Dycom Industries
DY
#2285
Rank
ยฃ6.23 B
Marketcap
ยฃ206.75
Share price
1.40%
Change (1 day)
-4.41%
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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended July 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to _______

Commission File Number 0-5423
DYCOM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

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

4440 PGA Boulevard, Suite 600
Palm Beach Gardens, Florida 33410
(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:
Title of each class Name of each exchange on which registered
Common Stock, New York Stock Exchange
par value $.33 1/3 per share

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)

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 [X] No[ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting common stock, par value $.33 1/3
per share, held by non-affiliates of the registrant, computed by reference
to the closing price of such stock on October 10, 1996 was $120,362,628.

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

Class Outstanding as of October 10, 1996
Common Stock, $.33 1/3 8,674,784

The registrant's proxy statement for the Annual Meeting of Shareholders to
be held on November 25, 1996 (the "Definitive Proxy Statement") to be filed
with the Commission pursuant to Regulation 14A is incorporated by reference
into Part III of this Form 10-K.
2

PART I

Item 1. Business
General

The business of Dycom Industries, Inc. ("Dycom" or the "Company") consists
primarily of providing a range of services to large companies in the
telecommunication and electric utility industries, private enterprise, and
governmental units. The services performed by Dycom can be categorized into
three broad groups: telecommunication services, utility line locating
services, and electrical services.

The telecommunication services performed by the Company consist primarily of
installation, maintenance, and other routine services performed under
comprehensive service contracts and the design and deployment of fiber optic
networks for communication companies and other business users. Prior to
November of 1989, most of the Company's telecommunication services business
consisted of installing fiber optic transmission lines for long-distance
carriers which were converting their systems from copper wire. This
long-distance conversion from copper to fiber optic facilities has
essentially been completed. As this work declined, the Company moved into
the performance of services under comprehensive service contracts. This was
primarily accomplished through the acquisition of Ansco & Associates, Inc.
and Star Construction, Inc. in fiscal 1990.

Contracts originate with both local telephone companies and with business
users. Design work performed by the Company's telephone engineers and
draftspersons is used by local telephone companies in the modernization and
expansion of their telephone networks. The Company also provides services in
the area of inside networks for office buildings, commercial parks and
governmental facilities, and the creation and maintenance of records.

The utility line locating services performed by the Company involves the
site identification of underground utilities such as water, sewer, gas,
telephone, and cable television lines. These services are performed under
contracts with various utility companies for the benefit of parties
excavating in an area where underground utilities are located.

Electrical services performed by the Company include installing and
maintaining electrical transmission and distribution lines, setting utility
poles and stringing electrical lines principally above ground, and
constructing substation facilities and switchyards for public utilities and,
to a lesser extent, other private enterprises and governmental entities.
The work performed often involves high voltage splicing and, on occasion,
the installation of underground high voltage distribution systems. The
Company also services "hot lines" (energized high voltage electrical
systems). In addition to new construction, the Company provides
retrofitting services for obsolete and defective utility systems and
subsystems, and repair and replacement of lines which are damaged or
destroyed as a result of weather conditions.

Dycom operates primarily in the southeastern United States but maintains
operations nationwide. Its operations are conducted through wholly-owned
subsidiaries which function essentially as independent units. Since November
1982, the Company or its subsidiaries have made eleven acquisitions.
3
Contracts

A majority of the Company's contract revenues are generated under
comprehensive service contracts. Under comprehensive service contracts, the
Company has the exclusive right to perform specified items of work during
the contract period. The customers may exclude certain work they perform
themselves and projects which exceed stipulated amounts. However, in the
cases where a project's scope exceeds these stipulated amounts, the Company
is typically permitted to bid for these projects. The Company may be
compensated on a unit or hourly basis or at a fixed price for services
performed. Comprehensive service contracts for telephone companies,
maintenance work, utility line locating services, and other service
contracts are generally for terms of one-to-three years. These contracts may
be extended for one or two additional years and are periodically renewed
through competitive bid. In addition to comprehensive service contracts, the
Company bids for other contract work. Contracts are generally awarded on
the basis of a number of factors, such as price competitiveness, quality of
work, on-time completion, and ability to mobilize the needed work force.
The weight attributed to each factor will vary from contract-to-contract,
but price is normally a major consideration.

The business of the Company is not generally seasonal but can be affected by
severe weather conditions and general economic conditions. Variations in
the level of utility companies' capital expenditures also affect the volume
of work performed by the Company.


Customers

The operating subsidiaries obtain contracts from public and private
concerns. Major customers include the Regional Bell Operating Companies,
GTE, U.S. West Communications, Florida Power and Light Company, and other
public and private utility companies, and various federal, state, and local
governmental units.

For the years ended July 31, 1996, 1995, and 1994, approximately 61%, 58%,
and 55%, respectively, of contract revenues were from BellSouth
Telecommunications, Inc. and 9%, 9%, and 11%, respectively, of contract
revenues were from GTE.


Backlog

The backlog of uncompleted work on hand at July 31, 1996 amounted to
approximately $228 million, of which approximately 50% is expected to be
completed within the next fiscal year. Backlog at July 31, 1995 and 1994
was $175 million and $181 million, respectively.
4
Competition

The telecommunication and electric utility services industry is highly
competitive, requiring substantial resources and experienced personnel.
Depending upon the size of a particular contract, competition in the bidding
process varies from intense for smaller contracts to less competitive on
larger, more technically complex assignments. Historically, the Company's
financial resources enabled it to satisfy the requirements for bonding,
technical, administrative, and financial prequalifications required in
connection with certain larger projects. There are no companies controlling
substantial market shares nationally in the telecommunication and electric
utility services industry. The leading telephone and utility companies have
maintained a high level of competition in the construction market to help
control capital outlays, ensure high standards of quality and workmanship,
and avoid contractor dependence. Some of the Company's competitors are
larger in size and have greater financial resources; however, most are
smaller than the Company.


Employees

The number of employees of the Company and its subsidiaries varies according
to the contracts in progress. As a matter of course, the Company maintains
a nucleus of technical and managerial personnel from which it draws to
supervise all projects. Other employees are added as needed to complete
specific projects. Such employees are generally available to the Company.
At July 31, 1996, the Company had 1,958 employees. The Company has no
collective bargaining agreements. The Company considers its relations with
its employees to be good.


Materials

In many cases, the Company's customers supply most or all of the materials
required for a particular contract; and the Company provides the personnel,
tools, and equipment to perform the installation services. However, with
respect to certain of its comprehensive telephone service contracts and
electrical installation contracts, the Company may supply part or all of the
materials required. In these instances, the Company is not dependent upon
any one source for the products which it customarily utilizes to complete
the job. The Company is not presently experiencing, nor does it anticipate
experiencing, any difficulties in procuring an adequate supply of materials.



Item 2. Properties

The Company leases its 7,900 sq. ft. executive office located in Palm Beach
Gardens, Florida. The Company's principal operations are conducted from
owned and leased administrative offices, district field offices, equipment
yards and shop facilities, and temporary storage locations. The Company's
owned properties include an 8,000 sq. ft. administrative office in Phoenix,
Arizona; combined office and shop facilities of 19,100 sq. ft. in Durham,
North Carolina; 18,000 sq. ft. in Pinellas Park, Florida; and 9,000 sq. ft.
in West Palm Beach, Florida. The Company leases, subject to long-term
noncancelable leases, combined office and shop facilities of 21,000 sq. ft.
in Bridgeport, Connecticut; 14,000 sq. ft. in Wallingford, Connecticut;
12,500 sq. ft. in Knoxville, Tennessee; 8,200 sq. ft. in Port Reading, New
Jersey; and 7,200 sq. ft. in Greensboro, North Carolina. The Company also
leases and owns other smaller properties as necessary to enable it to
effectively perform its operations under comprehensive service contracts and
other specific contracts. The Company believes that its facilities are
adequate for its current operations.
5
Item 3. Legal Proceedings

The Company is not involved in any material legal proceedings within the
meaning of Item 103 of Regulation S-K. In the normal course of business,
certain subsidiaries of the Company have pending and unasserted claims.
Although the ultimate resolution and liability of these claims cannot be
determined, management believes the final disposition of these claims will
not have a material adverse impact on the Company's consolidated financial
condition or results of operations.


