
Depreciation and amortization			15,191				16,612
Total			248,664				312,798
Interest income			35				135
Interest expense			(3,544	)			(4,052	)
Other income, net			1,105				402
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			8,048				17,654
PROVISION FOR INCOME TAXES:
Current			3,149				4,104
Deferred			1,376				2,964
Total			4,525				7,068
INCOME FROM CONTINUING OPERATIONS			3,523				10,586
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX			—				(38	)
NET INCOME		$	3,523			$	10,548
EARNINGS PER COMMON SHARE — BASIC:
Income from continuing operations		$	0.09			$	0.27
Loss from discontinued operations			—				—
Net income		$	0.09			$	0.27
EARNINGS PER COMMON SHARE — DILUTED:
Income from continuing operations		$	0.09			$	0.27
Loss from discontinued operations			—				—
Net income		$	0.09			$	0.27
SHARES USED IN COMPUTING EARNINGS PER COMMON SHARE:
Basic			38,990,281				39,321,662
Diluted			39,281,606				39,421,590

See notes to the condensed consolidated financial statements.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands)
OPERATING ACTIVITIES:
Net income		$	3,523			$	10,548
Adjustments to reconcile net cash inflow from operating activities:
Depreciation and amortization			15,191				16,612
Bad debts expense (recovery), net			24				(138	)
Gain on sale of fixed assets			(1,026	)			(1,022	)
Deferred income tax provision			1,376				3,052
Stock-based compensation expense			971				1,547
Amortization of debt issuance costs			257				231
Write-off of deferred financing costs			—				551
Change in operating assets and liabilities, net of acquisitions:
(Increase) decrease in operating assets:
Accounts receivable, net			3,687				(9,232	)
Costs and estimated earnings in excess of billings, net			9,640				(2,134	)
Other current assets and inventory			(4,872	)			(5,786	)
Income taxes receivable			4,872				—
Other assets			(326	)			220
Increase (decrease) in operating liabilities:
Accounts payable			(397	)			2,609
Accrued liabilities and insurance claims			(10,254	)			(16,638	)
Income taxes payable			1,916				3,690
Net cash provided by operating activities			24,582				4,110
INVESTING ACTIVITIES:
Changes in restricted cash			—				(210	)
Capital expenditures			(9,936	)			(9,290	)
Proceeds from sale of assets			1,614				1,259
Net cash used in investing activities			(8,322	)			(8,241	)
FINANCING ACTIVITIES:
Proceeds from long-term debt			—				30,000
Principal payments on long-term debt			(455	)			(670	)
Debt issuance costs			—				(1,547	)
Restricted stock tax withholdings			(29	)			(14	)
Exercise of stock options and other			—				17
Net cash (used in ) provided by financing activities			(484	)			27,786
Net increase (decrease) in cash and equivalents			15,776				23,655
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD			104,707				22,068
CASH AND EQUIVALENTS AT END OF PERIOD		$	120,483			$	45,723
SUPPLEMENTAL DISCLOSURE OF OTHER CASH FLOW ACTIVITIES AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid during the period for:
Interest		$	6,013			$	6,657
Income taxes		$	332			$	231
Purchases of capital assets included in accounts payable or other accrued liabilities at period end		$	2,531			$	2,020

See notes to the condensed consolidated financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

          Dycom Industries, Inc. (“Dycom” or the “Company”) is a leading provider of specialty contracting services. These services are provided throughout the United States and include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities including telecommunications providers, and other construction and maintenance services to electric utilities and others. Additionally, Dycom provides services on a limited basis in Canada.

          The condensed consolidated financial statements include the results of Dycom and its subsidiaries, all of which are wholly-owned. All intercompany accounts and transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements do not include all of the financial information and footnotes required by GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three months ended October 24, 2009 are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended July 25, 2009 included in the Company’s 2009 Annual Report on Form 10-K, filed with the SEC on September 3, 2009.

               Discontinued Operations - During fiscal 2007, a wholly-owned subsidiary of the Company, Apex Digital, LLC (“Apex”) notified its primary customer of its intention to cease performing installation services in accordance with its contractual rights. Effective December 2006, this customer, a satellite broadcast provider, transitioned its installation service requirements to others and Apex ceased providing these services. As a result, the Company has discontinued the operations of Apex. The results of Apex were not material in fiscal 2009 or 2010.

               Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. For the Company, key estimates include: recognition of revenue for costs and estimated earnings in excess of billings, the fair value of goodwill and intangible assets, income taxes, accrued insurance claims, asset lives used in computing depreciation and amortization, allowance for doubtful accounts, compensation expense for performance-based stock awards, and accruals for contingencies, including legal matters. At the time they are made, the Company believes that such estimates are fair when considered in conjunction with the condensed consolidated financial position and results of operations taken as a whole. However, actual results could differ from those estimates and such differences may be material to the financial statements.

          Subsequent Events — The Company evaluated subsequent events through the time of filing these financial statements with the SEC on November 25, 2009, and there were no subsequent events that would require disclosure, except for the legal matter disclosed in Note 15, Commitments and Contingencies — Legal Proceedings.

