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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 30, 2021

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________


Commission File Number 001-10613
DYCOM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida59-1277135
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
11780 US Highway 1, Suite 600
Palm Beach Gardens, FL33408
(Address of principal executive offices, including 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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.33 1/3 per shareDYNew York Stock Exchange

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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

There were 30,180,688 shares of common stock with a par value of $0.33 1/3 outstanding at November 22, 2021.



Dycom Industries, Inc.
Table of Contents
PART I - FINANCIAL INFORMATION
PART II - OTHER INFORMATION
SIGNATURES

2

Table of Contents
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.
3

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
(Unaudited)
 October 30, 2021January 30, 2021
ASSETS
Current assets:  
Cash and equivalents$263,701 $11,770 
Accounts receivable, net (Note 5)959,741 858,123 
Contract assets110,685 197,110 
Inventories69,876 70,849 
Income tax receivable7,502 1,706 
Other current assets37,498 29,072 
Total current assets1,449,003 1,168,630 
Property and equipment, net284,246 273,960 
Operating lease right-of-use assets61,993 63,179 
Goodwill272,485 272,485 
Intangible assets, net105,864 119,322 
Other assets31,104 46,589 
Total assets$2,204,695 $1,944,165 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$173,599 $158,966 
Current portion of debt13,125 81,722 
Contract liabilities13,943 14,101 
Accrued insurance claims39,933 41,736 
Operating lease liabilities24,614 24,769 
Income taxes payable6 6,387 
Other accrued liabilities127,933 120,809 
Total current liabilities393,153 448,490 
Long-term debt827,226 501,562 
Accrued insurance claims - non-current51,339 70,224 
Operating lease liabilities - non-current 37,211 38,359 
Deferred tax liabilities, net - non-current56,362 47,650 
Other liabilities28,630 26,572 
Total liabilities1,393,921 1,132,857 
COMMITMENTS AND CONTINGENCIES (Note 19)
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: 30,176,486 and 30,615,167 issued and outstanding, respectively
10,059 10,205 
Additional paid-in capital3,942 2,284 
Accumulated other comprehensive loss(1,767)(1,769)
Retained earnings798,540 800,588 
Total stockholders’ equity810,774 811,308 
Total liabilities and stockholders’ equity$2,204,695 $1,944,165 
See notes to the condensed consolidated financial statements.

4

Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
For the Three Months Ended
 October 30, 2021October 24, 2020
Contract revenues$853,973 $810,256 
Costs of earned revenues, excluding depreciation and amortization705,865 658,355 
General and administrative66,899 62,628 
Depreciation and amortization37,766 42,313 
Total810,530 763,296 
Interest expense, net(9,132)(4,710)
Other income, net564 3,708 
Income before income taxes34,875 45,958 
Provision for income taxes6,158 12,032 
Net income$28,717 $33,926 
Earnings per common share:
Basic earnings per common share$0.95 $1.06 
Diluted earnings per common share$0.94 $1.05 
Shares used in computing earnings per common share:
 Basic30,172,254 31,878,583 
 Diluted30,614,706 32,425,300 
See notes to the condensed consolidated financial statements.
5

Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
For the Nine Months Ended
 October 30, 2021October 24, 2020
Contract revenues$2,369,038 $2,448,500 
Costs of earned revenues, excluding depreciation and amortization1,977,243 1,996,514 
General and administrative198,640 195,871 
Depreciation and amortization115,307 132,313 
Goodwill impairment charge 53,264 
Total2,291,190 2,377,962 
Interest expense, net(24,343)(25,020)
(Loss) gain on debt extinguishment(62)12,046 
Other income, net4,267 7,921 
Income before income taxes57,710 65,485 
Provision for income taxes9,930 26,953 
Net income$47,780 $38,532 
Earnings per common share:
Basic earnings per common share$1.57 $1.21 
Diluted earnings per common share$1.54 $1.20 
Shares used in computing earnings per common share:
 Basic30,426,337 31,744,199 
 Diluted30,928,890 32,106,661 
See notes to the condensed consolidated financial statements.
6

Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
For the Three Months EndedFor the Nine Months Ended
October 30, 2021October 24, 2020October 30, 2021October 24, 2020
Net income$28,717 $33,926 $47,780 $38,532 
Foreign currency translation gains (losses), net of tax1 9 2 (1)
Comprehensive income$28,718 $33,935 $47,782 $38,531 
See notes to the condensed consolidated financial statements.