Item 4. Submission of Matters to a Vote of Security Holders

During the fourth quarter of the year covered by this report, no matters
were submitted to a vote of the Company's security holders whether through
the solicitation of proxies or otherwise.


PART II


Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters

The Company's common stock is traded on the New York Stock Exchange ("NYSE")
under the symbol "DY". The following table sets forth the range of the high
and low sales prices for each quarter within the last two fiscal years as
reported on the NYSE Composite Tape.
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
_____________ _____________

High Low High Low
______ _____ _____ _____
<S> <C> <C> <C> <C>
First Quarter $ 8 1/2 $6 1/8 $3 $2
Second Quarter 7 1/4 4 7/8 4 3/8 2 1/8
Third Quarter 9 3/4 5 5/8 4 1/4 3 1/4
Fourth Quarter 13 5/8 8 5/8 7 1/2 3 5/8
</TABLE>
As of October 10, 1996, there were approximately 742 record holders of the
Company's $.33 1/3 par value common stock. The common stock traded at a
high of $14 3/4 and a low of $11 during the period August 1, 1996 through
October 10, 1996.

Dycom has not paid any cash dividends on its common stock during the last
five fiscal years. For further discussion of dividend policy and
restrictions on the payment of dividends, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
6
Item 6. Selected Financial Data

The following table sets forth certain selected financial data of the
Company for the years ended July 31, 1996, 1995, 1994, 1993, and 1992. This
data should be read in conjunction with the consolidated financial
statements and related notes included elsewhere in this report.
<TABLE>
<CAPTION>
In Thousands, Except Per Share Amounts
______________________________________

1996 1995 1994<F1> 1993<F1> 1992
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Revenues $145,135 $145,283 $122,492 $136,941 $134,253
Net income (loss) 6,390 4,433 (7,777) (31,508) (4,573)
Earnings (loss) per
common and common
equivalent share:<F2>
Primary 0.73 0.52 (0.91) (3.68) (0.54)
Fully diluted 0.72 0.52 (0.91) (3.68) (0.54)
Total assets 52,074 51,793 48,699 60,178 94,845
Long-term obligations 16,515 20,468 5,137<F3>27,358 27,627
Stockholders' equity 17,776 11,187 6,709 14,186 45,270
Cash dividends per share -0- -0- -0- -0- -0-
<FN>
<F1>
The Company changed its method of accounting for income taxes as of
the beginning of fiscal 1993; the years prior to fiscal 1993 have
been restated. Also, the Company wrote-off $1,423 and $24,285 of
intangible assets in 1994 and 1993, respectively.

<F2>
The options to purchase common stock had a dilutive effect on the
computation of earnings per common share for fiscal year 1996.
In the years prior to fiscal 1996, the options to purchase common
stock had an insignificant or anti-dilutive effect on the per share
amounts. See Note 1 to the consolidated financial statements
regarding the per share data.

<F3>
The outstanding borrowings under the bank credit agreement were
classified as a current liability at July 31, 1994 due to the
likelihood of covenant violations within the following twelve
months. But for the reclassification, the long-term obligations at
July 31, 1994 would have been $24,011.
</FN>
</TABLE>
Financial data includes the results of operations and financial position of
the following acquired companies as of the business combination date noted
below:

1992: Globe Communications, Inc. and Globe Equipment
Corporation--January 3, 1992.
7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations

The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated financial condition and results of operations. The discussion
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto.

Results of Operations
Fiscal 1996 compared to Fiscal 1995

The Company reported earnings per common and common equivalent share of
$0.73 for the fiscal year ended July 31, 1996. This compares to earnings
per common and common equivalent share of $0.52 for the fiscal year ended
July 31, 1995. Earnings per common share assuming full dilution was $0.72
per share in fiscal 1996 as compared to $0.52 per share in fiscal 1995.

Contract revenues were $143.9 million in fiscal 1996 or $23,000 higher than
fiscal 1995. For the fiscal year ended July 31, 1996, the telecommunication
services group contract revenues increased $1.7 million or 1%; while the
utility line locating services and the electrical service groups contract
revenues decreased $1.1 million or 7%, and $0.6 million or 5%, respectively.
The telecommunication services group experienced higher volume associated
with the design and installation of broadband networks, telephony
engineering and design services, cable splicing, and inside network
installations for office buildings. These volume improvements were partially
offset by lower volume associated with the multi-year comprehensive service
contracts. The utility line locating group's lower volume relates primarily
to the loss of certain locating contracts. The electrical utility services
group experienced lower volume from bid contracts, partially offset by
improved volume and pricing in existing unit master contracts.

The contract revenue mix between the telecommunication services, utility
line locating services, and electrical services over recent years has
reflected a steady increase in contract revenues from the telecommunication
services group, offset by a decline in the electrical services group. For
the fiscal years 1996 and 1995, the contract revenue mix between the
telecommunication services, utility line locating services, and electrical
services was 83%, 10%, and 7%, respectively, and 82%, 10%, and 8%,
respectively. Contract revenues from multi-year comprehensive service
contracts continues to be a significant source of contract revenue. In
fiscal 1996, multi-year comprehensive service contracts included in the
telecommunication services group represented 64% of total contract revenues
as compared to 68% in fiscal 1995.

The Company's backlog of uncompleted work at July 31, 1996 was $228 million
as compared to $175 million at July 31, 1995. During fiscal 1996, the
Company was awarded various multi-year comprehensive service contracts
totaling approximately $85.2 million in the telecommunication services
group. These awards represent successful rebids or extensions granted under
existing contracts. The utility line locating services group was awarded
multi-year contracts totaling approximately $13.5 million during fiscal
1996. Also during fiscal 1996, the electrical services group was awarded a
multi-year contract totaling approximately $2.3 million.

Other revenues were primarily comprised of earnings on short-term
investments and net gains and losses from property and equipment disposals.
In fiscal 1996, other revenues were $1.2 million or $0.2 million lower than
fiscal 1995. Gains on the sale of property and equipment were $77,000 lower
than fiscal 1995. In addition, miscellaneous income declined $90,000 in
fiscal 1996 compared to fiscal 1995.
8
The Company's costs and operating expenses generally vary depending on
contract volume, character of services rendered, work locations,
competition, changes in productivity, and other factors. Cost of earned
revenues excluding depreciation, were 80% and 82% of contract revenues for
the fiscal years ended July 31, 1996 and 1995, respectively. The cost of
earned revenues decreased as a percentage of contract revenues due to
improved margins. Operating efficiencies and productivity in the labor force
and the utilization of more modern equipment were the primary factors
contributing to the margin improvements.

General and administrative expenses were $14.6 million in fiscal 1996 as
compared to $14.1 million in fiscal 1995. The increase is primarily
attributable to a $0.6 million increase in administrative salaries, wages
and related payroll taxes, a $0.2 million increase in general insurance, and
a $0.2 million increase in professional fees. These increases were partially
offset by a $0.5 million decrease in interest expense due to the declining
balance of outstanding indebtedness.

The provision for income taxes was $2.7 million in fiscal 1996 as compared
to $3.1 million in fiscal 1995. The provision for income taxes reflects a
$1.1 million reduction in a deferred tax asset valuation allowance recorded
in the fourth quarter of fiscal 1996. The Company's effective tax rate is
30% in fiscal 1996 as compared to 41% in fiscal 1995. The effective tax
rate differs from the statutory rate due to state income taxes, the
amortization of intangible assets with no tax benefit, other non-deductible
expenses for tax purposes, and in 1996, the reduction in the deferred tax
asset valuation allowance.

Fiscal 1995 compared to Fiscal 1994

Contract revenues in fiscal 1995 were $143.9 million or 19% higher than the
contract revenues recorded for fiscal 1994. The increase in contract
revenues was primarily attributable to the increased volume experienced in
the telecommunication services and utility line locating services groups.

