UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended October 25, 2008

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

For the transition period from                      to                     

DYCOM INDUSTRIES, INC.

(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)

Registrant’s telephone number, including area code (561) 627-7171
Securities registered pursuant to Section 12(b) of the Act:

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

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 23, 2008
Common stock, par value of $0.33 1/3		39,369,764

 

 

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			31
Item 3. Quantitative and Qualitative Disclosures About Market Risk			44
Item 4. Controls and Procedures			45
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			45
Item 1A. Risk Factors			46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 6. Exhibits			49
Signatures			49
EX-10.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part 1 — FINANCIAL INFORMATION

Item 1. Financial Statements

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

		October 25,				July 26,
		2008				2008
		(Dollars in thousands)
ASSETS
CURRENT ASSETS:
Cash and equivalents		$	45,723			$	22,068
Accounts receivable, net			155,791				146,420
Costs and estimated earnings in excess of billings			96,231				94,270
Deferred tax assets, net			16,779				19,347
Income taxes receivable			2,241				6,014
Inventories			10,135				8,994
Other current assets			11,945				7,301
Current assets of discontinued operations			618				667
Total current assets			339,463				305,081
Property and equipment, net			164,597				170,479
Goodwill			240,138				240,138
Intangible assets, net			61,035				62,860
Other			11,428				10,478
Total non-current assets			477,198				483,955
TOTAL		$	816,661			$	789,036
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	32,994			$	29,835
Current portion of debt			2,064				2,306
Billings in excess of costs and estimated earnings			311				483
Accrued insurance claims			29,883				29,834
Other accrued liabilities			47,934				66,275
Current liabilities of discontinued operations			1,828				2,731
Total current liabilities			115,014				131,464
LONG-TERM DEBT			180,621				151,049
ACCRUED INSURANCE CLAIMS			39,118				37,175
DEFERRED TAX LIABILITIES, net non-current			19,947				19,514
OTHER LIABILITIES			5,717				5,314
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS			437				427
Total liabilities			360,854				344,943
COMMITMENTS AND CONTINGENCIES, Notes 10, 11, 15 and 16
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: 39,366,150 and 39,352,020 issued and outstanding, respectively			13,121				13,117
Additional paid-in capital			173,628				172,167
Accumulated other comprehensive (loss) income			(114	)			186
Retained earnings			269,172				258,623
Total stockholders’ equity			455,807				444,093
TOTAL		$	816,661			$	789,036

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 25, 2008				October 27, 2007
		(Dollars in thousands, except per share amounts)
REVENUES:
Contract revenues		$	333,967			$	329,672
EXPENSES:
Costs of earned revenues, excluding depreciation and amortization			268,646				261,312
General and administrative (including stock-based compensation expense of $1.5 million and $2.1 million, respectively)			27,540				25,608
Depreciation and amortization			16,612				16,047
Total			312,798				302,967
Interest income			135				210
Interest expense			(4,052	)			(3,556	)
Other income, net			402				1,572
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			17,654				24,931
PROVISION (BENEFIT) FOR INCOME TAXES:
Current			4,104				12,193
Deferred			2,964				(2,519	)
Total			7,068				9,674
INCOME FROM CONTINUING OPERATIONS			10,586				15,257
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX			(38	)			(330	)
NET INCOME		$	10,548			$	14,927
EARNINGS PER COMMON SHARE — BASIC:
Income from continuing operations		$	0.27			$	0.37
Loss from discontinued operations			—				(0.01	)
Net income		$	0.27			$	0.37
EARNINGS PER COMMON SHARE — DILUTED:
Income from continuing operations		$	0.27			$	0.37
Loss from discontinued operations			—				(0.01	)
Net income		$	0.27			$	0.36
SHARES USED IN COMPUTING EARNINGS PER COMMON SHARE:
Basic			39,321,662				40,718,872
Diluted			39,421,590				41,174,497

Earnings per share amounts may not add due to rounding.

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 25, 2008				October 27, 2007
		(Dollars in thousands)
OPERATING ACTIVITIES:
Net income		$	10,548			$	14,927
Adjustments to reconcile net cash inflow from operating activities:
Depreciation and amortization			16,612				16,047
Bad debts (recovery) expense, net			(138	)			66
Gain on sale of fixed assets			(1,022	)			(1,178	)
Deferred income tax (benefit) provision			3,052				(2,507	)
Stock-based compensation expense			1,547				2,140
Amortization of debt issuance costs			231				194
Write-off of deferred financing costs			551				—
Excess tax benefit from share-based awards			—				(79	)
Change in operating assets and liabilities, net of acquisitions:
(Increase) decrease in operating assets:
Accounts receivable, net			(9,232	)			(10,288	)
Costs and estimated earnings in excess of billings, net			(2,134	)			(1,499	)
Other current assets and inventory			(5,786	)			(5,821	)
Other assets			220				403
Increase (decrease) in operating liabilities:
Accounts payable			2,609				1,560
Accrued insurance claims and other liabilities			(16,638	)			(8,018	)
Income taxes receivable/payable			3,690				11,740
Net cash provided by operating activities			4,110				17,687
INVESTING ACTIVITIES:
Restricted cash			(210	)			(369	)
Capital expenditures			(9,290	)			(21,168	)
Proceeds from sale of assets			1,259				1,842
Net cash used in investing activities			(8,241	)			(19,695	)
FINANCING ACTIVITIES:
Proceeds from long-term debt			30,000				15,000
Principal payments on long-term debt			(670	)			(10,930	)
Debt issuance costs			(1,547	)			—
Repurchases of common stock			—				(2,754	)
Excess tax benefit from share-based awards			—				79
Restricted stock tax withholdings			(14	)			(130	)
Exercise of stock options and other			17				1,113
Net cash provided by financing activities			27,786				2,378
Net increase in cash and equivalents			23,655				370
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD			22,068				18,862
CASH AND EQUIVALENTS AT END OF PERIOD		$	45,723			$	19,232
SUPPLEMENTAL DISCLOSURE OF OTHER CASH FLOW ACTIVITIES AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid during the period for:
Interest		$	6,657			$	6,234
Income taxes		$	231			$	132
Purchases of capital assets included in accounts payable or other accrued liabilities at period end		$	2,020			$	6,737