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Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)
For the Three Months Ended
October 30, 2021
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
 SharesAmount
Balances as of July 31, 202130,170,076 $10,057 $2,309 $(1,768)$769,823 $780,421 
Stock-based compensation524 — 1,789 — — 1,789 
Issuance of restricted stock, net of tax withholdings5,886 2 (156)— — (154)
Other comprehensive income— — — 1 — 1 
Net income— — —  28,717 28,717 
Balances as of October 30, 202130,176,486 $10,059 $3,942 $(1,767)$798,540 $810,774 
For the Three Months Ended
October 24, 2020
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
SharesAmount
Balances as of July 25, 202031,836,930 $10,612 $31,093 $(1,791)$833,834 $873,748 
Stock options exercised62,748 21 1,795 — — 1,816 
Stock-based compensation965  3,796 — — 3,796 
Issuance of restricted stock, net of tax withholdings8,523 3 (173)— — (170)
Other comprehensive income— — — 9 — 9 
Net income— — — — 33,926 33,926 
Balances as of October 24, 202031,909,166 $10,636 $36,510 $(1,782)$867,760 $913,124 
See notes to the condensed consolidated financial statements.

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Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)
For the Nine Months Ended
October 30, 2021
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
 SharesAmount
Balances as of January 30, 202130,615,167 $10,205 $2,284 $(1,769)$800,588 $811,308 
Stock options exercised11,169 4 362 — — 366 
Stock-based compensation1,765 1 7,838 — — 7,838 
Issuance of restricted stock, net of tax withholdings180,023 60 (2,748)— (3,832)(6,520)
Repurchase of common stock(631,638)(211)(3,793)— (45,996)(50,000)
Other comprehensive income— — — 2 — 2 
Net income— — —  47,780 47,780 
Balances as of October 30, 202130,176,486 $10,059 $3,942 $(1,767)$798,540 $810,774 
For the Nine Months Ended
October 24, 2020
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
SharesAmount
Balances as of January 25, 202031,583,938 $10,528 $30,158 $(1,781)$829,699 $868,604 
Cumulative effect from implementation of ASU 2016-13— — — — (471)(471)
Stock options exercised275,275 92 5,333 — — 5,425 
Stock-based compensation4,313 1 10,489 — — 10,490 
Issuance of restricted stock, net of tax withholdings45,640 15 (515)— — (500)
Equity component of the settlement of 0.75% convertible senior notes due 2021, net of taxes
— — (8,976)— — (8,976)
Purchase of warrants— — (7,176)— — (7,176)
Settlement of convertible note hedges related to extinguishment of convertible debt— — 7,197 — — 7,197 
Other comprehensive loss— — — (1)— (1)
Net income— — — — 38,532 38,532 
Balances as of October 24, 202031,909,166 $10,636 $36,510 $(1,782)$867,760 $913,124 
See notes to the condensed consolidated financial statements.
9


DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the Nine Months Ended
October 30, 2021October 24, 2020
Cash flows from operating activities:
Net income $47,780 $38,532 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization115,307 132,313 
Non-cash lease expense23,865 23,480 
Deferred income tax provision (benefit)8,712 (20,478)
Stock-based compensation7,838 10,490 
Amortization of debt discount1,665 6,732 
Provision for bad debt, net2,918 353 
Gain on sale of fixed assets(4,259)(9,207)
Loss (gain) on debt extinguishment62 (12,046)
Amortization of debt issuance costs and other2,123 2,189 
Goodwill impairment charge 53,264 
Change in operating assets and liabilities:
Accounts receivable, net(104,536)(122,520)
Contract assets, net86,267 48,568 
Other current assets and inventories(7,469)20,670 
Other assets3,412 5,212 
Income taxes receivable/payable(12,177)10,513 
Accounts payable13,215 68,731 
Accrued liabilities, insurance claims, operating lease liabilities, and other liabilities(21,610)22,629 
Net cash provided by operating activities163,113 279,425 
Cash flows from investing activities:
Capital expenditures(113,477)(36,110)
Proceeds from sale of assets5,226 11,859 
Net cash used in investing activities(108,251)(24,251)
Cash flows from financing activities:
Proceeds from 2029 Notes500,000  
Proceeds from borrowings on senior credit agreement, including term loan95,000 773,000 
Principal payments on senior credit agreement, including term loan(271,875)(704,875)
Debt issuance costs(11,638) 
Repurchase of common stock(50,000) 
Extinguishment of 2021 Convertible Notes (58,264)(401,736)
Redemption discount on convertible debt, net of costs 30,761 
Settlement of convertible note hedges related to extinguished convertible debt 7,197 
Purchase of warrants (7,176)
Exercise of stock options366 5,425 
Restricted stock tax withholdings(6,520)(500)
Net cash provided by (used in) financing activities197,069 (297,904)
Net increase (decrease) in cash, cash equivalents and restricted cash251,931 (42,730)
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Cash, cash equivalents and restricted cash at beginning of period (Note 7)13,574 59,869 
Cash, cash equivalents and restricted cash at end of period (Note 7)$265,505 $17,139 
Supplemental disclosure of other cash flow activities and non-cash investing and financing activities:
Cash paid for interest$19,580 $17,652 
Cash paid for taxes, net$12,653 $38,309 
Purchases of capital assets included in accounts payable or other accrued liabilities at period end$6,165 $3,726 
See notes to the condensed consolidated financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Dycom Industries, Inc. (“Dycom”, the “Company”, “we”, “our”, or “us”) is a leading provider of specialty contracting services throughout the United States. These services include program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications providers. Additionally, Dycom provides underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. Dycom supplies the labor, tools, and equipment necessary to provide these services to its customers.

The Company uses a 52/53 week fiscal year ending on the last Saturday in January. Fiscal 2021 consisted of 53 weeks of operations and fiscal year ending January 29, 2022 consists of 52 weeks of operations.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries, all of which are wholly-owned, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2021, filed with the SEC on March 5, 2021. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included. This includes all normal and recurring adjustments and elimination of intercompany accounts and transactions. Operating results for the interim period are not necessarily indicative of the results expected for any subsequent interim or annual period.

Segment Information. The Company operates in one reportable segment. Its services are provided by its operating segments on a decentralized basis. Each operating segment consists of a subsidiary (or in certain instances, the combination of two or more subsidiaries), the results of which are regularly reviewed by the Company’s Chief Executive Officer, the chief operating decision maker. All of the Company’s operating segments have been aggregated into one reportable segment based on their similar economic characteristics, nature of services and production processes, type of customers, and service distribution methods.

The economy of the United States has been and continues to be severely impacted by a pandemic caused by a novel strain of coronavirus, including variants of the coronavirus, such as the Delta variant (“COVID-19”) and the nation’s response to it. Measures mandated by governmental agencies have included vaccination and masking requirements, travel and large gathering restrictions, social distancing requirements, quarantines, and shelter in place orders. Even as efforts to contain the pandemic have made progress and some restrictions have relaxed, new variants of COVID-19 have resulted in, and may continue to result in, additional outbreaks. As a result, certain business-related activities have been curtailed or modified. During the COVID-19 pandemic, our services have generally been considered essential in nature and have not been materially interrupted by governmental mandates. As the situation continues to evolve, we are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it impacts our customers, subcontractors, suppliers, vendors and employees, in addition to how the COVID-19 pandemic impacts our ability to provide services to our customers. We believe the full extent of the impact of the COVID-19 pandemic on the Company's operational and financial performance will be determined by factors which are uncertain, unpredictable and outside of our control, including the duration and severity of the pandemic, any worsening of the pandemic, the vaccination rates in the areas we operate and among our employees and subcontractors, the nature and duration of the containment and mitigation actions taken by federal, state and local governments and protocols and contractual requirements implemented by our customers, and the resulting impact on the demand for our services from our customers. The situation surrounding COVID-19 remains fluid, and if disruptions do arise, they could materially adversely impact our business.