               Restricted Cash — As of October 24, 2009 and July 25, 2009, the Company had approximately $4.9 million in restricted cash which is held as collateral in support of the Company’s insurance obligations. Restricted cash is included in other current assets and other assets in the condensed consolidated balance sheets and changes in restricted cash are reported in cash flows used in investing activities in the condensed consolidated statements of cash flows.

          Comprehensive Income — During the three months ended October 24, 2009 and October 25, 2008, the Company did not have any material changes in its equity resulting from non-owner sources, including foreign currency translation adjustments. Accordingly, comprehensive income approximated the net income amounts presented for the respective period’s operations.

          Multiemployer Defined Benefit Pension Plan — A wholly-owned subsidiary of the Company participates in a multiemployer defined benefit pension plan that covers certain of its employees. This subsidiary makes periodic contributions to the plan to meet its benefit obligations. During each of the three months ended October 24, 2009 and October 25, 2008, the subsidiary contributed approximately $1.2 million to the plan.

               Fair Value of Financial Instruments — Accounting Standard Codification (“ASC”) Topic 825 requires certain disclosures regarding the fair value of financial instruments. The Company’s financial instruments consist primarily of cash and equivalents, restricted cash, accounts receivable, income taxes receivable and payable, accounts payable and accrued expenses, and long-term debt. The carrying amounts of these instruments approximate their fair value due to the short maturity of these items, except for the Company’s 8.125% senior subordinated notes due October 2015. The Company determined that the fair value of the 8.125% senior subordinated notes at October 24, 2009 was $124.0 million based on quoted market prices compared to a carrying value of $135.35 million.

               Segment Information — The Company operates in one reportable segment as a specialty contractor, providing engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities including telecommunications providers, and other construction and maintenance services to electric utilities and others. All of the Company’s subsidiaries have been aggregated into one reporting segment due to their similar economic characteristics, products and production methods, and distribution methods. The Company’s services are provided by its various subsidiaries throughout the United States and, on a limited basis, in Canada. One of the Company’s subsidiaries earned revenues from contracts in Canada of approximately $1.6 million and $1.1 million during the three months ended October 24, 2009 and October 25, 2008, respectively. The Company had no material long-lived assets in the Canadian operations at October 24, 2009 and July 25, 2009.

               Recently Issued Accounting Pronouncements — In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statements of Financial Accounting Standards (“SFAS”) No. 166, “Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140”, ASC Topic 860. SFAS No. 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. This statement is effective for the Company in fiscal 2011. The adoption of SFAS No. 166 is not expected to have a material effect on the Company’s condensed consolidated financial statements.

               In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”, ASC Topic 810. SFAS No. 167 amends FASB Interpretation No. 46 (R), “Consolidation of Variable Interest Entities”, to require an analysis to determine whether a variable interest gives a company a controlling financial interest in a variable interest entity. This statement requires an ongoing reassessment of whether an enterprise is the primary beneficiary of a variable interest

entity. This statement is effective for the Company in fiscal 2011. The adoption of SFAS No. 167 is not expected to have a material effect on the Company’s condensed consolidated financial statements.

2. Computation of Earnings Per Common Share

          In June 2008, the FASB issued Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“EITF 03-6-1”), ASC Topic 260. ASC Topic 260 addresses whether unvested share-based payment awards with rights to receive dividends or dividend equivalents should be considered as participating securities for the purposes of applying the two-class method of calculating earnings per share. The FASB staff concluded that unvested share-based payment awards that contain rights to receive non-forfeitable dividends or dividend equivalents are participating securities, and thus, should be included in the two-class method of computing earnings per share. The Company adopted this standard in the first quarter of fiscal 2010 and the adoption did not change the Company’s earnings per share calculation for any prior period presented.

          The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation as required by ASC Topic 260. Basic earnings per common share is computed based on the weighted average number of shares outstanding during the period, excluding unvested restricted shares and restricted share units. Diluted earnings per common share includes the weighted average common shares outstanding for the period plus dilutive potential common shares, including unvested time vesting and certain performance vesting restricted shares and restricted share units. Performance vesting restricted shares and restricted share units are only included in diluted earnings per common share calculations for the period if all the necessary performance conditions are satisfied and their impact is not anti-dilutive. Common stock equivalents related to stock options are excluded from diluted earnings per common share calculations if their effect would be anti-dilutive.

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands, except per share amounts)
Numerator:
Income from continuing operations		$	3,523			$	10,586
Loss from discontinued operations, net of tax			—				(38	)
Net income		$	3,523			$	10,548
Denominator:
Basic
Weighted-average number of common shares — Basic			38,990,281				39,321,662
Diluted
Weighted-average number of common shares — Basic			38,990,281				39,321,662
Potential common stock arising from stock options, unvested restricted shares and unvested restricted share units			291,325				99,928
Weighted-average number of common shares — Diluted			39,281,606				39,421,590
Antidilutive weighted shares excluded from the calculation of earnings per common share			2,017,726				2,298,370
EARNINGS PER COMMON SHARE — BASIC:
Income from continuing operations		$	0.09			$	0.27
Loss from discontinued operations			—				—
Net income		$	0.09			$	0.27
EARNINGS PER COMMON SHARE — DILUTED:
Income from continuing operations		$	0.09			$	0.27
Loss from discontinued operations			—				—
Net income		$	0.09			$	0.27