The telecommunication services and utility line locating services groups
contract revenues increased $23.6 million or 25% and $3.4 million or 30%,
respectively, for the fiscal year ended July 31, 1995. Contract revenues
from the telecommunication services and utility line locating services
groups increased as a result of improved pricing and volume realized on
multi-year comprehensive service contracts. The electrical services group
contract revenues decreased 29% or $4.5 million for the fiscal year ended
July 31, 1995. The electrical services group experienced lower contract
revenues as a result of lower volume on existing unit master contracts and
the decision in fiscal 1994 to terminate the Company's business interest in
the government electrical contracting activities.

The Company's revenue mix between telecommunication services, utility line
locating services, and electrical services for fiscal year ended July 31,
1995 was 82%, 10%, and 8%, respectively, and 78%, 9%, and 13%, respectively,
for the fiscal year ended July 31, 1994. The contract revenue mix for
fiscal 1995 reflected an increase in contract revenues from the
telecommunication services group. This increase is primarily attributable
to the multi-year comprehensive service contracts which represent 68% of
total contract revenues in fiscal 1995 compared to 66% in fiscal 1994.

The Company's backlog of uncompleted work at July 31, 1995 was $175 million
as compared to $181 million at July 31, 1994. During fiscal 1995, the
Company was awarded various multi-year comprehensive service contracts
totaling approximately $71 million in the telecommunication services group.
During fiscal 1994, the Company was awarded various multi-year comprehensive
service contracts in the telecommunication services group totaling
approximately $127 million of which $73 million represents successful rebids
of existing contracts.
9
In fiscal 1995, other revenues included gains from the disposal of idle and
surplus property and equipment of $0.8 million. In fiscal 1994, other
revenues included $0.3 million from the recovery of damages received in the
settlement of a breach of contract claim and $0.2 million from gains on the
disposal of idle and surplus property and equipment.

Cost of earned revenues, excluding depreciation, was 82% of contract
revenues in fiscal 1995, and 87% in fiscal 1994. The Company's prime costs
of direct labor, materials, subcontractors, and equipment costs remained
relatively stable at 63% and 64% of contract revenues for the fiscal years
ended July 31, 1995 and 1994, respectively. Cost of earned revenues in
fiscal 1995 decreased as a percentage of contract revenues as compared to
fiscal 1994 due to operating efficiencies and productivity, and the
cancellation of less profitable contracts during fiscal 1994. Also, the
favorable settlement of a lawsuit in fiscal 1995 resulted in the reversal of
$450,000 of a previously accrued $1.2 million liability.

General and administrative expenses in fiscal 1995 were $14.1 million
compared to $15.6 million in fiscal 1994. The primary factor contributing
to the decrease was a $0.8 million reduction in professional and legal fees.
In fiscal 1994, a $0.4 million charge was recorded for the settlement of a
lawsuit filed by BellSouth Telecommunications, Inc.

During fiscal 1994, the Company wrote off $1.4 million of intangible assets
with no related tax benefit. Approximately, $1.3 million of the write-off
relates to the acquisition of Prime Utility Contractors, Inc. ("Prime").
During the quarter ending July 31, 1994, Prime voluntarily terminated its
only telecommunication services contract as a result of the Company's
involvement in certain litigation matters with BellSouth Telecommunications,
Inc. in the state of Alabama. Given the severity of the litigation matters
and the competitive environment in which the Company and its subsidiaries
operate, the Company could not predict with any certainty whether Prime
would be awarded service contracts in the future. These factors led the
Company to conclude that the intangible assets related to the acquisition of
Prime were permanently impaired and would not be recoverable from future
earnings. In fiscal 1995, the Company completed the liquidation of Prime.
The remaining intangible asset write-off of $0.1 million relates to the
Company terminating its business interests in the utility right-of-way
maintenance activities and certain other business activities.

During fiscal 1994, the Company recorded a deferred tax asset valuation
allowance of $1.7 million to recognize the Company's possible inability to
generate sufficient taxable income to realize the related deferred tax
assets. The variance between the statutory tax rates and the effective tax
rates resulted from the impact of the deferred tax asset valuation
allowance, the write-off of intangible assets without any related tax
benefits, and other non-deductible expenses for tax purposes.

On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 (the
"Act") was signed into law. The Act increased the federal tax rate to 35%
for taxable income in excess of $10 million and reduced the deductibility of
certain business expenses. The Act did not have a material effect on the
Company's consolidated financial statements.

During fiscal 1994, the Company decided to terminate its business interests
relating to the governmental electrical contracting and utility right-of-way
maintenance activities. For fiscal 1994, the loss from these activities
was $2.3 million, or $0.26 per share. The estimated costs of completing the
existing contracts, the write-off and disposal of certain assets, and the
administrative expenses required to shutdown these activities resulted in a
charge of $0.6 million in fiscal 1994.
10
Subsequent to July 31, 1994, several disputes between the Company and Mr.
Stover (a former Director of the Company) and affiliated parties were
resolved and settled. The settlement required the payment of $103,000 by
the Company to Mr. Stover. In addition, the settlement modified the terms
of the lease agreements the Company had previously entered into with Mr.
Stover and affiliated parties. The modifications reduced the monthly rental
payments effective January 1995 and accelerated the termination dates to be
no later than June 30, 1998. As a result, the Company recorded a charge
against operations of $0.6 million, including a $0.4 million reserve against
certain leasehold improvements, during the quarter ended July 31, 1994.


Liquidity and Capital Resources

The Company's primary sources of cash and equivalents has historically been
from operating activities and the proceeds from the sale of idle and surplus
real property and equipment. Strong operating results continued to finance
the Company's working capital and capital expenditure requirements. The
excess funds generated were used to reduce the Company's outstanding long-term
debt. Net cash flows from operating activities in fiscal 1996 of $11.5
million were 26% above the $9.2 million in fiscal 1995. These internally
generated sources of funds continue to be the Company's primary source of
liquidity as the available borrowing capabilities under the bank credit
agreement are limited.

Investing activities used $7.6 million of cash in fiscal 1996 for the normal
replacement of equipment and the start up of new contracts in the utility
line locating services group. Investing activities also included proceeds
of $2.2 million from the sale of property and equipment. Aside from the
capital expenditures, the Company obtained approximately $3.0 million of
equipment under various noncancelable operating leases ranging from
one-to-three years.

Cash used for financing activities in fiscal 1996 was $6.7 million for debt
reduction. This included a $1.8 million prepayment of the term-loan
principal from the proceeds on the sale of certain property and equipment.
The Company has continued its efforts to extinguish the balance of the
term-loan principal. The final term-loan principal payment is scheduled for
March 1997. This is one year earlier than the original repayment date in the
bank credit agreement. During fiscal 1996, $135,000 of equipment was
financed by a capital lease.

At July 31, 1996, the Company had outstanding borrowings under a term-loan
of $2.2 million, equipment acquisition term-loans aggregating $0.7 million,
and a revolving credit facility of $9.0 million. The interest rate on the
term-loan and revolving credit facility is at the bank's prime interest rate
plus one-half percent (8.75% at July 31, 1996 and 9.25% at July 31, 1995).
The interest rate on the equipment acquisition term-loans is at the bank's
prime interest rate plus three-quarters percent (9.00% at July 31, 1996 and
9.50% at July 31,1995). The interest rate on equipment acquisition term-loans
subsequent to November 30, 1995 is at the bank's prime interest rate
plus one-half percent. The outstanding principal on the term-loan and
equipment acquisition term-loans are payable quarterly through March 1997
and January 1998, respectively. The revolving credit facility is used to
finance working capital and is payable in March 1998. Substantially all of
the Company's assets are pledged as collateral in support of these
facilities.

In addition, the Company has available a $9.8 million standby letter of
credit facility of which $0.2 million was available and a $5.0 million
equipment acquisition facility of which $4.0 million was available at July
31, 1996. The standby letter of credit facility is issued as security to
the Company's insurance administrators as part of its self-insurance
11
program. During fiscal 1996, the bank renewed these facilities for a period
of one year expiring on November 30, 1996. In addition, the bank increased
the borrowing capacity of the equipment acquisition facility from $3.0
million to $5.0 million and reduced the interest rate on future borrowings
from the bank's prime interest rate plus three-quarters percent to the
bank's prime interest rate plus one-half percent. There were no additional
borrowings under the revised terms of the equipment acquisition facility.
The Company currently intends to petition the lender for renewal of these
facilities and anticipates that the renewals will be granted.