2. Significant Accounting Policies and Estimates

There have been no material changes to the Company’s significant accounting policies and critical accounting estimates described in the Company’s Annual Report on Form 10-K for fiscal 2021.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. These estimates are based on our historical experience and management’s understanding of current facts
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and circumstances. At the time they are made, we believe that such estimates are fair when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole. However, actual results could differ materially from those estimates.

3. Accounting Standards

Recently issued accounting pronouncements are disclosed in the Company’s Annual Report on Form 10-K for fiscal 2021. As of the date of this Quarterly Report on Form 10-Q, there have been no changes in the expected dates of adoption or estimated effects on the Company’s condensed consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K for fiscal 2021. Further, there have been no additional accounting standards issued as of the date of this Quarterly Report on Form 10-Q that are applicable to the condensed consolidated financial statements of the Company. Accounting standards adopted during the nine months ended October 30, 2021 are disclosed in this Quarterly Report on Form 10-Q.

Recently Adopted Accounting Standards

Codification Improvement. In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements (“ASU 2020-10”). The amendments in this ASU represent changes to clarify the Accounting Standards Codification (“ASC”), correct unintended application of guidance, or make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2020-10 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied retrospectively. We adopted the provisions of this ASU in the first quarter of fiscal 2022 and there was no material effect on our condensed consolidated financial statements.

Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740) (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted the provisions of this ASU in the first quarter of fiscal 2022. The adoption of this ASU did not have a material effect on our condensed consolidated financial statements.

Accounting Standards Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this ASU require acquiring entities to apply Topic 606 to recognize and measure contract assets and liabilities in a business combination. This update is intended to improve comparability after the business combination by providing consistent recognition and measurement of acquired revenue contracts and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied prospectively. We will adopt the provisions of this ASU in the first quarter of fiscal 2024 and do not expect the adoption to have a material effect on our consolidated financial statements.


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4. Computation of Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):
 For the Three Months EndedFor the Nine Months Ended
 October 30, 2021October 24, 2020October 30, 2021October 24, 2020
Net income available to common stockholders (numerator)$28,717 $33,926 $47,780 $38,532 
Weighted-average number of common shares (denominator)30,172,254 31,878,583 30,426,337 31,744,199 
Basic earnings per common share$0.95 $1.06 $1.57 $1.21 
Weighted-average number of common shares30,172,254 31,878,583 30,426,337 31,744,199 
Potential shares of common stock arising from stock options, and unvested restricted share units442,452 546,717 502,553 362,462 
Total shares-diluted (denominator)30,614,706 32,425,300 30,928,890 32,106,661 
Diluted earnings per common share$0.94 $1.05 $1.54 $1.20 
Anti-dilutive weighted shares excluded from the calculation of earnings per common share:
Stock-based awards218,525 238,226 89,765 245,633 
0.75% convertible senior notes due 2021(1) (2)
297,367 601,349 500,017 2,116,093 
Warrants(1) (2)
601,349 601,349 601,349 2,116,093 
Total 1,117,241 1,440,924 1,191,131 4,477,819 

(1) The company used the treasury stock method for calculating any potential dilutive impact on earnings per common share if our average stock price for the period exceeded the $96.89 per share conversion price. There was no dilutive impact on earnings per common share during any of the periods presented as our average stock price did not exceed the per share conversion price and the 2021 Convertible Notes (as defined in Note 13) matured on September 15, 2021. The warrants associated with our 2021 Convertible Notes will have a dilutive impact on earnings per common share if our average stock price for the period exceeds the $130.43 per share warrant strike price. As our average stock price did not exceed the strike price for the warrants for any of the periods presented, the underlying common shares were anti-dilutive as reflected in the table above. The warrants will expire in ratable portions on a series of expiration dates commencing on December 15, 2021 and concluding on May 9, 2022.

(2) In connection with the offering of the 2021 Convertible Notes, we entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the 2021 Convertible Notes and offsetting any potential cash payments in excess of the principal amount of the 2021 Convertible Notes. Prior to conversion, the convertible note hedge was not included for purposes of the calculation of earnings per common share as its effect would be anti-dilutive. Upon any conversion, the convertible note hedge was expected to offset the dilutive effect of the 2021 Convertible Notes when the average stock price for the period was above $96.89 per share. The 2021 Convertible Notes matured on September 15, 2021. The convertible note hedge transactions expired on September 13, 2021. See Note 13, Debt, for additional information related to our 2021 Convertible Notes, warrant transactions, and hedge transactions.