3. Accounts Receivable

          Accounts receivable consists of the following:

		October 24, 2009				July 25, 2009
		(Dollars in thousands)
Contract billings		$	110,621			$	113,275
Retainage and other receivables			3,206				4,501
Total			113,827				117,776
Less: allowance for doubtful accounts			819				808
Accounts receivable, net		$	113,008			$	116,968

          The allowance for doubtful accounts changed as follows:

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands)
Allowance for doubtful accounts at beginning of period		$	808			$	769
Bad debt expense (recovery), net			24				(138	)
Amounts charged against the allowance			(13	)			(157	)
Allowance for doubtful accounts at end of period		$	819			$	474

          As of October 24, 2009, the Company expected to collect all retainage balances within the next twelve months.

4. Costs and Estimated Earnings on Contracts in Excess of Billings

          Costs and estimated earnings in excess of billings, net, consists of the following:

		October 24, 2009				July 25, 2009
		(Dollars in thousands)
Costs incurred on contracts in progress		$	46,523			$	53,823
Estimated to date earnings			10,977				13,288
Total costs and estimated earnings			57,500				67,111
Less: billings to date			180				151
		$	57,320			$	66,960
Included in the accompanying consolidated balance sheets under the captions:
Costs and estimated earnings in excess of billings		$	57,500			$	67,111
Billings in excess of costs and estimated earnings			(180	)			(151	)
		$	57,320			$	66,960

          The above amounts include revenue for services from contracts based both on the units of delivery and the cost-to-cost measures of the percentage of completion method.

5. Property and Equipment

          Property and equipment, including amounts for assets subject to capital leases, consists of the following:

		October 24, 2009				July 25, 2009
		(Dollars in thousands)
Land		$	2,937			$	2,974
Buildings			9,739				9,875
Leasehold improvements			4,427				4,361
Vehicles			199,872				199,372
Computer hardware and software			44,755				42,323
Office furniture and equipment			5,142				5,030
Equipment and machinery			123,770				123,709
Total			390,642				387,644
Less: accumulated depreciation			253,831				245,512
Property and equipment, net		$	136,811			$	142,132

          Depreciation expense and repairs and maintenance, including amounts for assets subject to capital leases, were as follows:

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands)
Depreciation expense		$	13,576			$	14,788
Repairs and maintenance expense		$	3,915			$	4,480

6. Goodwill and Intangible Assets

          The Company’s goodwill and intangible assets consist of the following:

		Useful Life
		In Years		October 24, 2009				July 25, 2009
				(Dollars in thousands)
Goodwill		N/A		$	157,851			$	157,851
Intangible Assets:
Carrying amount
UtiliQuest tradename		Indefinite			4,700				4,700
Tradenames		4-15			2,600				2,925
Customer relationships		5-15			77,555				77,555
					84,855				85,180
Accumulated amortization:
Tradenames					616				897
Customer relationships					29,798				28,227
					30,414				29,124
Net Intangible Assets				$	54,441			$	56,056

          For finite-lived intangible assets, amortization expense for the three months ended October 24, 2009 and October 25, 2008 was $1.6 million and $1.8 million, respectively. Amortization of the Company’s customer relationships is recognized on an accelerated basis related to the expected economic benefit of the intangible asset, while amortization of other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life.

          The Company’s goodwill resides in multiple reporting units. The profitability of individual reporting units may periodically suffer from downturns in customer demand and other factors resulting from the cyclical nature of the Company’s business, the high level of competition existing within the Company’s industry, the concentration of the Company’s revenues within a limited number of customers, and the level of overall economic activity. Individual reporting units may be relatively more impacted by these factors than the Company as a whole. During times of economic slowdown, the Company’s customers may reduce their capital expenditures and defer or cancel pending projects. As a result, demand for the services of one or more of the Company’s reporting units could decline resulting in an impairment of goodwill or intangible assets.

          During fiscal 2009, the Company’s market capitalization was significantly impacted by the extreme volatility in the U.S. equity and credit markets and was below the book value of shareholders’ equity as of the end of the Company’s second quarter. As a result, the Company evaluated whether the decrease in its market capitalization reflected factors that would more likely than not reduce the fair value of the Company’s reporting units below their carrying value. Based on a combination of factors, including the economic environment, the sustained period of decline in the Company’s market capitalization, and the implied valuation and discount rate assumptions in the Company’s industry, the Company concluded there were sufficient indicators to perform an interim impairment test of the reporting units and related intangible assets as of January 24, 2009, and, as a result, recognized a preliminary goodwill impairment charge of $94.4 million during the second quarter of fiscal 2009. The Company’s interim impairment analysis was finalized during the third quarter of fiscal 2009 and no further charges were incurred. The Company performed its annual impairment test in the fourth quarter of fiscal 2009 and there was no impairment of goodwill or indefinite-lived intangible assets. However, the estimated fair value of the Prince Telecom (“Prince”) reporting unit exceeded its carrying value by a margin of less than 25%. There were also smaller margins of fair value over carrying value for the Broadband Installations Services, Ervin Cable Construction (“Ervin”), and UtiliQuest reporting units, as their carrying values were written down to their estimated fair values during fiscal 2009. As a result, the goodwill balances of these reporting units may have an increased likelihood of impairment in future periods if adverse events were to occur or circumstances were to change and the long-term outlook for their cash flows were adversely impacted. Broadband Installation Services, Ervin, Prince, and UtiliQuest have remaining goodwill balances of $19.7 million, $7.4 million, $39.7 million, and $35.6 million, respectively, as of October 24, 2009.