The bank credit agreement contains provisions regarding minimum working
capital, tangible net worth, debt-to-equity ratios and certain other
financial covenants. At July 31, 1996 and July 31, 1995, the Company was in
compliance with all financial covenants and conditions of the bank credit
agreement.

No cash dividends have been paid during the last five fiscal years. The
Board will determine future dividend policies based on financial condition,
profitability, cash flow, capital requirements, and business outlook, as
well as other factors relevant at the time. The Company's bank credit
agreement limits the payment of cash dividends to 33 1/3 percent of earnings
available for distribution.

The Company foresees its capital resources together with existing cash
balances, to be sufficient to meet its financial obligations, including the
scheduled debt payments under the bank credit agreement and operating lease
commitments, and to support the Company's normal replacement of equipment at
its current level of business. The Company's future operating results and
cash flows may be affected by a number of factors including the Company's
success in bidding on future contracts and the Company's ability to
effectively manage controllable costs.

Recently Issued Accounting Pronouncements

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" which is effective for fiscal years beginning after December 15, 1995.
SFAS No. 121 requires that the long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company will adopt this Statement in fiscal 1997. The
impact on the Company of adopting SFAS No. 121 is not expected to have a
material adverse impact on the consolidated financial position or results of
operations.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation" which is effective for fiscal years beginning after December
15, 1995. SFAS No. 123 defines a fair value based method of accounting for
an employee stock option or similar equity instrument. It allows the
continued use of the intrinsic value based method of accounting as
prescribed by Accounting Principles Board Opinion ("APB") No. 25 "Accounting
for Stock Issued to Employees". The Company has not yet determined the
method or effect on operating results of implementing this Statement;
however, the adoption of SFAS No. 123 is not expected to have a material
adverse impact on the consolidated financial position or results of
operations.
12
Outlook

The Company completed fiscal year 1996 with a backlog of uncompleted work of
$228 million of which approximately 50% will be completed in fiscal year
1997. Contract revenues recognized will be partially dependent upon the
timing and amounts of new work. The Telecommunications Reform Act of 1996
is a significant factor contributing to the industry's growth potential.
The Company's success in taking advantage of new growth opportunities will
be affected by its ability to secure adequate bonding and financing
facilities to purchase needed equipment and to mobilize a trained labor
force. Management is not aware of any adverse trends that would materially
affect the Company's financial position or results of operations.

Item 8. Financial Statements and Supplementary Data

The Registrant's consolidated financial statements and related notes and
independent auditors' report follow on subsequent pages of this report.
13
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 3,835,479 $ 4,306,675
Accounts receivable, net 13,306,064 16,330,477
Costs and estimated earnings in
excess of billings 7,137,212 5,223,425
Deferred tax assets, net 1,261,065 385,755
Other current assets 1,248,405 1,396,201
------------ ------------
Total current assets 26,788,225 27,642,533
------------ ------------

PROPERTY AND EQUIPMENT, net 19,574,410 18,802,563
------------ ------------
OTHER ASSETS:
Intangible assets, net 4,839,447 4,994,535
Deferred tax assets 598,887
Other 272,916 353,227
------------ ------------
Total other assets 5,711,250 5,347,762
------------ ------------
TOTAL $ 52,073,885 $ 51,792,858
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,541,789 $ 5,607,567
Notes payable 2,758,795 4,955,080
Billings in excess of costs and
estimated earnings 38,714 100,951
Accrued self-insured claims 3,064,229 2,266,855
Income taxes payable 227,619 621,483
Other accrued liabilities 8,151,589 6,585,387
------------ ------------
Total current liabilities 17,782,735 20,137,323

NOTES PAYABLE 9,452,630 13,870,064
ACCRUED SELF-INSURED CLAIMS 7,062,150 6,598,372
------------ ------------
Total liabilities 34,297,515 40,605,759
------------ ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock, par value $.33 1/3
per share: 50,000,000 shares
authorized; 8,601,492 and 8,543,990
issued and outstanding, respectively 2,867,164 2,847,997
Additional paid-in capital 24,473,269 24,293,309
Retained earnings (deficit) ( 9,564,063) (15,954,207)
------------- ------------
Total stockholders' equity 17,776,370 11,187,099
------------ ------------
TOTAL $ 52,073,885 $ 51,792,858
============ ============
See notes to consolidated financial statements.
</TABLE>
14
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JULY 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>

1996 1995 1994
<S> <C> <C> <C>
REVENUES:
Contract revenues earned $143,932,608 $143,909,874 $121,407,707
Other, net 1,202,772 1,373,242 1,084,195
------------ ------------ ------------
Total 145,135,380 145,283,116 122,491,902
------------ ------------ ------------
EXPENSES:
Cost of earned revenues
excluding depreciation 115,732,334 117,742,300 105,607,777
General and administrative 14,564,558 14,113,615 15,582,953
Depreciation and
amortization 5,718,768 5,911,104 7,337,438
Intangible asset write-off 1,422,876
------------ ------------ ------------
Total 136,015,660 137,767,019 129,951,044
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES 9,119,720 7,516,097 (7,459,142)
------------ ------------ ------------
PROVISION (BENEFIT) FOR
INCOME TAXES
Current 4,203,772 3,082,893 (1,445,880)
Deferred (1,474,196) 1,763,661
------------ ------------ ------------
Total 2,729,576 3,082,893 317,781
------------ ------------ ------------

NET INCOME (LOSS) $ 6,390,144 $ 4,433,204 $ (7,776,923)
============ ============ ============
EARNINGS (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE:
Primary $ 0.73 $ 0.52 $ (0.91)
============ ============ ============
Fully diluted $ 0.72 $ 0.52 $ (0.91)
============ ============ ============

SHARES USED IN COMPUTING EARNINGS
(LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary 8,806,577 8,535,524 8,528,990
============ ============ =============

Fully diluted 8,875,042 8,535,524 8,528,990
============ ============ =============

See notes to consolidated financial statements.
</TABLE>
15
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JULY 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
1996 1995 1994

<S> <C> <C> <C>
COMMON STOCK:
Balance at beginning of year $ 2,847,997 $ 2,842,997 $ 2,842,997
Stock options exercised 19,167 5,000
------------ ------------ ------------
Balance at end of year 2,867,164 2,847,997 2,842,997
------------ ------------ ------------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year 24,293,309 24,253,309 24,253,309
Stock options exercised 179,960 40,000
------------ ------------ ------------
Balance at end of year 24,473,269 24,293,309 24,253,309
------------ ------------ ------------
RETAINED EARNINGS (DEFICIT):
Balance at beginning of year (15,954,207) (20,387,411) (12,610,488)
Net income (loss) 6,390,144 4,433,204 (7,776,923)
------------ ------------ ------------
Balance at end of year ( 9,564,063) (15,954,207) (20,387,411)
------------ ------------ ------------
UNEARNED RESTRICTED STOCK
COMPENSATION:
Balance at beginning of year (300,000)
Amortization of deferred
compensation 300,000
------------ ------------ ------------
Balance at end of year 0 0 0
------------ ------------ ------------