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 balance sheets of the Company and the related condensed consolidated statements of operations and cash flows for the three month periods reflect all adjustments (consisting 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 25, 2008 are not necessarily indicative of the results that may be expected for the entire year. For a fuller understanding of the Company and its financial statements, the Company recommends reading these condensed consolidated financial statements in conjunction with the Company’s audited financial statements for the year ended July 26, 2008 included in the Company’s 2008 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on September 4, 2008.

     Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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, allowance for doubtful accounts, accrued insurance claims, the fair value of goodwill and intangible assets, asset lives used in computing depreciation and amortization, compensation expense for performance-based stock awards, income taxes and the outcome of contingencies, including legal matters. While 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, actual results could differ from those estimates and such differences may be material to the financial statements.

     Restricted Cash — As of October 25, 2008 and July 26, 2008, the Company had approximately $5.0 million and $4.8 million, respectively, 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 from investing activities in the condensed consolidated statements of cash flows.

     Goodwill and Intangible Assets — The Company accounts for goodwill in accordance with Statements of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” The Company’s reporting units and related indefinite-lived intangible asset are tested annually during the fourth fiscal quarter of each year in accordance with SFAS No. 142 in order to determine whether their carrying value exceeds their fair value. Should this be the case, the value of a reporting unit’s goodwill or indefinite-lived intangible asset may be impaired and written down. Goodwill and indefinite-lived intangible assets are also tested for impairment on an interim basis if an event occurs or circumstances change between annual tests that would more likely than not reduce the fair value below the carrying value. If the Company determines the fair value of the goodwill or other identifiable intangible asset is less than their carrying value, an impairment loss is recognized in an amount equal to the difference. Impairment losses, if any, are reflected in operating income or loss in the condensed consolidated statements of operations.

     In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company reviews finite-lived intangible assets for impairment whenever an event occurs or circumstances change which indicates that the carrying amount of such assets may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. An impairment loss is measured by comparing the fair value of the asset to its carrying value. If the Company determines the fair value of the asset is less than the carrying value, an impairment loss is incurred in an amount equal to the difference. Impairment losses, if any, are reflected in operating income or loss in the condensed consolidated statements of operations.

     The Company uses judgment in assessing goodwill and intangible assets for impairment. Estimates of fair value are based on the Company’s projection of revenues, operating costs, and cash flows considering historical and anticipated future results, general economic and market conditions as well as the impact of planned business or operational strategies. In order to measure fair value, the Company employs a combination of present value techniques which reflect market factors. Changes in the Company’s judgments and projections could result in a significantly different estimate of the fair value and could result in an impairment of the goodwill and intangible assets.

     Income Taxes.— The Company accounts for income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”) on July 29, 2007, the first day of fiscal 2008. See Note 11 for further discussion regarding the Company’s income taxes.

     Comprehensive Income — During the three months ended October 25, 2008 and October 27, 2007, the Company did not have any material changes in its equity resulting from non-owner sources. Accordingly, comprehensive income approximated the net income amounts presented for the respective periods in the accompanying condensed consolidated statements of operations.

     Multiemployer Defined Benefit Pension Plan — A wholly-owned subsidiary participates in a multiemployer defined benefit pension plan that covers certain of its employees. The subsidiary makes periodic contributions to the plan to meet the benefit obligations. During the three months ended October 25, 2008 and October 27, 2007, the subsidiary contributed approximately $1.2 million and $1.0 million to the plan, respectively.

     Recently Adopted Accounting Standards — The Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) on July 27, 2008, the first day of fiscal 2009. SFAS No. 157 defines fair value, establishes a measurement framework and expands disclosure requirements. SFAS No. 157 does not require any new fair value measurements, but applies to existing accounting pronouncements that require or permit fair value measurement as the relevant measurement attribute. The Company has no material financial assets or liabilities, or material non-financial assets and liabilities recognized at fair value on a recurring basis, which were impacted by the adoption of SFAS No. 157 during fiscal 2009. However, the Company does have material non-financial assets and liabilities measured on a non-recurring basis, including goodwill and other intangible assets. The effective date of the provisions of SFAS No. 157 for non-financial assets and liabilities, except for items recognized at fair value on a recurring basis, was deferred by FASB Staff Position FAS 157-2, “Effective Date of FASB Statement No. 157” and is effective for the Company beginning in fiscal 2010. The Company is currently evaluating the impact of the provisions for non-financial assets and liabilities. The adoption of SFAS No. 157 for financial assets and liabilities did not have an impact on the Company’s condensed consolidated financial statements.