In connection with the purchase of $401.7 million of the 2021 Convertible Notes in fiscal 2021 and $25.0 million in fiscal 2020, we unwound convertible note hedge transactions and warrants proportionately to the number of 2021 Convertible Notes, resulting in a decrease in the number of excluded weighted shares.



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5. Accounts Receivable, Contract Assets, and Contract Liabilities

The following provides further details on the balance sheet accounts of accounts receivable, net; contract assets; and contract liabilities.

Accounts Receivable
 
Accounts receivable, net, classified as current, consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Trade accounts receivable$363,770 $352,501 
Unbilled accounts receivable576,365 492,324 
Retainage21,145 14,974 
Total961,280 859,799 
Less: allowance for doubtful accounts(1,539)(1,676)
Accounts receivable, net$959,741 $858,123 
 
We maintain an allowance for doubtful accounts for estimated losses on uncollected balances. The allowance for doubtful accounts changed as follows (dollars in thousands):
For the Three Months EndedFor the Nine Months Ended
October 30, 2021October 24, 2020October 30, 2021October 24, 2020
Cumulative effect from implementation of ASU 2016-13$ $ $ $471 
Allowance for doubtful accounts at beginning of period1,527 1,605 1,676 4,582 
Provision for bad debt17 117 2,918 353 
Amounts charged against the allowance(5)29 (3,055)(3,655)
Allowance for doubtful accounts at end of period$1,539 $1,751 $1,539 $1,751 

Contract Assets and Contract Liabilities

Net contract assets consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Contract assets$110,685 $197,110 
Contract liabilities 13,943 14,101 
Contract assets, net$96,742 $183,009 

Net contract assets were $96.7 million and $183.0 million as of October 30, 2021 and January 30, 2021, respectively. The decrease primarily resulted from increased billings and reduced services performed under contracts consisting of multiple tasks. During the three and nine months ended October 30, 2021, we performed services and recognized $2.3 million and $10.4 million, respectively, of contract revenues related to contract liabilities that existed at January 30, 2021. See Note 6, Other Current Assets and Other Assets, for information on our long-term contract assets.

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Customer Credit Concentration

Customers whose combined amounts of accounts receivable and contract assets, net, exceeded 10% of total combined accounts receivable and contract assets, net, as of October 30, 2021 or January 30, 2021 were as follows (dollars in millions):

October 30, 2021January 30, 2021
Amount% of TotalAmount% of Total
Verizon Communications Inc.$233.5 22.1%$389.9 37.4%
Lumen Technologies(1)
$177.4 16.8%$173.5 16.6%
Comcast Corporation$131.5 12.4%$131.7 12.6%
AT&T Inc.$107.0 10.1%$71.7 6.9%
(1) Formerly known as CenturyLink, Inc.

We believe that none of the customers above were experiencing financial difficulties that would materially impact the collectability of the Company’s total accounts receivable and contract assets, net, as of October 30, 2021 or January 30, 2021.

6. Other Current Assets and Other Assets
 
Other current assets consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Prepaid expenses$22,298 $14,849 
Deposits and other current assets13,810 12,706 
Insurance recoveries/receivables for accrued insurance claims 111 
Restricted cash1,372 1,372 
Receivables on equipment sales18 34 
Other current assets$37,498 $29,072 

Other assets consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Long-term contract assets$15,284 $17,574 
Deferred financing costs5,128 5,205 
Restricted cash432 432 
Insurance recoveries/receivables for accrued insurance claims3,769 15,837 
Other non-current deposits and assets6,491 7,541 
Other assets$31,104 $46,589 

Long-term contract assets represent payments made to customers pursuant to long-term agreements and are recognized as a reduction of contract revenues over the period for which the related services are provided to the customers.

See Note 10, Accrued Insurance Claims, for information on our Insurance recoveries/receivables.