TOTAL STOCKHOLDERS' EQUITY $ 17,776,370 $ 11,187,099 $ 6,708,895
============ ============ ============

See notes to consolidated financial statements.
</TABLE>
16
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Increase (Decrease) in Cash and
Equivalents from:
OPERATING ACTIVITIES:
Net income (loss) $ 6,390,144 $ 4,433,204 $ (7,776,923)
Adjustments to reconcile net cash
provided by operating activities:
Intangible asset write-off 1,422,876
Depreciation and amortization 5,718,768 5,911,104 7,337,438
(Gain) loss on disposal of assets (760,809) (837,942) 225,858
Deferred income taxes (1,474,196) 1,763,661
Deferred compensation 300,000
Changes in assets and liabilities:
Accounts receivable, net 3,024,413 (1,444,880) 852,796
Unbilled revenues, net (1,976,024) (1,608,984) 109,120
Other current assets 147,796 (132,597) (21,165)
Other assets 80,311 87,120 (247,911)
Accounts payable (2,065,779) 877,189 91,564
Accrued self-insured claims
and other liabilities 2,827,397 1,245,941 487,331
Accrued income taxes (393,864) 621,483
------------ ------------ ------------
Net cash inflow from operating
activities 11,518,157 9,151,638 4,544,645
------------ ------------ ------------
INVESTING ACTIVITIES:
Capital expenditures (7,632,761) (5,971,966) (4,825,723)
Proceeds from sale of assets 2,193,341 2,566,619 2,464,677
------------ ------------ ------------
Net cash outflow from investing
activities (5,439,420) (3,405,347) (2,361,046)
------------ ------------ ------------
FINANCING ACTIVITIES:
Borrowings on notes payable and
bank lines-of-credit 1,350,000 1,100,000
Principal payments on notes
payable and bank lines-of-
credit (6,749,060) (5,460,399) (5,090,555)
Exercise of stock options 199,127 45,000
------------ ------------ ------------
Net cash outflow from financing
activities (6,549,933) (4,065,399) (3,990,555)
------------ ------------ ------------
NET CASH INFLOW (OUTFLOW) FROM
ALL ACTIVITIES (471,196) 1,680,892 (1,806,956)
CASH AND EQUIVALENTS AT BEGINNING
OF YEAR 4,306,675 2,625,783 4,432,739
CASH AND EQUIVALENTS AT END ------------ ------------ ------------
OF YEAR $ 3,835,479 $ 4,306,675 $ 2,625,783
============ ============ ============

See notes to consolidated financial statements.
</TABLE>
17
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
FOR THE YEARS ENDED JULY 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW AND NONCASH INVESTING AND
FINANCING ACTIVITIES:

Cash paid during the period for:
Interest $ 1,504,701 $ 1,946,918 $ 1,725,832
Income taxes 4,614,302 2,749,817 762,792

Property and equipment acquired
and financed with:
Capital lease obligations $ 135,341 $ 360,242
Short-term notes payable $ 204,521





See notes to consolidated financial statements.
</TABLE>
18
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
Dycom Industries, Inc. ("Dycom" or the "Company") and its subsidiaries,
all of which are wholly owned. The Company's operations consist primarily
of telecommunication and electric utility services contracting. All
material intercompany accounts and transactions have been eliminated. For
comparative purposes, certain amounts in the 1994 financial statements have
been reclassified to conform with the 1996 and 1995 presentations.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities as of the
date of the financial statements and revenues and expenses during the period
reported. Actual results could differ from those estimates.

Estimates are used for the revenue recognition of work-in-process, allowance
for doubtful accounts, self-insured claims liability, deferred tax asset
valuation allowance, depreciation and amortization, and the estimated lives
of assets, including intangibles.

REVENUE -- Income on long-term contracts is recognized on the
percentage-of-completion method based primarily on the ratio of contract
costs incurred to date to total estimated contract costs. As some of these
contracts extend over one or more years, revisions in cost and profit
estimates during the course of the work are reflected in the accounting
period as the facts that require the revision become known. At the time a
loss on a contract becomes known, the entire amount of the estimated
ultimate loss is accrued. Income on short-term unit contracts is recognized
as the related work is completed. Work-in-process on unit contracts is based
on management's estimate of work performed but not billed.

"Costs and estimated earnings in excess of billings" represents the excess
of contract revenues recognized under the percentage-of-completion method of
accounting for long-term contracts and work-in-process on unit contracts
over billings to date. For those contracts in which billings exceed contract
revenues recognized to date, such excesses are included in the caption
"billings in excess of costs and estimated earnings".

CASH AND EQUIVALENTS -- Cash and equivalents include cash balances in excess
of daily requirements which are invested in overnight repurchase agreements,
certificates of deposits, and various other financial instruments having a
maturity of three months or less. For purposes of the consolidated
statements of cash flows, the Company considers these amounts to be cash
equivalents. The carrying amount reported in the balance sheet for cash and
equivalents approximates its fair value.

PROPERTY AND EQUIPMENT -- Property and equipment is stated at cost, reduced
in certain cases by valuation reserves. Depreciation and amortization is
computed over the estimated useful life of the assets utilizing the
straight-line method. The estimated useful service lives of the assets are:
buildings -- 20-31 years; leasehold improvements -- the term of the
respective lease or the estimated useful life of the improvements, whichever
is shorter; vehicles -- 3-7 years; equipment and machinery -- 3-10 years;
and furniture and fixtures -- 3-10 years. Maintenance and repairs are
expensed as incurred; expenditures that enhance the value of the property or
extend its useful life are capitalized. When assets are sold or retired, the
cost and related accumulated depreciation are removed from the accounts and
the resulting gain or loss is included in income.
19
INTANGIBLE ASSETS -- The excess of the purchase price over the fair market
value of the tangible net assets of acquired businesses (goodwill) is
amortized on the straight-line method over 40 years. The appropriateness of
the carrying value of intangible assets is continually reviewed and adjusted
where appropriate. The ongoing assessment of intangible assets for
impairment is based on the recoverability of such amounts through future
operations.

Amortization expense, which is comprised primarily of goodwill, was
$155,088, $155,088, and $293,478 for the years ended July 31, 1996, 1995,
and 1994, respectively. The intangible assets are net of accumulated
amortization of $996,270 and $841,182 at July 31, 1996 and 1995,
respectively.

In fiscal 1994, the Company wrote off the unamortized portion of intangible
assets, primarily goodwill, related to an acquired subsidiary and certain
terminated business activities totaling $1,422,876. See Note 2.

SELF-INSURED CLAIMS LIABILITY -- The Company is primarily self-insured, up
to certain limits, for automobile and general liability, workers'
compensation, and employee group health claims. A liability for unpaid
claims and the associated claim expenses, including incurred but not
reported losses, is actuarially determined and reflected in the consolidated
financial statements as an accrued liability. The self-insured claims
liability includes incurred but not reported losses of $4,458,000 and
$5,072,000 at July 31, 1996 and 1995, respectively. The determination of
such claims and expenses and the appropriateness of the related liability is
continually reviewed and updated.

INCOME TAXES -- The Company and its subsidiaries file a consolidated federal
income tax return. Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities.

PER SHARE DATA -- Earnings per common and common equivalent share are
computed using the weighted average shares of common stock outstanding plus
the common stock equivalents arising from the effect of dilutive stock
options, using the treasury stock method. In the years ended July 31, 1995
and 1994, options to purchase stock did not impact the per share amounts as
they were either insignificant or anti-dilutive. See Note 11.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- In March 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" which is effective for
fiscal years beginning after December 15, 1995. SFAS No. 121 requires that
the long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company will adopt
this Statement in fiscal 1997. The impact on the Company of adopting SFAS
No. 121 is not expected to have a material adverse impact on the
consolidated financial position or results of operations.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation" which is effective for fiscal years beginning after December
15, 1995. SFAS No. 123 defines a fair value based method of accounting for
an employee stock option or similar equity instrument. It allows the
continued use of the intrinsic value based method of accounting as prescribed
by Accounting Principles Board Opinion ("APB") No. 25 "Accounting for Stock
Issued to Employees". The Company has not yet determined the method or
effect on operating results of implementing this Statement; however, the
adoption of SFAS No. 123 is not expected to have a material adverse impact
on the consolidated financial position or results of operations.
20
2. INTANGIBLE ASSET WRITE-OFF

In fiscal 1994, Prime Utility Contractors, Inc. ("Prime"), a wholly-owned
subsidiary of the Company, voluntarily terminated its only telecommunication
services contract due to Dycom's involvement in certain litigation matters
with BellSouth Telecommunications, Inc. in the state of Alabama. Given the
severity of the litigation matters and the competitive environment in which
the Company and its subsidiaries operate, Dycom could not predict with any
certainty whether Prime would be awarded service contracts in the future.
These factors led the Company to conclude that the intangible assets related
to the acquisition of Prime were permanently impaired and would not be
recoverable from future earnings. As a result, the Company wrote off
$1,286,321 of intangible assets (goodwill), net of accumulated amortization
of $152,919, with no related tax benefit. In fiscal 1995, the Company
completed the liquidation of Prime.

In addition, the Company wrote off $136,555 of intangible assets, net of
accumulated amortization of $375,495, related to certain other terminated
and discontinued business activities in fiscal 1994.