     The Company also adopted SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”) on July 27, 2008, the first day of fiscal 2009. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. As of October 25, 2008, the Company has elected not to apply the fair value option for any of its financial instruments or other assets and liabilities.

     Recently Issued Accounting Pronouncements — In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“EITF 03-6-1”). EITF 03-6-1 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 (“EPS”) under SFAS No. 128, “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 EPS. EITF 03-6-1 is effective for the Company beginning in fiscal 2010 and also requires that all prior-period EPS data presented be adjusted retrospectively.

     In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 defines the order in which accounting principles that are generally accepted should be followed. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board (“PCAOB”) amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” SFAS No. 162 is not expected to have a material effect on the Company’s results of operations, financial position, or cash flows.

     In April 2008, the FASB issued FASB Staff Position 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142. FSP 142-3 will be effective for the Company in fiscal 2010 and the Company is currently evaluating its impact.

     In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) retains the fundamental acquisition method of accounting established in SFAS No. 141; however, among other things, SFAS No. 141(R) requires fair value measurement of consideration and contingent consideration, expense recognition for transaction costs and certain integration costs, and adjustments to income tax expense for changes in an acquirer’s existing valuation allowances or uncertain tax positions that result from the business combination. SFAS No. 141(R) will be effective for the Company for any acquisition completed subsequent to July 26, 2009 (fiscal 2010). The Company is currently evaluating the impact of SFAS No. 141(R).

2. 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 and presented its results separately in the accompanying condensed consolidated financial statements for all periods presented.

     The summary comparative financial results of the discontinued operations were as follows:

		For the Three Months Ended
		October 25, 2008				October 27, 2007
		(Dollars in thousands)
Contract revenues of discontinued operations		$	—			$	—
Loss from discontinued operations before income taxes		$	(64	)		$	(539	)
Loss from discontinued operations, net of tax		$	(38	)		$	(330	)

     In December 2006, two former employees of Apex commenced a lawsuit against the subsidiary in Illinois State Court on behalf of themselves and purporting to represent other similarly situated employees in Illinois. The lawsuit alleged that Apex violated certain minimum wage laws under the Fair Labor Standards Act and related state laws by failing to comply with applicable minimum wage and overtime pay requirements. In June 2008, the subsidiary reached an agreement to settle these claims through a structured mediation process. While the subsidiary denies the allegations underlying the dispute, it agreed to the mediated settlement to avoid additional legal fees, the uncertainty of a jury trial and the management time that would have been devoted to litigation. In November 2008, the Court approved this settlement and the sole objecting plaintiff will have thirty days from the entry of the court’s order approving the settlement to file the appeal. During the fourth quarter of fiscal 2008, the Company incurred a charge of approximately $1.2 million which represents management’s best estimate of the amount to be paid pursuant to the settlement. Actual payments could differ from our estimate.

     The following table represents the assets and the liabilities of the discontinued operations:

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Deferred tax assets, net		$	618			$	667
Current assets of discontinued operations		$	618			$	667
Accounts payable		$	79			$	129
Accrued liabilities			1,749				2,602
Total current liabilities of discontinued operations		$	1,828			$	2,731
Other accrued liabilities and deferred taxes		$	437			$	427
Non-current liabilities of discontinued operations		$	437			$	427

3. Computation of Earnings Per Common Share

     The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation as required by SFAS No. 128, “Earnings Per Share.” 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 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 25, 2008				October 27, 2007
		(Dollars in thousands, except per share amounts)
Numerator:
Income from continuing operations		$	10,586			$	15,257
Loss from discontinued operations, net of tax			(38	)			(330	)
Net income		$	10,548			$	14,927
Denominator:
Basic
Weighted-average number of common shares — Basic			39,321,662				40,718,872
Diluted
Weighted-average number of common shares — Basic			39,321,662				40,718,872
Potential common stock arising from stock options, unvested restricted shares and unvested restricted share units			99,928				455,625
Weighted-average number of common shares — Diluted			39,421,590				41,174,497
Antidilutive weighted shares excluded from the calculation of earnings per common share			2,298,370				1,152,514
EARNINGS PER COMMON SHARE — BASIC:
Income from continuing operations		$	0.27			$	0.37
Loss from discontinued operations			—				(0.01	)
Net income		$	0.27			$	0.37
EARNINGS PER COMMON SHARE — DILUTED:
Income from continuing operations		$	0.27			$	0.37
Loss from discontinued operations			—				(0.01	)
Net income		$	0.27			$	0.36

Earnings per share amounts may not add due to rounding.

4. Accounts Receivable

     Accounts receivable consist of the following:

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Contract billings		$	154,258			$	145,346
Retainage			1,338				972
Other receivables			669				871
Total			156,265				147,189
Less: allowance for doubtful accounts			474				769
Accounts receivable, net		$	155,791			$	146,420

     The allowance for doubtful accounts changed as follows:

		For the Three Months Ended
		October 25, 2008				October 27, 2007
		(Dollars in thousands)
Allowance for doubtful accounts at beginning of period		$	769			$	986
Bad debt (recovery) expense, net			(138	)			66
Amounts charged against the allowance			(157	)			(73	)
Allowance for doubtful accounts at end of period		$	474			$	979

     As of October 25, 2008, the Company expected to collect all retainage balances within the next twelve months.