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7. Cash, Cash Equivalents and Restricted Cash
 
Amounts of cash, cash equivalents and restricted cash reported in the condensed consolidated statement of cash flows consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Cash and cash equivalents$263,701 $11,770 
Restricted cash included in:
Other current assets1,372 1,372 
Other assets (long-term)432 432 
Cash, cash equivalents and restricted cash$265,505 $13,574 

8. Property and Equipment
 
Property and equipment consisted of the following (dollars in thousands):

Estimated Useful Lives (Years)October 30, 2021January 30, 2021
Land$4,127 $3,796 
Buildings
10-35
10,649 11,169 
Leasehold improvements
1-10
17,739 17,030 
Vehicles
1-5
688,244 626,809 
Computer hardware and software
1-7
157,194 144,989 
Office furniture and equipment
1-10
12,933 13,293 
Equipment and machinery
1-10
317,735 300,143 
Total1,208,621 1,117,229 
Less: accumulated depreciation(924,375)(843,269)
Property and equipment, net$284,246 $273,960 

Depreciation expense was $33.7 million and $37.3 million for the three months ended October 30, 2021 and October 24, 2020, respectively, and $101.8 million and $116.9 million for the nine months ended October 30, 2021 and October 24, 2020, respectively.

9. Goodwill and Intangible Assets

Goodwill

There was no change in the carrying amount of goodwill during the nine months ended October 30, 2021. The goodwill balance consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Goodwill, gross$521,516 $521,516 
Accumulated impairment losses(249,031)(249,031)
Total$272,485 $272,485 

The Company’s goodwill resides in multiple reporting units and primarily consists of expected synergies, together with the expansion of the Company’s geographic presence and strengthening of its customer base from acquisitions. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment, or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. The profitability of individual reporting units may suffer periodically due to downturns in customer demand, increased costs of providing services, and the level of overall economic activity. The Company’s customers may reduce capital expenditures and defer or cancel pending projects due to changes in technology, a slowing or uncertain economy, merger or acquisition activity, a decision to allocate resources to other areas of their business, or other reasons. The profitability of reporting units may also suffer if actual costs of providing services exceed the costs anticipated when the Company enters into contracts. Additionally, adverse conditions in the economy and
17


future volatility in the equity and credit markets could impact the valuation of the Company’s reporting units. The cyclical nature of the Company’s business, the high level of competition existing within its industry, and the concentration of its revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets.

During fiscal 2021 the economy of the United States was severely impacted by the COVID-19 pandemic and the nation’s response to it. Measures mandated by governmental agencies have included vaccination and masking requirements, travel and large gathering restrictions, social distancing requirements, quarantines, and shelter in place orders. Even as efforts to contain the pandemic have made progress and some restrictions have relaxed, new variants of COVID-19 have resulted in, and may continue to result in, additional outbreaks. As a result, certain business-related activities have been curtailed or modified. During the COVID-19 pandemic, our services have generally been considered essential in nature and have not been materially interrupted by governmental mandates. However, certain customers of the Company’s broadband reporting units restricted our technicians from entering third party premises. Furthermore, customers had modified their protocols to increase the self-installation of customer premise equipment by their subscribers. The events following the onset of COVID-19 were expected to result in a prolonged downturn in customer demand for installation services and to have a direct, adverse impact on its revenue, operating results and cash flows. As a result, during the quarter ended April 25, 2020 the Company recognized an impairment charge of $53.3 million which is the amount by which the carrying amount exceeded the reporting unit’s fair value.

The Company performs its annual impairment assessment as of the first day of the fourth fiscal quarter of each fiscal year. As a result of the Company’s fiscal 2021 period assessment, the Company concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any of the periods other than the first quarter of fiscal 2021. As of October 30, 2021, the Company continues to believe the remaining goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units.