3. ACCOUNTS RECEIVABLE

Accounts receivable at July 31 consist of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Contract billings $12,305,652 $15,222,897
Retainage 1,138,619 1,201,454
Other receivables 368,677 773,704
----------- -----------
Total 13,812,948 17,198,055
Less allowance for doubtful accounts 506,884 867,578
----------- -----------
Accounts receivable, net $13,306,064 $16,330,477
=========== ===========
</TABLE>
4. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS

The accompanying consolidated balance sheets include costs and estimated
earnings on contracts in progress, net of progress billings as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Costs incurred on contracts in progress $24,272,835 $20,862,665
Estimated earnings thereon 334,905 609,280
----------- -----------
24,607,740 21,471,945
Less billings to date 17,509,242 16,349,471
----------- -----------
$ 7,098,498 $ 5,122,474
=========== ===========
Included in the accompanying consolidated
balance sheets under the captions:
Costs and estimated earnings in excess
of billings $ 7,137,212 $ 5,223,425
Billings in excess of costs and
estimated earnings (38,714) (100,951)
----------- -----------
$ 7,098,498 $ 5,122,474
=========== ===========
</TABLE>
21
5. PROPERTY AND EQUIPMENT

The accompanying consolidated balance sheets include the following property
and equipment:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Land $ 1,711,464 $ 1,723,527
Buildings 2,236,322 2,223,627
Leasehold improvements 743,101 750,955
Vehicles 22,153,365 21,381,527
Equipment and machinery 20,033,610 19,711,023
Furniture and fixtures 3,541,638 2,930,467
----------- -----------
Total 50,419,500 48,721,126
Less accumulated depreciation and
amortization 30,845,090 29,918,563
----------- -----------
Property and equipment, net $19,574,410 $18,802,563
=========== ===========
</TABLE>
During fiscal 1996 and 1995, certain subsidiaries of the Company entered
into lease arrangements accounted for as capitalized leases. The carrying
value of capital leases at July 31, 1996 and 1995 was $372,170 and $326,704,
respectively, net of accumulated depreciation at July 31, 1996 and 1995 of
$123,413 and $33,538, respectively. Capital leases are included as a
component of equipment and machinery.

Maintenance and repairs of property and equipment amounted to $5,080,902,
$5,015,998, and $5,048,482 for the fiscal years ended July 31, 1996, 1995,
and 1994, respectively.

6. NOTES PAYABLE

Notes payable at July 31 are summarized by type of borrowing as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Bank Credit Agreement:
Revolving credit facility $ 9,000,000 $ 9,000,000
Term-loan 2,162,812 7,948,469
Equipment acquisition term-loans 704,167 1,566,667
Capital lease obligations 344,446 310,008
----------- -----------
Total 12,211,425 18,825,144
Less current portion 2,758,795 4,955,080
----------- -----------
Notes payable--non-current $ 9,452,630 $13,870,064
=========== ===========
</TABLE>
At July 31, 1996, the Company had a bank credit agreement consisting of a
$9.0 million revolving credit facility, a $2.2 million term-loan, a $5.0
million equipment acquisition facility of which $4.0 million was available,
and a $9.8 million standby letter of credit facility of which $0.2 million
was available. The bank credit agreement contains restrictions which, among
other things, require maintenance of certain financial ratios and covenants,
restrict encumbrance of assets and creation of indebtedness, and limit the
payment of cash dividends. Cash dividends are limited to 33 1/3 percent of
earnings available for distribution as dividends. No cash dividends have
been paid during fiscal 1996. Substantially all the Company's assets are
pledged as collateral under the terms of the agreement.
22
The interest rate on the term-loan and the revolving credit facility is at
the bank's prime interest rate plus one-half percent (8.75% at July 31, 1996
and 9.25% at July 31, 1995). The interest rate on the equipment acquisition
term-loans are at the bank's prime interest rate plus three-quarters percent
(9.00% at July 31, 1996 and 9.50% at July 31, 1995). The interest rate on
equipment acquisition term-loans subsequent to November 30, 1995 is at the
bank's prime interest rate plus one-half percent. Interest costs incurred
on notes payable, all of which were expensed, for the years ended July 31,
1996, 1995, and 1994, were $1,457,488, $1,981,010, and $1,704,265,
respectively. Such amounts are included in general and administrative
expenses in the accompanying consolidated statements of operations.

The term-loan quarterly principal payments increased to $1.0 million in
September 1995. During fiscal 1996 and 1995, the Company prepaid the
term-loan principal utilizing the proceeds from the sale of property and
equipment. The prepayments were $1.8 million in fiscal 1996 and $1.5 million
in fiscal 1995. The term-loan principal is payable through March 1997.
During fiscal 1995, $1.4 million was drawn against the equipment acquisition
facility and in accordance with the bank credit agreement, the draws were
converted to equipment acquisition term-loans. The outstanding balance of
the equipment acquisition term-loans is payable quarterly through January
1998. The revolving credit facility is used to finance working capital and
is payable in March 1998.

At July 31, 1996, the Company had $9.6 million in outstanding standby
letters of credit issued as security to the Company's insurance
administrators as part of its self-insurance program.

During fiscal 1996, the equipment acquisition facility and the standby
letter of credit facility were renewed for a period of one year expiring
November 30, 1996. In addition, the bank increased the borrowing capacity
of the equipment acquisition facility from $3.0 million to $5.0 million and
reduced the interest rate on future borrowings from the bank's prime
interest rate plus three-quarters percent to the bank's prime interest rate
plus one-half percent. There were no additional borrowings under the revised
terms of the equipment acquisition facility. The Company currently intends
to petition the bank for renewal of these facilities and anticipates that
the renewals will be granted.

In addition to the borrowings under the bank credit agreement, certain
subsidiaries have outstanding obligations under capital leases. The
obligations are payable in monthly installments expiring at various dates
through May 1999.

The estimated aggregate annual principal repayments for notes payable in
the next three years are $2,758,795 in 1997, $9,411,068 in 1998, and
$41,562 in 1999.

The interest rates on notes payable under the bank credit agreement are at
current rates and, therefore, the carrying amount approximates fair value.
23
7. INCOME TAXES

The components of the provision (benefit) for income taxes are:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $ 3,408,167 $ 2,582,918 $ (1,287,506)
State 795,605 499,975 (158,374)
------------ ------------ ------------
4,203,772 3,082,893 (1,445,880)
------------ ------------ ------------
Deferred:
Federal (416,169) (74,145) (138,875)
State 190,163
Valuation allowance (1,058,027) 74,145 1,712,373
------------ ------------ ------------
(1,474,196) 0 1,763,661
------------ ------------ ------------
Total tax provision (benefit) $ 2,729,576 $ 3,082,893 $ 317,781
============ ============ ============
</TABLE>

The deferred tax provision (benefit) is the change in the deferred tax
assets and liabilities representing the tax consequences of changes in the
amount of temporary differences and changes in tax rates during the year.
The deferred tax assets and liabilities at July 31 are comprised of the
following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets:
Self-insurance, warranty, and
other non-deductible reserves $ 4,008,715 $ 3,610,217
Allowance for doubtful accounts 172,340 294,977
Other 5,660
----------- -----------
4,181,055 3,910,854
Valuation allowance (728,491) (1,786,518)
----------- -----------
$ 3,452,564 $ 2,124,336
=========== ===========
Deferred tax liabilities:
Property and equipment $ 1,381,314 $ 1,530,608
Unamortized acquisition costs 211,298 207,973
----------- -----------
$ 1,592,612 $ 1,738,581
=========== ===========
Net deferred tax assets $ 1,859,952 $ 385,755
=========== ===========
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion of the Company's deferred tax assets will not be realized.
Management has evaluated the available evidence about the Company's future
taxable income and other possible sources of realization of deferred tax
assets, and as a result, the valuation allowance was reduced by $1.1 million
in fiscal 1996. The valuation allowance recorded in the financial
statements reduces deferred tax assets to an amount that represents
management's best estimate of the amount of such deferred tax assets that
more likely than not will be realized.
24
The difference between the total tax provision and the amount computed by
applying the statutory federal income tax rates to pre-tax income is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Statutory rate applied to
pre-tax income (loss) $ 3,100,705 $ 2,555,473 $ (2,536,108)
State taxes, net of federal
tax benefit 525,099 329,984 20,981
Amortization and write-off of
intangible assets, with no tax
benefit 52,730 52,730 502,312
Tax effect of non-deductible
items, primarily purchase
accounting adjustments 78,197 70,561 27,686
Adjustment of prior years'
accrual 318,848
Valuation allowance (1,058,027) 74,145 1,712,373
Deferred compensation--permanent
difference 191,250
Other items, net 30,872 80,439
----------- ------------ ------------
Total tax provision $ 2,729,576 $ 3,082,893 $ 317,781
=========== ============ ============
</TABLE>

On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 (the
"Act") was signed into law. The Act increased the federal tax rate to 35%
for taxable income in excess of $10 million and reduced the deductibility of
certain business expenses. The Act did not have a material effect on the
Company's consolidated financial statements.