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

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

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Costs incurred on contracts in progress		$	77,681			$	75,978
Estimated to date earnings			18,550				18,292
Total costs and estimated earnings			96,231				94,270
Less: billings to date			311				483
		$	95,920			$	93,787
Included in the accompanying consolidated balance sheets under the captions:
Costs and estimated earnings in excess of billings		$	96,231			$	94,270
Billings in excess of costs and estimated earnings			(311	)			(483	)
		$	95,920			$	93,787

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

6. Property and Equipment

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

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Land		$	2,974			$	2,953
Buildings			9,773				9,751
Leasehold improvements			4,325				3,959
Vehicles			202,325				204,814
Furniture, fixtures, computer equipment and software			43,417				40,339
Equipment and machinery			135,018				133,138
Total			397,832				394,954
Less: accumulated depreciation			233,235				224,475
Property and equipment, net		$	164,597			$	170,479

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

		For the Three Months Ended
		October 25, 2008				October 27, 2007
		(Dollars in thousands)
Depreciation expense		$	14,788			$	14,217
Repairs and maintenance expense		$	4,480			$	5,556

7. Goodwill and Intangible Assets

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

		Useful Life
		In Years				October 25, 2008				July 26, 2008
						(Dollars in thousands)
Goodwill			N/A			$	240,138			$	240,138
Intangible Assets:
Carrying amount
Covenants not to compete			5			$	800			$	800
UtiliQuest tradename		Indefinite					4,700				4,700
Tradenames			4-15				2,925				2,925
Customer relationships			5-15				77,555				77,555
							85,980				85,980
Accumulated amortization:
Covenants not to compete							787				747
Tradenames							765				714
Customer relationships							23,393				21,659
							24,945				23,120
Net Intangible Assets						$	61,035			$	62,860

     For finite-lived intangible assets, amortization expense for each of the three months ended October 25, 2008 and October 27, 2007 was $1.8 million. Amortization for the Company’s customer relationships is recognized on an accelerated basis related to the expected economic benefit of the intangible asset. Amortization for the Company’s other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life of the intangible assets.

     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 which result 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. Specifically 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 reporting units could decline during periods of economic downturns which could result in an impairment of goodwill or intangible assets and could adversely affect the Company’s operations, cash flows and liquidity.

     During the Company’s fiscal 2008 goodwill impairment test, the estimated fair value of the UtiliQuest, LLC (“UtiliQuest”) reporting unit exceeded its carrying value by a margin of approximately 25%. The goodwill balance of this reporting unit may have an increased likelihood of impairment if a sustained downturn in customer demand were to occur, or if the reporting unit was not able to execute against customer opportunities, and the long-term outlook for their cash flows were adversely impacted. Furthermore, changes in the long-term outlook may result in changes to other valuation assumptions. The UtiliQuest reporting unit, with a goodwill balance of $73.9 million, provides services to a broad range of customers including utilities and telecommunication providers in over 20 states throughout the United States. These services are required prior to underground excavation and are affected by overall economic activity. Demand for these services could decline during periods of economic downturn which could adversely affect the operations and cash flows of the reporting unit.

     As of October 25, 2008, the Company believes the goodwill and other indefinite-lived intangible asset is recoverable for all of the reporting units; 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 25, 2008, management believes that the carrying amounts of these other intangible assets are recoverable. 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.

     The Company’s market capitalization has been significantly impacted by extreme volatility in the U.S. equity and credit markets and has recently been below its net book value. These conditions have not been sustained for an extended period of time. Further adverse changes in general economic and market conditions and future volatility in the equity and credit markets could impact the Company’s valuation of its reporting units. However, the Company currently believes indicators do not suggest testing goodwill or intangible assets for impairment in advance of the tests it performs annually in the fourth fiscal quarter of each year.

8. Accrued Insurance Claims

     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. With regard to losses occurring in fiscal year 2009, the Company has retained the risk to $1.0 million on a per occurrence basis for automobile liability, general liability and workers’ compensation. These annual retention amounts are applicable in all of the states in which the Company operates, except with respect to workers’ compensation insurance in three states in which the Company chooses to participate in a state fund. Aggregate stop loss coverage for automobile liability, general liability and workers’ compensation claims is $50.0 million for fiscal 2009. For losses under the Company’s employee health plan occurring during fiscal 2009, the Company has retained the risk, on an annual basis, of $250,000 per participant.

     Accrued insurance claims consist of the following:

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Amounts expected to be paid within one year:
Accrued auto, general liability and workers’ compensation		$	16,696			$	16,599
Accrued employee group health			4,080				4,506
Accrued damage claims			9,107				8,729
			29,883				29,834
Amounts expected to be paid beyond one year:
Accrued auto, general liability and workers’ compensation			31,789				30,156
Accrued damage claims			7,329				7,019
			39,118				37,175
Total accrued self-insured claims		$	69,001			$	67,009

9. Other Accrued Liabilities

     Other accrued liabilities consist of the following:

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Accrued payroll and related taxes		$	23,829			$	25,935
Accrued employee benefit and bonus costs			3,275				7,017
Accrued construction costs			9,922				10,434
Interest payable			637				3,621
Other			10,271				19,268
Total other accrued liabilities		$	47,934			$	66,275

10. Debt

     The Company’s outstanding indebtedness consists of the following:

		October 25, 2008				July 26, 2008
		(Dollars in thousands)
Senior subordinated notes		$	150,000			$	150,000
Borrowings under bank credit agreement			30,000				—
Capital leases			2,685				3,355
			182,685				153,355
Less: current portion			2,064				2,306
Long-term debt		$	180,621			$	151,049

     On September 12, 2008, the Company entered into a new three-year $195.0 million Credit Agreement (“Credit Agreement”) with a syndicate of banks. The Credit Agreement has an expiration date of September 12, 2011 and provides for a maximum borrowing of $195.0 million, including 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 the ability to borrow an incremental $100.0 million. The Credit Agreement replaces the Company’s existing credit facility which was due to expire in December 2009 (the “Prior Agreement”). Letters of credit issued from the Prior Agreement were transferred to the Credit Agreement.