          Except for the goodwill impairment charges described above, none of the Company’s reporting units with remaining goodwill balances incurred significant losses in fiscal 2009 or 2010. The estimates and assumptions used in assessing the fair value of the Company’s reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Changes in the Company’s judgments and estimates could result in a significantly different estimate of the fair value of the reporting units and could result in impairments of goodwill or intangible assets at additional reporting units. A change in the estimated discount rate used would have impacted the amount of the goodwill impairment charges recorded during fiscal 2009. Additionally, continued adverse conditions in the economy and future volatility in the equity and credit markets could further impact the valuation of the Company’s

reporting units. The Company can provide no assurances that, if such conditions continue, they will not trigger additional impairments of goodwill and other intangible assets in future periods.

          As of October 24, 2009, the Company believes the carrying value of its goodwill and other indefinite-lived intangible asset is recoverable; however, there can be no assurances that they will not be impaired in future periods. Certain of the Company’s reporting units also have other intangible assets including tradenames and customer relationship intangibles. As of October 24, 2009, management believes that the carrying amounts of the 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 may become impaired.

7. Accrued Insurance Claims

          The Company retains the risk of loss, up to certain limits, for claims relating to automobile liability, general liability (including locate damages), workers’ compensation, employee group health. With regard to losses occurring in fiscal 2010, the Company has retained 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 three states in which the Company participates in a state sponsored insurance fund. Aggregate stop loss coverage for automobile liability, general liability and workers’ compensation claims is $43.8 million for fiscal 2010. For losses under the Company’s employee health plan occurring during fiscal 2010, it has retained the risk of loss, on an annual basis, of $250,000 per participant.

Accrued insurance claims consist of the following:

		October 24, 2009				July 25, 2009
		(Dollars in thousands)
Amounts expected to be paid within one year:
Accrued auto, general liability and workers’ compensation		$	15,292			$	15,559
Accrued employee group health			3,430				3,698
Accrued damage claims			8,362				8,129
			27,084				27,386
Amounts expected to be paid beyond one year:
Accrued auto, general liability and workers’ compensation			24,987				23,866
Accrued damage claims			6,071				5,893
			31,058				29,759
Total accrued insurance claims		$	58,142			$	57,145

8. Other Accrued Liabilities

          Other accrued liabilities consist of the following:

		October 24, 2009				July 25, 2009
		(Dollars in thousands)
Accrued payroll and related taxes		$	19,519			$	22,041
Accrued employee benefit and incentive plan costs			1,886				7,195
Accrued construction costs			7,557				8,083
Accrued interest and related bank fees			466				3,228
Current liabilities of discontinued operations			464				528
Other			9,869				11,515
Total other accrued liabilities		$	39,761			$	52,590

9. Debt

          The Company’s outstanding indebtedness consists of the following:

		October 24, 2009				July 25, 2009
		(Dollars in thousands)
Senior subordinated notes		$	135,350			$	135,350
Capital leases			615				953
			135,965				136,303
Less: current portion			615				926
Long-term debt		$	135,350			$	135,377

          During the first quarter of fiscal 2009, the Company entered into a new three-year $195.0 million revolving Credit Agreement (the “Credit Agreement”) with a syndicate of banks. The Credit Agreement was subsequently amended to add an additional bank to the syndicate of banks and increase the maximum borrowing available under the Credit Agreement from $195.0 million to $210.0 million. The Credit Agreement has an expiration date of September 12, 2011 and includes a sublimit of $100.0 million for the issuance of letters of credit. Subject to certain conditions, the Credit Agreement provides for two one-year extensions and, after giving affect to the amendment, also provides the ability to borrow an incremental $85.0 million (the “Incremental Revolving Facility”).

          Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (a) the administrative agent’s base rate, described in the Credit Agreement as the higher of the administrative agent’s prime rate or the federal funds rate plus 0.50%, or (b) LIBOR (a publicly published rate) plus, in either instance, a spread determined by the Company’s condensed consolidated leverage ratio. Since the Credit Agreement has been in place, the spread above the administrative agent’s base rate ranged from 0.75% to 1.00% and the spread above LIBOR ranged from 1.75% to 2.00%. The Credit Agreement requires the payment of fees for outstanding

letters of credit and unutilized commitments, in each case based on the Company’s consolidated leverage ratio. Since inception of the Credit Agreement, fees for outstanding letters of credit ranged from 1.875% to 2.125% per annum and fees for unutilized commitments ranged from 0.625% to 0.75% per annum. The payments under the Credit Agreement are guaranteed by certain subsidiaries and secured by a pledge of (i) 100% of the equity of the Company’s material domestic subsidiaries, and (ii) 100% of the non-voting equity and 65% of the voting equity of first tier material foreign subsidiaries, if any, in each case excluding certain unrestricted subsidiaries.