The Internal Revenue Service has examined and closed the Company's federal
income tax returns for all years through fiscal 1990. The Company has
settled all assessments of additional taxes and believes that it has made
adequate provision for income taxes that may become payable with respect to
open tax years.


8. REVENUES--OTHER

The components of other revenues for the fiscal years ending 1996, 1995, and
1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Interest income $ 262,994 $ 265,931 $ 315,094
Gain on sale of
fixed assets 760,809 837,942 200,292
Settlement proceeds 250,000
Miscellaneous income 178,969 269,369 318,809
----------- ----------- ------------
Total other revenues, net $ 1,202,772 $ 1,373,242 $ 1,084,195
=========== =========== ============
</TABLE>
25
9. CAPITAL STOCK


On June 1, 1992, the Company approved a Shareholder Rights Plan. All
shareholders of record on June 15, 1992 were issued a Right for each
outstanding share of the Company's common stock. Each Right entitles the
holder to purchase one-half share of common stock for an exercise price of
$18 subject to adjustment. The Right is exercisable only when a triggering
event occurs. The triggering events, among others, are a person or group's
(1) acquisition of 20% or more of Dycom's common stock, (2) commencement of
a tender offer which would result in the person or group owning 20% or more
of Dycom's common stock, or (3) acquisition of at least 10% of Dycom's
common stock and such acquisition is determined to have effects adverse to
the Company. The Company can redeem the Rights at $0.01 per Right at any
time prior to ten days after a triggering event occurs.



10. EMPLOYEE BENEFIT PLAN


Effective January 1, 1995, the Company adopted The Dycom Industries, Inc.
Retirement Savings Plan, a defined contribution plan that qualifies under
Section 401(k) of the Internal Revenue Code. The plan provides retirement
benefits to all employees who elect to participate. Under the plan,
participating employees may defer up to 10% of their base pre-tax
compensation. The Company's contributions to the plan are discretionary.
The Company's discretionary contributions totaled $100,000 and $60,039 in
fiscal years 1996 and 1995, respectively.



11. STOCK OPTION PLAN AND RESTRICTED STOCK AWARD

The Company has reserved 900,000 shares of common stock under its 1991
Incentive Stock Option Plan (the "1991 Plan") which was approved by the
shareholders on November 25, 1991. The Plan provides for the granting of
options to key employees until it expires in 2001. Options are granted at
the fair market value on the date of grant and are exercisable over a period
of up to five years. Certain of the options granted during the years ended
July 31, 1996, 1995, and 1994 have lapsed as a result of certain employees
terminating their employment with the Company. At July 31, 1996, 1995, and
1994, options available for grant under the 1991 Plan were 427,353 shares,
403,419 shares, and 549,792 shares, respectively.

The Company's previous Incentive Stock Option Plan (the "1981 Plan") expired
on December 31, 1991. No further grants will be made under the 1981 Plan,
and all outstanding options expired during the first quarter of fiscal 1996.
26
The following table summarizes the stock option transactions under the 1991
Plan and the 1981 Plan for the three years ended July 31, 1996, 1995, and
1994:
<TABLE>
<CAPTION>
1991 Plan 1981 Plan

Number of Option Price Number of Option Price
Options Per Share Options Per Share

____________________________________________________
<S> <C> <C> <C> <C>
Options outstanding at
July 31, 1993 76,440 $4.00 170,961 $9.33 to 11.50

Granted 310,840 $2.875 to 3.875
Terminated (37,072) (76,671)
____________________________________________________
Options outstanding at
July 31, 1994 350,208 $2.875 to 4.00 94,290 $9.33 to 11.50

Granted 161,300 $2.75 to 6.75
Terminated (14,927) (67,698)
Exercised (15,000) $3.00
____________________________________________________
Options outstanding at
July 31, 1995 481,581 $2.75 to 6.75 26,592 $10.75

Terminated (23,934) (26,592)
Exercised (49,502) $2.75 to 6.75

____________________________________________________
Options outstanding at
July 31, 1996 408,145 $2.75 to 6.75 0

____________________________________________________
Exercisable options at
July 31, 1996 174,819 $2.75 to 6.75 0
____________________________________________________

</TABLE>
On August 26, 1996, the Company granted to key employees under the 1991 Plan
options to purchase an aggregate of 100,000 shares of common stock. The
options were granted at $13.50, the fair market value on the date of grant.

In addition to the stock option plans discussed above, the Company has
agreements outside of the plans with the non-employee members of the Board
of Directors. On January 10, 1994, the Company granted to the non-employee
Directors, non-qualified options to purchase an aggregate of 60,000 shares
of common stock. The options were granted at $3.875, the fair market value
on the date of grant, with vesting over a three-year period. During fiscal
1996, 8,000 options were exercised. During fiscal 1995, 24,000 options
lapsed as a result of certain resignations from the Board of Directors. At
July 31, 1996, 28,000 options were outstanding of which 16,000 were
exercisable.

As part of an employment agreement with a key executive of the Company,
225,000 shares of Dycom common stock were awarded to the executive on August
1, 1989. A portion of the stock award contained various restrictions as to
the sale or transfer prior to July 31, 1994 when the restrictions lapsed.
Compensation expense based on the value of the stock at the date of grant
was amortized over the restricted period. The charge to compensation expense
for fiscal 1994 was $300,000.
27
12. RELATED PARTY TRANSACTIONS

Several of the Company's subsidiaries lease land, office buildings, shop
facilities, and other equipment from two of these subsidiaries' former
owners, one of which is a former Director of the Company. Total expense
under these arrangements while such individuals were considered related
parties for the years ended July 31, 1995, and 1994 was $404,767 and
$1,166,883, respectively. Total expense in fiscal 1996 for these properties
and the future minimum lease payments are disclosed in Note 14 since they
are no longer related parties.

Subsequent to July 31, 1994, several disputes between the Company and Mr.
Stover (a former Director of the Company) and affiliated parties were
resolved and settled. As a result of the settlement, the Company recorded a
charge against operations of $0.6 million, including a $0.4 million reserve
against certain leasehold improvements, during the year ended July 31, 1994.


13. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The operating subsidiaries obtain contracts from both public and private
concerns. For the years ended July 31, 1996, 1995, and 1994, approximately
61%, 58%, and 55%, respectively, of the contract revenues were from
BellSouth Telecommunications, Inc. ("BellSouth") and 9%, 9%, and 11%,
respectively, of the contract revenues were from GTE.

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts
receivable. BellSouth represents a significant portion of the Company's
customer base. The Company's outstanding trade receivables from BellSouth
were $4.8 million or 36% and $5.7 million or 35% of the total outstanding
trade receivables at July 31, 1996 and 1995, respectively.

14. COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries have operating leases covering office
facilities, vehicles, and equipment which have noncancelable terms in
excess of one year. During fiscal 1996, 1995, and 1994, the Company entered
into numerous operating leases for vehicles and equipment. Certain of these
leases contain renewal provisions and generally require the Company to pay
insurance, maintenance, and other operating expenses. Total expense
incurred under operating lease agreements, excluding the transactions with
related parties (see Note 12), for the years ended July 31, 1996, 1995, and
1994, was $4,195,203, $2,642,407, and $1,102,641, respectively. The future
minimum obligations under these leases are $3,352,183 in 1997, $2,265,584 in
1998, $716,757 in 1999, $211,865 in 2000, $102,282 in 2001, and $317,448
thereafter.