     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 case, a spread based upon the Company’s consolidated leverage ratio. Based on the Company’s current leverage ratio, borrowings would be eligible for a spread of 1.00% for revolving borrowings based on prime rate or the federal funds rate and 2.00% for revolving borrowings based on LIBOR. The Credit Agreement also includes a fee for the outstanding letters of credit, currently at a rate of 2.125% per annum. In addition, the Company pays a quarterly facility fee, at rates that range from 0.50% to 0.75% of the unutilized commitments depending on its leverage ratio. 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, (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. The Credit Agreement contains financial covenants based on defined calculations 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 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 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 25, 2008, the Company had $30.0 million of outstanding borrowings and $51.8 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 25, 2008, the Company had additional borrowing availability of $113.2 million under the most restrictive covenants of the Credit Agreement and was in compliance with the financial covenants and conditions.

     In October 2005, Dycom Investments, Inc., a wholly-owned subsidiary of the Company, issued 8.125% senior subordinated notes (“Notes”) due October 2015 in the aggregate principal amount of $150.0 million. Interest is due semi-annually on April 15th and October 15th of each year. The indenture governing the Notes contains covenants that restrict the Company’s ability to: make certain payments, including the payment of dividends; redeem or repurchase capital stock of the Company; incur additional indebtedness and issue preferred stock; make investments; create liens; enter into sale and leaseback transactions; merge or consolidate with another entity; sell assets; and enter into transactions with affiliates. As of October 25, 2008, the Company was in compliance with all covenants and conditions under the indenture governing the Notes.

     The Company had $2.7 million in capital lease obligations as of October 25, 2008. The capital lease obligations were assumed in connection with the fiscal 2007 acquisitions of Cable Express Holding Company and Cavo Communications, Inc. The capital leases include obligations for certain vehicles and computer equipment and expire at various dates through fiscal year 2011.

11. Income Taxes

     As of October 25, 2008, the total amount of unrecognized tax benefits is $4.2 million. If it is subsequently determined those liabilities are not required, approximately $3.8 million would affect the Company’s effective tax rate and $0.4 million would reduce goodwill during the periods recognized.

     The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. During the three months ended October 25, 2008 and October 27, 2007, the Company recognized approximately $0.1 million and $0.2 million, respectively, in interest expense in the accompanying condensed consolidated statements of operations.

12. Other Income, net

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

		For the Three Months Ended
		October 25, 2008				October 27, 2007
		(Dollars in thousands)
Gain on sale of fixed assets		$	1,022			$	1,377
Miscellaneous (loss) income			(69	)			195
Write-off of deferred financing costs			(551	)			—
Total other income, net		$	402			$	1,572

13. 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 million of its common stock over an eighteen month period in open market or private transactions (for an aggregate authorization of $30 million). On August 26, 2008 the Company’s Board of Directors increased its authorization to repurchase shares of its common stock by $15 million, from $30 million to $45 million. The stock repurchases are authorized to be made through February 2010. As of October 25, 2008, approximately $19.8 million of the authorized amount remains for the repurchase of common stock.

14. Stock-Based Awards

     The Company’s stock-based award plans are comprised of the following (collectively, “the Plans”):

	•		the 1991 Incentive Stock Option Plan (“1991 Plan”)
	•		the Arguss Communications, Inc. 1991 Stock Option Plan (“1991 Arguss Plan”)
	•		the 1998 Incentive Stock Option Plan (“1998 Plan”)
	•		the 2001 Directors Stock Option Plan (“2001 Directors Plan”)
	•		the 2002 Directors Restricted Stock Plan (“2002 Directors Plan”)
	•		the 2003 Long-term Incentive Plan (“2003 Plan”)
	•		the 2007 Non-Employee Directors Equity Plan (“2007 Directors Plan”)

     The outstanding options under the 1991 Plan, the 1991 Arguss Plan, the 1998 Plan, and the 2003 Plan are fully vested, except 35,000 options granted in July 2008 under the 2003 Plan which vest ratably over a four-year period. Outstanding options granted under the 2001 Directors Plan and 2007 Directors Plan, vest and become exercisable ratably over a four-year period, beginning on the date of the grant. Under the 2003 Plan, time vesting restricted shares and units that are outstanding vest ratably over a period of four years from the grant date. Performance vesting restricted shares and units that are outstanding vest over a three year period from the grant date, if certain annual and three year Company performance goals are achieved. The Company’s policy is to issue new shares to satisfy equity awards under the Plans. Under the terms of the current 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 2007 Directors Plan provides for equity grants to non-employee directors upon their initial election or appointment to the Board of Directors and for annual equity grants to continuing non-employee directors. Additionally, to the extent that a non-employee director does not beneficially own 7,500 shares of Company common stock, the plan requires a portion of the annual retainer paid to directors to be paid in the form of restricted shares or restricted share units.