          The Credit Agreement contains certain affirmative and negative covenants, including limitations with respect to indebtedness, liens, investments, distributions, mergers and acquisitions, disposition of assets, sale-leaseback transactions and transactions with affiliates. It also contains defined financial covenants which require the Company to (i) maintain a leverage ratio of not greater than 3.00 to 1.00, as measured at the end of each fiscal quarter, (ii) maintain an interest coverage ratio of not less than 2.75 to 1.00, as measured at the end of each fiscal quarter and (iii) maintain condensed consolidated total tangible net worth, as measured at the end of each fiscal quarter, of not less than $50.0 million plus (A) 50% of condensed consolidated net income (if positive) from September 12, 2008 to the date of computation plus (B) 75% of equity issuances made from September 12, 2008 to the date of computation.

          As of October 24, 2009, the Company had no outstanding borrowings and $47.9 million of outstanding letters of credit issued under the Credit Agreement. The outstanding letters of credit are issued as part of the Company’s insurance program. At October 24, 2009, the Company had additional borrowing availability of $162.1 million as determined by the most restrictive covenants of the Credit Agreement and was in compliance with all of the financial covenants.

          In October 2005, Dycom Investments, Inc., a wholly-owned subsidiary of the Company, issued $150.0 million in aggregate principal amount of 8.125% senior subordinated notes due October 2015 (“Notes”). Interest on the Notes is due on April 15th and October 15th of each year. The Company purchased $14.65 million principal amount of the Notes during fiscal 2009 for $11.3 million. The indenture governing the Notes contains covenants that restrict the Company’s ability to, among other things:

•		make certain payments, including the payment of dividends;
•		redeem or repurchase capital stock;
•		incur additional indebtedness and issue preferred stock;
•		make investments or create liens;
•		enter into sale and leaseback transactions;
•		merge or consolidate with another entity;
•		sell certain assets; and
•		enter into transactions with affiliates.

          The Company had $0.6 million in capital lease obligations as of October 24, 2009 which were assumed in connection with the fiscal 2007 acquisition of Broadband Installation Services.

10. Income Taxes

          In previous years, the Company incurred non-cash impairment charges on an investment for financial statement purposes and recorded a deferred tax asset reflecting the tax benefits of those impairment charges. During the three months ended October 24, 2009, the investment became impaired for tax purposes and the Company determined that it is more likely than not that the associated tax benefit will not be realized prior to its eventual expiration. Accordingly, the Company recognized a non-cash income tax charge of $1.1 million for a valuation allowance on the associated deferred tax asset.

          As of October 24, 2009, the Company has total unrecognized tax benefits of $3.0 million, which would reduce the Company’s effective tax rate during future periods if it is subsequently determined that those liabilities are not required. The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. During each of the three months ended October 24, 2009 and October 25, 2008, the Company recognized less than $0.1 million of interest expense in the accompanying condensed consolidated statements of operations related to unrecognized tax benefits.

11. Other Income, net

          The components of other income, net, are as follows:

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands)
Gain on sale of fixed assets		$	1,026			$	1,022
Miscellaneous (loss) income			79				(69	)
Write-off of deferred financing costs			—				(551	)
Total other income, net		$	1,105			$	402

12. Capital Stock

          On each of August 28, 2007 and May 20, 2008, the Company’s Board of Directors authorized the repurchase of up to $15.0 million of its common stock in open market or private transactions (for an aggregate authorization of $30.0 million). The Board of Directors further increased its authorization to repurchase shares of its common stock by $15.0 million, increasing the aggregate authorization from $30.0 million to $45.0 million on August 26, 2008. The stock repurchases are authorized to be made through February 2010. As of October 24, 2009, approximately $16.9 million of the aggregate authorized amount remains available for the repurchase of common stock.

13. Stock-Based Awards

               Stock-based awards are granted by the Company under its 2003 Long-term Incentive Plan (“2003 Plan”) and the 2007 Non-Employee Directors Equity Plan (“2007 Directors Plan”), (collectively, “the Plans”). The Company also has several other plans under which no further awards will be granted, including expired plans. The Company’s policy is to issue new shares to satisfy equity awards under the Plans. Under the terms of the Plans, stock options are granted at the closing price on the date of the grant and are exercisable over a period of up to ten years. The Plans also provide for the grants of time based restricted share units (“RSUs”), that currently vest ratably over a four year period from the date of grant. Additionally, the 2003 Plan provides for the grants of performance based restricted share units (“Performance RSUs”). Outstanding Performance RSUs vest over a three year period from the grant date if certain Company performance goals are achieved.

