10-Q 1 g69479qe10-q.txt ORIUS CORP. FORM 10-Q DATED 03/31/01 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] 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 333-36952 ORIUS CORP. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 65-0894212 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 1401 Forum Way, Suite 400 West Palm Beach, Florida 33401 -------------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) (561) 687-8300 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of April 30, 2001 ---------------------------- -------------------------------- Common Stock, par value $.01 25,784,329 2 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets- March 31, 2001 and December 31, 2000 3 Consolidated Statements of Operations for the three months ended March 31, 2001 and March 31, 2000 4 Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and March 31, 2000 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitative and Qualitative Disclosures about Market Risk 16 PART II. OTHER INFORMATION Item 1. Legal Proceedings 16 Item 2. Changes in Securities and Use of Proceeds 17 Item 3. Defaults by the Company on its Senior Securities 17 Item 4. Results of Votes of Security Holders 17 Item 5. Other Information 17 Item 6(a). Exhibits 18 Item 6(b). Reports on Form 8-K 19 SIGNATURES 20 2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated financial statements. 3 4 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Consolidated Statements of Operations (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements. 4 5 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Consolidated Statements of Cash Flows (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements. 5 6 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Notes to Consolidated Financial Statements (Unaudited) 1. BASIS OF PRESENTATION OVERVIEW The interim consolidated financial statements of Orius Corp. ("Orius" or the "Company") and its subsidiaries, the successor to LISN Holdings, Inc. ("LISN") as of March 31, 2001 and December 31, 2000 include the accounts of Orius and its subsidiaries and in the opinion of management, include all necessary adjustments, consisting of only normal recurring adjustments, to present fairly the consolidated financial position and results of operations of the Company for the periods presented. The accompanying consolidated financial statements have been prepared by the Company, without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Accordingly, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, and notes thereto, for the year ended December 31, 2000. Reported interim results of operations are not necessarily indicative of those expected for the year. 2. STOCK SPLIT On March 9, 2000, the Orius Board of Directors ratified a 10 for 1 stock split. All share amounts presented in these financial statements have been restated to reflect the split. 3. ACCOUNTING CHANGE On January 1, 2001, we adopted Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities," as amended, which requires that all derivative instruments be recorded on the balance sheet at their fair value. Derivatives that are not hedges are recorded at fair value through earnings. Changes in the fair values of derivatives designated as fair-value hedges are recognized in earnings as offsets to changes in the fair value of the underlying asset or liability. For derivatives designated as cash-flow hedges, changes in the fair values are deferred and recorded in other comprehensive income until the hedged transaction occurs and is recognized in earnings. The ineffective portion of a hedging derivative is immediately recognized in earnings. The implementation of SFAS No. 133 did not have a material impact on our results of operations or financial position at adoption and during the first quarter of 2001. Our risk-management policies and objectives for holding hedging instruments have not changed with the adoption of Statement of Financial Accounting Standards No. 133. At March 31, 2001, $2.8 million representing fair values of derivative contracts is included in other non-current liabilities. 6 7 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Notes to Consolidated Financial Statements (Unaudited) - (Continued) 4. COMPREHENSIVE INCOME Comprehensive income for the quarters ended March 31, 2001 and 2000 was as follows: 2001 2000 ----------- ---- Transition adjustment adoption of SFAS No. 133 $(1,537,437) $ -- Net loss (5,394,056) -- Changes related to cash flow derivative hedges (1,241,141) -- ----------- ---- Total comprehensive income $(8,172,634) $ -- =========== ==== 5. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS Costs and estimated earnings, and related billings on uncompleted projects at March 31, 2001 and December 31, 2000 are as follows:

6. ACQUISITIONS During the first quarter 2001, the Company completed the acquisition of the assets of Quality Metal Works, Inc. ("QMW"), and acquired K&S Construction, Inc. ("K&S"), Sorenson Construction, Inc. and the assets of Sorenson Leasing, Inc. ("Sorenson"). The total purchase consideration of $47.6 million, consisting of $35.0 million cash (net of $.3 million cash acquired and $3.4 million accrued purchase price adjustment) and $8.9 million in common stock, preferred stock and junior subordinated debt, exceeded the fair value of the tangible net assets acquired by $35.3 million, which is being amortized on a straight-line basis over 25 years. Results of QMW, K&S and Sorenson have been included in the consolidated results of the Company from the date of acquisition. Additionally, during 2001, certain purchase price adjustments in the amount of approximately $7.5 million was paid to former stockholders related to a 1999 acquisition. Shares issued in connection with these transactions were valued using valuation models that take into account earnings multiples of comparable companies. The following unaudited pro forma financial information represents the unaudited pro forma results of operations as if the aforementioned acquisitions were completed on January 1, 2000. These pro forma results give effect to increased interest expense for acquisition-related debt and amortization of related goodwill. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of operations which would have been achieved had these acquisitions been completed on January 1, 2000, nor are the results indicative of the Company's future results of operations. Three Months Ended March 31, --------------------------- 2001 2000 --------- --------- (in thousands) Revenues $ 154,798 $ 178,911 Net (loss) income (5,551) 1,485 7 8 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Notes to Consolidated Financial Statements (Unaudited) - (Continued) 7. ACCOUNTS RECEIVABLE The allowance for doubtful accounts was $3,568,073 and $1,193,999 at March 31, 2001 and December 31, 2000, respectively. Included in accounts receivable at March 31, 2001 are unbilled receivables of $12,545,711 and retainage of $10,520,412. The balances billed but not paid by customers pursuant to retainage provisions in customer contracts will be due upon completion of the contracts, substantially all of the retention balances at March 31, 2001 are expected to be collected within the next twelve months. Unbilled accounts receivable relate to the Company's unit based contracts and represent revenue the Company is entitled to based upon the units delivered as of the balance sheet date. Accounts receivable consist of the following: March 31, December 31, 2001 2000 ------------ ------------ Contract billing $130,586,703 $146,678,544 Retainage 10,520,412 12,806,446 Other receivables 1,720,587 2,644,154 ------------ ------------ Total 142,827,702 162,129,144 Less allowance for doubtful accounts 3,568,073 1,193,999 ------------ ------------ Accounts receivable, net $139,259,629 $160,935,145 ============ ============ 8. LONG TERM DEBT AND CAPITAL LEASES On December 15, 1999, NATG Holdings, LLC ("NATG") and Orius Capital Corp. ("Capital Corp."), each wholly owned subsidiaries of the Company, entered into a credit agreement with Deutsche Bank Securities, Inc., Bankers Trust and a syndication of banks. The credit agreement includes a revolving credit facility, in an aggregate amount not to exceed $100 million at any time, maturing on December 15, 2004, and a $275 million senior secured term loan credit facility. The term loan facility is allocated among a $75 million Term Loan A with a letter of credit facility, maturing on December 15, 2004; and a $200 million Term Loan B facility, maturing on December 15, 2006. Amounts under the revolving credit facility and Term Loan A facility bear interest, at NATG's choice, at either the Federal Funds Rate plus 0.50% or the Eurodollar rate, in each case plus an applicable 8 9 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Notes to Consolidated Financial Statements (Unaudited) - (Continued) margin of 0.75% to 2.00% and 1.75% to 3.00%, respectively, determined on the most recent total debt to EBITDA ratio. Amounts under Term Loan B facility bear interest, at NATG's choice, at either Bankers Trust Prime Rate or the Federal Funds Rate plus 0.50%, or the Eurodollar rate plus a margin of 3.5%. Loans made under the revolving credit facility and the Term Loan A facility are collateralized by a pledge of all of the assets of the Company and its subsidiaries. During the first quarter of 2000, the NATG and Capital Corp. completed a private offering of $150 million of 12.75% Senior Subordinated Notes due 2010. The notes are guaranteed by all of the Company's subsidiaries. A portion of the proceeds from this offering was used to pay down the principal amount outstanding on Term Loan B. In September 2000, NATG exchanged the notes for substantially identical notes that were registered under the Securities Act of 1933, as amended. In July 2000 the Company entered into additional borrowings of $60 million under Term Loan C of the senior credit facility, which were primarily used to pay down amounts due under the revolving credit facility. Amounts under Term Loan C, due December 15, 2007, bear interest at the greater of Bankers Trust Prime Rate or the Federal Funds Rate plus 0.50% or the Eurodollar rate, plus a margin of 3.75%. The senior credit facility also contains affirmative and negative covenants relating to the Company's operations. The Company was in compliance with these covenants at March 31, 2001. However, should the cash flows from operations for the quarter ending June 30, 2001 not increase over levels achieved during the quarter ended March 31, 2001, the Company will violate one or more of the covenants contained in the Company's senior credit facility. In such event, the Company intends to seek a waiver of such covenants. No assurance can be given that the Company will be able to obtain a waiver. Additionally, the Company is subject to certain working capital restrictions and is restricted from declaring or paying any dividends or making distributions on or in respect of its capital stock. As of March 31, 2001 and December 31, 2000, long-term debt and capital lease obligations consisted of the following:

9 10

9. SERIES C PARTICIPATING PREFERRED STOCK The Orius Series C participating preferred stock accrues dividends daily at a rate of 12% per annum based on a liquidation value of $1,000 per share and participates in any dividends paid to holders of the common stock. The Series C participating preferred stock will be redeemed on December 31, 2019 at its purchase price, plus accrued dividends and the liquidation value of the common stock into which it is convertible. At March 31, 2001 and December 31, 2000, the total recorded value of the Series C preferred stock has been determined based upon purchase price of $1,000 per share, accrued and unpaid dividends of $31,423,744 and $25,190,192, respectively, and a value per common share of $1.52 and $6.01, respectively. Value per common share is adjusted quarterly based upon the Company's performance, recent transactions and comparable trading multiples. For the three months ended March 31, 2001, the decrease in the estimated value of the Company's common stock has resulted in a reduction of $13,932,584 in the redemption value of the Series C preferred stock. This reduction has been recorded as a decrease in the retained deficit and an increase in the income available to common shareholders. 10. PROVISIONS FOR INCOME TAX During the quarter ended March 31, 2001, the estimated effective tax rate is 66%. This rate was calculated using the forecasted full year tax rate based on forecasted pretax earnings. This rate is 10 11 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Notes to Consolidated Financial Statements (Unaudited) - (Continued) influenced by the non-deductible amortization of goodwill associated with the Company's acquisitions. 11. SEGMENTS To strategically manage its business, the Company has designated two operating segments. The internal telecom service market provides engineering, furnishing and installation of network equipment and related components and maintenance services. The external telecom services segment provides installation, design engineering and maintenance of fiber optic, coaxial and copper cable networks for the telecom industry. Identifiable assets for each operating segment are as follows: As of ---------------------------------- March 31, December 31, 2001 2000 ------------ ------------ Internal telecom services $127,485,515 $116,842,388 External telecom services 162,686,533 171,342,581 ------------ ------------ Total identifiable assets 290,172,048 288,184,969 Goodwill 466,370,499 435,575,984 Corporate 15,816,409 15,961,129 ------------ ------------ Total assets $772,358,956 $739,722,082 ============ ============

(1) Income before provision for income taxes have been impacted by an allocation of corporate expenses based on a percentage of revenue. 11 12 Orius Corp. and Subsidiaries (formerly LISN Holdings, Inc.) Notes to Consolidated Financial Statements (Unaudited) - (Continued) 12. COMMITMENTS AND CONTINGENCIES In the normal course of business, certain subsidiaries of the Company have pending and unasserted claims. It is the opinion of the Company's management, based on the information available at this time, that these claims will not have material adverse impact on the Company's Consolidated Financial Statements. 12 13 ITEM 2. 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 the assessment and understanding of the Company's consolidated financial condition and results of operations. The discussion should be read in conjunction with the consolidated financial statements and notes hereto. Certain statements under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Such forward looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward looking statements, such factors include general economic and business conditions, telecom infrastructure service competition, the impact of federal regulation and changes in other laws affecting the Company. For a discussion of risks, you are urged to refer to "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. HISTORICAL RESULTS OF OPERATIONS Given our significant number of acquisitions any analysis of revenues, cost of revenues, general and administrative expenses, and other items, could be inappropriate for comparison purposes. Accordingly, the discussion below of the Company's results of operations includes a discussion of the Company's historical results of operations and then a discussion of the Company's unaudited pro forma results of operations. The following table sets forth, as a percentage of revenue earned, certain items in the Company's Consolidated Statements of Operations for the periods indicated:

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000 REVENUE. Revenue for the period decreased 1.4%, or $2.1 million, from $156.4 million for the three months ended March 31, 2000 to $154.2 million for the three months ended March 31, 2001. This decrease was due to a slowdown in project related work in our external segment, partially offset by increased demand for central office services in our internal segment. 13 14 DIRECT COSTS. Direct costs increased 9.7%, or $10.9 million, from $112.4 million for the three months ended March 31, 2000 to $123.2 million for the three months ended March 31, 2001. As a percent of revenue direct costs increased 8.1% to 79.9% for the three months ended March 31, 2001 from 71.8% for the three months ended March 31, 2000. This increase was due to competitive pricing pressure and absorption of fixed costs over a lower revenue base. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses increased 12.7%, or $2.3 million, from $18.2 million for the three months ended March 31, 2000 to $20.5 million for the three months ended March 31, 2001. Increase in general and administrative expenses are related to the increase in activity in the internal segment and holding company. DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses increased 36.0%, or $2.3 million, from $6.5 million for the three months ended March 31, 2000 to $8.8 million for the three months ended March 31, 2001. The increase in amortization and depreciation expense is mainly due to the acquisitions and related amortization of goodwill and depreciation of assets associated with the related acquisitions. INTEREST EXPENSE. Interest expense increased 20.5%, or $3.0 million, from $14.6 million for the three months ended March 31, 2000 to $17.6 million for the period ended March 31, 2001. This increase in interest was due to the higher levels of debt incurred under our senior credit facilities in connection with our working capital requirements and acquisition activity. PROVISION FOR INCOME TAXES. For the period ended March 31, 2001 the provision for income taxes decreased 533.0%, or $12.8 million, from a provision of $2.4 million for the three months ended March 31, 2000 to a benefit of $10.4 million for the three months ended March 31, 2001. This decrease is due to the first quarter loss and the expected annualized effective tax rate for 2001. The provision is impacted by the amortization of non-deductible goodwill associated with our acquisitions. PRO FORMA RESULTS OF OPERATIONS The following table, and the period-to-period comparisons which follow, set forth unaudited pro forma financial data for the periods indicated. This pro forma financial data has been derived by the application of pro forma adjustments to our historical Consolidated Financial Statements and to each of the four companies we acquired in 2000 and the three companies we acquired in 2001. For purposes of the discussion below, we have included unaudited pro forma financial data because we believe it provides a more meaningful basis for period-to-period comparisons than the actual historical financial data. Due to the significant number of acquisitions that we have completed within the relevant periods, our historical financial statements are not reflective of our ongoing operations. To improve the comparability of the periods set forth below, and to assist you in better understanding the changes in our operations over these periods, we have provided this pro forma information for informational purposes only. This pro forma financial data should not be viewed as a substitute for our results of operations calculated in accordance with generally accepted accounting principles. In addition, the following pro forma financial data does not purport to represent our results of operations had these transactions occurred at the beginning of the periods presented, nor does it purport to be indicative of future results of operations. 14 15 Pro Forma Financial Results Three Months Ended March 31, --------------------------------------------------- 2001 2000 ---------------------- ---------------------- $ % $ % ------- ----- ------- ----- (dollars in thousands) Statement of Operations Data: Revenue 154,798 100.0% 178,911 100.0% Direct costs 123,618 79.9% 126,821 70.9% General and administrative 20,622 13.3% 21,345 11.9% ------- ----- ------- ----- EBITDA* 10,558 6.8% 30,745 17.2% * EBITDA is defined as net income before interest expense, net, other (income) expense, income taxes, depreciation and amortization. EBIDTA is presented because it is commonly used by certain investors and analysts to analyze a company's ability to service debt. However, EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered an alternative to operating income or net income as a measure of operating performance or to net cash provided by operating activities as a measure of liquidity. PRO FORMA THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO PRO FORMA THREE MONTHS ENDED MARCH 31, 2000 REVENUE. Revenue decreased 13.5% for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. This decrease was attributable to a 27.2% decrease in the external services segment revenues due to a marked slowdown of project related work. This decrease was offset somewhat by a 5.7% increase in revenue in the internal segment driven by a general increase in demand for central office services. DIRECT COSTS. Direct costs decreased 2.5% for the three months ended March 31, 2001 compared to the three months ended March 31, 2000, due to reduced levels of activity associated with the decreased revenue base. Direct costs as a percent of revenues increased 9.0% from 70.9% to 79.9% for the three months ended March 31, 2000 and 2001, respectively. The majority of the increase was due to competitive pricing pressure and absorption of fixed costs over a lower revenue base. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses decreased 3.4% for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. The decrease was due to a reduced payroll and other expenses resulting from a reduction in support staff to service the lower levels of activity. As a percent of revenue, the level of general and administrative expenses increased 1.4% from 11.9% for the three months ended March 31, 2000 to 13.3% for the three months ended March 31, 2001. DEPRECIATION AND AMORTIZATION. As a percent of revenue, depreciation and amortization expense was 5.7% and 4.9% for the three months ended March 31, 2001 and 2000, respectively, based on normalized levels at March 31, 2001. INTEREST EXPENSE. As a percent of revenue, interest expense was 11.3% and 9.8% for the three months ended March 31, 2001 and 2000, respectively, based on normalized levels at March 31, 2001. LIQUIDITY AND CAPITAL RESOURCES The Company's needs for capital are attributable primarily to its needs for equipment to support customer contracts and its needs for working capital sufficient to meet general corporate purposes. In addition, the Company used $35.0 million to purchase three companies during the first three months of 15 16 fiscal 2001. These purchases are expected to expand the Company's market share and geographic footprint. These purchases were financed by borrowings from the Company's bank credit facility. Capital expenditures have been financed by borrowings from the Company's credit line and internal cash flow. The Company's sources of cash have been from operating activities and bank borrowings. Net cash provided by operating activities was $7.0 million for the three months ended March 31, 2001 compared to ($7.1) million for the three months ended March 31, 2000. Revenues are the primary sources of operating cash flow. Working capital items provided $3.7 million of operating cash flow for the three-month period ended March 31, 2001, principally through a decrease in accounts receivable. In the three months ended March 31, 2001, net cash used in investing activities was $52.4 million as compared to $18.8 million for the three months ended March 31, 2000. For the three months ended March 31, 2001 cash used for capital expenditures was $10.0 million compared to $6.8 million for the three months ended March 31, 2000. These expenditures were for normal purchases of new equipment, and replacement of existing equipment. In the three months ended March 31, 2001, net cash provided by financing activities was $45.4 million, as compared to ($2.6) million for the three months ended March 31, 2000. The first quarter 2001 financing activities are primarily attributable to the proceeds from borrowing on debt facilities. The first quarter of 2000 reflects the activity associated with the issue of Senior Subordinated Notes. Our senior credit facility and the indenture governing the notes contain numerous restrictive covenants, including, among other things, covenants that limit our ability to borrow money, make capital expenditures, use assets as security in other transactions, pay dividends, incur contingent obligations, sell assets and enter into leases and transactions with affiliates. For a description of our credit facility, see Note 8 to the Consolidated Financial Statements. During the quarter ended March 31, 2001, the Company was in compliance with both negative and affirmative covenants required under our senior credit agreement, see Note 8 to the Consolidated Financial Statements. However, should the cash flows from operations for the quarter ending June 30, 2001 not increase over levels achieved during the quarter ended March 31, 2001, the Company will violate one or more of the covenants contained in the Company's senior credit facility. In such event, the Company intends to seek a waiver of such covenants. No assurance can be given that the Company will be able to obtain a waiver. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Management's Discussion and Analysis of Financial Condition and Result of Operations ("Risk Factors") and Quantitative and Qualitative Disclosures about Market Risk in Orius' most recent annual report filed on Form 10-K. There has been no material change in this information. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We occasionally are a party to legal proceedings incidental to our ordinary business operations. At present, we are not party to any pending legal proceedings that we believe could have a material adverse effect on our business, financial condition or results of operations. 