     The following table lists the number of shares available and outstanding under each plan as of October 25, 2008, including restricted performance shares and units that will be issued under outstanding awards if certain performance goals are met:

										Unvested
										Restricted
										Shares and				Shares
		Plan				Outstanding				Units				Available
		Expiration				Stock Options				Outstanding				for Grant
1991 Plan		Expired					45,000				—				—
1991 Arguss Plan (a)			N/A				47,018				—				—
2001 Directors Plan (a)			2011				59,001				—				—
2002 Directors Plan (a)			2012				—				6,424				—
1998 Plan (b)			2008				1,358,918				—				833,724
2003 Plan			2013				793,395				853,369				1,808,538
2007 Directors Plan			2017				27,604				9,808				258,608
							2,330,936				869,601				2,900,870

(a)   No further options will be granted under the 1991 Arguss Plan, the 2001 Directors Plan, or the 2002 Directors Plan.

(b)   The 833,724 available shares under the 1998 Plan that have been authorized but not issued are available for grant under the 2003 Plan.

     The following tables summarize the stock-based awards outstanding at October 25, 2008:

										Weighted
										Average
						Weighted				Remaining
		Shares Subject to				Average Exercise				Contractual				Aggregate
		Options				Price				Life				Intrinsic Value
														(In thousands)
Options outstanding			2,330,936			$	29.43				4.0			$	—
Options exercisable			2,250,581			$	29.78				3.8			$	—

										Weighted
						Weighted				Average
		Restricted				Average Grant				Remaining				Aggregate
		Shares/Units				Price				Vesting Period				Intrinsic Value
														(In thousands)
Unvested time vesting shares/units			129,325			$	24.30				2.0			$	976
Unvested performance vesting shares/units			740,276			$	22.25				1.4			$	5,589

     The aggregate intrinsic value for stock options and restricted shares and units in the preceding tables are based on the Company’s closing stock price of $7.55 on October 25, 2008. These amounts represent the total intrinsic value that would have been received by the holders of the stock-based awards had the awards been exercised and sold as of that date, before any applicable taxes.

     The following table summarizes the stock-based awards activity during the three months ended October 25, 2008:

										Time Vesting Restricted								Performance Vesting
		Stock Options								Shares/Units								Restricted Shares/Units
						Weighted								Weighted								Weighted
						Average								Average								Average
						Exercise								Grant								Grant
		Shares				Price				Shares/Units				Price				Shares/Units				Price
Outstanding as of July 26, 2008			2,375,557			$	29.45				134,872			$	24.32				643,450			$	24.95
Granted			—			$	—				—			$	—				128,000			$	8.78
Options Exercised/Shares and Units Vested			(1,200	)		$	13.84				—			$	—				(12,266	)		$	26.46
Forfeited or cancelled			(43,421	)		$	29.16				(5,547	)		$	24.93				(18,908	)		$	25.10
Outstanding as of October 25, 2008			2,330,936			$	29.43				129,325			$	24.30				740,276			$	22.25

     The performance vesting restricted shares and units in the above table represent the maximum number of awards which may vest under the outstanding grants assuming that all performance criteria are 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 25, 2008 and October 27, 2007 is as follows:

		For the Three Months Ended
		October 25, 2008				October 27, 2007
		(Dollars in thousands)
Stock-based compensation expense		$	1,547			$	2,140
Tax benefit recognized			(596	)			(823	)

     The Company evaluates compensation expense quarterly and only recognizes compensation expense for performance based awards if management determines it is probable that the performance criteria for the awards will be met. Accordingly, the amount of compensation expense recognized during the three month period ended October 25, 2008 may not be representative of future stock-based compensation expense. The total amount of compensation ultimately recognized is based on the number of awards that actually vest.

     Under the Plans, the maximum total unrecognized compensation expense and weighted-average period over which the expense would be recognized subsequent to October 25, 2008 is shown below. For performance based awards, the unrecognized compensation cost is based upon the maximum amount of restricted stock and units that can be earned under outstanding awards. If the performance goals are not met, no compensation expense will be recognized for these shares/units and compensation expense previously recognized will be reversed.

		Unrecognized				Weighted-
		Compensation				Average
		Expense				Period
		(In thousands)				(In years)
Stock options		$	634				3.0
Unvested time vesting shares/units		$	2,125				2.0
Unvested performance vesting shares/units		$	14,106				1.4

     During the three months ended October 25, 2008 and October 27, 2007, the Company received cash of less than $0.1 million and $1.1 million, respectively, from the exercise of stock options and realized a tax benefit from share-based awards of less than $0.1 million and $0.3 million, respectively.

15. 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 25, 2008 and October 27, 2007. Additionally, the Company paid approximately $0.2 million for the three months ended October 27, 2007 in subcontracting services to entities related to officers of certain of its subsidiaries. There were minimal subcontracting services paid to entities related to officers of certain of its subsidiaries during the three months ended October 25, 2008.

16. Commitments and Contingencies

Legal Proceedings.

     During fiscal 2007, the Company was contacted by counsel representing current and former employees alleging violations of the Fair Labor Standards Act and state wage and hour laws at the Company’s UtiliQuest, LLC, S.T.S., LLC and Locating, Inc. subsidiaries. The claims included periods dating primarily from September 2003 through January 31, 2007 and cover a number of states where these subsidiaries conducted business. During the second quarter of fiscal 2008, these subsidiaries reached an agreement to settle these claims through a structured mediation process. While the subsidiaries deny the allegations underlying the dispute, they agreed to the mediated settlement to avoid additional legal fees, the uncertainty of a jury trial and the management time that would have been devoted to litigation. Excluding legal expenses of the Company, approximately $8.6 million was incurred pursuant to the settlement and was included in accrued liabilities as of July 26, 2008. This amount was paid during the three month period ended October 25, 2008.