Intangible Assets

Our intangible assets consisted of the following (dollars in thousands):
October 30, 2021January 30, 2021
Weighted Average Remaining Useful Lives (Years)Gross Carrying AmountAccumulated AmortizationIntangible Assets, NetGross Carrying AmountAccumulated AmortizationIntangible Assets, Net
Customer relationships8.7$312,017 $211,835 $100,182 $312,017 $198,604 $113,413 
Trade names, finite8.410,350 9,368 982 10,350 9,141 1,209 
Trade name, indefinite4,700  4,700 4,700  4,700 
$327,067 $221,203 $105,864 $327,067 $207,745 $119,322 

Amortization of our customer relationship intangibles is recognized on an accelerated basis as a function of the expected economic benefit. Amortization of our other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life. Amortization expense for finite-lived intangible assets was $4.1 million and $5.0 million for the three months ended October 30, 2021 and October 24, 2020, respectively, and $13.5 million and $15.5 million for the nine months ended October 30, 2021 and October 24, 2020, respectively.

As of October 30, 2021, we believe that the carrying amounts of our intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment.

10. Accrued Insurance Claims
 
For claims within our insurance program, we retain the risk of loss, up to certain annual stop-loss limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. Losses for claims beyond our retained risk of loss are covered by insurance up to our coverage limits.

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For fiscal 2021, with regard to workers’ compensation losses, we retained the risk of loss up to $1.0 million on a per occurrence basis. This retention amount is applicable to all of the states in which we operate, except with respect to workers’ compensation insurance in two states in which we participate in state-sponsored insurance funds. With regard to automobile liability and general liability losses, we retained the risk of loss up to $1.0 million on a per occurrence basis for the first $5.0 million of insurance coverage. In addition, we also retained the risk of loss for automobile and general liability for the next $5.0 million on a per-occurrence basis with aggregate loss limits of $11.5 million within this layer of retention.

For fiscal 2022, with regard to workers’ compensation losses, our retention of risk remains the same as fiscal 2021. With regard to automobile liability and general liability losses, our retention of primary risk remains the same as fiscal 2021. In addition, we reduced our coverage limit and retained $10.0 million risk of loss on a per occurrence basis for losses above $30.0 million.

We are party to a stop-loss agreement for losses under our employee group health plan. For the calendar year 2020, we retained the risk of loss, on an annual basis, up to the first $450,000 of claims per participant, as well as an annual aggregate amount for all participants of $475,000. For the calendar year 2021, we retain the risk of loss on an annual basis, up to the first $600,000 of claims per participant.


Amounts for total accrued insurance claims and insurance recoveries/receivables are as follows (dollars in thousands):

October 30, 2021January 30, 2021
Accrued insurance claims - current$39,933 $41,736 
Accrued insurance claims - non-current51,339 70,224 
Accrued insurance claims$91,272 $111,960 
Insurance recoveries/receivables:
Current (included in Other current assets)$ $111 
Non-current (included in Other assets)$3,769 $15,837 
Insurance recoveries/receivables$3,769 $15,948 

Insurance recoveries/receivables represent the amount of accrued insurance claims that are covered by insurance as the amounts exceed the Company’s loss retention. During the nine months ended October 30, 2021, total insurance recoveries/receivables decreased approximately $12.2 million primarily due to the settlement of claims that exceeded our loss retention. Accrued insurance claims decreased by a corresponding amount.

11. Leases

We lease the majority of our office facilities as well as certain equipment, all of which are accounted for as operating leases. These leases have remaining terms ranging from less than 1 year to approximately 9 years. Some leases include options to extend the lease for up to 5 years and others include options to terminate.

The following table summarizes the components of lease cost recognized in the condensed consolidated statements of operations for the nine months ended October 30, 2021 and October 24, 2020 (dollars in thousands):
For the Three Months EndedFor the Nine Months Ended
October 30, 2021October 24, 2020October 30, 2021October 24, 2020
Lease cost under long-term operating leases$8,526 $8,804 $25,952 $26,238 
Lease cost under short-term operating leases6,452 6,624 17,707 22,616 
Variable lease cost under short-term and long-term operating leases(1)
756 743 2,696 3,076 
Total lease cost$15,734 $16,171 $46,355 $51,930 

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(1) Variable lease cost primarily includes insurance, maintenance, and other operating expenses related to our leased office facilities.

Our operating lease liabilities related to long-term operating leases were $61.8 million as of October 30, 2021 and $63.1 million as of January 30, 2021. Supplemental balance sheet information related to these liabilities is as follows:

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