          The following table summarizes the stock-based awards activity during the three months ended October 24, 2009:

		Stock Options								RSUs								Performance RSUs
						Weighted								Weighted								Weighted
						Average								Average								Average
						Exercise								Grant								Grant
		Shares				Price				Shares/Units				Price				Shares/Units				Price
Outstanding as of July 25, 2009			2,866,675			$	23.36				177,400			$	13.78				680,342			$	21.34
Granted			—			$	—				—			$	—				55,746			$	12.25
Options Exercised/Shares and Units Vested			—			$	—				—			$	—				(19,693	)		$	18.42
Forfeited or cancelled			(168,545	)		$	25.95				(7,324	)		$	6.83				(109,699	)		$	15.71
Outstanding as of October 24, 2009			2,698,130			$	23.20				170,076			$	14.08				606,696			$	21.62
Excerisable options as of October 24, 2009			1,878,561			$	30.03

          The Performance RSUs in the above table represent the maximum number of awards which may vest under the outstanding grants assuming that all performance criteria are met. Approximately 237,000 Performance RSUs outstanding as of October 24, 2009 will be cancelled during the second quarter of fiscal 2010 related to fiscal 2009 performance criteria not being met.

          Compensation expense for stock-based awards is based on the fair value at the measurement date and is included in general and administrative expenses in the condensed consolidated statements of operations. The compensation expense and the related tax benefit recognized related to stock options, restricted share and restricted share units for the three months ended October 24, 2009 and October 25, 2008 is as follows:

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands)
Stock-based compensation expense		$	971			$	1,547
Tax benefit recognized			(314	)			(596	)

          The Company evaluates compensation expense quarterly and only recognizes expense for performance based awards if management determines it is probable that the performance criteria for the awards will be met. The total amount of expense ultimately recognized is based on the number of awards that actually vest. Accordingly, the amount recognized during current and prior periods may not be representative of future stock-based compensation expense.

          Under the Plans, the maximum total unrecognized compensation expense and weighted-average period over which the expense would be recognized subsequent to October 24, 2009 is as follows:

		Unrecognized
		Compensation				Weighted-
		Expense				Average Period
		(In thousands)				(In years)
Stock options		$	2,644				3.0
Unvested RSUs		$	1,368				1.8
Unvested Performance RSUs		$	6,244				0.8

          For Performance RSUs, the unrecognized compensation cost above is based upon the maximum amount of restricted units that can be earned under outstanding awards and excludes unrecognized compensation for awards that will cancel in December 2009 due to the fiscal 2009 performance criteria not being met. If performance goals are not met related to future performance periods, no compensation expense will be recognized for these units and compensation expense previously recognized will be reversed.

14. Related Party Transactions

          The Company leases administrative offices from entities related to officers of the Company’s subsidiaries. The total expense under these arrangements was $0.3 million for each of the three month periods ended October 24, 2009 and October 25, 2008, respectively.

15. Commitments and Contingencies

Legal Proceedings.

          In May 2009, the Company and one of its subsidiaries were named as defendants in a lawsuit in the U.S. District Court for the Western District of Washington. The plaintiffs, all former employees of the subsidiary, allege various wage and hour claims, including that employees were not paid for all hours worked and were subject to improper wage deductions. Plaintiffs seek to certify as a class current and former employees of the subsidiary who worked in the State of Washington. In November 2009, the plaintiffs’ attorneys, the Company and the subsidiary entered into a memorandum of understanding pursuant to which the parties agreed to the terms of a

proposed settlement with respect to the lawsuit. The proposed settlement provides for the resolution of all claims against the Company and the subsidiary in exchange for an aggregate payment of not more than $2.2 million. This proposed settlement is subject to a number of contingencies, including preparation of a Stipulation of Settlement and Release, preliminary Court approval, certification of a settlement class and final Court approval after providing members of the plaintiffs’ class with notice of the settlement terms. The Company has estimated the liability of this proposed settlement at $2.0 million and recorded a pre-tax charge for this amount during the quarter ended October 24, 2009. The actual amount of the proposed settlement to be paid will depend on the number of class members that participate in the settlement, and could differ from the estimated amount.

          From time to time, the Company and its subsidiaries are also party to various other claims and legal proceedings. Additionally, as part of the Company’s insurance program, the Company retains the risk of loss, up to certain limits, for claims related to automobile liability, general liability, workers’ compensation, employee group health, and locate damages. For these claims, the effect on the Company’s financial statements is generally limited to the amount of the Company’s insurance deductible or insurance retention. It is the opinion of the Company’s management, based on information available at this time, that none of such other pending claims or proceedings will have a material effect on its condensed consolidated financial statements.

Performance Bonds and Guarantees.

          The Company has obligations under performance bonds related to certain of its customer contracts. Performance bonds generally provide the Company’s 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 October 24, 2009, the Company had $38.5 million of outstanding performance bonds and no events have occurred in which the customers have exercised their rights under the performance bonds.