In the normal course of business, certain subsidiaries of the Company have
pending and unasserted claims. Although the ultimate resolution and
liability of these claims cannot be determined, management believes the
final disposition of these claims will not have a material adverse impact on
the Company's consolidated financial condition or results of operations.
28
15. LITIGATION SETTLEMENT

During fiscal year 1995, a final settlement was reached in the complaint
filed in March 1993 by BellSouth against Star Construction, Inc. ("Star"), a
subsidiary of the Company. The settlement provided for the payment of
$750,000 to BellSouth by Star. The settlement monies were paid in two
installments of $375,000 each during the quarters ended April 30, 1995 and
January 31, 1995, respectively. The Company previously recorded a liability
of $1.2 million for this claim and as such, credited operations for the
excess liability at the time the claim was settled.
29
16. QUARTERLY FINANCIAL DATA (Unaudited)

In the opinion of management, the following unaudited quarterly data for the
years ended July 31, 1996 and 1995 reflect all adjustments necessary for a
statement of operations. All such adjustments are of a normal recurring
nature other than as discussed below. Earnings per common and common
equivalent share calculation for each quarter is based on the weighted
average shares of common stock outstanding plus the effect of dilutive stock
options. The sum of the quarters earnings per common and common equivalent
share may not necessarily be equal to the full year earnings per common and
common equivalent share amounts.
<TABLE>
<CAPTION>
In Whole Dollars, Except Per Share Amounts
------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1996:
Revenues $37,605,583 $32,831,463 $35,390,645 $39,307,689
Income Before
Income Taxes 1,715,485 1,603,524 2,965,713 2,834,998

Net Income 968,638 984,232 1,704,150 2,733,124
Earnings per
Common and Common
Equivalent Share:
Primary 0.11 0.12 0.20 0.31
Fully Diluted 0.11 0.12 0.20 0.31

1995:
Revenues $36,422,599 $33,792,883 $36,528,337 $38,539,297
Income Before
Income Taxes 1,948,203 1,451,330 2,007,430 2,109,134

Net Income 939,227 1,106,972 1,051,302 1,335,703
Earnings per
Common and Common
Equivalent Share:
Primary 0.11 0.13 0.12 0.16
Fully Diluted 0.11 0.13 0.12 0.16
</TABLE>

The fiscal 1996 fourth quarter results of operations include the $1.1
million reduction in the deferred tax asset valuation allowance.

The fiscal 1995 second quarter results of operations include the favorable
settlement of the lawsuit between BellSouth and Star. The Company previously
recorded a liability of $1.2 million in fiscal 1992 for this lawsuit and as
such, credited operations for $0.5 million representing the excess liability
at the time the lawsuit was settled.
30

Independent Auditors' Report


Dycom Industries, Inc.

We have audited the accompanying consolidated balance sheets of
Dycom Industries, Inc. and subsidiaries (the "Company") as of
July 31, 1996 and 1995, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of
the three years in the period ended July 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Dycom
Industries, Inc. and subsidiaries at July 31, 1996 and 1995 and
the results of their operations and their cash flows for each of
the three years in the period ended July 31, 1996 in conformity
with generally accepted accounting principles.








DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida

September 27, 1996
31
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

There have been no disagreements with accountants on accounting and
financial disclosure within the meaning of Item 304 of Regulation S-K.



PART III

Item 10. Directors and Executive Officers of the Registrant

Information concerning directors and nominees of the Registrant is hereby
incorporated by reference from the Company's definitive proxy statement to
be filed with the Commission pursuant to Regulation 14A.

The following table sets forth certain information concerning the executive
officers of the Company, all of whom serve at the pleasure of the Board of
Directors.
<TABLE>
<CAPTION>
Executive
Officer
Name Age Office Since
<S> <C> <C> <C>
Thomas R. Pledger 58 Chairman and Chief Executive 1/4/84
Officer

Steven E. Nielsen 33 President and Chief Operating 2/26/96
Officer

Douglas J. Betlach 44 Vice President and Chief 10/6/93
Financial Officer

Darline M. Richter 35 Vice President and Controller 2/9/93

Patricia B. Frazier 61 Corporate Secretary 1/4/84

Susan M. Sproul 38 Treasurer 6/3/96
</TABLE>


Item 11. Executive Compensation

Information concerning executive compensation is hereby incorporated by
reference from the Company's definitive proxy statement to be filed with the
Commission pursuant to Regulation 14A.
32
Item 12. Security Ownership of Certain Beneficial Owners and Management

Information concerning the ownership of certain of the Registrant's
beneficial owners and management is hereby incorporated by reference from
the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A.


Item 13. Certain Relationships and Related Transactions

Information concerning certain relationships and related transactions is
hereby incorporated by reference from the Company's definitive proxy
statement to be filed with the Commission pursuant to Regulation 14A.
33

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as a part of this report:
<TABLE>
<CAPTION>
Page
<S> <C>
1. Consolidated financial statements:

Consolidated balance sheets at July 31, 1996 and 1995 13

Consolidated statements of operations for the years
ended July 31, 1996, 1995, and 1994 14

Consolidated statements of stockholders' equity for
the years ended July 31, 1996, 1995, and 1994 15

Consolidated statements of cash flows for the years
ended July 31, 1996, 1995, and 1994 16-17

Notes to consolidated financial statements 18-29

Independent auditors' report 30

2. Financial statement schedules:

All schedules have been omitted because they are inapplicable,
not required, or the information is included in the above
referenced consolidated financial statements or the notes
thereto.

3. Exhibits furnished pursuant to the requirements of Form 10-K:

See Exhibit Index on page 35.

(b) Reports on Form 8-K:

No reports on Form 8-K were filed on behalf of the Registrant
during the quarter ended July 31, 1996.
</TABLE>
34

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


DYCOM INDUSTRIES, INC.
<TABLE>
<S>
<C>
/s/ Thomas R. Pledger October 15, 1996
- ----------------------- ----------------
By: Thomas R. Pledger Date
Chairman and Chief
Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Position Date

<S> <C> <C>
/s/ Douglas J. Betlach Vice President, Chief October 15, 1996
- ----------------------- Financial Officer, and ----------------
Principal Accounting
Officer


/s/ Thomas R. Pledger Director October 15, 1996
- ----------------------- ----------------


/s/ Louis W. Adams, Jr. Director October 11, 1996
- ----------------------- ----------------


/s/ Walter L. Revell Director October 11, 1996
- ----------------------- ----------------


/s/ Ronald L. Roseman Director October 11, 1996
- ----------------------- ----------------


/s/ Ronald P. Younkin Director October 11, 1996
- ----------------------- ----------------
</TABLE>
35


EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <C>

(3)(i) Articles of Incorporation of the Company,
as amended

(3)(ii) Bylaws of the Company, as amended

(11) Statement re computation of per share earnings

(21) Subsidiaries of the Company

(23) Independent Auditors' Consent

(27) Financial Data Schedule

(99)(i) Credit Agreement dated April 28, 1993 between
Dycom Industries, Inc. and First Union National
Bank of Florida, including the First, Second,
and Third Modifications and related Consent by
Guarantors dated December 13, 1993, April 7, 1994
and November 30, 1994, respectively.

(99)(ii) Security Agreement dated as of April 28, 1993
between Dycom Industries, Inc. and First Union
National Bank of Florida. Similar agreements
were executed by each subsidiary of Dycom.

(99)(iii) Guaranty Agreement dated as of April 28, 1993,
between Southeastern Electric Construction, Inc.
and First Union National Bank of Florida. Similar
agreements were executed by each subsidiary of
Dycom.

(99)(iv) Fourth Modification of Credit Agreement and
Consent by Guarantors as of July 31, 1995,
to Credit Agreement dated as of April 28, 1993,
as amended, between Dycom Industries, Inc. and
First Union National Bank of Florida.

(99)(v) Fifth Modification of the Credit Agreement and
Consent by Guarantors as of November 30, 1995
to Credit Agreement dated as of April 28, 1993,
as amended, between Dycom Industries, Inc. and
First Union National Bank of Florida.
</TABLE>