16 17 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Orius completed the acquisition of QMW Communications, Inc. in January 2001 and K & S Construction, Inc., Sorenson Construction, Inc. and Sorenson Leasing, Inc. in February 2001. As partial consideration for the purchase of these companies, Orius issued the former owners of these companies shares of its common stock, Series C preferred stock and Junior Subordinated Notes in the amounts set forth below. These issuances were exempt from registration under Section 4(2) of the Securities Act as transactions not involving a public offering. During the quarter ended March 31, 2001, Orius sold the following securities related to the 2001 acquisitions that were not registered under the Securities Act of 1933, as amended; 66,718 shares of common stock, 4,475 shares of Series C preferred stock and at aggregate of $3,633,507 principal amount of Junior Subordinated Notes. No underwriting discounts or commissions were paid in connection with any of these sales. During the first quarter of 2001, Orius issued options to purchase an aggregate of 69,712 shares of its common stock to its employees in reliance on Rule 701 under the Securities Act. ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES None. ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. 17 18 ITEM 6(A). EXHIBITS Exhibit Number Description ------- ----------- 2.1 -Agreement and Plan of Reorganization, dated November 8, 1999, by and among Orius Corp., Orius Merger Sub., Inc. and LISN Holdings, Inc.+ 2.2 -Amendment Number One to Agreement and Plan or Reorganization, dated January 13, 2000, by and among Orius Corp., Orius Merger Sub, Inc. and LISN Holdings, Inc.+ 3.1 -Second Amended and Restated Articles of Incorporation of Orius Corp.+ 3.2 -Bylaws of Orius Corp.+ 4.2 -Indenture, dated February 9, 2000, by and among NATG Holdings, LLC and Orius Capital Corp. (the "Issuers"), the Guarantors named therein (the "Guarantors") and United States Trust Company of New York, as trustee (the "Trustee").+ 4.3 -Supplemental Indenture, dated April 14, 2000, by and among the Issuers, Fenix Communications, Inc., Fenix Limited Partnership, the other Guarantors and the Trustee.+ 4.4 -Second Supplemental Indenture, dated July 11, 2000, by and among the Issuers, Fenix Holdings, Inc., Fenix Telecom Services Limited Partnership, Network Comprehensive Telecom, L.P., Network Cabling Holdings, Inc., Fenix Telecommunications Services, Inc.,Irwin Telecom Services, Inc., Midwest Splicing & Activation, Inc., Hattech, Inc., the other Guarantors and the Trustee.+ 4.5 -Third Supplemental Indenture, dated as of January 12, 2001, by and among the Issuers, Orius Information Technologies LLC, Orius Telecom Services, Inc., Orius Holdings, Inc., Orius Broadband Services, Inc., Orius Telecommunication Services, Inc., Orius Central Office Services, Inc., Orius Telecom Products, Inc., Orius Integrated Premise Services, Inc. and QMW Communications, Inc., the other Guarantors and the Trustee.++ 4.6 -Fourth Supplemental Indenture, dated as of February 4, 2001, by and among Sorenson Constructions Inc., K&S Construction, Inc., the Issuers, the Parent and the Trustee.++ 4.7 -Fifth Supplemental Indenture, dated as of April 9, 2001, by and among Orius Telecommunication Services (WI), Inc., Orius Telecommunication Holdings (WI), Inc., Orius Telecommunication Services (WI) Limited Partnership, the Issuers, the Parent and the Trustee.* 10.1 -Amended and Restated Credit Agreement, dated July 5, 2000, among Orius Corp., NATG Holdings, LLC, Bankers Trust Company, as Agent, and various lending institutions, with Deutsche Bank Securities, as Lead Arranger and Book Manager, Bank of America, N.A., as Syndication Agent, and First Union National Bank, as Documentation Agent.+ 10.2 -Orius Corp. Investor Rights Agreement, dated November 8, 1999, by and among Orius Corp., Willis Stein & Partners II, L.P., Willis Stein & Partners Dutch, L.P., LISN Holdings, Inc. and each of the other shareholders listed on the signature pages thereto.+ 10.3 -1999 Orius Management Equity Compensation Plan.+ 10.7 -Employment Agreement, dated December 14, 1999, by and between Orius Corp. and Joseph P. Powers.+ 18 19 Exhibit Number Description ------- ------------ 10.8 -Employment Agreement, dated December 14, 1999, by and between Orius Corp. and Robert Agres.+ 10.9 -Senior Management Agreement, dated November 8, 1999, by and between Orius Corp. and William J. Mercurio.+ 10.11 -Employment Agreement, dated June 30, 1998, by and between William G. Mullen and U.S. Cable, Inc., as amended pursuant to a Letter Agreement, dated September 24, 1999.+ 10.13 -Promissory Note, dated January 16, 2000, issued by William J. Mercurio to Orius Corp.+ 10.14 -Employment Agreement, dated May 24, 2000, by and between Texel Corporation and E. Scott Kasprowicz.++ 10.15 -Employment Agreement, dated October 23, 2000, by and between Orius Corp. and Martin J. Kobs.++ ----------------------- * Filed herewith. + This exhibit is incorporated by reference to Orius Corp.'s Registration Statement on Form S-4, File No. 333-36952, originally filed with the SEC on May 12, 2000. Orius Corp. agrees to furnish supplementally to the Commission a copy of any omitted schedule or exhibit to such agreement upon request by the Commission. ++ This exhibit is incorporated by reference to Orius Corp.'s Annual Report filed April 2, 2001 on Form 10-K. Item 6(B). Reports On Form 8-K No reports on Form 8-K were filed by Orius Corp. during the quarter ended March 31, 2001. 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ORIUS CORP. Date: May 15, 2001 By: /s/ ROBERT E. AGRES ----------------------------------------------- Robert E. Agres Senior Vice President - Chief Financial Officer (Principal Financial and Accounting Officer) 20

ORIUS CORP 10-Q