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

16. Customer Concentrations

                The Company provides specialty contracting services to telecommunications providers, utilities and others. Revenue information by type of customer is as follows:

		For the Three Months Ended
		October 24, 2009				October 25, 2008
		(Dollars in thousands)
Telecommunications		$	204,897			$	263,203
Underground facility locating			46,940				51,517
Electric utilities and other construction and maintenance			7,279				19,247
Total contract revenues		$	259,116			$	333,967

           The Company’s customer base is highly concentrated, with the top five customers accounting for approximately 65.5% and 64.9% of total contract revenues for the three month periods ended October 24, 2009 and October 25, 2008, respectively. AT&T, Inc. (“AT&T”), Comcast Cable Corporation (“Comcast”) , and Verizon Communications, Inc. (“Verizon”) represent a significant portion of the Company’s customer base. For the three month periods ended October 24, 2009 and October 25, 2008, revenues from AT&T, Comcast, and Verizon represented the following percentages of total revenue from continuing operations:

		For the Three Months Ended
		October 24, 2009				October 25, 2008
AT&T			18.2	%			15.7	%
Comcast			15.7	%			16.1	%
Verizon			14.7	%			19.4	%

                    The Company believes that none of its significant customers were experiencing financial difficulties that would impact the collectability of the Company’s trade accounts receivable and costs in excess of billings as of October 24, 2009. The outstanding balances for trade accounts receivable and costs and estimated earnings in excess of billings as of October 24, 2009, from AT&T, Comcast, and Verizon, totaled approximately $25.8 million or 15.1%, $20.6 million or 12.0%, and $40.0 million or 23.4%, respectively, of the outstanding balances. The outstanding balances for these amounts as of July 25, 2009 from AT&T, Comcast, and Verizon totaled approximately $28.5 million or 15.6%, $21.6 million or 11.8%, and $48.0 million or 26.2%, respectively, of the outstanding balances.

17. Supplemental Consolidating Financial Statements

          As of October 24, 2009, the principal amount outstanding of the Company’s Notes was $135.35 million. The Notes were issued in fiscal 2006 by Dycom Investments, Inc. (“Issuer”), a wholly-owned subsidiary of the Company. The following condensed consolidating financial statements present, in separate columns, financial information for (i) Dycom Industries, Inc. (“Parent”) on a parent only basis, (ii) the Issuer, (iii) the guarantor subsidiaries for the Notes on a combined basis, (iv) other non-guarantor subsidiaries on a combined basis, (v) the eliminations and reclassifications necessary to arrive at the information for the Company on a consolidated basis, and (vi) the Company on a consolidated basis. The condensed consolidating financial statements are presented in accordance with the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the

Company’s share of subsidiaries’ cumulative results of operations, capital contributions, distributions and other equity changes. Intercompany charges (income) between the Parent and subsidiaries are recognized in the condensed consolidating financial statements during the period incurred and the settlement of intercompany balances is reflected in the condensed consolidating statement of cash flows based on the nature of the underlying transactions.

          Each guarantor and non-guarantor subsidiary is wholly-owned, directly or indirectly, by the Issuer and the Parent. The Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary and Parent. There are no contractual restrictions limiting transfers of cash from guarantor and non-guarantor subsidiaries to Issuer or Parent, within the meaning of Rule 3-10 of Regulation 
S-X.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)
OCTOBER 24, 2009

														Non-
										Subsidiary				Guarantor				Eliminations and				Dycom
		Parent				Issuer				Guarantors				Subsidiaries				Reclassifications				Consolidated
		(Dollars in thousands)
ASSETS
CURRENT ASSETS:
Cash and equivalents		$	—			$	—			$	119,881			$	602			$	—			$	120,483
Accounts receivable, net			—				—				112,002				1,006				—				113,008
Costs and estimated earnings in excess of billings			—				—				56,947				553				—				57,500
Deferred tax assets, net			1,182				—				14,193				118				(158	)			15,335
Income taxes receivable			2,144				—				—				—				—				2,144
Inventories			—				—				7,664				110				—				7,774
Other current assets			7,022				47				4,473				1,182				—				12,724
Total current assets			10,348				47				315,160				3,571				(158	)			328,968
Property and equipment, net			13,382				—				106,881				17,166				(618	)			136,811
Goodwill			—				—				157,851				—				—				157,851
Intangible assets, net			—				—				54,441				—				—				54,441
Deferred tax assets, net non-current			—				—				15,175				107				(15,282	)			—
Investment in subsidiaries			676,638				1,226,413				—				—				(1,903,051	)			—
Intercompany receivables			—				—				723,191				—				(723,191	)			—
Other			4,677				2,819				2,168				600				—				10,264
Total non-current assets			694,697				1,229,232				1,059,707				17,873				(2,642,142	)			359,367
TOTAL		$	705,045			$	1,229,279			$	1,374,867			$	21,444			$	(2,642,300	)		$	688,335
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	1,357			$	—			$	26,435			$	301			$	—			$	28,093
Current portion of debt			—				—				615				—				—				615
Billings in excess of costs and estimated earnings			—				—				180				—				—				180
Accrued insurance claims			557				—				26,459				68				—				27,084
Income taxes payable			2,317				—				—				—				—				2,317
Deferred tax liabilities			—				106				—				52				(158	)			—
Other accrued liabilities			2,230				331				35,393				1,807				—				39,761
Total current liabilities			6,461				437				89,082				2,228				(158	)			98,050
LONG-TERM DEBT			—				135,350				—				—				—				135,350
ACCRUED INSURANCE CLAIMS			791				—				30,167				100				—				31,058
DEFERRED TAX LIABILITIES, net non-current			1,337				423				34,163				3,251				(15,282	)			23,892
INTERCOMPANY PAYABLES			297,532				416,431				—				9,239				(723,202	)			—
OTHER LIABILITIES			3,875				—				1,052				9				—				4,936
Total liabilities			309,996				552,641				154,464				14,827				(738,642	)			293,286
Total stockholders’ equity			395,049				676,638				1,220,403				6,617				(1,903,658	)			395,049
TOTAL		$	705,045			$	1,229,279			$	1,374,867			$	21,444			$	(2,642,300	)		$	688,335