     From time to time, the Company and its subsidiaries are 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 the pending claims or proceedings will have a material effect on its 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 obligations under contract. As of October 25, 2008, the Company had $41.9 million of outstanding performance bonds. As of October 25, 2008, 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.

17. Concentration of Credit Risk

     The Company is subject to concentrations of credit risk related primarily to its cash and equivalents, trade accounts receivable and costs and estimated earnings in excess of billings. Cash and equivalents include cash balances on deposit in banks, money market accounts, overnight repurchase agreements, and other financial instruments having an original maturity of three months or less. The Company maintains substantially all of its cash and equivalents at financial institutions believed by the Company to be of high credit quality. A substantial portion of the balances are held as cash in operating accounts with these financial institutions and are within the current insurance levels of the Federal Deposit Insurance Corporation (“FDIC”). These balances, at times, may not be subject to or may exceed the FDIC limit. To date the Company has not experienced any loss or lack of access to cash in its operating accounts. However, the Company can provide no assurances that access to its cash and equivalents will not be impacted by adverse conditions in the financial markets.

     The Company grants credit under normal payment terms, generally without collateral, to its customers, which primarily include telephone companies, cable television multiple system operators, electric utilities and others. Consequently, the Company is subject to potential credit risk related to changes in business and economic factors that could impact its customers, which may be heightened as a result of the current financial crisis and volatility of the markets. The Company generally has certain statutory lien rights with respect to services provided. Historically, some of the Company’s customers have experienced significant financial difficulties, and others may experience financial difficulties in the future. These difficulties expose the Company to increased risk related to collectability of amounts due for services performed. The Company believes that none of its significant customers were experiencing significant financial difficulty as of October 25, 2008.

     Verizon Communications, Inc. (“Verizon”), Comcast Cable Corporation (“Comcast”), and AT&T, Inc. (“AT&T”) represent a significant portion of the Company’s customer base. For the three month periods ended October 25, 2008 and October 27, 2007, revenues from Verizon, Comcast, and AT&T represented the following percentages of total revenue from continuing operations:

		For the Three Months Ended
		October 25, 2008				October 27, 2007
Verizon			19.4	%			17.9	%
Comcast			16.1	%			12.3	%
AT&T			15.7	%			18.5	%

     Financial instruments which subject the Company to concentrations of credit risk include trade accounts receivable and costs and estimated earnings in excess of billings. As of October 25, 2008, the outstanding balances for these amounts from Verizon, Comcast, and AT&T totaled approximately $67.6 million or 26.8%, $40.2 million or 16.0%, and $34.8 million or 13.8%, respectively, of the outstanding balances. As of July 26, 2008, the outstanding balances for these amounts from Verizon, Comcast, and AT&T totaled approximately $66.0 million or 27.4%, $25.0 million or 10.4%, and $35.0 million or 14.5%, respectively, of the outstanding balances.

18. 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. These services are provided by the Company’s various subsidiaries throughout the United States and, on a limited basis, in Canada. 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 following table presents information regarding revenues by type of customer:

		For the Three Months Ended
		October 25, 2008				October 27, 2007
		(Dollars in thousands)
Telecommunications		$	263,203			$	245,625
Underground facility locating			51,517				58,344
Electric utilities and other construction and maintenance			19,247				25,703
Total contract revenues		$	333,967			$	329,672

     One of the Company’s subsidiaries earned revenues from contracts in Canada of approximately $1.1 million and $1.6 million during the three months ended October 25, 2008 and October 27, 2007, respectively. The Company had no material long-lived assets in the Canadian operations at October 25, 2008 or July 26, 2008.

19. Supplemental Consolidating Financial Statements

     During fiscal 2006, the Company completed an offering of 8.125% senior subordinated notes in an aggregate principal amount of $150.0 million (see Note 10). The Notes were issued by Dycom Investments, Inc. (“Issuer”), a wholly-owned subsidiary of the Company. The following 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 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.

     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.

     The condensed consolidating statement of cash flows for the three months ended October 27, 2007 has been restated to correct the presentation of transactions that are settled on a net basis through the Company’s intercompany payables and receivables. Previously, the Company had presented certain intercompany activity between the Parent, Issuer, guarantor, and non-guarantor subsidiaries as operating activities of the Parent. The impact of these activities is now reflected in the operating activity of the guarantor and non-guarantor subsidiaries. Additionally, cash flow activity of the Issuer related to the payment of interest has been restated as an operating activity. These amounts had previously been reflected in the financing section as part of transactions that are settled on a net basis through the Issuer’s intercompany payables. There was no impact on the condensed consolidated statement of cash flows for the three months ended October 25, 2008.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)
OCTOBER 25, 2008