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
JULY 25, 2009

														Non-
										Subsidiary				Guarantor				Eliminations and				Dycom
		Parent				Issuer				Guarantors				Subsidiaries				Reclassifications				Consolidated
		(Dollars in thousands)
ASSETS
CURRENT ASSETS:
Cash and equivalents		$	—			$	—			$	104,582			$	125			$	—			$	104,707
Accounts receivable, net			3				—				115,631				1,334				—				116,968
Costs and estimated earnings in excess of billings			—				—				66,780				331				—				67,111
Deferred tax assets, net			1,275				—				14,562				112				(170	)			15,779
Income taxes receivable			7,028				—				—				—				(12	)			7,016
Inventories			—				—				8,189				114				—				8,303
Other current assets			2,202				8				4,454				659				—				7,323
Total current assets			10,508				8				314,198				2,675				(182	)			327,207
Property and equipment, net			13,114				—				113,032				16,615				(629	)			142,132
Goodwill			—				—				157,851				—				—				157,851
Intangible assets, net			—				—				56,056				—				—				56,056
Deferred tax assets, net non-current			—				—				15,576				113				(15,689	)			—
Investment in subsidiaries			672,026				1,216,440				—				2				(1,888,468	)			—
Intercompany receivables			—				—				716,687				—				(716,687	)			—
Other			4,796				2,906				1,875				634				—				10,211
Total non-current assets			689,936				1,219,346				1,061,077				17,364				(2,621,473	)			366,250
TOTAL		$	700,444			$	1,219,354			$	1,375,275			$	20,039			$	(2,621,655	)		$	693,457
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	258			$	—			$	28,019			$	700			$	—			$	28,977
Current portion of debt			—				—				926				—				—				926
Billings in excess of costs and estimated earnings			—				—				151				—				—				151
Accrued insurance claims			670				—				26,641				75				—				27,386
Deferred tax liabilities			—				105				10				55				(170	)			—
Other accrued liabilities			4,937				3,073				43,026				1,566				(12	)			52,590
Total current liabilities			5,865				3,178				98,773				2,396				(182	)			110,030
LONG-TERM DEBT			—				135,350				27				—				—				135,377
ACCRUED INSURANCE CLAIMS			970				—				28,676				113				—				29,759
DEFERRED TAX LIABILITIES, net non-current			491				428				34,413				3,267				(15,689	)			22,910
INTERCOMPANY PAYABLES			298,713				408,372				—				9,614				(716,699	)			—
OTHER LIABILITIES			3,782				—				964				12				—				4,758
Total liabilities			309,821				547,328				162,853				15,402				(732,570	)			302,834
Total stockholders’ equity			390,623				672,026				1,212,422				4,637				(1,889,085	)			390,623
TOTAL		$	700,444			$	1,219,354			$	1,375,275			$	20,039			$	(2,621,655	)		$	693,457

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED OCTOBER 24, 2009

														Non-
										Subsidiary				Guarantor				Eliminations and				Dycom
		Parent				Issuer				Guarantors				Subsidiaries				Reclassifications				Consolidated
		(Dollars in thousands)
REVENUES:
Contract revenues		$	—			$	—			$	257,017			$	2,099			$	—			$	259,116
EXPENSES:
Costs of earned revenues, excluding depreciation and amortization			—				—				207,938				2,033				—				209,971
General and administrative			5,572				128				15,783				2,019				—				23,502
Depreciation and amortization			737				—				13,534				931				(11	)			15,191
Intercompany charges (income) , net			(6,998	)			—				6,813				185				—				—
Total			(689	)			128				244,068				5,168				(11	)			248,664
Interest income			6				—				29				—				—				35
Interest expense			(696	)			(2,829	)			(19	)			—				—				(3,544	)
Other income, net			1				—				1,097				7				—				1,105
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES			—				(2,957	)			14,056				(3,062	)			11				8,048
PROVISION (BENEFIT) FOR INCOME TAXES			1,090				(1,262	)			6,004				(1,307	)			—				4,525
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES			(1,090	)			(1,695	)			8,052				(1,755	)			11				3,523
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX			—				—				—				—				—				—
NET INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES			(1,090	)			(1,695	)			8,052				(1,755	)			11				3,523
EQUITY IN EARNINGS OF SUBSIDIARIES			4,613				6,308				—				—				(10,921	)			—
NET INCOME (LOSS)		$	3,523			$	4,613			$	8,052			$	(1,755	)		$	(10,910	)		$	3,523