														Non-
										Subsidiary				Guarantor				Eliminations and				Dycom
		Parent				Issuer				Guarantors				Subsidiaries				Reclassifications				Consolidated
										(Dollars in thousands)
ASSETS
CURRENT ASSETS:
Cash and equivalents		$	—			$	—			$	45,723			$	—			$	—			$	45,723
Accounts receivable, net			12				—				154,931				848				—				155,791
Costs and estimated earnings in excess of billings			—				—				96,063				168				—				96,231
Deferred tax assets, net			1,413				—				15,414				105				(153	)			16,779
Income taxes receivable			2,241				—				—				—				—				2,241
Inventories			—				—				10,135				—				—				10,135
Other current assets			5,787				45				4,457				1,656				—				11,945
Current assets of discontinued operations			—				—				618				—				—				618
Total current assets			9,453				45				327,341				2,777				(153	)			339,463
Property and equipment, net			13,242				—				136,747				15,236				(628	)			164,597
Goodwill			—				—				240,138				—				—				240,138
Intangible assets, net			—				—				61,035				—				—				61,035
Deferred tax assets, net non-current			—				263				—				—				(263	)			—
Investment in subsidiaries			777,469				1,146,591				—				—				(1,924,060	)			—
Intercompany receivables			—				—				543,275				—				(543,275	)			—
Other			5,146				3,503				2,770				9				—				11,428
Total non-current assets			795,857				1,150,357				983,965				15,245				(2,468,226	)			477,198
TOTAL		$	805,310			$	1,150,402			$	1,311,306			$	18,022			$	(2,468,379	)		$	816,661
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	776			$	—			$	31,926			$	292			$	—			$	32,994
Current portion of debt			—				—				2,064				—				—				2,064
Billings in excess of costs and estimated earnings			—				—				311				—				—				311
Accrued insurance claims			733				—				28,980				170				—				29,883
Deferred tax liabilities			—				153				—				—				(153	)			—
Other accrued liabilities			4,134				499				41,833				1,468				—				47,934
Current liabilities of discontinued operations			—				—				1,828				—				—				1,828
Total current liabilities			5,643				652				106,942				1,930				(153	)			115,014
LONG-TERM DEBT			30,000				150,000				621				—				—				180,621
ACCRUED INSURANCE CLAIMS			939				—				37,883				296				—				39,118
DEFERRED TAX LIABILITIES, net non-current			12				—				18,607				1,591				(263	)			19,947
INTERCOMPANY PAYABLES.			307,444				222,281				—				13,550				(543,275	)			—
OTHER LIABILITIES			5,465				—				252				—				—				5,717
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS			—				—				437				—				—				437
Total liabilities			349,503				372,933				164,742				17,367				(543,691	)			360,854
Total stockholders’ equity			455,807				777,469				1,146,564				655				(1,924,688	)			455,807
TOTAL.		$	805,310			$	1,150,402			$	1,311,306			$	18,022			$	(2,468,379	)		$	816,661

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)
JULY 26, 2008

														Non-
										Subsidiary				Guarantor				Eliminations and				Dycom
		Parent				Issuer				Guarantors				Subsidiaries				Reclassifications				Consolidated
										(Dollars in thousands)
ASSETS
CURRENT ASSETS:
Cash and equivalents		$	—			$	—			$	21,568			$	500			$	—			$	22,068
Accounts receivable, net			6				—				145,805				609				—				146,420
Costs and estimated earnings in excess of billings			—				—				94,122				148				—				94,270
Deferred tax assets, net			1,912				—				17,452				101				(118	)			19,347
Income taxes receivable			6,014				—				—				—				—				6,014
Inventories			—				—				8,991				3				—				8,994
Other current assets			2,192				—				4,633				476				—				7,301
Current assets of discontinued operations			—				—				667				—				—				667
Total current assets			10,124				—				293,238				1,837				(118	)			305,081
Property and equipment, net			12,795				—				144,410				13,872				(598	)			170,479
Goodwill			—				—				240,138				—				—				240,138
Intangible assets, net			—				—				62,860				—				—				62,860
Deferred tax assets, net non-current			66				228				—				—				(294	)			—
Investment in subsidiaries			766,921				1,134,086				—				1				(1,901,008	)			—
Intercompany receivables			—				—				564,177				—				(564,177	)			—
Other			3,830				3,596				3,041				11				—				10,478
Total non-current assets			783,612				1,137,910				1,014,626				13,884				(2,466,077	)			483,955
TOTAL		$	793,736			$	1,137,910			$	1,307,864			$	15,721			$	(2,466,195	)		$	789,036
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	804			$	—			$	28,882			$	148			$	1			$	29,835
Current portion of debt			—				—				2,306				—				—				2,306
Billings in excess of costs and estimated earnings			—				—				483				—				—				483
Accrued insurance claims			672				—				28,968				194				—				29,834
Deferred tax liabilities			—				120				—				—				(120	)			—
Other accrued liabilities			5,217				3,546				55,922				1,613				(23	)			66,275
Current liabilities of discontinued operations			—				—				2,731				—				—				2,731
Total current liabilities			6,693				3,666				119,292				1,955				(142	)			131,464
LONG-TERM DEBT			—				150,000				1,049				—				—				151,049
ACCRUED INSURANCE CLAIMS			939				—				35,940				296				—				37,175
DEFERRED TAX LIABILITIES, net non-current			—				—				18,755				1,054				(295	)			19,514
INTERCOMPANY PAYABLES			336,705				217,323				—				10,161				(564,189	)			—
OTHER LIABILITIES			5,306				—				7				—				1				5,314
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS			—				—				427				—				—				427
Total liabilities			349,643				370,989				175,470				13,466				(564,625	)			344,943
Total stockholders’ equity			444,093				766,921				1,132,394				2,255				(1,901,570	)			444,093
TOTAL		$	793,736			$	1,137,910			$	1,307,864			$	15,721			$	(2,466,195	)		$	789,036